exv10w35






Exhibit 10.35




LEASE AGREEMENT




     THIS LEASE AGREEMENT (this “Lease”) is made this 30th day of December,
2010, between ARE-SD REGION NO. 32, LLC, a Delaware limited liability company
(“Landlord”), and ILLUMINA, INC., a Delaware corporation (“Tenant”).



	 	 	 
	Address:

	 	5200 Research Place, San Diego, California
	 
	 	 
	Premises:

	 	That certain portion of the Project consisting of (i) a
building containing approximately 171,340 rentable square feet
(“Building 1”), (ii) a building containing approximately
159,272 rentable square feet (“Building 2”), (iii) that certain
to be constructed office building containing approximately
123,429 rentable square feet (“Building 3”), and (iv) a central
plant building containing approximately 15,969 rentable square
feet (“Central Plant Building”), all as shown on Exhibit A.
Building 1, Building 2, Building 3 and the Central Plant
Building are collectively referred to herein as the
“Buildings”.
	 
	 	 
	Project:

	 	The real property on which the Buildings are located together
with all improvements now or in the future located thereon and
appurtenances thereto as described on Exhibit B.
	 
	 	 
	Base Rent:

	 	$3.15 per rentable square foot of the Premises per month,
subject to adjustment as provided for in this Lease.






	 	 	 

	Rentable Area of Premises:

	 	470,010 rentable square feet, subject to adjustment as provided for in this Lease.
	 
	 	 
	Rentable Area of Project:

	 	470,010 rentable square feet, subject to adjustment as provided for in this Lease.






	 	 	 

	Tenant’s Share of Operating Expenses:

	 	 100%, subject to adjustment as provided for in this Lease.






	 	 	 

	Security Deposit:

	 	 None






	 	 	 

	Target Initial Commencement Date:

	 	November 1, 2011 for Building 1, Building 2 and the Central Plant Building.






	 	 	 

	Bi-Annual Rent Adjustment Percentage:

	 	 6%






	 	 	 

	Base Term:

	 	Beginning on the Initial Commencement Date and ending 240 months thereafter,
subject to adjustment as provided for in Section 39 hereof.
	 
	 	 
	Permitted Use:

	 	Research and development laboratory, office and other legally permitted uses
consistent with the character of the Project as a Class A office and
laboratory project and otherwise in compliance with the provisions
of Section 7 hereof.






	 	 	 
	Address for Rent Payment:

	 	Landlord’s Notice Address:
	DEPT LA 23447

	 	385 E. Colorado Boulevard, Suite 299
	Pasadena, CA 91185-3447

	 	Pasadena, CA 91101
	 

	 	Attention: Corporate Secretary











 









 




5200 Research Place/Illumina — Page 2




Tenant’s Notice Address:




Following Initial Commencement Date:




5200 Research Place 
San
Diego, CA 92122

Attention: General Counsel




with a copy to:




5200 Research Place
San
Diego, CA 92122
Attention:
Director of Facilities




Prior to Initial Commencement Date:




9885 Towne Center Drive 
San
Diego, CA 92124
Attention:
General Counsel




with a copy to:




9885 Towne Center Drive San

Diego, CA 92124 
Attention:
Director of Facilities



The following Exhibits and Addenda are attached hereto and incorporated herein by this reference:




	 	 	 
	þ EXHIBIT A — Premises Description

	 	þ EXHIBIT B — Description of Project
	þ EXHIBIT C — Building 3 Work Letter

	 	þ EXHIBIT D — Commencement Date
	þ EXHIBIT E — Rules and Regulations

	 	þ EXHIBIT F — Tenant’s Personal Property
	þ EXHIBIT G — Building 1 and 2 Work Letter

	 	þ EXHIBIT H — Project Site Plan
	þ EXHIBIT I — Expansion Building Specifications

	 	þ EXHIBIT J — Expansion Building Work Letter
	þ EXHIBIT K — Tenant Improvement Specifications

	 	þ EXHIBIT L — Form of Memorandum of Lease
	þ EXHIBIT M — Landlord’s Property

	 	þ EXHIBIT N — Warehouse Building Specifications
	þ EXHIBIT O — Parking Garage Description

	 	þ EXHIBIT P — Excluded Premises Description






     1. Lease of Premises. Upon and subject to all of the terms and conditions hereof, Landlord
hereby leases the Premises to Tenant and Tenant hereby leases the Premises from Landlord. The
portions of the Project which are designated by Landlord for the non-exclusive use of tenants of
the Project are collectively referred to herein as the “Common Areas.” Landlord reserves the right,
subject to the restrictions expressly provided for in this Lease, to reasonably modify Common
Areas; provided, however, that Tenant is not precluded from accessing the Premises, the parking
areas and/or otherwise having beneficial use of the Premises.



     2. Delivery; Acceptance of Premises; Commencement Date.



     (a) Buildings 1 and 2. Landlord shall use reasonable efforts to deliver Building 1, Building
2
and the Central Plant Building to Tenant on or before the Target Initial Commencement Date. Except
as otherwise provided for in this Lease, if Landlord fails to timely deliver Building 1, Building 2
and the Central Plant Building, Landlord shall not be liable to Tenant for any loss or damage
resulting therefrom, and this Lease shall not be void or voidable.



     Notwithstanding anything to the contrary contained herein, if Landlord is successful in
entering into a lease termination agreement with Biogen Idec Inc. (“Biogen Idec”), the existing
tenant in Building 1 and Building 2, which lease termination agreement is acceptable to both Biogen
Idec and Landlord, each in their sole and absolute discretion (the “Existing Lease Termination
Agreement”), which provides for,








 








 








5200 Research Place/Illumina — Page 3



among other things, an early termination of Biogen Idec’s lease with respect to Building 1 and
Building 2 (as well as the Central Plant Building), Landlord shall deliver Building 1, Building 2
and the Central Plant Building to Tenant prior to the Target Initial Commencement Date. The period
between the date that Landlord delivers any portion of the Premises for continuous and
uninterrupted access to Tenant and the Initial Commencement Date is referred to herein as the
“Early Access Period”. The Early Access Period shall be extended 1 day for each day of Landlord
Delay (as defined in the Building 1 and 2 Work Letter) and for up to 60 days in the aggregate for
Force Majeure delays occurring during the Early Access Period which prevent Tenant from
constructing the Building 1 and Building 2 Tenant Improvements (as defined in the Building 1 and 2
Work Letter) which were planned to be constructed during the Early Access Period (collectively,
the “Access Extension Period”). Landlord shall, as part of the negotiation of the Existing Lease
Termination Agreement, require Biogen Idec surrender Building 1 and Building 2 with its furniture,
fixtures and equipment described on Exhibit M (“Landlord’s Property”) in place. If Landlord
delivers Building 1 and Building 2 to Tenant prior to the Target Initial Commencement Date, (i)
Tenant shall not be required to pay Base Rent with respect to Building 1, Building 2 or the
Central Plant Building until the Initial Commencement Date (as defined below), and (ii) Tenant
shall not be required to pay Operating Expenses (as defined in Section 5) with respect to
Building 1, Building 2 or the Central Plant Building prior to the Initial Commencement Date unless
Tenant commences business operations in any portion(s) of Building 1 or Building 2 in which case
Tenant shall commence paying a proportionate share of Operating Expenses (but not Base Rent)
reasonably allocable to the portion(s) of the Premises in which Tenant has commenced conducting
business operations.




     The “Initial Commencement Date” shall be the later of (i) the date Landlord delivers Building
1, Building 2 and the Central Plant Building to Tenant, and (ii) the Target Initial Commencement
Date; provided, however, that in no event shall the Initial Commencement Date occur until the
Early Access Period for Building 1 and Building 2 equals 6 months (plus the Access Extension
Period, if any) except for the portion of the Premises depicted as Phase 3 on Exhibit P attached
hereto (the “Excluded Premises”) for which the Early Access Period need only equal 4 months (plus
the Access Extension Period, if any, is actually applicable to such Excluded Premises). If Tenant
so elects, Tenant may, during the Early Access Period, construct the Building 1 and 2 Tenant
Improvements and otherwise prepare Building 1 and Building 2 for Tenant’s use and occupancy.



     If Landlord fails to deliver any portion of Building 1 or Building 2 to Tenant within 6 months
after the Target Initial Commencement Date (as extended by delays caused by Force Majeure, the
“Outside Date”), Tenant shall in addition to the Rent Abatement be entitled, starting on the first
day of the 13th month of the Base Term, to occupy such portion of the Premises, without
the obligation to pay Base Rent,
2 days for each day following the Outside Date until such portion of the Premises was delivered to
Tenant. If Landlord fails to deliver Building 1 or Building 2 to Tenant within 10 months of the
Target Initial Commencement Date (as extended by delays caused by Force Majeure), this Lease may
be terminated by Tenant by written notice to Landlord, and if so terminated by Tenant, neither
Landlord nor Tenant shall have any further rights, duties or obligations under this Lease, except
with respect to provisions which expressly survive termination of this Lease. If Tenant does not
elect to terminate this Lease within 6 business days of the lapse of such 10 month period (as
extended by Force Majeure), such right to terminate this Lease shall be waived and this Lease
shall remain in full force and effect. As used in this paragraph, in no event may any “delays
caused by Force Majeure” extend the date of the applicable delivery by more than 90 days in the
aggregate except in the case of any matter covered by the provisions of Sections 18 and
19 hereof.



     (b) Building 3. Landlord shall use reasonable efforts to deliver the 1st floor
lobby and floors
3 and 4 containing approximately 61,715 rentable square feet of Building 3 (“Initial Building 3
Premises”) to Tenant on or before June 1, 2013, with Landlord’s Work in the Initial Building 3
Premises Substantially TI Completed, and to deliver the balance of Building 3 (“Subsequent
Building 3 Premises”) to Tenant on or before January 1, 2014, with Landlord’s Work in the
Subsequent Building 3 Premises Substantially TI Completed. Except as provided herein, if Landlord
fails to timely deliver the Initial Building 3 Premises or the Subsequent Building 3 Premises, as
applicable, Landlord shall not be liable to Tenant for any loss or damage resulting therefrom, and
this Lease shall not be void or voidable.








 









 








5200 Research Place/Illumina — Page 4



As used in this paragraph, the terms “Landlord’s Work” and “Substantially TI Completed” shall have
the meanings set forth for such terms in the Building 3 Work Letter.




     The “Initial Building 3 Commencement Date” shall be the earlier of the date that Landlord
delivers the Initial Building 3 Premises to Tenant Substantially TI Completed or the date that
Landlord could have delivered the Initial Building 3 Premises Substantially TI Completed but for
Tenant Delay (as defined in the Building 3 Work Letter) and which shall in no event be prior to
June 1, 2013, and the “Subsequent Building 3 Commencement Date” shall be the date which is the
later of (i) 6 months following the Initial Building 3 Commencement Date and (ii) the date
Landlord delivers the Subsequent Building 3 Premises to Tenant, in each case with the applicable
Landlord’s Work Substantially TI Completed.



     If Landlord fails to deliver the 1st floor lobby and the Initial Building 3
Premises to Tenant by December 1, 2013 (as extended by delays caused by Force Majeure and Tenant
Delay (as defined in the Building 3 Work Letter), the “Building 3 Outside Date”), Tenant shall be
entitled, starting on the Initial Building 3 Commencement Date, to occupy the Initial Building 3
Premises, without the obligation to pay Base Rent, 2 days for each day following the Building 3
Outside Date until such time as the 1st floor lobby is substantially completed and the
Initial Building 3 Premises was delivered to Tenant. If Landlord fails to substantially complete
the 1st floor lobby and deliver the Initial Building 3 Premises to Tenant by April 1,
2014 (as extended by delays caused by Force Majeure and Tenant Delay (as defined in the Building 3
Work Letter)), this Lease with respect to Building 3 only may be terminated by Tenant by written
notice to Landlord, and if so terminated by Tenant, neither Landlord nor Tenant shall have any
further rights, duties or obligations under this Lease with respect to the Building 3, except with
respect to provisions which expressly survive termination of this Lease. If Tenant does not elect
to terminate this Lease with respect to Building 3 within 6 business days of the lapse of April 1,
2014 (as extended by delays caused by Tenant Delay (as defined in the Building 3 Work Letter) and
Force Majeure), such right to terminate this Lease respect to the Building 3 shall be waived and
this Lease shall remain in full force and effect. As used in this paragraph, in no event may any
“delays caused by Force Majeure” extend the date of the applicable delivery by more than 90 days in
the aggregate except in the case of any matter covered by the provisions of Sections 18 and
19 hereof.



     Notwithstanding anything to the contrary contained herein, Tenant acknowledges that Landlord
reserves the right to reasonably modify, among other things, the site plan, building size,
configuration and location within the Project of Building 3; provided, however, that such
modifications do not materially and adversely impact Tenant’s use of Building 3 and associated
parking at the Project, materially reduce or increase the rentable square footage of Building 3,
materially and adversely affect the configuration of Building 3, and/or materially increase
Tenant’s obligations under this Lease. Landlord shall request Tenant’s prior approval with respect
to any changes to the location of Building 3, which approval shall not be unreasonably withheld,
conditioned or delayed.



     (c) Term; Acknowledgment of Commencement Date. The “Term” of this Lease shall be the Base
Term, as defined above on the first page of this Lease (as may be extended pursuant to Section
39), and any Extension Terms which Tenant may elect pursuant to Section 40 hereof.
Upon request of either Landlord or Tenant, the other party shall execute and deliver a factually
correct written acknowledgment of the Initial Commencement Date, the Initial Building 3
Commencement Date, the Subsequent Building 3 Commencement Date and the expiration date of the Base
Term as and when such may be established in the form of the “Acknowledgement of Commencement Date”
attached to this Lease as Exhibit D; provided, however, that either party’s
failure to execute and deliver such acknowledgment shall not affect the other party’s rights
hereunder.



     (d) Acceptance of Premises. Except as set forth in the Building 1 and 2 Work Letter or the
Building 3 Work Letter, as applicable: (i) Tenant shall accept Building 1 and Building 2 in their
condition as of delivery of Building 1 and Building 2; (ii) Tenant shall accept the Initial
Building 3 Premises in their condition as of the Initial Building 3 Commencement Date; and (iii)
Tenant shall accept the Subsequent Building 3 Premises in their condition as of the Subsequent
Premises 3 Commencement Date; and









 









 








5200 Research Place/Illumina — Page 5



(iv) except as otherwise provided for in this Lease, the Building 1 and 2 Work Letter or Building
3 Work Letter, Landlord shall have no obligation for any defects in the Premises; and (v) Tenant’s
taking possession of the Premises shall be conclusive evidence that Tenant accepts the Premises.
Tenant shall in addition be entitled to receive the benefit of all of Landlord’s construction
warranties and manufacturer’s equipment warranties, if any, relating to the Premises. Any access
to or occupancy of any portion of the Premises by Tenant before the commencement of the Base Term
for such portion of the Premises shall be subject to all of the terms and conditions of this Lease
(other than the payment of Base Rent and, except as otherwise provided for herein, Operating
Expenses).




     Tenant shall have the right, during the Term, at no additional cost to Tenant, to use
Landlord’s Property. Tenant shall accept Landlord’s Property in its “as is” lien free condition as
of such delivery and shall return Landlord’s Property to Landlord upon the expiration or earlier
termination of this Lease in the same condition as received, ordinary wear and tear excepted.
Notwithstanding the foregoing and provided that there is no early termination of the Term of this
Lease, Tenant may elect, by delivery of written notice to Landlord no later than 60 days prior to
the expiration of the Term, to purchase for $1.00 any of Landlord’s Property other than any
furniture, fixtures, equipment and/or laboratory improvements that are affixed or attached in any
way to the Premises. Tenant shall have the right, from time to time during the Term but in no event
more than once in each calendar quarter, to remove from the Premises or replace, at Tenant’s cost,
any of Landlord’s Property that Tenant has the right to purchase at the expiration of the Term;
provided, however, that in the event Tenant elects to dispose of any of the same, Tenant shall
provide written notice to Landlord and Landlord shall have the right to elect to take possession of
the same. If Landlord fails to respond to any such notice within 15 business days, then Tenant
shall provide Landlord with a second written notice stating in bold and all caps 12 point font that
Landlord’s failure to respond within 5 business days after Landlord’s receipt of the second notice
shall be deemed Landlord’s election not to take possession of the same. Tenant shall be required to
repair or restore, at Tenant’s cost, any damage to the Premises or the Project caused by Tenant’s
removal of any of Landlord’s Property which Tenant is permitted hereunder to remove.



     Tenant agrees and acknowledges that neither Landlord nor any agent of Landlord has made any
representation or warranty with respect to the condition of all or any portion of Landlord’s
Property, the Premises or the Project, and/or the suitability of Landlord’s Property, the Premises
or the Project for the conduct of Tenant’s business, and Tenant waives any implied warranty that
Landlord’s Property, the Premises or the Project are suitable for the Permitted Use. This Lease
constitutes the complete
agreement of Landlord and Tenant with respect to the subject matter hereof and supersedes any and
all prior representations, inducements, promises, agreements, understandings and negotiations
which are not contained herein.



     (e) Continuous Access. Subject to any early access provided to Tenant hereunder, from
and after (i) the Initial Commencement Date with respect to Building 1 and Building 2, (ii) the
Initial Building 3 Commencement Date with respect to the Initial Building 3 Premises, and (iii)
the Subsequent Building 3 Commencement Date with respect to the Subsequent Building 3 Premises,
through the expiration of the Term, Tenant shall have access to the Premises 24 hours per day, 7
days per week, except in the case of emergencies, as the result of Legal Requirements, and
otherwise subject to the terms of this Lease.



     3. Rent.



     (a) Base Rent. Tenant shall, on or before January 4, 2011, deliver a payment to Landlord in
the amount of $683,460.32 to be applied against the Base Rent first coming due from Tenant under
this Lease. Commencing on the Initial Commencement Date, Tenant shall pay full Base Rent with
respect to Building 1, Building 2 and the Central Plant Building. Commencing on the Initial
Building 3
Commencement Date with respect to the Initial Building 3 Premises and on the Subsequent Building 3
Commencement Date with respect to the Subsequent Building 3 Premises, Tenant shall pay Base Rent
with respect to Building 3. Except as may be expressly provided for in this Lease, Tenant shall
pay to Landlord in advance, without demand, abatement, deduction or set-off, monthly installments
of Base Rent








 









 





5200 Research Place/Illumina — Page 6



on or before the first day of each calendar month during the Term hereof, in lawful money of the
United States of America, at the office of Landlord for payment of Rent set forth above, or to such
other person or at such other place as Landlord may from time to time designate in writing.
Payments of Base Rent for any fractional calendar month shall be prorated. The obligation of Tenant
to pay Base Rent and other sums to Landlord and the obligations of Landlord under this Lease are
independent obligations. Except as may be expressly provided for in this Lease, Tenant shall have
no right at any time to abate, reduce, or set-off any Rent (as defined in Section 5) due
hereunder.




     (b) Base Rent Abatement. Tenant shall be entitled to an abatement of a portion of the
Base Rent (“Rent Abatement”) due during the Term pursuant to the schedule set forth below:



	 	 	 	 	 
	 	 	Annual
	Base Rent Period During Term	 	Base Rent Abatement
	Month 1 through Month 12

	 	$	13,100,762	 
	Month 13 through Month 24

	 	$	4,899,238	 
	Month 25 through Month 36

	 	$	9,500,000	 
	Month 37 through Month 48

	 	$	9,500,000	 
	Month 49 through Month 60

	 	$	8,250,000	 
	Month 61 through Month 72

	 	$	8,250,000	 
	Month 73 through Month 84

	 	$	8,250,000	 
	Month 85 through Month 96

	 	$	7,250,000	 
	Month 97 through Month 108

	 	$	7,250,000	 
	Month 109 through Month 120

	 	$	7,250,000	 
	Month 121 through Month 132

	 	$	7,250,000	 
	Month 133 through Month 144

	 	$	7,250,000	 






     As used in the above table, Month 1 shall mean the month in which the Initial Commencement
Date occurs. The Rent Abatement provided for in the schedule above shall be amortized and applied
in equal installments over the applicable 12 month period. For example, for months 13 through 24,
$408,269.83 shall be deducted each month from the monthly Base Rent due during such period.
Notwithstanding anything the contrary contained herein, Tenant shall not, however, be entitled to
the applicable Rent Abatement during any period(s) where Tenant is in material Default under this
Lease.



     (c) Additional Rent. In addition to Base Rent, Tenant agrees to pay to Landlord as
additional rent (“Additional Rent”): (i) Tenant’s Share of Operating Expenses, and (ii) any and all
other amounts Tenant is required or agrees to pay under the provisions of this Lease, including,
without limitation, any and all other sums that may become due by reason of any default of Tenant
or failure to comply with the agreements, terms, covenants and conditions of this Lease to be
performed by Tenant, after any applicable notice and cure period.



     4. Base Rent Adjustments. Base Rent shall be increased on every other anniversary of the
Initial Commencement Date (i.e., the first day of the 25th month, 49th month
and 61st month of the Term, etc.) (each an “Adjustment Date”) by multiplying the Base
Rent payable immediately before such Adjustment Date by the Bi-Annual Rent Adjustment Percentage
and adding the resulting amount to the Base Rent payable immediately before such Adjustment Date.
Base Rent, as so adjusted, shall thereafter be due as provided herein. Base Rent adjustments for
any fractional calendar month shall be prorated.



     5. Operating Expense Payments. Landlord shall deliver to Tenant a reasonably detailed line
item written estimate of Operating Expenses for each calendar year during the Term (the “Annual
Estimate”), which may be reasonably revised by Landlord from time to time (but not more than twice)
during such calendar year. During each month of the Term, on the same date that Base Rent is due,
Tenant shall pay Landlord an amount equal to 1/12th of Tenant’s Share of the Annual Estimate.
Payments for any fractional calendar month shall be prorated.











 









 








5200 Research Place/Illumina — Page 7




     The term “Operating Expenses” means all actual, documented costs and expenses of any kind or
description whatsoever incurred or accrued each calendar year by Landlord, consistent with GAAP (as
defined below) except as otherwise provided for herein with respect to capital expenditures,
consistently applied, and fairly allocable to the applicable Lease year, including, without
limitation, costs and expenses relating to the ownership, maintenance, repairs, replacements and/or
operation of the Project and the Buildings, Expansion Buildings (if any), Taxes (as defined in
Section 9), capital repairs and improvements amortized over the lesser of 10 years and the
useful life of such capital items with interest calculated at a rate equal to the prime rate
established from time to time by Wells Fargo Bank (or if Wells Fargo Bank ceases to exist or to
publish such a rate, then the rate published by the largest federally chartered banking institution
in California) plus 1% per annum, and if Landlord has no third party property manager,
administration rent in the amount of 1.0% of Base Rent unless (x) Landlord has assumed the Common
Area Maintenance Obligations (as defined in Section 13) in which case administration rent
shall be increased to 1.5% of Base Rent or (y) if Landlord has assumed the Common Area Maintenance
Obligations and has also assumed substantial maintenance obligations with respect to the Premises
because of a Maintenance Breach (as defined in Section 13) in which case the administration
rent shall be increased to 2% of Base Rent and Operating Expenses payable by Tenant pursuant to
this Lease (or if Landlord has a third party property manager in no event may the cost of such
third property manager exceed the costs Landlord is entitled to charge for administration rent for
the performance of the same obligations if there were no third party property manager); provided,
however, that Operating Expenses shall exclude only:



     (a) the original construction costs of the Project and renovation prior to the date of the
Lease and costs of correcting defects in such original construction or renovation;



     (b) capital expenditures for expansion of the Project;



     (c) interest, principal payments of Mortgage (as defined in Section 27) debts of
Landlord, financing costs and amortization of funds borrowed by Landlord, whether secured or
unsecured;



     (d) depreciation of the Project (except for those capital improvements, the cost of which are
permitted under this Lease to be included in Operating Expenses);



     (e) advertising, legal and space planning expenses and leasing commissions and other costs and
expenses incurred in procuring and leasing space to tenants for the Project, including any leasing
office maintained in the Project, free rent and construction allowances for tenants;



     (f) legal and other expenses incurred in the negotiation or enforcement of leases;



     (g) completing, fixturing, improving, renovating, painting, redecorating or other work, which
Landlord pays for or performs for other tenants within their premises, and costs of correcting
defects in such work;



     (h) costs to be reimbursed by other tenants of the Project or Taxes to be paid directly by
Tenant or other tenants of the Project, whether or not actually paid;



     (i) salaries, wages, benefits and other compensation paid to officers and employees of
Landlord who are not assigned in whole or in part to the operation, management, maintenance or
repair of the Project (with the costs to be prorated if such officers and employees are assigned to
the Project only in part);



     (j) general organizational, administrative and overhead costs relating to maintaining
Landlord’s existence, either as a corporation, partnership, or other entity, including general
corporate, legal and accounting expenses;








 









 





5200 Research Place/Illumina — Page 8




     (k) costs (including attorneys’ fees and costs of settlement, judgments and payments in lieu
thereof) incurred in connection with disputes with tenants, other occupants, or prospective
tenants, and costs and expenses, including legal fees, incurred in connection with negotiations or
disputes with employees, consultants, management agents, leasing agents, purchasers or mortgagees
of any of the Buildings;



     (l) costs incurred by Landlord due to the violation by Landlord, its employees, agents or
contractors or any tenant of the terms and conditions of any lease of space in the Project or any
Legal Requirement (as defined in Section 7);



     (m) penalties, fines or interest incurred as a result of Landlord’s inability or failure to
make
payment of Taxes and/or to file any tax or informational returns when due, or from Landlord’s
failure to make any payment of Taxes required to be made by Landlord hereunder before delinquency;



     (n) overhead and profit increment paid to Landlord or to subsidiaries or affiliates of
Landlord
for goods and/or services in or to the Project to the extent the same exceeds the costs of such
goods and/or services rendered by unaffiliated third parties on a competitive basis;



     (o) costs of Landlord’s charitable or political contributions, or of fine art maintained at
the Project;



     (p) costs in connection with services (including electricity), items or other benefits of a
type
which are not standard for the Project and which are not available to Tenant without specific
charges therefor, but which are provided to another tenant or occupant of the Project, whether or
not such other tenant or occupant is specifically charged therefor by Landlord;



     (q) costs incurred in the sale or refinancing of the Project;



     (r) net income taxes of Landlord or the owner of any interest in the Project, franchise,
capital
stock, gift, estate or inheritance taxes or any federal, state or local documentary taxes imposed
against the Project or any portion thereof or interest therein;



