EMPLOYMENT AGREEMENT BETWEEN THE COMPANY AND THOMAS L. MONAHAN III DATED MAY 19, 2006
Exhibit 10.1
EMPLOYMENT AGREEMENT BETWEEN THE COMPANY
AND XXXXXX X. XXXXXXX III
AND XXXXXX X. XXXXXXX III
DATED MAY 19, 2006
THIS EMPLOYMENT AGREEMENT (this “Agreement”), effective as of the 1st of January, 2006 (the
“Effective Date”), is made and entered into on May 19, 2006 by and between The Corporate Executive
Board Company (hereinafter the “Company”) and Xxxxxx X. Xxxxxxx III (hereinafter the “Executive”).
The Company hereby agrees to employ the Executive on the terms and conditions stated herein,
to perform and discharge such services and duties as are reasonably required of the Chief Executive
Officer, and such other substantially similar services and duties as he may be assigned from time
to time by the Company’s Board of Directors (the “Board”). The Executive agrees to accept such
employment with the Company as of the Effective Date on the terms and conditions stated herein, and
to devote his full business time and best efforts, energies and abilities to the Company; provided,
however, that the Executive may engage in charitable, civic or community activities, manage his
personal investments and, with the prior approval of the Board, serve as a director of any company
that is not directly or indirectly in competition with the Company, as long as such activities or
service do not materially interfere with his duties and obligations to the Company hereunder.
The term of employment of the Executive by the Company pursuant to this Agreement shall
commence as of the Effective Date and, unless earlier terminated pursuant to Section 8 hereof,
shall end on the second anniversary of the Effective Date; provided that the term of Executive’s
employment under this Agreement shall be extended automatically for one additional year as of each
anniversary of the Effective Date, unless no later than 90 days prior to any such renewal date
either the Board, on behalf of the Company, or the Executive gives written notice to the other that
the term of Executive’s employment under this Agreement shall not be so extended. This
Agreement does not address any terms of the Executive’s employment other than as Chief Executive
Officer.
During his employment under this Agreement, the Company shall, commencing with the Effective
Date, pay the Executive a base salary at the rate of Five Hundred Fifty Thousand Dollars
($550,000.00) per annum, payable in installments in accordance with the Company’s policy governing
salary payments to executive employees generally. The Board will review the Executive’s salary
periodically and may, in its sole discretion, grant increases to the Executive’s salary rate.
(b) Annual Incentive Bonus
Each fiscal year, the Executive shall have a target annual incentive bonus opportunity of not
less than 110% of the Executive’s Base Salary in effect at the beginning of such fiscal year. The
actual incentive bonus payable to the Executive for any fiscal year shall be based upon criteria
established and approved by the Compensation Committee and/or the Board in its sole discretion,
which need not be objective performance criteria, and may be less than (including zero) or greater
than the target annual incentive bonus opportunity for such fiscal year.
Executive confirms and acknowledges that any other elements of compensation, including without
limitation grants of equity-based compensation, are provided at the sole discretion of the Board of
Directors and/or its compensation committee, which also shall have sole discretion to determine the
terms, amount and frequency of any such other elements of compensation.
Unless otherwise specifically approved by the Board of Directors, the Executive shall not
receive separate or additional compensation for service on the Board of Directors or for service in
any other or additional capacity to the Company and/or its subsidiaries.
The Company shall provide the Executive with all of the standard benefits it provides to other
executive employees who are similarly situated, as such benefits may be modified from time to time,
including without limitation vacation, holidays, sick leave, group health insurance, short term and
long term disability insurance, life insurance and participation in the 401(k) plan.
Notwithstanding the foregoing, the Company agrees to maintain for the benefit of the Executive
short term and long term disability insurance with coverage amounts at least equal to such coverage
amounts maintained by the Company with respect to the Executive on the Effective Date. In addition,
the Company agrees, subject to the Board’s approval, to reimburse the Executive for membership fees
and other reasonable expenses incurred with respect to the Executive’s participation in
professional development, community and business-related organizations.
The Company shall reimburse the Executive for all reasonable and necessary business expenses
incurred by him in the performance of his duties hereunder, in accordance with its policies, and
provided they are vouchered in a form satisfactory to the Internal Revenue Service and consistent
with company policy with respect to such expenses. The Company shall pay the reasonable legal fees
and expenses incurred by the Executive in connection with the negotiation and preparation of this
Agreement.
