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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made this 16th day of January 2007 between
Center Financial Corporation ("Center Financial"), a California
Corporation; Center Bank (the "Bank"), a California banking
corporation (collectively referred to as the "Company" unless the
context otherwise requires); both having their principal place of
business at 3435 Wilshire Boulevard, California 90010; and Jae Whan
Yoo ("Executive"), whose residence address is [intentionally
omitted].
W I T N E S S E T H
WHEREAS, the Company desires to avail itself of the skill,
knowledge and experience of Executive in order to insure the
successful management of its business;
WHEREAS, the parties hereto desire to specify the terms
controlling Executive’s employment by the Company;
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth, and intending to be legally bound, it is
agreed that from and after January 16, 2007 (the "Effective
Date"), the following terms and conditions shall apply to
Executive’s said employment:
A. TERM OF EMPLOYMENT
The Company hereby employs Executive and Executive hereby
accepts employment with the Company for the period of three
(3) years (the "Term") commencing with the Effective Date,
subject, however, to prior termination of this Agreement as
hereinafter provided. Where used herein, "Term" shall refer to the
entire period of employment of Executive by the Company hereunder,
whether for the period provided above, or whether terminated
earlier as hereinafter provided.
B. DUTIES OF EXECUTIVE
1. Duties. Executive shall perform the duties of
President and Chief Executive Officer of Center Financial and the
Bank, subject to the powers by law vested in the Boards of
Directors of Center Financial and the Bank and in Center
Financial’s shareholders. Executive shall also serve as a
member of the Boards of Directors of both Center Financial and the
Bank throughout the Term. During the Term, Executive shall perform
exclusively the services herein contemplated to be performed by
Executive faithfully, diligently and to the best of
Executive’s ability, consistent with the highest and best
standards of the banking industry and in compliance with all
applicable laws and the Articles of Incorporation, Bylaws and
internal written policies of Center Financial and/or the Bank.
2. Conflicts of Interest. Except as permitted by the
prior written consent of the Company’s Board of Directors,
Executive shall devote Executive’s entire productive time,
ability and attention to the business of the Company during the
Term and Executive shall not directly or indirectly render any
services of a business, commercial or professional nature, to any
other person, firm or corporation, whether for compensation or
otherwise, which are in conflict with the Company’s
interests. Notwithstanding the foregoing, Executive may make
investments of a passive nature in any business or venture,
provided that the amount of such investment does not exceed one
percent (1%) of the issued and outstanding shares or one
percent (1%) of the equity interest in such business or
venture.
C. COMPENSATION
1. Salary . For Executive’s services hereunder, the
Company shall pay or cause to be paid as annual base salary to
Executive the sum of Two Hundred Fifty Thousand Dollars ($250,000)
for the first year of the Term, with annual increases thereafter
based on the Consumer Price Index of the Bureau of Labor Statistics
of the Department of Labor for all urban consumers of the Los
Angeles metropolitan area, but in no event to exceed seven percent
(7%) per year. Said salary shall be payable in equal
installments in conformity with the Company’s normal payroll
period.
2. Incentive Bonuses . Executive shall receive an
incentive annual bonus equal to four percent (4%) of the
amount of the Company’s pre-tax earnings for that year which
exceed the Company’s pre-tax earnings for the previous year;
provided, however, that in no event shall such bonus be less than
$40,000 nor more than 75% of the amount of Executive’s annual
base salary. For purposes of this section, "pre-tax earnings" shall
be defined to mean net earnings of the Company before taxes
(calculated in accordance with generally accepted accounting
principles ("GAAP"), after all expenses and revenues have been
paid, including but not limited to provisions or allocations for
possible loan losses, and shall exclude gains and losses on the
sale of securities and any other extraordinary income or losses).
No payments shall be made pursuant to this section until the
Company’s financial statements for the year in question have
been audited by the Company’s independent registered public
accountants.
D. EXECUTIVE BENEFITS
1. Vacation . Executive shall be entitled to three
(3) weeks vacation during each year of the Term; provided,
however, that for each year of the Term, Executive is required to
and shall take at least two (2) weeks of said vacation (the
"Mandatory Vacation"), which shall be taken consecutively. Accrual
of any unused vacation shall be determined in accordance with the
Company’s Personnel Policy as in effect from time to time and
shall be subject to any limitations set forth therein.
