Exhibit 10(a)

                              EMPLOYMENT AGREEMENT


     THIS  AGREEMENT is made  effective as of November 15, 2000,  by and between
KLAMATH FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION (the "Association"),  Klamath
Falls,  Oregon;   KLAMATH  FIRST  BANCORP,  INC.  (the  "Company"),   an  Oregon
corporation; and Kermit Houser (the "Executive").

     WHEREAS,  the  Association  wishes to  assure  itself  of the  services  of
Executive for the period provided in this Agreement; and

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

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

1.       POSITION.

     During  the period of his  employment  under  this  agreement,  Association
agrees to employee  Executive  and  Executive  agrees to serve as President  and
Chief  Executive  Officer of the  Association  and  Company.  During  said term,
Executive also agrees to serve, if elected, without separate compensation, as an
officer of the Company and/or  Association or any subsidiary or affiliate of the
Company or the Association.

2.       DUTIES.

     As  President  and Chief  Executive  Officer of  Association  and  Company,
Executive  shall have such powers and duties  appropriate  to that office (a) as
may be provided by the articles and/or bylaws of Association and Company and (b)
as determined by the board of directors of Association and Company, or either of
them,  respectively,  from time to time.  Executive shall at all times discharge
his duties in  consultation  with and under the supervision and direction of the
board of directors or Association and Company. Subject to the provisions of this
Agreement,  Executive'  duties may be changed from time to time during the term
of this Agreement,  and  Executive'  place of work may be relocated at the sole
discretion  of the board of directors of  Association  and Company,  or other of
them.

3.       TERM.

     The term of Executive'  employment  under this Agreement shall commence as
of the date first written above and shall  continue for a period of two years at
which time it shall end,  unless sooner  terminated in accordance with the terms
of t his  Agreement  or  extended  as  provided  below.  Beginning  on the first
anniversary  date of this  Agreement,  and continuing at each  anniversary  date
thereafter,  the board of directors  of  Association  and Company,  or either of
them, may in their sole  discretion  extend  Executive'  employment  under this
Agreement as provided in this Section, the board of directors of Association and
Company,  or either of them, may in their sole discretion  conduct a performance
evaluation  of  Executive  for  purposes of  determining  whether to extend this
Agreement.  Executive may terminate this Agreement at any time,  after providing
at least sixty (60)

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days' written notice to the chair of the board of directors of  Association  and
Company, or either of them. In such event,  Executive will remain subject to the
post termination provisions set form in this agreement.

4.       OUTSIDE ACTIVITIES.

     During the term of his employment  under this  Agreement,  Executive  shall
devote all of his business time,  attention,  skill, and efforts to the faithful
performance  of his duties  under this  Agreement.  Executive  shall  obtain the
consent of the board of directors of  Association  and Company before he engages
in any other professional or business activities that may require an appreciable
portion of  executive's  time or effort to the  detriment  of  Association's  or
Company's business or that of their affiliates.

5.       COMPENSATION AND FRINGE BENEFITS.

     (a) As  compensation  for services under this  Agreement,  Association  and
Company  shall pay to  Executive  an annual  salary of  $200,000,  less  legally
required  deductions and withholdings  ("Base  Salary").  Executives Base Salary
shall be payable in accordance  with the usual payroll  practices of Association
and Company.  During the term of Executive's  employment  under this  Agreement,
Executive's  Base Salary  shall be  reviewed  at least  annually by the board of
directors of  Association  and Company and the board of directors of Association
and Company,  or either of them, may in their sole discretion adjust Executives
Base Salary from time to time.

     (b) In  addition to the Base Salary  provided  in Section  5(a),  Executive
shall be eligible to receive an annual bonus  targeted at 30 percent of his then
current Base Salary (but not limited to 30 percent if goal is exceeded), payable
within  30  days  of  each  anniversary  date  of  this  Agreement.  Executive's
entitlement to and the specific  amount of any such annual bonus shall be at the
discretion of the board of directors of  Association  and Company (or their duly
convened  committee),  based  upon and  subject  to  Executive's  satisfactorily
meeting  certain  goals and  objectives  mutually  established  and agreed to in
writing by the board of directors of Association and Company and Executive.

     (c) Executive shall also be granted an option to purchase 100,000 shares of
stock of  Company,  which will vest as  follows:  50,000  shares  will vest upon
Executive's successfully completing one year of employment under this Agreement,
and  the  remaining  50,000  shares  will  vest  upon  Executive'  successfully
completing two years of employment under this Agreement.  The purchase price for
such shares  shall be fair market  value of such  shares on November  15,  2000,
which was $11.625 per share.

     (d)  Upon  successfully  completing  one  year  of  employment  under  this
Agreement,  Executive  shall be  entitled  to receive  10,000  shares  under the
Management   Recognition   Development   Program   ("MRDP")  of  Company.   Upon
successfully completing two years of employment under this Agreement,  Executive
shall be entitled to receive an additional 10,000 shares under the MRDP.

     (e) In  addition  to  the  compensation  described  above,  to  the  extent
otherwise eligible, Executive shall be entitled to receive or participate in, at
no cost to Executive,  all such other  benefits,  including  without  limitation
pension plans, employee stock option plans, and health and

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welfare  plans  as may  from  time to time be make  available  to  other  senior
management employees of the Association and Company.

6.       EXPENSES.

     Association  and Company shall  reimburse  Executive for all reasonable and
necessary  expenses  incurred by Executive in carrying out his duties under this
Agreement.  Executive shall present to Association and Company from time to time
an  itemized  account  of such  expenses  in such  forms as may be  required  by
Association and Company, or either of them.


7.       PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.

     (a) For purposes of this Agreement, "Event of Termination" means any one or
more of the following:  (i) termination by Association or Company of Executive's
employment  under this  Agreement  for any reason other than a Change in Control
(as  defined in Section 8),  disability  (as  provided in Section 9),  death (as
provided  in  Section  10);  or  Cause  (as  defined  in  Section  11);  or (ii)
termination  by  Executive of  Executive's  employment  under this  Agreement in
accordance  with the provisions of this Section upon (A) unless  consented to by
Executive,  a material change in Executive's  title or job duties,  which change
would  cause   Executive's   position  to  become  one  of   materially   lesser
responsibility from the position and duties described in Section 1 and 2, or the
assignment  to the  Executive  of any duties or  responsibilities  substantially
inconsistent   with  the  executive's  title  or  duties,  or  a  relocation  of
Executive's  principal  place of work by more than 35 miles from its location at
the effective date of this Agreement;  (B) unless consented to by Executive, any
reduction in  Executive's  Base Salary;  (C) the  liquidation  or dissolution of
Association  or  Company;  or (D)  any  material  breach  of this  Agreement  by
Association or Company.  Upon the  occurrence of any event  described in clauses
(A),  (B), (C), or (D) of clause (ii) above,  Executive  shall have the right to
elect to terminate his  employment  under this  Agreement  upon not less than 60
days' prior written notice to the board of Directors of Association and Company,
and each of them,  given within a  reasonable  period of time not to exceed four
calendar months after the event giving rise to said right to elect.

     (b) Upon  termination  of  employment  following  occurrence of an Event of
Termination or upon failure to extend  Executive's  employment for an additional
one-year  period,  Association and Company shall pay to Executive a sum equal to
(i) the amount of  Executive's  Base Salary (at the then  current  rate) for the
remainder of the term of this Agreement  following the Date of  Termination  (as
described below),  and (ii) the value of any employer  contributions that should
be have been made by  Association  and  Company on  Executive's  behalf over the
remaining term of Executive's  employment under this Agreement to any retirement
plan  sponsored by  Association  and Company as of the Date of  Termination  (as
defined  below);  provided,  however,  that if  Association or Company is not in
compliance with its minimum capital  requirements or if such payment would cause
Association's  or  Company's  capital to be reduced  below its  minimum  capital
requirements,  such payment shall not be made until such time as Association and
Company are in capital compliance.  Additionally, Executive shall be entitled to
receive the stock option and grant  described  under Section 5(c) and 5(d).  The
payment described in this Section 7(b) shall be made in a single lump sum within
30 days of the Date of Termination.



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8.       CHANGE IN CONTROL.

     (a) For  purposes  of this  Agreement,  a "Change in Control" of Company or
Association  shall be  deemed  to occur if an when  (a) an  offeror  other  than
Company purchases shares of the common stock of Company or Association  pursuant
to a tend or exchange  offer for such shares,  (b) any person (such as term used
in Sections  13(d) and  14(d)(2) of the  Securities  Exchange Act of 1934) is or
becomes the beneficial owner,  directly or indirectly,  of securities of Company
or  Association  representing  25% or  more  of the  combined  voting  power  of
Company's  then  outstanding  securities,  (c) the  membership  of the  board of
directors  of  Company  or  Association  changes  as the  result of a  contested
election,  such that  individuals  who were  directors  at the  beginning of any
twenty-four  month period do not constitute a majority of the board of directors
at the end of such period, or (d) shareholders of Company or Association approve
a merger,  consolidation,  sale of  disposition of all or  substantially  all of
Company's or Association's assets, or a plan of partial or complete liquidation.

     (b) In the  event  of a  Change  of  Control,  in lieu of  amounts  payable
pursuant to Section 7(b), Executive shall be entitled to the payment provided in
Section 8(c) upon his  subsequent  involuntary  termination of employment at any
time  during  the term of his  employment  under  this  Agreement,  unless  such
termination is because of Executive's death,  disability (as provided in Section
9), or for Cause (as defined in Section 11).

     (c) Upon a Change in Control  followed by the  involuntary  termination  of
Executive's  employment  as provided in Section  8(b),  Association  and Company
shall pay to executive a sum equal to (i) 2.99 times  Executive's "base amount,"
within the meaning of Section  280G(b)(3) of the Internal  Revenue Code of 1986,
as amended  ("Code");  (ii) his stock option and grant  described  under Section
5(c) and 5(d); and (iii) the value of any employer contributions that would have
been made by Association  and Company on  Executive's  behalf over the remaining
term of  Executive's  employment  under this  Agreement to any  retirement  plan
sponsored by Association and Company as of the Date of Termination. Such payment
shall be made in a single lump sum within 30 days of the Date of Termination.

     (d)  Notwithstanding  the  foregoing,  if the total  payment  to be made to
Executive  under this Section 8 would be deemed to include an "excess  parachute
payment"  under Code Section  280G,  such payment  shall be payable to Executive
over the minimum period necessary to reduce the present value of such payment to
an amount which is one dollar less than three times  Executive's  "base  amount"
under Code Section 280G(b)(3).


9.       TERMINATION UPON DISABILITY OF EXECUTIVE.

     (a) If the Executive shall become disabled as defined in the  Association's
then  current  disability  plan (or,  if no such plan is then in effect,  if the
Executive  is  permanently  and totally  disabled  within the meaning of Section
22(e)(3) of the Code as determined by a physician  designated by the Board), the
Association may terminate Executive's employment for "Disability."

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     (b) Upon the  Executive's  termination  of employment for  Disability,  the
Association will pay Executive,  as disability pay, a bi-weekly payment equal to
three-quarters  (3/4) of  Executive's  bi-  weekly  rate of Base  Salary  on the
effective date of such termination.  These disability payments shall commence on
the Date of  Termination  and will end on the earlier of (i) the date  Executive
returns  to  the  full-time  employment  with  Association  and  Company;   (ii)
Executive's  employment by another employer;  (iii) Executive  attaining age 65;
(iv)  Executive's  death;  or (v) the  expiration  of the  term  of  Executive's
employment under this agreement.  The disability  payments shall also be reduced
by this amount,  if any,  paid to Executive  under any plan of  Association  and
Company providing disability benefits to Executive.


10.      TERMINATION UPON DEATH OF EXECUTIVE.

     Upon the death of the  Executive  during the term of his  employment  under
this Agreement,  this Agreement shall terminate immediately and Executive's Base
Salary  pursuant to Section 5(a) shall be prorated and payable until the date of
termination of this Agreement.


11.      TERMINATION FOR CAUSE.

     Association  and  Company,  or either of them,  may  terminate  Executive's
employment  under this  Agreement  at any time for Cause.  For  purposes of this
Agreement, "Cause" means any fraud or dishonesty by Executive; any continuing or
repeated  problems with  Executive's  job  performance  or conduct after written
notice  specifying such problem with  performance of conduct;  any failure by or
refusal of Executive to comply with any  instructions or directives of the board
of  directors  of  Association  and  Company,  or either of them,  any breach of
fiduciary  duty by  Executive;  violation  of any law or  government  regulation
(other than misdemeanor traffic violations or similar  misdemeanor  offenses) by
Executive; any other conduct by Executive which adversely reflects or impacts on
Association's  or Company's  reputation or business;  or any material  breach of
this Agreement by Executive.  Notwithstanding the foregoing, Executive shall not
be deemed to have been  terminated  for Cause  unless and until there shall have
been  sent to  Executive  a copy of  resolution  duly  adopted  by the  board of
directors of Association and Company, or either of them (after reasonable notice
to Executive  and an  opportunity  for Executive to be heard before the board of
directors of Association and Company), finding that in the good faith opinion or
the board of directors of Association and Company,  Executive engaged in conduct
justifying  termination  for  Cause and  describing  specifically  the  conduct.
Executive shall not have the right to receive any compensation or other benefits
for any period after  termination of his employment for Cause. Any stock options
granted to  Executive  under any stock option plan that have vested shall remain
the property of the Executive,  but any unvested  awards granted under any other
stocks  benefit plan of  Association,  Company,  or any  subsidiary or affiliate
thereof, shall become null and void effective upon Executive's receipt of Notice
of  Termination  (as defined  below) for Cause and shall not be  exercisable  by
Executive at any time subsequent to such termination for Cause.


12.      REQUIRED PROVISIONS.

     (a)  If  Executive  is  suspended   and/or   temporarily   prohibited  from
participated in the conduct of Association's  or Company's,  or either of their,
affairs by a notice served under Section 8(e)(3)

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or (g)(1) of the Federal  Deposit  Insurance  Act  ("FDIA"),  Association's  and
Company'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
of  dismissed,  Association  and  Company,  or  either  of them,  may,  in their
discretion, (i) pay Executive all or part of the compensation withheld while its
contract obligations were suspended and (ii) reinstate (in whole or in part) any
of its obligations that were suspended.

     (b)  If   Executive  is  removed   and/or   permanently   prohibited   from
participating  in the conduct of the  Association's  affairs by an order  issued
under  Section  8(e)(4) or (g)(1) of the FDIA (12 U.S.C.  1818(e)(4) or (g)(1)),
all obligations of the Association under the 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  Association is in default (as defined in Section 3(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 parties.

