XenoPort, Inc. 2005 Equity Incentive Plan Stock Unit Award Agreement
Exhibit 10.9
Pursuant to the Stock Unit Grant Notice (“Grant Notice”) and this Stock Unit Award Agreement
(“Agreement”), XenoPort, Inc. (the “Company”) has awarded you a Stock Unit Award pursuant to
Section 7(c) of the Company’s 2005 Equity Incentive Plan (the “Plan”) for the number of Stock Units
as indicated in the Grant Notice (collectively, the “Award”). Defined terms not explicitly defined
in this Agreement but defined in the Plan shall have the same definitions as in the Plan. Subject
to adjustment and the terms and conditions as provided herein and in the Plan, each Stock Unit
shall represent the right to receive one (1) share of Common Stock.
The details of your Award, in addition to those set forth in the Grant Notice, are as follows.
1. Number of Stock Units and Shares of Common Stock. The number of Stock Units in
your Award is set forth in the Grant Notice.
(a) The number of Stock Units subject to your Award and the number of shares of Common Stock
deliverable with respect to such Stock Units may be adjusted from time to time for Capitalization
Adjustments as described in Section 11(a) of the Plan. You shall receive no benefit or adjustment
to your Award with respect to any cash dividend or other distribution that does not result in a
Capitalization Adjustment pursuant to Section 11(a) of the Plan; provided, however, that this
sentence shall not apply with respect to any shares of Common Stock that are delivered to you in
connection with your Award after such shares have been delivered to you.
(b) Any additional Stock Units, shares of Common Stock, cash or other property that becomes
subject to the Award pursuant to this Section 1 shall be subject, in a manner determined by the
Board, to the same forfeiture restrictions, restrictions on transferability, and time and manner of
delivery as applicable to the other Stock Units and Common Stock covered by your Award.
(c) Notwithstanding the provisions of this Section 1, no fractional Stock Units or rights for
fractional shares of Common Stock shall be created pursuant to this Section 1. The Board shall, in
its discretion, determine an equivalent benefit for any fractional Stock Units or fractional shares
that might be created by the adjustments referred to in this Section 1.
2. Vesting. The Stock Units shall vest, if at all, as provided in the Vesting
Schedule set forth in your Grant Notice and the Plan, provided that vesting shall cease upon the
termination of your Continuous Service.
3. Delivery of Shares of Common Stock.
(a) Subject to the provisions of this Agreement and the Plan, in the event one or more Stock
Units vests, the Company shall deliver to you one (1) share of Common Stock for each Stock Unit
that vests on the applicable vesting date. However, if a scheduled delivery date
falls on a date that is not a business day, such delivery date shall instead fall on the next following business
day.
(b) The form of such delivery (e.g., a stock certificate or electronic entry evidencing such
shares) shall be determined by the Company.
4. Payment by You. This Award was granted in consideration of your services for the
Company. Subject to Section 10 below, except as otherwise provided in the Grant Notice, you will
not be required to make any payment to the Company (other than your past and future services for
the Company) with respect to your receipt of the Award, vesting of the Stock Units, or the delivery
of the shares of Common Stock underlying the Stock Units.
5. Securities Law Compliance. You may not be issued any Common Stock under your
Award unless either (i) the shares of Common Stock are then registered under the Securities Act of
1933, as amended (the “Securities Act”) or (ii) the Company has determined that such issuance would
be exempt from the registration requirements of the Securities Act. Your Award must also comply
with other applicable laws and regulations governing the Award, and you shall not receive such
Common Stock if the Company determines that such receipt would not be in material compliance with
such laws and regulations.
6. Restrictive Legends. The Common Stock issued under your Award shall be endorsed
with appropriate legends, if any, determined by the Company.
7. Transfer Restrictions. Prior to the time that shares of Common Stock have been
delivered to you, you may not transfer, pledge, sell or otherwise dispose of the shares in respect
of your Award. For example, you may not use shares that may be issued in respect of your Stock
Units as security for a loan, nor may you transfer, pledge, sell or otherwise dispose of such
shares. This restriction on transfer will lapse upon delivery to you of shares in respect of your
vested Stock Units. Your Award is not transferable, except by will or by the laws of descent and
distribution. 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 receive any distribution of Common Stock to which you were entitled
at the time of your death pursuant to this Agreement.
8. Award not a Service Contract. Your Award is not an employment or service
contract, and nothing in your Award shall be deemed to create in any way whatsoever any obligation
on your part to continue in the service of the Company or any Affiliate, or on the part of the
Company or any Affiliate to continue such service. In addition, nothing in your Award shall
obligate the Company or any Affiliate, their respective stockholders, boards of directors or
employees to continue any relationship that you might have as an Employee or Consultant of the
Company or any Affiliate.
9. Unsecured Obligation. Your Award is unfunded, and even as to any Stock Units that
vest, you shall be considered an unsecured creditor of the Company with respect to the Company’s
obligation, if any, to issue Common Stock pursuant to this Agreement. You shall not have voting or
any other rights as a stockholder of the Company with respect to the Common Stock acquired pursuant
to this Agreement until such Common Stock is issued to you pursuant to
Section 3 of this Agreement.
