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                                                                  Exhibit 10.31

                 CONFIDENTIAL SEPARATION AGREEMENT AND RELEASE

     THIS SEPARATION AGREEMENT AND RELEASE (this "Agreement"), dated September
30, 2003 (the "Date of this Agreement"), is entered into by and between
Questcor Pharmaceuticals, Inc. (the "Company") and Kenneth R. Greathouse (the
"Executive"). The Company and the Executive are sometimes referred to herein as
a "Party" or collectively as the "Parties".

     WHEREAS, the Executive is employed by the Company as the Company's Senior
Vice President, Commercial Operations; and

     WHEREAS, Executive and the Company desire to modify and subsequently
terminate such employment relationship on the mutually agreed upon terms set
forth herein.

     For and in consideration of the foregoing recitals and the mutual
covenants and agreements set forth herein, the Company and the Executive agree
as follows:


     1.   Resignation.
          (a)   Effective as of the Date of this Agreement, the Executive
hereby resigns from his position as Senior Vice President, Commercial
Operations of the Company and from all other executive officer positions then
held by the Executive with the Company or any of its direct or indirect
subsidiaries, and the Company hereby relieves the Executive of all duties and
responsibilities performed by the Executive prior to the Date of this Agreement.

          (b)   From the Date of this Agreement through March 31, 2004 (the
"Date of Resignation"), the Executive shall remain a full-time employee of the
Company in a non-executive capacity and shall continue to perform services for
the Company as agreed to by Executive and the Chief Executive Officer of the
Company.

          (c)   Effective as of the Date of Resignation, the Executive agrees
to resign as an employee of the Company or any of its direct or indirect
subsidiaries, at which time the Executive will be relieved of all duties and
responsibilities performed by the Executive prior to the Date of Resignation.
Executive understands that as of the Date of Resignation he is giving up any
right or claim to continuing or future employment with the Company and any
benefits or compensation therefrom, except as provided in the Change of Control
Agreements (as defined in paragraph 8 of this Agreement).


     2. Compensation. From the Date of this Agreement through the Date of
Resignation, the Company shall continue to pay Executive his regular salary in
the amount of $10,270.84 (ten thousand two hundred seventy-dollars and
eighty-four cents), less tax withholding required by law and any additional
applicable withholdings or deductions, on a semi-monthly basis in accordance
with the Company's payroll practices. Any payment made to Executive in
accordance with this Section 2 shall be made only to the extent the General
Release set forth in Section 7 becomes irrevocable in accordance with Section
7(c)(6).
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     3.   Accrued Vacation. Executive acknowledges that the balance of the
Executive's accrued vacation as of the Date of this Agreement is zero. Executive
shall not be entitled to accrue vacation days from the Date of this Agreement
through the Date of Resignation.

     4.   Bonus for 2003. Company agrees to pay to Executive a bonus payment in
the amount of $27,000 (twenty-seven thousand dollars) as the total bonus payment
for 2003, less tax withholding required by law and any additional applicable
withholdings or deductions, in accordance with the Company's payroll practices
("2003 Bonus Payment"). Executive agrees to a deferral of said 2003 Bonus
Payment until January 2004. However, in no event will the 2003 Bonus Payment be
paid to Executive any later than January 31, 2004. Any payments made to
Executive in accordance with this Section 4 shall be made only to the extent the
General Release set forth in Section 7 becomes irrevocable in accordance with
Section 7(c)(6).

