<PAGE>
                                                                Exhibit 10.1

                   [FIRST FEDERAL BANCSHARES, INC. LETTERHEAD]




                               ______________,2000

First Federal Bank
2001 Maine Street
Quincy, Illinois 62301

Dear Mr. _____________:

         This letter confirms First Federal Bancshares, Inc.'s commitment to
fund a leveraged ESOP in an amount sufficient to purchase 8% of the shares
issued in the mutual to stock conversion of First Federal Bank (the
"Conversion"). The commitment is subject to the following terms and conditions:

         1.   LENDER: First Federal Bank (the "Company").

         2.   BORROWER: First Federal Bank Employee Stock Ownership Plan.

         3.   TRUSTEE: ______________

         4.   SECURITY: Unallocated shares of stock of the Company held in First
              Federal Bank Employee Stock Ownership Plan Trust.

         5.   MATURITY: Up to __ years from takedown.

         6.   AMORTIZATION: Equal quarterly principal and interest payments.

         7.   PRICING:

              a.   Lowest "prime rate" as published in the Wall Street Journal
                   on the date of the loan transaction.


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         8.   INTEREST PAYMENTS:

              a.   Annual on a 365 day basis.

         9.   PREPAYMENT: Voluntary prepayments are permitted at any time.

         10.  CONDITIONS PRECEDENT TO CLOSING: Receipt by the Company of all
              supporting loan documents in a form and with terms and conditions
              satisfactory to the Company and its counsel. Consummation of the
              transaction will also be contingent upon no material adverse
              change occurring in the condition of First Federal Bank or the
              Company.

         If the terms and conditions are agreeable to you, please indicate your
acceptance by signing the enclosed copy and returning it to my attention.


                                       Sincerely,

Accepted on Behalf of
First Federal Bank

By:                                    Date:
   -------------------------------          ----------------------------


<PAGE>



                                 LOAN AGREEMENT

         THIS LOAN AGREEMENT ("Loan Agreement") is made and entered in as of the
___ day of ___________, 2000, by and between the FIRST FEDERAL BANK EMPLOYEE
STOCK OWNERSHIP PLAN TRUST ("Borrower"), a trust forming part of the First
Federal Bank Employee Stock Ownership Plan ("ESOP"); and FIRST FEDERAL
BANCSHARES, INC. ("Lender"), a corporation organized and existing under the laws
of the State of Delaware.

                               W I T N E S S E T H

         WHEREAS, the Borrower is authorized to purchase shares of common stock
of First Federal Bancshares, Inc. ("Common Stock"), either directly from First
Federal Bancshares, Inc. or in open market purchases in an amount not to exceed
______________ shares of Common Stock.

         WHEREAS, the Borrower is authorized to borrow funds from the Lender for
the purpose of financing authorized purchases of Common Stock; and

         WHEREAS, the Lender is willing to make a loan to the Borrower for such
purpose:

         NOW, THEREFORE, the parties agree hereto as follows:


                                    ARTICLE I

                                   DEFINITIONS

         The following definitions shall apply for purposes of this Loan
Agreement, except to the extent that a different meaning is plainly indicated by
the context:

         BUSINESS DAY means any day other than a Saturday, Sunday or other day
on which banks are authorized or required to close under federal or local law.

         CODE means the Internal Revenue Code of 1986 (including the
corresponding provisions of any succeeding law).

         DEFAULT means an event or condition which would constitute an Event of
Default. The determination as to whether an event or condition would constitute
an Event of Default shall be determined without regard to any applicable
requirements of notice or lapse of time.

         ERISA means the Employee Retirement Income Security Act of 1974, as
amended (including the corresponding provisions of any succeeding law).

         EVENT OF DEFAULT means an event or condition described in Article 5.

         LOAN means the loan described in section 2.1


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         LOAN DOCUMENTS means, collectively, the Loan Agreement, the Promissory
Note and the Pledge Agreement and all other documents now or hereafter executed
and delivered in connection with such documents, including all amendments,
modifications and supplements of or to all such documents.

         PLEDGE AGREEMENT means the agreement described in section 2.8(a).

         PRINCIPAL AMOUNT means the face amount of the Promissory Note,
determined as set forth in section 2.1(c).

         PROMISSORY NOTE means the promissory note described in section 2.3.

         REGISTER means the register described in section 2.9.


                                   ARTICLE II

                           THE LOAN; PRINCIPAL AMOUNT;

                       INTEREST; SECURITY; INDEMNIFICATION

         SECTION 2.1    THE LOAN; PRINCIPAL AMOUNT.

         (a)  The Lender hereby agrees to lend to the Borrower such amount, and
at such time, as shall be determined under this Section 2.1; provided, however,
that in no event shall the aggregate amount lent under this Loan Agreement from
time to time exceed the greater of (i) $___________ or (ii) the aggregate amount
paid by the Borrower to purchase up to ____________ shares of Common Stock.

         (b)  Subject to the limitations of Section 2.1(a), the Borrower shall
determine the amounts borrowed under this Agreement, and the time at which such
borrowings are effected. Each such determination shall be evidenced in a writing
which shall set forth the amount to be borrowed and the date on which the Lender
shall disburse such amount, and such writing shall be furnished to the Lender by
notice from the Borrower. The Lender shall disburse to the Borrower the amount
specified in each such notice on the date specified therein or, if later, as
promptly as practicable following the Lender's receipt of such notice; provided,
however, that the Lender shall have no obligation to disburse funds pursuant to
this Agreement following the occurrence of a Default or an Event of Default
until such time as such Default or Event of Default shall have been cured.

