Document:

EX-10.1

Exhibit 10.1

NEITHER THE ISSUANCE AND SALE OF THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE
OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933 OR
(B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144, RULE 144A OR OTHER EXEMPTION UNDER SAID ACT.

THE TRANSFER OF THE SECURITIES REPRESENTED HEREBY IS PROHIBITED EXCEPT IN ACCORDANCE WITH THE
SECURITIES ACT OF 1933, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION.

VIASPACE INC.

SENIOR SECURED CONVERTIBLE PROMISSORY NOTE

$35,000.00 October 23, 2012

FOR VALUE RECEIVED, VIASPACE INC., a Nevada corporation (“Company”), promises to pay to Kevin
Schewe (“Holder”), or its registered assigns, in lawful money of the United States of America the
principal sum of THIRTY FIVE THOUSAND Dollars ($35,000.00), or such other amount as shall equal the
outstanding principal amount hereof, together with interest from the date of this Note on the
unpaid principal balance at a rate equal to six percent (6.0%) per annum, computed on the basis of
the actual number of days elapsed and a year of 365 days. Unless converted into Common Stock of
Company as set forth in Section 3 and/or Section 8 below, all unpaid principal, together with any
then unpaid and accrued interest, shall be due and payable on the earlier of (i) October 23, 2014
(the “Maturity Date”), (ii) upon prepayment of all amounts due and payable under this Note in
accordance with the terms hereof, or (iii) when, upon or after the occurrence of an Event of
Default (as defined below), such amounts are declared due and payable by Holder or made
automatically due and payable in accordance with the terms hereof. Immediately prior to the
issuance of this Note by Company, Holder acknowledges that it has delivered to Company the sum of
THIRTY FIVE THOUSAND Dollars ($35,000.00) reflecting the principal amount under this Note.

This Note is one of a series of notes (the “Notes”) having like tenor and effect (except for
variations necessary to express the name of the holder, the principal amount of each of the Notes
and the date on which each Note is funded) in an aggregate principal amount of up to $1,000,000
issued or to be issued by Company on or about the period from September 2012 to August 2017 (or
such other period as agreed upon by the Company and the Holder) pursuant to the terms of a Loan
Agreement, dated as of September 30, 2012, by and between Company and the Holder (or his designees)
of the Notes (the “Loan Agreement”). The Notes shall rank equally without preference or priority
of any kind over one another, and all payments on account of principal and interest with respect to
any of the Notes shall be applied ratably and proportionately on the outstanding Notes on the basis
of the principal amount of the outstanding indebtedness represented thereby.

The following is a statement of the rights of Holder and the conditions to which this Note is
subject, and to which Company by issuance of this Note, and Holder by the acceptance of this Note,
agree:

1. Definitions. As used in this Note, the following capitalized terms have the
following meanings:

(a) “Common Stock” shall mean the Company’s Common Stock, par value $0.001.

(b) “Collateral” has the meaning given in Section 4 hereof.

(c) “Company” includes the corporation initially executing this Note and any Person which
shall succeed to or assume the obligations of Company under this Note.

(d) “Conversion Notice” has the meaning given in Section 8(e) hereof.

(e) “Conversion Period” shall mean the period from the date of the Note and ending on the
Maturity Date.

(f) “Conversion Price” has the meaning given in Section 8(b) hereof

(g) “Event of Default” has the meaning given in Section 6 hereof.

(h) “Holder” shall mean the Person specified in the introductory paragraph of this Note or any
Person who shall at the time be the registered holder of this Note. “Holders” shall mean the
Persons collectively specified in the introductory paragraph of this Note and the other Notes or
any Persons who shall at the time be the registered holders of this Note and the other Notes.

(i) “Majority Holders” shall mean Holders holding a majority of the aggregate principal amount
of the Notes then outstanding.

(j) “Note” shall mean this Senior Secured Convertible Promissory Note.

(k) “Obligations” shall mean and include all loans, advances, debts, liabilities and
obligations owed by Company to Holder of every kind and description, now existing or hereafter
arising under or pursuant to the terms of this Note including, all interest, fees, charges,
expenses, attorneys’ fees and costs and accountants’ fees and costs chargeable to and payable by
Company hereunder.

