exh104.htm


     

    
      

      

    

    Exhibit
      10.4

     

     

    
      AMENDED
        AND RESTATED CHANGE IN CONTROL SEVERANCE AGREEMENT

      


      


      THIS
        AMENDED AND RESTATED CHANGE IN CONTROL SEVERANCE AGREEMENT is dated this
        14th day of
        December
        2007, among First Federal Bancshares of Arkansas, Inc., a Texas corporation
        (the
        "Corporation"), First Federal Bank, a federally chartered savings bank (the
        "Bank"), and Allen Ross Mallioux (the "Executive").  The Corporation
        and the Bank are collectively referred to as the "Employers".

      


      WITNESSETH

      


      WHEREAS,
        the Bank was previously known
        as First Federal Bank of Arkansas, F.A.;

      


      WHEREAS,
        the Executive is currently employed as the President/Western Division /Chief
        Lending Officer of the Corporation and the Bank, and the Employers and the
        Executive have previously entered into a change in control severance agreement
        dated January 25, 2002, as amended on January 1, 2006 (the “Prior
        Agreement”);

      


      WHEREAS,
        the Employers desire to amend
        and restate the Prior Agreement in order to make changes to comply with Section
        409A of the Internal Revenue Code of 1986, as amended (the “Code”), as well as
        certain other changes;

      


      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 year in which the
        Date
        of Termination occurs (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
        Employers.

       

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          2

        

      

       

      (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.

      


      (c)           Change
        in Control.  "Change in Control " shall mean a change in the
        ownership of the Corporation or the Bank, a change in the effective control
        of
        the Corporation or the Bank or a change in the ownership of a substantial
        portion of the assets of the Corporation or the Bank, in each case as provided
        under Section 409A of the Code and the regulations thereunder.

      


      (d)           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.

      


      (e)           Disability.  “Disability”
        shall mean the Executive (i) is unable to engage in any substantial gainful
        activity by reason of any medically determinable physical or mental impairment
        which can be expected to result in death or can be expected to last for a
        continuous period of not less than 12 months, or (ii) is, by reason of any
        medically determinable physical or mental impairment which can be expected
        to
        result in death or can be expected to last for a continuous period of not
        less
        than 12 months, receiving income replacement benefits for a period of not
        less
        than three months under an accident and health plan covering employees of
        the
        Employers.

      


      (f)           Effective
        Date.  The Effective Date of this Agreement shall mean the
        date first written above.

      


      (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 the occurrence of any of the
        following events:

       

      (i)
        (A) a
        material diminution in the Executive’s base compensation as in effect
        immediately prior to the date of the Change in Control or as the same may
        be
        increased from time to time thereafter, (B) a material diminution in the
        Executive’s authority, duties or responsibilities as in effect immediately prior
        to the Change in Control, or (C) a material diminution in the authority,
        duties
        or responsibilities of the officer (as in effect immediately prior to the
        date
        of the Change in Control) to whom the Executive is required to report
        immediately prior to the Change in Control,

       

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          3

        

      

       

      (ii)
        any
        material breach of this Agreement by the Employers, or

      


      (iii)
        any
        material change in the geographic location at which the Executive must perform
        his services under this Agreement immediately prior to the Change in
        Control;

      


      provided,
        however, that prior to any termination of employment for Good Reason, the
        Executive must first provide written notice to the Employers within ninety
        (90)
        days of the initial existence of the condition, describing the existence
        of such
        condition, and the Employers shall thereafter have the right to remedy the
        condition within thirty (30) days of the date the Employers received the
        written
        notice from the Executive.  If the Employers remedy the condition
        within such thirty (30) day cure period, then no Good Reason shall be deemed
        to
        exist with respect to such condition.  If the Employers do not remedy
        the condition within such thirty (30) day cure period, then the Executive
        may
        deliver a Notice of Termination for Good Reason at any time within sixty
        (60)
        days following the expiration of such cure period.

      


      (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
        Cause, Disability or Retirement, or by the Executive for any reason, including
        without limitation for Good Reason, shall be communicated by a 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, subject to the provisions of Section 3 hereof, if
        applicable,

      


      (A)        pay
        to the Executive, in a lump sum within ten (10) business days following the
        Date
        of Termination, a cash severance amount equal to three (3) times the Executive’s
        Annual Compensation, and

       

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          4

        

      

       

            
        (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, and disability
        insurance in which the Executive was participating immediately prior to the
        Date
        of Termination; provided that any insurance premiums payable by the Employers
        or
        any successors pursuant to this Section 5(c)(B) shall be payable at such
        times
        and in such amounts as if the Executive was still an employee of the Employers,
        subject to any increases in such amounts imposed by the insurance company
        or
        COBRA, and the amount of insurance premiums required to be paid by the Employers
        in any taxable year shall not affect the amount of insurance premiums required
        to be paid by the Employers in any other taxable year; and provided further
        that
        if the Executive’s participation in any group insurance plan is barred, the
        Employers shall either arrange to provide the Executive with insurance benefits
        substantially similar to those which the Executive was entitled to receive
        under
        such group insurance plan or, if such coverage cannot be obtained, pay a
        lump
        sum cash equivalency amount within thirty (30) days following the Date of
        Termination based on the annualized rate of premiums being paid by the Employers
        as of the Date of Termination; and

      


      (C)           pay
        to the Executive, in a lump sum within thirty (30) days following the Date
        of
        Termination, a cash amount equal to the projected cost to the Employers of
        providing benefits to the Executive for the remaining term of employment
        under
        this Agreement (prior to giving effect to the Notice of Termination) pursuant
        to
        any other employee benefit plans, programs or arrangements offered by the
        Employers in which the Executive was entitled to participate immediately
        prior
        to the Date of Termination (excluding (y) stock option plans, restricted
        stock
        plans and employee stock ownership plans of the Employers and (z) bonuses
        and
        other items of cash compensation), with the projected cost to the Employers
        to
        be based on the costs incurred for the calendar year immediately preceding
        the
        year in which the Date of Termination occurs and with any automobile-related
        costs to exclude any depreciation on Bank-owned automobiles.

