EXHIBIT 10.25EMPLOYMENT,CONFIDENTIALITY AND CONTINGENT SEVERANCE AGREEMENT
        This Employment, Confidentiality and Contingent Severance Agreement (the "Agreement") is made between First Bank of BeverlyHills, F.S.B. (the "Bank"), a federally chartered savings bank, and Joseph W. Kiley, III (the "Employee").  The Bank is an affiliateof Wilshire Financial Services Group, Inc., a Delaware corporation (the "Company").
        Accordingly,on the basis of the representations, warranties, and covenants contained in thisAgreement, the parties agree as follows effective as of January 1, 2003 (the“Effective Date”): 

        1.     **ARTICLE 1 - EMPLOYMENT AND TERM**
            1.1 Employment. TheBank shall employ the Employee as its President and Chief Executive Officer (the“Position”), and the Employee accepts such employment, on the termsand conditions set forth in this Agreement. 

            1.2 Term. The termof employment under this Agreement shall commence on the Effective Date, andshall continue for a period of 12 months thereafter. Upon the expiration of such12 month period, the term of Employee’s employment under this Agreementshall automatically renew for successive periods of 12 months each, unless, atleast 90 days before the expiration of such 12 month period or any succeeding 12month period, either the members of the board of directors of the Bank (the“Board of Directors” or the “Board”) gives written notice ofnon-renewal to Employee, or Employee gives written notice of non-renewal to theBank. If such notice of non-renewal is timely given, the term of Employee’semployment under this Agreement shall expire at the end of such 12 month periodor at the end of the current 12 month period, as the case may be. The term ofEmployee’s employment under the Agreement is referred to herein as the“term.” In the event that the Bank or the Employee gives 90 dayswritten notice as herein provided and the Bank and the Employee do not enterinto a new Employment Agreement, the Employee shall receive the benefits ofSection 4.2 below. 
       2. ARTICLE 2 -DUTIES OF THE EMPLOYEE
            2.1 Duties. TheEmployee agrees to undertake and perform all duties as required of the Position.The Employee shall render such services and shall perform such duties and actsin connection with any aspect of the Bank’s business as may be required bythe Management or the Board of Directors of the Bank. The Employee shall performthe services contemplated herein faithfully, diligently, to the best ofEmployee’s ability, and in the best interests of the Bank. The Employeeshall devote the Employee’s full and exclusive business time and efforts tothe rendition of such services. The Employee shall at all times perform suchservices in compliance with (and, to the extent of Employee’s authority,shall ensure that the Bank is in compliance with) any and all laws, rules,regulations, and policies applicable to the Bank, including, but not limited to,the Federal Deposit Insurance Act and the regulations thereunder. The Employeeshall, at all times, adhere to and obey any and all written internal rules andregulations governing the conduct of the Bank’s employees, as establishedand modified from time to time. 

            2.2 ExclusiveServices. During his employment by the Bank, the Employee shall not, withoutthe express prior written consent of the Board of Directors of the Bank, engagedirectly or indirectly in any outside employment or consulting of any kind,whether or not the Employee receives remuneration for such services. Further,the Employee shall not engage in any activity that would impair theEmployee’s ability to act and exercise judgment in the best interest of theBank. 

            2.3 Subpoenas;Cooperation in Defense of the Bank. If the Employee, during employment orthereafter, is served with any subpoena or other compulsory judicial oradministrative process calling for production of confidential information or ifthe Employee is otherwise required by law or regulations to discloseconfidential information, the Employee will immediately, before making any suchproduction or disclosure, notify the Bank and provide it with such informationas may be necessary for the Bank to take such action as the Bank deems necessaryto protect its interests. The Employee agrees to cooperate reasonably with theBank, whether during employment or thereafter, in the prosecution or defense ofall threatened claims or actual litigation in which the Bank is or may become aparty, whether now pending or hereafter brought, in which the Employee hasknowledge of relevant facts or issues. The Employee shall be reimbursed forreasonable expenses for travel time due to cooperating with the prosecution ordefense of any litigation for the Bank. 

            2.4 OtherObligations. The Employee acknowledges that the Bank from time to time mayhave agreements with other persons or with various governmental agencies thatimpose obligations or restrictions on the Bank regarding inventions or creativeworks made during the course of the Bank’s work under such agreements, orthat relate to the confidential nature of such work. The Employee agrees to bebound by all such obligations and restrictions of which the Employee is informedby the Bank and to take all action necessary to discharge the obligations of theBank thereunder. 
       3.      ARTICLE 3 - COMPENSATION
       Asthe total consideration for the services that the Employee renders under thisAgreement, the Employee shall be entitled to the following: 

            3.1 Base Salary. TheBank shall pay to the Employee a base salary of $275,000.00 per year, lessincome tax and other applicable withholdings. The base salary shall be payablein accordance with the Bank’s regular payroll practices. 

            3.2 Stock Options.The Company and the Employee have entered into (1) an Amended and RestatedIncentive Stock Options Agreement dated March 12, 2001 for 150,000 options and(2) Incentive Stock Option Agreement dated October 2, 2001 for 50,000 options.The Employee’s rights to such stock options shall be determined by theterms and conditions of said agreements. 

