Document:

exv10w1

Exhibit 10.1

`BASIC ENERGY SERVICES, INC.

[FORM OF — Non-Compliant Under Section 162(m) of the Internal Revenue Code of 1986]

PERFORMANCE-BASED AWARD AGREEMENT

For Performance Year 2011

(Officers and Employees)

Grantee: ____________________

     1. Grant of Performance-Based Award; Issuance of Restricted Stock Upon Achievement of
Performance-Based Metrics.

     (a) As of the effective date of this agreement (this “Agreement”), Basic Energy
Services, Inc. (formerly BES Holding Co.), a Delaware corporation (the “Company”), hereby
grants to the Grantee (identified above) shares (the “Restricted Stock”) of common stock,
$0.01 par value per share of the Company (the “Common Stock”), subject to meeting the
Performance Metrics as described in Section 12 hereof, and in accordance with the terms and
conditions of this Agreement and the Fourth Amended and Restated Basic Energy Services, Inc.
2003 Incentive Plan (the “Plan”). The Plan is hereby incorporated in this Agreement in its
entirety by reference.

     (b) To determine the actual number of shares of Restricted Stock to be earned by
Grantee, the PB Peer Group (as identified in Section 12 below) will be ranked from best
performing to worst performing with regard to each company’s respective TSR Performance
Metric where the PB Peer Group company ranked 1st shall be the one with the
highest TSR Performance Metric when compared to all other PB Peer Group companies, the PB
Peer Group company ranked 2nd shall be the one with the second highest TSR
Performance Metric when compared to all other PB Peer Group companies, the PB Peer Group
company ranked 3rd shall be the one with the third highest TSR Performance Metric
when compared to all other PB Peer Group companies, and so forth. The PB Peer Group company
ranked 13th shall be the one with the lowest TSR Performance Metric when compared
to all other PB Peer Group companies. The percentage of TSR Target Shares (as identified in
Section 12 below) earned by Grantee should the Company’s TSR Performance Metric equal that
of the 1st-ranked, 2nd-ranked, 3rd-ranked, etc., PB Peer
Group company will be as set forth below:

	 	 	 	 	 
	PB Peer Group Company	 	 	 
	Rank Based on TSR	 	Percentage of TSR Target	 
	Performance Metric	 	Shares Earned	 
	1st
	 	 	150.0	%
	2nd
	 	 	141.7	%
	3rd
	 	 	133.3	%
	4th
	 	 	125.0	%
	5th
	 	 	116.7	%

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	PB Peer Group Company	 	 	 
	Rank Based on TSR	 	Percentage of TSR Target	 
	Performance Metric	 	Shares Earned	 
	6th
	 	 	108.3	%
	7th
	 	 	100.0	%
	8th
	 	 	83.3	%
	9th
	 	 	66.7	%
	10th
	 	 	50.0	%
	11th
	 	 	33.3	%
	12th
	 	 	16.7	%
	13th
	 	 	0	%

Should the Company’s TSR Performance Metric be (1) greater than the TSR Performance Metric
of the 1st-ranked member of the PB Peer Group, the percentage of TSR Target Shares earned by
Grantee will be 150.0%, (2) less than the TSR Performance Metric of the 13th-ranked (or
last) member of the PB Peer Group, the percentage of TSR Target Shares earned by Grantee
will be 0%, and (3) greater than the TSR Performance Metric of one PB Peer Group company and
less than the TSR Performance Metric of the next highest ranked PB Peer Group company, the
percentage of TSR Target Shares earned by Grantee will be higher than the percentage
assigned to the lower ranked of the two companies and lower than the percentage assigned to
the higher ranked of the two companies with the exact percentage of Target Shares earned by
the Grantee determined by proportional interpolation (for example, if the Company’s TSR
Performance Metric were to be at the midpoint between the TSR Performance Metrics of the
6th-ranked and the 5th-ranked PB Peer Group companies, the Grantee
would earn 112.5% of the TSR Target Shares (as identified in Section 12 below), 112.5%
lying exactly halfway between the 108.3% assigned to the 6th-ranked PB Peer Group
company and the 116.7% assigned to the 5th-ranked PB Peer Group company).
Notwithstanding the foregoing in this Section 1(b), if the Company’s TSR Performance Metric
exceeds that of both Key Energy Services, Inc. and Complete Production Services, Inc.,
Grantee shall earn the higher of (A) 100% of the TSR Target Shares or (B) the percentage
derived above in this Section 1(b).

     (c) The stock certificate(s) or book entry evidencing the shares of Restricted Stock
shall not be issued or registered on the Company’s books and records until (i) the
achievement of the Performance Metrics set forth above and described in Section 12 below
have been met and approved by the Committee and (ii) the Committee has determined the
specific number of shares of Restricted Stock to be issued pursuant to this Agreement. Upon
resolution and certification by the Committee that the applicable Performance Metrics have
been achieved, and subject to the other terms and conditions of this Agreement, the Company
will promptly issue by book entry or a stock certificate(s) the aggregate number of shares
of Restricted Stock certified by the Committee for issuance under this Agreement.

     2. Definitions. All capitalized terms used herein shall have the meanings set forth
in the Plan unless otherwise provided herein. Section 12 below sets forth meanings for certain of
the capitalized terms used in this Agreement.

     3. Vesting Term. Any Restricted Stock earned by and issued to Grantee pursuant to
this Agreement will vest in the Grantee as set forth in Section 12 below.

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     4. Purchase Price. No consideration shall be payable by the Grantee to the Company
for the Restricted Stock.

     5. Restrictions on Restricted Stock.

     (a) The Restricted Stock earned and issued to Grantee hereunder shall be maintained in
book entry form or the stock certificates shall be retained in the possession of the Company
until vested in the Grantee as provided in Sections 3 and 12 hereof.

     (b) All unvested shares of Restricted Stock will be forfeited by the Grantee (a) if the
Grantee’s employment with the Company is terminated by the Company for “Cause” before the
Restricted Stock is vested or (b) if the Grantee terminates his employment with the Company
before the Restricted Stock is vested for any reason other than (i) “Good Reason” or (ii)
the death or “Disability” of the Grantee, as such terms “Cause,” “Disability” or “Good
Reason” or equivalent terms (such as “Termination for Cause” or “Termination for Good
Reason”) are defined in the employment agreement in effect between the Grantee and the
Company as of the effective date hereof or, if no such employment agreement exists, as such
terms are defined in the Plan at the time of such termination of employment to the extent
not modified in Section 12 below, or as otherwise defined in this Agreement. “Retirement”
shall also have the effect as set forth in Section 12(e) below.

     (c) At such time as the vesting period is satisfied, a certificate for the Common Stock
no longer subject to forfeiture will be delivered to the Grantee without the legend set
forth in Section 5(e) below.

     (d) From and after the date the stock certificate for the Restricted Stock is issued
and prior to any forfeiture of the Restricted Stock, the Grantee shall be entitled to vote
the shares of Restricted Stock and shall be entitled to receive any cash dividends payable
on such shares at the time such dividends are paid with respect to the Common Stock. Any
dividends paid or payable in shares of Common Stock or other stock of the Company applicable
to the Restricted Stock shall be retained by the Company until the vesting period of the
Restricted Stock on which the stock dividend was issued is satisfied.

