EXHIBIT 10.5
                         FIRST FEDERAL BANKSHARES, INC.
                       1999 RECOGNITION AND RETENTION PLAN




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                                                                      APPENDIX A

                         FIRST FEDERAL BANKSHARES, INC.

                       1999 RECOGNITION AND RETENTION PLAN

1.       Establishment of the Plan

         First Federal  Bankshares,  Inc.  hereby  establishes the First Federal
Bankshares, Inc. 1999 Recognition and Retention Plan (the "Plan") upon the terms
and conditions hereinafter stated in the Plan.

2.       Purpose of the Plan

         The purpose of the Plan is to advance the  interests of the Company and
its stockholders by providing Key Employees and Outside Directors of the Company
and  its  Affiliates,   including  First  Federal  Bank,  upon  whose  judgment,
initiative and efforts the successful conduct of the business of the Company and
its Affiliates largely depends, with compensation for their contributions to the
Company and its Affiliates and an additional  incentive to perform in a superior
manner, as well as to attract people of experience and ability.

3.       Definitions

         The following  words and phrases when used in this Plan with an initial
capital letter,  unless the context clearly indicates otherwise,  shall have the
meanings set forth below.  Wherever  appropriate,  the  masculine  pronoun shall
include the feminine pronoun and the singular shall include the plural:

         "Affiliate" means any "parent corporation" or "subsidiary  corporation"
of the Company or the Bank, as such terms are defined in Section 424(e) and (f),
respectively,  of the Code, or a successor to a parent corporation or subsidiary
corporation.

         "Award"  means the  grant by the  Committee  of  Restricted  Stock,  as
provided in the Plan.

         "Bank" means First Federal Bank, or a successor corporation.

         "Beneficiary"  means the person or persons designated by a Recipient to
receive any  benefits  payable  under the Plan in the event of such  Recipient's
death.  Such person or persons shall be designated in writing on forms  provided
for this  purpose  by the  Committee  and may be  changed  from  time to time by
similar  written  notice  to  the  Committee.   In  the  absence  of  a  written
designation,  the Beneficiary shall be the Recipient's surviving spouse, if any,
or if none, his estate.

         "Board" or "Board of  Directors"  means the Board of  Directors  of the
Company or an Affiliate,  as applicable.  For purposes of Section 4 of the Plan,
"Board" shall refer solely to the Board of the Company.

         "Cause" means personal  dishonesty,  willful misconduct,  any breach of
fiduciary duty involving personal profit,  intentional failure to perform stated
duties,  or the willful  violation of any law,  rule or  regulation  (other than
traffic violations or similar offenses) or a final  cease-and-desist  order, any
of which results in a material loss to the Company or an Affiliate.
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         "Change  in  Control"  of the Bank or the  Company  means a  change  in
control of a nature  that:  (i) would be  required to be reported in response to
Item 1(a) of the current  report on Form 8-K,  as in effect on the date  hereof,
pursuant  to Section  13 or 15(d) of the  Securities  Exchange  Act of 1934 (the
"Exchange  Act");  or (ii) results in a Change in Control of the Company  within
the meaning of the Home Owners Loan Act,  as amended  ("HOLA"),  and  applicable
rules and regulations  promulgated  thereunder,  as in effect at the time of the
Change in Control; 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  securities  of the  Company  representing  25% or  more  of the
combined  voting power of the Company's  outstanding  securities  except for any
securities  purchased by the Bank's  employee stock  ownership plan or trust; or
(b)  individuals  who  constitute  the Board 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  whose  nomination  for  election  by  the  Company's
stockholders  was approved by the same  Nominating  Committee  serving  under an
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  Company or similar  transaction  in which the Bank or the Company is not
the surviving  institution  occurs; or (d) a proxy statement  soliciting proxies
from stockholders of the Company,  by someone other than the current  management
of the Company, seeking stockholder approval of a plan of reorganization, merger
or  consolidation  of the  Company  or  similar  transaction  with  one or  more
corporations  as a result  of  which  the  outstanding  shares  of the  class of
securities  then subject to the Plan are to be exchanged  for or converted  into
cash or property or securities not issued by the Company;  or (e) a tender offer
is made  for  25% or  more  of the  voting  securities  of the  Company  and the
shareholders  owning  beneficially  or of record 25% or more of the  outstanding
securities of the Company have tendered or offered to sell their shares pursuant
to such tender offer and such  tendered  shares have been accepted by the tender
offeror.