The Executive represents and warrants that his performance hereunder shall not conflict with
any other agreements to which he is a party. He further represents and warrants that he will not
use in his performance hereunder any information, material or documents of a former employer which
are trade secrets or are otherwise confidential or proprietary to said employer, unless he has
first obtained written authorization from such former employer for their possession or use. The
Executive agrees not to enter into any agreement, either written or oral, which may conflict with
this Agreement, and he authorizes the Company to make known the terms of this Agreement to any
person or entity.
| 7. | Exclusive Services, Confidential Information, Business Opportunities, Non-Competition, Non-Solicitation and Work Product | |
The Executive and the Company’s predecessor previously entered into an Agreement
Concerning Exclusive Services, Confidential Information, Business Opportunities,
Non-Competition, Non-Solicitation and Work Product, dated August 20, 1997 (as such may be
amended from time to time, the “Non-Competition Agreement”), which is hereby affirmed and
incorporated herein in its entirety by this reference.
If, for any reason, the Executive’s employment by the Company is terminated, the Executive
immediately shall resign his position as a director of the Company. The termination of the
Executive’s employment by the Company shall be governed by the following:
(a) By the Company
(i) Termination for Cause
The Company may terminate the employment of the Executive for Cause at any time upon three (3)
months notice to the Executive. For purposes of this Agreement, “Cause” shall mean the commission
of a material act of fraud, theft or dishonesty against the Company; conviction for any felony; or
willful non-performance of material duties which is not cured within sixty (60) days after receipt
of written notice to the Executive from the Board of Directors; provided, however, that no
action(s) or inaction(s) by the Executive will constitute Cause unless a resolution finding that
Cause exists has been approved by a majority of all of the members of the Board at a meeting of the
Board at which the Executive is allowed to appear with his legal counsel. In the event of
termination pursuant to this Section 8(a)(i), the Executive shall not be entitled to any further
compensation or benefits from the Company except such compensation or benefits which have been
earned prior to the date of termination pursuant to the express terms of this Agreement or that are
payable or otherwise provided pursuant to the Non-
Competition Agreement or the benefit plans and arrangements in which the Executive
participates at the time of his termination (including without limitation any further vesting or
exercisability that may be provided for in such circumstances under the express terms of an equity
compensation arrangement then held by executive).
(ii) Termination Without Cause
The Company, in its sole discretion, may terminate the employment of the Executive at any time
without “Cause” as defined by Section 8(a)(i) or without any other cause or reason whatsoever. For
purposes of this Section 8(a)(ii), a termination by the Company without cause shall include a
termination upon the expiration of the term of this Agreement as the result of notice from the
Board to the Executive pursuant to Section 2 above that this Agreement shall not be extended, but
shall not include a termination due to death or disability (as defined in Section 8(b) below) or a
termination by the Executive without Good Reason (as defined in Section 8(c)(ii) below). In the
event of termination pursuant to this Section 8(a)(ii), (A) (I) the Company shall pay the Executive
a lump sum payment equal to the sum of (x) 200% of one year’s base salary of the Executive at the
time of such termination and (y) the Executive’s prorated (through and including the date on which
the Executive’s employment terminates) target annual incentive bonus for the year in which
termination occurs, (II) all of the options and stock appreciation rights granted to the Executive
shall vest and immediately become exercisable and such options and stock appreciation rights shall
expire ninety (90) days after such termination without Cause, (III) all restricted stock units and
other equity or deferred compensation of the Executive shall vest and (IV) the Company shall
provide to the Executive for a period of two years following the date on which the Executive’s
employment terminates, at the same cost to the Executive as is charged to active executive
employees of the Company, the same welfare benefits, including, without limitation, health, life
and disability insurance coverage, provided to the Executive immediately prior to the termination
of the Executive’s employment (or alternative coverage which is no less favorable to the Executive
in all respects if continued coverage under the Company’s welfare benefit plans is not less
possible) and (B) the Executive shall not be entitled to any further compensation or benefits from
the Company except such compensation or benefits which have been earned prior to the date of
termination pursuant to the express terms of this Agreement or that are payable or otherwise
provided pursuant to the Non-Competition Agreement or the benefit plans and arrangements in which
the Executive participates at the time of his termination (including without limitation any further
vesting or exercisability that may be provided for in such circumstances under the express terms of
an equity compensation arrangement then held by executive).
