AMENDED AND RESTATED EMPLOYMENT AND NONCOMPETITION AGREEMENT
Exhibit (e)(9)
AMENDED AND RESTATED
THIS AMENDED AND RESTATED EMPLOYMENT AND NONCOMPETITION AGREEMENT (the “Agreement”) is made
and entered into as of December 30, 2008, by and among Avocent Huntsville Corp., an Alabama
corporation (the “Employer”), Avocent Corporation, a Delaware corporation, and Xxxxxxx X. Xxxxxx
(the “Employee”).
WHEREAS, Avocent Corporation and its affiliates, including Employer (collectively referred to
in this Agreement as “Avocent”) are engaged in the business of designing, manufacturing, and
selling connectivity and centralized management of information technology infrastructure solutions
for enterprise data centers, branch offices, and small to medium size businesses worldwide; and
WHEREAS, Employee, Employer, and Avocent Corporation entered into that certain Employment and
Noncompetition Agreement dated July 14, 2008 (the “Original Employment Agreement”); and
WHEREAS, Employee, Employer, and Avocent Corporation now wish to amend and restate the
Original Employment Agreement with this Amended and Restated Employment and Noncompetition
Agreement, and Employee is willing to accept employment as Chief Executive Officer of Avocent on
the terms and subject to the conditions set forth in this Agreement.
THE PARTIES HERETO AGREE AS FOLLOWS:
1.1 POSITION. During the term of this Agreement, the Employee shall be employed by Employer
and serve as Chief Executive Officer of Avocent. The Employee shall devote such of his business
time, energy, and skill to the affairs of Avocent and Employer as shall be necessary to perform the
duties of Chief Executive Officer at the headquarters of Avocent Corporation. The Employee shall
report to the Board of Directors of Avocent Corporation (the “Board”), and shall have powers,
duties, authorities, and responsibilities typically associated with this position in public
companies of a similar size and nature and such other powers, duties, authorities, and
responsibilities as are assigned and delegated to him by the Board consistent with his position as
Chief Executive Officer.
1.2 BOARD MEMBERSHIP. During the term of this Agreement, the Board will, to the extent
consistent with its fiduciary duties, recommend to the stockholders of Avocent Corporation that
Employee be elected to serve as a member of the Board without any additional compensation. If
Employee’s position as Chief Executive Officers terminates or is terminated under
any of the
provisions of this Agreement, Employee shall immediately resign as a member of the Board.
(a) “ACCRUED OBLIGATIONS” shall mean, collectively as of the date of any termination, all of
Employee’s accrued salary, bonus compensation to the extent earned, vested deferred compensation,
if any, in accordance with the terms of any applicable deferred compensation plan or arrangement,
any benefits under any plans of Employer or Avocent in which the Employee is a participant to the
full extent of the Employee’s rights under such plans, and accrued but unused vacation pay.
(b) “CHANGE IN CONTROL” shall mean, after the date of this Agreement, any one of the following
events:
(i) Any person (other than Avocent Corporation) or more than one person acting as a group (a
“Person”) acquires beneficial ownership of Avocent Corporation’s securities and is or thereby
becomes when such ownership is combined with stock held by such Person a beneficial owner of
securities entitling such Person to exercise twenty-five percent (25%) or more of the combined
voting power of Avocent Corporation’s then outstanding stock. For purposes of this Agreement,
“beneficial ownership” shall be determined in accordance with Regulation 13D under the Securities
Exchange Act of 1934, or any similar successor regulation or rule; and the term “Person” shall
include any natural person, corporation, partnership, trust, or association, or any group or
combination thereof, whose ownership of Employer’s or Avocent Corporation’s securities would be
required to be reported under such Regulation 13D, or any similar successor regulation or rule.
(ii) Within any twenty-four (24) month period, the individuals who were Directors of Avocent
Corporation at the beginning of any such period, together with any other Directors first elected as
directors of Avocent Corporation pursuant to nominations approved or ratified by at least
two-thirds (2/3) of the Directors in office immediately prior to any such election, cease to
constitute a majority of the Board of Directors of Avocent Corporation.
