Document:

exv10w44

 

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.

 

 

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:                                                  

3exv10w46

 

Exhibit 10.46

SEPARATION AGREEMENT AND RELEASE OF CLAIMS

     If you choose to accept Avanir Pharmaceuticals’ (“the Company”) Severance Package, please sign
and return this Agreement to Jesus Varela, Director of Human Resources, by no later than 5:00 p.m.
on 29 June 2007. You may scan and e-mail the signed Agreement to Jesus Varela at
jvarela@avanir.com and mail the original to him at the Company’s offices at 101 Enterprise, Suite
300, Aliso Viejo, California 92656, telephone 949.389.6747.

RECITALS

     WHEREAS, Jagadish Sircar (“Employee”) will conclude his employment with the Company
(collectively the “Parties”), as described herein;

     WHEREAS, after the conclusion of Employee’s employment with the Company, the Employee wishes
to serve as a consultant to the Company, and the Company wishes to retain the Employee as a
consultant, on the terms and conditions described herein; and

     WHEREAS, each of the Parties to this Agreement desires an amicable separation of the
Employee’s employment with the Company, and to resolve any and all claims, disputes, issues, or
matters that were asserted or could be asserted;

     NOW THEREFORE, in consideration of the mutual covenants and agreements herein contained and
other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
the Parties agree as follows:

(a) Termination Date

     Employee’s employment with the Company will terminate effective 29 June 2007 (the “Termination
Date”);

(b) Consulting Services

     Employee agrees to provide to the Company consulting services, defined below, as an
independent contractor for a term of six (6) months following the Termination Date (the “Consulting
Period”) at any reasonable times requested by the Company; provided that the Company shall not
require the Employee to provide any such services to an extent that would unreasonably interfere
with the Employee’s search for employment or with any subsequent employment. Such services
include, but are not limited to, providing advice and assistance pertaining to research
collaborations and patent portfolio, special projects, conference/meeting appearances or any other
matter consistent with the Employee’s background, skills and experience, as requested by Keith
Katkin, President & Chief Executive Officer (the “Consulting Services”). Such Consulting Services
shall be limited to a maximum of one (1) full day per week. As compensation for providing
Consulting Services during the Consulting Period, Employee will receive $1,000.00 per week payable
by the Company within thirty (30) days following its receipt of an invoice for the Work. The
Company shall reimburse Employee for reasonable expenses, including travel expenses, incurred on
behalf of the Company during the Consulting Period, provided that such expenses are approved in
advance and substantiated in accordance with Company policies. Employee understands and agrees
that his obligations to the Company under the Employee Invention Assignment, Patent and
Confidential Information Agreement entered into between Employee and the Company on 15

 

 

May 1996, a copy of which is attached to this Agreement, shall continue through the Consulting
Period. The Consulting Period will terminate on 31 December 2007 unless extended upon mutual
agreement.

     If, at any time within the Consulting Period, the Company enters into a definitive agreement
with a strategic partner pertaining to the development and/or commercialization of AVP-13358,
XenerexTM, and/or RCT, Employee shall be entitled to an incentive payment in an amount equal to
$15,000.00 (the “Incentive Payment”) for each transaction. In addition, Employee shall be entitled
to an incentive payment in an amount equal to $5,000.00 for each additional cytokine inhibitor that
is included within the same, or different, definitive agreement. The Incentive Payment(s) shall be
made to Employee within five (5) days following the execution of the definitive agreement(s) which
triggered such Incentive Payment(s). Employee acknowledges and agrees that the Company shall
withhold appropriate federal, state, local (and foreign, if applicable) income and employment taxes
from the Incentive Payment(s).

(c) Severance

   In exchange for agreeing to be bound by the terms of this Agreement, the Company will provide
Employee with the following payments and incentives to which he otherwise would not be entitled:

	 	a)	 	The Company will make a cash severance payment to Employee in an amount equal to
thirty-nine (39) weeks of Employee’s current base salary, less all the required
withholdings and taxes, payable in a lump sum.
	 
	 	b)	 	If Employee chooses to elect continuation of coverage under the federal law known as
COBRA, the Company will continue to pay his medical, dental and vision premiums through 31
March 2008, unless Employee becomes eligible for coverage under another group insurance
plan before that date, at which time the Company’s payment obligations would terminate.
Effective 01 April 2008, COBRA payments become Employee’s sole responsibility.
	 
	 	c)	 	Right Management Consultants will be available to Employee for the purpose of providing
executive outplacement services, provided that Employee begins utilizing such services no
later than two (2) months after the date of this Agreement. Included in the outplacement
services offered will be:

	 	•	 	Coaching with an Executive Career Management Consultant
	 
	 	•	 	Logistics and Support with an Office
	 
	 	•	 	Unlimited Access Right Management’s Learning Center
	 
	 	•	 	Marketplace Resources
	 
	 	•	 	Computer, Phone

The payments described in this Section will become due one business day after the Date of
Irrevocability (defined below), provided that Employee complies with his obligations under this
Agreement.

