exv10w1



 






EXHIBIT 10.1




EXECUTIVE EMPLOYMENT AGREEMENT




HANMI FINANCIAL CORPORATION



This Employment Agreement (the “Agreement”) between Hanmi Financial Corporation (“Hanmi” or the
“Company”), a Delaware corporation, and Dr. Sung Sohn (“Executive”) is hereby entered into
effective as of the 3rd day of January, 2005, contingent upon Executive commencing employment on
that date (“Effective Date”). In consideration of the mutual promises, terms, covenants and
conditions set forth herein and the performance of each, it is hereby agreed as follows:




     1. Employment and Duties; Place of Performance.



     (a) Hanmi hereby employs Executive as the President and Chief Executive Officer of Hanmi and
as the President and Chief Executive Officer of Hanmi Bank. As such, Executive shall have
responsibilities, duties and authority reasonably accorded to and expected of a president and chief
executive officer and will report solely and directly to the Board of Directors of Hanmi (the
“Board”). Executive hereby accepts this employment upon the terms and conditions herein contained
and, subject to Section 1(c), agrees to devote his full time, attention and efforts to promote and
further the business of Hanmi.



     (b) Executive shall faithfully adhere to, execute and fulfill all lawful policies established
by Hanmi.



     (c) Executive shall not, during the term of his employment hereunder, be engaged in any other
business activity pursued for gain, profit or other pecuniary advantage except to the extent
permitted by this Agreement. The foregoing limitations shall not be construed as prohibiting
Executive from making personal investments in such form or manner as will neither require his
services in the operation or affairs of the companies or enterprises in which such investments are
made nor violate the terms of Section 3 hereof. Hanmi and Executive hereby acknowledge and agree
that Executive may spend a limited amount of time each year delivering speeches, which may not
exceed 12 speaking engagements outside of the Los Angeles metropolitan area in a 12 month period
and may not cause Executive to take more than 20 days of leave time in a 12 month period in order
to deliver speeches, except in either case with the advance approval of the Chairman of the
Compensation Committee of the Board (“Compensation Committee”). Executive may retain up to $50,000
per calendar year received from making such speeches and any amount payable in excess of $50,000
per calendar year shall be paid directly or paid over by the Executive to Hanmi. Hanmi and
Executive also acknowledge and agree that Executive may serve on the board of directors of no more
than two (2) non-profit, tax-exempt organizations and may not serve on the board of directors of
any other organization, except in either case with the approval of the Compensation Committee. In
no event shall any such speaking engagement or service as a member of a board of directors violate
the provisions of Section 3 hereof.



 









 





     (d) Executive understands that he shall perform his duties and responsibilities under this
Agreement primarily at the Company’s principal place of business in Los Angeles, California.



     2. Compensation. For all services rendered by Executive, Hanmi shall compensate
Executive as follows:



     (a) Base Salary. Beginning on the Effective Date, the base salary payable to Executive shall
be $550,000 per year, payable on a regular basis in accordance with Hanmi’s standard payroll
procedures. On each anniversary of the Effective Date, Executive’s base salary shall be
automatically adjusted in order to reflect any change in the Consumer Price Index for All Urban
Consumers (CPI-U) for the Greater Los Angeles Area (Los Angeles-Riverside-Orange County
Consolidated Metropolitan Statistical Area) in the preceding year. In addition, on at least an
annual basis, the Compensation Committee will review Executive’s performance and may increase such
base salary if, in its reasonable discretion, any such increase is warranted. Any salary increase
approved by the Compensation Committee shall be submitted to the Board for ratification to the
extent required by the Company’s By-Laws, the Compensation Committee’s charter, and other relevant
corporate governance documents of the Company. Once Executive’s base salary has been increased it
shall thereafter not be reduced without the consent of Executive.



     (b) Incentive Bonus. For calendar year 2005 and subsequent calendar years during the
Executive’s employment with the Company hereunder, Executive shall be eligible to receive an annual
incentive bonus expressed as a percentage of Executive’s base salary in effect at the beginning of
such period and calculated according to the table set forth as Exhibit A labeled “Bonus Schedule
II”. In the event that Executive’s annual cash incentive bonus calculated according to such table
produces a bonus of more than 100% of base salary for two consecutive calendar years or less than
35% of base salary for two consecutive calendar years, then the Compensation Committee shall review
the table and make appropriate adjustments to such table for future calendar years with the consent
of Executive. Notwithstanding the foregoing, for calendar year 2005 Executive’s annual cash
incentive bonus shall not be less than 50% of base salary and with respect to his bonus for any
given calendar year, shall not exceed 125% of base salary.



