Exhibit 10.89
EXECUTION VERSION
October 16, 2009
Via Hand Delivery
Brian Dickson
9308 Royal Crest Drive
Raleigh, NC 27617
RE: Separation Letter Agreement and General Release
Dear Brian:
     This Separation Letter Agreement and General Release (the “Agreement”) sets
forth and confirms the terms of the separation package that you are eligible to
receive pursuant to your Amended and Restated Executive Employment Agreement
dated May 6, 2009 (the “Employment Agreement”) by and between Cornerstone
Therapeutics Inc. (the “Company”) and you (“you” or the “Employee”) as a result
of the Company’s termination of your employment with the Company without
“cause.” To receive the severance benefits, you must enter into a binding
severance agreement drafted by and satisfactory to the Company. You will have
twenty-one (21) days from your receipt of this Agreement to consider it and once
you have signed this Agreement, you will have seven (7) days to revoke your
acceptance as set forth in Paragraphs Nos. 8 and 19 below. Please note that the
earliest you can accept this Agreement is the Termination Date (as defined
below). Please read this Agreement carefully and review it with your attorney.
If you are willing to agree to its terms, please sign and date in the space
provided on the signature page and return it to the Director, Human Resources of
the Company at the address set forth in Paragraph No. 21.
     1. Whether or not you choose to timely sign and return this Agreement, your
employment with the Company will end as of October 16, 2009 (the “Termination
Date”), provided that you satisfactorily perform your job and comply with
Company policies and practices as determined in good faith by the Company
through the Termination Date. Whether or not you choose to sign this Agreement,
you will be paid on or about the Termination Date the following:

  (a)   any of your unpaid current base salary through the Termination Date,
less lawful deductions; and

  (b)   your unused and accrued vacation as of the Termination Date.

     2. After the Termination Date, except as provided below, you will not be
entitled to receive any benefits paid by, or participate in any benefit programs
offered by the Company to its employees, including, but not limited to, the
Company’s 401(k) plan, stock option plans, bonus plans, commission plans, sales
incentive plans, retention agreements, severance, expense reimbursements, life
insurance or disability insurance programs, except as required by federal or
state law or as otherwise described to you in writing in such plan or program
documents. You will receive, under separate cover, information concerning your
right to continue your health insurance and dental insurance benefits after that
date in accordance with COBRA. You must complete the COBRA enrollment documents
within the required period in order to continue this coverage. You will also
receive, under separate cover, an information statement regarding the vesting of
your stock options agreements as of the Termination Date. Under the

 

--------------------------------------------------------------------------------

 

terms of the Company’s stock option plans, you cease further vesting of stock
options upon the Termination Date except as otherwise provided in your
Employment Agreement.
     3. In consideration for timely signing of this Agreement and the promises
made herein, the Company agrees to provide you with the monies and benefits in
accordance with the terms of Section 5.4 of the Employment Agreement set forth
in Attachment A (attached hereto) provided that you do not revoke your
acceptance of this Agreement pursuant to Paragraph No. 19 below. The
distribution of all severance payments and benefits provided in Attachment A
shall be subject to the provisions of Attachment B (attached hereto).
     4. You also understand and agree that you would not receive the monies
and/or benefits specified in Paragraph No. 3 above, except for your execution of
this Agreement and the fulfillment of the promises contained herein. You
acknowledge and agree that such payments shall be provided in lieu of any
severance plan of the Company, any benefits under your Employment Agreement and
any benefits under your employment offer letter. You acknowledge and agree that
you are solely responsible for the following:

  (a)   properly and timely electing to continue health and dental insurance
coverage under COBRA; and

  (b)   promptly notifying the Company if you become eligible for coverage under
the group health plan of another employer prior to twelve (12) months after the
Termination Date.

