<PAGE>
 
                                                                    EXHIBIT 10.3

                              EMPLOYMENT AGREEMENT
                              --------------------

     THIS AGREEMENT entered into this 8th day of April, 1994, by and between
First Missouri National Bank (the "Bank") and Gerald W. Elson (the "Employee"),
effective on the date (the "Effective Date") of the conversion of First Missouri
Federal Savings and Loan Association (the "Association") to a national bank
charter.

     WHEREAS, the Employee has heretofore been employed by the Association as
Chairman of the Board and Chief Executive Officer and is experienced in all
phases of the business of the Association and the Bank; and

     WHEREAS, the parties desire by this writing to set forth the continuing
employment relationship of the Bank and the Employee.

     NOW, THEREFORE, it is AGREED as follows:

     1.    Employment.  The Employee is employed as the Chairman of the Board
           ----------                                                        
and Chief Executive Officer of the Bank.  The Employee shall render such
administrative  and management services for the Bank as are currently rendered
and as are customarily performed by persons situated in a similar executive
capacity.  The Employee shall also promote, by entertainment or otherwise, as
and to the extent permitted by law, the business of the Bank.  The Employee's
other duties shall be such as the Board of Directors of the Bank ("Board") may
from time to time reasonably direct, including normal duties as an officer of
the Bank.

     2.    Base Compensation.  The Bank agrees to pay the Employee during the
           -----------------                                                 
term of this Agreement a salary at the rate of $28,000 per annum, payable in
cash not less frequently than monthly.  The Board shall review, not less often
than annually, the rate of the Employee's salary, and in its sole discretion may
decide to increase his salary.

     3.    Discretionary Bonuses.  The Employee shall participate in an
           ---------------------                                       
equitable manner with all other senior management employees of the Bank in
discretionary bonuses that the Board may award from time to time to the Bank's
senior management employees.  No other compensation provided for in this
Agreement shall be deemed a substitute for the Employee's right to participate
in such discretionary bonuses.

     4.    (a)  Participation in Retirement, Medical and Other Plans.  The
                ----------------------------------------------------      
Employee shall participate in any plan that the Bank maintains for the benefit
of its employees if the plan relates to (i) pension, profit-sharing, or other
retirement benefits, (ii) medical insurance or the reimbursement of medical or
dependent care expenses, or (iii) other group benefits, including disability and
life insurance plans.

           (b)  Employee Benefits; Expenses.  The Employee shall participate in
                ---------------------------                                    
any fringe benefits which are or may become available to the Bank's senior
management employees, including for example: any stock option or incentive
compensation plans, club memberships, and any other benefits which are
commensurate with the responsibilities and functions to be performed by the
Employee under this Agreement.  The Employee shall be reim bursed for all
reasonable out-of-pocket business expenses which he shall incur in connection
with his services under this Agreement upon substantiation of such expenses in
accordance with the policies of the Bank.

     5.    Term.  The Bank hereby employs the Employee, and the Employee hereby
           ----                                                                
accepts such employment under this Agreement, for the period commencing on the
Effective Date and ending 36 months thereafter (or such earlier date as is
determined in accordance with Section 9).  Additionally, on each annual
anniversary date from the Effective Date, the Employee's term of employment
shall be extended for an additional one-year period beyond the then effective
expiration date provided the Board determines in a duly adopted resolution that
the performance of the Employee has met the Board's requirements and standards,
and that this Agreement shall be extended.

                                      65
<PAGE>
 
     6.    Loyalty; Noncompetition.
           ----------------------- 

           (a) During the period of his employment hereunder and except for
illnesses, reasonable vacation periods, and reasonable leaves of absence, the
Employee shall devote all his full business time, attention, skill, and efforts
to the faithful performance of his duties hereunder; provided, however, from
time to time, Employee may serve on the boards of directors of, and hold any
other offices or positions in, companies or organizations, which will not
present any conflict of interest with the Bank or any of its subsidiaries or
affiliates, or unfavorably affect the performance of Employee's duties pursuant
to this Agreement, or will not violate any applicable statute or regula tion.
"Full business time" is hereby defined as that amount of time usually devoted to
like companies by similarly situated executive officers.  During the term of his
employment under this Agreement, the Employee shall not engage in any business
or activity contrary to the business affairs or interests of the Bank, or be
gainfully employed in any other position or job other than as provided above.

           (b) Nothing contained in this Paragraph 6 shall be deemed to prevent
or limit the Employee's right to invest in the capital stock or other securities
of any business dissimilar from that of the Bank, or, solely as a passive or
minority investor, in any business.

