Document:

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                                                                   EXHIBIT 10.20

                              SETTLEMENT AGREEMENT

            This Settlement Agreement ("Agreement") is entered into as of
January 14, 2005 by and between Adams Laboratories, Inc. ("Adams"), a Texas
corporation having its principal place of business in Chester, New Jersey; and
Carolina Pharmaceuticals, Inc. ("Carolina"), a Delaware corporation having its
principal place of business in Cary, North Carolina; and Cornerstone Biopharma,
Inc. ("Cornerstone"), a Nevada corporation having its principal place of
business in Cary, North Carolina (collectively the "Parties").

                                    RECITALS

            WHEREAS, Adams is the plaintiff in Civil Action No. 04-CV-3535 (SAS)
in the United States District Court for the Southern District of New York (the
"Litigation"), in which Adams asserts claims under Section 43(a) of the Lanham
Act, under N.Y. Gen. Bus. Law Sections 349 & 350, and under common law against
Carolina and Cornerstone; and

            WHEREAS, Carolina and Cornerstone filed counterclaims in the
Litigation, asserting claims under Section 2 of the Sherman Act, under Section
43(a) of the Lanham Act, under N.Y. Gen. Bus. Law Section 349, under N.C. Gen.
Stat. Section 75.1.1, and under common law against Adams; and

            WHEREAS, the Parties wish to settle all claims and counterclaims
asserted in the Litigation and wish to resolve all disputes between or among
them, without any admission of fault or liability by any of the Parties, on the
terms and conditions set forth herein;

            NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements contained herein and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and intending to be legally bound hereby, the Parties agree
as follows:

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                              TERMS AND CONDITIONS

            1. ASSIGNMENT OF HUMIBID MARKS AND HUMIBID DM FORMULATION TO ADAMS.
On or before February 15, 2005 (the "Effective Date"), Cornerstone will deliver
to Adams an Assignment, duly executed by Cornerstone, in the form attached as
Exhibit A hereto, assigning to Adams, as of the Effective Date, all of
Cornerstone's rights, title and interest in, to and under all HUMIBID
trademarks, including all registrations and applications for any HUMIBID marks,
and including the goodwill of the business associated with and symbolized by the
HUMIBID marks. Such assignment shall also include all of Cornerstone's right,
title and interest in the new prescription formulation for Humibid DM capsules
developed in conjunction with PharmaFab, Inc. (the "Humibid DM Rx Product").
Cornerstone and Carolina will not sell any products under any HUMIBID mark after
the Effective Date.

            2. ASSIGNMENT OF SUBLICENSE AGREEMENT AND ALLERX MARKS AND PATENTS
TO CORNERSTONE. On or before the Effective Date, Adams will deliver to
Cornerstone: (a) an Assignment, duly executed by Adams, in the form attached as
Exhibit B hereto, assigning to Cornerstone, as of the Effective Date, all of
Adams' rights and obligations, as amended by Adams and JMED, under that certain
agreement dated April 25, 1999 between Adams and J-Med Pharmaceuticals, Inc.
(the "J-Med Agreement"), which includes exclusive rights under U.S. Patent #'s
5,846,976 and 6,270,796, until April 28, 2009, a copy of which is attached to
Exhibit B hereto; (b) a writing executed by J-Med Pharmaceuticals, Inc. in the
form attached as Exhibit C hereto (the "J-Med Consent"), providing its consent
to Adams' assignment to Cornerstone of Adams' rights and obligations under the
J-Med Agreement; and (c) an Assignment, duly executed by Adams, in the form
attached as Exhibit D hereto, assigning to Cornerstone, as of the Effective
Date, all of Adams' rights, title and interest in, to and under all ALLERX
trademarks,

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                                      -3-

patents, including all registrations and applications for any ALLERX marks, and
including the goodwill of the business associated with and symbolized by the
ALLERX marks. Adams will not sell any products under any ALLERX mark after the
Effective Date.

            3. DISMISSAL OF ALL CLAIMS AND COUNTERCLAIMS. Within three (3)
business days after the Parties have fulfilled their respective obligations
under paragraphs 1 and 2 of this Agreement, the Parties will file a Stipulation
in the Litigation in the form attached as Exhibit E hereto, dismissing all
claims and counterclaims in the Litigation with prejudice, each party to bear
its own costs.

            4. ROYALTY PAYMENTS TO CORNERSTONE. If Adams sells any
pharmaceutical products under any HUMIBID mark during the period beginning on
the Effective Date and ending on the three (3) year anniversary of the Effective
Date (the "Royalty Period"), then Adams shall pay an annual royalty on any sales
made during the Royalty Period in accordance with the following terms and
conditions:

            (a) Adams shall pay to Cornerstone royalties during the Royalty
Period equal to: (i) one percent (1%) of Adams' Net Sales of pharmaceutical
products under any HUMIBID marks during any fiscal year in the Royalty Period on
the first $10 million of Adams' Net Sales during said fiscal year, plus (ii) two
percent (2%) of Adams' Net Sales of pharmaceutical products under any HUMIBID
marks in excess of $10 million during said fiscal year year. For these purposes,
a fiscal year shall be the annual anniversary of the Effective Date. For the
three (3) fiscal years during the Royalty Period, Adams shall pay to Cornerstone
a minimum royalty payment equal to $50,000 for each fiscal year during the
Royalty Period. If for any fiscal year during the Royalty Period, the royalties
payable to Cornerstone are less than $50,000, Adams

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shall, within 30 days after the end of such fiscal year, make-up the difference
with a supplemental payment to Cornerstone.

            (b) For purposes of this paragraph 3, the term "net sales" is
defined to mean net sales determined in accordance with generally accepted
accounting principles, consistently applied.

            (c) Adams shall submit to Cornerstone within forty-five (45) days
after the end of each calendar quarter during the Royalty Period a statement
setting forth (i) Adams' net sales of pharmaceutical products under any HUMIBID
marks during that quarter, and (ii) the amount of the royalties payable to
Cornerstone for that quarter pursuant to paragraph 4 of this Agreement. Within
sixty (60) days after the end of each calendar quarter during the Royalty
Period, Adams shall make payment to Cornerstone of the full amount of royalties
payable for that quarter or portion thereof as appropriate. All such payments
shall be made by Adams in U.S. dollars to the credit of a bank account
designated in writing by Cornerstone.

            (d) Any payments due to Cornerstone hereunder that are received
after the due date shall bear interest at the rate of twelve percent (12%) per
year from the due date.

            (e) Adams shall have the right to offset royalties payable to
Cornerstone and Carolina against amounts otherwise owed by Cornerstone or
Carolina to Adams arising under this Agreement (i.e., inventory purchases or
returns liability).

