UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant
þ
Filed by a Party other than the Registrant
o
Check the appropriate box:
þ
|
|
Preliminary Proxy Statement
|
o
|
|
Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2)
)
|
o
|
|
Definitive Proxy Statement
|
o
|
|
Definitive Additional Materials
|
o
|
|
Soliciting Material Pursuant to §240.14a-12
|
HANMI FINANCIAL CORPORATION
(Name of Registrant as Specified In Its Charter)
None
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ
|
|
No fee required.
|
o
|
|
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
|
|
(1)
|
|
Title of each class of securities to which transaction applies:
|
|
|
|
|
|
|
|
|
|
|
|
(2)
|
|
Aggregate number of securities to which transaction applies:
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
|
Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was
determined):
|
|
|
|
|
|
|
|
|
|
|
|
(4)
|
|
Proposed maximum aggregate value of transaction:
|
|
|
|
|
|
|
|
|
|
|
|
(5)
|
|
Total fee paid:
|
|
|
|
|
|
|
|
|
|
o
|
|
Fee paid previously with preliminary materials.
|
|
o
|
|
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of its
filing.
|
|
(1)
|
|
Amount Previously Paid:
|
|
|
|
|
|
|
|
|
|
|
|
(2)
|
|
Form, Schedule or Registration Statement No.:
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
|
Filing Party:
|
|
|
|
|
|
|
|
|
|
|
|
(4)
|
|
Date Filed:
|
|
|
|
|
|
|
|
|
|
June 18, 2010
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders of Hanmi Financial
Corporation to be held at the Wilshire Grand Hotel, located at 930 Wilshire Boulevard, Los Angeles,
California on Wednesday, July 28, 2010, at 10:30 a.m. The formal meeting notice and our proxy
statement for the meeting are attached.
We are writing to seek your approval of several important proposals at this years annual
meeting. In addition to the election of seven (7) directors and ratification of our independent
registered public accounting firm, we are asking you to approve an amendment to our Amended and
Restated Certificate of Incorporation to increase our authorized shares of common stock from 200
million shares to 500 million shares, and the issuance of up to 200 million shares of common stock
to Woori Finance Holdings Co. Ltd. (Woori).
On
May 25, 2010, we entered into a securities purchase agreement
with Woori pursuant to which Woori has agreed to purchase $210 million (175 million shares) of our
common stock at a purchase price of $1.20 per share. Woori has the option to purchase an
additional $30 million (25 million shares) of our common stock at $1.20 per share for an aggregate
investment not to exceed $240 million (200 million shares). We have also commenced a registered
rights and best efforts offering for our stockholders and the public to raise up to an additional
$120 million from the sale of common stock at a purchase price of $1.20 per share. These
transactions are intended to permit us to significantly increase Hanmi Banks capital ratios.
As previously disclosed and described in the attached proxy statement, on November 2, 2009,
the Board of Directors of Hanmi Bank consented to the issuance of a Final Order from the California
Department of Financial Institutions (the Order) and entered into a Written Agreement with the
Federal Reserve Bank of San Francisco (the Written Agreement). Under the Order, Hanmi Bank is
required to increase its capital and maintain certain regulatory capital ratios prior to certain
dates specified in the Order. Hanmi Bank is required to increase its contributed equity capital by
July 31, 2010 by not less than an additional $100 million. Hanmi Bank is also required to maintain
specified ratios of tangible stockholders equity to total tangible assets.
If we fail to obtain the approval of the amendment to our Amended and Restated Certificate of
Incorporation to increase our authorized shares of common stock from 200 million shares to 500
million shares, or approval of the issuance of up to 200 million shares of our common stock to
Woori, we will not be able to consummate the transactions with Woori and it is unlikely that we
will be able to satisfy the Order or continue as a going concern.
Our Board of Directors recommends that you vote FOR each of the proposals described in the
proxy statement.
We encourage you to carefully review the proxy statement and accompanying appendices, which
provide information regarding the matters to be voted on at the annual meeting.
Whether or not you plan to attend the annual meeting, it is important that your shares be
represented at the annual meeting. You may vote your common shares via a toll-free telephone
number or on the Internet or you may complete, date, sign and return the enclosed proxy card in the
enclosed postage-paid envelope. If you attend the meeting and prefer to vote in person, you may do
so.
|
|
|
|
|
|
Sincerely,
Joseph K. Rho
Chairman of our Board
|
|
|
|
|
|
|
|
|
|
|
|
TABLE OF CONTENTS
HANMI FINANCIAL CORPORATION
3660 Wilshire Boulevard, Penthouse Suite A
Los Angeles, California 90010
(213) 382-2200
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 28, 2010
TO OUR STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the 2010 annual meeting of stockholders of Hanmi Financial
Corporation (Hanmi Financial or we, us or our) will be held at the Wilshire Grand
Hotel, located at 930 Wilshire Boulevard, Los Angeles, California on Wednesday,
July 28, 2010 at 10:30 a.m., for the following purposes:
1.
|
|
To elect seven (7) directors to serve for terms expiring at
the 2011 annual meeting of stockholders, or until their
successors are elected and qualified;
|
|
2.
|
|
To approve an amendment to our Amended and Restated
Certificate of Incorporation to increase our authorized shares of common stock, $0.001 par value, from 200,000,000
shares to 500,000,000 shares;
|
|
3.
|
|
To approve, for purposes of Nasdaq Rule 5635, the
issuance of
up to 200,000,000 shares of Hanmi Financial common stock
to Woori Finance Holdings Co. Ltd.;
|
|
4.
|
|
To ratify the appointment of KPMG LLP as our independent
registered public accounting firm for the fiscal year
ending December 31, 2010;
|
|
5.
|
|
To approve the adjournment of the annual meeting, if
necessary or appropriate, to solicit additional proxies if
there are insufficient votes at the time of the annual
meeting to adopt Proposals 1 through 4; and
|
|
6.
|
|
To transact such other business as may properly come before
the annual meeting and at any adjournments or postponements
thereof.
|
Only stockholders of record at the close of business on June 14, 2010 are entitled to receive
notice of and to vote at the annual meeting and any adjournment or postponement thereof.
You are cordially invited to attend the annual meeting in person. Whether or not you plan to
attend in person, please vote by signing, dating, and returning the enclosed proxy card or by
telephone or internet. Any stockholder attending the annual meeting may vote in person even if he
or she previously returned a proxy.
|
|
|
|
|
|
By Order of our Board of Directors,
|
|
|
/s/ Joseph K. Rho
|
|
|
Joseph K. Rho
|
|
|
Chairman of our Board
|
|
|
Los Angeles, California
June 18, 2010
1
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 28, 2010
The accompanying proxy is solicited by the Board of Directors of Hanmi Financial Corporation
for use at our annual meeting of stockholders to be held on July 28, 2010 or at any adjournment or
postponement thereof.
At the annual meeting, our stockholders of record as of the close of business on June 14, 2010
will be asked to consider and vote upon several proposals, including proposals (i) to elect seven
(7) nominees to our Board of Directors, (ii) to amend our Amended and Restated Certificate of
Incorporation to increase our authorized shares of common stock from 200 million shares to 500
million shares, (iii) to approve the issuance of up to 200 million shares of common stock to Woori
Finance Holdings Co. Ltd., (iv) to ratify the appointment of KPMG LLP as our independent registered
public accounting firm for the year ending December 31, 2010 and (v) to adjourn the annual meeting,
if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the
time of the annual meeting to adopt each of the foregoing proposals.
We have entered into a Securities Purchase Agreement dated May 25, 2010 with Woori Finance
Holdings Co., Ltd. pursuant to which Woori has agreed to purchase $210 million (175 million shares)
of our common stock at a purchase price of $1.20 per share. Woori has the option to purchase an
additional $30 million (25 million shares) of our common stock at $1.20 per share for an aggregate
investment not to exceed $240 million (200 million shares). We have also commenced a registered
rights and best efforts offering for our stockholders and the public to raise up to an additional
$120 million from the sale of common stock at a purchase price of $1.20 per share.
After careful consideration and receipt of the recommendation of a special committee of our
Board of Directors made up of a majority of our independent directors, our Board of Directors has
unanimously approved the transactions contemplated by the securities purchase agreement with Woori.
Our Board of Directors and the special committee believe that the terms of the securities purchase
agreement are fair to, and in the best interest of, our company and our stockholders.
The approval of the amendment to our Amended and Restated Certificate of Incorporation and of
the issuance of our common stock to Woori are intended to permit us consummate the transactions
with Woori and engage in the registered stock offerings to significantly increase Hanmi Banks
capital ratios and to satisfy the requirements of an order and written agreement with state and
federal bank regulators. If we fail to obtain approval of those proposals , we will not be able to
consummate the transactions with Woori and it is unlikely that we will be able to satisfy our
regulatory requirements or continue as a going concern.
Our
Board of Directors recommends that you vote FOR each of the proposals above.
This proxy statement, the enclosed proxy card, and other enclosures are first being mailed to
stockholders on or about June 18, 2010.
Stockholders are urged to carefully review this proxy statement, including the accompanying
appendices, which discuss each of the proposals in more detail.
The date of this proxy statement is June 18, 2010.
2
INFORMATION ABOUT THE ANNUAL MEETING
Our Board of Directors is soliciting your proxy for use at the 2010 annual meeting of
stockholders to be held at the Wilshire Plaza Hotel, located at 3515 Wilshire Boulevard, Los
Angeles, California, on Wednesday July 28, 2010, at 10:30 a.m., and at any adjournments or
postponements thereof.
Questions and Answers about these Proxy Materials and the Annual Meeting:
Question:
|
|
Why am I receiving these materials?
|
|
|
|
You are receiving these materials because we are soliciting your vote at our annual meeting of stockholders.
In addition, to the election of directors and ratification of our independent registered public accounting
firm, we are asking you to approve two additional proposals that will permit us to significantly increase
Hanmi Banks capital ratios and satisfy the requirements of the Order and Written Agreement with our state
and federal bank regulators.
|
|
|
|
In order to obtain the requisite stockholder approvals of these matters, and to vote on the matters we would
otherwise be submitting to our stockholders at an annual meeting, we are calling the annual meeting of our
stockholders for July 28, 2010. Our Board of Directors is providing these proxy materials to you in connection with the
annual meeting. As a stockholder of record of our common stock, you are invited to attend the annual meeting,
and are entitled to and requested to vote on the proposals described in this document.
|
|
Question:
|
|
Who is entitled to vote and how many votes do I have?
|
|
|
|
All stockholders who were stockholders of record of our common stock at the close of business on June 14,
2010, and only those stockholders, will be entitled to vote at the annual meeting. You have one vote for each
share of our common stock you owned at the close of business on the record date.
|
|
Question:
|
|
How many shares are eligible to be voted?
|
|
|
|
As of June 14, 2010, [
] shares of our common stock were outstanding. Each outstanding share of our
common stock will entitle its holder to one vote on each matter to be voted on at the annual meeting.
|
|
Question:
|
|
What may I vote on at the annual meeting?
|
|
|
|
You may vote on the following matters:
|
|
|
|
A proposal to elect seven (7) nominees to our Board of Directors (Proposal 1);
|
|
|
|
A proposal to approve an amendment to our Certificate of Incorporation to
increase the number of authorized shares of our common stock to 500,000,000 (and,
correspondingly, to increase the total number of authorized shares of all classes of
stock from 210,000,000 to 510,000,000) (Proposal 2);
|
|
|
|
A proposal to approve for purposes of Nasdaq Listing Rule 5635 the issuance of
up to 200,000,000 shares of our common stock to Woori (Proposal 3);
|
|
|
|
A proposal to ratify the appointment of KPMG LLP as our independent registered
public accounting firm (Proposal 4);
|
|
|
|
A proposal to adjourn the annual meeting, if necessary or appropriate, to
solicit additional proxies if there are insufficient votes at the time of the annual
meeting to adopt Proposals 1 through 4 (Proposal 5); and
|
3
|
|
Such other matters as may properly come before the annual meeting or any
adjournment or postponement thereof.
|
|
|
|
In this document, we refer to Proposals 2 and 3 collectively as the Capital Raising
Stockholder Proposals. Both Proposal 2 and Proposal 3 must be approved by our
stockholders for the transactions with Woori to be completed.
|
|
Question:
|
|
How does Our Board of Directors recommend that I vote on the proposals?
|
|
|
|
Our Board unanimously recommends that you vote
FOR (i) the proposal to elect our seven (7)
nominees to our Board of Directors, (ii) the proposal to approve an amendment to our
Certificate of Incorporation to increase the number of authorized shares of common stock
to 500,000,000 shares, (iii) the proposal to approve for purposes of Rule 5635 of the
Nasdaq Listing Rules the issuance of shares of up to 200,000,000 shares of common stock
to Woori Finance Holding Co., Ltd., (iv) the proposal to ratify KPMG LLP as our
independent registered public accounting firm for the year ended December 31, 2010 and
(v) the proposal to adjourn the annual meeting, if necessary or appropriate, to solicit
additional proxies if there are insufficient votes at the time of the annual meeting to
adopt the foregoing proposals.
|
|
Question:
|
|
What is the required quorum at the annual meeting?
|
|
|
|
The required quorum for the transaction of business at the annual meeting is a majority of the shares of our common
stock entitled to vote at the annual meeting. Shares voted on a matter are treated as being present for purposes of
establishing a quorum.
|
|
Question:
|
|
Why is Hanmi Financial seeking stockholder approval for the amendment to its Certificate of Incorporation to increase
the number of authorized shares of our common stock to 500,000,000?
|
|
|
|
Our Certificate of Incorporation currently authorizes the issuance of 200,000,000 shares of our common stock. As of
June 14, 2010, the record date, [
] shares of our common stock were issued and outstanding. As a condition to
closing the securities purchase agreement with Woori, and in order to issue the shares of common stock necessary to
complete the stock offerings in the aggregate, the number of shares of our common stock authorized for issuance must
be increased.
|
|
|
|
Under the securities purchase agreement, we have agreed to issue to Woori a minimum of 175,000,000 shares of common
stock and a maximum of 200,000,000 shares of common stock. In addition, we may sell up to 100,000,000 shares of
common stock in the registered rights and best efforts offering. We could issue up to 300,000,000 shares of our
common stock in the aggregate in the stock offerings. The proposed authorized number of 500,000,000 is greater than
the number of shares of our common stock that would be required to complete the stock offerings as currently
contemplated. The additional shares authorized for issuance will provide us with the flexibility to issue additional
shares from time to time, without stockholder approval, as our Board may determine, for future financings and capital
raise transactions, acquisitions, strategic business relationships, stock-based incentives to employees, directors
and consultants and for other purposes.
|
|
|
|
As of the date of this document, our Board has no agreement, arrangement or intention to issue any of the shares for
which approval is sought, other than (i) the issuance and sale of shares pursuant to the stock offerings, (ii)
warrants we may issue as compensation to our advisors in connection with the stock offerings and (iii) awards
issuable upon the exercise of outstanding options, restricted stock grants and other awards under our current equity
incentive plans.
|
|
|
|
Our Board does not intend to solicit further stockholder approval prior to the issuance of any additional shares of
common stock, except as may be required by applicable law, rules of the Nasdaq or other applicable stock exchange
requirements.
|
4
Question:
|
|
Why is Hanmi Financial seeking stockholder approval for the issuance of our common stock?
|
|
|
|
Because our common stock is listed on the Nasdaq Global Select Market, we are subject to Nasdaq rules and
regulations. Nasdaq Listing Rule 5635 requires stockholder approval prior to:
|
|
|
|
(i)the issuance of common stock, or securities convertible into or exercisable for
common stock, equal to 20% or more of the common stock or 20% or more of the voting
power outstanding before the issuance for less than the greater of book value or market
value of the stock or (ii) when the issuance of securities would result in a change in
control.
|
|
|
|
The proposed issuance of common stock to Woori falls under both of these rules because
the common stock to be issued to Woori will exceed 20% of both the voting power and
number of shares of our common stock outstanding before the issuance, and the negotiated
price per share of common stock will be below the greater of book value or market value
of our common stock. In addition, Woori will own a majority of our common stock if the
transactions contemplated by the securities purchase agreement with Woori are completed
(taking into account the stock offerings) which will result in a change in control for
Nasdaq purposes.
|
|
Question:
|
|
Must the stockholders approve both the Capital Raising Stockholder Proposals (Proposal 2 and Proposal 3) for the
transaction with Woori to proceed?
|
|
|
|
Yes. Approval of both of the Capital Raising Stockholder Proposals is a condition to closing in our securities
purchase agreement with Woori.
|
|
Question:
|
|
Why are you proposing a transaction with Woori?
|
|
|
|
We have been exploring a wide variety of strategic alternatives to enhance our capital ratios and satisfy the
regulatory orders to which we are subject. After careful consideration and receipt of the recommendation of a
special committee of our Board of Directors made up of a majority of our independent directors, our Board has
unanimously approved the transactions contemplated by the securities purchase agreement with Woori. Our Board of
Directors and the special committee believe that the terms of the securities purchase agreement are fair to, and in
the best interest of, our company and our stockholders. See
Background to Proposals 2 and 3
.
|
|
Question:
|
|
What happens if the Capital Raising Stockholder Proposals are approved?
|
|
|
|
If the Capital Raising Stockholder Proposals are approved by our stockholders, we will have satisfied one of the
conditions necessary to consummate the transactions contemplated by the securities purchase agreement with Woori.
However, receiving approval of the Capital Raising Stockholder Proposals does not mean we will complete the
transactions contemplated by the securities purchase agreement with Woori. There are many other conditions to
closing the securities purchase agreement with Woori, including obtaining necessary regulatory approvals. See
Description of the Securities Purchase Agreement with Woori Finance and the Stock Offerings
.
|
|
|
|
If the Capital Raising Stockholder Proposals are approved and the transactions contemplated by the securities
purchase agreement with Woori are completed, (i) Woori will become the majority owner of our outstanding shares of
common stock, (ii) Woori will have the right to designate five (5) of our seven (7) directors at closing and (iii)
there will be immediate and substantial dilution to the existing holders of common stock.
|
5
Question:
|
|
What happens if either of the Capital Raising Stockholder Proposals are not approved?
|
|
|
|
If the Capital Raising Stockholder Proposals are not approved by our stockholders, we will not be able to complete
the transactions contemplated by the securities purchase agreement with Woori and we may not be able to continue as a
going concern. Although we currently have enough authorized shares to complete the registered rights and best
efforts offering as presently structured (exclusive of the sale of shares to Woori), we cannot provide any assurance
regarding how many, if any, shares will be subscribed for in those offerings. In addition, even if those offerings
are fully subscribed for, we believe that we will also need to complete the contemplated transaction with Woori to
provide us with sufficient capital resources for us to continue as a going concern.
|
|
Question:
|
|
What vote is required to approve each the proposal at the annual meeting?
|
|
|
|
Directors are elected by a plurality of votes cast. The seven (7) nominees receiving
the most votes will be elected as our directors.
|
|
|
|
Approval of the proposal to amend our Certificate of Incorporation to increase the
number of authorized shares of common stock to 500,000,000 (and, correspondingly, to
increase the total number of authorized shares of all classes of stock from 210,000,000
to 510,000,000) requires approval of a majority of our outstanding shares of common
stock.
|
|
|
|
Approval of the proposal to authorize the issuance of shares of up to 200,000,000 shares
of common stock to Woori requires that the majority of shares represented and voting
(which shares voting affirmatively also constitute at least a majority of the required
quorum).
|
|
|
|
Approval of the proposal to ratify the selection of KPMG LLP as our independent
registered public accounting firm requires the approval of a majority of shares
represented and voting (which shares voting affirmatively also constitute at least a
majority of the required quorum).
|
|
|
|
Approval of the proposal to adjourn the annual meeting, if necessary or appropriate, to
solicit additional proxies requires the affirmative vote of the holders of a majority of
shares represented and voting, whether or not a quorum exists.
|
|
Question:
|
|
What is the effect of broker-nonvotes and abstentions.
|
|
|
|
Abstentions and broker non-votes will be counted for purposes of
determining a quorum. Unlike previous years, your broker,
however, will not be entitled to vote on the election of
Directors without your instruction. In addition, brokers will
not be entitled to vote on the proposal to issue shares to Woori
or to adjourn the meeting to solicit additional votes. Broker
non-votes will have no effect on those proposals.
|
|
|
|
Your broker will be authorized to vote your shares on the proposal to increase the
authorized shares of common stock and the ratification of our independent registered
public accounting firm even if it does not receive instructions from you, and
accordingly, broker non-votes will have no effect on those proposals. Abstentions will
have no effect on the election of directors, but will have the effect of a vote AGAINST
the proposal to increase the authorized shares of common stock, the proposal to approve
the issuance of common stock to Woori, the ratification of our independent registered
public accounting firm and the proposal to adjourn or postpone the annual meeting to
solicit additional proxies.
|
|
Question:
|
|
How can I vote my shares?
|
|
|
|
If you hold your common stock in your own name and not through a broker or another nominee, you may vote your shares of
common stock as follows, subject to compliance with the applicable cutoff
times and deadlines described below in the Vote by Telephone, Vote by Internet and Vote by Proxy paragraphs:
|
6
|
|
|
by using the toll-free telephone number
(1 (800) 652-8683), which is also listed on the proxy card;
|
|
|
|
|
by using the Internet website www.investorvote.com/HAFC,
which is also listed on the proxy card;
|
|
|
|
|
by signing, dating and mailing the proxy card in the enclosed postage-paid envelope, or
|
|
|
|
|
by attending the annual meeting and voting in person.
|
|
|
Whichever of these methods you select to transmit your instructions, the proxy holders will vote your common stock in
accordance with your instructions. If you give a proxy without specific voting instructions, your proxy will be voted by the proxy
holders in favor of our Boards nominees and FOR Proposals 2 through 5.
|
|
|
|
If any matters other than the proposals contained in this Proxy Statement are properly brought up at the annual meeting,
then the proxy holders, will have the authority to vote your shares on those matters as directed by our Board, or, if no direction
is given, in accordance with their discretion and judgment. Our Board of Directors currently does not know of any matters to be
raised at the annual meeting other than the proposals contained in this Proxy Statement.
|
|
|
|
Vote by Telephone.
If you hold your common stock in your own name and not through your broker or another nominee, you
can vote your shares of common stock by telephone by dialing the toll-free telephone number printed on your proxy card. Telephone
voting is available 24 hours a day until 11:59 p.m., California time, on July 27, 2010. Easy-to-follow voice prompts allow you to
vote your shares of common stock and confirm that your instructions have been properly recorded. If you vote by telephone, you do
not need to return your proxy card.
|
|
|
|
Vote by Internet
.
If you hold your common stock in your own name and not through your
broker or another nominee, you can choose to vote via the Internet. The website for
Internet voting is printed on your proxy card. Internet voting is available 24 hours a
day until 11:59 p.m., California time, on July 27, 2010. As with telephone voting, you
will be given the opportunity to confirm that your instructions have been properly
recorded. If you vote via the Internet, you do not need to return your proxy card.
|
|
|
|
Vote by Mail
.
You can vote by mail by signing, dating and returning the enclosed proxy
card in the enclosed postage-paid envelope. Proxy cards sent by mail must be received by
July 27, 2010.
|
|
|
|
The telephone and Internet voting procedures are designed to authenticate stockholders
identities, to allow stockholders to give their voting instructions and to confirm that
stockholders instructions have been recorded properly. Stockholders voting via the
Internet should understand that there may be costs associated with electronic access,
such as usage charges from Internet access providers and telephone companies, that must
be borne by the stockholder.
|
|
Question:
|
|
Can I change or revoke my vote after I return my proxy card?
|
|
|
|
You may revoke a proxy at any time before the vote is taken at
the annual meeting by filing with our Corporate Secretary a
properly executed proxy of a later date by mail, telephone or
Internet, or by attending the annual meeting and voting in
person. Any such filing should be made to the attention of
Judith Kim, Corporate Secretary, Hanmi Financial Corporation,
3660 Wilshire Boulevard, Penthouse Suite A, Los Angeles,
California 90010. Attendance at the annual meeting will not by
itself constitute revocation of a proxy.
|
7
Question:
|
|
How do I vote in person?
|
|
|
|
If you plan to attend the meeting and vote in person, we will give you a ballot form when you arrive.
However, if your shares are held in the name of your broker, bank or other nominee, you must bring a legal
proxy from your broker, bank or other nominee to vote the shares at the annual meeting.
|
|
Question:
|
|
Who should I call if I have questions or need assistance voting my shares?
|
Please call our proxy solicitor: D.F. King & Co. at (800) 829-6511. Banks and brokers should
call (212) 269-5550.
Question:
|
|
How will proxies be solicited?
|
|
|
|
In addition to soliciting Proxies by mail, our officers, directors, and
employees, without receiving any additional compensation, may solicit Proxies by
telephone, fax, in person, or by other means. Arrangements also will be made with
brokerage firms and other custodians, nominees, and fiduciaries to forward proxy
solicitation materials to the beneficial owners of our common stock held of record by
such persons, and we will reimburse such brokerage firms, custodians, nominees, and
fiduciaries for reasonable out-of-pocket expenses incurred by them in connection
therewith. We will pay all reasonable expenses related to the solicitation of Proxies.
|
|
|
|
We have engaged D.F. King & Co. to assist with the solicitation of Proxies. D.F. King &
Co. will be paid a retainer fee of $7,500 plus additional costs for solicitation
services they provide. We estimate that we will spend approximately $11,500 in the
aggregate for these services being provided by D.F. King & Co.
|
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE ANNUAL MEETING TO BE HELD ON JULY 28, 2010
This Proxy Statement, form of proxy and Annual Report on Form 10-K, as amended, for the 2010
annual meeting of stockholders are available on our website at
www.hanmi.com
by clicking on
Investor Relations, then Corporate Governance, and then 2010 Proxy Information.
8
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements in this document regarding future events, performance or results are
forward-looking statements within the meaning of the Private Securities Litigation Reform Act of
1995 (which we refer to as the PSLRA) and are made pursuant to the safe harbors of the PSLRA.
Such statements include, but are not limited to, statements relating to our business and financial
condition, pro forma financial information relating to the stock offerings, regulatory orders
against us, consequences associated with votes on the proposals described herein and the conditions
and ability to consummate the transactions with Woori or other investors in the stock offering.
In some cases, you can identify forward-looking statements by terminology such as may,
will, should, could, expects, plans, intends, anticipates, believes, estimates,
predicts, potential, or continue, or the negative of such terms and other comparable
terminology. Although we believe that the expectations reflected in the forward-looking statements
are reasonable, we cannot guarantee future results, levels of activity, performance or
achievements. Actual results could be quite different from those expressed or implied by the
forward-looking statements. Do not unduly rely on forward-looking statements; they give our
expectations about the future and are not guarantees. Forward-looking statements speak only as of
the date they are made and we do not undertake any obligation to update them to reflect changes
that occur after that date except as required by law.
Factors that may cause our actual results, levels of activity, performance or achievements to
differ from those expressed or implied by the forward-looking statement include:
|
|
|
our ability to continue as a going concern;
|
|
|
|
|
failure to complete the transactions contemplated by the securities purchase agreement with Woori;
|
|
|
|
|
failure to raise capital from the stock offerings or to raise enough capital from the stock offerings to
support our operations or meet our regulatory requirements;
|
|
|
|
|
with respect to our pro forma financial information, material differences in the amount of capital we
raise from the stock offerings compared to the amounts reflected in such pro forma financial
information;
|
|
|
|
|
failure to maintain adequate levels of capital to support our operations;
|
|
|
|
|
a significant number of customers failing to perform under their loans and other terms of credit
agreements;
|
|
|
|
|
the effect of regulatory orders we have entered into and potential future supervisory actions against us
or Hanmi Bank;
|
|
|
|
|
fluctuations in interest rates and a decline in the level of our interest rate spread;
|
|
|
|
|
failure to attract or retain deposits;
|
|
|
|
|
sources of liquidity available to us and to Hanmi Bank becoming limited or our potential inability to
access sufficient sources of liquidity when needed or the requirement that we obtain government waivers
to do so;
|
|
|
|
|
adverse changes in domestic or global financial markets, economic conditions or business conditions;
|
|
|
|
|
regulatory restrictions on Hanmi Banks ability to pay dividends to us and on our ability to make
payments on our obligations;
|
|
|
|
|
significant reliance on loans secured by real estate and the associated vulnerability to downturns in
the local real estate market, natural disasters and other variables impacting the value of real estate;
|
|
|
|
|
failure to attract or retain our key employees;
|
|
|
|
|
failure to maintain our status as a financial holding company;
|
|
|
|
|
adequacy of our allowance for loan losses;
|
|
|
|
|
credit quality and the effect of credit quality on our provision for credit losses and allowance for
loan losses;
|
|
|
|
|
volatility and disruption in financial, credit and securities markets, and the price of our common stock;
|
|
|
|
|
deterioration in financial markets that may result in impairment charges relating to our securities
portfolio;
|
|
|
|
|
competition in our primary market areas;
|
|
|
|
|
demographic changes in our primary market areas;
|
|
|
|
|
global hostilities, acts of war or terrorism, including but not limited to, conflict between North and
South Korea;
|
|
|
|
|
significant government regulations, legislation and potential changes thereto; and
|
|
|
|
|
other risks we describe from time to time in the reports and statements we file with the SEC.
|
For additional information concerning risks we face, see
Item 1A. Risk Factors, Item 7.
Managements Discussion and Analysis of Financial Condition and Results of Operations Interest
Rate Risk Management
and
Capital Resources and Liquidity.
identified in our Annual Report on
Form 10-K for the year ended December
31, 2009, and the information set forth in our Quarterly Report on Form 10-Q for the quarter
ended March 31, 2010, including under the headings Forward Looking Statements and
Item 2,
Managements Discussion and Analysis of Financial Condition and Results of Operations.
See Where
you Can Find More Information.
9
PROPOSAL NO. 1 ELECTION OF DIRECTORS
Board of Directors and Nominees
Our Certificate of Incorporation and Bylaws provide for a Board of Directors consisting of no
less than five (5) and no more than eleven (11) directors, the exact number within this range to be
determined by our Board of Directors, with the current number fixed at seven (7). Subject to their
earlier resignation or retirement, and except as described below,
directors elected at the 2010 annual
meeting will serve until the 2011 annual meeting of stockholders and until their successors are
elected and qualified.
Our Board of Directors has nominated I Joon Ahn, John A. Hall, Paul Seon-Hong Kim, Joon Hyung
Lee, Joseph K. Rho, William Stolte and Jay S. Yoo for election to our Board of Directors. The
nominees receiving the most votes will be elected. The nominees have indicated their willingness
to serve. Each proxy will be voted for the election of such nominees unless instructions are given
on the proxy to withhold authority to vote for them. In the event a nominee is unable to serve,
your proxy will be voted for an alternative nominee as determined by our Board of Directors.
None of the directors, nominees for directors, or executive officers was selected pursuant to
any arrangement or understanding, other than with the directors and executive officers of Hanmi
Financial acting within their capacity as such. There are no family relationships among our
directors or executive officers. As of the date hereof, no directorships are held (or have been
held within the last five years) by any director with a company that has a class of securities
registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section
15(d) of the Exchange Act, or any company registered as an investment company under the Investment
Company Act of 1940.
The following tables set forth information with respect to our nominees for director and our
executive officers. In addition, as further described under Proposal 3, if the transactions with
Woori are consummated, Woori will have the ability to nominate five (5) of our seven (7) directors
at the closing of that transaction and up to five (5) of our existing directors designated by us
may resign.
In addition to each directors professional experience and specific qualifications outlined in
the table below, we believe each member of our Board of Directors has other key attributes that are
important to an effective Board: integrity and demonstrated high ethical standards; sound judgment;
analytical skills; the ability to engage management and each other in a constructive and
collaborative fashion; diversity of origin, background, experience, and thought; and the commitment
to devote significant time and energy to service on our Board and its Committees. All our director
nominees have previously been elected by our stockholders except for Messrs. Hall, Kim, Stolte and
Yoo. Mr. Hall was identified to us by an attorney and former general counsel of the California
Department of Financial Institutions. Mr. Kim was identified to us by one of our existing
directors. Mr. Stolte was identified to us by a federal bank regulator. Mr. Yoo was identified to
us by an executive search firm specializing in chief executive, board of directors and senior level
management assignments, and he joined our Board of Directors upon becoming our CEO.
The following tables set forth information with respect to our directors and executive
officers as of the record date as well as information concerning the reasons for selecting our
director nominees to our Board:
|
|
|
|
|
|
|
|
|
|
|
Name and Position
|
|
Age
|
|
Principal Occupation for Past Five Years and 10 Year Legal Proceedings
|
I Joon Ahn,
Director
|
|
|
70
|
|
|
Principal Occupation:
|
|
Retired; President, Aces Fashion
Company, a garment manufacturing
company (1973 to 2001); Founder of
Hanmi Bank and Hanmi Financial;
former Chairman of our Boards,
Hanmi Financial and Hanmi Bank;
former member of the Korean
American Chamber of Commerce and
the Southern California
International Trade
Federation. Our Board
selected Mr. Ahn as a nominee
because our Board believes that Mr.
Ahn plays a critical role in
connection to the Korean-American
community. Mr. Ahn has founded and
served on a number of important
Korean-American organizations
inclusive of the Korean-American
Garment Association, the Southern
California Korean Federation, the
Korean-American Chamber of Commerce
and the Southern California
International Trade Federation.
Additionally, Mr. Ahn is a founding
member of Hanmi Bank.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director Since:
|
|
1982
|
|
10
|
|
|
|
|
|
|
|
|
|
|
Name and Position
|
|
Age
|
|
Principal Occupation for Past Five Years and 10 Year Legal Proceedings
|
John A. Hall,
Director
|
|
|
60
|
|
|
Principal Occupation:
|
|
Retired; National Bank Examiner,
Office of the Comptroller of the
Currency (OCC), a division of the
U.S. Treasury Department (1974 to
2005). Our Board selected Mr. Hall
as a nominee because our Board
believes that Mr. Halls experience
as a bank regulatory examiner, both
in credit and operations, is
valuable to Hanmi Bank. In his
role with the OCC, he served as an
examiner in charge of various
larger banking institutions and
most recently served in the credit
position for the Wells Fargo Large
Bank Team. Our Board believes that
Mr. Halls experience as a bank
regulatory examiner has provided
him with financial expertise that
is valuable in his role as Audit
Committee Chairman and assisting
Hanmi Bank in complying with
applicable regulations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director Since:
|
|
February 2009
|
|
|
|
|
|
|
|
|
|
|
|
Paul Seon-Hong Kim,
Director
|
|
|
65
|
|
|
Principal Occupation:
|
|
Retired; Chief Executive Officer,
Uniti Financial Corporation and
Uniti Bank (2007 to 2008);
President and Chief Executive
Officer, Center Financial
Corporation and Center Bank (1998
to 2007); served in various
capacities, including Chief
Marketing Officer, Chief Credit
Officer, and Chief Financial
Officer, Hanmi Financial and Hanmi
Bank (1986 to 1998). Our
Board selected Mr. Kim as a nominee
because our Board believes that Mr.
Kims many years of experience and
long distinguished background in
the banking industry gives him a
valuable understanding of the
Korean-American banking community
that Hanmi Bank serves.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director Since:
|
|
February 2009
|
|
|
|
|
|
|
|
|
|
|
|
Joon Hyung Lee,
Director
|
|
|
66
|
|
|
Principal Occupation:
|
|
President, Root-3 Corporation, a
property management, real estate
investment, and development company
(1983 to present); former Chairman
of our Boards, Hanmi Financial and
Hanmi Bank; former President of
Byucksan America, Inc.; former
President of Uniko Trading Co.;
former Vice President of Nait
Corporation; former Assistant
Professor of Business
Administration at Sung Kyun Kwan
University in Korea; Master of
Business Administration from New
York University. Our Board
selected Mr. Lee as a nominee
because our Board believes that Mr.
Lees knowledge and connections to
the real estate development and
investment markets are important
for Hanmi Bank and make him a
valuable asset to Hanmi Bank,
particularly in the area of
asset/liability management. In
addition to his property management
experience, Mr. Lee has a general
contractors license, a real estate
brokers license as well as
international trading experience.
Mr. Lees longevity with Hanmi Bank
also assists Hanmi Bank in setting
its strategic direction.
|
|
|
|
|
|
|
|
|
Director Since:
|
|
1989
|
|
|
|
|
|
|
|
|
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
Name and Position
|
|
Age
|
|
Principal Occupation for Past Five Years and 10 Year Legal Proceedings
|
William Stolte,
Director
|
|
|
63
|
|
|
Principal Occupation:
|
|
Retired; Senior Executive Vice
President, Union Bank of California
in San Francisco (2000 to 2008);
Director, Deloitte & Touche, LLP
(1995 to 2000); Partner, The Secura
Group (1992 to 1995); served in
various capacities, including
Deputy Comptroller of the Currency,
Chief National Bank Examiner,
Deputy Director Multinational &
Regional Bank Supervision, National
Bank Examiner, Office of the
Comptroller of the Currency
(1968-1992) In selecting
Mr. Stolte as a nominee for
election, our Board considered Mr.
Stoltes banking experience both as
an examiner as well as a consultant
to the banking industry and his
ability to assist our Board in
addressing the challenges
confronting Hanmi Bank.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director Since:
|
|
April 2009
|
|
|
|
|
|
|
|
|
|
|
|
Joseph K. Rho,
Chairman of our
Board
|
|
|
69
|
|
|
Principal Occupation:
|
|
Principal, J & S Investment (2002
to present); former Partner, Korea
Plaza LP (1987 to 2002); former and
current Chairman of our Boards,
Hanmi Financial and Hanmi Bank;
former Chief of Parish for St.
Agnes Cathedral; former Board
Member of Finance Counsel of the
Los Angeles Archdiocese; former
Trustee of John of God Hospital;
and former President and Owner of
Joseph K. Rho Insurance Agency.
In selecting Mr. Rho as
a nominee for election and
appointment as Chairman of Hanmi
Financial and Hanmi Bank, our Board
considered, in particular the
importance of the Chairmans role
to ensure the effective functioning
of our Board of Directors. Mr.
Rho, who has been a director since
1984, had been instrumental this
past year in the transition that
has taken place in Board
composition with the addition of
the new professional directors.
Our Board believes that Mr. Rho is
an effective coordinator of
multiple Hanmi Bank constituencies,
including shareholders, customers,
officers, employees, community and
regulators. In appointing Mr. Rho
as Chairman, our Board considered
that Mr. Rho is the largest
individual shareholder and as such,
can speak to building long-term
shareholder value and provides
valuable insight into the concerns
of shareholders and investors.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director Since:
|
|
1984
|
|
|
|
|
|
|
|
|
|
|
|
|
Jay S. Yoo,
Director
|
|
|
63
|
|
|
Principal Occupation:
|
|
President and Chief Executive
Officer, Hanmi Financial (June 2008
to present); President and Chief
Executive Officer, Woori America
Bank, a subsidiary of Woori Bank
(2001 to 2007); former Chairman of
the Board of Woori America
Bank. Our Board selected
Mr. Yoo as a nominee because our
Board believes that Mr. Yoos
understanding of the
Korean-American community, his
years of banking experience as well
as his past regulatory experience
with the banking institutions in
both New York and Seoul, Korea are
valuable assets to Hanmi Bank.
Additionally, our Board felt that
it is important to have the Chief
Executive Officer of Hanmi
Financial serve as a director in
order to effectively execute our
Boards direction.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director Since:
|
|
June 2008
|
12
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS STOCKHOLDERS VOTE FOR
ALL NOMINEES FOR ELECTION TO OUR BOARD.
Executive Officers
|
|
|
|
|
|
|
|
|
Name and Position
|
|
Age
|
|
Principal Occupation for Past Five Years and 10 Year Legal Proceedings
|
Jay S. Yoo,
President and Chief
Executive Officer
|
|
|
63
|
|
|
Current Position:
|
|
President and Chief Executive
Officer, Hanmi Financial and Hanmi
Bank (June 2008 to present)
Chairman, President, and Chief
Executive Officer, Woori America
Bank, a subsidiary of Woori Bank
(2001 to 2007)
|
|
|
|
|
|
|
|
Previous Positions
|
|
Chairman, President, and Chief
Executive Officer, Woori America
Bank, a subsidiary of Woori Bank
(2001 to 2007)
|
|
|
|
|
|
|
|
|
|
Brian E. Cho,
Executive Vice
President and Chief
Financial Officer
|
|
|
50
|
|
|
Current Position:
|
|
Executive Vice President and Chief
Financial Officer, Hanmi Financial
and Hanmi Bank (December 2007 to
present)
|
|
|
|
|
|
|
|
Previous Positions
|
|
Executive Vice President and Chief
Financial Officer, Wilshire
Bancorp, Inc. (1992 to 2007)
|
|
|
|
|
|
|
|
|
|
|
Jung Hak Son,
Senior Vice
President and Chief
Credit Officer
|
|
|
51
|
|
|
Current Position:
|
|
Senior Vice President and Chief
Credit Officer, Hanmi Bank (October
2009 to present)
|
|
|
|
|
|
|
Previous Positions
|
|
Senior Vice President and District
Leader of various districts, Hanmi
Bank (2006 2009)
|
Persons Chosen to Become Directors in Connection with the Issuance of Common Stock to Woori
If the securities purchase with Woori closes pursuant to its terms, Woori will be able to
nominate five (5) of our seven (7) directors, one of whom shall be the Chief Executive
Officer/President of Hanmi Financial. In conjunction therewith, up to five (5) of our directors
designated by us may resign to accommodate Wooris contractual rights. The directors identified by
Woori shall serve until our next annual meeting of stockholders and until their successors are
elected and qualified. So long as Woori holds more than 50% of our outstanding common stock on a
fully-diluted basis, it shall have the right to nominate two-thirds of our Board members (rounded
to the nearest whole number). We have agreed to recommend to our stockholders the election of the
Woori nominees. Woori must provide us with the identity of the nominees no less than 20 days prior
to the closing date of the securities purchase agreement. In addition, the appointment of the Woori nominees is
subject to non-disapproval requirements of the Order and the notice requirements of the Written
Agreement.
For additional information about the issuance of common stock to Woori and the
appointment of the Woori nominees to our Board, see
Description of the Securities Purchase
Agreement with Woori Finance and the Stock Offerings
. In the event the closing of the securities
purchase agreement with Woori does not occur, the Woori nominees will not be appointed to our Board
of Directors. While we anticipate that the transaction with Woori will occur sometime after the
annual meeting, we cannot provide any assurance that such transaction will be consummated.
13
BACKGROUND TO PROPOSALS 2 AND 3
Historical Background
Since the fall of 2008, our Board of Directors and management have explored a wide range of
alternative strategies to maintain our capital ratios at levels sufficient to support our
operations and risk profile and above those required to be considered well-capitalized for
regulatory purposes. In light of our credit quality and loan loss challenges, liquidity pressures
and reported operating losses resulting from the deterioration in our loan portfolio, disruptions
in the credit and real estate markets and the weakened economy, including in particular the
regional economic conditions in California, our capital ratios have deteriorated significantly.
Memorandum of Understanding
On October 8, 2008, Hanmi Bank entered into an informal supervisory agreement (a memorandum of
understanding) with the Federal Reserve Bank of San Francisco (FRB) and the California Department
of Financial Institutions (DFI) to address certain issues raised in Hanmi Banks then most recent
regulatory examination. Under the terms of the memorandum of understanding, Hanmi Bank was
required to address: (i) Board and senior management maintenance and succession planning; (ii)
Board oversight and education; (iii) Board assessment and enhancement; (iv) loan policies and
procedures; (v) allowance for loan losses policies and procedures; (vi) liquidity and funds
management policies; (vii) strategic planning; and (viii) capital maintenance. In addition, the
memorandum of understanding included a requirement that Hanmi Bank maintain a minimum Tier 1
leverage ratio and tangible stockholders equity to total tangible assets ratio of not less than
8.0 percent.
KBW, Leading and IWL
We engaged Keefe, Bruyette & Woods, Inc. on September 29, 2008 to act as our
financial adviser to explore various alternatives to enhance our capital position. Upon their
engagement, and with KBWs assistance, our Board and management discussed alternative strategies,
including private and public capital raises and general corporate finance issues. Our Board
instructed management and KBW to comprehensively review and explore these potential strategies.
Thereafter, our Board regularly met with management and KBW to receive updates and to discuss
strategies. We decided to adopt a capital raise strategy which contemplated the filing of a
universal shelf registration statement with the Securities and Exchange Commission and the
subsequent offering of equity and/or debt securities to the public. Shortly prior to the filing of
our shelf registration statement, the United States Department of the Treasury announced the terms
of the TARP Capital Purchase Program (the CPP) under the Emergency Economic Stabilization Act of
2008.
Our
Board of Directors determined it to be in the best interests of our
stockholders to seek
additional capital through participation in the CPP. During the early part of 2009, when it became
apparent that we would not receive the requisite approvals for participation in the CPP in a timely
fashion, we withdrew our application for participation in the CPP and re-engaged KBW to assist us.
Upon the advice of KBW, and based on public market conditions, we began to explore the possibility
of engaging in a private placement of equity securities anchored by a lead investor. In the late
spring of 2009, and after contacting multiple potential lead investors, KBW identified IWL Partners
LLC, a Korean private equity fund (IWL), as a potential lead investor for our private placement.
On May 28, 2009, we entered into a non-binding term sheet with Leading Investment & Securities
Co., Ltd., a Korean securities broker-dealer and IWL, an affiliate of
Leading, which outlined the
proposed terms of a purchase by Leading and IWL of newly issued shares of our common stock.
Pursuant to the terms set forth in the Term Sheet, Leading would acquire, in two separate
installments, an aggregate of 14.9% of our outstanding common stock through the purchase of newly
issued common stock. The term sheet also contemplated a larger equity capital infusion from IWL
through the purchase of common stock in an amount equal to the difference between $100 million less
the aggregate amount invested by Leading. The term sheet provided for an exclusivity period with
IWL and Leading which expired on July 31, 2009.
On June 12, 2009, we entered into a securities purchase agreement with Leading, providing for
the sale of 8,040,882 unregistered shares of our common stock to Leading at a purchase price of
$1.37 per share, in two separate installments, with the first installment to provide Leading with
ownership of 9.9% of our outstanding
14
common stock and the second installment to provide Leading with aggregate ownership of 14.9% of our
outstanding common stock. KBW acted as our placement agent in connection with this transaction.
On July 3, 2009, we entered into a first amendment to the securities purchase agreement with
Leading to, among other things, extend the termination date in the securities purchase agreement to
September 30, 2009 and to specify the terms for funding an escrow account relating to the initial
acquisition of our common stock by Leading.
On August 5, 2009, we amended the term sheet with Leading and IWL to extend the exclusivity
period from July 31, 2009 to September 30, 2009.
Pursuant to the terms of the Leading securities purchase agreement, on September 4, 2009
Leading completed the first installment purchase of our common stock under its securities purchase
agreement by acquiring 5,070,423 shares of our common stock at a purchase price of $1.37 per share.
On September 14, 2009, we entered into a non-binding amended and restated term sheet with
Leading and IWL which provided for exclusivity for Leading and IWL through September 30, 2009 and
which outlined the terms and conditions of the proposed investments by Leading and IWL in newly
issued shares of our common stock, including the previously consummated purchase of 5,070,423
shares of our common stock at a purchase price of $1.37 per share. The amended and restated term
sheet also contemplated a larger equity capital infusion from IWL, its affiliates or one or
more-co-investors introduced by IWL through the purchase of common stock in an amount equal to the
difference between $100 million less the aggregate amount invested by Leading.
On September 28, 2009, we entered into a second amendment to the securities purchase agreement
with Leading to, among other things, extend the termination date in the securities purchase
agreement to November 30, 2009 and to provide for the terms of the funding of the purchase price
for the second installment of the Leading investment. On September 28, 2009, we, Leading and IWL
also entered into a first amendment to the Amended and Restated Term Sheet to extend the exclusive
dealing undertaking in the term sheet from September 30, 2009 to November 30, 2009.
Without further regulatory progress with Leading and IWL on the second installment of the
Leading investment and the larger capital infusion, the exclusive dealing undertaking in the
Amended and Restated Term Sheet expired on November 30, 2009 and the termination date in the
securities purchase agreement was reached. We and KBW agreed to mutually terminate our
relationship on January 28, 2010 following a determination that no further progress was being made
in identifying additional sources of capital.
Regulatory Order and Written Agreement
On November 2, 2009, the members of the Board of Directors of Hanmi Bank consented to the
issuance of the Order. On the same date, we and Hanmi Bank entered into the Written Agreement with
the Federal Reserve Bank of San Francisco. The Order and the Written Agreement contain
substantially similar provisions.
The Order and the Written Agreement require the Board of Directors of Hanmi Bank to prepare
and submit written plans to the DFI and the FRB that address the following items: (i) strengthening
Board oversight of the management and operation of Hanmi Bank; (ii) strengthening credit risk
management practices; (iii) improving credit administration policies and procedures; (iv) improving
Hanmi Banks position with respect to problem assets; (v) maintaining adequate reserves for loan
and lease losses; (vi) improving the capital position of Hanmi Bank and, with respect to the
Written Agreement, of Hanmi Financial; (vii) improving Hanmi Banks earnings through a strategic
plan and a budget for 2010; (viii) improving Hanmi Banks liquidity position and funds management
practices; and (ix) contingency funding. In addition, the Order and the Written Agreement place
restrictions on Hanmi Banks lending to borrowers who have adversely classified loans with Hanmi
Bank and requires Hanmi Bank to charge off or collect certain problem loans. The Order and the
Written Agreement also require Hanmi Bank to review and revise its allowance for loan and lease
losses consistent with relevant supervisory guidance. Hanmi Bank is also prohibited from paying
dividends, incurring, increasing or guaranteeing any debt, or making certain changes to its
business without prior approval from the DFI, and Hanmi Bank and Hanmi Financial must obtain
approval from the FRB prior to declaring and paying dividends. The Order and Written Agreement also
require that Hanmi Financial and Hanmi Bank notify, and obtain the non-disapproval of the
applicable regulator prior to adding any individual as a Board member or senior executive officer.
15
Under the Order, Hanmi Bank is also required to increase its capital and maintain certain
capital ratios prior to certain dates specified in the Order. By July 31, 2010, Hanmi Bank is
required to increase its contributed equity capital by not less than an additional $100 million.
Hanmi Bank is required to maintain a ratio of tangible shareholders equity to total tangible
assets as follows:
|
|
|
|
|
Ratio of Tangible Shareholder's
|
Date
|
|
Equity to Total Tangible Assets
|
By July 31, 2010
|
|
Not Less Than 9.0 Percent
|
|
|
|
From December 31, 2010 and Until the Order is Terminated
|
|
Not Less Than 9.5 Percent
|
Such requirements are in addition to a fully funded allowance for loan and lease losses. As
of March 31, 2010, Hanmi Bank had a tangible stockholders equity to total tangible assets ratio of
5.89 percent. Pursuant to the Written Agreement, Hanmi Financial
is also required to increase and maintain sufficient capital at Hanmi
Financial and Hanmi Bank which is satisfactory to the FRB.
Based on its capital ratios at March 31, 2010, Hanmi Bank is deemed to be undercapitalized
for regulatory purposes as of March 31, 2010. See
Consequences if Either of the Capital Raising
Stockholder Proposals are Not Approved
.
During the year ended December 31, 2009, we recorded a $196.4 million provision for credit
losses and charged off $125.4 million in loans, net of $2.8 million in recoveries. For the year
ended December 31, 2009, we recognized net losses of $122.3 million. For the quarter ended March
31, 2010, we recorded a $58.0 million provision for credit losses and charged off $26.4 million in
loans, net of $3.7 million in recoveries. For the quarter ended March 31, 2010, we recognized net
losses of $49.5 million. We have been adversely affected by the general slowdown in the economy
and, in particular, in areas of Southern California where a majority of our loan customers are
based.
Woori and GWI
In January, 2010, our Chairman traveled to Korea to visit with various potential investors,
including Woori which had been identified by IWL as potentially
interested in a transaction with us. The purpose of the visit was to explore the possibility of a Korean financial
services company with an existing presence in the United States making a potential investment in
us. During our Chairmans visit, he met with representatives of Woori and discussed preliminarily
Wooris potential desire to make an investment. During the visit, our Chairman also met with
other potential investors.
On January 15, 2010, we engaged Cappello Capital Corp. (Cappello) to act as our financial
advisor in exploring a range of capital raising strategies, including private and public stock
investments, the disposition of Hanmi Financial or Hanmi Bank and combinations of equity
investments involving one or more lead investors and multiple smaller investors. See Securities
Purchase AgreementFees and Expenses below for a discussion of fees to be paid to Cappello. In
January 2010, we engaged Manatt, Phelps & Phillips, LLP to act as our legal advisor in connection
with our strategic alternatives and capital raising strategies.
On January 18, 2010, we engaged IWL to render financial advisory services in connection with
the offer and sale of our stock in Korea. At the time we executed the engagement letter with IWL,
IWL and its affiliate, Leading, we were informed that they were
subject to certain passivity commitments to the Board of Governors of the Federal Reserve System.
The effectiveness of the engagement letter is expressly conditioned upon IWLs release from the
passivity commitments or acknowledgement in writing from the Board of Governors of the Federal
Reserve System that performance of IWLs obligations under the engagement letter would not violate
the passivity commitments. We have been advised by IWL that its release from the passivity
commitments is conditioned upon the sale by Leading of its holdings of our common stock. We have
been further advised by IWL that Leading has entered into an irrevocable 10b5-1 trading plan to
sell all of its shares of our common stock it owns. However, we did not receive any written
confirmation of IWLs release from its passivity commitments or the required acknowledgment from
the Board of Governors of the Federal Reserve System prior to the expiration of our engagement
agreement with IWL on May 31, 2010. Accordingly, based upon the
advice of counsel, we believe that
our engagement letter with IWL was not effective and we have no obligations owing to it. See
Securities Purchase AgreementFees and Expenses.
16
Over the course of the nearly two months immediately following Cappellos engagement, Cappello
conducted a market check in conjunction with our Board of Directors by contacting over 60
potential strategic and financial partners to explore their interest in a strategic transaction
with us based on our publicly available information, including private equity funds and other
financial investors that make investments in financial institutions that, like Hanmi Bank, have a
primary market focus on the Korean-American community, and in other community banks and national
and international financial institutions. Cappello also responded to a number of inquiries
expressing potential interest in an investment from parties that contacted Cappello after learning
that Cappello had been engaged to serve as our financial adviser. Following the engagement of
Cappello, 13 parties entered into nondisclosure agreements with us to obtain additional due
diligence information. Concurrent with its efforts to identify a potential lead investor
interested in acquiring a controlling interest in our company, Cappello actively engaged in
discussions with investors who would consider making an investment with a lead investor.
On January 28, 2010, GWI Enterprise Ltd. presented a letter to Mr. Joseph K. Rho, our
Chairman, informing Mr. Rho of GWIs interest in exploring an acquisition of equity interests in
us. In the letter of interest, GWI proposed making an unspecified investment that would result in
GWI holding a majority interest in our outstanding equity. The letter stated, among other things,
that any formal proposal with respect to a proposed transaction would be subject to satisfactory
completion of due diligence and the valuation of GWIs proposed investment would be based on our
book value adjusted for mark-to-market valuation based on a third-party review of Hanmi Banks loan
portfolio. The letter also requested an opportunity to discuss the proposed transaction with us
and our advisors.
