Document:

Exhibit 10.18

 

SUBORDINATED
REVOLVING

LINE OF
CREDIT AGREEMENT

 

This Subordinated Revolving Line of Credit Agreement
(this “Agreement”) is made as of May 2, 2006 by and between HD Partners
Acquisition Corporation, a Delaware corporation (“Borrower”), and the
individuals and entities set forth on Schedule A (“Lenders”), with
reference to the following facts.

 

(a)  Borrower has been organized for the
purpose of effecting a merger, capital stock exchange, asset acquisition or
other similar business combination with an operating business (a “Business
Combination”).

 

(b)  Borrower proposes to: (a) make a
public offering (the “Public Offering”) of its securities pursuant to a
registration statement (the “Registration Statement”) filed with and
declared effective by the Securities and Exchange Commission (the “SEC”);
(b) deposit the proceeds from the Public Offering into a trust account
(the “Trust Account”) for the benefit of the purchasers of securities in
the Public Offering, net of offering costs, underwriting discounts, to be held
and disbursed in accordance with the terms of the Investment Management Trust
Agreement to be entered into between Borrower and Corporate Stock Transfer,
Inc. as trustee (the “Trust Agreement”); and (c) utilize the funds
in the Trust Account in connection with a Business Combination.

 

(c)  Borrower may need funds to pay costs
and expenses prior to consummation of a Business Combination.

 

(d)  On the terms and subject to the
conditions set forth in this Agreement, Lenders are willing to make available
to Borrower a revolving line of credit to pay certain costs and expenses that
may arise prior to a Business Combination (the “Loan”).

 

1.  The Loan

 

1.1  Lenders agree to make advances to
Borrower, and Borrower agrees to repay such advances, from time to time in
accordance with the terms and conditions of this Agreement and the form of
revolving promissory note attached hereto as Exhibit A (the “Note”);
provided, however, that notwithstanding anything to the contrary in this
Agreement, at no time shall the aggregate of all advances and readvances
outstanding under the Loan at any time exceed $500,000. Each Lender shall be
obligated to advance or readvance his pro-rata share to the Borrower, up to
$100,000 per Lender.

 

This Agreement and the Note are each sometimes
referred to in this Agreement individually as a “Loan Document,” and are
sometimes collectively referred to as the “Loan Documents.”

 

1.2  Lenders’ obligation to make advances
shall expire upon the first to occur of the following:

 

 

1.2.1  Upon
a material breach or default of any representation, warranty or agreement of
Borrower that is not cured or corrected within 20 days of notice of such breach
from any Lender;

 

 

1.2.2  Upon
consummation of a business combination;

 

 

1.2.3  Two years after the effective date
of the Registration Statement;

 

1.2.4 Thirty days after Borrower provides written
notice to Lenders of its termination of this Agreement and the Loan facility,
and the payment of all amounts due hereunder to Lenders.

 

 

2.  Conditions of Advances.  Upon
reasonable advance request from Borrower, Lenders shall make advances to or as
directed by Borrower, provided that each and all of the following conditions is
satisfied:

 

2.1  Borrower shall have executed and
delivered the Note to Lenders, as applicable;

 

2.2  The aggregate amount of outstanding
advances following such advance shall not exceed $500,000;

 

 

2.3  The representations and warranties of
Borrower in the Loan Documents shall be true and correct in all material
respects;

 

2.4  Borrower shall have complied in all
material respects with each of its agreements in the Loan Documents; 

 

2.5  The advances shall be used only for
such purposes as are set forth in Section 4.1 of this Agreement; and

 

2.6  Borrower
shall have completed the Public Offering.

 

 

3.  Borrower Representations

 

3.1  Borrower represents and warrants as
follows:

 

3.1.1  Borrower has full power and
authority to execute and deliver this Agreement and the other Loan Documents to
be executed and delivered by it pursuant hereto and to perform its obligations
hereunder and thereunder. This Agreement and such Loan Documents constitute the
valid and legally binding obligations of the Borrower and are enforceable
against Borrower in accordance with their terms.

