Document:

Exhibit 10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (“Agreement”) is effective as of March 1, 2011, by and between EMMIS
OPERATING COMPANY, an Indiana company (“Employer”), and RICHARD F. CUMMINGS, a California resident
(“Executive”).

RECITALS

WHEREAS, Employer and its affiliates are engaged in the ownership and operation of certain
radio stations, magazines, and related operations (together, the “Emmis Group”); and

WHEREAS, Employer desires to employ Executive and Executive desires to be so employed.

NOW, THEREFORE, in consideration of the foregoing, the mutual promises and covenants set forth
in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows:

AGREEMENT

1. Employment Status and Duties. Upon the terms and subject to the conditions set
forth in this Agreement, Employer hereby employs Executive, and Executive hereby accepts exclusive
employment with Employer. During the Term (as defined herein), Executive shall serve as President,
Emmis Radio Programming. Executive shall have such duties, functions, authority and
responsibilities as are commensurate with such position. Executive’s services hereunder shall be
performed on an exclusive, full-time basis in a professional, diligent and competent manner to the
best of Executive’s abilities. Executive shall not undertake any outside employment or business
activities without the prior written consent of Employer. Executive shall be permitted to serve on
the board of charitable or civic organizations so long as such services: (i) are approved in
writing in advance by Employer; and (ii) do not interfere with Executive’s duties and obligations
under this Agreement. It is understood and agreed that the location for the performance of
Executive’s duties and services pursuant to this Agreement shall be the offices located at 3500
West Olive Avenue, Burbank, California, or if Employer no longer maintains possession of those
premises, then such offices as may be designated by Employer in Los Angeles, California. If
Executive is elected as a Director of Emmis Communications Corporation, he shall serve in such
position without additional remuneration (unless Employer elects to remunerate “inside directors”)
but shall be entitled to the benefit of indemnification pursuant to the terms of Section
14.12. Executive shall also serve without additional remuneration as a director and/or
officer of one (1) or more of Employer’s subsidiaries or affiliates if appointed to such
position(s) by Employer and shall also be entitled to the benefit of indemnification pursuant to
the terms of Section 14.12.

2. Term. The term of this Agreement shall be for a period of one (1) year commencing
on March 1, 2011, unless earlier terminated in accordance with the provisions set forth in this
Agreement (the “Term”).

3. Base Salary; Auto Allowance. Upon the terms and subject to the conditions set
forth in this Agreement, Employer shall pay or cause to be paid to Executive during the Term an
annualized base salary of Four Hundred Fifty-Five Thousand Dollars ($455,000) (the “Base Salary”),
payable pursuant to Employer’s customary payroll practices and subject to applicable taxes and
withholdings as required by law.

 

 

 

Except as otherwise set forth herein, Employer shall have no obligation to pay Executive the
Base Salary for any periods during which Executive fails or refuses to render services pursuant to
this Agreement or for any period following the expiration or termination of this Agreement. In
addition, it is understood and agreed that Employer may, at its sole election, pay up to ten
percent (10%) of Executive’s Base Salary in shares of Class A Common Stock of Emmis Communications
Corporation (the “Shares”); provided that: (i) the Shares are registered with the U.S. Securities
and Exchange Commission (the “SEC”)
on a then-effective Form S-8 or other applicable registration statement and are issued without
restriction on resale (and further provided that the Shares are listed on a securities exchange or
over-the-counter market, which does not include listing on the “pink sheets,” at the time of
issuance), subject to any restrictions on resale under Employer’s insider trading policy or
applicable federal and state law; and (ii) the percentage of Executive’s Base Salary payable in
Shares shall be consistent with, and the exact number of Shares to be awarded to Executive shall be
determined in the same manner as, that utilized for other senior management level employees.

During the Term, Executive shall receive a monthly auto allowance in the amount of One
Thousand Dollars ($1,000) (subject to withholding and applicable taxes as required by law)
consistent with Employer’s policy or practices regarding such allowances, as such policy or
practices may be amended from time to time during the Term in Employer’s sole and absolute
discretion; provided, however, that in no event shall the auto allowance amount paid to Executive
pursuant to this provision be reduced.

4. Incentive Compensation.

4.1 Bonus Amounts. Upon the terms and subject to the conditions set forth in
this Section 4, Executive shall be eligible to receive one (1) performance bonus in
a target amount equivalent to sixty percent (60%) of Executive’s Base Salary for each
Contract Year, and the exact amount of such performance bonus, if any, shall be determined
on the basis of Executive’s attainment of certain performance and financial goals to be
determined by Employer in its sole and absolute discretion.

4.2 Payment of Bonus Amounts. Employer shall pay or cause to be paid to
Executive the foregoing bonus amounts if earned according to the terms and conditions set
forth in Section 4.1; provided, that, at the end of the relevant
measuring period: (i) this Agreement is in full force and effect and has not been
terminated for any reason (other than due to a material breach of this Agreement by
Employer); and (ii) Executive is fully performing all of Executive’s duties and obligations
pursuant to this Agreement and is not in breach of any of the material terms and conditions
of this Agreement. In addition, it is understood and agreed that Employer may, at its sole
election, pay any bonus amounts earned by Executive pursuant to this Section 4 in
cash or Shares; provided that: (i) the Shares are registered with the SEC on a
then-effective Form S-8 or other applicable registration statement and are issued without
restriction on resale (and further provided that the Shares are listed on a securities
exchange or over-the-counter market, which does not include listing on the “pink sheets,”
at the time of issuance), subject to any restrictions on resale under Employer’s insider
trading policy or applicable federal and state law; and (ii) the percentage of Executive’s
Base Salary payable in Shares shall be consistent with, and the exact number of Shares to
be awarded to Executive shall be determined in the same manner as, that utilized for other
senior management level employees. Any bonus amounts earned by Executive pursuant to the
terms and conditions of this Section 4 shall be paid after the end of the relevant
measuring period (but in no event later than ninety (90) days after the end of such
measuring period). Any and all bonus amounts payable by Employer to Executive pursuant to
this Section 4 shall be subject to applicable taxes and withholdings as required by
law.

5. Expenses; Travel. Employer shall pay or reimburse Executive for all reasonable
expenses actually incurred or paid by Executive during the Term in connection with the performance
of Executive’s services hereunder upon presentation of expense statements, vouchers or other
supporting documentation as Employer may require of Executive; provided such expenses are otherwise
in accordance with Employer’s policies. Executive shall undertake such travel as may be required
in the performance of Executive’s duties pursuant to this Agreement. Under no circumstances shall
the Employer’s reimbursement for expenses incurred in a calendar year be made later than the end of
the next following calendar year; provided, however, this requirement shall not alter the
Employer’s obligation to reimburse Executive for eligible expenses on a current basis.

 

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6. Fringe Benefits.

6.1 Vacation and Other Benefits. During each Contract Year, Executive shall
be entitled to four (4) weeks of paid vacation in accordance with Employer’s applicable
policies and procedures for executive-level employees. Executive shall also be eligible to
participate in and receive the fringe benefits generally made available to other
executive-level employees of Employer in accordance with and to the extent that Executive
is eligible under, the general provisions of Employer’s fringe benefit plans or programs;
provided, however, Executive understands that these benefits may be increased, changed,
eliminated or added from time to time during the Term as determined in Employer’s sole and
absolute discretion.

6.2 Life and Disability Insurance. During each Contract Year, Employer agrees
to reimburse Executive in an amount not to exceed Five Thousand Dollars ($5,000) for the
annual premium associated with Executive’s purchase or maintenance of a life or disability
insurance policy or other insurance policies on the life, or related to the care, of
Executive. Executive shall be entitled to freely select and change the beneficiary or
beneficiaries under such policy or policies. Notwithstanding anything to the contrary
contained in this Agreement, Employer’s obligations under this Section 6.2 are
expressly contingent upon Executive providing required information and taking all necessary
actions required of Executive in order to obtain and maintain the subject policy or
policies, including without limitation, passing any required physical examinations.

