GENOMIC HEALTH INC (Form: 10-Q, Received: 10/30/2019 16:18:16)

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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 000-51541

GENOMIC HEALTH, INC.

(Exact name of registrant as specified in its charter)


Delaware		77-0552594
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)

301 Penobscot Drive

Redwood City, California 94063

(Address of principal executive offices, including Zip Code)

(650) 556-9300

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, par value $0.0001 per share	GHDX	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ⌧ NO ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES ⌧ NO ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


	Large accelerated filer ⌧			Accelerated filer ◻

	Non-accelerated filer ◻			Smaller reporting company ☐

				Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ⌧

The number of outstanding shares of the registrant’s Common Stock, $0.0001 par value, was 37,587,598 as of October 28, 2019.

Table of Contents

GENOMIC HEALTH, INC.

INDEX


		Page
PART I:	FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Income	5
	Consolidated Statements of Stockholders’ Equity	6
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	44
Item 4.	Controls and Procedures	44
PART II:	OTHER INFORMATION	46
Item 1.	Legal Proceedings	46
Item 1A.	Risk Factors	47
Item 6.	Exhibits	69
Signatures		70

Table of Contents

PART 1: FINANCIAL INFORMATION

Item 1. Financial Statements

GENOMIC HEALTH, INC.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)


	September 30,		December 31,
	2019		2018
ASSETS
Current assets:
Cash and cash equivalents	$	71,961	$	61,645
Short-term marketable securities		203,474		148,149
Accounts receivable		55,875		51,531
Prepaid expenses and other current assets		13,726		13,511
Total current assets		345,036		274,836
Property and equipment, net		46,491		39,532
Operating lease right-of-use assets		50,082		—
Long-term marketable securities		—		4,066
Other assets		18,802		15,938
Total assets	$	460,411	$	334,372
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	6,431	$	8,849
Accrued compensation and employee benefits		31,934		34,457
Accrued expenses and other current liabilities		14,743		15,870
Current portion of operating lease liabilities		4,530		—
Other current liabilities		262		600
Total current liabilities		57,900		59,776

Operating lease liabilities		50,786		—
Other liabilities		2,352		4,436
Commitments and contingencies
Stockholders’ equity:
Common stock		3		3
Additional paid-in capital		538,083		506,679
Accumulated other comprehensive income (loss)		42		(87)
Accumulated deficit		(188,755)		(206,325)
Treasury stock, at cost		—		(30,110)
Total stockholders’ equity		349,373		270,160
Total liabilities and stockholders’ equity	$	460,411	$	334,372

See accompanying notes.

Table of Contents

GENOMIC HEALTH, INC.

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Revenues:
Product revenues	$	114,355	$	101,258	$	337,252	$	289,502
Contract revenues		—		—		12		—
Total revenues		114,355		101,258		337,264		289,502
Operating expenses:
Cost of product revenues		18,709		15,518		53,391		48,635
Research and development		16,457		15,433		46,828		47,552
Selling and marketing		39,910		40,051		129,898		122,143
General and administrative		20,233		18,498		61,064		56,702
Total operating expenses		95,309		89,500		291,181		275,032
Income from operations		19,046		11,758		46,083		14,470
Interest income		1,389		676		3,874		1,492
Unrealized (loss) gain on equity securities		(1,239)		127		(1,091)		1,538
Other (expense) income, net		(296)		39		(373)		101
Income before income taxes		18,900		12,600		48,493		17,601
Income tax expense		206		375		813		834
Net income	$	18,694	$	12,225	$	47,680	$	16,767
Basic net income per share	$	0.50	$	0.34	$	1.29	$	0.47
Diluted net income per share	$	0.48	$	0.32	$	1.23	$	0.45
Shares used in computing basic net income per share		37,411		35,925		37,088		35,558
Shares used in computing diluted net income per share		38,958		38,026		38,746		37,044

See accompanying notes.

Table of Contents

GENOMIC HEALTH, INC.

Condensed Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Net income	$	18,694	$	12,225	$	47,680	$	16,767
Other comprehensive income:
Unrealized gain (loss), net, on available-for-sale marketable securities, net of tax of $0 for the three and nine months ended September 30, 2019 and 2018, respectively		(74)		15		129		64
Comprehensive income	$	18,620	$	12,240	$	47,809	$	16,831

See accompanying notes.

Table of Contents

GENOMIC HEALTH, INC.

Consolidated Statements of Stockholders’ Equity

(In thousands)

(Unaudited)


	Three Months Ended September 30, 2019
						Accumulated
				Additional		Other				Treasury		Total
	Common Stock			Paid-In		Comprehensive		Accumulated		Stock		Stockholders’
	Shares	Amount		Capital		Income (Loss)		Deficit		at Cost		Equity
Balance at June 30, 2019	37,267	$	3	$	524,551	$	116	$	(207,449)	$	—	$	317,221
Issuance of common stock upon exercise of stock options for cash and vesting of restricted stock units, net of taxes	278		—		6,974		—		—		—		6,974
Issuance of restricted stock to directors in lieu of fees	1		—		75		—		—		—		75
Stock-based compensation expense related to employee stock options, restricted stock units and employee stock purchase plan	—		—		6,483		—		—		—		6,483
Net income	—		—		—		—		18,694		—		18,694
Unrealized loss on investments, net of tax	—		—		—		(74)		—		—		(74)
Balance at September 30, 2019	37,546	$	3	$	538,083	$	42	$	(188,755)	$	—	$	349,373


	Three Months Ended September 30, 2018
						Accumulated
				Additional		Other				Treasury		Total
	Common Stock			Paid-In		Comprehensive		Accumulated		Stock		Stockholders’
	Shares	Amount		Capital		Income (Loss)		Deficit		at Cost		Equity
Balance at June 30, 2018	35,838	$	3	$	482,835	$	(65)	$	(227,460)	$	(30,110)	$	225,203
Issuance of common stock upon exercise of stock options for cash and vesting of restricted stock units, net of taxes	165		—		3,123		—		—		—		3,123
Issuance of restricted stock to directors in lieu of fees	1		—		50		—		—		—		50
Stock-based compensation expense related to employee stock options, restricted stock units and employee stock purchase plan	—		—		5,401		—		—		—		5,401
Net income	—		—		—		—		12,225		—		12,225
Unrealized gain on investments, net of tax	—		—		—		15		—		—		15
Balance at September 30, 2018	36,004	$	3	$	491,409	$	(50)	$	(215,235)	$	(30,110)	$	246,017

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GENOMIC HEALTH, INC.

Consolidated Statements of Stockholders’ Equity-Continued

(In thousands)

(Unaudited)


	Nine Months Ended September 30, 2019
						Accumulated
				Additional		Other				Treasury		Total
	Common Stock			Paid-In		Comprehensive		Accumulated		Stock		Stockholders’
	Shares	Amount		Capital		Income (Loss)		Deficit		at Cost		Equity
Balance at December 31, 2018	36,407	$	3	$	506,679	$	(87)	$	(206,325)	$	(30,110)	$	270,160
Issuance of common stock upon exercise of stock options for cash and vesting of restricted stock units, net of taxes	1,065		—		8,803		—		—		—		8,803
Issuance of common stock upon settlement of employee stock purchase plan	71		—		3,156		—		—		—		3,156
Issuance of restricted stock to directors in lieu of fees	3		—		175		—		—		—		175
Stock-based compensation expense related to employee stock options, restricted stock units and employee stock purchase plan	—		—		19,270		—		—		—		19,270
Retirement of treasury stock	—		—		—		—		(30,110)		30,110		—
Net income	—		—		—		—		47,680		—		47,680
Unrealized gain on investments, net of tax	—		—		—		129		—		—		129
Balance at September 30, 2019	37,546	$	3	$	538,083	$	42	$	(188,755)	$	—	$	349,373


	Nine Months Ended September 30, 2018
						Accumulated
				Additional		Other				Treasury		Total
	Common Stock			Paid-In		Comprehensive		Accumulated		Stock		Stockholders’
	Shares	Amount		Capital		Income (Loss)		Deficit		at Cost		Equity
Balance at December 31, 2017	35,049	$	3	$	464,637	$	(294)	$	(245,945)	$	(30,110)	$	188,291
Cumulative effect of change in accounting policies (1)	—		—		—		180		13,943		—		14,123
Issuance of common stock upon exercise of stock options for cash and vesting of restricted stock units, net of taxes	852		—		8,333		—		—		—		8,333
Issuance of common stock upon settlement of employee stock purchase plan	99		—		2,547		—		—		—		2,547
Issuance of restricted stock to directors in lieu of fees	4		—		150		—		—		—		150
Stock-based compensation expense related to employee stock options, restricted stock units and employee stock purchase plan	—		—		15,742		—		—		—		15,742
Net income	—		—		—		—		16,767		—		16,767
Unrealized gain on investments, net of tax	—		—		—		64		—		—		64
Balance at September 30, 2018	36,004	$	3	$	491,409	$	(50)	$	(215,235)	$	(30,110)	$	246,017

(1)	Effective January 1, 2018, the Company adopted ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10) and ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and subsequent related updates

See accompanying notes.

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GENOMIC HEALTH, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Nine Months Ended
	September 30,
	2019		2018
Operating activities
Net income	$	47,680	$	16,767
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		9,874		9,348
Employee stock-based compensation		19,270		15,742
Write-off of previously capitalized software costs		—		2,347
Impairment of long-lived assets		—		2,095
Loss on disposal of property and equipment		747		23
Outside director restricted stock awarded in lieu of fees		175		150
Gain on sale of corporate debt securities		(13)		—
Unrealized net (gain) loss on revaluation of equity investments		1,091		(1,538)
Write-off of convertible promissory note		—		1,329
Changes in assets and liabilities:
Accounts receivable		(4,344)		(6,269)
Prepaid expenses and other assets		1,446		1,168
Accounts payable		(2,460)		5,919
Accrued compensation and employee benefits		(2,523)		4,179
Accrued expenses and other liabilities		(3,944)		726
Deferred revenues		(121)		—
Net cash provided by operating activities		66,878		51,986
Investing activities
Purchases of property and equipment		(15,995)		(6,953)
Purchases of marketable securities		(224,906)		(116,529)
Maturities of marketable securities		149,224		86,925
Proceeds from sales of corporate debt securities		23,305		—
Other investments		—		(2,500)
Net cash used in investing activities		(68,372)		(39,057)
Financing activities
Proceeds from issuance of common stock under stock plans		24,128		15,989
Withholding taxes related to restricted stock units net share settlement		(12,169)		(5,109)
Payments on finance lease liabilities		(155)		—
Net cash provided by financing activities		11,804		10,880
Net increase in cash, cash equivalents and restricted cash		10,310		23,809
Cash, cash equivalents and restricted cash at the beginning of period		61,917		45,708
Cash, cash equivalents and restricted cash at the end of period	$	72,227	$	69,517
Non-cash investing and financing activities
Accrued purchases of property and equipment	$	2,072	$	900
Change in fair value of investments	$	(1,091)	$	209

See accompanying notes.

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GENOMIC HEALTH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2019

(Unaudited)

Note 1. Organization and Summary of Significant Accounting Policies

The Company

Genomic Health, Inc. (the “Company”) is a global healthcare company that provides actionable genomic information to personalize cancer treatment decisions. The Company develops and globally commercializes genomic based clinical laboratory services that analyze the underlying biology of cancer, allowing physicians and patients to make individualized treatment decisions. The Company was incorporated in Delaware in August 2000. The Company’s first product, the Oncotype DX breast cancer test, was launched in 2004 and is used for early stage invasive breast cancer patients to predict the likelihood of breast cancer recurrence and the likelihood of chemotherapy benefit. In 2010, the Company launched its second product, the Oncotype DX colon cancer test, which is used to predict the likelihood of colon cancer recurrence in patients with stage II disease. The tests for invasive breast and colon cancer result in a quantitative score referred to as a Recurrence Score. In 2011, the Company made Oncotype DX available for patients with ductal carcinoma in situ (“DCIS”), a pre-invasive form of breast cancer. This test provides a DCIS Score that is used to predict the likelihood of local disease recurrence. In 2012, the Company began offering the Oncotype DX colon cancer test for use in patients with stage III disease treated with oxaliplatin containing adjuvant therapy. In 2013, the Company launched the Oncotype DX prostate cancer test, which provides a Genomic Prostate Score (“GPS”) to predict disease aggressiveness in men with low risk prostate cancer and to improve treatment decisions for prostate cancer patients, in conjunction with the Gleason score, or tumor grading. In February 2018, the Oncotype DX AR-V7 Nucleus Detect test for men with metastatic castration-resistant prostate cancer (“mCRPC”) became commercially available.

Merger Agreement

On July 28, 2019, the Company, Exact Sciences Corporation, a Delaware corporation (“Exact Sciences”) and Spring Acquisition Corporation, a Delaware corporation and wholly owned subsidiary of Exact Sciences (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which, among other things, Merger Sub will be merged with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly owned subsidiary of Exact Sciences, subject to the terms and conditions of the Merger Agreement. The boards of directors of both the Company and Exact Sciences have unanimously approved the transaction. The completion of the Merger is subject to customary conditions, including, among others, the approval of the Merger by the Company’s stockholders, the absence of any order or law that has the effect of enjoining or otherwise prohibiting the completion of the Merger, each party’s representations and warranties being true and correct as of the closing, generally to a “Material Adverse Effect” standard, and the approval for listing of the shares of Exact Sciences common stock forming part of the merger consideration on the Nasdaq Stock Market and the effectiveness of a registration statement on Form S-4 with respect to such Exact Sciences common stock. and the approval for listing of the shares of Exact Sciences common stock forming part of the merger consideration on the Nasdaq Stock Market. Pursuant to the Merger Agreement, and subject to the terms and conditions contained therein, upon the closing of the Merger, each share of the Company’s common stock outstanding immediately prior to the closing of the Merger (other than shares owned by the Company or by Exact Sciences, any of its subsidiaries, any of the Company’s subsidiaries or holders of the Company’s common stock, if any, who properly exercise their appraisal rights under the General Corporation Law of the State of Delaware) will be converted into the right to receive (a)$27.50 in cash, without interest, and (b) a number of shares of common stock of Exact Sciences equal to (i) 0.36854, if the average of the volume-weighted average prices per share of Exact Sciences common stock on the Nasdaq Stock Market for each of the fifteen consecutive trading days ending immediately prior to the closing date (the “measurement price”) is equal to or greater than $120.75, (ii) an amount equal to the quotient obtained by dividing $44.50 by the measurement price if the measurement price is greater than $98.79 but less than $120.75, and (iii) 0.45043, if the measurement price is equal to or less than $98.79, less any applicable withholding taxes.

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Principles of Consolidation

The accompanying condensed consolidated financial statements include all the accounts of the Company and its wholly-owned subsidiaries. The Company had two wholly-owned subsidiaries at September 30, 2019: Genomic Health International Holdings, LLC, which was established in Delaware in 2010 and supports the Company’s international sales and marketing efforts; and Oncotype Laboratories, Inc., which was established in 2012, and is inactive. Genomic Health International Holdings, LLC has eight wholly-owned subsidiaries. The functional currency for the Company’s wholly-owned subsidiaries incorporated outside the United States is the U.S. dollar. All significant intercompany balances and transactions have been eliminated.

The Company assesses whether it is the primary beneficiary of a variable interest entity (“VIE”) at the inception of the arrangement and at each reporting date. This assessment is based on the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and the Company’s obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company continuously performs this assessment, as changes to existing relationships or future transactions may result in the consolidation or deconsolidation of a VIE.

Basis of Presentation and Use of Estimates

The accompanying interim period condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The condensed consolidated balance sheet as of September 30, 2019, condensed consolidated statements of operations, comprehensive income and stockholders’ equity for the three and nine months ended September 30, 2019 and 2018, and the condensed consolidated statements cash flows are unaudited for nine months ended September 30, 2019 are unaudited, but include all adjustments, consisting only of normal recurring adjustments, which the Company considers necessary for a fair presentation of its financial position, operating results and cash flows for the periods presented. The condensed consolidated balance sheet at December 31, 2018 has been derived from audited financial statements, but it does not include certain information and notes required by GAAP for complete consolidated financial statements.

The preparation of financial statements in conformity with GAAP requires management to make judgments, assumptions and estimates that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures in the Company’s condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates.

The accompanying interim period condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

During the first quarter of 2019, the Company adopted new accounting guidance related to leases which is described below. There have been no other significant changes in the Company’s accounting policies during the three and nine months ended September 30, 2019 as compared to the significant accounting policies described in its Annual Report on Form 10-K for the year ended December 31, 2018.

Revenue Recognition

Revenues are recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. To determine revenue recognition for the arrangements that the Company determines are within the scope of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, the Company performs the following five steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation. See Note 2 “Revenues” for further discussion on Revenues.

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Concentration of Risk

The Company is subject to credit risk from its portfolio of cash equivalents and marketable securities. The Company invests in money market funds through a major U.S. bank and is exposed to credit risk in the event of default by the financial institution to the extent of amounts recorded on the consolidated balance sheets. The Company invests in short term, investment grade debt instruments and by policy limits the amount in any one type of investment, except for securities issued or guaranteed by the U.S. government. Under its investment policy, the Company limits amounts invested in such securities by credit rating, maturity, industry group, investment type and issuer, except for securities issued by the U.S. government. The Company is not exposed to any significant concentrations of credit risk from these financial instruments. The goals of the Company’s investment policy, in order of priority, are as follows: safety and preservation of principal and diversification of risk; liquidity of investments sufficient to meet cash flow requirements; and a competitive after tax rate of return.

The Company is also subject to credit risk from its accounts receivable related to its product sales. The majority of the Company’s accounts receivable arise from product sales in the United States. Reimbursement on behalf of patients covered by Medicare accounted for 24% of the Company’s product revenues for each of the three and nine months ended September 30, 2019 and 23% and 24% for the three and nine months ended September 30, 2018, respectively. Accounts receivable on behalf of patients directly covered by Medicare represented 13% and 17% of the Company’s total accounts receivable at September 30, 2019 and December 31, 2018, respectively. No other third party payor represented more than 10% of the Company’s product revenues or accounts receivable balances for these periods.

Non-Marketable Investments

The carrying values of the Company’s non-marketable equity securities without readily determinable market values are initially measured at cost and adjusted to fair value for observable transactions for identical or similar investments of the same issuer or impairment. All gains and losses on non-marketable equity securities, realized and unrealized, are recognized in other (expense) income, net.

As of September 30, 2019, the carrying value of the preferred stock of Epic Sciences, Inc. (“Epic Sciences”) was $10.8 million. The Company did not adjust the carrying value of the preferred stock during the three and nine months ended September 30, 2019.

The preferred stock of Epic Sciences is classified within Level 3 in the fair value hierarchy because the Company estimated the value utilizing an option pricing model that considered the most recent observable transaction and other unobservable inputs including volatility and long-term plans of Epic Sciences. The preferred stock represents a variable interest in the investee. The Company has concluded it is not the primary beneficiary and thus has not consolidated the investee pursuant to the requirements of FASB ASC 810, Consolidation. Additionally, as the Company does not have the ability to exercise significant influence, the equity method was not used to account for the investment.

Derivative Financial Instruments

The Company hedges a portion of its foreign currency exposure related to outstanding monetary assets and liabilities using foreign currency forward contracts. The foreign currency forward contracts are included in prepaid and other current assets or in accrued liabilities, depending on the contracts’ net position. These contracts are not designated as hedges, and as a result, the increased changes in their fair value of $378,000 and $429,000 for the three and nine months ended September 30, 2019 respectively, are recorded in other (expense) income, net. As of September 30, 2019 and December 31, 2018, the Company had foreign currency forward contracts with notional amounts of $16.4 million and $17.1 million, respectively.

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Impairment of Long Lived Assets

The Company reviews long lived assets, which include property and equipment, intangible assets and investments in privately held companies, for impairment whenever events or changes in business circumstances indicate that the carrying amounts of the assets may not be fully recoverable. For property and equipment and intangible assets, an impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount. Impairment, if any, is assessed using undiscounted cash flows. For investments in non-marketable equity securities, evidence of impairment might include the absence of an ability to recover the carrying amount of the investment or the inability of the investee to sustain an earnings capacity which would justify the carrying amount of the investment. If the fair value of the investment is determined to be less than the carrying value, the asset is written down to its fair value. During the nine months ended September 30, 2019, the Company wrote off $4.0 million of property and equipment due to disposal activities, incurring a loss of $747,000. During the nine months ended September 30, 2018 the Company wrote off $2.1 million and $2.3 million of previously capitalized equipment and software development costs, respectively, due to disposal activities.

Treasury Stock

In 2012, the Company entered into an accelerated share repurchase agreement with a financial institution to repurchase $30.1 million of its common stock on an accelerated basis. The shares of common stock repurchased under the agreement were 984,074 and 77,257 during the year ended December 31, 2012 and 2013, respectively. In April 2019, the Company retired all existing treasury stock.

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The new guidance requires lessees to recognize a right-of-use asset and a lease liability for almost all leases on the balance sheet. The Company adopted the new standard as of January 1, 2019 using a modified retrospective approach and did not restate comparative periods. The Company elected the package of practical expedients permitted under the transition guidance, which allowed the Company to carry forward the assessment of whether its contracts contain or are leases, classification of its leases and remaining lease terms. The Company also elected to combine its lease and non-lease components and to keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments in the condensed statements of operations on a straight-line basis over the lease term. Based on the Company’s portfolio of leases as of December 31, 2018, the adoption of ASU 2016-02 on January 1, 2019 resulted in the recognition of operating lease right-of-use (“ROU”) assets of $17.9 million and lease liabilities of $22.5 million, of which $6.1 million was recorded as current portion of operating lease liabilities, and the elimination of $4.5 million of straight-line lease liabilities, of which $1.1 million was recorded as accrued expenses and other current liabilities. There was no material impact to its condensed consolidated statements of operations. See Note 7 “Commitments and Contingencies” for additional information and disclosures.

Recently Issued Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments (ASU 2016-13). ASU 2016-13 requires measurement and recognition of expected credit losses for financial assets. This guidance will become effective for the Company beginning January 1, 2020 with early adoption permitted. The Company is evaluating the impact of the adoption of this standard on its consolidated financial statements.

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Note 2. Revenues

Revenue Recognition

Revenues are recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The estimated uncollectible amounts that were historically classified as bad debt expense are now generally considered implicit price concessions that are a direct reduction to accounts receivable rather than allowance for doubtful accounts.

The majority of the Company’s historical product revenues have been derived from the sale of its Oncotype DX breast cancer test. For product revenues, the Company estimates the transaction price which is the amount of consideration it expects to be entitled to receive in exchange for providing services based on its historical collection experience using a portfolio approach as a practical expedient to account for patient contracts as collective groups rather than individually. The Company monitors its estimates of transaction price to depict conditions that exist at each reporting date. If the Company subsequently determines that it will collect more consideration than it originally estimated for a contract with a patient, it will account for the change as an increase in the estimate of the transaction price in the period identified. Similarly, if the Company subsequently determines that the amount it expects to collect from a patient is less than it originally estimated, it will generally account for the change as a decrease in the estimate of the transaction price, provided that such downward adjustment does not result in a significant reversal of cumulative revenue recognized.

The Company’s performance obligations are satisfied at one point in time when test reports are delivered. The Company also provides services to patients with whom the Company does not have contracts as defined in Topic 606. The Company recognizes revenue for these patients when contracts as defined in Topic 606 are established at the amount of consideration to which it expects to be entitled or when the Company receives substantially all of the consideration subsequent to the performance obligations being satisfied.

The following table presents the Company’s product revenues disaggregated by revenue source:


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	United States		Outside of the United States		Total		United States		Outside of the United States		Total
2019	(In thousands)
Invasive breast cancer test	$	82,359	$	18,861	$	101,220	$	244,341	$	54,378	$	298,719
Prostate cancer test		9,384		59		9,443		27,472		201		27,673
Other		3,587		105		3,692		10,552		308		10,860
Total product revenues		95,330		19,025		114,355		282,365		54,887		337,252
Contract revenues		—		—		—		12		—		12
Total revenues	$	95,330	$	19,025	$	114,355	$	282,377	$	54,887	$	337,264

2018
Invasive breast cancer test	$	76,748	$	15,315	$	92,063	$	220,141	$	42,951	$	263,092
Prostate cancer test		6,926		71		6,997		19,462		152		19,614
Other		2,073		125		2,198		6,451		345		6,796
Total revenues	$	85,747	$	15,511	$	101,258	$	246,054	$	43,448	$	289,502

Contract revenues are generally derived from studies conducted with biopharmaceutical and pharmaceutical companies. The specific methodology for revenue recognition is determined on a case-by-case basis according to the facts and circumstances applicable to a given contract. The Company typically uses an input method that recognizes revenue based on the Company’s efforts to satisfy the performance obligation relative to the total expected inputs to the satisfaction of that performance obligation. Advance payments received in excess of revenues recognized are classified as deferred revenue until such time as the revenue recognition criteria have been met.

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Note 3. Net Income Per Share

Basic net income per share is calculated by dividing net income for the period by the weighted-average number of common shares outstanding for the period without consideration of potential common shares. Diluted earnings per share is calculated using the weighted-average number of common shares outstanding including the dilutive effect of stock awards as determined under the treasury stock method.


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
		(In thousands, except per share amounts)
Numerator:
Net income	$	18,694	$	12,225	$	47,680	$	16,767
Denominator:
Weighted-average shares of common stock outstanding used in the calculation of basic net income per share		37,411		35,925		37,088		35,558
Effect of dilutive securities:
Options to purchase common stock		1,225		1,555		1,325		1,046
Restricted stock units		305		522		327		417
ESPP		17		24		6		23
Total		1,547		2,101		1,658		1,486
Weighted-average shares of common stock outstanding used in the calculation of diluted net income per share		38,958		38,026		38,746		37,044
Basic net income per share	$	0.50	$	0.34	$	1.29	$	0.47
Diluted net income per share	$	0.48	$	0.32	$	1.23	$	0.45

The Company excluded stock awards of 376,000 and 486,000 for the three and nine months ended September 30, 2019, respectively, from the computation of diluted net income per share because their effect was anti-dilutive.

The Company excluded stock awards of 65,000 and 547,000 for the three and nine months ended September 30,2018, respectively, from the computation of diluted net income per share because their effect was anti-dilutive.

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Note 4. Cash and Cash Equivalents, Restricted Cash, and Marketable Securities

The following tables set forth the Company’s cash and cash equivalents, restricted cash, and marketable securities as of the dates indicated:


		September 30,		December 31,
		2019		2018
	(In thousands)
Cash, cash equivalents, and restricted cash
Cash		$	68,193	$	49,046
Money market deposits			3,768		10,364
Commercial paper			—		2,235
Restricted cash ⁽¹⁾			266		272
Total cash, cash equivalents and restricted cash			72,227		61,917
Marketable securities
U.S. Treasury securities			174,488		—
Commercial paper			4,497		70,162
Corporate debt securities			22,677		78,981
Corporate equity securities			1,812		3,072
Total marketable securities			203,474		152,215
Total cash and cash equivalents, restricted cash and marketable securities		$	275,701	$	214,132

(1)	Restricted cash is included in Other assets on the consolidated balance sheets.

The following tables summarize the Company’s available-for-sale securities that are measured at fair value as of the dates indicated:


	September 30, 2019
	Cost or		Gross		Gross		Total
	Amortized		Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value
	(In thousands)
U.S. Treasury securities	$	174,479	$	40	$	(31)	$	174,488
Commercial paper		4,497		—		—		4,497
Corporate debt securities		22,644		33		—		22,677
Total	$	201,620	$	73	$	(31)	$	201,662


	December 31, 2018
	Cost or		Gross		Gross		Total
	Amortized		Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value
	(In thousands)
Commercial paper	$	72,455	$	—	$	(58)	$	72,397
Corporate debt securities		79,009		18		(46)		78,981
Total	$	151,464	$	18	$	(104)	$	151,378

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The following table provides the breakdown of the available-for-sale marketable securities with unrealized losses as of the dates indicated:


	In a Loss Position for
	Less Than 12 Months
	Gross
	Unrealized		Estimated
	Losses		Fair Value
	(In thousands)
As of September 30, 2019:
U.S Treasury securities	$	(31)	$	75,777
Total	$	(31)	$	75,777
As of December 31, 2018:
Commercial paper	$	(58)	$	59,423
Corporate debt securities		(46)		37,608
Total	$	(104)	$	97,031

The following table provides the amortized cost and fair value of fixed maturity securities available for sale by contractual maturity:


	September 30, 2019				December 31, 2018
	Amortized		Estimated		Amortized		Estimated
	Cost		Fair Value		Cost		Fair Value
	(In thousands)
Due in one year or less	$	201,620	$	201,662	$	147,398	$	147,312
Due in more than one year but less than five years		—		—		4,066		4,066
Total	$	201,620	$	201,662	$	151,464	$	151,378

Marketable Equity Securities

In December 2017, the Company invested €3.4 million or $4.0 million in 270,000 shares of the common stock of Biocartis N.V. (Biocartis), a public company listed on the Euronext exchange. This corporate equity security investment was accounted for as an available-for-sale marketable security and valued at €1.7 million or $1.8 million and €2.7 million or $3.1 million at September 30, 2019 and December 31, 2018, respectively. During the three and nine months ended September 30, 2019, the Company recorded unrealized losses relating to changes in fair value of $1.2 million and $1.1 million and foreign currency revaluation losses of $146,000 and $169,000, respectively, in other (expense) income, net. During the three and nine months ended September 30, 2018, the Company recorded unrealized gains relating to changes in fair value of $127,000 and $345,000 and foreign currency revaluation gains of $42,000 and losses of $50,000, respectively, in other (expense) income, net.

Note 5. Fair Value Measurements

Fair Value Hierarchy

The Company measures certain financial assets, including cash equivalents and marketable securities, at their fair value on a recurring basis. The fair value of these financial assets was determined based on a hierarchy of three levels of inputs, of which the first two are considered observable and the last unobservable, as follows:

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

Level 2: Observable inputs other than Level 1 inputs, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

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Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. The Company did not have any non-financial assets or liabilities that were measured or disclosed at fair value on a recurring basis at either September 30, 2019 or December 31, 2018. The following tables set forth the Company’s financial instruments that were measured at fair value on a recurring basis at September 30, 2019 and December 31, 2018 by level within the fair value hierarchy:


	Actively Quoted		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable		Balance at
	Assets		Inputs		Inputs		September 30,
	Level 1		Level 2		Level 3		2019
	(In thousands)
As of September 30, 2019:
Assets
Money market deposits	$	3,768	$	—	$	—	$	3,768
U.S. Treasury securities		—		174,488		—		174,488
Commercial paper		—		4,497		—		4,497
Corporate debt securities		—		22,677		—		22,677
Corporate equity securities		1,812		—		—		1,812
Foreign exchange derivative instruments				17				17
Total	$	5,580	$	201,679	$	—	$	207,259


	Actively Quoted		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable		Balance at
	Assets		Inputs		Inputs		December 31,
	Level 1		Level 2		Level 3		2018
	(In thousands)
As of December 31, 2018:
Assets
Money market deposits	$	10,364	$	—	$	—	$	10,364
Commercial paper		—		72,397		—		72,397
Corporate debt securities		—		78,981		—		78,981
Corporate equity securities		3,072		—		—		3,072
Total	$	13,436	$	151,378	$	—	$	164,814
Liabilities
Foreign exchange derivative instruments	$	—	$	135		—	$	135
Total	$	—	$	135	$	—	$	135

The Company’s U.S. Treasury securities, commercial paper and corporate debt securities are classified as Level 2 as they are valued using multi-dimensional relational pricing models that use observable market inputs, including benchmark yields, reported trades, broker-dealer quotes, issuer spreads, benchmark securities, bids, offers and reference data. Not all inputs listed are available for use in the evaluation process on any given day for each security evaluation. In addition, market indicators and industry and economic events are monitored and may serve as a trigger to acquire further corroborating market data. The Company’s corporate equity securities are classified as Level 1. There were no transfers between Level 1 and Level 2 categories during the nine months ended September 30, 2019.

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Note 6. Collaboration and Commercial Technology Licensing Agreements

The Company has entered into agreements with third parties for the development and commercialization of certain products and product candidates.

Epic Sciences

In June 2016, the Company entered into a collaboration agreement with Epic Sciences, which was superseded and replaced in March 2019 by a license agreement and laboratory services agreement with Epic Sciences, under which the Company was granted an exclusive license and distribution rights to commercialize Epic Sciences’ AR-V7 test in the United States, which is marketed under the Company’s trademark as the Oncotype DX AR-V7 Nucleus Detect test. The Company has primary responsibility, in accordance with applicable laws and regulations, for marketing and promoting the test, order fulfillment, billing and collections of receivables, claims appeals, customer support, and providing and maintaining order management systems for the test. Epic Sciences is responsible for performing all tests, performing studies, including analytic, clinical utility and clinical validation studies, and seeking Medicare coverage and a Medicare payment rate from the Centers for Medicare and Medicaid Services (“CMS”) for the test. The license and laboratory service agreement has a term of 10 years from June 2016, unless terminated earlier under certain circumstances. The Oncotype DX AR-V7 Nucleus Detect test became commercially available in February 2018. In October 2018, Palmetto GBA (“Palmetto”), the Medicare Administrative Contractor that sets Medicare coverage policies, approved coverage for the use of the Oncotype DX AR-V7 test through its final local coverage determination (“LCD”), providing initial coverage for eligible Medicare patients for dates of service on or after December 10, 2018. The Company recognizes revenues for the test performed under this arrangement and Epic Sciences receives a fee per test performed that represents the fair market value for the testing services they perform.

Under the collaboration agreement, in 2016 and 2017, the Company invested $7.5 million in subordinated convertible promissory notes of Epic Sciences that converted into 14,858,403 shares of Epic Sciences preferred stock in March 2017. The subordinated convertible promissory notes had been recognized at fair value, which the Company estimated to be approximately $7.1 million while the difference of $375,000 was deferred as of December 31, 2017 and has been recognized as an additional cost of purchases of Oncotype DX AR-V7 Nucleus Detect tests, which the Company believes would be at a discount to fair value. In June 2018, the Company invested an additional $2.5 million and received 3,400,435 additional shares of Epic Sciences preferred stock.

Additional terms of the original agreement included the Company’s obligation to pay Epic Sciences $4.0 million upon achievement of certain milestones. In December 2018 and January 2019, the milestones were achieved and, the Company recorded the payments of $2.0 million for each in other assets, which are being recognized as cost of product revenue over the term of the agreement, which is through June 2026.

Biocartis

In September 2017, the Company entered into an exclusive license and development agreement with Biocartis, N.V,, or Biocartis, a molecular diagnostics company based in Belgium, to develop and commercialize an in vitro diagnostic (“IVD”) version of the Oncotype DX breast cancer test on Biocartis’ Idylla platform that can be performed locally by laboratory partners and in hospitals around the world. Under the terms of the license and development agreement, the Company has an exclusive, worldwide, royalty-bearing license to develop and commercialize an IVD version of the Oncotype DX breast cancer test on the Biocartis Idylla platform, and an option to expand the collaboration to include additional tests in oncology and urology. The Company has primary responsibility for developing, validating and obtaining regulatory authorizations and registrations for IVD Oncotype DX tests to be performed on the Idylla platform. The Company is also responsible for manufacturing and commercialization activities with respect to such tests.

In December 2017, the Company purchased 270,000 ordinary shares of Biocartis at the market price of €12.50 for a total cost of €3.4 million or $4.0 million. The investment has been recognized at fair value of $1.8 million and $3.1 million at September 30, 2019 and December 31, 2018, respectively.

