EMPLOYMENT SEPARATION AGREEMENT
Exhibit
10.4
Employment
Separation Agreement (the “Agreement”) effective as of January 1, 2007, by and
between PDI, Inc., a Delaware corporation (the “Company”), having its principal
place of business at 0 Xxxxx 00 Xxxxx, Xxxxxx Xxxxx, Xxx Xxxxxx 00000, and
Xx.
Xxxxxx X. Xxxx (the “Executive”), pursuant to which the parties
agree:
1. Employment. In
connection with the Executive’s continued employment beyond the scheduled
expiration of that certain Amended and Restated Employment Agreement dated
May
1, 2001, by and between the Company and the Executive (the “2001 Agreement”), a
copy of which is annexed hereto as Exhibit
A,
and
contingent upon the Executive’s execution of the Company’s current
Confidentiality, Non-Solicitation and Covenant Not to Compete Agreement for
executives (the “Confidentiality Agreement”), annexed hereto as Exhibit
B,
simultaneously with the execution of this Agreement, the Company shall continue
Executive’s employment with the Company as President, Sales Services Segment,
which employment shall terminate upon notice by either party, for any reason.
Executive
understands and agrees that his employment with the Company is at will and
can
be terminated at any time by either party, and for any or no
reason.
The
Executive and the Company acknowledge and agree that this Agreement shall
supersede the 2001 Agreement in all respects, and that upon the execution of
this Agreement, the 2001 Agreement shall be deemed to be immediately terminated
in all respects and shall be of no further force or effect. Furthermore, for
the
purpose of clarity, Executive hereby waives, disclaims, renounces and foregoes
receipt of the “Termination Payment” set forth in paragraph 8(g) of the 2001
Agreement, in order to receive the Retention Benefit set forth in this paragraph
1 and the Termination Benefits set out in paragraph 2 of this Agreement in
addition to his salary and benefits due to him for so long as he continues
to be
employed by the Company. Accordingly, the Company agrees that it will provide
a
“Retention Benefit” to Executive in the gross amount of $553,777.00, which
equals the sum of (i) 12 times his Base Monthly Salary as of April 30, 2007,
plus (ii) the average of the incentive compensation paid to Executive for the
three (3) calendar years of 2003, 2004 and 2005 (which were approved by the
Compensation and Management Development Committee of the Company’s Board of
Directors (the “Board”) and received by Executive in calendar years 2004, 2005
and 2006).
This
Retention Benefit shall be paid to Executive as follows:
a. One-
half
of the gross Retention Benefit will be paid to Executive in eight (8) equal
installments, paid quarterly, less applicable withholdings under federal, state
and local law or regulations, beginning in February 2007. Regardless of the
reason for such termination, in the event Executive’s employment with the
Company shall terminate before all payments required by this paragraph 1(a)
have
been made, then the remaining payments shall be made simultaneously with the
payment of the remaining half of the gross Retention Benefit, i.e., within
ten
business days following the Executive’s last day of employment with the
Company.
b. The
remaining half of the gross Retention Benefit, less applicable withholdings
under federal, state and local law or regulations, will be paid to Executive
within ten (10) business days following his last day of employment with the
Company, regardless of the reason for the cessation of his
employment.
2. Termination
Benefits.
a. In
further consideration for Executive’s agreement to execute the Confidentiality
Agreement, the Company agrees that if it terminates the Executive’s employment
without Cause (as defined below) or if the Executive terminates his employment
as provided for in Section 2b hereof, and,
in
either instance, the Executive executes and does not revoke the PDI Agreement
and General Release given to him upon such termination in substantially the
form
annexed to this Agreement as Exhibit
C,
the
Company will:
i. pay
Executive an additional lump sum payment over and above the remaining gross
Retention Benefit equal to six (6) times his Base Monthly Salary, plus one-half
(0.5) of the average of the cash incentive compensation paid to the Executive
during the three (3) years immedi-ately preceding the termination
date (the
“Severance Payment”); and,
ii. in
the
event the Executive properly and timely elects to
continue coverage under the Aetna Plan in accordance with the continuation
requirements of COBRA, the Company shall pay for the continuation of such family
benefits under COBRA (the “COBRA Benefit”) for up to twelve (12) months or until
the Executive is eligible to participate in the health insurance plan of any
successor employer of the Executive, whichever occurs earliest.