     (s) any costs incurred to remove, study, test, remediate or otherwise related to the
existence
of any Hazardous Materials which migrate or migrated from off-site to the Project or which Tenant
can prove were in existence in the Project prior to the commencement of the Early Access Period and
was of such a nature that a Governmental Authority (as defined in Section 9), if it had
then had knowledge of the presence of such Hazardous Materials, in the state, and under the
conditions that they then existed in the Project, would have then required the removal of such
Hazardous Materials or other remedial or containment action with respect thereto, and costs
incurred with respect to Hazardous Materials, which Hazardous Materials Tenant can prove were
brought onto the Project after the commencement of the Early Access Period by (i) Landlord, its
officers, directors, employees, managers, agents, invitees and contractors (collectively, “Landlord
Parties”), (ii) any other tenant of Landlord at the Project, or (iii) during any period where any
portion of the Project is leased by Landlord to any other tenant, any third party, and is of such a
nature, at that time, that a Governmental Authority, if it had then had knowledge of the presence
of such Hazardous Materials, in the state, and under the conditions, that they then exist in the
Project, would have then required the removal, remediation or other action with respect thereto,
except and only to the extent in any case Tenant and/or the Tenant Parties have exacerbated or
contributed to such Hazardous Materials conditions;



     (t) any expenses otherwise includable within Operating Expenses to the extent actually
reimbursed by persons other than tenants of the Project under leases for space in the Project;



     (u) the costs reimbursed by insurance proceeds received by Landlord;



     (v) any bad debt loss, rent loss, or reserves for bad debts or rent loss;








 









 





5200 Research Place/Illumina — Page 9




     (w) the wages and benefits attributable to personnel above the level of vice president,
asset
manager and/or equivalent positions (and Landlord shall be entitled to pass through as part of the
Operating Expenses the wages and benefits attributable to personnel at or below the level of vice
president, asset manager and/or equivalent positions);



     (x) amount paid as ground rental for the Project by Landlord;



     (y) rentals of equipment ordinarily considered to be of a capital nature (such as elevators
and HVAC systems) except if such equipment is reasonably and customarily leased either temporarily
or permanently in the operation of Class A office and laboratory buildings in the San Diego area;



     (z) costs for services for which Tenant or any other tenant in the Project reimburses
Landlord
or which Landlord provides selectively to one or more tenants (other than Tenant) without
reimbursement;



     (aa) any costs expressly excluded from Operating Expenses elsewhere in this Lease;



     (bb) costs of repairs directly resulting from the gross negligence or willful misconduct of
Landlord or any Landlord Parties (as defined below);



     (cc) any reserves retained by Landlord;



     (dd) costs for late charges, interest or penalties due to the late payment of bills by
Landlord
unless Tenant fails to make any applicable payments to Landlord on the due date;



     (ee) the cost of any training or incentive programs, other than for tenant life safety
information
services;



     (ff) in-house legal fees;



     (gg) in-house accounting expenses, except, however, Operating Expenses shall include all
costs and expenses including employee costs for bookkeeping and accounting functions related to
the Project (but employee costs shall be prorated if such employees are assigned to the Project
only in part);



     (hh) costs associated with material portions of the Common Areas dedicated by Landlord for
the exclusive use of other tenants of the Project, except to the extent Tenant is given its
pro-rata share (rentable square feet in the Premises in relation to rentable square feet in the
Project) of comparable Common Areas;



     (ii) costs of signs at the Project in or on the Buildings exclusively identifying Landlord
as the
owner of the Project or exclusively identifying other tenants;



     (jj) to the extent applicable, electric power costs or other utility costs for which any
tenant
directly contracts with the local public service company;



     (kk) any entertainment, dining or travel expenses for any purpose;



     (ll) the costs of any flowers, gifts, balloons, etc. provided to any prospective tenants,
Tenant,
other tenants, and occupants of the Project;



     (mm) costs reimbursed to Landlord under any warranty carried by Landlord for the Project,
which warranties Landlord shall, as part of Operating Expenses, use commercially reasonable efforts
to enforce;



     (nn) costs of tenant parties unless approved by Tenant;








 









 





5200 Research Place/Illumina — Page 10




     (oo) costs of any “tap fees” or any sewer or water connection fees for the benefit of any
particular tenant (other than Tenant) at the Project;



     (pp) costs of magazine and newspaper subscriptions;



     (qq) costs of insurance deductibles in excess of commercially reasonable deductibles (based
on deductibles maintained by other institutional owners of other Class A office and laboratory
buildings in the University Towne Center area of San Diego);



     (rr) costs arising from any voluntary special assessment on the Building or the Project by
any
transit district authority or any other governmental entity having the authority to impose such
voluntary assessment, unless such costs are approved by Tenant; and



     (ss) the cost of structural repairs and replacements to the foundation, load bearing walls
and
roof structure of the Buildings (exclusive of the roof membrane the cost of which shall be
included in Operating Expenses), except for costs required (i) to comply with Legal Requirements
(other than those Legal Requirements which Landlord was required to comply with as of the date of
this Lease), and/or (ii) required as a result of Tenant’s Alterations or any damage caused by
Tenant or any Tenant Parties.



     Landlord shall credit Operating Expenses for any refund Landlord or Landlord’s property
manager, if any, receives for any costs, goods, services, utilities or expenditures previously
included in Operating Expenses.



     Landlord shall not collect Operating Expenses from Tenant or any other tenants of the Project
in an amount which is in excess of 100% of the Operating Expenses actually paid by Landlord in
connection with the Project, and Landlord shall make no profit from the collection of Operating
Expenses. All Operating Expense costs payable by Tenant to Landlord under this Lease shall be on
an actual cost basis except as otherwise provided for herein. Landlord shall equitably allocate
Operating Expenses if other buildings are constructed in the Project for use by tenants other than
Tenant.



     Within 90 days after the end of each calendar year (or such longer period as may be
reasonably required), Landlord shall furnish to Tenant a statement (an “Annual Statement”) showing
in reasonable detail: (a) the total and Tenant’s Share of actual Operating Expenses for the
previous calendar year, and (b) the total of Tenant’s payments in respect of Operating Expenses
for such year. If Tenant’s Share of actual Operating Expenses for such year exceeds Tenant’s
payments of Operating Expenses for such year, the excess shall be due and payable by Tenant as
Rent within 30 days after delivery of such Annual Statement to Tenant. If Tenant’s payments of
Operating Expenses for such year exceed Tenant’s Share of actual Operating Expenses for such year
Landlord shall pay the excess to Tenant within 30 days after delivery of such Annual Statement,
except that after the expiration, or earlier termination of the Term or if Tenant is delinquent in
its obligation to pay Rent, Landlord shall pay the excess to Tenant after deducting all other
amounts due Landlord.



     The Annual Statement shall be final and binding upon Tenant unless Tenant, within 360 days
after Tenant’s receipt thereof, shall contest any item therein by giving written notice to
Landlord, specifying each item contested and the reason therefor. If, during such 360 day period,
Tenant
reasonably and in good faith questions or contests the accuracy of Landlord’s statement of
Tenant’s Share of Operating Expenses (including, if applicable, Landlord’s allocation of the
Operating Expenses between the buildings at the Project if any other tenants lease space from
Landlord at the Project), Landlord will provide Tenant with access to all of Landlord’s relevant
books and records relating to the operation of the Project (the “Expense Information”). If after
Tenant’s review of such Expense
Information, Landlord and Tenant cannot agree upon the amount of Tenant’s Share of Operating
Expenses, then Tenant shall have the right to have an independent public accounting firm selected
by Tenant from among the 4 largest in the United States or a regionally recognized independent
public accounting firm selected by Tenant and approved by Landlord (which approval shall not be
unreasonably withheld or delayed), working pursuant to a fee arrangement other than a contingent
fee (at Tenant’s sole








 









 





5200 Research Place/Illumina — Page 11



cost and expense), audit and/or review the Expense Information for the year in question (the
“Independent Review”). The results of any such Independent Review shall be binding on Landlord and
Tenant. If the Independent Review shows that the payments actually made by Tenant with respect to
Operating Expenses for the calendar year in question exceeded Tenant’s Share of Operating Expenses
for such calendar year, Landlord shall at Tenant’s option either (i) credit the excess amount to
the next succeeding installments of estimated Operating Expenses or (ii) pay the excess to Tenant
within 30 days after delivery of such statement, except that after the expiration or earlier
termination of this Lease or if Tenant is delinquent in its obligation to pay Rent, Landlord shall
credit or pay, as applicable, the excess to Tenant after deducting all other amounts due Landlord.
If the Independent Review shows that Tenant’s payments with respect to Operating Expenses for such
calendar year were less than Tenant’s Share of Operating Expenses for the calendar year, Tenant
shall pay the deficiency to Landlord within 30 days after delivery of such statement. If the
Independent Review shows that Tenant has overpaid with respect to Operating Expenses by more than
5% then Landlord shall reimburse Tenant for all costs incurred by Tenant for the Independent
Review. Operating Expenses for the calendar years in which Tenant’s obligation to share therein
begins and ends shall be prorated.




     The square footages provided for on page 1 of this Lease with respect to Building 1, Building
2 and the Central Plant Building shall conclusively be deemed to be the rentable square footage of
Building 1, Building 2 and the Central Plant Building, respectively, and the same shall not be
subject to remeasurement during the Term of this Lease.



     Following the approval of the Shell Construction Drawings (as defined in the Building 3 Work
Letter) for Building 3 by Landlord and Tenant, Landlord shall cause the rentable square footage of
Building 3 to be measured by DGA Architects, or another architect or general contractor reasonably
acceptable to Landlord and Tenant, in accordance with the 1996 Standard Method of Measuring Floor
Area in Office Buildings for single tenant buildings as adopted by the Building Owners and Managers
Association (ANSI/BOMA Z65.1-1996). If the rentable square footage of Building 3 measured by such
party deviates from the amounts specified for or attributable to Building 3 in the definitions of
“Premises”, “Rentable Area of Premises” and “Rentable Area of Project” on page 1 of this Lease,
then, promptly following such measurement, this Lease shall be amended so as to (i) reflect the
actual rentable square footage thereof in the definitions of “Premises”, “Rentable Area of
Premises” and “Rentable Area of Project”, and Building 3 shall not thereafter be subject to
remeasurement. Landlord and Tenant shall each have the right to dispute such measurement provided
that the disputing party delivers written notice of such dispute to the other party within 30 days
after the date that Landlord notifies Tenant of the results of the measurement. If the dispute is
not resolved within 30 days after either party’s written notice to the other of such dispute, then
such dispute shall be resolved by a single arbitrator with the qualifications and experience
appropriate to resolve the matter and appointed pursuant to and acting in accordance with the rules
of the American Arbitration Association.



     “Tenant’s Share” shall be the percentage set forth on the first page of this Lease as
Tenant’s Share as reasonably adjusted by Landlord for changes in the physical size of the Premises
or the Project occurring thereafter. If at any time during the Term any portion of the Project is
leased to any third party(ies), Landlord may equitably increase or decrease Tenant’s Share for any
item of expense or cost reimbursable by Tenant that relates to a repair, replacement, or service
that benefits only the Premises or only a portion of the Project that includes the Premises or
that varies with occupancy or use. Base Rent, Tenant’s Share of Operating Expenses and all other
amounts payable by Tenant to Landlord hereunder are collectively referred to herein as “Rent.”



     6. Intentionally Omitted.



     7. Use. The Premises shall be used solely for the Permitted Use set forth on page 1 of this
Lease, and in compliance with all laws, orders, judgments, ordinances, regulations, codes,
directives, permits, licenses, the PID Permit applicable to the Project, covenants and
restrictions now or hereafter applicable to the Premises, and to the use and occupancy thereof,
including, without limitation, the Americans With Disabilities Act, 42 U.S.C. § 12101, et seq.
(together with the regulations promulgated











 









 





5200 Research Place/Illumina — Page 12



pursuant thereto, “ADA”) (collectively, “Legal Requirements” and each, a “Legal Requirement”).
Landlord shall not voluntarily encumber title to the Project after the date hereof with covenants,
conditions or restrictions nor amend any existing covenants, conditions or restrictions encumbering
title nor grant easements or make public dedications which materially and adversely (i) affect
Tenant’s use of the Premises for the Permitted Use, (ii) affect access to the Premises or the
parking facilities, (iii) affect Tenant’s rights under this Lease, (iv) increase Tenant’s
obligations under this Lease, and (v) decrease Tenant’s rights under this Lease. Tenant shall, upon
5 days’ written notice from Landlord, discontinue any use of the Premises which is declared by any
Governmental Authority having jurisdiction to be a violation of a Legal Requirement; provided,
however, that Tenant may continue the use in question if Tenant is contesting the same with the
applicable Governmental Authority and Tenant is permitted under Legal Requirements to continue the
use in question while the matter is being contested. Tenant will not use or permit the Premises to
be used for any purpose or in any manner that would void Tenant’s or Landlord’s insurance. Tenant
shall not permit any part of the Premises to be used as a “place of public accommodation”, as
defined in the ADA or any similar legal requirement. If at any time during the Term any portion of
the Project is leased to any third party(ies), Tenant shall reimburse Landlord promptly upon demand
for any additional premium charged for any such insurance policy by reason of Tenant’s failure to
comply with the provisions of this Section or otherwise caused by Tenant’s use and/or occupancy of
the Premises. Tenant will use the Premises in a careful, safe and proper manner and will not commit
or permit waste, overload the floor or structure of the Premises, subject the Premises to use that
would damage the Premises or obstruct or interfere with the rights of Landlord or other tenants or
occupants of the Project, including conducting or giving notice of any auction, liquidation, or
going out of business sale on the Premises, or using or allowing the Premises to be used for any
unlawful purpose. Tenant shall cause any equipment or machinery to be installed in the Premises so
as to reasonably prevent sounds or vibrations from the Premises from extending into Common Areas,
or other space in the Project. Tenant shall not place any machinery or equipment which exceeds the
structural capacity of the applicable floor within the Premises. Tenant shall not, without the
prior written consent of Landlord which shall not be unreasonably withheld, use the Premises in any
manner which will require ventilation, air exchange, heating, gas, steam, electricity or water
beyond the existing capacity of the Project as proportionately allocated to the Premises based upon
Tenant’s Share as usually furnished for the Permitted Use.




     Tenant shall, at its sole expense, make any alterations or modifications to the interior or
the exterior of the Premises or the Project that are required by Legal Requirements (including,
without limitation, compliance of the Premises with the ADA) related to Tenant’s particular use or
occupancy of the Premises; provided, however, that if as a matter of law Tenant is entitled to not
implement or delay implementation of an applicable Legal Requirement Tenant may not implement or
delay such implementation for as long as legally permitted. Except as provided for in the
preceding sentence, Landlord shall, as an Operating Expense (to the extent such Legal Requirement
is generally applicable to similar buildings in the area in which the Project is located) or at
Tenant’s expenses (to the extent such Legal Requirement is applicable solely by reason of Tenant’s
particular use of the Premises or Tenant’s Alterations) make any alterations or modifications to
the Project that are required by Legal Requirements. Notwithstanding any other provision herein to
the contrary, Tenant shall be responsible for any and all demands, claims, liabilities, losses,
costs, expenses, actions, causes of action, damages or judgments, and all reasonable expenses
incurred in investigating or resisting the same (including, without limitation, reasonable
attorneys’ fees, charges and disbursements and costs of suit) (collectively, “Claims”) arising out
of or in connection with the failure of the Premises to comply with Legal Requirements (excepting
Landlord’s obligations with respect to the Premises as expressly set forth herein), and Tenant
shall indemnify, defend, hold and save Landlord harmless from and against any and all Claims
arising out of or in connection with any failure of the Premises to comply with any Legal
Requirement (excepting Landlord’s obligations with respect to the Premises as expressly set forth
herein).



     8. Holding Over. If Tenant remains in possession of the Premises after the expiration or
earlier termination of the Term without the express written consent of Landlord, (A) Tenant shall
become a tenant at sufferance upon the terms of this Lease except that (i) during the first 90
days of such holding over, the monthly rental shall be equal to 115% of Rent in effect during the
last 30 days of the Term, and (ii) thereafter, the monthly rental shall be equal to 150% of Rent
in effect during the last 30 days of the








 









 





5200 Research Place/Illumina — Page 13



Term, and (B) Tenant shall be responsible for all actual documented damages suffered by Landlord
resulting from or occasioned by Tenant’s holding over in excess of 90 days and, in addition to
such actual documented damages, Landlord shall also be entitled to consequential damages. Landlord
shall, in response to written inquiries from Tenant, notify Tenant at the time of each such
inquiry whether the potential then exists for consequential damages. No holding over by Tenant,
whether with or without consent of Landlord, shall operate to extend this Lease except as
otherwise expressly provided, and this Section 8 shall not be construed as consent for
Tenant to retain possession of the Premises. Acceptance by Landlord of Rent after the expiration
of the Term or earlier termination of this Lease shall not result in a renewal or reinstatement of
this Lease.




     9. Taxes. Landlord shall pay, as part of Operating Expenses, all taxes, levies, fees,
assessments and governmental charges of any kind, existing as of the Initial Commencement Date or
thereafter enacted (collectively referred to as “Taxes”), imposed by any federal, state, regional,
municipal, local or other governmental authority or agency, including, without limitation,
quasi-public agencies (collectively, “Governmental Authority”) during the Term, including, without
limitation, all Taxes: (i) imposed on or measured by or based, in whole or in part, on rent payable
to (or gross receipts received by) Landlord under this Lease and/or from the rental by Landlord of
the Project or any portion thereof, or (ii) based on the square footage, assessed value or other
measure or evaluation of any kind of the Premises or the Project, or (iii) assessed or imposed by
or on the operation or maintenance of any portion of the Premises or the Project, including
parking, or (iv) assessed or imposed by, or at the direction of, or resulting from Legal
Requirements, or interpretations thereof, promulgated by any Governmental Authority, or (v) imposed
as a license or other fee, charge, tax, or assessment on Landlord’s business or occupation of
leasing space in the Project. Landlord may (but shall, upon Tenant’s written request and at
Tenant’s cost,) contest by appropriate legal proceedings the amount, validity, or application of
any Taxes or liens securing Taxes. Taxes shall not include any net income taxes or profit taxes or
franchise taxes imposed on Landlord except to the extent such net income taxes or profit taxes or
franchise taxes are in substitution for any Taxes payable hereunder. Nothing herein contained shall
be construed to include as Taxes: (A) any inheritance, estate, succession, transfer, gift or
franchise taxes that is or may be imposed upon Landlord, or (B) any transfer tax or recording
charge payable to the San Diego County recorder to effectuate a transfer, financing or refinancing
of the Project (or any portion thereof), or any transfer of any partial interest of Landlord
therein. Any assessments that are permitted to be paid in installments over a period of time
(without the imposition of interest, penalties or other charge) shall be paid by Landlord in the
maximum number of permitted installments. If any such Tax is levied or assessed directly against
Tenant, then Tenant shall be responsible for and shall pay the same at such times and in such
manner as the taxing authority shall require. Tenant shall pay, prior to delinquency, any and all
Taxes levied or assessed against any personal property or trade fixtures placed by Tenant in the
Premises, whether levied or assessed against Landlord or Tenant. If any Taxes on Tenant’s personal
property or trade fixtures are levied against Landlord or Landlord’s property, or if the assessed
valuation of the Project is increased by a value attributable to improvements in or alterations to
the Premises, whether owned by Landlord or Tenant and whether or not affixed to the real property
so as to become a part thereof, higher than the base valuation on which Landlord from time-to-time
allocates Taxes to all tenants in the Project, Landlord shall have the right, but not the
obligation, to pay such Taxes. Landlord’s reasonable
determination of any excess assessed valuation shall be binding and conclusive, absent manifest
error and shall be included as part of the information for the Independent Review. The amount of
any such payment by Landlord shall constitute Additional Rent due from Tenant to Landlord
immediately upon demand along with supporting information.



     Notwithstanding anything to the contrary contained in this Lease, if, during the first 60
months after the Initial Commencement Date, any sale, transfer, refinancing or other changes in
ownership of the Project is consummated, and solely as a result thereof, and to the extent that
solely in connection therewith, the Project is reassessed (the “Reassessment”) for real estate tax
purposes by the appropriate Governmental Authority pursuant to the terms of Proposition 13, Tenant
shall not be obligated to pay the Tax Increase in connection therewith. The term “Tax Increase”
shall mean that portion of the Taxes, as calculated immediately following the Reassessment, which
is attributable solely to the Reassessment. Accordingly, the term Tax Increase shall not include
(and Tenant shall be required to pay








 









 





5200 Research Place/Illumina — Page 14



for) any portion of the Taxes, as calculated immediately following the Reassessment, which (i) is
attributable to the initial assessment of the value of the Project, the base, shell and core of
the Buildings or the tenant improvements located in the Buildings, (ii) is attributable to
assessments which were pending prior to the Reassessment or which would otherwise have occurred
unrelated to the sale, or (iii) is attributable to the annual inflationary increase of real estate
taxes. In addition, nothing contained in this paragraph is intended to excuse Tenant from paying
the full amount of any Taxes (including, without limitation, as a result of reassessments)
resulting from any construction and/or improvements made to the Project by Landlord or Tenant at
any time pursuant to and/or in connection with this Lease.




     10. Parking. Subject to all matters of record, Force Majeure, a Taking (as defined in
Section 19 below), the PID Permit and the exercise by Landlord of its rights hereunder,
Tenant shall have the right to use all of the parking spaces at the Project for the first 36
months after the Initial Commencement Date. Tenant’s right to use all of the parking spaces at the
Project shall be extended for so long as all of Tenant’s Expansion Rights (as defined in
Section 39) continue in full force and effect. All of Tenant’s parking rights under this
Lease shall, during the Base Term, be at no additional cost to Tenant. Notwithstanding anything to
the contrary contained herein, Landlord and Tenant acknowledge and agree that all parking at the
Project (including, without limitation, the number of parking spaces available in the Parking
Structure(s) (as defined below) and in the balance of the Project shall be required at all times
to satisfy all Legal Requirements for the Project.



     If Tenant’s Expansion Rights expire and/or Landlord commences constructing any new buildings
at the Project (“New Construction”), Tenant shall, subject to the provisions of this Section
10, be entitled to the following parking rights at the Project: (i) 4 parking spaces per 1,000
rentable square feet located in Building 1 and Building 3, (ii) 3 parking spaces per 1,000
rentable square feet located in Building 2, (iii) if Tenant has elected its Expansion Right with
respect to Building 4 (as defined in Section 39(a)), 1 parking space per 1,000 rentable
square feet located in Building 4, (iv) if Tenant has elected its Expansion Right with respect to
Building 5 (as defined in Section 39(a)), 4 parking spaces per 1,000 rentable square feet
located in Building 5 if the same is an office building and 3 parking spaces per 1,000 rentable
square feet located in Building 5 if the same is a laboratory building, and (v) if Tenant has
elected its Expansion Right with respect to Building 6 (as defined in Section 39(a)), 4
parking spaces per 1,000 rentable square feet located in Building 6 if the same is an office
building and 3 parking spaces per 1,000 rentable square feet located in Building 6 if the same is
a laboratory building. Such parking spaces shall be located in those areas designated for
non-reserved parking, subject in each case to Landlord’s commercially reasonable rules and
regulations. If Landlord commences New Construction, Tenant may elect to mark as reserved or
separate and secure its parking from the balance of the Project, in which case, Landlord shall
reasonably cooperate with Tenant to effectuate, if possible and at Tenant’s sole cost and expense,
such a separation of Tenant’s parking in a manner reasonably acceptable to Landlord and Tenant.
Landlord shall not be responsible for enforcing Tenant’s parking rights against any third parties,
including other tenants of the Project.



     11. Utilities, Services. During any period of the Term that Landlord is responsible for the
day-to-day maintenance of the Project, Landlord shall provide, subject to the terms of this
Section 11, water, electricity, heat, light, power, HVAC, sewer, and other utilities
(including gas and fire sprinklers to the extent the Project is plumbed for such services), refuse
and trash collection and janitorial services for the Common Areas (collectively, “Utilities”).
Except as provided for in the preceding sentence, Tenant shall be responsible for the provision of
Utilities to the Project. Landlord shall pay, as Operating Expenses or subject to Tenant’s
reimbursement obligation or Tenant’s direct payment obligation to the Utility provider as provided
for below, for all Utilities used on the Premises, all maintenance charges for Utilities, and any
storm sewer charges or other similar charges for Utilities imposed by any Governmental Authority or
Utility provider, and any taxes, penalties, surcharges or similar charges thereon. Landlord may
cause, at Tenant’s expense, any Utilities to be separately metered or charged directly to Tenant by
the provider. Tenant shall pay directly to the Utility provider, prior to delinquency, any
separately metered Utilities and services which may be furnished to Tenant or the Premises during
the Term. Tenant shall pay, as part of Operating Expenses, its share of all charges for jointly
metered Utilities based upon consumption, as reasonably determined by Landlord. No interruption or
failure of Utilities, from any








 









 





5200 Research Place/Illumina — Page 15



cause whatsoever other than Landlord’s willful misconduct, shall result in eviction or
constructive eviction of Tenant, termination of this Lease or, except as provided in the next
paragraph, the abatement of Rent. Tenant shall be responsible for obtaining and paying for its own
janitorial services for the Premises which in no event shall be less than 5 days per week and with
specifications comparable to other Class A office projects in the University Towne Center area of
San Diego.




     Notwithstanding anything in this Lease to the contrary, if Tenant is prevented from using, and
does not use, the Premises or any portion thereof, as a result of the failure by Landlord to
provide access to the Premises, HVAC service, water, sewer and electricity as required by this
Lease and such failure is due to the negligent acts or omissions of Landlord and not due in any
part to any act or omission on the part of Tenant or any Tenant Party or any matter beyond
Landlord’s reasonable control (any such stoppage to be known as an “Abatement Event”), then Tenant
shall give Landlord written notice of such Abatement Event, and if such Abatement Event continues
for 3 consecutive business days (including Saturday) after Landlord’s receipt of any such notice,
or occurs for 10 non-consecutive business days in a 12 month period (provided Landlord is sent a
notice (in either of such events, the “Eligibility Period”), then the Base Rent and Tenant’s Share
of Operating Expenses shall be abated or reduced, as the case may be, after the expiration of the
Eligibility Period for such time that Tenant continues to be so prevented from using, and does not
use, the Premises, or a portion thereof, in the proportion that the rentable area of the portion of
the Premises that Tenant is prevented from using, and does not use (“Unusable Area”), bears to the
total rentable area of the Premises; provided, however, regardless who is managing the Project, if
Tenant is prevented from using, and does not use, the Unusable Area for a period of time in excess
of the Eligibility Period and the remaining portion of the Premises is not sufficient to allow
Tenant to conduct its business therein, and if Tenant does not conduct its business from such
remaining portion, then for such time after the expiration of the Eligibility Period during which
Tenant is so prevented from conducting its business and is not conducting its business in any
portion of the Premises, the Base Rent and Tenant’s Share of Operating Expenses for the entire
Premises shall be abated for such time as Tenant continues to be so prevented from using, and does
not use, the Premises. Notwithstanding anything to the contrary contained herein, Tenant shall not
be entitled to any abatement of Rent provided for in this paragraph above and beyond the amount of
rent loss insurance proceeds paid to Landlord for the Abatement Event in question. If, however,
Tenant reoccupies any portion of the Premises during such period, the Rent allocable to such
reoccupied portion, based on the proportion that the rentable area of such reoccupied portion of
the Premises bears to the total rentable area of the Premises, shall be payable by Tenant from the
date Tenant reoccupies such portion of the Premises. If Tenant’s right to abatement for a
particular portion of the Premises occurs during a free rent period during the Term for that
particular portion of the Premises, Tenant’s free rent period shall be extended for the number of
days that the abatement period overlapped the free rent period. Such right to abate Base Rent and
Tenant’s Share of Operating Expenses shall be Tenant’s sole and exclusive remedy at law or in
equity for an Abatement Event and Landlord shall not otherwise be liable for any loss or damage
suffered or sustained by Tenant resulting from any failure or cessation of services; provided,
however, nothing in this paragraph, shall impair Tenant’s rights under Section 31 below. To
the extent Tenant is entitled to abatement under this paragraph because of an event covered by
Sections 18 or 19 of this Lease, then those provisions of this Lease shall apply
and not the provisions of this paragraph. For the avoidance of any doubt, the Rent Abatement being
provided for under this Lease shall not be considered a free rent period.