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In September 2018, the Company extended its option to expand the collaboration to include urology, and recorded a €1.0 million, or $1.2 million, expense.

In November 2018, the Company and Biocartis signed an addendum to the license and development agreement in which the Company exercised the option to expand the collaboration to include the urology field and recorded a €2.0 million, or $2.3 million, expense. In addition, the Company obtained a right of first refusal to add an additional test, a non-invasive detection of prostate cancer in a pre-biopsy setting, and recorded a €500,000, or $575,000, expense. The Company did not extend the right of first refusal which expired in May 2019.

Additional terms of the license and development agreement include the Company’s obligation to pay Biocartis an aggregate of €3.5 million in cash upon achievement of certain milestones and €2.0 million for the expansion of the collaboration to include additional tests in oncology. In addition, the Company will pay royalties based primarily on the future revenues based on sales volumes of the Company’s test performed on the Idylla platform.

Note 7. Commitments and Contingencies

Leases

The Company has operating leases for office and laboratory facilities, data centers and certain equipment, some of which include options to extend for 5 years and finance leases for certain equipment. The Company's leases have remaining lease terms of 1 to 9 years. Under Topic 842, the Company determines if an arrangement is a lease at inception. Right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. As the Company’s leases do not provide an implicit rate of interest, the Company uses its incremental borrowing rate based on the information available at commencement date or remeasurement date in determining the present value of lease payments. The incremental borrowing rate is a hypothetical rate based on the Company’s understanding of what its credit rating was as of such date. Leases with an initial term of 12 months or less and leases deemed immaterial are not recorded on the condensed consolidated balance sheet. Certain of the Company’s lease contracts include obligations to pay for other services, such as operations and maintenance. The Company accounts for these other services as a component of the lease when related payments are fixed or vary depending on an index or a rate.

In March 2019, the Company considered that it is reasonably certain that the Company will exercise the option to extend the lease term of leases for its office and laboratory facilities in Redwood City, California. The Company included the extended term of 5 years and remeasured the ROU assets and lease liabilities for the related leases. The remeasurement resulted in the recognition of $34.0 million of ROU assets and lease liabilities.

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During the nine months ended September 30, 2019, the Company entered into new operating leases for office facilities and recognized ROU assets and liabilities of $3.1 million, respectively. The following table represents the Company’s ROU assets and lease liabilities and the balance sheet classification at September 30, 2019:


		September 30, 2019
Lease activity	Balance sheet classification	(In thousands)
Operating lease
Operating lease ROU assets	Operating lease right-of-use assets	$	50,082

Operating lease liabilities - current portion	Current portion of operating lease liabilities	$	4,530
Operating lease liabilities - non-current portion	Operating lease liabilities		50,786
Total operating lease liabilities		$	55,316

Finance leases
Finance lease ROU assets	Other assets	$	299

Finance lease liabilities - current portion	Other current liabilities	$	213
Finance lease liabilities - non-current portion	Other liabilities		91
Total finance lease liabilities		$	304

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The following table represents lease costs and other lease information. The table does not include short-term lease cost which is immaterial to the Company’s condensed statement of operations.


	Three Months Ended		Nine Months Ended
	September 30, 2019		September 30, 2019
	(In thousands)
Lease cost
Operating lease cost	$	2,272	$	6,370
Finance lease cost:
Amortization of right-of-use assets		52		158
Interest on lease liabilities		4		13
Variable lease cost		410		1,232
Total lease cost	$	2,738	$	7,773

	Three Months Ended		Nine Months Ended
	September 30, 2019		September 30, 2019
	(In thousands)
Other information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,977	$	5,627
Operating cash flows from finance leases		4		13
Financing cash flows from finance leases		52		155

Right-of-use assets obtained in exchange for new operating lease liabilities		—		55,003
Right-of-use assets obtained in exchange for new finance lease liabilities		—		457

			September 30, 2019

Weighted-average remaining lease term — operating leases				7.5 years
Weighted-average remaining lease term — finance leases				1.4 years

Weighted-average discount rate — operating leases				5.9%
Weighted-average discount rate — finance leases				4.5%

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Maturities of lease liabilities were as follows:


	Operating		Finance
	lease payments		lease payments
	(In thousands)
Years Ending December 31,
2019 (remainder of year)	$	1,715	$	55
2020		7,832		221
2021		8,475		37
2022		8,861		—
2023		9,956		—
2024 and thereafter		32,755		—
Total lease payments	$	69,594	$	313
Less imputed interest		(14,278)		(9)
Total lease liabilities	$	55,316	$	304

Operating lease payments include $48.2 million related to options to extend lease terms that are reasonably certain of being exercised.

In October 2019, the Company entered into an operating lease with future lease payments of $5.8 million that are not reflected in the table above. The lease commenced in October 2019 with a non-cancelable lease term of 8.5 years.

In October 2019, the Company executed amendments to extend the lease term of certain leases for its office and laboratory facilities in Redwood City, California. The Company included the extended term of 6 to 7 years and remeasured the ROU assets and lease liabilities for the related leases. The remeasurement resulted in the recognition of $16.6 million of ROU assets and lease liabilities.

Contingencies

From time to time, the Company may be subject to various legal proceedings and claims arising in the ordinary course of business. The Company assesses contingencies to determine the degree of probability and range of possible loss for potential accrual in its consolidated financial statements. An estimated loss contingency is accrued in the consolidated financial statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Legal proceedings, including litigation, government investigations and enforcement actions, could result in material costs, occupy significant management resources and entail civil and criminal penalties, even if the Company ultimately prevails. Any of the foregoing consequences could result in serious harm to the Company’s business, results of operations and financial condition.

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Note 8. Stock-Based Compensation

Stock Options

The following table summarizes the activities for stock options for the nine months ended 2019:


				Weighted-Average
	Outstanding Options			Remaining	Aggregate
	Number of	Weighted-Average		Contractual	Intrinsic
	Shares	Exercise Price		Life	Value
	(In thousands)			(In years)	(In thousands)
Balance at December 31, 2018	3,083	$	29.03
Options granted	379	$	69.30
Options exercised	(813)	$	25.80
Options forfeited	(32)	$	41.80
Options expired	(1)	$	17.18
Balance at September 30, 2019	2,616	$	35.72	6.9	$	85,401
Exercisable at September 30, 2019	1,671	$	29.92	6.1	$	63,310
Vested and expected to vest at September 30, 2019	2,553	$	35.36	6.3	$	84,177

Restricted Stock Units

The following table summarizes the activities for restricted stock units (“RSU”s) for the nine months ended September 30, 2019:


		Weighted-Average
	Number of	Grant Date Fair
	Shares	Value
	(In thousands)
Balance at December 31, 2018	843	$	31.70
RSUs granted	311	$	73.75
RSUs vested ⁽¹⁾	(404)	$	30.62
RSUs cancelled	(52)	$	46.51
Balance at September 30, 2019	698	$	49.97

(1)

Includes 148,742 shares withheld to cover taxes.

Restricted Stock in Lieu of Directors’ Fees

Outside members of the Company’s Board of Directors may elect to receive fully-vested restricted stock in lieu of cash compensation for services as a director. During the nine months ended September 30, 2019, the Company issued 2,792 shares of restricted stock to outside directors, with a grant date fair value of $175,000 and a weighted-average grant date fair value of $62.53 per share.

Employee Stock Purchase Plan

During the nine months ended September 30, 2019, 71,054 shares were issued pursuant to the Employee Stock Purchase Plan (“ESPP”). As of September 30, 2019, there was $310,000 of unrecognized compensation expense related to the ESPP, which is expected to be recognized over a period of two months.

Employee Stock-Based Compensation Expense

The Company recognized employee stock-based compensation expense of $6.5 million and $19.3 million for the three and nine months ended September 30, 2019, respectively.

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Note 9. Segment Information

The Company operates in one business segment, which primarily focuses on the development and global commercialization of genomic-based clinical laboratory services that analyze the underlying biology of cancer, allowing physicians and patients to make individualized treatment decisions. The Company’s Oncotype DX breast, colon and prostate cancer tests have similar economic and other characteristics, including the nature of the products and production processes, type of customers, distribution methods and regulatory environment. As of September 30, 2019, the majority of the Company’s product revenues have been derived from sales of one product, the Oncotype DX breast cancer test.

The following table summarizes total revenue from customers by geographic region. Product revenues are attributed to countries based on ship-to location.


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
	(In thousands)				(In thousands)
United States	$	95,330	$	85,747	$	282,377		246,054
Outside of the United States		19,025		15,511		54,887		43,448
Total revenues	$	114,355	$	101,258	$	337,264	$	289,502

Note 10. Income Taxes

The Company recognized income tax expense of $206,000 and $813,000 for the three and nine months ended September 30, 2019 and $375,000 and $834,000 for the three and nine months ended September 30, 2018, respectively, which was computed using the “discrete” (or “cut-off”) method. The income tax expense for the three and nine months ended September 30, 2019 and 2018 was primarily comprised of foreign income tax expense.

Based on all available objective evidence, the Company believes that it is more likely than not that its deferred tax assets will not be fully realized. Accordingly, the Company maintains a valuation allowance against all of its deferred tax assets as of both September 30, 2019 and December 31, 2018. Because of the Company’s recent history of recognizing operating income, the Company is continually reassessing the likelihood of realizing its deferred tax assets. Should the Company determine in a future period that the realization of those assets is more likely than not, based on all available evidence, both positive and negative, that change in assessment would result in a reversal of some or all of the recorded valuation allowance which would have a significant impact to that period’s provision for income taxes and net income.

The Company had $7.2 million and $6.4 million of unrecognized tax benefits at September 30, 2019 and December 31, 2018, respectively. The Company does not anticipate a material change to its unrecognized tax benefits over the next 12 months that would affect its effective tax rate. Unrecognized tax benefits may change during the next 12 months for items that arise in the ordinary course of business.

Accrued interest and penalties related to unrecognized tax benefits are recognized as part of the Company’s income tax provision in its condensed consolidated statements of operations. The statute of limitations remains open for the years 2001 through 2019 in U.S. federal and state jurisdictions, and for the years 2013 through 2019 in foreign jurisdictions.

Note 11. Restructuring

In March 2018, the Company announced its decision to no longer provide its commercial offering of Oncotype SEQ Liquid Select or any further investment in next generation sequencing (“NGS”) panels due to a decision to focus the Company’s efforts to develop IVD test solutions and other tests with more predictable reimbursement, higher proprietary value and better prospects for global adoption. With this shift in strategic direction, the Company announced a reduction of its workforce of approximately 10% and recorded charges of $8.5 million consisting of $4.8 million in non-cash asset impairments and $3.7 million in employee separation charges, all of which were recorded as operating expenses in the consolidated statements of operations. The Company paid all of the employee separation charges during 2018.

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There were no restructuring costs during the three and nine months ended September 30, 2019.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this report, the words “expects,” “anticipates,” “intends,” “estimates,” “plans,” “believes,” and similar expressions are intended to identify forward looking statements. These are statements that relate to future periods and include the effect of the announcement or pendency of the proposed acquisition by Exact Sciences Corporation, or Exact Sciences, of Genomic Health, or the Merger, on our business relationships, operating results and business; the failure to complete the proposed Merger in a timely manner or at all and the effects of such failure on our business, financial condition, operating results and stock price; the limitations on our ability to pursue alternative transactions pursuant to the provisions of the merger agreement; the potential outcome of litigation with respect to the Merger, statements about our expectation that, for the foreseeable future, a significant amount of our revenues will be derived from our Oncotype DX invasive breast cancer test; the factors that may impact our financial results; our ability to achieve sustained profitability; our business strategy and our ability to achieve our strategic goals; our expectations regarding product revenues and the sources of those revenues; the amount of future revenues that we may derive from Medicare patients or categories of patients; our belief that we may become more dependent on Medicare reimbursement in the future; our plans to pursue reimbursement on a case-by-case basis; our ability, and expectations as to the amount of time it will take, to achieve reimbursement from third-party payors and government insurance programs for new indications of tests, new tests or in new markets; the potential impact of changes in reimbursement levels for our tests; our expectations regarding our international expansion and opportunities; the potential effects of foreign currency exchange rate fluctuations and our efforts to hedge such effects; our beliefs with respect to the benefits and attributes of our tests or collaborations or tests we may seek to develop or collaborate on in the future; the factors we believe drive demand for our tests and our ability to sustain or increase such demand; our success in increasing patient and physician demand as a result of our direct sales approach and our salesforce’s capacity to sell our tests; plans for, and the timeframe for the development or commercial launch of future tests, test enhancements or new technologies; the factors that we believe will drive reimbursement and the establishment of coverage policies; the capacity of our clinical reference laboratory to process tests and our expectations regarding capacity; our dependence on collaborative relationships to develop tests and the success of those relationships; whether any additional tests will result from our collaborations or license agreements; the applicability of clinical results to actual outcomes; our estimates and assumptions with respect to disease incidence and potential market opportunities; the occurrence, timing, outcome or success of clinical trials or studies; our expectations regarding timing of the announcement or publication of research results; the benefits of our technology platform; the economic benefits of our tests to the healthcare system; the ability of our tests to impact treatment decisions; our beliefs regarding our competitive position; our expectations regarding new and future technologies, including non-invasive test technology, and their potential benefits; our belief that multi gene analysis provides superior analytical information; our beliefs regarding the benefits of genomic analysis in various patient populations; our expectations regarding our research and development, general and administrative and sales and marketing expenses and our anticipated uses of our funds; our expectations regarding capital expenditures; our ability to comply with the requirements of being a public company; our expectations regarding billing and collections; our ability to attract and retain experienced personnel; the adequacy of our insurance; our anticipated cash needs and our estimates regarding our capital requirements; our expected future sources of cash; our compliance with federal, state and foreign regulatory requirements; the potential impact resulting from the regulation of our tests by the U.S. Food and Drug Administration, or FDA, and other similar non-U.S. regulators; our belief that our tests are properly regulated under the Clinical Laboratory Improvement Amendments of 1988, or CLIA; the impact of new or changing policies, regulation or legislation, or of judicial decisions, on our business and reimbursement for our tests; the impact of seasonal fluctuations on our business; our belief that we have taken reasonable steps to protect our intellectual property; the impact of changing interest rates; our beliefs regarding unrecognized tax benefits or our valuation allowance; the impact of accounting pronouncements and our critical accounting policies, judgments, estimates, models and assumptions on our financial results; the impact of the economy on our business, patients and payors; and anticipated trends and challenges in our business and the markets in which we operate.

Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expected. These risks and uncertainties include, but are not limited to, those risks discussed in Item 1A of this report, as well as our ability to develop and commercialize new products and product enhancements; the risk of unanticipated delays in research and development efforts; the risk that we may not obtain or maintain reimbursement for

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our existing tests or any future tests we may develop, including the risk that we may lose Medicare coverage for our tests; the risk that reimbursement pricing or coverage for our tests may change; the risks and uncertainties associated with the regulation of our tests by the FDA or regulatory agencies outside of the U.S.; risks associated with the outcome of any legal proceeding, including litigation, government investigations and enforcement actions against us; the success of our new technology; the results of clinical studies; the applicability of clinical results to actual outcomes; the impact of new legislation or regulations, or of judicial decisions, on our business; our ability to compete against third parties; the success of our collaborations; our ability to obtain capital when needed; the economic environment; and our history of operating losses. These forward-looking statements speak only as of the date hereof. We expressly disclaim any obligation or undertaking to update any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

This report contains epidemiological cancer data sourced from GLOBOCAN 2018 and the American Cancer Society, Cancer Facts and Figures, 2018. These sources generally indicate that they believe their information is reliable but do not guarantee the accuracy and completeness of their information. Although we believe that the sources are reliable, we have not independently verified their data.

In this report, all references to “Genomic Health,” “we,” “us,” or “our” mean Genomic Health, Inc.

Genomic Health, the Genomic Health logo, Oncotype, Oncotype DX, Breast Recurrence Score, DCIS Score, Genomic Prostate Score, GPS, Oncotype DX AR-V7 Nucleus Detect and Oncotype IQ are trademarks or registered trademarks of Genomic Health, Inc. We also refer to trademarks of other corporations and organizations in this report.

Business Overview

We are a global healthcare company that provides clinically-actionable genomic information to personalize cancer treatment. We develop and globally commercialize genomic-based clinical laboratory services that analyze the underlying biology of cancer, allowing physicians and patients to make individualized treatment decisions. We are translating significant amounts of genomic data that will be useful for treatment planning throughout the cancer patient’s journey, from diagnosis to treatment selection and monitoring. We offer our Oncotype tests as a clinical laboratory service, where we analyze the expression levels of genes in tumor tissue samples and provide physicians with a quantitative gene expression profile expressed as a single quantitative score, which we call a Recurrence Score for invasive breast cancer and colon cancer, a DCIS Score for ductal carcinoma in situ, or DCIS, and a Genomic Prostate Score, or GPS, for prostate cancer.

In 2004, we launched our first Oncotype DX test, which is used to predict the likelihood of cancer recurrence and the likelihood of chemotherapy benefit in early stage invasive breast cancer patients. In 2010, we launched our second Oncotype DX test, the first multigene expression test developed to assess risk of recurrence in stage II colon cancer patients. In late 2011, we made Oncotype DX available for patients with DCIS, a pre-invasive form of breast cancer. In 2012, we extended our offering of the Oncotype DX colon cancer test to patients with stage III disease treated with oxaliplatin-containing adjuvant therapy. In 2013, we launched our Oncotype DX prostate cancer test, which is used to predict disease aggressiveness in men with low and intermediate risk disease. In February 2018, the Oncotype DX AR-V7 Nucleus Detect test for men with metastatic castration-resistant prostate cancer, or mCPRC, which is offered through our collaboration with Epic Sciences, Inc., or Epic Sciences, became commercially available. As of October 28, 2019, the list price of our Oncotype DX invasive breast cancer and DCIS tests in the United States was $4,620, the list price of our Oncotype DX colon cancer test was $4,420, the list price of our Oncotype DX prostate cancer test was $4,520, and the list price of the Oncotype DX AR-V7 Nucleus Detect test was $4,160. There have been no increases during the three months ended September 30, 2019 to the list prices of our Oncotype DX invasive breast, colon and prostate cancer tests and our DCIS test. The substantial majority of our historical revenues have been derived from the sale of Oncotype DX invasive breast cancer tests ordered by physicians in the United States.

For the three and nine months ended September 30, 2019, more than 39,340 and 115,390 Oncotype test reports were delivered for use in treatment planning, compared to more than 34,810 and 100,840 test reports delivered for the same period in 2018. All of our internally-developed tests are conducted at our clinical reference laboratory in Redwood City,

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California, which is accredited under the Clinical Laboratory Improvement Amendments of 1988, or CLIA, and certified by the College of American Pathologists, or CAP. The Oncotype DX AR-V7 Nucleus Detect test is performed by Epic Sciences at its clinical reference laboratory in San Diego, California, which is accredited under CLIA and certified by CAP. Our clinical reference laboratory processing capacity is currently approximately 180,000 tests annually, and has expansion capacity with incremental increases in laboratory personnel and equipment. The Oncotype DX breast, colon, and prostate cancer tests analyze different genes. However, all of our tests, excluding Oncotype DX AR-V7 Nucleus Detect, are based on a similar Oncotype DX reverse transcription polymerase chain reaction, or RT-PCR, platform and require both histology and pathology assessments. We believe that we currently have sufficient capacity to process current demand for our tests.

We have expanded our clinical laboratory facilities and processing capacity to accommodate future test processing, research and development and general use office space. We expect our continued commercialization efforts of our tests will result in increased costs for laboratory testing, including staffing-related costs, incremental sales and marketing personnel to introduce our products to physicians and patients, costs for clinical utility studies and costs associated with obtaining and maintaining reimbursement coverage.

We depend upon third-party payors, both public and private, to provide reimbursement for our tests. Accordingly, we have and expect to continue to focus substantial resources on obtaining and maintaining reimbursement coverage from third-party payors. Sales of our tests in the United States and other countries are dependent upon the coverage decisions and reimbursement policies established by government healthcare programs and private health insurers. Market acceptance of our tests has and will continue to depend upon the ability to obtain an appropriate level of coverage for, and reimbursement from, third-party payors for our tests. We have had Medicare coverage for our Oncotype DX invasive breast cancer test since 2006 and for our Oncotype DX colon cancer test since 2011. In October 2015, we obtained Medicare coverage for our Oncotype DX prostate cancer test for patients with low and very-low risk as defined by National Comprehensive Cancer Network, or NCCN, guidelines. Effective October 2017, Palmetto expanded their reimbursement coverage of our Oncotype DX prostate cancer test to include qualified patients with favorable intermediate-risk prostate cancer. In 2017, Palmetto announced that it would cover the Oncotype DX DCIS test under a new local coverage determination, or LCD, for services furnished beginning March 6, 2017.

In September 2018, the Centers for Medicare and Medicaid Services, or CMS, issued new Proprietary Laboratory Analyses, or PLA, codes for our Oncotype DX DCIS test and Oncotype DX Genomic Prostate Score test, which became effective on October 1, 2018 for administrative and billing purposes. Medical national payment rates for the new PLA codes for both tests became effective January 1, 2019.

We have expanded our business in both the United States and international markets. Operational requirements generally vary from country to country, and different countries may have a public healthcare system, a combination of public and private healthcare system or a cash-based payment system. We have a direct commercial presence with employees in Canada, Japan and certain European countries, including our European headquarters in Geneva, Switzerland. Additionally, we have exclusive distribution agreements for the sale of our breast and colon cancer tests with distributors covering more than 90 countries outside of the United States.

As our international business expands, our financial results become more sensitive to the effect of fluctuations in foreign currency exchange rates. For example, in countries where we have a direct commercial presence, our tests are sold in local currency, which results in foreign currency exchange rate fluctuations affecting our U.S.-dollar reported revenues. In other markets where we sell our tests in U.S. dollars to distribution partners, the demand for our tests may be impacted by the change in U.S. dollar exchange rates affecting partners’ costs or local market price adjustments.

We expect that international sales of our Oncotype tests will be heavily dependent on the availability of reimbursement and sample access. In many countries, governments are primarily responsible for reimbursing diagnostic tests. Governments often have significant discretion in determining whether a test will be reimbursed at all, and if so, on what conditions, for which other competing products, and how much will be paid. In addition, certain countries, such as China, have limitations on exporting tissue samples which will impair our ability to offer our tests in those countries without local laboratories or a method of test delivery which does not require samples to be transported to our U.S. laboratory.

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The majority of our international Oncotype DX breast and colon cancer test revenues come from direct payor reimbursement, payments from our distributors, patient self-pay, and clinical collaborations in various countries. We have obtained some coverage, which varies substantially from country to country, for our breast cancer test outside of the United States, including in Argentina, Canada, the Czech Republic, Germany, Greece, Hungary, Ireland, Israel, Saudi Arabia, Spain, Switzerland and the United Kingdom.

We established reimbursement with NHS England following the National Institute for Health and Care Excellence, or NICE, recommendation for our breast cancer test, and in 2015 we began to receive payments from NHS England trusts with whom we have completed contractual arrangements. In December 2018, NICE issued updated guidance to include patients with micrometastases, while continuing to recommend the Oncotype DX breast cancer test for use in clinical practice to guide chemotherapy treatment decisions for certain patients with early stage, N-, hormone receptor positive, human epidermal growth factor receptor 2, or HER2, negative, invasive breast cancer.

In 2014, the Gynecologic Oncology Working Group, or AGO, in Germany first updated their guidelines to recommend Oncotype DX as the only breast cancer gene expression test to predict chemotherapy benefit in early-stage, hormone receptor-positive invasive breast cancer. Additionally, in its updated assessment of breast cancer gene expression profiling tests, the German Institute for Quality and Efficiency in Health Care, or IQWiG, concluded in September 2018 that only the Oncotype DX Breast Recurrence Score test has sufficient evidence to guide breast cancer adjuvant chemotherapy decisions based on the Trial Assigning IndividuaLized Options for Treatment (Rx), or TAILORx, study results. Also, each of the AGO in Germany and the Japan Breast Cancer Society recently updated their guidelines to recommend Oncotype DX as the only breast cancer gene expression test to predict chemotherapy benefit in early-stage, hormone receptor-positive invasive breast cancer. In June 2019, the German Federal Joint Committee, or G-BA, issued a positive reimbursement decision for the Oncotype DX Breast Recurrence Score test, which will provide wide national coverage for patients with early stage, primary N-, hormone receptor positive, HER2-negative breast cancer.

We expect that it will take several years to establish broad coverage and reimbursement for our Oncotype DX breast, colon and prostate cancer tests with payors in countries outside of the United States and there can be no assurance that our efforts will be successful.

Oncotype DX Breast Cancer Tests

We expect to continue to focus substantial resources on pursuing adoption of and reimbursement for our Oncotype DX breast cancer test including through the development of a distributable in vitro diagnostic, or IVD, version of the Oncotype DX breast cancer test, offered on the Biocartis Idylla platform, which we currently anticipate will be available in select European markets beginning in 2020. We believe increased demand for our Oncotype DX breast cancer test resulted from the impact of the Trial Assigning IndividuaLized Options for Treatment (Rx), or TAILORx, results in June 2018, our ongoing commercial efforts, expanded utility for new breast cancer patient groups, continued publication of peer-reviewed articles on studies we sponsored, conducted or collaborated on that support the use of and reimbursement for the test, clinical presentations at major symposia, and the inclusion of our breast cancer test in clinical practice guidelines for, node negative, or N−, estrogen receptor positive, or ER+, invasive disease. However, this increased demand is not necessarily indicative of future growth rates, and we cannot provide assurance that this level of increased demand can be sustained or that publication of articles, future appearances or presentations at medical conferences, increased commercial efforts or expansion of utility to new breast cancer patient groups will have a similar impact on demand for our breast cancer test in the future. Sequential quarterly demand for our breast cancer test may also be impacted by other factors, including the economic environment and seasonal variations that have historically impacted physician office visits, any shift in commercial focus, patient enrollment in Oncotype DX clinical studies and the number of clinical trials in process by cooperative groups or makers of other tests conducting experience studies.

In June 2018, the results of the TAILORx trial were published in The New England Journal of Medicine and presented at the plenary session of the 2018 American Society of Clinical Oncology annual meeting. The TAILORx trial was independently designed and led by ECOG-ACRIN Cancer Research Group under the sponsorship of the National Cancer Institute, or NCI. TAILORx represents the largest breast cancer treatment trial ever conducted, and thousands of investigators enrolled more than 10,000 women across approximately 1,200 sites in six countries. With regard to the

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primary endpoint, TAILORx enrolled approximately 7,000 women with Oncotype DX Breast Recurrence Score results of 11 to 25. This primary study group was randomized to receive hormonal therapy with or without chemotherapy in order to more precisely define the benefit of chemotherapy, if any. These randomized patients with Oncotype DX Breast Recurrence Score results of 11 to 25 comprised approximately two-thirds of all TAILORx patients and were followed long-term, with nine-year outcomes reported. This group of women represents approximately 260,000 breast cancer patients diagnosed in major global markets each year. The TAILORx study definitively established that chemotherapy can be spared in at least 70 percent of patients. Tumor size or tumor grade did not predict chemotherapy benefit. Thus, the TAILORx trial established that chemotherapy treatment should be guided using the Oncotype DX breast cancer test as the genomic classifier. We anticipate that the results of the TAILORx study will continue to have a positive impact on our invasive breast cancer revenue growth.

Most national and regional third-party payors in the United States, along with the designated regional Medicare Administrator Contractor for our tests, have issued positive coverage determinations for our Oncotype DX breast cancer test for patients with N−, ER+ invasive disease through contracts, agreements or policy decisions. The local carrier with jurisdiction for claims submitted by us for Medicare patients also provides coverage for our invasive breast cancer test for ER+ patients with N+ disease (up to three positive lymph nodes) and invasive breast cancer patients where a lymph node status is unknown or not accessible due to a prior surgical procedure, or when the test is used to guide a neoadjuvant treatment decision. Additionally, some payors provide policy coverage for the use of our test in ER+ patients with N+ disease, including lymph node micro metastasis. However, we may not be able to obtain reimbursement coverage from other payors for our test for breast cancer patients with N+, ER+ disease.

We have established limited reimbursement coverage for the use of our Oncotype DX DCIS test for some private third-party payors. In many instances our test is covered under existing breast cancer coverage policies with the addition of the indicated diagnosis code for DCIS. We have also received an LCD for our Oncotype DX DCIS test beginning March 2017. We intend to continue to devote resources to expanding private reimbursement for our Oncotype DX DCIS test in this patient population. We believe it may take several years to achieve reimbursement with a majority of third-party payors for the use of our test for DCIS patients. However, we cannot predict whether, or under what circumstances, payors will reimburse for this test.

We have established coverage for our Oncotype DX invasive breast cancer test in more than 90% of state Medicaid programs for N− disease. In addition, the Veterans Administration and the Department of Defense hospitals have processes in place that provide coverage for this test.

Oncotype DX Colon Cancer Test

We expect to continue to pursue adoption of and reimbursement for our Oncotype DX colon cancer test. We are working with public and private payors and health plans to secure coverage for our Oncotype DX colon cancer test based upon our published and presented results in clinical validation studies and the completed and ongoing studies designed to demonstrate the treatment decision impact of the test in clinical practice. We intend to pursue reimbursement while seeking to obtain formal coverage policies with payors and expect that this test will continue to be reviewed on a case by case basis until policy decisions have been established. We believe it may take several years to achieve additional reimbursement with third-party payors for our colon cancer test. However, we cannot predict whether, or under what circumstances, payors will reimburse for this test.

Oncotype DX Prostate Cancer Test

We expect to continue to focus substantial resources on pursuing adoption of and reimbursement for our Oncotype DX prostate cancer test. We believe the key factors that will drive adoption of this test include publication of the clinical validation study conducted in collaboration with the University of California, San Francisco and other studies we sponsored, conducted or collaborated on that support the use of and reimbursement for the test, clinical presentations at major symposia and our ongoing commercial efforts.

In 2015, Palmetto issued its final LCD, approving nationwide coverage of our prostate cancer test for qualified male Medicare patients with low and very-low risk disease, as defined by NCCN guidelines, throughout the United States and

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subsequently initiated reimbursement of the Oncotype DX prostate cancer test. The LCD includes specific requirements for certification and training of physicians who order the test and requirements for collection and reporting of specific data elements related to the use of our test and patient outcomes. .

In August 2017, Palmetto issued its final LCD, recommending Medicare coverage for use of our prostate cancer test in qualified patients with favorable intermediate-risk prostate cancer. Effective October 2017, Palmetto expanded their reimbursement coverage of our Oncotype DX prostate cancer test to include qualified patients with favorable intermediate-risk prostate cancer.

Other than Medicare coverage, we have obtained limited reimbursement coverage from third-party payors for our Oncotype DX prostate cancer test. Our prostate cancer test may be considered investigational by payors and therefore may not be covered under their reimbursement policies. Consequently, we intend to pursue case by case reimbursement and expect that this test will continue to be reviewed on this basis until policy decisions have been made by individual payors. We plan to work with public and private payors and health plans to secure coverage for our Oncotype DX prostate cancer test based upon clinical evidence demonstrating the clinical utility of the test. We believe it may take several years to achieve reimbursement with a majority of third-party payors for our prostate cancer test. However, we cannot predict whether, or under what circumstances, payors will reimburse for this test. We may continue to hire additional commercial, scientific, technical and other personnel to support this process.

Oncotype DX AR-V7 Nucleus Detect Test

In 2016, we entered into a collaboration agreement with Epic Sciences which was subsequently superseded in March 2019 by a new contractual agreement, under which we have been granted exclusive license and distribution rights to commercialize the Oncotype DX AR-V7 Nucleus Detect test in the United States.

The Oncotype DX AR-V7 Nucleus Detect test is performed by Epic Sciences in its centralized laboratory in San Diego, California. This blood-based test detects the V7 variant of the androgen receptor, or AR, protein in the nucleus of CTCs, and provides information to help guide treatment selection in patients with metastatic castration-resistant prostate cancer, or mCRPC.

In January 2017, investigators from Memorial Sloan Kettering Cancer Center and Epic Sciences published findings in European Urology, that only nuclear localization of AR-V7 protein in CTCs from mCRPC patient blood samples is predictive of therapeutic benefit. Previous work by the same team, reported in JAMA Oncology, demonstrated that nuclear localized AR-V7 protein in CTCs was predictive of a 76% reduction of risk of death for mCRPC patients who received taxane chemotherapy versus Androgen Receptor Signaling Inhibitors. We began making the Oncotype DX AR-V7 Nucleus Detect test available through a clinical utility program in July 2017 and it became commercially available in February 2018.

In October 2018, Palmetto initiated coverage for the use of the Oncoytpe DX AR-V7 test through its final LCD, providing coverage for eligible Medicare patients for dates of service on or after December 10, 2018.

We believe that this test is complementary to our other Oncotype tests and allows us to leverage our commercial channel in oncology and urology in a way that we believe may generate growth across our business in the United States. We may also pursue additional collaboration opportunities that are intended to complement our expanding product portfolio.

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Commercial Collaborations

In September 2017, we entered into an exclusive license and development agreement with Biocartis N.V., or Biocartis, a molecular diagnostics company based in Belgium, to develop and commercialize an IVD version of the Oncotype DX breast cancer test on Biocartis' Idylla platform that can be performed locally by laboratory partners and in hospitals around the world. The Idylla platform offers a unique solution in the localization of complex molecular diagnostics. Using the sample-to-answer, real-time PCR-based cartridge of the Idylla platform, we intend to enable local pathology labs to generate Oncotype DX breast recurrence score results. Under the terms of the license and development agreement, we have an exclusive, worldwide, royalty-bearing, license to develop and commercialize an IVD version of our Oncotype DX breast cancer test on Biocartis’ Idylla platform, and an option to expand the collaboration to include additional tests in oncology and urology. We have primary responsibility for developing, validating and registering IVD tests to be performed on the Idylla platform, and are also responsible for manufacturing and commercialization activities with respect to such tests. In November 2018, we signed an addendum to the license and development agreement with Biocartis, exercising our option to expand the collaboration to include urology. We obtained a first right to add an additional test, a non-invasive detection of prostate cancer in a pre-biopsy setting. We did not extend the right of first refusal which expired in May 2019.

See Note 6 “Collaboration and Commercial Technology Licensing Agreements” in the Notes to Condensed Consolidated Financial Statements for additional information regarding the financial terms of our commercial collaboration agreements.

Product Development Opportunities

In addition to developing products to address new cancer areas, we seek to expand the clinical utility and addressable patient populations for our existing tests, including expanding our current test offerings to include tests that are performed as IVDs. These development efforts may lead to a variety of possible new products covering various treatment decisions, including risk assessment, screening and prevention, early disease diagnosis, adjuvant and/or neoadjuvant disease treatment, metastatic disease treatment selection and patient monitoring.

Potential new products may address a variety of specific clinical needs by leveraging one or multiple technological capabilities. Additionally, we believe potential new products can be implemented in the form of non-invasive tests performed on blood or urine, similar to the Oncotype DX AR-V7 Nucleus Detect test.

We are developing an IVD version of the Oncotype DX breast cancer test on Biocartis' Idylla platform that we believe will be able to be performed locally by laboratory partners and in hospitals around the world.

As new clinical evidence continues to be introduced, we intend to incorporate such evidence into additional iterations of these tests, which could include additional genes or updated interpretations of genes already included in such tests.

