EXHIBIT 10.2 EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into as of July 3,2003 by and between HANMI FINANCIAL CORPORATION, a Delaware corporation and HANMI BANK, a California banking corporation, located at 3660 Wilshire Blvd., PH-A, Los Angeles, CA 90010 (collectively referred to as the "Company") on one hand and JAE WHAN YOO, an individual ("Employee") on the other hand. WITNESSETH: WHEREAS, the Company desires to retain the services of Employee as President and Chief Executive Officer and Employee desires to render services to the Company as President and Chief Executive Officer; WHEREAS, the Company and Employee desire to set forth in this Agreement the terms and conditions of Employee's employment with the Company; NOW, THEREFORE, in consideration of the mutual promises and covenants herein contained, the parties agree as follows: 1. Term. Company agrees to employ Employee and Employee agrees to serve Company as President and Chief Executive Officer, in accordance with the terms of this Agreement, for a term of three (3) years, commencing July 1, 2003 and ending June 30, 2006, unless this Agreement is earlier terminated in accordance with the provisions of Paragraph 6, below. 2. Services and Exclusivitv of Services. So long as this Agreement shall continue in effect, Employee shall devote his full business time, energy and ability exclusively to the business, affairs and interests of Company and its subsidiaries and matters related thereto, shall use Employee's best efforts and abilities to promote the Company's interests, and shall perform the services contemplated by this Agreement in accordance with policies established by and under the direction of the Board of Directors of Company ("Board"). Employee agrees to faithfully and diligently promote the business, affairs and interests of Company. Without the prior express written authorization of the Board, Employee shall not, directly or indirectly, during the term of this Agreement: (a) render services to any other person or firm for compensation or (b) engage in any activity competitive with or adverse to the Company's business, whether alone, as a partner, or as an officer, director, employee, consultant or significant investor of or in any other entity. (An investment of greater than 1 % of the outstanding capital or equity securities of an entity shall be deemed significant for these purposes.) 3. Specific Position; Duties and Responsibilities. The Company and Employee agree that, subject to the provisions of this Agreement, the Company will employ Employee and Employee will serve Company as the President and Chief Executive Officer of Company for the duration of this Agreement. Employee agrees to observe and comply with the rules and regulations of Company respecting the performance of Employee's duties and agrees to carry out and perform orders, directions and policies of Company and its Board as they may be, from time to time, stated either orally or in writing. Employee shall have such corporate power and authority as shall reasonably be required to enable the discharge of duties as President and Chief Executive Officer of Company. For the term of this Agreement, Employee shall report to the Board. 4. Compensation. a) Base and Incentive Compensation During the term of this Agreement, beginning July 1, 2003, Company agrees to pay Employee a base salary (the "Base Salary") at the annual rate of $250,000.00, less withholdings. If employed in the second and third years under this Agreement, Company will provide Employee with a cost-of-living increase in an amount not to exceed five (5%) percent of Employee's previous year's base salary in each of the second and third years of employment. Employee shall not be entitled to or receive a director's fee for his services on the Board during the term of his employment at Company. b) Bonus Employee and the Company agree that they will continue to negotiate with regard to a bonus plan and stock option plan for Employee. Both parties agree to negotiate in good faith with regard to these two issues in an effort to reach a mutually agreeable resolution. If the parties are not able to reach a mutually agreeable resolution regarding Employee's bonuses and stock options within 60 days from the date of this Agreement, the entirety of this Agreement is avoidable at the will of either party. If either party exercises his or its right to void this Agreement pursuant to this paragraph, then the other party shall have no further obligations to the party voiding the Agreement from that date forward. c) Stock Options Employee and the Company agree that they will continue to negotiate with regard to a bonus plan and stock option plan for Employee. Both parties agree to negotiate in good faith with regard to these two issues in an effort to reach a mutually agreeable resolution. If the parties are not able to reach a mutually agreeable resolution regarding Employee's bonuses and stock options within 60 days from the date of this Agreement, the entirety of this Agreement is avoidable at the will of either party. If either party exercises his or its right to void this Agreement pursuant to this paragraph, then the other party shall have no further obligations to the party voiding the Agreement from that date forward. 