            (f) Adams agrees to keep true and accurate records and books of
account containing all data necessary for the determination of royalties payable
under this Paragraph 4, which records and books of account shall be opened for
review upon at least thirty (30) days written notice during reasonable business
hours, but in no event more than twice in any twelve (12) month period, for
inspection by an independent certified public accountant selected by

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Cornerstone and acceptable to Adams (which acceptance shall not be unreasonably
withheld) for the sole purpose of verifying the accuracy of Adams' statements
hereunder. Cornerstone shall be solely responsible for the costs of the
independent accountant. If any such inspection indicates the royalty payments
due to Cornerstone have been underpaid or overpaid for any period, the
applicable Party shall promptly pay to the other the amount of such underpayment
or overpayment. Before any independent accountant conducts any inspection of
Adams' records and books of account, Adams may require the accountant to enter
into a written agreement with Adams under which the accountant agrees not to
disclose to any third party any information in Adams' records and books of
account made available for the accountant's inspection and not to disclose to
Cornerstone or Carolina the name, address, or sales volume of any customers of
Adams.

            (g) Notwithstanding the foregoing, no royalties shall be payable on
any sales made by Adams of the Humibid DM Rx Product.

            5. SALES PRIOR TO THE EFFECTIVE DATE. Cornerstone agrees not to sell
or launch the Humibid DM Rx Product but shall cause Pharmafab, Inc. to
manufacture sufficient launch quantities as Adams may require for the sale by
Adams. From January 5, 2005 through the Effective Date, Cornerstone will make
sales of its over-the-counter versions of Humibid (Humibid e and Humibid CS)
only to existing customers and such sales shall be limited to re-orders not
solicited by Cornerstone. The parties agree that Wal-Mart is not an existing
customer of Cornerstone for this purpose. From January 5, 2005 through the
Effective Date, Adams will make sales of its AlleRx product line only to
existing customers and such sales shall be limited to re-orders not solicited by
Adams.

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            6. RETURNS OF PRODUCT SOLD PRIOR TO THE EFFECTIVE DATE. Cornerstone
and Carolina shall be responsible for all returns of products sold by Adams
under any AlleRx mark prior to the Effective Date, provided that Adams
reimburses Cornerstone or Carolina for the first $1 million of documented AlleRx
product returns that were sold by Adams prior to the Effective Date, to the
extent such products are returned within 18 months of the Effective Date. Adams
shall be responsible for all returns of products sold by Cornerstone and
Carolina under any Humibid mark prior to the Effective Date, provided that
Cornerstone or Carolina reimburses Adams for the first $1 million of documented
Humibid product returns that were sold by Cornerstone or Carolina prior to the
Effective Date, to the extent such products are returned within 18 months of the
Effective Date. After the Effective Date, each party, on a monthly basis, will
provide product return documentation in reasonable detail (lot number, quantity,
and dollar credit amount) to the other party, until the $1 million return limit
has been exceeded. Each party will have 30 days to inspect the documentation and
make payment to the other party.

            7. FINISHED GOODS INVENTORIES. Upon the Effective Date, Cornerstone
shall transfer to Adams all its right, title and interest in any finished goods
inventories of Humibid e, Humibid CS, Humibid LA, and Humibid DM, excepting the
Humibid DM Rx Product, at no cost to Adams. Upon the Effective Date, Cornerstone
shall transfer to Adams all its right, title and interest in any finished goods
inventories of the Humibid DM Rx Product and Adams shall transfer to Cornerstone
all its right, title and interest in any finished goods inventories of AlleRx
Dose Pack, AlleRx D and AlleRx Suspension syrup. Such transfers will be made at
actual cost basis in such inventory with the intent of having no cash exchange
hands at the Effective Date. However, if one party's cost basis in transferred
inventory exceeds the others, then the party transferring the lower cost value
of inventory will pay such deficiency to the other by wire

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transfer on the Effective Date. By way of example, if Adams delivers to
Cornerstone $250,000 of AlleRx inventory, at cost basis, and Cornerstone
delivers to Adams $400,000 of the Humibid DM Rx Product inventory, at cost
basis, then Adams will make wire transfer payment to Cornerstone in the amount
of $150,000 on the Effective Date. The cost basis of each parties inventory will
be subject to a maximum of $500,000. Five days prior to the Effective Date, the
parties will provide each other with a detailed listing of the finished goods
inventories referenced herein.

            8. MANUFACTURING AND PRODUCT SUPPLY. Prior to the Effective Date,
Adams and Cardinal Health PTS, LLC ("Cardinal Health") shall have entered into
an agreement whereby Cardinal Health will continue to manufacture the current
formulations of AlleRx Dose pack and AlleRx D for Cornerstone for a period of 12
months after the Effective Date. Cardinal Health or Adams will bill and
Cornerstone shall pay $2.70 and $6.10 for each container, dose pack or bottle,
of the current formulations of AlleRx Dose pack and AlleRx D, respectively and
$0.25 for AlleRx samples, plus the cost of shipping. Cornerstone will be
required to make purchase orders of such product at the current production lot
sizes in place at the Effective Date. Cornerstone will provide Cardinal and
Adams with a four (4) month committed purchase forecast. With respect to the
ALLERx Suspension product currently manufactured by Hitech, Adams will use
commercially reasonable efforts to transfer any open purchase orders or supply
agreement to Cornerstone.

      Prior to the Effective Date, Adams, Cornerstone and Pharmafab will meet
and Pharmafab and Adams will agree that PharmaFab will manufacture and package,
under Adams labeling and tooling, the Humibid DM Rx Product for Adams.
Cornerstone will be responsible for the purchase of the initial launch
quantities subject to the maximum dollar cost basis of $500,000 set

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forth in paragraph 7 above. It is understood that no inventory currently exists
for the Humibid DM Rx Product.

      As soon as commercially reasonable after the Effective Date, (a)
Cornerstone will, at its cost, provide tooling and labeling to Cardinal Health
in order to identify Cornerstone as the distributor of the AlleRx products and
(b) Adams will, at its cost, provide tooling and labeling to PharmaFab, Inc. in
order to identify Adams as the distributor of the Humibid products.

      9. REPRESENTATIONS AND WARRANTIES OF ADAMS. Adams hereby represents and
warrants to Cornerstone and Carolina as follows:

            (a) Adams and the person executing this Agreement on its behalf are
legally authorized to execute this Agreement, and the terms of this Agreement
are binding upon, and, enforceable against, Adams.

            (b) The J-Med Agreement is in full force and effect, and the
executed Assignment in the form attached as Exhibit B hereto, together with the
executed J-Med Consent in the form attached as Exhibit C hereto, will convey to
Cornerstone all rights and obligations of Adams under the J-Med Agreement, as
amended, in accordance with its terms.

            (c) Adams is the lawful sole owner of all rights, title and interest
in the ALLERX marks identified in the Assignment attached as Exhibit D hereto
and is unaware of any other person or entity who is currently claiming ownership
of any ALLERX mark for any product or service. The executed Assignment in the
form attached as Exhibit D hereto will convey to Cornerstone all rights, title
and interest in all ALLERX marks identified in said Assignment.