(iii) The closing of any transaction involving:
(1) any consolidation, merger, or other reorganization of Avocent Corporation in which Avocent
Corporation is not the continuing or surviving corporation or pursuant to which shares of Avocent
Corporation common stock would be converted into cash, securities or other property, other than a
merger, consolidation, or other reorganization of Avocent Corporation in which the holders of
Avocent Corporation’s common stock immediately prior to the merger or consolidation have
substantially the same proportionate ownership and voting control of the surviving corporation
immediately after the merger or consolidation; or
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(2) any sale, lease, exchange, liquidation or other transfer (in one transaction or a series
of transactions) of all or substantially all of the assets of Avocent Corporation.
Notwithstanding the foregoing, the term “Change in Control” shall not include a consolidation,
merger, or other reorganization if upon consummation of such transaction all of the outstanding
voting stock of Avocent Corporation is owned, directly or indirectly, by a holding company, and the
holders of Avocent Corporation’s common stock immediately prior to the transaction have
substantially the same proportionate ownership and voting control of such holding company after
such transaction.
(c) “CODE” means the Internal Revenue Code of 1986, as amended.
(d) “CONSTRUCTIVE TERMINATION” shall mean Employee’s voluntary termination of Employee’s
employment by reason of (i) a material diminution of Employee’s title, reporting line, powers,
duties, authorities, or responsibilities, (ii) a reduction in Employee’s base salary or annual
bonus target percentage, or (iii) any other material breach of this Agreement by the Employer or
Avocent Corporation; provided, however that termination shall only constitute “Constructive
Termination” if Employee gives Employer written notice within ninety (90) days of the occurrence
of an event that would constitute Constructive Termination and Employer has failed to cure such
event within thirty (30) days of receipt of such written notice and such separation from service
occurs during a period not to exceed two (2) years following the initial existence of the reason
giving rise to such Constructive Termination.
(e) “RELEASE” shall mean a release of any claims against Avocent, Employer that is acceptable
in form and substance to Avocent Corporation. A Release must be executed and become effective by
the sixtieth (60th) day following termination or within the shorter time frame provided
by such Release (such deadline, the “Release Deadline”).
(f) “SECTION 409A” shall mean the Section 409A of the Code and the final regulations and any
guidance promulgated thereunder, as each may be amended from time to time.
(g) “SEVERANCE PAYMENT DATE” shall mean the date specified in Section 4.5 of this Agreement.
(h) “TERMINATION FOR CAUSE” shall mean termination by the Employer or Avocent Corporation of
the Employee’s employment with the Employer by reason of: (i) the Employee’s willful dishonesty
towards, fraud upon, or deliberate injury or attempted injury to, the Employer or Avocent which has
resulted in material injury to Employer or Avocent; (ii) the Employee’s willful material breach of
this Agreement which, if curable, is not cured within thirty (30) days after the Employer or
Avocent provides Employee with written notice describing in detail the material breach; or
(iii) the Employee’s conviction of or pleading guilty or nolo contendere to any felony or
misdemeanor involving, theft, embezzlement, dishonesty, or moral turpitude.
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(i) “TERMINATION OTHER THAN FOR CAUSE” shall mean termination by the Employer or Avocent
Corporation of the Employee’s employment with the Employer (other than a Termination for Cause or a
termination by reason of Disability or death as described in Sections 2.5 and 2.6) and shall
include any Constructive Termination.
(j) “TERMINATION UPON A CHANGE IN CONTROL” shall mean (i) a termination by the Employee of the
Employee’s employment with the Employer or Avocent or Employee’s death within six (6) months
following any “Change in Control” or (ii) any termination by the Employer or Avocent Corporation of
the Employee’s employment with the Employer or Avocent within eighteen (18) months following any
“Change in Control” (other than a termination by reason of Employee’s death as described in
Section 2.6 more than six (6) months following any Change in Control, a Termination for Cause as
described in Section 2.4, or a termination by reason of Disability as described in Section 2.5).
(k) “VOLUNTARY TERMINATION” shall mean termination by the Employee of the Employee’s
employment with the Employer other than (i) Constructive Termination as described in subsection
2.1(d), (ii) ”Termination Upon a Change in Control” as described in Section 2.1(j), and
(iii) termination by reason of the Employee’s Disability or death as described in Sections 2.5 and
2.6.
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conditions specified in any such
deferred compensation plan or arrangement, (ii) upon receipt of proper documentation in accordance
with Avocent’s standard reimbursement policies, reimbursement of any appropriate business expenses
incurred by the Employee in connection with his duties hereunder on or prior to the date of
termination of employment, and (iii) all severance compensation provided in Section 4.2, but no
other compensation or reimbursement of any kind. Reimbursements will be made as soon as
administratively practicable following the approval of the reimbursement in accordance with Company
policies, but in no event will taxable reimbursements be made later than the last date permitted by
Section 409A such that the reimbursements are not subject to any additional taxation pursuant to
Section 409A.