     7.    Standards.  The Employee shall perform his duties under this
           ---------                                                   
Agreement in accordance with such reasonable standards as the Board may
establish from time to time.  The Bank will provide Employee with the working
facilities and staff customary for similar executives and necessary for him to
perform his duties.

     8.    Vacation and Sick Leave.  At such reasonable times as the Board shall
           -----------------------                                              
in its discretion permit, the Employee shall be entitled, without loss of pay,
to absent himself voluntarily from the performance of his employment under this
Agreement, all such voluntary absences to count as vacation time; provided that:

           (a) The Employee shall be entitled to an annual vacation in
accordance with the policies that the Board periodically establishes for senior
management employees of the Bank.

           (b) The Employee shall not receive any additional compensation from
the Bank on account of his failure to take a vacation, and the Employee shall
not accumulate unused vacation from one fiscal year to the next, except in
either case to the extent authorized by the Board.

           (c) In addition to the aforesaid paid vacations, the Employee shall
be entitled without loss of pay, to absent himself voluntarily from the
performance of his employment with the Bank for such additional periods of time
and for such valid and legitimate reasons as the Board may in its discretion
determine. Further, the Board may grant to the Employee a leave or leaves of
absence, with or without pay, at such time or times and upon such terms and
conditions as such Board in its discretion may determine.

           (d) In addition, the Employee shall be entitled to an annual sick
leave benefit as established by the Board.

     9.    Termination and Termination Pay.  Subject to Section 11 hereof, the
           -------------------------------                                    
Employee's employment hereunder may be terminated under the following
circumstances:

           (a) Death.  The Employee's employment under this Agreement shall
               -----                                                       
terminate upon his death during the term of this Agreement, in which event the
Employee's estate shall be entitled to receive the compensation due the Employee
through the last day of the calendar month in which his death occurred.

           (b) Disability.  The Bank may terminate the Employee's employment
               ----------                                                   
after having established the Employee's Disability.  For purposes of this
Agreement, "Disability" means a physical or mental infirmity which impairs the
Employee's ability to substantially perform his duties under this Agreement and
which results in the Employee becoming eligible for long-term disability
benefits under the Bank's long-term disability plan (or, if the Bank has no such
plan in effect, which impairs the Employee's ability to substantially perform
his duties under this Agreement for a period of one hundred eighty (180)
consecutive days).  The Employee shall be entitled to the

                                      66
<PAGE>
 
compensation and benefits provided for under this Agreement for (i) any period
during the term of this Agreement and prior to the establishment of the
Employee's Disability during which the Employee is unable to work due to the
physical or mental infirmity, or (ii) any period of Disability which is prior to
the Executive's termination of employment pursuant to this Section 9(b).

          (c) Just Cause.  The Board may, by written notice to the Employee,
              ----------                                                    
immediately terminate his employment at any time, for Just Cause.  The Employee
shall have no right to receive compensation or other benefits for any period
after termination for Just Cause.  Termination for "Just Cause" shall mean
termination because of, in the good faith determination of the Board, the
Employee's personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order, or material
breach of any provision of this Agreement.  Notwithstanding the foregoing, the
Employee shall not be deemed to have been terminated for Just Cause unless there
shall have been delivered to the Employee a copy of a resolution duly adopted by
the affirmative vote of not less than a majority of the entire membership of the
Board at a meeting of the Board called and held for the purpose (after
reasonable notice to the Employee and an opportunity for the Employee to be
heard before the Board), finding that in the good faith opinion of the Board the
Employee was guilty of conduct set forth above in the second sentence of this
Subsection (c) and specifying the particulars thereof in detail.

          (d) Without Just Cause.  Subject to Section 11 hereof, the Board may,
              ------------------                                               
by written notice to the Employee, immediately terminate his employment at any
time for a reason other than Just Cause, in which event the Employee shall be
entitled to receive the following compensation and benefits: (i) the salary
provided pursuant to Section 2 hereof, up to the date of termination of the term
(including any renewal term) of this Agreement (the "Termination Date"), plus
said salary for an additional 12-month period, and (ii) the cost to the Employee
of obtaining all health, life, disability and other benefits which the Employee
would have been eligible to participate in through the Termination Date based
upon the benefit levels substantially equal to those that the Bank provided for
the Employee at the date of termination of employment.  Said sum shall be paid,
at the option of the Employee, either (I) in periodic payments over the
remaining term of this Agreement, as if the Employee's employment had not been
terminated, or (II) in one lump sum within ten (10) days of such termination.