            3.3 Bank EmployeeBenefits. The Employee shall be entitled to participate in the Bank’semployee benefit plans, medical, dental, vision, long-term disability, andshort-term disability benefits or insurance programs, if any, on the same basisas any of those benefits or insurance programs is available generally to otherofficers of similar position under the Bank’s personnel policies. The Bankand the Company will not, without Employee’s written consent, make anychanges in such plans, benefits or arrangements which would materially adverselyaffect Employee’s rights or benefits thereunder, except to the extent suchchanges are made applicable to all executive-level Bank and Company employees ona non-discriminatory basis. 

            3.4 Indemnity andInsurance. The Employee shall receive all benefits and privileges to whichthe Employee is entitled by law or pursuant to the Bylaws of the Bank or theCompany. 

            3.5 Reimbursement forExpenses. The Bank shall reimburse the Employee for any and all reasonableand documented actual business expenses that the Employee incurs from time totime in the performance of his duties under this Agreement, provided thatreimbursement shall be made in accordance with the policies and practices of theBank; and 

            3.6 Vacation. TheEmployee shall be entitled to personal time, to be used for sick and vacationtime, earned based on hours worked, to a maximum of 13.33 hours, per month.Thus, a total of up to 160 hours or four weeks of personal time may be earnedduring a full year of employment. Generally, employees are not permitted to usepersonal time in excess of time earned. The Employee Guidelines of the Bankprovide additional information. Vacation time not used in any calendar year maybe carried forward, provided, however, that, once the Employee has accrued anumber of vacation days equal to two hundred hours, the Employee shall not beeligible to accrue additional days of vacation until he/she has taken one ormore days of vacation. The Employee may, at his/her option, sell back to theBank up to forty hours of accrued-but-unused vacation. 
       4.      ARTICLE 4 - TERMINATION
            4.1     Termination for Cause (12 C.F.R. 563.39).
                 Termination for Cause shall mean termination because of Employee's personal dishonesty, incompetence,willful misconduct, anybreach of fiduciary duty involving personal profit, intentional failure toperform stated duties, willful violation of any law, rule or regulation (otherthan traffic violations or similar offenses) or final cease-and-desist order ormaterial breach of any provision of this Agreement. For purposes of thisAgreement, no act, or the failure to act, on Employee’s part shall bewillful” unless done, or omitted to be done, not in good faith and withoutreasonable belief that the action or omission was in the best interest of theBank. Notwithstanding the foregoing, Employee shall not be deemed to have beenterminated for Cause unless and until there shall have been delivered to him anotice of termination which shall include a copy of a resolution duly adopted bythe affirmative vote of not less than a majority of the members of the Board ata meeting of the Board called and held for that purpose (which may betelephonic), finding that in the good faith opinion of the Board, Employee wasguilty of conduct justifying termination for Cause and specifying theparticulars thereof in detail. Employee shall not have the right to receivecompensation or other benefits for any period after termination for Cause whichhave not vested or been earned as of the date of such termination. Employeeshall have the right to receive compensation or other benefits which havealready vested or been earned as of the date of termination for Cause, unlesspayment of such compensation or benefits is expressly prohibited by the terms ofany plan, program or agreement governing such compensation or benefits. TheEmployee shall have no right to receive compensation or other benefits for anyperiod after termination for Cause. 

