July 31, 2008
Exhibit 10.1
July 31, 2008
VIA HAND DELIVERY
Xx. Xxxxxx X. Xxxxxx
Questcor Pharmaceuticals, Inc.
0000 Xxxxxxx Xxxx
Xxxxx Xxxx, XX 00000
Questcor Pharmaceuticals, Inc.
0000 Xxxxxxx Xxxx
Xxxxx Xxxx, XX 00000
Re: Transition to Part-Time Employee
Dear Xx. Xxxxxx:
This letter agreement (“Agreement”) sets forth the terms of your change in status from your
current role as a full-time employee of Questcor Pharmaceuticals, Inc. (the “Company”) to a new
role as a part-time employee of the Company for a six month transition period:
1. Transition Date. Your last day as the Company’s Senior Vice President and Chief Financial
Officer, the Company’s Principal Accounting Officer and its Assistant Secretary, will be the
earlier to occur of the following two dates: (i) the date upon which a new Chief Financial Officer
begins his or her employment with the Company; or (ii) December 31, 2008 (the “Transition Date”).
The Company will immediately initiate a search for a new Chief Financial Officer and may publicly
announce this search. Until the Transition Date, you shall continue to use your best efforts to
perform your currently assigned duties and responsibilities. During your continued employment in
your current capacity through the Transition Date, you will receive your regular base salary
payments and continued benefits coverage in which you are currently enrolled. Of course, you must
continue to comply with all of the Company’s policies and procedures during your continued
employment.
2. Post-Transition Date. On the Transition Date, you will continue to be an employee of the
Company under the terms set forth in this Agreement, but you will no longer be an officer of the
Company. Within five (5) business days of the Transition Date, you will use your best efforts to
execute and deliver to the Company a “sub-certification” to support the certifications
contemplated by Section 302 of the Xxxxxxxx-Xxxxx Act of 2002. You agree to work a normal
part-time work week and your compensation will be a gross amount of $17,333.33 per month
($8,666.67 gross semi-monthly) less all applicable payroll deductions and withholdings. The
Company will also reimburse you, in accordance with its standard practices, for any expenses
incurred in the performance of your post-Transition Date duties and responsibilities. The term of
your post-Transition Date employment will be for a period (the “Transition Period”) commencing on
the Transition Date and ending on the “Transition Ending Date” which shall be the date that is (a)
six months after the Transition Date, (b) a later date determined by mutual agreement evidenced by
an amendment to this Agreement or (c) if you become employed by any employer as described in
Paragraph 8 before the six month anniversary of the Transition Date, the day before your
employment with that other employer starts. A description of your duties and responsibilities
during the Transition Period is set forth on Schedule 1. All duties and responsibilities
assigned during the Transition Period may be conducted from your home office in San Diego,
California.
SCHEDULE 1
3. Continued Vesting. As a result of your continuous service as an employee, all your stock
options to purchase the Company’s Common Stock shall continue to vest until the Transition Ending
Date. After the Transition Ending Date, in accordance with the your stock option agreements (the
“Option Agreements”) and the stock option plans under which your options were granted (the “Option
Plans”), you will have ninety (90) days to exercise your vested stock options, subject to certain
exceptions as set forth in the Option Agreements and Option Plans. Upon the Transition Ending
Date, all of your unvested stock options will terminate immediately.
4. Other Benefits. Until the Transition Ending Date, you will continue to be eligible to
participate in the Company’s various benefit plans to which you are currently enrolled including
medical, dental and vision insurance, as well as life, accidental death and disability insurance.
You will receive 7 days of paid vacation during the Transition Period, in lieu of continuing to
accrue vacation at your current rate, and will receive regular paid holidays. Until the
Transition Ending Date, you will also continue to be eligible to participate in the Company’s
401(k) Plan, Section 529 College Savings Program and Employee Stock Purchase Plan.
5. Accrued Salary and Vacation. On the Transition Ending Date, the Company will pay you for
all accrued salary and all accrued and unused vacation earned through the Transition Ending Date,
subject to standard payroll deductions and withholdings. The Company will also pay you for any
approved expenses incurred but not yet paid as of the Transition Ending Date. You are entitled to
these payments by law.
