Document:

exv10w19

 

EXHIBIT 10.19

SUBLEASE

     This SUBLEASE (“Sublease”), dated October___, 2007 for reference purposes only, is
entered into by and between VERENIUM CORPORATION, a Delaware corporation (“Sublandlord”), and
ARDEA BIOSCIENCES, INC., a Delaware corporation (“Subtenant”).

RECITALS:

     A. Sublandlord leases certain premises consisting of approximately 60,662 square
feet 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 is
attached as Exhibit A, as more particularly described therein. Capitalized terms used but not
defined herein have the same meanings as they have in the Master Lease.

     B. Sublandlord desires to sublease to Subtenant, and Subtenant desires to sublease
from Sublandlord a portion of the Premises which is agreed to be approximately 51,660 rentable
square feet, and more particularly shown on the layout attached at Exhibit B hereto (“Sublease
Premises”) 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, the
Sublease Premises.

     2. Term.

          (a) Initial Term. The term of this Sublease (the “Term”) shall commence on
the date (the “Commencement Date”) that is the earlier of (a) March 1, 2008 or (b) the date
that Subtenant commences occupancy of the Sublease Premises for operation of its business and shall
expire eighty-four (84) months thereafter, unless sooner terminated pursuant to any provision
hereof. This Sublease and the parties obligations hereunder are expressly conditioned upon
receipt of Master Landlord’s consent hereto no later than December 3, 2007. In the event
Sublandlord has not obtained Master Landlord’s consent by December 3, 2007, either party may
terminate this Sublease by written notice to the other party given within ten (10) days
thereafter.
Sublandlord agrees to use good faith and diligent efforts to obtain Master Landlord’s consent
to this Sublease.

          (b) Extension Option. Subtenant shall have one option to extend the term of
the Sublease to expire on March 31, 2017 (“Extension Term”). This option is personal to the
Subtenant originally named herein and shall not be exercisable and shall be deemed void if
Subtenant 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 time
during the term hereof. The option must be exercised, if at all, by written notice (the “Commitment
Notice”) to Sublandlord not less than nine (9) months prior to the expiration of the Term. All of
the 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 “Fair
Market Rent” for the Sublease Premises as determined pursuant to this Section 2(b) and, if
applicable, Exhibit C. On each anniversary of the commencement date of the Extension Term, the Base
Rent shall increased by three and one-half percent (3.5%), compounded. Upon receipt of the
Commitment 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 for
comparable space in the Sorrento Mesa area of San Diego County, taking into account items that
professional real estate brokers customarily consider including location, whether the space is
subleased or direct leased, rental rates, tenant improvements, office space availability, tenant
size and other relative factors affecting properties in such area. In the event Subtenant objects
to Sublandlord’s determination of the Fair Market Rent, Sublandlord and Subtenant shall attempt to
agree in good faith upon the Fair Market Rent. If Sublandlord and Subtenant fail to reach agreement
within thirty (30) days following Subtenant’s delivery of the Commitment Notice (the “Outside
Agreement Date”), then each party shall make a separate determination of the Fair Market Rent
within five (5) business days after the Outside Agreement Date, concurrently exchange such
determinations and such determinations shall be submitted to arbitration in accordance with Exhibit
C.

     3. Possession. Sublandlord agrees that Subtenant shall have access to the Sublease
Premises upon mutual execution of this Sublease for purposes of installing improvements,
furniture, fixtures and equipment, provided that (a) such activity shall be done during
mutually
agreeable time and with the approval and coordination of Sublandlord and Sublandlord’s
architect and (b) Subtenant complies with all of the terms of this Sublease (including,
without
limitation, the requirement to carry insurance and obtain consent to alterations and
improvements
in 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 (“Base
Rent”) 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 to
Sublandlord, Subtenant’s Proportionate Share (as defined below) of Tenant’s Share of Direct
Expenses (as such terms are defined in Section 4.2 of the Master Lease) and Subtenant’s
Proportionate Share of all other costs payable by Sublandlord under the Master Lease (“Additional
Rent”). Additional Rent shall be payable to Sublandlord as and when payments are due from
Sublandlord pursuant to the Master Lease, but at least five (5) business days prior to the date
Sublandlord must pay such amounts to Master Landlord. For purposes hereof, “Subtenant’s
Proportionate Share” shall mean eighty five and 16/100 percent (85.16%). Within a reasonable time
period after Subtenant’s request, Sublandlord shall provide all statements identifying such
Additional Rent.

               (iii) Direct Costs. Subtenant shall further pay to Sublandlord as Additional Rent any
costs 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 real
property taxes, and the actual costs incurred by Sublandlord to provide Subtenant with facilities
services, as requested by Subtenant. Without limiting the foregoing, Subtenant acknowledges that
the Sublease Premises are not separately metered for electricity and agrees that it shall pay
Subtenant’s Proportionate Share of the electricity consumed at the Premises.

               (iv) Exclusions. Notwithstanding the foregoing, in the event any amounts payable by
Sublandlord to Master Landlord or any direct costs incurred by Subtenant applicable to the
Sublease Premises are (A) due to Subtenant’s breach of any provision of the Master Lease, (B) due
to 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 sole
responsibility of Subtenant. In addition, notwithstanding the foregoing, in the event any amounts
payable by Sublandlord to Master Landlord are (A) due to Sublandlord’s breach of any provision of
the Master Lease (unless caused by Subtenant’s breach hereunder), (B) due to Sublandlord’s
negligence or willful misconduct, or (C) are for the sole benefit of Sublandlord, then such
amounts shall not be prorated between Sublandlord and Subtenant and shall be the sole
responsibility of Sublandlord.

               (v) Payment of Rent. If the Commencement Date does not fall on the first day of a
calendar 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 calendar
month during the term hereof. All Rent shall be paid to Sublandlord at the address specified for
notices to Sublandlord in Section 18 below.

          (b) Upon execution of this Sublease, Subtenant shall deliver to Sublandlord
the sum of Seventy-Eight Thousand Dollars ($78,000), representing the first (1st)
month’s Base
Rent.

          (c) In the event of any casualty or condemnation affecting the Sublease
Premises, Rent payable by Subtenant shall be abated hereunder, but only to the extent that
Rent
under the Master Lease is abated.