As a result of the consideration of an equity investment which would result in the control of
a majority of our outstanding stock by one investor, and after extensive review of our Board of
Directors fiduciary duties in considering proposals for our recapitalization with our legal
advisors, on February 3, 2010 our Board of Directors formed a Special Committee comprised of
Directors Hall, Rho and Stolte. The Special Committee was appointed to: (a) review and assess, and
assist our Board of Directors in reviewing and assessing potential capital raising alternatives,
including without limitation, those involving a sale of majority ownership, in the context of our
strategic alternatives and regulatory mandate to increase Hanmi Banks capital by July 31, 2010;
(b) consult with, monitor and assist our legal, financial and other professional advisors in the
negotiation of one or more potential transactions; and (c) develop recommendations to our Board
with respect to the potential transactions.
We executed a Confidentiality Agreement with GWI on February 5, 2010. During this same time
period, Cappello prepared, and on February 10, 2010 the Special Committee approved, a protocol
letter to be mailed to parties that expressed interest in acquiring a controlling interest in us.
The protocol letter was intended to solicit interest and at the same time provide a structure and
timeline for the market check process in light of the July 31, 2010 deadline to increase Hanmi
Banks contributed equity capital by not less than an additional $100 million. Following execution
of the Confidentiality Agreement, GWI and its advisors engaged in an extensive due diligence
process in connection with the proposed transaction, including in-person meetings on February 18,
2010 and February 19, 2010 with us, Hanmi Bank and our respective legal and financial advisors.
Following the in-person meetings, our advisors along with advisors for GWI engaged in on-going
discussions regarding the submission of an indicative offer by GWI with respect to the proposed
transaction. In addition, during the latter part of February and early March the Special
Committee, in consultation with its financial and legal advisers, considered a preliminary term
sheet provided by GWI. The Special Committee engaged in several discussions regarding the
preliminary term sheet. On March 4, 2010, we provided GWI with certain proposed modifications to
the preliminary term sheet. On two occasions, and at the request of GWI, the Special Committee
extended the deadline for the submission of indicative offers set forth in the protocol letter to
allow interested parties additional time to conduct deeper due diligence, including review of a
report prepared by an independent third-party based on its examination of Hanmi Banks loan
portfolio. Nevertheless, following completion of GWIs due diligence and preliminary discussions
between the parties, on March 15, 2010, GWI sent a letter to Mr. Joseph K. Rho withdrawing its
interest in the proposed transaction.
Concurrent with our discussions with GWI, we engaged in discussions with Woori Finance
Holdings Co. Woori is Koreas first and largest financial holding company, and its operations
include the second-largest commercial bank in Korea, in terms of total assets (including loans).
Its subsidiaries collectively engage in a broad
17
range of businesses, including commercial banking, credit cards, capital markets activities,
international banking, asset management and bancassurance. As of
December 31, 2009, Woori had total
consolidated assets of (Won) [] trillion (approximately US$[] billion), consolidated total
deposits of (Won) [] trillion (approximately US$[] billion) and consolidated stockholders
equity of (Won) [] trillion (approximately US$[] billion).
On January 15, 2010, Woori provided us with a preliminary proposal letter, which reflected the
starting point for discussions between the parties. Shortly thereafter, on January 22, 2010, Woori
presented us with an initial draft of a term sheet to acquire a majority interest in us. Over the
course of the following two weeks we, Woori and our respective advisors participated in on-going
conversations regarding Wooris proposed term sheet, focusing on the structure and size of the
potential transaction and Wooris desire to enter into an exclusive negotiation period.
Throughout the course of the discussions, we advised Woori that entering into an exclusivity
arrangement with them at this early stage in the process was inconsistent with our fiduciary duties
to our stockholders. We indicated that we could not enter into an exclusive arrangement at this
stage in the process, but rather we needed the ability to explore a wide range of strategic
alternatives and capital raising possibilities. In addition, despite our repeated recommendations,
Woori had not yet undertaken a comprehensive due diligence investigation of our company. On
February 3, 2010, a letter was delivered on our behalf to Wooris legal counsel indicating that
because of several restrictions that would be imposed on us by the term sheet, we could not enter
into the term sheet. The letter went on to indicate that, while we were interested in continuing a
dialogue with Woori and encouraged Woori to conduct due diligence, we had to preserve our ability
to entertain and explore all potential strategic alternatives available. On February 8, 2010, we
received a letter from Woori acknowledging receipt of our February 3rd letter and indicating that
further negotiations between the parties would be suspended while we conducted our market check.
Over the course of the following weeks, the parties had intermittent communications. We
repeatedly encouraged Woori to engage in its due diligence efforts so Woori would not fall behind
in the process, particularly in light of the July 31st deadline imposed by the Order. On or about
February 12, 2010, Manatt and Wooris legal counsel, Kim & Chang, reconvened their conversations.
Although Woori would not formally re-engage in term sheet negotiations or perform due diligence
while we conducted our market check, it was agreed that maintaining open lines of communication
and discussing potential issues in the term sheet would be beneficial.
During the week of February 15th, several representatives of Woori met with the Special
Committee in Los Angeles to review, among other things, the general parameters for the size and
structure of a potential transaction and regulatory considerations. In addition, representatives
of Woori conducted some due diligence during this period. During the meetings we reiterated our
desire that Woori commence significant due diligence, despite the fact that we were still engaged
with our market check. In response, Woori requested that we enter into an agreement to reimburse
Woori for its expenses incurred in connection with certain due diligence activities. The expense
reimbursement agreement was approved by the Special Committee and entered into on February 24,
2010. The Special Committee held four meetings during February 2010.
Following the in-person meetings in Los Angeles and the return of Wooris representatives to
Korea, on March 5, 2010 we received a revised term sheet from Woori. On March 8, 2010 the Special
Committee met to discuss the revised term sheet received from Woori. Based on the Special
Committees discussions, on March 9, 2010 we sent a revised draft of the term sheet to Woori. The
following day we received a further revised term sheet from Woori and held a Special Committee
meeting to discuss the term sheets provisions. Following a careful review of the term sheet and a
detailed discussion of its terms, the Special Committee concluded that the term sheet represented
the best offer reasonably available to us and our stockholders, approved entering into the term
sheet with Woori and recommended it be submitted to our Board of Directors for its approval. Our
Board of Directors approved the term sheet and it was executed and entered into by both parties on
March 10, 2010. The Special Committee held five meetings during March 2010 to continue to review,
among other things, the status of the Woori proposal.
We and Woori agreed at the outset that the structure of the investment should emphasize common
equity, reflecting the increased market and regulatory focus on common equity and the requirements
set forth in the Order and Written Agreement. During April 2010, discussions continued with a view
to refining the terms of an investment and addressing structuring issues. The week of April 5th
the Special Committee and a representative of
18
Cappello made a trip to Korea. During the trip the Special Committee conducted due diligence,
attended several meetings and initiated discussions regarding the preparation of a definitive stock
purchase agreement.
On April 16, 2010, Woori delivered an initial draft of the securities purchase agreement to
us. Over the course of the following two weeks the Special Committee met on two occasions to
discuss the securities purchase agreement and during that same period of time we and Woori engaged
in preliminary discussions regarding the draft securities purchase agreement. We collectively
agreed that, as a result of the proposed size of the contemplated placement and the mutual intent
that the investment be in the form of Tier 1 common equity securities, the approval of our
stockholders would be required.
On April 23, 2010, our Board of Directors engaged McGladrey Capital Markets LLC (McGladrey)
to render a fairness opinion to our Board of Directors on the financial terms of the Woori
investment. On April 28, 2010, the Special Committee engaged Cappello to provide an opinion to the
Board of Directors as to the fairness to our stockholders, from a financial point of view, of the
consideration to be received pursuant to the proposed sale of a majority interest in us and
potential private placement. The Special Committee held three meetings during April 2010 to discuss
the proposed Woori investment.
The week of May 3rd, Chairman Rho, as representative of the Special Committee, our Chief
Financial Officer, a representative of Cappello and two representatives of Manatt made a trip to
Korea. During the meetings held in Korea that week, we and Woori, with our collective financial
and legal advisors, reached definitive agreement on the structuring of a transaction, pricing and
terms. These terms included the principal investment of $210 million of our common stock by Woori
at a per share purchase price of $1.20, with an option to purchase up to $30 million of additional
common stock at the same price per share. During this time, our representatives in Korea engaged
in a number of telephonic discussions regarding the potential terms and structure of an investment
with the other members of the Special Committee, the market check that had been completed, the lack
of viable alternatives facing us and the need to raise capital by the deadlines set by our
regulators.
During the meetings in Korea, working in close consultation with our Special Committee, the
parties determined that the optimal structure for a transaction with Woori would include an
opportunity for our existing stockholders and other public investors to participate in a public
offering at the same purchase price per share as Woori would pay for the securities it could
acquire pursuant to the securities purchase agreement with us. Accordingly, the decision was made
that following the execution of a securities purchase agreement with Woori, that we would engage in
a registered rights and best efforts offering of up to $120 million of our common stock. The
registered rights and best efforts offering would be made at $1.20 per share.
During the negotiations with Woori, we remained in regular contact with and provided status
reports regarding the discussions with Woori to representatives of the FRB, Federal Deposit
Insurance Corporation and the DFI, our and Hanmi Banks primary regulators.
On May 12, 2010, the Special Committee and the Board of Directors held separate meetings.
Both the Special Committee and the Board of Directors held lengthy discussions of the terms and
conditions of the securities purchase agreement with legal and financial advisors. Following the
discussion of the securities purchase agreement, and at the request of our Board of Directors,
McGladrey then reviewed its methodologies and financial analyses with respect to the proposed
transaction with Woori and provided its preliminary findings to the effect that as of such date and
based upon and subject to various assumptions, limitations and qualifications, the proposed
purchase price to be paid by Woori was fair, from a financial point of view, to our stockholders.
At the request of the Special Committee, Cappello then reviewed its methodologies and financial
analyses with respect to the proposed sale of a majority interest in Hanmi Financial to Woori and
the subsequent registered rights and best efforts offering, collectively referred to as the
Transaction, and, while noting that at the direction of the Special Committee it had not yet
completed its fairness analysis, provided its preliminary findings to the effect that as of May 12,
2010, based upon its preliminary analyses, and subject to various assumptions, limitations and
qualifications, the price per share of our common stock to be received by Hanmi Financial in the
Transaction was fair, from a financial point of view, to the holders of our common stock, other
than Woori and any other purchasers of our common stock in the Transaction (the Investors).
McGladrey was excused from the meeting during Cappellos presentation.
19
Following another week of negotiations between the parties, with the securities purchase
agreement in substantially final form, the Special Committee and our Board of Directors held
separate meetings on May 19, 2010. Manatt identified the changes to the securities purchase
agreement since the prior meetings on May 12, 2010. After the update on the securities purchase
agreement, McGladrey summarized its methodologies and financial analyses with respect to the
proposed transaction with Woori and then each rendered their opinion that as of such date and based
upon and subject to various assumptions, limitations and qualifications, the proposed purchase
price to be paid by Woori was fair, from a financial point of view, to our stockholders. At the
request of the Special Committee, Cappello then described to the Board of Directors the updates
that had been made to its financial analyses since its prior presentation and then delivered its
oral opinion to the Special Committee, subsequently confirmed in writing as of the same date, that,
as of May 19, 2010, and subject to the assumptions, qualifications and limitations set forth in its
opinion, the price per share of our common stock to be received by Hanmi Financial in the
Transaction was fair, from a financial point of view, to the holders of our common stock, other
than the Investors. Following the delivery of Cappellos and McGladreys fairness opinions and
careful consideration of all facts and circumstances deemed relevant to it, the Special Committee
determined that the terms of the securities purchase agreement with Woori are fair to, and in the
best interests of our stockholders and unanimously recommended approval of entry into and
performance of the transactions contemplated by the securities purchase agreement to our Board of
Directors. Following the delivery of Cappellos and McGladreys fairness opinions, and careful
consideration of additional facts and circumstances, including the recommendation of the Special
Committee, our Board of Directors determined that the terms of the securities purchase agreement
with Woori are fair to, and in the best interest of our stockholders and unanimously approved the
securities purchase agreement with Woori and entry into the same by us, delegating authority to
Chairman Rho to execute the securities purchase agreement with such changes as he deemed
appropriate in consultation with the Special Committee and its financial and legal advisers. At
the May 19th meeting, our Board of Directors also authorized a registered rights and best efforts
offering for up to $120 million of our common stock at $1.20 purchase price per share. The Special
Committee met again on May 21, 24 and 25, 2010 to discuss certain matters related to finalizing the
securities purchase agreement and to approve the final form of the agreement.
Definitive Agreement
On May 25, 2010, we entered into a definitive securities purchase agreement with Woori by
which we will issue $210 million of our common stock to Woori at a price per share of $1.20.
Pursuant to the agreement, we also granted Woori an option to purchase an additional $30 million of
common stock at the same price per share. The closing of the transactions is subject to
satisfaction of certain closing conditions, including required regulatory and stockholder
approvals.
Between the time of signing the definitive securities purchase agreement with Woori and the
closing, we intend to use commercially reasonable efforts to consummate the sale of up to an
additional $120 million of common stock through a registered rights and best efforts offering. We
cannot provide any assurance that we will be successful in consummating the transaction with Woori
or successful in completing the registered rights or best efforts offering.
Recommendation of Our Board of Directors; Reasons for the Capital Raising Stockholder Proposals
|
|
|
Our Board, upon the recommendation of our Special Committee, has
unanimously (i) determined that the securities purchase agreement with
Woori and the transactions contemplated thereby are advisable and in
the best interest of our stockholders, (ii) approved the securities
purchase agreement and the stock offerings, and (iii) recommended that
our stockholders vote in favor of the Capital Raising Stockholder
Proposals; and
|
|
|
|
|
In reaching its determination, our Board and Special Committee
consulted with our management, as well as our legal and financial
advisors, and reviewed (i) historical information concerning our
business, financial performance and condition, operations and
competitive position; (ii) our financial condition, results of
operations, businesses and strategic objectives; (iii) current
financial market conditions and historical market prices with respect
to our common stock; (iv) the challenges our business faces; (v) the
regulatory orders pending against us and the consequences if we fail
to comply with those regulatory
|
20
|
|
|
orders; (v) the terms of the securities purchase agreement, including the parties representations,
warranties and covenants, and the conditions to their respective
obligations; (vi) the prospects for any alternative transactions or
strategies and (viii) financial analysis prepared by Cappello and
McGladrey.
|
In the course of its deliberations, our Board considered the following material factors:
Factors Relating to the Specific Terms of our Securities Purchase Agreement with Woori:
|
|
|
The effect of consummation of the transactions on our capital ratios
and the terms of our regulatory orders;
|
|
|
|
|
The opportunity for our existing stockholders to purchase shares in a
rights offering on the same financial terms as Woori;
|
|
|
|
|
Our assessment of the ability of Woori to consummate the transactions
contemplated by the securities purchase agreement and obtain the
appropriate regulatory approvals;
|
|
|
|
|
The securities purchase agreement, subject to the limitations in the
agreement, allows our Board to engage in discussions or negotiations
with third parties in certain circumstances and, upon the payment to
Woori of a termination fee of $10.5 million, to terminate the
agreement to accept a superior offer;
|
|
|
|
|
The securities purchase agreement prohibits Woori from engaging in a
cash-out merger transaction for a period of three (3) years from the
closing date unless the cash-out merger is (i) approved by our
stockholders (including a majority of our stock other than Woori) and
a majority of disinterested directors or (ii) completed at a time when
Woori owns at least 90% of our outstanding voting stock;
|
|
|
|
|
The increase in our authorized shares of common stock must be approved
by a vote of a majority of our outstanding shares of common stock and
the issuance of shares to Woori pursuant to the terms of our
securities purchase agreement must be approved by a majority of votes
represented and voting at a duly constituted stockholder meeting at
which a quorum is present in person or by proxy; and
|
|
|
|
|
Our Board considered the methodologies and financial analyses reviewed
and discussed with our Board by representatives of McGladrey and
Cappello on May 12 and May 19, 2010, as well as the oral opinion of
McGladrey rendered to our Board on May 19, 2010 (which opinion was
subsequently confirmed in writing by delivery of written opinions
dated the same date) to the effect that as of such date and based upon
and subject to various assumptions, limitations and qualifications,
the $1.20 in cash per share to be paid by Woori to acquire a
controlling interest in us was fair, from a financial point of view,
to our stockholders, and the oral opinion of Cappello delivered to our
Special Committee on May 19, 2010, subsequently confirmed in writing
as of the same date, that, as of such date, and subject to the
assumptions, qualifications and limitations set forth in its opinion,
the price per share of our common stock to be received by us in the
Transaction was fair, from a financial point of view, to the holders
of our common stock, other than the Investors.
|
Potential Negative Factors Relating to the Securities Purchase Agreement with Woori:
In the course of its deliberations, our Board also considered a variety of risks and other
potentially negative factors, including the following:
|
|
|
The transaction with Woori must be approved by certain governmental
agencies, including the FRB, the DFI and the Korean Financial Services
Commission, which could delay or prevent the closing;
|
|
|
|
|
The issuance of shares to Woori will result in substantial dilution to
our existing stockholders and the shareholders equity per share of
our common stock will be substantially diluted, and our trading price
could be adversely affected;
|
|
|
|
|
The securities purchase agreement with Woori contains restrictive
covenants, including covenants which limit the ownership of purchasers
to 4.9% and with Wooris consent 9.9% of our voting stock, which in
turn could limit our ability to raise capital from other sources in
the amounts we may otherwise seek;
|
21
|
|
|
The securities purchase agreement precludes us from actively
soliciting alternative proposals to the Woori transaction, and,
accordingly, if the transactions contemplated by the securities
purchase agreement are not consummated, we may not have sufficient
time to raise capital from alternative sources to satisfy the terms of
the regulatory orders we are subject to;
|
|
|
|
|
We are obligated to pay to Woori a termination fee of $10.5 million if
the securities purchase agreement is terminated under certain
circumstances. Although our Board felt that these payment terms were
reasonable when viewed in context with all other aspects of the
securities purchase agreement, it is possible that these provisions
could discourage a competing proposal to acquire us or make a
controlling investment in us or reduce the price in an alternative
transaction;
|
|
|
|
|
As a controlling stockholder, Woori will have control over our Board
and other corporate strategic decisions and will be able to: (i) elect
all of the members of our Board of Directors (although they have
agreed to elect at least two independent directors) ; (ii) adopt
amendments to our charter documents; or (iii) control the vote on any
merger, sale of assets or other fundamental corporate transaction of
us or Hanmi Bank, or the issuance of additional equity securities or
incurrence of debt, in each case without the approval of our other
stockholders;
|
|
|
|
|
Certain of our directors and executive officers may have conflicts of
interest in connection with the securities purchase agreement with
Woori, as they may receive certain benefits that are different from,
and in addition to, those of our other stockholders. See
Interests of
Certain Persons in the Capital Raising Stockholder Proposals
; and
|
|
|
|
|
We are exposed to significant risks and may incur significant costs if
the securities purchase agreement does not close, including failing to
satisfy the regulatory orders we are subject to, the diversion of
management and employee attention during the period after the signing
of the securities purchase agreement, potential employee attrition and
the potential effect on our business and customer relations. In that
regard, under the securities purchase agreement, we must conduct our
business in the ordinary course and we are subject to a variety of
other restrictions on the conduct of our business prior to completion
of the sale of shares to Woori or termination of the securities
purchase agreement, which may delay or prevent us from undertaking
business opportunities that may arise or to exploring other capital
raising alternatives to satisfy our capital requirements.
|
The above discussion is not intended to be exhaustive, but we believe it addresses the
material information and factors considered by our Board in its consideration of the Woori
investment, including factors that support the investment as well as those that may weigh against
it. In view of the number and variety of factors and the amount of information considered, our
Board did not find it practicable to make specific assessments of, quantify or otherwise assign
relative weights to the specific factors considered in reaching its determination. In addition,
our Board did not undertake to make any specific determination as to whether any particular factor,
or any aspect of any particular factor, was favorable or unfavorable to its ultimate determination,
and individual members of our Board may have given different weights
to different factors. We cannot provide any assurance that the
transactions contemplated by the Securities Purchase Agreement with Woori will close or that we will
be able to raise any capital from our registered rights and best efforts offering.
Opinions of Our Financial Advisors
On May 19, 2010, McGladrey rendered its oral opinion to us (which was subsequently confirmed
in writing by delivery of its written opinion dated the same date) to the effect that, as of May
19, 2010, the $1.20 cash per share that Woori would pay to us to acquire a controlling interest in
us was fair, from a financial point of view, to our stockholders, and Cappello delivered its oral
opinion to the Special Committee, subsequently confirmed in writing as of the same date, that, as
of May 19, 2010, and subject to the assumptions, qualifications and limitations set forth in its
opinion, the price per share of our common stock to be received by us in the Transaction was fair,
from a financial point of view, to the holders of our common stock, other than the Investors. The
summary of the opinions of McGladrey and Cappello are each qualified in their entirety by reference
to the full text of the written opinions which are included as
Annex B
and
Annex C
, respectively,
to this proxy statement and sets forth the procedures followed, assumptions made, qualifications
and limitations on the review and other matters considered by McGladrey and Cappello in preparing
their respective opinions.
22
McGladrey Opinion
On April 23, 2010 our Board of Hanmi Financial engaged McGladrey to render financial advisory
services in connection with the proposed sale of a majority ownership interest in Hanmi Financial.
Specifically and pursuant to that engagement, McGladrey agreed to prepare and deliver an opinion to
the Companys Board as to the fairness, from a financial point of view, to the stockholders of
Hanmi Financial of the price paid per share of Hanmi Financial common stock in the proposed
offering to Woori. Our Board selected McGladrey because McGladrey is a globally recognized provider
of investment banking services to owners, stockholders, boards of directors and senior managers of
midsized private and public companies. As part of its investment banking business, McGladrey is
continually engaged in the valuation of companies in connection with mergers, acquisitions and
placements of equity and debt securities. McGladrey has acted exclusively for our Board of Hanmi
Financial in rendering its fairness opinion and received a fee for its services. No portion of such
fee was contingent upon the successful completion of the offering to Woori.
As part of its engagement, representatives of McGladrey attended the meeting of the Hanmi
Financial Board held on May 19, 2010 at which the Hanmi Financial Board evaluated the terms of the
offering to Woori. At this meeting, McGladrey rendered an opinion that, as of such date, the price
paid per share of Hanmi Financial common stock in the offering to Woori was fair, from a financial
point of view, to Hanmi Financials stockholders.
The full text of McGladreys written opinion is attached as
Annex C
to this document and is
incorporated herein by reference. Hanmi Financial stockholders are urged to read the opinion in its
entirety for a description of procedures followed, matters considered, assumptions made, and
qualifications and limitations of the review undertaken by McGladrey. The summary description of
the opinion set forth herein is qualified in its entirety by reference of the full text of the
opinion.
McGladreys opinion is based upon conditions as they exist and can be evaluated as of the date
of the opinion. The opinion is directed to the Hanmi Financial Board and addresses only the
fairness, from a financial point of view, to the stockholders of the Company of the price paid per
share of Hanmi Financial common stock in the offering to Woori. It does not address the underlying
business decision to proceed with the offering to Woori and does not constitute a recommendation to
any Hanmi Financial shareholder as to how the shareholder should vote at the Hanmi Financial
stockholders meeting on the offering to Woori or any related matter.
In rendering its opinion, McGladrey reviewed, among other things (i) the draft securities
purchase agreement; (ii) Annual Report to stockholders and Form 10-K for the year ended December
31, 2009; (iii) Quarterly Reports on Form 10-Q filed over the last twelve months; (iv) Reports on
Form 8-K filed over the last twelve months; (v) other financial information concerning the
business, operations and financial condition of Hanmi Financial provided by Hanmi Financial.
McGladrey also had discussions with Hanmi Financial management regarding current business
operations, regulatory relations, financial condition, and future prospects. In addition, McGladrey
(i) reviewed the market prices, valuation multiples and certain operating benchmarks of publicly
traded companies that McGladrey deemed to be relevant and compared them with Hanmi Financial; (ii)
compared the price paid per share of Hanmi Financial common stock in the offering to Woori with the
financial terms of certain other transactions that McGladrey deemed to be relevant; and (iii)
performed other analyses and considered other factors that it considered appropriate including our Boards consent to a Final Order from the California
Department of Financial Institutions and the Written Agreement with the Federal Reserve Bank of
California.
In conducting its review and arriving at its opinion, McGladrey relied upon and assumed the
accuracy of all the financial and other information provided to or otherwise made available to
McGladrey or that was discussed with, or reviewed by McGladrey, or that was publicly available.
McGladrey did not attempt or assume any responsibility to verify such information independently and
relied upon the management of Hanmi Financial as to the reasonableness and achievability of the
financial and operating projections and underlying assumptions. McGladrey also assumed, without
independent verification, that the allowances for loan losses are adequate to cover those losses.
McGladrey did not make or obtain any evaluations of Hanmi Financials assets or examine any
individual credit files.
The following is a summary of the material analyses presented by McGladrey to the Hanmi
Financial Board on May 19, 2010 in connection with its fairness opinion. The summary is not a
complete description of the
23
analyses underlying the McGladrey opinion or the presentation made by
McGladrey to the Hanmi Financial Board but summarizes the material analyses performed and presented
in connection with such opinion. The preparation of a fairness opinion is a complex analytic
process involving various determinations as to the most appropriate and relevant of financial
analysis and the application of those methodologies to the particular situation. In arriving at
its opinion, McGladrey made qualitative judgments as to the significance and relevance of each
analysis and factor as well as consideration of the impact of not proceeding with the offering to
Woori given Hanmi Financials regulatory and going-concern situation.
Summary of Offering to Woori
Hanmi Financial will sell in the stock offerings up to 300,000,000 shares of common stock at
$1.20 per share. As part of the offering to Woori, Woori will purchase through a private placement
exempt from the registration requirements of the U.S. Securities Act of 1933, as amended, a minimum
of 175,000,000 shares of Hanmi Financial common stock at $1.20 per share pursuant to the securities
purchase agreement.
Summary of Valuation Methodologies
McGladrey utilized a generally and widely accepted standard set of valuation methodologies in
supporting its fairness opinion including Peer Group Analysis, Precedent Transactions Analysis, and
Discounted Cash Flow Analysis. Peer Group Analysis applies relevant public market valuation
multiples to Hanmi Financials current financial and operating results to determine an overall
valuation range. Precedent Transactions Analysis determines the value range of Hanmi Financial by
examining public merger and acquisition transactions as well as private placements, specifically
PIPE (private investment in public equity) transactions. Discounted Cash Flow Analysis estimates
the present value range based on future cash flow or income streams.
Based on the results of the valuation methodologies summarized below, general economic, market
and financial conditions and consideration of Hanmi Financials current regulatory and
going-concern situation, McGladrey determined a valuation range of $0.90 to $1.83 per share of
Hanmi Financial common stock, providing support for its fairness opinion.
Peer Group Analysis
McGladrey identified seven publicly-held U.S. based regional banks comparable to Hanmi
Financial based on the following criteria: (i) asset size (range of $1 billion to $20 billion),
(ii) primarily serving the Southern California region, (iii) similar regional loan exposure, and
(iv) similar ethnic composition of deposit base. Companies included in Hanmi Financials peer
group were:
Cathay General Bancorp
Center Financial Corporation
East West Bancorp, Inc.
First California Financial Group, Inc.
Nara Bancorp Inc.
Preferred Bank
Wilshire Bancorp Inc.
Using the most current publicly-reported financial information for the peer group, McGladrey
analyzed the following key valuation metrics: Price/Tangible Book Value per Share, Price/Pre-Tax,
Pre-Provision Earnings per Share, Price/Total Assets, and Price/Core Deposits. McGladrey also did
an analysis and compared Hanmi Financials operating performance and financial strength to the peer
group based on the following benchmarks: Tangible Equity/Tangible Assets, Net Charge-Offs
(NCO)/Loans, Net Interest Margin, and Efficiency Ratio. The following table summarizes the results
of McGladreys benchmarking analysis:
24
|
|
|
|
|
|
|
|
|
|
|
Tangible
|
|
|
|
|
|
|
|
|
Equity/Tangible
|
|
NCO/
|
|
|
|
Efficiency
|
|
|
Assets
|
|
Loans
|
|
Net Interest Margin
|
|
Ratio
|
Peer Group Mean
|
|
9.46%
|
|
3.31%
|
|
3.37%
|
|
56.53%
|
Hanmi
|
|
3.25%
|
|
4.48%
|
|
3.69%
|
|
76.37%
|
Due to the low benchmarking comparisons of Hanmi Financial to the peer group, in particular
Tangible Equity/Tangible Assets (a key measure of regulatory capital adequacy and compliance),
McGladrey did not utilize the high end of the valuation range from its peer group analysis, rather
determined a valuation range per share of Hanmi Financial common stock based on the low and mean
valuation metrics for the peer group as summarized below:
|
|
|
|
|
|
|
Low Peer Group
|
|
Mean Peer Group
|
|
|
Multiple or % /
|
|
Multiple or %/
|
|
|
Derived Hanmi Share
|
|
Derived Hanmi Share
|
Valuation Metric
|
|
Price
|
|
Price
|
Price/Tangible Book
Value per Share
|
|
0.37X/$0.71
|
|
0.92X/$1.76
|
Price/Pre-Tax, Pre
Provision Earnings
per Share
|
|
2.94X/$1.29
|
|
6.12X/$2.69
|
Price/Total Assets
|
|
2.45%/$1.44
|
|
8.75%/$5.16
|
Price/Core Deposits
|
|
3.83%/$1.15
|
|
18.37%/$5.53
|
While McGladrey considered all four valuation metrics and the resulting derived price per
share of Hanmi Financial common stock summarized above, it placed greater consideration on
Price/Tangible Book value per Share based on its broad acceptance and importance with both relevant
regulatory agencies as well as investors.
Precedent Transactions Analysis
McGladrey identified precedent merger and acquisition (M&A) transactions that have taken
place among financial institutions, particularly for regional commercial banks based in the United
States with total assets under $15 billion. PIPE (private investment in public equity) offerings
were also considered in McGladreys precedent transaction analysis.
For M&A transactions, McGladrey determined that the two most appropriate valuation metrics to
apply to Hanmi Financial were purchase price to tangible book value per share and purchase price to
book value per share. In reviewing relevant acquisitions, only those transactions announced since
September 2008 were analyzed. McGladrey examined the following relevant M&A transactions:
|
|
|
|
|
Announced
|
|
Target
|
|
Buyer
|
5/13/10
|
|
First Resource Bank
|
|
Continental Bank
|
5/10/10
|
|
Atlantic Bancgroup Inc.
|
|
Jacksonville Bancorp, Inc.
|
5/07/10
|
|
First Franklin Corp.
|
|
Lenox Wealth Management, Inc.
|
4/19/10
|
|
Union National Financial Corporation
|
|
Donegal Financial Services Corporation
|
1/07/10
|
|
OAK Financial Corp.
|
|
Chemical Financial Corp.
|
12/27/09
|
|
First Chester County Corp.
|
|
Tower Bancorp Inc.
|
11/03/09
|
|
First Keystone Financial Inc.
|
|
Bryn Mawr Bank Corp.
|
10/25/09
|
|
First Litchfield Financial Corp.
|
|
Union Savings Bank
|
9/17/09
|
|
Gibraltar Private Bank & Trust Company
|
|
Management
|
7/26/09
|
|
Harleysville National Corp.
|
|
First Niagara Financial Group Inc.
|
6/29/09
|
|
Pamrapo Bancorp Inc.
|
|
BCB Bancorp Inc.
|
6/16/09
|
|
Beverly National Corporation
|
|
Danvers Bancorp Inc.
|
12/18/08
|
|
Provident Bankshares Corp.
|
|
M&T Bank Corp.
|
12/05/08
|
|
Old Forge Bank
|
|
Penseco Financial Services Corporation
|
11/08/08
|
|
Benjamin Franklin Bancorp Inc.
|
|
Independent Bank Corp.
|
9/23/08
|
|
Gateway Financial Holdings, Inc.
|
|
Hampton Roads Bankshares Inc.
|
25
For PIPE offerings, McGladrey determined that the most appropriate valuation metric to apply
to Hanmi Financial is the price per share discount in comparable transactions. In reviewing PIPE
transactions, U.S. Treasury investments under the Troubled Asset Relief Program (TARP) were
excluded. In addition, due to recent market volatility and dislocations experienced within the
financial sector, McGladrey determined it was relevant to include PIPE offerings announced since
the beginning of 2009. Based on these criteria, 31 relevant PIPE offerings were identified.
Based on its precedent transactions summary analysis, McGladrey determined the valuation range
per share of Hanmi Financial common stock to be between $0.66 and $2.10 as summarized below:
M&A Transactions:
|
|
|
|
|
|
|
Low
|
|
Mean
|
|
|
Multiple/Derived
|
|
Multiple/Derived
|
Valuation Metric
|
|
Hanmi Share Price
|
|
Hanmi Share Price
|
Tangible Book Value per Share
|
|
0.34X/$0.65
|
|
1.09X/$2.08
|
Book Value per Share
|
|
0.34X/$0.67
|
|
0.97X/$1.91
|
Average Derived Hanmi Share
Price
|
|
$0.66
|
|
$2.00
|
PIPE Offerings:
|
|
|
|
|
|
|
High Discount
|
|
Mean Discount
|
|
|
%/Derived Share Price
|
|
%/Derived Share Price
|
Valuation Metric
|
|
(a)
|
|
(a)
|
Share Price Discount
1-day before
Announcement
|
|
27.88%/$1.67
|
|
8.96%/$2.10
|
|
|
|
(a)
|
|
Based on closing share price of Hanmi common stock on May 18, 2010
|
Discounted Cash Flow Analysis
McGladrey relied on a five-year forecast prepared and approved by senior Hanmi Financial
management to perform a discounted cash flow (DCF) analysis and determine a valuation price range
for Hanmi Financial common stock. Although this analysis is sometimes done by reviewing after tax
cash flows (the equivalent of pre-tax, pre-provision earnings for banks), McGladreys discounted
cash flow analysis takes into account loan loss provisions, even though this has no immediate cash
impact. However, McGladrey believes that the equity markets and regulators have become increasingly
concerned over underperforming loans and that their impact, although not immediate, eventually
impacts the future cash flows. Therefore, McGladrey utilized after-tax net income as the future
projected income streams for its DCF analysis.
The discount rate used to arrive at present value is a function of the uncertainty or
riskiness of Hanmi Financial managements projected net income compared to market risk, with
investors requiring higher rates of return for riskier assets and lower rates of return for less
riskier assets. Given that Hanmi Financial management periodically stress tests its loan base and
has been working to identify and provision for the assets at risk on the Hanmi Financials balance
sheet, McGladrey determined that a discount rate range of 10% 15% was appropriate. As current
Price/Earnings (P/E) multiples are significantly depressed due to the current economy and
challenges facing regional banks, McGladrey considered historical P/E multiples and applied a
terminal exit multiple range of 8.0X to 12.0X to projected 2014 net income.
Based on the assumptions summarized above, McGladreys DCF analysis resulted in a valuation
range of between $0.90 and $1.77 per share of Hanmi Financial common stock.
Cappello Opinion
Pursuant to an engagement letter with the Special Committee dated April 26, 2010, and at the
request of the Special Committee, on May 19, 2010, Cappello delivered its oral opinion to the
Special Committee, subsequently
26
confirmed in writing as of the same date, that, as of that date and
subject to the assumptions, qualifications and limitations set forth in its opinion, the price per
share of Hanmi Financials common stock to be received by Hanmi Financial in the Transaction was
fair, from a financial point of view, to the holders of Hanmi Financials common stock, other than
the Investors. The full text of Cappellos written opinion dated May 19, 2010 is attached to this
document as
Annex B
.
This summary of Cappellos opinion is qualified in its entirety by reference to the full text
of the opinion. We urge you to read Cappellos opinion carefully in its entirety for a description
of the procedures followed, assumptions made, matters considered and limitations on the review
undertaken by Cappello. Cappellos opinion was addressed to and provided for the benefit and use
of the Special Committee in connection with its consideration of the Transaction. Cappellos
opinion addresses only the fairness, from a financial point of view, as of the date thereof, to the
holders of Hanmi Financials common stock, other than the Investors, of the price per share of
Hanmi Financials common stock to be received by Hanmi Financial in the Transaction. Cappellos
opinion does not constitute a recommendation to the Special Committee, Hanmi Financials Board of
Directors, Hanmi Financials stockholders or any other person as to how to vote or act on any
matter. Cappellos opinion and the analyses performed by Cappello in connection with its opinion
and reviewed by the Special Committee were only two of many factors considered by the Special
Committee in connection with their evaluation of the Transaction. See
Reasons for the Capital
Raising Stockholder Proposals; Recommendation of Hanmi Financials Board of Directors
.
In the course of performing its review and analyses for rendering its opinion, Cappello
undertook the review and inquiries it deemed necessary and appropriate under the circumstances,
including:
|
i.
|
|
reviewing a draft of the securities purchase agreement with Woori dated May 19, 2010;
|
|
|
ii.
|
|
reviewing Hanmi Financials Annual Reports to Stockholders and Annual Reports on Form
10-K for the fiscal years ended December 31, 2007, 2008 and 2009, Hanmi Financials
quarterly report on Form 10-Q for the period ended March 31, 2010, Hanmi Financials
Current Reports on Form 8-K filed since December 31, 2009, and certain other publicly
available business and financial information relating to Hanmi Financial;
|
|
|
iii.
|
|
reviewing certain operating and financial information relating to Hanmi Financials
business and prospects furnished by Hanmi Financials management, including financial
estimates and projections furnished by Hanmi Financials management (the Management
Projections);
|
|
|
iv.
|
|
meeting with Hanmi Financials management to discuss Hanmi Financials business,
operations, historical and projected financial results and future prospects;
|
|
|
v.
|
|
reviewing the historical prices, trading multiples and trading volume of the shares of
Hanmi Financials common stock;
|
|
|
vi.
|
|
reviewing publicly available financial data, stock market performance data and trading
multiples of companies which Cappello deemed similar to Hanmi Financial in relevant
aspects;
|
|
|
vii.
|
|
reviewing, to the extent publicly available, the financial terms of certain private
investments in public securities and other transactions which have recently been effected
or announced which Cappello deemed similar to the proposed Transaction in relevant aspects;
|
|
|
viii.
|
|
performing discounted cash flow analyses based on the Management Projections;
|
|
|
ix.
|
|
reviewing estimates of and adjustments to the book value of Hanmi Financials assets
furnished by Hanmi Financials management (the Book Value Estimates);
|
|
|
x.
|
|
reviewing the pro forma financial results, financial condition and capitalization of
Hanmi Financial, giving effect to the Transaction;
|
|
|
xi.
|
|
participating in discussions and negotiations regarding the Transaction with Hanmi
Financial, Woori and other interested parties; and
|
|
|
xii.
|
|
considering such other information, financial studies, analyses and investigations and
financial, economic and market criteria which Cappello deemed appropriate.
|
27
In conducting its review and rendering its opinion, Cappello, with the Special
Committees consent, assumed and relied, without independent investigation or verification, on the
accuracy and completeness of all the foregoing information and all other information provided to,
discussed with or reviewed by Cappello. With respect to the Management Projections and Book Value
Estimates, Hanmi Financials management advised Cappello, and Cappello assumed, with the Special
Committees consent, that such projections and estimates were reasonably prepared on bases
reflecting the best currently available estimates and judgments of Hanmi Financials senior
management as to Hanmi Financials expected future performance and the book value of Hanmi
Financials assets. Cappello has, with the Special Committees consent, not assumed any
responsibility for the independent verification of any such information and Cappello further, with
the Special Committees consent, relied upon the assurance of Hanmi Financials senior management
that they are unaware of any facts that would make the information, financial estimates and
projections incomplete or misleading. Without limiting the foregoing, Cappello expressed no
opinion as to the Management Projections or Book Value Estimates or the assumptions on which they
were prepared.
In rendering its opinion, Cappello assumed, with the Special Committees consent, that, in the
course of obtaining any regulatory or third party consents, approvals or agreements in connection
with the Transaction, no delay, limitation, restriction or condition would be imposed that would
have an adverse effect on the contemplated benefits of the Transaction and that the Transaction
would be consummated in accordance with the terms of the draft of the stock purchase agreement with
Woori that Cappello reviewed, without waiver, modification or amendment of any material term,
condition or agreement thereof. Cappello also assumed for the purposes of its opinion that the
Transaction would be consummated as of the date of its opinion.
Cappello was not requested to make, and did not make, any independent evaluation or appraisal
of the assets or liabilities (contingent or otherwise) of Hanmi Financial, and Cappello did not
receive any such evaluations or appraisals, other than certain reports provided by Hanmi
Financials management with respect to book value of certain of Hanmi Financials assets. Without
limiting the foregoing, Cappello did not review any of Hanmi Financials loan files or Hanmi
Financials allowances for loan losses. In addition, Cappello did not evaluate or obtain any
evaluations of, and its opinion does not address, the solvency, fair value or viability of Hanmi
Financial or any other person under any state or federal laws relating to bankruptcy, insolvency or
similar matters.
Hanmi Financials management informed Cappello that Hanmi Financials wholly-owned banking
subsidiary, Hanmi Bank, has consented to a Final Order from the California Department of Financial
Institutions, and that Hanmi Financial and Hanmi Bank have entered into a Written Agreement with
the Federal Reserve Bank of San Francisco, which require, among other things, that Hanmi Bank
increase its capital and maintain certain regulatory capital ratios prior to certain specified
dates, including an increase of contributed equity capital by not less than an additional $100
million by July 31, 2010. Cappello has assumed, with the Special Committees consent, that failure
to meet these requirements would lead to regulatory actions that could have a material adverse
impact on the value of Hanmi Financials common stock and could lead to a regulatory liquidation or
takeover that would render Hanmi Financials common stock worthless.
Cappellos opinion addresses only the fairness, from a financial point of view, as of the date
of its opinion, to the holders of Hanmi Financials common stock, other than the Investors, of the
price per share to be received by Hanmi Financial in the Transaction, and does not address any
other aspect or implication of the Transaction or any other agreement, arrangement or understanding
entered into in connection with the Transaction or otherwise. Cappellos opinion dose not address
any legal, tax, accounting or regulatory matters related to the securities purchase agreement with
Woori or the Transaction or otherwise to Hanmi Financial, as to which it has assumed that Hanmi
Financial, the Special Committee and Hanmi Financials Board of Directors have received such advice
from relevant advisors as each has deemed appropriate, and Cappello expressed no opinion as to the
federal, state or local tax consequences of the Transaction. Cappellos opinion is necessarily
based upon the financial, economic, market and other conditions as they existed and could be
evaluated, and the information made available to it, as of the date of its opinion. Cappello
expressly disclaimed any obligation to update or otherwise revise its opinion in the event of, or
to advise any person of, any change in any fact or matter affecting its opinion of which it may
become aware after the date of its opinion. Cappellos opinion did not address Hanmi Financials
underlying business decision to proceed with or effect the Transaction or the relative merits of
the stock offerings compared as compared to any alternative transactions or business strategies
that might be available to us. Further, in rendering its opinion, Cappello expressed no opinion as
to the fairness of the amount or nature of the compensation to any of Hanmi Financials officers,
directors or employees, or any class of such persons. In addition, Cappello expressed no
28
opinion as to the trading price or range of prices of Hanmi Financials common stock at any
time, including upon the announcement or consummation of the Transaction.
Summary of Principal Financial Analyses
The following is a summary of the principal financial analyses performed by Cappello to arrive
at its opinion. Some of the summaries of financial analyses include information presented in
tabular format. In order to fully understand the financial analyses, the tables must be read
together with the text of each summary. The tables alone do not constitute a complete description
of the financial analyses. Considering the data set forth in the tables without considering the
full narrative description of the financial analyses, including the methodologies and assumptions
underlying the analyses, could create a misleading or incomplete view of the financial analyses.
In connection with the rendering of its opinion to the Special Committee, Cappello reviewed with
the Special Committee the following analyses and other information material to its opinion. Unless
otherwise noted, all analyses were performed based on market information available as of May 19,
2010, the trading day on which Cappello finalized its analysis.
Indicative Standalone Valuation Summary
Cappello analyzed the standalone valuation implied for Hanmi Financial using selected public
companies, precedent transactions, adjusted book value and discounted cash flow analyses. A
summary of these analyses and the resulting implied equity value and equity value per share for
Hanmi on a standalone basis are shown below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Value
|
|
|
Equity Value
|
|
|
|
|
|
|
|
Selected Metric
|
|
|
Range
|
|
|
Per Share
|
|
|
|
|
|
|
|
Range
|
|
|
($ millions)
|
|
|
Range
|
|
Valuation Methods
|
|
Metric
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
|
High
|
|
|
Selected Public Companies
|
|
Price to Book Value
|
|
|
0.45
|
x
|
|
|
0.55
|
x
|
|
$
|
45
|
|
|
$
|
56
|
|
|
$
|
0.89
|
|
|
$
|
1.09
|
|
Precedent Transactions
|
|
Price to Book Value
|
|
|
0.20
|
x
|
|
|
0.50
|
x
|
|
$
|
20
|
|
|
$
|
51
|
|
|
$
|
0.39
|
|
|
$
|
0.99
|
|
Precedent Transactions
|
|
1-Day Discount to Unaffected Price
|
|
|
-25
|
%
|
|
|
-15
|
%
|
|
$
|
46
|
|
|
$
|
52
|
|
|
$
|
0.90
|
|
|
$
|
1.02
|
|
Adjusted Book Value
|
|
Book Value Per Share
|
|
$
|
0.00
|
|
|
$
|
0.94
|
|
|
$
|
0
|
|
|
$
|
48
|
|
|
$
|
0.00
|
|
|
$
|
0.94
|
|
Discounted Cash Flow
|
|
Equity Value Per Share
|
|
$
|
0.23
|
|
|
$
|
0.37
|
|
|
$
|
12
|
|
|
$
|
19
|
|
|
$
|
0.23
|
|
|
$
|
0.37
|
|
Selected Public Companies Analysis.
Although Cappello believed that no companies were
directly comparable to Hanmi Financial, it nonetheless prepared a selected company analysis of
Hanmi Financials implied price to book value trading multiple relative to a group of
publicly-traded companies that Cappello believed to be of similar size and faced with similar
levels of capital to Hanmi Financial. In selecting these publicly-traded companies,
Cappello included publicly listed banks with $1.0 billion to $5.0 billion in total assets and a
holding company Tier 1 Capital Ratio of 3.0% to 8.0% (other than Preferred Bank, listed below,
which had a Tier 1 Capital Ratio of 8.03%). These criteria generated the following list of banks:
|
|
|
Macatawa Bank Corp.
|
|
|
|
|
First Business Financial Services
|
|
|
|
|
Bank of Granite
|
|
|
|
|
Mercantile Bancorp
|
|
|
|
|
Preferred Bank
|
|
|
|
|
Cascade Bancorp
|
|
|
|
|
FNB United Corp.
|
|
|
|
|
Integra Bank Corp.
|
As part of its selected public companies analysis, Cappello calculated each selected companys
current trading price to book value multiple, and selected an implied price to book value multiple
range of 0.45x to 0.55x.
29
Cappello then calculated the implied valuation range for Hanmi Financial on a standalone basis
by applying the selected range of price to book value multiples for the selected public companies
to the book value for Hanmi Financial as at March 31, 2010 of $101 million, producing an implied
equity value range of $45-$56 million, or $0.89-$1.09 per share of Hanmi Financials common stock.
Selected Precedent Transactions Analysis.
Cappello conducted a selected precedent
transactions analysis by examining private investment in public equity (PIPE) transactions by
public banking companies announced after 2008 that were either pending or closed, involved a change
of control, and had a transaction size between $50 million and $2 billion. The precedent
transactions included PIPEs involving the following twelve companies:
|
|
|
Allegiance Bank of North America
|
|
|
|
|
Berkshire Bancorp Inc.
|
|
|
|
|
California Oaks State Bank
|
|
|
|
|
Cascade Bancorp
|
|
|
|
|
Doral Financial Corp.
|
|
|
|
|
Flagstar Bancorp Inc.
|
|
|
|
|
Heritage Oaks Bancorp
|
|
|
|
|
Pacific Capital Bancorp
|
|
|
|
|
Patriot National Bancorp Inc.
|
|
|
|
|
Saehan Bancorp
|
|
|
|
|
Sterling Financial Corp.
|
|
|
|
|
West Coast Bancorp
|
As part of its selected precedent transactions analysis, Cappello calculated each companys
price to book value multiple at the time of announcement of the respective precedent transaction
and the premium or discount of the offer price to the trading price the day before the precedent
transaction was announced. Based on these metrics, Cappello selected a price to book value
multiple range of 0.20x to 0.50x and a 1-day discount range of -25% to -15%. Cappello then
calculated implied valuation ranges of Hanmi Financial on a standalone basis by applying the
selected range of price to book value multiples for the selected precedent transactions to the book
value for Hanmi as at March 31, 2010 of $101 million, producing an implied equity value range of
$20-51 million, or $0.39-$0.99 per share of Hanmi Financials common stock, and by applying the
selected 1-day discount range for the selected precedent transactions to the closing price for
Hanmi Financials common stock of $1.20 on January 15, 2010, the trading day immediately prior to
the first of several press reports containing speculation regarding a potential transaction with
Woori (such price is referred to as the Unaffected Price), producing an implied equity value
range of $46-52 million, or $0.90-$1.02 per share of Hanmi Financials common stock.
Cappello believed that none of the transactions reviewed in the selected precedent
transactions analysis were directly comparable to the Transaction and that none of the companies
involved in the precedent transactions were directly comparable to Hanmi Financial.
Adjusted Book Value.
Cappello reviewed the Book Value Estimates furnished by Hanmi
Financials management to Cappello. Cappello observed that the Book Value Estimates describe Hanmi
Financials adjusted book value as $0 to $48.1 million as of May 19, 2010. In performing its
analyses, Cappello took into account that Hanmi Financials adjusted book value per share range
pursuant to Hanmi Financials managements Book Value Estimates was $0.00 to $0.94.
Discounted Cash Flow Analysis.
Cappello calculated a range of implied Hanmi Financial equity
values per share on a standalone basis utilizing a 20-year discounted cash flow analysis. In
preparing these analyses, Cappello relied upon the Management Projections, including Hanmi
Financials managements assumptions with respect to return on assets and targeted tangible common
equity and other assumptions provided by management. Utilizing the Management Projections and
these assumptions, Cappello calculated Hanmi Financials annual after-tax free cash flows available
for distribution to stockholders for calendar years 2010 to 2030, based upon a range of target
tangible common equity ratios of 7.0% to 9.0%. Cappello estimated a terminal value calculated for
calendar year 2031 and beyond utilizing a terminal price to earnings multiple of 10.0x. Cappello
then discounted the free cash flow streams and the estimated terminal value to a present value
using a cost of equity discount rate range of 22.5%
30
to 27.5%. Based on the Management Projections and these assumptions, the discounted cash flow
analysis yielded an implied equity valuation range of $12-$19 million, or $0.23-$0.37 per share of
Hanmi Financials common stock, as of June 30, 2010.
Pro Forma Transaction Valuation Indications
Cappello analyzed the valuation implied for Hanmi Financials common stock after giving pro
forma effect to the shares of Hanmi Financials common stock to be issued pursuant to the
Transaction, using selected public companies, post-transaction control PIPE trading multiple,
precedent transactions and discounted cash flow analyses. Cappello conducted each of these
analyses, except the discounted cash flow analysis, using a pro forma book value for Hanmi
Financial as of March 31, 2010, calculated using Hanmi Financials managements estimates for two
different scenarios for implementation of the Transaction: (i) a scenario involving total sales of
Hanmi Financials common stock in the Transaction of $330 million, resulting in pro forma shares
outstanding of 326.2 million (the Woori Plus Other Investors scenario), and (ii) a scenario
involving total sales of Hanmi Financials common stock in the Transaction of $210 million,
resulting in pro forma shares outstanding of 226.2 million (the Woori Only scenario). A summary
of these analyses under each of the Woori Plus Other Investors and the Woori Only scenarios, and
the resulting implied equity value and equity value per share for Hanmi Financial on a pro forma
basis, are shown below.
Woori Plus Other Investors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Value
|
|
|
Equity Value
|
|
|
|
|
|
|
|
Selected Metric
|
|
|
Range
|
|
|
Per Share
|
|
|
|
|
|
|
|
Range
|
|
|
($ millions)
|
|
|
Range
|
|
Valuation Mehodst
|
|
Metric
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
|
High
|
|
|
Selected Public Companies
|
|
Price to Book Value
|
|
|
1.00x
|
|
|
|
1.40x
|
|
|
$
|
435
|
|
|
$
|
609
|
|
|
$
|
1.33
|
|
|
$
|
1.87
|
|
Post-Transaction Control PIPE Trading Multiples
|
|
Price to Book Value
|
|
|
0.99x
|
|
|
|
1.22x
|
|
|
$
|
431
|
|
|
$
|
531
|
|
|
$
|
1.32
|
|
|
$
|
1.63
|
|
Precedent Transactions M&A
|
|
Price to Book Value
|
|
|
0.90x
|
|
|
|
1.10x
|
|
|
$
|
392
|
|
|
$
|
479
|
|
|
$
|
1.20
|
|
|
$
|
1.47
|
|
Discounted Cash Flow
|
|
Equity Value Per Share
|
|
$
|
1.35
|
|
|
$
|
1.55
|
|
|
$
|
440
|
|
|
$
|
506
|
|
|
$
|
1.35
|
|
|
$
|
1.55
|
|
Woori Only
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Value
|
|
|
Equity Value
|
|
|
|
|
|
|
|
Selected Metric
|
|
|
Range
|
|
|
Per Share
|
|
|
|
|
|
|
|
Range
|
|
|
($ millions)
|
|
|
Range
|
|
Valuation Methods
|
|
Metric
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
|
High
|
|
| | | | | | |
|
Selected Public Companies
|
|
Price to Book Value
|
|
|
1.00x
|
|
|
|
1.40x
|
|
|
$
|
315
|
|
|
$
|
441
|
|
|
$
|
1.39
|
|
|
$
|
1.95
|
|
Post-Transaction Control PIPE Trading Multiples
|
|
Price to Book Value
|
|
|
0.99x
|
|
|
|
1.22x
|
|
|
$
|
312
|
|
|
$
|
385
|
|
|
$
|
1.38
|
|
|
$
|
1.70
|
|
Precedent Transactions M&A
|
|
Price to Book Value
|
|
|
0.90x
|
|
|
|
1.10x
|
|
|
$
|
284
|
|
|
$
|
347
|
|
|
$
|
1.25
|
|
|
$
|
1.53
|
|
Selected Public Companies Analysis.
