Document:

Exhibit 10.14

 

 

AS AGREED

 

January 31, 2007

 

Daniel Canafax, Pharm.D.

 

Dear Dan:

 

ARYx Therapeutics  is pleased to
invite you to join us as Vice President and Chief Development Officer. It will
be recommended to the ARYx Board of Directors that you be elected an Officer of
the Company in this position. The ARYx mission of discovering and developing
pharmaceuticals in which safety is a critical measure of efficacy can be
greatly enhanced through people such as yourself.

 

Responsibilities

 

Should you join us, you will be responsible for the
functions of Chief Development Officer. Amongst the duties of this position
will be to:

 

•      Work as a member of the
Management Committee, chaired by the Chief Executive Officer, participating in
all management decisions to come before the Management Committee;

 

•      Assume full responsibility
for the management and leadership of the Development function, including
clinical operations, drug manufacture and development, project management,
preclinical development, quality control and assurance, and regulatory affairs.
This includes the proper management of the corporate budget established
annually for Development activities;

 

•      Work within Medical Affairs,
as a member of that group,  collaborating
in the design, conduct and evaluation of clinical trails  in pursuit of safety and efficacy data on
Company product candidates;

 

•      Serve
on the current and future standing committees that call upon the Chief
Development Officer, including the Portfolio Management Committee, the Protocol
Review Committee and the Scientific Review Committee;

 

•      Assume full responsibility
for the delivery of Development work product in line with the established
corporate goals, including timelines, or to make clear to the President and the
Management Committee what constraints exist in executing to those goals and
timelines;

 

ARYx Therapeutics, Inc.

6300 Dumbarton
Circle,   Fremont, CA  94555  
Ph: 510-585-2200   Fax:
510-585-2202

www. aryx.com

 

 

•      Work with the Board of
Directors on matters as designated by the President and the CEO.

 

You will report directly to me as President, and will
work at our facilities in Fremont, California. Based upon your performance and
the evolving needs of the Company, your position, duties, and work location may
change over the course of your employment with us.

 

Compensation

 

 ARYx is
offering to you a compensation package intended to provide both short-term and
long-term income. Your cash compensation will include a base salary of $255,000
per annum (less payroll deductions and all required withholdings), paid
semi-monthly, In addition, ARYx provides a substantial benefits package
including health, dental and vision care, as well as paid vacation of three
weeks per year. Details about these benefits and benefits plans are available
upon request.

 

In addition to your base salary, you may be eligible
for bonus payments in cash compensation, additional equity, or a combination of
cash and equity, as determined by the Compensation Committee of the ARYx Board
of Directors. While it is the stated intent of the Board that such a bonus
program occur annually, there is no representation made, either in writing or
implied, that such bonuses are guaranteed. Whether such bonuses are paid will
be based upon the Board’s review of both corporate and individual performance.
However, as part of your initial employment, you will be eligible for a cash
bonus in January, 2008 equal to 25% of your total base cash compensation
received during 2007. The actual amount of bonus paid will be based upon the
achievement of performance goals to be mutually established by you and the
President within the first 30 days of your employment.

 

As an additional element of your hire, ARYx will
provide cash bonuses of $50,000 paid entirely at the time of your first payroll
with the Company, and an additional $50,000 to be paid on August 1, 2007. As
with your other cash compensation, this will be subject to payroll deductions
and all required withholdings.

 

Equity

 

Long-term income will be tied to the success of the
Company. ARYx believes that key employees should share in the Company’s
success, and accordingly, it will be recommended to the Board of Directors that
you be granted an option to purchase 500,000 shares of ARYx common stock (the “Option”)
under the terms of the Company’s stock option plan. The exercise price will be
equal to the fair market value of the Company’s common stock on the date of
grant, as determined by the Board. Your granted options will vest as follows:
twenty-five percent (25%) of the shares will vest upon award, and thereafter
the remaining options will continue to vest on the first anniversary of the
commencement date of your employment in equal monthly installments (1/48th of
the shares) over the 

 

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following thirty-six
months. Of course, this vesting schedule assumes continued qualified service to
the Company.

 

As described above, it is currently the intention of
the Board of Directors to award annual stock option grants to all employees, including
officers. Should grants be awarded in January 2008, you will be eligible for an
additional grant at that time. The amount of the grant will be determined
solely by the Board of Directors.

 

Confidentiality

 

ARYx is committed to the highest ethical standards. In
your work for the Company, you will be expected not to use or disclose any
confidential information, including trade secrets, of any former employer or
other person to whom you have an obligation of confidentiality. Rather, you
will be expected to use only that information which is generally known and used
by persons with training and experience comparable to your own, which is common
knowledge in the industry or otherwise legally in the public domain, or which
is otherwise provided or developed by ARYx. In addition, you agree that you
will not bring onto ARYx’ premises any unpublished documents or property
belonging to any former employer or other person to whom you have an obligation
of confidentiality. During our discussions about your proposed job duties, you
assured us that you would be able to perform those duties within the guidelines
just described.

 

Termination of Employment

 

You may terminate your employment with ARYx at any
time, with or without Good Reason (as defined below), simply by notifying us. Likewise,
ARYx may terminate your employment at any time and for any reason whatsoever,
with or without Cause (as defined below), or advance notice. As required by
law, this offer is subject to satisfactory proof of your right to work in the
United States.

 

If the Company terminates your employment at any time
for Cause, or if you resign from ARYx without Good Reason, your salary shall
cease on the date of termination, and you will not be entitled to severance
pay, pay in lieu of notice or any other such compensation, other than payment
of accrued salary and such other benefits as expressly required by applicable
law or the terms of any applicable Company benefit plans. The Option and any
other stock awards you hold shall cease vesting as of the date of termination
and those options which are already vested shall be exercisable only pursuant
to the terms of the ARYx stock option plans and agreements.

 

However, if the Company terminates your employment at any time without
Cause, or you resign from ARYx for Good Reason (as long as this resignation
occurs within thirty days after the occurrence of the event that forms the
basis of the resignation), (i) the Company shall make a lump sum severance
payment to you in an amount equal to six (6) months of your then-current base
salary, subject to withholdings and deductions, (ii) if you timely elect COBRA
health insurance coverage, the Company will reimburse your COBRA premiums for a
maximum of either six (6) months following the date your employment 

 

3

 

terminates or
until you secure health insurance coverage from another source, whichever
occurs sooner, and (iii) the vesting of the Option shall immediately accelerate
with respect to the number of shares that would otherwise vest if you were to
remain employed by ARYx over the six (6) month period following the date of
such termination.

