CIMA LABS INC.
EMPLOYMENT AGREEMENT
WITH XXXX X. XXXXXXX
THIS AGREEMENT is entered into effective as of the date of signing by
and between CIMA LABS INC., a Delaware corporation (the "Company"), and Xxxx
X. Xxxxxxx, Ph.D. (the "Employee").
WHEREAS the Company desires to engage the Employee in the position of
President and Chief Executive Officer to render services for the Company on
the terms and conditions set forth in this Agreement;
WHEREAS, the Employee desires to be retained by the Company as its
President and Chief Executive Officer; and
WHEREAS, both parties recognize the critical importance to the Company,
its employees, and its investors of preserving the confidentiality of the
Company's trade secrets and confidential information and of protecting the
Company against competition from former executives or other key employees of
the Company following their separation from the Company;
NOW, THEREFORE, in consideration of the foregoing premises and the
parties' mutual covenants and undertakings contained in this Agreement, the
sufficiency of which is hereby acknowledged, the Company and the Employee
agree as follows:
1. EMPLOYMENT AND TERM. Subject to the terms and conditions herein
provided, the Company hereby continues employment of the Employee, and the
Employee hereby accepts employment by the Company, for a term continuing as
of January 1, 1998 and thereafter for three (3) years to January 1, 2001.
The employment term of the Employee will expire at the expiration of this
(3) year employment continuation term, without further obligation for either
party. On or before January 1, 2000, the Company expects to indicate to the
Employee whether the Company is interested in continuing employment of the
Employee with respect to a new employment agreement.
Notwithstanding the foregoing, the Company may terminate the Employee's
employment for cause and without notice and without further obligation of any
kind to the Employee. For purposes of this Agreement, "cause" means:
(a) any felony conviction;
(b) use of intoxicating beverages or chemical abuse that negatively
affects job performance (following at least one written warning);
(c) an act or acts of personal dishonesty taken by the Employee and
intended to result in personal enrichment of the Employee at the expense of
the Company;
(d) any material breach of the Employee's obligations under this
Agreement;
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(e) the willful misconduct or gross negligence of the Employee in
connection with the performance of his duties, responsibilities,
agreements, and covenants hereunder, or his failure to comply with the
reasonable rules, regulations, policies, directions, and restrictions as
may be established from time to time by the Board of Directors, and which
misconduct, negligence, or failure shall continue for a period of thirty
(30) days after written notice to the Employee; or
(f) willful conduct of the Employee which brings discredit to the Company,
its products, or its services.
It is further agreed that the term of the Employee's employment under
this Agreement shall automatically terminate in the event of the Employee's
death. In the event the Employee becomes mentally or physically disabled
during the term of employment hereunder, his employment under this Agreement
shall terminate as of the date such disability is established. As used in
this paragraph, the term "disabled" shall have the meaning as set forth in
the Americans with Disabilities Act, as amended. Upon termination for
disability, the Employee shall be entitled to receive continuation of his
base salary (as herein defined) for a period of one hundred eighty (180)
days. If the Company maintains a disability policy covering the employee,
then the amount of payment to be made by the Company to the Employee pursuant
to this provision shall be reduced by any amount so paid to the Employee
under any such insurance policy. Upon termination in the event of the
Employee's death, the Company shall continue to pay the Employee's base
salary (as herein defined) for a period of one hundred eighty (180) days.
2. DUTIES AND REPRESENTATIONS OF THE EMPLOYEE. During the Employee's
employment hereunder, he shall serve as the Company's President and Chief
Executive Officer. The Employee shall devote his full time, attention,
knowledge, and skill exclusively to the loyal service of the Company. The
Employee represents and warrants to the Company that: (a) his acceptance of
employment under this Agreement and his performance of the duties
contemplated herein are not in conflict with any obligation, undertaking, or
agreement between the Employee and any third party; and (b) he has not and
will not, during the course of his employment with the Company, disclose or
utilize without permission, any confidential or proprietary information,
trade secrets, materials, documents, or property owned by any third party.
The Company through the Compensation Committee expects to evaluate the
Employee's performance every twelve (12) months during the term of this
Agreement.