     (e) Any book entry shares or certificate representing the Restricted Stock awarded
hereunder shall be issued to the Grantee pursuant to the terms of the Plan and this
Agreement and shall be marked with the following legend:

“The shares represented by this certificate have been issued pursuant to the terms of the
Fourth Amended and Restated Basic Energy Services, Inc. 2003 Incentive Plan and may not be
sold, pledged, transferred, assigned or otherwise encumbered in any manner except as set
forth in the terms of such Plan or Award Agreement dated effective March 10, 2011.”

     6. Independent Legal and Tax Advice. Grantee acknowledges that the Company has
advised Grantee to obtain independent legal and tax advice regarding the grant of the Restricted
Stock in accordance with this Agreement and any disposition of any such shares.

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     7. Reorganization of Company. The existence of this Agreement shall not affect in any
way the right or power of the Company or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations or other changes in Company’s capital structure or
its business, or any merger or consolidation of the Company, or any issue or bonds, debentures,
preferred or prior preference stock ahead of or affecting the Restricted Stock or the rights
thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any
part of its assets or business, or any other corporate act or proceeding, whether of a similar
character or otherwise.

     8. Investment Representation. Grantee will enter into such written representations,
warranties and agreements as Company may reasonably request in order to comply with any federal or
state securities law. Moreover, any stock certificate for any Restricted Stock (and/or Common
Stock) issued to Grantee hereunder may contain a legend restricting their transferability as
determined by the Company in its discretion. Grantee agrees that Company shall not be obligated to
take any affirmative action in order to cause the issuance or transfer of shares of Common Stock
hereunder to comply with any law, rule or regulation that applies to the shares subject to this
Agreement.

     9. No Guarantee of Employment. This Agreement shall not confer upon Grantee any right
to continued employment with the Company or any Affiliate thereof.

     10. Withholding of Taxes. The Grantee shall have the responsibility of discharging
all taxes owed by the Grantee as a result of any Restricted Stock awarded to Grantee pursuant to
this Agreement and no issuance of Common Stock pursuant to this Agreement shall be made until
appropriate arrangements satisfactory to the Company have been made for the payment of any tax
amounts that may be required to be withheld or paid to the Company with respect thereto.
Notwithstanding the foregoing, in accordance with Section 9(b) of the Plan, the Company hereby
agrees that the Grantee may direct the Company to satisfy the Company’s actual withholding tax
obligations through the “constructive” tender and withholding of vested Restricted Stock under this
Agreement; provided, the Company may revoke such right at any time prior to the vesting date of
Awards under this Agreement by giving written notice to the Grantee. Grantee agrees that, if he
makes an election under Section 83(b) of the Internal Revenue Code of 1986, as amended, with regard
to the Restricted Stock, he will so notify the Company in writing within two (2) weeks after making
such election, so as to enable the Company to timely comply with any applicable governmental
reporting requirements.

     11. General.

     (a) Notices. All notices under this Agreement shall be mailed or delivered by
hand to the parties at their respective addresses set forth beneath their signatures below
or at such other address as may be designated in writing by either of the parties to one
another, or to their permitted transferees if applicable. Notices shall be effective upon
receipt.

     (b) Transferability of Award. The rights of the Grantee pursuant to this
Agreement are not transferable by Grantee. No right or benefit hereunder shall in any
manner be liable for or subject to any debts, contracts, liabilities, obligations or torts
of

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Grantee or any permitted transferee thereof. Any purported assignment, alienation,
pledge, attachment, sale, transfer or other encumbrance of the Restricted Stock, prior to
the lapse of restrictions, that does not satisfy the requirements hereunder shall be void
and unenforceable against the Company.

     (c) Amendment and Termination. No amendment, modification or termination of
this Agreement shall be made at any time without the written consent of Grantee and the
Company.

     (d) No Guarantee of Tax Consequences. The Company and the Committee make no
commitment or guarantee that any federal or state tax treatment will apply or be available
to any person eligible for benefits under this Agreement. The Grantee has been advised and
been provided the opportunity to obtain independent legal and tax advice regarding the award
of Restricted Stock pursuant to this Agreement and the disposition of any Common Stock
acquired thereby.

     (e) Severability. In the event that any provision of this Agreement shall be
held illegal, invalid or unenforceable for any reason, such provision shall be fully
severable, but shall not affect the remaining provisions of the Agreement, and the Agreement
shall be construed and enforced as if the illegal, invalid or unenforceable provision had
not been included therein.

     (f) Supersedes Prior Agreements. This Agreement shall supersede and replace
all prior agreements and understandings, oral or written, between the Company and the
Grantee regarding the grant of the Restricted Stock covered hereby.

     (g) Governing Law. This Agreement shall be construed in accordance with the
laws of the State of Texas without regard to its conflict of law provisions, to the extent
federal law does not supersede and preempt Texas law.

     (h) No Trust or Fund Created. This Agreement shall not create or be construed
to create a trust or separate fund of any kind or a fiduciary relationship between the
Company or any Affiliate and a Grantee or any other Person. To the extent that any Person
acquires a right to receive payments from the Company or any Affiliates pursuant to this
Agreement, such right shall be no greater than the right of any general unsecured creditor
of the Company or any Affiliate.

     (i) Other Laws. The Company retains the right to refuse to issue or transfer
any Common Stock if it determines that the issuance or transfer of such shares might violate
any applicable law or regulation or entitle the Company to recover under Section 16(b) of
the Securities Exchange Act of 1934.

     (j) Binding Effect. This Agreement shall be binding upon and inure to the
benefit of any successors to the Company and all persons lawfully claiming under the
Grantee.

     12. Definitions and Other Terms. The following capitalized terms shall have those
meanings set forth opposite them:

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     (a) Grantee. The person specified as the Grantee on page 1 and the signature
page of this Agreement.

     (b) Vesting. Subject to Section 5 above and the terms of the Plan, the Grantee
shall vest in all rights to the Restricted Stock and any rights of the Company to such
Restricted Stock shall lapse on the earlier of (i) the dates set forth below; (ii)
termination by the Company without Cause; (iii) the death or Disability of the Grantee; or
(iv) Termination for Good Reason.

With respect to any of the events set forth in clauses (ii), (iii) or (iv) above in this
Section 12(b) prior to the end of the Performance Period, the Grantee shall also be deemed
to have met the TSR Performance Metric and earned 100% of each of the TSR Target Shares. In
the event of a Change of Control as defined in the Plan and related termination events,
Section 8(b) of the Plan shall be applicable, including the potential deemed meeting of the
TSR Performance Metric at the highest level set forth in this Agreement.

