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NOMINATING AND CORPORATE GOVERNANCE COMMITTEE CHARTER
Adopted by the Board of Directors (the "Board") of the XenoPort, Inc. (the "Company") as of January 21, 2005
Effective as of June 3, 2005
Amended by the Board of the Company as of June 9, 2005
The purpose of the Nominating and Corporate Governance Committee (the "Committee") of the Board of the Company shall be to (i) oversee all aspects of the Company's corporate governance functions on behalf of the Board; (ii) make recommendations to the Board regarding corporate governance issues; (iii) provide oversight assistance in connection with the Company's legal, regulatory and ethical compliance programs as established by the Company's management and the Board, including the Company's Code of Business Conduct and Ethics (the "Code"); (iv) identify, review and evaluate candidates to serve as directors of the Company and review and evaluate incumbent directors; (v) recommend to the Board for appointment or nomination, as appropriate, candidates to serve as directors of the Company; and (vi) make other recommendations to the Board regarding affairs relating to the directors of the Company, including director compensation.
The Committee shall consist of at least two members of the Board, provided that any vacancies will be filled as promptly as possible. All members of the Committee shall satisfy the independence requirements of The Nasdaq Stock Market ("Nasdaq") as in effect from time to time, when and as required by Nasdaq. The members of the Committee shall be appointed by and serve at the discretion of the Board. Vacancies occurring on the Committee shall be filled by the Board. The Committee's chairperson shall be designated by the Board or, if it does not do so, the Committee members shall elect a chairperson by vote of a majority of the full Committee.
MEETINGS AND MINUTES
The Committee shall hold such regular or special meetings as its members shall deem necessary or appropriate. Meetings may be held in person or telephonically. Minutes of each meeting of the Committee shall be prepared and distributed to each director of the Company and the Secretary of the Company promptly after each meeting. The Committee, or the chairperson of the Committee acting on its behalf, shall report to the Board from time and time and whenever requested to do so by the Board.
The Committee shall have full access to all books, records, facilities and personnel of the Company as deemed necessary or appropriate by any member of the Committee to discharge his or her responsibilities hereunder. The Committee shall have authority to obtain, at the expense of the Company, advice and assistance from internal or external legal or other advisors and consultants, as well as executive search firms, and other internal or external resources as it deems necessary or appropriate in the performance of its duties. The Committee shall also have authority to pay, at the expense of the Company, ordinary administrative expenses that, as determined by the Committee, are necessary or appropriate in carrying out its duties. The approval of this charter shall be construed as a delegation of authority to the Committee with respect to the responsibilities set forth herein. The operation of the Committee shall be subject to the Bylaws of the Company, as in effect from time to time, and Section 141 of the Delaware General Corporation Law.
In fulfilling its responsibilities, the Committee should give due consideration to the following operating principles:
Communication - Regular and meaningful contact throughout the year with the Board, Board committee chairpersons, members of the Company's management and independent professional advisors to the Board and its various committees, as applicable, is viewed as important for strengthening the Committee's knowledge of relevant current and prospective corporate governance issues.
Committee Education/Orientation - Developing with the Company's management and participating in a process for systematic review of important corporate governance issues and trends in corporate governance practices that could potentially impact the Company and educating the Board as to such issues and trends will enhance the effectiveness of the Committee.
To implement the Committee's purpose, the Committee shall be charged with the following responsibilities with the understanding, however, that the Committee may supplement or (except as otherwise required by applicable laws or rules) deviate from these activities as appropriate under the circumstances:
Corporate Governance Compliance. The Committee shall periodically review and assess the Company's Corporate Governance Policy and any other corporate governance principles applicable to the Company, and their application, and shall recommend any changes or additions deemed appropriate to the Board for its consideration. The Committee shall also review any regulatory disclosure of corporate governance compliance required in the Company's Annual Report on Form 10-K or other filings with the Securities and Exchange Commission.
