Exhibit 10.33
April 15, 2008
Vincent J. Angotti
Dear Vince:
On behalf of XenoPort, Inc. (the “Company”), I am pleased to invite you to join
the Company as Senior Vice President, Chief Commercialization Officer. In this
position, you will report directly to the President of the Company. Subject to
Section 10 below, you will be expected to devote all of your business time,
attention and energies to the performance of your duties with the Company. The
effective date (the “Effective Date”) of your employment will be May 1, 2008, or
as mutually agreed upon with the Company.
The terms of this offer of employment are as follows:

1.   Compensation. The Company will pay you a starting salary of $31,250.00 per
month (equivalent to $375,000.00 per year), payable in periodic installments on
our regular paydays in accordance with the Company’s standard payroll policies.
Subject to Section 10 below, your salary will begin as of the Effective Date of
employment. The first and last payment by the Company to you will be adjusted,
if necessary, to reflect a commencement or termination date other than the first
or last working day of a pay period.

2.   Bonuses. The Company will offer you a sign-on bonus in the amount of
$50,000.00 (subject to applicable payroll taxes) to be paid on the first payroll
date following the Effective Date of your employment. If you voluntarily
terminate your employment prior to the one year anniversary of the Effective
Date, other than for Good Reason (as defined in the Change of Control Agreement,
but excluding your relocation from New Jersey to the Bay Area for the purposes
of (iv)) or Disability (as defined in the Company’s long term disability plan)
you will return to the Company one hundred percent (100%) of the after-tax
proceeds of this bonus. Additionally, the Company will offer you a retention
bonus in the amount of $30,000.00 (subject to applicable payroll taxes) to be
payable on the first anniversary of the Effective Date of your employment.

3.   Bonus Plan. You will be entitled to participate in any bonus plan adopted
by the Company for its employees on such terms as the Company’s Board of
Directors (the “Board”) may determine in its discretion, including the existing
XenoPort, Inc. Corporate Bonus Plan. The target bonus for 2008 at your level is
40% of your base salary set forth in Section 1. Starting in 2009, unless
modified by the Board in connection with the annual compensation review of
executives and pursuant to the terms of the plan, fifty percent of your bonus
will be based on the performance of the Company against its corporate goals, and
50% of your bonus will be based on your performance against your individual
goals. Under the terms of the plan, target bonus awards are determined and
communicated to eligible employees annually. For the 2008 bonus year, the
Company will guarantee the payment of a bonus that is based entirely on the
performance of the Company against its corporate goals, prorated to reflect the
percentage of the year spent working on Company matters. For example, in the
event that you work 50% of the time from May 1, 2008 until June 15, 2008 and
100% of the time from August 15, 2008 through the end of the year and the
Company achieves 100% performance against its corporate goals, your bonus would
be $65,985.00, calculated as follows: $375,000.00 (base salary) multiplied by
40% (bonus target) multiplied by 100% (2008 corporate goal score) multiplied by
.4399 (23 days in May and June (i.e., 46 days at 50%) plus 138 days between
August 15, 2008 and year end divided by 366 days). As another example, in the
event that you work 50% of the time from May 1, 2008 until June 15, 2008 and
100% of the time from August 15, 2008

 

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    through the end of the year and the Company achieves 60% performance against
its corporate goals, your bonus would be $39,591.00, calculated as follows:
$375,000.00 (base salary) multiplied by 40% (bonus target) multiplied by 60%
(2008 corporate goal score) multiplied by .4399 (23 days in May and June (i.e.,
46 days at 50%) plus 138 days between August 15, 2008 and year end divided by
366 days). All of the foregoing bonuses will be paid, to the extent earned,
within 60 days following the end of the applicable performance year. The Company
agrees to operate and maintain the foregoing bonus arrangements and applicable
bonus plans and programs in compliance with Section 409A of the Internal Revenue
Code.

4.   Benefits. During the term of your employment, you will be entitled to the
Company’s standard vacation and benefits covering employees and officers, as
such may be in effect from time to time.

