Exhibit 10.1
PURCHASE AGREEMENT
XenoPort, Inc.
3410 Central Expressway
Santa Clara, California 95051
Ladies and Gentlemen:
The undersigned (the “Investor”) hereby confirms its agreement with you as
follows:
     1. This Purchase Agreement, including the Terms and Conditions For Purchase
of Units attached hereto as Annex I (collectively, this “Agreement”), is made as
of the date set forth below between XenoPort, Inc., a Delaware corporation (the
“Company”), and the Investor. Capitalized terms not defined herein shall have
the meanings assigned to them in Annex I.
     2. The Company has authorized the sale and issuance to the Investor and
[insert name of other investors] of up to an aggregate of 1,889,467 units (the
“Units”), with each Unit consisting of (i) one share (the “Share,” collectively,
the “Shares”) of its common stock, par value $0.001 per share (the “Common
Stock”), and (ii) one warrant (the “Warrant,” collectively, the “Warrants”) to
purchase 0.15 of a share of Common Stock (and the fractional amount being the
“Warrant Ratio”), in the form attached hereto as Exhibit B, for a purchase price
of $21.17 per Unit (the “Purchase Price”). Units will not be issued or
certificated. The Shares and Warrants are immediately separable and will be
issued separately. The shares of Common Stock issuable upon exercise of the
Warrants are referred to herein as the “Warrant Shares” and, together with the
Units, the Shares and the Warrants, are referred to herein as the “Securities”.
     3. The offering and sale of the Units (the “Offering”) are being made
pursuant to (1) an effective Registration Statement on Form S-3 (File No.
333-156485 (including the Prospectus contained therein (the “Base Prospectus”),
the “Registration Statement”) filed by the Company with the Securities and
Exchange Commission (the “Commission”) on the date hereof, (2) the “free writing
prospectus” (as that term is defined in Rule 405 under the Securities Act of
1933, as amended (the “Act”)), dated as of the date hereof (the “Issuer Free
Writing Prospectus” and together with the Base Prospectus, the “Time of Sale
Prospectus”), containing certain supplemental information regarding the
Securities, the terms of the Offering and information that may be material to
the Company and its securities that has been or will be filed with the
Commission, and that has been delivered to the Investor on or prior to the date
hereof, and (3) a Prospectus Supplement (the “Prospectus Supplement” and
together with the Base Prospectus, the “Prospectus”) containing certain
supplemental information regarding the Securities, the terms of the Offering and
information that may be material to the Company and its securities that will be
filed with the Commission and delivered to the Investor (or made available to
the Investor by the filing by the Company of an electronic version thereof with
the Commission).
     4. The Company and the Investor agree that the Investor will purchase from
the Company and the Company will issue and sell to the Investor the Units set
forth below for the aggregate purchase price set forth below. The Units shall be
purchased pursuant to the Terms and Conditions for Purchase of Units attached
hereto as Annex I and incorporated herein by this reference as if fully set
forth herein. The Investor acknowledges that the Offering is not being

- 1 -

--------------------------------------------------------------------------------

 

underwritten [and that there is no minimum offering amount]1 [and that the
minimum offering amount is $40 million]2.
     5. The manner of settlement of the Shares included in the Units purchased
by the Investor shall be as follows. Shares will be delivered by crediting the
account of the Investor’s prime broker (as specified by such Investor on
Exhibit A annexed hereto) with the Depository Trust Company (“DTC”) through its
Deposit/Withdrawal At Custodian (“DWAC”) system, whereby Investor’s prime broker
shall initiate a DWAC transaction on the Closing Date using its DTC participant
identification number, and released by BNY Mellon Shareowner Services, the
Company’s transfer agent (the “Transfer Agent”), at the Company’s direction. No
later than the Closing, the Investor shall:

  (i)   direct the broker-dealer at which the account or accounts to be credited
with the Shares are maintained to set up a DWAC instructing the Transfer Agent
to credit such account or accounts with the Shares, and     (ii)   remit by wire
transfer the amount of funds equal to the aggregate purchase price for the Units
being purchased by the Investor to an account designated in writing by the
Company to the Investor no later than two business days prior to the Closing (as
defined in Annex I hereto).

     6. The executed Warrant included in the Units purchased by the Investor
shall be delivered in accordance with the terms thereof.
     The Investor represents that, except as set forth below, (a) it has had no
position, office or other material relationship within the past one year with
the Company or persons known to it to be affiliates of the Company, (b) it is
not a broker dealer and (c) neither the Investor nor any group of investors of
which the Investor is a part that would be required to file a statement with the
Commission containing the information required by Schedule 13D or Schedule 13G
regarding the same Securities in connection with the Offering, acquired, or
obtained the right to acquire, 20% or more of the Common Stock (or securities
convertible into or exercisable for Common Stock) or the voting power of the
Company on a post-transaction basis.
     7. The Investor represents that it has received (or otherwise had made
available to it by the filing by the Company of an electronic version thereof
with the Commission) the Base Prospectus, dated December 30, 2008, which is a
part of the Company’s Registration Statement, the documents incorporated by
reference therein and the Issuer Free Writing Prospectus (collectively, the
“Disclosure Package”), which includes pricing and other information regarding
the Offering (the “Offering Information”), prior to or in connection with the
receipt of this Agreement. The Investor acknowledges that the Issuer Free
Writing Prospectus included in the Disclosure Package contains information that
may be material to the Company and its securities that shall be disclosed to the
public by the Company in a Current Report on Form 8-K in accordance with
Section 15 of Annex I hereto, and the Investor agrees not to transact or agree
to transact in the Company’s securities or otherwise use such information until
(a) the Company files with the Commission on December 30, 2008 a Current Report
on Form 8-K in accordance
 

1   Note: For Maverick, closing is not conditioned on Venrock closing.   2  
Note: For Venrock, closing is conditioned on Maverick closing.

- 2 -

--------------------------------------------------------------------------------

 

with Section 15 of Annex I hereto and (b) The NASDAQ Global Market has opened
for regular trading on December 30, 2008.
     8. No offer by the Investor to buy Units will be accepted and no part of
the Purchase Price will be delivered to the Company until the Investor has
received the Disclosure Package including the Offering Information and the
Company has accepted such offer by countersigning a copy of this Agreement, and
any such offer may be withdrawn or revoked, without obligation or commitment of
any kind, at any time prior to the Company sending (orally, in writing or by
electronic mail) notice of its acceptance of such offer, provided that delivery
of a copy of this Agreement countersigned by or on behalf of the Company to the
Investor shall constitute such notice. An indication of interest will involve no
obligation or commitment of any kind until the Investor has been delivered the
Disclosure Package including the Offering Information and this Agreement is
accepted and countersigned by or on behalf of the Company.
     9. This Agreement, including Annex I and the exhibits hereto, constitutes
the entire agreement of the parties to this Agreement and supersedes all prior
written or oral and all contemporaneous oral agreements, understandings and
negotiations with respect to the subject matter hereof. In this Agreement, the
masculine, feminine and neuter genders and the singular and the plural include
one another.

