Document:

Exhibit 10.8

 

	
  

  	
  UNITED STATES
  OF AMERICA Before the OFFICE OF THRIFT SUPERVISION In the Matter of Order
  No.: WN-10-14 FIRST FEDERAL BANCSHARES OF OF ARKANSAS, INC.
  Effective Date: April 14, 2010 Harrison, Arkansas OTS Docket No. H2658 ORDER TO CEASE AND DESIST
  WHEREAS, First Federal Bancshares of Arkansas, Inc., Harrison, Arkansas, OTS Docket No. H2658 (Holding Company), by and through
  its Board of Directors (Board), has executed a Stipulation and Consent to the
  Issuance of an Order to Cease and Desist (Stipulation); and WHEREAS, the
  Holding Company, by executing the Stipulation, has consented and agreed to
  the issuance of this Order to Cease and Desist (Order) by the Office of
  Thrift Supervision (OTS) pursuant to 12 U.S.C. § 1818(b); and WHEREAS, pursuant to delegated
  authority, the OTS Regional Director for the
  Western Region (Regional Director) is authorized to issue Orders to Cease and
  Desist where a savings and loan holding company has consented to the issuance
  of an order. NOW, THEREFORE, IT IS ORDERED that: First Federal Bancshares of
  Arkansas, Inc. Order to Cease and Desist Page 1 of 11

  

 

	
  

  	
  Cease and
  Desist. 1. The Holding Company and its directors, officers, employees, and
  agents shall cease and desist from any action (alone or with another or
  others) for or toward causing, bringing about, participating in, counseling,
  or the aiding and abetting of unsafe or unsound practices that resulted in:
  (a) the Holding Company’s failure to identify, measure, monitor, and control
  specific risks to the Holding Company’s operations; (b) the operation of the
  Holding Company and its subsidiary insured depository institution, First
  Federal Bank, Harrison, Arkansas, OTS Docket No.
  02721 (Association), with inadequate capital and earnings to support its risk
  profile; and (c) the operation of the Association with an inadequate level of
  capital protection for the volume, type, and quality of assets held by the
  Association. Capital Augmentation Plan. 2. By June 30, 2010, the Holding
  Company shall submit plan to preserve and enhance the capital of the Holding
  Company and the Association and to ensure that the Association complies with
  the capital requirements imposed by the Order to Cease and Desist issued by
  the OTS against the Association on April 14, 2010
  (Capital Augmentation Plan). At a minimum, the Capital Augmentation Plan
  shall: (a) address the requirements and restrictions imposed by this Order
  and the Order to Cease and Desist issued by the OTS
  against the Association on April 14, 2010 (Association Order) relating to
  capital; (b) detail the Holding Company’s capital preservation and
  enhancement strategies with specific narrative goals; First Federal
  Bancshares of Arkansas, Inc. Order to Cease and Desist Page 2 of 11

  

 

	
  

  	
  (c) identify
  the specific sources of additional capital and the timeframes and methods by
  which additional capital will be raised, including specific target dates and
  capital levels; (d) establish an alternative strategy, including, but not
  limited to, seeking a merger or an acquisition partner for the Holding
  Company and/or the Association, to be implemented immediately if the Board’s
  primary strategy to raise additional capital is unsuccessful; and (e) require
  the Senior Executive Officers(1) (Management) Board to prepare and submit for
  the Board’s review, at each regular monthly meeting, a written report
  regarding the Holding Company’s compliance with the Capital Augmentation Plan
  and the Association’s compliance with its Capital Plan. 3. Upon receipt of
  written notification from the Regional Director that the Capital Augmentation
  Plan is acceptable, the Holding Company shall immediately implement the
  Capital Augmentation Plan. 4. The Holding Company shall notify the Regional
  Director regarding any material event adversely affecting or that may adversely
  affect the capital or capital projections of the Holding Company within two
  (2) days after such event. 5. Within thirty (30) days after:
  (a) the Association fails to meet the capital requirements imposed by
  Association Order; (b) the Holding Company fails to comply with the
  Capital Augmentation Plan prescribed in Paragraph 2 of this Order; or
  (c) a request from the Regional Director, the Holding Company shall
  submit a written Contingency Plan that is acceptable to the  The term “Senior Executive Officer” is
  defined at 12 C.F.R. § 563.555. First Federal Bancshares of Arkansas, Inc. Order to Cease and
  Desist Page 3 of 11