5.   Moving and Relocation Related Expenses.

  a.   Should you elect this option, the Company will provide you with a cash
payment (subject to the usual, required withholding) intended to cover moving
and relocation related expenses in the amount of $200,000.00 (the “Relocation
Amount”), to be paid on or about the Effective Date, in accordance with the
Company’s normal payroll practices; OR     b.   Should you elect this option,
the Company will reimburse you for customary relocation expenses actually
incurred, such expenses not to exceed $150,000.00 (the “Relocation Amount”),
including (i) closing costs associated with purchasing a home in the Bay Area,
(ii) real estate fees incurred in selling your home in New Jersey and (iii) the
cost of packing and shipping your household goods to the Bay Area.
Reimbursements for all taxable expenses referred to in the option described in
this subsection 5b will be ‘grossed-up’ to compensate for applicable taxes.

    If you voluntarily terminate your employment other than for Good Reason or
Disability: (i) prior to the one-year anniversary of the Effective Date, you
will return to the Company one hundred percent (100%) of the after-tax proceeds
of any amounts paid as the Relocation Amount under this Section 5; or (ii) after
the one-year anniversary of the Effective Date but prior to the two-year
anniversary of the Effective Date, you will return to the Company fifty percent
(50%) of the after-tax proceeds of any amounts paid as the Relocation Amount
under this Section 5. The Company agrees to operate the foregoing payments and
reimbursements in accordance with Section 409A of the Internal Revenue Code.

6.   Housing Subsidies. In accordance with the Company’s normal payroll
practices and subject to the usual, required withholding:

  a.   until the earlier to occur of the sale or rental of your current
residence in New Jersey or September 1, 2009, the Company will: (i) pay you the
cost of reasonable temporary housing in the Bay Area; and (ii) pay or reimburse
you for reasonable and customary travel expenses, including airline
transportation (coach class), in connection with your services while your family
continues to reside in the New Jersey area; and     b.   in connection with your
purchase of a new home in the Bay Area, the Company will negotiate in good faith
the terms to pay you additional housing assistance, which could include either
(i) a cash bonus payment when you finalize a loan with a third-party bank;
(ii) monthly housing cash supplements paid for up to four years; or (iii)

 

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      some combination of (i) and (ii); provided, however, that in no event
shall the housing assistance provided pursuant to this Section 6(b) exceed
$500,000.00 in the aggregate.

    Each of these payments will be subject to your continued service to the
Company through the relevant payment dates. If you voluntarily terminate your
employment other than for Good Reason or Disability: (i) prior to the one-year
anniversary of the Effective Date, you will return to the Company one hundred
percent (100%) of the after-tax proceeds of any amounts paid as the Housing
Subsidy under this Section 6; or (ii) after the one-year anniversary of the
Effective Date but prior to the two-year anniversary of the Effective Date, you
will return to the Company fifty percent (50%) of the after-tax proceeds of any
amounts paid as the Housing Subsidy under this Section 6. The Company agrees to
operate the foregoing payments and reimbursements in accordance with
Section 409A of the Internal Revenue Code.

7.   Stock Options. Upon the approval of the Compensation Committee of the Board
as soon as practicable following your Effective Date, you will be granted a
stock option, which will be, to the maximum extent possible under the
$100,000.00 rule of Section 422(d) of the Internal Revenue Code of 1986, as
amended (the “Code”), an “incentive stock option” (as defined in Section 422 of
the Code)(with the remainder granted as non-qualified stock options), to
purchase 150,000 shares of the Company’s Common Stock (as adjusted for stock
splits, stock dividends and similar events) pursuant to the Company’s 2005
Equity Incentive Plan (the “2005 Plan”) or outside of the 2005 Plan. The
exercise price of such options will be set at the fair market value on the date
of grant. The options will have a ten year term. Company Common Stock subject to
the option shall vest, assuming uninterrupted full-time service to the Company,
over a 4-year period, with 25% of the shares subject to the option vesting one
year from your Effective Date, and 1/48th of the shares subject to the option
vesting each month thereafter subject to your continued service to the Company
through the respective vesting dates. The actual vesting schedule will be
attached to this letter agreement following the ultimate resolution of your
request for part-time service and unpaid leave of absence, as further described
in Section 10.

