**Exhibit
      10.4**





**EMPLOYMENT
      SEPARATION AGREEMENT**





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 1 Route 17 South, Saddle River, New Jersey 07458, and
      Mr.
      Steven K. Budd (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/
              Steven K. Budd______________
            By:
            /s/
                Michael Marquard________****Steven K. Budd
            
            Michael Marquard, ChiefExecutive Officer