Exhibit 10.1
July 16, 2007
David Medeiros
3260 Whipple Road
Union City, California 94587
RE: Severance Agreement
Dear David:
In addition to the terms and conditions of your employment with Questcor
Pharmaceuticals, Inc. (the “Company”) which are set forth in your Offer Letter
dated May 6, 2003, and Change-in-Control Agreement dated February 13, 2007,
which are incorporated herein, the Company agrees to provide you severance in
the event that the following conditions are met. This Severance Agreement
supersedes the original severance agreement dated July 10, 2003 which agreement
is hereby terminated and of no further force or effect.
In the event (1) your employment is terminated by the Company other than (a) for
Cause (as defined below) or (b) as a result of your permanent and total
disability within the meaning of Section 422(c)(6) of the Internal Revenue
Service Code of 1986, as amended (the “Code”), or (c) you resign your employment
upon 30 days’ prior written notice to the Company for Good Reason (as defined
below), you will receive severance compensation totaling twelve (12) months of
base salary.
As a condition precedent to receiving severance compensation, you will be
required to execute a general release (in a form prepared by counsel for the
Company) of claims against the Company and its officers, directors, agents and
shareholders. Such general release will not include rights to vested options or
claims for any compensation earned (including, without limitation, accrued
vacation), or reimbursement of expenses incurred, through the date of
termination. Severance compensation will be paid in accordance with normal
payroll procedures. If you are reemployed at any time during the severance
period, all further severance compensation payments shall immediately cease.
“Cause” will mean termination of your employment for any one or more of the
following: (a) habitual or material neglect of your assigned duties (other than
by reason of disability) or intentional refusal to perform your assigned duties
(other than by reason of disability) which continues uncured for 30 days
following receipt of written notice of such deficiency or “Cause” event from the
Board of Directors, specifying in detail the scope and nature of the deficiency
or the “Cause” event; (b) an act of dishonesty intended to result in your gain
or personal enrichment; (c) personally engaging in illegal conduct which causes
material harm to the reputation of the Company or its affiliates; (d)

 

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committing a felony or gross misdemeanor directly relating to, an act of
dishonesty or fraud against, or a misappropriation of property belonging to, the
Company or its affiliates; (e) personally engaging in any act of moral turpitude
that causes material harm to the reputation of the Company; (f) intentionally
breaching in any material respect the terms of any nondisclosure agreement with
the Company; or (g) commencement of employment with another Company while an
employee of the Company without the prior consent of the Board of Directors. Any
determination of “Cause” as used herein will be made only in good faith by the
Board of Directors.
“Good Reason” will mean the removal of your title of Senior Vice President,
Pharmaceutical Operations without your written consent; provided, however, that
Good Reason shall not exist as a result of any reduction of your authority,
duties or responsibilities so long as you retain the title of Senior Vice
President, Pharmaceutical Operations of the Company.
This letter, your Offer Letter, your Change-in-Control Agreement, your existing
stock option grants, and any future stock option grants or stock awards,
constitute the entire agreement between you and the Company regarding the terms
and conditions of your employment with the Company and supersede any other
agreement or promises made to you by anyone, whether oral or written, express or
implied.
This Agreement shall be interpreted, construed and administered in a manner that
satisfies the requirements of Sections 409A of the Code, and the Treasury
Regulations there under.
Please sign and date this letter, and return it to me a soon as possible
acknowledging your understanding and acceptance of the terms and conditions set
forth above.

     
Sincerely,
   
 
   
/s/ Don Matthew Bailey
   
 
   
Don Matthew Bailey
   
Interim President
  Date: July 16, 2007
 
   
Agreed:
   
 
   
/s/ David J. Medeiros
   
 
   
David J. Medeiros
   
Senior Vice President, Pharmaceutical Operations
  Date: July 17, 2007