Exhibit 10.6

[Date]

 

Confidential

 

Via Electronic Mail

 

[NAME]

 

Dear [Name],

 

Re: Offer of Employment (U.S. Executive)

 

We are pleased to offer you the position of [TITLE] with Xenon Pharmaceuticals
USA Inc. (the “Company”), a wholly-owned subsidiary of Xenon Pharmaceuticals
Inc. (the “Parent”), commencing on or about [DATE]. Subject to Sections L
through P below, the Company agrees to employ you, and you agree to serve the
Company, on an “at-will” basis, which means that either the Company or you may
terminate your employment with the Company at any time and for any or no reason,
in accordance with the terms of this agreement (the “Agreement”).

 

A.Base Salary. Subject to Section V below, you will earn a base salary at a rate
of $[XXX] USD per year, less statutory and other applicable deductions as
required, for all work and services you perform for the Company (the “Base
Salary”). The Base Salary is payable semi-monthly in arrears in accordance with
the Company’s applicable payroll policies.

 

B.Annual Discretionary Bonus. In addition to your Base Salary, you are eligible
to earn an annual discretionary bonus, less statutory and other applicable
deductions as required, of up to [XX] percent ([XX]%) of your base salary
earnings actually earned in the applicable calendar year of service. The payment
and amount of the annual bonus is within the sole discretion of the Board of
Directors of the Company (the “Board”), based on the determination of the
Compensation Committee of the Board of Directors of Parent (the “Compensation
Committee”) and will be evaluated in the first quarter of each year in relation
to the achievement of corporate and/or personal objectives for the previous year
and subject to the terms and conditions of Appendix A. Such objectives will be
established annually by the Compensation Committee in its sole discretion.
Bonuses are not earned until paid and are contingent upon your continued
employment with the Company through the date the bonus is paid. No “pro-rated”
or partial bonus will be provided unless provided for in Sections L through P
below or as otherwise approved by the Board, based on the determination of the
Compensation Committee, in its sole discretion.

 

C.Annual Review. The Compensation Committee will conduct an annual review of
your compensation package, including your salary and bonus percentage in
accordance with its policies. The Compensation Committee’s recommendations
regarding your compensation package will be conveyed to the Board for final
approval. Any adjustment to your compensation package is at the sole discretion
of the Compensation Committee and the Board provided that the Base Salary will
not be reduced without your consent and subject to Sections L and M of this
Agreement.

 

D.Expense Reimbursement. In accordance with its expense policy, as amended from
time to time, the Company will reimburse any authorized expenses actually and
reasonably incurred in the course of performing your employment duties. The
Company will also provide to you, for the duration of your employment, any
necessary work tools and equipment, such as a laptop computer and mobile phone.
Subject to advance approval by the Company, you will also be reimbursed for
out-of-pocket expenses incurred for attending courses or workshops related to
your employment duties.

 

 

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E.Reporting Structure/Responsibilities. You will report to the [Title]. You
agree that the Company may change the reporting structure, including the person
and position to whom you report, and the people and positions who report to you.
You will perform the responsibilities and duties of your position, as described
in Schedule A, and subject to Sections L and M of this Agreement, such other
responsibilities and duties as may be reasonably requested by the Parent and/or
the Company from time to time. You will at all times: (i) conform to the
reasonable and lawful directions of the Parent, the Company and the Board; (ii)
adhere to all applicable Company and Parent policies; (iii) give the Company and
Parent the full benefit of your knowledge, expertise, skill and ingenuity; (iv)
well and faithfully serve the Company and Parent; (v) devote your full time and
best efforts to furthering the interests of the Company and Parent; and (vi)
exercise the degree of care, diligence and skill that a prudent executive would
exercise in comparable circumstances. You acknowledge and agree that you will
sign an acknowledgement of any applicable Company or Parent policy in connection
with your commencing employment with the Company.

 

You will not during your employment with the Company, be employed by, or provide
products or services of any nature whatsoever to, any other person, company,
organization or other entity without prior written permission from the Company,
provided that you may provide services to Parent as agreed between Parent and
Company as part of your duties under this Agreement (with the understanding that
the compensation provided to you under this Agreement shall fully compensate you
for any such services to Parent). This does not restrict you from performing
reasonable volunteer activities; however, you must obtain the prior consent of
the Company if you wish to serve on a board of directors or advisory board, or
if you perform any paid work or services for other organizations. Schedule B
contains a description of all such appointments and positions that you currently
occupy, and all paid work and services you currently provide to outside
organizations, to which the Company confirms that it provides its permission.
The Company retains the right to revoke any consent for such outside services,
especially in the event where any such services may create a conflict of
interest.

