EXHIBIT 10.31
February 27, 2003
Xxxxx Xxxxx
0000 Xxxxxxx Xxx X
Xxxxxxxxxxx, XX 00000
Dear Xxxx:
This letter will confirm our discussions and agreements regarding the
transition and termination of your employment with CIMA LABS INC. (the
"Company").
1. Employment. Your employment with the Company will end by mutual
agreement effective June 30, 2003 (the "Separation Date"). Your status as Chief
Financial Officer of the Company ("CFO") will end effective March 31, 2003. You
will continue to perform the responsibilities of CFO from now through March 31,
2003. Thereafter until the Separation Date, you will perform such transition
duties consistent with your former position as CFO as may be requested by the
Company. Such transition duties requested by the Company will not exceed eight
days per month and will be performed by you at times mutually agreed upon with
the Company. Between now and the Separation Date, the Company may terminate your
employment only for "cause," as defined in the Employment Agreement between you
and the Company, dated as of January 26, 2001 (the "Employment Agreement"). In
the event of termination by the Company for "cause," the Company shall have no
further obligation to you under this letter agreement except to pay your base
salary and benefits accrued through the date of termination.
2. Compensation. While you are so employed by the Company, you will
continue to receive base salary at your current annual rate of $203,970 and
those benefits as set forth in Section 3(c), (d), (e), and (g) of the Employment
Agreement. Except as provided in paragraph 3(c) of this letter agreement below,
you will not be eligible for any incentive bonus for calendar year 2003.
3. Severance Pay. If you sign the enclosed Release By Xxxxx Xxxxx (the
"Release") within 21 days following the Separation Date and do not rescind the
Release within 15 days after signing it, and subject to your complying with all
terms of this letter agreement, the Company will provide you with the following
benefits:
a. The Company will pay you severance pay equal to your final
base salary at the annual rate of $203,970 for a period of six months.
Thereafter, if you have not obtained other employment by December 31, 2003, then
the Company will continue to pay you severance pay at the same rate until the
earlier of (i) March 31, 2004 and (ii) the date you obtain other employment.
Such severance pay will subject to normal tax withholdings and will be paid by
the Company in accordance with its regular payroll schedule. You agree to
diligently seek employment following the Separation Date and to promptly report
any employment to the Company in writing within three (3) days of acceptance of
such employment.
b. If following the Separation Date you elect to continue your
group medical and dental insurance in accordance with the terms of the
applicable plans and laws, the Company
will continue to pay its portion of the monthly premiums for such coverage up to
nine (9) months following the Separation Date as if you were still employed by
the Company. Your continued coverages will be at the same level as in effect as
of the Separation Date and dependent coverages may be added in connection with a
qualifying event in accordance with the applicable plans and laws. The portion
of the premiums that shall be paid by the Company if dependent coverage is added
will also be that portion that the Company would pay if you were still an
employee of the Company. The Company's obligation to make such premium payments
shall commence after the rescission period has expired and shall cease
immediately if you become eligible for other health or dental (as applicable)
insurance benefits through a new employer. The Company shall deduct your
contributions for the monthly premiums from the severance pay described in
paragraph 3(a) above of this letter agreement. You agree to notify the Company
in writing within three (3) days of your acceptance of any employment that
provides health or dental insurance benefits.
c. The Company will pay you a prorated annual bonus for
calendar year 2003, in the amount of $25,496.25, less normal tax withholdings.
Such bonus payment will be paid at the same time as annual bonus payments are
paid to other management employees of the Company for calendar year 2003, but in
no event later than March 31, 2004.
4. Stock Options. You currently have options to purchase shares
of the Common Stock of the Company in accordance with the following schedule,
assuming your continued employment with the Company through the Separation Date:
Amount
Date of Exercise Number of Exercisable as of
Xxxxx Xxxxx Shares Granted 6/30/03
----------- -------- -------------- -----------------
2/28/00 $18.6875 50,000 25,000
5/16/00 $15.00 86,000 57,333
12/31/00 $66.00 75,000 50,000
You agree and acknowledge that all of your options to purchase the Company's
Common Stock are listed above and will lapse and cease to be outstanding 90 days
following the Separation Date, unless previously exercised in accordance with
the terms of the applicable option agreement and the Equity Incentive Plan (and
subject to adjustment if your employment terminates before the Separation Date).