     5. Security Deposit. Upon execution of this Sublease, Subtenant shall deposit with
Sublandlord the sum of Three Hundred Twelve Thousand Dollars ($312,000) as a security
deposit (together with accrued interest hereunder, the “Security Deposit”). Subtenant hereby
grants to Sublandlord a security interest in the Security Deposit, including but not limited
to
replenishments thereof. If Subtenant fails to pay Rent or other charges when due under this
Sublease, or fails to perform any of its other obligations hereunder, Sublandlord may use or
apply all or any portion of the Security Deposit for the payment of any Rent or other amount
then
due hereunder and unpaid, for the payment of any other sum for which Sublandlord may become
obligated by reason of Subtenant’s default or breach, or for any loss or damage sustained by
Sublandlord as a result of Subtenant’s default or breach. If Sublandlord so uses any portion
of
the Security Deposit, Subtenant shall restore the Security Deposit to the full amount
originally
deposited within ten (10) days after Sublandlord’s written demand. Sublandlord shall not be
required to keep the Security Deposit separate from its general accounts and no interest shall
be
payable thereon. The Security Deposit, or so much thereof as had not theretofore been applied
by Sublandlord, shall be returned to Subtenant within thirty (30) days of the expiration or
earlier
termination 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 the
use
or occupancy of the Sublease Premises by anyone other than Subtenant, unless Subtenant has
obtained Sublandlord’s consent thereto (which shall not be unreasonably withheld) and the
consent of Master Landlord. Notwithstanding the foregoing, Section 14.8 of the Master Lease
shall apply to the Subtenant. Regardless of Sublandlord’s consent, no subletting or assignment
shall release Subtenant of its obligations hereunder. Any rent or other consideration payable
to
Subtenant pursuant to any sublease or assignment permitted by this paragraph which is in
excess
of the Rent payable to Sublandlord pursuant hereto shall be divided equally between
Sublandlord
and Subtenant, after payment to Master Landlord of any amount required to be paid under the
Master Lease.

     7. Condition of Sublease Premises.

          (a) Except for the Improvement Loan set forth in subsection (c) below and as otherwise
expressly set forth in this Sublease, Subtenant agrees that (i) Sublandlord has made no
representations 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 the
Sublease Premises “as is, where is,” with all faults, without any obligation on the part of
Sublandlord to modify, improve or otherwise prepare the Sublease Premises for Subtenant’s
occupancy. Sublandlord shall provide Subtenant with the benefit of all warranties held by
Sublandlord or provided by the Master Lease in connection with the construction of the Building
which are applicable to the Sublease Premises. Notwithstanding the foregoing, Sublandlord covenants
and agrees to demise the Sublease Premises from the remainder of the Premises prior to the
Commencement Date and to deliver the Sublease Premises to Subtenant with all Building systems in
good working order.

          (b) Sublandlord has not made an independent investigation of the Premises or
determination with respect to the physical and environmental condition of the Premises
including
without limitation the existence of any underground tanks, pumps, piping, toxic or hazardous
substances on the Premises. Notwithstanding the foregoing, if reasonably requested by
Subtenant, Sublandlord, at its sole cost and expense, will cause a Phase I environmental
assessment 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 the
exterior of the Building and the common areas of the Premises comply with the “American With
Disabilities Act” (“ADA”). However, no investigation has been made by Sublandlord to ensure
compliance of the Sublease Premises with ADA. ADA may require a variety of changes to the
Sublease Premises, including potential removal of barriers to access by disabled persons and
provision 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 professional
specializing in the areas referenced in this Section 7(b), and shall be responsible for
ensuring that
the Sublease Premises comply with ADA.

          (c) Subtenant, at its sole cost and expense, shall construct all improvements in
the 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 plans
and specifications therefor. Sublandlord’s consent shall not be unreasonably withheld or
delayed. If Master Landlord approves of Subtenant’s contractor and architect, Sublandlord’s
consent thereto shall not be required. If Master Landlord requires the Subtenant Improvements
or any subsequent improvements to be removed at the expiration or earlier termination of this
Sublease, Subtenant shall comply with all such requirements, whether imposed upon granting of
consent or thereafter, as provided in the Master Lease. If Master Landlord does not so require
the Subtenant to remove the Subtenant Improvements or any subsequent improvements,
Subtenant shall not be required to remove the Subtenant Improvements and all subsequent
improvements, except that if Sublandlord notifies Subtenant in writing that Subtenant is
required
to remove any of improvements, Subtenant shall have such removal obligation as to such
improvements and shall restore the Sublease Premises to their condition existing as of the
date
hereof, reasonable wear and tear excepted; provided that if Subtenant exercises the extension
option set forth in Section 2(b) above, then Subtenant shall not have such removal obligation
as
to any of the improvements.

          (d) To the extent Subtenant incurs construction costs for the Subtenant
Improvements 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 Thousand
Dollars ($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 of
consultants and other “soft” costs) incurred for the construction of the Subtenant Improvements
which are in excess of the initial Two Hundred Fifty Thousand Dollars ($250,000) incurred by
Subtenant 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 be
repaid by Subtenant to Sublandlord in equal monthly installments (“Improvement Loan Payments”) in
an 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 the
outstanding principal balance, computed at the rate equal to the lesser of seven percent (7%) per
annum or the maximum rate permitted by law. The Improvement Loan Payments shall be due and payable
on the first day of each month along with the payments of Rent payable under this Sublease. The
obligation of Subtenant to pay the Improvement Loan Payments is separately enforceable by
Sublandlord and shall survive (but shall be repayable in full, including all outstanding principal
and 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 amount
due. Sublandlord will use good faith and diligent efforts to obtain Master Landlord’s consent to
the Subtenant Improvements. Sublandlord agrees that it will not charge a supervision fee for its
own review of the Subtenant Improvements or other improvements to the Sublease Premises by
Subtenant. Subtenant acknowledges that Master Landlord may impose a supervision fee under the
Master Lease, which fee shall be paid by Subtenant.

     8. Use. Subtenant may use the Sublease Premises only for the purposes as allowed
applicable laws and by the Master Lease, and for no other purpose. Subtenant shall promptly comply
with all applicable statutes, ordinances, rules, regulations, orders, restrictions of record, and
requirements in effect during the term of this Sublease governing, affecting and regulating the
Sublease Premises, including but not limited to the use thereof. Sublandlord will notify Subtenant
of any non-compliance with the foregoing of which Sublandlord becomes aware. Subtenant shall not
use 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 Master
Lease. Subtenant acknowledges and agrees that the operation and use of the Sublease Premises may
require that Subtenant apply for and receive licenses and/or permits from various federal, state
and local governments, and Subtenant covenants and agrees to apply for and receive such licenses
and/or permits as are required. Subtenant shall provide to Sublandlord copies of any such licenses
and/or permits to the extent applicable to the Sublease Premises. Subtenant acknowledges, agrees
and covenants that its occupancy, operation and use of such Sublease Premises shall be in
accordance with: (a) all applicable state and federal regulations; (b) all licenses and permits
that either Subtenant or Sublandlord has received or receives in the future respecting such
Sublease Premises; and (c) all policies and procedures Sublandlord has reasonably promulgated
respecting 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 the
Building. The card access keys will provide access only to the Sublease Premises and the common
areas of the Building shown on Exhibit B. The security system for the Sublease Premises shall be
set to prohibit employees, contractors, vendors and guests of Sublandlord from accessing the
Sublease Premises, except in the case of

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an emergency (in which case Sublandlord’s employees and security vendor shall have access), and
except for (i) interior security patrols by Sublandlord’s security vendor, as requested by
Subtenant, (ii) facilities personnel for provision of facilities services as requested by
Subtenant, (iii) Sublandlord’s janitorial vendor to provide janitorial services to the Sublease
Premises, as requested by Subtenant, and (iv) the provision of any other services to the Sublease
Premises as requested by Subtenant.