  

 

	
  

  	
  Regional
  Director. The Contingency Plan shall detail the actions to be taken, with
  specific time frames, to achieve one of the following results by the later of
  the date of receipt of all required regulatory approvals or sixty (60) days
  after the implementation of the Contingency Plan: (i) a
  merger of the Holding Company or the Association with, or the acquisition of
  the Holding Company or the Association by, another federally insured
  depository institution or holding company thereof; or (ii) voluntary
  liquidation of the Association by filing an appropriate application with the OTS in conformity with federal laws and regulations. 6. Upon receipt of notification from
  the Regional Director to implement the Contingency Plan, the Holding Company
  shall implement the Contingency Plan immediately. By no later than the first
  (1st) and fifteenth (15th) of each month following implementation of the Contingency
  Plan, the Board shall provide the Regional Director with written status
  reports detailing the Holding Company’s progress in implementing the
  Contingency Plan. Business Plan.
  7. By June 30, 2010, the Holding Company shall submit a written three-year
  business plan (Business Plan) for the remainder of calendar year 2010 and
  calendar years 2011 and 2012 that is acceptable to the Regional Director.
  Thereafter, the Holding Company shall submit a revised two-year Business Plan
  at least sixty (60) days prior to the end of each calendar  year. At a minimum, the Business
  Plan shall: (a) address the requirements contained within this Order and the
  comments contained within the OTS Report of
  Examination of the Holding Company, dated September 21, 2009; First Federal
  Bancshares of Arkansas, Inc. Order to Cease and Desist Page 4 of 11

  

 

	
  

  	
  (b) include
  defined strategies for capital enhancement with the capital maintenance
  requirements of the Capital Augmentation Plan adopted pursuant to Paragraph 2
  of this Order; (c) include a detailed narrative of the Board’s plans and
  strategies to strengthen and improve the Holding Company’s, as well as the
  consolidated enterprise’s operations, earnings, and profitability; (d)
  include a detailed discussion of the Holding Company’s current financial
  position and resources and the Board’s strategies for preserving and
  enhancing the Holding Company’s financial resources to meet the needs of the
  consolidated enterprise under the Business Plan, adequately support the
  Association’s risk profile, maintain compliance with applicable regulatory
  requirements and this Order and satisfy the Association’s liquidity needs;
  (e) require quarterly pro forma financial projections (balance sheet, income
  statement, and budget) for each quarter covered by the Business Plan,
  beginning with the quarter ending March 31, 2010; (f) identify all
  relevant assumptions and documentation, including documentation supporting
  such assumptions and projections; and (g) a contingency plan that addresses
  under three (3) different scenarios involving progressively stressed
  economic environments: (i) projected
  short-term and long-term sources of liquidity and cash flow, both into and
  out of the Holding Company; (ii) the payment of the operating expenses
  of the Holding Company; and (iii) the payment of dividend on common
  stock, and the payment of dividends on preferred stock issued under First
  Federal Bancshares of Arkansas, Inc. Order to Cease and Desist Page 5 of 11

  

 

	
  

  	
  the Troubled Asset
  Relief Program’s Capital Purchase Program, without the reliance of capital
  distributions or any other payments from the Association. 8. Upon receipt of
  written notification from the Regional Director that the Business Plan is
  acceptable, the Holding Company shall implement and adhere to the Business
  Plan. The Holding Company shall retain all documentations supporting
  assumptions addressed in Paragraph 7(f) of this Order. 9. Any material modification(2) to the Business Plan must receive the
  prior written notice of non-objection of the Regional Director. The Holding
  Company shall submit any proposed material modifications to the Regional
  Director at least forty-five (45) days prior to implementation. 10. Within
  thirty (30) days after the end of each quarter, beginning with the quarter ending
  June 30, 2010, the Board shall review quarterly variance reports on the
  Holding Company’s compliance with the Business Plan (Quarterly Variance
  Reports). The Quarterly Variance Reports shall: (a) identify material
  variances in the Holding Company’s actual performance during the preceding
  quarter as compared to the projections set forth in the Business Plan; (b)
  contain an analysis and explanation of identified variances; and (c) discuss
  the specific measures taken to address identified variances. 11. The Board’s
  review of the Quarterly Variance Reports, assessment of the Holding Company’s
  compliance with the Business Plan, and any corrective actions taken or to be
  taken (2) A modification shall be considered material under this Paragraph
  of the Order if the Holding Company plans to: (a) engage in any activity
  that is inconsistent wit the Business Plan; or (b) exceed the level of
  any activity contemplated in the Business Plan or fail to meet target amounts
  established in the Business Plan by more than ten percent (10%), unless the
  activity involves assets risk-weighted fifty percent (50%) or less, in which
  case a variance of more than twenty-five percent (25%) shall be deemed to be
  a material modification. First Federal
  Bancshares of Arkansas, Inc. Order to Cease and Desist Page 6 of 11