     (d) All obligations under this Agreement shall be terminated (except to the
extent  determined  that  continuation  of the  Agreement is  necessary  for the
continued  operation of the  Association):  (i) by the Director of the Office of
Thrift  Supervision  (the  "Director")  or his or her  designee  at the time the
Federal Deposit Insurance Corporation or the Resolution Trust Corporation enters
into an agreement to provide assistance to or on behalf of the Association under
the authority contained in Section 13(c) of the FDIA or (ii) by the Director, or
his or her  designee  at the time  the  Director  or such  designee  approves  a
supervisory  merger to resolve  problems related to operation of the Association
or when the  Association  is  determined  by the  Director to be in an unsafe or
unsound condition.  Any rights of the parties that have already vested, however,
shall not be affected by such action.

     (e)  Any  payments  made  to  Executive  pursuant  to  this  Agreement,  or
otherwise,  are subject to and conditioned upon compliance with Section 18(k) of
the FDIA and any regulations promulgated thereunder.


13.      NOTICE.

     (a)  Any  purported  termination  of  Executive's   employment  under  this
Agreement  (except  by  reason of  Executive's  death)  by the  Association  and
Company,  or either of them, or by Executive  shall be communicated by Notice of
Termination  to the other party.  For purposes of this  Agreement,  a "Notice of
Termination"  shall  mean a  written  notice  which  shall  state  the  specific
termination  provision in this  Agreement  relied upon and the effective date of
the termination of Executive's employment.

     (b) For purposes of this Agreement,  "Date of Termination"  means effective
date of the  termination  of Executive's  employment  specified in the Notice of
Termination.


14.      NONCOMPETITION AND CONFIDENTIALITY.


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     (a) During the term of Executive's  employment under this agreement and for
a period of one year following the termination of Executive's  employment  under
this  Agreement  for any  reason,  Executive  agrees  not to  compete  with  the
Association  and/or  the  Company  in any  city,  town or  county  in which  the
Association  and/or the  Company has an office or has filed an  application  for
regulatory approval to establish an office,  determined as of the effective date
of such  termination.  Executive  agrees that during such period and within said
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  Association  and/or the  Company.  The  parties  hereto,  recognizing  that
irreparable  injury  will  result to the  Association  and/or the  Company,  its
business  and  property in the event of  Executive's  breach of this  Subsection
14(a) agree that in the event of any such breach by Executive,  the  Association
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, employers, employees and all
persons acting for or with  Executive.  Executive  represents and admits that in
the event of the termination of his employment per this  Agreement,  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
Association  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  Association  and/or the  Company  from
pursuing any other remedies  available to the Association 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  Association  and
affiliates  thereof,  as it may exist from time to time, is a valuable,  special
and unique asset of the business of the Association.  Executive will not, during
or  after  the term of his  employment,  disclose  any  knowledge  of the  past,
present,  planned  or  considered  business  activities  of the  Association  or
affiliates  thereof to any person,  firm,  corporation,  or other entity for any
reason or purpose  whatsoever.  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 Association.  In the event of a breach or threatened
breach by the Executive of the provisions of this Section,  the Association 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  Association  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  Association  from pursuing
any other remedies  available to the  Association  for such breach or threatened
breach, including the recovery of damages from Executive.


15.      EFFECT ON PRIOR AGREEMENTS.

     This  Agreement  contains  the entire  understanding  between  the  parties
concerning  the  subject  matter  hereof  and  supersedes  any prior  agreements
(express  or  implied,  oral or  written)  among the  Association,  Company  and
Executive concerning the subject matter of this Agreement.





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16.      SUCCESSORS AND ASSIGNS.

     This  Agreement  shall inure to the benefit of any successors or assigns of
Association  or  Company.  In the case of any  termination  in which a successor
would  not be the  foregoing  sentence  or  operation  of law be  bound  by this
Agreement, Company shall require such successor to expressly and unconditionally
assume this Agreement and perform Company's obligations under this Agreement.


17.      MODIFICATION AND WAIVER.

     (a) This Agreement may be modified or amended only by a written  instrument
signed by the parties.

     (b) No term or  condition  of this  Agreement  shall be deemed to have been
waived, nor shall there by 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.


18.      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.


19.      HEADINGS FOR REFERENCE ONLY.

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


20.      GOVERNING LAW.

     This Agreement shall be governed by the laws of the State of Oregon.


21.      ARBITRATION.

     Any  dispute or  controversy  arising  out of or in any way related to this
Agreement of Executive's  employment  under this Agreement or the termination of
that employment, except a claim by the Association and/or Company of a breach or
threatened  breach by Executive of any of the provisions of Section 14, shall be
submitted to binding arbitration, conducted in Portland,

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Oregon,  in accordance  with the then current rules of the American  Arbitration
Association. Such arbitration shall be the exclusive remedy for any such dispute
or  controversy,  and judgment may be entered on the  arbitrator's  award in any
court having jurisdiction.


22.      ATTORNEY FEES.

     If any action  (including  arbitration)  is brought to enforce or interpret
the terms of this  Agreement  or any part of it, the  prevailing  party shall be
entitled to recover from the other party its reasonable  attorney fees and costs
incurred therein, including all attorney fees and costs on appear.


23.      INDEMNIFICATION.

     The Association and Company shall provide  Executive  (including his heirs,
executors and  administrators)  with coverage  under a standard  directors'  and
officers' liability  insurance policy at its expense, or in lieu thereof,  shall
indemnify Executive (and his heirs, executors and administrators) to the fullest
extent  permitted  under law against all  expenses  and  liabilities  reasonably
incurred  by him in  connection  with or  arising  out of any  action,  suite or
proceeding  in which he may be  involved by reason of his having been a director
or officer of the Association and Company,  or either of them (whether or not he
continues to be a director or officer at the time of incurring  such expenses or
liabilities),  such expenses and liabilities to include without judgment,  court
costs, and attorney fees and the cost of reasonable settlements.




     IN WITNESS  WHEREOF,  Association and Company have caused this Agreement to
be executed  and  Executive  has  executed  this  Agreement as of the date first
written above.

                          KLAMATH FIRST FEDERAL SAVINGS
                              AND LOAN ASSOCIATION



____________________________                  By:      ________________________


                                              Title:   ________________________


                                               KLAMATH FIRST BANCORP, INC.


                                               By: _____________________________

                                               Title:   _______________________

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<PAGE>


                                  Exhibit 10(b)

                              EMPLOYMENT AGREEMENT


     THIS  AGREEMENT  is made  effective  as of October 1, 2001,  by and between
KLAMATH FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION (the "Association"),  Klamath
Falls,  Oregon;   KLAMATH  FIRST  BANCORP,  INC.  (the  "Company"),   an  Oregon
corporation; and Marshall J. Alexander (the "Executive").

     WHEREAS,  the  Association  wishes to  assure  itself  of the  services  of
Executive for the period provided in this Agreement; and

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

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

1.       POSITION AND RESPONSIBILITIES.

     During the period of his employment hereunder, Executive agrees to serve as
Executive Vice President of the Association.  During said period, Executive also
agrees to serve,  if elected,  as an officer of the Company or any subsidiary or
affiliate of the Company or the Association.

2.       TERMS AND DUTIES.

     (a) The term of this Agreement  shall be deemed to have commenced as of the
date first above  written and shall  continue for a period of  twenty-four  (24)
full calendar months  thereafter.  Commencing on the first anniversary date, and
continuing at each anniversary  date  thereafter,  the Board of Directors of the
Association (the "Board") may extend the Agreement for an additional year. Prior
to the extension of the Agreement as provided herein,  the Board of Directors of
the Association  will conduct a formal  performance  evaluation of the Executive
for purposes of  determining  whether to extend the  Agreement,  and the results
thereof shall be included in the minutes of the Board's meeting.

     (b) During the period of his  employment  hereunder,  except for periods of
absence  occasioned by illness,  reasonable  vacation  periods,  and  reasonable
leaves of absence,  Executive shall devote  substantially all his business time,
attention,  skill,  and  efforts  to the  faithful  performance  of  his  duties
hereunder  including  activities  and  services  related  to  the  organization,
operation and management of the Association;  provided,  however, that, with the
approval of the Board, as evidenced by a resolution of such Board,  from time to
time,  Executive may serve, or continue to serve, on the boards of directors of,
and hold any other offices or positions in, companies or  organizations,  which,
in such Board's  judgment,  will not present any  conflict of interest  with the
Association, or materially affect the performance of Executive's duties pursuant
to this Agreement.





                                      -10-
<PAGE>



3.       COMPENSATION AND REIMBURSEMENT.

     (a) The  compensation  specified under this Agreement shall  constitute the
salary and  benefits  paid for the  duties  described  in  Sections 1 and 2. The
Association  shall pay Executive as  compensation a salary of $ 114,600 per year
("Base  Salary").  Such Base  Salary  shall be  payable in  accordance  with the
customary  payroll  practices  of the  Association.  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 one year  from the date of this
Agreement.  Such review  shall be  conducted  by a Committee  designated  by the
Board, and the Board may increase  Executive's  Base Salary.  In addition to the
Base  Salary  provided in this  Section  3(a),  the  Association  shall  provide
Executive at no cost to Executive  with all such other  benefits as are provided
uniformly to permanent full-time employees of the Association.

     (b) The  Association  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  Association  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. Without limiting the generality of the foregoing provisions
of this Subsection (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 plan, medical coverage or any other employee benefit
plan or  arrangement  made  available  by the  Association  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,  or  pursuant  to any  arrangement  of the
Association, in which Executive is eligible to participate.  Nothing paid to the
Executive  under  any such plan or  arrangement  will be deemed to be in lieu of
other  compensation  to which the  Executive is entitled  under this  Agreement,
except as provided under Section 5(e).

     (c) In addition to the Base Salary  provided for by  paragraph  (a) of this
Section 3, the Association  shall pay or reimburse  Executive for all reasonable
travel  and  other  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.       PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.

     (a) Upon the  occurrence  of an Event of  Termination  (as herein  defined)
during the Executive's term of employment  under this Agreement,  the provisions
of  this  Section  shall  apply.  As  used  in  this  Agreement,  an  "Event  of
Termination"  shall mean and include any one or more of the  following:  (i) the
termination by the Association of Executive's full-time employment hereunder for
any reason  other than a Change in Control,  as defined in Section  5(a) hereof;
disability,  as defined in Section 6(a) hereof; death; retirement, as defined in
Section 7 hereof; or for Cause, as defined in Section 8 hereof; (ii) Executive's
resignation from the Association's  employ,  upon (A) unless consented to by the
Executive,   a   material   change   in   Executive's   function,   duties,   or
responsibilities, which change would cause Executive's position to become one of
lesser  responsibility,  importance,  or scope from the position and  attributes
thereof described in Sections 1 and 2, above, (any such material change shall be
deemed a continuing breach of this

                                      -11-
<PAGE>


Agreement),  (B) a relocation of  Executive's  principal  place of employment by
more than 35 miles from its location at the effective date of this Agreement, or
a material  reduction in the benefits and  perquisites  to Executive  from those
being provided as of the effective date of this  Agreement,  (C) the liquidation
or  dissolution of the  Association,  or (D) any breach of this Agreement by the
Association.  Upon the  occurrence  of any event  described in clauses (A), (B),
(C), or (D),  above,  Executive  shall have the right to elect to terminate  his
employment  under this  Agreement by  resignation  upon not less than sixty (60)
days  prior  written  notice  given  within a  reasonable  period of time not to
exceed,  except in case of a continuing  breach,  four calendar months after the
event giving rise to said right to elect.

     (b) Upon the occurrence of an Event of Termination,  the Association  shall
pay Executive,  or, in the event of his  subsequent  death,  his  beneficiary or
beneficiaries, or his estate, as the case may be, as severance pay or liquidated
damages,  or both,  a sum equal to the  payments  due to the  Executive  for the
remaining term of the Agreement,  including Base Salary,  bonuses, and any other
cash or  deferred  compensation  paid  or to be paid  (including  the  value  of
employer  contributions that would have been made on the Executive's behalf over
the  remaining  term  of the  agreement  to any  tax-qualified  retirement  plan
sponsored by the  Association as of the Date of  Termination),  to the Executive
for the term of the Agreement provided,  however, that if the Association is not
in compliance  with its minimum  capital  requirements or if such payments would
cause  the  Association's  capital  to be  reduced  below  its  minimum  capital
requirements, such payments shall be deferred until such time as the Association
is in capital compliance.  All payments made pursuant to this Section 4(b) shall
be paid in substantially  equal monthly  installments over the remaining term of
this Agreement following the Executive's termination; provided, however, that if
the remaining term of the Agreement is less than one (1) year  (determined as of
the Executive's Date of  Termination),  such payments and benefits shall be paid
to the Executive in a lump sum within 30 days of the Date of Termination.

     (c) Upon the occurrence of an Event of Termination,  the  Association  will
cause  to  be  continued   life,   medical,   dental  and  disability   coverage
substantially  identical  to the  coverage  maintained  by the  Association  for
Executive  prior  to  his  termination.  Such  coverage  shall  cease  upon  the
expiration of the remaining term of this Agreement.

5.       CHANGE IN CONTROL.

     (a) No benefit  shall be paid under this  Section 5 unless there shall have
occurred a Change in Control of the Company or the Association.  For purposes of
this Agreement, a "Change in Control" of the Company or the Association shall be
deemed to occur if and when (a) an  offeror  other  than the  Company  purchases
shares of the common  stock of the  Company  or the  Association  pursuant  to a
tender or exchange  offer for such shares,  (b) any person (as such term is used
in Sections  13(d) and  14(d)(2) of the  Securities  Exchange Act of 1934) is or
becomes the  beneficial  owner,  directly or  indirectly,  of  securities of the
Company or the Association representing 25% or more of the combined voting power
of the Company's then outstanding securities, (c) the membership of the board of
directors of the Company or the Association changes as the result of a contested
election,  such that  individuals  who were  directors  at the  beginning of any
twenty-four month period (whether  commencing before or after the effective date
of this  Agreement) do not constitute a majority of the Board at the end of such
period, or (d) shareholders of the Company or the Association  approve a merger,
consolidation,  sale or disposition of all or substantially all of the Company's
or the Association's assets, or a plan of partial or complete liquidation.


                                      -12-
<PAGE>


     (b) If any of the events  described in Section 5(a) hereof  constituting  a
Change in Control have occurred or the Board of the  Association  or the Company
has  determined  that a Change  in  Control  has  occurred,  Executive  shall be
entitled to the benefits provided in paragraphs (c), (d) and (e) of this Section
5 upon his subsequent  involuntary  termination of employment at any time during
the term of this  Agreement  (or  voluntary  termination  following  a Change of
Control following any demotion,  loss of title, office or significant authority,
reduction in his annual compensation or benefits, or relocation of his principal
place of employment by more than 35 miles from its location immediately prior to
the  Change in  Control),  unless  such  termination  is  because  of his death,
retirement as provided in Section 7,  termination  for Cause, or termination for
Disability.

