EXHIBIT 10.4

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                              EMPLOYMENT AGREEMENT

         This is an Employment  Agreement  dated as of October 1, 1999,  between
HARRODSBURG FIRST FINANCIAL BANCORP, INC., a Delaware corporation ("Parent") and
ARTHUR L. FREEMAN ("Executive"),  and joined in by FIRST FEDERAL SAVINGS BANK OF
HARRODSBURG ("Bank"), Parent's wholly owned subsidiary.

                                     RECITAL

         WHEREAS,  Parent  wishes  to employ  Executive  as  Chairman  and Chief
Executive  Officer of Parent and the Bank,  and  Executive  is willing to accept
such employment, upon the terms and conditions contained in this Agreement.

                                    AGREEMENT

         NOW, THEREFORE,  in consideration of the foregoing and of the covenants
contained herein, the parties agree as follows:

         1. Employment.  Parent agrees to employ Executive as Chairman and Chief
Executive  Officer of Parent and the Bank, and Executive hereby agrees to accept
such  employment with Parent and the Bank, for the period provided in Section 6,
all upon the terms and conditions of this Agreement.

         2.  Duties and  Responsibilities.  Executive  shall  perform the duties
customary  for the  position of Chairman  and Chief  Executive  Officer and such
other duties as the Board of Directors of Parent (the "Parent  Board") or of the
Bank (the "Bank Board") may from time to time assign to him. Executive agrees to
use his best efforts for the benefit of Parent and the Bank,  and throughout the
term of this Agreement shall devote his entire time, attention,  and energies to
their business.  Executive shall not engage in other business activities without
Parent's  prior  consent,  whether or not such business  activity is pursued for
profit,  gain or other pecuniary  advantage.  Executive may invest his assets in
such  form or  manner  as will  not  require  any  services  on his  part in the
operation of the affairs of the enterprises in which the investments are made.

         3. Base Compensation.  The Bank agrees to pay Executive during the term
of this Agreement a salary at the rate of $93,600 per year,  payable in cash not
less  frequently  than  monthly,  less any amounts  withheld at the direction of
Executive  or as  otherwise  required  by law;  provided,  that the rate of such
salary  shall be  reviewed by the Bank Board not less often than  annually,  and
Executive  shall be entitled to receive  annually an increase at such percentage
or in such an amount as the Bank Board in its sole discretion may decide at such
time.

         4. Discretionary  Bonus.  Executive shall be entitled to participate in
any  discretionary  bonus that may be  authorized by the Bank Board from time to
time for its senior management employees.

         5. Incentive Compensation,  Participation in Employee Benefit Plans and
Other Benefits.



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                  (a) Parent and the Bank agree to grant  Executive  the initial
incentive  compensation  benefits  set forth in  Appendix  A to this  Agreement.
Executive  shall also be eligible to participate in any stock or other incentive
compensation programs that the Parent Board or the Bank Board adopt from time to
time for senior management employees of Parent or Bank.

                  (b) Executive shall be entitled to participate in all pension,
profit-sharing retirement,  medical coverage or other employee benefit plans and
programs  provided  by  Parent  or Bank  for  which  Executive  is  eligible  in
accordance with the terms of such plans and programs.  Parent and Bank expressly
reserve the right to alter,  modify,  amend or terminate any or all such benefit
plans and programs at any time and for any reason at their sole discretion.

                  (c) Bank shall provide Executive a reasonable  expense account
and such fringe  benefits  that the Parent Board or the Bank Board  provides for
senior  management  employees  of Parent or the Bank.  The Bank shall  reimburse
Executive for all reasonable  out-of-pocket  expenses that  Executive  incurs in
connection with his service for the Bank, subject to Executive's compliance with
the Bank's expense and reimbursement policies.

                  (d) The Bank will provide Executive with an automobile, either
leased or purchased, at no expense to Executive, and pay for all maintenance and
insurance  thereon,  for use in connection with  Executive's  performance of his
duties.  Executive  will account for any personal use of the  automobile  in the
manner prescribed by the Bank from time to time, and acknowledges that the value
of that  personal use will be  reflected as taxable  income on his W-2 form from
the Bank.

