Exhibit 10.5






EMPLOYMENT AGREEMENT


          This
Agreement (“Agreement”) is made effective as of the _______ day of
_______________, 2007, by and among KAISER FEDERAL BANK (the “Bank”), a
federally chartered stock savings bank, with its principal administrative
office at 1359 N. Grand Ave., Covina, California 91724 and KAY HOVELAND
(“Executive”). Any reference to the “Company” herein shall mean KAISER FEDERAL
FINANCIAL GROUP, INC., the holding company of the Bank. The Company is a party
to this Agreement for the sole purpose of guaranteeing the payments required
hereunder, except as otherwise provided herein.


          WHEREAS,
Executive is currently employed as the President and Chief Executive Officer of
the Bank; and 


          WHEREAS,
the Bank desires to assure itself of the continued services of Executive
pursuant to the terms of this Agreement.


          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.

	
POSITION AND RESPONSIBILITIES





          During
the period of her employment hereunder, Executive agrees to serve as President
and Chief Executive Officer of the Bank. During said period, Executive also
agrees to serve, if elected, as an officer and director of any subsidiary or
affiliate of the Bank or the Company.


	
 

	
 


	
2.

	
TERMS AND DUTIES





          (a)
The term of this Agreement and the period of Executive’s employment hereunder
shall begin as of the date first above written and shall continue for
thirty-six (36) full calendar months thereafter. Commencing July 1, 2008 and
continuing on the first day of July of each year thereafter (the “Anniversary
Date”), this Agreement shall renew for an additional year such that the remaining
term shall be thirty-six (36) months, provided, however, that in order for
the Agreement to renew, the disinterested members of the Board of Directors of
the Bank (the “Board”) must take the following actions prior to each
non-renewal notice period (as described in the next sentence): (i) at least
sixty (60) days prior to the Anniversary Date, conduct a comprehensive
performance evaluation and review of Executive for purposes of determining
whether to extend the Agreement; and (ii) affirmatively approve the renewal or
non-renewal of the Agreement, which decision shall be included in the minutes
of the Board’s meeting. If the decision of such disinterested members of the
Board is not to renew the Agreement, then the Board shall provide the Executive
with a written notice of non-renewal (“Non-Renewal Notice”) at least thirty
(30) days and not more than sixty (60) days prior to any Anniversary Date ,
such that this Agreement shall terminate at the end of thirty-six (36)
months following such Anniversary Date. 


          (b)
During the period of her employment hereunder, except for periods of
absence occasioned by illness, reasonable vacation periods, and reasonable
leaves of absence, Executive






shall
faithfully perform her duties hereunder including activities and services
related to the organization, operation and management of the Bank.


	
 

	
 


	
3.

	
COMPENSATION AND REIMBURSEMENT





          (a)
The compensation specified under this Agreement shall constitute the salary and
benefits paid for the duties described in Section 2(b). The Bank shall pay
Executive as compensation a salary of not less than $350,000 per year (“Base
Salary”). Such Base Salary shall be payable in accordance with the customary
payroll practices of the Bank. During the period of this Agreement, Executive’s
Base Salary shall be reviewed at least annually; the first such review will be
made no later than July 1 of each year during the term of this Agreement and
shall be effective from that date through the end of the next succeeding June.
Such review shall be conducted by a Committee designated by the Board, and the
Board may increase, but not decrease, Executive’s Base Salary (any increase in
Base Salary shall become the “Base Salary” for purposes of this Agreement). In
addition to the Base Salary provided in this Section 3(a), the Bank shall
provide Executive at no cost to Executive with all such other benefits as are
provided uniformly to permanent full-time employees of the Bank.