 

F.Paid Time Off. You will earn twenty (20) days of paid time off per calendar
year on a pro rata basis. You may use paid time off for any purpose, including
vacation, sick or personal days.  You may also be entitled to other leaves,
including without limitation, an additional allotment of paid sick days and
statutory holidays in accordance with applicable law and the Company’s
applicable policies, as may be in effect from time to time. Accrued but unused
paid time off and sick days will expire in accordance with the Company’s
policies, as amended from time to time

 

G.Confidentiality Agreement. As a condition of your employment under this
Agreement, you must enter into and abide by the enclosed At-Will Employment,
Confidential Information, Invention Assignment, and Arbitration Agreement (the
“Confidentiality Agreement”). Please note that this agreement also deals with,
among other things, confidentiality and the ownership of intellectual property
developments, and contains non-solicitation, non-competition, and other
restrictive covenants. By entering into the Confidentiality Agreement, you are
agreeing that compliance with its provisions is reasonable and a necessary
requirement in our highly competitive industry, and may be required by our
agreements with our suppliers, customers, and distributors. In the event that
you leave the employ of the Company, you consent to notification by the Company
to your new employer about your rights and obligations under the Confidentiality
Agreement.

 

 

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H.Stock Options. As a Company employee, you will be eligible to participate in
Parent’s 2014 Equity Incentive Plan (the “Plan”), a copy of which is attached.
Subject to the terms of the Plan (as such may be amended from time to time) and
approval by Parent’s Board of Directors, you will be granted [XXX] stock options
to purchase common shares of Parents. All such stock options will have a ten
(10) year term and vest in installments over a four (4) year term, in accordance
with Parent’s standard policy in that regard: 25% on the first anniversary of
the date you begin your employment position with Company, and the remaining 75%
then vesting monthly over the course of the following three (3) years, in equal
amounts, on the last day of each month. The exercise price will be the Market
Price as determined by the Plan on the date that these options are approved and
granted by Parent’s Board of Directors.  

 

I.Benefits. You will be eligible to receive and participate in the Company’s
employee benefits as may be established from time to time for the Company’s
employees, subject to the terms of the applicable plans. You will be eligible to
participate in any retirement savings plan that the Company may sponsor, which,
subject to compliance with applicable U.S. laws, may include a Company matching
contribution of up to the amount of your personal contributions to such
retirement savings plan in a given tax year, subject to a cap of 5% of your Base
Salary (the “Matching Contribution”). Alternatively, if either (a) there is no
Company-sponsored retirement savings plan in which you are eligible to
participate, or (b) there is a Company-sponsored retirement savings plan in
which you have contributed the maximum amount permitted by law in a given tax
year and applicable U.S. law does not permit receipt of the full Matching
Contribution, then the Company may pay you a bonus in an amount through the
Company’s regular payroll so that the aggregate amount you receive for a plan
year (including any portion of the Matching Contribution) is economically
equivalent to the full Matching Contribution.

 

J.Taxes. Any taxes applicable to your employment compensation package with the
Company and your secondment to the Parent will be deducted and remitted to the
appropriate authorities in accordance with the Company’s standard policies and
applicable law. You acknowledge and agree that during your employment with the
Company, you will be expected to provide services to the Parent pursuant to a
secondment arrangement between the Company and the Parent, and that any such
services may result in your owing taxes in Canada. You are advised to consult
your own financial advisor.

 

If you work in a second tax jurisdiction at the Parent or Company’s request, the
Company will cover the reasonable costs for you to use the services of the
Company’s tax adviser or another tax adviser agreed upon by the Parties to
prepare your home and host country tax returns for any year during which you are
required to file tax returns in more than one country as a result of your
employment with the Company.

 

K.Insurance and Indemnification. As a corporate and/or executive officer of the
Company and/or of the Parent during your employment with the Company, you will
be covered by Parent’s Directors’ and Officers’ Liability Insurance Policy and
such other indemnity policy, agreement or commitment established by the Company
or Parent, as may be in effect from time to time, subject to the terms of the
Insurance Policy and other policy, agreement or commitment and any amendments
made from time to time at the discretion of the Parent’s Board of Directors,
provided that no amendment will substantially reduce your entitlements. Your
coverage under such insurance policy and any other policy, agreement or
commitment will continue after your employment with the Company ends in respect
of your employment with the Company.

 

 

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L.Change of Control. In this Agreement:

 

a.