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                                      -9-

            (d) As of the Effective Date there is no action pending or
threatened against Adams, other than the Litigation, relating to Adams' rights
or obligations under the J-Med Agreement, or to any ALLERX products, or to any
ALLERX marks identified in the Assignment attached as Exhibit D hereto.

            (e) During the period between December 1, 2004 and the Effective
Date, Adams' promotional and sales activities with respect to products sold
under any ALLERX marks were consistent with and at the same level as such
activities during October-November 2004.

            (f) During the two year period ending December 31, 2004: (i) Adams
has sold less than 650,000 units of AlleRx Dose Pack; (ii) less than 40,000
units of AlleRx D; and (iii) less than 20,000 units of AlleRx Suspension.

            (g) Adams shall submit to Cornerstone any orders it receives for
AlleRx Dose Pack, AlleRx D and AlleRx Suspension on or after the Effective Date.

            10. REPRESENTATIVES AND WARRANTIES OF CORNERSTONE AND CAROLINA.
Cornerstone and Carolina hereby represent and warrant to Adams as follows:

            (a) Cornerstone and Carolina and the persons executing this
Agreement on their behalf are legally authorized to execute this Agreement, and
the terms of this Agreement are binding upon, and enforceable against,
Cornerstone and Carolina.

            (b) Cornerstone is the lawful sole owner of all rights, title and
interest in the HUMIBID marks identified in the Assignment attached as Exhibit A
hereto and the formulation for the Humid DM Rx Product and is unaware of any
other person or entity who is currently claiming ownership of any HUMIBID mark
or such formulation for any product or service. The executed Assignment in the
form attached as Exhibit A hereto will convey to Adams all rights, title and
interest in all HUMIBID marks identified in said Assignment.

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                                      -10-

            (c) As of the Effective Date there is no action pending or
threatened against Cornerstone or Carolina, other than the Litigation, relating
to any HUMIBID products or to any HUMIBID marks identified in the Assignment
attached as Exhibit A hereto.

            (d) During the period between December 1, 2004 and the Effective
Date, Cornerstone's and Carolina's promotional and sales activities with respect
to products sold under any HUMIBID marks were consistent with and at the same
level as such activities during October-November 2004.

            (e) Prior to January 5, 2005, Cornerstone and Carolina have sold
less than 850,000 units of Humibid e and Humibid CS, collectively and less than
625,000 equivalent 100-count bottles of Humibid LA and Humibid DM, collectively.

            (f) Cornerstone and Carolina shall submit to Adams any orders either
of them receives for any Humibid product on or after the Effective Date.

            11. GUAIFENESIN. Cornerstone and Carolina hereby covenant and agree
that, during the Royalty Period, Cornerstone and Carolina will not engage in the
development, marketing or sale of any product comprised in whole or in part of
guaifenesin; provided, however, that Cornerstone may continue to market,
distribute and sell DECONSAL in its present formulation as a prescription
product during the Royalty Period (and thereafter); and provided further that
either Cornerstone or Carolina may during the Royalty Period acquire a company
that manufactures, markets, distributes and/or sells a product comprised in
whole or in part of guaifenesin so long as said guaifenesin product does not
represent or is not anticipated to represent more than 25% of the annual revenue
of such company. The Parties also hereby agree that, in the event the three year
Royalty Period is deemed too restrictive by any court in any court proceeding,
the court may reduce said three-year period of time to such shorter period as
the

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court deems reasonable under the circumstances, but the Parties agree not to
advocate for reductions in said time period.

            12. CONFIDENTIALITY OF THIS AGREEMENT. The terms of this Agreement
are confidential and shall not be disclosed to any third party by any party or
by any person or entity controlled by a party, without the written consent of
all adverse parties; provided, however, that disclosure may be made without such
consent as required by judicial process, court order or mandatory request from a
governmental entity. In the event a party receives judicial process, a court
order, or such a mandatory request requiring disclosure, the party will give
notice to all other parties in sufficient time, if possible, to enable the other
parties to object to such disclosure and/or to request that such disclosure be
made subject to conditions designed to maintain the confidentiality of the
Agreement to the maximum extent possible. Absent such timely objection or
request, the party from whom such information is sought is entitled to provide
such information to the extent called for by the judicial process, court order,
or mandatory request. However, the parties may discuss the transfer of the
trademarks in a press release on March 1, 2005 in the form attached as Exhibit F
hereto ("the press release").

            13. CONFIDENTIALITY OF EVIDENCE AND INFORMATION. Each party agrees
not to disclose evidence or information that is not a matter of public record
and that was discovered from an opposing party during the Litigation and was not
otherwise known to the party outside of the Litigation; provided, however, that
in the event a party receives judicial process, a court order, or a mandatory
request from a governmental entity to disclose such evidence or information, the
party will give notice to all other parties in sufficient time, if possible, to
enable the other parties to object to the disclosure of such evidence or
information and/or to request that

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any such disclosure be made subject to conditions designed to maintain the
confidentiality of such evidence and information. Absent such timely objection
or request, the party from whom such evidence or information is sought is
entitled to provide said evidence or information to the extent called for by the
judicial process, court order, or mandatory request.

            14. NON-DISPARAGEMENT. No party, or any person authorized to speak
for a party, will make any public derogatory or negative comments about any
other party, or any officer, director, or manager of any other party concerning
their conduct in such capacities, or about the Litigation or the settlement of
the Litigation; provided, however, that nothing contained herein shall be
construed to prevent any party from making any allegations in any future
litigation as such party deems appropriate.

            15. RELEASE BY ADAMS. Subject to fulfillment by Cornerstone and
Carolina of their obligations under paragraphs 1 and 3 hereof, Adams hereby
releases and discharges Cornerstone and Carolina and their respective
subsidiaries and successors, from all actions, causes of action, suits, debts,
sums of money, accounts, reckonings, bonds, bills, specialties, covenants,
contracts, controversies, agreements, promises, variances, trespasses, damages,
judgments, claims and demands whatsoever in law or equity, which Adams and its
successors or assigns can, shall or may have against Cornerstone or Carolina,
for or by reason of any act, omission, matter, cause, or thing whatsoever, from
the beginning of time to the Effective Date, whether known or unknown and
whether the same may hereafter be discovered, accrue or mature, including
without limiting the generality of the foregoing, any and all claims and demands
Adams has asserted against, or could have asserted against, Cornerstone or
Carolina in the Litigation.

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            16. RELEASE BY CORNERSTONE AND CAROLINA. Subject to fulfillment by
Adams of its obligations under paragraphs 2 and 3 hereof, Cornerstone and
Carolina hereby release and discharge Adams and its subsidiaries and successors,
from all actions, causes of action, suits, debts, sums of money, accounts,
reckonings, bonds, bills, specialties, covenants, contracts, controversies,
agreements, promises, variances, trespasses, damages, judgments, claims and
demands whatsoever in law or equity, which Cornerstone and/or Carolina and their
respective successors and assigns can, shall, or may have against Adams for or
by reason of any act, omission, matter, cause or thing whatsoever, from the
beginning of time to the Effective Date, whether known or unknown and whether
the same may hereafter be discovered, accrue or mature, including without
limiting the generality of the foregoing, any and all claims and demands
Carolina and Cornerstone have asserted against, or could have asserted against,
Adams in the Litigation.

