Change In Control Agreement Dated November 1, 2003

EXHIBIT 10.7


FIRST BANK OF BEVERLY HILLS, F.S.B.

23901 Calabasas Road

Suite 1050

Calabasas, CA 91302


November 1, 2003


To:

CRAIG KOLASINSKI

Subject:

First Bank of Beverly Hills, F.S.B. Change in Control Plan


First Bank of Beverly Hills, F.S.B. has adopted the First Bank of Beverly Hills, F.S.B. Change in Control Plan (the " Plan" ). The provisions of the Plan, as they apply to you, are as follows:


Article I

DEFINITIONS

1.1 Definitions

Whenever used in this Plan, the following capitalized terms shall have the meanings set forth in this Section 1.1, certain other capitalized terms being defined elsewhere in this Plan:


(a) " Bank" means First Bank of Beverly Hills, F.S.B., and any successor or assignee as provided in Article IV.

(b) " Board" means the Board of Directors of the Bank.


(c) " Cause" means any of the following acts or circumstances: (i) willful destruction by you of property of the Bank or a Subsidiary having a material value to the Bank or such Subsidiary; (ii) fraud, embezzlement, theft, or comparable dishonest activity committed by you (excluding acts involving a de minimis dollar value and not related to the Bank or a Subsidiary); (iii) your conviction of or entering a plea of guilty or nolo contendere to any crime constituting a felony or any misdemeanor involving fraud, dishonesty or moral turpitude (excluding acts involving a de minimis dollar value and not related to the Bank or a Subsidiary); (iv) your breach or neglect of, or refusal or failure to materially discharge, your duties (other than due to physical or mental illness) commensurate with your title and function or your failure to comply with the lawful directions of the Board or the Chief Executive Officer of the Bank, or of the Board of Directors or the Chief Executive Officer of the Subsidiary that employs you, in any such case that is not cured within fifteen (15) days after you have received written notice thereof from such Board of Directors or Chief Executive Officer; or (v) a willful and knowing material misrepresentation to the Board or the Chief Executive Officer of the Bank or to the Board of Directors or the Chief Executive Officer of the Subsidiary that employs you.

(d) " Change in Control" shall mean the occurrence of any of the following:


(i) Any " Person" or " Group" (as such terms are defined in Section 13(d) of the Securities Exchange Act of 1934 (the " Exchange Act" ) and the rules and regulations promulgated thereunder) is or becomes the " Beneficial Owner" (within the meaning of Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of WFSG, or of any entity resulting from a merger or consolidation involving WFSG, representing more than fifty percent (50%) of the combined voting power of the then outstanding voting securities of WFSG or such entity.


(ii) The individuals who, as of the date hereof, are members of the Board of Directors of WFSG (the " Existing Directors" ), cease, for any reason, to constitute more than fifty percent (50%) of the number of authorized directors of WFSG as determined in the manner prescribed in the Certificate of Incorporation and Bylaws; provided, however, that if the election, or nomination for election, by WFSG stockholders of any new director was approved by a vote of at least fifty percent (50%) of the Existing Directors, such new director shall be considered an Existing Director; provided further, however, that no individual shall be considered an Existing Director if such individual initially assumed office as a result of either an actual or threatened " Election Contest" (as described in Rule 14a-11 promulgated under the Exchange Act) or other actual or threatened solicitation of proxies by or on behalf of anyone other than the Board of Directors of WFSG (a " Proxy Contest" ), including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest.

(iii) The consummation of (x) a merger, consolidation or reorganization to which WFSG is a party, whether or not WFSG is the Person surviving or resulting therefrom, or (y) a sale, assignment, lease, conveyance or other disposition of all or substantially all of the assets of WFSG, in one transaction or a series of related transactions, to any Person other than WFSG, where any such transaction or series of related transactions referred to in clause (x) or clause (y) above in this subparagraph (iii) (a " Transaction" ) does not otherwise result in a " Change in Control" pursuant to subparagraph (i) of this definition of " Change in Control" ; provided, however, that no such Transaction shall constitute a " Change in Control" under this subparagraph (iii) if the Persons who were the stockholders of WFSG immediately before the consummation of such Transaction are the Beneficial Owners, immediately following the consummation of such Transaction, of fifty percent (50%) or more of the combined voting power of the then outstanding voting securities of the Person surviving or resulting from any merger, consolidation or reorganization referred to in clause (x) above in this subparagraph (iii) or the Person to whom the assets of WFSG are sold, assigned, leased, conveyed or disposed of in any transaction or series of related transactions referred in clause (y) above in this subparagraph (iii), in substantially the same proportions in which such Beneficial Owners held voting stock in WFSG immediately before such Transaction or series of related transactions.


