**EXHIBIT 10.19****SUBLEASE**     This SUBLEASE **(“Sublease”),**dated October___, 2007 for reference purposes only, isentered into by and between VERENIUM CORPORATION, a Delaware corporation **(“Sublandlord”),**andARDEA BIOSCIENCES, INC., a Delaware corporation **(“Subtenant”).****RECITALS****:**     A. Sublandlord leases certain premises consisting of approximately 60,662 squarefeet in a building located at 4939 Directors Place, San Diego, California (the **“Premises”),**pursuant to that certain Lease dated February 11, 2000, between KR-Gateway Partners,Delaware limited partnership, as landlord (the **“Master Landlord”)**and Sublandlord, as tenant(as amended or otherwise modified from time to time, the **“Master Lease**”), a copy of which isattached as **Exhibit A**, as more particularly described therein. Capitalized terms used but notdefined herein have the same meanings as they have in the Master Lease.     B. Sublandlord desires to sublease to Subtenant, and Subtenant desires to subleasefrom Sublandlord a portion of the Premises which is agreed to be approximately 51,660 rentablesquare feet, and more particularly shown on the layout attached at **Exhibit B**hereto **(“SubleasePremises”)**upon the terms and conditions provided for herein.     NOW, THEREFORE, in consideration of the mutual covenants and conditions contained herein,Sublandlord and Subtenant covenant and agree as follows:**AGREEMENT****:**     **1. ****Sublease Premises.** On and subject to the terms and conditions below,Sublandlord hereby leases to Subtenant, and Subtenant hereby leases from Sublandlord, theSublease Premises.     **2. ****Term.**          **(a) Initial Term.**The term of this Sublease (the **“Term”)**shall commence onthe date (the **“Commencement Date”)**that is the earlier of (a) March 1, 2008 or (b) the datethat Subtenant commences occupancy of the Sublease Premises for operation of its business and shallexpire eighty-four (84) months thereafter, unless sooner terminated pursuant to any provisionhereof. This Sublease and the parties obligations hereunder are expressly conditioned uponreceipt of Master Landlord’s consent hereto no later than December 3, 2007. In the eventSublandlord has not obtained Master Landlord’s consent by December 3, 2007, either party mayterminate this Sublease by written notice to the other party given within ten (10) daysthereafter.Sublandlord agrees to use good faith and diligent efforts to obtain Master Landlord’s consentto this Sublease.          **(b) Extension Option.**Subtenant shall have one option to extend the term ofthe Sublease to expire on March 31, 2017 **(“Extension Term”).**This option is personal to theSubtenant originally named herein and shall not be exercisable and shall be deemed void ifSubtenant is in default under this Sublease at the time of the exercise of such option, or if
 

 
Subtenant has been in material default (after any applicable notice and cure period) at any timeduring the term hereof. The option must be exercised, if at all, by written notice (the **“CommitmentNotice**”) to Sublandlord not less than nine (9) months prior to the expiration of the Term. All ofthe terms and conditions of this Sublease shall continue to apply during the term of such option,except that Base Rent for the first (1st) year of the Extension Term shall be the **“FairMarket Rent”**for the Sublease Premises as determined pursuant to this Section 2(b) and, ifapplicable, **Exhibit C.**On each anniversary of the commencement date of the Extension Term, the BaseRent shall increased by three and one-half percent (3.5%), compounded. Upon receipt of theCommitment Notice, Sublandlord shall determine the Fair Market Rent for the Sublease Premises,which shall be based on comparable rents then charged and collected for non-renewing tenants forcomparable space in the Sorrento Mesa area of San Diego County, taking into account items thatprofessional real estate brokers customarily consider including location, whether the space issubleased or direct leased, rental rates, tenant improvements, office space availability, tenantsize and other relative factors affecting properties in such area. In the event Subtenant objectsto Sublandlord’s determination of the Fair Market Rent, Sublandlord and Subtenant shall attempt toagree in good faith upon the Fair Market Rent. If Sublandlord and Subtenant fail to reach agreementwithin thirty (30) days following Subtenant’s delivery of the Commitment Notice (the **“OutsideAgreement Date**”), then each party shall make a separate determination of the Fair Market Rentwithin five (5) business days after the Outside Agreement Date, concurrently exchange suchdeterminations and such determinations shall be submitted to arbitration in accordance with **ExhibitC.**     **3. ****Possession.** Sublandlord agrees that Subtenant shall have access to the SubleasePremises upon mutual execution of this Sublease for purposes of installing improvements,furniture, fixtures and equipment, provided that (a) such activity shall be done duringmutuallyagreeable time and with the approval and coordination of Sublandlord and Sublandlord’sarchitect and (b) Subtenant complies with all of the terms of this Sublease (including,withoutlimitation, the requirement to carry insurance and obtain consent to alterations andimprovementsin the Sublease Premises), other than the payment of Rent.     **4. ****Rent.**          **(a)**Commencing on the Commencement Date and continuing throughout the term of this Sublease,Subtenant shall pay monthly rent consisting of Base Rent and Additional Rent (as defined below)(collectively, “**Rent**”) to Sublandlord in the following amounts:               **(i) **Base Rent. Subtenant shall pay to Sublandlord monthly base rent **(“BaseRent”)**as follows:
