CHANGE OF CONTROL AGREEMENT
Exhibit 10.13
This Change of Control Agreement (the “Agreement”) is made and entered into by and
between [Name] (the “Executive”) and XenoPort, Inc., a Delaware corporation (the
“Company”), effective as of [Date], 2007.
RECITALS
It is expected that the Company from time to time may consider the possibility of an
acquisition by another company or other change of control. The Board of Directors of the Company
(the “Board”) recognizes that such consideration can be a distraction to the Executive and
can cause the Executive to consider alternative employment opportunities. The Board has determined
that it is in the best interests of the Company and its stockholders to assure that the Company
will have the continued dedication and objectivity of the Executive, notwithstanding the
possibility, threat or occurrence of a Change of Control (as defined below) of the Company.
The Board believes that it is in the best interests of the Company and its stockholders to
provide the Executive with an incentive to continue [his/her] employment and to motivate the
Executive to maximize the value of the Company upon a Change of Control for the benefit of its
stockholders.
Certain capitalized terms used in the Agreement are defined in Section 4 below.
The parties hereto agree as follows:
1. Term of Agreement. This Agreement shall terminate upon the date that all obligations of
the parties hereto with respect to this Agreement have been satisfied.
2. At-Will Employment. The Company and the Executive acknowledge that the Executive’s
employment is and shall continue to be at-will. If the Executive’s employment terminates for any
reason, including (without limitation) any termination prior to a Change of Control, the Executive
shall not be entitled to any payments, benefits, damages, awards or compensation other than as
provided by this Agreement, or as may otherwise be available in accordance with written plans or
agreements with the Company.
3. Termination Following a Change of Control.
(a) Termination Without Cause or Voluntary Termination For Good Reason. In the event
that a Change of Control (as defined below) of the Company occurs, and during the period beginning
on the closing date of the transaction giving rise to such Change of Control and ending twelve (12)
months after such closing date, the Executive’s employment with the Company (or the successor
entity in such Change of Control transaction) is either (1) terminated by the Company (or its
successor entity) without Cause (as defined below) or (2) terminated by the Executive for Good
Reason (as defined below), then the Executive shall be entitled to receive Termination Benefits (as
defined below); provided, however, that in order for the Executive to terminate for Good Reason,
(i) the Executive must provide written notice to the Company (or the successor
entity in the Change of
Control transaction) of the existence of the Good Reason condition within
ninety (90) days following the initial existence of the Good Reason condition, and (ii) the Company
(or the successor entity in the Change of Control transaction) shall not be required to provide
Termination Benefits if it is able to remedy the Good Reason condition within a period of thirty
(30) days following such notice.
(b) Payment of Termination Benefits. If the Executive becomes entitled to receive
Termination Benefits pursuant to Section 3(a), the continued payments of base salary, to the extent
of payments made from the date of the Executive’s termination of employment through March 15 of the
calendar year following such termination, are intended to constitute separate payments for purposes
of Section 1.409A-2(b)(2) of the Treasury Regulations and thus payable pursuant to the “short-term
deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations; to the extent such
payments are made following said March 15, they are intended to constitute separate payments for
purposes of Section 1.409A-2(b)(2) of the Treasury Regulations made upon an involuntary termination
from service and payable pursuant to Section 1.409A-1(b)(9)(iii) of the Treasury Regulations, to
the maximum extent permitted by such provision, with any excess amount being regarded as subject to
the distribution requirements of Section 409A(a)(2)(A) of the Internal Revenue Code of 1986, as
amended (the “Code”), including, without limitation, the requirement of Section 409A(a)(2)(B)(i) of
the Code that payment be delayed until six (6) months after the Executive’s termination of
employment if the Executive is a “specified employee” within the meaning of Section
409A(a)(2)(B)(i) of the Code at the time of such termination.
4. Definition of Terms. The following terms referred to in this Agreement shall have the
following meanings:
“Cause” shall mean either: (i) any act of personal dishonesty taken by the Executive
in connection with [his/her] responsibilities as an Executive and intended to result in substantial
personal enrichment of the Executive; (ii) the conviction of a felony; (iii) a willful act by the
Executive that constitutes gross misconduct and that is injurious to the Company; or (iv) following
delivery to the Executive of a written demand for performance from the Company that describes the
basis for the Company’s belief that the Executive has not substantially performed [his/her] duties,
continued violations by the Executive of the Executive’s obligations to the Company that are
demonstrably willful and deliberate on the Executive’s part.
“Change of Control” means the completion by the Company of a reorganization, merger or
consolidation, in each case with respect to which persons who were the stockholders of the Company
immediately prior to such reorganization, merger or consolidation would not immediately thereafter
own more than 50% of, respectively, the capital stock and the combined voting power entitled to
vote generally in the election of directors of the reorganized, merged or consolidated
corporation’s then-outstanding voting securities, or of a liquidation or dissolution of the Company
or of the sale of all or substantially all of the assets of the Company. For purposes hereof, such
Change of Control shall be deemed to have occurred on the date on which the transaction closes.