(l) “Person” shall mean and include an individual, a partnership, a corporation (including a
business trust), a joint stock company, a limited liability company, an unincorporated association,
a joint venture or other entity or a governmental authority.

(m) “Prepayment Amount” has the meaning given in Section 3 hereof

(n) “Prepayment Notice” has the meaning given in Section 3 hereof.

(o) “Sale Transaction” shall mean a transaction or series of related transactions involving
(i) the consolidation or merger of Company with another Person, (ii) a sale of all or substantially
all of the assets of Company, (iii) a purchase, tender or exchange offer that is accepted by the
holders of more than the 50% of the outstanding shares of capital stock of Company, (iv) the
consummation of a stock purchase agreement or other business combination with another Person
whereby such other Person acquires more than the 50% of the outstanding capital stock of Company.

(p) “Securities Act” has the meaning given in Section 5(b) hereof.

(q) “Loan Agreement” has the meaning in the second introductory paragraph of this Note.

(r) “Successor Entity” has the meaning given in Section 10 hereof.

Capitalized term not otherwise defined shall have the meaning set forth in the Loan Agreement.

2. Interest. Unless converted into Common Stock of Company as set forth in Section 8
below, or unless prepaid or converted as set forth in Section 3 below, accrued interest on this
Note shall be payable on the Maturity Date.

3. Prepayment. During the Conversion Period, Company may, at any time and from time
to time, prepay all or any portion of the principal due under this Note, together with accrued
interest, without penalty. Company shall effect such prepayment by providing Holder twenty (20)
days written notice prior to the date of such prepayment (such notice, a “Prepayment Notice”)
indicating the amount of principal and accrued interest Company desires to prepay (the “Prepayment
Amount”). Notwithstanding the foregoing, Holder shall have 10 days following receipt of such
Prepayment Notice to notify Company in writing of its election to convert the Prepayment Amount
into shares of Common Stock, in which case such Prepayment Amount shall be converted into shares of
Common Stock in accordance with the conversion procedures set forth in Section 8(e) hereof
(provided that, with respect to conversions effected pursuant to this Section 3, any references to
the Conversion Amount in Section 8(e) shall refer to the Prepayment Amount). Should Holder elect
to convert the Prepayment Amount into shares of Common Stock, the number of shares of Common Stock
into which such Prepayment Amount will be converted shall be determined by dividing the Prepayment
Amount by the then applicable Conversion Price.

4. Security Interest. As security for the payment and performance of the Obligations
under this Note and the other Notes, Company hereby grants to the holder of this Note and of the
other Notes a first lien security interest in all of Company’s right, title and interest in, to and
under all of its personal property, wherever located and whether now existing or owned or hereafter
acquired or arising, including all accounts, chattel paper, commercial tort claims, deposit
accounts, documents, equipment (including all fixtures), general intangibles, intellectual property
(including all patents and patent applications, all copyrights and applications for copyright, all
state (including common law), federal and foreign trademarks, service marks and trade names, and
applications for registration of such trademarks, service marks and trade names, and all trade
secrets), instruments, inventory, investment property, letter-of-credit rights, money and all
products, proceeds and supporting obligations of any and all of the foregoing (collectively, the
“Collateral”). Notwithstanding the foregoing, the security interest granted herein shall not
extend to any property, rights or licenses to the extent the granting of a security interest
therein would be contrary to applicable law.

5. Representations and Warranties of Holder. Holder represents and warrants to Company
as follows:

(a) Binding Obligation. Holder has full legal capacity, power and authority to execute
and deliver this Note and to perform his obligations hereunder. This Note is a valid and binding
obligation of Holder, enforceable in accordance with its terms, except as limited by bankruptcy,
insolvency or other laws of general application relating to or affecting the enforcement of
creditors’ rights generally and general principles of equity.

(b) Securities Law Compliance. Holder has been advised that this Note has not been
registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state
securities laws and, therefore, cannot be resold unless they are registered under the Securities
Act and applicable state securities laws or unless an exemption from such registration requirements
is available. Holder is aware that Company is under no obligation to effect any such registration
with respect to this Note, or the Common Stock issuable or issued pursuant to the conversion of
this Note, or to file for or comply with any exemption from registration. Holder has not been
formed solely for the purpose of making this investment and is purchasing this Note for its own
account for investment, not as a nominee or agent, and not with a view to, or for resale in
connection with, the distribution thereof. Holder has such knowledge and experience in financial
and business matters that Holder is capable of evaluating the merits and risks of such investment,
is able to incur a complete loss of such investment and is able to bear the economic risk of such
investment for an indefinite period of time.