     9. Parking. Subtenant shall have Subtenant’s Proportionate Share of the parking for
the Building, subject to the terms of the Master Lease. In addition, Sublandlord shall label
seven
(7) of the parking spaces on the front west side of the Building as “Visitor’s Parking” for
Subtenant.

     10. Furniture. During the term of this Sublease, Subtenant shall have the right to use
the chemical and biological fume hoods, workstations, cubicles, cabling and furniture existing
in
the Sublease Premises on the date hereof (“Furniture”). Subtenant shall accept such Furniture
in its “as-is” condition without any representation or warranty by Sublandlord, and agrees
that
Sublandlord shall have no liability or repair obligations with regard to the Furniture. At
the
expiration or earlier termination of this Sublease, Subtenant may remove and keep all
Furniture
other than the chemical and biological fume hoods, and shall have no obligation to return such
Furniture to Sublandlord.

     11. Signage. Subject to receipt of Master Landlord’s consent and all of the terms of
the Master Lease, Subtenant shall have the right to install, at its sole cost and expense,
standard
directional and building top signage. Upon expiration or earlier termination of this
Sublease,
Subtenant shall remove all such signs and repair damage to the Property and the Building
caused
by their removal.

     12. Utilities. Subject to Subtenant’s obligation to reimburse Sublandlord pursuant to
Section 4 of this Sublease, Sublandlord shall cause to be furnished (a) electricity for
lighting and
the operation of equipment, (b) heat and air conditioning to the extent reasonably required
for the
comfortable occupancy by Subtenant in its use of the Sublease Premises, and (c) water for
lavatory and drinking purposes. Sublandlord may establish reasonable measures to conserve
energy, including but not limited to, automatic switching of lights after hours and more
efficient
forms of lighting, so long as such measures do not unreasonably interfere with Subtenant’s use
of
the Sublease Premises, provided that Sublandlord shall provide a system for Subtenant to turn
on
building systems outside of the core period listed above. Sublandlord shall not be in
default
hereunder or be liable for any damages directly or indirectly resulting from, nor shall the
rental
herein reserved be abated by reason of (i) the installation, use or interruption of use of any
equipment in connection with the furnishing of any of the foregoing services, provided such
acts
are done at reasonable times and Sublandlord uses reasonable efforts to avoid disruption of
Subtenant’s use of the Sublease Premises, (ii) failure to furnish or delay in furnishing any
such
services when such failure or delay is caused by accident or any condition beyond the control
of
Sublandlord or by the making of necessary repairs or improvements to the Premises or to the
Building, 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 waives
the provisions of California Civil Code Section 1932 or any other applicable existing or
future
law 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 are
existing in the Sublease Premises, and to the extent required for such use, the liquid nitrogen
storage tank(s) at the Building; provided that Subtenant will not be permitted to have direct
contact with the liquid nitrogen tank(s) (which will at all times remain the sole property of
Sublandlord). Sublandlord shall maintain the distribution lines and tanks in good condition and
repair, subject to reimbursement pursuant to Section 4(a) above.

     13. Outside Improvements. Subject to Subtenant’s receipt of all permits required
therefor, Subtenant may construct, at its sole cost and expense, three (3) hazardous materials
sheds and a nitrogen storage and delivery system outside the Premises, in the locations shown
on
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 of
the
Master Lease. In addition, Subtenant shall obtain Master Landlord’s consent to the contractor
and architect for the Outside Improvements. Subtenant’s construction and operation of the
Outside Improvements shall comply with all requirements of the Master Lease, including,
without limitation Article 8 of the Master Lease as incorporated
herein, and with all laws. In
addition, Subtenant shall be responsible for all costs due to Master Landlord under the Master
Lease in connection with the Outside Improvements. Upon expiration or earlier termination of
this Sublease, Subtenant shall remove the Outside Improvements and all associated Hazardous
Materials and repair all damage to the area caused by the constructions and/or removal of
thereof.

     14. Vivarium. Subtenant may construct, in its sole discretion and at its sole cost and
expense, a vivarium in the Sublease Premises for housing of rats and mice (and no other
animals), in the location shown on Exhibit B (the “Vivarium”). Prior to constructing the
Vivarium, Subtenant shall obtain Master Landlord’s prior written consent, as required by the
terms of the Master Lease. In addition, Subtenant shall obtain Master Landlord’s consent to
the
contractor and architect for the Vivarium. Subtenant’s construction of the Vivarium shall
comply with all requirements of the Master Lease, including, without limitation Article 8 of
the
Master Lease as incorporated herein, and with all laws. In addition, Subtenant shall be
responsible for all costs due to Master Landlord under the Master Lease in connection with the
alterations, additions, or improvements. Upon construction, the Vivarium shall be deemed part
of
the 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 of
the parties under the Master Lease are hereby imposed upon the parties hereto with respect to the
Sublease Premises, the Sublandlord being substituted for the Landlord in the Master Lease, the
Subtenant 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 Master
Landlord, not Sublandlord: Section 6.1, Articles 7, 11, 13, and 29.13 and (ii) shall mean both
Master Landlord and Sublandlord: Article 8. It is further understood that where reference is made
in the Master Lease to the “Premises,” the same shall mean the Sublease Premises as defined
herein; 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,” the
same shall mean this Sublease. The parties specifically agree that any provisions relating to any
construction obligations of “Landlord” under the Master Lease with respect to construction that
occurred 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 its
obligations under the Master Lease, nor shall such failure by Master Landlord excuse performance by
Subtenant of its obligations hereunder; provided, however, that Sublandlord shall use its
commercially reasonable efforts to cause Master Landlord to perform its obligations under the
Master Lease, including instituting legal proceedings at Subtenant’s sole cost and expense if
reasonably requested by Subtenant, provided that Sublandlord is not exposed to any risk of
termination of the Master Lease or the Building A Lease. Anything in the Master Lease to the
contrary notwithstanding, no personal liability shall at any time be asserted or enforceable
against Sublandlord’s stockholders, directors, officers or partners on account of any of
Sublandlord’s obligations or actions under this Sublease.

          (b) The following Sections and Exhibits of the Master Lease are not
incorporated herein: Summary of Basic Lease Information (except Items 7 and 9), Sections 1.1.1
and 1.2, Articles 2 and 3, Sections 4.6 and 8.5, Articles 20, 21 and 22 (unless Master
Landlord
consents 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 to
Lease.

          (c) Subtenant hereby assumes and agrees to perform for Sublandlord’s
benefit, during the term of this Sublease, all of Sublandlord’s obligations as Subtenant with
respect to the Premises under the Master Lease, as such obligations apply to the Sublease
Premises, except as otherwise provided herein. Subtenant shall not commit or permit to be
committed 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 and
subordinate to all of the terms of the Master Lease and Master Landlord shall have all rights
in
respect of the Master Lease and the Premises as set forth therein.

