AMENDED AND RESTATED JEFFERSON FEDERAL BANK SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

(a)

The purpose of the Jefferson Federal Bank Supplemental Executive Retirement Plan (the “Plan”) is to assist Jefferson Federal Bank (the “Bank”) and its affiliates in retaining the services of key employees until their retirement, to induce such employees to use their best efforts to enhance the business of the Bank and its affiliates, and to provide certain supplemental retirement benefits to such employees.

(b)

The Plan, in relevant part, is intended to constitute an unfunded “excess benefit plan” as defined in Section 3(36) of the Employee Retirement Income Security Act of 1974, as amended. The Plan is specifically designed to provide certain key employees with retirement benefits that would have been payable under the various tax-qualified retirement plans sponsored by the Bank but for the limitations placed on the benefits and contribution under such plans by various provisions of the Internal Revenue Code of 1986, as amended.

(c)

The Bank is amending and restating the Plan in its entirety effective as of January 1, 2005, to comply with Section 409A of the Code.

(a)

“Affiliate” means any “parent corporation” or any “subsidiary corporation” of the Bank, as such terms are defined in Sections 424(e) and 424(f), respectively, of the Code.

(b)

“Applicable Limitations” means one of the following:

(i)

the maximum limitation on annual benefits payable by a qualified defined benefit plan under Section 415(b) of the Code;

(ii)

the maximum limitations on annual additions to a qualified defined contribution plan under Section 415(c) of the Code;

(iii)

the maximum limitation on the aggregate projected annual benefits payable by qualified defined benefit plans and the annual additions to qualified defined contribution plans under Section 415(e) of the Code; and

(iv)

the maximum limitation on the annual amount of compensation that may, under Section 401(a)(17) of the Code, be taken into account in determining contributions to and benefits under qualified plans.

(c)

“Bank” means Jefferson Federal Bank, and its successors.

(d)

“Board of Directors” means the Board of Directors of the Bank.

(e)

“Change in Control” means the earliest occurrence of a “change in ownership,” “change in effective control,” or “change in ownership of a substantial portion of assets” for purposes of Section 409 of the Code.

(f)

“Code” means the Internal Revenue Code of 1986, as amended.

(g)

“Committee” means the person(s) designated by the Board of Directors, pursuant to Section 9.02 of the Plan, to administer the Plan.

(h)

“Common Stock” means the common stock of the Company.

(i)

“Company” means Jefferson Bancshares, Inc. and its successors.

(j)

“Eligible Individual” means any Employee of the Bank or an Affiliate who participates in the ESOP, as the case may be, and whom the Board of Directors determines is one of a “select group of management or highly compensated employees,” as such phrase is used for purposes of Sections 101, 201, and 301 of ERISA.

(k)

“ Employee ” means any person employed by the Bank or an Affiliate.

(l)

“Employer” means the Bank or Affiliate that employs the Employee.

(m)

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

(n)

“ESOP” means the Jefferson Federal Bank Employee Stock Ownership Plan, as amended from time to time.

(o)

“ESOP Acquisition Loan” means a loan or other extension of credit incurred by the trustee of the ESOP in connection with the purchase of Common Stock on behalf of the ESOP.

(p)

“ESOP Valuation Date” means any day as of which the investment experience of the trust fund of the ESOP is determined and individuals’ accounts under the ESOP are adjusted accordingly.

(q)

“Effective Date” means January 1, 2003.

(r)

“Participant” means an Eligible Employee who is entitled to benefits under the Plan.

(s)

“Plan” means this Jefferson Federal Bank Supplemental Executive Retirement Plan, as amended and restated.

(t)

“Separation from Service” means a Participant’s separation from service with the Bank within the meaning of Section 409A of the Code.

(u)

“Specified Employee” means as of a given date, a “specified employee” as of such date for purposes of Section 409A of the Code.

(v)

“Retirement” means termination of employment at any time following the satisfaction the requirements for early or normal retirement under the ESOP.