         "Code" means the Internal Revenue Code of 1986, as amended.

         "Committee"  means a Committee of the Board consisting of either (i) at
least two Non-Employee Directors of the Company, or (ii) the entire Board of the
Company.

         "Common  Stock" means  shares of the common  stock of the Company,  par
value $0.01 per share.

         "Company"  means First  Federal  Bankshares,  Inc.,  the stock  holding
company of the Bank, or a successor
corporation.

         "Continuous  Service" means employment as a Key Employee and/or service
as  an  Outside  Director  without  any  interruption  or  termination  of  such
employment and/or service.  Continuous Service shall also mean a continuation as
a member of the Board of Directors  following a cessation of employment as a Key
Employee.  In the case of a Key  Employee,  employment  shall not be  considered
interrupted  in the case of sick  leave,  military  leave or any other  leave of
absence  approved  by the  Bank or in the  case  of  transfers  between  payroll
locations of the Bank or between the Bank, its parent,  its  subsidiaries or its
successor.
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         "Director" means a member of the Board.

         "Disability"  means  the  permanent  and total  inability  by reason of
mental or  physical  infirmity,  or both,  of an  employee  to perform  the work
customarily assigned to him, or of a Director to serve as such. Additionally, in
the case of an employee, a medical doctor selected or approved by the Board must
advise the  Committee  that it is either not  possible  to  determine  when such
Disability will terminate or that it appears  probable that such Disability will
be permanent during the remainder of such employee's lifetime.

         "Effective  Date" means the date of, or a date  determined by the Board
of Directors following, approval of the Plan by the Company's stockholders.

         "ERISA" means the Employee  Retirement  Income Security Act of 1974, as
amended.

         "Key  Employee"  means any  person  who is  currently  employed  by the
Company or an Affiliate  who is chosen by the  Committee to  participate  in the
Plan.

         "Non-Employee Director" means, for purposes of the Plan, a Director who
(a) is not  employed  by the  Company  or an  Affiliate;  (b) does  not  receive
compensation  directly or indirectly as a consultant  (or in any other  capacity
than as a Director)  greater  than  $60,000;  (c) does not have an interest in a
transaction  requiring disclosure under Item 404(a) of Regulation S-K; or (d) is
not engaged in a business  relationship  for which  disclosure would be required
pursuant to Item 404(b) of Regulation S-K.

         "Normal Retirement" means for a Key Employee,  retirement at the normal
or early  retirement date set forth in the Bank's Employee Stock Ownership Plan,
or any  successor  plan.  Normal  Retirement  for an  Outside  Director  means a
cessation of service on the Board of Directors for any reason other than removal
for Cause,  after reaching 60 years of age and  maintaining at least 10 years of
Continuous Service.

         "OTS" means the Office of Thrift Supervision.

         "Outside  Director" means a Director of the Company or an Affiliate who
is not an employee of the Company or an Affiliate.

         "Recipient"  means a Key Employee or Outside Director of the Company or
its Affiliates who receives or has received an Award under the Plan.

         "Restricted  Period" means the period of time selected by the Committee
for the purpose of determining  when  restrictions are in effect under Section 6
with respect to Restricted Stock awarded under the Plan.

         "Restricted  Stock"  means  shares  of  Common  Stock  that  have  been
contingently awarded to a Recipient by the Committee subject to the restrictions
referred to in Section 6, so long as such restrictions are in effect.

4.       Administration of the Plan.

         (a)  Role  of  the  Committee.  The  Plan  shall  be  administered  and
interpreted by the Committee, which shall have all of the powers allocated to it
in the Plan,  subject to OTS  regulations  and policy.  The  interpretation  and
construction  by the  Committee  of any  provisions  of the Plan or of any Award
<PAGE>
granted hereunder shall be final and binding. The Committee shall act by vote or
written consent of a majority of its members.  Subject to the express provisions
and  limitations  of the Plan and subject to OTS  regulations  and  policy,  the
Committee may adopt such rules and  procedures as it deems  appropriate  for the
conduct of its affairs.  The  Committee  shall report its actions and  decisions
with respect to the Plan to the Board at appropriate times, but in no event less
than one time per calendar year.

