Document:

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                                                                    EXHIBIT 10.2

                                 LOAN AGREEMENT

      THIS LOAN AGREEMENT ("Loan Agreement") is made and entered into as of the
_____day of ________, 2004, by and between the FIRST FEDERAL SAVINGS AND LOAN
ASSOCIATION EMPLOYEE STOCK OWNERSHIP PLAN TRUST ("Borrower"), a trust forming
part of the First Federal Savings and Loan Association Employee Stock Ownership
Plan ("ESOP"); and KENTUCKY FIRST FEDERAL BANCORP, INC. ("Lender"), a
corporation organized and existing under the laws of the United States of
America.

                               W I T N E S S E T H

      WHEREAS, the Borrower is authorized to purchase shares of common stock of
Kentucky First Federal Bancorp, Inc. ("Common Stock"), either directly from the
Company or in open market purchases in an amount not to exceed _______ shares of
Common Stock.

      WHEREAS, the Borrower is authorized to borrow funds from the Lender for
the purpose of financing authorized purchases of Common Stock; and

      WHEREAS, the Lender is willing to make a loan to the Borrower for such
purpose.

      NOW, THEREFORE, the parties agree hereto as follows:

                                    ARTICLE I

                                   DEFINITIONS

      The following definitions shall apply for purposes of this Loan Agreement,
except to the extent that a different meaning is plainly indicated by the
context:

      Business Day means any day other than a Saturday, Sunday or other day on
which banks are authorized or required to close under federal or local law or
regulation.

      Code means the Internal Revenue Code of 1986, as amended (including the
corresponding provisions of any succeeding law).

      Default means an event or condition which would constitute an Event of
Default. The determination as to whether an event or condition would constitute
an Event of Default shall be determined without regard to any applicable
requirements of notice or lapse of time.

      ERISA means the Employee Retirement Income Security Act of 1974, as
amended (including the corresponding provisions of any succeeding law).

      Event of Default means an event or condition described in Article 5.

      Loan means the loan described in section 2.1

      Loan Documents means, collectively, the Loan Agreement, the Promissory
Note and the Pledge Agreement and all other documents now or hereafter executed
and delivered in connection with such documents, including all amendments,
modifications and supplements of or to all such documents.

      Pledge Agreement means the agreement described in section 2.8(a).

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      Principal Amount means the face amount of the Promissory Note, determined
as set forth in section 2.1(c).

      Promissory Note means the promissory note described in section 2.3.

      Register means the register described in section 2.9.

                                   ARTICLE II

                           THE LOAN; PRINCIPAL AMOUNT;
                       INTEREST; SECURITY; INDEMNIFICATION

      Section 2.1 The Loan; Principal Amount.

      (a) The Lender hereby agrees to lend to the Borrower such amount, and at
such time, as shall be determined under this Section 2.1; provided, however,
that in no event shall the aggregate amount lent under this Loan Agreement from
time to time exceed the greater of (i) $_________ or (ii) the aggregate amount
paid by the Borrower to purchase up to _______ shares of Common Stock.

      (b) Subject to the limitations of Section 2.1(a), the Borrower shall
determine the amounts borrowed under this Agreement, and the time at which such
borrowings are effected. Each such determination shall be evidenced in a writing
which shall set forth the amount to be borrowed and the date on which the Lender
shall disburse such amount, and such writing shall be furnished to the Lender by
notice from the Borrower. The Lender shall disburse to the Borrower the amount
specified in each such notice on the date specified therein or, if later, as
promptly as practicable following the Lender's receipt of such notice; provided,
however, that the Lender shall have no obligation to disburse funds pursuant to
this Agreement following the occurrence of a Default or an Event of Default
until such time as such Default or Event of Default shall have been cured.

      (c) For all purposes of this Loan Agreement, the Principal Amount on any
date shall be equal to the excess, if any, of:

            (i)   the aggregate amount disbursed by the Lender pursuant to
                  section 2.1(b) on or before such date; over

            (ii)  the aggregate amount of any repayments of such amounts made
                  before such date.

The Lender shall maintain on the Register a record of, and shall record in the
Promissory Note, the Principal Amount, any changes in the Principal Amount and
the effective date of any changes in the Principal Amount.

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      Section 2.2 Interest.

      (a) The Borrower shall pay to the Lender interest on the Principal Amount,
for the period commencing with the first disbursement of funds under this Loan
Agreement and continuing until the Principal Amount shall be paid in full, at
the rate of _____ percent (___%) per annum. Interest payable under this
Agreement shall be computed on the basis of a year of 365 days and actual days
elapsed (including the first day but excluding the last) occurring during the
period to which the computation relates.

      (b) Accrued interest on the Principal Amount shall be payable by the
Borrower on the dates set forth in Schedule I to the Promissory Note. All
interest on the Principal Amount shall be paid by the Borrower in immediately
available funds.

      (c) Anything in the Loan Agreement or the Promissory Note to the contrary
notwithstanding, the obligation of the Borrower to make payments of interest
shall be subject to the limitation that payments of interest shall not be
required to be made to the Lender to the extent that the Lender's receipt
thereof would not be permissible under the law or laws applicable to the Lender
limiting rates of interest which may be charged or collected by the Lender. Any
such payment referred to in the preceding sentence shall be made by the Borrower
to the Lender on the earliest interest payment date or dates on which the
receipt thereof would be permissible under the laws applicable to the Lender
limiting rates of interest which may be charged or collected by the Lender. Such
deferred interest shall not bear interest.

      Section 2.3 Promissory Note.

      The Loan shall be evidenced by the Promissory Note of the Borrower
attached hereto as an exhibit payable to the order of the lender in the
Principal Amount and otherwise duly completed.

      Section 2.4 Payment of Trust Loan.

      The Principal Amount of the Loan shall be repaid in accordance with
Schedule I to the Promissory Note on the dates specified therein until fully
paid.

      Section 2.5 Prepayment.

      The Borrower shall be entitled to prepay the Loan in whole or in part, at
any time and from time to time; provided, however, that the Borrower shall give
notice to the Lender of any such prepayment; and provided, further, that any
partial prepayment of the Loan shall be in an amount not less than $1,000. Any
such prepayment shall be: (a) permanent and irrevocable; (b) accompanied by all
accrued interest through the date of such prepayment; (c) made without premium
or penalty; and (d) applied on the inverse order of the maturity of the
installment thereof unless the Lender and the Borrower agree to apply such
prepayments in some other order.

      Section 2.6 Method of Payments.

      (a) All payments of principal, interest, other charges (including
indemnities) and other amounts payable by the Borrower hereunder shall be made
in lawful money of the United States, in immediately available funds, to the
Lender at the address specified in or pursuant to this Loan Agreement for
notices to the Lender, on the date on which such payment shall become due. Any
such payment made on such date but after such time shall, if the amount paid
bears interest, and except as expressly provided to the contrary herein, be
deemed to have been made on, and interest shall continue to accrue and be
payable thereon until, the next succeeding

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Business Day. If any payment of principal or interest becomes due on a day other
than a Business Day, such payment may be made on the next succeeding Business
Day, and when paid, such payment shall include interest to the day on which
payment is in fact made.

      (b) Notwithstanding anything to the contrary contained in this Loan
Agreement or the Promissory Note, the Borrower shall not be obligated to make
any payment, repayment or prepayment on the Promissory Note if doing so would
cause the ESOP to cease to be an employee stock ownership plan within the
meaning of section 4975(e)(7) of the Code or qualified under section 401(a) of
the Code or cause the Borrower to cease to be a tax exempt trust under section
501(a) of the Code or if such act or failure to act would cause the Borrower to
engage in any "prohibited transaction" as such term is defined in the section
4975(c) of the Code and the regulations promulgated thereunder which is not
exempted by section 4975(c)(2) or (d) of the Code and the regulations
promulgated thereunder or in section 406 of ERISA and the regulations
promulgated thereunder which is not exempted by section 408(b) of ERISA and the
regulations promulgated thereunder; provided, however, that in each case, the
Borrower, may act or refrain from acting pursuant to this section 2.6(b) on the
basis of an opinion of counsel, and any opinion of such counsel. The Borrower
may consult with counsel, and any opinion of such counsel shall be full and
complete authorization and protection in respect of any action taken or suffered
or omitted by it hereunder in good faith and in accordance with such opinion of
counsel. Nothing contained in this section 2.6(b) shall be construed as imposing
a duty on the Borrower to consult with counsel. Any obligation of the Borrower
to make any payment, repayment or prepayment on the Promissory Note or refrain
from taking any other act hereunder or under the Promissory Note which is
excused pursuant to this section 2.6(b) shall be considered a binding obligation
of the Borrower, or both, as the case may be, for the purposes of determining
whether a Default or Event of Default has occurred hereunder or under the
Promissory Note and nothing in this section 2.6(b) shall be construed as
providing a defense to any remedies otherwise available upon a Default or an
Event of Default hereunder (other than the remedy of specific performance).

