Exhibit 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
     This Employment Agreement (the “Agreement") is made and entered into
effective as of April 6, 2010 (the “Effective Date"), by and between Ardea
Biosciences, Inc. (the “Company") and Stephen Davis (the “Executive"). The
Company and the Executive are hereinafter collectively referred to as the
“Parties", and individually referred to as a “Party".
Recitals
A. The Company desires assurance of the association and services of the
Executive in order to retain the Executive’s experience, skills, abilities,
background and knowledge, and is willing to engage the Executive’s services on
the terms and conditions set forth in this Agreement.
B. The Executive desires to be in the employ of the Company, and is willing to
accept such employment on the terms and conditions set forth in this Agreement.
Agreement
     In consideration of the foregoing Recitals and the mutual promises and
covenants herein contained, and for other good and valuable consideration, the
Parties, intending to be legally bound, agree as follows:
     1. Employment.
          1.1 Title. The Executive shall initially have the title of Executive
Vice President and Chief Operating Officer of the Company and shall serve in
such other capacity or capacities as the Company may from time to time
prescribe. The Executive shall initially report to the Company’s Chief Executive
Officer (“CEO”).
          1.2 Duties. The Executive shall do and perform all services, acts or
things necessary or advisable to manage and conduct the business of the Company,
which are normally associated with the position of Chief Operating Officer,
consistent with the bylaws of the Company and as required by the CEO. Your
responsibilities will include oversight of business development, finance, legal,
human resources and G&A.
          1.3 Policies and Practices. The employment relationship between the
Parties shall be governed by the policies and practices established by the
Company and/or the Company’s Board of Directors (the “Board"). The Executive
acknowledges that he has read the Company’s Employee Handbook and other
governing policies, which will govern the terms and conditions of his employment
with the Company, along with this Agreement. In the event that the terms of this
Agreement differ from or are in conflict with the Company’s policies or
practices or the Company’s Employee Handbook, this Agreement shall control.
          1.4 Location. Unless the Parties otherwise agree in writing, during
the term of this Agreement, the Executive shall perform the services the
Executive is required to perform pursuant to this Agreement at the Company’s
offices, located in San Diego, California; provided,

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however, that the Company may from time to time reasonably require the Executive
to travel temporarily to other locations in connection with the Company’s
business.
     2. Loyal and Conscientious Performance; Noncompetition.
          2.1 Loyalty. During the Executive’s employment by the Company, the
Executive shall devote the Executive’s full business energies, interest,
abilities and productive time to the proper and efficient performance of the
Executive’s duties under this Agreement.
          2.2 Covenant not to Compete. Except with the prior written consent of
the Board or the CEO, which shall not be unreasonably withheld, the Executive
will not, during the Executive’s employment by the Company, engage in
competition with the Company and/or any of its Affiliates, either directly or
indirectly, in any manner or capacity, as adviser, principal, agent, affiliate,
promoter, partner, officer, director, employee, stockholder, owner, co-owner,
consultant, or member of any association or otherwise, in any phase of the
business of developing, manufacturing and marketing of products or services
which are in the same field of use or which otherwise compete with the products
or services or proposed products or services of the Company and/or any of its
Affiliates. For purposes of this Agreement, “Affiliate” means, with respect to
any specific entity, any other entity that, directly or indirectly, through one
or more intermediaries, controls, is controlled by or is under common control
with such specified entity.
          2.3 Agreement not to Participate in Company’s Competitors. During any
period during which the Executive is receiving any compensation or consideration
from the Company, the Executive agrees not to acquire, assume or participate in,
directly or indirectly, any position, investment or interest known by the
Executive to be adverse or antagonistic to the Company, its business or
prospects, financial or otherwise or in any company, person or entity that is,
directly or indirectly, in competition with the business of the Company or any
of its Affiliates. Notwithstanding the foregoing, ownership by the Executive, as
a passive investment, of less than two percent (2%) of the outstanding shares of
capital stock of any corporation with one or more classes of its capital stock
listed on a national securities exchange or publicly traded on the Nasdaq Stock
Market or in the over-the-counter market shall not constitute a breach of
Section 2.2 or this Section 2.3.
     3. Compensation of the Executive.
          3.1 Base Salary. The Company shall pay the Executive a base salary of
Three Hundred Fifty Thousand Dollars ($350,000) per year, less payroll
deductions and all required withholdings payable in regular periodic payments in
accordance with Company policy. Such base salary shall be prorated for any
partial year of employment on the basis of a 365-day fiscal year.
          3.2 Annual Performance Bonus. In addition to the Executive’s base
salary, the Executive shall be eligible for an annual performance bonus based
upon the Executive’s and the Company’s achievement of specified objectives
established by the CEO and/or the Board during the first quarter of each year,
as evaluated by the CEO and/or Board in the exercise of good faith reasonable
judgment. The target bonus for achievement of all objectives shall be forty