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in no event will taxable reimbursements be
made later than the last date permitted by Section 409A such that the reimbursements are not
subject to any additional taxation pursuant to Section 409A.
3.1 BASE SALARY. Effective July 15, 2008 (the “Effective Date”), as payment for the services
to be rendered by the Employee as provided in Section 1 and subject to the terms and conditions of
Section 2, the Employer agrees to pay to the Employee a “Base Salary” at the rate of Six Hundred
Thousand Dollars ($600,000.00) per annum, payable in equal bi-weekly installments in accordance
with Employer’s normal payroll practices. The Base Salary for each calendar year (or proration
thereof) beginning January 1, 2009 may be increased by the Board upon a recommendation of the
Compensation Committee of the Board (the “Compensation Committee”). The Employee’s Base Salary
shall be reviewed annually by the Board and the Compensation Committee.
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of this
Agreement and any extensions thereof, with the actual amount of any such bonus to be determined in
the sole discretion of the Compensation Committee based upon its evaluation of the Employee’s
performance during such year, with the annual target for each calendar year being at least one
hundred percent (100%) of Base Salary for that year and the annual bonus opportunity for each
calendar year being at least one hundred fifty percent (150%) of the Base Salary for that year.
Employee must be employed by Avocent on the last day of the fiscal year (or other period determined
by the Compensation Committee) to which the bonus relates; provided, however, that in the event of
Employee’s death during the term of this Agreement, the estate of Employee shall be paid within
thirty (30) days after his death an amount equal to the product of (i) Employee’s target bonus for
the year multiplied by (ii) a fraction the numerator of which is the number of days in such year
prior to the Employee’s death and the denominator of which is three hundred sixty-five (365). All
such bonuses shall be payable during the last month of the fiscal year or within forty-five (45)
days after the end of the fiscal year (or other period determined by the Compensation Committee) to
which such bonus relates. In no event will any such bonus be paid later than March 15th
of the year following the fiscal year in which the bonus is earned. All such bonuses shall be
reviewed annually by the Compensation Committee.
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(i) Effective on the date Employee commences employment with Employer, Employee shall be
granted 125,000 restricted stock units, with 50,000 units scheduled to vest on January 1, 2009, and
25,000 units scheduled to vest on January 1 of each of 2010, 2011, and 2012, in each case subject
to the Employee remaining an employee or other service provider of Avocent during that time under
the terms and conditions of a Restricted Stock Unit Agreement. In addition, Employee shall be
awarded a targeted performance share award of 100,000 performance shares with a maximum award of up
to one hundred twenty five percent (125%) of such performance shares, and Employee shall become
eligible to vest in such performance shares upon the achievement of the specified targeted levels
of Avocent Corporation’s common stock price (as measured on a rolling average basis) on specific
dates over a two-year period under the terms and conditions of Employee’s Notice of Grant of
Performance Shares and Avocent Corporation’s 2008 performance share program, as shall be determined
by the Compensation Committee, subject to the Employee remaining an employee or other service
provider of Avocent at the time such performance is achieved. If shares become eligible to vest,
such shares shall be scheduled to vest in three equal amounts on January 1 of each of 2010, 2011,
and 2012, in each case subject to the Employee remaining an employee or other service provider of
Avocent during that time. Each grant of restricted stock units or performance shares shall be
subject to the terms and conditions of the equity plan under which it is granted and to an equity
award agreement between Avocent Corporation and Employee.
