stockholders. This reorganization does not preclude the conversion of First Federal MHC from the mutual to stock form of organization in the future. No assurance can be given when, if ever, First Federal MHC will convert to stock form or what conditions the Office of Thrift Supervision or other regulatory agencies may impose on such a transaction. See “Risk Factors” and “Summary- Possible Conversion of First Federal MHC to Stock Form.”

Description of the Plan of Reorganization

     Following receipt of all required regulatory approvals and approval of the plan of reorganization by First Federal of Hazard’s members, the reorganization will be effected as follows or in any other manner approved by the Office of Thrift Supervision that is consistent with the purposes of the plan of reorganization and applicable laws and regulations:

	•		First Federal of Hazard will organize an interim federal savings bank (“Interim One”) as a wholly owned subsidiary;
	•		Interim One will organize Kentucky First as a wholly owned subsidiary;
	•		Interim One will then organize an interim federal savings bank (“Interim Two”) as a wholly owned subsidiary;
	•		First Federal of Hazard will convert its charter to a federal stock savings and loan association charter and Interim One will exchange its charter for a federal mutual holding company charter to become First Federal MHC;
	•		sequentially with the step described in the fourth bullet, Interim Two will merge with and into First Federal of Hazard with First Federal of Hazard in stock form surviving as a subsidiary of First Federal MHC;
	•		former members of First Federal of Hazard will become members of First Federal MHC; and
	•		First Federal MHC will contribute 100% of the issued common stock of First Federal of Hazard to Kentucky First; and
	•		Kentucky First will issue a majority of its common stock to First Federal MHC.

     Contemporaneously with the reorganization, we will offer shares of our common stock in the reorganization offering at a price of $10.00 per share.

     Immediately after completion of the reorganization, Kentucky First intends to acquire by merger Frankfort First Bancorp, Inc., the holding company for First Federal Savings Bank of Frankfort. In addition to the shares we are selling in the reorganization offering, we will issue Kentucky First shares to shareholders of Frankfort First in the merger. Frankfort First shareholders may elect to exchange each Frankfort First share for either $23.50 in cash or 2.35 Kentucky First shares. First Federal MHC, the federally chartered mutual holding company parent to be formed by First Federal of Hazard, will own 55% of the common stock of Kentucky First outstanding following the reorganization and the merger. First Federal of Hazard intends to capitalize First Federal MHC with $100,000.

     As a result of the reorganization, First Federal of Hazard will be organized in stock form and will be wholly owned by Kentucky First. The legal existence of First Federal of Hazard will not terminate as a result of the reorganization. Instead, First Federal of Hazard in stock form will be a continuation of First Federal of Hazard in mutual form. All property of First Federal of Hazard, including its right, title and interest in all property of any kind and nature, interest and asset of every conceivable value or benefit then existing or pertaining to First Federal of Hazard, or which would inure to First Federal of Hazard immediately by operation of law and without the necessity of any conveyance or transfer and without any further act or deed, will vest in First Federal of Hazard in stock form. First Federal of Hazard in stock form will have, hold and enjoy the same in its right and fully and to the same extent as the same was possessed, held and enjoyed by First Federal of Hazard in the mutual form. First Federal of Hazard in stock form will continue to have, succeed to and be responsible for all the rights, liabilities and obligations of First Federal of Hazard in the mutual form and will maintain its headquarters and operations at First Federal of Hazard’s present locations.

Effects of the Reorganization and the Merger on Deposits, Borrowers and Members

      Continuity. While the reorganization is being accomplished, the normal business of First Federal of Hazard and First Federal of Frankfort will continue without interruption, including being regulated by the Office of Thrift Supervision, their primary regulators, and the Federal Deposit Insurance Corporation. After the reorganization and merger, First Federal of Hazard and First Federal of Frankfort will continue to provide services for depositors and borrowers under current policies by their respective present management and staff.

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     The directors of First Federal of Hazard at the time of reorganization will serve as directors of First Federal of Hazard and First Federal MHC after the reorganization. The board of directors of Kentucky First will be composed of four current directors of First Federal of Hazard, two current directors of Frankfort First and the President and Chief Executive Officer of Frankfort First. See “Management of Kentucky First.” All officers of First Federal of Hazard and First Federal of Frankfort at the time of reorganization and the merger will retain their positions after the reorganization and the merger.

