Document:

exv10w41

 

EXHIBIT 10.41

[QUESTCOR LETTERHEAD]

March 7, 2005

VIA EMAIL

Steve Cartt

3260 Whipple Road

Union City, CA 94587

Re:      Offer of Employment

Dear Mr. Cartt:

Questcor Pharmaceuticals, Inc. (the “Company”) is pleased to offer you the position of Executive
Vice President, Commercial Development, a corporate officer, on the terms described below. Should
you accept our offer of employment, your start date will be March 8, 2005.

You will report to James Fares, Chief Executive Officer. Your office will be located at our
facility in Union City, California. Of course, the Company may change your reporting
responsibilities, position, duties, and work location from time to time, as it deems necessary.

Your base compensation will be $245,000 per annum ($10,208.33 semi-monthly) less all amounts the
Company is required to hold under applicable laws. You will be a participant in the annual
employee incentive program, which for 2005 has not yet been approved by the Compensation Committee.
Your incentive bonus of up to $50,000, will be based on the attainment of specific milestones
during each calendar year. The milestones will be communicated to you in writing by Mr. Fares
following the start of your employment and will be updated annually as part of the performance
review process. The Company will provide you with indemnification equivalent to that provided to
other senior management and pursuant to the Company’s Directors and Officers insurance policies as
in place from time to time. In addition, as soon as administratively practicable following the
start of your employment, the Company will provide you with a change of control agreement
commensurate with your position.

You will be eligible to participate in the Company’s various benefit plans including medical,
dental and vision insurance, as well as life, accidental death and disability insurance. You will
receive 16 days of paid vacation per calendar year, in addition to 12 paid regular holidays and two
paid floating holidays. You will also be eligible to participate in the Company’s 401(k) Plan,
Section 529 College Savings Program and Employee Stock Purchase Plan. The eligibility requirements
for these plans are explained

 

 

in the Company’s Employee Handbook, and in the case of the Company’s
401(k) Plan, in
the 401(k) Plan’s summary plan description. A copy of the Employee Handbook and the 401(k) Plan’s
summary plan description will be provided to you. Please read them carefully. Of course, to the
extent the provisions of the various plans are inconsistent with the provisions of the Employee
Handbook or summary plan description, the plan provisions will control.

As you no doubt appreciate, as a Company employee, you will be expected to abide by Company rules
and regulations, acknowledge in writing that you have read the Company’s Employee Handbook, sign
and comply with a Proprietary Information and Inventions Agreement which prohibits unauthorized use
or disclosure of Company proprietary information and sign the Policy Against Insider Trading.

The Company’s management has in effect an employee stock option plan to recognize the talent and
skills our employees bring to the Company. Management will recommend to the Board of Directors
that, at the time you join the Company, the Company grant to you an option under the stock option
plan to purchase 600,000 shares of the Common Stock of the Company at an exercise price equal to
100% of the closing price of the Company’s Common Stock on the date prior to hire. One-fourth
(1/4th) of these options will vest after twelve (12) months of employment and thereafter
the remaining shares will vest at the rate of 1/48th of the total grant on each monthly
anniversary of your continued employment with the Company. The option will be subject to the terms
and conditions of the Company’s stock option plan and your stock option agreement.

In a separate agreement to be provided to you under separate cover, the Company will agree that
upon a Change of Control of the Company, if your employment is terminated by the Company other than
for “cause” (as defined in such agreement) or if you resign your employment upon 30 days’ prior
written notice to the Company for “good reason” (as defined in such agreement) within six months of
the Change of Control, one-half of your unvested stock options will accelerate and become
immediately vested and exercisable.

In the event (i) your employment is terminated by the Company other than (x) for Cause (as defined
below) or (y) as a result of your disability, or (ii) you resign your employment upon 30 days’
prior written notice to the Company for Good Reason (as defined below), during your first three
years of employment, you will receive severance compensation totaling Six (6) months of base
salary. In the event (i) your employment is terminated by the Company other than (x) for Cause
(as defined below) or (y) as a result of your disability, or (ii) you resign your employment upon
30 days’ prior written notice to the Company for Good Reason (as defined below), after your first
three years of employment, you will receive severance compensation totaling Twelve (12) months of
base salary.

As a condition to receiving severance compensation, you will need to execute a general release 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: (i) 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; (ii) an act of dishonesty intended to result in your gain or personal enrichment; (iii)
personally engaging in illegal conduct which causes material harm to the reputation of the Company
or its affiliates; (iv) 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; (v) personally engaging in any act of moral turpitude that causes material harm to the
reputation of the Company; (vi) intentionally breaching in any material respect the terms of any
nondisclosure agreement with the Company; or (vii) 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 Executive Vice President, Commercial
Development 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 Executive Vice President, Commercial Development of the Company.

This Agreement shall be interpreted, construed and administered in a manner that satisfies the
requirements of Sections 409A of the Internal Revenue Code of 1986, as amended, and the Treasury
Regulations thereunder.