     5. In consideration of the payments to be made by the Company to you as set
forth in Paragraph No. 3 above and the promises contained in this Agreement, you
hereby voluntarily and of your own free will agree to release, remise, forever
discharge and hold harmless the Company, its past, present and future
subsidiaries, corporate affiliates, parent companies, and its and/or their past,
present and future officers, directors, stockholders, trustees, successors and
assigns, agents and employees (each in both their individual and corporate
capacities) (hereinafter, the “Releasees”) from any and all claims, charges,
complaints, demands, actions, causes of action, suits, rights, debts, sums of
money, costs, accounts, reckonings, covenants, contracts, agreements, promises,
doings, omissions, damages, executions, obligations, liabilities, and expenses
(including attorneys’ fees and costs), of every kind and nature, whether known
or unknown, that might be asserted arising out of your employment by and
separation from the Company, including, but not limited to, (1) The National
Labor Relations Act, as amended; (2) Title VII of the Civil Rights Act of 1964,
as amended; (3) Sections 1981 through 1988 of Title 42 of the United States
Code, as amended; (4) the Age Discrimination in Employment Act of 1967, as
amended (“ADEA”); (5) the Older Workers Benefit Protection Act (“OWBPA”);
(6) the Immigration Reform Control Act, as amended; (7) the Employee Retirement
Income Security Act of 1974, 29 U.S.C. § 1001, et seq., except for any claims
for benefits vested, due and owing; (8) the Occupational Safety and Health Act,
as amended; (9) the Civil Rights Act of 1866, 29 U.S.C. § 1981, et seq; (10) the
Rehabilitation Act of 1973, 29 U.S.C. § 701, et seq.; (11) the Americans With
Disabilities Act of 1990, as amended; (12) the Civil Rights Act of 1991;
(13) the Workers Adjustment and Retraining Notification Act, as amended;
(14) the Family and Medical Leave Act, as amended; (15) Section 806 of the
Corporate and Criminal Fraud Accountability Act of 2002; (16) Executive Order
11141; (17) the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq.; (18) any
other federal or state law, regulation, or ordinance; (19) any public policy,
contract, tort, or common law; (20) all claims to any non-vested ownership
interest in the Company, contractual or otherwise, including but not limited to
claims to stock or stock options (except as set forth in Attachment A); and
(21) any allegation for costs, fees, or other expenses including attorneys’ fees
incurred in these matters. The release of claims set forth in this paragraph
does not apply to claims for workers’ compensation benefits or unemployment
benefits filed with the applicable state agencies. You

2

--------------------------------------------------------------------------------

 

agree that neither this Agreement, nor the furnishing of consideration for this
Agreement, shall be deemed or construed at anytime for any purpose as an
admission by the Company of any liability or unlawful conduct of any kind.
     6. You will not sue the Releasees on any matters relating to your
employment arising before the execution of this Agreement, including, but not
limited to, claims under the ADEA, or join as a party with others who may sue
Releasees on any such claims. Provided, however, nothing in this Agreement
prevents you from filing, cooperating with, or participating in any proceeding
before the EEOC or a State Fair Employment Practices Agency (except that you
acknowledge that you may not be able to recover any monetary benefits in
connection with any such claim, charge or proceeding), from challenging under
the OWBPA the enforceability of the waiver and release of ADEA claims set forth
in this Agreement, or from pursuing claims for workers’ compensation or
unemployment benefits referenced in Paragraph No. 5 above, and this Paragraph
will not apply when prohibited by law. If you do not abide by this Paragraph,
then: (i) you will return all monies received under this Agreement and indemnify
Releasees for all expenses they incur in defending the action; and
(ii) Releasees will be relieved of their obligations hereunder.
     7. You acknowledge and reaffirm your post-employment obligations under
Sections 7 (non-compete) and 8 (proprietary information and developments) of the
Employment Agreement.
     8. You will be afforded ten (10) calendar days after the Termination Date
to submit to the Company, to the attention of the Director, Human Resources in
the manner set forth in Paragraph No. 21, any and all documentation for any
expense reimbursements you claim are owed to you in conjunction with your
employment with the Company. You will be reimbursed for any reasonable business
expenses incurred and approved through the Termination Date consistent with
Company policy, subject to the submission of the properly documented business
expense reports and according to the Company’s normal expense reimbursement
practices and subject to the provisions of Attachment B.
     9. You are afforded up to twenty-one (21) calendar days from receipt of
this Agreement to consider the meaning and effect of this Agreement and general
release and you acknowledge that you have been given twenty-one (21) calendar
days to consider it. You agree that any modifications, material or otherwise, do
not restart or affect in any manner the original consideration period for the
separation proposal made to you. You are advised to consult with an attorney
regarding this Agreement and you acknowledge that you have had the opportunity
to do so.
     10. You agree to return to the Company by the Termination Date all Company
property and equipment in your possession or control, including but not limited
to, all documents, tapes, notes, computer files, equipment, company vehicles,
physician lists, employee lists, lab notebooks, files, computer equipment,
security badges, telephone calling cards, credit cards, and other information or
materials (and all copies) which contain confidential, proprietary or non-public
information of the Company. You further agree to leave intact all electronic
Company documents on the Company’s servers or computers, including those which
you developed or helped develop during your employment.
     11. Nothing herein limits either party’s right, where applicable, to file
or participate in an investigative proceeding of any federal, state or local
governmental agency, provided however, that by signing this Agreement, you waive
the right to seek or receive any money damages or other relief of any nature
whatsoever from the Company based upon any claim that might be asserted arising
out of your employment at the Company. You further affirm that you have been
paid and have received all leave (paid or unpaid), compensation, wages, bonuses,
commissions, severance and/or benefits to which you may be entitled and that no
other leave (paid or unpaid), compensation, wages, bonuses, commissions,
severance and/or benefits are due to you, except as provided in this Agreement.
You furthermore affirm