         6. Term. The term of employment of Executive under this Agreement shall
be for the  period  commencing  on October  1, 1999 (the  "Effective  Date") and
ending  September  30,  2002;  provided,   however,  that  such  term  shall  be
automatically extended for additional successive 12-month periods thereafter, if
neither  party  gives  written  notice  to the  other at  least  30 days  before
expiration of the original  12-month period or any renewal period  thereafter of
that party's desire to terminate this Agreement.

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

                  (a) Executive  shall be entitled to annual  vacation  leave in
accordance with the policies as are  periodically  established by the Bank Board
for senior management employees of the Bank.

                  (b) Executive  shall not be entitled to receive any additional
compensation  from the Bank on account of his failure to take vacation leave and
Executive  shall not be entitled to accumulate  unused  vacation from one fiscal
year to the next,  except in either  case to the extent  authorized  by the Bank
Board for senior management employees of the Bank.

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                  (c) In addition to the  aforesaid  paid  vacations,  Executive
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 Bank  Board may  authorize.
Further, the Executive shall be entitled to such leave or leaves of absence with
or without pay at such time or times and upon such terms and  conditions  as the
Bank Board in its discretion may determine.

                  (d) In addition, Executive shall be entitled to an annual sick
leave benefit as established by the Bank Board for senior  management  employees
of the  Bank.  If  Executive  does not use any sick  leave  benefit  during  the
applicable  year, such leave shall accrue to subsequent years only to the extent
authorized by the Bank Board for employees of the Bank.

         8.       Loyalty; Confidentiality and Noncompetition

                  (a)     Employment Relationship and Acknowledgments. Executive
acknowledges that:

                           (i)   Executive's employment by Parent  and  the Bank
creates  a  relationship  of confidence and trust between Executive  and  Parent
and the Bank;

                           (ii)  Parent   and   the  Bank  have  a   proprietary
interest  in  documents  and  information applicable  to its  business or to the
business  of  its  clients  and  customers  which may be made known to Executive
during the period of Executive's employment;

                  (b)      Confidentiality.

                           (i)   Restricted Disclosure and Use.  Notwithstanding
any other  provision  of this  Agreement,  unless  Executive  shall first secure
Parent  and the  Bank's  written  consent,  and  except  for  authorized  use in
performance of Executive's duties on behalf of and for the benefit of Parent and
the Bank,  Executive  shall not disclose to any others,  or use, at any time, in
any way, or anywhere,  either during or subsequent to employment with Parent and
the  Bank,  any  trade  secret  or other  confidential  information  (of  either
technical or non-technical nature) of Parent and the Bank.

                           (ii)  Return  of  Materials  Upon  Termination.  Upon
termination  of Executive's  employment,  Executive  shall  promptly  deliver to
Parent and the Bank all confidential  material relating in any way to Parent and
the Bank's  business and which are in the  possession of or under the control of
Executive,  whether made, written or obtained by Executive or others.  Executive
shall  retain no copies of such  materials,  either for  Executive's  own use or
otherwise.

                  (c)      Noncompetition and Non-Solicitation

                           (i)   General.    Executive,  during   and  following
termination  of  employment  with  Parent and the Bank,  shall not  directly  or
indirectly,   individually,   in  partnership  or  through  a  corporation,   as
proprietor,  manager,  executive, major stockholder or consultant,  compete with
Parent

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and the Bank or assist others to so compete.  Except as otherwise stated herein,
this  covenant-not-to-compete  shall be  limited  to:  (1) a period of two years
following  such  termination;  (2) any  business in which Parent or the Bank are
actually engaged or intend to engage within said two year period;  and (3) those
geographical  areas where Parent and the Bank, at the time of said  termination,
are  actually  doing  business  or intend to do  business  within  said two year
period.