3. COMPENSATION. The Company shall pay to the Employee the following
compensation:
(a) BASE SALARY. The Company shall pay to the Employee an annual base
salary of $255,000 beginning January 1, 1998, less legally required
deductions and withholdings, payable in periodic installments in accordance
with the standard payroll practices of the Company in effect from
time-to-time. On January 1, 1999, the annual base salary will be adjusted
upwards by 5%. On January 1, 2000, the annual base salary will be adjusted
upwards from the 1999 increase by an incremental 5%. In the event of change
of control of the Company which leads to the termination or separation of the
Employee (1) because the position is eliminated, (2) because continuing to
work in the position would require the Employee to transfer to a work site
outside a 100-mile radius of his work location at the time of change in
control and Employee is unwilling to relocate, or because his
responsibilities change so substantially that the Employee has effectively
been removed from the position held by him prior to the change in control,
the Employee will automatically get an additional twelve (12) months of
compensation or the remainder of his contract (less any amount of salary
received in a subsequent job during such twelve (12) month period or
remainder of contract, as applicable), whichever is
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longer, in addition to the benefits of any corporate severance plan, during
which time the terms of the Agreement will remain in full force and effect.
(b) INCENTIVE BONUS. The Employee will be entitled to receive an
incentive bonus award of up to fifty percent (50%) of his base salary
depending upon the achievement of objectives defined and agreed to by the
Compensation Committee of the Board of Directors prior to the last Board
meeting of each calendar year. The award for achievement that occurs against
objectives in that year will be agreed-upon by the Compensation Committee and
paid before February 1 of the next year. The determination of whether and
when any of the objectives are achieved shall be in the reasonable discretion
of the Compensation Committee. The determination of any additional incentive
bonus programs shall be in the sole discretion of the Compensation Committee.
In the event of change of control of the Company, a minimum bonus of
$100,000 will be paid for each year of compensation remaining under the terms
of this Agreement for which a bonus has not yet been paid.
(c) PARTICIPATION IN BENEFIT PLANS. The Employee shall also be
entitled to participate in all employee benefit plans or programs of the
Company, including any disability and life insurance group plans, to the
extent that his position, title, tenure, salary, age, health, and other
qualifications make him eligible to participate. The Company will provide a
life insurance policy with minimum payout of $500,000 in the event the
Employee is killed or disabled during travel which is undertaken in the
course of business.
(d) VACATION. During the term of the Employee's employment under this
Agreement, the Employee shall be entitled to take twenty (20) days of
vacation per year with pay, at such times as shall be mutually convenient to
the Company and the Employee. Vacation time may be accumulated throughout
the term of this and any prior Agreements. Two weeks before the final Board
meeting of each year, the Vice President, CFO will provide the Compensation
Committee with a report outlining the Employee's paid time off (PTO) taken
and remaining for that year.
(e) EMPLOYMENT-RELATED EXPENSES. The Company shall pay or reimburse
the Employee for all reasonable and necessary out-of-pocket expenses incurred
by him in the performance of his duties under this Agreement, subject to the
presentment of appropriate vouchers in accordance with the Company's normal
policies for expenses verification.
(f) CAR ALLOWANCE. The Employee will be paid a car allowance in the
amount of six hundred fifty dollars ($650.00) per month, consistent with the
Company's payroll and accounting practices.
(g) STOCK OPTION. Subject to the terms of the Company's Equity
Incentive Plan, and subject to the Employee executing this document, the
Company shall issue to the Employee an incentive stock option to purchase one
hundred thousand (100,000) shares of common stock in the Company effective at
the date of signing this Agreement. This award will vest as follows: (i)
thirty-three percent (33%) of the shares subject to the option will vest on
December 31, 1998; (ii) thirty-three percent (33%) of the shares subject to
the option will vest on December 31, 1999; (iii) thirty-three percent (33%)
of the shares subject to the option will vest on December 31, 2000; subject
to accelerated vesting as provided in the Equity Incentive Plan.
Any payment or benefit hereunder shall be reduced to the extent that,
due to the excise tax on excess parachute payments under Section 4999 of the
Internal Revenue Code of 1986, such reduction would increase the Employee's
after-tax income. The Employee shall determine which payments or benefits
shall be so reduced."
