exv10w1



 




Exhibit
10.1



HANMI FINANCIAL CORPORATION




2007 EQUITY COMPENSATION PLAN




(Effective May 23, 2007)




     Hanmi Financial Corporation hereby adopts in its entirety the Hanmi Financial Corporation 2007
Equity Compensation Plan (“Plan”), as of May 23, 2007 (“Plan Adoption Date”). Unless otherwise
defined, terms with initial capital letters are defined in Section 2 below.



SECTION 1

BACKGROUND AND PURPOSE



1.1 Background The Plan permits the grant of Nonqualified Stock Options, Incentive Stock
Options, Stock Appreciation Rights (SARs), Restricted Stock, Performance Shares and Performance
Units.



1.2 Purpose of the Plan The Plan is intended to attract, motivate and retain the following
individuals: (a) employees of the Company or its Affiliates; (b) consultants who provide
significant services to the Company or its Affiliates and (c) directors of the Company or any of
its Affiliates who are employees of neither the Company nor any Affiliate. The Plan is also
designed to encourage stock ownership by such individuals, thereby aligning their interests with
those of the Company’s shareholder.




SECTION 2

DEFINITIONS




     The following words and phrases shall have the following meanings unless a different meaning
is plainly required by the context:


2.1 “1934 Act” means the Securities Exchange Act of 1934, as amended. Reference to a
specific section of the Act shall include such section, any valid rules or regulations promulgated
under such section, and any comparable provisions of any future legislation, rules or regulations
amending, supplementing or superseding any such section, rule or regulation.



2.2 “Administrator” means, collectively the Board, and/or one or more Committees, and/or
one or more executive officers of the Company designated by the Board to administer the Plan or
specific portions thereof; provided, however, that Awards may not be made by executive officers.



2.3 “Affiliate” means any corporation or any other entity (including, but not limited to,
Subsidiaries, partnerships and joint ventures) controlling, controlled by, or under common control
with the Company.



2.4 “Applicable Law” means the legal requirements relating to the administration of
Options, SARs, Restricted Stock, Performance Shares and Performance Units and similar incentive
plans under any applicable laws, including but not limited to federal and state employment, labor,
privacy and securities laws, the Code, and applicable rules and regulations promulgated by the
NASDAQ, New York Stock Exchange, American Stock Exchange or the requirements of any other stock
exchange or quotation system upon which the Shares may then be listed or quoted.



2.5 “Award” means, individually or collectively, a grant under the Plan of Nonqualified
Stock Options, Incentive Stock Options, SARs, Restricted Stock, Performance Shares and/or
Performance Units.



2.6 “Award Agreement” means the written agreement setting forth the terms and provisions
applicable to each Award granted under the Plan, including the Grant Date.



2.7 “Board” or “Board of Directors” means the Board of Directors of the Company.




 









 







2.8 “Change in Control” means the occurrence of any of the following events:





	 	(a)	 	Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or
indirectly, of securities of the Company representing fifty percent (50%) or more of the total
voting power represented by the Company’s then outstanding voting securities;
	 
	 	(b)	 	The consummation of the sale or disposition by the Company of all or substantially all of
the Company’s assets;
	 
	 	(c)	 	The consummation of a liquidation or dissolution of the Company;
	 
	 	(d)	 	A change in the composition of the Board occurring within a two-year period, as a result
of which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors”
means directors who either (A) are Directors as of the Plan Effective Date, or (B) are elected, or
nominated for election, to the Board with the affirmative votes of at least a majority of the
Directors at the time of such election or nomination (but will not include an individual whose
election or nomination is in connection with an actual or threatened proxy contest relating to the
election of Directors);
	 
	 	(e)	 	The consummation of a merger or consolidation of the Company with any other corporation,
other than a merger or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving entity or its parent) at least fifty
percent (50%) of the total voting power represented by the voting securities of the Company or such
surviving entity or its parent outstanding immediately after such merger or consolidation; or
	 
	 	(f)	 	Other events specified by the Administrator in the Participant’s Award Agreement.




2.9 “Code” means the Internal Revenue Code of 1986, as amended. Reference to a specific
section of the Code or regulation thereunder shall include such section or regulation, any valid
regulation promulgated under such section, and any comparable provision of any future legislation
or regulation amending, supplementing or superseding such section or regulation.



2.10 “Committee” means any committee appointed by the Board of Directors to administer the
Plan.



2.11 “Company” means Hanmi Financial Corporation, or any successor thereto.



2.12 “Consultant” means any consultant, independent contractor or other person who provides
significant services to the Company or its Affiliates or any employee or affiliate of any of the
foregoing, but who is neither an Employee nor a Director.



2.13 “Continuous Status” as an Employee or Consultant means that a Participant’s employment
or service relationship with the Company or any Affiliate is not interrupted or terminated.
“Continuous Status” shall not be considered interrupted in the following cases: (i) any
leave of absence approved by the Company or (ii) transfers between locations of the Company or
between the Company and any Subsidiary or successor. A leave of absence approved by the Company
shall include sick leave, military leave or any other personal leave approved by an authorized
representative of the Company. For purposes of Incentive Stock Options, no leave of absence may
exceed ninety (90) days, unless reemployment upon expiration of such leave is guaranteed by statute
or contract. If such reemployment is not so guaranteed, then on the one hundred eighty-first
(181st) day of such leave any Incentive Stock Option held by the Participant shall cease to be
treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonqualified Stock
Option.



2.14 “Director” means any individual who is a member of the Board of Directors of the
Company or an Affiliate of the Company.




 









 







2.15 “Disability” means a permanent and total disability within the meaning of Section
22(e)(3) of the Code, provided that in the case of Awards other than Incentive Stock Options, the
Administrator in its discretion may determine whether a permanent and total disability exists in
accordance with uniform and non-discriminatory standards adopted by the Administrator from time to
time.



2.16 “Employee” means any individual who is a common-law employee of the Company or of an
Affiliate.