     16. Insurance. Subtenant shall be responsible for compliance with the insurance
provisions of the Master Lease. Such insurance shall insure the performance by Subtenant of
its
indemnification obligations hereunder and shall name Master Landlord and Sublandlord as
additional insureds. All insurance required under this Sublease shall contain an endorsement
requiring thirty (30) days written notice from the insurance company to Subtenant and
Sublandlord before cancellation or change in the coverage, insureds or amount of any policy.
Subtenant shall provide Sublandlord with certificates of insurance evidencing such coverage
prior to the commencement of this Sublease.

     17. Default. In addition to defaults and applicable cure periods contained in the
Master Lease, failure of Subtenant to make any payment of Rent within three (3) days of when
due hereunder shall constitute an event of default hereunder. If Subtenant’s default causes
Sublandlord to default under the Master Lease, Subtenant shall defend, indemnify and hold
Sublandlord 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 notices
to 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 from
Master Landlord which pertains to the Sublease Premises within five (5) business days after
Sublandlord’s receipt of such notice.

     19. Sublandlord’s Obligations.

          (a) To the extent that the provision of any services or the performance of any
maintenance or any other act respecting the Sublease Premises, the Premises or Building is the
responsibility of Master Landlord (collectively “Master Landlord Obligations”), upon
Subtenant’s request, Sublandlord shall make reasonable efforts to cause Master Landlord to
perform such Master Landlord Obligations, provided, however, that in no event shall
Sublandlord be liable to Subtenant for any liability, loss or damage whatsoever in the event
that
Master Landlord should fail to perform the same, unless Master Landlord’s failure to perform
is
caused by Sublandlord’s own negligence or willful misconduct, nor shall Subtenant be entitled
to
withhold the payment of Rent or terminate this Sublease. It is expressly understood that the
services and repairs which are incorporated herein by reference, including but not limited to
the
maintenance of exterior walls, structural portions of the roof, foundations, walls and floors,
will
in 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 serving
the Building (which will be available for service to the Sublease Premises), (ii) the common
areas inside the Building, and (iii) the HVAC, electrical, and plumbing systems of the
Building.
Except as otherwise provided herein, Sublandlord shall have no other obligations to Subtenant
with 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 to
the expiration of this Sublease, Sublandlord shall have no liability to Subtenant on account
of
such termination. Notwithstanding the foregoing, Sublandlord will not voluntarily do, or fail
to
do, anything which will constitute a default under the Master Lease or permit the Master Lease
to be terminated for any reason other than as expressly permitted by the Master Lease due to
casualty, condemnation, or material default of Master Landlord thereunder.

-10-

 

     21. Consent of Master Landlord and Sublandlord. If Subtenant desires to take any
action which requires the consent or approval of Sublandlord pursuant to the terms of this
Sublease, 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 of
approval or disapproval as Master Landlord has under the Master Lease, and (b) Subtenant shall
not take any such action until it obtains the consent of Sublandlord and Master Landlord, as
may
be required under this Sublease or the Master Lease. This Sublease shall not be effective
unless
and until any required written consent of the Master Landlord shall have been obtained.

     22. Indemnity. Subtenant shall indemnify, defend, protect, and hold Sublandlord and
Master Landlord harmless from and against all actions, claims, demands, costs, liabilities,
losses,
reasonable attorneys’ fees, damages, penalties, and expenses (collectively “Claims”) which are
brought or made against Sublandlord or which Sublandlord pays or incurs to the extent caused
by (a) a breach of this Sublease by Subtenant, (b) any violation of law by Subtenant or its
employees, agents, contractors or invitees (collectively, “Agents”) relating to the use or
occupancy of the Sublease Premises or the area occupied by the Outside Improvements, (c) any
act or omission by Subtenant or its Agents resulting in contamination of any part or all of
the
Premises or area occupied by the Outside Improvements by Hazardous Materials, (d) the gross
negligence or willful misconduct of Subtenant or its Agents, and (e) Subtenant’s use of the
Premises, including the Outside Improvements and Vivarium. Nothing in the Master Lease or
the Sublease shall be construed to impose any liability, cost or other requirement on
Subtenant
for any Hazardous Materials existing in the Sublease Premises or the area occupied by the
Outside Improvements prior to the date the Sublease Premises are delivered to Subtenant, or
any
Hazardous Materials introduced to the Sublease Premises or the area occupied by the Outside
Improvements by Sublandlord or its Agents. Sublandlord shall indemnify, defend, protect, and
hold Subtenant harmless from and against all Claims which are brought or made against
Subtenant or which Subtenant pays or incurs to the extent caused by (i) Sublandlord’s or its
Agent’s gross negligence or willful misconduct, (ii) any event relating to the Premises that
occurred 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 no
broker in connection with this Sublease and the transactions contemplated herein, except
Irving
Hughes Group (“Broker”). Each party shall indemnify, protect, defend and hold the other party
harmless from all costs and expenses (including reasonable attorneys’ fees) arising from or
relating to a breach of the foregoing representation and warranty. Sublandlord agrees to pay
the
Broker pursuant to a separate written agreement.

     24. Surrender of Sublease Premises. In lieu of any obligation or liability set forth
in the Master Lease, upon the termination of the Sublease, Subtenant shall surrender the
Sublease
Premises and the area occupied by the Outside Improvements to Sublandlord broom-clean and in
as good a condition as on the Commencement Date, ordinary wear and tear excepted. In
addition, at Sublandlord’s option (by written notice to Subtenant at the time of its consent
to such
alteration, addition or improvements, if Subtenant obtained Sublandlord’s consent thereto, and
if
not, by written notice at least sixty (60) days prior to the expiration of this Sublease)
Subtenant
shall remove any alterations, additions and improvements , prior to the termination of the
Sublease and restore the Sublease Premises to its prior condition, ordinary wear and tear

-11-

 

excepted, repairing all damage caused by or related to any such removal, all at Subtenant’s
expense. Removal of the Subtenant Improvements shall be governed by Section 7(c) above. Removal of
the Outside Improvements shall be governed by Section 13 above.