- 3 -

--------------------------------------------------------------------------------

 

         
Number of Units: 
 
 
Purchase Price Per Unit:
$                         
Aggregate Purchase Price:
$                         

     Please confirm that the foregoing correctly sets forth the agreement
between us by signing in the space provided below for that purpose.

         
 
  Dated as of:                     , 200___          
 
  INVESTOR    
 
       
 
  By: 
 
 
  Name: 
 
 
  Title:
 
   
 
  Address: 
 
 
             

Agreed and Accepted
this ___day of ___, 200___:
XENOPORT, INC.

         
By:
 
 
Name:
       
 
       
Title:
       
 
       

[Signature Page to Purchase Agreement]

- 4 -

--------------------------------------------------------------------------------

 

ANNEX I
TERMS AND CONDITIONS FOR PURCHASE OF UNITS
     1. Authorization and Sale of the Units. Subject to the terms and conditions
of this Agreement, the Company has authorized the sale of the Units, the Shares
and the Warrants and the issuance of the Warrant Shares upon exercise of the
Warrants.
     2. Agreement to Sell and Purchase the Units.
          2.1 At the Closing (as defined in Section 3.1), the Company will sell
to the Investor, and the Investor will purchase from the Company, upon the terms
and conditions set forth herein, the number of Units set forth on the last page
of the Agreement to which these Terms and Conditions for Purchase of Units are
attached as Annex I (the “Signature Page”) for the aggregate purchase price
therefor set forth on the Signature Page.
          2.2 The Company [proposes to]3 [shall] enter into substantially this
same form of Purchase Agreement with [insert name of other investors] (the
“Other Investors”) [and expects to complete the sale of the Units to the Other
Investors] [on the date hereof, pursuant to which the Company will agree to sell
to the Other Investors, and the Other Investors will purchase from the Company,
simultaneously with the Closing, Units (each at the Purchase Price) for the
aggregate purchase price of $[ ] million]. The Investor and the Other Investors
are hereinafter sometimes collectively referred to as the “Investors,” and this
Agreement and the Purchase Agreement executed by the Other Investors are
hereinafter sometimes collectively referred to as the “Agreements.”
     3. Closings and Delivery of the Units and Funds.
          3.1 Closing. The completion of the purchase and sale of the Units (the
“Closing”) shall take place at 9:00 a.m. Pacific Standard Time, on December 31,
2008 or at such other time as the Company and the Investors shall agree, at the
offices of Cooley Godward Kronish LLP, Five Palo Alto Square, 3000 El Camino
Real, Palo Alto, California 94306 (the “Closing Date”), in accordance with
Rule 15c6-1 promulgated under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”). At the Closing, (a) the Company shall cause the Transfer
Agent to deliver to the Investor the number of Shares set forth on the Signature
Page registered in the name of the Investor or, if so indicated on the Investor
Questionnaire attached hereto as Exhibit A, in the name of a nominee designated
by the Investor, (b) the Company shall cause to be delivered to the Investor a
Warrant to purchase a number of whole Warrant Shares determined by multiplying
the number of Shares set forth on the Signature Page by the Warrant Ratio and
rounding down to the nearest whole number and (c) the aggregate purchase price
for the Units being purchased by the Investor set forth on the Signature Page
will be delivered by or on behalf of the Investor to the Company.
          3.2 Conditions to the Company’s Obligations. The Company’s obligation
to issue and sell the Units to the Investor shall be subject to: (i) the receipt
by the Company of the purchase price for the Units being purchased hereunder as
set forth on the Signature Page and (ii) the accuracy in all material respects
of the representations and warranties made by the Investor and the fulfillment
of those undertakings of the Investor to be fulfilled prior to the Closing Date.
 

3   Note: Language regarding simultaneous closings in this Section 2.2 is for
Venrock only.

Annex I - 1

--------------------------------------------------------------------------------

 

          3.3 Conditions to the Investor’s Obligations. The Investor’s
obligation to purchase the Units will be subject to the accuracy of the
representations and warranties of the Company contained herein, to the accuracy
of the statements of the Company made in any certificates pursuant to the
provisions hereof, to the performance by the Company of its obligations
hereunder and to each of the following additional terms and conditions. [The
Investor’s obligations are expressly not conditioned on the purchase by the
Other Investors of the Units that it has agreed to purchase from the Company.]4
               (a) No stop order suspending the effectiveness of the
Registration Statement or any part thereof, preventing or suspending the use of
any Base Prospectus, the Prospectus or any Issuer Free Writing Prospectus or any
part thereof shall have been issued and no proceedings for that purpose or
pursuant to Section 8A under the Act shall have been initiated or threatened by
the Commission, and all requests for additional information on the part of the
Commission (to be included or incorporated by reference in the Registration
Statement or the Prospectus or otherwise) shall have been complied with to the
reasonable satisfaction of the Investor; and each Issuer Free Writing Prospectus
and the Prospectus shall have been filed with the Commission within the
applicable time period prescribed for such filing by, and in compliance with,
the published rules and regulations under the Act (the “Rules and Regulations”).
               (b) The Investor shall not have discovered and disclosed to the
Company, and the Company shall not have discovered (which discovery, if any, the
Company shall immediately disclose to the Investor and counsel for the
Investor), on or prior to the Closing Date that the Registration Statement or
any amendment or supplement thereto contains an untrue statement of a fact
which, in the opinion of counsel for the Investor, is material or omits to state
any fact which, in the opinion of such counsel, is material and is required to
be stated therein or is necessary to make the statements therein not misleading,
or that the Disclosure Package, any Issuer Free Writing Prospectus, or the
Prospectus or any amendment or supplement thereto contains an untrue statement
of fact which, in the opinion of such counsel, is material or omits to state any
fact which, in the opinion of such counsel, is material and is necessary in
order to make the statements, in the light of the circumstances in which they
were made, not misleading.
               (c) All corporate proceedings and other legal matters incident to
the authorization, form and validity of each of this Agreement, the Purchase
Agreements, the Units, the Shares, the Warrants, the Warrant Shares, the
Registration Statement, the Disclosure Package, each Issuer Free Writing
Prospectus, if any, and the Prospectus and all other legal matters relating to
this Agreement and the transactions contemplated hereby shall be reasonably
satisfactory in all material respects to counsel for the Investor, and the
Company shall have furnished to such counsel all documents and information that
they may reasonably request to enable them to pass upon such matters.
               (d) Cooley Godward Kronish LLP shall have furnished to the
Investor such counsel’s written opinion, as counsel to the Company, dated the
Closing Date, in the form agreed as of the date hereof.
               (e) The Company shall have furnished to Investor a certificate,
dated the Closing Date, of its Chief Executive Officer or President and its
Chief Financial Officer stating that (i) since the effective date of the
Registration Statement, no event has occurred which should have been set forth
in a supplement or amendment to the Registration Statement, the Disclosure
Package, the
 