If not earlier vested, the Restricted Stock shall vest according to the following schedule:

March 15, 2013 — 1/3 of such shares

March 15, 2014 — 1/3 of such shares

March 15, 2015 — 1/3 of such shares

     (c) Termination for Good Reason. Termination for Good Reason shall have the
meaning set forth in the Plan, except that clause (ii) of the definition thereof is hereby
amended and restated in its entirety as follows: (ii) reduction in (a) the Participant’s
annual base salary immediately prior to the Change in Control, (b) the Participant’s target
bonus opportunity (expressed as a percentage of the Participant’s annual base salary or
other method approved by the Committee) immediately prior to the Change in Control or (c)
benefits comparable in the aggregate to those enjoyed by the Participant under the Company’s
retirement, life insurance, medical, dental, health, accident and disability plans in which
Participant was participating immediately prior to the Change in Control;

     (d) Disability. “Disability” shall mean that Grantee is entitled to receive
long-term disability (“LTD”) income benefits under the LTD plan or policy maintained by the
Company that covers Grantee. If, for any reason, Grantee is not covered under such LTD plan
or policy, then “Disability” shall mean a “permanent and total disability” as defined in
Section 22(e)(3) of the Code and Treasury regulations thereunder. Evidence of such
Disability shall be certified by a physician acceptable to the Company. Grantee agrees to
submit to any examinations that are reasonably required by the attending physician or other
healthcare service providers to determine whether he or she has a Disability.

     (e) Retirement. “Retirement” means the voluntary termination of Grantee’s
employment for normal retirement at or after attaining age 62 provided that, on the date of
his retirement, Grantee has accrued at least ten continuous years of active employment
service with the Company; provided, if the Grantee is party to an employment agreement in
effect between the Grantee and the Company as of the date hereof in which the term

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“Retirement” is defined for purposes of that agreement, such term shall apply to this
Agreement.

In the event of the Retirement of the Grantee, Grantee is hereby given the option to have
any unvested shares forfeited in connection with such Retirement in accordance with Section
5(b) reissued to the Grantee upon, and as partial consideration for, Grantee’s execution and
delivery of a non-compete agreement (in the form required by the Company in its sole
discretion with a term of not longer than the final vesting date set forth in Section 12(d)
above) within the period of time specified by the Company after delivery of such agreement
to the Grantee for execution. In addition, with respect to a Retirement after the end of the
Performance Period but prior to the determination of the achievement of the TSR Performance
Metric by the Committee, the Grantee shall also be deemed to have met the TSR Performance
Metric and earn TSR Target Shares if and when determined in accordance with the terms of
this Agreement.

     (f) TSR Target Shares and Maximum Number of Shares of Restricted Stock. “TSR
Target Shares” means _______ shares of Common Stock. Accordingly, based on the potential
achievement that may be obtained in Section 1(b) hereof, the maximum number of shares of
Restricted Stock that may be issued by the Company pursuant to this Agreement is 150% of the
TSR Target Shares.

     (g) Performance Metric. For purposes of this Agreement:

	 	(i)	 	“TSR Performance Metric” means the cumulative total
shareholder return (“TSR”) for the Common Stock of the Company as
calculated below for the Performance Period. The award will be earned as
set forth in Section 1(b) based on the Company’s TSR performance relative
to the PB Peer Group.
	 
	 	(ii)	 	“TSR for the Performance Period” shall be defined and
calculated as follows, where “Beginning Price” is the average closing price
on the New York Stock Exchange (“NYSE”) for the last 20 NYSE trading days
of 2010, and “Ending Price” is the average closing price on the NYSE for
the last 20 NYSE trading days of 2011, in each case as applied to the
applicable equity security:

TSR = (Ending Price - Beginning Price + cash dividends (if any) per share paid*)

Beginning Price

 

			
	*	 	Stock dividends paid in securities rather than cash in which there is a
distribution of less than 25 percent of the outstanding shares (as calculated prior to
the distribution) shall be treated as cash for purposes of this calculation.

	 	 	To the extent a security of the Company or any member of the PB Peer Group is not listed
or traded on the NYSE, “NYSE” as used above above shall mean the principal

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	 	 	national securities exchange or quotation service on which the security is listed or
quoted.

     (h) PB Peer Group. “PB Peer Group” means each of the following companies: (1)
Bronco Drilling Company, Inc.; (2) Complete Production Services, Inc.; (3) Hercules Offshore
Inc.; (4) Key Energy Services, Inc; (5) Natural Gas Services Group, Inc.; (6) Oil States
International, Inc.; (7) Patterson-UTI Energy Inc.; (8) Pioneer Drilling Co.; (9) Superior
Energy Services, Inc.; (10) Team Inc.; (11) Tesco Corp.; (12) Tetra Technologies, Inc.; and
(13) Union Drilling, Inc.; provided, in the event any such company ceases to exist, ceases
to file public reports timely with the U.S. Securities and Exchange Commission with respect
to the Performance Period or merges or combines with any other entity that, in the
determination of the Committee makes such combined company not comparable for use as part of
the PB Peer Group, the Committee in its sole discretion may continue to include or exclude
such company in the PB Peer Group, but in no event may substitute any other company in its
place as part of the PB Peer Group.

     (i) Performance Period. “Performance Period” means the one-year calculation
period starting on the 20th NYSE trading day prior to and including the last NYSE trading
day of 2010 and ending on the last NYSE trading day of 2011.

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     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its behalf by its
duly authorized officer and Grantee has hereunto executed this Agreement as of the same date, to be
effective as of March 10, 2011.

	 	 	 	 	 
	 	

BASIC ENERGY SERVICES, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 

	 

	 	Address for Notices:
	 	 
	 
	 	 	 	 
	 

	 	Basic Energy Services, Inc.	 	 
	 

	 	P.O. Box 10460	 	 
	 

	 	Midland, Texas 79702	 	 
	 

	 	Fax: (432) 620-5501	 	 
	 
	 	 	 	 
	 

	 	Attn: President	 	 
	 
	 	 	 	 
	 

	 	GRANTEE	 	 
	 
	 	 	 	 
	 

	 	[NAME]	 	 
	 
	 	 	 	 
	 

	 	 
 

	 	 
	 
	 	 	 	 
	 

	 	Address for Notices:	 	 
	 
	 	 	 	 
	 

	 	 
 

	 	 
	 
	 	 	 	 
	 

	 	 
 

	 	 
	 
	 	 	 	 
	 

	 	 
 

	 	 
	 	 	 	 
	 	Fax:  	
 	 	 
	 	 	 	 
	 	 	 	 
	 

9exv10w29

Exhibit 10.29
 

			
	STATE OF CALIFORNIA
	 	ARNOLD SCHWARZENEGGER, Governor
	BUSINESS, TRANSPORTATION AND HOUSING AGENCY
	 	DALE E. BONNER, Secretary

			
	DEPARTMENT OF FINANCIAL
INSTITUTIONS

WILLIAM S. HARAF, Commissioner of Financial Institutions

www.dfi.ca.gov
	 	

November 3, 2009

Board of Directors

Hanmi Bank 

Attention: Jean Lim

3660 Wilshire Boulevard

Penthouse A 

Los Angeles, CA 90010

Re:     Hanmi Bank – Final Order (Financial Code Section 1913)

Members of the Board of Directors:

Enclosed is an original executed Final Order (Financial Code Section 1913) issued
to the above-referenced bank and copy of the Waiver and Consent executed by it on
October 28, 2009.

