SEVERANCE AGREEMENT AND GENERAL RELEASE
Exhibit 10.40
SEVERANCE AGREEMENT AND GENERAL RELEASE
THIS SEVERANCE AGREEMENT AND GENERAL RELEASE (“Release Agreement”) is executed by
Xxxxx Xxxxx (the “Executive”) pursuant to Section 6 of the Employment Agreement dated as of
January 10, 2007 by and between PharmaNet Development Group, Inc., a Delaware corporation (the
“Company”) and the Executive (the “Employment Agreement”).
WHEREAS, the Executive’s employment with the Company has been terminated effective November
21, 2007 (the “Effective Date of Termination”);
WHEREAS, the Executive has had 21 days to consider this Release Agreement, and 7 days to
revoke after signing;
WHEREAS, the Company has advised the Executive in writing, through this Release Agreement, to
consult with an attorney before signing this Release Agreement, and Executive has done so with
Xxxxxxx Xxxxxxxxxx, Esq., his counsel of choice;
WHEREAS, the Executive acknowledges that the consideration to be provided to the Executive
under this Release Agreement is sufficient to support all promises contained herein; and
WHEREAS, the Executive understands that the Company regards the representations and covenants
by the Executive in the Employment Agreement and this Release Agreement as material and that the
Company is relying on such representations and covenants in paying amounts to the Executive
pursuant to the Employment Agreement and this Release Agreement.
THE EXECUTIVE THEREFORE AGREES AS FOLLOWS:
1. The Executive shall receive the payments and benefits set forth in Section 6(c) of the
Employment Agreement in accordance with the terms and subject to the conditions thereof, and those
set forth herein, except that the provisions of Section 6 shall be modified as follows:
(a) Executive’s execution of this Release Agreement shall signify his certification that he
has complied with his obligations under the Employment Agreement and acknowledges his continuing
obligations under the Employment Agreement. Executive further certifies that he has returned any
and all documents, data, materials and other property of Company that he has ever had in his
possession, custody, or control. Executive shall be permitted to purchase the laptop computer and
printer owned by the Company and used by the Executive prior to the Effective Date of Termination
for the fair market value of three hundred dollars ($300); provided, however, that all proprietary
materials of the Company and software (including licensed software) shall be removed from the
computer. Executive’s execution of this Release Agreement shall be deemed sufficient to satisfy the
requirements of Section 6(b)(i)(a), (b), and (c) of the Employment Agreement.
Page 1 of 7 — Severance Agreement And General Release
(b) Section 6(c)(i) of the Employment Agreement is modified as follows: “In lieu of any
further salary payments to the Executive for periods subsequent to the Effective Date of
Termination, the Company shall cause an aggregate severance payment to be made to the Executive, in
cash, equal to two (2) times such Executive’s Annual Base Salary (the “Cash Severance
Payment”), and payable in forty-eight (48) equal bi-monthly installments in accordance with the
Company’s normal pay roll practices commencing with the Company’s first pay roll period in the
month following the Executive’s “separation from service” (as such term is defined in Treasury
Regulations issued under Section 409A of the Internal Revenue Code) in accordance with Section
6(f), or such later date required by Section 6(g) hereof, subject to the Executive’s execution of
an effective release.”
(c) Section 6(c)(ii) of the Employment Agreement is modified as follows: “For a twenty-four
(24) month period after the Effective Date of Termination, the Executive shall receive life,
disability, accident and health insurance coverage that is substantially similar to that which the
Executive is receiving immediately prior to the Effective Date of Termination; provided, however,
that in order to receive continued health coverage, the Executive shall be required to pay to the
Company at the same time that premium payments are due for the month an amount equal to the full
monthly premium payments required for such health coverage and the Company shall reimburse to the
Executive the amount of such monthly premium, less the amount that the Executive was required to
pay for such health coverage immediately prior to the Effective Date of Termination (the “Health
Payment”), no later than five (5) days following the date the premium for the month is paid by the
Executive. In addition, on each date on which the Health Payments are made, subject to subparagraph
6(g), the Company shall pay to the Executive an additional amount equal to the federal, state and
local income and payroll taxes that the Executive incurs on each monthly Health Payment (the
“Health Gross-up Payment”). The Health Payment paid to the Executive during the period of time
during which the Executive would be entitled to continuation coverage under the Company’s group
health plan pursuant to Code Section 4980B (or any replacement or successor provision of the United
States tax law) if the Executive elected such coverage and paid the applicable premiums is intended
to qualify for the exception from deferred compensation as a medical benefit provided in accordance
with the requirements of Treas. Reg. §1.409A-1(b)(9)(v)(B). The Health Payment, the Health Gross-up
Payment, and any taxable medical benefits paid or provided hereunder shall be reimbursed to
Executive in a manner that complies with the requirements of Treas. Reg. §1.409A-3(i)(1)(iv). The
COBRA health care continuation coverage period under section 4980B of the Code shall run
concurrently with the foregoing 24-month period.”
