SEVERANCE AGREEMENT
EXHIBIT
10.44
This Severance Agreement (the “Agreement”) is made and entered into by and between Questcor
Pharmaceuticals, Inc. (the “Company”) and Xxxxx Xxxxxxxx (“Xxxxxxxx”) (collectively referred to as
the “Parties”). The Agreement is effective as of July 10, 2003.
WHEREAS, the Company has employed Xxxxxxxx as Vice President, Manufacturing and has determined
that Xxxxxxxx holds a key position;
WHEREAS, the Company desires to (1) secure and retain the services of Xxxxxxxx and to provide
inducement for him to remain in such employment, (2) to make possible full work productivity by
assuring Xxxxxxxx’ morale and peace of mind with respect to future security, and (3) to provide a
just means for terminating Xxxxxxxx’ services at such time as the Company may desire to terminate
his employ;
NOW THEREFORE, in consideration of the promises and mutual covenants set forth herein, the
Parties agree as follows:
X. XXXXXXXXX OBLIGATION
Xxxxxxxx will be entitled to severance payments and certain benefits as set forth in § I.A.
below, if his employment is terminated by the Company or any successor entity (collectively
referred to as the “Company”) without “Cause” (as defined in § II.B, below) or if he dies or
becomes disabled (as set forth in § II.A below).
A. Payment and Benefits. In the event that the Company becomes obligated to Xxxxxxxx
in accordance with § I, above, and subject to his performance of his obligations hereunder, the
Company will pay him wages and benefits through his final day of employment in accordance with its
usual payroll practices. Additionally, the Company will be obligated to Xxxxxxxx as follows.
1. Severance Payments. Xxxxxxxx will be entitled to severance payments, at his
last effective rate of pay, made on the Company’s regular payroll dates (the “Severance
Payments”), consistent with the Company’s then current payroll practice, for a period of
four months (the “Severance Period”). The first Severance Payment will be made to Xxxxxxxx
on the first regular payroll date following Xxxxxxxx’ termination of employment.
2. Continuation of Benefits. Xxxxxxxx will be entitled to continuation of
medical, dental and vision insurance, if he timely elects continuing coverage under COBRA.
Xxxxxxxx will not accrue additional benefits, such as vacation, holiday pay or stock option
vesting during the Severance Period.
B. Limit on Payments By Company.
1. Parachute Payment Limitation. Notwithstanding anything to the
contrary in this Agreement, the payments and benefits otherwise provided in
paragraphs I.A.1 & I.A.2 of this Agreement shall be reduced if and to the extent
that such payments and benefits, when added to any payments and benefits provided by
the Company other than under this Agreement, would result in any
such payments being nondeductible to the Company or would subject Xxxxxxxx to an
excise tax pursuant to the golden parachute payment provisions of Section 280G or
Section 4999 of the Internal Revenue Code of 1986, as amended. Any reduction of
payments and benefits under this Agreement resulting from the foregoing limitations
shall be applied to the payments and benefits due to be otherwise provided to
Xxxxxxxx later in time.
II. TERMINATION OF EMPLOYMENT.
A. Death or Disability.
1. Any rights under § I of this Agreement, which have already accrued to
Xxxxxxxx prior to his death or disability, will survive his death or disability.
2. If Xxxxxxxx dies while employed by the Company, the employment relationship
will terminate as of the date of death.
3. If Xxxxxxxx becomes disabled for purposes of any long-term disability plan
of the Company for which Xxxxxxxx is eligible, or, in the event that there is no
such plan, if Xxxxxxxx, by virtue of ill health or other disability, exhausts any
leave available to him under Family Medical Leave Act or under state law, if
applicable, and is unable to perform substantially and continuously the duties
assigned to him, then the Company shall have the right, to the extent permitted by
law, to terminate Xxxxxxxx’ employment.
4. Upon termination of Xxxxxxxx’ employment due to death or disability,
Xxxxxxxx (or Xxxxxxxx’ estate or beneficiaries in the case of his death) will be
entitled to receive any salary earned and other benefits earned and accrued by
Xxxxxxxx prior to the date of termination and shall have no further rights to any
other compensation, benefits, or other rights under this Agreement, unless such
right survives the termination of this Agreement by its express terms and except as
otherwise provided in the plans and policies of the Company.