Although Cappello believed that no companies were
directly comparable to Hanmi Financial on a pro forma basis, it nonetheless prepared a selected
public companies analysis of Hanmi Financials implied price to book value trading multiple
relative to a group of Korean American and Chinese American banks that Cappello believed to be of
similar size and with similar operations to us. These criteria generated the following
list of banks:
|
|
|
Nara Bancorp Inc.
|
|
|
|
|
Wilshire Bancorp Inc.
|
|
|
|
|
Center Financial Corporation
|
31
|
|
|
Saehan Bancorp
|
|
|
|
|
Pacific City Financial Corp.
|
|
|
|
|
East West Bancorp, Inc.
|
|
|
|
|
Cathay General Bancorp
|
|
|
|
|
Preferred Bank
|
As part of its selected public companies analysis, Cappello calculated each selected companys
current trading price to book value multiple, and selected an implied price to book value multiple
range of 1.00x to 1.40x. Cappello then calculated the implied pro forma valuation ranges of Hanmi
Financial by applying the selected range of price to book value multiples for the selected public
companies to the pro forma book value for Hanmi Financial as of March 31, 2010. Cappello conducted
its analysis assuming each of the Woori Plus Other Investors and Woori Only scenarios, with March
31, 2010 pro forma book values of $435 million and $315 million, respectively, resulting in implied
pro forma equity values between $1.33-$1.87 per share of Hanmi Financials common stock for the
Woori Plus Other Investors scenario, and $1.39-$1.95 per share of Hanmi Financials common stock
for the Woori Only scenario.
Post-Transaction Control PIPE Trading Multiples.
Cappello selected the West Coast Bancorp
PIPE for a post-transaction control PIPE trading multiple analysis based on West Coast Bancorps
having had total assets and a holding company Tier 1 Capital Ratio similar to Hanmi Financials and
having also faced regulatory requirements to increase its capital and maintain certain capital
ratios. Cappello observed that West Coast Bancorps stock price closed at 0.99x book value as of
May 19, 2010 and traded in a range of 0.99x to 1.22x book value from April 26, 2010 (the date West
Coast Bancorp disclosed its post-transaction book value in an earnings release) until May 19, 2010.
Cappello then calculated pro forma valuation ranges for Hanmi Financial by applying price to book
value multiples between 0.99-1.22x to the pro forma book value for Hanmi Financial as of March 31,
2010. Cappello conducted its analysis assuming each of the Woori Plus Other Investors and Woori
Only scenarios, with March 31, 2010 pro forma book values of $435 million and $315 million,
respectively, resulting in implied pro forma equity values between $1.32-$1.63 per share of Hanmi
Financials common stock for the Woori Plus Other Investors scenario and $1.38-$1.70 per share of
Hanmi Financials common stock for the Woori Only scenario.
Precedent Transactions M&A.
Cappello reviewed selected precedent mergers & acquisitions
(M&A) transactions that were announced and closed between January 1, 2007 and May 19, 2010
involving control acquisitions of banks by strategic buyers and total target assets of $500 million
to $10 billion. These criteria generated 37 M&A transactions in total.
As part of its precedent transactions analysis, Cappello calculated each banks price to book
value multiple at the time of announcement of the respective precedent transaction. Based on these
metrics, Cappello selected a pro forma price to book value multiple range of 0.90x to 1.10x.
Cappello then calculated implied pro forma valuation ranges of Hanmi Financial by applying the
selected range of price to book value multiples to the pro forma book value for Hanmi Financial as
of March 31, 2010. Cappello conducted its analysis assuming each of the Woori Plus Other Investors
and Woori Only scenarios, with March 31, 2010 pro forma book values of $435 million and $315
million, respectively, resulting in implied pro forma equity values between $1.20-$1.47 per share
of Hanmi Financials common stock for the Woori Plus Other Investors scenario and $1.25-$1.53 per
share of Hanmi Financials common stock for the Woori Only scenario.
Cappello believed that none of the transactions reviewed in the precedent transactions
analysis were directly comparable to the Transaction and that none of the companies involved in the
precedent transactions were directly comparable to Hanmi Financial.
Discounted Cash Flow Analysis.
Cappello conducted a five-year discounted cash flow analysis
of Hanmi Financial on a pro forma basis. In preparing these analyses, Cappello relied upon the
Management Projections, which include long-term pro forma projections assuming total sales of Hanmi
Financials common stock in the Transaction to Woori and other Investors of $330 million.
Utilizing the Management Projections in conjunction with Hanmi Financials managements indicative
pro forma range of target tangible common equity ratios of 7.0% to 9.0%, Cappello calculated Hanmi
Financials annual after-tax free cash flows available for distribution to stockholders for
calendar years 2010 to 2014. Cappello estimated a terminal value calculated for calendar year 2015
and beyond utilizing a terminal price to earnings multiple of 10.0x. Cappello then discounted the
free cash flow
32
streams and the estimated terminal value to a present value using a cost of equity discount
rate range of 16.0% to 20.0%. This discounted cash flow analysis yielded an implied pro forma
valuation range for Hanmi Financials common stock of $1.35-$1.55 per share as of June 30, 2010.
Overview of Analyses and Other Considerations
The preceding discussion is a summary of the material financial analyses furnished by Cappello
to the Special Committee, but does not purport to be a complete description of the analyses
performed by Cappello or of its presentation to the Special Committee. In reaching its opinion,
Cappello did not assign any particular weight to any one analysis or the results yielded by that
analysis, but rather exercised its professional judgment as to the significance and relevance of
each analysis or result. Cappello believed that it was inappropriate to, and therefore did not,
rely solely on the quantitative results of the analyses and, accordingly, also made qualitative
judgments concerning differences between the characteristics of Hanmi Financial and the data
selected for use in its analyses, as further discussed below. No single company used in the above
analyses as a comparison is identical to Hanmi Financial, and no single transaction used in the
above analyses is identical to the Transaction, and accordingly an evaluation of the results of
those analyses is not entirely mathematical. Rather, the analyses involve complex considerations
and judgments concerning financial and operating characteristics and other factors that could
affect the acquisition, public trading or other values of the companies, businesses or transactions
analyzed. The analyses were prepared solely for purposes of Cappello providing an opinion as to
the fairness, from a financial point of view, as of the date of its opinion, to the holders of
Hanmi Financials common stock, other than the Investors, of the price per share to be received by
Hanmi Financial in the Transaction, and do not purport to be appraisals or necessarily reflect the
prices at which businesses or securities actually may be sold, which are inherently subject to
uncertainty.
The preparation of a fairness opinion is a complex process that involves the application of
subjective business judgment in determining the most appropriate and relevant methods of financial
analysis and the application of those methods to the particular circumstances. Several analytical
methodologies were used by Cappello, and no one method of analysis should be regarded as critical
to the overall conclusion reached. Each analytical technique has inherent strengths and
weaknesses, and the nature of the available information may further affect the value of particular
techniques. The overall conclusions of Cappello were based on all the analyses and factors
presented herein taken as a whole and also on the application of Cappellos own experience and
judgment. Such conclusions may involve significant elements of subjective judgment and qualitative
analysis. Cappello therefore believes that its analyses must be considered as a whole and that
selecting portions of the analyses and of the factors considered, without considering all factors
and analyses, could create an incomplete or misleading view of the processes underlying its
opinion.
In connection with its analyses, Cappello made, and was provided by Hanmi Financials
management with, numerous assumptions with respect to industry performance, general business and
economic conditions and other matters, many of which are beyond Hanmi Financials control or the
control of Cappello or Hanmi Financials other advisors. Analyses based upon forecasts of future
results are not necessarily indicative of actual future results, which may be significantly more or
less favorable than suggested by these analyses. Because these analyses are inherently subject to
uncertainty, being based upon numerous factors or events beyond the control of Hanmi Financial or
Hanmi Financials advisors, none of Hanmi Financial, Cappello or any other person assumes
responsibility if future results or actual values are materially different from these forecasts or
assumptions.
Cappello is an investment banking advisory firm engaged in, among other things, the valuation
of businesses and their securities in connection with mergers and acquisitions, private placements
and related financings. The Special Committee selected Cappello to render its opinion based on
Cappellos familiarity with the market in which we compete, Cappellos reputation, and the depth of
the experience and expertise of the Cappello team responsible for the engagement.
Cappello has acted as financial advisor and placement agent to Hanmi Financial in connection
with the Transaction and will receive a fee for its services, a significant portion of which is
contingent upon the purchases of shares pursuant to the Transaction. Cappello has also received a
fee for rendering its opinion, without regard to the conclusion reached in such opinion or whether
the proposed stock offering is consummated. We have also agreed to indemnify Cappello against
certain liabilities and other items arising out of its engagement, both in its capacity as
financial advisor and in connection with the rendering of its opinion. The terms of Cappellos
engagement letter
33
were negotiated at arms-length between Hanmi Financial and Cappello, and the Special Committee
and Hanmi Financials Board of Directors were aware of this fee arrangement at the time they
reviewed and approved the securities purchase agreement with Woori and the Transaction. From time
to time, Cappello and its affiliates may in the future provide investment banking and other
financial services to Hanmi Financial, Woori or the other Investors, for which they would expect to
receive compensation. Cappello is a registered broker-dealer with the U.S. Securities and Exchange
Commission and a member of the Financial Industry Regulatory Authority.
Cappellos opinion was approved by the Cappello Capital Corp. Fairness Opinion Committee.
INTERESTS OF CERTAIN PERSONS IN THE CAPITAL RAISING STOCKHOLDER PROPOSALS
Certain of our directors and executive officers intend to participate in the registered rights
and best efforts offering. The current stock ownership of each of the above individuals as of the
record date is set forth below under Beneficial Ownership of Principal Stockholders and
Management. The following directors and executive officers have initially indicated to us an
intention to purchase the following number of shares of our common stock in the registered rights
and best efforts offering. The actual amounts the directors and executive officers purchase in
the registered rights and best efforts offering may change.
|
|
|
|
|
|
|
Number
|
|
|
|
of
|
|
Name
|
|
Shares
|
|
Joseph K. Rho,
Chairman of our Board
|
|
|
1,637,838
|
|
Joon Hyung Lee,
Director
|
|
|
1,220,677
|
|
I Joon Ahn,
Director
|
|
|
1,200,000
|
|
Paul Seon-Hong Kim,
Director
|
|
|
130,000
|
|
Jay S. Yoo,
President and Chief Executive Officer, Director
|
|
|
80,000
|
|
Brian E. Cho,
Executive Vice President and Chief Financial Officer
|
|
|
20,000
|
|
Jung Hak Son,
Senior Vice President and Chief Credit Officer
|
|
|
30,000
|
|
John A. Hall,
Director
|
|
|
10,000
|
|
William J. Stolte,
Director
|
|
|
21,000
|
|
|
|
|
|
|
All Directors and Executive Officers as a Group (9 in Number)
|
|
|
4,349,515
|
|
In addition, other of our employees may participate in the registered rights and best
efforts offering.
If
the transactions contemplated by the securities purchase agreement with Woori are
consummated, we will have incurred a change in control under the terms of our 2007 equity
incentive plan. Accordingly, all of our outstanding options under our 2007 equity incentive plans
will accelerate and the conditions on our restricted stock issued under our 2007 equity incentive
plan will lapse. The table below sets forth the intrinsic values that our directors and executive
officers would derive from the equity awards which accelerate upon consummation of the securities
purchase agreement with Woori assuming the transactions with Woori closed on May 25, 2010. For
restricted stock awards, the intrinsic value is based upon the closing price of our common stock on
May 25, 2010 ($2.03), and for stock options, the value is based on such $2.03 minus the exercise
price of the applicable stock option. You should note that the amounts indicated below are
estimates based on multiple assumptions that may or may not actually occur. As a result, the
actual amounts, if any, to be received by an executive officer or
director may differ from the amounts set
forth below.
|
|
|
|
|
|
|
|
|
|
|
Intrinsic Value of Accelerated
|
|
|
Intrinsic Value of Accelerated
|
|
Name
|
|
Stock Options ($)
|
|
|
Restricted Stock ($)
|
|
Joseph K. Rho,
Chairman of our Board
|
|
$
|
13,600
|
|
|
$
|
30,450
|
|
Joon Hyung Lee,
Director
|
|
$
|
13,600
|
|
|
$
|
30,450
|
|
I Joon Ahn,
Director
|
|
$
|
13,600
|
|
|
$
|
30,450
|
|
Paul Seon-Hong Kim,
Director
|
|
$
|
13,600
|
|
|
$
|
30,450
|
|
34
|
|
|
|
|
|
|
|
|
|
|
Intrinsic Value of Accelerated
|
|
|
Intrinsic Value of Accelerated
|
|
Name
|
|
Stock Options ($)
|
|
|
Restricted Stock ($)
|
|
Jay S. Yoo,
President and Chief
Executive Officer, Director
|
|
$
|
34,000
|
|
|
$
|
40,600
|
|
Brian E. Cho,
Executive Vice
President and Chief Financial
Officer
|
|
$
|
10,200
|
|
|
$
|
36,540
|
|
Jung Hak Son,
Senior Vice President
and Chief Credit Officer
|
|
$
|
6,800
|
|
|
$
|
23,954
|
|
John A. Hall,
Director
|
|
$
|
13,600
|
|
|
$
|
30,450
|
|
William J. Stolte,
Director
|
|
$
|
9,200
|
|
|
$
|
30,450
|
|
|
|
|
|
|
|
|
|
|
All Directors and Executive
Officers as a Group (9 in Number)
|
|
$
|
128,200
|
|
|
$
|
283,794
|
|
Subject to appropriate regulatory approvals, the securities purchase agreement permits us to
adopt a severance and retention plan for officers and directors providing payments in connection with their
severance or continued service to us through the closing date of the transactions with Woori. Pursuant to the
severance and retention plan, we intend to provide for our directors who resign as a result of the appointment of
the Woori representatives upon closing of the transactions contemplated by the securities purchase
agreement will be entitled to receive, (i) in the case of directors who have served us for at least
20 years, a payment of $3,000 per month over a five year period following termination totaling
$180,000 for each director and (ii) in the case of directors who have served us for less than 20
years a payment of $3,000 per month over a three year period totaling $108,000 for each director.
In addition, our retention plan provides that each of our executive officers, other than Mr. Yoo,
will be entitled to a lump sum payment equal to 3 months of their current base salary on November
1, 2010 or the termination of their employment, whichever occurs first. In the case of any
termination of our executive officers within 12 months of closing of the transactions contemplated
by the securities purchase agreement, each of our executive officers, other than Mr. Yoo, will
receive a lump sum payment equal to 3 months of their current base salary and 3 months of medical
insurance. Mr. Yoo is entitled to severance payments pursuant to the terms of his employment
agreement. Assuming that the transactions contemplated by the securities purchase agreement closed
on May 25, 2010 and the executive officers were terminated within 12 months of the closing of the
transaction, the executive officers would have received the approximate amounts set forth in the
table below. You should note that the amounts indicated below are estimates based on assumptions
that may or may not actually occur. As a result, the actual amounts, if any, to be received by an
executive officer may differ from the amounts set forth below. In addition, any amounts to be
paid to our executives as a result of consummation of the transactions with Woori are subject to
applicable approval of our federal and state regulators.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health and/or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Insurance
|
|
|
Equity
|
|
|
Accrued
|
|
|
|
|
Name
|
|
Severance Pay
|
|
|
Premiums
|
|
|
Acceleration (1)
|
|
|
Vacation
|
|
|
Total
|
|
Jay Yoo
|
|
$
|
165,000
|
|
|
$
|
7,658
|
|
|
$
|
24,000
|
|
|
$
|
34,687
|
|
|
$
|
231,345
|
|
Brian Cho
|
|
$
|
67,500
|
|
|
$
|
2,965
|
|
|
$
|
21,600
|
|
|
$
|
30,456
|
|
|
$
|
122,521
|
|
Jung Hak Son
|
|
$
|
52,500
|
|
|
$
|
2,965
|
|
|
$
|
14,160
|
|
|
$
|
24,230
|
|
|
$
|
93,855
|
|
|
|
|
(1)
|
|
Based on the intrinsic values of equity awards that accelerate upon consummation of
the securities purchase agreement with Woori assuming the transactions with Woori closed on May 25,
2010. For restricted stock awards, the intrinsic value is based upon the closing price of our
common stock on May 25, 2010 ($2.03), and for stock options, the value is based on such $2.03 minus
the exercise price of the applicable stock option.
|
As set forth in his biographical description, Mr. Jay Yoo was previously President and
Chief Executive Officer of Woori America Bank, a subsidiary of Woori Bank, from (2001 to 2007). He
also previously served as Chairman of the Board of Woori America Bank.
35
DESCRIPTION OF THE SECURITIES PURCHASE AGREEMENT WITH WOORI
AND THE STOCK OFFERINGS
As described above, Woori has entered into a securities purchase agreement with us to purchase
a minimum of $210 million (175 million shares) of common stock and a maximum of $240 million (200
million shares) of common stock. In addition, prior to the closing of the securities purchase
agreement with Woori, we intend to commence a registered rights and best efforts offering comprised
of a $60 million rights offering for our stockholders and a $60 million best efforts offering (plus
any additional shares of common stock that are not subscribed for in the rights offering) to the
public to raise up to $120 million, for aggregate gross proceeds, with the Woori investment, of up
to $360 million.
The following is a summary of the material terms of the securities purchase agreement with
Woori and the registered rights and best efforts offering. A copy of the securities purchase
agreement with Woori is attached to this document as
Annex A
and is incorporated by reference into
this document. Stockholders are urged to read the securities purchase agreement attached as
Annex A
in its entirety. While we believe this summary covers the material terms and provisions of the
securities purchase agreement with Woori, it may not contain all of the information that is
important to you and is qualified in its entirety by reference to
Annex A
. We cannot provide any
assurance that the transactions with Woori will be completed or that we will be able to sell any of
our shares of common stock pursuant to the registered rights and best efforts offering. For a
discussion of the fees and warrants being issued to our financial advisors in connection with the
securities purchase agreement, see
Fees and Expenses
below.
SECURITIES PURCHASE AGREEMENT
Purchase of Stock
The securities purchase agreement with Woori provides that upon satisfaction of all conditions
to closing, Woori shall purchase $210 million (175 million shares) of our common stock at a per
share purchase price of $1.20. Woori also has the option to purchase up to an additional $30
million (25 million shares) of our common stock for an aggregate investment not to exceed $240
million (200 million shares). The maximum dollar amount of shares of common stock to be issued in
the stock offerings will not exceed $360 million (300,000,000 shares of our common stock) and of
that amount, the maximum amount that may be raised in the registered rights and best efforts
offering may not exceed $120 million (100 million shares) in the aggregate. If Woori acquires 175
million shares of our common stock (and does not exercise its option) and we are able to sell the
maximum of 100 million shares of our common stock in the registered rights and best efforts
offering, Woori will own approximately 54% of our outstanding common stock following consummation of the
transactions contemplated by the securities purchase agreement. If Woori acquires 200 million
shares of our common stock (by exercising its option) and we are not able to sell any shares of our
common stock in the registered rights and best efforts offering,
Woori will own approximately 80% of our
outstanding common stock following consummation of the transactions contemplated by the securities
purchase agreement. Depending on how many shares of our common stock Woori purchases and how many
shares of our common stock are sold in the registered rights and best efforts offering, if the
transactions contemplated by the securities purchase agreement with Woori are completed Woori will
own anywhere between approximately 54% and 80% of our outstanding common stock.
Representations and Warranties
In the securities purchase agreement, we make customary representations and warranties to
Woori relating to, among other things, our corporate authority, business, capitalization, financial
condition and changes to our financial condition, governmental filings, internal controls,
employee benefit plans, taxes, any environmental liabilities, assets and liabilities generally, and
the common stock to be issued. The representations and warranties survive for a period of twelve
months following the closing date; provided that certain representations and warranties relating to
tax, employee benefit plans and environmental liability survive until 60 days after the expiration
of the applicable statute of limitations and certain representations and warranties relating to our
organization, subsidiaries and capitalization which survive forever. Woori has also made various
representations
36
and warranties relating to, among other things, its corporate authority, business, investment
intent and sufficiency of funds now and at the closing.
Stockholders are not third-party beneficiaries under the securities purchase agreement and
should not construe the representations, warranties and covenants or any descriptions thereof as
characterizations of the actual state of facts or condition of our company, any of the investors or
any of their respective subsidiaries or affiliates. Moreover, information concerning the subject
matter of the representations and warranties may change after the date of the securities purchase
agreement, which subsequent information may or may not be fully reflected in the our public
disclosures. The provisions of the securities purchase agreement, including the representations and
warranties, should not be read alone, but instead should only be read together with the information
provided elsewhere in this document and in the documents incorporated by reference into this
document, including the periodic and current reports and statements that we file with the
Securities and Exchange Commission, or the SEC. For more information regarding these documents
incorporated by reference, see Where You Can Find More Information below.
Covenants
We have agreed with Woori that between the signing of the securities purchase agreement and
the closing, that we and our subsidiaries will carry on our business in the ordinary course, and
maintain and preserve our business relationships with third parties having business dealings with
us. In addition, we have agreed between the execution of the securities
purchase agreement and the closing date to certain covenants relating to our business activities.
Specifically, we have agreed, among other things, not to, and to cause our subsidiaries not to,
without the consent of Woori:
declare or pay dividends on, or make any distributions on, our capital stock;
split, combine or reclassify our capital stock;
repurchase our capital stock;
amend our charter documents except as contemplated by the securities purchase agreement;
enter into any merger, share exchange, reorganization or similar business combination except
as permitted by the securities purchase agreement;
make or acquire any loan or issue a commitment for any loan, except for loans and
commitments made in the ordinary course of business and with a principal balance of $2,000,000 or
less, subject to certain exceptions;
release any collateral or guarantees or restructure any loan or commitment for any loan with
a principal balance in excess of $1,000,000;
incur any indebtedness for borrowed money other than deposit liabilities, Federal Home Loan
Bank advances and the FRB federal discount window and reverse repurchase agreements, in each case,
entered into in the ordinary course of business consistent with past practice and with a final
maturity of one year or less;
change our method of accounting except as required by GAAP or regulatory accounting
principles;
except in the case of non-executive officers and other employees for increases in salary or
wages in the ordinary course of business consistent with past practice and except as otherwise
permitted by the securities purchase agreement, increase the compensation or benefits of any
present or former director, officer or employee, adopt or amend any employee benefit plan or grant
any equity or equity based awards;
37
pay, settle or compromise any claims, liabilities or obligations, including any litigation,
involving monetary damages in excess of $1,000,000 other than (i) payments or settlements in the
ordinary course of business; (ii) with respect to liabilities unless we have previously reserved
for that liability; or (iii) as we have previously agreed with Woori;
except for any sale, disposition or other transfer of certain real estate owned having a
value of $1,000,000 or less, sell, license, lease, encumber, assign or otherwise dispose of, or
abandon or fail to maintain any of our assets, properties or other rights or agreements material to
our business except for (i) sales of loans and investment securities in the ordinary course of
business or (ii) pledges of assets to secure public deposits accepted in the ordinary course of
business;
enter into, create, renew, amend or terminate, fail to perform any material obligations
under, waive or release any material rights under or give notice of a proposed renewal, amendment,
waiver, release or termination of, any contract agreement or lease to which we are a party or by
which we or our properties are bound that calls for aggregate annual payments of $1,000,000 or
more;
other than in the ordinary course of business or as required by law, make any material tax
claims, file any amended tax return with respect to any material tax, change any annual tax period
or surrender any claim to a material tax refund; or
enter into any agreements with our officers or directors or their immediate family members.
We have agreed with Woori that we may conduct the registered rights and best efforts offering,
provided that we will not issue more than $120 million of common
stock in the registered rights and best efforts offering. We have also agreed to use our commercially reasonable efforts to continue the
employment of our and our subsidiaries executive officers after the closing. Subject to
appropriate regulatory approvals, we may adopt a retention plan for officers and directors
providing payments (including severance obligations provided in the employment agreement with our
President and Chief Executive Officer) of up to $2,035,000 in
connection with their severance or continued
service to us or Hanmi Bank through the closing date.
We and Woori have agreed to file all necessary regulatory applications to consummate the
transactions contemplated by the securities purchase agreement. Woori has agreed, no later than 30
calendar days after the securities purchase agreement, to seek all governmental and regulatory
consents and approvals required for consummation of the transactions contemplated by the securities
purchase agreement, including, but not limited to, applications and notices required by the FRB,
the DFI, and the Korean Financial Services Commission.
In addition, we have agreed to call a meeting of our stockholders as soon as practicable to
vote on the proposals to (1) approve the amendment to our Certificate of Incorporation to increase
the number of authorized shares of our common stock to 500 million shares and (2) approve the
issuance of up to 200 million shares of common stock to Woori for purposes of Nasdaq Listing Rule
5635. In the event that both of the foregoing approvals are not obtained at the annual meeting,
we have agreed to include a proposal to approve (and our Board will unanimously recommend approval
of) such issuance at a subsequent meeting of our stockholders within 90 days of the annual meeting.
Woori has agreed that, for a period of three (3) years from the closing, neither it nor any of
its affiliates will, directly or indirectly, effect a cash-out merger or similar transaction
involving Hanmi Financial unless (a)(i) no less than a majority of the directors who are unaffiliated
with Woori and who were members of our Board of Directors prior to our entering into the agreement
with Woori approve the terms of the cash-out merger or similar
transaction, and (ii) the cash-out
merger or similar transaction receives the affirmative vote in favor by 66 2/3% of the
stockholders entitled to vote thereon, and separately by a majority of the stockholders entitled to
vote thereon excluding the vote of Woori or (b) Woori owns at least 90% of our outstanding voting
shares.
The
securities purchase agreement with Woori permits us to offer and sell
up to 4.9% of our
shares of common stock (on a fully-diluted basis and taking into account the registered rights and best efforts offering) to
any single investor or group of investors acting together (other than Woori) in the best efforts
portion of the registered rights and best efforts
38
offering. To the extent we desire to offer and sell more than 4.9% of the shares of common
stock (on a fully-diluted basis and taking into account the registered rights and best efforts offering) to any single investor
or group of investors acting together (other than Woori), it shall provide notice to Woori.
Notwithstanding the foregoing, we are not permitted to offer and sell more than 9.9% of the shares
of our common stock (on a fully-diluted basis and taking into account the registered rights and best efforts offering) to any other single
investor or group of investors acting together without the prior written consent of Woori.
Indemnification
We have agreed to indemnify and hold harmless Woori and its directors, officers, stockholders,
members, employees and agents (and any persons who controls Woori and the directors, officers,
stockholders, members, employees and agents of such control persons) (collectively, the Woori
Indemnitees) from any losses, damages, liabilities, contingencies, claims, costs and expenses, as
a result of any breach of any representation, warranty, covenant or agreement we make in the
securities purchase agreement. We are not required to indemnify Woori with respect to any claim
for indemnification until the aggregate amount of all losses exceed $1,000,000, in which case we
will be responsible for the full amount of such losses. The cumulative indemnification obligation
to the Woori Indemnitees shall not exceed $210 million. The indemnity provided for in the
agreement is the sole and exclusive monetary remedy of the Woori Indemnitees after the closing for
any inaccuracy of any of the representations and warranties contained in the securities purchase
agreement or any other breach of any covenant or agreement contained in the securities purchase
agreement, except in the case of fraud. Any claim for indemnification must be brought on or prior
to the first anniversary of the closing of the securities purchase agreement, subject to certain
exceptions for representations and warranties relating to (i) our organization, subsidiaries and
capitalization which claims may be brought at any time and (ii) our benefit plans, taxes and
environmental liability, which claims may be brought at any time prior to 60th day after the
expiration of the applicable statute of limitations.
No Solicitation
We have agreed that, neither we nor any of our subsidiaries will, nor will we or any of our
subsidiaries authorize or permit any of our respective directors, officers, employees,
consultants, agents and other authorized representatives acting in such capacity, to directly or
indirectly:
|
|
|
solicit, initiate or encourage the submission of
any acquisition proposal (as defined below) or enter
into any agreement or understanding with respect to an
acquisition proposal; or
|
|
|
|
|
participate in any discussions or negotiations
with, or disclose any information, for the purpose of
facilitating the making of, or take any other action to
facilitate any inquiries or the making of, any proposal
that constitutes or may reasonable be expected to lead to any acquisition
proposal.
|
We also agreed to, and agreed to cause our representatives to, cease any and all existing
discussions or negotiations, if any, with any third party conducted prior to the date of the
securities purchase agreement with respect to any acquisition proposal and to advise Woori of any
other acquisition proposal we receive.
Acquisition proposal means any written offer, proposal, or indication of interest from any
third party relating to any transaction or series of related transactions involving any (i)
acquisition or purchase by any person or entity, directly or indirectly, of 10% or more of our
common stock, or any tender offer (including a self-tender) or exchange offer that, if consummated,
would result in any person or entity beneficially owning 10% or more of any of our common stock,
(ii) any direct or indirect merger, acquisition, amalgamation, consolidation, share exchange,
business combination, joint venture or other similar transaction involving us or any of our
subsidiaries, which results in our stockholders before such transaction owning less than 51% of the
issued and outstanding voting or equity securities of us after the consummation of such
transaction, (iii) any sale, lease, exchange, transfer, license (other than licenses in the
ordinary course of business), acquisition or disposition of all or substantially all of our assets
and any of its subsidiaries, taken as a whole (measured by the lesser of book or fair market value
thereof), (iv) any liquidation, dissolution, recapitalization, extraordinary dividend or other
significant corporate reorganization us or any of our subsidiaries or (v) any issuance by us, other
than the sale of shares to Woori which
involves the purchase and sale by any person, directly or indirectly, of 10% or more of our common
stock.
39
Notwithstanding the restrictions described above, we may (i) comply with applicable
securities laws and regulations, including regulations relating to tender or exchange offers and
(ii) prior to the approval of the Capital Raising Stockholder Proposals, engage in negotiations or
discussions with any third party who, without any solicitation, initiation or encouragement of us
or our representatives, seeks to initiate discussion or negotiations and may furnish such third
party information concerning us and our business if such third party has first made an acquisition
proposal that is superior to Wooris proposal and our Board has determined in good faith after
consultation with its financial advisors and legal counsel that failure to take such action would
be inconsistent with its fiduciary duties under applicable law.
Conditions to Closing
The securities purchase agreement with Woori is subject to certain conditions to closing,
including, but not limited to:
the truth and correctness at the closing of all representations and warranties made in
the securities purchase agreement except where the failure of a representation or warranty to be
true and correct would not reasonably be expected to have a material adverse effect;
the performance of all covenants and agreements set forth in the securities purchase
agreement in all material respects;
we shall not have experienced an effect that has had or would reasonably expected to
result in a material adverse effect on us;
resignations of certain of our directors to accommodate Wooris ability to designate
five (5) of our seven (7) directors at the closing;
the obtaining of all required regulatory and stockholder approvals and required third
party consents; and
the delivery of all required certificates, opinions and other closing documents.
Board Recommendation
Subject to the provisions described below, our Board agreed to unanimously recommend that our
stockholders vote in favor of the Capital Raising Stockholder Proposals. The securities purchase
agreement with Woori provides that neither our Board nor any committee thereof will:
|
|
|
fail to make, withdraw, amend or modify, or
publicly propose to withhold, withdraw, amend or
modify, in a manner adverse to Woori, our Board
recommendation in favor of the Capital Raising
Stockholder Proposals;
|
|
|
|
|
approve, endorse, adopt or recommend, or publicly
propose to approve, endorse, adopt or recommend, any
acquisition proposal;
|
|
|
|
|
make any public statement inconsistent with our Board recommendation; or
|
|
|
|
|
resolve or agree to take any of the foregoing actions.
|
We refer to each of the foregoing actions as an adverse recommendation change.
Notwithstanding these restrictions, our Board may effect an adverse recommendation change at
any time if, following the receipt of and on account of an acquisition proposal that is superior to
the proposal contemplated by the securities purchase agreement with Woori:
40
our Board determines in good faith, after
consultation with its outside legal counsel, that the
failure to make an adverse recommendation change would
be inconsistent with its fiduciary duties under
applicable law.
The securities purchase agreement permits our Board to comply with Rule 14d-9 and Rule
14e-2(a) under the Securities Exchange Act of 1934, as amended (relating to tender offers and
exchange offers) with regard to an alternative proposal although such disclosure (other than a
stop, look and listen communication pursuant to Rule 14d-9(f)) will constitute an adverse
recommendation change unless our Board expressly publicly reaffirms our Board recommendation in
such communication or within two business days after requested to do so by Woori.
Board Representation
If the securities purchase with Woori closes pursuant to its terms, Woori is entitled to
nominate five (5) of our seven (7) directors, one of whom shall be the Chief Executive
Officer/President of Hanmi Financial. In conjunction therewith, up to five (5) of our directors
designated by us may resign to accommodate Wooris contractual rights. The directors identified by
Woori shall serve until our next annual meeting of stockholders and until their successors are
elected and qualified. So long as Woori holds more than 50% of our outstanding common stock on a
fully-diluted basis, it shall have the right to nominate two-thirds of our Board (rounded to the
nearest whole number). We have agreed to recommend to our stockholders the election of the Woori
nominees. Woori must provide us with the identity of the nominees no less than 20 days prior to
the date any such nominee takes office. In addition, the appointment of the Woori nominees is
subject to non-disapproval requirements of the Order and the notice requirements of the Written
Agreement.
Transfer Restrictions
The common stock issuable to Woori pursuant to those securities, has not been registered under
the Securities Act, or under the securities laws of any state or other jurisdiction, and unless so
registered may not be offered or sold in the United States or to U.S. persons except pursuant to
applicable regulation or an exemption from the registration requirements of the Securities Act and
applicable state securities laws.
Registration Rights
As a condition to closing, we will enter into a registration rights agreement with Woori
providing for the resale registration of the shares they will receive pursuant to the securities
purchase agreement.
Termination; Termination Fee
The securities purchase agreement with Woori may be terminated prior to the closing date:
by mutual agreement;
by either Woori, on the one hand, or us, on the other hand, if the conditions
precedent to such partys obligations have not been met or waived by July 31, 2010; provided,
however, that we may extend such termination date for up to 60 days if we fail to obtain approval
of the Capital Raising Stockholders Proposals by such date and both parties believe in good faith
that such approval will be secured by September 30, 2010; or if Woori fails to obtains it
regulatory approvals by July 31, 2010 and it notifies us that it believes in good faith that it can
secure the regulatory approvals by September 30, 2010 (such date, as may be extended, the Outside
Date);
by Woori or us, (i) upon being advised in writing by a governmental entity (or, in our
case, by Woori), that any of the regulatory approvals will not be granted or obtained on
or prior to the Outside Date; (ii) upon receipt of written notice that any regulatory approval has
been denied; or (iii) if Woori has been requested to withdraw any regulatory application required
for the transactions contemplated by the securities purchase agreement to be consummated;
41
by Woori, if our Board shall have (i) made an adverse recommendation change which has not subsequently been withdrawn; (ii)
failed to make our Board recommendation in favor of the Capital Raising Stockholder Proposals,
withdrawn such recommendation or modified or changed such recommendation in a manner such that it
would constitute an adverse recommendation change; or (iii) failed to call, give notice of, convene
and hold a stockholders meeting to vote on the Capital Raising Stockholder Proposals;
by Woori, if we breach our nonsolicitation obligations;
by us, in order to enter into an acquisition proposal;
by us or Woori if the Capital Raising Stockholder Proposals have not been approved by
the Outside Date; or
by us or Woori in the event a governmental entity prohibits or makes illegal the
consummation of the transactions contemplated by the securities purchase agreement.
If (i) Woori terminates the securities purchase agreement because we breach our
nonsolicitation obligations and we enter into an agreement with respect to an acquisition proposal
within 12 months of such termination; (ii) we terminate the securities purchase agreement to enter
into an alternative proposal or (iii) Woori terminates the securities purchase agreement because
the our Board makes an adverse recommendation change, fails to make, or modifies or changes our
Board recommendation, or fails to call, notice or hold the stockholders meeting to approve the
Capital Raising Stockholder Proposals and within 12 months after such termination we enter into an
agreement with respect to an acquisition proposal, then, in any such case, we are required to pay
to Woori $10,500,000 as a termination fee (Termination Fee).
If the securities purchase agreement is terminated, neither party will have any liability or
further obligation (except with respect to the Termination Fee); provided, however, any termination
of the securities purchase agreement will not relieve any party from liability for any breach by it
of the securities purchase agreement prior to the date of termination.
Fees and Expenses
We and Woori will each bear our own expenses in connection with the securities purchase
agreement. We have agreed to pay Cappello a cash fee equal to 1 percent (1%) of the aggregate
purchase price paid by Woori and five-year warrants to purchase up to 1 percent (1%) of the
aggregate number of shares issued to Woori at an exercise price of $1.20 per share. In addition,
we have paid a cash fee of $350,000 to Cappello in connection with the rendering of its fairness
opinion to our Board. We have agreed to pay a cash fee of $150,000 to McGladrey in connection with
the rendering of its fairness opinion to our Board. We have also agreed to indemnify Cappello and
McGladrey in connection with the services they have provided to us. Cappello and McGladrey and
their respective affiliates may provide services to us in the future for which they will be
compensated. Cappello will also receive fees from us in connection with services it provides in
the registered rights and best efforts offering discussed immediately below.
On January 18, 2010, we engaged IWL to render financial advisory services in connection with
the offer and sale of our stock in Korea. As set forth above, based upon the advice of counsel, we
believe that our engagement letter with IWL was not effective and we have no obligations owing
under it. If the agreement with IWL were effective, we would have paid IWL a cash fee equal to
3.1% of the aggregate purchase price paid by Woori upon the closing of the transaction and agreed
to reimburse IWL up to $250,000 in expenses. The engagement letter with IWL also required a
$750,000 non-refundable retainer which has not been paid and which would have been credited against
any amounts owing to IWL if the transaction with Woori closed while the advisory services agreement
was effective.
42
REGISTERED RIGHTS AND BEST EFFORTS OFFERING
In connection with the transactions contemplated by the securities purchase agreement with
Woori, our Board authorized us to pursue an offering of up to $120 million (100,000,000 shares) of
our common stock. The offering is structured as a $120 million registered rights and best efforts
offering comprised of a $60 million rights offering to our existing stockholders as of June 7,
2010 together with a $60 million registered best efforts offering (plus any additional shares of
common stock that are not subscribed for in the rights offering) to the public. We will not raise
more than $120 million from the registered rights and best efforts offering in the aggregate. The
price per share for our common stock issued in the registered rights and best efforts offering is
$1.20 per share. We are conducting the registered rights and best efforts offering (1) to raise
equity capital and (2) to provide our existing stockholders with the opportunity to purchase our
common stock at the same price per common share being offered to Woori pursuant to the terms of its
securities purchase agreement.
We are distributing to holders of our common stock as of 5:00 p.m., New York time on June 7,
2010, which is the record date for the rights offering, at no charge, non-transferable subscription
rights to purchase shares of our common stock at the subscription price of $1.20 per share.
Stockholders as of the record date will receive one (1) subscription right for each share of common
stock they owned at the close of business on the record date. The subscription rights will be
issued on or about June 11, 2010 and shall be exercisable until 5:00 p.m. New York city time on
July 12, 2010, unless we extend the rights offering.
If a stockholder exercises all of the subscription rights distributed to them, they will also
have the opportunity to purchase additional shares in the rights offering which are not purchased
by other stockholders pursuant to an over-subscription privilege. To the extent any shares of
common stock remain available after the rights offering, we will offer those shares to the public
in a best efforts offering.
Although our existing stockholders who received subscription rights in the registered rights
and best efforts offering (stockholders as of June 7, 2010) will have the ability to purchase at
least their pro rata percentage of $60 million being offered in the rights offering component, they
will not have any right to maintain their proportional ownership of our common stock in connection
with the shares being offered to Woori or the additional $60 million of common stock being offered
in the registered rights and best efforts offering.
In connection with the registered rights and best efforts offering, we have agreed to pay
Cappello a cash fee equal to 2.75 percent (2.75%) of the aggregate gross proceeds we raise in such
offerings together with five-year warrants to purchase up to 2 percent (2%) of the aggregate number
of shares issued in the registered rights and best efforts offering at an exercise price of $1.20
per share.
This proxy statement shall not constitute an offer to sell or the solicitation of an offer to
buy any of the securities described herein, nor shall there be any sale of the securities in any
jurisdiction or state in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such jurisdiction or state. The
registered rights and best efforts offerings described above will be conducted under an existing
effective shelf registration statement declared effective by the SEC on November 30, 2009. Rights
and best efforts offering materials, including a prospectus supplement and related prospectus and
other items necessary to exercise the rights and information about the best efforts offering, will
be mailed to stockholders following the time when a prospectus supplement relating to the offerings
is filed with the Securities Exchange Commission. The rights and the underlying shares being
offered in the rights offering, as well as the shares being offered in the best efforts offering,
may not be offered nor may offers to buy be accepted prior to the time the prospectus supplement
relating to the offerings is filed with the SEC. The prospectus supplement and related prospectus
will contain important information about the offerings and investors are urged to read them
carefully when available. When available, copies of the prospectus supplement and related
prospectus may be obtained by contacting our head of investor relations, David J. Yang
213-637-4798.
USE OF PROCEEDS
Depending on our ability to consummate the transactions contemplated by the securities
purchase agreement with Woori, whether or not Woori exercises its option to purchase an additional
$30 million of common stock and how much stock we are able to sell in the registered rights and
best efforts offering, we anticipate that we
43
will raise gross proceeds from the stock offerings of between $210 million and $360 million
and estimated net proceeds of between $205 million and $350 million. We intend to contribute a
substantial portion of the net proceeds of the stock offerings to Hanmi Bank as additional capital.
We will retain the remaining net proceeds at the Hanmi Financial corporate level to satisfy the
cash needs of Hanmi Financial and for general corporate purposes, subject to any regulatory
requirements.
PRO FORMA FINANCIAL INFORMATION
The
following unaudited pro forma condensed consolidated financial information for the fiscal
year ended December 31, 2009 and the quarter ended
March 31, 2010, shows various adjustments and
effects of the consummation of the transactions contemplated by the securities purchase agreement
with Woori and the sale of common stock in the stock offerings as if completed on January 1, 2009
and January 1, 2010, respectively. We have included the following unaudited pro forma condensed
consolidated financial data solely for the purpose of providing stockholders with information that
may be useful for purposes of considering and evaluating the proposals set forth in this proxy
statement. The actual effect on our financial statements from the stock offerings may change
materially depending upon the actual amounts raised in the aggregate in such stock offerings.
Accordingly, the pro forma financial information presented below may differ materially from actual
results. We cannot provide any assurance that the transaction with Woori will close at all, or, in
the case of the registered rights and best efforts offering, that we will be able to raise any
proceeds from the sale of our common stock. If we close the transaction with Woori, the gross
amount raised in the aggregate from the stock offerings may be as low as $210 million. If we close
the transaction with Woori, Woori exercises its option to purchase an additional $30 million of our
common stock and we sell the maximum amount available in the registered rights and best efforts
offering, the gross amount raised in the aggregate from the stock offerings would be $360 million.
The actual gross amount raised from the stock offerings in the aggregate may also be anywhere
between $210 million and $360 million if the transaction with Woori closes.
The unaudited pro forma condensed consolidated financial information
below reflects the separate
adjustments that would occur with respect to the amounts of common stock which may be sold to Woori
($210 million and an additional $30 million) and the maximum amount which may be raised in the
registered rights and best efforts offering ($120 million). In addition, for the periods
presented, we show the pro forma effects of the stock offerings from the sale of four separate
aggregate gross amounts of our common stock: $210 million; $240 million; $330 million and $360
million and the application of net proceeds. We can provide no assurance as to the aggregate
amount we actually will raise in the stock offerings, if any, our actual net proceeds from the
stock offerings, or how much we will contribute to Hanmi Bank. The pro forma weighted average
diluted shares impact of warrants, which are to be issued to our advisors in connection with the
stock offerings have been excluded from the pro forma weighted average diluted shares calculation
due to the anti-dilutive impact of the warrants in the calculation.
The following data should be read in conjunction with Managements Discussion and Analysis of
Financial Condition and Results of Operations and the consolidated financial statements and the
notes thereto from our Annual Report on Form 10-K for the fiscal year ended December 31, 2009 and
Quarterly Report on Form 10-Q for the quarter ended March 31, 2010 incorporated by reference into
this Proxy Statement.
In addition, the following data should be read with the understanding that the March 15, 2010
audit report of KPMG LLP, our independent registered public accounting firm, on the financial
statements included within the Hanmi Financial Annual Report on Form 10-K states that the ability
of Hanmi Financial to comply with the Written Agreement raises substantial doubt about our ability
to continue as a going concern. Furthermore, the March 15, 2010 KPMG report expresses an adverse
opinion on the effectiveness of our internal control over financial reporting. Important
assumptions to the unaudited pro forma condensed consolidated combined financial information are
set forth in the footnotes following each table.
44
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands, except for share data)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
|
|
|
|
|
|
|
|
|
|
|
|
|
31, 2009
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
|
(Actual)
|
|
|
Adjustments
|
|
|
Adjustments
|
|
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Rights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Offering and
|
|
|
|
|
|
|
|
(Woori
|
|
|
(Woori
|
|
|
Best Efforts
|
|
|
|
|
|
|
|
Purchasing
|
|
|
Purchasing
|
|
|
Offering of
|
|
|
|
|
|
|
|
$210 million
|
|
|
$30 million
|
|
|
$120 million
|
|
|
|
|
|
|
|
of Common
|
|
|
of Common
|
|
|
of Common
|
|
|
|
Actual
|
|
|
Stock)
|
|
|
Stock)
|
|
|
Stock)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalent
(4)
|
|
$
|
154,110
|
|
|
$
|
3,536
|
|
|
$
|
505
|
|
|
$
|
1,984
|
|
Securities Held to Maturity, at Amortized Cost
|
|
|
869
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities Available for Sale
(1) (2) (3)
|
|
|
132,420
|
|
|
|
205,567
|
|
|
|
29,367
|
|
|
|
115,367
|
|
Loan Receivable, Net of Allowance for Loan
Losses of $144,996
|
|
|
2,669,054
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan Held for Sale, at the Lower of Cost or Fair
value
|
|
|
5,010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Assets
|
|
|
201,243
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
3,162,706
|
|
|
$
|
209,103
|
|
|
$
|
29,872
|
|
|
$
|
117,351
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
$
|
2,749,327
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Federal Home Loan Bank Advances
|
|
|
153,978
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Borrowings
|
|
|
1,747
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Liabilities
(5)
|
|
|
107,910
|
|
|
|
2,403
|
|
|
|
344
|
|
|
|
2,747
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
3,012,962
|
|
|
|
2,403
|
|
|
|
344
|
|
|
|
2,747
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS EQUITY:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock, $0.001 Par Value; Authorized
200,000,000 Shares; Issued 55,814,890 Shares
(51,182,390 Shares Outstanding)
(1) (2) (3)
|
|
|
56
|
|
|
|
175
|
|
|
|
25
|
|
|
|
100
|
|
Additional Paid-In Capital
(1) (2) (3) (5)
|
|
|
357,174
|
|
|
|
202,989
|
|
|
|
28,998
|
|
|
|
112,520
|
|
Unearned Compensation
|
|
|
(302
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Other Comprehensive Income
Unrealized Gain on Securities Available for Sale
and Interest-Only Strips, Net of Income Taxes of
$602
|
|
|
859
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Deficit
(4)
|
|
|
(138,031
|
)
|
|
|
3,536
|
|
|
|
505
|
|
|
|
1,984
|
|
Treasury Stock, at Cost (4,632,500 Shares)
|
|
|
(70,012
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Stockholders Equity
|
|
|
149,744
|
|
|
|
206,700
|
|
|
|
29,528
|
|
|
|
114,604
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
|
|
$
|
3,162,706
|
|
|
$
|
209,103
|
|
|
$
|
29,872
|
|
|
$
|
117,351
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Reflects the issuance of $210.0 million of common stock to Woori. Net proceeds
of $205.6 million when received are assumed to be initially invested in U.S. government agency
securities which will be classified as available for sale.
|
|
(2)
|
|
Reflects the issuance of the $30.0 million of common stock to Woori. Net proceeds of
$29.4 million when received are assumed to be initially invested in U.S. government agency
securities which will be classified as available for sale.
|
|
(3)
|
|
Reflects the issuance of the $120.0 million of common stock to individual investors.
Net proceeds of $115.4 million when received are assumed to be initially invested in U.S.
government agency securities which will be classified as available sale.
|
|
(4)
|
|
The funds received from the closed investment transactions are assumed to earn
interest income at an average yield of 1.72%.
|
|
(5)
|
|
The carrying value of the common stock warrants to be issued to our advisors is
based on their fair value at issue date. The fair value of the common stock warrants was
estimated to be $1.37 per share and determined using the Black-Scholes option-pricing model
with the following assumptions: no dividend yield; risk-free rate 1.71%,; expected life 5.0
years; and volatility 67.0%
|
45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
|
|
|
December
|
|
|
December
|
|
|
December
|
|
|
December
|
|
|
|
31, 2009
|
|
|
31, 2009
|
|
|
31, 2009
|
|
|
31, 2009
|
|
|
31, 2009
|
|
|
|
(Actual)
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($330
|
|
|
($360
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
million of
|
|
|
million of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
|
Common
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Issued
|
|
|
Stock Issued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in the
|
|
|
in the
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate to
|
|
|
Aggregate to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Woori and
|
|
|
Woori and
|
|
|
|
|
|
|
|
(Woori
|
|
|
(Woori
|
|
|
in Rights
|
|
|
in Rights
|
|
|
|
|
|
|
|
Purchasing
|
|
|
Purchasing
|
|
|
Offering
|
|
|
Offering
|
|
|
|
|
|
|
|
$210 million
|
|
|
$240 million
|
|
|
and Best
|
|
|
and Best
|
|
|
|
|
|
|
|
of Common
|
|
|
of Common
|
|
|
Efforts
|
|
|
Efforts
|
|
|
|
Actual
|
|
|
Stock)
|
|
|
Stock)
|
|
|
Offering)
|
|
|
Offering)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalent
(5)
|
|
$
|
154,110
|
|
|
$
|
157,646
|
|
|
$
|
158,151
|
|
|
$
|
159,639
|
|
|
$
|
160,135
|
|
Securities Held to Maturity, at Amortized Cost
|
|
|
869
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities Available for Sale
(1) (2) (3) (4)
|
|
|
132,420
|
|
|
|
337,987
|
|
|
|
367,353
|
|
|
|
453,878
|
|
|
|
482,721
|
|
Loan Receivable, Net of Allowance for Loan
Losses of $144,996
|
|
|
2,669,054
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan Held for Sale, at the Lower of Cost or Fair
value
|
|
|
5,010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Assets
|
|
|
201,243
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
3,162,706
|
|
|
$
|
3,371,809
|
|
|
$
|
3,401,680
|
|
|
$
|
3,489,693
|
|
|
$
|
3,519,032
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
$
|
2,749,327
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Federal Home Loan Bank Advances
|
|
|
153,978
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Borrowings
|
|
|
1,747
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Liabilities
(6)
|
|
|
107,910
|
|
|
|
110,313
|
|
|
|
110,656
|
|
|
|
112,716
|
|
|
|
113,404
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
3,012,962
|
|
|
|
3,015,365
|
|
|
|
3,015,708
|
|
|
|
3,017,768
|
|
|
|
3,018,456
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS EQUITY:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock, $0.001 Par Value; Authorized
200,000,000 Shares; Issued 55,814,890 Shares
(51,182,390 Shares Outstanding)
(1) (2) (3) (4)
|
|
|
56
|
|
|
|
231
|
|
|
|
256
|
|
|
|
331
|
|
|
|
356
|
|
Additional Paid-In Capital
(1) (2) (3) (4) (6)
|
|
|
357,174
|
|
|
|
560,163
|
|
|
|
589,161
|
|
|
|
673,551
|
|
|
|
701,681
|
|
Unearned Compensation
|
|
|
(302
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Other Comprehensive Income
Unrealized Gain on Securities Available for Sale
and Interest-Only Strips, Net of Income Taxes of
$602
|
|
|
859
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Deficit
(5)
|
|
|
(138,031
|
)
|
|
|
(134,495
|
)
|
|
|
(133,990
|
)
|
|
|
(132,502
|
)
|
|
|
(132,006
|
)
|
Treasury Stock, at Cost (4,632,500 Shares)
|
|
|
(70,012
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Stockholders Equity
|
|
|
149,744
|
|
|
|
356,444
|
|
|
|
385,972
|
|
|
|
471,925
|
|
|
|
500,576
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
|
|
$
|
3,162,706
|
|
|
$
|
3,371,809
|
|
|
$
|
3,401,680
|
|
|
$
|
3,489,693
|
|
|
$
|
3,519,032
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Reflects the issuance of $210.0 million of common stock to Woori. Net proceeds
of $205.6 million when received are assumed to be initially invested in U.S. government agency
securities which will be classified as available for sale.
|
|
(2)
|
|
Reflects the aggregate issuance of the $240.0 million of common stock to Woori. Net
proceeds of $234.9 million when received are assumed to be initially invested in U.S.
government agency securities which will be classified as available for sale.
|
|
(3)
|
|
Reflects the aggregate issuance of the $330.0 million of common stock to Woori and
individual investors. Net proceeds of $321.5 million when received are assumed to be initially
invested in U.S. government agency securities which will be classified as available for sale.
|
|
(4)
|
|
Reflects the aggregate issuance of the $360.0 million of common stock to Woori and
individual investors. Net proceeds of $350.3 million when received are assumed to be initially
invested in U.S. government agency securities which will be classified as available for sale.
|
|
(5)
|
|
The funds received from the closed investment transactions are assumed to earn
interest income at an average yield of 1.72%.
|
|
(6)
|
|
The carrying value of the common stock warrants is based on their fair value at
issue date. The fair value of the common stock warrants was estimated to be $1.37 per share
and determined using the Black-Scholes option-pricing model with the following assumptions: no
dividend yield; risk-free rate 1.71%,; expected life 5.0 years; and volatility 67.0%.
|
46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
|
(Actual)
|
|
|
Adjustments
|
|
|
Adjustments
|
|
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Rights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Offering and
|
|
|
|
|
|
|
|
(Woori
|
|
|
(Woori
|
|
|
Best Efforts
|
|
|
|
|
|
|
|
Purchasing
|
|
|
Purchasing
|
|
|
Offering of
|
|
|
|
|
|
|
|
$210 million
|
|
|
$30 million
|
|
|
$120 million
|
|
|
|
|
|
|
|
of Common
|
|
|
of Common
|
|
|
of Common
|
|
|
|
Actual
|
|
|
Stock)
|
|
|
Stock)
|
|
|
Stock)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalent
(4)
|
|
$
|
199,217
|
|
|
$
|
1,343
|
|
|
$
|
192
|
|
|
$
|
754
|
|
Securities Held to Maturity, at Amortized Cost
|
|
|
862
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities Available for Sale
(1) (2) (3)
|
|
|
113,369
|
|
|
|
205,567
|
|
|
|
29,367
|
|
|
|
115,367
|
|
Loan Receivable, Net of Allowance for Loan
Losses of $177,820
|
|
|
2,494,966
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan Held for Sale, at the Lower of Cost or Fair
value
|
|
|
10,104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Assets
|
|
|
199,783
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
3,018,301
|
|
|
$
|
206,910
|
|
|
$
|
29,559
|
|
|
$
|
116,121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
$
|
2,650,280
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Federal Home Loan Bank Advances
|
|
|
153,898
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Borrowings
|
|
|
4,428
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Liabilities
(5)
|
|
|
108,673
|
|
|
|
1,575
|
|
|
|
225
|
|
|
|
1,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
2,917,279
|
|
|
|
1,575
|
|
|
|
225
|
|
|
|
1,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS EQUITY:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock, $0.001 Par Value; Authorized
200,000,000 Shares; Issued 55,814,890 Shares
(51,182,390 Shares Outstanding)
(1) (2) (3)
|
|
|
56
|
|
|
|
175
|
|
|
|
25
|
|
|
|
100
|
|
Additional Paid-In Capital
(1) (2) (3) (5)
|
|
|
357,359
|
|
|
|
203,817
|
|
|
|
29,117
|
|
|
|
113,467
|
|
Unearned Compensation
|
|
|
(281
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Other Comprehensive Income
Unrealized Gain on Securities Available for Sale
and Interest-Only Strips, Net of Income Taxes of
$1,002
|
|
|
1,417
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Deficit
(4)
|
|
|
(187,517
|
)
|
|
|
1,343
|
|
|
|
192
|
|
|
|
754
|
|
Treasury Stock, at Cost (4,632,500 Shares)
|
|
|
(70,012
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Stockholders Equity
|
|
|
101,022
|
|
|
|
205,335
|
|
|
|
29,334
|
|
|
|
114,321
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
|
|
$
|
3,018,301
|
|
|
$
|
206,910
|
|
|
$
|
29,559
|
|
|
$
|
116,121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Reflects the issuance of $210.0 million of common stock to Woori. Net proceeds
of $205.6 million when received are assumed to be initially invested in U.S. government agency
securities which will be classified as available for sale.
|
|
(2)
|
|
Reflects the issuance of the $30.0 million of common stock to Woori. Net proceeds of
$29.4 million when received are assumed to be initially invested in U.S. government agency
securities which will be classified as available for sale.
|
|
(3)
|
|
Reflects the issuance of the $120.0 million of common stock to individual investors.
