(c) Termination by Executive for Good Reason. Executive may terminate his employmentwith the Company for Good Reason. *“***Good Reason***”*shall mean the occurrence, without Executive’swritten consent, of one or more of the following events: (i) the Company materially decreasesExecutive’s responsibilities, or (ii) the Company breaches the terms of this Agreement; providedthat no such event shall constitute Good Reason hereunder unless (a) Executive shall have givenwritten notice to the Company of Executive’s intent to resign for Good Reason within 30 days afterExecutive becomes aware of the occurrence of any such event (specifying in detail the nature andscope of the event) and (b) such event or occurrence shall not have been resolved to Executive’sreasonable satisfaction within 30 days of the Company’s receipt of such notice.     (d) Notice of Termination. Any termination of Executive’s employment by the Companyor by Executive shall be communicated by a written Notice of Termination addressed to Executive orthe Company, as applicable. Termination may be effective immediately upon communication of suchNotice of Termination. A “**Notice of Termination**” shall mean a notice stating that Executive’semployment with the Company has been or will be terminated and the specific provisions of thisSection 1 under which such termination is being effected.     (e) Payments Upon Termination. Upon termination of Executive’s employment for anyreason, the Company shall pay Executive (i) his Base Salary earned but not yet paid for servicesrendered to the Company on or prior to the date on which the Employment Period ends, (ii) anyaccrued but unused vacation days, (iii) any incurred but unpaid reimbursable business expenses andother insurance related reimbursable expenses, and (iv) any amounts required under the Company’sEmployee Stock Purchase Plan (or successor plans).     2. Payments Upon Certain Terminations Not Involving a Change in Control.     (a) Termination by the Company Without Cause or Termination by Executive for GoodReason. In addition to the payments described in Section 1(e) and subject to Section 4,provided that Executive is in compliance with his obligations under his Proprietary Information andInventions Agreement with the Company, in the event Executive’s employment is terminated by theCompany Without Cause or by Executive for Good Reason, the Company shall (i) pay Executive anyannual bonus payable for services rendered in any annual bonus period for the year which had beencompleted in its entirety prior to the date on which the Employment Period ends and that had notpreviously been paid, (ii) continue to make Base Salary payments for (A) a period 6 monthsfollowing such termination of employment if the termination occurs on or before the thirdanniversary of the date on which Executive commenced employment with the Company, or (B) a period12 months following such termination of employment if the termination occurs after such thirdanniversary date (the period of time such payments are provided, the “**Severance Period**”), payablein accordance with the Company’s payroll practices as in effect on such termination date, exceptthat such continued Base Salary payments shall not commence until the first payroll date followingthe effective date of the Release Agreement referenced in Section 4, and the first continued BaseSalary payment shall cover the period between the termination date and such payment. Eachinstallment payment made pursuant to this Section 2(a)(ii) shall be considered a separate paymentfor purposes of Section 409A of the Internal Revenue Code of 1986 (the “Code”).
2

 
     (b) Duty to Mitigate. If Executive is reemployed for at least twenty (20) hours perweek on average at any time after the termination date and before the end of the Severance Period,Executive shall promptly provide written notice to the Company of such reemployment, and allfurther severance compensation payments under this Section 2 shall be decreased by the amount ofthe annual compensation received by Executive from the new employer.     3. Payments Upon Certain Terminations Involving a Change in Control.     (a) Statement of Intent. The Board recognizes that, as is the case with many publiclyheld corporations, the possibility of a change in control of the Company may exist and that theuncertainty and questions that it may raise among management could result in the departure ordistraction of management personnel to the detriment of the Company and its shareholders.Accordingly, the Board has decided to reinforce and encourage Executive’s attention and dedicationto Executive’s assigned duties without the distraction arising from the possibility of a change incontrol of the Company.     (b) Accelerated Vesting. Notwithstanding anything to the contrary in the Company’s1992 Employee Stock Option Plan or its 2006 Equity Incentive Award Plan (the “Option Plans”), inthe event that a Change in Control (as defined in the Option Plans) occurs, and Executive’semployment with the Company is terminated by the Company Without Cause or by Executive for GoodReason at any time within the three (3) month period before the date of such Change in Control orduring the twelve (12) month period following the date of such Change in Control, one-hundredpercent (100%) of the then-unvested shares of Questcor’s common stock subject to each ofExecutive’s outstanding stock options and one-hundred percent (100%) of Executive’s restrictedshares subject to vesting will become immediately vested and exercisable on the date of suchtermination.     (c) Cash Severance Upon Termination Without Cause or for Good Reason. In the eventthat a Change in Control occurs, and Executive’s employment with the Company is terminated by theCompany Without Cause or by Executive for Good Reason at any time within the three (3) month periodbefore the date of such Change in Control or during the twelve (12) month period following the dateof such Change in Control, Executive will receive severance compensation equal to the sum of (i) anamount equal to his highest Base Salary in the calendar year in which the Change in Control occurs,plus (ii) an amount equal to his target bonus as established by the Board or its CompensationCommittee for the year during which the termination takes place (or if such target bonus has notyet been established, the target bonus for the prior year).     (d) Payment Administration. The severance payment under Section 3(c) shall be made ina single lump sum on the release effective date of the Release Agreement referenced in Section 4.Payments under Section 3(c) shall be in addition to the payments under Section 1(e) but shall be inlieu of, and not in addition to, the payment of any cash severance payments that Executive mayotherwise be entitled to under Section 2 of this Agreement.     (e) No Duty to Mitigate. Executive’s reemployment at any time following thetermination of Executive’s employment shall have no effect on his right to collect severance underthis Section 3.
3

