EXHIBIT 10.2

     
 
  (DEUTSCHE BANK LOGO) [a27530a2753001.gif]
 
   
 
  Deutsche Bank AG London
 
  Winchester house
 
  1 Great Winchester St, London
 
  EC2N 2DB
 
  Telephone: 44 20 7545 8000
 
   
 
  c/o Deutsche Bank Securities Inc.
 
  60 Wall Street
 
  New York, NY 10005
 
  Telephone: 212-250-2500
 
   
 
  Internal Reference: 159077

     
DATE:
  February 12, 2007
 
   
TO:
  Illumina, Inc.
ATTENTION:
  Christian O. Henry
 
  Senior Vice President, Chief Financial Officer
TELEPHONE:
  858-202-4508
FACSIMILE:
  858-202-4599
 
   
FROM:
  Deutsche Bank AG London
TELEPHONE:
  + 44 20 7545 8193
FACSIMILE:
  + 44 11 3336 2009
 
   
SUBJECT:
  Convertible Bond Hedge Transaction
 
   
REFERENCE NUMBER(S):
  159077

     The purpose of this communication (this “Confirmation”) is to set forth the
terms and conditions of the above-referenced transaction entered into on the
Trade Date specified below (the "Transaction”) between Deutsche Bank AG acting
through its London branch (“Bank”) and Illumina, Inc. (“Counterparty”). This
communication constitutes a “Confirmation” as referred to in the ISDA Master
Agreement specified below.
     DEUTSCHE BANK AG IS NOT REGISTERED AS A BROKER DEALER UNDER THE U.S.
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. DEUTSCHE BANK SECURITIES INC. HAS
ACTED SOLELY AS AGENT IN CONNECTION WITH THE TRANSACTION AND HAS NO OBLIGATION,
BY WAY OF ISSUANCE, ENDORSEMENT,

     
Chairman of the Supervisory Board: Clemens Börsig Board of Managing Directors:
Hermann-Josef Lamberti, Josef Ackermann, Tessen von Heydebreck, Anthony DiIorio,
Hugo Banziger
  Deutsche Bank AG is regulated by the FSA for the conduct of designated
investment business in the UK, is a member of the London Stock Exchange and is a
limited liability company incorporated in the Federal Republic of Germany HRB
No. 30 000 District Court of Frankfurt am Main; Branch Registration No. in
England and Wales BR000005, Registered address:
 
  Winchester House, 1 Great Winchester Street, London EC2N 2DB.

 

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GUARANTEE OR OTHERWISE WITH RESPECT TO THE PERFORMANCE OF EITHER PARTY UNDER THE
TRANSACTION. DEUTSCHE BANK AG, LONDON BRANCH IS NOT A MEMBER OF THE SECURITIES
INVESTOR PROTECTION CORPORATION (SIPC).
     1. This Confirmation is subject to, and incorporates, the definitions and
provisions of the 2000 ISDA Definitions (including the Annex thereto) (the “2000
Definitions”) and the definitions and provisions of the 2002 ISDA Equity
Derivatives Definitions (the “Equity Definitions”, and together with the 2000
Definitions, the “Definitions”), in each case as published by the International
Swaps and Derivatives Association, Inc. (“ISDA”). In the event of any
inconsistency between the 2000 Definitions and the Equity Definitions, the
Equity Definitions will govern. Certain defined terms used herein have the
meanings assigned to them in the Indenture to be dated as of February 16, 2007
between Counterparty and The Bank of New York, as trustee (the “Indenture”)
relating to the USD350,000,000 principal amount of 0.625% convertible senior
notes due 2014 (the "Convertible Debentures”). In the event of any inconsistency
between the terms defined in the Indenture and this Confirmation, this
Confirmation shall govern. For the avoidance of doubt, references herein to
sections of the Indenture are based on the draft of the Indenture most recently
reviewed by the parties at the time of execution of this Confirmation. If any
relevant sections of the Indenture are changed, added or renumbered prior to
execution of the Indenture, the parties will amend this Confirmation in good
faith to preserve the economic intent of the parties, as evidenced by such draft
of the Indenture. The Transaction is subject to early unwind if the closing of
the Convertible Debentures is not consummated for any reason, as set forth below
in Section 8(k).
     Each party is hereby advised, and each such party acknowledges, that the
other party has engaged in, or refrained from engaging in, substantial financial
transactions and has taken other material actions in reliance upon the parties’
entry into the Transaction to which this Confirmation relates on the terms and
conditions set forth below.
     This Confirmation evidences a complete and binding agreement between Bank
and Counterparty as to the terms of the Transaction to which this Confirmation
relates. This Confirmation shall be subject to an agreement (the “Agreement”) in
the form of the 1992 ISDA Master Agreement as if Bank and Counterparty had
executed an agreement in such form on the date hereof (but without any Schedule
except for (i) the election of Loss and Second Method and US Dollars (“USD”) as
the Termination Currency and (ii) the replacement of the word “third” in the
last line of Section 5(a)(i) with the word “first”).
     All provisions contained in, or incorporated by reference to, the Agreement
will govern this Confirmation except as expressly modified herein. In the event
of any inconsistency between this Confirmation and either the Definitions or the
Agreement, this Confirmation shall govern.
     The Transaction hereunder shall be the sole Transaction under the
Agreement. If there exists any ISDA Master Agreement between Bank and
Counterparty or any confirmation or other agreement between Bank and
Counterparty pursuant to which an ISDA Master Agreement is deemed to exist
between Bank and Counterparty, then notwithstanding anything to the contrary in
such ISDA Master Agreement, such confirmation or agreement or any other
agreement to which Bank and Counterparty are parties, the Transaction shall not
be considered Transactions under, or otherwise governed by, such existing or
deemed ISDA Master Agreement.
     2. The Transaction constitutes a Share Option Transaction for purposes of
the Equity Definitions. The terms of the particular Transaction to which this
Confirmation relates are as follows:
General Terms:

         
 
  Trade Date:   February 12, 2007
 
       
 
  Effective Date:   February 16, 2007
 
       
 
  Option Style:   Modified American, as described under “Procedures for
Exercise” below.
 