      Section 2.7 Use of Proceeds of Loan.

      The entire proceeds of the Loan shall be used solely for acquiring shares
of Common Stock, and for no other purpose whatsoever.

      Section 2.8 Security.

      (a) In order to secure the due payment and performance by the Borrower of
all of its obligations under this Loan Agreement, simultaneously with the
execution and delivery of this Loan Agreement by the Borrower, the Borrower
shall:

            (i)   pledge to the Lender as Collateral (as defined in the Pledge
                  Agreement), and grant to the Lender a first priority lien on
                  and security interest in, the Common Stock purchased with the
                  Principal Amount, by the execution and delivery to the lender
                  of the Pledge Agreement attached hereto as an exhibit; and

            (ii)  execute and deliver, or cause to be executed and delivered,
                  such other agreement, instruments and documents as the Lender
                  may reasonably require in order to effect the purposes of the
                  Pledge Agreement and this Loan Agreement.

      (b) The Lender shall release from encumbrance under the Pledge Agreement
and transfer to the Borrower, as of the date on which any payment or repayment
of the Principal

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Amount is made, a number of shares of Common Stock held as Collateral determined
pursuant to the applicable provisions of the ESOP.

      Section 2.9 Registration of the Promissory Note.

      (a) The Lender shall maintain a Register providing for the registration of
the Principal Amount and any stated interest and of transfer and exchange of the
Promissory Note. Transfer of the Promissory Note may be effected only by the
surrender of the old instrument and either the reissuance by the Borrower of the
old instrument to the new holder or the issuance by the Borrower of a new
instrument to the new holder. The old Promissory Note so surrendered shall be
canceled by the Lender and returned to the Borrower after such cancellation.

      (b) Any new Promissory Note issued pursuant to section 2.9(a) shall carry
the same rights to interest (unpaid and to accrue) carried by the Promissory
Note so transferred or exchanged so that there will not be any loss or gain of
interest on the note surrender. Such new Promissory Note shall be subject to all
of the provisions and entitled to all of the benefits of this Agreement. Prior
to due presentment for registration or transfer, the Borrower may deem and treat
the registered holder of any Promissory Note as the holder thereof for purposes
of payment and other purposes. A notation shall be made on each new Promissory
Note of the amount of all payments of principal and interest theretofore paid.

                                   ARTICLE III
                 REPRESENTATIONS AND WARRANTIES OF THE BORROWER

      The Borrower hereby represents and warrants to the Lender as follows:

      Section 3.1 Power, Authority, Consents.

      The Borrower has the power to execute, deliver and perform this Loan
Agreement, the Promissory Note and Pledge Agreement, all of which have been duly
authorized by all necessary and proper corporate or other action.

      Section 3.2 Due Execution, Validity, Enforceability.

      Each of the Loan Documents, including, without limitation, this Loan
Agreement, the Promissory Note and the Pledge Agreement, has been duly executed
and delivered by the Borrower; and each constitutes the valid and legally
binding obligation of the Borrower, enforceable in accordance with its terms.

      Section 3.3 Properties, Priority of Liens.

      The liens which have been created and granted by the Pledge Agreement
constitute valid, first liens on the properties and assets covered by the Pledge
Agreement, subject to no prior or equal lien.

      Section 3.4 No Defaults, Compliance with Laws.

      The Borrower is not in default in any material respect under any
agreement, ordinance, resolution, decree, bond, note, indenture, order or
judgment to which it is a party or by which it is bound, or any other agreement
or other instrument by which any of the properties or assets owned by it is
materially affected.

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      Section 3.5 Purchase of Common Stock.

      Upon consummation of any purchase of Common Stock by the Borrower with the
proceeds of the Loan, the Borrower shall acquire valid, legal and marketable
title to all of the Common Stock so purchased, free and clear of any liens,
other than a pledge to the Lender of the Common Stock so purchased pursuant to
the Pledge Agreement. Neither the execution and delivery of the Loan Documents
nor the performance of any obligation thereunder violates any provisions of law
or conflicts with or results in a breach of or creates (with or without the
giving of notice of lapse of time, or both) a default under any agreement to
which the Borrower is a party or by which it is bound or any of its properties
is affected. No consent of any federal, state, or local governmental authority,
agency, or other regulatory body, the absence of which could have a materially
adverse effect on the Borrower or the Trustee, is or was required to be obtained
in connection with the execution, delivery, or performance of the Loan Documents
and the transaction contemplated therein or in connection therewith, including
without limitation, with respect to the transfer of the shares of Common Stock
purchased with the proceeds of the Loan pursuant thereto.

      Section 3.6 ESOP; Contributions.

      As of the effective date of the ESOP sponsor's conversion, the ESOP and
the Borrower will be duly created, organized and maintained by the ESOP sponsor
in compliance with all applicable laws, regulations and rulings. The ESOP will
qualify as an "employee stock ownership plan" as defined in section 4975(e)(7)
of the Code. The ESOP provides that the ESOP sponsor may make contributions to
the ESOP in an amount necessary to enable the Trustee to amortize the Loan in
accordance with the terms of the Promissory Note; provided, however, that no
such contributions shall be required if they would adversely affect the
qualification of the ESOP under section 401(a) of the Code.

      Section 3.7 Trustee.

      The trustee of the ESOP has been duly appointed by the ESOP sponsor.

      Section 3.8 Compliance with Laws; Actions.

      Neither the execution and delivery by the Borrower of this Loan Agreement
or any instruments required thereby, nor compliance with the terms and
provisions of any such documents by the lender, constitutes a violation of any
provision of any law or any regulation, order, writ, injunction or decree of any
court or governmental instrumentality, or an event of default under any
agreement, to which the Borrower is a party, to which the Borrower is bound or
to which the Borrower is subject, which violation or event of default would have
a material adverse effect on the Borrower. There is no action or proceeding
pending or threatened against either the ESOP or the Borrower before any court
or administrative agency.

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                                   ARTICLE IV

                  REPRESENTATIONS AND WARRANTIES OF THE LENDER

      The Lender hereby represents and warrants to the Borrower as follows:

      Section 4.1 Power, Authority, Consents.

      The Lender has the power to execute, deliver and perform this Loan
Agreement, the Pledge Agreement and all documents executed by the Lender in
connection with the Loan, all of which have been duly authorized by all
necessary and proper corporate or other action. No consent, authorization or
approval or other action by any governmental authority or regulatory body, and
no notice by the Lender to, or filing by the Lender with, any governmental
authority or regulatory body is required for the due execution, delivery and
performance of this Loan Agreement.

      Section 4.2 Due Execution, Validity, Enforceability.

      This Loan Agreement and the Pledge Agreement have been duly executed and
delivered by the Lender, and each constitutes a valid and legally binding
obligation of the Lender, enforceable in accordance with its terms.

                                    ARTICLE V

                                EVENTS OF DEFAULT

      Section 5.1 Events of Default under Loan Agreement.

      Each of the following events shall constitute an "Event of Default"
hereunder:

      (a) Failure to make any payment or mandatory prepayment of principal of
the Promissory Note when due, or failure to make any payment of interest on the
Promissory Note not later than five (5) Business Days after the date when due.

      (b) Failure by the Borrower to perform or observe any term, condition or
covenant of this Loan Agreement or of any of the other Loan Documents,
including, without limitation, the Promissory Note and the Pledge Agreement.

      (c) Any representation or warranty made in writing to the Lender in any of
the Loan Documents, or any certificate, statement or report made or delivered in
compliance with this Loan Agreement, shall have been false or misleading in any
material respect when made or delivered.