     Notwithstanding any provision of this Section (9)d to the contrary:  (1)
the amount payable under clause (i) hereof shall be reduced to the extent that
on the date of the Employee's termination of employment, the present value of
the benefits payable under clauses (i) and (ii) hereof exceeds three times his
average annual compensation based on his most recent five taxable years; and (2)
the aggregate amount payable under clauses (i) and (ii) shall be reduced to the
extent that such payment would cause the Bank to fail to meet any of its
regulatory capital requirements under 12 C.F.R. Part 3.

          (e) Termination or Suspension Under Federal Law.  (1) If the Employee
              -------------------------------------------                      
is removed and/or permanently prohibited from participating in the conduct of
the Bank's affairs by an order issued under Sections 8(e)(4) or 8(g)(1) of the
Federal Deposit Insurance Act ("FDIA") (12 U.S.C. 1818(e)(4) or (g)(1)), all
obligations of the Bank under this Agreement shall terminate, as of the
effective date of the order, but vested rights of the parties shall not be
affected.

          (2) If the Bank is in default (as defined in Section 3(x)(1) of FDIA),
all obligations under this Agreement shall terminate as of the date of default;
however, this Paragraph shall not affect the vested rights of the parties.

          (3) All obligations under this Agreement shall terminate, except to
the extent that continuation of this Agreement is necessary for the continued
operation of the Bank:  (i) by the Comptroller of the Currency (the
"Comptroller"), or his or her designee, at the time that the Federal Deposit
Insurance Corporation ("FDIC") enters into an agreement to provide assistance to
or on behalf of the Bank under the authority contained in Section 13(c) of FDIA;
or (ii) by the Comptroller, or his or her designee, at the time that the
Comptroller, or his or her designee approves a supervisory merger to resolve
problems related to operation of the Bank or when the Bank

                                      67
<PAGE>
 
is determined by the Comptroller to be in an unsafe or unsound condition.  Such
action shall not affect any vested rights of the parties.

          (4)  If a notice served under Section 8(e)(3) or (g)(1) of the FDIA
(12 U.S.C. 1818(e)(3) or (g)(1)) suspends and/or temporarily prohibits the
Employee from participating in the conduct of the Bank's affairs, the Bank's
obligations under this Agreement shall be suspended as of the date of such
service, unless stayed by appropriate proceedings.  If the charges in the notice
are dismissed, the Bank may in its discretion (i) pay the Employee all or part
of the compensation withheld while its contract obligations were suspended, and
(ii) reinstate (in whole or in part) any of its obligations which were
suspended.

          (f) Voluntary Termination by Employee.  Subject to Section 11 hereof,
              ---------------------------------                                
the Employee may voluntarily terminate employment with the Bank during the term
of this Agreement, upon at least 60 days' prior written notice to the Board of
Directors, in which case the Employee shall receive only his compensation,
vested rights and employee benefits up to the date of his termination.

     10.  No Mitigation.  The Employee shall not be required to mitigate the
          -------------                                                     
amount of any payment provided for in this Agreement by seeking other employment
or otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Employee in any subsequent employment.

     11.  Change in Control.
          ----------------- 

          (a) Notwithstanding any provision herein to the contrary, if the
Employee's employment under this Agreement is terminated by the Bank, without
the Employee's prior written consent and for a reason other than Just Cause, in
connection with or within twelve (12) months after any change in control of the
Bank or First Missouri Bancshares, Inc. (the "Corporation"), the Employee shall
be paid an amount equal to the difference between (i) the product of 2.99 times
his "base amount" as defined in Section 280G(b)(3) of the Internal Revenue Code
of 1986, as amended (the "Code") and regulations promulgated thereunder, and
(ii) the sum of any other parachute payments (as defined under Section
280G(b)(2) of the Code) that the Employee receives on account of the change in
control.  Said sum shall be paid in one lump sum within ten (10) days of such
termination.  The term "change in control" shall mean (1) the ownership, holding
or power to vote more than 25% of the Bank's or Corporation's voting stock, (2)
the control of the election of a majority of the Bank's or Corporation's
directors, (3) the exercise of a controlling influence over the management or
policies of the Bank or the Corporation by any person or by persons acting as a
"group" (within the meaning of Section 13(d) of the Securities Exchange Act of
1934), or (4) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors of the Corporation or
the Bank (the "Company Board") (the "Continuing Directors") cease for any reason
to constitute at least two-thirds thereof, provided that any individual whose
election or nomination for election as a member of the Company Board was
approved by a vote of at least two-thirds of the Continuing Directors then in
office shall be considered a Continuing Director.  The term "person" means an
individual other than the Employee, or a corporation, partnership, trust,
association, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization or any other form of entity not specifically listed herein.