     25. Right of First Offer. Sublandlord hereby grants to Subtenant the continuing
right of first offer to amend this Sublease to add any or all of the remainder of the
Building, and
any or all of Building A (“First Offer Space”) in the event Sublandlord elects to offer such
space to sublet during the Term of this Sublease, or in the event Sublandlord decides to
assign
the remainder of the Master Lease to any third party. Sublandlord will deliver written
notice
(“Offer Notice”) to Subtenant from time to time whenever Sublandlord determines that it will
commence marketing any portion of the First Offer Space for sublease or assignment or prior to
entering into negotiations to sublet any portion of the First Offer Space or assign the Master
Lease, which Offer Notice will describe the space which Sublandlord proposes to sublease or
assign. Within ten (10) business days after Subtenant’s receipt of the Offer Notice,
Subtenant
may elect to exercise its right of first offer with respect to any of the space described in
the Offer
Notice by delivering written notice (“Exercise Notice”) to Sublandlord. The right of first
offer
shall not apply if, as of the date Sublandlord receives Subtenant’s Exercise Notice, Subtenant
is
in default of any terms, covenants or conditions of this Sublease after the expiration of any
applicable notice and cure periods. If Subtenant properly exercises the right of first offer,
the
First Offer Space will be leased to Subtenant on the same terms and conditions as affect the
original Sublease Premises (except for the Improvement Loan, which shall not be applicable),
at
the 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 additional
rentable square feet of the First Offer Space. The parties agree to execute an amendment to
this
Sublease promptly after the exercise of the right of first offer to include the First Offer
Space and
the terms thereof. This right of first offer shall be a continuing right and in the event
Subtenant
fails to lease any space offered to Subtenant, the right of first offer will continue to apply
to any
subsequent availability of such space.

     26. No Third Party Rights. The benefit of the provisions of this Sublease is
expressly limited to Sublandlord and Subtenant and their respective permitted successors and
assigns. Under no circumstances will any third party be construed to have any rights as a
third
party beneficiary with respect to any of said provisions.

     27. Counterparts. This Sublease may be signed in two or more counterparts, each of
which shall be deemed an original and all of which shall constitute one agreement.

     28. Quiet Enjoyment. Subtenant shall peacefully have, hold and enjoy the Sublease
Premises, subject to the terms and conditions of this Sublease and subject to the Master
Lease,
provided that Subtenant pays all rent and performs all of Subtenant’s covenants and agreements
contained 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 will
become
a direct lease between Sublandlord, as Landlord and Subtenant as Tenant on all the same terms
and conditions contained herein.

-12-

 

     30. Estoppel. Sublandlord hereby represents and warrants that (i) the Master Lease is
in full force and effect, (ii) to Sublandlord’s actual knowledge, no defaults exist by either
Sublandlord or the Master Landlord under the Master Lease, (iii) to Sublandlord’s actual knowledge
there are no circumstances which, given notice or the passage of time or both, would constitute a
default under the Master Lease, and (iv) that Sublandlord has the full right, power and authority
to enter into this Sublease (subject to the consent of Master Landlord).

[Remainder of Page Intentionally Left Blank]

-13-

 

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

	 	 	 
	 

	 	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 the
Sublease 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

EXHIBIT B-Page 1

 

 

EXHIBIT B-Page 2

 

 

EXHIBIT C 

DETERMINATION OF FAIR MARKET RENT

          1. Sublandlord and Subtenant shall each appoint one arbitrator who shall by
profession be a real estate broker or appraiser who shall have been active over the five (5)
year
period ending on the date of such appointment in the leasing (or appraisal, as the case may
be) of
commercial / industrial properties in the Sorrento Mesa submarket of San Diego, California.
The
determination of the arbitrators shall be limited solely to the issue of whether Sublandlord’s
or
Subtenant’s submitted Fair Market Rent is the closest to the actual Fair Market Rent, as
determined by the arbitrators, taking into account the requirements of Section 2(b) of this
Sublease (i.e., the arbitrators may only select Sublandlord’s or Subtenant’s determination and
shall not be entitled to make a compromise determination). Each such arbitrator shall be
appointed within fifteen (15) business days after the applicable Outside Agreement Date.

          2. The two (2) arbitrators so appointed shall within five (5) days of the date
of the appointment of the last appointed arbitrator agree upon and appoint a third arbitrator
who
shall be qualified under the same criteria set forth hereinabove for qualification of the
initial two
(2) arbitrators.

          3. The three (3) arbitrators shall within five (5) days of the appointment of
the third arbitrator reach a decision as to whether the parties shall use Sublandlord’s or
Subtenant’s submitted Fair Market Rent and shall notify Sublandlord and Subtenant thereof.

          4. The decision of the majority of the three (3) arbitrators shall be binding
upon Sublandlord and Subtenant.

          5. If either Sublandlord or Subtenant fails to appoint an arbitrator within
fifteen (15) business days after the applicable Outside Agreement Date, the arbitrator
appointed
by one of them shall reach a decision, notify Sublandlord and Subtenant thereof, and such
arbitrator’s decision shall be binding upon Sublandlord and Subtenant.

          6. If the two (2) arbitrators fail to agree upon and appoint a third arbitrator,
or both parties fail to appoint an arbitrator, then the appointment of the third arbitrator or
any
arbitrator shall be dismissed and the Fair Market Rent be decided shall be forthwith submitted
to
arbitration under the provisions of the American Arbitration Association, but subject to the
instruction set forth in this Exhibit C.

          7. The cost of arbitration shall be paid by Sublandlord and Subtenant equally.

EXHIBIT C-Page 1

 

 

EXHIBIT D 

DISBURSEMENT OF IMPROVEMENT LOAN

Subtenant shall prepare a budget for the design, permitting and construction of the Subtenant
Improvements (“Subtenant Improvement Budget”), including, without limitation: (i) design and
architectural fees, (ii) engineering fees, (iii) costs of processing and obtaining permits from any
governmental entity, (iv) water and sewer connection charges, utilities consumed for construction,
and other expenses related or similar thereto, (v) payments to architects, designers, contractors,
subcontractors and material suppliers and the other direct costs incurred in the design and
construction of the Subtenant Improvements, and (vi) premiums for insurance carried by Subtenant or
its contractors, subcontractors, designers, or architects with respect to the construction. As work
progresses on the Subtenant Improvements, Subtenant shall submit an application for payment
(“Application for Payment”) to Sublandlord no more often than monthly, for work completed by and
through the twentieth (20th) day of the month, for disbursement of the Improvement Loan.
Applications for Payment may be made only for work actually completed or services actually provided
and shall include a detailed description of such completed Subtenant Improvement work or services.
Applications for Payment shall include copies of the invoices to Subtenant by Subtenant’s
contractor(s) or other vendors for the work completed. As a condition of payment of any Application
for Payment, Sublandlord shall require the certification by both Subtenant and Subtenant’s
architect that the described Subtenant Improvement Work or services have been completed.
Sublandlord shall disburse the requested funds directly to Subtenant (or, at Subtenant’s election,
to a contractor or other vendor) on or before the later of the tenth (10th) day following the date
the Application for Payment was submitted to Sublandlord or the tenth (10th) day of the calendar
month immediately succeeding the last day covered by the Application for Payment. Notwithstanding
the foregoing, if Subtenant fails to promptly pay to any vendor or contractor any amount included
in an Application for Payment submitted to Sublandlord, then at its election, Sublandlord may
disburse any sums otherwise owing by Sublandlord to Subtenant hereunder by joint check in the name
of the Subtenant and the applicable vendors or contractors, until Subtenant demonstrates to
Sublandlord’s reasonable satisfaction that all vendors and contractors have been paid current;
provided, however, that the foregoing shall not apply to any vendor or contractor (i) with which
Subtenant has a good faith dispute, (ii) to whom Subtenant has paid all sums that are not in
dispute, and (iii) for whom Subtenant has provided Sublandlord with a bond or other appropriate
assurances that no lien will attach to Master Landlord’s right, title and interest in the Premises.