 
     4. Release.     (a) Execution of Release. As a condition of Executive’s right to receive the paymentsdescribed in Sections 2(a) and 3(c), Executive shall within 21 days following Executive’stermination of employment (or within 45 days if Executive is terminated as part of a group layoff)execute and deliver to the Company a full and complete release of all claims, known and unknown,that Executive may have against the Company and its related past and present entities, officers,directors, shareholders, agents, representatives, successors and employees, such release to besubstantially in the form of the release attached hereto as Exhibit A (the “**ReleaseAgreement**”); provided, however, that any conflict between the terms of this Agreement and such formof release attached as Exhibit A shall be resolved in favor of this Agreement.     (b) Effect of Failure. In the event Executive fails to deliver or revokes the releasereferred to in Section 4(a) above, Executive shall not be entitled to any of the payments describedin Section 2(a) or 3(c) above. In the event that, prior to the end of the Severance Period,Executive breaches any of his obligations under this Agreement, including this Section 4, theCompany’s obligations to provide the payments under Sections 2(a) and 3(c) shall thereupon ceaseand the Company shall be entitled to recover from Executive any and all amounts theretofore paid toExecutive pursuant to Section 2(a) or 3(c).     5. Death and Disability. In the event the Executive’s employment at the Company endsas a result of Executive’s death, this Agreement shall automatically terminate and Executive’sestate shall be entitled to receive (i) the amounts described in Section 1(e), and (ii) any annualbonus payable for services rendered in any annual bonus period for the year which had beencompleted in its entirety prior to the date on which the Employment Period ends and that had notpreviously been paid. The bonus amount under clause (ii) will be payable to Executive’s estatewhen and if such annual bonuses would otherwise have been payable. In the event of Executive’sDisability, the Company shall have the right to terminate this Agreement and Executive’s employmentimmediately. Additionally, Executive shall be entitled to his annual bonus as described underclause (ii) above, except that the payments shall be to Executive and not his estate.     6. Miscellaneous.     (a) Survival. To the extent necessary to give effect to such provisions, theprovisions of this Agreement shall survive the termination hereof, whether such termination shallbe by expiration of the Employment Period or otherwise.     (b) Binding Effect. This Agreement shall be binding on, and shall inure to thebenefit of, the Company and any person or entity that succeeds to the interest of the Company(regardless of whether such succession occurs by operation of law) by reason of the sale of all ora portion of the Company’s equity securities, a merger, consolidation or reorganization involvingthe Company or, unless the Company otherwise elects in writing, a sale of all or a portion of theassets of the business of the Company. This Agreement shall also inure to the benefit ofExecutive’s heirs, executors, administrators and legal representatives.
4

 
     (c) Assignment. Executive may not assign this Agreement. The Company may assign itsrights, together with its obligations, under this Agreement (i) to any affiliate or subsidiary or(ii) to third parties in connection with any sale, transfer or other disposition of all orsubstantially all of its business or assets.     (d) Entire Agreement. This Agreement constitutes the entire agreement between theparties hereto with respect to the matters referred to herein and supersedes any and all prioragreements, whether written or oral. There are no promises, representations, inducements orstatements between the parties other than those that are expressly contained herein. Executiveacknowledges that he is entering into this Agreement of his own free will and accord, and with noduress, that he has read this Agreement and that he understands it and its legal consequences.     (e) Severability; Reformation. In the event that one or more of the provisions ofthis Agreement is or shall become invalid, illegal or unenforceable in any respect, the validity,legality and enforceability of the remaining provisions contained herein shall not be affectedthereby. In the event any covenant contained herein is not enforceable in accordance with itsterms, including, but not limited to, if found to be excessively broad as to duration, scope,activity or subject, Executive and the Company agree that such covenant shall be reformed to makeit enforceable in a manner that provides as nearly as possible the result intended by thisAgreement so as to be enforceable to the maximum extent compatible with applicable law.     (f) Waiver. Waiver by any party hereto of any breach or default by the other party ofany of the terms of this Agreement shall not operate as a waiver of any other breach or default,whether similar to or different from the breach or default waived. No waiver of any provision ofthis Agreement shall be implied from any course of dealing between the parties hereto or from anyfailure by either party hereto to assert its or his rights hereunder on any occasion or series ofoccasions.     (g) Notices. Any notice required or desired to be delivered under this Agreementshall be in writing and shall be delivered personally, by courier service, by registered mail,return receipt requested, or by email and shall be effective upon actual receipt by the party towhich such notice shall be directed, and shall be addressed as follows (or to such other address asthe party entitled to notice shall hereafter designate in accordance with the terms hereof):If to the Company:Questcor Pharmaceuticals, Inc.