2.17 “Exercise Price” means the price at which a Share may be purchased by a Participant
pursuant to the exercise of an Option, and the price used to determine the number of Shares payable
to a Participant upon the exercise of a SAR.



2.18 “Fair Market Value” means, as of any date, provided the Common Stock is listed on an
established stock exchange or a national market system, including without limitation the Nasdaq
National Market of the National Association of Securities Dealers, Inc. Automated Quotation
(“NASDAQ”) System, the Fair Market Value of a share of Common Stock shall be the closing sales
price for such stock on the Grant Date of the Award. If no sales were reported on the Grant Date
of the Award, the Fair Market Value of a share of Common Stock shall be the closing price for such
stock as quoted on the NASDAQ (or the exchange with the greatest volume of trading in the Common
Stock) on the last market trading day with reported sales prior to the date of determination.



2.19 “Fiscal Year” means a fiscal year of the Company.



2.20 “Grant Date” means the date the Board of Directors approves the Award.



2.21 “Incentive Stock Option” means an Option to purchase Shares, which is designated as an
Incentive Stock Option and is intended to meet the requirements of Section 422 of the Code.



2.22 “Independent Director” means a Nonemployee Director who is (i) a “nonemployee
director” within the meaning of Section 16b-3 of the 1934 Act, (ii) “independent” as determined
under the applicable rules of the NASDAQ, and (iii) an “outside director” under Treasury Regulation
Section 1.162-27(e)(3), as any of these definitions may be modified or supplemented from time to
time.



2.23 “Individual Objectives” means as to a Participant, the objective and measurable goals
set by a “management by objectives” process and approved by the Administrator in its discretion.



2.24 “Misconduct” shall include commission of any act in competition with any activity of
the Company (or any Affiliate) or any act contrary or harmful to the interests of the Company (or
any Affiliate) and shall include, without limitation: (a) conviction of a felony or crime
involving moral turpitude or dishonesty, (b) violation of Company (or any Affiliate) policies, with
or acting against the interests of the Company (or any Affiliate), including employing or
recruiting any present, former or future employee of the Company (or any Affiliate), (c) misuse of
any confidential, secret, privileged or non-public information relating to the Company’s (or any
Affiliate’s) business, or (e) participating in a hostile takeover attempt of the Company or an
Affiliate. The foregoing definition shall not be deemed to be inclusive of all acts or omissions
that the Company (or any Affiliate) may consider as Misconduct for purposes of the Plan.



2.25 “NASDAQ” means The NASDAQ Stock Market, Inc.



2.26 “Nonemployee Director” means a Director who is not employed by the Company or an
Affiliate.



2.27 “Nonqualified Stock Option” means an option to purchase Shares that is not intended to
be an Incentive Stock Option.



2.28 “Option” means an Incentive Stock Option or a Nonqualified Stock Option.




 









 







2.29 “Participant” means an Employee, Consultant or Nonemployee Director who has an
outstanding Award.



2.30 “Performance Goals” means the goal(s) (or combined goal(s)) determined by the
Administrator (in its discretion) to be applicable to a Participant with respect to an Award. As
determined by the Administrator, the Performance Goals applicable to an Award may provide for a
targeted level or levels of achievement, including without limitation goals tied to Individual
Objectives and/or the Company’s (or a business unit’s) return on assets, return on shareholders’
equity, efficiency ratio, earnings per share, net income, or other financial measures determined in
accordance with U.S. generally accepted accounting principles (“GAAP”), with or without adjustments
determined by the Administrator. The foregoing definition shall not be deemed to be inclusive of
all Performance Goals for purposes of this Plan. The Performance Goals may differ from Participant
to Participant and from Award to Award.



2.31 “Performance Shares” mean an Award granted to a Participant pursuant to Section 8 of
the Plan that entitles the Participant to receive a prescribed number of Shares, or the equivalent
value in cash, upon achievement of performance objectives associated with such Award. The Notice
of Grant shall specify whether the Performance Shares will be settled in Shares or cash.



2.32 “Performance Units” mean an Award granted to Participant pursuant to Section 8 of the
Plan that entitles the Participant to a cash payment equal to the value of a prescribed number of
Shares upon achievement of performance objectives associated with such Award.



2.33 “Period of Restriction” means the period during which the transfer of Shares of
Restricted Stock are subject to restrictions that subject the Shares to a substantial risk of
forfeiture. As provided in Section 7, such restrictions may be based on the passage of time, the
achievement of Performance Goals, or the occurrence of other events as determined by the
Administrator, in its discretion.



2.34 “Plan” means this Hanmi Financial Corporation 2007 Equity Incentive Plan, as set forth
in this instrument and as hereafter amended from time to time.



2.35 “Restricted Stock” means an Award granted to a Participant pursuant to Section 7. An
Award of Restricted Stock constitutes a transfer of ownership of Shares to a Participant from the
Company subject to restrictions against transferability, assignment, and hypothecation. Under the
terms of the Award, the restrictions against transferability are removed when the Participant has
met the specified vesting requirement. Vesting can be based on continued employment or service
over a stated service period, or on the attainment of specified Performance Goals. If employment
or service is terminated prior to vesting, the unvested restricted stock reverts back to the
Company.



2.36 “Retirement” means the termination of employment pursuant to the Company’s retirement
policies for an Employee who has attained the age of fifty-five (55) and whose Continuous Status as
an Employee was not interrupted during the previous five (5) years.



2.37 “Rule 16b-3” means a person promulgated under the 1934 Act, and any future regulation
amending, supplementing or superseding such regulation.



2.38 “SEC” means the U.S. Securities Exchanged Commission.



2.39 “Section 16 Person” means a person who, with respect to the Shares, is subject to
Section 16 of the 1934 Act.



2.40 “Shares” means shares of common stock of the Company.



