**EXHIBIT 10.8**

 

**EMPLOYMENT AGREEMENT**

 

EMPLOYMENT AGREEMENT, dated this 25th day of April 2002, between FirstFederal Bancshares of Arkansas, Inc., a Texas chartered corporation (the“Corporation”), First Federal Bank of Arkansas, FA, a federally chartered savingsand loan association and a wholly owned subsidiary of the Corporation (the“Association”), and Sherri Billings (the “Executive”).

 

**WITNESSETH**

 

WHEREAS, the Executive is presently an officer of the Corporation andthe Association (together the “Employers”); and

 

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

 

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

 

NOW THEREFORE, in consideration of the premises and the mutualagreements herein contained, the parties hereby agree as follows:

 

**1.             Definitions.**  Thefollowing words and terms shall have the meanings set forth below for thepurposes of this Agreement:

 

(a)**           AverageAnnual Compensation.**  TheExecutive’s “Average Annual Compensation” for purposes of this Agreement shallbe deemed to mean the average level of compensation paid to the Executive bythe Employers or any subsidiary thereof during the most recent five taxableyears preceding the Date of Termination (or such shorter period as theExecutive was employed), and which was included in the Executive’s gross incomefor tax purposes including but not limited to Base Salary, bonuses, director’sfees, if applicable, and all other amounts taxable to the Executive pursuant toany employee benefit plans of the Employers.

 

(b)**           BaseSalary.**  “Base Salary” shallhave the meaning set forth in Section 3(a) hereof.

 

(c)**           Cause.**Termination of the Executive’s employment for “Cause” shall mean terminationbecause of personal dishonesty, incompetence, willful misconduct, breach offiduciary duty involving personal profit, intentional failure to perform statedduties, willful violation of any law, rule or regulation (other than trafficviolations or similar offenses) or final cease-and-desist order or materialbreach of any provision of this Agreement. For purposes of this paragraph, no act or failure to act on theExecutive’s part shall be considered “willful” unless done, or omitted to bedone, by the Executive not in good faith and without reasonable belief that theExecutive’s action or omission was in the best interest of the Employers.

 

(d)**           Changein Control of the Corporation.** “Change in Control of the Corporation” shall mean a change in control ofa nature that would be required to be reported in response to Item 6(e) ofSchedule 14A of Regulation 14A promulgated under the Securities Exchange Act of1934, as amended (“Exchange Act”), or any successor thereto, whether or not theCorporation is registered under the Exchange Act; provided that, withoutlimitation, 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 ExchangeAct) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under theExchange Act), directly or indirectly, of securities of the Corporationrepresenting 25% or more of the combined voting power of the Corporation’s thenoutstanding securities; or (ii) during any period of two consecutive years,individuals who at the beginning of such period constitute the Board ofDirectors of the Corporation cease for any reason to constitute at least amajority thereof unless the election, or the nomination for election bystockholders, of each new director was approved by a vote of at leasttwo-thirds of the directors then still in office who were directors at thebeginning of the period.

 

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(e)**           Code.**  “Code” shall mean the Internal Revenue Codeof 1986, as amended.

 

(f)**            Dateof Termination.**  “Date ofTermination” shall mean (i) if the Executive’s employment is terminated forCause or for Disability, the date specified in the Notice of Termination, and(ii) if the Executive’s employment is terminated for any other reason, the dateon which a Notice of Termination is given or as specified in such Notice.

 

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

 

(h)**           GoodReason.**  Termination by theExecutive of the Executive’s employment for “Good Reason” shall meantermination by the Executive within one year following a Change in Control ofthe 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 theExecutive to the office of Executive Vice President and Chief Financial Officerof the Employers or a material adverse change made by the Employers in theExecutive’s functions, duties or responsibilities as Executive Vice Presidentand Chief Financial Officer of the Employers;

 

(ii)                                  Without the Executive’s express written consent,a material reduction by the Employers in the Executive’s Base Salary as thesame may be increased from time to time or, except to the extent permitted bySection 3(b) hereof, a material reduction in the package of fringe benefitsprovided to the Executive, taken as a whole;

 

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

 

(iv)                              Any purported termination of the Executive’semployment for Cause, Disability or Retirement which is not effected pursuantto a Notice of Termination satisfying the requirements of paragraph (j) below;or

 

(v)                                 The failure by the Employers to obtain theassumption of and agreement to perform this Agreement by any successor ascontemplated in Section 9 hereof.

 

(i)**            IRS.**  IRS shall mean the Internal Revenue Service.