            Notwithstanding the foregoing:
                 (a)      The Board of Directors of the Bank may terminate the Employee's employment at any time withoutcause, but any termination by the Bank's Board of Directors other than termination for Cause shall not prejudice the Employee's rightto compensation or other benefits under this Agreement.
                 (b)      If the Employee is suspended and/or temporarily prohibited from participating in the conduct ofthe Bank's affairs by a notice served under section 8(e)(3) or (g) (1) of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)(3) and(g)(1)), the Bank's obligations under this Agreement shall be suspended as of the date of service, unless stayed by appropriateproceedings.  If the charges in the notice are dismissed, the Bank may in its discretion (i) pay the Employee all or part of thecompensation withheld while its contract obligations were suspended, or (ii) reinstate (in whole or in part) any of its obligationswhich were suspended.
                 (c)      If the Employee is removed and/or is permanently prohibited from participating in the conduct ofthe Bank's affairs by an order issued under section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)(3) and(g)(1)), all obligations of the Bank under this Agreement shall terminate as of the effective date of the order, but vested rights ofthe Employee shall not be affected.
                 (d)      If the Bank is in default (as defined in section (3)(x)(1) of the Federal Deposit Insurance Act),all obligations under this Agreement shall terminate as of the date of default, but this paragraph (d) shall not affect any vestedrights of the Employee.
                 (e)      All obligations under this Agreement shall be terminated, except to the extent it is determinedthat continuation of this Agreement is necessary for the continued operation of the association:
                      (1)     By the Director ("Director of the Federal Deposit Insurance Corporation") or his or herdesignee, at the time the Federal Deposit Insurance Corporation  enters into an agreement to provide assistance to or on behalf ofthe Bank under the authority contained in section 13(c) of the Federal Deposit Insurance Act; or
                      (2)     By the Director or his or her designee, when the Director or his or her designee approvesa supervisory merger to resolve problems related to the operation of the association, or when the Bank is determined by the Directorto be in an unsafe or unsound condition; provided that any rights of the parties that have already vested shall not be affected bysuch action.
            4.2     Termination Upon An Other Event of Termination
                 (a)      Upon the occurrence of an Other Event of Termination (as herein defined) during the Term, theprovisions of this Section 4.3 shall apply.  As used in this Agreement, an Other Event of Termination" shall mean and include any oneor more of the following:  (i) the termination by the Bank of Employee's employment hereunder for any reason other than a terminationgoverned by Sections 4.1, 4.3, 4.4 or 4.5 hereof; (ii) Employee's resignation from the Bank's employ upon any (A) failure to elect orre-elect or to appoint or re-appoint Employee as President and Chief Executive Officer unless consented to by the Employee, (B) amaterial change in Employee's functions, duties, or responsibilities, which change would cause Employee's position to become one oflesser responsibility, importance, or scope from the position and attributes thereof described in Sections 1.1 and 2.1 hereof, unlessconsented to by Employee, (C) a relocation of Employee's principal place of employment outside of Los Angeles County or VenturaCounty, California, unless consented to by the Employee, (D) a material reduction in the aggregate benefits and perquisites to theEmployee from those being provided as of the effective date of this Agreement, unless such reduction is (I) consented to by theEmployee, (II) applies generally to executive-level-employees of the Bank to the extent Employee receives benefits or perquisitesgenerally available to executive-level employees of the Bank, or applies generally to executive level employees of the Company to theextent Employee receives benefits or perquisites generally available to executive-level employees of the Company, or (III) is areduction in the amount of Employee's bonus based on the application of a formula or index to the financial performance of the Bank,(E) a liquidation or dissolution of the Bank, or (F) a material breach of this Agreement by the Bank or the Company.  Upon theoccurrence of any event described in clauses (A), (B), (C), (D), (E) or (F), above, Employee shall have the right to elect toterminate his employment under this Agreement by resignation upon not less than thirty (30) days prior written notice given withinsix full months after the event giving rise to said right to elect.
                 (b)      Upon the occurrence of an Other Event of Termination, the Bank shall be obligated to pay Employee,or, in the event of his subsequent death, his beneficiary or beneficiaries, or his estate, as the case may be, an amount equal toEmployee's then annual base salary.  Such amount shall be paid in six equal monthly installments commencing on the 30th day after theTermination Date.  Such amount shall be in addition to any compensation or benefits earned by Employee or to which Employee wasentitled prior to the Termination Date.  Such payments shall not be reduced in the event the Employee obtains other employmentfollowing termination of employment.
                 (c)      Upon the occurrence of an Other Event of Termination, the Bank will cause to be continued life,medical, dental and disability coverage substantially identical to the coverage maintained by the Bank or the Company for Employeeprior to his termination at no premium cost to the Employee, except to the extent such coverage may be changed in its application toall executive-level employees of the Bank if such coverage was generally available on the date of an Other Event of Termination toexecutive-level employees of the Bank, if such coverage was generally available on the date of an Other Event of Termination toexecutive-level employees of the Bank, or except to the extent such coverage may be changed in its application to all executive-levelemployees of the Company if such coverage was generally available on the date of an other Event of Termination to executive levelemployees of the Company.  The benefits provided under this Section 4.2(c) shall continue until the earlier of (a) the expiration ofone year following Employee's termination of employment with the Bank, or (b) the date Employee becomes covered under any other grouphealth plan not maintained by the Bank, the Company or any of its subsidiaries; provided, however, that if such other group healthplan excludes any pre-existing condition that Employee or Employee's dependents may have when coverage under such group health planwould otherwise begin, coverage under this Section 4.2(c) shall continue (but not beyond the one year period described in clause (a)of this sentence) with respect to such pre-existing condition until such exclusion under such other group health plan lapses orexpires.  In the event Employee is required to make an election under Sections 601 through 607 of the Employee Retirement IncomeSecurity Act of 1974 (commonly known as COBRA) to qualify for the benefits described in this Section 4.2(c), the obligations of theBank under this Section 4.2(c) shall be conditioned upon Employee's timely making such an election.
            4.3      Change of Control.