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4. CONFIDENTIAL INFORMATION. Except as permitted or directed by the
Company's Board of Directors, during the term of this Agreement or at any
time thereafter, the Employee shall not divulge, furnish, or make accessible
to anyone or use in any way (other than in the ordinary course of business of
the Compete) any confidential or secret knowledge of the Company which the
Employee has acquired or become acquainted with or will acquire or become
acquainted with prior to the termination of the period of his employment by
the Company, whether developed by himself or by others, concerning any trade
secrets, confidential or secret designs, processes, formulae, plans, devices,
or materials (whether or not patented or patentable), directly or indirectly
useful in any aspect of the business of the Company, any customer or supplier
list of the Company, any confidential or secret development or research work
of the Company. or any other confidential information or secret aspects of
the business of the Company. The Employee acknowledges that the
above-described knowledge or information constitutes a unique and valuable
asset of the Company and represents a substantial investment of time and
expense by the Company and its predecessors, and that any disclosure or other
use of such knowledge or information other than for the sole benefit of the
Company would be wrong and would cause irreparable harm to the Company. Both
during and after the term of this Agreement, the Employee will refrain from
any acts or omissions that would reduce the value of such knowledge or
information to the Company. The foregoing obligations of confidentiality,
however, shall not apply to any knowledge or information which is now
published or which subsequently becomes generally publicly known in the form
in which it was obtained from the Company, other than as a direct or indirect
result of a breach of this Agreement by the Employee.
5. RETURN OF PROPRIETARY PROPERTY. The Employee agrees that all
property in the Employee's possession belonging to the Company, including
without limitation, all documents, reports, manuals, memoranda, computer
print-outs, customer lists, credit cards, keys, identification, products,
access cards, and all other property relating in any way to the business of
the Company are the exclusive property of the Company, even if the Employee
authored, created, or assisted in authoring or creating such property. The
Employee shall return to the Company all such documents and property
immediately upon termination of employment or at such earlier time as the
Company may reasonably request.
6. RESTRICTIVE COVENANT. The Employee acknowledges that the Company
needs to be protected against the potential for unfair competition and
impairment of the Company's good will by the Employee's use of the Company's
training, assistance, confidential information, and trade secrets in direct
competition with the Company. The Employee therefore agrees that for a
period of one (1) year from the date of termination of his employment
hereunder, the Employee shall not operate, join, control, be employed by, or
participate in ownership, management, operation, or control of, or be
connected in any manner as an independent contractor, consultant, or
otherwise, with any person or organization engaged in any business activity
which is the same as, or directly competitive with any business of the
Company or any successor of the Company as of the date of the termination of
his employment hereunder within the states of the United States of America.
The Employee expressly agrees that the provisions of this paragraph 6 shall
survive the termination of the Employee's employment hereunder or the
termination of this Agreement for a period of one (1) year, whether such
termination be voluntary or involuntary or with or without cause.
7. COVENANT NOT TO RECRUIT. The Employee recognizes that the
Company's work force constitutes an important and vital aspect of its
business. The Employee agrees that for a period of one (1) year following
the termination of his employment hereunder or the termination of this
Agreement for any reason whatsoever, he shall not recruit, or assist anyone
else in the solicitation of, any of the Company's then current employees to
terminate their employment with the Company and to become employed by any
business enterprise with which the Employee may then be associated or
connected, whether as an owner, employee, partner, agent, investor,
consultant, contractor or otherwise.
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8. ASSIGNMENT. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the Company. The Employee may not assign this
Agreement or any rights hereunder. Any purported or attempted assignment or
transfer by the Employee of this Agreement or any of the Employee's duties,
responsibilities, or obligations hereunder shall be void.
9. NOTICES. For purposes of this Agreement, notices provided in this
Agreement shall be in writing; and shall be deemed to have been given when
personally served, sent by courier or mailed by United States registered or
certified mail, return receipt requested, postage prepaid, to the last known
residence address of the Employee or, in the case of the Company, to its
principal office to the attention of the Board of Directors, or to such other
address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be
effective only upon receipt.
10. CONSTRUCTION AND SEVERABILITY. The validity, interpretation,
performance, and enforcement of this Agreement shall be governed by the laws
of the State of Minnesota. In the event any provision of this Agreement
shall be held illegal or invalid for any reason, said illegality or
invalidity will not in any way affect the legality or validity of any other
provision hereof. It is the intention of the parties hereto that the Company
be given the broadest possible protection respecting its confidential
information and trade secrets; and respecting competition by the Employee
following his separation by the Company.