“Average Bonus” means an amount that is (i) the sum of the annual bonus awards
(expressed as a percentage of the applicable year’s Base Salary) that you earned
in each of the three (3) completed calendar years preceding the date your
employment with the Company terminates, divided by (ii) three (3), multiplied by
(iii) your Base Salary at the time your employment with the Company terminates
[for example: (15%+5%+10%)/3 = 10% of Base Salary]. If you have been employed
for more than one (1) but fewer than three (3) completed calendar years of
service, then your “Average Bonus” will be the average of the annual bonus
awards (as expressed as a percentage of the applicable year’s Base Salary) that
you have received for the completed calendar year(s) preceding the date of your
employment with the Company terminates

 

b.

“Change of Control” means:

 

 

(i)

the acquisition by any person or persons acting jointly or in concert (as
determined by the Securities Act) (“Person”), whether directly or indirectly, of
voting securities of the Parent that, together with all other voting securities
of the Parent held by such Person, constitute in the aggregate more than 50% of
all outstanding voting securities of the Parent; provided, however, that for
purposes of this subsection, the acquisition of additional securities by any one
Person, who owns more than 50% of all outstanding voting securities of the
Parent will not be a Change of Control;

 

 

(ii)

an amalgamation, arrangement or other form of business combination of the Parent
with another corporation that results in the holders of voting securities of
that other corporation holding, in the aggregate, more than 50% of all
outstanding voting securities of the corporation resulting from the business
combination; provided, however, that for purposes of this subsection, the
acquisition of additional securities by any one Person, who owns more than
50% of all outstanding voting securities of the Parent will not be a Change of
Control; or

 

 

(iii)

a change in the ownership of a substantial portion of the Parent’s assets,
including the sale, lease, transfer or exchange of a substantial portion of the
Parent’s assets, to another Person, other than in the ordinary course of
business of the Parent, which occurs on the date that such Person acquires (or
has acquired during the twelve (12) month period ending on the date of the most
recent acquisition by such person or persons) assets from the Parent that have a
total gross fair market value equal to or more than fifty percent (50%) of the
total gross fair market value of all of the assets of the Parent immediately
prior to such acquisition or acquisitions; provided, however, that for purposes
of this subsection (iii), the following will not constitute a change in the
ownership of a substantial portion of the Parent’s assets: (A) a transfer to a
Related Entity, or (B) a transfer of assets by the Parent to: (1) a stockholder
of the Parent (immediately before the asset transfer) in exchange for or with
respect to the Parent’s stock, (2) an entity of which the Parent has Control,
(3) a Person, that owns, directly or indirectly, fifty percent (50%) or more of
the all outstanding voting securities of the Parent, or (4) an entity of which a
Person described in this subsection (iii)(B)(3) has Control. For purposes of
this subsection (iii), gross fair market value means the value of the assets of
the Parent, or the value of the assets being disposed of, determined without
regard to any liabilities associated with such assets;

 

provided, however, that a Change in Control will not be deemed to have occurred
if such Change in Control results solely from the issuance, in connection with a
bona fide public offering, financing or series of financings by the Parent, of
voting securities of the Parent or any rights to acquire voting securities of
the Parent which are convertible into voting securities.

 

 

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Further and for the avoidance of doubt, a transaction will not constitute a
Change of Control if: (x) its sole purpose is to change the state or
jurisdiction of the Parent’s incorporation, or (y) its sole purpose is to create
a holding company the voting securities of which will be owned in substantially
the same proportions by the persons who held the Parent’s voting securities
immediately before such transaction.

 

c.

“Good Reason” means any of the following:

 

 

(i)

any unilateral change or series of changes to your employment responsibilities,
reporting relationship, or status within the Company or Parent, such that
immediately after such a change or series of changes to your responsibilities,
reporting relationship, or status, taken as a whole, and taking into account the
size and complexity of the business of the Company or Parent at that time, are
substantially less than those assigned to you immediately prior to such change
or series of changes; or

 

 

(ii)

a material reduction in your Base Salary or other compensation as in effect
prior to the Change of Control; or

 

 

(iii)

the taking of any action by the Company or Parent, or the failure by the Company
or Parent to take any action, that would materially adversely affect your
participation in, or materially reduce your aggregate benefits under, the total
package of long-term incentive, bonus, compensation, retirement savings plan,
life insurance, health, accident disability and other similar plans in which you
are participating prior to the action by the Company or Parent or the failure by
the Company or Parent to take any action; or

 

 

(iv)

the unilateral requirement that you relocate to a new location that is both (a)
more than 60 kilometers from your previous work location and (b) more than 60
kilometers from your primary residence; it being understood that you shall not
be considered to have been relocated for purposes of this subsection (iv) if you
are providing services to the Company consistent with Section R of this
Agreement or you otherwise expressly consent to a change to Section R; or

 

 

(v)

failure or refusal of the Successor Company to offer you terms and conditions of
employment, including the provisions of Section M of this Agreement, that are
substantially the same as the provisions of this Agreement;

 

provided that any change or series of changes in reporting relationships alone
will not constitute Good Reason.

