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AMENDED AND RESTATED TERM SHEET
This Amended and Restated Term Sheet (this "Amended and Restated Term Sheet") is
made and entered into by and among HANMI FINANCIAL CORPORATION, a Delaware
corporation and registered bank holding company with its principal offices in
Los Angeles, California (the "Company"), LEADING INVESTMENT & SECURITIES CO.,
LTD., a Korean corporation with its principal offices in Seoul, Korea
("Leading") and IWL PARTNERS LLC, a Korean company with its principal offices in
Seoul, Korea ("IWL Partners," and collectively with the Company and Leading, the
"Parties").
WHEREAS, the Parties hereto have amended a Term Sheet dated as of May 28, 2009
(the "Term Sheet") on August 5, 2009, outlining the terms and conditions of the
proposed investments by Leading and IWL in newly issued common stock of the
Company;
WHEREAS, the Company and Leading entered into a Securities Purchase Agreement
(the "SPA") dated as of June 12, 2009 pursuant to which the Company has agreed
to issue and Leading has agreed to purchase certain number of shares of the
common stock of the Company, as contemplated by the Term Sheet;
WHEREAS, the Company and Leading have subsequently amended the SPA on July 31,
2009 to, among others, extend the closing date of the Leading Investment and
Additional Leading Investment to September 30, 2009; and
WHEREAS, the Company and Leading have consummated the Leading Investment (as
defined below) as of September 4, 2009.
NOW, THEREFORE, in consideration of the mutual covenants contained in this
Amended and Restated Term Sheet, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the Parties hereby
agree to amend and restate the Term Sheet, as amended, as follows:
Section A. Introduction
Transactions Leading will purchase:
(i) shares of newly issued common stock of the Company in
an amount equal to 9.9% of the total outstanding common
stock of the Company on a fully diluted basis at a
price per share equal to $1.37 (the "Leading
Investment"); and
(ii) shares of newly issued common stock of the Company in
an amount, which together with the Leading Investment,
will equal to 14.9% of the total outstanding common
stock of the Company on a fully diluted basis at a
price per share equal to $1.37 (the "Additional Leading
Investment"), subject to receipt of the regulatory
approval and/or confirmation described in the section
of this Amended and Restated Term Sheet entitled
"Leading
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Investment and Additional Investment Closing" on or
before September 30, 2009.
Subject to satisfactory due diligence and price and other
terms and conditions set forth herein, the Parties agree to
negotiate in good faith the purchase by IWL Partners
(including its affiliates and/or one or more investment
vehicles to be established and managed by IWL Partners or
one or more co-investors introduced by IWL Partners
(collectively, "IWL")) of shares of newly issued common
stock of the Company in an amount equal to $100 million less
the total aggregate dollar amount of the Leading Investment
and Additional Leading Investment (if any) made by Leading
(the "IWL Investment," together with the Leading Investment
and Additional Leading Investment, the "Proposed
Transaction").
In connection with the closing of the IWL Investment, the
Board will be re-constituted. See the section of this
Amended and Restated Term Sheet entitled "Composition of the
Board; Committees" below.
Tax, Other The Parties intend to structure the Proposed Transaction
Treatment from an efficient tax, accounting, and legal perspective.
Amended and This Amended and Restated Term Sheet is an expression of the
Restated Term present mutual intent only of the Parties with respect to
Sheet Not Binding the Proposed Transaction that are the subject hereof, and,
except for the sections of this Amended and Restated Term
Sheet entitled (i) Amended and Restated Term Sheet Not
Binding, (ii) Transaction Expenses, (iii) Exclusive Dealing
Undertaking, (iv) Publicity, and (iv) Governing Law, the
Parties agree and acknowledge that this Amended and Restated
Term Sheet is not intended to be binding on IWL, Leading,
the Company or any of their respective subsidiaries,
affiliates, advisors, or representatives. Legally binding
obligations of the Parties will only arise from the
definitive agreement or agreements negotiated by the Parties
and approved by their respective boards of directors. The
definitive agreement or agreements will include other terms
and provisions customary for transactions of this type.
Section B. Leading Investment, Additional Leading Investment
and IWL Investment
Leading Investment; The Parties intend that the Leading Investment and
Passive Investment Additional Leading Investment will be structured to meet the
passive equity investment policy of the Federal Reserve
Board. The Leading Investment will not be conditioned on the
consummation of the Additional Leading Investment or IWL
Investment, and the Parties shall use commercially
reasonable efforts to negotiate and document the terms and
conditions of the Leading Investment and Additional Leading
Investment (the "Leading Investment Agreement") within 10
business days of the execution of this Amended and Restated
Term Sheet.