(c) Accredited Investor. Holder is an “accredited investor” within the meaning of SEC
Rule 501 of Regulation D of the Securities Act, as presently in effect.

(d) Restricted Securities. Holder understands that this Note is a “restricted
security” under the federal securities laws inasmuch as it is being acquired from Company in a
transaction not involving a public offering and that under such laws and applicable regulations
such Note may be resold without registration under the Securities Act only in certain limited
circumstances. In the absence of an effective registration statement covering the Note or an
available exemption from registration under the Securities Act, the Note must be held indefinitely.
Holder represents that it is familiar with SEC Rule 144, and understands the resale limitations
imposed thereby and by the Securities Act.

(e) Access to Information. Holder acknowledges that Company has given Holder access
to the corporate records and accounts of Company and to all information in its possession relating
to Company, has made its officers and representatives available for interview by Holder, and has
furnished Holder with all documents and other information required for Holder to make an informed
decision with respect to the purchase of this Note.

6. Events of Default. The occurrence of any of the following shall constitute an
“Event of Default” under this Note:

(a) Failure to Pay. Company shall fail to pay (i) when due any principal or interest
payment on the due date hereunder or (ii) any other payment required under the terms of this Note
on the date due, and (in either case) such payment shall not have been made within twenty (20) days
of Company’s receipt of Holder’s written notice to Company of such failure to pay;

(b) Failure to Perform. Company fails to perform any obligation under this Note and
does not cure that failure within twenty (20) days of Company’s receipt of Holder’s written notice
to Company of such failure to perform; or

(c) Voluntary Bankruptcy or Insolvency Proceedings. Company shall (i) apply for or
consent to the appointment of a receiver, trustee, liquidator or custodian of itself or of all or a
substantial part of its property, (ii) be unable, or admit in writing its inability, to pay its
debts generally as they mature, (iii) make a general assignment for the benefit of its or any of
its creditors, (iv) be dissolved or liquidated, (v) become insolvent (as such term may be defined
or interpreted under any applicable statute), (vi) commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or consent to any such
relief or to the appointment of or taking possession of its property by any official in an
involuntary case or other proceeding commenced against it, or (vii) take any action for the purpose
of effecting any of the foregoing; or

(d) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the appointment
of a receiver, trustee, liquidator or custodian of Company or of all or a substantial part of the
property thereof, or an involuntary case or other proceedings seeking liquidation, reorganization
or other relief with respect to Company or the debts thereof under any bankruptcy, insolvency or
other similar law now or hereafter in effect shall be commenced and an order for relief entered or
such proceeding shall not be dismissed or discharged within thirty (30) days of commencement.

7. Rights of Holder upon Default. Upon the occurrence or existence of any Event of
Default (other than an Event of Default referred to in Sections 6(c) and 6(d)) and at any time
thereafter during the continuance of such Event of Default, the Majority Holders may, by written
notice to Company, declare all outstanding Obligations payable by Company under the Notes to be
immediately due and payable without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived. Upon the occurrence or existence of any Event of Default
described in Sections 6(c) and 6(d), immediately and without notice, all outstanding Obligations
payable by Company under the Notes shall automatically become immediately due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are hereby expressly
waived. In addition to the foregoing remedies, upon the occurrence or existence of any Event of
Default, Holder may exercise any other right power or remedy permitted to him by law, either by
suit in equity or by action at law, or both.

8. Conversion.

(a) Conversion. Holder shall have the right to convert, at any time during the
Conversion Period, all or any portion of the principal amount, together with any unpaid and accrued
interest, then outstanding under this Note into fully paid and non-assessable shares of Common
Stock at a conversion price per share equal to the Conversion Price (as defined below). The number
of shares of Common Stock into which such principal and interest then outstanding under this Note
will be converted shall be determined by dividing the amount of principal, together with all unpaid
and accrued interest, then outstanding under this Note to be converted (the “Conversion Amount”) by
the Conversion Price.