7. Confidential Information.

7.1 Non-Disclosure. Executive acknowledges that certain information
concerning the business of the Emmis Group and its members (including but not limited to
trade secrets and other proprietary information) is of a highly confidential nature, and
that, as a result of Executive’s employment with Employer prior to and during the Term,
Executive shall receive and develop, proprietary and confidential information concerning
the business of Employer and/or other members of the Emmis Group which, if known to
Employer’s competitors, would damage Employer, other members of the Emmis Group and their
respective businesses. Accordingly, Executive hereby agrees that during the Term and
thereafter, Executive shall not divulge or appropriate for Executive’s own use, or for the
use or benefit of any third party (other than Employer and its representatives, or as
directed in writing by Employer), any information or knowledge concerning the business of
Employer or any other member of the Emmis Group which is not generally available to the
public other than through the activities of Executive. Executive further agrees that,
immediately upon termination of Executive’s employment for any reason, Executive shall
promptly surrender to Employer all documents, brochures, plans, strategies, writings,
illustrations, client lists, price lists, sales, financial or marketing plans, budgets and
any and all other materials (regardless of form or character) which Executive received from
or developed on behalf of Employer or any member of the Emmis Group in connection with
Executive’s employment prior to or during the Term. Executive acknowledges that all such
materials shall remain at all times during the Term and thereafter the sole and exclusive
property of Employer and that nothing in this Agreement shall be deemed to grant Executive
any right, title or interest in such material.

7.2 Ownership of Materials. Employer shall solely and exclusively own all
rights of every kind and nature in perpetuity and throughout the universe in: (i) the
programs and broadcasts on which Executive appears or for which Executive renders services
to Employer in any capacity; (ii) the results and proceeds of Executive’s services pursuant
to this Agreement including, without limitation, those results and proceeds provided in
connection with the creation, development, preparation, writing, editing or production by
Executive or any employee of any member of the Emmis Group of any and all materials,
properties or elements of any and all kinds for the programs on which Executive appears or
for which Executive renders services (whether directly or indirectly); and (iii) any
business, financial, sales or marketing plans and strategies, documents, presentations, or
other similar materials, regardless of kind or character, each of which Executive
acknowledges is a work specially ordered by Employer which

 

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shall be considered to be a “work made for hire” for Employer. Therefore, Employer shall be the author and
copyright owner of the programs on which Executive appears or for which Executive renders
services pursuant to this Agreement, the broadcasts and tapes or recordings thereof for all
purposes without limitation of any kind, and all materials described in the immediately
preceding sentence. The exclusive legal title to all of the aforesaid works and matters,
programs, broadcasts, and materials and all secondary and derivative rights therein, shall
belong, at all times, to Employer which shall have the right to copyright the same and
apply for copyright registrations and copyright renewal registrations and to make whatever
use thereof that Employer, in its sole and absolute discretion, deems advisable, including
but not limited to rebroadcasts of programs or use of any portions of any program in the
production or broadcast of other programs at any time, notwithstanding expiration of the
Term or termination of this Agreement for any reason.

7.3 Injunctive Relief. Executive acknowledges that Executive’s breach of this
Section 7 will cause irreparable harm and damage to Employer, the exact amount of
which will be difficult to ascertain; that the remedies at law for any such breach would be
inadequate; and that the provisions of this Section 7 have been specifically
negotiated and carefully written to prevent such irreparable harm and damage. Accordingly,
if Executive breaches this Section 7, Employer shall be entitled to injunctive
relief (including attorneys’ fees and costs) enforcing this Section 7 to the extent
reasonably necessary to protect Employer’s legitimate interests, without posting bond or
other security.

8. Non-Interference; Injunctive Relief.

8.1 Non-Interference. During the Term, and for a period of two (2) years
immediately following the expiration or early termination of the Term for any reason, and
during the Post Term Period if Executive elects part-time employment pursuant to
Section 13, Executive shall not, directly or indirectly, take any action (or permit
any action to be taken by an entity with which Executive is associated) which has the
effect of interfering with Employer’s relationship (contractual or otherwise) with: (i)
on-air talent of any member of the Emmis Group; or (ii) any other employee of any member of
the Emmis Group. Without limiting the generality of the foregoing, Executive specifically
agrees that during such time period, neither Executive nor any entity with which Executive
is associated shall solicit, hire or engage any on-air talent or other employee of any
member of the Emmis Group or any other employee of any member of the Emmis Group to provide
services for Executive’s benefit or for the benefit of any other business or entity, or
solicit or encourage them to cease their employment with any member of the Emmis Group for
any reason.

8.2 Injunctive Relief. Executive acknowledges and agrees that the provisions
of this Section 8 have been specifically negotiated and carefully worded in
recognition of the opportunities which will be afforded to Executive by Employer by virtue
of Executive’s continued association with Employer during the Term, and the influence that
Executive has and will continue to have over Employer’s employees, customers and suppliers.
Executive further acknowledges that Executive’s breach of Section 8.1 herein will
cause irreparable harm and damage to Employer, the exact amount of which will be difficult
to ascertain; that the remedies at law for any such breach would be inadequate; and that
the provisions of this Section 8 have been specifically negotiated and carefully
written to prevent such irreparable harm and damage. Accordingly, if Executive breaches
Section 8.1, Employer shall be entitled to injunctive relief (including attorneys’
fees and costs) enforcing Section 8.1, to the extent reasonably necessary to
protect Employer’s legitimate interests, without posting bond or other security.
Notwithstanding anything to the contrary contained in this Agreement, if Executive violates
Section 8.1, and Employer brings legal action for injunctive or other relief,
Employer shall not, as a result of the time involved in obtaining such relief, be deprived
of the benefit of the full period of noninterference set forth therein. Accordingly, the
obligations set forth in Section 8.1 shall have the duration set forth therein,
computed from the date such relief is granted but reduced by the time expired
between the date the restrictive period began to run and the date of the first
violation of the obligation(s) by Executive.

 

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8.3 Construction. Despite the express agreement herein between the parties,
in the event that any provisions set forth in this Section 8 shall be determined by
any court or other tribunal of competent jurisdiction to be unenforceable for any reason
whatsoever, the parties agree that this Section 8 shall be interpreted to extend
only to the maximum extent as to which it may be enforceable, and that this Section
8 shall be severable into its component parts, all as determined by such court or
tribunal.

9. Termination of Agreement by Employer for Cause.

9.1 Termination. Employer may terminate this Agreement and Executive’s
employment hereunder for Cause (as defined in Section 9.3 below) in accordance with
the terms and conditions of this Section 9. Following a determination by Employer
that Executive should be terminated for Cause, Employer shall give written notice (the
“Preliminary Notice”) to Executive specifying the grounds for such termination, and
Executive shall have ten (10) days after receipt of the Preliminary Notice to respond to
Employer in writing. If following the expiration of such ten (10) day period Employer
reaffirms its determination that Executive should be terminated for Cause, such termination
shall be effective upon delivery by Employer to Executive of a final notice of termination
(the “Final Notice”).

9.2 Effect of Termination. In the event of termination for Cause
as provided in Section 9.1 above:

(i) Executive shall have no further obligations or liabilities hereunder
except Executive’s obligations under Sections 7 and 8, which shall
survive the termination of this Agreement, and except for any obligations arising
in connection with any conduct of Executive described in Section 9.3;

(ii) Employer shall have no further obligations or liabilities hereunder,
except that Employer shall, not later than two (2) weeks after the termination
date:

(a) Pay to Executive all earned but unpaid Base Salary with respect
to any applicable pay period ending on or before the termination date; and

(b) Pay to Executive any bonus amounts which have been earned on or
prior to the termination date pursuant to Section 4, if any, but
which remain unpaid as of the termination date.