       

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  Option Type:   Call
 
       
 
  Seller:   Bank
 
       
 
  Buyer:   Counterparty
 
       
 
  Shares:   The Common Stock of Counterparty, par value USD0.01 per share
(Ticker Symbol:
 
      “ILMN”).
 
       
 
  Number of Options:   The number of Convertible Debentures in denominations of
USD1,000 principal amount issued by Counterparty on the closing date for the
initial issuance of the Convertible Debentures; provided that the Number of
Options shall be automatically increased as of the date of exercise by the
Purchasers (as defined in the Purchase Agreement), of their option pursuant to
Section 2 of the Purchase Agreement dated as of February 12, 2007 between
Counterparty and Deutsche Bank Securities Inc. and Goldman, Sachs & Co., as
representatives of the Purchasers party thereto (the “Purchase Agreement”) by
the number of Convertible Debentures in denominations of USD1,000 principal
amount issued pursuant to such exercise (such Convertible Debentures, the
“Additional Convertible Debentures”). For the avoidance of doubt, the Number of
Options outstanding shall be reduced by each exercise of Options hereunder.
 
       
 
  Option Entitlement:   As of any date, a number of Shares per Option equal to
the Conversion Rate (as defined in the Indenture, but without regard to any
adjustments to the Conversion Rate pursuant to Sections 12.01(e) or 12.04(f) of
the Indenture).
 
       
 
  Strike Price:   As of any date, an amount in USD, rounded to the nearest cent
(with 0.5 cents being rounded upwards), equal to USD1,000 divided by the Option
Entitlement.
 
       
 
  Number of Shares:   The product of the Number of Options, the Option
Entitlement and the Applicable Percentage.
 
       
 
  Applicable Percentage:   30%
 
       
 
  Premium:   USD36,498,000 (Premium per Option USD104.28); provided that if the
Number of Options is increased pursuant to the proviso to the definition of
“Number of Options” above, an additional Premium equal to the product of the
number of Options by which the Number of Options is so increased and the Premium
per Option shall be paid on the Additional Premium Payment Date.
 
       
 
  Premium Payment Date:   The Effective Date
 
       
 
  Additional Premium Payment Date:   The closing date for the purchase and sale
of the Additional Convertible Debentures.
 
       
 
  Exchange:   NASDAQ Global Market
 
       
 
  Related Exchange:   All Exchanges

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          Procedures for Exercise:    
 
       
 
  Exercise Date:   Each Conversion Date.
 
       
 
  Conversion Date:   Each “Conversion Date”, as defined in the Indenture
occurring during the Exercise Period for Convertible Debentures.
 
       
 
  Exercise Period:   The period from and excluding the Trade Date to and
including the Expiration Date.
 
       
 
  Expiration Date:   The third Scheduled Trading Day immediately preceding the
“Maturity Date” as defined in the Indenture.
 
       
 
  Scheduled Trading Day:   As defined in the Indenture
 
       
 
  Automatic Exercise on    
 
  Conversion Dates:   On each Conversion Date, a number of Options equal to the
number of Convertible Debentures converted on such Conversion Date in
denominations of USD1,000 principal amount shall be automatically exercised,
subject to “Notice of Exercise” below.
 
       
 
  Notice of Exercise:   Notwithstanding anything to the contrary in the Equity
Definitions, Bank shall have no obligation to make any payment or delivery in
respect of any exercise of Options hereunder unless Counterparty notifies Bank
in writing prior to 5:00 PM, New York City time, on the Scheduled Trading Day
prior to the first Exchange Business Day of the “Observation Period”, as defined
in the Indenture, relating to the Convertible Debentures converted on the
Conversion Date on which such Exercise Date occurs (the “Notice Deadline”) of
(i) the number of Options being exercised on such Exercise Date, (ii) the
scheduled settlement date under the Indenture for the Convertible Debentures
converted on the Conversion Date on which such Exercise Date occurs and
(iii) the first day of the relevant Observation Period. Notwithstanding the
foregoing, in respect of Options with an Exercise Date occurring during the
period from and including the 25th Scheduled Trading Day prior to the “Maturity
Date” to and including the Expiration Date (the “Final Conversion Period”), the
Notice Deadline shall be 12:00 PM, New York City time on the Scheduled Trading
Day immediately following the Expiration Date and the content of such notice
shall be as set forth in clauses (i) and (ii) above as they relate to all
Exercise Dates occurring during the Final Conversion Period. For the avoidance
of doubt, if Counterparty fails to give such notice when due in respect of any
exercise of Options hereunder, Bank’s obligation to make any payment or delivery
in respect of such exercise shall be permanently extinguished, and late notice
shall not cure such failure. Notwithstanding the foregoing, a Notice of Exercise
in respect of any Exercise Date occurring prior to the Final Conversion Period
shall be effective

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      (and shall be considered to have been given when due for purposes of the
first sentence of this paragraph) if given after the Notice Deadline but prior
to 5:00 PM New York City time, on the fifth Exchange Business Day of the
relevant Observation Period, in which event the Calculation Agent shall have the
right to adjust the Delivery Obligation as appropriate to reflect the additional
costs (including, but not limited, to hedging mismatches and market losses) and
expenses incurred by Bank in connection with its hedging activities (including
the unwinding of any hedge position) as a result of Bank not having received
such notice prior to the Notice Deadline.
 
       

             
 
  Bank’s Telephone Number and Telex and/or Facsimile Number and Contact Details
for purpose of Giving Notice:   To:   Deutsche Bank AG London
 
          C/o Deutsche Bank Securities Inc.
 
          60 Wall Street
 
          New York, NY 10005
 
           
 
      Attn:   Documentation Department:
 
           
 
      Telephone:
Facsimile:   + 44 20 7545 8193
+ 44 11 3336 2009

Settlement Terms:

         
 
  Settlement Date:   The settlement date for the Shares to be delivered in
respect of the Convertible Debentures being converted on the Conversion Date
under the terms of the Indenture.
 
