XenoPort,
Inc.
New Hire Option
Agreement
(Nonstatutory Stock
Option)
Pursuant to your
New Hire Stock Option Grant Notice (“ Grant
Notice ”) and this New Hire Option Agreement (the
“ Option Agreement ”), XenoPort, Inc.
(the “ Company ”) has granted you an
option outside of any equity incentive plan maintained by the
Company to purchase the number of shares of the Company’s
Common Stock indicated in your Grant Notice at the exercise price
per share indicated in your Grant Notice.
The details of
your option are as follows:
1.
General . This
option may be granted to you only if you are newly employed by the
Company or an Affiliate. In order to be eligible to receive this
option, you either (i) must never have been an Employee or
director of the Company or an Affiliate, or (ii) entered into
an employment relationship with the Company following a bona
fide period of non-employment. The grant of this option must be
approved either by a majority of Independent Directors or by the
Company’s independent Compensation Committee. Your option is
intended to be exempt from stockholder approval requirements under
the “inducement grant exception” provided by NASDAQ
Marketplace Rule 4350(i)(1)(A)(iv).
(a) Your option shall be administered by the Board unless
and until the Board delegates administration to a Committee or
Committees. If administration is delegated to a Committee, the
Committee shall have, in connection with the administration of your
option, the powers theretofore possessed by the Board that have
been delegated to the Committee, including the power to delegate to
a subcommittee any of the administrative powers the Committee is
authorized to exercise (and references in this Option Agreement to
the Board shall thereafter be to the Committee or subcommittee),
subject, however, to such resolutions as may be adopted from time
to time by the Board. The Board may retain the authority to
concurrently administer your option with the Committee and may, at
any time, revest in the Board some or all of the powers previously
delegated.
(b) The Board shall have the authority to construe and
interpret your option and this Option Agreement, and to establish,
amend and revoke rules and regulations for its administration. The
Board, in the exercise of this power, may correct any defect,
omission or inconsistency in this Option Agreement, in a manner and
to the extent it shall deem necessary or expedient to make your
option fully effective. All determinations, interpretations and
constructions made by the Board in good faith shall not be subject
to review by any person and shall be final, binding and conclusive
on all persons. No member of the Board shall be personally liable
for any action,
determination,
or interpretation made in good faith with respect to this Option
Agreement.
3.
Vesting. Subject
to the limitations contained herein, your option will vest as
provided in your Grant Notice, provided that vesting will cease
upon the termination of your Continuous Service.
4.
Number of Shares and
Exercise Price. In the event of any Capitalization
Adjustments, the Board shall appropriately and proportionately
adjust the class(es) and number of securities subject to your
option and the exercise price per share referenced in your Grant
Notice.
5.
Method of
Payment. Payment of the exercise price is due in full
upon exercise of all or any part of your option. You may elect to
make payment of the exercise price in cash or by check or in any
other manner permitted by your Grant Notice , which
may include one or more of the following:
(a) In the Company’s sole discretion at the time your
option is exercised and provided that at the time of exercise the
Common Stock is publicly traded and quoted regularly in The Wall
Street Journal , pursuant to a program developed under
Regulation T as promulgated by the Federal Reserve Board that,
prior to the issuance of Common Stock, results in either the
receipt of cash (or check) by the Company or the receipt of
irrevocable instructions to pay the aggregate exercise price to the
Company from the sales proceeds.
(b) In the Company’s sole discretion at the time your
option is exercised and provided that at the time of exercise the
Common Stock is publicly traded and quoted regularly in The Wall
Street Journal , by delivery to the Company (either by actual
delivery or attestation) of already-owned shares of Common Stock
that are owned free and clear of any liens, claims, encumbrances or
security interests, and that are valued at Fair Market Value on the
date of exercise. “Delivery” for these purposes, in the
sole discretion of the Company at the time you exercise your
option, shall include delivery to the Company of your attestation
of ownership of such shares of Common Stock in a form approved by
the Company. Notwithstanding the foregoing, you may not exercise
your option by tender to the Company of Common Stock to the extent
such tender would violate the provisions of any law, regulation or
agreement restricting the redemption of the Company’s
stock.