EXHIBIT D-Page 1

 

 

EXHIBIT E 

OUTSIDE IMPROVEMENTS

EXHIBIT E-Page 1exv10w1

 

EXHIBIT 10.1

March 7, 2008

Via Hand Delivery

Robin Easton

Chief Financial Officer

Blue Nile, Inc.

705 Fifth Avenue South

Suite 900

Seattle, Washington 98104

Dear Robin:

     This letter sets forth the terms of the separation agreement (the “Agreement”) that Blue Nile
(the “Company”) is offering to you to aid in your employment transition.

     1. Separation Date. Your employment with the Company will terminate effective March 31, 2008
(the “Separation Date”). Between the date of this Agreement and the Separation Date, you are not
expected to nor authorized to take any action on behalf of the Company, except with advanced
written authorization by the Chief Executive Officer.

     2. Accrued Salary and Vacation Pay. The Company will pay you all accrued salary, and all
accrued and unused vacation (if any), earned through the Separation Date, less standard payroll
deductions and withholdings.

     3. Severance Payments. Although the Company is not otherwise obligated to do so, if you enter
into this Agreement, the Company will pay you severance equal to two months of your current base
salary, paid in the form of salary continuation (the “Severance Payments”). The Severance Payments
will be subject to standard payroll deductions and withholdings and paid on the Company’s normal
payroll dates beginning with the first payroll date following the later of the Separation Date or
the Effective Date (as defined below). Following the Separation Date, you will not be entitled to
accrual of any employee benefits, including, but not limited to, vacation benefits, 401(k)
contributions or bonuses.

     4. Health Insurance. Your coverage under the Company’s group health plan will end on the last
day of the month in which your Separation Date falls (or as otherwise provided in the plan). To
the extent provided by the federal COBRA law or, if applicable, state insurance laws, and by the
Company’s current group health plan, you may be eligible to continue your group health insurance
benefits at your own expense after the Separation Date. You will be separately provided a written
notice of your rights and obligations under COBRA.

     5. No Other Compensation or Benefits. You acknowledge that, except as expressly provided in
this Agreement, you are not entitled to and you will not receive from the Company any additional
compensation, severance, or benefits after the Separation Date, with the exception of any vested
right you may have under the terms of a written ERISA-qualified benefit plan (e.g., 401(k)
account). By way of example, but not limitation, you acknowledge that you have not earned and are
not owed any bonus or incentive compensation. You also acknowledge that you do not have any
vested and exercisable shares as of the Separation Date and that your option on all unvested shares
as of the Separation Date will terminate.

     6. Expense Reimbursements. You agree that, within thirty (30) days after the Separation Date,
you will submit your final documented expense reimbursement statement reflecting all business
expenses you incurred through the Separation Date, if any, for which you seek reimbursement. The
Company will reimburse you for these expenses pursuant to its regular business practices.

 

 

     7. Return of Company Property. You agree that, on the Separation Date, you will return to the
Company all Company documents (and all copies thereof) and other Company property that you have in your
possession or control, including, but not limited to, any files, correspondence, memoranda,
reports, lists, proposals, notes, drawings, records, plans, forecasts, purchase orders, personnel
information, operational information, customer information and contact lists, sales and marketing
information, financial information, promotional literature, product specifications,
computer-recorded information, other tangible property, credit cards, entry cards, identification
badges and keys; and any materials of any kind that contain or embody any proprietary or
confidential information of the Company or its officers, directors, and employees (and all
reproductions thereof in whole or in part). You agree that you will make a diligent search to
locate any such documents, property and information. In addition, if you have used any personal
computer, server, or e-mail system to receive, store, review, prepare or transmit any Company
confidential or proprietary data, materials or information, you agree to provide the Company with a
computer-useable copy of such information and then permanently delete and expunge such Company
confidential or proprietary information from those systems; and you agree to provide the Company
access to your system as requested to verify that the necessary copying and/or deletion is done.
Your timely return of all Company property is a precondition of your receipt of the Severance
Payments.

     8. Proprietary Information Obligations. You hereby acknowledge and reaffirm your continuing
obligation to comply with your Employee Nondisclosure, Proprietary Information, Inventions,
Nonsolicitation and Noncompetition Agreement dated September 10, 2007, and you will comply fully
with those obligations, including refraining from any use or disclosure of the Company’s
confidential or proprietary information or materials, unless specifically authorized in writing by
an officer of the Company.

     9. Confidentiality. You agree to keep the terms and conditions of this Agreement confidential
and not to disclose or characterize it to any third party; provided, however, that you may disclose
this Agreement in confidence to your immediate family; attorneys, accountants, auditors, tax
preparers, and financial advisors; or as required by law or pursuant to a lawfully issued subpoena.

     10. Nondisparagement. You agree not to disparage the Company or its officers, directors,
employees, shareholders and agents, in any manner likely to be harmful to them or their business,
business reputation or personal reputation. The Company will respond to any questions from
prospective employers about your employment with or separation from the Company by providing only
your dates of employment, title and salary, and indicating that it is not the practice of the
Company to provide more information. You agree to direct all such prospective employers to the
Human Resources department.

     11. No Voluntary Adverse Action. You agree that you will not encourage any person in bringing
or pursuing any claim or action of any kind against the Company, its parents, subsidiaries,
affiliates, officers, directors, employees or agents, unless pursuant to subpoena or other
compulsion of law.

     12. No Admissions. Nothing contained in this Agreement shall be construed as an admission by
you or the Company of any liability, obligation, wrongdoing or violation of law.

     13. Release of Claims. Except as otherwise set forth in this Agreement, in exchange for the
consideration under this Agreement to which you would not otherwise be entitled (including, but not
limited to, the Severance Payments), you, on behalf of yourself, and your respective heirs, family
members, executors and assigns, hereby generally and completely release the Company and its
parents, subsidiaries, successors, predecessors and affiliates, and its and their past, present and
future directors, officers, employees, agents, employees, investors, stockholders, predecessor and
successor corporations, attorneys, insurers, affiliates and assigns (the “Released Parties”), from
any and all claims, demands, actions, suits, damages, losses, expenses, attorneys’ fees duties,
liabilities, obligations or causes of action relating to any matters of any kind, both known and
unknown, that arise out of or are in any way related to events, acts, conduct, or omissions
occurring at any time prior to and including the time you sign this Agreement.