          (b) Notwithstanding any other provision of this Agreement to the
contrary, the Employee may voluntarily terminate his employment under this
Agreement within twelve (12) months following a change in control of the Bank or
the Corporation, and the Employee shall thereupon be entitled to receive the
payment described in Section 11(a) of this Agreement, upon the occurrence of any
of the following events, or within ninety (90) days thereafter, which have not
been consented to in advance by the Employee in writing: (i) the requirement
that the Employee move his personal residence, or perform his principal
executive functions, more than thirty-five (35) miles from his primary office as
of the Effective Date of this Agreement; (ii) a material reduction in the
Employee's base compensation as in effect on the Effective Date of this
Agreement or as the same may be increased from time to time; (iii) the failure
by the Bank to continue to provide the Employee with compensation and benefits
provided for under this Agreement, as the same may be increased from time to
time, or with benefits substantially similar to those provided to him under any
of the employee benefit plans in which the Employee now or hereafter becomes a
participant, or the taking of any action by the Bank which would directly or
indirectly reduce any of such benefits or deprive the Employee of any material
fringe benefit enjoyed by him at the time of the change in control;

                                      68
<PAGE>
 
(iv) the assignment to the Employee of duties and responsibilities materially
different from those normally associated with his position as referenced at
Section 1; (v) a failure to elect or reelect the Employee to the Board of
Directors of the Bank if he is serving on the Board on the date of the change in
control; or (vi) a material diminution or reduction in the Employee's
responsibilities or authority (including reporting responsibilities) in
connection with his employment with the Bank.

          (c) Any payments made to the Employee pursuant to this Agreement, or
otherwise, are subject to and conditioned upon their compliance with 12 U.S.C.
Section 1828(k) and any regulations promulgated thereunder.

          (d)  Notwithstanding any provision of this Section 11 to the contrary,
any payment under the provisions of this Section 11 shall be reduced to the
extent that such payment would cause the Bank to fail to meet any of its
regulatory capital requirements under 12 C.F.R. Part 3.

          (e) In the event that any dispute arises between the Employee and the
Bank as to the terms or interpretation of this Agreement, including this Section
11, whether instituted by formal legal proceedings or otherwise, including any
action that the Employee takes to enforce the terms of this Section 11 or to
defend against any action taken by the Bank, the Employee shall be reimbursed
for all costs and expenses, including reasonable attorneys' fees, arising from
such dispute, proceedings or actions, provided that the Employee shall obtain a
final judgement by a court of competent jurisdiction in favor of the Employee.
Such reimbursement shall be paid within ten (10) days of Employee's furnishing
to the Bank written evidence, which may be in the form, among other things, of a
cancelled check or receipt, of any costs or expenses incurred by the Employee.

     12.  Successors and Assigns.
          ---------------------- 

          (a) This Agreement shall inure to the benefit of and be binding upon
any corporate or other successor of the Bank which shall acquire, directly or
indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the Bank.

          (b) Since the Bank is contracting for the unique and personal skills
of the Employee, the Employee shall be precluded from assigning or delegating
his rights or duties hereunder without first obtaining the written consent of
the Bank.

     13.  Amendments.  No amendments or additions to this Agreement shall be
          ----------                                                        
binding unless made in writing and signed by all of the parties, except as
herein otherwise specifically provided.

     14.  Applicable Law.  Except to the extent preempted by Federal law, the
          --------------                                                     
laws of the State of Missouri shall govern this Agreement in all respects,
whether as to its validity, construction, capacity, performance or otherwise.

     15.  Severability.  The provisions of this Agreement shall be deemed
          ------------                                                   
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.

     16.  Entire Agreement.  This Agreement, together with any understanding or
          ----------------                                                     
modifications thereof as agreed to in writing by the parties, shall constitute
the entire agreement between the parties hereto.

                                      69
<PAGE>
 
     IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first hereinabove written.