      Deposit Accounts and Loans. The reorganization and the merger will not affect any deposit accounts or borrower relationships with First Federal of Hazard or First Federal of Frankfort. All deposit accounts in First Federal of Hazard and First Federal of Frankfort after the reorganization and the merger will continue to be insured up to the legal maximum by the Federal Deposit Insurance Corporation in the same manner as such deposit accounts were insured immediately before the reorganization and the merger. The reorganization and the merger will not change the interest rate or the maturity of deposits at First Federal of Hazard or First Federal of Frankfort.

     After the reorganization and the merger, each depositor of First Federal of Hazard or of First Federal of Frankfort will retain a deposit account in First Federal of Hazard or First Federal of Frankfort, as the case may be, and depositors of First Federal of Hazard will have a pro rata ownership interest in the equity of First Federal MHC based upon the balance in the depositor’s account. This ownership interest is tied to the depositor’s account, has no tangible market value separate from the deposit account and may only be realized in the event of a liquidation of First Federal MHC. Any depositor who opens a deposit account in First Federal of Hazard obtains a pro rata ownership interest in the equity of First Federal MHC without any additional payment beyond the amount of the deposit. A depositor who reduces or closes his or her account in First Federal of Hazard receives the balance in the account but receives nothing for his or her ownership interest in the equity of First Federal MHC, which is lost to the extent that the balance in the account is reduced. Consequently, depositors of First Federal MHC have no way to realize the value of their ownership interest in First Federal MHC, except in the unlikely event that First Federal MHC is liquidated.

     After the reorganization and the merger, all loans of First Federal of Hazard and First Federal of Frankfort will retain the same status that they had before the reorganization and the merger. The amount, interest rate, maturity and security for each loan will remain as they were contractually fixed before the reorganization and the merger.

      Effect on Voting Rights of Members. After the reorganization and the merger, direction of First Federal of Hazard and First Federal of Frankfort will continue to be under the control of their respective boards of directors. As the holder of all of the outstanding common stock of First Federal of Hazard and First Federal of Frankfort, we will have exclusive voting rights with respect to any matters concerning First Federal of Hazard and First Federal of Frankfort requiring stockholder approval, including the election of directors.

     After the reorganization and the merger, Kentucky First stockholders will have exclusive voting rights with respect to any matters concerning Kentucky First that requires stockholder approval. By virtue of its ownership of a majority of the outstanding shares of common stock of Kentucky First, First Federal MHC will be able to control the outcome of most matters presented to the stockholders for resolution by vote.

     As a federally chartered mutual holding company, First Federal MHC will have no authorized capital stock and, therefore, no stockholders. Holders of deposit accounts of First Federal of Hazard will become members of First Federal MHC. Such persons will be entitled to vote on all questions requiring action by the members of First Federal MHC, including the election of directors of First Federal MHC. In addition, all persons who become depositors of First Federal of Hazard following the reorganization and the merger will have membership rights with respect to First Federal MHC. Borrowers of First Federal of Hazard who were borrower members of First Federal of Hazard at the time of the reorganization will also become members of First Federal MHC. Borrowers will not receive membership rights in connection with any new borrowings made after the reorganization.

      Effect on Liquidation Rights. In the unlikely event of a complete liquidation of First Federal of Hazard before the completion of the reorganization, each depositor would receive a pro rata share of any assets of First Federal of Hazard remaining after payment of expenses and satisfaction of claims of all creditors. Each depositor’s pro rata share of such liquidating distribution would be in the same proportion as the value of such depositor’s deposit account was to the total value of all deposit accounts in First Federal of Hazard at the time of liquidation.

     Upon a complete liquidation of First Federal of Hazard after the reorganization, each depositor would have a claim as a creditor of the same general priority as the claims of all other general creditors of First Federal of Hazard. However, except as described below, a depositor’s claim would be solely for the amount of the balance in such depositor’s deposit account plus accrued interest. Such depositor would not have an interest in the value or assets of First Federal of Hazard above that amount. Instead, the holder of First Federal of Hazard’s common stock ( i.e. , Kentucky First) would be entitled to any assets remaining upon a liquidation of First Federal of Hazard.