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percent (40%) of the Executive’s then-current base salary. Bonuses awards will
be pro-rated based upon the number of months employed during the calendar year.
     3.3 Equity Grants
               3.3.1 Stock Option. Upon the commencement of the Executive’s
employment and subject to approval of the Board and the terms of the Company’s
2004 Stock Equity Incentive Plan (the “Plan"), the Executive will be granted a
stock option under the Plan to purchase one-hundred fifty thousand (150,000)
shares of the Company’s Common Stock (the “Option"). To the maximum extent
possible, the Option shall be an Incentive Stock Option as such term is defined
in Section 422 of the Internal Revenue Code of 1986, as amended. The Option will
be governed by and granted pursuant to a separate Stock Option Agreement and the
Plan. The exercise price per share of the Option will be equal to the fair
market value of the Common Stock established on the date of grant, subject to
approval by the Board. Subject to Section 4.4.1 below, the Option will vest over
four (4) years for so long as the Executive continues to be employed by the
Company, as follows: twenty-five percent (25%) of the shares subject to the
Option shall vest on the first anniversary of the Executive’s first day of
employment with the Company, and 1/48th of the shares subject to the Option
shall vest on the same calendar day of each month thereafter.
               3.3.2 Restricted Stock. Upon the commencement of the Executive’s
employment and subject to approval of the Board and the terms of the Plan, the
Executive will be granted twenty-five thousand (25,000) shares of the Company’s
Common Stock (the “Restricted Stock"), each share of which shall be payable in
future services to the Company and as such restricted until vested as described
below. Such Restricted Stock Award shall either be made pursuant to the Plan
(and be governed by and granted pursuant to a separate Stock Issuance Agreement
and the Plan) or in a separate Restricted Stock Agreement outside of the Plan,
but in either case, on terms consistent with those described in this Agreement.
In addition to including the terms describe herein, the terms of the agreement
governing the Restricted Stock will provide the same rights and benefits to the
Executive with respect to the Restricted Stock as to stock options under the
Company’s Senior Executive Severance Benefit Plan (the “Severance Terms”).
Subject to Section 4.4.2 below, the Restricted Stock will vest over four
(4) years for so long as the Executive continues to be employed by the Company,
as follows: twenty-five percent (25%) of the shares of Restricted Stock shall
vest on the first anniversary of the Executive’s first day of employment with
the Company, and 1/48th of the shares of Restricted Stock shall vest on the same
calendar day of each month thereafter. Subject to Section 4 below and the
Severance Terms, if the Executive ceases to be employed by the Company while
holding one or more unvested shares of Restricted Stock, then those shares shall
be surrendered immediately to the Company for cancellation (for no
consideration), and the Executive shall have no further stockholder rights with
respect to those shares.
          3.4 Changes to Compensation. The Executive’s compensation will be
reviewed on a regular basis by the Company and may be increased from time to
time as deemed appropriate.