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         Period Amount    Months 1-12 $1.50 per rsf    Months 13-24 $1.55 per rsf    Months 25-36 $1.60 per rsf    Months 37-48 $1.66 per rsf    Months 49-60 $1.72 per rsf    Months 61 -72 $1.78 per rsf    Months 73-84 $1.84 per rsf                 **(ii) **Additional Rent. In addition to Base Rent, Subtenant shall also pay toSublandlord, Subtenant’s Proportionate Share (as defined below) of Tenant’s Share of DirectExpenses (as such terms are defined in Section 4.2 of the Master Lease) and Subtenant’sProportionate Share of all other costs payable by Sublandlord under the Master Lease **(“AdditionalRent”).**Additional Rent shall be payable to Sublandlord as and when payments are due fromSublandlord pursuant to the Master Lease, but at least five (5) business days prior to the dateSublandlord must pay such amounts to Master Landlord. For purposes hereof, **“Subtenant’sProportionate Share”**shall mean eighty five and 16/100 percent (85.16%). Within a reasonable timeperiod after Subtenant’s request, Sublandlord shall provide all statements identifying suchAdditional Rent.               **(iii) **Direct Costs. Subtenant shall further pay to Sublandlord as Additional Rent anycosts and expenses applicable to the Sublease Premises which are paid directly by Sublandlord,including, but not limited to, janitorial, maintenance, repair and improvement costs, utilities(including nitrogen systems serving the Sublease Premises), personal property taxes and realproperty taxes, and the actual costs incurred by Sublandlord to provide Subtenant with facilitiesservices, as requested by Subtenant. Without limiting the foregoing, Subtenant acknowledges thatthe Sublease Premises are not separately metered for electricity and agrees that it shall paySubtenant’s Proportionate Share of the electricity consumed at the Premises.               **(iv) **Exclusions. Notwithstanding the foregoing, in the event any amounts payable bySublandlord to Master Landlord or any direct costs incurred by Subtenant applicable to theSublease Premises are (A) due to Subtenant’s breach of any provision of the Master Lease, (B) dueto Subtenant’s negligence or willful misconduct, or (C) are for the sole benefit of Subtenant,then such amounts shall not be prorated between Sublandlord and Subtenant and shall be the soleresponsibility of Subtenant. In addition, notwithstanding the foregoing, in the event any amountspayable by Sublandlord to Master Landlord are (A) due to Sublandlord’s breach of any provision ofthe Master Lease (unless caused by Subtenant’s breach hereunder), (B) due to Sublandlord’snegligence or willful misconduct, or (C) are for the sole benefit of Sublandlord, then suchamounts shall not be prorated between Sublandlord and Subtenant and shall be the soleresponsibility of Sublandlord.               **(v) **Payment of Rent. If the Commencement Date does not fall on the first day of acalendar month, Rent for the first month shall be prorated on a daily basis based
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upon a calendar month. Rent shall be payable to Sublandlord in lawful money of the United States,in advance, without prior notice, demand, or offset, on or before the first day of each calendarmonth during the term hereof. All Rent shall be paid to Sublandlord at the address specified fornotices to Sublandlord in Section 18 below.          **(b)**Upon execution of this Sublease, Subtenant shall deliver to Sublandlordthe sum of Seventy-Eight Thousand Dollars ($78,000), representing the first (1st)month’s BaseRent.          **(c)**In the event of any casualty or condemnation affecting the SubleasePremises, Rent payable by Subtenant shall be abated hereunder, but only to the extent thatRentunder the Master Lease is abated.     **5. ****Security Deposit.** Upon execution of this Sublease, Subtenant shall deposit withSublandlord the sum of Three Hundred Twelve Thousand Dollars ($312,000) as a securitydeposit (together with accrued interest hereunder, the **“Security Deposit”).**Subtenant herebygrants to Sublandlord a security interest in the Security Deposit, including but not limitedtoreplenishments thereof. If Subtenant fails to pay Rent or other charges when due under thisSublease, or fails to perform any of its other obligations hereunder, Sublandlord may use orapply all or any portion of the Security Deposit for the payment of any Rent or other amountthendue hereunder and unpaid, for the payment of any other sum for which Sublandlord may becomeobligated by reason of Subtenant’s default or breach, or for any loss or damage sustained bySublandlord as a result of Subtenant’s default or breach. If Sublandlord so uses any portionofthe Security Deposit, Subtenant shall restore the Security Deposit to the full amountoriginallydeposited within ten (10) days after Sublandlord’s written demand. Sublandlord shall not berequired to keep the Security Deposit separate from its general accounts and no interest shallbepayable thereon. The Security Deposit, or so much thereof as had not theretofore been appliedby Sublandlord, shall be returned to Subtenant within thirty (30) days of the expiration orearliertermination of this Sublease, provided Subtenant has vacated the Sublease Premises.     **6. ****Assignment and Subletting.** Subtenant may not assign, sublet, transfer, pledge,hypothecate or otherwise encumber the Sublease Premises, in whole or in part, or permit theuseor occupancy of the Sublease Premises by anyone other than Subtenant, unless Subtenant hasobtained Sublandlord’s consent thereto (which shall not be unreasonably withheld) and theconsent of Master Landlord. Notwithstanding the foregoing, Section 14.8 of the Master Leaseshall apply to the Subtenant. Regardless of Sublandlord’s consent, no subletting or assignmentshall release Subtenant of its obligations hereunder. Any rent or other consideration payabletoSubtenant pursuant to any sublease or assignment permitted by this paragraph which is inexcessof the Rent payable to Sublandlord pursuant hereto shall be divided equally betweenSublandlordand Subtenant, after payment to Master Landlord of any amount required to be paid under theMaster Lease.     **7. ****Condition of Sublease Premises.**          **(a)**Except for the Improvement Loan set forth in subsection (c) below and as otherwiseexpressly set forth in this Sublease, Subtenant agrees that (i) Sublandlord has made norepresentations or warranties of any kind or nature whatsoever respecting the Sublease Premises,
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their condition or suitability for Subtenant’s use; and (ii) Subtenant agrees to accept theSublease Premises “as is, where is,” with all faults, without any obligation on the part ofSublandlord to modify, improve or otherwise prepare the Sublease Premises for Subtenant’soccupancy. Sublandlord shall provide Subtenant with the benefit of all warranties held bySublandlord or provided by the Master Lease in connection with the construction of the Buildingwhich are applicable to the Sublease Premises. Notwithstanding the foregoing, Sublandlord covenantsand agrees to demise the Sublease Premises from the remainder of the Premises prior to theCommencement Date and to deliver the Sublease Premises to Subtenant with all Building systems ingood working order.          **(b)**Sublandlord has not made an independent investigation of the Premises ordetermination with respect to the physical and environmental condition of the Premisesincludingwithout limitation the existence of any underground tanks, pumps, piping, toxic or hazardoussubstances on the Premises. Notwithstanding the foregoing, if reasonably requested bySubtenant, Sublandlord, at its sole cost and expense, will cause a Phase I environmentalassessment to be performed and delivered to Subtenant prior to the Commencement Date.Throughout the Term, Sublandlord shall be responsible, at its expense, for ensuring that theexterior of the Building and the common areas of the Premises comply with the “American WithDisabilities Act” **(“ADA”)**. However, no investigation has been made by Sublandlord to ensurecompliance of the Sublease Premises with ADA. ADA may require a variety of changes to theSublease Premises, including potential removal of barriers to access by disabled persons andprovision of auxiliary aids and services for hearing, vision or speech impaired persons.Subtenant shall rely solely on its own investigations and/or that of a licensed professionalspecializing in the areas referenced in this Section 7(b), and shall be responsible forensuring thatthe Sublease Premises comply with ADA.          **(c)**Subtenant, at its sole cost and expense, shall construct all improvements inthe Sublease Premises required by Subtenant for operation of its business therein (the**“Subtenant Improvements”),**subject to all requirements of this Sublease and the Master Lease,including, without limitation, obtaining Sublandlord’s and Master Landlord’s approval of plansand specifications therefor. Sublandlord’s consent shall not be unreasonably withheld ordelayed. If Master Landlord approves of Subtenant’s contractor and architect, Sublandlord’sconsent thereto shall not be required. If Master Landlord requires the Subtenant Improvementsor any subsequent improvements to be removed at the expiration or earlier termination of thisSublease, Subtenant shall comply with all such requirements, whether imposed upon granting ofconsent or thereafter, as provided in the Master Lease. If Master Landlord does not so requirethe Subtenant to remove the Subtenant Improvements or any subsequent improvements,Subtenant shall not be required to remove the Subtenant Improvements and all subsequentimprovements, except that if Sublandlord notifies Subtenant in writing that Subtenant isrequiredto remove any of improvements, Subtenant shall have such removal obligation as to suchimprovements and shall restore the Sublease Premises to their condition existing as of thedatehereof, reasonable wear and tear excepted; provided that if Subtenant exercises the extensionoption set forth in Section 2(b) above, then Subtenant shall not have such removal obligationasto any of the improvements.          **(d)**To the extent Subtenant incurs construction costs for the SubtenantImprovements in excess of Two Hundred Fifty Thousand Dollars ($250,000), Sublandlord