8.   Restricted Stock Unit Award. On the first business day of the month
following your Effective Date, you will be granted 10,000 restricted stock units
relating to shares of the Company Common Stock (as adjusted for stock splits,
stock dividends and similar events), which may be settled in stock, pursuant to
the 2005 Plan or outside of the 2005 Plan. Such restricted stock units shall
vest, assuming uninterrupted full-time service to the Company, in four equal
annual installments on each anniversary of the grant date of the restricted
stock unit award, subject to your continued service to the Company through the
respective vesting dates. The actual vesting schedule will be attached to this
letter agreement following the ultimate resolution of your request for part-time
service and unpaid leave of absence, as further described in Section 10. The
Company agrees to operate the foregoing payments and reimbursements in
accordance with Section 409A of the Internal Revenue Code.

9.   Severance. If, prior to the two-year anniversary of the Effective Date,
your services to the Company are terminated by the Company without Cause (as
defined below), or if you terminate your employment for Good Reason, you will be
entitled to receive Severance Benefits (as defined below).       If you become
entitled to receive such Severance Benefits pursuant to this Section 9, the
continued payments of base salary, to the extent of payments made from the date
of your termination of employment through March 15 of the calendar year
following such termination, are intended to constitute separate payments for
purposes of Section 1.409A-2(b)(2) of the Treasury Regulations and thus payable
pursuant to the “short-term deferral” rule set forth in

 

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    Section 1.409A-1(b)(4) of the Treasury Regulations; to the extent such
payments are made following said March 15, they are intended to constitute
separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury
Regulations made upon an involuntary termination from service and payable
pursuant to Section 1.409A-1(b)(9)(iii) of the Treasury Regulations, to the
maximum extent permitted by such provision, with any excess amount being
regarded as subject to the distribution requirements of Section 409A(a)(2)(A) of
the Code, including, without limitation, the requirement of
Section 409A(a)(2)(B)(i) of the Code that payment be delayed until six
(6) months after your termination of employment if you are a “specified
employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code at the time
of such termination.       For the purposes of this Section 9, “Cause” shall
mean either: (i) any act of personal dishonesty taken by you in connection with
your responsibilities as an officer or employee of the Company and intended to
result in substantial personal enrichment; (ii) the conviction of a felony;
(iii) a willful act that constitutes gross misconduct and that is demonstrably
injurious to the Company; or (iv) following delivery to you of a written demand
for performance from the Company that describes the basis for the Company’s
belief that you have not substantially performed your duties, continued
violations of your obligations to the Company that are demonstrably willful and
deliberate.       For purposes of this Section 9, “Severance Benefits” shall
mean continued payment of your base salary in effect immediately prior to such
termination of employment for a period of 12 months following the effective date
of such termination of employment. In addition, you shall have the right to
continue your health insurance benefits pursuant to the Consolidated Omnibus
Budget Reconciliation Act of 1985 (“COBRA”) and any analogous provisions of
applicable state law. Should you so elect, the Company shall reimburse you
(within 30 days following the Company’s receipt of your monthly payment in
accordance with the terms of the plan) for 12 months of such health care
coverage following the effective date of such termination of employment.      
Notwithstanding the foregoing, the payment of Severance Benefits, if any,
pursuant to this Section 9 will cease immediately and terminate permanently at
the earlier of (i) 12 months following the effective date of such termination of
employment and (ii) such time as you commence full-time employment (or a
comparable full-time consulting engagement) after your termination of employment
with the Company.       The receipt of any Severance Benefits pursuant to this
Section 9 shall be subject to you executing and not revoking a separation
agreement and release of all claims in a form acceptable to the Company and in
the form used by the Company with respect to the termination of employment of
other executive officers of the Company.   10.   Part-time Status; Leave of
Absence. Commencing on the Effective Date, you will devote 50% or your business
time, attention and energies to the performance of your duties with the Company.
These duties could include, without limitation, attendance at meetings (in
person or telephonically) with the Company’s management, collaborators and/or
investors. During this time, you will receive base salary equal to 50% of the
normal rate and any equity grants will vest at 50% of the full-time rate.
Commencing on June 14, 2008, you will be reclassified to unpaid leave of absence
(“LOA”) status, which LOA status will terminate upon your commencement of
full-time employment in California, currently estimated to be on or about
September 2, 2008. During the unpaid LOA, there will be no vesting of any equity
granted to you. Any equity grants that do not vest during the unpaid LOA or that
vest at a 50% rate during the period referenced in this paragraph above shall
remain outstanding and re-commence vesting in accordance with the normal
48 month vesting schedule upon your return