     (c) Upon the occurrence of a Change in Control  followed by the Executive's
termination of employment,  the Association shall pay Executive, or in the event
of his subsequent death, his beneficiary or beneficiaries, or his estate, as the
case may be, as severance  pay or  liquidated  damages,  or both, a sum equal to
2.99  times the  Executive's  "base  amount,"  within  the  meaning  of  Section
280G(b)(3)  of the Internal  Revenue  Code of 1986  ("Code"),  as amended.  Such
payment shall be made in a lump sum paid within ten (10) days of the Executive's
Date of Termination.

     (d) Upon the occurrence of a Change in Control  followed by the Executive's
termination  of employment,  the  Association  will cause to be continued  life,
medical,  dental and disability coverage substantially identical to the coverage
maintained by the Association for Executive prior to his severance. In addition,
Executive shall be entitled to receive the value of employer  contributions that
would have been made on the  Executive's  behalf over the remaining  term of the
agreement to any  tax-qualified  retirement plan sponsored by the Association as
of the Date of  Termination.  Such  coverage and  payments  shall cease upon the
expiration of thirty-six (36) months.

     (e) Upon the  occurrence  of a Change in Control,  the  Executive  shall be
entitled to receive benefits due him under, or contributed by the Company or the
Association  on his  behalf,  pursuant  to  any  retirement,  incentive,  profit
sharing,  bonus,   performance,   disability  or  other  employee  benefit  plan
maintained by the  Association or the Company on the  Executive's  behalf to the
extent that such benefits are not otherwise  paid to the Executive upon a Change
in Control.

     (f)  Notwithstanding  the  preceding  paragraphs  of this Section 5, in the
event that the  aggregate  payments  or  benefits  to be made or afforded to the
Executive  under this  Section  would be deemed to include an "excess  parachute
payment"  under  Section 280G of the Code,  such  payments or benefits  shall be
payable or provided to Executive over the minimum period necessary to reduce the
present  value of such  payments or  benefits  to an amount  which is one dollar
($1.00) less than three (3) times the  Executive's  "base  amount" under Section
280G(b)(3) of the Code.

6.       TERMINATION FOR DISABILITY.

     (a) If the Executive shall become disabled as defined in the  Association's
then  current  disability  plan (or,  if no such plan is then in effect,  if the
Executive  is  permanently  and totally  disabled  within the meaning of Section
22(e)(3) of the Code as determined by a physician  designated by the Board), the
Association may terminate Executive's employment for "Disability."

     (b) Upon the  Executive's  termination  of employment for  Disability,  the
Association will pay Executive,  as disability pay, a bi-weekly payment equal to
three-quarters  (3/4) of  Executive's  bi-  weekly  rate of Base  Salary  on the
effective date of such termination.  These disability payments shall commence on
the effective date of Executive's termination and will end on the earlier of (i)

                                      -13-
<PAGE>


the date Executive returns to the full-time employment of the Association in the
same capacity as he was employed  prior to his  termination  for  Disability and
pursuant to an employment agreement between Executive and the Association;  (ii)
Executive's full-time employment by another employer;  (iii) Executive attaining
the age of 65; or (iv)  Executive's  death; or (v) the expiration of the term of
this Agreement.  The disability pay shall be reduced by the amount, if any, paid
to the Executive under any plan of the Association providing disability benefits
to the Executive.

     (c) The Association  will cause to be continued life,  medical,  dental and
disability  coverage  substantially  identical to the coverage maintained by the
Association for Executive prior to his termination for Disability. This coverage
and payments shall cease upon the earlier of (i) the date  Executive  returns to
the  full-time  employment  of the  Association,  in the same capacity as he was
employed prior to his  termination  for Disability and pursuant to an employment
agreement  between  Executive and the Association;  (ii)  Executive's  full-time
employment by another employer;  (iii)  Executive's  attaining the age of 65; or
(iv) the Executive's death; or (v) the expiration of the term of this Agreement.

     (d)  Notwithstanding  the  foregoing,  there  will be no  reduction  in the
compensation  otherwise  payable to  Executive  during any period  during  which
Executive is incapable of performing his duties hereunder by reason of temporary
disability.

7.       TERMINATION UPON RETIREMENT; DEATH OF EXECUTIVE.

     Termination by the  Association of Executive  based on  "Retirement"  shall
mean  retirement  at age 65 or in  accordance  with any  retirement  arrangement
established  with  Executive's  consent with respect to him. Upon termination of
Executive upon Retirement, Executive shall be entitled to all benefits under any
retirement  plan of the  Association  or the  Company  and other  plans to which
Executive is a party.  Upon the death of the  Executive  during the term of this
Agreement,  the Association shall pay to Executive's estate the compensation due
to the Executive  through the last day of the calendar  month in which his death
occurred.

8.       TERMINATION FOR CAUSE.

     For  purposes of this  Agreement,  "Termination  for Cause"  shall  include
termination  because  of  the  Executive's  personal  dishonesty,  incompetence,
willful misconduct,  breach of fiduciary duty involving personal profit, willful
violation of any law,  rule,  or  regulation  (other than traffic  violations or
similar  offenses) or final  cease-and-desist  order,  or material breach of any
provision of this Agreement. In addition,  "Termination for Cause" shall include
termination  because of  continuing or repeated  problems  with the  Executive's
performance or conduct,  the Executive's  inattention to duties,  the refusal of
the Executive to comply with the  Association's  or the Company's  instructions,
policies or rules or other conduct of the Executive which reflects  adversely on
the  Association's  or the Company's reputation  or operation.  For purposes of
this  Section,  no act,  or the  failure to act,  on  Executive's  part shall be
"willful"  unless  done,  or omitted to be done,  not in good faith and  without
reasonable  belief that the action or omission  was in the best  interest of the
Association or its affiliates.  Notwithstanding  the foregoing,  Executive shall
not be deemed to have been  terminated  for Cause  unless and until  there shall
have  been  delivered  to  him a  copy  of a  resolution  duly  adopted  by  the
affirmative vote of not less than three-fourths of the members of the Board at a
meeting of the Board called and held for that purpose (after  reasonable  notice
to Executive and an  opportunity  for him,  together  with counsel,  to be heard
before  the  Board),  finding  that in the  good  faith  opinion  of the  Board,
Executive was guilty of conduct justifying termination

                                      -14-
<PAGE>


for Cause and specifying the reasons  thereof.  The Executive shall not have the
right to receive compensation or other benefits for any period after termination
for Cause. Any stock options granted to Executive under any stock option plan or
any  unvested  awards  granted  under  any  other  stock  benefit  plan  of  the
Association,  the Company, or any subsidiary or affiliate thereof,  shall become
null and void effective upon  Executive's  receipt of Notice of Termination  for
Cause pursuant to Section 9 hereof, and shall not be exercisable by Executive at
any time subsequent to such Termination for Cause.

9.       REQUIRED PROVISIONS.

     (a) The Association may terminate  Executive's  employment at any time, but
any termination by the Association,  other than Termination for Cause, shall not
prejudice  Executive's  right to  compensation  or  other  benefits  under  this
Agreement.  Executive shall not have the right to receive  compensation or other
benefits  for any  period  after  Termination  for Cause as defined in Section 8
herein.

     (b)  If  Executive  is  suspended   and/or   temporarily   prohibited  from
participating  in the conduct of the  Association's  affairs by a notice  served
under Section  8(e)(3) or (g)(1) of the Federal  Deposit  Insurance Act ("FDIA")
(12 U.S.C.  1818(e)(3)  and (g)(1)),  the  Association's  obligations  under the
Agreement  shall  be  suspended  as of the date of  service,  unless  stayed  by
appropriate  proceedings.  If the  charges  in the  notice  are  dismissed,  the
Association  may,  in its  discretion,  (i)  pay  Executive  all or  part of the
compensation  withheld  while its contract  obligations  were suspended and (ii)
reinstate (in whole or in part) any of its obligations that were suspended.

     (c)  If   Executive  is  removed   and/or   permanently   prohibited   from
participating  in the conduct of the  Association's  affairs by an order  issued
under  Section  8(e)(4) or (g)(1) of the FDIA (12 U.S.C.  1818(e)(4) or (g)(1)),
all obligations of the Association under the Agreement shall terminate as of the
effective date of the order, but vested rights of the contracting  parties shall
not be affected.

     (d) If the  Association is in default (as defined in Section 3(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 parties.

     (e) All obligations under this Agreement shall be terminated (except to the
extent  determined  that  continuation  of the  Agreement is  necessary  for the
continued  operation of the  Association):  (i) by the Director of the Office of
Thrift  Supervision  (the  "Director")  or his or her  designee  at the time the
Federal Deposit Insurance Corporation or the Resolution Trust Corporation enters
into an agreement to provide assistance to or on behalf of the Association under
the authority contained in Section 13(c) of the FDIA or (ii) by the Director, or
his or her  designee  at the time  the  Director  or such  designee  approves  a
supervisory  merger to resolve  problems related to operation of the Association
or when the  Association  is  determined  by the  Director to be in an unsafe or
unsound condition.  Any rights of the parties that have already vested, however,
shall not be affected by such action.

     (f)  Any  payments  made  to  Executive  pursuant  to  this  Agreement,  or
otherwise,  are  subject  to and  conditioned  upon  compliance  with 12  U.S.C.
Section 1828(k) and any regulations promulgated thereunder.


                                      -15-
<PAGE>



10.      NOTICE.

     (a) Any purported  termination by the  Association 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  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 he shall not have returned to the performance of his duties
on a  full-time  basis  during  such  thirty  (30) day  period),  and (B) if his
employment is terminated for any other reason,  the date specified in the Notice
of Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given).

     (c) If, within thirty (30) days after any Notice of  Termination  is given,
the party  receiving such Notice of Termination  notifies the other party that a
dispute  exists  concerning  the  termination,  except upon the  occurrence of a
Change in Control and voluntary  termination  by the Executive in which case the
Date of  Termination  shall be the date  specified  in the  Notice,  the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties,  by a binding  arbitration award, or
by a final judgment,  order or decree of a court of competent  jurisdiction (the
time for appeal there from having  expired and no appeal having been  perfected)
and provided further that the Date of Termination  shall be extended by a notice
of dispute  only if such notice is given in good faith and the party giving such
notice  pursues  the  resolution  of such  dispute  with  reasonable  diligence.
Notwithstanding the pendency of any such dispute,  the Association will continue
to pay Executive his full  compensation in effect when the notice giving rise to
the dispute was given (including,  but not limited to, Base Salary) and continue
him as a participant in all  compensation,  benefit and insurance plans in which
he was participating  when the notice of dispute was given, until the dispute is
finally  resolved in  accordance  with this  Agreement.  Amounts paid under this
Section are in addition to all other amounts due under this  Agreement and shall
not be offset against or reduce any other amounts due under this Agreement.

11.      NON-COMPETITION.

     (a) Upon any termination of Executive's employment hereunder pursuant to an
Event of  Termination as provided in Section 4 hereof,  Executive  agrees not to
compete  with the  Association  and/or the  Company for a period of one (1) year
following such  termination in any city, town or county in which the Association
and/or the  Company  has an office or has filed an  application  for  regulatory
approval to establish an office,  determined  as of the  effective  date of such
termination.  Executive  agrees that during such period and within said  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
Association and/or the Company. The parties hereto, recognizing that irreparable
injury will result to the  Association  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 Association and/or the Company
will be entitled, in addition to any other remedies and damages

                                      -16-
<PAGE>


available,  to an  injunction  to restrain the  violation  hereof by  Executive,
Executive's partners,  agents,  servants,  employers,  employees and all persons
acting for or with Executive.  Executive represents and admits that in the event
of the termination of his employment  pursuant to Section 8 hereof,  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
Association  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  Association  and/or the  Company  from
pursuing any other remedies  available to the Association 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  Association  and
affiliates  thereof,  as it may exist from time to time, is a valuable,  special
and unique asset of the business of the Association.  Executive will not, during
or  after  the term of his  employment,  disclose  any  knowledge  of the  past,
present,  planned  or  considered  business  activities  of the  Association  or
affiliates  thereof to any person,  firm,  corporation,  or other entity for any
reason or purpose  whatsoever.  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 Association.  In the event of a breach or threatened
breach by the Executive of the provisions of this Section,  the Association 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  Association  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  Association  from pursuing
any other remedies  available to the  Association  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  Association.  The  Company,  however,
guarantees  all  payments  and the  provision  of all amounts and  benefits  due
hereunder to Executive  and, if such payments are not timely paid or provided by
the  Association,  such  amounts and  benefits  shall be paid or provided by the
Company.

13.      EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.

     This Agreement contains the entire understanding between the parties hereto
and supersedes any prior  employment  agreement  between the  Association or any
predecessor of the Association  and Executive,  except that this Agreement shall
not  affect or operate to reduce  any  benefit  or  compensation  inuring to the
Executive of a kind elsewhere provided.  No provision of this Agreement shall be
interpreted to mean that  Executive is subject to receiving  fewer benefits than
those available to him without reference to this Agreement.

14.      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

                                      -17-
<PAGE>


of law, and any attempt,  voluntary  or  involuntary,  to affect any such action
shall be null, void, and of no effect.

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

15.      MODIFICATION AND WAIVER.

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

     (b) No term or  condition  of this  Agreement  shall be deemed to have been
waived, nor shall there by 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.

16.      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.

17.      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.

18.      GOVERNING LAW.

     This Agreement shall be governed by the laws of the State of Oregon, unless
otherwise specified herein;  provided,  however, that in the event of a conflict
between the terms of this Agreement and any  applicable  federal or state law or
regulation, the provisions of such law or regulation shall prevail.

19.      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  sitting in a location selected by the employee within one
hundred (100) miles from the location of the Association, in accordance with the
rules of the American  Arbitration  Association then in effect.  Judgment may be
entered on the arbitrator's  award in any court having  jurisdiction;  provided,
however,  that Executive  shall be entitled to seek specific  performance of his
right to be paid  until  the Date of  Termination  during  the  pendency  of any
dispute or controversy arising under or in connection with this Agreement.


                                      -18-
<PAGE>




20.      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  Association,  if successful  pursuant to a legal judgment,
arbitration or settlement.

21.      INDEMNIFICATION.

     The Association shall provide Executive (including his heirs, executors and
administrators)   with  coverage  under  a  standard  directors'  and  officers'
liability insurance policy at its expense,  or in lieu thereof,  shall indemnify
Executive (and his heirs,  executors and  administrators)  to the fullest extent
permitted under law against all expenses and liabilities  reasonably incurred by
him in  connection  with or arising out of any action,  suite or  proceeding  in
which he may be  involved  by reason of his having been a director or officer of
the Association (whether or not he continues to be a directors or officer at the
time of incurring such expenses or  liabilities),  such expenses and liabilities
to include, but not be limited to, judgment, court costs and attorneys' fees and
the cost of reasonable settlements.