(b) Conversion Price. Subject to Section 8(c), the “Conversion Price” shall be equal
to 80% of the Average Trading Price as reported by the principal trading exchange on which the
Company’s Common Stock is traded for the twenty (20) trading days preceding the date of the Note.

(c) Adjustments to Conversion Price. The Conversion Price shall be subject to
proportional adjustments for stock splits, stock dividends, combinations, consolidations,
reclassifications and the like.

(d) Conversion Procedure. Before Holder shall be entitled to convert the Conversion
Amount then outstanding under this Note into shares of Common Stock, Holder shall surrender this
Note at the office of this Company, and shall give written notice (a form of which is attached to
this Note, the “Conversion Notice”) to Company at its principal corporate office, of the election
to convert the same and shall state therein the total Conversion Amount. Company shall not be
obligated to issue certificates evidencing the shares of Common Stock issuable upon such conversion
unless (i) Holder executes and delivers to Company the Conversion Notice for the converted shares
and (ii) this Note is delivered to Company. Company shall, as soon as practicable after such
delivery, issue and deliver certificates (bearing such legends as are required by applicable state
and federal securities laws in the opinion of counsel to Company and required by this Note and the
Loan Agreement), representing the number of fully paid and non-assessable shares of the Common
Stock into which the Conversion Amount will be converted in accordance with the provisions herein,
and a new promissory note having like tenor as this Note for the principal amount and interest then
outstanding under this Note that are not being so converted. Any conversion pursuant to this
Section 8 shall be deemed to have been made immediately prior to the close of business on the date
of Company’s receipt of the Conversion Notice, so that the rights of Holder under this Note to the
extent of the Conversion Amount shall cease at such time and Holder shall be treated for all
purposes as having become the record holder of such shares of Common Stock at such time.

(e) Fractional Shares; Effect of Conversion. No fractional shares shall be issued
upon conversion of this Note. In lieu of Company issuing any fractional shares to Holder upon the
conversion of this Note, Company shall pay to Holder an amount equal to the product obtained by
multiplying the Conversion Price by the fraction of a share not issued pursuant to the previous
sentence. Upon conversion of this Note in full and the payment of the amounts specified in this
Section 9(f), Company shall be forever released from all its obligations and liabilities under this
Note.

(f) Reservation of Stock Issuable Upon Conversion. Company shall at all times reserve
and keep available out of its authorized but unissued shares of Common Stock solely for the purpose
of effecting the conversion of this Note such number of its shares of Common Stock as shall from
time to time be sufficient to effect the conversion of this Note.

9. Reserved

10. Effect of Sale Transaction. Upon the occurrence of any Sale Transaction, the
Successor Entity (as defined below) shall succeed to, and be substituted for the Company (so that
from and after the date of such Sale Transaction, the provisions of this Note referring to the
“Company” shall refer instead to the Successor Entity), and may exercise every right and power of
the Company and shall assume all of the obligations of the Company under this Note with the same
effect as if such Successor Entity had been named as the Company herein. Upon consummation of the
Sale Transaction, the Successor Entity shall deliver to the Holder confirmation that there shall be
issued upon conversion of this Note at any time after the consummation of the Sale Transaction, in
lieu of the shares of the Common Stock purchasable upon the conversion of the Notes prior to such
Sale Transaction, such shares of common stock (or other securities, cash, assets or other property)
of the Successor Entity. The provisions of this Section shall apply similarly and equally to
successive Sale Transactions and shall be applied without regard to any limitations on the
conversion of this Note. As used in this Section 10, “Successor Entity” means the Person, which
may be the Company, formed by, resulting from or surviving any Sale Transaction, or the parent
entity of such Person, as applicable.

11. Successors and Assigns. Subject to the restrictions on transfer described in
Sections 12 and 13 below, the rights and obligations of Company and Holder of this Note shall be
binding upon and benefit the successors, assigns, heirs, administrators and transferees of the
parties.

12. Waiver and Amendment. Any term of this Note may be amended or waived only with
the written consent of Company and the Majority Holders; provided, however, that any such amendment
or modification which by its terms would not apply equally to all holders of the Notes shall not be
applicable to any holder whose rights under the Notes would be adversely affected by such amendment
or modification in a different manner than other holders thereof without such adversely affected
holder’s written consent.