Please contact the undersigned at 213.897.2172 if you have any questions.

Very truly yours,

WALLACE M. WONG

Senior Counsel

WMW:lca

Enclosure

			
	cc:	 	Gary Steven Findley, Esq.

Mary Luvisi, Federal Reserve Board

John Ross, Department of Financial Institutions, Los Angeles

David Spainhour, Department of Financial Institutions, Los Angeles

 

	 	 	 	 	 	 	 

	45 Fremont Street, Suite 1700
	 	1810 13th Street
	 	300 S. Spring Street, Suite 15513
	 	7575 Metropolitan Drive, Suite 108
	San Francisco, CA 94105
	 	Sacramento, CA 95811
	 	Los Angeles, CA 90013
	 	San Diego, CA 92108
	(415) 263-8500
	 	(916) 322-5966
	 	(213) 897-2085
	 	(619) 682-7227

 

 

STATE OF CALIFORNIA

 DEPARTMENT OF FINANCIAL INSTITUTIONS

	 	 	 	 	 	 	 

	In the Matter of

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	          HANMI BANK

	 	 	)	 	 	FINAL ORDER
	 

	 	 	)	 	 	(Financial Code Section 1913)
	 

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	 

	 	 	 	 	 

FINAL ORDER

Pursuant to Section 1913 of the Financial Code, the Commissioner of Financial Institutions
(Commissioner) hereby orders:

	I.	 	Hanmi Bank (Bank) shall discontinue its unsafe and injurious practices, as follows:

	 	1.	 	Within 60 days of the effective date of this Order, the board of directors of
the Bank shall submit to the Department of Financial Institutions (Department) a
written plan to strengthen board oversight of the management and operations of the
Bank. The plan shall, at a minimum, address, consider, and include:

	 	(a)	 	The actions that the board of directors will take to improve
the Bank’s condition and maintain effective control over, and supervision of,
the Bank’s major operations and activities, including but not limited to,
credit risk management, credit administration,

 

 

	 	 	 	processes to mitigate risks associated with credit concentrations,
earnings, and liquidity;
	 
	 	(b)	 	The responsibility of the board of
directors to monitor
management’s adherence to approved policies and procedures,
and applicable laws and regulations; and
	 
	 	(c)	 	A description of the information and
reports that will be regularly
reviewed by the board of directors in its oversight of the operations
and management of the Bank, including information on the Bank’s
adversely classified assets, allowance for loan and lease losses,
capital, earnings, and liquidity.

	 	2.	 	Within 60 days of the effective date of this Order, the Bank shall submit to the Department
an acceptable written plan to strengthen credit risk management practices. The plan shall, at
a minimum, address, consider, and include:

	 	(a)	 	Procedures to periodically review and revise risk exposure limits to address
changes in market conditions;
	 
	 	(b)	 	Strategies to minimize credit losses and reduce the level of problem assets;
	 
	 	(c)	 	Enhanced stress testing of loan and portfolio segments; and
	 
	 	(d)	 	Procedures to identify, limit, and manage concentrations of credit that are
consistent with the interagency Guidance on Concentrations in Commercial Real Estate
Lending, Sound Risk Management Practices, dated December 12, 2006 (SR 07-1).

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	 	3.	 	Within 60 days of the effective date of this Order, the Bank shall submit to the
Department acceptable revised written credit administration policies and procedures that
shall, at a minimum, address, consider, and include:

	 	(a)	 	For loans that are modified, analyses of borrowers’ current financial
condition and guarantors’ cash flow and repayment sources
	 
	 	(b)	 	The appropriate use of interest reserves; and
	 
	 	(c)	 	Enhancements to the internal loan grading system to timely and accurately
identify individual problem credits.

	 	4.	 	(a)    The Bank shall not, directly or indirectly, extend or renew any credit
to or for the benefit of any borrower, including any related interest of the borrower, who
is obligated to the Bank in any manner on any extension of credit or portion thereof that
has been charged off by the Bank or classified, in whole or in part, “loss” in the Report
of Examination of the Bank conducted by the Federal Reserve Bank of San Francisco and the
Department that commenced on April 13, 2009 (the “Report of Examination”) or in any
subsequent report of examination, as long as such credit remains uncollected.

	 	(b)	 	The Bank
shall not, directly or indirectly, extend or renew any credit to or for the benefit of any
borrower, including any related interest of the borrower, whose extension of credit has
been classified “doubtful” or “substandard” in the Report of Examination or in any
subsequent report of examination, without the prior approval of the Bank’s board of
directors or the Bank’s loan committee. The board

3

 

	 	 	 	of directors or loan committee shall document in writing the reasons for the
extension of credit or renewal, specifically certifying that: (i) the extension of
credit is necessary to protect the Bank’s interest in the ultimate collection of
the credit already granted or (ii) the extension of credit is in full compliance
with the Bank’s written loan policy, is adequately secured, and a thorough credit
analysis has been performed indicating that the extension or renewal is reasonable
and justified, all necessary loan documentation has been properly and accurately
prepared and filed, the extension of credit will not impair the Bank’s interest in
obtaining repayment of the already outstanding credit, and the board of directors
or loan committee reasonably believes that the extension of credit or renewal will
be repaid according to its terms. The written certification shall be made a part of
the minutes of the board of directors meetings, and a copy of the signed
certification, together with the credit analysis and related information that was
used in the determination, shall be retained by the Bank in the borrower’s credit
file for subsequent supervisory review. For purposes of this Order, the term
“related interest” is defined as set forth in Section 215.2(n) of Regulation O of
the Board of Governors of the Federal Reserve System (Board of Governors) (12
C.F.R. § 215.2(n)).

	 	5.	 	(a)   Within 60 days of the effective date of this Order, the Bank shall submit to the
Department an acceptable written plan designed to

4

 

	 	 	 	improve the Bank’s position through repayment, amortization, liquidation, additional
collateral, or other means on each loan or other asset in excess of $3 million, including
other real estate owned (OREO), that (i) is past due as to principal or interest more than
90 days as of the date of this Order; (ii) is on the Bank’s problem loan list; or (iii)
was adversely classified in the Report of Examination. In developing the plan for each
loan, the Bank shall, at a minimum, review, analyze, and document the financial position
of the borrower, including source of repayment, repayment ability, and alternative
repayment sources, as well as the value and accessibility of any pledged or assigned
collateral, and any possible actions to improve the Bank’s collateral position.

	 	(b)	 	Within 30 days of the date that any additional loan or other asset in excess of $3 million,
including OREO, becomes past due as to principal or interest for more than 90 days, is on the
Bank’s problem loan list, or is adversely classified in any subsequent report of examination
of the Bank, the Bank shall submit to the Department an acceptable written plan to improve the
Bank’s position on such loan or asset.
	 
