Document:

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                                                                    Exhibit 10.4

                                     FORM OF
                               FIRST FEDERAL BANK
                           CHANGE IN CONTROL AGREEMENT

         This AGREEMENT is entered into effective and made 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, and First Federal Bancshares, Inc. (the "Holding
Company"), a corporation organized under the laws of the State of Delaware and
the holding company of the Bank and [NAME] ("Executive").

         WHEREAS, the Bank recognizes the substantial contribution Executive has
made to the Bank and wishes to continue to protect Executive's position with the
Bank for the period provided in this Agreement in the event of a Change in
Control (as defined in this Agreement); and

         WHEREAS, Executive has agreed to continue serve in the employ of the
Bank.

         NOW, THEREFORE, in consideration of the contribution and
responsibilities of Executive, and upon the other terms and conditions
hereinafter provided, the parties hereto agree as follows:

1.       TERM OF AGREEMENT.

         The period of this Agreement shall be deemed to have commenced as of
the date first above written and shall continue for a period of thirty-six
(36) full calendar months from the date of this Agreement. Commencing on [DATE]
, and at each anniversary date thereafter, the Board of Directors of the Bank
(the "Board") may extend the term of this Agreement for an additional year so
that the remaining term is a full thirty-six (36) calendar months, unless
Executive elects not to extend the term of the Agreement by providing written
notice to the Board in accordance with Section 5 of the Agreement. The Board
will review the Agreement and Executive's performance annually for purposes
of determining whether to extend the term of the Agreement, and the results
of such review shall be included in the minutes of the Board's meeting.

2.       CHANGE IN CONTROL.

         (a)      Upon the occurrence of a Change in Control (as defined in
paragraph (b) of this Section 2), Executive shall be entitled to the payments
and benefits provided for in Section 3 of this Agreement upon Executive's
termination of employment on or after the date the Change in Control occurs due
to: (i) Executive's dismissal at any time during the term of this Agreement; or
(ii) Executive's resignation at any time during the term of this Agreement
following any demotion, or loss of title, office or significant authority, or
reduction in Executive's 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; provided, however,
Executive may consent in writing to any such demotion, loss, reduction or
relocation. The effect of any written consent of Executive under this Section
2(a) shall be strictly limited to the terms specified in such written consent.

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         (b)      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(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 Bank or the Holding Company within the meaning of the
Home Owners' Loan Act of 1933 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 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 securities of the Bank or the Holding Company
representing 25% or more of the Bank's or the Holding Company's outstanding
securities except for any securities of the Bank purchased by the Holding
Company in connection with the conversion of the Bank to the stock form and any
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 she 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.

         (c)      Notwithstanding any other provision of this Agreement,
Executive shall not have the right to receive termination benefits under this
Agreement upon Executive's 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)
or final cease and desist order, or any material breach of this Agreement. In
determining incompetence, the acts or omissions shall be measured against
standards of professional competence generally prevailing for officers having
comparable positions in the savings institutions 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 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

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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.
Executive shall not have the right to receive compensation or other benefits for
any period after Termination for Cause except for compensation or benefits
already vested. Any stock options and related limited rights granted to
Executive under any stock option plan, or any unvested awards granted to
Executive under any restricted stock benefit plan of the Holding Company or its
subsidiaries, shall become null and void effective upon Executive's receipt of
Notice of Termination For Cause pursuant to Section 5 of this Agreement except
all benefits shall be deemed to have remained in effect if Executive is
reinstated, and shall not be exercisable by or delivered to Executive at any
time subsequent to such Termination For Cause.

3.       TERMINATION BENEFITS.

         (a)      Upon the occurrence of a Change in Control, followed at any
time by the termination of Executive's employment in accordance with the
provisions of Section 2 of this Agreement, the Bank shall be obligated to pay
Executive, or in the event of Executive's subsequent death, Executive's
beneficiary or beneficiaries, or Executive's estate, as the case may be, a sum
equal to three (3) times Executive's average annual compensation for the five
most recently completed taxable years of Executive. For purposes of this Section
3(a), annual compensation shall include base salary and any other taxable
income, 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 profit sharing, employee stock ownership plan and
other retirement contributions or benefits (other than defined benefit pension
benefits), including to any tax-qualified or non-tax-qualified plan or agreement
(whether or not taxable) made or accrued on behalf of Executive for such year.
In addition, for purposes of determining her 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 she would have earned for vesting
and benefit accrual purposes for the remaining term of the Agreement had her
employment not terminated. 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 on a monthly basis during the remaining thirty-six (36) month term of the
Agreement. Such payments shall not be reduced in the event Executive obtains
other employment following termination of employment. However, in the event the
Bank is not in compliance with its minimum capital requirements or if such
payments pursuant to this Section 3 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.