The Company will review your performance in accordance with the Employee Handbook, to assess your
accomplishment of milestones and goals, which the Company reasonably sets for you. The Company will
consider whether and when you should receive increases in your compensation and benefits as
described therein based on such accomplishments.

You may terminate your employment with the Company at any time and for any reason whatsoever simply
by notifying the Company. Likewise, the Company may terminate your employment at any time and for
any reason whatsoever, with or without cause or advance notice. This at-will employment
relationship cannot be changed except in writing signed by the Chief Executive Officer.

Any and all disputes connected with, relating to or arising from your employment with the Company
will be settled by final and binding arbitration in accordance with the rules of the American
Arbitration Association as presently in force. The only claims not covered by this Agreement are
claims for benefits under the unemployment insurance or workers’

 

 

compensation laws. Any such
arbitration will take place in Alameda County, California. The
parties hereby incorporate into this agreement all of the arbitration provisions of Section 1283.05
of the California Code of Civil Procedure. The Company understands and agrees that it will bear
the costs of the arbitration filing and hearing fees and the cost of the arbitrator. Each side
will bear its own attorneys’ fees, and the arbitrator will not have authority to award attorneys’
fees unless a statutory section at issue in the dispute authorizes the award of attorneys’ fees to
the prevailing party, in which case the arbitrator has authority to make such award as permitted by
the statute in question. The arbitration shall be instead of any civil litigation; this means that
you are waiving any right to a jury trial, and that the arbitrator’s decision shall be final and
binding to the fullest extent permitted by law and enforceable by any court having jurisdiction
thereof. Judgment upon any award rendered by the arbitrators may be entered in any court having
jurisdiction.

The employment terms in this letter supersede any other agreements or promises made to you by
anyone, whether oral or written, express or implied. In the event you accept this employment
offer, the terms set forth in this letter will comprise our final, complete and exclusive agreement
with respect to the subject matter of this letter. Thus, by accepting this employment offer and
signing this offer letter, you agree to be bound by its terms and conditions. As required by law,
the Company’s offer is subject to satisfactory proof of your right to work in the United States no
later than three days after your employment begins.

Please sign and date this letter, and return it to me as soon as possible. This offer terminates
if it is not signed and delivered to me by March 8, 2005. A facsimile copy will suffice for this
purpose, so long as an original signature is delivered when you commence employment. My
confidential facsimile number is (510) 400-0710.

We look forward to your favorable reply and to a productive and enjoyable work relationship.

	 	 	 
	Sincerely,
	 	 
	 
	 	 
	/s/ James L. Fares

	 	 
	 	 	 
	 
	 	 
	James L. Fares
	 	 
	Chief Executive Officer and President
	 	 

I hereby acknowledge that I have read the foregoing letter and agree to be bound by all of its
terms and conditions:

	 	 	 
	/s/ Steve Cartt

	 	 
	 	 	 
	Steve Cartt
	 	 
	 
	 	 
	March 7, 2005
	 	 
	 	 	 
	Dateexv10w42

 

EXHIBIT 10.42

[QUESTCOR LETTERHEAD]

March 8, 2005

Steve Cartt

3260 Whipple Road

Union City, CA 94587

RE: Change-in-Control

Dear Steve:

     This letter agreement (this “Agreement”) is entered into pursuant to that certain offer letter
(the “Offer Letter”) dated March 7, 2005, between you and Questcor Pharmaceuticals, Inc., a
California corporation (“Questcor”). Questcor considers it essential to the best interests of its
stockholders to foster the continuous employment of key management personnel. In connection with
this, Questcor’s Board of Directors (the “Board”) recognizes that, as is the case with many
publicly held corporations, the possibility of a change in control of Questcor may exist and that
the uncertainty and questions that it may raise among management could result in the departure or
distraction of management personnel to the detriment of Questcor and its stockholders.

     Accordingly, the Board has decided to reinforce and encourage your attention and dedication to
your assigned duties without the distraction arising from the possibility of a change in control of
Questcor. In order to induce you to become an employee of Questcor and remain in the employ of
Questcor and its direct and indirect, majority-owned subsidiaries (collectively, the “Company”),
Questcor hereby agrees that after this letter agreement (this “Agreement”) has been fully executed
and delivered by Questcor and you, you shall be entitled to receive the benefits set forth in this
Agreement in the event of certain Changes in Control (as defined in The Questcor Pharmaceuticals
Incorporated 1992 Stock Option Plan (the “Plan”). You shall receive no benefits under this
Agreement unless there has been a Change in Control.

     1. Accelerated Vesting. Notwithstanding anything to the contrary in Section 11 of the
Plan (other than Sections 11(a) and 11(h)), in the event that a Change in Control occurs, and your
employment with the Company is terminated as a result of an Involuntary Termination (as defined
below) at any time within the six (6) month period commencing on the date of such Change in
Control, fifty percent (50%) of the then-unvested shares of Questcor’s common stock subject to each
of your outstanding stock options will become immediately vested and exercisable on the date of
your Involuntary Termination. The Company shall cause each option agreement evidencing the grant
of stock options to you (each, an “Option Agreement”) under the Plan to reflect the accelerated
vesting provisions set forth in this Agreement.