The Executive’s employment shall be terminated in the event of his death or disability. The
term “disability” shall mean a serious and permanent medical incapacity or disability that
precludes the Executive from performing professional work. The Company, at its option and expense,
shall be entitled to retain a physician reasonably acceptable to the Executive to confirm the
existence of such incapacity or disability. In the event of termination under this Section 8(b),
(i) the Company shall pay the Executive a lump sum payment equal to the Executive’s prorated
(through and including the date on which the Executive’s employment terminates) target annual
incentive bonus for the year in which termination occurs, (ii) all of the options and stock
appreciation rights granted to the Executive shall vest and immediately become exercisable and such
options and stock appreciation rights shall expire ninety (90) days (twelve (12) months in the case
of termination due to the Executive’s death) after such
termination, (iii) all restricted stock units and other equity or deferred compensation of the
Executive shall vest and (iv) neither the Executive nor his estate shall be entitled to any further
compensation or benefits from the Company except for such compensation or benefits which have been
earned prior to the date of termination pursuant to the express terms of this Agreement or that are
payable or otherwise provided pursuant to the benefit plans and arrangements in which the Executive
participates at the time of his termination (including without limitation any further vesting or
exercisability that may be provided for in such circumstances under the express terms of an equity
compensation arrangement then held by executive).
(c) By the Executive
(i) Termination for Good Reason
The Executive may terminate his employment for Good Reason at any time upon sixty (60) days
notice to the Company. For purposes of this Agreement, “Good Reason” shall mean during the period
of the Executive’s employment under this Agreement, without the written consent of the Executive,
(V) there is a material reduction in the Executive’s responsibility for, and authority over, the
same internal functions of the Company’s business as he had prior to such reduction; provided that
(I) the designation of another director as Chairman of the Board or as lead outside director shall
not be deemed a reduction in authority, regardless of whether the Executive shall have previously
served as Chairman of the Board, and (II) the assignment of responsibilities to an executive or
other employee who reports to the Executive shall not be deemed to be a reduction in the
Executive’s responsibility for or authority over any internal functions, (W) a reduction in the
base salary or target annual incentive bonus opportunity of the Executive, (X) the Executive is
required to relocate his place of employment to a location that is more than thirty-five (35) miles
from the location of the Company’s headquarters at the Effective Date, (Y) termination by the
Company without Cause of the Executive as Chief Executive Officer of the Company or (Z) a material
breach of this Agreement by the Company; provided that no event enumerated in (V), (W), (X), (Y) or
(Z) shall be deemed to be a basis for Executive’s termination for Good Reason unless, within 60
days of the occurrence of the event enumerated in (V), (W), (X), (Y) or (Z), the Executive delivers
written notice to the Company stating that the Executive believes that a basis for termination for
Good Reason exists and specifying the event that the Executive considers to constitute the basis
for termination for Good Reason, and the Company shall not have remedied or cured such event within
60 days of receipt of such notice. In the event of termination pursuant to this Section 8(c)(i),
(A) (I) the Company shall pay the Executive a lump sum payment equal to the sum of (x) 200% of one
year’s base salary of the Executive at the time of such termination and (y) the Executive’s
prorated (through and including the date on which the Executive’s employment terminates) target
annual incentive bonus for the year in which termination occurs, (II) all of the options and stock
appreciation rights granted to the Executive shall vest and immediately become exercisable and such
options and stock appreciation rights shall expire ninety (90) days after such termination for Good
Reason, (III) all restricted stock units and other equity or deferred compensation previously
granted to the Executive that by its terms is scheduled to vest within twelve months of the date on
which Executive’s employment terminates shall immediately vest and, except as provided in clause
(B) of this sentence, all other unvested restricted stock units and other equity or deferred
compensation shall immediately expire, and (IV) the Company shall provide to the Executive for a
period of two years following the date on which the Executive’s employment terminates, at the same
cost to the Executive as is charged to active executive employees of the Company, the same welfare
benefits, including, without
limitation, health, life and disability insurance coverage, provided to the Executive
immediately prior to the termination of the Executive’s employment (or alternative coverage which
is no less favorable to the Executive in all respects if continued coverage under the Company’s
welfare benefit plans is not less possible) and (B) the Executive shall not be entitled to any
further compensation or benefits from the Company except such compensation or benefits which have
been earned prior to the date of termination pursuant to the express terms of this Agreement or
that are payable or otherwise provided pursuant to the Non-Competition Agreement or the benefit
plans and arrangements in which the Executive participates at the time of his termination
(including without limitation any further vesting or exercisability that may be provided for in
such circumstances under the express terms of an equity compensation arrangement then held by
executive).