Upon such issuance, you will obtain full voting and other rights as a stockholder of the Company
with respect to the Common Stock so issued. Nothing contained in this Agreement, and no action
taken pursuant to its provisions, shall create or be construed to
create a trust of any kind or a fiduciary relationship between you and the Company or any
other person.
10. Withholding Obligations.
(a) On or before the time you receive a distribution of Common Stock pursuant to your Award,
or at any time thereafter as requested by the Company, you hereby authorize any required
withholding from the Common Stock issuable to you and otherwise agree to make adequate provision in
cash for any sums required to satisfy the federal, state, local and foreign income and employment
tax withholding obligations of the Company or any Affiliate which arise in connection with your
Award (the “Withholding Taxes”). If specified in your Grant Notice, you may direct the Company to
withhold shares of Common Stock with a Fair Market Value (measured as of the date shares of Common
Stock are delivered pursuant to Section 3) equal to the amount of such Withholding Taxes; 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.
(b) Unless the tax withholding obligations of the Company and/or any Affiliate are satisfied,
the Company shall have no obligation to deliver to you any Common Stock.
(c) In the event the Company’s obligation to withhold arises prior to the delivery to you of
Common Stock or it is determined after the delivery of Common Stock to you that the amount of the
Company’s withholding obligation was greater than the amount withheld by the Company, you agree to
indemnify and hold the Company harmless from any failure by the Company to withhold the proper
amount.
11. Change In Control.
(a) 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 of your Award shall be
accelerated in full.
(b) “Cause,” “Change in Control,” “Continuous Service” and “Disability” shall have the
respective meanings set forth in the Plan.
(c) “Good Reason” means that one or more of the following are undertaken by the Company
without your express written consent: (i) the assignment to you of any duties or responsibilities
that results in a material diminution in your function as in effect immediately prior to the
effective date of the Change in Control; provided, however, that neither a change in your title or
reporting relationships nor the Common Stock ceasing to be listed on any established stock exchange
or traded on the Nasdaq Global Market or the Nasdaq Capital Market
shall provide the basis for a voluntary termination with Good Reason; (ii) a material reduction by the Company in your annual
base salary, as in effect on the effective date of the Change in Control or as increased
thereafter; provided, however, that Good Reason shall not be deemed to
have occurred in the event of a reduction in your annual base salary that is pursuant to a
salary reduction program affecting substantially all of the employees of the Company and that does
not adversely affect you to a greater extent than other similarly situated employees; (iii) any
failure by the Company to continue in effect any material benefit plan or program, including
incentive plans or plans with respect to the receipt of securities of the Company, in which you
were participating immediately prior to the effective date of the Change in Control (hereinafter
referred to as “Benefit Plans”), or the taking of any action by the Company that would materially
adversely affect your participation in or materially reduce your benefits under the Benefit Plans
or deprive you of any material fringe benefit that you enjoyed immediately prior to the effective
date of the Change in Control; provided, however, that Good Reason shall not be deemed to have
occurred if the Company provides for your participation in benefit plans and programs that, taken
as a whole, are comparable to the Benefit Plans; (iv) a relocation of your business office to a
location more than fifty (50) miles from the location at which you performed your duties as of the
effective date of the Change in Control, except for required travel by you on the Company’s
business to an extent substantially consistent with your business travel obligations prior to the
effective date of the Change in Control; or (v) a material breach by the Company of any provision
of the Plan or this Agreement or any other material agreement between you and the Company
concerning the terms and conditions of your employment.
12. 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 (ii) but for this sentence, be subject to the excise tax imposed by
Section 4999 of the Code (the “Excise Tax”), then such Payment shall be equal to the Reduced
Amount. The “Reduced Amount” shall be either (x) the largest portion of the Payment that would
result in no portion of the Payment being subject to the Excise Tax, or (y) the largest portion, up
to and including the total, of the Payment, whichever amount, after taking into account all
applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all
computed at the highest applicable marginal rate), results in your receipt, on an after-tax basis,
of the greater amount of the Payment notwithstanding that all or some portion of the Payment may be
subject to the Excise Tax. If a reduction in payments or benefits constituting “parachute payments”
is necessary so that the Payment equals the Reduced Amount, reduction shall occur in a manner
necessary to provide you with the greatest economic benefit. If more than one manner of reduction
of payments or benefits necessary to arrive at the Reduced Amount yields the greatest economic
benefit, the payments and benefits shall be reduced pro rata.
(b) The accounting firm engaged by the Company for general tax purposes as of the day prior to
the effective date of the Change in Control shall perform the foregoing calculations. If the
accounting firm so engaged by the Company is serving as accountant or auditor for the individual,
entity or group effecting the Change in Control, the Company shall appoint a nationally recognized
accounting firm to make the determinations required hereunder.
The Company shall bear all expenses
with respect to the determinations by such accounting firm required to be made hereunder.