2.41 “Stock Appreciation Right” or “SAR” means an Award granted to a Participant
pursuant to Section 6. Upon exercise, a SAR gives a Participant a right to receive a payment in
cash, or the equivalent value in Shares, equal to the difference between the Fair Market Value of
the Shares on the exercise date


 









 






and the Exercise Price. Both the number of SARs and the Exercise Price are determined on the Grant
Date. For example, assume a Participant is granted 100 SARs at an Exercise Price of $10 and the
notice of grant specifies that the SARs will be settled in Shares. Also assume that the SARs are
exercised when the underlying Shares have a Fair Market Value of $40 per Share. Upon exercise of
the SAR, the Participant is entitled to receive 50 Shares [(($20-$10)*100)/$20].



2.42 “Subsidiary” means any corporation in an unbroken chain of corporations beginning with
the Company if each of the corporations other than the last corporation in the unbroken chain then
owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.




SECTION 3

ADMINISTRATION



3.1 The Administrator. The Administrator shall be appointed by the Board of Directors from
time to time.



3.2 Authority of the Administrator. It shall be the duty of the Administrator to
administer the Plan in accordance with the Plan’s provisions and in accordance with Applicable Law.
The Administrator shall have all powers and discretion necessary or appropriate to administer the
Plan and to control its operation, including, but not limited to, the power to make recommendations
to the Board regarding the following: (a) which Employees, Consultants and Directors shall be
granted Awards; (b) the terms and conditions of the Awards, (c) interpretation of the Plan, (d)
adoption of rules for the administration, interpretation and application of the Plan as are
consistent therewith and (e) interpretation, amendment or revocation of any such rules.



3.3 Delegation by the Administrator. The Administrator, in its discretion and on such
terms and conditions as it may provide, may delegate all or any part of its authority and powers
under the Plan to one or more Directors; provided, however, that the Administrator may not delegate
its authority and powers (a) with respect to Section 16 Persons, or (b) in any way which would
jeopardize the Plan’s qualification under Section 162(m) of the Code or Rule 16b-3.



3.4 Decisions Binding. All determinations and decisions made by the Administrator, the
Board and any delegate of the Administrator pursuant to the provisions of the Plan shall be final,
conclusive and binding on all persons, and shall be given the maximum deference permitted by
Applicable Law.




SECTION 4

SHARES SUBJECT TO THE PLAN



4.1 Number of Shares. Subject to adjustment, as provided in Section 4.3, the total number
of Shares initially available for grant under the Plan shall be 2,737,508 plus the Shares available
for grant under the Hanmi Financial Corporation Year 2000 Stock Option Plan (not to exceed
2,262,492). Upon stockholder approval of the Plan, no further Shares will be issued under the
Hanmi Financial Corporation Year 2000 Stock Option Plan. Shares granted under the Plan may be
authorized but unissued Shares or reacquired Shares bought on the market or otherwise.



4.2 Lapsed Awards. If any Award made under the Plan expires, or is forfeited or cancelled,
or otherwise exercised without delivery of Shares, such undelivered Shares shall become available
for future Awards under the Plan.



4.3 Adjustments in Awards and Authorized Shares. Except as provided under Section 4.3.1,
subject to any required action by the stockholders of the Company, the number of Shares covered by
each outstanding Award, and the per Share exercise price of each such Award, shall be
proportionately adjusted for any increase or decrease in the number of issued shares of common
stock resulting from a stock split, reverse stock split, recapitalization, combination,
reclassification, the payment of a stock dividend on the


 









 






common stock or any other increase or decrease in the number of such Shares of common stock
effected without receipt of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been “effected without receipt of
consideration.” Such adjustment shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. Except as expressly provided herein, no issue by the
Company of Shares of stock of any class, or securities convertible into Shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number
or price of shares of common stock subject to an Option.




     4.3.1 Incentive Stock Options. Except as provided in Sections 4.3.2, any adjustment
to the maximum aggregate number of Shares to be issued through the exercise of Incentive Stock
Options must be approved by shareholders of the Company within 12 months before or after the date a
resolution is adopted by the Board of Directors to adjust the maximum aggregate number of Shares to
be issued through the exercise of Incentive Stock Options.



     4.3.2 Increase to Reflect Outstanding Shares. Any adjustment described in Section 4.3
which merely reflects a change in the outstanding Shares, such as a stock dividend or stock split,
will be effective without shareholder approval.


4.4 Legal Compliance. Shares shall not be issued pursuant to the making or exercise of an
Award unless the exercise of Options and rights and the issuance and delivery of Shares shall
comply with the Securities Act of 1933, as amended, the 1934 Act and other Applicable Law, and
shall be further subject to the approval of counsel for the Company with respect to such
compliance. Any Award made in violation hereof shall be null and void.



4.5 Investment Representations. As a condition to the exercise of an Option or other right,
the Company may require the person exercising such Option or right to represent and warrant at the
time of exercise that the Shares are being acquired only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required.




SECTION 5

STOCK OPTIONS




     The provisions of this Section 5 are applicable to Options granted to Employees, Directors,
Nonemployee Directors and Consultants. Such Participants shall also be eligible to receive other
types of Awards as set forth in the Plan.


5.1 Grant of Options. Subject to the terms and provisions of the Plan, Options may be
granted at any time and from time to time as determined by the Administrator in its discretion.
The Administrator may grant Incentive Stock Options, Nonqualified Stock Options, or a combination
thereof, and the Administrator, in its discretion and subject to Sections 4.1, shall determine the
number of Shares subject to each Option.



5.2 Award Agreement. Each Option shall be evidenced by an Award Agreement that shall
specify the Exercise Price, the expiration date of the Option, the number of Shares to which the
Option pertains, any conditions to exercise the Option, and such other terms and conditions as the
Administrator, in its discretion, shall determine. The Award Agreement shall also specify whether
the Option is intended to be an Incentive Stock Option or a Nonqualified Stock Option.



5.3 Exercise Price. The Administrator shall determine the Exercise Price for each Option
subject to the provisions of this Section 5.3.




