Exhibit 10.20


    Exhibit
      10.20

    EMPLOYMENT
      SEPARATION AGREEMENT

    


    


    


    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. Jeffrey
      E.
      Smith, residing at 6 Bradson Court, Westfield, New Jersey 07090 (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/
      Jeffrey E. Smith_______________________

    Jeffrey
      E. Smith

    


    


    PDI,
      INC.

    


    


    By:
      _/s/
      Nancy McCarthy_____________________

    Nancy
      McCarthy

    Executive
      Vice President, Human Resources