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     Upon a complete liquidation of Kentucky First, our stockholders, including First Federal MHC, would be entitled to receive our remaining assets, following payment of all debts, liabilities and all claims of greater priority.

     If liquidation of First Federal MHC occurs following completion of the reorganization, all depositors of First Federal of Hazard at that time will be entitled, pro rata, to the value of their deposit accounts, to a distribution of any assets of First Federal MHC remaining after payment of all debts and claims of creditors.

     There are no plans to liquidate First Federal of Hazard, First Federal of Frankfort, Kentucky First or First Federal MHC in the future.

Subscription Offering and Subscription Rights

     Under the plan of stock issuance, we have granted rights to subscribe for our common stock to the following persons in the following order of priority:

	•		Persons with deposits in First Federal of Hazard with balances aggregating $50 or more (“qualifying deposits”) as of June 30, 2003 (“eligible account holders”). For this purpose, deposit accounts include all savings and time accounts.
	•		Our tax-qualified benefit plans, including our employee stock ownership plan.
	•		Persons with qualifying deposits in First Federal of Hazard as of [Supplemental ERD] (“supplemental eligible account holders”).
	•		Persons with deposits in First Federal of Hazard as of [Voting RD] and borrowers of First Federal of Hazard as of September 23, 2004 who continue to be borrowers as of [Voting RD] (“other members”).

     The amount of common stock that any person may purchase will depend on the availability of the common stock after satisfaction of all subscriptions having prior rights in the subscription offering and to the maximum and minimum purchase limitations set forth in the plan of stock issuance. See " -Limitations on Purchases of Shares .” All persons sharing a qualifying joint account will be counted as a single depositor for purposes of determining the maximum amount that may be subscribed for by individuals and persons exercising subscription rights through qualifying accounts registered to the same address will be subject to the overall purchase limitation.

      Category 1: Eligible Account Holders. Each eligible account holder has the right to subscribe for up to the greater of:

	•		$150,000 of common stock (which equals 15,000 shares);
	•		one-tenth of 1% of the total offering of common stock to persons other than First Federal MHC; or
	•		15 times the product, rounded down to the next whole number, obtained by multiplying the total number of shares of common stock to be sold in the reorganization offering to persons other than First Federal MHC by a fraction of which the numerator is the amount of qualifying deposits of the eligible account holder and the denominator is the total amount of qualifying deposits of all eligible account holders.

     If there are insufficient shares to satisfy all subscriptions by eligible account holders, shares first will be allocated so as to permit each subscribing eligible account holder, if possible, to purchase a number of shares sufficient to make the person’s total allocation equal 100 shares or the number of shares actually subscribed for, whichever is less. After that, unallocated shares will be allocated to each remaining subscribing eligible account holder whose subscription remains unfilled in the proportion that the amounts of his or her respective qualifying deposits bear to the total qualifying deposits of all remaining eligible account holders whose subscriptions remain unfilled. Subscription rights of eligible account holders who are also executive officers or directors of First Federal of Hazard or their associates will be subordinated to the subscription rights of other eligible account holders to the extent attributable to increased deposits in First Federal of Hazard in the one-year period preceding June 30, 2003.

     To ensure a proper allocation of stock, each eligible account holder must list on his or her stock order form all deposit accounts in which such eligible account holder had an ownership interest at June 30, 2003. Failure to list an account, or providing incorrect information, could result in the loss of all or part of a subscriber’s stock allocation.

      Category 2: Tax-Qualified Employee Benefit Plans. Our tax-qualified employee benefit plans have the right to purchase up to 10% of the shares of common stock sold in the reorganization and issued in the merger offering. As a tax-qualified employee benefit plan, our employee stock ownership plan intends to

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purchase a number of shares equal to 3.92% of the shares of Kentucky First common stock that will be outstanding following the reorganization and the merger. Subscriptions by the employee stock ownership plan will not be aggregated with shares of common stock purchased by any other participants in the offering, including subscriptions by our officers and directors, for the purpose of applying the purchase limitations in the plan of stock issuance. If we increase the number of shares offered in the reorganization above the maximum of the offering range, the employee stock ownership plan will have a first priority right to purchase any shares exceeding that amount up to 10% of the common stock sold in the offering. If the plan’s subscription is not filled in its entirety, the employee stock ownership plan may purchase shares in the open market or may purchase shares directly from us with the approval of the Office of Thrift Supervision.