      Section 5.2 Lender's Rights upon Event of Default.

      If an Event of Default under this Loan Agreement shall occur and be
continuing, the Lender shall have no rights to assets of the Borrower other
than: (a) contributions (other than contributions of Common Stock) that are made
by the ESOP sponsor to enable the Borrower to meet its obligations pursuant to
this Loan Agreement and earnings attributable to the investment of such
contributions and (b) "Eligible Collateral" (as defined in the Pledge
Agreement); provided, however, that: (i) the value of the Borrower's assets
transferred to the Lender following an Event of Default in satisfaction of the
due and unpaid amount of the Loan shall not exceed the amount in default
(without regard to amounts owing solely as a result of any

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acceleration of the Loan); (ii) the Borrower's assets shall be transferred to
the Lender following an Event of Default only to the extent of the failure of
the Borrower to meet the payment schedule of the Loan; and (iii) all rights of
the Lender to the Common Stock purchased with the proceeds of the Loan covered
by the Pledge Agreement following an Event of Default shall be governed by the
terms of the Pledge Agreement.

                                   ARTICLE VI

                            MISCELLANEOUS PROVISIONS

      Section 6.1 Payments Due to the Lender.

      If any amount is payable by the Borrower to the Lender pursuant to any
indemnity obligation contained herein, then the Borrower shall pay, at the time
or times provided therefor, any such amount and shall indemnify the Lender
against and hold it harmless from any loss or damage resulting from or arising
out of the nonpayment or delay in payment of any such amount. If any amounts as
to which the Borrower has so indemnified the Lender hereunder shall be assessed
or levied against the Lender, the Lender may notify the Borrower and make
immediate payment thereof, together with interest or penalties in connection
therewith, and shall thereupon be entitled to and shall receive immediate
reimbursement therefor from the Borrower, together with interest on each such
amount as provided for in section 2.2(c). Notwithstanding any other provision
contained in this Loan Agreement, the covenants and agreements of the Borrower
contained in this section 6.1 shall survive: (a) payment of the Promissory Note
and (b) termination of this Loan Agreement.

      Section 6.2 Payments.

      All payments hereunder and under the Promissory Note shall be made without
set-off or counterclaim and in such amounts as may be necessary in order that
all such payments shall not be less than the amounts otherwise specified to be
paid under this Loan Agreement and the Promissory Note, subject to any
applicable tax withholding requirements. Upon payment in full of the Promissory
Note, the Lender shall mark such Promissory Note "Paid" and return it to the
Borrower.

      Section 6.3 Survival.

      All agreements, representations and warranties made herein shall survive
the delivery of this Loan Agreement and the Promissory Note.

      Section 6.4 Modifications, Consents and Waivers; Entire Agreement.

      No modification, amendment or waiver of or with respect to any provision
of this Loan Agreement, the Promissory Note, the Pledge Agreement, or any of the
other Loan Documents, nor consent to any departure from any of the terms or
conditions thereof, shall in any event be effective unless it shall be in
writing and signed by the party against whom enforcement thereof is sought. Any
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. No consent to or demand on a party in any case
shall, of itself, entitle it to any other or further notice or demand in similar
or other circumstances. This Loan Agreement embodies the entire agreement and
understanding between the Lender and the Borrower and supersedes all prior
agreements and understandings relating to the subject matter hereof.

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      Section 6.5 Remedies Cumulative.

      Each and every right granted to the Lender hereunder or under any other
document delivered hereunder or in connection herewith, or allowed it by law or
equity, shall be cumulative and may be exercised from time to time. No failure
on the part of the Lender or the holder of the Promissory Note to exercise, and
no delay in exercising, any right shall operate as a waiver thereof, nor shall
any single or partial exercise of any right preclude any other or future
exercise thereof or the exercise of any other right. The due payment and
performance of the obligations under the Loan Documents shall be without regard
to any counterclaim, right of offset or any other claim whatsoever which the
Borrower may have against the Lender and without regard to any other obligation
of any nature whatsoever which the Lender may have to the Borrower, and no such
counterclaim or offset shall be asserted by the Borrower in any action, suit or
proceeding instituted by the Lender for payment or performance of such
obligations.

      Section 6.6 Further Assurances; Compliance with Covenants.

      At any time and from time to time, upon the request of the Lender, the
Borrower shall execute, deliver and acknowledge or cause to be executed,
delivered and acknowledged, such further documents and instruments and do such
other acts and things as the Lender may reasonably request in order to fully
effect the terms of this Loan Agreement, the Promissory Note, the Pledge
Agreement, the other Loan Documents and any other agreements, instruments and
documents delivered pursuant hereto or in connection with the Loan.

      Section 6.7 Notices.

      Except as otherwise specifically provided for herein, all notice,
requests, reports and other communications pursuant to this Loan Agreement shall
be in writing, either by letter (delivered by hand or commercial messenger
service or sent by registered or certified mail, return receipt requested,
except for routine reports delivered in compliance with Article VI hereof which
may be sent by ordinary first-class mail) or telex or telecopier addressed as
follows:

      (a)   If to the Borrower:

            First Federal Savings and Loan Association
            Employee Stock Ownership Plan Trust
            c/o

      (b)   If to the Lender:

            Kentucky First Federal Bancorp, Inc.
            479 Main Street
            Hazard, Kentucky 41702

Any notice, request or communication hereunder shall be deemed to have been
given on the day on which it is delivered by hand or by commercial messenger
service, or sent by telex or telecopier, to such party at its address specified
above, or, if sent by mail, on the third Business Day after the day deposited in
the mail, postage prepaid, addressed as aforesaid. Any party may change the
person or address to whom or which notices are to be given hereunder, by notice
duly given hereunder; provided, however, that any such notice shall be deemed to
have been given only when actually received by the party to whom it is
addressed.

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      Section 6.8 Counterparts.

      This Loan Agreement may be signed in any number of counterparts which,
when taken together, shall constitute one and the same document.

      Section 6.9 Construction; Governing Law.

      The headings used in the table of contents and in this Loan Agreement are
for convenience only and shall not be deemed to constitute a part hereof. All
uses herein of any gender or of singular or plural terms shall be deemed to
include uses of the other genders or plural or singular terms, as the context
may require. All references in this Loan Agreement of an Article or section
shall be to an Article or section of this Loan Agreement, unless otherwise
specified. This Loan Agreement, the Promissory Note, the Pledge Agreement and
the other Loan Documents shall be governed by, and construed and interpreted in
accordance with, the laws of the State of Kentucky.

      Section 6.10 Severability.

      Wherever possible, each provision of this Loan Agreement shall be
interpreted in such manner as to be effective and valid under applicable law;
however, the provisions of this Loan Agreement are severable, and if any clause
or provision hereof shall be held invalid or unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction and shall not in
any manner affect such clause or provision in any other jurisdiction, or any
other clause or provisions in this Loan Agreement in any jurisdiction. Each of
the covenants, agreements and conditions contained in this Loan Agreement are
independent, and compliance by a party with any of them shall not excuse
non-compliance by such party with any other. The Borrower shall not take any
action the effect of which shall constitute a breach or violation of any
provision of this Loan Agreement.

      Section 6.11 Binding Effect: No Assignment or Delegation.

      This Loan Agreement shall be binding upon and inure to the benefit of the
Borrower and its successors and the Lender and its successors and assigns. The
rights and obligations of the Borrower under this Agreement shall not be
assigned or delegated without the prior written consent of the Lender, and any
purported assignment or delegation without such consent shall be void.

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      IN WITNESS WHEREOF, the parties have caused this Loan Agreement to be
executed as of the date first written above.

                                   FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION
                                   EMPLOYEE STOCK OWNERSHIP PLAN TRUST

                                   _____________________________________________
                                   Authorized Trust Officer

                                   KENTUCKY FIRST FEDERAL BANCORP, INC.

                                   By: _________________________________________
                                       Tony D. Whitaker
                                       President and Chief Executive Officer

                                       11

<PAGE>

                                PLEDGE AGREEMENT

      THIS PLEDGE AGREEMENT ("Pledge Agreement") is made as of the _____ day
of_________, 2004, by and between the FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION
EMPLOYEE STOCK OWNERSHIP PLAN TRUST ("Pledgor"), and KENTUCKY FIRST FEDERAL
BANCORP, INC. ("Pledgee").