4   Note: Delete bracketed language for Venrock.

Annex I - 2

--------------------------------------------------------------------------------

 

Time of Sale Prospectus, or the Prospectus, (ii) as of the Closing Date, the
representations and warranties of the Company in this Agreement are true and
correct in all material respects, except that any such representation or
warranty shall be true and correct in all respects where such representation or
warranty is qualified with respect to materiality, and the Company has complied
with all agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date, and (iii) there has not
been, subsequent to the date of the most recent quarterly unaudited financial
statements included or incorporated by reference in the Disclosure Package, any
material adverse change in the financial position or results of operations of
the Company and its subsidiaries, taken as a whole, or any change or development
that, singularly or in the aggregate, would involve a material adverse change or
a prospective material adverse change, in or affecting the condition (financial
or otherwise), results of operations, business, assets or prospects of the
Company and its subsidiaries taken as a whole, except as set forth in the
Prospectus.
               (f) Since the date of the latest audited financial statements
included in the Disclosure Package or incorporated by reference in the
Disclosure Package as of the date hereof, (i) neither the Company nor any of its
subsidiaries shall have sustained any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth in the Disclosure Package, and (ii) there
shall not have been any change in the capital stock or long-term debt of the
Company nor any of its subsidiaries, or any change, or any development involving
a prospective change, in or affecting the business, general affairs, management,
financial position, stockholders’ equity, results of operations or prospects of
the Company and its subsidiaries, taken as a whole, otherwise than as set forth
in the Disclosure Package, the effect of which, in any such case described in
clause (i) or (ii) of this paragraph (f), is, in the sole judgment of the
Investor, so material and adverse as to make it impracticable or inadvisable to
proceed with the sale or delivery of the Units on the terms and in the manner
contemplated in the Disclosure Package.
               (g) No action shall have been taken and no law, statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency or body which would prevent the issuance or sale of the
Units or materially and adversely affect the business or operations of the
Company or its subsidiaries, taken as a whole; and no injunction, restraining
order or order of any other nature by any federal or state court of competent
jurisdiction shall have been issued which would prevent the issuance or sale of
the Units or materially and adversely affect the business or operations of the
Company or its subsidiaries, taken as a whole.
               (h) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange, NASDAQ Global Market or the American
Stock Exchange or in the over-the-counter market, or trading in any securities
of the Company on any exchange or in the over-the-counter market, shall have
been suspended or materially limited, or minimum or maximum prices or maximum
range for prices shall have been established on any such exchange or such market
by the Commission, by such exchange or market or by any other regulatory body or
governmental authority having jurisdiction, (ii) a banking moratorium shall have
been declared by Federal or state authorities or a material disruption has
occurred in commercial banking or securities settlement or clearance services in
the United States, (iii) the United States shall have become engaged in
hostilities, or the subject of an act of terrorism, or there shall have been an
outbreak of or escalation in hostilities involving the United States, or there
shall have been a declaration of a national emergency or war by the United
States or (iv) there shall have occurred such a material adverse change in
general economic, political or

Annex I - 3

--------------------------------------------------------------------------------

 

financial conditions (or the effect of international conditions on the financial
markets in the United States shall be such) as to make it, in the sole judgment
of the Investor, impracticable or inadvisable to proceed with the sale or
delivery of the Units on the terms and in the manner contemplated in the
Disclosure Package and the Prospectus.
               (i) The Investor shall have received the signed agreements,
substantially in the form of Exhibit C-1 hereto, of the persons listed on
Exhibit C-2 hereto.
               (j) [The Other Investors shall purchase simultaneously with the
Closing the Units that they have agreed to purchase from the Company as
described in Section 2.2.]5
All opinions, evidence and certificates mentioned above or elsewhere in this
Agreement shall be deemed to be in compliance with the provisions hereof only if
they are in form and substance reasonably satisfactory to counsel for the
Investor.
          3.4 Delivery of Shares.
     Prior to the Closing, the Investor shall direct the broker-dealer at which
the account or accounts to be credited with the Shares being purchased by such
Investor are maintained, which broker/dealer shall be a DTC participant, to set
up a DWAC instructing the Transfer Agent to credit such account or accounts with
the Shares. Such DWAC instruction shall indicate the settlement date for the
deposit of the Shares, which date shall be the Closing Date. Simultaneously with
the delivery to the Company of the funds on the Closing Date pursuant to
Section 3.1 above, the Company shall direct the Transfer Agent to credit the
Investor’s account or accounts with the Shares pursuant to the information
contained in the DWAC.
     4. Representations and Warranties of the Company.
     The Company represents and warrants to the Investor that:
          4.1 The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect, and no
proceedings for such purpose are pending before or, to the Company’s knowledge,
after due inquiry, threatened by the Commission. If the Registration Statement
is an automatic shelf registration statement as defined in Rule 405 under the
Act, the Company is a well-known seasoned issuer (as defined in Rule 405 under
the Act) eligible to use the Registration Statement as an automatic shelf
registration statement and the Company has not received notice that the
Commission objects to the use of the Registration Statement as an automatic
shelf registration statement.
          4.2 (i) Each document, if any, filed or to be filed pursuant to the
Exchange Act and incorporated by reference in the Time of Sale Prospectus or the
Prospectus complied or will comply when so filed in all material respects with
the Exchange Act and the applicable rules and regulations of the Commission
thereunder, (ii) each part of the Registration Statement, when such part became
effective, did not contain, and each such part, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, (iii) the Registration Statement as of the
date hereof does not contain any untrue statement of a material fact or omit to
state a material
 