11. ARBITRATION. Except as provided in this paragraph, any claims or
disputes of any nature between the parties arising from or related to the
performance, breach, termination, expiration, application, or meaning of this
Agreement or any matter relating to the Employee's employment and the
termination of that employment by the Company, shall be resolved exclusively
by arbitration before the American Arbitration Association in Minneapolis,
Minnesota, in accordance with the applicable rules then obtaining of the
American Arbitration Association.
The decision of the arbitrator(s) shall be final and binding upon both
parties Judgment of the award rendered by the arbitrator(s) may be entered in
any court having jurisdiction thereof. In the event of submission of any
dispute to arbitration, each party shall, not later than thirty (30) days
prior to the date set for hearing, provide to the other party and to the
arbitrator(s) a copy of all exhibits upon which the party intends to rely at
the hearing and a list of all persons each party intends to all at the
hearing.
This paragraph shall have no obligation to claims by the Company
asserting a violation of or seeking to enforce, by injunction or otherwise,
the terms of paragraphs 4, 5, 6 and 7 above. Such claims may be maintained
by the Company in a lawsuit subject to the terms of paragraph 12 below. The
Employee agrees that, in addition to, but not to the exclusion of any other
available remedy, the Company shall have the right to enforce the provisions
of paragraphs 4, 5, 6 and 7 by applying for and obtaining temporary and
permanent restraining orders or injunctions from a court of competent
jurisdiction without the necessity of filing a bond therefore, and the
Company shall be entitled to recover from the Employee its reasonable
attorneys' fees and costs in enforcing the provisions of paragraphs 4, 5, 6
and 7.
12. VENUE. Any action at law, suit in equity, or judicial proceeding
arising directly, indirectly, or otherwise in connection with, out of,
related to or from this Agreement or any provision hereof, shall be litigated
only in the courts of the State of Minnesota, County of Hennepin. The
Employee waives any right the Employee may have to transfer or change the
venue of any litigation brought against the Employee by the Company.
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13. ENTIRE AGREEMENT. This Agreement sets forth the entire Agreement
between the Company and the Employee with respect to his employment by the
Company and there are no undertakings, covenants, or commitments other than
as set forth herein. This Agreement may not be altered or amended, except by
a writing executed by the party against whom such alteration or amendment is
to be enforced. This Agreement supersedes any and all prior understandings
or agreements between the parties.
14. COUNTERPARTS. This Agreement may be simultaneously executed in any
number of counterparts, and such counterparts executed and delivered, each as
an original, shall constitute but one and the same instrument.
15. CAPTIONS AND HEADINGS. The captions and paragraph headings used in
this Agreement are for convenience of reference only, and shall not affect
the construction or interpretation of this Agreement or any of the provisions
hereof.
16. SURVIVAL. The parties expressly acknowledge and agree that the
provisions of this Agreement which by their express or implied terms extend
beyond the expiration of this Agreement or the termination of the Employee's
employment hereunder, shall continue in full force and effect,
notwithstanding the Employee's termination of employment hereunder or the
expiration of this Agreement.
17. WAIVERS. No failure on the part of either party to exercise, and
no delay in exercising, any right or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right or
remedy hereunder preclude any other or further exercise thereof, or the
exercise of any other right or remedy granted hereby or by any related
document or by law. No single or partial waiver of rights or remedies
hereunder, nor any course of conduct of the parties, shall be construed as a
waiver of rights or remedies by either party (other than as expressly and
specifically waived).
18. RELIANCE BY THIRD PARTIES. This Agreement is intended for the
exclusive benefit of the parties hereto and their respective heirs,
executors, administrators, personal representatives, successors, and
permitted assigns, and no other person or entity shall have any right to rely
on this Agreement or to claim or derive any benefit therefrom, absent the
express written consent of the party to be charged with such reliance or
benefit.
IN WITNESS WHEREOF, the parties have signed this Agreement. This
Agreement terminates the prior Agreement.
CIMA LABS INC.
Dated: OCTOBER 29, 1997 By: /s/ Xxxxxxxx X. Xxxxxxx
---------------- -----------------------------------
Its: Chairman
-----------------------------------
Dated: OCTOBER 29, 1997 /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx, Ph.D.
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