 

Change of Control

 

In the event your employment with the Company is
involuntarily terminated without Cause by the Company or its successor, or you
resign for Good Reason, and such termination or resignation occurs within
thirteen (13) months following a Change of Control (as defined below), the
vesting of the Option shall be accelerated such that the Option shall become fully
vested. Your receipt of the accelerated vesting of the Option provided in this
paragraph, or the receipt of the severance pay described above, shall be
conditioned on your execution of a release agreement in the form attached to
this letter as Attachment II, such executed release must be delivered to
the Company within twenty-one (21) days after the termination of your
employment with the Company in order for any of such benefits be provided to
you.

 

Definitions

 

For purposes of this letter agreement:

 

•              “Cause” shall mean that you have committed, or there has
occurred, one or more of the following: 
(a) conviction of, a guilty plea with respect to, or a plea of nolo  contendere to a
charge that you have committed a felony under the laws of the United States or
of any state of a crime involving moral turpitude, including, but not limited
to, fraud, theft, embezzlement or any crime that results in or is intended to
result in personal enrichment at the expense of the Company; (b) material
breach of any agreement entered into between you and the Company that impairs
the Company’s interest therein; (c) willful misconduct, or gross neglect by you
of your duties, if such conduct is not cured within seven (7) days of your
receipt of written notice (provided that such conduct can reasonably be cured);
(d) an unauthorized use or disclosure of the Company’s confidential information
or trade secrets; or (e) engagement in any activity that constitutes a material
conflict of interest with the Company. Your death or physical or mental
disability shall also constitute Cause for termination under this letter
agreement. Cause to terminate your employment based on your physical or mental
disability shall exist if any illness, disability or other incapacity renders
you physically or mentally unable to regularly perform your duties hereunder
for a period in excess of sixty (60) consecutive days or more than ninety (90)
days in any consecutive twelve (12) month period. The Board of Directors shall
make a good faith determination of whether you are physically or mentally
unable to regularly perform your duties, subject to its review and
consideration of any physical and/or mental health information provided to it
by you.

 

•              “Good Reason” shall mean any one of the following events which
occurs on or after the commencement of your employment without your
consent:  (i) any reduction of 

 

4

 

your then current annual
base salary, except to the extent that the annual base salary of all other officers
of the Company is similarly reduced; (ii) any material reduction in your
benefits, except to the extent that such benefits of all other officers of the
Company are similarly reduced; (iii) any material diminution of your duties,
responsibilities, or authority, excluding for this purpose an isolated or
inadvertent action not taken in bad faith which is remedied by the Company
immediately after notice thereof is given by you; or (iv) any requirement that
you relocate to a work site that would increase your one-way commute distance
to more than sixty (60) miles from
the Company’s current headquarters; or (v) any material breach by the Company
of its obligations under letter agreement that is not remedied by Company
within thirty (30) days of written notice of such breach from you. You must
tender your resignation to the Company or its successor within thirty (30) days
after the occurrence of the event that forms the basis for your resignation for
Good Reason.

 

•              “Change of Control” shall mean the occurrence of any of the
following: (i) a sale, lease, or other disposition of all or substantially all
of the assets of the Company; (ii) a merger or consolidation in which the
Company is not the surviving corporation; (iii) a reverse merger involving the
Company in which the Company is the surviving corporation but the shares of
common stock of the Company (the “Common Stock”)
outstanding immediately preceding the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash or
otherwise; (iv) an acquisition by any person, entity or group within the
meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), or any comparable
successor provisions (excluding any employee benefit plan, or related trust,
sponsored or maintained by the Company or an affiliate of the Company) of the
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act, or comparable successor rules) of securities of the Company
representing at least fifty percent (50%) of the combined voting power entitled
to vote in the election of directors; or, (v) in the event that the individuals
who, as of the date hereof, are members of the Board (the “Incumbent
Board”), cease for any reason to constitute at least fifty percent
(50%) of the Company’s Board of Directors. (If the election, or nomination for
election by the Company’s shareholders, of any new member of the Company’s
Board of Directors is approved by a vote of at least fifty percent (50%) of the
Incumbent Board, such new member of the Board of Directors shall be considered
as a member of the Incumbent Board.) 
Notwithstanding the foregoing, for the purposes of this letter agreement
and with respect to any and all clauses of this paragraph, an initial public
offering of the securities of the Company (an “IPO”)
or any transactions or events constituting part of an IPO, or any transaction
or series of transactions principally for bona fide equity financing purposes
in which cash is received by the Company or indebtedness of the Company is
cancelled or converted or a combination thereof shall not be deemed to
constitute or in any way effect a Change of Control.

 

General Provisions

 

ARYx requires all of its employees to comply with its
Employee Proprietary Information and Inventions Agreement, as attached, that
prohibits unauthorized use or disclosure of ARYx proprietary information. This
letter, together with an executed 

 

5

 

Employee Proprietary
Information and Inventions Agreement and an executed Release Agreement, forms
the complete and exclusive statement of your employment agreement with the
Company. The employment terms in this letter supersede any other agreements or
promises made to you by anyone, whether oral or written. This letter agreement
cannot be changed except in a writing signed by you and a duly authorized
officer of the Company.

 

On behalf of ARYx, I hope you find this employment
offer agreeable, and will indicate your acceptance by signing, dating and
returning a copy of this letter and the attachments to David Nagler at the ARYx
address below. I would appreciate a reply on or before February 2, 2007. If you
accept our offer, please plan on starting on March 1, 2007.

 

ARYx has set a bold course for itself. We intend to
serve patients through safety and efficacy, employees through meaningful work
and very competitive compensation, and shareholders through high standards and
beneficial financial returns. We look forward to your joining us on this
course.

 

Sincerely,

 

	
  /s/ Peter G. Milner

  	
   

  

 

 

Peter Milner M.D.

President

ARYx Therapeutics

 

Accepted:

 

	
  /s/ Daniel
  Canafax

  	
   

  	
  1-31-07

  	
   

  
	
  Daniel Canafax

  	
   

  	
  Date

  

 

Attachment I:  Employee Proprietary Information and
Inventions Agreement

 

Attachment II: Release
Agreement

 

6

 

ARYX THERAPEUTICS

 

EMPLOYEE PROPRIETARY INFORMATION

AND INVENTIONS AGREEMENT

 

In consideration of my
employment or continued employment by ARYX THERAPEUTICS
(the “Company”), and the compensation now and
hereafter paid to me, I hereby agree as follows:

 

1.             NONDISCLOSURE

 

1.1          Recognition of Company’s
Rights; Nondisclosure. At all times during my employment and thereafter, I
will hold in strictest confidence and will not disclose, use, lecture upon or
publish any of the Company’s Proprietary Information (defined below), except as
such disclosure, use or publication may be required in connection with my work
for the Company, or unless an officer of the Company expressly authorizes such
in writing. I will obtain Company’s written approval before publishing or
submitting for publication any material (written, verbal, or otherwise) that
relates to my work at Company and/or incorporates any Proprietary Information. I
hereby assign to the Company any rights I may have or acquire in such
Proprietary Information and recognize that all Proprietary Information shall be
the sole property of the Company and its assigns.