6. Transition Ending Date Benefits. If you: (a) timely sign and date this Agreement, (b)
allow it to become effective and fully perform under its terms, (c) sign and date the Transition
Ending Date Release attached hereto as Exhibit A on or within 21 days after the Transition
Ending Date, and (d) allow the Transition Ending Date Release to become effective and do not
revoke it; then after your Transition Ending Date, the Company will pay you (i) $26,000, and (ii)
$20,000 for each full month remaining from the Transition Ending Date until the 6 month
anniversary of the Transition Date (collectively, the “Transition Ending Date Benefits”).
7. Proprietary Information and Inventions. You agree that the Proprietary Information and
Inventions Agreement between you and the Company (the “Proprietary Information Agreement” shall
remain in full force and effect following the date of this Agreement and the Transition Ending
Date in accordance with its terms.
8. Other Work Activities. You have no duty to mitigate any compensation you receive from
this Agreement. Throughout the Transition Period, you may engage in employment, consulting, or
other work relationships in addition to your work for the Company, provided that such other
employment, consulting, or work relationships do not interfere with your continuing obligations to
the Company or otherwise create a conflict of interest with the Company. The Company will make
reasonable arrangements to enable you to perform your work for the Company at such times and in
such a manner so that it will not interfere with other activities in which you may engage.
Notwithstanding the foregoing, in the event you are employed by a third party for more than an
average of 20 hours per week, you agree to notify the Company. If this re-employment occurs, then
your Transition Ending Date shall be the day before that employment starts. In order to protect
the trade secrets and confidential and proprietary information of the Company, you agree that,
during the Transition Period, you will notify the Company, in writing, before you obtain
competitive employment, perform competitive work for any business entity, or engage in any other
work activity that is or may be competitive with the Company, and you will
obtain the Company’s written consent before engaging in any such competitive activity. If
you engage in such competitive activity without the Company’s prior written consent, or otherwise
breach this Agreement or the Proprietary Information Agreement, then, in addition to any other
remedies, the Company’s obligation to pay your salary will cease, and the Company will have the
right to set your Transition Ending Date as of the date you first engaged in competitive activity
and void your right to the Transition Ending Date Benefits described in Paragraph 6.
9. Other Compensation or Benefits.
(a) General Compensation or Benefits. You acknowledge that, except as expressly
provided in this Agreement or unless your Transition Ending Date is extended beyond the date that
the Board of Directors authorizes payments of incentive compensation to other Questcor executives,
you are not entitled to receive and will not receive from the Company any additional compensation
or benefits, including but not limited to salary, bonuses, severance, or employee benefits either
during your continued employment or after the Transition Ending Date. By way of example, but not
limitation, you acknowledge and agree that you are not eligible for any bonus compensation for
2008, and upon the termination of your employment on the Transition Ending Date, you will not be
entitled to receive any severance pay notwithstanding the terms of that certain Severance Agreement
between you and the Company dated September 28, 2005, which agreement is hereby terminated and of
no further force or effect, and you hereby waive any right to any compensation or benefits under
that Agreement.
(b) Change in Control Compensation or Benefits.
(i) Change in Control Benefits Prior to the Reassignment Date. From the date of this
Agreement up until and including your Transition Date, you shall be entitled to receive any Change
in Control benefits to which you become entitled during such period pursuant to the terms of your
Change in Control Agreement dated September 28, 2005 and amended February 13, 2007 (“Change in
Control Agreement”); provided, however, that if any such compensation or benefits are provided to
you, they shall be in lieu of the other benefits provided under this Agreement, including without
limitation any of the compensation or benefits set forth in Xxxxxxxx 0, 0, 0, 0 xxx 0 xxxxxx.
(xx) Change in Control Benefits After the Reassignment Date. After the Transition Date, you
shall not be entitled to receive any Change in Control severance benefits, regardless of whether
the Company is subject to a Change in Control after the Transition Date (including any Change in
Control that occurs during the Transition Period) under your Change in Control Agreement. The
acceleration of the vesting of your stock options upon a Change in Control shall be governed by the
Option Plans and your Option Agreements. You expressly agree that your Change in Control Agreement
shall have no further force or effect after the Transition Date, and you hereby waive any right to
any compensation or benefits under that Agreement after the Transition Date. For purposes of
clarification, if there is a Change of Control after the Transition Period, all other terms of this
Agreement will remain in full effect.