13. Transfer of this Note or Securities Issuable on Conversion Hereof. With respect
to any offer, sale or other disposition of this Note or securities into which such Note may be
converted, Holder will give written notice to Company prior thereto, describing briefly the manner
thereof, together with a written opinion of Holder’s counsel, or other evidence if reasonably
satisfactory to Company, to the effect that such offer, sale or other distribution may be effected
without registration or qualification (under any federal or state law then in effect). Upon
receiving such written notice and reasonably satisfactory opinion, if so requested, or other
evidence, Company, as promptly as practicable, shall notify Holder that Holder may sell or
otherwise dispose of this Note or such securities, all in accordance with the terms of the notice
delivered to Company. If a determination has been made pursuant to this Section 12 that the
opinion of counsel for Holder, or other evidence, is not reasonably satisfactory to Company,
Company shall so notify Holder promptly after such determination has been made. Each Note thus
transferred and each certificate representing the securities thus transferred shall bear a legend
as to the applicable restrictions on transferability in order to ensure compliance with the
Securities Act, unless in the opinion of counsel for Company such legend is not required in order
to ensure compliance with the Securities Act. Company may issue stop transfer instructions to its
transfer agent in connection with such restrictions. Subject to the foregoing, transfers of this
Note shall be registered upon registration books maintained for such purpose by or on behalf of
Company. Prior to presentation of this Note for registration of transfer, Company shall treat the
registered Holder hereof as the owner and Holder of this Note for the purpose of receiving all
payments of principal and interest hereon and for all other purposes whatsoever, whether or not
this Note shall be overdue and Company shall not be affected by notice to the contrary.

14. Notices. Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and will be deemed to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile (provided confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one business day after deposit with an overnight
courier service, in each case properly addressed to the party to receive the same. The addresses
and facsimile numbers for such communications shall be to the respective addresses or facsimile
numbers of the parties as set forth in the Loan Agreement, or at such other address or facsimile
number as such parties shall have furnished in writing.

15. Usury. In the event any interest is paid on this Note which is deemed to be in
excess of the then legal maximum rate, then that portion of the interest payment representing an
amount in excess of the then legal maximum rate shall be deemed a payment of principal and applied
against the principal of this Note.

16. Waivers. Company hereby waives notice of default, presentment or demand for
payment, protest or notice of nonpayment or dishonor and all other notices or demands relative to
this instrument.

17. Governing Law and Forum. This Note and all actions arising out of or in
connection with this Note shall be governed by and construed in accordance with the laws of the
State of Colorado, United States of America, without regard to the conflicts of law provisions of
the State of Colorado, or of any other state. All disputes or controversies relating to or arising
from this Note shall be adjudicated in the state and federal courts located in the state of
Colorado. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION
WITH RESPECT TO THIS NOTE AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS
WAIVER. The Convention on Contracts for the International Sale of Goods shall not apply to this
Note.

[Remainder of Page Intentionally Left Blank]

1

IN WITNESS WHEREOF, Company has caused this Note to be issued as of the date first written
above and Holder agrees to the terms and conditions of this Note.

VIASPACE INC.

By: /s/ Carl Kukkonen

	 	 	Name: Carl Kukkonen

Its: CEO

KEVIN SCHEWE

/s/ Kevin Schewe

NOTICE OF CONVERSION

(To be executed by the Registered Holder in order to convert the Note)

The undersigned hereby elects to convert $      of the principal and $      of the
interest due on the Note issued by VIASPACE Inc. on [ ] into Shares of Common Stock
of VIASPACE Inc. (the “Borrower”) according to the conditions set forth in such Note, as of the
date written below.

Date of Conversion:      

Conversion Price:      

Shares To Be Delivered:      

Signature:      

Print Name:      

Address:      

      

2EX-10.1

Exhibit 10.1

October 16, 2012

Via Hand Delivery

Vincent T. Morgus

201 Sedgemoor Drive

Cary, NC 27513

 

Re: Separation Letter Agreement and General Release

Dear Vince:

As we have discussed, your employment with Cornerstone Therapeutics Inc. (the “Company”) and
your Executive Employment Agreement with the Company dated February 1, 2011 (the “Employment
Agreement”) are being terminated by the Company “without cause.” This Separation Letter Agreement
and General Release (this “Agreement”) sets forth the terms of the separation package that you will
receive if you enter into this Agreement.  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 Paragraph No. 18 below. Please note that the earliest
and latest 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. 20. 