 

1.2          Proprietary Information.
The term “Proprietary Information” shall mean
any and all confidential and/or proprietary knowledge, data or information of
the Company. By way of illustration but not limitation, “Proprietary
Information” includes (a) information relating to products,
processes, know-how, designs, drawings, clinical data, test data, formulas,
methods, samples, media and/or cell lines, developmental or experimental work,
improvements, discoveries, plans for research, new products, manufacturing,
marketing and selling, business plans, budgets and unpublished financial
statements, licenses, prices and costs, suppliers and customers, and
information regarding the skills and compensation of other employees of the
Company. (hereinafter collectively referred to as “Inventions”);
and (b) information regarding plans for research, development, new
products, marketing and selling, business plans, budgets and unpublished
financial statements, licenses, prices and costs, suppliers and customers; and
(c) information regarding the skills and compensation of other employees of the
Company. Notwithstanding the foregoing, it is understood that, at all such
times, I am free to use information which is generally known in the trade or
industry, which is not gained as result of a breach of this Agreement, and my
own skill, knowledge, know-how and experience to whatever extent and in
whichever way I wish.

 

1.3          Third Party Information.
I understand, in addition, that the Company has received and in the future
will receive from third parties confidential or proprietary information (“Third Party Information”) subject to a duty on the Company’s
part to maintain the confidentiality of such information and to use it only for
certain limited purposes. During the term of my employment and thereafter, I
will hold Third Party Information in the strictest confidence and will not
disclose to anyone (other than Company personnel who need to know such
information in connection with their work for the Company) or use, except in
connection with my work for the Company, Third Party Information unless
expressly authorized by an officer of the Company in writing.

 

1.4          No Improper Use of
Information of Prior Employers and Others. During my employment by the
Company I will not improperly use or disclose any confidential information or
trade secrets, if any, of any former employer or any other person to whom I
have an obligation of confidentiality, and I will not bring onto the premises
of the Company any unpublished documents or any property belonging to any
former employer or any other person to whom I have an obligation of
confidentiality unless consented to in writing by that former employer or
person. I will use in the performance of my duties only information which is
generally known and used by persons with training and experience comparable to
my own, which is common knowledge in the industry or otherwise legally in the
public domain, or which is otherwise provided or developed by the Company.

 

2.             ASSIGNMENT OF
INVENTIONS.

 

2.1          Proprietary Rights. The
term “Proprietary Rights” shall mean all
trade secret, patent, copyright, mask work and other intellectual property
rights throughout the world.

 

2.2          Prior Inventions. Inventions,
if any, patented or unpatented, which I made prior to the 

 

1

 

commencement of my employment
with the Company are excluded from the scope of this Agreement. To preclude any
possible uncertainty, I have set forth on Exhibit B (Previous
Inventions) attached hereto a complete list of all Inventions that I have,
alone or jointly with others, conceived, developed or reduced to practice or
caused to be conceived, developed or reduced to practice prior to the
commencement of my employment with the Company, that I consider to be my
property or the property of third parties and that I wish to have excluded from
the scope of this Agreement (collectively referred to as “Prior
Inventions”). If disclosure of any such Prior Invention would cause
me to violate any prior confidentiality agreement, I understand that I am not
to list such Prior Inventions in Exhibit B
but am only to disclose a cursory name for each such invention, a listing of
the party(ies) to whom it belongs and the fact that full disclosure as to such
inventions has not been made for that reason. A space is provided on Exhibit B for such purpose. If no such disclosure is
attached, I represent that there are no Prior Inventions. If, in the course of
my employment with the Company, I incorporate a Prior Invention into a Company
product, process or machine, the Company is hereby granted and shall have a
nonexclusive, royalty-free, irrevocable, perpetual, worldwide license (with
rights to sublicense through multiple tiers of sublicensees) to make, have
made, modify, use and sell such Prior Invention. Notwithstanding the foregoing,
I agree that I will not incorporate, or permit to be incorporated, Prior
Inventions in any Company Inventions without the Company’s prior written
consent.

 

2.3          Assignment of Inventions.
Subject to Sections 2.4, and 2.6, I hereby assign and agree to assign in
the future (when any such Inventions or Proprietary Rights are first reduced to
practice or first fixed in a tangible medium, as applicable) to the Company all
my right, title and interest in and to any and all Inventions (and all
Proprietary Rights with respect thereto) whether or not patentable or
registrable under copyright or similar statutes, made or conceived or reduced
to practice or learned by me, either alone or jointly with others, during the
period of my employment with the Company. Inventions assigned to the Company,
or to a third party as directed by the Company pursuant to this Section 2,
are hereinafter referred to as “Company Inventions.”

 

2.4          Nonassignable Inventions.
This Agreement does not apply to an Invention which qualifies fully as a
nonassignable Invention under Section 2870 of the California Labor Code
(hereinafter “Section 2870”). I have
reviewed the notification on Exhibit A
(Limited Exclusion Notification) and agree that my signature acknowledges
receipt of the notification.

 

2.5          Obligation to Keep
Company Informed. During the period of my employment and for six (6) months
after termination of my employment with the Company, I will promptly disclose
to the Company fully and in writing all Inventions authored, conceived or
reduced to practice by me, either alone or jointly with others. In addition, I
will promptly disclose to the Company all patent applications filed by me or on
my behalf within a year after termination of employment. At the time of each
such disclosure, I will advise the Company in writing of any Inventions that I
believe fully qualify for protection under Section 2870; and I will at
that time provide to the Company in writing all evidence necessary to
substantiate that belief. The Company will keep in confidence and will not use for
any purpose or disclose to third parties without my consent any confidential
information disclosed in writing to the Company pursuant to this Agreement
relating to Inventions that qualify fully for protection under the provisions
of Section 2870. I will preserve the confidentiality of any Invention that
does not fully qualify for protection under Section 2870.

 

2.6          Government or Third
Party. I also agree to assign all my right, title and interest in and to
any particular Company Invention to a third party, including without limitation
the United States, as directed by the Company.

 

2.7          Works for Hire. I
acknowledge that all original works of authorship which are made by me (solely
or jointly with others) within the scope of my employment and which are protectable
by copyright are “works made for hire,” pursuant to United States Copyright Act
(17 U.S.C., Section 101).

 

2.8          Enforcement of
Proprietary Rights. I will assist the Company in every proper way to
obtain, and from time to time enforce, United States and foreign Proprietary
Rights relating to Company Inventions in any and all countries. To that end I
will execute, verify and deliver such documents and perform such other acts
(including appearances as a witness) as the Company may reasonably request for
use in applying for, obtaining, perfecting, evidencing, sustaining and
enforcing such Proprietary Rights and the assignment thereof. In addition, I
will execute, verify and deliver assignments of such Proprietary Rights to the
Company or its designee. My obligation to assist the Company with respect to
Proprietary Rights relating to such Company Inventions in any 

 

2

 

and all countries shall
continue beyond the termination of my employment, but the Company shall
compensate me at a reasonable rate after my termination for the time actually
spent by me at the Company’s request on such assistance.