5   Note: Include this condition only for Venrock.

Annex I - 4

--------------------------------------------------------------------------------

 

fact required to be stated therein or necessary to make the statements therein
not misleading, (iv) the Registration Statement and the Prospectus comply, and
as amended or supplemented, if applicable, will comply in all material respects
with the Act and the applicable rules and regulations of the Commission
thereunder, (v) the Time of Sale Prospectus does not, and at the time of each
sale of the Shares or the Warrants in connection with the Offering when the
Prospectus is not yet available to prospective purchasers and at the Closing
Date, the Time of Sale Prospectus, as then amended or supplemented by the
Company, if applicable, will not, contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
(vi) the Prospectus does not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading and (vii) any free
writing prospectus does not conflict with the information contained in the
Registration Statement, the Time of Sale Prospectus or the Prospectus, except
that the representations and warranties set forth in this paragraph do not apply
to statements or omissions in the Registration Statement, the Time of Sale
Prospectus or the Prospectus based upon information relating to any Investor
furnished to the Company in writing by such Investor expressly for use therein.
          4.3 The Company is not an “ineligible issuer” in connection with the
Offering pursuant to Rules 164, 405 and 433 under the Act. Any free writing
prospectus that the Company is required to file pursuant to Rule 433(d) under
the Act has been, or will be, filed with the Commission in accordance with the
requirements of the Act and the applicable rules and regulations of the
Commission thereunder. Each free writing prospectus that the Company has filed,
or is required to file, pursuant to Rule 433(d) under the Act or that was
prepared by or behalf of or used or referred to by the Company complies or will
comply in all material respects with the requirements of the Act and the
applicable rules and regulations of the Commission thereunder.
          4.4 The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property and to
conduct its business as described in the Time of Sale Prospectus and Prospectus
and is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the failure to
be so qualified or be in good standing would not have a material adverse effect
on the Company, including, without limitation, a material adverse effect on the
condition, financial or otherwise, or in the earnings, business or operations of
the Company or on the power or ability of the Company to perform its obligations
under this Agreement or to consummate the transactions contemplated by the Time
of Sale Prospectus (a “Material Adverse Effect”).
          4.5 There are no legal or governmental proceedings pending or, to the
Company’s knowledge, threatened to which the Company is a party or to which any
of the properties of the Company is subject other than proceedings accurately
described in all material respects in the Time of Sale Prospectus and
proceedings that would not have a Material Adverse Effect.
          4.6 The Company has no subsidiaries.
          4.7 (a) This Agreement has been duly authorized, executed and
delivered by the Company, and (b) this Agreement constitutes a valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’

Annex I - 5

--------------------------------------------------------------------------------

 

and contracting parties’ rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and except as
to the enforceability of any rights to indemnification or contribution that may
be violative of the public policy underlying any law, rule or regulation
(including any federal or state securities law, rule or regulation).
          4.8 The authorized capital stock of the Company conforms in all
material respects as to legal matters to the description thereof contained in
each of the Time of Sale Prospectus and the Prospectus.
          4.9 The shares of Common Stock outstanding prior to the issuance of
the Units have been duly authorized and are validly issued, fully paid and
non-assessable.
          4.10 The Shares to be issued and sold by the Company to the Investors
hereunder and the Warrant Shares have been duly and validly authorized, and the
Shares, when issued and delivered against payment therefor as provided herein,
and the Warrant Shares, when issued and delivered against payment therefore as
provided in the Warrants, will be duly and validly issued, fully paid and
non-assessable and free of any preemptive or similar rights and will conform to
the description thereof contained in the Disclosure Package and the Prospectus.
          4.11 The execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement will not contravene any
provision of (i) applicable law, (ii) the amended and restated certificate of
incorporation or bylaws of the Company, (iii) any agreement or other instrument
binding upon the Company, or (iv) any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company except,
in the cases of clauses (i) and (iii) above for any such contravention that
would not have a Material Adverse Effect, and no consent, approval,
authorization or order of, or qualification with, any governmental body or
agency is required for the performance by the Company of its obligations under
this Agreement, except such as may be required by the securities or Blue Sky
laws of the various states in connection with the offer and sale of the Shares.
          4.12 There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the condition,
financial or otherwise, or in the earnings, business or operations of the
Company, from that set forth in the Time of Sale Prospectus.
          4.13 There are no legal or governmental proceedings pending or, to the
Company’s knowledge, threatened to which the Company is a party or to which any
of the properties of the Company is subject (i) other than proceedings
accurately described in all material respects in the Time of Sale Prospectus and
proceedings that would not have a Material Adverse Effect or (ii) that are
required to be described in the Registration Statement or the Prospectus and are
not so described; and there are no statutes, regulations, contracts or other
documents that are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement that are not
described or filed as required.
          4.14 Each preliminary prospectus filed pursuant to Rule 424 under the
Act complied, and the Prospectus and any amendments or supplements thereto shall
comply when so filed, in all material respects with the Act and the applicable
rules and regulations of the Commission thereunder.

Annex I - 6

--------------------------------------------------------------------------------

 

          4.15 The Company is not, and after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as described in
the Time of Sale Prospectus and the Prospectus will not be, required to register
as an “investment company” as such term is defined in the Investment Company Act
of 1940, as amended.
          4.16 The Company (i) is in compliance with any and all applicable
foreign, federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants (“Environmental Laws”), (ii)
has received all permits, licenses or other approvals required under applicable
Environmental Laws to conduct its business and (iii) is in compliance with all
terms and conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals would not, singly or in the aggregate,
have a Material Adverse Effect.
          4.17 There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with Environmental
Laws or any permit, license or approval, any related constraints on operating
activities and any potential liabilities to third parties) that would, singly or
in the aggregate, have a Material Adverse Effect.
          4.18 Except as described in the Time of Sale Prospectus, there are no
contracts, agreements or understandings between the Company and any person
granting such person the right to require the Company to file a registration
statement under the Act with respect to any securities of the Company. There are
no contracts, agreements or understandings between the Company and any person
granting such person the right to require the Company to include any securities
in the registration of the Shares as contemplated by this Agreement, the Time of
Sale Prospectus and the Prospectus.
          4.19 Subsequent to the respective dates as of which information is
given in each of the Registration Statement, the Time of Sale Prospectus and the
Prospectus, (i) the Company has not incurred any material liability or
obligation, direct or contingent, nor entered into any material transaction not
in the ordinary course of business; (ii) the Company has not purchased any of
its outstanding capital stock other than ordinary and customary repurchases of
restricted stock from employees upon termination of service pursuant to the
terms of the Company’s equity incentive plans, nor declared, paid or otherwise
made any dividend or distribution of any kind on its capital stock other than
ordinary and customary dividends; and (iii) there has not been any material
change in the capital stock, short-term debt or long-term debt of the Company,
except in each case as described in each of the Registration Statement, the Time
of Sale Prospectus and the Prospectus.
          4.20 The Company has good and marketable title to all personal
property owned by it that is material to the business of the Company, free and
clear of all liens, encumbrances and defects except as described in the Time of
Sale Prospectus or such as do not materially affect the value of such property
and do not interfere with the use made and proposed to be made of such property
by the Company; and any real property and buildings held under lease by the
Company is held under valid, subsisting and enforceable leases with such
exceptions as are not material and do not interfere with the use made and
proposed to be made of such property and buildings by the Company, except as
described in the Time of Sale Prospectus. The Company does not own any real
property.

