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EXHIBIT 10.4
NON-COMPETITION AGREEMENT
This Agreement is entered into effective January 1, 1999, by and among
The Corporate Executive Board Company, a Delaware corporation, including its
subsidiaries, successors and assigns (collectively, "CEB"), The Advisory Board
Company, a Maryland corporation, including its subsidiaries, successors and
assigns (collectively, "ABC") and Xxxxx X. Xxxxxxx, including his successors,
assigns and any entity controlled by him (collectively, "Xxxxxxx").
WHEREAS, CEB, ABC and Xxxxxxx desire to enter into an agreement to place
certain limitations on competition between CEB, on the one hand, and, on the
other hand, ABC and Xxxxxxx (ABC and Xxxxxxx together are referred to herein as
the "Xxxxxxx Parties").
NOW, THEREFORE, in consideration of the premises and covenants contained
herein and intending to be legally bound hereby, CEB, ABC and Xxxxxxx agree as
follows:
1. DEFINITIONS.
(a) "Covered Services" shall mean membership based subscription
services substantially similar to the services provided by ABC
and CEB as of the date of this agreement, in which members
receive a bundle of services incorporating a meaningful
combination of the following: multi-client syndicated studies,
meetings focused on discussions of syndicated studies, short
answer custom research, and on site seminars.
(b) "Health Care Provider Company" shall mean any company or
institution, or any division or subsidiary of any company or
institution, that is principally engaged in the health care
provider business, which shall include providers of patient care
(such as hospitals, outpatient facilities, home health agencies
and relevant government agencies) and providers of medical
professional services (such as physician and nursing services and
physician practice management companies).
(c) "Other Health Care Company" shall mean any company or
institution, or any division or subsidiary of any company or
institution, that is not a Health Care Provider Company and which
is principally engaged in other types of health care business,
including: pharmaceuticals companies; medical supply companies;
medical equipment companies; technology, software,
communications, financing and services vendors selling
predominantly to Health Care Provider Companies; companies
providing health insurance; and managed care companies.
(d) "Non-Health Care Company" shall mean any company or institution,
or any division or subsidiary of any company or institution, that
is not a Health Care Provider Company or an Other Health Care
Company.
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2. NON-COMPETITION.
(a) THE XXXXXXX PARTIES. The Xxxxxxx Parties shall not offer or sell
Covered Services to any Non-Health Care Companies.
Notwithstanding the forgoing, the Xxxxxxx Parties may:
(i) sell products and services to any company or institution,
or any division or subsidiary of any company or
institution, that is a Health Care Provider Company;
(ii) sell products and services to divisions and subsidiaries
of companies other than Health Care Provider Companies, if
such divisions or subsidiaries themselves are Health Care
Provider Companies; and
(iii) continue to renew pre-existing subscriptions with respect
to those products and services that it has sold as of the
closing date of the initial public offering of shares of
Common Stock of CEB (the "Offering Date") to any then
existing client, if such client was a subscriber to such
products or services immediately prior to such
subscription renewal and such products and services
specifically address health care provider industry issues;
and
(iv) offer and sell to any entity:
(A) magazines, newspapers and news services;
(B) advertising for its publications, news or
on-line services; and
(C) products and services that are specifically
addressed to and deal with advertising and
promotion activities by companies and institutions
and advertising agencies, provided that such
products and services are offered only to the
offices and divisions of companies, institutions or
advertising agencies that are responsible for the
placement or designing of advertisements;
(D) products and services that are specifically
addressed to and deal with government relations and
lobbying activities by companies and institutions,
provided that such products and services are
offered only to the offices and divisions of
companies or institutions that are responsible for
government relations and lobbying.
(b) CEB. CEB shall not offer or sell Covered Services to Health Care
Provider Companies. Notwithstanding the forgoing, CEB may:
(i) sell its products and services to Non-Health Care
Companies;
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(ii) sell its products and services to divisions and
subsidiaries of companies other than Non-Health Care
Companies, if such divisions or subsidiaries are
themselves Non-Health Care Companies; and
(iii) continue to renew pre-existing subscriptions with respect
to those products and services that it has sold as of the
Offering Date to any then existing client, if such client
was a subscriber to such products or services immediately
prior to such subscription renewal and such products and
services do not specifically address health care provider
industry issues.
(c) PROVISION OF SERVICES TO OTHER HEALTH CARE COMPANIES.
Notwithstanding the forgoing:
(i) the Xxxxxxx Parties may sell Covered Services to Other
Health Care Companies provided that Xxxxxxx Parties do not
offer programs targeted to the same executives and
covering the same subjects as that of CEB's Human
Resources, Chief Financial Officer or General Counsel
programs; and also provided that all research agendas,
brochures and any other sales and marketing materials
associated with such services make explicit the health
care industry focus of such services.
(ii) CEB may sell Covered Services to Other Health Care
Companies, only if such services are of a general business
nature and are also sold by CEB principally to Non-Health
Care Companies.
3. EMPLOYEES.
(a) Except as provided in Section 3(c) of this Agreement, the Xxxxxxx
Parties shall not recruit or employ any person who is at the time
of such recruitment an employee of CEB, or who was employed by
CEB at any time during the 24-month period preceding the date of
such recruitment or employment, unless CEB's chief executive
officer consents to such recruitment and employment.