                 (a)      For purposes of this Agreement, a Change of Control" of the Bank or Company shall mean:  (i) any"person" (as the term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the Exchange Act)), ormore than one person acting as a group, becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly orindirectly, of voting securities of the Bank, the Company or any subsidiary of the Company which owns a majority of the outstandingvoting securities of the Bank (the Direct Parent") representing 50% or more of the Bank's, the Company's or the Direct Parent'soutstanding voting securities, except for any voting securities (A) of the Bank purchased by the Company or Direct Parent, (B) of theDirect Parent purchased by the Company, or (C) of the Bank or Company purchased by any employee benefit plan of the Bank or theCompany, or (ii) individuals who constitute the board of directors of the Bank (including Employee, if Employee is a director) on thedate hereof (the "Incumbent Board") cease for any reason to constitute at least a majority thereof, provided that any person becominga director subsequent to the date hereof whose election was approved by a vote of more than one-half of the directors comprising theIncumbent Board, or whose nomination for election by the company's stockholders was approved by the same nominating committee servingunder an Incumbent Board, shall be, for purposes of this clause (ii), considered as though he were a member of the Incumbent Board,or (iii) the consummation of (A) a merger, consolidation or reorganization to which the Bank, the Company or the Direct Parent is aparty, whether or not the Bank, the Company or the Direct Parent is the entity surviving or resulting therefrom, or (B) a sale orother disposition of all or substantially all of the assets of the Bank, the Company or the Direct Parent, in one transaction or aseries of related transactions, to any person other than the Bank, the Company or the Direct Parent; provided, however, that no suchconsummation will constitute a Change of Control pursuant to this clause (iii) if persons who were stockholders of the Companyimmediately before the consummation of the transaction are the beneficial owners immediately following the consummation of thetransaction, of more than 50% of  the combined voting power of the then outstanding voting securities of the person surviving orresulting from any merger, consolidation or reorganization referred to in clause (iii)(A) or the person to whom the assets of theBank, the Company or the Direct Parent are sold, assigned or disposed of in any transaction or series of transactions referred to inclause (iii)(B).
                 (b)      If a Change of Control has occurred pursuant to Section 4.3(a) or the Board has determined that aChange of Control has occurred, Employee shall be entitled to the benefits provided in paragraphs (c) and (d) of this Section 4.3upon his subsequent termination of employment at any time within 12 months following the Change of Control due to:  (i) Employee'sdismissal without cause or (ii) Employee's voluntary resignation following an Other Event of Termination (as defined in Section 4.2).
                 (c)      Upon Employee's entitlement to benefits pursuant to Section 4.3(b), the Bank shall pay Employee,or in the event of his subsequent death, his beneficiary or beneficiaries, or his estate, as the case may be, a sum equal to twotimes the then annual base salary.  Such payment shall be made in one lump sum within 30 days after Employee's termination ofemployment which entitles Employee thereto; provided, however, that in the event the Bank is not in compliance with its minimumcapital requirements or if such payment would cause the Bank's capital to be reduced below its minimum regulatory capitalrequirements, such payment shall be deferred until such time as the Bank or successor thereto is in capital compliance.  In the eventthe Bank is unable to make such payment after deferred for more than (6) months, payment of said sum shall be made by the Company.Such payment shall not be reduced in the event Executive obtains other employment following termination of employment.
                 (d)      Upon Employee's entitlement to benefits pursuant to Section 4.3, the Bank will cause to becontinued life, medical, dental and disability coverage substantially identical to the coverage maintained by the Bank for Employeeprior to his termination of employment at no premium cost to the Employee, except to the extent such coverage may be changed in itsapplication to all executive level employees of the Bank if such coverage was generally available on Executive's Termination Date toexecutive-level employees of the Bank, or except to the extent such coverage may be changed in its application to all executive-levelemployees of the Company if such coverage was generally available on Executive's Termination Date to executive-level employees of theCompany.  The benefits provided under this Section 4.3(d) shall continue until the earlier of (a) the expiration of one yearfollowing Employee's termination of employment with the Bank, or (b) the date Employee becomes covered under any other group healthplan not maintained by the Bank, the Company or any of its subsidiaries; provided, however, that if such other group health planexcludes any pre-existing condition that Employee or Employee's dependents may have when coverage under such group health plan wouldotherwise begin, coverage under this Section 4.3(d) shall continue (but not beyond the one year period described in clause (a) ofthis sentence) with respect to such pre-existing condition until such exclusion under such other group health plan lapses orexpires.  In the event Employee is required to make an election under Sections 601 through 607 of the Employee Retirement IncomeSecurity Act of 1974 (commonly known as COBRA) to qualify for the benefits described in this Section 4.3(d), the obligations of theBank under this Section 4.3(d) shall be conditioned upon Employee's timely making such an election.
                 (e)      Notwithstanding anything to the contrary in this Section 4.3, in no event shall the aggregatepayments or benefits to be made or afforded to Employee under Section 4.3 (the Termination Benefits") constitute an "excess parachutepayment" under Section 280G of the Internal Revenue Code of 1986, as amended or any successor thereto, and in order to avoid such aresult, Termination Benefits will be reduced, if necessary, to an amount (the Non-Triggering Amount"), the value of which is $1.00less than an amount equal to three times Employee's base amount," as determined in accordance with said Section 280G.  The allocationof the reduction required hereby among the Termination Benefits provided by this Section 4.3 shall be determined by Employee.
            4.4 Termination By theEmployee or Death. If the Employee terminates his employment with the Bankfor any reason other than the reasons set forth in Sections 4.2 and 4.3 hereof,or Employee’s employment is terminated as a result of his death, the Bankshall pay to the Employee, or in the event of his death, his beneficiary orbeneficiaries or his estate, as the case may be, the base salary earned butunpaid pursuant to Section 3.1 hereof through the Termination Date and anyearned but unused vacation pay due to the Employee at the Termination Date. Anysuch payments due Employee, under this Section 4.4 shall be paid on theTermination Date, unless the termination of Employee’s employment was dueto his death, in which case, such payment shall be made by no later than 30 daysafter the Termination Date. Employee shall not have the right to receivecompensation or other benefits for any period after the Termination Date whichhave not vested or been earned as of the Termination Date. Employee shall havethe right to receive compensation or other benefits which have already vested orbeen earned as of the Termination Date, unless payment of such compensation orbenefits is expressly prohibited by the terms of any plan, program or agreementgoverning such compensation or benefits. 

