Exhibit 10.9

 

CHANGE IN CONTROL SEVERANCE AGREEMENT

 

THIS CHANGE IN CONTROL SEVERANCE AGREEMENT is dated this 24th day of
January 2006, among First Federal Bancshares of Arkansas, Inc., a Texas
corporation (the “Corporation”), First Federal Bank of Arkansas, FA, a federally
chartered savings and loan association (the “Association”), and Jeffrey Brandt
(the “Executive”). The Corporation and the Association are collectively referred
to as the “Employers”.

 

WITNESSETH

 

WHEREAS, the Executive is presently an officer of each of the Employers;

 

WHEREAS, the Employers desire to be ensured of the Executive’s continued active
participation in the business of the Employers; and

 

WHEREAS, in order to induce the Executive to remain in the employ of the
Employers and in consideration of the Executive’s agreeing to remain in the
employ of the Employers, the parties desire to specify the severance benefits
which shall be due the Executive in the event that his employment with the
Employers is terminated under specified circumstances;

 

NOW THEREFORE, in consideration of the mutual agreements herein contained, and
upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:

 

1.                                      Definitions. The following words and
terms shall have the meanings set forth below for the purposes of this
Agreement:

 

(a)                                  Annual Compensation. The Executive’s
“Annual Compensation” for purposes of this Agreement shall be deemed to mean the
average level of compensation paid to the Executive by the Employers or any
subsidiary thereof during the most recent five taxable years preceding the Date
of Termination (or such shorter period as the Executive was employed), and which
was included in the Executive’s gross income for tax purposes, including but not
limited to the Executive’s salary, bonuses and all other amounts taxable to the
Executive pursuant to any employee benefit plans of the Employers.

 

(b)                                 Cause. Termination of the Executive’s
employment for “Cause” shall mean termination because of personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties, willful violation of any
law, rule or regulation (other than traffic violations or similar offenses),
final cease-and-desist order or material breach of any provision of this
Agreement. For purposes of this paragraph, no act or failure to act on the
Executive’s part shall be considered “willful” unless done, or omitted to be
done, by the Executive not in good faith and without reasonable belief that the
Executive’s action or omission was in the best interests of the Employers.

 

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(c)                                  Change in Control of the Corporation.
“Change in Control of the Corporation” shall mean a change of control of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended (“Exchange Act”), or any successor thereto, whether or not the
Corporation is registered under the Exchange Act; provided that, without
limitation, such a change in control shall be deemed to have occurred if (i) any
“person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Corporation
representing 25% or more of the combined voting power of the Corporation’s then
outstanding securities; or (ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors of the Corporation cease for any reason to constitute at least a
majority thereof unless the election, or the nomination for election by
stockholders, of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of the
period.

 

(d)                                 Code. “Code” shall mean the Internal Revenue
Code of 1986, as amended.

 

(e)                                  Date of Termination. “Date of Termination”
shall mean (i) if the Executive’s employment is terminated for Cause, the date
on which the Notice of Termination is given, and (ii) if the Executive’s
employment is terminated for any other reason, the date specified in the Notice
of Termination.

 

(f)                                    Disability. Termination by the Employers
of the Executive’s employment based on “Disability shall mean termination
because of any physical or mental impairment which qualifies the Executive for
disability benefits under the applicable long-term disability plan maintained by
the Employers or any subsidiary or, if no such plan applies, which would qualify
the Executive for disability benefits under the Federal Social Security System.