(ii) The equity awards described in Section 3.3(e)(i) of this Agreement shall be earned and
vest as set forth in Employee’s Restricted Stock Unit Agreement(s) and Notice(s) of Grant of
Performance Shares, but upon the termination of Employee’s employment with Employer, any such
equity awards and any equity awards as the Compensation Committee in its discretion shall grant to
Employee (all such past and future equity awards, the “Equity Awards”) shall be deemed and treated
as earned and/or the vesting of such Equity Awards shall be accelerated as to the extent set forth
in Section 4 of this Agreement. In the event that (i) there is a “Change of Control” as defined in
the Avocent Corporation 2005 Equity Incentive Plan (the “2005 Plan”) or a
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“Change of Control” as
defined in the Avocent Corporation 2008 Inducement Equity Incentive Plan (the “2008 Plan,” and
collectively with the 2005 Plan, the “Stock Plans”) and Employee is employed by Employer or a
successor at the time of such Change of Control event, (ii) any of Employee’s then-outstanding
Equity Awards constitute “deferred compensation” within the meaning of Section 409A, and (iii) such
Equity Awards are accelerated by application of Section 19 of the 2005 Plan or Section 15 of the
2008 Plan (as a result of such awards not being assumed or substituted for), then if such “Change
of Control,” event is not also a “change in control” within the meaning of Section 409A, such
accelerated awards, though vested, will nonetheless be paid out to Employee on the award’s original
vesting schedule, unless (x) Avocent Corporation determines in good faith that an earlier payout
would not result in the imposition of additional taxation to Employee under Section 409A or (y)
there is a subsequent termination of Employee’s employment in a manner that would otherwise
(without application of Section 19 or Section 15 of the applicable Stock Plan) trigger vesting
pursuant to Section 4 of this Agreement, in which case the payment of such awards will be made at
the time(s) and pursuant to the terms and conditions specified in Section 4 of this Agreement,
which shall then become applicable. All Equity Awards that constitute “deferred compensation”
within the meaning of Section 409A will otherwise be paid on the later of (i) the end of the
calendar year in which such Equity Awards vest, or (ii) two and one-half (21/2) months following the
vesting of such Equity Awards. Notwithstanding the foregoing, the delay of the payment of such
awards pursuant to the prior sentence will cease upon Employee’s death and such payment will be
made as soon as practicable after the date of Employee’s death. Avocent and the Employee hereby
agree that the provisions of this Section shall supersede any conflicting provisions of the
applicable Stock Plan and any equity-based compensation award agreement of the Employee.
(iii) Employee shall be eligible to participate in any long-term incentive and equity-based
arrangements generally available to senior executives of Employer or Avocent and shall receive such
awards as the Compensation Committee in its discretion shall grant to Employee.
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that in the event the date of termination is prior to
the determination of Employee’s annual Bonus for calendar year 2009, Employee shall be paid an
amount equal to his targeted bonus for 2009 in lieu of his average annual bonus over the prior two
years. The Employee shall also be entitled to have the vesting of any then-outstanding Equity
Awards deemed and treated as fully earned and accelerated, and all such shares under any such
Equity Awards shall be delivered to Employee on the Severance Payment Date. If Employee timely
elects continuation of Employee’s medical, dental and vision coverage under a group health plan of
Avocent or Employer pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended (“COBRA”), within the time period prescribed pursuant to COBRA, Employer shall provide such
continuation coverage under such plans for a period of eighteen (18) months from the date of such
Termination Upon a Change in Control at no cost to Employee.
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plan of Avocent or Employer pursuant to COBRA,
within the time period prescribed pursuant to COBRA, Employer shall provide such continuation
coverage under such plans for a period of eighteen (18) months from the date of such termination by
reason on Disability at no cost to Employee.
(a) Except as provided in this Section 4.5, the “Severance Payment Date” shall be the sixtieth
(60th) day following Employee’s termination of employment, provided the Release has
become effective by the Release Deadline.
(b) Notwithstanding anything to the contrary in this Agreement, Deferred Compensation
Separation Benefits (as defined below) will not become payable under this Agreement, and the
Severance Payment Date will not be deemed to have occurred, until Employee has a “separation from
service” within the meaning of Section 409A. Further, if (x) Employee is a “specified employee”
within the meaning of Section 409A at the time of Employee’s termination of employment (or at the
time of a later “separation from service” within the meaning of Section 409A) other than due to
Employee’s death, and (y) some or any portion of the severance payments and benefits payable to
Employee, if any, pursuant to this Agreement (including, but not limited to, cash severance and the
delivery of shares pursuant to restricted stock units and performance shares), when considered
together with any other severance payments or separation benefits that are considered deferred
compensation under Section 409A (together, the “Deferred Compensation Separation Benefits”) that
are payable on or within the first six (6) month period following Employee’s termination of
employment, then payments and benefits will instead become payable in a lump sum on the first
payroll date that occurs on or after the date six (6) months and one (1) day following the date of
Employee’s termination of employment (or such longer period as is required to avoid the imposition
of additional tax under Section 409A), and such date will be the “Severance Payment Date.” All
subsequent Deferred Compensation Separation Benefits, if any, will be payable in accordance with
the payment schedule applicable to each payment or benefit. Each payment and benefit payable under
this Agreement is intended to constitute separate payments for purposes of Section 1.409A-2(b)(2)
of the Treasury Regulations.