5. Perquisites a) Automobile Allowance and Insurance Company will provide Employee with a suitable automobile for his use in the performance of his duties and shall pay all reasonable costs and expenses of maintaining and operating said automobile, including automobile liability insurance. Upon the termination of Employee's employment with Company, Employee shall return the automobile in good working condition, less normal wear and tear for reasonable usage of the automobile. b) Vacation Employee shall accrue 15 days of paid vacation annually. Employee shall take at least two consecutive weeks vacation during each year of his employment by the Company. Employee shall accrue a maximum of 22 & 1/2 days of vacation. Once Employee accrues 22 & 1/2 days of vacation, Employee shall cease accruing any additional vacation until Employee's vacation accrual falls below 22 & 1/2 days. c) Insurance Benefits Company shall provide Employee and Employee's spouse and dependent children, where applicable, at Company's expense, participation in accident and health insurance at no cost to Employee, and term life insurance benefits for Employee to the maximum benefits available under Company's Group Insurance program, except that term life insurance shall not be in excess of $150,000 for Employee. d) Professional Society Membership Company agrees to reimburse Employee for professional society memberships which are related to and enhance Employee's employment at the Company during Employee's employment at Company. e) Continuing Education Company agrees to reimburse Employee for continuing education which are related to and enhance Employee's employment at Company during Employee's employment at Company. f) Country Club Membership Company agrees to reimburse Employee for reasonable initiation fees and monthly dues related to a country club membership during Employee's employment at Company. The country club must be located in Los Angeles County or Orange County. 6. Termination. The compensation and other benefits and perquisites provided to Employee pursuant to this Agreement, and the employment of Employee by the Company, shall be terminated prior to expiration of the term of this Agreement as provided in this Section: a) Disability. In the event that Employee shall fail, because of illness, incapacity or injury which is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to Employee or Employee's legal representative (such agreement as to acceptability not to be withheld unreasonably) to render for three consecutive months or shorter periods aggregating 60 or more business days in any twelve (12)-month period, the services contemplated by this Agreement, Employee's employment hereunder may be terminated, as allowed by law. b) Death. In the event of Employee's death during the term of this Agreement, Employee's Base Salary and any other right or benefit shall terminate. c) Action by Supervisory Authority. If Company is ordered to remove, suspend, or take any other action against Employee (by an order issued under Section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act [12 U.S.C. 1818(e)(3) or (e)(4) or (g)(1)]), or Company is closed or in default (as defined in Section 3(x)(1) of the Federal Deposit Insurance Act [12 U.S.C. 1813(x)(1)]) or Company is taken over by the California State Department of Financial Institutions, the Federal Reserve, or the Federal Deposit Insurance Corporation, Company may immediately terminate this Agreement without further liability, compensation or obligation to Employee, except that Employee shall be entitled to his rights, if any, under Paragraph 4(c) hereof and the Stock Option Plan referred to therein. d) For Cause Employee's employment hereunder shall be terminated and all of his rights to receive Base Salary, Bonus or Stock Options under Paragraph 4 of the Agreement or any other benefit or perquisite provided to Employee under this Agreement except the payment of accrued but unused vacation, shall terminate upon a good faith determination by the Board that Employee is or has been personally dishonest, incompetent, or is engaging or has engaged in willful or negligent misconduct. e) Without Cause Notwithstanding any other provision in this Agreement to the contrary, the parties agree that either the Employee or the Company may terminate this Agreement, including any extensions thereto, without cause at any time. i. If Company terminates this Agreement without cause, upon such termination and upon Employee's execution of a general release agreement, the Company shall pay Employee his Base Salary, excluding any bonuses, for a period of six (6) months or for the remaining duration of the term of this Agreement, whichever is lesser. In no event will Employee be entitled to more than six months of his base salary upon termination. During this six-month period or the remainder of the term of the Agreement, whichever is less, Employee shall not be entitled to any other benefits or perquisites provided by this Agreement. ii. If the Company terminates this Agreement without cause, Employee shall also be entitled to all of his accrued but unused vacation leave at his then current daily salary rate. iii. If Employee terminates this Agreement without cause, Employee's base salary, bonus and all other benefits or perquisites provided by this Agreement shall immediately terminate on the date Employee terminates this Agreement. 