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hereby agrees to loan to Subtenant **(“Improvement Loan”)**a maximum of an Two Hundred Fifty ThousandDollars ($250,000) (**“Cap”**), which Improvement Loan shall be (i) used solely to reimburse Subtenant,up to the Cap, for actual “hard” costs (i.e., materials and labor as opposed to costs ofconsultants and other “soft” costs) incurred for the construction of the Subtenant Improvementswhich are in excess of the initial Two Hundred Fifty Thousand Dollars ($250,000) incurred bySubtenant for the Subtenant Improvements (which initial costs shall first be paid by Subtenant),and (ii) disbursed in accordance with the provisions of **Exhibit D**. The Improvement Loan shall berepaid by Subtenant to Sublandlord in equal monthly installments **(“Improvement Loan Payments”)**inan amount that would fully amortize the Improvement Loan over an amortization period of eighty-four(84) months commencing on the Commencement Date, with interest from the date of expenditure on theoutstanding principal balance, computed at the rate equal to the lesser of seven percent (7%) perannum or the maximum rate permitted by law. The Improvement Loan Payments shall be due and payableon the first day of each month along with the payments of Rent payable under this Sublease. Theobligation of Subtenant to pay the Improvement Loan Payments is separately enforceable bySublandlord and shall survive (but shall be repayable in full, including all outstanding principaland accrued and unpaid interest, upon) the expiration or earlier termination of this Sublease and,because such obligation is intended to be a loan, is not subject to any mitigation of the amountdue. Sublandlord will use good faith and diligent efforts to obtain Master Landlord’s consent tothe Subtenant Improvements. Sublandlord agrees that it will not charge a supervision fee for itsown review of the Subtenant Improvements or other improvements to the Sublease Premises bySubtenant. Subtenant acknowledges that Master Landlord may impose a supervision fee under theMaster Lease, which fee shall be paid by Subtenant.     **8. ****Use.** Subtenant may use the Sublease Premises only for the purposes as allowedapplicable laws and by the Master Lease, and for no other purpose. Subtenant shall promptly complywith all applicable statutes, ordinances, rules, regulations, orders, restrictions of record, andrequirements in effect during the term of this Sublease governing, affecting and regulating theSublease Premises, including but not limited to the use thereof. Sublandlord will notify Subtenantof any non-compliance with the foregoing of which Sublandlord becomes aware. Subtenant shall notuse or permit the use of the Sublease Premises in a manner that will create waste or a nuisance,interfere with or disturb other tenants in the Building or violate the provisions of the MasterLease. Subtenant acknowledges and agrees that the operation and use of the Sublease Premises mayrequire that Subtenant apply for and receive licenses and/or permits from various federal, stateand local governments, and Subtenant covenants and agrees to apply for and receive such licensesand/or permits as are required. Subtenant shall provide to Sublandlord copies of any such licensesand/or permits to the extent applicable to the Sublease Premises. Subtenant acknowledges, agreesand covenants that its occupancy, operation and use of such Sublease Premises shall be inaccordance with: (a) all applicable state and federal regulations; (b) all licenses and permitsthat either Subtenant or Sublandlord has received or receives in the future respecting suchSublease Premises; and (c) all policies and procedures Sublandlord has reasonably promulgatedrespecting such Sublease Premises. In connection with Subtenant’s use of the Sublease Premises,Sublandlord shall provide Subtenant with card access keys for use with the security system of theBuilding. The card access keys will provide access only to the Sublease Premises and the commonareas of the Building shown on **Exhibit B**. The security system for the Sublease Premises shall beset to prohibit employees, contractors, vendors and guests of Sublandlord from accessing theSublease Premises, except in the case of