  

 

	
  

  	
  by the Board
  shall be fully documented in the Board meeting minutes. A copy of the
  Quarterly Variance Reports and the Board meeting minutes detailing the
  Board’s review shall be provided to the Regional Director within fifteen (15)
  days after the Board meeting. Dividends.
  12. Effective immediately, the Holding Company shall not declare, make, or
  pay any cash dividends or other capital distributions or purchase, repurchase
  or redeem or commit to purchase, repurchase, or redeem any Holding Company
  equity stock without the prior written non-objection of the Regional
  Director. The Holding Company shall submit its written request for
  non-objection to the Regional Director at least forty-five (45) days prior to
  the anticipated date of the proposed dividend, capital distribution, or stock
  transaction. The written request for such notice of non-objection shall:
  (a) contain current and pro forma projections regarding the Holding
  Company’s capital, asset quality, and earnings; and (b) address
  compliance with the Capital Plan required by Paragraph 2 of this Order. 13.
  Effective immediately, the Holding Company shall not issue a new class of
  stock or change the terms of any existing classes of stock, or convert any
  class of stock into another class of stock without the prior written notice
  of non-objection of the Regional Director. The Holding Company shall submit
  its written request for non-objection to the Regional Director at least
  forty-five (45) days prior to the anticipated date of the proposed
  transaction. Debt Restrictions.
  14. Effective immediately, the Holding Company not, directly or indirectly,
  incur, issue, renew, or rollover any debt, or commit to so without the prior
  written non-objection of the Regional Director. The Holding Company shall
  submit its written request for non-objection to the Regional Director at
  least forty-five (45) days prior to the anticipated date of the proposed
  First Federal Bancshares of Arkansas, Inc. Order to Cease and Desist Page 7
  of 11

  

 

	
  

  	
  debt transaction.
  The Holding Company’s written request for the Regional Director’s non-objection
  to engage in such debt transactions, at a minimum, shall: (a) describe
  the purpose of the proposed debt; (b) set forth and analyze the terms of
  the proposed debt and covenants; (c) analyze the Holding Company’s
  current cash flow resources available to satisfy such debt repayment; and
  (d) set forth the anticipated source(s) of repayment of the
  proposed debt. For purposes of this Paragraph of the Order, the term “debt” includes,
  but is not limited to, loans, bonds, cumulative preferred stock, hybrid
  capital instruments such as subordinated debt or trust preferred securities,
  and guarantees of debt. For purposes of this Paragraph of this Order, the
  term “debt” does not include liabilities that are incurred in the ordinary
  course of business to acquire goods and services and that are normally
  recorded as accounts payable under generally accepted accounting principles. Employment Contracts and Compensation
  Arrangements. 15. Effective immediately, the Holding Company shall not
  enter into, renew, extend, or revise any contractual arrangement related to
  compensation or benefits with any director or Senior Executive Officers of
  the Holding Company, unless it first provides the Regional Director with not
  less than sixty (60) days prior written notice of the proposed transaction.
  The notice to the Regional Director shall include a copy of the proposed
  employment contract or compensation arrangement, or a detailed written
  description of the compensation arrangement to be offered to such director or
  officer, including, but not limited to all benefits and perquisites. The
  Board shall ensure that any contract, agreement, or arrangement submitted to
  the Regional Director fully complies with the requirements of 12 C.F.R. Part 359 and 31 C.F.R.
  Part 30. First Federal Bancshares of Arkansas, Inc. Order to Cease and
  Desist Page 8 of 11

