DASAN ZHONE SOLUTIONS, INC. (NASDAQ:DZSI) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
ME Staff 8-k
DASAN ZHONE SOLUTIONS, INC. (NASDAQ:DZSI) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain OfficersItem 5.02
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
On October 10, 2017, DASAN Zhone Solutions, Inc. (formerly known as Zhone Technologies, Inc.) (the “Company”) entered into an Amended and Restated Employment Agreement (the “Restated Employment Agreement”) with Il Yung Kim, the Company’s President, Chief Executive Officer and Acting Chief Financial Officer. The Restated Employment Agreement with Mr. Kim supersedes his existing employment agreement.
The Restated Employment Agreement has a three-year term expiring on October 10, 2017. During the term, Mr. Kim will serve as President, Chief Executive Officer and Acting Chief Financial Officer reporting to the Board of Directors (the “Board”), with such duties and responsibilities as are commensurate with such positions. The Restated Employment Agreement provides that Mr. Kim will have an initial annual base salary of $400,000, which will be reviewed on at least an annual basis by the Compensation Committee of the Board. In addition, Mr. Kim is eligible to participate in a performance-based annual bonus program. Mr. Kim has an annual target bonus equal to $400,000. During the term, the Company will provide Mr. Kim with a monthly housing allowance of up to $6,500. In addition, in the event that Mr. Kim’s employment is terminated, the Company will pay or reimburse Mr. Kim for up to an additional $30,000 in relocation expenses at such termination of his employment, unless he voluntarily resigns without “good reason” (as defined below). The relocation expenses to be provided to Mr. Kim will be grossed-up for taxes. Mr. Kim 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. Mr. Kim will also receive a one-time signing bonus in the amount of $100,000 in connection with the execution of the Restated Employment Agreement.
On October 10, 2017, in accordance with the terms of the Restated Employment Agreement, the Board granted Mr. Kim stock options to purchase 150,000 shares under the Company’s 2017 Incentive Award Plan. The options have a ten-year term and an exercise price equal to the fair market value of the Company’s common stock on the date of grant. The options vest in 36 equal monthly installments following the date of the Restated Employment Agreement, subject to Mr. Kim’s continuing services to the Company through the applicable vesting date.
Under the Restated Employment Agreement, Mr. Kim will receive certain compensation in the event that his employment is terminated by the Company for any reason other than by reason of death, disability, his termination for “cause” (as defined below), if he resigns for “good reason” (as defined below), or as a result of the expiration of the term (each, a “Qualifying Termination”). In the event that Mr. Kim’s employment is terminated by reason of a Qualifying Termination, he will be entitled to receive a lump-sum payment equal to his annual salary as in effect immediately prior to the date of termination (or, if greater, $400,000) plus an amount equal to the sum of the bonuses earned by Mr. Kim for the four most recently completed calendar quarters preceding his date of termination. In addition, in the event of a Qualifying Termination, all stock awards held by Mr. Kim will vest in full on the date of termination and, with respect to stock awards granted on or after the date of the Restated Employment Agreement, shall remain exercisable for a period of one year following the date of termination (but not beyond the original expiration date of such stock awards).
For purposes of the Restated Employment Agreement, “cause” is generally defined to include: (1) Mr. Kim’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 Board consistent with the terms of the Restated Employment Agreement, which failure continues for 15 days following his receipt of written notice from the Board, (2) Mr. Kim’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, (3) Mr. Kim’s willful or reckless misconduct that has caused or is reasonably likely to cause demonstrable and material financial injury to the Company, or (4) Mr. Kim’s willful and material breach of the Restated Employment Agreement, which breach remains uncured for 15 days following his receipt of written notice from the Board.
For purposes of the Restated Employment Agreement, “good reason” is generally defined to include the occurrence of any of the following events without Mr. Kim’s consent: (1) a material diminution in his base compensation, (2) a material diminution in his authority, duties or responsibilities, (3) a material change in the geographic location at which he must perform his duties, or (4) any other action or inaction that constitutes a material breach by the Company of its obligations under the Restated Employment Agreement.
The foregoing description of the Restated Employment Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Restated Employment Agreement, which will be filed as an exhibit to the Company’s Annual Report on Form 10-K for the year ending December 31, 2017, and which is hereby incorporated herein by reference.
About DASAN ZHONE SOLUTIONS, INC. (NASDAQ:DZSI) DASAN Zhone Solutions, Inc., formerly Zhone Technologies, Inc., designs, develops and manufactures communications network equipment for telecommunications operators and enterprises across the world. The Company’s products provide enterprise solutions that enable both network service providers and enterprises to deliver high speed fiber access, while transporting voice, video and data to the end user. In addition to its product offerings in its core business, it offers FiberLAN Passive Optical local area network (LAN), which provides an alternative to switched copper-based LANs. The customers of its FiberLAN business include hospitality, government, education, manufacturing and business enterprises. Its products span two categories: SLMS Products, and Legacy, Service and Other Products. Its SLMS Products include Broadband Aggregation and Service, Customer Premise Equipment (CPE), Zhone Management System and FiberLAN Passive Optical LAN.