9.3 Definition of Cause. For purposes of this Agreement, “Cause” shall be
defined to mean any of the following: (i) Executive’s failure, refusal or neglect to
perform any of Executive’s material duties or obligations under this Agreement (or any
material duties assigned to Executive consistent with the terms of this Agreement) or abide
by any applicable policy of Employer, or Executive’s breach of any material term or
condition of this Agreement, and continuation of such failure, refusal, neglect, or breach
after written notice and the expiration of a ten (10) day cure period; provided,
however, that it is not the parties’ intention that the Employer shall be required
to provide successive such notices, and in the event Employer has provided Executive with a
notice and opportunity to cure pursuant to this Section 9.3, Employer may terminate
this Agreement for a subsequent breach similar or related to the breach for which notice
was previously given or for a continuing series or pattern of breaches (whether or not
similar or related) without providing notice and an opportunity to cure; (ii) commission of
any felony or

 

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 any other crime involving an act of moral turpitude which is harmful to
Employer’s business or reputation; (iii) Executive’s action or omission, or knowing allowance of actions or
omissions, which are in violation of any law or any of the rules or regulations of the
Federal Communications Commission (the “FCC”), or which otherwise jeopardize any of the
licenses granted to Employer or any member of the Emmis Group in connection with the
ownership or operation of any radio station; (iv) theft in any amount; (v) actual or
threatened violence against another employee or individual; (vi) sexual or other prohibited
harassment of others; (vii) unauthorized disclosure or use of trade secrets or proprietary
or confidential information, as described more fully in Section 7.1; (viii) any
action which brings Employer or member of the Emmis Group into public disrepute, contempt,
scandal or ridicule, and which is harmful to Employer’s business or reputation; and (ix)
any matter constituting cause or misconduct under applicable laws.

10. Termination of Agreement by Employer for Incapacity.

10.1 Termination. If Executive shall become incapacitated (as defined in the
Employer’s employee handbook or, if that is not applicable, as reasonably determined by
Employer), Employer shall continue to compensate Executive under the terms of this
Agreement without diminution and otherwise without regard to such incapacity or
nonperformance of duties until Executive has been incapacitated for a cumulative period of
six (6) months, at which time Employer may, in its sole discretion, elect to terminate
Executive’s employment. The date that Executive’s employment terminates pursuant to this
section is referred to herein as the “Incapacity Termination Date.”

10.2 Obligations after Termination. Executive shall have no further
obligations or liabilities hereunder after an Incapacity Termination Date except
Executive’s obligations under Section 7 and 8 that shall survive the
termination or expiration of this Agreement. After an Incapacity Termination Date,
Employer shall have no further obligations or liabilities hereunder except that Employer
shall, not later than two (2) weeks after an Incapacity Termination Date, pay to Executive
those amounts described in Section 9.2(ii). Nothing in this Section 10 or
in Section 11 shall affect the amount of any benefits which may be payable to
Executive under any insurance plan or policy maintained by Employer or Executive or
pursuant to any Employer company practice, plan or program applicable to other senior
management level employees of the Emmis Group.

11. Death of Executive. This Agreement shall terminate immediately upon Executive’s
death. In the event of such termination, Employer shall have no further obligations or liabilities
hereunder except that Employer shall, not later than two (2) weeks after Executive’s date of death,
pay or grant to Executive’s estate or designated beneficiary those amounts described in Section
9.2(ii).

12. Severance. Subject to the conditions set forth in this Section 12 and
Exhibit A, in the event that Employer elects not to allow this Agreement to automatically
renew pursuant to Section 2, does not offer Executive employment upon expiration of the
Term on terms substantially similar to those contained herein (which shall include without
limitation a Base Salary that is at least ninety-five percent (95%) of the Base Salary in effect at
expiration of the Term) and Executive’s employment is terminated by Executive or Employer, Employer
shall make a lump sum severance payment to Executive in the amount of $470,000, subject to
applicable taxes and withholdings (the “Severance Payment”) not later than the later of (a) the
fourteenth day of March immediately following Executive’s termination of employment or (b) the date
which is sixty (60) days following Executive’s termination of employment. As a material condition
upon which Executive shall be entitled to receive the Severance Payment, and as an inducement to
Employer’s agreement to pay Executive the Severance Payment, Executive agrees to execute a general
release in a form acceptable to Employer upon the termination of Executive’s full-time employment.
Executive shall not be entitled to any additional severance compensation upon the termination or
expiration of this Agreement other than the Severance Payment. Executive shall not be entitled to
the Severance Payment as otherwise specified in this Agreement or if Executive’s employment is
terminated either (i) by Employer under Section 9, (ii) by reason of Executive’s incapacity
or death under Sections 10 or 11, or (iii) by Executive for any reason other than a
material breach of this Agreement by Employer. In addition,
subject to the terms and conditions of Section 13, upon Executive’s termination of
employment pursuant to this Section 12, Executive shall be entitled to continue his
employment with Employer as a part-time employee during the Post Term Period.

 

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13. Part-Time Employment. If Executive is entitled to the Severance Payment pursuant
to Section 12, Executive shall be entitled to continue his employment with Employer as a
part-time employee, pursuant to the terms and conditions set forth in this Section 13.
Such part-time employment shall commence upon the last day of Executive’s employment upon
termination pursuant to Section 12 and shall end on the earliest of: (i) the fourth (4th)
anniversary of its commencement, (ii) the date Executive secures full-time employment other than
with Employer or any of its “Affiliates” (as defined in Exhibit A), (iii) Executive’s
death, (iv) the date Executive becomes unable to perform the services required by Section
13.3 because of ill health or physical or mental disability as reasonably determined by a
physician selected by Employer, (v) the date thirty (30) days after Executive gives notice to
Employer of his decision to terminate his part-time employment, or (vi) the date Executive ceases
to comply with the provisions of Section 13.3, as reasonably determined by the Board of
Directors of Employer. The term of part-time employment described in the preceding sentence shall
be referred to herein as the “Post Term Period”. In the event Executive elects to continue his
employment as a part-time employee pursuant to this Section 13, the Change in Control
Agreement (Exhibit A hereto) shall become null, void and of no further force and effect as
of the date Executive commences such part-time employment. 

13.1 During each year of the Post Term Period, Employer shall pay to Executive total
annual compensation equal to $132,500 (“Part-Time Compensation”). Part-Time Compensation
shall be paid by Employer in accordance with Employer’s customary payroll practices. In
addition, during the Post Term Period, Executive and his dependents (as such term is
defined in the applicable health plan of Employer) may continue to participate in
Employer’s health plan, to the extent permitted under the terms of such plan and at the
expense of Employer, except for any premium co-payment or other similar amounts for which
Executive would have otherwise been responsible pursuant to the terms of such plan. In the
event that the terms of Employer’s health plan do not at any time during the Post Term
Period permit Executive and/or his dependents to continue to participate in such plan,
Employer shall reimburse Executive for the cost of securing substantially comparable health
care coverage for Executive and his dependents. During the Post Term Period, no other
compensation or benefits shall be payable or provided by Employer other than those
described in this Section 13.