Technology

Next Generation Technologies

When the presence of tumor-derived DNA in blood or urine is high and persists or increases over time, the cancer is likely growing and a new course of treatment may be appropriate. We plan on monitoring this tumor-derived DNA through a variety of technologies to expand our focus beyond early-stage treatment decision support toward patients with later-stage disease to help guide therapeutic choices, monitor progression and response to therapeutics, and monitor disease recurrence. We may pursue additional research and development opportunities and leverage our existing and future collaborations using other analytes such as circulating tumor cells, or CTCs, RNA, and proteins. Additionally, we may also use a number of other technologies across our various development programs and to implement our products. While early-stage cancer continues to represent a significant opportunity with near-term revenue potential, we believe we also have an opportunity to expand our business further along the patient’s cancer journey, both through our research and development process and strategic collaborations.

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We are also working with a number of different technologies, such as digital PCR and detection and capture methods for circulating tumor cells, or CTCs, and circulating tumor DNA, or ctDNA, to expand our capabilities, and continue to develop methods to enable genomic testing using a variety of biological materials such as blood and urine.

We have developed computer programs to automate our RT-PCR assay processes. We have also developed and optimized laboratory information management systems to track our gene-specific reagents, instruments, assay processes and the data generated. Similarly, we have automated data analysis, storage and process quality control. We use statistical methods to optimize and monitor assay performance and to analyze data from our development studies. We are investigating methods to further automate our workflow.

Economic Environment

Continuing concerns over entitlement and health care reform efforts, including efforts to repeal, replace or reduce the impact of the Affordable Care Act, or ACA, the elimination of the ACA’s personal mandate, regulatory changes and taxation issues, and geopolitical issues have contributed to uncertain expectations both for the U.S. and global economies. These factors, combined with uncertainties in business and consumer confidence and continued concerns regarding the stability of some European Union member countries and the United Kingdom’s exit from the European Union, have contributed to the expectations of slower domestic and global economic growth in the near term. We periodically evaluate the impact of the economic environment on our cash management, cash collection activities and volume of tests delivered.

As of the date of this report, we have not experienced a loss of principal on any of our short-term marketable securities, and we expect that we will continue to be able to access or liquidate these investments as needed to support our business activities. We periodically monitor the financial position of our significant third-party payors, which include Medicare and managed care companies. As of the date of this report, we do not expect the current economic environment to have a material negative impact on our ability to collect payments from third-party payors in the foreseeable future. We believe the economic environment and changes in the healthcare system continued to impact product payment cycles, growth in tests delivered and product revenue generated during the three and nine months ended September 30, 2019. We intend to continue to assess the impact of the economic environment on our business activities. If the economic environment does not improve or deteriorates, our business including our patient population, government and third-party payors and our distributors and suppliers could be negatively affected, resulting in a negative impact on our product revenues.

U.S. Healthcare Reimbursement and Regulatory Environment

The healthcare industry has undergone significant change driven by various efforts to reduce costs, both in the U.S. and in many foreign countries. The effect of the implementation of the ACA, the elimination of personal mandate, or any future changes to the ACA on our business is uncertain and, could among other things limit the use of our tests and reduce reimbursement. We also expect that pricing of medical products and services will remain under pressure as alternative payment models such as bundling, value-based purchasing and accountable care organizations develop in the United States. Additionally, the ACA requires medical device manufacturers to pay a 2.3% excise tax on U.S. sales of certain medical devices that are listed with the FDA starting in January 2013; this tax has been suspended through 2019, but is scheduled for re-imposition in 2020. Various proposals have been put forth, including by the FDA to regulate laboratory developed tests, or LDTs, as medical devices. Although none of our LDTs, such as our Oncotype DX breast, colon and prostate cancer tests, are currently listed with the FDA, we cannot assure you that the tax will not apply to services such as ours in the future.

In addition, the Protecting Access to Medicare Act of 2014, or PAMA, requires CMS to implement a substantial new payment system for certain clinical laboratory tests, which became effective in 2018. Under PAMA, laboratories that receive the majority of their Medicare revenues from payments made under the Clinical Laboratory Fee Schedule, or CLFS, or the Physician Fee Schedule will be required to report every three years (or annually for “advanced diagnostic laboratory tests”), private payor payment rates and volumes for their tests. CMS will use the rates and volumes reported by laboratories to develop Medicare payment rates for the tests equal to the volume-weighted median of the private

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payor payment rates for the tests. As a result, effective January 1, 2018, our Medicare reimbursement rate for our invasive breast cancer test increased by more than 10%. This rate will be reassessed by CMS every three years.

There have also been recent and substantial changes to the payment structure for physicians, including those passed as part of the Medicare Access and CHIP Reauthorization Act of 2015, or MACRA, which was signed into law on April 16, 2015. MACRA created the Merit-Based Incentive Payment System which, beginning in 2019, more closely aligns physician payments with composite performance for the Physician Quality Reporting System, the Value-based modifier program and the Electronic Health Record Meaningful Use program, and incentivizes physicians to enroll in alternative payment methods. At this time, we do not know whether these changes to the physician payment systems will have any impact on orders or payments for our tests.

Changes in Medicare Administrative Contractor (MAC) services

On a five-year basis, Medicare requests bids for its regional MAC services. Palmetto GBA under their MolDx Program is continuing to establish coverage and coding policies for molecular diagnostic tests performed in our jurisdiction, including our tests, which is not subject to the same five-year rotation as for regional MAC services. The elimination of the MolDx Program or a change in the administrator of that program could impact the current coverage for our existing tests and our ability to obtain Medicare coverage for products for which we do not yet have coverage or any products we may launch in the future, or delay payments for our tests.

Recent Development

On July 28, 2019, Genomic Health, Exact Sciences Corporation, a Delaware corporation, or Exact Sciences, and Spring Acquisition Corporation, a Delaware corporation and wholly owned subsidiary of Exact Sciences, or Merger Sub, entered into an Agreement and Plan of Merger, or the Merger Agreement, pursuant to which, among other things, Merger Sub will be merged with and into Genomic Health, or the Merger, with Genomic Health surviving the Merger as a wholly owned subsidiary of Exact Sciences, subject to the terms and conditions of the Merger Agreement. The boards of directors of both Genomic Health and Exact Sciences have unanimously approved the transaction. The completion of the Merger is subject to customary conditions, including, among others, the approval of the Merger by our stockholders, the absence of any order or law that has the effect of enjoining or otherwise prohibiting the completion of the Merger, each party’s representations and warranties being true and correct as of the closing, generally to a “Material Adverse Effect” standard, and the approval for listing of the shares of Exact Sciences common stock forming part of the merger consideration on the Nasdaq Stock Market and the effectiveness of a registration statement on Form S-4 with respect to such Exact Sciences common stock and the approval for listing of the shares of Exact Sciences common stock forming part of the merger consideration on the Nasdaq Stock Market. Pursuant to the Merger Agreement, and subject to the terms and conditions contained therein, upon the closing of the Merger, each share of our common stock outstanding immediately prior to the closing of the Merger (other than shares of our common stock owned by us or by Exact Sciences, any of its subsidiaries, any of our subsidiaries or holders of our common stock, if any, who properly exercise their appraisal rights under the General Corporation Law of the State of Delaware) will be converted into the right to receive (a) $27.50 in cash, without interest, and (b) a number of shares of common stock of Exact Sciences equal to (i) 0.36854, if the average of the volume-weighted average prices per share of Exact Sciences common stock on the Nasdaq Stock Market for each of the fifteen consecutive trading days ending immediately prior to the closing date (the “measurement price”) is equal to or greater than $120.75, (ii) an amount equal to the quotient obtained by dividing $44.50 by the measurement price if the measurement price is greater than $98.79 but less than $120.75, and (iii) 0.45043, if the measurement price is equal to or less than $98.79, less any applicable withholding taxes.

Critical Accounting Policies and Significant Judgments and Estimates

The preparation of our condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts in the financial statements and related disclosures. On an ongoing basis, management evaluates its significant accounting policies and estimates. We base our estimates on historical experience and on various market-specific and other relevant assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ significantly from these estimates. Estimates are assessed each period and

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updated to reflect current information. A summary of our critical accounting policies is presented in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2018. During the first quarter of 2019, we adopted new accounting guidance related to leases which is described below at “Recently Adopted Accounting Pronouncements.” There have been no other significant changes in our accounting policies during 2019 as compared to the significant accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2018.

Results of Operations

Three and Nine Months Ended September 30, 2019 and 2018

We recognized net income of $18.7 million and $47.7 million for the three and nine months ended September 30, 2019 compared to a net income of $12.2 million and $16.8 million for the three and nine months ended September 30, 2018. On a basic and diluted per share basis, net income per share was $0.50 and $0.48, respectively, for the three months ended September 30, 2019, and $1.29 and $1.23, respectively, for the nine months ended September 30, 2019. On a basic and diluted per share basis, net income per share was $0.34 and $0.32, respectively, for the three months ended September 30, 2018, and $0.47 and $0.45, respectively, for the nine months ended September 30, 2018. We may incur net losses in future periods due to future spending and fluctuations in our business, and we may not achieve or maintain sustained profitability in the future.

Revenues

We derive our revenues primarily from product sales and, in some periods, from contract research arrangements. We operate in one industry segment. As of September 30, 2019, the substantial majority of our product revenues have been derived from the sale of our Oncotype DX breast cancer test. Payors are billed upon generation and delivery of test results to the ordering physician.

Revenues are recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.


	For the Three Months Ended					For the Nine Months Ended
	September 30,						September 30,
	2019			2018		2019			2018
	(In thousands)					(In thousands)
Invasive breast cancer test	$	101,220		$	92,063	$	298,719		$	263,092
Prostate cancer test		9,443			6,997		27,673			19,614
Other		3,692			2,198		10,860			6,796
Product revenues	$	114,355		$	101,258	$	337,252		$	289,502
Period over period dollar increase in product revenues	$	13,097				$	47,750
Period over period percentage increase in product revenues		13	%				16	%

Contract revenues		—			—		12			—
Total revenues	$	114,355		$	101,258	$	337,264		$	289,502
Period over period dollar increase in total revenues	$	13,097				$	47,762
Period over period percentage increase in total revenues		13	%				16	%

The period over period increases in product revenues resulted primarily from increased adoption of our tests, as well as expanded private and Medicare coverage, collection efficiencies due to process and system improvements and private payor contract renewals. The 13% and 16% increase in product revenues for the three and nine months ended September 30, 2019, respectively, compared to the same period in 2018 includes reimbursement for Oncotype DX AR-V7 Nucleus Detect tests that were delivered in 2018 as well as an increase in the Medicare reimbursement rate and expanded reimbursement from private payors in 2019 for our prostate cancer test.

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Test volume increased by 13% and 14%, respectively, for the three and nine months ended September 30, 2019 compared to the three and nine months ended September 30, 2018. Of the growth in test volume, our U.S. invasive breast cancer and prostate cancer tests increased by 9% and 19%, respectively, for the three months ended September 30, 2019 compared to the same period in 2018. For the nine months ended September 30, 2019 compared to the same period in 2018, test volume of our U.S. invasive breast cancer and prostate cancer tests increased 11% and 18%, respectively.

International product revenue was $19.0 million, or 17% and $54.9 million or 16%, respectively, of product revenues for the three and nine months ended September 30, 2019 compared to $15.5 million, or 15% and $43.4 million or 15%, respectively, of product revenues for the three and nine months ended September 30, 2018. These increases were primarily due to revenue growth in the United Kingdom, Canada, and the Asia-Pacific region offset by the impact of a stronger U.S. dollar compared to the Euro and British pound. International test volume increased by 19% and 23% for the three and nine months ended September 30, 2019 compared to the same periods in 2018.

Product revenues related to Medicare patients for each of the three and nine months ended September 30, 2019 comprised 24% of product revenues compared to 23% and 24% for each of the same periods in 2018. There were no other third-party payors comprising product revenues of 10% or more for those periods.

Cost of Product Revenues


	For the Three Months Ended					For the Nine Months Ended
	September 30,					September 30,
	2019			2018		2019			2018
	(In thousands)					(In thousands)
Cost of product revenues	$	18,709		$	15,518	$	53,391		$	48,635
Period over period dollar increase	$	3,191				$	4,756
Period over period percentage increase		21	%				10	%

Cost of product revenues includes the cost of materials, direct labor, equipment and infrastructure expenses associated with processing tissue samples (including sample accessioning, histopathology, anatomical pathology, paraffin extraction, RT-PCR, quality control analyses and shipping charges to transport tissue samples) and license fees. Infrastructure expenses include allocated facility occupancy and information technology costs. Costs associated with performing our tests are recorded as tests are processed. Costs recorded for tissue sample processing represent the cost of all the tests processed during the period regardless of whether revenue was recognized with respect to that test.

The $3.2 million, or 21% increase in the cost of product revenue for the three months ended September 30, 2019 compared to the three months ended September 30, 2018 was primarily due to an increase of $1.7 million in other expenses, such as license fees, including payments to Epic Sciences for processing Oncotype DX AR-V7 Nucleus Detect tests, lab supplies, reagents and shipping expenses, which were primarily due to an increase in test volume, an increase of $1.2 million in personnel cost, primarily due to increased salary, bonus and contract labor and an increase in facilities costs of $320,000.

The $4.8 million, or 10% increase in the cost of product revenue for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018 was primarily due to an increase of $3.8 million in other expenses, such as license fees, lab supplies, reagents and shipping expenses, which were primarily due to an increase in test volume, an increase of $3.7 million in personnel cost, primarily due to increased salary, bonus, stock-based compensation expense and contract labor, partially offset by a decrease of $2.6 million for a one-time write-off of fixed assets and lab supplies due to our March 2018 cessation of Oncotype SEQ, including Oncotype SEQ Liquid Select test, product development and commercialization activities. Excluding the first quarter 2018 Oncotype SEQ related termination costs, total cost of product revenues for the nine months ended September 30, 2019 would have increased by 16% over expenses in the comparable period in 2018.

We expect the cost of product revenues may increase in future periods to the extent we process more tests.

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Research and Development Expenses


	For the Three Months Ended					For the Nine Months Ended
	September 30,					September 30,
	2019			2018		2019			2018
	(In thousands)					(In thousands)
Research and development expenses	$	16,457		$	15,433	$	46,828		$	47,552
Period over period dollar increase (decrease)	$	1,024				$	(724)
Period over period percentage increase (decrease)		7	%				(2)	%

Research and development expenses represent costs incurred to develop our technology, our pipeline products and continuous process improvement, and carry out clinical studies, primarily related to our ongoing work in breast and prostate cancer. Research and development expenses include personnel related expenses, reagents and supplies used in research and development laboratory work, collaboration expenses, infrastructure expenses, including allocated overhead and facility occupancy costs, contract services and other outside costs.

The $1.0 million, or 7%, increase in research and development expenses for the three months ended September 30, 2019 compared to September 30, 2018 was primarily due to a $2.8 million increase in personnel expenses, primarily as a result of increased salary, bonus, and stock-based compensation expense, primarily due to increased headcount, as well as increased contract labor and an increase in facilities costs of $461,000 partially offset by a $2.3 million decrease in collaboration expense resulting from one-time payments in 2018 of a $1.2 million milestone payment to Biocartis and a $1.l million decrease in clinical studies expense for a TAILORx milestone payment and other studies.

The $724,000, or 2%, decrease in research and development expenses for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018 was primarily due to a $5.0 million decrease in collaboration expense and a $744,000 million decrease in other costs, partially offset by a $4.5 million increase in personnel expenses, primarily due to increased salary, bonus, consulting, stock-based compensation expense and contract labor and an increase of $400,000 in travel related expenses.

The decrease in collaboration expense resulted from one-time payments in 2018 including a $2.1 million milestone payment to Biocartis, a $1.3 million write-off of a convertible promissory note in connection with the termination of our collaboration with Cleveland Diagnostics and a $1.6 million milestone payment for TAILORx and other studies that were concluded in 2018. The decrease in other costs was partially due to the $1.3 million charge for impairment of long-lived assets related to our March 2018 cessation of Oncotype SEQ, including Oncotype SEQ Liquid Select test, product development and commercialization activities. The increase in personnel-related expenses was reduced by the March 2018 one-time expense of $1.8 million in severance charges, primarily due to the reduction in personnel resulting from our decision to no longer provide our commercial offering of Oncotype SEQ Liquid Select or any further investment in next generation sequencing (NGS) panels. Excluding the first quarter 2018 Oncotype SEQ related termination and impairment costs, total research and development expenses would have increased by 5% over the comparable nine month period in 2018.

We expect our research and development expenses to increase in future periods due to increased investment in our new product pipeline for breast, prostate and other cancers.

Selling and Marketing Expenses


	For the Three Months Ended					For the Nine Months Ended
	September 30,					September 30,
	2019			2018		2019			2018
	(In thousands)					(In thousands)
Selling and marketing expenses	$	39,910		$	40,051	$	129,898		$	122,143
Period over period dollar increase	$	(141)				$	7,755
Period over period percentage increase		(0)	%				6	%

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Our selling and marketing expenses consist primarily of personnel related expenses, education and promotional expenses, market analysis and development expenses and infrastructure expenses, including allocated facility occupancy and information technology costs. These expenses include the costs of educating physicians, laboratory personnel and other healthcare professionals regarding our genomic technologies, how our tests are developed and validated and the value of the quantitative information that our tests provide. Selling and marketing expenses also include the costs of sponsoring continuing medical education, medical meeting participation and dissemination of scientific and economic publications related to our tests. Our sales force compensation includes annual salaries and eligibility for quarterly commissions based on the achievement of predetermined sales goals and other management objectives.

The $141,000 decrease in selling and marketing expenses for the three months ended September 30, 2019 compared to the three months ended September 30, 2018 was primarily due to a $1.4 million decrease in promotional marketing materials expense, substantially offset by a $712,000 million increase in facilities costs mainly due to international lease costs and a $592,000 increase in personnel-related expense, primarily from increased head count.

The $7.8 million, or 6%, increase in selling and marketing expenses for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018 was primarily due to a $4.1 million increase in personnel-related expense, including salary, benefits, bonus, contract labor and stock compensation, primarily from increased head count, as well as a $2.0 million increase in facilities costs primarily due to increased lease costs, a $1.1 million increase in promotional marketing materials expense, including expanded International promotions and a $632,000 increase in travel and entertainment resulting from increased conference sponsorships. The increase in promotional and marketing materials was due to a combination of new international product campaigns and marketing and trade shows along with an increase in sponsorships.

We expect selling and marketing expenses will increase in future periods due to our efforts to establish adoption of and reimbursement for our products, continued investment in our global commercial infrastructure and increases in our sales force and incurring other expenses to support the growth of our business.

General and Administrative Expenses


	For the Three Months Ended					For the Nine Months Ended
	September 30,					September 30,
	2019			2018		2019			2018
	(In thousands)					(In thousands)
General and administrative expenses	$	20,233		$	18,498	$	61,064		$	56,702
Period over period dollar increase	$	1,735				$	4,362
Period over period percentage increase		9	%				8	%

Our general and administrative expenses consist primarily of personnel-related expenses, occupancy and equipment expenses, including rent and depreciation expenses, billing and collection fees, bad debt expense, professional fees and other expenses, including intellectual property defense and prosecution costs, and other administrative costs, partially offset by cost allocations to our commercial laboratory operations, research and development, and sales and marketing functions, including allocated information technology and facility occupancy costs.

The $1.7 million, or 9%, increase in general and administrative expenses for the three months ended September 30, 2019 compared to the three months ended September 30, 2018 was primarily due to a $1.3 million increase in professional fees, including billing and collections and legal fees, a $326,000 increase in personnel expenses, primarily due to increased bonus and stock-based compensation expense and a $301,000 increase in facilities cost, partially offset by a $228,000 decrease in contract labor and consulting services.

The $4.4 million, or 8%, increase in general and administrative expenses for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018 was primarily due to a $3.2 million increase in professional fees, including billing and collections and legal fees, a $945,000 increase in personnel expenses, a $790,000 increase in facilities costs and a $238,000 increase in promotional and marketing materials, partially offset by a $777,000 decrease in contract labor and consulting services related to the evaluation of our business for process improvements and

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information technology enhancements in 2018. The increase in personnel-related expenses were a result of increases in employee benefits, payroll taxes and stock-based compensation expense of $1.3 million due to an increase in head count during 2019 offset by a decrease in salary expense of $373,000, primarily due to higher salary expense in 2018 for severance and other personnel-related costs related to our cessation of Oncotype SEQ in March 2018.

We expect general and administrative expenses to increase in future periods as we hire additional staff and incur other expenses to support the growth of our business, and to the extent we spend more on billing and collections fees.

Interest Income

Interest income was $1.4 million and $3.9 million, respectively, for the three and nine months ended September 30, 2019 compared to $676,000 and $1.5 million, respectively, for the three and nine months ended September 30, 2018. The $713,000 and $2.4 million increases in interest income for the three and nine months ended September 30, 2019 over the comparable period in 2018 were primarily due to a combination of increased cash and investments in interest-bearing marketable securities and higher interest rates.

Unrealized gain on equity securities

For the three and nine months ended September 30, 2019, we had unrealized loss on equity securities of $1.2 million and $1.1 million, respectively compared to $127,000 and $1.5 million for the three and nine months ended September 30, 2018.

Other (Expense) Income, Net

Other expense, net was $296,000 and $373,000 for the three and nine months ended September 30, 2019, respectively, compared to other income, net of $39,000 and $101,000 for the three and nine months ended September 30, 2018, respectively. Other expense, net for the three and nine months ended September 30, 2019 was primarily related to net foreign currency losses of $330,000 and $560,000, partially offset by a gain on revaluation of deferred compensation investments of $39,000 and $90,000, respectively. Other income, net for the three and nine months ended September 30, 2018 was primarily related to $3,000 and $37,000 of net foreign currency losses and gains, respectively. We expect other income (expense), net to continue to fluctuate based on fluctuations in exchange rates that impact our foreign currency transaction gains and losses.

Income Tax Expense

We recognized income tax expense of $206,000 and $813,000 for the three and nine months ended September 30, 2019, respectively, which was computed using the “discrete” (or “cut-off”) method. The income tax expense for both periods was primarily comprised of foreign tax expense.

We recognized income tax expense of $375,000 and $834,000 for the three and nine months ended September 30, 2018, respectively, which was computed using the “discrete” (or “cut-off”) method. The income tax expense for both periods was primarily comprised of foreign tax expense.

Based on all available objective evidence, we believe that it is more likely than not that our deferred tax assets will not be fully realized. Accordingly, we maintain a valuation allowance on all of our deferred tax assets as of both September 30, 2019 and December 31, 2018. Because of our recent history of recognizing operating income, we are continually reassessing the likelihood of realizing our deferred tax assets. Should we determine in a future period that the realization of those assets is more likely than not, based on all available evidence, both positive and negative, that change in assessment would result in a reversal of some or all of our recorded valuation allowance which would have a significant impact to that period’s provision for income taxes and net income.

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Liquidity and Capital Resources

As of September 30, 2019, we had an accumulated deficit of $188.8 million. We may incur net losses in the future, and we cannot provide assurance that our profitability is sustainable. We expect that our research and development expenses, selling and marketing expenses and general and administrative expenses will increase in future periods and, as a result, we will need to continue to generate significant product revenues to achieve ongoing profitability.


	September 30,		December 31,
	2019		2018
	(in thousands)
Cash, cash equivalents, restricted cash, and short-term marketable securities	$	275,701	$	210,066
Working capital		287,164		215,060

In 2012, we entered into an accelerated share repurchase agreement with a financial institution to repurchase $30.1 million of its common stock on an accelerated basis. In April 2019, we retired all existing treasury stock.

Sources (Uses) of Liquidity

Historically, we have financed our operations primarily through sales of our equity securities and cash received in payment for our tests. At September 30, 2019, we had cash, cash equivalents, restricted cash and short-term investments of $275.7 million compared to $210.1 million at December 31, 2018. The $65.6 million increase in cash, cash equivalents, restricted cash and short-term investments was primarily attributable to an increase in cash generated from operations, partially offset by capital expenditures, cash payments for annual bonuses and payroll taxes on annual RSU vesting, as well as investments in the growth of our business, including research and development, global expansion, and activities related to reimbursement coverage of our tests. In accordance with our investment policy, available cash is invested in short-term and long-term, U.S. Treasury securities, and, low risk, investment-grade debt instruments. Our cash and marketable securities are held in a variety of interest-bearing instruments including money market accounts and high-grade commercial paper and corporate bonds.

Accounts Receivable

At September 30, 2019 and December 31, 2018, $55.9 million and $51.5 million, or 12% and 15%, respectively, of our total assets consisted of accounts receivable. The $4.4 million increase in accounts receivable was primarily due to an increase in product revenue.

Days sales outstanding, or DSO, is a measure of the average number of days it takes for us to collect our accounts receivable, calculated from the date that tests are billed. At September 30, 2019 and December 31, 2018, our weighted average DSOs were 50 days and 65 days, respectively. The timing of our billing and cash collections may also cause fluctuations in our monthly DSOs and accounts receivable. We actively monitor our accounts receivable aging and during the quarter ended September 30, 2019, we updated the underlying methodology of our DSO calculation to the traditional method, to better reflect our collection efficiency and align with industry practice.

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The following tables summarize accounts receivable by payor mix at September 30, 2019 and December 31, 2018:


	September 30, 2019
			% of				31 - 60		61 - 90		91 - 120		121 to 180		Over 180
	Total		Total		Current		Days		Days		Days		Days		Days
	(In thousands)
Managed care and other	$	48,775	87	%	$	16,397	$	9,397	$	6,085	$	3,910	$	5,201	$	7,785
Medicare		7,100	13			5,664		706		254		153		114		209
Total accounts receivable	$	55,875	100	%	$	22,061	$	10,103	$	6,339	$	4,063	$	5,315	$	7,994


	December 31, 2018
			% of				31 - 60		61 - 90		91 - 120		121 to 180		Over 180
	Total		Total		Current		Days		Days		Days		Days		Days
	(In thousands)
Managed care and other	$	42,739	83	%	$	15,838	$	8,621	$	3,980	$	3,272	$	4,433	$	6,595
Medicare		8,792	17			5,735		1,333		748		513		292		171
Total accounts receivable	$	51,531	100	%	$	21,573	$	9,954	$	4,728	$	3,785	$	4,725	$	6,766

Cash Flows

The following table summarizes our cash flow activities:


	2019		2018
	(In thousands)
For the nine months ended September 30,
Cash provided by (used in):
Operating activities	$	66,878	$	51,986
Investing activities		(68,372)		(39,057)
Financing activities		11,804		10,880
Capital expenditures (included in investing activities above)	$	(15,995)	$	(6,953)

Cash Provided by Operating Activities

Cash provided by operating activities was $66.9 million for the nine months ended September 30, 2019 and consisted primarily of net income of $47.7 million and adjustments for non-cash items of $31.1 million offset by $11.9 million related to changes in operating assets and liabilities.

Cash provided by operating activities was $52.0 million for nine months ended September 30, 2018 and consisted primarily of net income of $16.8 million adjusted for non-cash items of $29.5 million and $5.7 million related to changes in operating assets and liabilities.

Cash Used in Investing Activities

Cash used in investing activities for nine months ended September 30, 2019 was $68.4 million, consisting of $224.9 million net purchases of marketable securities and $16.0 million in capital expenditures related to the expansion of our business, partially offset by $149.2 million of maturities of marketable securities and $23.3 million from sales of debt securities.

Cash used in investing activities for the nine months ended September 30, 2018 was $39.1 million, consisting of $29.6 million net purchases of marketable securities, $7.0 million in capital expenditures related to the expansion of our business and an additional $2.5 million investment in preferred stock of Epic Sciences.

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Cash Provided by Financing Activities

Cash provided by financing activities for the nine months ended September 30, 2019 was $11.8 million, consisting primarily of $24.1 million of proceeds from the issuance of our common stock upon the exercise of stock options offset by $12.2 million of cash paid for tax withholdings related to net share settlements of RSUs, and $155,000 of finance lease payments.

Cash provided by financing activities for the nine months ended September 30, 2018 was $10.9 million, consisting primarily of $16.0 million of proceeds from the issuance of our common stock upon the exercise of stock options offset by $5.1 million of cash paid for tax withholdings related to net share settlements of RSUs.

Contractual Obligations

There were no material changes during the interim period in the contractual obligations presented in the latest annual report for the year ended December 31, 2018.

Operating Capital and Capital Expenditure Requirements

We currently anticipate that our cash, cash equivalents and short-term marketable securities, together with payments for our tests, will be sufficient to fund our operations and facilities expansion plans for at least the next 12 months, including our research and development programs, our commercialization efforts related to Oncotype DX AR-V7 Nucleus Detect, our efforts to expand adoption of and reimbursement for our tests, our international expansion efforts and our development of our IVD product and capabilities. We expect to spend approximately $33 million over the next 12 months for planned laboratory equipment, information technology and facilities expansion. We may also use cash to acquire or invest in complementary businesses, technologies, services or products. We expect that our cash, cash equivalents and short-term marketable securities will also be used to fund working capital and for other general corporate purposes, such as licensing technology rights, distribution arrangements for our tests both within and outside of the United States or expanding our direct sales capabilities worldwide.

The amount and timing of actual expenditures may vary significantly depending upon a number of factors, such as the amount of cash provided by our operations, the progress of our commercialization efforts, product development, regulatory requirements, progress in reimbursement for our tests and available strategic opportunities for acquisition of or investment in complementary businesses, technologies, services or products.

We cannot be certain that our international expansion plans, efforts to expand adoption of and reimbursement for our tests or the development of future products will be successful or that we will be able to raise sufficient additional funds to see these activities through to a successful result. It may take years to move any one of a number of product candidates in research through development and validation to commercialization.

Our future funding requirements will depend on many factors, including the following:

●

the rate of progress in establishing and maintaining reimbursement arrangements with domestic and international third-party payors;

●

costs associated with expanding our commercial and laboratory operations, including our selling and marketing efforts;

●

the rate of progress and cost of research and development activities associated with expansion of our current tests and the development of new tests;

●

the rate of progress and cost of selling and marketing activities associated with expanding adoption of our tests;

●

costs associated with acquiring, licensing or investing in technologies;

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●

costs associated with acquiring or investing in complementary businesses or assets;

●

expenditures in connection with strategic relationships and license agreements, including our agreements with Epic Sciences and Biocartis;

●

costs related to future product launches;

●

costs related to acquiring or achieving access to tissue samples and technologies;

●

costs related to filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;

●

the effect of competing technological and market developments;

●

costs related to international expansion;

●

costs and delays in product development as a result of any changes in regulatory oversight applicable to our products or operations;

●

the impact of changes in Federal, state and international taxation; and

●

the economic and other terms and timing of any collaborations, licensing or other arrangements into which we may enter or investments or acquisitions we might seek to effect.

If we are not able to generate and maintain sustained product revenues to finance our cash requirements, we will need to finance future cash needs primarily through public or private equity offerings, debt financings, borrowings or strategic collaborations or licensing arrangements. If we raise funds by issuing equity securities, dilution to stockholders may result. Any equity securities issued may also provide for rights, preferences or privileges senior to those of holders of our common stock. If we raise funds by issuing debt securities, these debt securities would have rights, preferences and privileges senior to those of holders of our common stock. The terms of debt securities or borrowings could impose significant restrictions on our operations. If we raise funds through collaborations and licensing arrangements, we might be required to relinquish significant rights to our technologies or products, or grant licenses on terms that are not favorable to us. The credit market and financial services industry have in the past, and may in the future, experience periods of upheaval that could impact the availability and cost of equity and debt financing. If we are not able to secure additional funding when needed, on acceptable terms, we may have to delay, reduce the scope of or eliminate one or more research and development programs or selling and marketing initiatives. In addition, we may have to work with a partner on one or more of our product or market development programs, which could lower the economic value of those programs to us.

Off-Balance Sheet Arrangements

As of September 30, 2019, we had no off-balance sheet arrangements.

Recently Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board, or FASB, issued ASU No. 2016-02, Leases (Topic 842). The new guidance requires lessees to recognize a right-of-use asset and a lease liability for almost all leases on the balance sheet. We adopted the new standard as of January 1, 2019 using a modified retrospective approach and did not restate comparative periods. As permitted under the transition guidance, we carried forward the assessment of whether our contracts contain or are leases, classification of its leases and remaining lease terms. Based on our portfolio of leases as of December 31, 2018, the adoption of ASU 2016-02 on January 1, 2019 resulted in the recognition of right-of-use assets of $17.9 million and lease liabilities of $22.5 million, primarily relating to real estate, on our condensed

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consolidated balance sheets, with no material impact to our condensed consolidated statement of operations. See Note 7 “Commitments and Contingencies” for additional information and disclosures.

Recently Issued Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments (ASU 2016-13). ASU 2016-13 requires measurement and recognition of expected credit losses for financial assets. This guidance will become effective for us beginning January 1, 2020 with early adoption permitted. We are evaluating the impact of the adoption of this standard on our consolidated financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

Our exposure to market risk for changes in interest rates relates primarily to interest earned on our cash equivalents and marketable securities. The primary objective of our investment activities is to preserve our capital to fund operations. We also seek to maximize income from our investments without assuming significant risk. Our investment policy provides for investments in short-term, low-risk, investment-grade debt instruments. Our investments in marketable securities, which are comprised primarily of money market funds, commercial paper and corporate bonds, are subject to default, changes in credit rating and changes in market value. These investments are subject to interest rate risk and will decrease in value if market interest rates increase.

At September 30, 2019, we had cash, cash equivalents and short-term marketable securities of $275.7 million. We currently do not utilize derivative financial instruments to hedge interest rate exposure. The securities in our investment portfolio are classified as available-for-sale securities and are, due to their short-term nature, subject to minimal interest rate risk. To date, we have not experienced a loss of principal on any of our investments. Although we currently expect that our ability to access or liquidate these investments as needed to support our business activities will continue, we cannot ensure that this will not change. We believe that, if market interest rates were to change immediately and uniformly by 10% from levels at September 30, 2019, the impact on the fair value of these securities or our cash flows or income would not be material.

Foreign Currency Exchange Risk

Substantially all of our revenues are recognized in U.S. dollars, although a growing percentage is denominated in foreign currency as we continue to expand into markets outside of the United States. Certain expenses related to our international activities are payable in foreign currencies. As a result, factors such as changes in foreign currency exchange rates or weak economic conditions in foreign markets will affect our financial results.

We recognized net foreign currency losses of $330,000 and $560,000 for the three and nine months ended September 30, 2019, respectively and net foreign currency gains of $3,000 and $37,000 for the three and nine months ended September 30, 2018, respectively. The functional currency of our wholly-owned subsidiaries is the U.S. dollar, so we are not currently subject to gains and losses from foreign currency translation of the subsidiary financial statements. We use forward contracts to mitigate the impact of adverse movements in foreign exchange rates related to the remeasurement of monetary assets and liabilities and hedge our foreign currency exchange rate exposure. As of September 30, 2019 and December 31, 2018, we had foreign currency contracts with notional amounts of $16.4 million and $17.1 million, respectively. Although the impact of currency fluctuations on our financial results has been immaterial in the past, there can be no guarantee that the impact of currency fluctuations related to our international activities will not be material in the future.

ITEM 4. CONTROLS AND PROCEDURES.