     5.   Stock Options. The Company has amended Executive's stock options
granted to Executive by the Company under the Questcor Pharmaceuticals
Incorporated 1992. Stock Option Plan and as set forth in the option agreements
dated: May 31, 2000; September 18, 2000; January 12, 2001; May 14, 2001; August
6, 2001; March 13, 2002; and December 18, 2002 (the "Option" or "Options"), to
provide that such Options (or portions thereof), to the extent vested on the
Date of Resignation, will be exercisable following Executive's resignation from
employment with the Company on the Date of Resignation through March 31, 2005
subject to and provided that: (i) this Agreement is executed and delivered by
Executive to the Company and (ii) the General Release set forth in Section 7
becomes irrevocable in accordance with Section 7(c)(6). Each of Executive's
Options shall continue to vest in accordance with its terms from the Date of
this Agreement through the Date of Resignation. Executive acknowledges and
understands that to the extent an Option, or any portion thereof, qualifies as
an "incentive stock option" under Section 422 of the Internal Revenue Code of
1986, as amended, such Option, or some portion thereof, may cease to qualify or
meet the requirements of an incentive stock option upon such amendment and may
be deemed a nonqualified stock option as of the effective date of such
amendment. Executive acknowledges that he has been advised by the Company to
consult his personal tax advisor regarding the tax implications to such
amendment to the Options.

     6.   Benefits. From the Date of this Agreement through the Date of
Resignation, Executive shall be entitled to participate in the Company's
employee benefit plans as set forth on Exhibit A in a manner consistent with
Executive's participation in such plans as of the date immediately prior to the
Date of this Agreement and shall, from and after the Date of Resignation, be
eligible for continued benefits, at Executive's expense, under COBRA; provided,
however, Executive shall be entitled to participate in the Company's employee
benefit plans pursuant to this Section 6 only to the extent that General Release
set forth in Section 7 becomes irrevocable in accordance with Section 7(c)(6).




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     7.   Release of the Company

          a.   General Release. In consideration for the payments and the other
matters described herein, the receipt and adequacy of which are hereby
acknowledged, the Executive, on behalf of himself and his heirs, executors,
administrators, successors, agents and assigns, hereby fully and without
limitation releases and forever discharges the Company and its shareholders,
parents, owners, subsidiaries, divisions, affiliates, officers, directors,
agents, employees, consultants, insurers, representatives, lawyers,
predecessors, successors and assigns, employee welfare benefit plans and pension
or deferred compensation plans under Section 401 of the Internal Revenue Code of
1986, as amended, and their trustees, administrators and other fiduciaries, and
all persons acting by, through, under or in concert with them, or any of them
(the "Company Releasees"), both individually and collectively, from any and all
rights, claims, demands, liabilities, actions, causes of action, damages,
losses, costs, expenses and compensation, of whatever nature whatsoever, known
or unknown, fixed or contingent ("Claims"), which the Executive may have, or now
claims to have against, or in the future claims from the Company Releasees by
reason of any matter, cause or thing whatsoever, from the beginning of time to
the date hereof, including, without limiting the generality of the foregoing,
any Claims arising out of, based upon or relating to the Executive's
recruitment, relocation, hire, employment, benefits, remuneration (including
salary, bonus, incentive or other compensation, vacation, sick leave or medical
insurance benefits, and/or benefits from any employee stock ownership,
profit-sharing and/or any deferred compensation plan under Section 401 of the
Internal Revenue Code of 1986, as amended) or termination by the Company, or any
contract, agreement, or compensation arrangement between the Executive and the
Company, other than any obligation created in this Agreement or the Change of
Control Agreements (defined in paragraph 8 below); provided, however, if a
"Change of Control" (as defined in the Change of Control Agreements) shall not
have occurred by December 31, 2003, then such Change of Control Agreements shall
terminate and be of no further force or effect and be subject to the General
Release contained in this Section 7(a) in all respects, and Executive expressly
agrees to release the Company from liability for any and all rights, claims,
benefits or awards due Executive under such Change of Control Agreements. As
part of this Agreement, the Executive expressly waives any Claims arising out of
Title VII of the Civil Rights Act of 1964, as amended, the Equal Pay Act, as
amended, the Age Discrimination in Employee Act, as amended, the Family and
Medical Leave Act of 1993, the California Fair Employee and Housing Act of 1993,
as amended, the California Labor Code (including but not limited to Section
970), the Fair Labor Standards Act, as amended, Section 17200 of the Business
and Professions Code, the federal and state wage and hour laws, the Americans
With Disabilities Act, as amended, the Immigration Reform and Control Act of
1986, the Employee Retirement Income Security Act of 1974, as amended, the
Uniformed Services Employment and Reemployment Rights Act, the Rehabilitation
Act of 1973, as amended, the California Family Rights Act, the Worker Adjustment
and Retraining Notification Act, the California common law of fraud,
misrepresentation, negligence, defamation, infliction of emotional distress,
breach of contract, or wrongful termination, and/or any other local, state or
federal law, rule or regulation governing employment, discrimination in
employment or the payment of wages and benefits. Nothing in this Paragraph shall
affect Executive's rights to vested funds held for his benefit in the Company's
401(k) plan.