 

d.

“Successor Company” means, in connection with a Change of Control, the surviving
or acquiring company or entity.

 

e.

“Cause” has the meaning set forth in Appendix A.

 

 

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M.Termination Without Cause or Resignation for Good Reason in Connection With or
Following A Change of Control:

 

In the event of (i) a termination without cause or (ii) resignation for Good
Reason, in either case, occurring within three (3) months prior to a Change of
Control and related or connected to that Change of Control or occurring within
twelve (12) months after the date of the Change of Control,  your employment
will end on the date it is terminated without Cause by the Company or Successor
Company or the date terminated by you for Good Reason, in which case the Company
or Successor Company will provide you with the following, subject to Appendix A
and the conditions precedent therein:

 

 

a.

payment equal to twelve (12) months’ Base Salary, plus one (1) additional month
of Base Salary for every year of consecutive service with the Company, including
any service with Parent, and Successor Company, up to a combined maximum of
eighteen (18) months (the “COC Payment Period”);

 

 

b.

payment of 100% of your then-applicable bonus eligibility calculated on your
then-applicable annual Base Salary (i.e. not prorated for the partial year
worked), less statutory and other applicable deductions as required;

 

 

c.

payment of an amount equal to the contributions to your retirement savings plan
the Company would have paid on your behalf during the COC Payment Period;

 

 

d.

notwithstanding any provision in the Equity Incentive Plan to the contrary:

 

 

i.

immediate vesting of all unvested stock options and other deferred compensation
awards granted to you by the Parent or the Successor Company; and

 

 

ii.

with respect to stock options and other deferred compensation granted pursuant
to the Equity Incentive Plan and any subsequent deferred compensation plan,
continued exercise rights for the longer of the period stipulated in the
applicable plan or grant and six (6) months from the termination of your
employment.

 

 

e.

payment directly on your behalf or reimbursement to you for the cost of the
monthly premiums for you and your eligible dependents to continue your health
care benefits pursuant to the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended (“COBRA”) up to the earlier of (I) the end of the Payment
Period, or (II) the date you commence full-time employment.

 

In the case of Good Reason, you must within three (3) months after the
occurrence of Good Reason, provide the Company or Successor Company with thirty
(30) days’ written notice of Good Reason. Where the Good Reason is based in
whole or in part on a series of changes, the notice period will commence on the
occurrence of the last change in the series. Within thirty (30) days after
receipt of written notice of Good Reason, the Company or the Successor Company
may correct, reverse, rectify or otherwise resolve the change or series of
changes that constitute Good Reason, in which case your employment with the
Company or Successor Company will continue.

 

 

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Subject to Appendix A, the payments described above, are inclusive of any
termination or severance pay owing to you under applicable law, and will be
subject to statutory withholdings and other regular payroll deductions. You
further agree that you will not be eligible for any additional severance or
separation payments under any other Company policy or practice. You will be
entitled to the pay, if any, accrued and owing under this Agreement up to the
date of termination of your employment. In the event you trigger termination
under the Change of Control/Good Reason terms above or are entitled to the
termination provisions above as a result of the termination of your employment
without Cause, you will not be eligible for any payment pursuant to the
termination sections below.

 

Termination:

 

N.Resignation. If for any reason you should wish to leave the Company, you will
provide the Company with three (3) months’ prior written notice of your
intention (the “Resignation Period”). You agree that in order to protect the
Company’s interests, the Company may, in its sole and unfettered discretion,
waive the Resignation Period and end your employment immediately by delivering
to you a written notice, which shall cease any further pay or compensation
obligations of the Company (except for pay, if any, accrued and owing under this
Agreement up to the date of termination of your employment). Nothing in this
provision is intended to alter the at-will nature of your employment with the
Company.

 

O.Termination for Cause. The Company may terminate your employment at any time
for Cause. You will not be entitled to receive any further pay or compensation
(except for pay, if any, accrued and owing under this Agreement up to the date
of termination of your employment), severance pay, notice, payment in lieu of
notice, benefits or damages of any kind, and for clarity, without limiting the
foregoing, you will not be entitled to any bonus or pro rata bonus payment that
has not already been awarded by the Company.