(a) Evaluation of disclosure controls and procedures. We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, or Exchange Act, that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange

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Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Our disclosure controls and procedures have been designed to meet reasonable assurance standards. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Based on their evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer and Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

(b) Changes in internal control over financial reporting. There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the third quarter of 2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we may be subject to various legal proceedings and claims arising in the ordinary course of business. Legal proceedings, including litigation, government investigations and enforcement actions could result in material costs, occupy significant management resources and entail civil and criminal penalties, even if we ultimately prevail. We are currently being investigated by the United States Department of Justice (“DOJ”) related to our compliance with the Medicare Date of Service billing regulation. As previously disclosed, we initially received a civil investigative demand (“CID”) in connection with this matter and have produced specific documents in response to the CID. On July 22 and 23, 2019, we received subpoenas duces tecum from the DOJ. The July 22, 2019 subpoena requested information regarding our relationship with the supplier of our customer relationship management software, and certain other financial and sales information, as well as certain claims submissions to CMS. The subpoena was issued as part of an investigation of federal healthcare offenses. The July 23, 2019 subpoena updated the end date for the time period for which the DOJ is seeking documents from the date of the CID to the date of issuance of the subpoena. If the investigation results in a proceeding against us, an adverse outcome could include us being required to pay treble damages, and incur attorneys’ fees, civil or criminal penalties and other adverse actions that could materially and adversely affect our business, financial condition and results of operations. We are unable to predict whether any proceedings will be filed and, if a proceeding is filed, the outcome and are unable to make a meaningful estimate of the amount or range of loss, if any, that could result from any unfavorable outcome.

In connection with the Merger, five actions, including two putative class action lawsuits, were filed in the United States District Court for the Northern District of California and two actions, including one putative class action lawsuit, were filed in the United States District Court for the District of Delaware. The five lawsuits filed in the United States District Court for the Northern District of California are captioned Wang v. Genomic Health, Inc., et al., 3:19-cv-05556 (filed September 4, 2019), Seligman v. Genomic Health, Inc., et al., 3:19-cv-05710 (filed September 11, 2019), Rice v. Genomic Health, Inc., et al., 3:19-cv-05929 (filed September 23, 2019), Martak v. Genomic Health, Inc., et al., 3:19-cv-06065 (filed September 25, 2019) and Litwin v. Genomic Health, Inc., et al., 3:19-cv-06511 (filed October 10, 2019), and the two lawsuits filed in the United States District Court for the District of Delaware are captioned Plumley v. Genomic Health, Inc., et al., 1:19-cv-01719 (filed September 12, 2019) and Shasheva v. Genomic Health, Inc., et al., 1:19-cv-01942 (filed October 14, 2019) (all seven lawsuits, collectively, the “Merger Litigation”). The complaints allege, among other things, claims under Section 14(a) and 20(a) of the Exchange Act asserting that the preliminary or final proxy statement filed by Genomic Health in connection with the Merger is materially incomplete and misleading, and the Seligman complaint also alleges claims for breach of fiduciary duty relating to the merger. The Seligman, Plumley and Rice actions seek to allege claims on behalf of a putative class of stockholders of Genomic Health. The complaints purport to seek to enjoin the planned special meeting of Genomic Health’s stockholders unless and until the allegedly missing material information is disclosed or, in the event the Merger is consummated, to recover damages from the defendants. The defendants believe the claims asserted in these civil actions are without merit

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ITEM 1A. RISK FACTORS.

Risks Relating to our Proposed Acquisition by Exact Sciences

The announcement and pendency of our agreement to be acquired by Exact Sciences may have an adverse effect on our business and operating results.

On July 28, 2019, we entered into an Agreement and Plan of Merger, or the Merger Agreement, with Exact Sciences Corporation, or Exact Sciences, pursuant to which Exact Sciences agreed to acquire us subject to the terms and conditions set forth in the Merger Agreement. We are subject to risks in connection with the announcement and pendency of the proposed transaction, including, but not limited to, the following:

●

Difficulties maintaining existing or establishing new business relationships, including relationships with patients, physicians, payors, collaboration partners, suppliers and other business partners;

●

Disruption to our business, including increased costs and expenses and diversion of management time and resources that could otherwise have been devoted to other opportunities that may have been beneficial to us;

●

The restrictions imposed on our business and operations pursuant to certain covenants set forth in the Merger Agreement, which may prevent us from pursuing certain opportunities, responding to competitive pressures and industry developments, or taking certain actions without Exact Sciences’ approval;

●

Adverse effects on our ability to attract, recruit, retain and motivate current and prospective employees who may be uncertain about their future roles following completion of the proposed transaction, and the possibility that our employees could lose productivity as a result of uncertainty regarding their employment following the proposed transaction;

●

The pendency and outcome of legal proceedings pending and that may be instituted against us, our directors, executive officers and others relating to the proposed transaction; and

●

The diversion of our employees’ attention due to activities related to the proposed transaction.

The failure to complete our pending acquisition by Exact Sciences may adversely affect our business, financial condition, operating results, and stock price.

Consummation of the Exact Sciences transaction remains subject to certain customary closing conditions, including, without limitation, adoption of the Merger Agreement by our stockholders and the absence of legal impediments. There can be no assurance that these conditions to the completion of the merger will be satisfied in a timely manner or at all. If the acquisition is not completed, our stock price could decline to the extent our current stock price reflects an assumption that the acquisition will be completed. Furthermore, if the acquisition is not completed, we may suffer other consequences that could adversely affect our business, financial condition, operating results, and stock price, including the following:

●

Any disruptions to our business resulting from the announcement and pendency of the proposed transaction, including adverse changes in our relationships with patients, physicians, payors, collaboration partners, suppliers, other business partners and employees, may continue or intensify in the event the acquisition is not consummated or is significantly delayed;

●

We would have incurred significant costs, including professional services fees and other transaction costs, in connection with the proposed transaction that we would be unable to recover;

●

We may have to pay Exact Sciences a termination fee of $92.4 million under certain circumstances that give rise to the termination of the Merger Agreement;

●

We may be subject to negative publicity or be negatively perceived by the investment or business communities;

●

We may be subject to legal proceedings related to the transactions contemplated by the Merger Agreement;

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We may not be able to take advantage of alternative business opportunities or effectively respond to competitive pressures; and

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We may experience a departure of employees.

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The Merger Agreement with Exact Sciences limits our ability to pursue alternative transactions, which could deter a third party from proposing an alternative transaction.

The Merger Agreement contains provisions that limit our ability to pursue an alternative acquisition transaction. These or other provisions may discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of us from considering or proposing an acquisition or might result in a potential competing acquirer proposing to pay a lower per share price to acquire us than it might otherwise have proposed to pay.

Litigation relating to the merger could require Genomic Health to incur significant costs and suffer management distraction, as well as to delay and/or enjoin the Merger.

Risks Relating to our Business and Business Strategy

We have a history of net losses, we may incur net losses in the future, and we expect to continue to incur significant expenses to develop and market our tests and enter into collaborations, which may make it difficult for us to achieve sustained profitability.

From our inception in August 2000 through September 30, 2019, we had an accumulated deficit of $188.8 million. We expect to continue to invest in our product pipeline, including our current Oncotype DX tests and future commercialized products, and to invest in our global commercial infrastructure, our laboratory operations, commercial collaborations, and other technologies. For the three and nine months ended September 30, 2019, our research and development expenses were $16.5 million and $46.8 million, respectively, and our selling and marketing expenses were $39.9 million and $129.9 million, respectively. We expect our expense levels to continue to increase for the foreseeable future as we seek to globally expand the clinical utility of our Oncotype DX breast and prostate cancer tests, drive adoption of and reimbursement for our Oncotype DX colon cancer and prostate cancer tests and develop and commercialize new tests, including Oncotype DX AR-V7 Nucleus Detect and the in-vitro diagnostic, or IVD, version of our Oncotype DX breast cancer test. As a result, we will need to generate significant growth in revenues in order to achieve sustained profitability. Our failure to achieve increased revenue or sustained profitability in the future could cause the market price of our common stock to decline.

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If third-party payors, including managed care organizations and Medicare, do not provide reimbursement, breach, rescind or modify their contracts or reimbursement policies or delay payments for our tests, or we are unable to successfully renegotiate reimbursement contracts, our commercial success could be compromised.

Physicians and patients might not order our tests unless third-party payors, such as managed care organizations as well as government payors such as Medicare and Medicaid and government payors outside of the United States, pay a substantial portion of the test price. Reimbursement by a payor may depend on a number of factors, including a payor’s determination that tests using our technologies are not experimental or investigational, and that they are medically necessary, cost-effective, supported by peer-reviewed publications and included in clinical practice guidelines. There is uncertainty concerning third-party payor reimbursement of any test incorporating new technology, including tests developed using our Oncotype platform.

Our Oncotype DX invasive breast cancer test has received certain negative assessments in the past relating to technology criteria for clinical effectiveness and appropriateness for use in patients with N+ disease, and our tests may receive similar negative assessments in the future. Since each payor makes its own decision as to whether to establish a policy to reimburse our tests, seeking these approvals is a time-consuming and costly process. To date, we have positive coverage determinations for our Oncotype DX breast cancer test for N-, ER+ patients from most third-party payors in the United States through contracts, agreements or policy decisions. We cannot be certain that coverage for this test will be provided in the future by additional third-party payors or that existing contracts, agreements or policy decisions or reimbursement levels, including tests processed as out of network, will remain in place or be fulfilled within existing terms and provisions. From time to time payors change processes that may affect timely payment. These changes may result in uneven cash flow or impact the timing of revenue recognized with these payors.

We have obtained limited reimbursement from private third-party payors in the United States for our Oncotype DX colon cancer test and for our Oncotype DX breast cancer test for N+ and DCIS patients. Until further clinical data is presented, our N+ and DCIS indication for our breast cancer test and our colon cancer test may be considered investigational by payors and therefore may not be covered under their reimbursement policies.

We have obtained Medicare reimbursement coverage for our Oncotype DX GPS prostate cancer test for low and very-low risk patients and for favorable intermediate risk patients. However, we may not be able to obtain Medicare reimbursement coverage for this test for patients with different risk profiles or obtain other third-party payor reimbursement for our tests for patients with colon or prostate cancer or with N+ breast cancer or DCIS that is similar to the coverage we have obtained for our invasive breast cancer test for N-, ER+ patients.

Under the terms of the coverage determinations for our Oncotype DX GPS prostate cancer test, coverage for the test for patients with certain risk profiles is limited to tests ordered by physicians who agree to participate in a Certification and Training Registry, or CTR, and to provide certain information about Medicare beneficiaries who receive our test. If physicians do not timely submit necessary information as part of participating in the CTR, the timeframe in which we are reimbursed and recognize revenue for those tests may be accordingly delayed and negatively affect our results of operations.

Changes in payment rates may result in delays receiving payments and a related increase in accounts receivable balances as payors update their billing systems to reflect the changes. Additionally, on a five-year rotational basis, Medicare requests bids for its regional Medicare Administrative Contractor, or MAC, services. In September 2013, the claims processing function for our jurisdiction transitioned from Palmetto to Noridian Healthcare Solutions, although coverage determinations for our tests remain with Palmetto at this time through the MolDx Program. Future changes in the MAC with jurisdiction over our tests may affect our ability to obtain Medicare coverage and reimbursement for products for which we have coverage, for products for which we do not yet have coverage or for any products we may launch in the future or delay payments.

We believe that it may take several years to achieve reimbursement with the majority of our third-party payors for our tests. If we fail to establish and maintain broad adoption of and reimbursement for all our current tests and any future tests we may develop, our reputation could be harmed and our future prospects, revenue and our business could suffer. Additionally, we have in the past, and will likely in the future, experience delays and temporary interruptions in the receipt of payments from third-party payors due to modifications in existing contracts or arrangements, contract

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implementation matters, documentation requirements and other issues, which could cause our revenues to fluctuate from period to period.

Our financial results depend largely on the sales of one test, our Oncotype DX invasive breast cancer test, and we will need to generate sufficient revenues from this and other tests to run our business and generate profit.

For the near future, we expect to continue to derive a substantial majority of our revenues from sales of one test, our Oncotype DX invasive breast cancer test. We do not expect to recognize significant revenues from our DCIS or colon cancer tests. We are in various stages of research and development for other tests that we may offer as well as for enhancements to our existing tests. We may not be able to successfully commercialize tests for other cancers or diseases. If we are unable to increase sales of our Oncotype DX invasive breast cancer test, establish expanded adoption of and reimbursement for our prostate cancer or DCIS tests, or successfully develop and commercialize new products or product enhancements to our currently commercialized tests, our revenues and our ability to achieve sustained profitability would be impaired.

The prices at which our tests are reimbursed may be reduced by Medicare and private and other payors, and any such changes could have a negative impact on our revenues.

Even if we are being reimbursed for our tests, Medicare, Medicaid and other payors may withdraw their coverage policies, cancel their contracts with us at any time, review and adjust the rate of reimbursement, require co-payments from patients or stop paying for our tests, which would reduce our revenues. In addition, insurers, including managed care organizations as well as government payors such as Medicare and Medicaid, have increased their efforts to control the cost, utilization and delivery of healthcare services. These measures have resulted in reduced payment rates for and decreased utilization of clinical laboratory services, as well as an increase in the administrative requirements for reimbursement of claims. Noridian Healthcare Solutions and Palmetto GBA, the MACs that process Medicare claims and set Medicare coverage policies, respectively, for most tests billed by our laboratory and other MACs review coverage and decisions regularly.

The Protecting Access to Medicare Act of 2014, or PAMA, implements a substantial new payment system for clinical laboratory tests under the Clinical Laboratory Fee Schedule, or CLFS. Under PAMA, Medicare payment rates for tests are equal to the volume-weighted median of the private payor payment rates for such tests. The payment rates calculated under PAMA apply to our tests effective January 1, 2018, and will be reviewed annually for “advanced diagnostic laboratory tests” (and every three years for other tests), based on private payor payment rates and volumes. Laboratories that fail to report or erroneously report the required payment information may be subject to substantial civil money penalties. We believe our Oncotype DX tests each meet the criteria to be considered advanced diagnostic laboratory tests. We may or may not, however, seek designation as an advanced diagnostic laboratory test for any of our established tests. There can be no assurance under PAMA that adequate Medicare payment rates will continue to be assigned to our tests.

If we are unable to obtain or maintain adequate reimbursement for our tests outside of the United States, our ability to expand internationally will be compromised.

The majority of our international Oncotype DX breast and colon cancer test revenues come from direct payor reimbursement, payments from our distributors, and patient self-pay. In many countries outside of the United States, various coverage, pricing and reimbursement approvals are required for our tests to be available to patients. We expect that it will take several years to establish broad coverage and reimbursement for our tests with payors in countries outside of the United States, and our efforts may not be successful. Even if public or private reimbursement is obtained, it may cover competing tests, or the reimbursement may be conditioned upon local performance of the tests or other requirements we may have difficulty satisfying. Reimbursement levels outside of the United States may vary considerably from the domestic reimbursement amounts we receive. In addition, because we rely on distributors to obtain reimbursement for our tests outside of the United States, to the extent we do not have direct reimbursement arrangements with payors, we may not be able to retain reimbursement coverage in certain countries with a particular payor if our agreement with a distributor is terminated or expires, if a distributor fails to pay us or for other reasons. We

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may also be negatively affected by the financial instability of, and austerity measures implemented by, several countries in the European Union, or EU, and elsewhere.

We depend on Medicare for a significant portion of our product revenues and if Medicare or other significant payors stop providing reimbursement or decrease the amount of reimbursement for our tests, our revenues could decline.

Reimbursement on behalf of patients covered by Medicare accounted for 24% of our product revenues for each of the three and nine months ended September 30, 2019 and 23% and 24% for the three and nine months ended September 30, 2018, respectively. Accounts receivable on behalf of patients directly covered by Medicare represented 13% and 17% of our total accounts receivable at September 30, 2019 and December 31, 2018, respectively. While there were no other third-party payors representing 10% or more of our product revenues for these periods, there have been in the past, and may be in the future, payors accounting for 10% or more of our product revenues. Because the majority of stage II and stage III colon cancer patients and prostate cancer patients in the United States are age 65 and over, and thus eligible for Medicare, we may become more dependent on Medicare reimbursement in the future. It is possible that Medicare or other third-party payors that provide reimbursement for our tests may suspend, revoke or discontinue coverage at any time, may require co-payments from patients, or may reduce the reimbursement rates payable to us. Any such action could have a negative impact on our business, financial condition and results of operations. In addition, as described in Item 1 – Legal Proceedings, we are being investigated by the United States Department of Justice related to our compliance with a Medicare billing regulation related to the date of service for our tests. An adverse outcome could include us being required to pay treble damages, and incur attorneys’ fees, civil or criminal penalties and other adverse actions, that could materially and adversely affect our business, financial condition and results of operations.

Because of Medicare billing rules or changes in Medicare billing rules and processes, we may not receive reimbursement for all tests provided to Medicare patients or may experience delays of receiving payments.

Under Medicare billing rules, payment for our Oncotype DX tests performed on Medicare beneficiaries who were hospital patients at the time the tumor tissue samples were obtained and whose tests were ordered less than 14 days from discharge must be bundled into the payment that the hospital receives for the services provided. Effective January 1, 2018, this Medicare rule changed such that we may now bill Medicare directly for tests performed on Medicare beneficiaries who were hospital outpatients at the time the tumor tissue samples were obtained following an outpatient encounter. The rule remains unchanged with respect to payment for our Oncotype DX tests performed on Medicare beneficiaries who were hospital inpatients at the time the tumor tissue or blood samples were obtained and whose tests were ordered less than 14 days from discharge – payment for those tests must be bundled into the payment that the hospital receives for its services provided. In these circumstances, hospitals are required to furnish services such as our tests as “services furnished under arrangements between a provider and an outside vendor” and only the hospital may bill Medicare for such tests. Under these circumstances, for us to obtain payment for these services, we are required to bill individual hospitals for tests ordered for Medicare beneficiaries. Such hospitals have generally been unwilling to enter into written agreements with us to assume the financial responsibility for these tests ordered for Medicare beneficiaries and consequently we generally cancel such orders when received within the 14-day timeframe when written agreements from such hospitals are not in place. We refer to this rule, as has been in effect and most recently amended as of January 1, 2018, as the Medicare Date of Service billing regulation.

These billing rules may lead to confusion regarding whether Medicare provides adequate reimbursement for our tests, and could discourage providers from ordering our tests for Medicare patients. In addition, compared to our breast cancer tests, a greater proportion of eligible patients for our colon and prostate tests are covered by Medicare. We cannot assure you that Medicare will continue these billing rules in their current form, that these billing rules will not change in the Hospital Outpatient Prospective Payment System (HOPPS) Rule for Calendar Year 2020, that Medicare will not seek to expand the scope of its payment bundling rules in the future, or that other payors will not adopt similar billing rules. In addition, changes in Medicare billing rules and processes could result in delays in receiving payments and any such delays could affect our results of operations. In addition, as described in Item 1 – Legal Proceedings, we are being investigated by the United States Department of Justice related to our compliance with the Medicare Date of Service billing regulation. An adverse outcome could include us being required to pay treble damages, and incur attorneys’ fees, civil or criminal penalties and other adverse actions, that could materially and adversely affect our business, financial condition and results of operations.

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If our laboratory facilities become inoperable, we will be unable to perform our tests and our business will be harmed.

We do not have redundant clinical reference laboratory facilities outside of Redwood City, California for our Oncotype DX tests. Redwood City is situated near active earthquake fault lines. Our facilities and the equipment we use to perform our tests would be costly to replace and could require substantial lead time to repair or replace. Our facilities may be harmed or rendered inoperable by natural or man-made disasters, including earthquakes, flooding and power outages, which may render it difficult or impossible for us to perform our tests for some period of time. The inability to perform our tests or the backlog of tests that could develop if our facility is inoperable for even a short period of time may result in the loss of customers or harm our reputation, and we may be unable to regain those customers in the future. Although we possess insurance for damage to our property and the disruption of our business, this insurance may not be sufficient to cover all of our potential losses and may not continue to be available to us on acceptable terms, if at all.

In order to rely on a third party to perform our tests, we could only use another facility with established state licensure and CLIA accreditation under the scope of which Oncotype DX tests could be performed following validation and other required procedures. We cannot assure you that we would be able to find another CLIA-certified facility willing to comply with the required procedures, that this laboratory would be willing to perform the tests for us on commercially reasonable terms, or that it would be able to meet our quality or regulatory standards. In order to establish a redundant clinical reference laboratory outside of our Redwood City, California facilities, we would have to spend considerable time and money securing adequate space, constructing the facility, recruiting and training employees, and establishing the additional operational and administrative infrastructure necessary to support a second facility. We may not be able, or it may take considerable time, to replicate our testing processes or results in a new facility. Additionally, any new clinical reference laboratory facility opened by us would be subject to certification under CLIA and licensing by several states, including California and New York, which could take a significant amount of time and result in delays in our ability to resume operations.

We may acquire other businesses, form joint ventures or make investments in other companies or technologies that could harm our operating results, dilute our stockholders’ ownership, increase our debt or cause us to incur significant expense.

As part of our business strategy, we may pursue acquisitions of complementary businesses and assets, as well as technology licensing arrangements or other collaborations. We also may pursue strategic alliances that leverage our core technology and industry experience to expand our product offerings or distribution, or make investments in other companies. We have in the past and may in the future experience losses related to the recognition of our portion of the net losses of equity method investees, and we may in the future experience impairment losses related to our investments in companies if we determine that the value of an investment is impaired. Losses related to our investments in other companies could have a material negative effect on our results of operations. We have no experience with respect to acquiring other companies and only recent experience with respect to the formation of strategic alliances and joint ventures. If we make any acquisitions, we may not be able to integrate these acquisitions successfully into our existing business, and we could assume unknown or contingent liabilities. Any future acquisitions by us also could result in significant write-offs or the incurrence of debt and contingent liabilities, any of which could harm our operating results. Integration of an acquired company also may require management resources that otherwise would be available for ongoing development of our existing business. We may not identify or complete these transactions in a timely manner, on a cost-effective basis, or at all, and we may not realize the anticipated benefits of any acquisition, technology license, strategic alliance, joint venture or investment. Additionally, although we are not currently a majority investor in any other company, we cannot guarantee that a company in whom we invest in the future will not be considered a variable interest entity, or VIE, under relevant accounting standards and guidance. If an entity in which we invest is determined to be a VIE, and we are determined to be the primary beneficiary of that VIE, we may have to consolidate that entity’s financial results with ours, and such consolidation could have a negative effect on our financial results.

To finance any acquisitions or investments, we may choose to issue shares of our common stock as consideration, which would dilute the ownership of our stockholders. Periods of upheaval in the capital markets and world economy have in the past, and may in the future, cause volatility in the market price of our common stock. If the price of our common stock is low or volatile, we may not be able to acquire other companies for stock. Alternatively, it may be

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necessary for us to raise additional funds for acquisitions through public or private financings. Additional funds may not be available on terms that are favorable to us, or at all.

Our strategy to seek to enter into strategic collaborations and licensing arrangements with third parties to develop diagnostic tests and other products may not be successful.

We have relied, and expect to continue to rely, on strategic collaborations and licensing agreements with third parties for development opportunities, upon which we may develop diagnostic tests. For example, we licensed the rights to intellectual property that permit us to commercialize Oncotype Dx AR-V7 Nucleus Detect from Epic Sciences in the United States. Similarly, in connection with our collaboration with Biocartis, we licensed the rights to intellectual property enabling our development efforts for a distributed IVD test kit, the first of which we refer to as the Oncotype DXx IVD Breast Recurrence Score test. However, there is no assurance that we will be successful in these development and commercialization efforts. Establishing collaborations and licensing arrangements is difficult and time-consuming. Discussions may not lead to collaborations or licenses on favorable terms, if at all. To the extent we agree to work exclusively with a party in a given area, our opportunities to collaborate with others could be limited. Potential collaborators or licensors may elect not to work with us based upon their assessment of our financial, regulatory, commercial or intellectual property position. Additionally, we may incur significant costs in connection with seeking strategic collaborations and licensing arrangements regardless of whether the transaction is ever consummated. In the event that we consummate strategic collaboration, license or other transactions in the future, we cannot assure you that we would fully realize the potential benefit of any such transaction, which could adversely affect our future financial results.

Furthermore, from time to time we may modify the terms of our agreements with collaborators, such as Epic Sciences, including financial terms, and in the future, it is possible that we will agree to modify the terms of existing and future agreements with collaborators. Such modifications, if they result in unfavorable terms, may alter or limit our expected growth of revenue or increase our expected expenses from such agreements.

International expansion of our business exposes us to business, regulatory, political, operational, financial, compliance and economic risks associated with doing business outside of the United States.

Our business strategy incorporates international expansion, including increasing the size of and maintaining direct sales and physician outreach and education capabilities outside of the United States and expanding our relationships with international payors and distributors. Additionally, we are in the process of developing our first IVD medical device product, the Oncotype DXx Breast Recurrence Score test, which we expect will be initially made available in Europe. Doing business internationally involves a number of risks, including:

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difficulties in complying with multiple, conflicting and changing laws and regulations such as tax laws, export and import restrictions, employment laws, data protection laws, regulatory requirements and other governmental approvals, permits and licenses;

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significant competition from local and regional product offerings;

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difficulties in complying with unclear product regulations in various jurisdictions, including the changing regulation in Europe with regard to medical device and IVD regulations;

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difficulties in staffing and managing foreign operations;

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complexities associated with managing multiple payor reimbursement regimes, government payors or patient self-pay systems;

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logistics and regulations associated with shipping tissue samples or complying with local regulations concerning the analysis of tissue, including infrastructure conditions and transportation delays;

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limits in our ability to penetrate international markets if we are not able to process tests locally;

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lack of intellectual property protection in certain markets;

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financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our tests and exposure to foreign currency exchange rate fluctuations;

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natural disasters, political and economic instability, including wars, terrorism, and political unrest, outbreak of disease, boycotts, curtailment of trade and other business restrictions; and

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regulatory and compliance risks that relate to maintaining accurate information and control over the activities of our salesforce and distributors that may fall within the purview of the U.S. Foreign Corrupt Practices Act, or FCPA, its books and records provisions or its anti-bribery provisions, or similar anti-bribery or anti-corruption laws or regulations, such as the U.K. Anti-bribery Act and the U.K. Criminal Finances Act.

Any of these factors could significantly harm our future international expansion and operations and, consequently, our revenues and results of operations.

We face risks associated with currency exchange rate fluctuations, which could adversely affect our operating results.

We receive a portion of our revenues and pay a portion of our expenses in currencies other than the U.S. dollar, such as the Euro, the Swiss franc, the British pound and the Canadian dollar. As a result, we are at risk from exchange rate fluctuations between such foreign currencies and the U.S. dollar, which could adversely affect our results of operations. Additionally, the volume of our international orders may be negatively impacted by a strong U.S. dollar. For the three months ended September 30, 2019, approximately 10% of our product revenues came from foreign denominated currencies. If the U.S. dollar strengthens against foreign currencies, the translation of these foreign currency denominated transactions will result in decreased revenues and operating expenses. We may not be able to offset adverse foreign currency impact with increased revenues. We enter into forward contracts to mitigate the impact of adverse movements in foreign exchange rates related to the re-measurement of monetary assets and liabilities and hedge our foreign currency exchange rate exposure. Even with this strategy in place to mitigate balance sheet foreign currency risk, we will not eliminate our exposure to foreign exchange rate fluctuations on our financial results.

If it became necessary and we were unable to raise additional capital on acceptable terms in the future, it may limit our ability to develop and commercialize new tests and technologies and expand our operations.

We expect capital outlays and operating expenditures to increase over the next several years as we expand our infrastructure, commercial operations and research and development activities. Specifically, we may need to raise capital to, among other things, expand and fund the commercialization of our products, increase our selling and marketing efforts, further expand our clinical laboratory operations, technologies and research and development activities, invest in complementary businesses or assets or finance capital expenditures and general and administrative expenses.

Our present and future funding requirements will depend on many factors, including establishing and maintaining reimbursement arrangements with third-party payors, costs associated with expanding our commercial and laboratory operations, spending on research and development activities, costs associated with acquiring, licensing or investing in new technologies or complementary businesses, costs associated with protecting our intellectual property rights, costs associated with international expansion, and the costs and potential delays involved with regulatory clearances and approvals.

We cannot assure you that we would be able to obtain additional funds on acceptable terms, or at all. If we raise funds by issuing equity securities, dilution to our stockholders could result. Any equity or debt securities issued also may provide for rights, preferences or privileges senior to those of holders of our common stock and could impose significant restrictions on our operations. If we raise funds through collaborations and licensing arrangements, we might be required

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to relinquish significant rights to our technologies or products, or grant licenses on terms that are not favorable to us. If we are not able to secure additional funding when needed, we may have to delay, reduce the scope of or eliminate one or more research and development programs or selling and marketing initiatives. Any or all of these factors could harm our business, operating results and financial condition.

We may be unable to manage our future growth and operational expansion effectively, which could make it difficult to execute our business strategy.

Future growth, including the development of new capabilities, infrastructure, and processes to support our global IVD commercialization efforts, will impose significant added responsibilities on management, including the need to identify, recruit, train and integrate additional employees to add new and extend existing organizational capabilities in multiple areas, including operations, R&D, quality, regulatory, commercial, finance, legal, and others. In addition, rapid and significant growth may place strain on these and other areas and functions. Our ability to manage our operations and growth will require us to continue to improve our operational, financial and management controls, reporting systems and procedures. If we are unable to manage our growth effectively, it may be difficult for us to execute our business strategy.

To prepare for the effective date of the EU’s IVD Directive Regulation, or IVDR, and to support our global IVD commercialization efforts, we obtained our ISO 13485 certification. If we were to lose our ISO 13485 certification, whether as a result of a revocation, suspension or limitation, our ability to meet the requirements of IVDR and ability to support global IVD commercialization could be significantly, negatively impacted, and our business and growth prospects would be adversely affected.

New diagnostic product development involves a lengthy and complex process, and we may be unable to commercialize on a timely basis, or at all, any of the tests or products we develop individually or with our collaborators.

At any point, we may delay or abandon a development program, or we may be required to expend unanticipated and considerable resources conducting or repeating clinical studies, which could adversely impact potential revenue and our expenses. In addition, any delay in product development could provide our competitors with additional time to commercialize competing products before we do, which in turn may adversely affect our growth prospects and operating results. In addition, the success of the development programs that require collaboration with third parties, such as our collaboration with Biocartis, will be dependent on the continued success of such collaborators. There is no guarantee that our collaborators will continue to be successful and, as a result, we may expend considerable time and resources developing diagnostic assays that will not ultimately be commercialized.

We are dependent on our information technology and telecommunications systems, and any failure of these systems could harm our business.

We depend on information technology, or IT, and telecommunications systems for significant aspects of our operations. In addition, our third-party billing and collections provider is dependent upon telecommunications and data systems provided by outside vendors and information it receives from us on a regular basis. These IT and telecommunications systems support a variety of functions, including test processing, sample tracking, quality control, customer service and support, billing and reimbursement, research and development activities, and our general and administrative activities. Failures or significant downtime of our IT or telecommunications systems or those used by our third-party service providers could prevent us from processing tests, providing test results to physicians, billing payors, processing reimbursement appeals, handling patient or physician inquiries, conducting research and development activities, and managing the administrative aspects of our business. Any disruption or loss of IT or telecommunications systems on which critical aspects of our operations depend could have an adverse effect on our business and our product revenues.

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Security breaches, loss of data and other disruptions could compromise sensitive information related to our business or prevent us from accessing critical information and expose us to liability, which could adversely affect our business and our reputation.

In the ordinary course of our business, we and our third-party billing and collections provider collect and store sensitive data, including legally protected health information, sensitive personal data, credit card information, personally identifiable information about our employees, customers and patients, intellectual property, and our proprietary business information and that of our customers, payors and collaboration partners. We manage and maintain our applications and data utilizing a combination of on-site systems, managed data center systems and cloud-based data center systems. These applications and data encompass a wide variety of business-critical information including research and development information, commercial information and business and financial information. We face four primary risks relative to protecting this critical information, including loss of access risk, inappropriate disclosure risk and inappropriate modification risk combined with the risk of our ability to identify and audit our controls over the first three risks.

The secure processing, storage, maintenance and transmission of this critical information is vital to our operations and business strategy, and we devote significant resources to protecting such information. Although we take measures to protect sensitive information from unauthorized access or disclosure, our information technology and infrastructure, and that of our third-party billing and collections provider, may be vulnerable to attacks by hackers or viruses, or breached due to employee error, malfeasance or other disruptions. Any such breach or interruption could compromise our networks and the information stored therein could be accessed by unauthorized parties, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, such as the Health Insurance Portability and Accountability Act of 1996, similar U.S. state data protection regulations, including the California Consumer Privacy Act, the E.U. General Data Protection Regulation, or GDPR, and other regulations, the breach of which could result in significant penalties. Unauthorized access, loss or disclosure could also disrupt our operations, including our ability to process tests, provide test results, bill payors or patients, process claims and appeals, provide customer assistance services, conduct research and development activities, collect, process and prepare company financial information, provide information about our tests and other patient and physician education and outreach efforts through our website, manage the administrative aspects of our business and damage our reputation, any of which could adversely affect our business.

In addition, the interpretation and application of consumer, health-related and data protection laws in the U.S., Europe and elsewhere are often uncertain, contradictory and in flux. We have self-certified with the Department of Commerce for compliance with the U.S.-E.U. Privacy Shield as of August 1, 2016, which we believe will mitigate customer concerns about overseas data transfers. However there continue to be concerns about whether the Privacy Shield will face additional challenges (similar to those that invalidated the prior Safe Harbor data transfer framework), and it is not guaranteed that companies who have self-certified under the Privacy Shield will be free of additional ongoing scrutiny by E.U. data protection authorities. Compliance with Privacy Shield requirements does not, in addition, equate to compliance with the stringent requirements of the GDPR. European data protection authorities could interpret or apply European data protection law in a manner that is inconsistent with our practices. If so, this could result in prohibitions on processing of data required to perform our tests in Europe or government-imposed fines, or both, which could adversely affect our business. Complying with these various laws could in addition cause us to incur substantial costs or require us to change our business practices and compliance procedures in a manner adverse to our business.

If we were sued for product liability or professional liability, we could face substantial liabilities that exceed our resources.

The marketing, sale and use of our tests could lead to the filing of product liability claims if someone were to allege that our tests failed to perform as designed. We may also be subject to liability for errors in the test results we provide to physicians or for a misunderstanding of, or inappropriate reliance upon, the information we provide. A product liability or professional liability claim could result in substantial damages and be costly and time consuming for us to defend. Although we maintain product and professional liability insurance, we cannot assure you that our insurance would protect us from the financial impact of defending against product liability or professional liability claims or any judgments, fines or settlement costs arising out of any such claims. Any product liability or professional liability claim brought against us, with or without merit, could increase our insurance rates or prevent us from securing insurance

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coverage in the future. Additionally, any product liability lawsuit could cause injury to our reputation, result in the recall of our products, or cause current clinical partners to terminate existing agreements and potential clinical partners to seek other partners, any of which could impact our results of operations.

If we use hazardous materials in a manner that causes injury, we could be liable for damages.

Our activities currently require the use of hazardous materials and medical specimens. We cannot eliminate the risk of accidental contamination or injury to employees or third parties from the use, storage, handling or disposal of these materials or specimens. In the event of contamination or injury, we could be held liable for any resulting damages, and any liability could exceed our resources or any applicable insurance coverage we may have. Additionally, we are subject on an ongoing basis to federal, state and local laws and regulations governing the use, storage, handling and disposal of these materials and specified waste products, as well as regulations relating to the safety and health of laboratory employees. The cost of compliance with these laws and regulations may become significant and could negatively affect our operating results.

We incur increased costs as a result of operating as a public company, and must continually implement additional and expensive business systems, procedures and controls to satisfy public company reporting requirements.

