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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 28, 2014
or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 001-35406

Illumina, Inc.
(Exact name of registrant as specified in its charter)

Delaware 33-0804655
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5200 Illumina Way
San Diego, California 92122
(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code: (858) 202-4500
Securities registered pursuant to Section 12(b) of the Act:

Title of each class Name of each exchange on which registered

Common Stock, $0.01 par value The NASDAQ Global Select Market
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and
posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files). Yes No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants
knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large
accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer Accelerated filer o Non-accelerated filer o Smaller reporting company o
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No
As of January 30, 2015, there were 143.8 million shares (excluding 37.8 million shares held in treasury) of the registrants common stock outstanding. The aggregate market
value of the common stock held by non-affiliates of the registrant as of June 29, 2014 (the last business day of the registrants most recently completed second fiscal quarter), based on
the closing price for the common stock on The NASDAQ Global Select Market on June 27, 2014 (the last trading day before June 29, 2014), was $21.2 billion. This amount excludes
an aggregate of approximately 15.1 million shares of common stock held by officers and directors and each person known by the registrant to own 10% or more of the outstanding
common stock. Exclusion of shares held by any person should not be construed to indicate that such person possesses the power, directly or indirectly, to direct or cause the direction
of the management or policies of the registrant, or that the registrant is controlled by or under common control with such person.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrants definitive proxy statement for the 2015 annual meeting of stockholders are incorporated by reference into Items 10 through 14 of Part III of this
Report.
 ILLUMINA, INC.
FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 28, 2014
TABLE OF CONTENTS

Page
PART I
Item 1 Business 4
Item 1A Risk Factors 11
Item 1B Unresolved Staff Comments 21
Item 2 Properties 22
Item 3 Legal Proceedings 22
Item 4 Mine Safety Disclosures 22

PART II
Item 5 Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 23
Item 6 Selected Financial Data 25
Item 7 Managements Discussion and Analysis of Financial Condition and Results of Operations 26
Item 7A Quantitative and Qualitative Disclosures About Market Risk 40
Item 8 Financial Statements and Supplementary Data 42
Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 80
Item 9A Controls and Procedures 80
Item 9B Other Information 83

PART III
Item 10 Directors, Executive Officers and Corporate Governance 83
Item 11 Executive Compensation 83
Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 83
Item 13 Certain Relationships and Related Transactions, and Director Independence 83
Item 14 Principal Accountant Fees and Services 84

PART IV
Item 15 Exhibits and Financial Statement Schedule 84
Signatures 89

1
Special Note Regarding Forward-Looking Statements

This annual report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended. These statements discuss our current expectations concerning future results or events,
including our future financial performance. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private
Securities Litigation Reform Act of 1995. These statements include, among others:

statements concerning our expectations as to our future financial performance, results of operations, or other operational results or metrics;

statements concerning the benefits that we expect will result from our business activities and certain transactions we have completed, such as
product introductions, increased revenue, decreased expenses, and avoided expenses and expenditures; and

statements of our expectations, beliefs, plans, strategies, anticipated developments (including new products and services), and other matters that
are not historical facts.

These statements may be made expressly in this document or may be incorporated by reference to other documents we have filed or will file with the
Securities and Exchange Commission (SEC). You can identify many of these statements by looking for words such as anticipates, believes, can,
continue, could, estimates, expects, intends, may, plans, potential, predicts, should, or will, or the negative of these terms, or other
comparable terminology and similar references to future periods. These forward-looking statements are subject to numerous assumptions, risks, and
uncertainties that may cause actual results or events to be materially different from any future results or events expressed or implied by us in those statements.
Many of the factors that will determine or affect these results or events are beyond our ability to control or project. Specific factors that could cause actual
results or events to differ from those in the forward-looking statements include:

our ability to develop and commercialize our instruments and consumables, to deploy new products, services, and applications, and to expand
the markets for our technology platforms;

our ability to manufacture robust instrumentation and consumables;

our ability to identify and integrate acquired technologies, products, or businesses successfully;

our expectations and beliefs regarding prospects and growth for the business and its markets;

our ability to maintain our revenue levels and profitability during periods of research-funding reduction or uncertainty, or adverse economic
and business conditions, including as a result of slowing or uncertain economic growth in the United States or worldwide;

the assumptions underlying our critical accounting policies and estimates;

our assessments and estimates that determine our effective tax rate;

our assessments and beliefs regarding the outcome of pending legal proceedings and any liability, that we may incur as a result of those
proceedings; and

other factors detailed in our filings with the SEC, including the risks, uncertainties, and assumptions described in Item 1A Risk Factors below,
or in information disclosed in public conference calls, the date and time of which are released beforehand.

Our forward-looking statements speak only as of the date of this annual report. We undertake no obligation, and do not intend, to update or revise
forward-looking statements publicly, to review or confirm analysts expectations, or to provide interim reports or updates on the progress of any current
financial quarter, whether as a result of new information, future events, or otherwise. All subsequent written and oral forward-looking statements attributable
to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained in this annual report. Given these
uncertainties, we caution investors not to rely unduly on our forward-looking statements.

2
Available Information

Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports are available free of
charge on our website, www.illumina.com. The information on our website is not incorporated by reference into this report. Such reports are made available as
soon as reasonably practicable after filing with, or furnishing to, the SEC. The SEC also maintains an Internet site at www.sec.gov that contains reports, proxy
and information statements, and other information regarding issuers that electronically file with the SEC. Copies of our annual report on Form 10-K will be
made available, free of charge, upon written request.

_______________________________________

Illumina, BaseSpace, BeadArray, BlueGnome, cBot, CSPro, DASL, DesignStudio, Epicentre, ForenSeq, Genetic Energy, GenomeStudio,
GoldenGate, HiScan, HiSeq, HiSeq X, Infinium, iScan, iSelect, MiSeq, MiSeqDx, MiSeq FGx, NeoPrep, NextBio, Nextera, NextSeq,
SeqMonitor, TruGenome, TruSeq, TruSight, Understand Your Genome, UYG, VeraCode, verifi, VeriSeq, the pumpkin orange color, and the
Genetic Energy streaming bases design are certain of our trademarks. This report also contains brand names, trademarks, or service marks of companies other
than Illumina, and these brand names, trademarks, and service marks are the property of their respective holders.

_______________________________________

Unless the context requires otherwise, references in this annual report on Form 10-K to Illumina, the Company, we, us, and our refer to
Illumina, Inc. and its subsidiaries.

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 PART I

ITEM 1. Business.

Overview

We are the global leader in sequencing-and array-based solutions for genetic analysis. Our solutions serve customers in a wide range of markets,
enabling the broad adoption of genomics solutions in research and clinical settings. We were incorporated in California in April 1998 and reincorporated in
Delaware in July 2000. Our principal executive offices are located at 5200 Illumina Way, San Diego, California 92122. Our telephone number is (858) 202-
4500.

Our customers include leading genomic research centers, academic institutions, government laboratories, hospitals, and reference laboratories as well as
pharmaceutical, biotechnology, agrigenomics, commercial molecular diagnostic, and consumer genomics companies.

Our portfolio of integrated systems, consumables, and analysis tools is designed to accelerate and simplify genetic analysis. This portfolio addresses a
range of genomic complexity, price points, and throughput, enabling customers to select the best solution for their research or clinical challenge. Our
leading-edge sequencing instruments can efficiently perform a broad range of nucleic-acid (DNA, RNA) analyses across a wide range of sample sizes.

To provide our customers with more comprehensive sample-to-answer solutions, we acquired several companies: NextBio, a leader in clinical and
genomic informatics, in November 2013, Advanced Liquid Logic Inc., a leader in digital microfluidics and liquid handling solutions, in July 2013, and
Epicentre Technologies Corporation, a leading provider of nucleic-acid sample preparation reagents and specialty enzymes for sequencing and array
applications, in January 2011.

Over the last few years, we have made key acquisitions to enable our goal of becoming a leader in the clinical market. These include Myraqa, Inc. in
July 2014, Verinata Health, Inc. in February 2013, and BlueGnome Ltd. in September 2012. Our acquisition of Myraqa bolstered our regulatory and quality
capabilities and enhanced our leadership team in molecular and companion diagnostics. The acquisition of Verinata strengthened our reproductive health
portfolio by adding the Verinata verifi prenatal test, a comprehensive noninvasive prenatal test (NIPT) for high-risk pregnancies. Our acquisition of
BlueGnome, a leading provider of genetic solutions for screening chromosomal abnormalities and genetic variations associated with developmental delay
and infertility, expanded our ability to offer integrated solutions in reproductive health and cancer.

Genetics Primer

The instruction set for all living cells is encoded in deoxyribonucleic acid, or DNA. The complete set of DNA for any organism is referred to as its
genome. DNA contains small regions called genes, which comprise a string of nucleotide bases labeled A, C, G, and T, representing adenine, cytosine,
guanine, and thymine, respectively. These nucleotide bases occur in a precise order known as the DNA sequence. When a gene is expressed, a partial copy
of its DNA sequence called messenger RNA (mRNA) is used as a template to direct the synthesis of a particular protein. Proteins, in turn, direct all cellular
function. The illustration below is a simplified gene expression schematic.

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Variations among organisms are due, in large part, to differences in their DNA sequences. Changes can result from insertions, deletions, inversions,
translocations, or duplications of nucleotide bases. These changes may result in certain genes becoming over-expressed (excessive protein production),
under-expressed (reduced protein production), or silenced altogether, sometimes triggering changes in cellular function. These changes can be the result of
heredity, but most often they occur at random. The most common form of variation in humans is called a single nucleotide polymorphism (SNP), which is a
base change in a single position in a DNA sequence. Another type of variation, copy number variations (CNVs), occur when there are fewer or more copies of
certain genes, segments of a gene, or stretches of DNA.

In humans, genetic variation accounts for many of the physical differences we see (e.g., height, hair, eye color, etc.). Genetic variations also can have
medical consequences affecting disease susceptibility, including predisposition to complex genetic diseases such as cancer, diabetes, cardiovascular disease,
and Alzheimers disease. They can affect individual response to certain drug treatments, causing patients to experience adverse side effects, or to respond well
or not at all.

Scientists are studying these variations and their consequences in humans, as well as in a broad range of animals, plants, and microorganisms. Such
research takes place in government, university, pharmaceutical, biotechnology, and agrigenomics laboratories around the world, where scientists expand our
knowledge of the biological functions essential for life. Beginning at the genetic level, Illumina tools are used to elucidate the correlation between gene
sequence and biological processes. Life-science research includes the study of the cells, tissues, organs, systems, and other components of living organisms.
This research supports the development of new treatments to improve human health. Examples include more tailored clinical treatments, often referred to as
precision medicine, as well as advances in agriculture and animal husbandry to meet growing needs for food and energy. Researchers who investigate human,
viral, and bacterial genetic variation to understand the mechanisms of disease are enabling the development of more effective diagnostics and therapeutics.
They also provide greater insight into genetic variation in plants (e.g., food and biofuel crops) and animals (e.g., livestock and domestic), enabling
improvements in crop yields and animal breeding programs.

By empowering genetic analysis and facilitating a deeper understanding of genetic variation and function, our tools advance disease research, drug
development, and the creation of molecular diagnostic tests. We believe that this will trigger a fundamental shift in the practice of medicine and health care.
The increased emphasis on preventive and predictive molecular medicine will usher in the era of precision health care.

Our Principal Markets

Our business units are aligned to target the markets and customers outlined below.

Life Sciences

Historically, our core business has been in the life sciences research market, which includes laboratories associated with universities, medical research
centers, and government institutions, along with biotechnology and pharmaceutical companies. Researchers at these institutions use our products and
services in a broad spectrum of scientific activities for basic analysis and research, including de novo sequencing, genetic variation analysis, gene expression
analysis, epigenetics, genome wide association studies, and targeted screening. Increasingly, these techniques are migrating to next-generation sequencing
(NGS) due to the improved performance, reduced complexity, and declining costs of NGS technologies. Both private and public funding drive this research,
along with global initiatives to characterize genetic variation and the migration of legacy genetic applications to sequencing-based technologies.

We also provide products and services for other life sciences applied markets such as agrigenomics. Government and corporate researchers use our
sequencing and array-based tools to accelerate and enhance agricultural research. Identifying desirable traits in plants and animals leads to healthier and
more productive crops and livestock.

Reproductive and Genetic Health

Illumina technologies and products provide reproductive-health solutions, including preimplantation genetic screening (PGS), preimplantation genetic
diagnosis (PGD), noninvasive prenatal testing (NIPT), and neonatal and genetic health testing. Our PGS solutions are used with in-vitro fertilization (IVF) to
determine, before implantation, whether an embryo has an abnormal number of chromosomes, which is a major cause of IVF failure and miscarriages. Our
PGD solutions identify, before implantation, which embryos are free from gene variants associated with genetic diseases. Our NIPT solutions provide
noninvasive tests for early identification of fetal chromosomal abnormalities by analyzing cell-free DNA in maternal blood.

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Oncology

Cancer is a disease of the genome, and the goal of cancer genomics is to identify genomic changes that transform a normal cell into a cancerous one.
Understanding these genomic changes allow for a more accurate diagnosis, a better understanding of the prognosis, and the ability to target therapies to
individuals. Researchers and clinicians in the research, translational, and clinical oncology markets use Illumina sequencing and array-based solutions to
identify the molecular changes in a tumor during all stages of tumor progression. Our solutions help transform discoveries into new treatments or therapies
and create tests to predict patient response.

To advance genomic-based precision health care, we are working with leading pharmaceutical companies to develop a universal NGS-based oncology
test system for clinical trials of targeted cancer therapies. The goal is to develop and commercialize a multi-gene panel for companion therapeutic
selection. We are also working with key thought leaders to set standards for NGS-based assays in routine clinical oncology practice and to define regulatory
frameworks for this new testing paradigm.

Enterprise Informatics

Enterprise informatics solutions increase the utility of genomic data by allowing customers to aggregate, analyze, archive, and share genomic data.
Integrating our instruments with data-analysis software solutions allows customers to go from their biological sample, through the raw genomic data, to
meaningful results. Our BaseSpace platform, which can be hosted onsite or in the cloud, integrates directly with our sequencing instruments. It facilitates data
sharing, provides data storage solutions, and streamlines sequencing-data analysis through a growing number of data-analysis applications from Illumina and
the bioinformatics community.

In 2013, we acquired NextBio, which provides a platform for aggregating and analyzing large quantities of genomic and phenotypic data. Translational
research uses this approach to optimize drug therapies and identify trends in overall patient outcomes. We believe that large-scale genomic databases
containing genomic and phenotypic information will enhance the value of human genome sequencing and accelerate the pace of discovery.

New and Emerging Opportunities

Our markets change rapidly in response to genomic innovations. New applications and opportunities develop and evolve quickly. We assess these
against our corporate strategies and consider whether there is a compelling unmet need together with a strong opportunity to transform the market. Some of
the markets that provide immediate and near-term opportunities to expand the use of next-generation sequencing include:

Transplant diagnostics, where sequencing is used to evaluate donor and patient compatibility;

Forensic genomics, where sequencing is used to investigate criminal cases; and

Consumer genomics, where genotyping is used primarily to reveal ancestry and genealogical linkage information.

Our Principal Products and Technologies

Our unique technology platforms support the scale of experimentation necessary for population-scale studies, genome-wide discovery, target selection,
and validation studies (see Figure 1 below). Customers use our products to analyze the genome at all levels of complexity, from whole-genome sequencing to
targeted panels. A large and dynamic Illumina user community has published more than 10,000 customer-authored scientific papers using our technologies.
Through rapid innovation, we are changing the economics of genetic research, enabling projects that were previously considered impossible, and supporting
clinical advances towards precision medicine.

Most of our product sales consist of instruments and consumables (which include reagents, flow cells, and microarrays) based on our proprietary
technologies. For the fiscal years ended December 28, 2014, December 29, 2013, and December 30, 2012, instrument sales comprised 30%, 26%, and 27%,
respectively, of total revenues, and consumable sales represented 56%, 62%, and 64%, respectively, of total revenues.

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Figure 1: Illumina Platform Overview:

Sequencing

DNA sequencing is the process of determining the order of nucleotide bases (A, C, G, or T) in a DNA sample. Our portfolio of sequencing platforms
represents a family of systems that we believe set the standard for productivity, cost-effectiveness, and accuracy among NGS technologies. Customers use our
platforms to perform whole-genome, de novo, and exome sequencing, and targeted resequencing of specific gene regions and genes.

Whole-genome sequencing determines the complete DNA sequence of an organism. In de novo sequencing, the goal is to sequence and analyze a
sample without using information from prior sequencing of that species. In targeted resequencing, a portion of the sequence of an organism is compared to a
standard or reference sequence from previously sequenced samples to identify genetic variation. Understanding the similarities and differences in DNA
sequence between and within species helps us understand the function of the structures encoded in the DNA.

Our DNA sequencing technology is based on our proprietary reversible terminator-based sequencing chemistry, referred to as sequencing by synthesis
(SBS) biochemistry. SBS tracks the addition of labeled nucleotides as the DNA chain is copied in a massively parallel fashion. Our SBS sequencing
technology provides researchers with a broad range of applications and the ability to sequence even large mammalian genomes in days rather than weeks or
years.

Our sequencing platforms can generate between 500 megabases (Mb) and 1.8 terabases (Tb) (equivalent to 16 human genomes) of genomic data,
depending on the instrument and application. There are different price points per gigabase (Gb) for each instrument, and for different applications, which
range from small-genome, amplicon, and targeted gene-panel sequencing to population-scale whole human genome sequencing. Since we launched our first
sequencing system in 2007, our systems have reduced the cost of sequencing by more than a factor of 10,000. In addition, the sequencing time per Gb has
dropped by a factor of nearly 2,000.

Arrays

Arrays are used for a broad range of DNA and RNA analysis applications, including SNP genotyping, CNV analysis, gene expression analysis, and
methylation analysis, and allows for the detection of up to 5,000,000 known genetic markers on a single array.

Our BeadArray technology combines microscopic beads and a substrate in a proprietary manufacturing process to produce arrays that can perform many
assays simultaneously. This facilitates large-scale analysis of genetic variation and biological function in a uniquely high-throughput, cost-effective, and
flexible manner. Using our BeadArray technology, we achieve high-throughput analysis via a high density of test sites per array and the ability to format
arrays in various configurations. We maximize cost effectiveness by reducing expensive consumables, valuable sample input requirements, and
manufacturing costs. Varying the size, shape, and format of the well patterns and creating specific beadpools for different

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applications lets us address multiple markets and market segments. Our HiScan and iScan array scanner systems, and our NextSeq 550 system, which we
announced in January 2015, image the arrays.

Consumables

We have developed various library preparation and sequencing kits to simplify workflows and accelerate analysis. Our sequencing applications include
whole-genome sequencing kits, which sequence entire genomes of any size and complexity, and targeted resequencing kits, which can sequence exomes,
specific genes, or other genomic regions of interest. Our sequencing kits maximize the ability of our customers to characterize the target genome accurately.
Through our acquisition of Epicentre Technologies Corporation in 2011, we acquired the proprietary Nextera technology for next-generation sequencing
library preparation. This technology has enabled us to reduce sample input requirements, simplify genetic analysis workflows, and significantly reduce the
time from sample preparation to answer.

Customers use Illumina array-based genotyping consumables for a wide range of analyses, including diverse species, disease-related mutations, and
genetic characteristics associated with cancer. Customers can select from a range of human, animal, and agriculturally relevant genome panels or create their
own custom arrays to investigate up to 5,000,000 genetic markers targeting any species.

Our Services

In addition to selling products, we provide genotyping, NIPT, and whole-genome sequencing services. Human whole-genome sequencing services are
provided through our CLIA-certified, CAP-accredited laboratory. We began offering genotyping services to academic institutions, biotechnology, and
pharmaceutical customers in 2002, and added sequencing services in 2007. Using our FastTrack services, customers can perform whole-genome sequencing
projects (including phasing and long-read sequencing services) and microarray projects (including large-scale genotyping studies and whole-genome
association studies). We also provide NIPT services through our partner laboratories that direct samples to us on a test send-out basis.

Intellectual Property

We have an extensive intellectual property portfolio. As of February 1, 2015, we own or have exclusive licenses to 473 issued U.S. patents and 421
pending U.S. patent applications, including 19 allowed applications that have not yet issued as patents. Our issued patents cover various aspects of our
arrays, assays, oligo synthesis, sequencing technology, instruments, digital microfluidics, and chemical-detection technologies, and have terms that expire
between 2015 and 2035. We continue to file new patent applications to protect the full range of our technologies. We have filed or have been granted
counterparts for many of these patents and applications in foreign countries.

We protect trade secrets, know-how, copyrights, and trademarks, as well as continuing technological innovation and licensing opportunities to develop
and maintain our competitive position. Our success depends in part on obtaining patent protection for our products and processes, preserving trade secrets,
patents, copyrights and trademarks, operating without infringing the proprietary rights of third parties, and acquiring licenses for technology or products.

We are party to various exclusive and nonexclusive license agreements and other arrangements with third parties that grant us rights to use key aspects
of our sequencing and array technologies, assay methods, chemical detection methods, reagent kits, and scanning equipment. Our exclusive licenses expire
with the termination of the underlying patents, which will occur between 2015 and 2030. We have additional nonexclusive license agreements with various
third parties for other components of our products. In most cases, the agreements remain in effect over the term of the underlying patents, may be terminated
at our request without further obligation, and require that we pay customary royalties.

Research and Development

Illumina has historically made substantial investments in research and development. Our research and development efforts prioritize continuous
innovation coupled with product evolution.

Research and development expenses for fiscal 2014, 2013, and 2012 were $388.1 million, $276.7 million, and $231.0 million, respectively. We expect
research and development expense to increase during 2015 to support business growth and continuing expansion in research and product-development
efforts.

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Marketing and Distribution

We market and distribute our products directly to customers in North America, Europe, Latin America, and the Asia-Pacific region. In each of these
areas, dedicated sales, service, and application-support personnel are expanding and supporting their respective customer bases. In addition, we sell through
life-science distributors in certain markets within Europe, the Asia-Pacific region, Latin America, the Middle East, and South Africa. We expect to continue
increasing our sales and distribution resources during 2015 and beyond as we launch new products and expand our potential customer base.

Manufacturing

Illumina manufactures sequencing and array platforms, reagent kits, and scanning equipment. In 2014, we continued to increase our manufacturing
capacity to meet customer demand. To address increasing product complexity and volume, we are automating manufacturing processes to accelerate
throughput and improve quality and yield. Illumina is committed to providing medical devices and related services that consistently meet customer and
applicable regulatory requirements. We adhere to access and safety standards required by federal, state, and local health ordinances, such as standards for the
use, handling, and disposal of hazardous substances. Our key manufacturing and distribution facilities operate under a quality management system certified
to ISO 13485.

Raw Materials

Our manufacturing operations require a wide variety of raw materials, electronic and mechanical components, chemical and biochemical materials, and
other supplies. Multiple commercial sources provide many of our components and supplies, but there are some raw materials and components that we obtain
from single-source suppliers. To manage potential risks arising from single source suppliers, we believe that we could redesign our products using alternative
components or for use with alternative reagents, if necessary. In addition, while we attempt to keep our inventory at minimal levels, we purchase incremental
inventory as circumstances warrant to protect our supply chain. If the capabilities of our suppliers and component manufacturers are limited or stopped, due
to disasters, quality, regulatory, or other reasons, it could negatively impact our ability to manufacture our products.

Competition

Although we believe that our products and services provide significant advantages over products and services currently available from other sources,
we expect continued intense competition. Our competitors offer products and services for sequencing, SNP genotyping, gene expression, and molecular
diagnostics markets. They include companies such as Affymetrix, Inc., Agilent Technologies, Inc., BGI, Pacific Biosciences of California, Inc., QIAGEN N.V.,
Roche Holding AG., and Thermo Fisher Scientific, Inc., among others. Some of these companies have or will have substantially greater financial, technical,
research, and other resources than we do, along with larger, more established marketing, sales, distribution, and service organizations. In addition, they may
have greater name recognition than we do in the markets we address, and in some cases a larger installed base of systems. We expect new competitors to
emerge and the intensity of competition to increase. To compete effectively, we must scale our organization and infrastructure appropriately and demonstrate
that our products have superior throughput, cost, and accuracy.

Segment and Geographic Information

In accordance with the authoritative accounting guidance for segment reporting, we have determined that we have one reportable segment for purposes
of recording and reporting our financial results.

We currently sell our products to a number of customers outside the United States, including customers in other areas of North America, Latin America,
Europe, and the Asia-Pacific region. Shipments to customers outside the United States totaled $910.7 million, or 49% of our total revenue, during fiscal 2014,
compared to $706.5 million, or 50%, and $580.1 million, or 51%, in fiscal 2013 and 2012, respectively. The U.S. dollar has been determined to be the
functional currency of the Companys international operations due to the primary activities of our foreign subsidiaries. We expect that sales to international
customers will continue to be an important and growing source of revenue. See note 13. Segment Information, Geographic Data, and Significant Customers
in Part II, Item 8 of this Form 10-K for further information concerning our foreign and domestic operations.

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Backlog

Our backlog was approximately $540 million and $330 million as of December 28, 2014, and December 29, 2013, respectively. Approximately $130
million of our backlog as of December 28, 2014, was associated with the Genomics England sequencing services project, the delivery of which is expected to
be completed by the end of 2017. Generally, our backlog consists of orders believed to be firm as of the balance-sheet date. However, we may allow
customers to make product substitutions as we launch new products. The timing of shipments depends on several factors, including agreed upon shipping
schedules, which may span multiple quarters, and whether the product is catalog or custom. We expect most of the backlog as of December 28, 2014, to be
shipped within the fiscal year ending January 3, 2016, with the exception of the Genomics England backlog. Although we generally recognize revenue upon
the transfer of title to a customer, some customer agreements or applicable accounting treatments might require us to defer the recognition of revenue beyond
title transfer.

Environmental Matters

We are committed to the protection of our employees and the environment. Our operations require the use of hazardous materials that subject us to
various federal, state, and local environmental and safety laws and regulations. We believe that we are in material compliance with current applicable laws
and regulations. However, we could be held liable for damages and fines should contamination of the environment or individual exposures to hazardous
substances occur. In addition, we cannot predict how changes in these laws and regulations, or the development of new laws and regulations, will affect our
business operations or the cost of compliance.

Government Regulation

As we expand product lines to address the diagnosis of disease, regulation by governmental authorities in the United States and other countries will
become an increasingly significant factor in development, testing, production, and marketing. Products that we develop in the molecular diagnostic markets,
depending on their intended use, may be regulated as medical devices by the FDA and comparable agencies in other countries. In the United States, certain of
our products may require FDA clearance following a pre-market notification process, also known as a 510(k) clearance, or premarket approval (PMA) from the
FDA before marketing. The shorter 510(k) clearance process, which we used for the FDA-cleared assays that are run on our FDA-regulated MiSeqDx
instrument, generally takes from three to six months after submission, but it can take significantly longer. The longer PMA process is much more costly and
uncertain. It generally takes from 9 to 18 months after a complete filing, but it can take significantly longer and typically requires conducting clinical
studies, which are not always needed for a 510(k) clearance. All of the products that are currently regulated by the FDA as medical devices are also subject to
the FDA Quality System Regulation (QSR). Obtaining the requisite regulatory approvals, including the FDA quality system inspections that are required for
PMA approval, can be expensive and may involve considerable delay.

We cannot be certain which of our planned molecular diagnostic products will be subject to the shorter 510(k) clearance process and, in fact, some of
our products may need to go through the PMA process. The regulatory approval process for such products may be significantly delayed, may be significantly
more expensive than anticipated, and may conclude without such products being approved by the FDA. Without timely regulatory approval, we may not be
able to launch or successfully commercialize such products.

Changes to the current regulatory framework, including the imposition of additional or new regulations, could arise at any time during the development
or marketing of our products. This may negatively affect our ability to obtain or maintain FDA or comparable regulatory approval of our products. In
addition, the FDA may introduce new requirements that may change the regulatory requirements for either or both Illumina or Illumina customers.

If our products labeled as Research Use Only, or RUO, are used, or could be used, for the diagnosis of disease, the regulatory requirements related to
marketing, selling, and supporting such products could be uncertain. This is true even if such use by our customers occurs without our consent. If the FDA or
other regulatory authorities assert that any of our RUO products are subject to regulatory clearance or approval, our business, financial condition, or results of
operations could be adversely affected.

Illumina products sold as medical devices in Europe will be regulated under the In Vitro Diagnostics Directive (98/79/EC). This regulation includes
requirements for both presentation and review of performance data and quality-system requirements.

Certain of our diagnostic products are currently available through laboratories that are certified under the Clinical Laboratory Improvements
Amendments (CLIA) of 1988. These products are commonly called laboratory developed tests, or

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LDTs. For a number of years, the FDA has exercised its regulatory enforcement discretion to not regulate LDTs as medical devices if created and used within a
single laboratory. However, as discussed in more detail under Risk Factors, the FDA is reexamining this regulatory approach and changes to the agencys
handling of LDTs could impact our business in ways that cannot be predicted at this time. Certification of CLIA laboratories includes standards in the areas
of personnel qualifications, administration, and participation in proficiency testing, patient test management, and quality control procedures. CLIA also
mandates that, for high complexity labs such as ours, to operate as a lab, we must have an accreditation by an organization recognized by CLIA such as the
College of Pathologists (CAP), which we have obtained and must maintain. If we were to lose our CAP accreditation, our business, financial condition, or
results of operations could be adversely affected. In addition, state laboratory licensing and inspection requirements may also apply to our products, which,
in some cases, are more stringent than CLIA requirements.

Employees

As of December 28, 2014, we had more than 3,700 employees. We consider our employee relations to be positive. Our success will depend in large part
upon our ability to attract and retain employees. In addition, we employ a number of temporary and contract employees. We face competition in this regard
from other companies, research and academic institutions, government entities, and other organizations.

ITEM 1A. Risk Factors.

Our business is subject to various risks, including those described below. In addition to the other information included in this Form 10-K, the following
issues could adversely affect our operating results or our stock price.

If we do not successfully manage the development, manufacturing, and launch of new products or services, including product transitions, our financial
results could be adversely affected.

We face risks associated with launching new products and pre-announcing products and services when the products or services have not been fully
developed or tested. If our products and services are not able to deliver the performance or results expected by our target markets or are not delivered on a
timely basis, our reputation and credibility may suffer. If we encounter development challenges or discover errors in our products late in our development
cycle, we may delay the product launch date. The expenses or losses associated with unsuccessful product development or launch activities or lack of market
acceptance of our new products could adversely affect our business, financial condition, or results of operations.

In addition, we may experience difficulty in managing or forecasting customer reactions, purchasing decisions, or transition requirements or programs
with respect to newly launched products (or products in development), which could adversely affect sales of our existing products. For instance, in January
2015 we announced significant expansions to our sequencing instrument platforms, the HiSeq X Five system and the HiSeq 3000/4000 systems. When we
introduce new or enhanced products, we face numerous risks relating to product transitions, including the inability to accurately forecast demand (including
with respect to our existing products), manage excess and obsolete inventories, address new or higher product cost structures, and manage different sales and
support requirements due to the type or complexity of the new or enhanced products. Announcements of currently planned or other new products may cause
customers to defer or stop purchasing our products until new products become available. Our failure to effectively manage product transitions or
introductions could adversely affect our business, financial condition, or results of operations.

We face intense competition, which could render our products obsolete, result in significant price reductions, or substantially limit the volume of
products that we sell.

We compete with life sciences companies that design, manufacture, and market products for analysis of genetic variation and biological function and
other applications using a wide-range of competing technologies. We anticipate that we will continue to face increased competition as existing companies
develop new or improved products and as new companies enter the market with new technologies. One or more of our competitors may render our technology
obsolete or uneconomical. Some of our competitors have greater financial and personnel resources, broader product lines, a more established customer base,
and more experience in research and development than we do. Furthermore, life sciences and pharmaceutical companies, which are our potential customers
and strategic partners, could also develop competing products. We believe that customers in our markets display a significant amount of loyalty to their
initial supplier of a particular product; therefore, it may be difficult to generate sales to potential customers who have purchased products from competitors.
To the extent we are unable to be the first to develop or supply new products, our competitive position may suffer.

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The market for molecular diagnostics products is currently limited and highly competitive, with several large companies already having significant
market share, intellectual property portfolios, and regulatory expertise. Established diagnostic companies also have an installed base of instruments in several
markets, including clinical and reference laboratories, which could deter acceptance of our products. In addition, some of these companies have formed
alliances with genomics companies that provide them access to genetic information that may be incorporated into their diagnostic tests.

Our success depends upon the continued emergence and growth of markets for analysis of genetic variation and biological function.

We design our products primarily for applications in the life sciences, diagnostic, agricultural, and pharmaceutical industries. The usefulness of our
technologies depends in part upon the availability of genetic data and its usefulness in identifying or treating disease. We are focusing on markets for
analysis of genetic variation and biological function, namely sequencing, genotyping, and gene expression profiling. These markets are new and emerging,
and they may not develop as quickly as we anticipate, or reach their full potential. Other methods of analysis of genetic variation and biological function
may emerge and displace the methods we are developing. Also, researchers may not be able to successfully analyze raw genetic data or be able to convert raw
genetic data into medically valuable information. In addition, factors affecting research and development spending generally, such as changes in the
regulatory environment affecting life sciences and pharmaceutical companies, and changes in government programs that provide funding to companies and
research institutions, could harm our business. If useful genetic data is not available or if our target markets do not develop in a timely manner, demand for
our products may grow at a slower rate than we expect.

Our continued growth is dependent on continuously developing and commercializing new products.

Our target markets are characterized by rapid technological change, evolving industry standards, changes in customer needs, existing and emerging
competition, strong price competition, and frequent new product introductions. Accordingly, our continued growth depends on developing and
commercializing new products and services, including improving our existing products and services, in order to address evolving market requirements on a
timely basis. If we fail to innovate or adequately invest in new technologies, our products and services will become dated, and we could lose our competitive
position in the markets that we serve as customers purchase new products offered by our competitors. We believe that successfully introducing new products
and technologies in our target markets on a timely basis provides a significant competitive advantage because customers make an investment of time in
selecting and learning to use a new product and may be reluctant to switch once that selection is made.

To the extent that we fail to introduce new and innovative products, or such products are not accepted in the market or suffer significant delays in
development, we may lose market share to our competitors, which will be difficult or impossible to regain. An inability, for technological or other reasons, to
successfully develop and introduce new products on a timely basis could reduce our growth rate or otherwise have an adverse effect on our business. In the
past, we have experienced, and are likely to experience in the future, delays in the development and introduction of new products. There can be no assurance
that we will keep pace with the rapid rate of change in our markets or that our new products will adequately meet the requirements of the marketplace,
achieve market acceptance, or compete successfully with competing technologies. Some of the factors affecting market acceptance of new products and
services include:

availability, quality, and price relative to competing products and services;

the functionality and performance of new and existing products and services;

the timing of introduction of new products or services relative to competing products and services;

scientists and customers opinions of the utility of new products or services;

citation of new products or services in published research;

regulatory trends and approvals; and

general trends in life sciences research and applied markets.

We may also have to write off excess or obsolete inventory if sales of our products are not consistent with our expectations or the market requirements
for our products change due to technical innovations in the marketplace.

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If defects are discovered in our products, we may incur additional unforeseen costs, our products may be subject to recalls, customers may not
purchase our products, our reputation may suffer, and ultimately our sales and operating earnings could be negatively impacted.

Our products incorporate complex, precision-manufactured mechanical parts, electrical components, optical components, and fluidics, as well as
computer software, any of which may contain errors or failures, especially when first introduced. In the course of conducting our business, we must
adequately address quality issues associated with our products and services, including defects in our engineering, design, and manufacturing processes, as
well as defects in third-party components included in our products. In addition, new products or enhancements may contain undetected errors or performance
problems that, despite testing, are discovered only after commercial shipment. Identifying the root cause of quality issues, particularly those affecting
reagents and third-party components, may be difficult, which increases the time needed to address quality issues as they arise and increases the risk that
similar problems could recur. Because our products are designed to be used to perform complex genomic analysis, we expect that our customers will have an
increased sensitivity to such defects. If we do not meet applicable regulatory or quality standards, our products may be subject to recall, and, under certain
circumstances, we may be required to notify applicable regulatory authorities about a recall. If our products are subject to recall or shipment holds, our
reputation, business, financial condition, or results of operations could be adversely affected.

Litigation, other proceedings, or third party claims of intellectual property infringement could require us to spend significant time and money and
could prevent us from selling our products or services.

Our success depends in part on our non-infringement of the patents or proprietary rights of third parties. Third parties have asserted and may in the
future assert that we are employing their proprietary technology without authorization. As we enter new markets or introduce new products, we expect that
competitors will likely claim that our products infringe their intellectual property rights as part of a business strategy to impede our successful competition.
In addition, third parties may have obtained and may in the future obtain patents allowing them to claim that the use of our technologies infringes these
patents. We could incur substantial costs and divert the attention of our management and technical personnel in defending ourselves against any of these
claims. Any adverse ruling or perception of an adverse ruling in defending ourselves against these claims could have an adverse impact on our stock price,
which may be disproportionate to the actual impact of the ruling itself. Furthermore, parties making claims against us may be able to obtain injunctive or
other relief, which effectively could block our ability to develop further, commercialize, or sell products or services, and could result in the award of
substantial damages against us. In the event of a successful infringement claim against us, we may be required to pay damages and obtain one or more
licenses from third parties, or be prohibited from selling certain products or services. In addition, we may be unable to obtain these licenses at a reasonable
cost, if at all. We could therefore incur substantial costs related to royalty payments for licenses obtained from third parties, which could negatively affect our
gross margins and earnings per share. In addition, we could encounter delays in product introductions while we attempt to develop alternative methods or
products. Defense of any lawsuit or failure to obtain any of these licenses on favorable terms could prevent us from commercializing products, and the
prohibition of sale of any of our products or services could adversely affect our ability to grow or maintain profitability.

We depend on third-party manufacturers and suppliers for some of our products, or components and materials used in our products, and if shipments
from these manufacturers or suppliers are delayed or interrupted, or if the quality of the products, components, or materials supplied do not meet our
requirements, we may not be able to launch, manufacture, or ship our products in a timely manner, or at all.

The complex nature of our products requires customized, precision-manufactured components and materials that currently are available from a limited
number of sources, and, in the case of some components and materials, from only a single source. If deliveries from these vendors are delayed or interrupted
for any reason, or if we are otherwise unable to secure a sufficient supply, we may not be able to obtain these components or materials on a timely basis or in
sufficient quantities or qualities, or at all, in order to meet demand for our products. We may need to enter into contractual relationships with manufacturers
for commercial-scale production of some of our products, or develop these capabilities internally, and there can be no assurance that we will be able to do this
on a timely basis, in sufficient quantities, or on commercially reasonable terms. In addition, the lead time needed to establish a relationship with a new
supplier can be lengthy, and we may experience delays in meeting demand in the event we must switch to a new supplier. The time and effort required to
qualify a new supplier could result in additional costs, diversion of resources, or reduced manufacturing yields, any of which would negatively impact our
operating results. Accordingly, we may not be able to establish or maintain reliable, high-volume manufacturing at commercially reasonable costs or at all. In
addition, the manufacture or shipment of our products may be delayed or interrupted if the quality of the products, components, or materials supplied by our
vendors does not meet our requirements. Current or future social and environmental regulations or critical issues, such as those relating to the sourcing of
conflict minerals from the Democratic Republic of the Congo or the need to eliminate environmentally sensitive materials from our products, could restrict
the supply

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of components and materials used in production or increase our costs. Any delay or interruption to our manufacturing process or in shipping our products
could result in lost revenue, which would adversely affect our business, financial condition, or results of operations.

Unforeseen problems with the implementation and maintenance of our information systems could have an adverse effect on our operations.

As a part of our ongoing effort to upgrade our current information systems, we are implementing new enterprise resource planning software and other
software applications to manage certain of our business operations. As we implement and add functionality, problems could arise that we have not foreseen,
including interruptions in service, loss of data, or reduced functionality. Such problems could adversely impact our ability to provide quotes, take customer
orders, and otherwise run our business in a timely manner. In addition, if our new systems fail to provide accurate and increased visibility into pricing and
cost structures, it may be difficult to improve or maximize our profit margins. As a result, our results of operations and cash flows could be adversely affected.

Reduction or delay in research and development budgets and government funding may adversely affect our revenue.

The timing and amount of revenues from customers that rely on government and academic research funding may vary significantly due to factors that
can be difficult to forecast, and there remains significant uncertainty concerning government and academic research funding worldwide as governments in
the United States and Europe, in particular, focus on reducing fiscal deficits while at the same time confronting uncertain economic growth. Funding for life
science research has increased more slowly during the past several years compared to previous years and has declined in some countries. Government funding
of research and development is subject to the political process, which is inherently fluid and unpredictable. Other programs, such as defense, entitlement
programs, or general efforts to reduce budget deficits could be viewed by governments as a higher priority. These budgetary pressures may result in reduced
allocations to government agencies that fund research and development activities, such as the U.S. National Institute of Health, or NIH. Past proposals to
reduce budget deficits have included reduced NIH and other research and development allocations. Any shift away from the funding of life sciences research
and development or delays surrounding the approval of government budget proposals may cause our customers to delay or forego purchases of our products,
which could adversely affect our business, financial condition, or results of operations.

Our acquisitions expose us to risks that could adversely affect our business, and we may not achieve the anticipated benefits of acquisitions of
businesses or technologies.

As part of our strategy to develop and identify new products, services, and technologies, we have made, and may continue to make, acquisitions of
technologies, products, or businesses. Acquisitions involve numerous risks and operational, financial, and managerial challenges, including the following,
any of which could adversely affect our business, financial condition, or results of operations:

difficulties in integrating new operations, technologies, products, and personnel;

lack of synergies or the inability to realize expected synergies and cost-savings;

difficulties in managing geographically dispersed operations;

underperformance of any acquired technology, product, or business relative to our expectations and the price we paid;

negative near-term impacts on financial results after an acquisition, including acquisition-related earnings charges;

the potential loss of key employees, customers, and strategic partners of acquired companies;

claims by terminated employees and shareholders of acquired companies or other third parties related to the transaction;

the issuance of dilutive securities, assumption or incurrence of additional debt obligations or expenses, or use of substantial portions of our
cash;

diversion of managements attention and company resources from existing operations of the business;

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inconsistencies in standards, controls, procedures, and policies;

the impairment of intangible assets as a result of technological advancements, or worse-than-expected performance of acquired companies; and

assumption of, or exposure to, unknown contingent liabilities or liabilities that are difficult to identify or accurately quantify.

In addition, the successful integration of acquired businesses requires significant efforts and expense across all operational areas, including sales
and marketing, research and development, manufacturing, finance, legal, and information technologies. There can be no assurance that any of the
acquisitions we make will be successful or will be, or will remain, profitable. Our failure to successfully address the above risks may prevent us from
achieving the anticipated benefits from any acquisition in a reasonable time frame, or at all.

If we are unable to increase our manufacturing or service capacity and develop and maintain operation of our manufacturing or service capability, we
may not be able to launch or support our products or services in a timely manner, or at all.

We continue to rapidly increase our manufacturing and service capacity to meet the anticipated demand for our products. Although we have
significantly increased our manufacturing and service capacity and we believe we have plans in place sufficient to ensure we have adequate capacity to meet
our current business plans, there are uncertainties inherent in expanding our manufacturing and service capabilities, and we may not be able to sufficiently
increase our capacity in a timely manner. For example, manufacturing and product quality issues may arise as we increase production rates at our
manufacturing facilities and launch new products. Also, we may not manufacture the right product mix to meet customer demand, especially as we introduce
new products. As a result, we may experience difficulties in meeting customer, collaborator, and internal demand, in which case we could lose customers or be
required to delay new product introductions, and demand for our products could decline. Additionally, in the past, we have experienced variations in
manufacturing conditions and quality control issues that have temporarily reduced or suspended production of certain products. Due to the intricate nature of
manufacturing complex instruments, consumables, and products that contain DNA, we may encounter similar or previously unknown manufacturing
difficulties in the future that could significantly reduce production yields, impact our ability to launch or sell these products (or to produce them
economically), prevent us from achieving expected performance levels, or cause us to set prices that hinder wide adoption by customers.

An interruption in our ability to manufacture our products or an inability to obtain key components or raw materials due to a catastrophic disaster or
infrastructure could adversely affect our business.

We currently manufacture in a limited number of locations. Our manufacturing facilities are located in San Diego and the San Francisco Bay Area in
California; Madison, Wisconsin; and Singapore. These areas are subject to natural disasters such as earthquakes, wildfires, or floods. If a natural disaster were
to damage one of our facilities significantly or if other events were to cause our operations to fail, we may be unable to manufacture our products, provide our
services, or develop new products. In addition, if the capabilities of our suppliers and component manufacturers are limited or stopped, due to disasters,
quality, regulatory, or other reasons, it could negatively impact our ability to manufacture our products.

Many of our manufacturing processes are automated and are controlled by our custom-designed laboratory information management system (LIMS).
Additionally, the decoding process in our array manufacturing requires significant network and storage infrastructure. If either our LIMS system or our
networks or storage infrastructure were to fail for an extended period of time, it may adversely impact our ability to manufacture our products on a timely
basis and could prevent us from achieving our expected shipments in any given period.

We also rely on our technology infrastructure, among other functions, to interact with suppliers; sell our products and services; fulfill orders; bill,
collect, and make payments; ship products; provide services and support to customers; fulfill contractual obligations; and otherwise conduct business. Our
systems may be vulnerable to damage or interruption from natural disasters, power loss, telecommunication failures, terrorist attacks, computer viruses,
computer denial-of-service attacks, unauthorized access to customer or employee data or company trade secrets, and other attempts to harm our systems. .
Certain of our systems are not redundant, and our disaster recovery planning is not sufficient for every eventuality. Despite any precautions we may take,
such problems could result in, among other consequences, interruptions in our services, which could harm our reputation and financial results.

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If we lose our key personnel or are unable to attract and retain additional personnel, we may be unable to achieve our goals.

We are highly dependent on our management and scientific personnel, including Jay Flatley, our Chief Executive Officer. The loss of their services
could adversely impact our ability to achieve our business objectives. In addition, the continued growth of our business depends on our ability to hire
additional qualified personnel with expertise in molecular biology, chemistry, biological information processing, sales, marketing, and technical support. We
compete for qualified management and scientific personnel with other life science companies, universities, and research institutions, particularly those
focusing on genomics. Competition for these individuals, particularly in the San Diego and San Francisco areas, is intense, and the turnover rate can be high.
Failure to attract and retain management and scientific personnel would prevent us from pursuing collaborations or developing our products or technologies.
Additionally, integration of acquired companies and businesses can be disruptive, causing key employees of the acquired business to leave. Further, we use
share-based compensation, including restricted stock units and performance stock units to attract key personnel, incentivize them to remain with us, and
align their interests with those of the Company by building long-term stockholder value. If our stock price decreases, the value of these equity awards
decreases and therefore reduces a key employees incentive to stay.

Any inability to effectively protect our proprietary technologies could harm our competitive position.

The proprietary positions of companies developing tools for the life sciences, genomics, forensics, agricultural, and pharmaceutical industries,
including our proprietary position, generally are uncertain and involve complex legal and factual questions. Our success depends to a large extent on our
ability to develop proprietary products and technologies and to obtain patents and maintain adequate protection of our intellectual property in the United
States and other countries. The laws of some foreign countries do not protect proprietary rights to the same extent as the laws of the United States, and many
companies have encountered significant challenges in establishing and enforcing their proprietary rights outside of the United States. These challenges can
be caused by the absence of rules and methods for the establishment and enforcement of intellectual property rights outside of the United States.

We will be able to protect our proprietary rights from unauthorized use by third parties only to the extent that our proprietary technologies are covered
by valid and enforceable patents or are effectively maintained as trade secrets. Any finding that our patents or applications are unenforceable could harm our
ability to prevent others from practicing the related technology, and a finding that others have inventorship or ownership rights to our patents and
applications could require us to obtain certain rights to practice related technologies, which may not be available on favorable terms, if at all. Furthermore, as
issued patents expire, we may lose some competitive advantage as others develop competing products, and, as a result, we may lose revenue.

In addition, our existing patents and any future patents we obtain may not be sufficiently broad to prevent others from practicing our technologies or
from developing competing products and may therefore fail to provide us with any competitive advantage. We may need to initiate lawsuits to protect or
enforce our patents, or litigate against third party claims, which would be expensive, and, if we lose, may cause us to lose some of our intellectual property
rights and reduce our ability to compete in the marketplace. Furthermore, these lawsuits may divert the attention of our management and technical personnel.
There is also the risk that others may independently develop similar or alternative technologies or design around our patented technologies. In that regard,
certain patent applications in the United States may be maintained in secrecy until the patents issue, and publication of discoveries in the scientific or patent
literature tend to lag behind actual discoveries by several months.

We also rely upon trade secrets and proprietary know-how protection for our confidential and proprietary information, and we have taken security
measures to protect this information. These measures, however, may not provide adequate protection for our trade secrets, know-how, or other confidential
information.

Security breaches, including with respect to cyber-security, and other disruptions could compromise our information and expose us to liability, which
could cause our business and reputation to suffer.

In the ordinary course of our business, we collect and store sensitive data, including intellectual property, our proprietary business information, and that
of our customers, and personally identifiable information of our customers and employees, in our data centers and on our networks. The secure maintenance
of this information is important to our operations and business strategy. Despite our security measures, our information technology and infrastructure may be
vulnerable to cyber-attacks by hackers or breached due to employee error, malfeasance, or other disruptions. As a leader in the field of genetic analysis, we
may face cyber-attacks that attempt to penetrate our network security, including our data centers; sabotage or otherwise disable our research, products, and
services; misappropriate our or our customers' and partners' proprietary information, which may include personally identifiable information; or cause
interruptions of our internal systems and services. Any such breach could

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compromise our networks and the information stored there could be accessed, publicly disclosed, lost, or stolen. Any such access, disclosure, or other loss of
information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, and damage to our reputation.

Our products, if used for the diagnosis of disease, could be subject to government regulation, and the regulatory approval and maintenance process for
such products may be expensive, time-consuming, and uncertain both in timing and in outcome.

Our products are not subject to FDA clearance or approval if they are not intended to be used for the diagnosis of disease. However, as we expand our
product line to encompass products that are intended to be used for the diagnosis of disease, such as our FDA-regulated MiSeqDx, certain of our products will
become subject to regulation by the FDA, or comparable international agencies, including requirements for regulatory clearance or approval of such products
before they can be marketed. Such regulatory approval processes or clearances may be expensive, time-consuming, and uncertain, and our failure to obtain or
comply with such approvals and clearances could have an adverse effect on our business, financial condition, or operating results. In addition, changes to the
current regulatory framework, including the imposition of additional or new regulations, could arise at any time during the development or marketing of our
products, which may negatively affect our ability to obtain or maintain FDA or comparable regulatory approval of our products, if required.

Molecular diagnostic products, in particular, depending on their intended use, may be regulated as medical devices by the FDA and comparable
international agencies and may require either clearance from the FDA following the 510(k) pre-market notification process or premarket approval from the
FDA, in each case prior to marketing. Obtaining the requisite regulatory approvals can be expensive and may involve considerable delay. If we fail to obtain,
or experience significant delays in obtaining, regulatory approvals for molecular diagnostic products that we develop, we may not be able to launch or
successfully commercialize such products in a timely manner, or at all.

In addition, if our products labeled as Research Use Only, or RUO, are used, or could be used, for the diagnosis of disease, the regulatory requirements
related to marketing, selling, and supporting such products could be uncertain, even if such use by our customers is without our consent. If the FDA or other
regulatory authorities assert that any of our RUO products are subject to regulatory clearance or approval, our business, financial condition, or results of
operations could be adversely affected.

If the FDA requires in the future that any of our LDT products be subject to regulatory clearance or approval, our business, financial condition, or
results of operations could be adversely affected.

Certain of our diagnostic products are currently available through laboratories that are certified under the Clinical Laboratory Improvements
Amendments (CLIA) of 1988. These products are commonly called laboratory developed tests, or LDTs. For a number of years, the FDA has exercised its
regulatory enforcement discretion to not regulate LDTs as medical devices if created and used within a single laboratory. However, the FDA has been
reconsidering its enforcement discretion policy and has commented that regulation of LDTs may be warranted because of the growth in the volume and
complexity of testing services utilizing LDTs. In October 2014, the FDA published two draft guidance documents suggesting an approach for registration and
listing of laboratories and assays along with a framework for regulation of LDTs by the FDA based on risk to patients rather than whether the LDTs were made
by a conventional manufacturer or a single laboratory. The draft framework guidance includes pre-market review for higher-risk LDTs, including many used
to guide treatment decisions, as well as companion diagnostics that have entered the market as LDTs. We cannot predict the nature or extent of the FDA's
final guidance or regulation of LDTs, in general, or with respect to our LDTs, in particular. If the FDA requires in the future that LDT products are subject to
regulatory clearance or approval, our business, financial condition, or results of operations could be adversely affected.

If product or service liability lawsuits are successfully brought against us, we may face reduced demand for our products and incur significant
liabilities.

Our products and services are used for sensitive applications, and we face an inherent risk of exposure to product or service liability claims if our
products or services are alleged to have caused harm, resulted in false negatives or false positives, or do not perform in accordance with specifications. We
cannot be certain that we would be able to successfully defend any product or service liability lawsuit brought against us. Regardless of merit or eventual
outcome, product or service liability claims may result in:

decreased demand for our products;

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injury to our reputation;

increased product liability insurance costs;

costs of related litigation; and

substantial monetary awards to plaintiffs.

Although we carry product and service liability insurance, if we become the subject of a successful product or service liability lawsuit, our insurance
may not cover all substantial liabilities, which could have an adverse effect on our business, financial condition, or results of operations.

As we develop, market, or sell diagnostic tests, we may encounter delays in receipt, or limits in the amount, of reimbursement approvals and public
health funding, which will impact our ability to grow revenues in the healthcare market.

Physicians and patients may not order diagnostic tests that we develop, market, or sell, such as our verifi prenatal test, unless third-party payors, such as
managed care organizations as well as government payors such as Medicare and Medicaid and governmental payors outside of the United States, pay a
substantial portion of the test price. Third-party payors are often reluctant to reimburse healthcare providers for the use of medical tests that involve new
technologies or provide novel diagnostic information. In addition, third-party payors are increasingly limiting reimbursement coverage for medical
diagnostic products and, in many instances, are exerting pressure on diagnostic product suppliers to reduce their prices. Reimbursement by a payor may
depend on a number of factors, including a payor's determination that tests using our technologies are:

not experimental or investigational,

medically necessary,

appropriate for the specific patient,

cost-effective,

supported by peer-reviewed publications, and

included in clinical practice guidelines.

Since each third-party payor often makes reimbursement decisions on an individual patient basis, obtaining such approvals is a time-consuming and
costly process that requires us to provide scientific and clinical data supporting the clinical benefits of each of our products. As a result, there can be no
assurance that reimbursement approvals will be obtained. This process can delay the broad market introduction of new products, and could have a negative
effect on our results of operations. As a result, third-party reimbursement may not be consistent or financially adequate to cover the cost of diagnostic
products that we develop, market, or sell. This could limit our ability to sell our products or cause us to reduce prices, which would adversely affect our
results of operations.

Even if our tests are being reimbursed, third party payors may withdraw their coverage policies, cancel their contracts with our customers at any time,
review and adjust the rate of reimbursement, require co-payments from patients, or stop paying for our tests, which would reduce our revenues. In addition,
insurers, including managed care organizations as well as government payors such as Medicare and Medicaid, have increased their efforts to control the cost,
utilization, and delivery of healthcare services. These measures have resulted in reduced payment rates and decreased utilization for the clinical laboratory
industry. Reductions in the reimbursement rate of payors may occur in the future. Reductions in the prices at which our tests are reimbursed could have a
negative impact on our results of operations.

Doing business internationally creates operational and financial risks for our business.

Conducting and launching operations on an international scale requires close coordination of activities across multiple jurisdictions and time zones
and consumes significant management resources. If we fail to coordinate and manage these activities effectively, including the risks noted below, our
business, financial condition, or results of operations could be adversely affected. We have sales offices located internationally throughout Europe, the Asia-
Pacific region, and Brazil, as well as manufacturing facilities in Singapore. Shipments to customers outside the United States comprised 49%, 50%, and 51%
of our total revenue for fiscal years 2014, 2013, and 2012, respectively.

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During 2014, a significant portion of our sales were denominated in foreign currencies while the majority of our purchases of raw materials were
denominated in U.S. dollars. Changes in the value of the relevant currencies may affect the cost of certain items required in our operations. Changes in
currency exchange rates may also affect the relative prices at which we are able sell products in the same market. Our revenues from international customers
may be negatively impacted as increases in the U.S. dollar relative to our international customers local currency could make our products more expensive,
impacting our ability to compete. Our costs of materials from international suppliers may increase if in order to continue doing business with us they raise
their prices as the value of the U.S. dollar decreases relative to their local currency. Foreign policies and actions regarding currency valuation could result in
actions by the United States and other countries to offset the effects of such fluctuations. Recent global financial conditions have led to a high level of
volatility in foreign currency exchange rates and that level of volatility may continue, which could adversely affect our business, financial condition, or
results of operations.

In addition to the foregoing risks, international operations entail the following risks:

longer payment cycles and difficulties in collecting accounts receivable outside of the United States;

longer sales cycles due to the volume of transactions taking place through public tenders;

challenges in staffing and managing foreign operations;

tariffs and other trade barriers;

unexpected changes in legislative or regulatory requirements of foreign countries into which we sell our products;

difficulties in obtaining export licenses or in overcoming other trade barriers and restrictions resulting in delivery delays; and

significant taxes or other burdens of complying with a variety of foreign laws.

We are subject to risks related to taxation in multiple jurisdictions.

We are subject to income taxes in both the United States and numerous foreign jurisdictions. Significant judgments based on interpretations of existing
tax laws or regulations are required in determining the provision for income taxes. Our effective income tax rate could be adversely affected by various
factors, including, but not limited to, changes in the mix of earnings in tax jurisdictions with different statutory tax rates, changes in the valuation of deferred
tax assets and liabilities, changes in existing tax laws or tax rates, changes in the level of non-deductible expenses (including share-based compensation),
changes in our future levels of research and development spending, mergers and acquisitions, or the result of examinations by various tax authorities.
Although we believe our tax estimates are reasonable, if the U.S. Internal Revenue Service or other taxing authority disagrees with the positions taken by the
Company on its tax returns, we could have additional tax liability, including interest and penalties. If material, payment of such additional amounts upon
final adjudication of any disputes could have a material impact on our results of operations and financial position.

An inability to manage our growth or the expansion of our operations could adversely affect our business, financial condition, or results of operations.

Our business has grown rapidly, with total revenues increasing from $73.5 million for the year ended January 1, 2006 to $1.86 billion for the year ended
December 28, 2014, and with the number of employees increasing from 375 to more than 3,700 during the same period. We expect to continue to experience
substantial growth in order to achieve our operating plans. The continued global expansion of our business and addition of new personnel may place a strain
on our management and operational systems. Our ability to effectively manage our operations and growth requires us to continue to expend funds to enhance
our operational, financial, and management controls, reporting systems, and procedures and to attract and retain sufficient numbers of talented employees on
a global basis. If we are unable to scale up and implement improvements to our manufacturing process and control systems in an efficient or timely manner, or
if we encounter deficiencies in existing systems and controls, then we will not be able to make available the products required to successfully commercialize
our technology. Our future operating results will depend on the ability of our management to continue to implement and improve our research, product
development, manufacturing, sales and marketing, and customer support programs, enhance our operational and financial control systems, expand, train, and
manage our employee base, integrate acquired businesses, and effectively address new issues related to our growth as they arise. There can be no assurance
that we will be able to manage our recent or any future expansion or acquisition successfully, and any inability to do so could adversely affect our business,
financial condition, or results of operations.

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Our operating results may vary significantly from period to period, and we may not be able to sustain operating profitability.

Our revenue is subject to fluctuations due to the timing of sales of high-value products and services, the effects of new product launches and related
promotions, the timing and availability of our customers funding, the impact of seasonal spending patterns, the timing and size of research projects our
customers perform, changes in overall spending levels in the life sciences industry, and other unpredictable factors that may affect customer ordering patterns.
Given the difficulty in predicting the timing and magnitude of sales for our products and services, we may experience quarter-to-quarter fluctuations in
revenue resulting in the potential for a sequential decline in quarterly revenue. While we anticipate future growth, there is some uncertainty as to the timing
of revenue recognition on a quarterly basis. This is because a substantial portion of our quarterly revenue is typically recognized in the last month of a
quarter and because the pattern for revenue generation during that month is normally not linear, with a concentration of orders in the final weeks of the
quarter. In light of that, our revenue cut-off and recognition procedures, together with our manufacturing and shipping operations, may experience increased
pressure and demand during the time period shortly before the end of a fiscal quarter.

A large portion of our expenses are relatively fixed, including expenses for facilities, equipment, and personnel. In addition, we expect operating
expenses to continue to increase significantly in absolute dollars, and we expect that our research and development and selling and marketing expenses will
increase at a higher rate in the future as a result of the development and launch of new products. Accordingly, our ability to sustain profitability will depend
in part on the rate of growth, if any, of our revenue and on the level of our expenses, and if revenue does not grow as anticipated, we may not be able to
maintain annual or quarterly profitability. Any significant delays in the commercial launch of our products, unfavorable sales trends in our existing product
lines, or impacts from the other factors mentioned above, could adversely affect our future revenue growth or cause a sequential decline in quarterly revenue.
In addition, non-cash share-based compensation expense and expenses related to prior and future acquisitions are also likely to continue to adversely affect
our future profitability. Due to the possibility of significant fluctuations in our revenue and expenses, particularly from quarter to quarter, we believe that
quarterly comparisons of our operating results are not a good indication of our future performance. If our operating results fluctuate or do not meet the
expectations of stock market analysts and investors, our stock price could decline.

From time to time, we receive large orders that have a significant effect on our operating results in the period in which the order is recognized as
revenue. The timing of such orders is difficult to predict, and the timing of revenue recognition from such orders may affect period to period changes in net
sales. As a result, our operating results could vary materially from quarter to quarter based on the receipt of such orders and their ultimate recognition as
revenue.

Changes in accounting standards and subjective assumptions, estimates, and judgments by management related to complex accounting matters could
significantly affect our financial results or financial condition.

Generally accepted accounting principles and related accounting pronouncements, implementation guidelines, and interpretations with regard to a
wide range of matters that are relevant to our business, such as revenue recognition, asset impairment and fair value determinations, inventories, business
combinations and intangible asset valuations, and litigation, are highly complex and involve many subjective assumptions, estimates, and judgments.
Changes in these rules or their interpretation or changes in underlying assumptions, estimates, or judgments could significantly change our reported or
expected financial performance or financial condition.

Ethical, legal, and social concerns related to the use of genetic information could reduce demand for our products or services.

Our products may be used to provide genetic information about humans, agricultural crops, other food sources, and other living organisms. The
information obtained from our products could be used in a variety of applications, which may have underlying ethical, legal, and social concerns regarding
privacy and the appropriate uses of the resulting information, including preimplantation genetic screening of embryos, prenatal genetic testing, genetic
engineering or modification of agricultural products, or testing genetic predisposition for certain medical conditions, particularly for those that have no
known cure. Governmental authorities could, for social or other purposes, call for limits on or regulation of the use of genetic testing or prohibit testing for
genetic predisposition to certain conditions, particularly for those that have no known cure. Similarly, such concerns may lead individuals to refuse to use
genetics tests even if permissible. These and other ethical, legal, and social concerns about genetic testing may limit market acceptance of our technology for
certain applications or reduce the potential markets for our technology, either of which could have an adverse effect on our business, financial condition, or
results of operations.

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Our strategic investments may result in losses.

We periodically make strategic investments in various public and private companies with businesses or technologies that may complement our
business. The market values of these strategic investments may fluctuate due to market conditions and other conditions over which we have no control.
Other-than-temporary declines in the market price and valuations of the securities that we hold in other companies would require us to record losses related to
our investment. This could result in future charges to our earnings. It is uncertain whether or not we will realize any long-term benefits associated with these
strategic investments.

Conversion of our outstanding convertible notes may result in losses.

As of December 28, 2014, we had $320.0 million aggregate principal amount of convertible notes due 2016, $632.5 million aggregate principal amount
of convertible notes due 2019, and $517.5 million aggregate principal amount of convertible notes due 2021 outstanding. The notes are convertible into
cash, and if applicable, shares of our common stock under certain circumstances, including trading price conditions related to our common stock. If the
trading price of our common stock remains significantly above the conversion price of $83.55 with respect to convertible notes due 2016, we believe that
some noteholders will elect to convert the applicable notes. Upon conversion, we are required to record a gain or loss for the difference between the fair value
of the notes to be extinguished and their corresponding net carrying value. The fair value of the notes to be extinguished depends on our current incremental
borrowing rate. The net carrying value of our notes has an implicit interest rate of 4.5% with respect to convertible notes due 2016, 2.9% with respect to
convertible notes due 2019, and 3.5% with respect to convertible notes due 2021. If our incremental borrowing rate at the time of conversion is lower than
the implied interest rate of the notes, we will record a loss in our consolidated statement of income during the period in which the notes are converted.

Our Certificate of Incorporation and Bylaws include anti-takeover provisions that may make it difficult for another company to acquire control of us or
limit the price investors might be willing to pay for our stock.

Certain provisions of our Certificate of Incorporation and Bylaws could delay the removal of incumbent directors and could make it more difficult to
successfully complete a merger, tender offer, or proxy contest involving us. Our Certificate of Incorporation has provisions that give our Board the ability to
issue preferred stock and determine the rights and designations of the preferred stock at any time without stockholder approval. The rights of the holders of
our common stock will be subject to, and may be adversely affected by, the rights of the holders of any preferred stock that may be issued in the future. The
issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could have the effect of
making it more difficult for a third party to acquire, or of discouraging a third party from acquiring, a majority of our outstanding voting stock. In addition,
the staggered terms of our board of directors could have the effect of delaying or deferring a change in control.

In addition, certain provisions of the Delaware General Corporation Law (DGCL), including Section 203 of the DGCL, may have the effect of
delaying or preventing changes in the control or management of Illumina. Section 203 of the DGCL provides, with certain exceptions, for waiting periods
applicable to business combinations with stockholders owning at least 15% and less than 85% of the voting stock (exclusive of stock held by directors,
officers, and employee plans) of a company.

The above factors may have the effect of deterring hostile takeovers or otherwise delaying or preventing changes in the control or management of
Illumina, including transactions in which our stockholders might otherwise receive a premium over the fair market value of our common stock.

ITEM 1B. Unresolved Staff Comments.

None.

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ITEM 2. Properties.

The following table summarizes the facilities we lease as of December 28, 2014, including the location and size of each principal facility, and their
designated use. We believe our facilities are adequate for our current and near-term needs, and will be able to locate additional facilities as needed.
Approximate Lease
Location Square Feet Operation Expiration Dates
San Diego, CA 707,000 R&D, Manufacturing, Warehouse, Distribution, and Administrative 2016 2031
San Francisco Bay Area, CA* 278,000 R&D, Manufacturing, Warehouse, and Administrative 2016 2024
Singapore 151,000 R&D, Manufacturing, Warehouse, and Administrative 2016 2021
Cambridge, United Kingdom 94,000 R&D, Manufacturing, and Administrative 2017 - 2024
Eindhoven, the Netherlands 42,000 Distribution and Administrative 2015
Madison, WI 38,000 R&D, Manufacturing, and Administrative 2019
Other 32,000 Administrative 2015 - 2017
________________
*Excludes approximately 360,000 square feet in Foster City, California, as the lease does not commence until 2017.

ITEM 3. Legal Proceedings.

We are involved in various lawsuits and claims arising in the ordinary course of business, including actions with respect to intellectual property,
employment, and contractual matters. In connection with these matters, we assesses, on a regular basis, the probability and range of possible loss based on the
developments in these matters. A liability is recorded in the financial statements if it is believed to be probable that a loss has been incurred and the amount
of the loss can be reasonably estimated. Because litigation is inherently unpredictable and unfavorable results could occur, assessing contingencies is highly
subjective and requires judgments about future events. We regularly review outstanding legal matters to determine the adequacy of the liabilities accrued and
related disclosures. The amount of ultimate loss may differ from these estimates. Each matter presents its own unique circumstances, and prior litigation does
not necessarily provide a reliable basis on which to predict the outcome, or range of outcomes, in any individual proceeding. Because of the uncertainties
related to the occurrence, amount, and range of loss on any pending litigation or claim, we are currently unable to predict their ultimate outcome, and, with
respect to any pending litigation or claim where no liability has been accrued, to make a meaningful estimate of the reasonably possible loss or range of loss
that could result from an unfavorable outcome. In the event that opposing litigants in outstanding litigations or claims ultimately succeed at trial and any
subsequent appeals on their claims, any potential loss or charges in excess of any established accruals, individually or in the aggregate, could have a material
adverse effect on our business, financial condition, results of operations, and/or cash flows in the period in which the unfavorable outcome occurs or becomes
probable, and potentially in future periods.

ITEM 4. Mine Safety Disclosures.

Not applicable.

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PART II

ITEM 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

Our common stock has been quoted on The NASDAQ Global Select Market under the symbol ILMN since July 28, 2000. Prior to that time, there was
no public market for our common stock. The following table sets forth, for the fiscal periods indicated, the quarterly high and low sales prices per share of our
common stock as reported on The NASDAQ Global Select Market.

2014 2013
High Low High Low
First Quarter $ 183.30 $ 106.79 $ 56.58 $ 48.00
Second Quarter $ 178.19 $ 127.69 $ 77.11 $ 53.77
Third Quarter $ 185.00 $ 156.85 $ 85.81 $ 72.13
Fourth Quarter $ 197.37 $ 145.12 $ 110.54 $ 72.77

Stock Performance Graph

The graph below compares the cumulative total stockholder returns on our common stock for the last five fiscal years with the cumulative total
stockholder returns on the NASDAQ Composite Index and the NASDAQ Biotechnology Index for the same period. The graph assumes that $100 was invested
on January 3, 2010 in our common stock and in each index and that all dividends were reinvested. No cash dividends have been declared on our common
stock. Stockholder returns over the indicated period should not be considered indicative of future stockholder returns.

Compare 5-Year Cumulative Total Return Among Illumina, NASDAQ Composite Index,
and NASDAQ Biotechnology Index

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Holders

As of January 30, 2015, we had 214 record holders of our common stock.

Dividends

We have never paid cash dividends and have no present intention to pay cash dividends in the foreseeable future. The indentures for our 0.25%
convertible senior notes due 2016, 0% convertible senior notes due 2019, and 0.5% convertible senior notes due in 2021, which notes are convertible into
cash and, in certain circumstances, shares of our common stock, require us to increase the conversion rate applicable to the notes if we pay any cash
dividends.

Purchases of Equity Securities by the Issuer

In April 2012, the Companys Board of Directors authorized share repurchases for up to $250.0 million via a combination of Rule 10b5-1 and
discretionary share repurchase programs. In addition, on January 30, 2014, the Companys Board of Directors authorized up to $250.0 million to repurchase
shares of the Companys common stock on a discretionary basis. The following table summarizes shares repurchased pursuant to these programs during the
three months ended December 28, 2014.
Approximate Dollar
Total Number of Value of Shares
Total Number Shares Purchased as that May Yet Be
of Shares Average Price Part of Publicly Purchased Under
Period Purchased (1) Paid per Share Announced Programs the Programs
September 29, 2014 - October 26, 2014 $ 165,118,222
October 27, 2014 - November 23, 2014 $ 165,118,222
November 24, 2014 - December 28, 2014 185,043 $ 187.79 185,043 $ 130,369,416
Total 185,043 $ 187.79 185,043 $ 130,369,416
___________
(1) All shares purchased during the three months ended December 28, 2014, were made in open-market transactions.

Sales of Unregistered Securities

None during the fiscal quarter ended December 28, 2014.

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ITEM 6. Selected Financial Data.

The following table sets forth selected historical consolidated financial data for each of our last five fiscal years during the period ended December 28,
2014.

Statement of Operations Data

Years Ended
December 28, 2014 December 29, 2013 December 30, 2012 January 1, 2012 (52 January 2, 2011 (52
(52 weeks) (52 weeks) (52 weeks) weeks) weeks)
(In thousands, except per share data)
Total revenue $ 1,861,358 $ 1,421,178 $ 1,148,516 $ 1,055,535 $ 902,741
Income from operations $ 514,711 $ 134,107 $ 200,752 $ 199,461 $ 211,654
Net income $ 353,351 $ 125,308 $ 151,254 $ 86,628 $ 124,891
Net income per share:
Basic $ 2.61 $ 1.00 $ 1.23 $ 0.70 $ 1.01
Diluted $ 2.37 $ 0.90 $ 1.13 $ 0.62 $ 0.87
Shares used in calculating net income per share:
Basic 135,553 125,076 122,999 123,399 123,581
Diluted 148,977 139,936 133,693 138,937 143,433

Balance Sheet Data

December 28, December 29, December 30, January 1, January 2,
2014 2013 2012 2012 2011
(In thousands)
Cash, cash equivalents and short-term
investments(1),(2) $ 1,338,371 $ 1,165,603 $ 1,350,204 $ 1,189,568 $ 894,289
Working capital $ 1,167,445 $ 1,295,472 $ 1,482,477 $ 1,317,698 $ 723,881
Total assets $ 3,339,640 $ 3,019,006 $ 2,566,085 $ 2,195,840 $ 1,839,113
Long-term debt, current portion(1) $ 304,256 $ 29,288 $ 36,967 $ 311,609
Long-term debt, less current portion(1) $ 986,780 $ 839,305 $ 805,406 $ 807,369
Total stockholders equity(2) $ 1,462,798 $ 1,533,202 $ 1,318,581 $ 1,075,215 $ 1,197,675

In addition to the following notes, see Item 7, Managements Discussion and Analysis of Financial Condition and Results of Operations, and Item 8,
Financial Statements and Supplementary Data, for further information regarding our consolidated results of operations and financial position for periods
reported therein and for known factors that will impact comparability of future results.
_______________________________________
(1) During 2014, we issued $632.5 million principal amount of 0% convertible senior notes due 2019 (2019 Notes) and $517.5 million principal amount
of 0.5% convertible senior notes due 2021 (2021 Notes), which were classified as long-term liabilities as of December 28, 2014. During 2011, we
issued $920.0 million principal amount of 0.25% convertible senior notes due 2016 (2016 Notes), the balance of which were classified as current
liabilities as of December 28, 2014, and as long-term liabilities as of December 29, 2013 and December 30, 2012, respectively. In February 2007, we
issued $400.0 million principal amount of 0.625% convertible senior notes due 2014 (2014 Notes). Due to the 2014 Notes being convertible during
the fiscal years ended December 29, 2013, December 30, 2012, and January 2, 2011, we classified the outstanding principal amount of these notes as
current in our consolidated balance sheets in the respective periods. As of January 1, 2012, the outstanding principal amount of the 2014 Notes was
not convertible and was therefore reclassified to long-term liabilities. See note 6. Convertible Senior Notes in Part II, Item 8, Notes to Consolidated
Financial Statements, for further information.

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(2) For the fiscal years ended December 28, 2014, December 29, 2013, December 30, 2012, January 1, 2012, and January 2, 2011, we repurchased 1.5
million, 0.9 million, 1.9 million, 9.2 million, and 0.8 million shares, respectively, of common stock for $237.2 million, $50.0 million, $82.5 million,
$570.3 million, and $44.0 million, respectively. See note 9. Stockholders Equity in Part II, Item 8, Notes to Consolidated Financial Statements.

ITEM 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.

Our Managements Discussion and Analysis of Financial Condition and Results of Operations (MD&A) will help readers understand our results of
operations, financial condition, and cash flow. It is provided in addition to the accompanying consolidated financial statements and notes. This MD&A is
organized as follows:

Business Overview and Outlook. High level discussion of our operating results and significant known trends that affect our business.

Results of Operations. Detailed discussion of our revenues and expenses.

Liquidity and Capital Resources. Discussion of key aspects of our statements of cash flows, changes in our financial position, and our financial
commitments.

Off-Balance Sheet Arrangements. We have no significant off-balance sheet arrangements.

Contractual Obligations. Tabular disclosure of known contractual obligations as of December 28, 2014.

Critical Accounting Policies and Estimates. Discussion of significant changes we believe are important to understanding the assumptions and
judgments underlying our financial statements.

Recent Accounting Pronouncements.

This MD&A discussion contains forward-looking statements that involve risks and uncertainties. See Special Note Regarding Forward-Looking
Statements for additional factors relating to such statements. See Risk Factors in Item 1A of this report for a discussion of certain risk factors applicable to
our business, financial condition, and results of operations. Operating results are not necessarily indicative of results that may occur in future periods.

Business Overview and Outlook

We are a global leader in sequencing and array-based solutions, which serve customers in a wide range of markets, enabling the broad adoption of
genomic solutions in research and clinical settings. Our portfolio of integrated systems, consumables, and analysis tools is designed to accelerate and
simplify genetic analysis. This portfolio addresses a range of genomic complexity, price points, and throughput, so that customers can select the best solution
for their scientific challenge. Our leading-edge sequencing and array instruments can perform a broad range of nucleic acid (DNA, RNA) analyses efficiently
across a wide range of sample sizes.

Financial highlights for 2014 include the following:

Net revenue increased by 31% in 2014 compared to 2013. Our sales increased across our portfolio of sequencing products, including
consumables, instruments, and services. We expect our revenue to continue to increase in 2015.

Gross profit as a percentage of revenue (gross margin) increased to 69.7% in 2014 from 64.2% in 2013. We settled our litigation with Syntrix in
2014, which resulted in a reversal of cost of sales of $10.4 million during the year, which positively impacted our gross margin. See detailed
discussions on this matter in note 10. Legal Proceedings in Part II, Item 8 of this Form 10-K. In addition, higher margins on sequencing
instrument sales during the period and efficiencies in manufacturing contributed to the increase in gross margin. Gross margin in 2013 was
negatively affected by a $25.2 million impairment charge associated with the discontinuation of the Eco and NuPCR product lines. We believe
our gross margin in future periods will depend on several factors, including: market conditions that may impact our pricing power; sales mix
changes among consumables, instruments, and services; product mix changes between established products and new products in new markets;
our cost structure for manufacturing operations; royalties; and our ability to create innovative and high premium products that meet or stimulate
customer demand.

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Income from operations increased by $380.6 million in 2014 compared to 2013. Operating expenses in 2014 included a $82.1 million legal
contingency gain associated with the Syntrix patent litigation matter, as compared to a $115.4 million legal contingency charge in 2013
associated with the matter. Operating expenses in 2014 also included a $48.8 million research and development charge recorded upon our
litigation settlement and pooling of patents with Sequenom, Inc. These changes as well as higher gross profit in 2014 led to the increase in
income from operations despite the increases in research and development and selling, general and administrative expenses, which we expect
will continue to grow.

Our effective tax rate was 21.3% in 2014 and 2013. The variance from the U.S. federal statutory tax rate of 35% in 2014 and 2013 was primarily
attributable to the mix of earnings in jurisdictions with lower statutory tax rates than the U.S. federal statutory tax rate, such as earnings in
Singapore and the United Kingdom, and the benefit from research and development credits and foreign tax credits. Our future effective tax rate
may vary from the U.S. federal statutory tax rate due to the mix of earnings in tax jurisdictions with different statutory tax rates and the other
factors discussed in the risk factor We are subject to risks related to taxation in multiple jurisdictions in Part I Item 1A Risk Factors of this
Form 10-K. We anticipate that our effective tax rate will trend lower than the U.S. federal statutory tax rate in the future due to the portion of our
earnings that will be subject to lower statutory tax rates.

We ended 2014 with cash, cash equivalents, and short-term investments totaling $1.3 billion.

This overview and outlook provides a high-level discussion of our operating results and significant known trends that affect our business. We believe that an
understanding of these trends is important to understanding our financial results for the periods reported herein as well as our future financial performance.
This summary is not intended to be exhaustive, nor is it intended to be a substitute for the detailed discussion and analysis provided elsewhere in this Annual
Report on Form 10-K.

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Results of Operations

To enhance comparability, the following table sets forth audited consolidated statement of operations data for the years ended December 28, 2014,
December 29, 2013, and December 30, 2012 stated as a percentage of total revenue.

2014 2013 2012

Revenue:
Product revenue 87.0 % 89.0 % 91.9 %
Service and other revenue 13.0 11.0 8.1
Total revenue 100.0 100.0 100.0
Cost of revenue:
Cost of product revenue 23.2 28.7 27.6
Cost of service and other revenue 5.0 4.8 3.8
Amortization of acquired intangible assets 2.1 2.3 1.2
Total cost of revenue 30.3 35.8 32.6
Gross profit 69.7 64.2 67.4
Operating expense:
Research and development 20.8 19.5 20.1
Selling, general and administrative 25.1 26.8 24.9
Legal contingencies (4.0) 8.1
Headquarter relocation 0.3 0.2 2.3
Acquisition related (gain) expense, net (0.1) (0.8) 0.2
Unsolicited tender offer related expense 1.0 2.0
Restructuring 0.4
Total operating expense 42.1 54.8 49.9
Income from operations 27.6 9.4 17.5
Other income (expense):
Interest income 0.3 0.3 1.4
Interest expense (2.2) (2.7) (3.3)
Cost-method investment related gain, net 0.2 4.3 4.0
Other expense, net (1.8) (0.1) (0.2)
Total other (expense) income, net (3.5) 1.8 1.9
Income before income taxes 24.1 11.2 19.4
Provision for income taxes 5.1 2.4 6.2
Net income 19.0 % 8.8 % 13.2 %

Our fiscal year is the 52 or 53 weeks ending the Sunday closest to December 31, with quarters of 13 or 14 weeks ending the Sunday closest to March 31,
June 30, September 30, and December 31. Each of fiscal years 2014, 2013 and 2012 were 52 weeks.

Revenue

2014 - 2013 2013 - 2012

(Dollars in thousands) 2014 2013 Change % Change 2012 Change % Change
Product revenue $ 1,619,511 $ 1,264,656 $ 354,855 28% $ 1,055,826 $ 208,830 20%
Service and other revenue 241,847 156,522 85,325 55 92,690 63,832 69
Total revenue $ 1,861,358 $ 1,421,178 $ 440,180 31% $ 1,148,516 $ 272,662 24%

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Product revenue consists primarily of revenue from sales of consumables and instruments. Services and other revenue consists primarily of sequencing
and genotyping service revenue as well as instrument service contract revenue. Revenues from businesses acquired in 2013 are predominantly recorded in
service and other revenue.

2014 Compared to 2013

Consumables revenue increased $160.7 million, or 18%, to $1,041.0 million in 2014 compared to $880.3 million in the prior year. The increase was
primarily attributable to sales of sequencing consumables, driven by the growth in the installed base, including HiSeq X Ten and NextSeq platforms
introduced in January 2014. Such increase was partially offset by a decrease in array consumables.

Instrument revenue increased $190.7 million, or 51%, to $562.2 million in 2014 compared to $371.5 million in the prior year, driven primarily by
shipments of sequencing instruments, in particular HiSeq X Ten and NextSeq platforms introduced in January 2014.

Service and other revenue increased $85.3 million, or 55%, to $241.8 million in 2014 compared to $156.5 million in the prior year, driven primarily by
sequencing services and extended service contracts for our instruments as our installed base continues to grow. Revenues from businesses acquired in 2013
are predominantly recorded in service revenue. Excluding the impact of acquisitions completed in 2013, the increase in service and other revenue was 35%.

2013 Compared to 2012

Consumables revenue increased $151.0 million, or 21%, to $880.3 million in 2013 compared to $729.3 million in the prior year. The increase was
primarily attributable to increased sales of sequencing consumables, driven by the growth in the installed base for both HiSeq and MiSeq systems, as well as
higher consumable sales per HiSeq instrument in the installed base.

Instrument revenue increased $57.2 million, or 18%, to $371.5 million in 2013 compared to $314.3 million in the prior year, driven primarily by an
increase in HiSeq shipments.

The increase in service and other revenue in 2013 compared to prior year was driven by an increase in sequencing service volume and instrument
service contract revenue as a result of our growing installed base. Excluding the impact of acquisitions completed in 2013, the increase in service and other
revenue was 49%.

Gross Margin

2014 - 2013 2013 - 2012

(Dollars in thousands) 2014 2013 Change % Change 2012 Change % Change
Total gross profit $ 1,297,710 $ 911,887 $ 385,823 42% $ 773,528 $ 138,359 18%
Total gross margin 69.7% 64.2% 67.4%

2014 Compared to 2013

Gross profit increased $385.8 million, or 42%, to $1,297.7 million in 2014 compared to $911.9 million in the prior year, primarily due to the increase in
revenue. Excluding gross profit from acquisitions completed in 2013, which was predominately included in gross profit from service sales, the increase in
gross profit was 37%. Also contributing to the increase in gross profit was our litigation settlement with Syntrix in 2014, which resulted in reversal of cost of
sales of $10.4 million. See detailed discussions on this matter in note 10. Legal Proceedings in Part II, Item 8 of this Form 10-K. In addition, higher margins
on sequencing instrument sales and efficiencies in manufacturing contributed to the increase in gross margin. In 2013, gross margin was negatively affected
by a $25.2 million impairment charge associated with the discontinuation of the Eco and NuPCR product lines.

2013 Compared to 2012

Gross profit increased $138.4 million, or 18%, to $911.9 million compared to $773.5 million in the prior year, primarily due to the increase in revenue.
Excluding gross profit from acquisitions completed in 2013, which was predominately included in gross profit from services sales, the increase in gross profit
was 19%. Gross margin decreased in 2013 in comparison to the prior year, primarily due to impairments associated with the discontinuation of the Eco and
NuPCR product lines, an increase in

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amortization of acquired intangible assets due to recent acquisitions, and an increase in legal contingencies, which had an aggregate impact to gross margins
of 3.9%. Acquisitions also contributed to the decrease in gross margin. These decreases were partially offset by the favorable impacts from higher instrument
margins, higher mix of sequencing consumables, and operational efficiencies.

Operating Expense

2014 - 2013 2013 - 2012

(Dollars in thousands) 2014 2013 Change % Change 2012 Change % Change
Research and development $ 388,055 $ 276,743 $ 111,312 40 % $ 231,025 $ 45,718 20 %
Selling, general and administrative 466,283 381,040 85,243 22 285,991 95,049 33
Legal contingencies (74,338) 115,369 (189,707) (164) 115,369 100
Headquarter relocation 5,638 2,624 3,014 115 26,328 (23,704) (90)
Acquisition related (gain) expense, net (2,639) (11,617) 8,978 (77) 2,774 (14,391) (519)
Unsolicited tender offer related expense 13,621 (13,621) (100) 23,136 (9,515) (41)
Restructuring 3,522 (3,522) (100)
Total operating expense $ 782,999 $ 777,780 $ 5,219 1% $ 572,776 $ 205,004 36 %

2014 Compared to 2013

Research and development expense increased by $111.3 million, or 40%, in 2014 from 2013. The increase is partially attributable to our litigation
settlement and patent pooling agreement with Sequenom in 2014, as $48.8 million was recorded to research and development expense for the upfront
payment. See detailed discussion on this matter in note 10. Legal Proceedings to our financial statements in Part II, Item 8 of this Form 10-K. In addition,
headcount increases and other expenses related to our new product launches contributed to the increase in research and development expenses, reflecting our
continued investment in the development of new products as well as enhancements to existing products.

Selling, general and administrative expense increased by $85.2 million, or 22% in 2014 from 2013. The increase is primarily driven by increases in
headcount, consulting services, and infrastructure investment to support the growth of our Company.

Acquisitions completed in 2013 also contributed to the increases in research and development expense and selling, general and administrative expense
in 2014 compared to 2013.

Legal contingencies in 2014 reflected predominantly the $82.1 million gain from our litigation settlement with Syntrix, offset by other legal
contingency charges. The $115.4 million in legal contingencies in 2013 were primarily charges recorded for the Syntrix litigation matter. See detailed
discussion on this matter in note 10. Legal Proceedings in Part II, Item 8 of this Form 10-K.

We completed the relocation of our headquarters in 2012. During 2014 and 2013, we incurred $5.6 million and $2.6 million, respectively, in additional
headquarter relocation expense, consisting primarily of changes in estimated lease exit liability recorded upon vacating our former headquarters, and
accretion expense related to such facility exit obligation.

Acquisition related (gain) expense, net, in 2014 and 2013 consisted of changes in fair value of contingent consideration and transaction related costs.

In 2013, we recorded $13.6 million of expenses incurred in relation to an unsolicited tender offer in Q1 2012. The expenses consisted primarily of
advisory and legal fees. The advisory service arrangement was completed in 2013.

2013 Compared to 2012

Research and development expense increased by $45.7 million, or 20%, in 2013 from 2012, primarily due to increased headcount and consulting
services as we continued to increase our investment in the development of new products as well as enhancements to existing products. In 2012, we recorded a
$21.4 million impairment charge for an in-process research and development asset. The lack of such charge in 2013 partially offset the increase in overall
research and development expense.

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Selling, general and administrative expense increased by $95.0 million, or 33%, in 2013 from 2012. The increase is primarily driven by increased
headcount and consulting services to support the growth of our Company and our focus on global business process improvements, as well as increased
amortization of intangible assets.

Acquisitions completed in 2013 and 2012 also contributed to the increases in research and development expense and selling, general and
administrative expense.

During 2013, we recorded $115.4 million in legal contingency charges within operating expenses primarily related to the Syntrix litigation matter. See
detailed discussion on this matter in note 10. Legal Proceedings in Part II, Item 8 of this Form 10-K.

We completed the relocation of our headquarters in 2012. During 2013, we recorded additional cease-use losses due to a delay in the sublease of
portions of our prior headquarters and accretion of interest expense related to the facility exit obligation recorded upon vacating our former headquarters.
Headquarter relocation expense recorded in 2012 consisted of cease-use loss recorded upon vacating our prior headquarters, accretion expense related to the
facility exit obligation, double rent expense during the transition to our new facility, and moving expenses.

Acquisition related (gain) expense, net, in 2013 consisted primarily of gains from changes in fair value of contingent consideration of $18.8 million.
Such gains were partially offset by transaction and other acquisition related costs of $7.2 million. Acquisition related (gain) expense, net in 2012 consisted of
changes in fair value of contingent consideration of $2.0 million.

During 2013, we recorded $13.6 million of expenses incurred in relation to an unsolicited tender offer in Q1 2012. The expenses consisted primarily of
advisory and legal fees. The advisory related expenses decreased from the prior year as the advisory service arrangements were completed.

As a result of a restructuring effort announced in 2011, we recorded restructuring charges of $3.5 million during 2012, comprised primarily of severance
pay and other employee separation costs.

Other (Expense) Income, Net

2014 - 2013 2013 - 2012

(Dollars in thousands) 2014 2013 Change % Change 2012 Change % Change
Interest income $ 3,901 $ 4,887 $ (986) (20)% $ 16,208 $ (11,321) (70)%
Interest expense (41,728) (39,690) (2,038) 5 (37,779) (1,911) 5
Cost-method investment
related gain, net 4,427 61,357 (56,930) (93) 45,911 15,446 34
Other expense, net (32,553) (1,347) (31,206) 2,317 (2,484) 1,137 (46)
Total other (expense)
income, net $ (65,953) $ 25,207 $ (91,160) (362)% $ 21,856 $ 3,351 15 %

2014 Compared to 2013

Interest income primarily consisted of returns from our investment portfolio. Interest income decreased slightly in 2014 compared to 2013 as a result of
lower yields, partially offset by the impact from a larger investment portfolio. Interest expense in 2014 remained relatively consistent to 2013 and consisted
primarily of accretion on our convertible senior notes.

Cost-method investment related gain, net in 2014 consisted of a gain associated with additional proceeds received for a cost-method investment sold in
a prior year. In 2013, we recognized $61.4 million in gains from sales of cost-method investments, of which $55.2 million related to the sale of our minority
ownership interest in Oxford Nanopore Technologies Ltd.

Other expense, net, in 2014 and 2013 primarily consisted of loss on extinguishment of debt and net foreign exchange gains and losses. In conjunction
with the issuance of the 2019 and 2021 Notes, we used $1,244.7 million in cash to repurchase $600.0 million in principal amount of the outstanding 2016
Notes in privately negotiated transactions. As a result, we recorded $31.4 million in loss on extinguishment of debt calculated as the difference between the
fair value and carrying value of the liability component of the debt.

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2013 Compared to 2012

Interest income decreased in 2013 from 2012 as a result of a decrease in our investment portfolio balance as well as lower yields during the period.
Furthermore, interest income in 2012 included a $6.0 million recovery of a note receivable. Interest expense in 2013 remained relatively consistent as
compared to 2012 and consisted primarily of accretion of discount on our convertible senior notes.

In 2013, we recognized $61.4 million in gains from sales of cost-method investments, of which $55.2 million related to the sale of our minority
ownership interest in Oxford Nanopore Technologies Ltd. Cost-method investment related gain in 2012 consisted of a gain of $48.6 million on the sale of
our minority ownership interest in deCODE Genetics, partially offset by an impairment loss of $2.7 million on another cost-method investment that was
determined to be other-than-temporarily impaired.

Other expense, net in 2013 and 2012 primarily consisted of net foreign exchange losses and losses on the extinguishment of debt recorded on
conversions of our 2014 Notes.

Provision for Income Taxes

2014 - 2013 2013 - 2012

(Dollars in thousands) 2014 2013 Change % Change 2012 Change % Change
Income before income taxes $ 448,758 $ 159,314 $ 289,444 182% $ 222,608 $ (63,294) (28)%
Provision for income taxes 95,407 34,006 61,401 181 71,354 (37,348) (52)
Net income $ 353,351 $ 125,308 $ 228,043 182% $ 151,254 $ (25,946) (17)%
Effective tax rate 21.3% 21.3% 32.1%

2014 Compared to 2013

Our effective tax rate was 21.3% in 2014 and 2013, respectively. The variance from the U.S. federal statutory tax rate of 35% was primarily attributable
to the mix of earnings in jurisdictions with lower statutory tax rates than the U.S. federal statutory tax rate, such as earnings in Singapore and the United
Kingdom. In addition, the variance in 2014 was also attributable to the benefit from research and development credits and foreign tax credits, and the
variance in 2013 was also attributable to the retroactive reinstatement of the federal research and development credit for 2012 which was enacted in January
2013. These items offset the impact of recording a valuation allowance which was primarily related to the estimated limitation on utilizing foreign tax credits
in the U.S.

2013 Compared to 2012

Our effective tax rate was 21.3% in 2013, as compared to 32.1% in 2012. The variance from the U.S. federal statutory tax rate of 35% in 2013 was
primarily attributable to the mix of earnings in jurisdictions with lower statutory tax rates than the U.S. federal statutory tax rate, such as earnings in
Singapore and the United Kingdom; and the retroactive reinstatement of the federal research and development credit for 2012 which was enacted in January
2013. These items offset the impact of recording a valuation allowance which was primarily related to the estimated limitation on utilizing foreign tax credits
in the U.S. In 2012 the variance from the U.S. federal statutory tax rate of 35% was primarily attributable to the change in the mix of earnings in tax
jurisdictions with different statutory rates.

The American Taxpayer Relief Act of 2012, which was signed into law on January 2, 2013, included the retroactive reinstatement of the federal research
and development credit from January 1, 2012 through December 31, 2013. Our provision for income taxes for the year ended December 30, 2012 did not
include the impact of the federal research credit generated in 2012 since the law was enacted subsequent to our 2012 reporting period. Instead, the retroactive
reinstatement of the federal research credit generated in 2012 reduced our provision for income taxes for 2013 by approximately $2.9 million.

Liquidity and Capital Resources

At December 28, 2014, we had approximately $636.2 million in cash and cash equivalents, of which approximately $430 million were held by our
foreign subsidiaries. Cash and cash equivalents decreased by $75.5 million from last year, due to the

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factors described in the Cash Flow Summary below. Our primary source of liquidity, other than our holdings of cash, cash equivalents, and investments, has
been cash flows from operations. Our ability to generate cash from operations provides us with the financial flexibility we need to meet operating, investing,
and financing needs. It is our intention to indefinitely reinvest all current and future foreign earnings in foreign subsidiaries.

Historically, we have liquidated our short-term investments and/or issued debt and equity securities to finance our business needs as a supplement to
cash provided by operating activities. As of December 28, 2014, we have $702.2 million in short-term investments. Short-term investments held by our
foreign subsidiaries as of December 28, 2014, were approximately $260 million. Our short-term investments include marketable securities consisting of U.S
government-sponsored entities, corporate debt securities, and U.S. Treasury securities.

In June 2014, we issued convertible senior notes due 2019 and 2021 (2019 and 2021 Notes) with an aggregate principal amount of $1,150.0 million.
The proceeds from such issuance and cash on hand totaling $1,244.7 million were used to repurchase $600.0 million in principal amount of our convertible
senior notes due 2016 (2016 Notes). As of December 28, 2014, $320.0 million in principal amount of the 2016 Notes remained outstanding, with a maturity
date of March 15, 2016. The 2016 Notes became convertible on April 1, 2014 and continue to be convertible through March 31, 2015. It is our intent and
policy to settle conversions of the 2016 Notes through combination settlement, which essentially involves repayment of an amount of cash equal to the
principal amount and delivery of the excess of conversion value over the principal amount in shares of common stock. The 2019 and 2021 Notes were not
convertible as of December 28, 2014.

We anticipate that our current cash, cash equivalents, and short-term investments, together with cash provided by operating activities are sufficient to
fund our near term capital and operating needs for at least the next 12 months. Operating needs include the planned costs to operate our business, including
amounts required to fund working capital and capital expenditures. Our primary short-term needs for capital, which are subject to change, include:

potential early repayment of debt obligations as a result of conversions;

support of commercialization efforts related to our current and future products, including expansion of our direct sales force and field support
resources both in the United States and abroad;
acquisitions of equipment and other fixed assets for use in our current and future manufacturing and research and development facilities;
repurchases of our outstanding common stock;
the continued advancement of research and development efforts;
potential strategic acquisitions and investments;
the expansion needs of our facilities, including costs of leasing additional facilities; and
investment in our global business processes, and the associated Enterprise Resource Planning platform.

As of December 28, 2014, we had $44.1 million in fair value of contingent consideration liabilities associated with prior acquisitions to be settled in
future periods.

During 2014, we used $237.2 million to repurchase our outstanding shares under the stock repurchase programs authorized by our Board of Directors.
As of December 28, 2014, there remains $130.4 million under the authorized programs.

We expect that our revenue and the resulting operating income, as well as the status of each of our new product development programs, will
significantly impact our cash management decisions.

Our future capital requirements and the adequacy of our available funds will depend on many factors, including:
our ability to successfully commercialize and further develop our technologies and create innovative products in our markets;
scientific progress in our research and development programs and the magnitude of those programs;
competing technological and market developments; and
the need to enter into collaborations with other companies or acquire other companies or technologies to enhance or complement our product
and service offerings.

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Cash Flow Summary

(In thousands) 2014 2013 2012

Net cash provided by operating activities $ 501,271 $ 386,421 $ 291,873
Net cash used in investing activities (406,624) (69,649) (150,012)
Net cash used in financing activities (166,748) (38,719) (10,755)
Effect of exchange rate changes on cash and cash equivalents (3,382) (397) (103)
Net (decrease) increase in cash and cash equivalents $ (75,483) $ 277,656 $ 131,003

Operating Activities

Cash provided by operating activities in 2014 consisted of net income of $353.4 million plus net adjustments of $204.4 million partially offset by net
changes in net operating assets and liabilities of $56.5 million. The primary non-cash expenses added back to net income included share-based compensation
of $152.6 million, depreciation and amortization expenses of $112.6 million, deferred income taxes $99.8 million, accretion of debt discount of $38.1
million, and loss on extinguishment of debt of $31.4 million. These non-cash add-backs were partially offset by $126.5 million in incremental tax benefit
related to share-based compensation and $109.4 million in gain on litigation settlement. Cash flow impact from changes in net operating assets included
increases in account receivables, inventory, other assets, and accrued legal contingencies, partially offset by an increase in accrued liabilities.

Cash provided by operating activities in 2013 consisted of net income of $125.3 million plus net adjustments of $107.7 million, and a change in net
operating assets of $153.4 million. The primary non-cash expenses added back to net income included share-based compensation of $105.8 million,
depreciation and amortization expenses related to property and equipment and intangible assets of $97.9 million, accretion of debt discount of $36.2 million,
and impairments of $25.2 million. The adjustments to net income also included $61.4 million in cost-method investment related gain, $56.7 million in
incremental tax benefit related to share-based compensation, and $36.7 million in deferred income taxes. The main drivers in the change in net operating
assets was an increase in legal contingencies due to the Syntrix patent litigation.

Cash provided by operating activities in 2012 consisted of net income of $151.3 million plus net adjustments of $158.6 million, offset by changes in
net operating assets of $18.0 million. The primary non-cash expenses added back to net income included share-based compensation of $94.3 million,
depreciation and amortization expenses related to property and equipment and intangible assets of $65.3 million, accretion of debt discount of $35.0 million,
and impairment of IPR&D of $21.4 million. The adjustments to net income also included a $45.9 million in net cost-method investment related gain and
$20.8 million in incremental tax benefit related to share-based compensation. The main drivers in the change in net operating assets included increases in
account receivable and inventory, partially offset by an increase in accounts payable, and, accrued liabilities.

Investing Activities

Cash used in investing activities totaled $406.6 million in 2014. We purchased $791.3 million of available-for-sale securities and $541.9 million of our
available-for-sale securities matured or were sold during the period. We also invested $106.0 million in capital expenditures primarily associated with the
purchase of manufacturing, research and development equipment, leasehold improvements, and information technology equipment and systems.

Cash used in investing activities totaled $69.6 million in 2013. We purchased $364.0 million of available-for-sale securities and $812.8 million of our
available-for-sale securities matured or were sold during the period. We also paid net cash of $523.5 million for acquisitions, and invested $79.2 million in
capital expenditures primarily associated with the purchase of manufacturing, research and development equipment, leasehold improvements, and
information technology equipment and systems.

Cash used in investing activities totaled $150.0 million in 2012. During the year we purchased $925.5 million of available-for-sale securities and
$898.8 million of our available-for-sale securities matured or were sold during the period. We received net proceeds from the sale of strategic investments of
$40.9 million. We also paid net cash of $83.2 million for acquisitions, $68.8 million in capital expenditures primarily associated with the purchase of
manufacturing and servicing equipment, leasehold improvements, and information technology equipment and systems and used $12.2 million for purchases
of intangibles assets.

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Financing Activities

Cash used in financing activities totaled $166.7 million in 2014. We received $1,132.4 million in proceeds from the issuance of $1,150.0 million in
principal amount of our convertible senior notes due 2019 and 2021, net of issuance costs paid in the period. We used $1,244.7 million to repurchase $600.0
million in principal amount of our 2016 Notes and used $237.2 million to repurchase our common stock. In addition, we paid $30.0 million primarily in
conversions of our convertible senior notes due 2014. We received $126.5 million in incremental tax benefit related to share-based compensation and $96.3
million in proceeds from the issuance of our common stock through the exercise of stock options and the sale of shares under our employee stock purchase
plan.

Cash used in financing activities totaled $38.7 million in 2013. We received $94.5 million in proceeds from the issuance of common stock through the
exercise of stock options and the sale of shares under our employee stock purchase plan, and received $56.7 million in incremental tax benefit related to
share-based compensation. We used $125.0 million for retirement of warrants, and used $50.0 million to repurchase our common stock.

Cash used in financing activities totaled $10.8 million in 2012. We received $54.4 million in proceeds from the issuance of common stock through the
exercise of stock options and warrants and the sale of shares under our employee stock purchase plan. We used $82.5 million to repurchase our common stock
in 2012. In addition, we received $20.8 million in incremental tax benefit related to share-based compensation.

Off-Balance Sheet Arrangements

We do not participate in any transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often
referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements
or other contractually narrow or limited purposes. During the fiscal year ended December 28, 2014, we were not involved in any off-balance sheet
arrangements within the meaning of the rules of the Securities and Exchange Commission.

Contractual Obligations

Contractual obligations represent future cash commitments and liabilities under agreements with third parties, and exclude orders for goods and
services entered into in the normal course of business that are not enforceable or legally binding. The following table represents our contractual obligations
as of December 28, 2014, aggregated by type (amounts in thousands):

Payments Due by Period(1)

Less Than More Than
Contractual Obligation Total 1 Year 1 3 Years 3 5 Years 5 Years
Debt obligations(2) $ 1,488,046 $ 3,388 $ 325,602 $ 637,675 $ 521,381
Leases(3) 614,053 36,197 85,401 77,403 415,052
License agreements 100,125 8,650 25,970 41,955 23,550
Purchase obligations 19,083 10,750 4,733 2,400 1,200
Amounts due under executive deferred compensation plan 20,310 20,310
Total $ 2,241,617 $ 79,295 $ 441,706 $ 759,433 $ 961,183
_______________________________________

(1) The table excludes $123.0 million of contingent consideration payments related to acquisitions and $52.1 million of uncertain tax positions. These
items were excluded because it remained uncertain as of December 28, 2014 with respect to the timing and amounts of the settlement of such
contingent payments or uncertain positions, if any. See notes 3. Acquisitions and 11. Income Taxes, respectively, in Part II, Item 8 of this Form 10-
K for further discussions of these items.

(2) Debt obligations include the principal amount of our convertible senior notes due 2016, 2019, and 2021, as well as interest payments to be made
under the notes. Although these notes mature in 2016, 2019, and 2021, respectively, they may be converted into cash and shares of our common stock
prior to maturity if certain conditions are met. Any conversion prior to maturity can result in repayments of the principal amounts sooner than the
scheduled repayments as

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indicated in the table. See note 6. Convertible Senior Notes in Part II, Item 8 of this Form 10-K for further discussion of the terms of the convertible
senior notes.

(3) Contractual obligations under leases excludes the lease we signed on December 30, 2014 for a facility in Foster City, California, which will commence
in 2017. The aggregate rent during the initial term of the lease is expected to be approximately $204.0 million. See note 7. Commitments in Part II,
Item 8 of this Form 10-K for further discussion of this lease.

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. Management bases its estimates on historical
experience, market and other conditions, and various other assumptions it believes to be reasonable. Although these estimates are based on managements
best knowledge of current events and actions that may impact us in the future, the estimation process is, by its nature, uncertain given that estimates depend
on events over which we may not have control. If market and other conditions change from those that we anticipate, our consolidated financial statements
may be materially affected. In addition, if our assumptions change, we may need to revise our estimates, or take other corrective actions, either of which may
also have a material effect on our consolidated financial statements.

We believe that the following critical accounting policies and estimates have a higher degree of inherent uncertainty and require our most significant
judgments. In addition, had we used estimates different from any of these, our consolidated financial statements could have been materially different from
those presented. Members of our senior management have discussed the development and selection of our critical accounting policies and estimates, and our
disclosure regarding them, with the audit committee of our board of directors. Our accounting policies are more fully described in note 1. Organization and
Significant Accounting Policies in Part II, Item 8 of this Form 10-K.

Revenue Recognition

Our revenue is generated primarily from the sale of products and services. Product revenue primarily consists of sales of instruments and consumables
used in genetic analysis. Service and other revenue primarily consists of revenue generated from genotyping and sequencing services and instrument service
contracts. The timing of revenue recognition and the amount of revenue recognized in each case depends upon a variety of factors, including the specific
terms of each arrangement and the nature of our deliverables and obligations. Determination of the appropriate amount of revenue recognized involves
significant judgment and estimates.

We recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the sellers price to the
buyer is fixed or determinable, and collectibility is reasonably assured. In instances where final acceptance of the product or system is required, revenue is
deferred until all the acceptance criteria have been met. We occasionally offer discounts on newly introduced products to recent customers of existing
products. These promotions sometimes involve the trade-in of existing products in exchange for a discount on new products. Where applicable, we defer a
portion of revenue on the sales of existing products in recognition of the promotional discounts until the delivery of new products. All revenue is recorded
net of discounts and sales taxes collected on behalf of governmental authorities.

Revenue from product sales is recognized generally upon transfer of title to the customer, provided that no significant obligations remain and
collection of the receivable is reasonably assured. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over
the contract term. Revenue from genotyping and sequencing services is recognized when earned, which is generally at the time the genotyping or sequencing
analysis data is made available to the customer or agreed upon milestones are reached.

In order to assess whether the price is fixed or determinable, we evaluate whether an arrangement is cancellable or subject to future changes in price,
deliverables, or other terms. If it is determined that the price is not fixed or determinable, we defer revenue recognition until the price becomes fixed or
determinable. We assess collectibility based on a number of factors, including past transaction history with, and the creditworthiness of, the customer. If we
determine that collection of a payment is not reasonably assured, revenue recognition is deferred until receipt of payment.

We regularly enter into contracts where revenue is derived from multiple deliverables including products or services. These products or services are
generally delivered within a short time frame, approximately three to six months, after the contract execution date. Revenue recognition for contracts with
multiple deliverables is based on the individual units of

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accounting determined to exist in the contract. A delivered item is considered a separate unit of accounting when the delivered item has value to the
customer on a stand-alone basis. Items are considered to have stand-alone value when they are sold separately by any vendor or when the customer could
resell the item on a stand-alone basis.

For transactions with multiple deliverables, consideration is allocated at the inception of the contract to all deliverables based on their relative selling
price. The relative selling price for each deliverable is determined using vendor specific objective evidence (VSOE) of selling price or third-party evidence of
selling price if VSOE does not exist. If neither VSOE nor third-party evidence exists, we use best estimate of the selling price for the deliverable.

In order to establish VSOE of selling price, we must regularly sell the product or service on a standalone basis with a substantial majority priced within a
relatively narrow range. VSOE of selling price is usually the midpoint of that range. If there are not a sufficient number of standalone sales and VSOE of
selling price cannot be determined, then we consider whether third party evidence can be used to establish selling price. Due to the lack of similar products
and services sold by other companies within the industry, we have rarely established selling price using third-party evidence. If neither VSOE nor third party
evidence of selling price exists, we determine our best estimate of selling price using average selling prices over a rolling 12-month period coupled with an
assessment of current market conditions. If the product or service has no history of sales or if the sales volume is not sufficient, we rely upon prices set by our
pricing committee adjusted for applicable discounts. We recognize revenue for delivered elements only when we determine there are no uncertainties
regarding customer acceptance.

In certain markets, we sell products and provides services to customers through distributors that specialize in life science products. In most sales through
distributors, the product is delivered directly to customers. In cases where the product is delivered to a distributor, revenue recognition is deferred until
acceptance is received from the distributor, and/or the end-user, if required by the applicable sales contract. The terms of sales transactions through
distributors are consistent with the terms of direct sales to customers. These transactions are accounted for in accordance with our revenue recognition policy
described herein.

Investments

We invest in various types of securities, including debt securities in government-sponsored entities, corporate debt securities, and U.S. Treasury
securities. As of December 28, 2014, we had $702.2 million in short-term investments. In accordance with the accounting standard for fair value
measurements, we classify our investments as Level 1, 2, or 3 within the fair value hierarchy. Fair values determined by Level 1 inputs utilize quoted prices
(unadjusted) in active markets for identical assets that we have the ability to access. Fair values determined by Level 2 inputs utilize data points that are
observable such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs utilize unobservable data points for the asset.

As discussed in note 5. Fair Value Measurements in Part II, Item 8 of this Form 10-K, a majority of our security holdings have been classified as Level
2. These securities have been initially valued at the transaction price and subsequently valued utilizing a third party service provider who assesses the fair
value using inputs other than quoted prices that are observable either directly or indirectly, such as yield curve, volatility factors, credit spreads, default rates,
loss severity, current market and contractual prices for the underlying instruments or debt, broker and dealer quotes, as well as other relevant economic
measures. We perform certain procedures to corroborate the fair value of these holdings, and in the process, we apply judgment and estimates that if changed,
could significantly affect our statement of financial positions.

Allowance for Doubtful Accounts

We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. We
evaluate the collectibility of our accounts receivable based on a combination of factors. We regularly analyze customer accounts, review the length of time
receivables are outstanding, review historical loss rates and assess current economic trends that may impact the level of credit losses in the future. Our gross
trade accounts receivables totaled $294.9 million and the allowance for doubtful accounts was $5.5 million at December 28, 2014. Our allowance for
doubtful accounts has generally been adequate to cover our actual credit losses. However, since we cannot reliably predict future changes in the financial
stability of our customers, we may need to increase our reserves if the financial conditions of our customers deteriorate.

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Inventory Valuation

Inventories are stated at lower of cost or market. We record adjustments to inventory for potentially excess, obsolete, or impaired goods in order to state
inventory at net realizable value. We must make assumptions about future demand, market conditions, and the release of new products that will supersede old
ones. We regularly review inventory for excess and obsolete products and components, taking into account product life cycles, quality issues, historical
experience, and usage forecasts. Our gross inventory totaled $217.2 million and the cumulative adjustment for potentially excess and obsolete inventory was
$26.1 million at December 28, 2014. Historically, our inventory adjustment has been adequate to cover our losses. However, if actual market conditions are
less favorable than anticipated, additional inventory adjustments could be required.

Contingencies

We are involved in various lawsuits and claims arising in the ordinary course of business, including actions with respect to intellectual property,
employment, and contractual matters. In connection with these matters, we assess, on a regular basis, the probability and range of possible loss based on the
developments in these matters. A liability is recorded in the financial statements if it is believed to be probable that a loss has been incurred and the amount
of the loss can be reasonably estimated. Because litigation is inherently unpredictable and unfavorable resolutions could occur, assessing contingencies is
highly subjective and requires judgments about future events. We regularly review outstanding legal matters to determine the adequacy of the liabilities
accrued and related disclosures in consideration of many factors, which include, but are not limited to, past history, scientific and other evidence, and the
specifics and status of each matter. We may change our estimates if our assessment of the various factors changes and the amount of ultimate loss may differ
from our estimates, resulting in a material effect on our business, financial condition, results of operations, and/or cash flows.

Business Combinations

Under the acquisition method of accounting, we allocate the fair value of the total consideration transferred to the tangible and identifiable intangible
assets acquired and liabilities assumed based on their estimated fair values on the date of acquisition. The fair values assigned, defined as the price that would
be received to sell an asset or paid to transfer a liability in an orderly transaction between willing market participants, are based on estimates and assumptions
determined by management. We record the excess consideration over the aggregate fair value of tangible and intangible assets, net of liabilities assumed, as
goodwill. These valuations require us to make significant estimates and assumptions, especially with respect to intangible assets.

In connection with certain of our acquisitions, additional contingent consideration is earned by the sellers upon completion of certain future
performance milestones. In these cases, a liability is recorded on the acquisition date for an estimate of the acquisition date fair value of the contingent
consideration by applying the income approach utilizing variable inputs such as anticipated future cash flows, risk-free adjusted discount rates, and
nonperformance risk. Any change in the fair value of the contingent consideration subsequent to the acquisition date is recognized in acquisition related
(gain) expense, net, a component of operating expenses, in our consolidated statements of income. This method requires significant management judgment,
including the probability of achieving certain future milestones and discount rates. Future changes in our estimates could result in expenses or gains.

Management typically uses the discounted cash flow method to value our acquired intangible assets. This method requires significant management
judgment to forecast future operating results and establish residual growth rates and discount factors. The estimates we use to value and amortize intangible
assets are consistent with the plans and estimates that we use to manage our business and are based on available historical information and industry estimates
and averages. If the subsequent actual results and updated projections of the underlying business activity change compared with the assumptions and
projections used to develop these values, we could experience impairment charges. In addition, we have estimated the economic lives of certain acquired
assets and these lives are used to calculate depreciation and amortization expense. If our estimates of the economic lives change, depreciation or amortization
expenses could be accelerated or slowed.

Intangible Assets and Other Long-Lived Assets Impairment Assessments

We regularly perform reviews to determine if the carrying values of our long-lived assets are impaired. A review of identifiable intangible assets and
other long-lived assets is performed when an event occurs indicating the potential for impairment. If indicators of impairment exist, we assess the
recoverability of the affected long-lived assets and compare their fair values to the respective carrying amounts.

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In order to estimate the fair value of identifiable intangible assets and other long-lived assets, we estimate the present value of future cash flows from
those assets. The key assumptions that we use in our discounted cash flow model are the amount and timing of estimated future cash flows to be generated by
the asset over an extended period of time and a rate of return that considers the relative risk of achieving the cash flows, the time value of money, and other
factors that a willing market participant would consider. Significant judgment is required to estimate the amount and timing of future cash flows and the
relative risk of achieving those cash flows.

Assumptions and estimates about future values and remaining useful lives are complex and often subjective. They can be affected by a variety of
factors, including external factors such as industry and economic trends, and internal factors such as changes in our business strategy and our internal
forecasts. For example, if our future operating results do not meet current forecasts or if we experience a sustained decline in our market capitalization that is
determined to be indicative of a reduction in fair value of our reporting unit, we may be required to record future impairment charges for purchased intangible
assets. Impairment charges could materially decrease our future net income and result in lower asset values on our balance sheet.

Share-Based Compensation

We are required to measure and recognize compensation expense for all share-based payments based on estimated fair value. We estimate the fair value
of stock options granted and stock purchases under our employee stock purchase plan using the Black-Scholes-Merton (BSM) option-pricing model. The fair
value of our restricted stock units is based on the market price of our common stock on the date of grant.

The determination of fair value of share-based awards using the BSM model requires the use of certain estimates and highly judgmental assumptions
that affect the amount of share-based compensation expense recognized in our consolidated statements of income. These include estimates of the expected
volatility of our stock price, expected life of an award, expected dividends, the risk-free interest rate, and forecast of our future financial performance, in the
case of performance stock units. We determine the volatility of our stock price by equally weighing the historical and implied volatility of our common
stock. The historical volatility of our common stock over the most recent period is generally commensurate with the estimated expected life of our stock
awards, adjusted for the impact of unusual fluctuations not reasonably expected to recur, and other relevant factors. Implied volatility is calculated from the
implied market volatility of exchange-traded call options on our common stock. The expected life of an award is based on historical forfeiture experience,
exercise activity, and on the terms and conditions of the stock awards. We determined expected dividend yield to be 0% given we have never declared or
paid any cash dividends on our common stock and we currently do not anticipate paying such cash dividends. The risk-free interest rate is based upon
U.S. Treasury securities with remaining terms similar to the expected term of the share-based awards. We update our forecast of future financial performance
periodically, which impacts our estimate of the number of shares to be issued pursuant to the outstanding performance stock units. We amortize the fair value
of share-based compensation on a straight-line basis over the requisite service periods of the awards. If any of the assumptions used in the BSM model change
significantly, share-based compensation expense may differ materially from what we have recorded in the current period.

Warranties

We generally provide a one-year warranty on instruments. Additionally, we provide a warranty on consumables through the expiration date, which
generally ranges from six to twelve months after the manufacture date. We establish an accrual for estimated warranty expenses based on historical experience
as well as anticipated product performance. We periodically review the adequacy of our warranty reserve, and adjust, if necessary, the warranty percentage
and accrual based on actual experience and estimated costs to be incurred. If our estimates of warranty obligation change or if actual product performance is
below our expectations we may incur additional warranty expense.

Cease-Use Loss upon Exit of Facility

We may, from time to time, relocate or consolidate our office locations and cease to use a facility for which the lease continues beyond the cease-use
date. We estimate cease-use loss as the present value of the remaining lease obligation offset by estimated sublease rental receipts during the remaining lease
period, adjusted for deferred items and leasehold improvements. In this process, management is required to make significant judgments to estimate the
present value of future cash flows from the assumed sublease, including the amount and timing of estimated sublease rental receipts, and the risk-adjusted
discount rate. These assumptions are subjective in nature and the actual future cash flows could differ from our estimates, resulting in significant adjustments
to the cease-use loss recorded.

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Income Taxes

Our provision for income taxes, deferred tax assets and liabilities, and reserves for unrecognized tax benefits reflect our best assessment of estimated
future taxes to be paid. Significant judgments and estimates based on interpretations of existing tax laws or regulations in the United States and the numerous
foreign jurisdictions where we are subject to income tax are required in determining our provision for income taxes. Changes in tax laws, statutory tax rates,
and estimates ofour future taxable income could impact the deferred tax assets and liabilities provided for in the consolidated financial statements and would
require an adjustment to the provision for income taxes.

Deferred tax assets are regularly assessed to determine the likelihood they will be recovered from future taxable income. A valuation allowance is
established when we believe it is more likely than not the future realization of all or some of a deferred tax asset will not be achieved. In evaluating our
ability to recover deferred tax assets within the jurisdiction which they arise, we consider all available positive and negative evidence. Factors reviewed
include the cumulative pre-tax book income for the past three years, scheduled reversals of deferred tax liabilities, our history of earnings and reliability of
our forecasts, projections of pre-tax book income over the foreseeable future, and the impact of any feasible and prudent tax planning strategies. Based on the
available evidence as of December 28, 2014, we were not able to conclude it is more likely than not certain U.S. deferred tax assets will be realized. Therefore,
we recorded a valuation allowance of $15.2 million against certain U.S. deferred tax assets.

We recognize the impact of a tax position in our financial statements only if that position is more likely than not of being sustained upon examination
by taxing authorities, based on the technical merits of the position. Tax authorities regularly examine our returns in the jurisdictions in which we do business
and we regularly assess the tax risk of our return filing positions. Due to the complexity of some of the uncertainties, the ultimate resolution may result in
payments that are materially different from our current estimate of the tax liability. These differences, as well as any interest and penalties, will be reflected in
the provision for income taxes in the period in which they are determined.

Recent Accounting Pronouncements

For summary of recent accounting pronouncements applicable to our consolidated financial statement see note 1 Organization and Summary of
Significant Accounting Policies in Part II, Item 8, Notes to Consolidated Financial Statements, which is incorporated herein by reference.

ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk.

Interest Rate Sensitivity

Our investment portfolio is exposed to market risk from changes in interest rates. The fair market value of fixed rate securities may be adversely
impacted by fluctuations in interest rates while income earned on floating rate securities may decline as a result of decreases in interest rates. Under our
current policies, we do not use interest rate derivative instruments to manage exposure to interest rate changes. We attempt to ensure the safety and
preservation of our invested principal funds by limiting default risk, market risk, and reinvestment risk. We mitigate default risk by investing in investment
grade securities. We have historically maintained a relatively short average maturity for our investment portfolio, and we believe a hypothetical 100 basis
point adverse move in interest rates along the entire interest rate yield curve would not materially affect the fair value of our interest sensitive financial
instruments. In addition, if a 100 basis point change in overall interest rates were to occur in 2015, our interest income would change by approximately $13.4
million in relation to amounts we would expect to earn, based on our cash, cash equivalents, and short-term investments as of December 28, 2014.

Changes in interest rates may impact gains or losses from the conversion of our outstanding convertible senior notes. In June 2014, we issued $632.5
million aggregate principal amount of 0% convertible senior notes due 2019 (2019 Notes) and $517.5 million aggregate principal amount of 0.5%
convertible senior notes due 2021 (2021 Notes). Similar to our 0.25% convertible senior notes due 2016, at our election, the notes are convertible into cash,
shares of our common stock, or a combination of cash and shares of our common stock under certain circumstances, including trading price conditions related
to our common stock. If the trading price of our common stock reaches a price at 130% above the conversion price, the notes will become convertible. Upon
conversion, we are required to record a gain or loss for the difference between the fair value of the debt to be extinguished and its corresponding net carrying
value. The fair value of the debt to be extinguished depends on our then-current incremental borrowing rate. If our incremental borrowing rate at the time of
conversion is higher or lower than the implied interest rate of the notes, we will record a gain or loss in our consolidated statement of income during the
period in which the notes are converted. The implicit interest rates for the 2019 and 2021 Notes were 2.9% and 3.5%, respectively. An incremental borrowing
rate that is a hypothetical 100 basis points lower than the implicit interest rate upon conversion of

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$100.0 million aggregate principal amount of each of the 2019 and 2021 Notes would result in losses of approximately $4.1 million and $5.5 million,
respectively.

Foreign Currency Exchange Risk

We conduct a portion of our business in currencies other than the companys U.S. dollar functional currency. These transactions give rise to monetary
assets and liabilities that are denominated in currencies other than the U.S. dollar. The value of these monetary assets and liabilities are subject to changes in
currency exchange rates from the time the transactions are originated until settlement in cash. Our foreign currency exposures are primarily concentrated in
the Euro, Yen, and Australian dollar. Both realized and unrealized gains or losses on the value of these monetary assets and liabilities are included in the
determination of net income. We recorded a $5.4 million net currency exchange loss for the fiscal year ended December 28, 2014 on business transactions,
excluding hedging transactions, which are included in other (expense) income, net, in our consolidated statements of income.

We use forward exchange contracts to manage foreign currency risks related to monetary assets and liabilities denominated in currencies other than the
U.S. dollar. We only use derivative financial instruments to reduce foreign currency exchange rate risks; we do not hold any derivative financial instruments
for trading or speculative purposes. We primarily use forward exchange contracts to hedge foreign currency exposures, and they generally have terms of one
month or less. Realized and unrealized gains or losses on the value of financial contracts entered into to hedge the exchange rate exposure of these monetary
assets and liabilities are also included in the determination of net income, as they have not been designated for hedge accounting. These contracts, which
settle monthly, effectively fix the exchange rate at which these specific monetary assets and liabilities will be settled, so that gains or losses on the forward
contracts offset the gains or losses from changes in the value of the underlying monetary assets and liabilities. As of December 28, 2014, the total notional
amount of outstanding forward contracts in place for foreign currency purchases was $61.0 million.

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ITEM 8. Financial Statements and Supplementary Data.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page
Report of Independent Registered Public Accounting Firm 43
Consolidated Balance Sheets 44
Consolidated Statements of Income 45
Consolidated Statements of Comprehensive Income 46
Consolidated Statements of Stockholders Equity 47
Consolidated Statements of Cash Flows 48
Notes to Consolidated Financial Statements 49

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of

Illumina, Inc.

We have audited the accompanying consolidated balance sheets of Illumina, Inc. as of December 28, 2014 and December 29, 2013, and the related
consolidated statements of income, comprehensive income, stockholders equity, and cash flows for each of the three fiscal years in the period ended
December 28, 2014. Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements and schedule are the
responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Illumina, Inc. at
December 28, 2014 and December 29, 2013, and the consolidated results of its operations and its cash flows for each of the three fiscal years in the period
ended December 28, 2014, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule,
when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Illumina, Inc.s internal
control over financial reporting as of December 28, 2014, based on criteria established in Internal Control-Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 17, 2015 expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP

San Diego, California

February 17, 2015

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ILLUMINA, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except par value)
December 28, December 29,
2014 2013
ASSETS
Current assets:
Cash and cash equivalents $ 636,154 $ 711,637
Short-term investments 702,217 453,966
Accounts receivable, net 289,458 238,946
Inventory 191,144 154,099
Deferred tax assets, current portion 40,786 36,076
Prepaid expenses and other current assets 29,844 22,811
Total current assets 1,889,603 1,617,535
Property and equipment, net 265,264 202,666
Goodwill 724,904 723,061
Intangible assets, net 314,500 331,173
Deferred tax assets, long-term portion 49,848 88,480
Other assets 95,521 56,091
Total assets $ 3,339,640 $ 3,019,006
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable $ 82,626 $ 73,655
Accrued liabilities 335,276 219,120
Long-term debt, current portion 304,256 29,288
Total current liabilities 722,158 322,063
Long-term debt 986,780 839,305
Long-term legal contingencies 132,933
Other long-term liabilities 167,904 191,221
Commitments and contingencies
Conversion option subject to cash settlement 282
Stockholders equity:
Preferred stock, $0.01 par value, 10,000 shares authorized; no shares issued and outstanding at December 28,
2014 and December 29, 2013
Common stock, $0.01 par value, 320,000 shares authorized; 181,332 shares issued and 143,629 outstanding
at December 28, 2014; 175,205 shares issued and 127,723 outstanding at December 29, 2013 1,805 1,753
Additional paid-in capital 2,172,940 2,562,705
Accumulated other comprehensive (loss) income (1,080) 1,234
Retained earnings 561,206 207,855
Treasury stock, 37,703 shares and 47,482 shares at cost at December 28, 2014 and December 29, 2013,
respectively (1,272,073) (1,240,345)
Total stockholders equity 1,462,798 1,533,202
Total liabilities and stockholders equity $ 3,339,640 $ 3,019,006

See accompanying notes to consolidated financial statements.

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ILLUMINA, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
Years Ended
December 28, December 29, December 30,
2014 2013 2012
Revenue:
Product revenue $ 1,619,511 $ 1,264,656 $ 1,055,826
Service and other revenue 241,847 156,522 92,690
Total revenue 1,861,358 1,421,178 1,148,516
Cost of revenue:
Cost of product revenue 431,920 407,877 317,283
Cost of service and other revenue 92,355 67,811 43,552
Amortization of acquired intangible assets 39,373 33,603 14,153
Total cost of revenue 563,648 509,291 374,988
Gross profit 1,297,710 911,887 773,528
Operating expense:
Research and development 388,055 276,743 231,025
Selling, general and administrative 466,283 381,040 285,991
Legal contingencies (74,338) 115,369
Headquarter relocation 5,638 2,624 26,328
Acquisition related (gain) expense, net (2,639) (11,617) 2,774
Unsolicited tender offer related expense 13,621 23,136
Restructuring 3,522
Total operating expense 782,999 777,780 572,776
Income from operations 514,711 134,107 200,752
Other income (expense):
Interest income 3,901 4,887 16,208
Interest expense (41,728) (39,690) (37,779)
Cost-method investment related gain, net 4,427 61,357 45,911
Other expense, net (32,553) (1,347) (2,484)
Total other (expense) income, net (65,953) 25,207 21,856
Income before income taxes 448,758 159,314 222,608
Provision for income taxes 95,407 34,006 71,354
Net income $ 353,351 $ 125,308 $ 151,254
Net income per basic share $ 2.61 $ 1.00 $ 1.23
Net income per diluted share $ 2.37 $ 0.90 $ 1.13
Shares used in calculating basic net income per share 135,553 125,076 122,999
Shares used in calculating diluted net income per share 148,977 139,936 133,693

See accompanying notes to consolidated financial statements.