 

P.Termination Without Cause.

 

(This Section P does not apply to a termination without cause that occurs within
three (3) months prior to a Change of Control and in relation or connection to
that Change of Control or within six (6) months prior to a Change of Control and
in relation or connection to that Change of Control or within twelve (12) months
of a Change of Control – such terminations are covered by Section M).

 

The Company may terminate your employment without Cause at any time upon
providing you a severance payment in the amount equal to twelve (12) months plus
one (1) additional month for every one (1) year of consecutive service with the
Company, up to a maximum of eighteen (18) months (the “Payment Period”), and
subject to Appendix A and the conditions precedent therein.

 

In addition to the severance payment above, in the event of a termination
without Cause, the Company will provide you with the following, and, as above,
subject to Appendix A and the conditions precedent therein:

 

 

(i)

the Company will pay on your behalf or otherwise reimburse you for the cost of
the monthly premiums for you and your eligible dependents to continue your
health care benefits pursuant under COBRA, as amended up to the earlier of (I)
the end of the Payment Period, or (II) the date you commence full-time
employment;

 

 

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(ii)

the Company will pay you an Average Bonus pro-rated for the period of the
partial bonus year you actually worked immediately prior to the termination of
your employment, less statutory and other applicable deductions as required. For
example, if your last day of work is March 31, you will receive three (3) months
of your Average Bonus. If a bonus has not yet been determined for the preceding
completed calendar year, the Compensation Committee will first make that
determination in the ordinary course using relevant criteria in a manner
consistent with prior practice and make its recommendation to the Board so that
the Average Bonus can then be determined and paid in accordance with this
provision. For clarity, it is expressly agreed that you will not be entitled to
any bonus whatsoever for any period of time after your last actual day at work,
including during the Payment Period;

 

 

(iii)

the Company will pay an amount equal to the contributions to your retirement
savings plan it would have paid on your behalf for the Payment Period;

 

 

(iv)

notwithstanding any provision in the Plan to the contrary, all options and any
other deferred compensation granted to you will continue to vest for a period of
three (3) months after the date your employment terminates and all vested stock
options and other deferred compensation will be exercisable until the earlier of
the original expiry day of the stock options and deferred compensation and the
date that is six (6) months after the date your employment terminates.

 

Any payments, severance, or other benefits hereunder will be subject to
applicable withholdings and deductions. You will not be entitled to receive any
further pay or compensation except (i) as expressly set out in this Agreement,
and (ii) the pay, if any, accrued and owing under this Agreement up to the date
of termination of your employment.

 

On termination of your employment, regardless of the reason for such
termination, you shall immediately (and with contemporaneous effect) resign any
directorships, offices or other positions that you may hold, if any, in the
Company, Parent or any affiliate, unless otherwise agreed in writing by the
Company and Parent.

 

Q.Work Permit.You will continue to be required to work in the Parent’s Canadian
office while fulfilling your on-site presence expectations, as further described
in an Employee Secondment Agreement Letter. As such, your employment with the
Company is contingent upon your signing and complying with the Employee
Secondment Agreement Letter and maintaining your authorization to work in
Canada. If you fail to maintain such status at any point after commencing your
employment with the Company, that will be considered a frustration of your
employment agreement and the Company will then be able to terminate your
employment agreement with no severance payment to you. The Company will support
your application for any such authorization.

 

R.On-Site Expectations. You will be expected to be on site at Parent’s place of
business an average of [XXX] weeks per month at a minimum. Business travel on
behalf of Parent will be considered as time spent on-site at Parent. The
requirements for your on-site presence will be reviewed with the Parent on an
ongoing basis. In order to support your on-site presence, Company will pay for
your flights to and from Vancouver, BC and your accommodation during your travel
to Vancouver, BC.

 

 

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S.FDA Debarment. As a condition of your employment with the Company, you must
certify and reaffirm that you are not under investigation by the FDA for
debarment action, have not been debarred under the Generic Drug Enforcement Act
of 1992 (21 U.S.C. 301 et seq.), and are not otherwise being investigated,
restricted or disqualified from performing services relating to clinical trials
by the FDA or any other regulatory authority or professional body in any other
jurisdiction. If, during the course of your employment with the Company, you
become subject to such investigation or otherwise are restricted or
disqualified, you will promptly inform Parent’s Legal Department of such event.