     (c) Stock Compensation. Executive shall be granted as an entitlement for Executive’s
execution of this Agreement a grant of an option to acquire 75,000 shares of Hanmi’s common stock
(the “First Option”). The shares subject to the First Option shall become vested and exercisable
over a period of six (6) years from the Effective Date, in equal annual installments of 16.666666%
per year (rounded to the nearest whole share) and upon termination of employment for any reason
shall continue to vest and become exercisable as if Executive had continued to deliver services to
Hanmi under this Agreement for the remainder of the Term, except to the extent that more favorable
terms are set forth elsewhere in this Agreement. At the same time Executive shall be granted an
option to acquire 100,000 shares of Hanmi’s common stock (the “Second Option”). The shares subject
to the Second Option shall become vested and exercisable over a period of six (6) years from the
Effective Date, in equal annual installments of 16.666666% per year (rounded to the nearest whole
share). The First Option and the Second



 









 




Option shall each have an exercise price per share equal to the closing price of the Company’s
common stock on November 3, 2004. If for some reason Executive does not commence employment with
the Company on the Effective Date, the First Option and the Second Option shall terminate at the
beginning of the following day. Except as set forth in the Agreement, the First Option and the
Second Option shall contain substantially the same terms and conditions as in the Company’s
standard form of non-qualified stock option agreement under the Hanmi Financial Corporation Year
2000 Stock Option Plan (the “Plan”), whether or not the First Option and/or the Second Option are
granted under the Plan.




     Executive shall also be entitled to the grant of an additional option to acquire shares of
Hanmi’s common stock under the Plan in the amount of 100,000 shares (adjusted for changes in the
Company’s capital structure that alters the amount and/or type of equity securities in the share
reserve of the Plan) at such time that (1) either (A) the fair market value of the Company’s common
stock (calculated as the median of the closing prices of the common stock over a 21 consecutive day
trading period) doubles from the closing price of the common stock on the Effective Date and such
doubling occurs during the Term, or (B) the Company’s earnings per share as announced in its annual
audited financial statements doubles from the earnings per share announced in the audited financial
statements for the Company’s 2004 fiscal year and such doubling occurs during the Term, and (2)
Executive is serving as Hanmi’s President and Chief Executive Officer on the grant date (the “First
Performance Option”). The First Performance Option shall be granted as soon as administratively
practicable after the time that it is determined that this performance objective has been met and
shall have an exercise price per share equal to the fair market value of the Company’s common stock
on the grant date. The shares subject to the First Performance Option shall become vested and
exercisable over the remainder of the Term following the grant date in equal annual installments.
Except as set forth in the Agreement, the First Performance Option shall contain substantially the
same terms and conditions as in the Company’s standard form of non-qualified stock option agreement
under the Plan.



     Furthermore, Executive shall be entitled to the grant of an additional option to acquire
shares of Hanmi’s common stock under the Plan in the amount of 100,000 shares (adjusted for changes
in the Company’s capital structure that alters the amount and/or type of equity securities in the
share reserve of the Plan) at such time that (1) either (A) the fair market value of the Company’s
common stock (calculated as the median of the closing prices of the common stock over a 21
consecutive day trading period) quadruples from the closing price of the common stock on the
Effective Date and such quadrupling occurs during the Term, or (B) the Company’s earnings per share
as announced in its annual audited financial statements quadruples from the earnings per share
announced in the audited financial statements for the Company’s 2004 fiscal year and such
quadrupling occurs during the Term, and (2) Executive is serving as Hanmi’s President and Chief
Executive Officer on the grant date (the “Second Performance Option”). The Second Performance
Option shall be granted as soon as administratively practicable after the time that it is
determined that this performance objective has been met and shall have an exercise price per share
equal to the fair market value of the Company’s common stock on the grant date. The shares subject
to the Second Performance Option shall become vested and exercisable over the remainder of the Term
following the grant date in equal annual installments. Except as set



 









 




forth in the Agreement, the Second Performance Option shall contain the same terms and conditions
as in the Company’s standard form of non-qualified stock option agreement under the Plan.




     For purposes of this Agreement, the First Option, the Second Option, the First Performance
Option, and the Second Performance Option shall be referred to collectively as the “Options”.



     Finally, Executive shall be granted as an entitlement for Executive’s execution of this
Agreement a stock bonus in the amount of 50,000 shares of Hanmi’s common stock (“Stock Bonus”).
Executive shall not be required to provide any monetary payment as a condition of receiving this
grant. The Stock Bonus shall be granted as soon as administratively practicable following the
Effective Date. The shares subject to such award shall become vested over a period of five (5)
years from the Effective Date, in equal annual installments of 20% per year, and upon termination
of employment for any reason shall continue to vest and become exercisable as if Executive had
continued to deliver services to Hanmi under this Agreement for the remainder of the Term, except
to the extent that more favorable terms are set forth elsewhere in this Agreement.



     (d) Executive Perquisites, Benefits and Other Compensation. Executive shall be entitled to
receive additional benefits and compensation from Hanmi in such form and to such extent as
specified below:




	 	(1)  	Coverage for Executive, his spouse and his dependent family
members under health, hospitalization, disability, dental, life and other
insurance plans that Hanmi may have in effect from time to time, with the
premiums for such coverage paid by Hanmi to at least the same degree as Hanmi
pays for its other executive officers.
	 
	 	(2)  	Reimbursement for all business travel and other out-of-pocket
expenses reasonably incurred by Executive in the performance of his services
pursuant to this Agreement. All reimbursable expenses shall be appropriately
documented in reasonable detail by Executive upon submission of any request for
reimbursement, and in a format and manner consistent with Hanmi’s
expense-reporting policy.
	 