Annex I - 7

--------------------------------------------------------------------------------

 

          4.21 All patents and patent applications filed by or on behalf of the
Company (the “Owned Patents”) are owned or co-owned by the Company free and
clear of all liens, encumbrances, defects or other restrictions, except as would
not, singly or in the aggregate, have a Material Adverse Effect; and the Company
is not aware of any valid or bona fide basis for a finding that any of the Owned
Patents in their entirety is unpatentable, invalid or unenforceable; and the
Company reasonably believes that the Owned Patents are patentable, valid and
enforceable, except as would not, singly or in the aggregate, have a Material
Adverse Effect.
          4.22 In connection with the Company’s Owned Patents, all known
relevant prior art references were disclosed or will be disclosed to the USPTO
to the extent required by and in accordance with 37 C.F.R. Section 1.56; all
information submitted to the USPTO in such patent applications, and in
connection with the prosecution of such applications, was accurate in all
material respects; and neither the Company nor, to the Company’s knowledge, any
other person made any material misrepresentations or concealed any material
information from the USPTO in such applications, or in connection with the
prosecution of such applications, in violation of 37 C.F.R. Section 1.56.
          4.23 Except as set forth in the Time of Sale Prospectus, the Company
owns or possesses rights to use, or can acquire on reasonable terms ownership of
or rights to use, all patents, patent applications, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names and other intellectual
property (collectively, “Intellectual Property”) necessary for the conduct of
the Company’s business as now conducted, and for the manufacture, use or sale of
its presently proposed products, as described in the Time of Sale Prospectus,
and the Company has not received any notice of infringement of or conflict with
asserted rights of others with respect to any of the foregoing that, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or finding,
would have a Material Adverse Effect.
          4.24 To the Company’s knowledge, after due inquiry, and except as
would not have a Material Adverse Effect, there are no valid and enforceable
rights of third parties to such Intellectual Property that are or would be
infringed by the business currently conducted by the Company or in the
manufacture, use, sale, offer for sale or import of its presently proposed
products, as described in the Time of Sale Prospectus.
          4.25 The Company is not subject to any judgment, order, writ,
injunction or decree of any court or any federal, state, local, foreign or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, or any arbitrator. Except as would not have a Material
Adverse Effect, the Company is not a party to any contract, which restricts or
impairs its use of any Intellectual Property.
          4.26 To the Company’s knowledge, after due inquiry, there are no
ongoing infringements by others of any Intellectual Property owned by the
Company in connection with the business currently conducted by the Company or
its presently proposed products, as described in the Prospectus.
          4.27 Other than as disclosed in the Time of Sale Prospectus and except
as would not have a Material Adverse Effect, to the Company’s knowledge, after
due inquiry, there is no U.S. patent or published U.S. patent application which
contains valid and enforceable claims that dominate or that

Annex I - 8

--------------------------------------------------------------------------------

 

would dominate any Owned Patent or other Intellectual Property owned by the
Company or that interferes with the issued or pending claims of any such Owned
Patent or other Intellectual Property.
          4.28 No material labor dispute with the employees of the Company
exists or, to the knowledge of the Company, is imminent; and the Company is not
aware of any existing, threatened or imminent labor disturbance by the employees
of any of its principal suppliers, manufacturers or contractors that would
reasonably be expected to have a Material Adverse Effect.
          4.29 The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which it is engaged; the Company has not been
refused any insurance coverage previously held in the last year or customarily
carried in the business in which it is engaged; and the Company has no reason to
believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would not have a
Material Adverse Effect, except as described in the Time of Sale Prospectus.
          4.30 Except as described in the Time of Sale Prospectus, the Company
has not sold, issued or distributed any shares of Common Stock during the
six-month period preceding the date hereof, including any sales pursuant to
Rule 144A under, or Regulation D or S of, the Act, other than shares issued
pursuant to employee benefit plans, qualified stock option plans or other
employee compensation plans or arrangements, or pursuant to outstanding options,
restricted stock units, rights or warrants.
          4.31 The Company has established and maintains disclosure controls and
procedures (as defined in Rule 13a-15 under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”)). Such disclosure controls and procedures are
designed to ensure that information required to be disclosed by the Company is
recorded, processed, summarized and reported, within the time periods specified
in the Commission’s rules and forms and that such information is accumulated and
communicated to the Company’s principal executive officer and its principal
financial officer. Such disclosure controls and procedures are sufficient to
provide reasonable assurance that the Company’s principal executive officer and
principal financial officer are alerted to material information required to be
included in the Company’s periodic reports required under the Exchange Act so as
to allow timely decisions regarding required disclosure.
          4.32 The Company maintains a system of internal control over financial
reporting (as defined in Rule 13a-15 under the Exchange Act) sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management’s general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles and to maintain asset
accountability; (iii) access to assets is permitted only in accordance with
management’s general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
          4.33 There are no outstanding loans made by the Company to any
executive officer (as defined in Rule 3b-7 under the Exchange Act) or director
of the Company which are prohibited by Section 402 of the Sarbanes-Oxley Act of
2002, as amended. The Company has not since January 19, 2005 taken any action
prohibited by Section 402 of the Sarbanes-Oxley Act of 2002, as amended.

Annex I - 9

--------------------------------------------------------------------------------

 

          4.34 The Company has all necessary consents, authorizations,
approvals, orders, certificates and permits of and from, and has made all
required declarations and filings with, and complied with all formal
recommendations of, all federal, state, local and other governmental
authorities, all self-regulatory organizations and all courts and other
tribunals, to own, lease, license and use its properties and assets and to
conduct its business in the manner described in the Time of Sale Prospectus,
including, without limitation, all necessary U.S. Food and Drug Administration
(“FDA”), independent data monitoring committee, and applicable foreign
regulatory agency approvals and recommendations, except as disclosed in the Time
of Sale Prospectus, and except to the extent that the failure to obtain such
consents, authorizations, approvals, orders, certificates, permits, or to make
such declarations or filings, or to follow such recommendations would not have a
Material Adverse Effect. The Company has not received any notice of proceedings
relating to the revocation or modification of any such consent, authorization,
approval, order, certificate, permit or recommendation which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
have a Material Adverse Effect, except as described in the Time of Sale
Prospectus.
          4.35 No investigational new drug (“IND”) application filed by or on
behalf of the Company with the FDA has been terminated by the FDA, and none of
the FDA, any independent data monitoring committee, or any applicable foreign
regulatory agency has recommended, commenced, or, to the knowledge of the
Company, threatened to initiate, any action to place a clinical hold order on,
or otherwise delay or suspend, proposed or ongoing clinical investigations
conducted or proposed to be conducted by or on behalf of the Company.
          4.36 To the best of the Company’s knowledge, all the operations of the
Company and all the manufacturing facilities and operations of the Company’s
suppliers of products and product candidates and the components thereof
manufactured in or imported into the United States are in compliance with
applicable FDA regulations, including current Good Manufacturing Practices, and
meet sanitation standards set by the Federal Food, Drug and Cosmetic Act of
1938, as amended, and all the operations of the Company and all the
manufacturing facilities and operations of the Company’s suppliers of products
and product candidates manufactured outside, or exported from, the United States
are in compliance with applicable foreign regulatory requirements and standards,
except to the extent that the failure to be in compliance with such regulations
and standards would not have a Material Adverse Effect.
          4.37 Except as described in the Time of Sale Prospectus, the clinical
trials and the human and animal studies that are described in the Time of Sale
Prospectus were and, if still pending, are being, conducted (to the knowledge of
the Company with respect to such studies conducted by or on behalf of third
parties) in accordance in all material respects with standard medical and
scientific research procedures and all applicable rules, regulations and
policies of the FDA, including the current Good Clinical Practices and Good
Laboratory Practices, and all applicable foreign regulatory requirements and
standards.
          4.38 The Company has operated its business and currently is in
compliance in all material respects with all applicable rules, regulations and
policies of the FDA and any applicable foreign regulatory organization and all
recommendations and actions of any independent data monitoring committee.
          4.39 The Shares and Warrant Shares will be listed at or prior to
Closing on the NASDAQ Global Market, subject only to official notice of
issuance.