3

--------------------------------------------------------------------------------

 

that you have no known workplace injuries or occupational diseases. You also
affirm that you have not been retaliated against for reporting any allegations
of wrongdoing by the Company or its officers, including any allegations of
corporate fraud.
     12. This Agreement, which includes a general release, represents the
complete agreement between you and the Company, and fully supersedes any prior
agreements or understandings between the parties (including, without limitation,
your Employment Agreement, except that your post-employment obligations
thereunder shall survive in full force and effect). You acknowledge that you
have not relied on any representations, promises, or agreements of any kind made
to you in connection with your decision to sign this Agreement, except those set
forth herein.
     13. This Agreement, which shall be construed under the law of the State of
North Carolina, shall be binding upon the parties and may not be abandoned,
supplemented, changed or modified in any manner, orally or otherwise, except by
an instrument in writing of concurrent or subsequent date signed by a duly
authorized representative of the parties hereto. This Agreement is binding upon
and shall inure to the benefit of the parties and their respective agents,
assigns, heirs, executors, successors and administrators. The parties hereby
consent to jurisdiction in the State of North Carolina for purposes of any
litigation relating to this Agreement and agree that any litigation by or
involving them relating to this Agreement shall be conducted in the state or
federal courts of the State of North Carolina.
     14. Should any provision of this Agreement be declared or be determined by
any court of competent jurisdiction to be illegal or invalid, the validity of
the remaining parts, terms, or provisions shall not be affected thereby and said
illegal and invalid part, term or provision shall be deemed not to be a part of
this Agreement. The language of all parts of this Agreement shall in all cases
be construed as a whole, according to its fair meaning, and not strictly for or
against any of the parties.
     15. You understand and agree that as a condition for payment to you of the
monetary consideration herein, you shall not make any false, disparaging or
derogatory statements in public or private to any person or media outlet
regarding the Company or any of its current, past or future directors, officers,
employees, agents, or representatives or the Company’s business affairs and
financial condition, except if testifying truthfully under oath pursuant to a
lawful court order or subpoena. If you receive such a court order or subpoena,
to the extent allowed by law, you or your attorney shall provide the Company
with a copy of such court order or subpoena within two (2) business days of your
receipt of it and shall notify the Company of the content of any testimony or
information to be provided and shall provide the Company with copies of all
documents to be produced.
     16. No delay or admission by the Company in exercising any right under this
Agreement shall operate as a waiver of that or any other right. A waiver or
consent given by the Company on any one occasion shall be effective only in that
instance and shall not be construed as a bar or waiver of any right on any other
occasion.
     17. You further agree to provide up to an additional ten (10) days of
consulting, advisory and related services for the Company as may be reasonably
requested by the Company or its employees, representatives or agents during the
period from the Termination Date through the date that is six months after the
Termination Date, including, but not limited to preparing to-do lists, answering
questions, preparing memos, and updating or completing projects. The Company
shall pay you a per diem consulting fee as a consultant for such time provided
under this Paragraph No. 17(a) at an amount equal to your 2009 base annual
salary divided by 175. The Company acknowledges and agrees that the Employee’s
ability to perform this consulting at the request of the Company will be limited
if the Employee accepts part-time or full-time employment with a third party. If
the Employee is required to travel at the request of the Company after the
Termination Date, the Company agrees to pay any