       
 
  Delivery Obligation:   In lieu of the obligations set forth in Sections 8.1
and 9.1 of the Equity Definitions, and subject to “Notice of Exercise” above, in
respect of an Exercise Date, Bank will deliver to Counterparty, on the related
Settlement Date, a number of Shares equal to the product of the Applicable
Percentage and the aggregate number of Shares, if any (and cash in lieu of
fractional Shares, if any, resulting from rounding of such aggregate number of
Shares based on the Daily VWAP (as defined in the Indenture) on the last day of
the relevant Observation Period) that Counterparty is obligated to deliver to
the holder(s) of the Convertible Debentures being converted on such Conversion
Date pursuant to Section 12.02 of the Indenture (such Shares and cash
collectively, the “Convertible Obligation”); provided that the Delivery
Obligation shall be determined excluding any Shares (and cash in lieu of
fractional Shares) that Counterparty is obligated to deliver to holder(s) of the
Convertible Debentures as a direct or indirect result of any adjustments to the
Conversion Rate pursuant to Sections 12.01(e) or 12.04(f) of the

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      Indenture and any interest payment that the Counterparty is obligated to
deliver to holder(s) of the Convertible Debentures converted on such Conversion
Date. For the avoidance of doubt, (i) if the “Daily Conversion Value”, as
defined in the Indenture, for each of the VWAP Trading Days, as defined in the
Indenture, occurring in the relevant Observation Period, is less than or equal
to USD50, Bank will have no delivery obligation hereunder in respect of such
Exercise Date and (ii) if in respect of any Conversion Date Counterparty is
obligated to deliver consideration other than Shares to the holder(s) of the
Convertible Debentures converted on such Conversion Date pursuant to
Section 12.10(b) of the Indenture, then, in lieu of Shares, the Convertible
Obligation shall be payable in other consideration.
 
       
 
  Notice of Delivery Obligation:   No later than the later of (a) the relevant
Exercise Date and (b) the Exchange Business Day immediately following the last
day of the Observation Period, Counterparty shall give Bank notice of the final
number of Shares and/or the amount of cash comprising the relevant Convertible
Obligation; provided that, with respect to any Exercise Date occurring during
the Final Conversion Period, Counterparty may provide Bank with a single notice
of the aggregate number of Shares and/or the amount of cash comprising the
Convertible Obligations for all such Exercise Dates (it being understood, for
the avoidance of doubt, that the requirement of Counterparty to deliver such
notice shall not limit Counterparty’s obligations with respect to Notice of
Exercise, as set forth above, in any way).
 
       
 
  Other Applicable Provisions:   To the extent Bank is obligated to deliver
Shares hereunder, the provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 and
9.12 of the Equity Definitions will be applicable as if “Physical Settlement”
applied to the Transaction; provided that the Representation and Agreement
contained in Section 9.11 of the Equity Definitions shall be modified by
excluding any representations therein relating to restrictions, obligations,
limitations or requirements under applicable securities laws that exist as a
result of the fact that Buyer is the issuer of the Shares.
 
       
 
  Restricted Certificated Shares:   Notwithstanding anything to the contrary in
the Equity Definitions, Bank may, in whole or in part, deliver Shares in
certificated form representing the Number of Shares to be Delivered to
Counterparty in lieu of delivery through the Clearance System.
 
        Adjustments:    
 
       
 
  Method of Adjustment:   Notwithstanding Section 11.2 of the Equity
Definitions, upon the occurrence of any event or condition set forth in
Sections 12.04(a), (b), (c), (d)

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      and (e) of the Indenture, the Calculation Agent shall make the
corresponding adjustment in respect of any one or more of the Number of Options,
the Option Entitlement and any other variable relevant to the exercise,
settlement or payment of the Transaction, to the extent an analogous adjustment
is made under the Indenture. Immediately upon the occurrence of any Adjustment
Event, as defined in the Indenture, Counterparty shall notify the Calculation
Agent of such Adjustment Event; and once the adjustments to be made to the terms
of the Indenture and the Convertible Debentures in respect of such Adjustment
Event have been determined, Counterparty shall immediately notify the
Calculation Agent in writing of the details of such adjustments. Extraordinary
Events:    
 
       
 
  Merger Events:   Notwithstanding Section 12.1(b) of the Equity Definitions, a
“Merger Event” has the definition set forth in Section 12.10 of the Indenture.
 
       
 
  Consequences of Merger Events:   Notwithstanding Sections 12.2 and 12.3 of the
Equity Definitions, upon the occurrence of a Merger Event, the Calculation Agent
shall make the corresponding adjustment in respect of any adjustment under the
Indenture to any one or more of the nature of the Shares, the Number of Options,
the Option Entitlement and any other variable relevant to the exercise,
settlement or payment for the Transaction, to the extent an analogous adjustment
is made under the Indenture in respect of such Merger Event; provided that such
adjustment shall be made without regard to any adjustment to the Conversion Rate
for the issuance of additional shares as set forth in Sections 12.01(e) and
12.04(f) of the Indenture; and provided further that, notwithstanding the
foregoing proviso, the Calculation Agent shall make additional adjustments, as
appropriate, to the Delivery Obligation (including in connection with a Merger
Event that may give rise to an adjustment to the Conversion Rate pursuant to
Section 12.01(e) of the Indenture) to preserve the fair value of the Transaction
(provided that no such additional adjustment, either alone or together with any
other adjustment hereunder to the terms of the Transaction, shall result in any
Delivery Obligation exceeding the related Convertible Obligation, determined
excluding any Shares (and cash in lieu of fractional Shares) that Counterparty
is obligated to deliver to holder(s) of the Convertible Debenture as a direct or
indirect result of any adjustments to the Conversion Rate pursuant to
Section 12.04(f) of the Indenture).
 
       
 
  Notice of Merger Consideration:   Upon the occurrence of a Merger Event that
causes the Shares to be converted into the right to receive more than a single
type of consideration (determined

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      based in part upon any form of stockholder election), Counterparty shall
reasonably promptly (but in any event prior to the Merger Date) notify the
Calculation Agent of (x) the weighted average of the types and amounts of
consideration received by the holders of Shares who affirmatively make such an
election or (y) if no holder of Shares affirmatively makes such an election, the
weighted average of the types and amount of consideration actually received by
holders of Shares.
 