22.      SUCCESSOR TO THE ASSOCIATION OR THE COMPANY.

     The  Association  and 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  Association  or the
Company,  expressly  and  unconditionally  to assume  and agree to  perform  the
Association's  or the Company's  obligations  under this Agreement,  in the same
manner and to the same  extent  that the  Association  or the  Company  would be
required to perform if no such succession or assignment had taken place.




                                      -19-
<PAGE>




     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
executed and their seal to be affixed  hereunto by a duly authorized  officer or
director, and Executive has signed this Agreement, all on the day of , 20 .


ATTEST:                                       KLAMATH FIRST FEDERAL SAVINGS
                                              AND LOAN ASSOCIATION



                                              BY:

                  [SEAL]


ATTEST:                                       KLAMATH FIRST BANCORP, INC.



                                              BY:

                  [SEAL]



WITNESS:




                                              Marshall J. Alexander









                                      -20-
<PAGE>


                                  Exhibit 10(c)

                              EMPLOYMENT AGREEMENT


     THIS  AGREEMENT  is made  effective  as of October 1, 2001,  by and between
KLAMATH FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION (the "Association"),  Klamath
Falls,  Oregon;   KLAMATH  FIRST  BANCORP,  INC.  (the  "Company"),   an  Oregon
corporation; and Frank X. Hernandez (the "Executive").

     WHEREAS,  the  Association  wishes to  assure  itself  of the  services  of
Executive for the period provided in this Agreement; and

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

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

1.       POSITION AND RESPONSIBILITIES.

     During the period of his employment hereunder, Executive agrees to serve as
Senior Vice  President of the  Association.  During said period,  Executive also
agrees to serve,  if elected,  as an officer of the Company or any subsidiary or
affiliate of the Company or the Association.

2.       TERMS AND DUTIES.

     (a) The term of this Agreement  shall be deemed to have commenced as of the
date first above  written and shall  continue for a period of  twenty-four  (24)
full calendar months  thereafter.  Commencing on the first anniversary date, and
continuing at each anniversary  date  thereafter,  the Board of Directors of the
Association (the "Board") may extend the Agreement for an additional year. Prior
to the extension of the Agreement as provided herein,  the Board of Directors of
the Association  will conduct a formal  performance  evaluation of the Executive
for purposes of  determining  whether to extend the  Agreement,  and the results
thereof shall be included in the minutes of the Board's meeting.

     (b) During the period of his  employment  hereunder,  except for periods of
absence  occasioned by illness,  reasonable  vacation  periods,  and  reasonable
leaves of absence,  Executive shall devote  substantially all his business time,
attention,  skill,  and  efforts  to the  faithful  performance  of  his  duties
hereunder  including  activities  and  services  related  to  the  organization,
operation and management of the Association;  provided,  however, that, with the
approval of the Board, as evidenced by a resolution of such Board,  from time to
time,  Executive may serve, or continue to serve, on the boards of directors of,
and hold any other offices or positions in, companies or  organizations,  which,
in such Board's  judgment,  will not present any  conflict of interest  with the
Association, or materially affect the performance of Executive's duties pursuant
to this Agreement.





                                      -21-
<PAGE>



3.       COMPENSATION AND REIMBURSEMENT.

     (a) The  compensation  specified under this Agreement shall  constitute the
salary and  benefits  paid for the  duties  described  in  Sections 1 and 2. The
Association  shall pay Executive as  compensation a salary of $ 103,980 per year
("Base  Salary").  Such Base  Salary  shall be  payable in  accordance  with the
customary  payroll  practices  of the  Association.  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 one year  from the date of this
Agreement.  Such review  shall be  conducted  by a Committee  designated  by the
Board, and the Board may increase  Executive's  Base Salary.  In addition to the
Base  Salary  provided in this  Section  3(a),  the  Association  shall  provide
Executive at no cost to Executive  with all such other  benefits as are provided
uniformly to permanent full-time employees of the Association.

     (b) The  Association  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  Association  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. Without limiting the generality of the foregoing provisions
of this Subsection (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 plan, medical coverage or any other employee benefit
plan or  arrangement  made  available  by the  Association  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,  or  pursuant  to any  arrangement  of the
Association, in which Executive is eligible to participate.  Nothing paid to the
Executive  under  any such plan or  arrangement  will be deemed to be in lieu of
other  compensation  to which the  Executive is entitled  under this  Agreement,
except as provided under Section 5(e).

     (c) In addition to the Base Salary  provided for by  paragraph  (a) of this
Section 3, the Association  shall pay or reimburse  Executive for all reasonable
travel  and  other  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.       PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.

     (a) Upon the  occurrence  of an Event of  Termination  (as herein  defined)
during the Executive's term of employment  under this Agreement,  the provisions
of  this  Section  shall  apply.  As  used  in  this  Agreement,  an  "Event  of
Termination"  shall mean and include any one or more of the  following:  (i) the
termination by the Association of Executive's full-time employment hereunder for
any reason  other than a Change in Control,  as defined in Section  5(a) hereof;
disability,  as defined in Section 6(a) hereof; death; retirement, as defined in
Section 7 hereof; or for Cause, as defined in Section 8 hereof; (ii) Executive's
resignation from the Association's  employ,  upon (A) unless consented to by the
Executive,   a   material   change   in   Executive's   function,   duties,   or
responsibilities, which change would cause Executive's position to become one of
lesser  responsibility,  importance,  or scope from the position and  attributes
thereof described in Sections 1 and 2, above, (any such material change shall be
deemed a continuing breach of this

                                      -22-
<PAGE>


Agreement),  (B) a relocation of  Executive's  principal  place of employment by
more than 35 miles from its location at the effective date of this Agreement, or
a material  reduction in the benefits and  perquisites  to Executive  from those
being provided as of the effective date of this  Agreement,  (C) the liquidation
or  dissolution of the  Association,  or (D) any breach of this Agreement by the
Association.  Upon the  occurrence  of any event  described in clauses (A), (B),
(C), or (D),  above,  Executive  shall have the right to elect to terminate  his
employment  under this  Agreement by  resignation  upon not less than sixty (60)
days  prior  written  notice  given  within a  reasonable  period of time not to
exceed,  except in case of a continuing  breach,  four calendar months after the
event giving rise to said right to elect.

     (b) Upon the occurrence of an Event of Termination,  the Association  shall
pay Executive,  or, in the event of his  subsequent  death,  his  beneficiary or
beneficiaries, or his estate, as the case may be, as severance pay or liquidated
damages,  or both,  a sum equal to the  payments  due to the  Executive  for the
remaining term of the Agreement,  including Base Salary,  bonuses, and any other
cash or  deferred  compensation  paid  or to be paid  (including  the  value  of
employer  contributions that would have been made on the Executive's behalf over
the  remaining  term  of the  agreement  to any  tax-qualified  retirement  plan
sponsored by the  Association as of the Date of  Termination),  to the Executive
for the term of the Agreement provided,  however, that if the Association is not
in compliance  with its minimum  capital  requirements or if such payments would
cause  the  Association's  capital  to be  reduced  below  its  minimum  capital
requirements, such payments shall be deferred until such time as the Association
is in capital compliance.  All payments made pursuant to this Section 4(b) shall
be paid in substantially  equal monthly  installments over the remaining term of
this Agreement following the Executive's termination; provided, however, that if
the remaining term of the Agreement is less than one (1) year  (determined as of
the Executive's Date of  Termination),  such payments and benefits shall be paid
to the Executive in a lump sum within 30 days of the Date of Termination.

     (c) Upon the occurrence of an Event of Termination,  the  Association  will
cause  to  be  continued   life,   medical,   dental  and  disability   coverage
substantially  identical  to the  coverage  maintained  by the  Association  for
Executive  prior  to  his  termination.  Such  coverage  shall  cease  upon  the
expiration of the remaining term of this Agreement.

5.       CHANGE IN CONTROL.

     (a) No benefit  shall be paid under this  Section 5 unless there shall have
occurred a Change in Control of the Company or the Association.  For purposes of
this Agreement, a "Change in Control" of the Company or the Association shall be
deemed to occur if and when (a) an  offeror  other  than the  Company  purchases
shares of the common  stock of the  Company  or the  Association  pursuant  to a
tender or exchange  offer for such shares,  (b) any person (as such term is used
in Sections  13(d) and  14(d)(2) of the  Securities  Exchange Act of 1934) is or
becomes the  beneficial  owner,  directly or  indirectly,  of  securities of the
Company or the Association representing 25% or more of the combined voting power
of the Company's then outstanding securities, (c) the membership of the board of
directors of the Company or the Association changes as the result of a contested
election,  such that  individuals  who were  directors  at the  beginning of any
twenty-four month period (whether  commencing before or after the effective date
of this  Agreement) do not constitute a majority of the Board at the end of such
period, or (d) shareholders of the Company or the Association  approve a merger,
consolidation,  sale or disposition of all or substantially all of the Company's
or the Association's assets, or a plan of partial or complete liquidation.


                                      -23-
<PAGE>


     (b) If any of the events  described in Section 5(a) hereof  constituting  a
Change in Control have occurred or the Board of the  Association  or the Company
has  determined  that a Change  in  Control  has  occurred,  Executive  shall be
entitled to the benefits provided in paragraphs (c), (d) and (e) of this Section
5 upon his subsequent  involuntary  termination of employment at any time during
the term of this  Agreement  (or  voluntary  termination  following  a Change of
Control following any demotion,  loss of title, office or significant authority,
reduction in his annual compensation or benefits, or relocation of his principal
place of employment by more than 35 miles from its location immediately prior to
the  Change in  Control),  unless  such  termination  is  because  of his death,
retirement as provided in Section 7,  termination  for Cause, or termination for
Disability.

     (c) Upon the occurrence of a Change in Control  followed by the Executive's
termination of employment,  the Association shall pay Executive, or in the event
of his subsequent death, his beneficiary or beneficiaries, or his estate, as the
case may be, as severance  pay or  liquidated  damages,  or both, a sum equal to
2.99  times the  Executive's  "base  amount,"  within  the  meaning  of  Section
280G(b)(3)  of the Internal  Revenue  Code of 1986  ("Code"),  as amended.  Such
payment shall be made in a lump sum paid within ten (10) days of the Executive's
Date of Termination.

     (d) Upon the occurrence of a Change in Control  followed by the Executive's
termination  of employment,  the  Association  will cause to be continued  life,
medical,  dental and disability coverage substantially identical to the coverage
maintained by the Association for Executive prior to his severance. In addition,
Executive shall be entitled to receive the value of employer  contributions that
would have been made on the  Executive's  behalf over the remaining  term of the
agreement to any  tax-qualified  retirement plan sponsored by the Association as
of the Date of  Termination.  Such  coverage and  payments  shall cease upon the
expiration of thirty-six (36) months.

     (e) Upon the  occurrence  of a Change in Control,  the  Executive  shall be
entitled to receive benefits due him under, or contributed by the Company or the
Association  on his  behalf,  pursuant  to  any  retirement,  incentive,  profit
sharing,  bonus,   performance,   disability  or  other  employee  benefit  plan
maintained by the  Association or the Company on the  Executive's  behalf to the
extent that such benefits are not otherwise  paid to the Executive upon a Change
in Control.

     (f)  Notwithstanding  the  preceding  paragraphs  of this Section 5, in the
event that the  aggregate  payments  or  benefits  to be made or afforded to the
Executive  under this  Section  would be deemed to include an "excess  parachute
payment"  under  Section 280G of the Code,  such  payments or benefits  shall be
payable or provided to Executive over the minimum period necessary to reduce the
present  value of such  payments or  benefits  to an amount  which is one dollar
($1.00)  less  than  three  (3)  times  the  Executive's   "base  amount"  under
Section 280G(b)(3) of the Code.

6.       TERMINATION FOR DISABILITY.

     (a) If the Executive shall become disabled as defined in the  Association's
then  current  disability  plan (or,  if no such plan is then in effect,  if the
Executive  is  permanently  and totally  disabled  within the meaning of Section
22(e)(3) of the Code as determined by a physician  designated by the Board), the
Association may terminate Executive's employment for "Disability."

     (b) Upon the  Executive's  termination  of employment for  Disability,  the
Association will pay Executive,  as disability pay, a bi-weekly payment equal to
three-quarters  (3/4) of  Executive's  bi-  weekly  rate of Base  Salary  on the
effective date of such termination.  These disability payments shall commence on
the effective date of Executive's termination and will end on the earlier of (i)

                                      -24-
<PAGE>


the date Executive returns to the full-time employment of the Association in the
same capacity as he was employed  prior to his  termination  for  Disability and
pursuant to an employment agreement between Executive and the Association;  (ii)
Executive's full-time employment by another employer;  (iii) Executive attaining
the age of 65; or (iv)  Executive's  death; or (v) the expiration of the term of
this Agreement.  The disability pay shall be reduced by the amount, if any, paid
to the Executive under any plan of the Association providing disability benefits
to the Executive.

     (c) The Association  will cause to be continued life,  medical,  dental and
disability  coverage  substantially  identical to the coverage maintained by the
Association for Executive prior to his termination for Disability. This coverage
and payments shall cease upon the earlier of (i) the date  Executive  returns to
the  full-time  employment  of the  Association,  in the same capacity as he was
employed prior to his  termination  for Disability and pursuant to an employment
agreement  between  Executive and the Association;  (ii)  Executive's  full-time
employment by another employer;  (iii)  Executive's  attaining the age of 65; or
(iv) the Executive's death; or (v) the expiration of the term of this Agreement.

     (d)  Notwithstanding  the  foregoing,  there  will be no  reduction  in the
compensation  otherwise  payable to  Executive  during any period  during  which
Executive is incapable of performing his duties hereunder by reason of temporary
disability.

7.       TERMINATION UPON RETIREMENT; DEATH OF EXECUTIVE.

     Termination by the  Association of Executive  based on  "Retirement"  shall
mean  retirement  at age 65 or in  accordance  with any  retirement  arrangement
established  with  Executive's  consent with respect to him. Upon termination of
Executive upon Retirement, Executive shall be entitled to all benefits under any
retirement  plan of the  Association  or the  Company  and other  plans to which
Executive is a party.  Upon the death of the  Executive  during the term of this
Agreement,  the Association shall pay to Executive's estate the compensation due
to the Executive  through the last day of the calendar  month in which his death
occurred.