 

In the event the
Company is unable for any reason, after reasonable effort, to secure my
signature on any document needed in connection with the actions specified in
the preceding paragraph, I hereby irrevocably designate and appoint the Company
and its duly authorized officers and agents as my agent and attorney in fact,
which appointment is coupled with an interest, to act for and in my behalf to
execute, verify and file any such documents and to do all other lawfully
permitted acts to further the purposes of the preceding paragraph with the same
legal force and effect as if executed by me. I hereby waive and quitclaim to
the Company any and all claims, of any nature whatsoever, which I now or may
hereafter have for infringement of any Proprietary Rights assigned hereunder to
the 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 may be required by the Company)
of all Proprietary Information developed by me and all Inventions made by me
during the period of my employment at 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 during the period of my employment by the Company I will not,
without the Company’s express written consent, engage in any employment or
business activity which is competitive with, or would otherwise conflict with,
my employment by the Company. I agree further that for the period of my
employment by the Company and for one (l) year after the date of termination of
my employment by the Company I will not, either directly or through others,
solicit or attempt to solicit any employee, independent contractor or
consultant of the company to terminate his or her relationship with the Company
in order to become an employee, consultant or independent contractor to or for
any other person or entity.

 

5.             NO CONFLICTING
OBLIGATION. I represent that my performance of all the terms of this
Agreement and as an employee of the Company does not and will not breach any
agreement to keep in confidence information acquired by me in confidence or in
trust prior to my employment by the Company. I have not entered into, and I
agree I will not enter into, any agreement either written or oral in conflict
herewith.

 

6.             RETURN OF COMPANY
DOCUMENTS. When I leave the employ of the Company, I will deliver to the
Company any and all drawings, notes, memoranda, specifications, devices,
formulas, and documents, together with all copies thereof, and any other
material containing or disclosing any Company Inventions, Third Party
Information or Proprietary Information of the Company. I further agree that any
property situated on the Company’s premises and owned by the Company, including
disks and other storage media, filing cabinets or other work areas, is subject
to inspection by Company personnel at any time with or without notice. Prior to
leaving, I will cooperate with the Company in completing and signing the
Company’s termination statement.

 

7.             LEGAL AND EQUITABLE
REMEDIES. Because my services are personal and unique and because I may
have access to and become acquainted with the Proprietary Information of the
Company, the Company shall have the right to enforce this Agreement and any of
its provisions by injunction, specific performance or other equitable relief,
without bond and without prejudice to any other rights and remedies that the
Company may have for a breach of this Agreement.

 

8.             NOTICES. Any
notices required or permitted hereunder shall be given to the appropriate party
at the address specified below or at such other address as the party shall
specify in writing. Such notice shall be deemed given upon personal delivery to
the appropriate address or if sent by certified or registered mail, three (3)
days after the date of mailing.

 

9.             NOTIFICATION OF NEW
EMPLOYER. In the event that I leave the employ of the Company, I hereby
consent to the notification of my new employer of my rights and obligations
under this Agreement.

 

10.          GENERAL PROVISIONS.

 

10.1        Governing Law; Consent to
Personal Jurisdiction. This Agreement will be governed by and construed
according to the laws of the State of California, as such laws are applied to
agreements entered into and to be performed entirely within California between
California residents. I hereby expressly consent to the personal jurisdiction
of the state and federal courts located in Santa Clara County, California for
any lawsuit filed there against me by Company arising from or related to this
Agreement.

 

3

 

10.2        Severability. In case
any one or more of the provisions contained in this Agreement shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect the other
provisions of this Agreement, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein. If
moreover, any one or more of the provisions contained in this Agreement shall
for any reason be held to be excessively broad as to duration, geographical
scope, activity or subject, it shall be construed by limiting and reducing it,
so as to be enforceable to the extent compatible with the applicable law as it
shall then appear.

 

10.3        Successors and Assigns. This
Agreement will be binding upon my heirs, executors, administrators and other
legal representatives and will be for the benefit of the Company, its
successors, and its assigns.

 

10.4        Survival. The
provisions of this Agreement shall survive the termination of my employment and
the assignment of this Agreement by the Company to any successor in interest or
other assignee.

 

10.5        Employment. I agree
and understand that nothing in this Agreement shall confer any right with
respect to continuation of employment by the Company, nor shall it interfere in
any way with my right or the Company’s right to terminate my employment at any
time, with or without cause.

 

10.6        Waiver. No waiver by
the Company of any breach of this Agreement shall be a waiver of any preceding
or succeeding breach. No waiver by the Company of any right under this
Agreement shall be construed as a waiver of any other right. The Company shall
not be required to give notice to enforce strict adherence to all terms of this
Agreement.

 

10.7        Entire Agreement. The
obligations pursuant to Sections 1 and 2 of this Agreement shall apply to any
time during which I was previously employed, or am in the future employed, by
the Company as a consultant if no other agreement governs nondisclosure and
assignment of inventions during such period. 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 discussions between us. No
modification of or amendment to this Agreement, nor any waiver of any rights
under this Agreement, will be effective unless in writing and signed by the
party to be charged. Any subsequent change or changes in my duties, salary or
compensation will not affect the validity or scope of this Agreement.

 

This
Agreement shall be effective as of the first day of my employment with the
Company, namely:                   ,
2007.

 

I HAVE
READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE COMPLETELY
FILLED OUT EXHIBIT B TO THIS AGREEMENT.

 

	
  Dated:

  	
  2-9-07

  	
   

  
	
   

  	
   

  
	
  /s/ Daniel
  Canafax

  	
   

  
	
  (Signature)

  	
   

  
	
   

  	
   

  
	
  Daniel Canafax

  	
   

  
	
  (Printed
  Name)

  	
   

  

 

 

ACCEPTED
AND AGREED TO:

 

ARYX
THERAPEUTICS

 

	
  By:

  	
  /s/ David Nagler

  	
   

  
	
   

  	
   

  
	
  Title:

  	
  VP Corporate
  Affairs

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (Address)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated:

  	
  2/23/07

  	
   

  

 

4

 

EXHIBIT A

 

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 the Company
does not require you to assign or offer to assign to the Company any invention
that you developed entirely on your own time without using the Company’s
equipment, supplies, facilities or trade secret information except for those
inventions that either:

 

1.             Relate at the time of conception or reduction to
practice of the invention to the Company’s business, or actual or demonstrably
anticipated research or development of the Company;

 

2.             Result from any work performed by you for the 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 the Company and the United States or any of its agencies
requiring full title to such patent or invention to be in the United States.

 

I
ACKNOWLEDGE RECEIPT of a copy of this notification.

