Exhibit 10.44
March 13, 2007
Keith Katkin
c/o Avanir Pharmaceuticals
101 Enterprise, Suite 300
Aliso Viejo, CA 92656
Dear Keith:
     We are pleased to present the following definitive terms for your
appointment as President and Chief Executive Officer. The terms of this offer
are set forth below:
TITLE AND RESPONSIBILITIES
     Your position will be that of President and Chief Executive Officer and you
will have such responsibilities as set forth in the Company’s bylaws and as may
be prescribed from time to time by the Board of Directors. Your appointment in
this capacity will be effective as of March 13, 2007 (the “Effective Date”) and
you will serve until the earlier of your resignation or removal. Notwithstanding
the foregoing, your appointment in this position and the terms of this agreement
are subject to the satisfactory completion of a customary background check.
COMPENSATION
     Base Salary. Your starting base salary will be $27,083 per month (an annual
rate of $325,000), or such higher amount as the Compensation Committee of the
Board of Directors may determine from time to time (“Base Salary”), payable in
accordance with the Company’s regular payroll practices. The minimum Base Salary
increase for fiscal 2008 will be 4% (without any pro-ration for fiscal 2007).
     Bonus. In addition to the Base Salary, you will be eligible for an annual
target bonus equal to 50% of the Base Salary. This annual bonus will be payable
in the first quarter of each fiscal year (commencing in the first quarter of
fiscal 2008, without any pro-ration for fiscal 2007) based on performance in the
prior year. The actual bonus may be higher or lower than the target amount,
depending on your satisfaction of performance criteria established by the
Compensation Committee of the Board and the Company’s overall performance.
     Equity Awards. The Compensation Committee will award you with equity
compensation on terms to be mutually agreed upon between you and the
Compensation Committee. It is expected that the targeted fair value of the
initial equity award will be $800,000 (with fair value being calculated in
accordance with the Company’s accounting for equity awards at the time of grant)
and that the award would vest on the earliest of: (a) the third anniversary of
the Effective Date, (b) upon the consummation of certain significant corporate
transactions (such as a change of control of the Company) to be identified by
the Compensation Committee at the time the awards are granted, or (c) such
earlier time as may be agreed upon by the Compensation Committee at the time the
award is granted. This initial equity award will be comprised of (i) stock
options and (ii) restricted stock or restricted stock units, with 25% of the
target value being granted in options and 75% of the value being granted in
restricted stock or restricted stock units.

 

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The timing for the grant of such awards may be affected by equity plan limits,
stock exchange shareholder approval rules and other relevant considerations.
     The Compensation Committee ordinarily assesses performance and makes annual
equity compensation grants following the end of each fiscal year (i.e., in the
first quarter of the following fiscal year). The specific terms of such annual
awards will be determined by the Compensation Committee and will be based on
performance and the results of periodic surveys of comparable compensation data
at peer companies identified by the Compensation Committee.
BENEFITS AND EXPENSES
     As an AVANIR employee you will be eligible for all other customary employee
benefits relating to health insurance, life insurance, disability insurance,
etc., the details of which you can obtain once you have started your employment.
In addition, all travel and other reasonable business expenses incurred by you
in the performance of your duties will be reimbursed to you.
     Additionally, as a member of AVANIR’s senior management team, you will
remain eligible to receive those change of control severance benefits to which
you are currently entitled under the Company’s standard form of Change of
Control Agreement (i.e., two years of severance).
     In addition, if the Company terminates your employment without Cause or you
Resign for Good Reason (each as defined in the Change of Control Agreement),
then, subject to your entering into and not revoking the Company’s standard form
of release of claims in favor of the Company, you will be entitled to severance
pay equal to one year of Base Salary, with such severance benefit to be paid
ratably over a one-year period following termination, provided that the payment
of the first six months of severance benefits shall be accelerated if necessary
so as to avoid the imposition of any excise taxes under Section 409A of the
Internal Revenue Code. Additionally, in the event of your termination without
Cause or a resignation for Good Reason, the vesting of all of your unvested
stock option shares will be accelerated in full so as to vest as of the date of
termination, and you will have 90 days to exercise all those stock option shares
that have vested as of the date of termination and the vesting of all restricted
stock awards shall accelerate so that such awards are fully vested.
OTHER ITEMS
     Employment with AVANIR Pharmaceuticals is considered “at will”, meaning it
is for an unspecified period of time and that the employment relationship may be
terminated by yourself or by AVANIR Pharmaceuticals at any time, with or without
cause. Nothing in the Change of Control Agreement will modify this at will
employment relationship.
     You will be required to devote your full time, attention, energy and skills
to the Company during the period you are employed under this Agreement. During
your employment, you may not, directly or indirectly, either as an employee,
employer, consultant, corporate officer or director, investor, or in any other
capacity, engage or participate in any business that is in

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competition with the business of Avanir, unless such participation or interest
is fully disclosed to the Company and approved by the Board.
     This offer, the Change of Control Agreement and the Inventions Agreement
previously executed by you constitute the entire agreement between you and
Avanir with respect to the terms of your employment and, by signing below, will
supersede all prior and contemporaneous negotiations, agreements and
understandings between you and Avanir, whether oral or written (including your
prior employment agreement, but excluding any agreements governing outstanding
equity awards). Any amendments to this agreement shall be in writing and signed
by both parties.
     In closing, we are delighted to offer you this position and look forward to
your contributions to Avanir.

                  Respectfully,       Avanir Pharmaceuticals,       /s/ Paul
Thomas         Paul Thomas     Chairman, Compensation Committee   Acceptance of
Offer:    

/s/ Keith A. Katkin                         
Date:                                                  

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