     During any period of the Term that Landlord is responsible for the day-to-day maintenance of
the Project, Landlord’s sole obligation for either providing emergency generators or providing
emergency back-up power to the Project shall be: (i) to provide emergency generators with not less
than the capacity of the emergency generators located in the Central Plant Building as of the
Initial Commencement Date, and (ii) to contract with a third party to maintain the emergency
generators as per the manufacturer’s standard maintenance guidelines. Landlord shall have no
obligation to provide Tenant with any other operational emergency generators or back-up power or to
supervise, oversee or confirm that the third party maintaining the emergency generators is
maintaining the generators as per the manufacturer’s standard guidelines or otherwise. During any
period of replacement, repair or maintenance of the emergency generators when the emergency
generators are not operational, including any delays thereto








 









 





5200 Research Place/Illumina — Page 16



due to the inability to obtain parts or replacement equipment, Landlord shall have no obligation
to provide Tenant with an alternative back-up generator or generators or alternative sources of
back-up power. Tenant expressly acknowledges and agrees that Landlord does not guaranty that such
emergency generators will be operational at all times or that emergency power will be available to
the Premises when needed. During any period of the Term that Landlord is responsible for the
day-to-day maintenance of the Project, Landlord shall, upon request from Tenant from time to time,
make the maintenance contract for the emergency generator available for Tenant’s review, schedule
meetings with Tenant and the applicable contractors maintaining the emergency generators to
respond to any questions or concerns that Tenant may have regarding the maintenance and operation
of the emergency generators.




     12. Alterations and Tenant’s Property. Any alterations, additions, or improvements made
to the Premises by or on behalf of Tenant excluding installation, removal or realignment of
furniture systems (other than removal of furniture systems owned or paid for by Landlord) not
involving any modifications to the structure or connections (other than by ordinary plugs or jacks)
to Building Systems (as defined in Section 13) (“Alterations”) shall be subject to
Landlord’s prior written consent, which may be given or withheld in Landlord’s sole discretion if
any such Alteration affects the structure or Building Systems and shall not be otherwise
unreasonably withheld. Notwithstanding the foregoing, Tenant may construct Alterations in the
Premises (but not in the Central Plant Building except for required repairs and replacements) that
(i) Tenant reasonably determines to be beneficial to Tenant’s operations, (ii) do not involve
modifications to the structure of the Buildings or major Building Systems (as defined in
Section 13), (iii) will not materially reduce the quality or the value of the leasehold
improvements to the applicable portion of the Premises (i.e., removing laboratory improvements),
(iv) do not affect the exterior appearance of any Building, (v) do not create a foreseeable risk of
violating any Legal Requirements or increasing insurance premiums, and (vi) do not involve a use of
the Premises that is inconsistent with the current use of the Premises, without Landlord’s prior
approval if the cost of any such Alteration (excluding carpeting and painting) does not exceed
$100,000 and the aggregate cost of all such Alterations (excluding carpeting and painting) in any
12 month period does not exceed $300,000 (a “Notice-Only Alteration”), provided Tenant notifies
Landlord in writing of such intended Notice-Only Alteration, and such notice shall be accompanied
by applicable plans, specifications, work contracts and such other information concerning the
nature and cost of the Notice-Only Alteration as may be reasonably requested by Landlord, which
notice and accompanying materials shall be delivered to Landlord not less than 15 days in advance
of any proposed construction. If Landlord approves any Alterations, Landlord may impose such
conditions on Tenant in connection with the commencement, performance and completion of such
Alterations as Landlord may deem appropriate in Landlord’s reasonable discretion. Any request for
approval shall be in writing, delivered not less than 15 days in advance of any proposed
construction, and accompanied by applicable plans, specifications, bid proposals, work contracts
and such other information concerning the nature and cost of the Alterations as may be reasonably
requested by Landlord, including the identities and mailing addresses of all persons performing
work or supplying materials. Landlord shall respond to Tenant’s written request for consent to any
Alterations within 15 days after Landlord’s receipt of such request along with all documentation
required to be delivered hereunder. If Landlord fails to respond within such 15 day period, then
Tenant shall provide Landlord with a second written notice stating in bold and all caps 12 point
font that Landlord’s failure to respond to Tenant’s Alteration request within 5 business days after
Landlord’s receipt of the second notice shall be deemed approval by Landlord, and if Landlord does
not respond within such 5 business day period, then Landlord shall be deemed to have approved such
Alteration request. Landlord’s right to review plans and specifications and to monitor construction
shall be solely for its own benefit, and Landlord shall have no duty to ensure that such plans and
specifications or construction comply with applicable Legal Requirements. Tenant shall cause, at
its sole cost and expense, all Alterations to comply with insurance requirements and with Legal
Requirements and shall implement at its sole cost and expense any alteration or modification
required by Legal Requirements as a result of any Alterations. Tenant shall pay to Landlord, as
Additional Rent, on demand an amount equal to the greater of (x) 1.5% of all charges incurred by
Tenant or its contractors or agents in connection with any Alteration to cover Landlord’s overhead
and expenses for plan review, coordination, scheduling and supervision and (y) all of Landlord’s
reasonable, actual out-of-pocket costs in connection with such Alteration. Before Tenant begins any
Alteration, Landlord may post on and about the Premises notices of non-responsibility pursuant to








 









 





5200 Research Place/Illumina — Page 17



applicable law. Tenant shall reimburse Landlord for, and indemnify and hold Landlord harmless
from, any expense incurred by Landlord by reason of faulty work done by Tenant or its contractors,
delays caused by such work, or inadequate cleanup.




     Other than being required by Landlord to provide a completion bond, Tenant shall make
arrangements reasonably satisfactory to Landlord to assure payment for the completion of all
Alterations work free and clear of liens, and shall provide (and cause each contractor or
subcontractor to provide) certificates of insurance for workers’ compensation and other coverage
in amounts and from an insurance company satisfactory to Landlord protecting Landlord against
liability for personal injury or property damage during construction. Upon completion of any
Alterations, Tenant shall deliver to Landlord: (i) sworn statements setting forth the names of all
contractors and subcontractors who did the work and final lien waivers from all such contractors
and subcontractors; and (ii) “as built” plans for any such Alteration (if any drawings were
required in connection with such Alteration).



     Except for Removable Installations (as hereinafter defined), all Installations (as hereinafter
defined) shall be and shall remain the property of Landlord during the Term and following the
expiration or earlier termination of the Term, shall not be removed by Tenant at any time during
the Term, and shall remain upon and be surrendered with the Premises as a part thereof.
Notwithstanding the foregoing, Landlord may, at the time its approval of any such Installation is
requested, or at the time it receives notice of a Notice Only Alteration, notify Tenant that
Landlord requires that Tenant remove such Installation upon the expiration or earlier termination
of the Term, in which event Tenant shall remove such Installation in accordance with the
immediately succeeding sentence; provided, however, that any Installation which is a like kind
replacement of an Installation which was part of the initial improvements to the Premises shall not
be required to be removed by Tenant. Upon the expiration or earlier termination of the Term, Tenant
shall remove (i) any Installations for which Landlord has given Tenant notice of removal in
accordance with the immediately preceding sentence, and (ii) all of Tenant’s Property (as
hereinafter defined), and Tenant shall restore and repair any damage caused by or occasioned as a
result of such removal, including, without limitation, capping off all such connections behind the
walls of the Premises and repairing any holes. During any restoration period beyond the expiration
or earlier termination of the Term, Tenant shall pay Rent to Landlord as provided herein as if said
space were otherwise occupied by Tenant. Notwithstanding anything to the contrary contained herein,
Tenant shall not be required to and shall not remove any tenant improvements located in the
Premises as of the date the same are delivered to Tenant and/or any initial tenant improvements
constructed pursuant to the Building 1 and 2 Work Letter, the Building 3 Work Letter and/or any
Expansion Building Work Letter (as defined in Section 39(a). Landlord and Tenant agree that
nothing in this Lease shall prohibit Tenant from removing/replacing any of Tenant’s Property at any
time throughout the Term provided that Tenant repairs any damage resulting therefrom.



     For purposes of this Lease, (x) “Removable Installations” means any items listed on Exhibit F
attached hereto and any items agreed by Landlord in writing to be included on Exhibit F in the
future, (y) “Tenant’s Property” means Removable Installations and, other than Installations, any
Building 3 FF&E (as defined in the Building 3 Work Letter), personal property or equipment of
Tenant that may be removed without material damage to the Premises, and (z) “Installations” means
all property of any kind paid for by Landlord and/or as part of TI Costs (as defined in the
Building 1 and 2 Work Letter), the TI Fund (as defined in the Building 3 Work Letter), all
Alterations, all fixtures, and all partitions, hardware, built-in machinery, built-in casework and
cabinets and other similar additions, equipment, property and improvements built into the Premises
so as to become an integral part of the Premises, including, without limitation, fume hoods which
penetrate the roof or plenum area, built-in cold rooms, built-in warm rooms, walk-in cold rooms,
walk-in warm rooms, deionized water systems, glass washing equipment, autoclaves, chillers,
built-in plumbing, electrical and mechanical equipment and systems, and any power generator and
transfer switch. Nothing contained in the preceding sentence is intended to preclude Tenant from
removing from the first floor of Building 2 any so called freestanding walk-in cold rooms or
walk-in warm rooms not paid for in any part by Landlord.








 









 





5200 Research Place/Illumina — Page 18




     13. Landlord’s Repairs. Landlord shall, as an Operating Expense (except as expressly
provided for in Section 5), in a manner consistent with other Class A office and laboratory
buildings in the University Towne Center area of San Diego, repair, replace and maintain, in good
condition and working order, all structural elements of the Project (including without limitation,
the roofs, foundations, and interior and exterior load bearing walls of the Buildings and Parking
Structure), all exterior elements of the Project (including, without limitation, the exterior walls
and windows of the Buildings and the Parking Structure), all parking areas and other Common Areas
of the Project, all HVAC, plumbing, fire sprinklers, elevators and other building systems serving
the Premises and/or any other portions of the Project (collectively, “Building Systems”), and,
subject to the last paragraph of Section 11, the emergency generators serving the Project,
all uninsured losses and damages caused by Tenant, or by any of Tenant’s agents, servants,
employees, invitees and contractors (collectively, “Tenant Parties”) excluded. Losses and damages
caused by Tenant or any Tenant Party shall be repaired by Landlord and, to the extent not covered
by insurance required to be maintained by Landlord or Tenant hereunder, at Tenant’s sole cost and
expense. Landlord reserves the right to stop Building Systems services when necessary (i) by reason
of accident or emergency, or (ii) for planned repairs, alterations or improvements, which are, in
the judgment of Landlord, desirable or necessary to be made, until said repairs, alterations or
improvements shall have been completed. Landlord shall have no responsibility or liability for
failure to supply Building Systems services during any such period of interruption;
provided, however, that Landlord shall, except in case of emergency, give Tenant 96
hours advance notice of any planned stoppage of Building Systems services for routine maintenance,
repairs, alterations or improvements. Tenant shall promptly give Landlord written notice of any
repair required by Landlord pursuant to this Section, after which Landlord shall effect such repair
within a reasonable period of time. Landlord shall not be liable for any failure to make any
repairs or to perform any maintenance unless such failure shall persist for an unreasonable time
after Tenant’s written notice of the need for such repairs or maintenance along with an explanation
of the effects of any delays (whether the time is reasonable or unreasonable being, among other
things, in part a function of the effects of Landlord’s failure to timely make the repairs or
perform the maintenance, such as imminent injury or harm to persons or material damage to property,
and in part a function of the amount of time reasonably necessary to engage a service provider to
make the repairs or perform the maintenance). Tenant waives its rights under any state or local law
to terminate this Lease or, except as expressly provided for in this Lease, to make such repairs at
Landlord’s expense and agrees that the parties’ respective rights with respect to such matters
shall be solely as set forth herein. Repairs required as the result of fire, earthquake, flood,
vandalism, war, or similar cause of damage or destruction shall be controlled by Section
18.



     Notwithstanding anything to the contrary contained in this Lease, effective as of the
commencement of the Early Access Period, Tenant shall undertake, at Tenant’s sole cost and expense
(except that during the Early Access Period Landlord shall reimburse Tenant for all maintenance
expenses approved in advance in writing by Landlord), all of Landlord’s maintenance obligations
with respect to the Project including, without limitation, maintaining the Buildings, Building
Systems serving the Buildings and the Common Areas in the condition which they are required to be
maintained by Landlord under this Lease. The maintenance obligation described in the preceding
sentence shall include, without limitation, an obligation on the part of Tenant to repair, replace
and maintain the Project in good condition and working order and in a first class manner
consistent with other Class A office and laboratory projects in the University Towne Center area
of San Diego. Tenant’s maintenance obligation shall also include the procurement and maintenance
of contracts, in form and substance reasonably satisfactory to Landlord, with copies to Landlord
upon Landlord’s written request, for and with contractors acceptable to Landlord specializing and
experienced in the maintenance and repair that Tenant is responsible for under this Lease. During
any period where Tenant is maintaining the Project as provided for in this paragraph, Landlord
shall, notwithstanding anything to the contrary contained in this Lease, have no obligation to
perform any maintenance, repairs or replacements under this Lease with respect to the Project
except as expressly provided for in the Building 1 and 2 Work Letter, the Building 3 Work Letter
and any other applicable work letters and with the respect to the structural repairs and
replacements the cost of which are excluded from Operating Expenses in Section 5(ss) which
shall remain Landlord’s responsibility. Tenant’s maintenance obligations under this paragraph
shall not include the right on the part of Tenant to make any capital repairs or improvements to
the Project without Landlord’s prior written consent and








 









 





5200 Research Place/Illumina — Page 19



except as provided in the immediately following paragraph. Tenant shall not take or omit to take
any action, the taking or omission of which shall cause waste, damage or injury to the Project. If
Tenant fails to maintain any portion of the Project in a manner reasonably acceptable to Landlord
within the requirements of this Lease (a “Maintenance Breach”), Landlord shall have the right to
provide Tenant with written notice thereof and to assume maintenance of all or any portion of the
Project if Tenant does not cure Tenant’s failure within 10 business days after receipt of such
notice (or such longer period as reasonably necessary to cure such failure so long as Tenant
provides Landlord with reasonably satisfactory evidence that Tenant is diligently prosecuting such
cure to completion). Notwithstanding anything to the contrary contained herein, if any portion of
the Project is leased by Landlord to any other tenant(s) or if Landlord commences construction of
any new building(s) other than pursuant to Tenant’s exercise of its Expansion Rights pursuant to
Section 39) at any time during the Term, Landlord may elect, at any time and/or from time
to time, to assume performing all the maintenance obligations provided for in this Lease with
respect the Common Areas, Central Plant Building, landscaping, security, if any, and any other
maintenance obligations (collectively, “Common Area Maintenance Obligations”) and, except in the
case of a Maintenance Breach which relates to the Premises and following which Landlord assumes the
obligations, Tenant shall continue to maintain the Premises and the Building Systems serving only
the Premises (but Tenant shall have no right to maintain the Central Plant Building). During any
periods where Tenant is maintaining the entire Project as provided for in this paragraph and
Landlord’s responsibility is limited to reviewing books and records, the administration rent
payable to Landlord shall be 1% of Base Rent as provided for in Section 5.




     Notwithstanding anything above to the contrary, if during the Term, any portion of the
Project which is Tenant’s responsibility under the immediately preceding paragraph to repair
cannot be repaired other than at a cost which is in excess of 50% of the cost of replacing the
applicable item(s) and the same constitutes a capital expenditure, then such item(s) shall be
replaced by Tenant (subject to Landlord’s prior written approval of the plans and specifications
and the cost of any such replacement). The cost of replacing each such item shall initially be
borne by Landlord but treated as a capital repair and improvement as part of Operating Expenses
payable by Tenant and amortized over the lesser of 10 years and the useful life of such item with
interest calculated at a rate equal to the prime rate established from time to time by Wells Fargo
Bank (or if Wells Fargo Bank ceases to exist or to publish such a rate, then the rate published by
the largest federally chartered banking institution in California) plus 1% per annum.



     14. Tenant’s Repairs. Subject to Section 13 hereof, Tenant, at its expense, shall
repair, replace and maintain in good condition all portions of the Premises, including, without
limitation, entries, doors, ceilings, interior windows, interior walls, and the interior side of
demising walls. Such repair and replacement may include, at Tenant’s sole cost and expense,
capital expenditures and repairs whose benefit may extend beyond the Term. Should Tenant fail to
make any such repair or replacement or fail to maintain the Premises, Landlord shall give Tenant
notice of such failure. If Tenant fails to commence cure of such failure within 10 business days
of Landlord’s notice (or longer if reasonably necessary to commence such cure), and thereafter
diligently prosecute such cure to completion, Landlord may perform such work and shall be
reimbursed by Tenant within 30 days after demand therefor; provided, however, that if such failure
by Tenant creates or could create an emergency (where there is an imminent threat of injury or
harm to persons or material damage to property), Landlord may immediately commence cure of such
failure and shall thereafter be entitled to recover the actual, documented costs of such cure from
Tenant.



     15. Mechanic’s Liens. Tenant shall discharge, by bond or otherwise, any mechanic’s lien filed
against the Premises or against the Project for work claimed to have been done for, or materials
claimed to have been furnished to, Tenant within 10 business days after the filing thereof, at
Tenant’s sole cost and shall otherwise keep the Premises and the Project free from any liens
arising out of work performed, materials furnished or obligations incurred by Tenant; provided,
however, that, subject to Tenant’s obligations under this Lease and any of the work letters
attached hereto (including, without limitation, payment of Operating Expenses), Landlord (and not
Tenant) shall be responsible for liens caused by any work performed by Landlord in the Premises
and/or the Project. Should Tenant fail to discharge any lien described herein, Landlord shall have
the right, but not the obligation, to pay such











 









 





5200 Research Place/Illumina — Page 20



claim or post a bond or otherwise provide security to eliminate the lien as a claim against title
to the Project and the cost thereof shall be immediately due from Tenant as Additional Rent. If
Tenant shall lease or finance the acquisition of office equipment, furnishings, or other personal
property of a removable nature utilized by Tenant in the operation of Tenant’s business, Tenant
warrants that any Uniform Commercial Code Financing Statement filed as a matter of public record by
any lessor or creditor of Tenant will upon its face or by exhibit thereto indicate that such
Financing Statement is applicable only to removable personal property of Tenant located within the
Premises. In no event shall the address of the Project be furnished on the statement without
qualifying language as to applicability of the lien only to removable personal property, located in
an identified suite held by Tenant.




     16. Indemnification. Tenant hereby indemnifies and agrees to defend, save and hold Landlord
harmless from and against any and all Claims for injury or death to persons or damage to property
occurring within or about the Premises, arising directly or indirectly out of use or occupancy of
the Premises or a breach or default by Tenant in the performance of any of its obligations
hereunder, except to the extent caused by the willful misconduct or gross negligence of Landlord
or any of the Landlord Parties. Landlord shall not be liable to Tenant for, and Tenant assumes all
risk of damage to, personal property (including, without limitation, loss of records kept within
the Premises). Tenant further waives any and all Claims for injury to Tenant’s business or loss of
income relating to any such damage or destruction of personal property (including, without
limitation, any loss of records). Landlord shall not be liable for any damages arising from any
act, omission or neglect of any tenant in the Project or of any other third party.



     Subject to the waivers in the penultimate paragraph of Section 17 and except as
otherwise provided for in this Lease, Landlord hereby indemnifies and agrees to defend, save and
hold Tenant harmless from and against any and all Claims for injury or death to persons or damage
to property occurring at the Project to the extent caused by or contributed to by (i) the willful
misconduct or gross negligence of Landlord or (ii) defaults by Landlord under this Lease.



     17. Insurance. Landlord shall maintain all risk property and, if applicable, sprinkler damage
insurance covering the full replacement cost of the Project or such lesser coverage amount as
Landlord may elect provided such coverage amount is not less than the full replacement cost
and rent loss insurance for not less than 12 months. Tenant acknowledges that, notwithstanding the
fact that Landlord may carry such insurance, the coverages remain subject to, among other things,
any deductibles, limitations and exceptions contained in the applicable policies. Landlord shall
further procure and maintain commercial general liability insurance with a single loss limit of not
less than $5,000,000 for bodily injury and property damage with respect to the Project. Landlord
may, but is not obligated to, maintain such other insurance and additional coverages as it may deem
necessary, including, but not limited to, flood, environmental hazard and earthquake, loss or
failure of building equipment, errors and omissions, fidelity bonds for employees employed to
perform services and insurance for any improvements installed by Tenant or which are in addition to
the standard improvements customarily furnished by Landlord without regard to whether or not such
are made a part of the Project. All such insurance shall be included as part of the Operating
Expenses. The Project may be included in a blanket policy (in which case the cost of such insurance
allocable to the Project will be reasonably determined by Landlord based upon the insurer’s cost
calculations). Tenant shall also reimburse Landlord for any actual and documented increased
premiums or additional insurance which Landlord reasonably deems necessary as a result of Tenant’s
use of the Premises.



     Tenant, at its sole cost and expense, shall maintain during the Term: all risk property
insurance with business interruption and extra expense coverage, covering the full replacement
cost of all property and improvements installed or placed in the Premises by Tenant at Tenant’s
expense; workers’ compensation insurance with no less than the minimum limits required by law;
employer’s liability insurance with such limits as required by law; and commercial general
liability insurance, with a minimum limit of not less than $5,000,000 per occurrence for bodily
injury and property damage with respect to the Premises which coverage amount may be satisfied
through a combination of primary and umbrella policies. The commercial general liability insurance
policy and umbrella policies shall name Alexandria








 









 





5200 Research Place/Illumina — Page 21



Real Estate Equities, Inc., Landlord and any property manager as additional insureds; insure on an
occurrence and not a claims-made basis; be issued by insurance companies which have a rating of
not less than policyholder rating of A- and financial category rating of at least Class VII in
“Best’s Insurance Guide”; shall not be cancelable for nonpayment of premium unless 30 days prior
written notice shall have been given to Landlord from the insurer; contain a hostile fire
endorsement and a contractual liability endorsement; and provide primary coverage to Landlord (any
policy issued to Landlord providing duplicate or similar coverage shall be deemed excess over
Tenant’s policies). Certificates of insurance showing the limits of coverage required hereunder
and showing Landlord as an additional insured, along with, upon Landlord’s request, reasonable
evidence of the payment of premiums for the applicable period, shall be delivered to Landlord by
Tenant upon commencement of the Term and upon each renewal of said insurance. Tenant’s policy may
be a “blanket policy” which specifically provides that the amount of insurance with respect to the
Project shall not be prejudiced by other losses covered by the policy. Tenant shall, at least 10
days prior to the expiration of such policies, furnish Landlord with renewal certificates.




     Notwithstanding anything in this Section 17 to the contrary, for so long as Tenant can
provide Landlord with reasonably acceptable evidence that Tenant has a net worth exceeding
$500,000,000 dollars (as determined in accordance with GAAP), Tenant may self-insure for the
insurance required by Tenant to be maintained pursuant to this Section 17. With respect to
Tenant’s self-insurance, Landlord and Tenant agree as follows: (a) that Tenant’s self-insurance
shall be treated as actual insurance and that such self-insurance shall be the primary coverage for
every risk for which Tenant is liable or responsible hereunder; (b) the waiver of subrogation
provisions set forth in this Lease shall apply to Tenant’s self-insurance as though Tenant were
maintaining the insurance required under this Lease, (c) Tenant shall bear the entire cost of the
defense of any claim for which it is responsible under the terms of this Lease including, without
limitation, the defense of Landlord, and (d) Tenant shall use its own funds to pay any claim or
indemnity or replace any property or otherwise provide the funding which would have been available
from insurance proceeds but for Tenant’s election to self-insure. If Tenant elects to self-insure,
Landlord shall be considered to be covered by the same insurance terms, including, but not limited
to, insuring grants, exclusions, conditions and limits, by which it would have been covered had
insurance covering such risk been in effect. Notwithstanding anything to the contrary contained in
this Lease, Tenant hereby releases Landlord from any liability for loss or damage caused by
Landlord and/or any Landlord Party against which Tenant has elected to self-insure but which Tenant
would otherwise be required to insure against under the Lease and in no event shall Landlord be
liable for any loss or damage which Landlord would not otherwise be responsible but for Tenant’s
election to self insure. The right to self-insure shall only apply as long as Illumina, Inc., or
any entity leasing or subleasing the Premises pursuant to a Permitted Assignment, is the tenant
under this Lease and so long as such entity satisfies the net worth requirements provided for in
the first sentence of this paragraph and shall not apply to any other assignee or sublessee.



     In each instance where Tenant’s insurance is to name Landlord as an additional insured, Tenant
shall upon written request of Landlord also designate and furnish certificates so evidencing
Landlord as additional insured to: (i) any lender of Landlord holding a security interest in the
Project or any portion thereof, (ii) the landlord under any lease wherein Landlord is tenant of the
real property on which the Project is located, if the interest of Landlord is or shall become that
of a tenant under a ground or other underlying lease rather than that of a fee owner, and/or (iii)
any management company retained by Landlord to manage the Project.