          (b)
The Bank will provide Executive with employee benefit plans, arrangements and
perquisites substantially equivalent to those in which Executive was
participating or otherwise deriving benefit from immediately prior to the
beginning of the term of this Agreement, and the Bank will not, without
Executive’s prior written consent, make any changes in such plans, arrangements
or perquisites which would adversely affect Executive’s rights or benefits
thereunder, except for amendments that are generally applicable to all
employees. Without limiting the generality of the foregoing provisions of this
Section 3(b), Executive will be entitled to participate in or receive benefits
under any employee benefit plans including but not limited to, retirement
plans, supplemental retirement plans, pension plans, profit-sharing plans,
health-and-accident plans, medical coverage or any other employee benefit plan
or arrangement made available by the Bank in the future to its senior
executives and key management employees, subject to and on a basis consistent
with the terms, conditions and overall administration of such plans and
arrangements. Executive will be entitled to incentive compensation and bonuses
as provided in any plan of the Bank in which Executive is eligible to
participate (and she shall be entitled to a pro rata distribution under any
incentive compensation or bonus plan as to any year in which a termination of
employment occurs, other than Termination for Cause). Nothing paid to Executive
under any such plan or arrangement will be deemed to be in lieu of other compensation
to which Executive is entitled under this Agreement.


          (c)
In addition to the Base Salary provided for by Section 3(a), the Bank shall pay
or reimburse Executive for all reasonable travel and other reasonable expenses
incurred by Executive in performing her obligations under this Agreement and
may provide such additional compensation in such form and such amounts as the
Board may from time to time determine.


	
 

	
 


	
4.

	
OUTSIDE ACTIVITIES





          Executive
may serve as a member of the board of directors of business, community and
charitable organizations subject to the approval of the Board, provided that in
each case such service shall not materially interfere with the performance of
her duties under this Agreement or


2






present any
conflict of interest. Such service to and participation in outside
organizations shall be presumed for these purposes to be for the benefit of the
Bank, and the Bank shall reimburse Executive her reasonable expenses associated
therewith.


	
 

	
 


	
5.

	
WORKING FACILITIES AND EXPENSES





          Executive’s
principal place of employment shall be at the Bank’s principal executive
offices. The Bank shall provide Executive, at her principal place of
employment, with a private office, stenographic services and other support
services and facilities suitable to her position with the Bank and necessary or
appropriate in connection with the performance of her duties under this
Agreement. The Bank shall reimburse Executive for her ordinary and necessary
business expenses incurred in connection with the performance of her duties
under this Agreement, including, without limitation, fees for memberships in
such clubs and organizations that Executive and the Board mutually agree are
necessary and appropriate to further the business of the Bank, and travel and
reasonable entertainment expenses. Reimbursement of such expenses shall be made
upon presentation to the Bank of an itemized account of the expenses in such
form as the Bank may reasonably require. 


	
 

	
 


	
6.

	
PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION





          (a)
The provisions of this Section 6 shall apply upon the occurrence of an Event of
Termination (as herein defined) during Executive’s term of employment under
this Agreement. As used in this Agreement, an “Event of Termination” shall mean
and include any one or more of the following:


          
(i)     the involuntary termination by the Bank of
Executive’s full-time employment hereunder for any reason other than (A)
Retirement, death or Disability, as defined in Section 7 below, or (B)
Termination for Cause as defined in Section 8 hereof; or


          (ii)     Executive’s
voluntary resignation from the Bank’s employ, upon


	
 

	
 


	
 

	
          (A)     a
  material diminution in Executive’s base compensation;


	
 

	
 


	
 

	
          (B)     a
  material diminution in Executive’s authority duties or responsibilities;


	
 

	
 


	
 

	
          (C)     a
  requirement that Executive must report to a corporate officer or employee
  instead of reporting directly to the Board;


	
 

	
 


	
 

	
          (D)     a
  material diminution in the budget over which Executive retains authority;


	
 

	
 


	
 

	
          (E)     a
  change in the geographic location at which Executive must perform her duties
  that is more than twenty-five (25) miles from the location of Executive’s
  principal workplace on the date of this Agreement; or


	
 

	
 


	
 

	
          (F)     any
  other action or inaction that constitutes a material breach by the Bank of
  this Agreement.