 

T.Miscellaneous

 

No Implied Entitlement. Other than as expressly provided herein, you will not be
entitled to receive any further pay or compensation, severance pay, notice,
payment in lieu of notice, incentives, bonuses, benefits or damages of any kind.

 

Continued Effect. Notwithstanding any changes in the terms and conditions of
your employment which may occur in the future, including any changes in
position, duties or compensation, the termination provisions in this Agreement
will continue to be in effect for the duration of your employment with the
Company unless otherwise amended in writing and signed by the Company.

 

Authorization to Deduct Debts. If, on the date you leave employment, you owe the
Company any money, you hereby authorize the Company to deduct any such debt from
your final pay or any other payment due to you to the extent permitted by
applicable law. Any remaining debt will be immediately payable to the Company
and you agree to satisfy such debt within fourteen (14) days after any demand
for repayment, to the extent permitted by applicable law.

 

Dispute Resolution. IN CONSIDERATION OF YOUR EMPLOYMENT WITH THE COMPANY, ITS
PROMISE TO ARBITRATE ALL EMPLOYMENT-RELATED DISPUTES AND YOUR RECEIPT OF THE
COMPENSATION AND OTHER BENEFITS PAID TO YOU BY THE COMPANY, AT PRESENT AND IN
THE FUTURE, YOU AGREE THAT ANY AND ALL CONTROVERSIES, CLAIMS, OR DISPUTES WITH
ANYONE (INCLUDING THE COMPANY AND ANY EMPLOYEE, OFFICER, DIRECTOR, SHAREHOLDER
OR BENEFIT PLAN OF THE COMPANY, IN THEIR CAPACITY AS SUCH OR OTHERWISE), ARISING
OUT OF, RELATING TO, OR RESULTING FROM YOUR EMPLOYMENT WITH THE COMPANY OR THE
TERMINATION OF YOUR EMPLOYMENT WITH THE COMPANY, INCLUDING ANY BREACH OF THIS
AGREEMENT, SHALL BE SUBJECT TO BINDING ARBITRATION, AS SET FORTH IN THE
CONFIDENTIALITY AGREEMENT.

 

Legal Counsel. You have been advised by the Company to retain independent legal
advice with respect to this Employment Agreement.

 

Currency. Except as otherwise specifically indicated, all monetary amounts
referenced herein are in U.S. dollars.

 

Severability. If any part, article, section, clause, paragraph or subparagraph
of this Agreement is held to be indefinite, invalid, illegal or otherwise
voidable or unenforceable for any reason, the entire Agreement will not fail on
the account thereof and the validity, legality and enforceability of the
remaining provisions will in no way be affected or impaired thereby.

 

 

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Entire Understanding. We also confirm that this Agreement (including Appendix A)
and the Confidentiality Agreement, Employee Secondment Agreement Letter and the
Equity Incentive Plan and related documentation set forth our entire
understanding of the terms of your employment with the Company, and cancels and
supersedes all previous invitations, proposals, letters, correspondence,
negotiations, promises, agreements with the Parent, the Company, or any related
entity (including the Prior Agreement), covenants, conditions, representations
and warranties with respect to the subject matter of this Agreement. Any
modifications to these employment terms must be made in writing and signed by
both you and the Company.

 

Governing Law. This Agreement and all matters arising hereunder will be governed
by and construed in accordance with the laws of the Commonwealth of
Massachusetts, without regard for conflict of law provisions.

 

Protected Activity Not Prohibited. I understand that nothing in this Agreement
shall in any way limit or prohibit me from engaging in any Protected Activity.
For purposes of this Agreement, “Protected Activity” means filing a charge or
complaint with, or otherwise communicating or cooperating with or participating
in any investigation or proceeding that may be conducted by any federal, state
or local government agency or commission, including the Securities and Exchange
Commission, the Equal Employment Opportunity Commission, the Occupational Safety
and Health Administration, and the National Labor Relations Board (“Government
Agencies”). I understand that in connection with such Protected Activity, I am
permitted to disclose documents or other information as permitted by law, and
without giving notice to, or receiving authorization from, the Company or
Parent. Notwithstanding, in making any such disclosures or communications, I
agree to take all reasonable precautions to prevent any unauthorized use or
disclosure of any information that may constitute Company Confidential
Information to any parties other than the Government Agencies. I further
understand that Protected Activity does not include the disclosure of any
Company or Parent attorney-client privileged communications. In addition, I
hereby acknowledge that the Company has provided me with notice in compliance
with the Defend Trade Secrets Act of 2016 regarding immunity from liability for
limited disclosures of trade secrets. The full text of the notice is attached in
Appendix B.

