Exhibit 10.18
AGREEMENT CONCERNING EXCLUSIVE SERVICES, CONFIDENTIAL INFORMATION, BUSINESS
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OPPORTUNITIES, NON-COMPETITION, NON-SOLICITATION AND WORK PRODUCT
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This Agreement is made this 30th day of October, 1997, by and between The
Corporate Advisory Board Company, including its affiliates, successors and
assigns (the "Company") and Xxxxxxx X'Xxxxx (the "Employee").
R E C I T A L S
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Rl. 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 Stock Option Agreement and Substitution Agreement between
the Employee and the Company 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 a
mutually agreeable percentage of his working time, attention, energies, efforts
and skills to the business of the Company or its affiliates, and shall not,
directly or indirectly, engage in any other significant business activity,
whether or not for profit, gain or other pecuniary advantages, without the
express permission of the Company (which shall not be unreasonably withheld).
The Company acknowledges that the Employee is engaged in ongoing work with Xxxx
and Company (hereinafter "Bain") and certain clients of Bain. The Employee
shall not, however, without prior written permission of the Company or its
affiliates, directly or indirectly, either as an officer,
director, employee, agent, adviser, consultant, principal, stockholder, partner,
owner or in any other capacity, on his/her 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/her 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. Nothing herein will preclude the
Employee from owning up to 10% of the stock of any publicly traded company.
2. CONFIDENTIAL INFORMATION
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Except as may be required and authorized in the course of his/her
employment with the Company, the Employee shall not at any time during his/her
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/her as a consequence of or through
his/her employment with the Company, where such information is not generally
known in the trade or industry or which is reasonably considered confidential by
the Company, and where such information refers or relates in any manner
whatsoever to the business activities, processes, services or products of the
Company or its affiliate. 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 (whether contemplated,
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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
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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/she contributed personally.
4. BUSINESS OPPORTUNITIES
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During the term of his/her 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,
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to the extent such disclosure would not conflict with duties employee owes to
other parties that are disclosed to and agreed to by the Company.
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 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 directly
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 or its affiliates. For the purposes of this Section 5(a), the
term "Company Services" shall mean: (aa) providing short-answer or custom
research on demand, including 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 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 (dd) 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 parties agree and acknowledge
that the Employee may (at the conclusion of his employment with the Company)
work as a consultant providing services of the same or substantially similar
type as provided by Xxxx and Company, McKinsey and Company, Inc. and The Boston
Consulting Group (the "Consulting Firms"), or be employed by a management
consulting firm of the same or substantially similar type as the Consulting
Firms. 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
(i) the commission of an act of fraud, theft or dishonesty against the Company;
(ii) conviction of or pleading guilty or nolo contendere to any felony or any
misdemeanor involving moral turpitude which, in the Company's reasonable
opinion, causes embarrassment to the Company; (iii) material violation of
material Company policy; or (iv) willful and repeated nonperformance or
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substandard performance of reasonable duties, provided, however, that in the
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case of either (iii) or (iv), above, the Company shall notify the Employee in
writing of such material violation or such performance (as applicable) and
provide a reasonable opportunity to cure such material violation or such
performance (the "Cure Period"). If the Employee fails to cure such material
violation or such performance in the Cure Period, a subsequent termination shall
be for "Cause."
(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/her by the
provisions of this section 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/her 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/her 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 or her
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 or she was terminated for Cause or
voluntarily resigned for a period of one (1) year from such termination,
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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 or she was terminated for Cause or
voluntarily resigned for a period of one (1) additional year, 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 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, a Maryland corporation, shall be an
affiliate of the Company.
6. SOLICITATION OF EMPLOYEES
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The Employee agrees that during the term of his/her employment, and for a
period of two (2) years after termination of such employment for any reason,
he/she shall not, except in the course of his/her 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
months, to leave the employ of the Company or to accept employment with another
employer besides the Company or as an independent contractor, or offers
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. INVENTIONS, IMPROVEMENTS AND COPYRIGHTABLE MATERIALS
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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 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 or its affiliates. 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.
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(a) All disclosures and assignments 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, letters patent,
copyrights, trademarks or other statutory or common law protections for the Work
Product covered by this Agreement, vesting title and right in such patents,
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 patents, copyrights, trademarks and
other protections as the Company or its affiliates may desire. The Employee's
obligation to deliver documents and assist the Company under this Agreement
applies both during and subsequent to the term of his/her employment.
(c) Any Work Product which the Employee may disclose to anyone within six
(6) months after the termination of his/her employment, or for which the Company
or its affiliates may file application for letters patent, copyright, trademark
or other statutory or common law protection within eighteen (18) months after
the termination of said employment, shall be rebuttably 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/her 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.
(d) The Employee represents that the Work Product does not infringe any
copyright or other proprietary right of any person or entity.
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 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 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
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commit any breach of this Agreement both pending further legal proceedings and
for appropriate periods in the future. The prevailing party in any action for
breach of this Agreement shall reimburse the other party for its reasonable
attorneys' fees and costs incurred in such action. The Employee 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 participates in any activity in violation of any such provision.
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
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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
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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/her obligations under this
Agreement without the express written consent of the Company and its successors
and assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
EMPLOYEE THE CORPORATE ADVISORY BOARD
COMPANY
_____________________________ By:______________________________________
Print Name
_____________________________ Title:___________________________________
Signature
Date:________________________ Date:____________________________________
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