3






Upon the
occurrence of any event described in clauses (ii) (A), (B), (C), (D), (E) or
(F), above, Executive shall have the right to elect to terminate her employment
under this Agreement by resignation upon sixty (60) days prior written notice
given within a reasonable period of time not to exceed ninety (90) days after
the initial event giving rise to said right to elect; provided, however that
the Bank shall have at least thirty (30) days to cure such condition and
provided that Executive actually terminates employment within two years after
the initial occurrence of such event. Notwithstanding the preceding sentence,
in the event of a continuing breach of this Agreement by the Bank, Executive,
after giving due notice within the prescribed time frame of an initial event
specified above, shall not waive any of her rights solely under this Agreement
and this Section 6 by virtue of the fact that Executive has submitted her
resignation but has remained in the employment of the Bank and is engaged in
good faith discussions to resolve any occurrence of an event described in
clauses (A), (B), (C), (D), (E) or (F) above. 


          (iii)     (A)
Executive’s involuntary termination by the Bank (other than Termination for
Cause) on the effective date of, or at any time following, a Change in Control,
or (B) Executive’s resignation from employment with the Bank or the Company (or
any successor thereto) following a Change in Control as a result of any event
described in Section 6(a)(ii)(A), (B), (C), (D), (E) or (F) above. For these
purposes, a Change in Control of the Bank or the Company shall mean a change in
control of a nature that: (i) would be required to be reported in response to
Item 5.01 of the current report on Form 8-K, as in effect on the date hereof,
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the
“Exchange Act”); or (ii) results in a Change in Control of the Bank or the
Company within the meaning of the Home Owners’ Loan Act, as amended, and
applicable rules and regulations promulgated thereunder (collectively, the
“HOLA”) as in effect at the time of the Change in Control; or (iii) without
limitation such a Change in Control shall be deemed to have occurred at such
time as (a) any “person” (as the term is used in Sections 13(d) and 14(d) of
the Exchange Act) is or becomes the “beneficial owner” (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing 25% or more of the combined voting power of Company’s
outstanding securities, except for any securities purchased by the Bank’s
employee stock ownership plan or trust; or (b) individuals who constitute the
Board on the date hereof (the “Incumbent Board”) cease for any reason to
constitute at least a majority thereof, provided
that any person becoming a director subsequent to the date hereof whose
election was approved by a vote of at least three-quarters of the directors
comprising the Incumbent Board, or whose nomination for election by the
Company’s stockholders was approved by the same Nominating Committee serving
under an Incumbent Board, shall be, for purposes of this clause (b), considered
as though he or she were a member of the Incumbent Board; or (c) a plan of
reorganization, merger, consolidation, sale of all or substantially all the
assets of the Bank or the Company or similar transaction in which the Bank or
Company is not the surviving institution occurs or is effected; or (d) a proxy
statement soliciting proxies from stockholders of the Company, by someone other
than the current management of the Company is distributed, seeking stockholder
approval of a plan of reorganization, merger or consolidation of the Company or
similar transaction with one or more corporations as a result of which the
outstanding shares of the class of securities then subject to the plan are
exchanged for or converted into cash or property or securities not issued by
the Company; or (e) a tender offer is made for 25% or more of the voting
securities of the Company and the shareholders owning beneficially or of record
25% or more of the outstanding securities of the Company have


4






tendered or offered
to sell their shares pursuant to such tender offer and such tendered shares
have been accepted by the tender offeror. 