 

(g)                                 Good Reason. Termination by the Executive of
the Executive’s employment for “Good Reason” shall mean termination by the
Executive following a Change in Control of the Corporation based on:

 

(i)            Without the Executive’s express written consent, the failure to
elect or to re-elect or to appoint or to re-appoint the Executive to the office
of Executive Vice President-Eastern Division of the Employers or a material
adverse change made by the Employers in the Executive’s functions, duties or
responsibilities as Executive Vice President-Eastern Division of the Employers;

 

(ii)           Without the Executive’s express written consent, a material
reduction by the Employers in the Executive’s base salary as the same may be
increased from time to time or a material reduction in the package of fringe
benefits provided to the Executive, taken as a whole;

 

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(iii)          Without the Executive’s express written consent, the Employers
require the Executive to work in an office which is more than 30 miles from the
location of the Employers’ current principal executive office, except for
required travel on business of the Employers to an extent substantially
consistent with the Executive’s present business travel obligations;

 

(iv)          Any purported termination of the Executive’s employment for
Disability or Retirement which is not effected pursuant to a Notice of
Termination satisfying the requirements of paragraph (i) below; or

 

(v)           The failure by the Employers to obtain the assumption of and
agreement to perform this Agreement by any successor as contemplated in
Section 6 hereof.

 

(h)                                 IRS. IRS shall mean the Internal Revenue
Service.

 

(i)                                     Notice of Termination. Any purported
termination of the Executive’s employment by the Employers for any reason,
including without limitation for Casue, Disability or Retirement, or by the
Executive for any reason, including without limitation for Good Reason, shall be
communicated by written “Notice of Termination” to the other party hereto. For
purposes of this Agreement, a “Notice of Termination” shall mean a dated notice
which (i) indicates the specific termination provision in this Agreement relied
upon, (ii) sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive’s employment under the
provision so indicated, (iii)  specifies a Date of Termination, which shall be
not less than thirty (30) nor more than ninety (90) days after such Notice of
Termination is given, except in the case of the Employers’ termination of the
Executive’s employment for Cause, which shall be effective immediately; and
(iv) is given in the manner specified in Section 7 hereof.

 

(j)                                     Retirement. “Retirement” shall mean
voluntary termination by the Executive in accordance with the Employers’
retirement policies, including early retirement, generally applicable to the
Employers’ salaried employees.

 

2.                                      Benefits Upon Termination. If the
Executive’s employment by the Employers shall be terminated subsequent to a
Change in Control of the Corporation by (i) the Employers for other than Cause,
Disability, Retirement or the Executive’s death or (ii) the Executive for Good
Reason, then the Employers shall

 

(a)                                  pay to the Executive, in either thirty-six
(36) equal monthly installments beginning with the first business day of the
month following the Date of Termination or in a lump sum as of the Date of
Termination (at the Executive’s election), a cash severance amount equal to
three (3) times the Executive’s Annual Compensation, and

 

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(b)                                 maintain and provide for a period ending at
the earlier of (i) the expiration of the remaining term of this Agreement as of
the Date of Termination or (ii) the date of the Executive’s full-time employment
by another employer (provided that the Executive is entitled under the terms of
such employment to benefits substantially similar to those described in this
subparagraph (b)), at no cost to the Executive, the Executive’s continued
participation in all group insurance, life insurance, health and accident
insurance, disability insurance and other employee benefit plans, programs and
arrangements offered by the Employers in which the Executive was entitled to
participate immediately prior to the Date of Termination (excluding (y) stock
option and restricted stock plans of the Employers and (z) cash incentive
compensation included in Annual Compensation), provided that in the event that
the Executive’s participation in any plan, program or arrangement as provided in
this subparagraph (b) is barred, or during such period any such plan, program or
arrangement is discontinued or the benefits thereunder are materially reduced,
the Employers shall arrange to provide the Executive with benefits substantially
similar to those which the Executive was entitled to receive under such plans,
programs and arrangements immediately prior to the Date of Termination.