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ILLUMINA, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)

Years Ended
December 28, December 29, December 30,
2014 2013 2012
Net income $ 353,351 $ 125,308 $ 151,254
Unrealized (loss) gain on available-for-sale securities, net of deferred tax (2,314) (889) 6
Total comprehensive income $ 351,037 $ 124,419 $ 151,260

See accompanying notes to consolidated financial statements.

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ILLUMINA, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
Accumulated Retained
Additional Other Earnings Total
Common Stock Paid-In Comprehensive (Accumulated Treasury Stock Stockholders
Shares Amount Capital Income (Loss) Deficit) Shares Amount Equity
(In thousands)
Balance as of January 1, 2012 166,707 $ 1,668 $2,249,900 $ 2,117 $ (68,707) (44,665) $(1,109,763) $ 1,075,215
Net income 151,254 151,254
Unrealized gain on available-for-sale securities, net of
deferred tax 6 6
Issuance of common stock, net of repurchases 3,464 35 55,106 (1,875) (83,306) (28,165)
Reclassification of conversion option subject to cash
settlement 2,565 2,565
Share-based compensation 94,385 94,385
Net incremental tax benefit related to share-based
compensation 17,015 17,015
Equity based contingent compensation 6,306 6,306
Issuance of treasury stock (5,446) 312 5,446
Balance as of December 30, 2012 170,171 1,703 2,419,831 2,123 82,547 (46,228) (1,187,623) 1,318,581
Net income 125,308 125,308
Unrealized loss on available-for-sale securities, net of
deferred tax (889) (889)
Issuance of common stock, net of repurchases 5,034 50 98,215 (1,254) (52,722) 45,543
Reclassification of conversion option subject to cash
settlement 2,338 2,338
Share-based compensation 105,771 105,771
Net incremental tax benefit related to share-based
compensation 53,032 53,032
Equity based contingent compensation 8,278 8,278
Fair value of options assumed in acquisition 240 240
Warrant retirement (125,000) (125,000)
Balance as of December 29, 2013 175,205 1,753 2,562,705 1,234 207,855 (47,482) (1,240,345) 1,533,202
Net income 353,351 353,351
Unrealized loss on available-for-sale securities, net of
deferred tax (2,314) (2,314)
Issuance of common stock, net of repurchases 6,127 52 96,204 (2,696) (247,221) (150,965)
Tax impact from the issuance, repurchase and
conversion of convertible notes (58,354) (58,354)
Reclassification of conversion option subject to cash
settlement 282 282
Share-based compensation 153,189 153,189
Net incremental tax benefit related to share-based
compensation 126,477 126,477
Equity based contingent compensation 2,621 2,621
Warrant exercises (215,493) 12,475 215,493
Repurchase of convertible notes, net of issuances (494,691) (494,691)
Balance as of December 28, 2014 181,332 $ 1,805 $2,172,940 $ (1,080) $ 561,206 (37,703) $(1,272,073) $ 1,462,798

See accompanying notes to consolidated financial statements.

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ILLUMINA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Years Ended
December 28, December 29, December 30,
2014 2013 2012
Cash flows from operating activities:
Net income $ 353,351 $ 125,308 $ 151,254
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense 61,905 50,810 48,249
Amortization of intangible assets 50,669 47,115 17,070
Share-based compensation expense 152,551 105,826 94,324
Accretion of debt discount 38,069 36,237 35,004
Loss on extinguishment of debt 31,360 555
Contingent compensation expense 2,621 8,278 6,306
Incremental tax benefit related to share-based compensation (126,479) (56,678) (20,783)
Deferred income taxes 99,846 (36,663) (21,698)
Change in fair value of contingent consideration (5,356) (18,784) 1,975
(Gain) impairment related to discontinued product line (2,000) 25,214 21,438
Change in estimated cease-use loss 5,651 2,624 22,367
Cost-method investment related gain (4,427) (61,357) (45,911)
Gain on litigation settlement (109,363)
Other 9,346 4,533 251
Changes in operating assets and liabilities:
Accounts receivable (50,381) (15,928) (34,441)
Inventory (36,542) 6,217 (23,707)
Prepaid expenses and other current assets 6,619 1,783 (3,062)
Other assets (36,256) (16,357) (2,903)
Accounts payable (2,106) 2,389 15,112
Accrued liabilities 83,902 38,550 24,388
Accrued legal contingencies (23,570) 132,933
Other long-term liabilities 1,861 3,816 6,640
Net cash provided by operating activities 501,271 386,421 291,873
Cash flows from investing activities:
Purchases of available-for-sale securities (791,252) (364,001) (925,478)
Sales of available-for-sale securities 391,655 523,635 498,371
Maturities of available-for-sale securities 150,229 289,197 400,379
Net cash paid for acquisitions (3,285) (523,501) (83,156)
Net (purchases of) sales proceeds from strategic investments (11,755) 95,580 40,881
Purchases of property and equipment (105,996) (79,215) (68,781)
Cash paid for intangible assets (36,220) (11,344) (12,228)
Net cash used in investing activities (406,624) (69,649) (150,012)
Cash flows from financing activities:
Payments on financing obligations (29,991) (10,852)
Payments on acquisition related contingent consideration liability (3,985) (3,374)
Proceeds from issuance of convertible notes 1,132,378
Repurchase of convertible notes (1,244,721)
Incremental tax benefit related to share-based compensation 126,479 56,678 20,783

Common stock repurchases (237,183) (50,020) (82,522)

Taxes paid related to net share settlement of equity awards (10,038)
Payments on retirement of warrants (125,000)
Proceeds from issuance of common stock 96,328 94,460 54,358
Net cash used in financing activities (166,748) (38,719) (10,755)
Effect of exchange rate changes on cash and cash equivalents (3,382) (397) (103)
Net (decrease) increase in cash and cash equivalents (75,483) 277,656 131,003
Cash and cash equivalents at beginning of year 711,637 433,981 302,978
Cash and cash equivalents at end of year $ 636,154 $ 711,637 $ 433,981
Supplemental cash flow information:
Cash paid for income taxes $ 17,886 $ 50,086 $ 74,037
Unsettled short-term investments purchase $ 9,154

See accompanying notes to consolidated financial statements.

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ILLUMINA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Unless the context requires otherwise, references in this report to Illumina, we, us, the Company, and our refer to Illumina, Inc. and its
consolidated subsidiaries.

1. Organization and Summary of Significant Accounting Policies

Organization and Business

Illumina, Inc. is a provider of sequencing- and array-based solutions, which serves customers in a board range of markets, enabling the adoption of
genomic solutions in research and clinical settings. The Companys customers include leading genomic research centers, academic institutions, government
laboratories, hospitals, and reference laboratories, as well as pharmaceutical, biotechnology, agrigenomics, commercial molecular diagnostic, and consumer
genomics companies.

Basis of Presentation

The consolidated financial statements of the Company have been prepared in conformity with U.S. generally accepted accounting principles and
include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Fiscal Year

The Companys fiscal year is 52 or 53 weeks ending the Sunday closest to December 31, with quarters of 13 or 14 weeks ending the Sunday closest to
March 31, June 30, September 30, and December 31. Each of the years ended December 28, 2014, December 29, 2013, and December 30, 2012 were
52 weeks.

Use of Estimates

The preparation of financial statements requires that management make estimates and assumptions that affect the reported amounts of assets, liabilities,
revenues, expenses, and related disclosures of contingent assets and liabilities. Actual results could differ from those estimates.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers.
The new standard is based on the principle that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount
that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 will be effective for the
Company beginning in the first quarter of 2017 and allows for a full retrospective or a modified retrospective adoption approach. The Company is currently
evaluating the impact of ASU 2014-09 on its consolidated financial statements.

Segment Information

Effective December 30, 2013, the Company reorganized and separated the roles of the Chief Executive Officer and the President, with core market and
operational functions centralized and reporting to the President, for the primary purpose of achieving scalability in business operations to support the growth
in the Companys strategic markets. Corporate functions and the President report to the CEO. As a result, the Company operates under one operating segment
and reports under one reportable segment.

Concentrations of Risk

The Company operates in markets that are highly competitive and rapidly changing. Significant technological changes, shifting customer needs, the
emergence of competitive products or services with new capabilities, and other factors could negatively impact the Companys operating results. A portion of
the Companys customers consist of university and research institutions that management believes are, to some degree, directly or indirectly supported by the
United States Government. A significant change in current research funding, particularly with respect to the U.S. National Institutes of Health, could have an
adverse impact on the Companys future revenues and results of operations.

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The Company is also subject to risks related to its financial instruments including its cash and cash equivalents, investments, and accounts receivable.
Most of the Companys cash and cash equivalents as of December 28, 2014 were deposited with U.S. financial institutions, either domestically or with their
foreign branches. The Companys investment policy restricts the amount of credit exposure to any one issuer to 5% of the portfolio or 5% of the total issue
size outstanding at the time of purchase and to any one industry sector, as defined by Bloomberg classifications, to 30% of the portfolio at the time of
purchase. There is no limit to the percentage of the portfolio that may be maintained in debt securities in U.S. government-sponsored entities, U.S. Treasury
securities, and money market funds.

The Companys products require customized products and components that currently are available from a limited number of sources. The Company
sources certain key products and components included in its products from single vendors.

The Company performs a regular review of customer activity and associated credit risks and does not require collateral or enter into netting
arrangements. Shipments to customers outside the United States comprised 49%, 50%, and 51% of the Companys revenue for the years ended December 28,
2014, December 29, 2013, and December 30, 2012, respectively. Customers outside the United States represented 48% and 52% of the Companys gross trade
accounts receivable balance as of December 28, 2014 and December 29, 2013, respectively.

International sales entail a variety of risks, including currency exchange fluctuations, longer payment cycles, and greater difficulty in accounts
receivable collection. The Company is also subject to general geopolitical risks, such as political, social and economic instability, and changes in diplomatic
and trade relations. The risks of international sales are mitigated in part by the extent to which sales are geographically distributed. The Company has
historically not experienced significant credit losses from investments and accounts receivable.

Fair Value Measurements

The Company determines the fair value of its assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a
liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the
measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The
Company uses a fair value hierarchy with three levels of inputs, of which the first two are considered observable and the last unobservable, to measure fair
value:

Level 1 Quoted prices in active markets for identical assets or liabilities.

Level 2 Inputs, other than Level 1, that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities;
quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for
substantially the full term of the assets or liabilities.
Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or
liabilities.

The carrying amounts of financial instruments such as cash and cash equivalents, accounts receivable, prepaid expenses and other current assets,
accounts payable, and accrued liabilities, excluding acquisition related contingent consideration liabilities, approximate the related fair values due to the
short-term maturities of these instruments.

Functional Currency

The U.S. dollar is the functional currency of the Companys international operations. The Company remeasures its foreign subsidiaries monetary assets
and liabilities to the U.S. dollar and records the net gains or losses resulting from remeasurement in other expense, net in the consolidated statements of
income.

Acquisitions

The Company measures all assets acquired and liabilities assumed, including contingent considerations and all contractual contingencies, at fair value
as of the acquisition date. Contingent purchase considerations to be settled in cash are remeasured to estimated fair value at each reporting period with the
change in fair value recorded in acquisition related (gain) expense, net, a component of operating expenses. In addition, the Company capitalizes in-process
research and development (IPR&D) and either amortizes it over the life of the product upon commercialization, or impairs it if the project is abandoned.

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Post-acquisition adjustments in deferred tax asset valuation allowances and liabilities for uncertain tax positions are recorded in current period income tax
expense.

Cash Equivalents and Short-Term Investments

Cash equivalents are comprised of short-term, highly liquid investments with maturities of 90 days or less at the date of purchase.

Short-term investments consist predominantly of debt securities in U.S. government-sponsored entities, corporate debt securities, and U.S. Treasury
securities. Management classifies short-term investments as available-for-sale at the time of purchase and evaluates such classification as of each balance
sheet date. All short-term investments are recorded at estimated fair value. Unrealized gains and losses for available-for-sale securities are included in
accumulated other comprehensive income, a component of stockholders equity. The Company evaluates its investments to assess whether those with
unrealized loss positions are other than temporarily impaired. Impairments are considered to be other than temporary if they are related to deterioration in
credit risk or if it is likely that the Company will sell the securities before the recovery of their cost basis. Realized gains, losses, and declines in value judged
to be other than temporary are determined based on the specific identification method and are reported in other (expense) income, net in the consolidated
statements of income.

Accounts Receivable

Trade accounts receivable are recorded at the net invoice value and are not interest bearing. The Company considers receivables past due based on the
contractual payment terms. The Company reserves specific receivables if collectibility is no longer reasonably assured. The Company also reserves a
percentage of its trade receivable balance based on collection history and current economic trends that might impact the level of future credit losses. The
Company re-evaluates such reserves on a regular basis and adjusts its reserves as needed. Once a receivable is deemed to be uncollectible, such balance is
charged against the reserve.

Inventory

Inventory is stated at the lower of cost or market, on a first in, first out basis. Inventory includes raw materials and finished goods that may be used in
the research and development process and such items are expensed as consumed or expired. Provisions for slow moving, excess, and obsolete inventories are
estimated based on product life cycles, quality issues, historical experience, and usage forecasts.

Property and Equipment

Property and equipment are stated at cost, subject to review for impairment, and depreciated over the estimated useful lives of the assets, which
generally range from three to seven years, using the straight-line method. Amortization of leasehold improvements is recorded over the shorter of the lease
term or the estimated useful life of the related assets. Maintenance and repairs are charged to operations as incurred. When assets are sold, or otherwise
disposed of, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in operating expense.

In 2013, as a part of the Companys ongoing effort to upgrade its current information systems, the Company started the implementation of new
enterprise resource planning software and applications to manage parts of its business operations. Certain costs incurred in the development of such internal-
use software and software applications, including external direct costs of materials and services and applicable compensation costs of employees devoted to
specific software development, are capitalized as computer software costs. Costs incurred outside of the application development stage are expensed as
incurred.

Leases

Leases are reviewed and classified as capital or operating at their inception. The Company records rent expense on a straight-line basis over the term of
the lease, which includes the construction build-out period and lease extension periods, if appropriate. The difference between rent payments and straight-
line rent expense is recorded as deferred rent in accrued liabilities and other long-term liabilities. Landlord allowances are amortized on a straight-line basis
over the lease term as a reduction to rent expense. The Company capitalizes leasehold improvements and amortizes the value over the shorter of the lease
term or expected useful lives.

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Headquarter relocation expenses consisted of expenses such as accelerated depreciation expense, impairment of assets, additional rent expense during
the transition period in 2012 when both the new and former headquarter facilities were occupied, moving expenses, cease-use losses, and accretion of interest
expense on lease exit liability. The Company completed the relocation of its headquarters in 2012 to another facility in San Diego, California and recorded
cease-use losses and the corresponding facility exit obligation upon vacating its former headquarters in 2011 and 2012, calculated as the present value of the
remaining lease obligation offset by estimated sublease rental receipts during the remaining lease period, adjusted for deferred items and estimated lease
incentives. The Company reassesses the facility exit obligation on a quarterly basis and the key assumptions used in the calculation include the amount and
timing of estimated sublease rental receipts, and the risk-adjusted discount rate.

Goodwill, Intangible Assets and Other Long-Lived Assets

Goodwill, which has an indefinite useful life, represents the excess of cost over fair value of net assets acquired. The change in the carrying value of
goodwill during the year ended December 28, 2014 was due to a current year acquisition and adjustments to the purchase price subsequent to the preliminary
allocation of purchase price related to prior year acquisitions. Goodwill is reviewed for impairment at least annually during the second quarter, or more
frequently if an event occurs indicating the potential for impairment. During its goodwill impairment review, the Company may assess qualitative factors to
determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying amount, including goodwill. The qualitative
factors include, but are not limited to, macroeconomic conditions, industry and market considerations, and the overall financial performance of the Company.
If, after assessing the totality of these qualitative factors, the Company determines that it is not more likely than not that the fair value of its reporting unit is
less than its carrying amount, then no additional assessment is deemed necessary. Otherwise, the Company proceeds to perform the two-step test for goodwill
impairment. The first step involves comparing the estimated fair value of the reporting unit with its carrying value, including goodwill. If the carrying
amount of the reporting unit exceeds its fair value, the Company performs the second step of the goodwill impairment test to determine the amount of loss,
which involves comparing the implied fair value of the goodwill to the carrying value of the goodwill. The Company may also elect to bypass the qualitative
assessment in a period and elect to proceed to perform the first step of the goodwill impairment test. The Company performed its annual assessment for
goodwill impairment in the second quarter of 2014, noting no impairment.

The Companys identifiable intangible assets are typically comprised of acquired core technologies, licensed technologies, customer relationships,
license agreements, and trade names. The cost of identifiable intangible assets with finite lives is generally amortized on a straight-line basis over the assets
respective estimated useful lives.

The Company regularly performs reviews to determine if any event has occurred that may indicate its intangible assets with finite useful lives and other
long-lived assets are potentially impaired. If indicators of impairment exist, the Company performs an impairment test to assess the recoverability of the
affected assets by determining whether the carrying amount of such assets exceeds the undiscounted expected future cash flows. If the affected assets are not
recoverable, the Company estimates the fair value of the assets and records an impairment loss if the carrying value of the assets exceeds the fair value.
Factors that may indicate potential impairment include a significant decline in the Companys stock price and market capitalization compared to its net book
value, significant changes in the ability of a particular asset to generate positive cash flows the Companys strategic business objectives, and the pattern of
utilization of a particular asset.

During 2013, the Company decided to discontinue its Eco and NuPCR product lines to better align its product portfolio with its core strategy. As a
result, the Company recorded a total impairment charge of $25.2 million in cost of product revenue, $22.9 million of which related to identifiable intangible
assets.

Derivatives

The Company is exposed to foreign exchange rate risks in the normal course of business. The Company enters into foreign exchange contracts to
manage foreign currency risks related to monetary assets and liabilities that are denominated in currencies other than the U.S. dollar. These foreign exchange
contracts are carried at fair value in other assets or other liabilities and are not designated as hedging instruments. Changes in the value of the derivatives are
recognized in other expense, net, along with the remeasurement gain or loss on the foreign currency denominated assets or liabilities.

As of December 28, 2014, the Company had foreign exchange forward contracts in place to hedge exposures in the euro, Japanese yen, and Australian
dollar. As of December 28, 2014 and December 29, 2013, the total notional amount of outstanding forward contracts in place for foreign currency purchases
was $61.0 million and $54.7 million, respectively. Non-

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designated foreign exchange forward contract related gain was $4.1 million and $3.5 million for the years ended December 28, 2014 and December 29, 2013,
respectively, and immaterial for the year ended December 30, 2012.

Reserve for Product Warranties

The Company generally provides a one-year warranty on instruments. Additionally, the Company provides a warranty on consumables through the
expiration date, which generally ranges from six to twelve months after the manufacture date. At the time revenue is recognized, the Company establishes an
accrual for estimated warranty expenses based on historical experience as well as anticipated product performance. The Company periodically reviews its
warranty reserve for adequacy and adjusts the warranty accrual, if necessary, based on actual experience and estimated costs to be incurred. Warranty expense
is recorded as a component of cost of product revenue.

Revenue Recognition

The Companys revenue is generated primarily from the sale of products and services. Product revenue primarily consists of sales of instruments and
consumables used in genetic analysis. Service and other revenue primarily consists of revenue generated from genotyping and sequencing services and
instrument service contracts.

The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the sellers
price to the buyer is fixed or determinable, and collectibility is reasonably assured. In instances where final acceptance of the product or system is required,
revenue is deferred until all the acceptance criteria have been met. The Company occasionally offers discounts on newly introduced products to recent
customers or existing products. These promotions sometimes involve the trade-in of existing products in exchange for a discount on new products. Where
applicable, the Company defers a portion of revenue on the sales of existing products in recognition of the promotional discounts until the delivery of new
products. All revenue is recorded net of discounts and sales taxes collected on behalf of governmental authorities.

Revenue from product sales is recognized generally upon transfer of title to the customer, provided that no significant obligations remain and
collection of the receivable is reasonably assured. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over
the contract term. Revenue from genotyping and sequencing services is recognized when earned, which is generally at the time the genotyping or sequencing
analysis data is made available to the customer or agreed upon milestones are reached.

In order to assess whether the price is fixed or determinable, the Company evaluates whether an arrangement is cancellable or subject to future changes
in price, deliverables, or other terms. If it is determined that the price is not fixed or determinable, the Company defers revenue recognition until the price
becomes fixed or determinable. The Company assesses collectibility based on a number of factors, including past transaction history with, and the
creditworthiness of, the customer. If the Company determines that collection of a payment is not reasonably assured, revenue recognition is deferred until
receipt of payment.

The Company regularly enters into contracts where revenue is derived from multiple deliverables including products or services. These products or
services are generally delivered within a short time frame, approximately three to six months, after the contract execution date. Revenue recognition for
contracts with multiple deliverables is based on the individual units of accounting determined to exist in the contract. A delivered item is considered a
separate unit of accounting when the delivered item has value to the customer on a stand-alone basis. Items are considered to have stand-alone value when
they are sold separately by any vendor or when the customer could resell the item on a stand-alone basis.

For transactions with multiple deliverables, consideration is allocated at the inception of the contract to all deliverables based on their relative selling
price. The relative selling price for each deliverable is determined using vendor specific objective evidence (VSOE) of selling price or third-party evidence of
selling price if VSOE does not exist. If neither VSOE nor third-party evidence exists, the Company uses its best estimate of the selling price for the
deliverable.

In order to establish VSOE of selling price, the Company must regularly sell the product or service on a standalone basis with a substantial majority
priced within a relatively narrow range. VSOE of selling price is usually the midpoint of that range. If there are not a sufficient number of standalone sales and
VSOE of selling price cannot be determined, then the Company considers whether third party evidence can be used to establish selling price. Due to the lack
of similar products and services sold by other companies within the industry, the Company has rarely established selling price using third-party evidence. If

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neither VSOE nor third party evidence of selling price exists, the Company determines its best estimate of selling price using average selling prices over a
rolling 12-month period coupled with an assessment of current market conditions. If the product or service has no history of sales or if the sales volume is not
sufficient, the Company relies upon prices set by the Companys pricing committee adjusted for applicable discounts. The Company recognizes revenue for
delivered elements only when it determines there are no uncertainties regarding customer acceptance.

In certain markets, the Company sells products and provides services to customers through distributors that specialize in life science products. In most
sales through distributors, the product is delivered directly to customers. In cases where the product is delivered to a distributor, revenue recognition is
deferred until acceptance is received from the distributor, and/or the end-user, if required by the applicable sales contract. The terms of sales transactions
through distributors are consistent with the terms of direct sales to customers. These transactions are accounted for in accordance with the Companys revenue
recognition policy described herein.

Share-Based Compensation

The Company incurs share-based compensation expense related to restricted stock, its Employee Stock purchase Plan (ESPP), and stock options.

Restricted stock units (RSU), restricted stock awards (RSA), and performance stock units (PSU) are all considered restricted stock. The fair value of
restricted stock is determined by the closing market price of the Companys common stock on the date of grant. The Company recognizes share-based
compensation expense based on the fair value on a straight-line basis over the requisite service periods of the awards, taking into consideration estimated
forfeitures. PSU represents a right to receive a certain number of shares of common stock based on the achievement of corporate performance goals and
continued employment during the vesting period. At each reporting period, the Company reassesses the probability of the achievement of such corporate
performance goals and any additional expenses resulting from an adjustment in the estimated shares to be released are treated as a cumulative catch-up in the
period of adjustment.

The Company uses the Black-Scholes-Merton option-pricing model to estimate the fair value of stock purchases under ESPP and stock options granted.
The model assumptions include expected volatility, term, dividends, and the risk-free interest rate. The Company determines the expected volatility by
equally weighing the historical and implied volatility of the Companys common stock. The historical volatility is generally commensurate with the
estimated expected term of the Companys stock awards, adjusted for the impact of unusual fluctuations and other relevant factors. The implied volatility is
calculated from the implied market volatility of exchange-traded call options on the Companys common stock. The expected term of an award is based on
historical forfeiture experience, exercise activity, and on the terms and conditions of the stock awards. The expected dividend yield is determined to be 0%
given that the Company has never declared or paid cash dividends on its common stock and does not anticipate paying such cash dividends. The risk-free
interest rate is based upon U.S. Treasury securities with remaining terms similar to the expected term of the share-based awards.

Shipping and Handling Expenses

Shipping and handling expenses are included in cost of product revenue.

Research and Development

Research and development expenses include personnel expenses, contractor fees, license fees, facilities costs, and utilities. Expenditures relating to
research and development are expensed in the period incurred.

Advertising Costs

The Company expenses advertising costs as incurred. Advertising costs were $16.4 million, $14.5 million, and $10.5 million for the years ended
December 28, 2014, December 29, 2013, and December 30, 2012, respectively.

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Income Taxes

The provision for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are recognized for the
expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for the expected future
tax benefit to be derived from tax loss and credit carryforwards. Deferred tax assets and liabilities are determined using the enacted tax rates in effect for the
years in which those tax assets are expected to be realized. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the
provision for income taxes in the period that includes the enactment date.

Deferred tax assets are regularly assessed to determine the likelihood they will be recovered from future taxable income. A valuation allowance is
established when the Company believes it is more likely than not the future realization of all or some of a deferred tax asset will not be achieved. In
evaluating the ability to recover deferred tax assets within the jurisdiction which they arise the Company considers all available positive and negative
evidence. Factors reviewed include the cumulative pre-tax book income for the past three years, scheduled reversals of deferred tax liabilities, history of
earnings and reliable forecasting, projections of pre-tax book income over the foreseeable future, and the impact of any feasible and prudent tax planning
strategies.

The Company recognizes excess tax benefits associated with share-based compensation to stockholders equity only when realized. When assessing
whether excess tax benefits relating to share-based compensation have been realized, the Company follows the with-and-without approach excluding any
indirect effects of the excess tax deductions. Under this approach, excess tax benefits related to share-based compensation are not deemed to be realized until
after the utilization of all other tax benefits available to the Company.

The Company recognizes the impact of a tax position in the financial statements only if that position is more likely than not of being sustained upon
examination by taxing authorities, based on the technical merits of the position. Any interest and penalties related to uncertain tax positions will be reflected
in income tax expense.

Net Income per Share

Basic net income per share is computed based on the weighted average number of common shares outstanding during the period. Diluted net income
per share is computed based on the sum of the weighted average number of common shares and potentially dilutive common shares outstanding during the
period.

Potentially dilutive common shares consist of shares issuable under convertible senior notes, equity awards, and warrants. Convertible senior notes
have a dilutive impact when the average market price of the Companys common stock exceeds the applicable conversion price of the respective notes.
Potentially dilutive common shares from equity awards and warrants are determined using the average share price for each period under the treasury stock
method. In addition, the following amounts are assumed to be used to repurchase shares: proceeds from exercise of equity awards and warrants; the average
amount of unrecognized compensation expense for equity awards; and estimated tax benefits that will be recorded in additional paid-in capital when
expenses related to equity awards become deductible. In loss periods, basic net loss per share and diluted net loss per share are identical because the
otherwise dilutive potential common shares become anti-dilutive and are therefore excluded.

The following table presents the calculation of weighted average shares used to calculate basic and diluted net income per share (in thousands):
Years Ended
December 28, December 29, December 30,
2014 2013 2012
Weighted average shares outstanding 135,553 125,076 122,999
Effect of potentially dilutive common shares from:
Convertible senior notes 3,489 1,340 967
Equity awards 4,340 4,404 3,906
Warrants 5,595 9,116 5,821
Weighted average shares used in calculating diluted net income per share 148,977 139,936 133,693
Potentially dilutive shares excluded from calculation due to anti-dilutive effect 124 996 2,556

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Accumulated Other Comprehensive Income

Comprehensive income is comprised of net income and other comprehensive income. Accumulated other comprehensive income on the consolidated
balance sheets at December 28, 2014 and December 29, 2013 includes accumulated foreign currency translation adjustments and unrealized gains and losses
on the Companys available-for-sale securities.

The components of accumulated other comprehensive income are as follows (in thousands):
December 28, December 29,
2014 2013
Foreign currency translation adjustments $ 1,289 $ 1,289
Unrealized loss on available-for-sale securities, net of deferred tax (2,369) (55)
Total accumulated other comprehensive income $ (1,080) $ 1,234

2. Balance Sheet Account Details

Short-Term Investments

The following is a summary of short-term investments (in thousands):

December 28, 2014 December 29, 2013

Gross Gross Gross Gross
Amortized Unrealized Unrealized Estimated Amortized Unrealized Unrealized Estimated
Cost Gains Losses Fair Value Cost Gains Losses Fair Value
Available-for-sale securities:
Debt securities in government-
sponsored entities $ 51,308 $ 10 $ (55) $ 51,263 $ 82,226 $ 18 $ (101) $ 82,143
Corporate debt securities 502,924 46 (2,882) 500,088 342,034 312 (376) 341,970
U.S. Treasury securities 151,255 5 (394) 150,866 29,795 58 29,853
Total available-for-sale securities $ 705,487 $ 61 $ (3,331) $ 702,217 $ 454,055 $ 388 $ (477) $ 453,966

As of December 28, 2014, the Company had 467 available-for-sale securities in a gross unrealized loss position, all of which had been in such position
for less than twelve months. There were no impairments considered other-than-temporary as it is more likely than not the Company will hold the securities
until maturity or the recovery of the cost basis.

The following table shows the estimated fair values and the gross unrealized losses of the Companys available-for-sale securities that were in an
unrealized loss position for less than twelve months as of December 28, 2014 and December 29, 2013, aggregated by investment category (in thousands):

December 28, 2014 December 29, 2013

Gross Gross
Estimated Unrealized Estimated Unrealized
Fair Value Losses Fair Value Losses
Debt securities in government-sponsored entities $ 36,084 $ (55) $ 73,362 $ (101)
Corporate debt securities 428,078 (2,882) 168,118 (373)
U.S. Treasury securities 143,755 (394)
Total $ 607,917 $ (3,331) $ 241,480 $ (474)

Realized gains and losses are determined based on the specific identification method and are reported in interest income.

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Contractual maturities of available-for-sale debt securities as of December 28, 2014 are as follows (in thousands):
Estimated Fair Value
Due within one year $ 238,198
After one but within five years 464,019
Total $ 702,217

Cost-Method Investments

As of December 28, 2014 and December 29, 2013, the aggregate carrying amounts of the Companys cost-method investments in non-publicly traded
companies were $37.2 million and $22.1 million, respectively, included in other assets. The Companys cost-method investments are assessed for impairment
quarterly. The Company determines that it is not practicable to estimate the fair value of its cost-method investments on a regular basis and does not reassess
the fair value of cost-method investments if there are no identified events or changes in circumstances that may have a significant adverse effect on the fair
value of the investments.

During the year ended December 28, 2014, the Company recorded a gain of $4.4 million associated with additional proceeds received for a cost-method
investment sold in a prior period. During the year ended December 29, 2013, the Company recorded cost-method investment related gains of $61.4 million,
of which $55.2 million related to the sale of the Companys minority interest in Oxford Nanopore Technologies Ltd.

No impairment losses were recorded during the years ended December 28, 2014 and December 29, 2013. During the year ended December 30, 2012, the
Company determined that a cost-method investment was other-than-temporarily impaired and recorded an impairment loss of $2.7 million. This
determination was based upon operational performance trends coupled with uncertainty regarding the entitys ability to obtain additional funding in a
required timeframe for the entity to continue operations.

Accounts Receivable

Accounts receivable, net consist of the following (in thousands):

December 28, December 29,
2014 2013
Accounts receivable from product and service sales $ 292,847 $ 241,360
Other receivables 2,070 1,266
Total accounts receivable, gross 294,917 242,626
Allowance for doubtful accounts (5,459) (3,680)
Total accounts receivable, net $ 289,458 $ 238,946

Inventory

Inventory consists of the following (in thousands):

December 28, December 29,
2014 2013
Raw materials $ 70,316 $ 57,398
Work in process 94,102 70,016
Finished goods 26,726 26,685
Total inventory $ 191,144 $ 154,099

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Property and Equipment

Property and equipment, net consists of the following (in thousands):

December 28, December 29,
2014 2013
Leasehold improvements $ 143,597 $ 104,571
Machinery and equipment 192,715 175,340
Computer hardware and software 86,929 73,544
Furniture and fixtures 13,669 10,511
Building 7,670 7,670
Construction in progress 35,421 8,531
Total property and equipment, gross 480,001 380,167
Accumulated depreciation (214,737) (177,501)
Total property and equipment, net $ 265,264 $ 202,666

Capital expenditures included accrued expenditures of $14.1 million for the year ended December 28, 2014, which was excluded from the consolidated
statements of cash flows. Accrued capital expenditures were immaterial for the years ended December 29, 2013, and December 30, 2012. As of December 28,
2014, $16.5 million of computer software costs were capitalized associated with the Companys implementation of a new enterprise resource planning
software and applications, which are included primarily in construction in progress assets on the consolidated balance sheets. No computer software costs
were capitalized as of December 29, 2013.

Goodwill

Changes to the Companys goodwill balance during the year ended December 28, 2014 and December 29, 2013 are as follows (in thousands):
December 28, December 29,
2014 2013
Balance at beginning of period $ 723,061 $ 369,327
Current period acquisition 3,338 353,734
Purchase price allocation adjustments related to prior year acquisitions (1,495)
Balance at end of period $ 724,904 $ 723,061

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

December 28, December 29,
2014 2013
Accrued compensation expenses $ 112,606 $ 82,705
Deferred revenue, current portion 75,294 50,834
Acquisition related contingent consideration liability, current portion 44,124 6,719
Accrued taxes payable 38,942 30,435
Customer deposits 20,274 13,569
Reserve for product warranties 15,616 10,407
Facility exit obligation, current portion 3,837 5,570
Other 24,583 18,881
Total accrued liabilities $ 335,276 $ 219,120

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3. Acquisitions

Acquisitions in 2013

On February 21, 2013, the Company acquired all of the outstanding capital stock of Verinata Health, Inc., a provider of non-invasive tests for the early
identification of fetal chromosomal abnormalities. With this acquisition, the Company strengthened its reproductive health product portfolio by gaining
access to Verinatas verifi non-invasive prenatal test (NIPT) as well as what management believes to be the most comprehensive intellectual property
portfolio in the NIPT industry.

The contractual price for the acquisition was $350.0 million, plus potential cash payments of up to $100.0 million based on the achievement of certain
regulatory and revenue milestones. The aggregate purchase price was determined to be $396.3 million, including total cash payment of $339.3 million, $56.2
million in fair value of the contingent milestone payments, $0.2 million in fair value of converted stock options attributed to pre-combination services, and
$0.5 million in loss realized on settlement of preexisting relationships. In connection with the transaction, the Company deposited into escrow $30.0 million
of consideration otherwise payable to shareholders of Verinata. This amount was included in the aggregate consideration and was released to shareholders of
Verinata in September of 2014. As of December 29, 2013, transaction costs of $3.4 million were expensed as incurred in acquisition related (gain) expense,
net.

In conjunction with the acquisition, the Company assumed the Verinata Health, Inc. 2008 Stock Plan and converted, as of the acquisition date, the
unvested stock options outstanding under the plan, all of which were in the money, into 0.4 million unvested stock options to purchase Illuminas common
stock, retaining the original vesting schedules. The fair value of all converted options was $18.9 million, $0.2 million of which was attributed to the pre-
combination service period and was included in the calculation of purchase price. The remaining fair value is being recognized over the awards remaining
vesting periods subsequent to the acquisition. The weighted-average acquisition-date fair value of the converted options was determined using the Black-
Scholes option pricing model with the following assumptions: (i) market price of $48.36 per share, which was the closing price of Illuminas common stock
on the acquisition date; (ii) weighted average expected term of 2.3 years; (iii) weighted average risk-free interest rate of 0.32%; (iv) weighted average
annualized volatility of 42%; and (v) no dividend yield. The weighted average acquisition-date fair value per share of the assumed stock options was $42.63.

An initial liability of $56.2 million was recorded for an estimate of the acquisition date fair value of the contingent consideration. Any change in the
fair value of the contingent milestone consideration subsequent to the acquisition date was and will be recognized in the consolidated statement of income.
The fair value of the regulatory milestone payments was measured by the probability-weighted discounted cash flows and the fair value of the revenue
milestone payments was measured using a risk-neutral option pricing model, which captures the present value of the expected payment and the probability of
reaching the revenue targets. Key assumptions used in the fair value assessments included discount rates ranging from 6% to 20%, volatility of 50%, risk-free
rates of 0.26%, revenue projections, and the probability of achieving regulatory milestones. This fair value measurement of the contingent consideration is
based on significant inputs not observed in the market and thus represents a Level 3 measurement. Level 3 instruments are valued based on unobservable
inputs that are supported by little or no market activity and reflect the Companys own assumptions in measuring fair value.

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As of December 29, 2013, the allocation of the purchase price to the assets acquired and liabilities assumed on the acquisition date was as follows (in
thousands):
Allocation of
purchase price
Cash and cash equivalents $ 9,151
Accounts receivable 2,801
Inventory 1,110
Prepaid expenses and other current assets 979
Property and equipment 12,083
Other assets 978
Intangible assets 176,490
Goodwill 227,453
Accounts payable (2,539)
Accrued liabilities (3,803)
Lease financing obligation (9,695)
Deferred tax liability (18,741)
Total purchase price $ 396,267

In conjunction with the acquisition, the Company assumed Verinatas building lease, for which Verinata was considered the accounting owner of the
leased building and as such, recorded the fair value of the building as an asset as of the acquisition date. The building is depreciated over a useful life of 30
years. The Company also recorded the related lease financing obligation as a liability assumed, representing the present value of all remaining building lease
payments with an interest rate of 6.0%. The annual future minimum payments, including the balloon payment at the end of the lease for the value of the
building to be transferred to the landlord, are $1.0 million for each of the years 2015 and 2016, and $8.4 million for 2017.

The following table summarizes the fair value of identifiable intangible assets acquired (amounts in thousands):
Weighted Average
Useful Lives
(in years) Fair Value
Developed technology 13 $ 170,200
Customer relationships 5 4,690
Trade name 2 1,600
Total intangible assets acquired, excluding goodwill $ 176,490

The fair value of the developed technology and trade name was estimated using an income approach. Under the income approach, an intangible assets
fair value is equal to the present value of future economic benefits to be derived from ownership of the asset. The estimated fair value was developed by
discounting future net cash flows to their present value at market-based rates of return. The fair value of the customer relationships was developed using a
cost approach by estimating the time and personnel effort in constructing the customer base. The useful life of the intangible assets for amortization purposes
was determined by considering the period of expected cash flows used to measure the fair value of the intangible assets adjusted as appropriate for the entity-
specific factors including legal, regulatory, contractual, competitive, economic, or other factors that may limit the useful life of intangible assets.

The excess of the fair value of the total consideration over the estimated fair value of the net assets was recorded as goodwill, which was primarily
attributable to the synergies expected from combining the technologies of Illumina with those of Verinata, including complementary products that will
enhance the Companys overall product portfolio, and the value of the workforce that became our employees following the closing of the acquisitions. The
goodwill recognized is not deductible for income tax purposes.

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During 2013, the Company also completed acquisitions of Advanced Liquid Logic Inc., a provider of liquid handling solutions, NextBio, a provider of
clinical and genomic informatics tools, and another development-stage company. As a result of these transactions, the Company recorded developed
technologies of $79.7 million with a weighted average useful life of eight years and goodwill of $124.8 million.

Pro Forma Information

The following unaudited pro forma information presents the consolidated results of operations of the Company as if the acquisitions completed during
the year ended December 29, 2013 had occurred at the beginning of the applicable annual reporting period, with pro forma adjustments to give effect to
intercompany transactions to be eliminated, amortization of intangible assets, share-based compensation, and transaction costs directly associated with the
acquisitions (in thousands, except per share amounts):

Years Ended
December 29, December 30,
2013 2012
Net revenues $ 1,433,935 $ 1,161,241
Net income $ 113,869 $ 92,645
Net income per share-basic $ 0.91 $ 0.75
Net income per share-diluted $ 0.81 $ 0.69

These unaudited pro forma consolidated financial results have been prepared for illustrative purposes only and do not purport to be indicative of the
results of operations that actually would have resulted had the acquisition occurred on the first day of the earliest period presented, or of the future results of
the consolidated entities. The unaudited pro forma consolidated financial information does not reflect any operating efficiencies and cost savings that may
be realized from the integration of the acquisition.

Acquisition in 2012

On September 19, 2012, the Company announced the acquisition of BlueGnome Ltd. (BlueGnome), a provider of cytogenetics and in vitro fertilization
screening products. Total consideration for the acquisition was $95.5 million, which included $88.0 million in initial cash payments and $7.5 million in fair
value of contingent cash consideration of up to $20.0 million based on the achievement of certain revenue based milestones by December 28, 2014.

The Company estimated the fair value of contingent cash consideration using a probability weighted discounted cash flow approach, a Level 3
measurement, using a discount rate of 30%. The Company also agreed to pay up to $20.0 million to BlueGnome shareholders contingent upon the retention
of certain key employees and certain other criteria. Such contingent payments are recognized as contingent compensation expense over the retention period
through December 28, 2014.

As a result of this acquisition, the Company recorded developed technologies of $25.0 million, customer relationships of $16.8 million, and a trade
name of $7.1 million with average useful lives of seven, five, and ten years, respectively. The Company recorded the excess consideration of approximately
$47.5 million as goodwill.

Summary of Contingent Compensation Expenses

Contingent compensation expenses recorded as a result of acquisitions consist of the following (in thousands):
Years Ended
December 28, December 29, December 30,
2014 2013 2012
Contingent compensation expense, included in research and development expense $ 1,509 $ 544 $ 3,419
Contingent compensation expense, included in selling, general and administrative
expense 2,756 13,066 5,732
Total contingent compensation expense $ 4,265 $ 13,610 $ 9,151

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4. Intangible Assets

The Companys intangible assets, excluding goodwill, include acquired licensed and core technologies, customer relationships, license agreements,
and trade name. Amortization for the intangible assets that have finite useful lives is generally recorded on a straight-line basis over their useful lives.

The following is a summary of the Companys identifiable intangible assets (in thousands):

December 28, 2014 December 29, 2013

Gross Gross
Carrying Accumulated Intangibles, Carrying Accumulated Intangibles,
Amount Amortization Net Amount Amortization Net
Licensed technologies $ 83,956 $ (39,423) $ 44,533 $ 48,361 $ (31,927) $ 16,434
Core technologies 321,200 (77,493) 243,707 321,700 (45,534) 276,166
Customer relationships 26,461 (12,522) 13,939 26,770 (7,376) 19,394
License agreements 15,042 (4,592) 10,450 18,917 (4,947) 13,970
Trade name 4,700 (2,829) 1,871 11,800 (6,591) 5,209
Total intangible assets, net $ 451,359 $ (136,859) $ 314,500 $ 427,548 $ (96,375) $ 331,173

As of December 28, 2014, the remaining weighted-average amortization period for identifiable intangible assets was 8.1 years.

Intangible assets acquired during the year ended December 28, 2014 are as follows (in thousands):
Weighted-Average Gross
Useful Lives Carrying
(in years) Amount
Licensed technologies 4.7 $ 35,595
Customer relationships 0.5 291
License agreements 7.2 125
Total intangible asset additions $ 36,011

The estimated annual amortization of intangible assets for the next five years and thereafter is shown in the following table (in thousands). Actual
amortization expense to be reported in future periods could differ from these estimates as a result of acquisitions, divestitures, asset impairments, among other
factors.
Estimated Annual
Amortization
2015 $ 52,994
2016 47,752
2017 43,276
2018 33,971
2019 30,685
Thereafter 105,822
Total $ 314,500

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5. Fair Value Measurements

The following table presents the Companys fair value hierarchy for assets and liabilities measured at fair value on a recurring basis as of December 28,
2014 and December 29, 2013 (in thousands):

December 28, 2014 December 29, 2013

Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Assets:
Money market funds (cash
equivalent) $ 431,172 $ $ $ 431,172 $ 478,755 $ $ $ 478,755
Debt securities in government-
sponsored entities 51,263 51,263 82,143 82,143
Corporate debt securities 500,088 500,088 341,970 341,970
U.S. Treasury securities 150,866 150,866 29,853 29,853
Deferred compensation plan assets 23,486 23,486 17,805 17,805
Total assets measured at fair value $ 582,038 $ 574,837 $ $ 1,156,875 $ 508,608 $ 441,918 $ $ 950,526

Liabilities:
Acquisition related contingent
consideration liabilities $ $ $ 44,124 $ 44,124 $ $ $ 49,480 $ 49,480
Deferred compensation liability 20,310 20,310 14,957 14,957
Total liabilities measured at fair
value $ $ 20,310 $ 44,124 $ 64,434 $ $ 14,957 $ 49,480 $ 64,437

The Company holds available-for-sale securities that consist of highly liquid, investment grade debt securities. The Company considers information
provided by the Companys investment accounting and reporting service provider in the measurement of fair value of its debt securities. The investment
service provider provides valuation information from an industry-recognized valuation service. Such valuations may be based on trade prices in active
markets for identical assets or liabilities (Level 1 inputs) or valuation models using inputs that are observable either directly or indirectly (Level 2 inputs),
such as quoted prices for similar assets or liabilities, yield curve, volatility factors, credit spreads, default rates, loss severity, current market and contractual
prices for the underlying instruments or debt, broker and dealer quotes, as well as other relevant economic measures. The Companys deferred compensation
plan assets consist primarily of investments in life insurance contracts carried at cash surrender value, which reflects the net asset value of the underlying
publicly traded mutual funds. The Company performs control procedures to corroborate the fair value of its holdings, including comparing valuations
obtained from its investment service provider to valuations reported by the Companys asset custodians, validation of pricing sources and models, and review
of key model inputs if necessary.

The Company reassesses the fair value of contingent consideration to be settled in cash related to acquisitions on a quarterly basis using the income
approach. This is a Level 3 measurement. Significant assumptions used in the measurement include probabilities of achieving the remaining milestones and
the discount rates, which depend on the milestone risk profiles. The changes in fair value of the contingent considerations during the years ended
December 28, 2014, December 29, 2013, and December 30, 2012 were due to changes in the estimated payments and a shorter discounting period.

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Changes in estimated fair value of contingent consideration liabilities from January 1, 2012 through December 28, 2014 are as follows (in thousands):
Contingent
Consideration
Liability
(Level 3
Measurement)
Balance as of January 1, 2012 $ 6,638
Acquisition of BlueGnome 7,500
Change in estimated fair value, recorded in acquisition related (gain) expense, net 1,975
Cash payments (3,594)
Balance as of December 30, 2012 12,519
Additional liability recorded for current period acquisitions 60,184
Change in estimated fair value, recorded in acquisition related (gain) expense, net (18,784)
Cash payments (4,439)
Balance as of December 29, 2013 49,480
Change in estimated fair value, recorded in acquisition related (gain) expense, net (5,356)
Balance as of December 28, 2014 $ 44,124

6. Convertible Senior Notes

As of December 28, 2014, the Company had outstanding $320.0 million in principal amount of 0.25% convertible senior notes due March 15, 2016,
$632.5 million in principal amount of 0% convertible senior notes due June 15, 2019, and $517.5 million in principal amount of 0.5% convertible senior
notes due June 15, 2021.

0% Convertible Senior Notes due 2019 and 0.5% Convertible Senior Notes due 2021

On June 11, 2014, the Company issued $632.5 million aggregate principal amount of 0% convertible senior notes due 2019 (2019 Notes) and $517.5
million aggregate principal amount of 0.5% convertible senior notes due 2021 (2021 Notes) in an offering conducted in accordance with Rule 144A under
the Securities Act of 1933, as amended. The Notes were issued at 100% of par value. The net proceeds from the issuance, after deducting the offering
expenses payable by the Company, was $1,132.4 million. The Company used the net proceeds plus cash on hand to repurchase a portion of the outstanding
2016 Notes in privately negotiated transactions concurrently with the issuance of the 2019 and 2021 Notes.

Both the 2019 and 2021 Notes will be convertible into cash, shares of common stock, or a combination of cash and shares of common stock, at the
Company's election, based on an initial conversion rate, subject to adjustment, of 3.9318 shares per $1,000 principal amount of the notes (which represents
an initial conversion price of approximately $254.34 per share), only in the following circumstances and to the following extent: (1) during the five business-
day period after any 10 consecutive trading day period (the measurement period) in which the trading price per 2019 and 2021 Note for each day of such
measurement period was less than 98% of the product of the last reported sale price of the Companys common stock and the conversion rate on each such
day; (2) during any calendar quarter (and only during that quarter) after the calendar quarter ending September 30, 2014, if the last reported sale price of the
Companys common stock for 20 or more trading days in the period of 30 consecutive trading days ending on the last trading day of the immediately
preceding calendar quarter exceeds 130% of the applicable conversion price in effect on the last trading day of the immediately preceding calendar quarter;
(3) upon the occurrence of specified events described in the indenture for the 2019 and 2021 Notes; and (4) at any time on or after March 15, 2019 for the
2019 Notes, or March 15, 2021 for the 2021 Notes, through the second scheduled trading day immediately preceding the maturity date.

As noted in the indentures for the 2019 and 2021 Notes, it is the Company's intent and policy to settle conversions through combination settlement,
which essentially involves repayment of an amount of cash equal to the principal portion and delivery of the share amount in excess of the conversion
value over the principal portion in shares of common stock. In general, for each $1,000 in principal the principal portion of cash upon settlement is defined
as the lesser of $1,000 and the conversion value during the 20-day observation period. The conversion value is the sum of the daily conversion value which
is

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the product of the effective conversion rate divided by 20 days and the daily volume weighted average price (VWAP) of the Company's common stock. The
share amount is the cumulative daily share amount during the observation period, which is calculated by dividing the daily VWAP into the difference
between the daily conversion value (i.e., conversion rate x daily VWAP) and $1,000.

The 2019 Notes carry no coupon interest. The Company pays 0.5% interest per annum on the principal amount of the 2021 Notes, payable
semiannually in arrears in cash on June 15 and December 15 of each year, beginning on December 15, 2014. The 2019 and 2021 Notes mature on June 15,
2019 and June 15, 2021, respectively. If a designated event, as defined in the indentures for the 2019 and 2021 Notes, such as acquisition, merger, or
liquidation, occurs prior to the maturity date, subject to certain limitations, holders of the notes may require the Company to repurchase all or a portion of
their notes for cash at a repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus any accrued and unpaid interest to, but
excluding, the repurchase date.

The Company accounts separately for the liability and equity components of the 2019 and 2021 Notes in accordance with authoritative guidance for
convertible debt instruments that may be settled in cash upon conversion. The guidance requires the carrying amount of the liability component to be
estimated by measuring the fair value of a similar liability that does not have an associated conversion feature. Because the Company has no outstanding
non-convertible public debt, the Company determined that market-traded senior, unsecured corporate bonds represent a similar liability to the convertible
senior notes without the conversion option. Based on market data available for publicly traded, senior, unsecured corporate bonds issued by companies in the
same industry as the Company, and with similar maturities to the 2019 and 2021 Notes, the Company estimated the implied interest rates of its 2019 and
2021 Notes to be 2.9% and 3.5%, respectively, assuming no conversion option. Assumptions used in the estimate represent what market participants would
use in pricing the liability component, including market interest rates, credit standing, and yield curves, all of which are defined as Level 2 observable inputs.
The estimated implied interest rates were applied to the 2019 and 2021 Notes, which resulted in a fair value of the liability component in aggregate of $971.5
million upon issuance, calculated as the present value of implied future payments based on the $1,150.0 million aggregate principal amount. The $161.2
million difference between the cash proceeds of $1,132.7 million and the estimated fair value of the liability component was recorded in additional paid-in
capital as the 2019 and 2021 Notes are not considered redeemable.

As a policy election under applicable guidance related to the calculation of diluted net income per share, the Company elected the combination
settlement method as its stated settlement policy and applied the treasury stock method in the calculation of the potential dilutive impact of the 2019 and
2021 Notes. Neither the 2019 nor the 2021 Notes were convertible as of December 28, 2014 and had no dilutive impact during the year ended December 28,
2014. If the 2019 and 2021 Notes were converted as of December 28, 2014, the if-converted value would not exceed the principal amount.

0.25% Convertible Senior Notes due 2016

In 2011, the Company issued $920.0 million aggregate principal amount of 0.25% convertible senior notes due 2016 (2016 Notes) in an offering
conducted in accordance with Rule 144A under the Securities Act of 1933, as amended. The 2016 Notes were issued at 98.25% of par value. Debt issuance
costs of approximately $0.4 million were primarily comprised of legal, accounting, and other professional fees, the majority of which were recorded in other
noncurrent assets and are being amortized to interest expense over the five-year term of the 2016 Notes.

The 2016 Notes are convertible into cash, shares of common stock, or a combination of cash and shares of common stock, at the Companys election,
based on an initial conversion rate, subject to adjustment, of 11.9687 shares per $1,000 principal amount of the 2016 Notes (which represents an initial
conversion price of approximately $83.55 per share), only in the following circumstances and to the following extent: (1) during the five business-day period
after any 10 consecutive trading day period (the measurement period) in which the trading price per 2016 Note for each day of such measurement period
was less than 98% of the product of the last reported sale price of the Companys common stock and the conversion rate on each such day; (2) during any
calendar quarter (and only during that quarter) after the calendar quarter ending March 31, 2011, if the last reported sale price of the Companys common
stock for 20 or more trading days in the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter
exceeds 130% of the applicable conversion price in effect on the last trading day of the immediately preceding calendar quarter; (3) upon the occurrence of
specified events described in the indenture for the 2016 Notes; and (4) at any time on or after December 15, 2015 through the second scheduled trading day
immediately preceding the maturity date. Based upon meeting the stock trading price conversion requirement during the three months ended March 30,
2014, the 2016 Notes became convertible on April 1, 2014 and continue to be

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convertible through March 31, 2015. As such, the remaining 2016 Notes outstanding were classified as current liabilities as of December 28, 2014.

As noted in the indenture for the 2016 Notes, it is the Companys intent and policy to settle conversions through combination settlement, which
essentially involves repayment of an amount of cash equal to the principal portion and delivery of the share amount in excess of the conversion value
over the principal portion in shares of common stock. In general, for each $1,000 in principal, the principal portion of cash upon settlement is defined as
the lesser of $1,000, and the conversion value during the 20-day observation period as described in the indenture for the 2016 Notes. The conversion value is
the sum of the daily conversion value which is the product of the effective conversion rate divided by 20 days and the daily volume weighted average price
(VWAP) of the Companys common stock. The share amount is the cumulative daily share amount during the observation period, which is calculated
by dividing the daily VWAP into the difference between the daily conversion value (i.e., conversion rate x daily VWAP) and $1,000. The Company pays
0.25% interest per annum on the principal amount of the 2016 Notes semiannually in arrears in cash on March 15 and September 15 of each year. The 2016
Notes mature on March 15, 2016. If a designated event, as defined in the indenture for the 2016 Notes, such as an acquisition, merger, or liquidation, occurs
prior to the maturity date, subject to certain limitations, holders of the 2016 Notes may require the Company to repurchase all or a portion of their 2016 Notes
for cash at a repurchase price equal to 100% of the principal amount of the 2016 Notes to be repurchased, plus any accrued and unpaid interest to, but
excluding, the repurchase date.

The Company accounts separately for the liability and equity components of the 2016 Notes in accordance with authoritative guidance for convertible
debt instruments that may be settled in cash upon conversion. The guidance requires the carrying amount of the liability component to be estimated by
measuring the fair value of a similar liability that does not have an associated conversion feature. Because the Company has no outstanding non-convertible
public debt, the Company determined that senior, unsecured corporate bonds traded on the market represent a similar liability to the convertible senior notes
without the conversion option. Based on market data available for publicly traded, senior, unsecured corporate bonds issued by companies in the same
industry and with similar maturity, the Company estimated the implied interest rate of its 2016 Notes to be 4.5%, assuming no conversion option.
Assumptions used in the estimate represent what market participants would use in pricing the liability component, including market interest rates, credit
standing, and yield curves, all of which are defined as Level 2 observable inputs. The estimated implied interest rate was applied to the 2016 Notes, which
resulted in a fair value of the liability component of $748.5 million upon issuance, calculated as the present value of implied future payments based on the
$920.0 million aggregate principal amount. The $155.4 million difference between the cash proceeds of $903.9 million and the estimated fair value of the
liability component was recorded in additional paid-in capital as the 2016 Notes were not considered redeemable.

In conjunction with the issuance of the 2019 and 2021 Notes, the Company used the net proceeds from the issuance plus cash on hand to repurchase
$600.0 million in principal amount of the outstanding 2016 Notes in privately negotiated transactions. The aggregate cash used for the repurchase was
$1,244.7 million. The repurchase is accounted for as an extinguishment of debt. Extinguishment accounting requires the purchase price to be allocated to the
liability and equity components of the repurchased notes based on the fair value of the liability component, and the difference between the fair value and the
carrying value of the liability component to be recognized as loss on extinguishment of debt. An interest rate of 1.2% upon settlement, which was estimated
using Level 2 inputs, was applied to measure the fair value of the liability component of the extinguished debt. This calculation resulted in $588.8 million
allocated to the debt component and $655.9 million allocated to the equity component. The $31.4 million difference between the $588.8 million fair value
of debt component and the carrying value of the repurchased 2016 Notes was recorded as a loss on extinguishment of debt within other expense, net, during
the three and six months ended June 29, 2014. The $655.9 million of the repurchase price allocated to the equity component was recorded as a reduction of
additional paid-in capital.

As a policy election under applicable guidance related to the calculation of diluted net income per share, the Company elected the combination
settlement method as its stated settlement policy and applied the treasury stock method in the calculation of dilutive impact of the 2016 Notes. During the
years ended December 29, 2013 and December 30, 2012, the 2016 Notes were not convertible. However, as the market price of the Companys common stock
exceeded the conversion price during the last months of 2013, the calculation of dilutive potential common shares outstanding for the year ended December
29, 2013 reflects the dilutive impact from the 2016 Notes. The 2016 Notes had no dilutive impact for the year ended December 30, 2012. If the 2016 Notes
were converted as of December 28, 2014, the if-converted value would exceed the principal amount by $393.3 million.

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0.625% Convertible Senior Notes due 2014

In 2007, the Company issued $400.0 million principal amount of 0.625% convertible senior notes due 2014 (2014 Notes). The Company pays 0.625%
interest per annum on the principal amount of the 2014 Notes semi-annually in arrears in cash on February 15 and August 15 of each year. The 2014 Notes
matured on February 15, 2014. The effective interest rate of the liability component was estimated to be 8.3%.

The Company entered into hedge transactions concurrently with the issuance of the 2014 Notes under which the Company was entitled to purchase up
to approximately 18.3 million shares of the Companys common stock at a strike price of approximately $21.83 per share, subject to adjustment. The
convertible note hedge transactions had the effect of reducing dilution to the Companys stockholders upon conversion of the 2014 Notes. Also concurrently
with the issuance of the 2014 Notes, the Company sold to the hedge counterparties warrants exercisable, on a cashless basis, for up to approximately 18.3
million shares of the Companys common stock at a strike price of $31.435 per share, subject to adjustment. The proceeds from these warrants partially offset
the cost to the Company of the convertible note hedge transactions.

The 2014 Notes were convertible into cash and shares of the Companys common stock in various prior periods and became convertible again from
April 1, 2012 through, and including, February 12, 2014, by which date all notes were converted. In all cases of conversions of the 2014 Notes, the principal
amount converted was repaid with cash and the excess of the conversion value over the principal amount was paid in shares of common stock. The equity
dilution resulting from the issuance of common stock related to the conversion of the 2014 Notes was offset by repurchase of the same amount of shares under
the convertible note hedge transactions, which were automatically exercised in accordance with their terms at the time of each conversion. Accordingly, the
hedge transactions terminated concomitant with the conversions of the 2014 Notes.

As a result of the conversions during the year ended December 28, 2014, the Company recorded losses on extinguishment of debt calculated as the
difference between the estimated fair value of the debt and the carrying value of the notes as of the settlement dates. To measure the fair value of the
converted notes as of the settlement dates, the applicable interest rates were estimated using Level 2 observable inputs and applied to the converted notes
using the same methodology as in the issuance date valuation.

The following table summarizes information about the conversion of the 2014 Notes during the year ended December 28, 2014 (in thousands):

2014 Notes
Cash paid for principal of notes converted $ 29,570
Conversion value over principal amount paid in shares of common stock $ 196,095
Number of shares of common stock issued upon conversion 1,151

The following table summarizes information about the equity and liability components of all convertible senior notes outstanding as of the period
reported (dollars in thousands). The fair values of the respective notes outstanding were measured based on quoted market prices.
December 28,
2014 December 29, 2013
Principal amount of convertible notes outstanding $ 1,470,027 $ 949,570
Unamortized discount of liability component (178,991) (80,977)
Net carrying amount of liability component 1,291,036 868,593
Less: current portion (304,256) (29,288)
Long-term debt $ 986,780 $ 839,305
Conversion option subject to cash settlement $ 282
Carrying value of equity component, net of issuance costs $ 215,283 $ 274,304
Fair value of outstanding notes $ 2,021,750 $ 1,428,743
Weighted average remaining amortization period of discount on the liability component 5.2 years 2.2 years

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7. Commitments

Leases

The Company leases office and manufacturing facilities under various noncancellable lease agreements. Facility leases generally provide for periodic
rent increases, and many contain escalation clauses and renewal options. Certain leases require the Company to pay property taxes and routine maintenance.
The Company is headquartered in San Diego, California and leases facilities in San Diego and the San Francisco Bay Area in California; Madison,
Wisconsin; Morrisville, North Carolina; Australia; Brazil; China; France; Japan; Singapore; the Netherlands; and the United Kingdom.

On December 30, 2014, the Company entered into a lease agreement, under the terms of which the Company will lease certain office buildings to be
constructed at 200-800 Lincoln Centre Drive, Foster City, California, consisting of approximately 360,000 rentable square feet. In addition, the Company has
the right to further expand the premises and lease an additional office building that may be built at this facility (the "Expansion Building"). The lease is for a
period of 16 years (the "Initial Term") with a target commencement date of July 1, 2017. The Company has three five-year options to extend the lease. The
aggregate rent during the Initial Term of the lease is expected to be approximately $204.0 million, but not including the Expansion Building. The future
minimum payments under this lease is not included in the table below. In addition to rent, the lease requires the Company to pay certain taxes, insurance, and
operating costs relating to the leased buildings.

During 2013, the Company entered into an agreement to sublease sections of its former headquarters. The sublease has an initial term of approximately
ten years. In conjunction with the sublease, the Company issued a letter of credit in the amount of $8.0 million, which will decrease ratably to zero over the
term of the sublease. As of December 28, 2014, the letter of credit carried a balance of $7.2 million.

Annual future minimum payments under operating leases as of December 28, 2014 were as follows (in thousands):
Operating Sublease Net Operating
Leases Income Leases
2015 $ 35,210 $ (2,900) $ 32,310
2016 38,892 (2,924) 35,968
2017 37,064 (2,708) 34,356
2018 37,747 (2,789) 34,958
2019 39,656 (2,873) 36,783
Thereafter 415,052 (11,837) 403,215
Total minimum lease payments $ 603,621 $ (26,031) $ 577,590

Rent expense was $33.2 million, $28.1 million, and $21.4 million for the years ended December 28, 2014, December 29, 2013, and December 30, 2012,
respectively.

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The Company recorded facility exit obligations upon vacating its former headquarters in 2011. Changes in the facility exit obligation from January 1,
2012 through December 28, 2014 are as follows (in thousands):
Facility Exit
Obligation
Balance as of January 1, 2012: $ 25,049
Adjustment to facility exit obligation 24,878
Accretion of interest expense 2,129
Cash payments (6,704)
Balance as of December 30, 2012 45,352
Adjustment to facility exit obligation (114)
Accretion of interest expense 2,738
Cash payments (9,758)
Balance as of December 29, 2013 38,218
Adjustment to facility exit obligation 2,555
Accretion of interest expense 2,638
Cash payments (5,711)
Balance as of December 28, 2014 $ 37,700

Licensing Agreements

In the normal course of its business, the Company enters, from time to time, into licensing agreements under which the Company commits to certain
minimum royalty payments, some of which are subject to adjustment. Such licensing agreements may be terminated prior to the expiration of underlying
intellectual property under certain circumstances. Annual future minimum royalty payments under the Companys licensing agreements as of December 28,
2014 are as follows (in thousands):

Minimum Payments
2015 $ 8,650
2016 12,470
2017 13,500
2018 18,475
2019 23,480
Thereafter 23,550
Total minimum royalty payments $ 100,125

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Warranties

Changes in the Companys reserve for product warranties from January 1, 2012 through December 28, 2014 are as follows (in thousands):

Warranty Reserve
Balance as of January 1, 2012 $ 11,966
Additions charged to cost of revenue 17,279
Repairs and replacements (19,109)
Balance as of December 30, 2012 10,136
Additions charged to cost of revenue 15,674
Repairs and replacements (15,403)
Balance as of December 29, 2013 10,407
Additions charged to cost of revenue 24,150
Repairs and replacements (18,941)
Balance as of December 28, 2014 $ 15,616

8. Share-based Compensation Expense

Share-based compensation expense for all stock awards consists of the following (in thousands):
Years Ended
December 28, December 29, December 30,
2014 2013 2012
Cost of product revenue $ 9,451 $ 6,223 $ 7,575
Cost of service and other revenue 1,204 777 461
Research and development 50,880 37,439 30,879
Selling, general and administrative 91,016 61,387 55,409
Share-based compensation expense before taxes 152,551 105,826 94,324
Related income tax benefits (44,194) (32,819) (30,759)
Share-based compensation expense, net of taxes $ 108,357 $ 73,007 $ 63,565

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The assumptions used for the specified reporting periods and the resulting estimates of weighted-average grant date fair value per share of options
granted and for stock purchased under the ESPP are as follows:
Years Ended
December 28, December 29, December 30,
2014 2013 2012
Stock options granted:
Risk-free interest rate 0.14 - 1.86% 0.56 - 0.93%
Expected volatility 30 - 44% 41 - 48%
Expected term 0.8 - 9.4 years 4.0 - 6.6 years
Expected dividends
Weighted-average grant-date fair value per share $ 40.66 $ 15.47

Stock purchased under the ESPP:

Risk-free interest rate 0.05 - 0.13% 0.08 - 0.15% 0.09 - 0.17%
Expected volatility 38% - 41% 31 - 32% 33 - 64%
Expected term 0.5 - 1.0 year 0.5 - 1.0 year 0.5 - 1.0 year
Expected dividends
Weighted-average grant-date fair value per share $ 44.64 $ 19.30 $ 16.45

As of December 28, 2014, approximately $280.6 million of total unrecognized compensation cost related to stock options, restricted stock, and ESPP
shares issued to date is expected to be recognized over a weighted-average period of approximately 2.1 years.

9. Stockholders Equity

The Companys 2005 Stock and Incentive Plan (the 2005 Stock Plan), 2005 Solexa Equity Incentive Plan (the 2005 Solexa Equity Plan), the Verinata
Health, Inc. 2008 Stock Plan (the 2008 Stock Plan), and the New Hire Stock and Incentive Plan allow for the issuance of stock options, restricted stock units
and awards, and performance stock units. During the year ended December 29, 2013, the stockholders ratified an amendment to increase the maximum
number of shares of common stock authorized for issuance under the 2005 Stock Plan by 5.0 million shares. As of December 28, 2014, approximately 5.3
million shares remained available for future grants under the 2005 Stock Plan, the 2005 Solexa Equity Plan, and the 2008 Verinata Health Stock Plan. There
is no set number of shares reserved for issuance under the New Hire Stock and Incentive Plan.

Stock Options

Stock options granted at the time of hire primarily vest over a four or five-year period, with 25% or 20% of options vesting on the first anniversary of
the grant date and the remaining options vesting monthly over the remaining vesting period. Stock options granted subsequent to hiring primarily vest
monthly over a four or five-year period. Each grant of options has a maximum term of ten years, measured from the applicable grant date, subject to earlier
termination if the optionees service ceases. Vesting in all cases is subject to the individuals continued service through the vesting date. The Company
satisfies option exercises through the issuance of new shares.

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The Companys stock option activity under all stock option plans from January 1, 2012 through December 28, 2014 is as follows:
Weighted-
Options Average
(in thousands) Exercise Price
Outstanding at January 1, 2012 10,378 $ 29.69
Granted 251 $ 40.79
Exercised (2,071) $ 20.34
Cancelled (207) $ 39.18
Outstanding at December 30, 2012 8,351 $ 32.10
Granted 512 $ 14.74
Exercised (3,006) $ 27.70
Cancelled (133) $ 41.80
Outstanding at December 29, 2013 5,724 $ 32.64
Exercised (2,478) $ 29.93
Cancelled (35) $ 31.73
Outstanding at December 28, 2014 3,211 $ 34.74

At December 28, 2014, outstanding options to purchase 2.9 million shares were exercisable with a weighted-average per share exercise price of $35.94.
The weighted-average remaining life of options outstanding and exercisable is 4.3 years and 4.1 years, respectively, as of December 28, 2014.

The aggregate intrinsic value of options outstanding and options exercisable as of December 28, 2014 was $492.8 million and $444.2 million,
respectively. Aggregate intrinsic value represents the product of the number of options outstanding multiplied by the difference between the Companys
closing stock price per share on the last trading day of the fiscal period, which was $188.20 as of December 26, 2014, and the exercise price. Total intrinsic
value of options exercised was $330.5 million, $141.7 million, and $60.6 million for the years ended December 28, 2014, December 29, 2013, and
December 30, 2012, respectively. Total fair value of options vested was $17.2 million, $24.0 million, and $31.9 million for the years ended December 28,
2014, December 29, 2013, and December 30, 2012, respectively.

Restricted Stock

The Company issues restricted stock units (RSU), restricted stock awards (RSA), and performance stock units (PSU). The Company grants RSU and PSU
pursuant to its 2005 Stock and Incentive Plan and 2008 Stock Plan. RSU are share awards that, upon vesting, will deliver to the holder shares of the
Companys common stock. For grants to new hires prior to July 2011 and for grants to existing employees, RSU generally vest 15% on the first anniversary of
the grant date, 20% on the second anniversary of the grant date, 30% on the third anniversary of the grant date, and 35% on the fourth anniversary of the
grant date. For grants to new hires subsequent to July 2011, RSU generally vest over a four-year period with equal vesting on anniversaries of the grant date.
The Company satisfies RSU vesting through the issuance of new shares. The Company issues PSU for which the number of shares issuable at the end of a
three-year performance period can reach up to 150% of the shares approved in the award based on the Companys performance relative to specified earnings
per share targets.

The Company also issues RSA that are released based on service related vesting conditions. RSA may be issued from the Companys treasury stock or
granted pursuant to the Companys 2005 Stock and Incentive Plan.

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A summary of the Companys restricted stock activity and related information from January 1, 2012 through December 28, 2014 is as follows (in
thousands, except per share amounts):
Weighted-Average
Restricted Restricted Performance
Grant-Date Fair Value per Share
Stock Awards Stock Units Stock Units
(RSA) (RSU) (PSU) RSA RSU PSU
Outstanding at January 1, 2012 230 3,476 $ 65.95 $ 41.87
Awarded 312 1,640 599 $ 47.91 $ 48.52 $ 49.66
Vested (77) (1,062) $ 65.95 $ 38.48
Cancelled (394) (12) $ 45.05 $ 50.54
Outstanding at December 30, 2012 465 3,660 587 $ 53.84 $ 45.49 $ 49.64
Awarded 1,532 584 $ 77.53 $ 59.16
Vested (217) (1,308) $ 54.27 $ 42.97
Cancelled (256) (70) $ 49.24 $ 50.42
Outstanding at December 29, 2013 248 3,628 1,101 $ 53.46 $ 59.66 $ 54.64
Awarded 780 968 $ 172.53 $ 104.52
Vested (140) (1,383) (753) $ 47.90 $ 55.44 $ 49.52
Cancelled (184) (59) $ 65.09 $ 52.87
Outstanding at December 28, 2014 108 2,841 1,257 $ 56.62 $ 92.35 $ 96.21

Pre-tax intrinsic values and total fair value of vested restricted stock are as follows (in thousands):

Years Ended
December 28, December 29, December 30,
2014 2013 2012
Pre-tax intrinsic value of outstanding restricted stock:
RSA $ 20,321 $ 27,384 $ 25,437
RSU $ 534,708 $ 400,421 $ 200,383
PSU $ 236,606 $ 121,555 $ 32,149

Fair value of restricted stock vested:

RSA $ 6,712 $ 11,750 $ 5,039
RSU $ 76,646 $ 56,212 $ 40,870
PSU $ 37,313

Employee Stock Purchase Plan

A total of 15.5 million shares of the Companys common stock have been reserved for issuance under its 2000 Employee Stock Purchase Plan, or ESPP.
The ESPP permits eligible employees to purchase common stock at a discount, but only through payroll deductions, during defined offering periods. The
price at which stock is purchased under the ESPP is equal to 85% of the fair market value of the common stock on the first or last day of the offering period,
whichever is lower. The initial offering period commenced in July 2000.

The ESPP provides for annual increases of shares available for issuance by the lesser of 3% of the number of outstanding shares of the Companys
common stock on the last day of the immediately preceding fiscal year, 3.0 million shares, or such lesser amount as determined by the Companys board of
directors. Approximately 0.3 million, 0.4 million, and 0.3 million shares were issued under the ESPP during the years ended December 28, 2014,
December 29, 2013, and December 30, 2012, respectively. As of December 28, 2014 and December 29, 2013, there were approximately 14.7 million and 15.0
million shares available for issuance under the ESPP, respectively.

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Warrants

In connection with the offering of the Companys 2014 Notes, the Company sold warrants to purchase 18.3 million shares of common stock to
counterparties to the convertible note hedge transactions. The warrants have an exercise price of $31.435 per share, and the proceeds from the sale of such
warrants were used by the Company to partially offset the cost of the transactions. In July 2013, the Company settled with a hedging counterparty
outstanding warrants to purchase approximately 3.0 million shares of the Companys common stock for $125.0 million in cash. The remaining warrants were
exercised in full during the year ended December 28, 2014.

Share Repurchases

During the years ended December 28, 2014, December 29, 2013, and December 30, 2012, the Company repurchased approximately 1.5 million shares
for $237.2 million, 0.9 million shares for $50.0 million, and 1.9 million shares for $82.5 million, respectively.

In April 2012, the Companys Board of Directors authorized share repurchases for up to $250.0 million via a combination of Rule 10b5-1 and
discretionary share repurchase programs. In addition, on January 30, 2014, the Companys Board of Directors authorized up to $250.0 million to repurchase
shares of the Companys common stock on a discretionary basis. Authorizations to repurchase up to an additional $130.4 million of its common stock
remained as of December 28, 2014.

Stockholder Rights Plan

In connection with the unsolicited tender offer by Roche (refer to note 15. Unsolicited Tender Offer), on January 25, 2012, the Companys Board of
Directors declared a dividend of one preferred share purchase right (Right) for each outstanding share of the Companys common stock. Each Right entitled
the registered holder to purchase from the Company one one-thousandth of a share of the Companys Series A Junior Participating Preferred Stock, par value
$0.01 per share (Preferred Shares), at a price of $275.00 per one thousandth of a Preferred Share, subject to adjustment. The Rights were not exercisable until
such time that the Board of Directors determined to eliminate its deferral of the date on which separate Rights certificates are issued and the Rights traded
separately from the Companys common stock (Distribution Date). If a person or group (triggering party) acquired 15% or more of the Companys
outstanding common stock, each Right would have entitled holders other than the triggering party to purchase, at the exercise price of the Right, a number of
shares of common stock having a market value of two times the exercise price of the Right. If the Company was acquired in a merger or other business
combination transaction after a person acquires 15% or more of the Companys common stock, each Right would have entitled holders other than the
triggering party to purchase, at the Rights then-current exercise price, a number of common shares of the acquiring company that at the time of such
transaction have a market value of two times the exercise price of the Right. The Board of Directors would have been entitled to redeem the Rights at a price
of $0.001 per Right at any time before the Distribution Date. The Board of Directors would have been entitled to exchange the Rights at an exchange ratio
per Right of one share of common stock after any person acquires beneficial ownership of 15% or more of the Companys outstanding common stock, and
prior to the acquisition of 50% or more of the Companys outstanding common stock. In 2013, the expiration date was amended to March 27, 2013, from
January 26, 2017, and the Rights expired accordingly.

10. Legal Proceedings

The Company is involved in various lawsuits and claims arising in the ordinary course of business, including actions with respect to intellectual
property, employment, and contractual matters. In connection with these matters, the Company assesses, on a regular basis, the probability and range of
possible loss based on the developments in these matters. A liability is recorded in the financial statements if it is believed to be probable that a loss has been
incurred and the amount of the loss can be reasonably estimated. Because litigation is inherently unpredictable and unfavorable results could occur,
assessing contingencies is highly subjective and requires judgments about future events. The Company regularly reviews outstanding legal matters to
determine the adequacy of the liabilities accrued and related disclosures. The amount of ultimate loss may differ from these estimates. Each matter presents its
own unique circumstances, and prior litigation does not necessarily provide a reliable basis on which to predict the outcome, or range of outcomes, in any
individual proceeding. Because of the uncertainties related to the occurrence, amount, and range of loss on any pending litigation or claim, the Company is
currently unable to predict their ultimate outcome, and, with respect to any pending litigation or claim where no liability has been accrued, to make a
meaningful estimate of the reasonably possible loss or range of loss that could result from an unfavorable outcome. In the event that opposing litigants in
outstanding litigations or claims ultimately succeed at trial and any subsequent appeals on their claims, any potential loss or charges in excess of any
established accruals, individually or in the aggregate,

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could have a material adverse effect on the Companys business, financial condition, results of operations, and/or cash flows in the period in which the
unfavorable outcome occurs or becomes probable, and potentially in future periods.

Syntrix

On November 24, 2010, Syntrix Biosystems, Inc. (Syntrix) filed suit against the Company in the United States District Court for the Western District
of Washington at Tacoma (Case No. C10-5870-BHS) alleging that the Company willfully infringed U.S. Patent No. 6,951,682 by selling its BeadChip array
products, and that the Company misappropriated Syntrixs trade secrets. On January 30, 2013, the Court granted the Companys motion for summary
judgment on Syntrixs trade secret claims, and dismissed those claims from the case. On March 14, 2013, a jury reached a verdict in favor of Syntrix, finding
that Illuminas BeadChip kits infringe the Syntrix patent. During trial, the Court dismissed Syntrixs claim that the alleged infringement was willful. On July
1, 2013, the Court entered a Final Amended Judgment for $115.1 million, in accordance with the jury verdict, including supplemental damages and
prejudgment interest. In addition, the Court awarded Syntrix an ongoing royalty of 8% for accused sales from March 15, 2013 until the patent expires on
September 16, 2019. On December 3, 2013, the Company filed a Notice of Appeal to the Court of Appeals for the Federal Circuit challenging the Final
Amended Judgment. On December 16, 2013, Syntrix cross appealed the Courts dismissal of its trade secret claims and denial of its willfulness claim. For the
year ended December 29, 2013, the Company recorded total charges of $132.9 million related to this matter, $114.6 million of which was recorded within
operating expenses, with the remainder recorded to cost of sales.

On November 14, 2014, the Company entered into a Settlement and License Agreement with Syntrix and its sole shareholders, John A. Zebala and Amy
Zebala, that settled all claims in the litigation. Pursuant to the terms of the Settlement and License Agreement, the Company paid Syntrix a one-time payment
of $70.0 million in exchange for a release of past damages claimed and a fully paid-up exclusive license to U.S. Patent No. 6,951,682. None of the parties
made any admission of liability in entering into the Settlement and License Agreement. On November 19, 2014, the Court dismissed the litigation with
prejudice and vacated the judgment against the Company. The Company allocated the $70.0 million payment on relative fair value basis, resulting in $29.5
million capitalized as an intangible asset for the value of the exclusive license, which is amortized over a period of 4.8 years on a straight-line basis, and the
remaining $40.5 million to the release of past damages claimed. The fair value of license and past damages was estimated using a discounted cash flow
model, and is considered to be a Level 3 measurement.

As of September 28, 2014, the Company had accrued $148.8 million for damages and interest awarded to Syntrix. The settlement of the litigation
resulted in a gain of $109.4 million, calculated as the difference between the accrual released and the amount of payment allocated to the release of past
damages claimed. $27.3 million of the total gain was recorded as reversal of cost of sales, reflecting a true-up of historical royalty expenses to the effective
royalty rate. The remaining gain of $82.1 million was recorded as a legal contingency gain in operating expenses. In conjunction with the settlement, a $33.5
million deposit with the Court, which was reported in prepaid expenses, was released.

Sequenom

On December 2, 2014, the Company and its subsidiary Verinata Health, Inc. entered into a series of agreements with Sequenom, Inc. (Sequenom), its
subsidiary Sequenom Center for Molecular Medicine LLC (Sequenom LLC), and Chinese University of Hong Kong (CUHK), and an agreement with the
Trustees of Leland Stanford University (Stanford), that, together, (1) settled a patent litigation pending in the United States District Court for the Northern
District of California (the District Court) between Verinata and Stanford, on the one hand, and Sequenom, Sequenom LLC, and Isis Innovation Limited
(Isis), on the other hand, (2) requested remand of certain claims and counterclaims of Sequenom, Isis, Verinata, and Stanford from the appeal pending in the
United States Court of Appeals for the Federal Circuit of a second patent litigation pending in District Court in order to seek to vacate an order related to
those claims and dismiss them, and (3) settled an inter partes review related to a United States Patent No. 8,195,415, assigned to Stanford and licensed to
Verinata.

As part of the settlement, the Company and Sequenom have entered into a Pooled Patents Agreement and related sublicense agreements whereby (1)
Sequenom granted Illumina a worldwide license to patents directed to Non-Invasive Prenatal Testing (NIPT) for Laboratory Developed Testing (LDT)
and In-Vitro Diagnostic (IVD) products, which license is exclusive in the LDT field, except with respect to certain patents formerly owned by Isis, in which
case it is non-exclusive, and (2) Illumina (and Verinata in some cases) granted a worldwide non-exclusive license to Sequenom under Illumina-owned and in-
licensed NIPT-related patents for Sequenom to continue its business related to NIPT LDT (the patents owned or in-licensed by either the Company or
Sequenom that fall under the Pooled Patents Agreement are the Pooled Patents). The Company also assumed, by novation, amended exclusive patent
licenses from CUHK to Sequenom and entered into several

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new exclusive in-license agreements with CUHK related to CUHK patents directed to NIPT, and granted to Sequenom non-exclusive sublicenses under the
Companys license agreements with CUHK, Stanford, and General Hospital Corporation for Sequenom to practice NIPT LDT. The Company and Sequenom
also extended, amended, and restated their current supply agreement under which Sequenom purchases from the Company equipment and supplies for NIPT
LDT and other clinical fields, and entered into a separate agreement whereby Sequenom transferred to the Company certain clinical samples and data useful
in the development of NIPT IVD.

As consideration for the foregoing settlement arrangements, the Company agreed to pay Sequenom an aggregate of $50.0 million, as well as to pay
royalties to Sequenom for sales of NIPT IVD products. The Company and Sequenom also agreed to share revenues received for exploitation of the Pooled
Patents in NIPT LDT. None of the parties made any admission of liability in entering into these arrangements. The parties filed certain stipulated motions
with the Federal Circuit and District Court to vacate and dismiss the associated claims and counterclaims with prejudice, which motions have been granted
by the respective courts.

The Company considered whether the elements received represented identifiable benefits that were sufficiently separable from the products it sells to
Sequenom, and considered whether the value of these benefits could be reasonably estimated. The Company identified the legal settlement, clinical samples,
the IVD and LDT patent rights as elements. The Company used a discounted cash flow analysis to estimate the value of the patent rights, replacement cost to
value the samples, and an assumed royalty rate on historical sales for the legal settlement. These fair value estimates are considered Level 3 measurements.
The Company determined that the aggregate fair value of the benefits received exceeded the consideration paid and allocated the $50.0 million payment to
the various elements on a relative fair value basis. This resulted in $48.8 million allocated to the samples and patent rights transferred to Illumina, which were
expensed in research and development expenses due to lack of alternative future use. The remaining $1.2 million was recorded as a legal contingency charge
in operating expenses.

11. Income Taxes

The income before income taxes summarized by region is as follows (in thousands):
Years Ended
December 28, December 29, December 30,
2014 2013 2012
United States $ 176,974 $ (53,703) $ 102,296
Foreign 271,784 213,017 120,312
Total income before income taxes $ 448,758 $ 159,314 $ 222,608

The provision for income taxes consists of the following (in thousands):
Years Ended
December 28, December 29, December 30,
2014 2013 2012
Current:
Federal $ 60,984 $ 78,419 $ 57,285
State 12,381 8,854 10,121
Foreign 41,815 39,416 31,504
Total current provision 115,180 126,689 98,910
Deferred:
Federal (3,191) (69,102) (7,724)
State (4,974) (15,222) (7,708)
Foreign (11,608) (8,359) (12,124)
Total deferred benefit (19,773) (92,683) (27,556)
Total tax provision $ 95,407 $ 34,006 $ 71,354

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The provision for income taxes reconciles to the amount computed by applying the federal statutory rate to income before taxes as follows (in
thousands):
Years Ended
December 28, December 29, December 30,
2014 2013 2012
Tax at federal statutory rate $ 157,065 $ 55,760 $ 77,913
State, net of federal benefit 5,023 647 4,056
Research and other credits (16,144) (10,977) (2,613)
Change in valuation allowance (4,212) 10,544 (37)
Change in fair value of contingent consideration (1,321) (3,859)
Impact of foreign operations (42,215) (18,006) (11,470)
Other (2,789) (103) 3,505
Total tax provision $ 95,407 $ 34,006 $ 71,354

The impact of foreign operations primarily represents the difference between the actual provision for income taxes for our legal entities that operate
primarily in jurisdictions that have statutory tax rates lower than the U.S. federal statutory tax rate of 35%. The most significant tax benefits from foreign
operations were from the Companys earnings in Singapore and the United Kingdom, which had statutory tax rates of 17% and 21.5%, respectively, in the
year ended December 28, 2014. The impact of foreign operations also includes the U.S. foreign tax credit impact of non-U.S. earnings and uncertain tax
positions related to foreign items.

Significant components of the Companys deferred tax assets and liabilities are as follows (in thousands):
December 28, December 29,
2014 2013
Deferred tax assets:
Net operating losses $ 47,738 $ 66,969
Tax credits 32,192 36,277
Other accruals and reserves 41,676 86,716
Stock compensation 54,570 36,728
Deferred rent 25,975 16,823
Inventory adjustments 12,003 9,034
Other amortization 28,203 9,571
Other 24,045 18,244
Total gross deferred tax assets 266,402 280,362
Valuation allowance on deferred tax assets (15,191) (19,132)
Total deferred tax assets 251,211 261,230
Deferred tax liabilities:
Purchased intangible amortization (85,612) (98,671)
Convertible debt (61,383) (27,821)
Property and equipment (16,521) (13,311)
Other (1,670) (6,349)
Total deferred tax liabilities (165,186) (146,152)
Net deferred tax assets $ 86,025 $ 115,078

A valuation allowance is established when it is more likely than not the future realization of all or some of the deferred tax assets will not be achieved.
The evaluation of the need for a valuation allowance is performed on a jurisdiction-by-jurisdiction basis, and includes a review of all available positive and
negative evidence. Based on the available evidence as of December 28, 2014, the Company was not able to conclude it is more likely than not certain
U.S. deferred tax assets will be realized. Therefore, the Company recorded a valuation allowance of $15.2 million against certain U.S. deferred tax assets.

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During the year ended December 28, 2014, the valuation allowance decreased by $3.9 million, primarily due to a $10.4 million decrease in the provision for
income taxes related to foreign tax credits utilized in the U.S., offset by a $6.0 million increase in the provision for income taxes related to state research and
development credits generated in the current year.

As of December 28, 2014, the Company had net operating loss carryforwards for federal and state tax purposes of $163.6 million and $295.0 million,
respectively, which will begin to expire in 2020 and 2015, respectively, unless utilized prior. The Company also had federal and state tax credit
carryforwards of $15.3 million and $63.7 million, respectively, which will begin to expire in 2024 and 2019, respectively, unless utilized prior.

Pursuant to Section 382 and 383 of the Internal Revenue Code, utilization of the Companys net operating losses and credits may be subject to annual
limitations in the event of any significant future changes in its ownership structure. These annual limitations may result in the expiration of net operating
losses and credits prior to utilization. The deferred tax assets as of December 28, 2014 are net of any previous limitations due to Section 382 and 383.

The Company recognizes excess tax benefits associated with share-based compensation to stockholders equity only when realized. When assessing
whether excess tax benefits relating to share-based compensation have been realized, the Company follows the with-and-without approach excluding any
indirect effects of the excess tax deductions. Under this approach, excess tax benefits related to share-based compensation are not deemed to be realized until
after the utilization of all other tax benefits available to the Company. During the year ended December 28, 2014, the Company realized $126.5 million of
such excess tax benefits, and accordingly recorded a corresponding credit to additional paid-in capital. As of December 28, 2014, the Company had $36.8
million of unrealized excess tax benefits associated with share-based compensation. These tax benefits will be accounted for as a credit to additional paid-in
capital, if and when realized, rather than a reduction of the provision for income taxes.

The Companys manufacturing operations in Singapore operate under various tax holidays and incentives that begin to expire in 2018. For the year
ended December 28, 2014, these tax holidays and incentives resulted in a $15.6 million decrease to the provision for income taxes and an increase in net
income per diluted share of $0.10.

It is the Companys intention to indefinitely reinvest all current and future foreign earnings in order to ensure sufficient working capital to support and
expand existing operations outside the United States. Accordingly, residual U.S. income taxes have not been provided on $395.6 million of undistributed
earnings of foreign subsidiaries as of December 28, 2014. In the event the Company was required to repatriate funds from outside of the United States, such
repatriation would be subject to local laws, customs, and tax consequences.

The following table summarizes the gross amount of the Companys uncertain tax positions (in thousands):
December 28, December 29, December 30,
2014 2013 2012
Balance at beginning of year $ 49,046 $ 37,585 $ 28,396
Increases related to prior year tax positions 426 4,794 2,573
Decreases related to prior year tax positions (804) (223) (69)
Increases related to current year tax positions 8,756 7,503 6,685
Decreases related to lapse of statute of limitations (5,336) (613)
Balance at end of year $ 52,088 $ 49,046 $ 37,585

Included in the balance of uncertain tax positions as of December 28, 2014, and December 29, 2013, were $42.6 million and $40.1 million,
respectively, of net unrecognized tax benefits that, if recognized, would reduce the Companys effective income tax rate in future periods.

Any interest and penalties related to uncertain tax positions are reflected in the provision for income taxes. The Company recognized expense of $0.7
million, $1.0 million, and $0.8 million, related to potential interest and penalties on uncertain tax positions during the years ended December 28, 2014,
December 29, 2013, and December 30, 2012, respectively. The Company recorded a liability for potential interest and penalties of $4.4 million and $3.5
million as of December 28, 2014 and December 29, 2013, respectively.

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ILLUMINA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company is currently under examination by the IRS for tax year 2011. The IRS has not yet proposed any adjustments to the filed return. Tax years
1997 to 2014 remain subject to future examination by the major tax jurisdictions in which the Company is subject to tax. Given the uncertainty of potential
adjustments from the current examination as well as the impact of the current examination on the potential expiration of the statute of limitations, it is
reasonably possible that the balance of unrecognized tax benefits could change significantly over the next 12 months. However, at this time, an estimate of
the range of reasonably possible adjustments to the balance of unrecognized tax benefits cannot be determined given the number of matters being examined
and the number of years that are potentially subject to examination.

12. Employee Benefit Plans

Retirement Plan

The Company has a 401(k) savings plan covering substantially all of its employees in the United States. Company contributions to the plan are
discretionary. During the years ended December 28, 2014, December 29, 2013, and December 30, 2012, the Company made matching contributions of $9.5
million, $7.0 million, and $5.5 million, respectively.

Deferred Compensation Plan

The Company adopted the Illumina, Inc. Deferred Compensation Plan (the Plan) that became effective January 1, 2008. The Companys senior level
employees can contribute up to 80% of their base salary and 100% of their variable cash compensation. Members of the board of directors can contribute up
to 100% of their director fees and equity awards. The Company has agreed to credit the participants contributions with earnings that reflect the performance
of certain independent investment funds. On a discretionary basis, the Company may also make employer contributions to participant accounts in any
amount determined by the Company. The vesting schedules of employer contributions are at the sole discretion of the Compensation Committee. However,
all employer contributions shall become 100% vested upon the occurrence of the participants disability, death or retirement or a change in control of the
Company. The benefits under this plan are unsecured. Participants are generally eligible to receive payment of their vested benefit at the end of their elected
deferral period or after termination of their employment with the Company for any reason or at a later date to comply with the restrictions of Section 409A. As
of December 28, 2014, no employer contributions were made to the Plan.

In January 2008, the Company also established a rabbi trust for the benefit of the participants under the Plan. In accordance with authoritative guidance
related to consolidation of variable interest entities and accounting for deferred compensation arrangements where amounts earned are held in a rabbi trust
and invested, the Company has included the assets of the rabbi trust in its consolidated balance sheet since the trusts inception. As of December 28, 2014
and December 29, 2013, the assets of the trust were $23.5 million and $17.8 million, respectively, and liabilities of the Company were $20.3 million and
$15.0 million, respectively. The assets and liabilities are classified as other assets and accrued liabilities, respectively, on the Companys consolidated
balance sheets. Changes in the values of the assets held by the rabbi trust are recorded in other (expense) income, net in the consolidated statements of
income, and changes in the values of the deferred compensation liabilities are recorded in cost of sales or operating expenses.

13. Segment Information, Geographic Data, and Significant Customers

The Company had revenue in the following regions for the years ended December 28, 2014, December 29, 2013, and December 30, 2012 (in
thousands):
Years Ended
December 28, December 29, December 30,
2014 2013 2012
United States $ 950,703 $ 714,662 $ 568,443
Europe 466,536 354,682 291,404
Asia-Pacific 342,702 276,442 232,498
Other markets 101,417 75,392 56,171
Total $ 1,861,358 $ 1,421,178 $ 1,148,516

Revenues are attributable to geographic areas based on the region of destination.

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ILLUMINA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The majority of our product sales consist of consumables and instruments. For the years ended December 28, 2014, December 29, 2013, and
December 30, 2012, consumable sales represented 56%, 62%, and 64%, respectively, of total revenues and instrument sales comprised 30%, 26%, and 27%,
respectively, of total revenues. The Companys customers include leading genomic research centers, academic institutions, government laboratories,
hospitals, and reference laboratories, as well as pharmaceutical, biotechnology, agrigenomics, commercial molecular diagnostic, and consumer genomics
companies. The Company had no customers that provided more than 10% of total revenue in the years ended December 28, 2014, December 29, 2013, and
December 30, 2012.

Net long-lived assets exclude goodwill and other intangible assets since they are not allocated on a geographic basis. The Company had net long-lived
assets consisting of property and equipment in the following regions as of December 28, 2014 and December 29, 2013 (in thousands):
December 28, December 29,
2014 2013
United States $ 204,717 $ 150,470
United Kingdom 31,965 24,122
Singapore 22,326 21,311
Other countries 6,256 6,763
Total $ 265,264 $ 202,666

14. Quarterly Financial Information (unaudited)

The following financial information reflects all normal recurring adjustments, which are, in the opinion of management, necessary for a fair statement of
the results and cash flows of interim periods. All quarters for fiscal years 2014 and 2013 ended December 28, 2014 and December 29, 2013 were 13 weeks.
Summarized quarterly data for fiscal years 2014 and 2013 are as follows (in thousands, except per share amounts):

First Quarter Second Quarter Third Quarter Fourth Quarter

2014
Total revenue $ 420,781 $ 447,568 $ 480,630 $ 512,379
Gross profit $ 278,292 $ 300,540 $ 333,941 $ 384,937
Net income $ 59,977 $ 46,605 $ 93,489 $ 153,280
Net income per share, basic $ 0.47 $ 0.36 $ 0.66 $ 1.08
Net income per share, diluted $ 0.40 $ 0.31 $ 0.63 $ 1.03
2013
Total revenue $ 330,958 $ 346,094 $ 356,800 $ 387,326
Gross profit $ 219,292 $ 223,409 $ 209,940 $ 259,246
Net (loss) income $ (22,587) $ 35,877 $ 31,357 $ 80,661
Net (loss) income per share, basic $ (0.18) $ 0.29 $ 0.25 $ 0.64
Net (loss) income per share, diluted $ (0.18) $ 0.26 $ 0.22 $ 0.56

ITEM 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

ITEM 9A. Controls and Procedures.

We design our internal controls to provide reasonable assurance that (1) our transactions are properly authorized; (2) our assets are safeguarded against
unauthorized or improper use; and (3) our transactions are properly recorded and reported in conformity with U.S. generally accepted accounting principles.
We also maintain internal controls and procedures to ensure that we comply with applicable laws and our established financial policies.

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Based on managements evaluation (under the supervision and with the participation of our chief executive officer (CEO) and chief financial officer
(CFO)), as of the end of the period covered by this report, our CEO and CFO concluded that our disclosure controls and procedures (as defined in Rules 13a-
15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)), are effective to provide reasonable assurance that
information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within
the time periods specified in SEC rules and forms, and is accumulated and communicated to management, including our principal executive officer and
principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

During the fourth quarter of 2014, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of
the Exchange Act) that materially affected or are reasonably likely to materially affect internal control over financial reporting.

An evaluation was also performed under the supervision and with the participation of our management, including our chief executive officer and chief
financial officer, of any change in our internal control over financial reporting that occurred during the fourth quarter of 2014 and that has materially
affected, or is reasonably likely to materially affect, our internal control over financial reporting. The evaluation did not identify any such change.

MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange
Act Rules 13a-15(f). Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Therefore, even
those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

We conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on our evaluation under
the framework in Internal Control Integrated Framework, our management concluded that our internal control over financial reporting was effective as of
December 28, 2014. The effectiveness of our internal control over financial reporting as of December 28, 2014 has been audited by Ernst & Young LLP, an
independent registered public accounting firm, as stated in their report which is included herein.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of Illumina, Inc.

We have audited Illumina, Inc.s internal control over financial reporting as of December 28, 2014, based on criteria established in Internal Control
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). Illumina,
Inc.s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal
control over financial reporting included in the accompanying Managements Report on Internal Control over Financial Reporting. Our responsibility is to
express an opinion on the companys internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as
we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys
internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use or disposition of the companys assets that could have a material effect on the
financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.

In our opinion, Illumina, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 28, 2014, based on
the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the accompanying
consolidated balance sheets of Illumina, Inc. as of December 28, 2014 and December 29, 2013, and the related consolidated statements of income,
comprehensive income, stockholders equity, and cash flows for each of the three fiscal years in the period ended December 28, 2014 of Illumina, Inc. and our
report dated February 17, 2015 expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP

San Diego, California
February 17, 2015

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ITEM 9B. Other Information.

None.

PART III

ITEM 10. Directors, Executive Officers, and Corporate Governance.

(a) Identification of Directors. Information concerning our directors is incorporated by reference from the section entitled Proposal One: Election of
Directors, Information About Directors, Director Compensation, and Board of Directors and Corporate Governance to be contained in our definitive
Proxy Statement with respect to our 2015 Annual Meeting of Stockholders to be filed with the SEC no later than April 26, 2015.

(b) Identification of Executive Officers. Information concerning our executive officers is incorporated by reference from the section entitled Executive
Officers to be contained in our definitive Proxy Statement with respect to our 2015 Annual Meeting of Stockholders to be filed with the SEC no later than
April 26, 2015.

(c) Compliance with Section 16(a) of the Exchange Act. Information concerning compliance with Section 16(a) of the Securities Exchange Act of 1934
is incorporated by reference from the section entitled Section 16(a) Beneficial Ownership Reporting Compliance to be contained in our definitive Proxy
Statement with respect to our 2015 Annual Meeting of Stockholders to be filed with the SEC no later than April 26, 2015.

(d) Information concerning the audit committee financial expert as defined by the SEC rules adopted pursuant to the Sarbanes-Oxley Act of 2002 is
incorporated by reference from the section entitled Board of Directors and Corporate Governance to be contained in our definitive Proxy Statement with
respect to our 2015 Annual Meeting of Stockholders to be filed with the SEC no later than April 26, 2015.

Code of Ethics

We have adopted a code of ethics for our directors, officers, and employees, which is available on our website at www.illumina.com in the Corporate
Governance portal of the Investor Relations section under Company. A copy of the Code of Ethics is available in print free of charge to any stockholder
who requests a copy. Interested parties may address a written request for a printed copy of the Code of Ethics to: Corporate Secretary, Illumina, Inc., 5200
Illumina Way, San Diego, California 92122. We intend to satisfy the disclosure requirement regarding any amendment to, or a waiver from, a provision of the
Code of Ethics for our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar
functions, by posting such information on our website. The information on, or that can be accessed from, our website is not incorporated by reference into this
report.

ITEM 11. Executive Compensation.

Information concerning executive compensation is incorporated by reference from the sections entitled Compensation Discussion and Analysis,
Director Compensation, and Executive Compensation to be contained in our definitive Proxy Statement with respect to our 2015 Annual Meeting of
Stockholders to be filed with the SEC no later than April 26, 2015.

ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Information concerning the security ownership of certain beneficial owners and management and information covering securities authorized for
issuance under equity compensation plans is incorporated by reference from the sections entitled Stock Ownership of Principal Stockholders and
Management, Executive Compensation, and Equity Compensation Plan Information to be contained in our definitive Proxy Statement with respect to
our 2015 Annual Meeting of Stockholders to be filed with the SEC no later than April 26, 2015.

ITEM 13. Certain Relationships and Related Transactions, and Director Independence.

Information concerning certain relationships and related transactions, and director independence is incorporated by reference from the sections entitled
Proposal One: Election of Directors, Information About Directors, Director Compensation, Executive Compensation, and Certain Relationships and
Related Party Transactions to be contained in our definitive Proxy Statement with respect to our 2015 Annual Meeting of Stockholders to be filed with the
SEC no later than April 26, 2015.

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ITEM 14. Principal Accountant Fees and Services.

Information concerning principal accountant fees and services is incorporated by reference from the sections entitled Proposal Two: Ratification of
Appointment of Independent Registered Public Accounting Firm and Independent Registered Public Accountants to be contained in our definitive Proxy
Statement with respect to our 2015 Annual Meeting of Stockholders to be filed with the SEC no later than April 26, 2015.

PART IV

ITEM 15. Exhibits, Financial Statement Schedules.

1. Financial Statements: See Index to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.

2. Financial Statement Schedule: See Schedule II Valuation and Qualifying Accounts and Reserves in this section of this Form 10-K.

3. Exhibits: The exhibits listed in the accompanying index to exhibits are filed or incorporated by reference as part of this Form 10-K.

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SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

Additions Charged
Balance at to Expenses/(Reductions Balance at
Beginning of from) End of
Period Revenue(1) Deductions(2) Period
(In thousands)
Year ended December 28, 2014
Allowance for doubtful accounts $ 3,680 1,870 (91) $ 5,459
Year ended December 29, 2013
Allowance for doubtful accounts $ 4,280 (422) (178) $ 3,680
Year ended December 30, 2012
Allowance for doubtful accounts $ 3,997 2,191 (1,908) $ 4,280
_______________________________________
(1) Additions to and reductions from allowance for doubtful accounts are recorded to selling, general and administrative expense.
(2) Deductions for allowance for doubtful accounts are for accounts receivable written off.

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INDEX TO EXHIBITS
Incorporated by Reference
Exhibit Filing Filed
Number Exhibit Description Form File Number Exhibit Date Herewith
2.1 Agreement and Plan of Merger by and among 10-K 000-35406 2.1 2/15/2013
Illumina, Inc., TP Corporation, Verinata Health, Inc.
and Shareholder Representative Services LLC (as the
Stockholder Representative), dated as of January 6,
2013
3.1 Amended and Restated Certificate of Incorporation 8-K 000-30361 3.1 9/23/2008
3.2 Amended and Restated Bylaws 8-K 000-30361 3.1 11/5/2014
4.1 Specimen Common Stock Certificate S-1/A 333-33922 4.1 7/3/2000
4.2 Indenture related to the 0.25% Convertible Senior 10-Q 000-30361 4.1 5/4/2011
Notes due 2016, dated as of March 18, 2011, between
Illumina and The Bank of New York Mellon Trust
Company, N.A., as trustee
4.3 Indenture related to the 0% Convertible Senior Notes 8-K 000-30361 4.1 6/11/2014
due 2019, dated as of June 11, 2014, between
Illumina and The Bank of New York Mellon Trust
Company, N.A., as trustee
4.4 Indenture related to the 0.5% Convertible Senior 8-K 000-30361 4.2 6/11/2014
Notes due 2021, dated as of June 11, 2014, between
Illumina and The Bank of New York Mellon Trust
Company, N.A., as trustee
4.5 First Supplemental Indenture related to the 0.5% 10-Q 000-30361 4.1 10/29/2014
Convertible Senior Notes due 2021, dated as of
August 27, 2014, between Illumina and The Bank of
New York Mellon Trust Company, N.A., as trustee
+10.1 Form of Indemnification Agreement between Illumina 10-Q 000-30361 10.55 7/25/2008
and each of its directors and executive officers
+10.2 Amended and Restated Change in Control Severance 10-K 000-30361 10.33 2/26/2009
Agreement between Illumina and Jay T Flatley, dated
October 22, 2008
+10.3 Form of Change in Control Severance Agreement 10-K 000-30361 10.34 2/26/2009
between Illumina and each of its executive officers
+10.4 2000 Employee Stock Purchase Plan, as amended and 10-K 000-30361 10.4 2/24/2012
restated through February 2, 2012
+10.5 2005 Stock and Incentive Plan, as amended and S-8 333-190322 4.5 8/2/2013
restated through May 29, 2013
+10.6 Form of Restricted Stock Unit Agreement for Non- 10-K 000-30361 10.6 2/24/2012
Employee Directors under 2005 Stock and Incentive
Plan
+10.7 Form of Stock Option Agreement for Non-Employee 10-K 000-30361 10.7 2/24/2012
Directors under 2005 Stock and Incentive Plan
+10.8 Form of Restricted Stock Unit Agreement for 10-K 000-30361 10.8 2/24/2012
Employees under 2005 Stock and Incentive Plan

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INDEX TO EXHIBITS (Continued)

+10.9 Form of Stock Option Agreement for Employees 10-K 000-30361 10.9 2/24/2012
under 2005 Stock and Incentive Plan
+10.10 New Hire Stock and Incentive Plan, as amended and 10-K 000-30361 10.7 2/26/2010
restated through October 28, 2009
10.11 License Agreement, effective as of May 6, 1998, 10-Q 000-30361 10.5 5/3/2007
between Tufts University and Illumina
+10.12 The Solexa Unapproved Company Share Option Plan 8-K 000-30361 99.3 11/26/2007
+10.13 The Solexa Share Option Plan for Consultants 8-K 000-30361 99.4 11/26/2007
+10.14 Solexa Limited Enterprise Management Incentive 8-K 000-30361 99.5 11/26/2007
Plan
+10.15 Amended and Restated Solexa 2005 Equity Incentive 10-K 000-30361 10.25 2/26/2009
Plan
+10.16 Amended and Restated Solexa 1992 Stock Option 10-K 000-30361 10.26 2/26/2009
Plan
10.17 License Agreement, dated June 24, 2002, between S-3/A 333-111496 10.23 3/2/2004
Dade Behring Marburg GmbH and Illumina (with
certain confidential portions omitted)
10.18 Non-exclusive License Agreement, dated January 24, S-3/A 333-111496 10.24 3/2/2004
2002, between Amersham Biosciences Corp. and
Illumina (with certain confidential portions omitted)
10.19 Amended and Restated Lease between BMR-9885 10-Q 000-30361 10.41 5/3/2007
Towne Centre Drive LLC and Illumina for the 9885
Towne Centre Drive property, dated January 26, 2007
10.20 Lease between BMR-9885 Towne Centre Drive LLC 10-Q 000-30361 10.42 5/3/2007
and Illumina for the 9865 Towne Centre Drive
property, dated January 26, 2007
10.21 Settlement and Release Agreement between 10-K 000-30361 10.44 2/26/2008
Affymetrix, Inc. and Illumina, dated January 9, 2008
10.22 Amended and Restated Lease Agreement, dated 10-Q 000-30361 10.1 5/3/2012
March 27, 2012, between ARE-SD Region No. 32,
LLC and Illumina
10.23 First Amendment to Amended and Restated Lease X
Agreement, dated March 27, 2012, between ARE-SD
Region No. 32, LLC and Illumina
10.24 Second Amendment to Amended and Restated Lease X
Agreement, dated March 27, 2012, between ARE-SD
Region No. 32, LLC and Illumina
+10.25 Deferred Compensation Plan, effective December 1, 14D-9 005-60457 99(e)(6) 2/7/2012
2007
10.26 Lease between BMR-Lincoln Centre LP and Illumina, X
dated December 30, 2014
10.27 Pooled Patents Agreement between Illumina and X
Sequenom, Inc., dated December 2, 2014 (with certain
confidential portions omitted)
21.1 Subsidiaries of Illumina X

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INDEX TO EXHIBITS (Continued)

23.1 Consent of Independent Registered Public X
Accounting Firm
24.1 Power of Attorney (included on the signature page) X
31.1 Certification of Jay T. Flatley pursuant to Section 302 X
of the Sarbanes-Oxley Act of 2002
31.2 Certification of Marc A. Stapley pursuant to X
Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification of Jay T. Flatley pursuant to 18 U.S.C. X
Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
32.2 Certification of Marc A. Stapley pursuant to 18 U.S.C. X
Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
101.INS XBRL Instance Document X
101.SCH XBRL Taxonomy Extension Schema X
101.CAL XBRL Taxonomy Extension Calculation Linkbase X
101.LAB XBRL Taxonomy Extension Label Linkbase X
101.PRE XBRL Taxonomy Extension Presentation Linkbase X
101.DEF XBRL Taxonomy Extension Definition Linkbase X
_______________________________________

+ Management contract or corporate plan or arrangement

Supplemental Information

No Annual Report to stockholders or proxy materials has been sent to stockholders as of the date of this report. The Annual Report to stockholders and
proxy material will be furnished to our stockholders subsequent to the filing of this Annual Report on Form 10-K and we will furnish such material to the
SEC at that time.

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SIGNATURES

Pursuant to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on February 17, 2015.

ILLUMINA, INC.

By /s/ JAY T. FLATLEY

Jay T. Flatley
Chief Executive Officer

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February 17, 2015

POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENT, that each person whose signature appears below constitutes and appoints Jay T. Flatley and Marc A.
Stapley, and each or any one of them, his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in
his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their, his, or her substitutes or substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates indicated.

Chief Executive Officer and Director

/s/ JAY T. FLATLEY (Principal Executive Officer) February 17, 2015
Jay T. Flatley

Senior Vice President and Chief Financial Officer

/s/ M ARC A. STAPLEY (Principal Financial Officer) February 17, 2015
Marc A. Stapley

Vice President and Chief Accounting Officer

/s/ M ICHEL B OUCHARD (Principal Accounting Officer) February 17, 2015
Michel Bouchard

/s/ WILLIAM H. R ASTETTER Chairman of the Board of Directors February 17, 2015
William H. Rastetter

/s/ FRANCIS A. DESOUZA President and Director February 17, 2015

Francis A. deSouza

/s/ A. B LAINE B OWMAN Director February 17, 2015

A. Blaine Bowman

/s/ DANIEL M. B RADBURY Director February 17, 2015

Daniel M. Bradbury

/s/ KARIN EASTHAM Director February 17, 2015

Karin Eastham

/s/ R OBERT S. EPSTEIN Director February 17, 2015

Robert S. Epstein

Director February 17, 2015

Gerald Mller

/s/ JEFF HUBER Director February 17, 2015

Jeff Huber

/s/ DAVID R. WALT Director February 17, 2015

David R. Walt

/s/ R OY WHITFIELD Director February 17, 2015

Roy Whitfield

90
7 0 5 4 9 0 6 9 6 .2 1 F IR S T A M E N D M E N T T O L E A S E T H IS F IR S T A M E N D M E N T T O L E A S E (th is "F irs tA m e n d m e n t")is m a d e a n d e n te re d in to a s o fA p ril_ _ _ ,2 0 1 3 ,b y a n d b e tw e e n A R E -S D R E G IO N N O .3 2 ,L L C ,a D e la w a re lim ite d lia b ilty c o m p a n y (L a n d lo rd ),a n d IL L U M IN A ,IN C .,a D e la w a re c o rp o ra tio n (T e n a n t).R E C IT A L S A .L a n d lo rd a n d T e n a n ta re p a rtie s to th a tc e rta in A m e n d e d a n d R e s ta te d L e a s e A g re e m e n td a te d a s o fM a rc h 2 7 ,2 0 1 2 (th e "L e a s e ").P u rs u a n to th e L e a s e ,T e n a n tle a s e s c e rta in p re m is e s c o n s is tin g o fa p p ro x im a te ly 4 9 7 ,0 7 8 re n ta b le s q u a re fe e t("P re m is e s "),lo c a te d a t5 2 0 0 Ilu m in a Wa y ,S a n D ie g o ,C a lifo rn ia .T h e P re m is e s a re m o re p a rtic u la rly d e s c rib e d in th e L e a s e .C a p ita liz e d te rm s u s e d h e re in w ith o u td e fin ito n s h a lh a v e th e m e a n in g s d e fin e d fo rs u c h te rm s in th e L e a s e .B .L a n d lo rd s a fila te ,A R E -S a n F ra n c is c o N o .4 3 ,L L C ,a D e la w a re lim ite d lia b ilty c o m p a n y ,a n d T e n a n ta re c o n c u re n tly h e re w ith e n te rin g in to th a tc e rta in L e a s e A g re e m e n t,d a te d o n o ra b o u th e d a te h e re o f(th e 4 9 9 L e a s e ),p u rs u a n to w h ic h T e n a n ts h a le a s e c e rta in p re m is e s a ta p ro p e rty lo c a te d a t4 9 9 Ilin o is S tre e t,S a n F ra n c is c o ,C a lifo rn ia .C .L a n d lo rd a n d T e n a n td e s ire ,s u b je c to th e te rm s a n d c o n d ito n s s e tfo rth h e re in to ,a m e n d th e L e a s e to ,a m o n g o th e rth in g s ,e x te n d th e L a n d R e n tC o m m e n c e m e n tD a te (a s s u c h te rm is d e fin e d in S e c tio n 3 9 (b )o fth e L e a s e ).