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     b.   Release of Unknown Claims. The Executive acknowledges that he is aware
of California Civil Code Section 1542, which provides as follows:

     "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR."

     With full awareness and understanding of the above provision, the Executive
hereby waives any rights he may have under Section 1542, as well as under any
other statutes or common law principles of similar effect. The Executive intends
to, and hereby does, release the Company Releasees from claims which he does not
presently know or suspect to exist at this time.

     c.   Release of Age Discrimination Claims. Executive agrees and expressly
acknowledges that this General Release includes a waiver and release of all
claims that Executive has or may have under the Age Discrimination in Employment
Act of 1967, as amended, 29 U.S.C. sec. 621, et seq. ("ADEA"). The following
terms and conditions apply to and are part of the waiver and release of the ADEA
claims under this Agreement:

          (1)  That this section and this Agreement are written in a manner
calculated to be understood by Executive.

          (2)  The waiver and release of claims under the ADEA contained in this
Agreement does not cover rights or claims that may arise after the date on which
Executive signs this Agreement.

          (3)  This Agreement provides for consideration in addition to anything
of value to which Executive is already entitled.

          (4)  Executive is advised to consult an attorney before signing this
Agreement.

          (5)  Executive is granted twenty-one (21) days after Executive is
presented with this Agreement to decide whether or not to sign this Agreement.
If Executive executes this Agreement prior to the expiration of such period,
Executive does so voluntarily and after having had the opportunity to consult
with an attorney.


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               (6)  Executive may revoke this Agreement within seven (7) days of
execution of the Agreement by Executive. Unless revoked by Executive, this
General Release shall become irrevocable upon the expiration of such 7-day
period ("Release Effective Date"). In the event of such a revocation, Executive
shall not be entitled to the consideration for this General Release set forth in
Sections 2, 4, 5, and 6.

          d.   No Assignment of Claims. Executive represents and warrants to the
Company Releasees that there has been no assignment or other transfer of any
interest in any Claim which Executive may have against the Company Releasees,
and Executive agrees to indemnify and hold the Company Releasees harmless from
any liability, claims, demands, damages, costs, expenses and attorneys' fees
incurred as a result of any person asserting any such assignment or transfer of
any rights or Claims under any such assignment or transfer from such Party.

          e.   No Suits or Actions. Executive has not filed any claims, actions
or charges against the Company Releasees. Executive agrees that if he hereafter
commences, joins in, or in any manner seeks relief through any suit arising out
of, based upon, or relating to any of the Claims released hereunder, or in any
manner asserts against the Company Releasees any of the Claims released
hereunder, then he will pay to the Company Releasees, in addition to any other
damages caused thereby, all attorneys' fees incurred by the Company Releasees in
defending or otherwise responding to said suit or Claim; provided, however, that
the requirement of payment of fees and/or damages shall not apply to claims or a
challenge to the release of claims under the Age Discrimination in Employment
Act.