                               W I T N E S S E T H

      WHEREAS, this Pledge Agreement is being executed and delivered to the
Pledgee pursuant to the terms of a Loan Agreement ("Loan Agreement"), by and
between the Pledgor and the Pledgee;

      NOW, THEREFORE, in consideration of the mutual agreements contained herein
and in the Loan Agreement, the parties hereto do hereby covenant and agree as
follows:

      Section 1. Definitions. The following definitions shall apply for purposes
of this Pledge Agreement, except to the extent that a different meaning is
plainly indicated by the context; all capitalized terms used but not defined
herein shall have the respective meanings assigned to them in the Loan
Agreement:

      Collateral shall mean the Pledged Shares and, subject to section 5 hereof,
and to the extent permitted by applicable law, all rights with respect thereto,
and all proceeds of such Pledged Shares and rights.

      ESOP shall mean the First Federal Savings and Loan Association Employee
Stock Ownership Plan.

      Event of Default shall mean an event so defined in the Loan Agreement.

      Liabilities shall mean all the obligations of the Pledgor to the Pledgee,
howsoever created, arising or evidenced, whether direct or indirect, absolute or
contingent, now or hereafter existing, or due or to become due, under the Loan
Agreement and the Promissory Note.

      Pledged Shares shall mean all the Shares of Common Stock of the Pledgee
purchased by the Pledgor with the proceeds of the loan made by the Pledgee to
the Pledgor pursuant to the Loan Agreement, but excluding any such shares
previously released pursuant to section 4.

      Section 2. Pledge. To secure the payment of and performance of all the
Liabilities, the Pledgor hereby pledges to the Pledgee, and grants to the
Pledgee, a security interest in, and lien upon, the Collateral.

      Section 3. Representations and Warranties of the Pledgor. The Pledgor
represents, warrants, and covenants to the Pledgee as follows:

      (a) the execution, delivery and performance of this Pledge Agreement and
the pledging of the Collateral hereunder do not and will not conflict with,
result in a violation of, or constitute a default under, any agreement binding
upon the Pledgor;

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      (b) the Pledged Shares are and will continue to be owned by the Pledgor
free and clear of any liens or rights of any other person except the lien
hereunder and under the Loan Agreement in favor of the Pledgee, and the security
interest of the Pledgee in the Pledged Shares and the proceeds thereof is and
will continue to be prior to and senior to the rights of all others;

      (c) this Pledge Agreement is the legal, valid, binding and enforceable
obligation of the Pledgor in accordance with its terms;

      (d) the Pledgor shall, from time to time, upon request of the Pledgee,
promptly deliver to the Pledgee such stock powers, proxies, and similar
documents, satisfactory in form and substance to the Pledgee, with respect to
the Collateral as the Pledgee may reasonably request; and

      (e) subject to the first sentence of section 4(b), the Pledgor shall not,
so long as any Liabilities are outstanding, sell, assign, exchange, pledge or
otherwise transfer or encumber any of its rights in and to any of the
Collateral.

      Section 4. Eligible Collateral.

      (a) As used herein the term "Eligible Collateral" shall mean the amount of
Collateral which has an aggregate fair market value equal to the amount by which
the Pledgor is in default (without regard to any amounts owing solely as the
result of an acceleration of the Loan Agreement) or such lesser amount of
Collateral as may be required pursuant to section 13 of this Pledge Agreement.

      (b) The Pledged Shares shall be released from this Pledge Agreement in a
manner conforming to the requirements of Treasury Regulations Section
54.4975-7(b)(8), as the same may be from time to time amended or supplemented,
and the applicable provisions of the ESOP. Subject to such Regulations, the
Pledgee may from time to time, after any Default or Event of Default, and
without prior notice to the Pledgor, transfer all or any part of the Eligible
Collateral in the name of the Pledgee or its nominee, without disclosing that
such Eligible Collateral is subject to any rights of the Pledgor and may from
time to time, whether before or after any of the Liabilities shall become due
and payable, without notice to the Pledgor, take all or any of the following
actions: (i) notify the parties obligated on any of the Eligible Collateral to
make payment to the Pledgee of any amounts due or due to become due thereunder,
(ii) release or exchange all or any part of the Eligible Collateral, or
compromise or extend or renew for any period (whether or not longer than the
original period) any obligations of any nature of any party with respect
thereto, and (iii) take control of any proceeds of the Eligible Collateral.

      Section 5. Delivery.

      (a) The Pledgor shall deliver to the Pledgee upon execution of this Pledge
Agreement (i) either (A) certificates for the Pledged Shares, each certificate
duly signed in blank by the Pledgor or accompanied by a stock transfer power
duly signed in blank by the Pledgor and each such certificate accompanied by all
required documentary or stock transfer tax stamps or (B) if the Trustee does not
yet have possession of the Pledged Shares, an assignment by the Pledgor of all
the Pledgor's rights to and interest in the Pledged Shares and (ii) an
irrevocable proxy, in form and substance satisfactory to the Pledgee, signed by
the Pledgor with respect to the Pledged Shares.

                                       2

<PAGE>

      (b) So long as no Default or Event of Default shall have occurred and be
continuing, (i) the Pledgor shall be entitled to exercise any and all voting and
other rights pertaining to the Collateral or any part thereof for any purpose
not inconsistent with the terms of this Pledge Agreement, and (ii) the Pledgor
shall be entitled to receive any and all cash dividends or other distributions
paid in respect of the Collateral.

      Section 6. Events of Default.

      (a) If a Default or Event Default shall be existing, in addition to the
rights it may have under the Loan Agreement, the Promissory Note, and this
Pledge Agreement, or by virtue of any other instrument, (i) the Pledgee may
exercise, with respect to the Eligible Collateral, from time to time, any rights
and remedies available to it under the Uniform Commercial Code as in effect from
time to time in the State of Kentucky or otherwise available to it and (ii) the
Pledgee shall have the right, for and in the name, place and stead of the
Pledgor, to execute endorsement, assignments, stock powers and other instruments
of conveyance or transfer with respect to all or any of the Eligible Collateral.
Written notification of intended disposition of any of the Eligible Collateral
shall be given by the Pledgee to the Pledgor at least three (3) Business Days
before such disposition. Subject to section 13 below, any proceeds of any
disposition of Eligible Collateral may be applied by the Pledgee to the payment
of expenses in connection with the Eligible Collateral, including, without
limitation, reasonable attorneys' fees and legal expenses, and any balance of
such proceeds may be applied by the Pledgee toward the payment of such of the
Liabilities as are in Default, and in such order of application, as the Pledgee
may from time to time elect. No action of the Pledgee permitted hereunder shall
impair or affect its rights in and to the Eligible Collateral. All rights and
remedies of the Pledgee expressed hereunder are in addition to all other rights
and remedies possessed by it, including, without limitation, those contained in
the documents referred to in the definition of Liabilities in section 1 hereof.

      (b) In any sale of any of the Eligible Collateral after a Default or an
Event of Default shall have occurred, the Pledgee is hereby authorized to comply
with any limitation or restriction in connection with such sale as it may be
advised by counsel if necessary in order to avoid violation of applicable law
(including, without limitation, compliance with such procedures as may restrict
the number of prospective bidders and purchasers or further restrict such
prospective bidders or purchasers to persons who will represent and agree that
they are purchasing for their own account for investment and not with a view to
the distribution or resale of such Eligible Collateral), or in order to obtain
such required approval of the sale or of the purchase by any governmental
regulatory authority or official, and the Pledgor further agrees that such
compliance shall not result in such sale's being considered or deemed not to
have been made in a commercially reasonable manner, nor shall the Pledgee be
liable or accountable to the Pledgor for any discount allowed by reason of the
fact that such Eligible Collateral is sold in compliance with any such
limitation or restriction.

      Section 7. Payment in Full. Upon the payment in full of all outstanding
Liabilities, this Pledge Agreement shall terminate and the Pledgee shall
forthwith assign, transfer and deliver to the Pledgor, against receipt and
without recourse to the Pledgee, all Collateral then held by the Pledgee
pursuant to the Pledge Agreement.