                           (ii)     Non-Solicitation  of  Customers.   Executive
further  agrees  that  during  his  employment  and for a  period  of two  years
following  the  date of any  termination  of his  employment,  he will  not,  by
influencing  or  attempting  to  influence  previously  existing  customers,  or
otherwise,  either  directly  or  indirectly,  divert or attempt to divert  from
Parent and the Bank,  any business  Parent and the Bank had enjoyed or solicited
anywhere during the past two years, or in connection with which Executive worked
during the last two years of his employment.

                           (iii)    Non-Solicitation  of  Management  Employees.
Executive  agrees that following any  termination of his employment  with Parent
and the Bank,  he shall not,  directly  or  indirectly,  approach or solicit any
management  employee of Parent and the Bank with a view to hiring such  employee
for any other entity or  persuading  such  employee to leave the  employment  of
Parent and the Bank.

                  (d)      Survival.  The  provisions  of this  Section 8  shall
survive  any  termination  of this Agreement.

         9. Termination and Termination Pay.

         Executive's  employment  under this Agreement  shall be terminated upon
any of the following occurrences:

                  (a) The death of Executive  during the term of this Agreement,
in which event Executive's  estate shall be entitled to receive the compensation
due Executive  through the last day of the calendar  month in which  Executive's
death shall have occurred.

                  (b) The Bank Board may terminate Executive's employment at any
time,  but any  termination  by the Bank Board other than  termination  for Just
Cause,  shall not prejudice  Executive's right to compensation or other benefits
under the Agreement.  Executive  shall have no right to receive  compensation or
other benefits for any period after termination for Just Cause.  Termination for
"Just  Cause"  shall  include  termination   because  of  Executive'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 the Agreement.

                  (c) Except as provided  pursuant to Section 13 herein,  in the
event Executive's  employment under this Agreement is terminated by the Board of
Directors  without  Just Cause,  the Bank shall be  obligated to continue to pay
Executive the salary  provided  pursuant to Section 2 herein,  up to the date of
termination  of the term  (including any renewal term) of this Agreement and the
cost of Executive  obtaining all health,  life,  disability,  and other benefits
which Executive would

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be eligible to  participate  in through such date based upon the benefit  levels
substantially equal to those being provided Executive at the date of termination
of employment.

                  (d) If Executive 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)(l) of the Federal  Deposit  Insurance Act ("FDIA") (12
U.S.C.  1818(e)(4) and (g)(1)), all obligations of the Bank under this Agreement
shall terminate as of the effective date of the order,  but the vested rights of
the parties shall not be affected.

                  (e) 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,  but  this  paragraph  shall  not  affect  any  vested  rights  of  the
contracting parties.

                  (f) All obligations  under this Agreement shall be terminated,
except to the extent determined that continuation of this Agreement is necessary
for the  continued  operation of the Bank:  (i) by the Director of the Office of
Thrift Supervision ("Director of OTS"), or his or her designee, at the time that
the Federal  Deposit  Insurance  Corporation  ("FDIC") 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 FDIA; or (ii) by the
Director of the OTS, or his or her  designee,  at the time that the  Director of
the OTS,  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 of the OTS 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.

                  (g) The voluntary  termination by Executive during the term of
this  Agreement  with the delivery of no less than 60 days written notice to the
Bank Board,  other than pursuant to Section 12(b), in which case Executive shall
be entitled to receive only the  compensation,  vested rights,  and all employee
benefits up to the date of such termination.

                  (h)  Notwithstanding  anything  herein  to the  contrary,  any
payments made to Executive  pursuant to the  Agreement,  or otherwise,  shall be
subject  to and  conditional  upon  compliance  with 12 USC  ss.1828(K)  and any
regualtion promulgated thereunder.