10. Return of Company Property. You agree to return to the Company, on the Transition Ending
Date or earlier if requested by the Company, all Company documents (and all copies thereof) and
other property of the Company in your possession or control. You agree that you will make a
diligent and timely search to locate any such documents, property and information. In addition,
if you have used any personally owned computer, server, or e-mail system to receive,
store, review, prepare or transmit any Company confidential or proprietary data, materials or
information, then you agree to provide the Company, no later than the Transition Ending Date, with
a computer-useable copy of all such information and then permanently delete and expunge such
Company confidential or proprietary information from those systems without retaining any
reproductions (in whole or in part); and you agree to provide the Company access to your system as
requested to verify that the necessary copying and/or deletion is done. Your timely compliance
with this Section 10 is a precondition to your eligibility for the Transition Ending Date
Benefits.
11. Nonsolicitation. In order to protect the trade secrets and confidential and proprietary
information of the Company, you agree that during your continued employment, and for one year
following the Transition Ending Date, you will not, either directly or through others, solicit or
attempt to solicit any employee, consultant, or independent contractor of the Company to terminate
his or her relationship with the Company in order to become an employee, consultant or independent
contractor to or for any other person or entity.
12. Nondisparagement. You agree not to disparage the Company or the Company’s officers,
directors, employees, shareholders, parents, subsidiaries, affiliates, and agents, in any manner
likely to be harmful to them or their business, business reputation or personal reputation and the
Company agrees not to disparage you in any manner likely to be harmful to your business, business
reputation or personal reputation; provided that the parties may respond accurately and fully to
any question, inquiry or request for information when required by legal process.
13. Release.
(a) General Release. In exchange for the consideration provided to you by this
Agreement that you are not otherwise entitled to receive, you hereby generally and completely
release, acquit and forever discharge the Company and affiliated entities, along with its and their
predecessors and successors and their respective directors, officers, employees, shareholders,
partners, agents, attorneys, insurers, affiliates and assigns (collectively, the “Released
Parties”), of and from any and all claims, liabilities and obligations, both known and unknown,
that arise from or are in any way related to events, acts, conduct, or omissions occurring at any
time prior to and including the date that you sign this Agreement (collectively, the “Released
Claims”).
(b) Scope of Release. The Released Claims include, but are not limited to: (a) all
claims arising out of or in any way related to your employment with the Company, or the termination
of that employment; (b) all claims related to your compensation or benefits from the Company,
including salary, bonuses, commissions, other incentive compensation, vacation pay and the
redemption thereof, expense reimbursements, severance payments, fringe benefits, stock, stock
options, or any other ownership or equity interests in the Company; (c) all claims for breach of
contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing;
(d) all tort claims, including but not limited to claims for fraud, defamation, emotional distress,
and discharge in violation of public policy; and (e) all federal, state, and local statutory
claims, including but not limited to claims for discrimination, harassment, retaliation, attorneys’
fees, or other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal
Americans with Disabilities Act of 1990 (as amended), the federal Age Discrimination in Employment
Act of 1967 (as amended) (the “ADEA”), and the California Fair Employment and Housing Act (as
amended).
(c) Exceptions. Notwithstanding the foregoing, the following are not included in the
Released Claims (the “Excluded Claims”): (a) any rights or claims for indemnification you may
have pursuant to any written indemnification agreement with the Company to which you are a
party, the charter, bylaws, or operating agreements of the Company, or under applicable law;
(b) any rights which are not waivable as a matter of law; or (c) any claims arising from the breach
of this Agreement. In addition, nothing in this Agreement prevents you from filing, cooperating
with, or participating in any investigation or proceeding before the Equal Employment Opportunity
Commission, the Department of Labor, the California Department of Fair Employment and Housing, or
any other government agency, except that you hereby waive your right to any monetary benefits in
connection with any such claim, charge, investigation or proceeding. You hereby represent and
warrant that, other than the Excluded Claims, you are not aware of any claims you have or might
have against any of the Released Parties that are not included in the Released Claims.