8.       TERMINATION FOR CAUSE.

     For  purposes of this  Agreement,  "Termination  for Cause"  shall  include
termination  because  of  the  Executive's  personal  dishonesty,  incompetence,
willful misconduct,  breach of fiduciary duty involving personal profit, willful
violation of any law,  rule,  or  regulation  (other than traffic  violations or
similar  offenses) or final  cease-and-desist  order,  or material breach of any
provision of this Agreement. In addition,  "Termination for Cause" shall include
termination  because of  continuing or repeated  problems  with the  Executive's
performance or conduct,  the Executive's  inattention to duties,  the refusal of
the Executive to comply with the  Association's  or the Company's  instructions,
policies or rules or other conduct of the Executive which reflects  adversely on
the Association's or the Company's reputation or operation. For purposes of this
Section,  no act, or the failure to act, on Executive's  part shall be "willful"
unless  done,  or omitted to be done,  not in good faith and without  reasonable
belief that the action or omission was in the best  interest of the  Association
or its affiliates.  Notwithstanding the foregoing, Executive shall not be deemed
to have  been  terminated  for Cause  unless  and until  there  shall  have been
delivered to him a copy of a resolution duly adopted by the affirmative  vote of
not less than  three-fourths  of the  members  of the Board at a meeting  of the
Board called and held for that purpose (after reasonable notice to Executive and
an opportunity  for him,  together with counsel,  to be heard before the Board),
finding  that in the good faith  opinion of the Board,  Executive  was guilty of
conduct justifying termination

                                      -25-
<PAGE>


for Cause and specifying the reasons  thereof.  The Executive shall not have the
right to receive compensation or other benefits for any period after termination
for Cause. Any stock options granted to Executive under any stock option plan or
any  unvested  awards  granted  under  any  other  stock  benefit  plan  of  the
Association,  the Company, or any subsidiary or affiliate thereof,  shall become
null and void effective upon  Executive's  receipt of Notice of Termination  for
Cause pursuant to Section 9 hereof, and shall not be exercisable by Executive at
any time subsequent to such Termination for Cause.

9.       REQUIRED PROVISIONS.

     (a) The Association may terminate  Executive's  employment at any time, but
any termination by the Association,  other than Termination for Cause, shall not
prejudice  Executive's  right to  compensation  or  other  benefits  under  this
Agreement.  Executive shall not have the right to receive  compensation or other
benefits  for any  period  after  Termination  for Cause as defined in Section 8
herein.

     (b)  If  Executive  is  suspended   and/or   temporarily   prohibited  from
participating  in the conduct of the  Association's  affairs by a notice  served
under Section  8(e)(3) or (g)(1) of the Federal  Deposit  Insurance Act ("FDIA")
(12 U.S.C.  1818(e)(3)  and (g)(1)),  the  Association's  obligations  under the
Agreement  shall  be  suspended  as of the date of  service,  unless  stayed  by
appropriate  proceedings.  If the  charges  in the  notice  are  dismissed,  the
Association  may,  in its  discretion,  (i)  pay  Executive  all or  part of the
compensation  withheld  while its contract  obligations  were suspended and (ii)
reinstate (in whole or in part) any of its obligations that were suspended.

     (c)  If   Executive  is  removed   and/or   permanently   prohibited   from
participating  in the conduct of the  Association's  affairs by an order  issued
under  Section  8(e)(4) or (g)(1) of the FDIA (12 U.S.C.  1818(e)(4) or (g)(1)),
all obligations of the Association under the Agreement shall terminate as of the
effective date of the order, but vested rights of the contracting  parties shall
not be affected.

     (d) If the  Association is in default (as defined in Section 3(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 parties.

     (e) All obligations under this Agreement shall be terminated (except to the
extent  determined  that  continuation  of the  Agreement is  necessary  for the
continued  operation of the  Association):  (i) by the Director of the Office of
Thrift  Supervision  (the  "Director")  or his or her  designee  at the time the
Federal Deposit Insurance Corporation or the Resolution Trust Corporation enters
into an agreement to provide assistance to or on behalf of the Association under
the authority contained in Section 13(c) of the FDIA or (ii) by the Director, or
his or her  designee  at the time  the  Director  or such  designee  approves  a
supervisory  merger to resolve  problems related to operation of the Association
or when the  Association  is  determined  by the  Director to be in an unsafe or
unsound condition.  Any rights of the parties that have already vested, however,
shall not be affected by such action.

     (f)  Any  payments  made  to  Executive  pursuant  to  this  Agreement,  or
otherwise,  are  subject  to and  conditioned  upon  compliance  with 12  U.S.C.
Section 1828(k) and any regulations promulgated thereunder.


                                      -26-
<PAGE>



10.      NOTICE.

     (a) Any purported  termination by the  Association 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  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 he shall not have returned to the performance of his duties
on a  full-time  basis  during  such  thirty  (30) day  period),  and (B) if his
employment is terminated for any other reason,  the date specified in the Notice
of Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given).

     (c) If, within thirty (30) days after any Notice of  Termination  is given,
the party  receiving such Notice of Termination  notifies the other party that a
dispute  exists  concerning  the  termination,  except upon the  occurrence of a
Change in Control and voluntary  termination  by the Executive in which case the
Date of  Termination  shall be the date  specified  in the  Notice,  the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties,  by a binding  arbitration award, or
by a final judgment,  order or decree of a court of competent  jurisdiction (the
time for appeal there from having  expired and no appeal having been  perfected)
and provided further that the Date of Termination  shall be extended by a notice
of dispute  only if such notice is given in good faith and the party giving such
notice  pursues  the  resolution  of such  dispute  with  reasonable  diligence.
Notwithstanding the pendency of any such dispute,  the Association will continue
to pay Executive his full  compensation in effect when the notice giving rise to
the dispute was given (including,  but not limited to, Base Salary) and continue
him as a participant in all  compensation,  benefit and insurance plans in which
he was participating  when the notice of dispute was given, until the dispute is
finally  resolved in  accordance  with this  Agreement.  Amounts paid under this
Section are in addition to all other amounts due under this  Agreement and shall
not be offset against or reduce any other amounts due under this Agreement.

11.      NON-COMPETITION.

     (a) Upon any termination of Executive's employment hereunder pursuant to an
Event of  Termination as provided in Section 4 hereof,  Executive  agrees not to
compete  with the  Association  and/or the  Company for a period of one (1) year
following such  termination in any city, town or county in which the Association
and/or the  Company  has an office or has filed an  application  for  regulatory
approval to establish an office,  determined  as of the  effective  date of such
termination.  Executive  agrees that during such period and within said  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
Association and/or the Company. The parties hereto, recognizing that irreparable
injury will result to the  Association  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 Association and/or the Company
will be entitled, in addition to any other remedies and damages

                                      -27-
<PAGE>


available,  to an  injunction  to restrain the  violation  hereof by  Executive,
Executive's partners,  agents,  servants,  employers,  employees and all persons
acting for or with Executive.  Executive represents and admits that in the event
of the termination of his employment  pursuant to Section 8 hereof,  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
Association  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  Association  and/or the  Company  from
pursuing any other remedies  available to the Association 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  Association  and
affiliates  thereof,  as it may exist from time to time, is a valuable,  special
and unique asset of the business of the Association.  Executive will not, during
or  after  the term of his  employment,  disclose  any  knowledge  of the  past,
present,  planned  or  considered  business  activities  of the  Association  or
affiliates  thereof to any person,  firm,  corporation,  or other entity for any
reason or purpose  whatsoever.  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 Association.  In the event of a breach or threatened
breach by the Executive of the provisions of this Section,  the Association 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  Association  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  Association  from pursuing
any other remedies  available to the  Association  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  Association.  The  Company,  however,
guarantees  all  payments  and the  provision  of all amounts and  benefits  due
hereunder to Executive  and, if such payments are not timely paid or provided by
the  Association,  such  amounts and  benefits  shall be paid or provided by the
Company.

13.      EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.

     This Agreement contains the entire understanding between the parties hereto
and supersedes any prior  employment  agreement  between the  Association or any
predecessor of the Association  and Executive,  except that this Agreement shall
not  affect or operate to reduce  any  benefit  or  compensation  inuring to the
Executive of a kind elsewhere provided.  No provision of this Agreement shall be
interpreted to mean that  Executive is subject to receiving  fewer benefits than
those available to him without reference to this Agreement.

14.      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

                                      -28-
<PAGE>


of law, and any attempt,  voluntary  or  involuntary,  to affect any such action
shall be null, void, and of no effect.

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

15.      MODIFICATION AND WAIVER.

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

     (b) No term or  condition  of this  Agreement  shall be deemed to have been
waived, nor shall there by 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.

16.      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.

17.      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.

18.      GOVERNING LAW.

     This Agreement shall be governed by the laws of the State of Oregon, unless
otherwise specified herein;  provided,  however, that in the event of a conflict
between the terms of this Agreement and any  applicable  federal or state law or
regulation, the provisions of such law or regulation shall prevail.

19.      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  sitting in a location selected by the employee within one
hundred (100) miles from the location of the Association, in accordance with the
rules of the American  Arbitration  Association then in effect.  Judgment may be
entered on the arbitrator's  award in any court having  jurisdiction;  provided,
however,  that Executive  shall be entitled to seek specific  performance of his
right to be paid  until  the Date of  Termination  during  the  pendency  of any
dispute or controversy arising under or in connection with this Agreement.


                                      -29-
<PAGE>




20.      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  Association,  if successful  pursuant to a legal judgment,
arbitration or settlement.

21.      INDEMNIFICATION.

     The Association shall provide Executive (including his heirs, executors and
administrators)   with  coverage  under  a  standard  directors'  and  officers'
liability insurance policy at its expense,  or in lieu thereof,  shall indemnify
Executive (and his heirs,  executors and  administrators)  to the fullest extent
permitted under law against all expenses and liabilities  reasonably incurred by
him in  connection  with or arising out of any action,  suite or  proceeding  in
which he may be  involved  by reason of his having been a director or officer of
the Association (whether or not he continues to be a directors or officer at the
time of incurring such expenses or  liabilities),  such expenses and liabilities
to include, but not be limited to, judgment, court costs and attorneys' fees and
the cost of reasonable settlements.

22.      SUCCESSOR TO THE ASSOCIATION OR THE COMPANY.

     The  Association  and 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  Association  or the
Company,  expressly  and  unconditionally  to assume  and agree to  perform  the
Association's  or the Company's  obligations  under this Agreement,  in the same
manner and to the same  extent  that the  Association  or the  Company  would be
required to perform if no such succession or assignment had taken place.




                                      -30-
<PAGE>




     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
executed and their seal to be affixed  hereunto by a duly authorized  officer or
director, and Executive has signed this Agreement, all on the day of , 20 .


ATTEST:                                           KLAMATH FIRST FEDERAL SAVINGS
                                                      AND LOAN ASSOCIATION



                                                     BY:

                  [SEAL]


ATTEST:                                              KLAMATH FIRST BANCORP, INC.



                                                     BY:

                  [SEAL]



WITNESS:




                                                       Frank X. Hernandez









                                      -31-
<PAGE>


                                  Exhibit 10(d)

                              EMPLOYMENT AGREEMENT


     THIS  AGREEMENT  is made  effective  as of October 1, 2001,  by and between
KLAMATH FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION (the "Association"),  Klamath
Falls,  Oregon;   KLAMATH  FIRST  BANCORP,  INC.  (the  "Company"),   an  Oregon
corporation; and Craig M. Moore (the "Executive").

     WHEREAS,  the  Association  wishes to  assure  itself  of the  services  of
Executive for the period provided in this Agreement; and

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

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

1.       POSITION AND RESPONSIBILITIES.

     During the period of his employment hereunder, Executive agrees to serve as
Senior Vice  President of the  Association.  During said period,  Executive also
agrees to serve,  if elected,  as an officer of the Company or any subsidiary or
affiliate of the Company or the Association.

2.       TERMS AND DUTIES.

     (a) The term of this Agreement  shall be deemed to have commenced as of the
date first above  written and shall  continue for a period of  twenty-four  (24)
full calendar months  thereafter.  Commencing on the first anniversary date, and
continuing at each anniversary  date  thereafter,  the Board of Directors of the
Association (the "Board") may extend the Agreement for an additional year. Prior
to the extension of the Agreement as provided herein,  the Board of Directors of
the Association  will conduct a formal  performance  evaluation of the Executive
for purposes of  determining  whether to extend the  Agreement,  and the results
thereof shall be included in the minutes of the Board's meeting.

     (b) During the period of his  employment  hereunder,  except for periods of
absence  occasioned by illness,  reasonable  vacation  periods,  and  reasonable
leaves of absence,  Executive shall devote  substantially all his business time,
attention,  skill,  and  efforts  to the  faithful  performance  of  his  duties
hereunder  including  activities  and  services  related  to  the  organization,
operation and management of the Association;  provided,  however, that, with the
approval of the Board, as evidenced by a resolution of such Board,  from time to
time,  Executive may serve, or continue to serve, on the boards of directors of,
and hold any other offices or positions in, companies or  organizations,  which,
in such Board's  judgment,  will not present any  conflict of interest  with the
Association, or materially affect the performance of Executive's duties pursuant
to this Agreement.





                                      -32-
<PAGE>



3.       COMPENSATION AND REIMBURSEMENT.

     (a) The  compensation  specified under this Agreement shall  constitute the
salary and  benefits  paid for the  duties  described  in  Sections 1 and 2. The
Association  shall pay Executive as  compensation  a salary of $ 95,000 per year
("Base  Salary").  Such Base  Salary  shall be  payable in  accordance  with the
customary  payroll  practices  of the  Association.  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 one year  from the date of this
Agreement.  Such review  shall be  conducted  by a Committee  designated  by the
Board, and the Board may increase  Executive's  Base Salary.  In addition to the
Base  Salary  provided in this  Section  3(a),  the  Association  shall  provide
Executive at no cost to Executive  with all such other  benefits as are provided
uniformly to permanent full-time employees of the Association.

     (b) The  Association  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  Association  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. Without limiting the generality of the foregoing provisions
of this Subsection (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 plan, medical coverage or any other employee benefit
plan or  arrangement  made  available  by the  Association  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,  or  pursuant  to any  arrangement  of the
Association, in which Executive is eligible to participate.  Nothing paid to the
Executive  under  any such plan or  arrangement  will be deemed to be in lieu of
other  compensation  to which the  Executive is entitled  under this  Agreement,
except as provided under Section 5(e).

     (c) In addition to the Base Salary  provided for by  paragraph  (a) of this
Section 3, the Association  shall pay or reimburse  Executive for all reasonable
travel  and  other  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.       PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.