(d) Release

     (1) Employee for himself and his heirs, agents, assigns, executors, successors and each of
them, unconditionally, irrevocably and absolutely releases and discharges the Company, and any
parent and subsidiary corporations, divisions, and affiliated corporations, partnerships or other
affiliated entities of the Company, past and present, as well as the Company’s employees, officers,
directors, agents, predecessors, successors and assigns (collectively “Released Parties”) from all
claims related in any way to the transactions or occurrences between them to date, to the fullest
extent permitted by law, including, but not limited to, Employee’s employment with the Company, the
termination of his employment, and

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all other losses, liabilities, claims, demands and causes of action, known or unknown,
suspected or unsuspected, arising directly or indirectly out of or in any way connected with
Employee’s employment with the Company and the termination of that employment. This release is
intended to have the broadest possible application permitted by law and includes, but is not
limited to, any tort, contract, common law, constitutional or statutory claims (including, without
limitation, claims under the Americans with Disabilities Act, Title VII of the Civil Rights Act of
1964, Older Workers Benefit Protection Act and Age Discrimination in Employment Act, California
Fair Employment and Housing Act, state or local fair employment practices laws or ordinances, and
state or federal plant closing laws) and all claims for attorneys’ fees, costs and expenses.
Notwithstanding the foregoing, this release shall not serve as a waiver of Employee’s rights to (i)
vested benefits such as in the Avanir Pharmaceuticals Employee Savings and Protection Plan, (ii)
workers compensation benefits, (iii) statutorily-required indemnification under California Labor
Code Section 2802 or any comparable provisions of other states’ laws, or (iv) any other benefits or
claims that cannot be released as a matter of law.

     (2) Employee declares and represents that he intends this Agreement to be complete and not
subject to any claim of mistake, and that the release herein expresses a full and complete release
and, regardless of the adequacy or inadequacy of the consideration, the Parties intend the release
to be final and complete. The Parties execute this release with the full knowledge that this
release covers all possible claims against the Released Parties, to the fullest extent permitted by
law.

     (3) Employee acknowledges that the Company has advised him to review this Agreement with an
attorney before signing it. Employee has 21 days within which to review and consider this Agreement
before signing it, which period may be waived. Should Employee decide not to use the entire 21
days, he knowingly and voluntarily waives any claim that he was not in fact given that period of
time or did not use the entire 21 days to consult an attorney and/or consider this Agreement.
Employee may revoke the Agreement for up to 7 calendar days after signing it, which period may not
be waived, and this Agreement shall not become effective or enforceable until the revocation period
has passed (such date of effectiveness being the “Date of Irrevocability”). Any revocation of this
Agreement must be in writing addressed to and received by Human Resources on behalf of the Company
no later than 5:00 p.m. on the 7th day after Employee signs it. If Employee revokes this
Agreement, he will not receive any of the benefits described in this Agreement. This Agreement does
not waive or release any rights or claims Employee may have under the Age Discrimination in
Employment Act that arise after the execution of this Agreement.

(e) Acknowledgement of Understanding

     Employee and the Company acknowledge that they may discover facts or law different from, or in
addition to, the facts or law that they know or believe to be true with respect to the claims
released in this Agreement and agree, nonetheless, that this Agreement and the release contained in
it shall be and remain effective in all respects notwithstanding such different or additional facts
or the discovery of them. Employee and the Company expressly acknowledge and agree that Employee’s
rights under Section 1542 of the California Civil Code and any comparable provisions of other
states’ and federal law are expressly waived. That section provides:

A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if known
by him must have materially affected his settlement with the debtor.

(f) Pursuit of Released Claims

     Employee represents that, as of the date of this Agreement, he has not filed any lawsuits,
charges, complaints, petitions, claims or other accusatory pleadings against Released Parties in
any court or with

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any governmental agency. Employee further agrees that, to the fullest extent permitted by
law, he will not prosecute, nor allow to be prosecuted on his behalf, in any court, whether state
or federal, any claim or demand of any type related to the matters released above, it being the
intention of Employee that with the execution of this release, Released Parties will be absolutely,
unconditionally and forever discharged of and from all obligations to or on behalf of Employee
related in any way to the matters discharged herein. Employee further represents that he has not
assigned any claim he may have against Released Parties to any other person or entity. Nothing in
this Agreement affects Employee’s right to file a charge or complaint with the Equal Employment
Opportunity Commission (EEOC).

(g) Return of Company Property

     By signing this Agreement, Employee represents and warrants that he will have returned to
the Company on or before 29 June 2007, all Company property, including all originals and copies of
documents removed from the Company’s premises at any time during his employment with the Company.
Employee will not be entitled to the Severance Package described in Section (c) herein unless and
until all such property is returned to the Company.

(h) Expense Reimbursement, Vacation Advance Reimbursement

     By signing this Agreement, Employee agrees that all outstanding claims for reimbursements have
been submitted to the Company.

(i) Nondisparagement

     Employee will not make any voluntary statements, written or verbal, or cause or encourage
others to make any such statements that defame, disparage or in any way criticize Released Parties’
business reputation, practices or conduct.