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          3.5 Employment Taxes. All of the Executive’s compensation shall be
subject to customary withholding taxes and any other employment taxes as are
commonly required to be collected or withheld by the Company.
          3.6 Relocation Benefit. To assist the Executive with relocation costs
associated with moving to the San Diego area, the Company will reimburse the
Executive for reasonable costs actually incurred in moving household goods; the
Company has selected Ace Atlas moving company as the service provider for
household goods moves. Additionally, the Company will provide up to a maximum
total of fifty thousand ($50,000) dollars in reimbursement for those
relocation-related benefits approved in the Relocation Agreement and Policy,
including a gross-up payment to offset (or partially offset) additional income
and employment taxes incurred by the Executive by virtue of reimbursement
authorized in this Section 3.6. In the case of a gross up payment, the Company
will gross up the employee’s salary at the lesser of the actual liability
incurred or fifty percent (50%) of taxable reimbursement, or such lesser amount
available within the cap. The maximum amount payable by the Company to the
Executive pursuant to this Section 3.6 for relocation-related benefits other
than approved expenses for moving household goods shall be fifty thousand
($50,000). Refer to the Relocation Agreement and Policy to see the type of
expenses included under our policy for the moving allowance. In the event that
the Executive resigns employment on or before the one year anniversary of the
Executive’s first day of employment with the Company, the Executive shall
immediately re-pay to the Company all relocation benefits provided by this
Section 3.6.
          3.7 Other Benefits. The Executive shall also be eligible to receive
all other benefits normally offered to full-time regular executive level
employees, including, without limitation, medical insurance, dental insurance,
life insurance, 401(k) plan and fifteen (15) working days paid time off per year
accruing on a bi-weekly basis, as outlined in the Company’s Employee Handbook.
     4. Termination.
          4.1 Termination by the Company. The Executive’s employment by the
Company shall be at will. The Executive’s employment with the Company may be
terminated by the Company at any time and for any reason or no reason. Subject
to the terms of the Company’s Senior Executive Severance Benefit Plan, as it may
be amended from time to time (provided that any amendment shall not result in a
reduction of benefits as set forth in such plan as of the date hereof), which is
hereby incorporated into this Agreement, in the event the Company terminates the
Executive’s employment, the Company shall have no further obligation to the
Executive, except for payment of earned wages and accrued and unused paid time
off earned through the date of termination, at the rate in effect at the time of
termination, subject to standard deductions and withholdings, and such other
benefits as required in such event by applicable law.
          4.2 Termination by Mutual Agreement of the Parties. The Executive’s
employment pursuant to this Agreement may be terminated at any time upon mutual
agreement in writing of the Parties. Any such termination of employment shall
have the consequences specified in such agreement.

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          4.3 Termination by the Executive. The Executive’s employment by the
Company shall be at will. The Executive shall have the right to resign or
terminate the Executive’s employment at any time and for any reason or no
reason. Subject to the terms of the Company’s Senior Executive Severance Benefit
Plan, as it may be amended from time to time (provided that any amendment shall
not result in a reduction of benefits as set forth in such plan as of the date
hereof), in the event the Executive resigns or terminates his employment, the
Company shall have no further obligation to the Executive, except for payment of
earned wages and accrued and unused paid time off earned through the date of
resignation or termination, at the rate in effect at the time of resignation or
termination, subject to standard deductions and withholdings, and such other
benefits as required in such event by applicable law.
          4.4 Change in Control.
               4.4.1 Acceleration of Vesting of Options. Upon a “Change in
Control” (as defined in the Plan), all unvested shares under the Option held by
the Executive immediately prior to the Change in Control shall vest; provided,
however, that if the successor corporation (or parent thereof) assumes the
Option, then fifty percent (50%) of the shares subject to the Option that are
unvested immediately prior to the Change in Control shall vest immediately prior
to the effective date of such Change in Control and the remaining fifty percent
(50%) of the unvested shares shall continue to vest pursuant to the schedule
described in Section 3.3.1 above; provided further, however, that if the
Executive’s “Service” (as defined in the Plan) is terminated by reason of an
“Involuntary Termination” (as defined in the Plan) within three (3) months
before or within thirteen (13) months following a Change in Control, then all
unvested shares subject to the Option (whether the Option is purported to be
assumed by the successor corporation or not) shall immediately vest.
               4.4.2 Acceleration of Vesting of Restricted Stock. Upon a Change
in Control, all shares of unvested Restricted Stock held by the Executive
immediately prior to the Change in Control (“Unvested Restricted Stock") shall
vest; provided, however, that if the repurchase rights with respect to the
Unvested Restricted Stock are assigned to the successor corporation (or parent
thereof) or are otherwise to continue in full force and effect pursuant to the
terms of the Change in Control, then fifty percent (50%) of the Unvested
Restricted Stock shall vest immediately prior to the effective date of such
Change in Control and the remaining fifty percent (50%) of the Unvested
Restricted Stock shall continue to vest pursuant to the schedule described in
Section 3.3.2 above; and provided further, however, that if the Executive’s
Service is terminated by reason of an Involuntary Termination within three
(3) months before or within thirteen (13) months following a Change in Control,
then all unvested shares of Restricted Stock held by the Executive (whether such
shares are purported to be assumed by the successor corporation or not) shall
immediately vest.
     5. Confidential and Proprietary Information; Nonsolicitation.
          As a condition of employment, the Executive agrees to execute and
abide by the Proprietary Information and Inventions Agreement attached hereto as
Exhibit A.