7. Business Expenses. During the term of this Agreement, to the extent that such expenditures satisfy the criteria under the Internal Revenue Code for deductibility by Company (whether or not fully deductible by the Company) for federal income tax purposes as ordinary and necessary business expenses, Company shall reimburse Employee promptly for reasonable business expenditures, including travel, entertainment, parking, business meetings, and professional dues and dues associated with maintaining club memberships, so long as such expenses are properly documented by Employee to the satisfaction of Company and Board. 8. Miscellaneous. a) Succession; Survival. This Agreement shall inure to the benefit of and shall be binding upon Company, its successors and assigns, but without the prior written consent of Employee this Agreement may not be assigned other than in connection with a merger or sale of substantially all the assets of Company or a similar transaction in which the successor or assignee assumes (whether by operation of law or express assumption) all obligations of Company hereunder. The obligations and duties of Employee hereunder are personal and otherwise not assignable. Employee's obligations and representatives under this Agreement will survive the termination of Employee's employment, regardless of the manner of such termination. 9. Incorporation by Reference of Employee Handbook Policies and Stock Option Plan. This Agreement incorporates by reference all policies of Company contained in its Employee Handbook. Employee has acknowledged in writing the receipt of a copy of the Employee Handbook and agrees to comply with all such policies. To the extent that the terms of the Employee Handbook contradict or conflict with the terms of the Agreement, the terms of this Agreement shall prevail. This Agreement incorporates by reference the Stock Option Plan. 10. Entire Aqreement: Amendments This Agreement, along with any documents incorporated herein by reference, contains the entire agreement of the parties relating to the subject matter hereof and it supersedes any prior agreements, undertakings, commitments and practices relating to Employee's employment by Company. No amendment or modification of the terms of this Agreement shall be valid unless made in writing and signed by Employee and by Company. 11. Waiver No failure on the part of any party to exercise or delay in exercising any right hereunder shall be deemed a waiver thereof or of any other right, nor shall any single or partial exercise preclude any further or other exercise of such right or any other right. 12. Choice of Law This Agreement, the legal relations between the parties and any action, whether contractual or non-contractual, instituted by any party with respect to matters arising under or growing out of or in connection with or in respect of this Agreement, the relationship of the parties as employer and employee or the subject matter hereof shall be governed by and construed in accordance with the laws of the State of California applicable to contracts made and performed in such State and without regard to conflicts of law doctrines, to the extent permitted by law. 13. Attorneys' Fees If any dispute shall occur between Employee and the Company which arises out of an alleged breach of this Agreement or which seeks an interpretation of this Agreement, the prevailing party in any such dispute shall be entitled to recover all costs and expenses associated with such dispute, including reasonable attorneys' fees and costs. 14. Confidentiality: Proprietary Information Employee agrees to not make use of, divulge or otherwise disclose, directly or indirectly any trade secret or other confidential or proprietary information concerning the business (including but not limited to its products, employees, services, practices or policies) of Company or any of its affiliates of which Employee may learn or be aware as a result of Employee's employment during the Term of this Agreement except to the extent such use or disclosure is (i) necessary to the performance of this Agreement and in furtherance of Company's best interests, or (ii) required by applicable law. The provisions of this Paragraph 14 shall survive the expiration, suspension or termination, for any reason, of this Agreement. 