(d) As of the date of Executive’s execution of this Release Agreement, the Executive has seven
(7) unused vacation days. The Executive shall be permitted to use these vacation days prior to the
Effective Date of Termination. To the extent that the Executive is unable to use any of these
vacation days prior to the Effective Date of Termination due to work assigned to him by the
Company, the Company shall compensate the Executive for all unused vacation days at the daily rate
of pay for Executive’s Annual Base Salary, which payment will be made simultaneously at the time
the first payment is made to Executive under Section 1(b) above.
Page 2 of 7 — Severance Agreement And General Release
(e) Section 6(f) of the Employment Agreement is modified as follows: “The Cash Severance
Payment shall be made twice monthly in accordance with the Company’s ordinary payroll practices in
each of the twenty-four (24) months immediately following the month in which the Effective Date of
Termination occurs, subject to the Executive’s execution of an effective release. At the time that
payments are made under this Section, the Company shall provide the Executive with a detailed
written statement setting forth the manner in which such payments were calculated and the basis for
such calculations. Notwithstanding the foregoing, Cash Severance Payments shall immediately cease
and no longer be payable if Executive violates any of the terms set forth in Sections 7 or 8
hereof. Such remedy shall be in addition to any and all other remedies available by law or equity.”
2. The Company will reimburse Executive’s legal fees incurred in connection with the review
and negotiation of this Agreement upon providing appropriate invoices evidencing the same; provided
such amount shall not exceed five thousand dollars ($5,000). The Executive shall provide such
invoices within sixty (60) days of the execution of this Release Agreement and the Company shall
reimburse the Executive within thirty (30) days after received.
3. The payments and benefits provided for in this Release Agreement, including the payments
and benefits set forth in Section 6 of the Employment Agreement, as modified herein, are intended
to comply with Section 409A of the Internal Revenue Code (“Code Section 409A”) and its
corresponding regulations, or an exemption, to the extent applicable. Company shall make all
payments under this Agreement in a manner permitted by Code Section 409A, to the extent applicable.
All payments to be made upon a termination of employment under this Agreement that constitute
“deferred compensation” within the meaning of Code Section 409A may only be made upon the
Executive’s “separation from service” with the Company within the meaning of Code Section 409A and
shall be delayed and paid in accordance with Section 6(g) of the Employment Agreement to the extent
required to comply with Code Section 409A. For purposes of Code Section 409A, each payment made
under this Agreement shall be treated as a separate payment and the right to a series of
installment payments under this Agreement shall be treated as a right to a series of separate
payments. In no event may the Executive, directly or indirectly, designate the calendar year of a
payment. All reimbursements and in-kind benefits provided under the Agreement shall be made or
provided in accordance with the requirements of Code Section 409A.
