**Exhibit 10.9**

 

**CHANGE IN CONTROLSEVERANCE AGREEMENT**

** **

THISCHANGE 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 charteredsavings 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 activeparticipation in the business of the Employers; and

 

WHEREAS,in order to induce the Executive to remain in the employ of the Employers andin consideration of the Executive’s agreeing to remain in the employ of theEmployers, the parties desire to specify the severance benefits which shall bedue the Executive in the event that his employment with the Employers isterminated under specified circumstances;

 

NOWTHEREFORE, in consideration of the mutual agreements herein contained, and uponthe other terms and conditions hereinafter provided, the parties hereby agreeas follows:

 

**1.****                                      Definitions.**The following words and terms shall have the meanings set forth below forthe 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 ofcompensation paid to the Executive by the Employers or any subsidiary thereofduring the most recent five taxable years preceding the Date of Termination (orsuch shorter period as the Executive was employed), and which was included inthe Executive’s gross income for tax purposes, including but not limited to theExecutive’s salary, bonuses and all other amounts taxable to the Executivepursuant 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, willfulmisconduct, breach of fiduciary duty involving personal profit, intentionalfailure to perform stated duties, willful violation of any law, rule orregulation (other than traffic violations or similar offenses), finalcease-and-desist order or material breach of any provision of this Agreement. Forpurposes of this paragraph, no act or failure to act on the Executive’s part shallbe considered “willful” unless done, or omitted to be done, by the Executivenot in good faith and without reasonable belief that the Executive’s action oromission was in the best interests of the Employers.

 

----

 

(c)                                  **Change in Control of the Corporation.**“Change in Control ofthe Corporation” shall mean a change of control of a nature that would berequired to be reported in response to Item 6(e) of Schedule 14A ofRegulation 14A promulgated under the Securities Exchange Act of 1934, asamended (“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 theExchange Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3under the Exchange Act), directly or indirectly, of securities of theCorporation representing 25% or more of the combined voting power of theCorporation’s then outstanding securities; or (ii) during any period oftwo consecutive years, individuals who at the beginning of such periodconstitute the Board of Directors of the Corporation cease for any reason toconstitute at least a majority thereof unless the election, or the nominationfor election by stockholders, of each new director was approved by a vote of atleast two-thirds of the directors then still in office who were directors atthe 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) ifthe Executive’s employment is terminated for Cause, the date on which theNotice of Termination is given, and (ii) if the Executive’s employment isterminated for any other reason, the date specified in the Notice ofTermination.

 

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

 

(g)                                 **Good Reason.**Termination by the Executive of the Executive’semployment for “Good Reason” shall mean termination by the Executive followinga Change in Control of the Corporation based on:

 

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

 

(ii)           Withoutthe Executive’s express written consent, a material reduction by the Employersin the Executive’s base salary as the same may be increased from time totime or a material reduction in the package of fringe benefits provided to theExecutive, taken as a whole;

 

----

 

(iii)          Without the Executive’s express writtenconsent, the Employers require the Executive to work in an office which is morethan 30 miles from the location of the Employers’ current principal executiveoffice, except for required travel on business of the Employers to an extentsubstantially consistent with the Executive’s present business travelobligations;

 

(iv)          Anypurported termination of the Executive’s employment for Disability orRetirement which is not effected pursuant to a Notice of Termination satisfyingthe requirements of paragraph (i) below; or

 

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

 

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

 

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

 

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

 

**2.****                                      BenefitsUpon Termination.**If the Executive’s employment by the Employers shall beterminated subsequent to a Change in Control of the Corporation by (i) theEmployers for other than Cause, Disability, Retirement or the Executive’s deathor (ii) the Executive for Good Reason, then the Employers shall

 

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

 

----

 

(b)                                 maintain and provide for a period endingat the earlier of (i) the expiration of the remaining term of thisAgreement as of the Date of Termination or (ii) the date of the Executive’sfull-time employment by another employer (provided that the Executive isentitled under the terms of such employment to benefits substantially similarto those described in this subparagraph (b)), at no cost to the Executive, theExecutive’s continued participation in all group insurance, life insurance,health and accident insurance, disability insurance and other employee benefitplans, programs and arrangements offered by the Employers in which theExecutive was entitled to participate immediately prior to the Date ofTermination (excluding (y) stock option and restricted stock plans of theEmployers 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, orduring such period any such plan, program or arrangement is discontinued or thebenefits 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.

 

**3.****                                      Limitationof Benefits under Certain Circumstances.**If the payments and benefitspursuant to Section 2 hereof, either alone or together with other paymentsand benefits which the Executive has the right to receive from the Employers,would constitute a “parachute payment” under Section 280G of the Code, thepayments and benefits payable by the Employers pursuant to Section 2hereof shall be reduced, in the manner determined by the Executive, by theamount, if any, which is the minimum necessary to result in no portion of thepayments and benefits under Section 2 being non-deductible to either ofthe Employers pursuant to Section 280G of the Code and subject to theexcise tax imposed under Section 4999 of the Code. The determination ofany reduction in the payments and benefits to be made pursuant to Section 2shall be based upon the opinion of independent tax counsel selected by theEmployers and paid by the Employers. Such counsel shall be reasonablyacceptable to the Employers and the Executive; shall promptly prepare theforegoing opinion, but in no event later than thirty (30) days from the Date ofTermination; and may use such actuaries as such counsel deems necessary oradvisable for the purpose. In the event that the Employers and/or the Executivedo not agree with the opinion of such counsel, (i) the Employers shall payto 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 highprobability do not result in any of such payments and benefits beingnon-deductible to the Employers and subject to the imposition of the excise taximposed under Section 4999 of the Code and (ii) the Employers may request,and Executive shall have the right to demand that the Employers request, aruling from the IRS as to whether the disputed payments and benefits pursuantto Section 2 hereof have such consequences. Any such request for a rulingfrom the IRS shall be promptly prepared and filed by the Employers, but in noevent later than thirty (30) days from the date of the opinion of counselreferred to above, and shall be subject to Executive’s approval prior tofiling, which shall not be unreasonably withheld. The Employers and Executiveagree to be bound by any ruling received from the IRS and to make appropriatepayments to each other to reflect any such rulings, together with the interestat the applicable federal rate provided for in Section 7872(f)(2) ofthe Code. Nothing contained herein shall result in a reduction of any paymentsor benefits to which the Executive may be