N O W,T H E R E F O R E ,in c o n s id e ra tio n o fth e fo re g o in g R e c ita ls ,w h ic h a re in c o rp o ra te d h e re in b y th is re fe re n c e ,th e m u tu a lp ro m is e s a n d c o n d ito n s c o n ta in e d h e re in ,a n d fo ro th e rg o o d a n d v a lu a b le c o n s id e ra tio n ,th e re c e ip ta n d s u fic ie n c y o fw h ic h a re h e re b y a c k n o w le d g e d ,L a n d lo rd a n d T e n a n th e re b y a g re e a s fo lo w s :1 .L a n d R e n tC o m m e n c e m e n tD a te .N o tw ith s ta n d in g a n y th in g to th e c o n tra ry c o n ta in e d in th e L e a s e ,th e L a n d R e n tC o m m e n c e m e n tD a te is h e re b y e x te n d e d u n tilJ a n u a ry 1 ,2 0 1 8 .2 .B ro k e rs .L a n d lo rd a n d T e n a n te a c h re p re s e n ts a n d w a ra n ts th a tih a s n o td e a ltw ith a n y b ro k e r,a g e n to ro th e rp e rs o n (c o le c tiv e ly ,B ro k e r")in c o n n e c tio n w ith th e tra n s a c tio n re fle c te d in th is F irs tA m e n d m e n ta n d th a tn o B ro k e rb ro u g h ta b o u th is tra n s a c tio n ,o th e rth a n C u s h m a n & Wa k e fie ld o fS a n D ie g o .L a n d lo rd a n d T e n a n te a c h h e re b y a g re e to in d e m n ify a n d h o ld th e o th e rh a rm le s s fro m a n d a g a in s ta n y c la im s b y a n y B ro k e rc la im in g a c o m m is s io n o ro th e rfo rm o fc o m p e n s a tio n b y v irtu e o fh a v in g d e a ltw ith T e n a n to rL a n d lo rd ,a s a p p lic a b le ,w ith re g a rd to th is F irs tA m e n d m e n t.3 .M is c e la n e o u s .a .T h is F irs tA m e n d m e n tis th e e n tire a g re e m e n tb e tw e e n th e p a rtie s w ith re s p e c to th e s u b je c tm a te rh e re o fa n d s u p e rs e d e s a lp rio ra n d c o n te m p o ra n e o u s o ra la n d w rite n a g re e m e n ts a n d d is c u s s io n s .T h is F irs tA m e n d m e n tm a y b e

a m e n d e d o n ly b y a n a g re e m e n tin w ritn g ,s ig n e d b y th e p a rtie s h e re to .b .T h is F irs tA m e n d m e n tis b in d in g u p o n a n d s h a lin u re to th e b e n e fito fth e p a rtie s h e re to a n d th e ire s p e c tiv e s u c c e s s o rs a n d a s s ig n s .c .T h is F irs tA m e n d m e n tm a y b e e x e c u te d in a n y n u m b e ro fc o u n te rp a rts ,e a c h o fw h ic h s h a lb e d e e m e d a n o rig in a l,b u ta lo fw h ic h w h e n ta k e n to g e th e rs h a lc o n s tiu te o n e a n d th e s a m e in s tru m e n t.T h e s ig n a tu re p a g e o fa n y c o u n te rp a rtm a y b e d e ta c h e d th e re fro m w ith o u tim p a irn g th e le g a le fe c to fth e s ig n a tu re (s )th e re o n p ro v id e d s u c h s ig n a tu re p a g e is a ta c h e d to
7 0 5 4 9 0 6 9 6 .2 2 a n y o th e rc o u n te rp a rtid e n tic a lth e re to e x c e p th a v in g a d d ito n a ls ig n a tu re p a g e s e x e c u te d b y o th e rp a rtie s to th is F irs tA m e n d m e n ta ta c h e d th e re to .d .E x c e p ta s a m e n d e d a n d /o rm o d ife d b y th is F irs tA m e n d m e n t,h e L e a s e is h e re b y ra tife d a n d c o n firm e d a n d a lo th e rte rm s o fth e L e a s e s h a lre m a in in fu lfo rc e a n d e fe c t,u n a lte re d a n d u n c h a n g e d b y th is F irs tA m e n d m e n t.In th e e v e n to fa n y c o n flic tb e tw e e n th e p ro v is io n s o fth is F irs tA m e n d m e n ta n d th e p ro v is io n s o fth e L e a s e ,th e p ro v is io n s o fth is F irs tA m e n d m e n ts h a lp re v a il.Wh e th e ro rn o ts p e c ifc a ly a m e n d e d b y th is F irs tA m e n d m e n t,a lo fth e te rm s a n d p ro v is io n s o fth e L e a s e a re h e re b y a m e n d e d to th e e x te n tn e c e s s a ry to g iv e e fe c to th e p u rp o s e a n d in te n to fth is F irs tA m e n d m e n t.[S ig n a tu re s a re o n th e n e x tp a g e .]
S E C O N D A M E N D M E N T T O L E A S E T H IS S E C O N D A M E N D M E N T T O L E A S E (th is "s e c o n d A m e n d m e n t")is m a d e a s ,A $ J "*t'2 0 1 4 ,b y a n d b e tw e e n A R E -S D R E G IO N N O .3 2 ,L L C ,a D e la w a re lim ite d lia b ilty c o m p a n y ("L a n d lo rd "),a n d IL L U M IN A ,lN C .,a D e la w a re c o rp o ra tio n ('T e n a n t").R E C IT A L S A .L a n d lo rd a n d T e n a n ta re n o w p a rtie s to th a tc e rta in A m e n d e d a n d R e s ta te d L e a s e A g re e m e n td a te d a s o fM a rc h 2 7 ,2 0 1 2 ,a s a m e n d e d b y th a tc e rta in F irs tA m e n d m e n to L e a s e d a te d a s o fM a y 2 3 ,2 0 1 3 (a s a m e n d e d ,th e "L e a s e ").P u rs u a n to th e L e a s e ,T e n a n tle a s e s c e rta in p re m is e s c o n s is tin g o fa p p ro x im a te ly 4 9 6 ,0 7 0 re n ta b le s q u a re fe e t("O rig in a lP re m is e s ")lo c a te d a t5 2 0 0 lu m in a Wa y ,S a n D ie g o ,C a lifo rn ia ("P ro je c t").T h e O rig in a lP re m is e s a re m o re p a rtic u la rly d e s c rib e d in th e L e a s e .C a p ita liz e d te rm s u s e d h e re in w ith o u td e fin ito n s h a lh a v e th e m e a n in g s d e fin e d fo rs u c h te rm s in th e L e a s e .B .L a n d lo rd a n d T e n a n td e s ire ,s u b je c to th e te rm s a n d c o n d ito n s s e tfo rth b e lo w ,to a m e n d th e L e a s e to ,a m o n g o th e rth in g s ,e x p a n d th e s iz e o fth e O rig in a lP re m is e s b y a d d in g a p p ro x im a te ly 1 4 9 ,6 6 3 re n ta b le s q u a re fe e to fs p a c e to b e lo c a te d in a to b e c o n s tru c te d b u ild in g a th e P ro je c t.N O W,T H E R E F O R E ,in c o n s id e ra tio n o fth e fo re g o in g R e c ita ls ,w h ic h a re in c o rp o ra te d h e re in b y th is re fe re n c e ,th e m u tu a lp ro m is e s a n d c o n d ito n s c o n ta in e d h e re in ,a n d fo ro th e r

g o o d a n d v a lu a b le c o n s id e ra tio n ,th e re c e ip ta n d s u fic ie n c y o fw h ic h a re h e re b y a c k n o w le d g e d ,L a n d lo rd a n d T e n a n th e re b y a g re e a s fo lo w s :1 .B u ild in s 6 .ln a d d ito n to th e O rig in a lP re m is e s ,c o m m e n c in g o n th e B u ild in g 6 C o m m e n c e m e n tD a te (a s d e fin e d b e lo w ),L a n d lo rd le a s e s to T e n a n t,a n d T e n a n tle a s e s fro m L a n d lo rd ,th a tc e rta in to b e c o n s tru c te d b u ild in g to b e lo c a te d a th e P ro je c ts h o w n o n E x h ib itA a ta c h e d to th is S e c o n d A m e n d m e n t,c o n ta in in g a p p ro x im a te ly 1 4 9 ,6 6 3 re n ta b le s q u a re fe e to fs p a c e (th e "B u ild in g 6 ").2 .D e liv e rv .L a n d lo rd s h a lb e re s p o n s ib le fo rL a n d lo rd 's Wo rk (a s d e fin e d in th e B u ild in g 6 Wo rk L e te ra ta c h e d to th is S e c o n d A m e n d m e n ta s E x h ib itB ).L a n d lo rd s h a ld e liv e rB u ild in g 6 to T e n a n tfo rth e c o m m e n c e m e n to fth e c o n s tru c tio n o fth e B u ild in g 6 T e n a n tlm p ro v e m e n ts (a s d e fin e d in th e B u ild in g 6 Wo rk L e te r)o n th e Wa te rp ro o fR o o fB u ild in g S h e lD e liv e ry D a te ("D e liv e ry "o r"D e liv e d ')w h ic h L a n d lo rd s h a lu s e re a s o n a b le e fo rts to c a u s e to o c c u ro n o rb e fo re A u g u s t8 ,2 0 1 5 ("T a rg e tB u itd in g 6 D e liv e ry D a te ").T h e "W a te rp ro o fR o o fB u ild in g S h e lD e liv e ry D a te "s h a lb e th e d a te th a t(a )T e n a n tis n o tife d a c c u ra te ly b y L a n d lo rd o rth e g e n e ra lc o n tra c to rfo rB u ild in g 6 th a tc o n s tru c tio n o fth e B u ild in g S h e l(a s d e fin e d in th e B u ild in g 6 Wo rk L e te r)is a ta p o in tw h e re B u ild in g 6 h a s a w a te rp ro o fro o f,a n d (b )L a n d lo rd a n d T e n a n tre a s o n a b ly

d e te rm in e th a tB u ild in g 6 is in a c o n d ito n re a s o n a b ly a c c e p ta b le fo rth e c o m m e n c e m e n ta n d c o n tin u in g c o n s tru c tio n o fth e B u ild in g 6 T e n a n tlm p ro v e m e n ts ,s u b je c to re a s o n a b le c o o rd in a tio n b e tw e e n L a n d lo rd a n d T e n a n ta k in g in to a c c o u n tL a n d lo rd 's c o n tin u e d c o n s tru c tio n o fth e B u ild in g S h e ld u rin g T e n a n t's c o n s tru c tio n o fth e T e n a n tlm p ro v e m e n ts .lfL a n d lo rd fa ils to tim e ly D e liv e rB u ild in g 6 ,L a n d lo rd s h a ln o tb e lia b le to T e n a n tfo ra n y lo s s o rd a m a g e re s u ltin g th e re fro m e x c e p ta s e x p re s s ly p ro v id e d fo rb e lo w ,a n d th e L e a s e ,a s a m e n d e d h e re in ,s h a ln o tb e v o id o rv o id a b le .lfL a n d lo rd d o e s n o tD e liv e rB u ild in g 6 w ith in 1 2 0 d a y s o fth e T a rg e tB u ild in g 6 D e liv e ry D a te ("A b a te m e n tT rig g e rD a te ")fo ra n y re a s o n o th e rth a n F o rc e M a je u re a n d T e n a n tD e la y s (a s d e fin e d b e lo w ),th e n T e n a n ts h a lre c e iv e (i)a 1 d a y a b a te m e n to fB a s e R e n to th e n iv is e p a y a b le b y T e n a n tfo rB u ild in g 6 fo re v e ry 1 fu ld a y a fte rth e A b a te m e n tT rig g e rD a te th a th e Wa te rp ro o fR o o fB u ild in g S h e lD e liv e ry D a te d o e s n o to c c u rth ro u g h th e d a te th a tis 6 0 d a y s a fte rth e A b a te m e n tT rig g e rD a te ,a n d (i)a 2 d a y a b a te m e n to fB a s e R e n to th e rw is e p a y a b le b y T e n a n tfo rB u ild in g 6 fo re v e ry 1 7 0 8 2 8 s s 3 6 .1 2 a C o p y ri8 h tO 2 m 5 ,A le x m d ria R c s ls ta tlq u ite iIrc .A L L U J R Ic lrfS R E S E R V E D .C o n rid a ria ls n d P rc p rie ta ry -D o N o l^r,_ i,o ,^.C o p y o rD is rib u te .A b x e & ia a n d th c A le B n d riL o g o @E g is le rc d

m d e @k s o fA le x a n d ria R e a ltrs h te E q u itc s ,In c .

 fu ld a y a fte rth e d a te th a tis 6 0 d a y s a fte rth e A b a te m e n tT rig g e rD a te th a th e Wa te rp ro o fR o o f.B u ild in g S h e lD e liv e ry D a te d o e s n o to c c u r.A s u s e d h e re in ,th e te rm "T e n a n tD e la y "s h a lm e a n :(i)a n y d e la y c a u s e d b y T e n a n tin c o n n e c tio n w ith th e d e s ig n ,p e rm itn g o rc o n s tru c tio n o fth e B u ild in g S h e lth a ta c tu a ly c a u s e s a d e la y o fth e Wa te rp ro o fR o o fB u ild in g S h e lD e liv e ry D a te b e y o n d th e d a te th a tD e liv e ry w o u ld h a v e o th e rw is e o c c u re d b u tfo rs u c h d e la y ;(i)a n y in te rfe re n c e b y T e n a n tw ith L a n d lo rd 's c o n s tru c tio n o fth e B u ild in g S h e lin c lu d in g ,w ith o u tlim ita tio n ,in e a c h c a s e ,(A )d e la y s a ris in g fro m c h a n g e s re q u e s te d b y T e n a n to th e s p e c ifc a tio n s fo rth e B u ild in g S h e ls e tfo rth in S c h e d u le 1 to th e B u ild in g 6 Wo rk L e te r("B a s e S h e lC h a n g e s "),(B )T e n a n t's fa ilu re to p ro v id e L a n d lo rd w ith a n y in fo rm a tio n re q u ire d fro m T e n a n tfo rth e n o rm a lp ro g re s s io n o fL a n d lo rd 's d e s ig n ,p e rm itn g a n d c o n s tru c tio n o fth e B u ild in g S h e lin a c c o rd a n c e w ith th e d e ta ile d s c h e d u le o fk e y m ile s to n e s a ta c h e d to th is S e c o n d A m e n d m e n ta s E x h ib itG a n d s o a s n o to d e la y L a n d lo rd 's s u b s ta n tia lc o m p le tio n o fB u ild in g 6 ,a n d /o r(C )T e n a n t's fa ilu re to re a s o n a b ly c o o rd in a te T e n a n t's c o n s tru c tio n o fth e B u ild in g 6 T e n a n tlm p ro v e m e n ts w ith L a n d lo rd .N o tw ith s ta n d in g a n y th in g to th e c o n tra ry c o n ta in e d h e re in ,T e n a n ts h a lb e s o le ly re s p o n s ib le fo ra lc o s ts in c u re d b y L a n d lo rd in

c o n n e c tio n w ith a n y B a s e S h e lC h a n g e s ;p ro v id e d ,h o w e v e r,n o th in g c o n ta in e d h e re in s h a lo b lig a te L a n d lo rd to a g re e to m a k e a n y s u c h re q u e s te d c h a n g e s .L a n d lo rd h e re b y a g re e s to p e rm itT e n a n te a rly a c c e s s ,a tT e n a n t's s o le ris k a n d e x p e n s e ,to B u ild in g 6 3 0 d a y s p rio rto th e Wa te rp ro o fR o o fB u ild in g S h e lD e liv e ry D a E ("E a rly A c c e s s D a te ")to c o m m e n c e p e rfo rm in g th e B u ild in g 6 T e n a n tlm p ro v e m e n ts ,p ro v id e d th a t(i)T e n a n t's a c c e s s a n d w o rk is c o o rd in a te d w ith L a n d lo rd 's a rc h ite c ta n d g e n e ra lc o n tra c to ra n d c o m p lie s w ith th e L e a s e a n d a lo th e re a s o n a b le re s tric tio n s a n d c o n d ito n s L a n d lo rd m a y im p o s e ,a n d (i)a ls u c h a c c e s s a n d w o rk b y T e n a n ts h a lb e d u rin g n o rm a lb u s in e s s h o u rs o ro th e rw is e a ts u c h o th e rtim e s a s a re re a s o n a b ly d e s ig n a te d b y L a n d lo rd .N o tw ith s ta n d in g th e fo re g o in g ,a n y s u c h e n try a n d w o rk b y T e n a n ta n d a n y T e n a n tP a rty s h a lc o m p ly w ith a le s ta b lis h e d s a fe ty p ra c tic e s o fL a n d lo rd 's c o n tra c to r,a n d T e n a n ta n d a n y T e n a n tP a rty s h a ln o tu n re a s o n a b ly in te rfe re w ith th e p e rfo rm a n c e o fL a n d lo rd 's Wo rk .L a n d lo rd s h a lh a v e th e rig h to e x c lu d e T e n a n ta n d a n y T e n a n tP a rty fro m B u ild in g 6 ifs u c h in te rfe re n c e is n o tre s o lv e d b y T e n a n tin a m a n n e re a s o n a b ly a c c e p ta b le to L a n d lo rd w ith in 1 d a y a fte rL a n d lo rd 's w rite n n o tic e to T e n a n t.L a n d lo rd a g re e s to u s e re a s o n a b le e fo rts to
c o o p e ra te w ith T e n a n tin T e n a n t's p e rfo rm a n c e o fT e n a n t's Wo rk ;p ro v id e d ,h o w e v e r,th a tin n o e v e n ts h a lL a n d lo rd h a v e a n y o b lig a tio n to in c u ra n y a d d ito n a lo ro v e rtim e c o s ts in c o n n e c tio n w ith s u c h c o o p e ra tio n w ith T e n a n t.T h e "B u ild in g 6 C o m m e n c e m e n tD a te "s h a lb e M a rc h 2 3 ,2 0 1 6 ,re g a rd le s s o fw h e th e ro rn o tT e n a n th a s c o m p le te d th e B u ild in g 6 T e n a n tlm p ro v e m e n ts ;p ro v id e d ,h o w e v e r,th a ts u c h d a te s h a lb e d e e m e d e x te n d e d b y o n e (1 )d a y fo re a c h d a y o fd e la y d u e to (i)F o rc e M a je u re d e la y s ,o r(i)d e la y s c a u s e d b y L a n d lo rd 's b re a c h o fits o b lig a tio n s u n d e rth is S e c o n d A m e n d m e n tw h ic h a c tu a ly c a u s e a d e la y o fT e n a n t's Wo rk ,p ro v id e d th a tn o s u c h d e la y s h a lb e d e e m e d to h a v e c o m m e n c e d u n le s s T e n a n th a s p ro v id e d L a n d lo rd w ith w rite n n o tic e o fs u c h d e la y .S u c h M a rc h 2 3 ,2 0 1 6 d a te s h a la ls o b e d e e m e d e x te n d e d o n e (1 )d a y fo re a c h d a y b e y o n d A u g u s t8 ,2 0 1 5 ,th a tL a n d lo rd fa ils ,fo ra n y re a s o n o th e rth a n T e n a n tD e la y s ,to d e liv e rth e B u ild in g S h e lto T e n a n tin th e c o n d ito n re q u ire d p u rs u a n to th e s e c o n d p a ra g ra p h o fth is S e c tio n 2 .U p o n th e re q u e s to fL a n d lo rd ,T e n a n ts h a le x e c u te a n d d e liv e ra fa c tu a ly c o re c tw rite n a c k n o w le d g m e n to fth e E a rly A c c e s s D a te ,th e Wa te rp ro o fR o o fB u ild in g S h e lD e liv e ry D a te a n d th e B u ild in g 6 C o m m e n c e m e n tD a te in s u b s ta n tia ly th e fo rm o fth e
"A c k n o w le d g e m e n to fC o m m e n c e m e n tD a te "a ta c h e d to th e L e a s e a s E x h ib itD ;o ro v id e d ,h o w e v e r,T e n a n t's fa ilu re to e x e c u te a n d d e liv e rs u c h a c k n o w le d g m e n ts h a ln o ta fe c tL a n d lo rd 's o rT e n a n t's rig h ts h e re u n d e r.T e n a n ta c k n o w le d g e s th a tL a n d lo rd s h a lre q u ire a c c e s s to B u ild in g 6 fo lo w in g th e Wa te rp ro o fR o o fB u ild in g S h e lD e liv e ry D a te in o rd e rto c o m p le te th e c o n s tru c tio n o fth e B u ild in g S h e l.L a n d lo rd a n d its c o n tra c to rs a n d a g e n ts s h a lh a v e th e rig h to e n te rB u ild in g 6 fo lo w in g th e Wa te rp ro o fR o o fB u ild in g S h e lD e liv e ry D a te to c o m p le te th e B u ild in g S h e l.T e n a n ta g re e s to c o o rd in a te s u c h e n try w ith L a n d lo rd b u tT e n a n ta c k n o w le d g e s th a tL a n d lo rd 's c o m p le tio n o fth e B u ild in g S h e lm a y a d v e rs e ly a fe c tT e n a n t's c o n s tru c tio n o fth e B u ild in g 6 T e n a n tlm p ro v e m e n ts C o p y rig h tO 2 m 5 ,A le x a n d ria R rs lis h b Iiq u ile s ,ln c .A L L (-l)R IG IT S R E S E R V E D .C o n lid $ tia la n d P rc p rie ta ry -D o N o r^,Y *R r^.C o p y o rq s rib u e .A b ra n d ria m d th e A le x a o d ria L o g o re -'B g is c r d m d c ru rk s o fA le re d ria R e a ls h te E q u itc s ,ltrc .7 0 8 2 8 5 5 3 6 .r2
(a s d e fin e d in th e B u ild in g 6 Wo rk L e te r).L a n d lo rd s h a lre a s o n a b ly c o o p e ra te w ith T e n a n tin .o rd e rto m in im iz e s u c h a d v e rs e e fe c ts .E x c e p ta s s e tfo rth in th e B u ild in g 6 Wo rk L e te r:(i)T e n a n ts h a la c c e p tB u ild in g 6 in its c o n d ito n a s o fth e Wa te rp ro o fR o o fB u ild in g S h e lD e liv e ry D a te ;(i)e x c e p ta s o th e rw is e p ro v id e d in th e B u ild in g 6 Wo rk L e te r,L a n d lo rd s h a lh a v e n o o b lig a tio n fo ra n y d e fe c ts in B u ild in g 6 .A n y o c c u p a n c y o fB u ild in g 6 b y T e n a n tb e fo re th e B u ild in g 6 C o m m e n c e m e n tD a te s h a lb e s u b je c to a lo fth e te rm s a n d c o n d ito n s o fth e L e a s e ,e x c lu d in g th e o b lig a tio n to p a y B a s e R e n t.T e n a n ta g re e s a n d a c k n o w le d g e s th a tn e ith e rL a n d lo rd n o ra n y a g e n to fL a n d lo rd h a s m a d e a n y re p re s e n ta tio n o rw a ra n ty w ith re s p e c to th e s u ita b ilty o fB u ild in g 6 fo rth e c o n d u c to fT e n a n t's b u s in e s s ,a n d T e n a n tw a iv e s a n y im p lie d w a ra n ty th a tB u ild in g 6 is s u ita b le fo rth e P e rm ite d U s e .3 .D e fin ito n o fP re m is e s .C o m m e n c in g o n th e B u ild in g 6 C o m m e n c e m e n tD a te ,th e d e fin e d te rm "P re m is e s "o n p a g e 1 o fth e L e a s e s h a lb e d e le te d in its e n tire ty a n d re p la c e d w ith th e fo lo w in g :"P re m is e s :T h a tc e rta in p o rtio n o fth e P ro je c tc o n s is tin g o f(i)a b u ild in g c o n ta in in g a p p ro x im a te ly 1 7 1 ,3 4 0 re n ta b le s q u a re fe e t("B u ild in g 1 "),(ia b u ild in g c o n ta in in g a p p ro x im a te ly 1 5 9 ,2 7 2 re n ta b le s q u a re fe e t("B u ild in g 2 "),(ia c e n tra lp la n tb u ild in g c o n ta in in g a p p ro x im a te ly 1 5 ,9 6 9 re n ta b le s q u a re fe e t
(re fe re d to h e re in a s th e "G e n tra lP Ia n tB u ild in g "o r"B u ild in g 3 "),(iv )th a tc e rta in o fic e /la b o ra to ry b u ild in g c o n ta in in g a p p ro x im a te ly 1 2 7 ,3 7 3 re n ta b le s q u a re fe e t("B u ild in g 4 "),(v )th a tc e rta in te n a n ta c tiv ity c e n te rb u ild in g c o n ta in in g a p p ro x im a te ly 2 2 ,1 1 6 re n ta b le s q u a re fe e t(re fe re d to h e re in a s th e "A c tiv ity C e n te r"o r"B u ild in g 5 "),a n d (v i)th a tc e rta in b u ild in g c o n ta in in g a p p ro x im a te ly 1 4 9 ,6 6 3 re n ta b le s q u a re fe e t("B u ild in g 6 ").B u ild in g 1 ,B u ild in g 2 ,B u ild in g 3 ,B u ild in g 4 ,B u ild in g 5 ,B u ild in g 6 a n d th e C e n tra lP la n ta re a la s s h o w n o n E x h ib itA .B u ild in g 1 ,B u ild in g 2 ,B u ild in g 3 ,B u ild in g 4 ,B u ild in g 5 a n d B u ild in g 6 a re c o le c tiv e ly re fe re d to h e re in a s th e "B u ild in g s ".A s o fth e B u ild in g 6 C o m m e n c e m e n tD a te ,E x h ib itA to th e L e a s e s h a lb e a m e n d e d to in c lu d e B u ild in g 6 a s s h o w n o n E x h ib itA a ta c h e d to th is S e c o n d A m e n d m e n t.R e n ta b le A re a o fP re m is e s a n d P ro ie c t.C o m m e n c in g o n th e B u ild in g 6 C o m m e n c e m e n tD a te ,th e d e fin e d te rm s "R e n ta b le A re a o fP re m is e s "a n d "R e n ta b le A re a o fP ro J e c t"o n p a g e 1 o fth e L e a s e s h a lb e d e le te d in th e ire n tire ty a n d re p la c e d w ith th e fo lo w in g :"R e n ta b le A re a o fP re m is e s :6 4 5 ,7 3 3 re n ta b le s q u a re fe e t"R e n ta b le A re a o fP ro je c t:6 4 5 ,7 3 3 re n ta b le s q u a re fe e t"B a s e R e n t.(a )O rig in a lP re m is e s .T e n a n ts h a lc o n tin u e to p a y B a s e R e n tfo rth e O rig in a lP re m is e s a s p ro v id e d fo rin th e L e a s e th ro u g h th e e x p ira tio n d a te o fth e L e a s e .(b )B u ild in g 6 .C o m m e n c in g o n th e
B u ild in g 6 C o m m e n c e m e n tD a te ,T e n a n ts h a lp a y B a s e R e n tfo rB u ild in g 6 in th e a m o u n to f$ 1 .3 8 p e re n ta b le s q u a re fo o to fB u ild in g 6 p e rm o n th .B a s e R e n tp a y a b le fo rB u ild in g 6 s h a lb e in c re a s e d o n e v e ry o th e ra n n iv e rs a ry o fth e B u ild in g 6 C o m m e n c e m e n tD a te (e a c h a "B u ild in g 6 A d ju s tm e n tD a te ")b y m u ltip ly in g th e B a s e R e n tp a y a b le w ith re s p e c tB u ild in g 6 im m e d ia te ly b e fo re s u c h B u ild in g 6 A d ju s tm e n tD a te b y th e R e n tA d ju s tm e n tP e rc e n ta g e a n d a d d in g th e re s u ltin g a m o u n to th e B a s e R e n tp a y a b le w ith re s p e c to B u ild in g 6 im m e d ia te ly b e fo re s u c h B u ild in g 6 A d ju s tm e n tD a te .4 .5 .7 0 8 2 8 5 5 3 6 .1 2 ,^C o p y riS h rO 2 m 5 ,A le x a n d d u R ls ls (a te l4 u ite !,ltrc ,A I-L L IJ R IC IT S R F S E R V E D .C o n fid e ria ls n d P ro frie try -D o N o t^,iR IA -C o p y o rD is rib u ts -A b rm & ia ild lh e A le ra n d riL o g o rc rg is te re d m d e M k s o fA le x a n d ia R e a l!$ a e E q u itc c .ln c .
7 .T e n a n t's S h a re o fO p e ra tin q E x p e n s e s .T e n a n ts h a lb e re q u ire d to p a y a lO p e ra tin g .E x p e n s e s w ith re s p e c to B u ild in g 6 a n d T e n a n t's S h a re o fO p e ra tin g E x p e n s e s s h a lc o n tin u e to b e 1 0 0 % .F o rth e a v o id a n c e o fa n y d o u b t,n o th in g c o n ta in e d in th is S e c o n d A m e n d m e n tis in te n d in g to lim ito re d u c e th e O p e ra tin g E x p e n s e s w h ic h T e n a n tis re q u ire d to p a y fo rth e P ro je c t(in c lu d in g ,w ith o u tlim ita tio n ,B u ild in g 6 )p rio rto th e B u ild in g 6 C o m m e n c e m e n tD a te .R e -M e a s u re m e n t.(a )O rig in a lP re m is e s .L a n d lo rd a n d T e n a n ta g re e th a th e re n ta b le s q u a re fo o ta g e o fth e O rig in a lP re m is e s s e tfo rth in th e L e a s e (a n d th is S e c o n d A m e n d m e n t)is c o n c lu s iv e ly d e e m e d to b e th e re n ta b le s q u a re fo o ta g e o fth e O rig in a lP re m is e s a n d ,n o tw ith s ta n d in g a n y th in g to th e c o n tra ry c o n ta in e d in th e L e a s e ,th e re n ta b le s q u a re fo o ta g e o fth e O rig in a lP re m is e s s h a ln o tb e s u b je c to re -m e a s u re m e n t.(b )B u ild in g 6 .L a n d lo rd a n d T e n a n ta g re e th a th e re n ta b le s q u a re fo o ta g e o fB u ild in g 6 is c o n c lu s iv e ly d e e m e d to b e 1 4 9 ,6 6 3 re n ta b le s q u a re fe e ta n d ,n o tw ith s ta n d in g a n y th in g to th e c o n tra ry c o n ta in e d in th e L e a s e o rth is S e c o n d A m e n d m e n t,h e re n ta b le s q u a re fo o ta g e o fB u ild in g 6 s h a ln o tb e s u b je c to re -m e a s u re m e n t.P a rk in q .S e c tio n 1 0 o fth e L e a s e is h e re b y d e le te d in its e n tire ty a n d re p la c e d w ith th e fo lo w in g :'1 0 .P a rk in g .S u b je c to a lm a te rs o fre c o rd ,F o rc e M a je u re ,a
T a k in g (a s d e fin e d in S e c tio n 1 9 b e lo w ),th e P ID P e rm ita n d th e e x e rc is e b y L a n d lo rd o fits rig h ts h e re u n d e r,T e n a n ts h a lh a v e th e rig h to u s e a lo fth e p a rk in g s p a c e s a th e P ro je c tfo rth e firs t3 6 m o n th s a fte rth e ln ita lC o m m e n c e m e n tD a te .T e n a n t's rig h to u s e a lo fth e p a rk in g s p a c e s a th e P ro je c ts h a lb e e x te n d e d fo rs o lo n g a s a lo fT e n a n t's E x p a n s io n R ig h ts (a s d e fin e d in S e c tio n 3 9 )c o n tin u e in fu lfo rc e a n d e fe c t.A lo fT e n a n t's p a rk in g rig h ts u n d e rth is L e a s e s h a l,d u rin g th e B a s e T e rm ,b e a tn o a d d ito n a lc o s to T e n a n t,e x c e p ta s p ro v id e d fo rh e re in .N o tw ith s ta n d in g a n y th in g to th e c o n tra ry c o n ta in e d h e re in ,L a n d lo rd a n d T e n a n ta c k n o w le d g e a n d a g re e th a ta lp a rk in g a th e P ro je c t(in c lu d in g ,w ith o u tlim ita tio n ,th e n u m b e ro fp a rk in g s p a c e s a v a ila b le in th e P a rk in g S tru c tu re (s )(a s d e fin e d b e lo w )a n d in th e b a la n c e o fth e P ro je c t)s h a lb e re q u ire d a ta ltim e s to s a tis fy a lL e g a lR e q u ire m e n ts fo rth e P ro je c t.N o tw ith s ta n d in g a n y th in g to th e c o n tra ry c o n ta in e d in th is L e a s e ,T e n a n tm a y o n ly e le c to e x e rc is e a n y o fits E x te n s io n R ig h ts u n d e rS e c tio n 4 0 w ith re s p e c to le s s th a n a lo fth e B u ild in g s ,ifa s o fth e c o m m e n c e m e n td a te o fth e a p p lic a b le E x te n s io n T e rm ,(i)th e re a re a tle a s t3 p a rk in g s p a c e s p e r1 ,0 0 0 re n ta b le s q u a re fe e ta v a ila b le fo re a c h B u ild in g w ith re s p e c to w h ic h T e n a n td o e s n o te x te n d th e T e rm o fth e L e a s e a n d th o s e p a rk in g s p a c e s a re in c lo s e

p ro x im ity to th e a p p lic a b le B u ild in g ,a n d (i)th e re a re s u fic ie n tp a rk in g s p a c e s a v a ila b le fo re a c h B u ild in g w ith re s p e c to w h ic h T e n a n th a s e le c te d to e x te n d th e T e rm o fth e L e a s e to c o m p ly w ith a p p lic a b le L e g a lR e q u ire m e n ts (b u tin n o e v e n tn o le s s th a n 2 .5 p a rk in g s p a c e s p e r1 ,0 0 0 re n ta b le s q u a re fe e t).T e n a n ta g re e s to in d e m n ify ,d e fe n d ,s a v e a n d h o ld L a n d lo rd h a rm le s s fro m a n d a g a in s ta n y a n d a lC la im s (in c lu d in g ,w ith o u tlim ita tio n ,fro m a n y G o v e rn m e n ta lA u th o rity )a ta n y tim e (s )(in c lu d in g ,w ith o u tlim ita tio n ,d u rin g th e c o n s tru c tio n o fa n y B u ild in g (s )a n d /o rP a rk in g S tru c tu re (s )in c o n n e c tio n w ith th e re n o tb e in g s u fic ie n tp a rk in g s p a c e s a th e P ro je c ta s m a y b e re q u ire d b y a p p lic a b le L e g a lR e q u ire m e n ts .lfT e n a n t's E x p a n s io n R ig h ts e x p ire a n d /o rL a n d lo rd c o m m e n c e s c o n s tru c tin g a n y n e w b u ild in g s a th e P ro je c t("N e w G o n s tru c tio n "),T e n a n ts h a l,s u b je c to th e p ro v is io n s o fth is S e c tio n 1 0 ,h a v e th e rig h t,in c o m m o n w ith o th e rte n a n ts o fth e P ro je c tp ro ra ta in a c c o rd a n c e w ith th e re n ta b le a re a o fth e P re m is e s a n d th e re n ta b le a re a s o fth e P ro je c to c c u p ie d b y s u c h o th e rte n a n ts ,to p a rk in th o s e a re a s d e s ig n a te d fo rn o n -re s e rv e d p a rk in g ,s u b je c tin e a c h c a s e to L a n d lo rd 's c o m m e rc ia ly re a s o n a b le ru le s a n d re g u la tio n s ;p ro v id e d ,h o w e v e r,th a tL a n d lo rd m a y re d u c e th e a lo c a tio n to T e n a n to le s s th a n T e n a n t's p ro ra ta s h a re ifT e n a n t's p ro ra ta
s h a re w o u ld re s u ltin a n y B u ild in g (s )a th e P ro je c tn o tb e in g le a s e d in th e ire n tire ty b y T e n a n th a v in g 8 .A C o p y rig h rO 2 0 0 .5 ,A le x e & irR e ljs le Iq u itb s ,ln o .A 1 "L L IJ R IC IT S R E S E R V E D .C o n fid c rtia la rd P ro p d o t{ry -D o N o l^r,x in R I^.C o p y o rD is rib lk .A la x a d lia a ld th e A le x e d d rL o g o e re g is rm d m d e @rk s o fA le x & n d tia R e a ltrs ta te E q u itc a ,:n c .'1 0 8 2 8 5 5 3 6 .1 2
1 0 .le s s th a n 3 p a rk in g s p a c e p e r1 ,0 0 0 re n ta b le s q u a re fe e t.L a n d lo rd m a y a lo c a te p a rk in g s p a c e s .a m o n g T e n a n ta n d o th e rte n a n ts in th e P ro je c ta s d e s c rib e d a b o v e ifL a n d lo rd d e te rm in e s th a tp a rk in g fa c ilte s a re b e c o m in g c ro w d e d .lfL a n d lo rd c o m m e n c e s N e w C o n s tru c tio n ,T e n a n tm a y e le c to m a rk a s re s e rv e d o rs e p a ra te a n d s e c u re its p a rk in g fro m th e b a la n c e o fth e P ro je c t,in w h ic h c a s e ,L a n d lo rd s h a lre a s o n a b ly c o o p e ra te w ith T e n a n to e fe c tu a te ,ifp o s s ib le a n d a tT e n a n t's s o le c o s ta n d e x p e n s e ,s u c h a s e p a ra tio n o fT e n a n t's p a rk in g in a m a n n e re a s o n a b ly a c c e p ta b le to L a n d lo rd a n d T e n a n t.L a n d lo rd s h a ln o tb e re s p o n s ib le fo re n fo rc in g T e n a n t's p a rk in g rig h ts a g a in s ta n y th ird p a rtie s ,in c lu d in g o th e rte n a n ts o fth e P ro je c t.N o tw ith s ta n d in g a n y th in g to th e c o n tra ry c o n ta in e d h e re in ,th e n u m b e ro fp a rk in g s p a c e s a lo c a te d to T e n a n tfo rB u ild in g 6 (a n d /o ra n y o th e rE x p a n s io n B u ild in g s )s h a lb e re d u c e d b y th e n u m b e ro fp a rk in g s p a c e w h ic h L a n d lo rd re a s o n a b ly d e te rm in e s c a n n o tb e c o n s tru c te d o ru s e d a s a re s u lto fa n y g e n e ra to r(s ),n o to e x c e e d 2 g e n e ra to rs ,a n d /o ra n y H V A C p a d (s )/e n c lo s u re (s )c o n s tru c te d in c o n n e c tio n w ith th e T e n a n t's u s e o fB u ild in g 6 (a n d /o ra n y o th e rE x p a n s io n B u ild in g s ).T e n a n ta c k n o w le d g e s a n d a g re e s th a th e lo c a tio n a n d s c re e n in g (a n d re la te d la n d s c a p in g

w ith re s p e c to )a n y s u c h g e n e ra to (s )a n d /o rH V A C p a d (s )/e n c lo s u re (s )s h a lb e s u b je c to L a n d lo rd 's p rio rw rite n a p p ro v a l(n o to b e u n re a s o n a b ly w ith h e ld ,c o n d ito n e d o rd e la y e d )a n d T e n a n ts h a lb e re s p o n s ib le fo rb e a rin g a lc o s ts in c o n n e c tio n fo re g o in g ;p ro v id e d ,h o w e v e r,th a tT e n a n tm a y u s e th e B u ild in g 6 T lA lo w a n c e to p a y fo rth e s a m e in c o n n e c tio n w ith B u ild in g 6 ."P e rm ite d U s e .ln a d d ito n to th e P e rm ite d U s e (a s p ro v id e d fo ro n th e firs tp a g e o fth e L e a s e ),T e n a n ts h a lb e e n tile d to u s e B u ild in g 6 fo rm a n u fa c tu rin g p u rp o s e s in c o m p lia n c e w ith a p p lic a b le L e g a lR e q u ire m e n ts .N o tw ith s ta n d in g a n y th in g to th e c o n tra ry c o n ta in e d in th e L e a s e o rth a tc e rta in le te ra g re e m e n tb e tw e e n L a n d lo rd a n d T e n a n td a te d M a y 1 0 ,2 0 1 3 ("L e te rA g re e m e n t"),T e n a n ts h a lb e e n tile d to u s e B u ild in g 5 a n d th e a m p h ith e a te ra d ja c e n to B u ild in g 5 ,s u b je c to th e te rm s a n d c o n d ito n s o fth e L e a s e a n d th e L e te rA g re e m e n t,fo rle c tu re s ,c o n c e rts ,p la y s ,fu n d ra is in g a c tiv ite s a n d /o rs im ila re v e n ts c o n d u c te d b y o rfo rc e rta in b u s in e s s e s ,n o n -p ro fite n tie s a n d /o rin d iv id u a ls ,w h e th e ro rn o th e y a re e n g a g e d in th e h e a lth a n d life s c ie n c e s in d u s try .A lte ra tio n s .S e c tio n 1 2 o fth e L e a s e is h e re b y a m e n d e d a s fo lo w s :(a )T h e la n g u a g e in c la u s e (v i)n th e s e c o n d s e n te n c e o fth e firs tp a ra g ra p h o fS e c tio n 1 2 w h ic h re a d s a s fo lo w s "(v i)d o n o tin v o lv e a u s e o fth e P re m is e s th a tis
in c o n s is te n tw ith th e c u re n tu s e o fth e P re m is e s ,w ith o u tL a n d lo rd 's p rio ra p p ro v a lifth e c o s to fa n y s u c h A lte ra tio n (e x c lu d in g c a rp e tin g a n d p a in tin g )d o e s n o te x c e e d $ 1 0 0 ,0 0 0 a n d th e a g g re g a te c o s to fa ls u c h A lte ra tio n s (e x c lu d in g c a rp e tin g a n d p a in tin g )in a n y 1 2 m o n th p e rio d d o e s n o te x c e e d $ 3 0 0 ,0 0 0 "is h e re b y d e le te d in its e n tire ty a n d re p la c e d w ith th e fo lo w in g :"(v i)d o n o tin v o lv e a u s e o fth e P re m is e s th a tis in c o n s is te n tw ith th e c u re n tu s e o fth e P re m is e s ,w ith o u tL a n d lo rd 's p rio ra p p ro v a l,a n d ifth e c o s to fa n y s u c h A lte ra tio n (e x c lu d in g c a rp e tin g a n d p a in tin g )d o e s n o te x c e e d $ 4 0 0 ,0 0 0 p e ro c c u re n c e a n d th e a g g re g a te c o s to fa ls u c h A lte ra tio n s (e x c lu d in g c a rp e tin g a n d p a in tin g )in a n y 1 2 m o n th p e rio d d o e s n o te x c e e d $ 2 ,0 0 0 ,0 0 0 ".(b )N o tw ith s ta n d in g a n y th in g to th e c o n tra ry c o n ta in e d in th e th ird to la s ts e n te n c e o fth e s e c o n d p a ra g ra p h o fS e c tio n 1 2 o fth e L e a s e ,in n o e v e n ts h a lT e n a n tb e re q u ire d to p a y to L a n d lo rd a n y p la n re v ie w ,c o o rd in a tio n ,s c h e d u lin g o rs u p e rv is io n fe e in c o n n e c tio n w ith a n y N o tic e -O n ly A lte ra tio n s .E x te n s io n R iq h t.F o rth e a v o id a n c e o fd o u b t,h e E x te n s io n R ig h ts g ra n te d to T e n a n tp u rs u a n to S e c tio n 4 0 (a )o fth e L e a s e s h a la p p ly to B u ild in g 6 .N o tw ith s ta n d in g a n y th in g to th e c o n tra ry c o n ta in e d in S e c tio n 4 0 (a ),ifT e n a n te le c ts to e x e rc is e a n y E x te n s io n R ig h t(s )fo rB u ild in g 6 p u rs u a n to
S e c tio n 4 0 (a ),u p o n th e c o m m e n c e m e n to fth e a p p lic a b le E x te n s io n T e rm ,B a s e R e n t1 1 .C o p y rig h O 2 0 0 5 ,A le x a rd lid tc rlE s la E L q u ite s ,ln c .A L l,U J R IC I-S R E S E R V E D .C o n fid n ria la n d P ro p d o td y -D o N o tn ,;iR rA C o p y o rD is rib u k .A le x ild ria e d th c A lc x a n d d a L o g o @'re g is m d m d e m rls o fA le x a rd ria R e s lL rs E re E q u ite s ,ln c .7 0 8 2 8 5 5 3 6 .1 2
1 2 .fo rB u ild in g 6 s h a lb e p a y a b le a th e B u ild in g 6 M a rk e tR a te (a s d e fin e d b e lo ru ).B a s e R e n tfo r.B u ild in g 6 s h a lth e re a fte rb e a d ju s te d o n e a c h a n n iv e rs a ry o fth e c o m m e n c e m e n td a te o fs u c h E x te n s io n T e rm b y a p e rc e n ta g e a s d e te rm in e d b y L a n d lo rd a n d a g re e d to b y T e n a n ta th e tim e th e B u ild in g 6 M a rk e tR a te is d e te rm in e d (o ra s p a rto fth e d e te rm in a tio n o fB u ild in g 6 M a rk e tR a te a s p ro v id e d in S e c tio n 4 0 (b )ifth e p a rtie s a re u n a b le to a g re e o n th e B u ild in g 6 M a rk e tR a te ).A s u s e d h e re in ,"B u ild in g 6 M a rk e tR a te "s h a lm e a n th e ra te th a tc o m p a ra b le la n d lo rd s o fc o m p a ra b le b u ild in g s h a v e a c c e p te d in c u re n tra n s a c tio n s fro m n o n -e q u ity (i.e .,n o tb e in g o fe re d e q u ity in th e b u ild in g s ),n o n re n e w a l,n o n -e x p a n s io n a n d n o n a fila te d te n a n ts o fs im ila rfin a n c ia ls tre n g th fo rs p a c e o fc o m p a ra b le s iz e ,q u a lity (b a s e d o n th e B u ild in g S h e la n d th e d e p re c ia te d a m o u n to fth e B u ild in g 6 T e n a n tlm p ro v e m e n ts p a id fo rw ith th e B u ild in g 6 T lA lo w a n c e (a s s u m in g a 3 8 -y e a ra m o rtiz a tio n s c h e d u le )a n d th e la n d v a lu e fo rB u ild in g 6 a g re e d u p o n b y th e p a rtie s (fo rth e a v o id a n c e o fd o u b t,h e "la n d v a lu e "fo rB u ild in g 6 s h a lm e a n th a tp o rtio n o fth e P ro je c ta lo c a te d to o re q u ire d fo rB u ild in g 6 a lo n g w ith th e p a rk in g re q u ire d p u rs u a n to a p p lic a b le L e g a lR e q u ire m e n ts in c o n n e c tio n w ith B u ild in g 6 a n d n o ta n y e x c e s s la n d ),p a rk in g s p a c e s a lo c a te d to B u ild in g 6 a n d flo o rh e ig h tin firs t
c la s s m a n u fa c tu rin g /re s e a rc h a n d d e v e lo p m e n tb u ild in g s ,a s a p p lic a b le ,in th e U n iv e rs ity T o w n e C e n te ra re a o fS a n D ie g o fo ra c o m p a ra b le te rm ,w ith th e d e te rm in a tio n o fth e B u ild in g 6 M a rk e tR a te to ta k e in to a c c o u n ta lre le v a n tfa c to rs ,in c lu d in g te n a n tin d u c e m e n ts ,le a s in g c o m m is s io n s ,a lo w a n c e s o rc o n c e s s io n s ,ifa n y .lfth e a lo w a n c e s ,fre e re n ta n d /o ro th e re c o n o m ic c o n c e s s io n s g ra n te d w ith re s p e c to B u ild in g 6 p u rs u a n to th is S e c tio n 1 1 d ife rfo m th o s e g ra n te d in th e c o m p a ra b le tra n s a c tio n s ,a n a d ju s tm e n to th e a p p lic a b le B u ild in g 6 M a rk e tR a te s h a lb e m a d e o n a b a s is c o n s is te n tw ith th e a d ju s tm e n ts c o m m o n ly m a d e in th e m a rk e tfo rc o m p a ra b le d ife re n o e s in c o n c e s s io n p a c k a g e s .F o rth e a v o id a n c e o fd o u b t,in n o e v e n ts h a lth e B u ild in g 6 M a rk e tR a te in c lu d e th e c o s to fa n y te n a n tim p ro v e m e n ts o ro th e ra lte ra tio n s to B u ild in g 6 p a id fo rs o le ly b y T e n a n t.E a rlv T e rm in a tio n R iq h t.F o rth e a v o id a n c e o fd o u b t,ifT e n a n te le c ts to e x e rc is e its T e rm in a tio n R ig h tp u rs u a n to S e c tio n 4 2 o fth e L e a s e ,th e le a s e w ith re s p e c to B u ild in g 6 s h a la ls o te rm in a te o n th e T e rm in a tio n D a te a n d th e E a rly T e rm in a tio n P a y m e n tp a y a b le b y T e n a n ts h a la ls o in c lu d e (i)a n a m o u n te q u a lto 6 m o n th s o fR e n tw ith re s p e c to B u ild in g 6 a th e a m o u n tp a y a b le w ith re s p e c to B u ild in g 6 b y T e n a n ta s o fth e d a te th a tT e n a n td e liv e rs th e T e rm in a tio n N o tic e to L a n d lo rd ,
a n d (i)a n a m o u n te q u a lto ,a s c a lc u la te d b y L a n d lo rd a n d p ro v id e d to T e n a n tw ith in 1 0 b u s in e s s d a y s a fte rT e n a n td e liv e rs a w rite n re q u e s th e re fo rto L a n d lo rd ,(1 )th e u n a m o rtiz e d B u ild in g 6 T lA lo w a n c e ,a n d (2 )a lo fth e u n a m o rtiz e d th ird p a rty le a s in g c o m m is s io n s p a id b y L a n d lo rd in c o n n e c tio n w ith T e n a n t's le a s e o fB u ild in g 6 ,w h ic h a m o u n ts in th is c la u s e 1 2 (i)s h a lb e s u b je c to v e rifc a tio n b y T e n a n t.R is h to E x o a n d .S e c tio n 3 9 o fth e L e a s e is h e re b y d e le te d in its e n tire ty a n d re p la c e d w ith th e fo lo w in g :'3 9 .R ig h to E x p a n d .(a )E x p a n s io n in th e P ro je c t.S u b je c to th e p ro v is io n s o fth is S e c tio n 3 9 ,T e n a n ts h a lh a v e th e rig h t,b u tn o th e o b lig a tio n ,o n o rb e fo re D e c e m b e r3 1 ,2 0 1 8 ("E x p a n s io n R ig h tE x p ira tio n D a te ")to e x p a n d th e P re m is e s (th e "E x p a n s io n R ig h ts ")to in c lu d e th e to b e c o n s tru c te d b u ild in g s (in c lu d in g a n y re la te d s u b te ra n e a n p a rk in g )c o n te m p la te d o n th e p ro je c ts ite p la n a ta c h e d h e re to a s E x h ib itH ("P ro je c tS ite P Ia n ")a s (i)B u ild in g 7 ,w h ic h L a n d lo rd c u re n tly c o n te m p la te s w ilc o n ta in 4 flo o rs a n d a to ta lo fa p p ro x im a te ly 1 9 5 ,0 0 0 re n ta b le s q u a re fe e to fla b o ra to ry a n d /o ro fic e s p a c e ("B u ild in g 7 '),(iB u ild in g 8 ,w h ic h L a n d lo rd c u re n tly c o n te m p la te s w ilc o n ta in 4 flo o rs a n d a to ta lo fa p p ro x im a te ly 1 9 8 ,0 0 0 re n ta b le s q u a re fe e to fla b o ra to ry a n d /o ro fic e s p a c e ("B u ild in g 8 "),a n d (i)B u ild in g 9 ,w h ic h L a n d lo rd c u re n tly c o n te m p la te s w ilc o n ta in 1 flo o ra n d a to ta lo f
a p p ro x im a te ly 6 ,8 0 0 re n ta b le E q u a re fe e tfo ra n a m e n ity b u ild in g ("B u ild in g 9 "),a lu p o n th e te rm s a n d c o n d ito n s in th is S e c tio n 3 9 ;p ro v id e d ,h o w e v e r,th a ta lo fth e E x p a n s io n R e q u ire m e n ts (a s d e fin e d b e lo w )a re m e te a c h tim e T e n a n te x e rc is e s a n E x p a n s io n R ig h t.B u ild in g 7 ,B u ild in g 8 a n d B u ild in g 9 s h a le a c h b e in d iv id u a ly re fe re d to h e re in a s a n "E x p a n s io n B u ild in g "a n d c o le c tiv e ly a s th e "E x p a n s io n B u ild in g s ".1 3 .7 0 8 2 8 s s 3 6 .1 2 ,^C {p y rig h r@2 m 5 ,A ie x a n d riR rl$ ta B Iq u itc ;ln o .A 1 l(I)R IC IT S R E S E R V E D .C o n lid e tria l.n d P ro tric ta ty -D o N o l^,"io ,n _ C o p y o rD is rib u k -A le x m d r:a a n d th e A le m & irL o g o e re g is m d m d e ru Is o rA le x a n *ia R e a ltrs la te E q u ire s ,lfc .
 L a n d lo rd s h a le n d e a v o rto c a u s e th e E x p a n s io n B u ild in g s to b e c o n s tru c te d in a m a n n e r'c o n s is te n tw ith th e s ite p la n a ta c h e d to th e S e c o n d A m e n d m e n ta s E x h ib itF .N o tw ith s ta n d in g a n y th in g to th e c o n tra ry c o n ta in e d in th is L e a s e ,T e n a n ta c k n o w le d g e s th a th e P ro je c tS ite P la n a n d th e re n ta b le s q u a re fo o ta g e p ro v id e d fo ra b o v e w ith re s p e c to th e E x p a n s io n R ig h ts (a n d th e E x p a n s io n B u ild in g s )c o n te m p la te s e n tile m e n ts a n d a p p ro v a ls fo rth e P ro je c tw h ic h L a n d lo rd d o e s n o tc u re n tly h a v e a n d m a y n o to b ta in a n d ,in th e e v e n th a tL a n d lo rd d o e s n o to b ta in a lo fs u c h e n tile m e n ts a n d a p p ro v a ls o n te rm s a n d c o n d ito n s ,a c c e p ta b le to L a n d lo rd in its s o le a n d a b s o lu te (b u tg o o d fa ith )d is c re tio n ,L a n d lo rd s h a lh a v e th e rig h ta ta n y tim e ,in L a n d lo rd 's s o le a n d a b s o lu te (b u tg o o d fa ith )d is c re tio n b u ta fte rc o n s u lta tio n w ith T e n a n t,o a m e n d b o th th e E x p a n s io n R ig h ts to w h ic h T e n a n tis e n tile d u n d e rth is L e a s e a n d th e P ro je c tS ite P la n in a m a n n e re a s o n a b ly a c c e p ta b le to L a n d lo rd a n d re fle c tiv e o fth e a c tu a le n tile m e n ts a n d a p p ro v a ls o b ta in e d b y L a n d lo rd .L a n d lo rd a g re e s th a t,w h ile T e n a n t's E x p a n s io n R ig h ts re m a in in e fe c t,L a n d lo rd s h a ln o tra n s fe rth e e n tile m e n ts a c tu a ly o b ta in e d b y L a n d lo rd w ith re s p e c to th e P ro je c ta n d re q u ire d fo rth e d e v e lo p m e n ta n d c o n s tru c tio n o fth e E x p a n s io n B u ild in g s ,u p to th e 3 9 9 ,8 0 0
re n ta b le s q u a re fe e to fe n tile m e n ts in th e a g g re g a te c o n te m p la te d a b o v e ,to a n o th e rp ro je c t.N o tw ith s ta n d in g th e fo re g o in g ,L a n d lo rd m a y tra n s fe ra n y e n tile m e n ts a c tu a ly o b ta in e d b y L a n d lo rd in e x c e s s o fth e 3 9 9 ,8 0 0 re n ta b le s q u a re fe e to fe n tile m e n ts c o n te m p la te d a b o v e to a n o th e rp ro je c ta ta n y tim e .U p o n T e n a n t's w rite n re q u e s tfro m tim e to tim e d u rin g th e T e rm (b u tin n o e v e n tm o re th a n tw ic e d u rin g a n y c a le n d a ry e a r),L a n d lo rd s h a lp ro v id e to T e n a n tu p d a te d in fo rm a tio n re g a rd in g th e s ta tu s o fe n tile m e n ts fo rth e P ro je c t,in c lu d in g ,b u tn o tlim ite d to ,m a te ria lc o re s p o n d e n c e b e tw e e n L a n d lo rd a n d a n y g o v e rn m e n ta la u th o rity re g a rd in g s u c h e n tile m e n ts .A s u s e d in th is L e a s e ,"E x p a n s io n R e q u ire m e n ts "s h a lm e a n th a ta lo fth e fo lo w in g re q u ire m e n ts a re s a tis fie d :(i)T e n a n tis n o tin m a te ria lD e fa u ltu n d e ra n y p ro v is io n o fth e L e a s e ;(i)T e n a n th a s a c re d itra tin g o f"B B B -'o rb e te rfo m S ta n d a rd & P o o r's C o rp o ra tio n ,o r"B a a 3 "o rb e te rfo m M o o d y 's ln v e s to rs S e rv ic e ,ln c .(o rin e a c h c a s e a n y s u c c e s s o rth e re o f),o r,in th e e v e n th a tT e n a n td o e s n o th a v e a c re d itra tin g a th a tim e ,T e n a n th a s a n e tw o rth (a s d e te rm in e d in a c c o rd a n c e w ith G A A P )th a tis n o tle s s th a n th e M in im u m N e tWo rth A m o u n t;a n d (i)lu m in a ,ln c .,a D e la w a re c o rp o ra tio n ,o ra n y e n tiy le a s in g o rs u b le a s in g th e P re m is e s p u rs u a n to a P e rm ite d A s s ig n m e n t,is th e te n a n to c c u p y in g a n d o p e ra tin g o u to fa tle a s t7 0 o /o o f
th e P re m is e s u n d e rth is L e a s e .S u b je c to th e te rm s a n d c o n d ito n s o fth is S e c tio n 3 9 ,ifT e n a n te le c ts to e x e rc is e a n E x p a n s io n R ig h tw ith re s p e c to a n y E x p a n s io n B u ild in g (s ),T e n a n ts h a l,o n o rb e fo re th e E x p a n s io n R ig h tE x p ira tio n D a te ,d e liv e rw rite n n o tic e to L a n d lo rd o fits e le c tio n to e x e rc is e s u c h E x p a n s io n R ig h t(e a c h ,a n "E x p a n s io n N o tic e "),w h ic h E x p a n s io n N o tic e s h a lid e n tify th e E x p a n s io n B u ild in g (s )w ith re s p e c to w h ic h T e n a n tis e x e rc is in g its E x p a n s io n R ig h t(e a c h a n "ld e n tife d E x p a n s io n B u ild in g ")a lo n g w ith a d e p o s itn th e a m o u n to f$ 1 0 0 ,0 0 0 m u ltip lie d b y th e n u m b e ro fld e n tife d E x p a n s io n B u ild in g s id e n tife d in th e E x p a n s io n N o tic e fo ru s e b y L a n d lo rd fo rth e in ita lc o s ts a c tu a ly in c u re d b y L a n d lo rd in c o n n e c tio n w ith th e in ita ld e s ig n a n d p ric in g (c o le c tiv e ly ,ln ita !C o s ts ")fo re a c h ld e n tife d E x p a n s io n B u ild in g ("E x p a n s io n D e p o s it").L a n d lo rd a g re e s to c o n trib u te u p to $ 1 0 0 ,0 0 0 fo rth e ln ita lC o s ts a s s o c ia te d w ith e a c h ld e n tife d E x p a n s io n B u ild in g fo lo w in g th e e x h a u s tio n o fT e n a n t's a p p lic a b le E x p a n s io n D e p o s itfo rs u c h ld e n tife d E x p a n s io n B u ild in g (e v id e n c e o fw h ic h e x h a u s tio n /c o n trib u tio n s h a lb e p ro v id e d to T e n a n tu p o n T e n a n t's w rite n re q u e s tfro m tim e to tim e in th e fo rm o fa d e ta ile d lin e ite m s ta te m e n t).N o tw ith s ta n d in g a n y th in g to th e c o n tra ry c o n ta in e d h e re in ,T e n a n ta c k n o w le d g e s a n d a g re e s th a t(i)L a n d lo rd s h a l
h a v e n o o b lig a tio n to c o m m e n c e th e d e s ig n a n d /o rc o n s tru c tio n o fa n y E x p a n s io n B u ild in g p rio rto T e n a n td e liv e rin g a n E x p a n s io n N o tic e a n d a n E x p a n s io n D e p o s itw ith re s p e c to s u c h E x p a n s io n B u ild in g to L a n d lo rd ,(i)n n o e v e n ts h a lT e n a n th a v e th e rig h to e x e rc is e a n E x p a n s io n R ig h tw ith re s p e c to a n y la te rn u m b e re d E x p a n s io n B u ild in g ifT e n a n th a s n o tp re v io u s ly o rc o n c u re n tly th e re w ith e x e rc is e d a n E x p a n s io n R ig h tw ith re s p e c to th e E x p a n s io n B u ild in g n u m b e rim m e d ia te p re c e d in g it(e .g .T e n a n tc a n n o te le c to e x e rc is e a n ,^C o p y rig h tO 2 0 0 5 ,A lc x a n d fi!R c e ltia c L q u irc $ ,lD c .A L L tlJ R IC IT S R E S E R V E D .C o n fid c n ria la n d p ra p fie ta ry -D o N o 1 ^rL rio o ,o .C o p y u D s rib o k .A le x ild ria e d th e A le x e & i!L o g o e E g is k rc d m d e rD rls o fA le x e {ria R e a lts h te E q u itc s ,:n c .7 0 8 2 8 s s 3 6 .1 2
E x p a n s io n R ig h tfo rB u ild in g 8 ifT e n a n th a s n o te x e rc is e d a n E x p a n s io n R ig h tfo rB u ild in g 7 )a n d .L a n d lo rd s h a lh a v e th e rig h t,in L a n d lo rd 's s o le a n d a b s o lu te d is c re tio n ,to e le c tn o to c o n s tru c ta n y la te rn u m b e re d E x p a n s io n B u ild in g (s )fo rT e n a n tifT e n a n te le c ts a s p ro v id e d fo rin th is L e a s e to re s c in d its E x p a n s io n N o tic e w ith re s p e c to a n e a rlie rn u m b e re d E x p a n s io n B u ild in g (e .9 .,L a n d lo rd c a n e le c tn o to c o n s tru c tB u ild in g 8 ifT e n a n tre s c in d s its E x p a n s io n N o tic e fo rB u ild in g 7 ),(in n o e v e n ts h a lT e n a n th a v e th e rig h tu n d e ra n y c irc u m s ta n c e s to e x e rc is e a n E x p a n s io n R ig h tw ith re s p e c to le s s th a n a lo fth e re n ta b le s q u a re fo o ta g e o fa n E x p a n s io n B u ild in g ,(iv )th e P ro je c tS ite P la n in c lu d in g ,w ith o u tlim ita tio n ,th e n u m b e ro flo o rs ,re n ta b le s q u a re fo o ta g e s ,c o n fig u ra tio n a n d lo c a tio n s o fth e E x p a n s io n B u ild in g s w ith in th e P ro je c ta re n o tg u a ra n te e d a n d a re s u b je c to c h a n g e b y L a n d lo rd in th e e x e rc is e o fL a n d lo rd 's re a s o n a b le d is c re tio n ;p ro v id e d ,h o w e v e r,th a ts o lo n g a s a lo fT e n a n t's E x p a n s io n R ig h ts re m a in in fu lfo rc e a n d e fe c tu n d e rth is S e c tio n 3 9 ,a n y s u c h c h a n g e s m a d e b y L a n d lo rd s h a ln o tm a te ria ly a n d a d v e rs e ly im p a c t:(A )th e u s e o fth e E x p a n s io n B u ild in g s fo rth e P e rm ite d U s e ,(B )T e n a n t's a b ilty to a c c e s s th e P re m is e s ,(C )T e n a n t's p a rk in g rig h ts u n d e rS e c tio n 1 0 ,o r(D )th e to ta ls q u a re fo o ta g e a v a ila b le to T e n a n tfo re x p a n s io n o f
th e P re m is e s p u rs u a n to th is S e c tio n 3 9 (a ),a n d (v )L a n d lo rd 's o b lig a tio n to d e v e lo p e a c h E x p a n s io n B u ild in g o n re c e ip to fth e a p p lic a b le E x p a n s io n N o tic e is e x p re s s ly c o n d ito n e d u p o n a n d s u b je c to ,a n d w ith L a n d lo rd h a v in g n o lia b ilty fo rth e fa ilu re o fa n y o fs u c h c o n d ito n s (e x c e p ta s o th e rw is e e x p re s s ly p ro v id e d h e re in ),L a n d lo rd 's a b ilty to o b ta in ,o n te rm s a n d c o n d ito n s re a s o n a b ly a c c e p ta b le to L a n d lo rd ,a lg o v e rn m e n ta la p p ro v a ls n e c e s s a ry to p e rm ith e d e s ig n a n d c o n s tru c tio n o fth e a p p lic a b le E x p a n s io n B u ild in g ,th e re a s o n a b le a v a ila b ilty o fm a te ria ls a n d la b o ra n d a lo th e rc o n d ito n s o u ts id e o fL a n d lo rd 's re a s o n a b le c o n tro l.fT e n a n te x e rc is e s its E x p a n s io n R ig h ts h e re u n d e rw ith re s p e c to a n y E x p a n s io n B u ild in g a n d d o e s n o te x e rc is e a n y o fits re s c is s io n rig h ts u n d e rS e c tio n 3 9 (c )w ith re s p e c th e re to ,L a n d lo rd a g re e s to u s e re a s o n a b le a n d d ilg e n te fo rts to p u rs u e a n d o b ta in a s c o n te m p la te d u n d e rth is L e a s e a n d th e a p p lic a b le w o rk le te rth e n e c e s s a ry g o v e rn m e n ta la p p ro v a ls to p e rm ith e d e s ig n a n d c o n s tru c tio n o fs u c h E x p a n s io n B u ild in g .(b )E x te n s io n o fE x p a n s io n R ig h tE x p ira tio n D a te .T e n a n ts h a lh a v e th e rig h to e x te n d th e E x p a n s io n R ig h tE x p ira tio n D a te b y d e liv e rin g w rite n n o tic e ("E Ie c tio n N o tic e ")o fs u c h e le c tio n to L a n d lo rd n o la te rth a n J u n e 3 0 ,2 0 1 8 ,in w h ic h c a s e ,c o m m e n c in g o n
J a n u a ry 1 ,2 0 1 9 ("L a n d R e n tC o m m e n c e m e n tD a te "),a n d c o n tin u in g th e re a fte ro n th e firs td a y o fe a c h m o n th u n tilh e O u ts id e E x p a n s io n R ig h tE x p ira tio n D a te (a s d e fin e d b e lo w ),T e n a n ts h a lb e re q u ire d to p a y re n to L a n d lo rd ("L a n d R e n t")in a n a m o u n tw h ic h re s u lts in L a n d lo rd re c e iv in g in e q u a lm o n th ly in s ta lm e n ts a 7 .5 o /o p ila n n u m re tu rn o n th e a m o u n to fth e th e n B u ild a b le E n tile m e n ts a th e P ro je c t(n o to e x c e e d 3 1 8 ,1 5 2 )m u ltip lie d b y $ 3 4 .0 9 fo re a c h s q u a re fo o to fs u c h B u ild a b le E n tile m e n ts .T h e L a n d R e n ts h a lb e in c re a s e d o n e v e ry o th e ra n n iv e rs a ry o fth e L a n d R e n tC o m m e n c e m e n tD a te b y th e B i-A n n u a lR e n tA d ju s tm e n tP e rc e n ta g e .F o re x a m p le ,ifT e n a n te le c ts to e x te n d th e E x p a n s io n R ig h tE x p ira tio n D a te a s p ro v id e d fo rin th is S e c tio n 3 9 (b )a n d T e n a n th a s n o tc o m m e n c e d p a y in g B a s e R e n to n a n y E x p a n s io n B u ild in g ,th e L a n d R e n td u e o n J a n u a ry '1 ,2 0 1 9 ,s h a lb e $ 6 7 ,7 8 6 .2 5 p e rm o n th (c a lc u la te d a s fo lo w s :3 1 8 ,1 5 2 X $ 3 4 .0 9 p e rs q u a re fo o tX 7 .5 % )d iv id e d b y 1 2 ).N o tw ith s ta n d in g a n y th in g to th e c o n tra ry c o n ta in e d h e re in ,ifc o m m e n c in g o n J a n u a ry 1 ,2 0 1 9 a n d c o n tin u in g fo re a c h m o n th o fth e T e rm ,T e n a n tp a y s th e L a n d R e n td u e u n d e rth is L e a s e a n d T e n a n tim e ly e x e rc is e s a n y e x p re s s rig h tw h ic h T e n a n th a s u n d e rS e c tio n 3 9 (e X E )to te rm in a te th is L e a s e w ith re s p e c to th e E x p a n s io n B u ild in g th e n
b e in g c o n s tru c te d ,L a n d lo rd s h a lre fu n d to T e n a n th e a lo c a b le p o rtio n o fth e L a n d R e n tp a id b y T e n a n tw ith re s p e c to s u c h E x p a n s io n B u ild in g b e tw e e n th e d a te th a tT e n a n te x e rc is e d th e E x p a n s io n R ig h tfo rs u c h E x p a n s io n B u ild in g a n d th e d a te T e n a n te le c ts to te rm in a te th e L e a s e p u rs u a n to S e c tio n 3 9 (e X E )w ith re s p e c to s u c h E x p a n s io n B u ild in g .ln n o e v e n t,h o w e v e r,s h a lT e n a n tb e e n tile d to a n y re fu n d o fa n y L a n d R e n tifT e n a n t's te rm in a tio n rig h tu n d e rS e c tio n 3 9 (e X E )is c a u s e d in w h o le o rin p a rtb y a n y re v o c a tio n o fa n y e n tile m e n ts e x is tin g a s o fth e d a te h e re o f.lL a n d lo rd re c e iv e s w rite n n o tic e fro m a n y G o v e rn m e n ta lA u th o rity re v o k in g a n y e n tile m e n ts e x is tin g a s o fth e d a te h e re o f,L a n d lo rd s h a lp ro v id e T e n a n tw ith a c o p y o fs u c h n o tic e a n d th e L a n d R e n ts h a lb e a d ju s te d a c c o rd in g ly o n a g o in g fo rw a rd b a s is .7 0 8 2 8 5 5 3 6 .1 2 C o p y ig h t@2 0 0 5 .A le x m d ia R a a lL lts trq u ite s ,In c .A I(!lJ R IG IT S R E S E R V E D .C o n fid e ita lo d P ro p rie ta ry -D o N o t^,io ,^_ C o p y o rD is rib u E .A lc x ild lia o d th c A le ru d ria L o g o rc F g is m d h d e lM ls o fA le ra n d d .R e a ls u te E q u ilc s ,]n c .
 lfT e n a n td o e s n o tp ro v id e L a n d lo rd w ith a n E le c tio n N o tic e b y J u n e 3 0 ,2 0 1 8 ,th e n ,L a n d lo rd s h a lp ro v id e T e n a n tw ith a w rite n n o tic e s ta tin g in b o ld a n d a lc a p s 1 2 p o in tfo n th a tT e n a n t's fa ilu re to re s p o n d in w ritn g to L a n d lo rd w ith in 1 0 b u s in e s s d a y s a fte rT e n a n t's re c e ip to fL a n d lo rd 's n o tic e a n d a firm a tiv e ly e le c tin g in s u c h re s p o n s e to e x te n d th e E x p a n s io n R ig h tE x p ira tio n D a te s h a lb e d e e m e d T e n a n t's e le c tio n to w a iv e T e n a n t's rig h to e x te n d th e E x p a n s io n R ig h tE x p ira tio n D a te .lfin T e n a n t's re s p o n s e n o tic e ,T e n a n te le c ts to e x te n d th e E x p a n s io n R ig h tE x p ira tio n D a te ,T e n a n ts h a lb e re q u ire d to c o m m e n c e p a y in g L a n d R e n ta s p ro v id e d fo rin th is L e a s e c o m m e n c in g o n J a n u a ry 1 ,2 0 1 9 .A s u s e d in th is L e a s e ,(i)"O u ts id e E x p a n s io n R ig h tE x p ira tio n D a te "s h a lm e a n th e e a rlie ro f(a )th e d a te w h ic h is 6 m o n th s a fte rth e d a te T e n a n tp ro v id e s L a n d lo rd w ith w rite n n o tic e o fits e le c tio n to te rm in a te a lo fits u n e x e rc is e d E x p a n s io n R ig h ts u n d e rth is S e c tio n 3 9 ,a n d (b )O c to b e r3 1 ,2 0 3 1 ;a n d (i)"B u ild a b le E n tile m e n ts "s h a lm e a n 3 1 8 ,1 5 2 re n ta b le s q u a re fe e to fs p a c e c o n te m p la te d fo rth e E x p a n s io n B u ild in g s (n o tw ith s ta n d in g th a th e c o n te m p la te d re n ta b le s q u a re fo o ta g e fo rth e E x p a n s io n B u ild in g s is 3 9 9 ,8 0 0 re n ta b le s q u a re fe e t)m in u s th e re n ta b le s q u a re fo o ta g e o fth e E x p a n s io n B u ild in g (s )fo rw h ic h T e n a n tis p a y in g B a s e R e n t.F o rth e
a v o id a n c e o fd o u b t,(x )fo lo w in g th e E x p a n s io n R ig h tE x p ira tio n D a te o r,ifa p p lic a b le th e O u ts id e E x p a n s io n R ig h tE x p ira tio n D a te ,o r(y )ifT e n a n tis n o tp a y in g th e L a n d R e n tw h ic h T e n a n tis re q u ire d to p a y to L a n d lo rd u n d e rth is L e a s e ,L a n d lo rd s h a lh a v e th e rig h to d e v e lo p a n y n e w b u ild in g (s )a th e P ro je c ta n d le a s e a lo ra n y p o rtio n o fs u c h n e w b u ild in g (s )to a n y th ird p a rty (ie s )(e x c e p ta s p ro v id e d in S e c tio n s 3 9 (fla n d 4 4 (r)u p o n a n y te rm s a n d c o n d ito n s a c c e p ta b le to L a n d lo rd .(c )R e s c is s io n R ig h ts .(i)ln ita lR e s c is s io n R ig h t.F o lo w in g re c e ip to fe a c h E x p a n s io n N o tic e ,L a n d lo rd s h a ld e liv e rto T e n a n ta d e ta ile d w rite n lin e ite m e s tim a te o n th e p a rto fL a n d lo rd o fth e P ro je c tC o s ts (a s d e fin e d b e lo w )fo rth e ld e n tife d E x p a n s io n B u ild in g ("ln ita lP ro je c tC o s tE s tim a te ")a lo n g w ith a c o re s p o n d in g e s tim a te o fth e in ita lm o n th ly B a s e R e n tw h ic h w o u ld b e d u e fo rth e a p p lic a b le ld e n tife d E x p a n s io n B u ild in g ("ln ita lB a s e R e n tE s tim a te ").T e n a n ts h a lh a v e th e rig h t("ln ita lR e s c is s io n R ig h t")o re s c in d th e a p p lic a b le E x p a n s io n N o tic e b y d e liv e ry to L a n d lo rd o fa w rite n re s c is s io n n o tic e ("ln ita lR e s c is s io n N o tic e ")o n o rb e fo re th e d a te th a tis 1 5 b u s in e s s d a y s a fte rL a n d lo rd 's d e liv e ry to T e n a n to fth e ln ita lP ro je c tC o s tE s tim a te a n d ln ita lB a s e R e n tE s tim a te fo rth e ld e n tife d E x p a n s io n B u ild in g if(a n d o n ly if)th e ln ita lB a s e R e n tE s tim a te fo rth e ld e n tife d E x p a n s io n B u ild in g fo rth e firs ty e a ro fth e B a s e
T e rm fo rs u c h ld e n tife d E x p a n s io n B u ild in g e x c e e d s $ 3 .0 0 p e re n ta b le s q u a re fo o tp e rm o n th ("C a p A m o u n t").T h e C a p A m o u n tp ro v id e d fo rin th e p re c e d in g s e n te n c e a p p lie s ifth e firs ty e a ro fth e B a s e T e rm fo rth e ld e n tife d E x p a n s io n B u ild in g is re a s o n a b ly e s tim a te d b y L a n d lo rd to c o m m e n c e w ith in 2 4 m o n th s a fte rth e ln ita lC o m m e n c e m e n tD a te ,a n d th e C a p A m o u n ts h a lth e re a fte rb e in c re a s e d b y th e B i-A n n u a lR e n tA d ju s tm e n tP e rc e n ta g e o n e v e ry o th e ra n n iv e rs a ry o fth e ln ita lC o m m e n c e m e n tD a te .T h e ln ita lR e s c is s io n R ig h ts h a lo n ly a p p ly ,d e p e n d in g o n w h e n th e B a s e T e rm fo rth e ld e n tife d E x p a n s io n B u ild in g is re a s o n a b ly e s tim a te d b y L a n d lo rd to c o m m e n c e ,ifth e ln ita lB a s e R e n tE s tim a te e x c e e d s th e C a p A m o u n t(a s a d ju s te d ).lfT e n a n tfa ils to tim e ly d e liv e rth e ln ita lR e s c is s io n N o tic e to L a n d lo rd ,T e n a n ts h a lb e d e e m e d to h a v e w a iv e d its ln ita lR e s c is s io n R ig h t.lfT e n a n td e liv e rs th e ln ita lR e s c is s io n N o tic e to L a n d lo rd p u rs u a n to th is p a ra g ra p h (a n d T e n a n td o e s n o tc o n tin u e to p a y L a n d R e n ta s p ro v id e d fo rin th is L e a s e ),T e n a n t's E x p a n s io n R ig h tw ith re s p e c to th e ld e n tife d E x p a n s io n B u ild in g s h a lte rm in a te a n d b e o fn o fu rth e rfo rc e o re fe c t,in w h ic h c a s e T e n a n ts h a lh a re n o fu rth e rig h ts u n d e rS e c tio n 3 9 w ith re s p e c to s u c h ld e n tife d E x p a n s io n B u ild in g ,a n d L a n d lo rd s h a lh a v e th e rig h to d e v e lo p a n y n e w b u ild in g (s )a th e

P ro je c ta n d le a s e a lo ra n y p o rtio n o fs u c h n e w b u ild in g (s )to a n y th ird p a rty (ie s )(e x c e p ta s p ro v id e d in S e c tio n s 3 9 (fla n d 4 4 (r)u p o n a n y te rm s a n d c o n d ito n s a c c e p ta b le to L a n d lo rd u n le s s T e n a n tc o n tin u e s to p a y th e L a n d R e n ta s p ro v id e d fo rin S e c tio n 3 9 (b )in w h ic h c a s e L a n d lo rd s h a ln o th a v e th e rig h to d e v e lo p a n y n e w b u ild in g (s )u n tilh e O u ts id e E x p a n s io n R ig h tE x p ira tio n D a te .,^C lp rig h r@2 m .5 .A le x a n d riltE rlI$ ta E Ih u ite s ,ln c .A L L (I)R IC Im S R E S E R V E D .C o n fid c n ti3 lrn d P rc p rie ta ry -D o N o r^,iR Ia _ C o p y o rD is rib u @.A lo x m & ia u d th e A le x a o & i{L o S o rc 're g is k E d m d e m a lk s o fA l rs d ria R e a lE s u te E q u itc s ,lo c .7 0 8 2 8 s s 3 6 .t2
 (i)F in a lR e s c is s io n R ig h t.F o lo w in g T e n a n t's w a iv e ro fits ln ita lR e s c is s io n R ig h ta n d th e d e v e lo p m e n tb y L a n d lo rd o fp re lim in a ry p la n s fo rs u c h ld e n tife d E x p a n s io n B u ild in g ,L a n d lo rd s h a lp re p a re a R F P fo r3 g e n e ra lc o n tra c to rs re a s o n a b ly a c c e p ta b le to L a n d lo rd a n d T e n a n tw h o w ile a c h b e re q u e s te d to re s p o n d w ith th e irfe e a n d g e n e ra lc o n d ito n s b a s e d o n th e E x p a n s io n B u ild in g P re lim in a ry P la n s .L a n d lo rd a n d T e n a n ts h a lu s e re a s o n a b le e fo rts to a g re e u p o n o n e o fth e b id s ("G o n tra c to r's ln ita lB id ")fo rth e p u rp o s e s o fd e v e lo p in g a re v is e d e s tim a te o fth e P ro je c tC o s ts .B a s e d o n th e C o n tra c to r's ln ita lB id ,L a n d lo rd s h a ld e liv e rto T e n a n ta re v is e d w rite n e s tim a te o n th e p a rto fL a n d lo rd o fth e P ro je c tC o s ts fo rth e ld e n tife d E x p a n s io n B u ild in g ("R e v is e d P ro je c tC o s tE s tim a te ").T e n a n ts h a lh a v e a fin a lrig h t("F in a tR e s c is s io n R ig h t")o re s c in d th e a p p lic a b le E x p a n s io n N o tic e b y d e liv e ry to L a n d lo rd o fa w rite n re s c is s io n n o tic e ("F in a lR e s c is s io n N o tic e ")o n o rb e fo re (i)th e d a te th a tis 1 5 b u s in e s s d a y s a fte rL a n d lo rd 's d e liv e ry to T e n a n to fth e R e v is e d P ro je c tC o s tE s tim a te fo rth e ld e n tife d E x p a n s io n B u ild in g if(a n d o n ly if)th e R e v is e d P ro je c tC o s tE s tim a te e x c e e d s th e ln ita lP ro je c tC o s tE s tim a te b y m o re lh a n 2 0 o /o ,o r(i)th e d a te th a tis 5 b u s in e s s d a y s a fte rL a n d lo rd s e le c tio n o fs u c h C o n tra c to r's ln ita lB id fo rth e p u rp o s e s o fd e v e lo p in g th e R e v is e d P ro je c tC o s t

E s tim a te ifT e n a n tw a s u n w iln g to a g re e to u s e th e C o n tra c to r's ln ita lB id s e le c te d b y L a n d lo rd fo rth e p u rp o s e s o fd e v e lo p in g a re v is e d e s tim a te o fth e P ro je c tC o s ts .lfT e n a n tfa ils to tim e ly d e liv e rth e F in a lR e s c is s io n N o tic e to L a n d lo rd ,T e n a n ts h a lb e d e e m e d to h a v e w a iv e d its F in a lR e s c is s io n R ig h t.lfT e n a n td e liv e rs th e F in a lR e s c is s io n N o tic e to L a n d lo rd p u rs u a n to th is p a ra g ra p h (a n d T e n a n td o e s n o tc o n tin u e to p a y L a n d R e n ta s p ro v id e d fo rin th is L e a s e ),T e n a n t's E x p a n s io n R ig h tw ith re s p e c to th e ld e n tife d E x p a n s io n B u ild in g s h a lte rm in a te a n d b e o fn o fu rth e rfo rc e o re fe c t,in w h ic h c a s e T e n a n ts h a lh a v e n o fu rth e rig h ts u n d e rS e c tio n 3 g w ith re s p e c to s u c h ld e n tife d E x p a n s io n B u ild in g ,a n d L a n d lo rd s h a lh a v e th e rig h to d e v e lo p a n y n e w b u ild in g (s )a th e P ro je c ta n d le a s e a lo ra n y p o rtio n o fs u c h n e w b u ild in g (s )to a n y th ird p a rty (ie s )(e x c e p ta s p ro v id e d in S e c tio n s 3 9 (fla n d 4 4 (r)u p o n a n y te rm s a n d c o n d ito n s a c c e p ta b le to L a n d lo rd u n le s s T e n a n tc o n tin u e s to p a y th e L a n d R e n ta s p ro v id e d fo rin S e c tio n 3 9 (b )in w h ic h c a s e L a n d lo rd s h a ln o th a v e th e rig h to d e v e lo p a n y n e w b u ild in g (s )u n tilh e O u ts id e E x p a n s io n R ig h tE x p ira tio n D a te .(i)E fe c to fM u ltip le R e s c is s io n s .N o tw ith s ta n d in g a n y th in g to th e c o n tra ry c o n ta in e d in th is L e a s e ,ifT e n a n t's e x e rc is e s a s e c o n d ln ita lR e s c is s io n R ig h ta n d /o ra s e c o n d F in a lR e s c is s io n
R ig h tu n d e rth is L e a s e ,T e n a n ts h a lb e s o le ly re s p o n s ib le (w ith o u ta n y c o n trib u tio n fro m L a n d lo rd )fo ra ln ita lC o s ts a n d o th e re la te d c o s ts in c u re d b y L a n d lo rd in c o n n e c tio n w ith a lfu tu re e x e rc is e s b y T e n a n to fa n y o fits E x p a n s io n R ig h ts .(iv )A c k n o w le d g e m e n t.lfT e n a n te le c ts to e x e rc is e e ith e rits ln ita lR e s c is s io n R ig h to rits F in a lR e s c is s io n R ig h tw ith re s p e c to a n y ld e n tife d E x p a n s io n B u ild in g ,L a n d lo rd s h a lre tu rn to T e n a n ta n y u n u s e d p o rtio n ,ifa n y ,o fth e E x p a n s io n D e p o s itd e liv e re d b y T e n a n to L a n d lo rd w ith re s p e c to s u c h ld e n tife d E x p a n s io n B u ild in g .T e n a n ta c k n o w le d g e s a n d a g re e s th a th e ln ita lP ro je c tC o s tE s tim a te s a n d th e R e v is e d P ro je c tC o s tE s tim a te p ro v id e d b y L a n d lo rd a n d th e C o n tra c to r's ln ita lB id d e liv e re d p u rs u a n to th e p ro v is io n s o fS e c tio n 3 g (c X i)a n d (j)a re m e re ly e s tim a te s a n d a re n o ta g u a ra n ty o fa c tu a lP ro je c tC o s ts a n d /o rth e a m o u n to fB a s e R e n tw h ic h w ilb e p a y a b le fo ra n y ld e n tife d E x p a n s io n B u ild in g a n d L a n d lo rd s h a lh a v e n o lia b ilty to T e n a n tin c o n n e c tio n th e re w ith n o rs h a lT e n a n th a v e a n y a d d ito n a lre s c is s io n rig h ts b e y o n d th o s e e x p re s s ly p ro v id e d fo rin S e c tio n 3 9 (c X i)a n d (!).d )L e a s e T e rm s fo rE x p a n s io n B u ild in g (s ).T e n a n ta c k n o w le d g e s a n d a g re e s th a tifT e n a n tle a s e s a n y E x p a n s io n B u ild in g (s )p u rs u a n to th is S e c tio n 3 9 ,a l!o fth e te rm s a n d c o n d ito n s o fth is L e a s e s h a la p p ly to th e
le a s in g o fs u c h E x p a n s io n B u ild in g ,e x c e p th a t:(i)h e d e fin ito n s o n p a g e 1 o fth is L e a s e s h a lb e a m e n d e d a s n e c e s s a ry to d o c u m e n ta n d re fle c th e a d d ito n o fth e a p p lic a b le E x p a n s io n B u ild in g to th e P ro je c t;(i)T e n a n ts h a lb e re q u ire d to p a y a n n u a lB a s e R e n tin e q u a lm o n th ly in s ta lm e n ts fo rth e firs t1 2 m o n th s fo lo w in g th e E x p a n s io n B u ild in g R e n tC o m m e n c e m e n tD a te (a s d e fin e d b e lo w )fo rth e a p p lic a b le E x p a n s io n B u ild in g a ta ra te w h ic h p ro v id e s L a n d lo rd w ith a n a n n u a lre tu rn o n a lP ro je c tC o s ts fo rs u c h E x p a n s io n B u ild in g w h ic h is th e g re a te ro f(A )3 0 0 b a s is p o in ts a b o v e th e 1 0 -y e a rU .S .T re a s u ry y ie ld a s o f7 0 8 2 8 5 5 3 6 .1 2 1 0 ,^C lp y rig h lO 2 m 5 ,A le x m d li{R .a lL s b b lh u ia iB s ,ln c .A L L (IlR lG lfs R E S E R V E D .C o n fid n tia la n d P ro p rie a a ry -D o N o l^,iR I^C o p y d D is rib u k .A le x u d ria e d th e A le x a n d d s L o g o re ftg is E rc d m d e m rk s o fA le x m & ia R e a lts h te E q u ite s ,tn c .
th e d a te th a tL a n d lo rd re c e iv e s th e a p p lic a b le E x p a n s io n N o tic e ,a n d (B )8 .5 % ,a n d s u c h re tu rn .s h a lb e s u b je c to in c re a s e s a s p ro v id e d fo rin S e c tio n 4 h e re o fb y th e B i-A n n u a lR e n tA d ju s tm e n tP e rc e n ta g e o n e v e ry o th e ra n n iv e rs a ry o fth e a p p lic a b le E x p a n s io n B u ild in g R e n tC o m m e n c e m e n tD a te ;(i)th e B a s e T e rm o fth e L e a s e w ith re s p e c to th e a p p lic a b le E x p a n s io n B u ild in g s h a le x p ire o n th e s a m e d a y a s th e B a s e T e rm w ith re s p e c to th e o rig in a lP re m is e s ;p ro v id e d ,h o w e v e r,th a te a c h tim e T e n a n te x e rc is e s its E x p a n s io n R ig h tw lth re s p e c to a n y E x p a n s io n B u ild in g d u rin g th e la s t1 2 0 m o n th s o fth e B a s e T e rm ,th e B a s e T e rm fo rth e e n tire P re m is e s s h a lb e e x te n d e d e a c h tim e to th e d a te th a tis 1 2 0 m o n th s a fte rth e E x p a n s io n B u ild in g R e n tC o m m e n c e m e n tD a te fo rth e a p p lic a b le E x p a n s io n B u ild in g ;(iv )L a n d lo rd s h a lb e re s p o n s ib le fo rth e c o n s tru c tio n o fte n a n tim p ro v e m e n ts in e a c h E x p a n s io n B u ild in g d e s ire d b y T e n a n tw h ic h im p ro v e m e n ts s h a lb e o fa fix e d a n d p e rm a n e n tn a tu re a p p ro v e d b y L a n d lo rd ("E x p a n s io n B u ild in g T e n a n tlm p ro v e m e n ts ")a n d s h a lb e re q u ire d to s a tis fy th e re q u ire m e n ts s e tfo rth o n E x h ib itK ,a n d th e p a rtie s s h a le n te rin to a w o rk le te rfo rth e E x p a n s io n B u ild in g a n d E x p a n s io n B u ild in g T e n a n tlm p ro v e m e n ts re a s o n a b ly a c c e p ta b le to b o th p a rtie s a n d b a s e d s u b s ta n tia ly o n th e fo rm o fw o rk le te r
a ta c h e d h e re to a s E x h ib itJ (e a c h ,a n "E x p a n s io n B u ild in g Wo rk L e te r')w ith T e n a n tre c e iv in g a te n a n tim p ro v e m e n ta lo w a n c e fro m L a n d lo rd in th e a m o u n to f$ 6 0 p e re n ta b le s q u a re fo o to fth e a p p lic a b le E x p a n s io n B u ild in g ($ 7 .5 0 p e re n ta b le s q u a re fo o to fw h ic h m a y b e u s e d fo rT e n a n t's c a b lin g a n d T e n a n t's fu rn itu re ,fix tu re s a n d e q u ip m e n tw ith in th e a p p lic a b le E x p a n s io n B u ild in g )w h ic h s h a lb e d is b u rs e d a s p ro v id e d fo rin th e a p p lic a b le E x p a n s io n B u ild in g Wo rk L e te r;a n d (v )th e "E x p a n s io n B u ild in g R e n tC o m m e n c e m e n tD a te "s h a lb e th e d a te th a tis 6 0 d a y s a fte rth e S u b s ta n tia lC o m p le tio n o fth e B u ild in g S h e la n d th e S u b s ta n tia lT lC o m p le tio n o fth e E x p a n s io n B u ild in g T e n a n tlm p ro v e m e n ts (a la s d e fin e d in th e E x p a n s io n B u ild in g Wo rk L e te r),a n d T e n a n ts h a lc o m m e n c e p a y in g B a s e R e n ta n d O p e ra tin g E x p e n s e s fo rth e E x p a n s io n B u ild in g o n s u c h d a te .A s u s e d in th is L e a s e ,"P ro je c tG o s ts "s h a lm e a n th e s u m o fa lo fth e a c tu a l,d o c u m e n te d c o s ts in c u re d b y L a n d lo rd th ro u g h P ro je c tC lo s e -O u tin c o n n e c tio n w ith th e a c q u is ito n ,d e s ig n a n d c o n s tru c tio n o fth e a p p lic a b le E x p a n s io n B u ild in g ,th e P a rk in g S tru c tu re a n d a lre la te d im p ro v e m e n ts in c lu d in g ,w ith o u tlim ita tio n :(i)th e v a lu e o fth e la n d o n w h ic h th e a p p lic a b le E x p a n s io n B u ild in g is b e in g c o n s tru c te d (w h ic h fo rp u rp o s e s h e re o fth e p a rtie s a g re e is e q u a lto $ 3 4 .0 9 p e r
re n ta b le s q u a re fo o to fth e a p p lic a b le E x p a n s io n B u ild in g a s o fth e ln ita lC o m m e n c e m e n tD a te a n d s u c h a m o u n tis s u b je c to in c re a s e s o f6 0 /o o n e v e ry o th e ra n n iv e rs a ry o fth e ln ita lC o m m e n c e m e n tD a te ;(i)a rc h ite c tu ra l,e n g in e e rin g ,c o n s tru c tio n a n d d e v e lo p m e n tc o s ta n d fe e s ;(i)o th e rs o fta n d le g a lc o s ts ;(iv )a d e v e lo p m e n tfe e to L a n d lo rd e q u a lto 3 o /o o fth e h a rd P ro je c tC o s ts ;(v )L a n d lo rd 's c a ry c o s ts re la te d to th e a p p lic a b le E x p a n s io n B u ild in g fro m th e in ita tio n o fc o n s tru c tio n o fs u c h E x p a n s io n B u ild in g u n tilh e a p p lic a b le E x p a n s io n B u ild in g R e n tC o m m e n c e m e n tD a te ;(v i)th e $ 6 0 p e re n ta b le s g u a re fo o te n a n tim p ro v e m e n ta lo w a n c e g ra n te d b y L a n d lo rd fo rth e a p p lic a b le E x p a n s io n B u ild in g T e n a n tlm p ro v e m e n ts p lu s L a n d lo rd 's c a ry c o s ts re la te d to th e a p p lic a b le E x p a n s io n B u iH in g T e n a n tlm p ro v e m e n ts fro m th e in ita tio n o fc o n s tru c tio n o fth e a p p lic a b le E x p a n s io n B u ild in g T e n a n tlm p ro v e m e n ts u n tilh e a p p lic a b le E x p a n s io n B u ild in g R e n tC o m m e n c e m e n tD a te ;(v i)n fra s tru c tu re c o s ts ,a s s e s s m e n ts ,im p a c tfe e s ,s ite p re p a ra tio n c o s ts ,te s tin g ,la b o ra n d m a te ria ls to c o n s tru c th e a p p lic a b le E x p a n s io n B u ild in g a n d th e P a rk in g S tru c tu re a n d re la te d in fra s tru c tu re a n d im p ro v e m e n ts ,p e rm itfe e s ,c o s ts a s s o c ia te d w ith o b ta in in g th e P ID P e rm ita m e n d m e n ta n d n e c e s s a ry e n tile m e n to re -e n tile m e n ts ,ifn e c e s s a ry ,a n d a n y o th e r
g o v e rn m e n ta lfe e s ,s a le s ta x e s a n d fe e s p a y a b le to c o n tra c to rs ,p ro je c tla n d s c a p in g ,w a te r,g a s a n d e le c tric a lfe e s a n d re la te d m is c e la n e o u s c o s ts ,a n d b u ild e r's ris k in s u ra n c e a n d o th e rin s u ra n c e re la te d c o s ts ,(v i)le a s in g c o m m is s io n s ,ifa n y ,p a y a b le to a b ro k e rs o le ly in its c a p a c ity a s th e b ro k e re p re s e n tin g T e n a n tin c o n n e c tio n w ith th e a p p lic a b le E x p a n s io n R ig h ta n d ,u n le s s T e n a n th a s n o tife d L a n d lo rd in w ritn g o th e rw is e ,s u c h b ro k e rs h a lb e C u s h m a n & Wa k e fie ld o fS a n D ie g o ,ln c .,b u to n ly ifS te v e R o s e ta is th e b ro k e ra tC u s h m a n & Wa k e fie ld o fS a n D ie g o ,ln c .,re p re s e n tin g T e n a n tin c o n n e c tio n w ith th e a p p lic a b le E x p a n s io n R ig h ta n d fu rth e rp ro v id e d h o w e v e r,th a tL a n d lo rd a n d te n a n t's b ro k e r(w h e th e rC u s h m a n & Wa k e fie ld o fS a n D ie g o ,ln c .,o ra n y o th e rb ro k e ra g e c o m p a n y )s h a lh a v e e n te re d in to a c o m m is s io n a g re e m e n tw ith re s p e c to s u c h c o m m is s io n w h ic h a g re e m e n tis in fo rm a n d c o n te n ta c c e p ta b le to L a n d lo rd a n d s u c h b ro k e r,7 0 8 2 8 s s 3 6 .1 2 1 1 ,^C o p y rig h tO 2 m -r,A le x m d ria R rn lU s ta te fq u it s ,ln c .A L L L IJ R IC IT S R E S E R V E D .C u l'id e ita ls n d P ro p rie ia ry -D o N o ln r,x i,R rA -C o p y o rD is rib u E .A lrx m d ria a rd th e A le m d ria L o g o rc E g is rc rc d m d e ro rls o J A le x a n *ia R e a :th ta te E q lic a ,ln c .
 e a c h in th e ire s p e c tiv e s o le a n d a b s o lu te d is c re tio n ,(ix )L a n d lo rd 's c a ry c o s ts re la te d to th e P a rk in g S tru c tu re fro m th e in ita tio n o fc o n s tru c tio n o fs u c h P a rk in g S tru c tu re u n tilh e P ro je c tC lo s e -O u t;(x )L a n d lo rd 's c o n trib u tio n to w a rd s th e ln ita lC o s ts fo rs u c h E x p a n s io n B u ild in g ,a n d (x i)L a n d lo rd 's re a s o n a b le fin a n c in g c o s ts (o re a s o n a b le im p u te d m a rk e tra te fin a n c in g c o s ts )w ith re s p e c to a lo fth e fo re g o in g .L a n d lo rd s h a ln o tin c u ra n y P ro je c tC o s ts n o tc o n te m p la te d b y th is L e a s e a n d /o ra n y a p p lic a b le w o rk le te rw ith o u tT e n a n t's p rio rw rite n a p p ro v a l.T e n a n ts h a lh a v e th e rig h to a u d itP ro je c tC o s ts w ith in 1 8 0 d a y s a fte rth e P ro je c tC lo s e -O u ta n d ifT e n a n td is c o v e rs e ro rs a n d L a n d lo rd a n d T e n a n ta re u n a b le to re s o lv e s u c h d is p u te w ith in 3 0 d a y s a fte rth e e x p ira tio n o fs u c h 1 8 0 d a y p e rio d ,its h a lb e re s o lv e d b y a rb itra tio n b y a s in g le a rb itra to rw ith th e q u a lifc a tio n s a n d e x p e rie n c e a p p ro p ria te to re s o lv e th e m a te ra n d a p p o in te d p u rs u a n to a n d a c tin g in a c c o rd a n c e w ith th e ru le s o fth e A m e ric a n A rb itra tio n A s s o c ia tio n .A s u s e d h e re in ,"P a rk in g S tru c tu re "s h a lm e a n ,a la s e le c te d b y L a n d lo rd in its o le d is c re tio n ,o n e o rm o re p a rk in g s tru c tu re s e a c h o fw h ic h m a y b e c o n s tru c te d in o n e o rm o re p h a s e s w ith th e s a m e o rd ife re n tn u m b e rs o ftie rs in e a c h p h a s e .L a n d lo rd s h a ln o th o w e v e re q u ire th e c o n s tru c tio n in c o n n e c tio n w ith a n y E x p a n s io n B u ild in g o fm o re
p a rk in g s p a c e s th a n is re q u ire d u n d e ra p p lic a b le L e g a lR e q u ire m e n ts to s a tis fy th e P ID P e rm itfo rth e th e n P re m is e s a n d th e a d d ito n a lre n ta b le s q u a re fo o ta g e o fs u c h E x p a n s io n B u ild in g .E a c h P a rk in g S tru c tu re s h a lg e n e ra ly c o m p ly w ith th e re q u ire m e n ts s e tfo rth o n E x h ib itO a ta c h e d h e re to .L a n d lo rd s h a lu s e re a s o n a b le e fo rts to n o tify T e n a n to fits e le c tio n s w ith re s p e c to th e a p p lic a b le P a rk in g S tru c tu re (s )w ith in a re a s o n a b le tim e a fte rT e n a n te x e rc is e s its E x p a n s io n R ig h tfo ra n E x p a n s io n B u ild in g .lfL a n d lo rd e le c ts to c o n s tru c ta n y P a rk in g S tru c tu re (s )in p h a s e s ,a lo fth e P ro je c tC o s ts in c u re d in c o n n e c tio n w ith e a c h s u c h p h a s e o fth e a p p lic a b le P a rk in g S tru c tu re (s )s h a lb e a trib u ta b le to th e a p p lic a b le E x p a n s io n B u ild in g b e in g c o n s tru c te d b y L a n d lo rd .F o re x a m p le ,ifL a n d lo rd e le c ts in c o n n e c tio n w ith T e n a n t's e x e rc is e o fth e E x p a n s io n R ig h tfo rB u ild in g 7 to c o n s tru c ta P a rk in g S tru c tu re w ith o n ly 2 tie rs ,a lo fth e P ro je c tC o s ts in c o n n e c tio n w ith s u c h P a rk in g S tru c tu re s h a lb e in c lu d e d in th e d e fin ito n o fP ro je c tC o s ts fo rB u ild in g 8 a n d u s e d to c a lc u la te B a s e R e n tfo rB u ild in g 8 ,a n d ,ifT e n a n th e re a fte re le c ts to e x e rc is e its E x p a n s io n R ig h tfo rB u ild in g 8 ,a n d L a n d lo rd e le c ts to c o n s tru c ta d d ito n a ltie rs a n d /o ra n e w P a rk in g S tru c tu re a th a tim e ,a lo fth e P ro je c tC o s ts in c o n n e c tio n w ith s u c h a d d ito n a ltie rs a n d /o rn e w P a rk in g S tru c tu re s h a lb e in c lu d e d in th e
d e fin ito n o fP ro je c tC o s ts fo rB u ild in g 8 a n d u s e d to c a lc u la te B a s e R e n tfo rB u ild in g 7 .N o tw ith s ta n d in g a n y th in g to th e c o n tra ry c o n ta in e d h e re in ,ifT e n a n tp ro p e rly e x e rc is e s its re s c is s io n rig h ts a s p ro v id e d fo rin th is L e a s e ,a n y e le c tio n s m a d e b y L a n d lo rd p u rs u a n to th is p a ra g ra p h s h a ln o tb e b in d in g o n L a n d lo rd ifL a n d lo rd s o e le c ts a n d L a n d lo rd s h a lb e fre e to m a k e n e w e le c tio n s ifT e n a n th e re a fte re x e rc is e s a n y o fits E x p a n s io n R ig h ts .A s u s e d in th is L e a s e ,"P ro je c tC lo s e -O u t"s h a lm e a n th e firs td a te fo lo w in g th e fin a lc o m p le tio n o fth e a p p lic a b le E x p a n s io n B u ild in g b y L a n d lo rd th a t(i)a lc o n tra c to rs ,s u b c o n tra c to rs ,s u p p lie rs ,a rc h ite c ts a n d o th e rs w h o s u p p lie d la b o ro rm a te ria ls h a v e b e e n p a id in fu la n d a lie n s a re re le a s e d ;(i)th e a rc h ite c to rg e n e ra lc o n tra c to rfo rth e a p p lic a b le E x p a n s io n B u ild in g h a v e is s u e d a n y c e rtifc a te (s )o fc o m p le tio n a s m a y b e re q u ire d b y L a n d lo rd ;(i)a lp u n c h lis tie m s h a v e b e e n c o m p le te d ;a n d (iv )th e c o n tra c to rs a n d a rc h ite c th a v e p ro v id e d a lc lo s e o u td o c u m e n ta tio n re q u ire d b y L a n d lo rd ;p ro v id e d ,h o w e v e r,th a tin n o e v e n ts h a ls u c h d a te b e d e e m e d to o c c u ru n tilh e a p p lic a b le E x p a n s io n B u ild in g R e n tC o m m e n c e m e n tD a te .(e )C o n s tru c tio n o fE x p a n s io n B u ild in g s .ln a d d ito n to th e fo re g o in g ,th e fo lo w in g p ro v is io n s s h a la p p ly w ith re s p e c to th e d e s ig n a n d c o n s tru c tio n o fe a c h E x p a n s io n B u ild in g :(A )

B u ild in g S h e l.N o tw ith s ta n d in g a n y th in g to th e c o n tra ry c o n ta in e d in th is S e c tio n 3 9 ,L a n d lo rd 's c o n s tru c tio n o b lig a tio n w ith re s p e c to th e e a c h E x p a n s io n B u ild in g s h a lb e lim ite d to a n o b lig a tio n to c o n s tru c t,s u b je c to th e o th e rp ro v is io n s o fth is S e c tio n 3 9 ,a n d to d e liv e rto T e n a n th e E x p a n s io n B u ild in g u p o n S u b s ta n tia lC o m p le tio n o fth e B u ild in g S h e la n d u p o n S u b s ta n tia lT lC o m p le tio n o fth e E x p a n s io n C o p y rig h tO 2 0 5 ,A le x a n d li{R c s lj$ ta E lh u itc s ,ln c ,A L L (I)R IG IT S R E S E R I'E D .C o n fid a tia l.n d h o p rie ta ry -D o N o l^,iR rA .C o p y o rD is ts ib u E .A b x ild ria e d tb e A le x a o d d !L o g o re re g is e re d m d e ro rls o fA le x m d ria R e a ls h te E q u ite s ,ln c .7 0 8 2 8 s s 3 6 .1 2 1 2
B u ild in g T e n a n tlm p ro v e m e n ts .A s u s e d in th is L e a s e ,"B u ild in g S h e l"s h a lm e a n a w a rm s h e lc o n ta in in g th e w a rm s h e lre q u ire m e n ts s e tfo rth in th e E x p a n s io n B u ild in g R e q u ire m e n ts a ta c h e d h e re to a s E x h ib itl.A s u s e d in th is L e a s e ,"B u ild in g S h e tl/T lD e liv e ry D a te "s h a lm e a n th e d a te th a tT e n a n tis n o tife d in w ritn g th a th e B u ild in g S h e lh a s b e e n S u b s ta n tia ly C o m p le te d .(B )A rc h ite c ts a n d G o n tra c to rs .A fte rth e s e le c tio n o fth e g e n e ra lc o n tra c to ra s p ro v id e d fo rin th e E x p a n s io n B u ild in g Wo rk L e te r,L a n d lo rd s h a le n te rin to a g u a ra n te e d m a x im u m p ric e c o n tra c tw ith th e s e le c te d g e n e ra lc o n tra c to r.(C )P la n s .T e n a n ta c k n o w le d g e s th a tc e rta in p la n s a n d o th e rin fo rm a tio n th a tm a y b e m a d e a v a ila b le to T e n a n tp u rs u a n to th e p ro v is io n s o fth is S e c tio n 3 9 a n d a n y E x p a n s io n B u ild in g Wo rk L e te rc o n s tiu te in fo rm a tio n th a tL a n d lo rd c o n s id e rs c o n fid e n tia la n d ,u p o n re q u e s tfro m L a n d lo rd ,T e n a n ta n d L a n d lo rd s h a le x e c u te a c o n fid e n tia lity a n d n o n -d is c lo s u re a g re e m e n tre a s o n a b ly a c c e p ta b le to e a c h p a rty w ith re s p e c to s u c h c o n fid e n tia lin fo rm a tio n .(D )B u d g e t.T h e c o s tin fo rm a tio n re la te d to th e d e s ig n a n d c o n s tru c tio n o fe a c h E x p a n s io n B u ild in g s h a lb e s h a re d w ith T e n a n to n a s o c a le d "o p e n b o o k b a s is ".T e n a n ts h a lh a v e th e rig h to a p p ro v e (w h ic h a p p ro v a ls h a ln o tb e u n re a s o n a b ly w ith h e ld ,c o n d ito n e d o rd e la y e d )a n y m a te ria lc h a n g e s
to th e fin a lb u d g e tp rio rto L a n d lo rd e n te rin g in to th e g u a ra n te e d m a x im u m p ric e c o n tra c tw ith th e g e n e ra lc o n tra c to rfo rth e B u ild in g S h e l.N o tw ith s ta n d in g a n y th in g to th e c o n tra ry c o n ta in e d h e re in o rin th e E x p a n s io n B u ild in g Wo rk L e te r,L a n d lo rd s h a lh a v e th e rig h to in c lu d e a c o n tin g e n c y o fu p to 1 0 % in th e b u d g e ta n d in th e g u a ra n te e d m a x im u m p ric e c o n tra c tw ith th e g e n e ra lc o n tra c to r.ln a d d ito n ,th e b u d g e tfo re a c h E x p a n s io n B u ild in g s h a la ls o in c lu d e a p a y m e n tfo rth e d e v e lo p m e n tfe e p ro v id e d fo ra s p a rto fth e P ro je c tC o s ts .L a n d lo rd s h a ln o tb e e n tile d to a n y re im b u rs e m e n to fa n y fe e s ,o v e rh e a d ,tra v e l,s a la rie s o rc o s ts o fL a n d lo rd 's p e rs o n n e lin c o n n e c tio n w ith th e c o n s tru c tio n o fth e E x p a n s io n B u ild in g u n le s s th e y a re d e fin e d a s d ire c tP ro je c tC o s t.(E )S c h e d u le .L a n d lo rd 's p ro p o s e d c o n s tru c tio n s c h e d u le s h a lb e in c lu d e d a s p a rto fth e E x p a n s io n B u ild in g Wo rk L e te r.L a n d lo rd s h a lu s e re a s o n a b le e fo rts to c a u s e th e B u ild in g S h e lto b e S u b s ta n tia ly C o m p le te d w ith in 2 4 m o n th s a fte rth e b u ild in g p e rm itfo rth e s h e la n d c o re c o n s tru c tio n o fth e a p p lic a b le S h e lB u ild in g h a s b e e n is s u e d b y th e a p p lic a b le G o v e rn m e n ta lA u th o rity ).lfth e B u ild in g S h e l/T lD e liv e ry D a te h a s n o to c c u re d w ith in s u c h 2 4 m o n th p e rio d ,T e n a n ts h a lh a v e n o rig h to te rm in a te th is L e a s e w ith re s p e c to th e E x p a n s io n B u ild in g n o rs h a lL a n d lo rd h a v e a n y lia b ilty to

T e n a n tfo ra n y lo s s o rd a m a g e re s u ltin g th e re fro m e x c e p th a tT e n a n ts h a lb e e n tile d to o c c u p y s u c h E x p a n s io n B u ild in g fo lo w in g th e E x p a n s io n B u ild in g R e n tC o m m e n c e m e n tD a te w ith o u th e o b lig a tio n to p a y B a s e R e n t1 d a y fo re a c h d a y fo lo w in g th e e x p ira tio n o fs u c h 2 4 m o n th p e rio d u n tilh e B u ild in g S h e lfD e liv e ry D a te .lfth e B u ild in g S h e lfD e liv e ry D a te h a s n o to c c u re d w ith in 3 0 m o n th s a fte rth e b u ild in g p e rm itfo rth e s h e la n d c o re c o n s tru c tio n o fth e a p p lic a b le S h e lB u ild in g h a s b e e n is s u e d b y th e a p p lic a b le G o v e rn m e n ta lA u th o rity ,T e n a n ts h a lh a v e th e rig h to e le c to e ith e r(i)c o n tin u e to re c e iv e th e B a s e R e n ta b a te m e n tp ro v id e d fo rin th e p re c e d in g s e n te n c e ,o r(i)te rm in a te th is L e a s e o n ly w ith re s p e c to th e a p p lic a b le E x p a n s io n B u ild in g b y w rite n n o tic e to L a n d lo rd ,in w h ic h c a s e ,e x c e p ta s p ro v id e d fo rin th e la s ts e n te n c e o fth e firs tp a ra g ra p h o fS e c tio n 3 9 (b ),L a n d lo rd s h a ln o th a v e a n y fu rth e rd u tie s o ro b lig a tio n s to T e n a n tu n d e rth is L e a s e w ith re s p e c to th e a p p lic a b le E x p a n s io n B u ild in g a n d T e n a n ts h a lh a v e n o fu rth e re x p a n s io n rig h ts w ith re s p e c to s u c h E x p a n s io n B u ild in g a n d L a n d lo rd s h a lb e fre e to le a s e ito a n y th ird p a rty (ie s )o n a n y te rm s a n d c o n d ito n s a c c e p ta b le to L a n d lo rd .lfT e n a n td o e s n o te le c to te rm in a te th is L e a s e w ith re s p e c to th e a p p lic a b le E x p a n s io n B u ild in g p u rs u a n to s u b s e c tio n (i)o fth e im m e d ia te ly
p re c e d in g s e n te n c e w ith in 1 0 b u s in e s s d a y s a fte rth e e x p ira tio n o fs u c h 3 0 m o n th p e rio d ,7 0 8 2 8 5 5 3 6 .1 2 1 3 ,^C o p y riS h rO 2 m .s ,A le x a n d ria R .d lis la E Iq u ire s ,ln c ,A L L (I)R IG IT S R E S E R V E D .C o n fid e n tia l.n d P ro F io ta ry -D o N o r^,io ,n _ C o p y o rD is rib u E .A le x a n d ria m d th c A lc m d ri{L o g o @-'re g is te re d m d e m a rts o fA le x e d ria R e a l['s u E E q u itc s ,ln c .
s u c h rig h to te rm in a te th is L e a s e w ith re s p e c to a p p lic a b le E x p a n s io n B u ild in g s h a lb e w a iv e d ,th is L e a s e w ith re s p e c to th e a p p lic a b le E x p a n s io n B u ild in g s h a lre m a in in fu lfo rc e a n d e fe c t,a n d T e n a n ts h a lb e d e e m e d to h a v e e le c te d to p ro c e e d u n d e rs u b s e c tio n (i)a b o v e .N o tw ith s ta n d in g a n y th in g to th e c o n tra ry c o n ta in e d h e re in ,T e n a n ta c k n o w le d g e s a n d a g re e s th a ta n y T e n a n tD e la y s (a s d e fin e d in E x p a n s io n B u ild in g Wo rk L e te r)a n d /o rd e la y s c a u s e d b y F o rc e M a je u re s h a le x te n d th e d a te s s e tfo rth in th is p a ra g ra p h fo rL a n d lo rd 's p e rfo rm a n c e o fits o b lig a tio n s o n a d a y fo rd a y b a s is ;p ro v id e d ,h o w e v e r,th a tin n o e v e n tm a y a n y d e la y s c a u s e d b y F o rc e M a je u re e x te n d th e d a te s s e tfo rth in th is p a ra g ra p h fo rL a n d lo rd 's p e rfo rm a n c e o fits o b lig a tio n s b y m o re th a n 9 0 d a y s in th e a g g re g a te e x c e p tin th e c a s e o fa n y m a te rc o v e re d b y th e p ro v is io n s o fS e c tio n s 1 8 a n d 1 9 h e re o f.(F )A c k n o w le d g m e n t.U p o n th e re q u e s to fe ith e rL a n d lo rd o rT e n a n t,h e p a rtie s s h a le x e c u te a n d d e liv e ra w rite n fa c tu a ly c o re c ta c k n o w le d g e m e n to fth e B u ild in g S h e lfD e liv e ry D a te ,th e E x p a n s io n B u ild in g R e n tC o m m e n c e m e n tD a te ,th e B a s e R e n tfo rth e E x p a n s io n B u ild in g a n d th e e x p ira tio n d a te o fth e B a s e T e rm a s a n d w h e n s u c h a re e s ta b lis h e d in th e fo rm s u b s ta n tia ly s im ila rto th e fo rm o fth e "A c k n o w le d g e m e n to fC o m m e n c e m e n tD a te "

a ta c h e d to th is L e a s e a s E x h ib itD ;p ro v id e d ,h o w e v e r,th e fa ilu re b y e ith e rp a rty to e x e c u te a n d d e liv e rs u c h a c k n o w le d g m e n ts h a ln o ta fe c th e o th e rp a rty 's rig h ts h e re u n d e r.(f)R ig h to F u rth e rE x p a n d a th e P ro je c t.D u rin g th e T e rm ,T e n a n ts h a lh a v e th e rig h t(h e "S G S E x p a n s io n R ig h t")o e le c to le a s e a n y A v a ila b le S e c o n d G e n e ra tio n S p a c e u p o n th e te rm s a n d c o n d ito n s s e tfo rth in th is S e c tio n 3 9 (fl.A s u s e d h e re in ,"A v a ila b le S e c o n d G e n e ra tio n S p a c e "s h a lm e a n a n y s p a c e p re v io u s ly le a s e d b y L a n d lo rd to a n y th ird p a rty in a n y n e w b u ild in g (s )c o n s tru c te d b y L a n d lo rd a th e P ro je c ta fte rth e d a te h e re o fa n d n o tle a s e d b y T e n a n t.lfh e re is a n y A v a ila b le S e c o n d G e n e ra tio n S p a c e a v a ila b le fo rle a s e o rb e c o m in g a v a ila b le fo rle a s e to a th ird p a rty (o th e rth a n th e te n a n th e n le a s in g s u c h s p a c e (w h e th e ro rn o ts u c h te n a n th a s th e rig h to re n e w )a n d /o ra n y o th e rp a rty to w h o m L a n d lo rd h a s g ra n te d a rig h to le a s e s u c h A v a ila b le S e c o n d G e n e ra tio n S p a c e ),L a n d lo rd s h a l,a ts u c h tim e a s L a n d lo rd s h a le le c t,d e liv e rto T e n a n tw rite n n o tic e (th e "O fe rN o tic e ")o fs u c h A v a ila b le S e c o n d G e n e ra tio n S p a c e ,to g e th e rw ith th e te rm s a n d c o n d ito n s o n w h ic h L a n d lo rd is p re p a re d to le a s e to T e n a n ts u c h A v a ila b le S e c o n d G e n e ra tio n S p a c e .T e n a n ts h a lb e e n tile d to e x e rc is e its rig h tu n d e rth is S e c tio n 3 9 (flo n ly w ith re s p e c to th e e n tire A v a ila b le S e c o n d
G e n e ra tio n S p a c e id e n tife d in th e O fe rN o tic e .lfth e a p p lic a b le A v a ila b le S e c o n d G e n e ra tio n S p a c e b e in g d e s c rib e d in th e a p p lic a b le O fe rN o tic e is 1 flo o ro rle s s o fa n y a p p lic a b le b u ild in g ,L a n d lo rd m a y n o tre q u ire a b a s e te rm fo rs u c h s p a c e in th e O fe rN o tic e w h ic h is m o re th a n 1 0 y e a rs .lfth e a p p lic a b le A v a ila b le S e c o n d G e n e ra tio n S p a c e b e in g d e s c rib e d in th e a p p lic a b le O fe rN o tic e is m o re th a n 1 flo o rin a n y a p p lic a b le b u ild in g ,th e re s h a lb e n o c a p o n th e le n g th o fth e b a s e te rm w h ic h L a n d lo rd m a y re q u ire fo rs u c h s p a c e in th e O fe rN o tic e .lfT e n a n td e liv e rs a n A c c e p ta n c e N o tic e b u tin g o o d fa ith b e lie v e s th a th e B a s e R e n ta n d e s c a la tio n s b e in g re q u ire d b y L a n d lo rd is a b o v e th e m a rk e tra te fo rs u c h A v a ila b le S e c o n d G e n e ra tio n S p a c e ,th e B a s e R e n tfo rs u c h A v a ila b le S e c o n d G e n e ra tio n S p a c e s h a lb e d e te rm in e d in th e s a m e m a n n e ra s th e M a rk e tR a te (a s d e fin e d in S e c tio n 4 0 )is d e te rm in e d p u rs u a n to S e c tio n 4 0 b u to n a n e x p e d ite d b a s is to b e a g re e d u p o n b y L a n d lo rd a n d T e n a n ta th e tim e T e n a n td e liv e rs a n A c c e p ta n c e N o tic e b u tin a le v e n ts th e d e te rm in a tio n o fth e B a s e R e n tfo rs u c h A v a ila b le S e c o n d G e n e ra tio n S p a c e m u s tb e fin a liz e d ,ifa ta l,w ith in 3 0 d a y s a fte rT e n a n td e liv e rs th e a p p lic a b le A c c e p ta n c e N o tic e .T e n a n ts h a lh a v e 1 0 b u s in e s s d a y s fo lo w in g d e liv e ry o fth e O fe rN o tic e to d e liv e rto L a n d lo rd w rite n
n o tifc a tio n ("A c c e p ta n c e N o tic e ")ifT e n a n te le c ts to le a s e th e A v a ila b le S e c o n d G e n e ra tio n E x p a n s io n S p a c e d e s c rib e d in th e O fe rN o tic e .T e n a n t's fa ilu re to d e liv e ra n A c c e p ta n c e N o tic e to L a n d lo rd w ith in th e re q u ire d 1 0 b u s in e s s d a y p e rio d s h a lb e d e e m e d to b e a n e le c tio n b y T e n a n tn o to e x e rc is e T e n a n t's rig h to le a s e th e A v a ila b le S e c o n d G e n e ra tio n 7 0 8 2 8 5 5 3 6 .1 2 1 4 ,^C o p y rig h t@2 0 0 -5 ,A le x o n d ria R lta tc ijq u ire s ,ln c .A L L L lJ R IG IrS R E S E R V E D .C o n fid c n tia ls n d P rc p rie ta ry -D o N o t^r,x i,R ra .C o p y G D is k ib u ts .A le ra n d ria & d $ e A le m d riL o g o rc rg i{e rc d m d e ru *s o fA le x m d ria R e a lis ta te E q u itc s ,ln c .
 S p a c e p u rs u a n to th is S e c tio n 3 9 (fl,in w h ic h c a s e T e n a n ts h a lb e d e e m e d to h a v e w a iv e d its rig h ts u n d e rth is S e c tio n 3 9 (flw ith re s p e c to s u c h A v a ila b le S e c o n d G e n e ra tio n S p a c e ,th e p ro v is io n s o fth is S e c tio n 3 9 (fls h a ln o lo n g e ra p p ly to s u c h A v a ila b le S e c o n d G e n e ra tio n S p a c e a n d L a n d lo rd s h a lh a v e th e rig h to le a s e s u c h A v a ila b le S e c o n d G e n e ra tio n S p a c e to a n y p a rty o rp a rtie s a n d o n a n y te rm s a n d c o n d ito n s a c c e p ta b le to L a n d lo rd in its s o le a n d a b s o lu te d is c re tio n .N o tw ith s ta n d in g a n y th in g to th e c o n tra ry c o n ta in e d h e re in ,ifT e n a n td e liv e rs a n A c c e p ta n c e N o tic e to L a n d lo rd fo ra n y A v a ila b le S e c o n d G e n e ra tio n S p a c e a n d w ith in 3 0 d a y s th e re a fte rn o le a s e a m e n d m e n to rle a s e a g re e m e n tfo rth e a p p lic a b le A v a ila b le S e c o n d G e n e ra tio n S p a c e h a s b e e n e n te re d in to b y th e p a rtie s o n s u c h te rm s a n d c o n d ito n s a s m a y b e a c c e p ta b le to e a c h p a rty in its s o le a n d a b s o lu te d is c re tio n a fte rn e g o tia tin g in g o o d fa ith ,T e n a n ts h a lb e d e e m e d to h a v e w a iv e d its rig h to le a s e th e a p p lic a b le A v a ila b le S e c o n d G e n e ra tio n S p a c e a n d L a n d lo rd s h a lb e fre e to le a s e th e s a m e to a n y th ird p a rty a n d o n a n y te rm s a n d c o n d ito n s a c c e p ta b le to L a n d lo rd in its s o le a n d a b s o lu te d is c re tio n .N o tw ith s ta n d in g a n y th in g to th e c o n tra ry c o n ta in e d h e re in ,T e n a n t's S G S E x p a n s io n R ig h ts h a l,a tL a n d lo rd 's o p tio n ,n o tb e in
e fe c td u rin g a n y p e rio d w h e re T e n a n tis in m a te ria lD e fa u ltu n d e rth is L e a s e .(g )T e n a n tD e fa u lt.N o tw ith s ta n d in g a n y th in g to th e c o n tra ry c o n ta in e d h e re in ,L a n d lo rd s h a lh a v e th e rig h to s u s p e n d p e rfo rm a n c e o fa lo ra n y o fL a n d lo rd 's o b lig a tio n s u n d e rth is S e c tio n 3 9 d u rin g a n y p e rio d th a tT e n a n tis in m a te ria lD e fa u ltu n d e rth is L e a s e a n d s u c h p e rio d o fs u s p e n s io n s h a lc o n s tiu te a d e la y c a u s e d b y T e n a n t;p ro v id e d th a tL a n d lo rd h a s n o tife d T e n a n tin w ritn g o fL a n d lo rd 's in te n tio n to s u s p e n d p e rfo rm a n c e d u e to s u c h D e fa u lt.(h )A m e n d e d L e a s e .L a n d lo rd a n d T e n a n ts h a le n te rin to a le a s e a m e n d m e n to rle a s e a g re e m e n ta c c e p ta b le to b o th L a n d lo rd a n d T e n a n tfo re a c h E x p a n s io n B u ild in g s e tin g fo rth th e le a s e te rm s a n d th e re n ta lo fs u c h E x p a n s io n B u ild in g c o n s is te n tw ith th o s e s e tfo rth in th is S e c tio n 3 9 .(i)T e rm in a tio n .T h e E x p a n s io n R ig h ts h a l,a tL a n d lo rd 's o p tio n ,te rm in a te a n d b e o fn o fu rth e rfo rc e o re fe c te v e n a fte rT e n a n t's d u e a n d tim e ly e x e rc is e o fth e E x p a n s io n R ig h t,ifa fte rs u c h e x e rc is e ,b u tp rio rto th e c o m m e n c e m e n td a te o fth e B a s e T e rm o fth e le a s e o fth e a p p lic a b le E x p a n s io n B u ild in g ,th e re is a n y m a te ria lD e fa u ltb y T e n a n tu n d e rth e L e a s e .0 )R ig h ts P e rs o n a l.T h e E x p a n s io n R ig h ts a n d th e S G S E x p a n s io n R ig h ta re p e rs o n a lto T e n a n ta n d a re n o ta s s ig n a b le w ith o u tL a n d lo rd 's c o n s e n t,w h ic h m a y b e g ra n te d o r
w ith h e ld in L a n d lo rd 's s o le d is c re tio n s e p a ra te a n d a p a rtfo m a n y c o n s e n tb y L a n d lo rd to a n a s s ig n m e n to fT e n a n t's in te re s tin th e L e a s e ,e x c e p th a th e y m a y b e a s s ig n e d in c o n n e c tio n w ith a n y P e rm ite d A s s ig n m e n to fth is L e a s e .(k )N o E x te n s io n s .T h e p e rio d o ftim e w ith in w h ic h a n y E x p a n s io n R ig h to rS G S E x p a n s io n R ig h t,a s a p p lic a b le ,m a y b e e x e rc is e d s h a ln o tb e e x te n d e d o re n la rg e d b y re a s o n o fT e n a n t's in a b ilty to e x e rc is e th e E x p a n s io n R ig h to rS G S E x p a n s io n R ig h t,a s a p p lic a b le .(l)A d d ito n a lE n tile m e n ts .T e n a n ta c k n o w le d g e s a n d a g re e s th a t(i)L a n d lo rd m a y b e a b le to o b ta in a d d ito n a le n tile m e n ts fo ra p p ro x im a te ly 1 9 0 ,0 0 0 a d d ito n a lre n ta b le s q u a re fe e ta th e P ro je c t("A d d ito n a lE n tile m e n ts "),(ifL a n d lo rd o b ta in s a n y o ra ls u c h A d d ito n a lE n tile m e n ts ,th e P ro je c tS ite P la n m a y b e re v is e d b y L a n d lo rd to in c lu d e s u c h a d d ito n a ls q u a re fo o ta g e ,(i)n n o e v e n tis L a n d lo rd o b lig a te d to s e e k o ro b ta in s u c h A d d ito n a lE n tile m e n ts ,a n d (iv )ifL a n d lo rd o b ta in s a n y o ra ls u c h A d d ito n a lE n tile m e n ts ,T e n a n t's E x p a n s io n R ig h ts h a l,a tL a n d lo rd 's o p tio n ,in c lu d e s u c h a d d ito n a ls q u a re fo o ta g e s u b je c to a lo fth e o th e rp ro v is io n s o fth is S e c tio n 3 9 ;p ro v id e d ,h o w e v e r,th a tT e n a n ts h a ln o tb e re q u ire d to p a y L a n d R e n tin c o n n e c tio n w ith s u c h A d d ito n a lE n tile m e n ts .ln n o e v e n ts h a la n y p o rtio n o f,^C o p y rig h r@2 m -5 ,A le x a n d lia R r& lj$ la e & u ite s ,
In c .A L L (IJ R lc lIT S R E S E R V E D .C o n lid c n ria la n d P ro p ie ta ry -D o N o l^,*io ,^-C o p y o rD s rib u c .A trx e & ia e d th e A le x m d d a L o g o rc rc g is re re d m d e w k s o fA le x e d ia R e a lf,s la te E q u its ,ln c -7 0 8 2 8 s s 3 6 .1 2 1 5
 1 4 ,th e s q u a re fo o ta g e c o m p ris in g th e A d d ito n a lE n tile m e n ts b e a d d e d to B u ild in g 7 ,B u ild in g B o rB u ild in g 9 s o lo n g a s T e n a n tc o n tin u e s to h a v e th e E x p a n s io n R ig h ts u n d e rth is L e a s e a n d T e n a n tis p a y in g th e L a n d R e n t."E x h ib itH a ta c h e d to th e L e a s e is h e re b y d e le te d in its e n tire ty a n d re p la c e d w ith E x h ib itC a ta c h e d to th is S e c o n d A m e n d m e n t.B ro k e rs .L a n d lo rd a n d T e n a n te a c h re p re s e n ts a n d w a ra n ts th a tih a s n o td e a ltw ith a n y b ro k e r,a g e n to ro th e rp e rs o n (c o le c tiv e ly ,"B ro k e r")in c o n n e c tio n w ith th e tra n s a c tio n re fle c te d in th is S e c o n d A m e n d m e n ta n d th a tn o B ro k e rb ro u g h ta b o u th is tra n s a c tio n ,o th e rth a n C u s h m a n & Wa k e fie ld .L a n d lo rd a n d T e n a n te a c h h e re b y a g re e s to in d e m n ify a n d h o ld th e o th e rh a rm le s s fro m a n d a g a in s ta n y c la im s b y a n y B ro k e rc la im in g a c o m m is s io n o ro th e rfo rm o fc o m p e n s a tio n b y v irtu e o fh a v in g d e a ltw ith T e n a n to rL a n d lo rd ,a s a p p lic a b le ,w ith re g a rd to th is le a s in g tra n s a c tio n .L a n d lo rd s h a lb e re s p o n s ib le fo ra lc o m m is s io n s d u e to C u s h m a n & Wa k e fie ld a ris in g o u to fth e e x e c u tio n o fth is S e c o n d A m e n d m e n tin a c c o rd a n c e w ith th e te rm s o fa s e p a ra te w rite n a g re e m e n tb e tw e e n C u s h m a n & Wa k e fie ld a n d L a n d lo rd .M is c e la n e o u s .a .T h is S e c o n d A m e n d m e n tis th e e n tire a g re e m e n tb e tw e e n th e p a rtie s w ith re s p e c to th e s u b je c tm a te rh e re o fa n d s u p e rs e d e s a lp rio ra n d
c o n te m p o ra n e o u s o ra la n d w rite n a g re e m e n ts a n d d is c u s s io n s .T h is S e c o n d A m e n d m e n tm a y b e a m e n d e d o n ly b y a n a g re e m e n tin w ritn g ,s ig n e d b y th e p a rtie s h e re to .b .T h is S e c o n d A m e n d m e n tis b in d in g u p o n a n d s h a lin u re to th e b e n e fito fth e p a rtie s h e re to ,a n d th e ire s p e c tiv e s u c c e s s o rs a n d a s s ig n s .c .T h is S e c o n d A m e n d m e n tm a y b e e x e c u te d in a n y n u m b e ro fc o u n te rp a rts ,e a c h o fw h ic h s h a lb e d e e m e d a n o rig in a l,b u ta lo fw h ic h w h e n ta k e n to g e th e rs h a lc o n s tiu te o n e a n d th e s a m e in s tru m e n t.T h e s ig n a tu re p a g e o fa n y c o u n te rp a rtm a y b e d e ta c h e d th e re fro m w ith o u tim p a irn g th e le g a le fe c to fth e s ig n a tu re (s )th e re o n p ro v id e d s u c h s ig n a tu re p a g e is a ta c h e d to a n y o th e rc o u n te rp a rtid e n tic a lth e re to e x c e p th a v in g a d d ito n a ls ig n a tu re p a g e s e x e c u te d b y o th e rp a rtie s to th is S e c o n d A m e n d m e n ta ta c h e d th e re to .d .E x c e p ta s a m e n d e d a n d /o rm o d ife d b y th is S e c o n d A m e n d m e n t,h e L e a s e is h e re b y ra tife d a n d c o n firm e d a n d a lo th e rte rm s o fth e L e a s e s h a lre m a in in fu lfo rc e a n d e fe c t,u n a lte re d a n d u n c h a n g e d b y th is S e c o n d A m e n d m e n t.ln th e e v e n to fa n y c o n flic tb e tw e e n th e p ro v is io n s o fth is S e c o n d A m e n d m e n ta n d th e p ro v is io n s o fth e L e a s e ,th e p ro v is io n s o fth is S e c o n d A m e n d m e n ts h a lp re v a il.Wh e th e ro rn o ts p e c ifc a ly a m e n d e d b y th is S e c o n d A m e n d m e n t,a lo fth e te rm s a n d
p ro v is io n s o fth e L e a s e a re h e re b y a m e n d e d to th e e x te n tn e c e s s a ry to g iv e e fe c to th e p u rp o s e a n d in te n to fth is S e c o n d A m e n d m e n t.[S ig n a tu re s a re o n th e n e x tp a g e .l1 5 .,^C o p y ri8 h rO 2 0 0 .r,A le x a n d irR c s l.is h c & u irs s ,ln c .A L L tU R IC IT S R E S E R V E D .C o n fid e n tia lrn d P ro p rie ta ry -D o N o t^,iR rA .C o p y o rD s rib u k .A b x a n d ri{to d th c A le x e d ria L o g o re re g is G re d m d e ru rls o fA le x rD d ria R e a lts te E q u itc s ,ln c .7 0 8 2 8 5 5 3 6 .1 2 1 6
IN WIT N E S S WH E R E O F ,d a y a n d y e a rfis ta b o v e w rite n .th e p a rtie s h e re to h a v e e x e c u te d th is S e c o n d A m e n d m e n ta s o fth e T E N A N T :IL L U M IN A ,IN C .,a D e la w a re c o rp o ra tio n L A N D L O R D :A R E .S D R E G IO N N O .3 2 ,L L C ,a D e la w a re lim ite d lia b ilty c o m p a n y B y :A L E X A N D R IA R E A L E S T A T E E Q U IT IE S ,L .P .,a D e la w a re lim ite d p a rtn e rs h ip ,m a n a g in g m e m b e rA R E -Q R S C O R P .,a M a ry la n d c o rp o ra tio n ,g e n e ra lp a rtn e rB y :R E L e g o lA fo in 'Y t-ri'C o p y rig h rO 2 m 5 ,A le x a a d ria R G a ,B ta E n q u ire s ,Itrc .A ItlJ R lG lT S R E S m V E D .C o n fid e rd o lrn d P ro p rio ta ry -D o N o l^,iR IA -C o p y s D is E ib u E ,A b x e & ia a d rh e A le x e d ris L o g o @E g is E E d m d e lM ls o fA le p n & ia R e a lL s la te E q u itc s ,ln c .7 0 8 2 8 s s 3 6 .1 2 1 7
L E A S E b y a n d b e tw e e n B M R L IN C O L N C E N T R E L P ,a D e la w a re lim ite d p a rtn e rs h ip a n d IL L U M IN A ,IN C .,a D e la w a re c o rp o ra tio n
iT a b le o fC o n te n ts 1 .L e a s e o fP re m is e s .1 2 .B a s ic L e a s e P ro v is io n s .2 3 .T e rm .7 4 .P ro je c ta n d B a s e B u ild in g Wo rk ;S u b s ta n tia lC o m p le tio n ;S c h e d u le a n d B u d g e t.7 5 .R e n t.1 2 6 .R e n tA d ju s tm e n ts .1 4 9 .U s e .1 8 1 0 .R u le s a n d R e g u la tio n s ,C C & R s a n d P a rk in g F a c ilte s .2 0 1 1 .C o n tro lb y L a n d lo rd .2 1 1 2 .Q u ie tE n jo y m e n t.2 2 1 3 .U tile s a n d S e rv ic e s .2 3 1 4 .A lte ra tio n s .2 8 1 5 .R e p a irs a n d M a in te n a n c e .3 1 1 7 .E s to p p e lC e rtifc a te .3 5 1 8 .H a z a rd o u s M a te ria ls .3 6 1 9 .O d o rs a n d E x h a u s t.3 9 2 0 .In s u ra n c e ;Wa iv e ro fS u b ro g a tio n .3 9 2 1 .D a m a g e o rD e s tru c tio n .4 4 2 2 .E m in e n tD o m a in .4 6 2 3 .S u re n d e r.4 7 2 4 .H o ld in g O v e r.4 8 2 5 .In d e m n ifc a tio n a n d E x c u lp a tio n .4 9 2 6 .A s s ig n m e n to rS u b le tin g .5 0 2 7 .S u b o rd in a tio n a n d A to rn m e n t.5 4 2 8 .D e fa u lts a n d R e m e d ie s .5 5 2 9 .B a n k ru p tc y .6 0 3 0 .B ro k e rs .6 1 3 1 .D e fin ito n o fL a n d lo rd .6 1 3 2 .L im ita tio n o fL a n d lo rd s L ia b ilty .6 1 3 3 .J o in ta n d S e v e ra lO b lig a tio n s .6 2
i3 4 .R e p re s e n ta tio n s .6 3 3 5 .C o n fid e n tia lity .6 3 3 6 .N o tic e s .6 4 3 7 .M is c e la n e o u s .6 4 3 8 .T e le c o m m u n ic a tio n s E q u ip m e n t.6 9 3 9 .O p tio n s to E x te n d T e rm .6 9 4 0 .E x p a n s io n O p tio n .7 1 4 1 .R ig h to fF irs tR e fu s a lto P u rc h a s e .7 6 4 2 .M u ltiT e n a n tP ro v is io n s .7 9 4 3 .S e c u re d A re a s .7 9
L E A S E T H IS L E A S E (th is L e a s e )is e n te re d in to a s o fth is _ _ _ _ d a y o fD e c e m b e r,2 0 1 4 (th e E x e c u tio n D a te ),b y a n d b e tw e e n B M R L IN C O L N C E N T R E L P ,a D e la w a re lim ite d p a rtn e rs h ip (L a n d lo rd ),a n d IL L U M IN A ,IN C .,a D e la w a re c o rp o ra tio n (T e n a n t).R E C IT A L S A .WH E R E A S ,L a n d lo rd o w n s c e rta in re a lp ro p e rty (th e P ro p e rty )a n d a lim p ro v e m e n ts o n th e P ro p e rty w h ic h is lo c a te d a t2 0 0 -8 0 0 L in c o ln C e n tre D riv e ,F o s te rC ity ,C a lifo rn ia 9 4 0 4 4 a s m o re fu ly d e s c rib e d o n E x h ib itA -1 a ta c h e d h e re to ;B .WH E R E A S ,L a n d lo rd in te n d s to c o n s tru c to n th e P ro p e rty th re e (3 )b u ild in g s ,e a c h c o n ta in in g 1 6 0 ,0 0 0 s q u a re fe e to fR e n ta b le A re a ,a s d e fin e d b e lo w ,(w h ic h b u ild in g s s h a lb e re fe re d to h e re in a s B u ild in g A ,B u ild in g B a n d B u ild in g C ),o n e (1 )b u ild in g c o n ta in in g 4 0 ,0 0 0 s q u a re fe e to fR e n ta b le A re a (w h ic h b u ild in g s h a lb e re fe re d to h e re in a s B u ild in g D ),a n d c e rta in p a rk in g s tru c tu re s (k n o w n a s P S 1 ,P S 2 a n d P S 3 ),s u rfa c e p a rk in g fa c ilte s a n d o th e rim p ro v e m e n ts (s u c h b u ild in g s a n d im p ro v e m e n ts a re m o re fu ly d e p ic te d o n th e p re lim in a ry s ite p la n a ta c h e d h e re to a s E x h ib itA ,w h ic h s ite p la n is fo rilu s tra tio n p u rp o s e s o n ly a n d re m a in s s u b je c to c h a n g e in a c c o rd a n c e w ith th e te rm s a n d c o n d ito n s o fth is L e a s e ).B u ild in g A ,B u ild in g B ,B u ild in g C a n d B u ild in g D o ra n y c o m b in a tio n th e re o fm a y b e re fe re d to h e re in a s th e B u ild in g s ,a n d a n y re fe re n c e h e re in to a B u ild in g
s h a lm e a n B u ild in g A ,B u ild in g B ,B u ild in g C o rB u ild in g D ,a s a p p lic a b le .B u ild in g A ,B u ild in g B ,B u ild in g C ,B u ild in g D a n d a lp a rk in g s tru c tu re s ,fa c ilte s a n d o th e rim p ro v e m e n ts s e rv in g s u c h b u ild in g s ,to g e th e rw ith th e P ro p e rty ,a re c o le c tiv e ly re fe re d to h e re in a s th e P ro je c t;a n d C .WH E R E A S ,L a n d lo rd w is h e s to le a s e to T e n a n t,a n d T e n a n td e s ire s to le a s e fro m L a n d lo rd ,th e P re m is e s (a s d e fin e d b e lo w ),p u rs u a n to th e te rm s a n d c o n d ito n s o fth is L e a s e ,a s d e ta ile d b e lo w .A G R E E M E N T N O W,T H E R E F O R E ,L a n d lo rd a n d T e n a n t,in c o n s id e ra tio n o fth e m u tu a lp ro m is e s c o n ta in e d h e re in a n d fo ro th e rg o o d a n d v a lu a b le c o n s id e ra tio n ,th e re c e ip ta n d s u fic ie n c y o fw h ic h a re h e re b y a c k n o w le d g e d ,a n d in te n d in g to b e le g a ly b o u n d ,a g re e a s fo lo w s :1 .L e a s e o fP re m is e s .E fe c tiv e o n th e T e rm C o m m e n c e m e n tD a te (a s d e fin e d b e lo w ),L a n d lo rd h e re b y le a s e s to T e n a n ta n d T e n a n th e re b y le a s e s fro m L a n d lo rd (i)B u ild in g A (in c lu d in g ,w ith o u tlim ita tio n ,a ls h a fts ,c a b le ru n s ,m e c h a n ic a ls p a c e s a n d ro o fto p a re a s (s u b je c to th e te rm s a n d c o n d ito n s o fth is L e a s e ),(iB u ild in g B (in c lu d in g ,w ith o u tlim ita tio n ,a ls h a fts ,c a b le ru n s ,m e c h a n ic a ls p a c e s a n d ro o fto p a re a s (s u b je c to th e te rm s a n d c o n d ito n s o fth is L e a s e ),(iB u ild in g D (in c lu d in g ,w ith o u tlim ita tio n ,a ls h a fts ,c a b le ru n s ,m e c h a n ic a ls p a c e s a n d ro o fto p a re a s (s u b je c to th e te rm s a n d c o n d ito n s o fth is L e a s e )

a n d (iv )a la n d s c a p in g ,p a rk in g fa c ilte s a n d s tru c tu re s ,p riv a te d riv e s a n d o th e rim p ro v e m e n ts a n d a p p u rte n a n c e s w ith in th e P ro je c tre la te d th e re to o rs e rv in g th e a p p lic a b le B u ild in g s a s re a s o n a b ly d e s ig n a te d b y L a n d lo rd (a lo f(i),a n d (iv )a b o v e ,to g e th e rw ith th e rig h ts o fa c c e s s a n d
 2 p a rk in g g ra n te d to T e n a n th e re u n d e rw h ic h a re a p p u rte n a n to th e P re m is e s ,a re c o le c tiv e ly re fe re d to h e re in a s th e P re m is e s )fo ru s e b y T e n a n tin a c c o rd a n c e w ith th e P e rm ite d U s e (a s d e fin e d b e lo w )a n d n o o th e ru s e s .N o tw ith s ta n d in g a n y th in g to th e c o n tra ry in th is L e a s e ,L a n d lo rd a n d T e n a n th a v e m u tu a ly a g re e d to d e fe rc o n s tru c tio n o fP S 1 (a s d e fin e d in S e c tio n 4 0 .5 b e lo w ),a n d h a v e a g re e d th a th e a re a w h e re P S 1 w ilb e c o n s tru c te d w ilb e p a v e d a n d u s e d a s a s u rfa c e p a rk in g lo tu n tilh e P S 1 T rig g e rD a te a s d e fin e d in S e c tio n 4 0 .5 b e lo w .1 .1 V e rifc a tio n o fR e n ta b le A re a .U p o n c o m p le tio n o fth e D e s ig n D e v e lo p m e n tD ra w in g s (a s d e fin e d b e lo w )o rth e ire q u iv a le n tfo re a c h B u ild in g in th e P ro je c t,L a n d lo rd w ilc a u s e a n a rc h ite c t/s p a c e m e a s u re m e n tc o n s u lta n tre a s o n a b ly a c c e p ta b le to L a n d lo rd a n d T e n a n t(h e S p a c e M e a s u re m e n tC o n s u lta n t)o c a lc u la te th e R e n ta b le A re a (a s d e fin e d b e lo w )fo rth e a p p lic a b le B u ild in g u s in g th e m e th o d o fm e a s u re m e n ta ta c h e d h e re to a s E x h ib itL (th e M e a s u re m e n tS ta n d a rd )a n d th e re s u lts o fs u c h m e a s u re m e n tw ilb e p ro v id e d to L a n d lo rd a n d T e n a n ta n d m a y b e re fe re d to h e re in a s th e R e n ta b le A re a o fs u c h B u ild in g (p ro v id e d ,h o w e v e r,L a n d lo rd a n d T e n a n th e re b y a g re e th a t,fo rp u rp o s e s o fth is L e a s e ,th e R e n ta b le A re a fo re a c h o fB u ild in g A ,B u ild in g D a n d B u ild in g B s h a lb e th e

