EMPLOYMENT SEPARATION AGREEMENT
This
Employment Separation Agreement (this “Agreement”) is effective as of November 12, 2008, 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 Xxxxx Xxxxxx, residing
at (the
“Executive”), pursuant to which the aforementioned parties agree:
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1.
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Employment.
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In
connection with Executive’s acceptance of that certain offer of employment
letter dated October 24, 2008 (the “Offer Letter”) and contingent upon
Executive’s successful completion of any pre-employment screening
requirements set forth in the Offer Letter and execution of the Company’s
Confidentiality, Non-Solicitation and Covenant Not to Compete Agreement,
the Company shall employ the Executive as Chief Executive Officer of the
Company, which employment shall terminate upon notice by either party, for
any reason. Executive
understands and agrees that Executive’s employment with the Company is at
will and can be terminated at any time by either party, and for any or no
reason.
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2.
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Compensation
and Benefits Payable Upon Involuntary Termination without Cause or
Resignation for Good Reason or Change of Control.
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a.
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Triggering
Event. In further consideration for Executive’s
employment, Executive will receive the compensation and benefits set forth
in Section 2(b) if the requirements set forth in Subsections (i or ii) and
Subsection iii (hereinafter referred to as the “Triggering Event”) are
met:
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i.
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Executive’s
employment is terminated involuntarily by the Company at any time for
reasons other than death, Total Disability or Cause, or Executive resigns
from employment for Good Reason; or
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ii.
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Executive’s
employment is terminated in connection with a Change of Control (as
defined in Section 6(c); and
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iii.
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As
of the 30th day following her termination date, Executive has executed the
Agreement and General Release in substantially the form attached to this
Agreement or in such form as may be provided by the Company (the
“Release”), provided that Release does not release Executive’s rights and
benefits as vested under ERISA or wage and hour laws of New Jersey, any
applicable revocation period has expired and Executive has not revoked the
Release during such revocation
period.
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b.
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Compensation
and Benefits. Following the occurrence of a Triggering
Event, the Company will provide the following compensation and benefits to
Executive:
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i.
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The
Company will pay Executive a lump sum payment equal to the product of: (a)
eighteen (18) times Executive’s Base Monthly Salary (excluding incentives,
bonuses, and other compensation), plus the actual amount paid to Executive
under any cash-based incentive or bonus plan in which Executive
participates with respect to the last full fiscal year of Executive’s
participation in such plan prior to the date of termination of Executive’s
employment with the Company if the Triggering Event occurs on or before
November 18, 2010; or (b)
twenty-four (24) times Executive’s Base Monthly Salary (excluding
incentives, bonuses, and other compensation) , plus the average of the
annual amounts paid to Executive under any cash-based incentive or bonus
plan in which Executive participates with respect to the last three (3)
full
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fiscal
years of Executive’s participation in such plan prior to the date of
termination of Executive’s employment with the Company (or, if Executive’s
number of full fiscal years of participation in any such plan prior to the
date of termination of Executive’s employment is less than three (3), the
average of the annual amounts paid to Executive over the number of full
fiscal years of Executive’s participation in such plan prior the date of
termination of Executive’s employment) if the Triggering Event occurs
after November 18, 2010.
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ii.
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The
Company will reimburse Executive for the cost of the premiums for COBRA
group health continuation coverage under the Company’s group health plan
paid by Executive for coverage during the period beginning following
Executive’s termination date and ending on the earlier of
either: (A) eighteen (18) months if the Triggering Event occurs
on or before November 18, 2010 or twenty-four
(24) months if the Triggering Event occurs after November 18, 2010; or (B)
the date on which Executive becomes eligible for other group health
coverage, provided that no reimbursement shall be paid unless and until
Executive submits proof of payment acceptable to the Company within 90
days after Executive incurs such expense. Any reimbursements of
the COBRA premium that are taxable to the Executive shall be made on or
before the last day of the year following the year in which the COBRA
premium was incurred, the amount of the COBRA premium eligible for
reimbursement during one year shall not affect the amount of COBRA premium
eligible for reimbursement in any other year, and the right to
reimbursement shall not be subject to liquidation or exchange for another
benefit.
