Document:

Exhibit 10.32

SETTLEMENT AGREEMENT
	
			
	I.
	 
	PARTIES

This Settlement Agreement (“Agreement”) is entered into among the United States of America, acting through the United States Department of Justice (the “United States”) and RedPath Integrated Pathology Incorporated (“RedPath”), (hereinafter jointly referred to as “the Parties”), through their undersigned counsel and/or authorized representatives
	
			
	II.
	 
	PREAMBLE

As a preamble to this Agreement, the Parties agree to the following:
A.    RedPath Integrated Pathology Incorporated is a Pennsylvania licensed, independent clinical laboratory specializing in genomics-based cancer diagnostics and is located at 2515 Liberty Avenue, Pittsburgh, Allegheny County, Pennsylvania 15222.  RedPath performs a patented molecular analysis test known as the PathFinder TG® (“PFTG”).
B.    The United States contends that RedPath submitted or caused to be submitted claims for payment to the Medicare Program (“Medicare”), Title XVII of the Social Security Act, 42 U.S.C. §§ 1395-1395ggg.  At all times relevant to this Settlement Agreement, RedPath was a Medicare provider.
C.    The United States contends that it has certain civil claims against RedPath under common law doctrines, including without limitation, payment by mistake and unjust enrichment, for engaging in the following conduct during the period from October 1, 2010 through September 30, 2012 and has demanded and continues to demand that RedPath pay damages to the United States arising from the Covered Conduct.  The United States contends that RedPath submitted or caused to be submitted certain claims for payment to the Medicare for the PFTG test which were not in compliance with the 14-Day Rule, found at 42 U.S.C. §414.510 (as 

Settlement Agreement:  the United States of America
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amended Nov. 27, 2007) (hereinafter referred to as the “Covered Conduct”).
D.    RedPath denies that their claims are not in compliance with the 14-Day Rule and claims that it has defenses to these contentions; however, the United States maintains that its assertions are correct and accurate.  This Agreement is neither an admission of liability by RedPath nor a concession by the United States that its claims are not well founded.
E.    To avoid the delay, uncertainty, inconvenience, and expense of protracted litigation of the above claims, the Parties reach a full and final settlement pursuant to the Terms and Conditions below.
	
			
	III.
	 
	TERMS AND CONDITIONS

1.    RedPath agrees not to submit any further claims for reimbursement to Medicare for the PFTG test performed on specimens obtained during the period from October 1, 2010 through September 30, 2012; nor will RedPath appeal any denials of any claims for reimbursement for the PFTG test submitted to Medicare which were performed on specimens obtained during the period October 1, 2010 through September 30,2012 which have been submitted as of the date of this Agreement.  Furthermore, RedPath agrees that if on or before December 31 of calendar years 2014,2015,2016, and 2017, RedPath has achieved total revenue of $9,000,000.00, it will tender a payment to the United States in the amount of $250,000.00; if RedPath has achieved total revenue of $12,000,000.00, it will tender a payment to the United States in the amount of $500,000.00; if RedPath has achieved total revenue of $16,000,000.00, it will tender a payment of $750,000.00 to the United States; and if RedPath has achieved total revenue of $20,000,000.00, it will tender a payment to the United States in the amount of $1,000,000.00, whichever is the greater amount in each calendar year 2014 through 2017.  The obligation to make payments shall cease once a total of $3,000,000.00 is paid.  Total Revenue 