            17. NO ADMISSION OF LIABILITY. Neither the terms of this Agreement
nor its execution, nor any of the negotiations relating thereto shall be
construed as an admission of wrongdoing or liability on the part of any party,
or offered or received into evidence in any action or proceeding in any court,
administrative agency or other tribunal, as any such purported admission.

            18. COMPLIANCE WITH PROTECTIVE ORDER. Pursuant to the provisions of
paragraph 15 of the Stipulation And Protective Order entered in the Litigation
on September 29, 2004, each party hereby requests of the other parties that all
documents (and all copies thereof) produced by said party to the other parties
be destroyed and that counsel for the other parties provide to counsel for the
producing party a written certification confirming their destruction;

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                                      -14-

provided, however, that the law firms of record in the Litigation for each party
may retain copies of any pleading, paper, document or anything that was filed
with the Court.

            19. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the Parties and supersedes all prior proposals,
representations, discussions and writings, and any oral representation
inconsistent with any term of this Agreement is of no force or effect. This
Agreement may be amended only with the written consent of all Parties.

            20. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the state of New York, not including its choice
of law provisions.

            21. ENFORCEMENT JURISDICTION. Any action to enforce this Agreement,
or otherwise arising out of this Agreement, shall be brought in a federal or
state court located in New York, New York, and each party agrees not to
challenge personal jurisdiction in any such action brought in any such court.

            22. NO THIRD PARTY RIGHTS. This Agreement confers no rights upon any
third party.

            23. SUCCESSORS AND ASSIGNS. The terms of this Agreement shall be
binding upon, and inure to the benefit of, the Parties hereto and their
respective successors and assigns.

            24. CONSTRUCTION OF AGREEMENT. The language of this Agreement is a
product of the mutual effort of the Parties and their attorneys and should not
be construed for or against any of the Parties on the basis of the extent to
which that party participated in drafting it.

            25. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original.

            26. NO EXISTING ASSIGNMENTS OF RIGHTS. The Parties expressly
represent and warrant that they have not assigned or transferred, or purported
to assign or transfer, to any

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                                      -15-

person, firm, corporation, partnership, association, or other entity whatsoever
any or all of the claims, counterclaims, rights, duties, or obligations embodied
or released in this Agreement.

            27. SEVERABILITY. In the event that any provision hereof is deemed
to be illegal or unenforceable, such a determination will not affect the
validity or enforceability of the remaining provisions hereof, all of which will
remain in full force.

            28. WAIVER. No waiver of any of the provisions of this Agreement
will be deemed or constitute a waiver of any other provision, whether or not
similar, nor will any waiver constitute a continuing waiver. No waiver will be
binding unless executed in writing by the party making the waiver.

            29. PARAGRAPH HEADINGS. Paragraph headings herein are used solely
for convenience and are not intended to be given any weight in the construction
of this Agreement.

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            IN WITNESS WHEREOF, the parties have executed this Agreement on the
dates shown opposite their signatures below.

                                      Adams Laboratories, Inc.

DATE: January 14, 2005                /s/ Michael J. Valentino
                                      __________________________________
                                      By: Michael J. Valentino
                                      Its President and Chief Executive Officer
                                      Cornerstone Biopharma, Inc.

DATE: January 14, 2005                /s/ Craig Collard
                                      __________________________________
                                      By: Craig Collard
                                      Its Chief Executive Officer

                                      Carolina Pharmaceuticals, Inc.

DATE: January 14, 2005                /s/ Craig Collard
                                      __________________________________
                                      By: Craig Collard
                                      Its: Chief Executive Officer

<PAGE>

                                    EXHIBIT A

                            ASSIGNMENT OF TRADEMARKS

            THIS ASSIGNMENT OF TRADEMARKS ("Assignment") is made this 14th day
of January, 2005, by Cornerstone Biopharma, Inc. ("Assignor") to Adams
Laboratories, Inc. ("Assignee").

            WHEREAS, Assignor is the owner of all rights, title, and interest in
various HUMIBID trademarks used in connection with various pharmaceutical
expectorant products, including without limitation the mark HUMIBID, the mark
HUMIBID L.A., the mark HUMIBID DM, the mark HUMIBID e and the mark HUMIBID cs,
and including Federal Registration No. 1,361,351 for the mark HUMIBID and all
other registrations and applications for any HUMIBID mark (collectively, "the
HUMIBID Marks"); and

            WHEREAS, Assignor and/or its predecessors in interest have
continuously used one or more of the HUMIBID marks in interstate commerce in the
United States for many years; and

            WHEREAS, Assignor and Assignee have entered into a Settlement
Agreement with an Effective Date of February 15, 2005 (the "Settlement
Agreement") pursuant to which Assignor has agreed to assign to Assignee all of
Assignor's rights, title and interest in, to and under the HUMIBID Marks; and

            WHEREAS, in accordance therewith, Assignor desires to transfer and
assign to Assignee, and Assignee desires to accept the transfer and assignment
of, all of Assignor's rights, title and interest in, to and under the HUMIBID
Marks and the goodwill of the business associated therewith and symbolized
thereby, effective as of February 15, 2005.

<PAGE>

                                      -2-

            NOW THEREFORE, for and in consideration of the mutual covenants
contained herein and in the Settlement Agreement and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Assignor hereby covenants and agrees as follows:

            1. ASSIGNMENT AND TRANSFER. Assignor hereby transfers and assigns to
Assignee, its successors and assigns, and Assignee hereby accepts, for the use
and benefit of the Assignee, its successors and assigns, effective as of
February 15, 2005, as fully and entirely as the same would have been held and
enjoyed by said Assignor had this Assignment not been made, all of Assignor's
right, title and interest in, to and under the HUMIBID Marks, together with the
goodwill of the business associated therewith and symbolized thereby, including
Federal Registration No. 1,361,351 and all other registrations for any HUMIBID
mark and including without limitation all rights of recovery and of legal action
for past infringements and of opposition and/or cancellation proceedings for
protection of the HUMIBID Marks. Assignor hereby also declares that, effective
as of February 15, 2005, Assignor expressly abandons all of its rights, title
and interest in, to and under each of the HUMIBID Marks.

            2. FURTHER ACTIONS. Assignor covenants and agrees to execute such
further documents and take such additional actions as may reasonably be
requested by Assignee to vest in Assignee all of Assignor's rights in the
HUMIBID Marks and otherwise to effectuate the intent of this Assignment.