      Category 3: Supplemental Eligible Account Holders . Each supplemental eligible account holder has the right to subscribe for up to the greater of:

	•		$150,000 of common stock (which equals 15,000 shares);
	•		one-tenth of 1% of the total offering of common stock to persons other than First Federal MHC; or
	•		15 times the product, rounded down to the next whole number, obtained by multiplying the total number of shares of common stock to be sold in the reorganization offering to persons other than First Federal MHC by a fraction of which the numerator is the amount of qualifying deposits of the supplemental eligible account holder and the denominator is the total amount of qualifying deposits of all supplemental eligible account holders.

     If eligible account holders and the employee stock ownership plan subscribe for all of the shares, no shares will be available for supplemental eligible account holders. If shares are available for supplemental eligible account holders but there are insufficient shares to satisfy all subscriptions by supplemental eligible account holders, shares first will be allocated so as to permit each subscribing supplemental eligible account holder, if possible, to purchase a number of shares sufficient to make the person’s total allocation equal 100 shares or the number of shares actually subscribed for, whichever is less. After that, unallocated shares will be allocated among each remaining subscribing supplemental eligible account holder whose subscription remains unfilled in the proportion that the amounts of his or her respective qualifying deposits bear to the total qualifying deposits of all remaining supplemental eligible account holders whose subscriptions remain unfilled.

     To ensure a proper allocation of stock, each supplemental eligible account holder must list on his or her stock order form all deposit accounts in which such supplemental eligible account holder had an ownership interest at [Supplemental ERD] . Failure to list an account, or providing incorrect information, could result in the loss of all or part of a subscriber’s stock allocation.

      Category 4: Other Members. Each other member has the right to purchase up to the greater of $150,000 of common stock (which equals 15,000 shares) or one-tenth of 1% of the total offering of common stock in the reorganization offering to persons other than First Federal MHC. If eligible account holders, the employee stock ownership plan and supplemental eligible account holders subscribe for all of the shares, no shares will be available for other members. If shares are available for other members but there are not sufficient shares to satisfy all subscriptions by other members, shares first will be allocated so as to permit each subscribing other member, if possible, to purchase a number of shares sufficient to make the person’s total allocation equal 100 shares or the number of shares actually subscribed for, whichever is less. After that, unallocated shares will be allocated among the remaining subscribing other members in the proportion that each other member’s subscription bears to the total subscriptions of all such subscribing other members whose subscriptions remain unfilled.

     To ensure a proper allocation of stock, each other member must list on his or her stock order form all deposit and loan accounts in which such other member had an ownership interest at the Voting Record Date. Failure to list an account or loan, or providing incorrect information, could result in the loss of all or part of a subscriber’s stock allocation.

      Expiration Date for the Subscription Offering. The subscription offering, and all subscription rights under the plan of stock issuance, is expected to terminate at 12:00 noon, Eastern Time, on [Expiration Date] . We will not accept orders for common stock in the subscription offering received after that time. We will make reasonable attempts to provide a prospectus and related offering materials to holders of subscription rights; however, all subscription rights will expire on the expiration date, as extended, whether or not we have been able to locate each person entitled to subscription rights. We may extend the expiration date without notice to you until [Extension Date #1] , unless the Office of Thrift Supervision approves a later date, which will not be beyond [Extension Date #2] .