Net proceeds of $115.4 million when received are assumed to be initially invested in U.S.
government agency securities which will be classified as available for sale.
|
|
(4)
|
|
The funds received from the closed investment transactions are assumed to earn
interest income at an average yield of 2.65%.
|
|
(5)
|
|
The carrying value of the common stock warrants to be issued to our advisors is
based on their fair value at issue date. The fair value of the common stock warrants was
estimated to be $0.90 per share and determined using the Black-Scholes option-pricing model with
the following assumptions: no dividend yield; risk-free rate 2.61%,; expected life 5.0 years;
and volatility 102.6%.
|
47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
March 31,
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2010
|
|
|
2010
|
|
|
2010
|
|
|
2010
|
|
|
|
(Actual)
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($330
|
|
|
($360
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
million of
|
|
|
million of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
|
Common
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Issued
|
|
|
Stock Issued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in the
|
|
|
in the
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate to
|
|
|
Aggregate to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Woori and
|
|
|
Woori and
|
|
|
|
|
|
|
|
(Woori
|
|
|
(Woori
|
|
|
in Rights
|
|
|
in Rights
|
|
|
|
|
|
|
|
Purchasing
|
|
|
Purchasing
|
|
|
Offering
|
|
|
Offering
|
|
|
|
|
|
|
|
$210 million
|
|
|
$240 million
|
|
|
and Best
|
|
|
and Best
|
|
|
|
|
|
|
|
of Common
|
|
|
of Common
|
|
|
Efforts
|
|
|
Efforts
|
|
|
|
Actual
|
|
|
Stock)
|
|
|
Stock)
|
|
|
Offering)
|
|
|
Offering)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalent
(5)
|
|
$
|
199,217
|
|
|
$
|
200,560
|
|
|
$
|
200,752
|
|
|
$
|
201,317
|
|
|
$
|
201,506
|
|
Securities Held to Maturity, at Amortized Cost
|
|
|
862
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities Available for Sale
(1) (2) (3) (4)
|
|
|
113,369
|
|
|
|
318,936
|
|
|
|
348,302
|
|
|
|
434,827
|
|
|
|
463,670
|
|
Loan Receivable, Net of Allowance for Loan
Losses of $177,820
|
|
|
2,494,966
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan Held for Sale, at the Lower of Cost or Fair
value
|
|
|
10,104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Assets
|
|
|
199,783
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
3,018,301
|
|
|
$
|
3,225,211
|
|
|
$
|
3,254,769
|
|
|
$
|
3,341,859
|
|
|
$
|
3,370,891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
$
|
2,650,280
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Federal Home Loan Bank Advances
|
|
|
153,898
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Borrowings
|
|
|
4,428
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Liabilities
(6)
|
|
|
108,673
|
|
|
|
110,248
|
|
|
|
110,472
|
|
|
|
111,821
|
|
|
|
112,273
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
2,917,279
|
|
|
|
2,918,854
|
|
|
|
2,919,078
|
|
|
|
2,920,427
|
|
|
|
2,920,879
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS EQUITY:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock, $0.001 Par Value; Authorized
200,000,000 Shares; Issued 55,814,890 Shares
(51,182,390 Shares Outstanding)
(1) (2) (3) (4)
|
|
|
56
|
|
|
|
231
|
|
|
|
256
|
|
|
|
331
|
|
|
|
356
|
|
Additional Paid-In Capital
(1) (2) (3) (4) (6)
|
|
|
357,359
|
|
|
|
561,176
|
|
|
|
590,293
|
|
|
|
675,394
|
|
|
|
703,760
|
|
Unearned Compensation
|
|
|
(281
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Other Comprehensive Income
Unrealized Gain on Securities Available for Sale
and Interest-Only Strips, Net of Income Taxes of
$1,002
|
|
|
1,417
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Deficit
(5)
|
|
|
(187,517
|
)
|
|
|
(186,174
|
)
|
|
|
(185,982
|
)
|
|
|
(185,417
|
)
|
|
|
(185,228
|
)
|
Treasury Stock, at Cost (4,632,500 Shares)
|
|
|
(70,012
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Stockholders Equity
|
|
|
101,022
|
|
|
|
306,357
|
|
|
|
335,691
|
|
|
|
421,432
|
|
|
|
450,012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
|
|
$
|
3,018,301
|
|
|
$
|
3,225,211
|
|
|
$
|
3,254,769
|
|
|
$
|
3,341,859
|
|
|
$
|
3,370,891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Reflects the issuance of $210.0 million of common stock to Woori . Net
proceeds of $205.6 million when received are assumed to be initially invested in U.S.
government agency securities which will be classified as available for sale.
|
|
(2)
|
|
Reflects the aggregate issuance of the $240.0 million of common stock to Woori. Net
proceeds of $234.9 million when received are assumed to be initially invested in U.S.
government agency securities which will be classified as available for sale.
|
|
(3)
|
|
Reflects the aggregate issuance of the $330.0 million of common stock to Woori and
individual investors. Net proceeds of $321.5 million when received are assumed to be initially
invested in U.S. government agency securities which will be classified as available for sale.
|
|
(4)
|
|
Reflects the aggregate issuance of the $360.0 million of common stock to Woori and
individual investors. Net proceeds of $350.3 million when received are assumed to be initially
invested in U.S. government agency securities which will be classified as available for sale.
|
|
(5)
|
|
The funds received from the closed investment transactions are assumed to earn
interest income at an average yield of 2.65%.
|
|
(6)
|
|
The carrying value of the common stock warrants to be issued to our advisors is
based on their fair value at issue date. The fair value of the common stock warrants was estimated
to be $0.90 per share and determined using the Black-Scholes option-pricing model with the following
assumptions: no dividend yield; risk-free rate 2.61%,; expected life 5.0 years; and volatility
102.6%.
|
48
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve
|
|
|
|
|
|
|
|
|
|
|
|
|
Months
|
|
|
|
|
|
|
|
|
|
|
|
|
Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
December
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
|
31, 2009
|
|
|
Adjustments
|
|
|
Adjustments
|
|
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Rights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Offering and
|
|
|
|
|
|
|
|
(Woori
|
|
|
(Woori
|
|
|
Best Efforts
|
|
|
|
|
|
|
|
Purchasing
|
|
|
Purchasing
|
|
|
Offering of
|
|
|
|
|
|
|
|
$210 million
|
|
|
$30 million
|
|
|
$120 million
|
|
|
|
|
|
|
|
of Common
|
|
|
of Common
|
|
|
of Common
|
|
|
|
Actual
|
|
|
Stock)
|
|
|
Stock)
|
|
|
Stock)
|
|
Total Interest and Dividend Income
(1)
|
|
$
|
184,147
|
|
|
$
|
3,536
|
|
|
$
|
505
|
|
|
$
|
1,984
|
|
Total Interest Expense
|
|
|
82,918
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Income before Provision for Credit Losses
|
|
|
101,229
|
|
|
|
3,536
|
|
|
|
505
|
|
|
|
1,984
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for Credit Losses
|
|
|
196,387
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Income (Loss) after Provision for Credit Losses
|
|
|
(95,158
|
)
|
|
|
3,536
|
|
|
|
505
|
|
|
|
1,984
|
|
Total Non-Interest Income
|
|
|
32,110
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Non-Interest Expense
|
|
|
90,354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) before Benefit for Income Taxes
|
|
|
(153,402
|
)
|
|
|
3,536
|
|
|
|
505
|
|
|
|
1,984
|
|
Benefit for Income Taxes
|
|
|
(31,125
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
|
|
$
|
(122,277
|
)
|
|
$
|
3,536
|
|
|
$
|
505
|
|
|
$
|
1,984
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS (LOSS) PER SHARE:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(2.57
|
)
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
Diluted
|
|
$
|
(2.57
|
)
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED-AVERAGE SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
47,570,361
|
|
|
|
175.000,000
|
|
|
|
25,000,000
|
|
|
|
100,000,000
|
|
Diluted
|
|
|
47,570,361
|
|
|
|
175,000,000
|
|
|
|
25,000,000
|
|
|
|
100,000,000
|
|
|
|
|
(1)
|
|
Net proceeds when received are assumed to be initially invested in U.S.
government agency securities which will be classified as available for sale and have a yield
at current market rates of 1.72%.
|
49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve
|
|
|
Twelve
|
|
|
Twelve
|
|
|
Twelve
|
|
|
Twelve
|
|
|
|
Months
|
|
|
Months
|
|
|
Months
|
|
|
Months
|
|
|
Months
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
|
December
|
|
|
December
|
|
|
December
|
|
|
December
|
|
|
December
|
|
|
|
31, 2009
|
|
|
31, 2009
|
|
|
31, 2009
|
|
|
31, 2009
|
|
|
31, 2009
|
|
|
|
(Actual)
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($330
|
|
|
($360
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
million of
|
|
|
million of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
|
Common
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Issued
|
|
|
Stock Issued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in the
|
|
|
in the
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate to
|
|
|
Aggregate to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Woori and
|
|
|
Woori and
|
|
|
|
|
|
|
|
(Woori
|
|
|
(Woori
|
|
|
in Rights
|
|
|
in Rights
|
|
|
|
|
|
|
|
Purchasing
|
|
|
Purchasing
|
|
|
Offering
|
|
|
Offering
|
|
|
|
|
|
|
|
$210 million
|
|
|
$240 million
|
|
|
and Best
|
|
|
and Best
|
|
|
|
|
|
|
|
of Common
|
|
|
of Common
|
|
|
Efforts
|
|
|
Efforts
|
|
|
|
Actual
|
|
|
Stock)
|
|
|
Stock)
|
|
|
Offering)
|
|
|
Offering)
|
|
Total Interest and Dividend Income
(1)
|
|
$
|
184,147
|
|
|
$
|
187,683
|
|
|
$
|
188,188
|
|
|
$
|
189,676
|
|
|
$
|
190,172
|
|
Total Interest Expense
|
|
|
82,918
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Income before Provision for Credit Losses
|
|
|
101,229
|
|
|
|
104,765
|
|
|
|
105,270
|
|
|
|
106,758
|
|
|
|
107,254
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for Credit Losses
|
|
|
196,387
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Income (Loss) after Provision for Credit Losses
|
|
|
(95,158
|
)
|
|
|
(91,622
|
)
|
|
|
(91,117
|
)
|
|
|
(89,629
|
)
|
|
|
(89,133
|
)
|
Total Non-Interest Income
|
|
|
32,110
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Non-Interest Expense
|
|
|
90,354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) before Benefit for Income Taxes
|
|
|
(153,402
|
)
|
|
|
(149,866
|
)
|
|
|
(149,361
|
)
|
|
|
(147,873
|
)
|
|
|
(147,377
|
)
|
Benefit for Income Taxes
|
|
|
(31,125
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
|
|
$
|
(122,277
|
)
|
|
$
|
(118,741
|
)
|
|
$
|
(118,236
|
)
|
|
$
|
(116,748
|
)
|
|
$
|
(116,252
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS (LOSS) PER SHARE:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(2.57
|
)
|
|
$
|
(0.53
|
)
|
|
$
|
(0.48
|
)
|
|
$
|
(0.36
|
)
|
|
$
|
(0.33
|
)
|
Diluted
|
|
$
|
(2.57
|
)
|
|
$
|
(0.53
|
)
|
|
$
|
(0.48
|
)
|
|
$
|
(0.36
|
|
|
$
|
(0.33
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED-AVERAGE SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
47,570,361
|
|
|
|
222,570,361
|
|
|
|
247,570,361
|
|
|
|
322,570,361
|
|
|
|
347,570,361
|
|
Diluted
|
|
|
47,570,361
|
|
|
|
222,570,361
|
|
|
|
247,570,361
|
|
|
|
322,570,361
|
|
|
|
347,570,361
|
|
|
|
|
(1)
|
|
Net proceeds when received are assumed to be initially invested in U.S.
government agency securities which will be classified as available for sale and have a yield
at current market rates of 1.72%.
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
|
|
|
|
|
|
|
|
|
|
|
|
|
Months
|
|
|
|
|
|
|
|
|
|
|
|
|
Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
|
(Actual)
|
|
|
Adjustments
|
|
|
Adjustments
|
|
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Rights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Offering and
|
|
|
|
|
|
|
|
(Woori
|
|
|
(Woori
|
|
|
Best Efforts
|
|
|
|
|
|
|
|
Purchasing
|
|
|
Purchasing
|
|
|
Offering of
|
|
|
|
|
|
|
|
$210 million
|
|
|
$30 million
|
|
|
$120 million
|
|
|
|
|
|
|
|
of Common
|
|
|
of Common
|
|
|
of Common
|
|
|
|
Actual
|
|
|
Stock)
|
|
|
Stock)
|
|
|
Stock)
|
|
Total Interest and Dividend Income
|
|
$
|
38,053
|
|
|
$
|
1,343
|
|
|
$
|
192
|
|
|
$
|
754
|
|
Total Interest Expense
|
|
|
10,719
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Income before Provision for Credit Losses
|
|
|
27,334
|
|
|
|
1,343
|
|
|
|
192
|
|
|
|
754
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for Credit Losses
|
|
|
57,996
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Income (Loss) after Provision for Credit Losses
|
|
|
(30,662
|
)
|
|
|
1,343
|
|
|
|
192
|
|
|
|
754
|
|
Total Non-Interest Income
|
|
|
7,005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Non-Interest Expense
|
|
|
26,224
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) before Benefit for Income Taxes
|
|
|
(49,881
|
)
|
|
|
1,343
|
|
|
|
192
|
|
|
|
754
|
|
Benefit for Income Taxes
|
|
|
(395
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
|
|
$
|
(49,486
|
)
|
|
$
|
1,343
|
|
|
$
|
192
|
|
|
$
|
754
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS (LOSS) PER SHARE:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.97
|
)
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
Diluted
|
|
$
|
(0.97
|
)
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED-AVERAGE SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
50,998,990
|
|
|
|
175.000,000
|
|
|
|
25,000,000
|
|
|
|
100,000,000
|
|
Diluted
|
|
|
50,998,990
|
|
|
|
175,000,000
|
|
|
|
25,000,000
|
|
|
|
100,000,000
|
|
|
|
|
(1)
|
|
Net proceeds when received are assumed to be initially invested in U.S.
government agency securities which will be classified as available for sale and have a yield
at current market rates of 2.65%.
|
51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
|
|
|
Three
|
|
|
Three
|
|
|
Three
|
|
|
Three
|
|
|
|
Months
|
|
|
Months
|
|
|
Months
|
|
|
Months
|
|
|
Months
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
March 31,
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2010
|
|
|
2010
|
|
|
|
(Actual)
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($330 million
|
|
|
($360 million
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Common
|
|
|
of Common
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Issued
|
|
|
Stock Issued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in the
|
|
|
in the
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate to
|
|
|
Aggregate to
|
|
|
|
|
|
|
|
(Woori
|
|
|
(Woori
|
|
|
Woori and
|
|
|
Woori and
|
|
|
|
|
|
|
|
Purchasing
|
|
|
Purchasing
|
|
|
in Rights
|
|
|
in Rights
|
|
|
|
|
|
|
|
$210 million
|
|
|
$240 million
|
|
|
Offering and
|
|
|
Offering and
|
|
|
|
|
|
|
|
of Common
|
|
|
of Common
|
|
|
Best Efforts
|
|
|
Best Efforts
|
|
|
|
Actual
|
|
|
Stock)
|
|
|
Stock)
|
|
|
Offering)
|
|
|
Offering)
|
|
Total Interest and Dividend Income
|
|
$
|
38,053
|
|
|
$
|
39,396
|
|
|
$
|
39,588
|
|
|
$
|
40,153
|
|
|
$
|
40,342
|
|
Total Interest Expense
|
|
|
10,719
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Income before Provision for Credit Losses
|
|
|
27,334
|
|
|
|
28,677
|
|
|
|
28,869
|
|
|
|
29,434
|
|
|
|
29,623
|
|
Provision for Credit Losses
|
|
|
57,996
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Income (Loss) after Provision for Credit Losses
|
|
|
(30,662
|
)
|
|
|
(29,319
|
)
|
|
|
(29,127
|
)
|
|
|
(28,562
|
)
|
|
|
(28,373
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Non-Interest Income
|
|
|
7,005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Non-Interest Expense
|
|
|
26,224
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) before Benefit for Income Taxes
|
|
|
(49,881
|
)
|
|
|
(48,538
|
)
|
|
|
(48,346
|
)
|
|
|
(47,781
|
)
|
|
|
(47,592
|
)
|
Benefit for Income Taxes
|
|
|
(395
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
|
|
$
|
(49,486
|
)
|
|
$
|
(48,143
|
)
|
|
$
|
(47,951
|
)
|
|
$
|
(47,386
|
)
|
|
$
|
(47,197
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS (LOSS) PER SHARE:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.97
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
(0.19
|
)
|
|
$
|
(0.15
|
)
|
|
$
|
(0.13
|
)
|
Diluted
|
|
$
|
(0.97
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
(0.19
|
)
|
|
$
|
(0.15
|
)
|
|
$
|
(0.13
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED-AVERAGE SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
50,998,990
|
|
|
|
225,998,990
|
|
|
|
250,998,990
|
|
|
|
325,998,990
|
|
|
|
350,998,990
|
|
Diluted
|
|
|
50,998,990
|
|
|
|
225,998,990
|
|
|
|
250,998,990
|
|
|
|
325,998,990
|
|
|
|
350,998,990
|
|
|
|
|
(1)
|
|
Net proceeds when received are assumed to be initially invested in U.S.
government agency securities which will be classified as available for sale and have a yield
at current market rates of 2.65%.
|
52
Regulatory Ratios
The following table presents Hanmi Banks actual regulatory capital ratios at March 31, 2010
adjusted for the pro forma impact of the stock offerings for the
periods and in the amounts shown. We cannot provide any assurance as
to the actual amount of net proceeds from the stock offerings that we
will contribute to Hanmi Bank.
HANMI BANK
PRO FORMA CONSOLIDATED REGULATORY RATIOS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
March 31,
|
|
March 31,
|
|
March 31,
|
|
March 31,
|
|
|
2010
|
|
2010
|
|
2010
|
|
2010
|
|
2010
|
|
|
(Actual)
|
|
Pro Forma
|
|
Pro Forma
|
|
Pro Forma
|
|
Pro Forma
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($330 million
|
|
($360 million
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Common
|
|
of Common
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Issued
|
|
Stock Issued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in the
|
|
in the
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate to
|
|
Aggregate to
|
|
|
|
|
|
|
(Woori
|
|
(Woori
|
|
Woori and in
|
|
Woori and in
|
|
|
|
|
|
|
Purchasing
|
|
Purchasing
|
|
Rights
|
|
Rights
|
|
|
|
|
|
|
$210 million
|
|
$240 million
|
|
Offering and
|
|
Offering and
|
|
|
|
|
|
|
of Common
|
|
of Common
|
|
Best Efforts
|
|
Best Efforts
|
|
|
Actual
|
|
Stock)
(1)
|
|
Stock)
(2)
|
|
Offering)
(3)
|
|
Offering)
(4)
|
Tier 1 Leverage Ratio
|
|
|
5.68
|
%
|
|
|
11.48
|
%
|
|
|
12.02
|
%
|
|
|
13.60
|
%
|
|
|
14.12
|
%
|
Tier 1 Risk Based Ratio
|
|
|
6.49
|
%
|
|
|
13.96
|
%
|
|
|
14.71
|
%
|
|
|
16.95
|
%
|
|
|
17.70
|
%
|
Total Risk Based Ratio
|
|
|
7.81
|
%
|
|
|
15.28
|
%
|
|
|
16.03
|
%
|
|
|
18.27
|
%
|
|
|
19.02
|
%
|
|
|
|
(1)
|
|
Assumes that Hanmi Financial invested $200 million of the offering proceeds
into Hanmi Bank as equity
capital.
|
|
(2)
|
|
Assumes that Hanmi Financial invested $220 million of the offering proceeds into
Hanmi Bank as equity
capital.
|
|
(3)
|
|
Assumes that Hanmi Financial invested $280 million of the offering proceeds into
Hanmi Bank as equity
capital.
|
|
(4)
|
|
Assumes that Hanmi Financial invested $300 million of the offering proceeds into
Hanmi Bank as equity
capital.
|
53
Consequences if the Capital Raising Stockholder Proposals Are Approved
If both the Capital Raising Stockholder Proposals are approved by our stockholders, we
will have satisfied one of the conditions necessary to consummate the transactions contemplated by
the securities purchase agreement with Woori. However, receiving approval of the Capital Raising
Stockholder Proposals does not mean we will be able to complete the transactions contemplated by
the securities purchase agreement with Woori. There are many other conditions to completing the
transactions contemplated by the securities purchase agreement with Woori, including obtaining
necessary regulatory approvals. See Description of the Securities Purchase Agreement with Woori
and the Stock Offerings. If the Capital Raising Stockholder Proposals are approved and the
transactions contemplated by the securities purchase agreement with Woori are completed, (i) Woori
will become the majority owner of our outstanding shares of common stock (ii) Woori will have the
right to designate five (5) of our seven (7) directors and (iii) there will be immediate and
substantial dilution to the existing holders of common stock. Woori will be issued a minimum of
175,000,000 and a maximum of 200,000,000 shares of our common stock pursuant to the terms of the
securities purchase agreement.
In addition, if we are successful in raising the maximum amount of stock we are offering in
the registered rights and best efforts offering, we will issue a maximum aggregate of 300,000,000
shares of our common stock in the stock offerings. Although our existing stockholders who received
subscription rights in the rights offering (stockholders as of June 7, 2010) will have the ability
to purchase at least their pro rata percentage of stock being offered in the rights offering, they
will not have any right to maintain their proportional ownership of our common stock in connection
with the shares being sold to Woori or the shares being issued as part of the best efforts
offering. If we consummate the transactions with Woori, we will issue to Woori a minimum of
175,000,000 shares and a maximum of 200,000,000 shares of our common stock (in addition to the
[
]
shares of common stock currently outstanding as of the record date). None of our
stockholders will have the ability to maintain their proportional ownership of our common stock in
connection with the shares being offered to Woori. Accordingly, we expect there to be a
significant dilutive effect on both the earnings per share of our common stock and the book value
per share of our common stock. In addition, our existing stockholders will incur substantial
dilution to their voting interests and will own a smaller percentage of our outstanding capital
stock following completion of the stock offerings.
If the transactions with Woori are consummated, Woori will be our majority stockholder. As a
result, and subject to compliance with applicable law and our charter documents, Woori will have
voting control of us, and will be able to (i) practically elect all of the members of our Board of
Directors; (ii) adopt amendments to our charter documents; (iii) control the vote on any merger,
sale of assets or other fundamental corporate transaction of Hanmi Financial or Hanmi Bank or the
issuance of additional equity securities or incurrence of debt, in each case without the approval
of our other stockholders. It will also be impossible for a third party, other than Woori, to
obtain control of Hanmi Financial through purchases of Hanmi Financial common stock not
beneficially owned or controlled by Woori, which could have a negative impact on our stock price.
See the discussion regarding Proposals 2 and 3 below.
Consequences If Either of the Capital Raising Stockholder Proposals Is Not Approved
A failure to approve either of the Capital Raising Stockholder Proposals at the annual
meeting would have potentially material adverse consequences for us and our stockholders as we
would not have satisfied certain conditions to closing the securities purchase agreement with Woori
and would not be able to raise capital through the sale of our common stock to Woori on the terms
we have agreed. If we are unable to raise a sufficient amount of
capital to satisfy the Order and Written Agreement we are currently
subject to and future regulatory action we may become subject to in the future, further regulatory
action could be taken against Hanmi Bank and Hanmi Financial and we may not be able to continue as
a going concern. Failure to comply with the terms of the Order and Written Agreement within the applicable
time frames provided could result in additional orders or penalties from the FRB, the FDIC and the
DFI, which could include further restrictions on our business, assessment of civil money penalties
on us and Hanmi Bank, as well as our respective
54
directors, officers and other affiliated parties, termination of deposit insurance, removal of
one or more officers and/or directors, and the liquidation or other closure of Hanmi Bank.
The capital ratios of Hanmi Financial and Hanmi Bank were as follows as of March 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To be Categorized as
|
|
|
|
|
|
|
|
|
|
|
Minimum
|
|
Well Capitalized
|
|
|
|
|
|
|
|
|
|
|
Regulatory
|
|
under Prompt Corrective
|
|
|
Actual
|
|
Requirement
|
|
Action Provision
|
March 31, 2010
|
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|
|
(Dollars in Thousands)
|
Total Capital (to Risk-Weighted Assets):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hanmi Financial
|
|
$
|
211,989
|
|
|
|
7.86
|
%
|
|
$
|
215,856
|
|
|
|
8.00
|
%
|
|
|
N/A
|
|
|
|
N/A
|
|
Hanmi Bank
|
|
$
|
210,354
|
|
|
|
7.81
|
%
|
|
$
|
215,493
|
|
|
|
8.00
|
%
|
|
$
|
269,366
|
|
|
|
10.00
|
%
|
Tier 1 Capital (to Risk-Weighted Assets):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hanmi Financial
|
|
$
|
129,394
|
|
|
|
4.80
|
%
|
|
$
|
107,928
|
|
|
|
4.00
|
%
|
|
|
N/A
|
|
|
|
N/A
|
|
Hanmi Bank
|
|
$
|
174,741
|
|
|
|
6.49
|
%
|
|
$
|
107,746
|
|
|
|
4.00
|
%
|
|
$
|
161,619
|
|
|
|
6.00
|
%
|
Tier 1 Capital (to Average Assets):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hanmi Financial
|
|
$
|
129,394
|
|
|
|
4.20
|
%
|
|
$
|
123,265
|
|
|
|
4.00
|
%
|
|
|
N/A
|
|
|
|
N/A
|
|
Hanmi Bank
|
|
$
|
174,741
|
|
|
|
5.68
|
%
|
|
$
|
123,027
|
|
|
|
4.00
|
%
|
|
$
|
153,783
|
|
|
|
5.00
|
%
|
Prompt Corrective Action Regulations
Federal law requires each federal banking agency to take prompt corrective action when a bank
falls below one or more prescribed minimum capital ratios. The federal banking agencies have, by
regulation, defined the following five capital categories:
|
|
|
Well Capitalized
Total risk-based capital ratio of 10.0 percent, Tier 1 risk-based
capital ratio of 6.0 percent, and leverage capital ratio of 5.0 percent, and not subject
to any order or written directive by any regulatory authority to meet and maintain a
specific capital level for any capital measure;
|
|
|
|
|
Adequately Capitalized
Total risk-based capital ratio of 8.0 percent, Tier 1
risk-based capital ratio of 4.0 percent, and leverage capital ratio of 4.0 percent (or
3.0 percent if the institution receives the highest rating from its primary regulator);
|
|
|
|
|
Undercapitalized
Total risk-based capital ratio of less than 8.0 percent, Tier 1
risk-based capital ratio of less than 4.0 percent, or leverage capital ratio of less than
4.0 percent (or 3.0 percent if the institution receives the highest rating from its
primary regulator);
|
|
|
|
|
Significantly Undercapitalized
Total risk-based capital ratio of less than 6.0
percent, Tier 1 risk-based capital ratio of less than 3.0 percent, or leverage capital
ratio of less than 3.0 percent; and
|
|
|
|
|
Critically Undercapitalized
Tangible equity to total assets of less than 2.0 percent.
|
A bank may be treated as though it were in the next lower capital category if, after notice
and the opportunity for a hearing, the appropriate federal agency finds an unsafe or unsound
condition or practice so warrants, but no bank may be treated as critically undercapitalized
unless its actual capital ratio warrants such treatment.
As of March 31, 2010, Hanmi Banks total risk-based capital ratio was below the minimum
regulatory requirement and placed Hanmi Bank within the definition of undercapitalized under the
regulatory framework for prompt corrective action. If a state member bank, like Hanmi Bank, is
classified as undercapitalized, the bank is required to submit a capital restoration plan to the
Federal Reserve. Pursuant to Federal Deposit Insurance Corporation Improvement Act (FDICIA), an
undercapitalized bank is prohibited from increasing its assets, engaging in a new line of business,
acquiring any interest in any company or insured depository institution, or opening or acquiring a
new branch office, except under certain circumstances, including the acceptance by the Federal
Reserve of a capital restoration plan for the bank.
55
If a bank is classified as significantly undercapitalized, the Federal Reserve would be
required to take one or more prompt corrective actions. These actions would include, among other
things, requiring sales of new securities to bolster capital; improvements in management; limits on
interest rates paid; prohibitions on transactions with affiliates; termination of certain risky
activities and restrictions on compensation paid to executive officers. These actions may also be
taken by the Federal Reserve at any time on an undercapitalized bank if it determines those
restrictions are necessary. If a bank is classified as critically undercapitalized, in addition to
the foregoing restrictions, FDICIA prohibits payment on any subordinated debt and requires the bank
to be placed into conservatorship or receivership within 90 days, unless the Federal Reserve
determines that other action would better achieve the purposes of FDICIA regarding prompt
corrective action with respect to undercapitalized banks.
Although we currently have enough authorized shares to complete the
registered rights and best efforts offering as presently structured (exclusive of the sale of shares to
Woori), we cannot provide any assurance regarding how many, if any, shares will be subscribed for
in those offerings. In addition, even if the registered rights and
best efforts offering is fully subscribed for, we believe that
we will also need to complete the contemplated transaction
with Woori to provide us with sufficient capital resources for us to
satisfy our regulators and continue as a going concern.
See the discussions regarding Proposal 2 and 3 below.
PROPOSAL NO. 2 INCREASE AUTHORIZED SHARES OF COMMON STOCK
Our
Board has adopted a resolution recommending that our stockholders approve an amendment to
our Certificate of Incorporation to increase the number of authorized shares of common stock from
200 million shares to 500 million shares (and, correspondingly, to increase the total number of
authorized shares of all classes of stock from 210 million shares to 510 million shares).
If the stockholders approve the amendment, the first paragraph of Article IV of our
Certificate of Incorporation will be amended to increase the number of authorized shares of all
classes of stock and of common stock as described above. The increase will become effective on the
filing of the amendment to the Certificate of Incorporation with the Secretary of State of the
State of Delaware. The text of the relevant section of the Certificate of Incorporation as proposed
to be amended is set forth below.
The Corporation is authorized to issue two classes of stock, designated, respectively,
Common Stock and Preferred Stock. The aggregate number of shares of all classes of
capital stock which the Corporation shall have authority to issue is five hundred ten
million (510,000,000) shares, of which five hundred million (500,000,000) shares shall
be Common Stock, with par value of $.001 per share, and ten million (10,000,000) of
which shall be Preferred Stock, with par value of $.001 per share, issuable in one or
more series.
The primary purpose of Proposal 2 is to satisfy our obligations under the securities purchase
agreement with Woori in connection with the sale and issuance of common stock. Under the
securities purchase agreement, we have agreed to issue to Woori a minimum of 175,000,000 shares of
common stock and a maximum of 200,000,000 shares of common stock. In addition, we may sell up to
100,000,000 shares of common stock in the registered rights and best efforts offering. In the
aggregate, we could issue up to a maximum of 300,000,000 shares of our common stock in the stock
offerings.
As of June 14, 2010, the record date, [
] shares of our common stock were issued and
outstanding. An additional [
] shares of common stock were reserved for issuance upon
exercise of outstanding stock options and [
] shares remain available for future awards under
our stock incentive plans.
We currently do not have a sufficient number of authorized shares of common stock to
consummate the transactions contemplated by the securities purchase agreement with Woori or the
stock offerings in the aggregate; therefore approval of Proposal 2 is required to complete the sale
of common stock in the stock offerings.
The proposed authorized number of 500,000,000 of common stock is greater than the number of
shares of our common stock that would be required to consummate the stock offerings. The
additional shares authorized for issuance will provide us with the flexibility to issue, without
stockholder approval, additional shares from time to
56
time as our Board may determine for future
financings and capital raises, acquisitions, strategic business relationships, stock-based
incentives to employees, directors and consultants and for other purposes. We cannot provide
assurances that any such future transactions (i) will be consummated on favorable terms or at all,
(ii) will enhance stockholder value or (iii) will not adversely affect our business or our the
trading price of its common stock. Any such transactions may require us to incur non-recurring or
other charges and may pose significant integration challenges or management and business
disruptions, any of which could materially and adversely affect our business and financial results.
While we have not proposed the increase in the authorized number of shares with the intention
of using the additional shares for anti-takeover purposes, except with respect to the transaction
contemplated with Woori, we could theoretically use the additional shares to make more difficult or
to discourage an attempt to acquire subsequent control of us because the issuance of such
additional shares could be used to dilute the stock ownership or voting rights of a person seeking
to obtain control of us. For example, without further stockholder approval, our Board of Directors
could sell shares of common stock in a private transaction to purchasers who would oppose a
takeover or
favor the current Board of Directors. Although this proposal to increase the authorized number
of shares of common stock has been prompted by the considerations described above and not by the
threat of any known or threatened hostile takeover attempt or any effort to accumulate our common
stock or to obtain control of us of which we are aware aside from Woori, stockholders should be
aware that approval of this proposal could facilitate future efforts by to oppose changes in
control and perpetuate our management, including transactions in which the stockholders might
otherwise receive a premium for their shares over then current market prices.
As of the date of this document, other than the issuance and sale of shares pursuant to the
stock offerings, warrants we may issue as compensation to our advisors in connection with the stock
offerings, awards issuable upon the exercise of outstanding options, restricted stock grants and
other awards under our current equity incentive plans, our Board has no agreement, arrangement or
intention to issue any of the shares for which approval is sought. Current stockholders have no
preemptive or similar rights, which means that current stockholders do not have a prior right to
purchase any newly issued common stock in order to maintain their proportionate ownership thereof.
Our authorized capital stock includes 10,000,000 shares of preferred stock, par value $0.001
per share. As of the record date, no shares of our preferred stock have been issued or are
outstanding. Our Certificate of Incorporation authorizes our Board to, without stockholder
approval, adopt resolutions providing for the issuance of preferred stock in such classes or
series, with such voting powers, conversion features, designations, preferences, rights,
qualifications, limitations and restrictions of each class or series of preferred stock as may be
determined by our Board of Directors, any of which may be senior to our common stock. If we offer
shares of preferred stock in the future, we will fix the designations, voting powers, preferences
and rights of the preferred stock of each series, as well as the qualifications, limitations or
restrictions thereof, in the certificate of designation relating to that series.
Other than with respect to Proposals 2 and 3, our Board does not intend to solicit further
stockholder approval prior to the issuance of any additional shares of common stock, except as may
be required by applicable law, rules of the Nasdaq or other applicable stock exchange requirements.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE PROPOSED AMENDMENT TO OUR CERTIFICATE OF INCORPORATION.
PROPOSAL NO. 3
APPROVE THE ISSUANCE OF SHARES OF COMMON STOCK TO WOORI
Our Board
adopted a resolution recommending that the stockholders approve the issuance of
shares of our common stock in connection with the transactions contemplated by the securities
purchase agreement with Woori, including the issuance up to 200
million shares of our common
stock to Woori whereby Woori would own a majority of our outstanding common stock, for purposes of
Rule 5635 of the Nasdaq Listing Rules. If Woori acquires 175 million shares of our common stock
(and does not exercise its option) and we are able to sell the maximum of 100 million shares of our
common stock in the registered rights and best efforts offering,
Woori will own approximately 54% of our
outstanding common stock following consummation of the transactions contemplated by the
57
securities
purchase agreement. If Woori acquires 200 million shares of our common stock (by exercising its
option) and we are not able to sell any shares of our common stock in the registered rights and
best efforts offering, Woori will own approximately 80% of our outstanding common stock following consummation of
the transactions contemplated by the securities purchase agreement. Depending on how many shares
of our common stock Woori purchases and how many shares of our common stock are sold in the
registered rights and best efforts offering, if the transactions contemplated by the securities
purchase agreement with Woori are completed Woori will own anywhere between approximately 54% and
80% of our outstanding common stock.
Because our common stock is listed on the Nasdaq Global Select Market, we are subject to the
Nasdaqs rules and regulations. Nasdaq Listing Rule 5635(b) and (d), requires stockholder approval
prior to (i) the issuance of common stock, or securities convertible into or exercisable for common
stock, equal to 20% or more of the common stock or 20% or more of the voting power outstanding
before the issuance for less than the greater of book value or market value of the stock and (ii)
when the issuance of securities would result in a change in control.
Our proposed issuance of common stock to Woori falls under this rule because (i) the common
stock issuable to Woori will exceed 20% of the voting power and number of shares of common stock
outstanding before the securities purchase agreement with Woori is consummated and qualifies as a
discounted issuance as the price per share of common stock since the purchase price of $1.20 per
share is below both the book value and market value of our common stock and (ii) Woori will own a
majority of our common stock following the transactions contemplated by the
securities purchase
agreement.
We can provide no assurance that we will be able to complete the transaction with Woori
as we have currently contemplated or at all.
If we consummate the transactions with Woori, we will issue to them a minimum of 175,000,000
shares and a maximum of 200,000,000 shares of our common stock (in addition to the
[
]
shares
of common stock currently outstanding as of the record date). None of our stockholders will have
the ability to maintain their proportional ownership of our common stock in connection with the
shares being offered to Woori. As a result, we expect there to be a significant dilutive effect on
both the earnings per share of our common stock and the book value per share of our common stock.
In addition, our existing stockholders will incur substantial dilution to their voting interests
and will own a smaller percentage of our outstanding capital stock following completion of the
stock offerings.
If the
transactions with Woori are consummated, Woori will control us as it will own in excess
of 50% of our outstanding common stock. As a result, and subject to compliance with applicable law and our
charter documents, Woori will have voting control of us, and will be able to (i) elect all of the
members of our Board of Directors; (ii) adopt amendments to our charter documents; (iii) subject to
the limitations set forth in the securities purchase agreement regarding a cash-out merger, control
the vote on any merger, sale of assets or other fundamental corporate transaction of Hanmi
Financial or Hanmi Bank or the issuance of additional equity securities or incurrence of debt, in
each case without the approval of our other stockholders. It will also be impossible for a third
party, other than Woori, to obtain control of us through purchases of our common stock not
beneficially owned or controlled by Woori, which could have a negative impact on our stock price.
Woori would also then have the ability to sell large amounts of shares of our common stock by
causing us to file a registration statement that would allow it to sell shares more easily. In
addition, Woori could sell shares of our common stock without registration under certain
circumstances, such as in a private transaction. Although we can make no prediction as to the
effect, if any, that such sales would have on the market price of our common stock, sales of
substantial amounts of our common stock, or the perception that such sales could occur, could
adversely affect the market price of our common stock. If Woori were to sell or transfer shares of
our common stock as a block, another person or entity could become our controlling stockholder,
subject to any required regulatory approvals.
Our common stock is currently listed on the Nasdaq. The Nasdaq generally requires a majority
of directors to be independent and requires independent director oversight over the nominating and
executive compensation functions. However, under the rules applicable to the Nasdaq, if another
company owns more than 50% of the voting power of a listed company, that company is considered a
controlled company and exempt from rules relating to independence of our Board of directors and
the compensation and nominating committees. If the
58
transaction with Woori is completed,
we will be
a controlled company because Woori will beneficially own more than
50% of our outstanding common
stock. Accordingly, we would be exempt from certain corporate governance requirements and our
stockholders may not have all the protections that these corporate governance rules are intended to
provide.
Woori is also subject to regulatory oversight, review and supervisory action (which can
include fines or penalties) by Korean and U.S. regulatory authorities as a result of its interest
in Woori America Bank headquartered in New York. Our business operations and expansion plans could
be negatively affected by regulatory concerns or supervisory action in the U.S. and in Korea
against Woori and its affiliates. The views of Woori regarding possible new businesses,
strategies, acquisitions, divestitures or other initiatives, including compliance and risk
management processes, may differ from ours. If the transactions with Woori are consummated, this
may delay or hinder us from pursuing individual initiatives or cause us to incur additional costs
and subject us to additional oversight. Also, to the extent any directors or officers or employees
serve us and Woori at the same time that could create or appear to create potential conflicts of
interest.
A failure to approve Proposal 3 at the annual meeting would have potentially adverse
consequences for us and our stockholders described elsewhere in this document, including under
Consequences If Either of the Capital Raising Stockholder Proposals Is Not Approved .
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE PROPOSED ISSUANCE OF SHARES OF COMMON STOCK TO WOORI.
59
PROPOSAL NO. 4 RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We are asking stockholders to ratify the appointment by our Audit Committee of KPMG LLP
(KPMG) as our independent registered public accounting firm for the fiscal year ending December
31, 2010. KPMG served as our independent registered public accounting firm for the fiscal year
ended December 31, 2009 and has served as our independent registered public accounting firm since
2001. KPMG has advised us that KPMG has no direct or indirect financial interest in us.
Representatives of KPMG are expected to be present at the annual meeting and will have the
opportunity to make a statement if they desire to do so. It is also expected that they will be
available to respond to appropriate questions. If this proposal is not approved at the annual
meeting, our Audit Committee will reconsider this appointment. Under applicable SEC regulations,
the selection of the independent auditors is solely the responsibility of the Audit Committee.
The following table sets forth information regarding the aggregate fees billed for
professional services rendered by KPMG for the fiscal years ended December 31, 2009 and 2008:
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
Audit Fees
(1)
|
|
$
|
600,000
|
|
|
$
|
575,000
|
|
Audit-Related Fees
(2)
|
|
|
19,326
|
|
|
|
28,996
|
|
Tax Fees
(3)
|
|
|
54,000
|
|
|
|
65,000
|
|
All Other Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
673,326
|
|
|
$
|
668,996
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Includes fees billed for the integrated audit of our annual financial statements and internal control over financial
reporting, for the reviews of the financial statements included in our Quarterly Reports on Form 10-Q, and for
compliance with the Federal Deposit Insurance Corporation Improvement Act.
|
|
(2)
|
|
Includes fees billed for professional services rendered in connection with reviews of registration statements.
|
|
(3)
|
|
Includes fees billed for professional services rendered in connection with tax compliance, tax advice, and tax planning.
|
There were no other fees billed by KPMG for advice or services rendered to us other than
as described above.
Audit Committee Pre-Approval Policies and Procedures
The Audit Committee has established Pre-Approval Policies and Procedures for independent
auditor services. Any proposed services not pre-approved or exceeding pre-approved cost levels
require specific pre-approval by the Audit Committee. The Audit Committee may not delegate to
management its responsibilities to pre-approve services performed by the independent auditors.
The Audit Committee may delegate pre-approval authority to one or more of its members. In 2008
and 2009, the Audit Committee Chairman was permitted to approve fees up to $25,000 with the
requirement that any pre-approval decisions be reported to the Audit Committee at its next
scheduled meeting. The only non-audit service provided by the independent auditors was the
preparation of our income tax return, which was 8.0 percent and 9.7 percent of the aggregate fees
billed by KPMG for the fiscal years ended December 31, 2009 and 2008, respectively. The Audit
Committee pre-approved this work and the related fees.
Ratification
Neither our bylaws nor other governing documents or law require stockholder ratification of
the selection of KPMG as the Companys independent registered public accounting firm. However, we
are submitting the selection of KPMG to the stockholders for ratification to obtain our
stockholders views. If the stockholders fail to ratify the selection of KPMG, the Audit Committee
will reconsider whether or not to retain that firm. Even if the selection is ratified, the Audit
Committee of our Board of directors in its discretion may direct the appointment of a different
independent registered public accounting firm at any time during the year if the Audit Committee of
our
60
Board of directors determines that such a change would be in our best interests and the best
interests of our stockholders.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR RATIFICATION OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
PROPOSAL NO. 5APPROVE THE ADJOURNMENT OF THE ANNUAL MEETING,
IF NECESSARY OR APPROPRIATE, TO SOLICIT ADDITIONAL PROXIES
If there are insufficient votes at the time of the annual meeting to adopt Proposals 1 through
4 or if a quorum is not present, our Board seeks to, if necessary or appropriate, adjourn the
annual meeting to solicit additional proxies. If it is necessary to adjourn the annual meeting, no
notice of the adjourned meeting is required to be given to stockholders, other than an announcement
at the annual meeting of the time and place to which the annual meeting is adjourned, so long as
the meeting is adjourned for 45 days or less and no new record date is fixed for the adjourned
meeting. At the adjourned meeting we may transact any business which might have been transacted at
the original meeting. Approval of the proposal to adjourn the annual meeting, if necessary or
appropriate, to solicit additional proxies requires the affirmative vote of the holders of a
majority of the stock represented at the annual meeting in person or by proxy, whether or not a
quorum exists.
A failure to approve Proposal 5 would have potentially adverse consequences for us and our
stockholders if, as a consequence, Proposal 2 or 3 is not approved. Please refer to Consequences
If Either of the Capital Raising Stockholder Proposals Is Not Approved above.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ADJOURNMENT OF
THE ANNUAL MEETING, IF NECESSARY OR APPROPRIATE, TO SOLICIT ADDITIONAL PROXIES.
61
CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS
We are committed to sound corporate governance principles. These principles are essential to
running our business efficiently and to maintaining our integrity in the marketplace. We have
adopted formal Corporate Governance Guidelines to explain our corporate governance principles to
investors. We have adopted a Code of Business Conduct and Ethics for Employees and Officers as well
as for Directors. These Corporate Governance Guidelines, as well as our Code of Business Conduct
and Ethics and other governance matters of interest to investors, are available through our website
at
www.hanmi.com
by clicking on Investor Relations and then Corporate Governance.
Director Independence
Our Board of Directors has determined that all of its Directors are independent under the
applicable listing standards of The Nasdaq Stock Market, Inc., except for Jay S. Yoo, who also
serves as the President and Chief Executive Officer of Hanmi Financial.
Our Board of Directors and Its Committees
During the fiscal year ended December 31, 2009, our Board of Directors held thirty-four (34)
meetings. No Director attended fewer than eighty-seven (87%) of the aggregate number of meetings of
our Board of Directors and the committees on which he served. Our policy is to encourage all
Directors to attend all annual meetings of stockholders. Our 2009 annual meeting of stockholders
was attended by all Directors.
Our Board of Directors has a process for stockholders to send communications directly to our
Board of Directors. Our stockholders and interested parties may send communications to our Board
of Directors by writing to our Board of Directors at Hanmi Financial Corporation, 3660 Wilshire
Boulevard, Penthouse Suite A, Los Angeles, California 90010, Attention: Board of Directors. All
such communications will be relayed directly to our Board of Directors. Any interested party
wishing to communicate directly with our independent Directors regarding any matter may send such
communication in writing to our independent Directors at Hanmi Financial Corporation, 3660 Wilshire
Boulevard, Penthouse Suite A, Los Angeles, California 90010, Attention: Chairman of our Board. Any
interested party wishing to communicate directly with the Audit Committee regarding any matter,
including any accounting, internal accounting controls, or auditing matter, may submit such
communication in writing to Hanmi Financial Corporation, 3660 Wilshire Boulevard, Penthouse Suite
A, Los Angeles, California 90010, Attention: Chairman of the Audit Committee.
Any of the submissions may be anonymous and/or confidential. Confidentiality is a priority,
and all reports will be treated confidentially to the fullest extent possible. Stockholders may
communicate to our Board of Directors on an anonymous basis. Submissions of complaints or concerns
will not be traced and submissions may be made anonymously. For submissions that are not anonymous,
the sender may be contacted in order to confirm information or to obtain additional information.
Our Board of Directors had three standing committees: the Audit Committee; the Nominating and
Corporate Governance and Compensation Committee; and the Planning Committee. Each committee is
governed by a charter, all of which are available through our website at
www.hanmi.com
by clicking
on Investor Relations and then Corporate Governance.
Audit Committee
The Audit Committee appoints an independent registered public accounting firm to conduct the
annual audit of our books and records. The Audit Committee also reviews with such accounting firm
the scope and results of the annual audit, the performance by such accounting firm of professional
services in addition to those related to the annual audit, and the adequacy of our internal
controls. The current members of our Audit Committee are John A. Hall, Paul Seon-Hong Kim, Joon
Hyung Lee, Joseph K. Rho and William Stolte, with Mr. Hall serving as its
62
Chairman. Each member is an outside (or non-employee) Director and meets the independence
requirements of the Securities and Exchange Commission (SEC) and Nasdaq. Mr. Hall, Mr. Kim, and
Mr. Stolte are each audit committee financial experts within the meaning of the current rules of
the SEC. The Audit Committee held eleven (11) meetings during the fiscal year ended December 31,
2009. See
Report of the Audit Committee of our Board of Directors
.
REPORT OF THE AUDIT COMMITTEE OF OUR BOARD OF DIRECTORS
Our Board of Directors maintains an Audit Committee composed of a minimum of three (3) outside
Directors. Our Board of Directors and the Audit Committee believe that the Audit Committees
current member composition satisfies Rule 4350(d)(2)(A) of Nasdaq, which governs audit committee
composition, because all Audit Committee members are independent directors.
The primary responsibility of the Audit Committee is to assist our Board of Directors in
fulfilling its responsibility to oversee managements conduct of our financial reporting process,
including: overseeing the integrity of the financial reports and other financial information
provided to governmental or regulatory bodies (such as the SEC), the public, and other users
thereof; our systems of internal accounting and financial controls; and the annual independent
audit of our financial statements.
Management has the primary responsibility for the financial statements and the reporting
process, including the system of internal controls. The independent auditors are responsible for
auditing the financial statements and expressing an opinion on the conformity of those financial
statements with U.S. generally accepted accounting principles.
In fulfilling its oversight responsibilities, the Audit Committee reviewed the 2009 audited
financial statements with management and the independent auditors. The Audit Committee discussed
with the independent auditors the matters required to be discussed in accordance with Statement of
Auditing Standards No. 61. This included a discussion of the auditors judgments as to the quality,
not just the acceptability, of the accounting principles, the reasonableness of significant
judgments, the disclosures in the financial statements, and any other matters that are required to
be discussed with the Audit Committee under Public Company Accounting Oversight Board standards. In
addition, the Audit Committee received from the independent auditors written disclosures and the
letter required by the applicable requirements of the Public Company Accounting Oversight Board
regarding the independent auditors communication with the Audit Committee concerning independence,
and the Audit Committee has discussed with the independent auditors the independent auditors
independence.
In addition, in response to the requirements set forth in Section 404 of the Sarbanes-Oxley
Act of 2002 and related regulations, management assessed the effectiveness of our internal control
over financial reporting as of December 31, 2009. Management based this assessment on criteria for
effective internal control over financial reporting described in
Internal Control-Integrated
Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Managements assessment included an evaluation of the design of our internal control over financial
reporting and testing of the operational effectiveness of its internal control over financial
reporting. At the conclusion of managements assessment, the Audit Committee reviewed a report
submitted by management on the effectiveness of our internal control over financial reporting.
The Audit Committee discussed with our independent auditors the overall scope and plans for
their audits. The Audit Committee met with the independent auditors, with and without management
present, to discuss the results of their audits and their evaluations of our internal controls and
the overall quality of our financial reporting. The Audit Committee also discussed the independence
of the independent auditors and concluded that their services provided to Hanmi Financial,
including their tax and non-audit related work, were compatible with maintaining their
independence.
Based on the reviews and discussions referred to above, the Audit Committee recommended to our
Board of Directors, and our Board of Directors approved, that the audited financial statements be
included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009 for filing
with the SEC.
Respectfully submitted by the Audit
Committee of the Board of Directors,
John A. Hall (Chairman)
Paul Seon-Hong Kim
Joon Hyung Lee
Joseph K. Rho
William Stolte
63
Planning Committee
The Planning Committee recommends planning policy, new lines of business, capital and
financial plans, and dividend plans to our Board of Directors, and monitors our planning activities
and our performance against our plans and budget. The current members of our Planning Committee
are William Stolte, I Joon Ahn, Paul Seon-Hong Kim, Joseph K. Rho, and Jay S. Yoo, with Mr. Ahn
serving as its Chairman. During 2009, the members of the Planning Committee were I Joon Ahn, Joon
Hyung Lee, Joseph K. Rho, William Stolte, and Jay S. Yoo, with Mr. Stolte serving as its Chairman.
Each member is an outside Director, except for Mr. Yoo, and meets the independence requirements of
the SEC and Nasdaq. The Planning Committee held eighteen (18) meetings during the fiscal year ended
December 31, 2009.
Nominating and Corporate Governance and Compensation Committee
The Nominating and Corporate Governance and Compensation Committee (NCGC Committee) assists
our Board of Directors by: identifying individuals qualified to become Directors; recommends to our
Board of Directors the Director nominees for our Board of Directors and Board committees for the
next annual meeting; develops, recommends, and implements a set of corporate governance principles
applicable to Hanmi Financial; and monitors the process to determine the effectiveness of our Board
of Directors and its committees.
The NCGC Committee believes that our Board of Directors as a whole should encompass a range of
talent, skill, diversity, and expertise enabling it to provide sound guidance with respect to our
operations and interests. In addition to considering a candidates background and accomplishments,
candidates are reviewed in the context of the current composition of our Board of Directors and the
evolving needs of our business.