 

3.1.2  Neither the execution and the
delivery of the Loan Documents by Borrower, nor the consummation of the
transactions contemplated by the Loan Documents, nor the borrowing by
Borrower, will (a) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of
any government, governmental agency, or court to which Borrower is subject or
any provision of the Amended and Restated Certificate of Incorporation or
Bylaws of Borrower, or (b) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any entity
or natural person (each, a “Person”) the right to accelerate, terminate,
modify, or cancel, any agreement, contract, lease, license, instrument, or other
arrangement to which Borrower is a party or by which it is bound or to which
any of its assets are subject (or result in the imposition of any security
interest upon any of its assets), in each case other than where such violation,
conflict, breach, default, acceleration or creation of right would not
reasonably be expected to have a material adverse effect on the ability of
Borrower to repay amounts due under the Note in accordance with the terms of
the Loan Documents. (a “Material Adverse Effect”).

 

3.1.3  Borrower does not need to give any
notice to, make any filing with, or obtain any authorization, permit,
certificate, registration, consent, approval or order of any government or
governmental agency in order for the parties to consummate the transactions
contemplated by this Agreement, except where the failure would not reasonably
be expected to have a Material Adverse Effect.

 

 

3.1.4  The conditions to the obligation of
Lenders to make the advance, as set forth in Section 2, shall be satisfied.

 

3.2  Each and every representation and
warranty made by Borrower in this Agreement shall be deemed renewed and remade
upon the making of each and every advance or readvance under the Note that
Lenders may make.

 

4.  Borrower Covenants.  For as long
as Lenders shall have a commitment to make advances or there shall be any
outstanding balance on the Loan, without the prior consent of Lenders, Borrower
shall:

 

4.1  use the proceeds of any advance made
hereunder only for ordinary and reasonable operating costs and expenses during
the period Borrower seeks to identify, investigate, negotiate and consummate a
Business Combination, including Borrower’s reporting obligations with the SEC,
the audit and review of Borrower’s financial statements, identifying and investigating
potential targets for a Business Combination, deposits, down payments or
funding of “no-shop” provisions in connection with a particular Business
Combination, negotiating and closing the Business Combination, legal and other
professional fees and expenses, fees, salaries and compensation for directors,
officers, employees, consultants and advisors, and insurance premiums;

 

4.2  not declare or pay any dividend or
distribution with respect to, or repurchase or redeem any shares of, the
capital stock of Borrower, provided that this shall not prohibit payments from
the Trust Account to stockholders of Borrower in accordance with the Trust
Agreement;

 

4.3  not engage in any business other than
identifying, investigating, negotiating and closing a Business Combination;

 

4.4  not make any material capital
expenditure or purchase any material property or asset (other than office
supplies and equipment); and

 

4.5  upon request of Lenders, provide to
Lenders copies of all filings with the Securities and Exchange Commission.

 

5.  No Recourse to Trust Account

 

Lenders,
on behalf of themselves and their successors and assigns, hereby acknowledge
and agree that under no circumstance shall Lenders have any right, title or
interest in or to any of the funds in the Trust Account, notwithstanding the
fact that such funds were received for the purchase and sale of securities of
Borrower, or any funds distributed from the Trust Account other than in a
Business Combination Distribution (as defined below), and that their sole
recourse for repayment of any and all amounts due under the Note shall be
against the assets or properties of Borrower never deposited into the Trust
Account or distributed to Borrower from the Trust Account in a Business
Combination Distribution. Lenders hereby irrevocably waive any claim that they
might have to funds in the Trust Account, and any funds distributed from the
Trust Account other than in a Business Combination Distribution, at law or in
equity, agree not to make any such claim, and agree to indemnify and hold
Borrower harmless from any such claim made by or on behalf of Lenders. For
purposes of this Section 5, a “Business Combination Distribution”
means a distribution from the Trust Account in connection with the consummation
of a Business Combination pursuant to the Trust Agreement.