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shall be determined on a GAAP basis and on standards set forth in the SEC’s SAB 104 which provides as follows: revenue generally is realized or realizable and earned when all of the following criteria are met: 1) Persuasive evidence of an arrangement exists; 2) Delivery has occurred or services have been rendered; 3) The seller’s price to the buyer is fixed or determinable; and 4) Collectability is reasonably assured.
The payment of $3,000,000.00 will satisfy any and all of RedPath’s obligations to pay any damages or fines resulting from the Covered Conduct under this Agreement.
Finally, if RedPath sells substantially all of its assets, merges with and into another entity (and the current stockholders of RedPath do not own at least a majority of the equity interests in the surviving entity to such a merger) or any person or entity who is not a current stockholder (or affiliate of a current stockholder) acquires a controlling interest in RedPath prior to payment of the maximum amount that may be owing by RedPath to the United States pursuant to this paragraph, RedPath agrees that as a condition to consummating any such transaction, RedPath shall obtain the acknowledgment and agreement of any entity that acquires substantially all of RedPath’s assets or any successor to RedPath by merger, that such acquiror or successor is bound by the terms of this Settlement Agreement (or in the instance of a change of control, the purchasing controlling stockholder shall acknowledge that this Settlement Agreement continues to be a valid and binding obligation of RedPath).  RedPath understands that the United States may rescind the releases provided in Paragraph 3 below, if RedPath fails to obtain any such acknowledgment and agreement as provided above.
2.    RedPath agrees to pay the amounts set forth in Paragraph 1, above, by electronic funds transfer pursuant to written instructions to be provided by the Financial Litigation Unit of the United States Attorney’s Office for the Western District of Pennsylvania within 90 days of 

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the end of calendar years 2014, 2015, 2016, and 2017 respectively. Contemporaneously with its payments, RedPath will provide complete copies of the final audited and certified financial statements for the years then ended to United States Attorney’s Office.
3.    Subject to the exceptions in Paragraph 4, below, in consideration of the obligations of RedPath set forth in this Agreement, conditioned upon RedPath’s fulfillment of the terms and conditions set forth in Paragraph 1, above, and subject to Paragraph 10, below (concerning bankruptcy proceedings commenced within 91 days of the Effective Date of this Agreement or any payment made under this Agreement), the United States agrees to release RedPath together with its current and former parent corporations, shareholders, officers, directors, and the successors and assigns of any of them from any civil claim the United States has or may have under the common law theories of payment by mistake and unjust enrichment for the Covered Conduct.
4.    Notwithstanding any term of this Agreement, specifically reserved and excluded from the scope and terms of this Agreement as to any entity or person (including RedPath) are the following:
a.    Any civil, criminal, or administrative liability arising under Title 26, U.S.  Code (Internal Revenue Code);
b.    Any criminal liability;
c.    Except as explicitly stated in this Agreement, any administrative liability, including permissive or mandatory exclusion from Federal health care programs;
d.    Any liability to the United States (or its agencies) for any conduct other than the Covered Conduct; and
e.    Any liability based upon such obligations as are created by this 

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Agreement.
5.    RedPath waives and shall not assert any defenses RedPath may have to any criminal prosecution relating to the Covered Conduct, which defenses may be based in whole or in part on a contention that, under the Double Jeopardy Clause in the Fifth Amendment of the Constitution, or under the Excessive Fines Clause in the Eighth Amendment of the Constitution, this Agreement bars a remedy sought in such criminal prosecution.  Nothing in this Paragraph or any other provision of this Agreement constitutes an agreement by the United States concerning the characterization of the Settlement Amount for purposes of the Internal Revenue laws, Title 26 of the United States Code.
6.    RedPath fully and finally releases the United States, its agencies, employees, servants, and agents from any claims (including attorney’s fees, costs, and expenses of every kind and however denominated) that RedPath has asserted, could have asserted, or may assert in the future against the United States, its agencies, employees, servants, and agents, related to the Covered Conduct and the United States’ investigation and prosecution thereof.
7.    This Agreement is intended to be for the benefit of the Parties only.  The Parties do not release any claims against any other person or entity, except to the extent provided for in Paragraph 8, below.
8.    RedPath waives and shall not seek payment for any of the health care billings covered by this Agreement from any health care beneficiaries or their parents, sponsors, legally responsible individuals, or third party payors based upon the claims defined as Covered Conduct.
9.    The Parties warrant that, in evaluating whether to execute this Agreement, they (a) have intended that the mutual promises, covenants, and obligations set forth constitute a contemporaneous exchange for new value given to RedPath, within the meaning of 11 U.S.C. 