         (c)  For all purposes of this Loan Agreement, the Principal Amount on
any date shall be equal to the excess, if any, of:

              (i)       the aggregate amount disbursed by the Lender pursuant
         to section 2.1(b) on or before such date; over


                                        2

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              (ii)      the aggregate amount of any repayments of such amounts
         made before such date.

The Lender shall maintain on the Register a record of, and shall record in the
Promissory Note, the Principal Amount, any changes in the Principal Amount and
the effective date of any changes in the Principal Amount.

         SECTION 2.2    INTEREST.

         (a)  The Borrower shall pay to the Lender interest on the Principal
Amount, for the period commencing with the first disbursement of funds under
this Loan Agreement and continuing until the Principal Amount shall be paid in
full, at the rate of___________ percent (_____%) per annum. Interest payable
under this Agreement shall be computed on the basis of a year of 365 days and
actual days elapsed (including the first day but excluding the last) occurring
during the period to which the computation relates.

         (b)  Accrued interest on the Principal Amount shall be payable by the
Borrower on the dates set forth in Schedule I to the Promissory Note. All
interest on the Principal Amount shall be paid by the Borrower in immediately
available funds.

         (c)  Anything in the Loan Agreement or the Promissory Note to the
contrary notwithstanding, the obligation of the Borrower to make payments of
interest shall be subject to the limitation that payments of interest shall
not be required to be made to the Lender to the extent that the Lender's
receipt thereof would not be permissible under the law or laws applicable to
the Lender limiting rates of interest which may be charged or collected by
the Lender. Any such payment referred to in the preceding sentence shall be
made by the Borrower to the Lender on the earliest interest payment date or
dates on which the receipt thereof would be permissible under the laws
applicable to the Lender limiting rates of interest which may be charged or
collected by the Lender. Such deferred interest shall not bear interest.

         SECTION 2.3    PROMISSORY NOTE.

         The Loan shall be evidenced by the Promissory Note of the Borrower
attached hereto as an exhibit payable to the order of the lender in the
Principal Amount and otherwise duly completed.

         SECTION 2.4    PAYMENT OF TRUST LOAN.

         The Principal Amount of the Loan shall be repaid in accordance with
Schedule I to the Promissory Note on the dates specified therein until fully
paid.


                                        3

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         SECTION 2.5    PREPAYMENT.

         The Borrower shall be entitled to prepay the Loan in whole or in part,
at any time and from time to time; provided, however, that the Borrower shall
give notice to the Lender of any such prepayment; and provided, further, that
any partial prepayment of the Loan shall be in an amount not less than $1,000.
Any such prepayment shall be: (a) permanent and irrevocable; (b) accompanied by
all accrued interest through the date of such prepayment; (c) made without
premium or penalty; and (d) applied on the inverse order of the maturity of the
installment thereof unless the Lender and the Borrower agree to apply such
prepayments in some other order.

         SECTION 2.6    METHOD OF PAYMENTS.

         (a)  All payments of principal, interest, other charges (including
indemnities) and other amounts payable by the Borrower hereunder shall be made
in lawful money of the United States, in immediately available funds, to the
Lender at the address specified in or pursuant to this Loan Agreement for
notices to the Lender, on the date on which such payment shall become due. Any
such payment made on such date but after such time shall, if the amount paid
bears interest, and except as expressly provided to the contrary herein, be
deemed to have been made on, and interest shall continue to accrue and be
payable thereon until, the next succeeding Business Day. If any payment of
principal or interest becomes due on a day other than a Business Day, such
payment may be made on the next succeeding Business Day, and when paid, such
payment shall include interest to the day on which payment is in fact made.

         (b)  Notwithstanding anything to the contrary contained in this Loan
Agreement or the Promissory Note, the Borrower shall not be obligated to make
any payment, repayment or prepayment on the Promissory Note if doing so would
cause the ESOP to cease to be an employee stock ownership plan within the
meaning of section 4975(e)(7) of the Code or qualified under section 401(a) of
the Code or cause the Borrower to cease to be a tax exempt trust under section
501(a) of the Code or if such act or failure to act would cause the Borrower to
engage in any "prohibited transaction" as such term is defined in the section
4975(c) of the Code and the regulations promulgated thereunder which is not
exempted by section 4975(c)(2) or (d) of the Code and the regulations
promulgated thereunder or in section 406 of ERISA and the regulations
promulgated thereunder which is not exempted by section 408(b) of ERISA and the
regulations promulgated thereunder; provided, however, that in each case, the
Borrower, may act or refrain from acting pursuant to this section 2.6(b) on the
basis of an opinion of counsel, and any opinion of such counsel. The Borrower
may consult with counsel, and any opinion of such counsel shall be full and
complete authorization and protection in respect of any action taken or suffered
or omitted by it hereunder in good faith and in accordance with such opinion of
counsel. Nothing contained in this section 2.6(b) shall be construed as imposing
a duty on the Borrower to consult with counsel. Any obligation of the Borrower
to make any payment, repayment or prepayment on the Promissory Note or refrain
from taking any other act hereunder or under the Promissory Note which is
excused pursuant to this section 2.6(b) shall be considered a binding obligation
of the Borrower, or both, as the case may be, for the purposes of determined
whether a Default or Event of Default has occurred hereunder or


                                        4

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under the Promissory Note and nothing in this section 2.6(b) shall be construed
as providing a defense to any remedies otherwise available upon a Default or an
Event of Default hereunder (other than the remedy of specific performance).