As a public reporting company, we are required to comply with the Sarbanes-Oxley Act of 2002 and the related rules and regulations of the Securities and Exchange Commission. Compliance with Section 404 of the Sarbanes-Oxley Act and other requirements has increased our costs and required additional management resources. We will need to continue to implement additional finance, accounting, and business operating systems, procedures, and controls as we grow our business and organization and to satisfy existing reporting requirements. If we fail to maintain or implement adequate controls, if we are unable to complete the required Section 404 assessment as to the adequacy of our internal control over financial reporting in future Form 10-K filings, or if our independent registered public accounting firm is unable to provide us with an unqualified report as to the effectiveness of our internal control over financial reporting in future Form 10-K filings, the market price of our stock could decline and we could be subject to sanctions or investigations by the SEC, Nasdaq or other regulatory authorities which could require additional financial and management resources.

Risks Related to Governmental Regulation

Healthcare policy changes, including legislation reforming the U.S. healthcare system, may have a material adverse effect on our financial condition and results of operations.

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act, collectively, the Affordable Care Act, or ACA, enacted in March 2010, makes changes that significantly impact the pharmaceutical and medical device industries and clinical laboratories. Significant measures contained in the ACA include, for example, coordination and promotion of research on comparative clinical effectiveness of different technologies and procedures, initiatives to revise Medicare payment methodologies, such as bundling of payments across the continuum of care by providers and physicians, and initiatives to promote quality indicators in payment methodologies. The ACA also includes significant new fraud and abuse measures, including required disclosures of financial arrangements with physician customers, lower thresholds for violations and increasing potential penalties for such violations. In addition to the ACA, various healthcare reform proposals have also emerged from federal and state governments. The current U.S. President and other U.S. lawmakers have made statements about potentially repealing and/or replacing the ACA. Notably, Congress enacted legislation in 2017 that eliminates the ACA’s individual insurance mandate beginning in 2019, which may significantly impact the number of covered lives participating in exchange plans. We are monitoring the impact of the ACA and proposals to repeal, replace or refine the ACA to enable us to determine the trends and changes that may potentially impact our business over time.

Under the Budget Control Act of 2011, which went into effect for dates of service on or after April 1, 2013, Medicare payments, including payments to clinical laboratories, are subject to a 2% reduction due to implementation of the automatic expense reductions (sequester). Reductions made by the Congressional sequester are applied to total claims payment made. The sequester reductions do not result in a rebasing of the negotiated or established Medicare or Medicaid reimbursement rates.

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Although individual states’ reimbursement methodology has not materially affected the payment rate for our tests recently, we cannot be certain that future changes will not affect payment rates. We also cannot predict whether future healthcare initiatives will be implemented at the federal or state level or in countries outside of the United States in which we may do business, or the effect any future legislation or regulation will have on us. The taxes imposed by new legislation, cost reduction measures and the expansion in government’s role in the U.S. healthcare industry may result in decreased profits to us, lower reimbursements by payors for our products or reduced medical procedure volumes, all of which may adversely affect our business, financial condition and results of operations. In addition, sales of our tests outside the United States make us subject to foreign regulatory requirements and cost-reduction measures, which may also change over time.

If the FDA were to begin regulating the laboratory developed tests we offer, we could incur substantial costs and time delays associated with meeting requirements for pre-market clearance or approval or we could experience decreased demand for or reimbursement of our tests.

Clinical laboratory tests like ours are regulated under the Clinical Laboratory Improvement Amendments of 1988, or CLIA, as well as by applicable state laws. Diagnostic kits that are sold and distributed through interstate commerce are regulated as medical devices by the FDA. Most LDTs are not currently subject to FDA regulation, although reagents or software provided by third parties and used to perform LDTs may be subject to regulation. We believe that our Oncotype tests are not diagnostic kits and also believe that they are LDTs. As a result, we believe our tests should not be subject to regulation at this time under established FDA policies. The container we provide for collection and transport of tumor samples from a pathology laboratory to our clinical reference laboratory may be a medical device subject to FDA regulation but is currently exempt from pre-market review by the FDA.

At various times since 2006, the FDA has issued documents outlining its intent to require varying levels of FDA oversight of many LDTs, including our tests. It is unclear at this time if or when the FDA will finalize its plans to end enforcement discretion for LDTs; however, the FDA may decide to regulate certain LDTs on a case-by-case basis at any time.

Legislative proposals addressing oversight of genetic testing and LDTs have been introduced in previous Congresses, and we expect that new legislative proposals will be introduced from time to time in the future. We cannot provide any assurance that FDA regulation, including pre-market review, will not be required in the future for our tests, whether through finalization of guidance issued by the FDA, new enforcement policies adopted by the FDA or new legislation enacted by Congress. It is possible that legislation will be enacted into law or guidance could be issued by the FDA which may result in increased regulatory burdens for us to continue to offer our tests or to develop and introduce new tests.

If pre-market review is required for our current LDTs, our business could be negatively impacted until such review is completed and clearance or approval is obtained, and the FDA could require that we stop selling our tests pending pre-market clearance or approval. If our tests are allowed to remain on the market but there is uncertainty about the regulatory status of our tests, if they are labeled investigational by the FDA, or if labeling claims the FDA allows us to make are more limited than the claims we currently make, orders or reimbursement may decline. The regulatory approval process may involve, among other things, successfully completing additional clinical trials and submitting a pre-market clearance notice or filing a pre-market approval application with the FDA. If pre-market review is required by the FDA, there can be no assurance that our tests will be cleared or approved on a timely basis, if at all, nor can there be assurance that the labeling claims cleared or approved by the FDA will be consistent with our current claims or adequate to support continued adoption of and reimbursement for our tests. Ongoing compliance with FDA regulations would increase the cost of conducting our business, and subject us to inspection by and the regulatory requirements of the FDA, for example registration and listing and medical device reporting, and penalties in the event we fail to comply with these requirements. We may also decide voluntarily to pursue FDA pre-market review of our tests if we determine that doing so would be appropriate.

We cannot predict the ultimate timing or form of final FDA guidance, legislation or regulation of LDTs and the potential impact on our existing tests, our tests in development or the materials used to perform our tests. While we qualify all materials used in our tests according to CLIA regulations, we cannot be certain that the FDA will not enact

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rules or guidance documents which could impact our ability to purchase certain materials necessary for the performance of our tests, such as products labeled for research use only. Should any of the reagents obtained by us from suppliers and used in conducting our tests be affected by future regulatory actions, our business could be adversely affected by those actions, including increasing the cost of testing or delaying and limiting or prohibiting the purchase of reagents necessary to perform testing.

If we were required to conduct additional clinical trials prior to continuing to sell our current tests or launching any other tests we may develop, those trials could result in delays or failure to obtain necessary regulatory approvals or clearances, which could harm our business.

If the FDA decides to regulate any of our LDTs, it may require additional pre-market clinical testing before clearing or approving such tests for commercial sales. Such pre-market clinical testing could delay the commencement or completion of other clinical testing, significantly increase our test development costs, delay commercialization of any future tests, and interrupt sales of our current tests. Many of the factors that may cause or lead to a delay in the commencement or completion of clinical trials may also ultimately lead to delay or denial of regulatory clearance or approval. The commencement of clinical trials may be delayed due to insufficient patient enrollment, which is a function of many factors, including the size of the patient population, the nature of the protocol, the proximity of patients to clinical sites and the eligibility criteria for the clinical trial.

We may find it necessary to engage contract research organizations to perform data collection and analysis and other aspects of our clinical trials, which might increase the cost and complexity of those trials. We may also depend on clinical investigators, medical institutions and contract research organizations to perform certain aspects of the trials. If these parties do not successfully carry out their contractual duties or obligations or meet expected deadlines, or if the quality, completeness or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols or for other reasons, our clinical trials may have to be extended, delayed or terminated. Many of these factors would be beyond our control. We may not be able to enter into replacement arrangements without undue delays or considerable expenditures. If there are delays in testing or approvals as a result of the failure to perform by third parties, our research and development costs would increase, and we may not be able to obtain regulatory clearance or approval for our tests. In addition, we may not be able to establish or maintain relationships with these parties on favorable terms, if at all. Each of these outcomes would harm our ability to market our LDTs, or to achieve sustained profitability.

Our business could be harmed by the loss, suspension, or other restriction on a license, certification, or accreditation, or by the imposition of a fine or penalties, under CLIA, its implementing regulations, or other state, federal and foreign laws and regulations affecting licensure or certification, or by future changes in these laws or regulations.

We and certain laboratories with whom we collaborate, including Epic Sciences, Inc., or Epic Sciences, are subject to CLIA, a federal law that regulates clinical laboratories that perform testing on specimens derived from humans for the purpose of providing information for the diagnosis, prevention or treatment of disease. CLIA regulations mandate specific standards in the areas of personnel qualifications, facilities administration, quality systems, inspections, and proficiency testing. We and Epic Sciences each have a current certificate of accreditation under CLIA to perform testing through our accreditations by the College of American Pathologists, or CAP. To renew a CLIA certificate, laboratories are subject to survey and inspection every two years and inspectors may also make random inspections of clinical reference laboratories.

Although we and Epic Sciences are required to hold a certificate of accreditation or compliance under CLIA to perform high complexity testing, laboratories are not required to hold a certificate of accreditation through CAP. We and Epic Sciences could alternatively maintain a certificate of accreditation from another accrediting organization or a certificate of compliance through inspection by surveyors acting on behalf of the CLIA program. If accreditation under CAP were to terminate, either voluntarily or involuntarily, it would be necessary to convert from a certification under CLIA to a certificate of compliance (or to a certificate of accreditation with another accreditation organization) in order to maintain our ability to perform clinical tests and to continue commercial operations. Whether we or Epic Sciences would be able to successfully maintain operations through either of these alternatives would depend upon the facts and circumstances surrounding the termination of the CAP accreditation, such as whether any deficiencies were identified by

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CAP as the basis for termination and, if so, whether these deficiencies were addressed to the satisfaction of the surveyors for the CLIA program (or another accrediting organization).

We and certain laboratories with whom we collaborate, including Epic Sciences, are also required to maintain a California clinical laboratory license to conduct testing in California. California laws establish standards for day-to-day operation of clinical reference laboratories, including the training and skills required of personnel and quality control.

In addition, clinical reference laboratories are required to be licensed on a test-specific basis by New York State. New York law also mandates proficiency testing for laboratories licensed under New York state law, regardless of whether or not such laboratories are located in New York. Moreover, Pennsylvania, Maryland and Rhode Island require that licenses are maintained to test specimens from patients in those states. Other states may have similar requirements or may adopt similar requirements in the future. Finally, we may be subject to regulation in foreign jurisdictions as we seek to expand international distribution of our tests, which may require regulatory review of our tests in order for them to be offered, or may have other limitations such as prohibitions on the export of tissue necessary for us to perform our tests that may limit our ability to distribute outside of the United States.

If we or any laboratory with whom we collaborate, including Epic Sciences, were to lose CLIA accreditation or California license, whether as a result of a revocation, suspension or limitation, we would no longer be able to sell our tests, which would limit our revenues and harm our business. Additionally, if we or any laboratory with whom we collaborate were to lose a license in New York or in other states where a license is required, specimens from those states would not be able to be tested.

We are subject to numerous U.S. and foreign laws and governmental regulations, and any governmental enforcement action may materially affect our financial condition and business operations.

We are subject to regulation in the United States by both the federal government and the states in which we conduct our business, as well as in other jurisdictions outside of the United States, including:

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Medicare billing and payment regulations applicable to clinical laboratories;

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the Federal Anti-kickback Law and state anti-kickback prohibitions and the Eliminating Kickback Recovery Act of 2018;

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the Federal physician self-referral prohibition, commonly known as the Stark Law, and the state equivalents;

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the Federal Health Insurance Portability and Accountability Act of 1996 (as amended);

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the Medicare civil money penalty and exclusion requirements;

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the Federal False Claims Act civil and criminal penalties and state equivalents; and

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the Foreign Corrupt Practices Act, the United Kingdom Anti-bribery Act, the GDPR, and the E.U. In Vitro Diagnostic Device Regulation, all of which apply or will apply to our international activities.

The U.S. Attorney’s Offices have increased their scrutiny over the healthcare industry in recent years. The U.S. Congress, Department of Justice, Office of Inspector General of the Department of Health and Human Services, and Department of Defense have all issued subpoenas and other requests for information to conduct investigations of, and commenced civil and criminal litigation against, healthcare companies, related to financial arrangements with health care

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providers, regulatory compliance, product promotional practices, and documentation, coding and billing practices. In addition, the Federal False Claims Act has led to whistleblowers filing numerous qui tam civil lawsuits against healthcare companies, in part, because a whistleblower can receive a portion of any amount obtained by the government through such a lawsuit.

Governmental enforcement action or qui tam civil litigation against us may result in material costs and occupy significant management resources, even if we ultimately prevail. In addition, governmental enforcement action may result in substantial fines, penalties or administrative remedies, including exclusion from government reimbursement programs and entry into corporate integrity agreements with governmental agencies, which would entail significant obligations and costs. As described further in Item 1 – Legal Proceedings, we are being investigated by the United States Department of Justice related to our compliance with the Medicare Date of Service billing regulation. An adverse outcome could include our being required to pay treble damages, and incur attorneys’ fees, civil or criminal penalties and other adverse actions that could materially and adversely affect our business, financial condition and results of operations.

We have adopted policies and procedures designed to comply with these laws. In the ordinary course of our business, we conduct internal reviews of our compliance with these laws. Our compliance is also subject to governmental review. The growth of our business and sales organization and our expansion outside of the United States may increase the potential of violating these laws or our internal policies and procedures. The risk of our being found in violation of these or other laws and regulations is further increased by the fact that many of them have not been fully interpreted by the regulatory authorities or the courts, and their provisions are open to a variety of interpretations. Any action brought against us for violation of these or other laws or regulations, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business. If our operations are found to be in violation of any of these laws and regulations, we may be subject to any applicable penalty associated with the violation, including civil and criminal penalties, damages and fines, we could be required to refund payments received by us, and we could lose the ability to bill for our tests and we could be required to curtail or cease our operations. Any of the foregoing consequences could seriously harm our business and our financial results.

If we are unable to obtain adequate regulatory clearances or approvals to market the in vitro diagnostic kits for our Oncotype DXx IVD Breast Recurrence Score tests in the countries in which we intend to commercialize this assay, or if regulatory limitations are placed on our diagnostic products, our business and growth will be harmed.

We intend to seek regulatory authorizations to market the Oncotype DXx IVD Breast Recurrence Score test in the markets in which we intend to commercialize the product. We expect to initially offer this test in Europe. We cannot assure investors that we will be successful in obtaining the required regulatory clearances or approvals. If we do not obtain regulatory clearances or approvals to market the Oncotype DXx IVD Breast Recurrence Score test or any future IVD products that we may develop, we may fail to successfully commercialize such products and the market potential for our IVD products would be constrained, and our business and growth prospects would be adversely affected.

We are subject to increasingly complex taxation rules and practices, which may affect how we conduct our business and our results of operations.

As our business grows, we are required to comply with increasingly complex taxation rules and practices. We are subject to tax in multiple U.S. tax jurisdictions and in foreign tax jurisdictions as we expand internationally. The development of our tax strategies requires additional expertise and may impact how we conduct our business. Our future effective tax rates could be unfavorably affected by changes in, or interpretations of, tax rules and regulations in the jurisdictions in which we do business or by changes in the valuation of our deferred tax assets and liabilities. Furthermore, we provide for certain tax liabilities that involve significant judgment. We are subject to the examination of our tax returns by federal, state and foreign tax authorities, which could focus on our intercompany transfer pricing methodology as well as other matters. If our tax strategies are ineffective or we are not in compliance with domestic and international tax laws, our financial position, operating results and cash flows could be adversely affected.

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Risks Relating to Product Development, Commercialization and Sales of our Products

New test development involves a lengthy and complex process, and we may be unable to commercialize on a timely basis, or at all, any new tests we may develop.

We have tests in development, including an IVD version of our invasive breast cancer test, and devote considerable resources to research and development. There can be no assurance that our new Oncotype tests or IVD versions of our current tests will be capable of reliably predicting the recurrence of cancers with the sensitivity and specificity necessary to be clinically useful and commercially viable. We also cannot be certain that the products we launch will attain use among the intended target of community oncologists and pathologists. In addition, before we can develop diagnostic tests for new cancers or other diseases and commercialize any new products, we will need to:

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conduct substantial research and development;

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conduct validation studies;

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expend significant funds;

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develop and scale our laboratory processes to accommodate different tests; and

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develop and scale our infrastructure including our operational systems such as order-to-cash, supply chain, and inventory management, and customer service to establish and add new capabilities.

Our product development process involves a high degree of risk and may take several years. Our product development efforts may fail for many reasons, including:

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failure of the product at the research or development stage;

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difficulty in accessing tissue and blood samples;

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challenges in timely patient enrollment in future clinical trials; or

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lack of clinical validation data to support the effectiveness of the product.

Few research and development projects result in commercial products, and success in early clinical trials often is not replicated in later studies. At any point, we may abandon development of a product candidate or we may be required to expend considerable resources repeating clinical trials, which would adversely impact the timing for generating potential revenues from those product candidates. If a clinical validation study fails to demonstrate the prospectively defined endpoints of the study, we might choose to abandon the development of the product or product feature that was the subject of the clinical trial, which could harm our business. In addition, competitors may develop and commercialize competing products faster than we are able to do so.

If we are unable to support demand for our tests, including successfully managing the evolution of our technology and business systems, our business could suffer.

As our test volume grows and we examine additional means through which we can provide our tests, we will need to continue to ramp up our testing capacity, implement increases in scale and related processing, customer service, billing and systems process improvements, and expand our internal quality assurance program, technology and manufacturing platforms to support testing on a larger scale. We will also need additional certified laboratory scientists and other scientific and technical personnel to process higher volumes of our tests. We cannot assure you that any increases in scale, related improvements and quality assurance will be successfully implemented or that appropriate personnel will be available. As additional products are commercialized, we will need to bring new equipment on-line, implement new systems, technology, controls and procedures and hire personnel with different qualifications. We cannot assure you that any such efforts will not result in delays. Failure to implement necessary procedures, transition to new equipment or processes or to hire the necessary personnel could result in higher cost of processing or an inability to meet market demand. There can be no assurance that we will be able to perform tests on a timely basis at a level consistent with

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demand, that our efforts to scale our commercial operations will not negatively affect the quality of test results, or that we will be successful in responding to the growing complexity of our testing operations. If we encounter difficulty meeting market demand or quality standards for our tests, our reputation could be harmed and our future prospects and our business could suffer.

We may experience limits on our revenues if physicians or patients decide not to order our tests.

If medical practitioners do not order our tests or any future tests developed or offered by us, we will likely not be able to create or maintain demand for our products in sufficient volume for us to achieve sustained profitability. To generate demand, we will need to continue to make oncologists, urologists, surgeons and pathologists aware of the benefits of each type of test through published papers, presentations at scientific conferences and one-on-one education by our salesforce. In addition, we will need to demonstrate our ability to obtain and maintain adequate reimbursement coverage from third-party payors.

We will need to continue to educate physicians, patients and payors about the benefits and cost-effectiveness of our tests and to establish reimbursement arrangements for these tests with payors. We have and expect to continue to hire additional commercial, sales, scientific, technical and other personnel to support this process. If our marketing and educational efforts do not result in sufficient physician or patient demand, we may not be able to obtain adequate reimbursement for our tests. If we fail to successfully establish adoption of and additional reimbursement beyond Medicare for our colon and prostate cancer tests, our reputation could be harmed and our business could suffer.

Some patients may decide not to use our Oncotype tests due to their price, all or part of which may be payable directly by the patient if the applicable payor denies reimbursement in full or in part. Even if medical practitioners recommend that their patients use our tests, patients may still decide not to use our tests, either because they do not want to be made aware of the likelihood of recurrence or they wish to pursue a particular course of therapy regardless of test results. Additionally, the current economic environment in the United States and abroad could continue to negatively impact patients, resulting in higher co-payments and insurance premiums or the loss of healthcare coverage, which may result in delayed medical checkups or an inability to pay for our tests. If only a small portion of the patient population decides to use our tests, we will experience limits on our revenues and our ability to achieve sustained profitability.

Our dependence on distributors for sales of our Oncotype tests outside of the U.S. could limit or prevent us from selling our test in foreign markets and impact our revenue.

As of September 30, 2019, we have entered into exclusive distribution agreements for the sale of our tests with distributors covering more than 90 countries. We may enter into other similar arrangements to distribute our tests in other countries in the future. We intend to continue to grow our business internationally, and to do so we may need to attract additional distributors to expand the territories in which we sell our tests. Despite contractual obligations, distributors may not commit the necessary resources to market and sell our tests to the level of our expectations. If current or future distributors do not perform adequately, or we are unable to enter into arrangements with distributors to market our tests in particular geographic areas, we may not realize long-term international revenue growth. In addition, our revenue from distributors could be negatively impacted as a result of changes in business cycles, business or economic conditions, reimbursement rates, changes in foreign currency exchange rates that make our tests more expensive in our distributors’ local currencies or other factors that could affect their ability to pay us for tests on a timely basis or at all.

Our rights to use technologies licensed from third parties are not within our control, and we may not be able to sell our products if we lose our existing rights or cannot obtain new rights on reasonable terms.

We license from third parties technology necessary to develop our products. In return for the use of a third party’s technology, we may agree to pay the licensor royalties based on sales of our products. Royalties are a component of cost of product revenues and impact the margins on our tests. We may need to license other technologies to commercialize future products. We may also need to negotiate licenses to patents and patent applications after launching any of our commercial products. Our business may suffer if these licenses terminate, if the licensors fail to abide by the terms of the license, determine to unilaterally stop supplying technologies or products subject to a license, or fail to prevent infringement by third parties, if the licensed patents or other rights are found to be invalid, if the patents or patent applications are unavailable for license or if we are unable to enter into necessary licenses on acceptable terms.

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If we are unable to develop products to keep pace with rapid technological, medical and scientific change, our operating results and competitive position could be harmed.

In recent years, there have been numerous advances in technologies relating to the diagnosis and treatment of cancer. For example, technologies in addition to ours now permit measurement of gene expression in fixed paraffin-embedded tissue specimens or blood or urine. There have also been advances in methods used to analyze very large amounts of genomic information, specifically NGS. These advances require us to continuously develop our technology, develop new products and enhance existing products to keep pace with evolving standards of care. Our tests could become obsolete unless we continually innovate and expand our products to demonstrate recurrence and treatment benefit in patients treated with new therapies. New treatment therapies typically have only a few years of clinical data associated with them, which limits our ability to perform clinical studies and correlate sets of genes to a new treatment’s effectiveness. Additionally, as new products are developed, evolving industry standards and metrics may slow the widespread adoption of any new products we may introduce. If we are unable to demonstrate the applicability of our tests to new treatments or to keep pace with new industry standards, sales of our test could decline, which would harm our revenues.

If we are unable to compete successfully, we may be unable to increase or sustain our revenues or achieve sustained profitability.

We compete in a rapidly evolving and highly competitive industry, and there are a number of private and public companies that offer products or have conducted research to profile genes and gene expression in breast, colon and prostate cancer, including companies such as Agendia Inc., BioTheranostics, Exact Sciences Corporation, GenomeDx Biosciences Inc., Guardant Health, Inc., Hologic Inc., Myriad Genetics Inc. (and its Sividon Diagnostics subsidiary), NanoString Technologies Inc., NeoGenomics, Inc., OPKO Health, Inc. (and its Bio-Reference Laboratories, Inc. subsidiary) and Qiagen N.V. As we look to expand our research, development and commercialization efforts, we may face competition from companies such as Danaher Corporation (and its Cepheid, Inc. subsidiary), Bio-Techne Corporation, Grail, MDxHealth, Metamark Genetics, Inc., Natera Inc. and Personal Genome Diagnostics, Inc. Historically, our principal competition for our Oncotype tests has also come from existing diagnostic methods used by pathologists and oncologists, and such traditional diagnostic methods can be difficult to change or supplement. We also face competition from commercial laboratories with strong distribution networks for diagnostic tests, such as Laboratory Corporation of America Holdings and Quest Diagnostics Incorporated. Other potential competitors include companies that develop diagnostic tests such as Roche Diagnostics, a division of Roche Holding, Ltd, and Siemens AG, as well as other companies and academic and research institutions.

In our more recently established prostate cancer market, we face comparatively greater competition than in our breast cancer market, including competition from products which were on the market prior to our product launch and which are supported by clinical studies and published data. This existing direct and indirect competition for tests and procedures may make it difficult to gain market share, impact our ability to obtain reimbursement or result in a substantial increase in resources necessary for us to successfully continue to commercialize our Oncotype DX GPS prostate test and the recently launched Oncotype DX AR-V7 Nucleus Detect test.

As more information regarding cancer genomics becomes available to the public, we anticipate that more products aimed at identifying targeted treatment options will be developed and that these products may compete with ours. In addition, competitors may develop their own versions of our tests in countries where we did not apply for patents, where our patents have not issued or where our intellectual property rights are not recognized and compete with us in those countries, including encouraging the use of their test by physicians or patients in other countries. We have changed the list price of our tests in the past and we expect to change prices for our tests in the future. Any increase or decrease in pricing could impact reimbursement of and demand for our tests. Many of our present and potential competitors have widespread brand recognition and substantially greater financial and technical resources and development, production and marketing capabilities than we do. Others may develop lower-priced tests that could be viewed by physicians and payors as functionally equivalent to our tests, or offer tests at prices designed to promote market penetration, which could force us to lower the list prices of our tests and impact our operating margins and our ability to achieve sustained profitability. Some competitors have developed tests cleared or approved for marketing by the FDA. There may be a marketing differentiation or perception that an FDA-cleared or approved test is more desirable than Oncotype tests, which are LDTs, and that may discourage adoption of and reimbursement for our tests. If we are unable to compete successfully against current or future competitors, we may be unable to increase market acceptance for and sales of our

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tests, which could prevent us from increasing or sustaining our revenues or achieving sustained profitability and could cause the market price of our common stock to decline.

Our research and development efforts will be hindered if we are not able to contract with third parties for access to tissue or complete timely enrollment in future clinical trials.

Under standard clinical practice, tumor biopsies removed from patients are typically chemically preserved and embedded in paraffin wax and stored. Our clinical development relies on our ability to secure access to these archived tumor biopsy samples, as well as information pertaining to their associated clinical outcomes. Generally, the agreements under which we gain access to archival samples are non-exclusive. Other companies study archival samples and often compete with us for access. Additionally, the process of negotiating access to archived samples is lengthy since it typically involves numerous parties and approval levels to resolve complex issues such as usage rights, institutional review board approval, privacy rights, publication rights, intellectual property ownership and research parameters. If we are not able to negotiate access to clinical samples with hospitals, clinical partners, pharmaceutical companies, or companies developing therapeutics on a timely basis, or at all, or if other laboratories or our competitors secure access to these samples before us, our ability to research, develop and commercialize future products will be limited or delayed. Finally, we may not be able to conduct or complete clinical trials on a timely basis if we are not able to enroll sufficient numbers of patients in such trials, and our failure to do so could have an adverse effect on our research and development and product commercialization efforts.

If we cannot successfully maintain or manage our current, or enter into new, relationships with outside third parties, our product development could be delayed and our introduction of new products into the market could be adversely affected which could have an adverse effect on our financial results.

We rely on and expect to continue to rely on clinical collaborators to perform a substantial portion of our clinical trial functions. If any of our collaborators were to breach or terminate its agreement with us or otherwise fail to conduct the contracted activities successfully and in a timely manner, the research, development or commercialization of the products contemplated by the collaboration could be delayed or terminated. If any of our collaboration agreements are terminated, or if we are unable to renew those agreements on acceptable terms, we would be required to seek alternatives. We may not be able to negotiate agreements with alternate collaborators on acceptable terms, if at all, and these collaborations may not be successful.

In the past, we have entered into clinical trial collaborations with highly regarded organizations in the cancer field. Our success in the future depends in part on our ability to enter into agreements with other leading cancer organizations. This can be difficult due to internal and external constraints placed on these organizations. Some organizations may limit the number of collaborations they have with any one company so as to not be perceived as biased or conflicted. Organizations may also have insufficient administrative and related infrastructure to enable collaborations with many companies at once, which can prolong the time it takes to develop, negotiate and implement collaboration. Additionally, organizations often insist on retaining the rights to publish the clinical data resulting from the collaboration. We have found the publication of clinical data in peer-reviewed journals to be a crucial step in commercializing and obtaining reimbursement for tests such as ours, and our inability to control when, if ever, results are published may delay or limit our ability to derive sufficient revenues from any product that may result from a collaboration.

We have only recent experience in commercializing products through collaborations with third parties, which includes our commercial collaboration with Epic Sciences and our license and development agreement with Biocartis. The collaboration with Epic Sciences poses a number of risks, including, among others, whether we will be able to obtain adequate reimbursement for Oncotype DX AR-V7 Nucleus Detect with both public and private payors, whether our commercial channel will be successful in creating market demand for Oncotype DX AR-V7 Nucleus Detect, whether Epic Sciences is able to maintain appropriate state laboratory licensure, and whether our information technology and reporting systems are adequately and securely integrated with those of Epic Sciences. We are also subject to legal, regulatory, quality and governmental risks with regards to the performance and delivery of Oncotype DX AR-V7 Nucleus Detect tests, due to the fact that Epic Sciences is a centralized CLIA laboratory performing such tests.

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We expect to rely on third parties in conducting any future studies of our diagnostic products that may be required by the FDA, the EU or other regulatory authorities, and to fulfill product registration requirements in foreign countries, and those third parties may not perform satisfactorily.

We do not have the ability to independently conduct the clinical studies or other studies that may be required to obtain FDA, EU and other regulatory clearance or approval for our IVD products. Accordingly, we expect to rely on third parties, such as medical institutions and clinical investigators, to conduct such studies. Our reliance on these third parties for clinical development activities will reduce our control over these activities. These third-party contractors may not complete activities on schedule or conduct studies in accordance with regulatory requirements or the study design. Our reliance on third parties that we do not control will not relieve us of any applicable requirement to ensure compliance with various procedures required under good clinical practices and regulatory requirements. If these third parties do not successfully carry out their contractual duties or regulatory obligations or meet expected deadlines, if the third parties need to be replaced or if the quality or accuracy of the data they obtain is compromised due to their failure to adhere to our clinical protocols or regulatory requirements or for other reasons, the studies may be extended, delayed, suspended or terminated, and we may not be able to obtain regulatory approval for our diagnostic products in a timely manner, or at all.

Additionally, in many countries we are not permitted to directly apply for product registrations, and therefore must rely on third-party contractors or product distributors resident in those countries to fulfill the product registration requirements. Our reliance on these third parties reduces our control over the registration activities, and those parties may not appropriately register the products. Our reliance on third parties does not relieve us of the obligation to comply with applicable requirements, and therefore any failure on the part of any of the third parties could subject us to enforcement action in the country in which the registration was not properly fulfilled.

The loss of key members of our senior management team or our inability to attract and retain highly skilled scientists, software engineers, clinicians and salespeople could adversely affect our business.

Our success depends largely on the skills, experience and performance of key members of our executive management team and others in key management positions. The efforts of each of these persons together will be critical to us as we continue to develop our technologies and testing processes, continue our international expansion and transition to a company with multiple commercialized products. If we were to lose one or more of these key employees, we may experience difficulties in competing effectively, developing our technologies and implementing our business strategies.

Our research and development programs, commercial laboratory operations and information technology infrastructure depend on our ability to attract and retain highly skilled scientists, technicians and engineers, including licensed laboratory technicians, chemists, biostatisticians and software engineers. We may not be able to attract or retain qualified scientists, technicians and software engineers in the future due to the competition for qualified personnel among life science and technology businesses, particularly in the San Francisco Bay Area. We also face competition from universities and public and private research institutions in recruiting and retaining highly qualified scientific personnel. In addition, our success depends on our ability to attract and retain salespeople with extensive experience in oncology and urology and close relationships with medical oncologists, urologists, surgeons, pathologists and other hospital personnel. All of our employees in the United States are at will, which means that either we or the employee may terminate their employment at any time. If we are not able to attract and retain the necessary personnel to accomplish our business objectives, our business and operating results could be harmed.

We rely on a limited number of suppliers or, in many cases, a sole supplier, for some of our laboratory instruments and materials and may not be able to find replacement suppliers or immediately transition to alternative suppliers.

We rely on many sole suppliers to supply and service some of the laboratory equipment on which we perform our tests. We believe that there are relatively few equipment manufacturers that are currently capable of supplying and servicing the equipment necessary for our tests. Although we have identified alternative suppliers, transition to a new supplier would be time consuming and expensive, and there can be no assurance that we would be able to secure alternative equipment and bring that equipment on line without experiencing interruptions in testing. If we should encounter delays or difficulties in securing the quality and quantity of equipment we require for our tests, we may need

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to reconfigure our test processes, which could result in an interruption in sales. If any of these events occur, our business and operating results could be harmed.

We also rely on several sole suppliers for certain laboratory reagents and materials which we use to perform our tests. While we have developed alternate sourcing strategies for these materials, we cannot be certain that these strategies will be effective. If we should encounter delays or difficulties in securing these laboratory materials, if the materials do not meet our quality specifications, or if we cannot obtain acceptable substitute materials, an interruption in test processing could occur. Any such interruption may significantly affect future product revenues.

Risks Related to Our Intellectual Property

If we are unable to maintain intellectual property protection, our competitive position could be harmed.

Our ability to compete and to achieve sustained profitability is impacted by our ability to protect our proprietary discoveries and technologies. We currently rely on a combination of issued patents, patent applications, copyrights, trademarks, and confidentiality, material data transfer, license and invention assignment agreements to protect our intellectual property rights. We also rely upon trade secret laws to protect unpatented know-how and continuing technological innovation. Our intellectual property strategy is intended to develop and maintain our competitive position.

Our pending patent applications may not result in issued patents, and we cannot assure you that our issued patents or any patents that might ultimately be issued by the U.S. Patent and Trademark Office, or USPTO, will protect our technology. In addition, we do not file patent applications in every country nor is patent protection available in every country. We may face competition internationally in jurisdictions where we do not have intellectual property protection. Any patents that may be issued to us might be challenged by third parties as being invalid or unenforceable, or third parties may independently develop similar or competing technology that avoids our patents.

We cannot be certain that the steps we have taken will prevent the misappropriation and use of our intellectual property, particularly in foreign countries where the laws may not protect our proprietary rights as fully as in the United States.

If patent regulations or standards are modified, such changes could have a negative impact on our business.

From time to time, the U.S. Supreme Court, other federal courts, the U.S. Congress or the USPTO may change the standards of patentability and validity of patents within the genomic diagnostic space, and any such changes could have a negative impact on our business. In addition, competitors may develop their own versions of our test in countries where we did not apply for patents or where our patents have not issued and compete with us in those countries, including encouraging the use of their test by physicians or patients in other countries.

There have been several cases involving “gene patents” and diagnostic claims that have been considered by the U.S. Supreme Court. In March 2012, the Supreme Court in Mayo Collaborative v. Prometheus Laboratories, or Prometheus, found a patented diagnostic method claim unpatentable because the relationship between a metabolite concentration and optimized dosage was a patent-ineligible “law of nature.” In June 2013, the Supreme Court ruled in ACLU v. Myriad Genetics, or Myriad, that an isolated genomic DNA sequence is not patent eligible while cDNA is eligible. Both the Prometheus and Myriad decisions affect the legal concept of subject matter eligibility by seemingly narrowing the scope of the statute defining patentable inventions.

