Form 8-K XENOPORT INC For: Sep 29

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October 1, 2015 4:16 PM EDT

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): September 29, 2015

XENOPORT, INC.

(Exact name of registrant as specified in its charter)

Delaware

000-51329

94-3330837

(State or Other Jurisdiction

of Incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

3410 Central Expressway

Santa Clara, California 95051

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (408) 616-7200

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 2 — Financial Information

Item 2.05 Costs Associated With Exit or Disposal Activities

On September 29, 2015, the board of directors (the “Board”) of XenoPort, Inc. (“XenoPort,” or the “Company”) committed to implementing a reduction in force that includes the elimination of approximately 25 positions, including positions related to the Company’s XP23829 product candidate development program in light of the Company’s announced new strategic focus (see Item 8.01 below). The Company notified the employees affected by the reduction in force on October 1, 2015.

The Company estimates that it will incur total charges of approximately $2.0 million in the fourth quarter of 2015 in connection with the restructuring, comprised primarily of severance and other one-time termination benefits. The Company expects that positions will be eliminated by December 23, 2015. The Company expects that the associated cash payments of approximately $2.0 million will be paid out commencing in the fourth quarter of 2015 and will be completed in the fourth quarter of 2016. The estimates of total charges and cash expenditures that the Company expects to incur in connection with the workforce reduction, and the timing thereof, are subject to a number of assumptions, and actual results may materially differ.

This Current Report on Form 8-K contains “forward-looking” statements, including, without limitation, statements related to the estimated charges for the reduction in force, including related estimated cash expenditures, and the timing for the completion of the reduction in force. Any statements contained in this Current Report on Form 8-K that are not statements of historical fact may be deemed to be forward-looking statements. These forward-looking statements are based upon the Company’s current expectations. Forward-looking statements involve risks and uncertainties. The Company’s actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation, the risk that restructuring costs may be greater than currently anticipated, and risks related to the impact of the workforce reduction on the Company’s business and unanticipated charges not currently contemplated that may occur as a result of the reduction in force. The Company’s most recent Quarterly Report on Form 10-Q, filed with the SEC on August 6, 2015, contains under the heading, “Risk Factors,” a more comprehensive description of risks to which the Company is subject. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.

Section 5 — Corporate Governance and Management

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Resignation of Ronald W. Barrett, Ph.D. as Chief Executive Officer and Director

In connection with the Company’s strategic shift to focus on commercializing its commercial product, HORIZANT (gabapentin enacarbil) Extended Release Tablets (see Item 8.01 below), on September 29, 2015, Ronald W. Barrett, Ph.D. notified the Board of his decision to retire as Chief Executive Officer of the Company and a director on the Board, effective immediately. Dr. Barrett’s resignation is not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

Dr. Barrett will receive the following severance benefits under his existing Severance Rights Agreement (the “Barrett Severance Rights Agreement”) as a result of his resignation (which the Company is treating as a qualifying termination for purposes of Dr. Barrett’s severance benefits thereunder):

(a)

continued payment of his base salary for 18 months;

(b)

a prorated bonus for the year of termination, paid in a lump sum; and

(c)

payment of up to 18 months of premiums under COBRA.

The Company estimates it will incur approximately $1.2 million as a result of Dr. Barrett’s severance benefits. Any additional amounts that Dr. Barrett would be eligible to receive upon a Change of Control (as defined in the Barrett Severance Rights Agreement), if any, would be incremental only.

In addition, pursuant to a Transition and Consulting Agreement dated October 1, 2015 (the “Consulting Agreement”), Dr. Barrett will provide strategic consulting services to the Company for a period of twelve months, unless earlier terminated. Pursuant to the terms of the Consulting Agreement, Dr. Barrett will be paid a monthly consulting fee of $8,625. In addition, the equity awards previously granted to Dr. Barrett pursuant to the Company’s equity incentive plans will be allowed to continue to vest in accordance with their existing terms for so long Dr. Barrett continues to provide service under the Consulting Agreement, subject to certain exceptions. In addition, the Consulting Agreement will have the effect of amending the Barrett Severance Rights Agreement to provide that if within six months after September 29, 2015, the Company enters into a definitive agreement which, upon consummation would constitute a Change of Control (as defined in the Barrett Severance Rights Agreement), and a Change of Control subsequently results from such definitive agreement, then Dr. Barrett would be entitled to receive the Change of Control benefits stated in the Barrett Severance Rights Agreement (which reflects an increase in the post-employment eligibility period from three (3) months to at least six (6) months).

The foregoing description of the Consulting Agreement is not intended to be complete and is qualified in its entirety by references to the full text of the Consulting Agreement that is filed as Exhibit 10.38 to this Current Report on Form 8-K.

Appointment of Vincent J. Angotti as Chief Executive Officer and Director

Also on September 29, 2015, the Board appointed Mr. Vincent J. Angotti as a director on the Board and as Chief Executive Officer of the Company, each effective as of September 29, 2015. Mr. Angotti’s appointment to the Board filled the vacancy created by Dr. Barrett’s resignation discussed above. In addition, John G. Freund, M.D., formerly the Lead Independent Director of the Board, was appointed by the Board to become the Chairman of the Board.

As previously disclosed, Mr. Angotti, age 47, had previously served as the Company’s Executive Vice President and Chief Operating Officer since June 2012. Prior to that, Mr. Angotti served as Senior Vice President and Chief Commercialization Officer from May 2008 to June 2012. From 2001 to 2008, Mr. Angotti held several positions with Reliant Pharmaceuticals, Inc., the most recent of which was Senior Vice President of Sales and Marketing. GlaxoSmithKline acquired Reliant Pharmaceuticals in 2008. Prior to Reliant Pharmaceuticals, from 1991 to 2001, Mr. Angotti held several positions at Novartis Pharmaceuticals Corporation, most recently as Executive Director, Field Operations. Mr. Angotti received a B.S. from Cornell University and an M.B.A. from Columbia University.

In connection with Mr. Angotti’s appointment as Chief Executive Officer, the Company and Mr. Angotti entered into a promotion letter agreement, which had the effect of amending his employment agreement with the Company, to provide the following:

•

the promotion to the position of the Company’s Chief Executive Officer;

•

an increase in annual base salary to $525,000;

•

a target bonus to remain at 60% of annual base salary;

•

a time-based restricted stock unit award for 326,086 shares, subject to vesting in four equal successive annual installments; and

•

a performance-based restricted stock unit award for 108,695 shares, 100% of which will vest if, on or prior to September 29, 2019, the daily volume-weighted average price for the Company’s common stock is greater or equal to $6.90 per share (reflecting a 100% increase from the per share closing price of the Company’s common stock of $3.45 per share as of September 29, 2015) for 30 consecutive trading days.

The foregoing description of Mr. Angotti’s promotion letter agreement is not intended to be complete and is qualified in its entirety by references to the full text of the promotion letter agreement that is filed as Exhibit 10.39 to this Current Report on Form 8-K.

In addition, Mr. Angotti and the Company entered into a new Severance Rights Agreement (the “Angotti Severance Rights Agreement”) pursuant to which Mr. Angotti would be eligible to receive:

(1)

in the event of a termination by the Company without Cause (as defined in the Angotti Severance Rights Agreement) and other than as a result of death of disability, or a resignation by Mr. Angotti for Good Reason (as defined in the Angotti Severance Rights Agreement) (either such termination, a “Qualifying CEO Termination”), in either case outside of the period beginning three months prior to, and ending 18 months after the closing of, a Change of Control (as defined in the Angotti Severance Rights Agreement) (such 21-month period, the “Change of Control Period”):

(a)

continued payment of his base salary for 18 months;

(b)

a prorated bonus for the year of termination, paid in a lump sum; and

(c)

payment of up to 18 months of premiums under COBRA; and

(2)

in the event of a Qualifying CEO Termination during the Change of Control Period:

(a)

continued payment of his base salary for 24 months;

(b)

200% of his target bonus for the year of termination, paid over 24 months;

(c)

a prorated target bonus for the year of termination, paid in a lump sum;

(d)

payment of up to 24 months of premiums under COBRA; and

(e)

full acceleration of the service-based vesting of his equity awards.

The vesting of Mr. Angotti’s performance-based RSU award that was granted in connection with his promotion to Chief Executive officer will not be subject to acceleration under the Angotti Severance Rights Agreement and remains subject to the terms of the applicable award agreement. The Angotti Severance Rights Agreement does not contain a 280G excise tax gross-up provision, and Mr. Angotti would be required to agree to a release of claims against the Company to receive any severance benefits included in the Angotti Severance Rights Agreement. The Angotti Severance Rights Agreement replaces Mr. Angotti’s previous severance arrangement with the Company.

