Exhibit 10.16
XENOPORT, INC.
CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement (the "AGREEMENT") is made and entered
into by and between Xxxxxx Xxxx (the "EXECUTIVE") and XenoPort, Inc. a Delaware
corporation (the "COMPANY"), effective as of July 15, 2004.
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
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 the
Company's established written Executive plans or pursuant to other written
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).
1.
(b) CONSTRUCTIVE TERMINATION. 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
Constructively Terminated (as defined below) by the Executive, then the
Executive shall be entitled to receive Termination Benefits (as defined below).
Notwithstanding the foregoing, the Executive shall not be entitled to the
Termination Benefits solely by reason of this Section 3(b) if the Executive
resigns his employment prior to the date six (6) months after the closing of the
transaction giving rise to such Change of Control.
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 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 which constitutes
gross misconduct and which is injurious to the Company, or (iv) following
delivery to the Executive of a written demand for performance from the Company
which describes the basis for the Company's belief that the Executive has not
substantially performed his duties, continued violations by the Executive of the
Executive's obligations to the Company which are demonstrably willful and
deliberate on the Executive's part.
"CHANGE OF CONTROL" means the completion by the Company of a
reorganization, merger, 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.
"CONSTRUCTIVE TERMINATION" shall mean the resignation by the Executive
from employment following, without the Executive's express written consent, the
then continuing assignment to the Executive of material duties or the then
continuing 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 transaction giving rise to a
Change of Control, or the then continuing removal of the Executive from such
position and responsibilities.
"GOOD REASON" shall mean (i) a material reduction by the Company in the
cash compensation of the Executive as in effect immediately prior to such
reduction; (ii) a material reduction by the Company in the kind or level of
employee benefits to which the Executive is entitled immediately prior to such
reduction with the result that the Executive's overall benefits package is
significantly reduced; or (iii) without the Executive's express written consent,
the relocation of Executive's principal place of employment to a facility or a
location more than 30 miles from the Executive's then present location.
2.
"STOCK RIGHTS" shall mean all of the Executive's options or rights to
acquire vested ownership of shares of Common Stock of the Company under plans,
agreements or arrangements which are compensatory in nature, including, without
limitation, the Company's 1999 Stock 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) or Section 3(b), as the case
may be, and (2) the Executive shall continue to receive for a period of twelve
(12) months following the effective date of such termination of employment
described in Section 3(a) or Section 3(b), as the case may be, 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 health insurance benefits to individual coverage pursuant to COBRA. Should
the Executive so elect, the Company shall reimburse the Executive for twelve
(12) months of health care coverage.
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 which executes and
delivers the assumption agreement described in this Section 5(a) or which
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 or 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 or a Constructive
Termination 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
3.
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). The failure by the Executive to
include in the notice any fact or circumstance which contributes to a showing of
Constructive Termination shall not waive any right of the Executive hereunder or
preclude the Executive from asserting such fact or circumstance in enforcing
Executive's rights hereunder.
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) WAIVER. No provision of this Agreement shall be modified, waived or
discharged unless the 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) which 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.
4.
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: /s/ Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
EXECUTIVE: /s/ Xxxxxx X. Xxxx
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Xxxxxx Xxxx
SIGNATURE PAGE TO XENOPORT, INC. CHANGE OF CONTROL AGREEMENT