Annex I - 10

--------------------------------------------------------------------------------

 

     5. Covenants of the Company.
          5.1 The Company hereby agrees that, without the prior written consent
of the Investor, it will not, during the period (the “Lock-Up Period”) ending
90 days after the date of the Prospectus, (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, lend, or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock;
(ii) file any registration statement with the Commission relating to the
offering of any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock; or (iii) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (i), (ii) or (iii) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise. The
foregoing sentence shall not apply to (A) the Shares, Warrants, or Warrant
Shares to be sold hereunder, (B) the issuance by the Company of shares of Common
Stock upon the exercise of an option or warrant, the vesting or settlement of
any restricted stock units or other equity compensation awards or the conversion
of a security, in each case outstanding on the date hereof; (C) the grant of
options, restricted stock units or other equity compensation awards, or the
issuance of shares of Common Stock by the Company to employees, officers,
directors, advisors or consultants of the Company in each case either
(x) pursuant to equity incentive and employee stock purchase plans described in
the Prospectus or (y) as an inducement grant within the meaning of NASDAQ
Rule 4350(i)(1)(iv) consistent with past practice, and the issuance by the
Company of any shares of Common Stock upon the exercise, vesting or settlement
of such equity compensation awards; or (D) the filing of any registration
statement (x) on Form S-8 in respect of any equity compensation plans or
arrangements maintained by the Company, (y) that the Company is contractually
obligated to file pursuant to the terms of that certain Fifth Amended and
Restated Investors Rights Agreement, dated December 16, 2004, by and among the
Company and certain stockholders of the Company or (z) that the Company files
pursuant to Section 5.3 hereof.
          5.2 Promptly following the Closing, the Company shall reimburse the
Investor for the reasonable and documented fees and expenses incurred in
connection with the transactions contemplated by this Agreement, including the
expenses of counsel to the Investor (which fees shall include, without
limitation, the fees and expenses associated with the negotiation, preparation
and execution and delivery of this Agreement and the other transaction
documents), up to a maximum of $75,000 for each of the Investors associated with
[name of fund] and the Other Investors associated with [name of fund]. The
Company and the Investor shall otherwise each pay the fees and expenses of their
respective advisers, counsel, accountants and other experts, if any, and all
other expenses incurred by such party in connection with the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company
shall pay all Transfer Agent fees, stamp taxes and other taxes and duties levied
in connection with the sale and issuance of the Units to the Investor and
issuance of the Warrant Shares.
          5.3
               (a) If all or any portion of a Warrant is exercised at a time
when there is an effective registration statement to cover the issuance of the
Warrant Shares or if the Warrant is exercised via cashless exercise more than
twelve months after the issuance thereof at a time at which the Investor is not
an Affiliate of the Company, the Warrant Shares issued pursuant to any such
exercise shall be issued free of all legends.

Annex I - 11

--------------------------------------------------------------------------------

 

               (b) Subject to Section 5.3(d), the Company shall use reasonable
efforts to keep a registration statement (including the Registration Statement)
registering the issuance of the Warrant Shares effective and available until the
earlier of the first anniversary of the Closing or such time as all Warrant
Shares have been issued.
               (c) Subject to Section 5.3(d), if all Warrant Shares have not
been issued on or prior to the first anniversary of the Closing, following a
written request by the Investor on not more than three (3) occasions during any
twelve month period, the Company shall use reasonable efforts to cause a
registration statement (including the Registration Statement) registering the
issuance of the Warrant Shares to be effective and available within ten
(10) Trading Days after such notice and to keep such registration statement
effective and available until the earlier of twenty (20) Trading Days after such
effectiveness and availability or such time as all Warrant Shares held by the
Investor have been issued.
               (d) If following the date hereof the Registration Statement (or
any subsequent registration statement registering the Warrant Shares) is not
effective or is not otherwise available for the sale of the Warrant Shares
during a period in which a registration statement is required to be effective
and available pursuant to Section 5.3(b) or Section 5.3(c) (a “Registration
Event”), (i) the Company shall promptly notify the holders of the Warrants in
writing that such registration statement is not then effective or available and
thereafter shall promptly notify such holders when a registration statement is
effective again and available for the sale of the Warrant Shares and (ii) to the
extent that there are Registration Events occurring (x) on more than an
aggregate of sixty (60) days in the period required by Section 5.3(b) or (y) on
more than an aggregate of five (5) Trading Days in each period required by
Section 5.3(c), the Company will make payments to the Investor, as liquidated
damages and not as a penalty, in an amount equal to 1.0% of Fair Market Value
(as defined in the Warrants and as determined on the last business day for each
30-day period (or pro rata for any portion thereof) for which such payment is
due) multiplied by the number of Warrant Shares held by the Investor for each
30-day period (or pro rata for any portion thereof) following any Registration
Events occurring on more than the time periods specified in clause (ii) above.
The amounts payable as liquidated damages pursuant to the preceding sentence
shall be paid monthly within five (5) Trading Days of the last day of each
30-day period (or pro rata for any portion thereof) following any Registration
Events occurring on more than the time periods specified in clause (ii) above.
Such payments shall constitute the Investor’s exclusive monetary remedy for such
events, but shall not affect the right of the Investor to seek injunctive
relief. Such payments shall be made to the Investor in cash. The twenty
(20) Trading Day period specified in Section 5.3(c) shall be extended by the
number of Trading Days on which there are Registration Events during such twenty
(20) Trading Day period.
               (e) For purposes of this Section 5.3, the term “Trading Day”
shall have the meaning ascribed to such term in the Warrants.
     6. Representations, Warranties and Covenants of the Investor.
     The Investor acknowledges, represents and warrants to, and agrees with, the
Company that:
          6.1 The Investor (a) is knowledgeable, sophisticated and experienced
in making, and is qualified to make decisions with respect to, investments in
securities presenting an investment decision like that involved in the purchase
of the Units, including investments in securities issued by the Company and
investments in comparable companies, (b) has answered all questions on the
Signature Page and the Investor Questionnaire and the answers thereto are true
and correct as of the