	 	(c)	 	Within 30 days after the end of each calendar quarter thereafter, the Bank shall submit a
written progress report to the Department to update each asset improvement plan, which shall
include, at a minimum, the carrying value of the loan or other asset and changes

5

 

	 	 	 	in the nature and value of supporting collateral, along with a copy of the Bank’s
current problem loan list, a list of all loan renewals and extensions without full
collection of interest in the last quarter, and past due/non-accrual report. The
board of directors shall review the progress reports before submission to the
Department and shall document the review in the minutes of the board of directors’
meetings.

	 	6.	 	(a)    Within 10 days after the effective date of this Order, the Bank shall eliminate from its
books, by charge-off or collection, all assets or portions of assets classified “loss” in the
Report of Examination that have not been previously collected in full or charged off.
Thereafter the Bank shall, within 30 days from the receipt of any federal or state report of
examination, charge off all assets classified “loss” unless otherwise approved in writing by
the Department.

	 	(b)	 	Within 60 days after the effective date of this Order, the Bank shall
review and revise its allowance for loan and lease losses (ALLL) methodology consistent with
relevant supervisory guidance, including the Interagency Policy Statements on the Allowance
for Loan and Lease Losses, dated July 2, 2001 (SR 01-17 (Sup)) and December 13, 2006 (SR
06-17), and the findings and recommendations regarding the ALLL set forth in the Report of
Examination, and submit a description of the revised methodology to the Department. The
revised ALLL methodology shall be designed

6

 

	 	 	 	to maintain an adequate ALLL and shall address, consider, and include, at a minimum, the
reliability of the Bank’s loan grading system, the volume of criticized loans,
concentrations of credit, the current level of past due and nonperforming loans, past loan
loss experience, evaluation of probable losses in the Bank’s loan portfolio, including
adversely classified loans, and the impact of market conditions on loan and collateral
valuations and collectibility.
	 
	 	(c)	 	Within 60 days of the effective date of this Order, the Bank shall submit to the Department
an acceptable written program for the maintenance of an adequate ALLL. The program shall
include policies and procedures to ensure adherence to the revised ALLL methodology and
provide for periodic reviews and updates to the ALLL methodology, as
appropriate. The program
shall also provide for a review of the ALLL by the board of directors on at least a quarterly
calendar basis. Any deficiency found in the ALLL shall be remedied in the quarter it is
discovered, prior to the filing of the Consolidated Reports of Condition and Income, by
additional provisions. The board of directors shall maintain written documentation of its
review, including the factors considered and conclusions reached by the Bank in determining
the adequacy of the ALLL. During the term of this Order, the Bank shall submit to the
Department, within 30 days after the end of each calendar quarter, a written report regarding
the board of directors’ quarterly review of the

7

 

	 	 	 	ALLL and a description of any changes to the methodology used in determining the
amount of ALLL for that quarter.

	 	7.	 	(a)    By December 31, 2009, the Bank shall have and thereafter
continue to maintain a ratio of tangible shareholder’s equity to total tangible
assets of not less than 7.0%. Such requirement shall be in addition to a fully
funded ALLL, the adequacy of which shall be satisfactory to the Commissioner as
determined at subsequent examinations and/or visitations.

	 	(b)	 	By July 31, 2010, the Bank shall increase its
contributed equity capital by
not less than an additional $100 million, and shall thereafter maintain a ratio of
tangible shareholder’s equity to total tangible assets of not less than 9.0%. Such
requirement shall be in addition to a fully funded ALLL, the adequacy of which shall
be satisfactory to the Commissioner as determined at subsequent examinations and/or
visitations.
	 
	 	(c)	 	By December 31, 2010, and thereafter during the life of this Order, the Bank
shall maintain a ratio of tangible shareholder’s equity to total tangible assets of
not less than 9.5%. Such requirement shall be in addition to a fully funded ALLL, the
adequacy of which shall be satisfactory to the Commissioner as determined at
subsequent examinations and/or visitations.

	 	8.	 	By November 30, 2009, the Bank shall develop, adopt, and implement a comprehensive capital
augmentation and maintenance plan (“Capital

8

 

	 	 	 	Plan”) acceptable to the Commissioner. Such Capital Plan shall identify the sources and
timing of additional capital and shall, at a minimum, provide a plan for compliance with
Subparagraphs 7(a) through 7(d) of this Order. Such Capital Plan shall include provisions
for monitoring, controlling, and addressing risks to the Bank’s capital, and shall also
discuss contingency plans for identifying and raising additional capital in the future if
and when it should become necessary. Such Capital Plan shall be in a form and shall be
implemented in a manner acceptable to the Commissioner.
	 
	 	9.	 	The Bank shall notify the Department, in writing, no more than 30 days after the end of any
quarter in which any of the Bank’s capital ratios (total risk-based, Tier 1, or leverage) fall
below the approved Capital Plan’s minimum ratios. Together with the notification, the Bank
shall submit an acceptable written plan that details the steps the Bank will take to increase
the Bank’s capital ratios to or above the approved Capital Plan’s minimums.
	 
	 	10.	 	(a)    Within 60 days of the effective date of this Order, the Bank shall
submit to the Department a strategic plan to improve the Bank’s earnings, and a
budget for 2010. The written plan and budget shall include, but not be limited to:

	 	(i)	 	Identification of the major areas where, and means by which,
the board of directors will seek to improve the Bank’s
operating performance;

9

 

	 	(ii)	 	A realistic and comprehensive budget for calendar year 2010,
including income statement and balance sheet projections; and
	 
	 	(iii)	 	A description of the operating assumptions that form the basis for, and adequately
support, major projected income, expense, and balance sheet
components.

	 	(b)	 	A strategic
plan and budget for each calendar year subsequent to
2010 shall be submitted to the Department at least 30 days prior to
the beginning of that calendar year.

	 	11.	 	Within 60 days of the effective date of this Order, the Bank shall submit to the Department
an acceptable written plan designed to improve management of the Bank’s liquidity position and
funds management practices that includes, but is not limited to, measures to reduce reliance
on short-term wholesale funding, including brokered deposits.
	 
	 	12.	 	Within 60 days of the effective date of this Order, the Bank shall submit to the Department
an acceptable revised written contingency funding plan that, at a minimum, identifies
available sources of liquidity and includes adverse scenario planning.
	 
	 	13.	 	(a)    The Bank shall not declare or pay any dividends, or make any other
distribution to its shareholder, without the prior written approval of the
Department.

	 	(b)	 	All requests for prior approval shall be received at least 30 days prior to
the proposed dividend declaration date. All requests shall

10

 

	 	 	 	contain, at a minimum, current and projected information on the Bank’s capital,
asset quality, earnings and ALLL needs.

	 	14.	 	(a)    Within 60 days from the date of this Order, and during the life of this Order, the Bank’s
board of directors shall have and retain management acceptable to the Commissioner. Such
management shall include a Chief Executive Officer, a Chief Financial Officer, and a Chief
Credit Officer (collectively referred to as “Senior Executive Officers”) qualified to restore
the Bank to satisfactory condition.