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The Leading Investment Agreement shall contain, among other
provisions, customary representations and warranties of the
Company and conditions to closing, including a
representation that the proceeds of the Proposed Transaction
will be sufficient for the Company (and its subsidiary bank)
to meet all applicable regulatory capital guidelines.
Leading Investment The closing of the Leading Investment is subject to receipt
and Additional by Leading of written or oral confirmation:
Leading Investment
Closing (i) From the Federal Reserve Board or the Federal Reserve
Bank of San Francisco that the Leading Investment (A)
will not require a change-of-control notice under the
Change in Bank Control Act ("Change-of-Control
Notice"), and (B) will not require a registration under
the Bank Holding Company Act of 1956, as amended ("BHC
Registration"); and
(ii) From the California Department of Financial
Institutions ("CDFI") that the Leading Investment will
not require a change-of-control application or other
application or notice to CDFI.
The closing of the Additional Leading Investment will be no
later than September 30, 2009 and is subject to receipt by
Leading of the following regulatory approval(s) and/or
confirmation(s), including, without limitation:
(i) Either a confirmation from CDFI that the Additional
Leading Investment (together with the Leading
Investment) will not require a change-of-control
application or other application or notice, or approval
by CDFI of such application or notice; and
(ii) Approval by the Federal Reserve Board or the Federal
Reserve Bank of San Francisco of a change-of-control
notice pursuant to the Change in Bank Control Act
and/or BHC Registration; and
(iii) Approval by the Financial Services Commission of the
Leading Investment and Additional Leading Investment.
The Parties shall use their commercially reasonable efforts
(i) to secure all relevant confirmations and approvals as
promptly as possible, following the execution of this
Amended and Restated Term Sheet, and (ii) to consummate the
Leading Investment and Additional Leading Investment as
promptly as possible following the execution of the Leading
Investment Agreement.
Non-Solicitation; The definitive agreement relating to the IWL Investment (the
Break-Up Fee "IWL Investment Agreement"), together with the Leading
Investment
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Agreement will be referred to herein as the "Definitive
Documentation". The Definitive Documentation shall include a
non-solicitation provision in customary form that is
mutually agreeable to the Parties and consistent with the
fiduciary duties of the Board. The IWL Investment Agreement
will provide for payment to IWL of a break-up fee of $3
million and the reimbursement of the Transaction Expenses
(defined below) in the event the Company terminates the
Proposed Transaction upon the acceptance by the Company of
any Competing Proposal (as defined below).
IWL Investment The closing of the IWL Investment is expected to occur on or
Closing before December 31, 2009, subject to completion of
satisfactory due diligence review of the Company and its
subsidiaries by IWL, Leading and its advisors and the
negotiation of the IWL Investment Agreement containing
provisions consistent with the terms hereof and other terms
and customary representations and warranties and conditions
to closing and receipt of all regulatory and third party
approvals.
Registration The offer, sale and purchase of common stock in the Proposed
Rights Transaction will be made in reliance on an exemption from
the registration requirements of the applicable federal and
state securities laws and regulations, including Section
4(2) of the Securities Act of 1933, as amended, and
Regulation D promulgated thereunder. IWL and Leading will be
granted mandatory and other customary demand and piggyback
registration rights on Form S-3.
Preemptive Rights IWL and Leading shall have the right, in the event the
Company proposes to offer any equity securities, including
convertible debt or preferred stock to any person, to
purchase on a pro rata basis all or any portion of such
securities.
Section C. Corporate Governance; Employee Matters
Composition of the Upon the closing of the IWL Investment, and subject to
Board; discussions with the appropriate regulatory authorities,
Committees the Board will be re-constituted. The Board will have up to
11 members, consisting of up to 6 members nominated by XXX,
the CEO and President of the Company's bank subsidiary and
up to 4 members nominated by the current shareholders of the
Company.
IWL will also have the right to have the same proportionate
representation on the committees of the Board and the board
of directors of the Company's bank subsidiary.
Election of XXX, as the holder of a majority of the outstanding shares
Directors of the common stock of the Company upon consummation of the
Proposed Transaction, will have the right to have elected a
majority of the members of the Board, and the closing of the
Proposed Transaction will be conditioned on the Board being
re-constituted in that regard. Between execution and
closing,
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the Parties will work together in good faith to ensure that,
upon closing, the Company will have a Board that has a
manageable number of members who are expected to continue as
directors so as to allow IWL to have seated a majority of
the Board members.