(ii) Termination Without Good Reason
The Executive may voluntarily terminate his employment without Good Reason at any time upon
six (6) months’ written notice to the Company. A voluntary termination by the Executive shall not
include a termination of employment due to death or disability (as defined in Section 8(b) above).
In the event of such voluntary termination by the Executive, the Company may at any time prior to
the expiration of the notice period relieve him of his duties and pay him his salary in lieu of
notice for the remainder of said notice period. In the event of termination pursuant to this
Section 8(c)(ii), the Executive shall not be entitled to any compensation or benefits from the
Company except for such compensation or benefits which have been earned prior to the date of
termination pursuant to the express terms of this Agreement or that are payable or otherwise
provided pursuant to the Non-Competition Agreement or the benefit plans and arrangements in which
the Executive participates at the time of his termination (including without limitation any further
vesting or exercisability that may be provided for in such circumstances under the express terms of
an equity compensation arrangement then held by executive).
In the event of a Change of Control (as defined in Section 10), the Executive may at any time
until the first anniversary of the date that the Change of Control transaction is actually
consummated voluntarily terminate his employment hereunder for any reason or no reason upon thirty
(30) days’ written notice to the Company. In the event of termination pursuant to this Section
8(d), (A) (I) the Company shall pay the Executive a lump sum payment equal to the sum of (x) 200%
of one year’s base salary of the Executive at the time of such termination and (y) the Executive’s
prorated (through and including the date on which the Executive’s employment terminates) target
annual incentive bonus for the year in which termination occurs, (II) all of the options and stock
appreciation rights granted to the Executive shall vest and immediately become exercisable and such
options and stock appreciation rights shall expire ninety (90) days after such termination, (III)
all restricted stock units and other equity or deferred compensation previously granted to the
Executive that by its terms is scheduled to vest within twelve months of the date on which
Executive’s employment terminates shall immediately vest and, except as provided in clause (B) of
this sentence, all other unvested restricted stock units and other equity or deferred compensation
shall immediately expire, and (IV) the Company shall provide to the Executive for a period of two
years following the date on which the Executive’s employment terminates, at the same cost to the
Executive as is charged to active executive employees of the Company, the same welfare benefits,
including, without limitation, health, life and disability insurance coverage, provided to the
Executive immediately prior to the termination
of the Executive’s employment (or alternative coverage which is no less favorable to the
Executive in all respects if continued coverage under the Company’s welfare benefit plans is not
less possible) and (B) the Executive shall not be entitled to any further compensation or benefits
from the Company except such compensation or benefits which have been earned prior to the date of
termination pursuant to the express terms of this Agreement or that are payable or otherwise
provided pursuant to the Non-Competition Agreement or the benefit plans and arrangements in which
the Executive participates at the time of his termination (including without limitation any further
vesting or exercisability that may be provided for in such circumstances under the express terms of
an equity compensation arrangement then held by executive)
(a) Anything in this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Company or its affiliated companies to or for
the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, but determined without regard to any additional payments
required under this Section 9) (a “Payment”) would, after taking into account the operation of
Section 11 below, be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code
of 1986, as amended (the “Code”), or any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the “Excise Tax”), then the Executive shall be entitled to
receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount
of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 9(c), all determinations required to be made under
this Section 9, including whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be
made by a nationally recognized public accounting firm selected by the Company and approved by the
Executive (the “Accounting Firm”) which shall provide detailed supporting calculations both to the
Company and the Executive within 15 business days of the receipt of notice from the Executive that
there has been a Payment, or such earlier time as is requested by the Company. All fees and
expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 9, shall be paid by the Company to the Executive within five
days of the receipt of the Accounting Firm’s determination. If the Accounting Firm determines that
no Excise Tax is payable by the Executive, it shall furnish the Executive with a written statement
that failure to report the Excise Tax on the Executive’s applicable federal income tax return would
not result in the imposition of a negligence or similar penalty. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a result of the
uncertainty in the application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been
made by the Company should have been made (“Underpayment”), consistent with the calculations
required to be made hereunder.