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§ 547(c)(l); and (b) conclude that these mutual promises, covenants, and obligations do, in fact, constitute such a contemporaneous exchange.  Further, the Parties warrant that the mutual promises, covenants, and obligations set forth herein are intended to and do, in fact, represent a reasonably equivalent exchange of value that is not intended to hinder, delay, or defraud any entity to which RedPath was or became indebted, on or after the date of this transfer, all within the meaning of 11 U.S.C. § 548(a)(1).
10.    If, within 91 days of the Effective Date of this Agreement or any payment made under this Agreement, RedPath commences, or a third party commences, any case, proceeding, or other action under any law relating to bankruptcy, insolvency, reorganization, or relief of debtors (a) seeking to have any order for relief of RedPath’s debts, or seeking to adjudicate RedPath as bankrupt or insolvent; or (b) seeking appointment of a receiver, trustee, custodian, or other similar official for RedPath or for all or any substantial part of RedPath’s assets, RedPath agrees as follows:
a.    RedPath’s obligations under this Agreement may not be avoided pursuant to 11 U.S.C. §§ 547 or 548, and RedPath shall not argue or otherwise take the position in any such case, proceeding, or action that: (I) RedPath’s obligations under this Agreement may be avoided under 11 U.S.C. §§ 547 or 548; (ii) RedPath was insolvent at the time this Agreement was entered into, or became insolvent as a result of the payment made to the United States hereunder; or (iii) the mutual promises, covenants, and obligations set forth in this Agreement do not constitute a contemporaneous exchange for new value given to RedPath.
b.    If RedPath’s obligations under this Agreement are avoided for any reason, including, but not limited to, through the exercise of a trustee’s avoidance powers under the Bankruptcy Code, the United States, at its sole option, may rescind the releases in this 

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Agreement, and bring any civil and/or administrative claim, action, or proceeding against RedPath for the claims that would otherwise be covered by the releases provided in Paragraph 3 above RedPath agrees that (I) any such claims, actions, or proceedings brought by the United States (including any proceedings to exclude RedPath from participation in Medicare, Medicaid, or other Federal health care programs) are not subject to an “automatic stay” pursuant to 11 U.S.C. § 362(a) as a result of the action, case, or proceeding described in the first clause of this Paragraph, and RedPath shall not argue or otherwise contend that the United States’ claims, actions, or proceedings are subject to an automatic stay; (ii) RedPath shall not plead, argue, or otherwise raise any defenses under the theories of statute of limitations, laches, estoppel, or similar theories, to any such civil or administrative claims, actions, or proceedings that are brought by the United States within 60 calendar days of written notification to RedPath that the releases herein have been rescinded pursuant to this Paragraph, except to the extent such defenses were available on the date of execution of this agreement;
c.    RedPath acknowledges that its agreements in this Paragraph are provided in exchange for valuable consideration provided in this Agreement.
11.    Each Party to this Agreement shall bear its own legal and other costs incurred in connection with this matter, including the preparation and performance of this Agreement.
12.    RedPath represents that this Agreement is freely and voluntarily entered into without any degree of duress or compulsion whatsoever and that RedPath has been advised with respect hereto by counsel.
13.    This Agreement is governed by the laws of the United States.  The Parties agree that the exclusive jurisdiction and venue for any dispute arising between and among the Parties under this Agreement is the United States District Court for the Western District of Pennsylvania.

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14.    This Agreement constitutes the complete agreement between the Parties. This Agreement may not be amended except by written consent of the Parties.
15.    The individuals signing this Agreement on behalf of RedPath represent and warrant that they are authorized by RedPath to execute this Agreement.  The United States signatories represent that they are signing this Agreement in their official capacities and that they are authorized to execute this Agreement.
16.    This Agreement may be executed in counterparts, each of which constitutes an original and all of which constitute one and the same Agreement.
17.    This Agreement is binding on RedPath’s successors, transferees, heirs, and assigns.
18.    This Agreement is effective on the date of signature of the last signatory to the Agreement (Effective Date of this Agreement).  Facsimiles of signatures shall constitute acceptable, binding signatures for purposes of this Agreement.