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x.
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Xxxxx
of Payment to Comply with Code Section
409A. Notwithstanding anything herein to the contrary,
if at the time of Executive’s termination of employment with the Company,
Executive is a “specified employee” within the meaning of Code Section
409A and the regulations promulgated thereunder, then the Company shall
delay the commencement of such payments (without any reduction) by a
period of six (6) months after Executive’s termination of
employment. Any payments that would have been paid during such
six (6) month period but for the provisions of the preceding sentence
shall be paid in a lump sum to Executive six (6) months and one (1) day
after Executive’s termination of employment. The 6-month
payment delay requirement of this Section 2(c) shall apply only to the
extent that the payments under this Section 2 are otherwise subject to
Code Section 409A. With respect to payments or benefits under
this Agreement that are subject to Code Section 409A, whether Executive
has had a termination of employment shall be determined in accordance with
Code Section 409A and applicable guidance issued
thereunder.
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3. Other
Compensation and Benefits.
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a.
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Except
as may be provided under this Agreement, any benefits to which Executive
may be entitled pursuant to the plans, policies and arrangements of the
Company shall be determined and paid in accordance with the terms of such
plans, policies and arrangements, and Executive shall have no right to
receive any other compensation or benefits, or to participate in any other
plan or arrangement, following the termination of Executive’s employment
by either party for any reason.
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b.
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Notwithstanding
any provision contained herein to the contrary, in the event of any
termination of employment, the Company shall pay Executive her earned, but
unpaid, base salary within ten (10) days of Executive’s termination date
and shall reimburse Executive for any accrued, but unpaid, reasonable
business expenses, in each case, earned or accrued as
of
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the
date of termination. Executive shall submit documentation of
any business expenses within ninety (90) days of her termination date and
any reimbursements of such expenses that are taxable to the Executive
shall be made on or before the last day of the year following the year in
which the expense was incurred, the amount of the expense eligible for
reimbursement during one year shall not affect the amount of reimbursement
in any other year, and the right to reimbursement shall not be subject to
liquidation or exchange for another
benefit.
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4.
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Withholding. All
amounts otherwise payable under this Agreement shall be subject to
customary withholding and other employment taxes, and shall be subject to
such other withholding as may be required in accordance with the terms of
this Agreement or applicable law.
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5.
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Confidentiality,
Non-Solicitation and Covenant Not to Compete
Agreement. In the event Executive’s employment with the
Company is terminated by either party for any reason, Executive shall
continue to be bound by the Company’s Confidentiality, Non-Solicitation
and Covenant Not to Compete Agreement for the periods set forth therein (a
copy of which is attached to this
Agreement).
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6. Definitions.
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a.
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Cause
shall mean: (i) the failure of Executive to use Executive’s best efforts
in accordance with Executive’s position, skill and abilities to achieve
Executive’s goals as periodically set by the Company; (ii) the failure by
Executive to comply with the reasonable instructions of the Company’s
Board of Directors (the “Board”); (iii) a material breach by Executive of
any of the terms or conditions of this Agreement or the Confidentiality,
Non-Solicitation and Covenant Not To Compete Agreement; (iv) the failure
by Executive to adhere to the Company’s documented policies and
procedures; (v) the failure of Executive to adhere to moral and ethical
business principles consistent with the Company’s Code of Business Conduct
and Guidelines on Corporate Governance as in effect from time to time;
(vi) Executive's conviction of a criminal offense (including the entry of
a nolo contendere plea); (vii) any documented act of material dishonesty
or fraud by the Executive in the commission of her duties; or (viii)
Executive engages in an act or series of acts constituting misconduct
resulting in a misstatement of the Company’s financial statements due to
material non-compliance with any financial reporting requirement within
the meaning of Section 304 of The Xxxxxxxx-Xxxxx Act of
2002.
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b.
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Base
Monthly Salary shall mean an amount equal to one-twelfth of
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 executive employees of the
Company.
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c.
