EMPLOYMENT SEPARATION AGREEMENT
Exhibit
10.20
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. Xxxxxxx
X.
Xxxxx, residing at 0 Xxxxxxx Xxxxx, Xxxxxxxxx, Xxx Xxxxxx 00000 (the
“Executive”), agree:
1. Employment. In
connection with the Executive’s acceptance of that certain offer of employment
letter dated May 5, 2006 and contingent upon the Executive’s appointment by the
Company’s Board of Directors (the “Board”), the Company shall employ the
Executive as Executive Vice President, Chief Financial Officer and Treasurer
commencing on or about May 15, 2006 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.
2. Termination
Benefits.
a. In
further consideration for Executive’s agreement to execute the PDI
Confidentiality, Non-Solicitation and Covenant Not to Compete Agreement (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 each
instance, the Executive executes and does not revoke the PDI Agreement and
General Release given to him upon such termination, then:
| i. |
If
the Executive terminates his employment before May
15, 2007,
the Executive shall be paid a lump sum payment equal to (y) the product
of
twelve (12) times his Base Monthly Salary, plus (z) the average annual
cash incentive compensation paid to the Executive during the three
years
immedi-ately preceding the termination date, or such shorter period
if
applicable. For purposes of the average calculation, any amount paid
for
2006 will be annualized. The sum of (y) and (z) is referred to herein
as
the “Severance Payment”.
|
| ii. |
If
such termination occurs
after May 15, 2007
the Executive shall be paid a lump sum payment equal to (y) the product
of
eighteen (18) times his Base Monthly Salary, plus (z) the average cash
incentive compensation paid to the Executive during the most recent
three
years immedi-ately preceding the termination date for which such incentive
compensation was paid, or such shorter period, For purposes of the
average
calculation, any amount paid for 2006 will be annualized. The sum of
(y)
and (z) is referred to herein as the “Severance Payment”.
|
In
the
event that the Company is obligated to pay the Executive the Severance Payment,
in addition to such payment the Company shall pay for the continuation of the
Executive’s health and welfare benefits under COBRA for up to twelve (12) months
(the “COBRA Benefit”). If the Executive becomes employed by a third party and is
entitled to comparable health and welfare benefits then the Company is entitled
to discontinue the COBRA Benefit.
All
payments due hereunder shall be subject to withholding for applicable federal,
state and local income and employment related taxes. In the event of any
termination of the Executive’s employment with the Company, the Executive shall
continue to be bound by the confidentiality, non-solicitation, non-competition
and other provisions set forth in the Confidentiality Agreement for the periods
set forth therein. No termination benefits will be paid if the Executive resigns
or terminates his employment for any reason other than as set forth in Section
2b. below or if the Company terminates the Executive’s employment for Cause (as
defined below) as determined by the Board (or a committee of the
Board).
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 with the Company because (i) the Executive suffers a substantial
adverse change in his title or responsibilities (for the avoidance of doubt,
this would include the Executive no longer being the CFO of the publicly traded
Company, no matter what the reason), or (ii) the Executive suffers a reduction
in his annual base salary, or (iii) if the Company modifies the Executive’s
overall compensation plan in a manner that materially reduces the Executive’s
earning potential, or (iv) if the Company relocates it’s principal place of
business more than 50 miles from the Executives current residence; provided,
however,
that
with respect to items (i), (ii) and (iii) above, within thirty (30) days of
written notice by the Executive, the Company has not cured, or commenced to
cure, such substantial adverse change or reduction.
3. Definitions.
a. Cause
shall
mean (1) despite adequate warnings, the failure by the Executive to
satisfactorily perform the duties and responsibilities of the position held
for
any reason other than total or partial incapacity due to physical or mental
illness; (2) the failure to adhere to generally accepted standards of conduct
in
the workplace and/or the Company’s policies and procedures; (3) the failure to
adhere to moral and ethical business principles; (4) Executive's conviction
of a
crime (including entry of a nolo
contendere
plea);
or (5) any act of dishonesty in the commission of his duties.
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.
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.
| 7. |
Assignment.
This
Agreement may and shall be assigned or transferred to, and be binding
|
upon
and
hall inure to the benefit of any Successor Company (any company that acquires
50% or more of the Company or is the surviving entity in the event of a
acquisition, merger, combination or similar transaction).
IN
WITNESS WHEREOF
the
parties have duly executed this Employment Separation Agreement as of the date
first above written.
EXECUTIVE
___/s/
Xxxxxxx X. Smith_______________________
Xxxxxxx
X. Xxxxx
PDI,
INC.
By:
_/s/
Xxxxx McCarthy_____________________
Xxxxx
XxXxxxxx
Executive
Vice President, Human Resources