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     6. Assignment and Binding Effect.
          This Agreement shall be binding upon and inure to the benefit of the
Executive and the Executive’s heirs, executors, personal representatives,
assigns, administrators and legal representatives. Because of the unique and
personal nature of the Executive’s duties under this Agreement, neither this
Agreement nor any rights or obligations under this Agreement shall be assignable
by the Executive. This Agreement shall be binding upon and insure to the benefit
of the Company and its successors, assigns and legal representatives.
     7. Choice of Law.
          This Agreement is made in California. This Agreement shall be governed
by and construed and interpreted in accordance with the laws of the State of
California.
     8. Integration.
          This Agreement, the Company’s Proprietary Information and Inventions
Agreement attached as Exhibit A hereto, the Company’s Senior Executive Severance
Benefit Plan and the Plan contain the complete, final and exclusive agreement of
the Parties relating to the terms and conditions of the Executive’s employment
and the termination of Executive’s employment, and supersedes all prior and
contemporaneous oral and written employment agreements or arrangements between
the Parties. To the extent this Agreement conflicts with the Proprietary
Information and Inventions Agreement attached as Exhibit A hereto, the
Proprietary Information and Inventions Agreement shall control. To the extent
this Agreement conflicts with the terms of the Employee Handbook, the Company’s
Senior Executive Severance Benefit Plan or the Plan, this Agreement shall
control.
     9. Amendment.
          This Agreement cannot be amended or modified, except by a written
agreement signed by the Executive and the Company.
     10. Waiver.
          No term, covenant or condition of this Agreement or any breach thereof
shall be deemed waived, except with the written consent of the Party against
whom the waiver is claimed, and any waiver of any such term, covenant, condition
or breach shall not be deemed to be a waiver of any preceding or succeeding
breach of the same or any other term, covenant, condition or breach.
     11. Severability.
          The finding by a court of competent jurisdiction of the
unenforceability, invalidity or illegality of any provision of this Agreement
shall not render any other provision of this Agreement unenforceable, invalid or
illegal. Such court shall have the authority to modify or replace the invalid or
unenforceable term or provision with a valid and enforceable term or provision
which most accurately represents the Parties’ intention with respect to the
invalid or unenforceable term or provision.