      Section 8. No Waiver. No failure or delay in the part of the Pledgee in
exercising any right or remedy hereunder or under any other document which
confers or grants any rights to the Pledgee in respect of the Liabilities shall
operate as a waiver thereof nor shall any single or

                                       3

<PAGE>

partial exercise of any such rights or remedy preclude any other or further
exercise thereof or the exercise of any other right or remedy of the Pledgee.

      Section 9. Binding Effect; No Assignment or Delegation. This Pledge
Agreement shall be binding upon and inure to the benefit of the Pledgor, the
Pledgee and their respective successors and assigns, except that the Pledgor may
not assign or transfer its rights hereunder without the prior written consent of
the Pledgee (which consent shall not unreasonably be withheld). Each duty or
obligation of the Pledgor to the Pledgee pursuant to the provisions of this
Pledge Agreement shall be performed in favor of any person or entity designated
by the Pledgee, and any duty or obligation of the Pledgee to the Pledgor may be
performed by any other person or entity designated by the Pledgee.

      Section 10. Governing Law. This Pledge Agreement shall be governed by and
construed in accordance with the laws of the State of Kentucky applicable to
agreements to be performed wholly within the State of Kentucky.

      Section 11. Notices. All notices, requests, instructions or documents
hereunder shall be in writing and delivered personally or sent by United States
mail, registered or certified, return receipt requested, with proper postage
prepaid as follows:

            (a)   If to the Pledgee: Kentucky First
                  Federal Bancorp, Inc. 479 Main
                  Street Hazard, KY 41702

            (b)   If to the Pledgor:
                  First Federal Savings and Loan Association
                  Employee Stock Ownership Plan Trust
                  c/o

or at such other address as either of the parties may designate by written
notice to the other party. If delivered personally, the date on which a notice,
request, instruction or document is delivered shall be the date on which such
delivery is made, and, if delivered by mail, the date on which such notice,
request, instruction, or document is deposited in the mail shall be the date of
delivery. Each notice, request, instruction or document shall bear the date on
which it is delivered.

      Section 12. Interpretation. Wherever possible each provision of this
Pledge Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision herein shall be prohibited by
or invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions hereof.

      Section 13. Construction. All provisions hereof shall be construed so as
to maintain (a) the ESOP as a qualified leveraged employee stock ownership plan
under section 401(a) and 4975(e)(7) of the Internal Revenue Code of 1986 (the
"Code"), (b) the Trust as exempt from taxation under section 501(a) of the Code
and (c) the Trust Loan as an exempt loan under section 54.4975-7(b) of the
Treasury Regulations and as described in Department of Labor Regulation section
2550.408b-3.
<PAGE>

      IN WITNESS WHEREOF, this Pledge Agreement has been duly executed by the
parties hereto as of the day and year first above written.

                                     FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION
                                     EMPLOYEE STOCK OWNERSHIP PLAN TRUST

                                     ___________________________________________
                                     Authorized Trust Officer

                                     KENTUCKY FIRST FEDERAL BANCORP, INC.

                                     By: _______________________________________
                                         Tony D. Whitaker
                                         President and Chief Executive Officer

                                       5

<PAGE>

                                 PROMISSORY NOTE

FOR VALUE RECEIVED, the undersigned, FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION
EMPLOYEE STOCK OWNERSHIP PLAN TRUST (the "Borrower"), hereby promises to pay to
the order of KENTUCKY FIRST FEDERAL BANCORP, INC., (the "Lender") up to $_______
payable in accordance with the Loan Agreement made and entered into between the
Borrower and the Lender of even date herewith ("Loan Agreement") pursuant to
which this Promissory Note is issued.

      The Principal Amount of this Promissory Note shall be payable in
accordance with the schedule attached hereto ("Schedule I").

      This Promissory Note shall bear interest at the rate per annum set forth
or established under the Loan Agreement, such interest to be payable in
accordance with Schedule I.

      Anything herein to the contrary notwithstanding, the obligation of the
Borrower to make payments of interest shall be subject to the limitation that
payments of interest shall not be required to be made to the Lender to the
extent that the Lender's receipt thereof would not be permissible under the law
or laws applicable to the Lender limiting rates on interest which may be charged
or collected by the Lender. Any such payments on interest which are not made as
a result of the limitation referred to in the preceding sentence shall be made
by the Borrower to the Lender on the earliest interest payment date or dates on
which the receipt thereof would be permissible under the laws applicable to the
Lender limiting rates of interest which may be charged or collected by the
Lender. Such deferred interest shall not bear interest.

      Payments of both principal and interest on this Promissory Note are to be
made at the principal office of the Lender or such other place as the holder
hereof shall designate to the Borrower in writing, in lawful money of the United
States of America in immediately available funds.

      Failure to make any payments of principal on this Promissory Note when
due, or failure to make any payment of interest on this Promissory Note not
later than five (5) Business Days after the date when due, shall constitute a
default hereunder, whereupon the principal amount of accrued interest on this
Promissory Note shall immediately become due and payable in accordance with the
terms of the Loan Agreement.

      This Promissory Note is secured by a Pledge Agreement between the Borrower
and the Lender of even date herewith and is entitled to the benefits thereof.

                             FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION
                             EMPLOYEE STOCK OWNERSHIP PLAN TRUST

                             _____________________________________
                             Authorized Trust Officer<PAGE>

                                                                    EXHIBIT 10.3

                                     FORM OF
                              EMPLOYMENT AGREEMENT

      THIS AGREEMENT (the "Agreement"), made this _____ day of _________, 2004,
by and between KENTUCKY FIRST FEDERAL BANCORP, a federally chartered corporation
(the "Company"), FIRST FEDERAL SAVINGS BANK OF FRANKFORT, a federally chartered
savings institution (the "Bank"), and DON D. JENNINGS (the "Executive").

      WHEREAS, Executive serves the Company and the Bank in a position of
substantial responsibility;

      WHEREAS, the Company and the Bank wish to assure the services of Executive
for the period provided in this Agreement; and

      WHEREAS, Executive is willing to serve in the employ of the Bank on a
full-time basis for said period.

      NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:

      1. EMPLOYMENT. Executive is employed as President of the Company and
[TITLE] of the Bank. Executive shall perform all duties and shall have all
powers which are commonly incident to those offices. During the term of this
Agreement, Executive also agrees to serve, if elected, as an officer and/or
director of any subsidiary of the Company and the Bank and in such capacity will
carry out such duties and responsibilities as are reasonably appropriate to that
office.

      2. LOCATION AND FACILITIES. Executive will be furnished with the working
facilities and staff customary for executive officers with the title and duties
set forth in Section 1 and as are necessary for him to perform his duties. The
location of such facilities and staff shall be at the principal administrative
offices of the Bank, or at such other site or sites customary for such offices.

      3. TERM.

      a.    The term of this Agreement shall be (i) the initial term, consisting
            of the period commencing on the date of this Agreement (the
            "Effective Date") and ending on the third anniversary of the
            Effective Date, plus (ii) any and all extensions of the initial term
            made pursuant to this Section 3.

      b.    Commencing on the first year anniversary date of this Agreement, and
            continuing on each anniversary thereafter, the disinterested members
            of the boards of directors of the Bank and the Company may extend
            the Agreement for an additional one-year period beyond the then
            effective expiration date, unless Executive elects not to extend the
            term of this Agreement by giving written notice in accordance with
            Section 19 of this Agreement. The Board of Directors of the Bank
            (the "Board") will review Executive's performance annually for
            purposes of determining whether to

<PAGE>

            extend the Agreement and the rationale and results thereof shall be
            included in the minutes of the Board's meeting. The Board of
            Directors of the Bank shall give notice to Executive as soon as
            possible after such review as to whether the Agreement is to be
            extended.

      4. BASE COMPENSATION.

      a.    The Company and the Bank agree to pay Executive during the term of
            this Agreement a base salary at the rate of $__________ per year,
            payable in accordance with customary payroll practices.

      b.    The Board shall review annually the rate of Executive's base salary
            based upon factors they deem relevant, and may maintain or increase
            his salary, provided that no such action shall reduce the rate of
            salary below the rate in effect on the Effective Date.

      c.    In the absence of action by the Board, Executive shall continue to
            receive salary at the annual rate specified on the Effective Date
            or, if another rate has been established under the provisions of
            this Section 4, the rate last properly established by action of the
            Board under the provisions of this Section 4.