5. Press Release. The Company will not issue a press release announcing
your departure from the Company without your advance approval of the text of
such release. Such approval will not be unreasonably withheld by you.
6. Your Obligations. You shall continue to be obligated to comply with
each of the terms of Sections 5, 6, 7, and 8 of the Employment Agreement,
provided, however, that the second sentence of Section 7 of the Employment
Agreement shall be amended to state as follows:
The Employee therefore agrees that for a period of one (1)
year from the date of termination of his employment with the
Company, the Employee
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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 the design, development, manufacture,
distribution, marketing or selling of pharmaceutical products
using fast-dissolve drug delivery technologies within the
United States.
7. Company Obligations. The sole obligations of the Company will
be its obligations as set forth in this letter agreement, except as otherwise
provided by law. This letter agreement represents the entire agreement between
you and the Company and supersedes all prior negotiations, discussions,
communications and agreements.
8. Governing Law. All matters relating to the interpretation,
construction, application, validity and enforcement of this letter agreement
shall be governed by the laws of the State of Minnesota.
* * * * *
This letter agreement is intended to state all the terms of the
conclusion of your employment by the Company. Please indicate your acceptance of
all such terms by signing both copies of this letter agreement and returning one
copy to the undersigned.
Sincerely,
CIMA LABS INC.
/s/Xxxxxx Xxxxxx
Xxxxxx Xxxxxx
Member, Board of Directors
On this 27th day of February, 2003, I, Xxxxx X. Xxxxx, hereby accept and agree
to the terms of the above letter agreement and further acknowledge that I have
21 days after the Separation Date to decide whether to sign the enclosed
Release. I also hereby specifically confirm (a) that I am being advised by the
Company to seek independent advice from legal counsel of my own selection in
connection with this letter agreement and the Release (and that I have had
adequate opportunity to do so); and (b) that I have not relied to any extent on
any statement or other communication from any shareholder, director, officer,
employee, attorney or agent of the Company in connection herewith.
/s/Xxxxx X. Xxxxx 2/27/03
----------------------------------------- -------
Xxxxx X. Xxxxx Dated
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RELEASE BY XXXXX X. XXXXX
DEFINITIONS. I intend all words used in this Release to have their plain
meanings in ordinary English. Specific terms that I use in this Release have the
following meanings:
A. I, me, and my include both me and anyone who has or obtains any
legal rights or claims through me.
B. CIMA means CIMA LABS INC., any company related to CIMA LABS INC. in
the present or past (including without limitation, its predecessors,
parents, subsidiaries, affiliates, joint venture partners, and
divisions), and any successors of CIMA LABS INC.
C. Company means CIMA; the present and past officers, directors,
committees, shareholders, and employees of CIMA; any company
providing insurance to CIMA in the present or past; the present and
past fiduciaries of any employee benefit plan sponsored or
maintained by XXXX (other than multiemployer plans); the attorneys
for CIMA; and anyone who acted on behalf of CIMA or on instructions
from CIMA.
D. Letter Agreement means the letter agreement from CIMA dated February
__, 2003 and accepted by me, including all of the documents attached
to the Letter Agreement.
E. My Claims mean all of my rights that I now have to any relief of any
kind from the Company, including without limitation:
1. all claims arising out of or relating to my employment with
CIMA or the termination of that employment;
2. all claims arising out of or relating to the statements,
actions, or omissions of the Company;
3. all claims for any alleged unlawful discrimination,
harassment, retaliation or reprisal, or other alleged
unlawful practices arising under any federal, state, or
local statute, ordinance, or regulation, including without
limitation, claims under Title VII of the Civil Rights Act
of 1964, the Age Discrimination in Employment Act, the
Americans with Disabilities Act, 42 U.S.C. ss. 1981, the
Employee Retirement Income Security Act, the Equal Pay Act,
the Worker Adjustment and Retraining Notification Act, the
Minnesota Human Rights Act, the Fair Credit Reporting Act,
and workers' compensation non-interference or
non-retaliation statutes (such as Minn. Stat. Section
176.82);
4. all claims for alleged wrongful discharge; breach of
contract; breach of implied contract; failure to keep any
promise; breach of a covenant of
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good faith and fair dealing; breach of fiduciary duty;
estoppel; my activities, if any, as a "whistleblower";
defamation; infliction of emotional distress; fraud;
misrepresentation; negligence; harassment; retaliation or
reprisal; constructive discharge; assault; battery; false
imprisonment; invasion of privacy; interference with
contractual or business relationships; any other wrongful
employment practices; and violation of any other principle
of common law;
5. all claims for compensation of any kind, including without
limitation, bonuses, commissions, stock-based compensation
or stock options, vacation pay, and expense reimbursements;
6. all claims for back pay, front pay, reinstatement, other
equitable relief, compensatory damages, damages for alleged
personal injury, liquidated damages, and punitive damages;
and
7. all claims for attorneys' fees, costs, and interest.