ATTEST:                          FIRST MISSOURI NATIONAL BANK


/s/ Harry J. Holderieath         By: /s/ Mark L. Smith
-------------------------            ------------------------------
Secretary                            Its: President

WITNESS:


                                     /s/ Gerald W. Elson
-----------------------------        ------------------------------
                                     Gerald W. Elson


                                      70
<PAGE>
 
                             EMPLOYMENT AGREEMENT
                             --------------------

     THIS AGREEMENT is entered into this 8th day of April, 1994, by and between
First Missouri Bancshares, Inc. (the "Holding Company") and Gerald W. Elson (the
"Employee"), effective on the date (the "Effective Date") of the conversion of
First Missouri Federal Savings and Loan Association (the "Association") to a
national bank under the corporate title "First Missouri National Bank" (the
"Bank").

     WHEREAS, the Employee has heretofore been employed by the Association as
Chairman of the Board and Chief Executive Officer and is experienced in all
phases of the business of the Association and the Bank; and

     WHEREAS, the parties desire by this writing to establish and to set forth
the employment relationship between the Holding Company and the Employee.

     NOW, THEREFORE, it is AGREED as follows:

     1.    Employment.  The Employee is employed as the Chairman of the Board
           ----------                                                        
and Chief Executive Officer of the Holding Company.  The Employee shall render
such administrative  and management services for the Holding Company as are
currently rendered and as are customarily performed by persons situated in a
similar executive capacity.  The Employee shall also promote, by entertainment
or otherwise, as and to the extent permitted by law, the business of the Holding
Company.  The Employee's other duties shall be such as the Board of Directors of
the Holding Company ("Board") may from time to time reasonably direct, including
normal duties as an officer of the Holding Company.

     2.    Consideration from Holding Company: Joint and Several Liability.  In
           ---------------------------------------------------------------     
lieu of paying the Employee a base salary during the term of this Agreement, the
Holding Company hereby agrees that to the extent permitted by law, it shall be
jointly and severally liable with the Bank for the payment of all amounts due
under the employment agreement of even date herewith between the Bank and the
Employee.  Nevertheless, the Board may in its discretion at any time during the
term of this Agreement agree to pay the Employee a base salary for the remaining
term of this Agreement.  If the Board agrees to pay such salary, the Board shall
thereafter review, not less often than annually, the rate of the Employee's
salary, and in its sole discretion may decide to increase his salary.

     3.    Discretionary Bonuses.  The Employee shall participate in an
           ---------------------                                       
equitable manner with all other senior management employees of the Holding
Company in discretionary bonuses that the Board may award from time to time to
the Holding Company's senior management employees.  No other compensation
provided for in this Agreement shall be deemed a substitute for the Employee's
right to participate in such discretionary bonuses.

     4.   (a) Participation in Retirement, Medical and Other Plans.  The
              ----------------------------------------------------      
Employee shall participate in any plan that the Holding Company maintains for
the benefit of its employees if the plan relates to (i) pension, profit-sharing,
or other retirement benefits, (ii) medical insurance or the reimbursement of
medical or dependent care expenses, or (iii) other group benefits, including
disability and life insurance plans.

          (b) Employee Benefits; Expenses.  The Employee shall participate in
              ---------------------------                                    
any fringe benefits which are or may become available to the Holding Company's
senior management employees, including for example: any stock option or
incentive compensation plans, club memberships, and any other benefits which are
commensurate with the responsibilities and functions to be performed by the
Employee under this Agreement.  The Employee shall be reimbursed for all
reasonable out-of-pocket business expenses which he shall incur in connection
with his services under this Agreement upon substantiation of such expenses in
accordance with the policies of the Holding Company.

     5.   Term.  The Holding Company hereby employs the Employee, and the
          ----                                                           
Employee hereby accepts such employment under this Agreement, for the period
commencing on the Effective Date and ending 36 months thereafter (or such
earlier date as is determined in accordance with Section 9).  Additionally, on
each annual anniversary date from the Effective Date, the Employee's term of
employment shall be extended for an additional one-year period beyond the then
effective expiration date provided the Board determines in a duly adopted
resolution

                                      71
<PAGE>
 
that the performance of the Employee has met the Board's requirements and
standards, and that this Agreement shall be extended.

     6.   Loyalty; Noncompetition.
          ----------------------- 

          (a) During the period of his employment hereunder and except for
illnesses, reasonable vacation periods, and reasonable leaves of absence, the
Employee shall devote all his full business time, attention, skill, and efforts
to the faithful performance of his duties hereunder; provided, however, from
time to time, Employee may serve on the boards of directors of, and hold any
other offices or positions in, companies or organizations, which will not
present any conflict of interest with the Holding Company or any of its
subsidiaries or affiliates, or unfavorably affect the performance of Employee's
duties pursuant to this Agreement, or will not violate any applicable statute or
regulation.  "Full business time" is hereby defined as that amount of time
usually devoted to like companies by similarly situated executive officers.
During the term of his employment under this Agreement, the Employee shall not
engage in any business or activity contrary to the business affairs or interests
of the Holding Company, or be gainfully employed in any other position or job
other than as provided above.

