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                                                                    Exhibit 10.3

                                      FORM
                         FIRST FEDERAL BANCSHARES, INC.
                              EMPLOYMENT AGREEMENT

         This AGREEMENT ("Agreement"), is entered into and made effective as of
[DATE] by and between First Federal Bancshares, Inc. (the "Holding Company"), a
corporation organized under the laws of Delaware, with its principal
administrative offices at 109 East Depot Street, Colchester, Illinois 62326, and
[NAME] ("Executive"). Any reference to the "Institution" in this Agreement shall
mean First Federal Bank or any successor to First Federal Bank.

         WHEREAS, the Holding Company wishes to assure itself of the services of
Executive for the period provided in this Agreement; and

         WHEREAS, Executive is willing to serve in the employ of the Holding
Company and its subsidiaries on a full-time basis for the term of this
Agreement.

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

1.       POSITION AND RESPONSIBILITIES.

         During the period of Executive's employment hereunder, Executive agrees
to serve as [TITLE] of the Holding Company. Executive shall render
administrative and management services to the Holding Company such as are
customarily performed by persons in a similar executive capacity. During the
term of this Agreement, Executive also agrees to serve an officer and director
of the Institution, as well as a director of the Holding Company.

2.       TERMS.

         (a)      The period of Executive's employment under this Agreement
shall be deemed to have commenced as of the date first written above and shall
continue for a period of thirty-six (36) full calendar months from the effective
date of this Agreement. Commencing on the date of execution of this Agreement,
the term of this Agreement shall be extended for one day each day, so that a
constant thirty-six (36) calendar month term shall remain in effect, until such
time as the Board of Directors of the Holding Company (the "Board") or Executive
elects not to extend the term of the Agreement by giving written notice to the
other party in accordance with Section 8 of this Agreement, in which case the
term of this Agreement shall be fixed and shall end on the third anniversary of
the date of such written notice.

         (b)      During the period of Executive's employment hereunder, except
for periods of absence occasioned by illness, vacation periods, and other
reasonable leaves of absence, Executive shall devote substantially all of his
business time, attention, skill, and efforts to the faithful performance of his
duties hereunder, including activities and services related to the organization,
operation and management of the Holding Company and its direct or indirect
subsidiaries ("Subsidiaries") and participation in industry, community and civic
organizations; provided, however, that, with the approval of the Board, as
evidenced by a resolution of the Board, from time


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to time, Executive may serve, or continue to serve, on the boards of directors
of, and hold any other offices or positions in, companies or organizations,
which, in the Board's judgment, will not present any conflict of interest with
the Holding Company or its Subsidiaries, or materially affect the performance of
Executive's duties pursuant to this Agreement.

         (c)      Notwithstanding anything in this Agreement to the contrary,
either Executive or the Holding Company may terminate Executive's employment
with the Holding Company at any time during the term of this Agreement, subject
to the terms and conditions of this Agreement.

3.       COMPENSATION AND REIMBURSEMENT.

         (a)      The compensation specified under this Agreement shall
constitute consideration paid by the Holding Company in exchange for the duties
described in Section 1 of this Agreement. The Holding Company shall pay
Executive, as compensation, a salary of not less than $[AMOUNT] ("Base Salary").
Base Salary shall include any amounts of compensation deferred by Executive
under any tax-qualified retirement or welfare benefit plan or any other deferred
compensation arrangement maintained by the Holding Company or its Subsidiaries.
Base Salary shall be payable in accordance with the normal payroll practices of
the Holding Company. During the period of this Agreement, Executive's Base
Salary shall be reviewed at least annually; on or about [DATE]. Such review
shall be conducted by the Board or by a committee of the Board delegated such
responsibility by the Board. The committee or the Board may increase Executive's
Base Salary at any time. Any increase in Base Salary shall thereafter become the
new "Base Salary" for purposes of this Agreement.