In December 2014, the USPTO published revised guidelines for patent examiners to apply when examining process claims for patent eligibility in view of several recent Supreme Court decisions, including Mayo Collaborative Services v. Prometheus Laboratories, Inc., Association for Molecular Pathology v. Myriad Genetics, Inc., and Alice Corporation Pty. Ltd. V. CLS Bank International, et al. The guidance indicates that claims directed to a law of nature, a natural phenomenon, or an abstract idea that do not meet the eligibility requirements should be rejected as non-statutory, patent ineligible subject matter. While these guidelines may be subject to review and modification by the USPTO over time, we cannot assure you that our patent portfolio will not be negatively impacted by the decisions described above, rulings in other cases or changes in guidance or procedures issued by the USPTO.

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Additional substantive changes to patent law, whether new or associated with the America Invents Act, may affect our ability to obtain, enforce or defend our patents. Accordingly, it is not clear what, if any, impact the new law will ultimately have on the cost of prosecuting our patent applications, our ability to obtain patents based on our discoveries and our ability to enforce or defend our issued patents, all of which could have a material adverse effect on our business.

We may face intellectual property infringement claims that could be time-consuming and costly to defend, and could result in our loss of significant rights and the assessment of treble damages.

We have in the past, and may in the future, receive notices of claims of infringement and misappropriation or misuse of other parties’ proprietary rights and may from time to time receive additional notices. Some of these claims may lead to litigation. We cannot assure you that we will prevail in such actions, or that other actions alleging misappropriation or misuse by us of third-party trade secrets, alleging infringement by us of third-party patents and trademarks or challenging the validity of our patents, will not be asserted or prosecuted against us. If there is a successful claim of infringement against us, we may be required to pay substantial damages (including treble damages if that infringement were found to be willful) to the party claiming infringement, develop non-infringing technology, stop selling our tests or using technology that contains the allegedly infringing intellectual property or enter into royalty or license agreements that may not be available on acceptable or commercially practical terms, if at all. Our failure to develop non-infringing technologies or license the proprietary rights on a timely basis could harm our business.

We may also initiate claims to defend our intellectual property or to seek relief on allegations that we use, sell, or offer to sell technology that incorporates third-party intellectual property. Intellectual property litigation, regardless of outcome, is expensive and time-consuming, could divert management’s attention from our business and have a material negative effect on our business, operating results or financial condition. In addition, revising our tests to include the non-infringing technologies would require us to re-validate our tests, which would be costly and time consuming. Also, we may be unaware of pending third-party patent applications that relate to our tests. Parties making infringement claims on future issued patents may be able to obtain an injunction that could prevent us from selling our tests or using technology that contains the allegedly infringing intellectual property, which could harm our business.

It is possible that a third party or patent office might take the position that one or more patents or patent applications constitute prior art in the field of genomic-based diagnostics. In such a case, we might be required to pay royalties, damages and costs to firms who own the rights to these patents, or we might be restricted from using any of the inventions claimed in those patents.

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ITEM 6. EXHIBITS


Exhibit Number		Description
10.11		Lease Agreement dated October 4, 2019 between the Company and Metropolitan Life Insurance Company.
10.12		Fourth Amendment to Lease dated September 23, 2005 between the Company and Metropolitan Life Insurance Company.
10.13		Third Amendment to Lease dated January 4, 2007 between the Company and Metropolitan Life Insurance Company.
10.14		Third Amendment to Lease dated August 30, 2013 between the Company and Metropolitan Life Insurance Company.
10.15		Second Amendment to Lease dated October 1, 2009 between the Company and Metropolitan Life Insurance Company.
10.16		First Amendment to Lease dated November 11, 2015 between the Company and Metropolitan Life Insurance Company.
31.1		Rule 13a-14(a) Certification of Chief Executive Officer.
31.2		Rule 13a-14(a) Certification of Chief Financial Officer.
32.1#		Statement of Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. §1350).
32.2#		Statement of Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. §1350).
101.INS		Inline XBRL Instance Document.
101.SCH		Inline XBRL Taxonomy Extension Schema.
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase.
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase.
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase.
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase.
104		The cover page from our Quarterly Report on Form 10-Q for the period ended September 30, 2019, filed with the Securities and Exchange Commission on October 30, 2019, is formatted in Inline Extensible Business Reporting Language (“iXBRL”)

In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”). Such exhibits will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	GENOMIC HEALTH, INC.

Date: October 30, 2019	By:	/s/ Kimberly J. Popovits
		Kimberly J. Popovits
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: October 30, 2019	By:	/s/ G. Bradley Cole
		G. Bradley Cole
		Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)

Exhibit 10.11

LEASE

BETWEEN

METROPOLITAN LIFE INSURANCE COMPANY (LANDLORD)

AND

GENOMIC HEALTH, INC. (TENANT)

SEAPORT CENTRE

Redwood City, California

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	PAGE

ARTICLE ONE - BASIC LEASE PROVISIONS	1
1.01 BASIC LEASE PROVISIONS	1
1.02 ENUMERATION OF EXHIBITS & RIDER(S)	2
1.03 DEFINITIONS	3

ARTICLE TWO - PREMISES, TERM, FAILURE TO GIVE POSSESSION, COMMON AREAS AND PARKING	7
2.01 LEASE OF PREMISES	7
2.02 TERM	7
2.03 FAILURE TO GIVE POSSESSION	7
2.04 AREA OF PREMISES	7
2.05 CONDITION OF PREMISES	7
2.06 COMMON AREAS & PARKING	7

ARTICLE THREE – RENT	8

ARTICLE FOUR - OPERATING EXPENSES RENT ADJUSTMENTS AND PAYMENTS	8
4.01 TENANT’S SHARE OF OPERATING EXPENSES	8
4.02 RENT ADJUSTMENTS	9
4.03 STATEMENT OF LANDLORD	9
4.04 BOOKS AND RECORDS	10
4.05 TENANT OR LEASE SPECIFIC TAXES	10

ARTICLE FIVE – SECURITY	10

ARTICLE SIX -UTILITIES & SERVICES	12
6.01 LANDLORD'S GENERAL SERVICES	12
6.02 TENANT TO OBTAIN & PAY DIRECTLY	12
6.03 TELEPHONE SERVICES	12
6.04 FAILURE OR INTERRUPTION OF UTILITY OR SERVICE	12
6.05 INTENTIONALLY OMITTED	13
6.06 SIGNAGE	13

ARTICLE SEVEN - POSSESSION, USE AND CONDITION OF PREMISES	13
7.01 POSSESSION AND USE OF PREMISES	13
7.02 HAZARDOUS MATERIAL	14
7.03 LANDLORD ACCESS TO PREMISES; APPROVALS	16
7.04 QUIET ENJOYMENT	16

ARTICLE EIGHT – MAINTENANCE & HVAC	16
8.01 LANDLORD'S MAINTENANCE	16
8.02 TENANT'S MAINTENANCE	17

ARTICLE NINE - ALTERATIONS AND IMPROVEMENTS	17
9.01 TENANT ALTERATIONS	17
9.02 LIENS	18

ARTICLE TEN - ASSIGNMENT AND SUBLETTING	19
10.01 ASSIGNMENT AND SUBLETTING	19
10.02 RECAPTURE	21
10.03 EXCESS RENT	21
10.04 TENANT LIABILITY	21
10.05 ASSUMPTION AND ATTORNMENT	21

ARTICLE ELEVEN - DEFAULT AND REMEDIES	21
11.01 EVENTS OF DEFAULT	21
11.02 LANDLORD'S REMEDIES	22
11.03 ATTORNEY'S FEES	24
11.04 BANKRUPTCY	24
11.05 LANDLORD’S DEFAULT	24

ARTICLE TWELVE - SURRENDER OF PREMISES	25
12.01 IN GENERAL	25
12.02 LANDLORD'S RIGHTS	25

ARTICLE THIRTEEN - HOLDING OVER	25


ARTICLE FOURTEEN - DAMAGE BY FIRE OR OTHER CASUALTY	25
14.01 SUBSTANTIAL UNTENANTABILITY	25
14.02 INSUBSTANTIAL UNTENANTABILITY	26
14.03 RENT ABATEMENT	26
14.04 WAIVER OF STATUTORY REMEDIES	26

ARTICLE FIFTEEN - EMINENT DOMAIN	27
15.01 TAKING OF WHOLE OR SUBSTANTIAL PART	27
15.02 TAKING OF PART	27
15.03 COMPENSATION	27

ARTICLE SIXTEEN - INSURANCE	27
16.01 TENANT'S INSURANCE	27
16.02 FORM OF POLICIES	28
16.03 LANDLORD'S INSURANCE	28
16.04 WAIVER OF SUBROGATION	28
16.05 NOTICE OF CASUALTY	29

ARTICLE SEVENTEEN - WAIVER OF CLAIMS AND INDEMNITY	29
17.01 WAIVER OF CLAIMS	29
17.02 INDEMNITY BY TENANT	29
17.03 WAIVER OF CONSEQUENTIAL DAMAGES	29

ARTICLE EIGHTEEN - RULES AND REGULATIONS	30
18.01 RULES	30
18.02 ENFORCEMENT	30

ARTICLE NINETEEN - LANDLORD'S RESERVED RIGHTS	30

ARTICLE TWENTY - ESTOPPEL CERTIFICATE	30
20.01 IN GENERAL	30
20.02 ENFORCEMENT	31

ARTICLE TWENTY‑ONE – INTENTIONALLY OMITTED	31

ARTICLE TWENTY‑TWO - REAL ESTATE BROKERS	31

ARTICLE TWENTY‑THREE - MORTGAGEE PROTECTION	31
23.01 SUBORDINATION AND ATTORNMENT	31
23.02 MORTGAGEE PROTECTION	31

ARTICLE TWENTY‑FOUR - NOTICES	32

ARTICLE TWENTY-FIVE - EXERCISE FACILITY	32

ARTICLE TWENTY-SIX – OFAC	32

ARTICLE TWENTY‑SEVEN - MISCELLANEOUS	33
27.01 LATE CHARGES	33
27.02 NO JURY TRIAL; VENUE; JURISDICTION	33
27.03 DEFAULT UNDER OTHER LEASE	34
27.04 OPTION	34
27.05 TENANT AUTHORITY	34
27.06 ENTIRE AGREEMENT	34
27.07 MODIFICATION OF LEASE FOR BENEFIT OF MORTGAGEE	34
27.08 EXCULPATION	34
27.09 ACCORD AND SATISFACTION	34
27.10 LANDLORD'S OBLIGATIONS ON SALE OF BUILDING	34
27.11 BINDING EFFECT	35
27.12 CAPTIONS	35
27.13 TIME; APPLICABLE LAW; CONSTRUCTION	35
27.14 ABANDONMENT	35
27.15 LANDLORD'S RIGHT TO PERFORM TENANT'S DUTIES	35
27.16 SECURITY SYSTEM	35
27.17 NO LIGHT, AIR OR VIEW EASEMENTS	35
27.18 RECORDATION	35
27.19 SURVIVAL	36
27.20 EXHIBITS OR RIDERS	36
27.21 DISCLOSURE REGARDING CERTIFIED ACCESS SPECIALIST	36
27.22 UTILITY USAGE INFORMATION	36

LEASE

ARTICLE ONE

BASIC LEASE PROVISIONS

1.01 BASIC LEASE PROVISIONS

In the event of any conflict between these Basic Lease Provisions and any other Lease provision, such other Lease provision shall control.

(1) BUILDING AND ADDRESS: Building Number 3, located in Phase I (“Tenant’s Phase”) of Seaport Centre. As of the Date of Lease, the Building has a street address of 575 Chesapeake Drive, Redwood City, California 94063

(2) LANDLORD AND ADDRESS:

Metropolitan Life Insurance Company,

a New York corporation

Notices to Landlord shall be addressed:

Metropolitan Life Insurance Company

c/o Seaport Centre Manager

701 Chesapeake Drive

Redwood City, CA 94063

with copies to the following:

Metlife Real Estate

425 Market Street, Suite 1050

San Francisco, CA 94105

Attention: Director, EIM

and

Metlife Real Estate

425 Market Street, Suite 1050

San Francisco, CA 94105

Attention: Associate General Counsel

(3) TENANT; CURRENT ADDRESS & TAX ID:

(a) Name: Genomic Health, Inc. (“Genomic Health”)

(b) State of incorporation: a Delaware corporation

Tenant shall notify Landlord of any change in the foregoing.

Notices to Tenant shall be addressed:

Genomic Health, Inc.

301 Penobscot Drive

Redwood City, CA 94063

Attention: Chief Financial Officer

(4) DATE OF LEASE: as of October 4, 2019

(5) LEASE TERM: Ninety-nine (99) months

(6) COMMENCEMENT DATE: The date which is the earlier to occur of (i) the date that Tenant first commence business operations in the Premises (except to the extent permitted under the last sentence of Section 2(a) of Rider 2), or (ii) ninety (90) days following the Delivery Date.

(7) EXPIRATION DATE: Ninety-nine (99) months after the Commencement Date.

(8) MONTHLY BASE RENT (initial monthly installment due upon Tenant’s execution):


Period from/to	Monthly
Months 01 – 15	$52,954.20
Months 16 – 27	$54,542.83
Months 28 – 39	$56,179.11
Months 40 – 51	$57,864.48
Months 52 – 63	$59,600.42
Months 64 – 75	$61,388.43
Months 76 – 87	$63,230.08
Months 88 – 99	$65,126.98

(9) RENT ADJUSTMENT DEPOSIT: The Rent Adjustment Deposit (at the initial monthly rate, until further notice and adjustment) shall be Six Thousand Nine Hundred Forty-Seven and no/100 Dollars ($6,947.00) and is due upon Tenant’s execution.

(10) RENTABLE AREA OF THE PREMISES: 11,388 square feet

(11) RENTABLE AREA OF THE BUILDING: 37,939 square feet

(12) RENTABLE AREA OF THE PHASE: 301,841square feet

(13) RENTABLE AREA OF THE PROJECT: 537,500 square feet

(14) SECURITY: The cash and/or Letter of Credit in the amount of Seventy-Two Thousand Sixty-Seven and 38/100 Dollars ($72,067.38) (and any proceeds of the Letter of Credit drawn and held by Landlord) as provided in Article 5.

(15) SUITE NUMBER &/OR ADDRESS OF PREMISES: 575 Chesapeake Drive, Redwood City, CA 94063

(16) TENANT'S SHARE:


Tenant's Building Share:	30.02%
Tenant's Phase Share:	3.77%
Tenant's Project Share:	2.12%

(17) TENANT'S USE OF PREMISES: General office use; biotechnology/pharmaceutical research and development, assembly, biotechnical or pharmaceutical manufacturing, and warehousing.

(18) PARKING SPACES: 37 unreserved parking spaces

(19) BROKERS:

Landlord's Broker: Newmark Cornish & Carey

Tenant's Broker: Kidder Mathews

(20) CONDITION PRECEDENT TO LEASE.

This Lease and the obligations of each party hereunder are expressly subject to the following condition precedent (the “Condition Precedent”): the recovery of possession of the Premises from the existing tenant in a manner satisfactory to Landlord in its sole discretion. If such Condition Precedent is not satisfied or waived in writing by Landlord in its sole discretion, this Lease shall be null and void, and of no force or effect. Landlord shall give Tenant notice of satisfaction of the Condition Precedent by any one of the following means: (i) by tendering possession of the Premises to Tenant; or (ii) by written notice given in any manner permitted under this Lease. If the Condition Precedent is not satisfied on or before the June 1, 2020, then Landlord and Tenant shall each have a right to terminate this Lease and, in the event of such termination, Landlord shall immediately return to Tenant, the Rent Adjustment Deposit, the Security and any prepaid Rent paid by Tenant to Landlord.

1.02 ENUMERATION OF EXHIBITS & RIDER(S)

The Exhibits and Rider(s) set forth below and attached to this Lease are incorporated in this Lease by this reference:

EXHIBIT A Plan of Premises

EXHIBIT B Workletter Agreement

EXHIBIT C Site Plan of Project

EXHIBIT D Permitted Hazardous Material

EXHIBIT E Form of Letter of Credit Acceptable from Silicon Valley Bank

EXHIBIT F Fair Market Value

EXHIBIT G Tenant’s Personal Property

EXHIBIT H Form of Letter of Credit

RIDER 1 Commencement Date Agreement

RIDER 2 Additional Provisions

1.03 DEFINITIONS

For purposes hereof, the following terms shall have the following meanings:

ADJUSTMENT YEAR: The applicable calendar year or any portion thereof after the Commencement Date of this Lease for which a Rent Adjustment computation is being made.

AFFILIATE: Any Person (as defined below) which is controlled by, controls, or is under common control with Tenant. The word Person means an individual, partnership, trust, corporation, limited liability company, firm or other entity. For purposes of this definition, the word "control," means, with respect to a Person that is a corporation or a limited liability company, the right to exercise, directly or indirectly, more than sixty percent (60%) of the voting rights attributable to the shares or membership interests of the controlled Person and, with respect to a Person that is not a corporation, the possession, directly or indirectly, of the power at all times to direct or cause the direction of the management of the controlled Person.

BUILDING: The building in which the Premises is located, as specified in Section 1.01(1).

BUILDING OPERATING EXPENSES: Those Operating Expenses described in Section 4.01.

COMMENCEMENT DATE: The date specified in Section 1.01(6).

COMMON AREAS: All areas of the Project made available by Landlord from time to time for the general common use or benefit of the tenants of the Building or Project, and their employees and invitees, or the public, as such areas currently exist and as they may be changed from time to time.

DECORATION: Tenant Alterations which do not require a building permit and which do not affect the facade or roof of the Building, or involve any of the structural elements of the Building, or involve any of the Building's systems, including its electrical, mechanical, plumbing, security, heating, ventilating, air-conditioning, communication, and fire and life safety systems.

DEFAULT RATE: Two (2) percentage points above the rate then most recently announced by Bank of America N.T.& S.A. at its San Francisco main office as its corporate base lending rate, from time to time announced, but in no event higher than the maximum rate permitted by Law.

DELIVERY DATE: The date for Landlord’s delivery to Tenant of possession of the Premises, if different from the Commencement Date, as provided in Rider 2.

ENVIRONMENTAL LAWS: All Laws governing the use, storage, disposal or generation of any Hazardous Material or pertaining to environmental conditions on, under or about the Premises or any part of the Project, including the Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended (42 U.S.C. Section 9601 et seq.), and the Resource Conservation and Recovery Act of 1976, as amended (42 U.S.C. Section 6901 et seq.).

EXPIRATION DATE: The date specified in Section 1.01(7) unless changed by operation of Article Two or Rider 2.

FORCE MAJEURE: Any accident, casualty, act of God, war or civil commotion, strike or labor troubles, or any cause whatsoever beyond the reasonable control of Landlord, including water shortages, energy shortages or governmental preemption in connection with an act of God, a national emergency, or by reason of Law, or by reason of the conditions of supply and demand which have been or are affected by act of God, war or other emergency.

HAZARDOUS MATERIAL: Such substances, material and wastes which are or become regulated under any Environmental Law; or which are classified as hazardous or toxic or medical waste or biohazardous waste

under any Environmental Law; and explosives, firearms and ammunition, flammable material, radioactive material, asbestos, polychlorinated biphenyls and petroleum and its byproducts.

INDEMNITEES: Collectively, Landlord, any Mortgagee or ground lessor of the Property, the property manager and the leasing manager for the Property and their respective directors, officers, agents and employees.

LAND: The parcel(s) of real estate on which the Building and Project are located.

LANDLORD WORK: The construction or installation of improvements to be furnished by Landlord, if any, specifically described in the Workletter attached hereto.

LAWS OR LAW: All laws, ordinances, rules, regulations, other requirements, orders, rulings or decisions adopted or made by any governmental body, agency, department or judicial authority having jurisdiction over the Property, the Premises or Tenant's activities at the Premises and any covenants, conditions or restrictions of record which affect the Property.

LEASE: This instrument and all exhibits and riders attached hereto, as may be amended from time to time.

LEASE YEAR: The twelve month period beginning on the first day of the first month following the Commencement Date (unless the Commencement Date is the first day of a calendar month in which case beginning on the Commencement Date), and each subsequent twelve month, or shorter, period until the Expiration Date.

MONTHLY BASE RENT: The monthly rent specified in Section 1.01(8).

MORTGAGEE: Any holder of a mortgage, deed of trust or other security instrument encumbering the Property.

NATIONAL HOLIDAYS: New Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day and other holidays recognized by the Landlord and the janitorial and other unions servicing the Building in accordance with their contracts.

OPERATING EXPENSES: All Taxes, costs, expenses and disbursements of every kind and nature which Landlord shall pay or become obligated to pay in connection with the ownership, management, operation, maintenance, replacement and repair of the Property (including the amortized portion of any capital expenditure or improvement, together with interest thereon, expenses of changing utility service providers, and any dues, assessments and other expenses pursuant to any covenants, conditions and restrictions, or any reciprocal easements, or any owner’s association now or hereafter affecting the Project; provided however that with respect to any expenses, dues, assessments and other expenses pursuant to any covenants, conditions and restrictions, or any reciprocal easements, or any owner’s association hereafter affecting the Project, then such costs and expenses shall only be deemed to be Operating Expenses to the extent that such costs or expenses could otherwise be deemed to be Operating Expenses pursuant to the provisions set forth in this section). Operating Expenses shall be allocated among the categories of Project Operating Expenses, Building Operating Expenses or Phase Operating Expenses as provided in Article Four. If any Operating Expense relates to more than one calendar year, such expense shall be proportionately allocated among such related calendar years. Operating Expenses shall include the following, by way of illustration only and not limitation: (1) all Taxes; (2) all insurance premiums and other costs (including deductibles), including the cost of rental insurance; (3) all license, permit and inspection fees; (4) all costs of utilities, fuels and related services, including water, sewer, light, telephone, power and steam connection, service and related charges; (5) all costs to repair, maintain and operate heating, ventilating and air conditioning systems, including preventive maintenance incurred by Landlord, if any; (6) all janitorial, landscaping and security services; (7) all wages, salaries, payroll taxes, fringe benefits and other labor costs, including the cost of workers' compensation and disability insurance; (8) all costs of operation, maintenance and repair of all parking facilities and other common areas; (9) all supplies, materials, equipment and tools; (10) dues, assessments and other expenses pursuant to any covenants, conditions and restrictions, or any reciprocal easements, or any owner’s association now or hereafter affecting the Project; (11) modifications to the Building or the Project occasioned by Laws now or hereafter in effect, but only as amortized over the useful life of the capital item as reasonably determined by Landlord; (12) the total charges of any independent contractors employed in the care, operation, maintenance, repair, leasing and cleaning of the Project, including landscaping, roof maintenance, and repair, maintenance and monitoring of life‑safety systems, plumbing systems, electrical wiring and Project signage; (13) the cost of accounting services necessary to compute the rents and charges payable by tenants at the Project; (14) exterior window and exterior wall cleaning and painting; (15) managerial and administrative expenses; (16) all costs in connection with the exercise facility at the Project; (17) all costs and expenses related to Landlord's retention of consultants in connection with the routine review, inspection, testing, monitoring, analysis and control of Hazardous Material, and retention of consultants in connection with the clean-up of Hazardous Material (to the extent not recoverable from a particular tenant of the Project), and all costs and expenses related to the implementation of recommendations made by such consultants concerning

the use, generation, storage, manufacture, production, storage, release, discharge, disposal or clean-up of Hazardous Material on, under or about the Premises or the Project (to the extent not recoverable from a particular tenant of the Project); (18) all capital improvements made for the purpose of reducing or controlling other Operating Expenses, and all other capital expenditures, but only as amortized over the useful life of such capital improvement as reasonably determined by Landlord, together with interest on the unamortized portion; (19) all property management costs and fees, including all costs in connection with the Project property management office; and (20) all fees or other charges incurred in conjunction with voluntary or involuntary membership in any energy conservation, air quality, environmental, traffic management or similar organizations. Operating Expenses shall not include: (a) costs of alterations of space to be occupied by new or existing tenants of the Project; (b) depreciation charges; (c) interest and principal payments on loans (except for loans for capital expenditures or improvements which Landlord is allowed to include in Operating Expenses as provided above); (d) ground rental payments; (e) real estate brokerage and leasing commissions; (f) advertising and marketing expenses; (g) costs of Landlord reimbursed by insurance proceeds; (h) costs for which the Landlord is reimbursed by any other tenant or occupant of the Building (other than payments comparable to Rent Adjustments hereunder) or by any tenant’s insurance carrier or by anyone else, and electric power costs for which any tenant directly contracts with the local public service company; (i) expenses incurred in negotiating leases of other tenants in the Project or enforcing lease obligations of other tenants in the Project; (j) Landlord's property manager's corporate general overhead or corporate general administrative expenses; (k) the wages and benefits of any employee who does not devote substantially all of his or her employed time to the Building, Project or Phase, unless such wages and benefits are prorated to reflect time spent on operation and managing the Building, Project or Phase; (l) Landlord's corporate general overhead or corporate general administrative expenses associated with the operation of the business of the entity which constitutes the Landlord, as the same are distinguished from the costs of operation of the Building, Project or Phase; (m) executives’ salaries; (n) any bad debt loss, rent loss, or reserves for bad debts or rent loss; (o) costs of Landlord’s charitable or political contributions; (p) the costs of any Tenant Work (as defined in the Workletter), (q) costs incurred in connection with Hazardous Materials to the extent such Hazardous Materials were present on the Project prior to the Delivery Date, and (r) the costs of maintaining compliance of the Common Areas with all applicable Laws to the extent required by a governmental authority with jurisdiction (except to the extent such compliance is triggered by the application for any permit or approval required in connection with any of the Tenant Additions or is the responsibility of Tenant under this Lease, in which events the Tenant shall be responsible for the costs of such compliance).

PHASE: Phase means any individual Phase of the Project, as more particularly described in the definition of Project.

PHASE OPERATING EXPENSES: Those Operating Expenses described in Section 4.01.

PREMISES: The Premises consists of the entire Building, consisting of 31,166 square feet of Rentable Area as depicted on Exhibit A attached hereto.

PROJECT or PROPERTY: As of the date hereof, the Project is known as Seaport Centre and consists of those buildings (including the Building) whose general location is shown on the Site Plan of the Project attached as Exhibit C, located in Redwood City, California, associated vehicular and parking areas, landscaping and improvements, together with the Land, any associated interests in real property, and the personal property, fixtures, machinery, equipment, systems and apparatus located in or used in conjunction with any of the foregoing. The Project may also be referred to as the Property. As of the date hereof, the Project is divided into Phase I and Phase II, which are generally designated on Exhibit C, each of which may individually be referred to as a Phase. Landlord reserves the right from time to time to add or remove buildings, areas and improvements to or from a Phase or the Project, or to add or remove a Phase to or from the Project. In the event of any such addition or removal which affects Rentable Area of the Project or a Phase, Landlord shall make a corresponding recalculation and adjustment of any affected Rentable Area and Tenant’s Share.

PROJECT OPERATING EXPENSES: Those Operating Expenses described in Section 4.01.

REAL PROPERTY: The Property excluding any personal property.

RENT: Collectively, Monthly Base Rent, Rent Adjustments and Rent Adjustment Deposits, and all other charges, payments, late fees or other amounts required to be paid by Tenant under this Lease.

RENT ADJUSTMENT: Any amounts owed by Tenant for payment of Operating Expenses. The Rent Adjustments shall be determined and paid as provided in Article Four.

RENT ADJUSTMENT DEPOSIT: An amount equal to Landlord's estimate of the Rent Adjustment attributable to each month of the applicable Adjustment Year. On or before the Commencement Date and the beginning of each subsequent Adjustment Year or with Landlord's Statement (defined in Article Four), Landlord may estimate and notify Tenant in writing of its estimate of Operating Expenses, including Project Operating Expenses, Building Operating Expenses and Phase Operating Expenses, and Tenant’s Share of each, for the

applicable Adjustment Year. The Rent Adjustment Deposit applicable for the calendar year in which the Commencement Date occurs shall be the amount, if any, specified in Section 1.01(9). Nothing contained herein shall be construed to limit the right of Landlord from time to time during any calendar year to revise its estimates of Operating Expenses and to notify Tenant in writing thereof and of revision by prospective adjustments in Tenant's Rent Adjustment Deposit payable over the remainder of such year. The last estimate by Landlord shall remain in effect as the applicable Rent Adjustment Deposit unless and until Landlord notifies Tenant in writing of a change.

RENTABLE AREA OF THE BUILDING: The amount of square footage set forth in Section 1.01(11)

RENTABLE AREA OF THE PHASE: The amount of square footage set forth in Section 1.01(12)

RENTABLE AREA OF THE PREMISES: The amount of square footage set forth in Section 1.01(10).

RENTABLE AREA OF THE PROJECT: The amount of square footage set forth in Section 1.01(13), which represents the sum of the rentable area of all space intended for occupancy in the Project.

SECURITY: The cash and/or Letter of Credit specified in Section 1.01, if any, paid or delivered to Landlord as security for Tenant's performance of its obligations under this Lease, and any proceeds of the Letter of Credit drawn and held by Landlord, all as more particularly provided in Article Five.

SUBSTANTIALLY COMPLETE: The completion of the Landlord Work or Tenant Work, as the case may be, except for minor insubstantial details of construction, decoration or mechanical adjustments which remain to be done.

TAXES: All federal, state and local governmental taxes, assessments (including assessment bonds) and charges of every kind or nature, whether general, special, ordinary or extraordinary, which Landlord shall pay or become obligated to pay because of or in connection with the ownership, leasing, management, control or operation of the Property or any of its components (including any personal property used in connection therewith), which may also include any rental or similar taxes levied in lieu of or in addition to general real and/or personal property taxes. For purposes hereof, Taxes for any year shall be Taxes which are assessed for any period of such year, whether or not such Taxes are billed and payable in a subsequent calendar year. There shall be included in Taxes for any year the amount of all fees, costs and expenses (including reasonable attorneys' fees) reasonably paid by Landlord during such year in seeking or obtaining any refund or reduction of Taxes. Taxes for any year shall be reduced by the net amount of any tax refund received by Landlord attributable to such year. If a special assessment payable in installments is levied against any part of the Property, Taxes for any year shall include only the installment of such assessment and any interest payable or paid during such year. Taxes shall not include any federal or state inheritance, general income, gift or estate taxes, except that if a change occurs in the method of taxation resulting in whole or in part in the substitution of any such taxes, or any other assessment, for any Taxes as above defined, such substituted taxes or assessments shall be included in the Taxes.

TENANT ADDITIONS: Collectively, Landlord Work, Tenant Work and Tenant Alterations. Tenant’s Personal Property (as set forth in Exhibit G hereto) shall not be deemed to be included in the definition of Tenant Additions.

TENANT ALTERATIONS: Any alterations, improvements, additions, installations or construction in or to the Premises or any Real Property systems serving the Premises done or caused to be done by Tenant after the date hereof, whether prior to or after the Commencement Date (including Tenant Work, but excluding Landlord Work).

TENANT DELAY: Any event or occurrence which delays the Substantial Completion of the Landlord Work which is caused by or is described as follows:

(i) special work, changes, alterations or additions requested or made by Tenant in the design or finish in any part of the Premises after approval of the plans and specifications (as described in the Workletter);

(ii) Tenant's delay in submitting plans, supplying information, approving plans, specifications or estimates, giving authorizations or otherwise;

(iii) failure to approve and pay for such work as Landlord undertakes to complete at Tenant's expense;

(iv) the performance or completion by Tenant or any person engaged by Tenant of any work in or about the Premises; or

(v) failure to perform or comply with any obligation or condition binding upon Tenant pursuant to the Wokletter including the failure to approve and pay for such Landlord Work or other items if and to the extent the Workletter provides they are to be approved or paid by Tenant.

TENANT’S FF&E: The property of Tenant described in Section 5 of the Workletter.

TENANT’S PERSONAL PROPERTY: Tenant’s property described on Exhibit G hereto.

TENANT WORK: All work installed or furnished to the Premises by Tenant in connection with Tenant’s initial occupancy pursuant to Rider 2 and the Workletter.

TENANT’S BUILDING SHARE: The share as specified in Section 1.01(16) and Section 4.01.

TENANT’S PHASE: The Phase in which the Premises is located, as indicated in Section 1.01(1).

TENANT’S PHASE SHARE: The share as specified in Section 1.01(16) and Section 4.01.

TENANT’S PROJECT SHARE: The share as specified in Section 1.01(16) and Section 4.01.

TENANT'S SHARE: Shall mean collectively, Tenant’s respective shares of the respective categories of Operating Expenses, as provided in Section 1.01(16) and Section 4.01.

TERM: The term of this Lease commencing on the Commencement Date and expiring on the Expiration Date.

TERMINATION DATE: The Expiration Date or such earlier date as this Lease terminates or Tenant's right to possession of the Premises terminates.

WORKLETTER: The Agreement regarding the completion of Tenant Work and Landlord Work, if any, set forth in Rider 2 and Exhibit B hereto.

ARTICLE TWO

PREMISES, TERM, FAILURE TO GIVE POSSESSION, COMMON AREAS AND PARKING

2.01 LEASE OF PREMISES

Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the Premises for the Term and upon the terms, covenants and conditions provided in this Lease.

2.02 TERM (See Rider 2)

2.03 FAILURE TO GIVE POSSESSION (See Rider 2)

2.04 AREA OF PREMISES

Landlord and Tenant agree that for all purposes of this Lease the Rentable Area of the Premises, the Rentable Area of the Building, the Rentable Area of the Phase and the Rentable Area of the Project as set forth in Article One are controlling, and are not subject to revision after the date of this Lease, except as otherwise provided herein.

2.05 CONDITION OF PREMISES (See Rider 2)

2.06 COMMON AREAS & PARKING

(a) Right to Use Common Areas. Tenant shall have the non-exclusive right, in common with others, to the use of any common entrances, ramps, drives and similar access and serviceways and other Common Areas in the Project. The rights of Tenant hereunder in and to the Common Areas shall at all times be subject to the rights of Landlord and other tenants and owners in the Project who use the same in common with Tenant, and it shall be the duty of Tenant to keep all the Common Areas free and clear of any obstructions created or permitted by Tenant or resulting from Tenant's operations. Tenant shall not use the Common Areas or common facilities of the Building or the Project, including the Building's electrical room, parking lot or trash enclosures, for storage purposes. Nothing herein shall affect the right of Landlord at any time to remove any persons not authorized to use the Common Areas or common facilities from such areas or facilities or to prevent their use by unauthorized persons.

(b) Changes in Common Areas. Landlord reserves the right, at any time and from time to time to (i) make alterations in or additions to the Common Areas or common facilities of the Project, including constructing new buildings or changing the location, size, shape or number of the driveways, entrances,

parking spaces, parking areas, loading and unloading areas, landscape areas and walkways, (ii) designate property to be included in or eliminate property from the Common Areas or common facilities of the Project, (iii) close temporarily any of the Common Areas or common facilities of the Project for maintenance purposes, and (iv) use the Common Areas and common facilities of the Project while engaged in making alterations in or additions and repairs to the Project; provided, however, that (x) such changes do not materially adversely affect Tenant’s use of the Premises or increase Tenant’s costs hereunder, and (y) reasonable access to the Premises and parking at or near the Project remains available.