         SECTION 2.7    USE OF PROCEEDS OF LOAN.

         The entire proceeds of the Loan shall be used solely for acquiring
shares of Common Stock, and for no other purpose whatsoever.

         SECTION 2.8    SECURITY.

         (a)  In order to secure the due payment and performance by the Borrower
of all of its obligations under this Loan Agreement, simultaneously with the
execution and delivery of this Loan Agreement by the Borrower, the Borrower
shall:

              (i)       pledge to the Lender as Collateral (as defined in the
         Pledge Agreement), and grant to the Lender a first priority lien on and
         security interest in, the Common Stock purchased with the Principal
         Amount, by the execution and delivery to the lender of the Pledge
         Agreement attached hereto as an exhibit; and

              (ii)      execute and deliver, or cause to be executed and
         delivered, such other agreement, instruments and documents as the
         Lender may reasonable require in order to effect the purposes of the
         Pledge Agreement and this Loan Agreement.

         (b)  The Lender shall release from encumbrance under the Pledge
Agreement and transfer to the Borrower, as of the date on which any payment or
repayment of the Principal Amount is made, a number of shares of Common Stock
held as Collateral determined pursuant to the applicable provisions of the ESOP.

         SECTION 2.9    REGISTRATION OF THE PROMISSORY NOTE.

         (a)  The Lender shall maintain a Register providing for the
registration of the Principal Amount and any stated interest and of transfer and
exchange of the Promissory Note. Transfer of the Promissory Note may be effected
only by the surrender of the old instrument and either the reissuance by the
Borrower of the old instrument to the new holder or the issuance by the Borrower
of a new instrument to the new holder. The old Promissory Note so surrendered
shall be canceled by the Lender and returned to the Borrower after such
cancellation.

         (b)  Any new Promissory Note issued pursuant to section 2.9(a) shall
carry the same rights to interest (unpaid and to accrue) carried by the
Promissory Note so transferred or exchanged so that there will not be any loss
or gain of interest on the note surrender. Such new Promissory Note shall be
subject to all of the provisions and entitled to all of the benefits of this
Agreement. Prior to due presentment for registration or transfer, the Borrower
may deem and treat the registered holder of any Promissory Note as the holder
thereof for purposes of payment and other purposes. A notation


                                        5

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shall be made on each new Promissory Note of the amount of all payments of
principal and interest theretofore paid.


                                   ARTICLE III

                 REPRESENTATIONS AND WARRANTIES OF THE BORROWER

         The Borrower hereby represents and warrants to the Lender as follows:

         SECTION 3.1    POWER, AUTHORITY, CONSENTS.

         The Borrower has the power to execute, deliver and perform this Loan
Agreement, the Promissory Note and Pledge Agreements, all of which have been
duly authorized by all necessary and proper corporate or other action.

         SECTION 3.2    DUE EXECUTION, VALIDITY, ENFORCEABILITY.

         Each of the Loan Documents, including, without limitation, this Loan
Agreement, the Promissory Note and the Pledge Agreement, have been duly executed
and delivered by the Borrower; and each constitutes the valid and legally
binding obligation of the Borrower, enforceable in accordance with its terms.

         SECTION 3.3    PROPERTIES, PRIORITY OF LIENS.

         The liens which have been created and granted by the Pledge Agreement
constitute valid, first liens on the properties and assets covered by the Pledge
Agreement, subject to no prior or equal lien.

         SECTION 3.4    NO DEFAULTS, COMPLIANCE WITH LAWS.

         The Borrower is not in default in any material respect under any
agreement, ordinance, resolution, decree, bond, note, indenture, order or
judgement to which it is an party or by which it is bound, or any other
agreement or other instrument by which any of the properties or assets owned by
it is materially affected.

         SECTION 3.5    PURCHASE OF COMMON STOCK.

         Upon consummation of any purchase of Common Stock by the Borrower with
the proceeds of the Loan, the Borrower shall acquire valid, legal and marketable
title to all of the Common Stock so purchased, free and clear of any liens,
other than a pledge to the Lender of the Common Stock so purchased pursuant to
the Pledge Agreement. Neither the execution and delivery of the Loan Documents
nor the performance of any obligation thereunder violates any provisions of law
or conflicts with or results in a breach of or creates (with or without the
giving of notice of lapse of


                                        6

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time, or both) a default under any agreement to which the Borrower is a party or
by which it is bound or any of its properties is affected. No consent of any
federal, state, or local governmental authority, agency, or other regulatory
body, the absence of which could have a materially adverse effect on the
Borrower or the Trustee, is or was required to be obtained in connection with
the execution, delivery, or performance of the Loan Documents and the
transaction contemplated therein or in connection therewith, including without
limitation, with respect to the transfer of the shares of Common Stock purchased
with the proceeds of the Loan pursuant thereto.