The foregoing description of the Angotti Severance Rights Agreement is not intended to be complete and is qualified in its entirety by references to the full text of the Angotti Severance Rights Agreement that is filed as Exhibit 10.40 to this Current Report on Form 8-K.

Section 8 — Other Events

Item 8.01 Other Events.

On October 1, 2015, the Company issued a press release announcing: (1) the strategic shift of the Company to focus on commercializing HORIZANT; (2) the resignations of Dr. Barrett as Chief Executive Officer and as a director of the Company; (3) the appointment of Mr. Angotti as Chief Executive Officer and as a director of the Company; (4) the appointment of John G. Freund, M.D., formerly the Lead Independent Director of the Board, to the position of Chairman of the Board (all discussed in Item 5.02 above) and (5) the planned reduction in force (discussed in Item 2.05 above). The press release is filed herewith as Exhibit 99.1 and is incorporated by reference herein.

Section 9 — Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

(d)

Exhibits


Exhibit Number		Description

10.38		Transition and Consulting Agreement, dated October 1, 2015, between the Company and Ronald W. Barrett, Ph.D.

10.39		Promotion Letter Agreement, dated September 29, 2015, between the Company and Vincent J. Angotti.

10.40		Severance Rights Agreement, dated September 29, 2015, between the Company and Vincent J. Angotti

99.1		Press release, dated October 1, 2015, titled “XenoPort Announces Plan to Focus on its Growing HORIZANT Business and Names Vincent J. Angotti Chief Executive Officer and Director”

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	XENOPORT, INC.
	(Registrant)

Dated: October 1, 2015	By:	/s/ William G. Harris
		William G. Harris
		Senior Vice President of Finance and
		Chief Financial Officer

EXHIBIT INDEX


Exhibit Number		Description

10.38		Transition and Consulting Agreement, dated October 1, 2015, between the Company and Ronald W. Barrett, Ph.D.

10.39		Promotion Letter Agreement, dated September 29, 2015, between the Company and Vincent J. Angotti.

10.40		Severance Rights Agreement, dated September 29, 2015, between the Company and Vincent J. Angotti

99.1		Press release, dated October 1, 2015, titled “XenoPort Announces Plan to Focus on its Growing HORIZANT Business and Names Vincent J. Angotti Chief Executive Officer and Director”

Exhibit 10.38

XENOPORT, INC.

October 1, 2015

Ronald W. Barrett, PhD

Re:

Transition and Consulting Agreement

Dear Ron:

This letter sets forth the terms of the transition and consulting agreement (the “Agreement”) that XenoPort, Inc. (the “Company”) is extending to you.

1. Transition Date. You resigned as Chief Executive Officer of the Company and from all positions you hold on the Company’s Board of Directors (the “Board”), and the Company hereby accepts such resignations effective as of September 29, 2015 (the “CEO Resignation Date”); however, you will remain an employee of the Company until October 1, 2015 (the “Transition Date”), at which time your employment with the Company will terminate in all capacities. After the Transition Date, you will cease to hold any offices or positions with the Company except as otherwise provided herein.

2. Accrued Salary and Paid Time Off. The Company will pay you all accrued salary and all accrued and unused flexible time off (“FTO”) earned through the Transition Date, subject to applicable payroll deductions and withholdings. You are entitled to these payments regardless of whether or not you sign this Agreement.

3. Expense Reimbursement. You agree that, within thirty (30) days after the Transition Date, you will submit to the Company your final documented expense reimbursement statement reflecting all business expenses you incurred through the Transition Date, if any, for which you seek reimbursement. The Company will reimburse you for these expenses pursuant to its regular business practice.

4. Health Insurance. You will cease to be eligible to participate in any of the Company’s benefit plans or programs after the Transition Date; however, to the extent provided by the federal COBRA law or, if applicable, state insurance laws (collectively, “COBRA”), and by the Company’s current group health insurance policies, you will be eligible to continue your group health insurance benefits after the Transition Date at your own expense (subject to the severance benefit provisions set forth below). Later, you may be able to convert to an individual policy through the provider of the Company’s health insurance, if you wish. You will be provided with a separate notice further describing your rights and obligations under COBRA on or after the Transition Date.

5. Severance Benefits. If you (i) return this fully-executed Agreement to the Company within twenty-one (21) days after you receive it, and allow the Agreement to become fully-effective and non-revocable by its terms, and (ii) remain in compliance with your continuing obligations to the Company (including under this Agreement and the agreements incorporated

Ronald W. Barrett

October 1, 2015

Page 2

herein by reference) (collectively, the “Severance Conditions”), the Company will treat your exit from the Company as a “Qualifying Termination” pursuant to your Severance Rights Agreement with the Company dated February 9, 2012 (the “Severance Rights Agreement”, a copy of which is attached as Exhibit A and incorporated herein by reference) and provide you with the severance benefits described below.

(a) Baseline Severance. After the Transition Date, the Company will provide you with the severance benefits (the “Baseline Severance Package”) set forth in Section 3 (Severance – No Change of Control) of the Severance Rights Agreement, subject to the same payment timing and other terms and conditions set forth in the Severance Rights Agreement.

(b) Enhanced Severance Benefits Upon a Change of Control. If (i) within six (6) months after the CEO Resignation Date (regardless of whether or not you are an active consultant to the Company at that time), the Company enters into a definitive agreement which, upon consummation, would constitute a Change of Control (as defined in the Severance Rights Agreement), and (ii) a Change of Control subsequently results from such agreement, then, provided you remain in compliance with your continuing obligations to the Company, the Company will provide you with the enhanced severance benefits (the “Enhanced Severance Package”) set forth in Section 4 (Severance – Change of Control Period) of the Severance Rights Agreement. Any severance pay or benefits provided to you pursuant to Section 5(a) of this Agreement prior to the date of a Change of Control shall be applied to reduce your entitlements under this provision. (For avoidance of doubt, nothing in Section 4(e) (Vesting Acceleration) of the Severance Rights Agreement alters or amends any accelerated vesting benefits available to you with respect to any outstanding stock options or other equity awards you received from the Company (including but not limited to Restricted Stock Unit awards) (collectively, the “Equity Awards”) pursuant to the terms of the plan documents and agreements applicable to those Equity Awards.)

(c) Extended Exercise Period. To enable you to secure the benefits of the Enhanced Severance Package as well as other Change of Control benefits being made available to you under this Agreement, the Company will extend the exercise period applicable to the equity awards you currently hold (the “Equity Awards”), if necessary, so that each Equity Award shall remain exercisable until the later of (i) its original exercise period as provided in the Equity Awards and (ii) the date that is six (6) months after the CEO Resignation Date (the “Extended Exercise Period”). As a result of this Extended Exercise Period, any stock options held by you which are incentive stock options shall be converted to non-qualified stock options to the extent required by law. Except as provided herein, the Company makes no representations or assurances regarding the impact of the Extended Exercise Period on the Equity Awards, and you are hereby advised to consult with your own financial or tax advisors about such matters.

6. Consulting Agreement. As part of this Agreement, the Company will retain you as a consultant immediately after the Transition Date, and you agree to serve as a consultant to the Company, on the terms set forth below. (Notwithstanding the foregoing, the consulting relationship will immediate lapse and terminate if the Severance Conditions are not timely met.)

Ronald W. Barrett

October 1, 2015

Page 3

(a) Consulting Period. You will serve as a consultant for a twelve (12) month period commencing immediately after the Transition Date (the “Consulting Period”), subject to the early termination provisions set forth in Section 6(g)(i) below. The parties may, in their sole discretion negotiate an extension of the Consulting Period on mutually acceptable terms, provided, however, that any such extension must be memorialized in a written agreement signed by the parties to be effective.

(b) Consulting Services. As a consultant, you shall assist the Company by performing services within your area of expertise as may be reasonably requested by the Company’s Chief Executive Officer (the “CEO”) or a duly authorized member of the Board from time to time (collectively, the “Consulting Services”), including (but not limited to) assisting with regulatory and business matters related to HORIZANT, and assisting in the Company’s efforts to explore and consummate a transaction with respect to its XP23829 product candidate. You agree to exercise the highest degree of professionalism and utilize your expertise and creative talents in performing the Consulting Services. You agree to make yourself available to perform the Consulting Services for up to a maximum of thirty-four (34) hours per month. You will perform the Consulting Services remotely (from your home or outside office) unless otherwise specifically requested or permitted by the CEO or Board in writing.