(c) The accounting firm engaged to make the determinations hereunder shall provide its
calculations, together with detailed supporting documentation, to you and the Company within
fifteen (15) calendar days after the date on which your right to a Payment is triggered (if
requested at that time by you or the Company) or such other time as requested by you or the
Company. If the accounting firm determines that no Excise Tax is payable with respect to a
Payment, either before or after the application of the Reduced Amount, it shall furnish you and the
Company with an opinion reasonably acceptable to you that no Excise Tax will be imposed with
respect to such Payment. Any good faith determinations of the accounting firm made hereunder shall
be final, binding and conclusive upon you and the Company.
13. Notices. Any notices provided for in your Award or the Plan shall be given in
writing to each of the other parties hereto and shall be deemed effectively given on the earlier of
(i) the date of personal delivery, including delivery by express courier, or (ii) the date that is
five (5) days after deposit in the United States Post Office (whether or not actually received by
the addressee), by registered or certified mail with postage and fees prepaid, addressed at the
following addresses, or at such other address(es) as a party may designate by ten (10) days’
advance written notice to each of the other parties hereto:
| Company: | XenoPort, Inc. Attn: General Counsel ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ |
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| Participant: | Your address as on file with the Company at the time notice is given |
14. Headings. The headings of the Sections in this Agreement are inserted for
convenience only and shall not be deemed to constitute a part of this Agreement or to affect the
meaning of this Agreement.
15. Amendment. This Agreement may be amended only by a writing executed by the
Company and you which specifically states that it is amending this Agreement. Notwithstanding the
foregoing, this Agreement may be amended solely by the Company by a writing which specifically
states that it is amending this Agreement, so long as a copy of such amendment is delivered to you,
and provided that no such amendment adversely affecting your rights hereunder may be made without
your written consent. Without limiting the foregoing, the Company reserves the right to change, by
written notice to you, the provisions of this Agreement in any way it may deem necessary or
advisable to carry out the purpose of the grant as a result of any change in applicable laws or
regulations or any future law, regulation, ruling, or judicial decision, provided that any such
change shall be applicable only to rights relating to that portion of the Award that has not been
delivered to you in Common Stock pursuant to Section 3.
16. Miscellaneous.
(a) The rights and obligations of the Company under your Award shall be transferable by the
Company to any one or more persons or entities, and all covenants and agreements hereunder shall
inure to the benefit of, and be enforceable by the Company’s successors and assigns.
(b) You agree upon request to execute any further documents or instruments necessary or
desirable in the sole determination of the Company to carry out the purposes or intent of your
Award.
(c) You acknowledge and agree that you have reviewed your Award in its entirety, have had an
opportunity to obtain the advice of counsel prior to executing and accepting your Award and fully
understand all provisions of your Award.
(d) This Agreement shall be subject to all applicable laws, rules, and regulations, and to
such approvals by any governmental agencies or national securities exchanges as may be required.
(e) All obligations of the Company under the Plan and this Agreement shall be binding on any
successor to the Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.
17. Governing Plan Document. Your Award is subject to all the provisions of the
Plan, the provisions of which are hereby made a part of your Award, and is further subject to all
interpretations, amendments, rules and regulations which may from time to time be promulgated and
adopted pursuant to the Plan. In the event of any conflict between the provisions of your Award
and those of the Plan, the provisions of the Plan shall control; provided, however, that Section 3
of this Agreement shall govern the timing of any distribution of Common Stock under your Award.
The Company shall have the power to interpret the Plan and this Agreement and to adopt such rules
for the administration, interpretation, and application of the Plan as are consistent therewith and
to interpret or revoke any such rules. All actions taken and all interpretations and determinations
made by the Board shall be final and binding upon you, the Company, and all other interested
persons. No member of the Board shall be personally liable for any action, determination, or
interpretation made in good faith with respect to the Plan or this Agreement.
18. Effect on Other Employee Benefit Plans. The value of the Award subject to this
Agreement shall not be included as compensation, earnings, salaries, or other similar terms used
when calculating benefits under any employee benefit plan (other than the Plan) sponsored by the
Company or any Affiliate except as such plan otherwise expressly provides. The Company expressly
reserves its rights to amend, modify, or terminate any or all of the employee benefit plans of the
Company or any Affiliate.
19. Choice of Law. The interpretation, performance and enforcement of this Agreement
shall be governed by the law of the state of California without regard to such state’s conflicts of
laws rules.
20. Severability. If all or any part of this Agreement or the Plan is declared by
any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity
shall not invalidate any portion of this Agreement or the Plan not declared to be unlawful or
invalid. Any Section of this Agreement (or part of such a Section) so declared to be unlawful or
invalid shall, if possible, be construed in a manner which will give effect to the terms of such
Section or part of a Section to the fullest extent possible while remaining lawful and valid.
21. Other Documents. You hereby acknowledge receipt or the right to receive a
document providing the information required by Rule 428(b)(1) promulgated under the Securities Act
(which includes the prospectus for this Award). In addition, you acknowledge receipt of the
Company’s Policy Regarding Stock Trading by Directors, Officers and Other Designated Insiders.
* * * * *
This Stock Unit Award Agreement shall be deemed to be signed by the Company and you upon your
electronic signing of the Stock Unit Grant Notice to which it is attached.