(w)

“Supplemental ESOP Account” means an account established by an Employer, pursuant to Section 5.01 of the Plan, with respect to a Participant’s Supplemental ESOP Benefit.

(x)

“Supplemental ESOP Benefit” means the benefit credited to a Participant pursuant to Section 4.01 of the Plan.

(y)

“Supplemental Stock Ownership Account” means an account established by an Employer, pursuant to Section 5.02 of the Plan, with respect to a Participant’s Supplemental Stock Ownership Benefit.

(x)

“Supplemental Stock Ownership Benefit” means the benefit credited to a Participant pursuant to Section 4.02 of the Plan.

(a)

he or she holds the office of Chief Executive Officer of the Bank, or

(b)

he or she is designated by the Board of Directors of the Bank to participate in the Plan.

(a)

Equals the annual contributions made by the Employer and/or the number of shares of Common Stock released for allocation in connection with the repayment of an ESOP Acquisition Loan that would otherwise be allocated to the accounts of the Participant under the ESOP for the applicable plan year if the provisions of the ESOP were administered without regard to and of the Applicable Limitations; and

(b)

Equals the annual contributions made by the Employer and/or the number of shares of common stock released for allocation in connection with the repayment of an ESOP Acquisition Loan that are actually allocated to the accounts of the Participant under the provisions of the ESOP for that particular plan year after giving effect to any reduction of such allocation required by the limitations imposed by any of the Applicable Limitations.

(a)

Upon a Participant’s Retirement from the Employer, the Employer shall credit to the Participant’s Supplemental Stock Ownership Account a Supplemental Stock Ownership Benefit equal to (i) less (ii), the result of which is multiplied by (iii), where:

(i)

Equals the total number of shares of Common Stock acquired with the proceeds of all ESOP Acquisition Loans (together with any dividends, cash proceeds, or other medium related to such ESOP Acquisition Loans) that would have been allocated or credited for the benefit of the Participant under the ESOP and/or this Plan, as the case may be, had the Participant continued in the employ of the Employer through the first ESOP Valuation Date following the last scheduled payment of principal and interest on all ESOP Acquisition Loans outstanding at the time of the Participant’s Retirement; and

(ii)

Equals the total number of shares of Common Stock acquired with the proceeds of all ESOP Acquisition Loans (together with any dividends, cash proceeds, or other medium related to such ESOP acquisition Loans) and allocated for the benefit of the Participant under the ESOP/and or this Plan as of the first ESOP Valuation Date following the Participant’s Retirement; and

(iii)

Equals the higher of the closing price of the Common Stock as of:

(A)

The first ESOP Valuation Date following the Participant’s Retirement, or

(B)

The last day of the Participant’s employment with the Employer.

(b)

For purposes of clause (i) of subsection (a) of this Section 4.02, the total number of shares of Common Stock shall be determined by multiplying the sum of (i) and (ii) by (iii), where:

(i)

equals the average of the total shares of Common Stock acquired with the proceeds of an ESOP Acquisition Loan and allocated for the benefit of the Participant under the ESOP as of three most recent ESOP Valuation Dates preceding the Participant’s Retirement (or lesser number if the Participant has not participated in the ESOP for three full years),

(ii)

equals the average number of shares of Common Stock credited to the Participant’s Supplemental ESOP Account for the three most recent plan years of the ESOP (such that the three recent plan years coincide with the three most recent ESOP Valuation Dates referred to in (i) above); and

(iii)

equals the original number of scheduled payments on the ESOP Acquisition Loan.

(c)

In the event of a Change in Control:

(i)

A Participant’s Retirement shall be deemed to have occurred as of the effective date of the Change in Control, as determined by the Board of Directors, regardless of whether the Participant continues in the employ of the Employer following the Change in Control; and

(ii)

The determination of fair market value of the Common Stock shall be made as the effective date of the Change in Control.