       
 
  Nationalization, Insolvency
or Delisting:   Cancellation and Payment (Calculation Agent Determination);
provided that in addition to the provisions of Section 12.6(a)(iii) of the
Equity Definitions, it will also constitute a Delisting if the Exchange is
located in the United States and the Shares are not immediately re-listed,
re-traded or re-quoted on any of the New York Stock Exchange, the American Stock
Exchange, the NASDAQ Global Select Market or the NASDAQ Global Market (or their
respective successors); if the Shares are immediately re-listed, re-traded or
re-quoted on any such exchange or quotation system, such exchange or quotation
system shall thereafter be deemed to be the Exchange.
 
       
 
  Additional Disruption Events:    
 
       
 
       (a) Change in Law:   Applicable
 
       
 
       (b) Failure to Deliver:   Applicable
 
       
 
       (c) Insolvency Filing:   Applicable
 
       
 
       (d) Hedging Disruption:   Applicable
 
       
 
       (e) Increased Cost of Hedging:   Not Applicable
 
       
 
  Hedging Party:   For all applicable Additional Disruption Events, Bank
 
       
 
  Determining Party:   For all applicable Additional Disruption Events, Bank
 
       
 
  Non-Reliance:   Applicable
 
       
 
  Agreements and Acknowledgments Regarding Hedging Activities:   Applicable;
provided, however, that Agreements and Acknowledgments Regarding Hedging
Activities shall be subject to the other respective representations, warranties
and agreements set forth herein.
 
       
 
  Additional Acknowledgments:   Applicable
 
       
 
  3. Calculation Agent:   Bank
 
       
 
  4. Account Details:    
 
       
 
    Bank Payment Instructions:    

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Bank of New York
ABA 021-000-018
Deutsche Bank Securities Inc.
A/C 8900327634
FFC: 145-91012-10
     Counterparty Payment Instructions:
          To be provided by Counterparty.
5. Offices:
     The Office of Bank for the Transaction is:
          Winchester house, 1 Great Winchester St, London EC2N 2DB
     Counterparty is not a multibranch party.
6. Notices: For purposes of this Confirmation:
(a) Address for notices or communications to Counterparty:

             
To:
  Illumina, Inc.    
Attn:
  Christian O. Henry    
 
  Senior Vice President, Chief Financial Officer    
Telephone:
  858-202-4508    
Facsimile:
  858-202-4599    

With a copy to:
       
 
       
Attn:
  Glenn Pollner    
 
  Dewey Ballantine LLP    
Facsimile:
  212-259-6333

(b) Address for notices or communications to Bank:

             
To:
  Deutsche Bank AG London    
 
  C/o Deutsche Bank Securities Inc.    
 
  60 Wall Street    
 
  New York, NY 10005    
 
       
Attn:
  Documentation Department    
Telephone:
  + 44 20 7545 8193    
Facsimile:
  + 44 11 3336 2009

     7. Representations, Warranties and Agreements:
     (a) In addition to the representations and warranties in the Agreement and
those contained elsewhere herein, Counterparty represents and warrants to and
for the benefit of, and agrees with, Bank as follows:
          (i) On the Trade Date, (A) the Counterparty is not aware of any
material nonpublic information regarding Counterparty or the Shares and (B) all
reports and other documents filed by Counterparty with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended
(the “Exchange Act”) when considered as a whole (with the more recent such
reports and documents deemed to amend inconsistent statements contained in any
earlier such reports and documents), taken together with the press release
issued by Counterparty relating to the Convertible Debentures, do not contain
any untrue statement of a material fact or any omission of a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances in which they were made, not misleading.

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          (ii) (A) On the Trade Date, the Shares or securities that are
convertible into, or exchangeable or exercisable for Shares, are not, and shall
not be, subject to a “restricted period,” as such term is defined in
Regulation M under the Exchange Act (“Regulation M”) and (B) Counterparty shall
not engage in any “distribution,” as such term is defined in Regulation M, other
than a distribution meeting the requirements of the exceptions set forth in
sections 101(b)(10) and 102(b)(7) of Regulation M, until the second Exchange
Business Day immediately following the Trade Date (it being understood that
Counterparty makes no representation pursuant to this clause in respect of any
action or inaction taken by Bank (or any other dealer entering into a similar
transaction to the Transaction in connection with the offering of the
Convertible Debentures) or any Purchaser of the Convertible Debentures, or any
of their respective affiliates, in each case other than actions or inactions
taken or not taken at Counterparty’s instruction or request).
          (iii) On the Trade Date, neither Counterparty nor any “affiliate” or
“affiliated purchaser” (each as defined in Rule 10b-18 of the Exchange Act
(“Rule 10b-18”)) shall directly or indirectly (including, without limitation, by
means of any cash-settled or other derivative instrument) purchase, offer to
purchase, place any bid or limit order that would effect a purchase of, or
commence any tender offer relating to, any Shares (or an equivalent interest,
including a unit of beneficial interest in a trust or limited partnership or a
depository share) or any security convertible into or exchangeable or
exercisable for Shares, except through Bank or as otherwise disclosed in the
preliminary offering memorandum relating to the Convertible Debentures (it being
understood that Counterparty makes no representation pursuant to this clause in
respect of any action or inaction taken by Bank (or any other dealer entering
into a similar transaction to the Transaction in connection with the offering of
the Convertible Debentures) or any Purchaser of the Convertible Debentures, or
any of their respective affiliates, in each case other than actions or inactions
taken or not taken at Counterparty’s instruction or request).
          (iv) Without limiting the generality of Section 13.1 of the Equity
Definitions, Counterparty acknowledges that Bank is not making any
representations or warranties with respect to the treatment of the Transaction
under FASB Statements 128, 133 ( as amended), 149 or 150, EITF Issue No. 00-19,
01-6 or 03-6 (or any successor issue statements) or under FASB’s Liabilities &
Equity Project.
          (v) Without limiting the generality of Section 3(a)(iii) of the
Agreement, the Transaction will not violate Rule 13e-1 or Rule 13e-4 under the
Exchange Act (it being understood that Counterparty makes no representation
pursuant to this clause in respect of any action or inaction taken by Bank (or
any other dealer entering into a similar transaction to the Transaction in
connection with the offering of the Convertible Debentures) or any Purchaser of
the Convertible Debentures, or any of their respective affiliates, in each case
other than actions or inactions taken or not taken at Counterparty’s instruction
or request).
          (vi) Prior to the Trade Date, Counterparty shall deliver to Bank a
resolution of Counterparty’s board of directors authorizing the Transaction and
such other certificate or certificates as Bank shall reasonably request.
          (vii) Counterparty is not entering into this Confirmation to create
actual or apparent trading activity in the Shares (or any security convertible
into or exchangeable for Shares) or to raise or depress or otherwise manipulate
the price of the Shares (or any security convertible into or exchangeable for
Shares) or otherwise in violation of the Exchange Act.
          (viii) Counterparty is not, and after giving effect to the
transactions contemplated hereby will not be, required to register as, an
“investment company” as such term is defined in the Investment Company Act of
1940, as amended.
          (ix) On each of the Trade Date, and the Premium Payment Date and the
Additional Premium Payment Date, if any, Counterparty is not “insolvent” (as
such term is defined under Section 101(32) of the U.S. Bankruptcy Code (Title 11
of the United States Code) (the “Bankruptcy Code”)) and Counterparty would be
able to purchase the Shares hereunder in compliance with the laws of the
jurisdiction of Counterparty’s incorporation.

