QUESTCOR PHARMACEUTICALS INC
EXHIBIT 10.27
<DOCUMENT>
<TYPE>EX-10.27
<SEQUENCE>8
<FILENAME>f87893exv10w27.txt
<DESCRIPTION>EXHIBIT 10.27
<TEXT>
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                                                                   EXHIBIT 10.27

                   [Questcor Pharmaceuticals, Inc. letterhead]

                                 March 21, 2003

Questcor Pharmaceuticals, Inc.
3260 Whipple Road
Union City, CA 94587

Dear Tim:

            This letter amends the terms of the November 7, 2000 letter
agreement (the "Agreement") between Questcor Pharmaceuticals, Inc. ("Questcor")
and you, and is in consideration of your continued employment with Questcor.

            The third and fourth paragraphs of the Agreement are hereby amended
to read in their entirety as follows:

                        Also, in the event that a Change in Control occurs, and
      your employment with the Company is terminated as a result of Involuntary
      Termination (as defined below) other than for Cause (as defined below), at
      any time within the fifteen (15) month period commencing ninety (90) days
      prior to such Change in Control, and you are a full-time employee of the
      Company at any time within the thirty (30) days prior to the termination
      of your employment with the Company, then you will be entitled to receive
      from Questcor a severance benefit, payable in cash in a lump sum payment,
      an amount equal to the sum of: (i) twelve (12) months of base salary, and
      (ii) your prorated maximum bonus opportunity for the fiscal year of
      Questcor in which the termination of your employment occurs (the
      'Termination Fiscal Year'). Such payment will be paid not later than ten
      (10) days following such termination of employment. For purposes of
      determining your severance benefit, your monthly rate of base salary will
      equal your greatest monthly rate of base salary in effect during the
      thirty (30) days prior to the date of the termination of your employment
      (or, if greater, your monthly rate of base salary in effect immediately
      prior to the Change in Control), and your prorated maximum bonus
      opportunity for the Termination Fiscal Year will equal your maximum bonus
      opportunity under the Company's bonus and incentive compensation plans for
      the Termination Fiscal Year, multiplied by a fraction, the numerator of
      which is the number of days during the Termination Fiscal Year that have
      elapsed on the date of the termination of your employment, and the
      denominator of which is the number of days in the Termination Fiscal Year.
      For purposes of this letter amendment, you will be treated as a full-time
      employee of the Company if you are regularly scheduled to work for the
      Company for not less than forty (40) hours per week. Furthermore, in the
      event

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      you are entitled to receive a severance benefit under this paragraph as a
      result of your termination of employment: (i) if the Board of Directors of
      Questcor (the "Board") (or the Compensation Committee thereof) has
      determined the amount of your bonus for the fiscal year of Questcor
      immediately preceding the Termination Fiscal Year (the 'Prior Fiscal
      Year') prior to the Change in Control, and Questcor has not paid the bonus
      for the Prior Fiscal Year (if any) to you prior to such termination of
      employment, Questcor will pay your bonus (as so determined) for the Prior
      Fiscal Year to you, or (ii) if the Board (or the Compensation Committee
      thereof) has not determined the amount of your bonus for the Prior Fiscal
      Year prior to the Change in Control, Questcor will pay to you a bonus for
      the Prior Fiscal Year in an amount not less than your maximum bonus
      opportunity for the Prior Fiscal Year. For purposes of this paragraph, any
      reference to the fiscal year of the Company will include the fiscal year
      of any successor thereto. Such payment will be paid in cash in a lump sum
      payment not later than ten (10) days following such termination of
      employment.