            3. GOVERNING LAW AND JURISDICTION. This Assignment shall be governed
by, and construed in accordance with, the laws of the State of New York
(regardless of any choice of law principles that would lead to a contrary
result). Assignor and Assignee unconditionally and irrevocably consent to the
exclusive jurisdiction of the courts

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                                      -3-

located in New York, New York and waive any objections with respect thereto, for
the purpose of any action, suit or proceeding arising out of or relating to this
Assignment or the transactions contemplated hereby.

            IN WITNESS WHEREOF, Cornerstone Biopharma, Inc. has caused this
Assignment of Trademark to be executed by its duly authorized officer and its
corporate seal to be hereunto affixed as of the date and year first above
written.

                                            CORNERSTONE BIOPHARMA, INC.

[Corporate Seal]                            By:_______________________________
                                                     [name]

                                            Its_______________________________
                                                     [title]

STATE OF NORTH CAROLINA ss:

            On this 14th day of January, 2005, personally appeared before me
[name], to me personally known, who being by me duly sworn, deposes and says
that he is [title] of Cornerstone Biopharma, Inc., the company described in and
which executed the above instrument, and that the execution and delivery of this
Assignment of Trademarks were authorized by said company.

                                            __________________________________
                                                  Notary Public

My commission expires:

            The foregoing ASSIGNMENT OF TRADEMARKS by Cornerstone Biopharma,
Inc. is hereby accepted by Adams Laboratories, Inc. as of the 15th day of
February, 2005.

<PAGE>

                                      -4-

                                            ADAMS LABORATORIES, INC.

[Corporate Seal]                            By:______________________________
                                                      [name]

                                            Its________________________________
                                                      [title]
<PAGE>

                                    EXHIBIT B

                       ASSIGNMENT OF SUBLICENSE AGREEMENT

            This ASSIGNMENT OF SUBLICENSE AGREEMENT ("Assignment") is made this
14th day of January, 2005, by Adams Laboratories, Inc ("Assignor") to
Cornerstone Biopharma, Inc. ("Assignee").

            WHEREAS, Assignor is a party to the Sublicense Agreement dated April
25, 1999 with J-Med Pharmaceuticals, Inc. ("J-Med"), as amended by that certain
letter dated August 10, 2001, copies of which are attached hereto (the
"Sublicense Agreement"); and

            WHEREAS, Assignor and Assignee have entered into a Settlement
Agreement with an Effective Date of February 15, 2005 (the "Settlement
Agreement") pursuant to which Assignor has agreed to assign to Assignee all of
Assignor's rights and obligations under the Sublicense Agreement; and

            WHEREAS, in accordance therewith, Assignor desires to transfer and
assign to Assignee, and Assignee desires to accept the transfer and assignment
of, all of Assignor's rights and obligations under the Sublicense Agreement; and

            WHEREAS, J-Med has provided its prior written consent to the
Assignment to Assignee of all of Assignor's rights and obligations under the
Sublicense Agreement in accordance with paragraph 13.03 of the Sublicense
Agreement;

            NOW THEREFORE, for and in consideration of the mutual covenants
contained herein and in the Settlement Agreement and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Assignor hereby covenants and agrees as follows:

<PAGE>
                                      -2-

            1. ASSIGNMENT OF RIGHTS AND OBLIGATIONS. Assignor hereby transfers
and assigns to Assignee, its successors and assigns, and Assignee hereby
accepts, for the use and benefit of the Assignee, its successors and assigns,
effective as of February 15, 2004, as fully and entirely as the same would have
been held and enjoyed by said Assignor had this Assignment not been made, all of
Assignor's rights and obligations under the Sublicense Agreement.

            2. FURTHER ACTIONS. Assignor covenants and agrees to execute such
further documents and take such additional actions as may reasonably be
requested by Assignee to vest in Assignee all of Assignor's rights and
obligations under the Sublicense Agreement and otherwise to effectuate the
intent of this Assignment.

            3. GOVERNING LAW AND JURISDICTION. This Assignment shall be governed
by, and construed in accordance with, the laws of the State of New York
(regardless of any choice of law principles that would lead to a contrary
result). Assignor and Assignee unconditionally and irrevocably consent to the
exclusive jurisdiction of the courts located in New York, New York and waive any
objections with respect thereto, for the purpose of any action, suit or
proceeding arising out of or relating to this Assignment.

            IN WITNESS WHEREOF, Adams Laboratories, Inc. has caused this
Assignment of Sublicense Agreement to be executed by its duly authorized officer
and its corporate seal to be hereunto affixed as of the date and year first
above written.

                                           ADAMS LABORATORIES, INC.

[Corporate Seal]                           By:______________________________
                                                 [name]

                                           Its_______________________________
                                                 [title]

<PAGE>
                                      -3-

STATE OF NEW JERSEY ss:

            On this 14th day of January ____, 2005, personally appeared before
me [name], to me personally known, who being by me duly sworn, deposes and says
that he is [title] of Adams Laboratories, Inc., the company described in and
which executed the above instrument, and that the execution and delivery of this
Assignment of Sublicense Agreement were authorized by said company.

                                              ______________________________
                                                      Notary Public

My commission expires:

            The foregoing ASSIGNMENT OF SUBLICENSE AGREEMENT by Adams
Laboratories, Inc. is hereby accepted by Cornerstone Biopharma, Inc. as of the
14th day of January, 2005.

                                           CORNERSTONE BIOPHARMA, INC.

[Corporate Seal]                           By:______________________________
                                                 [name]

                                           Its______________________________
                                                 [title]

<PAGE>

                                    EXHIBIT C

                  CONSENT TO ASSIGNMENT OF SUBLICENSE AGREEMENT

            This CONSENT TO ASSIGNMENT OF SUBLICENSE AGREEMENT is provided this
31st day of December, 2004, by J-Med Pharmaceuticals, Inc. ("J-Med) to Adams
Laboratories, Inc. ("Adams").

            WHEREAS, J-Med and Adams are the only parties to that certain
Sublicense Agreement between them dated April 20, 1999, as amended (the
"Sublicense Agreement"); and

            WHEREAS, Adams is about to enter into a Settlement Agreement with
Cornerstone Biopharma, Inc. ("Cornerstone") that will settle litigation between
them and will also, inter alia, obligate Adams to assign to Cornerstone all of
Adams' rights and obligations under the Sublicense Agreement; and

            WHEREAS, under paragraph 13.03 of the Sublicense Agreement, Adams
may not assign its rights and obligations under the Sublicense Agreement to
Cornerstone without J-Med's prior written consent; and

            WHEREAS, J-Med is prepared to provide its written consent to such
assignment by Adams to Cornerstone, and Adams desires to obtain J-Med's written
consent;

            NOW THEREFORE, for and in consideration of one dollar and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, J-Med does hereby consent to the assignment by Adams to
Cornerstone of all of Adams' rights and obligations under the Sublicense
Agreement, subject to (i) Cornerstone's written acceptance of such assignment,
(ii) Cornerstone's written assumption of Adams obligations under the Sublicense
Agreement, and (iii) an indemnification of J-Med by Cornerstone of any liability
and

<PAGE>
                                      -2-

costs incurred by J-Med associated with the commercialization of products under
the Sublicense Agreement by Cornerstone.