 

Whether or not you choose to timely sign and return this Agreement, your employment with the
Company will end as of October 19, 2012 (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, your unpaid current base salary
through the Termination Date, less lawful deductions, and $13,154.00 in respect of twelve days of
your accrued but unused vacation.

1. 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, equity incentive 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 or as set
forth in Attachment A.  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.  Under the terms of the Company’s equity incentive plans, and except as
provided in Paragraph Nos. 4 and 5 of Attachment A, you cease further vesting of restricted
stock or stock options upon the Termination Date.

2. In consideration for your timely signing of this Agreement, and the promises made herein,
the Company agrees to provide you with the monies and benefits set forth in Attachment A
(Description of Severance Benefits) (attached hereto) provided that you do not revoke your
acceptance of this Agreement pursuant to Paragraph No. 18 below.   The distribution of all
severance payments and benefits provided in Attachment A shall be subject to the provisions
of Attachment B (Payments Subject to Section 409A) (attached hereto). 

3. You also understand and agree that you would not receive the monies and/or benefits
specified in Paragraph No. 2 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 or severance arrangements 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.

4. In consideration of the monies and benefits to be provided by the Company to you as set
forth in Paragraph No. 2 above and the promises contained in this Agreement, you hereby voluntarily
and of your own free will agree to release, remise, and forever discharge 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 claim 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 agree that neither this Agreement, nor the
furnishing of consideration for this Agreement, shall be deemed or construed at any time for any
purpose as an admission by the Company of any liability or unlawful conduct of any kind.  The
Company shall not contest any claim for unemployment benefits made by you to the applicable state
agency.

5. [Intentionally omitted]

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 Section 8 (proprietary
information and developments) of the Employment Agreement. The Company agrees to waive its right
to enforce your obligations under Section 7 (non-compete) of that Agreement for so long as you do
not accept employment with Discovery Laboratories, Inc. 

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.
20, 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 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
were provided with this Agreement at least twenty-one (21) calendar days in advance of the
Termination Date in order that you will have an opportunity 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 that you will 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 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, as modified by this Agreement, 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 or other legal requirements.  If you receive such a court order or subpoena, to
the extent reasonably feasible and allowed by law, you or your attorney shall provide the Company
with a copy of such court order or subpoena within five (5) 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.  In consideration for your
execution of this Agreement, the Company agrees that it will not make any false, disparaging or
derogatory statements in public or private to any person or media outlet regarding you or any of
your acts undertaken in connection with your employment by the Company.

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 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.

18. 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.

19. 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.

20. 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. 20):

(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:

Vincent T. Morgus

201 Sedgemoor Drive

Cary, NC 27513

21. You acknowledge and agree that for a period of one (1) year after the Termination Date,
you 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). For purposes of defining the scope
of this restrictive covenant, indirect recruitment, solicitation, inducement, hiring or engaging of
independent contractors or employees excludes the recruiting, soliciting, inducing, hiring and
engagement decisions of your future employer in which your only material role was to set, approve,
or modify your future employer’s budgets, including but not limited to budgets for recruitment and
hiring prospective contractors and employees.

22. 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 the existence of
this Agreement or such terms or contents of this Agreement are disclosed in 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. The Company agrees to file a Form 8-K disclosing
the terms of this Agreement by October 29, 2012. At any time after the earlier of October 29, 2012
or the date on which such Form 8-K filing is made by the Company, you shall be free to disclose the
terms of this Agreement at your sole discretion.

23. In consideration of your execution of this Agreement, the Company agrees to release,
remise, and forever discharge you from and refrain from suing you for any and all claims, charges,
complaints, demands, actions, causes of action or suits, that the Company might otherwise initiate
against you, arising out of acts undertaken by you in connection with your employment by the
Company, except to the extent such acts involve fraud or moral turpitude. The Company also agrees
to maintain in full force and effect director and officer indemnity insurance policies in
substantially the form and substance as such insurance exists today, for at least five (5) years,
and to take such actions as may be appropriate to ensure that such policies would, subject to their
terms, provide coverage for you against third party claims arising out of acts undertaken by you in
connection with your employment by the Company; provided, however, that the Company may in lieu of
such obligation purchase an extended reporting period endorsement covering such claims. In the
absence or insufficiency of such insurance, the Company shall, to the fullest extent currently set
forth in Article Eighth of its Amended and Restated Certificate of Incorporation, as amended to
date, indemnify, defend, and hold you harmless from third party claims arising from or relating to
the acts undertaken by you in connection with your employment with the Company.