 

If you have any questions or concerns regarding the above, please do not
hesitate to contact me.

 

To accept this Agreement on the terms set out herein, please sign where
indicated below, and return a signed copy of this Agreement along with a signed
copy of the Confidentiality Agreement and the Secondment Agreement to me before
[Date].

 

Yours sincerely,

 

XENON PHARMACEUTICALS USA INC.

 

 

[Signatory Name]

[Signatory Title]

Attachment(s):

 

1.

Confidentiality Agreement

 

2.

Employee Secondment Agreement Letter

 

3.

2014 Equity Incentive Plan

 

 

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I hereby confirm that I have read, understand and voluntarily accept the terms
of this Agreement:

 

 

 

_____________________________      ________________________

Name  DD/MM/YYYY

 

 

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APPENDIX A

 

ADDITIONAL TERMS TO EXECUTIVE EMPLOYMENT AGREEMENT

 

Unless otherwise defined below, capitalized terms used herein will have the
meanings set forth in the Agreement.

 

 

A.

Conditions to Receipt of Annual Bonus. Your annual bonus must be paid no later
than March 15th of the year following the year for which you earn such bonus.

 

 

B.

Conditions to Receipt of Severance.

 

 

a.

Release of Claims. The receipt of any vesting acceleration, severance payments
and benefits pursuant to Sections M or P of the Agreement will be subject to you
signing and not revoking a separation agreement and release of claims related to
your service with the Company (which may include an agreement not to disparage
the Company, affirmation of your obligations under the Confidentiality Agreement
(as defined above), and other standard terms and conditions) in a form
reasonably satisfactory to the Company (the “Release”) and provided that such
Release becomes effective and irrevocable no later than sixty (60) days (or such
longer time as may be required by applicable law) following the termination date
(such deadline, the “Release Deadline”). If the Release does not become
effective and irrevocable by the Release Deadline, you will forfeit any rights
to severance or benefits under this Agreement. In no event will severance
payments or benefits be paid or provided until the Release becomes effective and
irrevocable. In the event that the Release Deadline spans two (2) calendar
years, then any severance payments or benefits payable under Sections M or P
that otherwise constitute Deferred Payments (as defined below) will be paid no
earlier than the first day of the second calendar year, subject to any delayed
as may be required for Section 409A.

 

 

b.

Section 409A

 

 

(i)

Notwithstanding anything to the contrary in this Agreement, no Deferred Payments
will be paid or otherwise provided until you have a “separation from service”
(within the meaning of Section 409A) from the relevant position or positions.
Similarly, no severance payable to you, if any, pursuant to this Agreement that
otherwise would be exempt from Section 409A solely pursuant to Treasury
Regulation Section 1.409A‑1(b)(9) will be payable until you have a “separation
from service” (within the meaning of Section 409A).

 

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(ii)

Notwithstanding anything to the contrary in this Agreement, if you are a
“specified employee” within the meaning of Section 409A at the time of your
termination of employment (other than due to death), then the Deferred Payments
that are payable within the first six (6) months following your separation from
service, will, to the extent required to be delayed pursuant to
Section 409A(a)(2)(B) of the Code, become payable on the first payroll date that
occurs on or after the date six (6) months and one (1) day following the date of
your separation from service. All subsequent Deferred Payments, if any, will be
payable in accordance with the payment schedule applicable to each payment or
benefit. Notwithstanding anything herein to the contrary, if you die following
your separation from service, but prior to the six (6) month anniversary of the
separation from service, then any payments delayed in accordance with this
paragraph will be payable in a lump sum as soon as administratively practicable
after the date of your death and all other Deferred Payments will be payable in
accordance with the payment schedule applicable to each payment or benefit. In
no event will the Company reimburse you for any taxes that may be imposed on you
as a result of Section 409A. Each payment and benefit payable under this
Agreement is intended to constitute a separate payment for purposes of Section
1.409A‑2(b)(2) of the U.S. Treasury Regulations.

 

(iii)

Any amount paid under this Agreement that satisfies the requirements of the
“short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the U.S.
Treasury Regulations will not constitute Deferred Payments for purposes of this
Agreement.

 

(iv)

Any amount paid under this Agreement that qualifies as a payment made as a
result of an involuntary separation from service pursuant to Section
1.409A-1(b)(9)(iii) of the U.S. Treasury Regulations that does not exceed the
Section 409A Limit (as defined below) will not constitute Deferred Payments for
purposes of this Agreement.