13.2 Any option granted to Executive prior to the Post Term Period under the Plan
(other than any plan intended to qualify under Section 423(b) of the Code and provided that
no provision hereof may supersede the terms of any plan of Employer) shall continue to vest
and become exercisable during the Post Term Period to the extent not already exercisable as
of the first day of the Post Term Period in accordance with the applicable vesting schedule
of each such option, and shall remain outstanding through the earlier of: (a) 30 days
following the last day of the Post Term Period or (b) the last day of the applicable option
term provided under the applicable award agreement pursuant to which each such option was
awarded. Ownership of any Shares granted to Executive (pursuant to Section 4.3 of
this Agreement or otherwise) prior to the Post Term Period shall continue to vest during
the Post Term Period (to the extent not already fully vested as of the first day of the
Post Term Period) in accordance with the vesting schedule applicable to each grant in the
same manner as if Executive remained a full-time employee with Employer continuously
through the expiration of the Post Term Period.

 

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13.3 During the Post Term Period, Executive shall make himself available to Employer
to complete such reasonable projects and assignments as may be assigned to him by the Chief
Executive Officer or Chief Financial Officer/Chief Operating Officer of Employer and/or
Emmis Communications Corporation or any successor in interest thereto. Without limiting
the generality of the foregoing, Executive shall provide consulting services relative to
operations, programming, ratings, personnel and budget. The parties intend that the
transition from full-time to part-time employment shall constitute a “separation from
service” within the meaning of
Internal Revenue Code Section 409A(a)(2)(B)(i). Therefore, notwithstanding anything
to the contrary contained herein, in no event will Executive be required or permitted to
provide more than twenty (20) hours of service during any calendar month pursuant to this
Section 13. Subject to the terms and conditions of this Section 13,
Employer shall have no obligation to pay Executive the Part-Time Compensation for any
periods during which Executive fails or refuses to render services pursuant to this
Section 13. Employer shall reimburse Executive for all reasonable expenses
actually incurred by Executive directly related to the performance of the services
contemplated by this Section 13 upon presentation of expense statements, vouchers
or similar documentation, or such other supporting information as Employer may require of
Executive. In addition, no later than ten (10) days following the first day of the Post
Term Period, Executive shall resign as a director of Employer and each of its Affiliates,
as applicable.

13.4 Notwithstanding anything in the Agreement to the contrary, Employer and Executive
hereby agree and acknowledge that solely for purposes of Sections 7 and 8
(Confidential Information; Non-Interference), the Term shall include the Post Term Period.

14. Miscellaneous.

14.1 Governing Law. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of Indiana without regard to its conflict
of law principles.

14.2 Section 409A. This Agreement is intended to comply with Internal Revenue
Code Section 409A(a)(2)(B)(i) and the regulations thereunder (collectively, “Section
409A”), and it is intended that no amounts payable hereunder shall be subject to tax under
Section 409A. Employer shall use commercially reasonable efforts to comply with Section
409A with respect to payments of benefits hereunderTo the extent required by Section 409A,
if Executive is a “specified employee” for purposes of such Section, payments on account of
Executive’s separation from service shall be delayed to the earliest date permissible under
Section 409A. For purposes of this Agreement, “termination of employment,” “terminates
employment,” or any variation of such term shall mean “separation from service” within the
meaning of Section 409A.

14.3 Captions. The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of any of the
terms and conditions of this Agreement.

14.4 Entire Agreement. This Agreement shall supersede and replace, in all
respects, any prior employment agreement entered into between the parties, and any such
agreements shall immediately terminate and be of no further force or effect. For purposes
of the preceding sentence, any change in control, restricted stock, option, and other
benefits-related agreement shall not constitute a “prior employment agreement.”

14.5 Assignment. This Agreement, and Executive’s rights and obligations
hereunder, may not be assigned by Executive to any third party; provided,
however, that Executive may designate pursuant to Section 14.7 one (1) or
more beneficiaries to receive any amounts that would otherwise be payable hereunder to
Executive’s estate. Employer may assign all or any portion of its rights and obligations
hereunder to any other member of the Emmis Group or to any successor or assignee of
Employer pursuant to a reorganization, recapitalization, merger, consolidation, sale of
substantially all of the assets or stock of Employer, or otherwise.

 

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14.6 Amendments; Waivers. Except as expressly provided in the following
sentence, this Agreement cannot be changed, modified or amended, and no provision or
requirement hereof may be waived, without the written consent of Executive and Employer.
Employer may amend this Agreement to the extent that Employer reasonably determines that
such change is necessary to comply with Section 409A and further guidance thereunder,
provided that such change does not
reduce the amounts payable to Executive hereunder. The failure of a party at any time
to require performance of any provision hereof shall in no manner affect the right of such
party at a later time to enforce such provision. No waiver by a party of the breach of any
term or covenant contained in this Agreement, whether by conduct or otherwise, in any one
or more instances, shall be deemed to be, or construed as, a further or continuing waiver
of any such breach or a waiver of the breach of any other term or covenant contained in
this Agreement.

14.7 Beneficiaries. Whenever this Agreement provides for any payment to
Executive’s estate, such payment may be made instead to such beneficiary as Executive may
have designated in a writing filed with Employer. Executive shall have the right to revoke
any such designation and to re-designate a beneficiary by written notice to Employer (or to
any applicable insurance company).

14.8 Notices. All notices, requests, consents and other communications,
required or permitted to be given hereunder, shall be made in writing and shall be deemed
to have been made as of: (a) the date that is three (3) days after the date of mailing, if
sent via the U.S. postal service, first-class, postage-prepaid, (b) the date that is the
next date upon which an overnight delivery service (Federal Express, UPS or DHL only) will
make such delivery, if sent via such overnight delivery service, first-class, postage
prepaid, (c) the date such delivery is made, if delivered in person to the notice party
specified below, or (d) the date such delivery is made, if delivered via email. Such
notice shall be delivered as follows (or to such other or additional address as either
party shall designate by notice in writing to the other in accordance herewith):

(i) If to Employer:

Emmis Communications Corporation

40 Monument Circle, Suite 700

Indianapolis, Indiana 46204

Attn: Chief Operating Officer

With a copy to:

Emmis Communications Corporation

40 Monument Circle, Suite 700

Indianapolis, Indiana 46204

Attn: Legal Department

(ii) If to Executive, to Executive at Executive’s address in the personnel
records of Employer.

14.9 Change in Fiscal Year. If, at any time during the Term, Employer changes
its fiscal year, Employer shall make such adjustments to the various dates and target
amounts included herein as are necessary or appropriate, provided that no such change shall
affect the date on which any amount is payable hereunder.

14.10 Executive’s Warranty and Indemnity. Executive hereby represents and
warrants that Executive: (i) has the full and unqualified right to enter into and fully
perform this Agreement according to each and every term and condition contained herein;
(ii) has not made any agreement, contractual obligation, or commitment in contravention of
any of the terms and conditions of this Agreement or which would prevent Executive from
performing according to any of the terms and conditions contained herein; and (iii) has not
entered into any agreement with any prior employer or other person, corporation or entity
which would in any way adversely affect Executive’s or Employer’s right to enter into this
Agreement. Furthermore, Executive hereby agrees to fully indemnify and hold harmless
Employer and each of its subsidiaries, affiliates and related entities, and each of their
respective officers, directors, employees, agents, attorneys, shareholders, insurers
and representatives from and against any and all losses, costs, damages, expenses
(including attorneys’ fees and expenses), liabilities and claims, arising from, in
connection with, or in any way related to Executive’s breach of any of the representations
or warranties contained in this Section 14.10.

 

9

 

14.11 Venue. Any action to enforce, challenge or construe the terms or making
of this Agreement or to recover for its breach shall be litigated exclusively in a state
court located in Marion County, Indiana, except that the Employer may elect, at its sole
and absolute discretion, to litigate the action in the county or state where any breach by
Executive occurred or where Executive can be found. Executive acknowledges and agrees that
this venue provision is an essential provision of this Agreement and Executive hereby
waives any defense of lack of personal jurisdiction or improper venue.