                        In the event you are entitled to a severance benefit
      under this letter amendment, then in addition to such severance benefit,
      you will receive such health, term life and disability insurance benefits
      coverage ('Company-Provided Coverage') as is provided to you (and your
      dependents, if applicable) immediately prior to the termination of your
      employment with the Company, for twelve (12) months following the
      termination of your employment, or until you become covered under another
      employer's group insurance plan or plans providing health, term life and
      disability insurance coverage, whichever occurs first. In addition, for
      fifteen (15) months following the termination of the Company-Provided
      Coverage, the Company will provide you (and your dependents, if
      applicable) with such health, term life and disability insurance benefits
      coverage as is provided to you (and your dependents, if applicable)
      immediately prior to the termination of your employment with the Company,
      at your election and expense. The benefits coverage provided under this
      paragraph will be under such terms and conditions (including benefits,
      premiums, deductibles and co-payments) as are at least as favorable as
      those in effect immediately prior to the date of termination of your
      employment (or, if more favorable, those in effect immediately prior to
      the Change in Control); provided, however, that, following the termination
      of the Company-Provided Coverage, your premiums for such benefits coverage
      will be based on the full cost of such coverage.

            The following paragraph is hereby added to the Agreement after the
fourth paragraph thereof:

                        In the event that you are entitled to a severance
      benefit under this letter amendment, then in addition to such severance
      benefit, you will have the right to require an extension of the exercise
      period of each of your stock options under any plan of the Company (or any
      options into which any such options have been converted) for a period of
      two (2) years following the later of: (i) the termination of employment,
      or (ii) the expiration of a lock-up agreement (if any) imposed on the
      Company's optionees at the time of your termination of

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      employment; provided, however, that in no event will such extension of
      such option extend beyond the expiration of the original term of the
      option.

            The following paragraphs are hereby added to the Agreement
immediately preceding the last paragraph thereof:

                        If any legal action or other proceeding is brought for
      the enforcement of this letter amendment, or because of an alleged
      dispute, breach or default in connection with any of the provisions of
      this letter amendment, the successful or prevailing party will be entitled
      to recover attorneys' fees and other expenses and costs incurred in that
      action or proceeding, in addition to any other relief that may be granted.

                        Notwithstanding the immediately preceding paragraph, in
      the case of any legal action or other proceeding by you to enforce a
      benefit under this letter amendment, or an alleged dispute, breach or
      default in connection with a benefit under this letter amendment,
      regardless of whether you are successful or prevail: (i) the Company shall
      bear its attorneys' fees and other expenses and costs, and (ii) the
      Company shall reimburse you for your reasonable attorneys' fees and other
      reasonable expenses and costs, to the extent incurred in connection with
      such enforcement or attempted enforcement or alleged dispute, breach or
      default as part of the Initial Adjudication (as defined below), in
      addition to any other relief that may be granted. The Company shall not
      reimburse you for any attorneys' fees and other expenses and costs
      incurred in connection with such enforcement or attempted enforcement or
      alleged dispute, breach or default incurred by you following the Initial
      Adjudication. Such reimbursements of your attorneys' fees and other
      expenses and costs shall be made monthly not later than 30 days after the
      Company has received a copy of the written invoice evidencing such fees,
      expenses or costs. In the event that a court of competent jurisdiction
      determines that you have acted in connection with such enforcement or
      attempted enforcement, or alleged dispute, breach or default, in bad
      faith, or that your positions, claims or assertions were frivolous or
      without substantial basis, you shall repay to the Company any attorneys'
      fees and other expenses and costs paid by the Company to you pursuant to
      this paragraph. For the purposes of this letter amendment, the 'Initial
      Adjudication' shall mean the final order, decree or other adjudication of
      your claims by a court of competent jurisdiction with regard to such
      enforcement or attempted enforcement or such alleged dispute, breach or
      default.

                        This Agreement shall be construed and enforced in
      accordance with the laws of the State of California, without giving effect
      to the principles of conflict of laws thereof.

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

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            The amendments made by this letter shall be effective as of the date
hereof. The Agreement, as amended, shall remain in full force and effect.

                                          Sincerely,

                                          /s/ Charles J. Casamento
                                          --------------------------------------
                                          Charles J. Casamento
                                          Chairman, President and CEO
                                          Questcor Pharmaceuticals, Inc.

                                          Date: March 21, 2003

Accepted by,

/s/ Timothy E. Morris
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Date: March 21, 2003

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