R e n ta b le A re a s e tfo rth in S e c tio n 2 .2 b e lo w ).L a n d lo rd a n d T e n a n th e re b y a g re e th a th e m e a s u re m e n to fth e a p p lic a b le B u ild in g a s d e te rm in e d b y th e S p a c e M e a s u re m e n tC o n s u lta n t(o r,w ith re s p e c to B u ild in g A ,B u ild in g D a n d B u ild in g B ,th e R e n ta b le A re a s e tfo rth in S e c tio n 2 .2 b e lo w )w ilb e th e fin a l,b in d in g R e n ta b le A re a o fth e a p p lic a b le B u ild in g a n d w iln o tb e s u b je c to c h a n g e b y e ith e rp a rty d u rin g th e T e rm ,u n le s s th e p h y s ic a ls iz e o fa B u ild in g o rth e P re m is e s le a s e d b y T e n a n ta c tu a ly c h a n g e s .A n y a m o u n ts o rp ro v is io n s in th is L e a s e w h ic h v a ry w ith R e n ta b le A re a w ilb e a p p ro p ria te ly a d ju s te d u p o n s u c h re m e a s u re m e n ta n d c o n firm e d b y L a n d lo rd to T e n a n tin w ritn g .2 .B a s ic L e a s e P ro v is io n s .F o rc o n v e n ie n c e o fth e p a rtie s ,c e rta in b a s ic p ro v is io n s o fth is L e a s e a re s e tfo rth h e re in .T h e p ro v is io n s s e tfo rth h e re in a re s u b je c to th e re m a in in g te rm s a n d c o n d ito n s o fth is L e a s e a n d a re to b e in te rp re te d in lig h to fs u c h re m a in in g te rm s a n d c o n d ito n s .2 .1 .T h is L e a s e s h a lta k e e fe c tu p o n th e E x e c u tio n D a te a n d ,e x c e p ta s s p e c ifc a ly o th e rw is e p ro v id e d w ith in th is L e a s e ,e a c h o fth e p ro v is io n s h e re o fs h a lb e b in d in g u p o n a n d in u re to th e b e n e fito fL a n d lo rd a n d T e n a n tfro m th e d a te o fe x e c u tio n a n d d e liv e ry h e re o fb y a lp a rtie s h e re to .2 .2 .R e n ta b le A re a o fth e P re m is e s .L a n d lo rd a n d T e n a n th e re b y s tip u la te th a th e R e n ta b le A re a o f
B u ild in g A ,B u ild in g D a n d B u ild in g B s h a lb e a s fo lo w s :(a )B u ild in g A :1 6 0 ,0 0 0 s q u a re fe e t.(b )B u ild in g D :4 0 ,0 0 0 s q u a re fe e t.(c )B u ild in g B :1 6 0 ,0 0 0 s q u a re fe e t.2 .3 .B a s e R e n t:
3 (a )B u ild in g A a n d B u ild in g D :In ita lm o n th ly a n d a n n u a lin s ta lm e n ts o fB a s e R e n tfo rB u ild in g A a n d B u ild in g D s h a lb e p a y a b le c o m m e n c in g a s o fth e P h a s e 1 R e n tC o m m e n c e m e n tD a te (a s d e fin e d b e lo w ),s u b je c to in c re a s e a s s e tfo rth in S e c tio n 6 b e lo w :D a te s S q u a re F e e to fR e n ta b le A re a B a s e R e n tp e rS q u a re F o o to fR e n ta b le A re a M o n th ly B a s e R e n tA n n u a lB a s e R e n tM o n th 1 M o n th 2 4 2 0 0 ,0 0 0 $ 3 2 .8 6 a n n u a ly $ 5 4 7 ,6 6 6 .6 7 $ 6 ,5 7 2 ,0 0 0 (b )B u ild in g B :In ita lm o n th ly a n d a n n u a lin s ta lm e n ts o fB a s e R e n tfo rB u ild in g B s h a lb e p a y a b le c o m m e n c in g a s o fth e P h a s e 2 R e n tC o m m e n c e m e n tD a te (a s d e fin e d b e lo w ),s u b je c to in c re a s e a s s e tfo rth in S e c tio n 6 b e lo w a n d s u b je c to th e B u ild in g B B a s e R e n tA b a te m e n t(a s d e fin e d in S e c tio n 5 .5 b e lo w ):D a te s S q u a re F e e to fR e n ta b le A re a B a s e R e n tp e rS q u a re F o o to fR e n ta b le A re a M o n th ly B a s e R e n tA n n u a lB a s e R e n tM o n th 1 M o n th 2 4 1 6 0 ,0 0 0 $ 3 2 .8 6 a n n u a ly $ 4 3 8 ,1 3 3 .3 3 $ 5 ,2 5 7 ,6 0 0 (c )O c c u p a n c y :N o tw ith s ta n d in g a n y th in g to th e c o n tra ry ,fro m a n d a fte rth e T e rm C o m m e n c e m e n tD a te ,T e n a n ts h a lb e p e rm ite d to o c c u p y a n y s p a c e w ith in B u ild in g A a n d /o rB u ild in g B fo rp u rp o s e s o fc o n d u c tin g b u s in e s s s u b je c to th e te rm s ,c o n d ito n s a n d p ro v is io n s o fth is S e c tio n 2 .3 (c ).T e n a n ts h a ln o tb e p e rm ite d to o c c u p y B u ild in g D fo ra n y p u rp o s e o th e rth a n c o n s tru c tin g th e
T e n a n tIm p ro v e m e n ts (a s d e fin e d b e lo w )u n tilh e P h a s e 1 R e n tC o m m e n c e m e n tD a te .(i)T e n a n tw iln o tify L a n d lo rd in a d v a n c e b e fo re c o m m e n c in g a n y b u s in e s s a c tiv ity in a n y B u ild in g ,w h ic h n o tic e m u s tin c lu d e p ro o fth a tT e n a n th a s o b ta in e d a lre q u ire d a p p ro v a ls ,p e rm its a n d lic e n s e s fro m a n y a p p lic a b le G o v e rn m e n ta lA u th o rite s to a lo w T e n a n to le g a ly c o m m e n c e b u s in e s s fro m s u c h B u ild in g .(i)Ifp rio rto th e P h a s e 1 R e n tC o m m e n c e m e n tD a te ,T e n a n tc o m m e n c e s c o n d u c tin g b u s in e s s w ith in a n y B u ild in g ,th e n T e n a n ts h a lp a y ,w ith re s p e c to a n y R e n ta b le A re a in w h ic h T e n a n tc o m m e n c e s c o n d u c tin g b u s in e s s (a n y s u c h R e n ta b le A re a ,P h a s e 1 E a rly O c c u p a n c y S p a c e ),E a rly O c c u p a n c y A d d ito n a lR e n t(a s d e fin e d b e lo w ),fo rth e p e rio d c o m m e n c in g o n th e d a te T e n a n tfirs tc o n d u c ts b u s in e s s a c tiv ite s in s u c h P h a s e 1 E a rly O c c u p a n c y S p a c e a n d e n d in g o n th e d a te im m e d ia te ly p re c e d in g th e P h a s e 1 R e n tC o m m e n c e m e n tD a te .
4 (i)If,a fte rth e P h a s e 1 R e n tC o m m e n c e m e n tD a te b u tp rio rto th e P h a s e 2 R e n tC o m m e n c e m e n tD a te ,T e n a n tc o m m e n c e s c o n d u c tin g b u s in e s s w ith in a c o m b in e d R e n ta b le A re a (w ith in B u ild in g A a n d B u ild in g B )in e x c e s s o fth e R e n ta b le A re a o fB u ild in g A (a n y s u c h e x c e s s R e n ta b le A re a ,P h a s e 2 E a rly O c c u p a n c y S p a c e ),th e n T e n a n ts h a lp a y ,w ith re s p e c to s u c h P h a s e 2 E a rly O c c u p a n c y S p a c e ,E a rly O c c u p a n c y A d d ito n a lR e n t,fo rth e p e rio d c o m m e n c in g o n th e d a te T e n a n tfirs tc o n d u c ts b u s in e s s a c tiv ite s in s u c h P h a s e 2 E a rly O c c u p a n c y S p a c e a n d e n d in g o n th e d a te im m e d ia te ly p re c e d in g th e P h a s e 2 R e n tC o m m e n c e m e n tD a te .(iv )E a rly O c c u p a n c y A d d ito n a lR e n ts h a lm e a n o n e h u n d re d p e rc e n t(1 0 0 % )o fu tily c h a rg e s a n d o th e re x p e n s e s in c u re d o ra trib u ta b le to a n y B u ild in g o c c u p ie d b y T e n a n t,T a x e s (a s p ro ra te d p u rs u a n to A rtic le 7 ),In s u ra n c e E x p e n s e s (a s p ro ra te d p u rs u a n to A rtic le 1 3 )a n d O p e ra tin g E x p e n s e s (a s p ro ra te d p u rs u a n to A rtic le 1 3 ).2 .4 .C o m m e n c e m e n tD a te :(a )T h e T e rm C o m m e n c e m e n tD a te s h a lb e th e d a te th a tB u ild in g A ,B u ild in g B a n d B u ild in g D a re d e liv e re d to T e n a n tin T IR e a d y C o n d ito n .(b )T h e P h a s e 1 R e n tC o m m e n c e m e n tD a te is th e d a te th a tis th e la te ro f(i)J u ly 1 ,2 0 1 7 a n d (i)th e d a te th a tis n in e (9 )m o n th s a fte rth e d a te u p o n w h ic h B u ild in g A ,B u ild in g B a n d B u ild in g D a re
d e liv e re d to T e n a n tin T IR e a d y C o n d ito n (a s d e fin e d in th e Wo rk L e te r);p ro v id e d th a tifh e P h a s e 1 R e n tC o m m e n c e m e n tD a te is d e la y e d b e c a u s e o fa T e n a n tD e la y (a s d e fin e d th e Wo rk L e te r),th e n th e P h a s e 1 R e n tC o m m e n c e m e n tD a te s h a lb e th e d a te th a th e P h a s e 1 R e n tC o m m e n c e m e n tD a te w o u ld h a v e o c c u re d b u tfo rs u c h T e n a n tD e la y ,a n d in th e e v e n th e re is a L a n d lo rd D e la y o ra n U n c o n tro la b le D e la y w h ic h a c tu a ly d e la y s c o m p le tio n o fth e T e n a n tIm p ro v e m e n ts (p ro v id e d th a tn o U n c o n tro la b le D e la y s s h a le x c e e d 9 0 d a y s re g a rd le s s o fth e a c tu a ln u m b e ro fd a y s o fU n c o n tro la b le D e la y ),th e n th e n in e (9 )m o n th p e rio d s e tfo rth a b o v e w ilb e e x te n d e d b y th e n u m b e ro fd a y s o fs u c h L a n d lo rd D e la y s a n d /o rU n c o n tro la b le D e la y s ,a s a p p lic a b le .(c )T h e P h a s e 2 R e n tC o m m e n c e m e n tD a te is th e d a te th a tis o n e (1 )y e a ra fte rth e P h a s e 1 R e n tC o m m e n c e m e n tD a te ;p ro v id e d th a tifh e P h a s e 2 R e n tC o m m e n c e m e n tD a te is d e la y e d b e c a u s e o fa T e n a n tD e la y ,th e n th e P h a s e 2 R e n tC o m m e n c e m e n tD a te s h a lb e th e d a te th a th e P h a s e 2 R e n tC o m m e n c e m e n tD a te w o u ld h a v e o c c u re d b u tfo rs u c h T e n a n tD e la y ,a n d in th e e v e n th e re is a L a n d lo rd D e la y o ra n U n c o n tro la b le D e la y w h ic h a c tu a ly d e la y s c o m p le tio n o fth e T e n a n tIm p ro v e m e n ts in B u ild in g B (p ro v id e d th a tn o U n c o n tro la b le D e la y s s h a l
e x c e e d 9 0 d a y s re g a rd le s s o fth e a c tu a ln u m b e ro fd a y s o fU n c o n tro la b le D e la y ),th e n th e P h a s e 2 R e n tC o m m e n c e m e n tD a te w ilb e e x te n d e d b y th e n u m b e ro fd a y s o fs u c h L a n d lo rd D e la y s a n d /o rU n c o n tro la b le D e la y s ,a s a p p lic a b le .2 .5 .T e rm E x p ira tio n D a te *:(a )B u ild in g A a n d B u ild in g D :T h e T e rm E x p ira tio n D a te fo rB u ild in g A a n d B u ild in g D s h a lb e d a te th a tis fite e n (1 5 )y e a rs a fte rth e P h a s e 1 R e n tC o m m e n c e m e n tD a te .
5 (b )B u ild in g B :T h e T e rm E x p ira tio n D a te fo rB u ild in g B s h a lb e th e d a te th a tis fite e n (1 5 )y e a rs a fte rth e P h a s e 2 R e n tC o m m e n c e m e n tD a te .*T h e p a rtie s h e re b y a c k n o w le d g e th a th e T e rm o fth is L e a s e a s to B u ild in g A a n d B u ild in g D w iln o te x p ire o n th e s a m e d a te a s th e T e rm o fth e L e a s e a s to B u ild in g B u n le s s T e n a n tp ro p e rly e x e rc is e s th e fo lo w in g o p tio n .T e n a n ts h a lh a v e th e o p tio n ,e x e rc is a b le b y w rite n n o tic e (a n E x te n s io n N o tic e )to L a n d lo rd w ith in n in e ty (9 0 )d a y s a fte rth e P h a s e 2 R e n tC o m m e n c e m e n tD a te ,to e x te n d th e T e rm E x p ira tio n D a te fo rB u ild in g A a n d B u ild in g D s u c h th a th e T e rm o fth e L e a s e w ith re s p e c to B u ild in g A a n d B u ild in g D w ile x p ire c o n te rm in o u s ly w ith th e T e rm o fth e L e a s e w ith re s p e c to B u ild in g B .In th e e v e n tT e n a n td e liv e rs th e E x te n s io n N o tic e w ith in th e tim e p e rio d s e tfo rth a b o v e ,th e T e rm o fth is L e a s e a s to B u ild in g A a n d B u ild in g D s h a lb e a u to m a tic a ly e x te n d e d s u c h th a tT e n a n ts le a s e o fB u ild in g A a n d B u ild in g D w ile x p ire o n th e T e rm E x p ira tio n D a te fo rB u ild in g B ,a n d a lte rm s a n d c o n d ito n s o fth is L e a s e a s a p p lic a b le to B u ild in g A a n d B u ild in g D s h a lc o n tin u e to a p p ly d u rin g s u c h e x te n d e d T e rm ,in c lu d in g th e b i-a n n u a la d ju s tm e n to fB a s e R e n tp a y a b le a s s e tfo rth in S e c tio n 6 b e lo w .T e n a n tw ils ig n a c o m m e rc ia ly re a s o n a b le le a s e a m e n d m e n tm e m o ria liz in g s u c h e x te n s io n ifre q u e s te d b y L a n d lo rd ,b u ts u c h
e x te n s io n w ilb e e fe c tiv e re g a rd le s s o fw h e th e rs u c h a n a m e n d m e n tis fu ly e x e c u te d b y L a n d lo rd a n d T e n a n t.T e n a n tw iln o th a v e th e rig h to e x e rc is e th e a b o v e o p tio n in th e e v e n tT e n a n tis in d e fa u lth e re u n d e ra fte rth e e x p ira tio n o fa n y a p p lic a b le n o tic e a n d c u re p e rio d s .2 .6 .S e c u rity D e p o s it:N o n e .2 .7 .P e rm ite d U s e :O fic e ,R & D ,m a n u fa c tu rin g ,d is trib u tio n ,la b o ra to ry a n d a n y o th e ru s e s in c o n fo rm ity w ith a lA p p lic a b le L a w s (a s d e fin e d b e lo w );p ro v id e d th a ta tle a s ts e v e n ty -fiv e p e rc e n t(7 5 % )o fth e R e n ta b le A re a o fth e P re m is e s w ilb e u s e d fo ro fic e ,R & D ,m a n u fa c tu rin g ,d is trib u tio n a n d /o rla b o ra to ry u s e .A p p lic a b le L a w s s h a lm e a n a lfe d e ra l,s ta te ,m u n ic ip a la n d lo c a la w s ,c o d e s ,o rd in a n c e s ,ru le s a n d re g u la tio n s o fG o v e rn m e n ta lA u th o rite s (a s d e fin e d b e lo w ),c o m m ite e s ,a s s o c ia tio n s ,o ro th e re g u la to ry c o m m ite e s ,a g e n c ie s o rg o v e rn in g b o d ie s h a v in g ju ris d ic tio n o v e rth e P re m is e s o ra n y p o rtio n th e re o f,L a n d lo rd o rT e n a n t,in c lu d in g b o th s ta tu to ry a n d c o m m o n la w a n d h a z a rd o u s w a s te ru le s a n d re g u la tio n s a n d a n y c o v e n a n ts ,c o n d ito n s o re s tric tio n s ,re c ip ro c a le a s e m e n ts o rs im ila ra g re e m e n ts a fe c tin g th e P ro je c t.S u b je c to F o rc e M a je u re o rte m p o ra ry in te ru p tio n s d u e to c a s u a lty o re p a irs a n d m a in te n a n c e ,T e n a n tw ilh a v e a c c e s s to th e P re m is e s 2 4 h o u rs p e rd a y ,7 d a y s p e rw e e k th ro u g h o u th e T e rm .2 .8 .A d d re s s fo rR e n tP a y m e n t:B M R -
L in c o ln C e n tre L P A te n tio n E n tiy 4 4 5 P .O .B o x 5 1 1 4 1 5 L o s A n g e le s ,C a lifo rn ia 9 0 0 5 1 -7 9 7 0 2 .9 .A d d re s s fo rN o tic e s to L a n d lo rd :
6 B M R -L in c o ln C e n tre L P 1 7 1 9 0 B e rn a rd o C e n te rD riv e S a n D ie g o ,C a lifo rn ia 9 2 1 2 8 A tn :V ic e P re s id e n t,R e a lE s ta te L e g a l2 .1 0 .A d d re s s fo rN o tic e s to T e n a n t:Ilu m in a ,In c .5 2 0 0 Ilu m in a Wa y S a n D ie g o ,C A 9 2 1 2 2 A tn :D ire c to ro fF a c ilte s A n d Ilu m in a ,In c .5 2 0 0 Ilu m in a Wa y S a n D ie g o ,C A 9 2 1 2 2 A tn :G e n e ra lC o u n s e lWith a c o p y to :M a rtin T o g n i,E s q .A le n M a tk in s L e c k G a m b le M a lo ry & N a ts is L L P 5 0 1 We s tB ro a d w a y ,1 5 th F lo o rS a n D ie g o ,C A 9 2 1 0 1 -3 5 4 1 2 .1 1 .A d d re s s fo rIn v o ic e s to T e n a n t:Ilu m in a ,In c .5 2 0 0 Ilu m in a Wa y S a n D ie g o ,C A 9 2 1 2 2 A tn :A c c o u n ts P a y a b le 2 .1 2 .T h e fo lo w in g E x h ib its a re a ta c h e d h e re to a n d in c o rp o ra te d h e re in b y re fe re n c e :E x h ib itA P re m is e s a n d S ite P la n E x h ib itA -1 P ro p e rty E x h ib itB Wo rk L e te rE x h ib itB -1 T e n a n tWo rk In s u ra n c e S c h e d u le E x h ib itC -1 S h e lS c h e m a tic D e s ig n D o c u m e n ts E x h ib itC -2 S p e c ifc a tio n s E x h ib itD P ro je c tC o s tE s tim a te E x h ib itE P ro je c tC o s ts E x h ib itF K e y M ile s to n e D a te s E x h ib itG M u lti-T e n a n tP ro v is io n s E x h ib itH T e n a n ts P e rs o n a lP ro p e rty E x h ib itIF o rm o fE s to p p e lC e rtifc a te
7 E x h ib itJ A c k n o w le d g e m e n to fC o m m e n c e m e n tD a te a n d T e rm E x p ira tio n D a te E x h ib itK R u le s a n d R e g u la tio n s E x h ib itL M e a s u re m e n tS ta n d a rd E x h ib itM F o rm o fM e m o ra n d u m o fL e a s e E x h ib itN F o rm T e rm in a tio n o fM e m o ra n d u m o fL e a s e 3 .T e rm .T h e a c tu a lte rm o fth is L e a s e (a s th e s a m e m a y b e e x te n d e d p u rs u a n to A rtic le 3 9 h e re o f,th e T e rm )s h a lc o m m e n c e o n th e T e rm C o m m e n c e m e n tD a te a n d s h a le n d o n th e T e rm E x p ira tio n D a te a s d e fin e d in S e c tio n 2 .5 a b o v e a s to th e a p p lic a b le p o rtio n s o fth e P re m is e s .T E N A N T H E R E B Y WA IV E S T H E R E Q U IR E M E N T S O F S E C T IO N 1 9 3 3 O F T H E C A L IF O R N IA C IV IL C O D E ,A S T H E S A M E M A Y B E A M E N D E D F R O M T IM E T O T IM E .4 .P ro je c ta n d B a s e B u ild in g Wo rk ;S u b s ta n tia lC o m p le tio n ;S c h e d u le a n d B u d g e t.4 .1 .E n tile m e n ts .P ro m p tly u p o n th e fu le x e c u tio n a n d d e liv e ry o fth is L e a s e ,L a n d lo rd s h a ld ilg e n tly p u rs u e th e p ro c u re m e n to fa lp e rm its ,a p p ro v a ls ,a n d e n tile m e n ts n e c e s s a ry fo rth e c o n s tru c tio n o fth e P ro je c ta n d B a s e B u ild in g Wo rk (a s d e fin e d b e lo w )o n th e P ro p e rty (c o le c tiv e ly ,th e "E n tile m e n ts "),w h ic h E n tile m e n ts w iln c lu d e P S 1 to th e e x te n tre a s o n a b ly p ra c tic a b le ,e v e n th o u g h P S 1 w ilb e c o n s tru c te d a ta la te rd a te .If,a s o fO c to b e r4 ,2 0 1 5 (a s s u c h d a te m a y b e e x te n d e d b y a n y U n c o n tro la b le D e la y s (a s d e fin e d b e lo w );b u tp ro v id e d th a ts u c h d a te w iln o tb e e x te n d e d b e y o n d

D e c e m b e r1 ,2 0 1 5 re g a rd le s s o fth e c a u s e o fd e la y ),a lE n tile m e n ts n e c e s s a ry to c o m m e n c e c o n s tru c tio n o fth e P ro je c ta n d B a s e B u ild in g Wo rk h a v e n o tb e e n re c e iv e d o re m a in s u b je c to a n y a p p e a lo rc h a le n g e fo ra n y re a s o n ,th e n T e n a n tw ilh a v e th e rig h t(in its s o le a n d a b s o lu te d is c re tio n )to te rm in a te th is L e a s e u p o n te n (1 0 )d a y s p rio rw rite n n o tic e to L a n d lo rd .In a d d ito n ,in th e e v e n tT e n a n tfa ils to e x e rc is e its te rm in a tio n rig h ta b o v e ,a n d a n y G o v e rn m e n ta lA u th o rity n o tife s L a n d lo rd th a tE n tile m e n ts w iln o tb e is s u e d fo rth e P ro je c t(d e s p ite L a n d lo rd s d ilg e n te fo rts to p ro c u re s u c h E n tile m e n ts in c lu d in g ,w ith o u tlim ita tio n ,e x h a u s tin g a la d m in is tra tiv e re m e d ie s a v a ila b le to L a n d lo rd in c o n n e c tio n th e re w ith ),th e n L a n d lo rd w ilh a v e th e rig h to te rm in a te th is L e a s e b y d e liv e ry o fw rite n n o tic e to T e n a n to n o rb e fo re D e c e m b e r3 1 ,2 0 1 5 .F o lo w in g th e e x e rc is e o fe ith e ro fth e te rm in a tio n rig h ts a b o v e ,th is L e a s e s h a lb e fu ly a n d fin a ly s u re n d e re d a n d te rm in a te d a n d s h a ln o lo n g e rb e o fa n y fo rc e o re fe c t,e x c e p tfo rth o s e p ro v is io n s th a t,b y th e ire x p re s s te rm s ,s u rv iv e th e e x p ira tio n o re a rlie rte rm in a tio n o fth is L e a s e .T h e te rm U n c o n tro la b le D e la y s h a lm e a n a n y e v e n to fF o rc e M a je u re (a s d e fin e d b e lo w ),a n y s trik e ,lo c k o u to rs im ila rla b o rd is tu rb a n c e ,a n y litg a tio n ,c h a le n g e o ra p p e a lb ro u g h tb y a th ird p a rty o b je c tin g to th e P ro je c to rE n tile m e n ts ,e x c e s s tim e in o b ta in in g
g o v e rn m e n ta lp e rm its o ra p p ro v a ls b e y o n d th e tim e p e rio d n o rm a ly re q u ire d to o b ta in s u c h p e rm its o ra p p ro v a ls fo rs im ila rs p a c e ,s im ila rly im p ro v e d ,in c o m p a ra b le o fic e /la b b u ild in g s in F o s te rC ity ,C a lifo rn ia ,d e la y s c a u s e d b y c h a n g e s to th e A p p ro v e d P la n s (a s d e fin e d b e lo w )re q u e s te d b y G o v e rn m e n ta lA u th o rite s ,a n y e n v iro n m e n ta lm itg a tio n re q u ire m e n ts o rs im ila ru n fo re s e e n d e la y in o b ta in in g E n tile m e n ts .4 .2 .L a n d lo rd 's P ro je c ta n d B a s e B u ild in g Wo rk .L a n d lo rd w ilc o n s tru c th e P ro je c ta n d B a s e B u ild in g Wo rk o n a n o p e n b o o k b a s is ,u s in g a g e n e ra lc o n tra c to rs e le c te d b y L a n d lo rd
 8 o n a n e g o tia te d fe e b a s is ,w h ic h g e n e ra lc o n tra c to rw ilb e re ta in e d p u rs u a n to a g u a ra n te e d m a x im u m p ric e c o n tra c tin a fo rm re a s o n a b ly n e g o tia te d b y L a n d lo rd ,a c o p y o fw h ic h w ilb e p ro v id e d to T e n a n t.T e n a n tw ilh a v e th e rig h to re a s o n a b ly a p p ro v e th e g e n e ra lc o n tra c to rs e le c te d b y L a n d lo rd ,p ro v id e d th a ts u c h a p p ro v a lm u s tb e g iv e n o rw ith h e ld (w ith a w rite n s ta te m e n to u tlin in g th e re a s o n a b le b a s is fo ra n y d is a p p ro v a l)w ith in fiv e (5 )d a y s a fte rL a n d lo rd s re q u e s tfo ra p p ro v a lo rT e n a n tw ilb e d e e m e d to h a v e a p p ro v e d th e c o n tra c to r.P ro m p tly fo lo w in g th e d a te o n w h ic h th e E n tile m e n ts n e c e s s a ry fo rth e c o n s tru c tio n o fth e P ro je c ta n d B a s e B u ild in g Wo rk h a v e b e e n re c e iv e d a n d a re n o lo n g e rs u b je c to a n y p o te n tia la p p e a lo rc h a le n g e a n d th e A p p ro v e d P la n s (a s d e fin e d in S e c tio n 4 .4 b e lo w )a re a p p ro v e d ,o ro n s u c h e a rlie rd a te a s L a n d lo rd m a y e le c tin its d is c re tio n ,L a n d lo rd s h a lc a u s e th e c o n tra c to rs e le c te d b y L a n d lo rd (th e G e n e ra lC o n tra c to r)to c o m m e n c e a n d d ilg e n tly p ro s e c u te th e c o n s tru c tio n o fth e w o rk d e s c rib e d o n th e A p p ro v e d P la n s (th e "P ro je c ta n d B a s e B u ild in g Wo rk ")in a c c o rd a n c e w ith S e c tio n 2 .1 o fth e Wo rk L e te ra ta c h e d h e re to a s E x h ib itB (th e "W o rk L e te r");p ro v id e d ,L a n d lo rd s h a lh a v e n o o b lig a tio n to s ta rta n y g ra d in g o rc o n s tru c tio n b e fo re th e n e c e s s a ry E n tile m e n ts fo rth e P ro je c ta n d B a s e B u ild in g Wo rk
h a v e b e e n re c e iv e d a n d a re n o lo n g e rs u b je c to a n y p o te n tia la p p e a lo rc h a le n g e a n d P S 1 c o n s tru c tio n w ilb e d e fe re d u n tilh e P S 1 T rig g e rD a te (a s d e fin e d in S e c tio n 4 0 .5 b e lo w ).T h e P ro je c ta n d B a s e B u ild in g Wo rk s h a lb e c o n s tru c te d in a g o o d a n d w o rk m a n lik e m a n n e r,a n d in a c c o rd a n c e w ith A p p lic a b le L a w s (s u b je c to n ly to (a )s u c h m in o rd is c re p a n c ie s a s w iln o ta d v e rs e ly im p a c th e p e rfo rm a n c e o fth e T e n a n tIm p ro v e m e n ts (c o le c tiv e ly ,th e "P u n c h lis tIe m s ")a n d (b )a n y fa ilu re to c o m p ly w ith A p p lic a b le L a w s a s w iln o ta d v e rs e ly im p a c tT e n a n t's a b ilty to o b ta in a c e rtifc a te o fo c c u p a n c y a n d u s e th e P re m is e s fo rT e n a n t's P e rm ite d U s e ).4 .3 .S u b s ta n tia lC o m p le tio n o fP ro je c ta n d B a s e B u ild in g Wo rk .T h e P ro je c ta n d B a s e B u ild in g Wo rk s h a lb e d e e m e d "S u b s ta n tia ly C o m p le te "o rth e re s h a lb e "S u b s ta n tia lC o m p le tio n "a ts u c h tim e a s (a )L a n d lo rd h a s c o m p le te d c o n s tru c tio n o fth e P ro je c ta n d B a s e B u ild in g Wo rk in a c c o rd a n c e w ith th e A p p ro v e d P la n s (e x c lu d in g P S 1 ,w h ic h s h a lb e c o n s tru c te d p u rs u a n to S e c tio n 4 0 .5 b e lo w ),s u b je c to n ly to P u n c h lis tIe m s (w h ic h s h a lb e c o m p le te d b y L a n d lo rd w ith in th irty (3 0 )d a y s a fte rth e p re p a ra tio n o fth e P u n c h lis t,o ra s s o o n th e re a fte ra s is re a s o n a b ly p ra c tic a b le p ro v id e d L a n d lo rd u s e s d ilg e n te fo rts to c o m p le te s u c h P u n c h lis tw ith in a re a s o n a b le tim e ),(b )T e n a n th a s b e e n p ro v id e d th e n u m b e r
o fp a rk in g p a s s e s to w h ic h its e n tile d p u rs u a n to S e c tio n 1 0 .4 o fth is L e a s e ,a n d (c )L a n d lo rd h a s p ro v id e d T e n a n tw ith c o n tin u o u s a n d u n in te ru p te d a c c e s s to th e P re m is e s (p ro v id e d th a tL a n d lo rd w ilb e p e rm ite d re a s o n a b le a c c e s s to th e P re m is e s a s n e c e s s a ry to c o m p le te th e P u n c h lis tIe m s ).T h e d a te o n w h ic h th e P ro je c ta n d B a s e B u ild in g Wo rk is d e e m e d S u b s ta n tia ly C o m p le te p u rs u a n to th e fo re g o in g s h a lb e re fe re d to h e re in a s th e "S u b s ta n tia lC o m p le tio n D a te ."T e n a n ta c k n o w le d g e s th a tn e ith e rL a n d lo rd n o ra n y a g e n to fL a n d lo rd h a s m a d e a n y re p re s e n ta tio n o rw a ra n ty w ith re s p e c to th e c o n d ito n o fth e P re m is e s o rw ith re s p e c to th e s u ita b ilty o fth e P re m is e s fo rth e c o n d u c to fT e n a n ts b u s in e s s .T e n a n ta c k n o w le d g e s th a tL a n d lo rd s h a lh a v e n o o b lig a tio n to a lte r,e p a iro ro th e rw is e p re p a re th e P re m is e s fo rT e n a n ts o c c u p a n c y o rto p a y fo ro rc o n s tru c ta n y im p ro v e m e n ts to th e P re m is e s ,e x c e p tw ith re s p e c to th e P ro je c ta n d B a s e B u ild in g Wo rk a n d p a y m e n to fth e T IA lo w a n c e (a s d e fin e d in th e Wo rk L e te r)o rin c o n n e c tio n w ith a n y re p a iro b lig a tio n s e x p re s s ly u n d e rta k e n b y L a n d lo rd p u rs u a n to th is L e a s e .T e n a n ts ta k in g o fp o s s e s s io n o fth e P re m is e s s h a l,e x c e p ta s o th e rw is e a g re e d to in w ritn g b y
9 L a n d lo rd a n d T e n a n t,c o n c lu s iv e ly e s ta b lis h th a th e P re m is e s w e re a ts u c h tim e in g o o d ,s a n ita ry a n d s a tis fa c to ry c o n d ito n a n d re p a ir.4 .4 .A p p ro v e d P la n s .L a n d lo rd h a s c a u s e d its a rc h ite c to p re p a re th e s c h e m a tic p la n s a ta c h e d h e re to a s E x h ib itC -1 (th e S h e lS c h e m a tic D e s ig n D o c u m e n ts ),b a s e d u p o n th e s p e c ifc a tio n s a ta c h e d h e re to a s E x h ib itC -2 (th e S p e c ifc a tio n s ).T h e S h e lS c h e m a tic D e s ig n D o c u m e n ts ,to g e th e rw ith a n y P e rm ite d P la n C h a n g e s (a s d e fin e d b e lo w )a n d a n y A p p ro v e d S ig n ifc a n tC h a n g e s (a s d e fin e d b e lo w )s h a lb e re fe re d to h e re in a s th e A p p ro v e d P la n s .T h e A p p ro v e d P la n s s h a lb e s u b je c to c h a n g e (a )to a c c o m m o d a te m in o rfie ld c h a n g e s ,(b )b y L a n d lo rd p ro v id e d s u c h c h a n g e s d o n o tm a te ria ly a n d a d v e rs e ly a fe c th e q u a lity o fth e P ro je c ta n d B a s e B u ild in g Wo rk o rT e n a n ts a b ilty to o p e ra te its b u s in e s s a th e P re m is e s fo rth e P e rm ite d U s e ,(c )to o b ta in E n tile m e n ts ,(d )to c o m p ly w ith A p p lic a b le L a w s o ra s re q u ire d b y a n y G o v e rn m e n ta lA u th o rity a s a c o n d ito n to th e is s u a n c e o fa p e rm ito ro th e ra p p ro v a lfo rth e P ro je c ta n d B a s e B u ild in g Wo rk (c o le c tiv e ly ,th e P e rm ite d P la n C h a n g e s ).T e n a n tw iln o tb e e n tile d to o b je c to a n y P e rm ite d P la n C h a n g e s u n le s s s u c h P e rm ite d P la n C h a n g e s a re n o ta lo g ic a lp ro g re s s io n o fth e S h e lS c h e m a tic D e s ig n D o c u m e n ts ,in c lu d in g a n y c h a n g e w h ic h re s u lts in
(1 )a re d u c tio n in th e n u m b e ro fb u ild in g s to b e b u ilto n th e P ro p e rty ,(2 )a m a te ria ld e c re a s e in th e R e n ta b le A re a ,w h ic h fo rp u rp o s e s h e re o fs h a lm e a n a d e c re a s e o fm o re th a n te n p e rc e n t(1 0 % )o fth e R e n ta b le A re a o fth e P re m is e s s e tfo rth in S e c tio n 2 .2 a b o v e ,(3 )a re d u c tio n in th e n u m b e ro fp a rk in g p a s s e s th a tL a n d lo rd c a n p ro v id e to T e n a n tb e lo w th e n u m b e re q u ire d in S e c tio n 1 0 .4 b e lo w ,(4 )a m a te ria lc h a n g e w h ic h s ig n ifc a n tly im p a irs in g re s s o re g re s s to th e P ro je c t,o r(5 )a m a te ria lc h a n g e in th e c o n fig u ra tio n o fth e P ro je c t(in c lu d in g a m a te ria lc h a n g e in th e c o n fig u ra tio n o fth e im p ro v e m e n ts th e re o n )(e a c h o fth e fo re g o in g ite m s (1 )th ro u g h (5 ),a S ig n ifc a n tC h a n g e ).(a )S ig n ifc a n tC h a n g e s ;T e rm in a tio n R ig h t.In th e e v e n to fa S ig n ifc a n tC h a n g e ,L a n d lo rd w ilc a u s e th e A p p ro v e d P la n s to b e m o d ife d to in c o rp o ra te th e S ig n ifc a n tC h a n g e a n d w ils u b m its u c h re v is e d p la n s to T e n a n tfo re v ie w .T e n a n tw ilh a v e te n (1 0 )d a y s fro m a n d a fte rth e d a te T e n a n tis p ro v id e d w ith th e re v is e d A p p ro v e d P la n s to d e liv e ra w rite n n o tic e to L a n d lo rd w h ic h n o tic e w ile ith e r(i)a p p ro v e th e re v is io n s ,(i)re q u e s tre a s o n a b le c h a n g e s to th e re v is e d A p p ro v e d P la n s (b a s e d u p o n th e S ig n ifc a n tC h a n g e )o r(i)te rm in a te th is L e a s e .F a ilu re o fT e n a n to re s p o n d d u rin g s u c h te n (1 0 )d a y p e rio d ,ifs u c h fa ilu re c o n tin u e s fo ra n a d d ito n a lth re e (3 )d a y s a fte rw rite n n o tic e to T e n a n to fs u c h fa ilu re ,s h a lb e
d e e m e d T e n a n ts a p p ro v a lo fth e re v is e d A p p ro v e d P la n s .In th e e v e n tT e n a n tre a s o n a b ly o b je c ts to th e re v is e d A p p ro v e d P la n s ,L a n d lo rd w ilre v is e th e A p p ro v e d P la n s in o rd e rto a d d re s s T e n a n ts o b je c tio n s .L a n d lo rd s h a lth e n re s u b m ith e fu rth e re v is e d A p p ro v e d P la n s to T e n a n tfo ra p p ro v a l,b u th e a p p ro v a lp e rio d w ith re s p e c to a n y s u c h re v is io n s s h a lb e fiv e (5 )b u s in e s s d a y s (a n d T e n a n ts re s p o n s e w ilb e lim ite d to e ith e ra p p ro v in g s u c h re v is io n s o re a s o n a b ly d is a p p ro v in g s u c h re v is io n s d u e to a fa ilu re to a d d re s s T e n a n ts re q u e s te d c h a n g e s ).F a ilu re o fT e n a n to re s p o n d w ith in s u c h fiv e (5 )b u s in e s s d a y s ,ifs u c h fa ilu re c o n tin u e s fo ra n a d d ito n a lth re e (3 )d a y s a fte rw rite n n o tic e to T e n a n to fs u c h fa ilu re ,w ilb e d e e m e d a p p ro v a lo fs u c h re v is e d A p p ro v e d P la n s .IfT e n a n te rm in a te s th is L e a s e a s a re s u lto fa S ig n ifc a n tC h a n g e in th e A p p ro v e d P la n s ,th is L e a s e w ilth e re a fte rb e n u la n d v o id a n d o fn o fu rth e rfo rc e o re fe c t,a n d L a n d lo rd w iln o tb e o b lig a te d to re im b u rs e T e n a n tfo ra n y c o s ts in c u re d b y T e n a n tin c o n n e c tio n w ith th is L e a s e .A n y c h a n g e s m a d e to th e A p p ro v e d P la n s p u rs u a n to th e fo re g o in g
1 0 p ro c e s s s h a lb e re fe re d to h e re in a s A p p ro v e d S ig n ifc a n tC h a n g e s .A fte rT e n a n ts a p p ro v a lo rd e e m e d a p p ro v a lo fth e re v is e d A p p ro v e d P la n s ,L a n d lo rd s h a ls u b m ith e re v is e d A p p ro v e d P la n s to th e a p p ro p ria te G o v e rn m e n ta lA u th o rite s fo ra p p ro v a l.Ifth e a p p lic a b le G o v e rn m e n ta lA u th o rite s re q u ire m o d ifc a tio n s to th e re s u b m ite d A p p ro v e d P la n s ,th e n L a n d lo rd w ilre v is e th e A p p ro v e d P la n s b a s e d u p o n th e d ire c tio n o fs u c h G o v e rn m e n ta lA u th o rity (w h ic h c h a n g e w ilb e a P e rm ite d P la n C h a n g e );p ro v id e d ,h o w e v e r,ifs u c h re v is io n s c o n s tiu te a S ig n ifc a n tC h a n g e to th e re s u b m ite d A p p ro v e d P la n s ,th e n L a n d lo rd s h a lre s u b m ith e re v is e d A p p ro v e d P la n s to T e n a n tp u rs u a n to th e re v ie w p ro c e s s fo ra S ig n ifc a n tC h a n g e s e tfo rth a b o v e .In th e e v e n th a tT e n a n td o e s n o te x e rc is e its rig h tu n d e rs u b s e c tio n (i)a b o v e in c o n n e c tio n w ith s u c h S ig n ifc a n tC h a n g e ,th e n ,a fte rT e n a n ts a p p ro v a lo rd e e m e d a p p ro v a lo fth e re v is e d A p p ro v e d P la n s ,L a n d lo rd s h a lre s u b m its u c h re v is e d A p p ro v e d P la n s to th e G o v e rn m e n ta lA u th o rity ,a n d th is p ro c e s s w ilb e re p e a te d u n tilh e A p p ro v e d P la n s a re a p p ro v e d b y th e G o v e rn m e n ta lA u th o rite s a n d a lE n tile m e n ts a re is s u e d .L a n d lo rd w ilp ro v id e n o tic e to T e n a n to fa n y P e rm ite d P la n C h a n g e to a lo w T e n a n to c o n fo rm th e T e n a n tIm p ro v e m e n ts to s u c h c h a n g e .L a n d lo rd w ilp re p a re th e fin a l
c o n s tru c tio n d ra w in g s fo rth e P ro je c ta n d B a s e B u ild in g Wo rk in a c c o rd a n c e w ith th e A p p ro v e d P la n s (th e D e s ig n D e v e lo p m e n tD ra w in g s )a n d p ro v id e a c o p y o fs u c h D e s ig n D e v e lo p m e n tD ra w in g s to T e n a n t,b u tT e n a n tw ilh a v e n o a p p ro v a lrig h ts o v e rth e D e s ig n D e v e lo p m e n tD ra w in g s s o lo n g a s th e y a re c o n s is te n tw ith a n d lo g ic a le v o lu tio n s o fth e A p p ro v e d P la n s .(b )C h a n g e O rd e rs .T e n a n tm a y re q u e s tc h a n g e s to th e A p p ro v e d P la n s o rD e s ig n D e v e lo p m e n tD ra w in g s in o rd e rto a c c o m m o d a te th e T e n a n tIm p ro v e m e n ts b y s u b m itn g a d e ta ile d re q u e s tfo rs u c h c h a n g e (s )to L a n d lo rd in w ritn g (a C h a n g e O rd e r);p ro v id e d th a ta fte rE n tile m e n ts a re is s u e d fo rth e P ro je c ta n d B a s e B u ild in g Wo rk ,T e n a n tw iln o tb e p e rm ite d to re q u e s ta C h a n g e O rd e rw h ic h w o u ld re q u ire a n y c h a n g e to th e E n tile m e n ts o rc o u ld p e rm ita n y G o v e rn m e n ta lA u th o rity to re v o k e a n y E n tile m e n t.A s s o o n a s re a s o n a b ly p ra c tic a b le a fte re c e ip to fT e n a n ts re q u e s te d C h a n g e O rd e r,L a n d lo rd w ile ith e ra p p ro v e o rd e n y th e C h a n g e O rd e rin its re a s o n a b le d is c re tio n .IfL a n d lo rd a p p ro v e s th e C h a n g e O rd e r,L a n d lo rd w ilp ro v id e T e n a n tw ith a b re a k d o w n o fth e to ta la n tic ip a te d c o s to im p le m e n ts u c h C h a n g e O rd e ra n d th e tim e d e la y a n tic ip a te d d u e to s u c h C h a n g e O rd e r(w h ic h tim e d e la y w ilb e a T e n a n tD e la y (a s d e fin e d in S e c tio n 9 .3 o fth e T e n a n tWo rk L e te r)(a

C h a n g e O rd e rS ta te m e n t).T e n a n tw ilh a v e fiv e (5 )d a y s a fte re c e ip to fth e C h a n g e O rd e rS ta te m e n to a p p ro v e th e C h a n g e O rd e rS ta te m e n t.In th e e v e n th a tT e n a n ta p p ro v e s th e C h a n g e O rd e rS ta te m e n t,T e n a n ts h a lb e s o le ly re s p o n s ib le fo ra lc o s ts in c u re d b y L a n d lo rd in c o n n e c tio n w ith th e C h a n g e O rd e ra n d s h a lp a y s u c h c o s ts to L a n d lo rd w ith in th irty (3 0 )d a y s o fre c e ip to fin v o ic e fro m L a n d lo rd .T e n a n ts fa ilu re to re s p o n d w ith in s u c h fiv e (5 )d a y p e rio d w ilb e d e e m e d d is a p p ro v a lo fs u c h C h a n g e O rd e rS ta te m e n t,in w h ic h c a s e th e C h a n g e O rd e rw ilb e d e e m e d to h a v e b e e n re s c in d e d a n d L a n d lo rd w iln o tb e o b lig a te d to m a k e th e re q u e s te d c h a n g e .4 .5 .B u d g e t/A d d ito n a lT IA lo w a n c e .L a n d lo rd h a s e s ta b lis h e d a b u d g e tfo rth e T o ta lP ro je c tC o s ts (a s d e fin e d in E x h ib itE )w h ic h itb e lie v e s w ilb e re a s o n a b ly re q u ire d to c o m p le te c o n s tru c tio n o fth e P ro je c ta n d B a s e B u ild in g Wo rk fo rth e P re m is e s ,w h ic h b u d g e tis $ 1 6 3 ,8 8 1 ,4 0 0 (th e P ro je c tC o s tE s tim a te )a s m o re p a rtic u la rly s e tfo rth o n E x h ib itD a ta c h e d h e re to ,a n d w h ic h P ro je c tC o s tE s tim a te d o e s n o tin c lu d e th e c o s to c o n s tru c tP S 1 ,a s T e n a n tis o b lig a te d to p a y th e c o s ts o fc o n s tru c tio n o fP S 1 s e p a ra te ly p u rs u a n to S e c tio n 4 0 .5 b e lo w .
1 1 U p o n c o m p le tio n o fth e D e s ig n D e v e lo p m e n tD ra w in g s fo rth e P ro je c t,L a n d lo rd w ils u b m ita re v is e d in te rim b u d g e to T e n a n tfo rin fo rm a tio n a lp u rp o s e s o n ly ,w h ic h re v is e d b u d g e tis a n tic ip a te d to b e d e liv e re d o n th e d a te s e tfo rth a s ta s k 1 1 o n E x h ib itF a ta c h e d h e re to .P ro m p tly u p o n c o m p le tio n o fth e P ro je c ta n d B a s e B u ild in g Wo rk (e x c e p tP S 1 ,w h ic h s h a lb e e x c lu d e d fro m P ro je c tC o s ts fo rp u rp o s e s o fth is S e c tio n 4 .5 ),L a n d lo rd w ilc a lc u la te th e a c tu a lto ta lo fa lP ro je c tC o s ts in c u re d p lu s th e L a n d V a lu e C o n trib u tio n to o b ta in th e a c tu a lT o ta lP ro je c tC o s ts (th e F in a lB u d g e t),w h ic h F in a lB u d g e tw ilb e d e liv e re d to T e n a n to g e th e rw ith a c a lc u la tio n o fth e A d d ito n a lT IA lo w a n c e (a s d e fin e d b e lo w ),ifa n y .In th e e v e n th e F in a lB u d g e tis le s s th a n th e P ro je c tC o s tE s tim a te ,th e d ife re n c e s h a lb e a n a d d ito n to th e T IA lo w a n c e p a y a b le to T e n a n tp u rs u a n to th e Wo rk L e te r(th e A d d ito n a lT IA lo w a n c e ).Itis th e in te n tio n o fth e p a rtie s th a th e A d d ito n a lT IA lo w a n c e w iln o tin c lu d e a n y a m o u n td u e to th e d e fe re d c o n s tru c tio n o fP S 1 ,a s th e P ro je c tC o s tE s tim a te d o e s n o tin c lu d e th e c o s to c o n s tru c tP S 1 a n d T e n a n tis o b lig a te d to p a y th e c o s ts o fc o n s tru c tio n o fP S 1 p u rs u a n to S e c tio n 4 0 .5 b e lo w .4 .6 .S c h e d u le /D e la y s .L a n d lo rd w ilu s e c o m m e rc ia ly re a s o n a b le e fo rts to (a )c a u s e e a c h B u ild in g to b e d e liv e re d to T e n a n tin T IR e a d y C o n d ito n w ith in e ig h te e n (1 8 )m o n th s a fte rth e

d a te o fis s u a n c e o fth e b u ild in g p e rm itfo rs u c h B u ild in g (s u b je c to T e n a n tD e la y s a n d U n c o n tro la b le D e la y s ),(b )m e e th e K e y M ile s to n e D a te s s e tfo rth o n E x h ib itF ,a s s u c h d a te s m a y b e e x te n d e d b y T e n a n tD e la y s a n d U n c o n tro la b le D e la y s a n d (c )c a u s e th e S u b s ta n tia lC o m p le tio n D a te to o c c u ro n o rb e fo re th e P h a s e 1 R e n tC o m m e n c e m e n tD a te (a s to B u ild in g A a n d B u ild in g D a n d th e p a rk in g s tru c tu re (P S 2 )d e s c rib e d o n E x h ib itA a s P a rk in g S tru c tu re 2 )a n d o n o rb e fo re th e P h a s e 2 C o m m e n c e m e n tD a te (a s to B u ild in g B );p ro v id e d ,h o w e v e r,e x c e p ta s o th e rw is e e x p re s s ly p ro v id e d u n d e rS e c tio n 4 .1 a b o v e o ru n d e rth is S e c tio n 4 .6 b e lo w ,T e n a n ta g re e s th a tin th e e v e n ta n y o ra lo fth e d e a d lin e s s e tfo rth in (a ),(b )o r(c )a b o v e a re n o tre a c h e d fo ra n y re a s o n ,th e n th is L e a s e s h a ln o tb e v o id o rv o id a b le a n d L a n d lo rd s h a ln o tb e lia b le to T e n a n tfo ra n y lo s s o rd a m a g e re s u ltin g th e re fro m .In th e e v e n th a tB u ild in g A ,B u ild in g D a n d B u ild in g B a re n o tin T IR e a d y C o n d ito n (a s d e fin e d in th e Wo rk L e te r)o n o rb e fo re th e d a te w h ic h is o n e h u n d re d tw e n ty (1 2 0 )d a y s a fte rJ u ly 1 ,2 0 1 6 (a s s u c h J u ly 1 ,2 0 1 6 d a te m a y b e e x te n d e d b y T e n a n tD e la y s a n d U n c o n tro la b le D e la y s (p ro v id e d th a tU n c o n tro la b le D e la y s w iln o te x c e e d 9 0 d a y s fo rp u rp o s e s o fth is S e c tio n 4 .6 )(O u ts id e D a te ),th e n th e s o le re m e d y o fT e n a n ts h a lb e a c re d ite q u a lto o n e (1 )
d a y o fre e B a s e R e n t(o b e a p p lie d c o m m e n c in g o n th e P h a s e 1 R e n tC o m m e n c e m e n tD a te )fo re a c h d a y b e y o n d th e O u ts id e D a te th a tB u ild in g A ,B u ild in g D a n d B u ild in g B a re n o tin T IR e a d y C o n d ito n ;p ro v id e d th a tifs u c h d e la y e x c e e d s s ix ty (6 0 )d a y s ,th e n fo re a c h d a y o fd e la y b e y o n d s ix ty (6 0 )d a y s ,T e n a n tw ilre c e iv e tw o (2 )d a y s o fre e B a s e R e n t(o b e a p p lie d c o m m e n c in g o n th e d a y th a tis s ix ty -o n e (6 1 )d a y s fo lo w in g th e P h a s e 1 R e n tC o m m e n c e m e n tD a te )fo re a c h d a y o fd e la y b e y o n d s ix ty (6 0 )d a y s .In th e e v e n th a tB u ild in g A ,B u ild in g D a n d B u ild in g B a re n o tin T IR e a d y C o n d ito n o n o rb e fo re th e d a te (O u ts id e T e rm in a tio n D a te )w h ic h is tw o h u n d re d fo rty (2 4 0 )d a y s a fte rJ u ly 1 ,2 0 1 6 (a s s u c h J u ly 1 ,2 0 1 6 d a te m a y b e e x te n d e d b y T e n a n tD e la y s a n d U n c o n tro la b le D e la y s (p ro v id e d th a tU n c o n tro la b le D e la y s w iln o te x c e e d 9 0 d a y s fo rp u rp o s e s o fth is S e c tio n 4 .6 ),th e n th e s o le re m e d y o fT e n a n ts h a lb e th e rig h to d e liv e ra n o tic e to L a n d lo rd (th e O u ts id e D a te T e rm in a tio n N o tic e )e le c tin g to te rm in a te th is L e a s e e fe c tiv e u p o n re c e ip to fth e O u ts id e D a te T e rm in a tio n N o tic e b y L a n d lo rd .T h e O u ts id e D a te T e rm in a tio n N o tic e m u s tb e d e liv e re d b y T e n a n to L a n d lo rd ,ifa ta l,n o te a rlie rth a n th e O u ts id e T e rm in a tio n D a te a n d n o tla te rth a n fiv e (5 )b u s in e s s d a y s a fte rth e O u ts id e T e rm in a tio n
1 2 D a te .IfT e n a n td e liv e rs th e O u ts id e D a te T e rm in a tio n N o tic e ,th is L e a s e s h a lte rm in a te a s o fth e d a te o fs u c h n o tic e ,a n d L a n d lo rd w iln o tb e o b lig a te d to re im b u rs e T e n a n tfo ra n y c o s ts in c u re d b y T e n a n tin c o n n e c tio n w ith th is L e a s e .4 .7 .A s s ig n m e n to fWa ra n tie s .E x c e p tfo rL a n d lo rd s re s p o n s ib ilty u n d e rS e c tio n 1 5 .3 b e lo w ,L a n d lo rd w iln o tb e re s p o n s ib le fo ra n y d e fe c ts in th e P ro je c ta n d B a s e B u ild in g Wo rk ;p ro v id e d th a tL a n d lo rd w ilo b ta in in d u s try s ta n d a rd w a ra n tie s re la tin g to s u c h P ro je c ta n d B a s e B u ild in g Wo rk (w h ic h w a ra n tie s s h a l,w ith re s p e c to a n y e le m e n ts o fth e P ro je c ta n d B a s e B u ild in g Wo rk re la te d to th e ro o fm e m b ra n e o fa B u ild in g ,b e in e fe c tfo ra m in im u m o f1 5 y e a rs fo lo w in g th e d a te th e a p p lic a b le B u ild in g is in T IR e a d y C o n d ito n ;a n d ,a s to th e w a ra n ty a p p lic a b le to th e g la z in g s y s te m ,L a n d lo rd w ilu s e g o o d fa ith e fo rts to o b ta in a 1 5 y e a rw a ra n ty ,in c lu d in g p u rc h a s in g s u c h w a ra n ty ifa v a ila b le fro m th e a p p lic a b le c o n tra c to ra ta c o m m e rc ia ly re a s o n a b le p ric e )a n d L a n d lo rd w ila s s ig n to T e n a n ta lw a ra n tie s o b ta in e d b y L a n d lo rd in c o n n e c tio n w ith th e n o n -s tru c tu ra lp o rtio n s o fth e P ro je c ta n d B a s e B u ild in g Wo rk (b u to n ly to th e e x te n ts u c h w a ra n tie s a re a s s ig n a b le ).L a n d lo rd w ilre a s o n a b ly c o o p e ra te w ith T e n a n to e n fo rc e s u c h w a ra n tie s ;p ro v id e d th a tL a n d lo rd w iln o th a v e a n y o b lig a tio n to in ita te le g a lp ro c e e d in g s o rp e rfo rm o rp a y th e
c o s to p e rfo rm a n y w o rk w h ic h a n y c o n tra c to rfa ils to p e rfo rm .A n y a s s ig n m e n to fs u c h w a ra n tie s w ilp ro v id e th a ta s s ig n m e n to fth e w a ra n ty to T e n a n tw iln o ta fe c tL a n d lo rd s rig h ts p u rs u a n to s u c h w a ra n tie s ,a n d L a n d lo rd re s e rv e s th e rig h to e n fo rc e s u c h w a ra n tie s d ire c tly a g a in s th e a p p lic a b le c o n tra c to r,a tis s o le o p tio n .In th e e v e n ta n y w a ra n tie s c a n n o tb e a s s ig n e d to T e n a n t,L a n d lo rd w ile n fo rc e s u c h w a ra n tie s a g a in s th e a p p lic a b le c o n tra c to ro n T e n a n ts b e h a lf.4 .8 .C o n firm a tio n o fD a te s .T e n a n ts h a le x e c u te a n d d e liv e rto L a n d lo rd a n y fa c tu a ly c o re c tw rite n a c k n o w le d g m e n ts o fth e R e n tC o m m e n c e m e n tD a te (s )(a s d e fin e d b e lo w )a n d th e T e rm E x p ira tio n D a te fo rth e a p p lic a b le p o rtio n o fth e P re m is e s w ith in te n (1 0 )b u s in e s s d a y s o fL a n d lo rd s re q u e s t(p ro v id e d ,h o w e v e r,th a tL a n d lo rd s h a ln o tb e p e rm ite d to re q u e s ta n y s u c h a c k n o w le d g e m e n tu n tila fte rth e a p p lic a b le R e n tC o m m e n c e m e n tD a te ),w h ic h a c k n o w le d g e m e n ts h a lb e in th e fo rm a ta c h e d a s E x h ib itJ h e re to .F a ilu re to e x e c u te a n d d e liv e rs u c h a c k n o w le d g m e n t,h o w e v e r,s h a ln o ta fe c ta n y R e n tC o m m e n c e m e n tD a te (s )o rL a n d lo rd s o rT e n a n ts lia b ilty h e re u n d e r.F a ilu re b y T e n a n to o b ta in v a lid a tio n b y a n y m e d ic a lre v ie w b o a rd o ro th e rs im ila rg o v e rn m e n ta lic e n s in g o fth e P re m is e s re q u ire d fo rth e P e rm ite d U s e b y T e n a n ts h a ln o ts e rv e to e x te n d a n y R e n t
C o m m e n c e m e n tD a te (s ).5 .R e n t.5 .1 .B a s e R e n t.T e n a n ts h a lp a y to L a n d lo rd a s B a s e R e n tfo r(a )B u ild in g A a n d B u ild in g D ,c o m m e n c in g o n th e P h a s e 1 R e n tC o m m e n c e m e n tD a te ,a n d (b )B u ild in g B ,c o m m e n c in g o n th e P h a s e 2 R e n tC o m m e n c e m e n tD a te (a s a p p lic a b le ,th e R e n tC o m m e n c e m e n tD a te ),th e B a s e R e n ts e tfo rth in S e c tio n 2 .3 ,s u b je c to th e re n ta la d ju s tm e n ts p ro v id e d in A rtic le 6 h e re o fa n d s u b je c to th e B u ild in g B B a s e R e n tA b a te m e n t(a s d e fin e d in S e c tio n 5 .5 b e lo w ).B a s e R e n ts h a lb e p a id in e q u a lm o n th ly in s ta lm e n ts in a d v a n c e o n th e firs td a y o fe a c h a n d e v e ry c a le n d a rm o n th d u rin g th e T e rm .B e g in n in g o n th e a p p lic a b le R e n tC o m m e n c e m e n tD a te ,T e n a n ts h a lp a y to L a n d lo rd a n a m o u n te q u a lto th e B a s e R e n t,s u b je c to a d ju s tm e n ts p u rs u a n to S e c tio n 6 b e lo w w ith o u td e d u c tio n ,o fs e to rp rio rn o tic e o rd e m a n d ,e x c e p ta s m a y b e e x p re s s ly p ro v id e d b y th e te rm s o fth is L e a s e .
1 3 5 .2 .A d d ito n a lR e n t.In a d d ito n to B a s e R e n t,T e n a n ts h a lp a y to L a n d lo rd a s a d d ito n a lre n t(A d d ito n a lR e n t)a tim e s h e re in a fte rs p e c ife d in th is L e a s e (a )a n y E a rly O c c u p a n c y A d d ito n a lR e n td u e p u rs u a n to S e c tio n 2 .3 (c )a b o v e ,(b )a m o u n ts re la te d to O p e ra tin g E x p e n s e s ,In s u ra n c e E x p e n s e s a n d T a x e s (e a c h a s d e fin e d b e lo w ),(c )th e P ro p e rty M a n a g e m e n tF e e (a s d e fin e d b e lo w )a n d (d )a n y o th e ra m o u n ts th a tT e n a n ta s s u m e s o ra g re e s to p a y u n d e rth e p ro v is io n s o fth is L e a s e th a ta re o w e d to L a n d lo rd ,in c lu d in g a n y a n d a lo th e rs u m s th a tm a y b e c o m e d u e b y re a s o n o fa n y d e fa u lto fT e n a n to rfa ilu re o n T e n a n ts p a rto c o m p ly w ith th e a g re e m e n ts ,te rm s ,c o v e n a n ts a n d c o n d ito n s o fth is L e a s e to b e p e rfo rm e d b y T e n a n t,a fte ra n y a p p lic a b le n o tic e a n d c u re p e rio d s .5 .3 .P a y m e n to fR e n t.B a s e R e n ta n d A d d ito n a lR e n ts h a lto g e th e rb e d e n o m in a te d R e n t.R e n ts h a lb e p a id to L a n d lo rd ,w ith o u ta b a te m e n t,d e d u c tio n o ro fs e t(e x c e p ta s m a y b e e x p re s s ly p ro v id e d b y th e te rm s o fth is L e a s e ),in la w fu lm o n e y o fth e U n ite d S ta te s o fA m e ric a a th e o fic e o fL a n d lo rd a s s e tfo rth in S e c tio n 2 .8 o rto s u c h o th e rp e rs o n o ra ts u c h o th e rp la c e a s L a n d lo rd m a y fro m tim e d e s ig n a te in w ritn g .In th e e v e n th e T e rm o ra n y e a rly o c c u p a n c y p u rs u a n to S e c tio n 2 .3 (c )a b o v e c o m m e n c e s o re n d s o n a d a y o th e rth a n th e firs td a y o fa c a le n d a rm o n th ,
th e n th e R e n tfo rs u c h fra c tio n o fa m o n th s h a lb e p ro ra te d fo rs u c h p e rio d o n th e b a s is o fth e n u m b e ro fd a y s in th e m o n th a n d s h a lb e p a id a th e th e n -c u re n tra te fo rs u c h fra c tio n a lm o n th .5 .4 .R e n ta lO b lig a tio n .E x c e p ta s e x p re s s ly p ro v id e d in th is L e a s e ,T e n a n ts o b lig a tio n to p a y R e n ts h a ln o tb e d is c h a rg e d o ro th e rw is e a fe c te d b y (a )a n y A p p lic a b le L a w s n o w o rh e re a fte ra p p lic a b le to th e P re m is e s ,(b )a n y o th e re s tric tio n o n T e n a n ts u s e n o ta trib u ta b le to a b re a c h o fth is L e a s e b y L a n d lo rd (S e c tio n 2 8 .1 3 b e lo w s h a lg o v e rn a n y b re a c h b y L a n d lo rd )o r(c )a n y o th e ro c c u re n c e ;a n d ,e x c e p ta s e x p re s s ly p ro v id e d in th is L e a s e ,T e n a n tw a iv e s a lrig h ts n o w o rh e re a fte re x is tin g to te rm in a te o rc a n c e lth is L e a s e o rq u ito rs u re n d e rth e P re m is e s o ra n y p a rth e re o f,o rto a s s e rta n y d e fe n s e in th e n a tu re o fc o n s tru c tiv e e v ic tio n to a n y a c tio n s e e k in g to re c o v e re n t.F o ra v o id a n c e o fd o u b t,L a n d lo rd a n d T e n a n ta g re e th a t,fo rp u rp o s e s o fth is S e c tio n 5 .4 ,th e p h ra s e e x c e p ta s e x p re s s ly p ro v id e d in th is L e a s e m e a n s th a tin th e e v e n to fa n y c o n flic tb e tw e e n th is S e c tio n 5 .4 a n d a n y o th e re x p re s s p ro v is io n o fth is L e a s e ,th e e x p re s s p ro v is io n o fth is L e a s e s h a lc o n tro l.5 .5 .B a s e R e n tA b a te m e n t.T e n a n ts o b lig a tio n s w ith re s p e c to B a s e R e n ta s to B u ild in g B o n ly (a n d n o ta s to a n y o th e rB u ild in g )s h a lb e s u b je c to a b a te m e n tin th e a m o u n to fF iv e M ilo n
T w o H u n d re d F ifty -S e v e n T h o u s a n d S ix H u n d re d D o la rs ($ 5 ,2 5 7 ,6 0 0 )(th e "B u ild in g B B a s e R e n tA b a te m e n t"),w h ic h B u ild in g B B a s e R e n tA b a te m e n ts h a lb e a m o rtiz e d a n d a p p lie d in e q u a lin s ta lm e n ts o v e rm o n th s o n e (1 )th ro u g h tw e lv e (1 2 )o fth e in ita lT e rm w ith re s p e c to B u ild in g B c o m m e n c in g o n th e P h a s e 2 R e n tC o m m e n c e m e n tD a te ;p ro v id e d ,h o w e v e r,th a tT e n a n ts h a ln o tb e e n tile d to a n y p o rtio n o fth e B u ild in g B B a s e R e n tA b a te m e n ta c c ru in g d u rin g a p e rio d o ftim e in w h ic h T e n a n tis in m o n e ta ry D e fa u lto rm a te ria ln o n -m o n e ta ry D e fa u ltu n d e rth is L e a s e .T e n a n ta c k n o w le d g e s a n d a g re e s th a th e B u ild in g B B a s e R e n tA b a te m e n th a s b e e n g ra n te d to T e n a n ta s a d d ito n a lc o n s id e ra tio n fo re n te rin g in to th is L e a s e a n d fo ra g re e in g to p a y th e R e n ta n d p e rfo rm a lo fth e o b lig a tio n s o fT e n a n tu n d e rth is L e a s e (in c lu d in g ,w ith o u tlim ita tio n ,T e n a n ts o b lig a tio n s w ith re s p e c to P S 1 u n d e rS e c tio n 4 0 .5 b e lo w ).T h e B u ild in g B B a s e R e n tA b a te m e n ts h a ln o tw o rk to a b a te o re d u c e T e n a n ts
1 4 o b lig a tio n s u n d e rth is L e a s e w ith re s p e c to A d d ito n a lR e n tfo rB u ild in g B in c lu d in g (w ith o u tlim ita tio n )T e n a n ts o b lig a tio n s w ith re s p e c to T a x e s ,In s u ra n c e a n d O p e ra tin g E x p e n s e s w ith re s p e c to B u ild in g B ;p ro v id e d ,h o w e v e r,th a th e P ro p e rty M a n a g e m e n tF e e fo rm o n th s o n e (1 )th ro u g h tw e lv e (1 2 )o fth e in ita lT e rm w ith re s p e c to B u ild in g B s h a lb e a d ju s te d p u rs u a n to A rtic le 8 b e lo w .6 .R e n tA d ju s tm e n ts .B a s e R e n tfo rth e P re m is e s s h a lb e s u b je c to a n u p w a rd a d ju s tm e n to fiv e p e rc e n t(5 % )o fth e th e n -c u re n tB a s e R e n te v e ry tw e n ty fo u r(2 4 )m o n th s d u rin g th e T e rm .A s to B u ild in g A a n d B u ild in g D ,th e firs ts u c h a d ju s tm e n ts h a lb e c o m e e fe c tiv e c o m m e n c in g o n th e s e c o n d (2 n d )a n n u a la n n iv e rs a ry o fth e P h a s e 1 R e n tC o m m e n c e m e n tD a te ,a n d s u b s e q u e n ta d ju s tm e n ts s h a lb e c o m e e fe c tiv e o n e v e ry o th e rs u c c e s s iv e a n n u a la n n iv e rs a ry fo rs o lo n g a s th is L e a s e c o n tin u e s in e fe c tw ith re s p e c to B u ild in g A a n d B u ild in g D .A s to B u ild in g B ,th e firs ts u c h a d ju s tm e n ts h a lb e c o m e e fe c tiv e c o m m e n c in g o n th e s e c o n d (2 n d )a n n u a la n n iv e rs a ry o fth e P h a s e 2 R e n tC o m m e n c e m e n tD a te ,a n d s u b s e q u e n ta d ju s tm e n ts s h a lb e c o m e e fe c tiv e o n e v e ry o th e rs u c c e s s iv e a n n u a la n n iv e rs a ry fo rs o lo n g a s th is L e a s e c o n tin u e s in e fe c tw ith re s p e c to B u ild in g B .In th e e v e n tT e n a n te x e rc is e s th e L a n d R e n ta lO p tio n (a s d e fin e d in
S e c tio n 4 0 .1 b e lo w ),th e n th e E x p a n s io n L a n d R e n tw ilb e s u b je c to a n u p w a rd a d ju s tm e n to fiv e p e rc e n t(5 % )o fth e th e n -c u re n tE x p a n s io n L a n d R e n te v e ry tw e n ty fo u r(2 4 )m o n th s d u rin g th e te rm o fth e L a n d R e n ta lO p tio n c o m m e n c in g o n th e firs td a y o fth e s ix ty -firs t(6 1 s t)m o n th fo lo w in g th e P h a s e 1 R e n tC o m m e n c e m e n tD a te ,a n d s u b s e q u e n ta d ju s tm e n ts s h a lb e c o m e e fe c tiv e o n e v e ry o th e rs u c c e s s iv e a n n u a la n n iv e rs a ry fo rs o lo n g a s th e L a n d R e n ta lO p tio n c o n tin u e s in e fe c t.T h e P ro je c tC o s ts C o m p o n e n t(a s d e fin e d in S e c tio n 4 0 b e lo w )o fB a s e R e n tfo rth e E x p a n s io n S p a c e w ilb e s u b je c to a n u p w a rd a d ju s tm e n to fiv e p e rc e n t(5 % )o fth e th e n -c u re n tP ro je c tC o s ts C o m p o n e n to fB a s e R e n te v e ry tw e n ty fo u r(2 4 )m o n th s d u rin g th e T e rm c o m m e n c in g o n th e s e c o n d (2 n d )a n n u a la n n iv e rs a ry o fth e E x p a n s io n S p a c e C o m m e n c e m e n tD a te (a s d e fin e d b e lo w ),a n d s u b s e q u e n ta d ju s tm e n ts o fth e P ro je c tC o s ts C o m p o n e n ts h a lb e c o m e e fe c tiv e o n e v e ry o th e rs u c c e s s iv e a n n u a la n n iv e rs a ry fo rs o lo n g a s th is L e a s e c o n tin u e s in e fe c tw ith re s p e c to th e E x p a n s io n S p a c e ,a n d th e L a n d R e n tC o m p o n e n t(a s d e fin e d b e lo w )o fB a s e R e n tfo rth e E x p a n s io n S p a c e s h a lb e s u b je c to a n u p w a rd a d ju s tm e n to fiv e p e rc e n t(5 % )o fth e th e n -c u re n tL a n d R e n tC o m p o n e n to fB a s e R e n te v e ry tw e n ty fo u r(2 4 )m o n th s
c o m m e n c in g o n th e firs td a y o fth e s ix ty -firs t(6 1 s t)m o n th fo lo w in g th e P h a s e 1 R e n tC o m m e n c e m e n tD a te (th e In ita lL a n d R e n tC o m p o n e n tA d ju s tm e n tD a te )re g a rd le s s o fw h e n p a y m e n to fth e L a n d R e n tC o m p o n e n tc o m m e n c e s (i.e .,a d ju s tm e n ts o fth e L a n d R e n tC o m p o n e n ts h a lc o m m e n c e o n th e In ita lL a n d R e n tC o m p o n e n tA d ju s tm e n tD a te e v e n ifT e n a n ts p a y m e n to b lig a tio n s w ith re s p e c to th e L a n d R e n tC o m p o n e n td o n o tb e g in u n tila fte rth e In ita lL a n d R e n tC o m p o n e n tA d ju s tm e n tD a te ),a n d s u b s e q u e n ta d ju s tm e n ts s h a lb e c o m e e fe c tiv e o n e v e ry o th e rs u c c e s s iv e a n n u a la n n iv e rs a ry fo rs o lo n g a s th is L e a s e c o n tin u e s in e fe c tw ith re s p e c to th e E x p a n s io n S p a c e .7 .T a x e s .7 .1 .C o m m e n c in g o n th e e a rlie ro f(i)th e P h a s e 1 R e n tC o m m e n c e m e n tD a te o r(i)th e firs td a y o fa n y e a rly o c c u p a n c y p u rs u a n to S e c tio n 2 .3 (c )a b o v e ,a n d c o n tin u in g fo re a c h ta x y e a r(e a c h s u c h ta x y e a rb e in g a p e rio d o ftw e lv e (1 2 )c o n s e c u tiv e c a le n d a rm o n th s fo rw h ic h th e a p p lic a b le ta x in g a u th o rity le v ie s o ra s s e s s e s T a x e s ),fo rth e b a la n c e o fth e T e rm ,T e n a n t
 1 5 s h a lp a y to L a n d lo rd th e a m o u n to fa lT a x e s le v ie d a n d a s s e s s e d fo ra n y s u c h y e a ra s fo lo w s :T e n a n ts h a lp a y 1 0 0 % o fth e p o rtio n o fT a x e s a trib u ta b le to im p ro v e m e n ts o n th e P ro p e rty ,p lu s a p ro ra ta p o rtio n o fT a x e s a trib u ta b le to th e la n d w ith in th e P ro je c t(w h ic h p ro ra ta p o rtio n w ilb e c a lc u la te d b a s e d u p o n a fra c tio n ,th e n u m e ra to ro fw h ic h w ilb e (a )p rio rto th e P h a s e 1 R e n tC o m m e n c e m e n tD a te ,th e c o m b in e d R e n ta b le A re a o fa n y P h a s e 1 E a rly O c c u p a n c y S p a c e o c c u p ie d u n d e rS e c tio n 2 .3 (c )(ia b o v e ,(b )a fte rth e P h a s e 1 R e n tC o m m e n c e m e n tD a te b u tp rio rto th e P h a s e 2 R e n tC o m m e n c e m e n tD a te ,th e c o m b in e d R e n ta b le A re a o fB u ild in g A ,B u ild in g D a n d a n y P h a s e 2 E a rly O c c u p a n c y S p a c e ,a n d (c )a ta n y tim e a fte rth e P h a s e 2 R e n tC o m m e n c e m e n tD a te ,a lR e n ta b le A re a le a s e d b y T e n a n t,a n d th e d e n o m in a to ro fw h ic h w ilb e to ta lR e n ta b le A re a o fth e P ro je c tin c lu d in g ,w ith o u tlim ita tio n ,th e E x p a n s io n S p a c e ).T a x e s m e a n s a lg o v e rn m e n tim p o s ito n s ,in c lu d in g p ro p e rty ta x c o s ts c o n s is tin g o fre a la n d p e rs o n a lp ro p e rty ta x e s a n d a s s e s s m e n ts (in c lu d in g a m o u n ts d u e u n d e ra n y im p ro v e m e n tb o n d u p o n th e P re m is e s o ra n y p o rtio n th e re o f)o ra s s e s s m e n ts in lie u th e re o fim p o s e d b y a n y fe d e ra l,s ta te ,re g io n a l,o c a lo rm u n ic ip a lg o v e rn m e n ta la u th o rity ,a g e n c y o rs u b d iv is io n (e a c h ,a G o v e rn m e n ta lA u th o rity );ta x e s o n o r
m e a s u re d b y g ro s s re n ta ls re c e iv e d fro m th e re n ta lo fs p a c e a th e P re m is e s ;ta x e s b a s e d o n th e R e n ta b le A re a o fth e P re m is e s o ra n y p o rtio n th e re o f,a s w e la s a n y p a rk in g c h a rg e s ,u tile s s u rc h a rg e s o ra n y o th e rc o s ts le v ie d ,a s s e s s e d o rim p o s e d b y ,o ra th e d ire c tio n o f,o re s u ltin g fro m A p p lic a b le L a w s o rin te rp re ta tio n s th e re o f,p ro m u lg a te d b y a n y G o v e rn m e n ta lA u th o rity in c o n n e c tio n w ith th e u s e o ro c c u p a n c y o fth e P re m is e s o rth e p a rk in g fa c ilte s s e rv in g th e P re m is e s ;ta x e s o n th is tra n s a c tio n o ra n y d o c u m e n to w h ic h T e n a n tis a p a rty c re a tin g o rta n s fe rin g a n in te re s tin th e P re m is e s ;a n y fe e fo ra b u s in e s s lic e n s e to o p e ra te a n o fic e b u ild in g ;a n d a n y e x p e n s e s ,in c lu d in g th e re a s o n a b le c o s to fa to rn e y s o re x p e rts ,re a s o n a b ly in c u re d b y L a n d lo rd in s e e k in g re d u c tio n b y th e ta x in g a u th o rity o fth e a p p lic a b le ta x e s ,le s s ta x re fu n d s o b ta in e d a s a re s u lto fa n a p p lic a tio n fo re v ie w th e re o f.N o tw ith s ta n d in g a n y th in g in th is L e a s e to th e c o n tra ry ,T a x e s s h a ln o tin c lu d e a n y fe d e ra lo rs ta te in c o m e ta x e s ,n e tin c o m e ,fra n c h is e ,c a p ita ls to c k ,e s ta te o rin h e rita n c e a n d s u c c e s s io n ta x e s ,o rta x e s th a ta re th e p e rs o n a lo b lig a tio n o fT e n a n t.A n y a m o u n tp a id b y T e n a n tfo ra n y p a rtia ly e a ro fth e T e rm s h a lb e p ro ra te d o n th e b a s is o fth e n u m b e ro fd a y s o fs u c h p a rtia ly e a r.P a y m e n ts h a lb e m a d e in th e fo lo w in g m a n n e r:T e n a n ts h a lp a y to L a n d lo rd
th e a m o u n ts o w e d u n d e rth is A rtic le 7 w ith in th irty (3 0 )d a y s a fte rL a n d lo rd g iv e s n o tic e to T e n a n to fth e a m o u n to fs u c h T a x e s p a y a b le b y T e n a n t(o rn o tle s s th a n fite e n (1 5 )d a y s p rio rto d e lin q u e n c y ,w h ic h e v e ris la te r).L a n d lo rd a ls o s h a lp ro v id e T e n a n tw ith a c o p y o fth e a p p lic a b le ta x b ilo rta x s ta te m e n tfro m th e re le v a n ta x in g a u th o rity .N o tw ith s ta n d in g th e fo re g o in g ,ifA p p lic a b le L a w s a lo w a n y s u c h T a x e s to b e p a id in in s ta lm e n ts ,th e n T e n a n tm a y m a k e s u c h p a y m e n ts to L a n d lo rd in in s ta lm e n ts ,p ro v id e d th a te a c h s u c h in s ta lm e n ts h a lb e p a y a b le to L a n d lo rd n o tle s s th a n fite e n (1 5 )d a y s p rio rto th e d a te u p o n w h ic h p a y m e n to fth e a p p lic a b le in s ta lm e n to th e ta x in g a u th o rity b e c o m e s d e lin q u e n t.In a d d ito n to a n y o th e ra m o u n ts d u e fro m T e n a n to L a n d lo rd ,ifT e n a n tfa ils to p a y T a x e s to L a n d lo rd a s h e re in re q u ire d ,T e n a n ts h a lp a y to L a n d lo rd th e a m o u n to fa n y in te re s t,p e n a ltie s o rla te c h a rg e s im p o s e d b y a n y g o v e rn m e n ta la u th o rity fo rla te p a y m e n t.(a )N o tw ith s ta n d in g a n y th in g to th e c o n tra ry c o n ta in e d in th is L e a s e ,in th e e v e n th a t,a ta n y tim e d u rin g th e firs tfiv e (5 )y e a rs o fth e in ita lT e rm ,a n y s a le ,re fin a n c in g ,o rc h a n g e in o w n e rs h ip o fth e P ro je c tis c o n s u m m a te d ,a n d a s a re s u lth e re o f,a n d to th e e x te n th a tin c o n n e c tio n th e re w ith ,th e P ro je c tis re a s s e s s e d (th e "R e a s s e s s m e n t")fo re a le s ta te ta x
1 6 p u rp o s e s b y th e a p p ro p ria te g o v e rn m e n ta la u th o rity p u rs u a n to th e te rm s o fP ro p o s ito n 1 3 ,th e n th e fo lo w in g p ro v is io n s s h a la p p ly to s u c h R e a s s e s s m e n to fth e P ro je c t.(b )F o rp u rp o s e s o fth is S e c tio n 7 .1 ,th e te rm "T a x In c re a s e "s h a lm e a n th a tp o rtio n o fth e T a x e s ,a s c a lc u la te d im m e d ia te ly fo lo w in g th e R e a s s e s s m e n t,w h ic h is a trib u ta b le s o le ly to th e R e a s s e s s m e n t.A c c o rd in g ly ,th e te rm T a x In c re a s e s h a ln o tin c lu d e a n y p o rtio n o fth e T a x e s ,a s c a lc u la te d im m e d ia te ly fo lo w in g th e R e a s s e s s m e n t,w h ic h (i)s a trib u ta b le to th e in ita la s s e s s m e n to fth e v a lu e o fth e P ro je c t,h e B u ild in g s o rth e te n a n tim p ro v e m e n ts lo c a te d in th e P ro je c t,(i)s a trib u ta b le to a s s e s s m e n ts w h ic h w e re p e n d in g im m e d ia te ly p rio rto th e R e a s s e s s m e n tw h ic h a s s e s s m e n ts w e re c o n d u c te d d u rin g ,a n d in c lu d e d in ,s u c h R e a s s e s s m e n t,o rw h ic h a s s e s s m e n ts w e re o th e rw is e re n d e re d u n n e c e s s a ry fo lo w in g th e R e a s s e s s m e n t,(i)s a trib u ta b le to im p ro v e m e n ts (in c lu d in g ,w ith o u tlim ita tio n ,d u e to c o n s tru c tio n o fB u ild in g A ,B u ild in g D ,B u ild in g B a n d B u ild in g C a s a p p lic a b le )c o n s tru c te d o n th e P ro je c ta n d n o td u e to a c h a n g e in o w n e rs h ip ,o r(iv )is a trib u ta b le to th e a n n u a lin fla tio n a ry in c re a s e o fre a le s ta te ta x e s p e rm ite d to b e a s s e s s e d a n n u a ly u n d e rP ro p o s ito n 1 3 .D u rin g th e firs tfiv e (5 )y e a rs o fth e in ita lT e rm ,a n y T a x In c re a s e s h a lb e e x c lu d e d fro m T a x e s .A fte rth e firs tfiv e (5 )
y e a rs o fth e in ita lT e rm ,a n y T a x In c re a s e s h a lb e in c lu d e d in T a x e s .(c )T h e a m o u n to fT a x e s w h ic h T e n a n tis n o to b lig a te d to p a y o rw iln o tb e o b lig a te d to p a y d u rin g th e firs tfiv e (5 )y e a rs o fth e in ita lT e rm in c o n n e c tio n w ith a p a rtic u la rR e a s s e s s m e n tp u rs u a n to th e te rm s o fth is S e c tio n 7 .1 ,s h a lb e re fe re d to a s a "P ro p o s ito n 1 3 P ro te c tio n A m o u n t."A ta n y tim e d u rin g th e T e rm ,u p o n n o tic e to T e n a n t,L a n d lo rd s h a lh a v e th e rig h to p u rc h a s e th e P ro p o s ito n 1 3 P ro te c tio n A m o u n tre la tin g to th e a p p lic a b le R e a s s e s s m e n t(h e "A p p lic a b le R e a s s e s s m e n t"),b y p a y in g to T e n a n ta n a m o u n te q u a lto th e P ro p o s ito n 1 3 P u rc h a s e P ric e ,a s th a te rm is d e fin e d b e lo w ,p ro v id e d th a th e rig h to fa n y s u c c e s s o ro fL a n d lo rd to e x e rc is e its rig h to fre p u rc h a s e h e re u n d e rs h a ln o ta p p ly to a n y R e a s s e s s m e n tw h ic h re s u lts fro m th e e v e n tp u rs u a n to w h ic h s u c h s u c c e s s o ro fL a n d lo rd b e c a m e th e L a n d lo rd u n d e rth is L e a s e .A s u s e d h e re in ,"P ro p o s ito n 1 3 P u rc h a s e P ric e "s h a lm e a n th e p re s e n tv a lu e o fth e P ro p o s ito n 1 3 P ro te c tio n A m o u n tre m a in in g d u rin g th e T e rm ,a s o fth e d a te o fp a y m e n to fth e P ro p o s ito n 1 3 P u rc h a s e P ric e b y L a n d lo rd .S u c h p re s e n tv a lu e s h a lb e c a lc u la te d (i)b y u s in g th e p o rtio n o fth e P ro p o s ito n 1 3 P ro te c tio n A m o u n ta trib u ta b le to e a c h re m a in in g y e a rd u rin g th e T e rm (a s th o u g h th e p o rtio n o fs u c h P ro p o s ito n 1 3 P ro te c tio n A m o u n tb e n e fite d
T e n a n ta th e e n d o fe a c h s u c h y e a r),a s th e a m o u n ts to b e d is c o u n te d ,a n d (i)b y u s in g d is c o u n tra te s fo re a c h a m o u n to b e d is c o u n te d e q u a lto th e p rim e in te re s tra te ,a s re p o rte d b y We ls F a rg o B a n k ,N .A .(o rifWe ls F a rg o c e a s e s to e x is to p u b lis h s u c h a ra te ,th e la rg e s tfe d e ra ly c h a rte re d b a n k in g in s tiu tio n in C a lifo rn ia )a s o fth e d a te o fL a n d lo rd 's e x e rc is e o fits rig h to p u rc h a s e ,a s s e tfo rth in th is S e c tio n 7 .1 (c ).U p o n s u c h p a y m e n to fth e P ro p o s ito n 1 3 P u rc h a s e P ric e ,th e p ro v is io n s o fS u b s e c tio n 7 .1 (b )o fth is L e a s e s h a ln o ta p p ly to a n y T a x In c re a s e a trib u ta b le to th e A p p lic a b le R e a s s e s s m e n t.IfL a n d lo rd e s tim a te s th e P ro p o s ito n 1 3 P u rc h a s e P ric e b e c a u s e a R e a s s e s s m e n th a s n o ty e to c c u re d ,th e n w h e n s u c h R e a s s e s s m e n to c c u rs ,ifL a n d lo rd h a s u n d e re s tim a te d th e P ro p o s ito n 1 3 P u rc h a s e P ric e ,th e n u p o n n o tic e b y L a n d lo rd to T e n a n t,T e n a n t's B a s e R e n tn e x td u e s h a lb e c re d ite d w ith th e a m o u n to fs u c h u n d e re s tim a tio n ,a n d ifL a n d lo rd o v e re s tim a te s th e P ro p o s ito n 1 3 P u rc h a s e P ric e ,th e n u p o n n o tic e b y L a n d lo rd to T e n a n t,B a s e R e n tn e x td u e s h a lb e in c re a s e d b y th e a m o u n to fth e o v e re s tim a tio n .
 1 7 7 .2 .T e n a n ts h a lh a v e th e rig h t,b y a p p ro p ria te p ro c e e d in g s ,to p ro te s to rc o n te s tin g o o d fa ith a n y a s s e s s m e n to re a s s e s s m e n to fT a x e s ,a n y s p e c ia la s s e s s m e n t,o rth e v a lid ity o fa n y T a x e s o ro fa n y c h a n g e in a s s e s s m e n to rta x ra te ;p ro v id e d ,h o w e v e r,th a tp rio rto a n y s u c h c h a le n g e T e n a n tm u s te ith e r(a )p a y th e T a x e s a le g e d to b e d u e in th e ire n tire ty a n d s e e k a re fu n d fro m th e a p p ro p ria te a u th o rity o r(b )p o s ta b o n d in a n a m o u n ts u fic ie n to e n s u re fu lp a y m e n to fth e T a x e s ,in c lu d in g a n y p o te n tia lin te re s t,la te c h a rg e a n d p e n a ltie s .U p o n a fin a ld e te rm in a tio n w ith re s p e c to a n y s u c h c o n te s to rp ro te s t,T e n a n ts h a lp ro m p tly p a y to th e a p p ro p ria te G o v e rn m e n ta lA u th o rity a ls u m s fo u n d to b e d u e w ith re s p e c th e re to .In a n y s u c h p ro te s to rc o n te s t,T e n a n tm a y a c tin its o w n n a m e ,a n d a th e re q u e s to fT e n a n t,L a n d lo rd s h a lc o o p e ra te w ith T e n a n tin a n y w a y T e n a n tm a y re a s o n a b ly re q u ire in c o n n e c tio n w ith s u c h c o n te s to rp ro te s t,in c lu d in g s ig n in g s u c h d o c u m e n ts a s T e n a n tre a s o n a b ly s h a lre q u e s t,p ro v id e d th a ts u c h c o o p e ra tio n s h a lb e a tn o e x p e n s e to L a n d lo rd a n d s h a ln o tre q u ire L a n d lo rd to a te n d a n y a p p e a lo ro th e rh e a rin g .A n y s u c h c o n te s to rp ro te s ts h a lb e a tT e n a n t's s o le e x p e n s e ,a n d ifa n y p e n a ltie s ,in te re s to rla te c h a rg e s b e c o m e p a y a b le w ith re s p e c to th e T a x e s a s a re s u lto fs u c h c o n te s to rp ro te s t,
T e n a n ts h a lp a y th e s a m e .7 .3 .IfT e n a n to b ta in s a re fu n d a s th e re s u lto fT e n a n t's p ro te s to rc o n te s t,a n d s u b je c to T e n a n t's o b lig a tio n to p a y L a n d lo rd 's a c tu a lc o s ts (ifa n y )a s s o c ia te d th e re w ith ,T e n a n ts h a lb e e n tile d to s u c h re fu n d to th e e x te n tire la te s to th e P re m is e s d u rin g th e T e rm .7 .4 .T e n a n ts h a lb e s o le ly re s p o n s ib le fo rth e p a y m e n to fa n y a n d a lta x e s le v ie d u p o n (a )p e rs o n a lp ro p e rty a n d tra d e fix tu re s lo c a te d a th e P re m is e s a n d (b )a n y g ro s s o rn e tre c e ip ts o fo rs a le s b y T e n a n t,a n d s h a lp a y th e s a m e a tle a s te n (1 0 )d a y s p rio rto d e lin q u e n c y .7 .5 .T o th e e x te n tL a n d lo rd is re q u ire d b y a le n d e r,T e n a n ts h a ltim e ly p a y a lta x a n d in s u ra n c e im p o u n d p a y m e n ts d u e o n th e P re m is e s .7 .6 .T e n a n ts h a ln o tb e re s p o n s ib le fo rT a x e s a trib u ta b le to th e tim e p e rio d p rio rto th e P h a s e 1 R e n tC o m m e n c e m e n tD a te e x c e p to th e e x te n tre q u ire d u n d e rS e c tio n 2 .3 (c )a b o v e .T e n a n ts re s p o n s ib ilty fo rT a x e s s h a lc o n tin u e to th e la te s to f(a )th e d a te o fte rm in a tio n o fth e L e a s e a n d (b )th e d a te T e n a n th a s fu ly v a c a te d th e P re m is e s (p ro v id e d th a th e fo re g o in g w iln o tlim itL a n d lo rd s re m e d ie s in th e e v e n to fa d e fa u ltb y T e n a n th e re u n d e r).7 .7 .C u t-O fD a te .N o tw ith s ta n d in g a n y th in g h e re in to th e c o n tra ry ,T e n a n ts h a ln o tb e re s p o n s ib le fo rT a x e s a trib u ta b le to a n y c a le n d a ry e a rw h ic h a re firs tb ile d to T e n a n tm o re th a n e ig h te e n (1 8 )m o n th s a fte rth e e x p ira tio n o fth e a p p lic a b le
c a le n d a ry e a r,e x c e p tw ith re s p e c to s u p p le m e n ta lT a x e s .8 .P ro p e rty M a n a g e m e n tF e e .T e n a n ts h a lp a y to L a n d lo rd o n th e firs td a y o fe a c h c a le n d a rm o n th o fth e T e rm ,a s A d d ito n a lR e n t,h e P ro p e rty M a n a g e m e n tF e e (a s d e fin e d b e lo w ).T h e P ro p e rty M a n a g e m e n tF e e s h a le q u a lo n e p e rc e n t(1 % )o fB a s e R e n td u e fro m T e n a n t(s u b je c to in c re a s e p u rs u a n to E x h ib itG ).T e n a n ts h a lp a y th e P ro p e rty M a n a g e m e n tF e e w ith re s p e c to th e e n tire T e rm ,in c lu d in g a n y e x te n s io n s th e re o fo ra n y h o ld o v e rp e rio d s ,re g a rd le s s o fw h e th e rT e n a n ts o b lig a tio n to p a y B a s e R e n t,O p e ra tin g E x p e n s e s o ra n y o th e rR e n tw ith re s p e c to a n y s u c h p e rio d o rp o rtio n th e re o fh a s b e e n a b a te d a n d ,fo ra n y p e rio d o ftim e in w h ic h
1 8 B a s e R e n tis a b a te d ,th e P ro p e rty M a n a g e m e n tF e e w ilb e c a lc u la te d a s ifT e n a n tw e re p a y in g th e a m o u n to fB a s e R e n th a tis b e in g a b a te d (p ro v id e d ,h o w e v e r,th a t,fo rp u rp o s e s o fc a lc u la tin g th e P ro p e rty M a n a g e m e n tF e e fo rm o n th s o n e (1 )th ro u g h tw e lv e (1 2 )o fth e in ita lT e rm w ith re s p e c to B u ild in g B ,th e d o la ra m o u n to fB a s e R e n ta c tu a ly a b a te d in c o n n e c tio n w ith th e B u ild in g B B a s e R e n tA b a te m e n tp u rs u a n to S e c tio n 5 .5 o fth is L e a s e s h a lb e d e d u c te d fro m B a s e R e n tfo rB u ild in g B ).9 .U s e .9 .1 .T e n a n ts h a ln o tu s e th e P re m is e s ,o rp e rm ito rs u fe rth e P re m is e s to b e u s e d ,fo ra n y p u rp o s e o th e rth a n th e P e rm ite d U s e w ith o u tL a n d lo rd s p rio rw rite n c o n s e n t,w h ic h c o n s e n tL a n d lo rd m a y w ith h o ld in its re a s o n a b le d is c re tio n .9 .2 .T e n a n ts h a ln o tu s e o ro c c u p y th e P re m is e s in v io la tio n o fA p p lic a b le L a w s ;z o n in g o rd in a n c e s ;o rth e c e rtifc a te o fo c c u p a n c y is s u e d fo rth e P re m is e s o ra n y p o rtio n th e re o f,a n d s h a l,u p o n fiv e (5 )d a y s w rite n n o tic e fro m L a n d lo rd ,d is c o n tin u e a n y u s e o fth e P re m is e s th a tis d e c la re d o rc la im e d b y a n y G o v e rn m e n ta lA u th o rity h a v in g ju ris d ic tio n to b e a v io la tio n o fa n y o fth e a b o v e .T e n a n ts h a lc o m p ly w ith a n y d ire c tio n o fa n y G o v e rn m e n ta lA u th o rity h a v in g ju ris d ic tio n th a ts h a l,b y re a s o n o fth e n a tu re o fT e n a n ts u s e o ro c c u p a n c y o fth e P re m is e s ,im p o s e a n y d u ty u p o n th e P re m is e s o rw ith re s p e c to th e u s e o ro c c u p a tio n
th e re o f.9 .3 .T e n a n ts h a ln o td o o rp e rm ito b e d o n e a n y th in g th a tw iln v a lid a te o rin c re a s e th e c o s to fa n y fire ,e n v iro n m e n ta l,e x te n d e d c o v e ra g e o ra n y o th e rin s u ra n c e p o lic y c o v e rin g th e P re m is e s o ra n y p o rtio n th e re o f,a n d s h a lc o m p ly w ith a lru le s ,o rd e rs ,re g u la tio n s a n d re q u ire m e n ts o fth e in s u re rs o fth e P re m is e s o ra n y p o rtio n th e re o f,a n d T e n a n ts h a lp ro m p tly ,u p o n d e m a n d ,re im b u rs e L a n d lo rd fo ra n y a d d ito n a lp re m iu m c h a rg e d fo rs u c h p o lic y b y re a s o n o fT e n a n ts fa ilu re to c o m p ly w ith th e p ro v is io n s o fth is A rtic le .9 .4 .S o lo n g a s T e n a n to ra T e n a n ts A fila te (a s d e fin e d b e lo w )is th e s o le te n a n to fth e P ro je c t,T e n a n ts h a l,a tT e n a n t's s o le c o s ta n d e x p e n s e ,h a v e th e e x c lu s iv e rig h to in s ta lth e m a x im u m a m o u n to fa n y le g a ly p e rm ite d s ig n a g e in th e P ro je c t("S ig n a g e "),w h ic h S ig n a g e s h a lb e s u b je c to c o m p lia n c e w ith a lA p p lic a b le L a w s .In th e e v e n tT e n a n to ra T e n a n ts A fila te is n o th e s o le te n a n to fth e P ro je c t,T e n a n tw ilh a v e th e rig h to in s ta la n d /o rm a in ta in its p ro -ra ta p o rtio n o fth e le g a ly -p e rm is s ib le s ig n a g e fo rth e P ro je c t,a n d w ilre m o v e a n y S ig n a g e in s ta le d in e x c e s s o fs u c h p ro -ra ta a lo tm e n t,a s d e s ig n a te d a n d d ire c te d b y L a n d lo rd .S u c h S ig n a g e m a y in c lu d e (a )b u ild in g to p s ig n a g e o n a n y B u ild in g a tle a s tfiy p e rc e n t(5 0 % )le a s e d b y T e n a n t(p ro v id e d th a tT e n a n ts b u ild in g to p s ig n a g e rig h ts w iln o tb e e x c lu s iv e fo ra n y B u ild in g n o t1 0 0 % le a s e d
b y T e n a n to ra T e n a n ts A fila te ),(b )m o n u m e n ts ig n a g e n e a rth e e n tra n c e to e a c h B u ild in g le a s e d b y T e n a n t(in c lu d in g B u ild in g D ,ifa p p lic a b le ),a n d (c )s ig n a g e a te a c h e n tra n c e to th e P ro je c t.T e n a n ts h a lk e e p th e S ig n a g e in g o o d c o n d ito n a n d re p a ir.T h e s iz e ,d e s ig n ,a n d o th e rp h y s ic a la s p e c ts o fa n y s ig n s h a lb e s u b je c to a n y c o v e n a n ts ,c o n d ito n s ,o re s tric tio n s e n c u m b e rin g th e P re m is e s a n d ,a n y A p p lic a b le L a w s .T h e c o s to fth e s ig n (s ),in c lu d in g b u tn o tlim ite d to th e p e rm itn g ,in s ta la tio n ,m a in te n a n c e a n d re m o v a lth e re o fs h a lb e a tT e n a n t's s o le c o s ta n d e x p e n s e .IfT e n a n tfa ils to m a in ta in its s ig n (s ),o rifT e n a n tfa ils to re m o v e s u c h s ig n (s )u p o n te rm in a tio n o fth is L e a s e (o ru p o n L a n d lo rd s d ire c tio n ifT e n a n tc e a s e s to b e th e s o le
1 9 te n a n to fth e P ro je c t),a n d /o rfa ils to re p a ira n y d a m a g e to th e B u ild in g s ,P ro je c to rP ro je c tm o n u m e n ts ig n s c a u s e d b y s u c h re m o v a l(in c lu d in g w ith o u tlim ita tio n ,p a in tin g th e d a m a g e d p o rtio n s o fth e B u ild in g s a n d a n y o th e rp o rtio n s o fth e B u ild in g s th a tL a n d lo rd re a s o n a b ly d e te rm in e s in g o o d fa ith s h a lb e p a in te d s o th a tre p a in tin g th e d a m a g e d p o rtio n o fth e B u ild in g s d o e s n o ta d v e rs e ly a fe c th e v is u a la p p e a ra n c e o fth e B u ild in g s ,ifre q u ire d b y L a n d lo rd ;p ro v id e d ,h o w e v e r,in n o e v e n ts h a lL a n d lo rd re q u ire T e n a n to re p a in ta n e n tire B u ild in g ),L a n d lo rd m a y d o s o a tT e n a n t's e x p e n s e .T e n a n ts h a lo n d e m a n d re im b u rs e L a n d lo rd fo ra lc o s ts in c u re d b y L a n d lo rd to e fe c ts u c h re m o v a l,w h ic h a m o u n ts s h a lb e d e e m e d A d d ito n a lR e n ta n d s h a lin c lu d e w ith o u tlim ita tio n ,a ls u m s d is b u rs e d ,in c u re d o rd e p o s ite d b y L a n d lo rd ,in c lu d in g L a n d lo rd 's c o s ts ,e x p e n s e s a n d a c tu a la to rn e y s 'fe e s w ith in te re s th e re o n .9 .5 .T e n a n tm a y o n ly p la c e e q u ip m e n tw ith in th e P re m is e s w ith flo o rlo a d in g c o n s is te n tw ith th e B u ild in g s s tru c tu ra ld e s ig n u n le s s T e n a n to b ta in s L a n d lo rd s p rio rw rite n a p p ro v a la n d p a y s fo ra n y s tru c tu ra ls u p p o rtn e c e s s a ry to s u p p o rts u c h a d d ito n a lo a d s .T e n a n tm a y p la c e s u c h e q u ip m e n to n ly in a lo c a tio n d e s ig n e d to c a ry th e w e ig h to fs u c h e q u ip m e n t.9 .6 .T e n a n ts h a ln o t(a )u s e o ra lo w th e P re m is e s to b e u s e d fo ru n la w fu l
p u rp o s e s o ra n y u s e w h ic h w o u ld re a s o n a b ly b e e x p e c te d to o fe n d a n in s tiu tio n a la n d lo rd o fc o m p a ra b le firs tc la s s la b o ra to ry p ro p e rtie s in th e v ic in ity o fth e P ro je c to r(b )c a u s e ,m a in ta in o rp e rm ita n y n u is a n c e o rw a s te in ,o n o ra b o u th e P re m is e s .9 .7 .T e n a n ts h a l,a tis s o le c o s ta n d e x p e n s e ,p ro m p tly a n d p ro p e rly o b s e rv e a n d c o m p ly w ith a lp re s e n ta n d fu tu re o rd e rs ,re g u la tio n s ,d ire c tio n s ,ru le s ,la w s ,o rd in a n c e s ,a n d re q u ire m e n ts o fa n y G o v e rn m e n ta lA u th o rite s (in c lu d in g ,w ith o u tlim ita tio n ,a ls ta te ,c o u n ty ,m u n ic ip a l,a n d fe d e ra lg o v e rn m e n ts a n d th e ird e p a rtm e n ts ,b u re a u s ,b o a rd s a n d o fic ia ls )re la tin g to th e P re m is e s ,in c lu d in g ,w ith o u tlim ita tio n th e re q u ire m e n ts o fth e A m e ric a n s w ith D is a b ilte s A c to f1 9 9 0 a n d re g u la tio n s a d o p te d th e re u n d e r(th e A D A ).N o tw ith s ta n d in g th e fo re g o in g ,L a n d lo rd w ilb e re s p o n s ib le fo rc o n s tru c tin g th e P ro je c ta n d B a s e B u ild in g Wo rk in c o m p lia n c e w ith A p p lic a b le L a w s (o n a n u n o c c u p ie d b a s is a n d w ith o u tre g a rd fo rT e n a n ts in te n d e d u s e o rth e T e n a n tIm p ro v e m e n ts ),in c lu d in g th e A D A ,in e fe c ta s o fth e d a te th a tL a n d lo rd s a rc h ite c tp ro v id e s a c e rtife d a fid a v ith a th e P ro je c ta n d B a s e B u ild in g Wo rk h a s b e e n c o m p le te d b y L a n d lo rd in a c c o rd a n c e w ith th e A p p ro v e d P la n s .In th e e v e n to fa b re a c h o fth e fo re g o in g s e n te n c e b y L a n d lo rd ,a s T e n a n ts s o le re m e d y (e n fo rc e a b le in a c c o rd a n c e w ith S e c tio n 1 5 .4 a s
a p p lic a b le ),L a n d lo rd w il,a tL a n d lo rd s s o le c o s ta n d e x p e n s e ,c o re c ta n y a s p e c to fth e P ro je c ta n d B a s e B u ild in g Wo rk w h ic h w a s n o tc o n s tru c te d in c o m p lia n c e w ith A p p lic a b le L a w s (o n a n u n o c c u p ie d b a s is a n d w ith o u tre g a rd fo rT e n a n ts in te n d e d u s e o rth e T e n a n tIm p ro v e m e n ts )in e fe c ta th e tim e th a tL a n d lo rd s a rc h ite c tp ro v id e d th e c e rtife d a fid a v itre fe re n c e d in th e im m e d ia te ly p re c e d in g g ra m m a tic a ls e n te n c e .In n o e v e n tw ilT e n a n tb e re q u ire d to m a k e a n y im p ro v e m e n ts ,a lte ra tio n s re p a irs o re p la c e m e n ts to c o m p ly w ith th is S e c tio n 9 .7 u n le s s th e a p p lic a b le G o v e rn m e n ta lA u th o rity re q u ire s th a ts u c h w o rk b e p e rfo rm e d (i.e .,ifa n a s p e c to fth e P re m is e s is n o tre q u ire d to b e b ro u g h tu p to c u re n tc o d e d u e to g ra n d fa th e rin g p ro v is io n s ,T e n a n tw iln o tb e re q u ire d to u p g ra d e s u c h ite m u n le s s a n d u n tils re q u ire d to d o s o b y a G o v e rn m e n ta lA u th o rity ).T e n a n ts h a lin d e m n ify ,s a v e ,d e fe n d (a tL a n d lo rd s o p tio n a n d w ith c o u n s e lre a s o n a b ly a c c e p ta b le to L a n d lo rd )a n d h o ld L a n d lo rd a n d its a fila te s ,e m p lo y e e s ,
 2 0 a g e n ts a n d c o n tra c to rs ;a n d a n y le n d e r,m o rtg a g e e o rb e n e fic ia ry (e a c h ,a L e n d e ra n d ,c o le c tiv e ly w ith L a n d lo rd a n d its a fila te s ,e m p lo y e e s ,a g e n ts a n d c o n tra c to rs ,th e L a n d lo rd In d e m n ite e s )h a rm le s s fro m a n d a g a in s ta n y d e m a n d s ,c la im s ,lia b ilte s ,lo s s e s ,c o s ts ,e x p e n s e s ,a c tio n s ,c a u s e s o fa c tio n ,d a m a g e s ,s u its o rju d g m e n ts ,a n d a lre a s o n a b le e x p e n s e s (in c lu d in g re a s o n a b le a to rn e y s fe e s ,c h a rg e s a n d d is b u rs e m e n ts ,re g a rd le s s o fw h e th e rth e a p p lic a b le d e m a n d ,c la im ,a c tio n ,c a u s e o fa c tio n o rs u its v o lu n ta rily w ith d ra w n o rd is m is s e d )in c u re d in in v e s tig a tin g o re s is tin g th e s a m e (c o le c tiv e ly ,C la im s )a ris in g o u to fa n y s u c h fa ilu re o fth e P re m is e s to c o m p ly w ith A p p lic a b le L a w s .T h e P re m is e s h a v e n o tu n d e rg o n e in s p e c tio n b y a C e rtife d A c c e s s S p e c ia lis t(a s d e fin e d in C a lifo rn ia C iv ilC o d e S e c tio n 5 5 .5 2 ).T h e p ro v is io n s o fth is S e c tio n s h a ls u rv iv e th e e x p ira tio n o re a rlie rte rm in a tio n o fth is L e a s e .1 0 .R u le s a n d R e g u la tio n s ,C C & R s a n d P a rk in g F a c ilte s .1 0 .1 .T e n a n ts h a lfa ith fu ly o b s e rv e a n d c o m p ly w ith th e ru le s a n d re g u la tio n s a d o p te d b y L a n d lo rd a n d a ta c h e d h e re to a s E x h ib itK ,to g e th e rw ith s u c h o th e re a s o n a b le a n d n o n d is c rim in a to ry ru le s a n d re g u la tio n s a s a re h e re a fte rp ro m u lg a te d b y L a n d lo rd in its re a s o n a b le d is c re tio n (th e R u le s a n d R e g u la tio n s ).In th e e v e n to fa c o n flic tb e tw e e n th e R u le s a n d
R e g u la tio n s a n d th e te rm s a n d c o n d ito n s o fth is L e a s e ,th e te rm s a n d c o n d ito n s o fth is L e a s e s h a lc o n tro l.1 0 .2 .T h is L e a s e is s u b je c to a n y re c o rd e d c o v e n a n ts ,c o n d ito n s o re s tric tio n s o n th e P ro p e rty o rP re m is e s a s th e s a m e m a y b e a m e n d e d ,a m e n d e d a n d re s ta te d ,s u p p le m e n te d o ro th e rw is e m o d ife d fro m tim e to tim e (th e C C & R s );p ro v id e d th a ta n y s u c h a m e n d m e n ts ,re s ta te m e n ts ,s u p p le m e n ts o rm o d ifc a tio n s d o n o tm a te ria ly m o d ify T e n a n ts rig h ts o ro b lig a tio n s h e re u n d e rn o rm a te ria ly in c re a s e T e n a n ts m o n e ta ry o b lig a tio n s u n d e rth is L e a s e .A n y fu tu re C C & R s o rm o d ifc a tio n s to e x is tin g C C & R s w h ic h w o u ld h a v e a m a te ria lim p a c to n T e n a n ts rig h ts o ro b lig a tio n s h e re u n d e rw ilb e s u b je c to T e n a n ts re a s o n a b le a p p ro v a l(w h ic h a p p ro v a lw ilb e g iv e n o rw ith h e ld w ith in te n (1 0 )b u s in e s s d a y s a fte re q u e s t)s o lo n g a s T e n a n to rT e n a n ts A fila te o c c u p ie s a tle a s ts e v e n ty fiv e p e rc e n t(7 5 % )o fth e R e n ta b le A re a w ith in th e P ro je c t.T e n a n ts h a lc o m p ly w ith th e C C & R s (e x c e p to th e e x te n ta n y s u c h fu tu re C C & R s o rm o d ifc a tio n to e x is tin g C C & R is re q u ire d b y A p p lic a b le L a w s o ra n y G o v e rn m e n ta lA u th o rity ).1 0 .3 .T e n a n ts h a lh a v e th e rig h to in s ta la n y s e c u rity s y s te m s (in c lu d in g c a m e ra s )in s id e a n d o u ts id e th e P re m is e s s u b je c to L a n d lo rd s re a s o n a b le p rio rw rite n c o n s e n ta n d th e te rm s a n d c o n d ito n s o fA rtic le 1 4 b e lo w .In th e e v e n th e

P ro je c tb e c o m e s a m u lti-e n a n tp ro je c t,L a n d lo rd m a y re q u ire th a tT e n a n tm a k e re a s o n a b le a d ju s tm e n ts a n d m o d ifc a tio n s to th e s e c u rity s y s te m s to th e e x te n tre a s o n a b ly d e e m e d n e c e s s a ry to a c c o m m o d a te a m u lti-e n a n tp ro je c t.1 0 .4 .F o rs o lo n g a s T e n a n to ra n y T e n a n ts A fila te is th e s o le te n a n to fth e P ro je c t,T e n a n ts h a lh a v e th e rig h to u s e a lp a rk in g s tru c tu re s a n d p a rk in g fa c ilte s s e rv in g th e P ro je c td u rin g th e T e rm a tn o a d d ito n a lc o s t,w h ic h p a rk in g w ilc o n ta in n o tle s s th a n 1 ,1 2 0 p a rk in g s p a c e s fo rB u ild in g A ,B u ild in g D a n d B u ild in g B .In th e e v e n tT e n a n to ra n y T e n a n ts A fila te is n o th e s o le te n a n to fth e P ro je c t,T e n a n tw ila ta ltim e s h a v e th e rig h to u s e its p ro ra ta s h a re o fth e p a rk in g s p a c e s s e rv in g th e P ro je c ta tlo c a tio n s d e s ig n a te d b y L a n d lo rd w ith in th e P ro je c ta n d s u b je c to th e te rm s a n d c o n d ito n s o fE x h ib itG ;p ro v id e d ,h o w e v e r,th a t(a )T e n a n ts h a lb e
2 1 p e rm ite d to d e s ig n a te u p to tw e n ty p e rc e n t(2 0 % )o fits p ro ra ta s h a re o fp a rk in g s p a c e s a s re s e rv e d p a rk in g s p a c e s (w ith L a n d lo rd re a s o n a b ly d e s ig n a tin g th e p re c is e lo c a tio n o fs u c h re s e rv e d p a rk in g s p a c e s ),a n d (b )L a n d lo rd s h a lb e o b lig a te d to m a in ta in a tle a s t1 ,1 2 0 to ta lp a rk in g s p a c e s a th e P ro je c tfo rth e c o le c tiv e u s e o fo c c u p a n ts o fB u ild in g A ,B u ild in g D a n d B u ild in g B .L a n d lo rd w ilp e rm itT e n a n t,s u b je c to T e n a n ts c o m p lia n c e w ith S e c tio n 1 4 o fth is L e a s e ,to in s ta ls e c u rity g a te s (in c lu d in g s e c u rity g u a rd s ),c a rd k e y a c c e s s c o n tro l,p a rk in g c o n tro la rm s o rs im ila rp a rk in g s e c u rity m e a s u re s ,s u b je c to L a n d lo rd s re a s o n a b le a p p ro v a lo fs u c h m e a s u re s .In th e e v e n tT e n a n to ra n y T e n a n ts A fila te c e a s e s to b e th e s o le te n a n to fth e P ro je c t,L a n d lo rd w ilh a v e th e o p tio n to (i)re q u ire T e n a n to re m o v e a n y s e c u rity m e a s u re s th a tL a n d lo rd re a s o n a b ly d e te rm in e s w o u ld in ju re o rd is tu rb o th e rte n a n ts o fth e P ro je c t;(i)m o d ify s u c h m e a s u re s in o rd e rto a lo w fo rs h a re d a c c e s s to th e p a rk in g s tru c tu re s a n d fa c ilte s b y o th e rte n a n ts a n d th e irv is ito rs ;a n d /o r(i)e q u ire T e n a n to re m o v e a n y re s e rv e d o rs im ila rp a rk in g d e s ig n a tio n s w h ic h ith a s m a rk e d o n a n y p a rk in g s ta ls o rp o rtio n s o fth e P ro je c tp a rk in g fa c ilte s (s u b je c to T e n a n ts rig h ts s e tfo rth in s u b s e c tio n 1 0 .4 (a )a b o v e ).1 1 .C o n tro lb y L a n d lo rd .1 1 .1 .L a n d lo rd re s e rv e s fu lc o n tro lo v e rth e P ro je c to th e e x te n t
n o tin c o n s is te n tw ith T e n a n ts e n jo y m e n to fth e s a m e a s p ro v id e d b y th is L e a s e .N o tw ith s ta n d in g th e fo re g o in g ,o n ly in th e e v e n th e P ro je c tc e a s e s to b e le a s e d s o le ly b y T e n a n to ra n y T e n a n ts A fila te ,L a n d lo rd s h a lh a v e th e rig h to s u b d iv id e th e P ro je c t;c o n v e rtp o rtio n s o fth e P ro je c to c o n d o m in iu m u n its ;c h a n g e th e s iz e o fth e P ro je c tb y s e lin g a lo ra p o rtio n o fth e P ro je c to ra d d in g re a lp ro p e rty a n d a n y im p ro v e m e n ts th e re o n to th e P ro je c t;p ro v id e d ,h o w e v e r,th a ts u c h rig h ts s h a lb e e x e rc is e d in a w a y th a td o e s n o tu n re a s o n a b ly a n d a d v e rs e ly (in lig h to fth e c o m m e rc ia ly re a s o n a b le e x p e c ta tio n s o fa s o p h is tic a te d la n d lo rd a n d te n a n tin th e c o n te x to fa le a s e tra n s a c tio n s im ila rto th is L e a s e )a fe c tT e n a n ts b e n e fic ia lu s e a n d o c c u p a n c y o fth e P re m is e s ,in c lu d in g th e P e rm ite d U s e a n d T e n a n ts a c c e s s to th e P re m is e s a n d T e n a n ts p a rk in g rig h ts h e re u n d e r.In a n y e v e n t,L a n d lo rd re s e rv e s th e rig h to g ra n te a s e m e n ts a n d lic e n s e s to th ird p a rtie s ;a n d m a in ta in o re s ta b lis h o w n e rs h ip o fth e B u ild in g s s e p a ra te fro m fe e tile to th e P ro p e rty ;p ro v id e d ,h o w e v e r,th a ts u c h rig h ts s h a lb e e x e rc is e d in a w a y th a td o e s n o tu n re a s o n a b ly a n d a d v e rs e ly (in lig h to fth e c o m m e rc ia ly re a s o n a b le e x p e c ta tio n s o fa s o p h is tic a te d la n d lo rd a n d te n a n tin th e c o n te x to fa le a s e tra n s a c tio n s im ila rto th is L e a s e )a fe c tT e n a n ts b e n e fic ia lu s e a n d o c c u p a n c y

o fth e P re m is e s ,in c lu d in g th e P e rm ite d U s e a n d T e n a n ts a c c e s s to th e P re m is e s a n d T e n a n ts p a rk in g rig h ts h e re u n d e r.1 1 .2 .T e n a n ts h a l,a tL a n d lo rd s re q u e s t,p ro m p tly e x e c u te s u c h fu rth e rd o c u m e n ts a s m a y b e re a s o n a b ly a p p ro p ria te to a s s is tL a n d lo rd in th e p e rfo rm a n c e o fits o b lig a tio n s h e re u n d e r;p ro v id e d th a tT e n a n tn e e d n o te x e c u te a n y d o c u m e n th a tc re a te s a d d ito n a lia b ilty fo rT e n a n to rth a tu n re a s o n a b ly a n d a d v e rs e ly (in lig h to fth e c o m m e rc ia ly re a s o n a b le e x p e c ta tio n s o fa s o p h is tic a te d la n d lo rd a n d te n a n tin th e c o n te x to fa le a s e tra n s a c tio n s im ila rto th is L e a s e )a fe c ts T e n a n ts q u ie te n jo y m e n ta n d b e n e fic ia lu s e o fth e P re m is e s (in c lu d in g a c c e s s a n d p a rk in g rig h ts )a s p ro v id e d fo rin th is L e a s e a n d L a n d lo rd w ilre im b u rs e T e n a n tw ith re a s o n a b le o u to fp o c k e tc o s ts in c u re d b y T e n a n tin c o n n e c tio n w ith th e re v ie w a n d e x e c u tio n o fa n y s u c h d o c u m e n ts .
 2 2 1 1 .3 .S u b je c to c o m p lia n c e w ith T e n a n ts c o m m e rc ia ly re a s o n a b le s e c u rity re q u ire m e n ts (in c lu d in g th e re q u ire m e n th a tL a n d lo rd b e e s c o rte d b y a re p re s e n ta tiv e o fT e n a n t),L a n d lo rd m a y ,a ta n y a n d a lre a s o n a b le tim e s d u rin g n o n -b u s in e s s h o u rs (o rd u rin g b u s in e s s h o u rs ,if(a )w ith re s p e c to S u b s e c tio n s 1 1 .3 (v )th ro u g h 1 1 .3 (y ),T e n a n ts o re q u e s ts ,a n d (b )w ith re s p e c to S u b s e c tio n 1 1 .3 (z ),ifL a n d lo rd s o re q u e s ts ),a n d u p o n fo rty -e ig h t(4 8 )h o u rs p rio rw rite n n o tic e (p ro v id e d th a tn o tim e re s tric tio n s s h a la p p ly o ra d v a n c e n o tic e b e re q u ire d ifa n e m e rg e n c y (w h ic h in v o lv e s a n im m in e n th re a to fp e rs o n a lin ju ry o rp ro p e rty d a m a g e )n e c e s s ita te s im m e d ia te e n try ),e n te rth e P re m is e s to (v )in s p e c th e s a m e a n d to d e te rm in e w h e th e rT e n a n tis in c o m p lia n c e w ith its o b lig a tio n s h e re u n d e r,(w )s u p p ly a n y s e rv ic e L a n d lo rd is re q u ire d to p ro v id e h e re u n d e r,(x )p o s tn o tic e s o fn o n re s p o n s ib ilty ,(y )a c c e s s th e te le p h o n e e q u ip m e n t,e le c tric a ls u b s ta tio n a n d fire ris e rs a n d (z )s h o w th e P re m is e s to p ro s p e c tiv e te n a n ts d u rin g th e fin a ly e a ro fth e T e rm a n d c u re n ta n d p ro s p e c tiv e p u rc h a s e rs a n d le n d e rs a ta n y tim e d u rin g th e T e rm .In n o e v e n ts h a lT e n a n ts R e n ta b a te a s a re s u lto fL a n d lo rd s a c tiv ite s p u rs u a n to th is S e c tio n ;p ro v id e d ,h o w e v e r,th a ta ls u c h a c tiv ite s s h a lb e c o n d u c te d in s u c h a m a n n e rs o a s to c a u s e a s lite in te rfe re n c e to T e n a n ta s is
re a s o n a b ly p o s s ib le .L a n d lo rd s h a la ta ltim e s re ta in a k e y w ith w h ic h to u n lo c k a lo fth e d o o rs in th e P re m is e s .Ifa n e m e rg e n c y (w h ic h in v o lv e s a n im m in e n th re a to fp e rs o n a lin ju ry o rp ro p e rty d a m a g e )n e c e s s ita te s im m e d ia te a c c e s s to th e P re m is e s ,L a n d lo rd m a y u s e w h a te v e rfo rc e is n e c e s s a ry to e n te rth e P re m is e s ,a n d a n y s u c h e n try to th e P re m is e s s h a ln o tc o n s tiu te a fo rc ib le o ru n la w fu le n try to th e P re m is e s ,a d e ta in e ro fth e P re m is e s ,o ra n e v ic tio n o fT e n a n tfro m th e P re m is e s o ra n y p o rtio n th e re o f.1 2 .Q u ie tE n jo y m e n t.L a n d lo rd c o v e n a n ts th a tT e n a n t,u p o n p a y in g th e R e n ta n d p e rfo rm in g its o b lig a tio n s c o n ta in e d in th is L e a s e ,m a y p e a c e fu ly a n d q u ie tly h a v e ,h o ld a n d e n jo y th e P re m is e s (in c lu d in g a la p p u rte n a n trig h ts e x p re s s ly s e tfo rth in th is L e a s e ),fre e fro m a n y c la im b y L a n d lo rd o rp e rs o n s c la im in g u n d e rL a n d lo rd ,b u ts u b je c to a lo fth e te rm s a n d p ro v is io n s h e re o f,p ro v is io n s o fA p p lic a b le L a w s a n d rig h ts o fre c o rd to w h ic h th is L e a s e is o rm a y b e c o m e s u b o rd in a te .T h is c o v e n a n tis in lie u o fa n y o th e rq u ie te n jo y m e n tc o v e n a n t,e ith e re x p re s s o rim p lie d .N o tw ith s ta n d in g th e fo re g o in g ,a n d s u b je c to S e c tio n 1 3 .9 b e lo w ,to th e e x te n th a tL a n d lo rd u s e s c o m m e rc ia ly re a s o n a b le e fo rts to m in im iz e a n y in te rfe re n c e th a ta n y c o n s tru c tio n a th e P ro je c tm a y h a v e o n T e n a n t's u s e a n d q u ie te n jo y m e n to fth e P re m is e s fo rT e n a n t's n o rm a l

b u s in e s s o p e ra tio n s ,T e n a n th e re b y (a )a c c e p ts a n y a n d a lty p ic a lin c o n v e n ie n c e s a s s o c ia te d w ith a n y s u c h c o n s tru c tio n (b a s e d o n th e s c o p e o fc o n s tru c tio n b e in g u n d e rta k e n ),in c lu d in g ,a n y n o is e ,p a in t,fu m e s ,d u s t,d e b ris ,o b s tru c tio n o fa c c e s s (in c lu d in g a n y te m p o ra ry o b s tru c tio n c a u s e d b y th e e re c tio n o fs c a fo ld in g ,b a ric a d e s o ro th e re a s o n a b ly n e c e s s a ry s tru c tu re s o n th e P ro p e rty ),o ra n y o th e rin c o n v e n ie n c e c a u s e d b y th e c o n s tru c tio n ,(b )a c k n o w le d g e s a n d a g re e s th a tL a n d lo rd s h a ln o t,fo ra n y re a s o n ,b e re s p o n s ib le o rlia b le to T e n a n tfo ra n y d ire c to rin d ire c tin ju ry to T e n a n to rT e n a n t's A g e n ts ,o rin te rfe re n c e w ith T e n a n t's b u s in e s s ,a ris in g fro m a n y c o n s tru c tio n a th e P ro je c t,a n d (c )a g re e s th a th e p e rfo rm a n c e o fc o n s tru c tio n s h a ln o tc o n s tiu te a c o n s tru c tiv e e v ic tio n n o rs h a lT e n a n tb e e n tile d to a n a b a te m e n to fR e n t;p ro v id e d ,h o w e v e r,th a th e te rm s ,c o n d ito n s a n d p ro v is io n s o fth is S e c tio n 1 2 s h a lb e s u b je c to th e te rm s ,c o n d ito n s a n d p ro v is io n s o fS e c tio n 1 3 .9 b e lo w .
 2 3 1 3 .U tile s a n d S e rv ic e s .1 3 .1 .T e n a n ts h a lb e re s p o n s ib le fo rc o n tra c tin g d ire c tly fo rja n ito ria ls e rv ic e s fo rth e P re m is e s a tle a s t5 d a y s p e rw e e k ,c o n s is te n tw ith s im ila rs e rv ic e s in c o m p a ra b le C la s s A o fic e /la b b u ild in g s in th e v ic in ity o fth e P re m is e s .1 3 .2 .T e n a n ts h a l,a tT e n a n ts s o le c o s ta n d e x p e n s e ,p ro c u re a n d m a in ta in c o n tra c ts ,w ith c o p ie s o fth e s a m e a n d o fa n y re la te d re c o rd s fu rn is h e d p ro m p tly to L a n d lo rd a fte re x e c u tio n th e re o f,in c u s to m a ry fo rm a n d s u b s ta n c e fo r,a n d w ith c o n tra c to rs a n d /o rT e n a n ts e m p lo y e e s s p e c ia liz in g a n d e x p e rie n c e d in ,th e m a in te n a n c e o fth e fo lo w in g e q u ip m e n ta n d im p ro v e m e n ts ,ifa n y ,ifa n d w h e n in s ta le d o n th e P re m is e s :(a )h e a tin g ,v e n tila tin g a n d a irc o n d ito n in g (H V A C )e q u ip m e n t,(b )b o ile rs a n d p re s s u re v e s s e ls ,(c )fire e x tin g u is h in g s y s te m s ,in c lu d in g fire a la rm a n d s m o k e d e te c tio n d e v ic e s ,(d )la n d s c a p in g a n d irg a tio n s y s te m s ,(e )ro o fc o v e rin g s a n d d ra in s ,(f)c la rife rs ,(g )b a s ic u tily fe e d s to th e p e rim e te ro fth e B u ild in g a n d (h )a n y o th e re q u ip m e n tre a s o n a b ly re q u ire d b y L a n d lo rd .N o tw ith s ta n d in g th e fo re g o in g ,in th e e v e n tT e n a n tfa ils to m a in ta in th e c o n tra c ts re q u ire d u n d e rth is S e c tio n 1 3 .2 w ith in fiv e (5 )b u s in e s s d a y s a fte rL a n d lo rd p ro v id e s T e n a n tw rite n n o tic e o fs u c h fa ilu re ,L a n d lo rd re s e rv e s th e rig h t,u p o n n o tic e to T e n a n t,o p ro c u re a n d m a in ta in a n y o ra lo fs u c h s e rv ic e c o n tra c ts ,a n d ifL a n d lo rd s o
e le c ts ,T e n a n ts h a lre im b u rs e L a n d lo rd ,u p o n d e m a n d ,fo rth e a c tu a ld o c u m e n te d c o s ts th e re o f.1 3 .3 .C o m m e n c in g o n th e d a te (th e O p e ra tin g E x p e n s e S ta rtD a te )th a tis e a rlie ro f(a )th e P h a s e 1 R e n tC o m m e n c e m e n tD a te ,o r(b )th e firs td a y o fa n y e a rly o c c u p a n c y p u rs u a n to S e c tio n 2 .3 (c )a b o v e ,a n d c o n tin u in g fo rth e b a la n c e o fth e T e rm ,T e n a n ts h a lp a y to L a n d lo rd th e a m o u n to fa lIn s u ra n c e E x p e n s e s a n d O p e ra tin g E x p e n s e s (s u b je c to th e te rm s a n d c o n d ito n s o fth is S e c tio n ).L a n d lo rd s h a lg iv e T e n a n ta w rite n e s tim a te fo re a c h c a le n d a ry e a ro fth e c o s to f(i)u tile s p ro v id e d to th e P ro je c t,o th e e x te n tn o ts e p a ra te ly m e te re d o rb ile d d ire c tly to T e n a n t,(i)a n y o th e rc o s ts (e x c lu d in g T a x e s a n d In s u ra n c e E x p e n s e s )p a id o rin c u re d b y L a n d lo rd in c o n n e c tio n w ith th e o p e ra tio n o ro w n e rs h ip o fth e P ro je c to rfo rw h ic h T e n a n tis o th e rw is e re q u ire d to re im b u rs e to L a n d lo rd p u rs u a n to th e te rm s o fth is L e a s e (i)a n d (i),c o le c tiv e ly ,O p e ra tin g E x p e n s e s ),a n d (i)n s u ra n c e p ro v id e d b y L a n d lo rd (In s u ra n c e E x p e n s e s ).1 3 .3 .1 F o rp u rp o s e s o fc a lc u la tin g O p e ra tin g E x p e n s e s p a y a b le b y T e n a n t,(a )O p e ra tin g E x p e n s e s w iln o tin c lu d e a n y o fth e ite m s e x c lu d e d fro m O p e ra tin g E x p e n s e s in E x h ib itG a ta c h e d h e re to ,a n d (b )c o m m e n c in g o n th e O p e ra tin g E x p e n s e S ta rtD a te b u tp rio rto th e P h a s e 2 R e n tC o m m e n c e m e n tD a te ,O p e ra tin g E x p e n s e s s h a l

in c lu d e 1 0 0 % o fa lv a ria b le O p e ra tin g E x p e n s e s b u ts h a lo n ly in c lu d e a p ro ra ta p o rtio n o fth o s e O p e ra tin g E x p e n s e s re a s o n a b ly d e te rm in e d b y L a n d lo rd to b e fix e d c o s ts (i.e .,O p e ra tin g E x p e n s e s th a td o n o tv a ry d e p e n d in g o n o c c u p a n c y )(s u c h O p e ra tin g E x p e n s e s ,F ix e d O p e ra tin g E x p e n s e s ),w h ic h p ro ra ta p o rtio n w ilb e c a lc u la te d b a s e d o n a fra c tio n ,th e n u m e ra to ro fw h ic h w ilb e (i)p rio rto th e P h a s e 1 R e n tC o m m e n c e m e n tD a te ,th e c o m b in e d R e n ta b le A re a o fa n y P h a s e 1 E a rly O c c u p a n c y S p a c e o c c u p ie d u n d e rS e c tio n 2 .3 (c )(ia b o v e ,a n d (i)a fte rth e P h a s e 1 R e n tC o m m e n c e m e n tD a te b u tp rio rto th e P h a s e 2 R e n tC o m m e n c e m e n tD a te ,th e c o m b in e d R e n ta b le A re a o fB u ild in g A ,B u ild in g D a n d a n y P h a s e 2 E a rly O c c u p a n c y S p a c e ;a n d in e ith e rc a s e ,th e d e n o m in a to rb e in g th e to ta lR e n ta b le A re a o fB u ild in g A ,B u ild in g B a n d B u ild in g D .
2 4 F o ra v o id a n c e o fd o u b t,fro m a n d a fte rth e P h a s e 2 R e n tC o m m e n c e m e n tD a te ,F ix e d O p e ra tin g E x p e n s e s s h a ln o lo n g e rb e p ro -ra te d a n d T e n a n ts h a lb e re s p o n s ib le fo r1 0 0 % o fO p e ra tin g E x p e n s e s .1 3 .3 .2 F o rp u rp o s e s o fc a lc u la tin g In s u ra n c e E x p e n s e s p a y a b le b y T e n a n t,T e n a n ts h a lp a y 1 0 0 % o fth e p o rtio n o fIn s u ra n c e E x p e n s e s a trib u ta b le to im p ro v e m e n ts o n th e P ro p e rty (a s re a s o n a b ly d e te rm in e d b y L a n d lo rd ),p lu s a p ro ra ta p o rtio n o fIn s u ra n c e E x p e n s e s a trib u ta b le to th e la n d w ith in th e P ro je c t(w h ic h p ro ra ta p o rtio n w ilb e c a lc u la te d b a s e d u p o n a fra c tio n ,th e n u m e ra to ro fw h ic h w ilb e (a )p rio rto th e P h a s e 1 R e n tC o m m e n c e m e n tD a te ,th e c o m b in e d R e n ta b le A re a o fa n y P h a s e 1 E a rly O c c u p a n c y S p a c e o c c u p ie d u n d e rS e c tio n 2 .3 (c )(ia b o v e ,(b )a fte rth e P h a s e 1 R e n tC o m m e n c e m e n tD a te b u tp rio rto th e P h a s e 2 R e n tC o m m e n c e m e n tD a te ,th e c o m b in e d R e n ta b le A re a o fB u ild in g A ,B u ild in g D a n d a n y P h a s e 2 E a rly O c c u p a n c y S p a c e ,a n d (c )a ta n y tim e a fte rth e P h a s e 2 R e n tC o m m e n c e m e n tD a te ,a lR e n ta b le A re a le a s e d b y T e n a n t,a n d th e d e n o m in a to ro fw h ic h w ilb e to ta lR e n ta b le A re a o fth e P ro je c tin c lu d in g ,w ith o u tlim ita tio n ,th e E x p a n s io n S p a c e ).T e n a n ts h a lp a y s u c h e s tim a te d a m o u n to L a n d lo rd in a d v a n c e in e q u a lm o n th ly in s ta lm e n ts .1 3 .3 .3 With in n in e ty (9 0 )d a y s a fte rth e c o n c lu s io n o fe a c h
c a le n d a ry e a r(o rs u c h lo n g e rp e rio d a s m a y b e re a s o n a b ly re q u ire d b y L a n d lo rd ),L a n d lo rd s h a lfu rn is h to T e n a n ta s ta te m e n ts h o w in g in re a s o n a b le d e ta ilth e a c tu a lT a x e s ,In s u ra n c e E x p e n s e s a n d a n y O p e ra tin g E x p e n s e s fo rth e P ro je c ta n d a n y o v e ro ru n d e rp a y m e n to fs u c h c o s ts b y T e n a n t(h e A n n u a lS ta te m e n t).A n y a d d ito n a ls u m d u e fro m T e n a n to L a n d lo rd s h a lb e im m e d ia te ly d u e a n d p a y a b le .Ifth e a m o u n ts p a id b y T e n a n tp u rs u a n to th is S e c tio n 1 3 .3 e x c e e d T a x e s ,In s u ra n c e E x p e n s e s a n d O p e ra tin g E x p e n s e s fo rth e p re v io u s c a le n d a ry e a r,th e n L a n d lo rd s h a lc re d ith e d ife re n c e a g a in s th e e s tim a te s o fT a x e s ,In s u ra n c e E x p e n s e s a n d O p e ra tin g E x p e n s e s n e x td u e a n d o w in g fro m T e n a n t;p ro v id e d th a t,ifh e T e rm h a s e x p ire d ,L a n d lo rd s h a la c c o m p a n y th e A n n u a lS ta te m e n tw ith p a y m e n tfo rth e a m o u n to fs u c h d ife re n c e .A n y a m o u n td u e u n d e rth is S e c tio n fo ra n y p e rio d th a tis le s s th a n a fu lm o n th s h a lb e p ro ra te d fo rs u c h fra c tio n a lm o n th o n th e b a s is o fth e n u m b e ro fd a y s in th e m o n th .O p e ra tin g E x p e n s e s fo rth e c a le n d a ry e a rin w h ic h T e n a n ts o b lig a tio n to s h a re th e re in c o m m e n c e s a n d fo rth e c a le n d a ry e a rin w h ic h s u c h o b lig a tio n c e a s e s s h a lb e p ro ra te d o n a b a s is re a s o n a b ly d e te rm in e d b y L a n d lo rd .1 3 .3 .4 T h e A n n u a lS ta te m e n ts h a lb e fin a la n d b in d in g o n T e n a n tu n le s s