         SECTION 3.6    ESOP; CONTRIBUTIONS.

         As of the effective date of the ESOP sponsor's mutual-to-stock
conversion, the ESOP and the Borrower will be duly created, organized and
maintained by the ESOP sponsor in compliance with all applicable laws,
regulations and rulings. The ESOP will qualify as an "employee stock ownership
plan" as defined in section 4975(e)(7) of the Code. The ESOP provides that the
ESOP sponsor may make contributions to the ESOP in an amount necessary to enable
the Trustee to amortize the Loan in accordance with the terms of the Promissory
Note; provided, however, that no such contributions shall be required if they
would adversely affect the qualification of the ESOP under section 401(a) of the
Code.

         SECTION 3.7    TRUSTEE.

         The trustees of the ESOP have been duly appointed by the ESOP sponsor.

         SECTION 3.8    COMPLIANCE WITH LAWS; ACTIONS.

         Neither the execution and delivery by the Borrower of this Loan
Agreement or any instruments required thereby, nor compliance with the terms and
provisions of any such documents by the lender, constitutes a violation of any
provision of any law or any regulation, order, writ, injunction or decree or any
court or governmental instrumentality, or an event of default under any
agreement, to which the Borrower is a party of which the Borrower is bound or to
which the Borrower is subject, which violation or event of default would have a
material adverse effect on the Borrower. There is no action or proceeding
pending or threatened against either the ESOP or the Borrower before any court
or administrative agency.


                                        7

<PAGE>


                                   ARTICLE IV

                  REPRESENTATIONS AND WARRANTIES OF THE LENDER

         The Lender hereby represents and warrants to the Borrower as follows:

         SECTION 4.1    POWER, AUTHORITY, CONSENTS.

         The Lender has the power to execute, deliver and perform this Loan
Agreement, the Pledge Agreement and all documents executed by the Lender in
connection with the Loan, all of which have been duly authorized by all
necessary and proper corporate or other action. No consent, authorization or
approval or other action by any governmental authority or regulatory body, and
no notice by the Lender to, or filing by the Lender with any governmental
authority or regulatory body is required for the due execution, delivery and
performance of this Loan Agreement.

         SECTION 4.2    DUE EXECUTION, VALIDITY, ENFORCEABILITY.

         This Loan Agreement and the Pledge Agreement have been duly executed
and delivered by the Lender, and each constitutes a valid and legally binding
obligation of the Lender, enforceable in accordance with its terms.

                                    ARTICLE V

                                EVENTS OF DEFAULT

         SECTION 5.1    EVENTS OF DEFAULT UNDER LOAN AGREEMENT.

         Each of the following events shall constitute an "Event of Default"
hereunder:

         (a)  Failure to make any payment or mandatory prepayment of principal
of the Promissory Note when due, or failure to make any payment of interest on
the Promissory Note not later than five (5) Business Days after the date when
due.

         (b)  Failure by the Borrower to perform or observe any term, condition
or covenant of this Loan Agreement or of any of the other Loan Documents,
including without limitation, the Promissory Note and the Pledge Agreement.

         (c)  Any representation or warranty made in writing to the Lender in
any of the Loan Documents, or any certificate, statement or report made or
delivered in compliance with this Loan Agreement, shall have been false or
misleading in any material respect when made or delivered.


                                        8

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         SECTION 5.2    LENDER'S RIGHTS UPON EVENT OF DEFAULT.

         If an Event of Default under this Loan Agreement shall occur and be
continuing, the Lender shall have no rights to assets of the Borrower other
than: (a) contributions (other than contributions of Common Stock) that are made
by the ESOP sponsor to enable the Borrower to meet its obligations pursuant to
this Loan Agreement and earnings attributable to the investment of such
contributions and (b) "Eligible Collateral" (as defined in the Pledge
Agreement); provided, however, that; (i) the value of the Borrower's assets
transferred to the Lender following an Event of Default in satisfaction of the
due and unpaid amount of the Loan shall not exceed the amount in default
(without regard to amounts owing solely as a result of any acceleration of the
Loan); (ii) the Borrower's assets shall be transferred to the Lender following
an Event of Default only to the extent of the failure of the Borrower to meet
the payment schedule of the Loan; and (iii) all rights of the Lender to the
Common Stock purchased with the proceeds of the Loan covered by the Pledge
Agreement following an Event of Default shall be governed by the terms of the
Pledge Agreement.


                                   ARTICLE VI

                            MISCELLANEOUS PROVISIONS

         SECTION 6.1    PAYMENTS DUE TO THE LENDER.

         If any amount is payable by the Borrower to the Lender pursuant to any
indemnity obligation contained herein, then the Borrower shall pay, at the time
or times provided therefor, any such amount and shall indemnify the Lender
against and hold it harmless from any loss of damage resulting from or arising
out of the nonpayment or delay in payment of any such amount. If any amounts as
to which the Borrower has so indemnified the Lender hereunder shall be assessed
or levied against the Lender, the Lender may notify the Borrower and make
immediate payment thereof, together with interest or penalties in connection
therewith, and shall thereupon be entitled to and shall receive immediate
reimbursement therefor from the Borrower together with interest on each such
amount as provided in section 2.2(c). Notwithstanding any other provision
contained in this Loan Agreement, the covenants and agreements of the Borrower
contained in this section 6.1 shall survive: (a) payment of the Promissory Note
and (b) termination of this Loan Agreement.