            Notwithstanding the foregoing, Cornerstone shall not be entitled to
the right of first negotiation set forth in Section 12 of the Sublicense
Agreement and such right shall terminate on the date of this Consent.

<PAGE>
                                      -3-

      IN WITNESS WHEREOF, J-Med Pharmaceuticals, Inc. has caused this Consent to
Assignment of Sublicense Agreement to be executed by its duly authorized officer
and its corporate seal to be hereunto affixed as of the date and year first
above written.

                                           J-MED PHARMACEUTICALS, INC.

[Corporate Seal]                           By:______________________________
                                                    [name]

                                           Its______________________________
                                                    [title]

DISTRICT OF COLUMBIA ss:

            On this      day of December ____, 2004, personally appeared before
me [name], to me personally known, who being by me duly sworn, deposes and says
that he is [title] of J-Med Pharmaceuticals, Inc., the company described in and
which executed the above instrument, and that the execution and delivery of this
Consent to Assignment of Sublicense Agreement were authorized by said company.

                                          __________________________________
                                                Notary Public

My commission expires:

            The foregoing CONSENT TO ASSIGNMENT OF SUBLICENSE AGREEMENT by J-Med
Pharmceuticals, Inc. is hereby accepted by Adams Laboratories, Inc. as of the
____ day of December, 2004.

<PAGE>
                                      -4-

                                           ADAMS LABORATORIES, INC.

[Corporate Seal]                           By:______________________________
                                                    [name]

                                           Its______________________________
                                                    [title]

<PAGE>

                                    EXHIBIT D

                            ASSIGNMENT OF TRADEMARKS

            THIS ASSIGNMENT OF TRADEMARKS ("Assignment") is made this 14th day
of January, 2004, by Adams Laboratories, Inc. ("Assignor") to Cornerstone
Biopharma, Inc. ("Assignee").

            WHEREAS, Assignor is the owner of all rights, title, and interest in
various ALLERX trademarks used in connection with various pharmaceutical
respiratory products, including without limitation the mark ALLERX, the mark
ALLERX D, the mark ALLERX DOSE PACK and the mark ALLERX SUSPENSION, and
including all registrations and applications for any ALLERX mark (collectively,
"the ALLERX Marks"); and

            WHEREAS, Assignor and/or its predecessors in interest have
continuously used one or more of the ALLERX marks in interstate commerce in the
United States for many years; and

            WHEREAS, Assignor and Assignee have entered into a Settlement
Agreement with an Effective Date of February 15, 2005 (the "Settlement
Agreement") pursuant to which Assignor has agreed to assign to Assignee all of
Assignor's rights, title and interest in, to and under the ALLERX Marks; and

            WHEREAS, in accordance therewith, Assignor desires to transfer and
assign to Assignee, and Assignee desires to accept the transfer and assignment
of, all of Assignor's rights, title and interest in, to and under the ALLERX
Marks and the goodwill of the business associated therewith and symbolized
thereby, effective as of February 15, 2005.

            NOW THEREFORE, for and in consideration of the mutual covenants
contained herein and in the Settlement Agreement and other good and valuable
consideration, the receipt

<PAGE>
                                      -2-

and sufficiency of which is hereby acknowledged, Assignor hereby covenants and
agrees as follows:

            1. ASSIGNMENT AND TRANSFER. Assignor hereby transfers and assigns to
Assignee, its successors and assigns, and Assignee hereby accepts, for the use
and benefit of the Assignee, its successors and assigns, effective as of
February 15, 2005, as fully and entirely as the same would have been held and
enjoyed by said Assignor had this Assignment not been made, all of Assignor's
right, title and interest in, to and under the ALLERX Marks, together with the
goodwill of the business associated therewith and symbolized thereby, including
all registrations and applications for any ALLERX mark and including without
limitation all rights of recovery and of legal action for past infringements and
of opposition and/or cancellation proceedings for protection of the ALLERX
Marks. Assignor hereby also declares that, effective as of February 15, 2005,
Assignor expressly abandons all of its rights, title and interest in, to and
under each of the ALLERX Marks.

            2. FURTHER ACTIONS. Assignor covenants and agrees to execute such
further documents and take such additional actions as may reasonably be
requested by Assignee to vest in Assignee all of Assignor's rights in the ALLERX
Marks and otherwise to effectuate the intent of this Assignment.

            3. GOVERNING LAW AND JURISDICTION. This Assignment shall be governed
by, and construed in accordance with, the laws of the State of New York
(regardless of any choice of law principles that would lead to a contrary
result). Assignor and Assignee unconditionally and irrevocably consent to the
exclusive jurisdiction of the courts located in New York, New York and waive any
objections with respect thereto, for the purpose of any action,
<PAGE>

                                      -3-

suit or proceeding arising out of or relating to this Assignment or the
transactions contemplated hereby.

            IN WITNESS WHEREOF, Adams Laboratories, Inc. has caused this
Assignment of Trademark to be executed by its duly authorized officer and its
corporate seal to be hereunto affixed as of the date and year first above
written.

                                               ADAMS LABORATORIES, INC.

[Corporate Seal]                               By: _____________________________
                                                   [name]

                                               Its _____________________________
                                                   [title]

STATE OF NEW JERSEY ss:

            On this 14th day of January, 2005, personally appeared before me
[name], to me personally known, who being by me duly sworn, deposes and says
that he is [title] of Adams Laboratories, Inc., the company described in and
which executed the above instrument, and that the execution and delivery of this
Assignment of Trademarks were authorized by said company.

                                               _________________________________
                                                   Notary Public

My commission expires:

<PAGE>

                                      -4-

            The foregoing ASSIGNMENT OF TRADEMARKS by Adams Laboratories, Inc.
is hereby accepted by Cornerstone Biopharma, Inc. as of the 15th day of
February, 2005.

                                               CORNERSTONE BIOPHARMA, INC.

[Corporate Seal]                               By: _____________________________
                                                   [name]

                                               Its _____________________________
                                                   [title]
<PAGE>

                                    EXHIBIT E

UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK

---------------------------------------------X

ADAMS LABORATORIES, INC.,                    :

                 Plaintiff,                  :

         v.                                  :  NO. 04-CV-3535 (SAS)

CAROLINA PHARMACEUTICALS, INC.,              :
and CORNERSTONE BIOPHARMA, INC.,
                                             :
                 Defendants.

---------------------------------------------X

CAROLINA PHARMACEUTICALS, INC.,              :
and CORNERSTONE BIOPHARMA, INC.,
                                             :
                 Counterclaim-Plaintiffs,
                                             :
         v.
                                             :
ADAMS LABORATORIES, INC.,
                                             :
                 Counterclaim-Defendant.

---------------------------------------------X

                       STIPULATION AND ORDER FOR DISMISSAL

            IT IS HEREBY STIPULATED AND AGREED by and among the undersigned
counsel for the parties that all claims and counterclaims in this action be
dismissed with prejudice, each party to bear its own costs.