            4.5 Termination ofDisability. If (i) the Employee is absent from work for 180 calendar days inany 12-month period by reason of illness or incapacity (whether physical orotherwise) or (ii) the Board of Directors reasonably determines that theEmployee is unable to perform his duties, services and responsibilitieshereunder by reason of illness or incapacity (whether physical or otherwise) fora total of 90 calendar days in any 12-month period during the Term(Disability”), the Bank may terminate the Employee’s employmenthereunder as of the Termination Date specified in a written notice terminationfrom the Bank to Employee. If the Employee’s employment is terminated bythe Bank pursuant to this Section 4.5, the Bank shall pay on the TerminationDate to Employee the base salary earned but unpaid pursuant to Section 3.1hereof through the Termination Date and any earned but unused vacation pay dueto the Employee at the Termination Date. In addition, the Employee shall beentitled to receive benefits based on the Bank’s applicable disabilityplans then in effect. Employee shall not have the right to receive compensationor other benefits for any period after the Termination Date which have notvested or been earned as of the Termination Date. Employee shall have the rightto receive compensation or other benefits which have already vested or beenearned as of the Termination Date, unless payment of such compensation orbenefits is expressly prohibited by the terms of any plan, program or agreementgoverning such compensation or benefits. 

            4.6 Termination ofBank’s Obligation. If, at any time within one year followingtermination of employment, the Employee breaches any of the Employee’sobligations under Article 2, 5 or 6 of this Agreement, then, in addition to anyother remedy of the Bank, the Bank’s obligation, if any, to make severancepayments under Section 4.3 shall cease as of the date such breach occurs.Moreover, the Employee acknowledges that breach of Article 2, 5 or 6 of thisAgreement will cause irreparable harm to the Bank and, if the Employee fails toabide by these obligations, the Bank will be entitled to seek specificperformance, including immediate issuance of a temporary restraining order orpreliminary injunction enforcing this Agreement, and to seek judgment fordamages caused by the Employee’s breach, and to seek other remediesprovided by applicable law. 

            4.7 TerminationDate. Any termination of Employee’s employment hereunder pursuant tothis Article 4 shall be effected by written notice other than a termination as aresult of Employee’s death. Any written notice of termination shallindicate the specific termination provision in this Agreement relied upon andshall set forth in reasonable detail the facts and circumstances claimed toprovide a basis for termination of Employee’s employment under theprovisions so indicated. The effective date of any such termination (the“Termination Date”) shall be as follows: 

                 (a)      In the event of a termination due to Employee's death, the date of such death.
                 (b)      In the event of termination for any reason other than Employee's death, the date specified in thewritten notice of termination which in no event shall be prior to the date of receipt of such notice.
            4.8 Compliance WithSafety and Soundness Standards. Notwithstanding anything contained herein tothe contrary, in no event shall the total compensation paid out upon thedeparture of an Employee be in excess of that considered safe and sound at thetime of such payment, taking into consideration all applicable laws,regulations, or other regulatory guidance, including but not limited to OTSRegulatory Bulletin 27a or any similar or successor regulatory pronouncements.Any payments made to the Employee, pursuant to this Agreement or otherwise, aresubject to and conditioned upon compliance with 12 U.S.C. Section 1828(k) andany regulations promulgated thereunder. 

            4.9 If Employee receivesany termination benefits pursuant to this Agreement, the Employee will berequired to sign a waiver and release of all claims . The form of such waiverand release is to be prepared by the Company. 

            4.10 During the Term, theabove described severance supersedes any and all other severance or layoffpolicies of the Bank. Absent a new employment agreement setting forth analternate severance arrangement, any involuntary termination by the Banksubsequent to the term shall be covered by the Bank’s general severancepolicy, if any, then in existence. 
       5.       ARTICLE 5 - CONFIDENTIALITY AND NON-SOLICITATION
            5.1 Nondisclosure.Employee acknowledges that, in the course of employment with the Bank, Employeewill have access to and learn confidential information. Confidential informationincludes but is not limited to information about the Bank’s borrowers andclients, the terms and conditions under which the Bank or its affiliates dealwith borrowers and clients, pricing information for the purchase or sale ofassets, financing and securitization arrangements, research materials, manuals,computer programs, formulas analyzing assets portfolios, techniques, data,marketing plans and tactics, technical information, lists of asset sources, theprocesses and practices of the Bank and related companies, information containedin electronic or computer files, financial information, salary and wageinformation, and other information that is designated by the Bank or itsaffiliates as confidential or that Employee knows or should know is confidentialinformation provided by third parties that the Bank or its affiliates areobligated to keep confidential and all other proprietary information of the Bankor its affiliates. The Employee acknowledges that all confidential informationis and shall continue to be the exclusive property of the Bank or itsaffiliates, whether or not prepared in whole or in part by the Employee andwhether or not disclosed to or entrusted to the Employee in connection withemployment by the Bank. The Employee agrees not to disclose confidentialinformation, directly or indirectly, under any circumstances or by any means, toany third persons without the prior written consent of the Bank. The Employeeagrees that he will not copy, transmit, reproduce, summarize, quote, or make anycommercial or other use whatsoever of confidential information, except as may benecessary to perform work done by Employee for the Bank. The Employee agrees toexercise the highest degree of care in safeguarding confidential informationagainst loss, theft or other inadvertent disclosure and agrees generally to takeall steps necessary or requested by the Bank to ensure maintenance of theconfidentiality of the confidential information. The Employee agrees in additionto the specific covenants contained herein to comply with all of the Bank’spolicies and procedures, as well as all applicable laws, for the protection ofconfidential information. 