(c) Independent Contractor Relationship. Your relationship with the Company during the Consulting Period will be that of an independent contractor only. Nothing in this Agreement is intended, or should be construed, to create a partnership, agency, joint venture or employment relationship with the Company after the Transition Date. As an independent contractor, you will not be entitled to any of the benefits which the Company may make available to its employees generally, and you shall be solely responsible for, and shall comply at your own expense with all applicable provisions of workers’ compensation laws, unemployment compensation laws, federal Social Security law, the Fair Labor Standards Act, federal, state and local income tax laws, and all other applicable federal, state and local laws, regulations and codes relating to terms and conditions of employment required to be fulfilled by employers and independent contractors. During the Consulting Period, you will have no responsibilities or authority as a consultant to the Company other than as provided in this Agreement. You will have no authority to bind the Company to any contractual obligations, whether written, oral or implied, except with the written authorization of the Company’s CEO or the Board; and you agree not to represent to anyone that you have such authority. You agree not to represent or purport to represent the Company in any manner whatsoever to any third party unless authorized by the Company, in writing, to do so.

(d) Compensation. You will be compensated for the Consulting Services through the cash compensation and vesting benefits described below.

(i) Fees. The Company will pay you fees for the Consulting Services (the “Fees”) in the total amount of $103,430 for the entirety of the anticipated 12-month Consulting Period, to be paid in equal monthly installments (prorated for any partial month of service), on or before the last day of each full month of the Consulting Period. The Company shall pay the Fees without withholdings or deductions and shall report such compensation by filing a Form 1099-MISC with the Internal Revenue Service as required by law. You shall be responsible for paying

Ronald W. Barrett

October 1, 2015

Page 4

all taxes of any nature whatsoever arising from or relating to the Fees and any other compensation paid to you under this Agreement, including, without limitation, any federal, state and/or local taxes. You hereby indemnify and hold harmless the Company from and against any taxes, penalties, or interest that may be imposed on you by any governmental authority arising from or relating to the Fees or any other compensation provided to you for your Consulting Services.

(ii) Vesting. Your unvested Equity Awards will continue to vest during the Consulting Period on the same terms and conditions set forth in the agreements and plan documents governing the Equity Awards (collectively, the “Equity Award Agreements”); provided, however, that: (1) you shall not be entitled to receive accelerated vesting upon a termination of your consultancy for “Good Reason” (as defined in the Equity Award Agreements); and (2) your eligibility for vesting acceleration in connection with a termination of your consultancy for Cause shall be determined in accordance with Section 6(g)(iii) of this Agreement and the Cause definition contained herein.

(iii) Expense Reimbursement. The Company will reimburse you for all documented business expenses reasonably incurred by you in performing the Consulting Services pursuant to the Company’s regular business practice. You agree to submit your expense reimbursement statements in a timely fashion, and to submit a final expense reimbursement statement not later than thirty (30) days after the end of the Consulting Period.

(e) Proprietary Information and Inventions. You agree that, during the Consulting Period and thereafter, you will not use or disclose, in any manner that is not authorized by the Company or essential to the performance of the Consulting Services, any confidential or proprietary information or materials of the Company that you obtain or develop in the course of performing the Consulting Services. Any and all work product you create in the course of performing the Consulting Services will be the sole and exclusive property of the Company. You hereby assign to the Company all right, title and interest in all inventions, techniques, processes, materials and other intellectual property developed in the course of performing the Consulting Services. You further acknowledge and reaffirm your continuing obligations, both during the Consulting Period and thereafter, under your Employee Proprietary Information Agreement with the Company dated August 2, 1999 (the “Proprietary Information Agreement”), a copy of which is attached hereto as Exhibit B and incorporated herein by reference.

(f) Other Work Activities. During the Consulting Period, you may engage in other employment, consulting or other work relationships and activities in addition to your continuing obligations to the Company as long as such relationships and activities do not compete with the business activities of the Company, or unreasonably interfere with your obligations to the Company or create an actual or apparent conflict of interest, each as determined by the Board in its sole discretion. In order to protect the trade secrets and confidential and proprietary information of the Company and to avoid any actual or apparent conflict of interest, you further agree that, during the Consulting Period, you will notify the Company, in writing, before you commence employment or accept a board position with any outside business entity.

Ronald W. Barrett

October 1, 2015

Page 5

(g) Early Termination; Post-Termination Rights.

(i) Early Termination. Your consultancy with the Company will automatically end on the last day of the scheduled Consulting Period. The Consulting Period may be early terminated (prior to the expiration of the scheduled 12-month term): (1) at any time, upon mutual written consent of the parties; (2) by you, for any or no reason, upon thirty (30) days advance written notice to the Company; or (3) by the Company for Cause, effective upon written notice to you.

(ii) Cause Defined. For purposes of this Agreement, “Cause” for the Company to early terminate your consultancy means: (A) any act of personal dishonesty by you in connection with your continuing duties and relationship with the Company which is intended to result in your own substantial personal enrichment; (B) your conviction or plea of nolo contendere to a felony; (C) any willful act by you that constitutes gross misconduct and that is injurious to the Company; or (D) your failure to perform your Consulting Services in a reasonably satisfactory manner or your material breach of any of your continuing obligations to the Company under this Agreement (including, without limitation, your Proprietary Information Agreement incorporated herein by reference) which failure or breach, if reasonably susceptible of cure, continues for more than ten (10) days after the Company issues you written notice to cure.

(iii) Post-Termination Rights; Accelerated Vesting Upon a Double Trigger Event. Upon the termination of the Consulting Period for any reason, you shall be entitled to receive all compensation earned and payable for your services through the Consulting End Date, as well as reimbursement of all documented and reimbursable expenses incurred through the Consulting End Date. You will not be entitled to any further compensation or benefits from the Company after the Consulting End Date; provided, however, that (1) if your consultancy is terminated by the Company without Cause on or after a Change of Control that occurs during the Consulting Period (a “Double Trigger Event”), and (2) you provide the Company with a full general release of claims in substantially the form attached hereto as Exhibit C (the “Post-Consulting Period Release”) within ten (10) business days after the Consulting End Date, your then-outstanding unvested Equity Awards (including all service-based and performance-based Equity Awards) will vest in full effective as of the later of the day immediately prior to the Change of Control or the Consulting End Date.

7. No Other Compensation or Benefits. You acknowledge that, except as expressly provided in this Agreement, you have not earned and will not receive any additional compensation, severance (including but not limited to under the Severance Agreement) or benefits on or after the Transition Date, with the exception of any vested right you may have under the express terms of a written ERISA-qualified benefit plan (e.g., 401(k) account). By way of example, you acknowledge that you have not earned and are not owed any equity interests or vesting, bonus, incentive compensation, commissions or severance, and that you will not continue to vest in or earn any additional equity interests, bonus, incentive compensation, commissions or severance after the Transition Date.

Ronald W. Barrett

October 1, 2015

Page 6

8. Return of Company Property.

(a) General Obligations. By no later than October 31, 2015 and excluding the Consulting Materials (defined below), you shall return to the Company all Company documents (and all copies thereof) and other Company property in your possession or control, including but not limited to Company files, notes, correspondence, e-mail or other electronically stored information, financial and operational information, customer lists and contact information, technical design or systems information, product and services information, research and development information, drawings, records, plans, forecasts, reports, payroll information, spreadsheets, studies, analyses, compilations of data, proposals, agreements, sales and marketing information, personnel information, specifications, code, software, databases, computer-recorded information, tangible property and equipment (including but not limited to computers, laptops, facsimile machines, mobile telephones, handheld devices, tablets and servers), credit cards, entry cards, identification badges, keys and any materials of any kind which contain or embody any proprietary or confidential information of the Company (and all reproductions thereof in whole or in part and in any medium), without retaining any copy, reproduction or embodiment of any such information in any form. You agree that you will make a diligent search to locate any such documents, property and information within the timeframe referenced above. In addition, if you have used any personally-owned computer, server or e-mail system to receive, store, review, prepare or transmit any confidential or proprietary data, materials or information of the Company, then on or before October 31, 2015 and excluding the Consulting Materials, you must provide the Company with a computer-useable copy of such information and then permanently delete and expunge such confidential or proprietary information from those systems without retaining any copies, reproductions or embodiments (in whole or in part); and you agree to provide the Company reasonable access to your system, as requested, to verify that the necessary copying and deletion is done. Your timely compliance with the provisions of this Section 8(a) is a precondition to your receipt of the severance benefits provided hereunder.

(b) Consulting Materials. You shall be entitled to temporarily retain all Company documents and other Company property in your possession or control that the Company expressly authorizes you in writing to retain in order to perform the Consulting Services (collectively, the “Consulting Materials”); provided, however, that you agree to return all Consulting Materials to the Company at the end of the Consulting Period or upon the Company’s earlier request, without retaining any copies, reproductions or embodiments (in whole or in part). If you used any personally-owned computer, server, or e-mail system to receive, store, review, prepare or transmit any confidential or proprietary data, materials or information of the Company in connection with your performance of the Consulting Services, then within (30) days after Consulting End Date, you must provide the Company with a computer-useable copy of such information and then permanently delete and expunge such confidential or proprietary information from those systems without retaining any copies, reproductions or embodiments (in whole or in part); and you agree to provide the Company reasonable access to your system, as requested, to verify that the necessary copying and deletion is done.