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

        11. Disability.  If Executive shall become disabled or incapacitated to
the extent  that he is unable to  perform  his  duties  hereunder,  by reason of
medically determinable physical or mental impairment,  as determined in the sole
judgment of a doctor  engaged by the Bank Board,  Executive  shall  nevertheless
continue to receive the  compensation  and benefits  provided under the terms of
this

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Agreement as follows:  100% of such  compensation and benefits for the period of
12 months,  but not  exceeding  the  remaining  term of the  Agreement,  and 65%
thereafter for the remainder of the term of the  Agreement.  Such benefits noted
herein shall be reduced by any benefits  otherwise  provided to Executive during
such period under the provisions of disability  insurance coverage in effect for
Bank  employees.  Thereafter,  Executive  shall be eligible to receive  benefits
provided by the Bank under the  provisions of disability  insurance  coverage in
effect  for Bank  employees.  Upon  returning  to active  full-time  employment,
Executive's full compensation as set forth in this Agreement shall be reinstated
as of the date of  commencement  of such  activities.  If  Executive  returns to
active employment on other than a full-time basis, then his compensation (as set
forth in Paragraph 3 of this Agreement) shall be determined in proportion to the
time  spent  in said  employment,  or as shall  otherwise  be  agreed  to by the
parties.

         12. Change in Control

                  (a) Notwithstanding  any provision herein to the contrary,  in
the event of the involuntary  termination of Executive's  employment  under this
Agreement  during the term of this Agreement  following any change in control of
the Bank or Parent,  absent Just Cause,  Executive shall be paid an amount equal
to the  product of 2.99 times  Executive's  "base  amount" as defined in Section
280G(b) (3) of the Internal  Revenue  Code of 1986,  as amended (the "Code") and
any  proposed or final  regulations  thereunder,  less the value of any benefits
provided or rights accelerated by the change in control,  as determined pursuant
to Section  280G of the Code and any proposed or final  regulations  thereunder.
Said sum shall be paid, at the option of  Executive,  either in one (1) lump sum
within  thirty (30) days after such  termination  (discounted  to present  value
using the "prime rate"  published  in The Wall Street  Journal as of the date of
such payment),  or in periodic payments over the next 36 months or the remaining
term of this Agreement  whichever is less, as if Executive's  employment had not
been terminated, and such payments shall be in lieu of any other future payments
which Executive would be otherwise  entitled to receive under Section 10 of this
Agreement.  Notwithstanding  the foregoing,  all sums payable hereunder shall be
reduced  in such  manner  and to such  extent  so  that  no such  payments  made
hereunder when  aggregated  with all other payments or benefits to be made to or
provided by Executive by Parent or the Bank shall be deemed an "excess parachute
payment"  in  accordance  with  Section  280G of the Code and be  subject to the
excise tax provided at Section  4999(a) of the Code.  The term  "control"  shall
refer to the  ownership,  holding or power to vote more than 25% of  Parent's or
the Bank's voting  stock,  the control of the election of a majority of Parent's
or the Bank's  directors,  or the exercise of a controlling  influence  over the
management or policies of Parent or the Bank by any person or by persons  acting
as a group within the meaning of Section 13(d) of the Securities Exchange Act of
1934.  The  term  "person"  means  an  individual  other  than  Executive,  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,  Executive may voluntary  terminate his employment during the term
of this  Agreement  following  a change in control  of the Bank or  Parent,  and
Executive  shall  thereupon  be entitled to receive  the  payment  described  in
Section 12 (a) of this  Agreement,  upon the  occurrence,  or within ninety (90)
days thereafter,  of any of the following events,  which have not been consented
to in advance by

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Executive in writing:  (i) a requirement  that  Executive  perform his principal
executive  functions more than thirty-five  (35) miles from Executive's  primary
office as of the signing of this Agreement; (ii) in the organizational structure
of the Bank or Parent, Executive being required to report to a person or persons
other than the Bank Board or the Parent Board;  (iii) the failure by the Bank or
Parent to maintain  Executive's  base  compensation in effect at the date of the
change in control and the benefits  substantially  comparable (in the aggregate)
to the employee benefits plans,  including material fringe benefit, stock option
and  retirement  plans  existing  at the date of the  change  in  control;  (iv)
Executive being assigned  significant duties and  responsibilities  inconsistent
with Executive's position, duties, responsibilities or status at the date of the
change in control;  (v) the failure to elect or reelect  Executive to the Parent
Board  or the  Bank  Board;  or  (vi) a  material  reduction  or  dimunition  of
Executive's  responsibilities or authority existing at the date of the change in
control.