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an emergency (in which case Sublandlord’s employees and security vendor shall have access), andexcept for (i) interior security patrols by Sublandlord’s security vendor, as requested bySubtenant, (ii) facilities personnel for provision of facilities services as requested bySubtenant, (iii) Sublandlord’s janitorial vendor to provide janitorial services to the SubleasePremises, as requested by Subtenant, and (iv) the provision of any other services to the SubleasePremises as requested by Subtenant.     **9. ****Parking.** Subtenant shall have Subtenant’s Proportionate Share of the parking forthe Building, subject to the terms of the Master Lease. In addition, Sublandlord shall labelseven(7) of the parking spaces on the front west side of the Building as “Visitor’s Parking” forSubtenant.     **10. ****Furniture.** During the term of this Sublease, Subtenant shall have the right to usethe chemical and biological fume hoods, workstations, cubicles, cabling and furniture existinginthe Sublease Premises on the date hereof **(“Furniture”).**Subtenant shall accept such Furniturein its “as-is” condition without any representation or warranty by Sublandlord, and agreesthatSublandlord shall have no liability or repair obligations with regard to the Furniture. Attheexpiration or earlier termination of this Sublease, Subtenant may remove and keep allFurnitureother than the chemical and biological fume hoods, and shall have no obligation to return suchFurniture to Sublandlord.     **11. ****Signage.** Subject to receipt of Master Landlord’s consent and all of the terms ofthe Master Lease, Subtenant shall have the right to install, at its sole cost and expense,standarddirectional and building top signage. Upon expiration or earlier termination of thisSublease,Subtenant shall remove all such signs and repair damage to the Property and the Buildingcausedby their removal.     **12. ****Utilities.** Subject to Subtenant’s obligation to reimburse Sublandlord pursuant toSection 4 of this Sublease, Sublandlord shall cause to be furnished (a) electricity forlighting andthe operation of equipment, (b) heat and air conditioning to the extent reasonably requiredfor thecomfortable occupancy by Subtenant in its use of the Sublease Premises, and (c) water forlavatory and drinking purposes. Sublandlord may establish reasonable measures to conserveenergy, including but not limited to, automatic switching of lights after hours and moreefficientforms of lighting, so long as such measures do not unreasonably interfere with Subtenant’s useofthe Sublease Premises, provided that Sublandlord shall provide a system for Subtenant to turnonbuilding systems outside of the core period listed above. Sublandlord shall not be indefaulthereunder or be liable for any damages directly or indirectly resulting from, nor shall therentalherein reserved be abated by reason of (i) the installation, use or interruption of use of anyequipment in connection with the furnishing of any of the foregoing services, provided suchactsare done at reasonable times and Sublandlord uses reasonable efforts to avoid disruption ofSubtenant’s use of the Sublease Premises, (ii) failure to furnish or delay in furnishing anysuchservices when such failure or delay is caused by accident or any condition beyond the controlofSublandlord or by the making of necessary repairs or improvements to the Premises or to theBuilding, or (iii) the limitation, curtailment, rationing or restrictions on use of water,electricity,gas or any other form of energy serving the Premises or the Building. Subtenant hereby waivesthe provisions of California Civil Code Section 1932 or any other applicable existing orfuturelaw or ordinance or governmental regulation permitting the termination of this Sublease due to
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any interruption, failure or inability to provide Sublandlord services as provided for herein.Subtenant shall have the right to use the distribution lines for liquid nitrogen which areexisting in the Sublease Premises, and to the extent required for such use, the liquid nitrogenstorage tank(s) at the Building; provided that Subtenant will not be permitted to have directcontact with the liquid nitrogen tank(s) (which will at all times remain the sole property ofSublandlord). Sublandlord shall maintain the distribution lines and tanks in good condition andrepair, subject to reimbursement pursuant to Section 4(a) above.     **13. ****Outside Improvements.** Subject to Subtenant’s receipt of all permits requiredtherefor, Subtenant may construct, at its sole cost and expense, three (3) hazardous materialssheds and a nitrogen storage and delivery system outside the Premises, in the locations shownon**Exhibit F**(the **“Outside Improvements”).**Prior to constructing the Outside Improvements,Subtenant shall obtain Master Landlord’s prior written consent, as required by the terms oftheMaster Lease. In addition, Subtenant shall obtain Master Landlord’s consent to the contractorand architect for the Outside Improvements. Subtenant’s construction and operation of theOutside Improvements shall comply with all requirements of the Master Lease, including,without limitation Article 8 of the Master Lease as incorporatedherein, and with all laws. Inaddition, Subtenant shall be responsible for all costs due to Master Landlord under the MasterLease in connection with the Outside Improvements. Upon expiration or earlier termination ofthis Sublease, Subtenant shall remove the Outside Improvements and all associated HazardousMaterials and repair all damage to the area caused by the constructions and/or removal ofthereof.     **14. Vivarium.**Subtenant may construct, in its sole discretion and at its sole cost andexpense, a vivarium in the Sublease Premises for housing of rats and mice (and no otheranimals), in the location shown on **Exhibit B**(the **“Vivarium”).