     (a) Upon the  occurrence  of an Event of  Termination  (as herein  defined)
during the Executive's term of employment  under this Agreement,  the provisions
of  this  Section  shall  apply.  As  used  in  this  Agreement,  an  "Event  of
Termination"  shall mean and include any one or more of the  following:  (i) the
termination by the Association of Executive's full-time employment hereunder for
any reason  other than a Change in Control,  as defined in Section  5(a) hereof;
disability,  as defined in Section 6(a) hereof; death; retirement, as defined in
Section 7 hereof; or for Cause, as defined in Section 8 hereof; (ii) Executive's
resignation from the Association's  employ,  upon (A) unless consented to by the
Executive,   a   material   change   in   Executive's   function,   duties,   or
responsibilities, which change would cause Executive's position to become one of
lesser  responsibility,  importance,  or scope from the position and  attributes
thereof described in Sections 1 and 2, above, (any such material change shall be
deemed a continuing breach of this

                                      -33-
<PAGE>


Agreement),  (B) a relocation of  Executive's  principal  place of employment by
more than 35 miles from its location at the effective date of this Agreement, or
a material  reduction in the benefits and  perquisites  to Executive  from those
being provided as of the effective date of this  Agreement,  (C) the liquidation
or  dissolution of the  Association,  or (D) any breach of this Agreement by the
Association.  Upon the  occurrence  of any event  described in clauses (A), (B),
(C), or (D),  above,  Executive  shall have the right to elect to terminate  his
employment  under this  Agreement by  resignation  upon not less than sixty (60)
days  prior  written  notice  given  within a  reasonable  period of time not to
exceed,  except in case of a continuing  breach,  four calendar months after the
event giving rise to said right to elect.

     (b) Upon the occurrence of an Event of Termination,  the Association  shall
pay Executive,  or, in the event of his  subsequent  death,  his  beneficiary or
beneficiaries, or his estate, as the case may be, as severance pay or liquidated
damages,  or both,  a sum equal to the  payments  due to the  Executive  for the
remaining term of the Agreement,  including Base Salary,  bonuses, and any other
cash or  deferred  compensation  paid  or to be paid  (including  the  value  of
employer  contributions that would have been made on the Executive's behalf over
the  remaining  term  of the  agreement  to any  tax-qualified  retirement  plan
sponsored by the  Association as of the Date of  Termination),  to the Executive
for the term of the Agreement provided,  however, that if the Association is not
in compliance  with its minimum  capital  requirements or if such payments would
cause  the  Association's  capital  to be  reduced  below  its  minimum  capital
requirements, such payments shall be deferred until such time as the Association
is in capital compliance.  All payments made pursuant to this Section 4(b) shall
be paid in substantially  equal monthly  installments over the remaining term of
this Agreement following the Executive's termination; provided, however, that if
the remaining term of the Agreement is less than one (1) year  (determined as of
the Executive's Date of  Termination),  such payments and benefits shall be paid
to the Executive in a lump sum within 30 days of the Date of Termination.

     (c) Upon the occurrence of an Event of Termination,  the  Association  will
cause  to  be  continued   life,   medical,   dental  and  disability   coverage
substantially  identical  to the  coverage  maintained  by the  Association  for
Executive  prior  to  his  termination.  Such  coverage  shall  cease  upon  the
expiration of the remaining term of this Agreement.

5.       CHANGE IN CONTROL.

     (a) No benefit  shall be paid under this  Section 5 unless there shall have
occurred a Change in Control of the Company or the Association.  For purposes of
this Agreement, a "Change in Control" of the Company or the Association shall be
deemed to occur if and when (a) an  offeror  other  than the  Company  purchases
shares of the common  stock of the  Company  or the  Association  pursuant  to a
tender or exchange  offer for such shares,  (b) any person (as such term is used
in Sections  13(d) and  14(d)(2) of the  Securities  Exchange Act of 1934) is or
becomes the  beneficial  owner,  directly or  indirectly,  of  securities of the
Company or the Association representing 25% or more of the combined voting power
of the Company's then outstanding securities, (c) the membership of the board of
directors of the Company or the Association changes as the result of a contested
election,  such that  individuals  who were  directors  at the  beginning of any
twenty-four month period (whether  commencing before or after the effective date
of this  Agreement) do not constitute a majority of the Board at the end of such
period, or (d) shareholders of the Company or the Association  approve a merger,
consolidation,  sale or disposition of all or substantially all of the Company's
or the Association's assets, or a plan of partial or complete liquidation.


                                      -34-
<PAGE>


     (b) If any of the events  described in Section 5(a) hereof  constituting  a
Change in Control have occurred or the Board of the  Association  or the Company
has  determined  that a Change  in  Control  has  occurred,  Executive  shall be
entitled to the benefits provided in paragraphs (c), (d) and (e) of this Section
5 upon his subsequent  involuntary  termination of employment at any time during
the term of this  Agreement  (or  voluntary  termination  following  a Change of
Control following any demotion,  loss of title, office or significant authority,
reduction in his annual compensation or benefits, or relocation of his principal
place of employment by more than 35 miles from its location immediately prior to
the  Change in  Control),  unless  such  termination  is  because  of his death,
retirement as provided in Section 7,  termination  for Cause, or termination for
Disability.

     (c) Upon the occurrence of a Change in Control  followed by the Executive's
termination of employment,  the Association shall pay Executive, or in the event
of his subsequent death, his beneficiary or beneficiaries, or his estate, as the
case may be, as severance  pay or  liquidated  damages,  or both, a sum equal to
2.99  times the  Executive's  "base  amount,"  within  the  meaning  of  Section
280G(b)(3)  of the Internal  Revenue  Code of 1986  ("Code"),  as amended.  Such
payment shall be made in a lump sum paid within ten (10) days of the Executive's
Date of Termination.

     (d) Upon the occurrence of a Change in Control  followed by the Executive's
termination  of employment,  the  Association  will cause to be continued  life,
medical,  dental and disability coverage substantially identical to the coverage
maintained by the Association for Executive prior to his severance. In addition,
Executive shall be entitled to receive the value of employer  contributions that
would have been made on the  Executive's  behalf over the remaining  term of the
agreement to any  tax-qualified  retirement plan sponsored by the Association as
of the Date of  Termination.  Such  coverage and  payments  shall cease upon the
expiration of thirty-six (36) months.

     (e) Upon the  occurrence  of a Change in Control,  the  Executive  shall be
entitled to receive benefits due him under, or contributed by the Company or the
Association  on his  behalf,  pursuant  to  any  retirement,  incentive,  profit
sharing,  bonus,   performance,   disability  or  other  employee  benefit  plan
maintained by the  Association or the Company on the  Executive's  behalf to the
extent that such benefits are not otherwise  paid to the Executive upon a Change
in Control.

     (f)  Notwithstanding  the  preceding  paragraphs  of this Section 5, in the
event that the  aggregate  payments  or  benefits  to be made or afforded to the
Executive  under this  Section  would be deemed to include an "excess  parachute
payment"  under  Section 280G of the Code,  such  payments or benefits  shall be
payable or provided to Executive over the minimum period necessary to reduce the
present  value of such  payments or  benefits  to an amount  which is one dollar
($1.00)  less  than  three  (3)  times  the  Executive's   "base  amount"  under
Section 280G(b)(3) of the Code.

6.       TERMINATION FOR DISABILITY.

     (a) If the Executive shall become disabled as defined in the  Association's
then  current  disability  plan (or,  if no such plan is then in effect,  if the
Executive  is  permanently  and totally  disabled  within the meaning of Section
22(e)(3) of the Code as determined by a physician  designated by the Board), the
Association may terminate Executive's employment for "Disability."

     (b) Upon the  Executive's  termination  of employment for  Disability,  the
Association will pay Executive,  as disability pay, a bi-weekly payment equal to
three-quarters  (3/4) of  Executive's  bi-  weekly  rate of Base  Salary  on the
effective date of such termination.  These disability payments shall commence on
the effective date of Executive's termination and will end on the earlier of (i)

                                      -35-
<PAGE>


the date Executive returns to the full-time employment of the Association in the
same capacity as he was employed  prior to his  termination  for  Disability and
pursuant to an employment agreement between Executive and the Association;  (ii)
Executive's full-time employment by another employer;  (iii) Executive attaining
the age of 65; or (iv)  Executive's  death; or (v) the expiration of the term of
this Agreement.  The disability pay shall be reduced by the amount, if any, paid
to the Executive under any plan of the Association providing disability benefits
to the Executive.

     (c) The Association  will cause to be continued life,  medical,  dental and
disability  coverage  substantially  identical to the coverage maintained by the
Association for Executive prior to his termination for Disability. This coverage
and payments shall cease upon the earlier of (i) the date  Executive  returns to
the  full-time  employment  of the  Association,  in the same capacity as he was
employed prior to his  termination  for Disability and pursuant to an employment
agreement  between  Executive and the Association;  (ii)  Executive's  full-time
employment by another employer;  (iii)  Executive's  attaining the age of 65; or
(iv) the Executive's death; or (v) the expiration of the term of this Agreement.

     (d)  Notwithstanding  the  foregoing,  there  will be no  reduction  in the
compensation  otherwise  payable to  Executive  during any period  during  which
Executive is incapable of performing his duties hereunder by reason of temporary
disability.

7.       TERMINATION UPON RETIREMENT; DEATH OF EXECUTIVE.

     Termination by the  Association of Executive  based on  "Retirement"  shall
mean  retirement  at age 65 or in  accordance  with any  retirement  arrangement
established  with  Executive's  consent with respect to him. Upon termination of
Executive upon Retirement, Executive shall be entitled to all benefits under any
retirement  plan of the  Association  or the  Company  and other  plans to which
Executive is a party.  Upon the death of the  Executive  during the term of this
Agreement,  the Association shall pay to Executive's estate the compensation due
to the Executive  through the last day of the calendar  month in which his death
occurred.

8.       TERMINATION FOR CAUSE.

     For  purposes of this  Agreement,  "Termination  for Cause"  shall  include
termination  because  of  the  Executive's  personal  dishonesty,  incompetence,
willful misconduct,  breach of fiduciary duty involving personal profit, willful
violation of any law,  rule,  or  regulation  (other than traffic  violations or
similar  offenses) or final  cease-and-desist  order,  or material breach of any
provision of this Agreement. In addition,  "Termination for Cause" shall include
termination  because of  continuing or repeated  problems  with the  Executive's
performance or conduct,  the Executive's  inattention to duties,  the refusal of
the Executive to comply with the  Association's  or the Company's  instructions,
policies or rules or other conduct of the Executive which reflects  adversely on
the  Association's  or the Company 's reputation  or operation.  For purposes of
this  Section,  no act,  or the  failure to act,  on  Executive's  part shall be
"willful"  unless  done,  or omitted to be done,  not in good faith and  without
reasonable  belief that the action or omission  was in the best  interest of the
Association or its affiliates.  Notwithstanding  the foregoing,  Executive shall
not be deemed to have been  terminated  for Cause  unless and until  there shall
have  been  delivered  to  him a  copy  of a  resolution  duly  adopted  by  the
affirmative vote of not less than three-fourths of the members of the Board at a
meeting of the Board called and held for that purpose (after  reasonable  notice
to Executive and an  opportunity  for him,  together  with counsel,  to be heard
before  the  Board),  finding  that in the  good  faith  opinion  of the  Board,
Executive was guilty of conduct justifying termination

                                      -36-
<PAGE>


for Cause and specifying the reasons  thereof.  The Executive shall not have the
right to receive compensation or other benefits for any period after termination
for Cause. Any stock options granted to Executive under any stock option plan or
any  unvested  awards  granted  under  any  other  stock  benefit  plan  of  the
Association,  the Company, or any subsidiary or affiliate thereof,  shall become
null and void effective upon  Executive's  receipt of Notice of Termination  for
Cause pursuant to Section 9 hereof, and shall not be exercisable by Executive at
any time subsequent to such Termination for Cause.

9.       REQUIRED PROVISIONS.

     (a) The Association may terminate  Executive's  employment at any time, but
any termination by the Association,  other than Termination for Cause, shall not
prejudice  Executive's  right to  compensation  or  other  benefits  under  this
Agreement.  Executive shall not have the right to receive  compensation or other
benefits  for any  period  after  Termination  for Cause as defined in Section 8
herein.

     (b)  If  Executive  is  suspended   and/or   temporarily   prohibited  from
participating  in the conduct of the  Association's  affairs by a notice  served
under Section  8(e)(3) or (g)(1) of the Federal  Deposit  Insurance Act ("FDIA")
(12 U.S.C.  1818(e)(3)  and (g)(1)),  the  Association's  obligations  under the
Agreement  shall  be  suspended  as of the date of  service,  unless  stayed  by
appropriate  proceedings.  If the  charges  in the  notice  are  dismissed,  the
Association  may,  in its  discretion,  (i)  pay  Executive  all or  part of the
compensation  withheld  while its contract  obligations  were suspended and (ii)
reinstate (in whole or in part) any of its obligations that were suspended.

     (c)  If   Executive  is  removed   and/or   permanently   prohibited   from
participating  in the conduct of the  Association's  affairs by an order  issued
under  Section  8(e)(4) or (g)(1) of the FDIA (12 U.S.C.  1818(e)(4) or (g)(1)),
all obligations of the Association under the Agreement shall terminate as of the
effective date of the order, but vested rights of the contracting  parties shall
not be affected.

     (d) If the  Association is in default (as defined in Section 3(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 parties.

     (e) All obligations under this Agreement shall be terminated (except to the
extent  determined  that  continuation  of the  Agreement is  necessary  for the
continued  operation of the  Association):  (i) by the Director of the Office of
Thrift  Supervision  (the  "Director")  or his or her  designee  at the time the
Federal Deposit Insurance Corporation or the Resolution Trust Corporation enters
into an agreement to provide assistance to or on behalf of the Association under
the authority contained in Section 13(c) of the FDIA or (ii) by the Director, or
his or her  designee  at the time  the  Director  or such  designee  approves  a
supervisory  merger to resolve  problems related to operation of the Association
or when the  Association  is  determined  by the  Director to be in an unsafe or
unsound condition.  Any rights of the parties that have already vested, however,
shall not be affected by such action.

     (f)  Any  payments  made  to  Executive  pursuant  to  this  Agreement,  or
otherwise,  are  subject  to and  conditioned  upon  compliance  with 12  U.S.C.
Section 1828(k) and any regulations promulgated thereunder.


                                      -37-
<PAGE>



10.      NOTICE.

     (a) Any purported  termination by the  Association 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  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 he shall not have returned to the performance of his duties
on a  full-time  basis  during  such  thirty  (30) day  period),  and (B) if his
employment is terminated for any other reason,  the date specified in the Notice
of Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given).

     (c) If, within thirty (30) days after any Notice of  Termination  is given,
the party  receiving such Notice of Termination  notifies the other party that a
dispute  exists  concerning  the  termination,  except upon the  occurrence of a
Change in Control and voluntary  termination  by the Executive in which case the
Date of  Termination  shall be the date  specified  in the  Notice,  the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties,  by a binding  arbitration award, or
by a final judgment,  order or decree of a court of competent  jurisdiction (the
time for appeal there from having  expired and no appeal having been  perfected)
and provided further that the Date of Termination  shall be extended by a notice
of dispute  only if such notice is given in good faith and the party giving such
notice  pursues  the  resolution  of such  dispute  with  reasonable  diligence.
Notwithstanding the pendency of any such dispute,  the Association will continue
to pay Executive his full  compensation in effect when the notice giving rise to
the dispute was given (including,  but not limited to, Base Salary) and continue
him as a participant in all  compensation,  benefit and insurance plans in which
he was participating  when the notice of dispute was given, until the dispute is
finally  resolved in  accordance  with this  Agreement.  Amounts paid under this
Section are in addition to all other amounts due under this  Agreement and shall
not be offset against or reduce any other amounts due under this Agreement.