         (b) Role of the Board.  The members of the Committee shall be appointed
or approved by, and will serve at the  pleasure of, the Board.  The Board may in
its  discretion  from time to time remove  members  from, or add members to, the
Committee.  The Board shall have all of the powers  allocated to it in the Plan,
may take any  action  under or with  respect to the Plan that the  Committee  is
authorized  to take,  and may reverse or override  any action  taken or decision
made by the Committee under or with respect to the Plan, provided, however, that
except as provided in Section 6(b), the Board may not revoke any Award except in
the event of  revocation  for Cause or with  respect to  unearned  Awards in the
event the Recipient of an Award voluntarily  terminates employment with the Bank
prior to Normal Retirement.

         (c) Plan  Administration  Restrictions.  All  transactions  involving a
grant, award or other acquisitions from the Company shall:

         (i) be approved by the Company's full Board or by the Committee;

         (ii) be approved,  or ratified,  in  compliance  with Section 14 of the
Exchange Act, by either:  the  affirmative  vote of the holders of a majority of
the shares  present,  or represented and entitled to vote at a meeting duly held
in  accordance  with the laws under  which the Company is  incorporated;  or the
written  consent of the  holders of a majority of the  securities  of the issuer
entitled to vote provided that such  ratification  occurs no later than the date
of the next annual meeting of shareholders; or

         (iii)  result in the  acquisition  of Common  Stock that is held by the
Recipient for a period of six months following the date of such acquisition.

         (d)  Limitation on  Liability.  No member of the Board or the Committee
shall be liable for any  determination  made in good  faith with  respect to the
Plan or any Awards  granted  under it. If a member of the Board or the Committee
is a party or is  threatened  to be made a party to any  threatened,  pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative,  by reason of anything  done or not done by him in such  capacity
under or with respect to the Plan, the Bank or the Company shall  indemnify such
member against expense (including attorneys' fees), judgments, fines and amounts
paid in settlement  actually and reasonably  incurred by him in connection  with
such  action,  suit or  proceeding  if he acted in good faith and in a manner he
reasonably believed to be in the best interests of the Bank and the Company and,
with respect to any criminal  action or proceeding,  had no reasonable  cause to
believe his conduct was unlawful.

5.       Eligibility; Awards

         (a)  Eligibility.  Key Employees and Outside  Directors are eligible to
receive Awards.
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         (b) Awards to Key  Employees and Outside  Directors.  The Committee may
determine which of the Key Employees and Outside Directors referenced in Section
5(a) will be  granted  Awards and the  number of shares  covered by each  Award;
provided,  however,  that in no event shall any Awards be made that will violate
the Bank's Charter and Bylaws,  the Company's  Certificate of Incorporation  and
Bylaws,  or any  applicable  federal  or  state  law or  regulation.  Shares  of
Restricted  Stock that are awarded by the  Committee  shall,  on the date of the
Award,  be  registered  in the  name of the  Recipient  and  transferred  to the
Recipient,  in accordance  with the terms and conditions  established  under the
Plan.  The  aggregate  number of shares  that shall be issued  under the Plan is
79,050.

         Notwithstanding the foregoing and subject to compliance with applicable
OTS  regulations  and policy,  no Outside  Director shall be granted Awards with
respect to more than 5% of the total  shares  subject to the Plan,  all  Outside
Directors  of the  Company,  in the  aggregate,  may not be granted  Awards with
respect  to more  than  30% of the  total  shares  subject  to the  Plan  and no
individual  shall be granted  Awards with  respect to more than 25% of the total
shares subject to the Plan. No Awards shall begin vesting  earlier than one year
from the date the Plan is ratified by  stockholders of the Company and no Awards
shall vest at a rate in excess of 20% per year  beginning one year from the Date
of Grant. In the event OTS  regulations are amended (the "Amended  Regulations")
to permit shorter vesting periods or to permit accelerated  vesting in the event
of Normal Retirement or a Change in Control of the Company,  or in the event OTS
policy would permit shorter vesting periods or accelerated vesting  irrespective
of the adoption of Amended  Regulations,  any Awards made  pursuant to this Plan
may vest, at the sole  discretion  of the  Committee,  in  accordance  with such
Amended  Regulations or OTS policy.  Subject to compliance  with OTS regulations
and policy,  the  Committee  shall have the  authority,  in its  discretion,  to
accelerate  the time at which any or all of the  restrictions  shall  lapse with
respect thereto,  or to remove any or all of such restrictions,  whenever it may
determine that such action is appropriate by reason of changes in applicable tax
or other laws or other changes in circumstances occurring after the commencement
of such Restricted Period.