In the event that the Company exhausts its remedies pursuant to Section 9(c) and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by
the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable but no later than 10 business days after
the Executive is informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The Executive shall not pay
such claim prior to the expiration of the 30-day period following the date on which the Executive
gives such notice to the Company (or such shorter period ending on the date that any payment of
taxes with respect to such claim is due). If the Company notifies the Executive in writing prior
to the expiration of such period that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the Company relating to
such claim;
(ii) take such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney reasonably selected by the
Company;
(iii) cooperate with the Company in good faith in order effectively to contest such
claim; and
(iv) permit the Company to participate in any proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any
Excise Tax or income tax (including interest and penalties with respect thereto) imposed as
a result of such representation and payment of costs and expenses. Without limitation on
the foregoing provisions of this Section 9(c), the Company shall control all proceedings
taken in connection with such contest and, at its sole option, may pursue or forgo any and
all administrative appeals, proceedings, hearings and conferences with the taxing authority
in respect of such claim and may, at its sole option, either direct the Executive to pay the
tax claimed and xxx for a refund or contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided further, that if the Company directs the
Executive to pay such claim and xxx for a refund, the Company shall advance the amount of
such payment to the Executive on an interest-free basis and shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such
advance or with respect to any imputed income with respect to such advance; and
provided further, that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which such
contested amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company’s control of the contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to
settle or contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by the Company
pursuant to Section 9(c), the Executive becomes entitled to receive, and receives, any
refund with respect to such claim, the Executive shall (subject to the Company’s complying
with the requirements of Section 9(c)) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after taxes applicable
thereto). If, after the receipt by the Executive of an amount advanced by the Company
pursuant to Section 9(c), a determination is made that the Executive shall not be entitled
to any refund with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration of 30 days
after such determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.
For purposes of this Agreement, the following capitalized terms shall have the meanings set
forth below.
(a) “Change of Control” means any of the following:
(i) the “acquisition” by a “person” or “group” (as those terms are used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules
promulgated thereunder), other than by Permitted Holders (as defined in Section 9(b)), of
beneficial ownership (as defined in Exchange Act Rule 13d-3) directly or indirectly, of any
securities of the Company or any successor of the Company immediately after which such person or
group owns securities representing 50% or more of the combined voting power of the Company or any
successor of the Company; or
(ii) within any 12-month period, the individuals who were directors of the Company as of
December 31, 2005 (the “Incumbent Directors”) ceasing for any reason other than death or disability
to constitute at least a majority of the Board of Directors, provided that any director who was not
a director as of December 31, 2005 shall be deemed to be an Incumbent Director if such director was
appointed or elected to the Board of Directors by, or on the recommendation or approval of, at
least a majority of directors who then qualified as Incumbent Directors, provided further that any
director appointed or elected to the Board of Directors to avoid or settle a threatened or actual
proxy contest shall in no event be deemed to be an Incumbent Director; or
(iii) approval by the stockholders of the Company of any merger, consolidation or
reorganization involving the Company, unless either (A) the stockholders of the
Company immediately before such merger, consolidation or reorganization own, directly or
indirectly immediately following such merger, consolidation or reorganization, at least 60% of the
combined voting power of the company(ies) resulting from such merger, consolidation or
reorganization in substantially the same proportion as their ownership in the Company immediately
before such merger, consolidation or reorganization, or (B) the stockholders of the Company
immediately after such merger, consolidation or reorganization are Permitted Holders; or
(iv) approval by the stockholders of the Company of a transfer of 50% or more of the assets
of the Company or a transfer of assets that during the current or either of the prior two fiscal
years accounted for more than 50% of the Company’s revenues or income, unless the person to which
such transfer is made is either (A) a Subsidiary of the Company, (B) wholly owned by all of the
stockholders of the Company, or (C) wholly owned by Permitted Holders; or
(v) approval by the stockholders of the Company of a complete liquidation or dissolution of
the Company.