      5. BONUSES. Executive shall be entitled to participate in discretionary
bonuses or other incentive compensation programs that the Company and the Bank
may award from time to time to senior management employees pursuant to bonus
plans or otherwise.

      6. BENEFIT PLANS. Executive shall be entitled to participate in such life
insurance, medical, dental, pension, profit sharing, retirement and stock-based
compensation plans and other programs and arrangements as may be approved from
time to time by the Company and the Bank for the benefit of their employees.

      7. VACATION AND LEAVE. At such reasonable times as the 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,
all such voluntary absences to count as vacation time, provided that:

      a.    Executive shall be entitled to an annual vacation in accordance with
            the policies that the Board periodically establishes for senior
            management employees.

      b.    Executive shall accumulate any unused vacation and/or sick leave
            from one fiscal year to the next, in either case to the extent
            authorized by the Board, provided that the Board shall not reduce
            previously accumulated vacation or sick leave.

      c.    In addition to the above mentioned paid vacations, Executive shall
            be entitled, without loss of pay, to absent himself voluntarily from
            the performance of his employment for such additional periods of
            time and for such valid and legitimate

                                       2
<PAGE>

            reasons as the Board may in its discretion determine. Further, the
            Board may grant Executive a leave or leaves or absence, with or
            without pay, at such time or times and upon such terms and
            conditions as the Board in its discretion may determine.

      8. EXPENSE PAYMENTS AND REIMBURSEMENTS. Executive shall be reimbursed for
all reasonable out-of-pocket business expenses that he shall incur in connection
with his services under this Agreement upon substantiation of such expenses in
accordance with applicable policies of the Company and the Bank.

      9. AUTOMOBILE ALLOWANCE. During the term of this Agreement, Executive may
be entitled to an automobile allowance. In the event such automobile allowance
is provided by the Company or the Bank, Executive shall comply with reasonable
reporting and expense limitations on the use of such automobile as may be
established by the Company or the Bank from time to time, and the Company or the
Bank shall annually include on Executive's Form W-2 any amount of income
attributable to Executive's personal use of such automobile.

      10. LOYALTY AND CONFIDENTIALITY.

      a.    During the term of this Agreement and except for illnesses,
            reasonable vacation periods, and reasonable leaves of absence,
            Executive: (i) shall devote his full business time, attention,
            skill, and efforts to the faithful performance of his duties
            hereunder; provided, however, that from time to time, Executive 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 Company or the Bank or any of their
            subsidiaries or affiliates or unfavorably affect the performance of
            Executive's duties pursuant to this Agreement, or violate any
            applicable statute or regulation and (ii) shall not engage in any
            business or activity contrary to the business affairs or interests
            of the Company or the Bank. "Full business time" is hereby defined
            as that amount of time usually devoted to like companies and
            institutions by similarly situated executive officers.

      b.    Nothing contained in this Agreement shall prevent or limit
            Executive's right to invest in the capital stock or other securities
            of any business dissimilar from that of the Company and the Bank,
            or, solely as a passive, minority investor, in any business.

      c.    Executive agrees to maintain the confidentiality of any and all
            information concerning the operation or financial status of the
            Company and the Bank; the names or addresses of any of its
            borrowers, depositors and other customers; any information
            concerning or obtained from such customers; and any other
            information concerning the Company and the Bank to which he may be
            exposed during the course of his employment. Executive further
            agrees that, unless required by law or specifically permitted by the
            Board in writing, he will not disclose to any person or entity,
            either during or subsequent to his employment, any of the
            above-mentioned information which is not generally known to the
            public, nor shall he employ such information in any way other than
            for the benefit of the Company and the Bank.

                                       3
<PAGE>

      11. TERMINATION AND TERMINATION PAY. Subject to Section 12 of this
Agreement, Executive's employment under this Agreement may be terminated in the
following circumstances:

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

      b.    Retirement. This Agreement shall be terminated upon Executive's
            retirement under the retirement benefit plan or plans in which he
            participates pursuant to Section 6 of this Agreement or otherwise.

      c.    Disability.

            i.    The Board or Executive may terminate Executive's employment
                  after having determined Executive has a Disability. For
                  purposes of this Agreement, "Disability" means a physical or
                  mental infirmity that impairs Executive's ability to
                  substantially perform his duties under this Agreement and that
                  results in Executive becoming eligible for long-term
                  disability benefits under any long-term disability plans of
                  the Company or the Bank (or, if there are no such plans in
                  effect, that impairs Executive's ability to substantially
                  perform his duties under this Agreement for a period of one
                  hundred eighty (180) consecutive days). The Board shall
                  determine whether or not Executive is and continues to be
                  permanently disabled for purposes of this Agreement in good
                  faith, based upon competent medical advice and other factors
                  that they reasonably believe to be relevant. As a condition to
                  any benefits, the Board may require Executive to submit to
                  such physical or mental evaluations and tests as it deems
                  reasonably appropriate.

            ii.   In the event of such Disability, Executive shall be entitled
                  to the compensation and benefits provided for under this
                  Agreement for (1) any period during the term of this Agreement
                  and prior to the establishment of Executive's Disability
                  during which Executive is unable to work due to the physical
                  or mental infirmity, and (2) any period of Disability which is
                  prior to Executive's termination of employment pursuant to
                  this Section 11c.; provided, however, that any benefits paid
                  pursuant to the Company's or the Bank's long-term disability
                  plan will continue as provided in such plan without reduction
                  for payments made pursuant to this Agreement. During any
                  period that Executive receives disability benefits and to the
                  extent that Executive shall be physically and mentally able to
                  do so, he shall furnish such information, assistance and
                  documents so as to assist in the continued ongoing business of
                  the Company and the Bank and, if able, he shall make himself
                  available to the Company and the Bank to undertake reasonable
                  assignments consistent with his prior position and his
                  physical and mental

                                       4
<PAGE>

                  health. The Company or the Bank shall pay all reasonable
                  expenses incident to the performance of any assignment given
                  to Executive during the Disability period.

      d.    Termination for Cause.

            i.    The Board may, by written notice to Executive in the form and
                  manner specified in this paragraph, immediately terminate his
                  employment at any time, for "Cause." Executive shall have no
                  right to receive compensation or other benefits for any period
                  after termination for Cause except for vested benefits.
                  Termination for Cause shall mean termination because of, in
                  the good faith determination of the Board, Executive's:

                  (1)   Personal dishonesty;

                  (2)   Incompetence;

                  (3)   Willful misconduct;

                  (4)   Breach of fiduciary duty involving personal profit;

                  (5)   Intentional failure to perform stated duties under this
                        Agreement;

                  (6)   Willful violation of any law, rule or regulation (other
                        than traffic violations or similar offenses) that
                        reflects adversely on the reputation of the Company or
                        the Bank, any felony conviction, any violation of law
                        involving moral turpitude, or any violation of a final
                        cease-and-desist order; or

                  (7)   Material breach by Executive of any provision of this
                        Agreement.

            ii.   Notwithstanding the foregoing, Executive shall not be deemed
                  to have been terminated for Cause unless there shall have been
                  delivered to Executive a copy of a resolution duly adopted by
                  the affirmative vote of a majority of the entire membership of
                  the Board at a meeting of such Board called and held for the
                  purpose (after reasonable notice to Executive and an
                  opportunity for Executive to be heard before the Board with
                  counsel), of finding that, in the good faith opinion of the
                  Board, Executive was guilty of the conduct described above and
                  specifying the particulars thereof.

      e.    Voluntary Termination by Executive. In addition to his other rights
            to terminate under this Agreement, Executive may voluntarily
            terminate employment during the term of this Agreement upon at least
            ninety (90) days' prior written notice to the Board, in which case
            Executive shall receive only his compensation, vested rights and
            employee benefits up to the date of his termination.