 

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    to full-time duty. In the event you have not commenced full-time employment
by October 1, 2008, this offer letter agreement, the Change of Control Agreement
and the Indemnification Agreement will be terminated.   11.   At-Will
Employment. You should be aware that your employment with the Company is for no
specified period and constitutes “at-will” employment. As a result, you are free
to terminate your employment at any time, for any reason or for no reason.
Similarly, the Company is free to terminate your employment at any time, for any
reason or for no reason.   12.   Proprietary Information Agreement. As a
condition of accepting this offer of employment, you will be required to
complete, sign and return the Company’s standard form of Employee Proprietary
Information Agreement (sent under separate cover).   13.   Immigration Laws. For
purposes of federal immigration laws, you will be required to provide to the
Company documentary evidence of your identity and eligibility for employment in
the United States. Such documentation must be provided within 3 business days of
the Effective Date, or your employment relationship with the Company may be
terminated.   14.   General. This offer letter, the Employee Proprietary
Information Agreement, the XenoPort employee handbook, the stock award
agreements covering the grants described in Sections 7 and 8 above, the Change
of Control Agreement, and Indemnification Agreement, when signed by you, set
forth the terms of your employment with the Company and supersede any and all
prior representations and agreements, whether written or oral. This agreement
can only be amended in writing, signed by you and an officer of the Company. Any
waiver of a right under this agreement must be in writing. This agreement will
be governed by California law.   15.   Taxation. This offer letter agreement is
intended to comply with the requirements of Section 409A of the Code
(“Section 409A”) and the regulations and guidance promulgated thereunder. To the
extent that any provision in this offer letter agreement is ambiguous as to its
compliance with Section 409A, the provision shall be read in such a manner so
that no payment or reimbursement due hereunder shall be subject to an
“additional tax” under Section 409A. For purposes of Section 409A, each payment
made under this offer letter agreement shall be treated as a separate payment.
All reimbursements provided under this offer letter agreement shall be made or
provided in accordance with the requirements of section 409A, including, where
applicable, the requirement that (i) the amount of expenses eligible for
reimbursement during a calendar year may not affect the expenses eligible for
reimbursement in any other calendar year; (ii) the reimbursement of an eligible
expense will be made on or before the last day of the calendar year following
the year in which the expense is incurred; and (iii) the right to reimbursement
is not subject to liquidation or exchange for another benefit.

 

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    We look forward to your joining the Company. If the foregoing terms are
agreeable, please indicate your acceptance by signing the enclosed copy of this
letter in the space provided below and returning it to me, along with your
completed and signed Employee Proprietary Information Agreement. This offer will
terminate if not accepted on or before April 15, 2008.

            Sincerely,
XENOPORT, INC.
      By:   /s/ Ronald W. Barett         Ronald W. Barrett        Chief
Executive Officer     

             
AGREED AND ACCEPTED:
      DATE    
 
           
/s/ Vincent J. Angotti
 
Vincent J. Angotti
      04/29/08