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         (b)      Upon the occurrence of a Change in Control and Executive's
termination of employment in accordance with the provisions of Section 2 of this
Agreement, the Bank will cause to be continued any life, medical, health and
disability or dental insurance plan or arrangement in which Executive
participates (each being a "Welfare Benefit Plan") substantially identical to
the benefit coverage maintained by the Bank for Executive and any of her
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
covered dependent's participation in any such plan or program is barred, the
Holding Company shall arrange to provide Executive and her dependents with
benefits coverage substantially similar to those which Executive and her
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 Executive's dependents.

4.       CHANGE IN CONTROL RELATED PROVISIONS.

         Notwithstanding the preceding paragraphs of Section 3, in no event
shall the aggregate payments or benefits to be made or afforded to Executive
under this Agreement (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.

5.       NOTICE OF TERMINATION.

         (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 detail the facts and circumstances claimed to provide a
basis for termination of Executive's employment under the provision so
indicated.

         (b)      "Date of Termination" shall mean the date specified in the
Notice of Termination (which, in the case of 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

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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 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 5(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.

6.       SOURCE OF PAYMENTS.

         The parties to this Agreement intend that all payments provided for in
this Agreement shall be paid in cash, check or other mutually agreed upon method
from the general funds of the Bank. Further, the Holding Company guarantees such
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.

7.       EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFIT PLANS.

         This Agreement contains the entire understanding between the parties
hereto and supersedes any prior agreement between the Bank and Executive, except
that this Agreement shall not affect or operate to reduce any benefit or
compensation inuring to 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 Executive without reference to
this Agreement.

         Nothing in this Agreement shall confer upon Executive the right to
continue in the employ of the Bank or shall impose on the Bank or its
subsidiaries any obligation to employ or retain Executive in its employ for any
period.

8.       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, the Bank and their respective successors and assigns.

9.       MODIFICATION AND WAIVER.

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

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         (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 or as to any act
other than that specifically waived.

10.      REQUIRED REGULATORY PROVISIONS.

         (a)      The Board may terminate Executive's employment at any time,
but any termination by the board of directors, 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
2 of this Agreement.

         (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 benefit 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(c)(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, 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 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
Office of Thrift Supervision (or his or her designee) at the time the Federal
Deposit Insurance Corporation or the Resolution Trust Corporation 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; or (ii) by the
Director of the Office of Thrift Supervision (or his or her designee) at the
time the Director (or his or her designee) approves a supervisory merger to
resolve problems related to operation of the Bank 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.

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         (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 any rules and regulations promulgated thereunder.

11.      REINSTATEMENT OF BENEFITS UNDER BANK AGREEMENT.

         In the event Executive is suspended and/or temporarily prohibited from
participating in the conduct of the Bank's affairs by a notice described in
Section 10(b) of this Agreement (the "Notice") during the term of this Agreement
and a Change in Control, as defined herein, occurs, the Bank will assume its
obligation to pay and Executive will be entitled to receive all of the
termination benefits provided for under Section 3 of this Agreement upon the
Bank's receipt of a dismissal of charges in the Notice of Termination.

12.      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.

13.      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. In addition, references herein to the
masculine shall apply to both the masculine and the feminine.

14.      GOVERNING LAW.

         The validity, interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the State of Illinois.

15.      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.

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16.      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.

17.      INDEMNIFICATION.

         The Bank shall provide Executive (including his or her legal
representatives, successors and assigns) with coverage under a standard
directors' and officers' liability insurance policy at its expense and shall
indemnify Executive (including his or her legal representatives, successors and
assigns) for reasonable costs and expenses incurred by Executive in defending or
settling any judicial or administrative proceeding, or threatened proceeding,
whether civil, criminal or otherwise, including any appeal or other proceeding
for review.