	 	(3)  	Four (4) weeks paid vacation (exclusive of sick pay) for each
year during the period of employment ending on the anniversary of the date on
which the period of employment commenced (pro rated for any year in which
Executive is employed for less than a full year).





 









 






	 	(4)  	An automobile allowance to provide Executive with an
appropriate automobile for his use in the performance of his duties. Hanmi
shall pay all reasonable costs and expenses of maintaining and operating said
automobile, including automobile liability insurance covering Executive. Any
reimbursement of expenses shall follow the procedures set forth in Hanmi’s
expense-reporting policy. In addition, Executive shall receive a tax gross-up
for any taxes recognized by Executive as a direct result of Executive’s
operation of said automobile.
	 
	 	(5)  	Such other executive perquisites as may be available to or
deemed appropriate for Executive by the Compensation Committee and
participation in all other Company-wide employee benefits as available from
time to time.
	 
	 	(6)  	Reimbursement of reasonable moving expenses associated with the
relocation of Executive’s principal residence from Minnesota to California,
including the cost of two house hunting trips for Executive and his spouse,
movement of household goods and cars, and other expenses related to the
foregoing.
	 
	 	(7)  	Payment or reimbursement of initiation fees not to exceed
$60,000 and payment or reimbursement for monthly dues related to a country club
membership while Executive is employed by the Company. The country club must
be located in either Los Angeles Country or Orange County, California. Upon
the termination of Executive’s employment, the Company will have the discretion
to transfer its rights relating to such membership to Executive.
	 
	 	(8)  	In the event that the Company is able to purchase such policy
from a life insurance company with a financial strength rating of A or above
from A.M. Best for an annual premium cost of no more than 200% of such
insurer’s premium for a policy written on the life of a male of the same age as
Executive in the “standard” risk category, the Company shall be obligated to
purchase a term life insurance policy with a death benefit of Two Million Two
Hundred Thousand Dollars ($2,200,000) for a period of no less than four (4)
years following the Effective Date so long as Executive is employed by the
Company under this Agreement. The initial beneficiary on the policy shall be
Executive’s estate, and then after the completion of each full year of
employment with the Company, twenty five percent (25%) of the death benefit
shall become payable to Hanmi or its assignee instead of Executive’s estate, so
that after four (4) years of Executive’s employment with the Company, one
hundred percent (100%) of the death benefit shall become payable to the
Company.





 









 






	 	(9)  	The Company shall employ its best efforts to obtain a
supplemental long-term disability insurance policy for Executive while
Executive is employed by the Company under this Agreement from a disability
insurance carrier with a financial strength rating of A or above from A.M. Best
with an annual premium of no more than Nine Thousand Dollars ($9000). Within
such parameters, the Company shall endeavor to obtain a policy with the most
beneficial level of benefits and other policy terms, as ultimately approved by
Executive.





     3. Non-Competition Agreement.



     (a) Executive will not, during the period of his employment by or with Hanmi, and thereafter
as described in further detail below, for any reason whatsoever, directly or indirectly, for
himself or on behalf of or in conjunction with any other person, persons, company, partnership,
corporation or business of whatever nature:




     (i) during the period of his employment by or with Hanmi, and thereafter through the
end of any period of time during which Executive is receiving payment or benefits under the
Termination Payment (as defined below), engage, as an officer, director, shareholder, owner,
partner, joint venturer, or in a managerial capacity, whether as an employee, independent
contractor, consultant or advisor, or as a sales representative, of or for any banking or
related businesses conducting business within any state within (i) the United States of
America, including its possessions and territories, in which Hanmi has a presence or written
detailed plans to have a presence during the full term of this Agreement, or (ii) any
country outside of the United States of America in which Hanmi has a presence (the
“Territory”);




     (ii) during the period of his employment by or with Hanmi, and thereafter through the
remainder of the Term set forth in Section 4 (even if Executive is no longer delivering
services to Hanmi for such remainder) call upon, or cause others to call upon, any person
who is, at that time, within the Territory, an employee of Hanmi (including its
subsidiaries) in a sales representative or managerial capacity for the purpose or with the
intent of enticing such employee away from or out of the employ of Hanmi (including its
subsidiaries);




     (iii) during the period of his employment by or with Hanmi, and thereafter through the
remainder of the Term set forth in Section 4 (even if Executive is no longer delivering
services to Hanmi for such remainder) knowingly call upon, or cause others to call upon, any
person or entity which is, at that time, or which has been, within one (1) year prior to
that time, a customer of Hanmi (including its subsidiaries) for the purpose of soliciting or
selling products or services in direct competition with Hanmi (including its subsidiaries)
within the Territory, and will cease any unknowing solicitation upon receipt of written
notice from Hanmi that such solicitation has occurred immediately upon such receipt of
written notice;



 









 






     (iv) during the period of his employment by or with Hanmi, and thereafter through the
remainder of the Term set forth in Section 4 (even if Executive is no longer delivering
services to Hanmi for such remainder) disclose customers or confidential information
regarding customers, whether in existence or proposed, of Hanmi (including its subsidiaries)
to any person, firm, partnership, corporation or business for any reason or purpose
whatsoever except to the extent that Hanmi (including its subsidiaries) has in the past
disclosed such information to the public for valid business reasons.