         SECTION 6.2    PAYMENTS.

         All payments hereunder and under the Promissory Note shall be made
without set-off or counterclaim and in such amounts as may be necessary in order
that all such payments shall not be less than the amounts otherwise specified to
be paid under this Loan Agreement and the Promissory Note, subject to any
applicable tax withholding requirements. Upon payment in full of the Promissory
Note, the Lender shall mark such Promissory Note "Paid" and return it to the
Borrower.


                                        9

<PAGE>


         SECTION 6.3    SURVIVAL.

         All agreements, representations and warranties made herein shall
survive the delivery of this Loan Agreement and the Promissory Note.

         SECTION 6.4    MODIFICATIONS, CONSENTS AND WAIVERS; ENTIRE AGREEMENT.

         No modification, amendment or waiver of or with respect to any
provision of this Loan Agreement, the Promissory Note, the Pledge Agreement, or
any of the other Loan Documents, nor consent to any departure from any of the
terms or conditions thereof, shall in any event be effective unless it shall be
in writing and signed by the party against whom enforcement thereof is sought.
Any such waiver or consent shall be effective only in the specific instance and
for the purpose for which given. No consent to or demand on a party in any case
shall, of itself, entitle it to any other or further notice or demand in similar
or other circumstances. This Loan Agreement embodies the entire agreement and
understanding between the Lender and the Borrower and supersedes all prior
agreements and understandings relating to the subject matter hereof.

         SECTION 6.5    REMEDIES CUMULATIVE.

         Each and every right granted to the Lender hereunder or under any other
document delivered hereunder or in connection herewith, or allowed it by law or
equity, shall be cumulative and may be exercised from time to time. No failure
on the part of the Lender or the holder of the Promissory Note to exercise, and
no delay in exercising, any right shall operate as a waiver thereof, nor shall
any single or partial exercise of any right preclude any other or future
exercise thereof or the exercise of any other right. The due payment and
performance of the obligations under the Loan Documents shall be without regard
to any counterclaim, right of offset or any other claim whatsoever which the
Borrower may have against the Lender and without regard to any other obligation
of any nature whatsoever which the Lender may have to the Borrower, and no such
counterclaim or offset shall be asserted by the Borrower in any action, suit or
proceeding instituted by the Lender for payment or performance of such
obligations.

         SECTION 6.6    FURTHER ASSURANCES; COMPLIANCE WITH COVENANTS.

         At any time and from time to time, upon the request of the Lender, the
Borrower shall execute, deliver and acknowledge or cause to be executed,
delivered and acknowledged, such further documents and instruments and do such
other acts and things as the Lender may reasonably request in order to fully
effect the terms of this Loan Agreement, the Promissory Note, the Pledge
Agreement, the other Loan Documents and any other agreements, instruments and
documents delivered pursuant hereto or in connection with the Loan.


                                       10

<PAGE>


         SECTION 6.7    NOTICES.

         Except as otherwise specifically provided for herein, all notice,
requests, reports and other communications pursuant to this Loan Agreement shall
be in writing, either by letter (delivered by hand or commercial messenger
service or sent by registered or certified mail, return receipt requested,
except for routine reports delivered in compliance with Article VI hereof which
may be sent by ordinary first-class mail) or telex or telecopier addressed as
follows:

         (a) If to the Borrower:

             ________________________, Trustee

             First Federal Bank Employee Stock Ownership Plan

         (b) If to the Lender:

             First Federal Bancshares, Inc.
             2001 Maine Street
             Quincy, Illinois 62301

Any notice, request or communication hereunder shall be deemed to have been
given on the day on which it is delivered by hand or by commercial messenger
service, or sent by telex or telecopier, to such party at its address specified
above, or, if sent by mail, on the third Business Day after the day deposited in
the mail, postage prepaid, addressed as aforesaid. Any party may change the
person or address to whom or which notices are to be given hereunder, by notice
duly given hereunder; provided, however, that any such notice shall be deemed to
have been given only when actually received by the party to whom it is
addressed.

         SECTION 7.1    COUNTERPARTS.

         This Loan Agreement may be signed in any number of counterparts which,
when taken together, shall constitute one and the same document.

         SECTION 7.2    CONSTRUCTION; GOVERNING LAW.

         The headings used in the table of contents and in this Loan Agreement
are for convenience only and shall not be deemed to constitute a part hereof.
All uses herein of any gender or of singular or plural terms shall be deemed to
include uses of the other genders or plural or singular terms, as the context
may require. All references in this Loan Agreement of an Article or section
shall be to an Article or section of this Loan Agreement, unless otherwise
specified. This Loan Agreement, the Promissory Note, the Pledge Agreement and
the other Loan Documents shall be governed by, and construed and interpreted in
accordance with, the laws of the State of Illinois.


                                       11

<PAGE>


         SECTION 7.3    SEVERABILITY.