 

(j)**            Noticeof Termination.**  Anypurported termination of the Executive’s employment by the Employers for anyreason, including without limitation for Cause, Disability or Retirement, or bythe Executive for any reason, including without limitation for Good Reason,shall be communicated by written “Notice of Termination” to the other partyhereto.  For purposes of this Agreement,a “Notice of Termination” shall mean a dated notice which (i) indicates thespecific termination provision in this Agreement relied upon, (ii) sets forthin reasonable detail the facts and circumstances claimed to provide a basis fortermination of Executive’s employment under the provision so indicated, (iii)specifies a Date of Termination, which shall be not less than thirty (30) nor morethan ninety (90) days after such Notice of Termination is given, except in thecase of the Employers’ termination of Executive’s employment for Cause; and(iv) is given in the manner specified in Section 10 hereof.

 

(k)**           Retirement.**  “Retirement” shall mean voluntarytermination by the Executive in accordance with the Employers’ retirementpolicies, including early retirement, generally applicable to the Employers’salaried employees.

 

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**2.             Term of Employment.**

 

(a)           The Employers herebyemploy the Executive as Executive Vice President and Chief Financial Officerand Executive hereby accepts said employment and agrees to render such servicesto the Employers on the terms and conditions set forth in this Agreement.Unless extended as provided in this Section 2, this Agreement shall terminatethree (3) years after the date first above written.  Prior to the first annual anniversary of the date first abovewritten and each annual anniversary thereafter, the Boards of Directors of theEmployers shall consider, review (with appropriate corporate documentationthereof, and after taking into account all relevant factors, including theExecutive’s performance) and, if appropriate, explicitly approve a one-yearextension of the remaining term of this Agreement.  The term of this Agreement shall continue to extend each year ifthe Boards of Directors so approve such extension unless the Executive giveswritten notice to the Employers of the Executive’s election not to extend theterm, with such notice to be given not less than thirty (30) days prior to anysuch anniversary date.  If the Boards ofDirectors elect not to extend the term, they shall give written notice of suchdecision to the Executive not less than thirty (30) days prior to any suchanniversary date.  If any party givestimely notice that the term will not be extended as of any annual anniversarydate, then this Agreement shall terminate at the conclusion of its remainingterm.  References herein to the term ofthis Agreement shall refer both to the initial term and successive terms.

 

(b)           During the term ofthis Agreement, the Executive shall perform such executive services for theEmployers as are consistent withher title of Executive Vice President and ChiefFinancial Officer.

 

**3.             Compensation and Benefits.**

 

(a)           The Employers shallcompensate and pay Executive for her services during the term of this Agreementat a minimum base salary of $150,000 per year (“Base Salary”), which may beincreased from time to time in such amounts as may be determined by the Boardsof Directors of the Employers.  Inaddition to her Base Salary, the Executive shall be entitled to receive duringthe term of this Agreement such bonus payments as may be determined by theBoards of Directors of the Employers.

 

(b)           During the term ofthe Agreement, Executive shall be entitled to participate in and receive thebenefits of any pension or other retirement benefit plan, profit sharing, stockoption, employee stock ownership, or other plans, benefits and privileges givento employees and executives of the Employers, to the extent commensurate withher then duties and responsibilities, as fixed by the Boards of Directors ofthe Employers.  The Employers shall notmake any changes in such plans, benefits or privileges which would adverselyaffect Executive’s rights or benefits thereunder, unless such change occurspursuant to a program applicable to all executive officers of the Employers anddoes not result in a proportionately greater adverse change in the rights of orbenefits to Executive as compared with any other executive officer of theEmployers.  Nothing paid to Executiveunder any plan or arrangement presently in effect or made available in the futureshall be deemed to be in lieu of the salary payable to Executive pursuant toSection 3(a) hereof.

 

(c)           During the term ofthis Agreement, Executive shall be entitled to paid annual vacation inaccordance with the policies as established from time to time by the Boards ofDirectors of the Employers.  Executiveshall not be entitled to receive any additional compensation from the Employersfor failure to take a vacation, nor shall Executive be able to accumulateunused vacation time from one year to the next, except to the extent authorizedby the Boards of Directors of the Employers.

 

(d)           During the term ofthis Agreement, in keeping with past practices, the Employers shall continue toprovide the Executive with the automobile he presently drives. The Employersshall be responsible and shall pay for all costs of insurance coverage,repairs, maintenance and other incidental expenses, including license, fuel andoil.  The Employers shall provide theExecutive with a replacement automobile of a similar type as selected by theExecutive at approximately the time that her present automobile reaches three(3) years of age and approximately every three (3) years thereafter, upon thesame terms and conditions.