     (v) comply with the provisions of a standard form of Confidentiality Agreement which
Executive shall execute on or before the Effective Date.



     Notwithstanding the above, the foregoing covenant shall not be deemed to prohibit Executive
from acquiring as an investment not more than one percent (1%) of the capital stock of another
financial institution or a subsidiary of such institution, provided that such capital stock is
traded on a national securities exchange or over-the-counter.



     (b) Because of the difficulty of measuring economic losses to Hanmi (including its
subsidiaries) as a result of a breach of the foregoing covenant, and because of the immediate and
irreparable damage that could be caused to Hanmi (including its subsidiaries) for which it would
have no other adequate remedy, Executive agrees that the foregoing covenants may be enforced by
Hanmi (including its subsidiaries) in the event of breach by him, by injunctions and restraining
orders to the fullest extent not prohibited by law.



     (c) It is agreed by the parties that the foregoing covenants in this Section 3 impose a
reasonable restraint on Executive in light of the activities and business of Hanmi (including its
subsidiaries) on the date of the execution of this Agreement and the current plans of Hanmi; but it
is also the intent of Hanmi and Executive that such covenants be construed and enforced in
accordance with the changing activities and business of Hanmi throughout the term of this covenant.
For example, if, during the term of this Agreement, Hanmi (including its subsidiaries) engages in
new and different activities, enters a new business or establishes new locations for its current
activities or business in addition to or other than the activities or business in effect on the
Effective Date or the locations currently established therefore, then Executive will be precluded
from soliciting the customers or employees of such new activities or business or from such new
location and from directly competing with such new business through the term of this covenant, even
if such restrictions are applicable outside of the Territory.



     It is further agreed by the parties hereto that, in the event that Executive shall cease to be
employed hereunder, and shall enter into a business or pursue other activities not in competition
with Hanmi (including its subsidiaries) as described above, or similar activities or business in
locations the operation of which, under such circumstances, does not violate this Section 3, and in
any event such new business, activities or location are not in violation of this Section 3 or of
Executive’s obligations under this Section 3, if any, Executive shall not be chargeable with a
violation of this Section 3 if Hanmi (including its subsidiaries) shall thereafter enter the same,
similar or a competitive (i) business, (ii) course of activities or (iii) location, as applicable.



 









 





     (d) The covenants in this Section 3 are severable and separate, and the unenforceability of
any specific covenant shall not affect the provisions of any other covenant. Moreover, in the
event any court of competent jurisdiction shall determine that the scope, time or territorial
restrictions set forth are unreasonable, then it is the intention of the parties that such
restrictions be enforced to the fullest extent that the court deems reasonable, and the Agreement
shall thereby be reformed.



     (e) All of the covenants in this Section 3 shall be construed as an agreement independent of
any other provision in this Agreement, and the existence of any claim or cause of action of
Executive against Hanmi (including its subsidiaries), whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by Hanmi (including its subsidiaries)
of such covenants. It is specifically agreed that the period of the remainder of the Term stated
at the beginning of this Section 3, during which the agreements and covenants of Executive made in
this Section 3 shall be effective, shall be computed by excluding from such computation any time
during which Executive is in violation of any provision of this Section 3.



     4. Term; Termination; Rights on Termination. The term of this Agreement shall begin
on the date hereof and continue for a period of six (6) years until January 3, 2011 (the “Term”).
This Agreement and Executive’s employment may be terminated in any one of the following ways:



     (a) Death. The death of Executive shall immediately terminate this Agreement. In the event
of Executive’s death, the First Option and the Stock Bonus shall become immediately fully vested
(and in the case of the First Option, fully exercisable) as of the date of death.



     (b) Disability. If, as a result of incapacity due to physical or mental illness or injury,
Executive either (i) shall have been absent from his full-time duties hereunder for substantially
all of six (6) consecutive months, or (ii) such incapacity can reasonably be expected to result in
death or to last for a continuous period of not less than twelve (12) months and to render
Executive unable to perform effectively the duties and responsibilities of his office, then Hanmi
may terminate Executive’s employment hereunder; provided, however, that any termination pursuant to
this Section 4(b) shall not occur prior to the expiration of three (3) months following the
commencement of Executive’s incapacity due to his physical or mental illness or injury. In the
event of the termination of Executive’s employment on account of Executive’s disability, the First
Option and the Stock Bonus shall become immediately fully vested (and in the case of the First
Option, fully exercisable) as of the date of death.



     (c) Good Cause. Hanmi may terminate the Agreement for “good cause”, which shall be: (1)
Executive’s willful or grossly negligent failure to comply with the lawful directions of the Board;
(2) Executive’s gross negligence or willful misconduct (including but not limited to any willfully
dishonest or fraudulent act or omission) in the performance or intentional nonperformance of any of
Executive’s material duties and responsibilities hereunder or continued neglect of Executive’s
duties to the Company (including its subsidiaries); (3) Executive’s material misappropriation of
property of the Company (including its subsidiaries) for his own personal financial benefit; or (4)
Executive’s conviction or plea of guilty or “no



 









 




contest” to a felony, in each case provided that Executive has failed to cure such act or omission
to the Company’s reasonable satisfaction, if such act or omission is reasonably capable of being
cured, no later than ten (10) days following delivery of written notice by the Company to Executive
of such offending act or omission. In the event of a termination for good cause, as enumerated
above, Executive shall have no right to any compensation not otherwise expressly provided for
herein.