9. Nondisparagement. You agree not to disparage the Company, and the Company’s officers, directors, employees, attorneys, shareholders, parents, subsidiaries, agents and affiliates,

Ronald W. Barrett

October 1, 2015

Page 7

in any manner likely to be harmful to them or their business, business reputation or personal reputation; provided that you may respond accurately and fully to any request for information if required by legal process or in connection with a government investigation.

10. Non-Interference. During the Consulting Period and for twelve (12) months thereafter, you agree that you will not directly or indirectly by any means (including but not limited to acting by or through any other person or entity) solicit, induce or attempt to solicit or induce any employee, independent contractor, consultant or service provider of the Company to terminate or breach any his, her or its employment, contractual or other business relationship with the Company.

11. Communications. Except as otherwise authorized or required by this Agreement, any statements or disclosures made by either party to communicate your change in status (including the reasons for your departure from the Company) shall be consistent with the text attached hereto as Exhibit D (the “Statement”) as well as the parties’ other obligations under this Agreement (including but not limited to the obligations under Section 9 (Nondisparagement) above. Notwithstanding any other provision of this Agreement, the parties acknowledge that the Company may disclose the material terms of this Agreement and publicly file the Agreement as required by applicable securities laws.

12. No Adverse Action/Cooperation and Assistance. You agree that you will not voluntarily provide assistance, information or advice, directly or indirectly (including through agents or attorneys), to any other person or entity in connection with any claim or cause of action of any kind brought against the Company, nor shall you induce or encourage any person or entity to bring such claims; provided, however, that this limitation shall not prevent you from pursuing a claim on your own behalf (to the extent such claim is not released by you pursuant to this Agreement) or from providing truthful and accurate testimony when requested by the Company or required under compulsion of law. Further, you agree to voluntarily cooperate with the Company, if you have knowledge of facts relevant to any threatened or pending claim, investigation, audit or litigation against or by the Company, by making yourself reasonably available without further compensation for interviews with the Company or its legal counsel, and preparing for and providing truthful and accurate deposition and trial testimony.

13. No Admissions. The promises and payments in consideration of this Agreement shall not be construed to be an admission of any liability or obligation by either party, and neither party makes any such admission.

14. Release of Claims.

(a) General Release. In exchange for the severance benefits, extended exercise period and post-employment consulting relationship being extended to you under this Agreement, you hereby generally and completely release the Company, and its affiliated, related, parent and subsidiary entities, and its and their current and former directors, officers, employees, shareholders, partners, agents, attorneys, predecessors, successors, insurers, affiliates, and assigns (collectively, the “Released Parties”) from any and all claims, liabilities and obligations, both known and unknown, that arise out of or are in any way related to events, acts, conduct or omissions occurring prior to or on the date you sign this Agreement (collectively, the “Released Claims”).

Ronald W. Barrett

October 1, 2015

Page 8

(b) Scope of Release. The Released Claims include but are not limited to: (i) all claims arising out of or in any way related to your employment with the Company, or the termination of that employment relationship; (ii) all claims arising from your role, status or activities as a director, employee, equityholder, or adviser of the Company; (iii) all claims related to compensation or benefits from the Company, including salary, bonuses, commissions, vacation, paid time off, expense reimbursements, severance pay, fringe benefits, stock, stock options, or any other ownership, equity, or profits interests in the Company; (iv) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (v) all tort claims, including claims for fraud, defamation, emotional distress and discharge in violation of public policy; and (vi) all federal, state, and local statutory claims, including claims for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights Act of 1964, the federal Americans with Disabilities Act of 1990, the federal Age Discrimination in Employment Act of 1967 (the “ADEA”), the California Labor Code and the California Fair Employment and Housing Act.

(c) ADEA Waiver. You acknowledge that you are knowingly and voluntarily waiving and releasing any rights you may have under the ADEA, and that the consideration given for the waiver and release in this Section is in addition to anything of value to which you are already entitled. You further acknowledge that you have been advised, as required by the ADEA, that: (i) your waiver and release do not apply to any rights or claims that may arise after the date that you sign this Agreement; (ii) you should consult with an attorney prior to signing this Agreement (although you may choose voluntarily not to do so); (iii) you have twenty-one (21) days to consider this Agreement (although you may choose voluntarily to sign it earlier); (iv) you have seven (7) days following the date you sign this Agreement to revoke it (by providing written notice of your revocation to me); and (v) this Agreement will not be effective until the date upon which the revocation period has expired, which will be the eighth day after the date that this Agreement is signed by you provided that you do not revoke it (the “Effective Date”).

(d) Waiver of Unknown Claims. In giving the releases set forth in this Agreement, which include claims which may be unknown to you at present, you acknowledge that you have read and understand Section 1542 of the California Civil Code which reads as follows: “A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.” You hereby expressly waive and relinquish all rights and benefits under that section and any law or legal principle of similar effect in any jurisdiction with respect to your release of claims herein, including but not limited to the release of unknown and unsuspected claims.

(e) Excluded Claims. Notwithstanding the foregoing, the following are not included in the Released Claims (the “Excluded Claims”): (i) any rights or claims for indemnification you may have pursuant to any written indemnification agreement with the Company to which you are a party or under applicable law; (ii) any rights which cannot be waived as a matter of

Ronald W. Barrett

October 1, 2015

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law; (iii) any rights you have to file or pursue a claim for workers’ compensation or unemployment insurance; and (iv) any claims for breach of this Agreement. In addition, nothing in this Agreement prevents you from filing, cooperating with or participating in any proceeding before the Equal Employment Opportunity Commission, the Department of Labor or any analogous federal or state government agency, except that you acknowledge and agree that you hereby waive your right to any monetary benefits in connection with any such claim, charge or proceeding. You represent and warrant that, other than the Excluded Claims, you are not aware of any claims you have or might have against any of the Released Parties that are not included in the Released Claims.

15. Representations. You hereby represent and warrant that, except as provided herein, (a) you have been paid all compensation owed and for all time worked for the Company through the Transition Date, (b) you have received all the leave and leave benefits and protections for which you are eligible pursuant to the federal Family and Medical Leave Act, the California Family Rights Act, any applicable law or Company policy, and (c) you have not suffered any on-the-job injury for which you have not already filed a workers’ compensation claim.

16. Dispute Resolution. To ensure the timely and economical resolution of disputes that may arise in connection with this Agreement, you and the Company agree that any and all disputes, claims, or causes of action (including statutory claims) arising from or relating to the enforcement, breach, performance, negotiation, execution or interpretation of this Agreement (including claims with respect to your severance benefits, your consultancy with the Company or the termination of that consulting relationship) shall be resolved pursuant to the Federal Arbitration Act, 9 U.S.C. §1-16, and to the fullest extent permitted by law by final, binding and confidential arbitration, by a single arbitrator, in Santa Jose, California, conducted by JAMS, Inc. (“JAMS”) under the then applicable JAMS rules (which can be found at the following web address: http://www.jamsadr.com/rulesclauses). By agreeing to this arbitration procedure, both you and the Company waive the right to resolve any such dispute through a trial by jury or judge or administrative proceeding. The Company acknowledges that you will have the right to be represented by legal counsel at any arbitration proceeding. The arbitrator shall: (a) have the right to determine if an issue is subject to this arbitration obligation; (b) have the authority to compel adequate discovery for the resolution of the dispute and to award such relief as would otherwise be permitted by law; and (c) issue a written arbitration decision, to include the arbitrator’s essential findings and conclusions and a statement of the award. The arbitrator shall be authorized to award any or all remedies that you or the Company would be entitled to seek in a court of law. The Company shall pay all JAMS’ arbitration fees in excess of the amount of court fees that would be required of you if the dispute were decided in a court of law. Nothing in this Agreement is intended to prevent either you or the Company from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration. Any awards or orders in such arbitrations may be entered and enforced as judgments in the federal and state courts of any competent jurisdiction.

