CIMA LABS INC
EMPLOYMENT AGREEMENT
<DOCUMENT>
<TYPE>EX-10.23
<SEQUENCE>2
<FILENAME>ex10-23.txt
<DESCRIPTION>EMPLOYMENT AGREEMENT
<TEXT>

<PAGE>   1
                                                                   EXHIBIT 10.23

                                 CIMA LABS INC.
                              EMPLOYMENT AGREEMENT
                              WITH JOHN M. SIEBERT


         THIS AGREEMENT is entered into effective as of the date of signing by
and between CIMA LABS INC., a Delaware corporation (the "Company"), and John M.
Siebert, 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, 2001 and thereafter for three (3) years to January 1, 2004. The
employment

<PAGE>   2

                                                                   EXHIBIT 10.23

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, 2003, 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;

         (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

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<PAGE>   3
                                                                   EXHIBIT 10.23

         (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. 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

                                       3

<PAGE>   4
                                                                   EXHIBIT 10.23

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 $305,000 beginning January 1, 2001, 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, 2002, the annual base salary will be adjusted upwards by 5%. On
January 1, 2003, the annual base salary will be adjusted upwards from the 2002
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 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.

                                       4

<PAGE>   5
                                                                   EXHIBIT 10.23

         (b) INCENTIVE BONUS. The Employee will be entitled to receive an
incentive bonus award of up to seventy percent (70%) 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 $150,000 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-five (25) days of
vacation per year with pay, at such times as shall be mutually convenient to the
Company and the

                                       5

<PAGE>   6
                                                                   EXHIBIT 10.23

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 (34%) of the shares subject to the option will vest on December 31,
2002; (ii) thirty-three percent (33%) of the shares subject to the option will
vest on December 31, 2003; (iii) thirty-three percent (33%) of the shares
subject to the option will vest on December 31, 2004; subject to accelerated
vesting as provided in the Equity Incentive Plan.

                                       6

<PAGE>   7
                                                                   EXHIBIT 10.23

         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."

         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

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<PAGE>   8
                                                                   EXHIBIT 10.23

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

                                       8

<PAGE>   9
                                                                   EXHIBIT 10.23

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.

         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

                                       9

<PAGE>   10
                                                                   EXHIBIT 10.23

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

                                       10

<PAGE>   11
                                                                   EXHIBIT 10.23

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

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                                                                   EXHIBIT 10.23

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.

         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.

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                                                                   EXHIBIT 10.23

         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.


<TABLE>
<CAPTION>
CIMA LABS INC.                                                 CIMA LABS INC.

<S>          <C>                                             <C>             <C>
By:          Terrence W. Glarner                             By:             John M. Siebert
             --------------------------------------------                    -------------------------------------------
             Print Name                                                      Print Name

Its:         Chairman of the Board                           Its:            President and CEO
             --------------------------------------------                    -------------------------------------------
             Title                                                           Title


             --------------------------------------------                    -------------------------------------------
             Signature                                                       Signature

Dated:                                                       Dated:
             --------------------------------------------                    -------------------------------------------
</TABLE>

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