CHANGE IN CONTROL SEVERANCE AGREEMENT
Exhibit 10.1
THIS CHANGE IN CONTROL SEVERANCE AGREEMENT (this “Agreement”) is made and entered into as of
the ___ day of , 2008 by and between The Corporate Executive Board Company (the
“Company”) and (the “Executive”).
WHEREAS, Executive has made or is expected to make a major contribution to the profitability,
growth and financial strength of the Company;
WHEREAS, the Company considers the continued availability of Executive’s services, managerial
skills and business experience to be in the best interest of the Company and its stockholders and
desires to assure the continued services of Executive on behalf of the Company without the
distraction of Executive occasioned by the possibility of an abrupt change in control of the
Company; and
WHEREAS, Executive is willing to remain in the employ of the Employer upon the understanding
that the Employer will provide him with income security and health benefits in accordance with the
terms and conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein
contained, and for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:
1. Definitions. Whenever the following terms are used in this Agreement, they shall
have the meaning specified below unless the context clearly indicates to the contrary:
1.01 “Board” shall mean the Board of Directors of the Company.
1.02 “Base Salary” means Executive’s annual rate of base salary in effect on the date
of Executive’s termination of employment (or, if higher, on the date of the Change in Control),
determined in each case prior to reduction for any employee-elected salary reduction contributions
made to an Employer-sponsored non-qualified deferred compensation plan or an Employer-sponsored
plan pursuant to Section 401(k) or 125 of the Code, and excluding bonuses, overtime, allowances,
commissions, deferred compensation payments and any other extraordinary remuneration.
1.03 “Cause” shall mean Executive’s 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 Executive.
1.04 “Change in Control” shall mean, and shall be deemed to have occurred, upon any of
the following events:
(a) 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, 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;
(b) within any 12-month period, the individuals who were directors of the Company as of September 1, 2008 (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 September 1, 2008 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;
(c) 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 immediately before such merger, consolidation or reorganization, or
(B) the stockholders of the Company immediately after such merger, consolidation or reorganization
include Permitted Holders;
(d) 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
(e) approval by the stockholders of the Company of a complete liquidation or dissolution of
the Company.
1.05 “Code” shall mean the Internal Revenue Code of 1986, as amended.
1.06 “Company” shall mean The Corporate Executive Board Company, and, after a Change
in Control, any successor or successors thereto.
1.07 “Date of Termination” following a Change in Control shall mean the dates, as the
case may be, for the following events: (a) if Executive’s employment is terminated by his death,
the date of his death, (b) if Executive’s employment is terminated due to a Disability, thirty (30)
days after the Notice of Termination is given (provided that Executive shall not have returned to
the performance of his or her duties on a full-time basis during such period), (c) if Executive’s
employment is terminated pursuant to a termination for Cause, the date specified in the Notice of
Termination, and (d) if Executive’s employment is terminated for any other reason, fifteen (15)
days after delivery of the Notice of Termination unless otherwise agreed by Executive and Company.
1.08 “Disability” shall mean that, in the Company’s reasonable judgment, either (a)
Executive has been unable to perform Executive’s duties because of a physical or mental impairment
for 80% or more of the normal working days during six consecutive calendar months or 50% or more
of the normal working days during twelve consecutive calendar months, or (b) Executive has
become totally and permanently incapable of performing the usual duties of his employment with the
Company on account of a physical or mental impairment.
1.09 “Effective Date” shall mean the date hereof.
1.10 “Employer” shall mean the Company or a Subsidiary employing Executive.
1.11 “Good Reason” shall mean any of the following actions upon or after a Change in
Control, without Executive’s express prior written approval, other than due to Executive’s
Disability or death: (a) a diminution in Executive’s Base Salary or annual bonus opportunity; (b) a
diminution in Executive’s title, authority, duties, or responsibilities; (c) a required relocation
of at least 60 miles; (d) a breach of this Agreement with respect to Executive not cured within ten
(10) days; or (e) a successor’s failure to assume this Agreement.
1.12 “Notice of Termination” shall mean a written notice which shall indicate the
specific termination provision in this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of Executive’s
employment under the provision so indicated.
1.13 “Permitted Holders” means:
(a) the Company;
(b) 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 (a
“Subsidiary”);
(c) any employee benefit plan of the Company or any Subsidiary; and
(d) 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 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.
1.14 “Release” shall mean a release to be signed by Executive in such form as the
Company shall reasonably determine, which shall, to the extent permitted by law, waive all claims
and actions against the Employer and its affiliates and such other related parties and entities as
the Company chooses to include in the release except for claims and actions for benefits provided
under the terms of this Agreement (which Release is not revoked by Executive).
1.15 “Target Bonus” shall mean Executive’s annual target bonus (as defined in the
Corporate Leadership Team Bonus Plan) for the year in which the Date of Termination occurs or, if
higher, the year in which the Change in Control occurred.
1.16 “Termination of Employment” shall mean the time when the employee-employer
relationship between Executive and the Employer is terminated for any reason, voluntarily
or involuntarily, with or without Cause, including, without limitation, a termination by
reason of resignation, discharge (with or without Cause), Disability, death or retirement, but
excluding terminations where there is a simultaneous re-employment by the Company or a subsidiary
of the Company.
2. Term. This Agreement shall terminate, except to the extent that any obligation of
the Company hereunder remains unpaid as of such time, upon the earliest of: (a) the second
anniversary of the Effective Date if a Change in Control of the Company has not occurred prior to
such anniversary; (b) the Termination of Employment of Executive with the Employer based on Death,
Disability, or Cause or by Executive other than for Good Reason; or (c) two (2) years from the date
of a Change in Control of the Company. Notwithstanding clause (a) hereof, on each anniversary of
the Effective Date, the term of this Agreement automatically shall be extended for one additional
year, unless not less than ninety (90) days prior to such anniversary the Company notifies
Executive in writing that it does not wish to extend the term of the Agreement.
3. Termination of Employment of Executive.
3.01 Payment of Severance Benefits Upon Change in Control. In the event of a Change
in Control of the Company, Executive shall be entitled to the severance benefits set forth in
Section 4 if Executive executes a Release, and only if during the term of this Agreement:
(a) Executive’s employment by the Employer is terminated by the Employer without Cause;
(b) Executive terminates his or her employment with the Employer for Good Reason and complies
with the procedures set forth in Section 3.02;
(c) Executive’s employment by the Employer is terminated by the Employer prior to the Change
in Control and such termination arose in connection with or in anticipation of the Change in
Control (for purposes of this Agreement, meaning that at the time of such termination the Company
had entered into an agreement, the consummation of which would result in a Change in Control, or
any person had publicly announced its intent to take or consider actions that would constitute a
Change in Control, and in each case such Change in Control is consummated, or the Board adopts a
resolution to the effect that a potential Change in Control for purposes of this Agreement has
occurred); or
(d) Executive terminates his or her employment with the Employer for Good Reason prior to the
Change in Control, the event constituting Good Reason arose in connection with or in anticipation
of the Change in Control and Executive complies with the procedures set forth in Section 3.02.
3.02 Good Reason. Notwithstanding anything contained in any employment agreement
between Executive and the Employer to the contrary, during the term of this Agreement Executive may
terminate his or her employment with the Employer for Good Reason as set forth in Section 3.01(b)
or (d) and be entitled to the benefits set forth in Section 4, provided that Executive gives
written notice to the Company of his or her election to terminate his or her employment for such
reason within 180 days after the time he or she becomes aware of the existence of facts or
circumstances constituting Good Reason and the Company has not cured such facts or circumstances
within thirty (30) days after receiving such notice.
3.03 Disability. In the event of a Disability of Executive, the Company may terminate
this Agreement provided that the Company shall have provided Executive a Notice of Termination and
Executive shall not have returned to the full-time performance of Executive’s duties within thirty
(30) days of such Notice of Termination.
3.04 Cause. The Employer may terminate the employment of Executive for Cause.
Executive shall not be deemed to have been terminated for Cause unless and until there shall have
been delivered to Executive a Notice of Termination and a written copy of a finding by the
Company’s Chief Executive Officer that Executive was guilty of conduct constituting Cause based on
reasonable evidence, specifying the particulars thereof in detail.
3.05 Notice of Termination. Any termination of Executive’s employment by the Employer
or by Executive (other than termination based on Executive’s death) following a Change in Control
shall be communicated by the terminating party in a Notice of Termination to the other party
hereto.
4. Compensation and Benefits Upon Termination of Employment.
4.01 Severance Benefits.
(a) If Executive shall be terminated from employment with the Employer or shall terminate his
or her employment with the Employer, in each case as described in Section 3.01, then Executive
shall be entitled to receive, in lieu of any further payments to Executive (including, without
limitation, in lieu of any annual bonus payments or pro-rata bonus payments) except as expressly
contemplated under this Agreement, a cash amount equal to the sum of (i) twelve (12) months of Base
Salary and (ii) a pro rata Target Bonus for the year in which the Date of Termination occurs, with
such amount payable in equal installments over the twelve (12) months following the Executive’s
Date of Termination, and commencing within ten (10) business days following Executive’s Date of
Termination (or, if later, upon the expiration of the revocation period, if applicable, under the
Release, but in no event later than the later of the December 31 next-following the Date of
Termination or 2-1/2 months after the Date of Termination). The payments under this Section
4.01(a) are in lieu of (and not in addition to) any severance payments the Executive may have been
entitled to receive under any other agreement, plan or policy, and any payments under any such
agreement, plan or policy shall offset dollar-for-dollar the amounts payable hereunder.
(b) For a period of twelve (12) months following Executive’s Date of Termination (the
“coverage period”), Executive shall be entitled to the continuation of the same or equivalent
health benefit coverage as he or she was receiving immediately prior to the Change in Control at
active employee rates, and Executive’s COBRA period shall commence at the end of such twelve (12)
month period. The benefits to be provided under this Section 4.01(b) shall be reduced to the
extent of the receipt of substantially equivalent coverage by Executive from any successor
employer.
4.02 Termination Prior to a Change in Control. Notwithstanding anything contained in
Section 4.01, in the case of a termination of employment prior to the occurrence of a Change in
Control, the Company shall have no obligation to pay or provide any compensation or benefits
hereunder prior to the occurrence of the Change in Control (and, for the avoidance of doubt, any
payments relating to a termination described in Section 3.01(c) or (d) shall commence upon the
occurrence of the Change in Control).
4.03 Accrued Benefits. Upon termination of the employment of Executive for any
reason, Executive shall be entitled to receive any unpaid Base Salary through the date of such
Eligible Executive’s termination and any bonus earned but unpaid as of the date of such
termination for any previously completed fiscal year of the Company. In addition, Executive shall
be entitled to prompt reimbursement of any unreimbursed expenses properly incurred by Executive in
accordance with Company policies prior to the date of Executive’s termination. Executive shall
also receive such other compensation (including any stock options or other equity-related payments)
and benefits, if any, to which Executive may be entitled from time to time pursuant to the terms
and conditions of the employee compensation, incentive, equity, benefit or fringe benefit plans,
policies or programs of the Company.
4.04 Section 409A. Notwithstanding any other provision of this Agreement to the
contrary, severance benefits pursuant to this Section 4, to the extent of payments made from the
date of termination of Executive’s employment through March 15 of the calendar year following such
termination, are intended to constitute separate payments for purposes of Section 1.409A-2(b)(2) of
the Treasury regulations and thus are payable pursuant to the “short-term deferral” rule set forth
in Section 1.409A-1(b)(4) of the Treasury Regulations. To the extent such severance payments are
made following said March 15, they are intended to constitute separate payments for purposes of
Section 1.409A-1(b)(9)(iii) of the Treasury Regulations to the maximum extent permitted by said
provision, with any excess amount being regarded as subject to the distribution requirements of
Section 409A(a)(2)(A) of the Code, including, without limitation, the requirement of Section
409A(a)(2)(B)(i) of the Code that payment be delayed until six (6) months after separation from
service if Executive is a “specified employee” with the meaning of the aforesaid section of the
Code at the time of such separation from service.
5. No Mitigation. Executive shall not be required to mitigate the amount of any
payments provided for by this Agreement by seeking employment or otherwise, nor shall the amount of
any cash payments or benefit provided under this Agreement be reduced by any compensation or
benefit earned by Executive after his Date of Termination (except as provided in the last sentence
of Section 4.01(b) above). Notwithstanding the foregoing, if Executive is entitled, by operation
of any applicable law, to unemployment compensation benefits or benefits under the Worker
Adjustment and Retraining Act of 1988 (known as the “WARN” Act) in connection with the termination
of his or her employment in addition to those required to be paid to him or her under this
Agreement, then to the extent permitted by applicable statutory law governing severance payments or
notice of termination of employment, the Company shall be entitled to offset the amounts payable
hereunder by the amounts of any such statutorily mandated payments.
6. Limitation on Rights.
6.01 No Employment Contract. This Agreement, including the recitals hereto, shall not
be deemed to create a contract of employment between the Employer and Executive and shall create no
right in Executive to continue in the Employer’s employment for any specific period of time, or to
create any other rights in Executive or obligations on the part of the Company or its subsidiaries,
except as expressly set forth herein. Except as expressly set forth herein, this Agreement shall
not restrict the right of the Employer to terminate Executive’s employment at any time for any
reason or no reason, or restrict the right of Executive to terminate his or her employment.
6.02 No Other Exclusions. This Agreement shall not be construed to exclude Executive
from participation in any other compensation or benefit programs in which he or she is specifically
eligible to participate either prior to or following the execution of this Agreement, or any such
programs that generally are available to other executive personnel of the Company, nor shall it
affect the kind and amount of other compensation to which Executive is entitled.
7. Legal Fees and Expenses. If any dispute arises between the parties with respect to
the interpretation or performance of this Agreement, the prevailing party in any proceeding shall
be entitled to recover from the other party its attorneys fees, court costs and other expenses
incurred in connection with any such proceeding. Amounts, if any, paid to Executive under this
Section 7 shall be in addition to all other amounts due to Executive pursuant to this Agreement.
8. Non-Alienation of Benefits. Except in so far as this provision may be contrary to
applicable law, no sale, transfer, alienation, assignment, pledge, collateralization or attachment
of any benefits under this Agreement shall be valid or recognized by the Company.
9. Executive Acknowledgment. Executive acknowledges that he or she has consulted with
or has had the opportunity to consult with independent counsel of his or her choice concerning this
Agreement, that he or she has read and understands this Agreement and is fully aware of its legal
effect.
10. Miscellaneous.
10.01 Entire Agreement.
(a) This Agreement constitutes the entire understanding and sole and entire agreement between
the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous
agreements, negotiations and discussions between the parties hereto and/or their respective counsel
and representatives with respect to the subject matter covered hereby. For the avoidance of doubt,
this Agreement supersedes any employment or similar agreement between Executive and the Company to
the extent such agreement includes any severance-type provisions.
(b) The severance payment hereunder is in lieu of any payment that Executive might otherwise
be entitled to from the Company (including, without limitation, in lieu of any annual bonus
payments or pro-rata bonus payments that would otherwise be due and any other payments due
Executive in the event of a Change in Control or termination of employment under the Company’s
applicable severance pay policies, if any, or under any other oral or written agreement including,
without limitation, any employment agreement); provided, however that Executive shall continue to
be entitled to receive the applicable severance pay benefits, if any, under the Company’s
applicable policies, if any, or under another written agreement if Executive’s termination is not a
termination providing benefits under this Agreement.
10.02 Amendments. This Agreement may be changed, amended or modified only by a
written instrument executed by both of the parties hereto.
10.03 Assignment and Binding Effect.
(a) Neither this Agreement nor the rights or obligations hereunder shall be assignable by
Executive or the Company except that this Agreement shall be assignable to, binding upon and inure
to the benefit of any successor of the Company, and any successor shall be deemed substituted for
the Company upon the terms and subject to the conditions hereof’.
(b) The Company will require any successor (whether by purchase of assets, merger,
consolidation or otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform all of the obligations of the Company under this
Agreement (including the obligation to cause any subsequent successor to also assume the
obligations of this Agreement) unless such assumption occurs by operation of law.
10.04 No Waiver. No waiver of any term, provision or condition of this Agreement,
whether by conduct or otherwise, in any one or more instances shall be deemed or be construed as a
further or continuing waiver of any such term, provision or condition or as a waiver of any other
term, provision or condition of this Agreement.
10.05 Rules of Construction.
(a) This Agreement has been negotiated and executed in, and shall be governed by and construed
in accordance with the laws of, the District of Columbia. Captions contained in this Agreement are
for convenience of reference only and shall not be considered or referred to in resolving questions
of interpretation with respect to this Agreement.
(b) If any provision of this Agreement is held to be illegal, invalid or unenforceable under
any present or future law, and if the rights or obligations of any party hereto under this
Agreement will not be materially and adversely affected thereby, (i) such provision will be fully
severable, (ii) this Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, (iii) the remaining provisions of this
Agreement will remain in full force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom and (iv) in lieu of such illegal, invalid or
unenforceable provision, there will be added automatically as a part of this Agreement a legal,
valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible.
10.06 Notices. Any notice required or permitted by this Agreement shall be in
writing, delivered by hand, or sent by registered or certified mail, return receipt requested, or
by recognized courier service (regularly providing proof of delivery), addressed to the Board and
the Company at the Company’s then principal office, or to Executive at the address set forth under
Executive’s signature below, as the case may be, or to such other address or addresses as any party
hereto may from time to time specify in writing. Notices shall be deemed given when received.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto as of
the date first above written.
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