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FOR THE UNITED STATES OF AMERICA, U.S. DEPARTMENT OF JUSTICE:
	
		
	

DATED:   1-28-13            
	

BY:   /s/ David J. Hickton         
   DAVID J. HICKTON
   United States Attorney
   Western District of Pennsylvania

	 
	 

	

DATED:   1/28/13            
	

BY:   /s/ Michael A. Comber         
   MICHAEL A. COMBER
   Office of the United States Attorney
     for the Western District of Pennsylvania

	 
	 

	

DATED:   1/28/13            
	

BY:   /s/ Philip P. O’Connor, Jr.      
   PHILIP P. O’CONNOR, JR.
   Office of the United States Attorney
     for the Western District of Pennsylvania

Settlement Agreement:  the United States of America
and RedPath Integrated Pathology Incorporated
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FOR REDPATH INTEGRATED PATHOLOGY INCORPORATED
	
		
	

DATED:   1-28-13            
	

BY:   /s/ Dennis Smith         
   Dennis Smith, M.D.
   Chief Executive Officer
   RedPath Integrated Pathology Incorporated

	 
	 

	

DATED:   1-28-13            
	

BY:   /s/ Tina O. Miller         
   Tina O. Miller, ESQ.
   Counsel for
   RedPath Integrated Pathology Incorporated

Settlement Agreement:  the United States of America
and RedPath Integrated Pathology Incorporated
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#32619493 v1Exhibit 10.38

EMPLOYMENT SEPARATION AGREEMENT
This Employment Separation Agreement (the “Agreement”) is effective as of 10/10/11, by and between PDL, Inc., a Delaware corporation (the “Company”), having its principal place of business at 300 Interpace Parkway, Parsippany, New Jersey 07054, and Gerald Melillo, residing at [**********], (the “Executive”), pursuant to which the aforementioned parties agree:
		
	1.
	Employment.  In connection with Executive’s acceptance of that certain offer of employment letter dated September 26, 2011 (the “Offer Letter”) and contingent upon Executive’s successful completion of any pre-employment screening requirements set forth in the Offer Letter and execution of the Company’s Confidentiality, Non-Solicitation and Covenant Not to Compete Agreement,, the Company shall employ the Executive as Senior Vice President - Business Development of the Company, which employment shall terminate upon notice by either party, for any reason.  Executive understands and agrees that Executive’s employment with the Company is at will and can be terminated at any time by either party, and for any or no reason.

		
	2.
	Compensation and Benefits Payable Upon Involuntary Termination without Cause or Resignation for Good Reason.

		
	a.
	Triggering Event.  In further consideration for Executive’s employment, Executive will receive the compensation and benefits set forth in Section 2(b) if the following requirements (hereinafter referred to as the ‘Triggering Event”) are met:

		
	i.
	Executive’s employment is terminated involuntarily by the Company at any time for reasons other than death, total disability or Cause, or Executive resigns from employment for Good Reason; and

		
	ii.
	As of the 30th day following his or her termination date, Executive has executed the Agreement and General Release in substantially the form attached to this Agreement or in such form as may be provided by the Company (the “Release”), any applicable revocation period has expired and Executive has not revoked the Release during such revocation period.

		
	b.
	Compensation and Benefits.  Following the occurrence of a Triggering Event, the Company will provide the following compensation and benefits to Executive:

		
	i.
	The Company will pay Executive a lump sum payment equal to the product of twelve (12) times Executive’s Base Monthly Salary (excluding incentives, bonuses, and other compensation), plus the average of the annual amounts paid to Executive under any cash-based incentive or bonus plan in which Executive participates with respect to the last three (3) full fiscal years of Executive’s participation in such plan prior to the date of termination of Executive’s employment with the Company (or, if Executive’s number of full fiscal years of participation in any such plan prior to the date of termination of Executive’s employment is less than three (3), the average of the annual amounts paid to Executive over the number of full fiscal years of 