	 	(b)	 	During the life of this Order, the Bank shall have and retain members of the
Bank’s board of directors acceptable to the Commissioner. Such members of the Bank’s
board of directors shall possess the skills and abilities to satisfactorily perform
the duties of a director of the Bank, to properly oversee and provide appropriate
guidance to the management of the Bank, and shall be qualified to restore the Bank to
satisfactory condition. Without limiting the generality of the foregoing, the
Commissioner reserves the right to determine whether Bank’s current senior officers
and the current members of Bank’s board of directors will be considered to be
qualified for purposes of this Order.
	 
	 	(c)	 	During the life of this Order, the Bank’s board of directors shall notify the
Commissioner in writing when it proposes to add any individual to the Bank’s board of
directors or employ any individual

11

 

	 	 	 	as a Senior Executive Officer. The notification must be received at least 30 days
before such addition or employment is intended to become effective and should
include a detailed description of the background and experience of the individual
or individuals to be added or employed. The Bank may not add any individual to its
board of directors or employ any individual as a Senior Executive Officer unless
and until the Commissioner has issued a notice of non-disapproval in writing.

	 	15.	 	The Bank shall not open, relocate or discontinue any branch office or place of business/loan
production office without the prior written consent of the Commissioner.
	 
	 	16.	 	(a)    Within 10 days of the effective date of this Order, the board of
directors of the Bank shall appoint a committee (the “Compliance Committee”) to
monitor and coordinate the Bank’s compliance with the provisions of this Order. The
Compliance Committee shall include a majority of outside directors who are not
executive officers or principal shareholders of the Bank or Hanmi Financial
Corporation, as defined in Sections 215.2(e)(1) and 215.2(m)(1)
of Regulation O of
the Board of Governors (12 C.F.R. §§ 215.2(e)(1) and 215.2(m)(1)). At a minimum,
the Compliance Committee shall meet at least monthly, keep detailed minutes of each
meeting, and report its findings to the board of directors of the Bank.

12

 

	 	(b)	 	Within 30 days after the end of each calendar quarter following the effective
date of this Order, the Bank shall submit to the Department written progress
reports detailing the form and manner of all actions taken to secure compliance
with this Order and the results thereof.

	 	17.	 	(a)    The Bank shall submit written plans, policies, procedures, and a
program that are acceptable to the Department within the applicable time periods
set forth in Paragraphs 2, 3, 5, 6(c), 7, 8, 10, and 11 of this Order.

	 	(b)	 	Within 10 days of approval by the Department, the Bank shall adopt the
approved plans, policies, procedures, and program. Upon adoption, the Bank shall
promptly implement the approved plans, policies, procedures, and program, and
thereafter fully comply with them.
	 
	 	(c)	 	During the term of this Order, the approved plans, policies,
procedures, and program shall not be amended or rescinded without the prior
written approval of the Department.

	 	18.	 	If the Department determines that the Bank has violated any substantive provision of this
Order, the Bank shall, for the purposes of the California Financial Code, be deemed to be
conducting its business in an unsafe or unauthorized manner and may subject the Bank to
further regulatory enforcement action by the Department.

13

 

	II.	 	This Order is effective immediately and shall remain effective and enforceable except to
the extent, and until such time as, the Commissioner shall amend, supplement, suspend or
terminate this Order.

Dated: November 2, 2009.

	 	 	 	 	 
	 	 	 
	 	                                               /s/ William S. Haraf
 	 
	 	William S. Haraf 	 
	 	Commissioner

California Department of Financial Institutions 	 
	 

14

 

STATE OF CALIFORNIA

DEPARTMENT OF FINANCIAL INSTITUTIONS

	 	 	 	 	 

	In the Matter of

	)	 	 	 
	 

	)	 	 	 
	HANMI BANK

	)	 	 	WAIVER AND CONSENT
	 

	)	 	 	 
	 

	)	 	 	 
	 

	 	 	 	 

Hanmi Bank (Bank) consents to the issuance of an order under Financial Code
Section 1913 substantially in the form attached, marked as “Exhibit A,” (Order).

In addition, in connection with the issuance of the Order, Bank waives (i) the issuance of
an order under Financial Code Section 1912, (ii) notice and a hearing, and (iii) findings of
fact and ultimate findings.

Dated:
10–28–2009

	 	 	 	 	 	 	 

	 

	 	 	 	HANMI BANK	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ JOSEPH K. RHO
 

(Signature)
	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	JOSEPH K. RHO	 	 
	 

	 	 	 	CHAIRMAN OF THE BOARD
 

(Print Name and Title)
	 	 

 

 

STATE OF CALIFORNIA

DEPARTMENT OF FINANCIAL INSTITUTIONS

	 	 	 	 	 

	In the Matter of

	)	 	 	 
	 

	)	 	 	 
	 

	)	 	 	 
	HANMI BANK

	)	 	 	FINAL ORDER
	 

	)	 	 	(Financial Code Section 1913)
	 

	)	 	 	 
	 

	)	 	 	 
	 

	 	 	 	 

FINAL ORDER

Pursuant to Section 1913 of the Financial Code, the Commissioner of Financial Institutions
(Commissioner) hereby orders:

	I.	 	Hanmi Bank (Bank) shall discontinue its unsafe and injurious practices, as follows:

	 	1.	 	Within 60 days of the effective date of this Order, the board of
directors of the Bank shall submit to the Department of Financial Institutions
(Department) a written plan to strengthen board oversight of the management and
operations of the Bank. The plan shall, at a minimum, address, consider, and include:

	 	(a)	 	The actions that the board of directors will take to
improve the Bank’s condition and maintain effective control over, and
supervision of, the Bank’s major operations and activities, including but not
limited to, credit risk management, credit administration,

EXHIBIT A

 

 

	 	 	 	processes to mitigate risks associated with credit concentrations, earnings,
and liquidity;
	 
	 	(b)	 	The responsibility of the board of directors to monitor management’s
adherence to approved policies and procedures, and applicable laws and regulations;
and
	 
	 	(c)	 	A description of the information and reports that will be regularly reviewed
by the board of directors in its oversight of the operations and management of the
Bank, including information on the Bank’s adversely classified assets, allowance for
loan and lease losses, capital, earnings, and liquidity.

	 	2.	 	Within 60 days of the effective date of this Order, the Bank shall submit to the
Department an acceptable written plan to strengthen credit risk management practices. The plan
shall, at a minimum, address, consider, and include:

	 	(a)	 	Procedures to periodically review and revise risk exposure limits to address
changes in market conditions;
	 
	 	(b)	 	Strategies to minimize credit losses and reduce the level of problem assets;
	 
	 	(c)	 	Enhanced stress testing of loan and portfolio segments; and
	 
	 	(d)	 	Procedures to identify, limit, and manage concentrations of credit that are
consistent with the Interagency Guidance on Concentrations in Commercial Real Estate
Lending, Sound Risk Management Practices, dated December 12, 2006 (SR 07-1).