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(iv) Any " Person" or " Group," other than WFSG or any of its subsidiaries, is or becomes the " Beneficial Owner," directly or indirectly, of securities representing more than fifty percent (50%) of the combined voting power of the then outstanding voting securities of the the Bank Business Entity. " FBBH Business Entity" shall mean, at any time, the principal corporation or other entity that is then engaged in the banking and related business activities in which the Bank is currently engaged, which entity may be (i) the Bank, (ii) any entity resulting from a merger, consolidation, reorganization or other similar transaction involving the Bank or a successor entity thereto, or (iii) any entity that has succeeded to the business of the Bank through the sale, transfer, contribution or other disposition of all or substantially all of the assets of the Bank or a successor entity thereto.

(e) " WFSG" means Wilshire Financial Services Group, Inc., a Delaware corporation.

(f) " Compensation" means and includes all of your base annual salary attributable to your employment with the Bank and/or any of its Subsidiaries (including, but not limited to, any amounts excludable from your gross income for federal income tax purposes pursuant to Section 125 or Section 401(k) of the Internal Revenue Code of 1986, as amended), in effect immediately before the Change in Control. " Compensation" shall not include your bonuses, annual incentive awards, non-cash compensation or reimbursements, if any (e.g., the grant or vesting of restricted stock, the grant, vesting, or exercise of stock options, automobile allowance and gasoline reimbursement).

(g) " Disability" means a physical or mental infirmity which substantially impairs your ability to perform your material duties for a period of at least one hundred eighty (180) consecutive calendar days, and, as a result of such Disability, you have not returned to your full-time regular employment prior to termination.

(h) " Eligible Employee" means any employee of the Bank or any of its Subsidiaries who is designated by the Board or any committee thereof to participate in this Plan.

(i) " ERISA" means the Employee Retirement Income Security Act of 1974, as amended.

(j) " Good Reason" means the occurrence, on or after the occurrence of a Change in Control, of any of the following:


(i) The Bank or any of its Subsidiaries reduces your base salary.

(ii) The Bank amends the method for computing bonuses in a way which is not generally applicable to executives of the Bank and its Subsidiaries and which materially reduces your potential bonus given any particular level of performance of the Bank and its Subsidiaries.

(iii) Without your express written consent, the Bank or any of its Subsidiaries requires you to change the location of your job or office, so that you will be based at a location more than 100 miles from the location of your job or office.


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(iv) Without your express written consent, the Bank or any of its Subsidiaries reduces your responsibilities or directs you to report to a person of lower rank or responsibilities than the person to whom you reported before the Change in Control.


(v) A successor to the Bank fails or refuses to assume the obligations of the Bank under this Plan.

(k) " Person" shall have the meaning set forth in the definition of " Change in Control."


(l) " Plan" means this Change in Control Plan.


(m) " Release" means the Separation and General Release Agreement in the form attached hereto as Exhibit " A" .

(n) " Severance Payment" means the payment of severance compensation as provided in Article II.

(o) " Subsidiary" means any corporation or other Person, a majority of the voting power, equity securities or equity interest of which is owned directly or indirectly by the Bank.

(p) " WARN" means the Worker Adjustment and Retraining Notification Act, 29 U.S.C. a72101 et seq.

Article II

SEVERANCE PAYMENTS

2.1 Right to Severance Payment; Release

Conditioned on the execution and delivery by you (or your beneficiary or personal representative, if applicable) of the Release, and subject to the provisions of Section 2.7, you shall be entitled to receive a Severance Payment from the Bank in the amount provided in Section 2.2 if (a) you are an Eligible Employee, and (b) within one year after the occurrence of a Change in Control, your employment is involuntarily terminated by the Bank or any of its Subsidiaries for any reason other than Cause or your death or Disability, or you voluntarily terminate your employment with the Bank and all Subsidiaries for Good Reason. Notwithstanding the foregoing, you wil ...