Document:

exv10w1

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.

3

 

     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

 

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.exv10w3

Exhibit 10.3

DAWSON GEOPHYSICAL COMPANY

2006 STOCK AND PERFORMANCE INCENTIVE PLAN

RESTRICTED STOCK AGREEMENT

          This Restricted Stock Agreement (“Agreement”) between DAWSON GEOPHYSICAL COMPANY (the
“Company”) and                                          (the “Participant”), an employee of the Company or one of its
Subsidiaries, regarding an award (“Award”) of
                                         shares of Common Stock (as defined
in the Dawson Geophysical Company 2006 Stock and Performance Incentive Plan (the “Plan”), such
Common Stock comprising this Award referred to herein as “Restricted Stock”) awarded to the
Participant on July 26, 2010 (the “Award Date”), such number of shares subject to adjustment as
provided in the Plan, and further subject to the terms and conditions set forth herein.

     1. Relationship to Plan.

          This Award is subject to all of the terms, conditions and provisions of the Plan and
administrative interpretations thereunder, if any, which have been adopted by the Company’s
Compensation Committee (the “Committee”) and are in effect on the date hereof. Except as defined
herein, capitalized terms shall have the same meanings ascribed to them under the Plan. For
purposes of this Agreement:

          (a) “Cause” means:

     (i) unacceptable or inadequate performance as determined by the Company,
including but not limited to failure to perform the Participant’s job at a level or
in a manner acceptable to the Company;

     (ii) misconduct, dishonesty, acts detrimental or destructive to the Company or
any Subsidiary or to any employees or property of the Company or any Subsidiary; or

     (iii) violation of any policies of the Company.

          (b) “Change of Control” means

     (i) any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934) is or becomes a beneficial owner, directly or
indirectly, of securities of the Company representing twenty percent (20%) or more
of the total voting power of the Company’s then outstanding securities;

     (ii) the individuals who were members of the Board of Directors of the Company
(the “Board”) immediately prior to a meeting of the shareholders

 

 

of the Company involving a contest for the election of directors shall not
constitute a majority of the Board following such election unless a majority of the
new members of the Board were recommended or approved by majority vote of the
members of the Board immediately prior to such shareholder meeting;

     (iii) the Company shall have merged into or consolidated with another
corporation, or merged another corporation into the Company, on a basis whereby less
than fifty percent (50%) of the total voting power of the surviving corporation is
represented by shares held by former shareholders of the Company prior to such
merger or consolidation; or

     (iv) the Company shall have sold, transferred or exchanged all, or
substantially all, of its assets to another corporation or other entity or person.

     (c) “Disability” means illness or other incapacity which prevents the Participant from
continuing to perform the duties of his job for a period of more than three months.

     (d) “Employment” means employment with the Company or any of its Subsidiaries.

     (e) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     2. Vesting Schedule.

     (a) This Award shall vest in accordance with the following schedule:

     100% of the Award to be vested on the third anniversary of the Award Date.

     (b) All shares of Restricted Stock subject to this Award shall vest, irrespective of
the limitations set forth in subparagraph (a) above, provided that the Participant has been
in continuous Employment since the Award Date, upon the occurrence of:

(i) a Change of Control;

(ii) the Participant’s termination of Employment due to death or Disability;
or

(iii) the Participant’s termination of Employment by the Company or a
Subsidiary for reasons other than Cause.

 

 

3. Forfeiture of Award.

          Except as provided in any other agreement between the Participant and the Company, if the
Participant’s Employment terminates other than by reason of the matters stated above in Section
2(b) of this Agreement, all unvested Restricted Stock as of the termination date shall be
forfeited.

     4. Escrow of Shares.

          During the period of time between the Award Date and the earlier of the date the Restricted
Stock vests or is forfeited (the “Restriction Period”), the Restricted Stock shall be registered in
the name of the Participant and held in escrow by the Company, and the Participant agrees, upon the
Company’s written request, to provide a stock power endorsed by the Participant in blank. Any
certificate shall bear a legend as provided by the Company, conspicuously referring to the terms,
conditions and restrictions described in this Agreement. Upon termination of the Restriction
Period, a certificate representing such shares shall be delivered upon written request to the
Participant as promptly as is reasonably practicable following such termination.