4

--------------------------------------------------------------------------------

 

reasonable business expenses incurred in connection with such travel provided
that the travel is approved by the Company and such reimbursement shall be made
consistent with Company policy, subject to the submission of the properly
documented business expense reports and according to the Company’s normal
expense reimbursement practices and subject to the provisions of Attachment B.
     Notwithstanding anything in this Paragraph No. 17 to the contrary, the
Company and the Employee intend that the Termination Date shall be the date of
the Employee’s “separation from service” for purposes of Section 409A of the
Internal Revenue Code of 1986, as amended, and guidance issued thereunder
(“Section 409A”). In accordance with such intent, the parties agree that in no
event will the consulting services required by this Paragraph 17 result in the
Employee’s performing services for the Company at a rate that exceeds 20% of
Employee’s level of bona fide services to the Company over the 36-month period
preceding to the Termination Date (or such shorter period during which the
Employee has been employed by the Company), as determined in accordance with
Section 409A.
     18. You acknowledge and agree that notwithstanding the provisions of
Attachment B (i) neither the Company nor the Company’s legal counsel makes any
representation or warranty if any provisions of this Agreement or any payments
made pursuant to this Agreement are, or may be determined to constitute,
“nonqualified deferred compensation” within the meaning of Section 409A and
(ii) the Company shall have no liability to you or any other person if any
payments pursuant to the provisions of this Agreement are determined to
constitute nonqualified deferred compensation subject to Section 409A and do not
satisfy the requirements of Section 409A. Notwithstanding any other provision of
this Agreement, the Company has the right to and the Company intends to comply
with all withholding and reporting obligations under Section 409A. You are
advised to consult with an attorney regarding this Agreement and you acknowledge
that you have had the opportunity to do so.
     19. You may revoke this Agreement for a period of seven (7) calendar days
following the day you execute this Agreement. Any revocation within this period
must be in writing and must state, “I hereby revoke my acceptance of the
Separation Letter Agreement and General Release.” The revocation must be
delivered to the following address:
Cornerstone Therapeutics Inc.
Attention: Rhonda P. Downum, Director, Human Resources
1255 Crescent Green Drive, Suite 250
Cary, North Carolina 27518
This Agreement shall not become effective or enforceable until the revocation
period has expired.
     20. For the convenience of the parties, this Agreement may be executed by
facsimile and in counterparts, each of which shall be deemed to be an original,
and both of which taken together, shall constitute one agreement binding on both
parties.
     21. Except as otherwise provided in this Agreement, all notices required or
permitted under this Agreement shall be in writing and shall be deemed effective
upon personal delivery or upon the day that is three (3) days after deposit in
the United States Post Office, by registered or certified mail, postage prepaid,
addressed to the other party at the address shown below (or at such other
address or addresses as either party shall designate to the other in accordance
with this Paragraph No. 21):

5

--------------------------------------------------------------------------------

 