**Prior to constructing theVivarium, Subtenant shall obtain Master Landlord’s prior written consent, as required by theterms of the Master Lease. In addition, Subtenant shall obtain Master Landlord’s consent tothecontractor and architect for the Vivarium. Subtenant’s construction of the Vivarium shallcomply with all requirements of the Master Lease, including, without limitation Article 8 oftheMaster Lease as incorporated herein, and with all laws. In addition, Subtenant shall beresponsible for all costs due to Master Landlord under the Master Lease in connection with thealterations, additions, or improvements. Upon construction, the Vivarium shall be deemed partofthe Sublease Premises and shall become the property of the Sublandlord.     **15. ****Incorporation of Master Lease.**          **(a)**All of the terms and provisions of the Master Lease, except as provided in subsection (b)below, are incorporated into and made a part of this Sublease, and the rights and obligations ofthe parties under the Master Lease are hereby imposed upon the parties hereto with respect to theSublease Premises, the Sublandlord being substituted for the Landlord in the Master Lease, theSubtenant being substituted for the Tenant in the Master Lease provided, however, that the term“Landlord” in the following Sections and Articles of the Master Lease (i) shall mean MasterLandlord, not Sublandlord: Section 6.1, Articles 7, 11, 13, and 29.13 and (ii) shall mean bothMaster Landlord and Sublandlord: Article 8. It is further understood that where reference is madein the Master Lease to the “Premises,” the same shall mean the Sublease Premises as definedherein; where reference is made to the “Commencement Date,” the same
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shall mean the Commencement Date as defined herein; and where reference is made to the “Lease,” thesame shall mean this Sublease. The parties specifically agree that any provisions relating to anyconstruction obligations of “Landlord” under the Master Lease with respect to construction thatoccurred or was to have occurred prior to the Commencement Date hereof, are hereby deleted.Sublandlord shall not be liable to Subtenant for any failure by Master Landlord to perform itsobligations under the Master Lease, nor shall such failure by Master Landlord excuse performance bySubtenant of its obligations hereunder; provided, however, that Sublandlord shall use itscommercially reasonable efforts to cause Master Landlord to perform its obligations under theMaster Lease, including instituting legal proceedings at Subtenant’s sole cost and expense ifreasonably requested by Subtenant, provided that Sublandlord is not exposed to any risk oftermination of the Master Lease or the Building A Lease. Anything in the Master Lease to thecontrary notwithstanding, no personal liability shall at any time be asserted or enforceableagainst Sublandlord’s stockholders, directors, officers or partners on account of any ofSublandlord’s obligations or actions under this Sublease.          **(b)**The following Sections and Exhibits of the Master Lease are notincorporated herein: Summary of Basic Lease Information (except Items 7 and 9), Sections 1.1.1and 1.2, Articles 2 and 3, Sections 4.6 and 8.5, Articles 20, 21 and 22 (unless MasterLandlordconsents to such equipment), Sections 23.4.1 (subject to Section 11 above), 29.32, 29.34,29.35,29.36 and 29.37, Exhibits A, B, C and G, and First, Second, Third and Fourth Amendments toLease.          **(c)**Subtenant hereby assumes and agrees to perform for Sublandlord’sbenefit, during the term of this Sublease, all of Sublandlord’s obligations as Subtenant withrespect to the Premises under the Master Lease, as such obligations apply to the SubleasePremises, except as otherwise provided herein. Subtenant shall not commit or permit to becommitted any act or omission which violates any term or condition of the Master Lease.Notwithstanding anything to the contrary contained herein, this Sublease shall be subject andsubordinate to all of the terms of the Master Lease and Master Landlord shall have all rightsinrespect of the Master Lease and the Premises as set forth therein.     **16. ****Insurance.** Subtenant shall be responsible for compliance with the insuranceprovisions of the Master Lease. Such insurance shall insure the performance by Subtenant ofitsindemnification obligations hereunder and shall name Master Landlord and Sublandlord asadditional insureds. All insurance required under this Sublease shall contain an endorsementrequiring thirty (30) days written notice from the insurance company to Subtenant andSublandlord before cancellation or change in the coverage, insureds or amount of any policy.Subtenant shall provide Sublandlord with certificates of insurance evidencing such coverageprior to the commencement of this Sublease.     **17. ****Default.** In addition to defaults and applicable cure periods contained in theMaster Lease, failure of Subtenant to make any payment of Rent within three (3) days of whendue hereunder shall constitute an event of default hereunder. If Subtenant’s default causesSublandlord to default under the Master Lease, Subtenant shall defend, indemnify and holdSublandlord harmless from all damages, costs (including reasonable attorneys’ fees),liability,expenses or claims relating to such default.