(c) Parking. During the Term, Tenant shall have the right, at no additional monthly parking charge during the initial Term, to use the number of Parking Spaces specified in Section 1.01(18) for parking on an unassigned basis on that portion of the Project designated by Landlord from time to time for parking. Tenant acknowledges and agrees that the parking spaces in the Project's parking facility may include a mixture of spaces for compact vehicles as well as full-size passenger automobiles, and that Tenant shall not use parking spaces for vehicles larger than the striped size of the parking spaces. Tenant shall comply with any and all parking rules and regulations if and as from time to time reasonably established by Landlord. Tenant shall not allow any vehicles using Tenant's parking privileges to be parked, loaded or unloaded except in accordance with this Section, including in the areas and in the manner designated by Landlord for such activities. If any vehicle owned or operated by Tenant or any Tenant Parties (as defined in Article Seven) is using the parking or loading areas contrary to any provision of this Section, Landlord shall have the right, in addition to all other rights and remedies of Landlord under this Lease, to remove or tow away the vehicle without prior notice to Tenant, and the cost thereof shall be paid to Landlord within ten (10) business days after notice from Landlord to Tenant.

ARTICLE THREE

RENT

Tenant agrees to pay to Landlord via wire transfer in accordance with instructions set forth below (as modified by Landlord from time to time), or to such other persons, or at such other places or in such manner designated by Landlord, without any prior demand therefor in immediately available funds and without any deduction or offset whatsoever, Rent, including Monthly Base Rent and Rent Adjustments in accordance with Article Four, during the Term. Monthly Base Rent shall be paid monthly in advance on the first day of each month of the Term, except that the first installment of Monthly Base Rent shall be paid by Tenant to Landlord concurrently with execution of this Lease by means of Tenant’s check payable to the order of Metropolitan Life Insurance Company. Monthly Base Rent shall be prorated for partial months within the Term. Unpaid Rent shall bear interest at the Default Rate from the date due until paid. Tenant's covenant to pay Rent shall be independent of every other covenant in this Lease. Until further notice to Tenant, Rent paid by wire transfer shall be wired to:

Bank: JP Morgan Chase Bank, N.A.

Address: PO Box 659754 San Antonio, TX 78265-9754

Account Name: MLIC Seaport Centre II CBRE

Account number: 9132219065

ACH ABA #: 021000021

ARTICLE FOUR

OPERATING EXPENSES, RENT ADJUSTMENTS AND PAYMENTS

4.01 TENANT’S SHARE OF OPERATING EXPENSES

Tenant shall pay Tenant’s Share of Operating Expenses in the respective shares of the respective categories of Operating Expenses as set forth below.

(a) Tenant’s Project Share of Project Operating Expenses, which is the percentage obtained by dividing the rentable square footage of the Premises by the rentable square footage of the Project and as of the date hereof equals the percentage set forth in Section 1.01(16);

(b) Tenant’s Building Share of Building Operating Expenses, which is the percentage obtained by dividing the rentable square footage of the Premises respectively for each building in which the Premises is located by the total rentable square footage of such building and as of the date hereof equals the percentage set forth in Section 1.01(16);

(c) Tenant’s Phase Share of Phase Operating Expenses, which is the percentage obtained by dividing the aggregate rentable square footage of the Premises by the total rentable square footage of Tenant’s Phase and as of the date hereof equals the percentage set forth in Section 1.01(16);

(d) Project Operating Expenses shall mean all Operating Expenses that are not included as Phase Operating Expenses (defined below) and that are not either Building Operating Expenses or operating expenses directly and separately identifiable to the operation, maintenance or repair of any

other building located in the Project, but Project Operating Expenses includes operating expenses allocable to any areas of the Building or any other building during such time as such areas are made available by Landlord for the general common use or benefit of all tenants of the Project, and their employees and invitees, or the public, as such areas currently exist and as they may be changed from time to time;

(e) Building Operating Expenses shall mean Operating Expenses that are directly and separately identifiable to each building in which the Premises or part thereof is located;

(f) Phase Operating Expenses shall mean Operating Expenses that Landlord may allocate to a Phase as directly and separately identifiable to all buildings located in the Phase (including but not limited to the Building) and may include Project Operating Expenses that are separately identifiable to a Phase;

(g) Landlord shall have the right to allocate a particular item or portion of Operating Expenses as any one of Project Operating Expenses, Building Operating Expenses or Phase Operating Expenses; however, in no event shall any portion of Building Operating Expenses, Project Operating Expenses or Phase Operating Expenses be assessed or counted against Tenant more than once; and.

(h) Notwithstanding anything to the contrary contained in this Section 4.01, as to each specific category of Operating Expense which one or more tenants of the Building either pays directly to third parties or specifically reimburses to Landlord (for example, separately contracted janitorial services or property taxes directly reimbursed to Landlord), then, on a category by category basis, the amount of Operating Expenses for the affected period shall be adjusted as follows: (1) all such tenant payments with respect to such category of expense and all of Landlord's costs reimbursed thereby shall be excluded from Operating Expenses and Tenant's Building Share, Tenant's Phase Share or Tenant's Project Share, as the case may be, for such category of Operating Expense shall be adjusted by excluding the square footage of all such tenants, and (2) if Tenant pays or directly reimburses Landlord for such category of Operating Expense, such category of Operating Expense shall be excluded from the determination of Operating Expenses for the purposes of this Lease.

4.02 RENT ADJUSTMENTS

Tenant shall pay to Landlord Rent Adjustments with respect to each Adjustment Year as follows:

(a) The Rent Adjustment Deposit shall be paid monthly during the Term with the payment of Monthly Base Rent, except the first installment which shall be paid by Tenant to Landlord concurrently with execution of this Lease. The Rent Adjustment Deposit represents, on a monthly basis, Tenant's Share of Landlord’s estimate of Operating Expenses, as described in Section 4.01, for the applicable Adjustment Year (or portion thereof); and

(b) Any Rent Adjustments due in excess of the Rent Adjustment Deposits in accordance with Section 4.03.

4.03 STATEMENT OF LANDLORD

Within one hundred twenty (120) days after the end of each calendar year or as soon thereafter as reasonably possible, Landlord will furnish Tenant a statement ("Landlord's Statement") showing the following:

(a) Operating Expenses for the last Adjustment Year showing in reasonable detail the actual Operating Expenses categorized among Project Operating Expenses, Building Operating Expenses and Phase Operating Expenses for such period and Tenant’s Share of each as described in Section 4.01 above;

(b) The amount of Rent Adjustments due Landlord for the last Adjustment Year, less credit for Rent Adjustment Deposits paid, if any; and

(c) Any change in the Rent Adjustment Deposit due monthly in the current Adjustment Year, including the amount or revised amount due for months preceding any such change pursuant to Landlord's Statement.

Tenant shall pay to Landlord within ten (10) days after receipt of such statement any amounts for Rent Adjustments then due in accordance with Landlord's Statement. Any amounts due from Landlord to Tenant pursuant to this Section shall be credited to the Rent Adjustment Deposit next coming due, or refunded to Tenant if the Term has already expired provided Tenant is not in default hereunder. No interest or penalties shall accrue on any amounts which Landlord is obligated to credit or refund to Tenant by reason of this Section

4.03. Landlord's failure to deliver Landlord's Statement or to compute the amount of the Rent Adjustments shall not constitute a waiver by Landlord of its right to deliver such items nor constitute a waiver or release of Tenant's obligations to pay such amounts. The Rent Adjustment Deposit shall be credited against Rent Adjustments due for the applicable Adjustment Year. During the last complete calendar year or during any partial calendar year in which the Lease terminates, Landlord may include in the Rent Adjustment Deposit its estimate of Rent Adjustments which may not be finally determined until after the termination of this Lease. Tenant's obligation to pay Rent Adjustments survives the expiration or termination of the Lease. Notwithstanding the foregoing, in no event shall the sum of Monthly Base Rent and the Rent Adjustments be less than the Monthly Base Rent payable.

4.04 BOOKS AND RECORDS

Landlord shall maintain books and records showing Operating Expenses and Taxes in accordance with sound accounting and management practices, consistently applied. The Tenant or its representative (which representative shall be a certified public accountant licensed to do business in the state in which the Property is located and whose primary business is certified public accounting) shall have the right, for a period of thirty (30) days following the date upon which Landlord's Statement is delivered to Tenant, to examine the Landlord's books and records with respect to the items in the foregoing statement of Operating Expenses and Taxes during normal business hours, upon written notice, delivered at least three (3) business days in advance. If Tenant does not object in writing to Landlord's Statement within sixty (60) days of Tenant's receipt thereof, specifying the nature of the item in dispute and the reasons therefor, then Landlord's Statement shall be considered final and accepted by Tenant. Any amount due to the Landlord as shown on Landlord's Statement, whether or not disputed by Tenant as provided herein shall be paid by Tenant when due as provided above, without prejudice to any such written exception.

4.05 TENANT OR LEASE SPECIFIC TAXES

In addition to Monthly Base Rent, Rent Adjustments, Rent Adjustment Deposits and other charges to be paid by Tenant, Tenant shall pay to Landlord, upon demand, any and all taxes payable by Landlord (other than federal or state inheritance, general income, gift or estate taxes) whether or not now customary or within the contemplation of the parties hereto: (a) upon, allocable to, or measured by the Rent payable hereunder, including any gross receipts tax or excise tax levied by any governmental or taxing body with respect to the receipt of such rent; or (b) upon or with respect to the possession, leasing, operation, management, maintenance, alteration, repair, use or occupancy by Tenant of the Premises or any portion thereof; or (c) upon the measured value of Tenant's personal property or trade fixtures located in the Premises or in any storeroom or any other place in the Premises or the Property, or the areas used in connection with the operation of the Property, it being the intention of Landlord and Tenant that, to the extent possible, Tenant shall cause such taxes on personal property or trade fixtures to be billed to and paid directly by Tenant; (d) resulting from Landlord Work, Tenant Work or Tenant Alterations to the Premises, whether title thereto is in Landlord or Tenant; or (e) upon this transaction. Taxes paid by Tenant pursuant to this Section 4.05 shall not be included in any computation of Taxes as part of Operating Expenses.

ARTICLE FIVE

SECURITY

(a) Tenant, at Tenant’s sole cost and expense, concurrently with execution of this Lease, shall either (1) pay Landlord in cash or immediately available funds or (2) provide Landlord the Letter of Credit (defined below) as more particularly described below, in each case in the amount of the Security specified in Section 1.01 as security (“Security”) for the full and faithful performance by Tenant of each and every term, provision, covenant, and condition of this Lease. If Tenant fails timely to perform any of the terms, provisions, covenants and conditions of this Lease or any other document executed by Tenant in connection with this Lease, including, but not limited to, the payment of the Monthly Base Rent, Rent Adjustment Deposits, Rent Adjustments or the repair of damage to the Premises caused by Tenant (excluding normal wear and tear), then Landlord may use, apply, or retain the whole or any part of the Security for the payment of any such Monthly Base Rent, Rent Adjustment Deposits or Rent Adjustments not paid when due, for the cost of repairing such damage, for the cost of cleaning the Premises, for the payment of any other sum which Landlord may expend or may be required to expend by reason of Tenant's failure to perform, and otherwise for compensation of Landlord for any other loss or damage to Landlord occasioned by Tenant's failure to perform, including, but not limited to, any loss of future Rent and any damage or deficiency in the reletting of the Premises (whether such loss, damages or deficiency accrue before or after summary proceedings or other reentry by Landlord) and the amount of the unpaid past Rent, future Rent loss, and all other losses, costs and damages, that Landlord would be entitled to recover if Landlord were to pursue recovery under California Civil Code Section 1951.2 or 1951.4. If Landlord so uses, applies or retains all or part of the Security, Tenant shall within five (5) business days after demand pay or deliver to Landlord in immediately available funds the sum necessary to replace the amount used, applied or retained, except as specified in (e) below. If Tenant has fully and faithfully performed and observed all of Tenant's obligations under the terms, provisions, covenants and conditions of this Lease, the Security (except any amount retained for application by Landlord as provided herein) shall be returned or

paid over to Tenant no later than ninety (90) days after the latest of: (i) the Termination Date; (ii) the removal of Tenant from the Premises; or (iii) the surrender of the Premises by Tenant to Landlord in accordance with this Lease. Provided, however, in no event shall any such return be construed as an admission by Landlord that Tenant has performed all of its obligations hereunder.

(b) The Security, whether in the form of cash, Letter of Credit (defined below) and/or Letter of Credit Proceeds (defined below), shall not be deemed an advance rent deposit or an advance payment of any kind, or a measure of Landlord’s damages with respect to Tenant’s failure to perform, nor shall any action or inaction of Landlord with respect to it or its use or application be a waiver of, or bar or defense to, enforcement of any right or remedy of Landlord. Landlord shall not be required to keep the Security separate from its general funds and shall not have any fiduciary duties or other duties (except as set forth in this Section) concerning the Security. Tenant shall not be entitled to any interest on the Security. In the event of any sale, lease or transfer of Landlord's interest in the Building, Landlord shall have the right to transfer the Security, or balance thereof, to the vendee, transferee or lessee and any such transfer shall release Landlord from all liability for the return of the Security. Tenant thereafter shall look solely to such vendee, transferee or lessee for the return or payment of the Security. Tenant shall not assign or encumber or attempt to assign or encumber the Security or any interest in it and Landlord shall not be bound by any such assignment, encumbrance, attempted assignment or attempted encumbrance, and regardless of one or more assignments of this Lease, Landlord may return the Security to the original Tenant without liability to any assignee. Tenant hereby waives any and all rights of Tenant under the provisions of Section 1950.7 of the California Civil Code, and any and all rights of Tenant under all other provisions of law, now or hereafter enacted, regarding security deposits.

(c) If Tenant fails timely to perform any obligation under this Article Five, such breach shall constitute a Default by Tenant under this Lease without any right to or requirement of any further notice or cure period under any other Article of this Lease, except such notice and cure period expressly provided under this Article Five.

(d) During the first six months after the date on which this Lease has been executed by both Tenant and Landlord, Tenant shall have the right, at Tenant’s sole cost and expense, to provide Landlord with the Letter of Credit (defined below) as the Security required under this Lease in substitution for the cash then held by Landlord as Security. In the event that Tenant first delivered the Security in the form of cash or immediately available funds prior to delivering the Letter of Credit, then, within thirty (30) days after Tenant’s delivery to Landlord of the Letter of Credit, Landlord shall refund to Tenant the amount of cash held by Landlord as Security, less any amounts thereof used, applied or retained by Landlord pursuant to the provisions of Subsection (a) and not replenished by Tenant.

(e) As used herein, “Letter of Credit” shall mean an unconditional, irrevocable sight draft letter of credit issued, presentable and payable at the San Francisco, California or San Jose, California office of a major national bank satisfactory to Landlord in its sole discretion (the “Bank”), naming Landlord as beneficiary, in the amount specified in Section 1.01(14) above. The Letter of Credit shall provide: (i) that Landlord may make partial and multiple draws thereunder, up to the face amount thereof, and that Landlord may draw upon the Letter of Credit up to the full amount thereof, as determined by Landlord, and the Bank will pay to Landlord the amount of such draw upon receipt by the Bank of a sight draft signed by Landlord without requirement for any additional documents or statements by Landlord; and (ii) that, in the event of assignment or other transfer of either Landlord’s interest in this Lease or of any interest in Landlord (including, without limitation, consolidations, mergers, reorganizations or other entity changes), the Letter of Credit shall be freely transferable by Landlord, without charge to Landlord and without recourse, to the assignee or transferee of such interest and the Bank shall confirm the same to Landlord and such assignee or transferee. The Letter of Credit shall be in the form attached as Exhibit H hereto. Provided however, if Tenant proposes to use Silicon Valley Bank as the issuer of the Letter of Credit, the form of Letter of Credit set forth in Exhibit E hereto will be acceptable to Landlord. Landlord may (but shall not be required to) draw upon the Letter of Credit and use the proceeds therefrom (the “Letter of Credit Proceeds”) or any portion thereof in any manner Landlord is permitted to use the Security under this Article Five. In the event Landlord draws upon the Letter of Credit and elects not to terminate the Lease, but to use the Letter of Credit Proceeds, then within five (5) business days after Landlord gives Tenant written notice specifying the amount of the Letter of Credit Proceeds so utilized by Landlord, Tenant shall deliver to Landlord an amendment to the Letter of Credit or a replacement Letter of Credit in an amount equal to one hundred percent (100%) of the then-required amount of the Letter of Credit. Tenant’s failure to deliver such amendment or replacement of the Letter of Credit to Landlord within five (5) business days after Landlord’s notice shall constitute a Default by Tenant under this Lease. The Letter of Credit shall have an initial term of no longer than one (1) year, shall be “evergreen”, and shall be extended, reissued or replaced by Tenant, in each case at least thirty (30) days prior to its expiration in a manner that fully complies with the requirements of this Article Five, so that in all events the Letter of Credit required hereunder shall be in full force and effect continuously until the date (the “L/C Expiration Date”) for return of the Security described in Subsection (a) above. No more often than once per year, Landlord shall have the right to require Tenant to deliver to Landlord, on fifteen (15) days prior notice, a replacement Letter of Credit on the same terms and conditions set forth in this Article Five, in the event that Landlord determines, in its good faith judgment, that the issuing Bank is no longer satisfactory to remain as the issuer of the Letter of Credit. Any

advice from the issuer that it intends to withdraw or not extend the Letter of Credit prior to any scheduled annual expiration or the L/C Expiration Date shall entitle the Landlord to immediately draw upon the Letter of Credit.

ARTICLE SIX

UTILITIES & SERVICES

6.01 LANDLORD'S GENERAL SERVICES

Landlord shall provide maintenance and services as provided in Article Eight.

6.02 TENANT TO OBTAIN & PAY DIRECTLY

(a) Tenant shall be responsible for and shall pay promptly all charges for gas, electricity, sewer, heat, light, power, telephone, refuse pickup (to be performed on a regularly scheduled basis so that accumulated refuse does not exceed the capacity of Tenant's refuse bins), janitorial service and all other utilities, materials and services furnished directly to or used by Tenant in, on or about the Premises, together with all taxes thereon. Tenant shall contract directly with the providing companies for such utilities and services.

(b) Notwithstanding any provision of the Lease to the contrary, without, in each instance, the prior written consent of Landlord, as more particularly provided in Article Nine, Tenant shall not: (i) make any alterations or additions to the electric or gas equipment or systems or other Building systems. Tenant's use of electric current shall at no time exceed the capacity of the wiring, feeders and risers providing electric current to the Premises or the Building. The consent of Landlord to the installation of electric equipment shall not relieve Tenant from the obligation to limit usage of electricity to no more than such capacity.

6.03 TELEPHONE SERVICES

All telegraph, telephone, and communication connections which Tenant may desire outside the Premises shall be subject to Landlord's prior written approval, in Landlord's sole discretion, and the location of all wires and the work in connection therewith shall be performed by contractors approved by Landlord and shall be subject to the direction of Landlord, except that such approval is not required as to Tenant's cabling from the Premises in a route designated by Landlord to any telephone cabinet or panel provided for Tenant's connection to the telephone cable serving the Building, so long as Tenant's equipment does not require connections different than or additional to those to the telephone cabinet or panel provided. As to any such connections or work outside the Premises requiring Landlord’s approval, Landlord reserves the right reasonably to approve the entity or entities providing telephone or other communication cable installation, removal, repair and maintenance outside the Premises and reasonably to restrict and control access to telephone cabinets or panels outside the Premises. Tenant shall be responsible for and shall pay all costs incurred in connection with the installation of telephone cables and communication wiring in the Premises, including any hook-up, access and maintenance fees related to the installation of such wires and cables in the Premises and the commencement of service therein, and the maintenance thereafter of such wire and cables; and there shall be included in Operating Expenses for the Building all installation, removal, hook-up or maintenance costs incurred by Landlord in connection with telephone cables and communication wiring serving the Building which are not allocable to any individual users of such service but are allocable to the Building generally. If Tenant fails to maintain all telephone cables and communication wiring in the Premises and such failure affects or interferes with the operation or maintenance of any other telephone cables or communication wiring serving the Building, Landlord or any vendor hired by Landlord may enter into and upon the Premises forthwith and perform such repairs, restorations or alterations as Landlord deems necessary in order to eliminate any such interference (and Landlord may recover from Tenant all of Landlord's costs in connection therewith). No later than the Termination Date, Tenant agrees to remove all telephone cables and communication wiring installed by Tenant for and during Tenant's occupancy, which Landlord shall request Tenant to remove. Tenant agrees that neither Landlord nor any of its agents or employees shall be liable to Tenant, or any of Tenant's employees, agents, customers or invitees or anyone claiming through, by or under Tenant, for any damages, injuries, losses, expenses, claims or causes of action because of any interruption, diminution, delay or discontinuance at any time for any reason in the furnishing of any telephone or other communication service to the Premises and the Building.

6.04 FAILURE OR INTERRUPTION OF UTILITY OR SERVICE

To the extent that any equipment or machinery furnished or maintained by Landlord outside the Premises is used in the delivery of utilities directly obtained by Tenant pursuant to Section 6.02 and breaks down or ceases to function properly, Landlord shall use reasonable diligence to repair same promptly. In the event of any failure, stoppage or interruption of, or change in, any utilities or services supplied by Landlord which are not directly obtained by Tenant, Landlord shall use reasonable diligence to have service promptly resumed. In either event covered by the preceding two sentences, if the cause of any such failure, stoppage or interruption

of, or change in, utilities or services is within the control of a public utility, other public or quasi-public entity, or utility provider outside Landlord's control, notification to such utility or entity of such failure, stoppage or interruption and request to remedy the same shall constitute "reasonable diligence" by Landlord to have service promptly resumed. Notwithstanding any other provision of this Section to the contrary, in the event of any failure, stoppage or interruption of, or change in, any utility or other service furnished to the Premises or the Project resulting from any cause other than the gross negligence or willful and wrongful act of Landlord or its agents or contractors, including changes in service provider or Landlord's compliance with any voluntary or similar governmental or business guidelines now or hereafter published or any requirements now or hereafter established by any governmental agency, board or bureau having jurisdiction over the operation of the Property: (a) Landlord shall not be liable for, and Tenant shall not be entitled to, any abatement or reduction of Rent; (b) no such failure, stoppage, or interruption of any such utility or service shall constitute an eviction of Tenant or relieve Tenant of the obligation to perform any covenant or agreement of this Lease to be performed by Tenant; (c) Landlord shall not be in breach of this Lease nor be liable to Tenant for damages or otherwise.

6.05 INTENTIONALLY OMITTED

6.06 SIGNAGE

Except as set forth in Rider 2, Tenant shall not install any signage within the Project or the Premises without obtaining the prior written approval of Landlord, and Tenant shall be responsible for procurement, installation, maintenance and removal of any such signage installed by Tenant, and all costs in connection therewith. Any such signage shall comply with Landlord's current Project signage criteria and all Laws.

ARTICLE SEVEN

POSSESSION, USE AND CONDITION OF PREMISES

7.01 POSSESSION AND USE OF PREMISES

(a) Tenant shall occupy and use the Premises only for the uses specified in Section 1.01(17) to conduct Tenant's business. Tenant shall not occupy or use the Premises (or permit the use or occupancy of the Premises) for any purpose or in any manner which: (1) is unlawful or in violation of any Law or Environmental Law; (2) may be dangerous to persons or property or which may increase the cost of, or invalidate, any policy of insurance carried on the Building or covering its operations; (3) is contrary to or prohibited by the terms and conditions of this Lease or the rules and regulations as provided in Article Eighteen; (4) contrary to or prohibited by the articles, bylaws or rules of any owner’s association affecting the Project; (5) would obstruct or interfere with the rights of other tenants or occupants of the Building or the Project, or injure or annoy them, or would tend to create or continue a nuisance; or (6) would constitute any waste in or upon the Premises or Project. Without limiting the generality of the foregoing, Tenant shall not bring upon the Premises or any portion of the Project or use the Premises or permit the Premises or any portion thereof to be used for the growing, manufacturing, administration, distribution (including without limitation, any retail sales), possession, use or consumption of any cannabis, marijuana or cannabinoid product or compound, regardless of the legality or illegality of the same.

(b) Landlord and Tenant acknowledge that the Americans With Disabilities Act of 1990 (42 U.S.C. §12101 et seq.) and regulations and guidelines promulgated thereunder, as all of the same may be amended and supplemented from time to time (collectively referred to herein as the "ADA") establish requirements for business operations, accessibility and barrier removal, and that such requirements may or may not apply to the Premises, the Building and the Project depending on, among other things: (1) whether Tenant's business is deemed a "public accommodation" or "commercial facility", (2) whether such requirements are "readily achievable", and (3) whether a given alteration affects a "primary function area" or triggers "path of travel" requirements. The parties hereby agree that: (a) Landlord shall be responsible for ADA Title III compliance in the Common Areas, except as provided below, (b) Tenant shall be responsible for ADA Title III compliance in the Premises, including any leasehold improvements or other work to be performed in the Premises under or in connection with this Lease, (c) Landlord may perform, or require that Tenant perform, and Tenant shall be responsible for the cost of, ADA Title III "path of travel" requirements triggered by Tenant Additions in the Premises, and (d) Landlord may perform, or require Tenant to perform, and Tenant shall be responsible for the cost of, ADA Title III compliance in the Common Areas necessitated by the Building being deemed to be a "public accommodation" instead of a "commercial facility" as a result of Tenant's use of the Premises. To the extent Tenant shall occupy the entire Building or an entire floor in the Building, all ADA Title III requirements relating to the restrooms, elevator lobbies and corridors on such floor shall be the responsibility of Tenant. In such event, all matters related to “life safety” on such floor shall also be the responsibility of Tenant. Tenant shall be solely responsible for requirements under Title I of the ADA relating to Tenant's employees. Notwithstanding any provision of the foregoing to the contrary, Landlord shall perform and be responsible for any ADA Title III compliance outside the Building (the cost of which shall be included in Operating Expenses unless expressly excluded from the definition of Operating Expenses), but Landlord shall not be obligated to pay for any compliance outside the Building to the extent that Tenant is responsible for such compliance pursuant to items (c) or (d) above.

(c) Landlord and Tenant agree to cooperate and use commercially reasonable efforts to participate in traffic management programs generally applicable to businesses located in or about the area and Tenant shall encourage and support van and carpooling by, and staggered and flexible working hours for, its office workers and service employees to the extent reasonably permitted by the requirements of Tenant's business. Neither this Section or any other provision of this Lease is intended to or shall create any rights or benefits in any other person, firm, company, governmental entity or the public.

(d) Tenant agrees to cooperate with Landlord and to comply with any and all guidelines or controls concerning energy management imposed upon Landlord by federal or state governmental organizations or by any energy conservation association to which Landlord is a party or which is applicable to the Building.

7.02 HAZARDOUS MATERIAL

(a) Tenant shall not use, generate, manufacture, produce, store, handle, release, discharge, or dispose of, on, under or about the Premises or any part of the Project, or transport to or from the Premises or any part of the Project, any Hazardous Material, or allow its employees, agents, contractors, licensees, invitees or any other person or entity under Tenant’s control (“Tenant Parties”) to do so except to the extent expressly provided below. Provided that the Premises are used only for the uses specified in Section 1.01(17) above, Tenant shall be permitted to use and store in, and transport to and from, the Premises Hazardous Material identified on Exhibit D hereto and by this reference incorporated herein ("Permitted Hazardous Material") so long as: (i) each item of the Permitted Hazardous Material is used or stored in, or transported to and from, the Premises only to the extent necessary for Tenant's operation of its business at the Premises; (ii) at no time shall any Permitted Hazardous Material be in use or storage at the Premises in excess of the quantity specified therefor in Exhibit D; (iii) Tenant shall not install any underground tanks of any type; and (iv) the conditions and provisions set forth in this Section 7.02 are complied with. If Tenant desires to add additional types or quantities of Hazardous Materials to the list of Permitted Hazardous Materials specified in Exhibit D, Tenant shall give Landlord notice of the Hazardous Materials and quantities thereof that Tenant desires to use at the Premises and Landlord shall thereafter have the right to approve or disapprove such additional Hazardous Materials in Landlord's sole discretion within ten (10) days after receipt of such notice. Failure to notify Tenant in writing of its decision within said ten (10) day period shall be deemed disapproval by Landlord. Tenant shall comply with and shall cause all Tenant Parties to comply with all Environmental Laws and other Laws pertaining to Tenant's occupancy and use of the Premises and concerning the proper use, generation, manufacture, production, storage, handling, release, discharge, removal and disposal of any Hazardous Material introduced to the Premises, the Building or the Property by Tenant or any of the Tenant Parties. Without limiting the generality of the foregoing:

(1) Tenant shall provide Landlord promptly with copies of: (x) all permits, licenses and other governmental and regulatory approvals with respect to the use, generation, manufacture, production, storage, handling, release, discharge, removal and disposal by Tenant or any of the Tenant Parties of Hazardous Material at the Project; and (y) each hazardous material management plan or similar document (“Plan(s)”) with respect to use, generation, manufacture, production, storage, handling, release, discharge, removal or disposal of Hazardous Material by Tenant or any of the Tenant Parties necessary to comply with Environmental Laws or other Laws prepared by or on behalf of Tenant or any of the Tenant Parties (whether or not required to be submitted to a governmental agency) and updates thereof in the event of any change in the Permitted Hazardous Materials used by Tenant or when otherwise required by Law.

(2) If Tenant is notified of any investigation or violation of any Environmental Laws or other Laws arising from any activity of Tenant or any of the Tenant Parties at the Property, or if Tenant knows, or has reasonable cause to believe, that a Hazardous Material has come to be located in, on, under or about the Premises or the Project, other than as previously consented to by Landlord, Tenant shall immediately give written notice of such fact to Landlord, and provide Landlord with a copy of all reports, notices, claims or other documentation which it has concerning the presence of such Hazardous Material. In such event Landlord may conduct, at Tenant’s expense, such tests and studies as Landlord deems desirable relating to compliance by Tenant or any of the Tenant Parties with this Lease, Environmental Laws, other Laws, or relating to the alleged presence of Hazardous Material introduced to the Premises, the Building or the Property by Tenant or any of the Tenant Parties. Further, Landlord may conduct, at Landlord’s expense, such tests and studies as Landlord deems desirable relating to compliance by Tenant or any of the Tenant Parties with this Lease, Environmental Laws, other Laws, or relating to the alleged presence of Hazardous Material introduced to the Premises, the Building or the Property by Tenant or any of the Tenant Parties. In the event such tests and studies done at Landlord’s expense reasonably indicate that Tenant or Tenant Parties have violated Environmental Laws or caused a release of Hazardous Material, then Tenant shall reimburse Landlord the cost of such tests and studies.

(3) Neither Tenant nor any of the Tenant Parties shall cause or permit any Hazardous Material to be released, discharged or disposed of in, on, under, or about the Premises or the Project (including through the plumbing or sanitary sewer system) and shall promptly, at Tenant’s expense, take all investigatory and/or remedial action reasonably recommended, whether or not formally ordered or required, for the cleanup of any contamination of, and for the maintenance, security and/or monitoring of the Premises, the Project or neighboring properties, that was caused or materially contributed to by Tenant, or pertaining to or involving any Hazardous Material brought onto the Premises or the Project by Tenant or any of the Tenant Parties.

(4) Tenant shall, no later than the Termination Date, surrender the Premises to Landlord free of Hazardous Material and with all remedial and/or closure plans completed (and deliver evidence thereof to Landlord).

(b) To the extent permitted by law, Tenant hereby indemnifies and agrees to protect, defend and hold the Indemnitees harmless against all actions, claims, demands, liability, costs and expenses, including reasonable attorneys' fees and expenses for the defense thereof, arising from the use, generation, manufacture, production, storage, handling, release, threatened release, discharge, disposal, transportation to or from, or presence of any Hazardous Material on, under or about the Premises or any part of the Project caused by Tenant or by any of the Tenant Parties, whether before, during or after the Term. Tenant's obligations under this Section 7.02 shall survive the expiration or earlier termination of this Lease. In case of any action or proceeding brought against the Indemnitees by reason of any such claim, upon notice from Landlord, Tenant covenants to defend such action or proceeding by counsel chosen by Landlord, in Landlord's sole discretion. Landlord reserves the right to settle, compromise or dispose of any and all actions, claims and demands related to the foregoing indemnity, subject to the prior written approval of Tenant, which may not unreasonably be withheld. Landlord acknowledges that the sewer system for the Premises joins a common sewer discharge line shared by other tenants of the Building and confirms that notwithstanding that some elements of the Building sewer discharge line are shared, Tenant shall be responsible only for materials actually discharged by Tenant or the Tenant Parties.

(c) The right to use and store in, and transport to and from, the Premises the Permitted Hazardous Material is personal to Genomic Health and may not be assigned or otherwise transferred by it without the prior written consent of Landlord, which consent may be withheld in Landlord's sole discretion, except (i) to a Permitted Transferee which is an assignee of the Lease and which has satisfied the requirements of Sections 10.01 and 10.05 of this Lease; and (ii) Genomic Health may permit a Permitted Transferee which is a sublessee to use and store in, and transport to and from, the Premises the Permitted Hazardous Material to the same extent as Genomic Health has such right under this Lease, subject to all the provisions of this Lease. Any consent by Landlord pursuant to Article Ten to an assignment, transfer, subletting, mortgage, pledge, hypothecation or encumbrance of this Lease, and any interest therein or right or privilege appurtenant thereto, shall not constitute consent by Landlord to the use or storage at, or transportation to, the Premises of any Hazardous Material (including a Permitted Hazardous Material) by any such assignee, sublessee or transferee unless Landlord expressly agrees otherwise in writing. Provided however, at the time Tenant requests approval of any proposed assignment or sublease of this Lease by Tenant, Tenant shall submit to Landlord the proposed Permitted Hazardous Material list of the proposed assignee or sublessee. Landlord shall have the right, in its sole discretion, to approve the proposed assignee’s or sublessee’s proposed Permitted Hazardous Material list, or to require modifications to said list. In the event that Landlord does not approve of the proposed assignee’s or sublessee’s Permitted Hazardous Material list, or the proposed assignee or sublessee cannot or will not modify said list, then it shall be reasonable for purposes of Article Ten hereof for Landlord to refuse its consent to the proposed assignee or sublessee. In the event that the proposed Hazardous Material list of the assignee or sublessee includes any Hazardous Material different from or in greater quantity than those on Tenant’s Permitted Hazardous Material list, Tenant shall pay Landlord, whether or not Landlord consents to the proposed list of Permitted Hazardous Materials and/or to the proposed assignment or sublease, (i) a processing fee of Three Thousand Dollars ($3,000.00) at the time Tenant submits the request for approval, and (ii) the reasonable fees and expenses of any consultants retained by Landlord in connection with review of the proposed Permitted Hazardous Material list and use thereof by the proposed assignee or sublessee. Any consent by Landlord to the use or storage at, or transportation to or from the Premises, of any Hazardous Material (including a Permitted Hazardous Material) by an assignee, sublessee or transferee of Tenant shall not constitute a waiver of Landlord's right to refuse such consent as to any subsequent assignee or transferee.

(d) Tenant acknowledges that the sewer piping at the Project is made of ABS plastic. Accordingly, without Landlord's prior written consent, which may be given or withheld in Landlord's sole discretion, only ordinary domestic sewage is permitted to be put into the drains at the Premises. UNDER NO CIRCUMSTANCES SHALL TENANT EVER DEPOSIT ANY ESTERS OR KETONES (USUALLY FOUND IN SOLVENTS TO CLEAN UP PETROLEUM PRODUCTS) IN THE DRAINS AT THE PREMISES. If Tenant desires to put any substances other than ordinary domestic sewage into the drains, it shall first submit to Landlord a complete description of each such substance, including its chemical composition, and a sample of such substance suitable for laboratory testing. Landlord shall promptly determine whether or not the

substance can be deposited into the drains and its determination shall be absolutely binding on Tenant. Upon demand, Tenant shall reimburse Landlord for expenses incurred by Landlord in making such determination. If any substances not so approved hereunder are deposited in the drains in Tenant's Premises, Tenant shall be liable to Landlord for all damages resulting therefrom, including but not limited to all costs and expenses incurred by Landlord in repairing or replacing the piping so damaged.