         Indemnification by the Bank shall be made only upon the final judgment
on the merits in the favor of Executive, in case of settlement, in case of final
judgment against Executive or in the case of final judgment in favor of
Executive other than on the merits, if a majority of the disinterested directors
of the Bank determine Executive was acting in good faith within the scope of
Executive's employment or authority in accordance with 12 C.F.R. section
545.121(c)(iii).

         Any such indemnification of Executive must conform with the notice
provisions of 12 C.F.R. Section 545.121(c)(iii) to indemnify Executive to the
fullest for such expenses and liabilities to include, but not be limited to,
judgments, court costs and attorneys' fees and the cost of reasonable
settlements, such settlements to be approved by the Board, if such action is
brought against Executive in his or her capacity as a officer or director of the
Bank, however, shall not extend to matters as to which Executive is finally
adjudged to be liable for willful misconduct in the performance of his or her
duties.

18.      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.

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                                   SIGNATURES

         IN WITNESS WHEREOF, First Federal Bank and First Federal Bancshares,
Inc. have caused this Agreement, to be executed 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

ATTEST:                                       FIRST FEDERAL BANCSHARES, INC.
                                              (Guarantor)

______________________________            By: _________________________________
Secretary                                     For the Entire Board of Directors

SEAL

WITNESS:                                      EXECUTIVE

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

                                        9<PAGE>

                                                                    Exhibit 10.5

                               First Federal Bank
                      Employee Severance Compensation Plan

SECTION 1.01      PURPOSE.

The purpose of this First Federal Bank, F.S.B. Employee Severance Compensation
Plan (the "Plan") is to assure the services of employees of the Bank in the
event of a Change in Control (as defined in Section 2.01 of the Plan). The
benefits contemplated by the Plan recognize the value to the Bank of its
employees and the potential effect upon the Bank resulting from the
uncertainties of continued employment, reduced employee benefits, management
changes and relocations that may arise in the event of a Change in Control. The
Board of Directors of the Bank believes that the Plan will also aid the Bank in
attracting and retaining the qualified individuals essential to the success of
the Bank and will reduce the distractions and other adverse effects on the
performance of employees in the event of a Change in Control.

SECTION 2.01      DEFINITIONS.

In this Plan, whenever the context so indicates, the singular or the plural
number and the masculine or feminine gender shall be deemed to include the
other, the terms "he," "his," and "him," shall refer to a Participant and,
except as otherwise provided, or unless the context otherwise requires, the
capitalized terms shall have the following meanings:

(a) "Annual Compensation" of a Participant means and includes all wages and
salary paid or accrued by the Employer with respect to the Participant's service
during the 12 consecutive-month period ending on the last day of the month
preceding the date the Participant's employment terminates.

(b) "Bank" means First Federal Bank, Colchester, Illinois and any successor to
First Federal Bank.

(c) "Board of Directors" means the Board of Directors of the Bank.

(d) "Change in Control" of the Holding Company or the Bank shall mean an event
of a nature that: (i) would be required to be reported in response to Item 1(a)
of the Current Report on Form 8-K, as in effect on the date hereof, pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, 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 as set forth under the rules and regulations of
the OTS, the Board of Directors shall substitute its judgment for that of the
OTS); or (iii) without limitation 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 20% or more of the
Bank's or the Holding Company's

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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 Holding Company or its
subsidiaries, or (B) individuals who constitute the Board of Directors on the
date hereof (the "Incumbent Board") cease for any reason to constitute at least
a majority thereof, provided that any person becoming a director subsequent to
the date hereof whose election was approved by a vote of at least three-quarters
of the directors comprising the Incumbent Board, or whose nomination for
election by the Holding Company's stockholders was approved by a Nominating
Committee solely composed of members which are Incumbent Board members, 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 or is effectuated 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 federal regulatory approvals not including the lapse
of any statutory waiting periods, or (D) a proxy statement has been distributed
soliciting proxies from stockholders of the Holding Company, by someone other
than the current management of the Holding Company, seeking stockholder approval
of a plan of reorganization, merger or consolidation of the Holding Company or
Bank with one or more corporations as a result of which the outstanding shares
of the class of securities then subject to such plan or transaction are
exchanged for or converted into cash or property or securities not issued by the
Bank or the Holding Company shall be distributed, or (E) a tender offer is made
by a person other than the Holding Company for 20% or more of the voting
securities of the Bank or Holding Company then outstanding.