         Wherever possible, each provision of this Loan Agreement shall be
interpreted in such manner as to be effective and valid under applicable law;
however, the provisions of this Loan Agreement are severable, and if any clause
of provision hereof shall be held invalid or unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction and shall not in
any manner affect such clause or provision in any other jurisdiction, or any
other clause or provisions in this Loan Agreement in and jurisdiction. Each of
the covenants, agreements and conditions contained in this Loan Agreement
independent, and compliance by a party with any of them shall not excuse
non-compliance by such party with any other. The Borrower shall not take any
action the effect of which shall constitute a breach or violation of any
provision of this Loan Agreement.

         SECTION 7.4    BINDING EFFECT: NO ASSIGNMENT OR DELEGATION.

         This Loan Agreement shall be binding upon and inure to the benefit of
the Borrower and its successors and the Lender and its successors and assigns.
The rights and obligations of the Borrower under this Agreement shall not be
assigned or delegated without the prior written consent of the Lender, and any
purported assignment or delegation without such consent shall be void.

         IN WITNESS WHEREOF, the parties have caused this Loan Agreement to be
executed as of the date first written above.

                                  FIRST FEDERAL BANK
                                  EMPLOYEE STOCK OWNERSHIP PLAN TRUST

                                                         , as TRUSTEE
                                  -----------------------

                                  FIRST FEDERAL BANCSHARES, INC.

                                  By:
                                     ---------------------------------
                                     James J. Stebor
                                     For the Entire Board of Directors


                                       12



<PAGE>


                                PLEDGE AGREEMENT


         THIS PLEDGE AGREEMENT ("Pledge Agreement") is made as of the ___ day of
_________, 2000, by and between FIRST FEDERAL BANK EMPLOYEE STOCK OWNERSHIP PLAN
TRUST ("Pledgor"), and FIRST FEDERAL BANCSHARES, INC., a corporation organized
and existing under the laws of the State of Delaware ("Pledgee").

                               W I T N E S S E T H

         WHEREAS, this Pledge Agreement is being executed and delivered to the
Pledgee pursuant to the terms of a Loan Agreement ("Loan Agreement"), by and
between the Pledgor and the Pledgee;

         NOW, THEREFORE, in consideration of the mutual agreements contained
herein and in the Loan Agreement, the parties hereto do hereby covenant and
agree as follows:

         SECTION 1. DEFINITIONS. The following definitions shall apply for
purposes of this Pledge Agreement, except to the extent that a different meaning
is plainly indicated by the context; all capitalized terms used but not defined
herein shall have the respective meanings assigned to them in the Loan
Agreement:

         COLLATERAL shall mean the Pledged Shares and, subject to section 5
hereof, and to the extent permitted by applicable law, all rights with respect
thereto, and all proceeds of such Pledged Shares and rights.

         ESOP shall mean First Federal Bank Employee Stock Ownership Plan.

         EVENT OF DEFAULT shall mean an event so defined in the Loan Agreement.

         LIABILITIES shall mean all the obligations of the Pledgor to the
Pledgee, howsoever created, arising or evidenced, whether direct or indirect,
absolute or contingent, now or hereafter existing, or due or to become due,
under the Loan Agreement and the Promissory Note.

         PLEDGED SHARES shall mean all the Shares of Common Stock of the Pledgee
purchased by the Pledgor with the proceeds of the loan made by the Pledgee to
the Pledgor pursuant to the Loan Agreement, but excluding any such shares
previously released pursuant to section 4.

         SECTION 2. PLEDGE. To secure the payment of and performance of all the
Liabilities, the Pledgor hereby pledges to the Pledgee, and the grants to the
Pledgee, a security interest in, and lien upon, the Collateral.

         SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE PLEDGOR. The Pledgor
represents, warrants, and covenants to the Pledgee as follows:


                                        1

<PAGE>


         (a) the execution, delivery and performance of this Pledge Agreement
and the pledging of the Collateral hereunder do not and will not conflict with,
result in a violation of, or constitute a default under, any agreement binding
upon the Pledgor;

         (b) the Pledged Shares are and will continue to be owned by the Pledgor
free and clear of any liens or rights of any other person except the lien
hereunder and under the Loan Agreement in favor of the Pledgee, and the security
interest of the Pledgee in the Pledged Shares and the proceeds thereof is and
will continue to be prior to and senior to the rights of all others;

         (c) this Pledge Agreement is the legal, valid, binding and enforceable
obligation of the Pledgor in accordance with its terms;

         (d) the Pledgor shall, from time to time, upon request of the Pledgee,
promptly deliver to the Pledgee such stock powers, proxies, and similar
documents, satisfactory in form and substance to the Pledgee, with respect to
the Collateral as the Pledgee may reasonable request; and

         (e) subject to the first sentence of section 4(b), the Pledgor shall
not, so long as any Liabilities are outstanding, sell, assign, exchange, pledge
or otherwise transfer or encumber any of its rights in and to any of the
Collateral.

         SECTION 4.  ELIGIBLE COLLATERAL.

         (a) As used herein the term "Eligible Collateral" shall mean the amount
of Collateral which has an aggregate fair market value equal to the amount by
which the Pledgor is in default (without regard to any amounts owing solely as
the result of an acceleration of the Loan Agreement) or such lesser amount of
Collateral as may be required pursuant to section 13 of this Pledge Agreement.