b. Subject
to the terms and conditions set forth in Section 2a above, the Executive shall
be entitled to the Severance Payment and the COBRA Benefit if he terminates
his
employment for any of the following reasons:
(i)
as a
result of (A) a material reduction in, or the assignment of duties to the
Executive which would be materially inconsistent with, the Executive’s
responsibilities, duties and authorities as President, Sales Services Segment,
which continues unremedied for a period of ten (10) business days after the
Executive has given written notice to the Company of same; (B) a material breach
by the Company of any of the terms or conditions of this Agreement, which
continues unremedied for a period of ten (10) business days after the Executive
has given written notice to the Company of same; or, (C) a reduction of more
than 25% in the Executive’s then current annual base salary or failure to pay
any material amount owing to or to provide a material benefit owing to the
Executive at the time such amount or benefit is due, which continues unremedied
for a period of ten (10) business days after the Executive has given written
notice to the Company of same. Or,
(ii)
within two years following the occurrence of a Change in Control because (A)
the
Executive suffers a material adverse change in his title or responsibilities,
(B) the Executive suffers a material reduction in his then current annual base
salary (unless such reduction is made in connection with a pro rata reduction
in
the annual base salaries of all of the Company’s senior executives);
provided,
however,
that
with respect to items (A) and (B) above, the Company has not cured such material
adverse change or reduction within thirty (30) days of written notice by the
Executive, or, (C) Executive is required to relocate as a result of a relocation
of the Company’s office location in New Jersey more than 50 miles from its
current location.
c. In
the
event of any termination of the Executive’s employment with the Company, the
Executive shall continue to be bound by the Confidentiality Agreement for the
periods set forth therein.
d. In
the
event of any termination of the Executive’s employment with the Company the
Company shall have no
obligation to accelerate the vesting of any equity based compensation that
may
be held by, or in the future given to, the Executive, other than pursuant to
the
terms and conditions set forth in the relevant grant agreements dated March
23,
2006, February 15, 2006 and March 10, 2004 (the “grant agreements”) pursuant to
which such equity based compensation was awarded to Executive. The Company
will
honor all terms and conditions of such grant agreements
e. Payment
of each of the Retention Benefit, the Severance Payment and the COBRA benefit
as
set forth in this Agreement is conditioned upon the execution of the PDI
Agreement and General Release and shall be subject to withholding for applicable
federal, state and local income and employment related taxes.
f.
No
Termination Benefit will be paid if the Executive resigns or terminates his
employment for any reason other than as set forth in Section 2b or if the
Company terminates the Executive’s employment for Cause (as defined below) as
determined by the Board or its designee(s).
3. Definitions.
a. Cause
shall
mean (1) the intentional and deliberate failure by the Executive to comply
with
the reasonable instructions of the Company’s Chief Executive Officer (“CEO”) or
the Board, provided that such instructions are consistent with the Executive’s
duties and responsibilities, and which such refusal continues unremedied for
a
period of ten (10) business days after the Board or CEO has given written notice
to the Executive specifying in reasonable detail the instructions the Executive
has failed to comply with; (2) a material breach by the Executive of any of
the
terms and conditions of this Agreement or the Confidentiality Agreement that
continues unremedied for a period of ten (10) business days after the CEO or
the
Board has given written notice to the Executive specifying in reasonable detail
the Executive’s breach of this Agreement; (3) the failure by the Executive to
adhere to the Company’s documented policies and procedures that continues
unremedied for a period of ten (10) business days after the CEO or Board has
given written notice to the Executive specifying in reasonable detail the
Executive’s breach of such policies and/or procedures; (4) the failure of the
Executive to adhere to moral and ethical business principles consistent with
the
Company’s Code of Conduct as in effect from time to time; (5) Executive's
conviction of a crime (including entry of a nolo
contendere
plea);
or (6) any act of dishonesty or fraud by the Executive.