     The property insurance obtained by Landlord and Tenant shall include a waiver of subrogation
by the insurers and all rights based upon an assignment from its insured, against Landlord or
Tenant, and their respective officers, directors, employees, managers, agents, invitees and
contractors (“Related Parties”), in connection with any loss or damage thereby insured against.
Notwithstanding anything to the contrary contained in this Lease, neither party nor its respective
Related Parties shall be liable to the other for loss or damage caused by any risk insured against
under property insurance required to be maintained hereunder, and each party waives any claims
against the other party, and its respective Related Parties, for such loss or damage. The failure
of a party to insure its property shall not void this








 









 





5200 Research Place/Illumina — Page 22



waiver. Landlord and its respective Related Parties shall not be liable for, and Tenant hereby
waives all claims against such parties for, business interruption and losses occasioned thereby
sustained by Tenant or any person claiming through Tenant resulting from any accident or
occurrence in or upon the Premises or the Project from any cause whatsoever. If the foregoing
waivers shall contravene any law with respect to exculpatory agreements, the liability of Landlord
or Tenant shall be deemed not released but shall be secondary to the other’s insurer.




     Landlord may require insurance policy limits to be raised to conform with requirements of
Landlord’s lender, the recommendations of Landlord’s insurance consultant and/or to bring coverage
limits to levels then being generally required of new tenants, if any, within the Project;
provided, however, that the increased amount of coverage and deductibles are consistent with
coverage amounts and deductibles then being required by other institutional owners of Class A
office and laboratory projects with tenants occupying similar size premises in the San Diego area.



     18. Restoration. If, at any time during the Term, any portion of the Premises is damaged or
destroyed by a fire or other casualty, Landlord shall notify Tenant within 60 days after discovery
of such damage as to the amount of time Landlord reasonably estimates it will take to restore the
Premises (the “Restoration Period”). If the Restoration Period is estimated to exceed 18 months or,
if the damage occurs within the last 60 months of the then applicable expiration date of the Term
of this Lease, 12 months (as applicable, the “Maximum Restoration Period”), Landlord may, in such
notice, elect to terminate this Lease as to only the portion of the Premises that cannot be
restored within the Maximum Restoration Period in which case such termination shall be effective as
of the date that is 75 days after the date of discovery of such damage or destruction provided,
however, that notwithstanding Landlord’s election to restore, Tenant may elect to terminate
this Lease as to only the portion of the Premises that cannot be restored within the Maximum
Restoration Period by written notice to Landlord delivered within 15 business days of receipt of a
notice from Landlord estimating a Restoration Period for such portion of the Premises longer than
the Maximum Restoration Period. Unless either Landlord or Tenant so elects to terminate this Lease,
Landlord shall, subject to receipt of sufficient insurance proceeds (with any deductible to be
treated as a current Operating Expense), promptly restore the damaged portion of the Premises
(excluding the improvements installed by Tenant or by Landlord and paid for by Tenant), subject to
delays arising from the collection of insurance proceeds, from Force Majeure events or as needed to
obtain any license, clearance or other authorization of any kind required to enter into and restore
the Premises issued by any Governmental Authority having jurisdiction over the use, storage,
handling, treatment, generation, release, disposal, removal or remediation of Hazardous Materials
(as defined in Section 30) in, on or about the Premises (collectively referred to herein as
“Hazardous Materials Clearances”); provided, however, that if repair or restoration
of such damaged portion of the Premises is not substantially complete as of the end of the Maximum
Restoration Period or, if longer, the Restoration Period, Landlord may, in its sole and absolute
discretion, elect not to proceed with such repair and restoration, or Tenant may by written notice
to Landlord delivered within 10 business days of the expiration of the Maximum Restoration Period
or, if longer, the Restoration Period, elect to terminate this Lease as to only the portion of the
Premises which has not been restored, in which event Landlord shall be relieved of its obligation
to make such repairs or restoration and this Lease shall as to only the portion of the Premises
which has not been restored terminate as of the date that is 75 days after the later of: (i)
discovery of such damage or destruction, or (ii) the date all required Hazardous Materials
Clearances are obtained, but Landlord shall retain any Rent paid and the right to any Rent payable
by Tenant prior to such election by Landlord or Tenant.



     Tenant, at its expense, shall promptly perform, subject to delays arising from the collection
of insurance proceeds, obtaining permits and other governmental approvals, from Force Majeure (as
defined in Section 34) events or to obtain Hazardous Material Clearances, all repairs or
restoration not required to be done by Landlord. Notwithstanding the foregoing, if any portion of
the Premises are damaged during the last year of the Term and Landlord reasonably estimates that
it will take more than 2 months to repair such damage either Landlord or Tenant may terminate this
Lease as to the damaged portion of the Premises upon written notice to the other; provided,
however, that such notice is delivered within 10 business days after the date that Landlord
provides Tenant with written notice of the estimated








 









 





5200 Research Place/Illumina — Page 23



Restoration Period. Landlord shall also have the right to terminate this Lease with respect to the
damaged portion of the Premises if sufficient insurance proceeds in excess of Landlord’s
Contribution are not available for such restoration. For purposes hereof, the “Landlord’s
Contribution” shall initially mean $2,500,000; provided, however, that such amount shall be
reduced by an amount equal to $12,500 on the first day of each month during the Term plus any
amounts paid by Landlord from time to time as a Landlord’s Contribution. In no event, however,
shall Landlord be required to pay Landlord’s Contribution if Tenant is in material Default under
this Lease. Rent shall be abated from the date all required Hazardous Material Clearances are
obtained until the Premises are repaired and restored, in the proportion which the area of the
Premises, if any, which is not usable by Tenant bears to the total area of the Premises; provided,
however, in the event that the remaining portion of the Premises is not sufficient to allow Tenant
to conduct its business therein, and if Tenant does not conduct its business from such remaining
portion, then for such time as Tenant does not conduct its business therein, the Base Rent and
Tenant’s Share of Operating Expenses for the entire Premises shall be abated but only for so long
as Landlord receives rent loss insurance proceeds for the full amount of the abatement. Such
abatement shall be the sole remedy of Tenant, and except as provided in this Section 18,
Tenant waives any right to terminate the Lease by reason of damage or casualty loss.




     The provisions of this Lease, including this Section 18, constitute an express
agreement between Landlord and Tenant with respect to any and all damage to, or destruction of,
all or any part of the Premises, or any other portion of the Project, and any statute or
regulation which is now or may hereafter be in effect shall have no application to this Lease or
any damage or destruction to all or any part of the Premises or any other portion of the Project,
the parties hereto expressly agreeing that this
Section 18 sets forth their entire
understanding and agreement with respect to such matters.



     19. Condemnation. If the whole or any material part of the Premises or the Project is taken
for any public or quasi-public use under governmental law, ordinance, or regulation, or by right of
eminent domain, or by private purchase in lieu thereof (a “Taking” or “Taken”), and the Taking
would in Landlord’s reasonable judgment, materially interfere with or impair Landlord’s ownership
or operation of the Project, then upon written notice by Landlord this Lease shall terminate and
Rent shall be apportioned as of said date. If the Taking would in the reasonable judgment of
Landlord and Tenant either prevent or materially interfere with Tenant’s use of the remaining
Premises for the Permitted Use (including permanently preventing reasonable access to the remaining
Premises and/or the parking at the Project) (all as resolved, if the parties are unable to agree,
by arbitration by a single arbitrator with the qualifications and experience appropriate to resolve
the matter and appointed pursuant to and acting in accordance with the rules of the American
Arbitration Association), then either party shall have the right to terminate this Lease by written
notice to other party within 30 days after the Taking in which case this Lease shall terminate 30
days thereafter unless either party elects, in writing during such 30 day period following the
other party’s election to terminate, to require arbitration of the matter in which case if this
Lease is being terminated based on the arbitrator’s decision, it shall terminate 30 days after the
arbitrator’s decision. If part of the Premises shall be Taken, and this Lease is not terminated as
provided above, Landlord shall promptly restore the Premises and the Project as nearly as is
commercially reasonable under the circumstances to their condition prior to such partial Taking and
the rentable square footage of the Buildings, the rentable square footage of the Premises, Tenant’s
Share of Operating Expenses and the Rent payable hereunder during the unexpired Term shall be
reduced to such extent as may be fair and reasonable under the circumstances. Upon any such Taking,
Landlord shall be entitled to receive the entire price or award from any such Taking without any
payment to Tenant, and Tenant hereby assigns to Landlord Tenant’s interest, if any, in such award.
Tenant shall have the right, to the extent that same shall not diminish Landlord’s award, to make a
separate claim against the condemning authority (but not Landlord) for such compensation as may be
separately awarded or recoverable by Tenant for moving expenses and damage to Tenant’s trade
fixtures, if a separate award for such items is made to Tenant. Tenant hereby waives any and all
rights it might otherwise have pursuant to any provision of state law to terminate this Lease upon
a partial Taking of the Premises or the Project.



     20. Events of Default. Each of the following events shall be a default (“Default”) by Tenant
under this Lease:











 









 








5200 Research Place/Illumina — Page 24




     (a) Payment Defaults. Tenant shall fail to pay any installment of Rent or any other payment
hereunder when due provided, however, that Landlord will give Tenant notice and an opportunity to
cure any failure to pay Rent within 5 business days of any such notice not more than twice in each
calendar year during the Term.



     (b) Insurance. Any insurance required to be maintained by Tenant pursuant to this Lease shall
be canceled or terminated or shall expire or shall be reduced or materially changed, or Landlord
shall receive a notice of nonrenewal of any such insurance and Tenant shall fail to obtain
replacement insurance at least 5 business days before the expiration of the current coverage.



     (c) Abandonment. Tenant shall abandon the Premises. Tenant shall not be deemed to have
abandoned the Premises if (i) Tenant provides Landlord with reasonable advance notice prior to
vacating and, within 60 days after vacating the Premises, Tenant completes Tenant’s obligations
with respect to the Surrender Plan in compliance with Section 28, (ii) Tenant has made
reasonable arrangements with Landlord for the security of the Premises for the balance of the
Term, and (iii) Tenant continues during the balance of the Term to satisfy all of its obligations
under the Lease as they come due.



     (d) Improper Transfer. Tenant shall assign, sublease or otherwise transfer or attempt to
transfer all or any portion of Tenant’s interest in this Lease or the Premises except as expressly
permitted herein and such assignment, sublease or other transfer is not voided ab initio within 5
business days after Tenant becomes aware that such assignment, sublease or other transfer was not
expressly permitted under this Lease. Tenant’s interest in this Lease shall be attached, executed
upon, or otherwise judicially seized and such action is not released within 90 days of the action.



     (e) Liens. Tenant shall fail to discharge, bond over in a manner reasonably acceptable to
Landlord or otherwise obtain the release of any lien placed upon the Premises in violation of this
Lease within 15 business days after Tenant’s receipt of notice that any such lien is filed against
the Premises.



     (f) Insolvency Events. Tenant shall: (A) make a general assignment for the benefit of
creditors; (B) commence any case, proceeding or other action seeking to have an order for relief
entered on its behalf as a debtor or to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, liquidation, dissolution or composition of it or its
debts or seeking appointment of a receiver, trustee, custodian or other similar official for it or
for all or of any substantial part of its property (collectively a “Proceeding for Relief”); (C)
become the subject of any Proceeding for Relief which is not dismissed within 90 days of its
filing or entry; or (D) be dissolved or otherwise fail to maintain its legal existence (if Tenant
is a corporation, partnership or other entity) and, in the case of a failure to maintain Tenant’s
legal existence, such failure is not cured within 5 business days after Tenant becomes aware of
such failure.



     (g) Estoppel Certificate or Subordination Agreement. Tenant fails to execute any document
required from Tenant under Sections 23 or 27 within 5 business days after a second
notice requesting such document.



     (h) Other Defaults. Tenant shall fail to comply with any provision of this Lease other than
those specifically referred to in this Section 20, and, except as otherwise expressly
provided herein, such failure shall continue for a period of 10 business days after written notice
thereof from Landlord to Tenant.


Any notice given under Section 20(h) hereof shall: (i) specify the alleged default, (ii)
demand that Tenant cure such default, (iii) be in lieu of, and not in addition to, or shall be
deemed to be, any notice required under any provision of applicable law, and (iv) not be deemed a
forfeiture or a termination of this Lease unless Landlord elects otherwise in such notice;
provided that if the nature of Tenant’s default pursuant to Section 20(h) is such
that it cannot be cured by the payment of money and reasonably requires more than 10 business days
to cure, then Tenant shall not be deemed to be in default if Tenant commences such cure within
said 10 business day period and thereafter diligently prosecutes the same to completion;









 









 





5200 Research Place/Illumina — Page 25



provided, however, that, upon request by Landlord from time to time, Tenant shall
provide Landlord with detailed written status reports regarding the status of such cure and the
actions being taken by Tenant.




     21. Landlord’s Remedies.



     (a) Payment By Landlord; Interest. All covenants and agreements to be kept or performed by
Tenant under this Lease shall be performed by Tenant at Tenant’s sole cost and expense and without
any reduction of Rent, If Tenant shall fail to perform any obligation under this Lease and such
failure shall continue in excess of the time allowed under Section 20 above, unless a
specific time period is otherwise stated in this Lease, Landlord may, without waiving or releasing
any obligation of Tenant hereunder, make such payment or perform such act. All sums so paid or
incurred by Landlord, together with interest thereon, from the date such sums were paid or
incurred, at the annual rate equal to 12% per annum or the highest rate permitted by law (the
“Default Rate”), whichever is less, shall be payable to Landlord on demand as Additional Rent.



     (b) Late Payment Rent. Late payment by Tenant to Landlord of Rent and other sums due will
cause Landlord to incur costs not contemplated by this Lease, the exact amount of which will be
extremely difficult and impracticable to ascertain. Such costs include, but are not limited to,
processing and accounting charges and late charges which may be imposed on Landlord under any
Mortgage covering the Premises. Therefore, if any installment of Rent due from Tenant is not
received by Landlord within 5 business days after the date such payment is due, Tenant shall pay to
Landlord an additional sum equal to 4% of the overdue Rent as a late charge. The parties agree that
this late charge represents a fair and reasonable estimate of the costs Landlord will incur by
reason of late payment by Tenant. Notwithstanding the foregoing, Landlord shall waive the
imposition of such late charge for the first late payment of Rent due hereunder in any calendar
year of the Term. In addition to the late charge, Rent not paid when due shall bear interest at the
Default Rate from the 5th business day after the date due until paid.



     (c) Remedies. Upon the occurrence of a Default, Landlord, at its option, without further
notice or demand to Tenant (unless required by Legal Requirements), shall have in addition to all
other rights and remedies provided in this Lease, at law or in equity, the option to pursue any one
or more of the following remedies, each and all of which shall be cumulative and nonexclusive,
without any notice or demand whatsoever.




     (i) Terminate this Lease, or at Landlord’s option if permitted by Legal
Requirements,
Tenant’s right to possession only, in which event Tenant shall immediately surrender the
Premises to Landlord, and if Tenant fails to do so, Landlord may, without prejudice to any
other remedy which it may have for possession or arrearages in rent, enter upon and take
possession of the Premises and expel or remove Tenant and any other person who may be
occupying the Premises or any part thereof, without being liable for prosecution or any
claim or damages therefor;




     (ii) Upon any termination of this Lease, whether pursuant to the foregoing
Section 21(c)(i) or otherwise, Landlord may recover from Tenant the following:




     (A) The worth at the time of award of any unpaid rent which has been earned at
the time of such termination; plus




     (B) The worth at the time of award of the amount by which the unpaid rent
which would have been earned after termination until the time of award exceeds the
amount of such rental loss that Tenant proves could have been reasonably avoided;
plus




     (C) The worth at the time of award of the amount by which the unpaid rent for
the balance of the Term after the time of award exceeds the amount of such rental
loss that Tenant proves could have been reasonably avoided; plus











 









 





5200 Research Place/Illumina — Page 26





     (D) Any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant’s failure to perform its obligations under this Lease
or which in the ordinary course of things would be likely to result therefrom; and




     (E) At Landlord’s election, except as otherwise expressly provided for to the
contrary in this Lease, such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by applicable law.


The term “rent” as used in this Section 21 shall be deemed to be and to mean all sums of
every nature required to be paid by Tenant pursuant to the terms of this Lease, whether to
Landlord or to others. As used in Sections 21(c)(ii)(A) and (B), above, the “worth
at the time of award” shall be computed by allowing interest at the Default Rate. As used in
Section 21(c)(ii)(C) above, the “worth at the time of award” shall be computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the
time of award plus 1%.





     (iii) Landlord may continue this Lease in effect after Tenant’s Default and recover
rent as it becomes due (Landlord and Tenant hereby agreeing that Tenant has the right to
sublet or assign hereunder, subject only to reasonable limitations). Accordingly, if
Landlord does not elect to terminate this Lease following a Default by Tenant, Landlord
may, from time to time, without terminating this Lease, enforce all of its rights and
remedies hereunder, including the right to recover all Rent as it becomes due.




     (iv) Whether or not Landlord elects to terminate this Lease following a Default by
Tenant, Landlord shall have the right to terminate any and all subleases, licenses,
concessions or other consensual arrangements for possession entered into by Tenant and
affecting the Premises or may, in Landlord’s sole discretion, succeed to Tenant’s interest
in such subleases, licenses, concessions or arrangements. Upon Landlord’s election to
succeed to Tenant’s interest in any such subleases, licenses, concessions or arrangements,
Tenant shall, as of the date of notice by Landlord of such election, have no further right
to or interest in the rent or other consideration receivable thereunder.




     (v) Independent of the exercise of any other remedy of Landlord hereunder or under
applicable law, Landlord may conduct an environmental test of the Premises as generally
described in Section 30(d) hereof, at Tenant’s expense.



     (d) Effect of Exercise. Exercise by Landlord of any remedies hereunder or otherwise
available shall not be deemed to be an acceptance of surrender of the Premises and/or a termination
of this Lease by Landlord, it being understood that such surrender and/or termination can be
effected only by the express written agreement of Landlord and Tenant. Any law, usage, or custom to
the contrary notwithstanding, Landlord and Tenant shall each have the right at all times to enforce
the provisions of this Lease in strict accordance with the terms hereof; and the failure of
Landlord or Tenant at any time to enforce its rights under this Lease strictly in accordance with
same shall not be construed as having created a custom in any way or manner contrary to the
specific terms, provisions, and covenants of this Lease or as having modified the same and shall
not be deemed a waiver of Landlord’s or Tenant’s right to enforce one or more of its rights in
connection with any subsequent default. A receipt by Landlord of Rent or other payment with
knowledge of the breach of any covenant hereof shall not be deemed a waiver of such breach, and no
waiver by Landlord of any provision of this Lease shall be deemed to have been made unless
expressed in writing and signed by Landlord. To the greatest extent permitted by law, Tenant waives
all right of redemption in case Tenant shall be dispossessed by a judgment or by warrant of any
court or judge. Any reletting of the Premises or any portion thereof shall be on such terms and
conditions as Landlord in its sole discretion may determine. Landlord shall not be liable for, nor
shall Tenant’s obligations hereunder be diminished because of, Landlord’s failure to relet the
Premises or collect rent due in respect of such reletting or otherwise to mitigate any damages
arising by reason of Tenant’s Default. Landlord shall, however, use reasonable efforts to mitigate
the damages arising by reason of the termination of this Lease as a result of a Default by Tenant;
provided, however, that in no








 









 





5200 Research Place/Illumina — Page 27



event shall mitigation require Landlord to consider, among other things, (i) any tenant which does
not satisfy Landlord’s then underwriting criteria, (ii) subdividing the Premises unless Landlord
elects to do so, (iii) any change in use of the Premises or any alterations which would lessen the
value of the leasehold improvements, (iv) granting any tenant improvement allowances, free rent or
other lease concessions, or (v) or accepting any tenant if Landlord would have the right to reject
such tenant if such tenant were a proposed assignee or sublessee of Tenant. Notwithstanding any
contrary provision of this Lease, neither Landlord nor Tenant shall be liable to the other party
for any consequential damages, loss of business or profit for a breach or default under this Lease;
provided that this sentence shall not limit Landlord’s damages (x) as expressly provided for in
Section 8 and/or (y) as provided for in this Section 21 (but expressly excluding,
however, Section 21(c)(ii)(E)).




     22. Assignment and Subletting.



     (a) General Prohibition. Without Landlord’s prior written consent subject to and on the
conditions described in this Section 22, Tenant shall not, directly or indirectly,
voluntarily or by operation of law, assign this Lease or sublease the Premises or any part thereof
or mortgage, pledge, or hypothecate its leasehold interest or grant any concession or license
within the Premises, and any attempt to do any of the foregoing shall be void and of no effect.



     (b) Permitted Transfers. If Tenant desires to assign, sublease, hypothecate or otherwise
transfer this Lease or sublet the Premises other than pursuant to a Permitted Assignment (as
defined below), then at least 15 business days, but not more than 120 days, before the date Tenant
desires the assignment or sublease to be effective (the “Assignment Date”), Tenant shall give
Landlord a notice (the “Assignment Notice”) containing such information about the proposed assignee
or sublessee, including the proposed use of the Premises and any Hazardous Materials, if any,
proposed to be used, stored handled, treated, generated in or released or disposed of from the
Premises, the Assignment Date, any relationship between Tenant and the proposed assignee or
sublessee, and all material terms and conditions of the proposed assignment or sublease, including
a copy of any proposed assignment or sublease in its current draft (along with revised drafts as
the same are updated and, when ready, the proposed final form), and such other information as
Landlord may deem reasonably necessary or appropriate to its consideration whether to grant its
consent. Landlord may, by giving written notice to Tenant within 15 business days after receipt of
the Assignment Notice along with all required information: (i) grant such consent, or (ii) refuse
such consent, in its reasonable discretion. Among other reasons, it shall be reasonable for
Landlord to withhold its consent in any of these instances: (1) the proposed assignee or subtenant
is a governmental agency; (2) in Landlord’s reasonable judgment, the use of the Premises by the
proposed assignee or subtenant would entail any alterations that would lessen the value of the
leasehold improvements in the Premises, unless Tenant agrees, if requested to do so by Landlord, to
restore the Premises to its condition prior to such alteration before the expiration of the Term
and Tenant provides Landlord with security reasonably satisfactory to Landlord to secure such
obligation in the event Tenant fails to perform such obligation; (3) Landlord has experienced
previous material defaults by or is in litigation with the proposed assignee or subtenant; and (4)
the proposed assignee or subtenant is an entity with whom Landlord is then negotiating to lease
space in the Project (as evidenced by an exchange of proposals). Landlord shall respond to each of
Tenant’s Assignment Notice requests within 15 business days after Landlord’s receipt of such
Assignment Notice request along with all documentation required to be delivered hereunder. If
Landlord fails to respond within such 15 business day period, then Tenant shall provide Landlord
with a second written notice stating in bold and all caps 12 point font that Landlord’s failure to
respond to Tenant’s Assignment Notice request within 5 business days after Landlord’s receipt of
the second notice shall be deemed approval by Landlord, and if Landlord does not respond within
such 5 business day period, then Landlord shall be deemed to have approved such Assignment Notice
request. Tenant shall reimburse Landlord for Landlord’s reasonable out-of-pocket expenses incurred
in connection with its consideration of any Assignment Notice and/or its preparation or review of
any consent documents (not to exceed $2,500 per Assignment Notice request). Notwithstanding the
foregoing, Landlord’s consent to an assignment of this Lease or a subletting of any portion of the
Premises to any entity controlling, controlled by or under common control with Tenant (a “Control
Permitted Assignment”) shall not be required, provided that Landlord shall have the right to











 









 





5200 Research Place/Illumina — Page 28



approve the form of any such sublease or assignment. In addition, Tenant shall have the right to
assign this Lease, upon 30 days prior written notice to Landlord but without obtaining Landlord’s
prior written consent, to a corporation or other entity which is a successor-in-interest to
Tenant, by way of merger, consolidation or corporate reorganization, or by the purchase of all or
substantially all of the assets or the ownership interests of Tenant provided that (i) such merger
or consolidation, or such acquisition or assumption, as the case may be, is for a good business
purpose and not principally for the purpose of transferring the Lease, and (ii) the net worth (as
determined in accordance with generally accepted accounting principles (“GAAP”)) of the assignee
is not less than the Minimum Net Worth Amount (as determined in accordance with GAAP), and (iii)
such assignee shall agree in writing to assume all of the terms, covenants and conditions of this
Lease arising after the effective date of the assignment (a “Corporate Permitted Assignment”).
Control Permitted Assignments and Corporate Permitted Assignments are hereinafter referred to as “Permitted Assignments.” As used in this Lease, (A)
“Minimum Net Worth Amount” shall mean $750,000,000 as of the date of this Lease which amount shall
be subject to annual CPI increases on each annual anniversary of the date of this Lease, and (B)
“CPI” shall mean the Consumer Price Index-All Urban Consumers-San Diego, All Items” compiled by
the U.S. Department of Labor, Bureau of Labor Statistics, (1982-84 = 100) or, if a substantial
change is made to such index or it is ceases to be published, the parties shall select a
reasonably acceptable substitute.




     Notwithstanding anything to the contrary contained herein, a grant by Tenant of a license or
sublease (i) with respect to individual offices within the Premises on an undemised basis to
affiliates of Tenant (“Tenant Affiliate”) or, (ii) with respect to up to 10% of the Premises to
clients or others having a business relationship with Tenant (each, a “Relationship Party”), shall
not constitute an assignment or subletting requiring Landlord consent under this Section
22; provided that any such Tenant Affiliate or Relationship Party that is subject to a sublease
(as opposed to a license) with Tenant shall execute and comply with the terms of Landlord’s form of
consent to sublease subject to those changes proposed by Tenant which are acceptable to Landlord,
in Landlord’s reasonable discretion. Notwithstanding anything to the contrary contained herein,
Tenant shall be fully responsible for the acts of the parties entering the Premises pursuant to the
immediately preceding sentence and Landlord shall have no liability to or in connection with such
parties.



     (c) Additional Conditions. As a condition to any such assignment or subletting, whether or
not Landlord’s consent is required, Landlord may require:




     (i) that any assignee or subtenant agree, in writing at the time of such assignment
or subletting, that if Landlord gives such party notice that Tenant is in default under
this Lease, such party shall thereafter make all payments otherwise due Tenant directly to
Landlord, which payments will be received by Landlord without any liability except to
credit such payment against those due under the Lease, and any such third party shall agree
to attorn to Landlord or its successors and assigns should this Lease be terminated for any
reason; provided, however, in no event shall Landlord or its successors or
assigns be obligated to accept such attornment; and




     (ii) A list of Hazardous Materials, certified by the proposed assignee or sublessee
to
be true and correct, which the proposed assignee or sublessee intends to use, store, handle,
treat, generate in or release or dispose of from the Premises, together with copies of all
documents relating to such use, storage, handling, treatment, generation, release or
disposal of Hazardous Materials by the proposed assignee or subtenant in the Premises or on
the Project, prior to the proposed assignment or subletting, including, without limitation:
permits; approvals; reports and correspondence; storage and management plans; plans relating
to the installation of any storage tanks to be installed in or under the Project (provided,
said installation of tanks shall only be permitted after Landlord has given its written
consent to do so, which consent may be withheld in Landlord’s sole and absolute discretion);
and all closure plans or any other documents required by any and all federal, state and
local Governmental Authorities for any storage tanks installed in, on or under the Project
for the closure of any such tanks. Neither Tenant nor any such proposed assignee or
subtenant is required, however, to provide Landlord with any








 









 





5200 Research Place/Illumina — Page 29





portion(s) of the such documents containing information of a proprietary nature which, in
and of themselves, do not contain a reference to any Hazardous Materials or hazardous
activities.



