Exhibit 10.18
XENOPORT, INC.
AMENDED AND RESTATED RIEFLIN EMPLOYMENT AGREEMENT
This Amended and Restated Rieflin
Employment Agreement (the “ Agreement ”) is
entered into as of November 7, 2007, by and between XenoPort,
Inc. (the “ Company ”), and William J. Rieflin
(“ Executive ”).
Whereas the Company and
Executive entered into that certain Rieflin Employment Agreement,
dated as of June 18, 2004, to provide certain terms and
conditions with respect to the employment of Executive to serve as
President of the Company (the “ 2004 Agreement
”); and
Whereas , the Company and
Executive now wish to amend and restate the 2004 Agreement in its
entirety to make the Agreement compliant with Section 409A of
the Internal Revenue Code of 1986, as amended (the “
Code ”), and the final regulations issued
thereunder.
Now, Therefore, in
consideration of the foregoing and the provisions and mutual
promises herein contained, the parties hereby agree as
follows:
1. Duties and Scope of
Employment .
(a)
Effective Date . Executive will commence employment with the
Company on the “ Effective Date ,” which shall
be the later of (i) August 31, 2004 or (ii) one
month following the closing of the acquisition of Tularik Inc. by
Amgen Inc. In the event that the closing of the acquisition of
Tularik Inc. by Amgen Inc. does not occur by September 30,
2004, this Agreement automatically shall be deemed rescinded and
terminated (with no obligations due by either party) by both the
Company and Executive, unless both the Company and Executive
provide written authorization to the contrary.
(b)
Positions and Duties . As of the Effective Date, Executive
will serve as President of the Company. Executive will render such
business and professional services in the performance of his
duties, consistent with Executive’s position within the
Company, as will reasonably be assigned to him by the
Company’s Board of Directors (the “ Board
”). These duties will initially include responsibility for
all aspects of the following operations of the Company: legal
(including intellectual property), corporate development, business
strategy, business development, human resources, facilities,
information technology, and environmental, health and safety. The
Board may modify Executive’s job title and duties, in a
manner consistent with Executive’s training and experience,
as it deems necessary and appropriate in light of the
Company’s needs and interests from time to time. The period
of Executive’s employment under this Agreement is referred to
herein as the “ Employment Term .”
(c)
Obligations . During the Employment Term, Executive will
perform his duties faithfully and to the best of his ability and
will devote his full business efforts and time to the Company. For
the duration of the Employment Term, Executive agrees not to
actively engage in any other employment, occupation or consulting
activity for any direct or indirect remuneration
without
the prior approval of the Board. Notwithstanding the foregoing,
during the Employment Term, Executive will be permitted to serve
(i) as a consultant to Amgen Inc. with respect to Tularik Inc.
matters and (ii) as a member of up to two boards of directors;
provided, however , that such outside activities will be
permitted only to the extent that they do not interfere or conflict
with Executive’s performance of his duties to the Company, as
reasonably determined by the Board.
2. At-Will Employment .
The parties agree that Executive’s employment with the
Company will be “at-will” employment and may be
terminated at any time with or without cause or notice. Executive
understands and agrees that neither his job performance nor
promotions, commendations, bonuses or the like from the Company
give rise to or in any way serve as the basis for modification,
amendment, or extension, by implication or otherwise, of his
employment with the Company.
3. Compensation .
(a)
Base Salary . During the Employment Term, the Company will
pay Executive an annual salary of $275,000.00 as compensation for
his services (the “ Base Salary ”). The Base
Salary will be paid periodically in accordance with the
Company’s normal payroll practices and be subject to the
usual, required withholding. Executive’s salary will be
subject to review and adjustments will be made based upon the
Company’s standard practices.
(b)
Bonus . Executive will be entitled to participate in any
bonus plan adopted by the Company for its employees or executive
officers on such terms as the Board may determine in its
discretion, including the existing XenoPort, Inc. Bonus Plan.
Executive’s target bonus under the terms of such Bonus Plan
for 2004 equals twenty-five percent (25%) of his Base Salary.