15. Trade Secrets Employee, prior to and during the term of employment, has had and will have access to and become acquainted with various trade secrets including, but not limited to, software, plans, formulas, patterns, devices, secret inventions, processes, customer lists, employee information, contracts, and compilations of information, records and specifications, which are owned by Company and regularly used in the operation of their respective businesses and which may give Company an opportunity to obtain an advantage over competitors, who do not know or use such trade secrets. Employee agrees and acknowledges that Employee has been granted access to these valuable trade secrets only by virtue of the confidential relationship created by Employee's employment. Employee shall not disclose any of the aforesaid trade secrets, directly or indirectly, or use them in any way, either during the term of this Agreement or at any time thereafter, except as required in the course of employment by Company and for its benefit. All records, files, documents, drawings, specifications, software, equipment, and similar items relating to the business of Company or its affiliates, including without limitation all records relating to customers (the "Documents"), whether prepared by Employee or otherwise coming into Employee's possession, shall remain the exclusive property of Company or such affiliates and shall not be removed from the premises of Company or its affiliates under any circumstances whatsoever without the prior consent of the Board. Upon termination of employment for any reason, Employee agrees to promptly deliver to Company all Documents in the possession or under the control of Employee. 16. Inventions and Patents Except as may be limited by Section 2870 of the California Labor Code, all inventions, designs, improvements, patents, copyrights, and discoveries conceived by Employee during the term of this Agreement which are useful in or directly or indirectly related to the business of Company or to any experimental work carried on by Company, shall be the property of Company. Employee will promptly and fully disclose to Company all such inventions, designs, improvements, and discoveries (whether developed individually or with other persons) and shall take all steps necessary and reasonably required to assure Company's ownership thereof and to assist Company in protecting or defending Company's proprietary rights therein. Employee acknowledges hereby receipt of written notice from Company pursuant to Labor Code Section 2872 that this Agreement (to the extent it requires an assignment or offer to assign rights to any invention of Employee) does not apply fully to an invention which qualifies fully under California Labor Code Section 2870. The full text of Section 2870 is attached hereto as Exhibit "A." 17. Place of Employment The principal place of employment and the location of Employee's principal office shall be in Los Angeles, California. 18. Severabilitv If any provision of this Agreement is held to be illegal, invalid or unenforceable under existing or future laws effective during the term of this Agreement, such provisions shall be fully severable, the Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Agreement, and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal and enforceable. 19. Material Breach If Employee commits a material breach of this Agreement, all of Company's obligations to Employee pursuant to this Agreement shall immediately cease. 20. Section Headings Section and other headings contained in this Agreement are for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. 21. Unique Services: Specific Performance The parties hereto agree that the services to be rendered by Employee pursuant to this Agreement, and the rights and privileges granted to the Company pursuant to this Agreement, and the rights and privileges granted to Employee by virtue of his position, are of a special, unique, extraordinary and intellectual character, which gives them a peculiar value, the loss of which cannot be reasonably or adequately compensated in damages in any action at law, and that a breach by Employee of any of the terms of this Agreement will cause Company great and irreparable injury and damage. Employee and Company hereby expressly agree that either Employee or Company shall be entitled to the remedies of injunction, specific performance and other equitable relief to prevent a breach of this Agreement by the other. Without limiting the generality thereof, the parties expressly agree that Company and Employee shall be entitled to the equitable remedies set forth in this paragraph 20 for any violation of paragraphs 14, 15, 22, 23, and 24. This paragraph shall not be construed as a waiver of any other rights or remedies which Company or Employee may have for damages or otherwise. 22. Non-Competition Employee agrees that for a period of one (1) year after the termination of Employee's employment, Employee will not, directly or indirectly, compete against, or in any manner be connected with or employed by any individual, association or other entity that is in competition with Company's business in Los Angeles County. 