     (d) No Release of Tenant, Sharing of Excess Rents. Notwithstanding any assignment or
subletting, Tenant shall at all times remain fully and primarily responsible and liable for the
payment of Rent and for compliance with all of Tenant’s other obligations under this Lease. If the
Rent due and payable by a sublessee or assignee (or a combination of the rental payable under such
sublease or assignment plus any bonus or other consideration therefor or incident thereto in any
form) exceeds the sum of the rental payable under this Lease (excluding however, any Rent payable
under this Section) and (i) any changes, alterations and improvements to the Premises in connection
with such sublease or assignment, (ii) any space planning, architectural or design fees or other
expenses incurred in marketing such space or in connection with such sublease or assignment, (iii)
any improvement allowance, rent abatement or other monetary concessions provided by Tenant to the
assignee or sublessee, (iv) any brokerage commissions incurred by Tenant in connection with such
sublease or assignment, (v) any attorneys’ fees incurred by Tenant in connection with such sublease
or assignment, (vi) any lease takeover costs incurred by Tenant in connection with such sublease or
assignment, and (vii) any costs of advertising the space which is the subject of such sublease or
assignment (“Excess Rent”), then Tenant shall be bound and obligated to pay Landlord as Additional
Rent hereunder 50% of such Excess Rent (after first deducting the costs described in clauses (i)
through (vii) above) within 10 days following receipt thereof by Tenant. If Tenant shall sublet the
Premises or any part thereof, Tenant hereby immediately and irrevocably assigns to Landlord, as
security for Tenant’s obligations under this Lease, all rent from any such subletting, and Landlord
as assignee and as attorney-in-fact for Tenant, or a receiver for Tenant appointed on Landlord’s
application, may collect such rent and apply it toward Tenant’s obligations under this Lease;
except that, until the occurrence of a Default, Tenant shall have the right to collect such rent.



     (e) No Waiver. The consent by Landlord to an assignment or subletting shall not relieve
Tenant or any assignees of this Lease or any sublessees of the Premises from obtaining the consent
of Landlord to any further assignment or subletting nor shall it release Tenant or any assignee of
Tenant from full and primary liability under the Lease. The acceptance of Rent hereunder, or the
acceptance of performance of any other term, covenant, or condition thereof, from any other person
or entity shall not be deemed to be a waiver of any of the provisions of this Lease or a consent
to any subletting, assignment or other transfer of the Premises.



     23. Estoppel Certificate. Tenant shall, within 10 business days of written notice from
Landlord, execute, acknowledge and deliver a statement in writing in any form reasonably requested
by a proposed lender or purchaser, (i) certifying that this Lease is unmodified and in full force
and effect (or, if modified, stating the nature of such modification and certifying that this Lease
as so modified is in full force and effect) and the dates to which the rental and other charges are
paid in advance, if any, (ii) acknowledging that there are not any uncured defaults on the part of
Landlord hereunder, or specifying such defaults if any are claimed, and (iii) setting forth such
further information with respect to the status of this Lease or the Premises as may be reasonably
requested thereon. Any such statement may be relied upon by any prospective purchaser or
encumbrancer of all or any portion of the real property of which the Premises are a part. Following
the original 10 business day period provided for in this Section 23, Tenant’s failure to
deliver such statement within 5 business days after a second written notice from Landlord shall, at
the option of Landlord, constitute a Default under this Lease, and, in any event, shall be
conclusive upon Tenant that the Lease is in full force and effect and without modification except
as may be represented by Landlord in any certificate prepared by Landlord and delivered to Tenant
for execution.



     Upon request by Tenant, Landlord will similarly execute an estoppel certificate: (i)
certifying that this Lease is unmodified and in full force and effect (or, if modified, stating
the nature of such modification and certifying that this Lease as so modified is in full force and
effect) and the dates to which the rental and other charges are paid in advanced, if any, (ii)
acknowledging that there are not, to Landlord’s knowledge, any uncured defaults on the part of
Tenant hereunder, or specifying such defaults if any are claimed and (iii) setting forth such
further information with respect to the status of this Lease as may be reasonably requested
thereon.








 









 





5200 Research Place/Illumina — Page 30




     24. Quiet Enjoyment. So long as Tenant is not in Default under this Lease, Tenant shall,
subject to the terms of this Lease, at all times during the Term, have peaceful and quiet
enjoyment of the Premises against any person claiming by, through or under Landlord.



     25. Prorations. All prorations required or permitted to be made hereunder shall be made on
the basis of a 360 day year and 30 day months.



     26. Rules and Regulations. Tenant shall, at all times during the Term and any extension
thereof, comply with all commercially reasonable rules and regulations at any time or from time to
time established by Landlord covering use of the Premises and the Project. The current rules and
regulations are attached hereto as Exhibit E and Landlord shall provide Tenant with written notice
of any updates or amendments thereto. If there is any conflict between said rules and regulations
and other provisions of this Lease, the terms and provisions of this Lease shall control. Landlord
shall not have any liability or obligation for the breach of any rules or regulations by other
tenants in the Project. Landlord shall not enforce such rules and regulations in a discriminatory
manner by enforcing certain rules and regulations only against Tenant and not any other tenants,
if any, at the Project.



     27. Subordination. This Lease and Tenant’s interest and rights hereunder are hereby made and
shall be subject and subordinate at all times to the lien of any Mortgage now existing or hereafter
created on or against the Project or the Premises, and all amendments, restatements, renewals,
modifications, consolidations, refinancing, assignments and extensions thereof, without the
necessity of any further instrument or act on the part of Tenant; provided, however
that so long as there is no Default hereunder, Tenant’s right to possession of the Premises shall
not be disturbed by the Holder of any such Mortgage. Tenant agrees, at the election of the Holder
of any such Mortgage, to attorn to any such Holder. Tenant agrees upon demand to execute,
acknowledge and deliver such commercially reasonable instruments, confirming such subordination,
and such commercially reasonable instruments of attornment as shall be requested by any such
Holder, provided any such instruments contain commercially reasonable non-disturbance provisions
assuring Tenant’s quiet enjoyment of the Premises as set forth in Section 24 hereof.
Notwithstanding the foregoing, any such Holder may at any time subordinate its Mortgage to this
Lease, without Tenant’s consent, by notice in writing to Tenant, and thereupon this Lease shall be
deemed prior to such Mortgage without regard to their respective dates of execution, delivery or
recording and in that event such Holder shall have the same rights with respect to this Lease as
though this Lease had been executed prior to the execution, delivery and recording of such Mortgage
and had been assigned to such Holder. The term “Mortgage” whenever used in this Lease shall be
deemed to include deeds of trust, security assignments and any other encumbrances, and any
reference to the “Holder” of a Mortgage shall be deemed to include the beneficiary under a deed of
trust. As of the date of this Lease, there is no existing Mortgage encumbering the Project. As a
condition precedent to Tenant’s execution of a written agreement subordinating this Lease to any
future Mortgage, such agreement shall be required to contain commercially reasonable
non-disturbance and attornment provisions and such agreement shall be executed by the Holder of any
such future Mortgage with a lien on the Project and the same shall provide, among other things,
that so long as Tenant is not in Default of its obligations under this Lease, foreclosure or other
enforcement of such Mortgage shall not terminate this Lease and the successor to Landlord’s
interest in the Project shall recognize this Lease and Tenant’s right to possession of the
Premises. Tenant shall be entitled, at Tenant’s sole cost and expense, to record any such
subordination non-disturbance and attornment agreement promptly after full execution and delivery
of such agreement.



     28. Surrender. Upon the expiration of the Term or earlier termination of Tenant’s right of
possession, Tenant shall surrender the Premises to Landlord in the same condition as received,
subject to any Alterations or Installations permitted by Landlord to remain in the Premises, free
of Hazardous Materials brought upon, kept, used, stored, handled, treated, generated in, or
released or disposed of from, the Premises by any person other than a Landlord Party
(collectively, “Tenant HazMat Operations”) and released of all Hazardous Materials Clearances,
broom clean, ordinary wear and tear and casualty loss and condemnation covered by Sections
18 and 19 excepted. At least 3 months prior to the surrender of the Premises, Tenant
shall deliver to Landlord a narrative description of the actions











 









 





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proposed (or required by any Governmental Authority) to be taken by Tenant in order to surrender
the Premises (including any Installations permitted by Landlord to remain in the Premises) at the
expiration or earlier termination of the Term, free from any residual impact from the Tenant HazMat
Operations and otherwise released for unrestricted use and occupancy (the “Surrender Plan”). Such
Surrender Plan shall be accompanied by a current listing of (i) all Hazardous Materials licenses
and permits held by or on behalf of any Tenant Party with respect to the Premises, and (ii) all
Hazardous Materials used, stored, handled, treated, generated, released or disposed of from the
Premises, and shall be subject to the review and approval of Landlord’s environmental consultant.
In connection with the review and approval of the Surrender Plan, upon the request of Landlord,
Tenant shall deliver to Landlord or its consultant such additional non-proprietary information
concerning Tenant HazMat Operations as Landlord shall request. On or before such surrender, Tenant
shall deliver to Landlord evidence that the approved Surrender Plan shall have been satisfactorily
completed and Landlord shall have the right, subject to reimbursement at Tenant’s expense as set
forth below, to cause Landlord’s environmental consultant to inspect the Premises and perform such
additional procedures as may be deemed reasonably necessary to confirm that the Premises are, as of
the effective date of such surrender or early termination of the Lease, free from any residual
impact from Tenant HazMat Operations. Tenant shall reimburse Landlord, as Additional Rent, for the
actual out-of pocket expense incurred by Landlord for Landlord’s environmental consultant to review
and approve the Surrender Plan and to visit the Premises and verify satisfactory completion of the
same, which cost shall not exceed $5,000. Landlord shall have the unrestricted right to deliver
such Surrender Plan and any report by Landlord’s environmental consultant with respect to the
surrender of the Premises to third parties.




     If Tenant shall fail to prepare or submit a Surrender Plan approved by Landlord, or if Tenant
shall fail to complete the approved Surrender Plan, or if such Surrender Plan, whether or not
approved by Landlord, shall fail to adequately address any residual effect of Tenant HazMat
Operations in, on or about the Premises, Landlord shall have the right to take such actions as
Landlord may deem reasonable or appropriate to assure that the Premises and the Project are
surrendered free from any residual impact from Tenant HazMat Operations, the actual, documented
cost of which actions shall be reimbursed by Tenant as Additional Rent, without regard to the
limitation set forth in the first paragraph of this Section 28.



     Tenant shall immediately return to Landlord all keys and/or access cards to parking, the
Project, restrooms or all or any portion of the Premises furnished to or otherwise procured by
Tenant. Any Tenant’s Property, Alterations and property not so removed by Tenant as permitted or
required herein shall be deemed abandoned and may be stored, removed, and disposed of by Landlord
at Tenant’s expense, and Tenant waives all claims against Landlord for any damages resulting from
Landlord’s retention and/or disposition of such property. All obligations of Tenant and Landlord
hereunder not fully performed as of the termination of the Term, including the obligations of
Tenant under Section 30 hereof, shall survive the expiration or earlier termination of the
Term, including, without limitation, indemnity obligations, payment obligations with respect to
Rent and obligations concerning the condition and repair of the Premises.



     29. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY LAW, TENANT AND LANDLORD WAIVE ANY RIGHT
TO TRIAL BY JURY OR TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE, BETWEEN LANDLORD AND TENANT ARISING OUT OF THIS LEASE OR ANY OTHER
INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE
TRANSACTIONS RELATED HERETO.



     30. Environmental Requirements.



     (a) Prohibition/Compliance/Indemnity. Tenant shall not cause or permit any Hazardous
Materials (as hereinafter defined) to be brought upon, kept, used, stored, handled, treated,
generated in or about, or released or disposed of from, the Premises or the Project in violation
of applicable Environmental Requirements (as hereinafter defined) by Tenant or any Tenant Party.
If Tenant breaches








 









 





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the obligation stated in the preceding sentence, or if the presence of Hazardous Materials in the
Premises during the Term or any holding over results in contamination of the Premises, the Project
or any adjacent property or if contamination of the Premises, the Project or any adjacent property
by Hazardous Materials brought into, kept, used, stored, handled, treated, generated in or about,
or released or disposed of from, the Premises by anyone other than Landlord and Landlord’s
employees, agents and contractors otherwise occurs during the Term or any holding over, Tenant
hereby indemnifies and shall defend and hold Landlord, its officers, directors, employees, agents
and contractors harmless from any and all actions (including, without limitation, remedial or
enforcement actions of any kind, administrative or judicial proceedings, and orders or judgments
arising out of or resulting therefrom), costs, claims, damages (including, without limitation,
punitive damages and damages based upon diminution in value of the Premises or the Project, or the
loss of, or restriction on, use of the Premises or any portion of the Project), expenses
(including, without limitation, attorneys’, consultants’ and experts’ fees, court costs and amounts
paid in settlement of any claims or actions), fines, forfeitures or other civil, administrative or
criminal penalties, injunctive or other relief (whether or not based upon personal injury, property
damage, or contamination of, or adverse effects upon, the environment, water tables or natural
resources), liabilities or losses (collectively, “Environmental Claims”) which arise during or
after the Term as a result of such contamination. This indemnification of Landlord by Tenant
includes, without limitation, costs incurred in connection with any investigation of site
conditions or any cleanup, treatment, remedial, removal, or restoration work required by any
federal, state or local Governmental Authority because of Hazardous Materials present in the air,
soil or ground water above, on, or under the Premises. Without limiting the foregoing, if the
presence of any Hazardous Materials on the Premises, the Project or any adjacent property caused by
Tenant or any Tenant Party results in any contamination of the Premises, the Project or any
adjacent property, Tenant shall promptly take all actions at its sole expense and in accordance
with applicable Environmental Requirements as are necessary to return the Premises, the Project or
any adjacent property to the condition existing prior to the time of such contamination, provided
that Landlord’s approval of such action shall first be obtained, which approval shall not
unreasonably be withheld so long as such actions would not potentially have any material adverse
long-term or short-term effect on the Premises or the Project. Notwithstanding anything to the
contrary contained in Section 28 or this Section 30, Tenant shall not be
responsible for, and the indemnification and hold harmless obligation set forth in this paragraph
shall not apply to (i) contamination in the Premises which Tenant can prove existed in the Premises
immediately prior to the date Building 1 and Building 2 are delivered to Tenant, (ii) the presence
of any Hazardous Materials in the Premises which Tenant can prove migrated from offsite to the
Project, (iii) contamination caused by Landlord or any Landlord’s employees, agents and
contractors, or (iv) contamination in the Common Areas which Tenant can prove was caused by any
party other than Tenant or any Tenant Party during any period where any portion of the Project is
leased by Landlord to any other tenant(s), unless in any case, the presence of such Hazardous
Materials was caused, contributed to or exacerbated by Tenant or any Tenant Party.




     (b) Business. Landlord acknowledges that it is not the intent of this Section 30 to
prohibit
Tenant from using the Premises for the Permitted Use. Tenant may operate its business according to
prudent industry practices so long as the use or presence of Hazardous Materials is strictly and
properly monitored according to all then applicable Environmental Requirements. As a material
inducement to Landlord to allow Tenant to use Hazardous Materials in connection with its business,
Tenant agrees to deliver to Landlord prior to the Initial Commencement Date a list identifying
each type of Hazardous Materials to be brought upon, kept, used, stored, handled, treated,
generated on, or released or disposed of from, the Premises and setting forth any and all
governmental approvals or permits required in connection with the presence, use, storage,
handling, treatment, generation, release or disposal of such Hazardous Materials on or from the
Premises (“Hazardous Materials List”). Tenant shall deliver to Landlord an updated Hazardous
Materials List at least once a year and shall also deliver an updated list before any new
Hazardous Material is brought onto, kept, used, stored, handled, treated, generated on, or
released or disposed of from, the Premises. Tenant shall deliver to Landlord true and correct
copies of the following documents (the “Haz Mat Documents”) relating to the use, storage,
handling, treatment, generation, release or disposal of Hazardous Materials prior to the
Commencement Date, or if unavailable at that time, concurrent with the receipt from or submission
to a Governmental Authority: permits; approvals; reports and correspondence; storage and
management plans, notice of violations of








 









 





5200 Research Place/Illumina — Page 33



any Legal Requirements; plans relating to the installation of any storage tanks to be installed in
or under the Project (provided, said installation of tanks shall only be permitted after Landlord
has given Tenant its written consent to do so, which consent may be withheld in Landlord’s sole and
absolute discretion); all closure plans or any other documents required by any and all federal,
state and local Governmental Authorities for any storage tanks installed in, on or under the
Project for the closure of any such tanks; and a Surrender Plan (to the extent surrender in
accordance with Section 28 cannot be accomplished in 3 months). Tenant is not required,
however, to provide Landlord with any portion(s) of the Haz Mat Documents containing information of
a proprietary nature which, in and of themselves, do not contain a reference to any Hazardous
Materials or hazardous activities. It is not the intent of this Section to provide Landlord with
information which could be detrimental to Tenant’s business should such information become
possessed by Tenant’s competitors.




     (c) Tenant Representation and Warranty. Tenant hereby represents and warrants to Landlord that
(i) Tenant has not been required by any prior landlord, lender or Governmental Authority at any
time to take remedial action in connection with Hazardous Materials contaminating a property which
contamination was permitted by Tenant or resulted from Tenant’s action or use of the property in
question, and (ii) Tenant is not subject to any enforcement order issued by any Governmental
Authority in connection with the use, storage, handling, treatment, generation, release or disposal
of Hazardous Materials (including, without limitation, any order related to the failure to make a
required reporting to any Governmental Authority).



     (d) Testing. Landlord shall have the right to conduct annual tests of the Premises to
determine whether any contamination of the Premises or the Project has occurred as a result of
Tenant’s use. Tenant shall be required to pay the cost of such annual test of the Premises if there
is a violation of this Section 30 or if contamination for which Tenant is responsible under
this Section 30 is identified; provided, however, that if Tenant conducts, at Tenant’s
cost, its own tests of the Premises using third party contractors and test procedures acceptable to
Landlord which tests are certified to Landlord, Landlord shall accept such tests in lieu of the
annual tests. In addition, at any time, and from time to time, prior to the expiration or earlier
termination of the Term, Landlord shall have the right to conduct appropriate tests of the Premises
and the Project to determine if contamination has occurred as a result of Tenant’s use of the
Premises. In connection with such testing, upon the request of Landlord, Tenant shall deliver to
Landlord or its consultant such non-proprietary information concerning the use of Hazardous
Materials in or about the Premises by Tenant or any Tenant Party. If contamination has occurred for
which Tenant is liable under this Section 30, Tenant shall pay all costs to conduct such
tests. If no such contamination is found, Landlord shall pay the costs of such tests (which shall
not constitute an Operating Expense). Landlord shall provide Tenant with a copy of all third party,
non-confidential reports and tests of the Premises made by or on behalf of Landlord during the Term
without representation or warranty and subject to a confidentiality agreement. Tenant shall, at its
sole cost and expense, promptly and satisfactorily remediate any environmental conditions
identified by such testing and for which Tenant is responsible under this Lease in accordance with
all Environmental Requirements. Landlord’s receipt of or satisfaction with any environmental
assessment in no way waives any rights which Landlord may have against Tenant.



     (e) Intentionally Omitted.



     (f) Underground Tanks. If underground or other storage tanks storing Hazardous Materials
located on the Premises or the Project are used by Tenant or are hereafter placed on the Premises
or the Project by Tenant, Tenant shall install, use, monitor, operate, maintain, upgrade and manage
such storage tanks, maintain appropriate records, obtain and maintain appropriate insurance,
implement reporting procedures, properly close any underground storage tanks, and take or cause to
be taken all other actions necessary or required under applicable state and federal Legal
Requirements, as such now exists or may hereafter be adopted or amended in connection with the
installation, use, maintenance, management, operation, upgrading and closure of such storage tanks.











 









 





5200 Research Place/Illumina — Page 34




     (g) Tenant’s Obligations. Tenant’s and Landlord’s obligations under this Section 30
shall
survive the expiration or earlier termination of the Lease. During any period of time after the
expiration or earlier termination of this Lease required by Tenant or Landlord to complete the
removal from the Premises of any Hazardous Materials (including, without limitation, the release
and termination of any licenses or permits restricting the use of the Premises and the completion
of the approved Surrender Plan), Tenant shall continue to pay the full Rent during such period in
accordance with this Lease for any portion of the Premises not relet by Landlord in Landlord’s sole
discretion, which Rent shall be prorated daily.



     (h) Definitions. As used herein, the term “Environmental Requirements” means all
applicable present and future statutes, regulations, ordinances, rules, codes, judgments, orders or
other similar enactments of any Governmental Authority regulating or relating to health, safety, or
environmental conditions on, under, or about the Premises or the Project, or the environment,
including without limitation, the following: the Comprehensive Environmental Response, Compensation
and
Liability Act; the Resource Conservation and Recovery Act; and all state and local counterparts
thereto, and any regulations or policies promulgated or issued thereunder. As used herein, the term
“Hazardous Materials” means and includes any substance, material, waste, pollutant, or contaminant
listed or defined as hazardous or toxic, or regulated by reason of its impact or potential impact
on humans, animals and/or the environment under any Environmental Requirements, asbestos and
petroleum, including crude oil or any fraction thereof, natural gas liquids, liquefied natural gas,
or synthetic gas usable for fuel (or mixtures of natural gas and such synthetic gas). As defined in
Environmental Requirements, Tenant is and shall be deemed to be the “operator” of Tenant’s
“facility” and the “owner” of all Hazardous Materials brought on the Premises by Tenant or any
Tenant Party, and the wastes, by-products, or residues generated, resulting, or produced therefrom.



     31. Tenant’s Remedies/Limitation of Liability. Landlord shall not be in default hereunder
unless Landlord fails to perform any of its obligations hereunder within 30 days after written
notice from Tenant specifying such failure (unless such performance will, due to the nature of the
obligation, require a period of time in excess of 30 days, then after such period of time as is
reasonably necessary so long as Landlord has commenced the cure and is diligently prosecuting the
same to completion)). If Landlord fails to cure a Landlord default after the expiration of all
applicable notice and cure periods, Tenant may, except as otherwise provided for in this Lease and
subject to any limitations contained in this Lease, exercise all of its rights and remedies
provided for in this Lease or at law or in equity for such default. Upon any default by Landlord,
Tenant shall give notice by registered or certified mail to any Holder of a Mortgage covering the
Premises and to any landlord of any lease of property in or on which the Premises are located and
Tenant shall offer such Holder and/or landlord the same cure rights provided to Landlord for a
default but also time to obtain possession of the Project by power of sale or a judicial action if
such should prove necessary to effect a cure; provided Landlord shall have furnished to
Tenant in writing the names and addresses of all such persons who are to receive such notices. All
obligations of Landlord hereunder shall be construed as covenants, not conditions. Tenant waives
its rights under Legal
Requirements relating to a landlord’s duty to maintain its premises in a tenantable condition.



     Notwithstanding the foregoing, if Tenant is not maintaining the Project as contemplated
pursuant to the second paragraph of Section 13 hereof and any claimed Landlord default
hereunder materially and adversely affects Tenant’s ability to conduct its business in the Premises
(a “Material Landlord Default”), Tenant shall, as soon as reasonably possible, give Landlord
written notice of such claim which notice shall specifically state that a Material Landlord Default
exists and telephonic notice to Tenant’s principal contact with Landlord. Landlord shall then have
2 business days to commence cure of such claimed Material Landlord Default and shall diligently
prosecute such cure to completion. If such claimed Material Landlord Default is not a default by
Landlord hereunder and/or is not the responsibility of Landlord under this Lease, Landlord shall be
entitled to recover from Tenant, as Additional Rent, any costs incurred by Landlord in connection
with such cure in excess of the costs, if any, that Landlord would otherwise have been liable to
pay hereunder. If Landlord fails to commence cure of any claimed Material Landlord Default as
provided above, Tenant may, following the delivery of a second written notice to Landlord (except
in the case of an emergency in which case no additional written notice shall be required but








 









 





5200 Research Place/Illumina — Page 35



Tenant shall use good faith efforts to provide Landlord with verbal notice with written notice to
follow) commence and prosecute such cure to completion provided that it does not affect any
Building Systems directly affecting other tenants, the structure of any of the Buildings or the
Common Areas, and shall be entitled to recover the costs of such cure (but not any consequential
or other damages) from Landlord by way of reimbursement from Landlord, to the extent of Landlord’s
obligation to cure such claimed Material Landlord Default hereunder. Landlord shall reimburse
Tenant for its reasonable costs and expenses incurred to cure the claimed Material Landlord
Default within 30 days after Landlord’s receipt of an invoice and evidence of payment of such
costs and expenses, together with reasonable documentation substantiating such costs and expenses
and delivery to Landlord of unconditional lien waivers from all material suppliers and workmen who
supplied materials or performed work associated with such maintenance and/or repairs (the
“Reimbursement Invoice”). Landlord shall have the right not to
reimburse Tenant as provided for in the preceding sentence and instead dispute Tenant’s
entitlement to reimbursement, Tenant’s right to perform such repairs and/or maintenance and/or or
the amount being requested by Tenant. If Landlord elects, in the exercise of its good faith
reasonable discretion, to dispute any of the foregoing matters, Landlord shall notify Tenant in
writing of the nature of such dispute within 30 days after receipt of Tenant’s written request for
reimbursement. Landlord and Tenant shall meet and discuss the dispute and if Landlord and Tenant
fail to reach a resolution of the dispute within 15 days after their meeting, the dispute shall be
resolved by arbitration by a single arbitrator with the qualifications and experience appropriate
to resolve the matter and appointed pursuant to and acting in accordance with the rules of the
American Arbitration Association. If the arbitrator decides in favor of Tenant, then Landlord
shall promptly pay the amount of any award to Tenant. If either party is determined by the
arbitrator to be the prevailing party, then such party shall be entitled to have its reasonable
attorneys’ fees and costs in connection with such arbitration paid by the other party. If Landlord
has not paid to Tenant in full the amount of any such award plus any attorneys’ fees and costs
awarded by the arbitrator within 30 days of the date of the arbitrator’s decision, then Tenant
shall have the right to set off against the next monthly payments of Base Rent the amount of the
award (including any awarded attorneys’ fees and costs).