T e n a n td is p u te s s u c h A n n u a lS ta te m e n tin a c c o rd a n c e w ith th is S e c tio n .In th e e v e n tT e n a n td is p u te s th e a m o u n ts o fO p e ra tin g E x p e n s e s in a n y A n n u a lS ta te m e n ta n d /o rth e a lo c a tio n o fO p e ra tin g E x p e n s e s fo rth e p a rtic u la rc a le n d a ry e a rd e liv e re d b y L a n d lo rd to T e n a n ta n d T e n a n tis n o tin m o n e ta ry D e fa u lto rm a te ria ln o n -m o n e ta ry D e fa u lth e re u n d e r,T e n a n ts h a lh a v e th e rig h t,a tT e n a n t's c o s t,a fte re a s o n a b le n o tic e to L a n d lo rd ,to h a v e T e n a n t's a u th o riz e d e m p lo y e e s in s p e c t,a tL a n d lo rd 's o fic e in S a n D ie g o C o u n ty d u rin g n o rm a lb u s in e s s h o u rs ,L a n d lo rd 's b o o k s ,re c o rd s a n d s u p p o rtin g d o c u m e n ts c o n c e rn in g th e O p e ra tin g E x p e n s e s s e tfo rth in s u c h A n n u a lS ta te m e n t;p ro v id e d ,h o w e v e r,T e n a n ts h a lh a v e n o rig h to c o n d u c ts u c h in s p e c tio n ,h a v e a n a u d itp e rfo rm e d b y th e A c c o u n ta n ta s d e s c rib e d b e lo w ,o ro b je c to o ro th e rw is e d is p u te th e a m o u n ta n d /o ra lo c a tio n o fth e O p e ra tin g E x p e n s e s s e tfo rth in a n y s u c h A n n u a lS ta te m e n tu n le s s T e n a n tn o tife s L a n d lo rd o fs u c h o b je c tio n a n d d is p u te ,c o m p le te s s u c h in s p e c tio n ,a n d h a s th e A c c o u n ta n tc o m m e n c e a n d c o m p le te s u c h a u d it
 2 5 w ith in o n e h u n d re d e ig h ty (1 8 0 )d a y s im m e d ia te ly fo lo w in g L a n d lo rd 's d e liv e ry o fth e p a rtic u la rA n n u a lS ta te m e n tin q u e s tio n (th e "R e v ie w P e rio d ");p ro v id e d ,fu rth e r,th a tn o tw ith s ta n d in g a n y s u c h tim e ly o b je c tio n ,d is p u te ,in s p e c tio n ,a n d /o ra u d it,a n d a s a c o n d ito n p re c e d e n to T e n a n t's e x e rc is e o fits rig h to fo b je c tio n ,d is p u te ,in s p e c tio n a n d /o ra u d ita s s e tfo rth in th is S e c tio n ,T e n a n ts h a ln o tb e p e rm ite d to w ith h o ld p a y m e n to f,a n d T e n a n ts h a ltim e ly p a y to L a n d lo rd ,th e fu la m o u n ts a s re q u ire d b y th e p ro v is io n s o fth is L e a s e in a c c o rd a n c e w ith s u c h A n n u a lS ta te m e n t.H o w e v e r,s u c h p a y m e n tm a y b e m a d e u n d e rp ro te s tp e n d in g th e o u tc o m e o fa n y a u d itw h ic h m a y b e p e rfo rm e d b y th e A c c o u n ta n ta s d e s c rib e d b e lo w .In c o n n e c tio n w ith a n y s u c h in s p e c tio n b y T e n a n t,L a n d lo rd a n d T e n a n ts h a lre a s o n a b ly c o o p e ra te w ith e a c h o th e rs o th a ts u c h in s p e c tio n c a n b e p e rfo rm e d p u rs u a n to a m u tu a ly a c c e p ta b le s c h e d u le .Ifa fte rs u c h in s p e c tio n a n d /o re q u e s tfo rd o c u m e n ta tio n ,T e n a n ts tild is p u te s th e a m o u n to fth e e x p e n s e s s e tfo rth in th e A n n u a lS ta te m e n t,T e n a n ts h a lh a v e th e rig h t,w ith in th e R e v ie w P e rio d ,to c a u s e a n in d e p e n d e n tc e rtife d p u b lic a c c o u n ta n ts e le c te d b y T e n a n t(a n d re a s o n a b ly a p p ro v e d b y L a n d lo rd )a n d c o m p e n s a te d o n a n o n -c o n tin g e n c y fe e b a s is (th e "A c c o u n ta n t")o c o m p le te a n a u d ito f
L a n d lo rd 's b o o k s a n d re c o rd s to d e te rm in e th e p ro p e ra m o u n to fth e e x p e n s e s in c u re d a n d a m o u n ts p a y a b le b y T e n a n tfo rth e c a le n d a ry e a rw h ic h is th e s u b je c to fs u c h A n n u a lS ta te m e n t.S u c h a u d itb y th e A c c o u n ta n ts h a lb e fin a la n d b in d in g u p o n L a n d lo rd a n d T e n a n t.Ifs u c h a u d itre v e a ls th a tL a n d lo rd h a s o v e r-c h a rg e d T e n a n t,h e n w ith in th irty (3 0 )d a y s a fte rth e re s u lts o fs u c h a u d ita re m a d e a v a ila b le to L a n d lo rd ,L a n d lo rd s h a lre im b u rs e to T e n a n th e a m o u n to fs u c h o v e r-c h a rg e .Ifth e a u d itre v e a ls th a th e T e n a n tw a s u n d e r-c h a rg e d ,th e n w ith in th irty (3 0 )d a y s a fte rth e re s u lts o fs u c h a u d ita re m a d e a v a ila b le to T e n a n t,T e n a n ts h a lre im b u rs e to L a n d lo rd th e a m o u n to fs u c h u n d e r-c h a rg e .T e n a n ta g re e s to p a y th e c o s to fs u c h a u d itu n le s s its s u b s e q u e n tly d e te rm in e d th a tL a n d lo rd 's o rig in a lA n n u a lS ta te m e n tw h ic h w a s th e s u b je c to fs u c h a u d ito v e rs ta te d e x p e n s e s b y fiv e p e rc e n t(5 % )o rm o re o fth e a c tu a le x p e n s e s w h ic h w e re th e s u b je c to fs u c h a u d it.T h e p a y m e n tb y T e n a n to fa n y a m o u n ts p u rs u a n to th is S e c tio n s h a ln o tp re c lu d e T e n a n tfro m q u e s tio n in g ,d u rin g th e R e v ie w P e rio d ,th e c o re c tn e s s o fth e p a rtic u la rA n n u a lS ta te m e n tin q u e s tio n p ro v id e d b y L a n d lo rd ,b u th e fa ilu re o fT e n a n to o b je c th e re to ,c o n d u c ta n d c o m p le te its in s p e c tio n a n d h a v e th e A c c o u n ta n tc o n d u c th e a u d ita s d e s c rib e d a b o v e

p rio rto th e e x p ira tio n o fth e R e v ie w P e rio d fo rs u c h A n n u a lS ta te m e n ts h a lb e c o n c lu s iv e ly d e e m e d T e n a n t's a p p ro v a lo fth e A n n u a lS ta te m e n tin q u e s tio n a n d th e a m o u n to fe x p e n s e s s h o w n th e re o n .Ifo lo w in g T e n a n t's d e liv e ry to L a n d lo rd o fa w rite n re q u e s to m a k e L a n d lo rd 's b o o k s a n d re c o rd s re g a rd in g th e e x p e n s e s re a s o n a b ly a v a ila b le to T e n a n ta n d /o rth e A c c o u n ta n to c o n d u c ta n y s u c h in s p e c tio n a n d /o ra u d itd e s c rib e d a b o v e in th is S e c tio n ,L a n d lo rd fa ils to m a k e L a n d lo rd 's b o o k s re a s o n a b ly a v a ila b le fo rs u c h p u rp o s e s d u rin g L a n d lo rd 's n o rm a lb u s in e s s h o u rs ,a n d s u c h fa ilu re c o n tin u e s fo rfiv e (5 )b u s in e s s d a y s a fte rT e n a n tn o tife s L a n d lo rd th e re o f,th e n th e R e v ie w P e rio d s h a lb e e x te n d e d o n e (1 )d a y fo re a c h s u c h a d d ito n a ld a y th a tT e n a n ta n d /o rth e A c c o u n ta n t,a s th e c a s e m a y b e ,is s o p re v e n te d fro m a c c e s s in g s u c h b o o k s a n d re c o rd s .In c o n n e c tio n w ith a n y in s p e c tio n a n d /o ra u d itc o n d u c te d b y T e n a n tp u rs u a n to th is S e c tio n ,T e n a n ta g re e s to k e e p ,a n d to c a u s e a lo fT e n a n t's e m p lo y e e s a n d c o n s u lta n ts a n d th e A c c o u n ta n to k e e p ,a lo fL a n d lo rd 's b o o k s a n d re c o rd s a n d th e a u d it,a n d a lin fo rm a tio n p e rta in in g th e re to a n d th e re s u lts th e re o f,s tric tly c o n fid e n tia l(e x c e p tifre q u ire d b y a n y c o u rto d is c lo s e s u c h in fo rm a tio n o rifs u c h in fo rm a tio n is a v a ila b le fro m a n in s p e c tio n o fp u b lic
re c o rd s ).
2 6 1 3 .4 .C o m m e n c in g a s o fth e T e rm C o m m e n c e m e n tD a te ,T e n a n ts h a lm a k e a la ra n g e m e n ts fo ra n d p a y fo ra lw a te r,e le c tric ity ,a ir,s e w e r,e fu s e ,g a s ,h e a t,lig h t,p o w e r,te le p h o n e s e rv ic e a n d a n y o th e rs e rv ic e o ru tily T e n a n tre q u ire d a th e P re m is e s .F o ra n y P ro je c t-w id e u tile s ,fo rp u rp o s e s o fa lo c a tin g s u c h c o s ts to th e P re m is e s ,L a n d lo rd m a y b a s e its b ils fo ru tile s o n re a s o n a b le e s tim a te s ;p ro v id e d th a tL a n d lo rd a d ju s ts s u c h b iln g s p ro m p tly th e re a fte rto re fle c th e a c tu a lc o s ta s a lo c a te d b y L a n d lo rd o fp ro v id in g u tile s to th e P re m is e s .1 3 .5 .E x c e p ta s p ro v id e d in S e c tio n 1 3 .9 b e lo w ,L a n d lo rd s h a ln o tb e lia b le fo r,n o rs h a la n y e v ic tio n o fT e n a n tre s u ltfro m ,th e fa ilu re to fu rn is h a n y u tily o rs e rv ic e (a n d in n o e v e n tw ilT e n a n th a v e a n y rig h to te rm in a te th is L e a s e d u e to s u c h fa ilu re ),w h e th e ro rn o ts u c h fa ilu re is c a u s e d b y a c c id e n ts ;b re a k a g e ;c a s u a ltie s (to th e e x te n tn o tc a u s e d b y th e p a rty c la im in g F o rc e M a je u re );S e v e re We a th e rC o n d ito n s (a s d e fin e d b e lo w );p h y s ic a ln a tu ra ld is a s te rs (b u te x c lu d in g w e a th e rc o n d ito n s th a ta re n o tS e v e re We a th e rC o n d ito n s );s trik e s ,lo c k o u ts o ro th e rla b o rd is tu rb a n c e s o rla b o rd is p u te s (o th e rth a n la b o rd is tu rb a n c e s a n d la b o rd is p u te s re s u ltin g s o le ly fro m th e a c ts o ro m is s io n s o fth e p a rty c la im in g F o rc e M a je u re );a c ts o fte ro ris m ;rio ts o rc iv ild is tu rb a n c e s ;w a rs o rin s u re c tio n s ;s h o rta g e s o fm a te ria ls (w h ic h s h o rta g e s a re n o tu n iq u e to
th e p a rty c la im in g F o rc e M a je u re );g o v e rn m e n tre g u la tio n s ,m o ra to ria o ro th e rg o v e rn m e n ta la c tio n s ,in a c tio n s o rd e la y s ;fa ilu re s b y th ird p a rtie s to d e liv e rg a s ,o ilo ra n o th e rs u ita b le fu e ls u p p ly ,o rin a b ilty o fth e p a rty c la im in g F o rc e M a je u re ,b y e x e rc is e o fre a s o n a b le d ilg e n c e ,to o b ta in g a s ,o ilo ra n o th e rs u ita b le fu e l;o ro th e rc a u s e s b e y o n d th e re a s o n a b le c o n tro lo fth e p a rty c la im in g th a tF o rc e M a je u re h a s o c c u re d (c o le c tiv e ly ,F o rc e M a je u re ).In th e e v e n tT e n a n tis p re v e n te d fro m p e rfo rm in g its o b lig a tio n s h e re u n d e ra s a re s u lto fa F o rc e M a je u re ,s u c h p e rfo rm a n c e w ilb e e x c u s e d d u rin g s u c h F o rc e M a je u re ,a n d ifth is L e a s e s p e c ife s a tim e p e rio d fo rT e n a n ts p e rfo rm a n c e ,s u c h tim e p e rio d w ilb e e x te n d e d b y th e n u m b e ro fd a y s o fs u c h F o rc e M a je u re ;p ro v id e d ,h o w e v e r,th a th is S e c tio n 1 3 .5 is n o tin te n d e d to ,a n d s h a ln o te x c u s e T e n a n ts o b lig a tio n s w ith re s p e c to a n y p a y m e n to fR e n to re x te n d th e tim e p e rio d fo rth e p a y m e n to fa n y R e n to ro th e rm o n e ta ry a m o u n ts d u e fro m T e n a n tp u rs u a n to th is L e a s e .S e v e re We a th e rC o n d ito n s m e a n s w e a th e rc o n d ito n s th a ta re m a te ria ly w o rs e th a n th o s e th a tre a s o n a b ly w o u ld b e a n tic ip a te d fo rth e P ro p e rty a th e a p p lic a b le tim e b a s e d o n h is to ric m e te o ro lo g ic a lre c o rd s .1 3 .6 .T e n a n ts h a lp a y fo r,p rio rto d e lin q u e n c y o fp a y m e n th e re fo r,a n y u tile s a n d s e rv ic e s th a tm a y b e fu rn is h e d to th e P re m is e s d u rin g o r,ifT e n a n t

o c c u p ie s th e P re m is e s a fte rth e e x p ira tio n o re a rlie rte rm in a tio n o fth e T e rm ,a fte rth e T e rm .T e n a n ts h a ln o tu s e th e P re m is e s in a m a n n e rth a tw o u ld in c re a s e th e a m o u n to fg a s ,e le c tric ity o rw a te rb e y o n d th e e x is tin g c a p a c ity o fth e P re m is e s ,u n le s s T e n a n ta g re e s ,a tT e n a n ts s o le c o s t,o u p g ra d e th e c a p a c ity o fth e a p p lic a b le B u ild in g (a s a n A lte ra tio n p u rs u a n to A rtic le 1 4 b e lo w a n d s u b je c to T e n a n to b ta in in g a ln e c e s s a ry p e rm its a n d a p p ro v a ls fo rs u c h u p g ra d e s )s u b je c to L a n d lo rd s a p p ro v a lo fa lp la n s a n d s p e c ifc a tio n s fo rs u c h c a p a c ity u p g ra d e .1 3 .7 .T e n a n tw ilb e p e rm ite d to in s ta le m e rg e n c y b a c k u p g e n e ra to rs in lo c a tio n s d e s ig n a te d b y L a n d lo rd fo re a c h o fB u ild in g A ,B u ild in g B a n d B u ild in g D (a n d ifle a s e d b y T e n a n tp u rs u a n to th e E x p a n s io n O p tio n ,B u ild in g C )a n d to c o n n e c ts u c h g e n e ra to rs to th e a p p lic a b le B u ild in g s e m e rg e n c y e le c tric a lp a n e l(c o le c tiv e ly ,th e G e n e ra to r).T e n a n ts h a l
 2 7 m a in ta in ,re p a ira n d (ifn e c e s s a ry )re p la c e th e G e n e ra to ra tis s o le c o s ta n d e x p e n s e .T h e te rm s a n d c o n d ito n s o fth is L e a s e ,in c lu d in g T e n a n ts in s u ra n c e a n d in d e m n ity o b lig a tio n s ,s h a la p p ly to s u c h G e n e ra to rs w h ic h s h a lb e a p a rto fth e P re m is e s fo rs u c h p u rp o s e s .T e n a n tw iln o tin s ta la n y u n d e rg ro u n d fu e ls to ra g e ta n k s a n d a n y H a z a rd o u s m a te ria ls u s e d in c o n n e c tio n w ith s u c h G e n e ra to rs w ilb e s u b je c to th e te rm s a n d c o n d ito n s o fth is L e a s e ,in c lu d in g a ls u re n d e ro b lig a tio n s .In n o e v e n ts h a lL a n d lo rd h a v e a n y lia b ilty to T e n a n tin c o n n e c tio n w ith th e G e n e ra to ro rits fa ilu re to o p e ra te in a n e m e rg e n c y s itu a tio n .1 3 .8 .F o ra n y u tile s s e rv in g th e P re m is e s fo rw h ic h T e n a n tis b ile d d ire c tly b y s u c h u tily p ro v id e r,T e n a n ta g re e s to fu rn is h to L a n d lo rd a n y u tily u s a g e in fo rm a tio n re q u ire d fo rL a n d lo rd to c o m p ly w ith A p p lic a b le L a w s ,in c lu d in g ,ifre q u ire d fo rL a n d lo rd to c o m p ly w ith a n y A p p lic a b le L a w ,a u th o riz a tio n to a lo w L a n d lo rd to a c c e s s T e n a n ts u s a g e in fo rm a tio n n e c e s s a ry fo rL a n d lo rd to c o m p le te a n E N E R G Y S T A R S ta te m e n to fP e rfo rm a n c e (o rs im ila rc o m p re h e n s iv e u tily u s a g e re p o rt)a n d a n y o th e rin fo rm a tio n re a s o n a b ly re q u e s te d b y L a n d lo rd .T e n a n ta g re e s a ta ltim e s to c o o p e ra te fu ly w ith L a n d lo rd a n d to a b id e b y a lre a s o n a b le ru le s e s ta b lis h e d b y L a n d lo rd in o rd e rto c o m p ly w ith th e re q u ire m e n ts o fu tily s u p p lie rs a n d
g o v e rn m e n ta la g e n c ie s re g u la tin g th e c o n s u m p tio n o fe n e rg y a n d /o ro th e re s o u rc e s .T e n a n ta c k n o w le d g e s th a ta n y u tily in fo rm a tio n fo rth e P re m is e s m a y b e s h a re d w ith th ird p a rtie s a s re q u ire d to c o m p ly w ith A p p lic a b le L a w s .In a d d ito n to th e fo re g o in g ,T e n a n ts h a lc o m p ly w ith a lA p p lic a b le L a w s re la te d to th e d is c lo s u re a n d tra c k in g o fe n e rg y c o n s u m p tio n a th e P re m is e s .T h e p ro v is io n s o fth is S e c tio n s h a ls u rv iv e th e e x p ira tio n o re a rlie rte rm in a tio n o fth is L e a s e .1 3 .9 .N o tw ith s ta n d in g a n y th in g in th is L e a s e to th e c o n tra ry ,ifT e n a n tis p re v e n te d fro m u s in g ,a n d d o e s n o tu s e ,th e P re m is e s o ra n y p o rtio n th e re o f,a s a re s u lto f(a )th e fa ilu re b y L a n d lo rd to p ro v id e a c c e s s to th e P re m is e s ,o r(b )th e in te ru p tio n o fH V A C s e rv ic e ,w a te r,s e w e ra n d /o re le c tric ity ,w h e re s u c h fa ilu re o rin te ru p tio n is d u e to th e n e g lig e n ta c ts o ro m is s io n s o fL a n d lo rd a n d n o td u e to a n y m a te rb e y o n d L a n d lo rd s re a s o n a b le c o n tro l(a n y s u c h s to p p a g e to b e k n o w n a s a n A b a te m e n tE v e n t),h e n T e n a n ts h a lg iv e L a n d lo rd w rite n n o tic e o fs u c h A b a te m e n tE v e n t,a n d ifs u c h A b a te m e n tE v e n tc o n tin u e s fo r3 c o n s e c u tiv e b u s in e s s d a y s (in c lu d in g S a tu rd a y )a fte rL a n d lo rd s re c e ip to fa n y s u c h n o tic e ,o ro c c u rs fo r1 0 n o n -c o n s e c u tiv e b u s in e s s d a y s in a 1 2 m o n th p e rio d (p ro v id e d L a n d lo rd is s e n ta n o tic e (in e ith e ro fs u c h e v e n ts ,th e E lig ib ilty P e rio d ),th e n th e B a s e R e n ta n d

T e n a n ts o b lig a tio n s w ith re s p e c to O p e ra tin g E x p e n s e s s h a lb e a b a te d o re d u c e d ,a s th e c a s e m a y b e ,a fte rth e e x p ira tio n o fth e E lig ib ilty P e rio d fo rs u c h tim e th a tT e n a n tc o n tin u e s to b e s o p re v e n te d fro m u s in g ,a n d d o e s n o tu s e ,th e P re m is e s ,o ra p o rtio n th e re o f,in th e p ro p o rtio n th a th e R e n ta b le A re a o fth e p o rtio n o fth e P re m is e s th a tT e n a n tis p re v e n te d fro m u s in g ,a n d d o e s n o tu s e (U n u s a b le A re a ),b e a rs to th e to ta lR e n ta b le A re a o fth e P re m is e s ;p ro v id e d ,h o w e v e r,e g a rd le s s w h o is m a n a g in g th e P ro je c t,ifT e n a n tis p re v e n te d fro m u s in g ,a n d d o e s n o tu s e ,th e U n u s a b le A re a fo ra p e rio d o ftim e in e x c e s s o fth e E lig ib ilty P e rio d a n d th e re m a in in g p o rtio n o fth e P re m is e s is n o ts u fic ie n to a lo w T e n a n to c o n d u c tis b u s in e s s th e re in ,a n d ifT e n a n td o e s n o tc o n d u c tis b u s in e s s fro m s u c h re m a in in g p o rtio n ,th e n fo rs u c h tim e a fte rth e e x p ira tio n o fth e E lig ib ilty P e rio d d u rin g w h ic h T e n a n tis s o p re v e n te d fro m c o n d u c tin g its b u s in e s s a n d is n o tc o n d u c tin g its b u s in e s s in a n y p o rtio n o fth e P re m is e s ,th e B a s e R e n ta n d T e n a n ts o b lig a tio n s u n d e rth is L e a s e w ith re s p e c to O p e ra tin g E x p e n s e s fo rth e e n tire P re m is e s s h a lb e a b a te d fo rs u c h
2 8 tim e a s T e n a n tc o n tin u e s to b e s o p re v e n te d fro m u s in g ,a n d d o e s n o tu s e ,th e P re m is e s .N o tw ith s ta n d in g a n y th in g to th e c o n tra ry c o n ta in e d h e re in ,T e n a n ts h a ln o tb e e n tile d to a n y a b a te m e n to fR e n tp ro v id e d fo rin th is p a ra g ra p h a b o v e a n d b e y o n d th e a m o u n to fre n tlo s s in s u ra n c e p ro c e e d s p a id to L a n d lo rd fo rth e A b a te m e n tE v e n tin q u e s tio n .If,h o w e v e r,T e n a n tre o c c u p ie s a n y p o rtio n o fth e P re m is e s d u rin g s u c h p e rio d ,th e R e n ta lo c a b le to s u c h re o c c u p ie d p o rtio n ,b a s e d o n th e p ro p o rtio n th a th e R e n ta b le A re a o fs u c h re o c c u p ie d p o rtio n o fth e P re m is e s b e a rs to th e to ta lR e n ta b le A re a o fth e P re m is e s ,s h a lb e p a y a b le b y T e n a n tfro m th e d a te T e n a n tre o c c u p ie s s u c h p o rtio n o fth e P re m is e s .S u c h rig h to a b a te B a s e R e n ta n d T e n a n ts o b lig a tio n s u n d e rth is L e a s e w ith re s p e c to O p e ra tin g E x p e n s e s s h a lb e T e n a n ts s o le a n d e x c lu s iv e re m e d y a tla w o rin e q u ity fo ra n A b a te m e n tE v e n ta n d L a n d lo rd s h a ln o to th e rw is e b e lia b le fo ra n y lo s s o rd a m a g e s u fe re d o rs u s ta in e d b y T e n a n tre s u ltin g fro m a n y fa ilu re o rc e s s a tio n o fs e rv ic e s ;p ro v id e d ,h o w e v e r,n o th in g in th is p a ra g ra p h ,s h a lim p a irT e n a n ts rig h ts u n d e rS e c tio n s 1 5 .4 a n d 2 8 .1 3 b e lo w .T o th e e x te n tT e n a n tis e n tile d to a b a te m e n tu n d e rth is p a ra g ra p h b e c a u s e o fa n e v e n tc o v e re d b y S e c tio n s 2 1 o r2 2 o fth is L e a s e ,th e n th o s e p ro v is io n s o fth is L e a s e s h a l
a p p ly a n d n o th e p ro v is io n s o fth is p a ra g ra p h .F o rth e a v o id a n c e o fa n y d o u b t,h e R e n ta b a te m e n tb e in g p ro v id e d fo ru n d e rth is L e a s e s h a ln o tb e c o n s id e re d a fre e re n tp e rio d .1 4 .A lte ra tio n s .1 4 .1 .T e n a n ts h a lm a k e n o a lte ra tio n s ,a d d ito n s o rim p ro v e m e n ts o th e rth a n th e T e n a n tIm p ro v e m e n ts in o rto th e P re m is e s o re n g a g e in a n y c o n s tru c tio n ,d e m o lito n ,re c o n s tru c tio n ,re n o v a tio n o ro th e rw o rk (w h e th e rm a jo ro rm in o r)o fa n y k in d in ,a to rs e rv in g th e P re m is e s (A lte ra tio n s )w ith o u tL a n d lo rd s p rio rw rite n a p p ro v a l,w h ic h a p p ro v a lL a n d lo rd s h a ln o tu n re a s o n a b ly w ith h o ld ,c o n d ito n o rd e la y ;p ro v id e d th a tis h a lb e re a s o n a b le to w ith h o ld c o n s e n tifh e A lte ra tio n (i)a d v e rs e ly a fe c ts th e e x te rio ra p p e a ra n c e o fa B u ild in g o rth e P re m is e s ,(i)a d v e rs e ly a fe c ts th e s tru c tu ra la s p e c ts o fa B u ild in g ,in c lu d in g ,w ith o u tlim ita tio n ,th e ro o f,o u n d a tio n ,lo a d b e a rin g w a ls a n d s tru c tu ra le le m e n ts o fth e P re m is e s ,(i)a d v e rs e ly a fe c ts a n y b a s e -b u ild in g s y s te m o re q u ip m e n t,in c lu d in g ,w ith o u tlim ita tio n ,th e b a s e b u ild in g H V A C ,m e c h a n ic a l,e le c tric a l,p lu m b in g o rlife s a fe ty s y s te m s ;(iv )w ilv io la te a n y A p p lic a b le L a w o rin c re a s e in s u ra n c e p re m iu m s (u n le s s T e n a n ta g re e s to p a y a n y s u c h p re m iu m in c re a s e );(v )v io la te s a n y re c o rd e d d o c u m e n ta fe c tin g th e P re m is e s (e a c h ,a "D e s ig n P ro b le m ").In s e e k in g L a n d lo rd s a p p ro v a l,T e n a n ts h a lp ro v id e L a n d lo rd ,a tle a s te n (1 0 )b u s in e s s d a y s in

a d v a n c e o fa n y p ro p o s e d c o n s tru c tio n ,w ith p la n s ,s p e c ifc a tio n s ,b id p ro p o s a ls ,c e rtife d s ta m p e d e n g in e e rin g d ra w in g s a n d c a lc u la tio n s b y T e n a n ts e n g in e e ro fre c o rd o ra rc h ite c to fre c o rd ,ifa n y (in c lu d in g ,ifa p p lic a b le ,c o n n e c tio n s to th e B u ild in g s s tru c tu ra ls y s te m ,m o d ifc a tio n s to th e B u ild in g s e n v e lo p e ,n o n -s tru c tu ra lp e n e tra tio n s in s la b s o rw a ls ,a n d m o d ifc a tio n s o rtie -in s to life s a fe ty s y s te m s ),ifa p p lic a b le ,w o rk c o n tra c ts ,re q u e s ts fo rla y d o w n a re a s a n d s u c h o th e rin fo rm a tio n c o n c e rn in g th e n a tu re a n d c o s to fth e A lte ra tio n s a s L a n d lo rd m a y re a s o n a b ly re q u e s t.N o tw ith s ta n d in g th e p ro v is io n s o fS e c tio n 1 4 .1 a b o v e ,T e n a n tm a y m a k e n o n -s tru c tu ra lA lte ra tio n s to th e P re m is e s ("A c c e p ta b le C h a n g e s ")u p o n a tle a s te n (1 0 )b u s in e s s d a y s p rio rw rite n n o tic e to L a n d lo rd b u tw ith o u tL a n d lo rd 's p rio rc o n s e n tp ro v id e d (a )th e A c c e p ta b le C h a n g e s d o n o tin v o lv e D e s ig n P ro b le m s ;(b )th e A c c e p ta b le C h a n g e s d o n o tim p a c th e b a s e b u ild in g s y s te m s ,(c )th e A c c e p ta b le C h a n g e s d o n o ta d v e rs e ly a fe c th e v a lu e o fth e im p ro v e m e n ts in th e p a rtic u la ra re a (e .g .,c o n v e rs io n o fla b to o fic e s p a c e )a n d (d )th e c o s to f
 2 9 s u c h A c c e p ta b le C h a n g e s d o n o te x c e e d F iv e H u n d re d T h o u s a n d D o la rs ($ 5 0 0 ,0 0 0 )p e ro c c u re n c e o ra n a g g re g a te a m o u n to fT w o M ilo n D o la rs ($ 2 ,0 0 0 ,0 0 0 )in a n y tw e lv e (1 2 )m o n th p e rio d .1 4 .2 .T e n a n ts h a ln o tc o n s tru c to rp e rm ito b e c o n s tru c te d p a rtio n s o ro th e ro b s tru c tio n s th a tw iln te rfe re w ith fre e a c c e s s to m e c h a n ic a lin s ta la tio n o rs e rv ic e fa c ilte s o fth e B u ild in g ,o rin te rfe re w ith th e m o v in g o fL a n d lo rd s e q u ip m e n to o rfo m th e e n c lo s u re s c o n ta in in g s u c h in s ta la tio n s o rfa c ilte s .1 4 .3 .T e n a n ts h a la c c o m p lis h a n y w o rk p e rfo rm e d o n th e P re m is e s in s u c h a m a n n e ra s to p e rm ita n y life s a fe ty s y s te m s to re m a in fu ly o p e ra b le a ta ltim e s (e x c e p tfo rte m p o ra ry o u ta g e s w h ic h a re p e rm ite d a n d p e rfo rm e d in a c c o rd a n c e w ith A p p lic a b le L a w s ).1 4 .4 .T e n a n tc o v e n a n ts a n d a g re e s th a ta lw o rk d o n e b y T e n a n to rT e n a n ts c o n tra c to rs s h a lb e p e rfo rm e d in fu lc o m p lia n c e w ith A p p lic a b le L a w s ,a n d T e n a n tw ilp e rfo rm a n y le g a lc o m p lia n c e w o rk in th e P ro je c tw h ic h is trig g e re d b y a n y A lte ra tio n s p e rfo rm e d b y o ro n b e h a lfo fT e n a n t.T e n a n ts h a lm a in ta in c o p ie s o fa s b u iltd ra w in g p rin ts e ts a n d e le c tro n ic C A D D file s o n d is c s h o w in g a n y c h a n g e s in th e P re m is e s (b u to n ly ifd ra w in g s a n d p la n s w e re re q u ire d b y th is L e a s e o rw e re p re p a re d in c o n n e c tio n w ith a n y s u c h A lte ra tio n s ).T e n a n tw ilp ro v id e th e s a m e to L a n d lo rd u p o n re q u e s t.1 4 .5 .B e fo re
c o m m e n c in g a n y A lte ra tio n s o rT e n a n tIm p ro v e m e n ts ,T e n a n ts h a lg iv e L a n d lo rd a tle a s te n (1 0 )d a y s p rio rw rite n n o tic e o fth e p ro p o s e d c o m m e n c e m e n to fs u c h w o rk .1 4 .6 .T e n a n ts h a lre p a ira n y d a m a g e to th e P re m is e s c a u s e d b y T e n a n ts re m o v a lo fa n y p ro p e rty fro m th e P re m is e s .D u rin g a n y s u c h re s to ra tio n p e rio d ,T e n a n ts h a lp a y R e n to L a n d lo rd a s p ro v id e d h e re in fo rth e p o rtio n o fth e s p a c e o c c u p ie d (o rs u c h la rg e rp o rtio n o fth e P re m is e s to th e e x te n tL a n d lo rd s a b ilty to s h o w th e la rg e rs p a c e to p ro s p e c tiv e te n a n ts ,le a s e th e s p a c e to p ro s p e c tiv e te n a n ts o rp re p a re th e s p a c e fo re le tin g is a d v e rs e ly a fe c te d )a s ifs u c h s p a c e w e re o th e rw is e o c c u p ie d b y T e n a n t.T h e p ro v is io n s o fth is S e c tio n s h a ls u rv iv e th e e x p ira tio n o re a rlie rte rm in a tio n o fth is L e a s e .1 4 .7 .E x c e p tfo r(a )th o s e ite m s lis te d o n E x h ib itH ,(b )a n y o th e ru n a ta c h e d tra d e fix tu re s ,e q u ip m e n t,s to c k ,in v e n to ry ,m a c h in e s o ro th e rp e rs o n a lp ro p e rty o fT e n a n t(w h ic h s h a lre m a in th e p ro p e rty o fT e n a n t),a n d (c )a n y a ta c h e d tra d e fix tu re s ,e q u ip m e n to rm a c h in e ry th a ta re p ro p rie ta ry o ru n iq u e to T e n a n ts b u s in e s s (a s o p p o s e d to a ta c h e d tra d e fix tu re s ,e q u ip m e n to rm a c h in e ry c o m m o n ly a s s o c ia te d w ith la b o ra to ry b u ild in g s ,s u c h a s la b b e n c h e s ,fu m e h o o d s ,s in k s ,e tc .)(a ),(b ),a n d (c ),c o le c tiv e ly ,T e n a n ts P ro p e rty ),a lA lte ra tio n s ,a ta c h e d e q u ip m e n t,d e c o ra tio n s ,fix tu re s ,tra d e fix tu re s ,

a d d ito n s a n d im p ro v e m e n ts a ta c h e d to o rb u iltn to th e P re m is e s ,m a d e b y e ith e ro fth e P a rtie s ,in c lu d in g ,w ith o u tlim ita tio n ,a lb u ilt-n flo o ra n d w a lc o v e rin g s ,b u ilt-n c a b in e tw o rk a n d p a n e lin g ,s in k s a n d re la te d p lu m b in g fix tu re s ,la b o ra to ry b e n c h e s ,e x te rio rv e n tin g fu m e h o o d s a n d w a lk -in fre e z e rs a n d re frig e ra to rs ,d u c tw o rk ,c o n d u its ,e le c tric a lp a n e ls a n d c irc u its s h a lb e c o m e th e p ro p e rty o fL a n d lo rd u p o n th e e x p ira tio n o re a rlie rte rm in a tio n o fth e T e rm ,a n d s h a lre m a in u p o n a n d b e s u re n d e re d w ith th e P re m is e s a s a p a rth e re o fu n le s s ,p rio rto s u c h
3 0 c o n s tru c tio n o rin s ta la tio n ,L a n d lo rd n o tife s T e n a n ts u c h in s ta la tio n o rc o n s tru c tio n m u s tb e re m o v e d u p o n th e e x p ira tio n o re a rlie rte rm in a tio n o fth is L e a s e a n d th e P re m is e s re s to re d to th e c o n d ito n e x is tin g p rio rto s u c h c o n s tru c tio n o rin s ta la tio n .T h e P re m is e s s h a la ta ltim e s re m a in th e p ro p e rty o fL a n d lo rd a n d s h a lb e s u re n d e re d to L a n d lo rd u p o n th e e x p ira tio n o re a rlie rte rm in a tio n o fth is L e a s e .T e n a n ts h a l,p rio rto th e e x p ira tio n o re a rlie rte rm in a tio n o fth is L e a s e ,re m o v e a lo fT e n a n ts P ro p e rty a n d re p a ira n y d a m a g e c a u s e d b y s u c h re m o v a l.N o tw ith s ta n d in g th e fo re g o in g ,a ta n y tim e d u rin g th e T e rm ,s u b je c to L a n d lo rd 's p rio rw rite n a p p ro v a l,w h ic h a p p ro v a ls h a ln o tb e u n re a s o n a b ly w ith h e ld ,c o n d ito n e d o rd e la y e d ,T e n a n ts h a lh a v e th e rig h to u p d a te E x h ib itH .1 4 .8 .IfT e n a n ts h a lfa ilto re m o v e a n y o fits e fe c ts fro m th e P re m is e s w ith in te n (1 0 )d a y s a fte rth e te rm in a tio n o fth is L e a s e ,th e n L a n d lo rd m a y ,a tis o p tio n ,re m o v e th e s a m e in a n y m a n n e rth a tL a n d lo rd s h a lc h o o s e a n d s to re s a id e fe c ts w ith o u tlia b ilty to T e n a n tfo rlo s s th e re o fo rd a m a g e th e re to ,a n d T e n a n ts h a lp a y L a n d lo rd ,u p o n d e m a n d ,a n y a c tu a l,d o c u m e n te d a n d re a s o n a b le c o s ts a n d e x p e n s e s in c u re d d u e to s u c h re m o v a la n d s to ra g e o rL a n d lo rd m a y ,a tis s o le o p tio n a n d u p o n n o tic e to T e n a n t,s e ls u c h p ro p e rty o ra n y p o rtio n th e re o fa tp riv a te s a le a n d w ith o u tle g a lp ro c e s s fo r
s u c h p ric e a s L a n d lo rd m a y o b ta in a n d a p p ly th e p ro c e e d s o fs u c h s a le a g a in s ta n y (a )a m o u n ts d u e b y T e n a n to L a n d lo rd u n d e rth is L e a s e a n d (b )a n y a c tu a la n d d o c u m e n te d e x p e n s e s in c id e n to th e re m o v a l,s to ra g e a n d s a le o fs a id p e rs o n a lp ro p e rty .1 4 .9 .N o tw ith s ta n d in g a n y o th e rp ro v is io n o fth is A rtic le to th e c o n tra ry ,in n o e v e n ts h a lT e n a n tre m o v e a n y im p ro v e m e n tfro m th e P re m is e s a s to w h ic h L a n d lo rd c o n trib u te d p a y m e n t,a n d in n o e v e n ts h a lT e n a n tre m o v e a n y o fth e in ita lT e n a n tIm p ro v e m e n ts (o ra n y im p ro v e m e n ts in s ta le d to re p la c e a n y in ita lT e n a n tIm p ro v e m e n ts w ith lik e -k in d o re a s o n a b le s u b s tiu te im p ro v e m e n ts ),w ith o u tL a n d lo rd s p rio rw rite n c o n s e n t,w h ic h c o n s e n tL a n d lo rd m a y w ith h o ld in its s o le a n d a b s o lu te d is c re tio n ,u n le s s s u c h im p ro v e m e n tis c o n s id e re d T e n a n ts P ro p e rty u n d e rS e c tio n 1 4 .7 a b o v e .1 4 .1 0 .T e n a n ts h a lp a y to L a n d lo rd a n a m o u n te q u a lto o n e p e rc e n t(1 % )o fth e h a rd c o s to T e n a n to fa lA lte ra tio n s (n o to e x c e e d T w e n ty F iv e T h o u s a n d D o la rs ($ 2 5 ,0 0 0 )fo ra n y o n e (1 )A lte ra tio n )to c o v e rL a n d lo rd s o v e rh e a d a n d e x p e n s e s fo rp la n re v ie w ,e n g in e e rin g re v ie w ,c o o rd in a tio n ,s c h e d u lin g a n d s u p e rv is io n th e re o f(b u to n ly fo rA lte ra tio n s re q u irn g L a n d lo rd c o n s e n t).F o rp u rp o s e s o fp a y m e n to fs u c h s u m ,T e n a n ts h a ls u b m ito L a n d lo rd c o p ie s o fa lb ils ,in v o ic e s a n d s ta te m e n ts

c o v e rin g th e c o s ts o fs u c h A lte ra tio n s ,a c c o m p a n ie d b y p a y m e n to L a n d lo rd o fth e fe e s e tfo rth in th is S e c tio n .T e n a n ts h a lre im b u rs e L a n d lo rd fo ra n y e x tra e x p e n s e s in c u re d b y L a n d lo rd b y re a s o n o fa u lty w o rk d o n e b y T e n a n to rits c o n tra c to rs ,o rb y re a s o n o fin a d e q u a te c le a n -u p .1 4 .1 1 .With in s ix ty (6 0 )d a y s a fte rfin a lc o m p le tio n o fth e T e n a n tIm p ro v e m e n ts o ra n y A lte ra tio n s p e rfo rm e d b y T e n a n tw ith re s p e c to th e P re m is e s ,T e n a n ts h a ls u b m ito L a n d lo rd a c o p y o fth e fin a lp e rm it(fa p p lic a b le ).1 4 .1 2 .T e n a n ts h a lta k e ,a n d s h a lc a u s e its c o n tra c to rs to ta k e ,c o m m e rc ia ly re a s o n a b le s te p s to p ro te c th e P re m is e s d u rin g th e p e rfo rm a n c e o fa n y A lte ra tio n s o rT e n a n tIm p ro v e m e n ts ,
 3 1 in c lu d in g c o v e rin g o rte m p o ra rily re m o v in g a n y w in d o w c o v e rin g s s o a s to g u a rd a g a in s td u s t,d e b ris o rd a m a g e .1 4 .1 3 .T e n a n ts h a lre q u ire its c o n tra c to rs a n d s u b c o n tra c to rs p e rfo rm in g w o rk o n th e P re m is e s to n a m e L a n d lo rd a n d its a fila te s a n d L e n d e rs a s a d d ito n a lin s u re d s o n th e ire s p e c tiv e in s u ra n c e p o lic ie s .1 5 .R e p a irs a n d M a in te n a n c e .1 5 .1 .S u b je c to S e c tio n 1 5 .3 b e lo w ,T e n a n t,a tis s o le c o s ta n d e x p e n s e ,s h a lm a in ta in a n d k e e p th e P re m is e s ,in c lu d in g w ith o u tlim ita tio n a lim p ro v e m e n ts th e re o n ,a n d a la p p u rte n a n c e s th e re to ,in c lu d in g w ith o u tlim ita tio n s id e w a lk s ,p a rk in g a re a s ,c u rb s ,ro a d s ,d riv e w a y s ,lig h tin g s ta n d a rd s ,la n d s c a p in g ,s e w e rs ,w a te r,g a s a n d e le c tric a ld is trib u tio n s y s te m s a n d fa c ilte s ,d ra in a g e fa c ilte s ,a n d a ls ig n s ,b o th ilu m in a te d a n d n o n -ilu m in a te d th a ta re n o w o rh e re a fte ro n th e P re m is e s ,in g o o d c o n d ito n a n d in a m a n n e rc o n s is te n tw ith th e P e rm ite d U s e .S u b je c to S e c tio n 1 5 .3 b e lo w ,T e n a n ts h a lm a k e a lre p a irs ,re p la c e m e n ts a n d im p ro v e m e n ts ,in c lu d in g w ith o u tlim ita tio n a ls tru c tu ra lre p a irs ,H V A C ,p lu m b in g a n d e le c tric a lre p a irs ,re p la c e m e n ts a n d im p ro v e m e n ts re q u ire d ,a n d s h a lk e e p th e s a m e fre e a n d c le a rfo m a lru b b is h ,d e b ris .T e n a n ts o b lig a tio n s h e re u n d e rm a y in c lu d e c a p ita le x p e n d itu re s a n d re p a irs w h o s e b e n e fitm a y e x te n d b e y o n d th e T e rm ,a n d n o th in g h e re in w ilb e c o n s tru e d to a lo w
c a p ita lre p a irs w ith o u tc o n s e n to fL a n d lo rd ifre q u ire d b y A rtic le 1 4 .T e n a n ts h a l,w ith in te n (1 0 )d a y s a fte re c e ip to fw rite n n o tic e fro m L a n d lo rd ,p ro v id e to L a n d lo rd a n y m a in te n a n c e re c o rd s th a tL a n d lo rd re a s o n a b ly re q u e s ts .A lre p a irs m a d e b y T e n a n ts h a lb e a tle a s te q u a lin q u a lity to th e o rig in a lw o rk ,a n d s h a lb e m a d e o n ly b y a q u a life d e m p lo y e e o ra lic e n s e d c o n tra c to ra p p ro v e d in a d v a n c e b y L a n d lo rd (w h ic h s h a ln o tb e u n re a s o n a b ly w ith h e ld ,c o n d ito n e d o rd e la y e d );p ro v id e d ,h o w e v e r,th a ts u c h c o n tra c to rn e e d n o tb e a p p ro v e d b y L a n d lo rd ifth e n o n -s tru c tu ra la lte ra tio n s ,re p a irs ,a d d ito n s o rim p ro v e m e n ts to b e p e rfo rm e d d o n o te x c e e d F iv e H u n d re d T h o u s a n d D o la rs ($ 5 0 0 ,0 0 0 )p e ro c c u re n c e .T e n a n ts h a ln o ta k e o ro m ito ta k e a n y a c tio n ,th e ta k in g o ro m is s io n o fw h ic h s h a lc a u s e w a s te ,d a m a g e o rin ju ry to th e P re m is e s .T e n a n ts h a lin d e m n ify ,d e fe n d (b y le g a lc o u n s e la c c e p ta b le to L a n d lo rd )a n d h o ld h a rm le s s L a n d lo rd fro m a n d a g a in s ta n y a n d a lC la im s (a s d e fin e d b e lo w )a ris in g o u to fth e fa ilu re o fT e n a n to rT e n a n ts A g e n ts to p e rfo rm th e c o v e n a n ts c o n ta in e d in th is S e c tio n .A s u s e d in th is L e a s e ,T e n a n ts A g e n ts s h a lb e d e fin e d to in c lu d e T e n a n ts o fic e rs ,e m p lo y e e s ,a g e n ts ,c o n tra c to rs ,in v ite e s ,c u s to m e rs a n d s u b c o n tra c to rs .1 5 .2 .S u b je c to S e c tio n 1 5 .3 b e lo w ,T e n a n ts h a lm a in ta in th e lin e s d e s ig n a tin g th e

p a rk in g s p a c e s in g o o d c o n d ito n a n d p a in th e s a m e a s o fte n a s m a y b e re a s o n a b ly n e c e s s a ry ,s o th a th e y a re e a s ily d is c e rn a b le a ta ltim e s ;re s u rfa c e th e p a rk in g a re a s a s n e c e s s a ry to m a in ta in th e m in g o o d c o n d ito n ;p a in ta n y e x te rio rp o rtio n s o fth e B u ild in g a s n e c e s s a ry to m a in ta in th e m in g o o d c o n d ito n ;m a in ta in th e ro o fm e m b ra n e a n d la n d s c a p in g in g o o d c o n d ito n ;m a in ta in s ig h tly s c re e n s ,b a ric a d e s o re n c lo s u re s a ro u n d a n y w a s te o rs to ra g e a re a s ;a n d ta k e a lre a s o n a b le p re c a u tio n s to in s u re th a th e d ra in a g e fa c ilte s o fth e ro o fa re n o tc lo g g e d a n d a re in g o o d a n d o p e ra b le c o n d ito n a ta ltim e s .1 5 .3 .S u b je c to S e c tio n 1 3 .9 a b o v e ,th e re s h a lb e n o a b a te m e n to fR e n ta n d n o lia b ilty o fL a n d lo rd b y re a s o n o fa n y in ju ry to o rin te rfe re n c e w ith T e n a n ts b u s in e s s a ris in g fro m th e
3 2 m a k in g o fa n y re p a irs ,a lte ra tio n s o rim p ro v e m e n ts in o rto a n y p o rtio n o fth e P re m is e s ,o rin o rto im p ro v e m e n ts ,fix tu re s ,e q u ip m e n ta n d p e rs o n a lp ro p e rty th e re in .L a n d lo rd s h a l,a tL a n d lo rd s s o le c o s ta n d e x p e n s e (n o to b e in c lu d e d w ith in O p e ra tin g E x p e n s e s ),b e re s p o n s ib le fo rth e re p a ira n d m a in te n a n c e o fth e s tru c tu ra lp o rtio n s o fth e B u ild in g s id e n tife d in th e s tru c tu ra lp la n s (i.e .,th e S s e rie s o fd ra w in g s )w h ic h fo rm a p a rto fth e A p p ro v e d P la n s .1 5 .4 .L a n d lo rd s h a ln o tb e lia b le fo ra n y fa ilu re to m a k e a n y re p a irs o rto p e rfo rm a n y m a in te n a n c e th a tis L a n d lo rd s o b lig a tio n p u rs u a n to th is L e a s e u n le s s s u c h fa ilu re s h a lp e rs is tb e y o n d th e tim e p e rio d s s e tfo rth in th e im m e d ia te ly fo lo w in g g ra m m a tic a ls e n te n c e .N o tw ith s ta n d in g a n y p ro v is io n in th is L e a s e to th e c o n tra ry ,ifT e n a n tp ro v id e s n o tic e to L a n d lo rd o fa n e v e n to rc irc u m s ta n c e w h ic h re q u ire s th e a c tio n o fL a n d lo rd w ith re s p e c to th e p ro v is io n o fre p a irs th a tL a n d lo rd is o b lig a te d to p e rfo rm u n d e rth is L e a s e ,a n d L a n d lo rd fa ils to p ro v id e s u c h a c tio n a s re q u ire d b y th e te rm s o fth is L e a s e w ith in th irty (3 0 )d a y s a fte rth e d a te o fs u c h n o tic e fro m T e n a n t(o rifs u c h re p a irs re a s o n a b ly e x p e c te d to re q u ire lo n g e rth a n th irty (3 0 )d a y s to c o m p le te ,ifL a n d lo rd s h a lfa ilto c o m m e n c e in a m e a n in g fu lw a y s u c h re p a irw ith in s a id th irty (3 0 )d a y p e rio d a n d d ilg e n tly p u rs u e s u c h re p a irto c o m p le tio n ),th e n T e n a n tm a y p ro v id e L a n d lo rd w ith a

s e c o n d w rite n n o tic e s ta tin g in b o ld a n d a lc a p s fo n t"L A N D L O R D 'S F A IL U R E T O C O M M E N C E R E P A IR O F T H E D A M A G E D E S C R IB E D B E L O W WIT H IN T H R E E (3 )B U S IN E S S D A Y S A F T E R L A N D L O R D 'S R E C E IP T O F T H IS S E C O N D N O T IC E S H A L L E N T IT L E T E N A N T T O R E P A IR S U C H D A M A G E ."IfL a n d lo rd d o e s n o tc o m m e n c e in a m e a n in g fu lw a y s u c h re p a irw ith in s u c h th re e (3 )b u s in e s s d a y p e rio d ,th e n T e n a n ts h a l,a s T e n a n ts s o le a n d e x c lu s iv e re m e d y (p ro v id e d ,h o w e v e r,n o th in g in th is p a ra g ra p h ,s h a lim p a irT e n a n ts rig h ts u n d e rS e c tio n 2 8 .1 3 b e lo w ),h a v e th e rig h to ta k e s u c h a c tio n ,a n d ifs u c h a c tio n w a s re q u ire d u n d e rth e te rm s o fth is L e a s e to b e ta k e n b y L a n d lo rd ,th e n T e n a n ts h a lb e e n tile d to re im b u rs e m e n tb y L a n d lo rd o fT e n a n t's re a s o n a b le a c tu a la n d d o c u m e n te d c o s ts a n d e x p e n s e s in ta k in g s u c h a c tio n .N o tw ith s ta n d in g th e fo re g o in g ,in c a s e o fa n e m e rg e n c y (w h e re th e re is a n im m in e n th re a to fin ju ry to p e rs o n s o rd a m a g e to p ro p e rty ),T e n a n ts h a lo n ly b e re q u ire d to p ro v id e L a n d lo rd fiv e (5 )b u s in e s s d a y s n o tic e o fth e n e e d to m a k e s u c h re p a irs s ta tin g in b o ld a n d a lc a p s "E M E R G E N C Y :L A N D L O R D 'S F A IL U R E T O C O M M E N C E IT S R E P A IR S O F S U C H D A M A G E WIT H IN F IV E (5 )B U S IN E S S D A Y S A F T E R L A N D L O R D 'S R E C E IP T O F T H IS N O T IC E S H A L L E N T IT L E T E N A N T T O R E P A IR S U C H D A M A G E ,"
a n d ifL a n d lo rd d o e s n o tc o m m e n c e in a m e a n in g fu lw a y s u c h re p a irw ith in s u c h fiv e (5 )b u s in e s s d a y p e rio d ,th e n T e n a n ts h a l,a s T e n a n ts s o le a n d e x c lu s iv e re m e d y (p ro v id e d ,h o w e v e r,n o th in g in th is p a ra g ra p h ,s h a lim p a irT e n a n ts rig h ts u n d e rS e c tio n 2 8 .1 3 b e lo w ),h a v e th e rig h to ta k e s u c h a c tio n .In th e e v e n tT e n a n ta k e s s u c h a c tio n ,a n d s u c h w o rk w ila fe c th e b u ild in g s y s te m s a n d e q u ip m e n t,s tru c tu ra lin te g rity o fth e B u ild in g s o re x te rio ra p p e a ra n c e o fth e B u ild in g s ,T e n a n ts h a lu s e a g e n e ra lc o n tra c to rd e s ig n a te d b y L a n d lo rd fo rs u c h w o rk u n le s s s u c h c o n tra c to ris u n w iln g o ru n a b le to p e rfo rm s u c h w o rk o rits p ric in g is u n re a s o n a b le ,in w h ic h e v e n tT e n a n tm a y u tilz e th e s e rv ic e s o fa n y o th e rq u a life d c o n tra c to rw h ic h n o rm a ly a n d re g u la rly p e rfo rm s s im ila rw o rk in c o m p a ra b le firs t-c la s s ,in s tiu tio n a lq u a lity ,o fic e b u ild in g s in th e F o s te rC ity ,C a lifo rn ia a re a w h o s e p ric in g is c o m p e tiv e ly b id in th e m a rk e t.IfT e n a n tis e n tile d to re im b u rs e m e n tb y L a n d lo rd o fT e n a n t's re a s o n a b le a c tu a la n d d o c u m e n te d c o s ts a n d e x p e n s e s in ta k in g a n y a c tio n p u rs u a n to th is S e c tio n ,T e n a n ts h a ls o n o tify L a n d lo rd in w ritn g (th e "R e im b u rs e m e n tN o tic e "),w h ic h R e im b u rs e m e n tN o tic e s h a ls p e c ify in d e ta ils u c h c o s ts a n d e x p e n s e s .With in
 3 3 th irty (3 0 )d a y s a fte rL a n d lo rd 's re c e ip to fa R e im b u rs e m e n tN o tic e ,L a n d lo rd s h a lp a y to T e n a n ta n y u n d is p u te d p o rtio n o fs u c h c o s ts a n d e x p e n s e s a n d s h a ln o tify T e n a n tin w ritn g o fth o s e c o s ts a n d e x p e n s e s s p e c ife d b y T e n a n tin th e R e im b u rs e m e n tN o tic e w h ic h L a n d lo rd d is p u te s (th e "D is p u te d A m o u n ts ")a n d th e re a s o n s fo rs u c h d is p u te .A n y a m o u n ts w h ic h a re n o ts o id e n tife d b y L a n d lo rd a s D is p u te d A m o u n ts w ith in s a id th irty (3 0 )d a y p e rio d s h a lb e c o n s id e re d to b e u n d is p u te d .T o th e e x te n tL a n d lo rd fa ils to re im b u rs e T e n a n tfo rth e a c tu a la n d d o c u m e n te d c o s ts a n d e x p e n s e s s p e c ife d in th e R e im b u rs e m e n tN o tic e w ith in th irty (3 0 )d a y s a fte rd e m a n d th e re fo r,T e n a n ts h a lb e e n tile d to o fs e th e s u m o fth e a m o u n to fa n y u n d is p u te d p o rtio n o fs u c h c o s ts a n d e x p e n s e s a g a in s tB a s e R e n tp a y a b le b y T e n a n tu n d e rth is L e a s e to g e th e rw ith in te re s ta th e in te re s tra te o fe ig h tp e rc e n t(8 % )p e ra n n u m fro m th e d a te o fe x p ira tio n o fs a id th irty (3 0 )d a y p e rio d u n tilh e e a rlie ro f(a )th e d a te th a tL a n d lo rd re im b u rs e s T e n a n ts u c h a m o u n ta n d (b )th e d a te o fo fs e t(u p to a m a x im u m o fs e te a c h m o n th o fite e n p e rc e n t(1 5 % )o fth e B a s e R e n tp a y a b le fo rth e P re m is e s )u n tilh e fu lp re -ju d g m e n to fs e ta m o u n t(p lu s s u c h in te re s t)h a s b e e n s o o fs e t.IfT e n a n to b ta in s a fin a lju d g m e n ta g a in s tL a n d lo rd fo rth e D is p u te d A m o u n ta n d ifL a n d lo rd fa ils to p a y s u c h

ju d g m e n tw ith in th irty (3 0 )d a y s a fte rth e d a te s u c h ju d g m e n tis re n d e re d ,T e n a n ts h a lb e e n tile d to o fs e ts u c h ju d g m e n ta g a in s tB a s e R e n tp a y a b le b y T e n a n tu n d e rth is L e a s e to g e th e rw ith in te re s ta th e in te re s tra te o fe ig h tp e rc e n t(8 % )p e ra n n u m fro m th e d a te L a n d lo rd fa ile d to tim e ly re im b u rs e T e n a n tfo rs u c h c o s ts a n d e x p e n s e s u n tilh e e a rlie ro f(y )th e d a te th a tL a n d lo rd re im b u rs e s T e n a n ts u c h a m o u n ta n d (z )th e d a te o fo fs e t(u p to a m a x im u m o fs e te a c h m o n th o fite e n p e rc e n t(1 5 % )o fth e B a s e R e n tp a y a b le fo rth e P re m is e s )u n tilh e fu la m o u n to fs u c h ju d g m e n t(p lu s s u c h in te re s t)h a s b e e n s o o fs e t.IfL a n d lo rd o b ta in s a fin a lju d g m e n ta g a in s tT e n a n tfo rth e D is p u te d A m o u n t,T e n a n ts h a lp a y to L a n d lo rd s u c h ju d g m e n tw ith in th irty (3 0 )d a y s a fte rth e d a te s u c h ju d g m e n tis re n d e re d ,to g e th e rw ith in te re s tfro m th e d a te L a n d lo rd p a id s u c h D is p u te d A m o u n to T e n a n to rth e d a te T e n a n tw ro n g ly o fs e ts u c h D is p u te d A m o u n ts ,a s a p p lic a b le .1 5 .5 .S u b je c to S e c tio n 1 5 .3 a b o v e ,T e n a n ts h a lb e re s p o n s ib le fo ra lre p a irs ,m a in te n a n c e a n d re p la c e m e n ts a th e P re m is e s .L a n d lo rd s h a ln o tb e re q u ire d to m a in ta in o rm a k e a n y re p a irs o re p la c e m e n ts o fa n y n a tu re o rd e s c rip tio n w h a ts o e v e rto th e P re m is e s u n le s s (a )L a n d lo rd is re q u ire d to m a k e s u c h re p a irs o re p la c e m e n ts p u rs u a n to S e c tio n 1 5 .3 a b o v e ,o r(b )th e n e c e s s ity fo rs u c h re p a irs o re p la c e m e n ts is
d u e to L a n d lo rd 's n e g lig e n c e o rw ilfu lm is c o n d u c t(a n d n o td u e in a n y p a rto a n y n e g lig e n ta c to ro m is s io n o n th e p a rto fT e n a n to ra n y T e n a n tP a rty ).E x c e p ta s o th e rw is e p ro v id e d in th is L e a s e ,T e n a n th e re b y e x p re s s ly w a iv e s th e rig h to m a k e re p a irs a th e e x p e n s e o fL a n d lo rd a s p ro v id e d fo rin a n y A p p lic a b le L a w s in e fe c ta th e tim e o fe x e c u tio n o fth is L e a s e ,o rin a n y o th e rA p p lic a b le L a w s th a tm a y h e re a fte rb e e n a c te d ,a n d w a iv e s its rig h ts u n d e rA p p lic a b le L a w s re la tin g to a la n d lo rd 's d u ty to m a in ta in its p re m is e s in a te n a n ta b le c o n d ito n .N o tw ith s ta n d in g th e fo re g o in g ,ifT e n a n ts h a lfa il,w h e re s u c h fa ilu re s h a lc o n tin u e fo ra p e rio d o fth irty (3 0 )d a y s a fte rw rite n n o tic e th e re o fro m L a n d lo rd to T e n a n t,o c o m m e n c e a n d th e re a fte rto p ro c e e d w ith d ilg e n c e to m a k e a n y re p a iro rp e rfo rm a n y m a in te n a n c e re q u ire d o fitp u rs u a n to th e te rm s o fth is L e a s e ,L a n d lo rd ,w ith o u tb e in g u n d e ra n y o b lig a tio n to d o s o a n d w ith o u th e re b y w a iv in g s u c h d e fa u ltb y T e n a n t,m a y s o m a in ta in o rm a k e s u c h re p a ira n d m a y c h a rg e T e n a n tfo rth e a c tu a la n d d o c u m e n te d c o s ts th e re o f.A n y c o m m e rc ia ly re a s o n a b le e x p e n s e re a s o n a b ly in c u re d b y L a n d lo rd in c o n n e c tio n w ith th e m a k in g o fs u c h re p a irs m a y b e b ile d b y L a n d lo rd to T e n a n tm o n th ly o r,a tL a n d lo rd 's o p tio n ,im m e d ia te ly ,a n d s h a lb e d u e a n d p a y a b le w ith in th irty (3 0 )d a y s a fte rs u c h b iln g .
3 4 1 5 .6 .S u b je c to S e c tio n 1 1 .3 a b o v e ,L a n d lo rd a n d L a n d lo rd s a g e n ts s h a lh a v e th e rig h to e n te ru p o n th e P re m is e s o ra n y p o rtio n th e re o fo rth e p u rp o s e s o fp e rfo rm in g a n y re p a irs o rm a in te n a n c e L a n d lo rd is re q u ire d to m a k e p u rs u a n to th is L e a s e ,a n d o fa s c e rta in in g th e c o n d ito n o fth e P re m is e s o rw h e th e rT e n a n tis o b s e rv in g a n d p e rfo rm in g T e n a n ts o b lig a tio n s h e re u n d e r,a lw ith o u tu n re a s o n a b le in te rfe re n c e fro m T e n a n to rT e n a n ts A g e n ts .E x c e p tfo re m e rg e n c y m a in te n a n c e o re p a irs ,th e rig h to fe n try c o n ta in e d in th is p a ra g ra p h s h a lb e e x e rc is a b le a tre a s o n a b le tim e s ,a tre a s o n a b le h o u rs a n d o n re a s o n a b le n o tic e .1 5 .7 .T e n a n ts h a l,u p o n th e e x p ira tio n o rs o o n e rte rm in a tio n o fth e T e rm ,(a )s u re n d e rth e P re m is e s to L a n d lo rd in a s g o o d a c o n d ito n a s w h e n re c e iv e d ,o rd in a ry w e a ra n d te a ra n d d a m a g e b y c a s u a lty e x c e p te d a n d w ith th e T e n a n tIm p ro v e m e n ts in s u b s ta n tia ly th e s a m e c o n d ito n a s e x is te d u p o n c o m p le tio n th e re o f,re a s o n a b le w e a ra n d te a re x c e p te d (s u b je c to a n y A lte ra tio n s m a d e b y T e n a n tp u rs u a n to A rtic le 1 4 );(b )a tL a n d lo rd s re q u e s ta n d T e n a n ts s o le c o s ta n d e x p e n s e ,re m o v e e q u ip m e n tfro m th e P re m is e s a n d re p a ira n y d a m a g e to th e P re m is e s c a u s e d th e re b y ,a n d (c )c a u s e a lic e n s e d e le c tric ia n to (i)re m o v e a lw irn g a n d c a b lin g fro m d is c o n n e c te d e q u ip m e n tb a c k to th e ju n c tio n b o x ,a n d (i)

o th e rw is e p la c e a lw irn g a n d c a b lin g in a s a fe c o n d ito n a n d in th e c o n d ito n re q u ire d b y A p p lic a b le L a w s .L a n d lo rd s h a lh a v e n o o b lig a tio n to a lte r,e m o d e l,im p ro v e ,re p a ir,d e c o ra te o rp a in th e P re m is e s o ra n y p a rth e re o f,o th e rth a n p u rs u a n to th e te rm s a n d p ro v is io n s o fth is L e a s e o ra s d e s c rib e d in E x h ib itB w ith re s p e c to p a y m e n to fth e Im p ro v e m e n tA lo w a n c e .1 5 .8 .Ifa n y e x c a v a tio n s h a lb e m a d e u p o n la n d a d ja c e n to o ru n d e rth e B u ild in g ,o rs h a lb e a u th o riz e d to b e m a d e ,T e n a n ts h a la fo rd to th e p e rs o n c a u s in g o ra u th o riz e d to c a u s e s u c h e x c a v a tio n ,lic e n s e to e n te rth e P re m is e s fo rth e p u rp o s e o fp e rfo rm in g s u c h w o rk a s s u c h p e rs o n s h a ld e e m n e c e s s a ry o rd e s ira b le to p re s e rv e a n d p ro te c th e B u ild in g fro m in ju ry o rd a m a g e a n d to s u p p o rth e s a m e b y p ro p e rfo u n d a tio n s ,w ith o u ta n y c la im fo rd a m a g e s o rlia b ilty a g a in s tL a n d lo rd a n d w ith o u tre d u c in g o ro th e rw is e a fe c tin g T e n a n ts o b lig a tio n s u n d e rth is L e a s e .1 5 .9 .T h is A rtic le re la te s to re p a irs a n d m a in te n a n c e a ris in g in th e o rd in a ry c o u rs e o fo p e ra tio n o fth e P re m is e s .In th e e v e n to fa c a s u a lty d e s c rib e d in A rtic le 2 1 ,A rtic le 2 1 s h a la p p ly in lie u o fth is A rtic le .In th e e v e n to fe m in e n td o m a in ,A rtic le 2 2 s h a la p p ly in lie u o fth is A rtic le .1 6 L ie n s .1 6 .1 S u b je c to th e im m e d ia te ly s u c c e e d in g s e n te n c e ,T e n a n ts h a lk e e p th e P re m is e s fre e fro m a n y lie n s a ris in g o u to fw o rk o rs e rv ic e s p e rfo rm e d ,m a te ria ls
fu rn is h e d o ro b lig a tio n s in c u re d b y T e n a n t.T e n a n tfu rth e rc o v e n a n ts a n d a g re e s th a ta n y m e c h a n ic s o rm a te ria lm a n s lie n file d a g a in s th e P re m is e s fo rw o rk o rs e rv ic e s c la im e d to h a v e b e e n d o n e fo r,o rm a te ria ls c la im e d to h a v e b e e n fu rn is h e d to ,o ro b lig a tio n s in c u re d b y T e n a n ts h a lb e d is c h a rg e d o rb o n d e d b y T e n a n tw ith in tw e n ty (2 0 )d a y s a fte rth e filn g th e re o f,a tT e n a n ts s o le c o s ta n d e x p e n s e ;p ro v id e d ,h o w e v e r,th a tT e n a n ts h a lh a v e th e rig h to c o n te s ta n y s u c h lie n b y a n y m a n n e ra v a ila b le to T e n a n tu n d e ra p p lic a b le la w p ro v id e d th a ta b o n d h a s b e e n is s u e d a n d a n y s u c h c o n te s ts h a ls ta y th e e n fo rc e m e n to fth e lie n u n tils u c h c o n te s tis c o m p le te d .
3 5 1 6 .2 S h o u ld T e n a n tfa ilto d is c h a rg e o rb o n d a g a in s ta n y lie n o fth e n a tu re d e s c rib e d in S e c tio n 1 6 .1 ,L a n d lo rd m a y ,a tL a n d lo rd s e le c tio n ,p a y s u c h c la im o rp o s ta s ta tu to ry lie n b o n d o ro th e rw is e p ro v id e s e c u rity to e lim in a te th e lie n a s a c la im a g a in s tile ,a n d T e n a n ts h a lim m e d ia te ly re im b u rs e L a n d lo rd fo rth e c o s ts th e re o fa s A d d ito n a lR e n t.T e n a n ts h a lin d e m n ify ,s a v e ,d e fe n d (a tL a n d lo rd s o p tio n a n d w ith c o u n s e lre a s o n a b ly a c c e p ta b le to L a n d lo rd )a n d h o ld th e L a n d lo rd In d e m n ite e s h a rm le s s fro m a n d a g a in s ta n y C la im s a ris in g fro m a n y s u c h lie n s ,in c lu d in g a n y a d m in is tra tiv e ,c o u rto ro th e rle g a lp ro c e e d in g s re la te d to s u c h lie n s .1 6 .3 In th e e v e n th a tT e n a n tle a s e s o rfin a n c e s th e a c q u is ito n o fo fic e e q u ip m e n t,fu rn is h in g s o ro th e rp e rs o n a lp ro p e rty o fa re m o v a b le n a tu re u tilz e d b y T e n a n tin th e o p e ra tio n o fT e n a n ts b u s in e s s (w h ic h T e n a n ts h a lh a v e th e rig h to d o ),T e n a n tw a ra n ts th a ta n y U n ifo rm C o m m e rc ia lC o d e fin a n c in g s ta te m e n ts h a l,u p o n its fa c e o rb y e x h ib ith e re to ,in d ic a te th a ts u c h fin a n c in g s ta te m e n tis a p p lic a b le o n ly to re m o v a b le p e rs o n a lp ro p e rty o fT e n a n tlo c a te d w ith in th e P re m is e s .In n o e v e n ts h a lth e a d d re s s o fth e P re m is e s b e fu rn is h e d o n a fin a n c in g s ta te m e n tw ith o u tq u a lify in g la n g u a g e a s to a p p lic a b ilty o fth e lie n o n ly to re m o v a b le p e rs o n a lp ro p e rty lo c a te d in a n id e n tife d s u ite le a s e d b y T e n a n t.S h o u ld a n y

h o ld e ro fa fin a n c in g s ta te m e n tre c o rd o rp la c e o fre c o rd a fin a n c in g s ta te m e n th a ta p p e a rs to c o n s tiu te a lie n a g a in s ta n y in te re s to fL a n d lo rd ,T e n a n ts h a l,w ith in te n (1 0 )d a y s a fte rfiln g s u c h fin a n c in g s ta te m e n t,c a u s e (a )a c o p y o fth e le n d e rs e c u rity a g re e m e n to ro th e rd o c u m e n ts to w h ic h th e fin a n c in g s ta te m e n tp e rta in s to b e fu rn is h e d to L a n d lo rd to fa c ilta te L a n d lo rd s a b ilty to d e m o n s tra te th a th e lie n o fs u c h fin a n c in g s ta te m e n tis n o ta p p lic a b le to L a n d lo rd s in te re s ta n d (b )T e n a n ts le n d e rto a m e n d s u c h fin a n c in g s ta te m e n ta n d a n y o th e rd o c u m e n ts o fre c o rd to c la rify th a ta n y lie n s im p o s e d th e re b y a re n o ta p p lic a b le to a n y in te re s to fL a n d lo rd in th e P re m is e s .U p o n T e n a n ts re q u e s t,L a n d lo rd w ile x e c u te a n d d e liv e rto T e n a n ta c o m m e rc ia ly re a s o n a b le fo rm o fL a n d lo rd s w a iv e re a s o n a b ly a c c e p ta b le to L a n d lo rd in fa v o ro fT e n a n ts e q u ip m e n tlie n o r;p ro v id e d ,h o w e v e r,th a t(a )L a n d lo rd s h a lh a v e th e o p p o rtu n ity to m a k e a n y re a s o n a b le c o m m e n ts to s u c h fo rm th a tL a n d lo rd d e s ire s ,a n d (b )T e n a n tw ilre im b u rs e L a n d lo rd fo rth e c o s to L a n d lo rd to re v ie w a n d n e g o tia te s u c h w a iv e r.1 7 .E s to p p e lC e rtifc a te .T e n a n ts h a l,w ith in tw e n ty (2 0 )d a y s o fre c e ip to fw rite n n o tic e fro m L a n d lo rd ,e x e c u te ,a c k n o w le d g e a n d d e liv e ra s ta te m e n tin w ritn g s u b s ta n tia ly in th e fo rm a ta c h e d to th is L e a s e a s E x h ib itI,o ro n a n y o th e rc o m m e rc ia ly re a s o n a b le fo rm re a s o n a b ly
re q u e s te d b y a c u re n to rp ro p o s e d L e n d e ro re n c u m b ra n c e ro rp ro p o s e d p u rc h a s e r,(a )c e rtify in g th a th is L e a s e is u n m o d ife d a n d in fu lfo rc e a n d e fe c t(o r,ifm o d ife d ,s ta tin g th e n a tu re o fs u c h m o d ifc a tio n a n d c e rtify in g th a th is L e a s e a s s o m o d ife d is in fu lfo rc e a n d e fe c t)a n d th e d a te s to w h ic h re n ta la n d o th e rc h a rg e s a re p a id in a d v a n c e ,ifa n y ,(b )a c k n o w le d g in g th a th e re a re n o t,o T e n a n ts k n o w le d g e ,a n y u n c u re d d e fa u lts o n th e p a rto fL a n d lo rd h e re u n d e r,o rs p e c ify in g s u c h d e fa u lts ifa n y a re c la im e d ,a n d (c )s e tin g fo rth s u c h fu rth e rin fo rm a tio n w ith re s p e c to th is L e a s e o rth e P re m is e s a s m a y b e re a s o n a b ly re q u e s te d th e re o n .A n y s u c h s ta te m e n tm a y b e re lie d u p o n b y a n y p ro s p e c tiv e p u rc h a s e ro re n c u m b ra n c e ro fa lo ra n y p o rtio n o fth e P ro p e rty .T e n a n ts fa ilu re to d e liv e rs u c h s ta te m e n tw ith in s u c h th e p re s c rib e d tim e s h a l,a tL a n d lo rd s o p tio n ,c o n s tiu te a D e fa u lt(a s d e fin e d b e lo w )u n d e rth is L e a s e ,a n d ,in a n y e v e n t,s h a lb e b in d in g u p o n T e n a n th a th e L e a s e is in fu lfo rc e a n d e fe c ta n d w ith o u tm o d ifc a tio n e x c e p ta s m a y b e re p re s e n te d b y L a n d lo rd in a n y c e rtifc a te p re p a re d b y L a n d lo rd a n d d e liv e re d
3 6 to T e n a n tfo re x e c u tio n .L a n d lo rd s h a l,w ith in tw e n ty (2 0 )d a y s o fre c e ip to fw rite n n o tic e fro m T e n a n tb u tin n o e v e n tm o re th a n o n c e e v e ry tw e lv e (1 2 )m o n th s ,p ro v id e to T e n a n ta n e s to p p e lc e rtifc a te s ig n e d b y L a n d lo rd ,(a )c e rtify in g th a th is L e a s e is u n m o d ife d a n d in fu lfo rc e a n d e fe c t(o r,ifm o d ife d ,s ta tin g th e n a tu re o fs u c h m o d ifc a tio n a n d c e rtify in g th a th is L e a s e a s s o m o d ife d is in fu lfo rc e a n d e fe c t)a n d th e d a te s to w h ic h re n ta la n d o th e rc h a rg e s a re p a id in a d v a n c e ,ifa n y ,a n d (b )a c k n o w le d g in g th a th e re a re n o t,o L a n d lo rd 's k n o w le d g e ,a n y u n c u re d d e fa u lts o n th e p a rto fT e n a n th e re u n d e r,o rs p e c ify in g s u c h d e fa u lts ifa n y a re c la im e d .1 8 .H a z a rd o u s M a te ria ls .1 8 .1 .T e n a n ts h a ln o tc a u s e o rp e rm ita n y H a z a rd o u s M a te ria ls (a s d e fin e d b e lo w )to b e b ro u g h tu p o n ,k e p to ru s e d in o ra b o u th e P re m is e s in v io la tio n o fA p p lic a b le L a w s b y T e n a n to ra n y o fits e m p lo y e e s ,a g e n ts ,c o n tra c to rs o rin v ite e s (c o le c tiv e ly w ith T e n a n t,e a c h a T e n a n tP a rty ).If(a )T e n a n tb re a c h e s s u c h o b lig a tio n ,(b )th e p re s e n c e o fH a z a rd o u s M a te ria ls a s a re s u lto fs u c h a b re a c h re s u lts in c o n ta m in a tio n o fth e P re m is e s ,a n y p o rtio n th e re o f,o ra n y a d ja c e n tp ro p e rty ,(c )c o n ta m in a tio n o fth e P re m is e s o th e rw is e o c c u rs d u rin g th e T e rm o ra n y e x te n s io n o re n e w a lh e re o fo rh o ld in g o v e rh e re u n d e r(o th e rth a n (i)fs u c h c o n ta m in a tio n re s u lts fro m m ig ra tio n o fH a z a rd o u s M a te ria ls fro m o u ts id e

th e P re m is e s n o tc a u s e d b y a T e n a n tP a rty o r(i)to th e e x te n ts u c h c o n ta m in a tio n is c a u s e d b y L a n d lo rd o ra n y L a n d lo rd P a rty o r(i)fs u c h H a z a rd o u s M a te ria ls e x is te d in ,o n o ra b o u th e P re m is e s p rio rto th e E x e c u tio n D a te )o r(d )c o n ta m in a tio n o fth e P re m is e s o c c u rs a s a re s u lto fH a z a rd o u s M a te ria ls th a ta re p la c e d o n o ru n d e ro ra re re le a s e d in to th e P re m is e s b y a T e n a n tP a rty ,th e n T e n a n ts h a lin d e m n ify ,s a v e ,d e fe n d (a tL a n d lo rd s o p tio n a n d w ith c o u n s e lre a s o n a b ly a c c e p ta b le to L a n d lo rd )a n d h o ld th e L a n d lo rd In d e m n ite e s h a rm le s s fro m a n d a g a in s ta n y a n d a lC la im s o fa n y k in d o rn a tu re ,in c lu d in g (w )d im in u tio n in v a lu e o fth e P re m is e s o ra n y p o rtio n th e re o f,(x )d a m a g e s fo rth e lo s s o re s tric tio n o n u s e o fre n ta b le o ru s a b le s p a c e o ro fa n y a m e n ity o fth e P re m is e s ,(y )d a m a g e s a ris in g fro m a n y a d v e rs e im p a c to n m a rk e tin g o fs p a c e in th e P re m is e s o ra n y p o rtio n th e re o fa n d (z )s u m s p a id in s e tle m e n to fC la im s th a ta ris e b e fo re ,d u rin g o ra fte rth e T e rm a s a re s u lto fs u c h b re a c h o rc o n ta m in a tio n .T h is in d e m n ifc a tio n b y T e n a n tin c lu d e s c o s ts in c u re d in c o n n e c tio n w ith a n y in v e s tig a tio n o fs ite c o n d ito n s o ra n y c le a n -u p ,re m e d ia l,re m o v a lo re s to ra tio n w o rk re q u ire d b y a n y G o v e rn m e n ta lA u th o rity b e c a u s e o fH a z a rd o u s M a te ria ls p re s e n tin th e a ir,s o ilo rg ro u n d w a te ra b o v e ,o n ,u n d e ro ra b o u th e P re m is e s .With o u tlim itn g th e fo re g o in g ,ifth e p re s e n c e o fa n y
H a z a rd o u s M a te ria ls in ,o n ,u n d e ro ra b o u th e P re m is e s ,a n y p o rtio n th e re o fo ra n y a d ja c e n tp ro p e rty c a u s e d o rp e rm ite d b y a n y T e n a n tP a rty re s u lts in a n y c o n ta m in a tio n o fth e P re m is e s ,a n y p o rtio n th e re o fo ra n y a d ja c e n tp ro p e rty ,th e n T e n a n ts h a lp ro m p tly ta k e a la c tio n s a tis s o le c o s ta n d e x p e n s e a s a re n e c e s s a ry to re tu rn th e P re m is e s ,a n y p o rtio n th e re o fo ra n y a d ja c e n tp ro p e rty to its re s p e c tiv e c o n d ito n e x is tin g p rio rto th e tim e o fs u c h c o n ta m in a tio n ;p ro v id e d th a tL a n d lo rd s w rite n a p p ro v a lo fs u c h a c tio n s h a lfirs tb e o b ta in e d ,w h ic h a p p ro v a lL a n d lo rd s h a ln o tu n re a s o n a b ly w ith h o ld ;a n d p ro v id e d ,fu rth e r,th a tis h a lb e re a s o n a b le fo rL a n d lo rd to w ith h o ld its c o n s e n tifs u c h a c tio n s c o u ld h a v e a m a te ria la d v e rs e lo n g -te rm o rs h o rt-e rm e fe c to n th e P re m is e s ,a n y p o rtio n th e re o fo ra n y a d ja c e n tp ro p e rty .T e n a n ts o b lig a tio n s u n d e rth is S e c tio n s h a ln o tb e a fe c te d ,re d u c e d o rlim ite d b y a n y lim ita tio n o n th e a m o u n to rty p e o fd a m a g e s ,c o m p e n s a tio n o rb e n e fits p a y a b le b y o rfo rT e n a n tu n d e rw o rk e rs c o m p e n s a tio n a c ts ,d is a b ilty b e n e fita c ts ,e m p lo y e e b e n e fita c ts o rs im ila rle g is la tio n .N o tw ith s ta n d in g a n y th in g c o n ta in e d in th is A rtic le 1 8 ,T e n a n ts h a ln o tb e
 3 7 re s p o n s ib le fo ra n y H a z a rd o u s M a te ria ls w h ic h (i)T e n a n tc a n p ro v e e x is te d o n th e P re m is e s p rio rto th e d a te T e n a n tfirs tc o m m e n c e d o c c u p a n c y o fth e P re m is e s ,(i)m ig ra te d o n to th e P re m is e s fro m o fs ite a n d w e re n o te x a c e rb a te d b y a n y a c to fT e n a n to ra n y T e n a n tP a rty o r(i)w e re b ro u g h to n to th e P re m is e s b y L a n d lo rd ,its e m p lo y e e s o ra g e n ts .L a n d lo rd w ilp ro v id e T e n a n tw ith c o p ie s o fa n y s o ils te s t,H a z a rd o u s M a te ria ls re p o rts o rs im ila rs tu d ie s o rd e re d b y L a n d lo rd d u rin g th e c o n s tru c tio n o fth e P ro je c ta n d B a s e B u ild in g Wo rk u p o n re q u e s tfro m T e n a n t.L a n d lo rd s h a l,a tn o c o s to T e n a n t(a n d n o ta s a n O p e ra tin g E x p e n s e ),c a u s e th e re m o v a lo re m e d ia tio n ,to th e e x te n tre q u ire d in o rd e rto o b ta in th e E n tile m e n ts fo rth e P ro je c ta n d /o re q u ire d b y a n y G o v e rn m e n ta lA u th o rity a s a c o n d ito n to th e c o n s tru c tio n o fth e P ro je c ta n d B a s e B u ild in g Wo rk ,o fa n y H a z a rd o u s M a te ria lw h ic h w a s o n th e P ro je c tp rio rto th e P h a s e 1 R e n tC o m m e n c e m e n tD a te in v io la tio n o fA p p lic a b le L a w s in e fe c ta s o fth e P h a s e 1 R e n tC o m m e n c e m e n tD a te ;p ro v id e d ,h o w e v e r,th a tL a n d lo rd s h a lh a v e n o o b lig a tio n s w ith re s p e c to a n y H a z a rd o u s M a te ria ls b ro u g h to n to th e P ro p e rty b y T e n a n to ra n y T e n a n tP a rty .L a n d lo rd in d e m n ife s T e n a n tfo r,fo m a n d a g a in s ta n y (a )b re a c h b y L a n d lo rd o fth e o b lig a tio n s s ta te d in th e p re c e d in g s e n te n c e a n d (b )c o n ta m in a tio n o fth e

P re m is e s c a u s e d b y L a n d lo rd o ra n y L a n d lo rd P a rty ,a n d a g re e s to d e fe n d a n d h o ld T e n a n th a rm le s s fro m a n d a g a in s ta n y a n d a lc la im s ,ju d g m e n ts ,d a m a g e s ,p e n a ltie s ,fin e s ,c o s ts ,lia b ilte s ,o rlo s s e s w h ic h a ris e d u rin g o ra fte rth e T e rm a s a re s u lto fs u c h (a )o r(b ).1 8 .2 .L a n d lo rd a c k n o w le d g e s th a tis n o th e in te n to fth is A rtic le to p ro h ib itT e n a n tfro m o p e ra tin g its b u s in e s s fo rth e P e rm ite d U s e .T e n a n tm a y o p e ra te its b u s in e s s a c c o rd in g to th e c u s to m o fT e n a n ts in d u s try s o lo n g a s th e u s e o rp re s e n c e o fH a z a rd o u s M a te ria ls is s tric tly a n d p ro p e rly m o n ito re d in a c c o rd a n c e w ith A p p lic a b le L a w s .A s a m a te ria lin d u c e m e n to L a n d lo rd to a lo w T e n a n to u s e H a z a rd o u s M a te ria ls in c o n n e c tio n w ith its b u s in e s s ,T e n a n ta g re e s to d e liv e rto L a n d lo rd (a )a lis tid e n tify in g e a c h ty p e o fH a z a rd o u s M a te ria lto b e p re s e n ta th e P re m is e s th a tis s u b je c to re g u la tio n u n d e ra n y e n v iro n m e n ta lA p p lic a b le L a w s ,(b )a lis to fa n y a n d a la p p ro v a ls o rp e rm its fro m G o v e rn m e n ta lA u th o rite s re q u ire d in c o n n e c tio n w ith th e p re s e n c e o fs u c h H a z a rd o u s M a te ria la th e P re m is e s a n d (c )c o re c ta n d c o m p le te c o p ie s o f(i)n o tic e s o fv io la tio n s o fA p p lic a b le L a w s re la te d to H a z a rd o u s M a te ria ls a n d (i)p la n s re la tin g to th e in s ta la tio n o fa n y s to ra g e ta n k s to b e in s ta le d in ,o n ,u n d e ro ra b o u th e P re m is e s (p ro v id e d th a tin s ta la tio n o fs to ra g e ta n k s s h a lo n ly b e p e rm ite d a fte rL a n d lo rd h a s g iv e n
T e n a n tis w rite n c o n s e n to d o s o ,w h ic h c o n s e n tL a n d lo rd m a y w ith h o ld in its s o le a n d a b s o lu te d is c re tio n )a n d c lo s u re p la n s o ra n y o th e rd o c u m e n ts re q u ire d b y a n y a n d a lG o v e rn m e n ta lA u th o rite s fo ra n y s to ra g e ta n k s in s ta le d in ,o n ,u n d e ro ra b o u th e P re m is e s fo rth e c lo s u re o fa n y s u c h s to ra g e ta n k s (c o le c tiv e ly ,H a z a rd o u s M a te ria ls D o c u m e n ts ).T e n a n ts h a ld e liv e rto L a n d lo rd u p d a te d H a z a rd o u s M a te ria ls D o c u m e n ts ,w ith in fo u rte e n (1 4 )d a y s a fte re c e ip to fa w rite n re q u e s th e re fo rfo m L a n d lo rd ,n o tm o re o fte n th a n o n c e p e ry e a r,u n le s s (m )th e re a re a n y c h a n g e s to th e H a z a rd o u s M a te ria ls D o c u m e n ts o r(n )T e n a n tin ita te s a n y A lte ra tio n s o rc h a n g e s its b u s in e s s ,in e ith e rc a s e in a w a y th a tin v o lv e s a n y m a te ria lin c re a s e in th e ty p e s o ra m o u n ts o fH a z a rd o u s M a te ria ls .F o re a c h ty p e o fH a z a rd o u s M a te ria lis te d ,th e H a z a rd o u s M a te ria ls D o c u m e n ts s h a lin c lu d e (t)h e c h e m ic a ln a m e ,(u )th e m a te ria ls ta te (e .g .,s o lid ,liq u id ,g a s o rc ry o g e n ),(v )th e c o n c e n tra tio n ,(w )th e s to ra g e a m o u n ta n d s to ra g e c o n d ito n (e .g .,in c a b in e ts o rn o tin c a b in e ts ),(x )th e u s e a m o u n ta n d u s e c o n d ito n (e .g .,o p e n u s e o rc lo s e d u s e ),(y )th e lo c a tio n (e .g .,ro o m n u m b e ro ro th e rid e n tifc a tio n )a n d (z )ifk n o w n ,th e
 3 8 c h e m ic a la b s tra c ts e rv ic e n u m b e r.N o tw ith s ta n d in g a n y th in g in th is S e c tio n to th e c o n tra ry ,T e n a n ts h a ln o tb e re q u ire d to p ro v id e L a n d lo rd w ith a n y H a z a rd o u s M a te ria ls D o c u m e n ts c o n ta in in g in fo rm a tio n o fa p ro p rie ta ry n a tu re ,w h ic h H a z a rd o u s M a te ria ls D o c u m e n ts ,in a n d o fth e m s e lv e s ,d o n o tc o n ta in a re fe re n c e to a n y H a z a rd o u s M a te ria ls o ra c tiv ite s re la te d to H a z a rd o u s M a te ria ls .L a n d lo rd m a y ,a tL a n d lo rd s e x p e n s e ,c a u s e th e H a z a rd o u s M a te ria ls D o c u m e n ts to b e re v ie w e d b y a p e rs o n o rfim q u a life d to a n a ly z e H a z a rd o u s M a te ria ls to c o n firm c o m p lia n c e w ith th e p ro v is io n s o fth is L e a s e a n d w ith A p p lic a b le L a w s .In th e e v e n th a ta re v ie w o fth e H a z a rd o u s M a te ria ls D o c u m e n ts in d ic a te s n o n -c o m p lia n c e w ith th is L e a s e o rA p p lic a b le L a w s ,T e n a n ts h a l,a tis e x p e n s e ,d ilg e n tly ta k e s te p s to b rin g its s to ra g e a n d u s e o fH a z a rd o u s M a te ria ls in to c o m p lia n c e .N o tw ith s ta n d in g a n y th in g in th is L e a s e to th e c o n tra ry o rL a n d lo rd s re v ie w in to T e n a n ts H a z a rd o u s M a te ria ls D o c u m e n ts o ru s e o rd is p o s a lo fh a z a rd o u s m a te ria ls ,h o w e v e r,L a n d lo rd s h a ln o th a v e a n d e x p re s s ly d is c la im s a n y lia b ilty re la te d to T e n a n ts o ro th e rte n a n ts u s e o rd is p o s a lo fH a z a rd o u s M a te ria ls ,itb e in g a c k n o w le d g e d b y T e n a n th a tT e n a n tis b e s ts u ite d to e v a lu a te th e s a fe ty a n d e fic a c y o fits H a z a rd o u s M a te ria ls u s a g e a n d p ro c e d u re s .1 8 .3 .

In te n tio n a ly O m ite d .1 8 .4 .A ta n y tim e ,a n d fro m tim e to tim e ,p rio rto th e e x p ira tio n o fth e T e rm ,L a n d lo rd ,a tis s o le c o s ta n d e x p e n s e ,s h a lh a v e th e rig h to c o n d u c ta p p ro p ria te te s ts o fth e P re m is e s o ra n y p o rtio n th e re o fto d e m o n s tra te th a tH a z a rd o u s M a te ria ls a re p re s e n to rth a tc o n ta m in a tio n h a s o c c u re d d u e to th e a c ts o ro m is s io n s o fa T e n a n tP a rty ;p ro v id e d th a tT e n a n ts h a lp a y a la c tu a l,d o c u m e n te d a n d re a s o n a b le c o s ts o fs u c h te s ts ifs u c h te s ts re v e a lth a tH a z a rd o u s M a te ria ls fo rw h ic h T e n a n tis re s p o n s ib le p u rs u a n to S e c tio n 1 8 .1 a b o v e e x is ta th e P re m is e s in v io la tio n o fA p p lic a b le L a w s o rth is L e a s e .1 8 .5 .Ifu n d e rg ro u n d o ro th e rs to ra g e ta n k s s to rin g H a z a rd o u s M a te ria ls in s ta le d o ru tilz e d b y T e n a n ta re lo c a te d o n th e P re m is e s ,o ra re h e re a fte rp la c e d o n th e P re m is e s b y T e n a n t(o rb y a n y o th e rp a rty ,ifs u c h s to ra g e ta n k s a re u tilz e d b y T e n a n t),h e n T e n a n ts h a lm o n ito rth e s to ra g e ta n k s ,m a in ta in a p p ro p ria te re c o rd s ,im p le m e n tre p o rtin g p ro c e d u re s ,p ro p e rly c lo s e a n y u n d e rg ro u n d s to ra g e ta n k s ,a n d ta k e o rc a u s e to b e ta k e n a lo th e rs te p s n e c e s s a ry o re q u ire d u n d e rth e A p p lic a b le L a w s .T e n a n ts h a lh a v e n o re s p o n s ib ilty o rlia b ilty fo ru n d e rg ro u n d o ro th e rs to ra g e ta n k s in s ta le d b y a n y o n e o th e rth a n T e n a n tu n le s s T e n a n tu tilz e s s u c h ta n k s ,in w h ic h c a s e T e n a n ts re s p o n s ib ilty fo rs u c h ta n k s s h a lb e a s s e tfo rth in th is S e c tio n .
1 8 .6 .T e n a n ts h a lp ro m p tly re p o rto L a n d lo rd a n y a c tu a lo rs u s p e c te d p re s e n c e o fm o ld o rw a te rin tru s io n a th e P re m is e s .1 8 .7 .L a n d lo rd s a n d T e n a n ts o b lig a tio n s u n d e rth is A rtic le s h a ls u rv iv e th e e x p ira tio n o re a rlie rte rm in a tio n o fth e L e a s e .D u rin g a n y p e rio d o ftim e n e e d e d b y T e n a n to rL a n d lo rd a fte rth e te rm in a tio n o fth is L e a s e to c o m p le te th e re m o v a lfro m th e P re m is e s o fa n y s u c h H a z a rd o u s M a te ria ls w h ic h a re T e n a n ts re s p o n s ib ilty u n d e rth is L e a s e ,T e n a n ts h a lb e d e e m e d a h o ld o v e rte n a n ta n d s u b je c to th e p ro v is io n s o fA rtic le 2 4 .1 8 .8 .A s u s e d h e re in ,th e te rm H a z a rd o u s M a te ria lm e a n s a n y to x ic ,e x p lo s iv e ,c o ro s iv e ,fla m m a b le ,in fe c tio u s ,ra d io a c tiv e ,c a rc in o g e n ic ,m u ta g e n ic o ro th e rw is e h a z a rd o u s
 3 9 s u b s ta n c e ,m a te ria lo rw a s te th a tis o rb e c o m e s re g u la te d b y A p p lic a b le L a w s o ra n y G o v e rn m e n ta lA u th o rity .1 9 .O d o rs a n d E x h a u s t.T e n a n ts h a l,a tT e n a n ts s o le c o s ta n d e x p e n s e ,u n d e rta k e c o m m e rc ia ly re a s o n a b le s te p s to m in im iz e o re lim in a te ,w h e re p o s s ib le ,o fe n s iv e o d o rs e m a n a tin g fro m th e P re m is e s ,in c lu d in g p ro v id in g o d o re lim in a to rs a n d o th e rd e v ic e s (s u c h a s filte rs ,a irc le a n e rs ,s c ru b b e rs a n d w h a te v e ro th e re q u ip m e n tm a y b e re q u ire d b y A p p lic a b le L a w s o rin T e n a n ts g o o d fa ith b u s in e s s ju d g m e n tb e n e c e s s a ry o ra p p ro p ria te fro m tim e to tim e )to c o m p le te ly re m o v e ,e lim in a te a n d a b a te a n y o d o rs ,fu m e s o ro th e rs u b s ta n c e s in T e n a n ts e x h a u s ts tre a m th a t,in L a n d lo rd s ju d g m e n t,e m a n a te fro m T e n a n ts P re m is e s .A n y w o rk T e n a n tp e rfo rm s u n d e rth is S e c tio n s h a lc o n s tiu te A lte ra tio n s .2 0 .In s u ra n c e ;Wa iv e ro fS u b ro g a tio n .2 0 .1 .L a n d lo rd s h a lm a in ta in in s u ra n c e fo rth e P ro je c tin a m o u n ts e q u a lto fu lre p la c e m e n tc o s t(e x c lu s iv e o fth e c o s ts o fe x c a v a tio n ,fo u n d a tio n s a n d fo o tin g s ,a n d w ith o u tre fe re n c e to d e p re c ia tio n ta k e n b y L a n d lo rd u p o n its b o o k s o rta x re tu rn s )p ro v id in g p ro te c tio n a g a in s ta n y p e rilg e n e ra ly in c lu d e d w ith in th e c la s s ifc a tio n "F ire a n d E x te n d e d C o v e ra g e ,"to g e th e rw ith in s u ra n c e a g a in s ts p rin k le rd a m a g e (ifa p p lic a b le ),v a n d a lis m a n d m a lic io u s m is c h ie f.L a n d lo rd ,s u b je c to a v a ila b ilty th e re o f,s h a l

fu rth e rin s u re ,ifL a n d lo rd d e e m s ita p p ro p ria te ,c o v e ra g e a g a in s tflo o d ,e n v iro n m e n ta lh a z a rd ,e a rth q u a k e ,lo s s o rfa ilu re o fb u ild in g e q u ip m e n t,re n ta lo s s d u rin g th e p e rio d o fre p a irs o re b u ild in g ,w o rk e rs c o m p e n s a tio n in s u ra n c e a n d fid e lity b o n d s fo re m p lo y e e s e m p lo y e d to p e rfo rm s e rv ic e s .N o tw ith s ta n d in g th e fo re g o in g ,L a n d lo rd m a y ,b u ts h a ln o tb e d e e m e d re q u ire d to ,p ro v id e in s u ra n c e fo ra n y im p ro v e m e n ts in s ta le d b y T e n a n to rth a ta re in a d d ito n to th e s ta n d a rd im p ro v e m e n ts c u s to m a rily fu rn is h e d b y L a n d lo rd ,w ith o u tre g a rd to w h e th e ro rn o ts u c h a re m a d e a p a rto fo ra re a fix e d to th e B u ild in g s .2 0 .2 .In a d d ito n ,L a n d lo rd s h a lc a ry C o m m e rc ia lG e n e ra lL ia b ilty in s u ra n c e w ith lim its o fn o tle s s th a n F iv e M ilo n D o la rs ($ 5 ,0 0 0 ,0 0 0 )p e ro c c u re n c e /g e n e ra la g g re g a te fo rb o d ily in ju ry (in c lu d in g d e a th ),o rp ro p e rty d a m a g e w ith re s p e c to th e P re m is e s .2 0 .3 .T e n a n ts h a l,a tis o w n c o s ta n d e x p e n s e ,p ro c u re (p rio rto T e n a n ts e n try o n to th e P re m is e s to c o m m e n c e a n y o c c u p a n c y o rT e n a n tIm p ro v e m e n ts )a n d m a in ta in d u rin g th e T e rm th e fo lo w in g in s u ra n c e fo rth e b e n e fito fT e n a n ta n d L a n d lo rd (a s th e irn te re s ts m a y a p p e a r)w ith in s u re rs fin a n c ia ly a c c e p ta b le a n d la w fu ly a u th o riz e d to d o b u s in e s s in th e s ta te w h e re th e P re m is e s a re lo c a te d :(b )C o m m e rc ia lG e n e ra lL ia b ilty in s u ra n c e o n a b ro a d -b a s e d o c c u re n c e c o v e ra g e fo rm ,w ith c o v e ra g e s in c lu d in g b u t
n o tlim ite d to b o d ily in ju ry (in c lu d in g d e a th ),p ro p e rty d a m a g e (in c lu d in g lo s s o fu s e re s u ltin g th e re fro m ),p re m is e s /o p e ra tio n s ,p e rs o n a l& a d v e rtis in g in ju ry ,a n d c o n tra c tu a lia b ilty w ith lim its o flia b ilty o fn o tle s s th a n $ 5 ,0 0 0 ,0 0 0 fo rb o d ily in ju ry a n d p ro p e rty d a m a g e p e ro c c u re n c e ,$ 5 ,0 0 0 ,0 0 0 g e n e ra la g g re g a te ,w h ic h lim its m a y b e m e tb y u s e o fe x c e s s a n d /o ru m b re la lia b ilty in s u ra n c e p ro v id e d th a ts u c h c o v e ra g e is a tle a s ta s b ro a d a s th e p rim a ry c o v e ra g e s re q u ire d h e re in .
4 0 (c )C o m m e rc ia lA u to m o b ile L ia b ilty in s u ra n c e c o v e rin g lia b ilty a ris in g fro m th e u s e o ro p e ra tio n o fa n y a u to ,in c lu d in g th o s e o w n e d ,h ire d o ro th e rw is e o p e ra te d o ru s e d b y o ro n b e h a lfo fth e T e n a n t.T h e c o v e ra g e s h a lb e o n a b ro a d -b a s e d o c c u re n c e fo rm w ith c o m b in e d s in g le lim its o fn o tle s s th a n $ 1 ,0 0 0 ,0 0 0 p e ra c c id e n tfo rb o d ily in ju ry a n d p ro p e rty d a m a g e .(d )C o m m e rc ia lP ro p e rty in s u ra n c e c o v e rin g p ro p e rty d a m a g e to th e fu lre p la c e m e n tc o s tv a lu e a n d b u s in e s s in te ru p tio n (w h ic h m a y b e s e lf-in s u re d a s s e tfo rth b e lo w ).C o v e re d p ro p e rty s h a lin c lu d e a lte n a n tim p ro v e m e n ts in th e P re m is e s (to th e e x te n tn o tin s u re d b y L a n d lo rd p u rs u a n to S e c tio n 2 0 .1 )a n d T e n a n ts P ro p e rty in c lu d in g p e rs o n a lp ro p e rty ,fu rn itu re ,fix tu re s ,m a c h in e ry ,e q u ip m e n t,s to c k ,in v e n to ry a n d im p ro v e m e n ts a n d b e te rm e n ts ,w h ic h m a y b e o w n e d b y T e n a n to rL a n d lo rd a n d re q u ire d to b e in s u re d h e re u n d e r,o rw h ic h m a y b e le a s e d ,re n te d ,b o ro w e d o rin th e c a re c u s to d y o rc o n tro lo fT e n a n t,o rT e n a n ts a g e n ts ,e m p lo y e e s o rs u b c o n tra c to rs .S u c h in s u ra n c e ,w ith re s p e c to n ly to a lT e n a n tIm p ro v e m e n ts ,A lte ra tio n s o ro th e rw o rk p e rfo rm e d o n th e P re m is e s b y T e n a n t(c o le c tiv e ly ,T e n a n tWo rk ),s h a ln a m e L a n d lo rd a n d L a n d lo rd s c u re n ta n d fu tu re m o rtg a g e e s a s lo s s p a y e e s a s th e irn te re s ts m a y a p p e a r.S u c h in s u ra n c e s h a lb e w rite n o n a n a lris k o fp h y s ic a l

lo s s o rd a m a g e b a s is in c lu d in g th e p e rils o fire ,e x te n d e d c o v e ra g e ,e le c tric a lin ju ry ,m e c h a n ic a lb re a k d o w n ,w in d s to rm ,v a n d a lis m ,m a lic io u s m is c h ie f,s p rin k le rle a k a g e ,b a c k -u p o fs e w e rs o rd ra in s ,flo o d ,e a rth q u a k e ,te ro ris m a n d s u c h o th e ris k s L a n d lo rd m a y fro m tim e to tim e d e s ig n a te ,fo rth e fu lre p la c e m e n tc o s tv a lu e o fth e c o v e re d ite m s w ith a n a g re e d a m o u n te n d o rs e m e n tw ith n o c o -in s u ra n c e .B u s in e s s in te ru p tio n c o v e ra g e s h a lh a v e lim its s u fic ie n to c o v e rT e n a n ts lo s tp ro fits a n d n e c e s s a ry c o n tin u in g e x p e n s e s ,in c lu d in g re n ts d u e L a n d lo rd u n d e rth e L e a s e .T h e m in im u m p e rio d o fin d e m n ity fo rb u s in e s s in te ru p tio n c o v e ra g e s h a lb e tw e lv e (1 2 )m o n th s p lu s tw e lv e (1 2 )m o n th s e x te n d e d p e rio d o fin d e m n ity .N o tw ith s ta n d in g a n y th in g to th e c o n tra ry c o n ta in e d h e re in ,th e T e n a n to rig in a ly n a m e d h e re in (th e O rig in a lT e n a n t)(a n d n o ta n y a s s ig n e e ,s u b te n a n to ro th e rta n s fe re e )m a y ,s u b je c to th e p ro v is io n s o fth is S e c tio n 2 0 .3 (d ),fu lfits in s u ra n c e o b lig a tio n s u n d e rth e p re c e d in g s e n te n c e b y s e lf-in s u ra n c e (re g a rd le s s o fw h e th e rT e n a n te le c ts to s e lf-in s u re a lin s u ra n c e p u rs u a n to S e c tio n 2 0 .1 0 b e lo w ).A n y s e lf-in s u ra n c e s o m a in ta in e d b y T e n a n ts h a lb e d e e m e d to c o n ta in a lo fth e te rm s a n d c o n d ito n s a p p lic a b le to s u c h in s u ra n c e a s re q u ire d in th is A rtic le 2 0 ,in c lu d in g ,w ith o u tlim ita tio n ,a d e e m e d w a iv e ro fs u b ro g a tio n ;
c o n s e q u e n tly ,L a n d lo rd s h a lb e tre a te d ,fo ra lp u rp o s e s ,a s ifT e n a n th a d a c tu a ly p u rc h a s e d s u c h in s u ra n c e fro m a th ird p a rty .IfT e n a n te le c ts to s o s e lf-in s u re ,th e n w ith re s p e c to a n y c la im s w h ic h m a y re s u ltfro m in c id e n ts o c c u rin g d u rin g th e T e rm ,s u c h s e lf-in s u ra n c e o b lig a tio n s h a ls u rv iv e th e e x p ira tio n o re a rlie rte rm in a tio n o fth is L e a s e to th e s a m e e x te n ta s th e in s u ra n c e re q u ire d h e re u n d e rw o u ld s u rv iv e .(e )Wo rk e rs C o m p e n s a tio n in s u ra n c e a s is re q u ire d b y s ta tu te o rla w ,o ra s m a y b e a v a ila b le o n a v o lu n ta ry b a s is a n d E m p lo y e rs L ia b ilty in s u ra n c e w ith lim its o fn o tle s s th a n th e fo lo w in g :e a c h a c c id e n t,F iv e H u n d re d T h o u s a n d D o la rs ($ 5 0 0 ,0 0 0 );d is e a s e ($ 5 0 0 ,0 0 0 );d is e a s e (e a c h e m p lo y e e ),F iv e H u n d re d T h o u s a n d D o la rs ($ 5 0 0 ,0 0 0 ).(fP o lu tio n L e g a lL ia b ilty in s u ra n c e is re q u ire d ifT e n a n ts to re s ,h a n d le s ,g e n e ra te s o rte a ts h a z a rd o u s m a te ria ls ,a s d e te rm in e d s o le ly b y L a n d lo rd ,o n o ra b o u th e P re m is e s .S u c h c o v e ra g e s h a lin c lu d e b o d ily in ju ry ,s ic k n e s s ,d is e a s e ,d e a th o rm e n ta la n g u is h
4 1 o rs h o c k s u s ta in e d b y a n y p e rs o n ;p ro p e rty d a m a g e in c lu d in g p h y s ic a lin ju ry to o rd e s tru c tio n o fta n g ib le p ro p e rty in c lu d in g th e re s u ltin g lo s s o fu s e th e re o f,c le a n -u p c o s ts ,a n d th e lo s s o fu s e o fta n g ib le p ro p e rty th a th a s n o tb e e n p h y s ic a ly in ju re d o rd e s tro y e d ;a n d d e fe n s e c o s ts ,c h a rg e s a n d e x p e n s e s in c u re d in th e in v e s tig a tio n ,a d ju s tm e n to rd e fe n s e o fc la im s fo rs u c h c o m p e n s a to ry d a m a g e s .C o v e ra g e s h a la p p ly to b o th s u d d e n a n d n o n -s u d d e n p o lu tio n c o n d ito n s in c lu d in g th e d is c h a rg e ,d is p e rs a l,re le a s e o re s c a p e o fs m o k e ,v a p o rs ,s o o t,fu m e s ,a c id s ,a lk a lis ,to x ic c h e m ic a ls ,liq u id s o rg a s e s ,w a s te m a te ria ls o ro th e rita n ts ,c o n ta m in a n ts o rp o lu ta n ts in to o ru p o n la n d ,th e a tm o s p h e re o ra n y w a te rc o u rs e o rb o d y o fw a te r.C la im s -m a d e c o v e ra g e is p e rm ite d ,p ro v id e d th e p o lic y re tro a c tiv e d a te is c o n tin u o u s ly m a in ta in e d p rio rto th e c o m m e n c e m e n td a te o fth is a g re e m e n t,a n d c o v e ra g e is c o n tin u o u s ly m a in ta in e d d u rin g a lp e rio d s in w h ic h T e n a n to c c u p ie s th e P re m is e s .C o v e ra g e s h a lb e m a in ta in e d w ith lim its o fn o tle s s th a n $ 1 ,0 0 0 ,0 0 0 p e rin c id e n tw ith a $ 2 ,0 0 0 ,0 0 0 p o lic y a g g re g a te .(g )D u rin g a lc o n s tru c tio n b y T e n a n ta th e P re m is e s ,w ith re s p e c to te n a n tim p ro v e m e n ts b e in g c o n s tru c te d (in c lu d in g th e T e n a n tIm p ro v e m e n ts a n d a n y A lte ra tio n s ,in s u ra n c e re q u ire d in E x h ib itB -1 m u s tb e in p la c e .2 0 .4 .T h e

in s u ra n c e re q u ire d to b e p u rc h a s e d a n d m a in ta in e d b y T e n a n tp u rs u a n to th is L e a s e s h a ls h o w ,a s a n a d d ito n a lin s u re d in re s p e c to fth e P re m is e s ,L a n d lo rd ,B io M e d R e a lty ,L .P .,B io M e d R e a lty T ru s t,In c .,a n y m a n a g e m e n tc o m p a n y re ta in e d b y L a n d lo rd to m a n a g e th e P re m is e s ,a n y g ro u n d le s s o ra n d a n y m o rtg a g e e o fL a n d lo rd re q u ire d to b e n a m e d p u rs u a n to its m o rtg a g e d o c u m e n ts .A lg e n e ra lia b ilty a n d p ro p e rty d a m a g e p o lic ie s s h a lc o n ta in a p ro v is io n th a tL a n d lo rd ,a lth o u g h n a m e d a s a n a d d ito n a lin s u re d o rlo s s p a y e e ,n e v e rth e le s s s h a lb e e n tile d to re c o v e ry u n d e rs a id p o lic ie s fo ra n y lo s s o c c a s io n e d to it,s s e rv a n ts ,a g e n ts a n d e m p lo y e e s b y re a s o n o fth e n e g lig e n c e o fT e n a n t.S a id in s u ra n c e s h a lb e w ith c o m p a n ie s h a v in g a ra tin g o fn o tle s s th a n p o lic y h o ld e ra tin g o fA a n d fin a n c ia lc a te g o ry ra tin g o fa tle a s tC la s s V Iin "B e s t's In s u ra n c e G u id e ."T e n a n ts h a lo b ta in fo rL a n d lo rd fro m th e in s u ra n c e c o m p a n ie s o rc a u s e th e in s u ra n c e c o m p a n ie s to fu rn is h c e rtifc a te s o fin s u ra n c e e v id e n c in g a lc o v e ra g e s re q u ire d h e re in to L a n d lo rd .Ifa v a ila b le ,th e p o lic y w ilp ro v id e th a ts u c h p o lic y s h a ln o tb e c a n c e la b le o rs u b je c to re d u c tio n o fc o v e ra g e o ro th e rm o d ifc a tio n o rc a n c e la tio n e x c e p ta fte rth irty (3 0 )d a y s 'p rio rw rite n n o tic e to L a n d lo rd fro m th e in s u re r.T e n a n ts re q u ire d p o lic ie s s h a lc o n ta in s e v e ra b ilty o fin te re s ts
c la u s e s s ta tin g th a t,e x c e p tw ith re s p e c to lim its o fin s u ra n c e ,c o v e ra g e s h a la p p ly s e p a ra te ly to e a c h in s u re d o ra d d ito n a lin s u re d .A ls u c h p o lic ie s s h a lb e w rite n a s p rim a ry p o lic ie s ,n o tc o n trib u tin g w ith a n d n o tin e x c e s s o fth e c o v e ra g e th a tL a n d lo rd m a y c a ry .T e n a n t's p o lic y m a y b e a "b la n k e tp o lic y "th a ts p e c ifc a ly p ro v id e s th a th e a m o u n to fin s u ra n c e s h a ln o tb e p re ju d ic e d b y o th e rlo s s e s c o v e re d b y th e p o lic y .T e n a n ts h a l,a tle a s tw e n ty (2 0 )d a y s p rio rto th e e x p ira tio n o fs u c h p o lic ie s ,fu rn is h L a n d lo rd w ith re n e w a ls o rb in d e rs .T e n a n ta g re e s th a tifT e n a n td o e s n o ta k e o u ta n d m a in ta in s u c h in s u ra n c e ,L a n d lo rd m a y (b u ts h a ln o tb e re q u ire d to )p ro c u re s a id in s u ra n c e o n T e n a n t's b e h a lfa n d a tis c o s to b e p a id b y T e n a n ta s A d d ito n a lR e n t.2 0 .5 .In e a c h in s ta n c e w h e re in s u ra n c e is to n a m e L a n d lo rd P a rtie s a s a d d ito n a lin s u re d s ,T e n a n ts h a l,u p o n L a n d lo rd s w rite n re q u e s t,a ls o d e s ig n a te a n d fu rn is h c e rtifc a te s e v id e n c in g s u c h L a n d lo rd P a rtie s a s a d d ito n a lin s u re d s to (a )a n y L e n d e ro fL a n d lo rd h o ld in g a s e c u rity in te re s tin th e P re m is e s ,(b )th e la n d lo rd u n d e ra n y le a s e w h e re u n d e rL a n d lo rd is a te n a n t
4 2 o fth e re a lp ro p e rty u p o n w h ic h th e P re m is e s is lo c a te d ifth e in te re s to fL a n d lo rd is o rs h a lb e c o m e th a to fa te n a n tu n d e ra g ro u n d le a s e ra th e rth a n th a to fa fe e o w n e ra n d (c )a n y m a n a g e m e n tc o m p a n y re ta in e d b y L a n d lo rd to m a n a g e th e P re m is e s .2 0 .6 .T e n a n ta s s u m e s th e ris k o fd a m a g e to a n y fix tu re s ,g o o d s ,in v e n to ry ,m e rc h a n d is e ,e q u ip m e n ta n d le a s e h o ld im p ro v e m e n ts ,a n d L a n d lo rd s h a ln o tb e lia b le fo rin ju ry to T e n a n ts b u s in e s s o ra n y lo s s o fin c o m e th e re fro m ,re la tiv e to s u c h d a m a g e ,a la s m o re p a rtic u la rly s e tfo rth w ith in th is L e a s e .T e n a n ts h a l,a tT e n a n ts s o le c o s ta n d e x p e n s e ,c a ry s u c h in s u ra n c e a s T e n a n td e s ire s fo rT e n a n ts p ro te c tio n w ith re s p e c to p e rs o n a lp ro p e rty o fT e n a n to rb u s in e s s in te ru p tio n .2 0 .7 .L a n d lo rd a n d T e n a n ta n d its in s u re rs e a c h h e re b y w a iv e a n y a n d a lrig h ts o fre c o v e ry a g a in s th e o th e ro ra g a in s th e o fic e rs ,d ire c to rs ,e m p lo y e e s ,a g e n ts a n d re p re s e n ta tiv e s o fth e o th e ro n a c c o u n to flo s s o rd a m a g e o c c a s io n e d b y s u c h w a iv in g p a rty o rits p ro p e rty o rth e p ro p e rty o fo th e rs u n d e rs u c h w a iv in g p a rty 's c o n tro l,in e a c h c a s e to th e e x te n th a ts u c h lo s s o rd a m a g e is in s u re d a g a in s tu n d e ra n y fire a n d e x te n d e d c o v e ra g e in s u ra n c e p o lic y th a te ith e rL a n d lo rd o rT e n a n tm a y h a v e in fo rc e a th e tim e o fs u c h lo s s o rd a m a g e .S u c h w a iv e rs s h a lc o n tin u e s o lo n g a s th e ire s p e c tiv e in s u re rs s o

p e rm it.A n y te rm in a tio n o fs u c h a w a iv e rs h a lb e b y w rite n n o tic e to th e o th e rp a rty ,c o n ta in in g a d e s c rip tio n o fth e c irc u m s ta n c e s h e re in a fte rs e tfo rth in th is S e c tio n 2 0 .7 .L a n d lo rd a n d T e n a n t,u p o n o b ta in in g th e p o lic ie s o fin s u ra n c e re q u ire d o rp e rm ite d u n d e rth is L e a s e ,s h a lg iv e n o tic e to th e in s u ra n c e c a rie ro rc a rie rs th a th e fo re g o in g m u tu a lw a iv e ro fs u b ro g a tio n is c o n ta in e d in th is L e a s e .Ifs u c h p o lic ie s s h a ln o tb e o b ta in a b le w ith s u c h w a iv e ro rs h a lb e s o o b ta in a b le o n ly a ta p re m iu m o v e rth a tc h a rg e a b le w ith o u ts u c h w a iv e r,th e n L a n d lo rd o rT e n a n ts h a ln o tify th e o th e rp a rty in w ritn g w ith in 3 0 d a y s o fb e c o m in g a w a re o fth e c o n d ito n .2 0 .8 .L a n d lo rd m a y re q u ire in s u ra n c e p o lic y lim its re q u ire d u n d e rth is L e a s e to b e ra is e d to c o n fo rm w ith re q u ire m e n ts o fL a n d lo rd s L e n d e r(p ro v id e d th a tL a n d lo rd w ilo n ly b e p e rm ite d to re v is e s u c h lim its o n e tim e in a n y fiv e (5 )y e a rp e rio d );p ro v id e d s u c h in c re a s e d lim its a re b e in g p ro v id e d b y s im ila rly s itu a te d te n a n ts o fL a n d lo rd .2 0 .9 .A n y c o s ts in c u re d b y L a n d lo rd p u rs u a n to th is A rtic le s h a lb e in c lu d e d a s In s u ra n c e E x p e n s e s p a y a b le b y T e n a n tp u rs u a n to th is L e a s e .2 0 .1 0 S e lfIn s u ra n c e .T h e O rig in a lT e n a n ts h a lh a v e th e rig h to s e lf-in s u re fo ra n y o ra lo fth e in s u ra n c e re q u ire d b y th is A rtic le 2 0 ,o n th e fo lo w in g te rm s a n d c o n d ito n s :"S e lf-in s u re "s h a lm e a n th a tT e n a n tis its e lfa c tin g a s th o u g h itw e re th e in s u ra n c e
c o m p a n y p ro v id in g th e in s u ra n c e re q u ire d u n d e rth e p ro v is io n s h e re o fa n d T e n a n ts h a lp a y a n y a m o u n ts d u e in lie u o fin s u ra n c e p ro c e e d s w h ic h w o u ld h a v e b e e n p a y a b le ifth e in s u ra n c e p o lic ie s h a d b e e n c a rie d ,w h ic h a m o u n ts s h a lb e tre a te d a s in s u ra n c e p ro c e e d s fo ra lp u rp o s e s u n d e rth is L e a s e .A la m o u n ts w h ic h T e n a n tp a y s o ris re q u ire d to p a y a n d a lo s s o rd a m a g e s re s u ltin g fro m ris k s fo rw h ic h T e n a n th a s e le c te d to s e lf-in s u re s h a lb e s u b je c to th e w a iv e ro f
4 3 s u b ro g a tio n p ro v is io n s o fS e c tio n 2 0 .7 h e re o fa n d s h a ln o tlim itT e n a n t's in d e m n ifc a tio n o b lig a tio n s s e tfo rth in S e c tio n 2 5 .1 h e re o f.T e n a n t's rig h to s e lf-in s u re a n d to c o n tin u e to s e lf-in s u re is c o n d ito n e d u p o n a n d s u b je c to :(a )T e n a n tn o w h a v in g a n d h e re a fte rm a in ta in in g a m a rk e tc a p ita liz a tio n ra te o fa tle a s tF iv e B ilo n D o la rs ($ 5 ,0 0 0 ,0 0 0 ,0 0 0 );(b )Ifre q u e s te d b y L a n d lo rd o rits m o rtg a g e e ,T e n a n tp ro v id in g a n a u d ite d fin a n c ia ls ta te m e n t,p re p a re d in a c c o rd a n c e w ith g e n e ra ly a c c e p te d a c c o u n tin g p rin c ip le s ,to L a n d lo rd a n d L a n d lo rd 's m o rtg a g e e o n c e p e ry e a rw h ic h e s ta b lis h e s a n d c o n firm s th a tT e n a n th a s th e re q u ire d n e tw o rth (p ro v id e d th a th e fo re g o in g w iln o tb e re q u ire d s o lo n g a s T e n a n tre m a in s a p u b lic ly tra d e d c o m p a n y a n d s u c h fin a n c ia lin fo rm a tio n is re a d ily a v a ila b le b y p u b lic m e a n s );(c )N o c h a n g e in u s e o c c u rin g in th e P re m is e s th a tw o u ld m a te ria ly in c re a s e th e ris k o fth e o p e ra tio n s c o n d u c te d b e in g th e re o n ;a n d (d )T e n a n tm a in ta in in g a p p ro p ria te lo s s re s e rv e s fo rth e a m o u n to fits s e lf-in s u ra n c e o b lig a tio n s u n d e rth is L e a s e a n d o th e rw is e w ith a re a c tu a ria ly d e riv e d in a c c o rd a n c e w ith a c c e p te d s ta n d a rd s o fth e in s u ra n c e in d u s try a n d a c c ru e d (i.e .,c h a rg e d a g a in s te a rn in g s )o ro th e rw is e fu n d e d .In th e e v e n tT e n a n tfa ils to fu lfith e re q u ire m e n ts o fth is S e c tio n 2 0 .1 0 ,th e n T e n a n ts h a lim m e d ia te ly lo s e th e rig h to s e lf-in s u re a n d
s h a lb e re q u ire d to p ro v id e th e in s u ra n c e s p e c ife d h e re in is s u e d b y a q u a lify in g in s u ra n c e c o m p a n y .In th e e v e n th a tT e n a n te le c ts to s e lf-in s u re a n d a n e v e n to rc la im o c c u rs fo rw h ic h a d e fe n s e a n d /o rc o v e ra g e w o u ld h a v e b e e n a v a ila b le fro m th e in s u ra n c e c o m p a n y ,T e n a n ts h a l:(1 )u n d e rta k e th e d e fe n s e o fa n y s u c h c la im ,in c lu d in g a d e fe n s e o fL a n d lo rd ,a tT e n a n t's s o le c o s ta n d e x p e n s e ,a n d (2 )u s e its o w n fu n d s to p a y a n y c la im o re p la c e p ro p e rty o ro th e rw is e p ro v id e th e fu n d in g w h ic h w o u ld h a v e b e e n a v a ila b le fro m in s u ra n c e p ro c e e d s b u tfo rs u c h e le c tio n b y T e n a n to s e lf-in s u re .In th e e v e n to fa d a m a g e o rd e s tru c tio n o fth e P re m is e s ,a n y s e lf-in s u ra n c e p ro c e e d s w ilb e p a id to L a n d lo rd a s re q u ire d b y A rtic le 2 1 o fth is L e a s e in th e s a m e m a n n e ra s th e p ro c e e d s fro m a th ird p a rty in s u re rw o u ld b e p a y a b le to L a n d lo rd .In th e e v e n th a tT e n a n te le c ts to s e lf-in s u re a d e d u c tib le o rs e lf-in s u re d re te n tio n ,T e n a n ts h a lp ro v id e L a n d lo rd a n d L a n d lo rd 's m o rtg a g e e w ith c e rtifc a te s o fin s u ra n c e fro m th e p rim a ry ,u m b re la a n d e x c e s s c a rie rs s p e c ify in g th e e x te n to fs e lf-in s u ra n c e c o v e ra g e h e re u n d e r
4 4 a n d c o n ta in in g a w a iv e ro fs u b ro g a tio n a n d /o re le a s e o frig h to fre c o v e ry p ro v is io n re a s o n a b ly s a tis fa c to ry to L a n d lo rd .A n y in s u ra n c e c o v e ra g e p ro v id e d b y T e n a n ts h a lb e fo rth e b e n e fito fT e n a n t,L a n d lo rd a n d L a n d lo rd s m o rtg a g e e ,a s th e ire s p e c tiv e in te re s ts m a y a p p e a ra n d ,s h a ln a m e th e m o rtg a g e e u n d e ra s ta n d a rd m o rtg a g e p ro v is io n .T h e o b lig a tio n s o fT e n a n tu n d e rth is S e c tio n 2 0 .1 0 a re in d e p e n d e n ta n d s h a lre m a in in fu lfo rc e a n d e fe c tn o tw ith s ta n d in g a n y b re a c h o fa n y p ro v is io n o fth is L e a s e b y L a n d lo rd .2 1 .D a m a g e o rD e s tru c tio n .2 1 .1 .S u b je c to S e c tio n 2 1 .2 ,In th e e v e n to fa p a rtia lo rc o m p le te d e s tru c tio n o fth e P re m is e s b y fire o ro th e rp e rils ,L a n d lo rd s h a lc o m m e n c e a n d p ro c e e d d ilg e n tly w ith th e w o rk o fre p a ir,e c o n s tru c tio n a n d re s to ra tio n o fth e P re m is e s ,a n d th is L e a s e s h a lc o n tin u e in fu lfo rc e a n d e fe c t.2 1 .2 .N o tw ith s ta n d in g th e te rm s o fth is A rtic le 2 1 ,L a n d lo rd m a y e le c tn o to re b u ild a n d /o re s to re th e P re m is e s a n d in s te a d te rm in a te th is L e a s e b y n o tify in g T e n a n tin w ritn g o fs u c h te rm in a tio n w ith in s ix ty (6 0 )d a y s a fte rth e d a te o fd a m a g e ,s u c h n o tic e to in c lu d e a te rm in a tio n d a te g iv in g T e n a n tn in e ty (9 0 )d a y s to v a c a te th e P re m is e s ,b u tL a n d lo rd m a y s o e le c to n ly ifth e P re m is e s o rth e B u ild in g s s h a lb e d a m a g e d b y fire o ro th e rc a s u a lty o rc a u s e o rb e s u b je c to a c o n d ito n e x is tin g a s a re s u lto fs u c h a fire o ro th e rc a s u a lty o r
c a u s e ,a n d o n e o rm o re o fth e fo lo w in g c o n d ito n s is p re s e n t:(i)n th e re a s o n a b le ju d g m e n to fa c o n tra c to rs e le c te d b y L a n d lo rd a n d re a s o n a b ly a p p ro v e d b y T e n a n t,re p a irs c a n n o tre a s o n a b ly b e c o m p le te d w ith in tw o h u n d re d fo rty (2 4 0 )d a y s o fth e d a te o fd a m a g e (w h e n s u c h re p a irs a re m a d e w ith o u th e p a y m e n to fo v e rtim e o ro th e rp re m iu m s );(ith e h o ld e ro fa n y m o rtg a g e o n th e P re m is e s o rth e B u ild in g s ,o rg ro u n d o ru n d e rly in g le s s o rw ith re s p e c to th e P re m is e s o rth e B u ild in g s (a )s h a lre q u ire th a th e in s u ra n c e p ro c e e d s o ra n y p o rtio n th e re o fb e u s e d to re tire th e m o rtg a g e d e b td u e to a n im p a irm e n to fs u c h h o ld e r's c o la te ra l,a n d th e re m a in in g p ro c e e d s a re in s u fic ie n to re p a irth e d a m a g e a n d a s a re s u lth e re o fth e d e fic ie n c y o fin s u ra n c e p ro c e e d s e x c e e d s th e "M a x im u m A m o u n t,"a s th a te rm is d e fin e d b e lo w ,a n d L a n d lo rd e le c ts n o to c o m m e n c e re p a irto th e P re m is e s w ith in o n e (1 )y e a ro fs u c h d a m a g e o rd e s tru c tio n ,o r(b )s h a lte rm in a te th e g ro u n d o ru n d e rly in g le a s e ,a s th e c a s e m a y b e ;(i)th e d o la ra m o u n to fth e d a m a g e o rc o n d ito n a ris in g a s a re s u lto fs u c h d a m a g e w h ic h is n o tfu ly c o v e re d b y L a n d lo rd 's in s u ra n c e p o lic ie s (a n d th a tw o u ld n o tb e fu ly c o v e re d b y L a n d lo rd 's in s u ra n c e p o lic ie s ifL a n d lo rd h a d c a rie d th e c o v e ra g e re q u ire d u n d e rth is L e a s e )in c lu d in g a n y d e d u c tib le a m o u n t,is e q u a lto o rg re a te rth a n T w o M ilo n D o la rs