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          (x) The representations and warranties of Counterparty set forth in
Section 3 of the Agreement and Section 1 of the Purchase Agreement are true and
correct in all material respects.
     (b) Each of Bank and Counterparty agrees and represents that it is an
“eligible contract participant” as defined in Section 1a(12) of the U.S.
Commodity Exchange Act, as amended.
     (c) Each of Bank and Counterparty acknowledges that the offer and sale of
the Transaction to it is intended to be exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act”), by virtue of
Section 4(2) thereof. Accordingly, Counterparty represents and warrants to Bank
that (i) it has the financial ability to bear the economic risk of its
investment in the Transaction and is able to bear a total loss of its investment
and its investments in and liabilities in respect of the Transaction, which it
understands are not readily marketable, are not disproportionate to its net
worth, and it is able to bear any loss in connection with the Transaction,
including the loss of its entire investment in the Transaction, (ii) it is an
“accredited investor” as that term is defined in Regulation D as promulgated
under the Securities Act, (iii) the assignment, transfer or other disposition of
the Transaction has not been and will not be registered under the Securities Act
and is restricted under this Confirmation, the Securities Act and state
securities laws, and (iv) its financial condition is such that it has no need
for liquidity with respect to its investment in the Transaction and no need to
dispose of any portion thereof to satisfy any existing or contemplated
undertaking or indebtedness and is capable of assessing the merits of and
understanding (on its own behalf or through independent professional advice),
and understands and accepts, the terms, conditions and risks of the Transaction.
     (d) Each of Bank and Counterparty agrees and acknowledges (A) that this
Confirmation is (i) a “securities contract,” as such term is defined in
Section 741(7) of the Bankruptcy Code, with respect to which each payment and
delivery hereunder is a “settlement payment,” as such term is defined in
Section 741(8) of the Bankruptcy Code, and (ii) a “swap agreement,” as such term
is defined in Section 101(53B) of the Bankruptcy Code, with respect to which
each payment and delivery hereunder is a “transfer,” as such term is defined in
Section 101(54) of the Bankruptcy Code, and (B) that Bank is entitled to the
protections afforded by, among other sections, Section 362(b)(6), 362(b)(17),
546(e), 546(g), 555 and 560 of the Bankruptcy Code.
     (e) Each party acknowledges and agrees to be bound by the Conduct Rules of
the National Association of Securities Dealers, Inc. applicable to transactions
in options, and further agrees not to violate the position and exercise limits
set forth therein.
     (f) Counterparty shall deliver to Bank an opinion of counsel, dated as of
the Trade Date and reasonably acceptable to Bank in form and substance, with
respect to certain matters to be agreed upon.
     8. Other Provisions:
     (a) Right to Extend. Bank may postpone any Exercise Date or any other date
of valuation or delivery by Bank, with respect to some or all of the relevant
Options (in which event the Calculation Agent shall make appropriate adjustments
to the Delivery Obligation), if Bank determines, in its reasonable discretion
based on the advice of counsel, that such extension is reasonably required or
necessary for legal, regulatory or self-regulatory organization compliance by
Bank in connection with its hedging, hedge unwind or settlement activity
hereunder. In the event this Section 8(a) affects any delivery owed by Bank
hereunder, Bank shall make such delivery as soon as reasonably practicable in
accordance with this Section 8(a).
     (b) Additional Termination Events. The occurrence of (i) an event of
default with respect to Counterparty under the terms of the Convertible
Debentures as set forth in Section 5.01 of the Indenture that results in the
Convertible Debentures becoming due and payable prior to their maturity pursuant
to the terms of the Indenture, or (ii) an Amendment Event shall be an Additional
Termination Event with respect to which the Transaction is the sole Affected
Transaction and Counterparty is the sole Affected Party.
          “Amendment Event” means that Counterparty amends, modifies,
supplements or receives a waiver in respect of any term of the Indenture or the
Convertible Debentures governing the principal amount, coupon, maturity,
repurchase obligation of Counterparty, redemption right of