 

 

6.  Events of Default.  The
occurrence of any of the following shall constitute an event of default (an “Event
of Default”) hereunder and under each and every other Loan Document:

 

6.1  The Borrower shall fail to pay any
principal or any other amount as and when due and payable under any Loan
Document;

 

6.2  Any representation or warranty which
is made or deemed made in any Loan Document by the Borrower shall prove to have
been incorrect or misleading in any material respect on or as of the date made
or deemed made or remade;

 

6.3  The Borrower shall fail to perform or
observe any term, provision, covenant, or agreement contained in any Loan
Document to be performed or observed by the Borrower (other than any payment
obligation) and such failure shall continue more than 20 days after notice
thereof from Lenders;

 

6.4  The Borrower shall (a) generally
not, or be unable to, or admit in writing its inability to, pay its debts as
such debts become due, only after the Company has borrowed the entire $500,000
pursuant hereto; or (b) make an assignment for the benefit of creditors,
or petition or apply to any tribunal for the appointment of a custodian,
receiver, or trustee for it or a substantial part of its assets; or
(c) commence any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution, or liquidation law or statute
of any jurisdiction, whether now or hereafter in effect; or (d) have any
such petition or application filed or any such proceeding commenced against it
in which an order for relief is entered or adjudication or appointment is made
and which remains undismissed for a period of 30 days or more; or (e) by
any act or omission to act indicate consent to, approval of, or acquiescence in
any such petition, application, or proceeding, or order for relief, or the
appointment of a custodian, receiver, or trustee for all or any such
substantial part of its properties; or (f) suffer any such custodianship,
receivership, or trusteeship for all or any substantial part of its properties;
or (g) suffer any such custodianship, receivership, or trusteeship to
continue undischarged for a period of 30 days or more; or

 

6.5  At any time after execution and
delivery of this Agreement, and whether or not due to any fault of Lender, any
Loan Document shall cease to be in full force and effect and enforceable in
accordance with its terms, or shall be declared null and void.

 

7.  Consequences of Default.  If an
Event of Default shall occur, Lenders:

 

7.1  shall have no further obligation to
make advances under the Loan Documents; and

 

7.2  may declare the Note and all amounts
payable under this Agreement and any other Loan Document to be forthwith due
and payable, whereupon the Note and all such amounts shall become and be
forthwith due and payable, without presentment, demand, protest, or further
notice of any kind, all of which are hereby expressly waived by Borrower.

 

8.  Miscellaneous Provisions

 

8.1  Notices.  All
notices, requests, demands and other communications (collectively, “Notices”)
given pursuant to this Agreement shall be in writing, and shall be delivered by
personal service, courier, facsimile transmission or by United States first
class, registered or certified mail, addressed to the following addresses:

 

 

	
  If
  to Borrower:

  	
  HD
  Partners Acquisition Corporation

  
	
   

  	
  2601
  Ocean Park Boulevard, Suite 320

  
	
   

  	
  Santa
  Monica, CA 90405

  
	
   

  	
  Facsimile:
  (310) 399-7303

  
	
   

  	
   

  
	
  If
  to Lenders:

  	
  Bruce
  Lederman

  
	
   

  	
  2601
  Ocean Park Boulevard, Suite 320

  
	
   

  	
  Santa
  Monica, CA 90405

  
	
   

  	
  Facsimile:
  (310) 399-7303

  

 

Any
Notice, other than a Notice sent by registered or certified mail, shall be
effective when received; a Notice sent by registered or certified mail, postage
prepaid return receipt requested, shall be effective on the earlier of when
received or the third day following deposit in the United States mails (or on
the seventh day if sent to or from an address outside the United States). Any
party may from time to time change its address for further Notices hereunder by
giving notice to the other party in the manner prescribed in this Section.

 

8.2  No Waivers; Remedies Cumulative.
No failure or delay by a party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies provided herein
shall be cumulative and not exclusive of any rights or remedies provided by law.

 

8.3  Amendments and Waivers. Any
provision of this Agreement may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by Borrower and Lenders and
such amendment is approved by the Board of Directors of Borrower.