     5.3.1 Nonqualified Stock Options. Unless otherwise specified in the Award Agreement,
in the case of a Nonqualified Stock Option, the per Share exercise price shall not be less than one
hundred percent (100%) of the Fair Market Value of a Share on the Grant Date, as determined by the
Administrator.



 









 





     5.3.2 Incentive Stock Options. The grant of Incentive Stock Options shall be subject
to the following limitations:



               (a) The Exercise Price of an Incentive Stock Option shall be not less than one hundred percent
(100%) of the Fair Market Value of a Share on the Grant Date; provided, however, that if on the
Grant Date, the Employee (together with persons whose stock ownership is attributed to the Employee
pursuant to Section 424(d) of the Code) owns stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or any of its Subsidiaries, the Exercise Price
shall be not less than one hundred and ten percent (110%) of the Fair Market Value of a Share on
the Grant Date;




               (b) Incentive Stock Options may be granted only to persons who are, as of the Grant Date,
Employees of the Company or a Subsidiary, and may not be granted to Nonemployee Directors or
Consultants. In the event the Company fails to obtain shareholder approval of the Plan within
twelve (12) months from the Plan Adoption Date, all Options granted under this Plan designated as
Incentive Stock Options shall become Nonqualified Stock Options and shall be subject to the
applicable provisions of this Section 5.




               (c) To the extent that the aggregate Fair Market Value of the Shares with respect to which
Incentive Stock Options are exercisable for the first time by the Participant during any calendar
year (under all plans of the Company and any parent or Subsidiary) exceeds $100,000, such Options
shall be treated as Nonstatutory Stock Options. For purposes of this Section 5.3.2(c), Incentive
Stock Options shall be taken into account in the order in which they were granted. The Fair Market
Value of the Shares shall be determined as of the time the Option with respect to such Shares is
granted; and




               (d) In the event of a Participant’s change of status from Employee to Consultant or Director,
an Incentive Stock Option held by the Participant shall cease to be treated as an Incentive Stock
Option and shall be treated for tax purposes as a Nonqualified Stock Option three (3) months and
one (1) day following such change of status.




     5.3.3 Substitute Options. Notwithstanding the provisions of Sections 5.3.1 and 5.3.2,
in the event that the Company or an Affiliate consummates a transaction described in Section 424(a)
of the Code (e.g., the acquisition of property or stock from an unrelated corporation), persons who
become Employees, Directors or Consultants on account of such transaction may be granted Options in
substitution for options granted by their former employer. If such substitute Options are granted,
the Administrator, in its discretion and consistent with Section 424(a) of the Code, may determine
that such substitute Options shall have an exercise price of no less than eighty-five percent (85%)
of the Fair Market Value of the Shares on the Grant Date.


5.4 Expiration of Options




     5.4.1 Expiration Dates. Unless otherwise specified in the Award Agreement, but in no
event no later than ten (10) years from the Grant Date, each Option shall terminate no later than
the first to occur of the following events:



               (a) Date in Award Agreement. The date for termination of the Option set forth in the
written Award Agreement;




               (b) Termination of Continuous Status as Employee or Consultant. The last day of the
three (3)-month period following the date the Participant ceases his/her/its Continuous Status as
an Employee or Consultant (other than termination for a reason described in subsections (c), (d),
(e), (f) or (g) below);




               (c) Misconduct. In the event a Participant’s Continuous Status as an Employee or
Consultant terminates because the Participant has performed an act of Misconduct as determined by
the


 









 







Administrator, all unexercised Options held by such Participant shall expire five (5) business
days following written notice from the Company to the Participant; provided, however, that the
Administrator may, in its sole discretion, within thirty (30) days of such termination, reinstate
the Options by giving written notice of such reinstatement to Participant. In the event of such
reinstatement, the Participant may exercise the Option only to such extent, for such time, and upon
such terms and conditions as if the Participant had ceased to be employed by or affiliated with the
Company or a Subsidiary upon the date of such termination for a reason other than Misconduct,
disability or death;




               (d) Disability. In the event that a Participant’s Continuous Status as an Employee or
Consultant terminates as a result of the Participant’s Disability, the Participant may exercise his
or her Option at any time within twelve (12) months from the date of such termination, but only to
the extent that the Participant was entitled to exercise it at the date of such termination (but in
no event later than the expiration of the term of such Option as set forth in the Award Agreement).
If, at the date of termination, the Participant is not entitled to exercise his or her entire
Option, the Shares covered by the unexercisable portion of the Option shall revert to the Plan.
If, after termination, the Participant does not exercise his or her Option within the time
specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to
the Plan;




               (e) Death. In the event of the death of a Participant, the Option may be exercised at
any time within twelve (12) months following the date of death (but in no event later than the
expiration of the term of such Option as set forth in the Award Agreement), by the Participant’s
estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but
only to the extent that the Participant was entitled to exercise the Option at the date of death.
If, at the time of death, the Participant was not entitled to exercise his or her entire Option,
the Shares covered by the unexercisable portion of the Option shall immediately revert to the Plan.
If, after death, the Participant’s estate or a person who acquired the right to exercise the Option
by bequest or inheritance does not exercise the Option within the time specified herein, the Option
shall terminate, and the Shares covered by such Option shall revert to the Plan;




               (f) Retirement. In the event that an Participant’s Continuous Status as an Employee
terminates as a result of the Participant’s Retirement, the Participant may exercise his or her
Option at any time subject to the limitations in the Plan and the Award Agreement, but only to the
extent that the Participant was entitled to exercise the Option at the time of such termination,
unless otherwise expressly provided in a written agreement between the Participant and the Company.
However, any Incentive Stock Options not exercised within three (3) months of the termination of
the Participant’s Continuous Status as an Employee shall be treated for tax purposes as
Nonstatutory Stock Options three (3) months and one (1) day following such Retirement; or




               (g) 10 Years from Grant. Unless otherwise specified above, an Option shall expire no
more than ten (10) years from the Grant Date; provided, however, that if an Incentive Stock Option
is granted to an Employee who, together with persons whose stock ownership is attributed to the
Employee pursuant to Section 424(d) of the Code, owns stock possessing more than 10% of the total
combined voting power of all classes of the stock of the Company or any of its Subsidiaries, such
Incentive Stock Option may not be exercised after the expiration of five (5) years from the Grant
Date.