11

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Counterparty, any term relating to conversion of the Convertible Debentures
(including changes to the conversion price, conversion settlement dates or
conversion conditions), or any term that would require consent of the holders of
not less than 100% of the principal amount of the Convertible Debentures to
amend, in each case without the prior consent of Bank.
     (c) Alternative Calculations and Payment on Early Termination and on
Certain Extraordinary Events. If, subject to Section 8(i) below, Bank shall owe
Counterparty any amount pursuant to Section 12.2 of the Equity Definitions and
“Consequences of Merger Events” above, or Sections 12.3, 12.6, 12.7 or 12.9 of
the Equity Definitions (except in the event of an Insolvency, a Nationalization
or a Merger Event, in each case, in which the consideration or proceeds to be
paid to holders of Shares consists solely of cash) or pursuant to
Section 6(d)(ii) of the Agreement (except in the event of an Event of Default in
which Counterparty is the Defaulting Party or a Termination Event in which
Counterparty is the Affected Party, that resulted from an event or events within
Counterparty’s control) (a “Payment Obligation”), Counterparty shall have the
right, in its sole discretion, to require Bank to satisfy any such Payment
Obligation by the Share Termination Alternative (as defined below) by giving
irrevocable telephonic notice to Bank, confirmed in writing within one Scheduled
Trading Day, between the hours of 9:00 A.M. and 4:00 P.M. New York City time on
the Merger Date, Announcement Date or Early Termination Date, as applicable
(“Notice of Share Termination”). Upon such Notice of Share Termination, the
following provisions shall apply on the Scheduled Trading Day immediately
following the Merger Date, Announcement Date or Early Termination Date, as
applicable:

     
Share Termination Alternative:
  Applicable and means that Bank shall deliver to Counterparty the Share
Termination Delivery Property on the date on which the Payment Obligation would
otherwise be due pursuant to Section 12.7 or 12.9 of the Equity Definitions or
Section 6(d)(ii) of the Agreement, as applicable (the “Share Termination Payment
Date”), in satisfaction of the Payment Obligation.
 
   
Share Termination Delivery
Property:
  A number of Share Termination Delivery Units, as calculated by the Calculation
Agent, equal to the Payment Obligation divided by the Share Termination Unit
Price. The Calculation Agent shall adjust the Share Termination Delivery
Property by replacing any fractional portion of a security therein with an
amount of cash equal to the value of such fractional security based on the
values used to calculate the Share Termination Unit Price.
 
   
Share Termination Unit Price:
  The value of property contained in one Share Termination Delivery Unit on the
date such Share Termination Delivery Units are to be delivered as Share
Termination Delivery Property, as determined by the Calculation Agent in its
discretion by commercially reasonable means and notified by the Calculation
Agent to Bank at the time of notification of the Payment Obligation.
 
   
Share Termination Delivery Unit:
  In the case of a Termination Event, Event of Default or Delisting, one Share
or, in the case of an Insolvency, Nationalization or Merger Event, a unit
consisting of the number or amount of each type of property received by a holder
of one Share (without consideration of any requirement to pay cash or other
consideration in lieu of fractional amounts of any securities) in such
Insolvency, Nationalization or Merger Event. If such Insolvency, Nationalization
or Merger Event involves a choice of consideration to be received by holders of
Shares, such holder shall be deemed to have elected to receive (x) the weighted
average of the types and amounts of consideration received by the holders of
Shares who affirmatively make such an election or (y) if no holder of Shares
affirmatively makes such an election, the weighted average of the types and
amount of consideration actually received by holders of Shares.

12

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Failure to Deliver:
  Applicable
 
   
Other applicable provisions:
  If Share Termination Alternative is applicable, the provisions of
Sections 9.8, 9.9, 9.10, 9.11 and 9.12 of the Equity Definitions will be
applicable as if “Physical Settlement” applied to the Transaction, except that
all references to “Shares” shall be read as references to “Share Termination
Delivery Units”; and provided that the Representation and Agreement contained in
Section 9.11 of the Equity Definitions shall be modified by excluding any
representations therein relating to restrictions, obligations, limitations or
requirements under applicable securities laws as a result of the fact that Buyer
is the issuer of any Share Termination Delivery Units (or any part thereof).

The parties hereby agree that, notwithstanding anything to the contrary herein
or in the Agreement, in the event that following the payment of the Premium by
Counterparty to Bank (i) an Early Termination Date (whether as a result of an
Event of Default or a Termination Event) occurs or is designated with respect to
the Transaction and, as a result, Counterparty owes to Bank an amount calculated
under Section 6(e) of the Agreement or (ii) an Extraordinary Event occurs that
results in the termination or cancellation of any Transaction pursuant to
Article 12 of the Equity Definitions and, as a result, Counterparty owes to Bank
a Cancellation Amount or other amount in respect of the Transaction, such amount
shall be deemed to be zero.
     (d) Disposition of Hedge Shares. Bank intends to conduct its hedging
activities in connection with the Transaction in a manner that it believes on
the Trade Date, based on its good faith reasonable judgment, will not require
Counterparty to register under the Securities Act or any state securities laws
any Shares acquired by Bank for the purpose of hedging its obligations pursuant
to the Transaction (any such Shares, “Hedge Shares”). Nevertheless, Counterparty
hereby agrees that if, in the good faith reasonable judgment of Bank based on
the advice of counsel, any Hedge Shares cannot be sold in the U.S. public market
by Bank without registration under the Securities Act, Counterparty shall, at
its election: (i) in order to allow Bank to sell such Hedge Shares in a
registered offering, make available to Bank an effective registration statement
under the Securities Act to cover the resale of such Hedge Shares and (A) enter
into an agreement, in form and substance reasonably satisfactory to Bank,
substantially in the form of an underwriting agreement for a registered
offering, (B) provide accountant’s “comfort” letters in customary form for
registered offerings of equity securities (provided that it shall not be
considered a failure to provide such a letter if Counterparty has used
reasonable efforts to provide such a letter and Counterparty’s accountants have
refused to do so solely as a result of a failure by Bank to provide information
to such accountants that is reasonably requested by such accountants in
accordance with customary practice under SAS 72 or a successor SAS provision),
(C) provide disclosure opinions of nationally recognized outside counsel to
Counterparty reasonably acceptable to Bank, (D) provide other customary
opinions, certificates and closing documents customary in form for registered
offerings of equity securities and (E) afford Bank a reasonable opportunity to
conduct a “due diligence” investigation with respect to Counterparty customary
in scope for underwritten offerings of equity securities; provided, however,
that if Bank, in its sole reasonable discretion, is not satisfied with access to
due diligence materials, the results of its due diligence investigation, or the
procedures and documentation for the registered offering referred to above, then
clause (ii) or clause (iii) of this Section 8(d) shall apply at the election of
Counterparty; (ii) in order to allow Bank to sell the Hedge Shares in a private
placement, enter into a private placement agreement substantially similar to
private placement purchase agreements customary for private placements of equity
securities, in form and substance reasonably satisfactory to Bank, including
customary representations, covenants, blue sky and other governmental filings
and/or registrations, indemnities to Bank, due diligence rights (for Bank or any
designated buyer of the Hedge Shares from Bank), opinions and certificates and
such other documentation as is customary for private placements agreements, all
reasonably acceptable to Bank (in which case, the Calculation Agent shall make
any adjustments to the terms of the Transaction that are necessary, in its
reasonable judgment to compensate Bank in a commercially reasonable manner for
any discount from the public market price of the Shares incurred on the sale of
Hedge Shares in a private placement); or (iii) purchase the Hedge Shares from
Bank at the VWAP Price on such Exchange Business Days, and in the amounts,
requested by Bank. “VWAP Price” means, on any Exchange Business Day, the per
Share volume-weighted average price as