          (b)
Upon the occurrence of an Event of Termination within thirty (30) days after
the Date of Termination, as defined in Section 9(b), the Bank shall pay
Executive, or, in the event of her subsequent death, her beneficiary or
beneficiaries, or her estate, as the case may be, as severance pay or
liquidated damages, or both, a sum equal to (i) the Executive’s earned but unpaid
Base Salary and benefits, plus (ii) three (3) times the sum of (A) Base Salary
and (B) the highest rate of bonus awarded to Executive during the prior three
(3) years; provided, however, that such Event of Termination must qualify as a
“Separation from Service” as defined in Internal Revenue Code (“Code”) Section
409A and the regulations thereunder. Notwithstanding the foregoing, to the
extent Executive is a “Specified Employee” as defined in Code Section 409A, and
such earlier payment would trigger penalties under Code Section 409A, then such
payment shall be made on the first day of the seventh month following
Executive’s Separation from Service. Such payment shall not be reduced in the
event Executive obtains other employment following Separation from Service.


          (c)
Upon the occurrence of an Event of Termination, the Bank will cause to be
continued, at the Bank’s expense, life insurance coverage and non-taxable
medical and dental insurance coverage, if any, substantially identical to the
coverage maintained by the Bank for Executive prior to her termination,
provided, however, such medical coverage shall cease upon the earlier of (i)
thirty-six (36) months from the Date of Termination or (ii) the date Executive
becomes eligible for Medicare coverage, provided further, that if Executive is
covered by family coverage or coverage for herself and a spouse, then the
Executive’s family or spouse shall continue to be covered for the remainder of
the thirty-six (36) month period or, in the case of the spouse, until the
spouse becomes eligible for Medicare coverage or obtains healthcare coverage
elsewhere, whichever period is less.


          (d)
Within thirty (30) days of Executive’s Separation from Service in connection
with an Event of Termination (provided, however, that, to the extent Executive
is a “Specified Employee” as defined in Code Section 409A, and such earlier
payment would trigger penalties under Code Section 409A, then such payment
shall be made on the first day of the seventh month following Executive’s
Separation from Service), the Bank shall pay Executive a lump sum equal to the
present value of the Bank’s contributions that would have been made on her
behalf under each of the Bank’s 401(k) Plan and Employee Stock Ownership Plan
(and any other defined contribution plan maintained by the Bank in which
Executive participates) as if she had continued working for the Bank for a
thirty-six (36) month period following her Separation from Service earning her
actual final rate of Base Salary as of the Date of Termination and as if she
had made the maximum amount of employee contributions permitted, if any, under
such plan or plans. Such present values are to be determined using a discount
rate equal to the short-term Internal Revenue Service’s “applicable federal
rate” for the month before the date of the Separation from Service, compounded
annually.


          (e)
Notwithstanding anything to the contrary herein, Executive’s resignation for
any reason other than those set forth in clauses 6(a)(ii)(A), (B), (C), (D),(E)
or (F) shall not entitle Executive to any payments under Section 6 of this
agreement.


5






	
 

	
 


	
7.

	
TERMINATION UPON RETIREMENT, DISABILITY OR DEATH





          For
purposes of this Agreement, termination by the Bank of Executive’s employment
based on “Retirement” shall mean termination of Executive’s employment by the Board
upon Executive’s attainment of age 62, or such later date as determined by the
Board. Upon termination of Executive’s employment because of Retirement,
Executive shall be entitled to all benefits under any retirement plan of the
Bank and other plans to which Executive is a party, but Executive shall not be
entitled to the Termination Benefits specified in Section 6. 


          In
the event Executive is unable to perform her duties under this Agreement on a
full-time basis for a period of six (6) consecutive months by reason of
“Disability” within the meaning of Code Section 409A, the Bank may terminate
this Agreement, provided that the Bank shall continue to be obligated to pay Executive
her Base Salary at the rate in effect at the Date of Termination for the
remaining term of the Agreement, or one year, whichever is the longer period of
time, and provided further that any amounts actually paid to Executive pursuant
to any disability insurance or other similar such program which the Bank has
provided or may provide on behalf of its employees or pursuant to any workman’s
or Social Security disability program shall reduce the Base Salary to be paid
to Executive pursuant to this paragraph. 