Officers The senior executive level management of the Company and the
Company's banking subsidiary in place immediately prior to
the closing shall remain in place until the Board, acting by
majority vote, takes action (if any) to change such
management or to add any such senior executive level
officers as the Board determines in its discretion is
advisable.
Employment Arrangements In conjunction with the closing of the IWL
Investment, certain key employees of the Company will enter
into or be subject to existing terms of employment
satisfactory to IWL.
Section D. Implementation Process
Approval by the The Parties understand that the Leading Investment and
Board and Additional Leading Investment will not require the approval
Shareholders of the shareholders of the Company. If the Proposed
Transaction is approved by the Board, it shall be submitted
by the Board to the Company's shareholders for a vote at a
meeting (the "Shareholder Meeting") to be held on a date to
be agreed on by the Parties. At the Shareholder Meeting, the
shareholders shall vote on approval of the IWL Investment,
any related amendments that are required to be made to the
Company's certificate of incorporation and any other matters
necessary to implement the IWL Investment that require
shareholder approval. The Company, in consultation with the
IWL, shall prepare a proxy statement for distribution to the
shareholders in connection with such meeting (the "Proxy
Statement").
Regulatory As soon as practicable following the execution of the IWL
Approvals Investment Agreement, the Parties shall seek all regulatory
and other third party approvals required for the
implementation of the IWL Investment, including, without
limitation, any approvals required by the Federal Reserve
Board and CDFI, any approval required by Financial Services
Commission and Financial Supervisory Service of Korea, any
approvals required from the FINRA (formerly NASD) in respect
of a change of control of the Company and all home country,
state and Federal bank regulatory authorities. The Parties
shall also cooperate in making any necessary filings with
the SEC, any exchange or quotation system on which the stock
is traded or quoted, and any other applicable governmental
authorities, including banking authorities. Consummation of
the Additional Leading Investment and IWL Investment shall
be conditioned on, among other things, obtaining all such
required approvals.
Other Third Party As soon as practicable following the execution of the
Approvals Definitive
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Documentation, the Parties shall seek the approval of any
third parties with which the Company and its subsidiaries
have outstanding credit facilities, leases or other
contracts, to the extent that such approval is required (or
reasonably deemed advisable by IWL or Leading) for the
implementation of the Proposed Transaction. Consummation of
the Leading Investment, Additional Leading Investment and
IWL Investment shall be conditioned on obtaining all such
approvals that are determined to be material.
Section E. Miscellaneous
Transaction The reasonable legal and advisory fees and expenses subject
Expenses to a cap of $500,000 incurred by IWL and/or Leading in
connection with the planning, negotiation, and
implementation of the Proposed Transaction (the "Transaction
Expenses"), including, without limitation, fees of counsel
and any financial, accounting, or other advisors and
consultants, shall be paid by the Company to IWL and/or
Leading (x) at the closing of the Proposed Transaction, (y)
upon the acceptance by the Company of any Competing Proposal
(as defined below) or (z) in the event the Company breaches
the Exclusive Dealing Undertaking. For the avoidance of
doubt, the Company shall not become obligated for any
Transaction Expenses prior to the execution of this Amended
and Restated Term Sheet.
Exclusive Dealing The Company agrees that through September 30, 2009, it shall
Undertaking not and that it shall cause its subsidiaries and
representatives not to: (i) communicate with nor provide any
information in its possession to any person or party (a
"Competing Party") with respect to development of a
competing proposal for a recapitalization transaction or any
other form of investment in, or business combination with,
the Company or any of its subsidiaries (a "Competing
Proposal"), or (ii) solicit any Competing Proposal from any
Competing Party. In the event the Company breaches the terms
of this provision, it shall reimburse Transaction Expenses
of IWL and Leading.
Publicity All press releases and public announcements relating to the
transactions contemplated by this Amended and Restated Term
Sheet will be prepared and be agreed to jointly by IWL,
Leading and the Company and no party will issue any press
release or public announcement without the approval of the
other party.
Governing Law This Amended and Restated Term Sheet and the Definitive
Documentation will be governed by California law.
[Signature Page Follows]
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Xxxxxx and accepted as of
14th day of September 2009:
IWL Partners
By: /s/ Xxx Xxxx Xxxx
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Name: Xxx Xxxx Park
Title: Vice Chairman and Chief
Executive Officer
Leading Investment & Securities Co.,
Ltd.
By: /s/ Cheul Park
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Name: Cheul Park
Title: Chairman and Chief
Executive Officer
Hanmi Financial Corp.
By: /s/ Xxx X. Xxx
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Name: Xxx X. Xxx
Title: President and Chief
Executive Officer
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