     (d) Without Good Cause. Hanmi may terminate the Agreement without a showing of “good cause”.
Should this Agreement be terminated by Hanmi without “good cause”, subject to Executive’s execution
of an effective general release of claims and Executive’s continuing compliance with the covenants
set forth in Sections 3, 5 and 6, Executive shall receive the following benefits: (1) Executive
shall continue to receive his base salary over the remainder of the Term as if Executive had
continued to deliver services to Hanmi under this Agreement for the remainder of the Term
(including cost of living adjustments to such base salary as described in Section 2(a) above), (2)
any Options that are outstanding on the date of Executive’s termination without “good cause” shall
continue to vest and become exercisable as if Executive had continued to deliver services to Hanmi
under this Agreement for the remainder of the Term, (3) the Stock Bonus shall continue to vest as
if Executive had continued to deliver services to Hanmi under this Agreement for the remainder of
the Term, and (4) the Company shall pay the premium cost of any private medical, dental and vision
coverage that Executive purchases for the benefit of himself, his spouse and his covered dependents
with coverage no more favorable in the aggregate than the coverage received by Executive, his
spouse and his covered dependents immediately prior to such termination of employment, such
payments to continue for the shorter of (i) the remainder of the Term as if Executive had continued
to deliver services to Hanmi under this Agreement for such period or (ii) the date that Executive
becomes eligible to receive health care benefits under a health care plan sponsored by a subsequent
employer (collectively the “Termination Payment”). Executive shall have no obligation to mitigate
such amount or take any action to lessen Hanmi’s liability for such payment, but in the event that
Executive receives any cash, goods, services, or other property (“Remuneration”) for his services
over the period during which any portion of the Termination Payment is being made, the amount of
the unpaid cash portion of the Termination Payment shall be reduced by the value of such
Remuneration. In the event that Executive violates one or more of the covenants set forth in
Section 3, Hanmi shall be entitled to immediately cease any further payments of the Termination
Payment and may seek the return of the value of the portion of the Termination Payment previously
made to Executive.



     (e) Resignation by Executive on Account of “Constructive Termination”. Executive may resign
on account of a “Constructive Termination” by Hanmi during the Term. In the event that Executive
resigns on account of “Constructive Termination”, such resignation shall be treated in the same
fashion as a termination of Executive’s employment without “good cause” by Hanmi. For purposes of
this Agreement, the term “Constructive Termination” shall mean: (1) the failure by Hanmi to pay or
cause to be paid to Executive his base salary or any earned annual cash incentive bonus payment
when due; (2) the reduction of Executive’s annual base salary without his consent; (3) a material
diminution in Executive’s authority, responsibilities, duties or reporting relationships as
President and Chief Executive Officer; or (4) the relocation of Executive’s primary work place with
Hanmi in Los Angeles, California to a location more than



 









 




thirty-five (35) miles from its current location as of the Effective Date without Executive’s
consent, in each if such breach is not cured by Hanmi within ten (10) business days following the
date on which Executive notifies the Board in writing of the existence of such breach.




     (f) Resignation by Executive other than on account of “Constructive Termination”. At any time
after the commencement of employment, Executive may terminate this Agreement and his employment by
resignation, effective thirty (30) days after written notice is provided to Hanmi. If Executive
voluntarily resigns or otherwise terminates his employment, and such termination is not considered
to be a “Constructive Termination” as defined in Section 4(e) above, then Executive shall receive
no Termination Payment or any other form of severance compensation, except that the First Option
shall continue to vest and become exercisable as if Executive had continued to deliver services to
Hanmi for the remainder of the Term and the Stock Bonus shall continue to vest as if Executive had
continued to deliver services to Hanmi for the remainder of the Term.



     Upon termination of this Agreement for any reason described above in Sections 4(a) through
4(f), inclusive, Executive shall be entitled to receive all compensation earned and all benefits
and reimbursements due through the effective date of termination. Additional compensation
subsequent to termination, if any, will be due and payable to Executive only to the extent and in
the manner expressly provided above or in Section 10. All other rights and obligations of Hanmi
and Executive under this Agreement shall cease as of the effective date of termination, except that
Hanmi’s obligations under this Section 4 and Section 10, as well as Section 7 herein, and
Executive’s obligations under Sections 3, 5, 6, 7 and 8 herein shall survive such termination in
accordance with their terms.



     5. Return of Company Property. All records, business plans, financial statements,
financial records, manuals, memoranda, lists, equipment and other property or information delivered
to, received by or compiled by Executive by or on behalf of Hanmi (including its subsidiaries) or
their representatives, vendors or customers which pertain to the business of Hanmi (including its
subsidiaries) shall be and remain the property of Hanmi (including its subsidiaries) and be subject
at all times to their discretion and control. Likewise, all correspondence, reports, records,
charts, advertising materials and other similar data pertaining to the business, activities or
future plans of Hanmi (including its subsidiaries) which is collected by Executive or otherwise in
Executive’s possession shall be delivered promptly to Hanmi without request by it upon termination
of Executive’s employment for any reason or no reason.