         In the  event  Restricted  Stock  is  forfeited  for  any  reason,  the
Committee,  from time to time,  may  determine  which of the Key  Employees  and
Outside Directors will be granted additional Awards to be awarded from forfeited
Restricted Stock.

         In selecting  those Key Employees and Outside  Directors to whom Awards
will be granted and the amount of Restricted  Stock covered by such Awards,  the
Committee  shall consider such factors as it deems  relevant,  which factors may
include,  among others, the position and  responsibilities  of the Key Employees
and Outside  Directors,  the length and value of their  services to the Bank and
its Affiliates,  the compensation  paid to the Key Employees or fees paid to the
Outside Directors,  and the Committee may request the written  recommendation of
the Chief Executive Officer and other senior executive officers of the Bank, the
Company  and  its  Affiliates  or the  recommendation  of the  full  Board.  All
allocations  by the  Committee  shall be  subject  to review,  and  approval  or
rejection, by the Board.

         No  Restricted   Stock  shall  vest  unless  the  Recipient   maintains
Continuous Service with the Bank or an Affiliate until the restrictions lapse.

         (c) Manner of Award.  As promptly as practicable  after a determination
is made pursuant to Section 5(b) to grant an Award,  the Committee  shall notify
the  Recipient  in writing  of the grant of the  Award,  the number of shares of
<PAGE>
Restricted  Stock covered by the Award,  and the terms upon which the Restricted
Stock  subject  to the Award may be  earned.  Upon  notification  of an Award of
Restricted  Stock,  the  Recipient  shall  execute  and return to the  Company a
restricted stock agreement (the "Restricted Stock Agreement")  setting forth the
terms and conditions under which the Recipient shall earn the Restricted  Stock,
together with a stock power or stock powers endorsed in blank.  Thereafter,  the
Recipient's  Restricted  Stock and stock power shall be deposited with an escrow
agent specified by the Company  ("Escrow  Agent") who shall hold such Restricted
Stock  under  the  terms  and  conditions  set  forth  in the  Restricted  Stock
Agreement.  Each  certificate  in respect of shares of Restricted  Stock Awarded
under the Plan shall be registered in the name of the Recipient.

         (d)  Treatment of Forfeited  Shares.  In the event shares of Restricted
Stock are forfeited by a Recipient, such shares shall be returned to the Company
and shall be held and accounted for pursuant to the terms of the Plan until such
time as the Restricted Stock is re-awarded to another  Recipient,  in accordance
with the terms of the Plan and the applicable  state and federal laws, rules and
regulations.

6.       Terms and Conditions of Restricted Stock

         The Committee  shall have full and complete  authority,  subject to the
limitations  of the Plan, to grant awards of  Restricted  Stock to Key Employees
and Outside Directors and, in addition to the terms and conditions  contained in
Sections 6(a) through 6(h),  to provide such other terms and  conditions  (which
need not be  identical  among  Recipients)  in respect of such  Awards,  and the
vesting thereof, as the Committee shall determine.

         (a) General  Rules.  Restricted  Stock shall vest in a Recipient at the
rate or rates determined by the Committee;  provided,  however,  that Restricted
Stock shall vest at a rate not in excess of 20% of the initially  awarded amount
per year  commencing  with the  first  installment  being  earned  on the  first
anniversary of the Date of Grant.  No shares shall vest in any year in which the
Bank is not meeting all of its fully phased-in capital requirements.  Subject to
any such other terms and conditions as the Committee  shall provide with respect
to Awards,  shares of Restricted  Stock may not be sold,  assigned,  transferred
(within the meaning of Code Section 83), pledged or otherwise  encumbered by the
Recipient, except as hereinafter provided, during the Restricted Period.