               (h) Change in Status. In the event a Participant’s status has changed from Consultant
to Employee, or vice versa, a Participant’s Continuous Status as an Employee or Consultant shall
not automatically terminate solely as a result of such change in status.




     5.4.2 Administrator Discretion. Not withstanding the foregoing the Administrator may,
after an Option is granted, extend the maximum term of the Option (subject to limitations
applicable to Incentive Stock Options).


5.5 Exercisability of Options. Options granted under the Plan shall be exercisable at such
times and be subject to such restrictions and conditions as the Administrator shall determine in
its discretion. After an Option is granted, the Administrator, in its discretion, may accelerate
the exercisability of the Option.




 









 







5.6 Exercise and Payment. Options shall be exercised by the Participant’s delivery of a
written notice of exercise to the Secretary of the Company (or its designee), setting forth the
number of Shares with respect to which the Option is to be exercised, accompanied by full payment
for the Shares.




     5.6.1 Form of Consideration. Upon the exercise of any Option, the Exercise Price
shall be payable to the Company in full in cash or its equivalent. The Administrator, in its
discretion, also may permit the same-day exercise and sale of Options and related Shares, or
exercise by tendering previously acquired Shares having an aggregate Fair Market Value at the time
of exercise equal to the total Exercise Price (such previously acquired Shares must have been held
for the requisite period necessary to avoid a charge to the Company’s earnings for financial
reporting purposes, unless otherwise determined by the Administrator), or by any other means which
the Administrator, in its discretion, determines to provide legal consideration for the Shares, and
to be consistent with the purposes of the Plan.



     5.6.2 Delivery of Shares. As soon as practicable after receipt of a written
notification of exercise and full payment for the Shares purchased, the Company shall deliver to
the Participant (or the Participant’s designated broker), Share certificates (which may be in book
entry form) representing such Shares.



SECTION 6

STOCK APPRECIATION RIGHTS



6.1 Grant of SARs. Subject to the terms of the Plan, a SAR may be granted to Employees,
Directors, Nonemployee Directors and Consultants at any time and from time to time as shall be
determined by the Administrator.




     6.1.1 Number of Shares. The Administrator shall have complete discretion to determine
the number of SARs granted to any Participant.



     6.1.2 Exercise Price and Other Terms. The Administrator, subject to the provisions of
the Plan, shall have discretion to determine the terms and conditions of SARs granted under the
Plan, including whether upon exercise the SARs will be settled in Shares or cash. However, the
Exercise Price of a SAR shall be not less than one hundred percent (100%) of the Fair Market Value
of a Share on the Grant Date.


6.2 Exercise of SARs. SARs shall be exercisable on such terms and conditions as the
Administrator, in its discretion, shall determine.



6.3 SAR Agreement. Each SAR grant shall be evidenced by an Award Agreement that shall
specify the Exercise Price, the term of the SAR, the conditions of exercise and such other terms
and conditions as the Administrator shall determine.



6.4 Expiration of SARs. A SAR granted under the Plan shall expire upon the date determined
by the Administrator in its discretion as set forth in the Award Agreement, or otherwise pursuant
to the provisions relating to the expiration of Options as set forth in Sections 5.4.



6.5 Payment of SAR Amount. Upon exercise of a SAR, a Participant shall be entitled to
Shares, or the equivalent value in cash, from the Company in an amount determined by dividing the
Fair Market Value of a Share on the exercise date by the following: (a) the difference between the
Fair Market Value of a Share on the date of exercise over the SAR Exercise Price, multiplied by (b)
the number of Shares with respect to which the SAR is exercised. If the Administrator designates
in the Award Agreement that the SAR will be settled in cash, upon Participant’s exercise of the SAR
the Company shall make a cash payment to Participant as soon as reasonably practical.




 









 








SECTION 7

RESTRICTED STOCK



7.1 Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the
Administrator, at any time and from time to time, may grant Shares of Restricted Stock to
Employees, Directors, Nonemployee Directors and Consultants in such amounts as the Administrator,
in its discretion, shall determine. The Administrator shall determine the number of Shares to be
granted to each Participant.



7.2 Restricted Stock Agreement. Each Award of Restricted Stock shall be evidenced by an
Award Agreement that shall specify the Period of Restriction, the number of Shares granted, and
such other terms and conditions as the Administrator, in its discretion, shall determine. Unless
the Administrator determines otherwise, Shares of Restricted Stock shall be held by the Company as
escrow agent until the restrictions on such Shares have lapsed.



7.3 Transferability. Except as provided in this Section 7, Shares of Restricted Stock may
not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until
expiration of the applicable Period of Restriction.



7.4 Other Restrictions. The Administrator, in its discretion, may impose such other
restrictions on Shares of Restricted Stock as it may deem advisable or appropriate, in accordance
with this Section 7.4, including, without limitation, provisions relating to expiration of
restrictions equivalent to the provisions relating to expiration of Options as set forth in Section
5.4.




     7.4.1 General Restrictions. The Administrator may set restrictions based upon the
achievement of specific Performance Goals (Company-wide, business unit, or individual), or any
other basis determined by the Administrator in its discretion.



     7.4.2 Section 162(m) Performance Restrictions. For purposes of qualifying grants of
Restricted Stock as “performance-based compensation” under Section 162(m) of the Code, the
Administrator, in its discretion, may set restrictions based upon the achievement of Performance
Goals. The Performance Goals shall be set by the Administrator on or before the latest date
permissible to enable the Restricted Stock to qualify as “performance-based compensation” under
Section 162(m) of the Code. In granting Restricted Stock which is intended to qualify under
Section 162(m) of the Code, the Administrator shall follow any procedures determined by it from
time to time to be necessary or appropriate to ensure qualification of the Restricted Stock under
Section 162(m) of the Code (e.g., in determining the Performance Goals).