 

3.                                      Limitation of Benefits under Certain
Circumstances. If the payments and benefits pursuant to Section 2 hereof, either
alone or together with other payments and benefits which the Executive has the
right to receive from the Employers, would constitute a “parachute payment”
under Section 280G of the Code, the payments and benefits payable by the
Employers pursuant to Section 2 hereof shall be reduced, in the manner
determined by the Executive, by the amount, if any, which is the minimum
necessary to result in no portion of the payments and benefits under Section 2
being non-deductible to either of the Employers pursuant to Section 280G of the
Code and subject to the excise tax imposed under Section 4999 of the Code. The
determination of any reduction in the payments and benefits to be made pursuant
to Section 2 shall be based upon the opinion of independent tax counsel selected
by the Employers and paid by the Employers. Such counsel shall be reasonably
acceptable to the Employers and the Executive; shall promptly prepare the
foregoing opinion, but in no event later than thirty (30) days from the Date of
Termination; and may use such actuaries as such counsel deems necessary or
advisable for the purpose. In the event that the Employers and/or the Executive
do not agree with the opinion of such counsel, (i) the Employers shall pay to
the Executive the maximum amount of payments and benefits pursuant to Section 2,
as selected by the Executive, which such opinion indicates that there is a high
probability do not result in any of such payments and benefits being
non-deductible to the Employers and subject to the imposition of the excise tax
imposed under Section 4999 of the Code and (ii) the Employers may request, and
Executive shall have the right to demand that the Employers request, a ruling
from the IRS as to whether the disputed payments and benefits pursuant to
Section 2 hereof have such consequences. Any such request for a ruling from the
IRS shall be promptly prepared and filed by the Employers, but in no event later
than thirty (30) days from the date of the opinion of counsel referred to above,
and shall be subject to Executive’s approval prior to filing, which shall not be
unreasonably withheld. The Employers and Executive agree to be bound by any
ruling received from the IRS and to make appropriate payments to each other to
reflect any such rulings, together with the interest at the applicable federal
rate provided for in Section 7872(f)(2) of the Code. Nothing contained herein
shall result in a reduction of any payments or benefits to which the Executive
may be

 

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entitled upon termination of employment under any circumstances other than as
specified in this Section 3, or a reduction in the payments and benefits
specified in Section 2 below zero.

 

4.                                      Mitigation; Exclusivity of Benefits.

 

(a)                                  The Executive shall not be required to
mitigate the amount of any benefits hereunder by seeking other employment or
otherwise, nor shall the amount of any such benefits be reduced by any
compensation earned by the Executive as a result of employment by another
employer after the Date of Termination or otherwise.

 

(b)                                 The specific arrangements referred to herein
are not intended to exclude any other benefits which may be available to the
Executive upon a termination of employment with the Employers pursuant to
employee benefit plans of the Employers or otherwise.

 

5.                                      Withholding. All payments required to be
made by the Employers hereunder to the Executive shall be subject to the
withholding of such amounts, if any, relating to tax and other payroll
deductions as the Employers may reasonably determine should be withheld pursuant
to any applicable law or regulation.

 

6.                                      Assignability. The Employers may assign
this Agreement and their rights and obligations hereunder in whole, but not in
part, to any corporation, bank or other entity with or into which either of the
Employers may hereafter merge or consolidate or to which either of the Employers
may transfer all or substantially all of its respective assets, if in any such
case said corporation, bank or other entity shall by operation of law or
expressly in writing assume all obligations of the Employers hereunder as fully
as if it had been originally made a party hereto, but may not otherwise assign
this Agreement or their rights and obligations hereunder. The Executive may not
assign or transfer this Agreement or any rights or obligations hereunder.

 

7.                                      Notice. For the purposes of this
Agreement, notices and all other communications provided for in this Agreement
shall be in writing and shall be deemed to have been duly given when delivered
or mailed by certified or registered mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth below:

 

To the Corporation:

Secretary

 

1401 Highway 62/65 North

 

P.O. Box 550

 

Harrison, AR 72602

 

 

To the Association:

Secretary

 

First Federal Bank of Arkansas, FA

 

1401 Highway 62/65 North

 

P.O. Box 550

 

Harrison, AR 72602

 

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To the Executive:

Jeffrey Brandt

 

P.O. Box 1770

 

HARRISON, AR 72602

 

8.                                      Amendment; Waiver. No provisions of this
Agreement may be modified, waived or discharged unless such waiver, modification
or discharge is agreed to in writing and signed by the Executive and such
officer or officers as may be specifically designated by the Boards of Directors
of the Employers to sign on their behalf. No waiver by any party hereto at any
time of any breach by any other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time.

