AMENDED AND RESTATED EMPLOYMENT SEPARATION AGREEMENT
AMENDED AND RESTATED
EMPLOYMENT SEPARATION AGREEMENT
This
Amended and Restated Employment Separation Agreement (this “Agreement”), dated
as of December 31, 2008, is entered into 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. Xxxxxxx X. Xxxxx, residing
at (the
“Executive”).
WHEREAS,
the Company and Executive previously entered into an Employment Separation
Agreement, effective as of May 15, 2006 (the “Prior Agreement”);
and
WHEREAS,
the Company and Executive desire to amend and restate the Prior Agreement to
comply with the requirements of Section 409A of the Internal Revenue Code of
1986, as amended and the regulations promulgated thereunder (the “Code”), and to
make certain other clarifying changes, with this Agreement to supersede the
Prior Agreement in its entirety.
NOW,
THEREFORE, in consideration of the premises and mutual agreements herein
contained, the parties hereby agree as follows:
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, as of the 30th day
following his termination, the Executive has executed the PDI Agreement and
General Release given to him upon such termination (the “Release”), any
applicable revocation period has expired and Executive has not revoked the
Release during such revocation period, then:
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i.
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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
immediately 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”.
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ii.
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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 immediately preceding the
termination date for
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iii.
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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”. Subject to Section 2(d) below, such payment shall be
made within forty-five (45) days after Executive’s termination
date.
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b. In
the event that the Company is obligated to pay the Executive the Severance
Payment, in addition to such payment the Company shall reimburse Executive for
the cost of the premiums for the continuation of the Executive’s health and
welfare benefits under the Company’s group health plan under COBRA for up to
twelve (12) months (the “COBRA Benefit”), 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. 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.
c. 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).
d. 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(d) shall apply only to the extent that the payments under this
Section 2 are 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.
e. 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.
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7.
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Assignment. This
Agreement may and shall be assigned or transferred to, and be
binding
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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 Agreement as of the date first above
written.
EXECUTIVE
_/s/ Xxxxxxx X.
Smith_________
Xxxxxxx X. Xxxxx
PDI, INC.
By: __/s/ Xxxxx
Lurker________
Xxxxx Xxxxxx
Chief
Executive Officer