The NCGC Committee seeks directors with strong reputations and experience in areas relevant to
the strategy and operations of our business, particularly industries and growth segments that we
serve, such and the banking and financial services industry, as well as key geographic markets
where we operate. Each of the of our current Directors holds or has held senior executive positions
in large, complex organizations and has operating experience that meets this objective. In these
positions, they have also gained experience in core management skills, such as strategic and
financial planning, public company financial reporting, corporate governance, risk management, and
leadership development.
The NCGC also believes that each of the current Directors has other key attributes that are
important to an effective board: integrity and demonstrated high ethical standards; sound judgment;
analytical skills; the ability to engage management and each other in a constructive and
collaborative fashion; diversity or origin, background, experience, and thought; and the commitment
to devote significant time and energy to service on our Board of Directors.
The NCGC annually reviews the individual skills and characteristics of the Directors, as well
as the composition of our Board as a whole. This assessment includes a consideration of
independence, diversity, age, skills, expertise, time availability, and industry background in the
context of the needs of our Board of Directors and Hanmi Financial. Although we have no policy
regarding diversity, the NCGC Committee seeks a broad range of perspectives and considers both the
personal characteristics (gender, ethnicity, age) and experience (industry, professional, public
service) of Directors and prospective nominees to our Board of Directors.
64
Recommendations by any stockholder for Director nominees must be submitted in writing to the
Chairman of the NCGC Committee at our principal executive offices, no later than the last business
day of January of the year that our next annual meeting will be held, to be considered at such
annual meeting. Stockholders shall include in such recommendation:
|
|
|
The name, age, and address of each proposed Director nominee;
|
|
|
|
|
The principal occupation of each proposed nominee;
|
|
|
|
|
The number of shares of our voting stock owned by each proposed nominee;
|
|
|
|
|
The name and address of the nominating stockholder;
|
|
|
|
|
The number of shares of our voting stock owned by the nominating stockholder; and
|
|
|
|
|
A letter from the proposed nominee indicating that such proposed nominee wishes to be
considered as a nominee for our Board of Directors and will serve as a Director if
elected.
|
In addition, each recommendation must set forth, in detail, the reasons why the nominating
stockholder believes the proposed nominee meets the following general qualifications, which are the
same qualifications used by the NCGC Committee in evaluating nominees:
|
|
|
Nominees must possess high personal and professional ethics, integrity, and values,
and be committed to representing the long-term interests of our stockholders;
|
|
|
|
|
Nominees must have an inquisitive and objective perspective, practical wisdom, and
mature judgment;
|
|
|
|
|
Nominees must possess a broad range of skills, expertise, industry knowledge, and
contacts useful to our business;
|
|
|
|
|
Nominees must be willing to devote sufficient time to carrying out their duties and
responsibilities effectively, and should be committed to serve on our Board of Directors
for an extended period of time;
|
|
|
|
|
Pursuant to the Corporate Governance Guidelines, nominees, once elected, should not
serve on our Boards of directors of more than two other public companies and, unless
granted an exception by our Board of Directors, nominees cannot serve simultaneously as a
Director of Hanmi Financial and as a director or officer of any other depository
organization other than a subsidiary bank of Hanmi Financial; and
|
|
|
|
|
Pursuant to the Corporate Governance Guidelines, nominees are encouraged to own shares
of common stock of Hanmi Financial at a level that demonstrates a meaningful commitment
to Hanmi Bank and Hanmi Financial, and to better align the nominees interests with the
stockholders of Hanmi Financial.
|
In identifying and evaluating Director candidates, the NCGC Committee will solicit and receive
recommendations, and review qualifications of potential Director candidates. The NCGC Committee
also may use search firms to identify Director candidates. To enable the NCGC Committee to
effectively evaluate Director candidates, the NCGC Committee also may conduct appropriate inquiries
into the backgrounds and qualifications of Director candidates, including reference checks. As
stated above, the NCGC Committee will consider Director candidates recommended by stockholders
utilizing the same criteria as candidates identified by the NCGC Committee.
Additionally, the NCGC Committee is responsible for determining the compensation of all of our
executive officers, including our Chief Executive Officer, as well as administering our
compensation plans. The NCGC
65
Committee has the authority to delegate such decisions to subcommittees of the NCGC Committee.
The NCGC Committee also is authorized to retain outside consultants to assist it in determining
executive officer compensation.
The members of the NCGC Committee are Joon Hyung Lee, I Joon Ahn, John Hall, Paul Seon-Hong
Kim, and Joseph K. Rho, with Mr. Lee serving as its Chairman. The NCGC Committee held fourteen (14)
meetings from January to December 2009. See
The NCGC Committee Report.
For a discussion of the
role of executive officers in determining compensation, see
Executive CompensationMethodology
for Establishing Compensation
.
Leadership Structure
Our Board of Directors does not have a policy regarding the separation of the roles of Chief
Executive Officer and Chairman of our Board as our Board believes it is in our best interests to
make that determination based on the position and direction of Hanmi Financial and the membership
of our Board of Directors. Our Board of Directors has determined that having an independent
director serve as Chairman of our Board is in the best interest of our stockholders at this time.
This structure ensures a greater role for the independent Directors in the oversight of our company
and active participation of the independent Directors in setting agendas and establishing Board
priorities and procedures. Further, this structure permits the Chief Executive Officer to focus on
the management of the companys day-to-day operations.
Risk Oversight
We have a risk management program overseen by Jean Lim, the Chief Risk Officer of Hanmi Bank,
who reports directly to Hanmi Banks Chief Executive Officer. Material risks are identified and
prioritized by management, and each prioritized task is referred to a Board committee or the full
Board of Directors for oversight. For example, strategic risks are referred to the full Board of
Directors while financial risks are referred to the Audit Committee. Our Board of Directors
regularly reviews information regarding our credit, liquidity, and operations, as well as the risks
associated with each, and annually reviews our risk management program as a whole. Also, the NCGC
periodically reviews the most important risks to us to ensure that compensation programs do not
encourage excessive risk-taking.
Section 16(a) Beneficial Ownership Reporting Compliance
Under Section 16(a) of the Exchange Act, our Directors, executive officers, and any persons
holding ten percent (10%) or more of our common stock are required to report their ownership of
common stock and any changes in that ownership to the SEC and to furnish Hanmi Financial with
copies of such reports. Specific due dates for these reports have been established, and Hanmi
Financial is required to report in this Annual Report of Form 10-K/A any failure to file on a
timely basis by such persons. Based solely upon a review of copies of reports filed with the SEC
during the fiscal year ended December 31, 2009, Hanmi Financial believes that all persons subject
to the reporting requirements of Section 16(a) filed all required reports on a timely basis.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Overview
This Compensation Discussion and Analysis (CD&A) describes our compensation philosophy,
methodologies and our current practices with respect to the remuneration programs for the
individuals listed in the Summary Compensation Table (the Named Executive Officers). The
compensation programs of our Named Executive Officers are established, evaluated and maintained by
the Nominating and Corporate Governance and Compensation Committee (NCGC) of our Board of
Directors. The NCGC is comprised entirely of outside Directors that satisfy the Nasdaq listing
requirements and relevant Internal Revenue Code and SEC regulations on independence.
66
Compensation Philosophy and Objectives
The objectives of our compensation programs, including those of its banking subsidiary, Hanmi
Bank, is to attract and retain executive officers of high caliber and quality, and to appropriately
reward them for achievements towards promoting and furthering the business objectives and
performance, both for the short term and the long term. The compensation programs of our Named
Executive Officers are designed to provide incentive for good performance without inducing them to
take excessive risk. Another objective is to encourage on-going and continued performance by
offering long-term incentives, such as stock options, that align executive and stockholders
interest. In the end, the overriding goal is to maintain and promote stockholder value.
Methodology for Establishing Compensation
To assist the NCGC Committee in its development of the compensation programs for the Named
Executive Officers, our Human Resources Department gathers data from competing financial
institutions, through review of public information, such as proxy statements and salary surveys. In
addition to the market data gathered by the Human Resources Department, the NCGC Committee also
reviews and considers the Chief Executive Officers (the CEO) compensation recommendations.
The survey data provides a broader representation of the compensation practices in the banking
industry. This data is used as reference point of the broader market. In establishing the target
compensation levels for the Named Executive Offers, the NCGC Committee relied upon benchmark data
from a peer group of three directly competing banks in the Los Angeles Korean American community
and two other additional Los Angeles banks (the Peer Group), as well as the salary survey
provided by the California Department of Financial Institutions. The banks included in the Peer
Group consisted of the following:
|
|
|
Cathay Bancorp, Los Angeles, California
|
|
|
|
|
Center Bank, Los Angeles, California
|
|
|
|
|
First Regional Bancorp, Los Angeles, California
|
|
|
|
|
Nara Bank, Los Angeles, California
|
|
|
|
|
Wilshire State Bank, Los Angeles, California
|
The Peer Group was selected to include banks comparable in size and the geography to that
served by us. Due to the rapidly changing economic conditions and turbulence in the financial
industry, few financial institutions fit this criteria. Therefore, NCGC Committee limited the Peer
Group to the above five financial institutions.
Our NCGC Committee aims to target our Named Executive Officers compensation package to be
between 50
th
and 75
th
percentile of the market and the
Peer-Group data is used to provide an indication of market pay practices for this purpose and to
effectively provide data for subjective review and confirmation of the reasonableness of the
compensation paid to our Named Executive Officers. The Peer-Group data, in addition to the broader
survey data, also provides the NCGC Committee with current information concerning market pay
practices with respect to the pay composition among base salaries, annual bonuses and long-term
incentives.
Although the decisions regarding the compensation levels are based on the information provided
from review of the Peer-Group data, the NCGC Committee also takes into account the prevailing
economic environment and the current financial condition of Hanmi Financial. The objective is to
establish compensation programs that are motivating but affordable, with the purpose of aligning
the interests of our Named Executive Officers with that of our stockholders.
67
Elements of the Compensation Program
The following describes the various components of the compensation mix that Hanmi Financial
provides to the Named Executive Officers, the objectives of each pay component, and how each
component is used to create a total competitive compensation package.
The NCGC Committee provides the Named Executive Officers with a compensation package that
includes annual base salary, short-term cash incentive compensation, long-term incentive awards,
deferred compensation, executive perquisites, and a broad-based benefits program.
Annual Base Salary
Annual base salaries are the fixed portion of the Named Executive Officers cash compensation
and are intended to reward the day-to-day aspects of their roles and responsibilities. The Named
Executive Officers annual salaries were set at the time they first joined Hanmi Bank. The initial
salaries were established by taking into account several factors including, but not limited to, the
executives experience, responsibilities, management abilities, and job performance. Hanmi
Financial targets base salaries for its Named Executive Officers at market median. The NCGC
Committee believes that the fiscal year 2009 base salaries of our Named Executive Officers are
competitive with companies of similar size. Pay adjustments are generally made annually, after
reviewing overall company performance, individual performance and the affordability of the
increase. In the past year, there were no salary adjustments. The CEOs annual adjustment to base
salary is incorporated in the Employment Agreement. The CEO is the only Named Executive Officer who
has an Employment Agreement with Hanmi. All other Named Executive Officers are employed at-will.
Short-Term Cash Incentive Compensation
In accordance with our compensation philosophy, a significant portion of the Named Executive
Officers compensation packages is based on individual performance and our performance. For each
Named Executive Officer, target bonuses are stated as a percentage of base salary. The annual bonus
payable to the CEO is capped at 75% of his base salary. The annual bonuses payable to the other
Named Executive Officers are capped at 50% of base salary. In evaluating the short-term
performance of Hanmi Financial, both financial and non-financial goals are utilized. The financial
goals include return on average assets, pre-tax earnings, average deposit growth, and earning per
share growth. The non-financial goals include leadership and management qualities, Board of
Director relations, external relations, employee relations, and certain knowledge and skills
specific to daily operations.
The NCGC Committee reviews performance against agreed upon financial goals on an annual basis
to determine the short-term cash incentive compensation. In 2009, financial performance was
measured against Asset Quality, Liquidity, Capital Adequacy, Earnings and Balance Sheet
Deleveraging, weighted differently between the various components and also between executives.
There is also a qualitative factor assessing Leadership and Capability for each of the Named
Executive Officers. The NCGC Committee established no other performance goals for determining the
short-term cash incentive compensation and no performance-based, short-term cash incentive
compensation was paid for the Named Executive Officers in 2009. In 2009, Hanmi Bank continued to
experience challenging economic conditions that adversely effected Hanmi Banks performance;
however, it is important and necessary to recognize the contribution and leadership of our Named
Executive Officers in this turbulent economy. The individual performance of each Named Executive
Officer is discussed below.
Long-Term Incentive Awards
Long-term incentive awards, such as stock options and restricted stock, are the third key
component of the Named Executive Officers total compensation package. The members of the NCGC
Committee believe that employee stock ownership is a significant incentive for the Named Executive
Officers to build stockholder wealth, and thereby aligning the interests of employees and
stockholders. The members of the NCGC Committee also believe that equity-based compensation
complements the short-term cash incentive compensation by forcing executives to recognize the
impact their short-term decisions might have on long-term outcomes. This compensation
68
approach limits an executives ability to reap short-term gains at the expense of our
longevity. This is also an important tool in retaining Named Executive Officers, particularly
through less rewarding years.
Long-term incentive awards are granted to the Named Executive Officers pursuant to the 2007
Equity Compensation Plan (the 2007 Plan). The NCGC Committee has not established grant
guidelines; rather, the size, timing, and other material terms of the long-term incentive awards
for the Named Executive Officers are made at the discretion of our Board of Directors and the NCGC
Committee. Factors considered by the NCGC Committee and our Board of Directors include awards to
industry peers and each executives previous grant history. In April 2009, in accordance with the
Management Retention Program, developed partly in response to regulatory requirements, stock
options and stock grants were awarded to the Named Executive Officers and other senior managers, as
part of Hanmis Management Retention Plan. Stock Options and restricted stock grants awarded are
included in the Summary Compensation Table.
The NCGC Committee approves all awards under the 2007 Plan and acts as the administrator of
the 2007 Plan. Stock options granted under the 2007 Plan generally vest over a five-year period,
with 20 percent becoming exercisable (vesting) on each anniversary of the grant date. In
connection with the negotiation of Mr. Yoos original 2008 employment agreement, his stock options
fully vest two years after initial grant. All stock options are granted with a ten-year exercise
term and have an exercise price equal to the fair market value of our common stock on the grant
date. Restricted stock granted under the 2007 Plan generally vests over a five-year period, with 20
percent becoming unrestricted on each anniversary of the grant date.
Deferred Compensation
Under our Deferred Compensation Plan (DCP), the Named Executive Officers may defer up to 100
percent (100%) of their base salary and up to 100 percent (100%) of their short-term cash incentive
compensation. The amounts deferred under the DCP are payable upon termination or retirement under
the distribution schedule elected by the participant. Taxes are due upon distribution. The DCP is
not exclusive to only the Named Executive Officers; all senior management employees are eligible to
participate in the DCP.
The DCP is intended to comply, both in form and operation, with the requirements of Internal
Revenue Code Section 409A and shall be limited, construed, and interpreted in accordance with such
intent. To the extent that any payment under the DCP is subject Section 409A, it is intended that
it be paid in a manner that shall comply with Section 409A, including the final regulations or any
other applicable guidance issued by the Secretary of the Treasury and the Internal Revenue Service
with respect thereto. In 2009, no Named Executive Officers participated in the DCP.
Executive Perquisites
The Named Executive Officers and other senior management employees receive the following
benefits in addition to their other compensation: gasoline card; cellular phone allowance; and
automobile allowance. Chief Executive Officer, Jay S. Yoo, also received a membership in
Mountain-Gate Country Club. These additional benefits and benefit levels of the Named Executive
Officers are detailed in the Summary Compensation Table
.
Broad-Based Benefits Programs
The Named Executive Officers participate in the benefit programs that are available to all
full-time employees. These benefits include health, dental, vision, and life insurance, short-and
long-term disability insurance, healthcare reimbursement accounts, paid vacation, and contributions
to a 401(k) profit sharing retirement plan.
Change in Control Arrangements
The CEOs Employment Agreement contains a provision for severance pay of a period of six (6)
months or the remainder of his employment contract, whichever is less, in case of his involuntary
termination of employment without cause. This provision also would apply should there be a change
in control. The Chief Financial Officer and the Chief Credit Officer do not have any such
change-in-control arrangements.
69
Compensation Policy Risk Assessment
The NCGC Committee reviews the compensation of the Named Executive Officers, as well as the overall
compensation practices for the organization. Any performance incentive programs, awarding of bonus
payments, and the budgeting for annual salary adjustments are reviewed and approved by the NCGC
Committee before being presented to the full Board of Directors for ratification. An important
aspect of the review is an assessment of whether the programs in any way encourage the Named
Executive Officers or any other employee of Hanmi Financial to take unacceptable risk, in the short
term and for the long term.
In 2009, the Officers Incentive Compensation Program was suspended and bonuses, usually paid in
July and December, were not paid.
Named Executive Officers Compensation
The Chief Executive Officer meets with the NCGC Committee to review the Chief Executive
Officers compensation recommendation for the other Named Executive Officers. No adjustments were
made in 2009 for any of the Named Executive Officers as a result of the unprecedented decline in
the economy and concurrent deterioration in our performance.
Employment Agreement with Chief Executive Officer, Jay S. Yoo
Jay S. Yoo joined us and Hanmi Bank as President and Chief Executive Officer as of June 23,
2008. His Employment Agreement, effective June 23, 2008, has a two-year initial term, with an
option to renew for an additional three years at the discretion of our Board of Directors, and
provides for a yearly base salary of $330,000, with a target bonus of up to seventyfive percent
(75%) of his annual base salary. Per the Employment Agreement, Mr. Yoos annual base salary was to
be increased by $10,000 in June 2009. Mr. Yoo voluntarily relinquished the increase in base salary
and our Board of Directors accepted his request as a well intentioned gesture towards the staff who
did not receive a base salary adjustment in 2009.
Mr. Yoos bonus, which is to be paid in cash, is dependent on the attainment of certain
financial goals set by our Board of Directors. The financial goals have been discussed and set in
early 2009, and based on the defined goals, Hanmi Financial paid no bonus to Mr. Yoo.
In addition, Under Mr. Yoos Employment Agreement, he is entitled to the use of a company car,
a bank issued cellular telephone, membership in a business club and golf country club, and payment
of reasonable business related expenses. His Employment Agreement also calls for the granting of
the option to purchase 70,000 shares of our stock. The terms of the stock options are subject to
the terms and conditions set forth in the 2007 Plan. The options vest in equal installments over
two years starting one year after the date of the grant.
Compensation for Chief Financial Officer, Brian Cho
Brian E. Cho, Executive Vice President & Chief Financial Officer joined us in December 2007.
He does not have an employment agreement and his employment is at-will. Per his employment letter
executed November 1, 2007, his annual base salary is $270,000 and he is eligible to receive
incentive cash compensation of up to fifty percent of his annual base salary.
In 2009, he received an annual base salary of $270,000, as well as an auto allowance of $700
per month, a cell phone allowance of $100 per month, a gas card, and other general benefits
afforded to all employees.
Compensation for Chief Credit Officer, John Park
Mr. John Park joined us on September 2, 2008 as an Executive Vice President and the Chief
Credit Officer. Per his employment offer letter, dated August 13, 2008, Mr. Parks annual base
salary was $210,000, plus an annual bonus of up to fifty percent (50%) of his base salary. Upon his
hiring, Mr. Park was granted an option to purchase 30,000 shares of common stock. He also received
5,000 shares in restricted stock grants at that same time. Both the
70
stock options and the restricted stock grants are subject to the terms and conditions set
forth in the 2007 Plan and vest over five years, starting one year after the date of the grant.
Mr. Park also was entitled to an automobile allowance of $700 per month, reimbursement of cell
phone expenses of $100 per month, and other general benefits afforded to all employees.
Mr. Park passed away in October 2009. Hanmi Financial paid his estate all accrued salary and
pay for vacation accrued and not used. Mr. Parks estate also received $50,000 from his life
insurance company.
Compensation for Interim Chief Credit Officer, Jung Hak Son
Mr. Jung Hak Son served as Senior Vice President and District Leader for the past 4 years and
was promoted to the position of Interim Chief Credit Officer on October 21, 2009. His employment is
at-will and there is no employment agreement between Hanmi Bank and Mr. Son. His compensation
package was not changed at the time of appointment to the Interim Chief Credit Officer position.
His compensation at the time of his appointment included a base salary of $180,000, plus a bonus of
up to forty percent of his base salary. The bonus payable to Mr. Son is wholly dependent on Hanmi
Banks performance and his individual performance. He is also entitled to an auto allowance of $700
per month, a $100 per month cell phone allowance, and other general benefits afforded to all
employees.
On December 23, 2009, he was appointed as the permanent Chief Credit Officer, pending
regulatory approval. At that time, his compensation package was revised. His new annual base salary
was increased to $210,000. All other benefits remain the same.
Administrative Policies and Practices
To evaluate and administer the compensation programs of the Named Executive Officers, the NCGC
Committee meets regularly, at least four times a year. In addition, the NCGC Committee also holds
special meetings to discuss extraordinary items, such as the appointment of the Interim Chief
Credit Officer in October 2009. At the end of a meeting, the NCGC Committee may choose to meet in
executive session, when necessary. In 2009, the NCGC Committee met 16 times.
Stock Ownership Guidelines
The NCGC Committee has not implemented stock ownership guidelines for the Named Executive
Officers; however, the NCGC Committee continues to periodically review best practices and
re-evaluate whether stock ownership guidelines are consistent with our compensation philosophy and
with stockholders interests.
Tax Deductibility of Executive Officer Compensation
Internal Revenue Code Section 162(m) precludes a public corporation from taking a deduction
for compensation in excess of $1 million for its chief executive officer or any of its three other
highest paid executive officers (excluding the chief financial officer), unless certain specific
and detailed criteria are satisfied. However, performance-based compensation that has been approved
by stockholders is excluded from the $1 million limit. Hanmi Financial complies with the
requirements of Section 162(m). Accordingly, all grants made under the 2007 Plan in fiscal year
2009 comply with Section 162(m) The NCGC Committee will continue to carefully consider the impact
of Section 162(m) in determining the appropriate pay mix and compensation levels for the Named
Executive Officers.
The NCGC Committee Report
The following NCGC Committee Report should not be deemed filed or incorporated by reference
into any other document, including our filings under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent Hanmi Financial specifically incorporates this Report
into any such filing by reference.
71
The NCGC Committee has reviewed and discussed the Compensation Discussion and Analysis
required by Item 402(b) of Regulation S-K with management and, based on such review and
discussions, the NCGC Committee recommended to our Board of Directors that the Compensation
Discussion and Analysis be included in this Proxy Statement.
Respectfully submitted by the NCGC Committee
of the Board of Directors,
Joon H. Lee (Chairman)
I Joon Ahn
John Hall
Paul Seon-Hong Kim
Joseph K. Rho
Summary Compensation Table
The following table summarizes the total compensation paid or earned by the Named Executive
Officers for the fiscal years ended December 31, 2009, 2008 and 2007. Only one of our current Named
Executive Officers was employed by us in 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUMMARY COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Qualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Non-Equity
|
|
Deferred
|
|
All Other
|
|
|
|
|
|
|
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Awards
|
|
Incentive Plan
|
|
Compensation
|
|
Compensation
|
|
|
Name and
|
|
|
|
|
|
(1)
|
|
(1) (5)
|
|
(2) (3)
|
|
(2) (4)
|
|
Compensation
|
|
Earnings
|
|
(1)
|
|
Total
|
Principal Position
|
|
Year
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
|
(i)
|
|
(j)
|
Jay S. Yoo,
President, Chief
|
|
|
2009
|
|
|
$
|
326,192
|
|
|
$
|
|
|
|
$
|
27,000
|
|
|
$
|
30,765
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
63,668
|
(6)
|
|
$
|
447,625
|
|
Executive Officer and Director
|
|
|
2008
|
|
|
$
|
172,404
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
87,619
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
49,722
|
(6)
|
|
$
|
309,745
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian E. Cho,
Executive Vice
|
|
|
2009
|
|
|
$
|
266,885
|
|
|
$
|
|
|
|
$
|
20,250
|
|
|
$
|
9,230
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
36,522
|
(7)
|
|
$
|
332,887
|
|
President and Chief Financial
|
|
|
2008
|
|
|
$
|
270,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
35,239
|
(7)
|
|
$
|
305,239
|
|
Officer
|
|
|
2007
|
|
|
$
|
22,500
|
|
|
$
|
100,000
|
|
|
$
|
47,600
|
|
|
$
|
75,453
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
878
|
(7)
|
|
$
|
246,431
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jung Hak Son,
Senior Vice
|
|
|
2009
|
|
|
$
|
173,385
|
|
|
$
|
|
|
|
$
|
13,500
|
|
|
$
|
6,153
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
36,169
|
(8)
|
|
$
|
229,207
|
|
President and Chief Credit Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Park,
Former Executive
|
|
|
2009
|
|
|
$
|
175,544
|
|
|
$
|
|
|
|
$
|
20,250
|
|
|
$
|
9,230
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
28,673
|
(9)
|
|
$
|
233,697
|
|
Vice President and Chief Credit
|
|
|
2008
|
|
|
$
|
70,000
|
|
|
$
|
|
|
|
$
|
25,750
|
|
|
$
|
58,386
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
6,448
|
(9)
|
|
$
|
160,584
|
|
Officer
(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
All cash compensation and perquisites paid to the Named Executive Officers are paid by, and are the responsibility of, our subsidiary, Hanmi Bank.
|
|
(2)
|
|
All equity awards are made by Hanmi Financial, are for shares of our common stock, and are made pursuant to the 2007 Equity Compensation Plan
(the 2007 Plan).
|
|
(3)
|
|
Pursuant to new SEC regulations regarding the valuation of equity awards, amounts in columns (e) represent the applicable full grant date fair
values of stock awards in accordance with FASB ASC Topic 718, excluding the effect for forfeitures. To facilitate year-to-year comparisons, the
SEC regulations require companies to present recalculated disclosures for each preceding year required under the rules so that equity awards and
stock options reflect the applicable full grant date fair values, excluding the effect of forfeitures. The total compensation column is
recalculated accordingly. For further information, see Note 13 to our audited financial statements for the year ended December 31, 2009 included
in our Annual Report on Form 10-K filed with the SEC on March 15, 2010.
|
|
(4)
|
|
Pursuant to new SEC regulations regarding the valuation of equity awards, amounts in columns (F) represent the applicable full grant date fair
values of option awards in accordance with FASB ASC Topic 718, excluding the effect for forfeitures. To facilitate year-to-year comparisons, the
SEC regulations require companies to present recalculated disclosures for each preceding year required under the rules so that equity awards and
stock options reflect the applicable full grant date fair values, excluding the effect of forfeitures. The total compensation column is
recalculated accordingly. For further information, see Note 13 to our audited financial statements for the year ended December 31, 2009 included
in our Annual Report on Form 10-K filed with the SEC on March 15, 2010.
|
|
(5)
|
|
The amounts in column (d) reflect the discretionary bonuses paid to the Named Executive Officers for services performed in the prior year.
Amounts shown are not reduced to reflect the Named Executive Officers elections, if any, to defer receipt of awards into the DCP.
|
72
|
|
|
(6)
|
|
Amounts consist of: a) life insurance premiums ($392 for 2009; $199 for 2008); b) company automobile ($26,936 for 2009; $3,967 for 2008); c)
health insurance premiums ($11,178 for 2009; $7,613 for 2008); d) employer contributions under the 401(k) plan ($12,375 for 2009; $9,900 for
2008); e) club memberships ($8,110 for 2009; $27,454 for 2008); and f) other perquisites ($4,677 for 2009; $589 for 2008) such as cellular phone
allowance, gasoline card, meal allowance and Holiday gift cards.
|
|
(7)
|
|
Amounts consist of: a) life insurance premiums ($392 for 2009; $398 for 2008, $0 for 2007); b) automobile allowance ($8,303 for 2009; $8,400 for
2008, $700 for 2007); c) health insurance premiums ($10,157 for 2009; $11,830 for 2008, $0 for 2007); d) employer contributions under the 401(k)
plan ($12,375 for 2009; $11,625 for 2008, $0 for 2007); and e) other perquisites ($5,295 for 2009; $2,236 for 2008, $178 for 2007) such as
cellular phone allowance, gasoline card, meal allowance and Holiday gift cards.
|
|
(8)
|
|
Amounts consist of: a) life insurance premiums ($370 for 2009); b) automobile allowance ($8,303 for 2009); c) health insurance premiums ($10,157
for 2009); d) employer contributions under the 401(k) plan ($10,403 for 2009); and e) other perquisites ($6,936 for 2009) such as cellular phone
allowance, gasoline card, meal allowance and Holiday gift cards.
|
|
(9)
|
|
Amounts consist of: a) life insurance premiums ($327 for 2009; $99 for 2008); b) automobile allowance ($6,591 for 2009; $2,800 for 2008); c)
health insurance premiums ($8,480 for 2009; $2,743 for 2008); d) employer contributions under the 401(k) plan ($9,547 for 2009; $394 for 2008);
and e) other perquisites ($3,728 for 2009; $412 for 2008) such as cellular phone allowance, gasoline card, meal allowance and Holiday gift cards.
|
|
(10)
|
|
Mr. Park passed away on October 14, 2009.
|
For information regarding the compensation arrangements we have entered into with our
Named Executive Officers, see
Compensation Discussion and Analysis
above.
Grants of Plan-Based Awards
The following table complements the
Summary Compensation Table
disclosure of the grant date
fair value of stock and option awards granted to our Named Executive Officers during the fiscal
year ended December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GRANTS OF PLAN BASED AWARDS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All other
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Awards:
|
|
Exercise or
|
|
Grant Date
|
|
|
|
|
|
|
Estimated Possible Payouts Under
|
|
Estimated Future Payouts Under
|
|
Number of
|
|
Number of
|
|
Base Price of
|
|
Fair Value of
|
|
|
|
|
|
|
Non-Equity Incentive Plan Awards
|
|
Equity Incentive Plan Awards (1)
|
|
Shares of
|
|
Securities All
|
|
Option
|
|
Stock and
|
|
|
Grant
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Stock or
|
|
Underlying
|
|
Awards
(1)
|
|
Option
|
Name
|
|
Date
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
Units (#)
|
|
Options (#)
|
|
($/Share)
|
|
Awards
(2)
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
|
(i)
|
|
(j)
|
|
(k)
|
|
(l)
|
|
Jay S. Yoo
|
|
|
(3
|
)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
247,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
04/08/09
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50.000
|
|
|
$
|
1.35
|
|
|
$
|
30.765
|
|
|
|
|
04/08/09
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
$
|
27,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian E. Cho
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
$
|
135,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
04/08/09
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
$
|
1,35
|
|
|
$
|
9,230
|
|
|
|
|
04/08/09
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
$
|
20,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jung Hak Son
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
$
|
105,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
04/08/09
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
$
|
1,35
|
|
|
$
|
6,153
|
|
|
|
|
04/08/09
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
$
|
13,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Park
|
|
|
04/08/09
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
$
|
1,35
|
|
|
$
|
9,230
|
|
|
|
|
04/08/09
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
$
|
20,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Our practice is that the exercise price for each stock option is the market value on the
date of grant.
|
|
(2)
|
|
The amounts in column (l) reflect the grant date fair value computed in accordance with FASB
ASC Topic 718. Assumptions used in the calculation of these amounts for the fiscal year ended
December 31, 2009 are included in Note 13 to our audited financial statements for the fiscal
year ended December 31, 2009, included in our Annual Report on Form 10-K filed with the SEC on
March 15, 2010.
|
|
(3)
|
|
Represents the maximum amount which could have been earned in 2009 as short-term incentive
cash compensation, as described in Compensation Discussion and Analysis. No amounts were
earned as short term incentive cash compensation for work performed in 2009.
|
Outstanding Equity Awards at Fiscal Year-End
In 2000, our Board of Directors adopted the Hanmi Financial Year 2000 Stock Option Plan (2000
Stock Option Plan) which was approved by stockholders in May 2000. The purpose of the 2000 Stock
Option Plan was to enable us to attract, retain and motivate officers, directors, and employees by
providing for or increasing their proprietary interests in our company and, in the case of
non-employee directors, to attract such directors and further align their interests with those of
our stockholders by providing or increasing their proprietary interests in our
73
company. The maximum number of shares of our common stock that may be issued pursuant to
outstanding options granted under the 2000 Plan is 804,358. Options may no longer being issued
under the 2000 Stock Option Plan.
In 2007, our Board of Directors adopted the Hanmi Financial Corporation 2007 Equity
Compensation Plan (the 2007 Plan). A key objective of the 2007 Plan is to provide more
flexibility in the types of equity incentives that may be offered to employees, consultants and
non-employee directors. The 2007 Plan provides for several different types of equity awards in
addition to stock options and restricted stock awards. Stock options granted under the 2007 Plan
generally vest over a five-year period, with 20 percent becoming exercisable 12 months following
the grant date, and 20 percent thereafter on each anniversary of the grant date. All stock options
are granted with a ten-year exercise term and have an exercise price equal to the fair market value
of our common stock on the date of grant. Restricted stock granted under the 2007 Plan also
generally vest over a five-year period, with 20 percent becoming unrestricted 12 months following
the grant date, and 20 percent thereafter on each anniversary of the grant date.
The 2007 Plan provides us flexibility to (i) attract and retain qualified non-employee
directors, executives and other key employees and consultants with appropriate equity-based awards,
(ii) motivate high levels of performance, (iii) recognize employee contributions to our success,
and (iv) align the interests of plan participants with those of our stockholders. In addition, our
Board believes a robust equity compensation program is necessary to provide Hanmi Financial with
flexibility in negotiating strategic acquisitions and other business relationships to further
expand and grow our business. The maximum number of shares of our common stock that may be issued
pursuant to the 2007 Plan is 3,000,000. As of the record date, there were [
] shares of
common stock issuable pursuant to outstanding options and an additional [
] shares of common
stock available for grant under the 2007 Plan.
The following table shows information as of December 31, 2009, for our Named Executive
Officers concerning unexercised options, stock that has not vested, and Equity Incentive Plan
Awards.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Payout
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
Unearned
|
|
Value of
|
|
|
Number of
|
|
Number of
|
|
Number of
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Value of
|
|
Shares,
|
|
Unearned
|
|
|
Securities
|
|
Securities
|
|
Securities
|
|
|
|
|
|
|
|
|
|
Shares or
|
|
Shares or
|
|
Units or
|
|
Shares, Units
|
|
|
Underlying
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
Units of
|
|
Units of
|
|
Other Rights
|
|
or Other
|
|
|
Unexercised
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
Option
|
|
Stock That
|
|
Stock That
|
|
That Have
|
|
Rights That
|
|
|
Options (#)
|
|
Options (#)
|
|
Unearned
|
|
Exercise
|
|
Expiration
|
|
Have Not
|
|
Have Not
|
|
Not Vested
|
|
Have Not
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
Options (#)
|
|
Price ($)
|
|
Date
|
|
Vested (#)
|
|
Vested ($)
|
|
(#)
|
|
Vested ($)
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
|
(i)
|
|
(j)
|
Jay S. Yoo
|
|
|
35,000
|
(1)
|
|
|
35,000
|
(1)
|
|
|
|
|
|
$
|
5.66
|
|
|
|
06/23/18
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
50,000
|
(2)
|
|
|
|
|
|
$
|
1.35
|
|
|
|
04/08/19
|
|
|
|
20,000
|
(9)
|
|
$
|
24,000
|
(14)
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian E. Cho
|
|
|
12,000
|
(3)
|
|
|
18,000
|
(3)
|
|
|
|
|
|
$
|
9.52
|
|
|
|
12/03/17
|
|
|
|
3,000
|
(10)
|
|
$
|
3,600
|
(15)
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
15,000
|
(4)
|
|
|
|
|
|
$
|
1.35
|
|
|
|
04/08/19
|
|
|
|
15,000
|
(11)
|
|
$
|
18,000
|
(16)
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jung Hak Son
|
|
|
6,000
|
(5)
|
|
|
4,000
|
(5)
|
|
|
|
|
|
$
|
18.00
|
|
|
|
04/19/16
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
6,000
|
(6)
|
|
|
4,000
|
(6)
|
|
|
|
|
|
$
|
19.44
|
|
|
|
06/30/16
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
1,800
|
(12)
|
|
$
|
2,160
|
(17)
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
10,000
|
(7)
|
|
|
|
|
|
$
|
1.35
|
|
|
|
4/08/19
|
|
|
|
10,000
|
(13)
|
|
$
|
12,000
|
(18)
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Park
|
|
|
6,000
|
(8)
|
|
|
|
(8)
|
|
|
|
|
|
$
|
5.15
|
|
|
|
01/12/10
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
On June 23, 2008, pursuant to the 2007 Plan, 70,000
stock options were granted to Jay S. Yoo with vesting
as follows: 50 percent (50%) to vest on June 23, 2009
and 50 percent (50%) to vest on June 23, 2010.
|
74
|
|
|
(2)
|
|
On April 8, 2009, pursuant to the 2007 Plan, 50,000
stock options were granted to Jay S. Yoo with vesting
as follows: 20 percent (20%) to vest on April 8, 2010
and 20 percent (20%) to vest on each of the next four
anniversary dates.
|
|
(3)
|
|
On December 3, 2007, pursuant to the 2007 Plan, 30,000
stock options were granted to Brian E. Cho with vesting
as follows: 20 percent (20%) to vest on December 3,
2008 and 20 percent (20%) to vest on each of the next
four anniversary dates.
|
|
(4)
|
|
On April 8, 2009, pursuant to the 2007 Plan, 15,000
stock options were granted to Brian E. Cho with vesting
as follows: 20 percent (20%) to vest on April 8, 2010
and 20 percent (20%) to vest on each of the next four
anniversary dates.
|
|
(5)
|
|
On April 19, 2006, pursuant to the Year 2000 Stock
Option Plan (2000 Plan), 10,000 stock options were
granted to Jung Hak Son with vesting as follows: 20
percent (20%) to vest on April 19, 2007 and 20 percent
(20%) to vest on each of the next four anniversary
dates.
|
|
(6)
|
|
On June 30, 2006, pursuant to the 2000 Plan, 10,000
stock options were granted to Jung Hak Son with vesting
as follows: 20 percent (20%) to vest on June 30, 2006
and 20 percent (20%) to vest on each of the next four
anniversary dates.
|
|
(7)
|
|
On April 8, 2009, pursuant to the 2007 Plan, 15,000
stock options were granted to Jung Hak Son with vesting
as follows: 20 percent (20%) to vest on April 8, 2010
and 20 percent (20%) to vest on each of the next four
anniversary dates.
|
|
(8)
|
|
On September 2, 2008, pursuant to the 2007 Plan, 30,000
stock options were granted to John Park with vesting as
follows: 20 percent (20%) to vest on September 2, 2009
and 20 percent (20%) to vest on each of the next four
anniversary dates. Mr. Park passed away on October 14,
2009. As of that date, 6,000 stock options were vested
and still exercisable for a period of 90 days, or
January 12, 2010.
|
|
(9)
|
|
On April 8, 2009, pursuant to the 2007 Plan, 20,000
shares of restricted stock were awarded to Jay S. Yoo
with vesting as follows: 20 percent (20%) to vest on
April 8, 2010 and 20 percent (20%) to vest on each of
the next four anniversary dates.
|
|
(10)
|
|
On December 3, 2007, pursuant to the 2007 Plan, 5,000
shares of restricted stock were awarded to Brian E. Cho
with vesting as follows: 20 percent (20%) to vest on
December 3, 2008 and 20 percent (20%) to vest on each
of the next four anniversary dates. 3,000 shares remain
unvested after 20% (1,000 shares) vested on December 3,
2009 and 20% (1,000 shares) vested on December 3, 2008.
|
|
(11)
|
|
On April 8, 2009, pursuant to the 2007 Plan, 15,000
shares of restricted stock were awarded to Brian E. Cho
with vesting as follows: 20 percent (20%) to vest on
April 8, 2010 and 20 percent (20%) to vest on each of
the next four anniversary dates.
|
|
(12)
|
|
On November 1, 2007, pursuant to the 2007 Plan, 3,000
shares of restricted stock were awarded to Jung Hak Son
with vesting as follows: 20 percent (20%) to vest on
November 1, 2007 and 20 percent (20%) to vest on each
of the next four anniversary dates. 1,800 shares remain
unvested after 20% (600 shares) vested on November 1,
2009 and 20% (600 shares) vested on November 1, 2008.
|
|
(13)
|
|
On April 8, 2009, pursuant to the 2007 Plan, 10,000
shares of restricted stock were awarded to Jung Hak Son
with vesting as follows: 20 percent (20%) to vest on
April 8, 2010 and 20 percent (20%) to vest on each of
the next four anniversary dates.
|
|
(14)
|
|
Amount calculated as follows: Closing Stock Price as of
December 31, 2009 ($1.20) x Unvested Shares of
Restricted Stock (20,000).
|
|
(15)
|
|
Amount calculated as follows: Closing Stock Price as of
December 31, 2009 ($1.20) x Unvested Shares of
Restricted Stock (3,000).
|
|
(16)
|
|
Amount calculated as follows: Closing Stock Price as of
December 31, 2009 ($1.20) x Unvested Shares of
Restricted Stock (15,000).
|
|
(17)
|
|
Amount calculated as follows: Closing Stock Price as of
December 31, 2009 ($1.20) x Unvested Shares of
Restricted Stock (1,800).
|
|
(18)
|
|
Amount calculated as follows: Closing Stock Price as of
December 31, 2009 ($1.20) x Unvested Shares of
Restricted Stock (10,000).
|
Option Exercises and Stock Vested
The following table shows information for amounts received upon exercise of options or vesting
of stock by our Named Executive Officers during the fiscal year ended December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPTION EXERCISES AND STOCK VESTED
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of Shares
|
|
Value Realized on
|
|
Number of Shares
|
|
Value Realized on
|
|
|
Acquired on Exercise
|
|
Exercise
|
|
Acquired on Vesting
|
|
Vesting
|
Name
|
|
(#)
|
|
($)
|
|
(#)
|
|
($)
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
Jay S. Yoo
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian E. Cho
|
|
|
|
|
|
|
|
|
|
|
1,000
|
(1)
|
|
|
1,210
|
(2)
|
Jung Hak Son
|
|
|
|
|
|
|
|
|
|
|
600
|
|
|
|
918
|
(3)
|
John Park
|
|
|
|
|
|
|
|
|
|
|
1,000
|
(4)
|
|
|
1,480
|
(5)
|
|
|
|
(1)
|
|
On December 3, 2007, pursuant to the 2007 Plan, 5,000
shares of restricted stock were awarded to Brian E.
Cho with vesting as follows: 20 percent (20%) to vest
on December 3, 2008 and 20 percent (20%) to vest on
each of the next four anniversary dates.
|
|
(2)
|
|
Amount calculated as follows: Closing Stock Price as
of December 3, 2009 ($1.21) x Shares of Restricted
Stock That Vested (1,000).
|
|
(3)
|
|
Amount calculated as follows: Closing Stock Price as
of October 30, 2009 ($1.53) x Shares of Restricted
Stock That Vested (600).
|
|
(4)
|
|
On September 2, 2008, pursuant to the 2007 Plan, 5,000
shares of restricted stock were awarded to John Park
with vesting as follows: 20 percent (20%) to vest on
September 2, 2009 and 20 percent (20%) to vest on each
of the next four anniversary dates.
|
|
(5)
|
|
Amount calculated as follows: Closing Stock Price as
of September 2, 2009 ($1.48) x Shares of Restricted
Stock That Vested (1,000).
|
75
Non-Qualified Deferred Compensation Plan
Our DCP is an unfunded, unsecured deferred compensation plan. The DCP allows participants to
defer all or a portion of their base salary and/or annual bonus. None of our Named Executive
Officers are currently participants in the DCP.
Potential Payments Upon Termination or Change In Control
Hanmi Financial has entered into an employment agreement with its Chief Executive Officer that
will require Hanmi Financial to provide compensation to him in the event of a termination of
employment or a change in control of Hanmi Financial.
The following table describes the potential payments upon termination or a change in control
of Hanmi Financial for the Named Executives if such termination occurred on December 31, 2009.
Pursuant to our 2007 Equity Compensation Plan, in the event of a change in control, unless an award
is assumed or substituted by a successor corporation, such awards become fully exercisable as of
the date of the change in control, whether or not then exercisable, and all restrictions and
conditions on any award then outstanding shall lapse as of the date of the change in control.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Benefits
|
|
|
|
|
|
Without
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and Payments
|
|
Voluntary
|
|
|
Good Cause
|
|
|
Good Cause
|
|
|
Change in
|
|
|
|
|
|
|
|
Upon Termination
(1)
|
|
Termination
|
|
|
Termination
|
|
|
Termination
|
|
|
Control
|
|
|
Death
|
|
|
Disability
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary
|
|
$
|
158,400
|
(2)
|
|
$
|
158,400
|
(2)
|
|
$
|
|
|
|
$
|
158,400
|
(2)
|
|
$
|
158,400
|
(2)
|
|
$
|
158,400
|
(2)
|
Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
24,000
|
(6)
|
|
|
|
|
|
|
|
|
Benefits and Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Insurance Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
50,000
|
(3)
|
|
|
|
|
Disability Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
97,500
|
(4)
|
Accrued Vacation Pay
|
|
$
|
24,115
|
(5)
|
|
$
|
24,115
|
(5)
|
|
$
|
24,115
|
(5)
|
|
$
|
24,115
|
(5)
|
|
$
|
24,115
|
(5)
|
|
$
|
24,115
|
(5)
|
|
Total
|
|
$
|
182,515
|
|
|
$
|
182,515
|
|
|
$
|
24,115
|
|
|
$
|
206,515
|
|
|
$
|
232,515
|
|
|
$
|
280,015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Assumes the Chief Executive Officers date of termination is December 31, 2009 and the price per share
of our stock on the date of termination is $1.20 per share.
|
|
(2)
|
|
Amount represents total base salary to be paid to the Chief Executive Officer, which is base pay equal
to six months or the remaining term of the Chief Executive Officers employment agreement, which ends
on June 23, 2010, whichever is shorter. Amount is calculated as follows: $330,000 (Annual Base Salary)
x 0.48 year (which is the remaining term of the Chief Executive Officers employment agreement)
|
|
(3)
|
|
Amount represents proceeds from life insurance policies.
|
|
(4)
|
|
Amount represents disability income to be paid to the Chief Executive Officer until he reaches age 65.
|
|
(5)
|
|
Amount represents cash lump-sum payment for unused vacation days as of termination date.
|
|
(6)
|
|
Based on the intrinsic values of equity awards that accelerate upon a change in control. For
restricted stock awards, the intrinsic value is based upon the closing price of our common stock on
December 31, 2009 ($1.20
)
|
Below is a description of the assumptions that were used in creating the table above. The
descriptions of the payments below are applicable only to the Chief Executive Officers potential
payments upon termination or change in control. For the other Named Executive Officers, any
potential payments upon termination or change in control would be the same as those generally
available to all employees except with respect to accelerated vesting on restricted stock. Based
on the intrinsic value of the restricted stock that accelerates upon a change in control which, in
the case of restricted stock, is the closing price of our common stock on December 31, 2009 ($1.20
per share), the value of Mr. Chos restricted stock that would vest in the event of a change in
control is $21,600 and the value of Mr. Sons restricted stock that would vest in the event of a
change in control is $14,160. Mr. Parks employment terminated in October 2009 upon his death.
Voluntary Termination
At any time after the commencement of employment, Mr. Yoo, our Chief Executive Officer, may
terminate his employment agreement. If he voluntarily resigns or otherwise terminates his
employment, including as a result
76
of a change in control, death or disability, then he is entitled to receive base salary equal
to six months or the remaining term of his employment agreement, which ends on June 23, 2010,
whichever is shorter. The unvested portion of any outstanding stock option shall terminate
immediately.
Without Good Cause Termination
Hanmi Financial may terminate Mr. Yoos employment agreement without a showing of good
cause. If Hanmi Financial terminates Mr. Yoos employment agreement without good cause,
including upon a change in control, subject to Mr. Yoos execution of an effective general release
of claims and his continuing compliance with the covenants set forth in his employment agreement,
Mr. Yoo shall receive an amount equal to his base salary for six months or the remaining term of
his employment agreement, which ends on June 23, 2010, whichever is shorter. The unvested portion
of any stock options and restrictive stock shall terminate immediately.
Good Cause Termination
We may terminate Mr. Yoos Employment Agreement for good cause, which shall mean: (1) Mr.
Yoo is negligent in the performance of his material duties or engages in misconduct (i.e., the
intentional or negligent violation of any state or federal banking law or regulation, or our
employment policies, including but not limited to policies regarding honesty, conflict of interest,
policies against discrimination, and/or employee leave policies); or (2) Mr. Yoo is convicted of or
pleads guilty or nolo contendere to any felony, or is convicted of or pleads guilty or nolo
contendere to any misdemeanor involving moral turpitude; or (3) Hanmi Financial is required to
remove or replace Mr. Yoo by formal order or formal or informal instruction, including a requested
consent order or agreement, from the Federal Deposit Insurance Corporation (FDIC) or any other
regulatory authority having jurisdiction; or (4) Mr. Yoo engages in any willful breach of duty
during the course of his employment, or habitually neglects his duties or has a continued
incapacity to perform; or (5) Mr. Yoo fails to follow any written policy of our Board of Directors
or any resolutions of our Board of Directors adopted at a duly called meeting intentionally and in
a material way; or (6) Mr. Yoo engages in any activity that materially adversely affects our
reputation in the community, provided, at the time of engaging in such activity, Mr. Yoo knew or
should have known that such activity would materially adversely affect our reputation in the
community; or (7) Hanmi Bank receives a Section 8(a) Order from the FDIC or a Section 8(b) Order
from the FDIC; or (8) Hanmi Bank receives a cease or desist order from the California Department of
Financial Institutions that is attributable to the act or omission of Mr. Yoo in any material
respect. In the event of a termination for good cause, as enumerated above, Mr. Yoo shall have no
right to any compensation not otherwise expressly provided for in the employment agreement.
Other Executives
Hanmi Financial does not have an employment agreement with any other executives. Because other
executives employment is at-will, Hanmi Financial does not owe any compensation to other
executives in the event of a termination of employment or a change in control of Hanmi Financial
other than accrued salary and accrued vacation not used.
77
Director Compensation
The following table sets forth certain information regarding compensation paid to persons who
served as outside Directors of Hanmi Financial for the fiscal year ended December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECTOR COMPENSATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
Earned
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Qualified
|
|
|
|
|
|
|
or Paid
|
|
Stock
|
|
Option
|
|
Non-Equity
|
|
Deferred
|
|
All Other
|
|
|
|
|
in Cash
|
|
Awards
|
|
Awards
|
|
Incentive Plan
|
|
Compensation
|
|
Compensation
|
|
|
|
|
($)
|
|
(4)
|
|
($)
|
|
Compensation
|
|
Earnings
|
|
($)
|
|
Total
|
Name
|
|
(1)
(2)
|
|
(3)
(4) (5) (6)
|
|
(3)
(4) (5) (6)
|
|
($)
|
|
($)
|
|
(1)
(7)
|
|
($)
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
Robert Abeles
(8)
|
|
$
|
12,900
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,274
|
|
|
$
|
14,174
|
|
I Joon Ahn
|
|
$
|
64,200
|
|
|
$
|
20,250
|
|
|
$
|
12,306
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
15,275
|
|
|
$
|
112,031
|
|
John A. Hall
|
|
$
|
66,350
|
|
|
$
|
20,250
|
|
|
$
|
12,306
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
98,906
|
|
Paul Seon-Hong Kim
|
|
$
|
63,700
|
|
|
$
|
20,250
|
|
|
$
|
12,306
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
12,762
|
|
|
$
|
109,018
|
|
Joon Hyung Lee
|
|
$
|
66,850
|
|
|
$
|
20,250
|
|
|
$
|
40,188
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
15,276
|
|
|
$
|
114,682
|
|
Richard B. C. Lee
(9)
|
|
$
|
19,300
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
295,612
|
|
|
$
|
314,912
|
|
Charles Kwak
(10)
|
|
$
|
13,600
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
3,822
|
|
|
$
|
17,422
|
|
Joseph K. Rho
|
|
$
|
83,000
|
|
|
$
|
20,250
|
|
|
$
|
12,306
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
15,275
|
|
|
$
|
130,831
|
|
William J. Stolte
|
|
$
|
42,200
|
|
|
$
|
23,550
|
|
|
$
|
14,492
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
478
|
|
|
$
|
80,720
|
|
|
|
|
(1)
|
|
All cash compensation and perquisites paid to
Directors are paid by Hanmi Bank, which is then
reimbursed by Hanmi Financial.
|
|
(2)
|
|
Each Director who is not an employee of Hanmi
Financial (an outside Director) is paid a monthly
retainer fee of $3,000 and $1,000 monthly for
attendance at Board of Directors meetings ($500 for
telephonic attendance at Board meetings). In
addition, the Chairman of our Board receives an
additional $2,500 each month. The Audit Committee
Chairman receives an additional $1,500 each month.
The chairmen of the remaining committees receive an
additional $750 each month, and committee members
receive an additional $200 each month for attending
committee meetings ($100 each month for telephonic
attendance at committee meetings).
|
|
(3)
|
|
All equity awards are made by Hanmi Financial, are
for shares of our common stock, and are made pursuant
to the 2007 Plan.
|
|
|
|
Pursuant to new SEC regulations regarding the
valuation of equity awards, amounts in column (c)
represent the applicable full grant date fair values
of stock awards in accordance with FASB ASC Topic
718, excluding the effect for forfeitures.
Assumptions used in the calculation of these amounts
for the fiscal year ended December 31, 2009 are
included in Note 13 to our audited financial
statements for the year ended December 31, 2009,
included in our Annual Report on Form 10-K filed with
the SEC on March 15, 2010.
|
|
(4)
|
|
Pursuant to new SEC regulations regarding the
valuation of equity awards, amounts in columns (d)
represent the applicable full grant date fair values
of option awards in accordance with FASB ASC Topic
718, excluding the effect for forfeitures.