17. General. This Agreement, including the Exhibits hereto, constitutes the complete, final and exclusive embodiment of the entire agreement between you and the Company with regard to this subject matter. It is entered into without reliance on any promise or representation, written

Ronald W. Barrett

October 1, 2015

Page 10

or oral, other than those expressly contained herein, and it supersedes any other such promises, warranties or representations. This Agreement may not be modified or amended except in a writing signed by you and a duly-authorized representative of the Board. This Agreement will bind the heirs, personal representatives, successors and assigns of both you and the Company, and inure to the benefit of both you and the Company, their heirs, successors and assigns. If any provision of this Agreement is determined to be invalid or unenforceable, in whole or in part, this determination will not affect any other provision of this Agreement and the provision in question will be modified by the court so as to be rendered enforceable to the fullest extent permitted by applicable law, consistent with the intent of the parties. This Agreement will be construed and enforced in accordance with the laws of the State of California without respect to conflicts of law principles. In construing this Agreement, any ambiguity shall not be construed against either party as the drafter. This Agreement may be executed in counterparts which shall be deemed to be part of one original, and facsimile copies of signatures shall be equivalent to original signatures.

If this Agreement is acceptable to you, please sign below and return the original to me within twenty-one (21) days after the date of this Agreement. The Company’s offer of enhanced severance benefits and a post-employment consulting relationship contained herein will automatically lapse and expire if we do not receive the fully-signed Agreement from you within this time period.

Sincerely,


XENOPORT, INC.

By:		/s/ Paul L. Berns
		Paul L. Berns
		Chair, Compensation Committee of the Board of Directors

Exhibit A – Severance Rights Agreement
Exhibit B –Proprietary Information Agreement
Exhibit C – Post-Consulting Period Release
Exhibit D – Statement

UNDERSTOOD AND AGREED:

/s/ Ronald W. Barrett
Ronald W. Barrett

October 1, 2015
Date

Exhibit 10.39

XENOPORT, INC.

September 29, 2015

Vincent J. Angotti

Re:

CEO Appointment

Dear Vince:

As discussed, we are delighted to promote you to the position of Chief Executive Officer (“CEO”) of XenoPort, Inc. (the “Company”), effective as of September 29, 2015 (the “Effective Date”). This promotion is recognition of your prior contributions to the Company, and our confidence in your ability to lead the organization moving forward. This letter (the “Amendment”) sets forth the changes in the terms and conditions of your employment that will result from this promotion.

1. Base Salary. As of the Effective Date, your base salary rate will be increased to $525,000 per year, subject to applicable payroll deductions and withholdings (the “Base Salary”). Your Base Salary is subject to periodic review and adjustment by the Company.

2. Bonus Plan. You will continue to be eligible to participate in the XenoPort, Inc. Corporate Bonus Plan (the “Bonus Plan”). Your target bonus under the Bonus Plan (the “Target Bonus”) for calendar year 2015 shall remain at sixty (60%) of your Base Salary. Your Target Bonus is subject to periodic review and adjustment by the Company. Whether you earn or receive a bonus under the Bonus Plan for any given year, and the amount of any such bonus, shall be determined by the Company’s Board of Directors (the “Board”) in its sole discretion.

3. Equity Awards.

(a) Existing Awards. Your outstanding stock options and any other equity awards you have received from the Company (collectively, the “Existing Equity Awards”) will continue to be governed by the terms and conditions of the applicable equity compensation plan and the agreements applicable to the Existing Equity Awards.

(b) New RSU Awards. In connection with your promotion to the position of CEO, you were, on the Effective Date, granted two restricted stock unit awards (the “New RSU Awards”), in each case under the Company’s 2014 Equity Incentive Plan (the “Equity Plan”). The number of shares of the Company’s common stock subject to each of the New RSU Awards are as follows: 326,086 shares for one of the New RSU Awards (the “Time-Based RSUs”) and 108,695 shares for the other New RSU Award (the “Performance-Based RSUs”). The Time-Based RSUs will vest in equal annual installments over the four-year period following the Effective Date (i.e., twenty-five percent (25%) vesting each year), subject to your continuous service (as defined in the Equity Plan) through each vesting date. The Performance-Based RSUs shall vest in full upon achievement of the Stock Price Milestone (defined below), subject to your continuous service (as defined in the Equity Plan) through such vesting date. For purposes of the Performance-Based RSUs, achievement of the “Stock Price Milestone” shall occur at the close of market on the 30^th consecutive trading day on which the daily volume-weighted average price for the Company’s common stock (for each of such 30 consecutive

Vincent J. Angotti

September 29, 2015

Page 2

trading days) is equal to or greater than $6.90, which is two times (2x) the per share price as of the close of market on the Effective Date ($3.45); provided, however, that if the Stock Price Milestone is not achieved by the four (4) year anniversary of the Effective Date, the Performance-Based RSUs shall automatically lapse and terminate on such date. The New RSU Awards will have no exercise price, and will be governed by the terms and conditions of the Equity Plan and the equity award grant notices and agreements to be issued to you thereunder.

4. Severance. You will be eligible for severance benefits pursuant to the terms of the Severance Rights Agreement attached hereto as Exhibit A (the “Severance Rights Agreement”). Upon the execution and delivery of the Severance Rights Agreement by both you and the Company, the Severance Rights Agreement will entirely supersede and replace the earlier Severance Rights Agreement between you and the Company dated February 9, 2012 and any prior severance or change of control agreements or arrangements by and between you and the Company, which shall have no further force or effect.

5. Compliance with Proprietary Information Agreement. You will continue to be bound and agree to abide by your Employee Proprietary Information Agreement with the Company (the “Confidentiality Agreement”, a copy of which is attached hereto as Exhibit B).

6. Dispute Resolution. To ensure the timely and economical resolution of disputes that may arise in connection with your employment with the Company, you and the Company agree that any and all disputes, claims or causes of action arising from or relating to the enforcement, breach, performance, negotiation, execution or interpretation of this Amendment, your employment or the termination of your employment, including but not limited to statutory claims, will be resolved to the fullest extent permitted by law by final, binding and confidential arbitration, by a single arbitrator, in San Jose, California, conducted by JAMS, Inc. (“JAMS”) under the then-applicable JAMS rules (available at the following web address: http://www.jamsadr.com/rulesclauses, and which will be provided to you on request). By agreeing to this arbitration procedure, both you and the Company waive the right to resolve any such dispute through a trial by jury or judge or administrative proceeding. You will have the right to be represented by legal counsel at any arbitration proceeding. The arbitrator shall: (a) have the authority to compel adequate discovery for the resolution of the dispute and to award such relief as would otherwise be permitted by law; and (b) issue a written arbitration decision, to include the arbitrator’s essential findings and conclusions and a statement of the award. The arbitrator shall be authorized to determine if a matter is subject to this arbitration obligation. The arbitrator shall also be authorized to award any or all remedies that you or the Company would be entitled to seek in a court of law. The Company shall pay all JAMS’ arbitration fees in excess of the amount of court fees that would be required of you if the dispute were decided in a court of law. Nothing in this Amendment is intended to prevent either you or the Company from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration. Any awards or orders in such arbitrations may be entered and enforced as judgments in the federal and state courts of any competent jurisdiction.

7. Existing Employment Agreement. Except as expressly modified by this Amendment, your employment will continue to be governed by the terms and conditions set forth in your offer letter with the Company dated April 15, 2008 (the “Employment Agreement”) (excluding only those provisions in the Employment Agreement which, because of the passage of time or other events, no longer have any effect). Your employment relationship with the Company will continue to be at-will.

Vincent J. Angotti

September 29, 2015

Page 3

8. Entire Agreement. This Amendment and the Employment Agreement (collectively, the “Amended Employment Agreement”), together with the attached Exhibits and your previously executed Indemnification Agreement with the Company, forms the complete and exclusive statement of your employment agreement with the Company, and supersedes any other agreements or promises made to you by anyone, whether oral or written, concerning your employment terms. Except for changes expressly reserved to the Company discretion as provided herein, the terms of the Amended Employment Agreement can only be changed in a signed written agreement duly approved by the Board.

We look forward to a continuing productive and enjoyable work relationship with you in your new position. Please sign, date and return this Amendment and the Severance Rights Agreement attached hereto as Exhibit A to confirm your acceptance of the terms set forth above.

Sincerely,


/s/ Paul L. Berns
Paul L. Berns
Chair, Compensation Committee of the Board of Directors

Reviewed, Understood and Accepted:

/s/ Vincent J. Angotti				September 30, 2015
Vincent J. Angotti				Date

Exhibit A: Severance Rights Agreement

Exhibit B: Confidentiality Agreement

Exhibit 10.40

SEVERANCE RIGHTS AGREEMENT

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SEVERANCE RIGHTS AGREEMENT

This Severance Rights Agreement (the “Agreement”) is made and entered into by and between VINCENT J. ANGOTTI (the “Executive”) and XENOPORT, INC., a Delaware corporation (the “Company”), effective as of September 29, 2015 (the “Effective Date”). This Agreement replaces and supersedes all prior agreements on the subject matter of this Agreement, including but not limited to the Severance Rights Agreement between the Executive and the Company dated February 9, 2012 (the “Prior Agreement”).

