EXHIBIT (10.4)
SEPARATION OF EMPLOYMENT AGREEMENT
BETWEEN NATIONAL RESEARCH CORPORATION AND XXXXXX XXXXXXXX
This Agreement is entered into between National Research Corporation,
1033 "O" Street, 0xx Xxxxx, Xxxx'x Xxxxxxxx, Xxxxxxx, XX 00000 (the "Company")
and Xxxxxx Xxxxxxxx, 0000 Xxx Xxxxxxxx Xxxx, Xxxxxxx, XX 00000 ("Employee"),
effective as of June 11, 1998 (the "separation date"). Employee and the Company
mutually agree that the employment agreement entered into between Employee and
the Company dated as of the 1st day of December, 1996 ("Employment Agreement")
is terminated by the Company, effective June 11, 1998, in full accordance with
all of the terms of that Employment Agreement including without limitation its
Paragraph 10.
In consideration of this mutual Agreement Employee and the Company hereby
agree as follows:
1. Severance Compensation. In full settlement of the severance
compensation obligations of Paragraph 10 of the Employment Agreement the Company
shall pay Employee a single lump sum amount of Two Hundred Eighty Thousand Seven
Hundred Thirty-seven Dollars ($280,737) reduced for applicable payroll taxes and
withholding. Payment will be made within not more than five (5) working days of
Employee's execution of this Agreement provided the conditions of Paragraph 6
have been met. This lump sum payment is deemed to be severance pay and will not
be treated as compensation for purposes of any retirement program of the
Company.
2. Other Compensation Matters.
(a) The Company will pay for, or reimburse Employee for, amounts not
to exceed Three Thousand Five Hundred Dollars ($3,500) for the cost of
outplacement services incurred by Employee.
(b) The Company will pay Employee for sixty-five (65) accrued but
unused vacation hours.
(c) The Company has previously reimbursed Employee for all business
expenses incurred on the Company's behalf by Employee.
(d) No annual incentive compensation is payable to Employee for the
portion of 1998 for which Employee worked for the Company.
(e) No long term incentive compensation is payable to Employee for
Employee's period of employment with the Company. Employee is not vested in any
stock options issued to Employee by the Company and such options terminate
immediately upon Employee's separation from service with the Company.
3. Medical and Group Life Insurance.
(a) Employee agrees to make a timely COBRA health insurance
continuation election to assure continuation of Employee's (and family members
currently covered) health insurance coverage for up to eighteen (18) months
after Employee's separation date. During the COBRA continuation coverage period,
up to a maximum of eighteen (18) months, the Company will subsidize Employee's
monthly COBRA continuation premium, which shall not be reported as income, so
that Employee's cost of continuation coverage will not exceed sixty-five percent
(65%) of the premium charged for similar coverage to an active employee of the
Company participating in the Company's pretax premium payment program. For
example, if an active employee's charge per pay period for similar coverage was
a pretax amount of One Hundred Twenty Dollars ($120.00), the charge to Employee
on an after tax basis would be sixty-five percent (65%) of that amount, or
Seventy-eight Dollars ($78.00) per pay period.
(b) The Company has made the 1998 premium payment on the term life
insurance policy described in Paragraph 7 of the Employment Agreement. No
further premium payments will be made by the Company on this policy and Employee
is not covered by any other component of the Company's group life insurance
program after Employee's separation date.
4. Nondisclosure and Noncompetition. Employee agrees that the covenants
regarding nondisclosure and noncompetition set forth in Paragraphs 13 and 14 of
the Employment Agreement remain fully effective and that the expiration date
under Paragraph 14 is November 30, 1999. In addition, in the event Employee or
anyone acting at Employee's direction at any time prior to December 1, 1999,
shall substantially denigrate the Company (including its business operations),
or its officers or directors, including without limitation by way of news media
or the expression to news media of personal views, opinions or judgments, the
Company shall be entitled to withhold and terminate any all payments and
benefits under this Agreement and/or the Company shall be entitled to pursue any
other available legal or equitable remedies. The Company, including its officers
and directors similarly agrees not to denigrate the Employee.
5. Tax Payments, Withholding and Reporting. Employee recognizes that
certain payments provided under this Agreement may result in taxable income to
Employee which the Company will report to the appropriate taxing authorities.
The Company has the right to deduct from any payment made under this Agreement
any federal, state, local or other income, employment or other taxes it
determines are required by law to be withheld with respect to such payments.