 

(e)           During the term ofthis Agreement, in keeping with past practices, the Employers shall continue topay the annual membership dues at the country clubs which the Executive iscurrently a member of.

 

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(f)            The Employers shallprovide continued medical insurance in the Employers’ health plan for thebenefit of the Executive and her spouse until the Executive shall have attainedthe age of 70, whether or not the Executive is employed full time by theEmployers, and such insurance shall be comparable to that which is provided tothe Executive as of the date of this Agreement notwithstanding anything to thecontrary in this Agreement and regardless of whether the Executive is eligibleto participate in the Employers’ health plan. In the event of the Executive’s death before he attains the age of 70, theEmployers shall provide the Executive’s spouse continued medical insurance inthe Employers’ health plan comparable to that which is being provided to theExecutive’s spouse at such time for three years from the date of theExecutive’s death.  This Section 3(f)shall not apply if the Employee is employed full-time by an employer other thanthe Corporation or the Association.

 

(g)           In the event of theExecutive’s death during the term of this Agreement, the Executive’s spouse,estate, legal representative or named beneficiaries (as directed by theExecutive in writing) shall be paid on a monthly basis the Executive’s BaseSalary (as defined in Section 3(a) hereof) in effect at the time of theExecutive’s death for a period of twelve (12) months from the date of theExecutive’s death.

 

(h)           The Executive’scompensation and expenses shall be paid by the Corporation and the Associationin the same proportion as the time and services actually expended by theExecutive on behalf of each respective Employer.

 

**4.             Expenses.**  TheEmployers shall reimburse Executive or otherwise provide for or pay for allreasonable expenses incurred by Executive in furtherance of, or in connectionwith the business of the Employers, including, but not by way of limitation,automobile and traveling expenses, and all reasonable entertainment expenses(whether incurred at the Executive’s residence, while traveling or otherwise),subject to such reasonable documentation and other limitations as may beestablished by the Boards of Directors of the Employers.  If such expenses are paid in the firstinstance by Executive, the Employers shall reimburse the Executive therefor.

 

**5.             Termination.**

 

(a)           The Employers shallhave the right, at any time upon prior Notice of Termination, to terminate the Executive’semployment hereunder for any reason, including without limitation terminationfor Cause, Disability or Retirement, and Executive shall have the right, uponprior Notice of Termination, to terminate her employment hereunder for anyreason.

 

(b)           In the event that(i) Executive’s employment is terminated by the Employers for Cause, or (ii)Executive terminates her employment hereunder other than for Good Reason,Executive shall have no right pursuant to this Agreement to compensation orother benefits for any period after the applicable Date of Termination.  In the event that the Executive’s employmentis terminated due to Disability or Retirement, the Executive’s rights shall beas provided in Section 3(f) hereof.  Inthe event the Executive’s employment is terminated due to the Executive’sdeath, the Executive’s rights shall be as provided in Section 3(g) hereof.

 

(c)           In the event that(i) Executive’s employment is terminated by the Employers for other than Cause,Disability, Retirement or the Executive’s death or (ii) such employment isterminated by the Executive (a) due to a material breach of this Agreement bythe Employers, which breach has not been cured within fifteen (15) days after awritten notice of non-compliance has been given by the Executive to theEmployers, or (b) for Good Reason, then the Employers shall, subject to theprovisions of Section 6 hereof, if applicable,

 

(A)          Pay to the Executive,in thirty-six (36) equal monthly installments beginning with the first businessday of the month following the Date of Termination, a cash severance amountequal to three (3) times the Executive’s Average Annual Compensation over themost recent five taxable years, and

 

(B)           Maintain and providefor a period ending at the earlier of (i) the expiration of the remaining termof employment pursuant hereto prior to the Notice of Termination or (ii) thedate of the Executive’s full-time employment by another employer (provided thatthe Executive is entitled under the terms of such employment to benefitssubstantially similar to those described in this subparagraph (B)), at no costto the Executive, the Executive’s continued participation in all groupinsurance, life insurance, health and accident, disability and other employeebenefit plans, programs and arrangements

 

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in whichthe Executive was entitled to participate immediately prior to the Date ofTermination (other than stock option and restricted stock plans of theEmployers), provided that in the event that the Executive’s participation inany plan, program or arrangement as provided in this subparagraph (B) is barredor during such period any such plan, program or arrangement is discontinued orthe benefits thereunder are materially reduced, the Employers shall arrange toprovide the Executive with benefits substantially similar to those which theExecutive was entitled to receive under such plans, programs and arrangementsimmediately prior to the Date of Termination.