                                       5
<PAGE>

      f.    Without Cause or With Good Reason.

            i.    In addition to termination pursuant to Sections 11a. through
                  11e., the Board may, by written notice to Executive,
                  immediately terminate his employment at any time for a reason
                  other than Cause (a termination "Without Cause") and Executive
                  may, by written notice to the Board, immediately terminate
                  this Agreement at any time within ninety (90) days following
                  an event constituting "Good Reason," as defined below (a
                  termination "With Good Reason").

            ii.   Subject to Section 12 of this Agreement, in the event of
                  termination under this Section 11f., Executive shall be
                  entitled to receive his base salary for the remaining term of
                  the Agreement paid in one lump sum within ten (10) calendar
                  days of such termination. Also, in such event, Executive
                  shall, for the remaining term of the Agreement, receive the
                  benefits he would have received during the remaining term of
                  the Agreement under any retirement programs (whether
                  tax-qualified or non-qualified) in which Executive
                  participated prior to his termination (with the amount of the
                  benefits determined by reference to the benefits received by
                  Executive or accrued on his behalf under such programs during
                  the twelve (12) months preceding his termination) and continue
                  to participate in any benefit plans of the Company or the Bank
                  that provide health (including medical and dental), life or
                  disability insurance, or similar coverage, upon terms no less
                  favorable than the most favorable terms provided to senior
                  executives of the Company or the Bank during such period. In
                  the event that the Company or the Bank are unable to provide
                  such coverage by reason of Executive no longer being an
                  employee, the Company or the Bank shall provide Executive with
                  comparable coverage on an individual policy basis.

            iii.  "Good Reason" shall exist if, without Executive's express
                  written consent, the Company and the Bank materially breach
                  any of their respective obligations under this Agreement.
                  Without limitation, such a material breach shall be deemed to
                  occur upon any of the following:

                  (1)   A material reduction in Executive's responsibilities or
                        authority in connection with his employment with the
                        Company or the Bank;

                  (2)   Assignment to Executive of duties of a non-executive
                        nature or duties for which he is not reasonably equipped
                        by his skills and experience;

                  (3)   Failure of Executive to be nominated or renominated to
                        the Company's Board;

                  (4)   A reduction in salary or benefits contrary to the terms
                        of this Agreement, or, following a Change in Control as
                        defined in Section

                                       6
<PAGE>

                        12 of this Agreement, any reduction in salary or
                        material reduction in benefits below the amounts to
                        which Executive was entitled prior to the Change in
                        Control;

                  (5)   Termination of incentive and benefit plans, programs or
                        arrangements, or reduction of Executive's participation
                        to such an extent as to materially reduce their
                        aggregate value below their aggregate value as of the
                        Effective Date;

                  (6)   A requirement that Executive relocate his principal
                        business office or his principal place of residence
                        outside of the area consisting of a thirty (30) mile
                        radius from the current main office and any branch of
                        the Bank, or the assignment to Executive of duties that
                        would reasonably require such a relocation; or

                  (7)   Liquidation or dissolution of the Company or the Bank.

            iv.   Notwithstanding the foregoing, a reduction or elimination of
                  Executive's benefits under one or more benefit plans
                  maintained by the Company and the Bank as part of a good
                  faith, overall reduction or elimination of such plans or
                  benefits thereunder applicable to all participants in a manner
                  that does not discriminate against Executive (except as such
                  discrimination may be necessary to comply with law) shall not
                  constitute an event of Good Reason or a material breach of
                  this Agreement, provided that benefits of the type or to the
                  general extent as those offered under such plans prior to such
                  reduction or elimination are not available to other officers
                  of the Company and the Bank or any company that controls
                  either of them under a plan or plans in or under which
                  Executive is not entitled to participate.

      g.    Continuing Covenant Not to Compete or Interfere with Relationships.
            Regardless of anything herein to the contrary, following a
            termination by the Company and the Bank or Executive pursuant to
            Section 11f.:

            i.    Executive's obligations under Section 10c. of this Agreement
                  will continue in effect; and

            ii.   During the period ending on the first anniversary of such
                  termination, Executive shall not serve as an officer, director
                  or employee of any bank holding company, bank, savings bank,
                  savings and loan holding company, or mortgage company (any of
                  which shall be a "Financial Institution") which Financial
                  Institution offers products or services competing with those
                  offered by the Bank from any office within fifty (50) miles
                  from the main office or any branch of the Bank and shall not
                  interfere with the relationship of the Company and the Bank
                  and any of its employees, agents, or representatives.

                                       7
<PAGE>

      12. TERMINATION IN CONNECTION WITH A CHANGE IN CONTROL.

      a.    For purposes of this Agreement, a "Change in Control" means any of
            the following events:

            i.    Merger: The Company merges into or consolidates with another
                  corporation, or merges another corporation into the Company,
                  and as a result less than a majority of the combined voting
                  power of the resulting corporation immediately after the
                  merger or consolidation is held by persons who were
                  stockholders of the Company immediately before the merger or
                  consolidation.

            ii.   Acquisition of Significant Share Ownership: The Company files,
                  or is required to file, a report on Schedule 13D or another
                  form or schedule (other than Schedule 13G) required under
                  Sections 13(d) or 14(d) of the Securities Exchange Act of
                  1934, if the schedule discloses that the filing person or
                  persons acting in concert has or have become the beneficial
                  owner of 25% or more of a class of the Company's voting
                  securities, but this clause (b) shall not apply to beneficial
                  ownership of Company voting shares held in a fiduciary
                  capacity by an entity of which the Company directly or
                  indirectly beneficially owns 50% or more of its outstanding
                  voting securities.

            iii.  Change in Board Composition: During any period of two
                  consecutive years, individuals who constitute the Company's
                  Board of Directors at the beginning of the two-year period
                  cease for any reason to constitute at least a majority of the
                  Company's Board of Directors; provided, however, that for
                  purposes of this clause (iii), each director who is first
                  elected by the Board (or first nominated by the Board for
                  election by the stockholders) by a vote of at least two-thirds
                  (2/3) of the directors who were directors at the beginning of
                  the two-year period shall be deemed to have also been a
                  director at the beginning of such period; or

            iv.   Sale of Assets: The Company sells to a third party all or
                  substantially all of its assets.

            Notwithstanding anything in this Agreement to the contrary, in no
            event shall the conversion of the Bank from mutual to stock form
            constitute a "Change in Control" for purposes of this Agreement.

      b.    Termination. If within the period ending two years after a Change in
            Control, (i) the Company and the Bank shall terminate Executive's
            employment Without Cause, or (ii) Executive voluntarily terminates
            his employment with Good Reason, the Company and the Bank shall,
            within ten calendar days of the termination of Executive's
            employment, make a lump-sum cash payment to him equal to three times
            Executive's average Annual Compensation over the five (5) most
            recently

                                       8
<PAGE>

            completed calendar years ending with the year immediately preceding
            the effective date of the Change in Control. In determining
            Executive's average Annual Compensation, 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
            (whether paid or accrued for the applicable period), as well as
            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, profit sharing, employee stock ownership plan
            and other retirement contributions or benefits, including to any
            tax-qualified plan or arrangement (whether or not taxable) made or
            accrued on behalf of Executive for such years. The cash payment made
            under this Section 12b. shall be made in lieu of any payment also
            required under Section 11f. of this Agreement because of a
            termination in such period. Executive's rights under Section 11f.
            are not otherwise affected by this Section 12. Also, in such event,
            Executive shall, for a thirty-six (36) month period following his
            termination of employment, receive the benefits he would have
            received over such period under any retirement programs (whether
            tax-qualified or non-tax-qualified) in which Executive participated
            prior to his termination (with the amount of the benefits determined
            by reference to the benefits received by Executive or accrued on his
            behalf under such programs during the twelve (12) months preceding
            the Change in Control) and continue to participate in any benefit
            plans of the Company or the Bank that provide health (including
            medical and dental), life or disability insurance, or similar
            coverage upon terms no less favorable than the most favorable terms
            provided to senior executives during such period. In the event that
            the Company or the Bank are unable to provide such coverage by
            reason of Executive no longer being an employee, the Company or the
            Bank shall provide Executive with comparable coverage on an
            individual policy basis or the cash equivalent.

      c.    The provisions of Section 12 and Sections 14 through 25, including
            the defined terms used in such sections, shall continue in effect
            until the later of the expiration of this Agreement or two years
            following a Change in Control.