         (b) Continuous Service; Forfeiture. Except as provided in Section 6(c),
if a Recipient ceases to maintain  Continuous Service for any reason (other than
death or Disability), unless the Committee shall otherwise determine, all shares
of Restricted Stock theretofore  awarded to such Recipient and which at the time
of such  termination  of  Continuous  Service  are  subject to the  restrictions
imposed by Section 6(a) shall upon such  termination  of  Continuous  Service be
forfeited.   Any  stock   dividends  or  declared  but  unpaid  cash   dividends
attributable to such shares of Restricted Stock shall also be forfeited.

         (c)   Exception   for   Termination   Due  to  Death   or   Disability.
Notwithstanding  the general rule  contained in Section 6(a),  Restricted  Stock
awarded to a Recipient  whose  employment  with the Company or an  Affiliate  or
service on the Board  terminates  due to death or Disability  shall be deemed to
vest as of the  Recipient's  last  day of  employment  with  the  Company  or an
Affiliate,  or last day of service on the Board of the Company or an  Affiliate;
provided  that  Restricted  Stock awarded to a Key Employee who at any time also
serves as a  Director,  shall not be deemed to vest  until both  employment  and
service as a Director have been terminated.
<PAGE>
         (d) Revocation for Cause.  Notwithstanding  anything hereinafter to the
contrary,  the Board may by resolution immediately revoke, rescind and terminate
any Award, or portion thereof,  previously awarded under the Plan, to the extent
Restricted  Stock has not been redelivered by the Escrow Agent to the Recipient,
whether or not yet vested,  in the case of a Key Employee  whose  employment  is
terminated by the Company or an Affiliate or an Outside  Director  whose service
is  terminated  by the Company or an  Affiliate  for Cause or who is  discovered
after  termination  of  employment  or service  on the Board to have  engaged in
conduct that would have justified termination for Cause.

         (e) Restricted  Stock Legend.  Each certificate in respect of shares of
Restricted  Stock  awarded under the Plan shall be registered in the name of the
Recipient and deposited by the  Recipient,  together with a stock power endorsed
in blank,  with the  Escrow  Agent and shall bear the  following  (or a similar)
legend:

                  "The  transferability  of this  certificate  and the shares of
              stock  represented  hereby are subject to the terms and conditions
              (including  forfeiture) contained in the First Federal Bankshares,
              Inc. 1999 Recognition and Retention Plan.  Copies of such Plan are
              on  file  in  the  offices  of  the  Secretary  of  First  Federal
              Bankshares, Inc., 329 Pierce Street, Sioux City, Iowa 51102."

         (f) Payment of Dividends and Return of Capital. After an Award has been
granted but before such Award has vested,  the Recipient  shall receive any cash
dividends  paid with  respect to such  shares,  or shall  share in any  pro-rata
return of capital to all  shareholders  with respect to the Common Stock.  Stock
dividends  declared  by the  Company and paid on Awards that have not yet vested
shall be  subject  to the same  restrictions  as the  Restricted  Stock  and the
certificate(s) or other instruments representing or evidencing such shares shall
be legended in the manner provided in Section 6(e) and shall be delivered to the
Escrow Agent for  distribution  to the Recipient when the Restricted  Stock upon
which such  dividends  were paid are vested.  Unless the  Recipient  has made an
election  under  Section 83(b) of the Code,  cash  dividends or other amounts so
paid on shares that have not yet vested shall be treated as compensation  income
to the  Recipient  when paid.  If  dividends  are paid with respect to shares of
Restricted  Stock under the Plan that have been issued but not awarded,  or that
have been  forfeited  and returned to the Company or to a trust  established  to
hold issued and  unawarded or forfeited  shares,  the Committee can determine to
award such dividends to any Recipient or Recipients under the Plan, to any other
employee or director of the Company or the Bank, or can return such dividends to
the Company.

         (g) Voting of Restricted Shares.  After an Award has been granted,  the
Recipient as conditional  owner of the Restricted  Stock shall have the right to
vote such shares.

