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                                                                    Exhibit 10.2

                                     FORM OF
                               FIRST FEDERAL BANK
                              EMPLOYMENT AGREEMENT

         This AGREEMENT ("Agreement"), is entered into and made effective as of
[DATE] by and between First Federal Bank (the "Bank"), a federally chartered
savings institution, with its principal administrative offices at 109 East Depot
Street, Colchester, Illinois 62326, First Federal Bancshares, Inc., a
corporation organized under the laws of the state of Delaware, the Holding
Company of the Bank (the "Holding Company") and [NAME] ("Executive").

         WHEREAS, the Bank 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 Bank 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 Bank. Executive shall render administrative and
management services to the Bank such as are customarily performed by persons in
a similar executive capacity. During the term of this Agreement, Executive also
agrees to serve as a director of the Bank.

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 first anniversary date of this
Agreement, and continuing on each anniversary thereafter, the disinterested
members of the board of directors of the Bank ("Board") may extend the Agreement
an additional year such that the remaining term of the Agreement shall be three
(3) years, unless Executive elects not to extend the term of this Agreement by
giving written notice in accordance with Section 8 of this Agreement. The Board
will review the Agreement and Executive's performance annually for purposes of
determining whether to extend the Agreement and the rationale and results
thereof shall be included in the minutes of the Board's meeting. The Board shall
give notice to the Executive as soon as possible after such review as to whether
the Agreement is to be extended.

         (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 Bank and participation in industry, community
and civic organizations; PROVIDED, HOWEVER, that, with the approval of the
Board, as evidenced by a resolution


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of the Board, from time 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 Bank, 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 Bank may terminate Executive's employment with the Bank
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 Bank in exchange for the duties described
in Section 1 of this Agreement. The Bank 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 Bank. Base Salary shall be payable in accordance with the
normal payroll practices of the Bank. During the period of this Agreement,
Executive's Base Salary shall be reviewed at least annually; on or about [DATE]
each year. 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 Bank 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 Bank now or in the future to full-time employees of the Bank
and/or senior executives and key management employees of the Bank, 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 Bank 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 Bank or 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 Bank's employ, upon, any (A)
failure to re-elect or re-appoint Executive as [TITLE] of the Bank or a failure
to nominate or re-elect Executive to the Board of Directors of the Bank, unless
consented to by the Executive, (B) material change in Executive's function,
duties, or responsibilities with the Bank, 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 Bank or the Holding Company, or (F) breach of this
Agreement by the Bank. 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 Bank 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 Bank 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 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 percentage of salary of any incentive or bonus
payment for the most recently-completed fiscal year; and (iii) the
employer-provided cost of any other benefit for the most recently-completed
fiscal year. In addition, for purposes of determining his vested accrued
benefit, Executive shall be credited either under the defined benefit pension
plan maintained


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by the Bank 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 Bank continues 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
Bank 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 Bank 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 Bank 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 Bank 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 Bank or any other plans which Executive is a 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.


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5.       CHANGE IN CONTROL.

         (a)      For purposes of this Agreement, a "Change in Control" of the
Bank or Holding Company shall mean an event of a nature that: (i) would be
required to be reported in response to Item 1 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, as amended (the "Exchange Act"); or (ii)
results in a Change in Control of the Bank 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 ("OTS") (or its predecessor agency), as in effect on the date hereof
(provided, that in applying the definition of change in control or presumptive
change in control or acting in concert or presumptive acting in concert as set
forth under the rules and regulations of the OTS, ownership by a person or a
group, including a presumptive group, of at least 15% of the voting stock of the
Bank or the Holding Company shall be required, and provided further that
ownership of stock by a tax-qualified employee benefit plan of the Bank or the
Holding Company shall not be subject to presumptions of control or acting in
concert); 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 Bank or the Holding Company representing
25% or more of the Bank's or the Holding Company's outstanding voting securities
or right to acquire such securities except for any voting securities of the Bank
purchased by the Holding Company and any voting securities purchased by any
employee benefit plan of the Bank or the Holding Company, 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 Holding Company's stockholders was approved by
the same Nominating Committee serving under an Incumbent Board (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 Bank or the Holding Company or similar transaction occurs in which
the Bank 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 regulatory approvals not including
the lapse of any statutory waiting periods.

         (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, (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


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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 Bank 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 three (3) times Executive's average annual compensation for the
five most recently completed taxable years of Executive. In the event the Bank
is not in compliance with its minimum capital requirements or if such payments
would cause the Bank's capital to be reduced below its minimum regulatory
capital requirements, such payments shall be deferred until such time as the
Bank or successor thereto is in capital compliance. For purposes of this Section
5(c), annual compensation shall include Base Salary and any other taxable income
paid by the Bank 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 Bank 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 Bank on Executive's behalf 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 the defined benefit pension plan maintained by
the Bank 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 Bank will cause to be continued any
Welfare Plan Benefit (as described in Section 4(d) of this


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Agreement) substantially identical to the benefit coverage maintained by the
Bank 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 Bank 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.