     All obligations of Landlord under this Lease will be binding upon Landlord only during the
period of its ownership of the Premises and not thereafter. The term “Landlord” in this Lease
shall mean only the owner for the time being of the Premises. Upon the transfer by such owner of
its interest in the Premises and the assumption (in writing) of such owner’s obligations under
this Lease thereafter accruing, such owner shall thereupon be released and discharged from all
obligations of Landlord thereafter accruing, but such obligations shall be binding during the Term
upon each new owner for the duration of such owner’s ownership.



     32. Inspection and Access. Landlord and Landlord’s representatives agents and
contractors may enter the Premises during business hours (i) on not less than 24 hours written
notice (which may be by email) for the purpose of inspecting the Premises and showing the Premises
to third parties (including, without limitation prospective purchasers or tenants) and (ii) on not
less than 72 hours advance written notice (except in the case of emergencies in which case no such
notice shall be required and such entry may be at any time) for the purpose of effecting any such
repairs or for any other business purpose. Notwithstanding the foregoing, Landlord may only show
the Premises to prospective tenants for the Premises during the last 18 months of the Term.
Landlord may erect a suitable sign at the Project stating the Premises (or portions thereof) may be
available for lease but in no event may Landlord erect such sign sooner than 18 months before the
expiration of the Term for any portion of the Premises. If Landlord desires to lease space at the
Project (other than the Premises), Landlord may erect a suitable sign at the Project stating that
space is or may be available for lease. Landlord may erect a suitable sign at the Project stating
the Project is available for sale. Tenant shall at all times, except in the case of emergencies,
have the right to escort Landlord or its agents, representatives, contractors or guests while the
same are in the Premises, provided such escort does not materially and adversely affect Landlord’s
access rights hereunder. Notwithstanding anything to the contrary set forth in this Lease, Tenant
may designate by prior written notice to Landlord certain limited areas of the Premises as “Secured
Areas” should Tenant require such areas for the purpose of securing certain valuable property or
confidential information. Landlord may not enter such Secured Areas except in the case of emergency
or in the event








 









 





5200 Research Place/Illumina — Page 36



of a Landlord inspection, in which case Landlord shall provide Tenant with 10 days’ prior written
notice of the specific date and time of such Landlord inspection.




     33. Security. Tenant acknowledges and agrees that security devices and services, if any,
while intended to deter crime may not in given instances prevent theft or other criminal acts and
that Landlord is not providing any security services with respect to the Premises. Tenant agrees
that Landlord shall not be liable to Tenant for, and Tenant waives any claim against Landlord with
respect to, any loss by theft or any other damage suffered or incurred by Tenant in connection
with any unauthorized entry into the Premises or any other breach of security with respect to the
Premises. So long as Tenant is the sole tenant of the Project, Tenant shall be permitted with
Landlord’s prior approval, which shall not be unreasonably withheld, to install security fencing
and gates (including a 24 hour guard), all as reasonably approved by Landlord, at Tenant’s sole
cost and expense; provided, however, that Landlord and the Landlord Parties shall at all times
have continuous and unfettered access to the Common Areas. Upon Landlord’s written request at the
point where Tenant will no longer be the only tenant at the Project, Tenant shall be responsible,
at Tenant’s sole cost and expense, for removing such security fencing and gates and restoring the
Project to its condition prior the installation of such security fencing and gates. Tenant shall
be solely responsible for the personal safety of Tenant’s officers, employees, agents,
contractors, guests and invitees while any such person is in, on or about the Premises and/or the
Project. Tenant shall at Tenant’s cost obtain insurance coverage to the extent Tenant desires
protection against such criminal acts. Tenant shall have the use during the Term of the existing
Access Control and Alarm Monitoring System and Closed Circuit Television Surveillance Systems
(collectively, the “Security Systems”) at no additional rental cost to Tenant; provided, however,
that Tenant shall be responsible for all maintenance, repairs and replacements to the Security
Systems during the Term. Notwithstanding the foregoing, if at any time during the Term any portion
of Building 1 and/or Building 2 is leased to any third party(ies), Tenant agrees to cooperate with
Landlord and/or adjust its usage of the Security Systems to reasonably address any privacy,
confidentiality, security, legal or other reasonable concerns of such third party(ies).



     34. Force Majeure. Except for the payment of Rent, neither Landlord nor Tenant shall be held
responsible or liable for delays in the performance of its obligations hereunder when caused by,
related to, or arising out of acts of God, strikes, lockouts, or other labor disputes, embargoes,
quarantines, weather, national, regional, or local disasters, calamities, or catastrophes,
inability to obtain labor or materials (or reasonable substitutes therefor) at reasonable costs or
failure of, or inability to obtain, utilities necessary for performance, governmental
restrictions, orders, limitations, regulations, or controls, national emergencies, inability to
obtain permits or approvals, including, without limitation, city and public utility approvals
beyond the time periods that generally prevail for obtaining such permits and approvals,
revocation of permits, enemy or hostile governmental action, terrorism, insurrection, riots, civil
disturbance or commotion, fire or other casualty, and other causes or events beyond their
reasonable control (“Force Majeure”).



     35. Brokers. Landlord and Tenant each represents and warrants that it has not dealt with any
broker, agent or other person (collectively, “Broker”) in connection with this transaction and that
no Broker brought about this transaction, other than Cushman & Wakefield of San Diego, Inc.
Landlord and Tenant each hereby agree to indemnify and hold the other harmless from and against any
claims by any Broker, other than the broker, if any named in this Section 35, claiming a
commission or other form of compensation by virtue of having dealt with Tenant or Landlord, as
applicable, with regard to this leasing transaction. Landlord shall be responsible for the
commission payable to Cushman & Wakefield of San Diego, Inc., arising out of the execution of this
Lease in accordance with the terms of a separate written agreement between Cushman & Wakefield of
San Diego, Inc., and Landlord. Landlord and Tenant both acknowledge that Cushman & Wakefield of San
Diego, Inc., is acting in a dual agency capacity under this Lease. Landlord and Tenant acknowledge
and agree with the disclosure and consent to the agency relationship specified.



     36. Limitation on Landlord’s Liability. NOTWITHSTANDING ANYTHING SET FORTH HEREIN OR IN ANY
OTHER AGREEMENT BETWEEN LANDLORD AND TENANT TO THE











 









 





5200 Research Place/Illumina — Page 37



CONTRARY: (A) LANDLORD SHALL NOT BE LIABLE TO TENANT OR ANY OTHER PERSON FOR (AND TENANT AND EACH
SUCH OTHER PERSON ASSUME ALL RISK OF) LOSS, DAMAGE OR INJURY, WHETHER ACTUAL OR CONSEQUENTIAL TO:
TENANT’S PERSONAL PROPERTY OF EVERY KIND AND DESCRIPTION, INCLUDING, WITHOUT LIMITATION TRADE
FIXTURES, EQUIPMENT, INVENTORY, SCIENTIFIC RESEARCH, SCIENTIFIC EXPERIMENTS, LABORATORY ANIMALS,
PRODUCT, SPECIMENS, SAMPLES, AND/OR SCIENTIFIC, BUSINESS, ACCOUNTING AND OTHER RECORDS OF EVERY
KIND AND DESCRIPTION KEPT AT THE PREMISES AND ANY AND ALL INCOME DERIVED OR DERIVABLE THEREFROM;
(B) ANY LIABILITY OF LANDLORD HEREUNDER SHALL BE STRICTLY LIMITED SOLELY TO LANDLORD’S INTEREST IN
THE PROJECT OR ANY PROCEEDS FROM SALE OR CONDEMNATION THEREOF AND ANY INSURANCE PROCEEDS PAYABLE IN
RESPECT OF LANDLORD’S INTEREST IN THE PROJECT OR IN CONNECTION WITH ANY SUCH LOSS; AND (C) IN NO
EVENT SHALL ANY PERSONAL LIABILITY BE ASSERTED AGAINST LANDLORD IN CONNECTION WITH THIS LEASE NOR
SHALL ANY RECOURSE BE HAD TO ANY OTHER PROPERTY OR ASSETS OF LANDLORD OR ANY OF LANDLORD’S
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR CONTRACTORS. UNDER NO CIRCUMSTANCES SHALL LANDLORD OR ANY
OF LANDLORD’S OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR CONTRACTORS BE LIABLE FOR INJURY TO
TENANT’S BUSINESS OR FOR ANY LOSS OF INCOME OR PROFIT THEREFROM.



NOTWITHSTANDING ANYTHING SET FORTH HEREIN, IN NO EVENT SHALL ANY PERSONAL LIABILITY BE ASSERTED BY
LANDLORD AGAINST ANY OF TENANT’S OFFICERS, DIRECTORS OR EMPLOYEES NOR SHALL ANY OF SUCH PARTIES BE
PERSONALLY LIABLE FOR INJURY TO LANDLORD’S BUSINESS OR FOR ANY LOSS OF INCOME OR PROFIT THEREFROM.




     37. Severability. If any clause or provision of this Lease is illegal, invalid or
unenforceable under present or future laws, then and in that event, it is the intention of the
parties hereto that the remainder of this Lease shall not be affected thereby. It is also the
intention of the parties to this Lease that in lieu of each clause or provision of this Lease that
is illegal, invalid or unenforceable, there be added, as a part of this Lease, a clause or
provision as similar in effect to such illegal, invalid or unenforceable clause or provision as
shall be legal, valid and enforceable.



     38. Signs; Exterior Appearance. If Landlord leases space at the Project to any other tenants,
Tenant shall not, without the prior written consent of Landlord, which may be granted or withheld
in Landlord’s reasonable discretion: (i) attach any awnings, exterior lights, decorations,
balloons, flags, pennants, banners, painting or other projection to any outside wall of the
Project, (ii) use any curtains, blinds, shades or screens other than Landlord’s standard window
coverings, (iii) coat or otherwise sunscreen the interior or exterior of any windows, (iv) place
any bottles, parcels, or other articles on the window sills, (v) place any equipment, furniture or
other items of personal property on any exterior balcony, or (vi) paint, affix or exhibit on any
part of the Premises or the Project any signs, notices, window or door lettering, placards,
decorations, or advertising media of any type which can be viewed from the exterior of the
Premises. Interior signs on doors and the directory tablet within the Premises shall be inscribed,
painted or affixed for Tenant by Landlord at the sole cost and expense of Tenant. The directory
tablet shall be provided exclusively for the display of the name and location of tenants.



     Tenant may install, at Tenant’s sole cost and expense, all legally permitted signage bearing
Tenant’s name and logo desired by Tenant at the Buildings including, but not limited to, (i)
exclusive signage on multiple locations on the Buildings including building top, façade and eyebrow
signs, all as may be desired by Tenant and reasonably acceptable to Landlord (“Building Signs”),
(ii) any existing monument signs at the main entrance to each of the Buildings (“Building Monument
Signs”), and (iii) any existing monument signs at the Project entrances at Nobel Drive and Judicial
Drive (“Project Monument Signs”). Tenant acknowledges and agrees that Tenant’s Building Signs,
Building
Monuments Signs and Project Monument Signs, without limitation, the size, color, type and
locations, shall be subject to Landlord’s prior written approval, which shall not be unreasonably
withheld, conditioned or delayed and shall be consistent with Landlord’s signage program at the
Project and applicable Legal Requirements. Tenant shall at all times have the most prominent
location on the








 









 





5200 Research Place/Illumina — Page 38



Building Monument Signs and Project Monument Signs. Tenant shall be responsible, at Tenant’s sole
cost and expense, for the maintenance of Tenant’s signage on Tenant’s Building Signs, Building
Monument Signs and Project Monument Signs, for the removal of Tenant’s Building Signs and Tenant’s
signage on the Building Monument Signs and Project Monument Signs at the expiration or earlier
termination of this Lease and for the repair all damage (excluding discoloration of the building
facades caused by any Building Signs) resulting from such removal. Tenant’s signage rights on the
Project Monument Signs shall become non-exclusive if, at any time during the Term, space in any
building at the Project is leased to any third party(ies).




     39. Right to Expand.



     (a) Expansion in the Project. Tenant shall have the right, but not the obligation, on or
before January 1, 2015 (“Expansion Right Expiration Date”) to expand the Premises (the “Expansion
Rights”) to include the to be constructed buildings (including any related subterranean parking)
contemplated on the project site plan attached hereto as Exhibit H (“Project Site Plan”) as (i)
Building 4, which Landlord currently contemplates will contain 1 floor and a total of
approximately 30,000 rentable square feet of warehouse space (“Building 4”), (ii) Building 5,
which Landlord currently contemplates will contain 4 floors and a total of approximately 133,685
rentable square feet of laboratory and/or office space (“Building 5”), and (iii) Building 6, which
Landlord currently contemplates will contain 4 floors and a total of approximately 133,686
rentable square feet of laboratory and/or office space (“Building 6”), all upon the terms and
conditions in this Section 39; provided, however, that all of the Expansion Requirements
(as defined below) are met each time Tenant exercises an Expansion Right. Building 4, Building 5
and Building 6 shall each be individually referred to herein as an “Expansion Building” and
collectively as the “Expansion Buildings”. Upon Tenant’s written request from time to time during
the Term (but in no event more than twice during any calendar year), Landlord shall provide to
Tenant updated information regarding the status of entitlements for the Project, including, but
not limited to, material correspondence between Landlord and any governmental authority regarding
such entitlements.



     As used in this Lease, “Expansion Requirements” shall mean that all of the following
requirements are satisfied: (i) Tenant is not in material Default under any provision of the
Lease; (ii) Tenant has a credit rating of “BBB-” or better from Standard & Poor’s Corporation, or
“Baa3” or better from Moody’s Investors Service, Inc. (or in each case any successor thereof), or,
in the event that Tenant does not have a credit rating at that time, Tenant has a net worth (as
determined in accordance with GAAP) that is not less than the Minimum Net Worth Amount; and (iii)
Illumina, Inc., a Delaware corporation, or any entity leasing or subleasing the Premises pursuant
to a Permitted Assignment, is the tenant occupying and operating out of at least 70% of the
Premises under this Lease.



     Subject to the terms and conditions of this Section 39, if Tenant elects to exercise
an Expansion Right with respect to any or all of the Expansion Buildings, Tenant shall, on or
before the Expansion Right Expiration Date, deliver written notice to Landlord of its election to
exercise such Expansion Right (each, an “Expansion Notice”), which Expansion Notice shall identify
which Expansion Building or Expansion Buildings with respect to which Tenant is exercising its
Expansion Right (“Identified Expansion Building”) along with a deposit in the amount of $100,000
multiplied by the number of Identified Expansion Buildings identified in the Expansion Notice for
use by Landlord for the initial costs actually incurred by Landlord in connection with the initial
design and pricing (collectively, Initial Costs”) for each Identified Expansion Building
(“Expansion Deposit”). Landlord agrees to contribute up to $100,000 for the Initial Costs
associated with each Identified Expansion Building following the exhaustion of the Tenant’s
applicable Expansion Deposit for such Identified Expansion Building (evidence of which
exhaustion/contribution shall be provided to Tenant upon Tenant’s written request from time to time
in the form of a detailed line item statement).



     Notwithstanding anything to the contrary contained herein, Tenant acknowledges and agrees
that (i) Landlord shall have no obligation to commence the design and/or construction of any
Expansion Building prior to Tenant delivering an Expansion Notice and an Expansion Deposit with
respect to such Expansion Building to Landlord, (ii) if Tenant does not exercise its Expansion
Right with respect to








 









 





5200 Research Place/Illumina — Page 39



Building 4 prior to January 1, 2015, Tenant shall have no further right to deliver an Expansion
Notice for Building 4 and the rentable square footage allocable to Building 4 shall be added, at
Landlord’s option, to Building 5 and/or Building 6 (and, if Tenants elects to extend the Expansion
Right Expiration Date as provided for below, Tenant shall nonetheless be required to pay Land Rent
(as defined below) with respect to the square footage that was contemplated for Building 4), (iii)
in no event shall Tenant have the right to exercise an Expansion Right with respect to Building 6
if Tenant has not previously or concurrently therewith exercised an Expansion Right with respect to
Building 5 and Landlord shall have the right, in Landlord’s sole and absolute discretion, to elect
not to construct Building 6 for Tenant if Tenant elects as provided for in this Lease to rescind
its Expansion Notice with respect to Building 5, (iv) in no event shall Tenant have the right under
any circumstances to exercise an Expansion Right with respect to less than all of the rentable
square footage of any Expansion Building, (v) the Project Site Plan including, without limitation,
the number of floors, rentable square footages, configuration and locations of the Expansion
Buildings within the Project are not guaranteed and are subject to change by Landlord in the
exercise of Landlord’s reasonable discretion; provided, however, that so long as all of Tenant’s
Expansion Rights remain in full force and effect under this Section 39, any such changes
made by Landlord shall not materially and adversely impact: (A) the use of Building 5 and/or
Building 6 for the Permitted Use, (B) Tenant’s ability to access the Premises, (C) Tenant’s parking
rights under Section 10, or (D) the total square footage available to Tenant for expansion
of the Premises pursuant to this Section 39(a), and (vi) Landlord’s obligation to develop
each Expansion Building on receipt of the applicable Expansion Notice is expressly conditioned upon
and subject to, and with Landlord having no liability for the failure of any of such conditions
(except as otherwise expressly provided herein), Landlord’s ability to obtain on, terms and
conditions reasonably acceptable to Landlord, all governmental approvals necessary to permit the
design and construction of the applicable Expansion Building, the reasonable availability of
materials and labor and all other conditions outside of Landlord’s reasonable control. If Tenant
exercises its Expansion Rights hereunder with respect to any Expansion Building and does not
exercise any of its rescission rights under Section 39(c) with respect thereto, Landlord
agrees to use reasonable and diligent efforts to pursue and obtain as contemplated under this Lease
and the applicable work letter the necessary governmental approvals to permit the design and
construction of the applicable Expansion Building.




     (b) Extension of Expansion Right Expiration Date. Tenant shall have the right to extend
the Expansion Right Expiration Date by delivering written notice (“Election Notice”) of such
election to Landlord no later than June 30, 2014, in which case, commencing on January 1, 2015
(“Land Rent Commencement Date”), and continuing thereafter on the first day of each month until
the Outside Expansion Right Expiration Date (as defined below), Tenant shall be required to pay
rent to Landlord (“Land Rent”) in an amount which results in Landlord receiving in equal monthly
installments a 7.5% per annum return on the amount of the then Buildable Entitlements (as defined
below) at the Project multiplied by $50 for each square foot of such Buildable Entitlements. The
Land Rent shall be increased on every other anniversary of the Land Rent Commencement Date by the
Bi-Annual Rent Adjustment Percentage. For example, if Tenant elects to extend the Expansion Right
Expiration Date as provided for in this Section 39(b) and Tenant has not commenced paying
Base Rent on any Expansion Building, the Land Rent due on January 1, 2015, shall be $92,928.44 per
month ((calculated as follows: 297,371 X $50.00 per square foot X 7.5%) divided by 12).
Notwithstanding anything to the contrary contained herein, if, commencing on January 1, 2015 and
continuing for each month of the Term, Tenant pays the Land Rent due under this Lease and Tenant
timely exercises any express right which Tenant has under Section 39(e)(E) to terminate
this Lease with respect to the Expansion Building then being constructed, Landlord shall refund to
Tenant the allocable portion of the Land Rent paid by Tenant with respect to such Expansion
Building between the date that Tenant exercised the Expansion Right for such Expansion Building
and the date Tenant elects to terminate the Lease pursuant to Section 39(e)(E) with
respect to such Expansion Building. In no event, however, shall Tenant be entitled to any refund
of any Land Rent if Tenant’s termination right under Section 39(e)(E) is caused in whole
or in part by any revocation of any entitlements existing as of the date hereof. If Landlord
receives written notice from any Governmental Authority revoking any entitlements existing as of
the date hereof, Landlord shall provide Tenant with a copy of such notice and the Land Rent shall
be adjusted accordingly on a going forward basis.








 









 





5200 Research Place/Illumina — Page 40




     If Tenant does not provide Landlord with an Election Notice by June 30, 2014, then Landlord
shall provide Tenant with a written notice stating in bold and all caps 12 point font that
Tenant’s failure to respond in writing to Landlord within 10 business days after Tenant’s receipt
of Landlord’s notice and affirmatively electing in such response to extend the Expansion Right
Expiration Date shall be deemed Tenant’s election to waive Tenant’s right to extend the Expansion
Right Expiration Date. If in Tenant’s response notice, Tenant elects to extend the Expansion Right
Expiration Date, Tenant shall be required to commence paying Land Rent as provided for in this
Lease commencing on January 1, 2015.



     As used in this Lease, (i) “Outside Expansion Right Expiration Date” shall mean the earlier
of (a) the date which is 6 months after the date Tenant provides Landlord with written notice of
its election to terminate all of its unexercised Expansion Rights under this Section 39,
and (b) October 31, 2031; and (ii) “Building Entitlements” shall mean all 297,371 rentable square
feet of space contemplated for the Expansion Buildings minus the rentable square footage of the
Expansion Building(s) for which Tenant is paying Base Rent.



     For the avoidance of doubt, (x) following the Expansion Right Expiration Date or, if
applicable the Outside Expansion Right Expiration Date, or (y) if Tenant is not paying the Land
Rent which Tenant is required to pay to Landlord under this Lease, Landlord shall have the right
to develop any new building(s) at the Project and lease all or any portion of such new building(s)
to any third party(ies) (except as provided in Sections 39(f) and 44(r)) upon any
terms and conditions acceptable to Landlord.



     (c) Rescission Rights.




     (i) Initial Rescission Right. Following receipt of each Expansion Notice, Landlord
shall deliver to Tenant a detailed written line item estimate on the part of Landlord of the
Project Costs (as defined below) for the Identified Expansion Building (“Initial Project
Cost Estimate”) along with a corresponding estimate of the initial monthly Base Rent which
would be due for the applicable Identified Expansion Building (“Initial Base Rent
Estimate”). Tenant shall have the right (“Initial Rescission Right”) to rescind the
applicable Expansion Notice by delivery to Landlord of a written rescission notice (“Initial
Rescission Notice”) on or before the date that is 15 business days after Landlord’s delivery
to Tenant of the Initial Project Cost Estimate and Initial Base Rent Estimate for the
Identified Expansion Building if (and only if) the Initial Base Rent Estimate for the
Identified Expansion Building for the first year of the Base Term for such Identified
Expansion Building exceeds $3.00 per rentable square foot per month (“Cap Amount”). The Cap
Amount provided for in the preceding sentence applies if the first year of the Base Term for
the Identified Expansion Building is reasonably estimated by Landlord to commence within 24
months after the Initial Commencement Date, and the Cap Amount shall thereafter be increased
by the Bi-Annual Rent Adjustment Percentage on every other anniversary of the Initial
Commencement Date. The Initial Rescission Right shall only apply, depending on when the Base
Term for the Identified Expansion Building is reasonably estimated by Landlord to commence,
if the Initial Base Rent Estimate exceeds the Cap Amount (as adjusted). If Tenant fails to
timely deliver the Initial Rescission Notice to Landlord, Tenant shall be deemed to have
waived its Initial Rescission Right. If Tenant delivers the Initial Rescission Notice to
Landlord pursuant to this paragraph (and Tenant does not continue to pay Land Rent as
provided for in this Lease), Tenant’s Expansion Right with respect to the Identified
Expansion Building shall terminate and be of no further force or effect, in which case
Tenant shall have no further rights under Section 39 with respect to such Identified
Expansion Building, and Landlord shall have the right to develop any new building(s) at the
Project and lease all or any portion of such new building(s) to any third party(ies) (except
as provided in Sections 39(f) and 44(r)) upon any terms and conditions
acceptable to Landlord unless Tenant continues to pay the Land Rent as provided for in
Section 39(b) in which case Landlord shall not have the right to develop any new
building(s) until the Outside Expansion Right Expiration Date.




     (ii) Final Rescission Right. Following Tenant’s waiver of its Initial Rescission
Right
and the development by Landlord of preliminary plans for such Identified Expansion Building,








 









 





5200 Research Place/Illumina — Page 41





Landlord shall prepare a RFP for 3 general contractors reasonably acceptable to Landlord
and Tenant who will each be requested to respond with their fee and general conditions
based on the Expansion Building Preliminary Plans. Landlord and Tenant shall use reasonable
efforts to agree upon one of the bids (“Contractor’s Initial Bid”) for the purposes of
developing a revised estimate of the Project Costs. Based on the Contractor’s Initial Bid,
Landlord shall deliver to Tenant a revised written estimate on the part of Landlord of the
Project Costs for the Identified Expansion Building (“Revised Project Cost Estimate”).
Tenant shall have a final right (“Final Rescission Right”) to rescind the applicable
Expansion Notice by delivery to Landlord of a written rescission notice (“Final Rescission
Notice”) on or before (i) the date that is 15 business days after Landlord’s delivery to
Tenant of the Revised Project Cost Estimate for the Identified Expansion Building if (and
only if) the Revised Project Cost Estimate exceeds the Initial Project Cost Estimate by
more than 20%, or (ii) the date that is 5 business days after Landlord selection of such
Contractor’s Initial Bid for the purposes of developing the Revised Project Cost Estimate
if Tenant was unwilling to agree to use the Contractor’s Initial Bid selected by Landlord
for the purposes of developing a revised estimate of the Project Costs. If Tenant fails to
timely deliver the Final Rescission Notice to Landlord, Tenant shall be deemed to have
waived its Final Rescission Right. If Tenant delivers the Final Rescission Notice to
Landlord pursuant to this paragraph (and Tenant does not continue to pay Land Rent as
provided for in this Lease), Tenant’s Expansion Right with respect to the Identified
Expansion Building shall terminate and be of no further force or effect, in which case
Tenant shall have no further rights under Section 39 with respect to such
Identified Expansion Building, and Landlord shall have the right to develop any new
building(s) at the Project and lease all or any portion of such new building(s) to any
third party(ies) (except as provided in Sections 39(f) and 44(r)) upon any
terms and conditions acceptable to Landlord unless Tenant continues to pay the Land Rent as
provided for in Section 39(b) in which case Landlord shall not have the right to
develop any new building(s) until the Outside Expansion Right Expiration Date.




     (iii) Effect of Multiple Rescissions. Notwithstanding anything to the contrary
contained in this Lease, if Tenant’s exercises a second Initial Rescission Right and/or a
second Final Rescission Right under this Lease, Tenant shall be solely responsible (without
any contribution from Landlord) for all Initial Costs and other related costs incurred by
Landlord in connection with all future exercises by Tenant of any of its Expansion Rights.