($ 2 ,0 0 0 ,0 0 0 )(th e "M a x im u m A m o u n t"),w h ic h M a x im u m A m o u n ts h a l,a s o fth e d a te o fte rm in a tio n o fth is L e a s e ,b e e q u a lto th e p ro d u c to f(a )th e M a x im u m A m o u n ta n d (b )a fra c tio n ,th e n u m e ra to ro fw h ic h is th e n u m b e ro fu lm o n th s re m a in in g in th e th e n -c u re n tT e rm ,o rw h e n a p p ro p ria te th e O p tio n T e rm th e n a p p lic a b le ,a s o fth e d a te o fth e te rm in a tio n o fth is L e a s e ,a n d th e d e n o m in a to ro fw h ic h is 1 8 0 (o r,ifa p p lic a b le ,6 0 d u rin g a n O p tio n T e rm )a n d L a n d lo rd e le c ts n o to c o m m e n c e re p a irto th e P re m is e s o rB u ild in g s w ith in o n e (1 )y e a ro fs u c h d a m a g e o rd e s tru c tio n ;o r(iv )th e d a m a g e o c c u rs d u rin g th e la s tw e n ty -fo u r(2 4 )m o n th s o fth e T e rm ,a s s u c h T e rm m a y h a v e b e e n e x te n d e d b y T e n a n tp u rs u a n to th is L e a s e ;p ro v id e d ,h o w e v e r,th a tifL a n d lo rd d o e s n o te le c to te rm in a te th is L e a s e p u rs u a n to L a n d lo rd 's te rm in a tio n rig h ta s p ro v id e d a b o v e ,a n d th e re p a irs o fs u c h d a m a g e
 4 5 c a n n o t,in th e re a s o n a b le o p in io n o fa c o n tra c to rs e le c te d b y L a n d lo rd a n d re a s o n a b ly a p p ro v e d b y T e n a n t,b e c o m p le te d w ith in tw e lv e (1 2 )m o n th s a fte rb e in g c o m m e n c e d ,T e n a n tm a y e le c t,n o tla te rth a n th irty (3 0 )d a y s a fte rth e d a te o fs u c h d a m a g e ,to te rm in a te th is L e a s e b y w rite n n o tic e to L a n d lo rd e fe c tiv e a s o fth e d a te s p e c ife d in th e n o tic e .A ta n y tim e ,fro m tim e to tim e ,a fte rth e d a te o c c u rin g th irty (3 0 )d a y s a fte rth e d a te o fth e d a m a g e ,b u tin n o e v e n tm o re th a n o n c e e v e ry fo rty -fiv e (4 5 )d a y s ,T e n a n tm a y re q u e s th a tL a n d lo rd p ro v id e T e n a n tw ith a c e rtifc a te fro m th e a rc h ite c to rc o n tra c to rd e s c rib e d a b o v e s e tin g fo rth s u c h a rc h ite c t's o rc o n tra c to rs 're a s o n a b le o p in io n o fth e d a te o fc o m p le tio n o fth e re p a irs a n d L a n d lo rd s h a lre s p o n d to s u c h re q u e s tw ith in fite e n (1 5 )b u s in e s s d a y s .2 1 .3 .L a n d lo rd s h a lg iv e w rite n n o tic e to T e n a n tw ith in s ix ty (6 0 )d a y s fo lo w in g th e d a te o fd a m a g e o rd e s tru c tio n o fits e le c tio n n o to re p a ir,e c o n s tru c to re s to re th e P re m is e s .2 1 .4 .U p o n a n y te rm in a tio n o fth is L e a s e u n d e ra n y o fth e p ro v is io n s o fth is A rtic le ,th e p a rtie s s h a lb e re le a s e d th e re b y w ith o u tfu rth e ro b lig a tio n to th e o th e rfo m th e d a te p o s s e s s io n o fth e P re m is e s is s u re n d e re d to L a n d lo rd ,e x c e p tw ith re g a rd to (a )ite m s o c c u rin g p rio rto th e d a m a g e o rd e s tru c tio n a n d (b )p ro v is io n s o fth is L e a s e th a t,b y th e ire x p re s s te rm s ,s u rv iv e th e e x p ira tio n o re a rlie rte rm in a tio n h e re o f.2 1 .5 .In th e
e v e n to fre p a ir,e c o n s tru c tio n a n d re s to ra tio n a s p ro v id e d in th is A rtic le ,a lR e n to b e p a id b y T e n a n tu n d e rth is L e a s e s h a lb e a b a te d p ro p o rtio n a te ly b a s e d o n th e e x te n to w h ic h T e n a n ts u s e o fth e P re m is e s is im p a ire d d u rin g th e p e rio d o fs u c h re p a ir,e c o n s tru c tio n o re s to ra tio n ,u n le s s L a n d lo rd p ro v id e s T e n a n tw ith o th e rs p a c e d u rin g th e p e rio d o fre p a ir,e c o n s tru c tio n a n d re s to ra tio n th a t,in T e n a n ts s o le ,b u tre a s o n a b le o p in io n ,is s u ita b le fo rth e te m p o ra ry c o n d u c to fT e n a n ts b u s in e s s .2 1 .6 .N o tw ith s ta n d in g a n y th in g to th e c o n tra ry c o n ta in e d in th is A rtic le ,s h o u ld L a n d lo rd b e d e la y e d o rp re v e n te d fro m c o m p le tin g th e re p a ir,e c o n s tru c tio n o re s to ra tio n o fth e d a m a g e o rd e s tru c tio n to th e P re m is e s a fte rth e o c c u re n c e o fs u c h d a m a g e o rd e s tru c tio n b y F o rc e M a je u re (b u tin n o e v e n ts h a lF o rc e M a je u re d e la y s e x c e e d n in e ty (9 0 )d a y s )o rd e la y s c a u s e d b y a T e n a n tP a rty ,o rd u e to d e la y s in o b ta in in g c le a ra n c e s o ra u th o riz a tio n re la tin g to a n y H a z a rd o u s M a te ria ls u s e d b y T e n a n t,h e n th e tim e fo rL a n d lo rd to c o m m e n c e o rc o m p le te re p a irs ,re c o n s tru c tio n a n d re s to ra tio n s h a lb e e x te n d e d o n a d a y -fo r-d a y b a s is ;p ro v id e d ,h o w e v e r,th a t,a tL a n d lo rd s e le c tio n ,L a n d lo rd s h a lb e re lie v e d o fits o b lig a tio n to m a k e s u c h re p a irs ,re c o n s tru c tio n a n d re s to ra tio n a n d m a y in s te a d te rm in a te th is L e a s e b y w rite n n o tic e d e liv e re d to T e n a n tin th e e v e n th a t

th e a g g re g a te a m o u n to fa n y s u c h d e la y s e x c e e d tw e lv e (1 2 )m o n th s (p ro v id e d ,fu rth e r,th a tfo rp u rp o s e s o fd e te rm in in g w h e th e rth e a g g re g a te a m o u n to fd e la y s e x c e e d s tw e lv e (1 2 )m o n th s ,th e n u m b e ro fd a y s o fF o rc e M a je u re d e la y s s h a ln o tb e lim ite d to n in e ty (9 0 )d a y s b u tra th e rs h a lb e u n c a p p e d ).2 1 .7 .IfL a n d lo rd is o b lig a te d to o re le c ts to re p a ir,e c o n s tru c to re s to re a s h e re in p ro v id e d ,th e n L a n d lo rd s h a lb e o b lig a te d to m a k e s u c h re p a irs ,re c o n s tru c tio n o re s to ra tio n o n ly w ith re g a rd to th o s e p o rtio n s o fth e P re m is e s th a tw e re o rig in a ly p ro v id e d a tL a n d lo rd s e x p e n s e .T h e re p a irs ,re c o n s tru c tio n o re s to ra tio n o fim p ro v e m e n ts n o to rig in a ly p ro v id e d b y L a n d lo rd o ra tL a n d lo rd s e x p e n s e s h a lb e th e o b lig a tio n o fT e n a n t.In th e e v e n tT e n a n th a s
4 6 e le c te d to u p g ra d e c e rta in im p ro v e m e n ts fro m L a n d lo rd s b u ild in g s ta n d a rd s (th e B u ild in g S ta n d a rd ),L a n d lo rd s h a l,u p o n th e n e e d fo re p la c e m e n td u e to a n in s u re d lo s s ,p ro v id e o n ly th e B u ild in g S ta n d a rd ,u n le s s T e n a n ta g a in e le c ts to u p g ra d e s u c h im p ro v e m e n ts a n d p a y a n y in c re m e n ta lc o s ts re la te d th e re to ,e x c e p to th e e x te n th a te x c e s s in s u ra n c e p ro c e e d s ,ifre c e iv e d ,a re a d e q u a te to p ro v id e s u c h u p g ra d e s ,in a d d ito n to p ro v id in g fo rb a s ic re p a irs ,re c o n s tru c tio n a n d re s to ra tio n o fth e P re m is e s .2 1 .8 .N o tw ith s ta n d in g a n y th in g to th e c o n tra ry c o n ta in e d in th is A rtic le ,L a n d lo rd s h a ln o th a v e a n y o b lig a tio n w h a ts o e v e rto re p a ir,e c o n s tru c to re s to re th e P re m is e s ifth e d a m a g e re s u ltin g fro m a n y c a s u a lty c o v e re d u n d e rth is A rtic le o c c u rs d u rin g th e la s tw e n ty -fo u r(2 4 )m o n th s o fth e T e rm o ra n y e x te n s io n th e re o f,a n d w ilta k e m o re th a n o n e h u n d re d e ig h ty (1 8 0 )d a y s to c o m p le te o rto th e e x te n th a tin s u ra n c e p ro c e e d s a re n o ta v a ila b le th e re fo r.2 1 .9 .L a n d lo rd s o b lig a tio n ,s h o u ld ite le c to rb e o b lig a te d to re p a ir,e c o n s tru c to re s to re ,s h a lb e lim ite d to th e P ro je c ta n d B a s e B u ild in g Wo rk .T e n a n ts h a l,a tis e x p e n s e ,re p la c e o rfu ly re p a ira lo fT e n a n ts p e rs o n a lp ro p e rty a n d a n y A lte ra tio n s in s ta le d b y T e n a n te x is tin g a th e tim e o fs u c h d a m a g e o rd e s tru c tio n .Ifth e P re m is e s a re to b e re p a ire d ,re c o n s tru c te d o re s to re d in a c c o rd a n c e w ith th e fo re g o in g ,
L a n d lo rd s h a lm a k e a v a ila b le to T e n a n ta n y p o rtio n o fin s u ra n c e p ro c e e d s itre c e iv e s th a ta re a lo c a b le to th e A lte ra tio n s c o n s tru c te d b y T e n a n tp u rs u a n to th is L e a s e ,a n d s u b je c to th e re q u ire m e n ts o fa n y L e n d e ro fL a n d lo rd (ifa p p lic a b le ).2 1 .1 0 .In a d d ito n to its te rm in a tio n rig h tin S e c tio n 2 1 .2 a b o v e ,T e n a n ts h a lh a v e th e rig h to te rm in a te th is L e a s e ifa n y d a m a g e to th e B u ild in g s o rP re m is e s :(a )o c c u rs d u rin g th e la s tw e lv e (1 2 )m o n th s o fth e T e rm o fth is L e a s e (in c lu d in g th e la s tw e lv e (1 2 )m o n th s o fa n y O p tio n T e rm ,ifa p p lic a b le );o r(b )c a u s e s T e n a n to b e u n a b le to o c c u p y m o re th a n tw e n ty -fiv e p e rc e n t(2 5 % )o fth e P re m is e s .2 1 .1 1 .T h is A rtic le s e ts fo rth th e te rm s a n d c o n d ito n s u p o n w h ic h th is L e a s e m a y te rm in a te in th e e v e n to fa n y d a m a g e o rd e s tru c tio n .A c c o rd in g ly ,th e p a rtie s h e re b y w a iv e th e p ro v is io n s o fC a lifo rn ia C iv ilC o d e S e c tio n s 1 9 3 2 (2 )a n d 1 9 3 3 (4 )(a n d a n y s u c c e s s o rs ta tu te s p e rm itn g th e p a rtie s to te rm in a te th is L e a s e a s a re s u lto fa n y d a m a g e o rd e s tru c tio n ).2 2 .E m in e n tD o m a in .2 2 .1 .T o ta lT a k in g T e rm in a tio n .In th e e v e n th e w h o le o fth e P re m is e s ,o rs u c h p a rth e re o fs o th a tre c o n s tru c tio n o fth e P re m is e s w iln o tre s u ltin th e P re m is e s b e in g re a s o n a b ly s u ita b le (a s re a s o n a b ly d e te rm in e d b y L a n d lo rd a n d T e n a n t)fo rT e n a n t's c o n tin u e d o c c u p a n c y fo rth e u s e s a n d p u rp o s e s p e rm ite d b y th is L e a s e ,s h a lb e ta k e n fo ra n y p u b lic o r

q u a s i-p u b lic p u rp o s e b y a n y la w fu lp o w e ro ra u th o rity b y e x e rc is e o fth e rig h to fa p p ro p ria tio n ,c o n d e m n a tio n o re m in e n td o m a in ,o rs o ld to p re v e n ts u c h ta k in g ,T e n a n to rL a n d lo rd m a y te rm in a te th is L e a s e e fe c tiv e a s o fth e d a te p o s s e s s io n is re q u ire d to b e s u re n d e re d to s a id a u th o rity .2 2 .2 .P a rtia lT a k in g .In th e e v e n to fa p a rtia lta k in g o fth e P re m is e s ,o ro fd riv e s ,w a lk w a y s o rp a rk in g a re a s s e rv in g th e P re m is e s fo ra n y p u b lic o rq u a s i-p u b lic p u rp o s e b y a n y la w fu lp o w e ro ra u th o rity b y e x e rc is e o frig h to fa p p ro p ria tio n ,c o n d e m n a tio n ,o re m in e n t
4 7 d o m a in ,o rs o ld to p re v e n ts u c h ta k in g ,th e n ,w ith o u tre g a rd to w h e th e ra n y p o rtio n o fth e P re m is e s o c c u p ie d b y T e n a n tw a s s o ta k e n ,L a n d lo rd m a y e le c to te rm in a te th is L e a s e a s o fs u c h ta k in g ifs u c h ta k in g is ,in L a n d lo rd 's s o le o p in io n ,o fa m a te ria ln a tu re s u c h a s to m a k e itu n e c o n o m ic a lto c o n tin u e u s e o fth e u n a p p ro p ria te d p o rtio n fo rp u rp o s e s o fre n tin g o fic e o rla b o ra to ry s p a c e .Ifa n y p a rtia lta k in g (i)m a te ria ly in te rfe re s w ith T e n a n ts u s e o fth e P re m is e s fo rth e P e rm ite d U s e a n d (i)p re v e n ts T e n a n tfro m a c c e s s in g th e P re m is e s o rth e p a rk in g a re a s o fth e P ro je c tw h e re n o s u b s tiu te p a rk in g is m a d e a v a ila b le ,a n d s u c h p a rtia lta k in g c o n tin u e s fo rm o re th a n o n e h u n d re d e ig h ty (1 8 0 )d a y s ,T e n a n tw ilh a v e th e rig h to te rm in a te th is L e a s e b y d e liv e ry o fw rite n n o tic e g iv e n w ith in te n (1 0 )b u s in e s s d a y s a fte rth e e x p ira tio n o fs u c h o n e h u n d re d e ig h ty (1 8 0 )d a y p e rio d .2 2 .3 .T e n a n ts h a lb e e n tile d to a n y a w a rd th a tis s p e c ifc a ly a w a rd e d a s c o m p e n s a tio n fo r(a )th e ta k in g o fT e n a n t's p e rs o n a lp ro p e rty th a tw a s in s ta le d a tT e n a n t's e x p e n s e a n d (b )th e c o s ts o fT e n a n tm o v in g to a n e w lo c a tio n .E x c e p ta s s e tfo rth in th is A rtic le 2 2 ,a n y a w a rd fo rs u c h ta k in g s h a lb e th e p ro p e rty o fL a n d lo rd .2 2 .4 .If,u p o n a n y ta k in g o fth e n a tu re d e s c rib e d in th is A rtic le ,th is L e a s e c o n tin u e s in e fe c t,h e n L a n d lo rd s h a lp ro m p tly p ro c e e d to re s to re th e P re m is e s to s u b s ta n tia ly th e irs a m e

c o n d ito n p rio rto s u c h p a rtia lta k in g .T o th e e x te n ts u c h re s to ra tio n is in fe a s ib le ,a s d e te rm in e d b y L a n d lo rd in its s o le a n d a b s o lu te d is c re tio n ,th e R e n ts h a lb e d e c re a s e d p ro p o rtio n a te ly to re fle c th e lo s s o fa n y p o rtio n o fth e P re m is e s n o lo n g e ra v a ila b le to T e n a n t.2 2 .5 .T h is A rtic le s e ts fo rth th e te rm s a n d c o n d ito n s u p o n w h ic h th is L e a s e m a y te rm in a te in th e e v e n to fa n y d a m a g e o rd e s tru c tio n .A c c o rd in g ly ,th e p a rtie s h e re b y w a iv e th e p ro v is io n s o fC a lifo rn ia C o d e o fC iv ilP ro c e d u re S e c tio n 1 2 6 5 .1 3 0 (a n d a n y s u c c e s s o rs ta tu te s p e rm itn g th e p a rtie s to te rm in a te th is L e a s e a s a re s u lto fa n y d a m a g e o rd e s tru c tio n ).2 2 .6 .T e n a n ts h a lh a v e th e rig h to file a n y s e p a ra te c la im a v a ila b le to T e n a n tfo ra n y ta k in g o fT e n a n ts p e rs o n a lp ro p e rty a n d fix tu re s b e lo n g in g to T e n a n ta n d re m o v a b le b y T e n a n tu p o n e x p ira tio n o fth e T e rm in a c c o rd a n c e w ith th e te rm s o fth is L e a s e ,a n d fo rm o v in g e x p e n s e s ,s o lo n g a s s u c h c la im is p a y a b le s e p a ra te ly to T e n a n ta n d d o e s n o td im in is h L a n d lo rd s c la im .2 3 .S u re n d e r.2 3 .1 .P rio rto T e n a n ts s u re n d e ro fp o s s e s s io n o fa n y p a rto fth e P re m is e s ,T e n a n ts h a lp ro v id e L a n d lo rd w ith a fa c ilty d e c o m m is s io n in g a n d H a z a rd o u s M a te ria ls c lo s u re p la n fo rth e P re m is e s (E x itS u rv e y )p re p a re d b y a n in d e p e n d e n th ird p a rty s ta te -c e rtife d p ro fe s s io n a lw ith a p p ro p ria te e x p e rtis e ,w h ic h E x itS u rv e y m u s tb e re a s o n a b ly a c c e p ta b le
to L a n d lo rd .T h e E x itS u rv e y s h a lc o m p ly w ith th e A m e ric a n N a tio n a lS ta n d a rd s In s tiu te s L a b o ra to ry D e c o m m is s io n in g g u id e lin e s (A N S I/A IH A Z 9 .1 1 -2 0 0 8 )o ra n y s u c c e s s o rs ta n d a rd s p u b lis h e d b y A N S Io ra n y s u c c e s s o ro rg a n iz a tio n (o r,ifA N S Ia n d its s u c c e s s o rs n o lo n g e re x is t,a s im ila re n tiy p u b lis h in g s im ila rs ta n d a rd s ).In a d d ito n ,a tle a s te n (1 0 )d a y s p rio rto T e n a n ts s u re n d e ro fp o s s e s s io n o fa n y p a rto fth e P re m is e s ,T e n a n ts h a l(a )p ro v id e L a n d lo rd w ith w rite n e v id e n c e o fa la p p ro p ria te g o v e rn m e n ta lre le a s e s o b ta in e d b y T e n a n tin a c c o rd a n c e w ith A p p lic a b le L a w s ,in c lu d in g la w s p e rta in in g to th e s u re n d e ro fth e P re m is e s ,(b )p la c e L a b o ra to ry
 4 8 E q u ip m e n tD e c o n ta m in a tio n F o rm s o n a ld e c o m m is s io n e d e q u ip m e n to a s s u re s a fe o c c u p a n c y b y fu tu re u s e rs a n d (c )c o n d u c ta s ite in s p e c tio n w ith L a n d lo rd .In a d d ito n ,T e n a n ta g re e s to re m a in re s p o n s ib le a fte rth e s u re n d e ro fth e P re m is e s fo rth e re m e d ia tio n o fa n y re c o g n iz e d e n v iro n m e n ta lc o n d ito n s s e tfo rth in th e E x itS u rv e y a n d c o m p ly w ith a n y re c o m m e n d a tio n s s e tfo rth in th e E x itS u rv e y .T e n a n ts o b lig a tio n s u n d e rth is S e c tio n s h a ls u rv iv e th e e x p ira tio n o re a rlie rte rm in a tio n o fth e L e a s e .2 3 .2 .N o s u re n d e ro fp o s s e s s io n o fa n y p a rto fth e P re m is e s s h a lre le a s e T e n a n tfro m a n y o fits o b lig a tio n s h e re u n d e r,u n le s s s u c h s u re n d e ris a c c e p te d in w ritn g b y L a n d lo rd .2 3 .3 .T h e v o lu n ta ry o ro th e rs u re n d e ro fth is L e a s e b y T e n a n ts h a ln o te fe c ta m e rg e rw ith L a n d lo rd s fe e tile o rle a s e h o ld in te re s tin th e P re m is e s o ra n y p o rtio n th e re o f,u n le s s L a n d lo rd c o n s e n ts in w ritn g ,a n d s h a l,a tL a n d lo rd s o p tio n ,o p e ra te a s a n a s s ig n m e n to L a n d lo rd o fa n y o ra ls u b le a s e s .2 3 .4 .T h e v o lu n ta ry o ro th e rs u re n d e ro fa n y g ro u n d o ro th e ru n d e rly in g le a s e th a tn o w e x is ts o rm a y h e re a fte rb e e x e c u te d a fe c tin g th e P re m is e s o ra n y p o rtio n th e re o f,o ra m u tu a lc a n c e la tio n th e re o fo ro fL a n d lo rd s in te re s th e re in b y L a n d lo rd a n d its le s s o rs h a ln o te fe c ta m e rg e rw ith L a n d lo rd s fe e tile o rle a s e h o ld in te re s tin th e P re m is e s a n d s h a l,a th e o p tio n o fth e s u c c e s s o rto

L a n d lo rd s in te re s tin th e P re m is e s o ra n y p o rtio n th e re o fo p e ra te a s a n a s s ig n m e n to fth is L e a s e .2 4 .H o ld in g O v e r.2 4 .1 .If,w ith L a n d lo rd s p rio rw rite n c o n s e n t,T e n a n th o ld s p o s s e s s io n o fa lo ra n y p a rto fth e P re m is e s a fte rth e T e rm ,T e n a n ts h a lb e c o m e a te n a n tfro m m o n th to m o n th a fte rth e e x p ira tio n o re a rlie rte rm in a tio n o fth e T e rm ,a n d in s u c h c a s e T e n a n ts h a lc o n tin u e to p a y (a )B a s e R e n tin a c c o rd a n c e w ith S e c tio n 2 .3 a n d A rtic le 5 ,a s a d ju s te d in a c c o rd a n c e w ith A rtic le 6 ,a n d (b )a n y a m o u n ts fo rw h ic h T e n a n tw o u ld o th e rw is e b e lia b le u n d e rth is L e a s e ifth e L e a s e w e re s tiln e fe c t,in c lu d in g p a y m e n ts fo rT a x e s ,O p e ra tin g E x p e n s e s ,In s u ra n c e E x p e n s e s a n d T e n a n ts e le c tric ity a n d o th e ru tily c o s ts .A n y s u c h m o n th -to -m o n th te n a n c y s h a lb e s u b je c to e v e ry o th e rte rm ,c o v e n a n ta n d a g re e m e n tc o n ta in e d h e re in .2 4 .2 .N o tw ith s ta n d in g th e fo re g o in g ,ifT e n a n tre m a in s in p o s s e s s io n o fth e P re m is e s a fte rth e e x p ira tio n o re a rlie rte rm in a tio n o fth e T e rm w ith o u tL a n d lo rd s p rio rw rite n c o n s e n t,(a )T e n a n ts h a lb e c o m e a te n a n ta ts u fe ra n c e s u b je c to th e te rm s a n d c o n d ito n s o fth is L e a s e ,e x c e p th a th e m o n th ly re n ts h a lb e e q u a lto (a )fo rth e firs th re e (3 )m o n th s th a tT e n a n tre m a in s in p o s s e s s io n o fth e P re m is e s a fte rth e e x p ira tio n o re a rlie rte rm in a tio n o fth is L e a s e ,o n e h u n d re d fite e n p e rc e n t(1 1 5 % )o fth e B a s e R e n tin e fe c td u rin g th e la s th irty (3 0 )d a y s o fth e T e rm ;a n d (b )
fo ra n y tim e th e re a fte rth a tT e n a n tre m a in s in p o s s e s s io n o fth e P re m is e s a fte rth e e x p ira tio n o re a rlie rte rm in a tio n o fth is L e a s e ,o n e h u n d re d fity p e rc e n t(1 5 0 % )o fth e B a s e R e n tin e fe c td u rin g th e la s th irty (3 0 )d a y s o fth e T e rm ,a n d (c )T e n a n ts h a lb e lia b le to L a n d lo rd fo ra n y a n d a ld a m a g e s s u fe re d b y L a n d lo rd a s a re s u lto fa n y h o ld o v e rfo rm o re th a n n in e ty (9 0 )d a y s ,in c lu d in g a n y lo s tre n to rc o n s e q u e n tia l,s p e c ia la n d in d ire c td a m a g e s (in e a c h c a s e ,re g a rd le s s o fw h e th e rs u c h d a m a g e s a re fo re s e e a b le ).
 4 9 2 4 .3 .A c c e p ta n c e b y L a n d lo rd o fR e n ta fte rth e e x p ira tio n o re a rlie rte rm in a tio n o fth e T e rm s h a ln o tre s u ltin a n e x te n s io n ,re n e w a lo re in s ta te m e n to fth is L e a s e .2 4 .4 .T h e fo re g o in g p ro v is io n s o fth is A rtic le a re in a d d ito n to a n d d o n o ta fe c tL a n d lo rd s rig h to fre e n try o ra n y o th e rig h ts o fL a n d lo rd h e re u n d e ro ra s o th e rw is e p ro v id e d b y A p p lic a b le L a w s .2 4 .5 .T h e p ro v is io n s o fth is A rtic le s h a ls u rv iv e th e e x p ira tio n o re a rlie rte rm in a tio n o fth is L e a s e .2 5 .In d e m n ifc a tio n a n d E x c u lp a tio n .2 5 .1 .T e n a n ta g re e s to in d e m n ify ,s a v e ,d e fe n d (a tL a n d lo rd s o p tio n a n d w ith c o u n s e lre a s o n a b ly a c c e p ta b le to L a n d lo rd )a n d h o ld th e L a n d lo rd In d e m n ite e s h a rm le s s fro m a n d a g a in s ta n y a n d a lC la im s o fa n y k in d o rn a tu re ,re a lo ra le g e d ,a ris in g fro m (a )in ju ry to o rd e a th o fa n y p e rs o n o rd a m a g e to a n y p ro p e rty o c c u rin g w ith in o ra b o u th e P re m is e s a ris in g d ire c tly o rin d ire c tly o u to fth e p re s e n c e a to ru s e o ro c c u p a n c y o fth e P re m is e s o rP ro je c tb y a T e n a n tP a rty ,(b )a n a c to ro m is s io n o n th e p a rto fa n y T e n a n tP a rty ,(c )a b re a c h o rd e fa u ltb y T e n a n tin th e p e rfo rm a n c e o fa n y o fits o b lig a tio n s h e re u n d e ro r(d )in ju ry to o rd e a th o fp e rs o n s o rd a m a g e to o rlo s s o fa n y p ro p e rty ,re a lo ra le g e d ,a ris in g fro m th e s e rv in g o fa lc o h o lic b e v e ra g e s a th e P re m is e s o rP ro je c t,in c lu d in g lia b ilty u n d e ra n y d ra m s h o p la w ,h o s tliq u o rla w o rs im ila rA p p lic a b le L a w ,e x c e p to th e e x te n tc a u s e d b y L a n d lo rd s

n e g lig e n c e o rw ilfu lm is c o n d u c t.T e n a n ts o b lig a tio n s u n d e rth is S e c tio n s h a ln o tb e a fe c te d ,re d u c e d o rlim ite d b y a n y lim ita tio n o n th e a m o u n to rty p e o fd a m a g e s ,c o m p e n s a tio n o rb e n e fits p a y a b le b y o rfo rT e n a n tu n d e rw o rk e rs c o m p e n s a tio n a c ts ,d is a b ilty b e n e fita c ts ,e m p lo y e e b e n e fita c ts o rs im ila rle g is la tio n .T e n a n ts o b lig a tio n s u n d e rth is S e c tio n s h a ls u rv iv e th e e x p ira tio n o re a rlie rte rm in a tio n o fth is L e a s e .S u b je c to S e c tio n s 2 0 .7 ,2 5 .2 a n d 2 8 .1 3 a n d a n y s u b ro g a tio n p ro v is io n s c o n ta in e d in th e Wo rk L e te r,L a n d lo rd a g re e s to in d e m n ify ,s a v e ,d e fe n d (a tT e n a n ts o p tio n a n d w ith c o u n s e lre a s o n a b ly a c c e p ta b le to T e n a n t)a n d h o ld th e T e n a n tP a rtie s h a rm le s s fro m a n d a g a in s ta n y a n d a lC la im s a ris in g fro m in ju ry to o rd e a th o fa n y p e rs o n o rd a m a g e to o rlo s s o fa n y p h y s ic a lp ro p e rty o c c u rin g w ith in o ra b o u th e P re m is e s to th e e x te n td ire c tly a ris in g o u to f(i)a d e fa u ltb y L a n d lo rd u n d e rth is L e a s e o r(i)L a n d lo rd s g ro s s n e g lig e n c e o rw ilfu lm is c o n d u c t.T e n a n ts h a ln o tb e lia b le fo ra n y d a m a g e s to th e e x te n ta ris in g fro m a n y a c t,o m is s io n o rn e g le c to fa n y o th e rte n a n to rin th e P ro je c t,e x c e p to th e e x te n ta T e n a n tP a rty c o m m ite d s u c h a c t,o m is s io n o rn e g le c t.2 5 .2 .S u b je c to S e c tio n 1 3 .9 a b o v e a n d L a n d lo rd s in d e m n ity o b lig a tio n s a b o v e ,L a n d lo rd s h a ln o tb e lia b le to T e n a n tfo ra n d T e n a n ta s s u m e s a lris k o fd a m a g e o rlo s s e s c a u s e d b y fire ,
e le c tric a lm a lfu n c tio n ,g a s e x p lo s io n o rw a te rd a m a g e o fa n y ty p e (in c lu d in g b ro k e n w a te rlin e s ,m a lfu n c tio n in g fire s p rin k le rs y s te m s ,ro o fle a k s o rs to p p a g e s o flin e s ),u n le s s a n y s u c h lo s s is d u e to L a n d lo rd s w ilfu ld is re g a rd o fw rite n n o tic e b y T e n a n to fn e e d fo ra re p a irth a tL a n d lo rd is re s p o n s ib le to m a k e fo ra n u n re a s o n a b le p e rio d o ftim e (g iv e n th e c irc u m s ta n c e s ).N o tw ith s ta n d in g a n y th in g to th e c o n tra ry c o n ta in e d in th is L e a s e ,L a n d lo rd s h a ln o tb e lia b le u n d e ra n y c irc u m s ta n c e s fo rd a m a g e to p e rs o n a lp ro p e rty o rs c ie n tifc re s e a rc h ,in c lu d in g lo s s o fre c o rd s k e p tb y T e n a n tw ith in th e P re m is e s (in e a c h c a s e ,re g a rd le s s o fw h e th e rs u c h d a m a g e s a re fo re s e e a b le ).T e n a n tfu rth e rw a iv e s a n y c la im fo rin ju ry to T e n a n t's b u s in e s s
5 0 o rlo s s o fin c o m e re la tin g to a n y s u c h d a m a g e o rd e s tru c tio n o fp e rs o n a lp ro p e rty a s d e s c rib e d in th is S e c tio n 2 5 .2 .2 5 .3 .L a n d lo rd s h a ln o tb e lia b le fo ra n y d a m a g e s a ris in g fro m a n y a c t,o m is s io n o rn e g le c to fa n y th ird p a rty o th e rth a n th e g ro s s n e g lig e n c e o rw ilfu lm is c o n d u c to fa n y L a n d lo rd P a rtie s .2 5 .4 .T e n a n ta c k n o w le d g e s th a ts e c u rity d e v ic e s a n d s e rv ic e s ,ifa n y ,w h ile in te n d e d to d e te rc rim e ,m a y n o tin g iv e n in s ta n c e s p re v e n th e fto ro th e rc rim in a la c ts .L a n d lo rd s h a ln o tb e lia b le fo rin ju rie s o rlo s s e s c a u s e d b y c rim in a la c ts o fth ird p a rtie s ,a n d T e n a n ta s s u m e s th e ris k th a ta n y s e c u rity d e v ic e o rs e rv ic e m a y m a lfu n c tio n o ro th e rw is e b e c irc u m v e n te d b y a c rim in a l.IfT e n a n td e s ire s p ro te c tio n a g a in s ts u c h c rim in a la c ts ,th e n T e n a n ts h a l,a tT e n a n ts s o le c o s ta n d e x p e n s e ,o b ta in a p p ro p ria te in s u ra n c e c o v e ra g e .2 5 .5 .N o tw ith s ta n d in g a n y c o n tra ry p ro v is io n o fth is L e a s e ,n e ith e rL a n d lo rd n o rT e n a n ts h a lb e lia b le to th e o th e rp a rty fo ra n y c o n s e q u e n tia ld a m a g e s ,lo s s o fb u s in e s s o rp ro fito ra b re a c h o rd e fa u ltu n d e rth is L e a s e ;p ro v id e d th a th is s e n te n c e s h a ln o tlim itL a n d lo rd 's d a m a g e s if,a s a re s u lto fT e n a n t's h o ld o v e rfo ra p e rio d in e x c e s s o fn in e ty (9 0 )d a y s a fte rth e e x p ira tio n o re a rlie rte rm in a tio n o fth is L e a s e :(a )L a n d lo rd d o e s n o to ris u n a b le to le a s e th e P re m is e s to a n o th e rp a rty ,o r(b )a th ird p a rty is u n a b le to o c c u p y th e P re m is e s o n th e

d a te s p e c ife d in s u c h th ird p a rty 's le a s e .2 5 .6 .T h e p ro v is io n s o fth is A rtic le s h a ls u rv iv e th e e x p ira tio n o re a rlie rte rm in a tio n o fth is L e a s e .2 6 .A s s ig n m e n to rS u b le tin g .2 6 .1 .E x c e p ta s h e re in a fte re x p re s s ly p e rm ite d ,T e n a n ts h a ln o t,e ith e rv o lu n ta rily o rb y o p e ra tio n o fA p p lic a b le L a w s ,d ire c tly o rin d ire c tly s e l,h y p o th e c a te ,a s s ig n ,p le d g e ,e n c u m b e ro ro th e rw is e tra n s fe rth is L e a s e ,o rs u b le th e P re m is e s o ra n y p a rth e re o f(e a c h ,a "T ra n s fe r"),w ith o u tL a n d lo rd 's p rio rw rite n c o n s e n t,w h ic h c o n s e n tL a n d lo rd m a y n o tu n re a s o n a b ly w ith h o ld ,c o n d ito n o rd e la y .T e n a n ts h a lh a v e th e rig h to T ra n s fe rw ith o u tL a n d lo rd 's p rio rw rite n c o n s e n th e P re m is e s o ra n y p o rtio n th e re o fto a n y p e rs o n o re n tiy th a t:(a )d ire c tly ,o rin d ire c tly th ro u g h o n e o rm o re in te rm e d ia rie s ,(i)c o n tro ls ,is c o n tro le d b y ,o ris u n d e rc o m m o n c o n tro lw ith T e n a n t,(i)a c q u ire s a lo rs u b s ta n tia ly a lo fth e a s s e ts o fT e n a n t,o r(i)s th e re s u ltin g e n tiy o fa m e rg e ro rc o n s o lid a tio n o fT e n a n tw ith a n o th e re n tiy ,a n d (b )h a s a n e tw o rth e q u a lto T w o H u n d re d M ilo n D o la rs ($ 2 0 0 ,0 0 0 ,0 0 0 )(e a c h ,a "T e n a n t's A fila te "),p ro v id e d (1 )T e n a n ts h a ln o tify L a n d lo rd in w ritn g a tle a s te n (1 0 )d a y s p rio rto th e e fe c tiv e n e s s o fs u c h T ra n s fe rto T e n a n t's A fila te (a n "E x e m p tT ra n s fe r"),u n le s s p ro v id in g s u c h n o tifc a tio n to L a n d lo rd w o u ld v io la te a c o n fid e n tia lity a g re e m e n tb e tw e e n T e n a n ta n d th e T e n a n ts A fila te (p ro v id e d ,h o w e v e r,th a tT e n a n ts h a lu s e its b e s te fo rts to
e n s u re th a ts u c h c o n fid e n tia lity a g re e m e n tp e rm its T e n a n to p ro v id e th e n o tifc a tio n re q u ire d u n d e rth is s u b s e c tio n 2 6 .1 (b )(1 ),in w h ic h e v e n tT e n a n ts h a lp ro v id e s u c h n o tifc a tio n a s s o o n a s s u c h n o tifc a tio n is p e rm is s ib le u n d e rth e c o n fid e n tia lity a g re e m e n t;a n d (2 )T e n a n tre m a in s fu ly a n d p rim a rily lia b le u n d e rth is L e a s e (in c lu d in g in c o n n e c tio n w ith a n y e x te n s io n o re x p a n s io n o fth is L e a s e a n d T e n a n ts o b lig a tio n s h e re u n d e rb y a n y s u c h T e n a n ts A fila te ,in c lu d in g ,w ith o u t
 5 1 lim ita tio n a n y e x e rc is e o fth e rig h ts g ra n te d p u rs u a n to S e c tio n s 3 7 .2 2 ,3 9 o r4 0 b e lo w ).F o rp u rp o s e s o fE x e m p tT ra n s fe rs ,"c o n tro l"re q u ire s b o th (y )o w n in g (d ire c tly o rin d ire c tly )m o re th a n fity -o n e p e rc e n t(5 1 % )o fth e s to c k o ro th e re q u ity in te re s ts o fa n o th e rp e rs o n a n d (z )p o s s e s s in g ,d ire c tly o rin d ire c tly ,th e p o w e rto d ire c to rc a u s e th e d ire c tio n o fth e m a n a g e m e n ta n d p o lic ie s o fs u c h p e rs o n .2 6 .2 .In th e e v e n tT e n a n td e s ire s to e fe c ta T ra n s fe r,th e n ,a tle a s tw e n ty (2 0 )b u s in e s s d a y s (o ra tle a s te n (1 0 )d a y s w ith re s p e c to a n E x e m p tT ra n s fe rs u b je c to s u b s e c tio n 2 6 .1 (b )(1 )a b o v e )b u tn o tm o re th a n o n e h u n d re d e ig h ty (1 8 0 )d a y s p rio rto th e d a te w h e n T e n a n td e s ire s th e T ra n s fe rto b e e fe c tiv e (th e "T ra n s fe rD a te "),T e n a n ts h a lp ro v id e w rite n n o tic e to L a n d lo rd (th e "T ra n s fe rN o tic e ")c o n ta in in g th e p ro p o s e d T ra n s fe rD a te ;a n y o w n e rs h ip o rc o m m e rc ia lre la tio n s h ip b e tw e e n T e n a n ta n d th e p ro p o s e d tra n s fe re e ,a s s ig n e e o rs u b le s s e e ;a n d th e c o n s id e ra tio n a n d a lo th e rm a te ria lte rm s a n d c o n d ito n s o fth e p ro p o s e d T ra n s fe r;a n d e v id e n c e re s p e c tin g th e re le v a n tb u s in e s s e x p e rie n c e a n d fin a n c ia lre s p o n s ib ilty ,in c lu d in g u n c o n s o lid a te d fin a n c ia ls ta te m e n ts ,o fth e p ro p o s e d tra n s fe re e ,a s s ig n e e o rs u b le s s e e ,a lin s u c h d e ta ila s L a n d lo rd s h a lre a s o n a b ly re q u ire (th e "T ra n s fe rIn fo rm a tio n ").T e n a n ts h a la ls o te n d e rto L a n d lo rd th e a c tu a l,d o c u m e n te d

a n d re a s o n a b le a to rn e y s 'fe e s a n d o th e rc o s ts o ro v e rh e a d e x p e n s e s in c u re d b y L a n d lo rd in re v ie w in g T e n a n t's re q u e s tfo rs u c h T ra n s fe r.2 6 .3 .L a n d lo rd ,in d e te rm in in g w h e th e rc o n s e n ts h o u ld b e g iv e n to a p ro p o s e d a s s ig n m e n t,m a y g iv e c o n s id e ra tio n to th e fin a n c ia ls tre n g th o fs u c h tra n s fe re e (n o tw ith s ta n d in g T e n a n tre m a in in g lia b le fo rT e n a n t's p e rfo rm a n c e ).N o tw ith s ta n d in g a n y th in g to th e c o n tra ry ,in n o e v e n ts h a lL a n d lo rd b e d e e m e d to b e u n re a s o n a b le fo rd e c lin in g to c o n s e n to a T ra n s fe rto a tra n s fe re e ,a s s ig n e e o rs u b le s s e e o fla c k in g fin a n c ia lq u a lifc a tio n s o rs e e k in g a c h a n g e in th e P e rm ite d U s e ,o rje o p a rd iz in g d ire c tly o rin d ire c tly th e s ta tu s o fL a n d lo rd o ra n y o fL a n d lo rd 's a fila te s a s a R e a lE s ta te In v e s tm e n tT ru s tu n d e rth e In te rn a lR e v e n u e C o d e o f1 9 8 6 (th e "C o d e ").N o tw ith s ta n d in g a n y th in g c o n ta in e d in th is L e a s e to th e c o n tra ry ,(w )n o T ra n s fe rs h a lb e c o n s u m m a te d o n a n y b a s is s u c h th a th e re n ta lo ro th e ra m o u n ts to b e p a id b y th e o c c u p a n t,a s s ig n e e ,m a n a g e ro ro th e rta n s fe re e th e re u n d e rw o u ld b e b a s e d ,in w h o le o rin p a rt,o n th e in c o m e o rp ro fits d e riv e d b y th e b u s in e s s a c tiv ite s o fs u c h o c c u p a n t,a s s ig n e e ,m a n a g e ro ro th e rta n s fe re e ;(x )T e n a n ts h a ln o tfu rn is h o re n d e ra n y s e rv ic e s to a n o c c u p a n t,a s s ig n e e ,m a n a g e ro ro th e rta n s fe re e w ith re s p e c to w h o m tra n s fe rc o n s id e ra tio n is re q u ire d to b e p a id ,o r
m a n a g e o ro p e ra te th e P re m is e s o ra n y c a p ita la d d ito n s s o tra n s fe re d ,w ith re s p e c to w h ic h tra n s fe rc o n s id e ra tio n is b e in g p a id ;(y )T e n a n ts h a ln o tc o n s u m m a te a T ra n s fe rw ith a n y p e rs o n in w h ic h L a n d lo rd o w n s a n in te re s t,d ire c tly o rin d ire c tly (b y a p p ly in g c o n s tru c tiv e o w n e rs h ip ru le s s e tfo rth in S e c tio n 8 5 6 (d )(5 )o fth e C o d e );a n d (z )T e n a n ts h a ln o tc o n s u m m a te a T ra n s fe rw ith a n y p e rs o n o rin a n y m a n n e rth a tc o u ld c a u s e a n y p o rtio n o fth e a m o u n ts re c e iv e d b y L a n d lo rd p u rs u a n to th is L e a s e o ra n y s u b le a s e ,lic e n s e o ro th e ra ra n g e m e n tfo rth e rig h to u s e ,o c c u p y o rp o s s e s s a n y p o rtio n o fth e P re m is e s to fa ilto q u a lify a s "re n ts fro m re a lp ro p e rty "w ith in th e m e a n in g o fS e c tio n 8 5 6 (d )o fth e C o d e ,o ra n y s im ila ro rs u c c e s s o rp ro v is io n th e re to o rw h ic h c o u ld c a u s e a n y o th e rin c o m e o fL a n d lo rd to fa ilto q u a lify a s in c o m e d e s c rib e d in S e c tio n 8 5 6 (c )(2 )o fth e C o d e .L a n d lo rd s h a lre s p o n d to T e n a n t's p ro p o s e d T ra n s fe rw ith in tw e n ty (2 0 )d a y s a fte re c e ip to fT e n a n t's T ra n s fe re q u e s t.IfL a n d lo rd fa ils to re s p o n d w ith in s u c h tw e n ty (2 0 )d a y p e rio d ,th e n T e n a n ts h a lp ro v id e L a n d lo rd w ith a s e c o n d w rite n n o tic e s ta tin g in b o ld a n d a lc a p s 1 2 p o in tfo n th a t"L a n d lo rd 's fa ilu re to re s p o n d to T e n a n t's T ra n s fe re q u e s tw ith in
5 2 fiv e (5 )d a y s a fte rL a n d lo rd 's re c e ip to fth is s e c o n d n o tic e s h a lb e d e e m e d a p p ro v a lb y L a n d lo rd ,"a n d ifL a n d lo rd d o e s n o tre s p o n d w ith in s u c h fiv e (5 )d a y p e rio d ,th e n L a n d lo rd s h a lb e d e e m e d to h a v e a p p ro v e d s u c h T ra n s fe re q u e s t.2 6 .4 .T h e fo lo w in g a re c o n d ito n s p re c e d e n to a T ra n s fe ro rto L a n d lo rd c o n s id e rin g a re q u e s tb y T e n a n to a T ra n s fe r:(a )T e n a n ts h a lre m a in fu ly lia b le u n d e rth is L e a s e d u rin g th e u n e x p ire d T e rm (a n d a n y O p tio n T e rm o ro th e re x te n s io n o fth e T e rm e x e rc is e d o rn e g o tia te d b y a T e n a n ts A fila te ,in c lu d in g ,w ith o u tlim ita tio n a n y e x e rc is e o fth e rig h ts g ra n te d p u rs u a n to S e c tio n s 3 7 .2 2 ,3 9 o r4 0 b e lo w ).T e n a n ta g re e s th a tis h a ln o tb e (a n d s h a ln o tb e d e e m e d to b e )a g u a ra n to ro rs u re ty o fth is L e a s e ,h o w e v e r,a n d w a iv e s its rig h to c la im th a tis its a g u a ra n to ro rs u re ty o rto ra is e in a n y le g a lp ro c e e d in g a n y g u a ra n to ro rs u re ty d e fe n s e s p e rm ite d b y th is L e a s e o rb y A p p lic a b le L a w s ;(b )T e n a n ts h a lp ro v id e L a n d lo rd w ith th e T ra n s fe rIn fo rm a tio n ;(c )In th e c a s e o fa n E x e m p tT ra n s fe r,T e n a n ts h a lp ro v id e L a n d lo rd w ith e v id e n c e re a s o n a b ly s a tis fa c to ry to L a n d lo rd th a th e T ra n s fe rq u a life s a s a n E x e m p tT ra n s fe r,u n le s s p ro v id in g s u c h in fo rm a tio n to L a n d lo rd p rio rto th e e fe c tiv e n e s s o fs u c h E x e m p tT ra n s fe rw o u ld v io la te a c o n fid e n tia lity a g re e m e n tb e tw e e n T e n a n ta n d th e T e n a n ts A fila te (p ro v id e d ,h o w e v e r,th a tT e n a n t

s h a lu s e its b e s te fo rts to e n s u re th a ts u c h c o n fid e n tia lity a g re e m e n tp e rm its T e n a n to p ro v id e th e in fo rm a tio n re q u ire d u n d e rth is s u b s e c tio n 2 6 .4 (c ),in w h ic h e v e n tT e n a n ts h a lp ro v id e s u c h in fo rm a tio n a s s o o n a s th e s a m e is p e rm is s ib le u n d e rth e c o n fid e n tia lity a g re e m e n t;(d )E x c e p tw ith re s p e c to a n E x e m p tT ra n s fe r,ifT e n a n ts tra n s fe ro frig h ts o rs h a rin g o fth e P re m is e s p ro v id e s fo rth e re c e ip tb y ,o n b e h a lfo fo ro n a c c o u n to fT e n a n to fa n y N e tP ro fita s d e fin e d b e lo w ,T e n a n ts h a lp a y fity p e rc e n t(5 0 % )o fa lo fs u c h N e tP ro fito L a n d lo rd .N e tP ro fits h a lm e a n a lc a s h re n ts p a y a b le b y a tra n s fe re e in e x c e s s o fth e B a s e R e n ta n d A d d ito n a lR e n tp a y a b le b y T e n a n tu n d e rth is L e a s e d u rin g th e te rm o fth e T ra n s fe r(o n a p e rs q u a re fo o tb a s is ifle s s th a n a lo fth e P re m is e s is tra n s fe re d )a fte rd e d u c tin g th e e x p e n s e s in c u re d o rto b e in c u re d b y T e n a n tfo rth e fo lo w in g :(1 )a n y c h a n g e s ,a lte ra tio n s a n d im p ro v e m e n ts to th e P re m is e s in c o n n e c tio n w ith th e T ra n s fe r,(2 )a n y s p a c e p la n n in g ,a rc h ite c tu ra lo rd e s ig n fe e s o ro th e re x p e n s e s in c u re d in m a rk e tin g s u c h s p a c e o rin c o n n e c tio n w ith s u c h T ra n s fe r,(3 )a n y im p ro v e m e n ta lo w a n c e ,re n ta b a te m e n to ro th e rm o n e ta ry c o n c e s s io n s p ro v id e d b y T e n a n to th e T ra n s fe re e ,(4 )a n y b ro k e ra g e c o m m is s io n s in c u re d b y T e n a n tin c o n n e c tio n w ith th e T ra n s fe r,(5 )a n y a to rn e y s 'fe e s in c u re d b y T e n a n tin c o n n e c tio n w ith
th e T ra n s fe r,(6 )a n y le a s e ta k e o v e rc o s ts in c u re d b y T e n a n tin c o n n e c tio n w ith th e T ra n s fe r,(7 )a n y c o s ts o fa d v e rtis in g th e s p a c e w h ic h is th e s u b je c to fth e T ra n s fe r,w ith a ls u c h c o s ts a m o rtiz e d o v e rth e te rm o fth e T ra n s fe r,(8 )th e fa irm a rk e tv a lu e o fa n y fu rn itu re th a tm a y b e in c lu d e d in c o n n e c tio n w ith th e tra n s fe r,a n d (9 )th e c o s to fth e T e n a n tIm p ro v e m e n ts a n d A lte ra tio n s p a id fo rb y T e n a n to th e P re m is e s o n a c c o u n to fs u c h tra n s fe r;(e )T h e p ro p o s e d tra n s fe re e ,a s s ig n e e o rs u b le s s e e s h a la g re e th a t,in th e e v e n tL a n d lo rd g iv e s s u c h p ro p o s e d tra n s fe re e ,a s s ig n e e o rs u b le s s e e n o tic e th a tT e n a n tis in
5 3 d e fa u ltu n d e rth is L e a s e ,s u c h p ro p o s e d tra n s fe re e ,a s s ig n e e o rs u b le s s e e s h a lth e re a fte rm a k e a lp a y m e n ts o th e rw is e d u e T e n a n td ire c tly to L a n d lo rd ,w h ic h p a y m e n ts s h a lb e re c e iv e d b y L a n d lo rd w ith o u ta n y lia b ilty b e in g in c u re d b y L a n d lo rd ,e x c e p to c re d its u c h p a y m e n ta g a in s th o s e d u e b y T e n a n tu n d e rth is L e a s e ,a n d a n y s u c h p ro p o s e d tra n s fe re e ,a s s ig n e e o rs u b le s s e e s h a la g re e to a to rn to L a n d lo rd o rits s u c c e s s o rs a n d a s s ig n s s h o u ld th is L e a s e b e te rm in a te d fo ra n y re a s o n ;p ro v id e d ,h o w e v e r,th a tin n o e v e n ts h a lL a n d lo rd o rits L e n d e rs ,s u c c e s s o rs o ra s s ig n s b e o b lig a te d to a c c e p ts u c h a to rn m e n t;(f)L a n d lo rd s c o n s e n to a n y s u c h T ra n s fe rs h a lb e e fe c te d o n L a n d lo rd s fo rm s ,s u b je c to c h a n g e s b y T e n a n th a ta re s a tis fa c to ry to L a n d lo rd in its re a s o n a b le d is c re tio n ;(g )T e n a n ts h a ln o th e n b e in m o n e ta ry o rm a te ria ln o n -m o n e ta ry d e fa u lth e re u n d e r(b e y o n d th e e x p ira tio n o fa la p p lic a b le n o tic e a n d c u re p e rio d s )h e re u n d e rin a n y re s p e c t;(h )S u c h p ro p o s e d tra n s fe re e ,a s s ig n e e o rs u b le s s e e s u s e o fth e P re m is e s s h a lb e c o n s is te n tw ith th e P e rm ite d U s e ;(i)L a n d lo rd s h a ln o tb e b o u n d b y a n y p ro v is io n o fa n y a g re e m e n tp e rta in in g to th e T ra n s fe r,e x c e p tfo rL a n d lo rd s w rite n c o n s e n to th e s a m e ;(j)T e n a n ts h a lp a y a ltra n s fe ra n d o th e rta x e s (in c lu d in g in te re s ta n d p e n a ltie s )a s s e s s e d o r

p a y a b le fo ra n y T ra n s fe r;(k )L a n d lo rd s c o n s e n t(o rw a iv e ro fits rig h ts )fo ra n y T ra n s fe rs h a ln o tw a iv e L a n d lo rd s rig h to c o n s e n to re fu s e c o n s e n to a n y la te rT ra n s fe r;(l)T e n a n ts h a ld e liv e rto L a n d lo rd o n e e x e c u te d c o p y o fa n y a n d a lw rite n in s tru m e n ts e v id e n c in g th e T ra n s fe r;a n d (m )T e n a n ts h a ld e liv e rto L a n d lo rd a lis to fH a z a rd o u s M a te ria ls (a s d e fin e d b e lo w ),c e rtife d b y th e p ro p o s e d tra n s fe re e ,a s s ig n e e o rs u b le s s e e to b e tru e a n d c o re c t,h a th e p ro p o s e d tra n s fe re e ,a s s ig n e e o rs u b le s s e e in te n d s to u s e o rs to re in th e P re m is e s .A d d ito n a ly ,T e n a n ts h a ld e liv e rto L a n d lo rd ,o n o rb e fo re th e d a te a n y p ro p o s e d tra n s fe re e ,a s s ig n e e o rs u b le s s e e ta k e s o c c u p a n c y o fth e P re m is e s ,a lo fth e ite m s re la tin g to H a z a rd o u s M a te ria ls o fs u c h p ro p o s e d tra n s fe re e ,a s s ig n e e o rs u b le s s e e a s d e s c rib e d in S e c tio n 1 8 .2 .2 6 .5 .A n y T ra n s fe rth a tis n o tin c o m p lia n c e w ith th e p ro v is io n s o fth is A rtic le o rw ith re s p e c to w h ic h T e n a n td o e s n o tfu lfits o b lig a tio n s p u rs u a n to th is A rtic le s h a lb e v o id a n d s h a l,a th e o p tio n o fL a n d lo rd ,c o n s tiu te a d e fa u ltu n d e rth is L e a s e .2 6 .6 .N o tw ith s ta n d in g a n y T ra n s fe r,T e n a n ts h a lre m a in fu ly a n d p rim a rily lia b le fo rth e p a y m e n to fa lR e n ta n d o th e rs u m s d u e o rto b e c o m e d u e h e re u n d e r,a n d fo rth e fu lp e rfo rm a n c e o fa lo th e rte rm s ,c o n d ito n s a n d c o v e n a n ts to b e k e p ta n d p e rfo rm e d b y T e n a n t.T h e a c c e p ta n c e o fR e n to ra n y o th e r
s u m d u e h e re u n d e r,o rth e a c c e p ta n c e o fp e rfo rm a n c e o fa n y
5 4 o th e rte rm ,c o v e n a n to rc o n d ito n th e re o f,ro m a n y p e rs o n o re n tiy o th e rth a n T e n a n ts h a ln o tb e d e e m e d a w a iv e ro fa n y o fth e p ro v is io n s o fth is L e a s e o ra c o n s e n to a n y T ra n s fe r.2 6 .7 .[In te n tio n a ly o m ite d ]2 6 .8 .IfT e n a n ts u b le ts th e P re m is e s o ra n y p o rtio n th e re o f,T e n a n th e re b y im m e d ia te ly a n d ire v o c a b ly a s s ig n s to L a n d lo rd ,a s s e c u rity fo rT e n a n ts o b lig a tio n s u n d e rth is L e a s e ,a lre n tfro m a n y s u c h s u b le tin g ,a n d a p p o in ts L a n d lo rd a s a s s ig n e e a n d a to rn e y -in -fa c tfo rT e n a n t,a n d L a n d lo rd (o ra re c e iv e rfo rT e n a n ta p p o in te d o n L a n d lo rd s a p p lic a tio n )m a y c o le c ts u c h re n ta n d a p p ly ito w a rd T e n a n ts o b lig a tio n s u n d e rth is L e a s e ;p ro v id e d th a t,u n tilh e o c c u re n c e o fa D e fa u lt(a s d e fin e d b e lo w )b y T e n a n t,T e n a n ts h a lh a v e th e rig h to c o le c ts u c h re n t.2 6 .9 .N o tw ith s ta n d in g a n y c o n tra ry p ro v is io n o fth is A rtic le 2 6 ,th e o rig in a lT e n a n tn a m e d in th is L e a s e (i.e .,Ilu m in a ,In c .)a n d a n y T e n a n ts A fila te (b u tn o ta n y o th e ra s s ig n e e o ra n y s u b te n a n t)s h a lh a v e th e rig h t,w ith o u th e re c e ip to fL a n d lo rd 's c o n s e n t,b u to n p rio rw rite n n o tic e to L a n d lo rd ,to lic e n s e (o r,w ith re s p e c to a n y s p a c e th a tc o n ta in s le s s th a n 5 ,0 0 0 s q u a re fe e to fR e n ta b le A re a ,s u b le a s e )u p to a n a g g re g a te o fu p to te n p e rc e n t(1 0 % )o fth e R e n ta b le A re a o fth e P re m is e s to in d iv id u a ls o re n tie s (e a c h ,a "B u s in e s s A fila te ")o rto a T e n a n tA fila te ,w h ic h lic e n s e (o rs u b le a s e )to a B u s in e s s A fila te o rT e n a n t

A fila te s h a lb e o n a n d s u b je c to a lo fth e fo lo w in g c o n d ito n s :(i)T e n a n ts h a lh a v e a d ire c tc o n tra c tu a lb u s in e s s re la tio n s h ip (re la tin g to a p rim a ry b u s in e s s o fT e n a n tc o n d u c te d in th e P re m is e s a n d o th e rth a n B u s in e s s A fila te 's u s e o fth e P re m is e s )w ith e a c h s u c h B u s in e s s A fila te ;(i)e a c h s u c h B u s in e s s A fila te o rT e n a n tA fila te s h a lb e o fa c h a ra c te ra n d re p u ta tio n c o n s is te n tw ith th e q u a lity o fth e B u ild in g s ;(i)e a c h lic e n s e s h a lc le a rly s p e c ify th a tis o n ly a c o n tra c trig h ta n d th a th e B u s in e s s A fila te o rT e n a n tA fila te is n o ta s u b te n a n ta n d h a s n o in te re s tin re a lp ro p e rty ;(iv )e a c h s u c h B u s in e s s A fila te 's o rT e n a n tA fila te s u s e o fth e P re m is e s is in a m a n n e rc o n s is te n tw ith th e P e rm ite d U s e ;a n d (v )n o d e m is in g w a ls o rs e p a ra te e n tra n c e s s h a lb e c o n s tru c te d in th e P re m is e s to a c c o m m o d a te a n y s u c h lic e n s e o rs u b le a s e .N o s u c h lic e n s e o rs u b le a s e s h a lre lie v e T e n a n tfro m a n y lia b ilty u n d e rth is L e a s e .2 7 .S u b o rd in a tio n a n d A to rn m e n t.2 7 .1 .S u b je c to T e n a n ts re c e ip to fa c o m m e rc ia ly re a s o n a b le s u b o rd in a tio n ,n o n -d is tu rb a n c e a n d a to rn m e n ta g re e m e n t,h is L e a s e s h a lb e s u b je c ta n d s u b o rd in a te to th e lie n o fa n y m o rtg a g e ,d e e d o ftru s t,o rle a s e in w h ic h L a n d lo rd is te n a n tn o w o rh e re a fte rin fo rc e a g a in s th e P re m is e s o ra n y p o rtio n th e re o fa n d to a la d v a n c e s m a d e o rh e re a fte rto b e m a d e u p o n th e s e c u rity th e re o fw ith o u th e n e c e s s ity o fth e
e x e c u tio n a n d d e liv e ry o fa n y fu rth e rin s tru m e n ts o n th e p a rto fT e n a n to e fe c tu a te s u c h s u b o rd in a tio n .S u c h c o m m e rc ia ly re a s o n a b le s u b o rd in a tio n ,n o n -d is tu rb a n c e a n d a to rn m e n ta g re e m e n ts s h a lin c lu d e a n o b lig a tio n b y a n y s u c c e s s o rg ro u n d le s s o ro rle n d e r,m o rtg a g o ro rlie n h o ld e rs to re c o g n iz e T e n a n ts rig h ts s p e c ifc a ly s e tfo rth in th is L e a s e s o lo n g a s T e n a n tis n o tin d e fa u lth e re u n d e ra fte ra n y a p p lic a b le n o tic e a n d c u re p e rio d ,a n d w ilb e in a re c o rd a b le fo rm .L a n d lo rd h e re b y re p re s e n ts to T e n a n th a th e re is n o le n d e rfo rth e P ro je c ta s o fth e d a te o fth is L e a s e .2 7 .2 .N o tw ith s ta n d in g th e fo re g o in g ,T e n a n ts h a le x e c u te a n d d e liv e ru p o n d e m a n d s u c h fu rth e rin s tru m e n to rin s tru m e n ts e v id e n c in g s u c h s u b o rd in a tio n o fth is L e a s e to th e lie n o f
5 5 a n y s u c h m o rtg a g e o rm o rtg a g e s o rd e e d s o ftru s to rle a s e in w h ic h L a n d lo rd is te n a n ta s m a y b e re q u ire d b y L a n d lo rd .Ifa n y s u c h m o rtg a g e e ,b e n e fic ia ry o rla n d lo rd u n d e ra le a s e w h e re in L a n d lo rd is te n a n t(e a c h ,a M o rtg a g e e )s o e le c ts ,h o w e v e r,th is L e a s e s h a lb e d e e m e d p rio rin lie n to a n y s u c h le a s e ,m o rtg a g e ,o rd e e d o ftru s tu p o n o rin c lu d in g th e P re m is e s re g a rd le s s o fd a te a n d T e n a n ts h a le x e c u te a s ta te m e n tin w ritn g to s u c h e fe c ta tL a n d lo rd s re q u e s t.IfT e n a n tfa ils to e x e c u te a n y d o c u m e n tre q u ire d fro m T e n a n tu n d e rth is S e c tio n w ith in th irty (3 0 )d a y s a fte rw rite n re q u e s th e re fo r,s u c h fa ilu re s h a lb e a D e fa u ltu n d e rth is L e a s e .2 7 .3 .U p o n w rite n re q u e s to fL a n d lo rd a n d o p p o rtu n ity fo rT e n a n to re v ie w ,T e n a n ta g re e s to e x e c u te a n y L e a s e a m e n d m e n ts n o t(a )m a te ria ly a lte rin g th e te rm s o fth is L e a s e ,(b )in c re a s in g T e n a n ts lia b ilty o ro b lig a tio n s u n d e rth is L e a s e ,o r(c )d im in is h in g T e n a n ts rig h ts u n d e rth is L e a s e ,ifre q u ire d b y a m o rtg a g e e o rb e n e fic ia ry o fa d e e d o ftru s te n c u m b e rin g re a lp ro p e rty o fw h ic h th e P re m is e s c o n s tiu te a p a rtin c id e n to th e fin a n c in g o fth e re a lp ro p e rty o fw h ic h th e P re m is e s c o n s tiu te a p a rt.2 7 .4 .S u b je c to S e c tio n 2 7 .1 a b o v e ,in th e e v e n ta n y p ro c e e d in g s a re b ro u g h tfo rfo re c lo s u re ,o rin th e e v e n to fth e e x e rc is e o fth e p o w e ro fs a le u n d e ra n y m o rtg a g e o rd e e d o ftru s tm a d e b y L a n d lo rd c o v e rin g th e P re m is e s ,T e n a n ts h a l

a th e e le c tio n o fth e p u rc h a s e ra ts u c h fo re c lo s u re o rs a le a to rn to th e p u rc h a s e ru p o n a n y s u c h fo re c lo s u re o rs a le a n d re c o g n iz e s u c h p u rc h a s e ra s L a n d lo rd u n d e rth is L e a s e .2 8 .D e fa u lts a n d R e m e d ie s .2 8 .1 .L a te p a y m e n tb y T e n a n to L a n d lo rd o fR e n ta n d o th e rs u m s d u e s h a lc a u s e L a n d lo rd to in c u rc o s ts n o tc o n te m p la te d b y th is L e a s e ,th e e x a c ta m o u n to fw h ic h s h a lb e e x tre m e ly d ifc u lta n d im p ra c tic a b le to a s c e rta in .S u c h c o s ts in c lu d e p ro c e s s in g a n d a c c o u n tin g c h a rg e s a n d la te c h a rg e s th a tm a y b e im p o s e d o n L a n d lo rd b y th e te rm s o fa n y m o rtg a g e o rtu s td e e d c o v e rin g th e P re m is e s .T h e re fo re ,ifa n y in s ta lm e n to fR e n td u e fro m T e n a n tis n o tre c e iv e d b y L a n d lo rd w ith in th re e (3 )d a y s a fte rw rite n n o tic e th a ts u c h p a y m e n tis d u e ,T e n a n ts h a lp a y to L a n d lo rd (a )a n a d d ito n a ls u m o fth re e p e rc e n t(3 % )o fth e o v e rd u e R e n ta s a la te c h a rg e p lu s (b )in te re s ta ta n a n n u a lra te (th e D e fa u ltR a te )e q u a lto th e le s s e ro f(1 )tw e lv e p e rc e n t(1 2 % )a n d (2 )th e h ig h e s tra te p e rm ite d b y A p p lic a b le L a w s ;p ro v id e d ,h o w e v e rth a t,s o lo n g a s R e n td u e fro m T e n a n th a s n o tb e e n la te m o re o fte n th a n tw o (2 )tim e s in a n y tw e lv e (1 2 )m o n th p e rio d o rm o re th a n fiv e (5 )tim e s o v e rth e T e rm o fth is L e a s e (w h ic h e v e ro c c u rs firs t),h e fo re g o in g c u re p e rio d w ilb e m o d ife d to p ro v id e th a tT e n a n tw iln o tb e s u b je c to a la te fe e u n le s s (i)a n y p a y m e n to fB a s e R e n tis n o tre c e iv e d
b y L a n d lo rd w ith in te n (1 0 )d a y s a fte rw rite n n o tic e th a ts u c h p a y m e n tis d u e a n d (i)a n y p a y m e n to fA d d ito n a lR e n tis n o tp a id w ith in th irty (3 0 )d a y s a fte rw rite n n o tic e th a ts u c h p a y m e n tis d u e .T h e p a rtie s a g re e th a th is la te c h a rg e re p re s e n ts a fa ira n d re a s o n a b le e s tim a te o fth e c o s ts th a tL a n d lo rd s h a lin c u rb y re a s o n o fla te p a y m e n tb y T e n a n ta n d s h a lb e p a y a b le a s A d d ito n a lR e n to L a n d lo rd d u e w ith th e n e x tin s ta lm e n to fR e n to rw ith in te n (1 0 )b u s in e s s d a y s a fte rL a n d lo rd s d e m a n d ,w h ic h e v e ris e a rlie r.L a n d lo rd s a c c e p ta n c e o fa n y A d d ito n a lR e n t(in c lu d in g a la te c h a rg e o ra n y o th e ra m o u n th e re u n d e r)s h a ln o tb e d e e m e d a n e x te n s io n o fth e d a te th a tR e n tis d u e o rp re v e n tL a n d lo rd fro m p u rs u in g a n y o th e rig h ts o re m e d ie s u n d e rth is L e a s e ,a tla w o rin e q u ity .N o tw ith s ta n d in g th e fo re g o in g ,L a n d lo rd s h a lw a iv e th e im p o s ito n o fs u c h la te c h a rg e fo rth e firs tla te p a y m e n to fR e n td u e h e re u n d e rin a n y c a le n d a ry e a ro fth e T e rm .
5 6 2 8 .2 .N o p a y m e n tb y T e n a n to re c e ip tb y L a n d lo rd o fa le s s e ra m o u n th a n th e R e n tp a y m e n th e re in s tip u la te d s h a lb e d e e m e d to b e o th e rth a n o n a c c o u n to fth e R e n t,n o rs h a la n y e n d o rs e m e n to rs ta te m e n to n a n y c h e c k o ra n y le te ra c c o m p a n y in g a n y c h e c k o rp a y m e n ta s R e n tb e d e e m e d a n a c c o rd a n d s a tis fa c tio n ,a n d L a n d lo rd m a y a c c e p ts u c h c h e c k o rp a y m e n tw ith o u tp re ju d ic e to L a n d lo rd s rig h to re c o v e rth e b a la n c e o fs u c h R e n to rp u rs u e a n y o th e re m e d y p ro v id e d in th is L e a s e o rin e q u ity o ra tla w .Ifa d is p u te s h a la ris e a s to a n y a m o u n to rs u m o fm o n e y to b e p a id b y T e n a n to L a n d lo rd h e re u n d e r,T e n a n ts h a lh a v e th e rig h to m a k e p a y m e n tu n d e rp ro te s t,s u c h p a y m e n ts h a ln o tb e re g a rd e d a s a v o lu n ta ry p a y m e n t,a n d th e re s h a ls u rv iv e th e rig h to n th e p a rto fT e n a n to in s tiu te s u itfo re c o v e ry o fth e p a y m e n tp a id u n d e rp ro te s t.2 8 .3 .IfT e n a n tfa ils to p a y a n y s u m o fm o n e y re q u ire d to b e p a id b y ith e re u n d e ro rp e rfo rm a n y o th e ra c to n its p a rto b e p e rfo rm e d h e re u n d e r,in e a c h c a s e w ith in th e a p p lic a b le c u re p e rio d (ifa n y )d e s c rib e d in S e c tio n 2 8 .4 ,th e n L a n d lo rd m a y (b u ts h a ln o tb e o b lig a te d to ),w ith o u tw a iv in g o re le a s in g T e n a n tfro m a n y o b lig a tio n s o fT e n a n t,m a k e s u c h p a y m e n to rp e rfo rm s u c h a c t;p ro v id e d th a ts u c h fa ilu re w o u ld lik e ly re s u ltin a v io la tio n o fA p p lic a b le L a w s o rth e c a n c e la tio n o fa n in s u ra n c e p o lic y

m a in ta in e d b y L a n d lo rd .N o tw ith s ta n d in g th e fo re g o in g ,in th e e v e n to fa n e m e rg e n c y ,L a n d lo rd s h a lh a v e th e rig h to e n te rth e P re m is e s a n d a c tin a c c o rd a n c e w ith its rig h ts a s p ro v id e d e ls e w h e re in th is L e a s e .In a d d ito n to th e la te c h a rg e d e s c rib e d in S e c tio n 2 8 .1 ,T e n a n ts h a lp a y to L a n d lo rd a s A d d ito n a lR e n ta ls u m s s o p a id o rin c u re d b y L a n d lo rd ,to g e th e rw ith in te re s ta th e D e fa u ltR a te ,c o m p u te d fro m th e d a te s u c h s u m s w e re p a id o rin c u re d .2 8 .4 .T h e o c c u re n c e o fa n y o n e o rm o re o fth e fo lo w in g e v e n ts s h a lc o n s tiu te a D e fa u lth e re u n d e rb y T e n a n t:(a )T e n a n tfa ils to m a k e a n y p a y m e n to fR e n t,a s a n d w h e n d u e ,o rto s a tis fy its o b lig a tio n s u n d e rA rtic le 1 8 ,w h e re s u c h fa ilu re s h a lc o n tin u e fo ra p e rio d o fiv e (5 )b u s in e s s d a y s a fte rw rite n n o tic e th e re o fro m L a n d lo rd to T e n a n t(p ro v id e d th a tfo rth e firs tla te p a y m e n tin a n y tw e lv e (1 2 )m o n th p e rio d ,th e c u re p e rio d s h a lb e te n (1 0 )d a y s a fte rw rite n n o tic e );(b )T e n a n tfa ils to o b s e rv e o rp e rfo rm a n y o b lig a tio n o rc o v e n a n tc o n ta in e d h e re in (o th e rth a n d e s c rib e d in S e c tio n s 2 8 .4 (a )a n d 2 8 .4 (c )-(ito b e p e rfo rm e d b y T e n a n t,w h e re s u c h fa ilu re c o n tin u e s fo ra p e rio d o fth irty (3 0 )d a y s a fte rw rite n n o tic e th e re o fro m L a n d lo rd to T e n a n t;p ro v id e d th a t,ifh e n a tu re o fT e n a n ts d e fa u ltis s u c h th a tire a s o n a b ly re q u ire s m o re th a n th irty (3 0 )d a y s to c u re ,T e n a n ts h a ln o tb e d e e m e d to b e in D e fa u ltifT e n a n tc o m m e n c e s s u c h c u re w ith in
s u c h th irty (3 0 )d a y p e rio d a n d th e re a fte rd ilg e n tly p ro s e c u te th e s a m e to c o m p le tio n ;(c )T e n a n tm a k e s a n a s s ig n m e n tfo rth e b e n e fito fc re d ito rs ;(d )A re c e iv e r,tu s te e o rc u s to d ia n is a p p o in te d to o rd o e s ta k e tile ,p o s s e s s io n o rc o n tro lo fa lo rs u b s ta n tia ly a lo fT e n a n ts a s s e ts ;(e )T e n a n tfile s a v o lu n ta ry p e tio n u n d e rth e U n ite d S ta te s B a n k ru p tc y C o d e o ra n y s u c c e s s o rs ta tu te (a s th e s a m e m a y b e a m e n d e d fro m tim e to tim e ,th e B a n k ru p tc y
5 7 C o d e )o ra n o rd e rfo re lie fis e n te re d a g a in s tT e n a n tp u rs u a n to a v o lu n ta ry o rin v o lu n ta ry p ro c e e d in g c o m m e n c e d u n d e ra n y c h a p te ro fth e B a n k ru p tc y C o d e ;(f)A n y in v o lu n ta ry p e tio n is file d a g a in s tT e n a n tu n d e ra n y c h a p te ro fth e B a n k ru p tc y C o d e a n d is n o td is m is s e d w ith in o n e h u n d re d tw e n ty (1 2 0 )d a y s ;(g )A d e fa u lte x is ts u n d e ra n y o th e rle a s e b y a n d b e tw e e n L a n d lo rd o ra n a fila te o fL a n d lo rd a n d T e n a n t,a fte rth e e x p ira tio n o fa n y a p p lic a b le n o tic e a n d c u re p e rio d s ;(h )T e n a n tfa ils to d e liv e ra n e s to p p e lc e rtifc a te in a c c o rd a n c e w ith A rtic le 1 7 a n d s u c h fa ilu re c o n tin u e s fo rm o re th a n fiv e (5 )b u s in e s s d a y s a fte rL a n d lo rd d e liv e rs n o tic e to T e n a n to fs u c h fa ilu re ;o r(i)T e n a n ts in te re s tin th is L e a s e is a ta c h e d ,e x e c u te d u p o n o ro th e rw is e ju d ic ia ly s e iz e d a n d s u c h a c tio n is n o tre le a s e d w ith in o n e h u n d re d tw e n ty (1 2 0 )d a y s o fth e a c tio n .N o tic e s g iv e n u n d e rth is S e c tio n s h a ls p e c ify th e a le g e d d e fa u lta n d s h a ld e m a n d th a tT e n a n tp e rfo rm th e p ro v is io n s o fth is L e a s e o rp a y th e R e n th a tis in a re a rs ,a s th e c a s e m a y b e ,w ith in th e a p p lic a b le p e rio d o ftim e ,o rq u ith e P re m is e s .N o s u c h n o tic e s h a lb e d e e m e d a fo rfe itu re o ra te rm in a tio n o fth is L e a s e u n le s s L a n d lo rd e le c ts o th e rw is e in s u c h n o tic e 2 8 .5 .In th e e v e n to fa D e fa u ltb y T e n a n t,a n d a ta n y tim e th e re a fte r,w ith o rw ith o u tn o tic e o rd e m a n d a n d w ith o u tlim itn g L a n d lo rd in th e e x e rc is e o fa n y rig h to r

re m e d y th a tL a n d lo rd m a y h a v e ,L a n d lo rd h a s th e rig h to d o a n y o ra lo fth e fo lo w in g :(a )H a lta n y P ro je c ta n d B a s e B u ild in g Wo rk ,T e n a n tIm p ro v e m e n ts a n d A lte ra tio n s a n d o rd e rT e n a n ts c o n tra c to rs ,s u b c o n tra c to rs ,c o n s u lta n ts ,d e s ig n e rs a n d m a te ria ls u p p lie rs to s to p w o rk (a n d a n y re s u ltin g d e la y w ilb e a T e n a n tD e la y );(b )T e rm in a te T e n a n ts rig h to p o s s e s s io n o fth e P re m is e s b y a n y la w fu lm e a n s ,in w h ic h c a s e T e n a n ts h a lim m e d ia te ly s u re n d e rp o s s e s s io n o fth e P re m is e s to L a n d lo rd .In s u c h e v e n t,L a n d lo rd s h a lh a v e th e im m e d ia te rig h to re -e n te ra n d re m o v e a lp e rs o n s a n d p ro p e rty ,a n d s u c h p ro p e rty m a y b e re m o v e d a n d s to re d in a p u b lic w a re h o u s e o re ls e w h e re a th e c o s ta n d fo rth e a c c o u n to fT e n a n t,a lw ith o u ts e rv ic e o fn o tic e o re s o rto le g a lp ro c e s s a n d w ith o u tb e in g d e e m e d g u ilty o ftre s p a s s o rb e c o m in g lia b le fo ra n y lo s s o rd a m a g e th a tm a y b e o c c a s io n e d th e re b y ;a n d (c )T e rm in a te th is L e a s e ,in w h ic h e v e n tT e n a n ts h a lim m e d ia te ly s u re n d e rp o s s e s s io n o fth e P re m is e s to L a n d lo rd .In s u c h e v e n t,L a n d lo rd ,s h a lto th e e x te n ta lo w e d u n d e rA p p lic a b le L a w s ,h a v e th e rig h to re -e n te ra n d re m o v e a lp e rs o n s a n d p ro p e rty ,a n d s u c h p ro p e rty m a y b e re m o v e d a n d s to re d in a p u b lic w a re h o u s e o re ls e w h e re a th e c o s ta n d fo rth e a c c o u n to fT e n a n t,a lw ith o u ts e rv ic e o fn o tic e o re s o rto le g a lp ro c e s s a n d w ith o u tb e in g
d e e m e d g u ilty o ftre s p a s s o rb e c o m in g lia b le fo ra n y lo s s o rd a m a g e th a tm a y b e o c c a s io n e d th e re b y .In th e e v e n th a tL a n d lo rd s h a le le c to s o te rm in a te th is L e a s e ,th e n L a n d lo rd s h a lb e
5 8 e n tile d to re c o v e rfo m T e n a n ta ld a m a g e s in c u re d b y L a n d lo rd b y re a s o n o fT e n a n ts d e fa u lt,in c lu d in g th e s u m o f:A .T h e w o rth a th e tim e o fa w a rd o fa n y u n p a id R e n tw h ic h h a d b e e n e a rn e d a th e tim e o fs u c h te rm in a tio n ;p lu s B .T h e w o rth a th e tim e o fa w a rd o fth e a m o u n tb y w h ic h th e u n p a id R e n th a tw o u ld h a v e b e e n e a rn e d d u rin g th e p e rio d c o m m e n c in g w ith te rm in a tio n o fth e L e a s e a n d e n d in g a th e tim e o fa w a rd e x c e e d s th a tp o rtio n o fth e lo s s o fL a n d lo rd s re n ta lin c o m e fro m th e P re m is e s th a tT e n a n tp ro v e s c o u ld h a v e b e e n re a s o n a b ly a v o id e d ;p lu s C .T h e w o rth a th e tim e o fa w a rd o fth e a m o u n tb y w h ic h th e u n p a id R e n tfo rth e b a la n c e o fth e T e rm a fte rth e tim e o fa w a rd e x c e e d s th a tp o rtio n o fth e lo s s o fL a n d lo rd s re n ta lin c o m e fro m th e P re m is e s th a tT e n a n tp ro v e s c o u ld h a v e b e e n re a s o n a b ly a v o id e d ;p lu s D .A n y o th e ra m o u n tn e c e s s a ry to c o m p e n s a te L a n d lo rd fo ra lth e d e trim e n tc a u s e d b y T e n a n ts fa ilu re to p e rfo rm its o b lig a tio n s u n d e rth is L e a s e o rth a tin th e o rd in a ry c o u rs e o fth in g s w o u ld b e lik e ly to re s u lth e re fro m ,;p lu s E .A tL a n d lo rd s e le c tio n ,s u c h o th e ra m o u n ts in a d d ito n to o rin lie u o fth e fo re g o in g a s m a y b e p e rm ite d fro m tim e to tim e b y A p p lic a b le L a w s .A s u s e d in S e c tio n s 2 8 .5 (c )(A )a n d (B ),w o rth a th e tim e o fa w a rd s h a lb e c o m p u te d b y a lo w in g in te re s ta th e D e fa u ltR a te .A s u s e d in S e c tio n 2 8 .5 (c )(C ),th e w o rth a th e tim e o fth e a w a rd s h a l

b e c o m p u te d b y ta k in g th e p re s e n tv a lu e o fs u c h a m o u n t,u s in g th e d is c o u n tra te o fth e F e d e ra lR e s e rv e B a n k o fS a n F ra n c is c o a th e tim e o fth e a w a rd p lu s o n e p e rc e n t(1 % ).2 8 .6 .In a d d ito n to a n y o th e re m e d ie s a v a ila b le to L a n d lo rd a tla w o rin e q u ity a n d u n d e rth is L e a s e ,L a n d lo rd s h a lh a v e th e re m e d y d e s c rib e d in C a lifo rn ia C iv ilC o d e S e c tio n 1 9 5 1 .4 a n d m a y c o n tin u e th is L e a s e in e fe c ta fte rT e n a n ts D e fa u lta n d a b a n d o n m e n ta n d re c o v e rR e n ta s itb e c o m e s d u e ,p ro v id e d T e n a n th a s th e rig h to s u b le to ra s s ig n ,s u b je c to n ly to re a s o n a b le lim ita tio n s .F o rp u rp o s e s o fth is S e c tio n ,th e fo lo w in g a c ts b y L a n d lo rd w iln o tc o n s tiu te th e te rm in a tio n o fT e n a n ts rig h to p o s s e s s io n o fth e P re m is e s :(a )A c ts o fm a in te n a n c e o rp re s e rv a tio n o re fo rts to re le th e P re m is e s ,in c lu d in g a lte ra tio n s ,re m o d e lin g ,re d e c o ra tin g ,re p a irs ,re p la c e m e n ts o rp a in tin g a s L a n d lo rd s h a lc o n s id e ra d v is a b le fo rth e p u rp o s e o fre le tin g th e P re m is e s o ra n y p a rth e re o f;o r(b )T h e a p p o in tm e n to fa re c e iv e ru p o n th e in ita tiv e o fL a n d lo rd to p ro te c tL a n d lo rd s in te re s tu n d e rth is L e a s e o rin th e P re m is e s .N o tw ith s ta n d in g th e fo re g o in g ,in th e e v e n to fa D e fa u ltb y T e n a n t,L a n d lo rd m a y e le c ta ta n y tim e to te rm in a te th is L e a s e a n d to re c o v e rd a m a g e s to w h ic h L a n d lo rd is e n tile d .
5 9 2 8 .7 .IfL a n d lo rd d o e s n o te le c to te rm in a te th is L e a s e a s p ro v id e d in S e c tio n 2 8 .5 ,th e n L a n d lo rd m a y ,fro m tim e to tim e ,re c o v e ra lR e n ta s itb e c o m e s d u e u n d e rth is L e a s e .A ta n y tim e th e re a fte r,L a n d lo rd m a y e le c to te rm in a te th is L e a s e a n d to re c o v e rd a m a g e s to w h ic h L a n d lo rd is e n tile d .2 8 .8 .In th e e v e n tL a n d lo rd e le c ts to te rm in a te th is L e a s e a n d re le th e P re m is e s ,L a n d lo rd m a y e x e c u te a n y n e w le a s e in its o w n n a m e .T e n a n th e re u n d e rs h a lh a v e n o rig h to ra u th o rity w h a ts o e v e rto c o le c ta n y R e n tfro m s u c h te n a n t.T h e p ro c e e d s o fa n y s u c h re le tin g s h a lb e a p p lie d a s fo lo w s :(a )F irs t,o th e p a y m e n to fa n y in d e b te d n e s s o th e rth a n R e n td u e h e re u n d e rfo m T e n a n to L a n d lo rd ;(b )S e c o n d ,to th e p a y m e n to fth e c o s ts a n d e x p e n s e s o fre le tin g th e P re m is e s ,in c lu d in g (i)a lte ra tio n s a n d re p a irs th a tL a n d lo rd d e e m s re a s o n a b ly n e c e s s a ry a n d a d v is a b le a n d (i)re a s o n a b le a to rn e y s fe e s ,c h a rg e s a n d d is b u rs e m e n ts in c u re d b y L a n d lo rd in c o n n e c tio n w ith th e re ta k in g o fth e P re m is e s a n d s u c h re le tin g ;(c )T h ird ,to th e p a y m e n to fR e n ta n d o th e rc h a rg e s d u e a n d u n p a id h e re u n d e r;a n d (d )F o u rth ,to th e p a y m e n to fu tu re R e n ta n d o th e rd a m a g e s p a y a b le b y T e n a n tu n d e rth is L e a s e .2 8 .9 .A lo fL a n d lo rd s rig h ts ,o p tio n s a n d re m e d ie s h e re u n d e rs h a lb e c o n s tru e d a n d h e ld to b e n o n e x c lu s iv e a n d c u m u la tiv e .L a n d lo rd s h a lh a v e th e

rig h to p u rs u e a n y o n e o ra lo fs u c h re m e d ie s ,o ra n y o th e re m e d y o re lie fth a tm a y b e p ro v id e d b y A p p lic a b le L a w s ,w h e th e ro rn o ts ta te d in th is L e a s e .N o w a iv e ro fa n y d e fa u lto fT e n a n th e re u n d e rs h a lb e im p lie d fro m a n y a c c e p ta n c e b y L a n d lo rd o fa n y R e n to ro th e rp a y m e n ts d u e h e re u n d e ro ra n y o m is s io n b y L a n d lo rd to ta k e a n y a c tio n o n a c c o u n to fs u c h d e fa u ltifs u c h d e fa u ltp e rs is ts o ris re p e a te d ,a n d n o e x p re s s w a iv e rs h a la fe c td e fa u lts o th e rth a n a s s p e c ife d in s u c h w a iv e r.2 8 .1 0 .L a n d lo rd s te rm in a tio n o f(a )th is L e a s e o r(b )T e n a n ts rig h to p o s s e s s io n o fth e P re m is e s s h a ln o tre lie v e T e n a n to fa n y lia b ilty to L a n d lo rd th a th a s p re v io u s ly a c c ru e d o rth a ts h a la ris e b a s e d u p o n e v e n ts th a to c c u re d p rio rto th e la te rto o c c u ro f(y )th e d a te o fL e a s e te rm in a tio n a n d (z )th e d a te T e n a n ts u re n d e rs p o s s e s s io n o fth e P re m is e s .2 8 .1 1 .T o th e e x te n tp e rm ite d b y A p p lic a b le L a w s ,T e n a n tw a iv e s a n y a n d a lrig h ts o fre d e m p tio n g ra n te d b y o ru n d e ra n y p re s e n to rfu tu re A p p lic a b le L a w s ifT e n a n tis e v ic te d o rd is p o s s e s s e d fo ra n y c a u s e ,o rifL a n d lo rd o b ta in s p o s s e s s io n o fth e P re m is e s d u e to T e n a n ts d e fa u lth e re u n d e ro ro th e rw is e 2 8 .1 2 .In th e e v e n to fa D e fa u ltb y T e n a n th e re u n d e r,to th e fu le s te x te n tre q u ire d b y A p p lic a b le L a w s (to th e e x te n ts u c h A p p lic a b le L a w s c a n n o tb e m o d ife d b y c o n tra c t),L a n d lo rd s h a lu s e c o m m e rc ia ly
re a s o n a b le e fo rts to m itg a te its d a m a g e s .
6 0 2 8 .1 3 .L a n d lo rd s h a ln o tb e in d e fa u lto rlia b le fo rd a m a g e s u n d e rth is L e a s e u n le s s L a n d lo rd fa ils to p e rfo rm o b lig a tio n s re q u ire d o fL a n d lo rd w ith in a re a s o n a b le tim e ,b u tin n o e v e n ts h a ls u c h fa ilu re c o n tin u e fo rm o re th a n th irty (3 0 )d a y s a fte rw rite n n o tic e fro m T e n a n ts p e c ify in g th e n a tu re o fL a n d lo rd s fa ilu re ;p ro v id e d ,h o w e v e r,th a tifh e n a tu re o fL a n d lo rd s o b lig a tio n is s u c h th a tm o re th a n th irty (3 0 )d a y s a re re q u ire d fo rits p e rfo rm a n c e ,th e n L a n d lo rd s h a ln o tb e in d e fa u ltifL a n d lo rd c o m m e n c e s p e rfo rm a n c e w ith in s u c h th irty (3 0 )d a y p e rio d a n d th e re a fte rd ilg e n tly p ro s e c u te s th e s a m e to c o m p le tio n .IfL a n d lo rd fa ils to c u re a L a n d lo rd d e fa u lta fte rth e e x p ira tio n o fa la p p lic a b le n o tic e a n d c u re p e rio d s ,T e n a n tm a y ,e x c e p ta s o th e rw is e p ro v id e d fo rin th is L e a s e a n d s u b je c to a n y lim ita tio n s c o n ta in e d in th is L e a s e ,e x e rc is e a lo fits rig h ts a n d re m e d ie s p ro v id e d fo rin th is L e a s e o ra tla w o rin e q u ity fo rs u c h d e fa u lt;p ro v id e d ,h o w e v e r,th a t,n o tw ith s ta n d in g a n y th in g to th e c o n tra ry ,T e n a n ts h a ln o tb e p e rm ite d to te rm in a te th is L e a s e u n le s s a c o u rto fc o m p e te n tju ris d ic tio n g ra n ts to T e n a n ta rig h to fte rm in a tio n .2 8 .1 4 .In th e e v e n to fa n y d e fa u ltb y L a n d lo rd ,T e n a n ts h a lg iv e n o tic e b y re g is te re d o rc e rtife d m a ilto a n y (a )b e n e fic ia ry o fa d e e d o ftru s to r(b )m o rtg a g e e u n d e ra m o rtg a g e c o v e rin g th e P re m is e s o ra n y p o rtio n th e re o fa n d to a n y la n d lo rd o fa n y le a s e o fla n d u p o n o rw ith in w h ic h

th e P re m is e s a re lo c a te d ,a n d s h a lo fe rs u c h b e n e fic ia ry ,m o rtg a g e e o rla n d lo rd a c o m m e rc ia ly re a s o n a b le o p p o rtu n ity to c u re th e d e fa u lt,in c lu d in g tim e to o b ta in p o s s e s s io n o fth e P re m is e s b y p o w e ro fs a le o ra ju d ic ia la c tio n ifs u c h s h o u ld p ro v e n e c e s s a ry to e fe c ta c u re ;p ro v id e d th a tL a n d lo rd s h a lfu rn is h to T e n a n tin w ritn g ,u p o n w rite n re q u e s tb y T e n a n t,h e n a m e s a n d a d d re s s e s o fa ls u c h p e rs o n s w h o a re to re c e iv e s u c h n o tic e s .2 9 .B a n k ru p tc y .In th e e v e n ta d e b to r,tu s te e o rd e b to rin p o s s e s s io n u n d e rth e B a n k ru p tc y C o d e ,o ra n o th e rp e rs o n w ith s im ila rig h ts ,d u tie s a n d p o w e rs u n d e ra n y o th e rA p p lic a b le L a w s ,p ro p o s e s to c u re a n y d e fa u ltu n d e rth is L e a s e o rto a s s u m e o ra s s ig n th is L e a s e a n d is o b lig e d to p ro v id e a d e q u a te a s s u ra n c e to L a n d lo rd th a t(a )a d e fa u lts h a lb e c u re d ,(b )L a n d lo rd s h a lb e c o m p e n s a te d fo rits d a m a g e s a ris in g fro m a n y b re a c h o fth is L e a s e a n d (c )fu tu re p e rfo rm a n c e o fT e n a n ts o b lig a tio n s u n d e rth is L e a s e s h a lo c c u r,th e n s u c h a d e q u a te a s s u ra n c e s s h a lin c lu d e a n y o ra lo fth e fo lo w in g ,a s d e s ig n a te d b y L a n d lo rd in its s o le a n d a b s o lu te d is c re tio n :2 9 .1 .T h o s e a c ts s p e c ife d in th e B a n k ru p tc y C o d e o ro th e rA p p lic a b le L a w s a s in c lu d e d w ith in th e m e a n in g o fa d e q u a te a s s u ra n c e ,e v e n ifth is L e a s e d o e s n o tc o n c e rn a s h o p p in g c e n te ro ro th e rfa c ilty d e s c rib e d in s u c h
A p p lic a b le L a w s ;2 9 .2 .A p ro m p tc a s h p a y m e n to c o m p e n s a te L a n d lo rd fo ra n y m o n e ta ry d e fa u lts o ra c tu a ld a m a g e s a ris in g d ire c tly fro m a b re a c h o fth is L e a s e ;2 9 .3 .A c a s h d e p o s itn a n a m o u n ta tle a s te q u a lto th e th e n -c u re n ta m o u n to fth e S e c u rity D e p o s it;o r2 9 .4 .T h e a s s u m p tio n o ra s s ig n m e n to fa lo fT e n a n ts in te re s ta n d o b lig a tio n s u n d e rth is L e a s e .
 6 1 3 0 .B ro k e rs .3 0 .1 .T e n a n tre p re s e n ts a n d w a ra n ts th a tih a s h a d n o d e a lin g s w ith a n y re a le s ta te b ro k e ro ra g e n tin c o n n e c tio n w ith th e n e g o tia tio n o fth is L e a s e o th e rth a n C u s h m a n & Wa k e fie ld o fS a n D ie g o ,In c .(B ro k e r),a n d th a tik n o w s o fn o o th e re a le s ta te b ro k e ro ra g e n th a tis o rm ig h tb e e n tile d to a c o m m is s io n in c o n n e c tio n w ith th is L e a s e .L a n d lo rd s h a lc o m p e n s a te B ro k e rin re la tio n to th is L e a s e p u rs u a n to a s e p a ra te a g re e m e n tb e tw e e n L a n d lo rd a n d B ro k e r.3 0 .2 .T e n a n tre p re s e n ts a n d w a ra n ts th a tn o b ro k e ro ra g e n th a s m a d e a n y re p re s e n ta tio n o rw a ra n ty re lie d u p o n b y T e n a n tin T e n a n ts d e c is io n to e n te rin to th is L e a s e ,o th e rth a n a s c o n ta in e d in th is L e a s e .3 0 .3 .T e n a n ta c k n o w le d g e s a n d a g re e s th a th e e m p lo y m e n to fb ro k e rs b y L a n d lo rd is fo rth e p u rp o s e o fs o lic ita tio n o fo fe rs o fle a s e s fro m p ro s p e c tiv e te n a n ts a n d th a tn o a u th o rity is g ra n te d to a n y b ro k e rto fu rn is h a n y re p re s e n ta tio n (w rite n o ro ra l)o rw a ra n ty fro m L a n d lo rd u n le s s e x p re s s ly c o n ta in e d w ith in th is L e a s e .L a n d lo rd is e x e c u tin g th is L e a s e in re lia n c e u p o n T e n a n ts re p re s e n ta tio n s ,w a ra n tie s a n d a g re e m e n ts c o n ta in e d w ith in S e c tio n s 3 0 .1 a n d 3 0 .2 .3 0 .4 .T e n a n ta g re e s to in d e m n ify ,s a v e ,d e fe n d (a tL a n d lo rd s o p tio n a n d w ith c o u n s e lre a s o n a b ly a c c e p ta b le to L a n d lo rd )a n d h o ld th e L a n d lo rd In d e m n ite e s h a rm le s s fro m a n y a n d a lc o s to rlia b ilty fo r