(a) If to the Company:
Cornerstone Therapeutics Inc.
Attention: Rhonda P. Downum, Director, Human Resources
1255 Crescent Green Drive, Suite 250
Cary, North Carolina 27518
(b) If to the Employee:
Brian Dickson
9308 Royal Crest Drive
Raleigh, NC 27617
     22. The Employee acknowledges and agrees that for a period of one (1) year
after the Termination Date, he will not, directly or indirectly, either alone or
in association with others, recruit, solicit, induce, hire or engage as an
independent contractor or attempt to recruit, solicit, induce, hire or engage as
an independent contractor, any person who then is or was employed by the Company
except for an individual whose employment with the Company has been terminated
by (i) the employee for any reason other than Good Reason (as defined in the
Company’s 2004 Stock Incentive Plan) for a period of six (6) months or longer,
(ii) by the Company for any reason, or (iii) by the employee for Good Reason (as
defined in the Company’s 2004 Stock Incentive Plan).
     23. You agree not to disclose to anyone, either directly or indirectly, any
information whatsoever regarding the existence, terms or contents of this
Agreement, except your immediate family, attorneys, financial advisors,
accountants, and tax preparation professionals, provided that they agree to keep
such information strictly confidential, until such time as this agreement is
filed as an exhibit to the Company’s filings with the U.S. Securities and
Exchange Commission. This includes, but is not limited to, present or former
employees of the Company and other members of the public. Violation of this
Paragraph shall be deemed a material breach of this Agreement.
     Cornerstone Therapeutics Inc. would like to extend its appreciation to you
for your past service, and its sincere hope for success in your future
endeavors.

            Very truly yours,

CORNERSTONE THERAPEUTICS INC.
      By:   /s/ David Price         Name:   David Price        Title:  
Executive Vice President, Finance, and
Chief Financial Officer   

6

--------------------------------------------------------------------------------

 

ACCEPTED AND AGREED:
     You have been advised in writing that you have up to twenty-one
(21) calendar days from receipt of this Separation Letter Agreement and General
Release (the “Agreement”) to consider this Agreement. You have also been advised
to consult with an attorney prior to the execution of the Agreement.
     Having elected to execute this Agreement, to fulfill the promises set forth
herein, and to receive thereby the sums and benefits set forth in
Paragraph No. 3 of the Agreement, you freely and knowingly, and after due
consideration, enter into this Agreement intending to waive, settle, and release
all claims you have or might have against Cornerstone Therapeutics Inc. You have
carefully read this Agreement and understand the contents herein.

                Date: October 20, 2009      /s/ Brian Dickson          
Name:  Brian Dickson       

7

--------------------------------------------------------------------------------

 

         

ATTACHMENT A

DESCRIPTION OF SEVERANCE BENEFITS

1.   Severance Payments. The Company will pay to you the following lump sum
amounts, less lawful deductions, pursuant to the Employment Agreement: (a)
$281,216 (which equals one times your annualized base salary); and (b)
$82,021.33, which equals 10/12 of the Target Cash Bonus (as defined in your
Employment Agreement) for 2009), such payments shall be made on January 4, 2010
provided you execute and do not revoke the Separation Letter Agreement and
General Release (the “Agreement”) to which this Attachment A is attached.

2.   Continuation of Benefits. The Company will pay on a monthly basis an amount
equal to:

  (a)   one hundred percent (100%) of your monthly health, dental and vision
COBRA premiums for you and your dependents, if any, if you properly elect to
continue health, dental and vision insurance under COBRA to be paid beginning on
the last day of the first payroll-cycle after the expiration of the revocation
period provided in Paragraph No. 19 of the Agreement; and

  (b)   $144.37 (which represents one hundred percent (100%) of the cost of the
monthly premiums paid by the Company for life insurance and disability insurance
for you in the month preceding the end of your employment) to be paid on the
first business day of each month after the expiration of the revocation period
provided in Paragraph No. 19 of the Agreement;

    such payments under Subsections 2(a) and 2(b) of this Attachment A to
continue until the COBRA Contribution End Date (defined for purposes of this
Agreement as the date that is the earlier of (i) twelve (12) months after the
Termination Date or (ii) the last day of the first month that you are eligible
for other employer-sponsored health coverage).