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     12. Interpretation; Construction.
          The headings set forth in this Agreement are for convenience of
reference only and shall not be used in interpreting this Agreement. This
Agreement has been drafted by legal counsel representing the Company, but the
Executive has been encouraged to consult with the Executive’s own independent
counsel and tax advisors with respect to the terms of this Agreement. The
Parties acknowledge that each Party has reviewed and revised, or had an
opportunity to review and revise, this Agreement, and the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement.
     13. Representations and Warranties.
          The Executive represents and warrants that the Executive is not
restricted or prohibited, contractually or otherwise, from entering into and
performing each of the terms and covenants contained in this Agreement, and that
the Executive’s execution and performance of this Agreement will not violate or
breach any other agreements between the Executive and any other person or
entity.
     14. Counterparts.
          This Agreement may be executed in two counterparts, each of which
shall be deemed an original, all of which together shall constitute one and the
same instrument. Delivery of an executed counterpart of a signature page to this
Agreement by facsimile or by email of a scanned copy will be effective as
delivery of an original executed counterpart of this Agreement.
     15. Arbitration.
          To ensure the rapid and economical resolution of disputes that may
arise in connection with the Executive’s employment with the Company, the
Executive and the Company agree that any and all disputes, claims or causes of
action, in law or equity, arising from or relating to the Executive’s
employment, or the termination of that employment, will be resolved pursuant to
the Federal Arbitration Act and to the fullest extent permitted by law, by
final, binding and confidential arbitration in San Diego, California conducted
by the Judicial Arbitration and Mediation Services (“JAMS”), or its successors,
under the then current rules of JAMS for employment disputes; provided, however,
that the arbitrator shall: (a) have the authority to compel adequate discovery
for the resolution of the dispute and to award such relief as would otherwise be
permitted by law; and (b) issue a written arbitration decision, including the
arbitrator’s essential findings and conclusions and a statement of the award.
Both the Executive and the Company shall be entitled to all rights and remedies
that either the Executive or the Company would be entitled to pursue in a court
of law. The Company shall pay all fees, including the arbitrator’s fee. Nothing
in this Agreement is intended to prevent either the Executive or the Company
from obtaining injunctive relief in court to prevent irreparable harm pending
the conclusion of any such arbitration.

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     16. Trade Secrets Of Others.
          It is the understanding of both the Company and the Executive that the
Executive shall not divulge to the Company and/or its Affiliates any
confidential information or trade secrets belonging to others, including the
Executive’s former employers, nor shall the Company and/or its Affiliates seek
to elicit from the Executive any such information. Consistent with the
foregoing, the Executive shall not provide to the Company and/or its Affiliates,
and the Company and/or its Affiliates shall not request, any documents or copies
of documents containing such information.
     17. Advertising Waiver.
          The Executive agrees to permit the Company and/or its Affiliates, and
persons or other organizations authorized by the Company and/or its Affiliates,
to use, publish and distribute advertising or sales promotional literature
concerning the products and/or services of the Company and/or its Affiliates, or
the machinery and equipment used in the provision thereof, in which the
Executive’s name and/or pictures of the Executive taken in the course of the
Executive’s provision of services to the Company and/or its Affiliates, appear.
The Executive hereby waives and releases any claim or right the Executive may
otherwise have arising out of such use, publication or distribution.
     18. Indemnification.
          The Executive shall have no liability to the Company for any loss
suffered by the Company that arises out of any action or inaction of the
Executive if the Executive in good faith determined that such course of conduct
was in the best interest of the Company, and such course of conduct did not
constitute gross negligence or willful misconduct of the Executive. The
Executive shall be indemnified by the Company against losses, judgments,
liabilities, expenses and amounts paid in settlement of any claims sustained by
him in connection with the Company, provided that the same were not the result
of gross negligence or willful misconduct on the part of the Executive.
     In Witness Whereof, the Parties have executed this Agreement as of the
Effective Date.

          Ardea Biosciences, Inc.
    /s/ Barry D. Quart     Barry D. Quart    Chief Executive Officer     
Executive
    /s/ Stephen Davis     Stephen Davis         