      13. INDEMNIFICATION AND LIABILITY INSURANCE.

      a.    Indemnification. The Company and the Bank agree to indemnify
            Executive (and his heirs, executors, and administrators), and to
            advance expenses related thereto, to the fullest extent permitted
            under applicable law and regulations against any and all expenses
            and liabilities reasonably incurred by him in connection with or
            arising out of any action, suit, or proceeding in which he may be
            involved by reason of his having been a director or Executive of the
            Company, the Bank or any of their subsidiaries (whether or not he
            continues to be a director or Executive at the time of incurring any
            such expenses or liabilities), such expenses and liabilities to
            include, but not be limited to, judgments, court costs, and
            attorneys' fees and the costs of reasonable settlements, such
            settlements to be approved by the Board, if such action is brought
            against Executive in his capacity as an Executive or director of the

                                       9
<PAGE>

            Company and the Bank or any of their subsidiaries. Indemnification
            for expenses shall not extend to matters for which Executive has
            been terminated for Cause. Nothing contained herein shall be deemed
            to provide indemnification prohibited by applicable law or
            regulation. Notwithstanding anything herein to the contrary, the
            obligations of this Section 13 shall survive the term of this
            Agreement by a period of six (6) years.

      b.    Insurance. During the period in which indemnification of Executive
            is required under this Section, the Company and the Bank shall
            provide Executive (and his heirs, executors, and administrators)
            with coverage under a directors' and officers' liability policy at
            the expense of the Company and the Bank, at least equivalent to such
            coverage provided to directors and senior executives of the Company
            and the Bank.

14. REIMBURSEMENT OF EXECUTIVE'S EXPENSES TO ENFORCE THIS AGREEMENT. The Company
and the Bank shall reimburse Executive for all out-of-pocket expenses,
including, without limitation, reasonable attorneys' fees, incurred by Executive
in connection with successful enforcement by Executive of the obligations of the
Company and the Bank to Executive under this Agreement. Successful enforcement
shall mean the grant of an award of money or the requirement that the Company
and the Bank take some action specified by this Agreement: (i) as a result of a
court order; or (ii) otherwise by the Company and the Bank following an initial
failure of the Company and the Bank to pay such money or take such action
promptly after written demand therefor from Executive stating the reason that
such money or action was due under this Agreement at or prior to the time of
such demand.

15. LIMITATION OF BENEFITS UNDER CERTAIN CIRCUMSTANCES. If the payments and
benefits pursuant to Section 12 of this Agreement, either alone or together with
other payments and benefits which Executive has the right to receive from the
Company and the Bank, would constitute a "parachute payment" under Section 280G
of the Code, the payments and benefits pursuant to Section 12 shall be reduced
or revised, in the manner determined by Executive, by the amount, if any, which
is the minimum necessary to result in no portion of the payments and benefits
under Section 12 being non-deductible to the Company and the Bank pursuant to
Section 280G of the Code and subject to the excise tax imposed under Section
4999 of the Code. The determination of any reduction in the payments and
benefits to be made pursuant to Section 12 shall be based upon the opinion of
the Company and the Bank's independent public accountants and paid for by the
Company and the Bank. In the event that the Company, the Bank and/or Executive
do not agree with the opinion of such counsel, (i) the Company and the Bank
shall pay to Executive the maximum amount of payments and benefits pursuant to
Section 12, as selected by Executive, which such opinion indicates there is a
high probability do not result in any of such payments and benefits being
non-deductible to the Company and the Bank and subject to the imposition of the
excise tax imposed under Section 4999 of the Code and (ii) the Company and the
Bank may request, and Executive shall have the right to demand that they
request, a ruling from the IRS as to whether the disputed payments and benefits
pursuant to Section 12 have such consequences. Any such request for a ruling
from the IRS shall be promptly prepared and filed by the Company and the Bank,
but in no event later than thirty (30) days from the date of the opinion of
counsel referred to above, and shall be subject to Executive's approval prior to
filing, which shall not be unreasonably withheld. The Company, the Bank and

                                       10
<PAGE>

Executive agree to be bound by any ruling received from the IRS and to make
appropriate payments to each other to reflect any such rulings, together with
interest at the applicable federal rate provided for in Section 7872(f)(2) of
the Code. Nothing contained herein shall result in a reduction of any payments
or benefits to which Executive may be entitled upon termination of employment
other than pursuant to Section 12 hereof, or a reduction in the payments and
benefits specified in Section 12 below zero.

16. INJUNCTIVE RELIEF. If there is a breach or threatened breach of Section 11g.
of this Agreement or the prohibitions upon disclosure contained in Section 10c.
of this Agreement, the parties agree that there is no adequate remedy at law for
such breach, and that the Company and the Bank shall be entitled to injunctive
relief restraining Executive from such breach or threatened breach, but such
relief shall not be the exclusive remedy hereunder for such breach. The parties
hereto likewise agree that Executive, without limitation, shall be entitled to
injunctive relief to enforce the obligations of the Company and the Bank under
this Agreement.

17. SUCCESSORS AND ASSIGNS.

      a.    This Agreement shall inure to the benefit of and be binding upon any
            corporate or other successor of the Company and 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
            Company and the Bank.

      b.    Since the Company 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 the Company and the Bank.

18. NO MITIGATION. Executive 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 Executive in any subsequent employment.

19. NOTICES. All notices, requests, demands and other communications in
connection with this Agreement shall be made in writing and shall be deemed to
have been given when delivered by hand or 48 hours after mailing at any general
or branch United States Post Office, by registered or certified mail, postage
prepaid, addressed to the Company and/or the Bank at their principal business
offices and to Executive at his home address as maintained in the records of the
Company and the Bank.

20. NO PLAN CREATED BY THIS AGREEMENT. Executive, the Company and the Bank
expressly declare and agree that this Agreement was negotiated among them and
that no provision or provisions of this Agreement are intended to, or shall be
deemed to, create any plan for purposes of the Employee Retirement Income
Security Act or any other law or regulation, and each party expressly waives any
right to assert the contrary. Any assertion in any judicial or administrative
filing, hearing, or process that such a plan was so created by this Agreement
shall be deemed a material breach of this Agreement by the party making such an
assertion.

                                       11
<PAGE>

21. 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.

22. APPLICABLE LAW. Except to the extent preempted by federal law, the laws of
the State of Kentucky shall govern this Agreement in all respects, whether as to
its validity, construction, capacity, performance or otherwise.

23. 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.

24. HEADINGS. Headings contained herein are for convenience of reference only.

25. ENTIRE AGREEMENT. This Agreement, together with any understanding or
modifications thereof as agreed to in writing by the parties, shall constitute
the entire agreement among the parties hereto with respect to the subject matter
hereof, other than written agreements with respect to specific plans, programs
or arrangements described in Sections 5 and 6.

26. REQUIRED PROVISIONS. In the event any of the foregoing provisions of this
Section 26 are in conflict with the terms of this Agreement, this Section 26
shall prevail.

      a.    The Bank may terminate Executive's employment at any time, but any
            termination by the Bank, 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 7 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 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(e)(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, 12 U.S.C. Section 1813(x)(1), all
            obligations of the Bank under this

                                       12
<PAGE>

            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 of the Bank 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 OTS (or his designee), the FDIC or the Resolution
            Trust Corporation, at the time the FDIC 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, 12
            U.S.C. Section 1823(c); or (ii) by the Director of the OTS (or his
            designee) at the time the Director (or his designee) approves a
            supervisory merger to resolve problems related to the operations 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.

      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 12 C.F.R. Section 545.121 and any rules
            and regulations promulgated thereunder.

                                       13
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first set forth above.

ATTEST:                               KENTUCKY FIRST FEDERAL BANCORP

_________________________             By:_______________________________________
Corporate Secretary                      For the Entire Board of Directors

ATTEST:                               FIRST FEDERAL SAVINGS BANK OF FRANKFORT

_________________________             By:_______________________________________
Corporate Secretary                      For the Entire Board of Directors

WITNESS:                              EXECUTIVE

_________________________             By:_______________________________________
Corporate Secretary                      Don D. Jennings

                                       14

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