     7.4.3 Legend on Certificates. The Administrator, in its discretion, may legend the
certificates representing Restricted Stock to give appropriate notice of such restrictions.


7.5 Removal of Restrictions. Except as otherwise provided in this Section 7, Shares of
Restricted Stock covered by each Restricted Stock grant made under the Plan shall be released from
escrow as soon as practicable after expiration of the Period of Restriction. The Administrator, in
its discretion, may accelerate the time at which any restrictions shall lapse or be removed. After
the restrictions have lapsed, the Participant shall be entitled to have any legend or legends under
Section 7.4.3 removed from his or her Share certificate, and the Shares shall be freely
transferable by the Participant, subject to Applicable Law.



7.6 Voting Rights. During the Period of Restriction, Participants holding Shares of
Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares,
unless the Administrator determines otherwise.



7.7 Dividends and Other Distributions. During the Period of Restriction, Participants
holding Shares of Restricted Stock shall be entitled to receive all dividends and other
distributions paid with respect to such Shares unless otherwise provided in the Award Agreement.
If any such dividends or distributions are


 









 






paid in Shares, the Shares shall be subject to the same restrictions on transferability and
forfeitability as the Shares of Restricted Stock with respect to which they were paid.



7.8 Return of Restricted Stock to Company. On the date set forth in the Award Agreement,
the Restricted Stock for which restrictions have not lapsed shall revert to the Company and again
shall become available for grant under the Plan.




SECTION 8

PERFORMANCE SHARES AND PERFORMANCE UNITS



8.1 Grant of Performance Shares/Units. Subject to the terms and conditions of the Plan,
Performance Shares and Performance Units may be granted to Employees, Directors, Nonemployee
Directors and Consultants at any time and from time to time, as shall be determined by the
Administrator in its discretion.




     8.1.1 Number of Shares or Units. The Administrator will have complete discretion in
determining the number of Performance Shares and Performance Units granted to any Participant,
subject to the limitations in Sections 4.1.



     8.1.2 Value of Performance Shares/Units. Each Performance Share/Unit will have an
value equal to the Fair Market Value of a Share.


8.2 Performance Objectives and Other Terms. The Administrator will set performance
objectives or other vesting provisions, including, without limitation, time-based vesting
provisions, in its discretion which, depending on the extent to which they are met, will determine
the number or value of Performance Shares/Units that will be paid out to Participants. The time
period during which the Performance Goals or other vesting provisions must be met will be called
the “Performance Period.” Each Award of Performance Shares/Units will be evidenced by an Award
Agreement that will specify the Performance Period, and such other terms and conditions as the
Administrator, in its discretion, will determine. The Administrator may set Performance Goals
based upon the achievement of Company-wide or Individual Objectives or any other basis determined
by the Administrator in its discretion.



8.3 Earning of Performance Shares/Units. After the applicable Performance Period has
ended, the holder of Performance Shares/Units will be entitled to receive a payment based on the
number of Performance Shares/Units earned by the Participant over the Performance Period, to be
determined as a function of the extent to which the corresponding performance objectives or other
vesting provisions have been achieved. After the grant of a Performance Share/Unit, the
Administrator, in its discretion, may reduce or waive any performance objectives or other vesting
provisions for such Performance Share/Unit.



8.4 Form and Timing of Payment of Performance Shares/Units. Payment with respect to earned
Performance Shares/Units shall be made as soon as reasonably practical after the expiration of the
Performance Period.



8.5 Cancellation of Performance Shares Units. On the date set forth in the Award
Agreement, all unearned or unvested Performance Shares/Units will be forfeited to the Company, and
again will be available for grant under the Plan.




SECTION 9

MISCELLANEOUS



9.1 Change In Control. Unless otherwise provided in the Award Agreement, in the event of a
Change in Control, unless an Award is assumed or substituted by the successor corporation, then (i)
such Awards shall become fully exercisable as of the date of the Change in Control, whether or not
then exercisable and (ii) all restrictions and conditions on any Award then outstanding shall lapse
as of the date of the Change in Control.




 









 







9.2 Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of
the Company, the Administrator shall notify each Participant as soon as practicable prior to the
effective date of such proposed transaction. Notwithstanding anything to the contrary contained in
this Plan or in any Award Agreement, the Participant shall have the right to exercise his or her
Award until ten (10) days prior to such dissolution or transaction as to all of the Shares covered
thereby, including Shares as to which the Award would not otherwise be exercisable.



9.3 No Effect on Employment or Service. Nothing in the Plan shall interfere with or limit
in any way the right of the Company or an Affiliate to terminate any Participant’s employment or
service at any time, with or without cause. Unless otherwise provided by written contract,
employment or service with the Company or any of its Affiliates is on an at-will basis only.
Additionally, the Plan shall not confer upon any Nonemployee Director any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor shall it interfere
in any way with any rights which such Nonemployee Director or the Company may have to terminate his
or her directorship at any time.



9.4 Participation. No Employee or Consultant shall have the right to be selected to
receive an Award under this Plan, or, having been so selected, to be selected to receive a future
Award.



9.5 Limitations on Awards. No Participant shall be granted an Award in any Fiscal Year for
where the underlying Shares of such Award represents more than one percent of the company’s total
number of outstanding Shares, provided, however, that such limitation shall be adjusted
proportionately in connection with any change in the Company’s capitalization as described in
Section 4.3.



9.6 Successors. All obligations of the Company under the Plan, with respect to Awards
granted hereunder, shall be binding on any successor to the Company, whether the existence of such
successor is the result of a direct or indirect purchase, merger, consolidation or, otherwise, sale
or disposition of all or substantially all of the business or assets of the Company.