Assumptions used in the calculation of these amounts
for the fiscal year ended December 31, 2009 are
included in Note 13 to our audited financial
statements for the fiscal year ended December 31,
2009, included in our Annual Report on Form 10-K
filed with the SEC on March 15, 2010.
|
|
(5)
|
|
Grants of Plan-Based Awards
Directors are eligible
to be granted stock options and restricted stock
under the 2007 Plan. In 2009, outside Directors were
granted the following stock options and restricted
stock awards under the 2007 Plan:
|
78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
Exercise
|
|
Date Fair
|
|
|
|
|
|
|
Restricted Stock
|
|
Price of
|
|
Value of
|
|
|
|
|
|
|
and Option
|
|
Option
|
|
Stock and
|
|
|
Grant
|
|
Awards
|
|
Awards
(a)
|
|
Option
|
Name
|
|
Date
|
|
(#)
|
|
($/Share)
|
|
Awards
|
I Joon Ahn
|
|
|
04/08/09
|
|
|
|
20,000
|
|
|
$
|
1.35
|
|
|
$
|
12,306
|
|
|
|
|
04/08/09
|
|
|
|
15,000
|
|
|
$
|
|
|
|
$
|
20,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John A. Hall
|
|
|
04/08/09
|
|
|
|
20,000
|
|
|
$
|
1.35
|
|
|
$
|
12,306
|
|
|
|
|
04/08/09
|
|
|
|
15,000
|
|
|
$
|
|
|
|
$
|
20,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul Seon-Hong Kim
|
|
|
04/08/09
|
|
|
|
20,000
|
|
|
$
|
1.35
|
|
|
$
|
12,306
|
|
|
|
|
04/08/09
|
|
|
|
15,000
|
|
|
$
|
|
|
|
$
|
20,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles Kwak
(10)
|
|
|
07/01/09
|
|
|
|
20,000
|
|
|
$
|
1.69
|
|
|
$
|
17,220
|
|
|
|
|
07/01/09
|
|
|
|
15,000
|
|
|
$
|
|
|
|
$
|
25,350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joon Hyung Lee
|
|
|
04/08/09
|
|
|
|
20,000
|
|
|
$
|
1.35
|
|
|
$
|
12,306
|
|
|
|
|
04/08/09
|
|
|
|
15,000
|
|
|
$
|
|
|
|
$
|
20,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph K. Rho
|
|
|
04/08/09
|
|
|
|
20,000
|
|
|
$
|
1.35
|
|
|
$
|
12,306
|
|
|
|
|
04/08/09
|
|
|
|
15,000
|
|
|
$
|
|
|
|
$
|
20,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William J. Stolte
|
|
|
04/22/09
|
|
|
|
20,000
|
|
|
$
|
1.57
|
|
|
$
|
14,492
|
|
|
|
|
04/22/09
|
|
|
|
15,000
|
|
|
$
|
|
|
|
$
|
23,550
|
|
|
|
|
(6)
|
|
Outstanding Equity Awards at Fiscal Year-End
The
following table shows information as of December 31,
2009 for our Directors concerning unexercised stock
options:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
|
|
|
|
Number of Securities
|
|
Underlying
|
|
|
|
|
|
|
Underlying
|
|
Unexercised
|
|
|
|
|
|
|
Unexercised Options
|
|
Options (#)
|
|
Option Exercise
|
|
Option Expiration
|
Name
|
|
(#) Exercisable
|
|
Unexercisable
|
|
Price ($)
|
|
Date
|
I Joon Ahn
|
|
|
24,000
|
(b)
|
|
|
|
|
|
$
|
21.63
|
|
|
|
11/15/16
|
|
|
|
|
|
|
|
|
20,000
|
(c)
|
|
$
|
1.35
|
|
|
|
04/08/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John A. Hall
|
|
|
|
|
|
|
20,000
|
(c)
|
|
$
|
1.35
|
|
|
|
04/08/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul Seon-Hong Kim
|
|
|
|
|
|
|
20,000
|
(c)
|
|
$
|
1.35
|
|
|
|
04/08/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joon Hyung Lee
|
|
|
36,624
|
(a)
|
|
|
|
|
|
$
|
3.89
|
|
|
|
09/20/10
|
|
|
|
|
24,000
|
(b)
|
|
|
|
|
|
$
|
21.63
|
|
|
|
11/15/16
|
|
|
|
|
|
|
|
|
20,000
|
(c)
|
|
$
|
1.35
|
|
|
|
04/08/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph K. Rho
|
|
|
24,000
|
(b)
|
|
|
|
|
|
$
|
21.63
|
|
|
|
11/15/16
|
|
|
|
|
|
|
|
|
20,000
|
(c)
|
|
$
|
1.35
|
|
|
|
04/08/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William J. Stolte
|
|
|
|
|
|
|
20,000
|
(d)
|
|
$
|
1.57
|
|
|
|
04/22/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
On September 20, 2000, pursuant to the 2000 Plan,
91,560 stock options were granted to each Director
with vesting as follows: 20 percent (20%) to vest on
September 20, 2001 and 20 percent (20%) on each of
the next four anniversary dates.
|
|
(b)
|
|
On November 15, 2006, pursuant to the 2000 Plan, 24,000 stock options were granted to each Director
with vesting as follows: 33.33 percent (33.33%) to vest on November 15, 2007 and 33.33 percent (33.33%) on each of the next two anniversary dates.
|
|
(c)
|
|
On April 8, 2009, pursuant to the 2007 Plan, 20,000
stock options were granted to each Director with
vesting as follows: 20 percent (20%) to vest on April
8, 2010 and 20 percent (20%) on each of the next four
anniversary dates.
|
|
(d)
|
|
On April 22, 2009, pursuant to the 2007 Plan, 20,000
stock options were granted to Mr. Stolte with vesting
as follows: 20 percent (20%) to vest on April 22,
2010 and 20 percent (20%) on each of the next four
anniversary dates.
|
|
(7)
|
|
The amounts in column (g) consist of:
|
79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Present
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
|
Health
|
|
|
Life
|
|
|
Total
|
|
|
|
Termination
|
|
|
Insurance
|
|
|
Insurance
|
|
|
All Other
|
|
Name
|
|
Benefits
(a)
|
|
|
Premiums
|
|
|
Premiums
|
|
|
Compensation
|
|
Robert Abeles
(8)
|
|
$
|
|
|
|
$
|
1,262
|
|
|
$
|
12
|
|
|
$
|
1,274
|
|
I Joon Ahn
|
|
$
|
|
|
|
$
|
15,138
|
|
|
$
|
137
|
|
|
$
|
15,275
|
|
John A. Hall
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Paul Seon-Hong Kim
|
|
$
|
|
|
|
$
|
12,615
|
|
|
$
|
147
|
|
|
$
|
12,762
|
|
Joon Hyung Lee
|
|
$
|
|
|
|
$
|
15,138
|
|
|
$
|
138
|
|
|
$
|
15,276
|
|
Richard B. C. Lee
(9)
|
|
$
|
288,060
|
|
|
$
|
7,484
|
|
|
$
|
68
|
|
|
$
|
295,612
|
|
Charles Kwak
(10)
|
|
$
|
|
|
|
$
|
3,785
|
|
|
$
|
37
|
|
|
$
|
3,822
|
|
Joseph K. Rho
|
|
$
|
|
|
|
$
|
15,138
|
|
|
$
|
137
|
|
|
$
|
15,275
|
|
William J. Stolte
|
|
$
|
|
|
|
$
|
399
|
|
|
$
|
79
|
|
|
$
|
478
|
|
|
|
|
(8)
|
|
Former Director who resigned effective January 31, 2009.
|
|
(9)
|
|
Former Director who retired effective April 3, 2009. In
connection with his retirement, Mr. Lee and Hanmi Bank
entered into a Severance and Release Agreement (the
Severance Agreement). Pursuant to the Severance
Agreement, among other things, Mr. Lee received a lump-sum
payment of $180,000 upon his retirement. Mr. Lee also will
receive current health insurance coverage for the next
five years in which Hanmi Bank will continue to pay for
medical, dental, and/or vision premiums with an aggregated
estimated cost of $113,275. The present value of
termination benefits is the amount accrued for those
payments and is equal to the present value of the
severance payments and premiums using a discount rate of
1.87 percent (1.87%).
|
|
(10)
|
|
Former Director who resigned effective September 28, 2009.
|
NCGC Committee Interlocks and Insider Participation
Joon H. Lee, I Joon Ahn, John Hall, Paul Seon-Hong Kim, Joseph K. Rho served as members of the
NCGC Committee during the last completed fiscal year. No member of the NCGC Committee was an
officer or employee of Hanmi Financial or Hanmi Bank during the fiscal year ended December 31, 2009
or at any prior time. No member of the NCGC Committee is or was on the compensation committee of
any other entity whose officers served either on our Board of Directors or on the NCGC Committee of
Hanmi Financial. See Certain Relationships and Related Transactions.
Review, Approval or Ratification of Transactions With Related Persons
We have adopted a Related Person Transaction Policy (Policy). The Policy provides that
executive officers, Directors, five-percent (5%) stockholders, and their family members, and
entities for which any of those persons serve as officers or partners or in which they have a ten
percent (10%) or greater interest, must notify our Corporate Secretary before entering into
transactions or other arrangements with Hanmi Financial or any of its affiliates (other than loans
subject to Regulation O promulgated by our Board of Governors of the Federal Reserve System) if the
amount exceeds $25,000. Our Corporate Secretary will determine whether, under the guidelines in the
Policy, the transaction or arrangement should be submitted to the Audit Committee for approval. In
determining whether to submit proposed transactions to the Audit Committee for consideration, our
Corporate Secretary will consider, among other things, the aggregate value of the proposed
transaction, the benefits to Hanmi Financial of the proposed transaction, and whether the terms of
the proposed transaction are comparable to the terms available to an unrelated third party and
employees generally. The Policy also includes provisions for the review and possible ratification
of transactions and arrangements that are entered into without prior review under the Policy.
During 2008, neither Hanmi Financial nor any of its affiliates entered into any related party
transactions that required review, approval, or ratification under the Policy.
80
BENEFICIAL OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth information pertaining to beneficial ownership (as defined
below) of our common stock, by (i) individuals or entities known to Hanmi Financial to own more
than five percent (5%) of the outstanding shares of our common stock, (ii) each Director and
nominee for election, (iii) the Named Executive Officers, and (iv) all Directors and executive
officers of Hanmi Financial as a group. The information contained herein has been obtained from our
records and from information furnished to us by each individual or entity. Management knows of no
other person who owns, beneficially or of record, either individually or with associates, more than
five percent (5%) of our common stock.
The number of shares beneficially owned by a given stockholder is determined under SEC
Rules, and the designation of ownership set forth below is not necessarily indicative of ownership
for any other purpose. In general, the beneficial ownership as set forth below includes shares over
which a Director, Director nominee, principal stockholder, or executive officer has sole or shared
voting or investment power and certain shares which such person has a vested right to acquire,
under stock options or otherwise, within 60 days of the record date. Except as otherwise indicated,
the address for each of the following persons is our address. Unless otherwise noted, the address
for each stockholder listed on the Common Stock Beneficially Owned table below is: c/o Hanmi
Financial Corporation, 3660 Wilshire Boulevard, Penthouse Suite A, Los Angeles, California 90010.
The following information is as of the record date.
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMON STOCK BENEFICIALLY OWNED
|
|
|
|
|
|
|
|
Number
|
|
|
Percent of
|
|
|
|
|
|
|
|
of
|
|
|
Shares
|
|
Name and Address of Beneficial Owner
|
|
|
Shares
|
|
|
Outstanding
|
|
Leading Investment & Securities Co., Ltd.
|
|
|
(1)(2)
|
|
|
|
5,070,423
|
|
|
|
9.90
|
%
|
BlackRock, Inc.
|
|
|
(3)
|
|
|
|
3,027,299
|
|
|
|
5.91
|
%
|
Joseph K. Rho,
Chairman of our Board
|
|
|
(4) (5) (6)
|
|
|
|
1,637,838
|
|
|
|
3.20
|
%
|
Joon Hyung Lee,
Director
|
|
|
(5) (7)
|
|
|
|
1,220,677
|
|
|
|
2.38
|
%
|
I Joon Ahn,
Director
|
|
|
(4) (5) (6)
|
|
|
|
1,220,526
|
|
|
|
2.38
|
%
|
Paul Seon-Hong Kim,
Director
|
|
|
(5)(8)
|
|
|
|
130,862
|
|
|
|
*
|
|
Jay S. Yoo,
President and Chief Executive Officer, Director
|
|
|
(5) (9)
|
|
|
|
60,000
|
|
|
|
*
|
|
Brian E. Cho,
Executive Vice President and Chief Financial Officer
|
|
|
(10)
|
|
|
|
35,000
|
|
|
|
*
|
|
Jung Hak Son,
Senior Vice President and Chief Credit Officer
|
|
|
(11)
|
|
|
|
27,000
|
|
|
|
*
|
|
John A. Hall,
Director
|
|
|
(5)(8)
|
|
|
|
22,000
|
|
|
|
*
|
|
William J. Stolte,
Director
|
|
|
(5)(8)
|
|
|
|
20,000
|
|
|
|
*
|
|
All Directors and Executive Officers as a Group (9 in Number)
|
|
|
|
|
|
|
4,373,903
|
|
|
|
8.51
|
%
|
|
|
|
(1)
|
|
Based on a Schedule 13D filed on September 14, 2009 with the SEC under
the Securities Exchange Act of 1934, as amended, by Leading Investment &
Securities Co., Ltd (Leading). The address of Leading is W Savings Bank
Building, 5
th
Floor, 90-7 Nonhyeon-Dong,
Gangnam-Gu, Seoul 135-818, Korea.
|
|
(2)
|
|
See Background to Proposals 2 and 3 with respect to further
information concerning Leading and our common stock.
|
|
(3)
|
|
Based on a Schedule 13G filed on January 29, 2010 with the SEC under the
Securities Exchange Act of 1934, as amended, by BlackRock, Inc.
(BlackRock). The address of BlackRock is 40 East 52nd Street, New York,
NY 10022.
|
|
(4)
|
|
Includes 24,000 options that are presently exercisable under the 2000
Plan and 4,000 options under the 2007 Plan that will become exercisable
within 60 days.
|
|
(5)
|
|
Includes 15,000 shares of restricted stock.
|
|
(6)
|
|
Shares beneficial ownership with his spouse.
|
|
(7)
|
|
Includes 60,624 options that are presently exercisable under the 2000
Plan and 4,000 options under the 2007 Plan that will become exercisable
within 60 days.
|
|
(8)
|
|
Includes 4,000 options under the 2007 Plan that will vest within 60 days.
|
|
(9)
|
|
Includes 35,000 options that are presently exercisable under the 2007
plan and 10,000 options under the 2007 Plan that will become exercisable
within 60 days.
|
|
(10)
|
|
Includes 12,000 options that are presently exercisable under the 2007
Plan, 3,000 options under the 2007 Plan that will become exercisable
within 60 days, and 18,000 shares of restricted stock
|
|
(11)
|
|
Includes 12,000 options that are presently exercisable under the 2000
Plan, 2,000 options under the 2007 Plan that will become exercisable
within 60 days, and 11,800 shares of restricted stock.
|
81
Change in Control
For information about the transaction with Woori which, if consummated, will result in a
change of control of Hanmi Financial, see
Background to Proposals 2 and 3
and Proposal 3.
Securities Authorized for Issuance Under Equity Compensation Plans
The following table summarizes information as of December 31, 2009 relating to equity
compensation plans of Hanmi Financial pursuant to which grants of options, restricted stock awards
or other rights to acquire shares may be granted from time to time.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
|
|
Remaining Available for
|
|
|
|
Number of Securities to be
|
|
|
Weighted-Average
|
|
|
Future Issuance Under
|
|
|
|
Issued Upon Exercise of
|
|
|
Exercise Price of
|
|
|
Equity Compensation
|
|
|
|
Outstanding Options,
|
|
|
Outstanding Options,
|
|
|
Plans (Excluding
|
|
|
|
Warrants and Rights
|
|
|
Warrants and Rights
|
|
|
Securities
|
|
|
|
(a)
|
|
|
(b)
|
|
|
Reflected in Column
(a)
)
|
|
Equity Compensation Plans
Approved By Security Holders
|
|
|
1,180,358
|
|
|
$
|
11.78
|
|
|
|
1,620,775
|
|
Equity Compensation Plans Not
Approved By Security Holders
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Equity Compensation Plans
|
|
|
1,180,358
|
|
|
$
|
11.78
|
|
|
|
1,620,775
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain Relationships and Related Transactions
Some of our Directors and executive officers and their immediate families, as well as the
companies with which they are associated, are customers of, or have had banking transactions with,
us or Hanmi Bank in the ordinary course of our business, and we expect to have banking transactions
with such persons in the future. In managements opinion, all loans and commitments to lend
included in such transactions were made in the ordinary course of business, in compliance with
applicable laws on substantially the same terms, including interest rates and collateral, as those
prevailing for comparable transactions with other persons of similar creditworthiness unrelated to
us or Hanmi Bank and, in the opinion of management, did not involve more than a normal risk of
repayment or present other unfavorable features. There are no amount of indebtedness owed to us or
Hanmi Bank by our principal officers and current Directors (including associated companies) as of
December 31, 2009.
In connection with the retirement of Mr. Won R. Yoon, Ki Tae Hong, and Chang Kyu Park in 2008
as Directors, we and Hanmi Bank entered into severance agreements with each of them. Pursuant to
such severance agreements, each of the retiring Directors is entitled to receive $3,000 per month
for a period of five years from date of retirement. Each of the retiring Directors also receives
health insurance coverage for five years from the date of retirement pursuant to which we continue
to pay for medical, dental, and/or vision premiums. In connection with his retirement in 2009,
Richard Lee entered into a severance agreement. Pursuant to the Severance Agreement, among other
things, Mr. Lee received a lump-sum payment of $180,000 upon his retirement. Mr. Lee also will also
receive current health insurance coverage from the date of retirement in which Hanmi Bank will
continue to pay for medical, dental, and/or vision premiums. See
Director Compensation
above.
We previously entered into a six-year employment agreement with Dr. Sung Won Sohn effective
January 3, 2005. Under the terms of the agreement, Dr. Sohn served as President and Chief Executive
Officer of both us and Hanmi Bank at a base annual salary of $550,000 with annual CPI adjustments.
In addition, Dr. Sohn was eligible to receive an annual incentive bonus based on our pre-tax
profitability in an amount not to exceed 125 percent (125%) of his base annual salary. The
agreement also provided for a stock bonus grant of 100,000 shares with a vesting schedule under
which 20,000 shares vest each year. Dr. Sohn also received two separate stock option grants to
acquire 150,000 and 200,000 shares.
82
On December 31, 2007, Dr. Sohn retired from his position as President and Chief Executive
Officer of us and Hanmi Bank. In a compromise of Dr. Sohns employment agreement, Dr. Sohn received
the following: a one-time, lump-sum cash payment of $1.298 million; cash payment of $39,346 as
payment for accrued, but unused vacation pay; ownership of the Hanmi Bank-owned automobile that he
was using; ownership of Hanmi Banks equitable ownership interests in two club memberships that
Hanmi Bank maintained for Dr. Sohns benefit; vesting of 40,000 shares of restricted stock was
accelerated; and a cash payment of $70,000 for the purchase of his vested stock options. In
addition, Dr. Sohn agreed to serve as a consultant to Hanmi Bank.
In return for his consulting services, Dr. Sohn will be paid $6,000 per month during 2008 and
2009. Dr. Sohn received his final payment from Hanmi Bank in December 2009.
For information relating to the participation of certain of our directors and officers in the
registered direct and best efforts offering and their interests in certain transactions arising out
of the Capital Raising Stockholder Proposals discussed elsewhere in this proxy statement, see
Interest of Certain Persons in the Capital Raising Stockholder Proposals
.
Review, Approval or Ratification of Transactions With Related Persons
We have adopted a written Related Person Transaction Policy (Policy). The Policy provides
that executive officers, Directors, five-percent (5%) stockholders, and their family members, and
entities for which any of those persons serve as officers or partners or in which they have a ten
percent (10%) or greater interest, must notify our Corporate Secretary before entering into
transactions or other arrangements with us or any of our affiliates (other than loans subject to
Regulation O promulgated by our Board of Governors of the Federal Reserve System) if the amount
exceeds $25,000. our Corporate Secretary will determine whether, under the guidelines in the
Policy, the transaction or arrangement should be submitted to the Audit Committee for approval. In
determining whether to submit proposed transactions to the Audit Committee for consideration, our
Corporate Secretary will consider, among other things, the aggregate value of the proposed
transaction, the benefits to Hanmi Financial of the proposed transaction, and whether the terms of
the proposed transaction are comparable to the terms available to an unrelated third party and
employees generally. The Policy also includes provisions for the review and possible ratification
of transactions and arrangements that are entered into without prior review under the Policy.
During 2009, neither Hanmi Financial nor any of its affiliates entered into any related party
transactions that required review, approval, or ratification under the Policy.
OTHER MATTERS
Our Board of Directors knows of no business other than that described herein that will be
presented for consideration at the annual meeting. If, however, other business shall properly come
before the annual meeting, the persons named in the Proxy intend to vote the shares represented by
the Proxies on such matters in accordance with the recommendation of our Board of Directors, or in
the absence of a recommendation, in accordance with their judgment.
STOCKHOLDER PROPOSALS FOR THE 2011 ANNUAL MEETING
Any stockholder proposal intended to be included in our proxy statement for the 2011 annual
meeting must be received by us for inclusion in the proxy statement and form of proxy for that
annual meeting by no later than February 18, 2011; provided, however, if the if the date of the
2011 meeting is changed by more than 30 days from the anniversary of the 2010 annual meeting, then
the deadline is a reasonable time before we begin to print and send out our proxy materials.
Pursuant to our Bylaws, any other stockholder proposal to be presented at any annual meeting must
be received by our Corporate Secretary not less than sixty (60) days nor more than ninety (90) days
prior to the anniversary date of the 2010 annual meeting (July 28, 2010). However, in the event
that the annual meeting is called for on a date that is not within thirty (30) days before or after
such anniversary date, in order to be timely, notice by the stockholder must be so received not
later than the close of business on the tenth (10th) day following the day on which such notice of
the date of the annual meeting was mailed or such public disclosure of the date of the annual
meeting was made, whichever first occurs. To be in proper form, the stockholders notice must
contain such information as is required by our Bylaws and applicable law.
83
For any stockholder proposal that is not submitted for inclusion in next years Proxy
Statement and is instead sought to be presented directly at next years annual meeting, SEC rules
permit management to vote proxies in its discretion if we (i) do not receive notice of the
stockholder proposal prior to the close of business on May 4, 2011 or (ii) receive notice of the
proposal before the close of business on May 4, 2011, and advises stockholders in the Proxy
Statement about the nature of the matter and how management intends to vote, provided, however, if
the if the date of the 2011 meeting is changed by more than 30 days from the anniversary of the
2010 annual meeting, then the deadline is a reasonable time before Hanmi Financial begins to print
and send out its proxy materials.
In addition to any other applicable requirements, for a nomination of a Director to be
properly made by a stockholder, such stockholder must have given timely notice thereof in proper
written form to our Corporate Secretary. To be timely, a stockholders notice to the Corporate
Secretary must be delivered to or mailed and received at the principal executive offices of Hanmi
Financial (a) in the case of an annual meeting, not less than sixty (60) days nor more than ninety
(90) days prior to the anniversary date of the 2010 annual meeting. However, in the event that the
annual meeting is called for a date that is not within thirty (30) days before or after such
anniversary date, in order to be timely, notice by the stockholder must be so received not later
than the close of business on the tenth (10th) day following the day on which such notice of the
date of the annual meeting was mailed or such public disclosure of the date of the annual meeting
was made, whichever first occurs. To be in proper written form, a stockholders notice to the
Corporate Secretary must set forth such information as is required by our Bylaws and applicable
law.
AVAILABILITY OF FORM 10-K
Our Annual Report for 2009 is included in the mailing with this proxy statement. We will
provide to any stockholder, without charge and by first class mail, upon the written request of
that stockholder, a copy of our Annual Report on Form 10-K, as amended, for the fiscal year ended
December 31, 2009 as filed with the SEC. Such requests should be addressed to: Investor Relations
Manager, Hanmi Financial Corporation, 3660 Wilshire Boulevard, Penthouse Suite A, Los Angeles,
California 90010, (213) 382-2200. The Annual Report on Form 10-K, as amended, includes a list of
exhibits. If you wish to receive copies of the exhibits, Hanmi Financial will send them to you.
Expenses for copying and mailing the copies of the exhibits will be your responsibility. In
addition, the SEC maintains an Internet site at
www.sec.gov
that contains information Hanmi
Financial files with them.
WHERE YOU CAN FIND MORE INFORMATION
The SEC maintains a website that contains reports, proxies and information statements and
other information regarding us and other issuers that file electronically with the SEC at
www.sec.gov
. Our proxy statements, annual reports on Form 10-K, quarterly reports on Form 10-Q and
current reports on Form 8-K, as well as any amendments to those reports, are available free of
charge through the SECs website. Stockholders may also read and copy materials that we file with
the SEC at the SECs Public Reference Room at 100 F Street, NE, Washington, DC 20549. Stockholders
may obtain information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330.
INCORPORATION BY REFERENCE
The SEC allows us to incorporate by reference into this document documents we file with the
SEC. This means that we can disclose important information to you by referring you to those
documents. The information incorporated by reference is considered to be a part of this document.
We incorporate by reference Items 7, 7A, 8 and 9 from our Annual Report on Form 10-K, as amended,
for the fiscal year ended December 31, 2009 and Items 1, 2 and 3 of Part I of our Quarterly Report
on Form 10-Q for the quarterly period ended March 31, 2010 and any other items in that Quarterly
Report or any other subsequent reports we file with the SEC expressly updating the above referenced
items from our Annual Report on Form 10-K or Quarterly Report on Form 10-Q.
This document incorporates important business and financial information about Hanmi Financial
from other documents that are not included in this document. This information is available to you
without charge upon your written or oral request. You can obtain the documents incorporated by
reference in this document through our website, www.hanmi.com, and from the SEC at its website,
www.sec.gov, or by requesting them in writing from
84
Investor Relations Manager, Hanmi Financial Corporation, 3660 Wilshire Boulevard, Penthouse
Suite A, Los Angeles, California 90010 or by calling (213) 382-2200 for the Investor Relations
Manager. To receive timely delivery of the documents in advance of the annual meeting, you should
make your request no later than July 17, 2010.
|
|
|
|
|
|
By Order of our Board of Directors,
|
|
|
/s/ Joseph K. Rho
|
|
|
Joseph K. Rho
|
|
|
Chairman of our Board
|
|
|
85
ANNEX A
SECURITIES PURCHASE AGREEMENT WITH WOORI FINANCE HOLDINGS CO. LTD.
Execution Version
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this
Agreement
) is dated as of May 25,
2010, by and between Hanmi Financial Corporation, a Delaware corporation and registered bank
holding company with its principal offices in Los Angeles, California (the
Company
), and
Woori Finance Holdings Co. Ltd., a Korean corporation with its principal offices in Seoul, Korea
(the
Purchaser
).
RECITALS
WHEREAS, the Company is in the process of raising up to $330 million (the
Aggregate
Offering Amount
) through: (i) a private placement to the Purchaser exempt from the
registration requirements of the U.S. Securities Act of 1933, as amended (the
Securities
Act
), of shares of the Companys common stock, par value US $0.001 per share (
Common
Stock
), and (ii) a rights offering registered under the Securities Act with the Companys
existing stockholders (the
Rights Offering
) and a best efforts public offering (the
Subsequent Offering
); and
WHEREAS, the Company desires to issue and sell to the Purchaser, and the Purchaser desires to
purchase from the Company, 200,000,000 shares of Common Stock (including such number of additional
shares of Common Stock which may be acquired by the Purchaser pursuant to Section 5.3 herein, if
any, the
Shares
), representing a majority of the issued and outstanding shares of Common
Stock (including any options, warrants and other securities or instruments convertible into common
stock), on an as-converted and fully-diluted basis taking into account the Rights Offering and
Subsequent Offering and assuming $120 million of Common Stock is issued in connection with the
Rights Offering and Subsequent Offering.
NOW, THEREFORE, IN CONSIDERATION of the representations, warranties and covenants contained in
this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company and the Purchaser hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1.
|
|
Definitions
. As used in this Agreement, the following capitalized terms shall have
the following meaning:
|
|
|
|
Action
means any action, suit, inquiry, notice of violation, proceeding
(including any partial proceeding such as a deposition) or investigation pending or, to
the Companys Knowledge, threatened against the Company, any Subsidiary or any of their
respective properties or any officer, director or employee of the Company or any
Subsidiary acting in his or her capacity as an officer, director or employee before or by
any federal, state,
|
A-1
|
|
county, local or foreign court, arbitrator, governmental or administrative agency,
regulatory authority, stock exchange or trading facility.
|
|
|
Acquisition Proposal
has the meaning set forth in Section 5.1(d).
|
|
|
|
Adverse Recommendation
has the meaning set forth in Section 5.1(c).
|
|
|
|
Affiliate
means, with respect to any Person, any other Person that, directly or
indirectly through one or more intermediaries, Controls, is controlled by or is under
common control with such Person.
|
|
|
|
Agreement
has the meaning ascribed to such term in the Preamble.
|
|
|
|
Benefit Plan
has the meaning set forth in Section 3.3(r)(i).
|
|
|
|
BHC Act
means the U.S. Bank Holdings Company Act of 1956, as amended.
|
|
|
|
Board
or
Board of Directors
shall mean the board of directors of the
Company.
|
|
|
|
Board Recommendation
has the meaning set forth in Section 4.1(c).
|
|
|
|
Business Day
means any day, other than a Saturday or Sunday or a day on which
banking institutions in the state of California or Seoul, Korea are authorized or required
by law or executive order to close.
|
|
|
|
CDFI
has the meaning set forth in Section 3.3(b)(ii).
|
|
|
|
CDI
means the California Department of Insurance.
|
|
|
|
CERCLA
has the meaning set forth in Section 3.3(y).
|
|
|
|
Closing
has the meaning set forth in Section (a).
|
|
|
|
Closing Date
has the meaning set forth in Section 2.1(b).
|
|
|
|
Code
means the Internal Revenue Code of 1986, as amended.
|
|
|
|
Common Stock
has the meaning set forth in the Recitals, and also includes any
securities into which the Common Stock may hereafter be reclassified or changed.
|
|
|
|
Common Stock Equivalents
means any securities of the Company or any Subsidiary
which would entitle the holder thereof to acquire at any time Common Stock, including,
without limitation, any debt, preferred stock, rights, options, warrants or other
instrument that is at any time convertible into or exchangeable for, or otherwise entitles
the holder thereof to receive, Common Stock or other securities that entitle the holder to
receive, directly or indirectly, Common Stock.
|
A-2
|
|
Company
has the meaning ascribed to such term in the Preamble.
|
|
|
|
Company Counsel
means Manatt, Phelps & Phillips, LLP.
|
|
|
|
Company Deliverables
has the meaning set forth in Section (a).
|
|
|
|
Company Financial Statements
has the meaning set forth in Section 3.3(i).
|
|
|
|
Company Significant Subsidiary
has the meaning set forth in Section 3.3(b).
|
|
|
|
Companys Knowledge
means the actual knowledge of the executive officers (as
defined in Exchange Act Rule 3b-7) of the Company or its Company Significant Subsidiaries,
after reasonable due inquiry, which, for the avoidance of doubt, shall include executive
officers of the Company and Hanmi Bank.
|
|
|
|
Control
(including, with correlative meaning, the terms controlling,
controlled by or under common control with) when used with respect to any Person,
means the possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
|
|
|
|
CRA
means the Community Reinvestment Act of 1977 or any successor law, and
regulations and rules issued pursuant to that Act or any successor law.
|
|
|
|
Disclosure Materials
has the meaning set forth in Section 3.1(h).
|
|
|
|
Dispute
has the meaning set forth in Section 8.9.
|
|
|
|
Environmental Laws
mean any applicable local, state or federal statutes,
regulations, ordinances or common laws for the protection of human health, safety or the
environment including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. § 9601
et seq.
, Federal Water Pollution Control
Act, 33 U.S.C. § 1251
et seq.
, Solid Waste Disposal Act, 42 U.S.C. § 6901
et seq.
, and
Occupational Safety and Health Act, 29 U.S.C. § 651
et seq.
|
|
|
|
ERISA
has the meaning set forth in Section 3.3(r)(i).
|
|
|
|
ERISA Affiliate
has the meaning set forth in Section 3.3(r)(ii).
|
|
|
|
Evaluation Date
has the meaning set forth in Section 3.3(j).
|
|
|
|
Exchange Act
means the Securities Exchange Act of 1934, as amended, or any
successor statute, and the rules and regulations promulgated thereunder.
|
|
|
|
FRB
has the meaning set forth in Section 4.1(a).
|
A-3
|
|
FDIC
has the meaning set forth in Section 3.3(b)(ii).
|
|
|
|
GAAP
means U.S. generally accepted accounting principles.
|
|
|
|
Governmental Entities
or
Governmental Entity
means any governmental or
regulatory authorities, agencies, courts, commissions or other entities, whether federal,
state, local or foreign, or applicable self-regulatory organizations.
|
|
|
|
Hazardous Substances
means pollutants, contaminants, dangerous goods, hazardous
or toxic substances, chemicals, hazardous microorganisms, radioactive materials,
petroleum, petroleum products and any other materials regulated under Environmental Laws.
|
|
|
|
ICC
has the meaning set forth in Section 8.9.
|
|
|
|
Information
has the meaning set forth in Section 4.2(a).
|
|
|
|
Initial Shares
has the meaning set forth in Section 2.1(a).
|
|
|
|
Intellectual Property
has the meaning set forth in Section 3.3(z).
|
|
|
|
Lien
means any mortgage, pledge, lien (statutory or otherwise), encumbrance,
hypothecation, charge, security interest, right of first refusal, right of first offer,
preemptive right or other restrictions of any kind.
|
|
|
|
Losses
has the meaning set forth in Section 5.10(a).
|
|
|
|
Material Adverse Effect
means any event, fact, circumstance or occurrence
(each, an
Effect
) that, individually or in the aggregate with any other event,
fact, circumstance or occurrence, results or would reasonably be expected to result in a
material adverse change in or a material adverse effect over a commercially reasonable
period on the (i) financial condition, results of operations, business, operations,
business assets or regulatory status of the Company and its Subsidiaries, taken as a
whole; (ii) legality, validity or enforceability of this Agreement, or (iii) ability on
the part of the Company or the Purchaser to consummate the transactions contemplated by
this Agreement and to perform in any material respect its obligations under this Agreement
within the time frames provided for in this Agreement, except that any of the following,
either alone or in combination, shall not be deemed a Material Adverse Effect: (A) effects
resulting from or relating to the announcement or disclosure of the sale of the Shares or
other transactions contemplated by this Agreement, (B) effects caused by any event,
occurrence or condition resulting from or relating to the taking of any action in
accordance with this Agreement, (C) changes in the generally accepted accounting
principles or regulatory accounting principles generally applicable to banks or their bank
holding companies in the United States or Korea, as the case may be, (D) changes in
applicable laws, rules and regulations or interpretations thereof by any Governmental
|
A-4
|
|
Entity, except for such changes which would reasonably be expected to have the effect of
making illegal the consummation of the transactions contemplated hereby, (E) general
changes in global or national economic, monetary or financial conditions, including
changes in prevailing interest rates, credit markets, equity markets, commodity prices,
currency exchange rates, bank failure rates, sovereign debt defaults, capital market
conditions or real estate price appreciation/depreciation trends, or in the industries in
which the Company and its subsidiaries operate, other than significant, sustained,
reasonably unanticipated and materially adverse changes in economic conditions in the
United States or Korea, which changes would reasonably be expected to have the effect of
making commercially impractical consummation of the transactions contemplated hereby, (F)
changes in global or national political conditions, including the outbreak or escalation
of war, acts of terrorism or civil unrest, other than significant, sustained, reasonably
unanticipated and materially adverse changes in such conditions in the United States or
Korea, which changes would reasonably be expected to have the effect of making
commercially impractical consummation of the transactions contemplated hereby, (G) the
entering into by the Company or any of its Subsidiaries or the continuation (on
substantially the same or similar terms) of any Regulatory Agreement and any future
classifications, guidance, directives or other supervisory actions (which are reasonably
foreseeable based on the current arrangements or agreements) that are related to the
Companys or any of its Subsidiaries financial condition as of the date of this
Agreement, in and of itself, (H) any failure by the Company to meet any public estimates
(disclosed to the public in compliance with applicable laws and consistent with past
practice) or expectations or analysts estimates or expectations of the Companys financial
condition, results of operations or other measures of financial performance for any
period, or any failure by the Company to meet any internal budgets, plans or forecasts of
its financial condition, results of operations, or other measures of financial
performance, (I) the results of operations and cash flow for the period ended, and changes
in the financial condition and shareholders equity of the Company at, June 30, 2010 and
(J) any legal proceedings (other than a permanent injunction or order that prohibits the
consummation of the transactions contemplated hereby) made or brought by any of the
current or former stockholders of the Company (on their own behalf or on behalf of the
Company) against the Company arising out of this Agreement or any of the transaction
contemplated hereby.
|
|
|
Material Contract
means any contract of the Company that was filed as an exhibit
to the SEC Reports pursuant to Item 601(b)(10) of Regulation S-K.
|
|
|
|
Material Permits
has the meaning set forth in Section 3.3(w).
|
|
|
|
Option Purchase Price
has the meaning set forth in Section 2.1(a).
|
|
|
|
Option Shares
has the meaning set forth in Section 2.1(a).
|
|
|
|
Other Investors
has the meaning set forth in Section 5.3.
|
A-5
|
|
Outside Date
has the meaning set forth in Section 7.1(b).
|
|
|
|
Permitted Liens
means (i) liens for Taxes and other governmental charges and
assessments arising in the ordinary course that are not yet due and payable, (ii) liens of
landlords, carriers, warehousemen, mechanics and materialmen and other like liens arising
in the ordinary course of business for sums not yet due and payable, and (iii) other liens
or imperfections on property that are, individually or in the aggregate, (A) not material
in amount or (B) do not materially detract from the value of or materially impair the
existing use of the property affected by such Lien or imperfection.
|
|
|
|
Per Share Price
has the meaning set forth in Section 2.1.
|
|
|
|
Person
means an individual, corporation, association, partnership, limited
liability company, group (as such term is used in Section 13(d)(3) of the Exchange Act),
trust, joint venture, business trust or unincorporated organization, or a government or
any agency or political subdivision thereof.
|
|
|
|
Principal Trading Market
means the exchange on which the Common Stock is
primarily listed on or quoted for trading, which, as of the date of this Agreement and the
Closing Date, shall mean the NASDAQ Stock Market.
|
|
|
|
Purchase Price
has the meaning set forth in Section 2.1(a).
|
|
|
|
Purchaser
has the meaning ascribed to such term in the Preamble.
|
|
|
|
Purchaser Deliverables
has the meaning set forth in Section (b).
|
|
|
|
Purchaser Nominees
has the meaning set forth in Section 5.2.
|
|
|
|
Purchaser Party
has the meaning set forth in Section 5.10(a).
|
|
|
|
Registration Rights Agreement
has the meaning set forth in Section 2.2(a)(iii).
|
|
|
|
Regulatory Agreement
has the meaning set forth in Section 3.3(s).
|
|
|
|
Regulatory Approvals
has the meaning set forth in Section 4.1(a).
|
|
|
|
Reg S
has the meaning set forth in Section 3.4(k).
|
|
|
|
Representatives
has the meaning set forth in Section 5.1(a).
|
|
|
|
Resigning Directors
has the meaning set forth in Section 5.2.
|
|
|
|
Rights Offering
has the meaning set forth in the Recitals.
|
|
|
|
Rules
has the meaning set forth in Section 8.9.
|
A-6
|
|
SEC
means the U.S. Securities and Exchange Commission.
|
|
|
|
SEC Reports
has the meaning set forth in Section 3.1(h).
|
|
|
|
Secretarys Certificate
has the meaning set forth in Section (a).
|
|
|
|
Securities Act
means the Securities Act of 1933, as amended, or any successor
statute, and the rules and regulations promulgated thereunder.
|
|
|
|
Shares
has the meaning set forth in the Recitals.
|
|
|
|
Stockholders Proposals
has the meaning set forth in Section 4.1(b).
|
|
|
|
Subsequent Offering
has the meaning set forth in the Recitals.
|
|
|
|
Subsidiary
means those entities identified on
Schedule 3.3(b)
.
|
|
|
|
Tax
or
Taxes
has the meaning set forth in Section 3.1(l).
|
|
|
|
Transfer Agent
means Computershare Limited, or any successor transfer agent for
the Company.
|
|
|
|
Unlawful Gains
has the meaning set forth in Section 3.1(q).
|
ARTICLE II
PURCHASE AND SALE
|
(a)
|
|
[Purchase Price
. On the terms and subject to the conditions set
forth herein, on the Closing Date, the Company hereby agrees to issue and sell to the
Purchaser, and the Purchaser hereby agrees to subscribe and purchase from the Company
175,000,000 shares of common stock (the Initial Shares), free and clear of all
Liens (other than the restrictions provided for in Section 5.6(a)), for an aggregate
purchase price (the
Purchase Price
) of US $210 million, at a per Share
price equal to US $1.20 per Share (the Per Share Price). In the event the Purchaser
exercises its option pursuant to Section 5.3 prior to or at Closing, the Purchaser
shall receive an additional 25,000,000 shares of common stock (the
Option
Shares
), free and clear or all Liens (other than the restrictions provided for
in Section 5.6(a)) for an additional consideration of US $30 million (the
Option
Purchase Price
) at the Per Share Price.
|
|
|
(b)
|
|
Closing
. The closing of the transactions contemplated herein (the
Closing
) shall take place at the offices of Manatt, Phelps & Phillips, LLP,
11355 West Olympic Boulevard, Los Angeles, California 90064, at 10:00 am (Los Angeles
time) within ten (10) Business Days after the satisfaction or waiver, by the
|
A-7
|
|
|
party entitled to grant such waiver (subject to applicable law), of the
conditions set forth in Article VI hereof, other than conditions which by their
terms are to be satisfied at Closing, or such other date, time and place as the
parties may mutually agree (the
Closing Date
).
|
2.2.
|
|
Closing Deliveries
.
|
|
(a)
|
|
On or prior to the Closing Date, the Company shall issue, deliver or cause
to be delivered to the Purchaser the following (the
Company Deliverables
):
|
|
(i)
|
|
this Agreement, duly executed by the Company;
|
|
|
(ii)
|
|
one or more certificates (as requested by Purchaser)
evidencing the Initial Shares and, if applicable, the Option Shares, in each
case free and clear of all Liens (other than the restrictive legends as
provided in Section 5.6(a), issued in the name of the Purchaser or its
Affiliate(s);
|
|
|
(iii)
|
|
a registration rights agreement in form and substance
reasonably satisfactory to the Company and the Purchaser (the
Registration Rights Agreement
) duly executed by the Company;
|
|
|
(iv)
|
|
a legal opinion of Company Counsel, dated as of the
Closing Date, which shall include, among other things, an opinion regarding
the exemption of the Transaction from the registration requirements under
the Securities Act, in substantially the form and substance reasonably
satisfactory to the Company;
|
|
|
(v)
|
|
a certificate of the Secretary of the Company (the
Secretarys Certificate
), dated as of the Closing Date, (a)
certifying the resolutions adopted by the Board of Directors or a duly
authorized committee thereof approving the transactions contemplated by this
Agreement and the issuance of the Shares, and (b) certifying as to the
incumbency of certain officers of the Company, in substantially the form
attached hereto as
Exhibit A
;
|
|
|
(vi)
|
|
the Compliance Certificate referred to in Section 6.1(h)
hereof;
|
|
|
(vii)
|
|
a certificate of good standing for each of the Company
and its Subsidiaries issued by the Secretary of State (or comparable office)
of the jurisdiction of its incorporation, CDFI and/or CDI, as appropriate,
as of a date within five (5) Business Days of the Closing Date;
|
|
|
(viii)
|
|
resignation letters in form and substance reasonably satisfactory to the
Company and the Purchaser from the Resigning Directors; and
|
A-8
|
(ix)
|
|
non-solicitation agreements in form and substance
reasonably satisfactory to the Purchaser executed by the Resigning
Directors.
|
|
(b)
|
|
On or prior to the Closing Date the Purchaser shall deliver or cause to be
delivered to the Company the following (the
Purchaser Deliverables
):
|
|
(i)
|
|
this Agreement, duly executed by the Purchaser;
|
|
|
(ii)
|
|
the Registration Rights Agreement, duly executed by the
Purchaser;
|
|
|
(iii)
|
|
a duly executed officers certificate in the form set
forth in
Exhibit B
hereto; and
|
|
|
(iv)
|
|
the Purchase Price and, if applicable, the Option
Purchase Price, in U.S. dollars and in immediately available funds, by wire
transfer to the account designated by the Company as set forth below:
|
|
|
|
|
Bank:
Address:
Account Name:
Account Number:
Routing Number:
|
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1.
|
|
Disclosure Schedules
. On or prior to the date of this Agreement, each of the Company
and the Purchaser delivered to the other a schedule (
Disclosure Schedule
) setting
forth, among other things, items the disclosure of which is necessary or appropriate either in
response to an express disclosure requirement contained in a provision hereof or as an
exception to one or more representations or warranties contained in Section 3.3 with respect
to the Company, or in Section 3.4 with respect to the Purchaser;
provided, however
,
that notwithstanding anything in this Agreement to the contrary, the mere inclusion of an item
in such schedule shall not be deemed to be an admission that such item represents a material
exception or material fact, event, or circumstance or that such item has had or would
reasonably be expected to have a Material Adverse Effect on the Company or the Purchaser, as
applicable.
|
|
3.2.
|
|
Previously Disclosed
.
Previously Disclosed
with regard to (1) any party
means information set forth on its Disclosure Schedule corresponding to the provision of this
Agreement to which such information relates; provided that information which, on its face is
reasonably apparent to a reader that it relates to another provision of this Agreement, shall
also be deemed to be Previously Disclosed with respect to such other provision and (2) the
Company, includes information publicly disclosed by the Company in the SEC Reports filed by it
with or furnished to the SEC and publicly
|
A-9
|
|
available on or prior to the Closing Date (excluding any risk factor disclosures contained
in such documents under the heading Risk Factors and any disclosure of risks included in
any forward-looking statements disclaimer or other statements that are predictive or
forward-looking in nature).
|
3.3.
|
|
Representations and Warranties of the Company
. Except as Previously Disclosed, the
Company hereby represents and warrants as of the date hereof and as of the Closing Date
(except to the extent made only as of a specified date, in which case as of such date) to the
Purchaser that:
|
|
(a)
|
|
Organization and Qualification
.
|
|
(i)
|
|
Each of the Company and its Subsidiaries is an entity
duly incorporated, validly existing and in good standing under the laws of
the jurisdiction of its incorporation, with the requisite corporate power
and authority to own or lease and use its properties and assets and to carry
on its business as currently conducted. Neither the Company nor any
Subsidiary is in material violation of any of the provisions of its
respective certificate or articles of incorporation or bylaws or other
similar organizational documents. Each of the Company and its Subsidiaries
is duly qualified to conduct business and is in good standing as a foreign
corporation in each jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the case may
be, would not reasonably be expected to have a Material Adverse Effect.
|
|
|
(ii)
|
|
The Company (i) is duly registered as a bank holding
company under the BHC Act; (ii) has duly elected to be treated as a
financial holding company thereunder; and (iii) is allowed to exercise all
powers of a financial holding company thereunder. The Company has
furnished or made available to the Purchaser true, correct and complete
copies of each of the Companys and its Subsidiaries certificate or
articles of incorporation and bylaws or other similar organizational
documents, as amended through the date of this Agreement.
|
|
(i)
|
|
The Company has no direct or indirect Subsidiaries other
than those subsidiaries listed on
Schedule 3.3(b)
and has indicated
therein which Subsidiaries would constitute a significant subsidiary of
such person within the meaning of Rule 1-02 of Regulation S-X of the SEC
(
Company Significant Subsidiary
). The Company owns, directly or
indirectly, all of the capital stock of each Company Significant Subsidiary,
free and clear of any and all Liens (other than Permitted
|
A-10
|
|
|
Liens), and all the issued and outstanding shares of capital stock of
each Company Significant Subsidiary have been duly authorized and
validly issued and are fully paid and non-assessable. There are no
outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character whatsoever providing for the purchase or
issuance of any Company Significant Subsidiarys capital stock or any
securities representing the right to purchase or otherwise receive any
shares of such Company Significant Subsidiarys capital stock.
|
|
(ii)
|
|
Except in respect of the Subsidiaries, the Company does
not own beneficially, directly or indirectly, more than 5% of any class of
equity securities or similar interests of any corporation, bank, business
trust, association or similar organization, and is not, directly or
indirectly, a partner in any partnership or party to any joint venture.
Hanmi Bank, the Companys principal subsidiary, is (A) duly organized and
validly existing as a banking institution chartered by the State of
California, (B) in good standing with the Department of Financial
Institutions of the State of California (
CDFI
), (C) a member bank
of the Federal Reserve System and (D) its deposit accounts are insured by
the Federal Deposit Insurance Corporation (
FDIC
) to the fullest
extent permitted by the Federal Deposit Insurance Act and the rules and
regulations of the FDIC thereunder, and all premiums and assessments
required to be paid in connection therewith have been paid when due.
|
|
(c)
|
|
Authorization; Enforcement; Validity
. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and otherwise to carry out its obligations hereunder.