b. Base
Monthly Salary
shall
mean an amount equal to one-twelfth of the Executive's then current annual
base
salary. Base Monthly Salary shall not include incentives, bonus(es), health
and
welfare benefits, car allowances, long term disability insurance or any other
compensation or benefit provided to employees of the Company at the executive
level.
c. Change
of Control
shall
mean (1) any merger by the Company into another corporation or corporations
which results in the stockholders of the Company immediately prior to such
transaction owning less than 51% of the surviving corporation; (2) any
acquisition (by purchase, lease or otherwise) of all or substantially all of
the
assets of the Company by any person, corporation or other entity or group
thereof acting jointly; (3) the acquisition of beneficial ownership of voting
securities of the Company (defined as common stock of the Company or any
securities having voting rights that the Company may issue in the future) or
rights to acquire voting securities of the Company (defined as including,
without limitation, securities that are convertible into voting securities
of
the Company (as defined above) and rights, options, warrants and other
agreements or arrangements to acquire such voting securities) by any person,
corporation or other entity or group thereof acting jointly, in such amount
or
amounts as would permit such person, corporation or other entity or group
thereof acting jointly to elect a majority of the members of the Board, as
then
constituted; or (4) the acquisition of beneficial ownership, directly or
indirectly, of voting securities and rights to acquire voting securities having
voting power equal to 51% or more of the combined voting power of the Company’s
then outstanding voting securities by any person, corporation or other entity
or
group thereof acting jointly. Notwithstanding the preceding sentence, (i) any
transaction that involves a mere change in identity form or place of
organization within the meaning of Section 368(a)(1)(F) of the Internal Revenue
Code of 1986, as amended, or a transaction of similar effect, shall not
constitute a Change of Control.
4. Integration;
Amendment.
This
Agreement and the Confidentiality Agreement constitute the entire agreement
between the parties hereto with respect to the matters set forth herein and
supersede and render of no force and effect all prior understandings and
agreements between the parties with respect to the matters set forth herein.
No
amendments or additions to this Agreement or the Confidentiality Agreement
shall
be binding unless in writing and signed by both parties.
5. Governing
Law; Headings.
This
Agreement and its construction, performance and enforceability shall be governed
by, and construed in accordance with, the laws of the State of New Jersey,
without regard to its conflicts of law provisions. Headings and titles herein
are included solely for convenience and shall not affect, or be used in
connection with, the interpretation of this Agreement.
6. Jurisdiction.
Except
as otherwise provided for herein, each of the parties (a) irrevocably submits
to
the exclusive jurisdiction of any state court sitting in Bergen County, New
Jersey or federal court sitting in New Jersey in any action or proceeding
arising out of or relating to this Agreement; (b) agrees that all claims in
respect of the action or proceeding may be heard and determined in any such
court; (c) agrees not to bring any action or proceeding arising out of or
relating to this Agreement in any other court; and (d) waives any right such
party may have to a trial by jury with respect to any action or proceeding
arising out of or relating to this Agreement. Each of the parties waives any
defense of inconvenient forum to the maintenance of any action or proceedings
so
brought and waives any bond, surety or other security that might be required
of
any other party with respect thereto. Any party may make service on another
party by sending or delivering a copy of the process to the party to be served
at the address set forth above or such updated address as may be provided to
the
other party. Nothing in this Section 6, however, shall affect the right of
any
party to serve legal process in any other manner permitted by law.
(Signatures
appear on page 5)
IN
WITNESS WHEREOF
the
parties have duly executed this Employment Separation Agreement as of the date
first above written.
| EXECUTIVE | PDI, INC. | ||
| /s/ Xxxxxx X. Budd______________ |
By:
|
/s/
Xxxxxxx Marquard________
|
|
| Xxxxxx X. Xxxx | Xxxxxxx Xxxxxxxx, Chief | ||
| Executive Officer |