2

 

	 	3.	 	Within 60 days of the effective date of this Order, the Bank shall submit to the
Department acceptable revised written credit administration policies and procedures that
shall, at a minimum, address, consider, and include:

	 	(a)	 	For loans that are modified, analyses of borrowers’ current financial
condition and guarantors’ cash flow and repayment sources;
	 
	 	(b)	 	The appropriate use of interest reserves; and
	 
	 	(c)	 	Enhancements to the internal loan grading system to timely and accurately
identify individual problem credits.

	 	4.	 	(a)	The Bank shall not, directly or indirectly, extend or renew any credit
to or for the benefit of any borrower, including any related interest of the borrower, who
is obligated to the Bank in any manner on any extension of credit or portion thereof that
has been charged off by the Bank or classified, in whole or in part, “loss” in the Report
of Examination of the Bank conducted by the Federal Reserve Bank of San Francisco and the
Department that commenced on April 13, 2009 (the “Report of Examination”) or in any
subsequent report of examination, as long as such credit remains uncollected.

	 	(b)	 	The Bank shall not, directly or indirectly, extend or renew any credit to or for the benefit
of any borrower, including any related interest of the borrower, whose extension of credit
has been classified “doubtful” or “substandard” in the Report of Examination or in any
subsequent report of examination, without the prior approval of the Bank’s board of
directors or the Bank’s loan committee. The board

3

 

	 	 	 	of directors or loan committee shall document in writing the reasons for the
extension of credit or renewal, specifically certifying that: (i) the extension of
credit is necessary to protect the Bank’s interest in the ultimate collection of the
credit already granted or (ii) the extension of credit is in full compliance with
the Bank’s written loan policy, is adequately secured, and a thorough credit
analysis has been performed indicating that the extension or renewal is reasonable
and justified, all necessary loan documentation has been properly and accurately
prepared and filed, the extension of credit will not impair the Bank’s interest in
obtaining repayment of the already outstanding credit, and the board of directors or
loan committee reasonably believes that the extension of credit or renewal will be
repaid according to its terms. The written certification shall be made a part of the
minutes of the board of directors meetings, and a copy of the signed certification,
together with the credit analysis and related information that was used in the
determination, shall be retained by the Bank in the borrower’s credit file for
subsequent supervisory review. For purposes of this Order, the term “related
interest” is defined as set forth in Section 215.2(n) of Regulation O of the Board
of Governors of the Federal Reserve System (Board of Governors) (12 C.F.R. §
215.2(n)).

	 	5.	 	(a)	Within 60 days of the effective date of this Order, the Bank shall submit to
the Department an acceptable written plan designed to

4

 

	 	 	 	improve the Bank’s position through repayment, amortization, liquidation, additional
collateral, or other means on each loan or other asset in excess of $3 million, including
other real estate owned (OREO), that (i) is past due as to principal or interest more than
90 days as of the date of this Order; (ii) is on the Bank’s problem loan list; or (iii) was
adversely classified in the Report of Examination. In developing the plan for each loan,
the Bank shall, at a minimum, review, analyze, and document the financial position of the
borrower, including source of repayment, repayment ability, and alternative repayment
sources, as well as the value and accessibility of any pledged or assigned collateral, and
any possible actions to improve the Bank’s collateral position.

	 	(b)	 	Within 30 days of the date that any additional loan or other asset in
excess of $3 million, including OREO, becomes past due as to principal or interest for
more than 90 days, is on the Bank’s problem loan list, or is adversely classified in any
subsequent report of examination of the Bank, the Bank shall submit to the Department an
acceptable written plan to improve the Bank’s position on such loan or asset.

	 	(c)	 	Within 30 days after the end of each calendar quarter thereafter, the Bank shall submit a
written progress report to the Department to update each asset improvement plan, which shall
include, at a minimum, the carrying value of the loan or other asset and changes

5

 

	 	 	 	in the nature and value of supporting collateral, along with a copy of
the Bank’s current problem loan list, a list of all loan renewals and extensions
without full collection of interest in the last quarter, and past
due/non-accrual report. The board of directors shall review the progress reports
before submission to the Department and shall document the review in the minutes
of the board of directors’ meetings.

	 	6.	 	(a)	Within 10 days after the effective date of this Order, the Bank
shall eliminate from its books, by charge-off or collection, all assets or portions of
assets classified “loss” in the Report of Examination that have not been previously
collected in full or charged off. Thereafter the Bank shall, within 30 days from the
receipt of any federal or state report of examination, charge off all assets classified
“loss” unless otherwise approved in writing by the Department.

	 	(b)	 	Within 60 days
after the effective date of this Order, the Bank shall review and revise its allowance
for loan and lease losses (ALLL) methodology consistent with relevant supervisory
guidance, including the Interagency Policy Statements on the Allowance for Loan and Lease
Losses, dated July 2, 2001 (SR 01-17 (Sup)) and December 13, 2006 (SR 06-17), and the
findings and recommendations regarding the ALLL set forth in the Report of Examination,
and submit a description of the revised methodology to the Department. The revised ALLL
methodology shall be designed

6

 

	 	 	 	to maintain an adequate ALLL and shall address, consider, and include, at a minimum, the
reliability of the Bank’s loan grading system, the volume of criticized loans,
concentrations of credit, the current level of past due and nonperforming loans, past loan
loss experience, evaluation of probable losses in the Bank’s loan portfolio, including
adversely classified loans, and the impact of market conditions on loan and collateral
valuations and collectibility.
	 
	 	(c)	 	Within 60 days of the effective date of this Order, the Bank shall submit to the
Department an acceptable written program for the maintenance of an adequate ALLL. The program
shall include policies and procedures to ensure adherence to the revised ALLL methodology and
provide for periodic reviews and updates to the ALLL methodology, as appropriate. The program
shall also provide for a review of the ALLL by the board of directors on at least a quarterly
calendar basis. Any deficiency found in the ALLL shall be remedied in the quarter it is
discovered, prior to the filing of the Consolidated Reports of Condition and Income, by
additional provisions. The board of directors shall maintain written documentation of its
review, including the factors considered and conclusions reached by the Bank in determining
the adequacy of the ALLL. During the term of this Order, the Bank shall submit to the
Department, within 30 days after the end of each calendar quarter, a written report regarding
the board of directors’ quarterly review of the

7

 

	 	 	 	ALLL and a description of any changes to the methodology used in determining the
amount of ALLL for that quarter.

	 	7.	 	(a)	By December 31, 2009, the Bank shall have and thereafter
continue to maintain a ratio of tangible shareholder’s equity to total tangible
assets of not less than 7.0%. Such requirement shall be in addition to a fully
funded ALLL, the adequacy of which shall be satisfactory to the Commissioner as
determined at subsequent examinations and/or visitations.

	 	(b)	 	By July 31, 2010, the Bank shall increase its contributed equity capital by
not less than an additional $100 million, and shall thereafter maintain a ratio of
tangible shareholder’s equity to total tangible assets of not less than 9.0%. Such
requirement shall be in addition to a fully funded ALLL, the adequacy of which shall
be satisfactory to the Commissioner as determined at subsequent examinations and/or
visitations.
	 