 

	
   

  	
  By:

  	
   /s/ Daniel Canafax

  	
   

  
	
   

  	
  (PRINTED NAME OF EMPLOYEE)

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  2-22-07

  	
   

  
					

 

 

WITNESSED BY:

 

	
  /s/ Chau Tran

  	
   

  
	
  (PRINTED
  NAME OF REPRESENTATIVE)

  

 

A-1

 

EXHIBIT B

 

	
  TO:

  	
  ARYx
  Therapeutics

  	
   

  
	
   

  	
   

  	
   

  
	
  FROM:

  	
  Daniel Canafax

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGN:

  	
  /s/ Daniel
  Canafax

  	
   

  
	
   

  	
   

  	
   

  
	
  DATE:

  	
  2-22-07

  	
   

  

 

SUBJECT:     Previous
Inventions

 

1.             Except as listed in
Section 2 below, the following is a complete list of all inventions or
improvements relevant to the subject matter of my employment by ARYx
Therapeutics (the “Company”) that
have been made or conceived or first reduced to practice by me alone or jointly
with others prior to my engagement by the Company:

 

o            No inventions or improvements.

 

x           See below:

 

	
   

  	
  Barrett, Canafax
  GABA [illegible] for treatment

  	
   

  
	
   

  	
  of RLS

  	
   

  
	
   

  	
   

  	
   

  

 

o         Additional sheets
attached.

 

2.             Due to a prior confidentiality agreement, I cannot
complete the disclosure under Section 1 above with respect to inventions
or improvements generally listed below, the proprietary rights and duty of
confidentiality with respect to which I owe to the following party(ies):

 

	
  Invention or Improvement

  	
   

  	
  Party(ies)

  	
   

  	
  Relationship

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

o         Additional sheets
attached.

 

 

EXHIBIT B

 

RELEASE AGREEMENT

 

I understand that my
employment with ARYX THERAPEUTICS, INC.
(the “Company”)
terminated effective             ,       
(the “Separation Date”).
The Company has agreed that if I choose to sign this Release Agreement (“Release”), the
Company will pay me certain severance benefits (minus the standard withholdings
and deductions) pursuant to the terms of the Employment Agreement (the “Agreement”) entered
into and effective as of January 31, 2007, between myself and the Company, and
any agreements incorporated therein by reference. I understand that I am not
entitled to such severance benefits unless I sign this Release and allow it to
become effective. I understand that, regardless of whether I sign this Release,
the Company will pay me all of my accrued salary and vacation through the
Separation Date, to which I am entitled by law.

 

In consideration for the
severance benefits I am receiving under the Agreement, I hereby generally and
completely release the Company and its officers, directors, agents, attorneys,
employees, stockholders, parents, subsidiaries, and affiliates from any and all
claims, liabilities, demands, causes of action, attorneys’ fees, damages, or
obligations of every kind and nature, whether they are now known or unknown,
arising at any time prior to or on the date I sign this Release. This general
release includes, but is not limited to: (a) all claims arising out of or in
any way related to my employment with the Company or the termination of that
employment; (b) all claims related to my compensation or benefits from the
Company, including salary, bonuses, commissions, vacation pay, expense reimbursements,
severance pay, fringe benefits, stock, stock options, or any other ownership
interests in the Company; (c) all claims for breach of contract, wrongful
termination, and breach of the implied covenant of good faith and fair dealing
(including, but not limited to, any claims based on or arising from the
Agreement); (d) all tort claims, including claims for fraud, defamation,
emotional distress, and discharge in violation of public policy; and (e) all
federal, state, and local statutory claims, including claims for
discrimination, harassment, retaliation, attorneys’ fees, or other claims
arising under the federal Civil Rights Act of 1964 (as amended), the federal
Americans with Disabilities Act of 1990, the federal Age Discrimination in
Employment Act of 1967 (as amended), and the California Fair Employment and
Housing Act (as amended). Notwithstanding the release in the preceding
sentence, I am not releasing any right of indemnification I may have for any
liabilities arising from my actions within the course and scope of my
employment with the Company or within the course and scope of my role as a
member of the Board of Directors of the Company.

 

In releasing claims
unknown to me at present, I am waiving all rights and benefits under Section
1542 of the California Civil Code, and any law or legal principle of similar
effect in any jurisdiction:  “A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the release,
which if known by him must have materially affected his settlement with the
debtor.”

 

If I am forty (40) years
of age or older as of the Separation Date, I acknowledge that I am knowingly
and voluntarily waiving and releasing any rights I may have under the federal Age
Discrimination in Employment Act of 1967, as amended (“ADEA”). I also
acknowledge that the consideration given for the waiver in the above paragraphs
is in addition to anything of value to which I was already entitled. I have
been advised by this writing, as required by the ADEA that:  (a) my waiver and release do not apply to any
claims that may arise after the date that I sign this Release; (b) I should
consult with an attorney prior to executing this Release (although I may choose
voluntarily not to do so); (c) I have twenty-one (21) days within which to
consider this Release (although I may choose voluntarily to sign this Release
earlier); (d) I have seven (7)

 

 

days following the date
that I sign this Release to revoke the Release by providing written notice of
revocation to the Company’s Chief Executive Officer; and (e) this Release will
not be effective until the eighth day after this Release has been signed both
by me and by the Company (“Effective
Date”).

 

Agreed:

 

	
  DANIEL
  CANAFAX

  	
   

  	
  ARYX
  THERAPEUTICS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Print Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Print Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
											

 

2Exhibit 10.15

[ARYx Logo]

 

July 15, 2003

 

David Nagler

 

Dear David:

 

ARYx Therapeutics  is pleased to
invite you to join us as Vice President Corporate Affairs. It will be
recommended at the next regular meeting of the ARYx Board of Directors that you
be elected an Officer of the Company in this position. The ARYx mission of
discovering and developing pharmaceuticals in which safety is a critical
measure of efficacy can be greatly enhanced through people such as yourself.

 

Should you join us, you will be responsible for the
functions of Human Resources and Corporate Communications. You will report
directly to me as President and CEO, although you may be subsequently asked to
report to an ARYx Chief Business Officer, should one be placed, for your role
as head of Corporate Communications. You will be a regular member of the ARYx
Management Committee, and will work at our facilities in Santa Clara and San
Ramon, California. Based upon your performance and the evolving needs of the
Company, your position, duties, and work location may change over the course of
your employment with us.

 

ARYx is offering to you a compensation package
intended to aggressively provide both short-term and long-term income. It is
mutually understood that your initial employment will allocate four days each
week to ARYx. This may change over the course of your employment but only by
mutual consent between ARYx and you. Your cash compensation will include a base
salary of $200,000 per annum (less payroll deductions and all required withholdings),
paid semi-monthly, and prorated to 4/5ths time. Accordingly, your actual base
salary will be $160,000 per annum until such time as you move to full time
status. In addition, ARYx provides a substantial benefits package including
health, dental and vision care, as well as paid vacation. Details about these
benefits and benefits plans are available for your review.