B. Cause. For purposes of this Agreement, Cause means:
1. Xxxxxxxx’ conviction for commission of a felony or a crime involving moral
turpitude;
2. Xxxxxxxx’ commission of any act of theft, embezzlement, misappropriation,
willful misconduct, willful or gross neglect, or fraud against the Company;
3. Xxxxxxxx’ willful and continued failure to substantially perform his job
duties (other than such failure resulting from Xxxxxxxx’ incapacity due to physical
or mental illness), which failure is not remedied within ten (10) days after written
demand for substantial performance is delivered by the Company which specifically
identifies the manner in which the Company believes that Xxxxxxxx has not
substantially performed Xxxxxxxx’ duties; or
4. Xxxxxxxx’ repeated failure to adhere to the directions of the CEO or CFO, to
adhere to the Company’s policies and practices or to devote substantially all of his
business time and efforts to the Company.
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In the event Xxxxxxxx is terminated for Cause pursuant to this section, he shall have the
right to receive his compensation through the effective date of termination. Xxxxxxxx shall have
no further right to receive compensation or other consideration from the Company, or have any other
remedy whatsoever against the Company, as a result of this Agreement or the termination of Xxxxxxxx
pursuant to this section.
C. At Will Employment. The Parties expressly acknowledge that nothing in this
Agreement alters the fundamental nature of Xxxxxxxx’ at-will employment with the Company.
Xxxxxxxx’ employment may be terminated at any time by the Company or by Xxxxxxxx, and any terms or
conditions of Xxxxxxxx’ employment may be modified, with or without Cause, and with or without
notice.
III. CHANGE OF CONTROL
Should a “Change of Control” (as defined by §III.A. below) result in Xxxxxxxx’ termination,
and should a severance plan with terms more favorable than those set forth in this Agreement be
offered as a consequence of that Change of Control, the more favorable severance plan will
supercede this Agreement.
A. Change of Control: For the purposes of this Agreement a “Change of Control” shall
be deemed to have occurred if:
1. any individual, firm, corporation, or other entity, or any group (as defined in §
13(d)(3) of the Securities Exchange Act of 1934, as amended (the “1934 Act”)), other than
the Company becomes directly or indirectly, the beneficial owner (as defined in the General
Rules and Regulations of the Securities and Exchange Commission with respect to §§13(d)(1)
and 13(g) of the 0000 Xxx) of more than fifty percent (50%) of the then outstanding shares
of the Company’s capital stock entitled to vote generally in the election of the board of
directors of the Company; or
2. the stockholders of the Company approve a definitive agreement for any of the
following:
a. the merger or other business combination of the Company with or into another
corporation, pursuant to which the stockholders of the Company, collectively or any
of them, do not own, immediately after the transaction, more than 50% of the voting
power of the corporation that survives; or
b. the sale, exchange, or other disposition of all or substantially all of the
assets of the Company.
IV. ARBITRATION OF CONTROVERSIES.
A. Agreement to Arbitrate. In exchange for the promises contained in this Agreement,
the Parties agree to submit any and all disputes, claims or controversies arising out of, or
relating to, this Agreement, to final and binding arbitration before the American Arbitration
Association in accordance with its rules relating to the resolution of employment disputes, in
effect at the time of the demand for arbitration. THE COMPANY AND XXXXXXXX UNDERSTAND AND
AGREE THAT THIS IS AN AGREEMENT TO ARBITRATE SUCH DISPUTES, CLAIMS OR CONTROVERSIES IN LIEU OF A
JURY TRIAL OR OTHER COURT TRIAL, AND HEREBY WAIVE THE RIGHT TO A JURY TRIAL. Accordingly, the
Parties agree as follows:
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1. This agreement to arbitrate may be enforced by any court of competent jurisdiction,
and the party seeking enforcement shall be entitled to an award of all costs, fees and
expenses, including attorney’s fees, to be paid by the party against whom enforcement is
ordered.
2. The arbitration shall be held at the office of the American Arbitration Association
in Alameda County, California before a panel of three arbitrators.
3. The award or decision of the arbitrator shall be final and binding on the Parties
and judgment on the arbitrator’s decision may be entered in any court having jurisdiction.
Each of the Parties consents to the exercise of personal jurisdiction over such person by
such court and to the propriety of venue of such court for the purpose of carrying out this
provision; and each waives any objections that such person would otherwise have to the same.