23. Non-Solicitation Employee agrees that for a period of one (1) year after the termination of employment, Employee will not, on behalf of Employee or on behalf of any other individual, association or entity, call on any of the customers of Company for the purpose of soliciting or inducing any of such customers to acquire (or providing to any of such customers) any product or service provided by Company or a Related Company, nor will Employee in any way, directly or indirectly, as agent or otherwise, in any other manner solicit, influence or encourage such customers to take away or to divert or direct their business to Employee or any other person or entity by or with which Employee is employed, associated, affiliated or otherwise related. 24. No-Raidinq of Employees Employee agrees that for a period of one (1) year after the termination of Employee's employment, Employee will not, directly or indirectly, disrupt, damage, impair, or interfere with Company's business by soliciting, influencing, encouraging or recruiting any employee of Company to work for Employee or any entity with which Employee is affiliated or related. 25. Counterparts This Agreement and any amendment hereto may be executed in one or more counterparts. All of such counterparts shall constitute one and the same agreement and shall become effective when a copy signed by each party has been delivered to the other party. 26. Representation By Counsel; Interpretation Company and Employee each acknowledge that each party to this Agreement has been represented by counsel in connection with this Agreement and the matters contemplated by this Agreement. Accordingly, any rule of law, including but not limited to Section 1654 of the California Civil Code, or any legal decision that would require interpretation of any claimed ambiguities in this Agreement against the party that drafted it has no application and is expressly waived. The provisions of this Agreement shall be interpreted in a reasonable manner to effect the intent of the parties. 27. Arbitration. Except for any controversy or claim arising from a breach of the covenants in paragraphs 14, 15, 22, 23, and 24 of this Agreement, any controversy or claim arising out of or relating to this Agreement or the breach thereof, or arising out of or relating to Employee's employment or termination of employment shall be submitted and resolved by final and binding arbitration under the terms of the Federal Arbitration Act and in a manner consistent with the California Code of Civil Procedure (and the California Arbitration Act). Any arbitration shall be in accordance with and under the auspices and rules of the American Arbitration Association. The arbitrator shall be selected by mutual agreement of the parties. The arbitrator shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability, or formation of this Agreement including but not limited to any claim that all or any part of this Agreement is void or voidable. The arbitration process will begin upon service of a written request of the complaining party served on the other within the appropriate statute of limitations as prescribed by law. Service of the written request shall be made only by certified mail, with a return receipt requested at the addresses listed below. The Arbitrator shall be neutral and shall have no authority to alter, amend, modify or change any of the terms of this Agreement. Upon conclusion of the arbitration, the arbitrator shall issue a written decision setting forth the reasons for his or her award. The decision of the Arbitrator shall be final and binding and judgment thereon may be entered in any court having jurisdiction thereof. Should Employee initiate an action in arbitration pursuant to this Paragraph, Employee shall be required to pay a fee no greater than what he would be required to pay to file an action in court. The remaining arbitration fees and costs shall be borne by the Company, except as allowed by law. Attorneys' fees shall be awarded to the prevailing party pursuant to paragraph 13 of this Agreement for any and all contractual claims. Otherwise, each party shall bear his or its own attorneys' fees, unless otherwise provided for by applicable law. The parties intend that this arbitration procedure is mandatory and shall be the exclusive means of resolving all disputes between Employee and Company and/or Company's employees, directors, officers or managers involving or arising out of this Agreement, the parties' employment relationship and/or the termination of that relationship including, but not limited to any controversies or claims pertaining to wrongful discharge and alleged violations of the covenant of good faith and fair dealing, implied contracts and/or public policies or anti-discrimination statutes. Employee and Company expressly acknowledge and understand that, as a result of this agreement to arbitrate, they are giving up their right to trial by a jury. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. DATED: July 3,2003 /s/ Jae Whan Yoo ---------------------------------- HANMI BANK JAE WHAN YOO Its: Chief Executive Officer DATED: July 3, 2003 /s/ Chang Kyu Park ---------------------------------- HANMI FINANCIAL CORPORATION HANMI BANK By: CHANG KYU PARK Its: Chairman, Board of Directors AMENDMENT TO EMPLOYMENT AGREEMENT THIS AMENDMENT TO EMPLOYMENT AGREEMENT ("Amendment") is entered into this 10th of December, 2003, between Jae Whan Yoo, an individual ("Employee") on the one hand, and Hanmi Financial Corporation, a Delaware corporation and Hanmi Bank, a California banking corporation located at 3660 Wilshire Blvd., PH-A, Los Angeles, CA 90010 (collectively referred to as the "Company"), on the other hand. RECITALS A. WHEREAS, Employee and the Company entered into an Employment Agreement (the "Agreement"), dated July 3, 2003; B. WHEREAS, Paragraphs 4(b) and 4(c) of the Agreement provide that Employee and the Company shall continue to negotiate in good faith with regard to a bonus plan and stock option plan for Employee; C. WHEREAS, Employee and the Company have continued to negotiate in good faith with regard to a bonus plan and stock option plan for Employee; D. WHEREAS, Employee and the Company have agreed on a bonus plan and stock option plan for Employee; NOW THEREFORE, Employee and the Company hereby agree as follows: AGREEMENT 1. Paragraph 4(b) of the Agreement shall be amended as follows: "After commencement of the term of this Agreement on July 1, 2003, Employee shall be eligible for a bonus at the end of each fiscal year of employment in the amount of four percent (4%) of the amount of Hanmi Bank's (and not Hanmi Financial Corporation's) pre-tax profits which exceed twenty percent (20%) of the primary capital of that year. In no event shall Employee's bonus exceed seventy-five percent (75%) of Employee's annual Base Salary in the year in which he is eligible for a bonus. There shall be no other bonuses. If Employee is employed less than a full fiscal year, the bonus will be paid to Employee on a pro-rata basis for that portion of the fiscal year in which Employee was employed as Chief Executive Officer. It is the obligation of Hanmi Bank, and not Hanmi Financial Corporation, to pay any bonus owed to Employee pursuant to this Paragraph. Pre-Tax Profit Determination The computation of Hanmi Bank's pre-tax profit shall be determined by Hanmi Bank's outside auditors and certified public accountants as approved by the Board. The computation of Hanmi Bank's pre-tax profit shall be conclusive and binding on Hanmi Bank and Employee. In the event of a dispute under this Section, the sole determination by the arbitrator shall be whether the pre-tax profit was determined in conformity with this paragraph -- i.e., whether the pre-tax profit was determined by Hanmi Bank's outside auditors and certified public accountants, and was approved by the Board." 2. Paragraph 4(c) of the Agreement shall be amended as follows: "Pursuant to and subject to the terms of Financial Corporation's Stock Option Plan, for the term of this Agreement, Hanmi Financial Corporation (and not Hanmi Bank) will grant Employee a stock option consisting of a maximum total of forty thousand (40,000) shares of Financial Corporation's common stock at the market price at the time of grant. The option will vest as follows over the three year term of this Agreement: 13,334 shares on July 3, 2003, and 13,333 shares on July 3, 2004 and July 3, 2005 respectively, and shall be exercisable at the time of each grant. Any such option will be subject to all of the terms and provisions of Hanmi Financial Corporation's Stock Option Plan and the form of Stock Option Agreement to be executed by Hanmi Financial Corporation and Employee, which Stock Option Plan and Stock Option Agreement are incorporated in full into this Agreement. Should Employee be terminated without cause, this option shall expire no later than ninety (90) days after such termination. Should Employee be terminated for cause, this option shall expire immediately. Reference should be made to Hanmi Financial Corporation's Stock Option Plan and form of Stock Option Agreement for full and complete terms and conditions governing stock option to be granted." 3. All other terms and conditions of the Agreement shall remain in full force and effect. 4. This Amendment, along with the Agreement, contain all the terms and conditions agreed upon by the parties hereto regarding the subject matter of this Amendment and the Agreement. Any prior agreements, promises, negotiations, or representations, either oral or written, relating to the subject matter of this Amendment or the Agreement not expressly set forth in this Amendment or the Agreement are of no force or effect. 5. Any waiver, alteration or modification of any of the terms of this Amendment shall be valid only if made in writing and signed by the parties hereto. Each party hereto, from time to time, may waive his/her or its rights hereunder without affecting a waiver with respect to any subsequent occurrences or transactions under this Amendment. IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first above written. HANMI FINANCIAL CORPORATION HANMI BANK HANMI BANK /s/ Chang Kyu Park /s/ Jae Whan Yoo - ---------------------------------- -------------------------------- By: Chang Kyu Park By: Jae Whan Yoo Its: Chairman, Board of Directors Its: Chief Executive Officer