2. Group Medical and Life Insurance Benefits . The
Company shall provide for Executive and his dependents, at the
Company’s expense, group health and other insurance benefits
in accordance with the Company’s Personnel Policy as in
effect from time to time. Said coverage shall be in existence or
shall take effect as of the Effective Date hereof and shall
continue throughout the Term. Provision of the insurance is subject
to Executive’s passing the necessary physical examinations
for qualification, if required, and to applicable waiting periods
imposed by the Company’s insurance carrier, if any.
3. Automobile . The Company shall provide Executive, for
Executive’s sole use, a suitable full-sized automobile, the
make of which shall be determined by mutual agreement. The Company
shall pay all operating expenses with regard to such automobile,
provided Executive furnishes to the Company adequate records and
other documentary evidence required by federal and state statutes
and regulations issued by the appropriate taxing authorities for
the substantiation of such payments as deductible business expenses
of the Company and not as deductible compensation to Executive. The
Company shall also procure and maintain in force an automobile
liability insurance policy on such automobile, containing all
reasonable and necessary coverage.
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4. Stock Options . The Company agrees to
grant to Executive, effective February 14, 2007 (or as soon
thereafter as is permissible consistent with the Company’s
Insider Trading Policy), stock options to purchase up to 100,000
shares of Center Financial’s authorized but unissued Common
Stock, at the fair market value of the stock on the date of grant,
on such further terms and conditions as shall be contained in Stock
Option Agreements to be entered into by and between Center
Financial and Executive pursuant to the terms of Center
Financial’s 2006 Stock Incentive Plan. Such options shall be
for a term of ten (10) years and shall vest at the rate of
one-third per year over the first three years of the option term,
with the first installment to vest one year from the date of grant.
The Company agrees that such options will be "incentive stock
options" within the meaning of Section 422 of the Internal
Revenue Code of 1986 (the "Code"), as amended, to the maximum
extent allowed by law.
5. Club Memberships . The Company agrees to pay
Executive’s membership dues in the Mountaingate Country Club,
of which Executive is currently a member. In addition, Executive
shall be provided with membership(s) in such other club(s) as may
be approved by the Board of Directors. The Company agrees to pay
all expenses reasonable and necessary in connection with the
maintenance and utilization of said memberships for business
related purposes by Executive throughout the Term.
E. REIMBURSEMENT FOR BUSINESS EXPENSES
Executive shall be entitled to reimbursement by the Company for
any ordinary and necessary business expenses incurred by Executive
in the performance of Executive’s duties and in acting for
the Company during the Term, which types of expenditures shall be
determined by the Board of Directors, provided that:
(a) Each such expenditure is of a nature qualifying it as a
proper deduction on the federal and state income tax returns of the
Company as a business expense and not as deductible compensation to
Executive; and
(b) Executive furnishes to the Company adequate records and
other documentary evidence required by federal and state statutes
and regulations issued by the appropriate taxing authorities for
the substantiation of such expenditures as deductible business
expenses of the Company and not as deductible compensation to
Executive.
F. TERMINATION
1. Termination for Cause . The Company may terminate this
Agreement at any time by action of the Board of Directors, if
Executive (i) engages in illegal activity which materially
adversely affects the Company’s reputation in the community
or which evidences the lack of Executive’s fitness or ability
to perform Executive’s duty as determined by the Board of
Directors in good faith; (ii) Executive has committed any
illegal or dishonest act which would cause termination of coverage
under the Company’s Bankers’ Blanket Bond as to
Executive, as distinguished from termination of coverage as to the
Company as a whole; (iii) Executive materially
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fails to perform, or habitually neglects,
Executive’s duties or commits a material act of malfeasance
or misfeasance in connection therewith; (iv) Executive engages
in the falsification of reports or material, intentional
misrepresentation or omission of information supplied to the
Company or to regulatory agencies; or (v) an action is
commenced by any bank regulatory agency having jurisdiction, to
remove or suspend Executive from office, or a cease and desist
order under 12 U.S.C. 1818(b) or any similar Federal or state
statute is issued against Executive or the Company which calls for
Executive’s suspension or removal from office. In the event
the Company terminates this Agreement for cause as provided herein,
Executive shall not be eligible for any severance benefits
otherwise contemplated by this Agreement. Such termination shall
not prejudice any remedy which the Company may have at law, in
equity, or under this Agreement.