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EXHIBIT A
PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
     In consideration of my employment or continued employment by Ardea
Biosciences, Inc. ("Company"), and the compensation paid to me now and during my
employment with the Company, I agree to the terms of this Agreement as follows:
1. Confidential Information Protections.
     1.1 Nondisclosure; Recognition of Company’s Rights. At all times during and
after my employment, I will hold in confidence and will not disclose, use,
lecture upon or publish any of Company’s Confidential Information (defined
below), except as may be required in connection with my work for Company, or as
expressly authorized by the Chief Executive Officer (the “CEO”) of Company. I
will obtain the CEO’s written approval before publishing or submitting for
publication any material (written, oral or otherwise) that relates to my work at
Company and/or incorporates any Confidential Information. I hereby assign to
Company any rights I may have or acquire in any and all Confidential Information
and recognize that all Confidential Information shall be the sole and exclusive
property of Company and its assigns.
     1.2 Confidential Information. The term “Confidential Information” shall
mean any and all confidential knowledge, data or information related to
Company’s business or its actual or demonstrably anticipated research or
development activities, including, without limitation, (a) trade secrets,
inventions, ideas, processes, computer source and object code, data, formulae,
programs, other works of authorship, know-how, improvements, discoveries,
developments, designs, and techniques; (b) information regarding products,
services, plans for research and development, marketing and business plans,
budgets, financial statements, contracts, prices, suppliers and customers;
(c) information regarding the skills and compensation of Company’s employees,
contractors, and any other service providers of Company; and (d) the existence
of any business discussions, negotiations or agreements between Company and any
third party.
     1.3 Third Party Information. I understand that Company has received and in
the future will receive from third parties confidential or proprietary
information (“Third Party Information") subject to a duty on Company’s part to
maintain the confidentiality of such information and to use it only for certain
limited purposes. During and after the term of my employment, I will hold Third
Party Information in strict confidence and will not disclose to anyone (other
than Company personnel who need to know such information in connection with
their work for Company) or use Third Party Information, except in connection
with my work for Company or unless expressly authorized by an officer of Company
in writing.
     1.4 No Improper Use of Information of Prior Employers and Others. I
represent that my employment by Company does not and will not breach any
agreement with any former employer, including any non-compete agreement or any
agreement to keep in confidence or refrain from using information acquired by me
prior to my employment by Company. I further represent that I have not entered
into, and will not enter into, any agreement, either written or oral, in
conflict with my obligations under this Agreement. During my employment by
Company, I will not improperly make use of or disclose any information or trade
secrets of any former employer or other third party, nor will I bring onto the
premises of Company or use any unpublished documents or any property belonging
to any former employer or other third party, in violation of any lawful
agreements with that former employer or third party. I will use in the
performance of my duties only information that is generally known and used by
persons with training and experience comparable to my own, is common knowledge
in the industry or otherwise legally in the public domain, or is otherwise
provided or developed by Company.
2. Inventions.
     2.1 Inventions and Intellectual Property Rights. As used in this Agreement,
the term “Invention” means any ideas, concepts, information, materials,
processes, data, programs, know-how, improvements, discoveries, developments,
designs, artwork, formulae, other copyrightable works, and techniques and all
Intellectual Property Rights in any of the items listed above. The term
“Intellectual Property Rights” means all trade secrets, copyrights, trademarks,
mask work rights, patents and other intellectual property rights recognized by
the laws of any jurisdiction or country.
     2.2 Prior Inventions. I have disclosed on Exhibit A a complete list of all
Inventions that (a) I have, or I have caused to be, alone or jointly with
others, conceived, developed or reduced to practice prior to the commencement of
my employment by Company; (b) in which I have an ownership interest or which I
have a license to use; (c) and that I wish to have excluded from the scope of
this Agreement (collectively referred to as “Prior Inventions”). If no Prior
Inventions are listed in Exhibit A, I warrant that there are no Prior
Inventions. I agree that I will not incorporate, or permit to be incorporated,
Prior Inventions in any Company Inventions (defined below) without Company’s
prior written consent. If, in the course of my employment with Company, I
incorporate a Prior Invention into a Company process, machine or other work, I
hereby grant Company a non-exclusive, perpetual,