 

8.4  Successors and Assigns.
Borrower may not assign its right or duties hereunder without the prior written
consent of Lenders, which consent Lenders may deny, withhold or delay in its
sole and absolute discretion.

 

8.5  Governing Law. This Agreement
has been made and entered into in the State of Delaware and shall be construed
in accordance with the laws of the State of Delaware without giving effect to
the principles of conflicts of law thereof.

 

8.6  Prior Understandings. This
Agreement supersedes all prior understandings and agreements (whether written,
oral or otherwise) pertaining to the subject matter hereof, and constitutes the
entire agreement between the parties hereto relating to the subject matter
hereof and the transactions provided for herein.

 

8.7  Counterparts. This Agreement
may be executed in any number of counterparts each of which shall be deemed an
original and all of which shall constitute one and the same agreement with the
same effect as if all parties had signed the same signature page. The parties
shall accept facsimile signatures as the equivalent of original ones.

 

8.8  Severability. If any provision
of this Agreement or the application of such provision to any Person or
circumstance will be held invalid, the remainder of this Agreement or the
application of such provision to Persons or circumstances other than those to
which it is held invalid will not be affected thereby.

 

8.9  Additional Documents and Acts.
Borrower shall execute and deliver such additional documents and instruments
and shall perform such additional acts as may be necessary or

 

 

appropriate to effectuate,
carry out and perform all of the terms, provisions, and conditions of this
Agreement and the transactions contemplated by this Agreement.

 

8.10  Survival. All indemnities,
rights, remedies, representations and warranties contained herein shall survive
the expiration or termination of this Agreement, and no termination or
expiration hereof shall relieve either party from liability for any breach of
this Agreement.

 

8.11  Action
by Lenders Any actions required by or taken by the Lenders pursuant to the
provisions of this Agreement or the Note shall be effective if taken pursuant
to a written document executed by Lenders holding 50.1% or more of the
outstanding principal balance of any unpaid Notes hereunder.

 

IN
WITNESS WHEREOF, the parties have executed and delivered this Agreement to one
another as of the date first above written.

 

 

	
  LENDERS:

  	
  /s/ Eddy
  W. Hartenstein

  	
   

  
	
   

  	
  Eddy W. Hartenstein

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Robert
  L. Meyers

  	
   

  
	
   

  	
  Robert L. Meyers

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Steven
  J. Cox

  	
   

  
	
   

  	
  Steven J. Cox

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Lawrence
  Chapman

  	
   

  
	
   

  	
  Lawrence Chapman

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Bruce
  R. Lederman

  	
   

  
	
   

  	
  Bruce R. Lederman

  
	
   

  	
   

  
	
   

  	
   

  
	
  BORROWER:

  	
  HD PARTNERS ACQUISITION CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Robert L. Meyers

  	
   

  
	
   

  	
   

  	
  Robert
  L. Meyers

  
	
   

  	
   

  	
  CFO,
  Treasurer and Director

  
					

 

 

Schedule A

 

Eddy
W. Hartenstein

Robert
L. Meyers

Steven
J. Cox

Lawrence
Chapman

Bruce
R. Lederman

 

 

EXHIBIT A

REVOLVING
LINE OF CREDIT NOTE

 

	
  Not to Exceed $500,000 in Principal

  	
   

  	
  , 2006

  

 

For value received, the undersigned HD PARTNERS ACQUISITION CORPORATION, a
Delaware corporation (“Borrower”), promises to pay, in lawful money of
the United States, to the order of                            ,
together with his successors and assigns (“Holder”), at such address as
Holder may direct, the principal sum of Five Hundred Thousand Dollars ($500,000),
or so much thereof as shall have been advanced and shall remain unpaid
hereunder.

 

This Note is delivered pursuant to, and is subject
to all of the terms and conditions of, that certain Subordinated Revolving Line
of Credit Agreement dated                       ,
2006 (the “Loan Agreement”) between Borrower and [                 ].
Unless otherwise defined in this Note, capitalized terms used in this Note
shall have the meanings ascribed to them in the Loan Agreement, and in the
event of any conflict between the terms of this Note and the terms of the Loan
Agreement, the terms of the Loan Agreement shall govern.