However, My Claims do not include any claims that the law does
not allow to be waived, any claims that may arise after the
date on which I sign this Release, any claims for
indemnification under the charter documents of the Company or
under any applicable state or federal statute, or any claims
for breach of the Letter Agreement.
AGREEMENT TO RELEASE MY CLAIMS. I will receive consideration from CIMA as set
forth in the Letter Agreement if I sign and do not rescind this Release as
provided below. I understand and acknowledge that that consideration is in
addition to anything of value that I would be entitled to receive from CIMA if I
did not sign this Release or if I rescinded this Release. In exchange for that
consideration I give up and release all of My Claims. I will not make any
demands or claims against the Company for compensation or damages relating to My
Claims. The consideration that I am receiving is a fair compromise for the
release of My Claims.
ADDITIONAL AGREEMENTS AND UNDERSTANDINGS. Even though CIMA will provide
consideration for me to settle and release My Claims, the Company does not admit
that it is responsible or legally obligated to me. In fact, the Company denies
that it is responsible or legally obligated to me for My Claims, denies that it
engaged in any unlawful or improper conduct toward me, and denies that it
treated me unfairly.
ADVICE TO CONSULT WITH AN ATTORNEY. I understand and acknowledge that I am
hereby being advised by the Company to consult with an attorney prior to signing
this Release and I have done so. My decision whether to sign this Release is my
own voluntary decision made with full knowledge that the Company has advised me
to consult with an attorney.
PERIOD TO CONSIDER THE RELEASE. I understand that I have 21 days following my
last day of employment with the Company to consider whether I wish to sign this
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Release before the end of the 21-day period, it will be my voluntary decision
to do so because I have decided that I do not need any additional time to decide
whether to sign this Release.
MY RIGHT TO RESCIND THIS RELEASE. I understand that I may rescind this Release
at any time within 15 days after I sign it, not counting the day upon which I
sign it. This Release will not become effective or enforceable unless and until
the 15-day rescission period has expired without my rescinding it.
PROCEDURE FOR ACCEPTING OR RESCINDING THE RELEASE. To accept the terms of this
Release, I must deliver the Release, after I have signed and dated it, to CIMA
by hand or by mail within the 21-day period that I have to consider this
Release. To rescind my acceptance, I must deliver a written, signed statement
that I rescind my acceptance to CIMA by hand or by mail within the 15-day
rescission period. All deliveries must be made to CIMA at the following address:
Xxxxxx Xxx
CIMA LABS INC.
00000 Xxxxxx Xxxx Xxxx
Xxxx Xxxxxxx, XX 00000
If I choose to deliver my acceptance or the rescission of my acceptance by mail,
it must be (1) postmarked within the period stated above; and (2) properly
addressed to CIMA at the address stated above.
INTERPRETATION OF THE RELEASE. This Release should be interpreted as broadly as
possible to achieve my intention to resolve all of My Claims against the
Company. If this Release is held by a court to be inadequate to release a
particular claim encompassed within My Claims, this Release will remain in full
force and effect with respect to all the rest of My Claims.
MY REPRESENTATIONS. I am legally able and entitled to receive the consideration
being provided to me in settlement of My Claims. I have not been involved in any
personal bankruptcy or other insolvency proceedings at any time since I began my
employment with XXXX. No child support orders, garnishment orders, or other
orders requiring that money owed to me by CIMA be paid to any other person are
now in effect.
I have read this Release carefully. I understand all of its terms. In signing
this Release, I have not relied on any statements or explanations made by the
Company except as specifically set forth in the Letter Agreement. I am
voluntarily releasing My Claims against the Company. I intend this Release and
the Letter Agreement to be legally binding.
Dated: _____________________________ _________________________________
Xxxxx X. Xxxxx
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