(b) “Permitted Holders” means:
(i) the Company,
(ii) any Subsidiary,
(iii) any employee benefit plan of the Company or any Subsidiary, and
(iv) any group which includes or any person who is wholly or partially owned by a majority of
the individuals who immediately prior to such acquisition of securities or stockholder approval
specified under Section 9(a)(i), 9(a)(iii) or 9(a)(iv) are executive officers (as defined in
Exchange Act Rule 3b-7) of the Company or any successor of the Company; provided that immediately
prior to and for six months following such acquisition of securities or stockholder approval such
executive officers of the Company are beneficial owners (as defined in Exchange Act Rule
16a-1(a)(2)) of the common stock of the Company or any successor of the Company; and provided
further that such executive officers’ employment is not terminated by the Company or any successor
of the Company (other than as a result of death or disability) during the six months following such
acquisition of securities or stockholder approval. A Change of Control shall be deemed to have
occurred on any date within six months following an acquisition of securities or stockholder
approval under Section 9(a)(i), 9(a)(iii) or 9(a)(iv) on which any of the conditions set forth in
this clause (iv) cease to be satisfied.
(c) “Subsidiary” means any corporation in which the Company owns, directly or indirectly,
stock possessing 50% or more of the total combined voting power of all classes of stock in such
corporation.
(d) “Headquarters Jurisdiction” means the District of Columbia from the Effective Date until
the date that the principal executive offices are relocated to Rosslyn, Virginia, and thereafter
means the Commonwealth of Virginia.
In the event that any payment or distribution to be made to the Executive upon termination of
the Executive’s employment hereunder is determined to constitute “deferred compensation” subject to
Section 409A of the Code, and the Executive is determined to be a “specified employee” (as defined
in Section 409A of the Code), such payment or distribution
shall not be made before the date which is six months after the termination of the Executive’s
employment (or, if earlier, the date of the Executive’s death).
The parties shall endeavor to settle all disputes by amicable negotiations. Any claim,
dispute, disagreement or controversy that arises among the parties relating to this Employment
Agreement (excluding enforcement by the Company of its rights under the Non-Competition Agreement)
that is not amicably settled shall be resolved by arbitration, as follows:
(a) An arbitration may be commenced by any party to this Agreement by the service of a
written request for arbitration upon the other affected party(ies). Such request for arbitration
shall summarize the controversy or claim to be arbitrated, and shall be referred by the complaining
party to the appointing authority for appointment of arbitrators ten (10) days following such
service or thereafter. If the panel of arbitrators is not appointed by the appointing authority
within thirty (30) days following such reference, any party may apply to any court within the
Headquarters Jurisdiction for an order appointing arbitrators qualified as set forth below.
(b) Any such arbitration shall be heard in the Headquarters Jurisdiction, before a panel
consisting of one (1) to three (3) arbitrators, each of whom shall be impartial. Except as the
parties may otherwise agree, an arbitrator shall be selected in the first instance by those members
of the Board of Directors who are neither members of the Compensation Committee of the Board of
Directors nor employees of the Company. If there are no such members of the Board of Directors, an
arbitrator shall be selected by the Board of Directors. Executive may request that additional
arbitrators be appointed, which arbitrator(s) shall be named by the appropriate official in the
District of Columbia office of the American Arbitration Association or, in the event of his or her
unavailability by reason of disqualification or otherwise, by the appropriate official in the New
York City office of the American Arbitration Association. In determining the number and appropriate
background of any additional arbitrators, the appointing authority shall give due consideration to
the issues to be resolved, but his or her decision as to the number of arbitrators and their
identity shall be final. Any arbitrator shall be an individual who is an attorney licensed to
practice law in the Headquarters Jurisdiction. Such arbitrator shall be neutral within the meaning
of the Commercial Rules of Dispute Resolution of the American Arbitration Association; provided,
however, that the arbitration shall not be administered by the American Arbitration Association.
Any challenge to the neutrality of an arbitrator shall be resolved by the arbitrator whose decision
shall be final and conclusive. The arbitration shall be administered and conducted by the
arbitrator(s) pursuant to the then-current employment dispute resolution rules of the American
Arbitration Association.
