Exhibit 10.42
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT
(“Agreement”), dated as of 12 February 2007 (the
“ Effective Date ”), is made by and between
AVANIR PHARMACEUTICALS, a California corporation having its
principal offices at 101 Enterprise, Suite 300, Aliso Viejo,
California, 92656 (the “ Company ”), and Martin
J. Sturgeon (“ Employee ”).
AGREEMENT
1. Commencement Date
.
Employee’s
employment under this Agreement shall commence on 12
February 2007 (“ Commencement Date
”).
2. At-will Employment
.
Employee’s employment
relationship with the Company (“ Employment ”)
is at-will, terminable at any time with or without cause or advance
notice by either the Company or Employee. While certain sections of
this Agreement describe events that could occur at a particular
time in the future, nothing in this Agreement shall be construed as
a guarantee of employment of any length.
3. Employment Duties
.
(a)
Title . Employee shall be Vice President of Finance and
Chief Accounting Officer of the Company and shall be assigned
duties and responsibilities consistent with that position at the
discretion of the Company.
(b)
Full-Time Attention . Employee shall devote his full time,
attention, energy and skills to the Company during the period he is
employed under this Agreement.
(c)
Policy Compliance . Employee shall comply with all of the
Company’s policies, practices and procedures, including the
terms of the Confidentiality Agreement (defined below).
4. Compensation .
(a)
Base Salary . The Company shall pay Employee a base salary
of $16,666.67 per month (an annual rate of $200,000), or such
higher amount as the Company may determine from time to time
(“ Base Salary ”), payable in accordance with
the Company’s regular payroll practices.
(b)
Bonus Compensation . In addition to the Base Salary,
Employee shall be eligible for an annual discretionary bonus of up
to 25% of the Employee’s then-current annual base salary
(pro-rated for fiscal 2007 as described below), with such bonus to
be determined and paid in the first quarter of each fiscal year
with respect to Employee and Company performance in the prior
fiscal year. The actual bonus may be higher or lower than the 25%
target amount, at the discretion of the Company. Any bonus payable
with regard to performance in fiscal 2007
will be
prorated on account of Employee’s commencement of employment
less than one year prior to the payment date. Employee must be
employed by the Company when bonuses are distributed in order to be
eligible to receive such bonus. If Employee leaves the employ of
the Company for any reason prior to the distribution of annual
bonuses in any given year, he will not be eligible to receive any
part of that year’s discretionary bonus.
(c)
Equity Compensation . The Company has recommend to its Board
of Directors that Employee be granted the following equity awards
as additional compensation and such awards have been approved,
pending the commencement of employment:
(i) Subject
to the commencement of employment, Employee shall be granted a
restricted stock unit on the Commencement Date representing 10,000
shares of Class A common stock (the “ RSU’s
”). The RSU’s shall vest in full upon Employee’s
completion of two full years of employment (the “ Vesting
Date ”). The RSU’s will be granted pursuant to the
Company’s equity compensation plans (the “ Equity
Plans ”) and will be governed by the terms and conditions
of such plans. Except as set forth in Section 10(d)(ii), the
RSU’s shall be forfeited if the Employment is terminated
prior to the Vesting Date.
(ii) Subject
to the commencement of employment, Employee shall be granted an
option on the Commencement Date to purchase 20,000 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 on the
first anniversary of the Commencement Date and the remainder
vesting in 12 equal installments each quarter thereafter over the
next three years). This option shall be granted as an
“inducement option” under NASDAQ Marketplace
Rule 4350 and shall be granted outside of the Equity Plans,
but shall be governed in all material respects as if it was granted
under the Company’s 2005 Equity Incentive Plan, mutatis
mutandis . This option will be treated for tax purposes as a
non-statutory stock option.
The foregoing share amounts and share
purchase prices shall be adjusted, as necessary, to give effect to
any stock split, reverse stock split, stock dividend,
recapitalization or similar transaction affecting the
Company’s Class A common stock that is effected after
the Effective Date.
(d)
Employee Benefits . Employee shall be entitled to
participate in all employee benefit plans, programs and
arrangements maintained by the Company and made available to
employees generally. The Employee’s participation in such
Company plans or programs shall be on the same basis and terms as
are applicable to other executive employees of the Company.
Employee shall accrue 5 weeks of vacation the first year of
service.
(e)
Reimbursement of Expenses . During his employment with the
Company, Employee shall be entitled to reimbursement for all
reasonable and necessary business expenses incurred on behalf of
the Company, in accordance with the Company’s policies and
procedures.
5. Confidentiality
Agreement . Employee shall concurrently herewith execute and
deliver to the Company the Employee Invention Assignment, Patent
and Confidential Information Agreement (“ Confidentiality
Agreement ”) in the form attached hereto as
Exhibit B .
6. Non-Competition .
During his Employment, Employee shall 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 a Competitor of the Company, unless such
participation or interest is fully disclosed to the Company and
approved by the Board. “Competitor,” as used in this
paragraph, refers to any company that has therapeutic products
(i) on the market or in clinical development and
(ii) that are in competition with the products the Company has
on the market or that have entered clinical development.
Notwithstanding the above, Employee may own securities in any
Competitor that is a public company, so long as Employee does not
own, of record or beneficially, more than an aggregate of five
percent of the outstanding securities of such company.
7. Non-Solicitation .
During his Employment, and for a period of 12 months
thereafter, whether for Employee’s own account or the account
of any other person, Employee shall not solicit, directly or
indirectly, any employee to leave his or her employment with the
Company. For purposes of this Agreement, the phrase, “shall
not solicit, directly or indirectly,” includes, without
limitation, that Employee shall not: (i) identify any Company
employees to any third party as potential candidates for
employment, such as by disclosing the names, backgrounds,
compensation or qualifications of any Company employees
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