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/ Craig A. Collard 

Name: Craig A. Collard

Title:   Chief Executive Officer

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 (this “Agreement”) to consider this
Agreement.  You have also been advised to consult with an attorney prior to the execution of this
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. 2 of this 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 19, 2012
	 	/s/ Vincent T. Morgus

	 	 	 

	 	 	Name:  Vincent T. Morgus

ATTACHMENT A

DESCRIPTION OF SEVERANCE BENEFITS

	1.	 	Payment in lieu of Notice.   The Company will pay to you the following lump sum
amount, less lawful deductions, on or before October 26, 2012 provided you execute and do not
revoke the Separation Letter Agreement and General Release (the “Agreement”) to which this
Attachment A is attached:

	 	•	 	$54,625 being payment in lieu of service for 69 days of the 90 day notice period
provided for in Section 4.6 of the Employment Agreement, which notice period began
September 29           

	2.	 	Severance Payments Payment in lieu of Notice.   The Company will pay to you the
following lump sum amounts, less lawful deductions, on January 4, 2013 provided you execute
and do not revoke the Agreement:

	 	•	 	$285,000, being one times base salary as provided under Section 5.4(b) of the
Employment Agreement;

	 	•	 	$74,812, being payment of your Target Cash Bonus, as provided under Section
5.4(d) of the Employment Agreement, pro-rated through September 29, 2012;

	 	•	 	Provided, however, that the total amount payable in cash pursuant to this
Section 2 will be reduced

	 	•	 	by the amount of any withholding tax paid on your
behalf pursuant to Subsection 5(c) of this Attachment, and

	 	•	 	by the value of the 20,460 shares of Restricted Stock
the vesting of which is accelerated pursuant to Subsection 5(b) of this
Attachment A, using as the value of each such share for purposes of this
calculation the average of the closing prices of the common stock of the
Company on the NASDAQ Capital Market on each of the twenty trading dates
beginning on September 17, 2012 and ending on October 12, 2012.

	3.	 	Continuation of Benefits.  The Company will, as provided in Section 5.4(c) of the
Employment Agreement, provided you execute and do not revoke the Agreement, 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. 18 of the Agreement; and

 

	 	(b)	 	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. 18 of the Agreement;

such payments under Subsections 3(a) and 3(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).

	4.	 	Accelerated Vesting of Stock Options. The Company will, provided you execute and do
not revoke the Agreement, vest all of your unvested stock options that would have vested at
any time before October 19, 2013, being 35,312 options, immediately as of the close of
business on the Termination Date, as provided under Section 5.4(e) of the Employment
Agreement, and the Company will extend the period during which the vested options may be
exercised until March 31, 2013.

	5.	 	Accelerated Vesting of Restricted Stock.

	 	(a)	 	The Company will, provided you execute and do not revoke the Agreement, vest
all of your unvested shares of restricted stock that would have vested at any time
before October 19, 2013, being 13,860 shares of restricted stock, immediately as of the
close of business on the date seven (7) calendar days following the day you execute
this Agreement, as provided under Section 5.4(e) of the Employment Agreement.

	 	(b)	 	The Company will, provided you execute and do not revoke the Agreement, in
addition vest all of your unvested shares of restricted stock not covered by paragraph
5(a) that would have vested at any time, being a further 20,460 shares of restricted
stock, immediately as of the close of business on the date seven (7) calendar days
following the day you execute this Agreement.

	 	(c)	 	The Company will, provided you execute and do not revoke the Agreement, make
whatever cash payments to IRS that may be required to settle the Company’s withholding
tax obligations paid on your behalf associated with deductions from your income related
to the vesting of your restricted stock, provided, however, that the Company will
reduce the amount of the severance payments to be made to you pursuant to Section 2 of
this Attachment in an amount equal to such withheld amounts.

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 beginning at the end of your tax year in
which the separation from service occurs and 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 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.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00209-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00209-of-00352.parquet"}]]