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fully-paid and royalty-free, irrevocable and worldwide license, with rights to
sublicense through multiple levels of sublicensees, to reproduce, make
derivative works of, distribute, publicly perform and publicly display in any
form or medium, whether now known or later developed, make, have made, use,
sell, import, offer for sale, and exercise any and all present or future rights
in, such Prior Invention.
     2.3 Assignment of Company Inventions. Inventions assigned to the Company or
to a third party as directed by the Company pursuant to the section titled
“Government or Third Party” are referred to in this Agreement as “Company
Inventions.” Subject to the section titled “Government or Third Party” and
except for Inventions that I can prove qualify fully under the provisions of
California Labor Code section 2870 and I have set forth in Exhibit A, I hereby
assign and agree to assign in the future (when any such Inventions or
Intellectual Property Rights are first reduced to practice or first fixed in a
tangible medium, as applicable) to Company all my right, title, and interest in
and to any and all Inventions (and all Intellectual Property Rights with respect
thereto) made, conceived, reduced to practice or learned by me, either alone or
with others, during the period of my employment by Company.
     2.4 Obligation to Keep Company Informed. During the period of my employment
and for one (1) year after my employment ends, I will promptly and fully
disclose to Company in writing (a) all Inventions authored, conceived or reduced
to practice by me, either alone or with others, including any that might be
covered under California Labor Code section 2870, and (b) all patent
applications filed by me or in which I am named as an inventor or co-inventor.
     2.5 Government or Third Party. I agree that, as directed by the Company, I
will assign to a third party, including, without limitation, the United States,
all my right, title and interest in and to any particular Company Invention.
     2.6 Enforcement of Intellectual Property Rights and Assistance. During and
after the period of my employment, I will assist Company in every proper way to
obtain and enforce United States and foreign Intellectual Property Rights
relating to Company Inventions in all countries. If the Company is unable to
secure my signature on any document needed in connection with such purposes, I
hereby irrevocably designate and appoint Company and its duly authorized
officers and agents as my agent and attorney in fact, which appointment is
coupled with an interest, to act on my behalf to execute and file any such
documents and to do all other lawfully permitted acts to further such purposes
with the same legal force and effect as if executed by me.
     2.7 Incorporation of Software Code. I agree that I will not incorporate
into any Company software or otherwise deliver to Company any software code
licensed under the GNU General Public License or Lesser General Public License
or any other license that, by its terms, requires or conditions the use or
distribution of such code on the disclosure, licensing or distribution of any
source code owned or licensed by Company.
3. Records. I agree to keep and maintain adequate and current records (in the
form of notes, sketches, drawings and in any other form that is required by the
Company) of all Inventions made by me during the period of my employment by the
Company, which records shall be available to, and remain the sole property of,
the Company at all times.
4. Additional Activities. I agree that (a) during the term of my employment by
Company, I will not, without Company’s express written consent, engage in any
employment or business activity that is competitive with, or would otherwise
conflict with my employment by, Company, and (b) for the period of my employment
by Company and for one (l) year thereafter, I will not, either directly or
indirectly, solicit or attempt to solicit any employee, independent contractor
or consultant of Company to terminate his, her or its relationship with Company
in order to become an employee, consultant or independent contractor to or for
any other person or entity.
5. Return of Company Property. Upon termination of my employment or upon
Company’s request at any other time, I will deliver to Company all of Company’s
property, equipment and documents, together with all copies thereof, and any
other material containing or disclosing any Inventions, Third Party Information
or Confidential Information and certify in writing that I have fully complied
with the foregoing obligation. I agree that I will not copy, delete or alter any
information contained upon my Company computer or Company equipment before I
return it to Company. In addition, if I have used any personal computer, server
or e-mail system to receive, store, review, prepare or transmit any Company
information, including, but not limited to, Confidential Information, I agree to
provide the Company with a computer-useable copy of all such Confidential
Information and then permanently delete and expunge such Confidential
Information from those systems. I agree to provide the Company access to my
system as reasonably requested to verify that the necessary copying and/or
deletion is completed. I further agree that any property situated on Company’s
premises and owned by Company is subject to inspection by Company’s personnel at
any time with or without notice. Prior to the termination of my employment or
promptly after termination of my employment, I will cooperate with Company in
attending an exit interview and certify in writing that I have complied with the
requirements of this section.
6. Notification Of New Employer. If I leave the employ of Company, I consent to
the notification of my new employer of my rights and obligations under this
Agreement, by Company providing a copy of this Agreement or otherwise.
7. General Provisions.
     7.1 Governing Law and Venue. This Agreement and any action related thereto
will be governed and interpreted by and under the laws of the State of
California,