     Office of Thrift Supervision regulations require that we complete the sale of common stock within 45 days after the close of the subscription offering. If the sale of the common stock is not completed within that period, all funds received will be returned promptly with interest at our passbook rate and all deposit account withdrawal authorizations will be canceled unless we receive approval of the Office of Thrift Supervision to

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extend the time for completing the offering. If regulatory approval of an extension of the time period has been granted, we will notify all subscribers of the extension and of the duration of any extension that has been granted, and subscribers will have the right to modify or rescind their purchase orders. If we do not receive an affirmative response from a subscriber to any resolicitation, the subscriber’s order will be rescinded and all funds received will be returned promptly with interest, or withdrawal authorizations will be canceled. No single extension can exceed 90 days, and all extensions in the aggregate may not last beyond [Extension Date #2] .

      Persons in Non-Qualified States. We will make reasonable efforts to comply with the securities laws of all states in the United States in which persons entitled to subscribe for stock under the plan of stock issuance reside. However, we are not required to offer stock in the subscription offering to any person who resides in a foreign country or who resides in a state of the United States in which (1) only a small number of persons otherwise eligible to subscribe for shares of common stock reside; (2) the granting of subscription rights or the offer or sale of shares to such person would require that we or our officers or directors register as a broker, dealer, salesman or selling agent under the securities laws of the state, or register or otherwise qualify the subscription rights or common stock for sale or qualify as a foreign corporation or file a consent to service of process; or (3) we determine that compliance with that state’s securities laws would be impracticable for reasons of cost or otherwise.

      Restrictions on Transfer of Subscription Rights and Shares. Subscription rights are nontransferable. You may not transfer, or enter into any agreement or understanding to transfer, the legal or beneficial ownership of your subscription rights issued under the plan of stock issuance or the shares of common stock to be issued upon exercise of your subscription rights. Your subscription rights may be exercised only by you and only for your own account. If you exercise your subscription rights, you will be required to certify that you are purchasing shares solely for your own account and that you have no agreement or understanding regarding the sale or transfer of such shares. Federal regulations also prohibit any person from offering, or making an announcement of an offer or intent to make an offer, to purchase such subscription rights or shares of common stock before the completion of the reorganization.

     If you sell or otherwise transfer your rights to subscribe for common stock in the subscription offering or subscribe for common stock on behalf of another person, you may forfeit those rights and face possible further sanctions and penalties imposed by the Office of Thrift Supervision or another agency of the U.S. Government. We will pursue any and all legal and equitable remedies in the event we become aware of the transfer of subscription rights and will not honor orders known by us to involve the transfer of such rights.

Community Offering

     To the extent that shares remain available for purchase after satisfaction of all subscriptions received in the subscription offering, we may offer shares in a community offering to the following persons in the following order of priority:

	•		Natural persons who maintain their personal residence in Perry County, Kentucky; and
	•		Members of the general public to whom we deliver a prospectus.

     We will consider persons to maintain their personal residence in Perry County if they occupy a dwelling in the county and establish an ongoing physical presence in the county that is not merely transitory in nature. We may utilize depositor or loan records or other evidence provided to us to make a determination as to whether a person is a resident. In all cases, the determination of residence status will be made by us in our sole discretion.

     Purchasers in the community offering are eligible to purchase up to $150,000 of common stock (which equals 15,000 shares). If not enough shares are available to fill orders of natural persons, the available shares will be allocated first to each such subscriber whose order we accept in an amount equal to the lesser of 100 shares or the number of shares subscribed for by each such subscriber, if possible. After that, unallocated shares will be allocated among subscribers whose orders remain unsatisfied in the same proportion that the unfilled order of each such subscriber bears to the total unfilled orders of all such subscribers. If oversubscription occurs among members of the general public, the allocation procedures described above will apply.

     The community offering, if held, may commence concurrently with or subsequent to the subscription offering, is expected to terminate with the subscription offering and must terminate no later than 45 days after the close of the subscription offering unless extended by us, with approval of the Office of Thrift Supervision. If we receive regulatory approval for an extension of the offering beyond [Extension Date #2] , all subscribers will be notified of the extension and of the duration of any extension that has been granted, and will have the right to confirm, increase, decrease or rescind their orders. If we do not receive an affirmative response from a subscriber to any resolicitation, the subscriber’s order will be rescinded and all funds received will be promptly returned with interest.

      The opportunity to subscribe for shares of common stock in the community offering is subject to our right to reject orders, in whole or part, either at the time of receipt of an order or as soon as

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practicable following the expiration date of the offering. If your order is rejected in part, you will not have the right to cancel the remainder of your order.