Annex I - 12

--------------------------------------------------------------------------------

 

date hereof and will be true and correct as of the Closing Date and (c) in
connection with its decision to purchase the number of Units set forth on the
Signature Page, has received and is relying only upon the Disclosure Package
(including the documents incorporated by reference therein).
          6.2 (a) No action has been or will be taken in any jurisdiction
outside the United States by the Company that would permit an offering of the
Units, or possession or distribution of offering materials in connection with
the issue of the Securities in any jurisdiction outside the United States where
action for that purpose is required, (b) if the Investor is outside the United
States, it will comply with all applicable laws and regulations in each foreign
jurisdiction in which it purchases, offers, sells or delivers Securities or has
in its possession or distributes any offering material, in all cases at its own
expense and (c) no agent of the Company has been authorized to make and no such
agent has made any representation, disclosure or use of any information in
connection with the issue, placement, purchase and sale of the Units, except as
set forth in the Issuer Free Writing Prospectus or as set forth in or
incorporated by reference in the Base Prospectus or the Prospectus Supplement or
as otherwise contemplated by this Agreement.
          6.3 (a) The Investor has full right, power, authority and capacity to
enter into this Agreement and to consummate the transactions contemplated hereby
and has taken all necessary action to authorize the execution, delivery and
performance of this Agreement, and (b) this Agreement constitutes a valid and
binding obligation of the Investor enforceable against the Investor in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ and contracting parties’ rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
and except as to the enforceability of any rights to indemnification or
contribution that may be violative of the public policy underlying any law, rule
or regulation (including any federal or state securities law, rule or
regulation).
          6.4 The Investor understands that nothing in this Agreement, the
Prospectus, the Disclosure Package or any other materials presented to the
Investor in connection with the purchase and sale of the Units constitutes
legal, tax or investment advice. The Investor has consulted such legal, tax and
investment advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with its purchase of Units. The Investor also
understands that there is no established public trading market for the Warrants
being offered in the Offering, and that the Company does not expect such a
market to develop. In addition, the Company does not intend to apply for listing
the Warrants on any securities exchange. Without an active market, the liquidity
of the Warrants will be limited.
          6.5 Since the date on which the Company first contacted such Investor
about the Offering or such Investor first learned of the Offering from its
investment manager, whichever occurred first, the Investor has not engaged in
any transactions in the securities of the Company (including, without
limitation, any Short Sales involving the Company’s securities). Each Investor
covenants that it will not engage in any transactions in the securities of the
Company (including Short Sales) or disclose any information about the Offering
(other than to its advisors that are under a legal obligation of
confidentiality) prior to the later of (a) the time that the transactions
contemplated by this Agreement are publicly disclosed and (b) the open of
regular trading on The NASDAQ Global Market on December 30, 2008. Each Investor
agrees that it will not use any of the Securities acquired pursuant to this
Agreement to cover any short position in the Common Stock if doing so would be
in violation of applicable securities laws. For purposes hereof, “Short Sales”
include, without limitation, all “short sales” as defined in Rule 200
promulgated under Regulation SHO under the Exchange Act, whether or not against
the box, and all types of direct and indirect stock pledges, forward sales
contracts, options,

Annex I - 13

--------------------------------------------------------------------------------

 

puts, calls, short sales, swaps, “put equivalent positions” (as defined in
Rule 16a-1(h) under the Exchange Act) and similar arrangements (including on a
total return basis), and sales and other transactions through non-US broker
dealers or foreign regulated brokers.
     7. Termination of Representations, Warranties and Agreements. All
covenants, agreements, representations and warranties made by the Company and
the Investor herein will terminate upon the delivery to the Investor of the
Units being purchased and the payment therefor, other than the covenants and
agreements set forth in Section 5 hereof.
     8. Notices. All notices, requests, consents and other communications
hereunder will be in writing, will be mailed (a) if within the domestic United
States by first-class registered or certified airmail, or nationally recognized
overnight express courier, postage prepaid, or by facsimile or (b) if delivered
from outside the United States, by International Federal Express or facsimile,
and will be deemed given (i) if delivered by first-class registered or certified
mail domestic, three business days after so mailed, (ii) if delivered by
nationally recognized overnight carrier, one business day after so mailed,
(iii) if delivered by International Federal Express, two business days after so
mailed and (iv) if delivered by facsimile, upon electric confirmation of receipt
and will be delivered and addressed as follows:
               (a) if to the Company, to:
XenoPort, Inc.
3410 Central Expressway
Santa Clara, California 95051
Attention: Gianna Bosko, Vice President and General Counsel
Facsimile: (408) 616-7214
with copies to (which shall not constitute notice):
Cooley Godward Kronish LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306
Attention: Suzanne Sawochka Hooper, Esq.
Facsimile: (650) 849-7400
               (b) if to the Investor, at its address on the Signature Page
hereto, or at such other address or addresses as may be furnished to the Company
in writing by the Investor.
     9. Changes. This Agreement may not be modified or amended except pursuant
to an instrument in writing signed by the Company and the Investor.
     10. Headings. The headings of the various sections of this Agreement have
been inserted for convenience of reference only and will not be deemed to be
part of this Agreement.
     11. Severability. In case any provision contained in this Agreement should
be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein will not in any way
be affected or impaired thereby.

Annex I - 14

--------------------------------------------------------------------------------

 

     12. Governing Law. This Agreement will be governed by, and construed in
accordance with, the internal laws of the State of California, without giving
effect to the principles of conflicts of law that would require the application
of the laws of any other jurisdiction.
     13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will constitute an original, but all of which, when
taken together, will constitute but one instrument, and will become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties. The Company and the Investor acknowledge and
agree that the Company shall deliver its counterpart to the Investor.
     14. Confirmation of Sale. The Investor acknowledges and agrees that such
Investor’s receipt of the Company’s counterpart to this Agreement, shall
constitute written confirmation of the Company’s acceptance and agreement to
sale the applicable Units to such Investor.
     15. Press Release. The Company and the Investor agree that the Company
shall issue a press release announcing the Offering prior to the open of regular
trading on The NASDAQ Global Market on December 30, 2008 and shall file the
related Form 8-K on December 30, 2008.
     16. Termination. In the event that the Closing shall not have occurred
within ten business days from the date of this Agreement due to the Company’s or
the Investor’s failure to satisfy the conditions set forth in Sections 3.2 and
3.3 above (and the non-breaching party’s failure to waive such unsatisfied
condition(s)), the non-breaching party shall have the option to terminate this
Agreement with respect to such breaching party at the close of business on such
date.