(b) CEB shall not recruit or employ any person who is at the time of
such recruitment an employee of ABC or Xxxxxxx, or who was
employed by ABC or Xxxxxxx at any time during the 24-month period
preceding the date of such recruitment or employment, unless
ABC's chief executive officer or Xxxxxxx, as the case may be,
consents to such recruitment and employment.
(c) Xxxxxxx or ABC may hire Xxxxx X. xxx Xxxxx, the Chief Research
Officer of CEB, at any time after January 1, 2002.
(d) Each of CEB and ABC shall incorporate in each of the
noncompetition agreements that it has entered into, or will
enter into, with its current or future employees provisions (the
"Noncompetition Provision") that would prohibit such employee
from competing with CEB or ABC, as the case may be, to the same
extent and under the same terms and conditions that similar
level employees
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generally are prohibited from competing with the company
employing such employee, and that would impose similar
restrictions on the use of confidential information. Neither CEB
nor ABC shall waive any rights under, or agree to any
settlements in connection with the enforcement of, the
Noncompetition Provision contained in any noncompetition
agreement without the prior written consent of the other
company, but only to the extent that such waiver or such
settlement relates to the rights of such other company. Each of
CEB and ABC shall use its best efforts to enforce the
Noncompetition Provision promptly upon being notified or
becoming aware of a breach of such provision by any of its
current or previous employees who are subject to the
Noncompetition Provision; provided, however, that the company
for whose benefit the Noncompetition Provision is being enforced
shall pay all reasonable costs and expenses incurred in
connection with such enforcement. In addition, each company may
assert directly its own rights under the Noncompetition
Provision with respect to current or previous employees of the
other company to the maximum extent permitted by law.
4. NAME LICENSE.
(a) ABC continues to own all rights, title, interest and any other
intellectual property or proprietary right in the name "The
Advisory Board Company" and all derivations thereof, including
but not limited to, "The Corporate Advisory Board Company" and
CEB has no right or interest therein, except for the license
granted in Section 4(b) below.
(b) ABC hereby grants an exclusive, non-transferable, royalty-free,
paid-up license to CEB to use the derivative name "The Corporate
Advisory Board Company" for a period of two years from the date
of this Agreement only for Transitional Purposes, provided that,
the name "The Corporate Advisory Board Company" may be used for
recruiting of prospective employees only if CEB receives prior
written approval from ABC. "Transitional Purposes" shall mean
for purposes of this Section, use of the name to inform the
general public that The Corporate Advisory Board Company has
changed its name to The Corporate Executive Board Company. Upon
the expiration of the two-year period, all rights, title and
interest in the name "The Corporate Advisory Board Company" will
revert back to ABC.
(c) ABC shall not use the name "The Corporate Advisory Board Company"
or any other derivation of its name with the word "Corporate"
during the term of this agreement.
5. TERM.
The term of this Agreement will commence on the date first written in
the preamble above and will end on the date that is five years from such date.
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6. FURTHER ASSURANCES.
CEB, ABC and Xxxxxxx agree that at any time and from time to time, upon
written request, they will execute and deliver such further documents and do
such further acts and things as may be reasonably requested in order to
effectuate the purposes of this Agreement and the transactions contemplated
hereby.
7. GOVERNING LAW.
This Agreement will be governed by and construed in accordance with the
internal laws of the State of Delaware (excluding its choice of law rules).
8. ARBITRATION.
The parties shall endeavor to settle all disputes by amicable
negotiations. Any claim, dispute, disagreement or controversy that arises among
the parties ("Disputed Matter") relating to this Agreement that is not amicably
settled shall be referred to and settled by arbitration administered by the
American Arbitration Association in accordance with the Expedited Procedures of
the Commercial Arbitration Rules of the American Arbitration Association (the
"AAA Rules") by a single arbitrator who is mutually agreeable to the parties. If
the parties are unable to agree upon an arbitrator, one arbitrator shall be
selected in accordance with the AAA Rules. All proceedings in any such
arbitration shall be conducted in Washington, D.C. Each party to such
arbitration proceeding shall bear its respective costs, fees and expenses in
connection with such arbitration. Upon a final determination by the arbitrator
with respect to the Disputed Matter, the arbitrator shall notify the parties
(such notice being the "Arbitration Order"). Any judgment on the award rendered
by the arbitrator may be entered in any court having jurisdiction thereof.
Jurisdiction of such arbitrator shall be exclusive as to disputes among the
parties relating to this Agreement and each of the parties agrees that this
Agreement to arbitrate shall be specifically enforceable under the laws of the
respective domiciliary jurisdictions of the parties. None of the parties shall
have the right to appeal the Arbitration Order or otherwise to submit a dispute
relating to this Agreement to a court of law.
9. COUNTERPARTS.
This Agreement may be executed in counterparts, each of which will
constitute an original and all of which will be one and the same document.
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IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the date first written above.
THE CORPORATE EXECUTIVE BOARD COMPANY
/s/ XXXXX X. XXXXXXXXX
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By: Xxxxx X. XxXxxxxxx
Its: Chief Executive Officer
THE ADVISORY BOARD COMPANY
/s/ XXXXXXX X. XXXXXX
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By: Xxxxxxx X. Xxxxxx
Its: Chief Executive Officer
/s/ XXXXX X. XXXXXXX
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Xxxxx X. Xxxxxxx
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