1. At-Will Employment. The Company and the Executive acknowledge that the Executive’s employment is and will continue to be at-will. If the Executive’s employment terminates for any reason, whether or not in connection with a Change of Control, the Executive will 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.

2. Conditions to Benefits. All of the payments, benefits and rights of the Executive under this Agreement are subject to and contingent upon: (a) the Executive’s execution, delivery and non-revocation of an effective release of all claims against the Company and its affiliates substantially in the form attached hereto as Exhibit A (the “Release”) as of a date not later than the 60^th day following the Executive’s “separation from service”, as defined under Treasury Regulations Section 1.409A-1(h) and without regard to any alternative definition thereunder (“Separation from Service”), (b) the Executive’s resignation from all positions the Executive holds with the Company and its affiliates as of the date of the Separation from Service (or such other date requested or permitted by the Board of Directors of the Company (the “Board”), and (c) the Executive’s continued compliance with all of the Executive’s obligations to the Company and its affiliates, including but not limited to obligations under this Agreement and the Employee Proprietary Information Agreement between the Company and the Executive (such agreement, as amended from time to time, or any successor agreement, the “Confidentiality Agreement”), (with (a) through (c) collectively referred to as the “Severance Conditions”).

3. Severance – No Change of Control. If the Executive’s employment with the Company is terminated (x) either (1) by the Company without Cause and other than as a result of death or disability, or (2) by the Executive for Good Reason (either such termination, provided it is also a Separation from Service, a “Qualifying Termination”), and (y) at any time other than during the period beginning three months prior to, and ending 18 months after the closing of, a Change of Control (such 21 month period, the “Change of Control Period”), then the Executive will be eligible to receive the following benefits, subject to the Executive’s satisfaction of the Severance Conditions:

(a) Base Salary. The Company will pay, as severance, continued payment of the Executive’s then-current base salary (ignoring any reduction in base salary that forms the basis for Good Reason) for the first 18 months following the Separation from Service, on the Company’s normal payroll schedule; provided, however, that no payments will be made until the 60^th day following the Separation from Service in order to comply with Section 409A (such 60^th day, the “Initial Payment Date”), and on such day, the Company will make a lump sum payment of the base salary that would have been paid through the Initial Payment Date had payments commenced immediately following the Separation from Service, with the balance paid thereafter on the original schedule.

(b) Pro-Rated Bonus. The Company will pay, as severance, a lump sum payment under the terms of the annual cash bonus plan in place for the year in which the Qualifying Termination occurs, equal to

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the product of (i) a fraction, the numerator of which is the number of days in the calendar year of termination from January 1 through the date of the Qualifying Termination and the denominator of which is 365 (the “Service Fraction”), and (ii) the actual cash bonus the Executive would have earned, based on actual Company and, if applicable, individual performance, had the Executive remained employed through the payment date under the annual cash bonus plan for that year. This pro-rated bonus payment will be paid on the same date that active employees are paid the cash bonus under that annual cash bonus plan, but in all cases not later than March 15 of the year following the year of the Qualifying Termination.

(c) COBRA Payments. If the Executive is participating in the Company’s group health insurance plans on the date of the Qualifying Termination, and timely elects to continue such coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, or, if applicable, comparable state or local insurance laws (“COBRA”), then the Company will pay, directly to the COBRA carrier, as and when due, the COBRA premiums necessary to continue such health insurance coverage for the Executive and his eligible dependents (“COBRA Continuation Payments”) until the earliest of: (i) the first 18 months of COBRA coverage following the Executive’s Separation from Service, (ii) the expiration of Executive’s eligibility for COBRA coverage, or (iii) the date when Executive or his dependents become eligible for health insurance coverage in connection with new employment or self-employment (such period, the “COBRA Payment Period”). However, if at any time the Company determines, in its sole discretion, that the Company’s payment of the COBRA Continuation Payments would result in a violation of the nondiscrimination rules of Section 105(h)(2) of the Code or any statute or regulation of similar effect (including but not limited to the 2010 Patient Protection and Affordable Care Act, as amended by the 2010 Health Care and Education Reconciliation Act) or otherwise result in a material penalty to the Company, then in lieu of providing the COBRA Continuation Payments for the remainder of the COBRA Payment Period, the Company will instead pay the Executive, on the first day of each month of the remainder of the COBRA Payment Period, a fully taxable cash payment equal to the COBRA Continuation Payments for that month, subject to applicable tax withholdings. In all cases, the Company will make the first payment under this clause on the Initial Payment Date in an amount equal to the aggregate payments that the Company would have paid through such date had such payments commenced on the Separation from Service, with the balance of the payments paid thereafter on the schedule described above. If the Executive becomes eligible for coverage under another employer’s group health plan or otherwise ceases to be eligible for COBRA during the COBRA Payment Period, the Executive must immediately notify the Company of such event, and all payments and obligations under this clause will immediately cease.

4. Severance - Change of Control Period. If the Executive suffers a Qualifying Termination during the Change of Control Period, then the Executive will be eligible to receive the following benefits, subject to the Executive’s satisfaction of the Severance Conditions:

(a) Base Salary. The Company will pay, as severance, continued payment of the Executive’s then-current base salary (ignoring any reduction in base salary that forms the basis for Good Reason) for the first 24 months following the Separation from Service, on the Company’s normal payroll schedule; provided, however, that no payments will be made until the Initial Payment Date, and on such day, the Company will make a lump sum payment of the base salary that would have been paid through the Initial Payment Date had payments commenced immediately following the Separation from Service, with the balance paid thereafter on the original schedule.

(b) Pro-Rated Bonus. The Company will pay, as severance, a lump sum payment under the terms of the annual cash bonus plan in place for the year in which the Qualifying Termination occurs, equal to

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the product of (i) the Service Fraction and (ii) the then-current target annual cash bonus (ignoring the effect of any reduction in base salary that forms the basis for Good Reason in determining the target bonus amount) that the Executive was eligible for under the annual cash bonus plan for that year. This pro-rated bonus payment will be paid on the later of (i) the Initial Payment Date and (ii) the day immediately prior to the effective date of the Change of Control (such later date, the “Determination Date”).

(c) COBRA Payments. If the Executive is participating in the Company’s group health insurance plans on the date of the Qualifying Termination, and timely elects to continue such coverage under COBRA, then the Company will provide the COBRA Continuation Payments, but for up to 24 months, under the same terms and conditions set forth under Section 3(c) above.

(d) 200% Target Bonus. In addition to the pro-rated bonus described in Section 4(b) above, the Company will pay, as severance, an amount equal to 200% of the Executive’s then-current target annual cash bonus (ignoring the effect of any reduction in base salary that forms the basis for Good Reason in determining the target bonus amount), payable in equal installments over the first 24 months following the Separation from Service, on the Company’s normal payroll schedule; provided, however, that no payments will be made until the later of the (i) Initial Payment Date and (ii) the Determination Date, and on such later date, the Company will make a lump sum payment of these target bonus amounts that would have been paid through such date had payments commenced immediately following the Separation from Service, with the balance paid thereafter on the original schedule.

(e) Vesting Acceleration. The Company will accelerate in full the time-based vesting requirements of all of the Executive’s then-outstanding compensatory equity awards, with such accelerated vesting effective as of the Determination Date. For clarity, this Section 4(e) does not provide for the waiver of, or deemed satisfaction of, any performance-based vesting requirements applicable to any compensatory equity awards; provided, however, that nothing herein alters any accelerated vesting benefit available to Executive with respect to his performance-based equity awards pursuant to the terms of the plan documents and agreements applicable to Executive’s performance-based equity awards.

5. Section 409A. It is intended that all of the benefits provided under the Agreement satisfy, to the greatest extent possible, the exemptions from the application of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the regulations and other guidance thereunder and any state law of similar effect (collectively, “Section 409A”) provided under Treasury Regulations Sections 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9), and the Agreement will be construed to the greatest extent possible as consistent with those provisions, taking into account the effect of the status of the benefits under the Prior Agreement on this Agreement. To the extent not so exempt, the Agreement (and any definitions under the Agreement) will be construed in a manner that complies with Section 409A, and incorporates by reference all required definitions and payment terms. For purposes of Section 409A (including, without limitation, for purposes of Treasury Regulations Section 1.409A-2(b) (2) (iii)), the Executive’s right to receive any installment payments under the Agreement will be treated as a right to receive a series of separate payments and, accordingly, each installment payment under the Agreement will at all times be considered a separate and distinct payment. If the Board determines that any of the payments in connection with a Separation from Service constitute “deferred compensation” under Section 409A, and if the Executive is a “specified employee” of the Company, as such term is defined in Section 409A(a)(2)(B)(i), at the time of his Separation from Service, then, solely to the extent necessary to avoid the incurrence of the adverse personal tax consequences under Section 409A, the timing of the payments due on a Separation from Service will be delayed as follows: on the earlier to occur of (i) the date that is six months and one day after the effective date of the Executive’s Separation from Service,

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and (ii) the date of the Executive’s death (such earlier date, the “Delayed Initial Payment Date”), the Company will (A) pay to the Executive a lump sum amount equal to the sum of the payments that the Executive would otherwise have received through the Delayed Initial Payment Date if the commencement of the payments had not been delayed pursuant to this paragraph, and (B) commence paying the balance of the payments in accordance with the applicable payment schedules set forth in above. No interest will be due on any amounts so deferred.