     6. Confidential Information. Executive is and will be employed hereunder by Hanmi in a
confidential relationship wherein Executive, in the course of his employment with Hanmi, is and
will become familiar with and aware of information as to Hanmi’s customers, specific manner of
doing business, including the processes, techniques, confidential information and trade secrets
utilized by Hanmi, and future plans with respect thereto, all of which will be established and
maintained at great expense to Hanmi; this information is confidential information and a trade
secret and constitutes the valuable goodwill of Hanmi. Executive agrees that he will not, during
or after the term of this Agreement with Hanmi, use or disclose the



 









 




specific terms of Hanmi’s relationships or agreements with its significant vendors or customers or
any other significant and material confidential information or trade secret of Hanmi, whether in
existence or proposed, with or to any person, firm, partnership, corporation or business for any
reason or purpose whatsoever other than as required by law or to attorneys or accountants or other
agents of the Company.




     7. Indemnification. In the event Executive is made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by Hanmi against Executive), by reason of the fact that he is or was
performing services under this Agreement, then Hanmi shall indemnify and hold harmless the
Executive against all expenses (including attorneys’ fees), judgments, fines and amounts paid in
settlement, as actually and reasonably incurred by Executive in connection therewith to the fullest
extent permitted by the General Corporation Law of the State of Delaware and the Company’s By-Laws.
In the event that both Executive and Hanmi are made a party to the same third-party action,
complaint, suit or proceeding, Hanmi agrees to engage competent legal representation, and Executive
agrees to use the same representation, provided that if counsel selected by Hanmi shall have a
conflict of interest that prevents such counsel from representing Executive, Executive may engage
separate counsel and Hanmi shall pay all reasonable attorneys’ fees and costs of such separate
counsel. Executive agrees to reimburse the Company for all amounts paid to or for the benefit of
Executive in the event that Executive is not entitled to indemnification under the General
Corporation Law of the State of Delaware or the Company By-Laws.



     8. No Prior Agreements. Executive hereby represents and warrants to Hanmi that the
execution of this Agreement by Executive and his employment by Hanmi and the performance of his
duties hereunder will not violate or be a breach of any agreement with a former employer, client or
any other person or entity. Further, Executive agrees to indemnify Hanmi for any claim, including,
but not limited to, attorneys’ fees and expenses of investigation, by any such third party that
such third party may now have or may hereafter come to have against Hanmi based upon or arising out
of any non-competition agreement, confidential information, invention, secrecy or similar agreement
between Executive and such third party which was in existence as of the Effective Date.



     9. Assignment; Binding Effect. Executive understands that he has been selected for
employment by Hanmi on the basis of his personal qualifications, experience and skills. Executive
agrees, therefore, he cannot assign all or any portion of his performance under this Agreement.
Subject to the preceding two (2) sentences and the express provisions of Section 11 below, this
Agreement shall be binding upon, inure to the benefit of and be enforceable by the parties hereto
and their respective heirs, legal representatives, successors and assigns.



     10. Change in Control.



     (a) Executive understands and acknowledges that Hanmi may be merged or consolidated with or
into another entity and that such entity shall automatically be subject to the rights and
obligations of Hanmi hereunder.



 









 





     (b) In the event of a pending Change in Control (as defined below) if (i) Executive resigns on
account of a Constructive Termination or his employment is terminated by Hanmi without “good
cause”, and such resignation or termination of employment occurs upon or within thirteen (13)
months following the occurrence of a Change of Control as defined in Section 10(c) below, or (ii)
Hanmi and Executive have not received written notice at least five (5) business days prior to the
anticipated closing date of the transaction giving rise to the Change in Control from the successor
to all or a substantial portion of Hanmi’s business and/or assets that such successor is willing
and able as of the closing to assume and agree to perform Hanmi’s obligations under this Agreement
in the same manner and to the same extent that Hanmi is hereby required to perform, then in either
such case termination or failure to assume Hanmi’s obligations under this Agreement shall be
treated as a termination of this Agreement by Hanmi without good cause and upon Executive’s
termination of employment (including a resignation by Executive for any reason pursuant to Section
10(b)(ii)), the provisions of Section 4(d) will apply; however, under such circumstances, (i) the
amount of the cash portion of the Termination Payment due to Executive shall be payable in a
lump-sum payment on the effective date of the termination and (ii) all then outstanding Options and
the Stock Bonus shall become fully vested (and in the case of the Options, fully exercisable) on
the effective date of the termination. In addition, Executive shall also be entitled to an
additional cash incentive bonus payable in a lump-sum amount on the effective date of the
termination in an amount equal to the mean average of Executive’s annual cash incentive bonuses
under Section 3(b) hereof for the preceding three (3) years (or such smaller number of years if
Executive has not received at least three annual cash incentive bonuses under Section 3(b)). In
calculating such supplemental bonus, if the amount of Executive’s cash incentive bonus for calendar
year 2005 was not greater than the guaranteed bonus for such year, then the 2005 annual cash
incentive bonus shall be disregarded. Any payments or other benefits to which Executive shall
become entitled to pursuant to this Section 10(b) shall be subject to Executive’s satisfaction of
all of the conditions set forth in Section 4(d) hereof (e.g., execution of an effective general
release of claims, compliance with the covenants in Sections 3 and 6, return of property).