(j) Arbitration of Disputes and Enforcement of Agreement

     (1) Employee and the Company agree to resolve any claims they may have against each other or
that Employee has with any other Released Party through final and binding arbitration. This
agreement to arbitrate applies to any and all disputes about the validity, interpretation, or
effect of this Agreement or alleged violations of it and whether a particular claim is covered by
this Agreement (“Arbitrable Claims”). Except as provided in Section (j)(3) below, arbitration
shall be the exclusive remedy for any such claim or dispute, and the parties expressly waive their
rights to a jury trial on any such claim or dispute. Arbitration shall be conducted in Orange
County, California through JAMS or, if JAMS is not available, through another arbitration provider
mutually acceptable to the parties. However, either party may bring an action in court to compel
arbitration under this Agreement or to enforce an arbitration award. The Federal Arbitration Act
shall govern the interpretation and enforcement of this section. If a court or arbitrator finds
the Federal Arbitration Act does not govern, then California law shall govern the interpretation
and enforcement of this section.

     (2) In any arbitration, legal proceeding or other proceeding brought to enforce or interpret
the terms of this Agreement, the prevailing party shall be entitled to recover reasonable
attorneys’ fees and costs. In addition, should Employee or the Company attempt to resolve any
claim waived by this Agreement or pursue any Arbitrable Claim by any method other than arbitration
(except to the extent allowed in Section (j)(3) below), the responding party will be entitled to
recover from the initiating party all damages, costs, expenses, and attorneys’ fees incurred as a
result of that breach.

     (3) The requirement to arbitrate disputes shall not preclude Employee from filing a charge or
complaint with the EEOC, including a challenge to the validity of this Agreement.

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(k) Miscellaneous

     This Agreement sets forth the entire agreement between Employee and the Company pertaining to
the subject matter of this Agreement and supersedes any previous agreements or understandings
between Employee and the Company except the 15 May 1996 Employee Invention Assignment, Patent and
Confidential Information Agreement (attached hereto) (the “Employee Invention Assignment, Patent
and Confidential Information Agreement”) which remains in full force and effect and the terms of
any outstanding stock options and restricted stock awards previously granted to Employee under any
of the following Company’s equity incentive plans: 1994 Stock Option Plan, 1998 Stock Option Plan,
2000 Stock Option Plan, 2003 Equity Incentive Plan and 2005 Equity Incentive Plan (the “Equity
Plans”). This Agreement may not be modified or canceled in any manner except by a writing signed
by both Employee and an authorized official of the Company. Employee acknowledges that the Company
has made no representations or promises to him, other than those in this Agreement. If any
provision in this Agreement is found to be unenforceable, that provision will be enforced to the
greatest extent permitted by law and all other provisions will remain fully enforceable. This
Agreement binds the Parties and their heirs, administrators, representatives, attorneys, executors,
successors, and assigns. This Agreement shall be construed as a whole according to its fair
meaning. It shall not be construed strictly for or against Employee or the Released Parties.
Unless the context indicates otherwise, the term “or” shall be deemed to include the term “and” and
the singular or plural number shall be deemed to include the other. This Agreement shall be
governed by the law of the State of California, excluding its laws relating to the choice of laws.

(l) Treatment of Equity Awards

     Nothing in this Agreement shall affect or modify any outstanding equity award granted to
Employee under the Equity Plans. Company and Employee acknowledge that pursuant to the terms of
the Equity Plans, that if Employee accepts this Agreement and commences service as a consultant
immediately after the Termination Date, that he will have no break in his continuous service to the
Company. As a result, all stock options and restricted stock awards previously issued to and held
by Employee as of the Termination Date will continue to vest through the duration of the Consulting
Period, in accordance with their existing terms and provisions. If Employee’s service as a
consultant hereunder begins more than one business day after the Termination Date, then the
Employee’s service would be considered terminated under the Equity Plans.

(m) Counterparts

     This Agreement may be executed by facsimile or facsimile signature, and in separate
counterparts, each of which shall be deemed an original but all of which, when taken together,
shall constitute one and the same instrument.

Please read this Agreement and carefully consider all of its provisions before signing it. This
Agreement includes a release of known and unknown claims. This Agreement also includes an
arbitration clause in which both parties waive any rights they may have to trial by jury with
regard to Arbitrable Claims. You may consider consulting with an attorney before signing this
Agreement.

I represent and agree that I have carefully read and fully understand all of the provisions of this
Separation Agreement and Release of Claims and that I am voluntarily agreeing to those provisions.

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	Enclosures:	 	Employee Invention Assignment, Patent and Confidential Information Agreement

	 	 	 	 	 	 	 	 	 
	Date

	 	6/25/07
	 	 	 	     /s/ Jagadish Sircar	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Employee	 	 
	 
	 	 	 	 	 	 	 	 
	Date

	 	6/21/07
	 	 	 	      /s/ Jesus Varela       Director Human Resources
	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Company	 	 

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