1

Executive’s participation in such plan prior the date of termination of Executive’s employment).  Subject to Section 2(c) below, such payment shall be made within forty-five (45) days after Executive’s termination date.

		
	ii.
	The Company will reimburse Executive for the cost of the premiums for COBRA group health continuation coverage under the Company’s group health plan paid by Executive for coverage during the period beginning following Executive’s termination date and ending on the earlier of either: (A) first anniversary of Executive’s termination date; or (B) the date on which Executive becomes eligible for other group health coverage, 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.

		
	c.
	Delay of Payment to Comply with Code Section 409A.  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(c) 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.

3.    Other Compensation.

		
	a.
	Except as may be provided under this Agreement, any benefits to which Executive may be entitled pursuant to the plans, policies and arrangements of the Company shall be determined and paid in accordance with the terms of such plans, policies and arrangements, and Executive shall have no right to receive any other compensation or benefits, or to participate in any other plan or arrangement, following the termination of Executive’s employment by either party for any reason.

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	b.
	Notwithstanding any provision contained herein to the contrary, in the event of any termination of employment, the Company shall pay Executive his or her earned, but unpaid, base salary within ten (10) days of Executive’s termination date and shall reimburse Executive for any accrued, but unpaid, reasonable business expenses, in each case, earned or accrued as of the date of termination.  Executive shall submit documentation of any business expenses within ninety (90) days of his or her termination date and any reimbursements of such expenses that are taxable to the Executive shall be made on or before the last day of the year following the year in which the expense was incurred, the amount of the expense eligible for reimbursement during one year shall not affect the amount of reimbursement in any other year, and the right to reimbursement shall not be subject to liquidation or exchange for another benefit.

		
	4.
	Withholding.  All amounts otherwise payable under this Agreement shall be subject to customary withholding and other employment taxes, and shall be subject to such other withholding as may be required in accordance with the terms of this Agreement or applicable law.

		
	5.
	Confidentiality, Non-Solicitation and Covenant Not to Compete Agreement.  In the event Executive’s employment with the Company is terminated by either party for any reason, Executive shall continue to be bound by the Company’s Confidentiality, Non-Solicitation and Covenant Not to Compete Agreement for the periods set forth therein (a copy of which is attached to this Agreement).

6.    Definitions.

		
	a.
	Cause shall mean: (i) the failure of Executive to use Executive’s best efforts in accordance with Executive’s position, skill and abilities to achieve Executive’s goals as periodically set by the Company; (ii) the failure by Executive to comply with the reasonable instructions of the Chief Executive Officer and/or the Company’s Board of Directors (the “Board”); (iii) a material breach by Executive of any of the terms or conditions of this Agreement; (iv) the failure by Executive to adhere to the Company’s documented policies and procedures; (v) the failure of Executive to adhere to moral and ethical business principles consistent with the Company’s Code of Business Conduct and Guidelines on Corporate Governance as in effect from time to time; (vi) Executive’s conviction of a criminal offense (including the entry of a nolo contendere plea); (vii) any documented act of material dishonesty or fraud by the Executive in the commission of his or her duties; or (viii) Executive engages in an act or series of acts constituting misconduct resulting in a misstatement of the Company’s financial statements due to material non-compliance with any financial reporting requirement within the meaning of Section 304 of The Sarbanes-Oxley Act of 2002.