13

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displayed under the heading “Bloomberg VWAP” on Bloomberg page ILMN.Q <equity>
VAP (or any successor thereto) in respect of the period from 9:30 a.m. to 4:00
p.m. (New York City time) on such Exchange Business Day (or if such
volume-weighted average price is unavailable, the market value of one Share on
such Exchange Business Day, as determined by the Calculation Agent using a
volume-weighted method).
     (e) Repurchase Notices. Counterparty shall, on any day on which
Counterparty effects any repurchase of Shares, promptly give Bank a written
notice of such repurchase (a “Repurchase Notice”) on such day if, following such
repurchase, the Notice Percentage as determined on such day is (i) greater than
8% and (ii) greater by 0.5% than the Notice Percentage included in the
immediately preceding Repurchase Notice (or, in the case of the first such
Repurchase Notice, greater than the Notice Percentage as of the date hereof).
The “Notice Percentage” as of any day is the fraction, expressed as a
percentage, the numerator of which is the Number of Shares and the denominator
of which is the number of Shares outstanding on such day. In the event that
Counterparty fails to provide Bank with a Repurchase Notice on the day and in
the manner specified in this Section 8(e) then Counterparty agrees to indemnify
and hold harmless Bank, its affiliates and their respective directors, officers,
employees, agents and controlling persons (Bank and each such person being an
“Indemnified Party”) from and against any and all losses, claims, damages and
liabilities (or actions in respect thereof), joint or several, to which such
Indemnified Party may become subject under applicable securities laws, including
without limitation, Section 16 of the Exchange Act, relating to or arising out
of such failure. If for any reason the foregoing indemnification is unavailable
to any Indemnified Party or insufficient to hold harmless any Indemnified Party,
then Counterparty shall contribute, to the maximum extent permitted by law, to
the amount paid or payable by the Indemnified Party as a result of such loss,
claim, damage or liability. In addition, Counterparty will reimburse any
Indemnified Party for all expenses (including reasonable counsel fees and
expenses) as they are incurred (after notice to Counterparty) in connection with
the investigation of, preparation for or defense or settlement of any pending or
threatened claim or any action, suit or proceeding arising therefrom, whether or
not such Indemnified Party is a party thereto and whether or not such claim,
action, suit or proceeding is initiated or brought by or on behalf of
Counterparty. This indemnity shall survive the completion of the Transaction
contemplated by this Confirmation and any assignment and delegation of the
Transaction made pursuant to this Confirmation or the Agreement shall inure to
the benefit of any permitted assignee of Bank.
     (f) Transfer and Assignment. Bank may transfer or assign its rights and
obligations hereunder and under the Agreement, in whole or in part, to any of
its affiliates without the consent of Counterparty, so long as the senior
unsecured debt rating (“Credit Rating”) of such affiliate (or any guarantor of
its obligations under the Transaction) is equal to or greater than the Credit
Rating of Bank, as specified by Standard and Poor’s Rating Services or Moody’s
Investors Service, Inc. at the time of assignment or transfer. In connection
with any assignment or transfer pursuant to the immediately preceding sentence,
the guarantee of any guarantor of the relevant transferee’s obligations under
the Transaction shall constitute a Credit Support Document under the Agreement.
In connection with any transfer or assignment by Bank of its rights and
obligations hereunder and under the Agreement, Bank shall promptly provide
written notice to Counterparty of such transfer or assignment, as the case may
be, and the identity of the relevant transferee or assignee. If at any time at
which the Equity Percentage exceeds 9.0%, Bank, in its discretion, is unable to
effect a transfer or assignment to a third party after its commercially
reasonable efforts on pricing terms reasonably acceptable to Bank such that the
Equity Percentage is reduced to 8.5% or less, Bank may designate any Scheduled
Trading Day as an Early Termination Date with respect to a portion (the
“Terminated Portion”) of the Transaction, such that the Equity Percentage
following such partial termination will be equal to or less than 8.5%. In the
event that Bank so designates an Early Termination Date with respect to a
portion of the Transaction, a payment or delivery shall be made pursuant to
Section 6 of the Agreement and Section 8(c) of this Confirmation as if (i) an
Early Termination Date had been designated in respect of a Transaction having
terms identical to the Terminated Portion of the Transaction, (ii) Counterparty
shall be the sole Affected Party with respect to such partial termination and
(iii) such portion of the Transaction shall be the only Terminated Transaction.
The “Equity Percentage” as of any day is the fraction, expressed as a
percentage, (A) the numerator of which will be the aggregate number of Shares
that Bank and any of its affiliates subject to aggregation with Bank under
Section 13 of the Exchange Act and the rules promulgated thereunder beneficially
own (within the meaning of such Section 13 and rules) on such day and (B) the
denominator of which is the number of Shares