      


      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, then the payments and benefits payable by the Employers pursuant to
        Section 2 hereof shall be reduced by the minimum amount 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.  If the payments
        and benefits under Section 2 are required to be reduced, the cash severance
        shall be reduced first, followed by a reduction in the fringe
        benefits.  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 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.  Nothing contained in this Section 3 shall result in a
        reduction of any payments or benefits to which the Executive may be 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.

       

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          5

        

      

       

      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, except as set forth in Section 2(c)(B)(ii)
        hereof.

      


      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:

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          6

        

      

      
        	 	 	 
	
                 

              	 To
                the Employers:	
                Board
                  of Directors

              
	 	
                First
                  Federal Bancshares of Arkansas, Inc.

              
	 	
                1401
                  Highway 62-65 North

              
	 	
                Harrison,
                  Arkansas  72601

              
	 	 
	
                 

              	
                To
                  the Executive:

              	
                At
                  his last address on file with the
                  Employers

              


      

      


      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.  In addition, notwithstanding anything in this
        Agreement to the contrary, the Employers may amend in good faith any terms
        of
        this Agreement, including retroactively, in order to comply with Section
        409A of
        the Code.

       

      


      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. This Agreement shall terminate three (3) years after
        December 14, 2007; provided that on or prior to December 14, 2008 and each
        subsequent December 14, the Boards of Directors of the Employers shall consider
        (with appropriate corporate documentation thereof, and after taking into
        account
        all relevant factors, including the Executive’s performance as an employee)
        renewal of the term of this Agreement for an additional one (1) year, and
        the
        term of this Agreement shall be so extended as of such December 14 unless
        the
        Boards of Directors of the Employers do not approve such renewal and provide
        written notice to the Executive, or the Executive gives written notice to
        the
        Employers, at least thirty (30) days prior to such December 14, of such party’s
        or parties’ election not to extend the term beyond its then scheduled expiration
        date.

       

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          7

        

      

       

      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.          Changes
        in Statutes or Regulations. If any statutory or regulation provision
        referenced herein is subsequently changed or re-numbered, or is replaced
        by a
        separate provision, then the references in this Agreement to such statutory
        or
        regulatory provision shall be deemed to be a reference to such section as
        amended, re-numbered or replaced.

      


      15.          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.

      


      16.          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.

      


      17.          Regulatory
        Actions.  The following provisions shall be applicable to the
        parties to the extent that they are required to be included in agreements
        between a savings association and its employees pursuant to Section 563.39(b)
        of
        the Regulations Applicable to all Savings Banks, 12 C.F.R. §563.39(b), or any
        successor thereto, and shall be controlling in the event of a conflict with
        any
        other provision of this Agreement, including without limitation Section 5
        hereof.

      


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

      


      (b)           If
        the Executive is removed from office and/or permanently prohibited from
        participating in the conduct of the Employers’ affairs by an order issued under
        Section 8(e)(4) or Section 8(g)(1) of the FDIA (12 U.S.C. §§1818(e)(4) and
        (g)(1)), all obligations of the Employers under this Agreement shall terminate
        as of the effective date of the order, but vested rights of the Executive
        and
        the Employers as of the date of termination shall not be affected.

       

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          8

        

      

       

             
        (c)           If the Bank
        is 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 the
        date of default, but vested rights of the Executive and the Employers as
        of the
        date of termination shall not be affected.

      


      (d)           All
        obligations under 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 Agreement for the continued operation of the Employers is necessary:
        (i) by
        the Director of the Office of Thrift Supervision (“OTS”), or his or her
        designee, at the time the Federal Deposit Insurance Corporation (“FDIC”) enters
        into an agreement to provide assistance to or on behalf of the Bank under
        the
        authority contained in Section 13(c) of the FDIA (12 U.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 merger to resolve problems related
        to
        operation of the Bank or when the Bank is determined by the Director of the
        OTS
        to be in an unsafe or unsound condition, but vested rights of the Executive
        and
        the Employers as of the date of termination shall not be affected.

      


      18.           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, including without limitation
        the
        Prior Agreement, are hereby superseded and shall have no force or
        effect.

       

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          9

        

      

       

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

       

      
        	
                Attest:

              	
                FIRST
                  FEDERAL BANCSHARES OF ARKANSAS, INC.

              
	 	 
	 	 
	/s/
                Tommy W. Richardson 	 	
                By:

              	/s/
                Larry J. Brandt 
	Tommy
                W. Richardson 	 	
                Larry
                  J. Brandt, President and Chief Executive Officer

              
	 	 
	
                Attest:

              	
                FIRST
                  FEDERAL BANK

              
	 	 
	 	 
	/s/
                Tommy W. Richardson 	 	
                By:

              	/s/
                Larry J. Brandt 
	Tommy
                W. Richardson 	 	
                Larry
                  J. Brandt, Chief Executive Officer

              
	 	 
	 	
                EXECUTIVE

              
	 	 
	 	 
	 	
                By:

              	/s/
                Allen Ross Mallioux 
	 	 	
                Allen
                  Ross Mallioux