 

**6.             Limitation of Benefits underCertain Circumstances.**  If the payments and benefitspursuant to Section 5 hereof, either alone or together with other payments andbenefits which Executive has the right to receive from the Employers, wouldconstitute a “parachute payment” under Section 280G of the Code, the paymentsand benefits pursuant to Section 5 hereof shall be reduced, in the mannerdetermined by the Executive, by the amount, if any, which is the minimumnecessary to result in no portion of the payments and benefits under Section 5being non-deductible to either of the Employers pursuant to Section 280G of theCode and subject to the excise tax imposed under Section 4999 of the Code.  The determination of any reduction in thepayments and benefits to be made pursuant to Section 5 shall be based upon theopinion of independent tax counsel selected by the Employers’ independentpublic accountants 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 suchcounsel deems necessary or advisable for the purpose.  In the event that the Employers and/or the Executive do not agreewith the opinion of such counsel, (i) the Employers shall pay to the Executivethe maximum amount of payments and benefits pursuant to Section 5, as selectedby the Executive, which such opinion indicates that there is a high probabilitydo not result in any of such payments and benefits being non-deductible to theEmployers and subject to the imposition of the excise tax imposed under Section4999 of the Code and (ii) the Employers may request, and Executive shall havethe right to demand that the Employers request, a ruling from the IRS as towhether the disputed payments and benefits pursuant to Section 5 hereof havesuch consequences.  Any such request fora 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 ofcounsel referred to above, and shall be subject to Executive’s approval priorto filing, which shall not be unreasonably withheld.  The Employers and Executive agree to be bound by any rulingreceived from the IRS and to make appropriate payments to each other to reflectany such rulings, together with interest at the applicable federal rateprovided for in Section 7872(f)(2) of the Code.  Nothing contained herein shall result in a reduction of anypayments or benefits to which the Executive may be entitled upon termination ofemployment under any circumstances other than as specified in this Section 6,or a reduction in the payments and benefits specified in Section 5 below zero.

 

**7.             Mitigation; Exclusivity of Benefits.**

 

(a)           The Executive shallnot be required to mitigate the amount of any benefits hereunder by seekingother employment or otherwise, nor shall the amount of any such benefits bereduced by any compensation earned by the Executive as a result of employmentby another employer after the Date of Termination or otherwise.

 

(b)           The specificarrangements referred to herein are not intended to exclude any other benefitswhich may be available to the Executive upon a termination of employment withthe Employers pursuant to employee benefit plans of the Employers or otherwise.

** **

**8.             Withholding.**  Allpayments required to be made by the Employers hereunder to the Executive shallbe subject to the withholding of such amounts, if any, relating to tax andother payroll deductions as the Employers may reasonably determine should bewithheld pursuant to any applicable law or regulation.

 

**9.             Assignability.**  TheEmployers may assign this Agreement and its rights and obligations hereunder inwhole, but not in part, to any corporation, bank or other entity with or intowhich the Employers may hereafter merge or consolidate or to which theEmployers may transfer all or substantially all of its assets, if in any suchcase said corporation, bank or other entity shall by operation of law orexpressly in writing assume all obligations of the Employers hereunder as fullyas if it had been originally made a party hereto, but may not otherwise assignthis Agreement or its rights and obligations hereunder.  The Executive may not assign or transferthis Agreement or any rights or obligations hereunder.

 

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**10.          Notice.**  For thepurposes of this Agreement, notices and all other communications provided forin this Agreement shall be in writing and shall be deemed to have been dulygiven when delivered or mailed by certified or registered mail, return receiptrequested, postage prepaid, addressed to the respective addresses set forthbelow:

 
| To the Employers: |   | Board of Directors                         |
|-------------------|--------|--------------------------------------------|
|              |   | First Federal Bancshares of Arkansas, Inc. |
|              |   | 200 West  Stephenson Avenue                |
|              |   | Harrison, Arkansas 72602-0550              |
|              |   |                                       |
| To the Executive: |   | Sherri Billings                            |
|              |   | 4101 Turtle Creek Cove                     |
|              |   | Harrison, Arkansas  72601             |

 

**11.          Amendment; Waiver.**  Noprovisions of this Agreement may be modified, waived or discharged unless suchwaiver, modification or discharge is agreed to in writing signed by theExecutive and such officer or officers as may be specifically designated by theBoards of Directors of the Employers to sign on its behalf.  No waiver by any party hereto at any time ofany breach by any other party hereto of, or compliance with, any condition orprovision of this Agreement to be performed by such other party shall be deemeda waiver of similar or dissimilar provisions or conditions at the same or atany prior or subsequent time.