 

In addition to your base salary, you may be eligible
for bonus payments in cash compensation, additional equity, or a combination of
cash and equity, as determined by the Compensation Committee of the ARYx Board
of Directors. There is no representation made, either in writing or implied,
that such bonuses will be paid. Whether such bonuses are paid will be based
upon the Board’s view of both corporate and individual performance. However, as
part of your initial employment, ARYx will pay to you a cash bonus of $25,000
in July, 2004 should you meet the following milestones: complete the writing
and publishing of an ARYx Employee Handbook; provide on-going assistance to me
in the building of the ARYx senior management team; detail the appropriate
projected head count and organizational structure through July 2005 based upon
a projection of additional corporate funding; manage the shaping of the ARYx
corporate culture; and, develop and execute a corporate communications strategy
to support corporate development and fundraising.

 

Long-term income will be tied to the success of the
Company. ARYx believes that key employees should share in the Company’s
success, and accordingly, it will be recommended to

 

 

the Board of Directors
that you be granted an option to purchase 180,000 shares of ARYx common stock
under the terms of the Company’s stock option plan. The exercise price will be
equal to the fair market value of the Company’s common stock on the date of
grant, as determined by the Board. Your granted options will vest as follows:
twenty-five percent (25%) of the shares will vest on the first anniversary of
the commencement date of your employment, and thereafter the options will vest
in equal monthly installments (1/48th of the shares) over the following
thirty-six months. Of course, this assumes continued qualified service to the
Company.

 

ARYx is committed to the highest ethical standards. In
your work for the Company, you will be expected not to use or disclose any
confidential information, including trade secrets, of any former employer or
other person to whom you have an obligation of confidentiality. Rather, you
will be expected to use only that information which is generally known and used
by persons with training and experience comparable to your own, which is common
knowledge in the industry or otherwise legally in the public domain, or which
is otherwise provided or developed by ARYx. In addition, you agree that you
will not bring onto ARYx’ premises any unpublished documents or property
belonging to any former employer or other person to whom you have an obligation
of confidentiality. During our discussions about your proposed job duties, you
assured us that you would be able to perform those duties within the guidelines
just described.

 

You may terminate your employment with ARYx at any
time and for any reason whatsoever simply by notifying us. Likewise, ARYx may
terminate your employment at any time and for any reason whatsoever, with or
without cause or advance notice. As required by law, this offer is subject to
satisfactory proof of your right to work in the United States.

 

ARYx requires all of its employees to comply with its
Employee Proprietary Information and Inventions Agreement that prohibits
unauthorized use or disclosure of ARYx proprietary information. This letter,
together with your Employee Proprietary Information and Inventions Agreement
that we already have on file from you, forms the complete and exclusive
statement of your employment agreement with the Company. The employment terms
in this letter supersede any other agreements or promises made to you by
anyone, whether oral or written. This letter agreement cannot be changed except
in a writing signed by you and a duly authorized officer of the Company.

 

On behalf of ARYx, I hope you find this employment
offer agreeable, and will indicate your acceptance by signing, dating and
returning a copy of this letter and the Proprietary Agreement to me at the ARYx
address below. I would appreciate a reply on or before July 17, 2003. If you
accept our offer, please plan on starting immediately.

 

 

ARYx has set a bold course for itself. We intend to
serve patients through safety and efficacy, employees through meaningful work
and very competitive compensation, and shareholders through high standards and
beneficial financial returns. We look forward to your joining us on this
course.

 

	
  Sincerely

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Peter
  Milner M.D.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Peter Milner
  M.D.

  	
   

  	
   

  
	
  President
  and Chief Executive Officer

  	
   

  	
   

  
	
  ARYx
  Therapeutics, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Accepted:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ David
  Nagler

  	
   

  	
  9/12/03

  	
   

  
	
  Name

  	
  Date

  	
   

  
					

 

Attachment:  Employee Proprietary
Information and Inventions Agreement

 

 

 

ARYX
THERAPEUTICS

 

EMPLOYEE
PROPRIETARY INFORMATION

 

AND
INVENTIONS AGREEMENT

 

In consideration
of my employment or continued employment by ARYX
THERAPEUTICS (the “Company”), and
the compensation now and hereafter paid to me, I hereby agree as follows:

 

1.             NONDISCLOSURE

 

1.1          Recognition
of Company’s Rights; Nondisclosure. At all times
during my employment and thereafter, I will hold in strictest confidence and
will not disclose, use, lecture upon or publish any of the Company’s
Proprietary Information (defined below), except as such disclosure, use or
publication may be required in connection with my work for the Company, or
unless an officer of the Company expressly authorizes such in writing. I will
obtain Company’s written approval before publishing or submitting for
publication any material (written, verbal, or otherwise) that relates to my
work at Company and/or incorporates any Proprietary Information. I hereby
assign to the Company any rights I may have or acquire in such Proprietary
Information and recognize that all Proprietary Information shall be the sole
property of the Company and its assigns.

 

1.2          Proprietary
Information. The term “Proprietary
Information” shall mean any and all confidential and/or proprietary
knowledge, data or information of the Company. By way of illustration but not
limitation, “Proprietary Information” includes
(a) information relating to products, processes, know-how, designs, drawings,
clinical data, test data, formulas, methods, samples, media and/or cell lines,
developmental or experimental work, improvements, discoveries, plans for
research, new products, manufacturing, marketing and selling, business plans,
budgets and unpublished financial statements, licenses, prices and costs,
suppliers and customers, and information regarding the skills and compensation
of other employees of the Company. (hereinafter collectively referred to as “Inventions”); and (b) information regarding plans for
research, development, new products, marketing and selling, business plans,
budgets and unpublished financial statements, licenses, prices and costs,
suppliers and customers; and (c) information regarding the skills and
compensation of other employees of the Company. Notwithstanding the foregoing,
it is understood that, at all such times, I am free to use information which is
generally known in the trade or industry, which is not gained as result of a
breach of this Agreement, and my own skill, knowledge, know-how and experience
to whatever extent and in whichever way I wish.

 

1.3          Third
Party Information. I understand, in addition, that the
Company has received and in the future will receive from third parties
confidential or proprietary information (“Third Party Information”)
subject to a duty on the Company’s part to maintain the confidentiality of such
information and to use it only for certain limited purposes. During the term of
my employment and thereafter, I will hold Third Party Information in the
strictest confidence and will not disclose to anyone (other than Company
personnel who need to know such information in connection with their work for
the Company) or use, except in connection with my work for the Company, Third
Party Information unless expressly authorized by an officer of the Company in
writing.