          In
the event of Executive’s death during the term of the Agreement, her estate,
legal representatives or named beneficiaries (as directed by Executive in
writing) shall be paid Executive’s Base Salary at the rate in effect at the
time Executive’s death for a period of one (1) year from the date of
Executive’s death, and the Bank will continue to provide non-taxable medical
and dental and other benefits normally provided for an Executive’s family for
one (1) year after Executive’s death.


	
 

	
 


	
8.

	
TERMINATION FOR CAUSE





          The
term “Termination for Cause” shall mean termination because of Executive’s
personal dishonesty, incompetence, willful misconduct, any breach of fiduciary
duty involving personal profit, intentional failure to perform stated duties,
willful violation of any law, rule, or regulation (other than minor traffic
violations or similar offenses) or final cease-and-desist order, or material
breach of any provision of this Agreement. In determining incompetence, the
acts or omissions shall be measured against standards generally prevailing in
the savings institutions industry. Executive shall not have the right to
receive Base Salary or other compensation for any period after Termination for
Cause. Any stock options or other incentives granted to Executive under any
plan of the Bank, the Company or any subsidiary or affiliate thereof (whether
vested or unvested), shall become null and void effective upon Executive’s
receipt of Notice of Termination for Cause pursuant to Section 9 hereof. 


	
 

	
 


	
9.

	
NOTICE





          (a)
Any purported termination by the Bank or by Executive shall be communicated by
Notice of Termination to the other party hereto. For purposes of this
Agreement, a “Notice of Termination” shall mean a written notice which shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances


6






claimed to
provide a basis for termination of Executive’s employment under the provision
so indicated.


          (b)
“Date of Termination” shall mean (A) if Executive’s employment is terminated
for Disability, thirty (30) days after a Notice of Termination is given
(provided that she shall not have returned to the performance of her duties on
a full-time basis during such thirty (30) day period), and (B) if her
employment is terminated for any other reason, the date specified in the Notice
of Termination.


          (c)
If the party receiving a Notice of Termination desires to dispute or contest
the basis or reasons for termination, the party receiving the Notice of
Termination must notify the other party within thirty (30) days after receiving
the Notice of Termination that such a dispute exists, and shall pursue the
resolution of such dispute in good faith and with reasonable diligence pursuant
to Section 20 of this Agreement. During the pendency of any such dispute,
neither the Company nor the Bank shall be obligated to pay Executive Base
Salary or other compensation beyond the Date of Termination. Any amounts paid
to Executive upon resolution of such dispute under this Section shall be offset
against or reduce any other amounts due under this Agreement.


	
 

	
 


	
10.

	
POST-TERMINATION OBLIGATIONS





          (a)
All payments and benefits to Executive under this Agreement shall be subject to
Executive’s compliance with paragraph (b) of this Section and Section 11 during
the term of this Agreement and for one (1) full year after the expiration or
termination hereof.


          (b)
Executive shall, upon reasonable notice, furnish such information and
assistance to the Bank as may reasonably be required by the Bank in connection
with any litigation in which it or any of its subsidiaries or affiliates is, or
may become, a party.


	
 

	
 


	
11.

	
NON-COMPETITION





          (a)
Upon any termination of Executive’s employment hereunder, other than a
termination, (whether voluntary or involuntary) in connection with a Change in
Control, as a result of which the Bank is paying Executive benefits under
Section 6 of this Agreement, Executive agrees not to compete with the Bank
and/or the Company for a period of one (1) year following such termination
within twenty-five (25) miles of any existing branch of the Bank or any
subsidiary of the Company or within twenty-five (25) miles of any office for
which the Bank, the Company or a Bank subsidiary of the Company has filed an
application for regulatory approval to establish an office, determined as of
the effective date of such termination, except as agreed to pursuant to a
resolution duly adopted by the Board. Executive agrees that during such period
and within said area, cities, towns and counties, Executive shall not work for
or advise, consult or otherwise serve with, directly or indirectly, any entity
whose business materially competes with the depository, lending or other
business activities of the Bank and/or the Company. The parties hereto,
recognizing that irreparable injury will result to the Bank and/or the Company,
its business and property in the event of Executive’s breach of this Subsection
11(a) agree that in the event of any such breach by Executive, the Bank and/or
the Company will be entitled, in addition to any other remedies and damages
available, to an injunction to restrain the violation hereof by Executive,
Executive’s partners, agents, servants,