     8.   Terminated Agreements. The offer of employment letter dated May 2,
2000, and amendment thereto dated March 25, 2003, entered into between Executive
and the Company (the "Terminated Agreement"), are hereby terminated in their
entirety and the obligations of the Parties thereunder are hereby terminated,
except to the extent provided in the amendments to the Terminated Agreement,
dated November 3, 2000 and March 21, 2003, relating to a change in control of
the Company (the "Change of Control Agreements"), subject to the provisions of
Sections 7 and 10 hereunder. Executive waives any and all rights, claims,
benefits and awards under the Terminated Agreement and releases the Company from
liability for any and all rights, claims, benefits or awards due Executive
thereunder. Executive further acknowledges and agrees that the Terminated
Agreement shall have no further force and effect.

     9.   Confidentiality of the Agreement. The Parties and their respective
agents, representatives, shareholders, officers, directors, attorneys,
employees, assigns, subsidiaries, affiliates, related companies, parent
companies, partners, partnerships, insurers, and predecessor or successor
companies shall maintain in strict confidence and shall not disclose the
contents of this Agreement (including the consideration received hereunder).
Notwithstanding the foregoing, such information may be disclosed by a Party (a)
in a legal action or proceeding to prove, interpret, or enforce this Agreement;
(b) by order of a court of competent jurisdiction; and (c) to its own employees,
outside accountants, financial advisors, lawyers, lenders, potential lenders,
insurers, or shareholders and taxing authorities to the extent necessary to
permit such individuals or entities to perform required tax, accounting,
insurance, financial, legal, or administrative tasks or services.

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     10.  Surviving Agreements. Nothing contained in this Agreement is intended
to or shall be construed to release or waive any rights of the Parties under any
agreement restricting solicitations of customers or employees of the Company, or
concerning the intellectual property of the Company. Company acknowledges that
the Change of Control Agreements shall remain in full force and effect through
December 31, 2003. Notwithstanding the foregoing, if a "Change of Control" (as
defined in the Change of Control Agreements) shall not have occurred by December
31, 2003, then such Change of Control Agreements shall terminate and be of no
further force or effect and be subject to the General Release contained in
Section 7(a) in all respects, and Executive expressly agrees to release the
Company from liability for any and all rights, claims, benefits or awards due
Executive under such Change of Control Agreements.

     11.  No Admission. Executive further understands and agrees that neither
the payment of money nor the execution of this Agreement shall constitute or be
construed as an admission of any liability whatsoever by the Company Releasees.

     12.  Acknowledgment. Executive represents and warrants that he (i) has
read this Agreement, (ii) has had adequate time to consider this Agreement,
(iii) understands the meaning and application of this Agreement, and (iv) has
signed this Agreement knowingly, voluntarily and of his own free will with the
intent of being bound by it.

     13.  Severability; Modification of Agreement. If any provision of this
Agreement shall be found invalid or unenforceable in whole or in part, then such
provisions shall be deemed to be modified or restricted to the extent and in the
manner necessary to render the same valid and enforceable or shall be deemed
excised from this Agreement as such circumstances may require, and this
Agreement shall be construed and enforced to the maximum extent permitted by law
as if such provision had been originally incorporated herein as so modified or
restricted or as if such provision had not been originally incorporated herein,
as the case may be.

     14.  Proprietary Information; Return of Company Property. The Executive
acknowledges that certain information, observations and data obtained by him
during the course of or related to his employment with the Company (including,
without limitation, financial information, shareholder information, product
design information, business plans, marketing plans or proposals and customer
lists and other customer information) are the sole property of the Company and
constitute trade secrets of the Company. On or before the Date of this
Agreement, the Executive agrees to promptly return all files, customer lists,
financial information or other Company property which are in the Executive's
possession or control without making copies thereof. Notwithstanding the
foregoing, Executive may retain the computer equipment formerly located in
Executive's office at the Company and currently in the possession of the
Executive. The Executive further agrees that he will not disclose to any person
or use for his own account any trade secret information, observations or data
without the written consent of the Company's Board of Directors, unless and to
the extent that the aforementioned matters become generally

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known to and available for use by the public, other than as a result of the
Executive's acts or omissions to act, which acts or omissions were unauthorized
and against the Company's interest. Further, the Executive acknowledges that any
unauthorized use of the above described confidential information will cause
irreparable harm to the Company and will give rise to an immediate action by the
Company for injunctive relief.