This general release includes, but is not limited to:

	 	a.	 	all claims arising out of or in any way related to your employment with
the Company or the termination of that employment;
	 
	 	b.	 	all claims related to your compensation or benefits, including salary,
bonuses, commissions, vacation pay, expense reimbursements, severance pay, fringe
benefits, stock, stock options, or any other equity interests in the Company;

 

 

	 	c.	 	all claims for breach of contract, wrongful termination, and breach of
the implied covenant of good faith and fair dealing;
	 
	 	d.	 	all tort claims, including claims for fraud, defamation, emotional
distress, and discharge in violation of public policy;
	 
	 	e.	 	any and all claims relating to, or arising from, your right to purchase,
or actual purchase of shares of stock of the Company, including, without limitation,
any claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty
under applicable state corporate law, and securities fraud under any state or
federal law;
	 
	 	f.	 	any and all claims for violation of the federal, or any state,
constitution;
	 
	 	g.	 	any and all claims for any loss, cost, damage, or expense arising out of
any dispute over the non-withholding or other tax treatment of any of the proceeds
received by you as a result of this Agreement;
	 
	 	h.	 	any and all claims for attorneys’ fees and costs;
	 
	 	i.	 	any and all claims under the law of any jurisdiction including, but not
limited to, wrongful discharge of employment; constructive discharge from
employment; termination in violation of public policy; discrimination; breach of
contract, both express and implied; promissory estoppel; negligent or intentional
infliction of emotional distress; negligent or intentional misrepresentation;
negligent or intentional interference with contract or prospective economic
advantage; unfair business practices; defamation; libel; slander; negligence;
personal injury; assault; battery; invasion of privacy; false imprisonment; and
conversion; and
	 
	 	j.	 	all federal, state, and local statutory claims, including claims for
discrimination, harassment, retaliation, or attorneys’ fees.

You make this commitment even though you understand that you may not, as of this date, know all of
the claims you may lawfully have against the Released Parties and that you are giving up the right
to pursue any claims that you could have pursued before courts without having the opportunity to
pursue those claims to a trial and have the damages, if any, set by a judge or jury. This release
is intended to be as broad as the law allows and includes, without limitation, any claims under
statute or otherwise for attorneys’ fees and costs.

You represent that you have no lawsuits, claims or actions pending in your name, or on behalf of
any other person or entity, against any of the Released Parties. You agree that all Released
Parties (except the Company, which is a party to this Agreement) are third party beneficiaries of
this Agreement who may enforce the terms of such release.

     14. Reservation of Rights. This Agreement shall not affect any rights which you may have
under any medical insurance, disability plan, workers’ compensation, unemployment compensation,
applicable stock incentive plan(s), or the 401(k) plan maintained by the Company.

     15. ADEA Waiver. You acknowledge that you are knowingly and voluntarily waiving and releasing
any rights you may have under the Age Discrimination and Employment Act (the “ADEA”), and that the
consideration given for the waiver and release in the preceding paragraph hereof is in addition to
anything of value to which you are already entitled.

You further acknowledge that you have been advised in this letter as required by the ADEA, that:

	 	a.	 	your waiver and release do not apply to any rights or claims that may
arise after the date that you sign this Agreement;
	 
	 	b.	 	you should consult with an attorney of your choice prior to signing this
Agreement (although you may choose voluntarily not to do so);
	 
	 	c.	 	you have twenty-one (21) days to consider this Agreement (although you
may choose voluntarily to sign it earlier);

 

 

	 	d.	 	you have seven (7) days following the date you sign this Agreement to
revoke the Agreement by providing written notice of revocation to the Company’s
General Counsel; and
	 
	 	e.	 	this Agreement will not be effective until the date upon which the
revocation period has expired, which will be the eighth calendar day after the date
that this Agreement is signed by you (the “Effective Date”).

     16. Future Lawsuits. You represent that you have no lawsuits, claims, or actions pending in
your name, or on behalf of any other person or entity, against the Company or any other person or
entity referred to herein. You also represent that you do not intend to bring any claims on your
own behalf or on behalf of any other person or entity against the Company or any other person or
entity referred to herein.

     17. Severability. If any provision of this Agreement is determined to be invalid or
unenforceable, in whole or in part, this determination will not affect any other provision of this
Agreement and the provision in question shall be modified so as to be rendered enforceable in a
manner consistent with the intent of the parties insofar as possible under applicable law.

     18. Miscellaneous. This Agreement constitutes the complete, final and exclusive embodiment of
the entire agreement between you and the Company with regard to its subject matter. It is entered
into without reliance on any promise or representation, written or oral, other than those expressly
contained herein, and it supersedes any other such promises, warranties or representations. This
Agreement may not be modified or amended except in a writing signed by both you and a duly
authorized officer of the Company. This Agreement will bind the heirs, personal representatives,
successors and assigns of both you and the Company, and inure to the benefit of both you and the
Company, their heirs, successors and assigns. This Agreement will be deemed to have been entered
into and will be construed and enforced in accordance with the laws of the State of Washington as
applied to contracts made and to be performed entirely within Washington. Any ambiguity in this
Agreement shall not be construed against either party as the drafter. Any waiver of a breach of
this Agreement shall be in writing and shall not be deemed to be a waiver of any successive breach.
This Agreement may be executed in counterparts and facsimile signatures will suffice as original
signatures.

If this Agreement is acceptable to you, please sign below and return the original to me within
twenty-one days from the date you receive this letter. The offer contained in this Agreement will
automatically expire if we do not receive the executed Agreement from you at the end of that
period.

We wish you the best in your future endeavors.

	 	 	 	 	 
	Sincerely,	 	 
	 
	 	 	 	 
	Blue Nile, Inc.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Diane Irvine
 

	 	 
	Diane Irvine	 	 
	Chief Executive Officer	 	 

Exhibit A — Nondisclosure, Proprietary Information, Inventions, Nonsolicitation and Noncompetition
Agreement

	 	 	 
	Understood and Agreed:
	 	 
	 
	 	 
	/s/ Robin Easton
 

Robin Easton

	 	 

Date: March 18, 2008

 

 

EXHIBIT A

BLUE NILE, INC.

EMPLOYEE NONDISCLOSURE, PROPRIETARY INFORMATION, INVENTIONS, NONSOLICITATION AND NONCOMPETITION AGREEMENT

          In consideration of my employment or continued employment by Blue Nile, Inc., a
Delaware corporation (the “Company”), and the compensation now and hereafter paid to me, I hereby
agree as follows:

1. Nondisclosure

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

          1.2 Proprietary Information. The term “Proprietary Information” shall mean any and all
information or physical material not generally known or available outside the Company or
information or physical material entrusted to the Company by third parties. By way of illustration
but not limitation, “Proprietary Information” includes: (a) customer orders, including, but not
limited to, customer names, shipping addresses, billing addresses, email addresses, order amounts,
phone numbers, social security numbers, or any other personally identifiable customer information;
(b) suppliers, including, but not limited to, supplier names, products, volumes or terms; (c) trade
secrets, inventions, mask works, ideas, processes, formulas, source and object codes, data,
programs, other works of authorship, know-how, improvements, discoveries, developments, designs and
techniques (hereinafter collectively referred to as “Inventions”); (d) information regarding plans
for research, development, new products, marketing and selling, business plans, budgets and
unpublished financial statements, licenses, prices and costs, suppliers and customers; (e) any and
all information relating to and concerning the Company’s employees, including, but not limited to,
employee names, skills, abilities, expertise, knowledge, experience, position or job titles, areas
of responsibility, educational background, professional certifications and/or licenses, previous
work experience, salary, compensation, employee benefits, contact information, employment policies
and/or procedures, and any other personnel-related information; and (f) cost or other financial
data concerning any of the foregoing or the Company and its operations. Notwithstanding the
foregoing, it is understood that, at all such times, I am free to use information which is
generally known in the trade or industry, which is not gained as result of a breach of this
Agreement, and my own, skill, knowledge, know-how and experience to whatever extent and in
whichever way I wish.