(e) "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. Additionally, a medical doctor selected or approved by the
Board of Directors must advise the Board of Directors that it is either not
possible to determine if or when such Disability will terminate or that it
appears probable that such Disability will be permanent during the remainder of
the employee's lifetime.

(f) "Effective Date" means [DATE].

(g) "Employer" means (i) the Bank, (ii) the Holding Company or (iii) any
subsidiary of the Bank or the Holding Company that has adopted the Plan pursuant
to the provision of Article VI.

(h) "Holding Company" means First Federal Bancshares, Inc., the holding company
of the Bank.

(i) "Participant" means an employee of an Employer who meets the eligibility
requirements of Article III.

(j) "Plan" means this First Federal Bank, F.S.B. Employee Severance Compensation
Plan.

(k) "Termination for Cause" means termination of employment because of the
Participant's personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit,

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intentional failure to perform stated duties, willful violation of any law, rule
or regulation (other than traffic violations or other similar offenses) or any
final cease-and-desist order.

SECTION 3.01      ELIGIBILITY.

(a) Every employee of an Employer shall be eligible to participate in this Plan
upon the completion of a 12 consecutive-month period during which the employee
has been credited with at least 500 hours of service.

(b) Notwithstanding paragraph (a) of this Section 3.01, any employee who has
entered into an employment or change in control agreement with an Employer that
is in effect at the time the employee's employment terminates shall not be
entitled to participate in this Plan.

SECTION 4.01      RIGHT TO BENEFITS.

(a) If a Change in Control occurs, a Participant shall be entitled to receive
benefits under this Plan from his Employer if, within one (1) year of the Change
in Control, he terminates employment for any of the following reasons:

         (i) Dismissal by the Employer or the successor to the Employer for any
         reason other than Termination for Cause;

         (ii) A reduction of the Participant's base salary or rate of
         compensation from that in effect immediately prior to the Change in
         Control or from any increase that occurs subsequent to the Change in
         Control;

         (iii) A material change in the Participant's functions, duties or
         responsibilities which would cause the Participant's position to be one
         of lesser responsibility, importance or scope;

         (iv) A relocation of the Participant's principal place of employment by
         more than twenty-five (25) miles from the location of the Participant's
         principal place of employment immediately prior to the Change in
         Control; provided that the place of relocation is not closer to the
         Participant's primary residence;

         (v) A material reduction in the benefits and perquisites available to
         the Participant immediately prior to the Change in Control;

         (vi) A successor to the Employer fails or refuses to assume the
         Employer's obligations under this Plan, as required by Article VII; or

         (vii) The Employer, or any successor to the Employer, breaches any
         provisions of this Plan.

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SECTION 4.02      DETERMINATION OF BENEFITS.

(a) Each Participant entitled to a Payment under this Plan shall receive from
his Employer or any successor to his Employer, a lump sum cash payment equal to
one-twenty-sixth of his or her Annual Compensation for each calendar year or
fraction thereof during which he or she was employed by an Employer or any
successor to an Employer. Notwithstanding the preceding sentence, a Participant
shall not receive a severance benefit in excess of 100% of his or her Annual
Compensation.

(b) Notwithstanding the provisions of paragraph (a) of this Section 4.02, if any
of the payments and benefits provided to a Participant under this Plan or
otherwise constitute an "excess parachute payment" for purposes of Sections 280G
and 4999 of the Internal Revenue Code of 1986, as amended, then the benefits
provided under this Plan to the Participant shall be reduced to the extent that
they no longer constitute an excess parachute payment.

(c) A Participant shall not be required to mitigate the benefits provided under
this Plan in any way, including seeking other employment.

(d) The benefits provided under this Plan shall not be in lieu of or reduced by
any compensation earned by the Participant as a result of employment following
his termination of employment with his Employer.

(e) Neither the provisions of this Plan nor the benefits provided for under this
Plan shall reduce any amounts otherwise payable to a Participant under any plan
or arrangement of the Participant's Employer.

SECTION 4.03      TIME OF PAYMENT.