2. Death or Disability . In the event of
Executive’s death or if Executive is found to be physically
or mentally disabled (as hereinafter defined) by the Board of
Directors in good faith, this Agreement shall terminate without any
further liability or obligation by the Company to Executive.
For purposes of this Agreement only, physical or mental
disability shall be defined as Executive being unable to fully
perform under this Agreement for a continuous period of ninety
(90) days or a cumulative period of one-hundred eighty
(180) days in any calendar year, provided Executive has
exhausted any leave time made available to him under applicable
disability laws. If there should be a dispute between the Company
and Executive as to Executive’s physical or mental disability
for purposes of this Agreement, the question shall be settled by
the opinion of an impartial reputable physician or psychiatrist
agreed upon by the parties or their representatives, or if the
parties cannot agree within ten (10) days after a request for
designation of such party, then by a physician or psychiatrist
designated by the Los Angeles County Medical Association. The
certification of such physician or psychiatrist as to the question
in dispute shall be final and binding upon the parties hereto.
3. Action by Supervisory Authority . If the Bank is
closed by or taken over by the California Department of Financial
Institutions or other supervisory authority, including the Federal
Deposit Insurance Corporation, such bank supervisory authority may
immediately terminate this Agreement without further liability or
obligation by the Company to Executive.
4. Change in Control . In the event of: (i) the
acquisition of more than fifty percent (50%) of the value or
voting power of the Bank’s or Center Financial’s stock
by a person or group; (ii) the acquisition in a period of
twelve (12) months or less of at least thirty-five percent
(35%) of the Bank’s or Center Financial’s stock by
a person or group; (iii) the replacement of a majority of the
Bank’s or Center Financial’s board of directors in a
period of twelve (12) months or less by directors who were not
endorsed by a majority of the current board members; or
(iv) the acquisition in a period of twelve (12) months or
less of forty percent (40%) or more of the Bank’s or
Center Financial’s assets by an unrelated entity
(collectively, a "change in control"), this Agreement shall not be
terminated, and the surviving entity shall be bound by all of the
provisions of the Agreement. If following such "change in control,"
Executive’s employment is terminated by the Company or its
successor entity, or Executive voluntarily terminates his
employment for a period of one (1) year following the
effective date of the change in control, Executive shall be
entitled to receive the amount specified in Paragraph F.5 herein
regarding termination without cause, upon the delivery to the
Company by the Executive of a waiver and release in substantially
the form of Exhibit "A" to this Agreement, and Executive’s
compliance with the terms thereof.
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Notwithstanding the preceding paragraph, if the
Bank or Center Financial is not the surviving entity in any
transaction contemplated above and said transaction is in any
manner the result of any suggestion or order of the Department of
Financial Institutions, the Federal Reserve Board or the FDIC,
then, in such event, this Agreement shall terminate immediately
upon the consummation of such transaction and Executive agrees that
all rights, duties and obligations and benefits herein conferred
shall thereupon terminate and that Executive shall be entitled to
no further compensation or benefits from the Company other than as
required by applicable law. In addition, the Company shall not be
required to make any payments under this paragraph which may be
prohibited by law.
If Executive is considered a "specified employee" (as defined by
Section 409A of the Code and regulations promulgated thereunder) at
the time of any voluntary termination of employment pursuant to
this Paragraph F.4, then any payment made upon such termination may
not commence earlier than six (6) months after the date of such
termination. In such event, any payments which would otherwise be
made to Executive within the first six (6) months following
Executive’s termination of employment under this Paragraph
F.4 shall be accumulated and paid to Executive in a lump sum on the
first day of the seventh month following such termination. All
subsequent distributions shall be paid in the manner specified.