         (b)      Executive shall be entitled to participate in any employee
benefit plans, arrangements and perquisites substantially equivalent to those in
which Executive was participating or otherwise deriving benefit from immediately
prior to the beginning of the term of this Agreement, and the Holding Company
and its Subsidiaries will not, without Executive's prior written consent, make
any changes in such plans, arrangements or perquisites (or any plans,
arrangements or perquisites with respect to which Executive begins to
participate at any time during the term of this Agreement) which would adversely
affect Executive's rights or benefits thereunder, without separately providing
for an arrangement that ensures Executive receives or will receive the economic
value that Executive would otherwise lose as a result of such adverse affect,
unless such change is general in nature and applies in a nondiscriminatory
manner to all employees covered by the plan, arrangement or perquisite. Without
limiting the generality of the foregoing provisions of this Subsection (b),
Executive shall be entitled to participate in and receive benefits under any
employee benefit plans including, but not limited to, retirement plans (such as
pension, profit sharing and employee stock ownership plans), supplemental
retirement plans, incentive plans, health and welfare plans and any other
employee benefit plan or arrangement made available by the Holding Company or
its Subsidiaries now or in the future to full-time employees of the Holding
Company and/or senior executives and key management employees of the Holding
Company or its Subsidiaries, subject to and on a basis consistent with the
terms, conditions and overall administration of such plans and arrangements.
Nothing paid to Executive under any such plans or arrangements will be deemed to
be in lieu of other compensation and benefits to which Executive is entitled
under this Agreement.


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         (c)      The Holding Company shall pay or reimburse Executive for all
reasonable expenses incurred by Executive in performing his obligations under
this Agreement.

4.       PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.

         (a)      Upon the occurrence of an Event of Termination (as herein
defined) during Executive's term of employment under this Agreement, the
provisions of this Section 4 shall apply. As used in this Agreement, an "Event
of Termination" shall mean and include any one or more of the following: (i) the
termination by the Holding Company of Executive's full-time employment hereunder
for any reason other than termination governed by Section 5(a) of this
Agreement, or Termination for Cause, as defined in Section 7 of this Agreement,
or Retirement or Disability, as defined in paragraph (f) of this Section 4 or;
(ii) Executive's resignation from the Holding Company's employ, upon, any (A)
failure to re-elect or re-appoint Executive as [TITLE] of the Holding Company or
a failure to nominate or re-elect Executive to the Board of Directors of the
Holding Company or of the Institution, unless consented to by the Executive, (B)
material change in Executive's function, duties, or responsibilities with the
Holding Company or its Subsidiaries, which change would cause Executive's
position to become one of lesser responsibility, importance, or scope from the
position and attributes thereof described in Section 1 of this Agreement (and
any such material change shall be deemed as continuing breach of this
Agreement), unless consented to by Executive, (C) relocation of Executive's
principal place of employment by more than 25 miles from its location at the
effective date of this Agreement, unless consented to by Executive, (D) material
reduction in the benefits, arrangements or perquisites to Executive which is not
general in nature and applicable on a nondiscriminatory basis to all employees
covered by such benefits, arrangements, or perquisites or, pursuant to Section
3(b) of this Agreement, to which Executive does not consent or for which
Executive is not or will not be provided the economic benefit, (E) liquidation
or dissolution of the Holding Company or the Institution, or (F) breach of this
Agreement by the Holding Company. Upon the occurrence of any event described in
clauses (A), (B), (C), (D), (E),or (F), above, Executive shall have the right to
elect to terminate employment under this Agreement by resignation upon not less
than sixty (60) days prior written notice given within six full calendar months
after the event giving rise to said right to elect.

         (b)      Upon the occurrence of an Event of Termination, on the Date of
Termination, as defined in Section 8 of this Agreement, the Holding Company
shall be obligated to pay Executive, or, in the event of Executive's subsequent
death, his beneficiary or beneficiaries, or his estate, as the case may be, the
amount of the remaining payments and benefits that Executive would have earned
if he had continued his employment with the Holding Company during the remaining
unexpired term of this Agreement, based on Executive's Base Salary and the
benefits provided to Executive as of the date of the Event of Termination, as
set forth in Sections 3(a) and (b) of this Agreement, as the case may be, and
the amount still due Executive under any paragraph of Section 3 for service
rendered through the Date of Termination. Except as provided for in below and in
paragraph (c) of this Section 4, the determination of Executive's benefits as of
the date of the Event of Termination shall be made based on (i) the value of the
allocation attributable to employer contributions for the most recent plan year
under any defined contribution type plan; (ii) the amount of any incentive or
bonus payment for the most recently-completed fiscal year; and (iii) the
employer-provided cost of


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any other benefit for the most recently-completed fiscal year from former (c).
In addition, for purposes of determining his vested accrued benefit, Executive
shall be credited either under any defined benefit pension plan maintained by
the Institution or, if not permitted under such plan, under a separate
arrangement, with the additional "years of service" that he would have earned
for vesting and benefit accrual purposes for the remaining term of the Agreement
had his employment not terminated. At the election of Executive, which election
is to be made within thirty (30) days of the Date of Termination, such payments
shall be made in a lump sum (without discount for early payment) or paid monthly
during the remaining term of the agreement following Executive's termination. In
the event that no election is made, payment to Executive will be made in a lump
sum. Such payments shall not be reduced in the event Executive obtains other
employment following termination of employment. Notwithstanding anything to the
contrary elsewhere in this Agreement, to the extent the Executive is entitled to
continued coverage or benefit accrual under any retirement or welfare benefit
plan during the remaining unexpired term of this Agreement, the amount payable
under this Section 4(b) should be adjusted to the extent necessary to avoid any
duplication of such benefits.