  

 

	
  

  	
  Severance and Indemnification Payments. 16. Effective immediately, the Holding Company shall not make
  any golden parachute payment(3) or any prohibited indemnification
  payment(4) unless, with respect to each such payment, the Holding
  Company has complied with the requirements of 12 C.F.R.
  Part 359. Effectively immediately, the Holding Company shall comply with
  31 C.F.R. § 30.9. Directorate and Management Changes. 17. Effective immediately,
  the. Holding Company shall comply with the prior notification requirements
  for changes in directors and Senior Executive Officers set forth in 12 C.F.R. Part 563, Subpart H. Affiliate Transactions. 18. Effective immediately, the Holding
  Company shall not engage in transactions with the Association without the
  prior written non-objection of the Regional Director, except: (a) exempt
  transactions under 12 C.F.R. Part 223; and (b) intercompany cost-sharing transactions and tax sharing
  pursuant to an executed written agreements between the parties, provided that
  such transactions comply with 12 C.F.R.
  Part 223 and 12 C.F.R. § 563.41. The Holding
  Company shall provide thirty (30) days advance written notice to the Regional
  Director of any proposed affiliate transaction and shall include a full
  description of the transaction. Compliance
  with this Order. 19. Within thirty (30) days after the end of each
  month, beginning with the month ending March 31, 2010, the Board shall
  adopt a board resolution (Compliance Resolution) formally resolving that the
  Association has complied with each provision of this Order currently in
  effect (3) The term “golden parachute payment” is defined at 12 C.F.R. § 359.1(f).  (4) The term
  “prohibited indemnification payment” is defined at 12 C.F.R.
  § 359.1(1). First Federal Bancshares of
  Arkansas, Inc. Order to Cease and Desist Page 9 of 11

  

 

	
  

  	
  during the
  immediately preceding month, except as otherwise stated. The Compliance
  Resolution shall: (a) specify in detail any instance of noncompliance;
  (b) set forth the corrective action initiated or taken in each instance
  of noncompliance; and (c) identity all notices of exemption or
  non-objection issued by the Regional Director. Within fifteen (15) days of
  the Board meeting at which the Compliance Resolution was adopted, the
  Association shall provide a copy of each Compliance Resolution to the
  Regional Director. Effective Date, Incorporation of Stipulation. 20. This Order is effective on the Effective Date as shown on
  the first page. The Stipulation is made a part hereof and is incorporated
  herein by this reference. Duration. 21. This Order shall remain in effect until terminated,
  modified, or suspended by written notice of such action by the OTS, acting by and through its authorized
  representatives. Time Calculations. 22.
  Calculation of time limitations for compliance with the terms of this Order
  run from the Effective Date and shall be based on calendar days, unless otherwise
  noted. 23. The Regional Director, or an OTS
  authorized representative, may extend any of the deadlines set forth in the
  provisions of this Order upon written request by the Holding Company that
  includes reasons in support for any such extension. Any OTS
  extension shall be made in writing. Submissions and Notices. 24. All
  submissions, including any reports, to the OTS that
  are required by or contemplated by this Order shall be submitted within the
  specified timeframes. First Federal Bancshares of Arkansas, Inc. Order to
  Cease and Desist Page 10 of 11

  

 

	
  

  	
  25. Except as
  otherwise provided herein, all submissions, requests, communications,
  consents, or other documents relating to this Order shall be in writing and
  sent by first class U.S. mail (or by reputable overnight carrier, electronic
  facsimile transmission, or hand delivery by messenger) addressed as follows:
  (a) To the OTS: C.K. Lee,
  Regional Director Attn Vivian Carlton, Assistant Director Office of Thrift
  Supervision 225 H. John Carpenter Freeway, Suite 500 Irving, Texas
  75062-2326 Fax No. (972)277-9501 (b) To the Holding Company: Larry J.
  Brandt, Chief Executive Officer First Federal Bancshares of
  Arkansas, Inc. 1401 Highway 62-65 North Harrison. Arkansas 72601-4226
  Fax No. (870)365-8355 No Violations Authorized. 26. Nothing in this
  Order or the Stipulation shall be construed as allowing the Holding Company,
  its Board, officers, or employees to violate any law, rule, or regulation. IT IS SO ORDERED. OFFICE OF THRIFT
  SUPERVISION By: C.K. Lee Regional
  Director, Western Region Date: See Effective Date on page 1 First Federal Bancshares of Arkansas, Inc. Order to Cease
  and Desist Page 11 of 11Exhibit 10.9