          (b) Nothing contained in this Paragraph 6 shall be deemed to prevent
or limit the Employee's right to invest in the capital stock or other securities
of any business dissimilar from that of the Holding Company, or, solely as a
passive or minority investor, in any business.

     7.   Standards.  The Employee shall perform his duties under this
          ---------                                                   
Agreement in accordance with such reasonable standards as the Board may
establish from time to time.  The Holding Company will provide Employee with the
working facilities and staff customary for similar executives and necessary for
him to perform his duties.

     8.   Vacation and Sick Leave.  At such reasonable times as the Board shall
          -----------------------                                              
in its discretion permit, the Employee shall be entitled, without loss of pay,
to absent himself voluntarily from the performance of his employment under this
Agreement, all such voluntary absences to count as vacation time; provided that:

          (a) The Employee shall be entitled to an annual vacation in accordance
with the policies that the Board periodically establishes for senior management
employees of the Holding Company.

          (b) The Employee shall not receive any additional compensation from
the Holding Company on account of his failure to take a vacation, and the
Employee shall not accumulate unused vacation from one fiscal year to the next,
except in either case to the extent authorized by the Board.

          (c) In addition to the aforesaid paid vacations, the Employee shall be
entitled without loss of pay, to absent himself voluntarily from the performance
of his employment with the Holding Company for such additional periods of time
and for such valid and legitimate reasons as the Board may in its discretion
determine.  Further, the Board may grant to the Employee a leave or leaves of
absence, with or without pay, at such time or times and upon such terms and
conditions as the Board in its discretion may determine.

          (d) In addition, the Employee shall be entitled to an annual sick
leave benefit as established by the Board.

     9.   Termination and Termination Pay.  Subject to Section 11 hereof, the
          -------------------------------                                    
Employee's employment hereunder may be terminated under the following
circumstances:

          (a) Death.  The Employee's employment under this Agreement shall
              -----                                                       
terminate upon his death during the term of this Agreement, in which event the
Employee's estate shall be entitled to receive the compensation due the Employee
through the last day of the calendar month in which his death occurred.

          (b) Disability.  The Holding Company may terminate the Employee's
              ----------                                                   
employment after having established the Employee's Disability.  For purposes of
this Agreement, "Disability" means a physical or mental infirmity which impairs
the Employee's ability to substantially perform his duties under this Agreement
and

                                      72
<PAGE>
 
which results in the Employee becoming eligible for long-term disability
benefits under the Holding Company's long-term disability plan (or, if the
Holding Company has no such plan in effect, which impairs the Employee's ability
to substantially perform his duties under this Agreement for a period of one
hundred eighty (180) consecutive days).  The Employee shall be entitled to the
compensation and benefits provided for under this Agreement for (i) any period
during the term of this Agreement and prior to the establishment of the
Employee's Disability during which the Employee is unable to work due to the
physical or mental infirmity, or (ii) any period of Disability which is prior to
the Executive's termination of employment pursuant to this Section 9(b).

          (c) Just Cause.  The Board may, by written notice to the Employee,
              ----------                                                    
immediately terminate his employment at any time, for Just Cause.  The Employee
shall have no right to receive compensation or other benefits for any period
after termination for Just Cause.  Termination for "Just Cause" shall mean
termination because of, in the good faith determination of the Board, the
Employee's personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order, or material
breach of any provision of this Agreement.  Notwithstanding the foregoing, the
Employee shall not be deemed to have been terminated for Just Cause unless there
shall have been delivered to the Employee a copy of a resolution duly adopted by
the affirmative vote of not less than a majority of the entire membership of the
Board at a meeting of the Board called and held for the purpose (after
reasonable notice to the Employee and an opportunity for the Employee to be
heard before the Board), finding that in the good faith opinion of the Board the
Employee was guilty of conduct set forth above in the second sentence of this
Subsection (c) and specifying the particulars thereof in detail.