     (c) A “Change in Control” shall be deemed to have occurred if:



               (i) The consummation of a merger or consolidation of Hanmi with or into another entity or any
other corporate reorganization, if more than 50% of the combined voting power of the continuing or
surviving entity’s securities outstanding immediately after such merger, consolidation or other
reorganization is owned by persons who were not stockholders of Hanmi immediately prior to such
merger, consolidation or other reorganization; or



               (ii) The sale, transfer or other disposition of all or substantially all of the Company’s
assets; or



 









 





               (iii) A change in the composition of the Board, as a result of which fewer than one-half of
the directors are incumbent directors who either (x) had been directors of Hanmi on the date 24
months prior to the date of the event that may constitute a Change in Control (the “original
directors”) or (y) were elected, or nominated with the affirmative votes of at least a majority of
the aggregate of the original directors who were still in office at the time of the election or
nomination and the directors whose election or nomination was previously so approved; or



               (iv) Any transaction as a result of which any person is the “beneficial owner” (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of Hanmi representing at
least 50% of the total voting power represented by Hanmi’s then outstanding voting securities. For
purposes of this Paragraph (iv), the term “person” shall have the same meaning as when used in
Sections 13(d) and 14(d) of the Exchange Act but shall exclude:



                    (x) A trustee or other fiduciary holding securities under an employee benefit plan of Hanmi or
a subsidiary of Hanmi; and



                    (y) A corporation owned directly or indirectly by the stockholders of Hanmi in substantially
the same proportions as their ownership of the common stock of Hanmi.



               A transaction shall not constitute a Change in Control if its sole purpose is to change the
state of Hanmi’s incorporation or to create a holding company that will be owned in substantially
the same proportions by the persons who held Hanmi’s securities immediately before such
transactions.



     (d) Executive must be notified in writing by Hanmi at any time if a Change in Control becomes
likely or probable.



     (e) In the event that any amounts payable under this Agreement or otherwise to Executive would
(i) constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code
of 1986, as amended (the “Code”), or any comparable successor provisions, and (ii) but for this
Section 10(e) would be subject to the excise tax imposed by Section 4999 of the Code, or any
comparable successor provisions (“Excise Tax”), then such amounts payable to Executive hereunder
shall be either



                    (i) provided to Executive in full, or



                    (ii) provided to Executive as to such lesser extent that would result in no portion of such
benefits being subject to the Excise Tax,


whichever of the foregoing amounts, when taking into account applicable federal, state, local and
foreign income and employment taxes, the Excise Tax, and any other applicable taxes, results in the
receipt by Executive, on an after-tax basis, of the greatest amount of benefits, notwithstanding
that all or some portion of such benefits may be taxable under the Excise Tax.




 









 




Unless the Company and Executive otherwise agree in writing, any determination required under this
Section 10(e) shall be made in writing in good faith by a nationally recognized accounting firm
(the “Accountants”). In the event of a reduction in benefits hereunder, Executive shall be given
the choice of which benefits to reduce. If Executive does not provide written identification to
the Company of which benefits he chooses to reduce within ten (10) days of his receipt of the
Accountants’ determination, and Executive has not disputed the Accountants’ determination, then the
Company shall select the benefits to be reduced. For purposes of making the calculations required
by this Section 10(e), the Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the
application of the Code, and other applicable legal authority. The Company and Executive shall
furnish to the Accountants such information and documents as the Accountants may reasonably request
in order to make a determination under this Section 10(e). The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations contemplated by this Section
10(e).




     If, notwithstanding any reduction described in this Section 10(e), the Internal Revenue
Service (“IRS”) determines that Executive is liable for the Excise Tax as a result of the receipt
of amounts payable under this Agreement or otherwise as described above, then Executive shall be
obligated to pay back to the Company, within thirty (30) days after a final IRS determination or in
the event that Executive challenges the final IRS determination, a final judicial determination, a
portion of such amounts equal to the “Repayment Amount”. The Repayment Amount with respect to the
payment of benefits shall be the smallest such amount, if any, as shall be required to be paid to
the Company so that Executive’s net after-tax proceeds with respect to any payment of benefits
(after taking into account the payment of the Excise Tax and all other applicable taxes imposed on
such payment) shall be maximized. The Repayment Amount with respect to the payment of benefits
shall be zero if a Repayment Amount of more than zero would not result in Executive’s net after-tax
proceeds with respect to the payment of such benefits being maximized. If the Excise Tax is not
eliminated pursuant to this paragraph, Executive shall pay the Excise Tax.



     Notwithstanding any other provision of this Section 10(e), if (i) there is a reduction in the
payment of benefits as described in this Section 10(e), (ii) the IRS later determines that
Executive is liable for the Excise Tax, the payment of which would result in the maximization of
Executive’s net after-tax proceeds (calculated as if Executive’s benefits had not previously been
reduced), and (iii) Executive pays the Excise Tax, then the Company shall pay to Executive those
benefits which were reduced pursuant to this subsection contemporaneously or as soon as
administratively possible after Executive pays the Excise Tax so that Executive’s net after-tax
proceeds with respect to the payment of benefits are maximized.