14. ADEA Waiver. You hereby acknowledge that you are knowingly and voluntarily waiving and
releasing any rights you may have under the ADEA, and that the consideration given for the waiver
and release you have given in this Agreement is in addition to anything of value to which you were
already entitled. You further acknowledge that: (a) your waiver and release do not apply to any
rights or claims that may arise after the date you sign this Agreement; (b) you should consult
with an attorney prior to signing this Agreement (although you may voluntarily decide not to do
so); (c) you have twenty-one (21) days to consider this Agreement (although you may choose
voluntarily to sign this Agreement sooner); (d) you have seven (7) days following the date you
sign this Agreement to revoke this Agreement (in a written revocation sent to and received by the
Company’s Chief Executive Officer); and (e) this Agreement will not be effective until the date
upon which the revocation period has expired, which will be the eighth day after you sign this
Agreement, provided that you do not revoke it (the “Effective Date”).
15. Section 1542 Waiver. In giving the release herein, which includes claims which may be
unknown to you at present, you acknowledge that you have read and understand Section 1542 of the
California Civil Code, which reads as follows:
A general release does not extend to claims which the creditor does
not know or suspect to exist in his or her favor at the time of
executing the release, which if known by him or her must have
materially affected his or her settlement with the debtor.
For the purpose of implementing a full and complete release and discharge of the Released Parties,
you hereby expressly waive and relinquish all rights and benefits under that section and any law or
legal principle of similar effect in any jurisdiction with respect to your release of claims in
this Agreement, including your release of unknown and unsuspected claims.
16. Entire Agreement. Nothing in this Agreement shall affect the terms of the
Indemnification Agreement you entered into with the Company on September 27, 2005, which shall
continue in full force and effect. Both your initial offer letter and your Severance Agreement
dated September 28, 2005 are completely superseded by this Agreement and are no longer of any
force and effect. Except as expressly stated above, this Agreement, including all exhibits,
constitutes the complete, final and exclusive embodiment of the entire agreement between you and
the Company with regard to the subject matter hereof. This Agreement supersedes any and all other
agreements, whether oral, implied or written, between you and the Company on its subject matter.
It is entered into without reliance on any promise or representation, written or oral, other than
those expressly contained herein. It may not be modified except in a written agreement approved
by the Board and signed by you and a duly authorized officer of the Company. Each
party has carefully read this Agreement, has been afforded the opportunity to be advised of
its meaning and consequences by his or its respective attorneys, and signed the same of his or its
own free will. Any ambiguity in this Agreement shall not be construed against either party as the
drafter.
17. Successors and Assigns. This Agreement will bind the heirs, personal representatives,
successors, assigns, executors and administrators of each party, and will inure to the benefit of
each party, its heirs, successors and assigns.
18. Applicable Law. This Agreement will be deemed to have been entered into and will be
construed and enforced in accordance with the laws of the State of California without regard to
conflict of laws principles. The parties agree that venue for any legal action relating to this
Agreement will be Alameda County, California.
19. Severability; Waiver of Breach. If any provision of this Agreement is determined to be
invalid or unenforceable, in whole or in part, this determination will not affect any other
provision of this Agreement and the provision in question shall be deemed modified so as to be
rendered enforceable in a manner consistent with the intent of the parties, insofar as possible
under applicable law. Any waiver of a breach of this Agreement, or rights hereunder, shall be in
writing and shall not be deemed to be a waiver of any successive breach or rights hereunder.
20. Counterparts. This Agreement may be executed in two counterparts, each of which will be
deemed an original, all of which together constitutes one and the same instrument. Facsimile
signatures are as effective as original signatures.
If this Agreement is acceptable to you, please sign below within twenty-one (21) days of your
receipt of this Agreement, and return the fully signed original to me. If you do not sign this
Agreement within the aforementioned timeframe and promptly return it to me, or if you sign this
Agreement but then timely revoke this Agreement under Paragraph 14 above, then this Agreement will
be of no force or effect.
We wish you the best and look forward to continuing to work with you prior to and during the
Reassignment Period.
| Sincerely, QUESTCOR PHARMACEUTICALS, INC. |
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| By: | /s/ Xxx Xxxxxx | |||
| Xxx Xxxxxx | ||||
| President & Chief Executive Officer | ||||
UNDERSTOOD AND AGREED: |
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/s/ Xxxxxx X. Xxxxxx
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Date: July 31, 2008 |