14.12 Indemnification. Executive shall be entitled to the benefit of the
indemnification provisions set forth in Employer’s Amended and Restated Articles of
Incorporation and/or By-Laws, or any applicable corporate resolution, as the same may be
amended from time to time during the Term (not including any limiting amendments or
additions, but including any amendments or additions that add to or broaden the protection
afforded to Executive at the time of execution of this Agreement) to the fullest extent
permitted by applicable law. Additionally, Employer shall cause Executive to be
indemnified in accordance with Chapter 37 of the Indiana Business Corporation Law (the
“IBCL”), as the same may be amended from time to time during the Term, to the fullest
extent permitted by the IBCL as required to make Executive whole in connection with any
indemnifiable loss, cost or expense incurred in Executive’s performance of Executive’s
duties and obligations pursuant to this Agreement. Employer shall also maintain during the
Term an insurance policy providing directors’ and officers’ liability coverage in a
commercially reasonable amount. It is understood that the foregoing indemnification
obligations shall survive the expiration or termination of the Term.

14.13 Change in Control. Effective as of January 1, 2008, Executive and Emmis
Communications Corporation have entered into that certain Emmis Communications Corporation
Change in Control Severance Agreement (the “CIC Agreement”). In the event of a “Change in
Control” (as defined in the CIC Agreement), the rights and obligations of Executive and
Employer shall be set forth in the CIC Agreement. Notwithstanding the preceding
provisions, Employer shall have the right to amend the CIC Agreement to the extent that it
reasonably deems such amendment necessary to comply with the requirements of Section 409A.

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first written
above.

	 	 	 	 	 
	 	EMMIS OPERATING COMPANY (“Employer”)

 	 
	 	By:  	/s/ Jeffrey H. Smulyan
 	 
	 	 	Jeffrey H. Smulyan 	 
	 	 	Chief Executive Officer 	 
	 
	 	RICHARD F. CUMMINGS

(“Executive”)

 	 
	 	/s/ Richard F. Cummings
 	 
	 	Richard F. Cumming 	 

 

10exv10w8

Exhibit 10.8

ARDEA BIOSCIENCES, INC.

2000 EMPLOYEE STOCK PURCHASE PLAN

Approved by the Board of Directors January 25, 2000

Approved by Stockholders February 25, 2000

Revised by Board of Directors October 8, 2007

1. Purpose.

     (a) The purpose of this 2000 Employee Stock Purchase Plan (the “Plan”) is to provide a means
by which employees of Ardea Biosciences, Inc. (the “Company”) and its Affiliates, as defined in
subparagraph 1(b), which are designated as provided in subparagraph 2(b), may be given an
opportunity to purchase common stock of the Company (the “Common Stock”).

     (b) The word “Affiliate” as used in the Plan means any parent corporation or subsidiary
corporation of the Company, as those terms are defined in Sections 424(e) and (f), respectively, of
the Internal Revenue Code of 1986, as amended (the “Code”).

     (c) The Company, by means of the Plan, seeks to retain the services of its employees, to
secure and retain the services of new employees, and to provide incentives for such persons to
exert maximum efforts for the success of the Company.

     (d) The Company intends that the rights to purchase stock of the Company granted under the
Plan be considered options issued under an “employee stock purchase plan” as that term is defined
in Section 423(b) of the Code.

2. Administration. 

     (a) The Plan shall be administered by the Board of Directors (the “Board”) of the Company,
unless and until the Board delegates administration to a Committee, as provided in subparagraph
2(c). Whether or not the Board has delegated administration, the Board shall have the final power
to determine all questions of policy and expediency that may arise in the administration of the
Plan.

     (b) The Board shall have the power, subject to, and within the limitations of, the express
provisions of the Plan:

          (i) To determine when and how rights to purchase stock of the Company shall be granted and the
provisions of each offering of such rights (which need not be identical).

          (ii) To designate from time to time which Affiliates of the Company shall be eligible to
participate in the Plan.

1.

 

          (iii) To construe and interpret the Plan and rights granted under it, and to establish, amend
and revoke rules and regulations for its administration. The Board, in the exercise of this power,
may correct any defect, omission or inconsistency in the Plan, in a manner and to the extent it
shall deem necessary or expedient to make the Plan fully effective.

          (iv) To amend the Plan as provided in paragraph 13.

          (v) To terminate or suspend the Plan as provided in paragraph 15.

          (vi) Generally, to exercise such powers and to perform such acts as the Board deems necessary
or expedient to promote the best interests of the Company and its Affiliates and to carry out the
intent that the Plan be treated as an “employee stock purchase plan” within the meaning of Section
423 of the Code.

     (c) The Board may delegate administration of the Plan to a Committee composed of not fewer
than two (2) members of the Board (the “Committee”). If administration is delegated to a
Committee, the Committee shall have, in connection with the administration of the Plan, the powers
theretofore possessed by the Board, subject, however, to such resolutions, not inconsistent with
the provisions of the Plan, as may be adopted from time to time by the Board. The Board may
abolish the Committee at any time and revest in the Board the administration of the Plan.

3. Shares Subject to the Plan.

     (a) Subject to the provisions of paragraph 12 relating to adjustments upon changes in stock
and subject to the increases in the number of reserved shares described below, the stock that may
be sold pursuant to rights granted under the Plan shall not exceed in the aggregate five hundred
thousand (500,000) shares of Common Stock (the “Reserved Shares”). On December 31st of
each year starting with December 31, 2000 and continuing through and including December 31, 2008,
the number of Reserved Shares will be increased automatically by the least of (i) one percent (1%)
of the total number of shares of Common Stock outstanding on such anniversary date, (ii) five
hundred thousand (500,000) shares, or (iii) a number of shares determined by the Board prior to
each December 31st, which number shall be less than (i) and (ii). If any right granted
under the Plan shall for any reason terminate without having been exercised, the Common Stock not
purchased under such right shall again become available for the Plan.

     (b) The stock subject to the Plan may be unissued shares or reacquired shares, bought on the
market or otherwise.

4. Grant of Rights; Offering.

     The Board or the Committee may from time to time grant or provide for the grant of rights to
purchase Common Stock of the Company under the Plan to eligible employees (an “Offering”) on a date
or dates (the “Offering Date(s)”) selected by the Board or the Committee. Each Offering shall be
in such form and shall contain such terms and conditions as the Board or the Committee shall deem
appropriate, which shall comply with the requirements of Section 423(b)(5) of the Code that all
employees granted rights to purchase stock under the Plan

2.

 

shall have the same rights and privileges. The terms and conditions of an Offering shall be
incorporated by reference into the Plan and treated as part of the Plan. The provisions of
separate Offerings need not be identical, but each Offering shall include (through incorporation of
the provisions of this Plan by reference in the document comprising the Offering or otherwise) the
period during which the Offering shall be effective, which period shall not exceed twenty-seven
(27) months beginning with the Offering Date, and the substance of the provisions contained in
paragraphs 5 through 8, inclusive.

5. Eligibility. 

     (a) Rights may be granted only to employees of the Company or, as the Board or the Committee
may designate as provided in subparagraph 2(b), to employees of any Affiliate of the Company.
Except as provided in subparagraph 5(b), an employee of the Company or any Affiliate shall not be
eligible to be granted rights under the Plan unless, on the Offering Date, such employee has been
in the employ of the Company or any Affiliate for such continuous period preceding such grant as
the Board or the Committee may require, but in no event shall the required period of continuous
employment be greater than two (2) years. In addition, unless otherwise determined by the Board or
the Committee and set forth in the terms of the applicable Offering, no employee of the Company or
any Affiliate shall be eligible to be granted rights under the Plan, unless, on the Offering Date,
such employee’s customary employment with the Company or such Affiliate is for at least twenty (20)
hours per week and at least five (5) months per calendar year.