         (h) Delivery of Earned Shares.  At the  expiration of the  restrictions
imposed by Section 6(a),  the Escrow Agent shall  redeliver to the Recipient (or
where the  relevant  provision of Section 6(b) applies in the case of a deceased
Recipient,  to his Beneficiary) the certificate(s) and any remaining stock power
deposited  with it pursuant to Section 5(c) and the shares  represented  by such
certificate(s) shall be free of the restrictions referred to Section 6(a).
<PAGE>
7.       Adjustments upon Changes in Capitalization

         In the event of any change in the outstanding  shares subsequent to the
Effective Date by reason of any reorganization,  recapitalization,  stock split,
stock dividend,  combination or exchange of shares, or any merger, consolidation
or any  change in the  corporate  structure  or shares of the  Company,  without
receipt or payment of consideration by the Company, the maximum aggregate number
and class of shares as to which  Awards may be  granted  under the Plan shall be
appropriately   adjusted  by  the  Committee,   whose   determination  shall  be
conclusive. Any shares of stock or other securities received, as a result of any
of the  foregoing,  by a Recipient  with  respect to  Restricted  Stock shall be
subject to the same  restrictions and the  certificate(s)  or other  instruments
representing  or  evidencing  such shares or  securities  shall be legended  and
deposited with the Escrow Agent in the manner provided in Section 6(e).

8.       Assignments and Transfers

         No Award nor any right or interest of a Recipient under the Plan in any
instrument  evidencing  any Award under the Plan may be assigned,  encumbered or
transferred  (within the meaning of Code Section 83) except, in the event of the
death of a Recipient, by will or the laws of descent and distribution until such
Award is earned.

9.       Key Employee Rights under the Plan

         No Key Employee  shall have a right to be selected as a Recipient  nor,
having been so selected, to be selected again as a Recipient and no Key Employee
or other  person  shall have any claim or right to be granted an Award under the
Plan or under any other  incentive or similar plan of the Bank or any Affiliate.
Neither the Plan nor any action  taken  thereunder  shall be construed as giving
any Key  Employee  any  right to be  retained  in the  employ of the Bank or any
Affiliate.

10.      Outside Director Rights under the Plan

         Neither the Plan nor any action taken  thereunder shall be construed as
giving any Outside  Director any right to be retained in the service of the Bank
or any Affiliate.

11.      Withholding Tax

         Upon the  termination  of the  Restricted  Period  with  respect to any
shares  of  Restricted  Stock  (or at any such  earlier  time,  if any,  that an
election  is made by the  Recipient  under  Section  83(b) of the  Code,  or any
successor  provision  thereto,  to include  the value of such  shares in taxable
income),  the Bank or the Company  shall have the right to require the Recipient
or other person receiving such shares to pay the Bank or the Company the minimum
amount  of any  federal  or  state  taxes,  including  payroll  taxes,  that are
applicable  to such  supplemental  income  and that the Bank or the  Company  is
required to withhold with respect to such shares, or, in lieu thereof, to retain
or sell without  notice,  a sufficient  number of shares held by it to cover the
amount required to be withheld.  The Bank or the Company shall have the right to
deduct from all dividends  paid with respect to shares of  Restricted  Stock the
amount of any taxes which the Bank or the  Company is required to withhold  with
respect to such dividend payments.
<PAGE>
12.      Amendment or Termination

         The Board of the Company may amend,  suspend or  terminate  the Plan or
any  portion  thereof  at any  time,  subject  to OTS  regulations  and  policy,
provided,  however,  that no such  amendment,  suspension or  termination  shall
impair  the  rights  of  any  Recipient,  without  his  consent,  in  any  Award
theretofore made pursuant to the Plan. Any amendment or modification of the Plan
or an outstanding  Award under the Plan shall be approved by the  Committee,  or
the full Board of the Company.

13.      Governing Law

         The Plan shall be governed by the laws of the State of Delaware.

14.      Term of Plan

         The Plan shall become effective on the date of, or a date determined by
the  Board  of  Directors  following,  approval  of the  Plan  by the  Company's
stockholders.  It shall  continue  in effect  until the earlier of (i) ten years
from the Effective  Date unless sooner  terminated  under Section 12 hereof,  or
(ii) the date on which all shares of Common Stock available for award hereunder,
have vested in the Recipients of such Awards.
<PAGE>

         IN WITNESS  WHEREOF,  the Company has caused the Plan to be executed by
its duly  authorized  officers  and the  corporate  seal to be affixed  and duly
attested, as of the ____ day of ________________, 1999.

Date Approved by Shareholders:      _______________________

Effective Date:                     _______________________


ATTEST:                                       FIRST FEDERAL  BANKSHARES, INC.

----------------                              ------------------
Secretary                                     Barry E. Backhaus,
                                              President and Chief Executive
                                              Officer