6. Severability. In the event any one or more of the terms of this
Agreement shall for any reason be held to be invalid, illegal or unenforceable,
the remaining terms of this Agreement shall be unimpaired, and the invalid,
illegal or unenforceable term shall be replaced by a term, which, being valid,
legal and enforceable, comes closest to the intention of the parties underlying
the invalid, illegal or unenforceable terms. However, in the event that any such
term of this Agreement is adjudged by a court of competent jurisdiction to
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be invalid, illegal or unenforceable, but that the other terms are adjudged to
be valid, legal and enforceable if such invalid, illegal or unenforceable term
were deleted or modified, then this Agreement shall apply with only such
deletions or modifications, or both, as the case may be, as are necessary to
permit the remaining separate terms to be valid, legal and enforceable.
7. Company Property. Employee affirms that Employee has previously
delivered to the Company the original and all copies of all documents, records,
electronic files, and property of any nature whatsoever which were in Employee's
possession or control and which are the property of the Company or which relate
to the business activities, facilities, or customers of the Company, its
subsidiaries, or its affiliates, including any records, documents or property
created by Employee and, where such records may be maintained on hard disk files
on computers owned by Employee, such files have been purged and eliminated.
8. Other Agreements. This Agreement does not limit or restrict in any way
Employee's rights under the Company's employee benefit plans. All the terms of
agreement relating to Employee's separation from employment with the Company are
embodied in this Agreement, which incorporates by reference Paragraphs 13 and 14
of the Employment Agreement. This Agreement fully supersedes any and all prior
agreements or understandings between Employee and the Company.
9. Governing Law, Dispute Resolution, Etc. This Agreement shall be
governed by the substantive laws of the State of Nebraska without regard to its
conflict of laws provisions. The parties agree that any proceeding to resolve
any dispute arising hereunder will be brought only in the courts of the State of
Nebraska or in the courts of the United States of America for the District of
Nebraska, and that each party irrevocably submits to such jurisdiction, and
hereby waives any and all objections as to venue, inconvenient forum and the
like. It is the intention of the parties hereto, however, that to the extent
practicable, the parties will endeavor to settle any dispute arising hereunder
first through the process of non-binding mediation to be conducted in Lincoln,
Nebraska. This agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, legal representatives, successors and
assigns.
10. Indemnification. The Company shall indemnify Employee if Employee is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative by reason of the fact that Employee is or was a director
(including advisory board member), officer, employee or agent of the Company or
Employee is or was serving at the request of the Company as a director
(including advisory board member), officer, employee or agent of another
corporation or other enterprise, against expenses (including attorney's fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by Employee in connection with such action, suit or proceeding if Employee acted
in good faith and in a manner Employee reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe Employee's conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that Employee did not act in good
faith and in a manner which Employee
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reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that Employee's conduct was unlawful. Expenses incurred by
Employee in defending a civil or criminal action, suit or proceeding shall be
paid by the Company in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of Employee to repay
such amount if it shall ultimately be determined that Employee is not entitled
to be indemnified by the Company as authorized in this paragraph. The
indemnification and advancement of expenses provided by this paragraph shall not
be deemed exclusive of any other rights to which those seeking indemnification
or advancement of expenses may be entitled under any section of the corporation
law of Nebraska as now in effect or as the same may hereafter be amended, or
under any agreement, vote of stockholders or directors, or otherwise both as to
action in Employee's official capacity and as to action in another capacity
while holding such office. The indemnification and advancement of expenses
provided by this paragraph shall, unless otherwise provided when authorized or
ratified, continue after Employee has ceased to be a director (including
advisory board member), officer, employee or agent and shall inure to the
benefit of Employee's heirs, executors and administrators.
11. Form 5 Representation. Employee, who served as Vice President-Sales,
Marketing and Client Services of the Company until the separation date, hereby
represents to the Company that she will not be required to file a Form 5 under
Section 16 of the Securities Exchange Act of 1934, as amended ("Section 16"),
for the Company's fiscal year ending December 31, 1998, because she (i) has
reported all transactions (if any) required to be reported under Section 16 that
occurred from December 31, 1997 through the separation date; and (ii) did not,
during the six months preceding the separation date, engage in a transaction in
Company securities that was not exempt under subparagraph (b) of Section 16.
Dated this 26th day of June, 1998.
NATIONAL RESEARCH CORPORATION
/s/ Xxxxxxx Xxxx
Xxxxxxx Xxxx, President
/s/ Xxxxxx Xxxxxxxx
Xxxxxx Xxxxxxxx, Employee