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employers,
employees and all persons acting for or with Executive. Executive represents
and admits that Executive’s experience and capabilities are such that Executive
can obtain employment in a business engaged in other lines and/or of a
different nature than the Bank and/or the Company, and that the enforcement of
a remedy by way of injunction will not prevent Executive from earning a
livelihood. Nothing herein will be construed as prohibiting the Bank and/or the
Company from pursuing any other remedies available to the Bank and/or the
Company for such breach or threatened breach, including the recovery of damages
from Executive. 


          (b)
Executive recognizes and acknowledges that the knowledge of the business
activities and plans for business activities of the Bank and affiliates
thereof, as it may exist from time to time, is a valuable, special and unique
asset of the business of the Bank. Executive will not, during or after the term
of her employment, disclose any knowledge of the past, present, planned or
considered business activities of the Bank or affiliates thereof to any person,
firm, corporation, or other entity for any reason or purpose whatsoever (except
for such disclosure as may be required to be provided to any federal banking
agency with jurisdiction over the Bank or Executive). Notwithstanding the
foregoing, Executive may disclose any knowledge of banking, financial and/or
economic principles, concepts or ideas which are not solely and exclusively
derived from the business plans and activities of the Bank, and Executive may
disclose any information regarding the Bank or the Company which is otherwise
publicly available. In the event of a breach or threatened breach by Executive
of the provisions of this Section, the Bank will be entitled to an injunction
restraining Executive from disclosing, in whole or in part, the knowledge of
the past, present, planned or considered business activities of the Bank or
affiliates thereof, or from rendering any services to any person, firm,
corporation, other entity to whom such knowledge, in whole or in part, has been
disclosed or is threatened to be disclosed. Nothing herein will be construed as
prohibiting the Bank from pursuing any other remedies available to the Bank for
such breach or threatened breach, including the recovery of damages from
Executive.


	
 

	
 


	
12.

	
SOURCE OF PAYMENTS





          All
payments provided in this Agreement shall be timely paid in cash or check from
the general funds of the Bank. The Company, however, guarantees payment and
provision of all amounts and benefits due hereunder to Executive and, if such
amounts and benefits due from the Bank are not timely paid or provided by the
Bank, such amounts and benefits shall be paid or provided by the Company.


	
 

	
 


	
13.

	
NO EFFECT ON EMPLOYEE BENEFITS PLANS OR PROGRAMS





          The
Board may terminate Executive’s employment at any time, but, any termination of
Executive’s employment, other than Termination for Cause shall have no effect
on or prejudice the vested rights of Executive under the Company’s or the
Bank’s qualified or non-qualified retirement, pension, savings, thrift,
profit-sharing or stock bonus plans, group life, health (including
hospitalization, medical and major medical), dental, accident and long term
disability insurance plans or other employee benefit plans or programs, or
compensation plans or programs in which Executive was a participant. Executive
shall not have the right to receive any Base


8






Salary or
other compensation for any period after Termination for Cause as defined in
Section 8, except as otherwise required by applicable law.


	
 

	
 


	
14.

	
REQUIRED REGULATORY PROVISIONS





          (a)
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) (12 USC §1818(e)(3)) or 8(g)(1) (12 USC §1818(g)(1)) of
the Federal Deposit Insurance Act (“FDIA”), as amended by the Financial
Institutions Reform, Recovery and Enforcement Act of 1989, the Bank’s obligations
under this Agreement shall be suspended as of the date of service, unless
stayed by appropriate proceedings. If the charges in the notice are dismissed,
the Bank may in its discretion (i) pay Executive all or part of the Base Salary
or other compensation withheld while its contract obligations were suspended
and (ii) reinstate (in whole or in part) any of its obligations which were
suspended.