(c) In the Company’s sole discretion at the time your
option is exercised, by a “net exercise” arrangement
pursuant to which the Company will reduce the number of shares of
Common Stock issued upon exercise by the largest whole number of
shares with a Fair Market Value that does not exceed the aggregate
exercise price; provided, however , the Company shall accept
a cash payment from you to the extent of any remaining balance of
the aggregate exercise price not satisfied by such holding back of
whole shares; provided, however , shares of Common Stock
will no longer be outstanding under your option and will not be
exercisable thereafter to the extent that (i) shares are used
to pay the exercise price pursuant to the “net
exercise,” (ii)
shares are
delivered to you as a result of such exercise, and
(iii) shares are withheld to satisfy tax withholding
obligations. To the extent that whole shares are not withheld,
fractional shares will not be issued but will be settled upon in
cash consideration.
6.
Whole Shares. You
may exercise your option only for whole shares of Common
Stock.
7.
Securities Law
Compliance. Notwithstanding anything to the contrary
contained herein, you may not exercise your option unless the
shares of Common Stock issuable upon such exercise are then
registered under the Securities Act or, if such shares of Common
Stock are not then so registered, the Company has determined that
such exercise and issuance would be exempt from the registration
requirements of the Securities Act. The exercise of your option
also must comply with other applicable laws and regulations
governing your option, and you may not exercise your option if the
Company determines that such exercise would not be in material
compliance with such laws and regulations.
8.
Term. You may not
exercise your option before the commencement or after the
expiration of its term. The term of your option commences on the
Date of Grant and expires upon the earliest of the
following:
(a) three (3) months after the termination of your
Continuous Service for any reason other than your Disability or
death, provided that if during any part of such three
(3) month period your option is not exercisable solely because
of the condition set forth in Section 7, your option shall not
expire until the earlier of the Expiration Date indicated in your
Grant Notice or until it shall have been exercisable for an
aggregate period of three (3) months after the termination of
your Continuous Service;
(b) twelve (12) months after the termination of your
Continuous Service due to your Disability;
(c) eighteen (18) months after your death if you die
either during your Continuous Service or within three
(3) months after your Continuous Service
terminates;
(d) twelve (12) months following the effective date of
a Change in Control if your Continuous Service terminates as of or
within twelve (12) months following such Change in
Control;
(e) the Expiration Date indicated in your Grant Notice;
or
(f) the day before the tenth (10th) anniversary of the Date
of Grant.
(a) You may exercise the vested portion of your option
during its term by delivering a Notice of Exercise (in a form
designated by the Company) together with the exercise price to the
Secretary of the Company, or to such other person as the
Company may
designate, during regular business hours, together with such
additional documents as the Company may then require.
(b) By exercising your option you agree that, as a condition
to any exercise of your option, the Company may require you to
enter into an arrangement providing for the payment by you to the
Company of any tax withholding obligation of the Company arising by
reason of (i) the exercise of your option, or (ii) the
disposition of shares of Common Stock acquired upon such
exercise.
10.
Withholding
Obligations.
(a) At the time you exercise your option, in whole or in
part, or at any time thereafter as requested by the Company, you
hereby authorize withholding from payroll and any other amounts
payable to you, and otherwise agree to make adequate provision for
(including by means of a “cashless exercise” pursuant
to a program developed under Regulation T as promulgated by
the Federal Reserve Board to the extent permitted by the Company),
any sums required to satisfy the federal, state, local and foreign
income and employment tax withholding obligations of the Company or
an Affiliate, if any, which arise in connection with the exercise
of your option.
(b) Upon your request and subject to approval by the
Company, in its sole discretion, and compliance with any applicable
legal conditions or restrictions, the Company may withhold from
fully vested shares of Common Stock otherwise issuable to you upon
the exercise of your option a number of whole shares of Common
Stock having a Fair Market Value, determined by the Company as of
the date of exercise; provided, however , that the number of
such shares of Common Stock so withheld shall not exceed the amount
necessary to satisfy the Company’s required tax withholding
obligations using the minimum statutory withholding rates for
federal, state, local and foreign tax purposes, including payroll
taxes, that are applicable to supplemental taxable income. Any
adverse consequences to you arising in connection with such share
withholding procedure shall be your sole responsibility.