11.      NON-COMPETITION.

     (a) Upon any termination of Executive's employment hereunder pursuant to an
Event of  Termination as provided in Section 4 hereof,  Executive  agrees not to
compete  with the  Association  and/or the  Company for a period of one (1) year
following such  termination in any city, town or county in which the Association
and/or the  Company  has an office or has filed an  application  for  regulatory
approval to establish an office,  determined  as of the  effective  date of such
termination.  Executive  agrees that during such period and within said  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
Association and/or the Company. The parties hereto, recognizing that irreparable
injury will result to the  Association  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 Association and/or the Company
will be entitled, in addition to any other remedies and damages

                                      -38-
<PAGE>


available,  to an  injunction  to restrain the  violation  hereof by  Executive,
Executive's partners,  agents,  servants,  employers,  employees and all persons
acting for or with Executive.  Executive represents and admits that in the event
of the termination of his employment  pursuant to Section 8 hereof,  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
Association  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  Association  and/or the  Company  from
pursuing any other remedies  available to the Association 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  Association  and
affiliates  thereof,  as it may exist from time to time, is a valuable,  special
and unique asset of the business of the Association.  Executive will not, during
or  after  the term of his  employment,  disclose  any  knowledge  of the  past,
present,  planned  or  considered  business  activities  of the  Association  or
affiliates  thereof to any person,  firm,  corporation,  or other entity for any
reason or purpose  whatsoever.  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 Association.  In the event of a breach or threatened
breach by the Executive of the provisions of this Section,  the Association 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  Association  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  Association  from pursuing
any other remedies  available to the  Association  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  Association.  The  Company,  however,
guarantees  all  payments  and the  provision  of all amounts and  benefits  due
hereunder to Executive  and, if such payments are not timely paid or provided by
the  Association,  such  amounts and  benefits  shall be paid or provided by the
Company.

13.      EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.

     This Agreement contains the entire understanding between the parties hereto
and supersedes any prior  employment  agreement  between the  Association or any
predecessor of the Association  and Executive,  except that this Agreement shall
not  affect or operate to reduce  any  benefit  or  compensation  inuring to the
Executive of a kind elsewhere provided.  No provision of this Agreement shall be
interpreted to mean that  Executive is subject to receiving  fewer benefits than
those available to him without reference to this Agreement.

14.      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

                                      -39-
<PAGE>


of law, and any attempt,  voluntary  or  involuntary,  to affect any such action
shall be null, void, and of no effect.

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

15.      MODIFICATION AND WAIVER.

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

     (b) No term or  condition  of this  Agreement  shall be deemed to have been
waived, nor shall there by 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.

16.      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.

17.      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.

18.      GOVERNING LAW.

     This Agreement shall be governed by the laws of the State of Oregon, unless
otherwise specified herein;  provided,  however, that in the event of a conflict
between the terms of this Agreement and any  applicable  federal or state law or
regulation, the provisions of such law or regulation shall prevail.

19.      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  sitting in a location selected by the employee within one
hundred (100) miles from the location of the Association, in accordance with the
rules of the American  Arbitration  Association then in effect.  Judgment may be
entered on the arbitrator's  award in any court having  jurisdiction;  provided,
however,  that Executive  shall be entitled to seek specific  performance of his
right to be paid  until  the Date of  Termination  during  the  pendency  of any
dispute or controversy arising under or in connection with this Agreement.


                                      -40-
<PAGE>




20.      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  Association,  if successful  pursuant to a legal judgment,
arbitration or settlement.

21.      INDEMNIFICATION.

     The Association shall provide Executive (including his heirs, executors and
administrators)   with  coverage  under  a  standard  directors'  and  officers'
liability insurance policy at its expense,  or in lieu thereof,  shall indemnify
Executive (and his heirs,  executors and  administrators)  to the fullest extent
permitted under law against all expenses and liabilities  reasonably incurred by
him in  connection  with or arising out of any action,  suite or  proceeding  in
which he may be  involved  by reason of his having been a director or officer of
the Association (whether or not he continues to be a directors or officer at the
time of incurring such expenses or  liabilities),  such expenses and liabilities
to include, but not be limited to, judgment, court costs and attorneys' fees and
the cost of reasonable settlements.

22.      SUCCESSOR TO THE ASSOCIATION OR THE COMPANY.

     The  Association  and 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  Association  or the
Company,  expressly  and  unconditionally  to assume  and agree to  perform  the
Association's  or the Company's  obligations  under this Agreement,  in the same
manner and to the same  extent  that the  Association  or the  Company  would be
required to perform if no such succession or assignment had taken place.




                                      -41-
<PAGE>




     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
executed and their seal to be affixed  hereunto by a duly authorized  officer or
director, and Executive has signed this Agreement, all on the day of , 20 .


ATTEST:                                           KLAMATH FIRST FEDERAL SAVINGS
                                                      AND LOAN ASSOCIATION



                                                     BY:

                  [SEAL]


ATTEST:                                              KLAMATH FIRST BANCORP, INC.



                                                     BY:

                  [SEAL]



WITNESS:




                                                       Craig M. Moore









                                      -42-
<PAGE>


                                  Exhibit 10(e)

                              EMPLOYMENT AGREEMENT


     THIS  AGREEMENT  is made  effective  as of October 1, 2001,  by and between
KLAMATH FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION (the "Association"),  Klamath
Falls,  Oregon;   KLAMATH  FIRST  BANCORP,  INC.  (the  "Company"),   an  Oregon
corporation; and Ben A. Gay (the "Executive").

     WHEREAS,  the  Association  wishes to  assure  itself  of the  services  of
Executive for the period provided in this Agreement; and

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

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

1.       POSITION AND RESPONSIBILITIES.

     During the period of his employment hereunder, Executive agrees to serve as
Executive Vice President of the Association.  During said period, Executive also
agrees to serve,  if elected,  as an officer of the Company or any subsidiary or
affiliate of the Company or the Association.

2.       TERMS AND DUTIES.

     (a) The term of this Agreement  shall be deemed to have commenced as of the
date first above  written and shall  continue for a period of  twenty-four  (24)
full calendar months  thereafter.  Commencing on the first anniversary date, and
continuing at each anniversary  date  thereafter,  the Board of Directors of the
Association (the "Board") may extend the Agreement for an additional year. Prior
to the extension of the Agreement as provided herein,  the Board of Directors of
the Association  will conduct a formal  performance  evaluation of the Executive
for purposes of  determining  whether to extend the  Agreement,  and the results
thereof shall be included in the minutes of the Board's meeting.

     (b) During the period of his  employment  hereunder,  except for periods of
absence  occasioned by illness,  reasonable  vacation  periods,  and  reasonable
leaves of absence,  Executive shall devote  substantially all his business time,
attention,  skill,  and  efforts  to the  faithful  performance  of  his  duties
hereunder  including  activities  and  services  related  to  the  organization,
operation and management of the Association;  provided,  however, that, with the
approval of the Board, as evidenced by a resolution of such Board,  from time to
time,  Executive may serve, or continue to serve, on the boards of directors of,
and hold any other offices or positions in, companies or  organizations,  which,
in such Board's  judgment,  will not present any  conflict of interest  with the
Association, or materially affect the performance of Executive's duties pursuant
to this Agreement.





                                      -43-
<PAGE>



3.       COMPENSATION AND REIMBURSEMENT.

     (a) The  compensation  specified under this Agreement shall  constitute the
salary and  benefits  paid for the  duties  described  in  Sections 1 and 2. The
Association  shall pay Executive as  compensation a salary of $ 114,600 per year
("Base  Salary").  Such Base  Salary  shall be  payable in  accordance  with the
customary  payroll  practices  of the  Association.  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 one year  from the date of this
Agreement.  Such review  shall be  conducted  by a Committee  designated  by the
Board, and the Board may increase  Executive's  Base Salary.  In addition to the
Base  Salary  provided in this  Section  3(a),  the  Association  shall  provide
Executive at no cost to Executive  with all such other  benefits as are provided
uniformly to permanent full-time employees of the Association.

     (b) The  Association  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  Association  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. Without limiting the generality of the foregoing provisions
of this Subsection (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 plan, medical coverage or any other employee benefit
plan or  arrangement  made  available  by the  Association  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,  or  pursuant  to any  arrangement  of the
Association, in which Executive is eligible to participate.  Nothing paid to the
Executive  under  any such plan or  arrangement  will be deemed to be in lieu of
other  compensation  to which the  Executive is entitled  under this  Agreement,
except as provided under Section 5(e).

     (c) In addition to the Base Salary  provided for by  paragraph  (a) of this
Section 3, the Association  shall pay or reimburse  Executive for all reasonable
travel  and  other  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.       PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.

     (a) Upon the  occurrence  of an Event of  Termination  (as herein  defined)
during the Executive's term of employment  under this Agreement,  the provisions
of  this  Section  shall  apply.  As  used  in  this  Agreement,  an  "Event  of
Termination"  shall mean and include any one or more of the  following:  (i) the
termination by the Association of Executive's full-time employment hereunder for
any reason  other than a Change in Control,  as defined in Section  5(a) hereof;
disability,  as defined in Section 6(a) hereof; death; retirement, as defined in
Section 7 hereof; or for Cause, as defined in Section 8 hereof; (ii) Executive's
resignation from the Association's  employ,  upon (A) unless consented to by the
Executive,   a   material   change   in   Executive's   function,   duties,   or
responsibilities, which change would cause Executive's position to become one of
lesser  responsibility,  importance,  or scope from the position and  attributes
thereof described in Sections 1 and 2, above, (any such material change shall be
deemed a continuing breach of this

                                      -44-
<PAGE>


Agreement),  (B) a relocation of  Executive's  principal  place of employment by
more than 35 miles from its location at the effective date of this Agreement, or
a material  reduction in the benefits and  perquisites  to Executive  from those
being provided as of the effective date of this  Agreement,  (C) the liquidation
or  dissolution of the  Association,  or (D) any breach of this Agreement by the
Association.  Upon the  occurrence  of any event  described in clauses (A), (B),
(C), or (D),  above,  Executive  shall have the right to elect to terminate  his
employment  under this  Agreement by  resignation  upon not less than sixty (60)
days  prior  written  notice  given  within a  reasonable  period of time not to
exceed,  except in case of a continuing  breach,  four calendar months after the
event giving rise to said right to elect.

     (b) Upon the occurrence of an Event of Termination,  the Association  shall
pay Executive,  or, in the event of his  subsequent  death,  his  beneficiary or
beneficiaries, or his estate, as the case may be, as severance pay or liquidated
damages,  or both,  a sum equal to the  payments  due to the  Executive  for the
remaining term of the Agreement,  including Base Salary,  bonuses, and any other
cash or  deferred  compensation  paid  or to be paid  (including  the  value  of
employer  contributions that would have been made on the Executive's behalf over
the  remaining  term  of the  agreement  to any  tax-qualified  retirement  plan
sponsored by the  Association as of the Date of  Termination),  to the Executive
for the term of the Agreement provided,  however, that if the Association is not
in compliance  with its minimum  capital  requirements or if such payments would
cause  the  Association's  capital  to be  reduced  below  its  minimum  capital
requirements, such payments shall be deferred until such time as the Association
is in capital compliance.  All payments made pursuant to this Section 4(b) shall
be paid in substantially  equal monthly  installments over the remaining term of
this Agreement following the Executive's termination; provided, however, that if
the remaining term of the Agreement is less than one (1) year  (determined as of
the Executive's Date of  Termination),  such payments and benefits shall be paid
to the Executive in a lump sum within 30 days of the Date of Termination.

     (c) Upon the occurrence of an Event of Termination,  the  Association  will
cause  to  be  continued   life,   medical,   dental  and  disability   coverage
substantially  identical  to the  coverage  maintained  by the  Association  for
Executive  prior  to  his  termination.  Such  coverage  shall  cease  upon  the
expiration of the remaining term of this Agreement.

5.       CHANGE IN CONTROL.

     (a) No benefit  shall be paid under this  Section 5 unless there shall have
occurred a Change in Control of the Company or the Association.  For purposes of
this Agreement, a "Change in Control" of the Company or the Association shall be
deemed to occur if and when (a) an  offeror  other  than the  Company  purchases
shares of the common  stock of the  Company  or the  Association  pursuant  to a
tender or exchange  offer for such shares,  (b) any person (as such term is used
in Sections  13(d) and  14(d)(2) of the  Securities  Exchange Act of 1934) is or
becomes the  beneficial  owner,  directly or  indirectly,  of  securities of the
Company or the Association representing 25% or more of the combined voting power
of the Company's then outstanding securities, (c) the membership of the board of
directors of the Company or the Association changes as the result of a contested
election,  such that  individuals  who were  directors  at the  beginning of any
twenty-four month period (whether  commencing before or after the effective date
of this  Agreement) do not constitute a majority of the Board at the end of such
period, or (d) shareholders of the Company or the Association  approve a merger,
consolidation,  sale or disposition of all or substantially all of the Company's
or the Association's assets, or a plan of partial or complete liquidation.


                                      -45-
<PAGE>


     (b) If any of the events  described in Section 5(a) hereof  constituting  a
Change in Control have occurred or the Board of the  Association  or the Company
has  determined  that a Change  in  Control  has  occurred,  Executive  shall be
entitled to the benefits provided in paragraphs (c), (d) and (e) of this Section
5 upon his subsequent  involuntary  termination of employment at any time during
the term of this  Agreement  (or  voluntary  termination  following  a Change of
Control following any demotion,  loss of title, office or significant authority,
reduction in his annual compensation or benefits, or relocation of his principal
place of employment by more than 35 miles from its location immediately prior to
the  Change in  Control),  unless  such  termination  is  because  of his death,
retirement as provided in Section 7,  termination  for Cause, or termination for
Disability.

     (c) Upon the occurrence of a Change in Control  followed by the Executive's
termination of employment,  the Association shall pay Executive, or in the event
of his subsequent death, his beneficiary or beneficiaries, or his estate, as the
case may be, as severance  pay or  liquidated  damages,  or both, a sum equal to
2.99  times the  Executive's  "base  amount,"  within  the  meaning  of  Section
280G(b)(3)  of the Internal  Revenue  Code of 1986  ("Code"),  as amended.  Such
payment shall be made in a lump sum paid within ten (10) days of the Executive's
Date of Termination.

     (d) Upon the occurrence of a Change in Control  followed by the Executive's
termination  of employment,  the  Association  will cause to be continued  life,
medical,  dental and disability coverage substantially identical to the coverage
maintained by the Association for Executive prior to his severance. In addition,
Executive shall be entitled to receive the value of employer  contributions that
would have been made on the  Executive's  behalf over the remaining  term of the
agreement to any  tax-qualified  retirement plan sponsored by the Association as
of the Date of  Termination.  Such  coverage and  payments  shall cease upon the
expiration of thirty-six (36) months.