         (b) The Pledged Shares shall be released from this Pledge Agreement in
a manner conforming to the requirements of Treasury Regulations Section
54.4975-7(b)(8), as the same may be from time to time amended or supplemented,
and the applicable provisions of the ESOP. Subject to such Regulations, the
Pledgee may from time to time, after any Default or Event of Default, and
without prior notice to the Pledgor, transfer all or any part of the Eligible
Collateral in the name of the Pledgee or its nominee, without disclosing that
such Eligible Collateral is subject to any rights of the Pledgor and may from
time to time, whether before or after any of the Liabilities shall become due
and payable, without notice to the Pledgor, take all or any of the following
actions: (i) notify the parties obligated on any of the Eligible Collateral to
make payment to the Pledgee of any amounts due or due to become due thereunder,
(ii) release or exchange all or any part of the Eligible Collateral, or
compromise or extend or renew for any period (whether or not longer than the
original period) any obligations of any nature of any party with respect
thereto, and (iii) take control of any proceeds of the Eligible Collateral.


                                        2

<PAGE>


         SECTION 5.  DELIVERY.

         (a) The Pledgor shall deliver to the Pledgee upon execution of this
Pledge Agreement (i) either (A) certificates for the Pledged Shares, each
certificate duly signed in blank by the Pledgor or accompanied by a stock
transfer power duly signed in blank by the Pledgor and each such certificate
accompanied by all required documentary or stock transfer tax stamps or (B) if
the Trustee does not yet have possession of the Pledged Shares, an assignment by
the Pledgor of all the Pledgor's rights to and interest in the Pledged Shares
and (ii) an irrevocable proxy, in form and substance satisfactory to the
Pledgee, signed by the Pledgor with respect to the Pledged Shares.

         (b) So long as no Default or Event of Default shall have occurred and
be continuing, (i) the Pledgor shall be entitled to exercise any and all voting
and other rights pertaining to the Collateral or any part thereof for any
purpose not inconsistent with the terms of this Pledge Agreement, and (ii) the
Pledgor shall be entitled to receive any and all cash dividends or other
distributions paid in respect of the Collateral.

         SECTION 6.  EVENTS OF DEFAULT.

         (a) If a Default or Event Default shall be existing, in addition to the
rights it may have under the Loan Agreement, the Promissory Note, and this
Pledge Agreement, or by virtue of any other instrument, (i) the Pledgee may
exercise, with respect to the Eligible Collateral, from time to time, any rights
and remedies available to it under the Uniform Commercial Code as in effect from
time to time in the State of Delaware or otherwise available to it and (ii) the
Pledgee shall have the right, for and in the name, place and stead of the
Pledgor, to execute endorsement, assignments, stock powers and other instruments
of conveyance or transfer with respect to all or any of the Eligible Collateral.
Written notification of intended disposition of any of the Eligible Collateral
shall be given by the Pledgee to the Pledgor at least three (3) Business Days
before such disposition. Subject to section 13 below, any proceeds of any
disposition of Eligible Collateral may be applied by the Pledgee to the payment
of expenses in connection with the Eligible Collateral, including, without
limitation, reasonable attorneys's fees and legal expenses, and any balance of
such proceeds may be applied by the Pledgee toward the payment of such of the
Liabilities as are in Default, and in such order of application, as the Pledgee
may from time to time elect. No action of the Pledgee permitted hereunder shall
impair or affect its rights in and to the Eligible Collateral. All rights and
remedies of the Pledgee expressed hereunder are in addition to all other rights
and remedies possessed by it, including, without limitation, those contained in
the documents referred to in the definition of Liability in section 1 hereof.

         (b) In any sale of any of the Eligible Collateral after a Default or an
Event of Default shall have occurred, the Pledgee is hereby authorized to comply
with any limitation or restriction in connection with such sale as it may be
advised by counsel is necessary in order to avoid violation of applicable law
(including, without limitation, compliance with such procedures as may restrict
the number of prospective bidders and purchasers or further restrict such
prospective bidders or purchasers to persons who will represent and agree that
they are purchasing for their own account


                                        3

<PAGE>


for investment and not with a view to the distribution or resale of such
Eligible Collateral), or in order to obtain such required approval of the sale
or of the purchase by any governmental regulatory authority or official, and the
Pledgor further agrees that such compliance shall not result in such sale's
being considered or deemed not to have been made in a commercially reasonable
manner, nor shall the Pledgee be liable or accountable to the Pledgor for any
discount allowed by reason of the fact that such Eligible Collateral is sold in
compliance with any such limitation or restriction.

         SECTION 7. PAYMENT IN FULL. Upon the payment in full of all outstanding
Liabilities, this Pledge Agreement shall terminate and the Pledgee shall
forthwith assign, transfer and deliver to the Pledgor, against receipt and
without recourse to the Pledgee, all Collateral then held by the Pledgee
pursuant to the Pledge Agreement.

         SECTION 8. NO WAIVER. No failure or delay in the part of the Pledgee in
exercising any right or remedy hereunder or under any other document which
confers or grants any rights in the Pledgee in respect of the Liabilities shall
operate as a waiver thereof nor shall any single or partial exercise of any such
rights or remedy preclude any other or further exercise thereof or the exercise
of any other right or remedy of the Pledgee.