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	b.
	Base Monthly Salary shall mean an amount equal to one-twelfth of 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 executive employees of the Company.

		
	c.
	Change of Control shall mean: (i) 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; (ii) 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; (iii) 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 (iv) 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, any transaction that involves a mere change in identity form or place of organization within the meaning of Section 368(a)(l)(F) of the Code, or a transaction of similar effect, shall not constitute a Change of Control.

		
	d.
	Good Reason.  Executive’s termination of employment with the Company shall be for Good Reason if (i) Executive notifies the Company in writing that one of the Good Reason Events (as defined below) has occurred, which notice shall be provided within ninety (90) days after he or she first becomes aware of the occurrence of such Good Reason Event, (ii) the Company fails to cure such Good Reason Event within thirty (30) days after receipt of the written notice from Executive (the “Cure Period”), and (iii) Executive resigns employment within thirty (30) days following expiration of the Cure Period.  For purposes of this Agreement, a “Good Reason Event” shall mean any of the following which occur without Executive’s consent:

		
	i.
	Prior to a Change of Control,

		
	(A)
	The failure by the Company to pay Executive any material amount of his or her current salary, or any material amount of his or her compensation deferred under any plan, agreement or arrangement of or with the Company that is currently due and payable;

4

		
	(B)
	A material reduction in Executive’s annual base salary; provided that a reduction consistent with reductions made to the annual base salaries for similarly situated senior executives of no more than 15% shall not constitute Good Reason; or

		
	(C)
	The relocation of Executive’s principal place of employment to a location more than fifty (50) miles from Executive’s current principal place of employment.

		
	ii.
	During the two (2) year period following any Change of Control,

		
	(A)
	The failure by the Company to pay Executive any material amount of his or her current salary, or any material amount of his or her compensation deferred under any plan, agreement or arrangement of or with the Company that is currently due and payable;

		
	(B)
	A material reduction in Executive’s annual base salary; provided that a reduction consistent with reductions made to the annual base salaries for similarly situated senior executives of no more than 15% shall not constitute Good Reason;

		
	(C)
	The relocation of Executive’s principal place of employment to a location more than fifty (50) miles from Executive’s current principal place of employment;

		
	(D)
	A material adverse alteration of Executive’s duties and responsibilities from those in effect immediately prior to the Change of Control;

		
	(E)
	An intentional, material reduction by the Company of Executive’s aggregate target incentive awards under any short-term and/or long-term incentive plans; and

		
	(F)
	The material failure of the Company to maintain Executive’s relative level of coverage under its material employee benefit, retirement, or fringe benefit plans, policies, practices, or arrangements in which Executive participates, both in terms of the amount of benefits provided and the relative level of Executive’s participation as in effect immediately before a Change of Control and with all improvements therein subsequent thereto (other than those plans or improvements that have expired thereafter in accordance with their original terms), or the taking of any action which would materially reduce Executive’s benefits under such plans or deprive him of any material fringe benefit enjoyed by him immediately before a Change of Control.  For this purpose, the Company may eliminate and/or modify existing employee benefit plans and coverage levels on a consistent and non-discriminatory basis applicable to all such executives; provided, however, that Executive’s level of coverage under all such programs must be at least as great as is such coverage provided to employees who have the same or lesser levels of reporting responsibilities within the organization.

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	c.
	Code shall mean the Internal Revenue Code of 1986, as amended.

		
	7.
	Integration; Amendment.  This Agreement, the Company’s Confidentiality, Non-Solicitation and Covenant Not to Compete Agreement, and the Executive’s Individual Stock Agreement (if any) (a copy of which are attached to this 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, provided, however, that this Agreement may be unilaterally amended by the Company where necessary to ensure any benefits payable hereunder are either excepted from Code Section 409A or otherwise comply with Code Section 409A.

		
	8.
	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.

		
	9.
	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 9, however, shall affect the right of any party to serve legal process in any other manner permitted by law.

[Signature Page Follows]

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IN WITNESS WHEREOF the parties have duly executed this Agreement as of the date first above written.
EXECUTIVE

By:    /s/ Gerald Melillo        
Gerald Melillo

PDI, INC.

By:    /s/                
Nancy Lurker
Chief Executive Officer

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