     5. Dividends and Voting Rights.

          The Participant is entitled to receive all dividends and other distributions made with respect
to Restricted Stock registered in his name and is entitled to vote or execute proxies with respect
to such registered Restricted Stock, unless and until the Restricted Stock is forfeited.

     6. Delivery of Shares.

          The Company shall not be obligated to deliver any shares of Common Stock if counsel to the
Company determines that such sale or delivery would violate any applicable law or any rule or
regulation of any governmental authority or any rule or regulation of, or agreement of the Company
with, any securities exchange or association upon which the Common Stock is listed or quoted. The
Company shall in no event be obligated to take any affirmative action in order to cause the
delivery of shares of Common Stock to comply with any such law, rule, regulation or agreement.

     7. Notices.

          Unless the Company notifies the Participant in writing of a different procedure, any notice or
other communication to the Company with respect to this Award shall be in writing and shall be:

     (a) by registered or certified United States mail, postage prepaid, to Dawson
Geophysical Company, Attn: Corporate Secretary, 508 West Wall, Suite 800, Midland, Texas
79701; or

 

 

          (b) by hand delivery or otherwise to Dawson Geophysical Company, Attn:
Corporate Secretary, 508 West Wall, Suite 800, Midland, Texas 79701.

          Any notices provided for in this Agreement or in the Plan shall be given in writing and shall
be deemed effectively delivered or given upon receipt or, in the case of notices delivered by the
Company to the Participant, five days after deposit in the United States mail, postage prepaid,
addressed to the Participant at the address specified at the end of this Agreement or at such other
address as the Participant hereafter designates by written notice to the Company.

     8. Assignment of Award.

          Except as otherwise permitted by the Committee, the Participant’s rights under the Plan and
this Agreement are personal; no assignment or transfer of the Participant’s rights under and
interest in this Award may be made by the Participant other than by will, by beneficiary
designation or by the laws of descent and distribution.

     9. Withholding.

          At the time of delivery or vesting of Restricted Stock, the amount of all federal, state and
other governmental withholding tax requirements imposed upon the Company with respect to the
delivery or vesting of such shares of Restricted Stock shall be remitted to the Company or
provisions to pay such withholding requirements shall have been made to the satisfaction of the
Committee. The Committee may make such provisions as it may deem appropriate for the withholding of
any taxes which it determines is required in connection with this Award. The Participant may pay
all or any portion of the taxes required to be withheld by the Company or paid by the Participant
in connection with the all or any portion of this Award by delivering cash, or by electing to have
the Company withhold shares of Common Stock, or by delivering previously owned shares of Common
Stock, having a Fair Market Value equal to the amount required to be withheld or paid.

     10. Stock Certificates.

          Certificates representing the Common Stock issued pursuant to the Award will bear all legends
required by law and necessary or advisable to effectuate the provisions of the Plan and this Award.
The Company may place a “stop transfer” order against shares of the Common Stock issued pursuant to
this Award until all restrictions and conditions set forth in the Plan or this Agreement and in the
legends referred to in this Section 10 have been complied with.

     11. Successors and Assigns.

          This Agreement shall bind and inure to the benefit of and be enforceable by the Participant,
the Company and their respective permitted successors and assigns (including personal
representatives, heirs and legatees), except that the Participant may not assign any rights or
obligations under this Agreement except to the extent and in the manner expressly
permitted herein.

 

 

     12. No Employment Guaranteed.

          No provision of this Agreement shall confer any right upon the Participant to continued
Employment with the Company or any Subsidiary.

     13. Governing Law.

          This Agreement shall be governed by, construed, and enforced in accordance with the laws of
the State of Texas.

     14. Amendment.

          This Agreement cannot be modified, altered or amended except by an agreement, in writing,
signed by both the Company and the Participant.

 

 

	 	 	 	 	 
	 	DAWSON GEOPHYSICAL COMPANY

 	 
	Date:                                          	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

          The Participant hereby accepts the foregoing Restricted Stock Agreement, subject to the terms
and provisions of the Plan and administrative interpretations thereof referred to above.

	 	 	 	 	 
	Date:                                         	PARTICIPANT:

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