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without giving effect to any conflicts of laws principles that require the
application of the law of a different state. I expressly consent to personal
jurisdiction and venue in the state and federal courts for the county in which
Company’s principal place of business is located for any lawsuit filed there
against me by Company arising from or related to this Agreement.
     7.2 Severability. If any provision of this Agreement is, for any reason,
held to be invalid or unenforceable, the other provisions of this Agreement will
remain enforceable and the invalid or unenforceable provision will be deemed
modified so that it is valid and enforceable to the maximum extent permitted by
law.
     7.3 Survival. This Agreement shall survive the termination of my employment
and the assignment of this Agreement by Company to any successor or other
assignee and be binding upon my heirs and legal representatives.
     7.4 Employment. I agree and understand that nothing in this Agreement shall
give me any right to continued employment by Company, and it will not interfere
in any way with my right or Company’s right to terminate my employment at any
time, with or without cause and with or without advance notice.
     7.5 Notices. Each party must deliver all notices or other communications
required or permitted under this Agreement in writing to the other party at the
address listed on the signature page, by courier, by certified or registered
mail (postage prepaid and return receipt requested), or by a
nationally-recognized express mail service. Notice will be effective upon
receipt or refusal of delivery. If delivered by certified or registered mail,
notice will be considered to have been given five (5) business days after it was
mailed, as evidenced by the postmark. If delivered by courier or express mail
service, notice will be considered to have been given on the delivery date
reflected by the courier or express mail service receipt. Each party may change
its address for receipt of notice by giving notice of the change to the other
party.
     7.6 Injunctive Relief. I acknowledge that, because my services are personal
and unique and because I will have access to the Confidential Information of
Company, any breach of this Agreement by me may cause irreparable injury to
Company for which monetary damages would not be an adequate remedy and,
therefore, will entitle Company to seek injunctive relief (including specific
performance). The rights and remedies provided to each party in this Agreement
are cumulative and in addition to any other rights and remedies available to
such party at law or in equity.
     7.7 Waiver. Any waiver or failure to enforce any provision of this
Agreement on one occasion will not be deemed a waiver of that provision or any
other provision on any other occasion.
     7.8 Export. I agree not to export, directly or indirectly, any U.S.
technical data acquired from Company or any products utilizing such data, to
countries outside the United States, because such export could be in violation
of the United States export laws or regulations.
     7.9 Entire Agreement. If no other agreement governs nondisclosure and
assignment of inventions during any period in which I was previously employed or
am in the future employed by Company as an independent contractor, the
obligations pursuant to sections of this Agreement titled “Confidential
Information Protections” and “Inventions” shall apply. This Agreement is the
final, complete and exclusive agreement of the parties with respect to the
subject matter hereof and supersedes and merges all prior communications between
us with respect to such matters. No modification of or amendment to this
Agreement, or any waiver of any rights under this Agreement, will be effective
unless in writing and signed by me and the CEO of Company. Any subsequent change
or changes in my duties, salary or compensation will not affect the validity or
scope of this Agreement.

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     This Agreement shall be effective as of the first day of my employment with
Company.

                Stephen Davis   Ardea Biosciences, Inc.     I have read,
understand, and accept this Agreement and have been given the opportunity to
review it with independent legal counsel:   Accepted and agreed:                
 
By:
  /s/ Stephen Davis   By:   /s/ Barry D. Quart  
 
                  Stephen Davis       Barry D. Quart
Chief Executive Officer  

             
Address:
  51 Dairy Hill Road
Madison, CT 06443   Address:   4939 Directors Place
San Diego, CA 92121

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EXHIBIT A
INVENTIONS
1. Prior Inventions Disclosure. The following is a complete list of all Prior
Inventions (as provided in Section 2.2 of the attached Employee Confidential
Information and Inventions Assignment Agreement, defined herein as the
“Agreement”):

  o   None     o   See immediately below:    
 
   
 

2. Limited Exclusion Notification.
     This is to notify you in accordance with Section 2872 of the California
Labor Code that the foregoing Agreement between you and Company does not require
you to assign or offer to assign to Company any Invention that you develop
entirely on your own time without using Company’s equipment, supplies,
facilities or trade secret information, except for those Inventions that either:
     a. Relate at the time of conception or reduction to practice to Company’s
business, or actual or demonstrably anticipated research or development; or
     b. Result from any work performed by you for Company.
     To the extent a provision in the foregoing Agreement purports to require
you to assign an Invention otherwise excluded from the preceding paragraph, the
provision is against the public policy of this state and is unenforceable.
     This limited exclusion does not apply to any patent or Invention covered by
a contract between Company and the United States or any of its agencies
requiring full title to such patent or Invention to be in the United States.