Oversee Ethical Compliance. The Committee shall review the results of the Company's management's efforts to monitor compliance with the Company's programs and policies designed to ensure adherence to applicable laws and rules, as well as to the Code, including review and approval of related-party transactions as required by Nasdaq rules. The Committee shall also review and make recommendations to the Board concerning the Company's compliance with legal and regulatory requirements as well as compliance by the directors and executive officers of the Company with the Code. The Company's Compliance Officer(s) shall report to the Committee. Further, the Committee shall periodically review the Company policy statements to determine their adherence to the Code.
Complaint Procedures. The Committee shall establish procedures for the receipt, retention and treatment of any reports of suspected or actual violations of the Code received by the Committee. Any reports of suspected or actual violations of the Code related to misconduct, illegal activities or fraud involving any accounting, internal accounting control or auditing matters or any other questionable accounting or auditing matters shall be referred to the Audit Committee of the Board.
Communications with Audit Committee. The Committee shall promptly report to the Audit Committee of the Board any reports of suspected or actual violations of the Code received by the Committee.
Board Assessment. The Committee shall periodically review, discuss and assess the performance of the Board, including Board committees, seeking input from the Company's management, the full Board and others. The assessment shall include evaluation of the Board's contribution as a whole and effectiveness in serving the best interests of the Company and its stockholders, specific areas in which the Board and/or management believe contributions could be improved, and overall Board composition and makeup, including the reelection of current Board members. The factors to be considered shall include whether the directors, both individually and collectively, can and do provide the integrity, experience, judgment, commitment, skills and expertise appropriate for the Company. The Committee shall also consider and assess the independence of directors, including whether a majority of the Board continues to be independent from management in both fact and appearance, as well as within the meaning prescribed by Nasdaq. The results of these reviews shall be provided to the Board for further discussion as appropriate. In addition, the Committee shall review the general responsibilities and function of the Board and the procedures for Board meetings and communications.
Oversight of Board Committees. The Committee shall oversee the Board's committee structure and operations. The Committee, after due consideration of the interests, independence and experience of the individual directors and the independence and experience requirements of Nasdaq, the rules and regulations of the Securities and Exchange Commission and applicable law, shall recommend to the entire Board the membership of each committee. In addition, the Committee shall review the charters of the Board committees annually and recommend to the Board such amendments as may be necessary or advisable.
Procedures for Information Dissemination. The Committee shall oversee and review the processes and procedures used by the Company to provide information to the Board and its committees. The Committee should consider, among other factors, the reporting channels through which the Board and its committees receive information and the level of access to outside advisors where necessary or appropriate, as well as the procedures for providing accurate, relevant and appropriately detailed information to the Board and its committees on a timely basis.
Director Nominations. The Committee has the responsibility of identifying, reviewing and evaluating candidates to serve on the Company's Board, including consideration of any potential conflicts of interest as well as applicable independence and experience requirements. The Committee shall also have the primary responsibility for reviewing, evaluating and considering the recommendation for nomination of incumbent directors for reelection to the Board, as well as monitoring the size of the Board. The Committee shall also recommend to the Board for appointment or nomination, as appropriate, candidates to serve as directors for the Company. The Committee shall also have the power and authority to consider recommendations for Board nominees and proposals submitted by the Company's stockholders, outside advisors and others and to establish any policies, requirements, criteria and procedures, including policies and procedures to facilitate stockholder communications with the Board of Directors, to recommend to the Board appropriate action on any such proposal or recommendation and to make any disclosures required by applicable law in the course of exercising its authority.
Continuing Education. The Committee shall consider instituting a plan or program for the continuing education of directors.
Director Compensation. The Committee shall periodically review the compensation paid to non-employee directors for their service on the Board and its committees to ensure such compensation properly reflects the responsibilities and risks in being a director, chairperson and/or committee member and recommend any changes considered appropriate to the full Board for its approval.
Management Succession. The Committee shall periodically review with the Chief Executive Officer the plans for succession to the offices of the Company's Chief Executive Officer and other critical executive officers and make recommendations to the Board with respect to the selection of appropriate individuals to succeed to these positions.
Committee Self-Assessment. The Committee shall review, discuss and assess its own performance at least annually.
Additional Responsibilities. The Committee shall perform such other functions and have such powers as may be necessary or appropriate in the efficient and lawful discharge of the foregoing.
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