DATED: February _____, 2004

<PAGE>

                                      -2-

                                            COVINGTON & BURLING
                                            ____________________________________
                                            S. William Livingston (SL-9126)
                                            Bingham B. Leverich (BL-5284)
                                            Julie L.B. Johnson (JJ-3638)
                                            Hope I. Hamilton (HH-9701)
                                            1201 Pennsylvania Ave., N.W.
                                            Washington, D.C. 20004-2401
                                            Tel: (202) 662-6000
                                            Fax: (202) 778-5188

                                            --and--

                                            Michael C. Nicholson (MN-3331)
                                            Matthew J. Watkins (MW-8844)
                                            1330 Avenue of the Americas
                                            New York, NY 10019-5400
                                            Tel: (212) 841-1000
                                            Fax: (646) 441-9030

                                            Counsel for Plaintiff and
                                            Counterclaim-Defendant Adams
                                            Laboratories, Inc.
                                            FROMMER LAWRENCE & HAUG LLP

                                            ____________________________________
                                            Charles J. Raubicheck (CR-5058)
                                            745 Fifth Avenue
                                            New York, NY 10151
                                            Tel: (212) 588-0800
                                            Fax: (212) 588-0500

                                            --and--

                                            THORSNES BARTOLOTTA McGUIRE
                                            Vincent J. Bartolotta, Jr.
                                            Daral B. Mazzarella
                                            2550 Fifth Ave., 11th Floor
                                            San Diego, CA 92103
                                            Tel: (619) 236-9363
                                            Fax: (619) 236-9653

So Ordered: ____________________________    Counsel for Defendants and
            United States District Judge    Counterclaim-Plaintiffs Carolina
                                            Pharmaceuticals Inc. and Cornerstone
                                            Biopharma, Inc.exv10w1

 

EXHIBIT 10.1

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (the “Agreement”), made as of the 6th day of May, 2005, is entered
into by VistaCare, Inc., a Delaware corporation with its principal place of business at 4800 N.
Scottsdale Road, Suite 5000, Scottsdale, Arizona 85251 (the “Company”), and Mark E. Liebner, an
individual residing in Phoenix, Arizona (“Liebner”).

Recitals:

     WHEREAS, Liebner, prior to the date hereof, has been employed by the Company and has held the
positions of Chief Financial Officer and Treasurer of the Company and its subsidiaries, and,
effective as of the date of this Agreement, shall no longer hold such positions; and

     WHEREAS, Liebner shall continue to be employed by the Company as described hereinafter; and

     WHEREAS, pursuant to a Management Agreement entered into by the Company and Liebner as of
October 9, 2002, the Company agreed to provide certain payments and benefits to Liebner in the
event Liebner’s employment by the Company were terminated under certain circumstances; and

     WHEREAS, terms and provisions of such Management Agreement are not applicable to Liebner’s
continuing employment; and

     WHEREAS, the Company and Liebner wish to set out terms and conditions upon which Liebner will
continue to provide services to the Company;

     NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein,
the parties hereto agree as follows:

     1. Definitions. As used in this Agreement the following terms shall have the
following respective meanings:

          (a) “Cause” shall mean: (i) Liebner’s willful failure to attempt in good faith to follow the
legal written directions of the Chief Operating Officer (the “COO”) or the Chief Executive Officer
(the “CEO”), which is not cured within ten (10) days following receipt by the Liebner of written
notice from the COO or the CEO specifying the details thereof, (ii) Liebner’s conviction of a
felony (other than a felony involving a traffic violation or as a result of vicarious liability),
(iii) Liebner’s commission of an act constituting fraud, embezzlement, larceny or theft with regard
to the Company that is of a material nature (other than good faith expense account reimbursement
disputes) or (iv) willful misconduct by Liebner with regard to the Company that has a material
adverse effect on the Company. For purposes of this definition, no act, or failure to act, on
Liebner’s part shall be considered “willful” unless done or omitted to be done by him not in good
faith and without reasonable belief that his action or omission was in the best interests of the
Company.

 

 

          (b) “Confidential Information” means all trade secrets and other information of a business,
financial, marketing, technical or other nature pertaining to the Company or any of its
subsidiaries or affiliates, including information of others that the Company or any of its
subsidiaries or affiliates has agreed to keep confidential; provided, that Confidential Information
shall not include any information that has entered or enters the public domain through no fault of
Liebner, was known by Liebner prior to Liebner’s affiliation with or employment by the Company or
which Liebner is required to disclose by legal process.

          (c) “Disability” means the failure of Liebner, due to physical or mental disability, to
perform the services reasonably contemplated by his position for a period of either (i) ninety (90)
consecutive days or (ii) one hundred twenty (120) days, whether or not consecutive, during any
360-day period.

     2. Employment Services. The Company agrees that Liebner’s employment shall continue
from the date hereof until May 31, 2006 (the “Term” of this Agreement), unless his employment is
terminated earlier as provided herein or is extended by mutual consent. At the reasonable request
of and pursuant to the instructions of the Company’s COO or CEO, Liebner shall perform the
following services, the itemization of which is for purposes of illustration and not limitation:

          (a) provide advice regarding financial and accounting matters;

          (b) provide advice and assist in the negotiation of business transactions;

          (c) assist and advise regarding litigation;

          (c) other activities as reasonably requested by the COO or CEO.

     Provided, however, the parties acknowledge and agree that Liebner shall not be required to
work more than five (5) hours per week or twenty (20) hours per month without his prior consent,
and the Company shall not be required to request any minimum amount of services.

     3. Compensation for Services. Liebner shall be paid a salary of Six Hundred Dollars
($600) per month for services provided hereunder. In the event Liebner shall provide more than
five hours of services in a month, he shall be paid the sum of One Hundred Twenty Dollars ($120)
per hour for the amount of services in excess of five hours during that month. Liebner shall also
receive reimbursement for reasonable expenses incurred in the performance of such services.
Liebner shall not accrue paid time off or be eligible for health insurance or other benefits. In
the event Liebner anticipates that expenses in connection with a particular work assignment will
exceed Fifteen Hundred Dollars ($1,500) he will notify the COO or CEO in advance.

2

 

     4. Termination of Employment Prior to End of the Term of this Agreement. If prior to
June 1, 2006, Liebner’s employment by the Company is terminated by the Company for any reason other
than Cause or Liebner’s death or Disability, all options granted by the Company to Liebner to
purchase shares of the Company’s capital stock which would have vested on or before May 31, 2006
shall become vested in full as of the employment termination date.

     5. Confidentiality.

          (a) Liebner will not at any time, directly or indirectly, disclose or divulge, except as
required in connection with the performance of Liebner’s duties for the Company, any Confidential
Information acquired by Liebner during or in connection with Liebner’s affiliation with or
employment by the Company.