 

	
  

  	
  UNITED STATES OF AMERICA Before the OFFICE OF THRIFT SUPERVISION In the Matter of Order No.: WN-10-13 FIRST FEDERAL BANK Harrison, Arkansas OTS Docket No. 02721
  Effective Date: April 14, 2010 STIPULATION
  AND CONSENT TO ISSUANCE OF ORDER TO CEASE AND DESIST WHEREAS, the
  Office of Thrift Supervision (OTS), acting by and through its Regional
  Director for the Western Region (Regional Director), and based upon
  information derived from the exercise of its regulatory and supervisory
  responsibilities, has informed First Federal Bank, Harrison, Arkansas, OTS
  Docket No. 02721 (Association), that the OTS is of the opinion that
  grounds exist to initiate an administrative proceeding against the
  Association pursuant to 12 U.S.C. § 1818(b); WHEREAS, the Regional Director, pursuant to delegated authority,
  is authorized to issue Orders to Cease and Desist where a savings association
  has consented to the issuance of an order; and WHEREAS, the Association desires to cooperate with the OTS to
  avoid the time and expense of such administrative cease and desist proceeding
  by entering into this Stipulation and Consent to the Issuance of Order to
  Cease and Desist (Stipulation) and, without admitting or First Federal Bank
  Stipulation and Consent to Issuance of Order to Cease and Desist Page 1
  of 6

  

 

	
  

  	
  denying that
  such grounds exist, but only admitting the statements and conclusions in
  Paragraphs 1 and 2 below concerning Jurisdiction, hereby stipulates and
  agrees to the following terms: Jurisdiction. 1. The Association is a “savings
  association” within the meaning of 12 U.S.C. § 1813(b) and 12 U.S.C. §
  1462(4). Accordingly, the Association is “an insured depository institution”
  as that term is defined in 12 U.S.C. § 1813(c). 2. Pursuant to 12 U.S.C. § 1813(q), the Director of the OTS is
  the “appropriate Federal banking agency” with jurisdiction to maintain an
  administrative enforcement proceeding against a savings association.
  Therefore, the Association is subject to the authority of the OTS to initiate
  and maintain an administrative cease and desist proceeding against it
  pursuant to 12 U.S.C. § 1818(b). OTS Findings of Fact. 3. (a) Based
  on its September 21, 2009 examination (2009 examination) of the
  Association, the OTS finds that the Association has engaged in unsafe or
  unsound banking practices, including: (i) operating the Association with
  an inadequate level of capital protection for the volume, type and quality of
  assets held by the Association; (ii) operating the Association with an
  inadequate allowance for loan and lease losses for the volume, type, and
  quality of loans held; (iii) creating concentrations of credit without
  adequate and effective risk management problems; and (iv) operating the
  Association with inadequate internal review policies or procedures with respect
  to loan assets. (b) Based on its 2009 examination of the Association, the OTS
  finds that the Association also violated the following regulations: First
  Federal Bank Stipulation and Consent to Issuance of Order to Cease and Desist
  Page 2 of 6

  

 

	
  