The execution, delivery and performance of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby (including, but not
limited to, the issuance, sale and delivery of the Shares) have been duly authorized
by all necessary corporate action on the part of the Company, and no further
corporate action is required by the Company, its Board of Directors or its
stockholders in connection therewith other than in connection with the Regulatory
Approvals and the Stockholder Proposals. This Agreement upon delivery will have been
duly and validly executed by the Company and, assuming due authorization, execution
and delivery of this Agreement by the Purchaser, will constitute (when delivered in
accordance with the terms hereof) the legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or similar laws relating to or affecting creditors generally or
by general equitable principles (whether applied in equity or law).
|
A-11
|
(d)
|
|
No Conflicts
. The execution, delivery and performance by the
Company of this Agreement and the consummation by the Company of the transactions
contemplated hereby (including, without limitation, the issuance, sale and delivery
of the Shares) do not and will not (i) subject to the approval of the Stockholders
Proposals, conflict with or violate any provisions of the Companys or any Company
Significant Subsidiarys certificate or articles of incorporation or bylaws or
otherwise result in a violation of the organizational documents of the Company; (ii)
conflict with, or constitute a default (or an event that with notice or lapse of time
or both would result in a default) under, result in the creation of any Lien (other
than Permitted Liens) upon any of the properties or assets of the Company or its
Subsidiaries or give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any note, bond,
mortgage indenture deed of trust, license, lease, agreement or other instrument or
obligation to which the Company or any of its Company Significant Subsidiaries is
subject; or (iii) subject to Section 3.1(e) below, conflict with or result in a
violation of any law, rule, regulation, order, judgment, injunction, decree or other
restriction applicable to the Company or any of its Subsidiaries or by which any
property or asset of the Company or any of its Subsidiaries is bound or affected,
except in the case of clauses (ii) and (iii) such as would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect. There are no
stockholders agreements, voting agreements or other similar arrangements with respect
to the Companys capital stock to which the Company is a party or, to the Companys
Knowledge, between or among any of the Companys stockholders.
|
|
|
(e)
|
|
Filings, Consents and Approvals
. Neither the Company nor any of
the Company Significant Subsidiaries is required to obtain any consent, waiver,
authorization or order of, give any notice to, or make any filing or registration
with, any Governmental Entity or other Person in connection with the execution,
delivery and performance by the Company of this Agreement (including, without
limitation, the issuance, sale and delivery of the Shares).
|
|
|
(f)
|
|
Issuance of the Shares
. As of the Closing the Shares will be duly
authorized and, when issued and paid for in accordance with the terms of this
Agreement, will be validly issued, fully paid and nonassessable and free and clear of
all Liens, other than the restrictions on transfer provided for in Section 5.6(a)
hereof, and shall not be subject to preemptive or similar rights. The Shares will be
issued in compliance with all applicable federal and state securities laws.
|
|
|
(g)
|
|
Capitalization
The authorized capital stock of the Company consists
of two hundred ten million (210,000,000) shares, of which two hundred million
(200,000,000) shares are Common Stock, with par value of $.001 per share, and ten
million (10,000,000) of which are Preferred Stock, with par value of $.001 per share,
issuable in one or more series as of the date hereof. As of the close
|
A-12
|
|
|
of business on May 19, 2010 there were 51,182,390 issued and outstanding shares
of Common Stock and no issued and outstanding shares of Preferred Stock. All of
the outstanding shares of capital stock of the Company are duly authorized,
validly issued, fully paid and non-assessable and none of such outstanding shares
was issued in violation of any preemptive rights or similar rights to subscribe
for or purchase any capital stock of the Company. (i) There are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, or
exercisable or exchangeable for, any shares of capital stock of the Company, or
contracts, commitments, understandings or arrangements by which the Company is or
may become bound to issue additional shares of capital stock of the Company,
other than those issued or granted pursuant to equity or incentive plans or
arrangements described in the SEC Reports; (ii) there are no material outstanding
debt securities, notes or other instruments evidencing indebtedness of the
Company or by which the Company is bound carrying the right to vote on any
matters on which the stockholders of the Company may vote; (iii) there are no
agreements or arrangements under which the Company is obligated to register the
sale of any of their securities under the Securities Act; (iv) there are no
outstanding securities or instruments of the Company that contain any redemption
or similar provisions, and there are no contracts, commitments, understandings or
arrangements by which the Company is or may become bound to redeem a security of
the Company; (v) there are no securities or instruments containing anti-dilution
or similar provisions that will be triggered by the issuance of the Shares; and
(vi) the Company does not have any stock appreciation rights or phantom stock
plans or agreements or any similar plan or agreement.
|
|
(h)
|
|
SEC Reports; Disclosure Materials
. Since December 31, 2007, the
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it under the Securities Act or the Exchange Act, including
pursuant to Section 13(a) or 15(d) of the Exchange Act (the foregoing materials,
including the exhibits thereto and documents incorporated by reference therein, being
collectively referred to herein as the
SEC Reports
and together with this
Agreement and the Schedules to this Agreement, the
Disclosure Materials
),
on a timely basis or has received a valid extension of such time of filing and has
filed such SEC Reports prior to the expiration of such extension. As of their
respective filing dates, or, to the extent corrected by a subsequent amendment or
restatement, the time of filing of such subsequent amendment or restatement, the SEC
Reports complied as to form in all material respects with the requirements of the
Securities Act and the Exchange Act and the rules and regulations of the SEC
promulgated thereunder, and, except as corrected by subsequent filings, none of the
SEC Reports, when filed, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which
|
A-13
|
|
|
they were made, not misleading. No executive officer of the Company has failed
in any respect to make the certifications required of him or her under Section
302 or 906 of the Sarbanes-Oxley Act of 2002.
|
|
(i)
|
|
Financial Statements
. The consolidated balance sheets of the
Company and its Subsidiaries as of December 31, 2009 and 2008 and related
consolidated statements of income, stockholders equity and cash flows for the three
years ended December 31, 2009, together with the notes thereto, certified by KPMG LLP
and included in the Companys Annual Report on Form 10-K for the fiscal year ended
December 31, 2009, as filed with the SEC and as the same may have been amended prior
to the date hereof (the
Company Financial Statements
), (i) have been
prepared from, and are in accordance with, the books and records of the Company and
its Subsidiaries; (ii) complied as to form, as of the date of filing with the SEC, in
all material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto; (iii) have been prepared in
accordance with GAAP applied on a consistent basis; and (iv) present fairly in all
material respects the consolidated financial position of the Company and its
Subsidiaries at the dates set forth therein and the consolidated results of
operations, changes in stockholders equity and cash flows of the Company and
Subsidiaries for the periods stated therein.
|
|
|
(j)
|
|
Disclosure Controls and Procedures
. The Company has established
and maintains disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) that are effective in all material respects to ensure that
material information relating to the Company, including any consolidated
Subsidiaries, is made known to its chief executive officer and chief financial
officer by others within those entities. The Companys certifying officers have
evaluated the effectiveness of the Companys controls and procedures as of the end of
the period covered by the most recently filed annual periodic report under the
Exchange Act (such date, the
Evaluation Date
). The Company presented in
its most recently filed annual periodic report under the Exchange Act the conclusions
of the certifying officers about the effectiveness of the disclosure controls and
procedures based on their evaluations as of the Evaluation Date. Since the
Evaluation Date, there have been no material changes in the Companys internal
controls (as such term is defined in Item 307(b) of Regulation S-K under the Exchange
Act) or, to the Companys Knowledge, in other factors that could affect the Companys
internal controls.
|
|
|
(k)
|
|
Accounting Controls
. The Company maintains a system of accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with managements general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial statements
in conformity with GAAP and to maintain accountability for assets;
|
A-14
|
|
|
(iii) access to assets is permitted only in accordance with managements general
or specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences. None of the Company, its Subsidiaries or,
to the Companys knowledge, any director, officer, employee, auditor, accountant
or representative of the Company or any Subsidiary has received or otherwise had
or obtained knowledge of any material complaint, allegation, assertion or claim,
whether written or oral, regarding the accounting or auditing practices,
procedures, methodologies or methods of the Company or any Subsidiary or their
respective internal accounting controls, including any material complaint,
allegation, assertion or claim that the Company or any Subsidiary has engaged in
questionable accounting or auditing practices.
|
|
(l)
|
|
Taxes
. (A)(i) Except as would not, individually or in the
aggregate, be reasonably expected to have a Material Adverse Effect on the Company,
each of the Company and its Subsidiaries has timely filed all federal, state, county,
local and foreign Tax returns, including all information returns, required to be
filed by it and all such Tax returns are true, complete and correct in all respects,
and were prepared in compliance with all applicable laws and regulations, and timely
paid all Taxes owed by it and no Tax owed by it or assessment received by it are
delinquent; (ii) neither the Company nor any Subsidiary has waived any statute of
limitations with respect to Taxes or agreed to any extension of time with respect to
a Tax assessment or deficiency, in each case that is still in effect, or has pending
a request for any such extension or waiver; (iii) neither the Company nor any
Subsidiary is a party to any pending action or proceeding, nor to the Companys
Knowledge is any such action or proceeding threatened by any Governmental Entity, for
the assessment or collection of Taxes, interest, penalties, assessments or
deficiencies that could reasonably be expected to have a Material Adverse Effect on
the Company and no issue (including in connection with tax refunds claimed for the
carry back of taxable losses or otherwise) has been raised, or to the Companys
Knowledge expected to be raised, by any federal, state, local or foreign taxing
authority in connection with an audit or examination of the Tax returns, business or
properties of the Company or any Subsidiary which has not been settled, resolved and
fully satisfied, or adequately reserved for (other than those issues that would not
be reasonably expected to have a Material Adverse Effect on the Company); (iv) except
as would not be reasonably expected to have a Material Adverse Effect on the Company,
each of the Company and the Subsidiaries has withheld and timely paid all Taxes that
it is required to withhold from amounts owing to employees, creditors or other third
parties; (v) neither the Company nor any Subsidiary is a party to, is bound by or has
any obligation under any material Tax sharing or material Tax indemnity agreement or
similar contract or arrangement other than any contract or agreement between or among
the Company and any Subsidiary. Neither the Company nor any Subsidiary has entered
into any reportable transaction within the meaning of Treasury
|
A-15
|
|
|
Regulations Section 1.6011-4(b), or any other transaction requiring disclosure
under analogous provisions of state, local or foreign law; (vi) neither the
Company nor any Subsidiary has liability for the Taxes of any person other than
the Company or any Subsidiary under Treasury Regulations Section 1.1502-6 (or any
similar provision of state, local or foreign law); (vii) there are no tax liens
on any assets of the Company or any Subsidiary; (viii) no acceleration of the
vesting schedule for any property that is substantially unvested within the
meaning of the regulations under Section 83 will occur in connection with the
transactions contemplated by this Agreement; (ix) to the Companys Knowledge,
neither the Company nor any Subsidiary is doing business in or engaged in a trade
or business in any jurisdiction in which it has not filed all required income or
franchise tax returns; (x) the Company has not been at any time a member of any
partnership or joint venture or the holder of a beneficial interest in any trust
for any period for which the statute of limitations for any Tax has not expired;
(xi) neither the Company nor any Subsidiary is subject to any accumulated
earnings tax, personal holding company tax or similar tax; and (xii) the Company
and the Subsidiaries have never been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
|
|
|
|
(B) (i) there are no requests for information currently outstanding that could
affect the Taxes of the Company or any Subsidiary; (ii) there are no proposed
reassessments of any property owned by the Company or any Subsidiary or other
proposals that could increase the amount of any Tax to which the Company or any
Subsidiary would be subject; (iii) no power of attorney that is currently in force
has been granted with respect to any matter relating to Taxes that could affect
the Company or any Subsidiary; and (iv) none of the Company or Subsidiaries are
loss corporations within the meaning of section 382 of the Code.
|
|
|
|
|
(C) (i)
Schedule 3.3(l)
lists all income, franchise and similar Tax
returns (federal, state, local and foreign) filed with respect to each of the
Company and the Subsidiaries for taxable periods ended on or after December
31,2009, indicates the most recent income, franchise or similar Tax return for
each relevant jurisdiction for which an audit has been completed or the statute of
limitations has lapsed and indicates all Returns that currently are the subject of
audit; (ii) the Company has made available to the Purchaser correct and complete
copies of all federal, state and foreign income, franchise and similar Returns,
examination reports, and statements of deficiencies assessed against or agreed to
by the Company or any Subsidiary since December 31,2009; and (iii) the Company has
delivered to the Purchaser a true and complete copy of any tax-sharing or
allocation agreement or arrangement involving the Company or any Subsidiary.
|
A-16
|
|
For the purpose of this Agreement, the term
Tax
(including, with correlative
meaning, the term
Taxes
) shall mean any and all taxes, fees, levies, duties,
tariffs, imposts and other charges of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect thereto) imposed
by any Governmental Entity, including taxes on or with respect to income, franchises,
windfall or other profits, gross receipts, property, sales, use, capital stock, payroll,
employment, unemployment, social security, workers compensation or net worth, and taxes
in the nature of excise, withholding, ad valorem stamp, transfer, gains or value added;
license, registration and documentation fees, and customs duties, tariffs, and similar
charges.
|
|
(m)
|
|
Material Changes
. Since December 31, 2009 (i) there have not been
any Effect that has had or would reasonably be expected to have, either individually
or in the aggregate, a Material Adverse Effect; (ii) the Company has not incurred any
material liabilities or material obligations of any nature (absolute, accrued,
contingent or otherwise) other than (A) accrued expenses and other liabilities
incurred in the ordinary course of business consistent with past practice and (B)
liabilities not required to be reflected or reserved against in the Company Financial
Statements in the Companys financial statements pursuant to GAAP or required to be
disclosed in filings made with the SEC; (iii) the Company has not materially altered
its method of accounting or the manner in which it keeps its accounting books and
records (excluding changes required by GAAP or regulatory accounting principles
applicable to banks or bank holding companies); (iv) the Company has not declared or
made any dividend or distribution of cash or other property to its stockholders or
purchased, redeemed or made any agreements to purchase or redeem any shares of its
capital stock (other than in connection with repurchases of unvested stock issued to
employees of the Company); (v) the Company has not issued any equity securities to
any officer, director or Affiliate, except Common Stock issued pursuant to existing
Company stock option plans; and (vi) there has not been any material change or
amendment to, or any waiver of any material right by the Company under, any Material
Contract under which the Company or any of its Company Significant Subsidiaries is
bound or subject.
|
|
|
(n)
|
|
Material Contracts
. Except for the Material Contracts and except
for this Agreement and the Registration Rights Agreement, the Company and its
Subsidiaries are not party to any agreements, contracts or commitments that are
material to the business, financial condition, assets or operations of the Company
and its Subsidiaries that would be required to be filed pursuant to Item 601(b)(10)
of Regulation S-K under the Exchange Act. Neither the Company nor any of its
Subsidiaries is in material default under or in material violation of, nor to the
Companys Knowledge, has received written notice of termination or default under any
Material Contract.
|
A-17
|
(o)
|
|
Litigation
. There is no Action pending, or, to the Companys
Knowledge, threatened against the Company or any Company Significant Subsidiary, nor
is the Company or any Company Significant Subsidiary subject to any order, judgment
on decree, in each case except as would not reasonably be expected to have a Material
Adverse Effect. There is no Action pending, or, to the Companys Knowledge,
threatened which adversely affects or challenges the legality, validity or
enforceability of this Agreement or the issuance of Shares hereunder. Neither the
Company nor any Company Significant Subsidiary, nor any director or officer thereof,
is or has been the subject of any Action involving a claim of violation of or
liability under federal or state securities laws or a claim of breach of fiduciary
duty.
|
|
|
(p)
|
|
Employment Matters
. (i) No material labor dispute exists or, to the
Companys Knowledge, has been threatened in writing with respect to any of the
employees of the Company or its Subsidiaries. None of the Companys or any of its
Subsidiaries employees is a member of a union that relates to such employees
relationship with the Company or relevant Subsidiary, and neither the Company nor any
of its Subsidiaries is a party to a collective bargaining agreement, and the Company
and each Subsidiary believes that its relationship with its employees is good. No
executive officer (as defined in Rule 501(f) of the Securities Act) of the Company or
a Subsidiary of the Company has notified the Company or such Subsidiary, as the case
may be, that such officer intends to leave the Company or such Subsidiary, as the
case may be, or otherwise terminate such officers employment with the Company or
such Subsidiary, as the case may be. To the Companys Knowledge, no executive officer
(as defined in Rule 501(f) of the Securities Act) of the Company or any of its
Subsidiaries is in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement or non-competition
agreement. To the Companys Knowledge, each of the Company and its Subsidiaries is in
compliance with all U.S. federal, state, local and foreign laws and regulations
relating to employment and employment practices, terms and conditions of employment
and wages and hours, except where the failure to be in compliance would not in the
reasonable judgment of the Company be expected to have, individually or in the
aggregate, a Material Adverse Effect.
|
|
|
|
|
(ii) There is no (a) employment-related lawsuit, action, proceeding, or claim
pending or threatened against the Company nor (b) pending internal investigation
of any complaints of employment law violations by the Company.
|
|
|
|
|
(iii) Each Person who performs services for the Company has been, and is, properly
classified by the Company as an employee or independent contractor.
|
|
|
(q)
|
|
Compliance
. Neither the Company nor any of its Subsidiaries (i) is
in default under or in violation of (and no event has occurred that has not been
waived
|
A-18
|
|
|
that, with notice or lapse of time or both, would result in a default by the
Company or any of its Subsidiaries under), nor has the Company or any of its
Subsidiaries received written notice of a claim that it is in default under or
that it is in violation of, any Material Contract (which default or violation has
not been waived); (ii) is in violation of any order of which the Company or any
Company Significant Subsidiary has been made aware in writing by any court,
arbitrator or governmental body having jurisdiction over the Company or any of
its Subsidiaries or its properties or assets; or (iii) is in violation of, or in
receipt of written notice that it is in violation of, any statute, rule or
regulation of any Governmental Entity applicable to the Company or any of its
Subsidiaries, except in each case as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. Except for statutory
or regulatory restrictions of general application, neither the Company nor any of
its Subsidiaries respective business or properties has been placed under any
material restriction by a Governmental Entity and, to the Companys Knowledge,
neither the Company nor any of its Subsidiaries has received any notification or
communication from any Governmental Entity that an investigation of the Company
or any of its Subsidiaries by such Governmental Entity is pending or threatened.
|
|
(r)
|
|
Company Benefit Plans.
|
|
(i)
|
|
Benefit Plan
means all material employee
benefit plans, program, agreements, policies, practices, or other
arrangements providing benefits to any current or former employee, officer,
director or other service provider of or to the Company or any Subsidiary or
any beneficiary or dependent thereof that is sponsored or maintained by the
Company or any Subsidiary or to which the Company or any Subsidiary
contributes or is obligated to contribute or is party, whether or not
written, including any material employee welfare benefit plan within the
meaning of Section 3(1) of the Employee Retirement Income Security Act of
1974, as amended (
ERISA
), any employee pension benefit plan within
the meaning of Section 3(2) of ERISA (whether or not such plan is subject to
ERISA) and any material bonus, incentive, deferred compensation, vacation,
stock purchase, stock option, severance, employment, change of control,
medical, life or other insurance, cafeteria, profit-sharing, savings,
consulting or fringe benefit plan, program, agreement or policy.
|
|
|
(ii)
|
|
Each Benefit Plan has been operated and administered in
all material respects in accordance with its terms and with the applicable
provisions of ERISA, the Code and all other laws and regulations applicable
to such Benefit Plan. Except as would not reasonably be expected to have a
Material Adverse Effect on the Company, none of
|
A-19
|
|
|
the Company and its Subsidiaries nor any of their respective ERISA
Affiliates has incurred any liability under Section 412, 430, 431, or
432 of the Code, or Section 302, 303, 304 or 305 or Title IV of ERISA,
that has not been satisfied in full, and no condition exists that
presents a material risk to the Company, any Subsidiary or any ERISA
Affiliate of incurring a liability under any such Sections or Title.
ERISA Affiliate
means any entity, trade or business, whether
or not incorporated, which together with the Company and its
Subsidiaries would be deemed a single employer within the meaning of
Section 4001 of ERISA or Sections 414(b), (c), (m) or (o) of the Code.
|
|
(iii)
|
|
Neither the execution and delivery of this Agreement,
nor the consummation of the transactions contemplated hereby will result in
or is a precondition to (A) any payment or benefit (including severance,
unemployment compensation, parachute payment (within the meaning of
Section 280G of the Code), forgiveness of indebtedness or otherwise)
becoming due to any current or former employee, officer or director of the
Company or any Subsidiary from the Company or any Subsidiary under any
Benefit Plan or any other agreement with any employee, including, for the
avoidance of doubt, change in control agreements, (B) any increase in
payments or benefits otherwise payable under any Benefit Plan, (C) any
acceleration of the time of payment or vesting of any such payments or
benefits, (D) the funding or increase in the funding of any such payments or
benefits, or (E) any limitation on the right of the Company or any
Subsidiary to amend, merge, terminate or receive a reversion of assets from
any Benefit Plan or related trust.
|
|
|
(iv)
|
|
Except as would not reasonably be expected to have a
Material Adverse Effect on the Company and except for liabilities fully
reserved for or identified in the Company Financial Statements, there are no
pending or threatened claims (other than claims for benefits in the ordinary
course), lawsuits or arbitrations which have been asserted or instituted
against and there are no judgments, decrees, injunctions, rules or orders
outstanding against (A) the Benefit Plans, (B) any fiduciaries thereof with
respect to their duties to the Benefit Plans, or (C) the assets of any of
the trusts under any of the Benefit Plans. There are no pending or, to the
Companys Knowledge, threatened audits or investigations by any Governmental
Entity involving any Benefit Plan. All contributions required to have been
made under the terms of any Benefit Plan or pursuant to ERISA and the Code
have been timely made and all obligations in respect of each Benefit Plan
have been properly accrued and reflected in the Company Financial
Statements.
|
A-20
|
(v)
|
|
Each of the Benefit Plans that is intended to be
qualified within the meaning of Section 401(a) of the Code is so qualified
and a favorable determination or opinion letter to that effect has been
issued by the IRS with respect to each such Benefit Plan, and nothing has
occurred that could reasonably be expected to adversely affect the qualified
status of any Benefit Plan under Section 401(a) of the Code or require the
filing of a submission under the IRSs employee plans compliance resolution
system or the taking of other corrective action pursuant to such system in
order to maintain the qualified status of such Benefit Plan. Each of the
Benefit Plans that is intended to satisfy the requirements of Section 125,
423 or 501(c)(9) of the Code satisfies such requirements in all material
respects.
|
|
|
(vi)
|
|
No payment or benefit paid or provided, or to be paid or
provided, to current or former employees, directors or other service
providers of or to the Company or any Subsidiary (including pursuant to this
Agreement or any other Transaction Documents) will fail to be deductible for
federal income tax purposes under Section 280G of the Code.
|
|
|
(vii)
|
|
Each Benefit Plan that provides deferred compensation
subject to Section 409A of the Code complies with Section 409A of the Code
(and has so complied for the entire period during which Section 409A of the
Code has applied to such Benefit Plan). None of the transactions
contemplated by this Agreement or any other Transaction Document will
constitute or result in a violation of Section 409A of the Code.
|
|
(s)
|
|
Regulatory Agreement
. Except as set forth on
Schedule
3
.
3
(s) (each, a
Regulatory Agreement
), the Company or the
Company Significant Subsidiary (i) has not received, consented to, or entered into
any notice, communication, memorandum, agreement or order of any applicable
Governmental Entity directing, restricting or limiting, or purporting to direct,
restrict or limit, in any manner the operations of the Company and (ii) is not aware
of any basis for any unresolved violation of any applicable Governmental Entity with
respect to any Regulatory Agreement which if resolved in a manner adverse to the
Company could have a Material Adverse Effect.
|
|
|
(t)
|
|
CRA Compliance
. Each of the Company and each Company Significant
Subsidiary, as applicable, is in compliance, in all material respects, with the
applicable provisions of the CRA, and, as of the date of this Agreement, the Company
has received a CRA rating of satisfactory or better from the applicable
Governmental Entity. To the Companys Knowledge, there is no fact or circumstance or
set of facts or circumstances that would cause the
|
A-21
|
|
|
Company to fail to comply with such provisions in a manner that could reasonably
be expected to have a Material Adverse Effect.
|
|
(u)
|
|
Loan Loss Reserves
. Each of the reserve and allowances for possible
loan losses and the carrying value for real estate owned which are shown on the
financial statements of the Company included in the SEC Reports has been established
in conformity with all applicable requirements, rules and policies of applicable
Governmental Entities and complies with GAAP applied on a consistent basis to provide
for possible losses on loans outstanding and real estate owned as of the date of such
financial statements.
|
|
|
(v)
|
|
Compliance with Capital Adequacy Guidelines
. To the Companys
Knowledge, upon the consummation of the transactions contemplated by this Agreement,
the Company and the Company Significant Subsidiaries will have sufficient regulatory
capital to meet all applicable regulatory capital guidelines of all applicable
Governmental Entities applicable to the Company as of the date of the Closing.
|
|
|
(w)
|
|
Regulatory Permits
. Each of the Company and the Company
Significant Subsidiaries possesses or has applied for all certificates,
authorizations, licenses, franchises, permits, orders and approvals issued or granted
by the appropriate Governmental Entities necessary to conduct its business as
currently conducted, except where the failure to possess such certificates,
authorizations, licenses, franchises, permits, orders and approval, individually or
in the aggregate, has not and would not reasonably be expected to have, a Material
Adverse Effect (
Material Permits
), and neither the Company nor any of the
Company Significant Subsidiaries has received any written notice of proceedings
relating to the revocation or material adverse modification of any such Material
Permits and (ii) to the Companys Knowledge, there are no facts or circumstances that
would give rise to the revocation or material adverse modifications of any Material
Permits.
|
|
|
(x)
|
|
Title to Assets
. The Company and the Company Significant
Subsidiaries have good and marketable title to all real property and tangible
personal property owned by them which is material to the business of the Company and
the Company Significant Subsidiaries, taken as whole, in each case free and clear of
all Liens (other than Permitted Liens) except such as do not materially affect the
value of such property or do not materially interfere with the use made of such
property by the Company and any of its Company Significant Subsidiaries. Any real
property and facilities held under lease by the Company and any of the Company
Significant Subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as do not interfere in a material manner with the use
made of such property and buildings by the Company and the Company Significant
Subsidiaries.
|
A-22
|
(y)
|
|
Environmental Liability
.
|
|
(i)
|
|
There is no legal, administrative, or other proceeding,
claim or action of any nature seeking to impose, or that would reasonably be
expected to result in the imposition of, on the Company or any Subsidiary,
any liability relating to Environmental Laws or the presence or release of
Hazardous Substances, pending against the Company or any Subsidiary, or, to
the Companys Knowledge, threatened in writing against the Company or any
Subsidiary, the result of which would reasonably be expected to have a
Material Adverse Effect on the Company and, to the Companys Knowledge,
neither the Company nor any Subsidiary is subject to any agreement, order,
judgment or decree by or with any Governmental Entity or third party
imposing such liability.
|
|
|
(ii)
|
|
The Company and the Company Significant Subsidiaries, all
real property owned or operated by them, are now and have been in the past
in continuous compliance with all Environmental Laws, except for
noncompliance that would not, in the aggregate, be reasonably expected to
have a Material Adverse Effect on the Company
|
|
|
(iii)
|
|
There are no Hazardous Substances at any real property
owned or operated by the Company or the Company Significant Subsidiaries and
there are no Hazardous Substances for which the Company or the Company
Significant Subsidiaries may be liable, in locations and amounts that
violate Environmental Laws or that exceed the applicable remediation
standards and criteria established pursuant to Environmental Laws, except
for Hazardous Substances that would not, in the aggregate, be reasonably
expected to have a Material Adverse Effect on the Company.
|
|
|
(iv)
|
|
Neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby shall result in any
requirement under Environmental Laws for any obligation to, notice to or
consent of, any governmental authority or third parties, related to the
presence of Hazardous Substances at any real properties.
|
|
(z)
|
|
Intellectual Property
.
|
|
(i)
|
|
Except as would not reasonably be expected to result in a
Material Adverse Effect on the Company, the Company and each of the
Subsidiaries owns, or is licensed to use (in each case, free and clear of
any Liens other than Permitted Liens), all material Intellectual Property to
the conduct of its business as currently conducted.
|
A-23
|
(ii)
|
|
The use of any Intellectual Property by the Company and
Subsidiaries does not, to the Companys Knowledge, infringe on or otherwise
violate the rights of any Person and is in accordance with any applicable
license pursuant to which the Company or any of its Subsidiaries acquired
the right to use any Intellectual Property, except for such infringement or
violation as would not reasonably be expected to result in a Material
Adverse Effect.
|
|
|
(iii)
|
|
To the Companys Knowledge, no Person is challenging,
infringing on or otherwise violating any right of the Company or any of its
Subsidiaries with respect to any material Intellectual Property owned by or
licensed to the Company or its Subsidiaries.
|
|
|
(iv)
|
|
To the Companys Knowledge, neither the Company nor any
of its Subsidiaries has received any notice of any pending material claim
with respect to any material Intellectual Property used by the Company or
any of its Subsidiaries and no such material claim has been threatened.
|
|
|
(v)
|
|
To the Companys Knowledge, no Intellectual Property owned or licensed
by the Company or any its Subsidiaries is being used or enforced in a manner
that would reasonably be expected to result in the abandonment, cancellation
or unenforceability of such Intellectual Property, except for abandonment,
cancellation or unenforceability as would not reasonably be expected to
result in a Material Adverse Effect.
|
|
|
|
For the purposes of this Agreement,
Intellectual Property
shall mean
trademarks, service marks, brand names, certification marks, trade dress and
other indications of origin, the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in any jurisdiction to
register, the foregoing, including any extension, modification or renewal of any
such registration or application; inventions, discoveries and ideas, whether
patentable or not, in any jurisdiction; patents, applications for patents
(including divisions, continuations, continuations in part and renewal
applications), and any renewals, extensions or reissues thereof, in any
jurisdiction; nonpublic information, trade secrets and confidential information
reduced to writing and rights in any jurisdiction to limit the use or disclosure
thereof by any Person; writings and other works, whether copyrightable or not, in
any jurisdiction; and registrations or applications for registration of
copyrights in any jurisdiction, and any renewals or extensions thereof; and any
similar intellectual property or proprietary rights.
|
A-24
|
(aa)
|
|
Insurance
. The Company and each of the Company Significant
Subsidiaries are insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as the Company believes to be commercially
reasonable in the businesses and locations in which the Company and the Company
Significant Subsidiaries are engaged. To the Companys Knowledge, the Company and its
Company Significant Subsidiary will be able to renew their respective existing
insurance coverage as and when such coverage expires or to obtain similar coverage
from similar insurers as may be necessary to continue its business.
|
|
|
(bb)
|
|
Transactions With Affiliates and Employees
. None of the officers or
directors of the Company or the Company Significant Subsidiaries is presently a party
to any transaction with the Company or a Company Significant Subsidiary or to a
presently contemplated transaction (other than for services as officers and
directors) that would be required to be disclosed pursuant to Item 404 of Regulation
S-K promulgated under the Securities Act.
|
|
|
(cc)
|
|
Brokers and Finders
. Neither the Company nor any Company
Significant Subsidiary nor any of their respective officers, directors or employees
has employed any broker or finder or incurred any liability for any financial
advisory fees, brokerage fees, commissions or finders fees, and no broker or finder
has acted, directly or indirectly, for the Company or any Company Significant
Subsidiary, in connection with the transactions contemplated by this Agreement.
|
|
|
(dd)
|
|
Offering of Shares
. Neither the Company nor any person acting on
its behalf has taken any action (in connection with any offering of any securities of
the Company (including the Rights Offering and the Subsequent Offering) under
circumstances which would require the integration of such offering with the offering
of any of the Shares to be issued pursuant to this Agreement under the Securities Act
and the rules and regulations of the SEC promulgated thereunder), which would subject
the offering, issuance or sale of any of the Shares to the registration requirements
of the Securities Act.
|
|
|
(ee)
|
|
Listing and Maintenance Requirements
. The Companys Common Stock is
registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company
has taken no action designed to terminate the registration of the Common Stock under
the Exchange Act nor has the Company received any written notification that the SEC
is contemplating terminating such registration. The Company has not, in the 12 months
preceding the date hereof, received written notice from the Principal Trading Market
to the effect that the Company is not in compliance with the listing or maintenance
requirements of the Principal Trading Market. The Companys Common Stock is listed
on the Principal Trading Market, and to the Companys Knowledge, the Company and
|
A-25
|
|
|
its Common Stock meet the criteria for continued listing and trading on the
Principal Trading Market.
|
|
(ff)
|
|
Investment Company
. Neither the Company nor any of the Company
Significant Subsidiaries is an investment company within the meaning of the
Investment Company Act of 1940, as amended.
|
|
|
(gg)
|
|
No General Solicitation
. Neither the Company nor any of its
Affiliates nor any person acting on its or their behalf, has engaged or will engage,
in connection with the offering of the Shares, in any form of general solicitation or
general advertising within the meaning of Rule 502(c) under the Securities Act.
|
|
|
(hh)
|
|
No Directed Selling Efforts
. Neither the Company nor any of its
Affiliates nor any person acting on its or their behalf, has engaged or will engage
in any directed selling efforts, as such term is defined in the Reg S, with respect
to the Shares
.
|
|
|
(ii)
|
|
Books and Records
. The books of account, minute books, stock
record books and other records of the Company and the Company Significant
Subsidiaries are complete and correct in all material respects and have been
maintained in accordance with the requirements of Section 13(b)(2) of the Exchange
Act.
|
3.4.
|
|
Representations and Warranties of the Purchaser
. Except as Previously Disclosed, the
Purchaser hereby represents and warrants as of the date hereof and as of Closing Date (except
in each case to the extent made only as of a specified date, in which case as of such date) to
the Company as follows:
|
|
(a)
|
|
Organization; Authority
. The Purchaser is duly organized and
validly existing under the laws of Korea, is duly qualified to do business and is in
good standing in all jurisdictions where its ownership or leasing of property or the
conduct of its business requires it to be so qualified and failure to be so qualified
would have a Material Adverse Effect on Purchaser, with the requisite corporate power
and authority to enter into and to consummate the transactions contemplated by this
Agreement and otherwise to carry out its obligations hereunder. The execution,
delivery and performance by the Purchaser of the transactions contemplated by this
Agreement and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of the Purchaser, no further
corporate action is required by the Purchaser in connection therewith other than in
connection with the Regulatory Approvals. This Agreement upon delivery will have
been duly and validly executed by the Purchaser, and, assuming due authorization,
execution and delivery of the Agreement by the Company, will constitute (when
delivered in accordance with the terms hereof) the valid and binding obligation of
the Purchaser, enforceable against the Purchaser in accordance with its terms, except
as such enforceability may be limited by bankruptcy,
|
A-26
|
|
|
insolvency, reorganization, moratorium, fraudulent transfer or similar laws
relating to, or affecting creditors generally or by general equitable principles
(whether applied in law or equity).
|
|
(b)
|
|
No Conflicts
. The execution, delivery and performance by the
Purchaser of this Agreement and the consummation by the Purchaser of the transactions
contemplated hereby (including, without limitation, the issuance, sale and delivery
of the Shares) do not and will not (i) subject to the approval of the Stockholders
Proposals, conflict with or violate any provisions of the Purchasers certificate or
articles of incorporation or bylaws or otherwise result in a violation of the
organizational documents of the Purchaser; (ii) conflict with, or constitute a
default (or an event that with notice or lapse of time or both would result in a
default) under, result in the creation of any Lien (other than Permitted Liens) upon
any of the properties or assets of the Purchaser or give to others any rights of
termination, amendment, acceleration or cancellation (with or without notice, lapse
of time or both) of, any note, bond, mortgage indenture deed of trust, license,
lease, agreement or other instrument or obligation to which the Purchaser is subject;
or (iii) subject to Section 3.4(e) below, conflict with or result in a violation of
any law, rule, regulation, order, judgment, injunction, decree or other restriction
applicable to the Purchaser or by which any property or asset of the Purchaser is
bound or affected, except in the case of clauses (ii) and (iii) such as would not
reasonably be expected to have, individually or in the aggregate, a Material Adverse
Effect. There are no stockholders agreements, voting agreements or other similar
arrangements with respect to the Purchasers capital stock to which the Purchaser is
a party or, to the Purchasers Knowledge, between or among any of the Purchasers
stockholders.
|
|
|
(c)
|
|
Investment Intent
. The Purchaser acknowledges that the Shares have
not been registered under the Securities Act or under any state securities laws. The
Purchaser (i) is acquiring the Shares pursuant to an exemption from registration
under the Securities Act solely for investment with no present intention to
distribute any of the Share to any Person; (ii) will not sell or otherwise dispose of
any of the Shares, except in compliance with the registration requirements or
exemption provisions of the Securities Act and any other applicable securities laws,
(iii) has such knowledge and experience in financial and business matters and in
investments of this type and that it is capable of evaluating the merits and risks of
its investment in the Shares and of making an informed investment decision; and (iv)
is an accredited investor (as that term is defined by Rule 501 of the Securities
Act).
|
|
|
(d)
|
|
Ownership.
As of the date of this Agreement, the Purchaser is not
the owner of record or the beneficial owner of shares of Common Stock, securities
convertible into or exchangeable for Common Stock or any other equity or
equity-linked security of the Company or any of its Subsidiaries.
|
A-27
|
(e)
|
|
Knowledge as to Conditions
. As of the date of this Agreement, the
Purchaser has no actual knowledge of any reason why the Regulatory Approvals should
not be obtained. Without limiting the scope of the foregoing, Purchasers U.S.
controlled insured depository institutions are currently considered by their
applicable regulatory authorities to be no less than in satisfactory compliance with
the Community Reinvestment Act, Bank Secrecy Act and Anti-Money Laundry Legislation,
and the rules and regulations issued thereunder, and upon consummation of the sale of
the Shares and thereafter, the Companys Significant Subsidiaries will not be subject
to risk of cross guarantee liability under §5(e) of the Federal Deposit Insurance Act
(12 U.S.C. §1815(e)) with Woori America Bank or any other insured depository
institutions in the United States controlled by the Purchaser.
|
|
|
(f)
|
|
Brokers and Finders
. Neither the Purchaser nor its Affiliates or
any of their respective officers, directors or employees has employed any broker or
finder or incurred any liability for any financial advisory fees, brokerage fees,
commissions or finders fees, and no broker or finder has acted directly or
indirectly for the Purchaser, in connection with the transactions contemplated
hereby.
|
|
|
(g)
|
|
Independent Investment Decision
. The Purchaser has independently
evaluated the merits of its decision to purchase the Shares pursuant to this
Agreement, and the Purchaser confirms that it has not relied on the advice of any
other persons business and/or legal counsel in making such decision. The Purchaser
understands that nothing in this Agreement or any other materials presented by or on
behalf of the Company by the Purchaser in connection with the purchase of the Shares
constitutes legal, tax or investment advice. The Purchaser has consulted such legal,
tax and investment advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with its decision to purchase the Shares.
|
|
|
(h)
|
|
No Reliance
. The Purchaser is not relying upon, and has not relied
upon, any statement, representation or warranty made by any person, including,
without limitation, the Company, Cappello Capital Corp. or IWL Partners except for
the statements, representations and warranties contained in this Agreement.
Furthermore, the Purchaser acknowledges and agrees that neither Cappello Capital
Corp. nor IWL Partners has performed any due diligence review on behalf of the
Purchaser. The Purchaser understands and agrees that any budgets, plans, forecasts
and other forward-looking information with respect to the Company and the Company
Significant Subsidiaries that it has reviewed are preliminary, may be incomplete and
may prove to be inaccurate and the Purchaser should not base any investment decision
with respect to the Shares on such information.
|
A-28
|
(i)
|
|
Access to Information
. The Purchaser acknowledges that it has had
the opportunity to review information relating to the Company and the Company
Significant Subsidiaries and has been afforded (i) the opportunity to ask such
questions as it has deemed necessary of, and to receive answers from, representatives
of the Company concerning the terms and conditions of the offering of the Shares and
the merits and risks of investing in the Shares; (ii) access to information about the
Company and the Company Significant Subsidiaries and their respective financial
condition, results of operations, business, properties, management and prospects
sufficient to enable it to evaluate its decision to purchase the Shares and thereby
invest in the Company; and (iii) the opportunity to obtain such additional
information that the Company possesses or can acquire without unreasonable effort or
expense that is necessary to make an informed investment decision with respect to the
investment. The Purchaser has sought such accounting, legal and tax advice as it has
considered necessary and appropriate to make a reasonably informed decision with
respect to its acquisition of the Shares.
|
|
|
(j)
|
|
No Concerted Action
. The Purchaser is not acting in concert with,
or deemed to be acting in concert (pursuant to Federal Reserve regulations) with any
other person or entity in connection with the transactions contemplated by this
Agreement and in furtherance thereof:
|
|
(1)
|
|
The Purchaser is not a party to any agreement, contract,
understanding, relationship or other arrangement, whether written or
otherwise, regarding the acquisition, voting or transfer of control of the
Common Stock.
|
|
|
(2)
|
|
The Purchaser has not made, and does not propose to make
a joint filing under Section 13 or 14 of the Exchange Act with respect to
the Common Stock.
|
|
(k)
|
|
Regulation S
. The Purchaser (i) is not a
U.S. person
(as
defined in Rule 902(k) of Regulation S (
Reg S
) under the Securities Act)
and is not acquiring the Shares for the account or benefit of any U.S. person, (ii)
has its principal address outside the United States, (iii) was located outside the
United States at the time any offer to buy the Shares was made to the Purchaser and
at the time that the Purchaser executed and entered into this Agreement, (iv) is not
acquiring, and has not entered into any discussions regarding the offer or the sale
of the Shares while the Purchaser was in the United States or any of its territories
or possessions, (v) has not and will not engage in any directed selling efforts, as
such term is defined in Reg S, with respect to the Shares, and (vi) will not offer or
re-sell the Shares, except in compliance with Reg S.
|
|
|
(l)
|
|
Offering of the Shares
. To the Purchasers actual knowledge, no
controlling shareholder, partner or management official of the Purchaser or any
Affiliate of
|
A-29
|
|
|
the Purchaser is directly or indirectly acquiring Common Stock in connection with
the transactions contemplated by this Agreement, the Rights Offering, the
Subsequent Offering or otherwise.
|
|
(m)
|
|
Sufficient Funds
. The Purchaser currently has the ability to
obtain and will have obtained prior to the Closing Date, sufficient cash, available
lines of credit or other sources of immediately available funds to enable it to
timely deliver to the Company the amount of the aggregate Purchase Price for the
Shares to be purchased pursuant to this Agreement.
|
ARTICLE IV
COVENANTS
4.1.
|
|
Filings; Other Actions
|
|
(a)
|
|
Each of the Purchaser and the Company will cooperate and consult with the
other and use its best efforts to prepare and file as soon as possible all necessary
documentation, to effect all necessary applications, notices, petitions, filings and
other documents, and to obtain all necessary permits, consents, orders, approvals and
authorizations of, or any exemption by, all third parties and Governmental Entities,
and expiration or termination of any applicable waiting periods, necessary or
advisable to consummate the transactions contemplated by this Agreement and to
perform covenants contemplated by this Agreement. As soon as practicable following
the execution of this Agreement, but in no event later than thirty (30) calendar days
from the date of this Agreement, the Purchaser shall seek all governmental and
regulatory consents and approvals required for the consummation of the transaction
contemplated by this Agreement (the
Regulatory Approvals
), including,
without limitation, any approvals required by U.S. federal regulatory and government
agencies, including the Korean Financial Services Commission and the Board of
Governors of the Federal Reserve System (the
FRB
) and all applicable state
bank and other regulatory or government agencies, including the CDFI and CDI. The
Purchaser shall provide the Company with the draft applications, other than materials
filed in connection therewith under a claim of confidentiality, to the FRB, CDFI and
for comment by the Company as soon as practicable (but in no event later than fifteen
(15) Business Days from the date of this Agreement) and the Company shall provide its
comments as promptly as possible after receiving the draft applications from the
Purchaser (but in no event later than three (3) business days from the date of
receipt of the draft applications). Each of the Company and the Purchaser shall keep
the other party advised as to the status of the Regulatory Approvals. The Purchaser
shall use its reasonable best efforts to obtain each such Regulatory Approval as
promptly as practicable following the submission or filing thereof. The Company will
provide reasonable cooperation and assistance in connection therewith (including the
|
A-30
|
|
|
furnishing of any information and any reasonable undertaking or reasonable
commitments which may be required to obtain the Regulatory Approvals).
|
|
(b)
|
|
As soon as practicable after the execution of this Agreement, the Company
shall call a meeting of its stockholders, to vote on proposals (collectively, the
Stockholder Proposals
) to approve (i) the amendment to the Companys
certificate of incorporation to increase the authorized number of common stock to 500
million shares and (ii) the transactions contemplated by this Agreement (including
the issuance of the Shares). The Board of Directors shall unanimously recommend to
the Companys stockholders that such stockholders approve the Stockholder Proposals
(the
Board Recommendation
). In connection with such meeting, the Company
shall promptly prepare (and the Purchaser will reasonably cooperate with the Company
to prepare) and file (but in no event more than 30 days following the execution of
this Agreement) with the SEC a preliminary proxy statement, shall use its best
efforts to solicit proxies for such stockholder approval and shall use its best
efforts to respond to any comments of the SEC or its staff and to cause a definitive
proxy statement related to such stockholders meeting to be mailed to the Companys
stockholders as promptly as practicable after clearance by the SEC. The Company
shall notify the Purchaser promptly of the receipt of any comments from the SEC or
its staff with respect to the proxy statement and of any request by the SEC or its
staff for amendments or supplements to such proxy statement or for additional
information and will supply the Purchaser with copies of all correspondence between
the Company or any of its representatives, on the one hand, and the SEC or its staff,
on the other hand, with respect to such proxy statement. If at any time prior to
such stockholders meeting there shall occur any event that is required to be set
forth in an amendment or supplement to the proxy statement, the Company shall as
promptly as practicable prepare and mail to its stockholders such an amendment or
supplement. Each of the Purchaser and the Company agrees promptly to correct any
information provided by it or on its behalf for use in the proxy statement if and to
the extent that such information shall have become false or misleading in any
material respect, and the Company shall as promptly as practicable prepare and mail
to its stockholders an amendment or supplement to correct such information to the
extent required by applicable laws and regulations. The Company shall consult with
the Purchaser prior to mailing any proxy statement, or any amendment or supplement
thereto, and provide the Purchaser with reasonable opportunity to comment thereon.
The directors recommendation described in this Section 4.1(c) shall be included in
the proxy statement filed in connection with obtaining such stockholder approval.
|
|
|
|
|
In the event the Company fails to obtain stockholder approval of the Stockholder
Proposals at such stockholders meeting, the Company shall include a proposal to
approve (and, the Board of Directors shall unanimously recommend approval of)
such Stockholder Proposal(s) at a subsequent meeting
|
A-31
|
|
|
of its stockholders to be held no later than 90 calendar days therefrom.
Immediately upon approval of the Stockholder Proposals, the Company shall amend
its Certificate of Incorporation to effect the increase in the authorized shares
of Common Stock.
|
|
(c)
|
|
Subject to Section 4.2 hereof, each party agrees, upon request, to furnish
the other party with all information concerning itself, its subsidiaries, Affiliates,
directors, officers, partners and stockholders and such other matters as may be
reasonably necessary or advisable in connection with the proxy statement relating to
such stockholders meeting.
|
|
(a)
|
|
Each party to this Agreement will hold, and will cause its respective
subsidiaries and their directors, officers, employees, agents, consultants and
advisors to hold, in strict confidence, unless disclosure to a Governmental Entity is
necessary in connection with any necessary regulatory approval or unless compelled to
disclose by judicial or administrative process or, in the written opinion of its
counsel, by other requirement of law or the applicable requirements of any
Governmental Entity, all nonpublic records, books, contracts, instruments, computer
data and other data and information (collectively,
Information
) concerning
the other party hereto furnished to it by such other party or its representatives
pursuant to this Agreement (except to the extent that such information can be shown
to have been (i) previously known by such party on a non-confidential basis, (ii) in
the public domain through no fault of such party or (iii) later lawfully acquired
from other sources by the party to which it was furnished), and neither party hereto
shall release or disclose such Information to any other Person, except its auditors,
attorneys, financial advisors, other consultants and advisors and, to the extent
permitted above, to bank regulatory authorities.
|
|
|
(b)
|
|
In the event of the termination of this Agreement, each party agrees that
it shall not use or disclose, and shall cause its Affiliates not to use or disclose
the Information of the other party for any purpose, including the solicitation of
customers or business of the other party, for a period of two (2) years.
|
|
|
(c)
|
|
Notwithstanding the foregoing, nothing herein shall require the Company or
any Company Subsidiary to disclose any information to the extent (i) prohibited by
applicable law or regulation, or (ii) that such disclosure would reasonably be
expected to cause a violation of any agreement to which the Company or any Company
Subsidiary is a party or would cause a risk of a loss of privilege to the Company or
any Company Subsidiary (provided that the Company shall use commercially reasonable
efforts to make appropriate substitute disclosure arrangements under circumstances
where the restrictions in this clause (ii) apply).
|
A-32
4.3.
|
|
Cash-Out Merger Limitation
. The Purchaser agrees that for a period of three years
from the Closing Date, that neither it nor any of its Affiliates will, directly or indirectly,
effect a cash-out merger or other similar transaction, unless (i) (A) no less than a
majority of the Disinterested Directors of the Company (as defined in the Companys
Certificate of Incorporation or Bylaws) approve the terms of such cash-out merger, and (B)
approval of the cash-out merger or other similar transaction is expressly conditioned upon
the affirmative vote in favor of such cash-out merger or other similar transaction by 66
2/3% of the stockholders entitled to vote thereon, and separately by a majority of the
stockholders entitled to vote thereon excluding the vote of Purchaser; or (ii) at the time of
such stockholder vote Purchaser owns at least 90% of the outstanding voting shares of the
Company.
|
4.4.
|
|
Access to Information
. From the date hereof until the earlier of the Closing or
termination of this Agreement pursuant to Article VII, the Company will ensure that upon
reasonable notice, the Company and the Company Significant Subsidiaries will afford to the
Purchaser and its representatives (including officers and employees of the Purchaser, and its
counsel, accountants and other professionals retained by the Purchaser) such access during
normal business hours to its books, records, properties and personnel and to such other
information as the Purchaser may reasonably request without undue interference to the ordinary
conduct of the Companys business and subject to applicable legal and regulatory restrictions.
The Purchaser shall permit the Company and its attorneys, consultants, accountants, lenders,
financial advisors and other agents, between the date hereof and the Closing, without undue
interference to the ordinary conduct of the Purchasers business, to have reasonable access
during normal business hours and upon reasonable notice and subject to applicable legal and
regulatory restrictions to information relevant or related directly or indirectly to this
Agreement and the transactions contemplated hereby, including the satisfaction of the closing
conditions set forth in Article VI.
|
4.5.
|
|
Hedging
. The Purchaser agrees that, during the six-month period following the
Closing, it shall not, directly or indirectly, enter into any hedging agreement, arrangement
or transaction the value of which is based upon the value of any securities purchased pursuant
to this Agreement, except for transactions involving an index-based portfolio of securities
that includes Common Stock (provided that the value of such Common Stock in such portfolio is
not more than 5% of the total value of the portfolio of securities).
|
ARTICLE V
OTHER AGREEMENTS OF THE PARTIES
|
(a)
|
|
From the date hereof and until the earlier of the Closing Date or the
termination of this Agreement, the Company shall not, and shall not authorize or
permit any
|
A-33
|
|
|
of its Subsidiaries and its officers, directors, employees, agents, advisors,
consultants or other representatives (collectively, its
Representatives
) to, directly or indirectly, (i) solicit, initiate, or
encourage the submission of any Acquisition Proposal (as defined below); (ii)
enter into any agreement or understanding with respect to an Acquisition
Proposal; or (iii) participate in any discussions or negotiations regarding, or
furnish to any Person or entity any information for the purpose of facilitating
the making of, or take any other action to facilitate any inquiries or the making
of, any proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal;
provided
,
however
, that notwithstanding any
other provision hereof, the Company may (A) comply with applicable securities
laws and regulations, including, without limitation, the Exchange Act (and Rule
14e-2 promulgated under the Exchange Act with regard to a tender or exchange
offer) and (B) prior to the time its stockholders approve the Stockholders
Proposals, the Company may engage in discussions or negotiations with a third
party who (without any solicitation, initiation or encouragement, directly or
indirectly, of the Company or its Representatives after the date hereof) seeks to
initiate such discussions or negotiations, and may furnish such third party
information concerning the Company and its business if and only to the extent a
third party has first made an Acquisition Proposal that is superior to the
proposal made by the Purchaser and the Board has determined in good faith after
consultation with its financial advisors and legal counsel that failure to take
such action would be inconsistent with its fiduciary duties under applicable law.
Notwithstanding the foregoing, the parties hereto acknowledge, and hereby agree
that, (i) subject to the terms and conditions of this Agreement, the Rights
Offering and Subsequent Offering and any and all action by the Company and its
Representatives in connection therewith shall not be subject to this Section
5.1(a) and (ii) if the Purchaser breaches any term or condition of this Agreement
in a manner that would reasonably be expected to materially impede or preclude
the consummation of the transactions contemplated hereby, the Company shall no
longer be bound by the terms and conditions of this Article V.
|
|
(b)
|
|
The Company will, and will direct its Representatives to, immediately cease
and cause to be terminated all discussions and negotiations that have taken place
prior to the date hereof, if any, with any Persons (other than the Purchaser) with
respect to any Acquisition Proposal. The Company shall promptly advise the Purchaser
of any Acquisition Proposal and inquiries with respect to any Acquisition Proposal,
and provide copies of the same.
|
|
|
(c)
|
|
Neither the Board nor any committee thereof shall (i) fail to make,
withdraw, amend or modify, or publicly propose to withhold, withdraw, amend or
modify, in a manner adverse to the Purchaser, the Board Recommendation, (ii) approve,
endorse, adopt or recommend, or publicly propose to approve, endorse, adopt or
recommend, any Acquisition Proposal, (iii) make any public statement inconsistent
with the Board Recommendation, or (iv) resolve or agree to take
|
A-34
|
|
|
any of the foregoing actions (any of the foregoing, an
Adverse
Recommendation Change
). The Company, following receipt of and on account of
an Acquisition Proposal that is superior to the proposal made by the Purchaser,
may make an Adverse Recommendation Change, but only if the Company determines in
good faith, after consultation with outside legal counsel to the Company, that
the failure to take such action would be inconsistent with its fiduciary duties
under applicable law. Nothing contained in this Section 5.01(c) shall prevent
the Company from complying with Rule 14d-9 and Rule 14e-2(a) under the Exchange
Act with regard to an Acquisition Proposal;
provided
,
that any such
disclosure (other than a stop, look and listen communication or similar
communication of the type contemplated by Section 14d-9(f) under the Exchange
Act) shall be deemed to be a Adverse Recommendation Change unless the Company
expressly publicly reaffirms its Board Recommendation in such communication.
|
|
(d)
|
|
Acquisition Proposal
means any written offer, proposal, or
indication of interest from any third party(ies) relating to any transaction or
series of related transactions involving any (i) acquisition or purchase by any
person, directly or indirectly, of 10% or more of any series of the Common Stock, or
any tender offer (including a self-tender) or exchange offer that, if consummated,
would result in any person beneficially owning 10% or more of any series of the
Common Stock, (ii) any direct or indirect merger, acquisition, amalgamation,
consolidation, share exchange, business combination, joint venture or other similar
transaction involving the Company or any of its Subsidiaries, which results in the
stockholders of the Company immediately preceding such transaction owning less than
51% of any series of the issued and outstanding voting or equity securities of the
Company after the consummation of such transaction, (iii) any sale, lease, exchange,
transfer, license (other than licenses in the ordinary course of business),
acquisition or disposition of all or substantially all of the assets of the Company
and its Subsidiaries, taken as a whole (measured by the lesser of book or fair market
value thereof), (iv) any liquidation, dissolution, recapitalization, extraordinary
dividend or other significant corporate reorganization of the Company or any of its
Subsidiaries, or (v) any issuance by the Company, other than the sale of the Shares
to the Purchaser, which involves the purchase and sale by any person, directly or
indirectly, of 10% or more of any series of the Common Stock at any time. Subject
to the terms and conditions of this Agreement, the Rights Offering and Subsequent
Offering shall not be deemed to be an Acquisition Proposal.
|
5.2.
|
|
Board of Directors
. The Purchaser and the Company agree that upon the Closing (i)
the initial Board of Directors upon the Closing shall be comprised of seven (7) directors and
(ii) subject to discussions with the appropriate regulatory authorities and compliance with
applicable law, the Purchaser shall have the right to nominate five (5) directors (the
Purchaser Nominees
), one of which Purchaser Nominees shall be the CEO/President of
the Company. The Purchaser shall provide the Company with the identities of the
|
A-35
|
|
Purchaser Nominees at least 20 calendar days before the Closing Date in order to provide
the Company with sufficient time to provide its stockholders with the notice required by
Exchange Act Rule 14f-1. On the Closing Date, the Company shall cause the resignation of
the directors to be identified by the Company prior to the Closing Date (the
Resigning Directors
). Pursuant to Section 223 of the Delaware General Corporate
Law and the Companys bylaws, immediately upon the resignation of the Resigning Directors,
the remaining directors shall appoint the Purchaser Nominees to the Board. Such Purchaser
Nominees shall serve as directors of the Company until the next annual meeting of the
stockholders. So long as the Purchaser holds more than 50% of the then issued and
outstanding Common Stock on a fully diluted basis, it shall have the right to nominate
two-thirds of the Board (rounded to the nearest whole number);
provided
,
however
, that nothing contained herein shall limit the rights of the Purchaser to
nominate or vote on the Board of Directors pursuant to applicable law. Subject to legal
and governance requirements regarding service as directors of the Company, the Board will
recommend to its stockholders the election of the Purchaser Nominees. Upon the death,
resignation, retirement, disqualification or removal from office of any Purchaser Nominee,
the Purchaser shall have right to designate a replacement, which replacement shall satisfy
all legal and governance requirements regarding service as a director of the Company. The
Purchaser shall have the same proportional representation on any committee or subcommittee
of the Board and board of directors of each of the Subsidiaries.
|
5.3.
|
|
Rights Offering and Subsequent Offering
. The Company shall, and the Purchaser hereby
acknowledges and agrees that the Company intends to conduct the Rights Offering concurrently
with or followed by the Subsequent Offering as soon as practical following execution and
delivery of this Agreement. The Company and Purchaser hereby agree that, in the aggregate, no
more than US $120 million will be raised from investors other than the Purchaser (the
Other Investors
) pursuant to the Rights Offering and the Subsequent Offering. The
Rights Offering shall involve the offer of the right to acquire shares of Common Stock to
Other Investors that are existing stockholders of the Company as of a record date set by the
Board and the Subsequent Offering shall involve a registered public offer and sale of shares
of Common Stock to the Other Investors. The price per share of Common Stock offered and sold
to investors in the Rights Offering and the Subsequent Offering shall not be less than the Per
Share Price. The Purchaser shall have the option, at its sole discretion, to purchase up to an
additional US $30 million of shares of Common Stock at the Per Share Price in accordance with
the terms of this Agreement.
|
5.4.
|
|
Restrictions on Sale and Purchase
. In connection with the Subsequent Offering, the
Company may offer and sell up to 4.9% of the shares of Common Stock (on a fully-diluted basis,
taking into account the Rights Offering and the Subsequent Offering) to any single investor or
group of investors acting together, other than the Purchaser. To the extent the Company
desires to offer and sell more than 4.9% of the shares of Common Stock (on a fully-diluted
basis, taking into account the Rights Offering and the
|
A-36
|
|
Subsequent Offering) to any single investor or group of investors acting together (other
than the Purchaser), it shall consult with the Purchaser. Notwithstanding the foregoing,
in no event shall the Company be permitted to offer and sell more than 9.9% of the shares
of Common Stock at any given time to any single investor or group of investor acting
together (other than the Purchaser) without the prior written consent of the Purchaser.
|
5.5.
|
|
Key Employees
. The Company shall use its commercially reasonable efforts to, and
shall cause its Subsidiaries to use their respective commercially reasonable efforts to,
continue to employ the executive officers of the Company and its Subsidiaries after the
Closing.
|
5.6.
|
|
Transfer Restrictions and Legend.
|
|
(a)
|
|
The Purchaser agrees that all certificates or other instruments
representing the Shares subject to this Agreement will bear a legend substantially to
the following effect:
|
|
|
|
|
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR SECURITIES LAWS OF ANY STATE AND MAY NOT
BE TRANSFERRED, OFFERED, SOLD OR OTHERWISE DISPOSED OF IN THE UNITED STATES OR TO
U.S. PERSONS, EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS AS EVIDENCED BY A LEGAL OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND ITS TRANSFER AGENT AND HEDGING
TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED BY THIS INSTRUMENT MAY NOT BE
CONDUCTED IN COMPLIANCE WITH THE SECURITIES ACT.
|
|
|
(b)
|
|
The Purchaser acknowledges that the Shares are being offered in a
transaction not involving any public offering within the United States within the
meaning of the Securities Act and that the Shares have not been registered under the
Securities Act or any other law of the United States and may not be sold except as
follows. The Purchaser agrees that, if in the future it decides to offer, resell,
pledge or otherwise transfer the Shares, prior to the date that is one year after the
later of the Closing and the last date on which the Company or any Affiliate of the
Company (or any predecessor thereto) was the owner of such Shares (the
Distribution Compliance Period
), such Shares may be offered, resold,
pledged or otherwise transferred only in accordance with the provisions of Reg S,
pursuant to registration under the Securities Act, or pursuant to an available
exemption from registration. The foregoing restrictions on resale will not apply
|
A-37
|
|
|
following the expiration of the Distribution Compliance Period. The Purchaser understands that the Transfer Agent for the Shares will not accept for
registration of transfer any Shares, except upon presentation of evidence
reasonably satisfactory to the Company and the Transfer Agent that the foregoing
restrictions on transfer have been complied with. The Purchaser acknowledges
that the Company reserves the right, prior to any offer, sale or other transfer
of the Shares prior to the Distribution Compliance Period, to require the
delivery of an opinion of counsel, certifications and/or other information
reasonably satisfactory to the Company in order to ensure compliance with the
transfer restrictions imposed by Reg S during the Distribution Compliance Period.