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     **18. ****Notices.** The addresses specified in the Master Lease for receipt of noticesto each of the parties are deleted and replaced with the following:       **To Sublandlord at:** 4955 Directors Place    San Diego, California 92121    Attn: Mr. Stephen Toon       **To Subtenant at:** 2131 Palomar Airport Road, Suite 300    Carlsbad, California 92011         Attn: Chief Business Officer       **After Commencement Date:** At the Sublease Premises    Attn: Chief Business Officer     Sublandlord hereby agrees to provide Subtenant with a copy of any notice it receives fromMaster Landlord which pertains to the Sublease Premises within five (5) business days afterSublandlord’s receipt of such notice.     **19. ****Sublandlord’s Obligations.**          **(a)**To the extent that the provision of any services or the performance of anymaintenance or any other act respecting the Sublease Premises, the Premises or Building is theresponsibility of Master Landlord (collectively **“Master Landlord Obligations”),**uponSubtenant’s request, Sublandlord shall make reasonable efforts to cause Master Landlord toperform such Master Landlord Obligations, provided, however, that in no event shallSublandlord be liable to Subtenant for any liability, loss or damage whatsoever in the eventthatMaster Landlord should fail to perform the same, unless Master Landlord’s failure to performiscaused by Sublandlord’s own negligence or willful misconduct, nor shall Subtenant be entitledtowithhold the payment of Rent or terminate this Sublease. It is expressly understood that theservices and repairs which are incorporated herein by reference, including but not limited tothemaintenance of exterior walls, structural portions of the roof, foundations, walls and floors,willin fact be furnished by Master Landlord and not by Sublandlord.          **(b)**Subject to reimbursement by Subtenant pursuant to Section 4 hereof,Sublandlord agrees to maintain in good condition and repair (i) the backup generators servingthe Building (which will be available for service to the Sublease Premises), (ii) the commonareas inside the Building, and (iii) the HVAC, electrical, and plumbing systems of theBuilding.Except as otherwise provided herein, Sublandlord shall have no other obligations to Subtenantwith respect to the Sublease Premises or the performance of the Master Landlord Obligations.     **20. ****Early Termination of Sublease.** If the Master Lease should terminate prior tothe expiration of this Sublease, Sublandlord shall have no liability to Subtenant on accountofsuch termination. Notwithstanding the foregoing, Sublandlord will not voluntarily do, or failtodo, anything which will constitute a default under the Master Lease or permit the Master Leaseto be terminated for any reason other than as expressly permitted by the Master Lease due tocasualty, condemnation, or material default of Master Landlord thereunder.
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     **21. ****Consent of Master Landlord and Sublandlord.** If Subtenant desires to take anyaction which requires the consent or approval of Sublandlord pursuant to the terms of thisSublease, prior to taking such action, including, without limitation, making any alterations,then,notwithstanding anything to the contrary herein, (a) Sublandlord shall have the same rights ofapproval or disapproval as Master Landlord has under the Master Lease, and (b) Subtenant shallnot take any such action until it obtains the consent of Sublandlord and Master Landlord, asmaybe required under this Sublease or the Master Lease. This Sublease shall not be effectiveunlessand until any required written consent of the Master Landlord shall have been obtained.     **22. ****Indemnity.** Subtenant shall indemnify, defend, protect, and hold Sublandlord andMaster Landlord harmless from and against all actions, claims, demands, costs, liabilities,losses,reasonable attorneys’ fees, damages, penalties, and expenses (collectively **“Claims”**) which arebrought or made against Sublandlord or which Sublandlord pays or incurs to the extent causedby (a) a breach of this Sublease by Subtenant, (b) any violation of law by Subtenant or itsemployees, agents, contractors or invitees (collectively, **“Agents”**) relating to the use oroccupancy of the Sublease Premises or the area occupied by the Outside Improvements, (c) anyact or omission by Subtenant or its Agents resulting in contamination of any part or all ofthePremises or area occupied by the Outside Improvements by Hazardous Materials, (d) the grossnegligence or willful misconduct of Subtenant or its Agents, and (e) Subtenant’s use of thePremises, including the Outside Improvements and Vivarium. Nothing in the Master Lease orthe Sublease shall be construed to impose any liability, cost or other requirement onSubtenantfor any Hazardous Materials existing in the Sublease Premises or the area occupied by theOutside Improvements prior to the date the Sublease Premises are delivered to Subtenant, oranyHazardous Materials introduced to the Sublease Premises or the area occupied by the OutsideImprovements by Sublandlord or its Agents. Sublandlord shall indemnify, defend, protect, andhold Subtenant harmless from and against all Claims which are brought or made againstSubtenant or which Subtenant pays or incurs to the extent caused by (i) Sublandlord’s or itsAgent’s gross negligence or willful misconduct, (ii) any event relating to the Premises thatoccurred prior to the entry by Subtenant onto the Premises pursuant to Section 3 hereof, and(iii)a breach of this Sublease or the Master Lease by Sublandlord.     **23. ****Brokers.** Each party hereto represents and warrants that it has dealt with nobroker in connection with this Sublease and the transactions contemplated herein, exceptIrvingHughes Group (**“Broker”**). Each party shall indemnify, protect, defend and hold the other partyharmless from all costs and expenses (including reasonable attorneys’ fees) arising from orrelating to a breach of the foregoing representation and warranty. Sublandlord agrees to paytheBroker pursuant to a separate written agreement.     **24. ****Surrender of Sublease Premises.** In lieu of any obligation or liability set forthin the Master Lease, upon the termination of the Sublease, Subtenant shall surrender theSubleasePremises and the area occupied by the Outside Improvements to Sublandlord broom-clean and inas good a condition as on the Commencement Date, ordinary wear and tear excepted. Inaddition, at Sublandlord’s option (by written notice to Subtenant at the time of its consentto suchalteration, addition or improvements, if Subtenant obtained Sublandlord’s consent thereto, andifnot, by written notice at least sixty (60) days prior to the expiration of this Sublease)Subtenantshall remove any alterations, additions and improvements , prior to the termination of theSublease and restore the Sublease Premises to its prior condition, ordinary wear and tear