     15.  No Solicitation.

          a.   For a period of twelve (12) months after the Date of this
Agreement, Executive shall not, directly or indirectly, solicit, induce or
encourage any of the Company's employees, agents, independent contractors or
consultants to end their relationship with the Company.

          b.   For a period of twelve (12) months after the Date of this
Agreement, Executive shall not, directly or indirectly, solicit, induce or
encourage any of the Company's customers or potential customers to end their
relationship with the Company, or interfere in such customers' or potential
customers' relationship with the Company.

     16.  No Disparagement. The Parties shall not make any disparaging or
derogatory comments concerning each other. The Parties shall further refrain
from making any derogatory or disparaging comments toward or concerning other
Company employees, consultants or independent contractors.

     17.  Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the Parties hereto and their respective
successors and assigns. Notwithstanding the foregoing, neither this Agreement
nor any rights hereunder may be assigned to any party by the Company or
Executive without the prior written consent of the other Party hereto.

     18.  Headings. The headings in this Agreement are for convenience only, and
shall not be given any affect in the interpretation of this Agreement.

     19.  Waiver. No waiver of any provision of this Agreement shall be valid
unless it is in writing and signed by the Party against whom the waiver is
sought to be enforced. The failure of a Party to insist upon strict performance
of any provision of this Agreement in anyone or more instances shall not be
construed as a waiver or relinquishment of the right to insist upon strict
compliance with such provision in the future.

     20.  Entire Agreement; No Oral Modification. This is the entire agreement
between the Parties with respect to the subject matter hereof. Executive
represents and warrants that no promise or inducement has been offered or made
except as expressly set forth herein. Executive acknowledges that (i) the
consideration expressly set forth herein is the sole consideration for this
Agreement, and (ii) except as expressly set forth herein, Executive shall not be
entitled to receive any further compensation and/or benefits from the Company.
This

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Agreement may not be modified other than in a writing executed by both Parties
and stating its intent to modify or supersede this Agreement.

     21.  Choice of Law. The Parties agree that this Agreement shall be
construed and enforced in accordance with the laws of the State of California
without regard to the conflict of laws provisions thereof.

     22.  Arbitration.   The Parties agree that any and all disputes,
controversies or claims arising out of or relating to this Agreement, or breach
thereof, shall be submitted to final and binding arbitration. The arbitration
may be compelled and enforced according to the California Arbitration Act (Code
of Civil Procedure Sections 1280 et seq.). Unless the Parties mutually agree
otherwise, the arbitration shall be conducted before the American Arbitration
Association, according to its Employment Arbitration Rules. Judgment on the
award the arbitrator renders may be entered in any court having jurisdiction
over the Parties. Arbitration shall be initiated in accordance with the
Employment Arbitration Rules of the American Arbitration Association.

     23.  Fees. If any Party to this Agreement brings an action to enforce his
or its rights hereunder, the prevailing Party shall be entitled to recover his
or its costs and expenses, including attorneys' fees, if any, incurred in
connection with such action.

     24.  Counterparts: Fax Signatures. This Agreement may be executed in
counterparts. The Parties may executed faxed copies of this Agreement, and
faxed signatures may be relied upon by either Party.

     IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the
dates indicated below.

KENNETH R. GREATHOUSE                         QUESTCOR PHARMACEUTICALS, INC.

     /s/ KENNETH R. GREATHOUSE                By:     /s/ CHARLES J. CASAMENTO
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Date:   September 30, 2003                    Title:  CHAIRMAN, PRESIDENT + CEO
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                                              Date:   September 30, 2003
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