            5.2 Exclusions.Section 6.1 shall not apply to the following information: (a) information nowand hereafter voluntarily disseminated by the Bank to the public or whichotherwise becomes part of the public domain through lawful means; (b)information already known to the Employee as documented by written records whichpredate Employee’s employment with the Bank; (c) information subsequentlyand rightfully received from third parties and not subject to any obligation ofconfidentiality; or (d) information independently developed by Employee aftertermination of his or her employment. 

            5.3 ConfidentialProprietary and Trade Secret Information of Others. Employee represents thathe or she has disclosed to the Bank any agreement to which Employee is or hasbeen a party regarding the confidential information of others and Employeeunderstands that Employee’s employment by the Bank will not requireEmployee to breach any such agreement. Employee will not disclose suchconfidential information to the Bank nor induce the Bank to use any trade secretproprietary information received from another under an agreement orunderstanding prohibiting such use or disclosure. 

            5.4 Non-Solicitation ofEmployees. During the period of twelve months after termination date, theEmployee shall not directly or indirectly solicit for employment or forindependent contractor work any employee of the Bank or the Company, and shallnot encourage any such employee to leave the employment of the Bank or theCompany. 

            5.5 Company to Benefitfrom Provisions. To the extent any provisions of this Article 6 relates inany way to confidential information and trade secrets of the Company, then theobligations of Employee set forth in this Article 6 shall also extend to theCompany and inure to its benefit. 
       6. ARTICLE 6 -BANK’S OWNERSHIP IN EMPLOYEE’S WORK
            6.1 Bank’sOwnership. The Employee agrees that all inventions, discoveries,improvements, trade secrets, formulas, techniques, mask works, processes, andknow-how, whether or not patentable, and whether or not reduced to practice,that are conceived or developed during the Employee’s employment with theBank, either alone or jointly with others, or relating to the Bank or to thebanking industry shall be owned exclusively by the Bank, and the Employee herebyassigns to the Bank all Employee’s right, title, and interest in all suchintellectual property. The Employee agrees that the Bank shall be the sole ownerof all rights pertaining thereto, including but not limited to domestic andforeign patents or other rights pertaining thereto, and further agrees toexecute all documents that the Bank reasonably determines to be necessary orconvenient for use in applying for, prosecuting, perfecting, or enforcingpatents or other intellectual property rights, including the execution of anyassignments, patents applications, or other documents that Bank may reasonablyrequest. The Employee shall claim no interest in any inventions, copyrightedmaterial, mask works, patents, or patent applications unless the Employeedemonstrates that any such invention, copyrighted material, mask, work, patent,or patent application was developed before he or she began any employment withthe Bank. This provision is intended to apply only to the extent permitted byapplicable law. 

            6.2 Statutory Limitationon Assignment. The Employee understands that the Bank is hereby advising theEmployee that any provision in this Agreement requiring the Employee to assignrights in any invention does not apply to an invention that qualifies fullyunder the provisions of Section 2870 of the California Labor Code. That Sectionprovides, as follows: 

                 (a)      Any provision in an employment agreement which provides that an employee shall assign, or offer toassign, any of his or her rights in invention to his or her employer shall not apply to an invention that the employee developedentirely on his or her own time without using the employer's equipment, supplies facilities, or trade secret information, except forthose inventions that either:
                      (1)     Relate at the time of conception or reduction to practice of the invention to theemployer's business, or actual or demonstrably anticipated research or development of the employer; or
                      (2)     Result from any work performed by the employee from the employer.
                 (b)      To the extent a provision in an employment agreement purports to require an employee to assign aninvention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy ofthe state and is unenforceable.
       Bysigning this Agreement, the Employee acknowledges that this paragraph shallconstitute written notice of the provisions of Section 2870. 

            6.3 Ownership ofRecords. Any written record that the Employee may maintain of inventions,discoveries, improvements, trade secrets, formulae, processes, or know-how,whether or not patentable and whether or not reduced to practice, and any suchrecords relating to original works of authorship or mask works made by theEmployee, alone or jointly with others, in the course of the Employee’semployment with the Bank shall remain the property of the Bank. The Employeeshall furnish the Bank any and all such records immediately upon request. 

            6.4 Ventures. If theEmployee, during employment with the Bank, is engaged in or associated with theplanning or implementation of any project, program, or venture involving theBank and any third parties, all rights in the project, program, or venture shallbelong to the Bank, and the Employee shall not be entitled to any interesttherein or to any commission, finder’s fee, or other compensation inconnection therewith other than the salary to be paid to the Employee asprovided in this Agreement. 