 

1.4          No
Improper Use of Information of Prior Employers and Others. During
my employment by the Company I will not improperly use or disclose any
confidential information or trade secrets, if any, of any former employer or
any other person to whom I have an obligation of confidentiality, and I will
not bring onto the premises of the Company any unpublished documents or any
property belonging to any former employer or any other person to whom I have an
obligation of confidentiality unless consented to in writing by that former
employer or person. I will use in the performance of my duties only information
which is generally known and used by persons with training and experience
comparable to my own, which is common knowledge in the industry or otherwise
legally in the public domain, or which is otherwise provided or developed by
the Company.

 

2.             ASSIGNMENT
OF INVENTIONS.

 

2.1          Proprietary
Rights. The term “Proprietary Rights”
shall mean all trade secret, patent, copyright, mask work and other
intellectual property rights throughout the world.

 

1

 

2.2          Prior
Inventions. Inventions, if any, patented or
unpatented, which I made prior to the commencement of my employment with the
Company are excluded from the scope of this Agreement. To preclude any possible
uncertainty, I have set forth on Exhibit B (Previous
Inventions) attached hereto a complete list of all Inventions that I have,
alone or jointly with others, conceived, developed or reduced to practice or
caused to be conceived, developed or reduced to practice prior to the
commencement of my employment with the Company, that I consider to be my
property or the property of third parties and that I wish to have excluded from
the scope of this Agreement (collectively referred to as “Prior
Inventions”). If disclosure of any such Prior Invention would cause
me to violate any prior confidentiality agreement, I understand that I am not
to list such Prior Inventions in Exhibit B
but am only to disclose a cursory name for each such invention, a listing of
the party(ies) to whom it belongs and the fact that full disclosure as to such
inventions has not been made for that reason. A space is provided on Exhibit B for such purpose. If no such disclosure is
attached, I represent that there are no Prior Inventions. If, in the course of
my employment with the Company, I incorporate a Prior Invention into a Company
product, process or machine, the Company is hereby granted and shall have a
nonexclusive, royalty-free, irrevocable, perpetual, worldwide license (with rights
to sublicense through multiple tiers of sublicensees) to make, have made,
modify, use and sell such Prior Invention. Notwithstanding the foregoing, I
agree that I will not incorporate, or permit to be incorporated, Prior
Inventions in any Company Inventions without the Company’s prior written
consent.

 

2.3          Assignment
of Inventions. Subject to Sections 2.4, and 2.6, I
hereby assign and agree to assign in the future (when any such Inventions or
Proprietary Rights are first reduced to practice or first fixed in a tangible
medium, as applicable) to the Company all my right, title and interest in and
to any and all Inventions (and all Proprietary Rights with respect thereto)
whether or not patentable or registrable under copyright or similar statutes,
made or conceived or reduced to practice or learned by me, either alone or
jointly with others, during the period of my employment with the Company. Inventions
assigned to the Company, or to a third party as directed by the Company
pursuant to this Section 2, are hereinafter referred to as “Company Inventions.”

 

2.4          Nonassignable
Inventions. This Agreement does not apply to an
Invention which qualifies fully as a nonassignable Invention under
Section 2870 of the California Labor Code (hereinafter “Section 2870”). I have reviewed the notification on Exhibit A (Limited Exclusion Notification) and agree that my
signature acknowledges receipt of the notification.

 

2.5          Obligation
to Keep Company Informed. During the period of my
employment and for six (6) months after termination of my employment with the
Company, I will promptly disclose to the Company fully and in writing all
Inventions authored, conceived or reduced to practice by me, either alone or
jointly with others. In addition, I will promptly disclose to the Company all
patent applications filed by me or on my behalf within a year after termination
of employment. At the time of each such disclosure, I will advise the Company
in writing of any Inventions that I believe fully qualify for protection under
Section 2870; and I will at that time provide to the Company in writing
all evidence necessary to substantiate that belief. The Company will keep in
confidence and will not use for any purpose or disclose to third parties
without my consent any confidential information disclosed in writing to the
Company pursuant to this Agreement relating to Inventions that qualify fully
for protection under the provisions of Section 2870. I will preserve the
confidentiality of any Invention that does not fully qualify for protection
under Section 2870.

 

2.6          Government
or Third Party. I also agree to assign all my right,
title and interest in and to any particular Company Invention to a third party,
including without limitation the United States, as directed by the Company.

 

2.7          Works
for Hire. I acknowledge that all original works of
authorship which are made by me (solely or jointly with others) within the
scope of my employment and which are protectable by copyright are “works made
for hire,” pursuant to United States Copyright Act (17 U.S.C., Section 101).

 

2.8          Enforcement
of Proprietary Rights. I will assist the Company in
every proper way to obtain, and from time to time enforce, United States and
foreign Proprietary Rights relating to Company Inventions in any and all countries.
To that end I will execute, verify and deliver such documents and perform such
other acts (including appearances as a witness) as the Company may reasonably
request for use in applying for, obtaining, perfecting, evidencing, sustaining
and enforcing such Proprietary Rights and the assignment thereof. In addition,
I will execute, verify and deliver assignments of such Proprietary Rights to
the Company or its designee. My obligation 

 

2

 

to assist the Company with respect to Proprietary Rights relating to
such Company Inventions in any and all countries shall continue beyond the
termination of my employment, but the Company shall compensate me at a
reasonable rate after my termination for the time actually spent by me at the
Company’s request on such assistance.

 

In the event the Company is unable for any
reason, after reasonable effort, to secure my signature on any document needed
in connection with the actions specified in the preceding paragraph, I hereby
irrevocably designate and appoint the Company and its duly authorized officers
and agents as my agent and attorney in fact, which appointment is coupled with
an interest, to act for and in my behalf to execute, verify and file any such
documents and to do all other lawfully permitted acts to further the purposes
of the preceding paragraph with the same legal force and effect as if executed
by me. I hereby waive and quitclaim to the Company any and all claims, of any
nature whatsoever, which I now or may hereafter have for infringement of any
Proprietary Rights assigned hereunder to the 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
may be required by the Company) of all Proprietary Information developed by me
and all Inventions made by me during the period of my employment at 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 during the period of my
employment by the Company I will not, without the Company’s express written
consent, engage in any employment or business activity which is competitive
with, or would otherwise conflict with, my employment by the Company. I agree
further that for the period of my employment by the Company and for one (l)
year after the date of termination of my employment by the Company I will not,
either directly or through others, solicit or attempt to solicit any employee,
independent contractor or consultant of the company to terminate his or her
relationship with the Company in order to become an employee, consultant or
independent contractor to or for any other person or entity.

 

5.             NO
CONFLICTING OBLIGATION. I represent that my performance
of all the terms of this Agreement and as an employee of the Company does not
and will not breach any agreement to keep in confidence information acquired by
me in confidence or in trust prior to my employment by the Company. I have not
entered into, and I agree I will not enter into, any agreement either written
or oral in conflict herewith.