 

----

 

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

 

**4.****                                      Mitigation;Exclusivity of Benefits.**

 

(a)                                  TheExecutive shall not be required to mitigate the amount of any benefitshereunder by seeking other employment or otherwise, nor shall the amount of anysuch benefits be reduced by any compensation earned by the Executive as aresult of employment by another employer after the Date of Termination orotherwise.

 

(b)                                 Thespecific arrangements referred to herein are not intended to exclude any otherbenefits which may be available to the Executive upon a termination ofemployment with the Employers pursuant to employee benefit plans of the Employersor otherwise.

 

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

 

**6.****                                      Assignability.**The Employers may assign this Agreement and their rights andobligations hereunder in whole, but not in part, to any corporation, bank orother entity with or into which either of the Employers may hereaftermerge or consolidate or to which either of the Employers may transfer allor substantially all of its respective assets, if in any such case saidcorporation, bank or other entity shall by operation of law or expressly inwriting assume all obligations of the Employers hereunder as fully as if it hadbeen originally made a party hereto, but may not otherwise assign thisAgreement or their rights and obligations hereunder. The Executive may notassign or transfer this Agreement or any rights or obligations hereunder.

 

**7.****                                      Notice.**For the purposes of this Agreement, notices and all other communicationsprovided for in this Agreement shall be in writing and shall be deemed to havebeen duly given when delivered or mailed by certified or registered mail,return receipt requested, postage prepaid, addressed to the respectiveaddresses 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                 |

 

----

 
| To the  Executive: | Jeffrey Brandt     |
|--------------------|--------------------|
|               | P.O. Box 1770 |
|               | Harrison, AR 72602 |

#####  

**8.****                                      Amendment;Waiver.**No provisions of this Agreement may be modified, waived ordischarged unless such waiver, modification or discharge is agreed to inwriting and signed by the Executive and such officer or officers as may bespecifically designated by the Boards of Directors of the Employers to sign ontheir behalf. No waiver by any party hereto at any time of any breach by anyother party hereto of, or compliance with, any condition or provision of thisAgreement to be performed by such other party shall be deemed a waiver ofsimilar or dissimilar provisions or conditions at the same or at any prior orsubsequent time.

 

**9.****                                      GoverningLaw.**The validity, interpretation, construction and performance of thisAgreement shall be governed by the laws of the United States where applicableand otherwise by the substantive laws of the State of Arkansas.

 

**10.****                               Natureof Employment and Obligations.**

 

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

 

(b)                                 Nothing contained herein shall create orrequire the Employers to create a trust of any kind to fund any benefits which may bepayable hereunder, and to the extent that the Executive acquires a right toreceive benefits from the Employers hereunder, such right shall be no greaterthan the right of any unsecured general creditor of the Employers.

 

**11.****                               Termof Agreement.**The term of this Agreement shall be for three years,commencing on the date of this Agreement and, upon approval of the Boards ofDirectors of the Employers, shall extend for an additional year on each annualanniversary of the date of this Agreement such that at any time the remainingterm of this Agreement and each annual anniversary thereafter, the Boards ofDirectors of the Employers shall consider and review (after taking into accountall relevant factors, including the Executive’s performance) an extension ofthe term of this Agreement, and the term shall continue to extend each year ifthe Boards of Directors approve such extension unless the Executive giveswritten notice to the Employers of the Executive’s election not to extend theterm, with such written notice to be given not less than thirty (30) days priorto any such anniversary date. If the Boards of Directors of the Employers electnot to extend the term, they shall give written notice of such decision to theExecutive not less than thirty (30) days prior to any such anniversary date. Ifany party gives timely notice that the term will not be extended as of anyannual anniversary date, then this Agreement shall terminate at the conclusionof its remaining term. References herein to the term of this Agreement shallrefer both to the initial term and successive terms.

 

----

 

**12.****                               Headings.**The section headings contained in this Agreement are for referencepurposes only and shall not affect in any way the meaning or interpretation ofthis Agreement.

 

**13.****                               Validity.**The invalidity or unenforceability of any provision of this Agreement shallnot affect the validity or enforceability of any other provisions of thisAgreement, which shall remain in full force and effect.

 

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

 

**15.****                               RegulatoryProhibition.**Notwithstanding any other provision of this Agreement to thecontrary, any payments made to the Executive pursuant to this Agreement, orotherwise, 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 regulationspromulgated thereunder, including 12 C.F.R. Part 359.

 

**16.****                               EntireAgreement.**This Agreement embodies the entire agreement between theEmployers and the Executive with respect to the matters agreed to herein. Allprior agreements between the Employers and the Executive with respect to thematters agreed to herein are hereby superseded and shall have no force oreffect.

 

----

 

INWITNESS WHEREOF, this Agreement has been executed as of the date first abovewritten.

 
| 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 |

 

----