     (iv) Acknowledgement. If Tenant elects to exercise either its Initial Rescission
Right or its Final Rescission Right with respect to any Identified Expansion Building,
Landlord shall return to Tenant any unused portion, if any, of the Expansion Deposit
delivered by Tenant to Landlord with respect to such Identified Expansion Building. Tenant
acknowledges and agrees that the Initial Project Cost Estimates and the Revised Project
Cost Estimate provided by Landlord and the Contractor’s Initial Bid delivered pursuant to
the provisions of Section 39(c)(i)and (ii) are merely estimates and are
not a guaranty of actual Project Costs and/or the amount of Base Rent which will be payable
for any Identified Expansion Building and Landlord shall have no liability to Tenant in
connection therewith nor shall Tenant have any additional rescission rights beyond those
expressly provided for in Section 39(c)(i) and (ii).



     (d) Lease Terms for Expansion Building(s). Tenant acknowledges and agrees that if
Tenant leases any Expansion Building(s) pursuant to this Section 39, all of the terms and
conditions of this Lease shall apply to the leasing of such Expansion Building, except that: (i)
the definitions on page 1 of this Lease shall be amended as necessary to document and reflect the
addition of the applicable Expansion Building to the Project; (ii) Tenant shall be required to pay
annual Base Rent in equal monthly installments for the first 12 months following the Expansion
Building Rent Commencement Date (as defined below) for the applicable Expansion Building at a rate
which provides Landlord with an annual return on all Project Costs for such Expansion Building
which is the greater of (A) 300 basis points above the 10-year U.S. Treasury yield as of the date
that Landlord receives the applicable Expansion Notice, and (B) 8.5%, and such return shall be
subject to increases as provided for in Section 4 hereof
by the Bi-Annual Rent Adjustment
Percentage on every other anniversary of the applicable Expansion Building








 









 





5200 Research Place/Illumina — Page 42



Rent Commencement Date; (iii) the Base Term of the Lease with respect to the applicable Expansion
Building shall expire on the same day as the Base Term with respect to the original Premises;
provided, however, that each time Tenant exercises its Expansion Right with respect to any
Expansion Building during the last 120 months of the Base Term, the Base Term for the entire
Premises shall be extended each time to the date that is 120 months after the Expansion Building
Rent Commencement Date for the applicable Expansion Building; (iv) Landlord shall be responsible
for the construction of tenant improvements in each Expansion Building desired by Tenant which
improvements shall be of a fixed and permanent nature approved by Landlord (“Expansion Building
Tenant Improvements”) and shall be required to satisfy the requirements set forth on Exhibit K,
and the parties shall enter into a work letter for the Expansion Building and Expansion Building
Tenant Improvements reasonably acceptable to both parties and based substantially on the form of
work letter attached hereto as Exhibit J (each, an “Expansion Building Work Letter”) with Tenant
receiving no tenant improvement allowance from Landlord for Building 4 and a tenant improvement
allowance from Landlord in the amount of $60 per rentable square foot of the applicable Expansion
Building in the case of Building 5 and Building 6 ($7.50 per rentable square foot of which may be
used for Tenant’s cabling and Tenant’s furniture, fixtures and equipment within the applicable
Expansion Building) which shall be disbursed as provided for in the applicable Expansion Building
Work Letter; and (v) the “Expansion Building Rent Commencement Date” shall be the date that is 60
days after the Substantial Completion of the Building Shell and the Substantial TI Completion of
the Expansion Building Tenant Improvements (all as defined in the Expansion Building Work Letter),
and Tenant shall commence paying Base Rent and Operating Expenses for the Expansion Building on
such date.




     As used in this Lease, “Project Costs” shall mean the sum of all of the actual, documented
costs incurred by Landlord through Project Close-Out in connection with the acquisition, design and
construction of the applicable Expansion Building, the Parking Structure and all related
improvements including, without limitation: (i) the value of the land on which the applicable
Expansion Building is being constructed (which for purposes hereof the parties agree is equal to
$50.00 per rentable square foot of the applicable Expansion Building as of the Initial Commencement
Date and such amount is subject to increases of 6% on every other anniversary of the Initial
Commencement Date; (ii) architectural, engineering, construction and development cost and fees;
(iii) other soft and legal costs; (iv) a development fee to Landlord equal to 3% of the hard
Project Costs; (v) Landlord’s carry costs related to the applicable Expansion Building from the
initiation of construction of such Expansion Building until the applicable Expansion Building Rent
Commencement Date; (vi) the $60 per rentable square foot tenant improvement allowance granted by
Landlord for the applicable Expansion Building Tenant Improvements (except for Building 4 for which
there shall be no tenant improvement allowance) plus Landlord’s carry costs related to the
applicable Expansion Building Tenant Improvements from the initiation of construction of the
applicable Expansion Building Tenant Improvements until the applicable Expansion Building Rent
Commencement Date; (vii) infrastructure costs, assessments, impact fees, site preparation costs,
testing, labor and materials to construct the applicable Expansion Building and the Parking
Structure and related infrastructure and improvements, permit fees, costs associated with obtaining
the PID Permit amendment and necessary entitlement or re-entitlements, if necessary, and any other
governmental fees, sales taxes and fees payable to contractors, project landscaping, water, gas and
electrical fees and related miscellaneous costs, and builder’s risk insurance and other insurance
related costs, (viii) leasing commissions, if any, payable to a broker solely in its capacity as
the broker representing Tenant in connection with the applicable Expansion Right and, unless Tenant
has notified Landlord in writing otherwise, such broker shall be Cushman & Wakefield of San Diego,
Inc., but only if Steve Rosetta is the broker at Cushman & Wakefield of San Diego, Inc.,
representing Tenant in connection with the applicable Expansion Right and further provided however,
that Landlord and tenant’s broker (whether Cushman & Wakefield of San Diego, Inc., or any other
brokerage company) shall have entered into a commission agreement with respect to such commission
which agreement is in form and content acceptable to Landlord and such broker, each in their
respective sole and absolute discretion, (ix) Landlord’s carry costs related to the Parking
Structure from the initiation of construction of such Parking Structure until the Project
Close-Out; (x) Landlord’s contribution towards the Initial Costs for such Expansion Building, and
(xi) Landlord’s reasonable financing costs (or reasonable imputed market rate financing costs) with
respect to all of the foregoing. Landlord shall not incur any Project Costs not contemplated by
this Lease











 









 








5200 Research Place/Illumina — Page 43



and/or any applicable work letter without Tenant’s prior written approval. Tenant shall have the
right to audit Project Costs within 180 days after the Project Close-Out and if Tenant discovers
errors and Landlord and Tenant are unable to resolve such dispute within 30 days after the
expiration of such 180 day period, it shall be resolved by arbitration by a single arbitrator with
the qualifications and experience appropriate to resolve the matter and appointed pursuant to and
acting in accordance with the rules of the American Arbitration Association.




     As used herein, “Parking Structure” shall mean, all as elected by Landlord in it sole
discretion, one or more parking structures each of which may be constructed in one or more phases
with the same or different numbers of tiers in each phase; provided, however that the first parking
structure shall be constructed in generally the location depicted on the Project Site Plan.
Landlord shall not however require the construction in connection with any Expansion Building of
more parking spaces than is required under applicable Legal Requirements to satisfy the PID Permit
for the then Premises and the additional rentable square footage of such Expansion Building. Each
Parking Structure shall generally comply with the requirements set forth on Exhibit O attached
hereto. Landlord shall use reasonable efforts to notify Tenant of its elections with respect to the
applicable Parking Structure(s) within a reasonable time after Tenant exercises its Expansion Right
for an Expansion Building. If Landlord elects to construct any Parking Structure(s) in phases, all
of the Project Costs incurred in connection with each such phase of the applicable Parking
Structure(s) shall be attributable to the applicable Expansion Building being constructed by
Landlord. For example, if Landlord elects in connection with Tenant’s exercise of the Expansion
Right for Building 5 to construct a Parking Structure with only 2 tiers, all of the Project Costs
in connection with such Parking Structure shall be included in the definition of Project Costs for
Building 5 and used to calculate Base Rent for Building 5, and, if Tenant thereafter elects to
exercise its Expansion Right for Building 6, and Landlord elects to construct additional tiers
and/or a new Parking Structure at that time, all of the Project Costs in connection with such
additional tiers and/or new Parking Structure shall be included in the definition of Project Costs
for Building 6 and used to calculate Base Rent for Building 6. Notwithstanding anything to the
contrary contained herein, if Tenant properly exercises its rescission rights as provided for in
this Lease, any elections made by Landlord pursuant to this paragraph shall not be binding on
Landlord if Landlord so elects and Landlord shall be free to make new elections if Tenant
thereafter exercises any of its Expansion Rights.



     As used in this Lease, “Project Close-Out” shall mean the first date following the final
completion of the applicable Expansion Building by Landlord that (i) all contractors,
subcontractors, suppliers, architects and others who supplied labor or materials have been paid in
full and all liens are released; (ii) the architect or general contractor for the applicable
Expansion Building have issued any certificate(s) of completion as may be required by Landlord;
(iii) all punch list items have been completed; and (iv) the contractors and architect have
provided all close out documentation required by Landlord; provided, however, that in no event
shall such date be deemed to occur until the applicable Expansion Building Rent Commencement Date.



     (e) Construction of Expansion Buildings. In addition to the foregoing, the following
provisions shall apply with respect to the design and construction of each Expansion Building:




     (A) Building Shell. Notwithstanding anything to the contrary contained in
this Section 39, Landlord’s construction obligation with respect to the each
Expansion Building shall be limited to an obligation to construct, subject to the
other provisions of this Section 39, and to deliver to Tenant the Expansion
Building upon Substantial Completion of the Building Shell and upon Substantial TI
Completion of the Expansion Building Tenant Improvements (except for Building 4 for
which there shall be no Expansion Building Tenant Improvements). As used in this
Lease, “Building Shell” shall mean a warm shell containing the warm shell
requirements set forth in the Expansion Building Requirements attached hereto as
Exhibit I except in the case of Building 4 in which case the requirements shall be
as set forth on Exhibit N. As used in this Lease, “Building Shell/TI Delivery Date”
shall mean the date that Tenant is notified in writing that the Building Shell has
been Substantially Completed.








 









 





5200 Research Place/Illumina — Page 44





     (B) Architects and Contractors. After the selection of the general contractor as provided for
in the Expansion Building Work Letter, Landlord shall enter into a guaranteed maximum price
contract with the selected general contractor.




     (C) Plans. Tenant acknowledges that certain plans and other information that may be made
available to Tenant pursuant to the provisions of this Section 39 and any Expansion
Building Work Letter constitute information that Landlord considers confidential and, upon request
from Landlord, Tenant and Landlord shall execute a confidentiality and non-disclosure agreement
reasonably acceptable to each party with respect to such confidential information.




     (D) Budget. The cost information related to the design and construction of each Expansion
Building shall be shared with Tenant on a so called “open book basis”. Tenant shall have the right
to approve (which approval shall not be unreasonably withheld, conditioned or delayed) any material
changes to the final budget prior to Landlord entering into the guaranteed maximum price contract
with the general contractor for the Building Shell. Notwithstanding anything to the contrary
contained herein or in the Expansion Building Work Letter, Landlord shall have the right to include
a contingency of up to 10% in the budget and in the guaranteed maximum price contract with the
general contractor. In addition, the budget for each Expansion Building shall also include a
payment for the development fee provided for as part of the Project Costs. Landlord shall not be
entitled to any reimbursement of any fees, overhead, travel, salaries or costs of Landlord’s
personnel in connection with the construction of the Expansion Building unless they are defined as
direct Project Cost.




     (E) Schedule. Landlord’s proposed construction schedule shall be included as part of the
Expansion Building Work Letter. Landlord shall use reasonable efforts to cause the Building Shell
to be Substantially Completed within 24 months after the building permit for the shell and core
construction of the applicable Shell Building has been issued by the applicable Governmental
Authority). If the Building Shell/TI Delivery Date has not occurred within such 24 month period,
Tenant shall have no right to terminate this Lease with respect to the Expansion Building nor shall
Landlord have any liability to Tenant for any loss or damage resulting therefrom except that Tenant
shall be entitled to occupy such Expansion Building following the Expansion Building Rent
Commencement Date without the obligation to pay Base Rent 1 day for each day following the
expiration of such 24 month period until the Building Shell/TI Delivery Date. If the Building
Shell/TI Delivery Date has not occurred within 30 months after the building permit for the shell
and core construction of the applicable Shell Building has been issued by the applicable
Governmental Authority, Tenant shall have the right to elect to either (i) continue to receive the
Base Rent abatement provided for in the preceding sentence, or (ii) terminate this Lease only with
respect to the applicable Expansion Building by written notice to Landlord, in which case, except
as provided for in the last sentence of the first paragraph of Section 39(b), Landlord
shall not have any further duties or obligations to Tenant under this Lease with respect to the
applicable Expansion Building and Tenant shall have no further expansion rights with respect to
such Expansion Building and Landlord shall be free to lease it to any third party(ies) on any terms
and conditions acceptable to Landlord. If Tenant does not elect to terminate this Lease with
respect to the applicable Expansion Building pursuant to subsection (ii) of the immediately
preceding sentence within 10 business days after the expiration of such 30 month period, such right
to terminate this Lease with respect to applicable Expansion Building shall be waived, this Lease
with respect to the applicable Expansion Building shall remain in full force and effect, and Tenant
shall be deemed to have elected to proceed under subsection (i) above. Notwithstanding anything to
the contrary contained herein, Tenant acknowledges and agrees that any Tenant Delays (as defined in
Expansion Building Work Letter) and/or delays caused by Force Majeure shall extend the dates set
forth in








 









 





5200 Research Place/Illumina — Page 45





this paragraph for Landlord’s performance of its obligations on a day for day
basis; provided, however, that in no event may any delays caused by Force Majeure
extend the dates set forth in this paragraph for Landlord’s performance of its
obligations by more than 90 days in the aggregate except in the case of any matter
covered by the provisions of Sections 18 and 19 hereof.




     (F) Acknowledgment. Upon the request of either Landlord or Tenant, the
parties shall execute and deliver a written factually correct acknowledgement of
the Building Shell/TI Delivery Date, the Expansion Building Rent Commencement Date,
the Base Rent for the Expansion Building and the expiration date of the Base Term
as and when such are established in the form substantially similar to the form of
the “Acknowledgement of Commencement Date” attached to this Lease as Exhibit D;
provided, however, the failure by either party to execute and
deliver such acknowledgment shall not affect the other party’s rights hereunder.



     (f) Right to Further Expand at the Project. During the Term, Tenant shall have the right
(the “SGS Expansion Right”) to elect to lease any Available Second Generation Space upon the terms
and conditions set forth in this Section 39(f). As used herein, “Available Second
Generation Space” shall mean any space previously leased by Landlord to any third party in any new
building(s) constructed by Landlord at the Project after the date hereof and not leased by Tenant.
If there is any Available Second Generation Space available for lease or becoming available for
lease to a third party (other than the tenant then leasing such space (whether or not such tenant
has the right to renew) and/or any other party to whom Landlord has granted a right to lease such
Available Second Generation Space), Landlord shall, at such time as Landlord shall elect, deliver
to Tenant written notice (the “Offer Notice”) of such Available Second Generation Space, together
with the terms and conditions on which Landlord is prepared to lease to Tenant such Available
Second Generation Space. Tenant shall be entitled to exercise its right under this Section
39(f) only with respect to the entire Available Second Generation Space identified in the Offer
Notice.



          If the applicable Available Second Generation Space being described in the applicable Offer
Notice is 1 floor or less of any applicable building, Landlord may not require a base term for
such space in the Offer Notice which is more than 10 years. If the applicable Available Second
Generation Space being described in the applicable Offer Notice is more than 1 floor in any
applicable building, there shall be no cap on the length of the base term which Landlord may
require for such space in the Offer Notice. If Tenant delivers an Acceptance Notice but in good
faith believes that the Base Rent and escalations being required by Landlord is above the market
rate for such Available Second Generation Space, the Base Rent for such Available Second
Generation Space shall be determined in the same manner as the Market Rate (as defined in
Section 40) is determined pursuant to Section 40 but on an expedited basis to be
agreed upon by Landlord and Tenant at the time Tenant delivers an Acceptance Notice but in all
events the determination of the Base Rent for such Available Second Generation Space must be
finalized, if at all, within 30 days after Tenant delivers the applicable Acceptance Notice.




          Tenant shall have 10 business days following delivery of the Offer Notice to deliver to
Landlord written notification (“Acceptance Notice”) if Tenant elects to lease the Available Second
Generation Expansion Space described in the Offer Notice. Tenant’s failure to deliver an
Acceptance Notice to Landlord within the required 10 business day period shall be deemed to be an
election by Tenant not to exercise Tenant’s right to lease the Available Second Generation Space
pursuant to this Section 39(f), in which case Tenant shall be deemed to have waived its
rights under this Section 39(f)with respect to such Available Second Generation Space,
the provisions of this Section 39(f) shall no longer apply to such Available Second
Generation Space and Landlord shall have the right to lease such Available Second Generation Space
to any party or parties and on any terms and conditions acceptable to Landlord in its sole and
absolute discretion.




          Notwithstanding anything to the contrary contained herein, if Tenant delivers an Acceptance
Notice to Landlord for any Available Second Generation Space and within 30 days thereafter









 









 





5200 Research Place/Illumina — Page 46



no lease amendment or lease agreement for the applicable Available Second Generation Space has
been entered into by the parties on such terms and conditions as may be acceptable to each party
in its sole and absolute discretion after negotiating in good faith, Tenant shall be deemed to
have waived its right to lease the applicable Available Second Generation Space and Landlord shall
be free to lease the same to any third party and on any terms and conditions acceptable to
Landlord in its sole and absolute discretion.




          Notwithstanding anything to the contrary contained herein, Tenant’s SGS Expansion Right
shall, at Landlord’s option, not be in effect during any period where Tenant is in material
Default under this Lease.




     (g) Tenant Default. Notwithstanding anything to the contrary contained herein, Landlord
shall have the right to suspend performance of all or any of Landlord’s obligations under this
Section 39 during any period that Tenant is in material Default under this Lease and such
period of suspension shall constitute a delay caused by Tenant; provided that Landlord has
notified Tenant in writing of Landlord’s intention to suspend performance due to such Default.



     (h) Amended Lease. Landlord and Tenant shall enter into a lease amendment or lease
agreement acceptable to both Landlord and Tenant for each Expansion Building setting forth the
lease the rental of such Expansion Building consistent with those set forth in this Section
39.



     (i) Termination. The Expansion Right shall, at Landlord’s option, terminate and be of no
further force or effect even after Tenant’s due and timely exercise of the Expansion Right, if,
after such exercise, but prior to the commencement date of the Base Term of the lease of the
applicable Expansion Building, there is any material Default by Tenant under the Lease.



     (j) Rights Personal. The Expansion Rights and the SGS Expansion Right are personal to
Tenant and are not assignable without Landlord’s consent, which may be granted or withheld in
Landlord’s sole discretion separate and apart from any consent by Landlord to an assignment of
Tenant’s interest in the Lease optional provision, except that they may be assigned in connection
with any Permitted Assignment of this Lease.



     (k) No Extensions. The period of time within which any Expansion Right or SGS Expansion
Right, as applicable, may be exercised shall not be extended or enlarged by reason of Tenant’s
inability to exercise the Expansion Right or SGS Expansion Right, as applicable.



     (l) Additional Entitlements. Tenant acknowledges and agrees that (i) Landlord may be
able to obtain additional entitlements for approximately 190,000 additional rentable square feet
at the Project (“Additional Entitlements”), (ii) if Landlord obtains any or all such Additional
Entitlements, the Project Site Plan may be revised by Landlord to include such additional square
footage, (iii) in no event is Landlord obligated to seek or obtain such Additional Entitlements,
and (iv) if Landlord obtains any or all such Additional Entitlements, Tenant’s Expansion Right
shall, at Landlord’s option, include such additional square footage subject to all of the other
provisions of this Section 39; provided, however, that Tenant shall not be required to pay
Land Rent in connection with such Additional Entitlements. In no event shall any portion of the
square footage comprising the Additional Entitlements be added to Building 5 or Building 6 so long
as Tenant continues to have the Expansion Rights under this Lease and Tenant is paying the Land
Rent.



     40. Right to Extend Term. Tenant shall have the right to extend the Term of the Lease
upon the following terms and conditions:



     (a) Extension Rights. Tenant shall have 4 consecutive rights (each, an “Extension Right”)
to extend the term of this Lease with respect to all or any of the Buildings (provided that Tenant
must exercise its Extension Right with respect to the entire rentable square footage of any
Building being leased to Tenant with respect which Tenant is exercising its Extension Right) for 5
years each (each, an








 









 





5200 Research Place/Illumina — Page 47



“Extension Term”) on the same terms and conditions as this Lease (other than with respect to Base
Rent, the Building 3 Work Letter, the Building 1 and 2 Work Letter, any Expansion Building Work
Letter and Section 39 hereof) by giving Landlord written notice of its election to
exercise each Extension Right (which notice shall identify the Building(s) with respect to which
Tenant elects to exercise its Extension Right) at least 12 months prior, and no earlier than 24
months prior, to the expiration of the Base Term of the Lease or the expiration of any prior
Extension Term.




     Upon the commencement of any Extension Term, Base Rent shall be payable at the Market Rate
(as defined below). Base Rent shall thereafter be adjusted on each annual anniversary of the
commencement of such Extension Term by a percentage as determined by Landlord and agreed to by
Tenant at the time the Market Rate is determined (or as part of the determination of Market Rate as
provided in Section 40(b) below). As used herein, “Market Rate” shall mean the rate that
comparable landlords of comparable buildings have accepted in current transactions from non-equity
(i.e., not being offered equity in the buildings), nonrenewal, non-expansion and nonaffiliated
tenants of similar financial strength for space of comparable size, quality (including all
Alterations and other improvements other than the Excluded Improvements (as defined below)) and
floor height in Class A office and laboratory buildings, as applicable, in the University Towne
Center area of San Diego for a comparable term, with the determination of the Market Rate to take
into account all relevant factors, including tenant inducements, percentage of laboratory and
office space, parking costs, leasing commissions, allowances or concessions, if any. If the
allowances, free rent and/or other economic concessions granted pursuant to this Section 40
differ from those granted in the comparable transactions, an adjustment to the applicable Market
Rate shall be made on a basis consistent with the adjustments commonly made in the market for
comparable differences in concession packages. As used herein, “Excluded Improvements” shall mean
those fixed and permanent improvements to the Premises which Tenant can prove to Landlord’s
reasonable satisfaction were installed and paid for by Tenant during the 120 months immediately
prior to the then applicable expiration date of the Base Term and which Landlord could require
under this Lease to remain in the Premises upon expiration of the Base Term of this Lease.



     If, on or before the date which is 180 days prior to the expiration of the Base Term of this
Lease or any prior Extension Term, Tenant has not agreed with Landlord’s determination of the
Market Rate and the rent escalations for the applicable Extension Term after negotiating in good
faith, Tenant shall be deemed to have elected arbitration as described in Section 40(b).
Tenant acknowledges and agrees that, if Tenant has elected to exercise an Extension Right by
delivering notice to Landlord as required in this Section 40(a), Tenant shall have no
right thereafter to rescind or elect not to extend the term of the Lease for such Extension Term.



     (b) Arbitration.




     (i) Within 10 days of Tenant’s notice to Landlord of its election (or deemed
election)
to arbitrate Market Rate and escalations, each party shall deliver to the other a proposal
containing the Market Rate and escalations that the submitting party believes to be correct
(“Extension Proposal”). If either party fails to timely submit an Extension Proposal and
such failure continues for more than 5 business days after receipt of a written notice from
the other party requesting such party’s Extension Proposal, then the requesting party’s
submitted proposal shall determine the Base Rent for the Extension Term. If both parties
submit Extension
Proposals, then Landlord and Tenant shall meet within 7 days after delivery of the last
Extension Proposal and make a good faith attempt to mutually appoint a single Arbitrator
(as defined below) to determine the Market Rate. If Landlord and Tenant are unable to agree
upon a single Arbitrator, then each shall, by written notice delivered to the other within
10 days after the meeting, select an Arbitrator. If either party fails to timely give
notice of its selection for an Arbitrator and such failure continues for more than 5
business days after receipt of a written notice from the other party requesting such
party’s Arbitrator selection, then the requesting party’s submitted Arbitrator shall
determine the Base Rent for the Extension Term. The 2 Arbitrators so appointed shall,
within 5 business days after their appointment, appoint a third Arbitrator. If the 2
Arbitrators so selected cannot agree on the selection of the third Arbitrator within the
time above








 









 





5200 Research Place/Illumina — Page 48





specified, then either party, on behalf of both parties may request such appointment of
such third Arbitrator by application to any state court of general jurisdiction in the
jurisdiction in which the Premises are located, upon 10 days prior written notice to the
other party of such intent.




     (ii) The authority of the Arbitrator(s) shall be limited strictly to a selection of
either
Landlord’s Extension Proposal in its entirety or Tenant’s Extension Proposal in its
entirety as the Extension Proposal which most closely approximates the Market Rate and
escalations. The Arbitrator(s) shall have no authority to create an independent structure
of Market Rate and escalations, combine elements of both Extension Proposals to create a
third, or compromise or alter in any way any of the components of the Extension Proposals
submitted by the parties. The sole decision to be made shall be which of the parties’
Extension Proposals in its entirety shall determine the Market Rate and escalations for the
Extension Term.




     (iii) The decision of the Arbitrator(s) shall be made within 30 days after the
appointment of a single Arbitrator or the third Arbitrator, as applicable. The decision of
the single Arbitrator or majority of the 3 Arbitrators shall be final and binding upon the
parties. Each party shall pay the fees and expenses of the Arbitrator appointed by or on
behalf of such party and the fees and expenses of the third Arbitrator shall be borne
equally by both parties. If the Market Rate and escalations are not determined by the first
day of the Extension Term, then Tenant shall pay Landlord Base Rent in an amount equal to
the Base Rent in effect immediately prior to the Extension Term increased by the Bi-Annual
Rent Adjustment Percentage until such determination is made. After the determination of the
Market Rate and escalations, the parties shall make any necessary adjustments to such
payments made by Tenant. Landlord and Tenant shall then execute an amendment recognizing the
Market Rate and escalations for the Extension Term.




     (iv) An “Arbitrator” shall be any person appointed by or on behalf of either party
or
appointed pursuant to the provisions hereof and: (i) shall be (A) a member of the American
Institute of Real Estate Appraisers with not less than 10 years of experience in the
appraisal of institutional quality Class A office and life sciences space in San Diego, or
(B) a licensed commercial real estate broker with not less than 15 years experience
representing landlords and/or tenants in the leasing of institutional quality Class A
office and life sciences space in San Diego, (ii) devoting substantially all of their time
to professional appraisal or brokerage work, as applicable, at the time of appointment and
(iii) be in all respects impartial and disinterested.