     (e) Upon the  occurrence  of a Change in Control,  the  Executive  shall be
entitled to receive benefits due him under, or contributed by the Company or the
Association  on his  behalf,  pursuant  to  any  retirement,  incentive,  profit
sharing,  bonus,   performance,   disability  or  other  employee  benefit  plan
maintained by the  Association or the Company on the  Executive's  behalf to the
extent that such benefits are not otherwise  paid to the Executive upon a Change
in Control.

     (f)  Notwithstanding  the  preceding  paragraphs  of this Section 5, in the
event that the  aggregate  payments  or  benefits  to be made or afforded to the
Executive  under this  Section  would be deemed to include an "excess  parachute
payment"  under  Section 280G of the Code,  such  payments or benefits  shall be
payable or provided to Executive over the minimum period necessary to reduce the
present  value of such  payments or  benefits  to an amount  which is one dollar
($1.00) less than three (3) times the  Executive's  "base  amount" under Section
280G(b)(3) of the Code.

6.       TERMINATION FOR DISABILITY.

     (a) If the Executive shall become disabled as defined in the  Association's
then  current  disability  plan (or,  if no such plan is then in effect,  if the
Executive  is  permanently  and totally  disabled  within the meaning of Section
22(e)(3) of the Code as determined by a physician  designated by the Board), the
Association may terminate Executive's employment for "Disability."

     (b) Upon the  Executive's  termination  of employment for  Disability,  the
Association will pay Executive,  as disability pay, a bi-weekly payment equal to
three-quarters  (3/4) of  Executive's  bi-  weekly  rate of Base  Salary  on the
effective date of such termination.  These disability payments shall commence on
the effective date of Executive's termination and will end on the earlier of (i)

                                      -46-
<PAGE>


the date Executive returns to the full-time employment of the Association in the
same capacity as he was employed  prior to his  termination  for  Disability and
pursuant to an employment agreement between Executive and the Association;  (ii)
Executive's full-time employment by another employer;  (iii) Executive attaining
the age of 65; or (iv)  Executive's  death; or (v) the expiration of the term of
this Agreement.  The disability pay shall be reduced by the amount, if any, paid
to the Executive under any plan of the Association providing disability benefits
to the Executive.

     (c) The Association  will cause to be continued life,  medical,  dental and
disability  coverage  substantially  identical to the coverage maintained by the
Association for Executive prior to his termination for Disability. This coverage
and payments shall cease upon the earlier of (i) the date  Executive  returns to
the  full-time  employment  of the  Association,  in the same capacity as he was
employed prior to his  termination  for Disability and pursuant to an employment
agreement  between  Executive and the Association;  (ii)  Executive's  full-time
employment by another employer;  (iii)  Executive's  attaining the age of 65; or
(iv) the Executive's death; or (v) the expiration of the term of this Agreement.

     (d)  Notwithstanding  the  foregoing,  there  will be no  reduction  in the
compensation  otherwise  payable to  Executive  during any period  during  which
Executive is incapable of performing his duties hereunder by reason of temporary
disability.

7.       TERMINATION UPON RETIREMENT; DEATH OF EXECUTIVE.

     Termination by the  Association of Executive  based on  "Retirement"  shall
mean  retirement  at age 65 or in  accordance  with any  retirement  arrangement
established  with  Executive's  consent with respect to him. Upon termination of
Executive upon Retirement, Executive shall be entitled to all benefits under any
retirement  plan of the  Association  or the  Company  and other  plans to which
Executive is a party.  Upon the death of the  Executive  during the term of this
Agreement,  the Association shall pay to Executive's estate the compensation due
to the Executive  through the last day of the calendar  month in which his death
occurred.

8.       TERMINATION FOR CAUSE.

     For  purposes of this  Agreement,  "Termination  for Cause"  shall  include
termination  because  of  the  Executive's  personal  dishonesty,  incompetence,
willful misconduct,  breach of fiduciary duty involving personal profit, willful
violation of any law,  rule,  or  regulation  (other than traffic  violations or
similar  offenses) or final  cease-and-desist  order,  or material breach of any
provision of this Agreement. In addition,  "Termination for Cause" shall include
termination  because of  continuing or repeated  problems  with the  Executive's
performance or conduct,  the Executive's  inattention to duties,  the refusal of
the Executive to comply with the  Association's  or the Company's  instructions,
policies or rules or other conduct of the Executive which reflects  adversely on
the  Association's  or the Company 's reputation  or operation.  For purposes of
this  Section,  no act,  or the  failure to act,  on  Executive's  part shall be
"willful"  unless  done,  or omitted to be done,  not in good faith and  without
reasonable  belief that the action or omission  was in the best  interest of the
Association or its affiliates.  Notwithstanding  the foregoing,  Executive shall
not be deemed to have been  terminated  for Cause  unless and until  there shall
have  been  delivered  to  him a  copy  of a  resolution  duly  adopted  by  the
affirmative vote of not less than three-fourths of the members of the Board at a
meeting of the Board called and held for that purpose (after  reasonable  notice
to Executive and an  opportunity  for him,  together  with counsel,  to be heard
before  the  Board),  finding  that in the  good  faith  opinion  of the  Board,
Executive was guilty of conduct justifying termination

                                      -47-
<PAGE>


for Cause and specifying the reasons  thereof.  The Executive shall not have the
right to receive compensation or other benefits for any period after termination
for Cause. Any stock options granted to Executive under any stock option plan or
any  unvested  awards  granted  under  any  other  stock  benefit  plan  of  the
Association,  the Company, or any subsidiary or affiliate thereof,  shall become
null and void effective upon  Executive's  receipt of Notice of Termination  for
Cause pursuant to Section 9 hereof, and shall not be exercisable by Executive at
any time subsequent to such Termination for Cause.

9.       REQUIRED PROVISIONS.

     (a) The Association may terminate  Executive's  employment at any time, but
any termination by the Association,  other than Termination for Cause, shall not
prejudice  Executive's  right to  compensation  or  other  benefits  under  this
Agreement.  Executive shall not have the right to receive  compensation or other
benefits  for any  period  after  Termination  for Cause as defined in Section 8
herein.

     (b)  If  Executive  is  suspended   and/or   temporarily   prohibited  from
participating  in the conduct of the  Association's  affairs by a notice  served
under Section  8(e)(3) or (g)(1) of the Federal  Deposit  Insurance Act ("FDIA")
(12 U.S.C.  1818(e)(3)  and (g)(1)),  the  Association's  obligations  under the
Agreement  shall  be  suspended  as of the date of  service,  unless  stayed  by
appropriate  proceedings.  If the  charges  in the  notice  are  dismissed,  the
Association  may,  in its  discretion,  (i)  pay  Executive  all or  part of the
compensation  withheld  while its contract  obligations  were suspended and (ii)
reinstate (in whole or in part) any of its obligations that were suspended.

     (c)  If   Executive  is  removed   and/or   permanently   prohibited   from
participating  in the conduct of the  Association's  affairs by an order  issued
under  Section  8(e)(4) or (g)(1) of the FDIA (12 U.S.C.  1818(e)(4) or (g)(1)),
all obligations of the Association under the Agreement shall terminate as of the
effective date of the order, but vested rights of the contracting  parties shall
not be affected.

     (d) If the  Association is in default (as defined in Section 3(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 parties.

     (e) All obligations under this Agreement shall be terminated (except to the
extent  determined  that  continuation  of the  Agreement is  necessary  for the
continued  operation of the  Association):  (i) by the Director of the Office of
Thrift  Supervision  (the  "Director")  or his or her  designee  at the time the
Federal Deposit Insurance Corporation or the Resolution Trust Corporation enters
into an agreement to provide assistance to or on behalf of the Association under
the authority contained in Section 13(c) of the FDIA or (ii) by the Director, or
his or her  designee  at the time  the  Director  or such  designee  approves  a
supervisory  merger to resolve  problems related to operation of the Association
or when the  Association  is  determined  by the  Director to be in an unsafe or
unsound condition.  Any rights of the parties that have already vested, however,
shall not be affected by such action.

     (f)  Any  payments  made  to  Executive  pursuant  to  this  Agreement,  or
otherwise,  are  subject  to and  conditioned  upon  compliance  with 12  U.S.C.
Section 1828(k) and any regulations promulgated thereunder.


                                      -48-
<PAGE>



10.      NOTICE.

     (a) Any purported  termination by the  Association 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  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 he shall not have returned to the performance of his duties
on a  full-time  basis  during  such  thirty  (30) day  period),  and (B) if his
employment is terminated for any other reason,  the date specified in the Notice
of Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given).

     (c) If, within thirty (30) days after any Notice of  Termination  is given,
the party  receiving such Notice of Termination  notifies the other party that a
dispute  exists  concerning  the  termination,  except upon the  occurrence of a
Change in Control and voluntary  termination  by the Executive in which case the
Date of  Termination  shall be the date  specified  in the  Notice,  the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties,  by a binding  arbitration award, or
by a final judgment,  order or decree of a court of competent  jurisdiction (the
time for appeal there from having  expired and no appeal having been  perfected)
and provided further that the Date of Termination  shall be extended by a notice
of dispute  only if such notice is given in good faith and the party giving such
notice  pursues  the  resolution  of such  dispute  with  reasonable  diligence.
Notwithstanding the pendency of any such dispute,  the Association will continue
to pay Executive his full  compensation in effect when the notice giving rise to
the dispute was given (including,  but not limited to, Base Salary) and continue
him as a participant in all  compensation,  benefit and insurance plans in which
he was participating  when the notice of dispute was given, until the dispute is
finally  resolved in  accordance  with this  Agreement.  Amounts paid under this
Section are in addition to all other amounts due under this  Agreement and shall
not be offset against or reduce any other amounts due under this Agreement.

11.      NON-COMPETITION.

     (a) Upon any termination of Executive's employment hereunder pursuant to an
Event of  Termination as provided in Section 4 hereof,  Executive  agrees not to
compete  with the  Association  and/or the  Company for a period of one (1) year
following such  termination in any city, town or county in which the Association
and/or the  Company  has an office or has filed an  application  for  regulatory
approval to establish an office,  determined  as of the  effective  date of such
termination.  Executive  agrees that during such period and within said  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
Association and/or the Company. The parties hereto, recognizing that irreparable
injury will result to the  Association  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 Association and/or the Company
will be entitled, in addition to any other remedies and damages

                                      -49-
<PAGE>


available,  to an  injunction  to restrain the  violation  hereof by  Executive,
Executive's partners,  agents,  servants,  employers,  employees and all persons
acting for or with Executive.  Executive represents and admits that in the event
of the termination of his employment  pursuant to Section 8 hereof,  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
Association  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  Association  and/or the  Company  from
pursuing any other remedies  available to the Association 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  Association  and
affiliates  thereof,  as it may exist from time to time, is a valuable,  special
and unique asset of the business of the Association.  Executive will not, during
or  after  the term of his  employment,  disclose  any  knowledge  of the  past,
present,  planned  or  considered  business  activities  of the  Association  or
affiliates  thereof to any person,  firm,  corporation,  or other entity for any
reason or purpose  whatsoever.  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 Association.  In the event of a breach or threatened
breach by the Executive of the provisions of this Section,  the Association 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  Association  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  Association  from pursuing
any other remedies  available to the  Association  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  Association.  The  Company,  however,
guarantees  all  payments  and the  provision  of all amounts and  benefits  due
hereunder to Executive  and, if such payments are not timely paid or provided by
the  Association,  such  amounts and  benefits  shall be paid or provided by the
Company.

13.      EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.

     This Agreement contains the entire understanding between the parties hereto
and supersedes any prior  employment  agreement  between the  Association or any
predecessor of the Association  and Executive,  except that this Agreement shall
not  affect or operate to reduce  any  benefit  or  compensation  inuring to the
Executive of a kind elsewhere provided.  No provision of this Agreement shall be
interpreted to mean that  Executive is subject to receiving  fewer benefits than
those available to him without reference to this Agreement.

14.      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

                                      -50-
<PAGE>


of law, and any attempt,  voluntary  or  involuntary,  to affect any such action
shall be null, void, and of no effect.

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

15.      MODIFICATION AND WAIVER.

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

     (b) No term or  condition  of this  Agreement  shall be deemed to have been
waived, nor shall there by 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.

16.      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.

17.      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.

18.      GOVERNING LAW.

     This Agreement shall be governed by the laws of the State of Oregon, unless
otherwise specified herein;  provided,  however, that in the event of a conflict
between the terms of this Agreement and any  applicable  federal or state law or
regulation, the provisions of such law or regulation shall prevail.

19.      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  sitting in a location selected by the employee within one
hundred (100) miles from the location of the Association, in accordance with the
rules of the American  Arbitration  Association then in effect.  Judgment may be
entered on the arbitrator's  award in any court having  jurisdiction;  provided,
however,  that Executive  shall be entitled to seek specific  performance of his
right to be paid  until  the Date of  Termination  during  the  pendency  of any
dispute or controversy arising under or in connection with this Agreement.


                                      -51-
<PAGE>




20.      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  Association,  if successful  pursuant to a legal judgment,
arbitration or settlement.

21.      INDEMNIFICATION.

     The Association shall provide Executive (including his heirs, executors and
administrators)   with  coverage  under  a  standard  directors'  and  officers'
liability insurance policy at its expense,  or in lieu thereof,  shall indemnify
Executive (and his heirs,  executors and  administrators)  to the fullest extent
permitted under law against all expenses and liabilities  reasonably incurred by
him in  connection  with or arising out of any action,  suite or  proceeding  in
which he may be  involved  by reason of his having been a director or officer of
the Association (whether or not he continues to be a directors or officer at the
time of incurring such expenses or  liabilities),  such expenses and liabilities
to include, but not be limited to, judgment, court costs and attorneys' fees and
the cost of reasonable settlements.

22.      SUCCESSOR TO THE ASSOCIATION OR THE COMPANY.

     The  Association  and 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  Association  or the
Company,  expressly  and  unconditionally  to assume  and agree to  perform  the
Association's  or the Company's  obligations  under this Agreement,  in the same
manner and to the same  extent  that the  Association  or the  Company  would be
required to perform if no such succession or assignment had taken place.




                                      -52-
<PAGE>



     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
executed and their seal to be affixed  hereunto by a duly authorized  officer or
director, and Executive has signed this Agreement, all on the day of , 20 .


ATTEST:                                          KLAMATH FIRST FEDERAL SAVINGS
                                                      AND LOAN ASSOCIATION



                                                     BY:

                  [SEAL]


ATTEST:                                              KLAMATH FIRST BANCORP, INC.



                                                     BY:

                  [SEAL]



WITNESS:




                                                       Ben A. Gay









                                      -53-