(c) You may not exercise your option unless the tax
withholding obligations of the Company and/or any Affiliate are
satisfied. Accordingly, you may not be able to exercise your option
when desired even though your option is vested, and the Company
shall have no obligation to issue a certificate for such shares of
Common Stock or release such shares of Common Stock from any escrow
provided for herein unless such obligations are
satisfied.
11.
Transferability.
Your option is not transferable, except by will or by the laws of
descent and distribution, and is exercisable during your life only
by you. Notwithstanding the foregoing, by delivering written notice
to the Company, in a form satisfactory to the Company, you may
designate a third party who, in the event of your death, shall
thereafter be entitled to exercise your option. In addition, you
may transfer your option to a trust if you are considered to be the
sole beneficial owner (determined under Section 671 of the
Code and applicable state law) while your option is held in
the
trust, provided
that you and the trustee enter into transfer and other agreements
required by the Company.
12.
Dissolution or
Liquidation . In the event of a dissolution or
liquidation of the Company, your option shall terminate immediately
prior to the completion of such dissolution or liquidation;
provided, however , that the Board may, in its sole
discretion, cause your option to become fully vested and
exercisable (to the extent your option has not previously expired
or terminated) before the dissolution or liquidation is completed
but contingent on its completion.
13.
Corporate
Transaction .
(a) In the event of a Corporate Transaction, any surviving
corporation or acquiring corporation (or the surviving or acquiring
corporation’s parent company) may assume or continue your
option or may substitute a similar stock award for your option
(including but not limited to, awards to acquire the same
consideration paid to the stockholders of the Company pursuant to
the Corporate Transaction). A surviving corporation or acquiring
corporation may choose to assume or continue only a portion of your
option or substitute a similar stock award for only a portion of
your option. The terms of any assumption, continuation or
substitution shall be set by the Board.
(b) In the event of a Corporate Transaction in which the
surviving corporation or acquiring corporation (or its parent
company) does not assume or continue your option or substitute a
similar stock award for your option, then if your Continuous
Service has not terminated more than three (3) months prior to the
effective time of the Corporate Transaction, the vesting and
exercisability of your option shall (contingent upon the
effectiveness of the Corporate Transaction) be accelerated in full
to a date prior to the effective time of such Corporate Transaction
as the Board shall determine (or, if the Board shall not determine
such a date, to the date that is five (5) days prior to the
effective time of the Corporate Transaction), and your option shall
terminate if not exercised at or prior to the effective time of the
Corporate Transaction (contingent upon the effectiveness of the
Corporate Transaction).
(c) In the event of a Corporate Transaction in which the
surviving corporation or acquiring corporation (or its parent
company) does not assume or continue your option or substitute a
similar stock award for your option, then if your Continuous
Service has terminated more than three (3) months prior to the
effective time of the Corporate Transaction, the vesting and
exercisability of your option shall not be accelerated and your
option shall terminate if not exercised (if applicable) prior to
the effective time of the Corporate Transaction.
(d) Notwithstanding the foregoing, in the event your option
will terminate if not exercised prior to the effective time of a
Corporate Transaction, the Board may provide, in its sole
discretion, that you may not exercise your option but will receive
a payment, in such form as may be determined by the Board, equal in
value to the excess, if any, of (i) the value of the property
you would have received upon the exercise
of your option,
over (ii) any exercise price payable by you in connection with
such exercise.
14.
Change In
Control. If your Continuous Service terminates within
twelve (12) months following the effective date of a Change in
Control due to (i) an involuntary termination (excluding death
or Disability) without Cause, or (ii) a voluntary termination
for Good Reason, the vesting and exercisability of your option
shall be accelerated in full.
15.
Best After-Tax
Provision.
(a) If any payment or benefit you would receive pursuant to
a Change in Control from the Company or otherwise (“
Payment ”) would (i) constitute a
“parachute payment” within the meaning of
Section 280G of the Code, and (i
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