     11. Complete Agreement. This Agreement is not a promise of future employment.
Executive has no oral representations, understandings or agreements with Hanmi or any of its
officers, directors or representatives covering the same subject matter as this Agreement. This
written Agreement (including any exhibits to the Agreement and any documents expressly referred to
in the Agreement) is the final, complete and exclusive statement and expression of the agreement
between Hanmi and Executive and of all the terms of this Agreement, and it cannot be



 









 




varied, contradicted or supplemented by evidence of any prior or contemporaneous oral or written
agreements. This Agreement hereby supersedes any other employment agreements or understandings,
written or oral, between Hanmi and Executive. This written Agreement may not be later modified
except by a further writing signed by a duly authorized officer of Hanmi and Executive, and no term
of this Agreement may be waived except by writing signed by the party waiving the benefit of such
term.



12. Notice. Whenever any notice is required hereunder, it shall be given in writing
addressed as follows:




	 	 	 	 	 	 	 	 	 
	 	 	To Hanmi:	 	Hanmi Financial Corporation	 	 
	 	 	 	 	
	 	 
	 	 	 	 	
	 	 
	

	 	 	 	Attn:	 	 	 	 
	

	 	 	 	 	 	
	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	To Executive:	 	 	 	 	 	 
	 	 	 	 	
	 	 
	 	 	 	 	
	 	 
	 	 	 	 	
	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	
	 	 
	 	 	Copies of Notices given to Executive shall be sent to:	 	 






Simpson Thacher & Bartlett

3330 Hillview Avenue

Palo Alto, CA 94304-1203

Attention: Stephen W. Fackler, Esq.

Fax: (650) 251-5002



Messerli & Kramer

1800 Fifth Street Towers

150 South Fifth Street

Minneapolis, MN 55402

Attention: Malcolm P. Terry, Esq.

Fax: (612) 672-3777



     Notice shall be deemed given and effective upon the occurrence of (i) the signing by the
recipient of an acknowledgement of receipt form accompanying delivery through the U.S. mail sent by
certified mail, return receipt requested, (ii) personal service by a process server, or (iii)
delivery to the recipient’s address by overnight delivery (e.g., FedEx, UPS, or DHL) or other
commercial delivery service. Either party may change the address for notice by notifying the other
party of such change in accordance with this Section 12.



 









 





     13. Severability; Headings. If any portion of this Agreement is held invalid or
inoperative, the other portions of this Agreement shall be deemed valid and operative and, so far
as is reasonable and possible, effect shall be given to the intent manifested by the portion held
invalid or inoperative. The Section headings herein are for reference purposes only and are not
intended in any way to describe, interpret, define or limit the extent or intent of the Agreement
or of any part hereof.



     14. Arbitration. Any unresolved dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration, conducted before a single
arbitrator in Los Angeles, California, in accordance with the rules of the JAMS, Inc. then in
effect. The arbitrator shall not have the authority to add to, detract from, or modify any
provision hereof nor to award punitive damages to any injured party. The arbitrator shall have the
authority to order back-pay, severance compensation, vesting of options (or cash compensation in
lieu of vesting of options), reimbursement of costs, including those incurred to enforce this
Agreement, and interest thereon in the event the arbitrator determines that Executive was
terminated without good cause, as defined in Section 4(d), or that Hanmi has otherwise materially
breached this Agreement. A decision by the arbitrator shall be final and binding. Judgment may be
entered on the arbitrator’s award in any court having jurisdiction. All expenses of any such
arbitration proceeding, including reasonable attorney’s fees, whether (i) initiated by Hanmi or
(ii) initiated by Executive in good faith, shall be borne by Hanmi to the fullest extent permitted
by law. Notwithstanding the foregoing, the Company may seek injunctive relief in a court of
competent jurisdiction for any breach or threatened breach by Executive of his obligations under
this Agreement, including those obligations set forth in Sections 3 and 6, for which injunctive
relief may be available either under this Agreement or applicable law.



     15. Governing Law. This Agreement shall in all respects be construed according to the
internal laws of the State of California, without regard to any conflicts of laws provisions
thereof.



 









 





     16. Counterparts. This Agreement may be executed simultaneously in two (2) or more
counterparts each of which shall be deemed an original and all of which together shall constitute
but one and the same instrument.



     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date set forth
below.



	 	 	 	 	 
	 	 	HANMI FINANCIAL CORPORATION
	 
	 	 	 	 
	

	 	By:
	 	/s/ Joon H. Lee


	

	 	Name:
	 	Joon H. Lee
	

	 	Title:
	 	Chairman, Board of Directors
	 
	 	 	 	 
	

	 	Date:
	 	November 3, 2004


	 
	 	 	 	 
	 	 	EXECUTIVE:
	 
	 	 	 	 
	 	 	/s/ Dr. Sung Sohn


Dr. Sung Sohn
	 
	 	 	 	 
	

	 	Date:
	 	November 3, 2004