(c) Notwithstanding anything herein to the contrary, if Employee dies following his
termination of employment but prior to the Severance Payment Date, then any payments delayed in
accordance with this Section 4.5 will be payable in a lump sum as soon as administratively
practicable after the date of Employee’s death and all other Deferred Compensation Separation
Benefits will be payable in accordance with the payment schedule applicable to each payment or
benefit.
(d) Any amount paid under the Agreement that satisfies the requirements of the “short-term
deferral” rule set forth in Section 1.409A-l(b)(4) of the Treasury Regulations shall not constitute
Deferred Compensation Separation Benefits for purposes of Section 4.5(b) above.
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(e) Any amount paid under the Agreement that qualifies as a payment made as a result of an
involuntary separation from service pursuant to Section 1.409A-1(b)(9)(iii) of the Treasury
Regulations that does not exceed the Section 409A Limit shall not constitute Deferred Compensation
Separation Benefits for purposes of Section 4.5(b) above. For purposes of this Section 4.5,
“Section 409A Limit” shall mean the lesser of two (2) times (A) the Employee’s annualized
compensation based upon the annual rate of pay paid to Employee during Employer’s taxable year
preceding the Employer’s taxable year of Employee’s termination of employment as determined under
Treasury Regulation 1.409A-l(b)(9)(iii)(A)(l) and any Internal Revenue Service guidance issued with
respect thereto; or (B) the maximum amount that may be taken into account under a qualified plan
pursuant to Section 401(a)(17) of the Code for the year in which the Employee’s employment is
terminated.
(f) The foregoing provisions and this Agreement are intended to comply with the requirements
of Section 409A so that none of the severance payments and benefits that may be provided hereunder
will be subject to the additional tax imposed under Section 409A, and any ambiguities herein will
be interpreted to so comply. Employer and Employee agree to work together in good faith to
consider amendments to this Agreement and to take such reasonable actions which are necessary,
appropriate or desirable to avoid imposition of any additional tax or income recognition prior to
actual payment to Employee under Section 409A.
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revenues of both such entity and Avocent, and (ii) Employee does not,
directly or indirectly, render services or assistance to such business, products or operations.
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compete with the Employer or Avocent or solicit their employees, customers or others during the
period described above.
6.3 WITHHOLDINGS. All compensation, payments (including severance payments under Section 4),
benefits, and the delivery of shares to the Employee under this Agreement shall be reduced by all
federal, state, local, and other withholdings and deductions and similar taxes and payments
required by applicable law.
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If to the Employer/Avocent:
|
Avocent Corporation | |
0000 Xxxxxxxxx Xxxxx | ||
Xxxxxxxxxx, XX 00000 | ||
Attn: Chairman of the Board of Directors | ||
With copy to: | ||
Avocent Corporation | ||
0000 Xxxxxxx Xxxx XX | ||
Xxxxxxx, XX 00000 | ||
Attn: General Counsel | ||
If to the Employee:
|
Xxxxxxx X. Xxxxxx | |
*************** | ||
*************** |
Any party may change such party’s address for notices by notice duly given pursuant to this
Section 6.6.
6.8 GOVERNING LAW; VENUE. This Agreement shall be governed by and construed in accordance
with the laws of the State of Alabama. The Employee, the Employer, and Avocent Corporation each
hereby expressly consents to the exclusive venue of the state and federal courts located in the
city in which the corporate headquarters of Avocent Corporation are located for any lawsuit arising
from or relating to this Agreement.
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of his case. The cost of the arbitration, including the cost of
the record or transcripts thereof, if any, administrative fees, and all other fees and costs shall
be borne equally by the parties.
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AVOCENT HUNTSVILLE CORP.: |
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By: | /s/ XXXXX X. XXXXX | |||
Its: | President | |||
AVOCENT CORPORATION: |
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By: | /s/ XXXXX X. XXXXX | |||
Its: | President | |||
EMPLOYEE: |
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/s/ XXXXXXX X. XXXXXX | ||||
Xxxxxxx X. Xxxxxx | ||||
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