4. The Executive, on behalf of himself, his heirs, executors, administrators, and/or assigns,
does hereby RELEASE AND FOREVER DISCHARGE the Company, together with its parents, subsidiaries,
affiliates, partners, joint ventures, predecessor and successor corporations and business entities,
past, present and future, and its and their agents, directors, officers, employees, shareholders,
investors, insurers and reinsurers, representatives, attorneys, and employee benefit plans (and the
trustees or other individuals affiliated with such plans) past, present and future (collectively,
the “Company Releasees”), of and from any and all legally waivable causes of action, suits,
debts, complaints, claims and demands whatsoever in law or in equity, whether known or unknown,
suspected or unsuspected, which Executive, or his heirs, executors, administrators, and/or assigns,
ever had or now has against each or any of the
Page 3 of 7 — Severance Agreement And General Release
Company Releasees, from the beginning of time to the date of Executive’s execution of this
Agreement, including, without limitation, any and all claims relating to Executive’s employment
with Company or the termination of that employment, including, without limitation, claims under the
Age Discrimination in Employment Act (“ADEA”), Title VII of the Civil Rights Act of 1964,
Section 1981 of the Civil Rights Act of 1870, the Americans with Disabilities Act, the Employee
Retirement Income Security Act, the Family and Medical Leave Act, the New Jersey Law Against
Discrimination, the New Jersey Conscientious Employee Protection Act, the New Jersey Family Leave
Act, the New Jersey Wage Payment Act, the New Jersey Wage and Hour Law, the Florida Civil Rights
Act of 1992, the Miami-Dade County Equal Opportunity Ordinance, the Florida Private Whistleblower
Act, the Florida Wage Discrimination Law, the Florida Equal Pay Law, the Florida Minimum Fair Wage
Standards Act, the retaliation provisions of the Florida Workers’ Compensation Law, and any and all
other applicable federal, state or local constitutional, statutory or common law claims, now or
hereafter recognized, including but not limited to, any claim for severance pay, bonus pay, sick
leave, holiday pay, vacation pay, except for any relating to Company’s obligations under subsection
(d) of Paragraph 1 hereof, life insurance, health or medical insurance or any other fringe benefit
or disability, or any claims for economic loss, compensatory damages, punitive damages, liquidated
damages, attorneys’ fees, other than with respect to Company’s obligations under Paragraph 2
hereof, expenses and costs, other than with respect to Company’s obligations hereunder. The Company
hereby confirms that the Executive was (during the term of his employment with the Company) an
“executive officer” of the Company. This Release Agreement shall not waive any rights to
indemnification that the Executive may have pursuant to the Company’s bylaws or certificate of
incorporation, as amended, and the Company shall continue to provide indemnification to the
Executive to the extent consistent with the Company’s obligations under such bylaws and certificate
of incorporation, or release the Executive’s rights, and the Company’s obligations, under this
Release Agreement.
5. The Executive expressly represents and warrants that the Executive is the sole owner of the
actual and alleged claims, demands, rights, causes of action and other matters that are released
herein; that the same have not been transferred or assigned or caused to be transferred or assigned
to any other person, firm, corporation or other legal entity; and that the Executive has the full
right and power to grant, execute and deliver the general release, undertakings and agreements
contained herein.
6. Without additional compensation, the Executive shall cooperate and assist the Company
Releasees and their counsel fully, as requested, in connection with any matter, including but not
limited to, any pending or future: claim, investigation, inquiry, regulatory matter, administrative
or judicial proceedings, arbitration, or litigation, relating to any matter in which he was
involved (or is alleged to have been involved) while employed by the Company or any of the Company
Releasees or of which he has knowledge by virtue of his employment at the Company or any of the
Company Releasees. Such cooperation and assistance shall include, but not be limited to: i) meeting
with and providing full, candid, and truthful information to the Company or any of the Company
Releasees or their respective attorneys, representatives, or advisors; ii) providing depositions,
testimony, or interviews; and iii) signing affidavits or other
Page 4 of 7 — Severance Agreement And General Release
documents provided that they are factually accurate. The parties will endeavor to schedule
such cooperation in a manner that is mutually convenient. The Company shall reimburse Executive for
any out-of-pocket expenses he incurs as a consequence of his compliance with requests made by the
Company under this Paragraph 6.
7. (a) Executive acknowledges that he will be deemed an affiliate under SEC Rule 144
promulgated under the Securities Act of 1933, as amended, for a period of three (3) months from the
Effective Date of Termination, and will remain subject to the Company’s xxxxxxx xxxxxxx policy
until the later of: (i) the Company’s public release of its financial statements for the quarter
ended September 30, 2007; or (ii) Executive is no longer in possession of material non-public
information. Executive also hereby acknowledges and agrees that, notwithstanding the Company’s
policies, Executive understands that he will remain subject to all federal and state securities
laws and regulations. The Company agrees to file on Executive’s behalf all necessary Form 4s
required by the SEC from the Executive for the full period the Executive is deemed to be an
affiliate under SEC Rule 144.
(b) The Company confirms that all options, restricted shares and restricted share units
(“RSUs”) that have not vested as described in Exhibit One, attached hereto, shall vest upon
the Effective Date of Termination. The Company shall deliver all restricted shares to Executive no
later than five (5) business days after the expiration of the revocation period described in
Paragraph 11 hereof, and all RSUs to Executive six (6) months and one (1) day after the Effective
Date of Termination.