         Notwithstanding the provisions of Section 5 of this Agreement, in no
event shall the aggregate payments or benefits to be made or afforded to
Executive under said paragraphs or otherwise paid or provided by the Bank in
connection with a Change in Control (the "Termination Benefits") constitute an
"excess parachute payment" under Section 280G of the Code or any successor
thereto, and in order to avoid such a result, the Termination Benefits will be
reduced, if necessary, to an amount (the "Non-Triggering Amount"), the value of
which is one dollar ($1.00) less than an amount equal to three (3) times
Executive's "base amount", as determined in accordance with said Section 280G.
The allocation of any reduction required with respect to the Termination
Benefits shall be determined by Executive.

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 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.


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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 Bank 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 Bank 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 Bank 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.

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 Bank. Executive shall, upon reasonable notice,
furnish such information and assistance to the Bank with regard to matters as to
which he has personal knowledge and as may reasonably be required by the Bank in
connection with


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any litigation in which it or any of its subsidiaries or affiliates is, or may
become, a party. The Bank 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 Bank 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 Bank 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 Bank. The parties
hereto, recognizing that irreparable injury will result to the Bank, 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 Bank 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 Bank, 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 Bank
from pursuing any other remedies available to the Bank 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 Bank and its
affiliates as it may exist from time to time, is a valuable, special and unique
asset of the business of the Bank. 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 Bank and its affiliates 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 Bank. In the
event of a breach or threatened breach by the Executive of the provisions of
this Section 10, the Bank 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 Bank or its affiliates
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


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the Bank from pursuing any other remedies available to the Bank 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 Bank subject to Section 11(b) of this Agreement. The Holding Company,
however, unconditionally guarantees payment and provision of all amounts and
benefits due hereunder to Executive and, if such amounts and benefits due from
the Bank are not timely paid or provided by the Bank, such amounts and benefits
shall be paid or provided by the Holding Company.

         (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 Holding Company, such payments and benefits paid by the Bank will be
subtracted from any amount due simultaneously to Executive under similar
provisions of this Agreement. Payments pursuant to this Agreement and the
Holding Company 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 Bank on a quarterly basis; PROVIDED, HOWEVER, that
except for the reduction provided by the first sentence of this Section 11(b),
the Bank 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 Bank or any
predecessor of the Bank 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.

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 Bank and their respective successors and assigns.


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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.      REQUIRED PROVISIONS.

         (a)      The Bank may terminate Executive's employment at any time, but
any termination by the Bank, other than Termination for Cause, shall not
prejudice Executive's right to compensation or other benefits under this
Agreement. Executive shall not have the right to receive compensation or other
benefits for any period after Termination for Cause as defined in Section 7
hereinabove.

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

         (c)      If Executive is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order issued under
Section 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C.
Section 1818(e)(4) or (g)(1), all obligations of the Bank under this contract
shall terminate as of the effective date of the order, but vested rights of the
contracting parties shall not be affected.

         (d)      If the Bank is in default as defined in Section 3(x)(1) of the
Federal Deposit Insurance Act, 12 U.S.C. Section 1813(x)(1) all obligations of
the Bank under this contract shall terminate as of the date of default, but this
paragraph shall not affect any vested rights of the contracting parties.

         (e)      All obligations of the Bank under this contract shall be
terminated, except to the extent determined that continuation of the contract is
necessary for the continued operation of the institution: (i) by the Director of
the OTS (or his designee), the FDIC or the Resolution Trust Corporation, at the
time the FDIC enters into an agreement to provide assistance to or on behalf of
the Bank under the authority contained in Section 13(c) of the Federal Deposit
Insurance Act, 12 U.S.C. Section 1823(c); or (ii) by the Director of the OTS (or
his designee) at the time the Director (or his designee) approves a supervisory
merger to resolve problems related to the operations of the Bank


                                     Page 11
<PAGE>

or when the Bank is determined by the Director to be in an unsafe or unsound
condition. Any rights of the parties that have already vested, however, shall
not be affected by such action.

         (f)      Any payments made to Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon compliance with 12 U.S.C. Section
1828(k) and 12 C.F.R. Section 545.121 and any rules and regulations promulgated
thereunder.

16.      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.

17.      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.

18.      GOVERNING LAW.

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

19.      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 Bank, 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.


                                     Page 12
<PAGE>

20.      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 Bank, if Executive is successful pursuant to a legal
judgment, arbitration or settlement.

21.      INDEMNIFICATION.

         The Bank 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 Bank 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.

22.      SUCCESSOR TO THE BANK.

         The Bank 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, expressly and
unconditionally, to assume and agree to perform the Bank's obligations under
this Agreement, in the same manner and to the same extent that the Bank would be
required to perform if no such succession or assignment had taken place.


                                     Page 13
<PAGE>

                                   SIGNATURES

         IN WITNESS WHEREOF, First Federal Bank and First Federal Bancshares,
Inc. have caused this Agreement, to be executed and their seals to be affixed
hereunto by their duly authorized officers and Executive has signed this
Agreement on [DATE].

ATTEST:                               FIRST FEDERAL BANK


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

                  [SEAL]

WITNESS:

                                      By:
-----------------------------            ---------------------------------------
Executive

ATTEST:                               FIRST FEDERAL BANCSHARES, INC.

                                      (Guarantor)

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

                  [SEAL]

WITNESS:                              EXECUTIVE


-----------------------------         ------------------------------------------
                                      [NAME]


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