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excepted, repairing all damage caused by or related to any such removal, all at Subtenant’sexpense. Removal of the Subtenant Improvements shall be governed by Section 7(c) above. Removal ofthe Outside Improvements shall be governed by Section 13 above.     **25. ****Right of First Offer.** Sublandlord hereby grants to Subtenant the continuingright of first offer to amend this Sublease to add any or all of the remainder of theBuilding, andany or all of Building A **(“First Offer Space”)**in the event Sublandlord elects to offer suchspace to sublet during the Term of this Sublease, or in the event Sublandlord decides toassignthe remainder of the Master Lease to any third party. Sublandlord will deliver writtennotice**(“Offer Notice”)**to Subtenant from time to time whenever Sublandlord determines that it willcommence marketing any portion of the First Offer Space for sublease or assignment or prior toentering into negotiations to sublet any portion of the First Offer Space or assign the MasterLease, which Offer Notice will describe the space which Sublandlord proposes to sublease orassign. Within ten (10) business days after Subtenant’s receipt of the Offer Notice,Subtenantmay elect to exercise its right of first offer with respect to any of the space described inthe OfferNotice by delivering written notice **(“Exercise Notice”)**to Sublandlord. The right of firstoffershall not apply if, as of the date Sublandlord receives Subtenant’s Exercise Notice, Subtenantisin default of any terms, covenants or conditions of this Sublease after the expiration of anyapplicable notice and cure periods. If Subtenant properly exercises the right of first offer,theFirst Offer Space will be leased to Subtenant on the same terms and conditions as affect theoriginal Sublease Premises (except for the Improvement Loan, which shall not be applicable),atthe same Base Rent rate as then applies to the original Sublease Premises; provided, however,that Subtenant’s Proportionate Share shall be increased to take into account the additionalrentable square feet of the First Offer Space. The parties agree to execute an amendment tothisSublease promptly after the exercise of the right of first offer to include the First OfferSpace andthe terms thereof. This right of first offer shall be a continuing right and in the eventSubtenantfails to lease any space offered to Subtenant, the right of first offer will continue to applyto anysubsequent availability of such space.     **26. ****No Third Party Rights.** The benefit of the provisions of this Sublease isexpressly limited to Sublandlord and Subtenant and their respective permitted successors andassigns. Under no circumstances will any third party be construed to have any rights as athirdparty beneficiary with respect to any of said provisions.     **27. ****Counterparts.** This Sublease may be signed in two or more counterparts, each ofwhich shall be deemed an original and all of which shall constitute one agreement.     **28. ****Quiet Enjoyment.** Subtenant shall peacefully have, hold and enjoy the SubleasePremises, subject to the terms and conditions of this Sublease and subject to the MasterLease,provided that Subtenant pays all rent and performs all of Subtenant’s covenants and agreementscontained herein.     **29. ****Option to Purchase.** In the event Sublandlord becomes an owner of the Building(whether pursuant to Section 29.35 of the Master Lease or otherwise), this Sublease willbecomea direct lease between Sublandlord, as Landlord and Subtenant as Tenant on all the same termsand conditions contained herein.
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     **30. ****Estoppel.** Sublandlord hereby represents and warrants that (i) the Master Lease isin full force and effect, (ii) to Sublandlord’s actual knowledge, no defaults exist by eitherSublandlord or the Master Landlord under the Master Lease, (iii) to Sublandlord’s actual knowledgethere are no circumstances which, given notice or the passage of time or both, would constitute adefault under the Master Lease, and (iv) that Sublandlord has the full right, power and authorityto enter into this Sublease (subject to the consent of Master Landlord).[Remainder of Page Intentionally Left Blank]
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     IN WITNESS WHEREOF, the parties have executed this Sublease as of the date first writtenabove.     **SUBLANDLORD:**     VERENIUM CORPORATION,  a Delaware corporation         By: /s/ (ILLEGIBLE)           Name: (ILLEGIBLE)    Title: EVP & CFO       **SUBTENANT:**     ARDEA BIOSCIENCES, INC.,  a Delaware corporation         By: /s/ Barry Quart           Name: Barry Quart           Title: President & CEO         
 

 
**CONSENT OF MASTER LANDLORD**     KR-Gateway Partners, LLC, the Master Landlord under the Master Lease, hereby consents to theSublease attached hereto, and all of the terms and conditions contained therein.     KR-GATEWAY PARTNERS, LLC,  a Delaware limited liability company       By: Kilroy Realty, L.P.,    a Delaware limited partnership,    Managing Member       By: Kilroy Realty Corporation,    a Maryland corporation,    General Partner         By:                    Its:                    Date:           
 

 
**EXHIBIT A****MASTER LEASE**EXHIBIT A-Page 1
 

 
**EXHIBIT B****SUBLEASE PREMISES**