Any Participant entitled to benefits under this Plan shall receive payment of
those benefits from the Employer or the successor to the Employer, in cash and
in full, not later than thirty (30) business days after the termination of the
Participant's employment. If any Participant should die after becoming entitled
to benefits under this Plan but before he has received payment of the benefits,
then the Employer or the successor to the Employer shall pay the benefits, in
full, to the Participant's named beneficiary, if living, or, if not living, to
the Participant's personal representative on behalf of or for the benefit of the
Participant's estate.

SECTION 4.04      SUSPENSION OF PAYMENT.

Notwithstanding the foregoing, no payments or portions thereof shall be made
under this Plan, if such payment or portion would result in the Bank failing to
meet its minimum regulatory capital requirements as required by 12 C.F.R.
Section 567.2. Any payments or portions thereof not paid shall be suspended
until such time as their payment would not result in a failure to meet the
Bank's minimum

                                     Page 4
<PAGE>

regulatory capital requirements. Any portion of benefit payments which have not
been suspended will be paid to Participants on an equitable basis, pro rata,
based upon amounts due each Participant.

SECTION 5.01      PARTICIPATING EMPLOYERS.

Upon approval by the Board of Directors of this Plan, any subsidiary of the Bank
or the Holding Company may adopt this Plan for the benefit of its employees.
Upon adoption, the subsidiary shall become an Employer for purposes of this Plan
and the provisions of the Plan shall be fully applicable to the employees of
that subsidiary. For this purpose, the term "subsidiary" means any corporation
in which the Bank or the Holding Company, directly or indirectly, holds a
majority of the voting power of its outstanding shares of capital stock.

SECTION 5.02      SUCCESSORS TO THE EMPLOYERS.

The Bank and the Holding Company shall require that any successor or assignee,
whether direct or indirect, by purchase, merger, consolidation or otherwise, to
all or substantially all the business or assets of the Bank or the Holding
Company, expressly and unconditionally to assume and agree to perform the
obligations of the Employers under this Plan.

SECTION 6.01      ADMINISTRATION.

The Board of Directors or a committee appointed by the Board of Directors shall
administer the Plan. Subject to the specific provisions of the Plan, the Board
of Directors or the committee shall have the authority to adopt, amend, alter
and repeal any administrative rules, guidelines or practices it may consider
advisable with respect to the Plan. The Board of Directors or the committee
shall also have the authority to interpret the provisions of the Plan and to
resolve all disputes arising in connection with the Plan. The Board of Directors
or the committee may correct any defect or supply any omission or reconcile any
inconsistency in the Plan in the manner and to the extent it deems appropriate
to carry out the purpose of the Plan. The decisions and interpretations of the
Board of Directors or the committee shall be final and binding. Any action of
the Board of Directors or the committee with respect to the administration of
the Plan shall be taken pursuant to a majority vote or by the unanimous written
consent of the members of the Board of Directors or the committee, as
appropriate.

SECTION 6.02.     CLAIMS AND REVIEW PROCEDURES.

(a) Claims procedure. If any person believes he or she is being denied any
rights or benefits under the Plan, such person may file a claim in writing with
the Board. If any such claim is wholly or partially denied, the Board will
notify such person of its decision in writing. Such notification will be written
in a manner calculated to be understood by such person and will contain (i)
specific reasons for the denial, (ii) specific reference to pertinent Plan
provisions, (iii) a description of any additional material or information
necessary for such person to perfect such claim and an explanation of why such
material or information is necessary and (iv) information as to the steps to be
taken if

                                     Page 5
<PAGE>

the person wishes to submit a request for review. Such notification will be
given within 90 days after the claim is received by the Board (or within 180
days, if special circumstances require an extension of time for processing the
claim, and if written notice of such extension and circumstances is given to
such person within the initial 90 day period). If such notification is not given
within such period, the claim will be considered denied as of the last day of
such period and such person may request a review of his claim.