          (d) Without Just Cause.  Subject to Section 11 hereof, the Board may,
              ------------------                                               
by written notice to the Employee, immediately terminate his employment at any
time for a reason other than Just Cause, in which event the Employee shall be
entitled to receive the following compensation and benefits: (i) any salary
provided pursuant to Section 2 hereof, up to the date of termination of the term
(including any renewal term) of this Agreement (the "Termination Date"), plus
said salary for an additional 12-month period, provided that the aggregate
compensation paid to the Employee under this Clause (i) shall not exceed three
times the Employee's total compensation for the most recent calendar year; and
(ii) the cost to the Employee of obtaining all health, life, disability and
other benefits which the Employee would have been eligible to participate in
through the Termination Date based upon the benefit levels substantially equal
to those that the Holding Company provided for the Employee at the date of
termination of employment.  Said sum shall be paid, at the option of the
Employee, either in periodic payments over the remaining term of this Agreement,
as if the Employee's employment had not been terminated, or in one lump sum
within ten (10) days of such termination.

     Notwithstanding any provision of this Subsection (d) to the contrary: (1)
the Holding Company shall not make any payment to the Employee under this
Subsection (d) if (A) such a payment by the Bank under the equivalent provision
of an employment agreement between the Employee and the Bank is then prohibited
by applicable regulation or by order properly issued by the Office of the
Comptroller of the Currency (the "OCC") under 12 U.S.C. Sections 1818 or 1828(k)
(unless a payment by the Holding Company under this Agreement is specifically
authorized by the Federal Reserve Bank of Kansas City) or (B) such payment by
the Holding Company is then prohibited by applicable regulation or by order
properly issued by the Board of Governors of the Federal Reserve System (the
"FRB") under 12 U.S.C. Sections 1818 or 1828(k); and (2) the aggregate amount
payable under clauses (i) and (ii) above shall be reduced to the extent that
such payment would cause the Holding Company to fail to meet any applicable
regulatory capital requirement under 12 C.F.R. Part 225.

          (e) Voluntary Termination by Employee.  Subject to Section 11 hereof,
              ---------------------------------                                
the Employee may voluntarily terminate employment with the Holding Company
during the term of this Agreement, upon at least 60 days' prior written notice
to the Board of Directors, in which case the Employee shall receive only his
compensation, vested rights and employee benefits up to the date of his
termination.

     10.  No Mitigation.  The Employee shall not be required to mitigate the
          -------------                                                     
amount of any payment provided for in this Agreement by seeking other employment
or otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Employee in any subsequent employment.

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<PAGE>
 
     11.  Change in Control.
          ----------------- 

          (a) Notwithstanding any provision herein to the contrary, if the
Employee's employment under this Agreement is terminated by the Holding Company,
without the Employee's prior written consent and for a reason other than Just
Cause, in connection with or within twelve (12) months after any change in
control of the Holding Company, the Employee shall be paid an amount equal to
the difference between (i) the product of 2.99 times his "base amount" as
defined in Section 280G(b)(3) of the Internal Revenue Code of 1986, as amended
(the "Code") and regulations promulgated thereunder, and (ii) the sum of any
other parachute payments (as defined under Section 280G(b)(2) of the Code) that
the Employee receives on account of the change in control.  Said sum shall be
paid in one lump sum within ten (10) days of such termination.  The term "change
in control" shall mean (1) the ownership, holding or power to vote more than 25%
of the Holding Company's voting stock, (2) the control of the election of a
majority of the Holding Company's directors, (3) the exercise of a controlling
influence over the management or policies of the Holding Company by any person
or by persons acting as a "group" (within the meaning of Section 13(d) of the
Securities Exchange Act of 1934), or (4) during any period of two consecutive
years, individuals who at the beginning of such period constitute the Board of
Directors of the Holding Company (the "Company Board") (the "Continuing
Directors") cease for any reason to constitute at least two-thirds thereof,
provided that any individual whose election or nomination for election as a
member of the Company Board was approved by a vote of at least two-thirds of the
Continuing Directors then in office shall be considered a Continuing Director.
The term "person" means an individual other than the Employee, or a corporation,
partnership, trust, association, joint venture, pool, syndicate, sole
proprietorship, unincorporated organization or any other form of entity not
specifically listed herein.