         (c)      To the extent that the Holding Company or its Subsidiaries
continue to offer any life, medical, health, disability or dental insurance plan
or arrangement in which Executive participates in on the last day of his
employment (each being a "Welfare Plan"), after an Event of Termination (as
herein defined), Executive and his dependents shall continue participating in
such Welfare Plans, subject to the same premium contributions on the part of
Executive as were required immediately prior to the Event of Termination until
the earlier of (i) his death (ii) his employment by another employer other than
one of which he is the majority owner or (iii) the end of the remaining term of
this Agreement. If the Holding Company or its Subsidiaries does not offer the
Welfare Plans (or if for any reason Executive's participation in said plans is
prohibited) after the Event of Termination, then the Holding Company shall
provide Executive with a payment equal to the actuarial value of the provision
of such benefit for the period which runs until the earlier of (i) his death;
(ii) his employment by another employer other than one of which he is the
majority owner; or (iii) the end of the remaining term of this Agreement.

         (d)      In the event that Executive is receiving monthly payments
pursuant to Section 4(b) of this Agreement, on an annual basis, thereafter,
between the dates of January 1 and January 31 of each year, Executive shall
elect whether the balance of the amount payable under the Agreement for that
year shall be paid in a lump sum or on a pro rata basis. Such election shall be
irrevocable for the year for which such election is made.

         (e)      Termination of Executive based on "Retirement" shall mean
termination by written notice to the Holding Company or its Subsidiaries from
Executive specifying an exact retirement date or termination in accordance with
any retirement arrangement established with Executive's written consent with
respect to him. Termination of Executive based on Disability shall mean written
notice to the Holding Company or its Subsidiaries by Executive specifying an
exact date as of which he is unable to perform all of the duties and
responsibilities of his position. Upon termination of Executive upon Disability,
Executive shall be entitled to all benefits under any disability plan of the
Holding Company or its Subsidiaries or any other plans which Executive is a


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party or a participant in accordance with the terms of the plan or arrangement.
Executive shall be entitled to all compensation and benefits provided for in
Section 3 of this Agreement through the date of his termination of employment as
specified in the notice provided by him.

5.       CHANGE IN CONTROL.

         (a)      For purposes of this Agreement, a "Change in Control" of the
Holding Company or the Institution shall mean an event of a nature that; (i)
would be required to be reported in response to Item 1(a) of the current report
on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 (the "Exchange Act"); or (ii) results in a
Change in Control of the Institution or the Holding Company within the meaning
of the Home Owners' Loan Act of 1933, as amended, the Federal Deposit Insurance
Act, and the Rules and Regulations promulgated by the Office of Thrift
Supervision (or its predecessor agency) ("OTS"), as in effect on the date hereof
(provided, that in applying the definition of change in control as set forth
under the rules and regulations of the OTS, the Board shall substitute its
judgment for that of the OTS); or (iii) without limitation such a Change in
Control shall be deemed to have occurred at such time as (A) any "person" (as
the 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 voting securities of the Institution or the Holding
Company representing 20% or more of the Institution's or the Holding Company's
outstanding voting securities or right to acquire such securities except for any
voting securities of the Institution purchased by the Holding Company and any
voting securities purchased by any employee benefit plan of the Holding Company
or its Subsidiaries; or (B) individuals who constitute the board of directors on
the date hereof (the "Incumbent Board") cease for any reason to constitute at
least a majority thereof, provided that any person becoming a director
subsequent to the date hereof whose election was approved by a vote of at least
three-quarters of the directors comprising the Incumbent Board (or members who
were nominated by the Incumbent Board), or whose nomination for election by the
Company's stockholders was approved by a Nominating Committee solely composed of
members which are Incumbent Board members (or members who were nominated by the
Incumbent Board), shall be, for purposes of this clause (B), considered as
though he were a member of the Incumbent Board; or (C) a plan of reorganization,
merger, consolidation, sale of all or substantially all the assets of the
Institution or the Holding Company or similar transaction occurs or is
effectuated in which the Institution or Holding Company is not the resulting
entity; provided, however, that such an event listed above will be deemed to
have occurred or to have been effectuated upon the receipt of all required
federal regulatory approvals not including the lapse of any statutory waiting
periods; or (D) a proxy statement has been distributed soliciting proxies from
stockholders of the Holding Company, by someone other than the current
management of the Holding Company, seeking stockholder approval of a plan of
reorganization, merger or consolidation of the Holding Company or Institution
with one or more corporations as a result of which the outstanding shares of the
class of securities then subject to such plan or transaction are exchanged for
or converted into cash or property or securities not issued by the Institution
or the Holding Company shall be distributed; or (E) a tender offer is made by a
person other than the Holding Company for 20% or more of the voting securities
of the Institution or Holding Company then outstanding.