Annex I - 15

--------------------------------------------------------------------------------

 

Exhibit A
XENOPORT, INC.
INVESTOR QUESTIONNAIRE
     Pursuant to Section 3 of Annex I to the Agreement, please provide us with
the following information:

         
1.
  The exact name that your Shares and Warrants are to be registered in. You may
use a nominee name if appropriate:    
 
       
 
       
2.
  The relationship between the Investor and the registered holder listed in
response to item 1 above:    
 
       
 
       
3.
  The mailing address of the registered holder listed in response to item 1
above:    
 
       
 
       
4.
  The Social Security Number or Tax Identification Number of the registered
holder listed in the response to item 1 above:    
 
       
5.
  Name of DTC Participant (broker-dealer at which the account or accounts to be
credited with the Shares are maintained):    
 
       
 
       
6.
  DTC Participant Number:    
 
       
7.
  Name of Account at DTC Participant being credited with the Shares:    
 
       
8.
  Account Number at DTC Participant being credited with the Shares:    
 
       

A - 1

--------------------------------------------------------------------------------

 

EXHIBIT B
Form of Warrant

B-1

--------------------------------------------------------------------------------

 

EXHIBIT C-1
Form of Lock-Up Agreement
___, 200_
[INVESTORS]
Ladies and Gentlemen:
     The undersigned understands that the recipients hereof (collectively, the
“Investors”) propose to enter into Purchase Agreements (the “Purchase
Agreements”) with XenoPort, Inc., a Delaware corporation (the “Company”),
providing for the public offering (the “Public Offering”) by the Company of
shares (the “Shares”) of the Common Stock (par value $0.001 per share) of the
Company (the “Common Stock”) and warrants to purchase shares of Common Stock
(the “Warrants”) to the Investors.
     To induce the Investors to enter into the Purchase Agreements, the
undersigned hereby agrees that, without the prior written consent of each of the
Investors, it will not, during the period (the “Lock-Up Period”) commencing on
the date hereof and ending 90 days after the date of the final prospectus
supplement relating to the Public Offering (the “Prospectus”), (1) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (2) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such transaction described in
clause (1) or (2) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. The foregoing sentence shall not apply
to transactions relating to shares of Common Stock or other securities acquired
in open market transactions after the completion of the Public Offering;
provided that no filing by any party under Section 16(a) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), shall be required or
shall be voluntarily made in connection with subsequent sales of Common Stock or
other securities acquired in such open market transactions. In addition, the
undersigned agrees that, without the prior written consent of each of the
Investors, it will not, during the Lock-Up Period, make any demand for or
exercise any right with respect to, the registration of any shares of Common
Stock or any security convertible into or exercisable or exchangeable for Common
Stock. The undersigned also agrees and consents to the entry of stop transfer
instructions with the Company’s transfer agent and registrar against the
transfer of the undersigned’s shares of Common Stock except in compliance with
the foregoing restrictions.
     Notwithstanding the foregoing, (1) if the undersigned is an individual, the
undersigned may transfer shares of Common Stock or securities convertible into
or exchangeable or exercisable for Common Stock by gift or gifts, will or
intestacy to a member or members of his or her immediate family, to a trust
formed for the benefit of any such person, or to a partnership, the partners of
which are exclusively the undersigned and/or a member or members of his or her
immediate family and/or a charity; (2) if the undersigned is a partnership,
trust, corporation or similar entity, the undersigned may transfer or distribute
shares of Common Stock or securities convertible into or exchangeable or
exercisable for Common Stock to its partners, limited liability company members
or stockholders; (3) the undersigned may sell shares of Common Stock pursuant to
an existing 10b5-1 plan which is

C-1

--------------------------------------------------------------------------------

 

disclosed to each of the Investors prior to the date hereof; (4) the undersigned
may enter into a 10b5-1 plan during the Lock-Up Period if sales under such plan
do not occur until after the expiration of the Lock-Up Period; (5) the
undersigned may “net” exercise outstanding options or warrants to purchase
Common Stock in accordance with their terms; (6) the undersigned may transfer
shares of Common Stock to the Company to satisfy tax withholding obligations
pursuant to Company equity compensation plans or arrangements; and (7) the
undersigned may transfer shares of Common Stock or securities convertible into
or exchangeable or exercisable for Common Stock pursuant to a sale or an offer
to purchase 100% of the outstanding Common Stock, whether pursuant to a merger,
tender offer or otherwise, to a third party or group of third parties; provided,
however, that in each of (1) and (2) above, it shall be a condition to the
transfer or distribution that (i) the transferee execute a copy of this Lock-Up
Agreement, (ii) no filing by any party (donor, donee, transferor or transferee)
under Section 16(a) of the Exchange Act shall be required or shall be made
voluntarily in connection with such transfer or distribution (other than a
filing on Form 5 made after the expiration of the Lock-Up Period), and (iii) no
such transfer or distribution may include a disposition for value; and provided
further that any Common Stock acquired upon the net exercise of options or
warrants described in clause (5) above shall be subject to the restrictions
imposed by this Lock-Up Agreement. For purposes of this paragraph, “immediate
family” means the spouse, domestic partner, lineal descendants, father, mother,
brother or sister of the transferor.
     The undersigned understands that the Company and each of the Investors are
relying upon this agreement in proceeding toward consummation of the Public
Offering. The undersigned further understands that this agreement is irrevocable
and shall be binding upon the undersigned’s heirs, legal representatives,
successors and assigns.
     Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to Purchase Agreements, the terms of which are subject to negotiation
between the Company and the Investors.
     This Lock-Up Agreement shall lapse and become null and void if (a) no
shares have been purchased and paid for pursuant to the Purchase Agreements by
January 31, 2009 or (b) the Company notifies the Investors in writing that it
does not intend to proceed with the Public Offering.

         
 
  Very truly yours,    
 
       
 
       
 
  (Name)    
 
       
 
       
 
  (Address)    

C-1

--------------------------------------------------------------------------------

 

EXHIBIT C-2
Parties to Lock-Up Agreement
Vincent Angotti
Ronald Barrett
Paul Berns
Kenneth Cundy
John Freund
Catherine Friedman
Mark Gallop
William Harris
Jeryl Hilleman
Per Lofberg
Kenneth Nussbacher
William Rieflin
David Savello
David Stamler
Gary Tollefson
Wendell Wierenga

C-2