9.7 Beneficiary Designations. If permitted by the Administrator, a Participant under the
Plan may name a beneficiary or beneficiaries to whom any vested but unpaid Award shall be paid in
the event of the Participant’s death. Each such designation shall revoke all prior designations by
the Participant and shall be effective only if given in a form and manner acceptable to the
Administrator. In the absence of any such designation, any vested benefits remaining unpaid at the
Participant’s death shall be paid to the Participant’s estate and, subject to the terms of the Plan
and of the applicable Award Agreement, any unexercised vested Award may be exercised by the
administrator or executor of the Participant’s estate.



9.8 Limited Transferability of Awards. No Award granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by
the laws of descent and distribution. All rights with respect to an Award granted to a Participant
shall be available during his or her lifetime only to the Participant. Notwithstanding the
foregoing, the Participant may, in a manner specified by the Administrator, (a) transfer a
Nonqualified Stock Option to a Participant’s spouse, former spouse or dependent pursuant to a
court-approved domestic relations order which relates to the provision of child support, alimony
payments or marital property rights and (b) transfer a Nonqualified Stock Option by bona fide gift
and not for any consideration to (i) a member or members of the Participant’s immediate family,
(ii) a trust established for the exclusive benefit of the Participant and/or member(s) of the
Participant’s immediate family, (iii) a partnership, limited liability company of other entity
whose only partners or members are the Participant and/or member(s) of the Participant’s immediate
family or (iv) a foundation in which the Participant an/or member(s) of the Participant’s immediate
family control the management of the foundation’s assets.



9.9 Restrictions on Share Transferability. The Administrator may impose such restrictions
on any Shares acquired pursuant to the exercise of an Award as it may deem advisable, including,
but not limited to, restrictions related to applicable federal securities laws, the requirements of
any national securities exchange or system upon which Shares are then listed or traded or any blue
sky or state securities laws.




 









 







9.10 Buyout Provisions. The Administrator may at any time offer to buy out for a payment in
cash or Shares, an Award previously granted based on such terms and conditions as the Administrator
shall establish and communicate to the Participant at the time that such offer is made.



9.11 Transfers Upon a Change in Control. In the sole and absolute discretion of the
Administrator, an Award Agreement may provide that in the event of certain Change in Control
events, which may include any or all of the Change in Control events described in Section 2.8,
Shares obtained pursuant to this Plan shall be subject to certain rights and obligations, which
include but are not limited to the following: (i) the obligation to vote all such Shares in favor
of such Change in Control transaction, whether by vote at a meeting of the Company’s shareholders
or by written consent of such shareholders; (ii) the obligation to sell or exchange all such Shares
and all rights to acquire Shares, under this Plan pursuant to the terms and conditions of such
Change in Control transaction; (iii) the right to transfer less than all but not all of such Shares
pursuant to the terms and conditions of such Change in Control transaction, and (iv) the obligation
to execute all documents and take any other action reasonably requested by the Company to
facilitate the consummation of such Change in Control transaction.



9.12 Performance-Based Awards. Each agreement for the grant of Performance Shares or other
performance-based awards shall specify the number of Shares or Units underlying the Award, the
Performance Period and the Performance Objectives (each as defined below), and each agreement for
the grant of any other award that the Program Administrators determine to make subject to a
Performance Objective similarly shall specify the applicable number of shares of Common Stock, the
period for measuring performance and the Performance Objective. As used herein, “Performance
Objectives” means performance objectives specified in the agreement for a Performance Share, or for
any other award which the Program Administrators determine to make subject to Performance
Objectives, upon which the vesting or settlement of such award is conditioned and “Performance
Period” means the period of time specified in an agreement over which Performance Shares, or
another award which the Program Administrators determine to make subject to a Performance
Objective, are to be earned. Each agreement for a performance-based award shall specify in respect
of a Performance Objective the minimum level of performance below which no payment will be made,
shall describe the method of determining the amount of any payment to be made if performance is at
or above the minimum acceptable level, but falls short of full achievement of the Performance
Objective, and shall specify the maximum percentage payout under the agreement. Such maximum
percentage in no event shall exceed two hundred percent (200%) of the Shares underlying the Award.




     9.12.1 Performance Metrics. The Program Administrators shall determine and specify,
in their discretion, the Performance Objectives in the agreement for a Performance Share or for any
other performance-based award, which Performance Objective shall consist of: (i) one or more
business criteria, including (except as limited under Section 9.12.2 below for awards to Covered
Employees (as defined below)) financial, service level and individual performance criteria; and
(ii) a targeted level or levels of performance with respect to such criteria. Performance
Objectives may differ between Plan Participants and between types of awards from year to year.



     9.12.2 Performance Objectives. The Performance Objectives for Performance Shares and
any other performance-based award granted to a Covered Employee, if deemed appropriate by the
Program Administrators, shall be objective and shall otherwise meet the requirements of Section
162(m)(4)(C) of the Code, and shall be based upon one or more of the following performance-based
business criteria, either on a business unit or Company-specific basis or in comparison with peer
group performance: net sales; gross sales; return on net assets; return on assets; return on
equity; return on capital; return on revenues; asset turnover; economic value added; total
stockholder return; net income; pre-tax income; operating profit margin; net income margin; sales
margin; market share; inventory turnover; days sales outstanding; sales growth; capacity
utilization; increase in customer base; cash flow; book value; earnings per share; stock price
earnings ratio; earnings before interest, taxes, depreciation and amortization expenses (“EBITDA”);
earnings before interest and taxes (“EBIT”); or EBITDA, EBIT or earnings before taxes and unusual
or nonrecurring items as measured either against the annual budget or as a ratio to revenue.
Achievement of any such Performance Objective shall be measured over a period of years not to
exceed ten (10) as specified by the Program Administrators in the agreement for the
performance-based award. No business



 