c o m p e n s a tio n c la im e d b y a n y b ro k e ro ra g e n t,o th e rth a n B ro k e r,e m p lo y e d o re n g a g e d b y T e n a n to rc la im in g to h a v e b e e n e m p lo y e d o re n g a g e d b y T e n a n t.3 1 .D e fin ito n o fL a n d lo rd .With re g a rd to o b lig a tio n s im p o s e d u p o n L a n d lo rd p u rs u a n to th is L e a s e ,th e te rm L a n d lo rd ,a s u s e d in th is L e a s e ,s h a lre fe ro n ly to L a n d lo rd o rL a n d lo rd s th e n -c u re n ts u c c e s s o r-in -in te re s t.In th e e v e n to fa n y tra n s fe r,a s s ig n m e n to rc o n v e y a n c e o fL a n d lo rd s in te re s tin th is L e a s e o rin L a n d lo rd s fe e tile to o rle a s e h o ld in te re s tin th e P ro p e rty ,a s a p p lic a b le ,L a n d lo rd h e re in n a m e d (a n d in c a s e o fa n y s u b s e q u e n tra n s fe rs o rc o n v e y a n c e s ,th e s u b s e q u e n tL a n d lo rd )s h a lb e a u to m a tic a ly fre e d a n d re lie v e d ,fro m a n d a fte rth e d a te o fs u c h tra n s fe r,a s s ig n m e n to rc o n v e y a n c e ,fro m a lia b ilty fo rth e p e rfo rm a n c e o fa n y c o v e n a n ts o ro b lig a tio n s c o n ta in e d in th is L e a s e th e re a fte rto b e p e rfo rm e d b y L a n d lo rd a n d ,w ith o u tfu rth e ra g re e m e n t,h e tra n s fe re e ,a s s ig n e e o rc o n v e y e e o fL a n d lo rd s in te re s tin th is L e a s e o rin L a n d lo rd s fe e tile to o rle a s e h o ld in te re s tin th e P ro p e rty ,a s a p p lic a b le ,s h a lo th e rw is e b e d e e m e d to h a v e a s s u m e d a n d a g re e d to o b s e rv e a n d p e rfo rm a n y a n d a lc o v e n a n ts a n d o b lig a tio n s o fL a n d lo rd h e re u n d e rd u rin g th e te n u re o fits in te re s tin th e L e a s e o rth e P ro p e rty .L a n d lo rd o ra n y s u b s e q u e n tL a n d lo rd m a y tra n s fe rits in te re s tin th e P re m is e s o r
th is L e a s e w ith o u tT e n a n ts c o n s e n t.3 2 .L im ita tio n o fL a n d lo rd s L ia b ilty .3 2 .1 .IfL a n d lo rd is in d e fa u ltu n d e rth is L e a s e a n d ,a s a c o n s e q u e n c e ,T e n a n tre c o v e rs a m o n e ta ry ju d g m e n ta g a in s tL a n d lo rd ,th e ju d g m e n ts h a lb e s a tis fie d o n ly o u to f(a )th e p ro c e e d s o fs a le re c e iv e d o n e x e c u tio n o fth e ju d g m e n ta n d le v y a g a in s th e rig h t,ile a n d in te re s to fL a n d lo rd in th e P re m is e s ,(b )re n to ro th e rin c o m e fro m s u c h re a lp ro p e rty re c e iv a b le b y L a n d lo rd o r(c )th e c o n s id e ra tio n re c e iv e d b y L a n d lo rd fro m th e s a le ,fin a n c in g ,re fin a n c in g o ro th e rd is p o s ito n o fa lo ra n y p a rto fL a n d lo rd s rig h t,ile o rin te re s tin th e P re m is e s .
6 2 3 2 .2 .N e ith e rL a n d lo rd n o ra n y o fits a fila te s ,n o ra n y o fth e ire s p e c tiv e p a rtn e rs ,s h a re h o ld e rs ,d ire c to rs ,o fic e rs ,e m p lo y e e s ,m e m b e rs o ra g e n ts s h a lb e p e rs o n a ly lia b le fo rL a n d lo rd s o b lig a tio n s o ra n y d e fic ie n c y u n d e rth is L e a s e ,a n d s e rv ic e o fp ro c e s s s h a ln o tb e m a d e a g a in s ta n y s h a re h o ld e r,d ire c to r,o fic e r,e m p lo y e e o ra g e n to fL a n d lo rd o ra n y o fL a n d lo rd s a fila te s .N o p a rtn e r,s h a re h o ld e r,d ire c to r,o fic e r,e m p lo y e e ,m e m b e ro ra g e n to fL a n d lo rd o ra n y o fits a fila te s s h a lb e s u e d o rn a m e d a s a p a rty in a n y s u ito ra c tio n ,a n d s e rv ic e o fp ro c e s s s h a ln o tb e m a d e a g a in s ta n y p a rtn e ro rm e m b e ro fL a n d lo rd e x c e p ta s m a y b e n e c e s s a ry to s e c u re ju ris d ic tio n o fth e p a rtn e rs h ip ,jo in tv e n tu re o rlim ite d lia b ilty c o m p a n y ,a s a p p lic a b le .N o p a rtn e r,s h a re h o ld e r,d ire c to r,o fic e r,e m p lo y e e ,m e m b e ro ra g e n to fL a n d lo rd o ra n y o fits a fila te s s h a lb e re q u ire d to a n s w e ro ro th e rw is e p le a d to a n y s e rv ic e o fp ro c e s s ,a n d n o ju d g m e n ts h a lb e ta k e n o rw rito fe x e c u tio n le v ie d a g a in s ta n y p a rtn e r,s h a re h o ld e r,d ire c to r,o fic e r,e m p lo y e e ,m e m b e ro ra g e n to fL a n d lo rd o ra n y o fits a fila te s .3 2 .3 .IfT e n a n tis a p a rtn e rs h ip o rjo in tv e n tu re ,th e n th e p a rtn e rs o fs u c h p a rtn e rs h ip s h a ln o tb e p e rs o n a ly lia b le fo rT e n a n t's o b lig a tio n s u n d e rth is L e a s e ,a n d n o p a rtn e ro fT e n a n ts h a lb e s u e d o rn a m e d a s a p a rty in a n y s u ito ra c tio n ,a n d s e rv ic e o fp ro c e s s s h a ln o tb e m a d e a g a in s ta n y p a rtn e ro f
T e n a n te x c e p ta s m a y b e n e c e s s a ry to s e c u re ju ris d ic tio n o fth e p a rtn e rs h ip o rjo in tv e n tu re .IfT e n a n tis a c o rp o ra tio n ,th e n th e s h a re h o ld e rs ,d ire c to rs ,o fic e rs ,e m p lo y e e s a n d a g e n ts o fs u c h c o rp o ra tio n s h a ln o tb e p e rs o n a ly lia b le fo rT e n a n t's o b lig a tio n s u n d e rth is L e a s e ,a n d n o s h a re h o ld e r,d ire c to r,o fic e r,e m p lo y e e o ra g e n to fT e n a n ts h a lb e s u e d o rn a m e d a s a p a rty in a n y s u ito ra c tio n .IfT e n a n tis a lim ite d lia b ilty c o m p a n y ,th e n th e m e m b e rs o fs u c h lim ite d lia b ilty c o m p a n y s h a ln o tb e p e rs o n a ly lia b le fo rT e n a n t's o b lig a tio n s u n d e rth is L e a s e ,a n d n o m e m b e ro fT e n a n ts h a lb e s u e d o rn a m e d a s a p a rty in a n y s u ito ra c tio n ,a n d s e rv ic e o fp ro c e s s s h a ln o tb e m a d e a g a in s ta n y m e m b e ro fT e n a n te x c e p ta s m a y b e n e c e s s a ry to s e c u re ju ris d ic tio n o fth e lim ite d lia b ilty c o m p a n y .N o p a rtn e r,s h a re h o ld e r,d ire c to r,e m p lo y e e ,m e m b e ro ra g e n to fT e n a n ts h a lb e re q u ire d to a n s w e ro ro th e rw is e p le a d to a n y s e rv ic e o fp ro c e s s in its p e rs o n a lc a p a c ity ,a n d n o ju d g m e n ts h a lb e ta k e n o rw rito fe x e c u tio n le v ie d a g a in s ta n y p a rtn e r,s h a re h o ld e r,d ire c to r,e m p lo y e e o ra g e n to fT e n a n tin its p e rs o n a lc a p a c ity .3 2 .4 .E a c h o fth e c o v e n a n ts a n d a g re e m e n ts o fth is A rtic le s h a lb e a p p lic a b le to a n y c o v e n a n to ra g re e m e n te ith e re x p re s s ly c o n ta in e d in th is L e a s e o rim p o s e d b y A p p lic a b le L a w s a n d s h a ls u rv iv e th e e x p ira tio n o re a rlie rte rm in a tio n o fth is
L e a s e .3 3 .J o in ta n d S e v e ra lO b lig a tio n s .Ifm o re th a n o n e p e rs o n o re n tiy e x e c u te s th is L e a s e a s T e n a n t,h e n :3 3 .1 .E a c h o fth e m is jo in tly a n d s e v e ra ly lia b le fo rth e k e e p in g ,o b s e rv in g a n d p e rfo rm in g o fa lo fth e te rm s ,c o v e n a n ts ,c o n d ito n s ,p ro v is io n s a n d a g re e m e n ts o fth is L e a s e to b e k e p t,o b s e rv e d o rp e rfo rm e d b y T e n a n t,a n d s u c h te rm s ,c o v e n a n ts ,c o n d ito n s ,p ro v is io n s a n d a g re e m e n ts s h a lb e b in d in g w ith th e s a m e fo rc e a n d e fe c tu p o n e a c h a n d a lo fth e p e rs o n s e x e c u tin g th is A g re e m e n ta s T e n a n t;a n d 3 3 .2 .T h e te rm T e n a n t,a s u s e d in th is L e a s e ,s h a lm e a n a n d in c lu d e e a c h o fth e m ,jo in tly a n d s e v e ra ly .T h e a c to f,n o tic e fro m ,n o tic e to ,re fu n d to ,o rs ig n a tu re o fa n y o n e o rm o re o fth e m w ith re s p e c to th e te n a n c y u n d e rth is L e a s e ,in c lu d in g a n y re n e w a l,e x te n s io n ,
6 3 e x p ira tio n ,te rm in a tio n o rm o d ifc a tio n o fth is L e a s e ,s h a lb e b in d in g u p o n e a c h a n d a lo fth e p e rs o n s e x e c u tin g th is L e a s e a s T e n a n tw ith th e s a m e fo rc e a n d e fe c ta s ife a c h a n d a lo fth e m h a d s o a c te d ,s o g iv e n o re c e iv e d s u c h n o tic e o re fu n d ,o rs o s ig n e d .3 4 .R e p re s e n ta tio n s .T e n a n th e re b y c o v e n a n ts a n d w a ra n ts th a t(a )T e n a n tis d u ly in c o rp o ra te d o ro th e rw is e e s ta b lis h e d o rfo rm e d a n d v a lid ly e x is tin g u n d e rth e la w s o fits s ta te o fin c o rp o ra tio n ,e s ta b lis h m e n to rfo rm a tio n ,(b )T e n a n th a s a n d is d u ly q u a life d to d o b u s in e s s in th e s ta te in w h ic h th e P ro p e rty is lo c a te d ,(c )T e n a n th a s fu lc o rp o ra te ,p a rtn e rs h ip ,tru s t,a s s o c ia tio n o ro th e ra p p ro p ria te p o w e ra n d a u th o rity to e n te rin to th is L e a s e a n d to p e rfo rm a lT e n a n ts o b lig a tio n s h e re u n d e r,(d )e a c h p e rs o n (a n d a lo fth e p e rs o n s ifm o re th a n o n e s ig n s )s ig n in g th is L e a s e o n b e h a lfo fT e n a n tis d u ly a n d v a lid ly a u th o riz e d to d o s o .In a d d ito n ,T e n a n tre p re s e n ts th a t,o its c u re n t,a c tu a lk n o w le d g e (w ith o u td u ty o fin q u iry ),its n o ta n e n tiy w ith w h o m U .S .p e rs o n s o re n tie s a re re s tric te d fro m d o in g b u s in e s s u n d e re g u la tio n s o fth e O fic e o fF o re ig n A s s e tC o n tro l(O F A C )o fth e D e p a rtm e n to fth e T re a s u ry (in c lu d in g th o s e n a m e d o n O F A C s S p e c ia ly D e s ig n a te d a n d B lo c k e d P e rs o n s L is t)o ru n d e ra n y s ta tu te ,e x e c u tiv e o rd e r(in c lu d in g th e S e p te m b e r2 4 ,2 0 0 1 ,E x e c u tiv e O rd e rB lo c k in g P ro p e rty a n d P ro h ib itn g
T ra n s a c tio n s w ith P e rs o n s Wh o C o m m it,T h re a te n to C o m m it,o rS u p p o rtT e ro ris m )o ro th e rs im ila rg o v e rn m e n ta la c tio n .L a n d lo rd h e re b y c o v e n a n ts a n d w a ra n ts th a t(a )L a n d lo rd is d u ly in c o rp o ra te d o ro th e rw is e e s ta b lis h e d o rfo rm e d a n d v a lid ly e x is tin g u n d e rth e la w s o fits s ta te o fin c o rp o ra tio n ,e s ta b lis h m e n to rfo rm a tio n ,(b )L a n d lo rd h a s a n d is d u ly q u a life d to d o b u s in e s s in th e s ta te in w h ic h th e P ro p e rty is lo c a te d ,(c )L a n d lo rd h a s fu lc o rp o ra te ,p a rtn e rs h ip ,tru s t,a s s o c ia tio n o ro th e ra p p ro p ria te p o w e ra n d a u th o rity to e n te rin to th is L e a s e a n d to p e rfo rm a lL a n d lo rd 's o b lig a tio n s h e re u n d e ra n d (d )e a c h p e rs o n (a n d a lo fth e p e rs o n s ifm o re th a n o n e s ig n s )s ig n in g th is L e a s e o n b e h a lfo fL a n d lo rd is d u ly a n d v a lid ly a u th o riz e d to d o s o .In a d d ito n ,L a n d lo rd re p re s e n ts th a t,o its c u re n t,a c tu a lk n o w le d g e (w ith o u td u ty o fin q u iry ),its n o ta n e n tiy w ith w h o m U .S .p e rs o n s o re n tie s a re re s tric te d fro m d o in g b u s in e s s u n d e re g u la tio n s o fth e O fic e o fF o re ig n A s s e tC o n tro l("O F A C ")o fth e D e p a rtm e n to fth e T re a s u ry (in c lu d in g th o s e n a m e d o n O F A C 's S p e c ia ly D e s ig n a te d a n d B lo c k e d P e rs o n s L is t)o ru n d e ra n y s ta tu te ,e x e c u tiv e o rd e r(in c lu d in g th e S e p te m b e r2 4 ,2 0 0 1 ,E x e c u tiv e O rd e rB lo c k in g P ro p e rty a n d P ro h ib itn g T ra n s a c tio n s w ith P e rs o n s Wh o C o m m it,T h re a te n to C o m m it,o rS u p p o rtT e ro ris m )o ro th e rs im ila rg o v e rn m e n ta la c tio n .3 5 .C o n fid e n tia lity .N e ith e rp a rty s h a ld is c lo s e
a n y te rm s o rc o n d ito n s o fth is L e a s e (in c lu d in g R e n t)o rg iv e a c o p y o fth is L e a s e to a n y th ird p a rty ,a n d L a n d lo rd s h a ln o tre le a s e to a n y th ird p a rty a n y n o n p u b lic fin a n c ia lin fo rm a tio n o rn o n p u b lic in fo rm a tio n a b o u tT e n a n t's o w n e rs h ip s tru c tu re th a tT e n a n tg iv e s L a n d lo rd ,e x c e p t(a )ifre q u ire d b y A p p lic a b le L a w s o rin a n y ju d ic ia lp ro c e e d in g o ro th e rw is e in c o n n e c tio n w ith S E C filn g s d e s ire d b y e ith e rp a rty (b u tn o tre q u ire d u n d e rA p p lic a b le L a w s ),p ro v id e d th a th e re le a s in g p a rty h a s g iv e n th e o th e rp a rty re a s o n a b le n o tic e o fs u c h re q u ire m e n to rS E C filn g ,ife a s ib le ,(b )to a p a rty 's a to rn e y s ,a c c o u n ta n ts ,b ro k e rs a n d o th e rb o n a fid e c o n s u lta n ts o ra d v is e rs ,p ro v id e d s u c h th ird p a rtie s a g re e to b e b o u n d b y th is S e c tio n o r(c )to b o n a fid e p ro s p e c tiv e a s s ig n e e s o rs u b te n a n ts o fth is L e a s e ,p ro v id e d th e y a g re e in w ritn g to b e b o u n d b y th is S e c tio n .E ith e rp a rty m a y is s u e a p re s s re le a s e o rs im ila ra n n o u n c e m e n tre g a rd in g th is L e a s e ,p ro v id e d th a th e o th e rp a rty re a s o n a b ly a p p ro v e s th e c o n te n to fs u c h p re s s re le a s e in a d v a n c e .
6 4 3 6 .N o tic e s .E x c e p ta s o th e rw is e s ta te d in th is L e a s e ,a n y n o tic e ,c o n s e n t,d e m a n d ,in v o ic e ,s ta te m e n to ro th e rc o m m u n ic a tio n re q u ire d o rp e rm ite d to b e g iv e n h e re u n d e rs h a lb e in w ritn g a n d s h a lb e g iv e n b y (a )p e rs o n a ld e liv e ry ,(b )o v e rn ig h td e liv e ry w ith a re p u ta b le in te rn a tio n a lo v e rn ig h td e liv e ry s e rv ic e ,s u c h a s F e d E x ,o r(c )fa c s im ile o re m a iltra n s m is s io n ,s o lo n g a s s u c h tra n s m is s io n is fo lo w e d w ith in o n e (1 )b u s in e s s d a y b y d e liv e ry u tilz in g o n e o fth e m e th o d s d e s c rib e d in S u b s e c tio n 3 6 (a )o r(b ).A n y s u c h n o tic e ,c o n s e n t,d e m a n d ,in v o ic e ,s ta te m e n to ro th e rc o m m u n ic a tio n s h a lb e d e e m e d d e liv e re d (x )u p o n re c e ip t,ifg iv e n in a c c o rd a n c e w ith S u b s e c tio n 3 6 (a );(y )o n e b u s in e s s (1 )d a y a fte rd e p o s itw ith a re p u ta b le in te rn a tio n a lo v e rn ig h td e liv e ry s e rv ic e ,ifg iv e n ifg iv e n in a c c o rd a n c e w ith S u b s e c tio n 3 6 (b );o r(z )u p o n tra n s m is s io n ,ifg iv e n in a c c o rd a n c e w ith S u b s e c tio n 3 6 (c ).E x c e p ta s o th e rw is e s ta te d in th is L e a s e ,a n y n o tic e ,c o n s e n t,d e m a n d ,in v o ic e ,s ta te m e n to ro th e rc o m m u n ic a tio n re q u ire d o rp e rm ite d to b e g iv e n p u rs u a n to th is L e a s e s h a lb e a d d re s s e d to T e n a n ta th e P re m is e s ,o rto L a n d lo rd o rT e n a n ta th e a d d re s s e s s h o w n in S e c tio n s 2 .9 a n d 2 .1 0 o r2 .1 1 ,re s p e c tiv e ly .E ith e rp a rty m a y ,b y n o tic e to th e o th e rg iv e n p u rs u a n to th is S e c tio n ,s p e c ify a d d ito n a lo rd ife re n ta d d re s s e s fo rn o tic e p u rp o s e s .3 7 .M is c e la n e o u s .
3 7 .1 .T e n a n tw ilb e p e rm ite d to s e le c th e in ita ln a m e fo rth e P ro je c t,s u b je c to L a n d lo rd s re a s o n a b le p rio ra p p ro v a lo fs u c h P ro je c tn a m e .Ifa ta n y tim e T e n a n tc e a s e s to o c c u p y a m in im u m o fth re e h u n d re d s ix ty th o u s a n d (3 6 0 ,0 0 0 )s q u a re fe e to fR e n ta b le A re a a th e P ro je c t,L a n d lo rd re s e rv e s th e rig h to c h a n g e th e n a m e o fth e B u ild in g o rth e P ro je c tin its s o le d is c re tio n .3 7 .2 .T o in d u c e L a n d lo rd to e n te rin to th is L e a s e ,T e n a n ta g re e s th a tis h a lp ro m p tly fu rn is h to L a n d lo rd ,fro m tim e to tim e ,u p o n L a n d lo rd s w rite n re q u e s t,h e m o s tre c e n ty e a r-e n d u n c o n s o lid a te d fin a n c ia ls ta te m e n ts re fle c tin g T e n a n ts c u re n tfin a n c ia lc o n d ito n a u d ite d b y a n a tio n a ly re c o g n iz e d a c c o u n tin g firm .T e n a n ts h a l,w ith in n in e ty (9 0 )d a y s a fte rth e e n d o fT e n a n ts fin a n c ia ly e a r,fu rn is h L a n d lo rd w ith a c e rtife d c o p y o fT e n a n ts y e a r-e n d u n c o n s o lid a te d fin a n c ia ls ta te m e n ts fo rth e p re v io u s y e a ra u d ite d b y a n a tio n a ly re c o g n iz e d a c c o u n tin g firm .T e n a n tre p re s e n ts a n d w a ra n ts th a ta lfin a n c ia ls ta te m e n ts ,re c o rd s a n d in fo rm a tio n fu rn is h e d b y T e n a n to L a n d lo rd in c o n n e c tio n w ith th is L e a s e a re tru e ,c o re c ta n d c o m p le te in a lre s p e c ts .Ifa u d ite d fin a n c ia ls a re n o to th e rw is e p re p a re d ,u n a u d ite d fin a n c ia ls c o m p ly in g w ith g e n e ra ly a c c e p te d a c c o u n tin g p rin c ip le s a n d c e rtife d b y th e c h ie fin a n c ia lo fic e ro fT e n a n ta s tru e ,c o re c ta n d c o m p le te in a lre s p e c ts s h a ls u fic e fo rp u rp o s e s o fth is
S e c tio n .T h is S e c tio n s h a ln o ta p p ly s o lo n g a s T e n a n tis a p u b lic ly tra d e d c o m p a n y a n d its fin a n c ia ls ta te m e n ts a re re a d ily a v a ila b le b y p u b lic m e a n s ,e .g .,th e in te rn e t.3 7 .3 .S u b m is s io n o fth is in s tru m e n tfo re x a m in a tio n o rs ig n a tu re b y T e n a n td o e s n o tc o n s tiu te a re s e rv a tio n o fo ro p tio n fo ra le a s e ,a n d s h a ln o tb e e fe c tiv e a s a le a s e o ro th e rw is e u n tile x e c u tio n b y a n d d e liv e ry to b o th L a n d lo rd a n d T e n a n t.3 7 .4 .T h e te rm s o fth is L e a s e a re in te n d e d b y th e p a rtie s a s a fin a l,c o m p le te a n d e x c lu s iv e e x p re s s io n o fth e ira g re e m e n tw ith re s p e c to th e te rm s th a ta re in c lu d e d h e re in ,a n d m a y n o tb e c o n tra d ic te d o rs u p p le m e n te d b y e v id e n c e o fa n y o th e rp rio ro rc o n te m p o ra n e o u s a g re e m e n t.
 6 5 3 7 .5 .L a n d lo rd o rT e n a n tm a y ,b u ts h a ln o tb e o b lig a te d to ,re c o rd a s h o rtfo rm o rm e m o ra n d u m h e re o f.In th e e v e n tT e n a n tw is h e s to re c o rd a s h o rtfo rm m e m o ra n d u m ,s u c h m e m o ra n d u m s h a lb e in th e fo rm a ta c h e d h e re to a s E x h ib itM ,a n d c o n c u re n tly w ith T e n a n ts s ig n a tu re o n s u c h s h o rtfo rm m e m o ra n d u m ,T e n a n tw ils ig n a te rm in a tio n o fs u c h s h o rtfo rm m e m o ra n d u m o fle a s e in th e fo rm o fE x h ib itN w h ic h te rm in a tio n w ilb e h e ld b y L a n d lo rd a n d m a y b e re c o rd e d b y L a n d lo rd u p o n th e e x p ira tio n o re a rlie rte rm in a tio n o fth is L e a s e .With in te n (1 0 )d a y s a fte re c e ip to fw rite n re q u e s tfro m L a n d lo rd ,w h ic h L a n d lo rd m a y m a k e a ta n y tim e ,T e n a n ts h a le x e c u te a n u p d a te d te rm in a tio n o fa n y s h o rtfo rm o rm e m o ra n d u m o fle a s e re c o rd e d w ith re s p e c th e re to (w h ic h te rm in a tio n w ilb e h e ld b y L a n d lo rd in e s c ro w u n tilh e te rm in a tio n o re x p ira tio n o fth is L e a s e ).T e n a n ts h a lb e re s p o n s ib le fo rth e c o s to fre c o rd in g a n y s h o rtfo rm o rm e m o ra n d u m o fth is L e a s e ,in c lu d in g a n y tra n s fe ro ro th e rta x e s in c u re d in c o n n e c tio n w ith s u c h re c o rd a tio n .N e ith e rp a rty s h a lre c o rd th is L e a s e .3 7 .6 .Wh e re a p p lic a b le in th is L e a s e ,th e s in g u la rin c lu d e s th e p lu ra la n d th e m a s c u lin e o rn e u te rin c lu d e s th e m a s c u lin e ,fe m in in e a n d n e u te r.T h e w o rd s in c lu d e ,in c lu d e s ,in c lu d e d a n d in c lu d in g m e a n in c lu d e ,e tc .,w ith o u tlim ita tio n .T h e w o rd s h a lis m a n d a to ry a n d th e w o rd m a y is p e rm is s iv e .T h e s e c tio n
h e a d in g s o fth is L e a s e a re n o ta p a rto fth is L e a s e a n d s h a lh a v e n o e fe c tu p o n th e c o n s tru c tio n o rin te rp re ta tio n o fa n y p a rto fth is L e a s e .L a n d lo rd a n d T e n a n th a v e e a c h p a rtic ip a te d in th e d ra ftin g a n d n e g o tia tio n o fth is L e a s e ,a n d th e la n g u a g e in a lp a rts o fth is L e a s e s h a lb e in a lc a s e s c o n s tru e d a s a w h o le a c c o rd in g to its fa irm e a n in g a n d n o ts tric tly fo ro ra g a in s te ith e rL a n d lo rd o rT e n a n t.3 7 .7 .E x c e p ta s o th e rw is e e x p re s s ly s e tfo rth in th is L e a s e ,e a c h p a rty s h a lp a y its o w n c o s ts a n d e x p e n s e s in c u re d in c o n n e c tio n w ith th is L e a s e a n d s u c h p a rty s p e rfo rm a n c e u n d e rth is L e a s e ;p ro v id e d th a t,ife ith e rp a rty c o m m e n c e s a n a c tio n ,p ro c e e d in g ,d e m a n d ,c la im ,a c tio n ,c a u s e o fa c tio n o rs u ita g a in s th e o th e rp a rty a ris in g o u to fo rin c o n n e c tio n w ith th is L e a s e ,th e n th e s u b s ta n tia ly p re v a iln g p a rty s h a lb e re im b u rs e d b y th e o th e rp a rty fo ra lre a s o n a b le c o s ts a n d e x p e n s e s ,in c lu d in g re a s o n a b le a to rn e y s fe e s a n d e x p e n s e s ,in c u re d b y th e s u b s ta n tia ly p re v a iln g p a rty in s u c h a c tio n ,p ro c e e d in g ,d e m a n d ,c la im ,a c tio n ,c a u s e o fa c tio n o rs u it,a n d in a n y a p p e a lin c o n n e c tio n th e re w ith (re g a rd le s s o fw h e th e rth e a p p lic a b le a c tio n ,p ro c e e d in g ,d e m a n d ,c la im ,a c tio n ,c a u s e o fa c tio n ,s u ito ra p p e a lis v o lu n ta rily w ith d ra w n o rd is m is s e d ).3 7 .8 .T im e is o fth e e s s e n c e w ith re s p e c to th e p e rfo rm a n c e o fe v e ry p ro v is io n o fth is L e a s e .3 7 .9 .E a c h
p ro v is io n o fth is L e a s e p e rfo rm a b le b y T e n a n ts h a lb e d e e m e d b o th a c o v e n a n ta n d a c o n d ito n .3 7 .1 0 .N o tw ith s ta n d in g a n y th in g to th e c o n tra ry c o n ta in e d in th is L e a s e ,T e n a n ts o b lig a tio n s u n d e rth is L e a s e a re in d e p e n d e n ta n d s h a ln o tb e c o n d ito n e d u p o n p e rfo rm a n c e b y L a n d lo rd .3 7 .1 1 .Wh e n e v e rc o n s e n to ra p p ro v a lo fe ith e rp a rty is re q u ire d ,th a tp a rty s h a ln o tu n re a s o n a b ly w ith h o ld s u c h c o n s e n to ra p p ro v a l,e x c e p ta s m a y b e e x p re s s ly s e tfo rth to th e c o n tra ry .
6 6 3 7 .1 2 .A n y p ro v is io n o fth is L e a s e th a ts h a lp ro v e to b e in v a lid ,v o id o rile g a ls h a lin n o w a y a fe c t,im p a iro rin v a lid a te a n y o th e rp ro v is io n h e re o f,a n d a lo th e rp ro v is io n s o fth is L e a s e s h a lre m a in in fu lfo rc e a n d e fe c ta n d s h a lb e in te rp re te d a s ifth e in v a lid ,v o id o rile g a lp ro v is io n d id n o te x is t.3 7 .1 3 .E a c h o fth e c o v e n a n ts ,c o n d ito n s a n d a g re e m e n ts h e re in c o n ta in e d s h a lin u re to th e b e n e fito fa n d s h a la p p ly to a n d b e b in d in g u p o n th e p a rtie s h e re to a n d th e ire s p e c tiv e h e irs ;le g a te e s ;d e v is e e s ;e x e c u to rs ;a d m in is tra to rs ;a n d p e rm ite d s u c c e s s o rs a n d a s s ig n s .T h is L e a s e is fo rth e s o le b e n e fito fth e p a rtie s a n d th e ire s p e c tiv e h e irs ,le g a te e s ,d e v is e e s ,e x e c u to rs ,a d m in is tra to rs a n d p e rm ite d s u c c e s s o rs a n d a s s ig n s ,a n d n o th in g in th is L e a s e s h a lg iv e o rb e c o n s tru e d to g iv e a n y o th e rp e rs o n o re n tiy a n y le g a lo re q u ita b le rig h ts .N o th in g in th is S e c tio n s h a lin a n y w a y a lte rth e p ro v is io n s o fth is L e a s e re s tric tin g a s s ig n m e n to rs u b le tin g .3 7 .1 4 .T h is L e a s e s h a lb e g o v e rn e d b y ,c o n s tru e d a n d e n fo rc e d in a c c o rd a n c e w ith th e la w s o fth e s ta te in w h ic h th e P re m is e s a re lo c a te d ,w ith o u tre g a rd to s u c h s ta te s c o n flic to fla w p rin c ip le s .3 7 .1 5 .T e n a n tg u a ra n te e s ,w a ra n ts a n d re p re s e n ts th a th e in d iv id u a lo rin d iv id u a ls s ig n in g th is L e a s e h a v e th e p o w e r,a u th o rity a n d le g a lc a p a c ity to s ig n th is L e a s e o n b e h a lfo fa n d to b in d a le n tie s ,c o rp o ra tio n s ,
p a rtn e rs h ip s ,lim ite d lia b ilty c o m p a n ie s ,jo in tv e n tu re rs o ro th e ro rg a n iz a tio n s a n d e n tie s o n w h o s e b e h a lfs u c h in d iv id u a lo rin d iv id u a ls h a v e s ig n e d .3 7 .1 6 .T h is L e a s e m a y b e e x e c u te d in o n e o rm o re c o u n te rp a rts ,e a c h o fw h ic h ,w h e n ta k e n to g e th e r,s h a lc o n s tiu te o n e a n d th e s a m e d o c u m e n t.3 7 .1 7 .N o p ro v is io n o fth is L e a s e m a y b e m o d ife d ,a m e n d e d o rs u p p le m e n te d e x c e p tb y a n a g re e m e n tin w ritn g s ig n e d b y L a n d lo rd a n d T e n a n t.3 7 .1 8 .N o w a iv e ro fa n y te rm ,c o v e n a n to rc o n d ito n o fth is L e a s e s h a lb e b in d in g u p o n L a n d lo rd u n le s s e x e c u te d in w ritn g b y L a n d lo rd .T h e w a iv e rb y L a n d lo rd o fa n y b re a c h o rd e fa u lto fa n y te rm ,c o v e n a n to rc o n d ito n c o n ta in e d in th is L e a s e s h a ln o tb e d e e m e d to b e a w a iv e ro fa n y p re c e d in g o rs u b s e q u e n tb re a c h o rd e fa u lto fs u c h te rm ,c o v e n a n to rc o n d ito n o ra n y o th e rte rm ,c o v e n a n to rc o n d ito n o fth is L e a s e .3 7 .1 9 .T o th e e x te n tp e rm ite d b y A p p lic a b le L a w s ,th e p a rtie s w a iv e tria lb y ju ry in a n y a c tio n ,p ro c e e d in g o rc o u n te rc la im b ro u g h tb y th e o th e rp a rty h e re to re la te d to m a te rs a ris in g o u to fo rin a n y w a y c o n n e c te d w ith th is L e a s e ;th e re la tio n s h ip b e tw e e n L a n d lo rd a n d T e n a n t;T e n a n ts u s e o ro c c u p a n c y o fth e P re m is e s ;o ra n y c la im o fin ju ry o rd a m a g e re la te d to th is L e a s e o rth e P re m is e s .3 7 .2 0 .S u b je c to F o rc e M a je u re o rte m p o ra ry in te ru p tio n s d u e to c a s u a lty o re p a irs a n d
m a in te n a n c e ,T e n a n tw ilh a v e a c c e s s to th e P re m is e s 2 4 h o u rs p e rd a y ,7 d a y s p e rw e e k th ro u g h o u th e T e rm .3 7 .2 1 .Wh e n e v e rin th is L e a s e a n o n -s c h e d u le d p a y m e n tis re q u ire d to b e m a d e b y o n e p a rty to th e o th e r,b u ta s p e c ifc d a te fo rp a y m e n tis n o ts e tfo rth o ra s p e c ifc n u m b e ro fd a y s
6 7 w ith in w h ic h p a y m e n tis to b e m a d e is n o ts e tfo rth ,o rth e w o rd s "p ro m p tly "a n d /o r"o n d e m a n d ,"o rth e e q u iv a le n t,a re u s e d to s p e c ify w h e n s u c h p a y m e n tis d u e ,th e n s u c h p a y m e n ts h a lb e d u e th irty (3 0 )d a y s (a n d w h e n w o rd s s u c h a s im m e d ia te ly o rth e e q u iv a le n ta re u s e d ,th e n s u c h p a y m e n tw ilb e d u e te n (1 0 )d a y s )a fte rth e p a rty w h ic h is e n tile d to s u c h p a y m e n ts e n d s w rite n n o tic e to th e o th e rp a rty d e m a n d in g p a y m e n t.3 7 .2 2 .F o rs o lo n g a s T e n a n tle a s e s a m in im u m o fth re e h u n d re d s ix ty th o u s a n d (3 6 0 ,0 0 0 )s q u a re fe e to fR e n ta b le A re a a th e P ro je c t,L a n d lo rd s h a ln o te n te rin to a le a s e a g re e m e n tfo ra n y s p a c e in th e P ro je c tw ith a n y o fth e fo lo w in g c o m p e tio rs o fT e n a n t:A fy m e trix (in c lu d in g P a ra le le ,T ru e M a te ria ls ,P a n o m ic s ,a n d U S B io C h e m ic a ls ),A g ile n t,B e c k m a n C o u lte r,B G I(in c lu d in g C o m p le te G e n o m ic s ),B io A ra y S o lu tio n s ,C o m b im a trix ,In te lig e n tB io s y s te m s ,T h e rm o F is h e r(in c lu d in g L ife T e c h n o lo g ie s ,A p p lie d B io s y s te m s ,In v itro g e n ,a n d Io n T o re n t),L u m in e x ,N a te ra ,N e w E n g la n d B io la b s ,P a c ifc B io s c ie n c e s ,Q ia g e n (in c lu d in g In te lig e n tB io s y s te m s & P y ro s e q u e n c in g ),R o c h e ,S e q u e n o m ,A rio s a (in c lu d in g T a n d e m D ia g n o s tic s ),G e n o m ic H e a lth ,O x fo rd N a n o p o re (e a c h ,a C o m p e tio r);p ro v id e d ,h o w e v e r,th a tn o th in g in th is L e a s e s h a lp ro h ib itL a n d lo rd fro m e n te rin g in to a le a s e a g re e m e n tw ith a n y a fila te (w h ic h s h a lm e a n a c o m p a n y
c o n tro le d b y ,u n d e rc o m m o n c o n tro lw ith ,o rw h ic h c o n tro ls s u c h C o m p e tio r)o fa C o m p e tio r(a n y s u c h e n tiy ,a C o m p e tio rA fila te );p ro v id e d ,fu rth e r,th a t,p rio rto e n te rin g in to a n y le a s e a g re e m e n tw ith a C o m p e tio rA fila te fo rs p a c e a th e P ro je c t,L a n d lo rd s h a lb e o b lig a te d to o fe rth e s p a c e w h ic h L a n d lo rd in te n d s to le a s e to s u c h C o m p e tio rA fila te to T e n a n tin a c c o rd a n c e w ith th e te rm s ,c o n d ito n s a n d p ro v is io n s o fth is S e c tio n 3 7 .2 2 (th e C o m p e tio rR O F R ).3 7 .2 2 .1 In th e e v e n tL a n d lo rd re c e iv e s fro m a C o m p e tio rA fila te a b o n a fid e o fe rto le a s e s p a c e in th e P ro je c to n te rm s w h ic h L a n d lo rd w o u ld c o n s id e r(a n y s u c h s p a c e ,th e C o m p e tio rR O F R P re m is e s ),L a n d lo rd s h a lp ro v id e w rite n n o tic e th e re o fto T e n a n t(h e N o tic e o fO fe r),s p e c ify in g th e te rm s a n d c o n d ito n s (in c lu d in g le a s e te rm )o fth e p ro p o s e d le a s e to s u c h C o m p e tio rA fila te o fth e C o m p e tio rR O F R P re m is e s .T h is C o m p e tio rR O F R w iln o ta p p ly in th e e v e n ta n e x is tin g te n a n to fth e P ro je c tb e c o m e s a C o m p e tio rA fila te a fte re n te rin g in to its le a s e a th e P ro je c t,in w h ic h c a s e ,L a n d lo rd w ilh a v e n o o b lig a tio n to o fe rs u c h C o m p e tio rA fila te s s p a c e to T e n a n t,a n d L a n d lo rd w ilh a v e th e rig h to e x te n d ,e x p a n d o rp e rm its u c h C o m p e tio rA fila te to e x e rc is e a n y rig h ts o ro p tio n s g ra n te d to itp u rs u a n to its le a s e w ith o u ta n y lia b ilty o ro b lig a tio n to T e n a n th e re u n d e r.3 7 .2 2 .2 With in te n (1 0 )d a y s fo lo w in g its re c e ip to fa N o tic e o fO fe r,T e n a n ts h a la d v is e
L a n d lo rd in w ritn g w h e th e rT e n a n te le c ts to le a s e a l(n o tju s ta p o rtio n )o fth e C o m p e tio rR O F R P re m is e s o n th e te rm s a n d c o n d ito n s s e tfo rth in th e N o tic e o fO fe r.IfT e n a n tfa ils to n o tify L a n d lo rd o fT e n a n ts e le c tio n w ith in s u c h te n (1 0 )d a y p e rio d ,th e n T e n a n ts h a lb e d e e m e d to h a v e e le c te d n o to le a s e th e C o m p e tio rR O F R P re m is e s .3 7 .2 2 .3 IfT e n a n tim e ly n o tife s L a n d lo rd th a tT e n a n te le c ts to le a s e th e C o m p e tio rR O F R P re m is e s o n th e te rm s a n d c o n d ito n s s e tfo rth in th e N o tic e o fO fe r,th e n L a n d lo rd s h a le a s e th e C o m p e tio rR O F R P re m is e s to T e n a n tu p o n th e te rm s a n d c o n d ito n s s e tfo rth in th e N o tic e o fO fe r.L a n d lo rd a n d T e n a n tw ile x e c u te a n a m e n d m e n to th is L e a s e a d d in g th e C o m p e tio rR O F R P re m is e s to th e P re m is e s o n th e te rm s s e tfo rth in th e N o tic e o f
 6 8 O fe r(p ro v id e d th a th e T e rm a s to th e C o m p e tio rR O F R P re m is e s d o e s n o th a v e to b e c o te rm in o u s w ith th e P re m is e s )a n d o th e rw is e in a c c o rd a n c e w ith th e te rm s a n d c o n d ito n s o fth is L e a s e .N o tw ith s ta n d in g a n y th in g in th is S e c tio n 3 7 .2 2 to th e c o n tra ry ,th e C o m p e tio rR O F R s h a ln o ta p p ly d u rin g th e la s tw e lv e (1 2 )m o n th s o fth e T e rm (o ra n y a p p lic a b le O p tio n T e rm )u n le s s T e n a n th a s d e liv e re d a n O p tio n E x e rc is e N o tic e p u rs u a n to S e c tio n 3 9 .3 o fth is L e a s e fu rth e re x te n d in g th e T e rm .3 7 .2 2 .4 IfT e n a n tn o tife s L a n d lo rd th a tT e n a n te le c ts n o to le a s e th e C o m p e tio rR O F R P re m is e s o n th e te rm s a n d c o n d ito n s s e tfo rth in th e N o tic e o fO fe r,o rifT e n a n tfa ils to n o tify L a n d lo rd o fT e n a n ts e le c tio n w ith in th e te n (1 0 )-d a y p e rio d d e s c rib e d a b o v e ,th e n L a n d lo rd s h a lh a v e th e rig h to c o n s u m m a te a le a s e w ith s u c h C o m p e tio rA fila te o fth e C o m p e tio rR O F R P re m is e s o n s u c h te rm s a s L a n d lo rd a n d s u c h C o m p e tio rA fila te d e e m a c c e p ta b le (p ro v id e d th a tin th e e v e n th e te rm s p re v io u s ly o fe re d to T e n a n tin th e N o tic e o fO fe ra re a lte re d s o a s to re d u c e th e N e tE fe c tiv e R e n ta lR a te (a s d e fin e d b e lo w )b y m o re th a n fiv e p e rc e n t(5 % )o fth e N e tE fe c tiv e R e n ta lR a te lis te d in th e N o tic e o fO fe rd e liv e re d to T e n a n t,L a n d lo rd w ilb e o b lig a te d to d e liv e ra re v is e d N o tic e o fO fe rs ta tin g s u c h re v is e d te rm s ,a n d T e n a n tw ilh a v e th re e (3 )b u s in e s s d a y s a fte re c e ip to fth e re v is e d N o tic e o fO fe rto d e liv e r
w rite n n o tic e to L a n d lo rd e x e rc is in g th e C o m p e tio rR O F R o n s u c h re v is e d te rm s ).T h e te rm N e tE fe c tiv e R e n ta lR a te s h a lm e a n th e re n ta lra te ,a s a d ju s te d to re fle c th e v a lu e o fa n y fre e re n t,e n a n tim p ro v e m e n ta lo w a n c e o rs im ila rm o n e ta ry c o n c e s s io n s c o n ta in e d in th e re v is e d N o tic e o fO fe r.IfT e n a n te le c ts n o to e x e rc is e th e C o m p e tio rR O F R o n s u c h re v is e d te rm s (o rfa ils to re s p o n d d u rin g s u c h th re e (3 )b u s in e s s d a y p e rio d ),th e n T e n a n tw ilh a v e n o fu rth e rig h ts w ith re s p e c to th e C o m p e tio rR O F R P re m is e s a n d L a n d lo rd s h a lh a v e th e rig h to e n te rin to a le a s e w ith s u c h C o m p e tio rA fila te o n a n y te rm s a n d c o n d ito n s itd e e m s a c c e p ta b le .3 7 .2 2 .5 N o tw ith s ta n d in g a n y th in g in th is A rtic le to th e c o n tra ry ,T e n a n ts h a ln o th a v e th e rig h to e x e rc is e th e C o m p e tio rR O F R d u rin g s u c h p e rio d o ftim e th a tT e n a n tis in m o n e ta ry o rm a te ria ln o n -m o n e ta ry D e fa u ltu n d e ra n y p ro v is io n o fth is L e a s e (a n d th e tim e p e rio d fo rT e n a n to e x e rc is e th e C o m p e tio rR O F R w iln o tb e e x te n d e d b y re a s o n o fT e n a n ts in a b ilty to s o e x e rc is e th e C o m p e tio rR O F R ).A n y a te m p te d e x e rc is e o fth e C o m p e tio rR O F R d u rin g a p e rio d o ftim e in w h ic h T e n a n tis s o in m o n e ta ry o rm a te ria ln o n -m o n e ta ry D e fa u lt(b e y o n d th e e x p ira tio n o fa la p p lic a b le n o tic e a n d c u re p e rio d s )s h a lb e v o id a n d o fn o e fe c t.3 7 .2 2 .6 T h e rig h ts d e s c rib e d in th is S e c tio n 3 7 .2 2 s h a lb e p e rs o n a lto th e T e n a n to rig in a ly n a m e d in th is L e a s e
(i.e .,Ilu m in a ,In c .),m a y n o tb e tra n s fe re d to a n y o th e re n tiy ,a n d m a y n o tb e a s s ig n e d to a n y th ird p a rty e x c e p tin c o n n e c tio n w ith a n a s s ig n m e n to fT e n a n ts e n tire in te re s tin th is L e a s e to a T e n a n ts A fila te ;p ro v id e d ,h o w e v e r,th a th e T e n a n to rig in a ly n a m e d in th is L e a s e (i.e .,Ilu m in a ,In c .)s h a lb e fu ly a n d p rim a rily lia b le u n d e rth is L e a s e fo ra n y C o m p e tio rR O F R P re m is e s le a s e d p u rs u a n to th is S e c tio n 3 7 .2 2 re g a rd le s s o fw h e th e rth e rig h to firs tre fu s a lg ra n te d u n d e rth is S e c tio n 3 7 .2 2 is e x e rc is e d b y th e T e n a n to rig in a ly n a m e d in th is L e a s e (i.e .,Ilu m in a ,In c .)o rb y a T e n a n ts A fila te .Ilu m in a ,In c .w ils ig n a n y re a s o n a b le d o c u m e n tre a s o n a b ly re q u e s te d b y L a n d lo rd to c o n firm th e fo re g o in g c o n tin u in g lia b ilty o fIlu m in a ,In c .a s a n e x p re s s c o n d ito n p re c e d e n to L a n d lo rd s o b lig a tio n to le a s e th e C o m p e tio rR O F R P re m is e s to a n y T e n a n ts A fila te .
6 9 3 7 .2 2 .7 IfT e n a n te x e rc is e s th e C o m p e tio rR O F R ,L a n d lo rd d o e s n o tg u a ra n te e th a th e C o m p e tio rR O F R P re m is e s w ilb e a v a ila b le o n th e a n tic ip a te d c o m m e n c e m e n td a te fo rth e L e a s e a s to s u c h C o m p e tio rR O F R P re m is e s d u e to a h o ld o v e rb y th e th e n -e x is tin g o c c u p a n ts o fth e C o m p e tio rR O F R P re m is e s o rfo ra n y o th e re a s o n b e y o n d L a n d lo rd s re a s o n a b le c o n tro l.3 8 .T e le c o m m u n ic a tio n s E q u ip m e n t.A ta n y tim e d u rin g th e T e rm ,s u b je c to th e te rm s o fth is A rtic le 3 8 ,T e n a n ts h a lh a v e th e e x c lu s iv e rig h to in s ta l,a tT e n a n t's s o le c o s ta n d e x p e n s e ,s a te lite o rm ic ro w a v e d is h e s o ro th e rc o m m u n ic a tio n e q u ip m e n t(h e "T e le c o m m u n ic a tio n s E q u ip m e n t")u p o n th e ro o fo fth e B u ild in g s le a s e d s o le ly b y T e n a n to th e e x te n th e s a m e is re a s o n a b ly n e c e s s a ry fo re q u ip m e n tu s e d in c o n n e c tio n w ith T e n a n ts b u s in e s s o p e ra tio n s a th e P ro je c t.T e n a n ts h a lc o m p ly w ith a n y ro o fo ro o f-re la te d w a ra n tie s .T h e p h y s ic a la p p e a ra n c e a n d th e s iz e o fth e T e le c o m m u n ic a tio n s E q u ip m e n ts h a lb e s u b je c to L a n d lo rd 's w rite n a p p ro v a lp rio rto in s ta la tio n (w h ic h a p p ro v a lw iln o tu n re a s o n a b ly b e w ith h e ld ,c o n d ito n e d o rd e la y e d )a n y c o v e n a n ts ,c o n d ito n s ,o re s tric tio n s e n c u m b e rin g th e P re m is e s a n d ,a n y A p p lic a b le L a w s .T e n a n ts h a lm a in ta in s u c h T e le c o m m u n ic a tio n s E q u ip m e n tin g o o d c o n d ito n a n d re p a ir,a tT e n a n t's s o le c o s ta n d
e x p e n s e .T h e c o s to fth e T e le c o m m u n ic a tio n s E q u ip m e n t,in c lu d in g b u tn o tlim ite d to th e p e rm itn g ,in s ta la tio n ,m a in te n a n c e a n d re m o v a lth e re o fs h a lb e a tT e n a n t's s o le c o s ta n d e x p e n s e .IfT e n a n tfa ils to m a in ta in its T e le c o m m u n ic a tio n s E q u ip m e n t,o rifT e n a n tfa ils to re m o v e s u c h T e le c o m m u n ic a tio n s E q u ip m e n tu p o n te rm in a tio n o fth is L e a s e ,o rfa ils to re p a ira n y d a m a g e c a u s e d b y s u c h re m o v a l,L a n d lo rd m a y d o s o a tT e n a n t's e x p e n s e .T e n a n ts h a lo n d e m a n d re im b u rs e L a n d lo rd fo ra la c tu a l,d o c u m e n te d a n d re a s o n a b le c o s ts in c u re d b y L a n d lo rd to e fe c ts u c h re m o v a l,w h ic h a m o u n ts s h a lb e d e e m e d A d d ito n a lR e n ta n d s h a lin c lu d e w ith o u tlim ita tio n ,a ls u m s d is b u rs e d ,in c u re d o rd e p o s ite d b y L a n d lo rd ,in c lu d in g L a n d lo rd 's c o s ts ,e x p e n s e s a n d a c tu a la to rn e y s 'fe e s w ith in te re s th e re o n .T e n a n ts h a lin d e m n ify ,d e fe n d a n d h o ld h a rm le s s L a n d lo rd fro m a n d a g a in s ta n y lo s s ,c o s t,c la im ,la w s u it,la b ilty o re x p e n s e (in c lu d in g re a s o n a b le a to rn e y s 'fe e s a n d d is b u rs e m e n ts )a ris in g d ire c tly o rin d ire c tly o u to fT e n a n t's T e le c o m m u n ic a tio n s E q u ip m e n to ra n y fa ilu re to p e rfo rm a n y o fits o b lig a tio n s u n d e rth is A rtic le 3 8 .3 9 .O p tio n s to E x te n d T e rm .T e n a n t(o ra T e n a n ts A fila te to w h o m T e n a n th a s a s s ig n e d its e n tire in te re s tin th is L e a s e )s h a lh a v e th re e (3 )o p tio n s (e a c h ,a n O p tio n )to e x te n d th e T e rm b y fiv e (5 )y e a rs e a c h (e a c h ,a n
O p tio n T e rm )a s to th e e n tire P re m is e s (o ra s to a n y fu lB u ild in g le a s e d b y T e n a n t;p ro v id e d th a tin th e e v e n tT e n a n td o e s n o te le c to e x e rc is e its O p tio n a s to a lB u ild in g s in th e P ro je c t,h e M u lti-T e n a n tP ro v is io n s w ila p p ly a s o fth e c o m m e n c e m e n td a te o fs u c h O p tio n T e rm )u p o n th e fo lo w in g te rm s a n d c o n d ito n s .IfT e n a n tfa ils to re n e w th e T e rm a s to a n y B u ild in g w ith in th e P ro je c t,T e n a n tw ilh a v e n o fu rth e rig h to rO p tio n w ith re s p e c to th o s e B u ild in g s fo rw h ic h T e n a n td o e s n o te x e rc is e th e a p p lic a b le O p tio n (e .g .,ifT e n a n te le c ts to e x e rc is e its O p tio n o n ly a s to B u ild in g A ,th e M u lti-T e n a n tP ro v is io n s w ila p p ly a n d T e n a n tw ilh a v e n o fu rth e rig h to rO p tio n w ith re s p e c to B u ild in g D ,B u ild in g B o rB u ild in g C ).T e n a n tm a y n o te x e rc is e th e s e c o n d o rth ird O p tio n ,a s a p p lic a b le ,u n le s s T e n a n th a s p ro p e rly e x e rc is e d th e firs ta n d s e c o n d O p tio n s in a c c o rd a n c e w ith th e te rm s o fth is A rtic le 3 9 .A n y e x te n s io n o fth e T e rm p u rs u a n to a n O p tio n s h a lb e o n a lth e s a m e te rm s a n d c o n d ito n s a s th is L e a s e ,e x c e p ta s fo lo w s :
7 0 3 9 .1 .B a s e R e n tfo rth e a p p lic a b le B u ild in g (s )id e n tife d in th e O p tio n E x e rc is e N o tic e (a s d e fin e d b e lo w )s h a lb e a d ju s te d o n th e firs t(1 s t)d a y o fe a c h O p tio n T e rm .T h e B a s e R e n td u rin g e a c h O p tio n T e rm s h a le q u a lth e F a irM a rk e tV a lu e fo rth e a p p lic a b le O p tio n T e rm ,w h ic h F a irM a rk e tV a lu e d e te rm in a tio n w iln c lu d e re n ta la d ju s tm e n ts in a c c o rd a n c e w ith c o m p a ra b le tra n s a c tio n s a s d e te rm in e d a s p a rto fth e F a irM a rk e tV a lu e d e te rm in a tio n ."F a irM a rk e tV a lu e "m e a n s th e th e n -p re v a iln g a v e ra g e a n n u a lra te th a tc o m p a ra b le la n d lo rd s h a v e a c c e p te d in c u re n tra n s a c tio n s fro m n e w ,n o n -e q u ity (i.e .,n o tb e in g o fe re d e q u ity in th e B u ild in g s ),n o n re n e w a l,n o n e x p a n s io n a n d n o n a fila te d te n a n ts o fs im ila rfin a n c ia ls tre n g th fo rc o m p a ra b le s p a c e in c o m p a ra b le c la s s "A "o fic e /la b b u ild in g s c o m p a ra b ly lo c a te d ,w ith c o m p a ra b le s iz e ,q u a lity a n d flo o rh e ig h tin a firs tc la s s o fic e b u ild in g ,o ra s a p p ro p ria te ,a la b o ra to ry b u ild in g ,ta k in g in to c o n s id e ra tio n a lre le v a n tfa c to rs ,in c lu d in g ,w ith o u tlim ita tio n ,th e p ro p o s e d le a s e te rm ,th e te n a n tin d u c e m e n ts ,a lo w a n c e s o rc o n c e s s io n s ,ifa n y ,a n d e x c lu d in g s p e c ia liz e d te n a n tim p ro v e m e n ts o rte n a n tp a id im p ro v e m e n ts fo ra c o m p a ra b le te rm ,w ith th e d e te rm in a tio n o fF a irM a rk e tV a lu e to ta k e in to a c c o u n ta lre le v a n tfa c to rs ,in c lu d in g te n a n tin d u c e m e n ts ,a lo w a n c e s o rc o n c e s s io n s ,ifa n y ,th e e x te n to fth e s e rv ic e s p ro v id e d o rto b e
p ro v id e d to th e P re m is e s ,a n d c o n tra c tio n a n d e x p a n s io n o p tio n s .In th e e v e n th e te n a n tin d u c e m e n ts ,a lo w a n c e s o rc o n c e s s io n s g ra n te d d ife rfo m th e te rm s c o n ta in e d in th is L e a s e ,a n a d ju s tm e n to th e F a irM a rk e tV a lu e s h a lb e m a d e o n a b a s is c o n s is te n tw ith th e a d ju s tm e n ts c o m m o n ly m a d e in th e m a rk e tfo rc o m p a ra b le d ife re n c e s a n d c o n c e s s io n p a c k a g e s .IfL a n d lo rd a n d T e n a n tc a n n o ta g re e o n th e F a irM a rk e tV a lu e fo rp u rp o s e s o fa n y O p tio n T e rm w ith in s ix ty (6 0 )d a y s a fte rT e n a n td e liv e rs th e O p tio n E x e rc is e N o tic e ,th e n th e y s h a le n g a g e a m u tu a ly a g re e a b le in d e p e n d e n th ird p a rty a p p ra is e r,w h ic h a p p ra is e rs h a lb e a re a le s ta te b ro k e rw ith a tle a s te n (1 0 )y e a rs 'e x p e rie n c e in a p p ra is in g th e re n ta lv a lu e o fle a s e d c o m m e rc ia lp re m is e s (fo re s e a rc h a n d d e v e lo p m e n ta n d la b o ra to ry u s e s )a tc o m p a ra b le s ite s w ith in th e B a y A re a P e n in s u la s u b m a rk e t(h e "A p p ra is e r").Ifth e p a rtie s c a n n o ta g re e o n th e A p p ra is e r,e a c h s h a lw ith in te n (1 0 )d a y s a fte rs u c h im p a s s e a p p o in ta n A p p ra is e r(m e e tin g th e q u a lifc a tio n s s e tfo rth a b o v e )a n d ,w ith in te n (1 0 )d a y s a fte rth e a p p o in tm e n to fb o th s u c h A p p ra is e rs ,th o s e tw o A p p ra is e rs s h a ls e le c ta th ird A p p ra is e rm e e tin g th e q u a lifc a tio n s s e tfo rth a b o v e .Ife ith e rp a rty fa ils to tim e ly a p p o in ta n A p p ra is e r,th e n th e A p p ra is e rth e o th e rp a rty a p p o in ts s h a lb e th e s o le A p p ra is e r.With in te n (1 0 )d a y s a fte r
a p p o in tm e n to fa lA p p ra is e r(s ),L a n d lo rd a n d T e n a n ts h a le a c h s im u lta n e o u s ly g iv e th e A p p ra is e rs (w ith a c o p y to th e o th e rp a rty )its d e te rm in a tio n o fF a irM a rk e tV a lu e ,w ith s u c h s u p p o rtin g d a ta o rin fo rm a tio n a s e a c h s u b m itn g p a rty d e te rm in e s a p p ro p ria te .With in te n (1 0 )d a y s a fte rs u c h s u b m is s io n s ,th e A p p ra is e rs s h a lb y m a jo rity v o te s e le c te ith e rL a n d lo rd 's o rT e n a n t's F a irM a rk e tV a lu e .T h e A p p ra is e rs m a y n o ts e le c to rd e s ig n a te a n y o th e rF a irM a rk e tV a lu e .T h e d e te rm in a tio n o fth e A p p ra is e r(s )s h a lb in d th e p a rtie s .3 9 .2 .T h e rig h ts d e s c rib e d in th is S e c tio n 3 9 s h a lb e p e rs o n a lto th e T e n a n to rig in a ly n a m e d in th is L e a s e (i.e .,Ilu m in a ,In c .),m a y n o tb e tra n s fe re d to a n y o th e re n tiy ,a n d m a y n o tb e a s s ig n e d s e p a ra te ly fro m th is L e a s e e x c e p tin c o n n e c tio n w ith a n a s s ig n m e n to fT e n a n ts e n tire in te re s tin th is L e a s e to a T e n a n ts A fila te ;p ro v id e d ,h o w e v e r,th a th e T e n a n to rig in a ly n a m e d in th is L e a s e (i.e .,Ilu m in a ,In c .)s h a lre m a in fu ly a n d p rim a rily lia b le u n d e rth is L e a s e d u rin g a n y O p tio n T e rm re g a rd le s s o fw h e th e rs u c h O p tio n w a s e x e rc is e d b y th e T e n a n to rig in a ly n a m e d in th is L e a s e (i.e .,Ilu m in a ,In c .)o rb y a T e n a n ts A fila te .Ilu m in a ,In c .w ils ig n a n y re a s o n a b le d o c u m e n tre a s o n a b ly re q u e s te d b y L a n d lo rd to c o n firm th e fo re g o in g
7 1 c o n tin u in g lia b ilty o fIlu m in a ,In c .a s a n e x p re s s c o n d ito n p re c e d e n to L a n d lo rd s o b lig a tio n to a lo w a n y T e n a n ts A fila te to e x e rc is e a n O p tio n .3 9 .3 .E a c h O p tio n is c o n d ito n a lu p o n T e n a n tg iv in g L a n d lo rd w rite n n o tic e (O p tio n E x e rc is e N o tic e )o fits e le c tio n to e x e rc is e s u c h O p tio n a tle a s tw e lv e (1 2 )m o n th s p rio rto th e e n d o fth e e x p ira tio n o fth e th e n -c u re n tT e rm .T im e s h a lb e o fth e e s s e n c e a s to T e n a n ts e x e rc is e o fa n O p tio n .T e n a n ta s s u m e s fu lre s p o n s ib ilty fo rm a in ta in in g a re c o rd o fth e d e a d lin e s to e x e rc is e a n O p tio n .T e n a n ta c k n o w le d g e s th a tiw o u ld b e in e q u ita b le to re q u ire L a n d lo rd to a c c e p ta n y e x e rc is e o fa n O p tio n a fte rth e d a te p ro v id e d fo rin th is S e c tio n .3 9 .4 .N o tw ith s ta n d in g a n y th in g c o n ta in e d in th is A rtic le to th e c o n tra ry ,T e n a n ts h a ln o th a v e th e rig h to e x e rc is e a n O p tio n d u rin g a n y tim e p e rio d w h e n T e n a n tis in m o n e ta ry o rm a te ria ln o n -m o n e ta ry d e fa u lta fte rth e e x p ira tio n o fa n y a p p lic a b le n o tic e a n d c u re p e rio d ,o rin th e e v e n th a tT e n a n th a s d e fa u lte d in th e p e rfo rm a n c e o fits o b lig a tio n s u n d e rth is L e a s e th re e (3 )o rm o re tim e s a n d a s e rv ic e o rla te c h a rg e h a s b e c o m e p a y a b le u n d e rS e c tio n 2 8 .1 fo re a c h o fs u c h d e fa u lts d u rin g th e tw e lv e (1 2 )-m o n th p e rio d im m e d ia te ly p rio rto th e d a te th a tT e n a n tin te n d s to e x e rc is e a n O p tio n ,w h e th e ro rn o tT e n a n th a s c u re d s u c h d e fa u lts .3 9 .5 .T h e p e rio d o ftim e w ith in w h ic h T e n a n tm a y e x e rc is e a n
O p tio n s h a ln o tb e e x te n d e d o re n la rg e d b y re a s o n o fT e n a n ts in a b ilty to e x e rc is e s u c h O p tio n b e c a u s e o fth e p ro v is io n s o fS e c tio n 3 9 .4 .4 0 .E x p a n s io n O p tio n .U p o n a w rite n re q u e s tfro m T e n a n t,a ta n y tim e d u rin g th e E x p a n s io n E x e rc is e P e rio d (a s d e fin e d b e lo w ),T e n a n tc a n re q u e s th a tL a n d lo rd p ro v id e (1 )its th e n -c u re n tc a lc u la tio n o fth e e s tim a te d P ro je c tC o s ts fo rth e E x p a n s io n S p a c e (a s d e fin e d b e lo w )b a s e d o n a b id fro m L a n d lo rd s g e n e ra lc o n tra c to r,a n d (2 )a d e ta ile d re n ts c h e d u le fo rth e E x p a n s io n S p a c e ,w h ic h L a n d lo rd s h a lp ro v id e w ith in th irty (3 0 )d a y s a fte re c e ip to fT e n a n ts w rite n re q u e s t.In th e e v e n th a t,a ta n y tim e w ith in th e firs th irty -s ix (3 6 )m o n th s a fte rth e P h a s e 1 R e n tC o m m e n c e m e n tD a te s u b je c to e x te n s io n a s s e tfo rth b e lo w (th e E x p a n s io n E x e rc is e P e rio d ),T e n a n tw o u ld lik e to e x p a n d th e P re m is e s to in c lu d e th a tc e rta in B u ild in g to b e c o n s tru c te d b y L a n d lo rd a n d re fe re d to a s B u ild in g C a n d c o n ta in in g a p p ro x im a te ly 1 6 0 ,0 0 0 s q u a re fe e to fR e n ta b le A re a ,s u b je c to m e a s u re m e n tp u rs u a n to S e c tio n 1 .1 a b o v e (E x p a n s io n S p a c e ),a s fu rth e rd e s c rib e d o n E x h ib itA a ta c h e d h e re to ,T e n a n tm a y d o s o b y d e liv e rin g w rite n n o tic e to L a n d lo rd (E x p a n s io n N o tic e ),w h ic h n o tic e s h a ls ta te th a tT e n a n tis e x e rc is in g its o p tio n (E x p a n s io n O p tio n )to re q u e s th a tL a n d lo rd c o n s tru c tB u ild in g C a n d th e re la te d p a rk in g fa c ilte s to
a c c o m m o d a te T e n a n ts e x p a n s io n in to th e E x p a n s io n S p a c e .IfT e n a n td e liv e rs a n E x p a n s io n N o tic e to L a n d lo rd w ith in th e E x p a n s io n E x e rc is e P e rio d ,th e n th e E x p a n s io n S p a c e w ilb e a d d e d to th e P re m is e s le a s e d b y T e n a n th e re u n d e ro n te rm s a n d c o n d ito n s s u b s ta n tia ly e q u iv a le n to th o s e a p p lic a b le to th e o rig in a lP re m is e s e x c e p th a t(i)h e C o m m e n c e m e n tD a te a s to T e n a n ts le a s e o fth e E x p a n s io n S p a c e w ilb e th e d a te (th e E x p a n s io n S p a c e C o m m e n c e m e n tD a te )w h ic h is n in e (9 )m o n th s a fte rth e E x p a n s io n S p a c e is d e liv e re d to T e n a n tin T IR e a d y C o n d ito n ;p ro v id e d th a tifh e E x p a n s io n S p a c e C o m m e n c e m e n tD a te is d e la y e d b e c a u s e o fa T e n a n tD e la y (a s d e fin e d th e Wo rk L e te r),th e n th e E x p a n s io n S p a c e C o m m e n c e m e n tD a te s h a lb e th e d a te th a th e E x p a n s io n S p a c e C o m m e n c e m e n tD a te w o u ld h a v e o c c u re d b u tfo rs u c h T e n a n tD e la y ,a n d in th e e v e n th e re is
 7 2 a L a n d lo rd D e la y o ra n U n c o n tro la b le D e la y w h ic h a c tu a ly d e la y s c o m p le tio n o fth e T e n a n tIm p ro v e m e n ts (p ro v id e d th a tn o U n c o n tro la b le D e la y s s h a le x c e e d 9 0 d a y s re g a rd le s s o fth e a c tu a ln u m b e ro fd a y s o fU n c o n tro la b le D e la y ),th e n th e n in e (9 )m o n th p e rio d s e tfo rth a b o v e w ilb e e x te n d e d b y th e n u m b e ro fd a y s o fs u c h L a n d lo rd D e la y s a n d /o rU n c o n tro la b le D e la y s ,a s a p p lic a b le ,a n d (i)th e a n n u a lB a s e R e n tfo rth e E x p a n s io n S p a c e (th e E x p a n s io n S p a c e B a s e R e n t)w ilb e e q u a lto th e s u m o f(a )th e p ro d u c to fs e v e n p e rc e n t(7 % )a n d th e P ro je c tC o s ts (a s d e fin e d in E x h ib itE )a lo c a b le to th e E x p a n s io n S p a c e ,w h ic h s h a lb e p a y a b le c o m m e n c in g a s o fth e E x p a n s io n S p a c e C o m m e n c e m e n tD a te (w h ic h w ile s c a la te p u rs u a n to S e c tio n 6 a b o v e )(th e P ro je c tC o s ts C o m p o n e n t),p lu s (b )th e fix e d p o rtio n o fth e E x p a n s io n L a n d R e n ts e tfo rth in S e c tio n 4 0 .1 (a )b e lo w (i.e .,$ 1 ,5 7 4 ,8 0 9 .6 0 ,b u ts u b je c to in c re a s e p u rs u a n to S e c tio n 6 a b o v e ),w h ic h s h a lb e p a y a b le c o m m e n c in g o n th e la te ro f(1 )th e firs td a y o fth e th irty -s e v e n th (3 7 th )m o n th a fte rth e P h a s e 1 R e n tC o m m e n c e m e n tD a te o r(2 )th e E x p a n s io n S p a c e C o m m e n c e m e n tD a te ,a n d w ilb e fu rth e rs u b je c to e s c a la tio n a s s e tfo rth in S e c tio n 6 a b o v e (th e L a n d R e n tC o m p o n e n t),(ih e o n ly te n a n tim p ro v e m e n ta lo w a n c e p a y a b le b y L a n d lo rd in c o n n e c tio n w ith th e
E x p a n s io n S p a c e w ilb e a n a m o u n te q u a lto F ifty F iv e D o la rs ($ 5 5 .0 0 )p e rs q u a re fo o to fR e n ta b le A re a in th e E x p a n s io n S p a c e ,a s m e a s u re d in a c c o rd a n c e w ith S e c tio n 1 .1 o fth is L e a s e ,(iv )th e T e rm E x p ira tio n D a te a s to th e E x p a n s io n S p a c e w ilb e th e d a te th a tis fite e n (1 5 )y e a rs a fte rth e E x p a n s io n S p a c e C o m m e n c e m e n tD a te a n d (v )th e P ro je c ta n d B a s e B u ild in g Wo rk ,in c lu d in g w ith o u tlim ita tio n th e S h e lS c h e m a tic D e s ig n D o c u m e n ts ,A p p ro v e d P la n s ,D e s ig n D e v e lo p m e n tD o c u m e n ts ,P ro je c tC o s tE s tim a te a n d F in a lB u d g e t,w ila lb e a lte re d ,p re p a re d a n d /o ra p p ro v e d a s n e c e s s a ry to re fle c th e E x p a n s io n S p a c e .E x p a n s io n S p a c e B a s e R e n tw ilb e p a y a b le in m o n th ly in s ta lm e n ts e q u a lto 1 /1 2 th o fth e E x p a n s io n S p a c e B a s e R e n ta s c a lc u la te d p u rs u a n to s u b s e c tio n (i)o fth e fo re g o in g s e n te n c e a n d o th e rw is e in a c c o rd a n c e w ith th e p ro v is io n s o fth is L e a s e a p p lic a b le to B a s e R e n t(a n d fu rth e rs u b je c to a d ju s tm e n tp u rs u a n to th e te rm s o fS e c tio n 6 o fth is L e a s e ).T h e P ro je c ta n d B a s e B u ild in g Wo rk w ith re s p e c to th e E x p a n s io n S p a c e w ilb e c o n s tru c te d in a m a n n e rw h ic h is c o m p a ra b le to th e in ita lP re m is e s (a n d d e liv e re d in s u b s ta n tia la c c o rd a n c e w ith th e S p e c ifc a tio n s s e tfo rth in E x h ib itC ).In th e e v e n tT e n a n tp ro p e rly e x e rc is e s th e E x p a n s io n O p tio n ,L a n d lo rd a n d T e n a n tw ile x e c u te a n a m e n d m e n to th is L e a s e
m e m o ria liz in g th e a d d ito n o fth e E x p a n s io n S p a c e to th e P re m is e s w ith in th irty (3 0 )d a y s a fte rth e d a te o fth e E x p a n s io n N o tic e (p ro v id e d th a th e e x e c u tio n o fs u c h a n a m e n d m e n tw iln o tb e a c o n d ito n p re c e d e n to th e e fe c tiv e n e s s o fth e e x p a n s io n ),w h ic h E x p a n s io n S p a c e A m e n d m e n ts h a lin c lu d e a d e ta ile d s c h e d u le o fth e E x p a n s io n S p a c e B a s e R e n t.In o rd e rto e x e rc is e th e E x p a n s io n O p tio n h e re u n d e r,T e n a n tm u s tn o tb e in D e fa u ltu n d e rth is L e a s e a fte re x p ira tio n o fa p p lic a b le n o tic e a n d c u re p e rio d s a th e tim e o fd e liv e ry o fth e E x p a n s io n N o tic e .T h e rig h ts d e s c rib e d in th is S e c tio n 4 0 s h a lb e p e rs o n a lto th e T e n a n to rig in a ly n a m e d in th is L e a s e (i.e .,Ilu m in a ,In c .),m a y n o tb e tra n s fe re d to a n y o th e re n tiy ,a n d m a y n o tb e a s s ig n e d s e p a ra te ly fro m th is L e a s e e x c e p tin c o n n e c tio n w ith a n a s s ig n m e n to fT e n a n ts e n tire in te re s tin th is L e a s e to a T e n a n ts A fila te ;p ro v id e d ,h o w e v e r,th a th e T e n a n to rig in a ly n a m e d in th is L e a s e (i.e .,Ilu m in a ,In c .)s h a lb e fu ly a n d p rim a rily lia b le u n d e rth is L e a s e fo rth e E x p a n s io n S p a c e (ifth e E x p a n s io n O p tio n is e x e rc is e d ),re g a rd le s s o fw h e th e rth e E x p a n s io n O p tio n is e x e rc is e d b y th e T e n a n to rig in a ly n a m e d in th is L e a s e (i.e .,Ilu m in a ,In c .)o rb y a T e n a n ts A fila te ,a n d Ilu m in a ,In c .a g re e s to s ig n a n y re a s o n a b le d o c u m e n tre a s o n a b ly re q u e s te d b y L a n d lo rd to c o n firm th e fo re g o in g c o n tin u in g lia b ilty o fIlu m in a ,In c .
a s a n e x p re s s c o n d ito n p re c e d e n to L a n d lo rd s o b lig a tio n to le a s e th e E x p a n s io n S p a c e to a n y T e n a n ts A fila te re g a rd le s s o fw h e th e rth e E x p a n s io n O p tio n ,L a n d R e n tO p tio n
7 3 a n d /o rB u ild in g C R O F R (a s a p p lic a b le )is e x e rc is e d b y th e T e n a n to rig in a ly n a m e d in th is L e a s e (i.e .,Ilu m in a ,In c .)o rb y a T e n a n ts A fila te .4 0 .1 B y d e liv e ry o fw rite n n o tic e (L a n d R e n ta lN o tic e )d e liv e re d to L a n d lo rd n o la te rth a n th e d a y th a tis tw e n ty -fo u r(2 4 )m o n th s a fte rth e P h a s e 1 R e n tC o m m e n c e m e n tD a te ,T e n a n t(o ra T e n a n ts A fila te to w h o m T e n a n th a s a s s ig n e d its e n tire in te re s tin th is L e a s e )m a y e le c to e x te n d th e E x p a n s io n O p tio n (s u c h e x te n s io n m a y b e re fe re d to a s th e L a n d R e n ta lO p tio n )b y a g re e in g to p a y E x p a n s io n L a n d R e n ta s d e fin e d b e lo w ,w h ic h E x p a n s io n L a n d R e n tw ilc o m m e n c e o n th e firs td a y o fth e th irty -s e v e n th (3 7 th )m o n th fo lo w in g th e P h a s e 1 R e n tC o m m e n c e m e n tD a te ;p ro v id e d ,h o w e v e r,th a tT e n a n t's rig h to p ro v id e th e L a n d R e n ta lN o tic e s h a lc o n tin u e u n le s s L a n d lo rd p ro v id e s w rite n n o tic e ("R e m in d e rN o tic e ")to T e n a n to fT e n a n t's fa ilu re to tim e ly p ro v id e s u c h L a n d R e n ta lN o tic e a n d T e n a n tfa ils to p ro v id e th e s a m e w ith in te n (1 0 )d a y s o fL a n d lo rd 's R e m in d e rN o tic e (w h ic h R e m in d e rN o tic e s h a ln o tb e s e n te a rlie rth a n th a td a te w h ic h is tw e n ty -fo u r(2 4 )m o n th s a fte rth e P h a s e 1 R e n tC o m m e n c e m e n tD a te ).T h e E x p a n s io n L a n d R e n ts h a lm e a n a n a n n u a la m o u n te q u a lto th e s u m o f(a )$ 1 ,5 7 4 ,8 0 9 .6 0 ,p lu s (b )th e p ro d u c to f(i)s e v e n p e rc e n t(7 % )a n d (i)a lP ro je c tC o s ts w h ic h a re a lo c a te d to B u ild in g C b y L a n d lo rd b a s e d
o n th e p ro ra ta s h a re o fB u ild in g C to th e o v e ra lR e n ta b le A re a o fth e P ro je c t.E x p a n s io n L a n d R e n tw ilb e p a y a b le in m o n th ly in s ta lm e n ts e q u a lto 1 /1 2 th o fth e E x p a n s io n L a n d R e n ta s c a lc u la te d p u rs u a n to th e fo re g o in g s e n te n c e a n d o th e rw is e in a c c o rd a n c e w ith th e p ro v is io n s o fth is L e a s e a p p lic a b le to B a s e R e n t(a n d fu rth e rs u b je c to a d ju s tm e n tp u rs u a n to th e te rm s o fS e c tio n 6 o fth is L e a s e ).In th e e v e n tT e n a n te le c ts to e x e rc is e th e L a n d R e n ta lO p tio n ,th e n T e n a n ts E x p a n s io n O p tio n w ilre m a in in fu lfo rc e a n d e fe c ta n d T e n a n tw ilc o n tin u e to p a y th e E x p a n s io n L a n d R e n tfo rs o lo n g a s T e n a n td e s ire s (p ro v id e d th a th e L a n d R e n ta lO p tio n w iln n o e v e n te x te n d b e y o n d th e T e rm o fth is L e a s e a s to B u ild in g A a n d B u ild in g D ).In th e e v e n tT e n a n tw is h e s to te rm in a te th e L a n d R e n ta lO p tio n ,itm a y d o s o b y d e liv e ry o fa tle a s te ig h te e n (1 8 )m o n th s p rio rw rite n n o tic e ,in w h ic h e v e n th e L a n d R e n ta lO p tio n (a n d th e E x p a n s io n O p tio n )w ilte rm in a te a s o fth e d a te w h ic h is e ig h te e n (1 8 )m o n th s a fte rL a n d lo rd s re c e ip to fs u c h te rm in a tio n n o tic e .L a n d lo rd s h a lh a v e a lth e s a m e rig h ts a n d re m e d ie s fo rn o n -p a y m e n to fE x p a n s io n L a n d R e n ta s ith a s fo rn o n -p a y m e n to fB a s e R e n th e re u n d e r.T h e rig h ts d e s c rib e d in th is S e c tio n 4 0 .1 s h a lb e p e rs o n a lto th e T e n a n to rig in a ly n a m e d in th is L e a s e (i.e .,Ilu m in a ,In c .),m a y n o tb e tra n s fe re d to a n y o th e re n tiy ,a n d m a y
n o tb e a s s ig n e d s e p a ra te ly fro m th is L e a s e e x c e p tin c o n n e c tio n w ith a n a s s ig n m e n to fT e n a n ts e n tire in te re s tin th is L e a s e to a T e n a n ts A fila te ;p ro v id e d ,h o w e v e r,th a th e T e n a n to rig in a ly n a m e d in th is L e a s e (i.e .,Ilu m in a ,In c .)s h a lb e fu ly a n d p rim a rily lia b le u n d e rth is L e a s e fo rth e E x p a n s io n L a n d R e n tre g a rd le s s o fw h e th e rth e L a n d R e n tO p tio n is e x e rc is e d b y th e T e n a n to rig in a ly n a m e d in th is L e a s e (i.e .,Ilu m in a ,In c .)o rb y a T e n a n ts A fila te ,a n d Ilu m in a ,In c .a g re e s to s ig n a n y re a s o n a b le d o c u m e n tre a s o n a b ly re q u e s te d b y L a n d lo rd to c o n firm th e fo re g o in g c o n tin u in g lia b ilty o fIlu m in a ,In c .a s a n e x p re s s c o n d ito n p re c e d e n to L a n d lo rd s o b lig a tio n to a lo w a n y T e n a n ts A fila te to e x e rc is e th e L a n d R e n ta lO p tio n .4 0 .2 T h e p a rtie s h e re b y a c k n o w le d g e th a tin th e e v e n tT e n a n te x e rc is e s th e E x p a n s io n O p tio n ,th e T e rm o fth is L e a s e a s to th e P re m is e s a n d th e E x p a n s io n S p a c e w iln o te x p ire o n th e s a m e d a te .T e n a n ts h a lh a v e th e o p tio n ,e x e rc is a b le b y w rite n n o tic e (a n E x p a n s io n E x te n s io n N o tic e )d e liv e re d to L a n d lo rd w ith in n in e ty (9 0 )d a y s a fte rth e E x p a n s io n S p a c e C o m m e n c e m e n tD a te ,to e x te n d th e T e rm E x p ira tio n D a te fo rth e P re m is e s s u c h th a th e T e rm o f
 7 4 T e n a n ts le a s e o fth e P re m is e s w ile x p ire c o n te rm in o u s ly w ith th e E x p a n s io n S p a c e .In th e e v e n tT e n a n td e liv e rs th e E x p a n s io n E x te n s io n N o tic e w ith in th e tim e p e rio d s e tfo rth a b o v e ,th e T e rm o fth is L e a s e a s to th e P re m is e s s h a lb e a u to m a tic a ly e x te n d e d s u c h th a tT e n a n ts le a s e o fth e P re m is e s w ile x p ire o n th e T e rm E x p ira tio n D a te fo rth e E x p a n s io n S p a c e ,a n d a lte rm s a n d c o n d ito n s o fth is L e a s e a s a p p lic a b le to th e P re m is e s s h a lc o n tin u e to a p p ly d u rin g s u c h e x te n d e d T e rm ,in c lu d in g th e b i-a n n u a la d ju s tm e n to fB a s e R e n ts e tfo rth in S e c tio n 6 a b o v e .T e n a n tw ils ig n a le a s e a m e n d m e n tm e m o ria liz in g s u c h e x te n s io n ifre q u e s te d b y L a n d lo rd ,b u ts u c h e x te n s io n w ilb e e fe c tiv e re g a rd le s s o fw h e th e ra n a m e n d m e n tis e n te re d .T e n a n tw iln o th a v e th e rig h to e x e rc is e th e a b o v e o p tio n in th e e v e n tT e n a n tis in m o n e ta ry o rm a te ria ln o n -m o n e ta ry d e fa u lth e re u n d e ra fte rth e e x p ira tio n o fa n y a p p lic a b le n o tic e a n d c u re p e rio d s .T h e rig h ts d e s c rib e d in th is S e c tio n 4 0 .2 s h a lb e p e rs o n a lto th e T e n a n to rig in a ly n a m e d in th is L e a s e (i.e .,Ilu m in a ,In c .),m a y n o tb e tra n s fe re d to a n y o th e re n tiy ,a n d m a y n o tb e a s s ig n e d s e p a ra te ly fro m th is L e a s e e x c e p tin c o n n e c tio n w ith a n a s s ig n m e n to fT e n a n ts e n tire in te re s tin th is L e a s e to a T e n a n ts A fila te ;p ro v id e d ,h o w e v e r,th a th e T e n a n to rig in a ly n a m e d in th is L e a s e (i.e .,Ilu m in a ,In c .)s h a lb e fu ly a n d
p rim a rily lia b le u n d e rth is L e a s e re g a rd le s s o fw h e th e rth e e x te n s io n rig h tis e x e rc is e d b y th e T e n a n to rig in a ly n a m e d in th is L e a s e (i.e .,Ilu m in a ,In c .)o rb y a T e n a n ts A fila te ,a n d Ilu m in a ,In c .a g re e s to s ig n a n y re a s o n a b le d o c u m e n tre a s o n a b ly re q u e s te d b y L a n d lo rd to c o n firm th e fo re g o in g c o n tin u in g lia b ilty o fIlu m in a ,In c .4 0 .3 In th e e v e n t(i)T e n a n tfa ils to e x e rc is e th e E x p a n s io n O p tio n o rth e L a n d R e n ta lO p tio n ,o r(i)th e E x p a n s io n O p tio n o rL a n d R e n ta lO p tio n e x p ire o ra re te rm in a te d in a c c o rd a n c e w ith th e te rm s o fth is A rtic le 4 0 o rb y la p s e o ftim e ,th e n L a n d lo rd w ilb e fre e to d e v e lo p B u ild in g C ,to g e th e rw ith a la n d s c a p in g ,p a rk in g fa c ilte s a n d s tru c tu re s ,p riv a te d riv e s a n d o th e rim p ro v e m e n ts a n d a p p u rte n a n c e s w ith in th e P ro je c tre la te d th e re to o rs e rv in g B u ild in g C e x c lu s iv e ly a s re a s o n a b ly d e s ig n a te d b y L a n d lo rd (th e B u ild in g C S ite );p ro v id e d s u c h d e v e lo p m e n tw ilc o m p ly w ith th e p ro v is io n s o fA rtic le 1 2 o fth is L e a s e a n d L a n d lo rd w iln o tm a k e a n y m a te ria lc h a n g e s to th e c o n fig u ra tio n o fth e P ro je c tin c o n n e c tio n w ith th e d e v e lo p m e n to fth e B u ild in g C S ite .L a n d lo rd w ilh a v e s o le c o n tro la n d d is c re tio n o v e rth e d e s ig n (p ro v id e d th a tL a n d lo rd w iln o tm a k e m a te ria lc h a n g e s to th e e x te rio ra p p e a ra n c e o fB u ild in g C ),d e v e lo p m e n ta n d le a s in g o fB u ild in g C (s u b je c to S e c tio n 3 7 .2 2 a b o v e a n d th e B u ild in g C R O F R d e s c rib e d in S e c tio n 4 0 .4 b e lo w ).4 0 .4 In th e e v e n t
T e n a n td o e s n o te x e rc is e its E x p a n s io n O p tio n ,T e n a n ts h a lh a v e a rig h to firs tre fu s a l(B u ild in g C R O F R )a s to a n y s p a c e in B u ild in g C ,p ro v id e d th a ts u c h B u ild in g C R O F R w ilo n ly a p p ly a fte rth e in ita le a s e o fth e a p p lic a b le p o rtio n s o fB u ild in g C to th ird p a rty te n a n t(s )(i.e .,T e n a n tw ilh a v e n o rig h ts w ith re s p e c to th e in ita le a s in g o fa n y p o rtio n o fB u ild in g C ,re g a rd le s s o fw h e n s u c h in ita le a s e is e n te re d ).A fte rth e in ita le a s e o fa n y p o rtio n o fB u ild in g C ,ifs u c h s p a c e b e c o m e s a v a ila b le fo rle a s e to th ird p a rtie s ,a s re a s o n a b ly d e te rm in e d b y L a n d lo rd (A v a ila b le S e c o n d G e n e ra tio n S p a c e ),th e B u ild in g C R O F R s h a la p p ly o n th e te rm s a n d c o n d ito n s s e tfo rth in th is S e c tio n 4 0 .4 ,s u b je c to th e rig h ts o fa n y h o ld e ro fa S u p e rio rR ig h t(a s d e fin e d b e lo w ).T o th e e x te n th a tL a n d lo rd re n e w s o re x te n d s a th e n -e x is tin g le a s e w ith a n y th e n -e x is tin g te n a n to rs u b te n a n to fa n y s p a c e ,o re n te rs in to a n e w le a s e w ith s u c h th e n -e x is tin g te n a n to rs u b te n a n tfo rth e s a m e p re m is e s ,o ra lo w s a n e x is tin g te n a n to e x e rc is e a n o p tio n to e x p a n d ,e x e rc is e a rig h to firs tre fu s a lo rfis to fe r,s u c h rig h ts s h a lb e d e e m e d S u p e rio rR ig h ts a n d th e a fe c te d s p a c e s h a ln o tb e d e e m e d to b e
7 5 A v a ila b le S e c o n d G e n e ra tio n S p a c e .In th e e v e n tL a n d lo rd re c e iv e s fro m a th ird p a rty a b o n a fid e o fe rto le a s e A v a ila b le S e c o n d G e n e ra tio n S p a c e o n te rm s w h ic h L a n d lo rd w o u ld c o n s id e r,L a n d lo rd s h a lp ro v id e w rite n n o tic e th e re o fto T e n a n t(h e B u ild in g C N o tic e o fO fe r),s p e c ify in g th e te rm s a n d c o n d ito n s (in c lu d in g le a s e te rm )o fa p ro p o s e d le a s e to T e n a n to fth e A v a ila b le S e c o n d G e n e ra tio n S p a c e .4 0 .4 .1 With in te n (1 0 )d a y s fo lo w in g its re c e ip to fa B u ild in g C N o tic e o fO fe r,T e n a n ts h a la d v is e L a n d lo rd in w ritn g w h e th e rT e n a n te le c ts to le a s e a l(n o tju s ta p o rtio n )o fth e A v a ila b le S e c o n d G e n e ra tio n S p a c e o n th e te rm s a n d c o n d ito n s s e tfo rth in th e B u ild in g C N o tic e o fO fe r.IfT e n a n tfa ils to n o tify L a n d lo rd o fT e n a n ts e le c tio n w ith in s u c h te n (1 0 )d a y p e rio d ,th e n T e n a n ts h a lb e d e e m e d to h a v e e le c te d n o to le a s e th e A v a ila b le S e c o n d G e n e ra tio n S p a c e .4 0 .4 .2 IfT e n a n tim e ly n o tife s L a n d lo rd th a tT e n a n te le c ts to le a s e th e A v a ila b le S e c o n d G e n e ra tio n S p a c e o n th e te rm s a n d c o n d ito n s s e tfo rth in th e B u ild in g C N o tic e o fO fe r,th e n L a n d lo rd s h a le a s e th e A v a ila b le S e c o n d G e n e ra tio n S p a c e to T e n a n tu p o n th e te rm s a n d c o n d ito n s s e tfo rth in th e B u ild in g C N o tic e o fO fe r.L a n d lo rd a n d T e n a n tw ile x e c u te a n a m e n d m e n to th is L e a s e a d d in g th e A v a ila b le S e c o n d G e n e ra tio n S p a c e to th e P re m is e s o n th e te rm s s e tfo rth in th e B u ild in g C N o tic e o f
O fe r(p ro v id e d th a th e T e rm a s to th e A v a ila b le S e c o n d G e n e ra tio n S p a c e d o e s n o th a v e to b e c o te rm in o u s w ith th e P re m is e s )a n d o th e rw is e in a c c o rd a n c e w ith th e te rm s a n d c o n d ito n s o fth is L e a s e .N o tw ith s ta n d in g a n y th in g in th is S e c tio n 4 0 .4 to th e c o n tra ry ,th e B u ild in g C R O F R s h a ln o ta p p ly d u rin g th e la s tw e lv e (1 2 )m o n th s o fth e T e rm (o ra n y a p p lic a b le O p tio n T e rm )u n le s s T e n a n th a s d e liv e re d a n O p tio n E x e rc is e N o tic e p u rs u a n to S e c tio n 3 9 .3 o fth is L e a s e fu rth e re x te n d in g th e T e rm .4 0 .4 .3 IfT e n a n tn o tife s L a n d lo rd th a tT e n a n te le c ts n o to le a s e th e A v a ila b le S e c o n d G e n e ra tio n S p a c e o n th e te rm s a n d c o n d ito n s s e tfo rth in th e N o tic e o fO fe r,o rifT e n a n tfa ils to n o tify L a n d lo rd o fT e n a n ts e le c tio n w ith in th e te n (1 0 )-d a y p e rio d d e s c rib e d a b o v e ,th e n L a n d lo rd s h a lh a v e th e rig h to c o n s u m m a te th e le a s e o fth e A v a ila b le S e c o n d G e n e ra tio n S p a c e w ith a th ird p a rty o n s u c h te rm s a s L a n d lo rd d e e m s a c c e p ta b le (p ro v id e d th a tin th e e v e n th e te rm s p re v io u s ly o fe re d to T e n a n tin th e B u ild in g C N o tic e o fO fe ra re a lte re d s o a s to re d u c e th e N e tE fe c tiv e R e n ta lR a te (a s d e fin e d b e lo w )b y m o re th a n fiv e p e rc e n t(5 % )o fth e N e tE fe c tiv e R e n ta lR a te lis te d in th e B u ild in g C N o tic e o fO fe rd e liv e re d to T e n a n t,L a n d lo rd w ilb e o b lig a te d to d e liv e ra re v is e d B u ild in g C N o tic e o fO fe rs ta tin g s u c h re v is e d te rm s ,a n d T e n a n tw ilh a v e th re e (3 )b u s in e s s d a y s a fte re c e ip to fth e
re v is e d B u ild in g C N o tic e o fO fe rto d e liv e rw rite n n o tic e to L a n d lo rd e x e rc is in g th e B u ild in g C R O F R o n s u c h re v is e d te rm s ).T h e te rm N e tE fe c tiv e R e n ta lR a te s h a lm e a n th e re n ta lra te ,a s a d ju s te d to re fle c th e v a lu e o fa n y fre e re n t,e n a n tim p ro v e m e n ta lo w a n c e o rs im ila rm o n e ta ry c o n c e s s io n s c o n ta in e d in th e re v is e d B u ild in g C N o tic e o fO fe r.IfT e n a n te le c ts n o to e x e rc is e th e B u ild in g C R O F R o n s u c h re v is e d te rm s (o rfa ils to re s p o n d d u rin g s u c h th re e (3 )b u s in e s s d a y p e rio d ),th e n T e n a n tw ilh a v e n o fu rth e rig h ts w ith re s p e c to th e A v a ila b le S e c o n d G e n e ra tio n S p a c e a n d L a n d lo rd s h a lh a v e th e rig h to e n te rin to a le a s e w ith a th ird p a rty o n a n y te rm s a n d c o n d ito n s itd e e m s a c c e p ta b le .4 0 .4 .4 N o tw ith s ta n d in g a n y th in g in th is A rtic le to th e c o n tra ry ,T e n a n ts h a ln o te x e rc is e th e B u ild in g C R O F R d u rin g s u c h p e rio d o ftim e th a tT e n a n tis in d e fa u ltu n d e ra n y p ro v is io n o fth is L e a s e (a n d th e tim e p e rio d fo rT e n a n to e x e rc is e th e B u ild in g C R O F R w iln o t
7 6 b e e x te n d e d b y re a s o n o fT e n a n ts in a b ilty to s o e x e rc is e th e B u ild in g C R O F R ).A n y a te m p te d e x e rc is e o fth e B u ild in g C R O F R d u rin g a p e rio d o ftim e in w h ic h T e n a n tis s o in d e fa u lts h a lb e v o id a n d o fn o e fe c t.4 0 .4 .5 T h e rig h ts d e s c rib e d in th is S e c tio n 4 0 .4 s h a lb e p e rs o n a lto th e T e n a n to rig in a ly n a m e d in th is L e a s e (i.e .,Ilu m in a ,In c .),m a y n o tb e tra n s fe re d to a n y o th e re n tiy ,a n d m a y n o tb e a s s ig n e d to a n y th ird p a rty e x c e p tin c o n n e c tio n w ith a n a s s ig n m e n to fT e n a n ts e n tire in te re s tin th is L e a s e to a T e n a n ts A fila te ;p ro v id e d ,h o w e v e r,th a th e T e n a n to rig in a ly n a m e d in th is L e a s e (i.e .,Ilu m in a ,In c .)s h a lb e fu ly a n d p rim a rily lia b le u n d e rth is L e a s e fo ra n y A v a ila b le S e c o n d G e n e ra tio n S p a c e le a s e d p u rs u a n to th is S e c tio n 4 0 .4 re g a rd le s s o fw h e th e rth e rig h to firs tre fu s a lg ra n te d u n d e rth is S e c tio n 4 0 .4 is e x e rc is e d b y th e T e n a n to rig in a ly n a m e d in th is L e a s e (i.e .,Ilu m in a ,In c .)o rb y a T e n a n ts A fila te .Ilu m in a ,In c .w ils ig n a n y re a s o n a b le d o c u m e n tre a s o n a b ly re q u e s te d b y L a n d lo rd to c o n firm th e fo re g o in g c o n tin u in g lia b ilty o fIlu m in a ,In c .a s a n e x p re s s c o n d ito n p re c e d e n to L a n d lo rd s o b lig a tio n to le a s e th e A v a ila b le S e c o n d G e n e ra tio n S p a c e to a n y T e n a n ts A fila te .4 0 .4 .6 IfT e n a n te x e rc is e s th e B u ild in g C R O F R ,L a n d lo rd d o e s n o tg u a ra n te e th a th e A v a ila b le S e c o n d G e n e ra tio n S p a c e w ilb e a v a ila b le o n th e a n tic ip a te d c o m m e n c e m e n td a te fo r
th e L e a s e a s to s u c h A v a ila b le S e c o n d G e n e ra tio n S p a c e d u e to a h o ld o v e rb y th e th e n -e x is tin g o c c u p a n ts o fth e A v a ila b le S e c o n d G e n e ra tio n S p a c e o rfo ra n y o th e re a s o n b e y o n d L a n d lo rd s re a s o n a b le c o n tro l.4 0 .5 P a rk in g S tru c tu re C o n s tru c tio n .E fe c tiv e a s o fth e d a te (P S 1 T rig g e rD a te )w h ic h is th e e a rlie ro f(i)th e d a te u p o n w h ic h T e n a n td e liv e rs a n E x p a n s io n N o tic e to L a n d lo rd p u rs u a n to S e c tio n 4 0 a b o v e ,(i)th e d a te u p o n w h ic h th e E x p a n s io n E x e rc is e P e rio d (a s th e s a m e m a y b e e x te n d e d b y th e L a n d R e n ta lO p tio n p u rs u a n to S e c tio n 4 0 .1 a b o v e )e n d s ,(i)th e d a te u p o n w h ic h th e T e rm w ith re s p e c to a n y B u ild in g e x p ire s o r(iv )th e e x p ira tio n o re a rlie rte rm in a tio n o fth is L e a s e (o th e rth a n a te rm in a tio n d u e to a L a n d lo rd d e fa u lt),T e n a n tw ilb e o b lig a te d to p a y fo rth e c o s to c o n s tru c ta p a rk in g s tru c tu re (P S 1 )in th e lo c a tio n la b e le d P a rk in g S tru c tu re 1 o n th e S ite P la n a ta c h e d h e re to a s E x h ib itA (a s s u c h S ite P la n m a y b e m o d ife d a s p e rm ite d h e re u n d e r).L a n d lo rd w ilp e rfo rm th e c o n s tru c tio n o fP S 1 in a c c o rd a n c e w ith th e p la n s a n d s p e c ifc a tio n s in c lu d e d w ith in th e A p p ro v e d P la n s .F o rc la rity ,T e n a n ts o b lig a tio n to p a y to c o n s tru c tP S 1 w ila p p ly re g a rd le s s o fw h e th e rT e n a n tle a s e s a n y s p a c e in B u ild in g C a n d is in d e p e n d e n to fa n y rig h to fe x p a n s io n ,e x te n s io n o ro th e rw is e in th is L e a s e .In th e e v e n tT e n a n td e te rm in e s th a tire q u ire s
a d d ito n a lp a rk in g s p a c e s p rio rto th e P S 1 T rig g e rD a te ,T e n a n tm a y d e liv e rw rite n n o tic e to L a n d lo rd re q u e s tin g to a c c e le ra te th e P S 1 T rig g e rD a te to a n e a rlie rd a te a s s p e c ife d in s u c h n o tic e ,in w h ic h c a s e L a n d lo rd w ilc o n s tru c tP S 1 a s s o o n a s re a s o n a b ly p ra c tic a b le a fte rs u c h a c c e le ra te d P S 1 T rig g e rD a te .L a n d lo rd w ilp ro v id e T e n a n tw ith m o n th ly in v o ic e s fo ra lc o s ts in c u re d b y L a n d lo rd d u rin g th e c o n s tru c tio n o fP S 1 ,w h ic h c o s ts s h a lc o n s tiu te A d d ito n a lR e n td u e h e re u n d e r.A ls u c h in v o ic e s w ilb e p a id b y T e n a n tw ith in th irty (3 0 )d a y s a fte rT e n a n ts re c e ip th e re o f.In th e e v e n tT e n a n tfa ils to p a y a n y c o s ts in c u re d b y L a n d lo rd in c o n n e c tio n w ith c o n s tru c tio n o fP S 1 ,L a n d lo rd w ilh a v e a lrig h ts a n d re m e d ie s a g a in s tT e n a n ta s ith a s fo rn o n -p a y m e n to fa n y o th e rR e n td u e h e re u n d e r,in c lu d in g a lrig h ts s e tfo rth in S e c tio n 4 6 b e lo w .In a d d ito n ,in th e e v e n th is L e a s e te rm in a te s p rio rto th e c o n s tru c tio n o fP S 1 fo ra n y re a s o n o th e rth a n a L a n d lo rd d e fa u lt,in lie u o fm a k in g m o n th ly p a y m e n ts d u rin g c o n s tru c tio n o fP S 1 a s s e t
7 7 fo rth a b o v e ,T e n a n tw ilp a y to L a n d lo rd a lu m p s u m e q u a lto th e a n tic ip a te d c o s t(b a s e d o n a c o m p e tiv e b id to a tle a s th re e (3 )g e n e ra lc o n tra c to rs s e le c te d b y L a n d lo rd )to c o n s tru c tP S 1 w ith in th irty (3 0 )d a y s a fte re c e ip to fa n in v o ic e fro m L a n d lo rd fo rs u c h c o s ts ,w h ic h in v o ic e w ilb e a c c o m p a n ie d b y th e g e n e ra lc o n tra c to rs b id ,w ith o u ta n y d e d u c tio n o ro fs e tw h a ts o e v e r,w h ic h o b lig a tio n w ils u rv iv e th e e x p ira tio n o re a rlie rte rm in a tio n o fth is L e a s e .4 1 .R ig h to fF irs tR e fu s a lto P u rc h a s e .P ro v id e d th a tT e n a n tis n o th e n in m o n e ta ry o rm a te ria ln o n -m o n e ta ry d e fa u ltu n d e rth is L e a s e ,th e n ifL a n d lo rd re c e iv e s a n o fe rto p u rc h a s e th e P ro je c to ra n y in d iv id u a lB u ild in g s w ith in th e P ro je c to n te rm s w h ic h L a n d lo rd w o u ld a g re e to s e ls u c h B u ild in g (s )o rP ro je c to s u c h th ird p a rty (th e a p p lic a b le B u ild in g (s )o rP ro je c to w h ic h s u c h o fe rto p u rc h a s e a p p lie s s h a lb e re fe re d to in th is A rtic le 4 1 a s th e In te re s t),h e n L a n d lo rd s h a lp ro v id e T e n a n tw ith a s u m m a ry o fth e p e rtin e n te c o n o m ic a n d n o n -e c o n o m ic te rm s o fs u c h o fe r,in c lu d in g th e p u rc h a s e p ric e a n d a n y e a rn e s tm o n e y d e p o s its re q u ire d (th e O fe rS u m m a ry ),a n d T e n a n ts h a lh a v e a p e rio d o fte n (1 0 )b u s in e s s d a y s fro m re c e ip th e re o f(th e R O F R P e rio d )w ith in w h ic h to e x e rc is e its rig h t(h e R O F R )to p u rc h a s e th e In te re s tu n d e rth e te rm s c o n ta in e d in th e O fe rS u m m a ry .IfT e n a n tis in d e fa u lt,h e fo re g o in g s h a ln o tb e re a d to p re v e n t
T e n a n tfro m c u rin g th e a p p lic a b le d e fa u lta n d th e n e x e rc is in g th e R O F R o n c e th e d e fa u ltis c u re d ifs u c h c u re is c o m p le te d w ith in th e a p p lic a b le c u re p e rio d ,ifa n y ,e x p re s s ly s e tfo rth in th is L e a s e a n d th e R O F R is e x e rc is e d w ith in th e p e rio d s e tfo rth h e re in (w h ic h p e rio d s h a ln o tb e e x te n d e d to a lo w fo ra c u re o fth e d e fa u lt).4 1 .1 F o rth e a v o id a n c e o fc o n fu s io n ,T e n a n ts rig h ts u n d e rth is A rtic le 4 1 :(a )s h a lb e p e rs o n a lto th e T e n a n to rig in a ly n a m e d in th is L e a s e (i.e .,Ilu m in a ,In c .),m a y n o tb e tra n s fe re d to a n y o th e re n tiy ,a n d m a y n o tb e a s s ig n e d s e p a ra te ly fro m th is L e a s e e x c e p tin c o n n e c tio n w ith a n a s s ig n m e n to fT e n a n ts e n tire in te re s tin th is L e a s e to a T e n a n ts A fila te ;(b )s h a lb e c o n tin u in g a n d b in d in g o n L a n d lo rd 's s u c c e s s o rs a n d a s s ig n s ,a n d ;(c )s h a la p p ly o n ly to a p ro p o s e d s a le o fL a n d lo rd s fe e s im p le in te re s to a th ird p a rty fo rc o n s id e ra tio n a n d s h a ln o ta p p ly in th e e v e n to f:(i)a m u lti-a s s e tp o rtfo lio s a le b y p e rs o n s h o ld in g a c o n tro lin g in te re s tin L a n d lo rd (a n d /o rth e ira fila te s ),o r(i)a re c a p ita liz a tio n o rfin a n c in g tra n s a c tio n ,in c lu d in g g ra n ts o fe a s e m e n ts ,rig h ts a n d re s tric tio n s a n d th e lik e (i)a n y la rg e rs e c u rite s tra n s a c tio n in v o lv in g th e In te re s to r(iv )a s a le ,tra n s fe ro ro th e rc o n v e y a n c e o fa n y In te re s tin th e P ro je c to a n y p a re n t,s u b s id ia ry o ra fila te o fL a n d lo rd .4 1 .2 T e n a n ts h a ln o tify L a n d lo rd o fits e le c tio n to e x e rc is e th e R O F R b y g iv in g L a n d lo rd w rite n n o tic e (R O F R
E x e rc is e N o tic e )w ith in th e R O F R P e rio d ,in th e m a n n e rs e tfo rth h e re in fo rth e g iv in g o fn o tic e to L a n d lo rd .With in te n (1 0 )b u s in e s s d a y s th e re a fte r,L a n d lo rd a n d T e n a n ts h a le n te rin to a p u rc h a s e a g re e m e n tin c o rp o ra tin g th e e c o n o m ic a n d o th e rte rm s c o n ta in e d in th e O fe rS u m m a ry ,w h ic h p u rc h a s e a g re e m e n tw ilo th e rw is e c o n ta in c o m m e rc ia ly re a s o n a b le te rm s c o n s is te n tw ith c o m p a ra b le tra n s a c tio n s in v o lv in g th e s a le o fa p ro je c to th e o c c u p a n th e re o fin th e m a rk e ta re a o fth e P ro je c t,in c lu d in g a th irty (3 0 )d a y
7 8 d ilg e n c e p e rio d w ith in w h ic h to o b ta in a n d re v ie w th e th e n -c u re n tile re p o rta n d s e c u re a n A L T A s u rv e y fo rth e In te re s to rc o n d u c ta n y o th e rc o m m e rc ia ly re a s o n a b le d ilg e n c e d e s ire d b y T e n a n t.T itle w ilb e in s u re d b y a tile c o m p a n y re a s o n a b ly a c c e p ta b le to L a n d lo rd a n d T e n a n t,a n d th e p a rtie s w ilc o o p e ra te a s re q u ire d to a lo w th e tile c o m p a n y to is s u e a 2 0 0 6 F o rm A m e ric a n L a n d T itle A s s o c ia tio n e x te n d e d c o v e ra g e O w n e rs P o lic y o fT itle In s u ra n c e (o re q u iv a le n t)in th e a m o u n to fth e p u rc h a s e p ric e u p o n c lo s in g ,w ith s u c h e n d o rs e m e n ts o re x c e p tio n s a s T e n a n tm a y n e g o tia te w ith th e tile c o m p a n y ,a tT e n a n ts s o le o p tio n a n d c o s t.L a n d lo rd a n d T e n a n ts h a lc o n s u m m a te th e p u rc h a s e a n d s a le o fth e In te re s tp u rs u a n to th e te rm s o fs u c h p u rc h a s e a g re e m e n t,p ro v id e d th a ts u c h p u rc h a s e a g re e m e n ts h a lp ro v id e T e n a n ta tle a s th irty (3 0 )d a y s a fte re n try in to th e p u rc h a s e a g re e m e n to c o m p le te its d u e d ilg e n c e a n d fite e n (1 5 )d a y s th e re a fte rw ith in w h ic h to c o m p le te th e p u rc h a s e o fth e In te re s t.IfL a n d lo rd a n d T e n a n ta re u n a b le to a g re e o n th e te rm s o fth e p u rc h a s e a g re e m e n tw ith in th e te n (1 0 )b u s in e s s d a y p e rio d s e tfo rth a b o v e ,th e n th e R O F R E x e rc is e N o tic e w ilb e d e e m e d re s c in d e d a n d T e n a n ts R O F R s h a lth e re a fte rb e n u la n d v o id a n d L a n d lo rd w ilb e fre e to c o n v e y th e In te re s to a th ird p a rty o n th e te rm s s e tfo rth in th e O fe r
S u m m a ry o rte rm s s u b s ta n tia ly e q u iv a le n th e re to ,a n d th is R O F R w ilth e re a fte rte rm in a te a s to s u c h In te re s t.N o b ro k e ra g e fe e s w ilb e p a y a b le in c o n n e c tio n w ith th e e x e rc is e o fth is R O F R ,a n d e a c h p a rty w ilb e re s p o n s ib le fo rth e p a y m e n to fa n y b ro k e ra g e fe e p a y a b le to a n y b ro k e rw h o c la im s to h a v e re p re s e n te d s u c h p a rty in c o n n e c tio n w ith th e p u rc h a s e o rs a le p u rs u a n to th is R O F R .4 1 .3 F a ilu re o fT e n a n to d e liv e rth e R O F R E x e rc is e N o tic e w ith in th e re q u ire d tim e p e rio d s h a lb e d e e m e d a n e le c tio n b y T e n a n to n o te x e rc is e th e R O F R ,a n d :(a )T e n a n ts h a lh a v e n o fu rth e rig h ts to e x e rc is e th e R O F R th e re a fte r(e x c e p ta s s e tfo rth in (c )a n d (d )b e lo w ),a n d (b )L a n d lo rd s h a lth e n h a v e th e rig h tfo rth e n e x tw o h u n d re d fo rty (2 4 0 )d a y s to c o m p le te th e tra n s a c tio n d e s c rib e d in th e O fe rS u m m a ry fo ra p u rc h a s e p ric e th a tis e q u a lto o rg re a te rth a n n in e ty -fiv e p e rc e n t(9 5 % )o fth e p ric e s e tfo rth in th e O fe rS u m m a ry ,w h e th e rw ith th e th ird p a rty w h o s u b m ite d th e u n s o lic ite d o fe rto p u rc h a s e o rw ith a n o th e rth ird p a rty ,u n e n c u m b e re d b y th e p ro v is io n s o fth is A rtic le ,a n d (c )Ifa s a le o fth e In te re s tc o m p ly in g w ith s u b p a ra g ra p h (b )d o e s n o to c c u rw ith in th e tw o h u n d re d s e v e n ty (2 7 0 )d a y p e rio d d e s c rib e d th e re in ,L a n d lo rd s h a la g a in c o m p ly w ith th e p ro v is io n s o fth is A rtic le 4 1 w ith re s p e c to a n y fu rth e ro fe rL a n d lo rd re c e iv e s to p u rc h a s e th e In te re s tw h ic h L a n d lo rd d e e m s a c c e p ta b le ,a n d (d )If
L a n d lo rd in te n d s to s e lits In te re s tin re s p o n s e to a n o fe rw ith re s p e c to w h ic h T e n a n tfa ile d to d e liv e rth e R O F R E x e rc is e N o tic e w ith in th e re q u ire d tim e p e rio d ,fo rle s s th a n n in e ty -fiv e p e rc e n t(9 5 % )o fth e p ric e s e tfo rth in th e a p p lic a b le O fe rS u m m a ry ,L a n d lo rd s h a la g a in p ro v id e T e n a n tw ith th e o p p o rtu n ity to d e liv e ra R O F R E x e rc is e N o tic e w ith re s p e c th e re to ,a n d th e R O F R P e rio d s h a lb e te n (1 0 )b u s in e s s d a y s a s to s u c h re v is e d O fe rS u m m a ry .N o tw ith s ta n d in g th e fo re g o in g ,T e n a n ts firs tre fu s a lrig h ts u n d e rth is A rtic le 4 1 s h a lb e n u la n d v o id a n d o fn o fu rth e re fe c tifT e n a n td e liv e rs a R O F R E x e rc is e N o tic e a n d th e n fa ils to c lo s e o n
 7 9 th e p u rc h a s e o fth e In te re s tfo ra n y re a s o n (o th e rth a n a s a re s u lto fa d e fa u ltb y L a n d lo rd u n d e rth e p u rc h a s e a g re e m e n t).IfT e n a n tc o m p le te s a p u rc h a s e o fa n y In te re s tw h ic h is le s s th a n th e e n tire P ro je c t,L a n d lo rd a n d T e n a n tw ile n te rin to a n a m e n d m e n to th is L e a s e te rm in a tin g th e L e a s e a s to th e In te re s tp u rc h a s e d b y T e n a n ta n d m a k in g s u c h o th e ra d ju s tm e n ts a s n e c e s s a ry to re fle c th a th e P re m is e s n o lo n g e rin c lu d e s th e In te re s t.4 2 .M u lti-T e n a n tP ro v is io n s .In th e e v e n th a t(i)T e n a n tfa ils to e x e rc is e th e E x p a n s io n O p tio n a n d /o rL a n d R e n ta lO p tio n a s to B u ild in g C o r(i)th e T e rm w ith re s p e c to a n y B u ild in g (s )e x p ire s p rio rto th e T e rm w ith re s p e c to a n y o th e rB u ild in g (s ),th e te rm s a n d c o n d ito n s o fE x h ib itG a ta c h e d h e re to w ila u to m a tic a ly a p p ly ,a n d th e L e a s e w ila u to m a tic a ly b e m o d ife d in a c c o rd a n c e w ith th e te rm s a n d c o n d ito n s s e tfo rth th e re in ,e fe c tiv e a s o fth e d a te (T rig g e rD a te )s e tfo rth in L a n d lo rd s w rite n n o tic e to T e n a n ta d v is in g T e n a n th a th e P ro je c tis a n tic ip a te d to b e c o m e a m u lti-e n a n tP ro je c t.4 3 S e c u re d A re a s .N o tw ith s ta n d in g a n y th in g to th e c o n tra ry s e tfo rth in th is L e a s e ,T e n a n tm a y d e s ig n a te c e rta in a re a s o fth e P re m is e s a s "S e c u re d A re a s "s h o u ld T e n a n tre q u ire s u c h a re a s fo rth e p u rp o s e o fs e c u rin g c e rta in v a lu a b le p ro p e rty o rc o n fid e n tia lin fo rm a tio n .L a n d lo rd s h a la ta ltim e s b e a c c o m p a n ie d b y a re p re s e n ta tiv e o fT e n a n tb e fo re
e n te rin g a n y S e c u re d A re a ,a n d L a n d lo rd w ilo th e rw is e fo lo w T e n a n ts c o m m e rc ia ly re a s o n a b le s e c u rity p ro c e d u re s .L a n d lo rd m a y n o te n te rs u c h S e c u re d A re a s e x c e p tin th e c a s e o fe m e rg e n c y o rin th e e v e n to fa L a n d lo rd in s p e c tio n ,in w h ic h c a s e L a n d lo rd s h a lp ro v id e T e n a n tw ith o n e (1 )b u s in e s s d a y p rio rw rite n n o tic e o fth e s p e c ifc d a te a n d tim e o fs u c h L a n d lo rd in s p e c tio n .N o tw ith s ta n d in g th e fo re g o in g ,L a n d lo rd w ilb e p e rm ite d to e n te rin to a S e c u re d A re a w ith o u ta re p re s e n ta tiv e o fT e n a n tin th e e v e n to fa n e m e rg e n c y w h ic h p o s e s a n im m in e n tris k o fin ju ry to p e rs o n s o rp ro p e rty w h e re n o re p re s e n ta tiv e o fT e n a n tis re a d ily a v a ila b le ,o rin th e e v e n tT e n a n tfa ils to p ro v id e a re p re s e n ta tiv e a fte rL a n d lo rd h a s m a d e s u c h re q u e s ta tle a s to n e (1 )b u s in e s s d a y in a d v a n c e .4 4 F ib e rO p tic /In te rn e tS e rv ic e s .S u b je c to th e te rm s o fth is L e a s e ,in c lu d in g w ith o u tlim ita tio n ,A rtic le 1 4 a b o v e ,T e n a n ts h a lh a v e th e rig h t,a tT e n a n ts s o le c o s t,o c o n tra c tw ith a th ird p a rty to c o n n e c tfib e ro p tic c a b le ,in c lu d in g a n y e q u ip m e n ta n c ila ry to s u c h fib e ro p tic c a b lin g (th e F ib e rO p tic L in e s )to a n y B u ild in g s w ith in th e P ro je c t.T e n a n tm a y s e le c th e s e rv ic e p ro v id e r,s u b je c to L a n d lo rd s a p p ro v a l,w h ic h w iln o tb e u n re a s o n a b ly w ith h e ld ,c o n d ito n e d o rd e la y e d .L a n d lo rd w ilh a v e th e rig h to re v ie w a n d re a s o n a b ly a p p ro v e a n y a g re e m e n ts w ith s u c h th ird p a rtie s ,a n d in th e
e v e n tL a n d lo rd is re q u ire d to e x e c u te a n y a c c e s s a g re e m e n t,e a s e m e n to rs im ila ra g re e m e n t,s u c h a g re e m e n tw ilb e in a fo rm re a s o n a b ly a c c e p ta b le to L a n d lo rd ,a n d T e n a n tw ilp a y a lo fL a n d lo rd s re a s o n a b le d o c u m e n te d c o s ts to re v ie w ,n e g o tia te a n d p e rfo rm s u c h a g re e m e n t.T h e m e th o d o fin s ta la tio n o fs u c h F ib e rO p tic L in e s ,in c lu d in g lo c a tio n o fa n y tre n c h e s a n d c o n d u it,w ilb e s u b je c to L a n d lo rd s re a s o n a b le p rio rc o n s e n t,a n d T e n a n to rits s e rv ic e p ro v id e rw ilre p a ira n y d a m a g e to th e P ro je c ta n d re s to re a ls u rfa c e a re a s d is tu rb e d b y th e in s ta la tio n a n d m a in te n a n c e o fs u c h F ib e rO p tic L in e s .In a d d ito n ,T e n a n tw ilh a v e th e rig h to c o n tra c tw ith its p re fe re d in te rn e ts e rv ic e p ro v id e rfo rin te rn e ts e rv ic e to th e P re m is e s ,a tT e n a n ts s o le c o s ta n d e x p e n s e .In th e e v e n ta n y c o n d u it,c a b lin g o rs im ila re q u ip m e n tn e e d s to b e c o n n e c te d to th e P re m is e s in o rd e rto p ro v id e s u c h in te rn e ts e rv ic e ,th e te rm s a n d c o n d ito n s s e tfo rth a b o v e re la tin g to F ib e rO p tic L in e s w ila p p ly to th e in s ta la tio n o fs u c h lin e s .
8 0 4 5 S o la r.T e n a n tm a y e le c to in s ta la s o la rp o w e rg e n e ra tin g s y s te m a n d a le q u ip m e n tre la tin g th e re to (S o la rP a n e ls )o n th e ro o fo fa n y B u ild in g w h o ly le a s e d b y T e n a n tin o rd e rto s u p p ly e le c tric a lp o w e rto th e P re m is e s ,s u b je c to T e n a n ts c o m p lia n c e w ith a lte rm s a n d c o n d ito n s o fA rtic le s 1 4 a n d 3 8 a b o v e .T e n a n ts h a lc o m p ly w ith a n y ro o fo ro o f-re la te d w a ra n tie s a n d A p p lic a b le L a w s .T e n a n tw ilb e re s p o n s ib le fo re n g a g in g a q u a life d s tru c tu ra le n g in e e rto a s s e s s th e w e ig h td is trib u tio n a n d re q u ire m e n ts fo rth e S o la rP a n e ls a n d T e n a n tw ilp ro v id e a n d p a y fo ra n y ro o fo rs tru c tu ra ls u p p o rte q u ire d to a c c o m m o d a te s u c h S o la rP a n e ls a n d p re s e rv e th e ro o fw a ra n ty a n d s tru c tu ra lin te g rity o fth e B u ild in g .A lp la n s fo rth e in s ta la tio n o fs u c h S o la rP a n e ls w ilb e s u b je c to L a n d lo rd s p rio rw rite n c o n s e n t,w h ic h s h a ln o tb e u n re a s o n a b ly w ith h e ld .U p o n th e e x p ira tio n o re a rlie rte rm in a tio n o fth is L e a s e ,L a n d lo rd m a y e le c to re q u ire T e n a n to re m o v e s u c h S o la rP a n e ls a n d re p a ira ld a m a g e c a u s e d b y s u c h re m o v a la n d re s to re th e B u ild in g to its c o n d ito n p rio rto th e in s ta la tio n o fs u c h s y s te m .T e n a n t,a tis s o le c o s ta n d e x p e n s e ,s h a lin s p e c th e S o la rP a n e ls a tle a s ta n n u a ly (o rm o re o fte n ,ifm o re fre q u e n tin s p e c tio n s a re in k e e p in g w ith in d u s try s ta n d a rd s ),a n d c o re c ta n y lo o s e b o lts ,fitn g s o ro th e ra p p u rte n a n c e s a n d re p a ira n y d a m a g e to th e ro o fc a u s e d b y th e
in s ta la tio n o ro p e ra tio n o fth e S o la rP a n e ls .T e n a n ts h a ln o tp e rm ith e in s ta la tio n ,m a in te n a n c e o ro p e ra tio n o fth e S o la rP a n e ls to v io la te a n y A p p lic a b le L a w s .4 6 .C o m p le tio n G u a ra n ty .In o rd e rto in d u c e L a n d lo rd to e n te rin to th e L e a s e ,a n d in c o n s id e ra tio n o fL a n d lo rd s in v e s tm e n tin th e P ro je c t,a n d fu rth e ra c k n o w le d g in g th a tL a n d lo rd in te n d s to re ly o n th e g u a ra n ty s e tfo rth in th is S e c tio n 4 6 in e n te rin g in to th is L e a s e a n d in v e s tin g in th e P ro je c t,T e n a n th e re b y ire v o c a b ly ,a b s o lu te ly a n d u n c o n d ito n a ly w a ra n ts a n d g u a ra n te e s to L a n d lo rd ,in d e p e n d e n tly o fa lo th e ro b lig a tio n s a n d rig h ts o fT e n a n tu n d e rth is L e a s e ,a n d re g a rd le s s o fw h e th e rT e n a n td e te rm in e s th a tiw iln o to c c u p y th e P re m is e s u n d e rth is L e a s e fo ra n y re a s o n ,th a tiw il()c o m p le te th e T e n a n tIm p ro v e m e n ts in B u ild in g D a n d c o m p le te th e T e n a n tIm p ro v e m e n ts in a m in im u m o f1 6 0 ,0 0 0 s q u a re fe e to fR e n ta b le A re a in B u ild in g A a n d /o rB u ild in g B in a c c o rd a n c e w ith th e A p p ro v e d T IP la n s (a s d e fin e d in th e T e n a n tWo rk L e te ra ta c h e d h e re to a s E x h ib itB ),w ith re a s o n a b le d ilg e n c e a fte rth e P re m is e s a re d e liv e re d to T e n a n tin T IR e a d y C o n d ito n (b u tin a n y e v e n tp rio rto th e d a te w h ic h is tw o (2 )y e a rs a fte rth e d a te o fd e liv e ry in T IR e a d y C o n d ito n ,s u b je c to U n c o n tro la b le D e la y s (p ro v id e d th a tn o U n c o n tro la b le D e la y s s h a le x c e e d 9 0 d a y s re g a rd le s s o fth e a c tu a ln u m b e ro fd a y s o f
U n c o n tro la b le D e la y ),(ip rio rto th e e x p ira tio n o fth e in ita lT e rm o fth is L e a s e ,c o m p le te T e n a n tIm p ro v e m e n ts in th e re m a in in g p o rtio n s o fB u ild in g A a n d B u ild in g B to a m in im u m le v e ls u c h th a ts u c h re m a in in g p o rtio n s o fB u ild in g A a n d B u ild in g B a re in w a rm s h e lc o n d ito n ,w ith s u c h w a rm s h e lim p ro v e m e n ts c o n s tru c te d in a g o o d a n d w o rk m a n lik e m a n n e r,in c o m p lia n c e w ith a lA p p lic a b le L a w s a n d c o n s tru c te d w ith fin is h e s a n d m a te ria ls e q u a lo rb e te rin q u a lity to th e m a te ria ls a n d fin is h e s u s e d in th e 1 6 0 ,0 0 0 s q u a re fe e to fR e n ta b le A re a c o m p le te d in a c c o rd a n c e w ith th e A p p ro v e d T IP la n s (e .g .,w ith s im ila rty p e a n d q u a lity /q u a n tiy o fb a s e b u ild in g s y s te m s (in c lu d in g b a s e b u ild in g H V A C ,e le c tric a l,p lu m b in g a n d fire life s a fe ty s y s te m s ),w ith fin is h e d lo b b ie s a n d re s tro o m s ,a n d c o m p le te e le v a to rs w ith fin is h e d c a b s );a n d (i)re im b u rs e L a n d lo rd fo rth e c o s to c o n s tru c tP S 1 a s s e tfo rth in S e c tio n 4 0 .5 a b o v e (ite m s (i),a n d (i)th e G u a ra n te e d O b lig a tio n s ).T e n a n tm a k e s th is g u a ra n ty w ith th e e x p e c ta tio n th a tiw ilre c e iv e s u b s ta n tia lb e n e fits fro m th is L e a s e a n d fro m th e in v e s tm e n to fL a n d lo rd in th e P ro je c t.
8 1 4 6 .1 IfT e n a n tfa ils to p e rfo rm a n y p a rto fth e G u a ra n te e d O b lig a tio n s w h e n d u e ,T e n a n ts h a l,im m e d ia te ly u p o n w rite n d e m a n d o fL a n d lo rd to T e n a n t,c u re s u c h fa ilu re to p e rfo rm th e a p p lic a b le p a rto fth e G u a ra n te e d O b lig a tio n s b y p e rfo rm in g ,o rc a u s in g to b e p e rfo rm e d ,th e fo lo w in g :(a )re c o m m e n c in g c o n s tru c tio n o fth e G u a ra n te e d O b lig a tio n s (o rp a y m e n to fth e c o s ts o fP S 1 ,a s a p p lic a b le )w ith in th irty (3 0 )d a y s o fn o tic e fro m L a n d lo rd a n d d ilg e n tly p ro s e c u tin g c o n s tru c tio n a n d /o rc o m p le tio n o fth e G u a ra n te e d O b lig a tio n s a tT e n a n ts s o le c o s ta n d e x p e n s e (s u b je c to n ly to L a n d lo rd s o b lig a tio n to d is b u rs e th e T IA lo w a n c e );(b )fu ly p a y in g a n d d is c h a rg in g a lc la im s ,in c lu d in g fo rla b o rp e rfo rm e d a n d m a te ria la n d s e rv ic e s fu rn is h e d in c o n n e c tio n w ith th e c o n s tru c tio n a n d c o m p le tio n o fth e G u a ra n te e d O b lig a tio n s ;a n d (c )p a y in g L a n d lo rd a lre a s o n a b le a to rn e y s fe e s a n d c o s ts L a n d lo rd in c u rs in e n fo rc in g th e p e rfo rm a n c e b y T e n a n to fth e G u a ra n te e d O b lig a tio n s ,w ith in te re s ta th e D e fa u ltR a te o n a lp a s td u e p o rtio n s o f,a n d /o rs u m s L a n d lo rd h a s a d v a n c e d to s a tis fy p o rtio n s o f,th e G u a ra n te e d O b lig a tio n s p u rs u a n to th is L e a s e .U n le s s o th e rw is e re q u ire d b y la w o ra s p e c ifc a g re e m e n to th e c o n tra ry ,a lp a y m e n ts re c e iv e d b y L a n d lo rd fro m T e n a n ts h a lb e a p p lie d b y L a n d lo rd to th e G u a ra n te e d O b lig a tio n s in s u c h m a n n e ra n d o rd e ra s L a n d lo rd
d e s ire s in L a n d lo rd s s o le d is c re tio n .Itis e x p re s s ly u n d e rs to o d a n d a g re e d th a tL a n d lo rd m a y e x e rc is e a lo fits rig h ts a n d re m e d ie s u n d e rth e L e a s e o ra tla w o ra te q u ity ,s h o u ld a n y D e fa u ltre la tin g to a n y o fth e G u a ra n te e d O b lig a tio n s e x is th a tis n o tc u re d p ro m p tly a fte ra d e m a n d b y L a n d lo rd to T e n a n tp u rs u a n to th is S e c tio n 4 6 .IfT e n a n ts h a lfa ilto p e rfo rm th e G u a ra n te e d O b lig a tio n s h e re u n d e r,th e n L a n d lo rd s h a lh a v e th e rig h to ,in a d d ito n to a n d c u m u la tiv e o fa n y o th e re m e d ie s L a n d lo rd m a y h a v e h e re u n d e r,a tL a n d lo rd s o p tio n a n d w ith o u ta n y o b lig a tio n to d o s o ,u p o n g iv in g p rio rw rite n n o tic e to T e n a n t,p ro c e e d to p e rfo rm th e G u a ra n te e d O b lig a tio n s o n b e h a lfo fT e n a n t,a n d T e n a n ts h a l,u p o n w rite n d e m a n d fro m L a n d lo rd ,in c lu d in g a n in v o ic e ,p a y to L a n d lo rd a ls u c h s u m s e x p e n d e d b y L a n d lo rd in th e p e rfo rm a n c e o fth e G u a ra n te e d O b lig a tio n s w ith in te re s th e re o n a th e D e fa u ltR a te .In c o n n e c tio n w ith s u c h c o m p le tio n ,L a n d lo rd m a y m a k e c h a n g e s to th e A p p ro v e d P la n s a s L a n d lo rd m a y re a s o n a b ly d e e m n e c e s s a ry o ra s m a y b e re q u ire d b y a n y G o v e rn m e n ta lA u th o rity .N o tw ith s ta n d in g a n y th in g to th e c o n tra ry ,T e n a n tfu rth e ra g re e s to in d e m n ify a n d h o ld h a rm le s s L a n d lo rd a g a in s ta n y lo s s ,d a m a g e ,c o s to re x p e n s e (in c lu d in g ,w ith o u tlim ita tio n ,re a s o n a b le a to rn e y s fe e s a n d c o s ts )th a tL a n d lo rd m a y s u fe ro rin c u rb y
re a s o n o fth e b re a c h o rfa ilu re o fth e T e n a n ts u n d e rta k in g s a n d a g re e m e n ts p u rs u a n to th is S e c tio n 4 6 ;p ro v id e d ,h o w e v e rth a tT e n a n ts in d e m n ity o b lig a tio n s h a ln o te x te n d to lo s s o fb u s in e s s ,lo s s o fp ro fits o ro th e rc o n s e q u e n tia ld a m a g e w h ic h m a y b e s u fe re d b y L a n d lo rd .T h is g u a ra n ty is n o ta g u a ra n ty o fc o le c tio n ,b u tra th e rth is g u a ra n ty is a n ire v o c a b le ,a b s o lu te ,a n d u n c o n d ito n a lg u a ra n te e o fp e rfo rm a n c e o fth e G u a ra n te e d O b lig a tio n s ;a n d ifa lo ra n y p a rto fth e G u a ra n te e d O b lig a tio n s a re n o tp e rfo rm e d b y T e n a n ta s a n d w h e n re q u ire d h e re in ,T e n a n ts h a lp e rfo rm th e s a m e im m e d ia te ly u p o n w rite n d e m a n d b y L a n d lo rd .4 6 .2 L a n d lo rd s rig h ts h e re u n d e rs h a ln o tb e e x h a u s te d b y a n y a c tio n ta k e n b y L a n d lo rd u n tila lG u a ra n te e d O b lig a tio n s h a v e b e e n fu ly p e rfo rm e d a n d th is g u a ra n ty s h a lc o n tin u e u n tilh e G u a ra n te e d O b lig a tio n s h a v e b e e n fu ly p e rfo rm e d .T h e lia b ilty o fT e n a n th e re u n d e rs h a lb e re in s ta te d a n d re v iv e d ,a n d th e rig h ts o fL a n d lo rd s h a lc o n tin u e w ith re s p e c to a n y a m o u n ta ta n y tim e p a id o n a c c o u n to fth e G u a ra n te e d O b lig a tio n s th a ts h a lth e re a fte rb e re q u ire d to b e re s to re d o re tu rn e d b y L a n d lo rd u p o n b a n k ru p tc y ,in s o lv e n c y ,o re o rg a n iz a tio n o fT e n a n t,o ra n y o th e rp e rs o n ,o ro th e rw is e ,a la s th o u g h s u c h a m o u n th a d n o tb e e n p a id .T h e
8 2 o b lig a tio n s o fT e n a n tp u rs u a n to th is S e c tio n 4 6 s h a ls u rv iv e th e e x p ira tio n o re a rlie rte rm in a tio n o fth is L e a s e .[R E M A IN D E R O F T H IS P A G E IN T E N T IO N A L L Y L E F T B L A N K ]
IN WIT N E S S WH E R E O F ,th e p a rtie s h e re to h a v e e x e c u te d th is L e a s e a s o fth e d a te firs ta b o v e w rite n .L A N D L O R D :B M R L IN C O L N C E N T R E L P ,a D e la w a re lim ite d p a rtn e rs h ip B y :N a m e :T itle :T E N A N T :IL L U M IN A ,IN C .,a D e la w a re c o rp o ra tio n B y :N a m e :T itle :
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POOLED PATENTS AGREEMENT

This Pooled Patents Agreement (the Agreement) is made and entered as of 11:59 P.M. Pacific Time on December 2,
2014 (such date and time the Effective Date) by and among:

Illumina Inc., a Delaware corporation, having a place of business at 5200 Illumina Way, San Diego, CA 92122
(Illumina), and

Sequenom, Inc., a Delaware corporation, having a place of business at 3595 John Hopkins Court, San Diego CA
92121 (Sequenom),

W I T N E S S E T H:

WHEREAS, the Parties and others have entered into the Settlement Agreement dated as of the Effective Date (the
Settlement Agreement) pursuant to which the Parties and others finally settled and resolved certain disputes on the terms and
conditions thereof;

WHEREAS, both of the Parties desire to continue their current businesses related to the sale of services in the NIPT
LDT Field;

WHEREAS, the Parties desire to pool together certain patent rights which each Party or its Affiliates owns or in-
licenses in the Licensed NIPT Field, as Pooled Patents, and to offer them to third parties as a package license in an effort to help
facilitate the broader exploitation in the marketplace of the technology claimed by the Pooled Patents;

WHEREAS, the Parties have agreed upon a price schedule for such licenses in the NIPT LDT Field, and upon
mechanisms for adjusting such prices in response to changes in market conditions;

WHEREAS, the Parties desire for Illumina to have the exclusive right to Exploit the Pooled Patents in the NIPT IVD
Field and have agreed on royalties that shall be payable by Illumina to Sequenom upon sale of NIPT IVD Products in the NIPT IVD
Field;

WHEREAS, the Parties desire that the Pooled Patents be prosecuted, enforced, and licensed or sublicensed by Illumina
or its Affiliates as set forth in this Agreement, and have set forth or referenced in this Agreement certain assignments, licenses, rights
and obligations in that regard;

WHEREAS, the Parties have agreed upon one-time and recurring payments to be made between and among them in
recognition of the rights and obligations each is receiving and incurring under this Agreement and the Ancillary Agreements; and

NOW THEREFORE, in consideration of the foregoing and the mutual covenants and promises contained herein, the
Parties, intending to be legally bound, agree as follows:
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ARTICLE I
DEFINITIONS AND INTERPRETATION

1.1 Definitions. Unless otherwise specifically provided herein, the following Capitalized terms shall have the following
meanings:

Affiliate means, with respect to a Person, any other Person directly or indirectly controlling, controlled by, or under
common control with, such Person at any time during the period for which the determination of affiliation is being made. For purposes
of this definition, the term control means, with respect to any Person, the possession, directly or indirectly, of the power to direct or
cause the direction of management policies of such Person, whether through the ownership of voting securities or by contract or
otherwise.

Agreement has the meaning set forth in the preamble.

Ancillary Agreement means any agreement that is executed and delivered pursuant to the terms of this Agreement,
including any agreement the execution and delivery of which is a condition precedent to the effectiveness of this Agreement, including
as stated in Sections 2.4, 2.5, 2.6 and 2.7.

Annual Report has the meaning set forth in Section 3.4(c)(i).

Authorized Lab has the meaning set forth in Section 2.8(b).

Business Day means all days other than Saturdays, Sundays or a national or local holiday recognized in the United
States or Hong Kong.

Change of Control means, with respect to a Person: (a) a transaction or series of related transactions that results in
the sale or other disposition of all or substantially all of such Persons assets; or (b) a merger or consolidation in which such Person is
not the surviving corporation or in which, if such Person is the surviving corporation, the shareholders of such Person immediately
prior to the consummation of such merger or consolidation do not, immediately after consummation of such merger or consolidation,
possess, directly or indirectly through one or more intermediaries, a majority of the voting power of all of the surviving entitys
outstanding stock and other securities and the power to elect a majority of the members of such Persons board of directors; or (c) a
transaction or series of related transactions (which may include a tender offer for such Persons stock or the issuance, sale or exchange
of stock of such Person) if the shareholders of such Person immediately prior to the initial such transaction do not, immediately after
consummation of such transaction or any of such related transactions, own, directly or indirectly through one or more intermediaries,
stock or other securities of the entity that possess a majority of the voting power of all of such Persons outstanding stock and other
securities and the power to elect a majority of the members of such Persons board of directors.

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Claims means, collectively, all losses, liabilities, damages, costs and expenses of any type or nature whatsoever, and
all claims, demands, suits, actions, causes of action or other proceedings of any type or nature whatsoever relating thereto.

Combined Product means a bundle of products consisting of at least one NIPT IVD Product and any other product
(including any Illumina Product) that is not itself an NIPT IVD Product where the bundle is sold or transferred for a single price in a
territory in any royalty reporting period, where such NIPT IVD Product and other product are also sold and priced separately in such
territory in such royalty reporting period.

Confidential Information means all information that (a) is provided by one Party to the other Party pursuant to this
Agreement, and (b) if disclosed in writing or other tangible medium is marked or identified as confidential at the time of disclosure to
the recipient or, if disclosed other than in writing, is acknowledged at the time of disclosure to be confidential and is documented as
confidential by written notice to the recipient within thirty (30) days after disclosure. Notwithstanding the foregoing, all reports,
payments made and notices provided under this Agreement shall be Confidential Information of the providing Party, and all
information subject to audits hereunder shall be Confidential Information of the audited Party, in each case whether or not so marked or
identified, and subject to the exclusions (i) through (iv) immediately below. Notwithstanding the foregoing, Confidential Information of
a Party shall not include that portion of such information that, and only to the extent that, the recipient can establish by satisfactory
evidence: (i) was known to the recipient without an obligation of confidentiality to disclosing Party or any other Person before receipt
thereof from the disclosing Party, (ii) is disclosed to the recipient free of confidentiality obligations by a Third Party who has the right
to make such disclosure, (iii) is or becomes part of the public domain through no fault of the recipient, or (iv) was independently
developed by Persons on behalf of recipient without use of the information disclosed by the disclosing Party.

CUHK Licenses means, collectively, the CUHK Licenses (2008/2011) and CUHK Licenses 2014.

CUHK Licenses (2008/2011) means (a) that license agreement between the Chinese University of Hong Kong
(CUHK) and Sequenom, No TS094849 titled License Agreement, effective as of September 16, 2008, (b) that license agreement
between CUHK and Sequenom, No TS116378 titled License Agreement, effective as of May 3, 2011 and (c) that license agreement
between CUHK and Sequenom, No TS116379 titled License Agreement, effective as of May 3, 2011, as each of (a), (b) and (c) is
amended as of the Effective Date and transferred by Sequenom to Illumina by assignment and novation as of the Effective Date.

CUHK Licenses (2014) means (a) that license agreement between CUHK and Illumina, No TS148570 titled
License Agreement, effective as of the Effective Date, pursuant to which CUHK grants to Illumina certain licenses and other rights
related to the inventions and other technology described in CUHKs University Docket No. 10/MED/401/ITF, and (b) that license
agreement between CUHK and Illumina, No TS148571 titled License Agreement, effective as of the Effective Date, pursuant to
which CUHK grants to Illumina certain licenses

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and other rights related to the inventions and other technology described in CUHKs University Docket No. 11/MED/403.

CUHK Patent means any Patent licensed to Illumina or Sequenom under a CUHK License.

Current Illumina Product means, collectively:

(a) any NIPT LDT Test that is first commercially performed by an Illumina Party as of or before the
Effective Date;
(b) any Illumina Product first commercially sold by an Illumina Party as of or before the Effective Date
solely to the extent such Product was used by any Person on or prior to the Effective Date for NIPT, and any line extension or natural
evolution of such Illumina Product, provided that such line extension or natural evolution is first commercially sold by an Illumina
Party and used for NIPT prior to the fifth (5th ) anniversary of the Effective Date and solely to the extent such Illumina Product is used
by any Person for NIPT as set forth in subsections (a), (c), (d) and (e) herein;
(c) any NIPT LDT Test that is a line extension or natural evolution of any NIPT LDT Test set forth in
the foregoing clause (a), provided that such line extension or natural evolution is first commercially performed by an Illumina Party
prior to the fifth (5th ) anniversary of the Effective Date;
(d) any NIPT LDT Test:
(i) which is first commercially performed by an Illumina Party prior to the fifth (5th)
anniversary of the Effective Date;
(ii) for which a Test Fee is paid in accordance with this Agreement; and
(iii) which is developed and performed solely and exclusively by or on behalf of Illumina
or its Affiliates as its own product, and is sold

(A) under brand names of Illumina or its Affiliates or

(B) under a private label for a Third Party sales agent, distributor or other reseller, provided that
an NIPT LDT Test shall be excluded from this clause (d) if such NIPT LDT Test is performed in collaboration with a Third Party
sales agent, distributor or other reseller; and
(e) any NIPT IVD Product:

(i) which is first commercially sold by an Illumina Party prior to the fifth (5th ) anniversary of the Effective
Date;

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(ii) for which a Royalty is paid in accordance with this Agreement; and

(iii) which is developed and made solely and exclusively by or on behalf of Illumina or its Affiliates as its own
product, and is sold

(A) under brand names of Illumina or its Affiliates; or

(B) under a private label for a Third Party sales agent, distributor or other reseller, provided that an
NIPT IVD Product shall be excluded from this clause (e) if such NIPT IVD Product is developed or manufactured for or in
collaboration with a Third Party sales agent, distributor or other reseller in accordance with the product design of, such Third Party,
including by an Illumina Party acting as a foundry, contract developer or manufacturer, or original equipment or device manufacturer.

For the avoidance of doubt,

(x) porting an NIPT LDT Test from one sequencing instrument to a different sequencing instrument for performance
thereon is a natural evolution or line extension of that NIPT LDT Test;

(y) nothing in this Agreement prohibits Illumina from using a foundry, contract developer or manufacturer to develop
and/or manufacture on its behalf any NIPT IVD Product; and

(z) NIPT IVD Product that is covered by the elements of clauses (e)(i), (ii) and (iii) herein is not excluded from Current
Illumina Product solely by as a result of being developed on its behalf, made on its behalf or distributed or re-sold by a
Third Party.

Current Sequenom Product means, collectively, (a) any NIPT LDT Test that is first commercially performed by a
Sequenom Party as of or before the Effective Date; (b) any NIPT LDT Test that is a line extension or natural evolution of any NIPT
LDT Test set forth in the foregoing clause (a), provided that such line extension or natural evolution is first commercially performed by
a Sequenom Party prior to the fifth (5th ) anniversary of the Effective Date; and (c) any NIPT LDT Test (i) which is first commercially
performed by a Sequenom Party prior to the fifth (5th ) anniversary of the Effective Date, (ii) for which a Test Fee is paid in accordance
with this Agreement, and (iii) which is developed and performed solely and exclusively by or on behalf of Sequenom or its Affiliates
as its own product and sold (A) under brand names of Sequenom or its Affiliates or (B) under a private label for a Third Party sales
agent, distributor or other reseller, provided that an NIPT LDT Test shall be excluded from this clause (c) if such NIPT LDT Test is
performed in collaboration with a Third Party sales agent, distributor or other reseller. For the avoidance of doubt, porting an NIPT
LDT Test from one sequencing instrument to a different sequencing instrument for performance thereon is a natural evolution or line
extension of that NIPT LDT Test.

Existing Illumina License has the meaning set forth in Section 2.11(a).

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Existing Illumina Licensee has the meaning set forth in Section 2.11(a).

Existing Illumina Litigant has the meaning set forth in Section 2.8(e).

Existing Sequenom License has the meaning set forth in Section 2.10(a).

Existing Sequenom Licensee has the meaning set forth in Section 2.10(a).

Existing Sequenom Litigant has the meaning set forth in Section 2.8(d).

Expire and grammatical variations expired or expiration (with corresponding meaning for unexpired) in
relation to a Patent shall include abandonment, failure to maintain, or a holding of invalidity or unenforceability by a final decision of a
court or a governmental agency of competent jurisdiction (including without limitation any patent office of competent jurisdiction),
from which no further appeal is possible, in addition to the ordinary expiration of a patent term of an issued patent.

Exploit means (a) with respect to NIPT LDT Tests, Current Sequenom Products and those Current Illumina Products
that are NIPT LDT Tests, to research, develop, offer for sale, have offered for sale, sell, have sold, market, have marketed and
perform, and (b) with respect to NIPT IVD Products and all Current Illumina Products not addressed in clause (a), to research,
develop, make, have made, use, have used, sell, have sold, offer to sell and have offered to sell, import and have imported, market and
have marketed, perform and all other acts that, but for a license, would infringe a Patent in the country in which the act occurred.

Granting Illumina Affiliate has the meaning set forth in Section 2.2(c).

Granting Sequenom Affiliate has the meaning set forth in Section 2.3(c).

Gross Test Fees has the meaning set forth in Section 3.2(d).

HDFN Product has the meaning set forth in Section 2.16.

Illumina Customer means any Person that purchases Illumina Products.

Illumina Customer License has the meaning set forth in Section 2.8(a).

Illumina In-Licensed Patents means all Patents in-licensed by Illumina or its Affiliates under, and as set forth in, the
Stanford License, [***] and, on and after the Effective Date, the CUHK Licenses. The Illumina In-Licensed Patents as of the
Effective Date are set forth on Annex II, provided that on and after the Effective Date, the Patents set forth on Annex IV (in-licensed
by Sequenom from CUHK) shall be deemed added to Annex II, and Annex IV shall be deemed to no longer include any Patents.

Illumina Owned Patents means, collectively, (a) those United States and foreign patents and patent applications,
including provisional applications, owned by Illumina or its Affiliates set forth on Annex I, (b) all divisional, continuation,
continuation-in-part, and

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substitute applications of any of the patents or patent applications set forth in the foregoing clause (a), (c) all patents that have issued or
in the future issue from any of the patent applications set forth in the foregoing clauses (a) and (b), including utility model and design
patents and certificates of invention, (d) all extensions, supplemental protection certificates, registrations, confirmations, reissues,
reexaminations, inter partes reviews, post-grant reviews, restorations and renewals of or to any of the foregoing described patents and
(e) any equivalents of any of the foregoing in clauses (a), (b), (c) and (d) in any jurisdiction.

Illumina Patents means, collectively, the Illumina In-Licensed Patents and Illumina Owned Patents.

Illumina Parties means, collectively, Illumina and its Affiliates.

Illumina Products refers to any and all consumables, reagents, instruments, software and accessories
commercialized by or on behalf of Illumina or its Affiliates.

Illumina Technology Partner has the meaning set forth in Section 2.12(a).

Isis License means that license agreement between Isis Innovation Limited (Isis) and Sequenom, titled Exclusive
License of Technology, effective as of October 14, 2005, and as amended on October 19, 2006 (1st amendment), November 5, 2007
(2nd amendment), November 3, 2009 (3rd amendment), November 29, 2012 (4th amendment), the letter amendment dated 26 October
2012, as further amended prior to the Effective Date, and which was terminated on or before the Effective Date.

Isis Patents means the Patents originally owned by Isis and licensed by Isis to Sequenom under the Isis License, and
that were sold, assigned and transferred to Sequenom before the Effective Date. The Isis Patents are set forth on Annex III.

Lapidus Patents means the Patents on Annex V.

Law means, individually and collectively, any and all laws, ordinances, orders, rules, rulings, directives and
regulations of any kind whatsoever of any governmental or regulatory authority within the applicable jurisdiction.

Licensed NIPT Field means, collectively, the NIPT IVD Field and NIPT LDT Field.

[***].

[***].

Net IVD Sales means the gross sales price of any NIPT IVD Product invoiced by Illumina or its Affiliates, a Person
that is sublicensee described in Section 3.3(c) or its Affiliates, for the first (and not any subsequent) arms-length sale of that NIPT IVD
Product to any non-Affiliate Person and any use, transfer or sale set forth in (i), (ii) or (iii) hereinbelow, less, to the extent reasonable in
the in vitro diagnostic industry and actually paid, applied or accrued,

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(a) credits, allowances, discounts and rebates to, and chargebacks from the account of, such Person for spoiled, damaged, outdated and
returned product; (b) freight and insurance costs incurred in transporting such product to such Persons; (c) cash, quantity and trade
discounts, rebates and other price reductions for such product given to such Persons under price reduction programs that are consistent
with price reductions given for in vitro diagnostic products; (d) sales, use, value-added and other direct taxes, incurred on the sale of
such product to such customers; and (e) customs duties, surcharges and other governmental charges incurred in exporting or importing
such product to such customers. To the extent any NIPT IVD Product in any calendar quarter is (i) used by Illumina or its Affiliates or
a Person that is a sublicensee described in Section 3.3(c) or its Affiliates (excluding NIPT IVD Products purchased from Illumina or its
Affiliates in an arms-length sale, for which gross sales price is included in Net IVD Sales) in conjunction with a fee-for-service
arrangement, or (ii) is transferred to a customer in the course of a reagent rental sales structure, or (iii) is sold in other than an arms
length sale (including as part of a reagent rental program, operating or capital lease or comparable sales arrangement), the gross sales
price of the NIPT IVD Product for purposes of calculating Net IVD Sales shall be the weighted average gross invoiced sales price of
the applicable NIPT IVD Product for sales of such NIPT IVD Product to Persons purchasing comparable volumes of such NIPT IVD
Product in an arms length sale in the applicable territory during such calendar quarter.