     (b) The Board or the Committee may provide that each person who, during the course of an
Offering, first becomes an eligible employee of the Company or designated Affiliate will, on a date
or dates specified in the Offering which coincides with the day on which such person becomes an
eligible employee or occurs thereafter, receive a right under that Offering, which right shall
thereafter be deemed to be a part of that Offering. Such right shall have the same characteristics
as any rights originally granted under that Offering, as described herein, except that:

          (i) the date on which such right is granted shall be the “Offering Date” of such right for all
purposes, including determination of the exercise price of such right;

          (ii) the period of the Offering with respect to such right shall begin on its Offering Date
and end coincident with the end of such Offering; and

          (iii) the Board or the Committee may provide that if such person first becomes an eligible
employee within a specified period of time before the end of the Offering, he or she will not
receive any right under that Offering.

     (c) No employee shall be eligible for the grant of any rights under the Plan if, immediately
after any such rights are granted, such employee owns stock possessing five percent (5%) or more of
the total combined voting power or value of all classes of stock of the Company or of any
Affiliate. For purposes of this subparagraph 5(c), the rules of Section 424(d) of the Code shall
apply in determining the stock ownership of any employee, and stock which such

3.

 

employee may purchase under all outstanding rights and options shall be treated as stock owned
by such employee.

     (d) An eligible employee may be granted rights under the Plan only if such rights, together
with any other rights granted under “employee stock purchase plans” of the Company and any
Affiliates, as specified by Section 423(b)(8) of the Code, do not permit such employee’s rights to
purchase stock of the Company or any Affiliate to accrue at a rate which exceeds twenty-five
thousand dollars ($25,000) of fair market value of such stock (determined at the time such rights
are granted) for each calendar year in which such rights are outstanding at any time.

     (e) Officers of the Company and any designated Affiliate shall be eligible to participate in
Offerings under the Plan; provided, however, that the Board may provide in an Offering that certain
employees who are highly compensated employees within the meaning of Section 423(b)(4)(D) of the
Code shall not be eligible to participate.

6. Rights; Purchase Price.

     (a) On each Offering Date, each eligible employee, pursuant to an Offering made under the
Plan, shall be granted the right to purchase up to the number of shares of Common Stock of the
Company purchasable with a percentage designated by the Board or the Committee not exceeding
fifteen percent (15%) of such employee’s Earnings (as defined in subparagraph 7(a)) during the
period which begins on the Offering Date (or such later date as the Board or the Committee
determines for a particular Offering) and ends on the date stated in the Offering, which date shall
be no later than the end of the Offering. The Board or the Committee shall establish one or more
dates during an Offering (the “Purchase Date(s)”) on which rights granted under the Plan shall be
exercised and purchases of Common Stock carried out in accordance with such Offering.

     (b) In connection with each Offering made under the Plan, the Board or the Committee may
specify a maximum number of shares that may be purchased by any employee as well as a maximum
aggregate number of shares that may be purchased by all eligible employees pursuant to such
Offering. In addition, in connection with each Offering that contains more than one Purchase Date,
the Board or the Committee may specify a maximum aggregate number of shares which may be purchased
by all eligible employees on any given Purchase Date under the Offering. If the aggregate purchase
of shares upon exercise of rights granted under the Offering would exceed any such maximum
aggregate number, then the Board or the Committee shall make a pro rata allocation of the shares
available in as nearly a uniform manner as shall be practicable and as it shall deem to be
equitable.

     (c) The purchase price of stock acquired pursuant to rights granted under the Plan shall be
not less than the lesser of:

          (i) an amount equal to eighty-five percent (85%) of the fair market value of the stock on the
Offering Date; or

          (ii) an amount equal to eighty-five percent (85%) of the fair market value of the stock on the
Purchase Date.

4.

 

7. Participation; Withdrawal; Termination.

     (a) An eligible employee may become a participant in the Plan pursuant to an Offering by
delivering a participation agreement to the Company within the time specified in the Offering, in
such form as the Company provides. Each such agreement shall authorize payroll deductions of up to
the maximum percentage specified by the Board or the Committee of such employee’s Earnings during
the Offering. “Earnings” is defined as an employee’s wages (including amounts thereof elected to
be deferred by the employee, that would otherwise have been paid, under any arrangement established
by the Company that is intended to comply with Section 125, Section 401(k), Section 402(h) or
Section 403(b) of the Code or that provides non-qualified deferred compensation), which shall
include overtime pay, bonuses, incentive pay and commissions, but shall exclude profit sharing or
other remuneration paid directly to the employee, the cost of employee benefits paid for by the
Company or an Affiliate, education or tuition reimbursements, imputed income arising under any
group insurance or benefit program, traveling expenses, business and moving expense reimbursements,
income received in connection with stock options, contributions made by the Company or an Affiliate
under any employee benefit plan, and similar items of compensation, as determined by the Board or
the Committee. The payroll deductions made for each participant shall be credited to an account
for such participant under the Plan and shall be deposited with the general funds of the Company.
A participant may reduce (including to zero) or increase such payroll deductions, and an eligible
employee may begin such payroll deductions, after the beginning of any Offering only as provided
for in the Offering. A participant may make additional payments into his or her account only if
specifically provided for in the Offering and only if the participant has not had the maximum
amount withheld during the Offering.

     (b) At any time during an Offering, a participant may terminate his or her payroll deductions
under the Plan and withdraw from the Offering by delivering to the Company a notice of withdrawal
in such form as the Company provides. Such withdrawal may be elected at any time prior to the end
of the Offering, except as provided by the Board or the Committee in the Offering. Upon such
withdrawal from the Offering by a participant, the Company shall distribute to such participant all
of his or her accumulated payroll deductions (reduced to the extent, if any, such deductions have
been used to acquire stock for the participant) under the Offering, without interest, and such
participant’s interest in that Offering shall be automatically terminated. A participant’s
withdrawal from an Offering will have no effect upon such participant’s eligibility to participate
in any other Offerings under the Plan, but such participant will be required to deliver a new
participation agreement in order to participate in subsequent Offerings under the Plan.

     (c) Rights granted pursuant to any Offering under the Plan shall terminate immediately upon
cessation of any participating employee’s employment with the Company and any designated Affiliate,
for any reason, and the Company shall distribute to such terminated employee all of his or her
accumulated payroll deductions (reduced to the extent, if any, such deductions have been used to
acquire stock for the terminated employee), under the Offering, without interest.

     (d) Rights granted under the Plan shall not be transferable by a participant otherwise than by
will or the laws of descent and distribution, or by a beneficiary designation as provided

5.

 

in paragraph 14 and, otherwise during his or her lifetime, shall be exercisable only by the
person to whom such rights are granted.

8. Exercise. 

     (a) On each Purchase Date specified therefore in the relevant Offering, each participant’s
accumulated payroll deductions and other additional payments specifically provided for in the
Offering (without any increase for interest) will be applied to the purchase of whole shares of
stock of the Company, up to the maximum number of shares permitted pursuant to the terms of the
Plan and the applicable Offering, at the purchase price specified in the Offering. No fractional
shares shall be issued upon the exercise of rights granted under the Plan. The amount, if any, of
accumulated payroll deductions remaining in each participant’s account after the purchase of shares
which is less than the amount required to purchase one share of stock on the final Purchase Date of
an Offering shall be held in each such participant’s account for the purchase of shares under the
next Offering under the Plan, unless such participant withdraws from such next Offering, as
provided in subparagraph 7(b), or is no longer eligible to be granted rights under the Plan, as
provided in paragraph 5, in which case such amount shall be distributed to the participant after
such final Purchase Date, without interest. The amount, if any, of accumulated payroll deductions
remaining in any participant’s account after the purchase of shares, which is equal to the amount
required to purchase whole shares of stock on the final Purchase Date of an Offering, shall be
distributed in full to the participant after such Purchase Date, without interest.