3. Stock Options and Restricted Stock. You will have until three (3) months
after your Termination Date to exercise any vested stock option rights you may
have; provided, however, if any of your stock options have a full option term
that expires prior to such date, then you will have only until the last day of
the full option term to exercise such stock option. In accordance with
Section 5.4(iv) of the Employment Agreement, you shall receive accelerated
vesting of your outstanding unvested stock options by one (1) year. Provided
that you execute and do not revoke the Agreement, you shall be vested in a total
of 384,681 stock options.

8

--------------------------------------------------------------------------------

 

ATTACHMENT B
PAYMENTS SUBJECT TO SECTION 409A
Subject to the provisions in this Attachment B, any severance payments or
benefits under the Agreement shall begin only upon the date of your “separation
from service” (determined as set forth below) which occurs on or after the date
of termination of your employment. The following rules shall apply with respect
to distribution of the payments and benefits, if any, to be provided to you
under the Agreement:

1.   If, as of the date of your “separation from service” from the Company, you
are a “specified employee” (within the meaning of Section 409A), then:

  a.   Each installment of the severance payments and benefits due under the
Agreement that, in accordance with the dates and terms set forth herein, will in
all circumstances, regardless of when the separation from service occurs, be
paid within the Short-Term Deferral Period (as hereinafter defined) shall be
treated as a short-term deferral within the meaning of Treasury
Regulation Section 1.409A-1(b)(4) to the maximum extent permissible under
Section 409A. For purposes of this Agreement, the “Short-Term Deferral Period”
means the period ending on the later of the fifteenth day of the third month
following the end of your tax year in which the separation from service occurs
and the fifteenth day of the third month following the end of the Company’s tax
year in which the separation from service occurs; and

  b.   Each installment of the severance payments and benefits due under the
Agreement that is not described in paragraph 1(a) above and that would, absent
this subsection, be paid within the six-month period following your “separation
from service” from the Company shall not be paid until the date that is six
months and one day after such separation from service (or, if earlier, your
death), with any such installments that are required to be delayed being
accumulated during the six-month period and paid in a lump sum on the date that
is six months and one day following your separation from service and any
subsequent installments, if any, being paid in accordance with the dates and
terms set forth herein; provided, however, that the preceding provisions of this
sentence shall not apply to any installment of severance payments and benefits
if and to the maximum extent that that such installment is deemed to be paid
under a separation pay plan that does not provide for a deferral of compensation
by reason of the application of Treasury Regulation 1.409A-1(b)(9)(iii)
(relating to separation pay upon an involuntary separation from service) or such
payments or benefits are otherwise exempt from Section 409A. Any installments
that qualify for the exception under Treasury
Regulation Section 1.409A-1(b)(9)(iii) must be paid no later than the last day
of your second taxable year following your taxable year in which the separation
from service occurs.

2.   The determination of whether and when your separation from service from the
Company has occurred shall be made and in a manner consistent with, and based on
the presumptions set forth in, Treasury Regulation Section 1.409A-1(h). Solely
for purposes of this paragraph 2, “Company” shall include all persons with whom
the Company would be considered a single employer under Section 414(b) and
414(c) of the Code.

3.   All reimbursements and in-kind benefits provided under the Agreement shall
be made or provided in accordance with the requirements of Section 409A to the
extent that such reimbursements or in-kind benefits are subject to Section 409A,
including, where applicable, the requirement that (i) any reimbursement is for
expenses incurred during Employee’s lifetime (or during a shorter

9

--------------------------------------------------------------------------------

 

    period of time specified in this Agreement), (ii) the amount of expenses
eligible for reimbursement during a calendar year may not affect the expenses
eligible for reimbursement in any other calendar year, (iii) the reimbursement
of an eligible expense will be made on or before the last day of the calendar
year following the year in which the expense is incurred and (iv) the right to
reimbursement is not subject to set off or liquidation or exchange for any other
benefit.

10