(b) Review procedure. Within 60 days after the date on which a person receives a
written notice of a denied claim (or, if applicable, within 60 days after the
date on which such denial is considered to have occurred) such person (or his
duly authorized representative) may (i) file a written request with the Board
for a review of his denied claim and of pertinent documents and (ii) submit
written issues and comments to the Board. The Board will notify such person of
its decision in writing. Such notification will be written in a manner
calculated to be understood by such person and will contain specific reasons for
the decision as well as specific references to pertinent Plan provisions. The
decision on review will be made within 60 days after the request for review is
received by the Board (or within 120 days, if special circumstances require an
extension of time for processing the requests such as an election by the Board
to hold a hearing, and if written notice of such extension and circumstances is
given to such person within the initial 60 day period). If the decision on
review is not made within such period, the claim will be considered denied.

SECTION 6.03      NAMED FIDUCIARY.

The Board will be a "named fiduciary" for purposes of Section 402(a)(1) of ERISA
with authority to control and manage the operation and administration of the
Plan, and will be responsible for complying with all of the reporting and
disclosure requirements of Part 1 of Subtitle B of Title I of ERISA.

SECTION 7.01      AMENDMENT AND TERMINATION.

(a) At any time prior to a Change in Control, the Bank may amend or terminate
the Plan by a resolution adopted by a majority of the Board of Directors. Any
amendment or termination of the Plan by the Bank shall apply equally to all
Employers. Further, at any time prior to a Change in Control, any Employer may
terminate its participation in the Plan by a resolution adopted by a majority of
its board of directors.

(b) The form of any amendment to the Plan shall be a written instrument signed
by a duly authorized officer or officers of the Bank, certifying that the
amendment has been approved by the Board of Directors.

SECTION 7.02      NO ATTACHMENT.

(a) Except as required by law, no right to receive benefits under this Plan
shall be subject to anticipation, commutation, alienation, sale, assignment,
encumbrance, charge, pledge, or

                                     Page 6
<PAGE>

hypothecation, or to execution, attachment, levy, or similar process or
assignment by operation of law, and any attempt, voluntary or involuntary, to
affect such action shall be null, void, and of no effect.

(b) The provisions of this Plan shall be binding upon, and inure to the benefit
of, each Participant, the Employers and their respective successors and assigns.

SECTION 7.03      LEGAL FEES AND EXPENSES.

All reasonable legal fees and other expenses paid or incurred by a Participant
or an Employer with respect to any claim under this Plan shall be paid or
reimbursed to the prevailing party by the other party in any legal judgment,
arbitration or settlement.

SECTION 7.04      APPLICABLE LAW.

The laws of the State of Illinois shall be controlling law in all matters
relating to the Plan to the extent not preempted by federal law.

SECTION 7.05      SEVERABILITY.

If any provision of this Plan is held illegal or invalid, the illegality or
invalidity of that provision shall not affect the remaining provisions of the
Plan and the Plan shall be construed and enforced as if the illegal or invalid
provision had not been included.

SECTION 7.06      EMPLOYMENT STATUS.

This Plan does not constitute a contract of employment or impose on any Employer
any obligation to retain a Participant, to maintain the status of the
Participant's employment, or to change the Employer's policies regarding
termination of employment.

SECTION 8.01      REQUIRED PROVISIONS.

(a) An Employer may terminate a Participant's employment at any time, but any
termination by the Employer, other than Termination for Cause, shall not
otherwise prejudice the Participant's right to compensation or other benefits
under this Plan.

(b) If a Participant is suspended and/or temporarily prohibited from
participating in the conduct of the Bank's affairs by a notice served under
Sections 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 Plan 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 the Participant all or part of the compensation withheld while the
obligations were suspended and (ii) reinstate (in whole or in part) any of the
obligations which were suspended.

                                     Page 7
<PAGE>

(c) If a Participant 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, 12 U.S.C. Section 1818(e)(4) or
(g)(1), all obligations of the Bank under this Plan shall terminate as of the
effective date of the order.

(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 Plan shall terminate as of the date of default; provided, however,
that this paragraph shall not affect any vested rights of the parties to this
Plan.

(e) Any payments made to a Participant pursuant to this Plan, or otherwise, are
subject to and conditioned upon their compliance with 12 U.S.C. Section 1828(k)
and any regulations promulgated thereunder.

Having been adopted by the Board of Directors on [DATE], this Plan is executed
by a duly authorized officer of the Bank on this [DATE].

Attest

------------------------------------           ---------------------------------
                                               For the Entire Board of Directors

                                     Page 8

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