EMPLOYMENT SEPARATION AGREEMENT
Exhibit
10.19
Employment
Separation Agreement (the “Agreement”) effective as of May 11, 2006, 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 Xxxxxxxx, residing at 00000 Xxxxxxxxx Xxxxx, Xxxxxx Xxxx, Xxxxx Xxxxxxxx
00000 (the “Executive”), pursuant to which the aforementioned parties
agree:
1. Employment. In
connection with the Executive’s acceptance of that certain offer of employment
letter (the “Offer Letter”) dated May 5, 2006 and contingent upon the
Executive’s execution of the Company’s Confidentiality, Non-Solicitation and
Covenant Not to Compete Agreement, the Company shall employ the Executive as
Chief Executive Officer commencing on or about May 11, 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 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 A, then: (i) if such termination occurs
on
or before May 11, 2007
the
Executive shall be paid a lump sum payment equal to (y) the product of twelve
(12) times his Base Monthly Salary (as defined below), plus (z) any cash
incentive compensation paid to the Executive during his employment with the
Company or any unpaid portion of any guaranteed incentive compensation on a
pro
rata basis, without regard to any requirements that the Executive be employed
by
the Company on any given date in order to be eligible to receive such incentive
compensation (the “Year 1 Severance Payment”); or
(ii) if
such termination occurs
after May 11, 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, if applicable (the “Subsequent
Year Severance Payment”). In the event that the Company is obligated to pay the
Executive either the Year 1 Severance Payment or the Subsequent Year Severance
Payment (collectively, 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 (the “COBRA Benefit”) for the lesser of (i) twelve (12)
months in the event that the Company is obligated to pay the Executive the
Year
1 Severance Payment or for eighteen (18) months in the event that the Company
is
obligated to pay the Executive the Subsequent Year Severance Payment, or (ii)
until the Executive is eligible for participation in the health insurance plan
of any successor employer of the Executive. 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. The
Company shall have no obligation to accelerate the vesting of any equity based
compensation that may be held by the Executive. 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: (a) as a result of (i) 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 Chief Executive Officer
of the Company, which continues unremedied for a period of ten (10) business
days after the Executive has given written notice to the Company of same, (ii)
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, (iii)
a
reduction 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 (b) within two years following the occurrence
of a Change in Control because (i) the Executive suffers an adverse change
in
his title or responsibilities, (ii) the Executive suffers a 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 (i) and (ii) above, within 30 days of written notice
by
the Executive, the Company has not cured such material adverse change or
reduction, or (iii) the 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.
3. Definitions.
a. Cause
shall
mean (1) the failure by the Executive to comply with the reasonable instructions
of the Company’s Board of Directors (the “Board”), provided that such
instructions are consistent with the Executive’s duties and responsibilities
hereunder, and which such refusal continues unremedied for a period of ten
(10)
business days after the Board 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 or
conditions of this Agreement that continues unremedied for a period of ten
(10)
business days after 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 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 documented act of material dishonesty or fraud by the Executive
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.
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, the Offer Letter 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 such agreements 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.
IN
WITNESS WHEREOF
the
parties have duly executed this Employment Separation Agreement as of the date
first above written.
EXECUTIVE
_______/s/
Xxxxxxx Marquard____________
Xxxxxxx
Xxxxxxxx
PDI,
INC.
By:
_/s/
Xxxxx Xxxx
Xxxxx
Xxxx
Director,
Chairman of the Compensation
and
Management Development Committee