(c) All attorneys’ fees and costs of the arbitration shall in the first instance be borne by
the respective party incurring such costs and fees, but the arbitrators shall have the discretion
to award costs and/or attorneys’ fees as they deem appropriate under the circumstances; provided,
however, that, notwithstanding the foregoing, if any contest or dispute shall arise under this
Agreement involving termination of the Executive’s employment with the Company or involving the
failure or refusal of the Company to perform fully in accordance with the terms hereof, the Company
shall advance to the Executive, on a current basis, all legal fees and expenses, if any, incurred
by the Executive in connection with such contest or dispute, together with interest thereon at a
rate equal to the prime rate, as published under “Money Rates” in The Wall Street Journal
from time to time plus 300 basis points, but in no event higher than
the maximum legal rate permissible under applicable law (the “Interest Rate”), such interest
to accrue from the date the Company receives the Executive’s written statement for such fees and
expenses through the date of payment thereof; provided, further, that in the event the resolution
of any such contest or dispute includes a finding denying, in total, the Executive’s claims in such
contest or dispute, the Executive shall be required to reimburse the Company, over a period of 12
months from the date of such resolution, for all sums advanced to the Executive pursuant to this
Section 12(c), but in no event shall the Executive be required to reimburse the Company for the
Company’s attorneys’ fees and costs. The parties hereby expressly waive punitive damages, and
under no circumstances shall an award contain any amount that in any way reflects punitive damages.
(d) The decision of the arbitrator on the issue(s) presented for arbitration shall be final
and conclusive and may be enforced in any court of competent jurisdiction.
(e) It is intended that controversies or claims submitted to arbitration under this Section
12 shall remain confidential, and to that end it is agreed by the parties that neither the facts
disclosed in the arbitration, the issues arbitrated, nor the views or opinions of any persons
concerning them, shall be disclosed to third persons at any time, except to the extent necessary to
enforce an award or judgment or as required by law or regulation, including the federal securities
laws and the regulations thereunder, in response to legal process or in connection with such
arbitration.
It is understood and agreed that one party’s failure at any time to require the performance by
the other party of any of the terms, provisions, covenants or conditions hereof shall in no way
affect the first party’s right thereafter to enforce the same, nor shall the waiver by either party
of the breach of any term, provision, covenant or condition hereof be taken or held to be a waiver
of any succeeding breach.
In the event that any provision of this Agreement conflicts with the law under which this
Agreement is to be construed, or if any such provision is held invalid or unenforceable by a court
of competent jurisdiction or any arbitrator, such provision shall be deleted from this Agreement
and this Agreement shall be construed to give full effect to the remaining provisions thereof.
This Agreement shall be interpreted, construed and governed according to the laws of the
Headquarters Jurisdiction, without regard to the principle of conflicts of laws thereof.
The paragraph headings and captions contained in this Agreement are for convenience only and
shall not be construed to define, limit or affect the scope or meaning of the provisions hereof.
This Agreement shall survive and continue in full force and effect in accordance with its
terms until all obligations hereunder have been satisfied in full. The provisions of the Non-
Competition Agreement and the Stock Option Agreement (and any agreements incorporated therein
by reference) shall survive the termination and/or expiration of this Agreement.
This Agreement, including the agreements expressly incorporated by reference herein (and any
agreements incorporated therein by reference), contains and represents the entire agreement of the
parties and supersedes all prior agreements, representations or understandings, oral or written,
express or implied with respect to the subject matter hereof. This Agreement may not be modified or
amended in any way unless in a writing signed by both the Executive and the Company.
Neither this Agreement nor any rights or obligations hereunder may be assigned by either party
without the prior written consent of the other. Subject to the foregoing, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their heirs, successors and
assigns. The Company agrees that concurrently with any merger, consolidation, or transfer of all
or substantially all material Company assets, it will cause any surviving or resulting corporation
or transferee to unconditionally assume all of the obligations of the Company under this Agreement.
All notices required or permitted hereunder shall be in writing and shall be deemed properly
given when (a) delivered personally or sent by overnight courier to the address of the other party
hereto pursuant to this Section 19 or (b) sent by facsimile, with a confirmatory copy delivered by
overnight courier to the address of the other party hereto pursuant to this Section 19. Any such
notice or communication shall be addressed: (a) if to the Company, to Chairman of the Board, The
Corporate Executive Board Company, 0000 Xxxxxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000; or (b)
if to the Executive, to his last known home address on file with the Company; or to such other
address as the parties shall have furnished to one another in writing.
This Agreement may be executed in two or more counterparts all of which shall have the same
force and effect as if all parties hereto had executed a single copy of this Agreement.
| The Corporate Executive Board Company |
||||
| By: | /s/ Xxxxx X. Xxxxxxxx | |||
| Name: | Xxxxx X. Xxxxxxxx | |||
| Title: | Treasurer and Secretary | |||
| By: | /s/ Xxxxxx X. Xxxxxxx III | |||
| Name: | Xxxxxx X. Xxxxxxx III | |||
| Title: | Chief Executive Officer | |||