14

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outstanding on such day. Counterparty may transfer or assign its rights and
obligations hereunder and under the Agreement, in whole or in part, to any party
with the consent of Bank, such consent not to be unreasonably withheld.
     (g) Staggered Settlement. If the Staggered Settlement Equity Percentage as
of any Exchange Business Day during any Observation Period is greater than 4.5%,
the Bank may, by notice to Counterparty prior to the related Settlement Date
(the “Nominal Settlement Date”), elect to deliver the Shares on two or more
dates (each, a “Staggered Settlement Date”) or at two or more times on the
Nominal Settlement Date as follows:
     (i) in such notice, Bank will specify to Counterparty the related Staggered
Settlement Dates (each of which will be on or prior to such Nominal Settlement
Date, but not prior to the beginning of the related Observation Period) or
delivery times and how it will allocate the Shares it is required to deliver
under “Delivery Obligation” (above) among the Staggered Settlement Dates or
delivery times; and
     (ii) the aggregate number of Shares that Bank will deliver to Counterparty
hereunder on all such Staggered Settlement Dates and delivery times will equal
the number of Shares that Bank would otherwise be required to deliver on such
Nominal Settlement Date.
The “Staggered Settlement Equity Percentage” as of any day is the fraction,
expressed as a percentage, (A) the numerator of which is the sum of (x) the
number of Shares that Bank or any of its affiliates subject to aggregation with
Bank under Section 13 of the Exchange Act and the rules promulgated thereunder
beneficially own (within the meaning of such Section 13 and rules) on such day,
other than any Shares so owned as a hedge of the Transaction, and (y) the Number
of Shares and (B) the denominator of which is the number of Shares outstanding
on such day.
     (h) Disclosure. Effective from the date of commencement of discussions
concerning the Transaction, Counterparty and each of its employees,
representatives, or other agents may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure of the Transaction
and all materials of any kind (including opinions or other tax analyses) that
are provided to Counterparty relating to such tax treatment and tax structure.
     (i) Netting and Set-off. Notwithstanding any provision of the Agreement
(including without limitation Section 6(f) thereof) and this Confirmation
(including without limitation this Section 8(i)) or any other agreement between
the parties to the contrary, (A) Counterparty shall not net or set off its
obligations under the Transaction, if any, against its rights against Bank under
any other transaction or instrument and (B) Bank shall not net or set off any
rights of Bank against Counterparty arising under the Transaction, if any,
against its obligations to Counterparty under any other transaction or
instrument.
     (j) Equity Rights. Bank acknowledges and agrees that this Confirmation is
not intended to convey to it rights with respect to the Transaction that are
senior to the claims of common stockholders in the event of Counterparty’s
bankruptcy. For the avoidance of doubt, the parties agree that the preceding
sentence shall not apply at any time other than during Counterparty’s bankruptcy
to any claim arising as a result of a breach by Counterparty of any of its
obligations under this Confirmation or the Agreement.
     (k) Early Unwind. In the event the sale by Counterparty of the Convertible
Debentures is not consummated with the Purchasers pursuant to the Purchase
Agreement for any reason by the close of business in New York on February 16,
2007 (or such later date as agreed upon by the parties, which in no event shall
be later than February 23, 2007) (February 16, 2007 or such later date being the
“Early Unwind Date”), the Transaction shall automatically terminate (the “Early
Unwind”), on the Early Unwind Date and the Transaction and all of the respective
rights and obligations of Bank and Counterparty thereunder shall be cancelled
and terminated. Following such termination, cancellation and payment, each party
shall be released and discharged by the other party from and agrees not to make
any claim against the other party with respect to any obligations or liabilities
of either party arising out of and to be performed in connection with the
Transaction either prior to or after the Early Unwind Date. Bank and
Counterparty represent and acknowledge to the other that upon an Early Unwind
and following the payment referred to above, all obligations with respect to the
Transaction shall be deemed fully and finally discharged.

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     (l) Adjustment Upon Amendment or Exchange of Convertible Debentures. If the
Convertible Debentures are amended to change the settlement method thereunder
(including, without limitation, to change from net share settlement to physical
settlement) or are exchanged for new convertible debentures with a different
settlement method but otherwise substantially identical to the Convertible
Debentures, the parties shall work together in good faith to adjust the terms of
the Transaction (including, without limitation, the settlement method under the
Transaction) to preserve the fair value of the Transaction and the economic
intent of the parties in light of such amendment or exchange.
     (m) Governing Law and Waiver of Jury Trial. THE AGREEMENT AND THIS
CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. EACH PARTY
HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THE AGREEMENT, THIS CONFIRMATION OR THE
TRANSACTION (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
     (n) Submission to Jurisdiction. Each party hereby irrevocably and
unconditionally submits for itself and its property in any legal action or
proceeding by the other party against it relating to the Transaction to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the exclusive jurisdiction of the Supreme Court of the State of New
York, sitting in New York County, the courts of the United States of America for
the Southern District of New York, and appellate courts from any thereof.
     (o) Method of Delivery. Whenever delivery of funds or other assets is
required hereunder by or to Counterparty, such delivery shall be effected
through Deutsche Bank Securities, Inc. (“DBSI”). In addition, all notices,
demands and communications of any kind relating to the Transaction between Bank
and Counterparty shall be transmitted exclusively through DBSI.
     (p) Counterparts. This Confirmation may be executed in several
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

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Counterparty hereby agrees to check this Confirmation and to confirm that the
foregoing correctly sets forth the terms of the Transaction by signing in the
space provided below and returning to Deutsche a facsimile of the fully-executed
Confirmation to + 44 11 3336 2009. Originals shall be provided for your
execution upon your request.
We are very pleased to have executed the Transaction with you and we look
forward to completing other transactions with you in the near future.
Very truly yours,
DEUTSCHE BANK AG LONDON

         
By:
  /s/ Andrea Leung      
 
 
 
Name: Andrea Leung    
 
  Title: Managing Director    
By:
  /s/ Lee Frankenfield    
 
 
 
Name: Lee Frankenfield    
 
  Title: Managing Director    

DEUTSCHE BANK SECURITIES INC.,
acting solely as Agent in connection with this Transaction

         
By:
  /s/ Andrea Leung    
Name:
  Andrea Leung    
Title:
  Managing Director    
 
       
By:
  /s/ Lee Frankenfield    
Name:
Lee Frankenfield    
Title:
  Managing Director    

Counterparty hereby agrees to, accepts and confirms the terms of the foregoing
as of the Trade Date.
ILLUMINA, INC.

     
By:
  /s/ Christian O. Henry
 
  Name: Christian O. Henry

 
  Title: Senior Vice President & Chief Financial Officer