          (b)
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) (12
U.S.C. §1818(e)(4)) or 8(g)(1) (12 U.S.C. §1818(g)(1)) of the FDIA, all
obligations of the Bank under this Agreement shall terminate as of the
effective date of the order, but vested rights of the contracting parties shall
not be affected.


          (c)
If the Bank is in default as defined in Section 3(x)(1) (12 U.S.C. §1813(x)(1))
of the FDIA, all obligations under this Agreement shall terminate as of the
date of default, but this paragraph shall not affect any vested rights of the
contracting parties.


          (d)
All obligations under this Agreement shall be terminated, except to the extent
determined that continuation of this Agreement is necessary for the continued
operation of the Bank, (i) by the Director of OTS or a designee, 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) (12 U.S.C. §1823(c)) of the
FDIA; or (ii) by the Director of OTS or a designee at the time the Director of
OTS or a designee approves a supervisory merger to resolve problems related to
operations of the Bank or when the Bank is determined by the Director of OTS or
a designee 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.


          (e)
Notwithstanding anything herein contained to the contrary, any payments to
Executive by the Company, whether pursuant to this Agreement or otherwise, are subject
to and conditioned upon their compliance with Section 18(k) of the FDIA, 12
U.S.C. § 1828(k), and the regulations promulgated thereunder in 12 C.F.R. Part
359.


	
 

	
 


	
15.

	
NO ATTACHMENT





          (a)
Except as required by law, no right to receive payments under this Agreement
shall be subject to anticipation, commutation, alienation, sale, assignment,
encumbrance, charge, pledge, or hypothecation, or to execution, attachment,
levy, or similar process or assignment by operation of law, and any attempt, voluntary
or involuntary, to affect any such action shall be null, void, and of no
effect.


9






          (b)
This Agreement shall be binding upon, and inure to the benefit of, Executive,
the Bank and the Company and their respective successors and assigns.


	
 

	
 


	
16.

	
ENTIRE AGREEMENT; MODIFICATION AND WAIVER





          (a)
This instrument contains the entire agreement of the parties relating to the
subject matter hereof, and supercedes in its entirety any and all prior
agreements, understandings or representations relating to the subject matter
hereof, except that the parties acknowledge that this Agreement shall not
affect any of the rights and obligations of the parties under any agreement or
plan entered into with or by the Bank or the Company pursuant to which the
Executive may receive Base Salary or other compensation except as set forth in
Section 12 hereof. No modifications of this Agreement shall be valid unless
made in writing and signed by the parties hereto. 


          (b)
This Agreement may not be modified or amended except by an instrument in
writing signed by the parties hereto.


          (c)
No term or condition of this Agreement shall be deemed to have been waived, nor
shall there be any estoppel against the enforcement of any provision of this
Agreement, except by written instrument of the party charged with such waiver
or estoppel. No such written waiver shall be deemed a continuing waiver unless
specifically stated therein, and each such waiver shall operate only as to the
specific term or condition waived and shall not constitute a waiver of such
term or condition for the future as to any act other than that specifically
waived.


	
 

	
 


	
17.

	
SEVERABILITY





          If,
for any reason, any provision of this Agreement, or any part of any provision,
is held invalid, such invalidity shall not affect any other provision of
this Agreement or any part of such provision not held so invalid, and each such
other provision and part thereof shall to the full extent consistent with law
continue in full force and effect.


	
 

	
 


	
18.

	
HEADINGS FOR REFERENCE ONLY





          The
headings of sections and paragraphs herein are included solely for convenience
of reference and shall not control the meaning or interpretation of any of the
provisions of this Agreement.


	
 

	
 


	
19.