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         (b)      If any of the events described in Section 5(a) of this
Agreement constituting a Change in Control have occurred, or the Board has
determined that a Change in Control has occurred, Executive shall be entitled to
the benefits provided in paragraphs (c), (d), (e), and (f) of this Section 5
upon his termination of employment on or after the date the Change in Control
occurs due to (i) Executive's dismissal at any time during the term of this
Agreement, or (ii) Executive's resignation following any demotion, loss of
title, office or significant authority or responsibility, reduction in the
annual compensation or benefits or relocation of Executive's principal place of
employment by more than 25 miles from its location immediately prior to the
Change in Control, unless such termination is because of Executive's Termination
for Cause; provided, however, Executive may consent in writing to any such
demotion, loss, reduction or relocation. The effect of any written consent of
the Executive under this Section 5(b) shall be strictly limited to the terms
specified in such written consent. Under no circumstances can a termination of
employment during the term of this Agreement on or after the date of a Change in
Control occurs be considered a termination on account of retirement or
disability for purposes of determining Executive's rights to the payment of
benefits provided in paragraphs (c), (d), (e), and (f) of this Section 5.

         (c)      Upon Executive's entitlement to payment pursuant to Section
5(b) of this Agreement, the Holding Company shall pay Executive, or in the event
of Executive's subsequent death, Executive's beneficiary or beneficiaries, or
estate, as the case may be, as severance pay or liquidated damages, or both, a
sum equal to the greater of: (i) the payments and benefits that would have been
due pursuant to Section 3 of this Agreement for the remaining term of the
Agreement (determined in the same manner set forth in paragraphs (b) and (c) of
Section 4 of this Agreement; or (ii) three (3) times Executive's average annual
compensation for the five most recently completed taxable years of Executive.
For purposes of this Section 5(c), annual compensation shall include Base Salary
and any other taxable income paid by the Holding Company or its Subsidiaries,
including but not limited to amounts related to the granting, vesting or
exercise of restricted stock or stock option awards, commissions, bonuses,
severance payments, retirement benefits, director or committee fees and fringe
benefits paid or to be paid to Executive or paid for Executive's benefit during
any such year, as well as pension, profit sharing, employee stock ownership plan
and other retirement contributions or benefits, including to any tax-qualified
or non-tax-qualified plan or arrangement (whether or not taxable) made or
accrued on behalf of Executive for such year. At the election of Executive,
which election is to be made prior to or within thirty (30) days of the Date of
Termination on or following a Change in Control, such payment may be made in a
lump sum (without discount for early payment) on or immediately following the
Date of Termination (which may be the date a Change in Control occurs) or paid
in equal monthly installments during the thirty-six (36) months following
Executive's termination. In the event that no election is made, payment to
Executive will be made in a lump sum. Such payments shall not be reduced in the
event Executive obtains other employment following termination of employment.

         (d)      Upon the occurrence of a Change in Control followed by
Executive's termination of employment, Executive will be entitled to receive
benefits due him under or contributed by the Holding Company or its Subsidiaries
on his behalf pursuant to any retirement, incentive, profit sharing, employee
stock ownership, bonus, performance, disability or other employee benefit plan
or other arrangement maintained by the Institution or the Holding Company on
Executive's behalf


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to the extent such benefits are not otherwise paid to Executive under a separate
provision of this Agreement. In addition, for purposes of determining his vested
accrued benefit, Executive shall be credited either under any defined benefit
pension plan maintained by the Institution or, if not permitted under such plan,
under a separate arrangement, with the additional "years of service" that he
would have earned for vesting and benefit accrual purposes for the remaining
term of the Agreement had his employment not terminated.