Syndicated Community Offering

     The plan of stock issuance provides that, if necessary, all shares of common stock not purchased in the subscription offering and community offering may be offered for sale to the general public in a syndicated community offering through a syndicate of registered broker-dealers to be formed and managed by Capital Resources, Inc. acting as our agent. Neither Capital Resources, Inc. nor any registered broker-dealer will have any obligation to take or purchase any shares of the common stock in the syndicated community offering; however, Capital Resources, Inc. has agreed to use its best efforts in the sale of shares in any syndicated community offering. We have not selected any particular broker-dealers to participate in a syndicated community offering. The syndicated community offering must terminate no later than 45 days after the expiration of the subscription offering, unless extended by us, with approval of the Office of Thrift Supervision. See "-Community Offering” above for a discussion of rights of subscribers in the event an extension is granted.

      The opportunity to subscribe for shares of common stock in the syndicated community offering is subject to our right to reject orders, in whole or part, either at the time of receipt of an order or as soon as practicable following the expiration date of the offering. If your order is rejected in part, you will not have the right to cancel the remainder of your order.

     Purchasers in the syndicated community offering are eligible to purchase up to $150,000 of common stock (which equals 15,000 shares).

     The syndicated community offering will be conducted in accordance with certain Securities and Exchange Commission rules applicable to best efforts offerings. Generally under those rules, Capital Resources, Inc., a broker-dealer, will deposit funds it receives prior to closing from interested investors into a separate interest-bearing bank account. If and when all the conditions for the closing are met, funds for common stock sold by Capital Resources, Inc. in the syndicated community offering will be promptly delivered to us. If the offering is consummated, but some or all of an interested investor’s funds are not accepted by us, those funds will be returned to the interested investor promptly, with interest. If the offering is not consummated, funds in the account will be promptly returned, with interest, to the potential investor. Normal customer ticketing will be used for order placement. In the syndicated community offering, subscription agreements will not be used.

     If we are unable to find purchasers from the general public for all unsubscribed shares, we will make other purchase arrangements, if feasible. Other purchase arrangements must be approved by the Office of Thrift Supervision and may provide for purchases for investment purposes by directors, officers, their associates and other persons in excess of the limitations provided in the plan of stock issuance and in excess of the proposed director purchases discussed earlier, although no purchases are currently intended. If other purchase arrangements cannot be made, the plan of reorganization will terminate.

Frankfort First Merger

     Upon consummation of the merger, in addition to the shares of common stock we are offering for sale in the reorganization offering, additional shares of Kentucky First common stock will be issued to Frankfort First shareholders as part of the consideration to be paid to Frankfort First shareholders pursuant to the terms of the merger agreement. Frankfort First shareholders may elect to exchange each share of Frankfort First common stock for either $23.50 in cash or 2.35 shares of Kentucky First common stock. No more than 45% of the shares of Kentucky First common stock to be issued in the reorganization and the merger to persons other than First Federal MHC may be issued in the merger to existing Frankfort First shareholders subject to the requirement that Frankfort First shareholders receive at least an aggregate of 1,247,565 shares of Kentucky First common stock in the merger (or such other minimum number as would satisfy the requirement that at least 40% of the value of the merger consideration paid to Frankfort First shareholders be in the form of Kentucky First common stock). However, under no circumstances will Frankfort First shareholders receive more than 49% of the Kentucky First shares issued to persons other than First Federal MHC.

Marketing Arrangements

     We have retained Capital Resources, Inc. as our marketing advisor to consult with and to advise Kentucky First, and to assist Kentucky First, on a best efforts basis, in the distribution of the shares of common stock in the offering. The services that Capital Resources, Inc. will provide include, but are not limited to:

	•		managing the Stock center and training and educating the employees of Kentucky First or First Federal of Hazard who will perform ministerial functions in the subscription offering and community offering, regarding the mechanics and regulatory requirements of the stock offering process;
	•		keeping records of subscriptions and orders for common stock;

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	•		assisting in the design and implementation of a marketing strategy for the offering and assisting management in scheduling and preparing for any investor meetings;
	•		soliciting orders for common stock and assisting interested stock subscribers; and
	•		assisting in soliciting proxy votes of members.