	
GOVERNING LAW





          This
Agreement shall be governed by the laws of the State of California but only to
the extent not superseded by federal law.


	
 

	
 


	
20.

	
ARBITRATION





          Any
dispute or controversy arising under or in connection with this Agreement shall
be settled exclusively by arbitration, conducted before a panel of three
arbitrators, one of whom shall be selected by the Bank, one of whom shall be
selected by Executive and the third of whom shall be selected by the other two
arbitrators. The panel shall sit in a location within fifty (50)


10






miles from the
location of the Bank, in accordance with the rules of the Judicial Mediation
and Arbitration Systems (JAMS) then in effect. Judgment may be entered on the
arbitrators award in any court having jurisdiction; provided, however, that
Executive shall be entitled to seek specific performance of her right to be
paid Base Salary and other compensation until the Date of Termination during
the pendency of any dispute or controversy arising under or in connection with
this Agreement.


	
 

	
 


	
21.

	
PAYMENT OF LEGAL FEES





          All
reasonable legal fees paid or incurred by Executive pursuant to any dispute or
question of interpretation relating to this Agreement shall be paid or
reimbursed by the Bank, provided that the dispute or interpretation has been
settled by Executive and the Bank or resolved in Executive’s favor and provided
that such payment or reimbursement shall be made not later than two and
one-half (2 1⁄2) months after the end of the taxable year in which such fees were
incurred.


	
 

	
 


	
22.

	
INDEMNIFICATION





          The
Bank shall provide Executive (including her heirs, executors and
administrators) with coverage under a standard directors and officers liability
insurance policy at its expense. Subject to 12 C.F.R. §545.121, the Bank or the
Company, shall indemnify Executive (and her heirs, executors and
administrators) to the fullest extent permitted under applicable law against
all expenses and liabilities reasonably incurred by her in connection with or arising
out of any action, suit or proceeding in which she may be involved by reason of
having been a director or officer of the Bank or the Company (whether or not
she continues to be a director or officer at the time of incurring such
expenses or liabilities), such expenses and liabilities to include, but not be
limited to, judgments, court costs and attorneys fees and the cost of
reasonable settlements (such settlements must be approved by the Board of
Directors of the Bank or the Company). If such action, suit or proceeding is
brought against Executive in her capacity as an officer or director of the
Bank, however, such indemnification shall not extend to matters as to which
Executive is finally adjudged to be liable for willful misconduct in the performance
of her duties.


	
 

	
 


	
23.

	
SUCCESSORS AND ASSIGNS





          The
Bank and/or the Company shall require any successor or assignee, whether direct
or indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Bank or the Company, expressly
and unconditionally to assume and agree to perform the Bank’s and the Company’s
obligations under this Agreement, in the same manner and to the same extent
that the Bank and/or the Company would be required to perform if no such
succession or assignment had taken place.


[Signature Page Follows]


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SIGNATURES


          IN
WITNESS WHEREOF, the Bank and the Company have caused this Agreement to be
executed and their seals to be affixed hereunto by their duly authorized
officers, and Executive has signed this Agreement, as of the day and date first
above written.


	
 

	
 

	
 

	
 


	
ATTEST:

	
KAISER FEDERAL BANK


	
 

	
 

	
 

	
 


	
 

	
By:

	
 

	
 


	


	
 

	



	
 

	
 

	
Name

	
 


	
 

	
 

	
Title

	
 


	
 

	
 

	
 

	
 


	
ATTEST:

	
KAISER FEDERAL FINANCIAL GROUP, INC.


	
 

	
 

	
 

	
 


	
 

	
By:

	
 

	
 


	


	
 

	



	
 

	
 

	
Name

	
 


	
 

	
 

	
Title

	
 


	
 

	
 

	
 

	
 


	
WITNESS:

	
EXECUTIVE


	
 

	
 

	
 

	
 


	


	



	
 

	
Kay Hoveland





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