          (b) Liebner shall make no use whatsoever, directly or indirectly, of any Confidential
Information, except as required in connection with the performance of Liebner’s duties for the
Company.

          (c) Upon the Company’s request at any time and for any reason, Liebner shall immediately
deliver to the Company all materials (including all copies) in Liebner’s possession which contain
or relate to Confidential Information.

     6. Non-competition and Non-solicitation. Liebner agrees that prior to the termination
of Liebner’s employment with the Company for whatever reason, and thereafter for two years (or one
year if a court of competent jurisdiction finds that two years is too long):

          (a) Liebner will not directly or indirectly, individually or as a consultant to, or employee,
officer, director, stockholder, partner or other owner of or participant in any business entity
other than the Company, engage in or assist any other person to engage in the business of providing
hospice services in competition with the Company or any of its subsidiaries; and

          (b) Liebner will not directly or indirectly, individually or as a consultant to, or employee,
officer, director, stockholder, partner or other owner of or participant in any business entity
other than the Company, solicit or hire from the Company or any of its subsidiaries or affiliates,
or otherwise materially interfere with the business relationship of the Company or any of its
subsidiaries or affiliates with, (i) any person who is, or was during the period of Liebner’s
employment with the Company, employed by or associated with the Company or any of its subsidiaries
or affiliates or (ii) any person or entity who is, or was during the period of Liebner’s employment
with the Company, a hospice patient referral source for the Company or any of its subsidiaries or
affiliates.

     7. Remedies. Without limiting the remedies available to the Company, Liebner
acknowledges that a breach of any of the covenants contained in Sections 5 and 6 herein could
result in irreparable injury to the Company for which there might be no adequate remedy at law, and
that, in the event of such a breach or threat thereof, the Company shall be entitled to obtain a
temporary restraining order and/or a preliminary injunction and a permanent injunction restraining
Liebner from engaging in any activities prohibited by Sections 5 and 6 herein or such

3

 

other equitable relief as may be required to enforce specifically any of the covenants of
Sections 5 and 6 herein. The foregoing provisions of Sections 5 and 6 herein shall survive the
termination of this Agreement and shall continue thereafter in full force and effect in accordance
with the terms of Sections 5 and 6 herein for the periods of time contemplated thereby.

     8. Release. It shall be a condition of the Company’s obligation to provide the
benefits contemplated by Sections 4 that Liebner execute and deliver to the Company a release in
form and substance satisfactory to the Company pursuant to which Liebner unconditionally and
irrevocably waives, relinquishes and forever releases and discharges the Company and its officers,
directors, shareholders, employees, agents, subsidiaries, affiliates, predecessors, successors and
assigns (collectively, the “Company Indemnitees”) from any and all claims, duties, causes of
actions, demands, obligations, liabilities, rights, damages (including business, punitive or
exemplary damages) of any kind or nature whether existing or contingent, then known or unknown,
asserted or unasserted, whether in law, equity and administrative proceeding that Liebner then has
or ever had against the Company Indemnitees since the beginning of the world through the date
thereof including, but not limited to, any and all matters related in any way to Liebner’s
employment with or separation from the Company, as well as claims under the Employee Retirement
Income Security Act of 1974, Title VII of the Civil Rights Act of 1964, the Age Discrimination in
Employment Act, the Americans with Disabilities Act, any claim based on state anti-discrimination
laws, any claim for wrongful discharge, and any alleged violation of public policy, contract or
tort law, or any other federal, state, or local law; provided, however, that such release shall not
apply to the terms and conditions of this Agreement, which shall remain valid and enforceable.

     9. Binding on Successors. If the Company is at any time merged or consolidated into
or with any other corporation or other entity (whether or not the Company is the surviving entity),
or if substantially all of the assets thereof are transferred to another corporation or other
entity, the provisions of this Agreement will be binding upon and inure to the benefit of the
corporation or other entity resulting from such merger or consolidation or the acquirer of such
assets, and this Section 9 will apply in the event of any subsequent merger or consolidation or
transfer of assets. In the event of any such merger, consolidation or sale of assets, references
to the Company in this Agreement shall unless the context suggests otherwise be deemed to include
the entity resulting from such merger or consolidation or the acquirer of such assets of the
Company.

     10. Withholding. All payments required to be made by the Company hereunder to Liebner
or his dependents, beneficiaries, or estate will be subject to the withholding of such amounts
relating to tax and/or other payroll deductions as may be required by law.

     11. Employment at Will. Nothing contained in this Agreement shall be construed as a
right of Liebner to continue in the employ of the Company, or as a limitation of the right of the
Company to discharge Liebner with or without Cause; provided that Liebner shall have the right to
receive upon termination of his employment the benefits provided in this Agreement. Liebner shall
have the right to terminate his employment with or without cause, in which event, except for those
the provisions intended to survive by their terms, this Agreement shall be terminated.

4

 

     12. No Other Severance. The benefits of this Agreement shall be in lieu of severance
payments, if any, which might otherwise be available to Liebner.

     13. Successors and Assigns. The provisions of this Agreement, shall be binding upon
and shall inure to the benefit of Liebner, his executors, administrators, legal representatives,
and assigns, and the Company and its successors.

     14. No Set-off. The Company shall have no right of set-off or counterclaims, in
respect of any claim, debt, or obligation, against any payments to Liebner, his dependents,
beneficiaries, or estate provided for in this Agreement.

     15. Notices. All notices required or permitted under this Agreement shall be in
writing and shall be deemed effective upon personal delivery or upon deposit in the United States
Post Office, by registered or certified mail, postage prepaid, addressed to the other party at the
address shown on the records of the Company, or at such other address or addresses as either party
shall designate to the other in accordance with this Section 18.

     16. Entire Agreement. This Agreement constitutes the entire agreement between the
parties and supersedes all prior agreements and understandings, whether written or oral, relating
to the subject matter of this Agreement, including without limitation the Management Agreement
between the Company and Liebner dated October 9, 2002.

     17. Amendment. This Agreement may be amended or modified only by a written instrument
executed by both the Company and Liebner.

     18. Governing Law. This Agreement shall be construed, interpreted and enforced in
accordance with the laws of the State of Arizona.

     19. Miscellaneous.

          (a) No delay or omission 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.

          (b) The captions of the sections of this Agreement are for convenience of reference only and
in no way define, limit or affect the scope or substance of any section of this Agreement.

          (c) In case any provision of this Agreement shall be invalid, illegal or otherwise
unenforceable, the validity, legality and enforceability of the remaining provisions shall in no
way be affected or impaired thereby.

This space intentionally blank.

Signature lines on next page.

5

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year set
forth above.

	 	 	 	 	 	 	 
	 	 	VISTACARE, INC.	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	

	 	By:	 	Richard R. Slager	 	 
	

	 	 	 	 	 	 
	

	 	Title:	 	President and Chief Executive
Officer	 	 
	

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	/s/ Mark E. Liebner	 	 	 	 
		 	 	 	 
	 	 	Mark E. Liebner	 	 

6

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