         (e)      Upon the occurrence of a Change in Control and Executive's
termination of employment pursuant to the provisions of Section 5(b) of this
Agreement in connection therewith, the Holding Company will cause to be
continued any welfare Plan benefit (as described in Section 4(d) of this
Agreement) substantially identical to the benefit coverage maintained by the
Holding Company or its Subsidiaries for Executive and any of his dependents
covered under such plans prior to the Change in Control. Such coverage shall
cease upon the expiration of thirty-six (36) full calendar months following the
Date of Termination. In the event Executive's or Executive's dependent's
participation in any such plan or program is barred, the Holding Company shall
arrange to provide Executive and his dependents with benefits coverage
substantially similar to those which Executive and his dependents would
otherwise have been entitled to receive under such plans and programs by
operation of this provision or provide their economic equivalent to executive
and his dependents.

         (f)      In the event that Executive is receiving monthly payments
pursuant to Section 5(c) hereof, on an annual basis, thereafter, between the
dates of January 1 and January 31 of each year, Executive shall elect whether
the balance of the amount payable under the Agreement for that year shall be
paid in a lump sum pursuant to such section. Such election shall be irrevocable
for the year for which such election is made.

6.       CHANGE OF CONTROL RELATED PROVISIONS.

         (a)      Notwithstanding the preceding provisions of Section 5 of this
Agreement, for any taxable year in which Executive shall be liable for the
payment of an excise tax under Section 4999 of the Internal Revenue Code (or any
successor provision thereto), with respect to any payment in the nature of the
compensation made by the Holding Company or its Subsidiaries to (or for the
benefit of) Executive pursuant to this Agreement or otherwise, the Holding
Company (or any successor thereto) shall pay to Executive an amount determined
under the following formula:

         An amount equal to:  (E x P) + X

WHERE:

         X  =                   E X P
               --------------------------------------------------------------
               1 - [(FI x (1 - SLI)) + SLI + E + M]
and

         E  =  the rate at which the excise tax is assessed under Section 4999
               of the Code;


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         P    =            the amount with respect to which such excise tax is
                           assessed, determined without regard to this Section
                           6;

         FI   =            the highest marginal rate of federal income,
                           employment, and other taxes (other than taxes imposed
                           under Section 4999 of the Code) applicable to
                           Executive for the taxable year in question with
                           respect to such payment (including any effective
                           increase in Executive's tax rate attributable to the
                           resultant disallowance of any deduction or the
                           phase-out of any personal exemption or similar
                           items);

         SLI  =            the sum of the highest marginal rates of income and
                           payroll tax applicable to Executive under applicable
                           state and local laws for the taxable year in question
                           (including any effective increase in Executive's tax
                           rate attributable to the resultant disallowance of
                           any deduction or the phase-out of any personal
                           exemption or similar items);

         M    =            highest marginal rate of Medicare tax; and

With respect to any payment in the nature of compensation that is made to (or
for the benefit of) Executive under the terms of this Section 6 or otherwise and
on which an excise tax under Section 4999 of the Code may or will be assessed,
the payment determined under this Section 6 shall be made to Executive on the
earliest of (i) the date the Holding Company is required to withhold such tax,
(ii) the date the tax is required to be paid by Executive, or (iii) at the time
of termination resulting from the Change in Control. It is the intention of the
parties that the Holding Company provide Executive with a full tax gross-up
under the provisions of this Section 6, so that on a net after-tax basis, the
result to Executive shall be the same as if the excise tax under Section 4999
(or any successor provisions) of the Code had not been imposed. The tax gross-up
may be adjusted, as appropriate, if alternative minimum tax rules are applicable
to Executive.

         (b)      Notwithstanding the foregoing, if its is (i) initially
determined by the Holding Company's tax advisors that no excise tax under
Section 4999 of the Code is due with respect to any payment or benefit described
in the first paragraph of Section 6(a) and thereafter it is determined in a
final judicial determination or administrative settlement that the Section 4999
excise tax is due with respect to such payments or benefits or subsequently
determined in a final judicial determination or a final administrative
settlement to which Executive is a party that the excise tax under Section 4999
of the Code is due or that the excess parachute payment as defined in Section
4999 of the Code is more than the amount determined as "P", above (such revised
determination under (i) or (ii) above thereafter being referred to as the
"Determinative Excess Parachute Payment"), then the tax advisors of the Holding
Company (or any successor thereto) shall determine the amount (the "Adjustment
Amount"), the Holding Company (or any successor thereto) must pay to Executive,
in order to put Executive in the same position as Executive would have been if
the amount determined as "P" above had been equal to the Determinative Excess
Parachute Payment. In determining the Adjustment Amount, the tax advisors shall
take into account any and all taxes (including any penalties and interest) paid
or payable by Executive in connection with such final


                                     Page 8
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judicial determination or final administrative settlement As soon as practicable
after the Adjustment Amount has been so determined, the Holding Company shall
pay the Adjustment Amount to Executive.