The Purchaser agrees not to engage in hedging transactions with regard to the
Shares unless in compliance with the Securities Act. The Purchaser further
understands that any certificates representing Shares acquired by the Purchaser
will bear a legend reflecting the substance of this paragraph.
|
|
(c)
|
|
Upon request of the Purchaser, upon receipt by the Company of an opinion of
counsel reasonably satisfactory to the Company to the effect that such legend is no
longer required under the Securities Act or applicable state laws, as the case may
be, the Company shall promptly cause the legend to be removed from any certificate
for any Shares to be so transferred.
|
5.7.
|
|
SEC Filings
. In connection with the offer and sale of the Shares, the Company agrees
to make any filings or submit any documents as may be required under the Securities Act and
the Exchange Act and the relevant blue sky laws.
|
|
5.8.
|
|
No Integration
. The Company shall not, and shall use its commercially reasonable
efforts to ensure that no Affiliate of the Company shall sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of
the Securities Act) that will be integrated with the offer or sale of the Shares in a manner
that would require the registration under the Securities Act of the sale of the Shares to the
Purchaser.
|
|
5.9.
|
|
Conduct of Business
. From the date hereof until the Closing Date, the Company shall
conduct its business and shall cause its Subsidiaries to conduct their respective businesses
in, and only in, the ordinary course of business and shall use, and shall cause its
Subsidiaries to preserve their respective present business organizations, operations, goodwill
and relationships with third parties. Without limiting the generality of the foregoing, from
the date hereof until the Closing Date, without the prior written consent of the Purchaser
(which consent shall not be unreasonably withheld or delayed), except as expressly permitted
or required by this Agreement or as may be required by any Governmental Entity, the Company
shall not or permit any of its Subsidiaries to do the following:
|
A-38
|
(a)
|
|
declare or pay any dividends on, or make other distributions in respect of,
any of its capital stock;
|
|
|
(b)
|
|
(i) split, combine or reclassify any shares of its capital stock or issue
or authorize or propose the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock; (ii) directly or indirectly
repurchase, redeem or otherwise acquire any shares of the capital stock of the
Company, or any securities convertible into or exercisable for any shares of the
capital stock of the Company, or, except pursuant to the Rights Offering, grant any
Person any right to acquire any shares of the capital stock of the Company; or (iii)
issue, deliver, sell, pledge or otherwise encumber or subject to any Lien (other than
Permitted Liens) or authorize or propose the issuance, delivery, sale, pledge or
encumbrance of or the imposition of any Lien (other than Permitted Liens) on, any
shares of its capital stock or any securities convertible into or exercisable for, or
any rights, warrants or options to acquire, any such shares, or enter into any
agreement with respect to any of the foregoing, except, in the case of clause (iii),
for the issuance of the Common Stock in the Subsequent Offering upon the exercise or
fulfillment of rights or options issued or existing pursuant to employee benefit
plans, programs or arrangements, all to the extent outstanding and in existence on
the date of this Agreement, and in accordance with their present terms;
|
|
|
(c)
|
|
amend its certificate of incorporation, by-laws or other similar governing
documents, or, except as provided in this Agreement, enter into a plan of
consolidation, merger, share exchange, reorganization or similar business combination
with or involving any other Person, or a letter of intent or agreement in principle
with respect thereto;
|
|
|
(d)
|
|
except for loans or commitments for loans that have previously been
approved by the Company prior to the date of this Agreement, (i) make or acquire any
loan or issue a commitment for any loan except for loans and commitments that are
made in the ordinary course of business and with a principal balance of US $2,000,000
or less, (ii) take any action that would result in any discretionary releases of
collateral or guarantees or otherwise restructure any loan or commitment for any loan
with a principal balance in excess of US $1,000,000, (iii) incur any indebtedness for
borrowed money other than deposit liabilities, Federal Home Loan Bank advances and
the FRB federal discount window and reverse repurchase agreements, in each case,
entered into in the ordinary course of business consistent with past practice and
with a final maturity of one year or less, or (iv) guarantee or agree to guarantee,
or endorse or assume responsibility for, the obligations of any Person (other than
the endorsement of checks and other negotiable instruments in the normal process of
collection, the issuance of standby letters of credit and trade letters of credit and
reimbursement of any of its Subsidiaries operating expenses, including, but not
limited to, tax payments and expenses related to the Transaction);
|
A-39
|
(e)
|
|
change its methods of accounting in effect at December 31, 2009 except as
required by changes in GAAP or regulatory accounting principles as concurred to by
the Companys independent auditors;
|
|
|
(f)
|
|
except for contractual obligations existing on the date hereof as set forth
in
Schedule 3.3(r)
, or in the case of non-executive officers and other
employees, for increases in salary or wages in the ordinary course of business, or
for payments pursuant to the Companys severance and retention plans as set forth in
Schedule 3.3(r)
: (i) increase the compensation or benefits of any present or
former director, officer or employee of the Company, (ii) establish, adopt, enter
into, amend or terminate any company employment benefit plan, except as required by
applicable law or as required to maintain qualification pursuant to the Code, or
(iii) grant any equity or equity based awards;
|
|
|
(g)
|
|
except for any sale, disposition or other transfer of certain real estate
owned having a value of US $1,000,000 or less, sell, license, lease, encumber, assign
or otherwise dispose of, or agree to sell, license, lease, encumber, assign or
otherwise dispose of, or abandon or fail to maintain any of its assets, properties or
other rights or agreements material to the business of the Company and its
Subsidiaries, except (i) sales of loans and investment securities in the ordinary
course of business, or (ii) pledges of assets to secure public deposits accepted in
the ordinary course of business;
|
|
|
(h)
|
|
enter into, create, renew, amend or terminate, fail to perform any material
obligations under, waive or release any material rights under or give notice of a
proposed renewal, amendment, waiver, release or termination of, any contract
agreement or lease to which the Company is a party or by which the Company or its
properties is bound that calls for aggregate annual payments of US $1,000,000 or
more; or make any material change in any of such contracts, agreements or leases,
other than the renewal in the ordinary course of business of any lease the term of
which expires prior to the Closing Date without material changes to the terms
thereof;
|
|
|
(i)
|
|
except pursuant to agreements or arrangements in effect on the date hereof
and previously provided to the Purchaser, pay, loan or advance any amount to, or
sell, transfer or lease any properties or assets (real, personal or mixed, tangible
or intangible) to, or enter into any agreement or arrangement with, any of its
officers or directors or any of their immediate family members or any affiliates or
associates (as such terms are defined under the Exchange Act) of any of its officers
or directors, except for and transactions in the ordinary course of business based on
criteria applied to and on substantially same terms as those offered to other
customers of the Company and its Subsidiaries;
|
|
|
(j)
|
|
other than in the ordinary course of business or as required by applicable
law, (i) make any material Tax election, (ii) file any amended Tax return with
|
A-40
|
|
|
respect to any material Tax, (iii) change any annual Tax accounting period, (iv)
enter into any closing agreement relating to any material Tax or (v) surrender
any right to claim a material Tax refund;
|
|
(k)
|
|
pay, discharge, settle, compromise or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or otherwise),
including taking any action to settle or compromise any litigation, in each case,
involving monetary damages in excess of US $1,000,000, other than the payment,
discharge, settlement, compromise or satisfaction (i) in the ordinary course of
business, (ii) with respect to the litigation disclosed in
Schedule 3.3(o)
,
or (iii) in accordance with their terms of liabilities reflected or reserved against
in, or contemplated by, the most recent consolidated financial statements (or the
notes thereto) in the SEC Reports filed prior to the date hereof, or agree or consent
to the issuance of any injunction, decree, order or judgment restricting or otherwise
affecting in any material manner its business or operations; and
|
|
|
(l)
|
|
authorize, commit or agree to do any of the foregoing actions.
|
|
(a)
|
|
Indemnification of Purchaser
. The Company will indemnify and hold
the Purchaser and its directors, officers, stockholders, members, employees and
agents (and any other Persons with a functionally equivalent role of a Person holding
such titles notwithstanding a lack of such title or any other title), each Person who
controls the Purchaser (within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act), and the directors, officers, stockholders, agents,
members or employees (and any other Persons with a functionally equivalent role of a
Person holding such titles notwithstanding a lack of such title or any other title)
of such controlling person (each, a
Purchaser Party
) harmless from any and
all losses, liabilities, obligations, claims, contingencies, damages, costs and
expenses, including all judgments, amounts paid in settlements, court costs and
reasonable attorneys fees and costs of investigation that any such Purchaser Party
may suffer or incur (collectively
Losses
) as a result of any breach of any
of the representations, warranties, covenants or agreements made by the Company in
this Agreement. The Company will not be liable to any Purchaser Party under this
Agreement to the extent, but only to the extent that Losses are attributable to any
Purchaser Partys breach of any of the representations, warranties, covenants or
agreements made by such Purchaser Party in this Agreement.
|
|
|
(b)
|
|
Conduct of Indemnification Proceedings
. Promptly after receipt by
any Purchaser Party of notice of any demand, claim or circumstances which would or
might give rise to a claim or the commencement of any action, proceeding or
investigation in respect of which indemnity may be sought pursuant to Section
|
A-41
|
|
|
5.10(a), such Purchaser Party shall promptly notify the Company in writing and
the Company shall assume the defense thereof, including the employment of counsel
reasonably satisfactory to such Indemnified Person, and shall assume the payment
of all fees and expenses in connection therewith;
provided
,
however
, that the failure of any Purchaser Party so to notify the Company
shall not relieve the Company of its obligations hereunder except to the extent
that the Company is actually and materially and adversely prejudiced by such
failure to notify. In any such proceeding, the Purchaser Party shall have the
right to retain its own counsel, but the fees and expenses of such counsel shall
be at the expense of such Purchaser Party unless: (i) the Company and the
Purchaser Party shall have mutually agreed to the retention of such counsel; (ii)
the Company shall have failed promptly to assume the defense of such proceeding
and to employ counsel reasonably satisfactory to such Purchaser Party in such
proceeding; or (iii) in the reasonable judgment of counsel to such Purchaser
Party, representation of both parties by the same counsel would be inappropriate
due to actual and material differing interests between them, in which case the
Company shall only be liable for the legal fees and expenses of one law firm for
all Indemnified Parties, taken together with regard to any single action or group
of related actions. The Company shall not be liable for any settlement of any
proceeding affected without its written consent, which consent shall not be
unreasonably withheld, delayed or conditioned. Without the prior written consent
of the Purchaser Party, which consent shall not be unreasonably withheld, delayed
or conditioned, the Company shall not effect any settlement of any pending or
threatened proceeding in respect of which any Purchaser Party is or could have
been a party and indemnity could have been sought hereunder by such Purchaser
Party, unless such settlement includes an unconditional release of such Purchaser
Party from all liability arising out of such proceeding. If the Company assumes
the defense of any claim, all Purchaser Parties seeking indemnification hereunder
shall use their reasonable commercial efforts to deliver to the Company copies of
all notices and documents (including court papers) received by the Company
relating to the claim, and any Indemnified Party shall reasonably cooperate in
the defense or prosecution of such claim.
|
|
|
(c)
|
|
The Company shall not be required to indemnify any Purchaser Party pursuant
to Section 5.10(a) with respect to any claim for indemnification for breach of
representations and warranties provided in Section 3.3 unless and until the aggregate
amount of all Losses incurred with respect to all claims pursuant to Section 5.10(a)
exceed $1,000,000 (the
Threshold Amount
);
provided
,
however
, in the event such Losses exceed the Threshold Amount, the Company
shall be responsible for the full amount of such Losses. Notwithstanding the
foregoing, the cumulative indemnification obligation of the Company to the Purchaser
and all of the Purchaser Parties for inaccuracies in or breaches of representations,
warranties, covenants and agreements set forth in this Agreement, shall in no event
exceed the Purchase Price.
|
A-42
|
(d)
|
|
Any claim for indemnification brought pursuant to this Section 5.10 for
breach of any representation or warranty can only be brought on or prior to the first
anniversary of the Closing Date (except that (i) claims for any breach of Sections
3.3(l), (r) and (y) may be brought after the Closing Date and prior to the
60
th
day after the expiration of the applicable periods of statute of
limitations) and (iii) claims for any breach of Sections 3.3(a)(i), (b)(i) and (g)
may be brought at any time after the Closing;
provided
that, where
applicable, if a notice of a claim for indemnification pursuant to this Section 5.10
for breach of any representation or warranty is brought prior to the end of such
period, then the obligation to indemnify in respect of such breach shall survive as
to such claim, until such claim shall have been finally resolved.
|
|
|
(e)
|
|
In the event of any transfer of the Shares to a third party (which for the
avoidance of doubt shall not include any Affiliate of the Purchaser), the Company
shall have no obligations under this Section 5.10 to the transferee. The indemnity
provided for in this Section 5.10 shall be the sole and exclusive monetary remedy of
Purchaser Parties after the Closing for any inaccuracy of any of the representations
and warranties contained in this Agreement or any other breach of any covenant or
agreement contained in this Agreement;
provided
that nothing herein shall
limit in any way any such parties remedies in respect of fraud in connection with
the transactions contemplated hereby.
|
|
|
(f)
|
|
Any indemnification payments pursuant to this Section 5.10 shall be treated
as an adjustment to the Purchase Price for the Shares for U.S. federal income and
applicable state and local Tax purposes, unless a different treatment is required by
applicable law.
|
ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING
6.1.
|
|
Conditions Precedent to the Obligations of the Purchaser to Purchase Shares
. The
obligation of the Purchaser to acquire Shares at the Closing is subject to the fulfillment to
the Purchasers reasonable satisfaction, on or prior to the Closing Date, of each of the
following conditions, any of which may be waived by the Purchaser:
|
|
(a)
|
|
Representations and Warranties
. The representations and warranties
of the Company set forth in this Agreement shall be true and correct (i) on and as of
the date hereof and (ii) on and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of the Closing Date
(except for representations and warranties that expressly speak only as of a specific
date or time which need only be true and correct as of such date or time) except in
each of cases (i) and (ii) for such failures of representations and warranties to be
true and correct (without giving effect to any materiality or Material Adverse Effect
qualification or standard contained
|
A-43
|
|
|
in any such warranties) which would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company.
|
|
(b)
|
|
Performance
. The Company shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by it at or
prior to the Closing Date.
|
|
|
(c)
|
|
No Injunction
. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any Governmental Entity of competent jurisdiction that prohibits the
consummation of the transactions contemplated by this Agreement.
|
|
|
(d)
|
|
Consents
. The Company and the Purchaser shall have obtained in a
timely fashion any and all consents, permits, approvals (including the Company
stockholders approval of the Stockholders Proposals), registrations and waivers
necessary for consummation of the purchase and sale of the Shares, all of which shall
be and remain so long as necessary in full force and effect.
|
|
|
(e)
|
|
Regulatory Approvals
. The Regulatory Approvals shall have been
obtained and shall remain in full force and effect, and all statutory waiting periods
applicable to the transactions contemplated hereby shall have expired or terminated.
|
|
|
(f)
|
|
Suspensions of Trading
. The Common Stock (i) shall be designated
for listing on the Principal Trading Market and (ii) shall not have been suspended,
as of the Closing Date, by the SEC or the Principal Trading Market from trading on
the Principal Trading Market.
|
|
|
(g)
|
|
Company Deliverables
. The Company shall have delivered the Company
Deliverables in accordance with Section 2.2(a).
|
|
|
(h)
|
|
Compliance Certificate
. The Company shall have delivered to the
Purchaser a certificate, dated as of Closing Date, and signed by its Chief Executive
Officer or its Chief Financial Officer, certifying to the fulfillment of the
conditions specified in Sections (a) and (b) in the form attached hereto as
Exhibit C
.
|
|
|
(i)
|
|
No Material Adverse Effect
. No Effect shall have occurred that has
had or would reasonably be expected to result in a Material Adverse Effect.
|
|
|
(j)
|
|
Termination
. This Agreement shall not have been terminated in
accordance with Section 7.1 herein.
|
6.2.
|
|
Conditions Precedent to the Obligations of the Company to sell Shares
. The Companys
obligation to sell and issue the Shares at the Closing is subject to the fulfillment to the
|
A-44
|
|
reasonable satisfaction of the Company on or prior to the Closing Date of the following
conditions, any of which may be waived by the Company:
|
|
(a)
|
|
Representations and Warranties
. The representations and warranties
of the Purchaser set forth in this Agreement shall be true and correct (i) on and as
of the date hereof and (ii) on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of the Closing
Date (except for representations and warranties that expressly speak only as of a
specific date or time which need only be true and correct as of such date or time)
except in each of cases (i) and (ii) for such failures of representations and
warranties to be true and correct (without giving effect to any materiality or
Material Adverse Effect qualification or standard contained in any such warranties)
which would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Purchaser.
|
|
|
(b)
|
|
Performance
. The Purchaser shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Purchaser at or prior to the Closing Date.
|
|
|
(c)
|
|
No Injunction
. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any Governmental Entity of competent jurisdiction that prohibits the
consummation of the transactions contemplated by this Agreement.
|
|
|
(d)
|
|
Consents
. The Company and the Purchaser shall have obtained in a
timely fashion any and all consents, permits, approvals (including the Company
stockholders approval of the Stockholders Proposals), registrations and waivers
necessary for consummation of the purchase and sale of the Shares, all of which shall
be and remain so long as necessary in full force and effect.
|
|
|
(e)
|
|
Regulatory Approvals
. The Regulatory Approvals shall have been
obtained and shall remain in full force and effect, and all statutory waiting periods
applicable to the transactions contemplated hereby shall have expired or terminated..
|
|
|
(f)
|
|
Purchaser Deliverables
. The Purchaser shall have delivered its
Purchaser Deliverables in accordance with Section 2.2(b).
|
|
|
(g)
|
|
Termination
. This Agreement shall not have been terminated in
accordance with Section 7.1 herein.
|
ARTICLE VII
TERMINATION
A-45
7.1.
|
|
Right of Termination
. This Agreement and the transactions contemplated hereby may be
terminated and abandoned at any time prior to or at the Closing, as follows, and in no other
manner:
|
|
(a)
|
|
By the mutual agreement of the Company and the Purchaser;
|
|
|
(b)
|
|
By either the Company or the Purchaser if the conditions precedent to such
partys obligations to close specified in Article VI hereof have not been met or
waived by the Outside Date,
provided
that a party shall not be entitled to
terminate this Agreement pursuant to this
Section 7.1(b)
, if the failure of
the Closing to occur by such date shall be due to the failure to perform or observe
the covenants or agreements of such party set forth herein by the party seeking to
terminate this Agreement;
|
|
|
(c)
|
|
By the Purchaser, if the Company shall have breached its obligations under
Section 5.1(a);
|
|
|
(d)
|
|
By the Company, to enter into an Acquisition Proposal.
|
|
|
(e)
|
|
By the Company or the Purchaser (i) upon being advised in writing by a
Governmental Entity (or in the case of the Company, the Purchaser) that any of the
Regulatory Approvals will not be granted or obtained on or prior to the Outside Date,
(ii) upon receipt of written notice that any Regulatory Approval has been denied, or
(iii) if the Purchaser has been requested to withdraw any regulatory application that
is required for the transactions contemplated hereby to be consummated
|
|
|
(f)
|
|
By the Purchaser if the Board of Directors of the Company (i) shall have
made an Adverse Recommendation Change which, has not subsequently been withdrawn,
(ii) shall have failed to make the Board Recommendation referred to in Section 4.1(c)
hereof, withdrawn such recommendation or modified or changed such recommendation in a
manner such that it would constitute an Adverse Recommendation Change, or (iii) shall
have breached its obligations under Section 4.1(c) hereof by failing to call, give
notice of, convene and hold a meeting of its stockholders to vote on the Stockholder
Proposals;
|
|
|
(g)
|
|
By the Company or the Purchaser, if the Company stockholders approval of
the Stockholder Proposals has not been obtained on or prior to the Outside Date.
|
|
|
(h)
|
|
By the Company or the Purchaser, upon written notice to the other party, in
the event a Governmental Entity of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any federal, state, or local law, constitution,
ordinance, code, rule of common law, regulation, statute or treaty or order,
permanent injunction, judgment, doctrine, decree, ruling, writ, assessment or
arbitration award, which is in effect and which prohibits or
|
A-46
|
|
|
makes illegal the consummation of the transactions contemplated by this Agreement
or materially alters the terms of this Agreement.
|
|
|
|
For the purposes of this Agreement, the term Outside Date shall mean July 31,
2010;
provided
,
however
, that such date shall be extended for
sixty (60) days (i) if the Company fails to obtain the stockholders approval of
the Stockholders Proposals by July 31, 2010 and both parties believe in good faith
that the stockholders approval will be secured by September 30, 2010, or (ii) if
the Purchaser fails to obtain the Regulatory Approvals by July 31, 2010 and the
Purchaser notifies the Company in writing that it believes in good faith that it
can secure the Regulatory Approvals by September 30, 2010.
|
7.2
|
|
Termination Fee
. The Company shall pay the Purchaser an amount equal to five percent
of the Purchase Price (the
Termination Fee
) no later than two (2) Business Days following
the events described below, by wire transfer of immediately available funds to an account specified
by the Purchaser in writing to the Company if:
|
(i) the Purchaser terminates this Agreement pursuant to Section 7.1(c) and the Company shall
have entered into an agreement with respect to an Acquisition Proposal within twelve months from
the date of such termination;
(ii) the Company terminates this Agreement pursuant to Section 7.1(d); or
(iii) the Purchaser terminates the Agreement pursuant to Section 7.1(f) and the Company shall
have entered into an agreement with respect to an Acquisition Proposal within twelve months from
the date of such termination.
7.3
|
|
Notice of Termination
. The power of termination provided for by Section 7.1 hereof may
be exercised only by a notice given in writing, as provided in Section 8.3 of this Agreement.
|
|
7.4
|
|
Effect of Termination
. If this Agreement is terminated and the transactions
contemplated by this Agreement are abandoned, either party will not have any liability or further
obligation under this Agreement (other than pursuant to Sections 7.2);
provided
,
however,
that any termination of this Agreement will not relieve a party from liability for
any breach by it of this Agreement prior to the date of the termination.
|
ARTICLE VIII
MISCELLANEOUS
8.1.
|
|
Fees and Expenses
. The Company and the Purchaser shall each pay the fees and
expenses of their respective advisers, counsel, accountants and other experts, if any, and all
other expenses incurred by such party in connection with the negotiation, preparation,
execution, delivery and performance of this Agreement. The Company shall pay all Transfer
Agent fees, stamp taxes and other taxes and duties levied in connection with the sale and
issuance of the Shares to the Purchaser.
|
A-47
8.2.
|
|
Entire Agreement
. This Agreement, together with the Exhibits and Schedules hereto,
contain the entire understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements, understandings, discussions and representations, oral or
written, with respect to such matters, which the parties acknowledge have been merged into
this Agreement and the Exhibits and Schedules. At or after the Closing, and without further
consideration, the Company and the Purchaser will execute and deliver to the other such
further documents as may be reasonably requested in order to give practical effect to the
intention of the parties under this Agreement.
|
8.3.
|
|
Notices
. Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (a) the date of transmission, if such notice or communication is delivered
via facsimile (provided the sender receives a machine-generated confirmation of successful
transmission) at the facsimile number specified in this Section prior to 5:00 p.m., Los
Angeles, California time, on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the facsimile
number specified in this Section on a day that is not a Trading Day or later than 5:00 p.m.,
Los Angeles, California time, on any Trading Day, (c) the Trading Day following the date of
mailing, if sent by U.S. nationally recognized overnight courier service with next day
delivery specified, or (d) upon actual receipt by the party to whom such notice is required to
be given. The address for such notices and communications shall be as follows:
|
|
|
|
If to the Company:
|
|
Hanmi Financial Corporation
3660 Wilshire Boulevard
Penthouse A
Los Angeles, California 90010
Telephone No.: (213) 427-5631
Facsimile No.: (213) 384-0990
Attention: Chairman of the Board of Directors
|
|
|
|
With a copy to:
|
|
Manatt, Phelps & Phillips, LLP
11355 West Olympic Boulevard
Los Angeles, California 90064
Attn: Gordon M. Bava, Esq. & Mark J. Kelson, Esq.
Facsimile: (310) 312-4224
|
|
|
|
If to a Purchaser:
|
|
Woori Finance Holdings Co. Ltd.
203, Hoehyeon-dong 1-ga, Jung-gu
Seoul 100-792
Telephone No.: (822) 2125-2222
Facsimile No.: (822) 2125-2291
Attention: Mr. Ki Hwa Jung
|
A-48
|
|
|
With a copy to:
|
|
Kim & Chang
Seyang Building
223 Naeja-dong. Jongno-gu, Seoul 110-720
Telephone No.: +82-2-3703-1283
Facsimile No.: +82-2-737-9091
Attention: Nelson K. Ahn, Esq. & Edward T. Kim, Esq.
|
or such other address as may be designated in writing hereafter, in the same manner, by such
Person.
8.4.
|
|
Amendments; Waivers; No Additional Consideration
. No provision of this Agreement may
be waived or amended except in a written instrument signed, in the case of an amendment, by
the Company and the Purchaser or, in the case of a waiver, by the party against whom
enforcement of any such waiver is sought. No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right.
|
|
8.5.
|
|
Construction
. The headings herein are for convenience only, do not constitute a part
of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The
language used in this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be applied against any
party. This Agreement shall be construed as if drafted jointly by the parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement or any of the Transaction Documents.
|
|
8.6.
|
|
Successors and Assigns
. The provisions of this Agreement shall inure to the benefit
of and be binding upon the parties and their successors and permitted assigns. This Agreement,
or any rights or obligations hereunder, may not be assigned by the Company or the Purchaser
without the prior written consent of the other party.
|
|
8.7.
|
|
No Third-Party Beneficiaries
. This Agreement is intended for the benefit of the
parties hereto and their respective successors and permitted assigns and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.
|
|
8.8.
|
|
Governing Law; Jurisdiction; and Venue
. This Agreement will be governed by and
construed in accordance with the laws of the State of Delaware applicable to contracts made
and to be performed entirely within such State. Each of the parties irrevocably agrees that
any legal action or proceeding with respect to this Agreement or for recognition or
enforcement of any judgment in respect of this Agreement shall be brought and determined
exclusively in the Delaware Court of Chancery and any state
|
A-49
|
|
appellate court therefrom within the State of Delaware. Each of the parties hereto
irrevocably submits with regard to any such action or proceeding for itself and in respect
of its property, generally and unconditionally, to the personal jurisdiction of such
courts and agrees that it will not bring any action relating to this Agreement in any
court other than the aforesaid courts. Each of the parties hereto irrevocably waives, and
agrees not to assert as a defense, counterclaim or otherwise, in any action or proceeding
with respect to this Agreement (a) any claim that it is not personally subject to the
jurisdiction of the above named courts for any reason, (b) any claim that it or its
property is exempt or immune from jurisdiction of any such court or from any legal process
commenced in such courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) to
the fullest extent permitted by the applicable law, any claim that (i) the suit, action or
proceeding in such court is brought in an inconvenient forum, (ii) the venue of such suit,
action or proceeding is improper or (iii) this Agreement or the subject matter hereof or
thereof, may not be not enforced in or by such courts. Each of the parties hereto
irrevocably consents to the service of process out of the Delaware Court of Chancery and
any state appellate court therefrom within the State of Delaware in any such action or
proceeding by the mailing of copies thereof by registered mail, postage prepaid, to its
address set forth in Section 7.7 of this Agreement, such service of process to be
effective upon acknowledgement of receipt of such registered mail. Nothing herein shall
affect the right of any party to serve process in any other manner permitted by applicable
law.
|
8.9.
|
|
Waiver of Jury Trial
. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY
|
|
8.10.
|
|
Survival
Each of the representations and warranties set forth in this Agreement
shall survive until the date that is the first anniversary of the Closing (or until final
resolution of any claim or action arising from the breach of any such representation and
warranty, if notice of such breach was provided prior to the end of such period) and
thereafter shall expire and have no further force and effect;
provided
, that the
representations and warranties set forth in
Sections 3.3(l)
,
(r)
and
(y)
shall survive until the 60th day after the expiration of the applicable periods of
statute of limitations and the representations and warranties set forth in
Sections
3.3(a)(i), (b)(i) and (g) shall survive indefinitely. Except as otherwise provided herein, all
covenants and agreements contained herein shall survive for the duration of any statutes of
limitations applicable thereto or until, by their respective terms, they are no longer
operative.
|
|
8.11.
|
|
Execution
. This Agreement may be executed in two or more counterparts, all of which
when taken together shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each party and delivered to the other party, it being
understood that both parties need not sign the same counterpart. In the event that any
signature is delivered by facsimile transmission, or by e-mail delivery of a
|
A-50
|
|
.pdf format data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same force and
effect as if such facsimile signature page were an original thereof.
|
8.12.
|
|
Severability
. If any provision of this Agreement is held to be invalid or
unenforceable in any respect, the validity and enforceability of the remaining terms and
provisions of this Agreement shall not in any way be affected or impaired thereby and the
parties will attempt to agree upon a valid and enforceable provision that is a reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this
Agreement.
|
|
8.13.
|
|
Specific Performance
. The parties agree that irreparable damage would occur in the
event that provisions contained in this Agreement are not performed in accordance with their
specific terms or were otherwise breached and that the parties would not have any adequate
remedy at law. It is accordingly agreed that the parties shall be entitled to an injunction
or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and
provisions of this Agreement (including the parties obligation to consummate this Agreement
subject to the terms of this Agreement) exclusively in the Delaware Court of Chancery and any
state appellate court therefrom within the State of Delaware. Any requirements for the
securing or posting of any bond with respect to any such remedy is hereby waived. The
foregoing is in addition to any other remedy to which any party is entitled to at law, in
equity or otherwise. Each of the parties hereto hereby waives any defenses in any action for
specific performance, including the defense that a remedy at law would be adequate. If any
party brings any action to enforce specifically the performance of the terms and provisions
hereof by any other party, the Outside Date shall automatically be extended by (x) the amount
of time during which such action is pending, plus twenty (20) business days or (y) such other
time period established by the Delaware court presiding over such action.
|
|
8.14.
|
|
Payment Set Aside
. To the extent that the Company makes a payment or payments to
the Purchaser pursuant to this Agreement or the Purchaser enforces or exercises its rights
thereunder, and such payment or payments or the proceeds of such enforcement or exercise or
any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set
aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise
restored to the Company, a trustee, receiver or any other person under any law (including,
without limitation, any bankruptcy law, state or federal law, common law or equitable cause of
action), then to the extent of any such restoration the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred.
|
|
8.15.
|
|
Rescission and Withdrawal Right
. Notwithstanding anything to the contrary contained
in (and without limiting any similar provisions of) this Agreement, whenever any Purchaser
exercises a right, election, demand or option under this Agreement and the
|
A-51
|
|
Company does not timely perform its related obligations within the periods therein
provided, then such Purchaser may rescind or withdraw, in its sole discretion from time to
time upon written notice to the Company, any relevant notice, demand or election in whole
or in part without prejudice to its future actions and rights.
|
8.16.
|
|
Public Announcements
. Subject to each partys disclosure obligations imposed by law
each of the parties hereto will cooperate with each other in the development and distribution
of all news releases and other public information disclosures with respect to this Agreement
and the transactions contemplated by this Agreement, and no party hereto will make any such
new release or public disclosure without first consulting with the other party hereto.
|
[Signature Page Follows]
A-52
IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be
duly executed by their respective authorized signatories as of the date first indicated above.
|
|
|
|
|
|
WOORI FINANCE HOLDINGS CO. LTD.
|
|
|
By:
|
/s/ Pal-Seung Lee
|
|
|
|
Pal-Seung Lee
|
|
|
|
Chairman and Chief Executive Officer
|
|
|
|
HANMI FINANCIAL CORPORATION
|
|
|
By:
|
/s/ Joseph K. Rho
|
|
|
|
Joseph K. Rho
|
|
|
|
Chairman of the Board
|
|
|
A-53
ANNEX B
FAIRNESS OPINION OF CAPPELLO
May 19, 2010
Special Committee of the Board of Directors
Hanmi Financial Corporation
3660 Wilshire Boulevard, Penthouse A
Los Angeles, CA 90010
Gentlemen:
You have requested our opinion as to the fairness, from a financial point of view, to the holders
of the common stock, par value $0.001 per share (Common Stock), of Hanmi Financial Corporation
(Hanmi), other than the Investors (as defined below), of the Investment Price (as defined below)
to be received by Hanmi in the Transaction (as defined below) contemplated by that certain
Securities Purchase Agreement (the SPA) to be entered into on or about the date hereof by Hanmi
and Woori Finance Holdings Co., Ltd. (Woori). All capitalized terms used but not defined herein
shall have the meanings assigned to them in the SPA.
As more specifically set forth in the SPA, and as further described to us by management of Hanmi,
(i) Woori will purchase from Hanmi (the Woori Purchase) 175 million shares of Common Stock at a
price of $1.20 per share (the Investment Price), for an aggregate purchase price of $210 million,
with an option to purchase up to an additional 25 million shares of Common Stock at the Investment
Price, for an additional aggregate purchase price of up to $30 million, and (ii) Hanmi may sell
additional shares of Common Stock, at a price per share of Common Stock no less than the Investment
Price, pursuant to a rights offering by Hanmi to holders of Common Stock and an additional offering
(such offerings, together with the Woori Purchase, the Transaction) by Hanmi to other investors
(Woori and any other purchasers of Common Stock in the Transaction being referred to herein as the
Investors). In the Transaction, the Investors will purchase Common Stock for an aggregate
purchase price of up to $330 million, of which no more than $120 million would be from Investors
other than Woori. Sales of shares of Common Stock in the Woori Purchase will be effected in a
manner exempt from the registration requirements under U.S. federal securities rules.
In the course of performing our review and analyses for rendering this opinion, we have:
|
|
|
reviewed a draft of the SPA dated May 19, 2010;
|
|
|
|
|
reviewed Hanmis Annual Reports to Stockholders and Annual Reports on Form 10-K for the
fiscal years ended December 31, 2007, 2008 and 2009, its quarterly report on Form 10-Q for the
period ended March 31, 2010, its Current Reports on Form 8-K filed since December 31, 2009, and
certain other publicly available business and financial information relating to Hanmi;
|
100 Wilshire Boulevard, Suite 1200, Santa Monica, California 90401
Telephone 310.393.6632 Fax 310.393.4838
FINRA SIPC
B-1
Special Committee of the Board of Directors
Hanmi Financial Corporation
May 19, 2010
Page 2
|
|
|
reviewed certain operating and financial information relating to Hanmis business and
prospects furnished by Hanmis management, including financial estimates and projections
furnished by Hanmis management (the Hanmi Projections);
|
|
|
|
|
met with Hanmis management to discuss Hanmis business, operations, historical and
projected financial results and future prospects;
|
|
|
|
|
reviewed the historical prices, trading multiples and trading volume of the shares of
Common Stock;
|
|
|
|
|
reviewed publicly available financial data, stock market performance data and trading
multiples of companies which we deemed similar to Hanmi in relevant aspects;
|
|
|
|
|
reviewed, to the extent publicly available, the financial terms of certain private
investments in public securities and other transactions which have recently been effected
or announced which we deemed similar to the Transaction in relevant aspects;
|
|
|
|
|
performed discounted cash flow analyses based on the Hanmi Projections;
|
|
|
|
|
reviewed estimates of and adjustments to the book value of Hanmis assets furnished by
Hanmis management (the Book Value Estimates);
|
|
|
|
|
reviewed the pro forma financial results, financial condition and capitalization of
Hanmi, giving effect to the Transaction;
|
|
|
|
|
participated in discussions and negotiations regarding the Transaction with Hanmi,
Woori and other interested parties; and
|
|
|
|
|
considered such other information, financial studies, analyses and investigations and
financial, economic and market criteria which we deemed appropriate.
|
In connection with our review, we have, with your consent, assumed and relied, without independent
investigation or verification, on the accuracy and completeness of all the foregoing information
and all other information provided to, discussed with or reviewed by us. With respect to the Hanmi
Projections and Book Value Estimates, Hanmis management has advised us, and we have assumed, with
your consent, that such projections and estimates have been reasonably prepared on bases reflecting
the best currently available estimates and judgments of the senior management of Hanmi as to the
expected future performance of Hanmi and the book value of Hanmis assets. We have, with your
consent, not assumed any responsibility for the independent verification of any such information
and we have further, with your consent, relied upon the assurance of the senior management of Hanmi
that they are unaware of any facts that would make the information, financial estimates and
projections incomplete or misleading. Without limiting the foregoing, we express no view as to the
Hanmi Projections or Book Value Estimates or the assumptions on which they were prepared.
We have assumed, with your consent, that, in the course of obtaining any regulatory or third party
consents, approvals or agreements in connection with the Transaction, no delay, limitation,
restriction or condition will be imposed that would have an adverse effect on the contemplated
benefits of the Transaction and that the Transaction will be consummated in accordance with the
terms of the draft of the SPA we have reviewed, without waiver, modification or amendment of any
material term, condition or agreement thereof. We have also assumed for purposes of this
B-2
Special Committee of the Board of Directors
Hanmi Financial Corporation
May 19, 2010
Page 3
opinion that the Transaction, including all sales of Common Stock in connection therewith, will be
consummated as of the date hereof.
We have not been requested to make, and have not made, any independent evaluation or appraisal of
the assets or liabilities (contingent or otherwise) of Hanmi, and we have not received any such
evaluations or appraisals, other than certain reports provided to us by Hanmis management with
respect to the book value of certain assets of Hanmi. Without limiting the foregoing, we have not
reviewed any of Hanmis loan files or Hanmis allowances for loan losses. In addition, we have not
evaluated or obtained any evaluations of, and this opinion does not address, the solvency, fair
value or viability of Hanmi or any other person under any state or federal laws relating to
bankruptcy, insolvency or similar matters.
Hanmis management has informed us that Hanmis wholly-owned banking subsidiary, Hanmi Bank, has
consented to a Final Order from the California Department of Financial Institutions, and that Hanmi
and Hanmi Bank have entered into a Written Agreement with the Federal Reserve Bank of San
Francisco, which require, among other things, that Hanmi Bank increase its capital and maintain
certain regulatory capital ratios prior to certain specified dates, including an increase of
contributed equity capital by not less than an additional $100 million by July 31, 2010. We have
assumed, with your consent, that failure to meet these requirements would lead to regulatory
actions that could have a material adverse impact on the value of Common Stock and could lead to a
regulatory liquidation or takeover that would render the Common Stock worthless.
Our opinion addresses only the fairness, from a financial point of view, as of the date hereof, to
the holders of Common Stock, other than the Investors, of the Investment Price to be received in
the Transaction, and does not address any other aspect or implication of the Transaction or any
other agreement, arrangement or understanding entered into in connection with the Transaction or
otherwise. Our opinion does not address any legal, tax, accounting or regulatory matters related
to the SPA or the Transaction or otherwise to Hanmi, as to which we have assumed that Hanmi, the
Special Committee and the Board of Directors of Hanmi have received such advice from relevant
advisors as each has determined appropriate, and we express no view as to the federal, state or
local tax consequences of the Transaction. Our opinion is subject to the assumptions and
conditions contained herein and is necessarily based upon the financial, economic, market and other
conditions as they exist and can be evaluated, and the information made available to us, as of the
date hereof. We expressly disclaim any obligation to update or otherwise revise our opinion or in
the event of, or to advise any person of, any change in any fact or matter affecting our opinion of
which we become aware after the date hereof. Our opinion does not address Hanmis underlying
business decision to pursue or proceed with the Transaction, nor does it address the relative
merits of the Transaction as compared to any alternative transactions or business strategies that
might exist for Hanmi or the effects of any
other transaction in which Hanmi might engage. We express no opinion as to the trading price or
range of prices of Common Stock at any time, including upon the announcement or consummation of the
Transaction.
We have acted as financial advisor to Hanmi in connection with the Transaction and will receive a
fee for our services, a significant portion of which is contingent upon the consummation of the
Transaction. We will also receive a fee for rendering this opinion. In addition, Hanmi has agreed
to indemnify us against certain liabilities and other items arising out of our engagement, both in
our capacity as financial advisor and in connection with the rendering of this opinion. From time
B-3
Special Committee of the Board of Directors
Hanmi Financial Corporation
May 19, 2010
Page 4
to time, we and our affiliates may in the future provide investment banking and other financial
services to Hanmi, Woori or the other Investors, for which we would expect to receive compensation.
We are a registered broker-dealer with the U.S. Securities and Exchange Commission and a member of
the Financial Industry Regulatory Authority.
It is understood that this letter is for the benefit and use of the Special Committee of the Board
of Directors of Hanmi in connection with its consideration of the Transaction, and that it may not
be used for any other purpose, or be reproduced, disseminated, quoted from or referred to at any
time, in whole or in part, without our prior written consent. This letter does not constitute a
recommendation to the Special Committee, the Board of Directors, any holder of Common Stock or any
other person as to how to vote or act on any matter relating to the proposed Transaction. In
addition, we have not been requested to opine as to, and our opinion does not address, the fairness
of the amount or nature of the compensation to any of Hanmis officers, directors or employees, or
class of such persons, relative to the compensation to be received by Hanmi or otherwise.
This opinion was reviewed and approved by Cappello Capital Corp.s fairness opinion review
committee.
Based upon and subject to the foregoing, it is our opinion that, as of the date hereof, the
Investment Price to be received by Hanmi in the Transaction is fair, from a financial point of
view, to the holders of Common Stock, other than the Investors.
|
|
|
|
|
Very truly yours,
CAPPELLO CAPITAL CORP.
|
|
|
By:
|
|
|
|
|
Managing Director
|
|
|
|
|
|
|
|
B-4
ANNEX C
FAIRNESS OPINION OF MCGLADREY CAPITAL MARKETS LLC
May 19, 2010
The Board of Directors
Hanmi Financial Corporation
3660 Wilshire Boulevard Penthouse A
Los Angeles, California 90010
Members of the Board of Directors:
You have requested our opinion as investment bankers as to the fairness, from a financial point of
view, to the shareholders of Hanmi Financial Corporation (Hanmi or the Company) of the price
paid per share of Hanmi Common Stock in a proposed offering of the Companys Common Stock at $1.20
per share (the Equity Offering). As part of the Equity Offering, Woori Finance Holdings Co., Ltd.
(Woori) will purchase through a private placement exempt from the registration requirements of
the U.S. Securities Act of 1933, as amended, 175,000,000 shares of Hanmi Common Stock at $1.20 per
share pursuant to the terms of the Securities Purchase Agreement (the Agreement) dated May 19,
2010.
McGladrey Capital Markets LLC (McGladrey) is a global provider of investment banking services to
owners, shareholders, boards of directors and managers of midsized private and public companies. As
part of our investment banking business, we are continually involved in the valuation of companies
in connection with mergers, acquisitions and private placements of equity and debt securities. We
have acted exclusively for the Board of Directors (the Board) of Hanmi in rendering this fairness
opinion and will receive a fee from Hanmi for our services. No portion of our fee is contingent
upon the successful completion of the Equity Offering.
In connection with this opinion, we have reviewed, analyzed and relied upon material addressing the
financial and operating condition of Hanmi, including among other things, the following: (i) the
Agreement; (ii) Annual Report to Stockholders and Form 10-K for the year ended December 31, 2009;
(iii) Quarterly Reports on Form 10-Q filed over the last twelve months; (iv), Reports on Form 8-K
filed over the last twelve months; and (v) other financial information concerning the business,
operations and financial condition of Hanmi furnished to us by the Company for purposes of our
analysis. We have also held discussions with management of Hanmi regarding current business
operations, regulatory relations, financial condition, future prospects and such other matters as
we have deemed relevant to our inquiry. In addition, we have compared certain financial and stock
market information for Hanmi with similar information for certain other companies the securities of
which are publicly traded, reviewed the financial terms of comparable transactions in the banking
industry, and performed such other studies and analysis as we considered appropriate.
In conducting our review and arriving at our opinion, we have relied upon the accuracy and
completeness of all of the financial and other information provided to us or publicly available and
we have not independently verified the accuracy or completeness of any such information or assumed
any responsibility for such verification or accuracy. We have relied upon the management of Hanmi
as to the reasonableness and achievability of the financial and operating forecasts and projections
(and the related assumptions) provided to us, and we have assumed that such forecasts and
projections reflect the best currently
575 Anton Boulevard, 11
th
Floor
Costa Mesa, CA 92626
Tel: 714.327.8800
Toll Free: 888.543.0711
Fax: 714.327.8850
www.mcgladreycm.com
C-1
available estimates and judgments of management. We are not experts in the independent
verification of the adequacy of allowances for loan losses and we have assumed the allowances for
loan losses for Hanmi are adequate to cover such losses. In rendering our opinion, we have not
obtained any evaluations or appraisals of the property or assets of Hanmi, nor have we examined any
individual credit files.
We have assumed that, in all respects material to our analyses, the following: (i) Equity Offering
will be completed substantially in accordance with the terms set forth in the Agreement; (ii) the
representations and warranties of each party in the Agreement and in all related documents and
instruments referred to in the Agreement are true and correct; (iii) each party to the Agreement
and all related documents will perform all of the covenants and agreements required to be performed
by such party under such documents; (iv) all conditions to the completion of the Equity Offering
will be satisfied without any waivers; and (v) in the course of obtaining the necessary regulatory,
contractual, or other consents or approvals for the Equity Offering, no restrictions will be
imposed that will have a material adverse effect on the future operating results or financial
condition of Hanmi.
We have considered such financial and other factors as we have deemed appropriate under the
circumstances, including, among others, the following: (i) the historical and current financial
position and operating results of Hanmi; (ii) the assets and liabilities of Hanmi; (iii) the
Boards consent to a Final Order from the California Department of Financial Institutions and the
Companys Written Agreement with the Federal Reserve Bank of California; and (iv) the terms of
certain other transactions involving banks and bank holding companies. We have also taken into
account our assessment of general economic, market and financial conditions and our overall
experience in other transactions, as well as our expertise in valuations of companies and related
securities. Our opinion is necessarily based upon conditions as they exist and can be evaluated on
the date hereof. Our opinion does not address the underlying business decision of Hanmi to proceed
with the Equity Offering or the relative merits of the Equity Offering as compared to any strategic
and financial alternatives that might be available to Hanmi.
Based upon and subject to the foregoing, it is our opinion that, as of the date hereof, the price
paid per share of Hanmi Common Stock in the Equity Offering is fair, from a financial point of
view, to the Companys shareholders.
Very Truly Yours,
/s/ McGladrey Capital Markets LLC
McGladrey Capital Markets LLC
|
|
|
|
|
|
Hanmi Financial Corporation Fairness Opinion
|
|
May 19, 2010
|
Page 2 of 2
|
|
|
C-2
INSTRUCTIONS FOR VOTING BY INTERNET, TELEPHONE OR MAIL
Hanmi Financial Corporation encourages you to take advantage of convenient
voting methods. Please take this opportunity to use one of the three voting
methods below. Voting is easier than ever. Proxies submitted by Internet or
telephone must be received no later than 11:59 p.m., California time, on July
27, 2010.
VOTE
BY INTERNET-www.investorvote.com/HAFC
Use the Internet to transmit your voting instructions and for electronic
delivery of information no later than 11:59 p.m., California time, on July 27,
2010. Have your proxy card in hand when you access the web site and follow the
instructions.
VOTE
BY TELEPHONE-1-800-652-8683
Use any touch-tone telephone to transmit your voting instructions no later than
11:59 p.m., California time, on July 27, 2010. Have your proxy card in hand
when you call and follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
we have provided, or return it to Hanmi Financial Corporation, c/o Investor
Relations; 3660 Wilshire Boulevard, Penthouse Suite A, Los Angeles, California
90010, (213) 382-2200. Proxy cards sent by mail must be received by July
27, 2010.
|
|
|
TO VOTE, MARK BLOCKS BELOW IN BLUE OR
BLACK INK AS FOLLOWS:
|
|
KEEP THIS PORTION FOR YOUR RECORDS
|
|
|
|
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
DETACH AND RETURN THIS PORTION ONLY
|
PROXY
HANMI FINANCIAL CORPORATION
ANNUAL MEETING OF STOCKHOLDERS JULY 28, 2010
The undersigned stockholder(s) of Hanmi Financial Corporation hereby nominates and appoints
Joon Hyung Lee and Judith Kim, and each of them, the attorney, agent, and proxy of the undersigned,
with full power of substitution, to vote all stock of Hanmi Financial Corporation that the
undersigned is entitled to vote at the Annual Meeting of Hanmi Financial Corporation to be held at
the Wilshire Grand Hotel, located at 930 Wilshire Boulevard, Los Angeles, California on Wednesday,
July 28, 2010, beginning at 10:30 a.m., California time, and at any adjournments or postponements
thereof, as fully and with the same force and effect as the undersigned might or could do if
personally present thereat, as follows:
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE OF FOR OUR BOARDS NOMINEES AND FOR PROPOSALS 2
THROUGH 5. THE PROXY SHALL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN. IF NO INSTRUCTIONS
ARE GIVEN, THE PROXY CONFERS AUTHORITY TO AND SHALL BE VOTED FOR OUR BOARDS NOMINEES AND FOR
PROPOSALS 2 THROUGH 5.
IF ANY OTHER BUSINESS IS PRESENTED AT THE ANNUAL MEETING, THIS PROXY SHALL BE VOTED IN
ACCORDANCE WITH THE RECOMMENDATIONS OF OUR BOARD OF DIRECTORS, OR, IF NO DIRECTION IS GIVEN, IN
ACCORDANCE WITH THE DISCRETION AND JUDGMENT OF THE PROXY HOLDERS.
THIS PROXY IS SOLICITED ON BEHALF OF OUR BOARD OF DIRECTORS AND MAY BE REVOKED PRIOR TO ITS
EXERCISE.
PLEASE SIGN AND DATE ON THE REVERSE SIDE.
6
DETACH PROXY CARD HERE
6
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE ANNUAL MEETING TO BE HELD ON JULY 28, 2010
This Proxy Statement for the Annual Meeting and our Annual Report for 2009 are available on
Hanmi Financial Corporations website at
www.hanmi.com
by clicking on Investor Relations,
then Corporate Governance, and then 2010 Proxy Information.
Our Board of Directors recommends a vote FOR all nominees.
1.
|
|
ELECTION OF DIRECTORS
To elect the following seven nominees to serve as Directors of Hanmi Financial Corporation for terms
expiring at the 2011 Annual Meeting of Stockholders, and in either case, to serve until their successors are elected and qualified.
|
|
|
|
|
|
|
|
Director Nominee:
|
|
I Joon Ahn
|
|
o
For
|
|
o
Withhold Authority to Vote
|
|
|
|
|
|
|
|
Director Nominee:
|
|
John A. Hall
|
|
o
For
|
|
o
Withhold Authority to Vote
|
|
|
|
|
|
|
|
Director Nominee:
|
|
Paul Seon-Hong Kim
|
|
o
For
|
|
o
Withhold Authority to Vote
|
|
|
|
|
|
|
|
Director Nominee:
|
|
Joon Hyung Lee
|
|
o
For
|
|
o
Withhold Authority to Vote
|
|
|
|
|
|
|
|
Director Nominee:
|
|
Joseph K. Rho
|
|
o
For
|
|
o
Withhold Authority to Vote
|
|
|
|
|
|
|
|
Director Nominee:
|
|
William Stolte
|
|
o
For
|
|
o
Withhold Authority to Vote
|
|
|
|
|
|
|
|
Director Nominee:
|
|
Jay S. Yoo
|
|
o
For
|
|
o
Withhold Authority to Vote
|
2.
|
|
AMENDMENT TO OUR CERTIFICATE OF INCORPORATION TO INCREASE OUR AUTHORIZED SHARES OF COMMON STOCK.
To approve a proposal
to amend our Amended and Restated Certificate of Incorporation to increase our authorized shares of common stock,
$0.001 par value, from 200,000,000 shares to 500,000,000 shares.
|
|
|
|
|
|
o
For
|
|
o
Against
|
|
o
Abstain
|
3.
|
|
ISSUANCE OF COMMON STOCK.
To approve, for purposes
of Nasdaq Rule 5635, the issuance of up to
200,000,000 shares of Hanmi Financial common stock
to Woori Finance Holdings Co. Ltd.
|
|
|
|
|
|
o
For
|
|
o
Against
|
|
o
Abstain
|
4.
|
|
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
. To ratify the appointment of
KPMG LLP as our independent registered public accounting firm for the fiscal year ending
December 31, 2010.
|
|
|
|
|
|
o
For
|
|
o
Against
|
|
o
Abstain
|
|
5.
|
|
ADJOURNMENT OF ANNUAL MEETING IF NECESSARY OR APPROPRIATE.
To approve the adjournment of
the annual meeting, if necessary or appropriate, to solicit additional proxies if there are
insufficient votes at the time of the annual meeting to adopt Proposals 1 through 4.
|
|
|
|
|
|
o
For
|
|
o
Against
|
|
o
Abstain
|
6.
|
|
OTHER BUSINESS
To transact such other business as may properly come before the Annual
Meeting and at any adjournments or postponements thereof. Management at present knows of no
other business to be presented by or on behalf of Hanmi Financial or its Board of Directors
at the Annual Meeting.
|
|
|
|
þ
Please mark votes as in this example.
|
|
I (We) do
o
do not
o
expect to attend
the Annual Meeting.
|
|
|
|
|
|
Number of Persons:
|
|
|
|
o
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW:
Please sign and date below.
|
|
|
|
|
Please Print Name
|
|
|
|
|
|
Please Print Name
|
|
|
|
|
|
Signature of Stockholder
|
|
|
|
|
|
Signature of Stockholder
|
|
|
|
|
|
(Please date this Proxy and sign your
name as it appears on your stock
certificates. Executors,
administrators, trustees, etc.,
should give their full duties. All
joint owners should sign.)
|
5
PLEASE DETACH HERE
5
You must detach this portion of the Proxy Card before returning it in the enclosed envelope.
Hanmi Financial (NASDAQ:HAFC)
Historical Stock Chart
From May 2024 to Jun 2024
Hanmi Financial (NASDAQ:HAFC)
Historical Stock Chart
From Jun 2023 to Jun 2024