5. Termination Without Cause . Notwithstanding anything
to the contrary contained herein, it is agreed by the parties
hereto that the Company may at any time and for any reason
terminate this Agreement and Executive’s employment by the
Company by action of the Board of Directors. Such termination shall
be effective immediately upon the giving of notice to Executive
from the Company, and all benefits provided by the Company
hereunder to Executive shall thereupon cease, except as provided in
this Paragraph. In the event of such termination, upon the delivery
to the Company by the Executive of a waiver and release in
substantially the form of Exhibit "A" to this Agreement, and
Executive’s compliance with the terms thereof, Executive
shall continue to be paid Executive’s salary at the rate in
effect as of the date of termination, for the lesser of the
remainder of the Term or a period of twelve (12) months. In
addition, Executive shall be entitled to the pro rata portion of
any bonus earned for the partial year served until the date of
termination, to be paid as soon as practicable after completion of
the audit of the Company’s financial statements for that
year. Such action shall not be construed as a breach of this
Agreement, and upon payment of the benefits stated above, the
Company shall have no further liability or obligation to Executive,
except as specified in Paragraph F.7 herein.
6. Golden Parachute Limitation . Severance compensation
under Paragraph F. 4 or F.5 hereof will be reduced as provided
below to avoid the penalties imposed on "parachute payments" under
the Code.
(a) If the present value of all Executive’s severance
compensation provided by the Company under Paragraph F.4 or F.5
hereof and outside this Agreement is high enough to cause any such
payment to be a "parachute payment" (as defined in
Section 280G(b)(2) of the Code), then one or more of such
payments will be reduced by the minimum amount required to prevent
the severance compensation under this Agreement from being a
"parachute payment."
(b) Executive may direct the Company regarding the order of
reducing severance compensation and other payments from the Company
to comply with this Paragraph F.6.
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7. Effect of Termination . In the event of
the termination of this Agreement for any reason, Executive shall
be entitled to the salary earned by Executive prior to the date of
termination as provided for in this Agreement computed pro rata up
to and including that date; but Executive shall be entitled to no
further compensation after the date of termination, except as
provided in Paragraph F.4 and F.5 above. Executive further agrees
that in the event of termination for any reason, he shall resign
from the Boards of Directors of Center Financial and the Bank on
the effective date of the termination of this Agreement.
Notwithstanding the foregoing, however, in the event this Agreement
is terminated due to non-renewal, Executive shall be entitled to
his bonus earned for the 2009 fiscal year, to be paid as soon as
practicable after completion of the audit of the Company’s
financial statements for that year.
G. GENERAL PROVISIONS
1. Trade Secrets . During the Term, Executive will have
access to and will become acquainted with what Executive and the
Company acknowledge are trade secrets, to wit, knowledge or data
concerning the Company, including its operations and methods of
doing business, and the identity of customers of the Company,
including knowledge of their financial condition and their
financial needs. Executive shall execute a Confidentiality
Agreement in substantially the form of the Confidentiality
Agreement attached hereto as Exhibit "B" concurrently with
Executive’s execution of this Agreement. Executive
acknowledges that a breach of the Confidentiality Agreement shall
constitute a material breach of this Agreement as defined in
Paragraph F.1 herein.
2. Indemnification . To the extent permitted by law,
applicable statutes and the Bylaws or resolutions of the Bank and
Center Financial as in effect from time to time, the Company shall
indemnify Executive against liability or loss arising out of
Executive’s actual or asserted misfeasance or non-feasance in
the performance of Executive’s duties or out of any actual or
asserted wrongful act against, or by, the Company including but not
limited to judgments, fines, settlements and expenses incurred in
the defense of actions, proceedings and appeals therefrom. However,
the Company shall have no duty to indemnify Executive with respect
to any claim, issue or matter as to which Executive has been
adjudged to be liable to the Company in the performance of his
duties, unless and only to the extent that the court or arbitrator
in which or in front of which such action was brought shall
determine upon application that, in view of all of the
circumstances of the case, Executive is fairly and reasonably
entitled to indemnification for the expenses which such court or
arbitrator shall determine. The Company shall endeavor to keep in
force Directors and Officers Liability Insurance to indemnify and
insure the Company and Executive from and against the aforesaid
liabilities. The provisions of this paragraph shall apply to the
estate, executor, administrator, heirs, legatees or devisees of
Executive.
3. Return of Documents . Executive expressly agrees that
all manuals, documents, files, reports, studies, instruments or
other mat
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