	 	(c)	 	By December 31, 2010, and thereafter during the life of this Order, the Bank
shall maintain a ratio of tangible shareholder’s equity to total tangible assets of
not less than 9.5%. Such requirement shall be in addition to a fully funded ALLL, the
adequacy of which shall be satisfactory to the Commissioner as determined at
subsequent examinations and/or visitations.

	 	8.	 	By November 30, 2009, the Bank shall develop, adopt, and implement a comprehensive capital
augmentation and maintenance plan (“Capital

8

 

	 	 	 	Plan”) acceptable to the Commissioner. Such Capital Plan shall identify the sources and
timing of additional capital and shall, at a minimum, provide a plan for compliance with
Subparagraphs 7(a) through 7(d) of this Order. Such Capital Plan shall include provisions
for monitoring, controlling, and addressing risks to the Bank’s capital, and shall also
discuss contingency plans for identifying and raising additional capital in the future if
and when it should become necessary. Such Capital Plan shall be in a form and shall be
implemented in a manner acceptable to the Commissioner.
	 
	 	9.	 	The Bank shall notify the Department, in writing, no more than 30 days after the end of any
quarter in which any of the Bank’s capital ratios (total risk-based, Tier 1, or leverage) fall
below the approved Capital Plan’s minimum ratios. Together with the notification, the Bank
shall submit an acceptable written plan that details the steps the Bank will take to increase
the Bank’s capital ratios to or above the approved Capital Plan’s minimums.

	 	10.	 	(a)	Within 60 days of the effective date of this Order, the Bank shall submit to the Department a
strategic plan to improve the Bank’s earnings, and a
budget for 2010. The written plan and budget shall include, but not be limited to:

	 	(i)	 	Identification of the major areas where, and means by which,
the board of directors will seek to improve the Bank’s
operating performance;

9

 

	 	(ii)	 	A realistic and comprehensive budget for calendar year 2010,
including income statement and balance sheet projections; and
	 
	 	(iii)	 	A description of the operating assumptions that form the basis for, and
adequately support, major projected income, expense, and balance
sheet components.

	 	(b)	 	A strategic plan and budget for each calendar year subsequent to
2010 shall be submitted to the Department at least 30 days prior to
the beginning of that calendar year.

	 	11.	 	Within 60 days of the effective date of this Order, the Bank shall submit to the Department
an acceptable written plan designed to improve management of the Bank’s liquidity position and
funds management practices that includes, but is not limited to, measures to reduce reliance
on short-term wholesale funding, including brokered deposits.
	 
	 	12.	 	Within 60 days of the effective date of this Order, the Bank shall submit to the Department
an acceptable revised written contingency funding plan that, at a minimum, identifies
available sources of liquidity and includes adverse scenario planning.

	 	13.	 	(a)	The Bank shall not declare or pay any dividends, or make any other
distribution to its shareholder, without the prior written approval of the
Department.

	 	(b)	 	All requests for prior approval shall be received at least 30 days prior
to the proposed dividend declaration date. All requests shall

10

 

	 	 	 	contain, at a minimum, current and projected information on the Bank’s capital,
asset quality, earnings and ALLL needs.

	 	14.	 	(a)	Within 60 days from the date of this Order, and during the life of this Order,
the Bank’s board of directors shall have and retain management
acceptable to the Commissioner.
Such management shall include a Chief Executive Officer, a Chief Financial Officer, and a
Chief Credit Officer (collectively referred to as “Senior Executive Officers”) qualified to
restore the Bank to satisfactory condition.

	 	(b)	 	During the life of this Order, the Bank shall have and retain members of the
Bank’s board of directors acceptable to the Commissioner. Such members of the Bank’s
board of directors shall possess the skills and abilities to satisfactorily perform
the duties of a director of the Bank, to properly oversee and provide appropriate
guidance to the management of the Bank, and shall be qualified to restore the Bank to
satisfactory condition. Without limiting the generality of the foregoing, the
Commissioner reserves the right to determine whether Bank’s current senior officers
and the current members of Bank’s board of directors will be considered to be
qualified for purposes of this Order.

	 	(c)	 	During the life of this Order, the Bank’s board of directors shall notify the
Commissioner in writing when it proposes to add any individual to the Bank’s board of
directors or employ any individual

11

 

	 	 	 	as a Senior Executive Officer. The notification must be received at least 30 days
before such addition or employment is intended to become effective and should
include a detailed description of the background and experience of the individual
or individuals to be added or employed. The Bank may not add any individual to its
board of directors or employ any individual as a Senior Executive Officer unless
and until the Commissioner has issued a notice of non-disapproval in writing.

	 	15.	 	The Bank shall not open, relocate or discontinue any branch office or place of business/loan
production office without the prior written consent of the Commissioner.

	 	16.	 	(a)	Within 10 days of the effective date of this Order, the board of
directors of the Bank shall appoint a committee (the “Compliance Committee”) to
monitor and coordinate the Bank’s compliance with the provisions of this Order. The
Compliance Committee shall include a majority of outside directors who are not
executive officers or principal shareholders of the Bank or Hanmi Financial
Corporation, as defined in Sections 215.2(e)(1) and 215.2(m)(1) of Regulation O of
the Board of Governors (12 C.F.R. §§ 215.2(e)(1) and 215.2(m)(1)). At a minimum,
the Compliance Committee shall meet at least monthly, keep detailed minutes of each
meeting, and report its findings to the board of directors of the Bank.

12

 

	 	(b)	 	Within 30 days after the end of each calendar quarter following the
effective date of this Order, the Bank shall submit to the Department written
progress reports detailing the form and manner of all actions taken to secure
compliance with this Order and the results thereof.

	 	17.	 	(a)	The Bank shall submit written plans, policies, procedures, and a
program that are acceptable to the Department within the applicable time periods
set forth in Paragraphs 2, 3, 5, 6(c), 7, 8, 10, and 11 of this Order.

	 	(b)	 	Within 10 days of approval by the Department, the Bank shall adopt the
approved plans, policies, procedures, and program. Upon adoption, the Bank shall
promptly implement the approved plans, policies, procedures, and program, and
thereafter fully comply with them.

	 	(c)	 	During the term of this Order, the approved plans, policies,
procedures, and program shall not be amended or rescinded without the prior
written approval of the Department.

	 	18.	 	If the Department determines that the Bank has violated any substantive provision of this
Order, the Bank shall, for the purposes of the California Financial Code, be deemed to be
conducting its business in an unsafe or unauthorized manner and may subject the Bank to
further regulatory enforcement action by the Department.

13

 

	II.	 	This Order is effective immediately and shall remain effective and enforceable except to the extent, and until
such time as, the Commissioner shall amend, supplement, suspend or terminate this Order.

Dated:                     , 2009.

	 	 	 	 	 

	 

	 	/s/ William S. Haraf 

William S. Haraf
	 	 
	 

	 	Commissioner	 	 
	 	 	California Department of Financial Institutions

14

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