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

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

2. Assignment of Inventions.

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

 

 

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

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

     2.4 Nonassignable Inventions. I recognize that, my obligation to assign shall not apply to
any Invention for which no equipment, supplies, facility or trade secret information of the Company
was used and which was developed entirely on the my own time, unless (a) the Invention relates
(i) directly to the business of the Company or (ii) to the Company’s actual or demonstrably
anticipated research or development; or (b) the Invention results from any work performed by me for
the Company (a “Nonassignable Invention”).

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

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

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

     2.8 Enforcement of Proprietary Rights. I will assist the Company in every proper way to
obtain, and from time to time enforce, United States and foreign Proprietary Rights relating to
Company Inventions in any and all countries. To that end I will execute, verify and deliver such
documents and perform such other acts (including appearances as a witness) as the Company may
reasonably request for use in applying for, obtaining, perfecting, evidencing, sustaining and
enforcing such Proprietary Rights and the assignment thereof. In addition, I will execute, verify
and deliver assignments of such Proprietary Rights to the Company or its designee. My obligation
to assist the Company with respect to Proprietary Rights relating to such Company Inventions in any
and all countries shall continue beyond the termination of my employment, but the Company shall
compensate me at a reasonable rate after my termination for the time actually spent by me at the
Company’s request on such assistance.

In the event the Company is unable for any reason, after reasonable effort, to secure my signature
on any document needed in connection with the actions specified in the preceding paragraph, I
hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as
my agent and attorney in fact, which appointment is coupled with an interest, to act for and in my
behalf to

9.

 

execute, verify and file any such documents and to do all other lawfully permitted acts to further
the purposes of the preceding paragraph with the same legal force and effect as if executed by me.
I hereby waive and quitclaim to the Company any and all claims, of any nature whatsoever, which I
now or may hereafter have for infringement of any Proprietary Rights assigned hereunder to the
Company.

3. Records. I agree to keep and maintain adequate and current records (in the
form of notes, sketches, drawings and in any other form that may be required by the Company) of all
Proprietary Information developed by me and all Inventions made by me during the period of my
employment at the Company, which records shall be available to and remain the sole property of the
Company at all times.

4. Nonsolicitation And Noncompetition

     4.1 Definition. “Competing Business” means any on-line business whose efforts, directly or
indirectly, are in competition with the efforts of the Company. A Competing Business includes, but
is not limited to, any on-line business whose efforts involve any research, development or products
in competition with products which are, during and at the end of the period of employment, either
(a) produced, marketed or otherwise commercially exploited by the Company or (b) in actual or
demonstrably anticipated research or development by the Company.

     4.2 Nonsolicitation. I agree further that for the period of my employment by the Company and
for one (l) year after the date of termination of my employment by the Company I will not induce
any employee or independent contractor of the Company to leave the employ of the Company.

     I agree further that for the period of my employment by the Company and for one (1) year after
the date of termination of my employment from the Company, I will not directly or indirectly (a)
solicit, divert, appropriate to or accept on behalf of any Competing Business, or (b) attempt to
solicit, divert, appropriate to or accept on behalf of any Competing Business, any business from
any supplier or vendor or actively sought prospective supplier or vendor of the Company with whom I
have dealt, whose dealings with the Company have been supervised by me or about whom I have
acquired Proprietary Information in the course of my employment.

     4.3 Noncompetition. I agree that during the period of my employment by the Company and for
one (1) year after the date of termination of my employment from the Company, I will not engage in,
be employed by, perform services for, participate in the ownership, management, control or
operation of, or otherwise be connected with, either directly or indirectly, any Competing
Business. I agree that: (a) services to be performed by me under this Agreement are of a special
and intellectual character; (b) the Company’s business is international in scope and its services
are marketed throughout the world; (c) the Company competes with other businesses that are or could
be located in any part of the world; and (d) the provisions of Section 4.3 are reasonable and
necessary to protect the Company’s business. I further agree that should a court exercising
jurisdiction with respect to this Agreement find the restrictions herein invalid or unenforceable
due to unreasonableness, either in period of time, geographic area, or otherwise, then in that
event, such restriction is to be interpreted and enforce to the maximum extent which such court
deems reasonable. The Company’s Chief Executive Officer, in his/her sole discretion, may determine
to waive the noncompetition provisions of this Section 4.3. Any such waiver must be in writing and
shall not constitute a waiver of any noncompetition or forfeiture provisions of any other agreement
between the Company and me.

5. Additional Activities. I agree that during the period of my employment by the
Company I will not, without the Company’s express written consent, engage in any employment or
business activity which is competitive with, or would otherwise conflict with, my employment by the
Company.

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

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

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

10.

 

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

10. Notification of New Employer. In the event that I leave the employ of the
Company, I hereby consent to the notification of my new employer of my rights and obligations under
this Agreement.

11. General Provisions.

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

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

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

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

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

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

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

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

     I have read this Agreement carefully and understand its terms. I have completely filled
out Exhibit A to this Agreement.

Dated: 9/10/2007

	 	 	 
	/s/ Robin Easton
 

(Signature)

	 	 
	 
	 	 
	Robin E. Easton
 

(Printed Name)

	 	 

Accepted and Agreed To:

	 	 	 	 	 
	Blue Nile, Inc.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Eva Elliot
 

	 	 
	 
	 	 	 	 
	705 Fifth Avenue South, Suite 900	 	 
	 	 	 
	(Address)	 	 

Seattle, WA 98104

Dated: 9/10/2007

11.

 

Exhibit A

	 	 	 
	TO:

	 	Blue Nile, Inc.
	 
	 	 
	FROM:

	 	Robin Easton
	 
	 	 
	DATE:

	 	9/10/2007
	 
	 	 
	SUBJECT:

	 	Previous Inventions 

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

	 	þ	 	No inventions or improvements.
	 
	 	o	 	See below:
	 
	 	 	 	 

	 
	 	 	 	 
	 
	 	 	 	 

	 
	 	 	 	 
	 
	 	 	 	 

	o	 	Additional sheets attached.

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

	 	 	 	 	 	 	 
	 	 	Invention or Improvement	 	Party(ies)	 	Relationship
	1.
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 
	2.
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 
	3.
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 

	o	 	Additional sheets attached.

Accepted and Agreed:

	 	 	 	 	 
	By:

	 	/s/ Robin Easton
 

	 	 

12.

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