     For its services, Capital Resources, Inc. will receive an advisory and marketing fee equal to the greater of (i) 1.50% of the total dollar amount of common stock sold in the reorganization offering and issued in the merger or (ii) 3.0% of the total dollar amount of stock sold in the reorganization offering. In both (i) and (ii), the fee shall exclude the dollar amount of common stock sold to the employee stock ownership plan and directors, officers and employees of First Federal of Hazard or their immediate families. Of the total amount due, First Federal of Hazard has paid $80,000 for consulting work. Such payments are non-refundable. If Capital Resources, Inc. sells common stock through a group of broker-dealers in a syndicated community offering, it will be paid a fee equal to    % of the dollar amount of total shares sold in the syndicated community offering, which fee along with the fee payable to selected dealers (which may include Capital Resources, Inc.) shall not exceed    % of aggregate syndicated community offering sales. Capital Resources, Inc. will also be reimbursed for its allocable expenses not to exceed $50,000 without our consent and its legal fees in an amount not expected to exceed $75,000. Kentucky First and First Federal of Hazard have agreed to indemnify Capital Resources, Inc. against certain claims or liabilities, including liabilities under the Securities Act of 1933, as amended, and will contribute to payments Capital Resources, Inc. may be required to make in connection with any such claims or liabilities. Capital Resources, Inc. is the wholly owned subsidiary of Capital Resources Group, which acted as financial advisor to First Federal of Hazard in connection with the merger.

     A Stock Center will be established at our office at Main & Lovern Streets, Hazard, Kentucky 41701. We will rely on Rule 3a4-1 of the Securities Exchange Act of 1934, and sales of common stock will be conducted within the requirements of this rule, so as to permit officers, directors and employees to participate in the sale of common stock in those states where the law permits. Our officers, directors and employees will not be compensated directly or indirectly by the payment of commissions or other remuneration in connection with his or her participation in the sale of common stock. Capital Resources, Inc. has not prepared a report or opinion constituting recommendations or advice to us in connection with the stock offering. In addition, Capital Resources, Inc. has expressed no opinion as to the prices at which the common stock to be offered in the stock offering may trade.

Description of Sales Activities; Stock Information Center

     We will offer the common stock in the subscription offering and community offering principally by the distribution of this prospectus and through activities conducted at our Stock center. At all times, registered representatives of Capital Resources, Inc. will manage the Stock center. The Stock center is open Monday through Friday, except for bank holidays, from 9:00 a.m. to 4:00 p.m., Eastern Time. The phone number is (606) 435-0052.

     Our officers and employees may participate in the offering in clerical capacities, providing administrative support in effecting sales transactions or, when permitted by state securities laws, answering questions of a ministerial nature relating to the proper execution of the order form. Our officers may answer questions regarding our business when permitted by state securities laws. Other questions of our depositors and other prospective purchasers, including questions as to the advisability or nature of the investment, will be directed to employees of Capital Resources, Inc. Our officers and employees have been instructed not to solicit offers to purchase common stock or provide advice regarding the purchase of common stock. None of our officers, directors or employees will be compensated, directly or indirectly, for any activities in connection with the offer or sale of securities issued in the reorganization.

     None of our personnel participating in the offering is registered or licensed as a broker or dealer or an agent of a broker or dealer. Our personnel will assist in the above-described sales activities under an exemption from registration as a broker or dealer provided by Rule 3a4-1 promulgated under the Securities Exchange Act of 1934. Rule 3a4-1 generally provides that an “associated person of an issuer” of securities will not be deemed a broker solely by reason of participation in the sale of securities of the issuer if the associated person meets certain conditions. These conditions include, but are not limited to, that the associated person participating in the sale of an issuer’s securities not be compensated in connection with the offering at the time of participation, that the person not be associated with a broker or dealer and that the person observe certain limitations on his or her participation in the sale of securities. For purposes of this exemption, “associated person of an issuer” is defined to include any person who is a director, officer or employee of the issuer or a company that controls, is controlled by or is under common control with the issuer.

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