 

1.  Maturity.  This Note shall mature
and become due and payable upon the earlier of an Event of Default (after the
expiration of any cure period), upon consummation of a Business Combination, or
two (2) years after the effective date of a Registration Statement, as
described in Section 1 of the Loan Agreement.

 

2.  Prepayment.  This Note may be
repaid in whole or in part at any time without penalty or premium.

 

3.  Event of Default.  Should an
Event of Default occur, Lenders shall have the rights set forth in
Section 7 of the Loan Agreement.

 

4.  Borrower’s Acknowledgement.  Borrower
acknowledges that Holder is extending the credit contemplated hereby solely as
an accommodation to Borrower, and is willing to do so in reliance upon Borrower’s
monetary and non-monetary covenants contained herein and in the Loan Agreement.

 

5.  Holder’s Acknowledgement.  The
Holder acknowledges and agrees that, as specified in Section 5 of the Loan
Agreement, the Holder has limited recourse against Borrower for repayment of
any and all amounts due and owing under this Note.

 

6.  Miscellaneous.  If this Note (or
any payment due hereunder) is not paid when due, Borrower promises to pay all
costs and expenses of collection and reasonable attorneys’ fees incurred by the
Holder hereof on account of such collection whether or not suit is filed
hereon. Borrower consents to renewals, replacements and extensions of time for
payment hereof, before, at, or after maturity, consents to the acceptance,
release or substitution of security for this Note, and waives demand and
protest. The indebtedness evidenced hereby shall be payable in lawful money of
the United States. In any action brought under or arising out of this Note,
Borrower, including successor(s) or assign(s), hereby consents to the
application of Delaware law, to the jurisdiction of any competent court within
the State of Delaware, and to service of process by any means authorized by
Delaware law. No single or partial exercise of any power hereunder, or under
any other Loan Document in connection herewith, shall preclude other or further
exercises thereof or the exercise of any other such power.

 

 

IN
WITNESS WHEREOF, Borrower has executed and delivered this Note as of the date
first above written.

 

 

	
   

  	
  HD PARTNERS ACQUISITION CORPORATION

  
	
   

  	
   

  
	
   

  	
  By :

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:Exhibit 10.9

 

CHANGE IN CONTROL
SEVERANCE AGREEMENT

 

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

 

WITNESSETH

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

 

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

 

4.                                      Mitigation;
Exclusivity of Benefits.

 

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

 

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

 

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

 

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

 

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

 

	
  To the
  Corporation:

  	
  Secretary

  
	
   

  	
  1401 Highway
  62/65 North

  
	
   

  	
  P.O. Box
  550

  
	
   

  	
  Harrison, AR
  72602

  
	
   

  	
   

  
	
  To the
  Association:

  	
  Secretary

  
	
   

  	
  First Federal
  Bank of Arkansas, FA

  
	
   

  	
  1401 Highway
  62/65 North

  
	
   

  	
  P.O. Box
  550

  
	
   

  	
  Harrison, AR
  72602

  

 

 

	
  To the
  Executive:

  	
  Jeffrey Brandt

  
	
   

  	
  P.O. Box 1770

  
	
   

  	
  Harrison, AR 72602

  

 

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

 

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

 

10.                               Nature
of Employment and Obligations.

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

 

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

 

	
  Attest:

  	
  FIRST
  FEDERAL BANCSHARES

  
	
   

  	
  OF
  ARKANSAS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Tommy Richardson

  	
   

  	
  By:

  	
  /s/ Larry J.
  Brandt

  	
   

  
	
   

  	
   

  	
  Larry J. Brandt, President/CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
  Attest:

  	
  FIRST
  FEDERAL BANK OF ARKANSAS, FA

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Tommy Richardson

  	
   

  	
  By:

  	
  /s/ Larry J.
  Brandt

  	
   

  
	
   

  	
   

  	
  Larry J. Brandt,
  Chairman/CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeffrey
  Brandt

  	
   

  
	
   

  	
   

  	
  Jeffrey Brandt

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