8. Except as set forth herein, the Executive agrees not to make any written or oral statements
about any of the Company Releasees external to the Executive that are disparaging. Nothing in this
Release Agreement shall preclude the Executive from communicating or testifying truthfully (i) to
the extent required or protected by law (as determined by the Executive in his sole discretion),
(ii) to any state or federal governmental agency, (iii) in response to a subpoena to testify issued
by a court of competent jurisdiction, (iv) in any action to challenge or enforce the terms of this
Release Agreement, or (v) in the course of satisfying any of Executive’s obligations under
Paragraph 6 hereof.
9. Except as set forth herein, the Company agrees that it shall not authorize anyone to make
written or oral statements, on its behalf, about the Executive external to the Company Releasees
that are disparaging. For purposes of this Paragraph, written or oral statements made by employees
who are not elected officers of the Company, members of the Company’s Executive Committee or the
head of Investor Relations of the Company (each an “Executive Officer”), which were not
expressly authorized by an Executive Officer of the Company, shall not be deemed to be statements
by, or on behalf of, the Company, or constitute a violation of this Paragraph. Nothing in this
Agreement shall preclude the Company from communicating or testifying truthfully (i) to the extent
required or protected by law (as determined by the Company in its sole discretion), (ii) to any
state or federal governmental agency, (iii) in response to a subpoena to testify issued by a court
of competent jurisdiction, or (iv) in any action to challenge or enforce the terms of this
Agreement.
Page 5 of 7 — Severance Agreement And General Release
10. Executive and Company each agree and acknowledge that this Release Agreement is not, and
shall not be construed to be, an admission of any violation of any federal, state or local statute,
ordinance or regulation, or of any duty owed by any Company Releasee to Executive or owed by
Executive to any Company Releasee, or of any wrongdoing to Executive by any Company Releasee or to
any Company Releasee by Executive.
11. ACKNOWLEDGMENT BY EXECUTIVE. BY EXECUTING THIS RELEASE AGREEMENT, THE EXECUTIVE
EXPRESSLY ACKNOWLEDGES THAT THE EXECUTIVE HAS READ THIS RELEASE AGREEMENT CAREFULLY, THAT THE
EXECUTIVE FULLY UNDERSTANDS ITS TERMS AND CONDITIONS, THAT THE EXECUTIVE HAS BEEN ADVISED TO
CONSULT WITH AN ATTORNEY PRIOR TO EXECUTING THIS RELEASE AGREEMENT, THAT THE EXECUTIVE HAS BEEN
ADVISED THAT THE EXECUTIVE HAS 21 DAYS WITHIN WHICH TO DECIDE WHETHER OR NOT TO EXECUTE
THIS RELEASE AGREEMENT AND THAT THE EXECUTIVE INTENDS TO BE LEGALLY BOUND BY IT. DURING A PERIOD OF
7 DAYS FOLLOWING THE DATE OF THE EXECUTIVE’S EXECUTION OF THIS RELEASE AGREEMENT, THE
EXECUTIVE SHALL HAVE THE RIGHT TO REVOKE THE RELEASE AGREEMENT. IF EXECUTIVE DOES NOT SO REVOKE,
THIS RELEASE AGREEMENT WILL BECOME A BINDING AGREEMENT BETWEEN EXECUTIVE AND THE COMPANY UPON THE
EXPIRATION OF SUCH 7-DAY REVOCATION PERIOD. THIS RELEASE AGREEMENT SHALL NOT BECOME EFFECTIVE OR
ENFORCEABLE UNTIL THE EXPIRATION OF SUCH 7-DAY REVOCATION PERIOD.
12. Together with the Employment Agreement, this Release Agreement contains the entire
agreement and understanding between the parties relating to the subject matter hereof and
supersedes any prior understandings, agreements or representations by or between the parties,
written or oral, relating to the subject matter hereof.
13. This Release Agreement shall be governed and construed in accordance with the laws of the
State of New Jersey without regard to principles of conflict of laws.
Signature Page Follows on Next Page
Page 6 of 7 — Severance Agreement And General Release
| EXECUTIVE |
||||
| /s/ Xxxxx Xxxxx | ||||
| Date: 10/21/07 | ||||
| PHARMANET DEVELOPMENT GROUP, INC. |
||||
| /s/ Xxxx X. Xxxxxx | ||||
| Name: | Xxxx X. Xxxxxx | |||
| Title: | EVP and CFO | |||
| Date: | 10/21/07 | |||
Page 7 of 7 — Severance Agreement And General Release
