Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment
of Certain Officers; Compensatory Arrangements of Certain Officers.
On April 27, 2017, Hanmi Financial Corporation and its wholly owned subsidiary, Hanmi
Bank (collectively, the “Company”), entered into a new employment agreement with C. G. Kum, the Company’s President
and Chief Executive Officer, effective as of April 27, 2017 (the “Employment Agreement”). The Employment Agreement
supersedes and replaces the employment agreement between the Company and Mr. Kum, dated as of May 24, 2013.
The Employment Agreement provides for a term that commences on April 27, 2017 and expires
on June 12, 2020 (unless earlier terminated by either party), subject to automatic renewal for successive one-year periods unless
either party provides written notice of non-renewal at least sixty days prior to the expiration of the then-current term.
Pursuant to the Employment Agreement, Mr. Kum will continue to serve as the Company’s
President and Chief Executive Officer, in addition to serving as a member of the Company’s Board of Directors (the “Board”).
Mr. Kum’s current annual base salary of $610,000 is unchanged from the amount in
effect as of the Company’s 2016 fiscal year end. Beginning in 2017, Mr. Kum’s annual base salary will be reviewed at
least annually for increase, but may not be decreased, in the sole discretion of the Board. In addition, Mr. Kum will continue
to be eligible to receive an annual bonus of up to 100% of his annual base salary for each fiscal year of the Company, based upon
the attainment of performance goals determined by the Board in its sole discretion. Under the Employment Agreement, Mr. Kum is
entitled to participate in employee benefit plans for which he may be eligible and will receive certain perquisites, including
the use of a company car, payment of country club dues, Company-provided welfare benefits and personal life insurance, and twenty
days of paid vacation annually.
The Employment Agreement provides that if Mr. Kum’s employment is terminated either
by the Company without “cause” or by him for “good reason,” in either case, other than within eighteen
months following a “change in control” (each as defined in the Employment Agreement), and subject to Mr. Kum’s
execution and non-revocation of a general release of claims, Mr. Kum will be entitled to receive the following severance payments
and benefits: (i) continued payment of his then-current annual base salary for twelve months following the date of termination,
(ii) a lump-sum payment of an amount equal to the pro-rated portion of his prior year’s annual bonus based on the number
of days worked during the year of termination, (iii) accelerated vesting of any then-unvested time-based equity awards held by
Mr. Kum with respect to the portion that would have vested if Mr. Kum’s employment had continued for one year following the
date of termination, and (iv) continued health insurance benefits at the Company’s expense under COBRA for up to 18 months,
or a monthly cash payment in lieu thereof.
In addition, the Employment Agreement provides that if, within eighteen months following
a change in control, the Executive’s employment with the Company is terminated either by the Company without cause or by
him for good reason, in either case, and subject to Mr. Kum’s execution and non-revocation of a general release of claims,
Mr. Kum will be entitled to receive the following severance payments and benefits: (i) a lump sum payment of an amount equal to
two and one-half times the sum of his then-current annual base salary and his then-maximum annual bonus, (ii) fully accelerated
vesting of any then-unvested time-based equity awards held by Mr. Kum, and (iii) continued health insurance benefits at the Company’s
expense under COBRA for up to 18 months, or a monthly cash payment in lieu thereof.
Pursuant to the Employment Agreement, if Mr. Kum’s employment terminates due to
his death or disability, then he or his estate, as applicable, will be entitled to receive a lump-sum payment of an amount equal
to the pro-rated portion of his prior year’s annual bonus based on the number of days worked during the year of termination
and accelerated vesting of any then-unvested time-based equity awards held by Mr. Kum with respect to the portion that would have
vested if Mr. Kum’s employment had continued for one year following the date of termination.
Mr. Kum remains subject to the confidentiality, non-solicitation and other covenants
included in his restrictive covenant agreements with the Company and the non-disparagement covenant set forth in the Employment
Agreement. In addition, if any payments or benefits provided to Mr. Kum in connection with a change in control are subject to excise
taxes as a result of the application of Sections 280G and 4999 of the Internal Revenue Code, such payments and benefits will be
reduced so that no excise tax is payable, but only if this reduction results in a more favorable after-tax position for him.
The above summary of the terms of Mr. Kum’s employment agreement is qualified in
its entirety by reference to Mr. Kum’s employment agreement, which is attached to this Report as Exhibit 10.1 and incorporated
in this Item 5.02 by reference.