6. Section 280 – Best After Tax. If any payment or benefit the Executive would receive from the Company or otherwise in connection with a change of control of the Company (a “Payment”) would (a) constitute a “parachute payment” within the meaning of Section 280G of the Code, and, (b) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment will be equal to the Reduced Amount. The “Reduced Amount” will be either (a) the largest portion of the Payment that would result in no portion of the Payment being subject to the Excise Tax, or (b) the largest portion, up to and including the total, of the Payment, whichever amount, after taking into account all applicable federal, state, provincial, foreign and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in the Executive’s receipt, on an after-tax basis, of the greatest economic benefit 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 will occur in the following order: (1) reduction of cash payments; (2) cancellation of accelerated vesting of stock awards other than stock options; (3) cancellation of accelerated vesting of stock options; and (4) reduction of other benefits paid to the Executive. Within any such category of Payments (that is, (1), (2), (3) or (4)), a reduction will occur first with respect to amounts that are not “deferred compensation” within the meaning of Section 409A of the Code and then with respect to amounts that are. In the event that acceleration of vesting of stock award compensation is to be reduced, such acceleration of vesting will be cancelled in the reverse order of the date of grant of the Executive’s applicable type of stock award (i.e., earliest granted stock awards are cancelled last). The Company will select a reputable third party professional firm to make all determinations required to be made under this Section 6. The Company will bear all reasonable expenses with respect to the determinations by such firm required to be made hereunder.

7. Duty of Loyalty & Confidentiality.

(a) Confidentiality Agreement. The Executive acknowledges and agrees that at all times during his employment with the Company he has been in compliance with, and he represents that he will continue to comply with, the terms of the Confidentiality Agreement. The Executive understands and agrees that as part of the consideration for the payments by the Company to the Executive under this Agreement, the Executive must remain in compliance with the terms of the Confidentiality Agreement following his Qualifying Termination, including but not limited to the obligations of confidentiality and non-solicitation, as well as any comparable duties (such as the duty of loyalty) under applicable law.

(b) Non-Disparagement. The Executive understands and agrees that as part of the consideration for the payments by the Company to the Executive under this Agreement, all times during the Executive’s employment and during any period in which he is receiving severance benefits following a Qualifying Termination, the Executive will not take any actions to disrupt the Company’s business or tarnish the Company’s reputation. Without limitation, the Executive will not (i) disparage the Company or its officers, directors, employees, shareholders, parents, subsidiaries, affiliates and agents, including but not limited to statements that may be harmful to its or their business, business reputation, or personal reputation, or (ii) interfere or attempt to interfere with any existing relationship between the Company

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and any Company customer or supplier. Nothing in this paragraph is intended to restrain the Executive in any manner from (x) engaging in any lawful profession, trade or business of any kind, (y) seeking legal counsel or (z) making truthful statements as required by law.

(c) Enforcement. The Executive acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the provisions of this Section 7 (including any breach of the Confidentiality Agreement, collectively, the “Covenants”) would be inadequate and, in recognition of this fact, Executive agrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company will be entitled to obtain equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other equitable remedy which may then be available. In addition, the Company will be entitled to immediately cease paying any amounts remaining due under this Agreement. It is expressly understood and agreed that although the Executive and the Company consider the Covenants to be reasonable, if a judicial determination is made by a court of competent jurisdiction that the time or territory or any other restriction contained in this Agreement is an unenforceable restriction against Executive, the Covenants will not be rendered void but will be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any court of competent jurisdiction finds that any of the Covenants is unenforceable, and such Covenant cannot be amended so as to make it enforceable, such finding will not affect the enforceability of the remainder of the Covenants. In any action, suit or proceeding to enforce the Covenants, the prevailing party will be entitled to an award of its or his reasonable attorneys’ fees and costs incurred.

8. Definition of Terms.

(a) “Cause” will mean: (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 Executive’s conviction of or plea of nolo contendre to 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 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.

(b) “Change of Control” has the meaning of “Change in Control” set forth in the Company’s 2014 Equity Incentive Plan, as of the date of this Agreement, except that if required for compliance with Section 409A, in no event will a Change of Control be deemed to have occurred if such transaction is not also a “change in the ownership or effective control of” the Company or “a change in the ownership of a substantial portion of the assets of” the Company as determined under Treasury Regulation Section 1.409A-3(i)(5) (without regard to any alternative definition thereunder).

(i) a material reduction in the Executive’s annual base compensation;

(ii) a material diminution in the Executive’s authority, duties, or responsibilities; or

(iii) a requirement that the Executive relocate his principal work location to a location that increases the Executive’s one-way commute by more than forty (40) miles;

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provided, however, that in any case, the Executive must (A) provide the Company with written notice setting forth with specificity the occurrence of such act or event within thirty (30) days after such act or event first occurs, (B) allow the Company thirty (30) days to cure such act or event from the date it receives such notice, and (C) if the Company does not cure such act or event within such period, the Executive’s resignation from all positions he then holds is effective not later than sixty (60) days after the conclusion of such cure period.

9. Successors.

(a) Company’s Successors. This Agreement will be binding upon any surviving entity resulting from a Change of Control and upon any other person who is a successor by merger, acquisition, consolidation or otherwise to the business formerly carried on by the Company without regard to whether or not such person or entity actively assumes the obligations hereunder.

(b) Executive’s Successors. The Executive may not assign his obligations hereunder. The rights of the Executive hereunder will inure to the benefit of, and be enforceable by, the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

10. Notice. For the purpose of this Agreement, notices and all other communications provided for in this Agreement must be given in writing and will be deemed to have been duly given if (i) delivered personally, (ii) delivered by overnight courier service, (iii) mailed by registered mail, return receipt requested, postage prepaid, or (iv) sent via facsimile or email (with the receipt function turned on) to the Company’s facsimile numbers and email addresses. Notices sent by personal delivery, registered mail, or overnight courier will be deemed given when delivered and notices sent by facsimile transmission or email will be deemed given upon the sender’s receipt of confirmation of complete transmission.

11. Offsets. The Company will reduce the Executive’s benefits under this Agreement by any statutory severance obligations or other contractual severance benefits, obligations for pay in lieu of notice, and any other similar benefits payable to the Executive by the Company (or any successor thereto) that are due in connection with the Executive’s Qualifying Termination and that are in the same form as the benefits provided under this Agreement (e.g., equity award vesting credit). Without limitation, this reduction includes a reduction for any benefits required pursuant to (a) any applicable legal requirement, including, without limitation, the Worker Adjustment and Retraining Notification Act (the “WARN Act”), (b) a written employment, severance or equity award agreement with the Company, (c) any Company policy or practice providing for the Executive to remain on the payroll for a limited period of time after being given notice of termination, and (d) any required salary continuation, notice pay, statutory severance payment, or other payments either required by local law, or owed pursuant to a collective labor agreement, as a result of the termination of the Executive’s employment. The benefits provided under this Agreement are intended to satisfy, to the greatest extent possible, and not to provide benefits duplicative of, any and all statutory, contractual and collective agreement obligations of the Company. Reductions may be applied on a retroactive basis, with benefits previously provided being recharacterized as benefits pursuant to the Company’s statutory or other contractual obligations. If the Executive is indebted to the Company on the effective date of his Qualifying Termination, the Company reserves the right to offset the payment of any severance benefits under this Agreement by the amount of such indebtedness. Such offset will be made in accordance with all applicable laws.

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12. Miscellaneous Provisions.

(a) No Duty to Mitigate. Except with respect to COBRA benefits, the Executive is not required to mitigate the amount of any payment contemplated by this Agreement, nor will any such payment be reduced by any compensation that the Executive may receive from any other source.

(b) Amendment; Waiver. No provision of this Agreement will be amended, modified, waived or discharged unless the amendment, modification, waiver or discharge is agreed to in writing by the adversely affected party. No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party will 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, including the Prior Agreement.

(d) Choice of Law. The validity, interpretation, construction and performance of this Agreement will 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 will not affect the validity or enforceability of any other provision hereof, which will remain in full force and effect.