4. Any costs payable to the American Arbitration Association in connection with the
arbitration, including the costs and fees of the arbitrator, shall be advanced by the
Company, but the arbitrator shall make such orders with respect to attorneys’ fees and other
costs and expenses related to the arbitration as the arbitrator deems just; provided that
the arbitrator shall award to any Party such attorneys’ fees and/or other costs as may be
required by statute.
5. This agreement to arbitrate may only be modified by a writing signed by the
Company’s CEO and Xxxxxxxx.
6. To the extent any provision of this agreement to arbitrate would, under applicable
law, be unenforceable or cause this agreement to arbitrate to be unenforceable in its
entirety, it is the intent of the Parties that the agreement to arbitrate be enforced to the
extent allowed by law and reformed and interpreted to consistent with the applicable law.
B. Intended Beneficiaries. Employees, officers, directors and anyone else acting as
an agent of the Company are intended beneficiaries of this agreement to arbitrate and the Parties
agree that any claim against an intended beneficiary of this agreement to arbitrate, which arises
out of or relates to this Agreement will be subject to this agreement to arbitrate.
V. ENTIRE AGREEMENT; NO ORAL MODIFICATION.
This Agreement constitutes the entire agreement and understanding between the Parties with
respect to the subject matter hereof and except as expressly set forth herein, supersedes any and
all other agreements, communications, understandings, promises, stipulations, and arrangements,
whether any of the same are either oral or in writing, or express or implied, between the Parties
hereto with respect to the subject matter hereof, including, but not limited to, any implied-in-law
or implied-in-fact covenants or duties relating to employment or the termination of employment.
This Agreement may not be modified other than in a writing executed by both Parties and
stating its intent to modify or supersede this Agreement.
VI. SUCCESSORS; BINDING AGREEMENT
The Company will require any successor or assign (whether direct or indirect, by purchase,
merger, consolidation, or otherwise) to all or substantially all of the business and/or assets of
the Company to expressly assume and agree to perform this Agreement in the same manner and to the
same extent that Company would be required to perform it is no such
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succession or assignment had taken place. As used in this Agreement, “Company” shall mean the
Company hereinbefore defined and any successor or assign to its business or assets as aforesaid
which assumes and agrees to perform this Agreement by operation of law, or otherwise.
VII. HEADINGS.
The headings in this Agreement are for convenience only, and shall not be given any affect in
the interpretation of this Agreement.
VIII. CHOICE OF LAW.
The Parties agree that this Agreement shall be construed and enforced in accordance with the
internal laws of the State of California, without regard to its choice of laws principles.
IX. NOTICES.
Any notice to be given to the Company under the terms of this Agreement shall be addressed to
the Company at the address of its principal place of business, and any notice to be given to
Xxxxxxxx shall be addressed to Xxxxxxxx’ home address last shown on the records of the Company, or
at such other address as either Party may hereafter designate in writing to the other. Any such
notice shall be in writing and shall be deemed to have been duly given upon personal delivery or on
the third calendar day after it has been enclosed in a properly sealed and addressed envelope,
certified, and deposited (postage and certification fee prepaid) in a post office or branch post
office regularly maintained by the United States Government.
X. SEVERABILITY.
Should any portion of this Agreement, other than Section I or II be determined by any
arbitrator or court of competent jurisdiction to be invalid, the remainder of the agreement will
remain in full force and given an effect a near as possible to the original intent of the Parties.
XI. WAIVER.
Either Party’s failure to enforce any provision or provisions of this Agreement shall not in
any way be construed as a waiver of any such provision or provisions, or prevent that Party
thereafter from enforcing each and every other provision of this Agreement.
XII. COUNTERPARTS.
This Agreement may be executed in several counterparts, each of which shall be deemed to be an
original, but all of which together will constitute one and the same instrument.
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IN WITNESS WHEREOF, the Parties hereto acknowledge that they have read this Agreement, fully
understand it, and have freely and voluntarily entered into it.
| Questcor Pharmaceuticals, Inc. |
||||
| By: | /s/ Xxxxxxx X. Xxxxxx | |||
| Dated: | July 10, 2003 | |||
| By: | /s/ Xxxxx Xxxxxxxx | |||
| Xxxxx Xxxxxxxx | ||||
| Dated: | July 9, 2003 | |||
I have been advised to seek the advice of an attorney before signing this Agreement, and have
either done so, or decline to do so.
| By: | /s/ Xxxxx Xxxxxxxx | |||
| Xxxxx Xxxxxxxx | ||||
| Dated: | July 9, 2003 | |||
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