         13. Successors and Assigns.

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

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

         14.  Amendments.  No amendments or additions to this Agreement shall be
binding  upon the  parties  hereto  unless  made in  writing  and signed by both
parties.

         15.  Applicable  Law. This agreement  shall be governed by all respects
whether as to validity, construction, capacity, performance or otherwise, by the
laws of the State of  Kentucky,  except to the extent that  Federal law shall be
deemed to apply.

         16.  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.

         17. Enforcement. Executive acknowledges that the restrictions contained
in Section 8, in view of the nature of the business in which Parent and the Bank
are engaged,  are  reasonable  and necessary in order to protect the  legitimate
business  interests  of Parent and the Bank and that any  violation of Section 8
would  result in  irreparable  injury to Parent and the Bank.  In the event of a
breach or a threatened  breach by Executive of the Section 8 of this  Agreement,
Parent and the Bank shall be entitled  to an  injunction  restraining  Executive
from the commission of such breach,  and to recover their attorneys' fees, costs
and  expenses  related  to the  breach  or  threatened  breach.  Nothing  herein
contained  shall be construed as  prohibiting  Parent and the Bank from pursuing
any other  remedies  available  to them for such  breach or  threatened  breach,
including the recovery of money damages.  These covenants and disclosures  shall
each be construed as independent of any other provisions in this Agreement,  and
the  existence of any claim or cause of action by Executive  against

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Parent and the Bank,  whether  predicated on this Agreement or otherwise,  shall
not  constitute  a defense  to the  enforcement  by Parent  and the Bank of such
covenants and agreements. If any provision of this Agreement,  including Section
8, is  invalid  in part or in whole,  it will be  deemed  to have been  amended,
whether as to time, area covered or otherwise, as and to the extent required for
its validity under applicable law and, as so amended,  will be enforceable.  The
parties will execute all documents necessary to evidence such amendment.

         18. Arbitration. Any controversy or claim arising out of or relating to
this  Agreement,  or the breach  thereof,  shall be settled  by  arbitration  in
accordance  with the rules then in effect of the district office of the American
Arbitration  Association  ("AAA")  nearest to the home  office of the Bank,  and
judgment upon the award rendered may be entered in any court having jurisdiction
thereof,  except to the extent  that the parties  may  otherwise  reach a mutual
settlement  of such  issue.  Parent or the Bank shall incur the cost of all fees
and  expenses  associated  with filing a request for  arbitration  with the AAA,
whether such filing is made on behalf of Parent, the Bank or Executive,  and the
costs and  administrative  fees  associated  with  employing the  arbitrator and
related  administrative  expenses  assessed by the AAA. Parent or the Bank shall
reimburse Executive for all costs and expenses,  including reasonable attorneys'
fees, arising from such dispute,  proceedings or actions, following the delivery
of the decision of the arbitrator  finding in favor of Executive;  provided that
if such finding is not in favor of Executive then such Executive shall reimburse
Parent or the Bank for the initial filing fee paid by either of them to the AAA.
Further, the settlement of the dispute by the parties to be approved by the Bank
Board or the Parent Board may include a provision for the  reimbursement  by the
Bank or Parent to Executive  for all costs and  expenses,  including  reasonable
attorneys'   fees,   arising  from  such   dispute,   proceedings   or  actions.
Additionally,   the  Bank  Board  or  the  Parent  Board  may   authorize   such
reimbursement  of such costs and  expenses  by  separate  action  upon a written
action and  determination  of such Board  following a final  disposition  of the
matter.  Such  reimbursement  shall be paid  within  ten (10) days of  Executive
furnishing to the Bank or Parent evidence, which may be in the form, among other
things,  of a canceled  check or receipt,  of any costs or expenses  incurred by
Executive.

         19. 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.

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