     (c) Rights Personal. Extension Rights are personal to Tenant and are not assignable without
Landlord’s consent, which may be granted or withheld in Landlord’s sole discretion separate and
apart from any consent by Landlord to an assignment of Tenant’s interest in the Lease, except that
they may be assigned in connection with any Permitted Assignment of this Lease.



     (d) Exceptions. Notwithstanding anything set forth above to the contrary, Extension Rights
shall, at Landlord’s option, not be in effect and Tenant may not exercise any of the Extension
Rights during any period of time that Tenant is in material Default under any provision of this
Lease.



     (e) No Extensions. The period of time within which any Extension Rights may be exercised
shall not be extended or enlarged by reason of Tenant’s inability to exercise the Extension
Rights.



     (f) Termination. The Extension Rights shall, at Landlord’s option, terminate and be of no
further force or effect even after Tenant’s due and timely exercise of an Extension Right, if,
after such exercise, but prior to the commencement date of an Extension Term, Tenant is in
material Default under this Lease.



     41. Right of First Refusal to Purchase. Tenant shall also have the right to purchase the
Buildings or the Project upon the following terms and conditions:








 









 





5200 Research Place/Illumina — Page 49




     (a) RFR Right. If Landlord intends to accept a bona fide offer (the “Pending Deal”) to sell
the Project, or any portion thereof, to any third party (other than to an affiliate of Landlord or
a Holder (or its successors or assigns) or in connection with a sale of the Project as part of a
portfolio transaction), Landlord shall, so long as Tenant’s rights hereunder are preserved, deliver
to Tenant written notice (the “Pending Deal Notice”) of the material terms of such Pending Deal
including, without limitation, the purchase price and any earnest money deposits required to be
delivered (collectively, the “Material Terms”). Within 10 business days after Tenant’s receipt of
the Pending Deal Notice, Tenant shall have the right to elect (“RFR Purchase Option”) to purchase
the Project or the portion thereof identified in the Pending Deal Notice (as applicable, the
“Identified Property”), subject to the terms set forth in the Pending Deal Notice by delivering to
Landlord written notice (the “Pending Deal Acceptance”) of Tenant’s election to purchase the
Identified Property. Nothing contained in this Section 41 shall excuse Tenant from any of
its obligations under this Lease prior to the date that the Identified Property is conveyed to
Tenant or from any obligation that survives the expiration or earlier termination of this Lease
with respect to the Identified Property. For purposes of this Section 41, the definition of
a “portfolio transaction” shall include a transaction which includes the Project and at least 2
other properties owned by Landlord or any entities affiliated with Landlord.



     Tenant’s failure to deliver a Pending Deal Acceptance as required pursuant to the preceding
paragraph to Landlord within the required 10 business day period shall be deemed to be an election
by Tenant not to exercise Tenant’s right to purchase the Identified Property in which case, subject
to the next sentence, Landlord shall have the right to sell the Identified Property to any third
party on any terms and conditions acceptable to Landlord and Tenant shall be deemed to have
irrevocably and forever waived its right pursuant to this Section 41 to purchase the
Identified Property. Notwithstanding anything to the contrary contained herein, Tenant’s RFR
Purchase Option shall be restored if (i) Landlord fails to sell the Identified Property to a third
party within 12 months after Landlord’s delivery of the Pending Deal Notice to Tenant (“Free
Period”), or (ii) at any time within such Free Period, Landlord intends to accept a purchase price
for the Identified Property which is less than 95% of the purchase price set forth in the original
Pending Deal Notice (“Reduced Purchase Price”); provided, however, that Tenant shall have the right
to deliver a Pending Deal Acceptance to Landlord exercising its right to purchase the Identified
Property for the Reduced Purchase Price and such other terms set forth in a revised Pending Deal
Notice for a period of 10 business days after Landlord’s delivery to Tenant of a revised Pending
Deal Notice reflecting the Reduced Purchase Price. Tenant’s failure to deliver a Pending Deal
Acceptance in connection with such revised Pending Deal Notice within such 10 business day period
shall be deemed to be an election by Tenant not to purchase the Identified Property in which case,
Tenant shall be deemed to have irrevocably and forever waived its right pursuant to this
Section 41 to purchase the Identified Property unless Landlord does not sell the Identified
Property during the remaining portion of the Free Period or in the event that the Reduced Purchase
Price is further reduced as provided for in clause (ii) above during such Free Period in which case
Tenant’s rights under this Section 41 shall be restored.



     (b) Purchase and Sale Agreement. If after the expiration of a period of 15 days from the date
Tenant delivers the Pending Deal Acceptance, Landlord and Tenant have not, after negotiating in
good faith, entered into (A) a purchase and sale agreement for the purchase and sale of the
Identified Property which agreement shall among other things: (i) contain the Material Terms, and
(ii) contain commercially reasonable terms consistent with comparable transactions for properties
being sold on an “as is” basis in the Southern California area (the “RFR Purchase Agreement”), and
(B) if the Identified Property is less than all of the Premises, an amendment to this Lease,
acceptable to both parties, in their respective sole and absolute discretion, documenting the
termination of this Lease with respect to the Identified Property effective on the closing of the
transaction contemplated by the RFR Purchase Agreement and documenting other related changes to
this Lease necessitated thereby, Tenant shall be deemed to have irrevocably and forever waived its
rights under this Section 41 to purchase the Identified Property, in which case (x) Tenant
shall have no further rights under this Section 41, (y) Tenant’s rights under this
Section 41 shall not be restored, and (z) Landlord shall have the right to sell the
Identified Property to any third party on any terms and conditions acceptable to Landlord.








 









 





5200 Research Place/Illumina — Page 50




     (c) Rights Personal. The RFR Purchase Option is personal to Tenant and is not assignable
without Landlord’s consent, which may be granted or withheld in Landlord’s sole discretion
separate and apart from any consent by Landlord to an assignment of Tenant’s interest in the
Lease, except that they may be assigned in connection with any Permitted Assignment of this Lease.



     (d) Termination. The RFR Purchase Option shall, at Landlord’s option, terminate and be of no
further force or effect even after Tenant’s due and timely exercise of the RFR Purchase Option,
if, after such exercise, but prior to the Closing Date, (i) Tenant is in material Default under
this Lease, or (ii) Tenant defaults under the RFR Purchase Agreement.



     (e) Exceptions. Notwithstanding anything set forth above to the contrary, the RFR Purchase
Option shall, at Landlord’s option, not be in effect and Tenant may not exercise the RFR Purchase
Option during any period of time that Tenant is in material Default under any provision of this
Lease.



     (f) No Extensions. The period of time within which the RFR Purchase Option may be exercised
shall not be extended or enlarged by reason of Tenant’s inability to exercise the RFR Purchase
Option.



     42. Early Termination Right. Tenant shall have the one time right to terminate this Lease with
respect to the entire Premises only (“Termination Right”) effective as of the last day of the 180th
month of the original Base Term (“Termination Date”); provided, however that Tenant delivers to
Landlord (i) a written notice (“Termination Notice”) of its election to exercise its Termination
Right on or before the expiration of the 168th month of the original Base Term, and (ii)
concurrent with Tenant’s delivery to Landlord of the Termination Notice, (x) an amount equal to 6
months of Rent at the amount payable by Tenant as of the date that Tenant delivers the Termination
Notice to Landlord, and (y) an amount equal to, as calculated by Landlord and provided to Tenant
within 10 business days after Tenant delivers a written request therefor to Landlord, (1) all of
the unamortized tenant improvement allowances provided to Tenant in connection with the Building 1
and 2 Tenant Improvements, the Building 3 Tenant Improvements and any Expansion Building Tenant
Improvements, (2) all of the unamortized third party leasing commissions paid by Landlord in
connection with Tenant’s lease of the Premises, and (3) all of the unamortized Rent Abatement
provided to Tenant under this Lease all of which shall be amortized on a straight line basis over
the originally scheduled Base Term (collectively, the “Early Termination Payment”). If Tenant
timely and properly exercises the Termination Right, Tenant shall vacate the entire Premises and
deliver possession thereof to Landlord in the condition required by the terms of this Lease within
30 days before the Termination Date and Tenant shall have no further obligations under this Lease
with respect to the Premises except for those accruing prior to the Termination Date and those
which, pursuant to the terms of the Lease, survive the expiration or early termination of the Lease
with respect to the Premises. If Tenant does not deliver to Landlord the Termination Notice and the
Early Termination Payment within the time period provided for in this paragraph, Tenant shall be
deemed to have waived its Termination Right. Notwithstanding the foregoing, the Termination Right
shall be null and void and of no further force or effect if Tenant exercises any of its Expansion
Rights pursuant to Section 39 after the date that is 60 months after the Initial
Commencement Date and such Expansion Right is not rescinded by Tenant as specifically permitted
pursuant to terms of this Lease. Upon Tenant’s request from time to time, Landlord shall provide
Tenant with Landlord’s estimate of the Early Termination Payment amount.



     43. Redevelopment of Project. Except as otherwise provided for in this Lease, Tenant
acknowledges that Landlord, in its reasonable discretion, may from time to time expand, renovate
and/or reconfigure the Project as the same may exist from time to time and, in connection
therewith or in addition thereto, as the case may be, from time to time without limitation: (a)
change the shape, size, location, number and/or extent of any improvements, buildings, structures,
lobbies, hallways, entrances, exits, parking and/or parking areas relative to any portion of the
Project; (b) modify, eliminate and/or add any buildings, improvements, and parking structure(s)
either above or below grade, to the Project, the Common Areas and/or any other portion of the
Project and/or make any other changes thereto affecting the same; and (c) make any other changes,
additions and/or deletions in any way affecting the Project











 









 





5200 Research Place/Illumina — Page 51



and/or any portion thereof as Landlord may elect from time to time, including without limitation,
additions to and/or deletions from the land comprising the Project, the Common Areas and/or any
other portion of the Project. Notwithstanding anything to the contrary contained in this Lease,
Tenant shall have no right to seek damages (including abatement of Rent) or to cancel or terminate
this Lease because of any proposed changes, expansion, renovation or reconfiguration of the Project
nor shall Tenant have the right to restrict, inhibit or prohibit any such changes, expansion,
renovation or reconfiguration; provided, however, Landlord shall not change the size, dimensions or
location of the Premises. In no event shall the redevelopment contemplated pursuant to this
Section 43 materially and adversely affect, other than on a temporary basis while work may
be ongoing, Tenant’s beneficial use and occupancy of the Premises and access to parking at the
Project. Notwithstanding the foregoing, Landlord shall meet with Tenant to discuss and make Tenant
aware of any significant redevelopment of the Project prior to Landlord commencing construction of
the same. Any new buildings constructed by Landlord at the Project pursuant to this Section
43 shall be comparable in quality to the existing Buildings at the Project.




     44. Miscellaneous.



     (a) Notices. All notices or other communications between the parties shall be in writing and
shall be deemed duly given upon delivery or refusal to accept delivery by the addressee thereof if
delivered in person, or upon actual receipt if delivered by reputable overnight guaranty courier,
addressed and sent to the parties at their addresses set forth above. Landlord and Tenant may from
time to time by written notice to the other designate another address for receipt of future
notices.



     (b) Joint and Several Liability. If and when included within the term “Tenant,” as used in
this instrument, there is more than one person or entity, each shall be jointly and severally
liable for the obligations of Tenant.



     (c) Financial Information. Tenant shall furnish Landlord with true and complete copies of (i)
Tenant’s most recent audited annual financial statements within 90 days of the end of each of
Tenant’s fiscal years during the Term, and (ii) Tenant’s most recent unaudited quarterly financial
statements within 45 days of the end of each of Tenant’s first three fiscal quarters of each of
Tenant’s fiscal years during the Term. Notwithstanding anything above to the contrary, so long as
Tenant is a “public company” and its financial information is publicly available, then the
foregoing delivery requirements of this Section 44(c)shall not apply.



     (d) Recordation. This Lease shall not be filed by or on behalf of Tenant in any public
record. Upon Tenant’s request and at Tenant’s sole cost and expense, Landlord shall prepare and
file after execution by Landlord and Tenant a memorandum of this Lease in substantially the form
attached hereto as Exhibit L. Tenant shall, within 15 business days after request from Landlord,
record a termination of the memorandum on the expiration or earlier termination of this Lease.



     (e) Interpretation. The normal rule of construction to the effect that any ambiguities are to
be resolved against the drafting party shall not be employed in the interpretation of this Lease or
any exhibits or amendments hereto. Words of any gender used in this Lease shall be held and
construed to include any other gender, and words in the singular number shall be held to include
the plural, unless the context otherwise requires. The captions inserted in this Lease are for
convenience only and in no way define, limit or otherwise describe the scope or intent of this
Lease, or any provision hereof, or in any way affect the interpretation of this Lease.



     (f) Not Binding Until Executed. The submission by Landlord to Tenant of this Lease shall have
no binding force or effect, shall not constitute an option for the leasing of the Premises, nor
confer any right or impose any obligations upon either party until execution and delivery of this
Lease by both parties.



     (g) Limitations on Interest. It is expressly the intent of Landlord and Tenant at all times to
comply with applicable law governing the maximum rate or amount of any interest payable on or in











 









 





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connection with this Lease. If applicable law is ever judicially interpreted so as to render
usurious any interest called for under this Lease, or contracted for, charged, taken, reserved, or
received with respect to this Lease, then it is Landlord’s and Tenant’s express intent that all
excess amounts theretofore collected by Landlord be credited on the applicable obligation (or, if
the obligation has been or would thereby be paid in full, refunded to Tenant), and the provisions
of this Lease immediately shall be deemed reformed and the amounts thereafter collectible hereunder
reduced, without the necessity of the execution of any new document, so as to comply with the
applicable law, but so as to permit the recovery of the fullest amount otherwise called for
hereunder.




     (h) Choice of Law. Construction and interpretation of this Lease shall be governed by the
internal laws of the state in which the Premises are located, excluding any principles of conflicts
of laws.



     (i) Time. Time is of the essence as to the performance of Tenant’s and Landlord’s
obligations under this Lease.



     (j) OFAC.
Tenant is currently (a) in compliance with and shall at all times during the Term of this Lease remain in compliance with the regulations of the Office of Foreign Assets Control
(“OFAC”) of the U.S. Department of Treasury and any statute, executive order, or regulation
relating thereto (collectively, the “OFAC Rules”), (b) not listed on, and shall not during the
term of this Lease be listed on, the Specially Designated Nationals and Blocked Persons List
maintained by OFAC and/or on any other similar list maintained by OFAC or other governmental
authority pursuant to any authorizing statute, executive order, or regulation, and (c) not a
person or entity with whom a U.S. person is prohibited from conducting business under the OFAC
Rules.



     (k) Incorporation by Reference. All exhibits and addenda attached hereto are hereby
incorporated into this Lease and made a part hereof. If there is any conflict between such
exhibits or addenda and the terms of this Lease, such exhibits or addenda shall control.



     (l) Entire Agreement. This Lease, including the exhibits attached hereto, constitutes the
entire agreement between Landlord and Tenant pertaining to the subject matter hereof and
supersedes all prior and contemporaneous agreements, understandings, letters of intent,
negotiations and discussions, whether oral or written, of the parties, and there are no
warranties, representations or other agreements, express or implied, made to either party by the
other party in connection with the subject matter hereof except as specifically set forth herein.



     (m) No Accord and Satisfaction. No payment by Tenant or receipt by Landlord of a lesser
amount than the monthly installment of Base Rent or any Additional Rent will be other than on
account of the earliest stipulated Base Rent and Additional Rent, nor will any endorsement or
statement on any check or letter accompanying a check for payment of any Base Rent or Additional
Rent be an accord and satisfaction. Landlord may accept such check or payment without prejudice to
Landlord’s right to recover the balance of such Rent or to pursue any other remedy provided in this
Lease.



     (n) Hazardous Activities. Notwithstanding any other provision of this Lease, Landlord, for
itself and its employees, agents and contractors, reserves the right to refuse to perform any
repairs or services in any portion of the Premises which, pursuant to Tenant’s routine safety
guidelines, practices or custom or prudent industry practices, require any form of protective
clothing or equipment other than safety glasses. In any such case, Tenant shall contract with
parties who are acceptable to Landlord, in Landlord’s reasonable discretion, for all such repairs
and services, and Landlord shall, to the extent required, equitably adjust Tenant’s Share of
Operating Expenses in respect of such repairs or services to reflect that Landlord is not
providing such repairs or services to Tenant.



     (o) Roof Equipment. Subject to the provisions of this Lease, Tenant may, at its sole cost,
install, maintain, and from time to time replace a telecommunications dish antenna or other
related equipment on the roofs of the Buildings (collectively, “Roof Equipment”) in locations
selected by Tenant and reasonably acceptable to Landlord for Tenant’s own communication purposely
use only; provided,








 









 





5200 Research Place/Illumina — Page 53



however, that (i) Tenant shall obtain Landlord’s prior written approval with respect to the
installation of such Roof Equipment which approval shall not be unreasonably withheld, conditioned
or delayed and shall include consideration all relevant factors including, without limitation, the
proposed size, weight and location of the Roof Equipment and method for fastening the same to the
roof, (ii) Tenant shall, at its sole cost, comply with any reasonable requirements imposed by
Landlord and all Legal Requirements and the conditions of any bond or warranty maintained by
Landlord on the roof, (iii) Tenant shall be responsible for paying for any structural upgrades
that may be required by Landlord in connection with the Roof Equipment, and (iv) Tenant shall
remove, at its expense, at the expiration or earlier termination of this Lease, any Roof Equipment
which Landlord requires to be removed. Landlord shall have the right to supervise any roof
penetration. Tenant may not access the roof without a representative of Landlord (who shall be
reasonably available) being present. Tenant shall repair any damage to the Buildings caused by
Tenant’s installation, maintenance, replacement, use or removal of the Roof Equipment. Tenant
shall remove any Roof Equipment at its cost upon expiration or termination of the Lease. Tenant
shall install, use, maintain and repair the Roof Equipment, and use the access areas, so as not to
damage or interfere with the operation of the Buildings. Tenant shall protect, defend, indemnify
and hold harmless Landlord from and against claims, damages, liabilities, costs and expenses of
every kind and nature, including reasonable attorneys’ fees, incurred by or asserted against
Landlord arising out of Tenant’s installation, maintenance, replacement, use or removal of the
Roof Equipment.




     Notwithstanding anything to the contrary contained herein, Tenant acknowledges and agrees
that, Landlord shall have the right, at no cost whatsoever to Tenant during the Term, to install,
maintain, repair and remove solar rooftop photo voltaic systems (“Solar Roof Systems”) on the
roofs of one or more of the Buildings at any time during the Term, in locations acceptable to
Landlord, in its reasonable discretion. Landlord and Tenant shall cooperate to minimize any
potential adverse impact that such Solar Roof Systems may have on Tenant’s rights under this Lease
(including, but not limited to, Tenant’s use of the Premises).



     (p) LEED Certification. Tenant agrees to cooperate with Landlord (with the reasonable
costs being passed through as part of Operating Expenses if applicable to any of the existing
buildings at the Project or as part of the Project Costs if applicable to any Expansion
Building(s)) and to comply with measures implemented by Landlord with respect to any of the
Buildings and/or the Project in connection with Landlord’s efforts to obtain a Leadership in
Energy and Environmental Design (LEED) certificate for any or all of the Buildings and/or the
Project, including any measures implemented by Landlord in connection with any Solar Roof Systems
installed by Landlord.



     (q) Central Plant Building. Tenant acknowledges and agrees that certain Building Systems
serving the Buildings are located within the Central Plant Building and that Tenant shall have no
right to enter the Central Plant Building during the Term except during any periods where Tenant is
responsible for the maintenance of the entire Project pursuant to the provisions of the second
paragraph of Section 13. If any space at the Project is leased to any third party(ies)
whose premises are served by any of the Building Systems located within the Central Plant Building,
both the Base Rent payable by Tenant with respect to the Central Plant Building as well as Tenant’s
Share of Operating Expenses payable with respect to the Central Plant Building shall be
proportionately adjusted by Landlord.



     (r) Project Restriction. Landlord shall not enter into a lease agreement for any space in
the Project (and all leases entered into by Landlord after the date hereof for the occupancy of
space at the Project during the Term shall recite the leasing restrictions contained in this
Section 44(r)) or sell any portion of the Project to Life Technologies Corporation or any successor
corporation to Life Tech Corporation (“Life Tech”), or lease any space in the Project (other than
space on the roofs of the Buildings) for other than the Permitted Use (“Alternate User”); provided,
however, that nothing contained in this sentence shall in any way limit or preclude (i) any tenant
that Landlord may lease space to at the Project from being acquired, directly or indirectly, by
Life Tech, (ii) any tenant that Landlord may lease space to at the Project from assigning its lease
or subleasing its premises to Life Tech, and (iii) Landlord from consenting to any transaction
described in clauses (i) or (ii). The provisions of this paragraph shall only apply as long as
Illumina, Inc., or its transferee under a Permitted Assignment is the tenant








 









 





5200 Research Place/Illumina — Page 54



occupying no less than 75% of the Premises under this Lease and shall not apply to any other
assignee or sublessee. In no event shall Landlord lease any space in the Project to a tenant for
medical office or hospital purposes or any uses other than Class A office or research and
development laboratory without Tenant’s prior written consent which consent shall not be
unreasonably withheld, conditioned or delayed.




     (s) Equipment Financing. Subject to the provisions of this Section 44(s), during the
Term,
Landlord waives any statutory landlord’s lien and any attachment for Rent on Tenant’s Property and
on any Alteration of Tenant that is not required to be surrendered to Landlord at the expiration or
sooner termination of the Term of this Lease (collectively, “Personalty”) that Landlord may have or
may hereafter acquire. Landlord acknowledges and agrees that Tenant’s Personalty may be leased from
an equipment lessor or encumbered by Tenant’s lender (collectively, “Equipment Lessor”) and that
Tenant may execute and enter into an equipment lease or security agreement with respect to such
Personalty (“Equipment Lease”). If and to the extent required by any Equipment Lease or Equipment
Lessor, Landlord shall execute and deliver to the Equipment Lessor a written consent, waiver and/or
acknowledgment which is in form and content reasonably acceptable to Landlord (“Lien Waiver”) in
which Landlord (i) acknowledges and agrees that, during the Term, the Personalty which is the
subject of the Equipment Lease and described with specificity on an exhibit to the Lien Waiver
constitutes the personal property of Tenant (unless contrary to the provisions of this Lease), and
shall not be considered to be part of the Premises, regardless of whether or by what means they
become attached thereto, (ii) agrees that, during the Term, it shall not claim any interest in such
Personalty, and (iii) agrees that Equipment Lessor may enter the Premises for the purpose of
removing such Personalty, but only if, in such consent such Equipment Lessor agrees to repair any
damage resulting from such removal and to indemnify and hold harmless Landlord from and against any
claim or other loss that results from such entry and, agrees, within 3 business days after the
expiration or termination of the Term to pay all Rent that would accrue under the Lease if it had
not terminated or expired for the period from the expiration or termination of such Lease until 5
business days after such Equipment Lessor relinquishes its right rights to enter into the Premises;
provided, further, such Equipment Lessor’s right to enter the Premises shall in any event expire 30
days after the expiration or termination of the Lease in which case the Equipment Lessor and Tenant
shall agree that the Personalty shall be deemed abandoned. Such Lien Waiver documents also may
contain such other reasonable and customary provisions that are reasonably acceptable to Landlord.
Landlord shall be entitled to be paid as administrative rent a fee of $1,500 per occurrence for its
time and effort in preparing and negotiating each Lien Waiver.



     (t) When Payment Is Due. Whenever in this Lease a non-scheduled payment is required to
be made by one party to the other, but a specific date for payment is not set forth or a specific
number of days within which payment is to be made is not set forth, or the words “immediately,”
“promptly” and/or “on demand,” or the equivalent, are used to specify when such payment is due,
then such payment shall be due 30 days after the party which is entitled to such payment sends
written notice to the other party demanding payment.



     (u) Property Manager. If Landlord has assumed maintenance of the Project pursuant to the
second paragraph of Section 13, Landlord shall provide a commercially reasonable system
pursuant to which Tenant, in the event of any emergency, may promptly contact the Project manager
and Project engineer or their equivalent 24 hours per day, 7 days per week (whether or not within
business hours).



     (v) Fiber Optic. Subject to the terms of this Lease, and subject to Tenant obtaining
Landlord’s consent, which shall not be unreasonably withheld or delayed, Tenant shall have the
right, at Tenant’s sole cost and expense, to bring to the Buildings comprising the Premises such
fiber optic cabling as Tenant shall desire for Tenant’s business operations at the Premises.
Landlord shall reasonably cooperate with Tenant, at Tenant’s sole cost and expense, in connection
with Tenant’s securing access to the fiber optic cabling of Tenant’s choice.



     (w) Internet Service. Tenant shall have the right to contract with any internet service
provider desired by Tenant, at Tenant’s sole cost and expense.








 









 





5200 Research Place/Illumina — Page 55




     (x) Confidentiality. Landlord and Tenant acknowledge and agree that the terms and
conditions of that certain Confidentiality Agreement dated October 7, 2010, between Tenant and
Landlord’s affiliate, Alexandria Real Estate Equities, Inc., shall have no further force or effect
following the execution and delivery of this Lease by both parties.



     (y) Leasehold Title Insurance. If Tenant elects in writing to Landlord, within 6 months
after
the date of this Lease, to purchase, at Tenant’ sole cost and expense, a leasehold policy of title
insurance from Chicago Title Insurance Company (utilizing the Los Angeles office) with respect to
Tenant’s leasehold interest at the Project, Landlord shall at the time of such election execute any
documents reasonably acceptable to Landlord which are required to be executed by landlords in
connection with the issuance of such a leasehold policy of title insurance. Tenant shall reimburse
Landlord for all of its reasonable out-of-pocket costs and expenses incurred in connection with
Landlord’s obligations under this Section 44(y).



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5200 Research Place/Illumina — Page 56




     IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the day and year first
above written.



	 	 	 	 	 	 	 	 	 	 	 

	 	 	TENANT:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	ILLUMINA, INC.,	 	 
	 	 	a Delaware corporation	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Christian O. Henry	 	 
	 	 	 	 	 	 	 
	 	 	Its:	 	Senior Vice President & CFO	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	LANDLORD:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	ARE-SD REGION NO. 32, LLC,	 	 
	 	 	a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	ALEXANDRIA REAL ESTATE EQUITIES, L.P., 

a Delaware limited partnership, managing member	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	ARE-QRS CORP.,	 	 
	 	 	 	 	 	 	a Maryland corporation,	 	 
	 	 	 	 	 	 	general partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:

Its:
	 	/s/ Gary Dean
 

 VP — RE Legal Affairs