     (b) No rights granted under the Plan may be exercised to any extent, unless the shares to be
issued upon such exercise under the Plan (including rights granted thereunder) are covered by an
effective registration statement pursuant to the Securities Act of 1933, as amended (the
“Securities Act”) and the Plan is in material compliance with all applicable state, foreign and
other securities and other laws applicable to the Plan. If on a Purchase Date in any Offering
hereunder the Plan is not so registered or in such compliance, no rights granted under the Plan or
any Offering shall be exercised on such Purchase Date, and the Purchase Date shall be delayed until
the Plan is subject to such an effective registration statement and such compliance, except that
the Purchase Date shall not be delayed more than twelve (12) months and the Purchase Date shall in
no event be more than twenty-seven (27) months from the Offering Date. If on the Purchase Date of
any Offering hereunder, as delayed to the maximum extent permissible, the Plan is not registered
and in such compliance, no rights granted under the Plan or any Offering shall be exercised and all
payroll deductions accumulated during the Offering (reduced to the extent, if any, such deductions
have been used to acquire stock) shall be distributed to the participants, without interest.

9. Covenants of the Company.

     (a) During the terms of the rights granted under the Plan, the Company shall keep available at
all times the number of shares of stock required to satisfy such rights.

     (b) The Company shall seek to obtain from each federal, state, foreign or other regulatory
commission or agency having jurisdiction over the Plan such authority as may be required to issue
and sell shares of stock upon exercise of the rights granted under the Plan. If,

6.

 

after reasonable efforts, the Company is unable to obtain from any such regulatory commission
or agency the authority which counsel for the Company deems necessary for the lawful issuance and
sale of stock under the Plan, then the Company shall be relieved from any liability for failure to
issue and sell stock upon exercise of such rights, unless and until such authority is obtained.

10. Use of Proceeds from Stock.

     Proceeds from the sale of stock pursuant to rights granted under the Plan shall constitute
general funds of the Company.

11. Rights as a Stockholder.

     A participant shall not be deemed to be the holder of, or to have any of the rights of a
holder with respect to, any shares subject to rights granted under the Plan, unless and until the
participant’s shareholdings acquired upon exercise of rights under the Plan are recorded in the
books of the Company.

12. Adjustments upon Changes in Stock.

     (a) If any change is made in the stock subject to the Plan, or subject to any rights granted
under the Plan, due to a change in corporate capitalization and without the receipt of
consideration by the Company (through reincorporation, stock dividend, stock split, reverse stock
split, combination or reclassification of shares), the Plan will be appropriately adjusted in the
class(es) and maximum number of securities subject to the Plan pursuant to subsection 3(a), and the
outstanding rights will be appropriately adjusted in the class(es) and number of securities and
price per share of stock subject to such outstanding rights. Such adjustments shall be made by the
Board, the determination of which shall be final, binding and conclusive.

     (b) In the event of: (1) a dissolution, liquidation or sale of all or substantially all of the
securities or assets of the Company, (2) a merger or consolidation in which the Company is not the
surviving corporation, or (3) a reverse merger in which the Company is the surviving corporation,
but the shares of 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, then any
surviving corporation may assume outstanding rights or substitute similar rights for those under
the Plan. In the event that no surviving corporation assumes outstanding rights or substitutes
similar rights therefor, participants’ accumulated payroll deductions shall be used to purchase
Common Stock immediately prior to the transaction described above and the participants’ rights
under the ongoing Offering shall terminate immediately following such purchase.

13. Amendment of the Plan.

     (a) The Board at any time, and from time to time, may amend the Plan. However, except as
provided in paragraph 12 relating to adjustments upon changes in stock, no amendment shall be
effective unless approved by the stockholders of the Company within twelve (12) months before or
after the adoption of the amendment, where the amendment will:

          (i) Increase the number of shares reserved for rights under the Plan;

7.

 

          (ii) Modify the provisions as to eligibility for participation in the Plan (to the extent such
modification requires stockholder approval in order for the Plan to obtain employee stock purchase
plan treatment under Section 423 of the Code or to comply with the requirements of Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended (“Rule 16b-3”)); or

          (iii) Modify the Plan in any other way if such modification requires stockholder approval in
order for the Plan to obtain employee stock purchase plan treatment under Section 423 of the Code
or to comply with the requirements of Rule 16b-3.

It is expressly contemplated that the Board may amend the Plan in any respect the Board deems
necessary or advisable to provide eligible employees with the maximum benefits provided or to be
provided under the provisions of the Code and the regulations promulgated thereunder relating to
employee stock purchase plans and/or to bring the Plan and/or rights granted under it into
compliance therewith.

     (b) Rights and obligations under any rights granted before amendment of the Plan shall not be
impaired by any amendment of the Plan, except with the consent of the person to whom such rights
were granted, or except as necessary to comply with any laws or governmental regulations, or except
as necessary to ensure that the Plan and/or rights granted under the Plan comply with the
requirements of Section 423 of the Code.

14. Designation of Beneficiary.

     (a) A participant may file a written designation of a beneficiary who is to receive any shares
and cash, if any, from the participant’s account under the Plan in the event of such participant’s
death subsequent to the end of an Offering, but prior to delivery to the participant of such shares
and cash. In addition, a participant may file a written designation of a beneficiary who is to
receive any cash from the participant’s account under the Plan in the event of such participant’s
death during an Offering.

     (b) Such designation of beneficiary may be changed by the participant at any time by written
notice. In the event of the death of a participant and in the absence of a beneficiary validly
designated under the Plan who is living at the time of such participant’s death, the Company shall
deliver such shares and/or cash to the executor or administrator of the estate of the participant,
or if no such executor or administrator has been appointed (to the knowledge of the Company), the
Company, in its sole discretion, may deliver such shares and/or cash to the spouse or to any one or
more dependents or relatives of the participant, or if no spouse, dependent or relative is known to
the Company, then to such other person as the Company may designate.

15. Termination or Suspension of the Plan.

     (a) The Board in its discretion, may suspend or terminate the Plan at any time. No rights may
be granted under the Plan while the Plan is suspended or after it is terminated.

     (b) Rights and obligations under any rights granted while the Plan is in effect shall not be
altered or impaired by suspension or termination of the Plan, except as expressly provided

8.

 

in the Plan or with the consent of the person to whom such rights were granted, or except as
necessary to comply with any laws or governmental regulation, or except as necessary to ensure that
the Plan and/or rights granted under the Plan comply with the requirements of Section 423 of the
Code.

16. Effective Date of Plan.

     The Plan shall become effective simultaneously with the effectiveness of the Company’s
registration statement under the Securities Act with respect to the initial public offering of
shares of the Company’s Common Stock (the “Effective Date”), but no rights granted under the Plan
shall be exercised unless and until the Plan has been approved by the stockholders of the Company
within twelve (12) months before or after the date the Plan is adopted by the Board, which date may
be prior to the Effective Date.

9.

 

ARDEA BIOSCIENCES, INC.