          (b) Notwithstanding any other provision of this Agreement to the
contrary, the Employee may voluntarily terminate his employment under this
Agreement within twelve (12) months following a change in control of the Holding
Company, and the Employee shall thereupon be entitled to receive the payment
described in Section 11(a) of this Agreement, upon the occurrence of any of the
following events, or within ninety (90) days thereafter, which have not been
consented to in advance by the Employee in writing: (i) the requirement that the
Employee move his personal residence, or perform his principal executive
functions, more than thirty-five (35) miles from his primary office as of the
Effective Date of this Agreement; (ii) a material reduction in the Employee's
base compensation as in effect on the Effective Date of this Agreement or as the
same may be increased from time to time; (iii) the failure by the Holding
Company to continue to provide the Employee with compensation and benefits
provided for under this Agreement, as the same may be increased from time to
time, or with benefits substantially similar to those provided to him under any
of the employee benefit plans in which the Employee now or hereafter becomes a
participant, or the taking of any action by the Holding Company which would
directly or indirectly reduce any of such benefits or deprive the Employee of
any material fringe benefit enjoyed by him at the time of the change in control;
(iv) the assignment to the Employee of duties and responsibilities materially
different from those normally associated with his position as referenced at
Section 1; (v) a failure to elect or reelect the Employee to the Board if he is
serving on the Board on the date of the change in control [ONLY APPLICABLE TO
EMPLOYEES WHO SERVE AS DIRECTORS]; or (vi) a material diminution or reduction in
the Employee's responsibilities or authority (including reporting
responsibilities) in connection with his employment with the Holding Company.

          (c) Any payments made to the Employee pursuant to this Agreement, or
otherwise, are subject to and conditioned upon their compliance with 12 U.S.C.
Section 1828(k) and any regulations promulgated thereunder.

          (d) In the event that any dispute arises between the Employee and the
Holding Company as to the terms or interpretation of this Agreement, including
this Section 11, whether instituted by formal legal proceedings or otherwise,
including any action that the Employee takes to enforce the terms of this
Section 11 or to defend against any action taken by the Holding Company, the
Employee shall be reimbursed for all costs and expenses, including reasonable
attorneys' fees, arising from such dispute, proceedings or actions, provided
that the Employee shall obtain a final judgement by a court of competent
jurisdiction in favor of the Employee.  Such reimbursement shall be paid within
ten (10) days of Employee's furnishing to the Holding Company written evidence,
which may be in the form, among other things, of a cancelled check or receipt,
of any costs or expenses incurred by the Employee.

                                      74
<PAGE>
 
          (e) Notwithstanding any provision of this Section 11 to the contrary:
(i) the Holding Company shall not make any payment to the Employee under this
Section 11 if (A) such a payment by the Bank under the equivalent provision of
an employment agreement between the Employee and the Bank is then prohibited by
applicable regulation or by order properly issued by the OCC under 12 U.S.C.
Sections 1818 or 1828(k) (unless a payment by the Holding Company under this
Agreement is specifically authorized by the Federal Reserve Bank of Kansas City)
or (B) such payment by the Holding Company is then prohibited by applicable
regulation or by order properly issued by the FRB under 12 U.S.C. Section 1818
or 1828(k); and (ii) any payment under the provisions of this Section 11 shall
be reduced to the extent that such payment would cause the Holding Company to
meet any applicable regulatory capital requirement under 12 C.F.R. Part 225.

     12.  Successors and Assigns.
          ---------------------- 

          (a) This Agreement shall inure to the benefit of and be binding upon
any corporate or other successor of the Holding Company which shall acquire,
directly or indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the Holding Company.

          (b) Since the Holding Company is contracting for the unique and
personal skills of the Employee, the Employee shall be precluded from assigning
or delegating his rights or duties hereunder without first obtaining the written
consent of the Holding Company.

     13.  Amendments.  No amendments or additions to this Agreement shall be
          ----------                                                        
binding unless made in writing and signed by all of the parties, except as
herein otherwise specifically provided.

     14.  Applicable Law.  Except to the extent preempted by Federal law, the
          --------------                                                     
laws of the State of Missouri shall govern this Agreement in all respects,
whether as to its validity, construction, capacity, performance or otherwise.

     15.  Severability.  The provisions of this Agreement shall be deemed
          ------------                                                   
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.

     16.  Entire Agreement.  This Agreement, together with any understanding or
          ----------------                                                     
modifications thereof as agreed to in writing by the parties, shall constitute
the entire agreement between the parties hereto.

                                      75
<PAGE>
 
     IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first hereinabove written.


ATTEST:                          FIRST MISSOURI BANCSHARES, INC.


/s/ Harry J. Holderieath         By: /s/ Mark L. Smith
-------------------------            ------------------------------
Secretary                            President



WITNESS:


                                     /s/ Gerald W. Elson
-----------------------------        ------------------------------ 
                                           Gerald W. Elson

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