SUBSCRIPTION AGREEMENT FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.

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executed copy of this Subscription Agreement;

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a completed and signed W-9 Request for Taxpayer Identification Number and Certification;

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a check payable to or wire transfer of immediately available funds to First Federal Bancshares of Arkansas, Inc. for the Total Subscription Price; and

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any other information regarding the Subscriber that the Corporation may reasonably request in order to accept the Subscriber’s subscription for the Shares.

(a)

If this Subscription is accepted by the Corporation, the closing of the purchase and sale of the Shares (the “Closing”) shall occur at a time and place as is mutually determined by the parties after all of the conditions provided herein have been satisfied or waived.

(b)

At or prior to the Closing, the Subscriber shall deliver to the Corporation duly executed Subscription Documents and a duly executed Registration Rights Agreement (defined below).

(c)

At or prior to the Closing, the Corporation shall deliver to the Subscriber a certificate or certificates representing the Shares and a duly executed Registration Rights Agreement.

(a)

The Subscriber qualifies as an “accredited investor,” as defined in Rule 501(a) of Regulation D promulgated by the SEC and has such knowledge and experience in financial and business matters to enable it to evaluate the merits and risks of an investment in the Shares.

(b)

The undersigned (i) has adequate means of providing for his or her current needs and possible personal contingencies, (ii) has no need for liquidity in this investment, (iii) believes that the nature and amount of such investment is suitable for the undersigned and consistent with the undersigned’s overall investment program and financial position, (iv) believes that the undersigned’s overall commitment to investments which are not readily marketable is not disproportionate to the undersigned’s net worth and the investment in the Shares will not cause such overall investment commitment to become excessive, (v) is under no present or contemplated future need to dispose of any of the Shares to satisfy any existing or contemplated undertaking, need or indebtedness, (vi) is able to bear the economic risks of his or her investment in the Shares, and (vii) at the present time, can afford a complete loss of such investment.

(c)

The Shares are being acquired (i) solely for investment for the Subscriber’s own account and not as nominee or agent or otherwise on behalf of any other person, and (ii) not with a view to or with any present intention to reoffer, resell, fractionalize, assign, grant any participation interest in, or otherwise distribute the Shares.

(d)

Subscriber recognizes that an investment in the Corporation involves substantial risk and Subscriber is fully cognizant of and understands all of the risk factors related to the purchase of Shares.

(e)

Subscriber has been provided with all materials and information requested by Subscriber and any others representing Subscriber, including any information requested to verify the information furnished, and there has been direct communication between the Corporation and its representatives on the one hand and Subscriber and Subscriber’s representatives, if any, on the other in connection with the information set forth herein. There has been made available to both Subscriber and any advisors of Subscriber the opportunity to ask questions of, and receive answers from the Corporation and the officers and employees of the Corporation concerning the terms and conditions of this Offering and to obtain any additional information deemed necessary to verify the accuracy of the information contained herein.

(f)

The Subscriber is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Arkansas, with full power and authority to execute, deliver and perform this agreement.

(g)

The execution, delivery and performance of this Subscription Agreement by the Subscriber and the consummation by the Subscriber of the transactions contemplated hereby, have been duly authorized by all necessary action on the part of the Subscriber. The Subscriber is not in breach or violation of any provision of its Articles of Organization, Operating Agreement, or any other contract or agreement to which it is a party (as amended in each case).

(h)

This Subscription Agreement has been duly executed and delivered by the Subscriber, constitutes the legal, valid and binding obligation of the Subscriber, and is enforceable against the Subscriber in accordance with its terms.

(i)

The information set forth on the Subscriber Information Schedule attached hereto is accurate and complete.

(j)

Subscriber is the majority shareholder of the Corporation and certain of its members and their representatives serve as directors of the Corporation, and as such, Subscriber has access to all financial information of the Corporation and possesses the ability to ask any questions of the Corporation regarding its financial condition and prospects.

(k)

All information which the Subscriber has provided to the Corporation is correct and complete as of the date set forth below, and if there should be any material change in such information prior to the acceptance of the Subscriber’s subscription, the Subscriber will immediately provide such information to the Corporation.

(a)

The Corporation is a corporation duly organized, validly existing, and in good standing under the laws of the State of Arkansas, with full power and authority to execute, deliver and perform this agreement.

(b)

The execution, delivery and performance of this Subscription Agreement by the Corporation and the consummation by the Corporation of the transactions contemplated hereby, have been duly authorized by all necessary action on the part of the Corporation. The Corporation is not in breach or violation of any provision of its Articles of Incorporation, Bylaws, or any other contract or agreement to which it is a party (as amended in each case).

(c)

This Subscription Agreement has been duly executed and delivered by the Corporation, constitutes the legal, valid and binding obligation of the Corporation, and is enforceable against the Corporation in accordance with its terms.

(d)

The Corporation will file all notices and applications with the NASDAQ Stock Market, LLC (“NASDAQ”) regarding the Shares to be issued hereunder, as may be required by the rules of NASDAQ.

(a)

The shareholders of the Corporation shall have approved the Offering.

(b)

The Corporation and First National Security Company shall have consummated the merger of First National Security Company with and into the Corporation, or the consummation of such merger shall be imminent.

(c)

▇▇▇▇▇▇▇▇ Financial, LLC shall not have withdrawn or modified its fairness opinion with regard to the Offering.

(a)

The Subscriber acknowledges and understands that there are substantial restrictions on the transferability of the Shares under federal and applicable state securities laws and under applicable banking laws, and that Subscriber may not transfer, offer or sell the Shares unless such transfer, offer or sale is pursuant to an effective registration statement under the Act or pursuant to an available exemption from registration under the Act.

(b)

The parties agree and acknowledge that as a condition to Subscriber’s obligations under this Subscription Agreement, both the Corporation and Subscriber shall have entered into a registration rights agreement in a form acceptable to both the Corporation and Subscriber that obligates the Corporation to file one or more registration statements under the Act to register the offer and sale of the Shares (the “Registration Rights Agreement”).

(a)

The Shares will bear a legend substantially to the following effect, until such time as not required under Section 8(a):

(b)

The legend described in subparagraph (a) above will be placed on any new certificates issued (whether because of transfer, loss, destruction or otherwise) with respect to the Shares unless the Corporation is satisfied that such legends are not required.

(c)

Notations of these restrictions will be made in the appropriate records of the Corporation and stop-transfer instructions will be issued to the Corporation’s transfer agent, if any.

Name(s) in which the Subscriber
wishes to hold the Shares:

Bear State Financial Holdings, LLC

Address:

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Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇

Telephone:

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E-mail Address:

Facsimile:

Taxpayer Identification Number:

Number of Shares Subscribed For:

2,291,593

Total Subscription Price:

$18,103,584.70