Revised 2000 EMPLOYEE STOCK PURCHASE PLAN OFFERING

Adopted October 8, 2007

1. Grant; Offering Date.

     (a) The Board of Directors of Ardea Biosciences, Inc. (the “Company”), pursuant to the
Company’s 2000 Employee Stock Purchase Plan (the “Plan”), hereby authorizes the grant of rights to
purchase shares of the common stock of the Company (“Common Stock”) to all Eligible Employees (an
“Offering”). The first Offering hereunder (the “Initial Offering”) shall begin on November 15, 2007
and shall end approximately 24 months later, unless terminated earlier as provided below. After the
Initial Offering, an additional new Offering shall begin on the day after the first Purchase Date
of the immediately preceding Offering. The first day of an Offering is that Offering’s “Offering
Date.” Except as provided below, each Offering shall be approximately twenty-four (24) months in
duration, with four (4) Purchase Periods which shall be six (6) months in length, except for the
first and second Purchase Periods of the Initial Offering which may be longer or shorter and shall
be approximately six (6) months in length. Except as provided below, a Purchase Date is the last
day of a Purchase Period or of an Offering, as the case may be. The Initial Offering shall consist
of four (4) Purchase Periods with the first Purchase Period of the Initial Offering ending on May
14, 2008 and the second Purchase Period of the Initial Offering ending on November 14, 2008.

     (b) If an Offering Date falls on a day during which the Common Stock is not actively traded,
then the Offering Date shall be the next succeeding day during which the Common Stock is actively
traded.

     (c) Prior to the commencement of any Offering, the Board of Directors (or the Committee
described in subparagraph 2(c) of the Plan, if any) may change any or all terms of such Offering
and any subsequent Offerings. The granting of rights pursuant to each Offering hereunder shall
occur on each respective Offering Date unless, prior to such date (a) the Board of Directors (or
such Committee) determines that such Offering shall not occur, or (b) no shares remain available
for issuance under the Plan in connection with the Offering.

     (d) Notwithstanding anything to the contrary, in the event that the fair market value of a
share of Common Stock on any Purchase Date during an Offering is less than the fair market value of
a share of Common Stock on the Offering Date of such Offering, then following the purchase of
Common Stock on such Purchase Date: (i) the Offering shall terminate, and (ii) all participants in
the just-terminated Offering shall automatically be enrolled in the new Offering that starts such
day.

2. Eligible Employees.

     All employees of the Company and each of its Affiliates (as defined in the Plan) incorporated
in the United States shall be granted rights to purchase Common Stock under each Offering on the
Offering Date of such Offering; provided, however, that each such employee

10.

 

otherwise meets the employment requirements of subparagraph 5(a) of the Plan (an “Eligible
Employee”). Notwithstanding the foregoing, the following employees shall not be Eligible Employees
or be granted rights under an Offering: (i) part-time or seasonal employees whose customary
employment is less than twenty (20) hours per week or less than five (5) months per calendar year,
and (ii) five percent (5%) stockholders (including ownership through unexercised options) described
in subparagraph 5(c) of the Plan shall not be eligible to participate.

     Each person who first becomes an Eligible Employee during any Offering shall be granted a
right to purchase Common Stock under the next Offering Date to occur under the Plan.

3. Rights.

     (a) Subject to the limitations contained herein and in the Plan, on each Offering Date each
Eligible Employee shall be granted the right to purchase the number of shares of Common Stock
purchasable with up to fifteen percent (15%) of such Participant’s Earnings (as defined in the
Plan) paid during the period of such Offering.

     (b) The maximum number of shares that may be purchased by an eligible employee on a Purchase
Date shall not exceed five thousand (5,000) shares. The maximum aggregate number of shares
available to be purchased by all Eligible Employees under an Offering shall be the number of shares
remaining available under the Plan on the Offering Date. If the aggregate purchase of shares of
Common Stock upon exercise of rights granted under the Offering would exceed the maximum aggregate
number of shares available, the Board shall make a pro rata allocation of the shares available in a
uniform and equitable manner.

     (c) Notwithstanding the foregoing, no employee shall be granted an option under the Plan which
permits such employee’s right to purchase stock under this Plan and all other employee stock
purchase plans (described in Section 423 of the Code) of the Company to accrue at a rate which
exceeds twenty five thousand dollars ($25,000) of fair market value of such stock (determined at
the time such option is granted) for each calendar year in which such option is outstanding at any
time.

4. Purchase Price.

     The purchase price of the Common Stock under the Offering shall be the lesser of (a)
eighty-five percent (85%) of the fair market value of the Common Stock on the Offering Date (or
eighty-five percent (85%) of the fair market value of the Common Stock on the first day on which
the Company’s Common Stock is actively traded that immediately follows the Offering Date if an
Offering Date falls on a day during which the Company’s Common Stock is not actively traded), or
(b) eighty-five percent (85%) of the fair market value of the Common Stock on the Purchase Date (or
eighty-five percent (85%) of the fair market value of the Common Stock on the first day on which
the Company’s Common Stock is actively traded that immediately precedes the Purchase Date if a
Purchase Date falls on a day during which the Company’s Common Stock is not actively traded).

11.

 

5. Participation.

     (a) Except as otherwise provided herein or in the Plan, an Eligible Employee may elect to
begin payroll deductions under an Offering as of the beginning of the Offering or as of the day
after any Purchase Date (i.e., any May 15th or November 15th). Such an
election shall be made by delivering an agreement authorizing payroll deductions. Such deductions
shall be made each pay period and must be in whole percentages not to exceed fifteen percent (15%)
of Earnings. The agreement shall be made on such enrollment form as the Company or a designated
Affiliate provides and must be delivered to the Company or designated Affiliate before the
applicable Offering Date to be effective for such Offering, unless a later time for filing the
enrollment form is set by the Company for all Eligible Employees with respect to a given Offering
Date. A participant may not make additional contributions under the Plan.

     (b) A participant may increase or reduce (including to zero) his or her participation level to
be effective immediately following the next Purchase Date during an Offering. Any such change in
participation shall be made by delivering a notice to the Company or a designated Affiliate in such
form and at such time as the Company provides. In addition, a participant may withdraw from an
Offering and receive his or her accumulated payroll deductions from the Offering (reduced to the
extent, if any, such deductions have been used to acquire Common Stock for the Participant on any
prior Purchase Dates), without interest, at any time prior to the end of the Offering, excluding
the fifteen (15) day period immediately preceding the Purchase Date, by delivering a withdrawal
notice to the Company or designated Affiliate in such form as the Company of designated Affiliate
provides. A participant who has withdrawn from an Offering shall not again participate in such
Offering but may participate in subsequent Offerings under the Plan by submitting a new
participation agreement in accordance with the terms thereof.

6. Purchases.

     Subject to the limitations contained herein, on each Purchase Date, each participant’s
accumulated payroll deductions (without any increase for interest) shall be applied to the purchase
of whole shares of Common Stock, up to the maximum number of shares permitted under the Plan and
the Offering. If a Purchase Date falls on a day during which the Common Stock is not actively
traded, then the Purchase Date shall be the nearest prior day on which the Common Stock is actively
traded.

7. Notices.

     Any notices or agreements provided for in the Offering or the Plan shall be given in writing,
in a form provided by the Company, and unless specifically provided for in the Plan or this
Offering shall be deemed effectively given upon receipt or, in the case of notices and agreements
delivered by the Company, five (5) days after deposit in the United States mail, postage prepaid.

8. Offering Subject to Plan.

     Each Offering is subject to all of the provisions of the Plan, and its provisions are hereby
made a part of the Offering, and is further subject to all interpretations, amendments, rules and
regulations which may from time to time be promulgated and adopted pursuant to the Plan. In

12.

 

the event of any conflict between the provisions of an Offering and those of the Plan
(including interpretations, amendments, rules and regulations which may from time to time be
promulgated and adopted pursuant to the Plan), the provisions of the Plan shall control.

13.

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