 







criterion other than those named above in this Section 9.12.2 may be used in establishing the
Performance Objective for an award to a Covered Employee under this Section 9.12. For each such
award relating to a Covered Employee, the Program Administrators shall establish the targeted level
or levels of performance for each such business criterion. The Program Administrators may, in
their discretion, reduce the amount of a payout otherwise to be made in connection with an award
under this Section 9.12, but may not exercise discretion to increase such amount, and the Program
Administrators may consider other performance criteria in exercising such discretion. All
determinations by the Program Administrators as to the achievement of Performance Objectives under
this Section 9.12 shall be made in writing. The Program Administrators may not delegate any
responsibility under this Section 9.12. As used herein, “Covered Employee” shall mean, with
respect to any grant of an award, an executive of the Company or any subsidiary who is a member of
the executive compensation group under the Company’s compensation practices (not necessarily an
executive officer) whom the Program Administrators deem may be or become a covered employee as
defined in Section 162(m)(3) of the Code for any year that such award may result in remuneration
over $1 million which would not be deductible under Section 162(m) of the Code but for the
provisions of the Program and any other “qualified performance-based compensation” plan (as defined
under Section 162(m) of the Code) of the Company; provided, however, that the Program
Administrators may determine that a Plan Participant has ceased to be a Covered Employee prior to
the settlement of any award.



     9.12.3 Mandatory Deferral of Income. The Program Administrators, in their sole
discretion, may require that one or more award agreements contain provisions which provide that, in
the event Section 162(m) of the Code, or any successor provision relating to excessive employee
remuneration, would operate to disallow a deduction by the Company with respect to all or part of
any award under the Program, a Plan Participant’s receipt of the benefit relating to such award
that would not be deductible by the Company shall be deferred until the next succeeding year or
years in which the Plan Participant’s remuneration does not exceed the limit set forth in such
provisions of the Code; provided, however, that such deferral does not violate Code Section 409A.



SECTION 10

AMENDMENT, SUSPENSION, AND TERMINATION



10.1 Amendment, Suspension, or Termination. Except as provided in Section 10.2, the Board,
in its sole discretion, may amend, suspend or terminate the Plan, or any part thereof, at any time
and for any reason. The amendment, suspension or termination of the Plan shall not, without the
consent of the Participant, alter or impair any rights or obligations under any Award theretofore
granted to such Participant. No Award may be granted during any period of suspension or after
termination of the Plan.



10.2 No Amendment without Shareholder Approval. The Company shall obtain shareholder
approval of any material Plan amendment (including but not limited to any provision to reduce the
exercise or purchase price of any outstanding Options or other Awards after the Grant Date (other
than for adjustments made pursuant Section 4.3), or to cancel and re-grant Options or other rights
at a lower exercise price), to the extent necessary or desirable to comply with the rules of the
NASDAQ, the Exchange Act, Section 422 of the Code, or other Applicable Law.



10.3 Plan Effective Date and Duration of Awards . The Plan shall be effective as of the
Plan Adoption Date subject to the shareholders of the Company approving the Plan by the required
vote), subject to Sections 10.1 and 10.2 (regarding the Board’s right to amend or terminate the
Plan), and shall remain in effect thereafter. However, without further shareholder approval, no
Award may be granted under the Plan more than ten (10) years after the Plan Adoption Date.




SECTION 11

TAX WITHHOLDING



11.1 Withholding Requirements. Prior to the delivery of any Shares or cash pursuant to an
Award (or exercise thereof), the Company shall have the power and the right to deduct or withhold,
or require a


 









 






Participant to remit to the Company, an amount sufficient to satisfy federal, state, and local
taxes (including the Participant’s FICA obligation) required to be withheld with respect to such
Award (or exercise thereof).



11.2 Withholding Arrangements. The Administrator, in its discretion and pursuant to such
procedures as it may specify from time to time, may permit a Participant to satisfy such tax
withholding obligation, in whole or in part by (a) electing to have the Company withhold otherwise
deliverable Shares or (b) delivering to the Company already-owned Shares having a Fair Market Value
equal to the minimum amount required to be withheld. The amount of the withholding requirement
shall be deemed to include any amount which the Administrator agrees may be withheld at the time
the election is made, not to exceed the amount determined by using the statutory minimum federal,
state or local income tax rates applicable to the Participant with respect to the Award on the date
that the amount of tax to be withheld is to be determined. The Fair Market Value of the Shares to
be withheld or delivered shall be determined as of the date taxes are required to be withheld.




SECTION 12

LEGAL CONSTRUCTION



12.1 Liability of Company. The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be
necessary to the lawful grant or any Award or the issuance and sale of any Shares hereunder, shall
relieve the Company, its officers, Directors and Employees of any liability in respect of the
failure to grant such Award or to issue or sell such Shares as to which such requisite authority
shall not have been obtained.



12.2 Grants Exceeding Allotted Shares. If the Shares covered by an Award exceed, as of the
date of grant, the number of Shares, which may be issued under the Plan without additional
shareholder approval, such Award shall be void with respect to such excess Shares, unless
shareholder approval of an amendment sufficiently increasing the number of Shares subject to the
Plan is timely obtained.



12.3 Gender and Number. Except where otherwise indicated by the context, any masculine
term used herein also shall include the feminine; the plural shall include the singular and the
singular shall include the plural.



12.4 Severability. In the event any provision of the Plan shall be held illegal or invalid
for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and
the Plan shall be construed and enforced as if the illegal or invalid provision had not been
included.



12.5 Requirements of Law. The granting of Awards and the issuance of Shares under the Plan
shall be subject to all applicable laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.



12.6 Governing Law. The Plan and all Award Agreements shall be construed in accordance
with and governed by the laws of the State of California



12.7 Captions. Captions are provided herein for convenience only, and shall not serve as a
basis for interpretation or construction of the Plan.




 









 








SECTION 13

EXECUTION




     IN WITNESS WHEREOF, the Company, by its duly authorized officer, has executed this Plan on the
date indicated below.



	 	 	 	 	 
	 	HANMI FINANCIAL CORPORATION

 	 
	Dated:   March 21, 2007 	By:  	/s/ Sung Won Sohn
 	 
	 	 	Sung Won Sohn, Ph.D. 	 
	 	 	President and Chief Executive Officer