 

 

     2. Definition of Involuntary Termination. For purposes of this Agreement,
“Involuntary Termination” means the termination of your employment with the Company either: (i) by
the Company without Cause, or (ii) by you upon 30 days’ prior written notice to the Company for
Good Reason.

     3. Definition of Cause. For purposes of this Agreement, “Cause” means the termination
of your employment for any one or more of the following: (i) your habitual or material neglect of
your assigned duties with the Company (other than by reason of disability), or intentional refusal
to perform your assigned duties with the Company (other than by reason of disability), which
continues uncured for thirty (30) days following receipt of written notice of such deficiency or
“Cause” event from the Board, specifying in detail the scope and nature of the deficiency or the
“Cause” event; (ii) your act of dishonesty intended to result in your gain or personal enrichment;
(iii) your personally engaging in illegal conduct which causes material harm to the reputation of
the Company or its Affiliates (as defined in the Plan); (iv) your commission of a felony or gross
misdemeanor directly relating to, your act of dishonesty or fraud against, or your misappropriation
of property belonging to, the Company or its Affiliates (as defined in the Plan); (v) your
personally engaging in any act of moral turpitude that causes material harm to the reputation of
the Company; (vi) your intentionally breach in any material respect of the terms of any
nondisclosure agreement with the Company; or (vii) your commencement of employment with another
company while an employee of the Company without the prior consent of the Board. Any determination
of “Cause” as used herein will be made only in good faith by the Board.

     4. Definition of Good Reason. For purposes of this Agreement, “Good Reason” means the
removal of your title of Executive Vice President, Commercial Development without your written
consent; provided, however, 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 Executive Vice President,
Commercial Development.

     5. Arbitration. Any controversy, claim or dispute involving the parties (or their
affiliated persons) directly or indirectly concerning this Agreement, or otherwise, shall be
finally settled by binding arbitration held in Union City, California, by one arbitrator in
accordance with the rules of employment arbitration then followed by the American Arbitration
Association or any successor to the functions thereof. The arbitrator shall apply California law
in the resolution of all controversies, claims and disputes. Any decision or award of the
arbitrator shall be final and conclusive on the parties to this Agreement and their respective
affiliates. The Company shall bear all costs of the arbitrator in any action brought under this
section. The parties hereto agree that any action to compel arbitration pursuant to this Agreement
may be brought in the appropriate California court and in connection with such action the laws of
the State of California shall control. Application may also be made to such court for confirmation
of any decision or award of the arbitrator, for an order of the enforcement and for any other
remedies, which may be necessary to effectuate such decision or award. The parties hereto hereby
consent to the jurisdiction of the arbitrator and of such court and waive any objection to the
jurisdiction of such arbitrator and court.

 

 

     6. Notices. For purposes of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have been duly given when
delivered or mailed by United States certified or registered mail, return receipt requested,
postage prepaid, addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to Questcor shall be directed to the attention of its
Secretary, or to such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective only upon receipt.

     7. At-Will Employment. Nothing contained in this Agreement shall (a) confer upon you
any right to continue in the employ of the Company, (b) constitute any contract or agreement of
employment, or (c) interfere in any way with the at-will nature of your employment with the
Company.

     8. Entire Agreement. This Agreement, the Offer Letter, the Plan and any Option
Agreements set forth the entire agreement of the parties hereto in respect of the accelerated
vesting of stock options held by you and supersede all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto, and any prior agreement of the parties
hereto in respect of the accelerated vesting of stock options held by you, is hereby terminated and
cancelled.

     9. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing and signed by you
and such officer as may be specifically designated by the Board. No waiver by either party hereto
at any time of any breach by the other party hereto of or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed a waiver of similar
or dissimilar provisions or conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied, with respect to the subject
matter hereof have been made by either party which are not expressly set forth in this Agreement.
The validity, interpretation, construction and performance of this Agreement shall be governed by
the laws of the State of California without regard to its conflicts of law principles. The section
headings contained in this Agreement are for convenience only, and shall not affect the
interpretation of this Agreement.

 

 

Please indicate your acceptance of this Agreement by returning a signed copy of this Agreement.

	 	 	 	 	 
	

	 	 	 	Sincerely,
	 
	 	 	 	 
	

	 	 
	 	/s/ James L. Fares
	 	 	 	 	 
	

	 	 	 	James L. Fares
	

	 	 	 	Chief Executive Officer
	

	 	 	 	Questcor Pharmaceuticals, Inc.
	 
	 	 	 	 
	

	 	 	 	Date: March 8, 2005
	 
	 	 	 	 
	Accepted by,
	 	 	 	 
	 
	 	 	 	 
	/s/ Steve Cartt
	 	 	 	 
	 	 	 	 	 
	Steve Cartt
	 	 	 	 
	 
	 	 	 	 
	Date: March 8, 2005

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00081-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00081-of-00352.parquet"}]]