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Change
of Control shall mean: (i) 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; (ii) 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; (iii)
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
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acting
jointly to elect a majority of the members of the Board, as then
constituted; or (iv) 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, 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 Code, or a transaction of similar effect,
shall not constitute a Change of
Control.
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d.
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Good
Reason. Executive’s termination of employment with the
Company shall be for Good Reason if (i) Executive notifies the
Company in writing that one of the Good Reason Events (as defined below)
has occurred, which notice shall be provided within ninety (90) days after
she first becomes aware of the occurrence of such Good Reason Event, (ii)
the Company fails to cure such Good Reason Event within thirty (30) days
after receipt of the written notice from Executive (the “Cure Period”),
and (iii) Executive resigns employment within thirty (30) days following
expiration of the Cure Period. For purposes of this Agreement,
a “Good Reason Event” shall mean any of the following which occur without
Executive’s consent:
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A.
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The
failure by the Company to pay Executive any material amount of her current
salary, or any bonus which Executive has earned and to which Executive has
become entitled, or any material amount of her compensation deferred under
any plan, agreement or arrangement of or with the Company that is
currently due and payable;
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B.
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A
material reduction in Executive’s annual base salary; provided that a
reduction consistent with reductions made to the annual base salaries for
similarly situated senior executives of no more than 15% shall not
constitute a Good Reason Event;
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C.
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The
relocation of Executive’s principal place of employment to a location more
than fifty (50) miles from Executive’s current principal place of
employment;
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D.
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A
material adverse alteration of Executive’s duties and
responsibilities;
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E.
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An
intentional, material reduction by the Company of Executive’s aggregate
target incentive awards under any short-term and/or long-term incentive
plans; or
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F.
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In
connection with a Change of Control, the material failure of the Company
to maintain Executive’s relative level of coverage under its material
employee benefit, retirement, or fringe benefit plans, policies,
practices, or arrangements in which Executive participates, both in terms
of the amount of benefits provided and the relative level of Executive’s
participation as in effect immediately before a Change of Control and with
all improvements therein subsequent thereto (other than those plans or
improvements that have expired thereafter in accordance with their
original terms), or the taking of any action which would materially reduce
Executive’s benefits under such plans or deprive her of any material
fringe benefit enjoyed by her immediately before a Change of
Control. For this purpose, the Company may eliminate and/or
modify existing employee benefit plans and
coverage
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levels
on a consistent and non-discriminatory basis applicable to all such
executives; provided, however, that Executive’s level of coverage under
all such programs must be at least as great as is such coverage provided
to employees who have the same or lesser levels of reporting
responsibilities within the
organization.
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e.
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Code
shall mean the Internal Revenue Code of 1986, as
amended.
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f.
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Total
Disability shall mean physical or mental impairments that preclude
the Executive from performing the duties of the job as determined by
medical experts and the Board of
Directors.
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7.
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Integration;
Amendment. This Agreement, the Company’s
Confidentiality, Non-Solicitation and Covenant Not to Compete Agreement,
and the Executive’s Individual Stock Agreement (if any) (a copy of which
are attached to this 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 such agreements shall be
binding unless in writing and signed by both parties, provided, however,
that this Agreement may be unilaterally amended by the Company where
necessary to ensure any benefits payable hereunder are either excepted
from Code Section 409A or otherwise comply with Code Section
409A.
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8.
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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.
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9.
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Jurisdiction. Except
as otherwise provided for herein, each of the parties: (a) irrevocably
submits to the exclusive jurisdiction of any state court sitting in 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 9, however, shall affect the right of
any party to serve legal process in any other manner permitted by
law.
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[Signature
page follows]
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IN WITNESS WHEREOF the
parties have duly executed this Employment Separation Agreement as of the
date first above written.
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EXECUTIVE
By: __/s/ Xxxxx Lurker______________________________
Xxxxx
Xxxxxx
PDI, INC.
By: __/s/ Xxxxx
Ryan________________________________
Name: Xxxxx
Xxxx
Title: Director,
Chairman of the Compensation
and
Management Development Committee