         SECTION 9. BINDING EFFECT; NO ASSIGNMENT OR DELEGATION. This Pledge
Agreement shall be binding upon and inure to the benefit of the Pledgor, the
Pledgee and their respective successors and assigns, except that the Pledgor may
not assign or transfer it rights hereunder without the prior written consent of
the Pledgee (which consent shall not unreasonably be withheld). Each duty or
obligation of the Pledgor to the Pledgee pursuant to the provisions of this
Pledge Agreement shall be performed in favor of any person or entity designated
by the Pledgee, and any duty or obligation of the Pledgee to the Pledgor may be
performed by any other person or entity designated by the Pledgee.

         SECTION 10. GOVERNING LAW. This Pledge Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware applicable to
agreements to be performed wholly within the State of Delaware.

         SECTION 11. NOTICES. All notices, requests, instructions or documents
hereunder shall be in writing and delivered personally or sent by United States
mail, registered or certified, return receipt requested, with proper postage
prepaid as follows:

         (a)  If to the Pledgee:

              First Federal Bancshares, Inc.
              2001 Maine Street
              Quincy, IL 62301
              Attn: ______________


                                        4

<PAGE>


         (b)  If to the Pledgor:

              First Federal Bank Employee Stock Ownership Plan
              c/o ____________, as trustee

or at such other address as either of the parties may designate by written
notice to the other party. If delivered personally, the date on which a notice,
request, instruction or document is delivered shall be the date on which such
delivery is made, and, if deliver by mail, the sate on which such notice,
request, instruction, or document is deposited in the mail shall be the date of
delivery. Each notice, request, instruction or document shall bear the date on
which it is delivered.

         SECTION 12. INTERPRETATION. Wherever possible each provision of this
Pledge Agreements shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision herein shall be prohibited by
or invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, with out invalidating the remainder of such
provision or the remaining provisions hereof.

         SECTION 13. CONSTRUCTION. All provisions hereof shall be construed so
as to maintain (a) the ESOP as a qualified leveraged employee stock ownership
plan under section 401(a) and 4975(e)(7) of the Internal Revenue Code of 1986
(the "Code"), (b) the Trust as exempt from taxation under section 501(a) of the
Code and (c) the Trust Loan as an exempt loan under section 54.4975-7(b) of the
Treasury Regulations and as described in Department of Labor Regulation section
2550.408b-3.


                                        5

<PAGE>


         IN WITNESS WHEREOF, this Pledge Agreement has been duly executed by the
parties hereto as of the day and year first above written.


                                  FIRST FEDERAL BANK
                                  EMPLOYEE STOCK OWNERSHIP PLAN TRUST



                                  ------------------------------------------
                                  Duly authorized officer of ___________, as
                                  Trustee



                                  FIRST FEDERAL BANCSHARES, INC.



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


                                        6




<PAGE>


                                 PROMISSORY NOTE



                                                                          , 2000
                                                              ------------


         FOR VALUE RECEIVED, the undersigned, FIRST FEDERAL BANK EMPLOYEE STOCK
OWNERSHIP PLAN TRUST ("Borrower"), hereby promises to pay to the order of FIRST
FEDERAL BANCSHARES, INC. ("Lender") an amount sufficient to purchase __________
shares of First Federal Bancshares, Inc. common stock payable in accordance with
the Loan Agreement made and entered into between the Borrower and the Lender of
even date herewith ("Loan Agreement") pursuant to which this Promissory Note is
issued.

         The Principal Amount of this Promissory Note shall be payable in
accordance with the schedule attached hereto ("Schedule I").

         This Promissory Note shall bear interest at the rate per annum set for
or established under the Loan Agreement, such interest to be payable in
accordance with Schedule I.

         Anything herein to the contrary notwithstanding, the obligation of the
Borrower to make payments of interest shall be subject to the limitation that
payments of interest shall not be required to be made to the Lender to the
extent that the Lender's receipt thereof would not be permissible under the law
or laws applicable to the Lender limiting rates on interest which may be charged
or collected by the Lender. Any such payments on interest which are not made as
a result of the limitation referred to in the preceding sentence shall be made
by the Borrower to the Lender on the earliest interest payment date or dates on
which the receipt thereof would be permissible under the laws applicable to the
Lender limiting rates of interest which may be charged or collected by the
Lender. Such deferred interest shall not bear interest.

         Payments of both principal and interest on this Promissory Note are to
be made at the principal office of the Lender or such other place as the holder
hereof shall designate to the Borrower in writing, in lawful money of the United
States of America in immediately available funds.

         Failure to make any payments of principal on this Promissory Note when
due, or failure to make any payment of interest on this Promissory Note not
later than five (5) Business Days after the date when due, shall constitute a
default hereunder, whereupon the principal amount of accrued interest on this
Promissory Note shall immediately become due and payable in accordance with the
terms of the Loan Agreement.


<PAGE>


         This Promissory Note is secured by a Pledge Agreement between the
Borrower and the Lender of even date herewith and is entitled to the benefits
thereof.


                                  FIRST FEDERAL BANK
                                  EMPLOYEE STOCK OWNERSHIP PLAN TRUST


                                  --------------------------------------------
                                  Duly authorized officer of _____________, as
                                  Trustee


                                        2