Exhibit 10.25
(AVANIR PHARMACEUTICALS LOGO)
June 13, 2005
PERSONAL & CONFIDENTIAL
VIA COURIER
Keith Katkin
Dear Keith:
Based on our recent conversations, I am delighted to present you with a
definitive offer to join AVANIR Pharmaceuticals. The terms of this offer are set
forth below:
TITLE AND RESPONSIBILITIES
Your position, title and responsibilities will be of those appropriate for
SENIOR VICE PRESIDENT, SALES & MARKETING, reporting to the President and Chief
Executive Officer.
START DATE / RESPONSE DATE
The anticipated start date is June 20, 2005 but shall be no later than June 30,
2005 (the "Commencement Date"). Please consider this offer and respond by
Wednesday, June 15, 2005.
COMPENSATION
Base Salary Your starting base salary will be $22,500 per month (an annual
rate of $270,000), 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.
Bonus In addition to the Base Salary, you will be eligible for the
following bonus compensation:
i. A bonus equal to 30% of the Base Salary, which shall be
payable in October 2005 and shall be prorated from the
Commencement Date through September 30, 2005.
ii. An annual target bonus equal to 30% of the Base Salary,
which is payable in October 2006 and annually thereafter,
provided that the actual bonus may be higher or lower than the
target amount, depending on the Employee's satisfaction of
performance criteria established by the Compensation Committee
of the Board and the Company's overall performance.
Options You will be granted the following equity awards as additional
compensation:
i. On the Commencement Date, you will be awarded an option
grant of 300,000 shares of Class A common stock, with an
exercise price equal to 100% of the fair market value of the
underlying shares on the date of grant, subject to a four-year
vesting schedule (25% vesting one year after the grant and the
remainder vesting in 12 equal installments on a quarterly basis
thereafter) and otherwise subject to the terms and conditions
of the Company's equity incentive plans.
ii. After one year of service, you will be eligible for an
annual target option grant of 75,000 shares of Class A common
stock, with an exercise price equal to 100% of the
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fair market value of the underlying shares on the date of
grant, subject to a four-year vesting schedule (25% vesting one
year after the grant and the remainder vesting in 12 equal
installments on a quarterly basis thereafter) and otherwise
subject to the terms and conditions of the Company's equity
incentive plans. The size of the option grants will be
established by the Compensation Committee and may be larger or
smaller than the target size, depending on your satisfaction of
performance criteria established by the Compensation Committee
and the Company's overall performance.
The Compensation Committee ordinarily assesses performance and
makes option grants following the end of each fiscal year
(i.e., in October of each year). If your annual option grant is
to be made in October of each year, the Compensation Committee
will make an appropriate adjustment to compensate for the fact
that your first annual option award would be made more than 12
months after the Commencement Date.
Additionally, the Compensation Committee may elect to grant
other types of equity-based awards, such as restricted stock or
restricted stock units, in lieu of the annual option grants
described above. If the Compensation Committee makes such an
award, the number of shares you are to receive under this offer
letter will be appropriately adjusted (e.g., one share of
restricted stock for each three option shares).
Relocation We will reimburse you for your reasonable documented relocation
expenses from the San Francisco Bay Area to San Diego County,
subject to a $150,000 cap. Additionally, we will provide you, or
reimburse you for, temporary housing in San Diego County for up to
90 days from the Commencement Date, or such longer period of time
as we may mutually agree upon. All of the payments described in
this paragraph will be subject to full gross-up of required taxes
and such will be paid by the Company.
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 be
offered the Company's standard Retention Agreement, which provides certain
severance benefits in the event that your employment is terminated following a
change in control of the Company. The Retention Agreements are considered
annually for renewal by the Compensation Committee and you will be entitled to
the same change in control severance benefits as other officers of the Company
so appointed by the Board of Directors.
In addition, if the Company terminates your employment without Cause or you
Resign for Good Reason (each as defined in the Retention Agreement) in either
case within one month prior to or 12 months after a Change of Control (as
defined in the Retention Agreement), then, subject to your entering into and not
revoking the Company's standard form of release of claims in favor of the
Company, 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.
OTHER ITEMS
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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 Retention 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 competition with the
business of Avanir, unless such participation or interest is fully disclosed to
the Company and approved by the Board.
This offer of employment is conditioned upon the execution of our Proprietary
Information and Inventions Agreement ("Inventions Agreement"). This offer is
further conditioned upon the execution by you of such standard agreements that
the employees of AVANIR Pharmaceuticals customarily are requested to sign. These
documents will be made available to you on or about your start date of
employment.
Finally, the U.S. Immigration and Naturalization Service (INS) requires
completion by you of their form I-9. You are required to show proof of
eligibility to work in the United States.
This offer, the Retention Agreement and the Inventions Agreement 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. Any amendments to this agreement shall be in writing and signed by
both parties.
In closing, we are delighted to offer you a position to join us in our growing
company. I am confident that with your experience, knowledge, and dedication, we
will work together to achieve the continued success of AVANIR.
Respectfully,
Avanir Pharmaceuticals,
By: /s/ Charles Mathews
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Charles Mathews
Chairman, Board of Directors
Acceptance of Offer:
/s/ Keith Katkin 6/14/2005
- ------------------------------------ Date
Start Date: Per contract
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