 

**12.          Governing Law.**  Thevalidity, interpretation, construction and performance of this Agreement shallbe governed by the laws of the United States where applicable and otherwise bythe substantive laws of the State of Arkansas.

 

**13.          Nature of Obligations.**  Nothingcontained herein shall create or require the Employers to create a trust of anykind to fund any benefits which may be payable hereunder, and to the extentthat the Executive acquires a right to receive benefits from the Employershereunder, such right shall be no greater than the right of any unsecuredgeneral creditor of the Employers.

 

**14.          Interpretation and Headings.**  Thisagreement shall be interpreted in order to achieve the purposes for which itwas entered into.  The section headingscontained in this Agreement are for reference purposes only and shall notaffect in any way the meaning or interpretation of this Agreement.

 

**15.          Validity.**  Theinvalidity or unenforceability of any provision of this Agreement shall notaffect the validity or enforceability of any other provisions of thisAgreement, which shall remain in full force and effect.

 

**16.          Counterparts.**  ThisAgreement may be executed in one or more counterparts, each of which shall bedeemed to be an original but all of which together will constitute one and thesame instrument.

 

**17.          Regulatory Actions.**  Thefollowing provisions shall be applicable to the parties to the extent that theyare required to be included in employment agreements between a savingsassociation and its employees pursuant to Section 563.39(b) of the RegulationsApplicable to all Savings Banks, 12 C.F.R. § 563.39(b), or any successorthereto, and shall be controlling in the event of a conflict with any other provisionof this Agreement, including without limitation Section 5 hereof.

 

(a)           If Executive issuspended from office and/or temporarily prohibited from participating in theconduct of the Employers’ affairs pursuant to notice served under Section8(e)(3) or Section 8(g)(1) of the Federal Deposit Insurance Act (“FDIA”) (12U.S.C. §§1818(e)(3) and 1818(g)(1)), the Employers’ obligations under thisAgreement shall be suspended as of the date of service, unless stayed byappropriate proceedings.  If the chargesin the notice are dismissed, the Employers may, in their discretion:  (i) pay Executive all or part of thecompensation withheld while its obligations under this Agreement weresuspended, and (ii) reinstate (in whole or in part) any of its obligationswhich were suspended.

 

(b)           If Executive isremoved from office and/or permanently prohibited from participating in theconduct of the Employers’ affairs by an order issued under Section 8(e)(4) orSection 8(g)(1) of the FDIA (12 U.S.C. §§1818(e)(4) and

 

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(g)(1)),all obligations of the Employers under this Agreement shall terminate as of theeffective date of the order, but vested rights of the Executive and theEmployers as of the date of termination shall not be affected.

 

(c)           If the Associationis in default, as defined in Section 3(x)(1) of the FDIA (12 U.S.C.§1813(x)(1)), all obligations under this Agreement shall terminate as of thedate of default, but vested rights of the Executive and the Employers as of thedate of termination shall not be affected.

 

(d)           All obligationsunder this Agreement shall be terminated pursuant to 12 C.F.R. §563.39(b)(5)(except to the extent that it is determined that continuation of the Agreementfor the continued operation of the Employers is necessary): (i) by the Directorof the Office of Thrift Supervision (“OTS”), or his or her designee, at thetime the Federal Deposit Insurance Corporation (“FDIC”) or Resolution TrustCorporation enters into an agreement to provide assistance to or on behalf ofthe Association under the authority contained in Section 13(c) of the FDIA (12U.S.C. §1823(c)); or (ii) by the Director of the OTS, or his or her designee,at the time the Director or his or her designee approves a supervisory mergerto resolve problems related to operation of the Association or when theAssociation is determined by the Director of the OTS to be in an unsafe orunsound condition, but vested rights of the Executive and the Employers as ofthe date of termination shall not be affected.

 

**18.          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 theFDIA (12 U.S.C. §1828(k)) and any regulations promulgated thereunder.

 

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

 

 
| Attest:              | **FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.** |
|----------------------|------------------------------------------------|
|                 |                                           |   |
| /s/ Tommy Richardson |                                           | By: | /s/ Larry J. Brandt |   |
|                 |                                           | Larry J. Brandt |
|                 |                                           |   |
| Attest:              | **FIRST FEDERAL BANK   OF ARKANSAS, FA**       |
|                 |                                           |   |
|                 |                                           |   |
| /s/ Tommy Richardson |                                           | By: | /s/ Larry J. Brandt |   |
|                 |                                           | Larry J. Brandt |
|                 |                                           |   |
|                 | **EXECUTIVE**                                  |
|                 |                                           |   |
|                 | By:                                            | /s/ Sherri Billings |   |
|                 |                                           | Sherri Billings |

 

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