In the event an NIPT IVD Product is sold, transferred or bundled as part of a Combined Product, the gross invoiced
sales price of such Combined Product shall be multiplied by the fraction A / (A+B) to determine the gross invoiced sales price of such
NIPT IVD Product for purposes of calculating the Net Sales of such NIPT IVD Product, where A equals the weighted average gross
invoiced sales price of such NIPT IVD Product sold separately, and B equals the weighted average gross invoiced sales price of such
other product comprising such Combined Product sold separately, in each case sold to Persons purchasing comparable volumes of
such NIPT IVD Product and/or other product in the applicable territory during the applicable royalty reporting period.

In the event an NIPT IVD Product is sold, transferred or bundled as part of a reagent rental program, operating or
capital lease or comparable sales arrangement, then the gross invoiced sales price of such NIPT IVD Product shall equal the weighted
average gross invoiced sales price of such NIPT IVD Product sold separately (other than as part of a reagent rental program, operating
or capital lease or comparable sales arrangement) to Persons purchasing comparable volumes of such NIPT IVD Product in the
applicable territory during the applicable royalty reporting period.

In the event of an NIPT IVD Product that is not a single use consumable and, instead, is intended for repeated use (e.g.,
software), the gross invoiced sales price of that NIPT IVD Product shall be (x) the actual gross invoiced sales price of that NIPT IVD
Product at the time of sale and (y) any additional sales price that is based on usage, subscription, or other recurring occurrences, both
(x) and (y) subject to applicable deductions permitted herein. Each of the sales prices described in clause (x) and (y) constitutes Net
IVD Sales for the calendar

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quarter in which such sales price is invoiced or payable, subject to applicable deductions permitted herein.

Notwithstanding anything in this Agreement to the contrary, in the case of NIPT IVD Product that is software, Illumina
has sole discretion to transfer such NIPT IVD Product by license instead of sale, provided that all amounts payable to Illumina, its
Affiliates, or a Person that is a sublicensee described in Section 3.3(c) or its Affiliates, in exchange for such transfer shall, for the
purpose of the immediately preceding paragraph, be considered as the sales price set forth in (x) and (y). For the avoidance of doubt,
separately invoiced services regarding installation, training, maintenance and similar activities that a software seller/licensor provides to
a software purchaser/licensee shall not be included in Net IVD Sales.

Net LDT Sales has the meaning [***].

New Illumina Licensee has the meaning set forth in Section 2.8(a).

New Sequenom Licensee has the meaning set forth in Section 2.9(b).

NIPT means in vitro cell-free nucleic acid-based non-invasive prenatal testing (including, without limitation, testing
by massively parallel sequencing or digital PCR) of a biological sample (including but not limited to plasma, serum, whole blood, and
urine) obtained from a pregnant woman, excluding oncology testing.

NIPT IVD Field means the field of conducting or performance of NIPT (in whole or in part) by use of an NIPT
IVD Product.

NIPT IVD Product means a distributable in vitro diagnostic device that has either (a) received applicable
Regulatory Approval for sale and use to conduct or perform (in whole or in part) NIPT or (b) is otherwise particularly labeled and
marketed for use to conduct or perform NIPT (in whole or in part,) excluding from (a) and (b) general purpose products and
components labeled for research use only. For the purposes of this Agreement, an item is distributable if it is distributed on tangible
medium or if accessed remotely (e.g., available in the cloud).

NIPT LDT Field means the field of conducting or performance of NIPT by use of an NIPT LDT Test, in a clinical
laboratory, excluding the NIPT IVD Field.

NIPT LDT Test means a non-distributable in vitro test (including a Site-specific IVD) performed in a clinical
laboratory to conduct or perform NIPT, excluding all NIPT IVD Products, but in all cases (other than Site-specific IVD tests), whether
or not the test requires Regulatory Approval for sale or use before or after the Effective Date. As of the Effective Date, NIPT LDT
Tests include, without limitation, the verifi test that is performed by Illumina and its Affiliates and the MaterniT21 test and
VisibiliT test that is performed by Sequenom and its Affiliates.

Nominal Amount has the meaning set forth in Section 3.4(c)(ii).

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Other Platform License has the meaning set forth in Section 2.8(f).

One-Time Payment has the meaning set forth in Section 3.1.

Party means Illumina or Sequenom and Parties means Illumina and Sequenom.

Patent means (a) any United States or foreign issued patent or pending patent application, including provisional
application, together with (b) all divisional, continuation, continuation-in-part, and substitute applications of any such patent or patent
application set forth in the foregoing clause (a), (c) all patents that have issued or in the future issue from any of the patent applications
set forth in the foregoing clauses (a) and (b), including utility model and design patents and certificates of invention, and (d) all
extensions, supplemental protection certificates, registrations, confirmations, reissues, reexaminations, inter partes reviews, post-grant
reviews, restorations and renewals of or to any of the foregoing described patents and any foreign equivalents of any of the foregoing.

Patent Royalty Term means, on a country-by-country and product-by-product basis with respect to a particular
NIPT IVD Product in the NIPT IVD Field, the time period beginning on the Effective Date and ending upon the date of expiration of
the last to Expire Pooled Patent having at least one Valid Issued Claim covering the applicable NIPT IVD Product or its use in the
NIPT IVD Field.

Person means any individual, corporation, partnership, firm, company, joint venture, association (including trust
association), joint-stock company, limited liability company, trust, unincorporated organization, governmental body, organization or
other entity.

Pooled Patents means the Illumina Patents and the Sequenom Patents.

Protective Action has the meaning as set forth in Section 5.1(b).

Regulatory Approval means any governmental approvals, licenses, registrations, clearances or authorizations
necessary for the marketing, sale, or use of an in vitro diagnostic device; provided that, (a) in the United States, as of the Effective Date
Regulatory Approval is only that sought from the Federal Food and Drug Administration, (b) in the European Union, as of the
Effective Date Regulatory Approval is only that sought through compliance with the In Vitro Diagnostic Medical Devices Directive
(which on the Effective Date is Directive 98/79/EC) and (c) in jurisdictions not requiring any governmental approvals, licenses,
registrations, clearances or authorizations for the marketing, sale, or use of an in vitro diagnostic device, Regulatory Approval shall be
deemed to have been provided for a particular in vitro diagnostic device upon the first commercial sale or marketing of that in vitro
diagnostic device if that in vitro diagnostic device would require Regulatory Approval in the United States if marketed in the United
States.

Royalty and Royalties have the meaning set forth in Section 3.3(d).

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Sample Agreement means the Sample Transfer Agreement made and entered into as of the Effective Date, between
the Parties.

Sequenom In-Licensed Patents means all Patents in-licensed by Sequenom or its Affiliates immediately prior to the
Effective Date under, and as set forth in, the CUHK Licenses (2008/2011). The Sequenom In-Licensed Patents immediately prior to
the Effective Date are set forth on Annex IV, provided that on and after the Effective Date, the Patents set forth on Annex IV shall be
deemed added to Annex II, and Annex IV shall be deemed to no longer include any Patents.

Sequenom Owned Patents means, collectively, (a) those United States and foreign patents and patent applications
and provisional applications owned by Sequenom or its Affiliates set forth on Annex III and (solely if and to the extent Sequenom
owns and has the right to grant licenses under the Lapidus Patents) the Lapidus Patents on Annex V, (b) all divisional, continuation,
continuation-in-part, and substitute applications of any of the patents or patent applications set forth in the foregoing clauses (a), (c) all
patents that have issued or in the future issue from any of the patent applications set forth in the foregoing clauses (a) and (b), including
utility model and design patents and certificates of invention, (d) all extensions, supplemental protection certificates, registrations,
confirmations, reissues, reexaminations, inter partes reviews, post-grant reviews, restorations and renewals of or to any of the
foregoing described patents, and (e) any equivalents of any of the foregoing in clauses (a), (b), (c) and (d) in any jurisdiction.

Sequenom Parties means, collectively, Sequenom and its Affiliates.

Sequenom Patents means, collectively, the Sequenom In-Licensed Patents, Sequenom Owned Patents and Isis
Patents.

Sequencing Platform Manufacturer means a Person, other than Illumina or its Affiliates, (a) that has raised at least
$[***] in financing transaction(s) and is engaged as a primary business in the business of [***], collectively, Sequencing
Platform Products), or (b) the annual aggregated revenue of such Person and its Affiliates for the most recent full calendar year is
greater than $[***] and [***].

Sequenom Technology Partner has the meaning set forth in Section 2.12(a).

Site-specific IVD means a non-distributable in vitro diagnostic test that received Regulatory Approval for sale or use,
which Regulatory Approval in the United States is pursuant to 21 CFR 814 or 21 CFR 807 Subpart E.

Stanford License means that license agreement between Verinata and the Trustees of Leland Stanford Junior
University (Stanford), titled the Second Amended and Restated Co-Exclusive Agreement, effective on September 14, 2012, as
amended as of the Effective Date.

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Stanford Sublicense Agreement means the sublicense agreement from Illumina Parties to Sequenom Parties
(excluding Affiliates that are Sequencing Platform Manufacturers) under the Stanford License, effective on the Effective Date.

Technology Agreement has the meaning as set forth in Section 2.12(a).

Term has the meaning as set forth in Section 4.1.

Test Fee has the meaning as set forth in Section 3.2(a).

Test Fee and Royalty Report has the meaning set forth in Section 3.4(a).

Third Party means any Person that is not a Party to this Agreement and is not an Affiliate of a Party to this
Agreement.

United States means the United States of America and its territories and possessions.

University Licenses means the CUHK Licenses, Stanford License, [***].

University Licensors means CUHK, Stanford, [***].

Valid Claim means (a) any claim of an issued and unexpired Pooled Patent that has not been held unenforceable,
unpatentable, or invalid by a final decision of a court or a governmental agency of competent jurisdiction (including without limitation
any patent office of competent jurisdiction), from which no further appeal is possible (Valid Issued Claim), and (b) solely in the
case of Pooled Patents other than Illumina Owned Patents, Isis Patents and Sequenom Owned Patents, any claim of a pending patent
application that is a Pooled Patent, excluding such claims that have been abandoned and such claims for which no further prosecution
is possible in order to seek allowance and issuance of such claim (Valid Pending Claim).

Verinata means Verinata Health, Inc.

1.2 Interpretation. Except where expressly stated otherwise in this Agreement, the following rules of interpretation apply to
this Agreement:

(a) all references to a particular section or schedule or annex shall be a reference to that section or schedule or annex in
or to this Agreement as it may be amended from time to time pursuant to this Agreement;

(b) the headings are inserted for convenience only and shall be ignored in construing this Agreement;

(c) words importing the masculine gender shall include the feminine and vice versa and words in the singular include
the plural and vice versa;

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(d) any phrase introduced by the terms including, include, in particular or any similar expression shall be
construed as illustrative and shall not limit the sense of the words preceding or following those terms;

(e) reference to any statute or regulation includes any modification or re-enactment of that statute or regulation;

(f) all references to a license, licensed or licensing include the grant or receipt of either a direct license from the
owner of the rights licensed, a sublicense from a Party or Affiliate of rights licensed or sublicensed to such Party or Affiliate, or both, in
each case as applicable to the particular rights being licensed and so referred to;

(g) all references in this Agreement to Illumina Patent or Illumina Patents or to Sequenom Patent or Sequenom
Patents is a reference to the defined terms, and is not a reference to all Patents of Illumina or all Patents of Sequenom;

(h) all references in this Agreement to Schedule 1 or the Test Fee Schedule is a reference to Schedule 1 as it may
be amended from time to time in accordance with this Agreement; and

(i) all references in this Agreement to NIPT LDT Tests in the NIPT LDT Field are understood to mean NIPT LDT
Tests performed in the NIPT LDT Field, and all references in this Agreement to NIPT IVD Products in the NIPT IVD Field are
understood to mean NIPT IVD Products in, for, or for use in the NIPT IVD Field.

ARTICLE II

RIGHTS OF SEQUENOM AND ILLUMINA UNDER POOLED PATENTS

2.1 Rights Under Pooled Patents Generally. This Section 2.1 is not intended to, and does not, convey any license rights under
any Pooled Patent. In the event of any conflict between the language in this Section 2.1 and the provisions of any Ancillary Agreement
granting a license under any Pooled Patent, or the licenses granted pursuant to Sections 2.2 (License to Sequenom Under Illumina
Owned Patents) and 2.3 (Licenses to Illumina Under Sequenom Owned Patents and Isis Patents) of this Agreement, the applicable
provisions in the Ancillary Agreement, Section 2.2, or Section 2.3 shall control.

(a) Illumina Rights. Pursuant and subject to this Agreement (including the license grants in Sections 2.2 and 2.3),
and the Ancillary Agreements, and the rights retained by Sequenom (and by Isis and its Affiliates as described in Schedule 7.1(b))
under the Sequenom Patents, the Illumina Parties will have:

(i) the exclusive (even as to the Sequenom Parties), worldwide, sublicensable right under the Pooled Patents to
Exploit NIPT IVD Products in the NIPT IVD Field,

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(ii) the exclusive, worldwide, sublicensable right under the Pooled Patents (excluding the Isis Patents) to
Exploit NIPT LDT Tests in the NIPT LDT Field, subject to the non-exclusive rights granted to, or reserved by, the Sequenom Parties,
and

(iii) the nonexclusive, worldwide, sublicensable right under the Isis Patents to Exploit NIPT LDT Tests in the
NIPT LDT Field.

Notwithstanding the foregoing, for the avoidance of doubt:

(1) each of Sections 2.1(a)(i), 2.1(a)(ii) and 2.1(a)(iii) is subject to any and all applicable terms in the
CUHK Licenses, including without limitation any territory restrictions and rights reserved by CUHK thereunder,

(2) each of Sections 2.1(a)(i), 2.1(a)(ii) and 2.1(a)(iii) is subject to Section 2.8 (Conditions for Illumina
Grant of Licenses Under Pooled Patents), and

(3) Section 2.1(a)(ii) is subject to rights granted under Existing Sequenom Licenses.

(b) Sequenom Rights. Pursuant and subject to this Agreement (including the license grants in Sections 2.2 and 2.3,
the exclusive rights of Illumina in Section 2.8(f)), the Ancillary Agreements, and the rights retained by the Sequenom Parties under
the Isis Patents:

(i) neither Sequenom nor any of its Affiliates will have any rights under the Pooled Patents (including under
the Isis Patents) to Exploit NIPT IVD Products anywhere in the world,

(ii) the Sequenom Parties will have a non-exclusive, worldwide, non-sublicensable right under the Pooled
Patents to Exploit NIPT LDT Tests in the NIPT LDT Field, except that, with respect to the Isis Patents, the Sequenom Parties will
have the right to grant sublicenses to Persons [***] and thereby authorize, only under the Isis Patents, each such sublicensee to
Exploit NIPT LDT Tests in the NIPT LDT Field in that sublicensees, or as applicable its Affiliates, clinical laboratory,

(iii) the Sequenom Parties will retain the rights under the Isis Patents, subject to the rights granted to Illumina
Parties under the Isis Patents (exclusive to Exploit NIPT IVD Products in the NIPT IVD Field, and nonexclusive to Exploit NIPT
LDT Tests in the NIPT LDT Field).

Notwithstanding the foregoing, for the avoidance of doubt, (A) Sequenom acknowledges and agrees that the Sequenom Parties do not
have any rights under Pooled Patents with respect to Exploiting NIPT IVD Products, and (B) each of Sections 2.1(b)(ii) and 2.1(b)(iii)
is subject to:

(1) rights granted under Existing Sequenom Licenses, and

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(2) any and all applicable terms in the University Licenses, including without limitation any field
limitations, any territory restrictions and rights reserved by the applicable University Licensor thereunder or Isis.

2.2 License to Sequenom Under Illumina Owned Patents. On the terms and conditions of this Agreement, Illumina, on behalf
of itself and its Affiliates, hereby grants to Sequenom and its Affiliates [***] a non-exclusive, irrevocable and perpetual (subject to
Section 2.2(b)), non-transferable and non-assignable (except as permitted under Section 9.1) worldwide non-sublicensable Test Fee -
bearing license under the Illumina Owned Patents to Exploit NIPT LDT Tests in the NIPT LDT Field.

(a) The license rights set forth in Section 2.2(a) granted to any Affiliate of Sequenom shall automatically terminate
with respect to such Person when it ceases to be an Affiliate of Sequenom. Persons (other than [***]) that become Affiliates of
Sequenom after the Effective Date shall be licensed under the license rights set forth in Section 2.2(a) only for those licensed acts that
occur on and after the date it becomes an Affiliate.

(b) Illumina agrees on behalf of itself, its Affiliates, and their respective successors and assigns that, to the extent any
Illumina Affiliate (a Granting Illumina Affiliate) is the owner (including joint owner) or in-licensee of any Pooled Patents for
which Sequenom Parties have been granted rights hereunder (including under Ancillary Agreements), or the Granting Illumina
Affiliate has granted rights hereunder (including under Ancillary Agreements) to any Sequenom Party, such rights granted to
Sequenom Parties (i) shall not terminate following the date, if any, that such Granting Illumina Affiliate ceases to be an Affiliate of
Illumina and that such rights shall continue after such date, with such rights under Illumina Owned Patents continuing to be perpetual
and irrevocable on and after such date, subject to Section 2.2(b) and (ii) to the extent the Sequenom Parties received rights only from a
Granting Illumina Affiliate under Pooled Patents and not from Illumina or another Affiliate that is not a Granting Illumina Affiliate,
such rights shall become a direct license from Illumina under Illumina Owned Patents or, if applicable, a direct license from the
applicable University Licensor under, and pursuant to the terms of, the applicable Illumina In-Licensed Patents.

2.3 License to Illumina Under Sequenom Owned Patents and Isis Patents.On the terms and conditions of this Agreement,
Sequenom, on behalf of itself and its Affiliates, hereby grants to Illumina and its Affiliates an exclusive, irrevocable and perpetual
(subject to Section 2.3(b)), non-transferable and non-assignable (except as permitted under Section 9.1), worldwide license, with the
exclusive right to grant sublicenses, under the Sequenom Owned Patents and Isis Patents, to Exploit NIPT LDT Tests in the NIPT
LDT Field and to Exploit NIPT IVD Products in the NIPT IVD Field, provided that the license is Royalty-bearing with respect to
NIPT IVD Products and the license is Test Fee-bearing with respect to NIPT LDT Tests. The foregoing license grant in the NIPT
LDT Field is subject to (i) any and all Existing Sequenom Licenses, and (ii) the reservation of the non-exclusive right, on behalf of
Sequenom and its Affiliates, to Exploit NIPT LDT Tests in the NIPT LDT Field and to grant sublicenses under the Isis Patents to
Persons that are not Sequencing Platform Manufacturers for each such sublicensee

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to Exploit NIPT LDT Tests in the NIPT LDT Field in its, or as applicable its Affiliates, clinical laboratories.

(a) The license rights set forth in Section 2.3(a) granted to any Affiliate of Illumina shall automatically terminate with
respect to such Person when it ceases to be an Affiliate of Illumina. Persons that become Affiliates of Illumina after the Effective Date
shall be licensed under the license rights set forth in Section 2.3(a) only for those licensed acts that occur on and after the date it
becomes an Affiliate.

(b) Sequenom agrees on behalf of itself, its Affiliates, and their respective successors and assigns that, to the extent any
such Sequenom Affiliate (a Granting Sequenom Affiliate) is the owner (including joint owner) or in-licensee of any Pooled Patents
for which Illumina Parties have been granted rights hereunder (including under Ancillary Agreements), or has granted rights hereunder
(including under Ancillary Agreements) to any Illumina Party, such rights granted to Illumina Parties (i) shall not terminate following
the date, if any, that such Granting Sequenom Affiliate ceases to be an Affiliate of Sequenom and that such rights shall continue to be
perpetual and irrevocable on and after such date, subject to Section 2.3(b) and (ii) to the extent the Illumina Parties received rights only
from a Granting Sequenom Affiliate under Pooled Patents and not from Sequenom or another Affiliate that is not a Granting
Sequenom Affiliate, such rights shall become a direct license from Sequenom under Sequenom Patents.

2.4 Amendments, Assignments, Licenses and Sublicenses Under CUHK Licenses. The effectiveness of this Agreement is
subject to the satisfaction in full, or the waiver by the Parties, of the due execution and delivery of the Settlement Agreement and the
agreements required to be duly executed and delivered pursuant to the terms of ARTICLE V thereof, of the satisfaction of the
conditions precedent set forth therein, and of the following additional conditions precedent:

(a) The due execution and delivery by Sequenom and CUHK, and acknowledgement by Illumina, of the amendments
to each of the CUHK Licenses (2008/2011) and the satisfaction of the conditions precedent set forth therein.

(b) The due execution and delivery by Sequenom, Illumina, and CUHK, of the assignment and novation from
Sequenom to Illumina of each of the CUHK Licenses (2008/2011) and the satisfaction of the conditions precedent set forth therein.

(c) The due execution and delivery by Sequenom and Illumina of the sublicenses from Illumina to Sequenom Parties
(excluding Affiliates that are Sequencing Platform Manufacturers) under each of the CUHK Licenses (2008/2011) and the satisfaction
of the conditions precedent set forth therein.

(d) The due execution and delivery by Illumina and CUHK of each of the CUHK Licenses (2014), and the
satisfaction of the conditions precedent set forth therein.

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(e) The due execution and delivery by Sequenom and Illumina of the sublicenses from Illumina to Sequenom Parties
(excluding Affiliates that are Sequencing Platform Manufacturers) under each of the CUHK Licenses (2014), and the satisfaction of
the conditions precedent set forth therein.

2.5 Sublicense Under Stanford License. The effectiveness of this Agreement is subject to the satisfaction in full, or the waiver
by the Parties, of the due execution and delivery by Sequenom and Illumina of the Stanford Sublicense Agreement.

2.6 Sublicense Under [***]. The effectiveness of this Agreement is subject to the satisfaction in full, or the waiver by the
Parties, of the due execution and delivery by Sequenom and Illumina of the sublicense from Illumina Parties to Sequenom Parties
(excluding Affiliates that are Sequencing Platform Manufacturers) under the [***].

2.7 Isis Patents. The effectiveness of this Agreement is subject to the due execution and delivery by Sequenom and Isis of a
valid and binding agreement pursuant to which Sequenom purchases from Isis all right title and interest in and to the Isis Patents and
receives full legal and beneficial title thereto, subject to the rights described in Schedule 7.1(b), and the satisfaction of any and all
conditions precedent set forth therein. Sequenom represents and warrants that the Isis Patents were sold, assigned and transferred to
Sequenom, and the provisions of this Section 2.7 have been satisfied in full, before the Effective Date.

2.8 Conditions for Illumina to Grant Licenses Under Pooled Patents.

(a) Test Fee; Conveyance of Customer License to Illumina Customers. Subject to the terms and conditions of this
Agreement (including Section 2.8(f) (Non-Illumina Platforms) and Section 2.9(a)(i) (Sequenom Granting Licenses Under Isis Patents),
and rights expressly retained by Sequenom to grant sublicenses to Persons to Exploit NIPT LDT Tests in the NIPT LDT Field in such
Persons, or as applicable its Affiliates, clinical laboratory under the Isis Patents), the Illumina Parties have the exclusive right to grant
licenses to perform NIPT LDT Tests in the NIPT LDT Field to any Person under any and all the Pooled Patents, provided the license
obligates the Person to pay a Test Fee on terms consistent with Section 3.2 of this Agreement (each a New Illumina Licensee).
Subject to the immediately preceding sentence, including obligations regarding Test Fees, the Illumina Parties may grant licenses under
Pooled Patents to Illumina Customers who purchase Illumina Products, which licenses authorize the Illumina Customer, with each unit
of consumable Illumina Product purchased, to Exploit, including a subset of the rights constituting Exploitation, NIPT LDT Tests in
the NIPT LDT Field using Illumina Products (each such license an Illumina Customer License).

(b) [***].

(c) Conveyance of License for NIPT IVD Product. With each NIPT IVD Product that is covered by a Valid Claim of
a Pooled Patent that is sold by Illumina and its Affiliates, Illumina and its Affiliates shall include a label license under Pooled Patents
authorizing use of that unit of NIPT IVD Product for the labeled intended use in the NIPT IVD Field under the applicable Pooled
Patents.

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(d) Third Parties in Litigation with Sequenom. A Third Party in litigation over a Pooled Patent with Sequenom or a
Sequenom Affiliate as of the Effective Date is an Existing Sequenom Litigant. Sequenom has identified Existing Sequenom
Litigants, and the Pooled Patents subject to each such litigation as of the Effective Date, on Schedule 2.8(d), which Schedule 2.8(d)
shall be amended by notice from Sequenom in the event that a litigant settles or is dismissed or is otherwise dropped from the
applicable litigation, and may be amended by mutual agreement of the Parties in writing from time to time. [***].

(e) Third Parties in Litigation with Illumina. A Third Party in litigation over any Pooled Patent with Illumina or an
Illumina Affiliate as of the Effective Date is an Existing Illumina Litigant. [***]. Illumina shall provide Sequenom with a
written accounting of any such amounts collected in settlement or as an award or reimbursements, and the allocations pursuant to the
terms of this Section 2.8(e). [***].

(f) Non-Illumina Platforms.

(i) Subject to the terms and conditions of this Agreement, including the right of Sequenom Parties to grant
sublicenses under Isis Patents only to a Person to Exploit NIPT LDT Tests in the NIPT LDT Field in that Persons, or as applicable its
Affiliates, clinical laboratory, Illumina has the exclusive right to grant licenses to or to authorize any Person under the Pooled Patents
to Exploit NIPT LDT Tests in the NIPT LDT Field or Exploit NIPT IVD Products in the NIPT IVD Field on any manufacturers
platform, including non-Illumina platforms, subject to Sequenoms prior written consent to the overall economic terms for any such
license that expressly permits such Exploitation in the Licensed NIPT Field on a non-Illumina platform under terms that are less
favorable to Sequenom set forth in this Agreement (Other Platform License), which consent shall not be unreasonably withheld,
delayed or conditioned. As between Sequenom and Illumina, Illumina shall have the right to retain all types of economic consideration
(whether one-time payments, royalties, continuing payments or other payment types) paid by all Persons under an Other Platform
License described in the preceding sentence until such time as Illumina has received under this sentence the aggregate amount of [
***]. Thereafter, with respect to consideration received under Other Platform Licenses (A) consideration received for Exploitation
of NIPT LDT Tests under Pooled Patents will be treated as Test Fees and shared between the Parties in accordance with
Section 3.2(d), (B) consideration received for all sales of NIPT IVD Products under Pooled Patents will be treated under, and Illumina
shall pay Royalties to Sequenom in accordance with, Section 3.3(c), and (C) all other types of economic consideration that are not
within (A) or (B), (whether one-time payments, continuing payments or other payment types) paid by a Person under any such Other
Platform License shall be shared between Illumina and Sequenom in the same proportion as for the Test Fees in accordance with
Section 3.2(d)(i).

(ii) In the event that Sequenom undergoes a Change of Control [***] (including as part of an assignment
of this Agreement in a bankruptcy or other financial restructuring of Sequenom), the provisions of this Section 2.8(f) shall apply with
respect to how rights under the Pooled Patents to Exploit NIPT LDT Tests in the NIPT LDT Field or Exploit

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NIPT IVD Products on non-Illumina platforms may be made available to such Person, provided that in such event [***].

2.9 Conditions for Sequenom Grant of Licenses under Isis Patents.Right to License Only Under Isis Patents; No Right to
License for NIPT IVD Products.

(i) Without limiting the foregoing in Section 2.9(a)(i), Sequenom and its Affiliates may not, and shall not, grant
licenses under the Pooled Patents, including the Isis Patents, to Exploit any NIPT IVD Product.

(b) Test Fees. [***], Sequenom agrees that any license granted by a Sequenom Party to a Person after the
Effective Date that authorizes performance in the NIPT LDT Field under any Isis Patent(s) (New Sequenom Licensee), will include
an obligation for that Person to pay a Test Fee on terms (including amounts) consistent with Section 3.2 of this Agreement and
Sequenom will share Test Fees and other consideration received for such sublicenses in accordance with Section 3.2.

(c) Settlement with Existing Sequenom Litigants. No term in this Agreement, or any Ancillary Agreement prohibits
Sequenom from settling any litigation with an Existing Sequenom Litigant, and Sequenom shall be entitled as part of any such
settlement to grant rights to an Existing Sequenom Litigant under rights Sequenom retains under any Isis Patent, provided that
Sequenom shall use commercially reasonable efforts to negotiate and enter into an agreement with such Existing Sequenom Litigant
obligating such Existing Sequenom Litigant to pay a Test Fee in at least the amount set forth in Schedule 1 for rights under any Isis
Patent or group of Isis Patents that authorizes the Existing Sequenom Litigant to perform NIPT LDT Tests in NIPT LDT Field in its,
or its Affiliates, clinical laboratory. [***]. Sequenom shall provide Illumina with a written accounting of any such amounts
collected in settlement or as an award or reimbursements, and the allocations pursuant to the terms of this Section 2.9(c). Nothing in
this Section 2.9(c) alters Illuminas exclusive rights regarding NIPT IVD Product.

2.10 Existing Sequenom Licensees.

(a) Sequenom and its Affiliates are parties to written agreements with Third Parties, entered into prior to the
Effective Date and remaining effective as of the Effective Date, under which such Third Party (Existing Sequenom Licensee) is
expressly authorized or licensed by Sequenom or its Affiliate to Exploit an NIPT LDT Test under one or more Sequenom Patents in
the NIPT LDT Field (Existing Sequenom License). The Existing Sequenom Licensees and Existing Sequenom Licenses are set
forth on Schedule 2.10(a), which indicates which Existing Sequenom Licensees are Sequenom Technology Partners and other
information.

(b) As set forth in and on the terms and conditions of this Agreement, Sequenom shall be responsible for collecting,
and shall use commercially reasonable efforts to collect, Test Fees for Licensed NIPT LDT Tests performed by Existing Sequenom
Licensees under a grant of any rights under any Pooled Patents on and after the Effective Date. [

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***]. All Test Fees paid by Existing Sequenom Licensees on and after the Effective Date are subject to sharing between Illumina
and Sequenom in accordance with Section 3.2(d).

(c) For avoidance of doubt, no rights are granted under this Agreement to Existing Sequenom Licensees or Existing
Illumina Licensees, however this Agreement shall not result in such existing licensees losing the rights under Sequenom Patents or
under Illumina Patents that each was granted or received from Sequenom Party or an Illumina Party, respectively, prior to the
Effective Date.

(i) [***].

(ii) [***].

(iii) Notwithstanding the foregoing, if an Existing Sequenom Licensee is obligated as of the Effective Date
under a written Agreement, to which it is a party with a Sequenom Party and was granted a right under Sequenom Patents (prior to
assignment of CUHK License (2008/2011)) to perform a Licensed NIPT LDT Test in the NIPT LDT Field, in exchange for payment
of Test Fees, in an amount that is $[***] or higher (based on currency exchange rates in effect on the Effective Date), for
performance of such Licensed NIPT LDT Tests in its, or as applicable its Affiliates, clinical laboratory, then the provisions of clause
(i) of this Section 2.10(c) shall apply to that Existing Sequenom Licensee.

2.11 Existing Illumina Licensees.

(a) Illumina or its Affiliates are parties to written agreements with Third Parties, entered into prior to the Effective
Date and remaining effective as of the Effective Date, under which such Third Party (Existing Illumina Licensee) is expressly
authorized or licensed by an Illumina Party to Exploit NIPT LDT Test under one or more Pooled Patent in the NIPT LDT Field
(Existing Illumina License). The Existing Illumina Licensees and Existing Illumina Licenses are set forth on Schedule 2.11(a),
which indicates which Existing Illumina Licensees are Illumina Technology Partners and other information. Existing Illumina
Licenses include licenses or rights granted pursuant to supply agreements in effect on the Effective Date.

(b) On the terms and conditions of this Agreement, Illumina shall be responsible for collecting, and shall use
commercially reasonable efforts to collect, Test Fees for Licensed NIPT LDT Tests performed in NIPT LDT Field by Existing
Illumina Licensees under a grant of any rights under any Pooled Patents on and after the Effective Date. For the avoidance of doubt,
and as set forth in Section 3.2, the amount of Test Fees paid by Existing Illumina Licensees on an per test or annual basis may be less
or more than the amounts, or at a less or more expensive price tier of annual Test Fees, on Schedule 1. All Test Fees paid by Existing
Illumina Licensees on and after the Effective Date are subject to sharing between Illumina and Sequenom in accordance with
Section 3.2(d).

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2.12 Transfers of NIPT Technology and Know How.

(a) Subject to Section 2.12(b) Illumina and Sequenom and their respective Affiliates each may enter into and
perform under Technology Agreements with Third Parties as set forth in this Section 2.12. Technology Agreement means a
written agreement under which (i) a Third Party receives from an Illumina Party certain know how and transfer of technology, and is
authorized under Illumina Patents (for Technology Agreements entered into prior to Effective Date) or Pooled Patents (for
Technology Agreements entered into on and after Effective Date) to use same to perform an NIPT LDT Test in NIPT LDT Field
that is the same or substantially similar to the Illumina verifi test or another Licensed NIPT LDT Test covered by Pooled Patents, or
(ii) a Third Party receives from Sequenom or its Affiliates certain know how and transfer of technology, and is authorized under
Sequenom Patents (for Technology Agreements entered into prior to the Effective Date) or Isis Patents (for Technology Agreements
entered into on and after Effective Date) to use same to perform an NIPT LDT Test in NIPT LDT Field that is the same or
substantially similar to the Sequenom MaterniT21 test or another Licensed NIPT LDT Tests covered by Pooled Patents. A Third
Party who enters into a Technology Agreement with an Illumina Party is an Illumina Technology Partner, and a Third Party
who enters into a Technology Agreement with Sequenom or an Affiliate is a Sequenom Technology Partner. The Illumina
Technology Partners and Sequenom Technology Partners as of the Effective Date are identified on Schedules 2.11(a) and 2.10(a),
respectively. This Agreement shall be amended by the Parties on a quarterly basis or otherwise upon notification by one Party to the
other, to revise Schedules 2.11(a) and 2.10(a) to identify any new Third Party that becomes an Illumina Technology Partner or a
Sequenom Technology Partner after the Effective Date and to identify which Existing Illumina Licenses and Existing Sequenom
Licenses (including those with existing Technology Partners) are terminated or expired.

(b) Illumina shall obligate Illumina Technology Partners and Sequenom shall obligate Sequenom Technology
Partners to pay a Test Fee on terms consistent with Section 3.2 of this Agreement. [***].

(c) Illumina represents that all Illumina Technology Partners under a Technology Agreement in effect as of the
Effective Date have received rights under one or more Illumina Patents (prior to assignment and novation of the CUHK
Licenses (2008/2011)) and, therefore, are Existing Illumina Licensees and, except as set forth on Schedule 7.1(c)(ix), are subject to
payment of Test Fees on terms consistent with Section 3.2 of this Agreement.

(d) Sequenom represents that all Sequenom Technology Partners under a Technology Agreement in effect as of the
Effective Date have received rights under one or more Sequenom Patents (prior to assignment and novation of the CUHK
Licenses (2008/2011)) and, therefore, are Existing Sequenom Licensees and are subject to payment of Test Fees on terms consistent
with Section 3.2 of this Agreement.

2.13 Non-Assertion Covenants.Sequenom, on behalf of itself and its Affiliates and their respective predecessors, successors
and assigns (each a Sequenom Covenant Party), hereby covenants not to directly (e.g., by itself) or indirectly (e.g., through a
strawman, other

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involvement for or with a Third Party, or otherwise) (i) sue (or purport to sue) in any forum, (ii) assign to any Third Party any right to
sue in any forum, nor (iii) in any way support or encourage any Third Party in suing in any forum, any Illumina Protected Party (as
defined below) for infringement of any Patent that (x) is owned or controlled by Sequenom or any of its Affiliates as of or after the
Effective Date and (y) has its earliest priority date as of or before the Effective Date, in each case excluding (1) the Pooled Patents,
(2) in the event of the Change of Control of Sequenom, all Patents of the Third Party acquirer, successor or survivor in such Change of
Control, and its Affiliates, immediately prior to such Change of Control, and (3) in the event of the Change of Control of either
Sequenom or Illumina, all Patents first owned or controlled by Sequenom or any of its Affiliates immediately after such Change of
Control, wherein such suit for infringement of any such Patent alleges that the Exploitation of any Current Illumina Product by
Illumina or its Affiliates and, solely to the extent any of the following Persons are expressly authorized to Exploit any Current Illumina
Product and are acting within the scope of such express authorization (including paying Test Fees if a (sub)licensee or if otherwise so
required to make payment as a condition of authorization): manufacturers, distributors, resellers, (sub)licensees and customers (each of
the Illumina Parties and the foregoing Persons an Illumina Protected Party), infringes, or induces or contributes to the infringement
of, any such Patent. With respect to subclause (3) herein, applications (and patents that issue therefrom) that are continuations,
divisionals, continuation-in-parts, or substitute applications claiming earliest priority from a Patent that was subject to the covenant in
this Section 2.13(a) prior to the date of the Change of Control, are deemed to be Patents first owned or controlled by Sequenom or any
of its Affiliates before the date of that Change of Control. Notwithstanding the foregoing or anything in this Agreement, the covenant
in this Section 2.13(a) shall not apply to the extent any Illumina Protected Party infringes (directly or indirectly) a Patent claim that
covers general platform technology of a Sequencing Platform Manufacturer that is an Affiliate of Sequenom solely to the extent
claiming multi-purpose (i.e., useful in multiple fields of use) consumables, reagents, instruments (or components of instruments),
software or accessories. This non-assertion covenant shall be a covenant that transfers with, and burdens, any sale, license, assign, or
other disposition, transfer or grant of rights under the applicable Patent including with respect to the disposition of any rights in any
license agreement pertaining thereto. Each Sequenom Covenant Party shall impose the foregoing non-assertion covenant on any Third
Party to which such Sequenom Covenant Party may sell, license, assign or otherwise dispose of, transfer or grant any rights to or under
the applicable Patent, but only to the extent such rights sold, licensed, assigned or otherwise disposed of, transferred or granted give the
Third Party the right to enforce such Patent against an Illumina Protected Party.

(a) Illumina, on behalf of itself, its Affiliates and their respective predecessors, successors and assigns (each an
Illumina Covenant Party), hereby covenants not to directly (e.g., by itself) or indirectly (e.g., through a strawman, other
involvement for or with a Third Party, or otherwise) (i) sue (or purport to sue) in any forum, (ii) assign to any Third Party any right to
sue in any forum, nor (iii) in any way support or encourage any Third Party in suing in any forum any Sequenom Protected Party (as
defined below) for infringement of any Patent that is (x) is owned or controlled by Illumina or any of its Affiliates as of or after the
Effective Date and (y) has its earliest priority date as of or before the Effective Date, in each case excluding (1) the Pooled Patents,
(2) in the event of the Change of Control of

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Illumina, all Patents of the Third Party acquirer, successor or survivor in such Change of Control, and its Affiliates, immediately prior
to such Change of Control, and (3) in the event of the Change of Control of either Sequenom or Illumina, all Patents first owned or
controlled by Illumina or any of its Affiliates immediately after such Change of Control, wherein such suit for infringement of any
such Patent alleges that the Exploitation of any Current Sequenom Product by any Sequenom Party and, solely to the extent any of
the following Persons are expressly authorized to Exploit any Current Sequenom Product and are acting within the scope of such
express authorization (including payment of Test Fees if a (sub)licensee or if otherwise so required to make payment as a condition
of authorization): distributors, resellers, (sub)licensees and customers (each of the Sequenom Parties and the foregoing Persons, a
Sequenom Protected Party), infringes, or induces or contributes to the infringement of, any such Patent. With respect to
subclause (3) herein, applications (and patents that issue therefrom) that are continuations, divisionals, continuation-in-parts, or
substitute applications claiming earliest priority from a Patent that was subject to the covenant in this Section 2.13(b) prior to the date
of the Change of Control, are deemed to be Patents first owned or controlled by Illumina or any of its Affiliates before the date of
that Change of Control. Notwithstanding the foregoing or anything in this Agreement, the covenant in this Section 2.13(b) shall not
apply to the extent any Sequenom Protected Party infringes (directly or indirectly) a Patent claim that covers general platform
technology of an Illumina Party solely to the extent claiming multi-purpose (i.e., useful in multiple fields of use) consumables,
reagents, instruments (or components of instruments), software or accessories. This non-assertion covenant shall be a covenant that
transfers with and burdens any sale, license assign, or other disposition, transfer or grant of rights under the applicable Patent,
including with respect to the disposition of any rights in any license agreement pertaining thereto. Each Illumina Covenant Party shall
impose the foregoing non-assertion covenant on any Third Party to which such Illumina Covenant Party may sell, license, assign or
otherwise dispose of, transfer or grant any rights to or under the applicable Patent, but only to the extent such rights sold, licensed,
assigned or otherwise disposed of, transferred or granted give the Third Party the right to enforce such Patent against a Sequenom
Protected Party.

(b) Each Sequenom Covenant Party hereby covenants not to directly (e.g., by itself) or indirectly (e.g., through a
strawman, other involvement for or with a Third Party, or otherwise) (i) sue (or purport to sue) in any forum, (ii) assign to any
Third Party any right to sue in any forum, nor (iii) in any way support or encourage any Third Party in suing in any forum alleging
that the Exploitation of any Current Illumina Product by any Illumina Party infringes any Pooled Patent. Nothing in this
Section 2.13(c) alters any obligation to pay Test Fees and/or Royalties in accordance with the terms of this Agreement.

(c) Each Illumina Covenant Party hereby covenants not to directly (e.g., by itself) or indirectly (e.g., through a
strawman, other involvement for or with a Third Party, or otherwise) (i) sue (or purport to sue) in any forum, (ii) assign to any
Third Party any right to sue in any forum, nor (iii) in any way support or encourage any Third Party in suing in any forum alleging
that the Exploitation of any Current Sequenom Product by any Sequenom Party infringes any Pooled Patent. Nothing in this
Section 2.13(d) alters any obligation to pay Test Fees and Royalties in accordance with the terms of this Agreement.

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2.14 [***] Patents. Sequenom, on behalf of itself and its Affiliates, agrees [***], it shall not undertake to expand the
scope of the claims of the Patents as such claims exist as of the Effective Date.

2.15 [***] Patents. Illumina, on behalf of itself and its Affiliates, represents and warrants [***].

2.16 HDFN Products. Notwithstanding anything to the contrary in this Agreement, solely with respect to NIPT LDT Tests in
each case that are solely directed to fetal blood antigen testing associated with hemolytic disease of the fetus and newborn (HDFN
Products), each Party shall be permitted to Exploit such HDFN Product in the NIPT LDT Field and, if such Exploitation of an
HDFN Product is covered by a Valid Claim of an Isis Patent, but not covered by a Valid Claim of any other Pooled Patent, then such
Party shall have no obligation under this Agreement to collect or share a Test Fee or other consideration with the other Party.

2.17 Additional Rights.

(a) The Patents set forth on Schedule 2.17(a) are exclusively licensed by Sequenom from CUHK and are not Pooled
Patents. Upon Illuminas request, Sequenom will negotiate in good faith commercially reasonable terms under which Sequenom
would grant Illumina a sublicense under the Patents on Schedule 2.17(a).

(b) The Patents set forth on Schedule 2.17(b) are solely owned by Sequenom and are not Pooled Patents. In the
event Sequenom licenses any of the Patents on Schedule 2.17(b) to any Third Party (other than in settlement of litigation), then upon
Illuminas request, Sequenom will negotiate in good faith with Illumina a license under the Patents on Schedule 2.17(b) [***].

ARTICLE III

CONSIDERATION

3.1 One-Time Payment. A one-time, non-refundable payment of fifty million dollars (US$50,000,000) shall be payable by
Illumina, in three installments, in recognition of the settlement of the disputes, grants of exclusivity and other rights granted to Illumina
as set forth in this Agreement and the Ancillary Agreements (the One-Time Payment). Within one (1) Business Day after the
Effective Date, Illumina shall pay to Sequenom forty four million dollars (US$44,000,000) of the One-Time Payment. Within five (5)
Business Days after the [***], Illumina shall pay to Sequenom two million dollars (US$2,000,000). Within five (5) Business
Days after the [***], Illumina shall pay to Sequenom four million dollars (US$4,000,000). In the event [***], Illumina shall
have the right to credit one million dollars (US$1,000,000) of the One-Time Payment against any and all amounts owed by Illumina to
Sequenom under this Agreement until the full one million dollars (US$1,000,000) has been credited. In the event [***], Illumina
shall have the right to credit two million dollars (US$2,000,000) of the One-Time Payment against any and all amounts owed by
Illumina to Sequenom under this Agreement until the full two million dollars (US$2,000,000) has been

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credited. Notwithstanding anything to the contrary in this Agreement, nothing in this Agreement is intended by the Parties to, and
nothing in this Agreement shall [***].

3.2 Test Fees for Performance of Licensed NIPT LDT Test.

(c) Selected Definitions. For purposes of this Agreement:

(i) A Licensed NIPT LDT Test means an NIPT LDT Test the performance of which is covered by a Valid
Claim of a Pooled Patent, wherein the Person performing the NIPT LDT Test received the right, license or other authorization to
Exploit that NIPT LDT Test under that Pooled Patent, subject to Section 3.2(b).

(ii) An Authorized Lab means any Person that receives the right, license or other authorization pursuant to
the terms and conditions of this Agreement to Exploit a Licensed NIPT LDT Test under at least one Pooled Patent. Without limitation,
each of the following is an Authorized Lab to the extent of its rights under the Pooled Patent(s) under which it received right, license or
other authorization: (A) each Sequenom Party, (B) Sequenom Technology Partners, (C) Existing Sequenom Licensees (which includes
Sequenom Technology Partners existing on Effective Date), (D) Illumina Parties, (E) Illumina Technology Partners, (F) Existing
Illumina Licensees (which includes Illumina Technology Partners existing on Effective Date), (G) any and all Illumina Customers who
receive an Illumina Customer License with purchase of Illumina Products, (H) any New Sequenom Licensee, and (I) any New
Illumina Licensee. For the avoidance of doubt, an Authorized Lab may be described by more than one category of (A) through (I). An
Authorized Lab shall be an Authorized Lab only for so long as it has a right, license or other authorization to Exploit Licensed NIPT
LDT Tests under one or more Pooled Patents pursuant to the terms and conditions of this Agreement.

(iii) A Test Fee means the per test amount that is payable by an Authorized Lab when a Licensed NIPT
LDT Test is performed by such Authorized Lab as a fee-for-service or reimbursable offering (whether or not Authorized Lab is paid or
reimbursed for the test), such amount set in accordance with Section 3.2(c) and payable and/or creditable in accordance with
Section 3.2(b).

(d) Payment and Collection of Test Fees. Illumina or Sequenom, as applicable, shall obligate, pursuant to written
agreements therewith (or this Agreement with respect to Sequenom Parties and Illumina Parties), every Authorized Lab to pay a Test
Fee for any and all (subject to Section 3.2(c)(ii)) Licensed NIPT LDT Tests performed by such Authorized Lab as follows:

(i) Sequenom shall be responsible for all Test Fees that are payable under this Agreement for any and all
Licensed NIPT LDT Tests performed by Sequenom Parties (Authorized Labs A), and Illumina shall be responsible for all Test Fees
that are payable under this Agreement for any and all Licensed NIPT LDT Tests performed by Illumina Parties (Authorized Labs D).

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(ii) Illumina shall use commercially reasonable efforts to collect Test Fees that are payable by Illumina
Technology Partners, Existing Illumina Licensees, and Illumina Customers who receive an Illumina Customer License (Authorized
Labs E, F, G), and any other Authorized Lab (I) that receives the applicable right, license or authorization from an Illumina Party, for
any and all Licensed NIPT LDT Tests performed by such Persons.

(iii) Sequenom shall use commercially reasonable efforts to collect Test Fees that are payable by its Sequenom
Technology Partners, Existing Sequenom Licensees, and any New Sequenom Licensees (Authorized Labs B, C and H) for any and
all Licensed NIPT LDT Tests performed by such Persons.

(iv) In the event there is an Authorized Lab that is not in a category addressed in this Section 3.2(b), Illumina
and Sequenom shall mutually agree on which of them shall be responsible for using commercially reasonable efforts to collect Tests
Fees payable by such an Authorized Lab.

(v) Each Party shall and shall cause its Affiliates to forego any conduct the intent of which is to prevent the
collection or sharing of Test Fees or other consideration between the Parties in accordance with the terms of this Agreement.

(vi) Any consideration received by an Illumina Party or a Sequenom Party from any Person for a license under
a Pooled Patent to Exploit an NIPT LDT Test in the NIPT LDT Field, that is not in the form of Test Fees, shall be shared between
Illumina and Sequenom in accordance with Section 3.2(d).

(vii) To the extent any Illumina Party or Sequenom Party entered into prior to the Effective Date any
agreement that obligates an Authorized Lab to pay a Test Fee for performance of an NIPT LDT Test that is covered by a Valid Issued
Claim or any pending claim of a Pooled Patent (including pending claims of the Illumina Owned Patents, Sequenom Owned Patents
and Isis Patents), and such Authorized Lab pays such Test Fee, then such NIPT LDT Test shall be deemed to be a Licensed NIPT
LDT Test and all such Test Fees collected under such agreements shall be shared between the Parties in accordance with this
Agreement.

(e) Determination of Test Fee Amounts. Test Fee amounts will be determined as follows:

(i) Except as expressly stated otherwise in this Agreement (including in Section 3.2(c)(ii) (Exceptions to
Amount of Test Fee), Section 2.8(e) (Third Parties in Litigation with Illumina), Section 2.8(f) (Non-Illumina Platforms) and
Section 2.9(c) (Settlement with Existing Sequenom Litigants)), each Illumina Party or Sequenom Party shall enter into written
agreements with Persons it grants rights, licenses, or authorizations as an Authorized Labs such that the Authorized Lab is obligated to
pay Test Fees on a quarterly basis, and Sequenom Parties and Illumina Parties shall be obligated to pay Test Fees on a quarterly basis.
(A) Except as stated below with respect to Licensed NIPT LDT Test for which the Test Fee is equal to [***]. With respect to
Licensed LDT Tests performed by an Authorized Lab during the first calendar year of its agreement under which it received the right
to perform Licensed

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NIPT LDT Tests, the Test Fee amount that the Authorized Lab shall pay for Licensed NIPT LDT Tests performed during the first
calendar year of that agreement shall be no lower than the amount of Test Fee on Schedule 1, Section 3 that corresponds to the good
faith estimate of the volume that Authorized Lab will achieve at the end of that first calendar year. For agreements entered into within
six months before the end of a calendar year, the first annual calculation of the Test Fee amount payable by the Authorized Lab will be
for the period ending on December 31 of the first full calendar year of that agreement. The quarterly Test Fees for an Authorized Lab
shall be in amounts that result in at least the product of (1) the number of Licensed NIPT LDT Tests performed by that Authorized Lab
in that quarter with (2) the Test Fee amount in effect for that Authorized Lab in that quarter, plus an amount equal to the product of the
annual number of Licensed NIPT LDT Tests in (1) that are subject to the additional $[***] fee as set forth on Schedule 1
multiplied by $[***]. (B) With respect to each Licensed NIPT LDT Test for which the Test Fee is equal to [***]. For the
avoidance of doubt, notwithstanding the minimum amounts payable in accordance with the first sentence of this Section 3.2(c), the full
amount of all Test Fees collected by Illumina and Sequenom from Authorized Labs shall be shared between the Parties as set forth in
Section 3.2(d) (Sharing of Test Fee Amounts.)

(ii) Exceptions to Amount of Test Fee.

(1) Illumina Licensees. Illumina shall use commercially reasonable efforts to collect a Test Fee from
Existing Illumina Licensees (including Illumina Technology Partners in existence as of the Effective Date) and New Illumina
Licensees in the amounts governed by the terms of the applicable Existing Illumina License (including an applicable Technology
Agreement) as modified by this Section 3.2(c)(ii). [***]. Notwithstanding anything to the contrary in this Agreement, any and all
amounts for Test Fees received by Illumina from an Existing Illumina Licensee or New Illumina Licensee, including amounts in excess
of the Test Fee that would otherwise be due under this Agreement, shall be subject to sharing with Sequenom in the same manner and
amount as set forth in Section 3.2(d) (Sharing of Test Fees).

(2) Existing Sequenom Licensees. Sequenom shall use commercially reasonable efforts to collect a
Test Fee from Existing Sequenom Licensees (including Sequenom Technology Partners in existence as of the Effective Date) and
New Sequenom Licensees in the amounts governed by the terms of the applicable Existing Sequenom License (including an
applicable Technology Agreement) as modified by this Section 3.2(c)(ii). If an Existing Sequenom Licensee is obligated under an
Existing Sequenom License to pay a per test fee upon performance of a NIPT LDT Test that is less than the amount that Sequenom
would otherwise be obligated to charge under the provisions of Sections 3.2(c)(i), then Sequenom shall not be under any obligation to
raise the Test Fee amounts payable by that Existing Sequenom Licensee from the amount set forth in that Existing Sequenom License
and the Test Fees amounts collected by Sequenom on such basis shall be shared with Illumina in accordance with this Agreement. [
***]. Notwithstanding anything to the contrary in this Agreement, any and all amounts for Test Fees (and their equivalents) received
by Sequenom from an Existing Sequenom Licensee or New Sequenom Licensee, including amounts in excess of the Test Fee due
under this

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Agreement shall be subject to sharing with Illumina in the same manner and amount as set forth in Section 3.2(d) (Sharing of Test
Fees).

(3) With respect to Existing Sequenom Licensees and New Sequenom Licensees that are Authorized
Labs, which have received less than full rights under all Pooled Patents to perform NIPT LDT Tests in the NIPT LDT Field, in the
event an Illumina Party enters into a later agreement with such Authorized Lab to extend the rights under the Pooled Patents granted to
such Authorized Lab under which such Authorized Lab is authorized to perform Licensed NIPT LDT Tests, Illumina shall be entitled
to offer such extended rights at Test Fee amounts lower than those set forth in Schedule 1 in order to facilitate the later agreement with
such Authorized Lab in view of the Test Fee amounts already owed pursuant the earlier agreement. In any such case, Illumina shall not
require such Authorized Lab or any existing Illumina Licensee to pay an additional amount of Test Fees (for the total rights received
from Sequenom and from Illumina) that would result in the aggregate amount of Test Fees paid by that Authorized Lab to be in excess
of the Test Fees set forth in Schedule 1.

(4) Research and Development. The Test Fee is [***] for a Licensed NIPT LDT Test (A) that
is performed by an Authorized Lab for internal research or development in the NIPT LDT Field, and (B) for which the Authorized
Lab did not receive compensation on a per test basis (individually or as a lot of tests) for such Licensed NIPT LDT Test, and (C) the
results of such Licensed NIPT LDT Test were not reported back to a subject or her physician or used for commercial purposes.

(iii) [***].

(1) Adjustment to Test Fee Schedule. Illumina shall have the right to adjust the Test Fee Schedule [
***] on a market segment (including geographic or product segment) basis to reflect such market changes, upon written notice to
and consent of Sequenom. Upon receipt of such notice [***], Sequenom shall consider in good faith whether or not to consent,
such consent not to be unreasonably withheld, delayed or conditioned. As promptly as practicable, [***], Sequenom shall notify
Illumina of its decision to consent or to withhold consent and its reasons therefor. If Sequenom has not responded in writing within the
specified time, then it shall be deemed to have consented and Illumina may proceed with such reduced Test Fee structure for that
market segment. In the event of a dispute between the Parties regarding adjustment of amounts in this clause (1), the procedures set
forth on Schedule 2 shall govern the resolution of such Dispute.

(2) [***] Test Fees for Potential Future Authorized Labs. Each Party shall have the right to
request that Test Fees be adjusted [***] for a particular Person that is a potential future Authorized Lab, upon notice to and
consent from the other Party. Upon receipt of such notice requesting a reduced Test Fee structure for a particular Person (other than the
Parties or their respective Affiliates), the other Party shall consider in good faith whether or not to consent, such consent not to be
unreasonably withheld, delayed or conditioned, on a case by case basis, to charging [***] to such Person if such [***] is
reasonably necessary or useful to promote adoption of Licensed NIPT LDT Tests in that Persons clinical laboratory [***]. As
promptly as practicable, but in no event later than [***] after

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receiving such notice, the other Party shall notify the requesting Party of its decision to consent or to withhold consent and its reasons
therefor. If the other Party has not responded in writing within the specified time, then the other Party shall be deemed to have
consented and the requesting Party may proceed with such [***] for that Authorized Lab [***].

(3) In the event the Test Fee Schedule is adjusted [***] pursuant to the procedure in clause (1) in
this Section 3.2(c)(iii), then Schedule 1 automatically shall be amended to reflect such [***] adjustment for the applicable market
segment, and thereafter shall be applicable to Test Fees payable by the Illumina Parties, Sequenom Parties and new Authorized Labs
authorized after the adjustment date and, pursuant to each Partys rights to adjust Test Fees as set forth in Section 3.2(c)(ii), payable by
the Parties then-existing licensees.

(f) Sharing of Test Fees.

(i) Sharing of Test Fees Between Illumina and Sequenom. The aggregate Test Fees collected by Illumina and
Sequenom in a particular calendar quarter from Authorized Labs, including the Test Fees payable by Sequenom Parties and Illumina
Parties as Authorized Labs (in amounts prior to any allocation of Test Fees between Illumina and Sequenom or deductions or credits),
are the Gross Test Fees Illumina and Sequenom will share Gross Test Fees as follows:

(1) For Licensed NIPT LDT Tests performed by Authorized Labs anywhere in the world, excluding
[***], Illumina shall be entitled [***] of the Gross Test Fees collected and Sequenom shall be entitled to [***] of the
Gross Test Fees collected, subject to Section 3.2(d)(ii).

(2) For Licensed NIPT LDT Tests performed by Authorized Labs in [***], Illumina shall be
entitled to [***] of the Gross Test Fees collected and Sequenom shall be entitled to [***] of the Test Fees collected, subject
to Section 3.2(d)(ii).

(ii) Illumina shall be responsible for any amounts owed to its third party licensors (including University
Licensors), and Sequenom shall be responsible for any amounts owed to its third party licensors or Isis, provided that, Illumina may
credit or [***] of all of Illuminas payments to CUHK pursuant to the CUHK Licenses (including all amounts paid or payable to
CUHK after termination or expiration of such CUHK Licenses, pursuant to the terms of any such CUHK License), based on
performance of NIPT LDT Tests by Authorized Labs (including royalties, milestone payments, and any recurring payments to the
extent related to performance of NIPT LDT Tests, and minimum guarantees, bonus payments, any payments to make up for shortfalls
in payments not made by sub-licensee or a sublicensee of a sublicensee, but excluding Patent Costs, the sharing of which is addressed
in Section 5.2) against the amounts owing to Sequenom based on the sharing of Gross Fees hereunder. Subject to Section 3.5
(Minimum Payments), payments by one Party to the other Party necessary to effectuate the sharing of Gross Test Fees set forth in this
Section 3.2(d) shall be made in accordance with Section 3.4 (Payments and Reports).

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(iii) If any University License, pursuant to which any Illumina In-Licensed Patents are licensed to Illumina, is
terminated and Sequenom and its Affiliates obtain a direct license from the applicable University Licensor under such Illumina In-
Licensed Patents, thereafter (1) Sequenom shall be responsible for the payment of all amounts owing to such University Licensor for
sales by Sequenom and its Affiliates under such Illumina In-Licensed Patents, (2) Sequenom shall continue to be responsible for all
payment obligations to Illumina set forth in this Agreement, including payment of Test Fees, and (3) Sequenom shall have the right to
credit against Illuminas portion of shared consideration under this Agreement all such amounts owing to such University Licensor
(other than CUHK) for sales by Sequenom and its Affiliates under such Illumina In-Licensed Patents up to the amounts that Illumina
would have paid to University Licensor if it had remained the direct licensee.

3.3 Royalties on NIPT IVD Products.

(f) For any country, in which there is, at the time of sale of the applicable NIPT IVD Product, a Valid Issued Claim
in such country covering that NIPT IVD Product, Illumina shall pay Sequenom a royalty of [***] of Net IVD Sales of such
NIPT IVD Product sold by Illumina and its Affiliates during the Patent Royalty Term in the NIPT IVD Field in such country.
Notwithstanding the foregoing [***] shall be due under this Agreement for sales of instruments, hardware or sale or sale/license
of general or multi-purpose software.

(g) For any country, other than [***], (i) in which there is not, at the time of sale of the applicable NIPT IVD
Product, a Valid Issued Claim in that country covering that NIPT IVD Product, and (ii) if that NIPT IVD Product had been sold in
another country at the same time, the sale or use thereof in such other country would be covered by a Valid Issued Claim in such
other country, then in the case of (i) and (ii) Illumina shall pay Sequenom a royalty of [***] of Net IVD Sales of such NIPT
IVD Product sold by Illumina and its Affiliates in the NIPT IVD Field during the period beginning on the Effective Date and ending
on the [***] anniversary thereof. Notwithstanding the foregoing [***] shall be due under this Agreement for sales of
instruments, hardware or sale/license of general or multi-purpose software.

(h) Illumina shall share with Sequenom any royalties received by Illumina or an Illumina Affiliate from a sublicensee
(and its Affiliates), that is licensed under Pooled Patents to Exploit an NIPT IVD Product in the NIPT IVD Field, for sale of NIPT
IVD Products in the NIPT IVD Field under such license to Pooled Patents, in the proportion set forth in Section 3.2(d). Illumina
agrees that any sublicense granted to any Person under Pooled Patents to Exploit an NIPT IVD Product in the NIPT IVD Field will
be for a royalty that is no less than [***]% of Net IVD Sales of NIPT IVD Products sold by such sublicensee (and its Affiliates)
in the NIPT IVD Field. For the avoidance of doubt, for the purpose of this Section 3.3(c), a Person that purchases NIPT IVD
Product is not a sublicensee under Pooled Patents. Notwithstanding the foregoing no Royalty shall be due under this Agreement for
sales of instruments, hardware or sale/license of general or multi-purpose software.

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(i) Royalty and Royalties means the amount payable to Sequenom pursuant to Sections 3.3(a), 3.3(b), 3.3(c)
and 3.3(g). Notwithstanding anything to the contrary in this Agreement, (i) except as stated in part (iii) herein, a Royalty shall be
calculated and due under this Agreement with respect to any and all NIPT IVD Products in the NIPT IVD Field sold, and subject to,
and solely with respect to, the terms of Section 3.3(g), NIPT Components sold and used with NIPT IVD Product(s) to perform (in
whole) NIPT, (ii) in the event any Person (including Illumina Parties, Sequenom Parties or any other Authorized Lab) purchases any
NIPT IVD Product from or on behalf of an Illumina Party or a sublicensee as permitted hereunder, (except as stated in part (iii)
herein) including to perform an NIPT LDT Test in the NIPT LDT Field and a Royalty is payable in accordance with Section 3.3(a)-
(c) or 3.3(g) for such sale of the NIPT IVD Product, then no Test Fee shall be payable under this Agreement for the performance of
such NIPT LDT Test, (iii) in the event of sale of an NIPT IVD Product in the NIPT IVD Field wherein the purchaser is expressly
authorized by Illumina Party or sublicensee as permitted hereunder to use such product to perform NIPT for tests not included in the
product label or protocols for use (e.g., for genetic conditions not included in label), then no Royalty shall be payable in accordance
with Section 3.3(a)- (c) or 3.3(g) for such sale of the NIPT IVD Product, however a Test Fee shall be payable under this Agreement
for the performance of such NIPT (whether the NIPT is deemed to be performed in the NIPT IVD Field or the NIPT LDT Field)
and (iv) except as set forth in clauses (x) and (y) of the fourth paragraph of the definition of Net IVD Sales, under no circumstances
shall more than one Royalty be payable for the same unit of NIPT IVD Product or NIPT Component sold.

(j) With respect to Net IVD Sales for NIPT IVD Products, Illumina shall be responsible for any amounts owed to its
third party licensors (including University Licensors), and Sequenom shall be responsible for any amounts owed to its third party
licensors, provided that, Illumina may credit or offset the full amount of all of Illuminas payments to CUHK pursuant to the CUHK
Licenses (including all amounts paid or payable to CUHK after termination or expiration of such CUHK Licenses, pursuant to the
terms of any such CUHK License), based on sales of NIPT IVD Product (by Illumina Parties or sublicensees and their Affiliates)
(including royalties, milestone payments, and any recurring payments to the extent related to sale of NIPT IVD Product, and
minimum guarantees, bonus payments, any payments to make up for shortfalls in payments not made by sub-licensee or a
sublicensee of a sublicensee, but excluding Patent Costs, the sharing of which is addressed in Section 5.2) against the Royalties
owing to Sequenom on Net IVD Sales.

(k) Subject to Section 3.5, payments by one Party to the other Party necessary to effectuate the Royalties provisions
set forth in this Section 3.3 shall be made in accordance with Section 3.4 (d).

(l) To the extent Illumina, its Affiliates, or sublicensees described in Section 3.3(c),

(i) sells an NIPT IVD Product in the NIPT IVD Field for conduct or performance (in part, but not in whole) of
NIPT,

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(A) for which a Royalty is payable pursuant to Section 3.3(a), (b) or (c) upon such sale, and

(B) which sale (alone or together with NIPT Component(s)) conveys to the purchaser particular rights
to conduct or perform (in whole) NIPT in accordance with product labeling or protocols of use without risk of infringing any Pooled
Patent (e.g., convey through patent exhaustion, license, or covenant), and

(ii) sells together (whether under a single purchase order or under separate purchase orders) with such NIPT
IVD Product other product(s) (whether NIPT IVD Product(s) or a non-NIPT IVD Product(s)) that is not an instrument, hardware, or
general or multi-purpose software (such software being sold or licensed), but that is a required component, with NIPT IVD Product(s),
to conduct or perform (in whole) NIPT, and (A) if each such other product(s) is the same or substantially the same as a product that, at
the time of sale, is a component of an NIPT IVD Product of the seller that has received Regulatory Approval in the United States for
conducting or performing (in whole) NIPT, or (B) in the event there is not such an NIPT IVD Product in (A), would be a component
of an NIPT IVD Product of the seller for which an application for Regulatory Approval in the United States would be required for sale
of such NIPT IVD Product for conducting or performing (in whole) NIPT (each such product an NIPT Component), then

(iii) Illumina shall pay Sequenom

(A) a Royalty upon sale of such NIPT IVD Product sold, payable in accordance with Section 3.3(a),
(b) or (c), as required,

(B) a Royalty on each NIPT Component sold, payable (1) only during the time period stated in the
applicable clause (a), (b) or (c) of Section 3.3, (2) as a percentage of net sales of each such NIPT Component calculated in the same
manner as set forth for calculation of Net IVD Sales (for the purpose of this Section 3.3(g)(iii)(B), each instance of NIPT IVD Product
in Net IVD Sales is replaced with NIPT Component) and (3) in the percentage stated in such applicable clause (a), (b) or (c) of
Section 3.3, as required, and

(C) Notwithstanding the foregoing or anything contrary in this Agreement, Illumina is not obligated to
pay a Royalty on any NIPT Component that is used by an Authorized Lab to perform a Licensed NIPT LDT Test for which a Test
Fee is owed to an Illumina Party or a Sequenom Party.

3.4 Payment and Reports.

(a) Not later than forty five (45) calendar days after the last day of each calendar quarter, Sequenom and Illumina
each shall provide the other with a written Test Fee and Royalty Report (each a Test Fee and Royalty Report), detailing
separately for Japan and the rest of the world other than Japan (i) the names of all Third Party Authorized Labs for which that Party
is obligated to collect Test Fees, (ii) the degree of compliance by each such Third Party Authorized Lab with its payment obligations
under the applicable agreement

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therewith, (iii) the aggregate number of Licensed NIPT LDT Tests performed by all such Authorized Labs, including by Sequenom
Parties and Illumina Parties, during that period, including the number of Licensed NIPT LDT Tests that are subject to the additional
$[***] added to the Test Fee and that are subject to a Test Fee in an amount equal to percentage of Net LDT Sales, (iv) the
aggregate amount of Test Fees collected by such Party during that period, including for its own Licensed NIPT LDT Test and those
of its applicable Affiliates, (v) the amount of the Test Fees collected by the reporting Party that is owed to the other Party during that
period based on the sharing obligations set forth in Section 3.2(d) (Sharing of Test Fees), (vi) in the case of Illumina, the aggregate
Net IVD Sales and the Royalties owed to Sequenom based on the Net IVD Sales, and the corresponding net sales and Royalties
owed to Sequenom based on sales of NIPT Components as provided for in Section 3.3(g)(iii)(B) above, (vii) all other consideration
received by such Party during that period that is subject to sharing hereunder and the amount thereof owing to the other Party
hereunder, (viii) in the case of Illumina, all amounts paid by Illumina to CUHK during such period pursuant to the CUHK Licenses
(including all amounts paid or payable to CUHK after termination of such CUHK Licenses, pursuant to the terms of any such
CUHK License), including as set forth in this Agreement in Section 3.2(d)(ii) and 3.3(e), (ix) a reasonably detailed report on any
anomalous activity during the period, such as a Third Partys licensees refusal to pay an owed amount or any other material
exception to the expected performance by such Authorized Lab in relation to this Agreement, (x) the aggregate Net LDT Sales, and
the number of tests upon which Net LDT Sales is based, by such Party or its Affiliates or (sub)licensees under any Pooled Patent, as
applicable, (xi) the Patent Cost incurred by that Party, (xii) in the case of Illumina, all amounts creditable in accordance with Section
3.1, and (xiii) based on the foregoing (i) through (xii), the net amount owed to the other Party for that period before taking into
consideration the other Partys Test Fee and Royalty Report for the same period. Each Party shall provide its quarterly Test Fee and
Royalty Report in a Microsoft excel-compatible spreadsheet (electronic and hard copy), or in another mutually acceptable
spreadsheet format. In the event that a University Licensor of Illumina under any Pooled Patent requires in its University License
additional reporting relating to sales of NIPT LDT Tests, which reporting is not set forth in this Agreement, upon Illuminas request
therefor, Sequenom shall include in its Test Fee and Royalty Report such additional reporting.

(b) Not later than sixty (60) calendar days after the last day of each calendar quarter, or thirty (30) days after a Party
receives the applicable Test Fee and Royalty Report from the other Party for such calendar quarter, whichever is later, (i) each Party
shall reconcile the amount subject to sharing hereunder that is owed to the other Party under the Test Fee and Royalty Reports
provided for such calendar quarter, after application of all offsets and credits permitted under this Agreement, including under
Sections 3.1, 3.2(d)(ii), 3.3(e) and 3.4(b) and Patent Costs, and (ii)(A) if such reconciliation shows that Illumina owes to Sequenom a
net aggregate amount of consideration subject to sharing hereunder for such calendar quarter, then Illumina shall pay such net
aggregate amount to Sequenom, and (B) if such reconciliation shows that Sequenom owes to Illumina a net aggregate amount of
consideration subject to sharing hereunder or subject to reimbursement hereunder for such calendar quarter, then Sequenom shall pay
such net aggregate amount to Illumina. Making or accepting a payment made under this

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Section 3.4(b) shall not constitute an admission by a Party or conclusive evidence of the correctness of any amount so paid or accepted.

(c) Annual Reporting and True-Up.

(iv) Not later than ninety (90) calendar days after the last day of each calendar year, or forty five (45) days after
a Party receives from the other Party the Test Fee and Royalty Report for the last calendar quarter of such calendar year, whichever is
later, each Party shall provide the other with an annual report (the Annual Report) in reasonable detail showing for the previous
calendar year all categories of information set forth in parts (i) through (xii) of the quarterly Test Fee and Royalty Report, and in each
case, any difference between the information reported on the Annual Report and the information reported in the quarterly Test Fee and
Royalty Reports. The Annual Report provided by Sequenom shall also report the number of NIPT LDT Tests in the NIPT LDT Field
(A) performed during that calendar year period using Illumina equipment and consumables and (B) performed during that period using
non-Illumina equipment and consumables, and any adjustments to those number permitted in accordance with Section 3.5(b)
(Adjustment Due to Third Party Platforms and Products). Each Party shall provide its Annual Report in a Microsoft excel spreadsheet
(electronic and hard copy), or in another mutually acceptable spreadsheet format.

(v) The Parties shall each calculate and also include such calculation in such Annual Report the sum of
(A) payments received by Sequenom from Illumina for shared Test Fees and other shared consideration, (B) Royalties received by
Sequenom from Illumina for Net IVD Sales, (C) the amounts retained by Sequenom for Test Fees and other shared consideration in
relation to Licensed NIPT LDT Tests, and, in the case of Illumina, (D) the amounts paid by Illumina to CUHK pursuant to the CUHK
Licenses and deducted by Illumina from payments to Sequenom as specifically permitted under this Agreement and (E) for 2015, any
amounts that Illumina credited in accordance with Section 3.1, in each case during the previous calendar year (such sum, the Nominal
Amount). For the avoidance of doubt, the Nominal Amount for a calendar year shall not include any amount of shared consideration
that was retained or received by Sequenom or Illumina, as applicable, in that year pursuant to Section 5.1(c), to the extent such amount
was in a prior year actually credited against a Minimum Payment, as permitted pursuant to Section 3.5(b)(ii) (Credit Due to Illumina
Enforcing Pooled Patents).

(vi) The Parties shall each calculate and also include in such Annual Report any adjustments to the Minimum
Payment pursuant to Section 3.5(b). If, for any calendar year, there is any amount paid by Illumina to CUHK pursuant to the CUHK
Licenses (except for the Patent Costs, which are addressed in ARTICLE V) that has not been credited or reimbursed by Sequenom,
then Sequenom shall pay to Illumina along with the payment otherwise due for the first calendar quarter of the following calendar year,
that amount of un-credited or not reimbursed payments made by Illumina to CUHK as set forth in Illuminas annual report.

(vii) If, for any calendar year starting with 2015 and ending with 2020, the Nominal Amount for that calendar
year is less than the Minimum Payment amount for the applicable year set forth in Section 3.5(a) as that Minimum Payment is adjusted
pursuant to

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Section 3.5(b), then Illumina shall pay to Sequenom along with the payment otherwise due for the first calendar quarter of the
following calendar year, the difference between such Minimum Payment and such Nominal Amount.

(d) To the extent that, with respect to any calendar year for which a Minimum Payment is set forth in Section 3.5(a),
the aggregate amount that Sequenom retains and receives of shared revenues hereunder is in excess of the applicable Minimum
Payment for such calendar year, then the excess amount over such Minimum Payment for such calendar year shall be credited
against the amount (if any) owing by Illumina to Sequenom under Section 3.5 for the immediately following calendar year in excess
of the aggregate amount that Sequenom retains and receives of shared revenues hereunder for such immediately following calendar
year; provided, however, that the operation of this Section 3.4(d), together with any adjustment under Section 3.5(b) that is subject to
a floor, shall not reduce the amount of the Minimum Payment below the amount of such floor therefor set forth in the first paragraph
of Section 3.5(b).

(e) All calculations and payments under this Section shall be made subject to Section 3.6 (Foreign Exchange).

3.5 Minimum Payments.Unadjusted Minimum Payments. Beginning in calendar year 2015 and continuing through calendar
year 2020, the unadjusted minimum aggregate annual amounts payable to Sequenom including all amounts expressly stated to be
payable under this Agreement, other than the One-Time Payment (each, a Minimum Payment), shall be:

(viii) for calendar year 2015, [***];

(ix) for calendar year 2016 [***];

(x) for calendar year 2017, [***];

(xi) for calendar year 2018, [***];

(xii) for calendar year 2019, [***]; and

(xiii) for calendar year 2020, [***].

(b) Adjustments and Credits to the Minimum Payment Obligations. To the extent that any of the events or
circumstances set forth in this Section 3.5(b) arises in any year after 2016, the Minimum Payment for the applicable year shall be
adjusted downward as set forth below, provided that any such reduction shall not bring the Minimum Payment owed for such year
below a floor of (1) in 2017 calendar year, [***]dollars (US$[***]), (2) in calendar year 2018, [***] dollars (US$[
***]), and (3) in calendar year 2019, [***] dollars (US$[***]) (with no floor applicable to calendar year 2020), except
as expressly stated otherwise.

(viii) Adjustment Due to Average Test Fee Collected. The Minimum Payments set forth in Section 3.5(a) are
based on an average annual Test Fee collected by

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Illumina and Sequenom in the amount of $[***] per NIPT Test. If the average Test Fee collected for a calendar year is lower than
$[***] per NIPT Test by [***] or more, then the Minimum Payment for the calendar year shall be adjusted downward by
multiplying the then current Minimum Payment amount by the quotient of the average Test Fee actually collected and subject to
sharing between Illumina and Sequenom during that calendar year divided by [***].

(ii) Credit Due to Illumina Enforcing Pooled Patents. To the extent an Illumina Party is suing in good faith any
Person (other than an Existing Illumina Litigant) for patent infringement under any Pooled Patent, and is diligently prosecuting such
suit:

(A) [***] shall be used to calculate the annual amount of Test Fees that would have been
collected by such Illumina Party, [***] Sequenom as if such sales were made by such Illumina Party, in each case if those sales
had been licensed under the Pooled Patents and amounts had been paid in accordance with this Agreement;

(B) the applicable amounts that would have been paid hereunder to Sequenom, [***]; and

(C) [***] of the applicable amounts calculated under clause (B) above shall be credited against the
minimum amounts set forth in Section 3.5(a) for such year, subject to Section 3.4(c)(ii).

(iii) Credit Due to Test Fees Not Paid by Sequenom. In the event that Sequenom fails to pay any Test Fee
owing under this Agreement based on Licensed NIPT LDT Tests performed by a Sequenom Party, then the full amount of such
unpaid debt (i.e., not just the share due to Sequenom) shall be credited against the Annual Minimum in the same year. The provisions
of Section 3.5(b) to establish a floor for adjustments shall not be applicable to this Section 3.5(b)(iii).

(iv) Adjustment Due to Third Party Platforms and Products. If in any calendar quarter a Sequenom Party
employs non-Illumina equipment and consumables (excluding library prep) for more than [***]% of its laboratory services for
NIPT, when Illumina equipment and consumables are otherwise available to Sequenom Party on non-discriminatory economic terms
consistent with the intent of this Agreement and any applicable Ancillary Agreements, then the annual Minimum Payment amounts set
forth in Section 3.5(a) will be reduced by [***]% for the calendar year during which such calendar quarter occurs and the
immediately following calendar year. The provisions of Section 3.5(b) to establish a floor for adjustments shall not be applicable to this
Section 3.5(b)(iv).

(v) Adjustment Due to Impairment of Pooled Patents. If one or more key Patents within the Patent Pool are
held invalid so as to be or otherwise become unenforceable in a country, then the Parties shall engage in good faith renegotiation of the
Minimum Payment amounts set forth in Section 3.5(a) with the intention of reducing those minimum amounts commensurate with the
impact of such an event in such country on the market. Notwithstanding the foregoing, the provisions of this Section 3.5(b)(v) shall not
be

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applicable if one or more key Patents within the Patent Pool are held invalid so as to be or otherwise become unenforceable in a
country as a result of a challenge by an Illumina Party pursuant to Section 4.2.2(e) of the Settlement Agreement and the Illumina Party
controlled, participated in, or assisted (other than being named as a nominal party or a real party in interest, or paying or reimbursing
costs, or taking an action that it is required to take under a University License as set forth in Schedule 3.5(b)(v)) in such challenge The
provisions of Section 3.5(b) to establish a floor for adjustments shall not be applicable to this Section 3.5(b)(v).

(vi) Adjustment Due to Decreased Value of Pooled Patents in Market. If after the Effective Date either Party or
its Affiliates, or any Third Party, sells a competitive NIPT LDT Test or NIPT IVD Product in a country that does not infringe any of
the Pooled Patents in such country, and all such competitive NIPT LDT Tests and NIPT IVD Products achieve in aggregate a market
share for the applicable products or services of at least [***], then the Parties shall engage in good faith renegotiation of the
Minimum Payment amounts set forth in Section 3.5(a) with the intention of reducing those minimum amounts commensurate with the
impact of such an event in such country on the market.

3.6 Foreign Exchange. For the purpose of calculating all amounts received hereunder subject to sharing with the other Party
hereunder, where the consideration is received in a currency other than U.S. Dollars, conversion from such foreign currency to U.S.
Dollars will be calculated and reported for each date in a calendar month based on the rate of exchange quoted by OANDA.com on
last calendar day of the applicable month, with respect to the currency in which such consideration is received for each day during the
applicable calendar quarter.

3.7 Records. Sequenom and Illumina each will keep, and will require all other Authorized Labs to keep, for [***] years
from the date of each payment of Test Fees or Royalties, or the date of receipt of any other amount that is subject to sharing between
the Parties under this Agreement, records in sufficient detail to allow the determination of the accuracy and completeness of reports
submitted hereunder with respect to any payment hereunder. Further, Sequenom and Illumina will obtain from the Authorized Labs
with which they or their applicable Affiliates are in contract, the right for the contracting Party to audit the records of such Authorized
Labs of a scope at least as beneficial to the auditing party as set forth herein. Sequenom and Illumina each will have the right for a
period of [***] years after receiving any report or statement with respect to amounts due and payable hereunder to appoint an
independent certified public accountant reasonably acceptable to the other Party, and which auditor shall receive the same
consideration for performing the audit regardless of outcome, to inspect the relevant records of the other Party to the extent necessary to
verify the accuracy and completeness of such report or statement. The auditor shall have the right to report to the auditing party
whether the Test Fees, Royalties and Test Fee Reports and Annual Reports were accurate and complete, and if they are not, then the
nature and amount of the inaccuracy or incompleteness, and no further information. The audited Party will make its records and the
relevant records of its Affiliates available (including any applicable reports received from Authorized NIPT Labs) for inspection by
such independent certified public accountant during regular business hours on Business Days at such place or places where such
records are customarily kept, upon reasonable prior notice (of at least thirty (30) days) from the auditing

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party, to verify the accuracy and completeness of the reports and payments. Such inspection right will not be exercised more than once
in any calendar year and no period may be audited by a Party more than once. The auditing Party will bear all costs and expenses
associated with an audit conducted pursuant to this Section 3.7, provided, however, that if the designated auditor discovers an
underpayment of [***] or more for the audited period between the amount of payments made under this Agreement and the
amount of payments actually owed under this Agreement, then the audited Party will bear all reasonable costs and expenses associated
with such audit. Any amount of underpayment shall be made, with interest calculated in accordance with Section 3.9, within ten (10)
Business Days after a final audit report. The auditing Party agrees to hold in confidence all information learned in the course of any
audit or inspection, in accordance with the terms and conditions set forth in ARTICLE VI. Neither Party will have any obligation
under this Agreement to maintain records pertaining to such reports or payments beyond such three-year period. The University
Licensors of the Pooled Patents shall have the audit rights stated in their respective University Licenses. In the event the written
agreement between an Illumina Party or a Sequenom Party and its Existing Illumina Licensee or Existing Sequenom Licensee,
respectively, does not include audit rights of at least the scope of this Section 3.7, then Illumina or Sequenom, as applicable, shall use
commercially reasonable efforts to seek such audit rights from the existing licensee and execute an amendment to that agreement that
contains audits rights of at least the scope of this Section 3.7.

3.8 Taxes.

(d) All payments under this Agreement will be made without deduction or withholding for taxes except to the extent
that any such deduction or withholding is required by Law in effect at the time of payment.

(e) Any tax required to be withheld on amounts payable under this Agreement will promptly be paid by payor on
behalf of the payee to the appropriate governmental authority, and the payor will furnish the payee with proof of payment of such
tax. Any such tax required to be withheld will be an expense of and borne by the payee.

(f) Illumina and Sequenom will cooperate with respect to all documentation required by any taxing authority or
reasonably requested by Illumina or Sequenom to attempt to minimize or eliminate the rate of applicable withholding taxes.

3.9 Interest on Late Payments. For any payment due hereunder that is not made when due, in addition to paying the amount of
such payment, the Party making such payment shall pay an additional amount as interest on such late amount calculated at a rate equal
to the lower of [***], or the highest rate permitted by applicable Law, calculated daily from the date that such late amount was
due until and including the date actually paid.

3.10 CUHK Licenses. Illumina and Sequenom acknowledge that certain of the CUHK Licenses include certain [***] to
CUHK. Notwithstanding anything to the contrary in this Agreement or any Ancillary Agreement, any and all of Sequenoms
obligations under this Agreement to reimburse Illumina (whether by credit, repayment, or any other means of reimbursement
satisfactory to Illumina) for payments that Illumina is obligated to make to

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CUHK under a CUHK License shall continue for so long as Illumina is so obligated to CUHK and shall be [***].

ARTICLE IV

TERM

4.1 Term. Unless earlier terminated by mutual written agreement of the Parties, the term of this Agreement, including the
licenses granted under this Agreement, shall be from the Effective Date until the date of Expiration of the last to Expire Pooled Patent
(the Term). Neither Party may terminate this Agreement except by mutual written agreement of the Parties. Upon termination of the
Agreement, the following terms and provisions shall survive: (a) ARTICLE I, (b) Section 5.1 (Infringement Claims Against Third
Parties) shall survive for six years after Expiration of each Pooled Patent, (c) ARTICLE VI (Confidentiality) shall survive, (d) all
payment obligations under the Agreement shall survive until satisfied, (e) Section 3.7 (Records) shall survive for three years after the
last day of the Term, (f) Section 7.2 (No Implied Warranty), (g) ARTICLE VIII, and (h) ARTICLE IX.

4.2 Effect of Material Breach. If a Party materially breaches this Agreement and such breach is not cured within thirty (30)
days after written notice thereof from the other Party, the non-breaching Party shall have a right to pursue a claim in accordance with
the enforcement procedures set forth in Section 9.7.

ARTICLE V

ENFORCEMENT AND PROSECUTION OF POOLED PATENTS

5.1 Infringement Claims Against Third Parties.Notices. Sequenom will advise Illumina promptly upon its becoming aware of:
(i) any unlicensed activities which it believes may be an actual or impending infringement of any Pooled Patent in the Licensed NIPT
Field; (ii) any attack on or appeal of the grant of any Pooled Patent; (iii) any published application for Patent by, or the grant of a Patent
to, a Person which claims the same subject matter as any Pooled Patent; or (iv) any application made for a compulsory license under
any Pooled Patent.

(m) Right to Take Action. Subject to Section 5.1(f) (Secondary Enforcement Rights) and Section 5.1(d) (University
Licensors) and any applicable University License, as between Sequenom and Illumina and their respective Affiliates, Illumina shall
have the sole right (which it may exercise through its Affiliates at its sole discretion), at its sole expense, to enforce the Pooled Patents
against Third Parties that Exploit NIPT LDT Tests in the NIPT LDT Field and against Third Parties that Exploit NIPT IVD
Products in the NIPT IVD Field, except to the extent (i) such sole right is inconsistent with an applicable Ancillary Agreement or
University License, (ii) that Sequenom and its Affiliates retains the enforcement rights under the Isis Patents in the NIPT LDT Field,
or (iii) subject to Section 5.1(e) (Existing Litigation). Subject to the foregoing, solely with respect to infringement of the Isis Patents
in the NIPT LDT Field, Sequenom, and in all other cases, Illumina, on behalf of itself and its respective Affiliates, will have the sole
right to determine whether or not to take whatever legal or other

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action is required in response to activities described under Section 5.1(a), including such activities of which Sequenom becomes
aware and provides notice under Section 5.1(a) (Protective Action). If the applicable Party determines in its sole discretion that
such Protective Action is warranted, then such Party or its Affiliates shall, at such Partys expense, commence and prosecute and
control such Protective Action. The other Party may be represented by counsel of its own selection at its own expense in such
Protective Action to the extent it is a party of record in such Protective Action, provided that such counsel shall not in any way
control such Protective Action.

(n) Recovery. Any recovery obtained as a result of such Protective Action, whether by judgment, award, decree or
settlement, (i) first, will be [***], and (ii) then [***] (A) with recovery of amounts for NIPT LDT Tests [***], and
(B) with recovery of amounts for NIPT IVD Products [***]. To the extent such recovery is insufficient to reimburse the Parties
associated reasonable costs and expenses fully, then a Partys share of the recovery will be [***].

(o) University Licensors. Each Party agrees to enforce the provisions of any agreement it has with any of the
University Licensors, which provisions permit such Party to solicit or compel the cooperation of, including the naming as a party to a
litigation of, any such University Licensor, as may be necessary or useful to bring or maintain an action to enforce any Pooled Patent
hereunder.

(p) Existing Litigation. Nothing in this ARTICLE V is intended to alter or divest rights of any Party to continue to
prosecute and settle any enforcement action of any Pooled Patent against a Third Party, which Third Parties as of the Effective Date
are set forth on Schedules 2.8(d) and 2.8(e), and which enforcement action had begun as of the Effective Date, or to take any appeal
therefrom.

(q) Secondary Enforcement Rights. Notwithstanding anything to the contrary in this Agreement, in the event
Sequenom provides notice to Illumina pursuant to Section 5.1(a) with respect to any Patent on Schedule 5.1(f), and Illumina does not
within three (3) months of such written notice take Protective Action in response to such notice and thereafter diligently prosecute
such Protective Action to eliminate the applicable activity described in Section 5.1(a), or if Illumina provides written notice earlier
than such three (3) months that it does not intend to take Protective Action, then Sequenom shall have the same right to take action
with respect to the applicable Patent as Illumina has to enforce the Pooled Patents set forth in Section 5.1(b), provided that Sequenom
takes such action within three (3) months of such notice and diligently prosecutes such action to eliminate the applicable activity
described in Section 5.1(a). In the event Sequenom chooses to take Protective Action, then Illumina shall have the same rights set
forth in Section 5.1(b) as Sequenom has when Illumina takes Protective Action. Any recovery obtained as a result of any such
Protective Action pursued by Sequenom in accordance with this Section 5.1(f) shall be treated as set forth in Section 5.1(c), except
that with respect to the division set forth in clause (ii) therein (A) recovery of amounts for NIPT LDT Tests treated as Test Fees shall
be shared between the Parties with Sequenom receiving the portion that Illumina would have received if Illumina

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pursued the Protective Action and with Illumina receiving the portion that Sequenom would have received if Illumina pursued the
Protective Action, and (B) with recovery of amounts for NIPT IVD Products being treated as royalties received and Sequenom shall
pay a portion of such amount equal to the Royalties that would have been payable by Illumina to Sequenom in accordance with
Section 3.3(c) if Illumina had pursued the Protective Action.

5.2 Prosecution and Maintenance of Pooled Patents.

(f) As between the Parties and subject to the applicable University Licenses and Section 5.2(e), Illumina and its
Affiliates shall control the prosecution and maintenance of the Illumina Patents and the Sequenom Patents.

(g) As between the Parties, Sequenom and its Affiliates shall control at their sole cost the prosecution and
maintenance of the Isis Patents.

(h) Subject to Section 5.2(b) (regarding Isis Patents), Illumina and Sequenom shall share the reasonable costs and
expenses directly incurred by Illumina and Sequenom for prosecution (including responding to interferences declared and
oppositions filed and post-grant proceedings) and maintenance of the Pooled Patents, other than Interference Expenses as that term is
defined in each of the CUHK Licenses, including without limitation costs and expenses for litigating (in any forum or procedure,
including arbitration) Patent Interference Nos. 105,920, 105,922, 105,923 and 105,924 before the United States Patent and
Trademark Office, Patent Trial & Appeal Board, or for appealing or settling such interferences, (such shared costs and expenses
Patent Costs) on a [***] Illumina:Sequenom basis. The Patent Costs include out-of-pocket costs and expenses and costs and
expenses incurred by Illumina and Sequenom for activities that occur on and after the Effective Date for outside counsel and in-
house patent attorneys and patent agents prosecuting the Pooled Patents (whether directly or through review and oversight of outside
counsel), provided that such in-house expenses shall be at an hourly rate of $[***] per hour (which shall increase annually by
[***] on January 1, 2016 and on each January 1 thereafter during the Term). Payments owed shall be made or credited in
accordance with Section 3.4. For the avoidance of doubt, (1) [***] are not creditable against the Minimum Payments, (2) [
***] is included in Patent Costs and (3) [***] shall be paid by Illumina and Sequenom shall reimburse Illumina for 100% of
such amounts paid. Notwithstanding the foregoing, Patent Costs shall not include any costs incurred by [***]. Unless there was
reasonable basis for delay, neither Party will be responsible for payment of costs or expenses that were incurred by the other Party
and arising more than six (6) months prior to the receipt by such first Party of the invoice from such other Party. Each Party shall
provide the other Party with reasonable detail regarding costs for services and shall include, at a minimum, the date services were
performed, a description of each service provided, specific and accurate time for each service provided and the hourly rate for the
service provider. A party shall have the right to audit the invoices in accordance with the audit process set forth in Section 3.7.

(i) Illumina will use commercially reasonable efforts to (i) prosecute (including responding to interferences declared
and oppositions filed) and maintain Sequenom-Owned Patents by filing all necessary papers and paying any fees required for such
purpose by

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the patent Laws of the particular country in which such Sequenom-Owned Patent is prosecuted and was granted, and (ii) obtain such
patent extensions or restorations of patent terms as may become available from time to time in any country regarding Sequenom-
Owned Patents. In the event Illumina decides not to prosecute or maintain any pending application or issued patent within
Sequenom-Owned Patents, or obtain any patent extensions or restorations of patent term, Illumina will give Sequenom written notice
of such decision at least sixty (60) days prior to Illumina allowing such application to go abandoned or prior to Illumina not taking a
necessary step to maintain, extend or restore such patent. Sequenom will have the option of taking over the activities in (i) and
(ii) with respect to such application or patent, and shall notify Illumina in writing if it chooses to assume such control of the
prosecution or maintenance of any such application or patent. If Sequenom so assumes control of the prosecution or maintenance of
any such application or patent, promptly after such notification, Illumina shall transfer its files with respect thereto to Sequenom, and
Sequenom will use commercially reasonable efforts to prosecute (including responding to interferences declared and oppositions
filed) and maintain any such application or patent to the same extent Illumina is required as set forth and pursuant to parts (i) and
(ii) of this Section 5.2(d).

(j) Each Party prosecuting Pooled Patents pursuant to Sections 5.2(a)-(d) shall use commercially reasonable efforts
and reasonably experienced patent professionals of its choosing (in-house or law firm) in so doing to maintain and, if reasonably
possible under applicable patent Laws, to prosecute to allowance Valid Issued Claims in the Pooled Patents in the Licensed NIPT
Field so maintained and prosecuted, and shall consider in good faith the interests of the other Party in so doing. [***].
Notwithstanding the foregoing, a Party prosecuting a Pooled Patent shall give good faith consideration to any such comments on
prosecution of a Pooled Patent in the Licensed NIPT Field received by the other Party.

5.3 Cooperation. Each Party shall reasonably cooperate with the other Party in the exercise of its rights or performance of its
obligations under this ARTICLE V. For any action or proceeding brought by a Party under this ARTICLE V, the other Party shall
join as a party plaintiff in any such action or proceeding if necessary for standing or otherwise necessary to enable the initiating Party
or its Affiliates to bring or continue such action or proceeding. Each Party shall enter into a common interest agreement if requested by
the other Party in connection with performing its obligations or exercising its rights under this Article V.

ARTICLE VI

CONFIDENTIALITY

6.1 Confidentiality. During the Term and for a period of five (5) years thereafter, each Party shall maintain in confidence the
Confidential Information of the other Party, shall not use or grant the use of the Confidential Information of the other Party except as
expressly permitted hereby, and shall not disclose the Confidential Information of the other Party except on a need-to-know basis to
such Partys directors, officers, employees, agents and consultants, to the extent such disclosure is necessary or useful in connection
with performance of such Partys obligations or exercise of such Partys rights under this Agreement or any of the Ancillary
Agreements. To the extent that disclosure to any Person is authorized by this Agreement, prior to

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disclosure, a Party shall have obtained written agreement of such Person (which written agreement may be a general employee
confidentiality agreement) to hold in confidence and not disclose, use or grant the use of the Confidential Information of the other Party
except as expressly permitted under this Agreement. Each Party shall notify the other Party promptly upon discovery of any
unauthorized use or disclosure of the other Partys Confidential Information.

6.2 Terms of Agreement. Neither Party shall disclose any terms or conditions of this Agreement to any Third Party without
the prior consent of the other Party; provided, however, that a Party may disclose the terms or conditions of this Agreement, (a) on a
need-to-know basis to such Partys directors, officers, employees and consultants, and its legal and accounting advisors, in each case,
to the extent such disclosure is necessary, and (b) to a Third Party, other than a Sequencing Platform Manufacturer, in connection with
(i) an equity investment in or financing of the operations of such Party, (ii) a merger, consolidation or similar transaction by such Party,
or (iii) the sale of all or substantially all of the assets of such Party to which the Agreement and the Ancillary Agreement are related,
provided in each case that such Third Party is bound by written confidentiality obligations respecting such disclosures in accordance
with the terms of this Agreement.

6.3 Permitted Disclosures. Notwithstanding Section 6.4, if required by Law, including without limitation by the U.S.
Securities and Exchange Commission or any stock exchange or Nasdaq, or by other applicable law, regulation, court or administrative
order then a Party may issue a press release or other public announcement regarding this Agreement, or make a disclosure required by
Law, provided that the other Party has received prior written notice of such intended press release or public announcement, or the
disclosure required by Law, if practicable under the circumstances, and the other Party has been provided sufficient opportunity to
object to any such disclosure or to request confidential treatment thereof , and an opportunity to seek a protective order (if applicable),
or to have discussion between the Parties and their counsel regarding the requirement, in each case to the extent reasonably practicable
under the circumstances, and the Party subject to the requirement cooperates with the other Party to limit the disclosure and includes in
such press release or public announcement or required disclosure only such information relating to this Agreement as is required by
such Law to be publicly disclosed. In the event this Agreement or an Ancillary Agreement is required by applicable Law to be made
public (e.g., SEC filing), the Parties will make reasonable attempts to diligently and in good faith work together to redact this
Agreement and any applicable Ancillary Agreement to a mutually acceptable extent and in compliance with applicable Law, and in
any event the Party required to make the applicable agreement public shall provide the other Party with a copy of the proposed
redaction prior to public disclosure.

6.4 Publicity; Use of Names. Each Party shall obtain the prior written consent of the other Party on all press releases or other
public announcements relating to this Agreement, including its existence or its terms, provided that a Party is not required to obtain
prior written consent of the other Party for press releases or public disclosures that repeat information that has been previously
authorized for public disclosure pursuant to terms of this Agreement. Notwithstanding anything to the contrary in this Agreement, the
Parties have mutually agreed on the form of the press release attached hereto as Schedule 6.4, and any Party may disclose free

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from confidentiality obligations the content of such press release, provided that, except as permitted hereunder, no more than one (1)
press release may be issued by any Party in relation to the transactions contemplated by this Agreement and the Ancillary Agreements
unless the other Party consents in writing to any additional press release, such consent to be given or withheld in such other Partys
sole and absolute discretion. Neither Party shall use the name or trademarks of the other Party without the express prior written consent
of the other Party.

ARTICLE VII

REPRESENTATIONS AND WARRANTIES

7.1 Representations and Warranties.Except as set forth on Schedule 7.1(a), each of the Parties represents and warrants, as of
the Effective Date, that:

(ix) it has legal power, authority and right to enter into this Agreement;

(x) the execution and performance by it of its obligations hereunder will not constitute a breach of, or conflict
with, its organizational documents nor any other material agreement or arrangement, whether written or oral, by which it is bound;

(xi) it has full power and authority and has taken all action necessary to enter into and perform this Agreement,
and that this Agreement has been duly authorized, executed and delivered by such Party;

(xii) this Agreement is a valid, binding, and legally enforceable obligation of that Party in accordance with its
terms;

(xiii) it has the right to grant the rights granted hereunder, including the licenses and covenants not to sue
granted hereunder, and undertake the obligations it assumes hereunder and that it has not previously licensed, assigned, or otherwise
conveyed rights in any intellectual property, which license, assignment or other conveyance is inconsistent with the terms of, or could
otherwise undermine any exclusivity set forth in, the terms of this Agreement;

(xiv) each of its Existing Illumina Licensees or Existing Sequenom Licensees (as applicable) as of the
Effective Date that is authorized by an Illumina Party under any Illumina Patent (excluding CUHK Patents) or by a Sequenom Party
under any Sequenom Patent (prior to assignment and novation of the CUHK Licenses (2008/2011)) or Isis Patent to perform or have
performed an NIPT LDT Test is obligated on a per-test basis to pay a fixed fee (or fixed fee dependent upon volume tiers) on
performance of such NIPT LDT Test, which fee will be treated as a Test Fee hereunder; and

(xv) it has no knowledge or reasonable belief, without a duty to investigate, that any Person, other than
Illumina, Sequenom, CUHK, Isis, Stanford, [***] and any of their Affiliates (a) owns any right, title or interest in a Pooled Patent,
or (b) has asserted or alleged that it owns any right, title or interest in a Pooled Patent.

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(c) Except as set forth on Schedule 7.1(b), Sequenom represents and warrants, as of the Effective Date, that:

(iv) it is the sole and exclusive beneficial and record owner of the Sequenom Owned Patents and Isis Patents
licensed to Illumina hereunder;

(v) this Agreement is not in conflict in any material respect with, and will not result in breach of another
agreement to which Sequenom or any of its Affiliates is a party;

(vi) other than as set forth in the Settlement Agreement, it is not aware of any legal action challenging the
ownership, validity or enforceability of any of the Sequenom Patents or CUHK Patents;

(vii) that the Sequenom Patents (prior to assignment and novation of the CUHK Licenses (2008/2011)) include
all Patents owned or in-licensed by Sequenom and its Affiliates with a right to sublicense that claim the verifi test, MaterniT21 test,
VisibiliT test and other methods of performing NIPT (including targeted sequencing, PCR, arrays), in each case as currently
commercially performed and sold by Sequenom and Illumina, [***];

(viii) it intends to continue prosecuting the ongoing disputes it has with Existing Sequenom Litigants in a
manner that, if successful, would lead to an obligation, on each such Existing Sequenom Litigant that intends to perform on a going
forward basis an NIPT LDT Test that is covered by a Valid Issued Claim under the Isis Patents, to take a license under the Isis Patents
in exchange for consideration payable to Sequenom that is consistent with the Test Fee amounts set forth on Schedule 1;

(ix) other than as set forth in the Settlement Agreement, it has no reasonable basis to believe that (A) any of the
Sequenom Owned Patents, Isis Patents or CUHK Patents will Expire prior to the ordinary date that would be calculated for any such
Patent based on the filing and priority dates of the applications leading to such Patent and (B) it will allow any Expiration to occur for
Pooled Patents under its control that is prior to the ordinary date that would be calculated for any such Patent based on the filing and
priority dates of the applications leading to such Patent;

(x) it is not a party to any agreement with any Person that would conflict with the obligations regarding Test
Fees collection and sharing with Illumina hereunder or that includes a right for a Person other than a Sequenom Party to sublicense any
rights under any Sequenom Patent or CUHK Patent;

(xi) it is not in material breach of any existing agreement under which it has obtained any right in any
Sequenom Patent (prior to assignment and novation of the CUHK Licenses (2008/2011)), including Isis Patents;

(xii) It has not reserved any rights for any Sequenom Party, nor granted any right or license to any Person
under any of the Sequenom Patents, including Isis Patents, or

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CUHK Patents that results in Illumina Parties receiving less than full exclusive rights under Sequenom Patents, including Isis Patents,
and CUHK Patents to Exploit NIPT IVD Products in the NIPT IVD Field;

(xiii) It has not reserved any rights for any Sequenom Party, nor granted any right or license to any Person
under any of the Sequenom Patents, including Isis Patents, or CUHK Patents to Exploit NIPT IVD Products in the NIPT IVD Field;

(xiv) any agreement entered into by Sequenom or any Affiliate of Sequenom prior to the Effective Date
granting rights under any Sequenom Patent (prior to assignment and novation of the CUHK Licenses (2008/2011)) includes an
obligation for the grantee to pay Test Fees to Sequenom or such Affiliate that are in an amount that is materially consistent with (or
higher than) the Test Fee amounts (based on currency exchange rates in effect on the Effective Date) set forth on Schedule 1
(excluding the additional $[***] fee pursuant to Section 3 of Schedule 1);

(xv) no Existing Sequenom Licensee has been granted a right under any Sequenom Patent (prior to assignment
and novation of the CUHK Licenses (2008/2011)) greater than a right to Exploit an NIPT LDT Test in the NIPT LDT Field;

(xvi) it and none of its Affiliates has neither granted any license to, nor entered into any agreement with, any
Person that would prohibit Illumina from granting licenses to Exploit NIPT IVD Products in the NIPT IVD Field and NIPT LDT
Tests in the NIPT LDT Field under the Pooled Patents anywhere in the world;

(xvii) other than an obligation to make an up-front payment, all payment obligations of Existing Sequenom
Licensees (including existing Sequenom Technology Partners) to Sequenom or its Affiliates pursuant to and under an Existing
Sequenom License are in consideration of the grant of a license or right under at least one Sequenom Patent (prior to assignment and
novation of the CUHK Licenses (2008/2011));

(xviii) [***];

(xix) [***];

(xx) it owns all right, title and interest in the Isis Patents, including the sole and exclusive right to assert, bring,
settle, and release claims of infringement and collect for past damages;

(xxi) other than rights granted by Sequenom or its Affiliates under Existing Sequenom Licenses, no other
Person has any right under any Isis Patent;

(xxii) it has the sole right to grant licenses under the Isis Patents; and

(xxiii) it has not granted any rights under any Sequenom Patent to an Existing Sequenom Licensee that is
performing NIPT on a non-Illumina platform.

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(d) Illumina represents and warrants, as of the Effective Date, that:

(ii) Except as set forth on Schedule 7.1(c)(i), it (and/or its Affiliates) is the sole and exclusive beneficial and
record owner of the Illumina Owned Patents licensed to Sequenom hereunder;

(iii) this Agreement is not in conflict in any material respect with, and will not result in breach of another
agreement to which Illumina or any of its Affiliates is a party;

(iv) other than as set forth in the Settlement Agreement, it is not aware of any legal action challenging the
ownership, validity or enforceability of any of the Illumina Patents (excluding the CUHK Patents);

(v) the Illumina Patents (excluding the CUHK Patents) include all Patents owned or in-licensed by Illumina
and its Affiliates with a right to sublicense that claim the verifi test, MaterniT21 test, VisibiliT test and other methods of
performing NIPT (including targeted sequencing, PCR, arrays), in each case as currently commercially performed and sold by
Sequenom and Illumina, but excluding those claims of Patents solely to the extent they cover Illuminas and its Affiliates general
purpose consumables, reagents, instruments, accessories and software and use thereof;

(vi) it intends to continue prosecuting the ongoing disputes it has with Existing Illumina Litigants in a manner
that, if successful, would lead to an obligation, on each such Existing Illumina Litigant that intends to perform on a going forward basis
an NIPT LDT Test that is covered by a Valid Issued Claim under the Illumina Patents (excluding the CUHK Patents), to take a license
under such Illumina Patents in exchange for consideration payable to Illumina that is consistent with the Test Fee amounts set forth on
Schedule 1 (excluding the additional $[***] fee pursuant to Section 3 of Schedule 1);

(vii) other than as set forth in the Settlement Agreement, it has no reasonable basis to believe that (A) any of
the Illumina Owned Patents or Illumina In-Licensed Patents (excluding the CUHK Patents) will Expire prior to the ordinary date that
would be calculated for any such Patent based on the filing and priority dates of the applications leading to such Patent and (B) it will
allow any Expiration to occur for Pooled Patents under its control that is prior to the ordinary date that would be calculated for any
such Patent based on the filing and priority dates of the applications leading to such Patent;

(viii) it is not a party to any agreement with any Person that would conflict with the obligations regarding Test
Fees collection and sharing with Sequenom hereunder or that includes a right for a Person, other than the Illumina Parties or its
University Licensors, to sublicense any rights under any Illumina Patent (excluding the CUHK Patents);

(ix) it is not in material breach of any existing agreement under which it has obtained any right in any Illumina
Patent (excluding any CUHK Patents);

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(x) except as set forth on Schedule 7.1(c)(ix), any agreement entered into by Illumina or any Affiliate of
Illumina prior to the Effective Date granting rights under any Illumina Patent (excluding the CUHK Patents) includes an obligation for
the grantee to pay Test Fees to Illumina or such Affiliate that are materially consistent with (or higher than) the Test Fee amounts
(based on currency exchange rates in effect on the Effective Date) set forth on Schedule 1 (excluding the additional $[***] fee
pursuant to Section 3 of Schedule 1);

(xi) no Existing Illumina Licensee has been granted a right under any Illumina Patent (excluding the CUHK
Patents) greater than a right to Exploit an NIPT LDT Test in the NIPT LDT Field;

(xii) it and none of its Affiliates has neither granted any license to, nor entered into any agreement with, any
Person that would prohibit Sequenom from granting licenses to Persons for Exploiting NIPT LDT Tests in the NIPT LDT Field in
such Persons, or its Affiliates, clinical laboratory under the Isis Patents anywhere in the world; and

(xiii) Except as set forth on Schedule 7.1(c)(xiii), all payment obligations of Existing Illumina Licensees
(including existing Illumina Technology Partners) to Illumina or an Illumina Affiliate pursuant to and under an Existing Illumina
License are in consideration of the grant of a license or right under at least one Illumina Patent (excluding CUHK Patents).

7.2 No Implied Agreements or Warranties. Nothing contained in this Agreement will be construed as:

(a) a warranty or representation that any manufacture, importation, offer for sale, sale, lease, use, performance or
other disposition of NIPT LDT Tests or NIPT IVD Product hereunder will be free from infringement of Third Party Patents;

(b) a warranty or representation of the validity of any claims of the Pooled Patents;

(c) an agreement or other obligation to bring or prosecute actions or suits for infringement of or otherwise enforce
any of the Pooled Patents generally or against any particular Person or Persons;

(d) conferring any right to use in advertising, publicity, or otherwise, any trademark, trade name or names, or any
contraction, abbreviation or simulation thereof, of any Party; and

(e) conferring by implication, estoppel or otherwise, upon any Party hereunder, any license or other right under any
class or type of Patent or other intellectual property right, except the licenses and rights expressly granted hereunder or under the
Ancillary Agreements. The Parties reserve for themselves any rights not so expressly granted to the other Party or its Affiliates
hereunder or under the Ancillary Agreements.

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ARTICLE VIII

INDEMNIFICATION

8.1 Indemnification.

(f) Illumina shall fully and unconditionally indemnify, defend and hold harmless Sequenom, its Affiliates, and each
of their respective directors, officers, employees, agents and representatives, successors and assigns, for any Claims by a Third Party
to the extent (i) arising from a breach or misrepresentation of any representation or warranty made by Illumina (on behalf of itself and
its Affiliates) under this Agreement, (ii) arising from infringement or alleged infringement of any [***] by the Exploitation of
any NIPT LDT Test in the NIPT LDT Field by Sequenom or its Affiliates that are not Sequencing Platform Manufacturers in
accordance with this Agreement and with the sublicense under the [***] executed and delivered in accordance with Section 2.6,
or (iii) arising from, resulting from or relating to the failure of Illumina to pay any and all applicable royalties owing to [***] for
activities for which Sequenom has paid the applicable consideration in accordance with [***].

(g) Sequenom shall fully and unconditionally indemnify, defend and hold harmless Illumina, its Affiliates, and each
of their respective directors, officers, employees, agents and representatives, successors and assigns, for any Claims (i) by a Third
Party to the extent arising from (A) a breach or misrepresentation of any representation or warranty made by Sequenom (on behalf of
itself and its Affiliates) under this Agreement, (B) infringement or alleged infringement of any [***], in each case by Illumina or
its Affiliates in accordance with this Agreement, (C) any act or omission of Sequenom, or an Affiliate of Sequenom pursuant to any
sublicense granted to Sequenom or an Affiliate of Sequenom under this Agreement or any Ancillary Agreement to the extent
Illumina has an express indemnification obligation in respect of such Claim under an applicable University License, in each case to
the extent such obligation is expressly disclosed by Illumina to Sequenom prior to the Effective Date or exists in a CUHK License as
of the Effective Date, (D) the transaction that resulted in Sequenom taking assignment and ownership of the Isis Patents, (E) any and
all Pre-Novation Liability (as defined in the assignment and novation agreements referenced in Section 2.4(b) of this Agreement), (F)
any act or omission of Sequenom, or its sublicensees or their sub-sublicensees under the Sequenom Sublicense (as defined in the
sublicenses referenced in Section 2.4(c) and (e) of this Agreement), any Existing Sequenom Sublicense or any sub-sublicense
granted under an Existing Sequenom License, including a breach of any of the foregoing sublicenses or sub-sublicenses, (G) any
duties, obligations act or omission of Sequenom or an Existing Sequenom Licensee, for which Illumina and Sequenom are jointly
and severally liable to CUHK under any or all of the assignment and novation agreement referenced in Section 2.4(b) (other than due
to any failure by Illumina or its Affiliates to comply with the terms and conditions of such novation or assignment), or (H) or arising
under, or otherwise in relation to the novation or assignment of any or all of the CUHK Licenses (2008/2011) referenced in
Section 2.4(b) to Illumina (other than due to any failure by Illumina or its Affiliates to comply with the terms and conditions of such
novation or assignment), or

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(ii) arising out of (A) a suit or other action by or on behalf of Sequenom or an Affiliate of Sequenom for infringement or alleged
infringement of any [***] by the Exploitation of any NIPT LDT Test in the NIPT LDT Field or Exploitation of any NIPT IVD
Products in the NIPT IVD Field by Illumina or its Affiliates, or (B) a Claim that would have been released under Section 4.1.1 of the
Settlement Agreement if Claims for infringement of any Patents licensed by [***] to Sequenom as of the Effective Date had not
been excluded from such release pursuant to Section 4.1.1 of the Settlement Agreement.

8.2 Procedure. The indemnified Party promptly shall notify the indemnifying Party of any Claim in respect of which the
indemnified Party intends to claim such indemnification, and the indemnifying Party shall have the right to assume the defense thereof
with reasonable counsel selected by the indemnifying Party. The indemnity agreement in this ARTICLE VIII shall not apply to
amounts paid in settlement of any Claim if such settlement is effected without the consent of the indemnifying Party, which consent
shall not be unreasonably withheld, delayed or conditioned. The failure to deliver notice to the indemnifying Party within a reasonable
time after the commencement of any such Claim, if prejudicial to its ability to defend such action, shall relieve the indemnifying Party
of liability to the indemnified Person under this ARTICLE VIII to the extent of such prejudice, but the omission so to deliver notice to
the indemnifying Party shall not relieve it of any liability that it may have to the indemnified Person otherwise than under this
ARTICLE VIII. The indemnified Party under this ARTICLE VIII, its directors, officers, employees, agents and representatives shall
reasonably cooperate with the indemnifying Party and its legal representatives in the investigation and defense of any Claim covered
by this indemnification.

8.3 Limitation of Liability. Notwithstanding anything to the contrary, the maximum economic liability of a Party under
Section 8.1 shall be limited to (a) [***] of the shared Test Fees and related revenues collected pursuant to Section 3.2(b)(vi) paid
to or retained by such Party under this Agreement, plus (b)(i) in the case of Sequenom, [***], and (ii) in the case of Illumina, [
***].

ARTICLE IX

MISCELLANEOUS PROVISIONS

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9.1 No Assignment Without Consent.No Party shall, without the prior written consent of the other Party, assign or transfer
this Agreement (in whole or in part) or assign, transfer, declare a trust of or dispose of in any manner any of its rights and obligations
hereunder to any Third Party, except that Illumina and Sequenom (a) may assign or transfer this Agreement (in whole or in part) to an
Affiliate or (b) may assign or transfer this Agreement, only together with all the Ancillary Agreements to which it is a party, to a Third
Party as part of a merger, sale of stock or shares, or sale of assets in each case relating to the entire business of either Illumina or
Sequenom to which this Agreement and the Ancillary Agreements relate, as applicable, in each case without any further consent
required of any other Party, subject in all cases to Section 2.8(f). Any purported assignment or transfer in violation of this
Section 9.1(a) shall be null and void ab initio.

(g) Subject to the foregoing, all of the terms and provisions of this Agreement shall be binding upon and shall inure
to the benefit of and be enforceable by the respective successors and assigns of the Parties.

(h) For the avoidance of doubt, the provisions of Section 2.8(f) shall be applicable in the event of a Change of
Control of Sequenom to a Sequencing Platform Manufacturer (including as part of an assignment of this Agreement in a bankruptcy
or other financial restructuring of Sequenom).

9.2 Notices. All notices required or permitted to be given hereunder will be in writing and will be valid and sufficient if
dispatched by internationally recognized overnight courier (such as UPS, FedEx or DHL), freight prepaid, or delivered personally with
written receipt as follows:

If to Illumina:

Illumina, Inc.
5200 Illumina Way
San Diego, CA 92122
Attn: Senior Vice President, Corporate Development

With a copy to:

Illumina, Inc.
5200 Illumina Way
San Diego, CA 92122
Attn: General Counsel

If to Sequenom:

Sequenom, Inc.
3595 John Hopkins Court
San Diego CA 92121
Attn: President

51
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With a copy to:

Sequenom, Inc.
3595 John Hopkins Court
San Diego CA 92121
Attn: General Counsel

Either Party may give written notice of a change of address and, after notice of such change has been received, any
notice or request will thereafter be given to such Party as above provided at such changed address.

9.3 Counterparts. This Agreement may be executed in one or more counterparts (whether delivered by facsimile or
otherwise), each of which will be considered one and the same agreement and will become effective when counterparts have been
signed by each of the Parties and delivered to the other Party.

9.4 Entire Agreement. This Agreement along with the Ancillary Agreements: (i) constitutes the entire agreement and
supersedes all prior agreements, negotiations, arrangements and understandings, both written and oral, between the Parties with respect
to the subject matter hereof, and (ii) is not intended to confer upon any Person, other than the Parties, any rights, benefits or remedies of
any nature whatsoever.

9.5 Severability. Any term or provision of this Agreement that is held to be invalid, void or unenforceable in any situation in
any jurisdiction will not affect the validity or enforceability of the remaining terms and provisions hereof, or the validity or
enforceability of the invalid, void or unenforceable term or provision in any other situation or in any other jurisdiction. If any term or
provision of this Agreement is declared invalid, void or unenforceable, the Parties agree that the authority making such determination
will have the power to and shall, subject to the discretion of such authority, reduce the scope, duration, area or applicability of the term
or provision, to delete specific words or phrases, or to replace any invalid, void or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the original intention of the invalid or unenforceable term or
provision.

9.6 Governing Law. This Agreement and any action related thereto shall be governed, controlled, interpreted and defined by
and under the Laws of the State of California, without regard to any choice of law or conflicts of laws provisions thereof.

9.7 Enforcement.Illumina and Sequenom each agree that all disputes arising out of or relating to this Agreement (other than
disputes between the Parties regarding adjustment of Test Fee amounts in accordance with Section 3.2(c)(iii)) shall be presented in
writing to the Presidents of the Parties who shall use good faith efforts to resolve such disputes. If any such dispute is not resolved by
the Presidents within thirty (30) days (or such longer period as the Parties mutually agree in writing) after first presentation in writing to
each of such dispute, then either Party shall be entitled to commence proceedings in the state or federal courts, as applicable, located in
San Diego, California. Each Party agrees (i) that all such disputes shall be instituted exclusively in the state or federal courts in
California; (ii) irrevocably to submit and

52
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CERTAIN INFORMATION OMITTED AND FILED SEPARATELY WITH THE SEC.

consent to the exclusive jurisdiction of the foregoing courts for any action properly brought pursuant to clause (i) above; and (iii) to
waive any objection they may have now or hereafter to the venue of any action brought pursuant to clause (i) above.

(a) Irreparable damage may occur if any of the provisions of this Agreement were not performed in accordance with
their specific terms. Accordingly, the Parties will be entitled to seek specific performance of the terms of this Agreement, this being in
addition to any other remedy to which they are entitled at Law or in equity.

(b) No failure or delay on the part of either Party in the exercise or assertion of any right under this Agreement will
impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation or agreement herein, nor
will any single or partial exercise of any such right preclude other or further exercise thereof or of any other right. All rights and
remedies under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available.

(c) Any agreement on the part of a Party to any extension, waiver, amendment, modification or supplement of this
Agreement or its rights hereunder will be valid only if set forth in an instrument in writing signed on behalf of such Party.

(d) All rights and licenses granted under or pursuant to this Agreement by one Party to the other are, and will
otherwise be deemed to be, for purposes of Article 365(n) of the Bankruptcy Code, licenses of rights to intellectual property as
defined under Article 101(52) of the Bankruptcy Code. The Parties agree that either Party in its capacity as a licensee of such rights
under this Agreement will retain and may fully exercise all of its rights and elections under the Bankruptcy Code.

9.8 Export Control Laws. Anything contained in this Agreement to the contrary notwithstanding, the obligations of the Parties
will be subject to all Laws, present and future and including export control laws and regulations, of any government having jurisdiction
over the Parties hereto, and to orders, regulations, directions or requests of any such government. Each Party will undertake to comply
with and be solely responsible for complying with such Laws applicable to such Party.

9.9 Construction. Any reference to a Party will include such Partys permitted successors and permitted assigns. If any
ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the Parties, and no
presumption or burden of proof will arise favoring or disfavoring any Party by virtue of the authorship of any provision of this
Agreement. No prior draft of this Agreement will be used in the interpretation or construction of this Agreement. Headings are used for
convenience only and will not in any way affect the construction or interpretation of this Agreement. The doctrine of election of
remedies will not apply in constructing or interpreting the remedies provisions of this Agreement or the equitable power of a court
considering this Agreement or the transactions contemplated hereby.

53
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9.10 No Implied Warranty. EXCEPT AS SPECIFIED IN SECTION VII (REPRESENTATIONS AND WARRANTIES),
AND ANY OTHER EXPRESS REPRESENTATION OR WARRANTY IN THIS AGREEMENT, THE LICENSES
GRANTED HEREUNDER ARE GRANTED WITHOUT ANY WARRANTY OF ANY KIND. EACH PARTY HEREBY
DISCLAIMS ANY IMPLIED WARRANTIES OF ANY KIND INCLUDING THE IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT.

9.11 Damage Limitation. EXCEPT FOR INFRINGEMENT OF THE OTHER PARTYS INTELLECTUAL PROPERTY
RIGHTS, ANY EXPRESS OBLIGATION OF A PARTY TO INDEMNIFY, HOLD HARMLESS AND DEFEND UNDER
THIS AGREEMENT, AND FOR BREACH OF THE CONFIDENTIALITY OBLIGATIONS SET FORTH IN ARTICLE VI
(CONFIDENTIALITY). NEITHER PARTY WILL BE LIABLE TO THE OTHER FOR ANY INDIRECT, CONSEQUENTIAL,
INCIDENTAL OR SPECIAL DAMAGES, OR FOR LOST PROFITS OR COSTS ASSOCIATED WITH OBTAINING
SUBSTITUTE PERFORMANCE HEREUNDER, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
BREACH THEREOF, REGARDLESS OF WHETHER SUCH PARTY HAD BEEN WARNED OF SUCH DAMAGES, AND
REGARDLESS OF THE THEORY UPON WHICH SUCH DAMAGES ARE CLAIMED, INCLUDING, FOR BREACH OF
CONTRACT, WARRANTY, TORT, NEGLIGENCE OR STRICT LIABILITY.

[signature page follows]

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 CONFIDENTIAL TREATMENT REQUESTED;
CERTAIN INFORMATION OMITTED AND FILED SEPARATELY WITH THE SEC.

Illumina and Sequenom have duly executed and delivered this Pooled Patents Agreement as of the Effective Date.

Illumina Inc. Sequenom, Inc.

By: By:
Name: Name:
Title: Title:
 CONFIDENTIAL TREATMENT REQUESTED;
CERTAIN INFORMATION OMITTED AND FILED SEPARATELY WITH THE SEC.
 SUBSIDIARIES OF THE COMPANY

Name of Subsidiary Jurisdiction Doing Business As

Advanced Liquid Logic Inc. Delaware Advanced Liquid Logic Inc.

BlueGnome, Ltd. United Kingdom BlueGnome, Ltd.
Epicentre Technologies Corporation Wisconsin Epicentre Biotechnologies
Illumina Australia Pty. Ltd. Australia Illumina Australia Pty. Ltd.
Illumina Brasil Produtos de Biotecnologia Ltda. Brazil Illumina Brazil
Illumina Cambridge, Ltd. United Kingdom Illumina Cambridge, Ltd.
Illumina Canada, Inc. New Brunswick, Canada Illumina Canada, Inc.
Illumina France Holding Sarl France Illumina France Holding Sarl
Illumina France Sarl France Illumina France Sarl
Illumina GmbH Germany Illumina GmbH
Illumina Hong Kong Limited Hong Kong Illumina Hong Kong Limited
Illumina Iceland ehf Iceland Illumina Iceland ehf
Illumina Italy S.r.l. Italy Illumina Italy S.r.l.
Illumina K.K. Japan Japan Illumina K.K. Japan
Illumina Netherlands B.V. Netherlands Illumina Netherlands B.V.
Illumina New Zealand Limited New Zealand Illumina New Zealand Limited
Illumina Singapore Pte. Ltd. Singapore Illumina Singapore Pte. Ltd
Illumina Trading (Shanghai) Co., Ltd. China Illumina Trading (Shanghai) Co., Ltd.
Illumina Switzerland GmbH Switzerland Illumina Switzerland GmbH
Illumina Europe Limited United Kingdom Illumina Europe Limited
Illumina Denmark ApS Denmark Illumina Denmark ApS
Illumina Productos de Espana, S.L.U. Spain Illumina Productos de Espana, S.L.U.
Illumina AB Sweden Illumina AB
NextBio California NextBio
Verinata Health, Inc. Delaware Verinata Health, Inc.
**All listed subsidiaries are wholly-owned, direct or indirect, subsidiaries of Illumina, Inc.

**As permitted under Rule 601 of Regulation S-K, we have omitted the names of subsidiaries, which if considered in the aggregate as a single subsidiary,
would not constitute a significant subsidiary (as defined in Rule 1-02(w) of Regulation S-X) as of the end of the year covered by this report
 Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the following Registration Statements:

(1) Registration Statements (Form S-3 Nos. 333-111496, 333-125100, 333-134012, 333-144953, 333-145408 and 333-168395) of
Illumina, Inc.,
(2) Registration Statement (Form S-4 No. 333-139111) of Illumina, Inc., and
(3) Registration Statements (Form S-8 Nos. 333-42866, 333-69058, 333-88808, 333-104190, 333-114633, 333-124074, 333-
125133, 333-129611, 333-134399, 333-140416, 333-147389, 333-151625, 333-159662, 333-168393, 333-188037 and 333-190322)
of Illumina, Inc.;

of our reports dated February 17, 2015, with respect to the consolidated financial statements and schedule of Illumina, Inc., and the
effectiveness of internal control over financial reporting of Illumina, Inc., included in this Annual Report (Form 10-K) for the fiscal
year ended December 28, 2014.

/s/ Ernst & Young LLP

San Diego, California

February 17, 2015
 Exhibit 31.1

CERTIFICATION OF JAY T. FLATLEY PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Jay T. Flatley, certify that:

1 I have reviewed this Annual Report on Form 10-K of Illumina, Inc.;

2 Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;

3 Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented
in this report;

4 The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is
being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and

d) disclosed in this report any change in the registrants internal control over financial reporting that occurred during the
registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting;
and

5 The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the
equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial
information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrants internal control over financial reporting.

Dated: February 17, 2015

By: /s/ JAY T. FLATLEY

Jay T. Flatley
Chief Executive Officer
 Exhibit 31.2

CERTIFICATION OF MARC A. STAPLEY PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Marc A. Stapley, certify that:

1 I have reviewed this Annual Report on Form 10-K of Illumina, Inc.;

2 Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;

3 Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented
in this report;

4 The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and

d) disclosed in this report any change in the registrants internal control over financial reporting that occurred during the
registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting;
and

5 The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the
equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial
information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrants internal control over financial reporting.

Dated: February 17, 2015

By: /s/ M ARC A. STAPLEY

Marc A. Stapley
Senior Vice President and Chief Financial Officer
 Exhibit 32.1

CERTIFICATION OF JAY T. FLATLEY PURSUANT TO 18 U.S.C. SECTION

1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-
OXLEY ACT OF 2002
In connection with the Annual Report of Illumina, Inc. (the Company) on Form 10-K for the year ended December 28, 2014, as filed with the Securities and
Exchange Commission on the date hereof (the Report), I, Jay T. Flatley, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: February 17, 2015

By: /s/ JAY T. FLATLEY

Jay T. Flatley
Chief Executive Officer

This certification accompanying the Report is not deemed filed with the Securities and Exchange Commission for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended, or otherwise subject to the liabilities such Section, and is not to be incorporated by reference into any filing of the
Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before, on or after the date of the
Report), irrespective of any general incorporation language contained in such filing.
 Exhibit 32.2

CERTIFICATION OF MARC A. STAPLEY PURSUANT TO 18 U.S.C.

SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Illumina, Inc. (the Company) on Form 10-K for the year ended December 28, 2014, as filed with the Securities and
Exchange Commission on the date hereof (the Report), I, Marc A. Stapley, Senior Vice President and Chief Financial Officer of the Company, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: February 17, 2015

By: /s/ M ARC A. STAPLEY

Marc A. Stapley
Senior Vice President and Chief Financial Officer

This certification accompanying the Report is not deemed filed with the Securities and Exchange Commission for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended, or otherwise subject to the liabilities such Section, and is not to be incorporated by reference into any filing of the
Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before, on or after the date of the
Report), irrespective of any general incorporation language contained in such filing.