 

6.             RETURN
OF COMPANY DOCUMENTS. When I leave the employ of the
Company, I will deliver to the Company any and all drawings, notes, memoranda,
specifications, devices, formulas, and documents, together with all copies
thereof, and any other material containing or disclosing any Company
Inventions, Third Party Information or Proprietary Information of the Company. I
further agree that any property situated on the Company’s premises and owned by
the Company, including disks and other storage media, filing cabinets or other
work areas, is subject to inspection by Company personnel at any time with or
without notice. Prior to leaving, I will cooperate with the Company in
completing and signing the Company’s termination statement.

 

7.             LEGAL
AND EQUITABLE REMEDIES. Because my services are
personal and unique and because I may have access to and become acquainted with
the Proprietary Information of the Company, the Company shall have the right to
enforce this Agreement and any of its provisions by injunction, specific
performance or other equitable relief, without bond and without prejudice to
any other rights and remedies that the Company may have for a breach of this Agreement.

 

8.             NOTICES.
Any notices required or permitted hereunder shall be
given to the appropriate party at the address specified below or at such other
address as the party shall specify in writing. Such notice shall be deemed
given upon personal delivery to the appropriate address or if sent by certified
or registered mail, three (3) days after the date of mailing.

 

9.             NOTIFICATION
OF NEW EMPLOYER. In the event that I leave the employ
of the Company, I hereby consent to the notification of my new employer of my
rights and obligations under this Agreement.

 

10.          GENERAL
PROVISIONS.

 

10.1        Governing
Law; Consent to Personal Jurisdiction. This Agreement
will be governed by and construed according to the laws of the State of
California, as such laws are applied to agreements entered into and to be
performed entirely within California between California residents. I hereby
expressly consent to the personal jurisdiction of the state and federal courts
located in Santa Clara County, California for any lawsuit filed there against 

 

3

 

me by Company arising from or related to this Agreement.

 

10.2        Severability.  In
case any one or more of the provisions contained in this Agreement shall, for
any reason, be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect the other
provisions of this Agreement, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein. If
moreover, any one or more of the provisions contained in this Agreement shall
for any reason be held to be excessively broad as to duration, geographical
scope, activity or subject, it shall be construed by limiting and reducing it,
so as to be enforceable to the extent compatible with the applicable law as it
shall then appear.

 

10.3        Successors
and Assigns.  This Agreement will be binding
upon my heirs, executors, administrators and other legal representatives and
will be for the benefit of the Company, its successors, and its assigns.

 

10.4        Survival.  The
provisions of this Agreement shall survive the termination of my employment and
the assignment of this Agreement by the Company to any successor in interest or
other assignee.

 

10.5        Employment.  I
agree and understand that nothing in this Agreement shall confer any right with
respect to continuation of employment by the Company, nor shall it interfere in
any way with my right or the Company’s right to terminate my employment at any
time, with or without cause.

 

10.6        Waiver.  No
waiver by the Company of any breach of this Agreement shall be a waiver of any
preceding or succeeding breach. No waiver by the Company of any right under
this Agreement shall be construed as a waiver of any other right. The Company
shall not be required to give notice to enforce strict adherence to all terms
of this Agreement.

 

10.7        Entire
Agreement.  The obligations pursuant to
Sections 1 and 2 of this Agreement shall apply to any time during which I was
previously employed, or am in the future employed, by the Company as a
consultant if no other agreement governs nondisclosure and assignment of
inventions during such period. 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 discussions between us. No modification of
or amendment to this Agreement, nor any waiver of any rights under this
Agreement, will be effective unless in writing and signed by the party to be
charged. Any subsequent change or changes in my duties, salary or compensation
will not affect the validity or scope of this Agreement.

 

This Agreement shall be effective as of the
first day of my employment with the Company, namely:                 ,
2000.

 

I HAVE READ THIS AGREEMENT CAREFULLY AND
UNDERSTAND ITS TERMS. I HAVE COMPLETELY FILLED OUT EXHIBIT B TO THIS
AGREEMENT.

 

	
  Dated:

  	
  7/21/03

  	
   

  
	
   

  
	
  /s/ David Nagler

  	
   

  
	
  (Signature)

  
	
   

  
	
  David Nagler

  	
   

  
	
  (Printed Name)

  
	
   

  
	
   

  
	
  ACCEPTED AND AGREED TO:

  
	
   

  
	
  ARYX THERAPEUTICS

  
	
   

  
	
  By:

  	
  /s/ Peter
  Milner

  	
   

  
	
   

  
	
  Title:

  	
  President and CEO

  	
   

  
	
   

  
	
  2255 F Martin
  Ave Santa Clara CA 95050

  	
   

  
	
  (Address)

  
	
   

  
	
  Dated: 

  	
  9/10/2003

  	
   

  
									

 

4

 

EXHIBIT A

 

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 the Company does not require you to assign or offer
to assign to the Company any invention that you developed entirely on your own
time without using the Company’s equipment, supplies, facilities or trade
secret information except for those inventions that either:

 

1.             Relate at the time of conception or reduction to practice of the
invention to the Company’s business, or actual or demonstrably anticipated
research or development of the Company;

 

2.             Result from any work performed by you for the 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 the Company and the United
States or any of its agencies requiring full title to such patent or invention
to be in the United States.

 

I ACKNOWLEDGE RECEIPT of
a copy of this notification.

 

	
   

  	
  By:

  	
  David Nagler

  
	
   

  	
  (PRINTED
  NAME OF EMPLOYEE)

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  7/12/03

  
	
   

  	
   

  
	
  WITNESSED BY:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (PRINTED NAME OF REPRESENTATIVE)

  	
   

  
				

 

 

A-1

 

EXHIBIT B

 

	
  TO:

  	
   

  	
  ARYx Therapeutics

  
	
   

  	
   

  	
   

  
	
  FROM:

  	
   

  	
  David Nagler

  	
   

  
	
   

  	
   

  	
   

  
	
  DATE:

  	
   

  	
  7/12/03

  	
   

  
					

 

SUBJECT:                 Previous
Inventions

 

1.             Except
as listed in Section 2 below, the following is a complete list of all
inventions or improvements relevant to the subject matter of my employment by
ARYx Therapeutics (the “Company”) that
have been made or conceived or first reduced to practice by me alone or jointly
with others prior to my engagement by the Company:

 

x           No inventions or improvements.

 

o            See below:

 

o                          Additional sheets attached.

 

2.             Due
to a prior confidentiality agreement, I cannot complete the disclosure under
Section 1 above with respect to inventions or improvements generally
listed below, the proprietary rights and duty of confidentiality with respect
to which I owe to the following party(ies):

 

	
   

  	
  Invention
  or Improvement

  	
   

  	
  Party(ies)

  	
   

  	
  Relationship

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  o

  	
  Additional sheets attached.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00128-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00128-of-00352.parquet"}]]