         (c)      The Holding Company (or its successor) shall indemnify and
hold Executive harmless from any and all losses, costs and expenses (including
without limitation, reasonable attorney's fees, reasonable accountant's fees,
interest, fines and penalties of any kind) which Executive incurs as a result of
any administrative or judicial review of Executive's liability under Section
4999 of the Code by the Internal Revenue Service or any comparable state agency
through and including a final judicial determination or final administrative
settlement of any dispute arising out of Executive's liability for the Section
4999 excise tax or otherwise relating to the classification for purposes of
Section 280G of the Code of any payment or benefit in the nature of compensation
made or provided to Executive by the Holding Company or any successor thereto.
Executive shall promptly notify the Holding Company in writing whenever
Executive receives notice of the commencement of any judicial or administrative
proceeding, formal or informal, in which the federal tax treatment under Section
4999 of the Code of any amount paid or payable under this Supplemental Agreement
is being reviewed or is in dispute (including a notice of audit or other inquiry
concerning the reporting of Executive's liability under Section 4999). The
Holding Company (or its successor) may assume control at its expense over all
legal and accounting matters pertaining to such federal or state tax treatment
(except to the extent necessary or appropriate for Executive to resolve any such
proceeding with respect to any matter unrelated to amounts paid or payable
pursuant to this contract) and Executive shall cooperate fully with the Holding
Company in any such proceeding. Executive shall not enter into any compromise or
settlement or otherwise prejudice any rights the Holding Company (or its
successor) may have in connection therewith without prior consent to the Holding
Company (or its successor). In the event that the Holding Company (or any
successor thereto) elects not to assume control over such matters, the Holding
Company (or any successor thereto) shall promptly reimburse Executive for all
expenses related thereto as and when incurred upon presentation of appropriate
documentation relating thereto.

7.       TERMINATION FOR CAUSE.

         The term "Termination for Cause" shall mean termination because of
Executive's personal dishonesty, incompetence, willful misconduct, any breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule, regulation (other than traffic
violations or similar offenses), final cease and desist order or material breach
of any provision of this Agreement. In determining incompetence, the acts or
omissions shall be measured against the standards for professional competence
generally prevailing for executive officers having comparable positions in the
savings institution industry. Notwithstanding the foregoing, Executive shall not
be deemed to have been terminated for Cause unless and until there shall have
been delivered to Executive a Notice of Termination which shall include a copy
of a resolution duly adopted by the affirmative vote of not less than
three-fourths of the members of the Board at a meeting of the Board called and
held for that purpose (after reasonable notice to Executive and an opportunity
for Executive, together with counsel, to be heard before the Board and which
such meeting shall be held not more than 30 days from the date of notice during
which period Executive


                                     Page 9
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may be suspended with pay), finding that in the good faith opinion of the Board,
Executive was guilty of conduct justifying Termination for Cause and specifying
the particulars thereof in detail. Executive shall not have the right to receive
compensation or other benefits for any period after Termination for Cause except
for compensation and benefits already vested. Any stock options and related
limited rights granted to Executive under any stock option plan, or any unvested
awards granted to Executive under any restricted stock benefit plan of the
Holding Company or its Subsidiaries, shall become null and void effective upon
Executive's receipt of Notice of Termination for Cause pursuant to Section 8
hereof, and shall not be exercisable by or delivered to Executive at any time
subsequent to such Termination for Cause except all benefits shall be deemed to
have remained in effect if Executive is reinstated.

8.       NOTICE.

         (a)      Any purported termination by the Holding Company or by
Executive shall be communicated by Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
written notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated.

         (b)      Except as otherwise provided for in this Agreement, "Date of
Termination" shall mean the date specified in the Notice of Termination (which,
in the case of a Termination for Cause, shall not be less than thirty (30) days
from the date such Notice of Termination is given).

