AMENDEDAND RESTATED FIRSTFEDERAL SAVINGS AND LOAN ASSOCIATION OF HAZARD CHANGEIN CONTROL SEVERANCE COMPENSATION PLAN

A.

Purpose.

The purpose of the First Federal Savings and Loan Association of Hazard Change in Control Severance Compensation Plan (the “Plan”) is to ensure the successful continuation of the business of First Federal Savings and Loan Association (the “Bank”) and the fair and equitable treatment of employees following a Change in Control (as defined below).  The Bank has amended and restated this Plan to conform to the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

B.	Covered Employees.

 

Subject to paragraph C below, any employee of the Bank (or a subsidiary that has adopted that Plan in accordance with paragraph H) with at least one year of service as of his or her termination date shall be eligible to receive a Change in Control Severance Benefit (as defined below) if, within the period beginning on the effective date of a Change in Control and ending on the first anniversary of such date, (i) the employee’s employment is involuntarily terminated or (ii) the employee terminates employment voluntarily after being offered continued employment in a position that is not a Comparable Position (as defined below).

C.	Limitations on Eligibility for Change in Control Severance Benefits.

1.      No employee shall be eligible for a Change in Control Severance Benefit if (a) his or her employment is terminated for “Cause”, (b) he or she is offered a Comparable Position and declines to accept such position or (c) the employee is, at the time of termination of employment, a party to an individual employment agreement or change in control agreement.

3.      For purposes of this Plan, a “Comparable Position” shall mean a position that would (i) provide the employee with base compensation and benefits that are comparable in the aggregate to those provided to the employee prior to the Change in Control, (ii) provide the employee with an opportunity for variable bonus compensation that is comparable to the opportunity provided to the employee prior to the Change in Control, (iii) be in a location that would not require the employee to increase his or her daily one way commuting distance by more than twenty-five miles as compared to the employee’s commuting distance immediately prior to the Change in Control and (iv) have job skill requirements and duties that are comparable to the requirements and duties of the position held by the employee prior to the Change in Control.

D.	Definition of Change in Control.

For purposes of this Plan, “Change in Control” means the occurrence of any one of the following events:

(1)

Merger: Kentucky First Federal Bancorp, Inc. (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.

(2)

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.

(3)

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 (⅔) 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

(4)

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

E.	Determination of the Change in Control Severance Benefit.

The Change in Control Severance Benefit payable to an eligible employee under this Plan shall be determined as follows:

(1)

An eligible employee who becomes entitled to receive a Change in Control Severance Payment under the Plan shall receive a benefit determined under the following schedule:

(a)

The basic benefit under the Plan shall be determined as the product of (i) the employee’s years of service from his or her hire date (including partial years) through the termination date and (ii) one (1) month of the employee’s Base Compensation (as defined below).  A “year of service” shall mean each 12-month period of service following an employee’s hire date determined without regard to the number of hours worked during such period(s).

 

(b)

Notwithstanding anything in this Plan to the contrary, the minimum payment to an eligible employee under this Plan shall be one (1) month of Base Compensation and the maximum payment to an eligible employee shall not exceed twelve (12) months of Base Compensation.

(2)

The Change in Control Severance payment shall be made in a lump sum not later than five (5) business days after the date of the employee’s termination of employment.

 

 

(3)

For the purpose of making severance determinations under this paragraph D, “Base Compensation” shall mean:

(a)

for salaried employees, the employee’s annual base salary at the rate in effect on his or her termination date or, if greater, the rate in effect on the date immediately preceding the Change in Control.

(b)

for employees whose compensation is determined in whole or in part on the basis of commission income, the employee’s base salary at termination (or, if greater, the base salary on the date immediately preceding the effective date of the Change in Control), if any, plus the commissions earned by the employee in the twelve (12) full calendar months preceding his or her termination date (or, if greater, the commissions earned in the twelve (12) full calendar months immediately preceding the effective date of the Change in Control).

(c)       for hourly employees, the employee’s total hourly wages for the twelve (12) full calendar months preceding his or her termination date or, if greater, the twelve (12) full calendar months preceding the effective date of the Change in Control.

F.	Withholding.

All payments will be subject to customary withholding for federal, state and local tax purposes.

G.	Parachute Payment.

Notwithstanding anything in this Plan to the contrary, if a benefit to an employee who is a “Disqualified Individual” shall be in an amount which includes an “Excess Parachute Payment” taking into account payments under this Plan and otherwise, the benefit under this Plan to that employee shall be reduced to the maximum amount which does not include an Excess Parachute Payment.  The terms “Disqualified Individual” and “Excess Parachute Payment” shall have the same meanings as under Section 280G of the Code, or any successor provision thereto.

H.	Adoption by Subsidiaries.

I.	Administration.

J.	Source of Payments.

 

 

 

K.	Inalienability.

 

In no event may any Employee sell, transfer, anticipate, assign or otherwise dispose of any right or interest under the Plan. At no time will any such right or interest be subject to the claims of creditors, nor liable to attachment, execution or other legal process.

L.	Governing Law.

M.	Severability.

 

N.	No Employment Rights.

O.	Amendment and Termination.

P.	Section 409A.

If when termination of employment occurs an employee is a “specified employee” (within the meaning of Section 409A of the Code), and if the cash severance payment under paragraph E. would be considered deferred compensation under Section 409A of the Code, and, finally, if an exemption from the six-month delay requirement of Section 409A(a)(2)(B)(i) of the Code is not available, the employee’s severance benefit shall be paid to the employee in a single lump sum, without interest, on the first payroll date of the seventh month after the month in which the employee’s employment terminates, provided the termination of employment constitutes a “separation from service” under Section 409A of the Code. References in this Plan to Section 409A of the Code include rules, regulations, and guidance of general application issued by the Department of the Treasury under Section 409A of the Code.

IN WITNESS WHEREOF, a duly authorized officer of the Bank has executed this Plan as of  December 22, 2008.