            6.5 Return ofBank’s Property and Materials. Upon termination of employment with theBank, the Employee shall deliver to the Bank all Bank property and materialsthat are in the Employee’s possession or control, including all of theinformation described as confidential information in Section 6 of this Agreementand including all other information relating to any inventions, discoveries,improvements, trade secrets, formulae, processes, know-how, original works ofauthorship, or mask works of the Bank. 

            6.6 Company to Benefitfrom Provisions. To the extent any provisions of this Article 6 relates inany way to information, property, rights, projects, ventures, or inventions ofthe Company, then the obligations of Employee set forth in this Article 6 shallalso extend to the Company and inure to its benefit. 
       7.       ARTICLE 7 - ARBITRATION
            Any claim or controversybetween the parties which the parties are unable to resolve themselves,including any claim arising out of Employee’s employment or the terminationof that employment, and including any claim arising out of, connected with, orrelated to the formation, interpretation, performance or breach of thisAgreement, and any claim or dispute as to whether a claim is subject toarbitration, shall be submitted to and resolved exclusively by expeditedarbitration by a single arbitrator in accordance with the following procedures: 

            7.1 In the event of a claimor controversy subject to this arbitration provision, the complaining partyshall promptly send written notice to the other party identifying the matter indispute and the proposed remedy. Following the giving of such notice, theparties shall meet and attempt in good faith to resolve the matter. In the eventthe parties are unable to resolve the matter within 21 days, the parties shallmeet and attempt in good faith to select a single arbitrator acceptable to bothparties. If a single arbitrator is not selected by mutual consent within 10business days following the giving of the written notice of dispute, anarbitrator shall be selected from a list of nine persons, each of whom shall bean attorney who is either engaged in the active practice of law or a recognizedarbitrator and who, in either event, is experienced in serving as an arbitratorin disputes between employers and employees, which list shall be provided by themain Los Angeles office of the American Arbitration Association (AAA) or of theFederal Mediation and Conciliation Service. If, within three business days ofthe parties’ receipt of such list, the parties are unable to agree upon anarbitrator from the list, then the parties shall each strike names alternativelyfrom the list, with the first to strike being determined by the flip of a coin.After each party has had four strikes, the remaining name on the list shall bethe arbitrator. If such person is unable to serve for any reason, the partiesshall repeat this process until an arbitrator is selected. 

            7.2 Unless the partiesagree otherwise, within 120 days of the selection of the arbitrator, a hearingshall be conducted before such arbitrator at a time and a place in Los AngelesCounty agreed upon by the parties. In the event the parties are unable to agreeupon the time or place of the arbitration, the time and place within Los AngelesCounty shall be designated by the arbitrator after consultation with theparties. Within 30 days of the conclusion of the arbitration hearing, thearbitrator shall issue an award, accompanied by a written decision explainingthe basis for the arbitrator’s award. 

            7.3 In any arbitrationhereunder, the Bank shall pay all administrative fees of the arbitration and allfees of the arbitrator, except that Employee may, if he wishes, pay up toone-half of those amounts. Each party shall pay its own attorneys’ fees,costs, and expenses, unless the arbitrator orders otherwise. The prevailingparty in such arbitration, as determined by the arbitrator, and in anyenforcement or other court proceedings, shall be entitled, to the extentpermitted by law, to reimbursement from the other party for all of theprevailing party’s costs (including, but not limited to, thearbitrator’s compensation), expenses, and attorneys’ fees. Thearbitrator shall have no authority to add to or to modify this Agreement, shallapply all applicable law, and shall have no lesser and no greater remedialauthority than would a court of law resolving the same claim or controversy. Thearbitrator shall, upon an appropriate motion, dismiss any claim without anevidentiary hearing if the party bringing the motion establishes that it wouldbe entitled to summary judgment if the matter had been pursued in courtlitigation. The parties shall be entitled to reasonable discovery subject to thediscretion of the arbitrator. 

            7.4.     The decision of the arbitrator shall be final, binding, and non-appealable, except as otherwise permittedby law, and may be enforced as a final judgment in any court of competent jurisdiction.
            7.5 This agreement toresolve any disputes by arbitration shall extend to claims against any parent,subsidiary, or affiliate of each party, and, when acting within such capacity,any officer, director, shareholder, employee or agent of each party, or of anyof the above, and shall apply as well to claims arising out of state and federalstatutes and local ordinances as well as to claims arising under the common lawor under this agreement. This agreement, however, shall not apply to claims forworkers’ compensation or unemployment compensation benefits. 

            7.6 Notwithstanding theforegoing, and unless otherwise agreed between the parties, either party may, inan appropriate matter, apply to a court for provisional relief, including atemporary restraining order or preliminary injunction, on the ground that thearbitration award to which the applicant may be entitled may be renderedineffectual without provisional relief. 

            7.7 Any arbitrationhereunder shall be conducted in accordance with the employment rules andprocedures of the AAA then in effect; provided, however, that, in the event ofany inconsistency between the rules and procedures of the AAA and the terms ofthis Agreement, the terms of this Agreement shall prevail. 