(c)
Restricted Stock Grant . Subject to approval of the Board,
Executive will be issued 200,000 shares of the Company’s
Common Stock (the “ Restricted Stock ”) at an
issue price per share equal to the par value of $0.001 per share of
such Common Stock, payable by Executive at the time of issuance,
pursuant to the terms of the Company’s standard restricted
stock purchase agreement (the “ Purchase Agreement
”). In the event Executive’s services to the Company
terminate for any reason (i) on or prior to the six-month
anniversary of the Effective Date, the Company will have the right
to repurchase one hundred percent (100%) of the Restricted Stock at
the per share par value price paid by Executive, or (ii) after
such six-month anniversary but on or prior to the one-year
anniversary of the Effective Date, the Company will have the right
to repurchase fifty percent (50%) of the Restricted Stock at the
per share par value price paid by Executive; provided,
however , that if Executive’s services to the Company are
(1) terminated by the Company without Cause (as defined below)
or (2) terminated by Executive for Good Reason (as defined
below), during either of the periods described in clause
(i) or (ii) above, the Company shall not have the right
to repurchase any of the Restricted Stock. The delivery of a stock
certificate representing any applicable vested portion of the
Restricted Stock following a termination of Executive’s
services to the Company will be subject to Executive signing and
not revoking a separation agreement and release of claims in a form
reasonably acceptable to the Company and Executive. No certificate
representing such vested shares will be delivered until the
separation agreement and release agreement becomes effective.
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(d)
Gross-Up Payment . In connection with the grant to Executive
of the Restricted Stock, Executive shall be entitled to receive an
additional cash payment (a “ Gross-Up Payment ”)
from the Company, or the Company shall pay such amount on
Executive’s behalf to the applicable government agency, in
the sole discretion of the Company, in an aggregate amount
sufficient to pay (i) Executive’s applicable federal and
state personal income tax liability on the initial value of the
Restricted Stock (the “ Primary Payment ”),
(ii) Executive’s applicable federal and state personal
income tax liability on the Primary Payment (the “
Secondary Payment ”) and (iii) Executive’s
applicable federal and state personal income tax liability on the
Secondary Payment; provided, however , in no event shall the
total Gross-Up Payment exceed $68,000. Executive shall provide the
Company with such documentation as it reasonably requests to
confirm the appropriate amount of such Gross-Up Payment and to
process the payment thereof.
(e)
Stock Options . Subject to approval of the Board, Executive
will be granted the following stock options, each of which will be,
to the extent possible under the $100,000 rule of Section 422(d) of
the Internal Revenue Code of 1986, as amended (the “
Code ”), an “incentive stock option” (as
defined in Section 422 of the Code): (i) a stock option
to purchase 300,000 shares of the Company’s Common Stock (as
adjusted for stock splits, stock dividends and similar events) (the
“ First Option ”), which will vest monthly as to
1/48 th
of the shares subject to the First Option, so that the First Option
will be fully vested four (4) years from the Effective Date,
subject to Executive’s continued service to the Company
through the relevant vesting dates and (ii) a stock option to
purchase 400,000 shares of the Company’s Common Stock (as
adjusted for stock splits, stock dividends and similar events) (the
“ Second Option ”), which, subject to the
accelerated vesting provisions set forth herein, will cliff vest in
full on the four-year anniversary of the Effective Date, subject to
Executive’s continued service to the Company through the
relevant vesting dates; provided, however , that
(1) fifty percent (50%) of the shares subject to the Second
Option will accelerate and vest on the earlier to occur of the
filing by the Company of its first registration statement with the
Securities and Exchange Commission under the Securities Act of
1933, as amended, (the “ Registration Statement Filing
”) or the closing of a Major Transaction (as defined below),
and (2) fifty percent (50%) of the shares subject to the
Second Option will accelerate and vest at the time the Company
first achieves a market capitalization of $500 million (as
reasonably determined by the Board prior to the date on which the
Company’s Common Stock is first traded on a national stock
exchange or quotation system, or if the Company’s Common
Stock is so traded, then based on the closing sale price of the
Company’s Common Stock on such exchange or system). The First
Option and Second Option will have an exercise price equal to the
fair market value of the Company’s Common Stock on the date
of grant as determined by the Board in its sole discretion and will
be subject to the terms, definitions and provisions of the
Company’s 1999 Stock Plan (the “ Option Plan
”) and the related stock option agreements by and between
Executive and the Company (the “ Option Agreements
”), all of which documents are incorporated herein by
reference.
(f)
Loan . The Company will permit Executive to early exercise
the First Option and Second Option pursuant to restricted stock
purchase agreements and to pay the applicable exercise price (as of
the date hereof estimated to be approximately $315,000, based on
the current fair market value of the Company’s Common Stock)
with a full recourse promissory note that is further secured by a
pledge of the Company’s Common Stock owned by Executive (the
“ Loan ”). The Loan, including principal and
outstanding interest thereon, will be payable by Executive at the
earlier of (i) immediately upon Executive’s termination
of services to the Company or (ii) immediately prior to
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the
Registration Statement Filing. The Loan will be reflected in
appropriate promissory note and security agreement d
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