         (c)      If, within thirty (30) days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a reasonable dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding arbitration award, or
by a final judgment, order or decree of a court of competent jurisdiction (the
time for appeal therefrom having expired and no appeal having been perfected)
and provided further that the Date of Termination shall be extended by a notice
of dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, the Holding Company will
continue to pay Executive's Base Salary and continue to cover Executive under
each Welfare Benefit Plan in which Executive participated at the time of such
notice in effect when the notice giving rise to the dispute was given until the
dispute is finally resolved in accordance with this Agreement. Amounts paid
under this Section 8(c) are in addition to all other amounts due under this
Agreement and shall not be offset against or reduce any other amounts due under
this Agreement.


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<PAGE>

9.       POST-TERMINATION OBLIGATIONS.

         All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with this Section 9 for two (2) full years
after the earlier of the expiration of this Agreement or termination of
Executive's employment with the Holding Company. Executive shall, upon
reasonable notice, furnish such information and assistance to the Holding
Company with regard to matters as to which he has personal knowledge and as may
reasonably be required by the Holding Company in connection with any litigation
in which it or any of its subsidiaries or affiliates is, or may become, a party.
The Holding Company shall reimburse Executive for all out-of-pocket expenses
incurred and at an hourly rate equivalent to the hourly rate (based on an
eight-hour work day) of his Base Salary in effect at the time of his termination
from employment for any time incurred in connection with services rendered
pursuant to this Section 9.

10.      NON-COMPETITION.

         (a)      Upon any termination of Executive's employment hereunder
pursuant to Section 4 of this Agreement, Executive agrees not to compete with
the Holding Company or its Subsidiaries for a period of one (1) year following
such termination in any city, town or county in which the Executive's normal
business office is located and the Holding Company or any of its Subsidiaries
has an office or has filed an application for regulatory approval to establish
an office, determined as of the effective date of such termination, except as
agreed to pursuant to a resolution duly adopted by the Board. Executive agrees
that during such period and within said cities, towns and counties, Executive
shall not work for or advise, consult or otherwise serve with, directly or
indirectly, any entity whose business materially competes with the depository,
lending or other business activities of the Holding Company or its Subsidiaries.
The parties hereto, recognizing that irreparable injury will result to the
Holding Company or its Subsidiaries, its business and property in the event of
Executive's breach of this Subsection 10(a) agree that in the event of any such
breach by Executive, the Holding Company or its Subsidiaries, will be entitled,
in addition to any other remedies and damages available, to an injunction to
restrain the violation hereof by Executive, Executive's partners, agents,
servants, employees and all persons acting for or under the direction of
Executive. Executive represents and admits that in the event of the termination
of his employment pursuant to Section 4 hereof, Executive's experience and
capabilities are such that Executive can obtain employment in a business engaged
in other lines and/or of a different nature than the Holding Company or its
Subsidiaries, and that the enforcement of a remedy by way of injunction will not
prevent Executive from earning a livelihood. Nothing herein will be construed as
prohibiting the Holding Company or its Subsidiaries from pursuing any other
remedies available to the Holding Company or its Subsidiaries for such breach or
threatened breach, including the recovery of damages from Executive.

         (b)      Executive recognizes and acknowledges that the knowledge of
the business activities and plans for business activities of the Holding Company
and its Subsidiaries as it may exist from time to time, is a valuable, special
and unique asset of the business of the Holding Company and its Subsidiaries.
Executive will not, during or after the term of Executive's employment, disclose
any knowledge of the past, present, planned or considered business activities of
the Holding Company


                                     Page 11
<PAGE>

and its Subsidiaries thereof to any person, firm, corporation, or other entity
for any reason or purpose whatsoever unless expressly authorized by the Board of
Directors or required by law. Notwithstanding the foregoing, Executive may
disclose any knowledge of banking, financial and/or economic principles,
concepts or ideas which are not solely and exclusively derived from the business
plans and activities of the Holding Company. In the event of a breach or
threatened breach by the Executive of the provisions of this Section 10, the
Holding Company will be entitled to an injunction restraining Executive from
disclosing, in whole or in part, the knowledge of the past, present, planned or
considered business activities of the Holding Company or its Subsidiaries or
from rendering any services to any person, firm, corporation, other entity to
whom such knowledge, in whole or in part, has been disclosed or is threatened to
be disclosed. Nothing herein will be construed as prohibiting the Holding
Company from pursuing any other remedies available to the Holding Company for
such breach or threatened breach, including the recovery of damages from
Executive.