“Good Reason” shall mean any of the following conditions arising without the
Executive’s express written consent:
(i) an assignment to the Executive of material duties or a material reduction of the
Executive’s duties, either of which results in a significant diminution in the Executive’s position
or responsibilities in effect immediately prior to the closing date of the Change of Control
transaction, or the removal of the Executive from such position and responsibilities;
(ii) a material reduction by the Company (or the successor entity in the Change of Control
transaction) in the base compensation of the Executive as in effect immediately prior to such
reduction; or
(iii) a relocation of the Executive’s principal place of employment to a facility or a
location more than 40 miles from the Executive’s then present location.
“Stock Rights” shall mean all of the Executive’s options, restricted stock, restricted
stock units or rights to acquire vested ownership of shares of Common Stock of the Company under
plans, agreements or arrangements that are compensatory in nature, including, without limitation,
the Company’s 1999 Stock Plan, the Company’s 2005 Equity Incentive Plan and Restricted Stock
Purchase Agreements between the Company and the Executive.
“Termination Benefits” shall mean (1) all unvested Stock Rights (as defined above)
shall become fully vested as of the effective date of such termination of employment described in
Section 3(a), and (2) the Executive shall continue to receive for a period of six (6) months
following the effective date of such termination of employment described in Section 3(a) continued
payment of the greater of the Executive’s base salary in effect immediately prior to (i) such
termination or (ii) the closing date of the transaction giving rise to a Change of Control. In
addition, the Executive shall have the right to convert [his/her] health insurance benefits to
individual coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985
(“COBRA”) and any analogous provisions of applicable state law. Should the Executive so elect, the
Company shall reimburse the Executive for six (6) months of such health care coverage following the
effective date of such termination of employment described in Section 3(a).
5. Successors.
(a) Company’s Successors. Any successor to the Company (whether direct or indirect
and whether by purchase, merger, consolidation, liquidation or otherwise) to all or substantially
all of the Company’s business and/or assets shall assume the obligations under this Agreement and
agree expressly to perform the obligations under this Agreement in the same manner and to the same
extent as the Company would be required to perform such obligations in the absence of a succession.
For all purposes under this Agreement, the term “Company” shall include any successor to the
Company’s business and/or assets that executes and delivers the assumption agreement described in
this Section 5(a) or that becomes bound by the terms of this Agreement by operation of law.
(b) Executive’s Successors. The terms of this Agreement and all rights of the
Executive hereunder shall inure to the benefit of, and be enforceable by, the Executive’s personal
or legal representatives, executors, administrators, successors, heirs, distributees, devisees and
legatees.
6. Notice.
(a) General. Notices and all other communications contemplated by this Agreement
shall be in writing and shall be deemed to have been duly given when personally delivered or when
mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In the
case of the Executive, mailed notices shall be addressed to the Executive at [his/her] home address
most recently communicated to the Company in writing. In the case of the Company, mailed notices
shall be addressed to its corporate headquarters, and all notices shall be directed to the
attention of its Secretary.
(b) Notice of Termination. Any termination by the Company for Cause or by the
Executive as a result of a voluntary resignation shall be communicated by a notice of termination
to the other party hereto given in accordance with Section 6(a) of this Agreement. Such notice
shall indicate the specific termination provision in this Agreement relied upon, shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for termination under the
provision so indicated, and shall specify the termination date (which shall be not more than 30
days after the giving of such notice).
7. Miscellaneous Provisions.
(a) No Duty to Mitigate. The Executive shall not be required to mitigate the amount
of any payment contemplated by this Agreement, nor shall any such payment be reduced by any
earnings that the Executive may receive from any other source.
(b) Amendment; Waiver. No provision of this Agreement shall be amended, modified,
waived or discharged unless the amendment, modification, waiver or discharge is agreed to in
writing and signed by the Executive and by an authorized officer of the Company (other than the
Executive). No waiver by either party of any breach of, or of compliance with, any condition or
provision of this Agreement by the other party shall be considered a waiver of any other condition
or provision or of the same condition or provision at another time.
(c) Whole Agreement. No agreements, representations or understandings (whether oral
or written and whether express or implied) that are not expressly set forth in this Agreement have
been made or entered into by either party with respect to the subject matter hereof. This
Agreement represents the entire understanding of the parties hereto with respect to the subject
matter hereof and supersedes all prior arrangements and understandings regarding same.
(d) Choice of Law. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of California as applied to agreements entered
into among California residents to be performed entirely within California, without regard to
conflict of laws rules.
(e) Severability. The invalidity or unenforceability of any provision or provisions
of this Agreement shall not affect the validity or enforceability of any other provision hereof,
which shall remain in full force and effect.
(f) Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed an original, but all of which together will constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the
Company by its duly authorized officer, as of the day and year set forth below.
| COMPANY: | XENOPORT, INC. | |||
| By: | ||||
| Xxxxxx X. Xxxxxxx, PhD | ||||
| Chief Executive Officer | ||||
| EXECUTIVE: | [Name] | |||
| [Name] | ||||
| [Title] | ||||
Signature Page to XenoPort, Inc. Change of Control Agreement
