Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On November 25, 2019, Dasan Zhone Solutions, Inc. (the "Company") announced the
appointment of Thomas Cancro as the Company's Chief Financial Officer and
Corporate Treasurer, effective as of December 2, 2019. In such capacity, Mr.
Cancro will serve as the Company's principal financial and accounting
officer. Mr. Cancro, 52, brings nearly 30 years of experience to the CFO role in
areas such as controllership, raising debt and equity capital, mergers and
acquisitions, and investor relations, with over 12 years in the
telecommunications industry. In connection with his appointment, Mr. Cancro
entered into an employment agreement with the Company (the "Employment
Agreement"), which is discussed in greater detail below.
Prior to joining the Company, Mr. Cancro worked from August 2016 to March 2019
with General Electric (NYSE:GE), a global diversified corporation, most recently
as Controller of the company's technology research and IP-licensing business
unit. From 2015 to 2016, Mr. Cancro served as Assistant Corporate Controller of
CarMax (NYSE:KMX), a retailer of used vehicles in the United States. From 2008
to 2015, Mr. Cancro served as Chief Accounting Officer and Corporate Controller
of GFI Group, Inc., a then NYSE-listed FinTech provider of wholesale brokerage
services and SaaS software solutions (now a subsidiary of BGC Partners, Inc.
(Nasdaq: BGCP)). From 2006 to 2008, Mr. Cancro served as Senior Vice President
and Corporate Controller of MasTec Inc. (NYSE:MTZ), a provider of
telecommunications and energy infrastructure. From 1995 to 2005, Mr. Cancro
served in a variety of leadership roles at Verizon Communications (NYSE:VZ),
including as Chief Financial Officer of the company's European joint venture
with AT&T and Deutsche Telekom, where he led that company through its initial
public debt offering and related registration with the U.S. Securities and
Exchange Commission, and later in an executive role in Verizon's Treasury
organization, where he advised the company as to capital markets strategy. Mr.
Cancro, who holds a Bachelor of Science degree in Accounting from the
Pennsylvania State University, began his career at PricewaterhouseCoopers. He is
a Certified Public Accountant and also holds a CFA Charter.
The Employment Agreement provides that Mr. Cancro's employment is
at-will. During the term of his employment, Mr. Cancro will serve in the
above-mentioned capacities reporting to the Chief Executive Officer, with such
duties and responsibilities as are commensurate with the position.
The Employment Agreement provides that Mr. Cancro will have an initial annual
base salary of $275,000, which will be increased to $300,000 on April 1, 2020.
The base salary will be reviewed on at least an annual basis by the Company's
Board of Directors or its Compensation Committee (collectively, the "Board").
Mr. Cancro will be eligible to participate in a performance-based annual bonus
program approved by the Board, pursuant to which bonuses will be earned and
paid, if at all, in equal quarterly installments. Mr. Cancro's initial target
quarterly bonus is $22,500. For a period of up to one year, Mr. Cancro will be
eligible for a housing and automobile allowance in connection with his
commencement of employment in the San Francisco Bay Area. Mr. Cancro will also
be eligible for relocation assistance in certain circumstances. Mr. Cancro is
also eligible to participate in all health benefits, insurance programs, pension
and retirement plans and other employee benefit and compensation arrangements
generally available to the Company's other officers, including a cell phone
allowance.
In connection with his appointment, the Board will grant Mr. Cancro stock
options to purchase 160,000 shares of the Company's common stock under the
Company's equity plan. The options, which will have a ten-year term and an
exercise price per share equal to the fair market value of the Company's common
stock on the date of grant, will vest over a four-year period, with 25% vesting
on the first anniversary of Mr. Cancro's commencement of employment and the
remainder vesting ratably over 36 months thereafter. Vesting of the options will
be immediately accelerated if, following a change in control, Mr. Cancro resigns
for "good reason" (as defined below) or his employment is terminated by the
Company for any reason other than by reason of death, disability or "cause" (as
defined below). Future equity grants will be made at the discretion of the
Board.
Under the Employment Agreement, Mr. Cancro will receive certain compensation in
the event that he resigns for "good reason" or his employment is terminated by
the Company for any reason other than by reason of death, disability or "cause"
(each, a "Qualifying Termination"). In the event Mr. Cancro's employment is
terminated by reason of a Qualifying Termination, Mr. Cancro will be entitled to
receive (i) his base salary through the date of termination, reimbursable
business expenses in accordance with company policies, and any accrued, vested
benefits, in each case to the extent not previously paid and (ii) a lump-sum
payment equal to the sum of (x)
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the greater of (A) six months' of Mr. Cancro's salary as in effect immediately
prior to the date of termination or (B) $150,000 plus (y) Mr. Cancro's bonus for
the quarter in which the termination occurs based on actual Company
performance.
For purposes of the Employment Agreement, "cause" is generally defined to
include: (i) Mr. Cancro's willful or continued failure to substantially perform
his duties with the Company, or any failure to carry out, or comply with, in any
material respect any lawful and reasonable directive of the Chief Executive
Officer or the Board consistent with the terms of his Employment Agreement,
which failure continues for 15 days following Mr. Cancro's receipt of written
notice, (ii) Mr. Cancro's conviction of, guilty plea to, or entry of a nolo
contendere plea to a felony or a crime of moral turpitude or commission of an
act of fraud, embezzlement or misappropriation against the Company, (iii) Mr.
Cancro's willful or reckless misconduct that has caused or is reasonably likely
to cause demonstrable and material financial injury to the Company, or (iv) Mr.
Cancro's willful and material breach of his Employment Agreement, which breach
remains uncured for 15 days following his receipt of written notice. For
purposes of the Employment Agreement, "good reason" is generally defined to
include the occurrence of any of the following events without his consent: (i) a
material diminution in Mr. Cancro's base compensation, (ii) a material
diminution in Mr. Cancro's authority, duties or responsibilities, (iii) subject
to limited exceptions, a material change in the geographic location at which Mr.
Cancro must perform his duties, or (iv) any other action or inaction that
constitutes a material breach by the Company of its obligations under
the Employment Agreement.
The foregoing description of the Employment Agreement does not purport to be
complete and is qualified in its entirety by reference to the full text of
the Employment Agreement, a copy of which is attached as Exhibit 10.1 to this
Current Report on Form 8-K.
There were no arrangements or understandings between Mr. Cancro and any other
person pursuant to which Mr. Cancro was appointed as an officer of the Company.
There are no family relationships between Mr. Cancro and any director or
executive officer of the Company, and he has no direct or indirect material
interest in any transactions required to be disclosed pursuant to Item 404(a) of
Regulation S-K.
In connection with the Company's appointment of Mr. Cancro as its new Chief
Financial Officer and Corporate Treasurer, effective upon December 2, 2019, Il
Yung Kim will resign from his positions as the Company's Interim Chief Financial
Officer and Treasurer. Mr. Kim will continue to serve as the Company's President
and Chief Executive Officer.
On November 25, 2019, the Company issued a press release announcing Mr. Cancro's
appointment, a copy of which is attached as Exhibit 99.1 to this Current Report
on Form 8-K.
Item 9.01
Exhibits
10.1 Employment Agreement, effective as of December 2, 2019, by and between
DASAN Zhone Solutions, Inc. and Tom Cancro
99.1 Press release, dated November 25, 2019
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