11.      SOURCE OF PAYMENTS.

         (a)      All payments provided in this Agreement shall be timely paid
in cash, check or other mutually agreed upon method from the general funds of
the Holding Company subject to Section 11(b) of this Agreement.

         (b)      Notwithstanding any provision herein to the contrary, to the
extent that payments and benefits, as provided by this Agreement, are paid to or
received by Executive under the Employment Agreement in effect between Executive
and the Institution, such payments and benefits paid by the Institution will be
subtracted from any amount due simultaneously to Executive under similar
provisions of this Agreement. Payments pursuant to this Agreement and the
Institution Agreement shall be allocated in proportion to the level of activity
and the time expended on such activities by Executive as determined by the
Holding Company and the Institution on a quarterly basis; provided, however,
that except for the reduction provided by the first sentence of this Section
11(b), the Holding Company will be obligated to pay 100% of the amounts due
Executive hereunder.

12.      EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.

         This Agreement contains the entire understanding between the parties
hereto and supersedes any prior employment agreement between the Holding Company
or any predecessor of the Holding Company and Executive, except that this
Agreement shall not affect or operate to reduce any benefit or compensation
inuring to the Executive of a kind elsewhere provided. No provision of this
Agreement shall be interpreted to mean that Executive is subject to receiving
fewer benefits than those available to him without reference to this Agreement.


                                     Page 12
<PAGE>

13.      NO ATTACHMENT.

         (a)      Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.

         (b)      This Agreement shall be binding upon, and inure to the benefit
of, Executive and the Holding Company and their respective successors and
assigns.

14.      MODIFICATION AND WAIVER.

         (a)      This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.

         (b)      No term or condition of this Agreement shall be deemed to have
been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.

15.      SEVERABILITY.

         If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.

16.      HEADINGS FOR REFERENCE ONLY.

         The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.

17.      GOVERNING LAW.

         This Agreement shall be governed by the laws of the State of Delaware,
unless otherwise specified herein.


                                     Page 13
<PAGE>

18.      ARBITRATION.

         Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by Executive within fifty
(50) miles from the location of the Association, in accordance with the rules of
the American Arbitration Association then in effect. Judgment may be entered on
the arbitrator's award in any court having jurisdiction; provided, however, that
Executive shall be entitled to seek specific performance of Executive's right to
be paid until the Date of Termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement.

         In the event any dispute or controversy arising under or in connection
with Executive's termination is resolved in favor of Executive, whether by
judgment, arbitration or settlement, Executive shall be entitled to the payment
of all back-pay, including salary, bonuses and any other cash compensation,
fringe benefits and any compensation and benefits due Executive under this
Agreement.

19.      PAYMENT OF LEGAL FEES.

         All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by the Holding Company, if Executive is successful pursuant to a
legal judgment, arbitration or settlement.

20.      INDEMNIFICATION.

         The Holding Company shall provide Executive (including Executive's
heirs, executors and administrators) with coverage under a standard directors'
and officers' liability insurance policy at its expense and shall indemnify
Executive (and Executive's heirs, executors and administrators) to the fullest
extent permitted under Delaware law against all expenses and liabilities
reasonably incurred by Executive in connection with or arising out of any
action, suit or proceeding in which Executive may be involved by reason of
Executive having been a director or officer of the Holding Company or its
Subsidiaries (whether or not Executive continues to be a director or officer at
the time of incurring such expenses or liabilities), such expenses and
liabilities to include, but not be limited to, judgments, court costs and
attorneys' fees and the cost of reasonable settlements.

21.      SUCCESSOR TO THE HOLDING COMPANY.

         The Holding Company shall require any successor or assignee, whether
direct or indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Bank or the Holding Company,
expressly and unconditionally to assume and agree to perform the Holding
Company's obligations under this Agreement, in the same manner and to the same
extent that the Holding Company would be required to perform if no such
succession or assignment had taken place.


                                     Page 14
<PAGE>

                                   SIGNATURES

         IN WITNESS WHEREOF, First Federal Bancshares, Inc. has caused this
Agreement, to be executed and its seal to be affixed hereunto by its duly
authorized officer and its directors, and Executive has signed this Agreement,
on [DATE].

ATTEST:                                FIRST FEDERAL BANCSHARES, INC.


                                       By:
-----------------------------             --------------------------------------
Secretary                                 For the Entire Board of Directors

                  [SEAL]



WITNESS:                               EXECUTIVE



                                       By:
-----------------------------             --------------------------------------
Executive                                       [NAME]


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