 

9.                                      Governing Law. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the United States where applicable and otherwise by the
substantive laws of the State of Arkansas.

 

10.                               Nature of Employment and Obligations.

 

(a)                                  Nothing contained herein shall be deemed to
create other than a terminable at will employment relationship between the
Employers and the Executive, and the Employers may terminate the Executive’s
employment at any time, subject to providing any payments specified herein in
accordance with the terms hereof.

 

(b)                                 Nothing contained herein shall create or
require the Employers to create a trust of any kind to fund any benefits which
may be payable hereunder, and to the extent that the Executive acquires a right
to receive benefits from the Employers hereunder, such right shall be no greater
than the right of any unsecured general creditor of the Employers.

 

11.                               Term of Agreement. The term of this Agreement
shall be for three years, commencing on the date of this Agreement and, upon
approval of the Boards of Directors of the Employers, shall extend for an
additional year on each annual anniversary of the date of this Agreement such
that at any time the remaining term of this Agreement and each annual
anniversary thereafter, the Boards of Directors of the Employers shall consider
and review (after taking into account all relevant factors, including the
Executive’s performance) an extension of the term of this Agreement, and the
term shall continue to extend each year if the Boards of Directors approve such
extension unless the Executive gives written notice to the Employers of the
Executive’s election not to extend the term, with such written notice to be
given not less than thirty (30) days prior to any such anniversary date. If the
Boards of Directors of the Employers elect not to extend the term, they shall
give written notice of such decision to the Executive not less than thirty (30)
days prior to any such anniversary date. If any party gives timely notice that
the term will not be extended as of any annual anniversary date, then this
Agreement shall terminate at the conclusion of its remaining term. References
herein to the term of this Agreement shall refer both to the initial term and
successive terms.

 

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12.                               Headings. The section headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.

 

13.                               Validity. The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity or
enforceability of any other provisions of this Agreement, which shall remain in
full force and effect.

 

14.                               Counterparts. This Agreement may be executed
in one or more counterparts, each of which shall be deemed to be an original but
all of which together will constitute one and the same instrument.

 

15.                               Regulatory Prohibition. Notwithstanding any
other provision of this Agreement to the contrary, any payments made to the
Executive pursuant to this Agreement, or otherwise, are subject to and
conditioned upon their compliance with Section 18(k) of the Federal Deposit
Insurance Act (12 U.S.C.§1828(k)) and the regulations promulgated thereunder,
including 12 C.F.R. Part 359.

 

16.                               Entire Agreement. This Agreement embodies the
entire agreement between the Employers and the Executive with respect to the
matters agreed to herein. All prior agreements between the Employers and the
Executive with respect to the matters agreed to herein are hereby superseded and
shall have no force or effect.

 

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IN WITNESS WHEREOF, this Agreement has been executed as of the date first above
written.

 

Attest:

FIRST FEDERAL BANCSHARES

 

OF ARKANSAS, INC.

 

 

 

 

/s/ Tommy Richardson

 

By:

/s/ Larry J. Brandt

 

 

 

LARRY J. BRANDT, PRESIDENT/CEO

 

 

 

 

Attest:

FIRST FEDERAL BANK OF ARKANSAS, FA

 

 

 

 

/s/ Tommy Richardson

 

By:

/s/ Larry J. Brandt

 

 

 

Larry J. Brandt, Chairman/CEO

 

 

 

 

 

EXECUTIVE

 

 

 

 

 

By:

/s/ Jeffrey Brandt

 

 

 

Jeffrey Brandt

 

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