            7.8 If any of theprovisions of this Section 7 are determined to be unlawful or otherwiseunenforceable, in whole or in part, such determination shall not affect thevalidity of the remainder of this Section 7, and this Section 7 shall bereformed to the extent necessary to carry out its provisions to the greatestextent possible and to insure that the resolution of all conflicts between theparties, including those arising out of statutory claims, shall be resolved byneutral, binding arbitration. If a court should find that the provisions of thisSection 7 are not absolutely binding, then the parties intend any arbitrationdecision and award to be fully admissible in evidence in any subsequent action,given great weight by any finder of fact, and treated as determinative to themaximum extent permitted by law. 
       8.       ARTICLE 8 - MISCELLANEOUS
            8.1 SeverableProvisions. The provisions of this Agreement are separate and distinct, andif any provisions are determined to be unenforceable, in whole or in part, theremaining provisions, and the enforceable parts of any partially unenforceableprovisions, shall nevertheless be enforceable. 

            8.2 Indemnification.The Bank and Employee are entering into an indemnification agreement in the formattached hereto as Exhibit **A.”** Any payments made to Employeepursuant to such indemnification agreement are subject to and conditioned uponcompliance with 12 C.F.R. Section 545.121, and any rules or regulationspromulgated thereunder. 

            8.3 Successors andAssigns. The Bank shall require any successor or assignee, whether direct orindirect, by purchase, merger, consolidation, or otherwise to all orsubstantially all of the business or assets of the Bank to expressly assume andagree to perform in writing this Agreement in the same manner and to the sameextent that the Bank would be required to perform it if no such succession orassignment had taken place. This Agreement shall inure to the benefit of and bebinding upon the Bank, its successors and assigns, and upon the Employee and hisheirs, executors, administrators and legal representatives. No party to thisAgreement may delegate its or his duties hereunder without the prior writtenconsent of the other parties to this Agreement. 

            8.4 Governing Law.Regardless of the choice of laws provisions of Oregon or of any otherjurisdiction, California law shall in all respects govern the validity,construction, and interpretation of this Agreement. 

            8.5 Source ofPayments. All payments provided in this Agreement shall be timely paid incash or check from the general funds of the Bank. The Company, however,unconditionally guarantees payment and provision of all amounts and benefits duehereunder to Employee and, if such amounts and benefits due from the Bank arenot timely paid or provided by the Bank, such amounts and benefits shall be paidor provided by the Company. 

            8.6.     Incorporation by Reference of Relevant Regulatory Law.  This Agreement incorporates by reference allapplicable regulatory law, including but not limited to12 U.S.C. section 1828(k) and any regulations promulgated under it; 12 U.S.C.section 1818(e); and 12 C.F.R. section 563.39(b); and all replacement statutes and regulations.
            8.7 Integration.This Agreement, including any documents expressly incorporated into it by theterms of this Agreement, constitute the entire agreement between the parties andsupersedes all prior oral and written agreements, understandings, negotiations,and discussions relating to the subject matter of this Agreement. With thisAgreement the parties rescind any previous employment agreements or arrangementsbetween themselves. Any supplement, modification, waiver, or termination of thisAgreement is valid only if it is set forth in a writing signed by both parties.The waiver of any provision of this Agreement shall not constitute a waiver ofany other provision and, unless otherwise stated, shall not constitute acontinuing waiver 

            8.8 No OralModification. Any supplement, modification, waiver, or cancellation of thisAgreement is valid only if it is set forth in a writing signed by both parties. 

            8.9 No Waiver. Thewaiver of any provision of this Agreement shall not constitute a waiver of anyother provision and, unless otherwise stated, shall not constitute a continuingwaiver. 

            8.10 Notice. Anynotice or other communication required or permitted under this Agreement shallbe in writing and shall be deemed to have been given (i) if personallydelivered, when so delivered, (ii) if mailed, one week after having been placedin the United States mail, registered, or certified, postage prepaid, addressedto the party to whom it is directed at the address listed below or (iii) ifgiven by facsimile, when the notice is transmitted to the facsimile numberspecified below, and the appropriate answer back or telephonic confirmation isreceived: 

       If to the Bank:
       23901 Calabasas Road       Suite 1050       Calabasas, California 91302
       Attention: Chairman of the Board and Corporate Secretary
       Telephone: (818) 223-8084       Facsimile:  (818) 223-8457
       If to the Employee:
       Joseph W. Kiley, III       14009 Weddington Street       Sherman Oaks, California  91401
       In order for a party tochange its address or other information for the purpose of this section, theparty must first provide notice of that change in the manner required by thissection. 
       9.      ARTICLE 9 - ADVICE OF COUNSEL
        Eachparty acknowledges that it has had an opportunity to negotiate, carefullyconsider, and receive the advice of an attorney of its own choosing on the termsof this Agreement before signing it. To the extent that any party does not seekthe advice of an attorney, it knowingly and freely waives such a right. 

        Inwitness whereof, the parties hereto have caused this Agreement to be executed asof the date and year set forth below. 
 First Bank of  Beverly Hills, F.S.B.  Date: ___________________By: ____________________________ Name: Title:   Employee  Date: _______________________________________________ Name:  Joseph W. Kiley, III     Wilshire Financial Services Group, Inc.  Date: ___________________By: ____________________________ Name: Title: