Exhibit 10.16
AGREEMENT CONCERNING EXCLUSIVE SERVICES,
CONFIDENTIAL INFORMATION, BUSINESS OPPORTUNITIES,
NON-COMPETITION, NON-SOLICITATION AND WORK PRODUCT
This Agreement is made effective as of the 15th day of April, 1998, by and
between The Corporate Executive Board Company, including its affiliates,
successors and assigns (the "Company") and Xxxxxx "Xxxxx" Xxxxxxx (the
"Employee").
R E C I T A L S
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R1. The Company is engaged in the business of providing research and
advisory services to individual members in various industries, including without
limitation such services as short-answer or custom research on demand, multiple
client or syndicated studies, benchmarking data and databases and conferences,
seminars, training and education. In order to remain competitive in this
business, the Company must protect its good will, its base of members and
prospective members, its employees, its confidential and proprietary
information, and the work product of its employees.
R2. The Company has offered employment or continued employment to the
Employee. During the course of employment, the Employee will develop important
contacts with the members and prospective members of the Company, and will also
become aware of certain methods, practices, information and procedures with
which the Company conducts its business, all of which are considered
confidential and proprietary by the Company. The Employee may also prepare
studies and other written materials using the Company's resources.
R3. The Company and the Employee agree that it is reasonable and necessary
to enter into an Agreement to protect the Company's good will, its base of
members and prospective members, its employees, its confidential and proprietary
information, and its work product.
NOW, THEREFORE, in consideration of the recitals above, initial and/or
continued employment, participation in the Company's employee benefit programs
as reflected in the Employment Agreement, Stockholders Agreement and Stock
Option Agreement between the Employee and the Company (the "Employee Benefit
Programs") and other good and valuable consideration, the receipt and
sufficiency of which is acknowledged, the parties agree as follows:
1. Exclusive Services
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During the term of employment, the Employee shall at all times devote his
entire working time, attention, energies, efforts and skills to the business of
the Company, and shall not, directly or indirectly, engage in any other business
activity, whether or not for profit, gain or other pecuniary advantages, without
the express written permission of the Company. The Employee shall not, without
prior written permission of the Company, directly or indirectly, either as an
officer, director, employee, agent, adviser, consultant, principal, stockholder,
partner, owner or in
any other capacity, on his own behalf or otherwise, in any way engage in,
represent, be connected with or have a financial interest in, any business which
is, or to the best of his knowledge, is about to become, engaged in the same or
substantially similar business lines as the Company or any of its affiliates or
which otherwise competes with or is about to compete with the Company or any of
its affiliates.
2. Confidential Information
------------------------
Except as may be required and authorized in the course of his employment
with the Company, the Employee shall not at any time during his employment with
the Company or after the termination thereof for any reason disclose or use,
directly or indirectly, any confidential or proprietary information of the
Company or its affiliates. For the purposes of this Agreement, "confidential or
proprietary information" shall mean all information disclosed to the Employee,
or known by him as a consequence of or through his employment with the Company,
where such information is not generally known in the trade or industry or which
is considered confidential by the Company or was the subject of efforts by the
Company to maintain its confidentiality, and where such information refers or
relates in any manner whatsoever to the business activities, processes, services
or products of the Company or its affiliates. Such information includes, but is
not limited to, trade secrets as defined by the District of Columbia Trade
Secrets Act, D.C. Code (S) 48-501 et seq., business and development plans
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(whether contemplated, initiated or completed), business contacts, methods of
operation, policies, results of analysis, member and prospective member lists,
employee lists, business forecasts, financial data, advertising and marketing
methods, manuals, training materials, management, performance review, project
assessment and all other forms and documents used in management of the Company's
employees and in performing work for the Company, reports, correspondence, data
collection forms and other documents provided to members, syndicated, multi-
client studies, custom research reports, statements, reports, strategic
information and other information distributed to policy or management committee
members, information relating to costs and revenues, and similar information.
3. Return of Company Property
--------------------------
Upon termination of employment for any reason, the Employee shall
immediately return to the Company all of the Company's and its affiliates'
property and confidential or proprietary information which is in tangible form
(including, but not limited to, all correspondence, memoranda, files, manuals,
books, lists, records, equipment, computer disks, magnetic tape, and electronic
and other media and equipment) and all copies thereof in the Employee's
possession, custody or control, provided that the Employee may retain one copy
of each published study to which he contributed personally.
4. Business Opportunities
----------------------
During the term of his employment, the Employee shall promptly disclose to
the Company each business opportunity of a type which, based upon its prospects
and relationship to the business of the Company or its affiliates, the Company
might reasonably consider pursuing. In the event that the Employee's employment
is terminated for any reason, the Company or its
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affiliates shall have the exclusive right to participate in or undertake any
such opportunity on their own behalf without any involvement by or compensation
to the Employee.
5. Covenant Not to Compete
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(a) Except as otherwise provided in Section 5(b) below, if the Employee's
employment is terminated by the Company for Cause, or if the Employee
voluntarily resigns for any reason, the Employee shall not, directly or
indirectly, either individually or as a stockholder, director, officer, partner,
consultant, owner, employee, agent, or in any other capacity, for a period of
two (2) years following such termination, (i) provide "Company Services" or work
for or provide services to any person or entity that provides "Company
Services," within a one hundred (100) mile radius of any city or location in the
United States or in any foreign country in which the Company or its affiliates
has an office, is or has engaged in business, or proposes to engage in business
as of the date of the Employee's termination; or (ii) solicit or offer to
provide or provide "Company Services," or work for a person or entity that
solicits or offers to provide or provides "Company Services," to any person or
entity who was a member of the Company or its affiliates or was directly or
indirectly solicited to be a member of the Company or its affiliates at any time
during the two-year period prior to the termination of the Employee's employment
with the Company. For the purposes of this Section 5(a), the term "Company
Services" shall mean: (aa) providing short-answer or custom research on demand,
including without limitation literature or database searches, telephone
interviews, or other research of the same or substantially similar type as that
provided by the Company or its affiliates; or (bb) preparing published multiple
client or syndicated studies, including without limitation studies of the same
or substantially similar type provided by the Company or its affiliates; or (cc)
selling benchmarking data and databases of the same or substantially similar
type provided by the Company or its affiliates; or (dd) providing conferences,
seminars, training or education of the same or substantially similar type
provided by the Company or its affiliates; or (ee) providing any other services
or products not described in (aa) through (dd) above that the Company or its
affiliates is providing, has provided or proposes to provide as of the date of
the Employee's termination; where any of the foregoing services described in
(aa) through (ee) above are provided to any of the following: physicians,
hospitals, health plans, pharmaceutical companies, insurance companies, managed
care companies, commercial banks, brokerage houses, mutual fund companies or
Fortune 1000 companies. Notwithstanding the foregoing, the Employee may, upon
termination in the situations described above, work as a consultant or for a
consulting firm, provided he complies with all of the provisions of this Section
5(a). The Company may release the Employee from some or all of the restrictions
in this section only in a written instrument signed by the Employee and the
Chairman of the Company.
For the purposes of this Section 5(a), "Cause" for termination shall mean
the commission of an act of fraud, theft or dishonesty against the Company;
arrest or conviction for any felony; arrest or conviction for any misdemeanor
involving moral turpitude which might, in the Company's reasonable opinion,
cause embarrassment to the Company; misconduct; substance abuse;
insubordination; violation of Company policy; willful or repeated non-
performance or substandard performance of duties; or violation of any District
of Columbia, state or federal laws, rules or regulations in connection with or
during performance of work.
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(b) In the event of an Approved Sale or an Initial Public Offering prior
to the date of the Employee's termination, the two year limitation period set
forth in Section 5(a) above shall be extended an additional one (1) year (for a
total of three (3) years from the date of termination). For purposes of this
Agreement, an "Approved Sale" shall mean a transaction or a series of related
transactions that result in a bona fide unaffiliated change of more than fifty
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percent (50%) of the economic beneficial ownership of (A) the Company or (B) a
functional unit or division of the Company in which the Employee is employed
(disregarding for purposes of this Section 5 any disparate voting rights
attributable to the outstanding capital stock of the Company), whether pursuant
to the sale of the capital stock of the Company, the sale of the assets of the
Company, or a merger or consolidation involving the Company. However, an
Approved Sale shall not include (i) an issuance by the Company of its own
capital stock, or (ii) a gift of the capital stock of the Company. For purposes
of this Agreement, an "Initial Public Offering" shall mean the effectiveness of
a registration statement under the Securities Act of 1933, as amended, covering
any of the capital stock of the Company and the completion of the sale
thereunder, if as a result of such sale (aa) the issuer becomes a reporting
company under Securities Exchange Act of 1934, as amended, and (bb) such stock
is traded on the New York Stock Exchange or the American Stock Exchange, or is
quoted on the NASDAQ National Market System.
(c) The Employee agrees that the restrictions imposed upon him by the
provisions of this Section 5 are fair and reasonable considering the nature of
the Company's business, and are reasonably required for the protection of the
Company. The Employee further agrees that the provisions of Section 5(a)
relating to areas of restriction, member limitations, or time periods of
restriction were specifically discussed in good faith and are acceptable to the
Employee. Nevertheless, to the extent that these restrictions exceed the
maximum areas of restriction, member limitations or periods of time which a
court of competent jurisdiction would enforce, the areas of restriction, member
limitations or time periods shall be modified by such court to be the maximum
areas of restriction, member limitations or time periods which such court would
enforce in any state in which such court shall be convened. If any other part
of Section 5(a) is held to be invalid or unenforceable, the remaining parts
shall nevertheless continue to be valid and enforceable as though the
unenforceable portions were absent. In addition, both during and subsequent to
his term of employment and at such times as the Company may reasonably request,
the Employee agrees to provide the Company with such information as may be
necessary to demonstrate his compliance with the terms and conditions of this
Agreement.
(d) Notwithstanding anything set forth above to the contrary, if the
Company notifies the Employee in writing within thirty (30) days of his
termination without Cause of the Company's desire to have the provisions of
Section 5(a) of this Agreement apply to the Employee, the Employee must comply
with the provisions of Section 5(a) as if he was terminated for Cause or
voluntarily resigned for a period of one (1) year from such termination,
provided the Company agrees to pay the Employee, in monthly installments, one
hundred twenty-five percent (125%) of the Employee's base salary at the time of
termination over such one (1) year period. In addition, if the Company
notifies the Employee in writing within thirty (30) days of the end of the one-
year period of non-competition provided by this Section 5(d) of the Company's
desire to extend such one-year period for an additional one (1) year period (for
a total of two years from the date of termination), the Employee must comply
with the provisions of Section 5(a) as if he was terminated for Cause or
voluntarily resigned for a period of one (1) additional year, provided
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the Company agrees to pay the Employee, in monthly installments, one hundred
twenty-five percent (125%) of the Employee's base salary at the time of
termination over such additional one-year period.
(e) For purposes of this Agreement, the term "affiliates" shall mean a
corporation of which 50 percent or more of the total combined voting power or
value of all classes of capital stock are, directly or indirectly, owned by the
Company or by the beneficial shareholders of the Company. Without limiting the
foregoing, The Advisory Board Company shall be deemed to be an affiliate of the
Company.
6. Solicitation of Employees
-------------------------
The Employee agrees that during the term of his employment, and for a
period of two (2) years after termination of such employment for any reason, he
shall not, except in the course of his duties for the Company, directly or
indirectly, induce or attempt to induce or otherwise counsel, advise, ask or
encourage any person who at the time is a current employee of the Company or its
affiliates, or who left such employ within the preceding six (6) months, to
leave the employ of the Company or to accept employment with another employer
besides the Company or as an independent contractor, or offer employment to or
hire such person, or work for any person or entity that offers employment to or
hires such person. In the event of an Approved Sale or an Initial Public
Offering prior to the date of the Employee's termination, the two year
limitation period set forth in this Section 6 shall be extended an additional
one (1) year (for a total of three (3) years from the date of termination).
7. Copyrightable Materials
-----------------------
The Employee shall disclose promptly in writing and assign immediately, and
hereby assigns to the Company, all of the Employee's right, title and interest
in and to, any original works of authorship, formulas, processes, programs,
benchmarking or other databases, techniques, know-how, data, developments or
discoveries, whether or not copyrightable (hereinafter referred to collectively
as "Work Product"), which the Employee may make or conceive, or first reduce to
practice or learn either solely or jointly with others, during the employment
period with the Company or its affiliates through the Employee's work with the
Company or its affiliates or with any other person or entity pursuant to an
assignment by the Company. The Employee acknowledges the special interest the
Company holds in its processes, techniques and technologies in producing its
editorial works and agrees that such processes, techniques and technologies
shall not be directly or indirectly used or distributed by the Employee for the
interests of any person or entity besides the Company.
(a) All disclosures and assignment made pursuant to this Agreement are
made without royalty or any additional consideration to the Employee other than
the regular compensation paid to the Employee by the Company or its affiliates.
(b) The Employee shall execute, acknowledge and deliver to the Company or
its affiliates all necessary documents, and shall take such other action as may
be necessary to assist the Company in obtaining by statute, copyrights,
trademarks or other statutory or common law
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protections for the Work Product covered by this Agreement, vesting title and
right in such copyrights, trademarks and other protections in the Company and
its designees. The Employee hereby agrees that the Work Product constitutes a
"work made for hire" in accordance with the definition of that term under the
U.S. copyright laws. The Employee shall further assist the Company or its
affiliates in every proper and reasonable way to enforce such copyrights,
trademarks and other protections as the Company may desire. The Employee's
obligation to deliver documents and assist the Company or its affiliates under
this Agreement applies both during and subsequent to the term of his employment.
(c) Any Work Product which the Employee may disclose to anyone within six
(6) months after the termination of his employment, or for which the Company or
its affiliates may file an application for copyright, trademark or other
statutory or common law protection within eighteen (18) months after the
termination of said employment, shall be presumed to have been made, conceived,
first reduced to practice or learned during the term of Employee's employment
and fully subject to the terms and conditions set forth herein; provided that if
the Employee, in fact, conceived any such Work Product subsequent to the
termination of the employment and such Work Product is not based upon or derived
from confidential or proprietary information of the Company or its affiliates or
does not relate to the scope of work performed by the Employee pursuant to his
employment duties with the Company or its affiliates, then such Work Product
shall belong to the Employee and shall be the Employee's sole property.
Employee assumes the responsibility of establishing by competent legal evidence
that such Work Product is not based on such confidential or proprietary
information and that the Employee conceived any such Work Product after the
termination of his employment.
(d) The Employee represents that the Work Product does not infringe any
copyright or other proprietary right of any person or entity.
(e) Attached to and made as part of this Agreement as Exhibit A is a
complete list of all Work Product, whether or not copyrighted, which has been
made or conceived or first reduced to practice by the Employee alone or jointly
prior to the date of his employment with the Company or its affiliates. Such
Work Product shall be excluded from the operation of this Agreement. If there
is no such list on Exhibit A, the Employee represents that no such Work Product
exists at the time of signing this Agreement.
8. Severability
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If any provision of this Agreement shall be determined, by a court having
jurisdiction, to be invalid, illegal or unenforceable, the remainder of this
Agreement shall not be affected but shall continue in full force and effect as
though such invalid, illegal or unenforceable provision were not originally a
part of this Agreement.
9. Specific Performance, Liquidated Damages, and Attorneys' Fees
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The Employee acknowledges that a breach of any of the provisions of this
Agreement may result in continuing and irreparable damages to the Company or its
affiliates for which there may be no adequate remedy at law and that the Company
or its affiliates, in addition to all other
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relief available to it, shall be entitled to the issuance of a temporary
restraining order, preliminary injunction and permanent injunction restraining
the Employee from committing or continuing to commit any breach of this
Agreement both pending further legal proceedings and for appropriate periods in
the future. Furthermore, the Employee understands that his breach of this
Agreement may cause monetary damages to the Company or its affiliates that are
difficult to calculate. Thus, should the Employee breach and term of this
Agreement, he shall be required to pay the Company or its affiliates as
liquidated damages 100% of the value of all cash payments (including gain from
the sale of stock obtained on exercise of any options) he has received with
respect to the Employee Benefit Programs during the five-year period preceding
said breach and he shall forfeit 100% of the value of all such cash payments to
which he may be entitled in the future. The Employee agrees that the foregoing
amount of liquidated damages is reasonable and does not constitute a penalty. If
the Company or its affiliate is the prevailing party in any action for breach of
this Agreement, the Employee shall reimburse the Company for its reasonable
attorneys' fees and costs incurred in such action. The Employee also agrees that
any applicable time period limitation on any provision of this Agreement (such
as the two year or three year limitation periods set forth in Sections 5(a) and
6 above) shall be extended on a day-for-day basis for each day during which the
Employee is in breach of this Agreement.
10. Choice of Law
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This Agreement shall be construed in accordance with and governed by the
laws of the District of Columbia, irrespective of the principles of conflicts of
law therein.
11. Limitations of Agreement
------------------------
This Agreement does not constitute a contract of employment for a definite
period of time. Either party may terminate the employment relationship with or
without cause at any time for any lawful reason. The provisions of this
Agreement shall survive the termination of the employment relationship between
the Company and the Employee.
12. Successors and Assigns
----------------------
This Agreement shall be binding upon and shall inure to the benefit of the
parties and their respective successors and assigns. Notwithstanding the
foregoing, the Employee shall not assign his obligations under this Agreement
without the express written consent of the Company and its successors and
assigns.
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IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the date first above written.
EMPLOYEE THE CORPORATE EXECUTIVE BOARD
COMPANY
/s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. X'Xxxxx
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Xxxxxx "Xxxxx" Xxxxxxx Name: Xxxxxxx X. X'Xxxxx
Title: Executive Vice President
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