 

(v)

With respect to any expense reimbursements which are not otherwise excludible
from your gross taxable income, to the extent required to comply with the
provisions of Section 409A, no reimbursement of expenses incurred by you during
any taxable year shall be made after the last day of the following taxable year,
the right to reimbursement of any such expenses shall not be subject to
liquidation or exchange for another benefit, and the amount of expenses eligible
for reimbursement during any taxable year may not affect the expenses eligible
for reimbursement in any other taxable year.

 

(vi)

The provisions of this Agreement and the payments and benefits hereunder are
intended to be exempt from or comply with the requirements of Section 409A so
that none of the severance or other payments and benefits to be provided
hereunder will be subject to the additional tax imposed under Section 409A, and
any ambiguities herein will be interpreted to be so exempt or so comply. The
Company and you agree to work together in good faith to consider amendments to
this Agreement and to take such reasonable actions which are necessary,
appropriate or desirable to avoid imposition of any additional tax or income
recognition prior to actual payment to you under Section 409A.

 

 

(vii)

Definitions:

 

 

(A)

“Deferred Payment” means any severance pay or benefits to be paid or provided to
you (or your estate or beneficiaries) pursuant to this Agreement and any other
severance payments or separation benefits to be paid or provided to you (or your
estate or beneficiaries), that in each case, when considered together, are
considered deferred compensation under Section 409A.

 

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(B)

“Section 409A” means Section 409A of the U.S. Internal Revenue Code of 1986 (the
“Code”) and the final regulations and any guidance thereunder and any applicable
state law equivalent, as each may be amended or promulgated from time to time.

 

(C)

“Section 409A Limit” means two (2) times the lesser of: (i) your annualized
compensation based upon the annual rate of pay paid to you during your taxable
year preceding the taxable year of your separation from service as determined
under U.S. Treasury Regulation Section 1.409A-1(b)(9)(iii)(A)(1) and any U.S.
Internal Revenue Service guidance issued with respect thereto; or (ii) the
maximum amount that may be taken into account under a qualified plan pursuant to
Section 401(a)(17) of the Code for the year in which your separation from
service occurred.

 

 

 

C.

“Cause” shall mean: (i) your continued failure to substantially perform the
material duties and obligations under this Agreement (for reasons other than
death or disability), which failure, if curable within the discretion of the
Company, is not cured to the reasonable satisfaction of the Company within
thirty (30) days after receipt of written notice from the Company of such
failure; (ii) your failure or refusal to comply with the policies, standards and
regulations established by the Company from time to time which failure, if
curable in the discretion of the Company, is not cured to the reasonable
satisfaction of the Company within thirty (30) days after receipt of written
notice of such failure from the Company; (iii) any act of personal dishonesty,
fraud, embezzlement, misrepresentation, or other unlawful act committed by you
that benefits you at the expense of the Company; (iv) your violation of a U.S.
or Canadian federal, provincial or state law or regulation applicable to the
Company’s business; (v) your violation of, or a plea of nolo contendere or
guilty to, a felony under the laws of the United States or any state or Canada
or any province; (vi) your material breach of the terms of this Agreement or the
Confidentiality Agreement; or (vii) the Company’s severe financial distress,
whereby the Company is in the process of winding down its business and your
employment is terminated in connection with such winding down.

 

 

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Schedule A

 

Duties and Responsibilities

 

 

 

Your duties and responsibilities in this position will include those listed
below:

1.

[XXX]

2.

Other duties as required from time to time.

3.

Strictly adhere to all Company and Parent corporate policies, particularly those
concerning confidentiality, intellectual property, and safety.

 

 

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SCHEDULE B

 

Disclosure of Volunteer, Board and Other External Commitments

 

 

Position

Organization

Length of Appointment/ Engagement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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APPENDIX B

 

Section 7 of The Defend Trade Secrets Act of 2016

 

“ . . . An individual shall not be held criminally or civilly liable under any
Federal or State trade secret law for the disclosure of a trade secret that—(A)
is made—(i) in confidence to a Federal, State, or local government official,
either directly or indirectly, or to an attorney; and (ii) solely for the
purpose of reporting or investigating a suspected violation of law; or (B) is
made in a complaint or other document filed in a lawsuit or other proceeding, if
such filing is made under seal. . . . An individual who files a lawsuit for
retaliation by an employer for reporting a suspected violation of law may
disclose the trade secret to the attorney of the individual and use the trade
secret information in the court proceeding, if the individual—(A) files any
document containing the trade secret under seal; and (B) does not disclose the
trade secret, except pursuant to court order.”