(f) Counterparts. This Agreement may be executed in counterparts, each of which will 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 above.


COMPANY:	XENOPORT, INC.

	By:	/s/ Paul L. Berns
		Paul L. Berns
		Chair, Compensation Committee of the Board of Directors

EXECUTIVE:	VINCENT J. ANGOTTI

	/s/ Vincent J. Angotti

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Exhibit 99.1

LOGO

NEWS RELEASE

Company Contact:

For Immediate Distribution

Jackie Cossmon

408-616-7220

[email protected]

XenoPort Announces Plan to Focus on its Growing HORIZANT Business and

Names Vincent J. Angotti Chief Executive Officer and Director

SANTA CLARA, CA – October 1, 2015 – XenoPort, Inc. (Nasdaq: XNPT) announced today a strategic shift to focus on and maximize the value of its commercial product, HORIZANT^® (gabapentin enacarbil) Extended Release Tablets. As part of this shift, XenoPort will discontinue development of XP23829 on its own and seek to partner this and other high potential development stage assets.

In connection with the decision to focus on commercializing HORIZANT, Ronald W. Barrett, Ph.D., has retired as Chief Executive Officer and as a Director of XenoPort, effective immediately. Vincent J. Angotti, Executive Vice President and Chief Operating Officer, who has spearheaded the commercialization of HORIZANT, has been named Chief Executive Officer and has joined XenoPort’s Board of Directors. Dr. Barrett will continue to work with XenoPort in an advisory role, with a primary focus on ensuring a smooth transition and advising on potential partnering activities for the company’s development stage assets, including XP23829.

Mr. Angotti has nearly 25 years of operations and commercialization experience in both large and start-up specialty pharmaceutical companies. Prior to joining XenoPort in May 2008, Mr. Angotti held several positions with Reliant Pharmaceuticals, Inc., the most recent of which was Senior Vice President of Sales and Marketing. In this senior leadership role, he was responsible for launching a portfolio of products including LOVAZA, leading to the acquisition of Reliant by GlaxoSmithKline in 2008 for $1.7 billion. Prior to Reliant, Mr. Angotti held several positions at Novartis Pharmaceuticals Corporation, most recently as Executive Director, Field Operations. Mr. Angotti received a B.S. from Cornell University and an M.B.A. from Columbia University.

XenoPort also announced that John G. Freund, M.D., has been named Chairman of XenoPort’s Board of Directors. Dr. Freund has been a member of XenoPort’s Board since 1999 and has served as its Lead Independent Director since July 2008.

“On behalf of the Board,” Dr. Freund stated, “I would like to thank Ron for his dedication and many contributions since co-founding XenoPort in 1999, including the discovery, development and approval of HORIZANT. Ron recruited Vince to lead the commercialization of HORIZANT and, together with the management team, they have meaningfully grown HORIZANT sales. The Board is thrilled to welcome Vince to the role of CEO and has confidence he will apply his operational and commercial experience to maximize the value of HORIZANT.”

Mr. Angotti stated, “I am excited by the opportunity to lead the company with our new strategic focus. Since XenoPort’s launch of HORIZANT in mid-2013, we have successfully taken a staged approach to its commercialization. With the recent expansion of our HORIZANT Neuroscience Health Specialist team to 120 representatives in July, I believe we are well positioned to expand our educational efforts and increase access to HORIZANT and thereby meaningfully benefit many more patients.”

HORIZANT Continues to Show Strong Growth

XenoPort noted that HORIZANT continues to show strong growth following the re-launch by XenoPort after reacquisition in May 2013. HORIZANT has achieved the following growth since the second quarter of 2013 with substantially fewer sales representatives than deployed by its former partner:


	2Q13		2Q15		% Change
New Prescriptions*		5,355		14,221		+166	%
Total Prescriptions*		9,173		26,271		+186	%
Tablets*		377,753		1,379,341		+265	%
Net Sales	$	1.6 million	$	8.2 million		+413	%

*	Data from National Prescription Audit from IMS

Expense Reduction

In connection with XenoPort’s strategic shift, the company also announced that it will be implementing a reduction in work force. Restructuring costs, primarily related to compensation and benefit expenses as well as severance costs related to its departing CEO, are expected to be approximately $3.2 million and result in annual future cash savings of approximately $6.7 million. In addition, future expenses will be reduced due to the discontinuation of late-stage development of XP23829. The company ended the second quarter of 2015 with $170.4 million in cash, cash equivalents and short-term investments.

About HORIZANT

HORIZANT, discovered and developed by XenoPort, was approved in the United States in April 2011 for the treatment of moderate-to-severe primary restless legs syndrome (RLS) in adults and in June 2012 for the management of postherpetic neuralgia (PHN) in adults. The most common adverse reactions for adult patients with moderate-to-severe primary RLS receiving HORIZANT were somnolence/sedation, dizziness,

headache, nausea and fatigue. The most common adverse reactions for adult patients with PHN taking HORIZANT were dizziness, somnolence/sedation, headache, nausea and fatigue. In addition, the National Institute on Alcohol Abuse and Alcoholism (NIAAA) is currently funding and conducting a trial of HORIZANT in patients with alcohol use disorder (AUD). XenoPort is supplying the clinical trial material for this trial. If successful, it could lead to a new potential option for the treatment of patients with AUD.

About XenoPort

XenoPort, Inc. is a biopharmaceutical company focused on commercializing HORIZANT in the United States. XenoPort has entered into a clinical trial agreement with the NIAAA under which the NIAAA has initiated a clinical trial evaluating gabapentin enacarbil as a potential treatment for AUD. REGNITE^® (gabapentin enacarbil) Extended-Release Tablets is being marketed in Japan by Astellas Pharma Inc. XenoPort has granted exclusive world-wide rights for the development and commercialization of its clinical-stage oral product candidate, arbaclofen placarbil, to Indivior PLC for all indications. XenoPort’s other product candidates include XP23829, a novel fumaric acid ester prodrug that is a potential treatment for patients with moderate-to-severe chronic plaque-type psoriasis and potentially for patients with relapsing forms of multiple sclerosis, and XP21279, a prodrug of levodopa that is a potential treatment for patients with idiopathic Parkinson’s disease.

To learn more about XenoPort, please visit the Web site at www.XenoPort.com.

Forward-Looking Statements

This press release contains “forward-looking” statements, including, without limitation, all statements related to: the anticipated benefits and effects related to XenoPort’s announced restructuring and executive leadership transition; the promotional efforts and value proposition for HORIZANT, including all statements related to the anticipated impact of XenoPort’s recent sales force expansion and anticipated future HORIZANT sales growth; the possible approval of HORIZANT for the treatment of patients with AUD; and the value of XenoPort’s development stage assets and the ability to partner XP23829 and other development stage assets. Any statements contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Words such as “believe,” “can,” “could,” “plan,” “potential,” “will” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based upon XenoPort’s current expectations. Forward-looking statements involve risks and uncertainties. XenoPort’s actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation, risks related to: XenoPort’s relative lack of commercialization experience and its ability to successfully market and sell HORIZANT, including XenoPort’s ability to maintain a sales force comprised of both XenoPort-employed sales representatives and contract sales representatives, and XenoPort’s reliance on its contract sales organization to maintain sales, marketing, distribution, supply chain and other sufficient capabilities to sell HORIZANT; XenoPort’s dependence on the success of its strategies for HORIZANT commercialization, promotion and distribution, as well as its ability to successfully execute on these activities and to comply with applicable laws, regulations and

regulatory requirements; the competitive environment for and the degree of market acceptance of HORIZANT; obtaining appropriate pricing and reimbursement for HORIZANT in an increasingly challenging environment; risks related to future opportunities and plans, including the uncertainties of future financial results and XenoPort’s ability to attain profitability; risks related to the impact of the XenoPort’s announced restructuring and reduction in workforce on XenoPort’s business, including the risk that such changes could negatively affect XenoPort’s ability to attract or retain the personnel necessary to enable XenoPort to successfully commercialize HORIZANT; risks related to executive leadership transitions, including that fact that such transitions inherently create uncertainty and can negatively affect business strategy and execution; XenoPort’s potential inability to partner XP23829 and its other development stage assets with third parties on acceptable terms, or at all, including the risk that XenoPort may fail to realize any return on its investments in such assets. Many of these and other risk factors are discussed under the heading “Risk Factors” in XenoPort’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 filed with the Securities and Exchange Commission on August 6, 2015. XenoPort expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the company’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.

HORIZANT, REGNITE and XENOPORT are registered trademarks of XenoPort, Inc.

XNPT2G

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Form 8-K XENOPORT INC For: Sep 29

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