  	
  (i) 12 C.F.R. §
  560.30 (Investment Limitations); (ii) 12 C.F.R. § 560.101 (Real Estate
  Lending Standards); and (iii) 12 C.F.R. Part 564 (Appraisal
  Requirements). Consent. 4. The Association consents to the issuance by the OTS of the
  accompanying Order to Cease and Desist (Order). The Association further
  agrees to comply with the terms of the Order upon the Effective Date of the
  Order and stipulates that the Order complies with all requirements of law. Finality. 5. The Order is issued by the OTS under 12 U.S.C. § 1818(b).
  Upon the Effective Date, the Order shall be a final order, effective, and
  fully enforceable by the OTS under the provisions of 12 U.S.C. § 1818(i). Waivers. 6. The Association waives the following: (a) the right to be
  served with a written notice of the OTS’s charges against it as provided by
  12 U.S.C. § 1818(b) and 12 C.F.R. Part 509; (b) the right to an
  administrative hearing of the OTS’s charges as provided by 12 U.S.C. §
  1818(b) and 12 C.F.R. Part 509; (c) the right to seek judicial
  review of the Order, including, without limitation, any such right provided
  by 12 U.S.C. § 1818(h), or otherwise to challenge the validity of the Order;
  and (d) any and all claims against the OTS, including its employees and
  agents, and any First Federal Bank Stipulation and Consent to Issuance of
  Order to Cease and Desist Page 3 of 6 

  

 

	
  

  	
  other
  governmental entity for the award of fees, costs, or expenses related to this
  OTS enforcement matter and/or the Order, whether arising under common law,
  federal statutes, or otherwise. OTS Authority Not Affected. 7. Nothing in this Stipulation or
  accompanying Order shall inhibit, estop, bar, or otherwise prevent the OTS
  from taking any other action affecting the Association if at any time the OTS
  deems it appropriate to do so to fulfill the responsibilities placed upon the
  OTS by law. Other
  Governmental Actions Not Affected. 8. The
  Association acknowledges and agrees that its consent to the issuance of the
  Order is solely for the purpose of resolving the matters addressed herein,
  consistent with Paragraph 7 above, and does not otherwise release, discharge,
  compromise, settle, dismiss, resolve, or in any way affect any actions,
  charges against, or liability of the Association that arise pursuant to this
  action or otherwise, and that may be or have been brought by any governmental
  entity other than the OTS. Miscellaneous. 9. The laws of
  the United States of America shall govern the construction and validity of
  this Stipulation and of the Order. 10. If any provision of this Stipulation
  and/or the Order is ruled to be invalid, illegal, or unenforceable by the
  decision of any Court of competent jurisdiction, the validity, legality, and
  enforceability of the remaining provisions hereof shall not in any way be
  affected or impaired thereby, unless the Regional Director in his or her sole
  discretion determines otherwise. 11. All references to the OTS in this
  Stipulation and the Order shall also mean any of the First Federal Bank
  Stipulation and Consent to Issuance of Order to Cease and Desist Page 4 of 6

  

 

	
  

  	
  OTS’s
  predecessors, successors, and assigns. 12. The section and paragraph headings
  in this Stipulation and the Order are for convenience only and shall not
  affect the interpretation of this Stipulation or the Order. 13. The terms of
  this Stipulation and of the Order represent the final agreement of the
  parties with respect to the subject matters thereof, and constitute the sole
  agreement of the parties with respect to such subject matters. 14. The Stipulation and Order shall
  remain in effect until terminated, modified, or suspended in writing by the
  OTS, acting through its Regional Director or other authorized representative.
  Signature of Directors/Board
  Resolution. 15. Each Director signing this Stipulation attests that he
  or she voted in favor of a Board Resolution authorizing the consent of the
  Association to the issuance of the Order and the execution of the
  Stipulation. This Stipulation may be executed in counterparts by the
  directors after approval of execution of the Stipulation at a duly called
  board meeting. A copy of the Board Resolution authorizing execution of this
  Stipulation shall be delivered to the OTS, along with the executed
  original(s) of this Stipulation. [Remainder of Page Intentionally Left Blank] First Federal Bank Stipulation and Consent to Issuance of Order
  to Cease and Desist Page 5 of 6 

  

 

	
  

  	
  WHEREFORE, the
  Association, by its directors, executes this Stipulation. Accepted by: FIRST FEDERAL BANK OFFICE OF THRIFT
  SUPERVISION Harrison, Arkansas By: Larry J. Brandt, Chairman and Chief
  Executive Officer By: C.K. Lee Regional Director, Western Region Date: See
  Effective Date on Page 1 John P. Hammerschmidt, Senior Chairman Jeffrey L.
  Brandt, Director and Executive Vice President Frank L. Conner, Director
  Kenneth C. Savells, Director First Federal Bank Stipulation and
  Consent to Issuance of Order to Cease and Desist Page 6 of 6

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