7.03 LANDLORD ACCESS TO PREMISES; APPROVALS

(a) Tenant shall permit Landlord to erect, use and maintain pipes, ducts, wiring and conduits in and through the Premises, so long as Tenant's use, layout or design of the Premises is not materially affected or altered. Landlord or Landlord's agents shall have the right to enter upon the Premises (i) in the event of an emergency, without prior notice, or (ii) with 24-hour prior notice to inspect the Premises, to perform janitorial and other services (if any), to conduct safety and other testing in the Premises and to make such repairs, alterations, improvements or additions to the Premises or the Building or other parts of the Property as Landlord may deem necessary or desirable (including all alterations, improvements and additions in connection with a change in service provider or providers). Janitorial and cleaning services (if any) shall be performed after normal business hours. Any entry or work by Landlord may be during normal business hours and Landlord may use reasonable efforts to ensure that any entry or work shall not materially interfere with Tenant's occupancy of the Premises.

(b) If Tenant or its agents shall not be personally present to permit an entry into the Premises when for any reason an entry therein shall be necessary or permissible, Landlord (or Landlord's agents), after having properly notified Tenant (unless Landlord believes an emergency situation exists), may enter the Premises without rendering Landlord or its agents liable therefor, and without relieving Tenant of any obligations under this Lease.

(c) Landlord may enter the Premises for the purpose of conducting such inspections, tests and studies as Landlord may deem desirable or necessary to confirm Tenant's compliance with all Laws and Environmental Laws or for other purposes necessary in Landlord's reasonable judgment to ensure the sound condition of the Property and the systems serving the Property. Landlord's rights under this Section 7.03 (c) are for Landlord's own protection only, and Landlord has not, and shall not be deemed to have assumed, any responsibility to Tenant or any other party as a result of the exercise or non-exercise of such rights, for compliance with Laws or Environmental Laws or for the accuracy or sufficiency of any item or the quality or suitability of any item for its intended use.

(d) Landlord may do any of the foregoing, or undertake any of the inspection or work described in the preceding paragraphs without such action constituting an actual or constructive eviction of Tenant, in whole or in part, or giving rise to an abatement of Rent by reason of loss or interruption of business of the Tenant, or otherwise.

(e) The review, approval or consent of Landlord with respect to any item required or permitted under this Lease is for Landlord's own protection only, and Landlord has not, and shall not be deemed to have assumed, any responsibility to Tenant or any other party, as a result of the exercise or non-exercise of such rights, for compliance with Laws or Environmental Laws or for the accuracy or sufficiency of any item or the quality or suitability of any item for its intended use.

7.04 QUIET ENJOYMENT

Landlord covenants, in lieu of any implied covenant of quiet possession or quiet enjoyment, that so long as Tenant is in compliance with the covenants and conditions set forth in this Lease, Tenant shall have the right to quiet enjoyment of the Premises without hindrance or interference from Landlord or those claiming through Landlord, and subject to the covenants and conditions set forth in the Lease and to the rights of any Mortgagee or ground lessor.

ARTICLE EIGHT

MAINTENANCE & HVAC

8.01 LANDLORD'S MAINTENANCE

Subject to Article Fourteen and Section 8.02, Landlord shall maintain the structural portions of the Building, the roof, exterior walls and exterior doors, foundation, and underslab standard sewer system of the Building in good, clean and safe condition. Notwithstanding the foregoing, Landlord shall have no responsibility to perform preventive maintenance or service for, or to repair any heating, ventilation and air conditioning equipment and systems serving the Premises (“HVAC”), and all such preventive maintenance, service, and repairs shall be performed by Tenant pursuant to the terms of Section 8.02. Landlord shall also (a) maintain the landscaping, parking facilities and other Common Areas of the Project, (b) wash the outside of exterior windows at intervals determined by Landlord, and (c) be responsible for maintaining compliance of the Common Areas with all

applicable Laws to the extent required by a governmental authority with jurisdiction (except to the extent such compliance is triggered by the application for any permit or approval required in connection with any of the Tenant Additions or is the responsibility of Tenant under this Lease, in which events the Tenant shall be responsible for such compliance). Except as provided in Article Fourteen and Article Fifteen, there shall be no abatement of rent, no allowance to Tenant for diminution of rental value and no liability of Landlord by reason of inconvenience, annoyance or any injury to or interference with Tenant's business arising from the making of or the failure to make any repairs, alterations or improvements in or to any portion of the Project or in or to any fixtures, appurtenances or equipment therein. Tenant waives the right to make repairs at Landlord's expense under any law, statute or ordinance now or hereafter in effect.

8.02 TENANT'S MAINTENANCE

(a) Subject to the provisions of Article Fourteen, Tenant shall, at Tenant's sole cost and expense, maintain and make all repairs to the Premises and fixtures therein which Landlord is not required to make pursuant to Section 8.01, including repairs to the interior walls, ceilings and windows of the Premises, the interior doors, Tenant's signage, and the electrical, life-safety, plumbing located within the Premises and any HVAC serving only the Premises, and shall maintain the Premises, the fixtures, HVAC systems serving only the Premises, utilities systems or portions thereof serving only the Premises, and garbage enclosures, if any, for Tenant’s exclusive use outside the Premises, in a good, clean and safe condition. Tenant shall deliver to Landlord a copy of any maintenance contract entered into by Tenant with respect to the Premises. Tenant shall also, at Tenant's expense, keep any non-standard heating, ventilating and air conditioning equipment and other non-standard equipment installed by or on behalf of Tenant in good condition and repair, using contractors approved in advance, in writing, by Landlord, which approval shall not be unreasonably withheld. Notwithstanding Section 8.01 above, to the extent that Landlord is not reimbursed by insurance and no waiver set forth in Section 16.04 is applicable, Tenant will pay for any repairs to the Building or the Project which are caused by any negligence or willful and wrongful act, of Tenant or its assignees, subtenants or employees, or of the respective agents of any of the foregoing persons, or of any other persons permitted in the Building or elsewhere in the Project by Tenant or any of them. Tenant will maintain the Premises, and will leave the Premises upon termination of this Lease, in a safe, clean, neat and sanitary condition.

(b) With respect to HVAC, Tenant, at Tenant’s sole cost and expense, shall enter into contracts (“HVAC Service Contracts”) for regularly scheduled inspections and preventive maintenance and service, as to which the contractors, scope of work, frequency of inspection, maintenance or service, shall be subject to Landlord’s prior written approval, in its sole discretion. If requested by Landlord, Tenant shall cause the contractor for such HVAC Service Contracts to deliver written reports or service records, as applicable, to Landlord within ten (10) days after the date of such inspection, maintenance and/or service. Tenant shall deliver to Landlord a copy of the initial HVAC Service Contracts within sixty (60) days after the Commencement Date and of subsequent HVAC Service Contracts entered into by Tenant within ten (10) days after execution thereof (which subsequent HVAC Service Contracts shall be subject to the same approval standards and requirements as set forth above with respect to the initial contract). In the event Tenant fails, in the reasonable judgment of Landlord, to meet the requirements for such HVAC Service Contracts and cause such inspections, maintenance and service to be performed, which failure continues at the end of fifteen (15) days following written notice given by Landlord stating the nature of the failure, Landlord shall have the right (but shall not be obligated) to obtain such HVAC Service Contracts and to enter the Premises and perform such inspection, maintenance and service, at Tenant’s sole cost and expense; provided, however, if the nature of the maintenance or repair is such that it cannot, with the exercise of reasonable diligence, be completed within fifteen (15) days of Tenant’s receipt of Landlord’s notice, Landlord shall not undertake such inspection, maintenance and service at Tenant’s expense provided Tenant commences such inspection, maintenance and service in the manner required above within said 15-day period and thereafter diligently and continuously prosecutes the same to completion and provided further, however, that in the event of an emergency condition, Landlord shall have the right to make such inspection, maintenance, service and/or repairs on behalf of Tenant at Tenant’s sole cost and expense after giving Tenant such notice, if any, as is reasonable under the circumstances. Landlord's right of entry pursuant to Section 7.03 shall include the right to enter and inspect the Premises for violations of Tenant's covenants herein. Tenant shall maintain written records of HVAC inspection, maintenance, service repairs, and shall use certified technicians approved in writing by Landlord to perform such maintenance and repairs.

ARTICLE NINE

ALTERATIONS AND IMPROVEMENTS

9.01 TENANT ALTERATIONS

(a) The following provisions shall apply to the completion of any Tenant Alterations:

(1) Tenant shall not, except as provided herein, without the prior written consent of Landlord, which consent shall not be unreasonably withheld, make or cause to be made any Tenant Alterations in or to the Premises or any Property systems serving the Premises. Prior to making any Tenant Alterations,

Tenant shall give Landlord ten (10) days prior written notice (or such earlier notice as would be necessary pursuant to applicable Law) to permit Landlord sufficient time to post appropriate notices of non-responsibility. Subject to all other requirements of this Article Nine, Tenant may, without Landlord's prior written consent, undertake (i) Decoration work and/or (ii) any Alterations that (x) do not adversely affect the roof, structural portions or the systems or equipment of the Building, (y) are not visible from the exterior of the Building, and (z) do not cost, in the aggregate, over the Term of the Lease, in excess of $50,000. Tenant shall furnish Landlord with the names and addresses of all contractors and subcontractors and copies of all contracts. All Tenant Alterations shall be completed at such time and in such manner as Landlord may from time to time designate, and only by contractors or mechanics approved by Landlord, which approval shall not be unreasonably withheld. The contractors, mechanics and engineers who may be used are further limited to those whose work will not cause or threaten to cause disharmony or interference with Landlord or other tenants in the Building and their respective agents and contractors performing work in or about the Building. Landlord may further condition its consent upon Tenant furnishing to Landlord and Landlord approving prior to the commencement of any work or delivery of materials to the Premises related to the Tenant Alterations such of the following as specified by Landlord: architectural plans and specifications, opinions from Landlord's engineers stating that the Tenant Alterations will not in any way adversely affect the Building's systems, necessary permits and licenses, certificates of insurance, and such other documents in such form reasonably requested by Landlord. Landlord may, in the exercise of reasonable judgment, request that Tenant provide Landlord with appropriate evidence of Tenant's ability to complete and pay for the completion of the Tenant Alterations such as a performance bond or letter of credit. Upon completion of the Tenant Alterations, Tenant shall deliver to Landlord an as-built mylar and digitized (if available) set of plans and specifications for the Tenant Alterations.

(2) Tenant shall pay the cost of all Tenant Alterations and the cost of decorating the Premises and any work to the Property occasioned thereby. In connection with completion of any Tenant Alterations, Tenant shall, upon receipt of Landlord’s itemized invoice therefor, pay Landlord’s actual and reasonable costs to review the plans and specifications for such Tenant Alterations and to monitor the performance thereof, including a construction administration fee and all elevator and hoisting charges at Landlord's then standard rate. Upon completion of Tenant Alterations, Tenant shall furnish Landlord with contractors' affidavits and full and final waivers of lien and receipted bills covering all labor and materials expended and used in connection therewith and such other documentation reasonably requested by Landlord or Mortgagee.

(3) Tenant agrees to complete all Tenant Alterations (i) in accordance with all Laws, Environmental Laws, all requirements of applicable insurance companies and in accordance with Landlord's standard construction rules and regulations, and (ii) in a good and workmanlike manner with the use of good grades of materials. Tenant shall notify Landlord immediately if Tenant receives any notice of violation of any Law in connection with completion of any Tenant Alterations and shall immediately take such steps as are necessary to remedy such violation. In no event shall such supervision or right to supervise by Landlord nor shall any approvals given by Landlord under this Lease constitute any warranty by Landlord to Tenant of the adequacy of the design, workmanship or quality of such work or materials for Tenant's intended use or of compliance with the requirements of Section 9.01(a)(3)(i) and (ii) above or impose any liability upon Landlord in connection with the performance of such work.

(b) All Tenant Additions to the Premises whether installed by Landlord or Tenant, shall without compensation or credit to Tenant, become part of the Premises and the property of Landlord at the time of their installation and shall remain in the Premises, unless pursuant to Article Twelve, Tenant may remove them or is required to remove them at Landlord's request. Tenant’s Personal Property, as set forth in Exhibit G, shall at all times remain the property of Tenant and Tenant shall remove such property at the expiration or earlier termination of this Lease.

9.02 LIENS

Tenant shall not permit any lien or claim for lien of any mechanic, laborer or supplier or any other lien to be filed against the Building, the Land, the Premises, or any other part of the Property arising out of work performed, or alleged to have been performed by, or at the direction of, or on behalf of Tenant. If any such lien or claim for lien is filed, Tenant shall within ten (10) days of receiving notice of such lien or claim (a) have such lien or claim for lien released of record or (b) deliver to Landlord a bond in form, content, amount, and issued by surety, satisfactory to Landlord, indemnifying, protecting, defending and holding harmless the Indemnitees against all costs and liabilities resulting from such lien or claim for lien and the foreclosure or attempted foreclosure thereof. If Tenant fails to take any of the above actions, Landlord, in addition to its rights and remedies under Article Eleven, without investigating the validity of such lien or claim for lien, may pay or discharge the same and Tenant shall, as payment of additional Rent hereunder, reimburse Landlord upon demand for the amount so paid by Landlord, including Landlord's expenses and reasonable attorneys' fees.

ARTICLE TEN

ASSIGNMENT AND SUBLETTING

10.01 ASSIGNMENT AND SUBLETTING

(a) Without the prior written consent of Landlord, which may be withheld in Landlord's sole discretion, Tenant may not sublease, assign, mortgage, pledge, hypothecate or otherwise transfer or permit the transfer of this Lease or the encumbering of Tenant's interest therein in whole or in part, by operation of Law or otherwise or permit the use or occupancy of the Premises, or any part thereof, by anyone other than Tenant, provided, however, if Landlord chooses not to recapture the space proposed to be subleased or assigned as provided in Section 10.02, Landlord shall not unreasonably withhold its consent to a subletting or assignment under this Section 10.01. Tenant agrees that the provisions governing sublease and assignment set forth in this Article Ten shall be deemed to be reasonable. If Tenant desires to enter into any sublease of the Premises or assignment of this Lease, Tenant shall deliver written notice thereof to Landlord ("Tenant's Notice"), together with the identity of the proposed subtenant or assignee and the proposed principal terms thereof and financial and other information sufficient for Landlord to make an informed judgment with respect to such proposed subtenant or assignee at least thirty (30) days prior to the commencement date of the term of the proposed sublease or assignment. If Tenant proposes to sublease less than all of the Rentable Area of the Premises, the space proposed to be sublet and the space retained by Tenant must each be a marketable unit as reasonably determined by Landlord and otherwise in compliance with all Laws; provided however, so long as the Tenant is Genomic Health or a Permitted Transferee which is an assignee of the Lease which has satisfied the requirements of Sections 10.01 and 10.05 below, the foregoing shall not apply to a sublease for a sublease term of a year or less, for undemised space in the aggregate (for one or more such subleases in effect at any one time) up to 3,000 square feet of Rentable Area. Landlord shall notify Tenant in writing of its approval or disapproval of the proposed sublease or assignment or its decision to exercise its rights under Section 10.02 within twenty (20) days after receipt of Tenant's Notice (and all required information). In no event may Tenant sublease any portion of the Premises or assign the Lease to any other tenant of the Project. Tenant shall submit for Landlord's approval (which approval shall not be unreasonably withheld) any advertising which Tenant or its agents intend to use with respect to the space proposed to be sublet.

(b) With respect to Landlord's consent to an assignment or sublease, Landlord may take into consideration any factors which Landlord may deem relevant, and the reasons for which Landlord's denial shall be deemed to be reasonable shall include, without limitation, the following:

(i) the business reputation or creditworthiness of any proposed subtenant or assignee is not acceptable to Landlord; or

(ii) in Landlord's reasonable judgment the proposed assignee or subtenant would diminish the value or reputation of the Building or Landlord; or

(iii) any proposed assignee's or subtenant's use of the Premises would violate Section 7.01 of the Lease or would violate the provisions of any other leases of tenants in the Project;

(iv) the proposed assignee or subtenant is either a governmental agency, a school or similar operation, or a medical related practice; or

(v) the proposed subtenant or assignee is a bona fide prospective tenant of Landlord in the Project as demonstrated by a written proposal dated within ninety (90) days prior to the date of Tenant's request; or

(vi) the proposed subtenant or assignee would materially increase the estimated pedestrian and vehicular traffic to and from the Premises and the Building.

In no event shall Landlord be obligated to consider a consent to any proposed assignment of the Lease which would assign less than the entire Premises. In the event Landlord wrongfully withholds its consent to any proposed sublease of the Premises or assignment of the Lease, Tenant's sole and exclusive remedy therefor shall be to seek specific performance of Landlord's obligations to consent to such sublease or assignment.

(c) Any sublease or assignment shall be expressly subject to the terms and conditions of this Lease. Any subtenant or assignee shall execute such documents as Landlord may reasonably require to evidence such subtenant or assignee's assumption of the obligations and liabilities of Tenant under this Lease. Tenant shall deliver to Landlord a copy of all agreements executed by Tenant and the proposed subtenant and assignee with respect to the Premises. Landlord's approval of a sublease, assignment, hypothecation, transfer or third party use or occupancy shall not constitute a waiver of Tenant’s obligation to obtain Landlord’s consent to further assignments or subleases, hypothecations, transfers or third party use or occupancy.

(d) For purposes of this Article Ten, an assignment shall be deemed to include a change in the majority control of Tenant, resulting from any transfer, sale or assignment of shares of stock or membership interests of Tenant occurring by operation of Law or otherwise, and includes any merger, acquisition, consolidation or reorganization, except as otherwise provided in this Subsection below. Notwithstanding any provision of this Section to the contrary, an assignment for purposes of this Article does not include any transfer of control of the stock or membership interests of Tenant through (i) any public offering of shares of stock in Tenant in accordance with applicable State and Federal law, rules, regulations and orders if thereafter the stock shall be listed and publicly traded through the New York Stock Exchange or the NASDAQ national market; or (ii) public sale of such stock effected through such Exchange or the NASDAQ national market. If Tenant is a partnership, any change in the partners of Tenant shall be deemed to be an assignment.

(e) For purposes of this Lease, a “Permitted Transferee” shall mean any Person which: (i) is an Affiliate of Tenant; or (ii) is the corporation or other entity (the “Successor”) resulting from a merger, conversion, consolidation or non-bankruptcy reorganization with Tenant; or (iii) is not a Successor but is otherwise a deemed assignee due to a change of control under section 10.01(d) above (including, but not limited to, a merger of Tenant with Exact Sciences Corporation); or (iv) purchases, leases or acquires by way of exchange all or substantially all the assets of Tenant as a going concern (the “Purchaser”). Notwithstanding anything to the contrary in Sections 10.01(a) and (b), 10.02 and 10.03, provided there is no uncured Default under this Lease, Tenant shall have the right, without the prior written consent of Landlord, to assign this Lease to a Permitted Transferee or to sublease the Premises or any part thereof to a Permitted Transferee provided that: (1) Landlord receives thirty (30) days prior written notice of an assignment or sublease (including a pending transaction described in subparts (i), (ii), (iii) or (iv) of this Section 10.01(e)); provided that Tenant may give notice in less than thirty (30) days in connection with a pending transaction described in subparts (ii) and (iv) of this Section 10.01(e) to the extent that Tenant is precluded, by the terms of the transaction or, if Tenant’s stock is publicly traded, by applicable securities’ laws, from making disclosure of the transaction itself; (2) with respect to an assignment of the Lease or a sublease of more than half the Premises to an entity described in subparts (ii) or (iv) of this Section 10.01(e), the Permitted Transferee’s net worth is not less than Tenant’s net worth (measured as of the most recent date for which financial statements prepared in accordance with GAAP are available); (3) with respect to an assignment of the Lease or a sublease of more than half the Premises to an entity described in subparts (i) or (iii) of this Section 10.01(e), Tenant (as the assignor or sublandord) continues in existence with a net worth not less than Tenant’s net worth immediately prior to such assignment or subletting; (4) the Permitted Transferee expressly assumes (except a Permitted Transferee which is a deemed assignee under subpart (iii) of this Section 10.01(e) or which is a sublessee in the event of a sublease under this Section 10.01(e)) in writing reasonably satisfactory to Landlord all of the obligations of Tenant under this Lease and delivers such assumption to Landlord no later than fifteen (15) days (or such lesser time as is appropriate in connection with a pending transaction described in subparts (ii) and (iv) of this Section 10.01(e) to the extent that Tenant is precluded, by the terms of the transaction or, if Tenant’s stock is publicly traded, by applicable securities’ laws, from making disclosure of the transaction itself) prior to the effective date of the assignment; (5) Landlord receives no later than five (5) days before the effective date a fully executed copy of the applicable assignment or sublease agreement between Tenant and the Permitted Transferee; and (6) promptly after Landlord's written request, Tenant and the Permitted Transferee provide such reasonable documents and information which Landlord reasonably requests for the purpose of substantiating whether or not the assignment or sublease is to a Permitted Transferee. All determinations of net worth for purposes of this Subsection shall exclude any value attributable to goodwill or going concern value. With respect to any proposed assignment under subparts (ii) or (iv) of this Section 10.01(e), Tenant shall pay Landlord, no later than fifteen (15) days prior to the effective date of such proposed assignment or sublease, a processing fee of Three Thousand Dollars ($3,000.00), which shall be Landlord’s earned fee whether or not the proposed assignment or sublease is completed by Tenant.

(f) With respect to any sublease to a Permitted Transferee pursuant to Subsection (e) above, Tenant hereby irrevocably assigns to Landlord, effective upon any such sublease, all rent and other payments due from subtenant under the sublease, provided however, that Tenant shall have a license to collect such rent and other payments until the occurrence of a default by Tenant under any of the provisions of the Lease, and notice to Tenant of such default shall not be a prerequisite to Landlord’s right to collect subrent. At any time at Landlord’s option, Landlord shall have the right to give notice to the subtenant of such assignment. Landlord shall credit Tenant with any rent received by Landlord under such assignment but the acceptance of any payment on account of rent from the subtenant as the result of any such default shall in no manner whatsoever serve to release Tenant from any liability under the terms, covenants, conditions, provisions or agreement under the Lease. No such payment of rent or any other payment by the subtenant directly to Landlord and/or acceptance of such payment(s) by Landlord, regardless of the circumstances or reasons therefor, shall in any manner whatsoever be deemed an attornment by the subtenant to Landlord in the absence of a specific written agreement signed by Landlord to such an effect. For purposes of this Subsection, any use or occupancy by a Permitted Transferee (unless it is an assignee) without a formal sublease shall for the purposes of this Subsection be deemed to be a sublease at the same rental rate as provided in the Lease.

10.02 RECAPTURE

Landlord shall have the option to exclude from the Premises covered by this Lease ("recapture"), the space proposed to be sublet or subject to the assignment, so long as (i) the proposed transfer is not to a Permitted Transferee in accordance with the provisions of Section 10.01(e), and (ii) the proposed sublease is for the remainder of the term of this Lease and Landlord recaptures the entire portion of the Premises subject to the proposed sublease. If Landlord elects to recapture, such recapture shall be effective as of the commencement date of such sublease or assignment, Tenant shall surrender possession of the space proposed to be subleased or subject to the assignment to Landlord on the effective date of recapture of such space from the Premises, such date being the Termination Date for such space. Effective as of the date of recapture of any portion of the Premises pursuant to this section, the Monthly Base Rent, Rentable Area of the Premises and Tenant's Share shall be adjusted accordingly.

10.03 EXCESS RENT

Except with respect to an assignment or sublease to a Permitted Transferee in accordance with the provisions of Section 10.01(e), Tenant shall pay Landlord on the first day of each month during the term of the sublease or assignment, fifty percent (50%) of the amount by which the sum of all rent and other consideration (direct or indirect) due from the subtenant or assignee for such month exceeds: (i) that portion of the Monthly Base Rent and Rent Adjustments due under this Lease for said month which is allocable to the space sublet or assigned; and (ii) the following costs and expenses for the subletting or assignment of such space: (1) brokerage commissions and reasonable attorneys' fees and expenses, (2) the actual costs paid in making any improvements or substitutions in the Premises required by any sublease or assignment; and (3) "free rent" periods, costs of any inducements or concessions given to subtenant or assignee, moving costs, and other amounts in respect of such subtenant's or assignee's other leases or occupancy arrangements. All such costs and expenses shall be amortized over the term of the sublease or assignment pursuant to sound accounting principles.

10.04 TENANT LIABILITY

In the event of any sublease or assignment, whether or not with Landlord’s consent, Tenant shall not be released or discharged from any liability, whether past, present or future, under this Lease, including any liability arising from the exercise of any renewal or expansion option, to the extent such exercise is expressly permitted by Landlord. Tenant's liability shall remain primary, and in the event of default by any subtenant, assignee or successor of Tenant in performance or observance of any of the covenants or conditions of this Lease, Landlord may proceed directly against Tenant without the necessity of exhausting remedies against said subtenant, assignee or successor. After any assignment, Landlord may consent to subsequent assignments or subletting of this Lease, or amendments or modifications of this Lease with assignees of Tenant, without notifying Tenant, or any successor of Tenant, and without obtaining its or their consent thereto, and such action shall not relieve Tenant or any successor of Tenant of liability under this Lease. If Landlord grants consent to such sublease or assignment, Tenant shall pay all reasonable attorneys' fees and expenses incurred by Landlord with respect to such assignment or sublease. In addition, if Tenant has any options to extend the term of this Lease or to add other space to the Premises, such options shall not be available to any subtenant or assignee, directly or indirectly without Landlord's express written consent, which may be withheld in Landlord's sole discretion.

10.05 ASSUMPTION AND ATTORNMENT

If Tenant shall assign this Lease as permitted herein, the assignee shall expressly assume all of the obligations of Tenant hereunder accruing from and after the effective date of such assignment in a written instrument satisfactory to Landlord and furnished to Landlord not later than fifteen (15) days prior to the effective date of the assignment. If Tenant shall sublease the Premises as permitted herein, Tenant shall, at Landlord's option, within fifteen (15) days following any request by Landlord, obtain and furnish to Landlord the written agreement of such subtenant to the effect that the subtenant will attorn to Landlord and will pay all subrent directly to Landlord.

ARTICLE ELEVEN

DEFAULT AND REMEDIES

11.01 EVENTS OF DEFAULT

The occurrence or existence of any one or more of the following shall constitute a material default and breach of the Lease (a "Default") by Tenant under this Lease:

(i) Tenant fails to pay any installment or other payment of Rent, including Rent Adjustment Deposits or Rent Adjustments, within three business (3) days after written notice to Tenant of such failure to pay, provided that after Landlord has twice sent such notice to Tenant for failure to

pay, thereafter such failure shall be a Default if Tenant fails to pay any such installment or other payment of Rent, including Rent Adjustment Deposits or Rent Adjustments, within three (3) business days after the date when the same are due;

(ii) Tenant fails to observe or perform any of the other covenants, conditions or provisions of this Lease or the Workletter and, unless the default involves a hazardous condition, which shall be cured forthwith or unless the failure to perform is a Default for which this Lease specifies there is no cure or grace period, fails to cure such default within thirty (30) days after written notice thereof to Tenant, provided that, if Tenant has exercised reasonable diligence to cure such failure and such failure cannot reasonably be cured within such thirty (30) day period despite reasonable diligence, Tenant shall not be in default under this subsection so long as Tenant diligently and continuously prosecutes the cure to completion;

(iii) the interest of Tenant in this Lease is levied upon under execution or other legal process;

(iv) a petition is filed by or against Tenant to declare Tenant bankrupt or seeking a plan of reorganization or arrangement under any Chapter of the Bankruptcy Act, or any amendment, replacement or substitution therefor, or to delay payment of, reduce or modify Tenant's debts, which in the case of an involuntary action is not discharged within thirty (30) days;

(v) Tenant is declared insolvent by Law or any assignment of Tenant's property is made for the benefit of creditors;

(vi) a receiver is appointed for Tenant or Tenant's property, which appointment is not discharged within thirty (30) days;

(vii) any action taken by or against Tenant to reorganize or modify Tenant's capital structure in a materially adverse way which in the case of an involuntary action is not discharged within thirty (30) days; or

(viii) upon the dissolution of Tenant.

11.02 LANDLORD'S REMEDIES

(a) A Default shall constitute a breach of the Lease for which Landlord shall have the rights and remedies set forth in this Section 11.02 and all other rights and remedies set forth in this Lease or now or hereafter allowed by Law, whether legal or equitable, and all rights and remedies of Landlord shall be cumulative and none shall exclude any other right or remedy.

(b) With respect to a Default, at any time Landlord may terminate Tenant's right to possession by written notice to Tenant stating such election. Upon the termination of Tenant’s right to possession pursuant to this Section 11.02, Tenant's right to possession shall terminate and this Lease shall terminate, and Tenant shall remain liable as hereinafter provided. Upon such termination, Landlord shall have the right, subject to applicable Law, to re-enter the Premises and dispossess Tenant and the legal representatives of Tenant and all other occupants of the Premises by unlawful detainer or other summary proceedings, or otherwise as permitted by Law, regain possession of the Premises and remove their property (including their trade fixtures, personal property and those Tenant Additions which Tenant is required or permitted to remove under Article Twelve), but Landlord shall not be obligated to effect such removal, and such property may, at Landlord's option, be stored elsewhere, sold or otherwise dealt with as permitted by Law, at the risk of, expense of and for the account of Tenant, and the proceeds of any sale shall be applied pursuant to Law. Landlord shall in no event be responsible for the value, preservation or safekeeping of any such property. Tenant hereby waives all claims for damages that may be caused by Landlord's removing or storing Tenant's personal property pursuant to this Section or Section 12.01, and Tenant hereby indemnifies, and agrees to defend, protect and hold harmless, the Indemnitees from any and all loss, claims, demands, actions, expenses, liability and cost (including reasonable attorneys' fees and expenses) arising out of or in any way related to such removal or storage. Upon such written termination of Tenant's right to possession and this Lease, Landlord shall have the right to recover damages for Tenant's Default as provided herein or by Law, including the following damages provided by California Civil Code Section 1951.2:

(1) the worth at the time of award of the unpaid Rent which had been earned at the time of termination;

(2) 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 Rent loss that Tenant proves could reasonably have been avoided;

(3) the worth at the time of award of the amount by which the unpaid Rent for the balance of the term of this Lease after the time of award exceeds the amount of such Rent loss that Tenant proves could be reasonably avoided; and

(4) 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. The word "rent" as used in this Section 11.02 shall have the same meaning as the defined term Rent in this Lease. The "worth at the time of award" of the amount referred to in clauses (1) and (2) above is computed by allowing interest at the Default Rate. The worth at the time of award of the amount referred to in clause (3) above is computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%). For the purpose of determining unpaid Rent under clause (3) above, the monthly Rent reserved in this Lease shall be deemed to be the sum of the Monthly Base Rent, and monthly Storage Space Rent, if any, and the amounts last payable by Tenant as Rent Adjustments for the calendar year in which Landlord terminated this Lease as provided hereinabove.

(c) Even if Tenant is in Default and/or has abandoned the Premises, this Lease shall continue in effect for so long as Landlord does not terminate Tenant's right to possession by written notice as provided in Section 11.02(b) above, and Landlord may enforce all its rights and remedies under this Lease, including the right to recover Rent as it becomes due under this Lease. In such event, Landlord shall have all of the rights and remedies of a landlord under California Civil Code Section 1951.4 (lessor may continue Lease in effect after Tenant's Default and abandonment and recover Rent as it becomes due, if Tenant has the right to sublet or assign, subject only to reasonable limitations), or any successor statute. During such time as Tenant is in Default, if Landlord has not terminated this Lease by written notice and if Tenant requests Landlord's consent to an assignment of this Lease or a sublease of the Premises, subject to Landlord's option to recapture pursuant to Section 10.02, Landlord shall not unreasonably withhold its consent to such assignment or sublease. Tenant acknowledges and agrees that the provisions of Article Ten shall be deemed to constitute reasonable limitations of Tenant's right to assign or sublet. Tenant acknowledges and agrees that in the absence of written notice pursuant to Section 11.02(b) above terminating Tenant's right to possession, no other act of Landlord shall constitute a termination of Tenant's right to possession or an acceptance of Tenant's surrender of the Premises, including acts of maintenance or preservation or efforts to relet the Premises or the appointment of a receiver upon initiative of Landlord to protect Landlord's interest under this Lease or the withholding of consent to a subletting or assignment, or terminating a subletting or assignment, if in accordance with other provisions of this Lease.

(d) In the event that Landlord seeks an injunction with respect to a breach or threatened breach by Tenant of any of the covenants, conditions or provisions of this Lease, Tenant agrees to pay the premium for any bond required in connection with such injunction.

(e) Tenant hereby waives any and all rights to relief from forfeiture, redemption or reinstatement granted by Law (including California Civil Code of Procedure Sections 1174 and 1179) in the event of Tenant being evicted or dispossessed for any cause or in the event of Landlord obtaining possession of the Premises by reason of Tenant's Default or otherwise;

(f) When this Lease requires giving or service of a notice of Default or of a failure of Tenant to observe or perform any covenant, condition or provision of this Lease which will constitute a Default unless Tenant so observes or performs within any applicable cure period, and so long as the notice given or served provides Tenant the longer of any applicable cure period required by this Lease or by statute, then the giving of any equivalent or similar statutory notice, including any equivalent or similar notices required by California Code of Civil Procedure Section 1161 or any similar or successor statute, shall replace and suffice as any notice required under this Lease. When a statute requires service of a notice in a particular manner, service of that notice (or a similar notice required by this Lease) in the manner required by Article Twenty-four shall replace and satisfy the statutory service–of–notice procedures, except that any notice of unlawful detainer required by California Code of Civil Procedure Section 1161 or any similar or successor statute shall be served as required by Code of Civil Procedure Section 1162 or any similar or successor statute, and for purposes of Code of Civil Procedure Section 1162 or any similar or successor statute, Tenant's "place of residence" and "usual place of business" shall mean the address specified by Tenant for notice pursuant to Section 1.01 of this Lease, as changed by Tenant pursuant to Article Twenty-four of this Lease.

(g) The voluntary or other surrender or termination of this Lease, or a mutual termination or cancellation thereof, shall not work a merger and shall terminate all or any existing assignments, subleases, subtenancies or occupancies permitted by Tenant, except if and as otherwise specified in writing by Landlord.

(h) No delay or omission in the exercise of any right or remedy of Landlord upon any default by Tenant, and no exercise by Landlord of its rights pursuant to Section 26.15 to perform any duty which Tenant fails timely to perform, shall impair any right or remedy or be construed as a waiver. No provision of this Lease shall be deemed waived by Landlord unless such waiver is in a writing signed by Landlord. The waiver by

Landlord of any breach of any provision of this Lease shall not be deemed a waiver of any subsequent breach of the same or any other provision of this Lease.

11.03 ATTORNEY'S FEES

Tenant shall be liable for, and shall pay upon demand, all costs and expenses, including reasonable attorneys’ fees, that Landlord incurs in interpreting or enforcing this Lease or otherwise protecting its rights hereunder (a) where Tenant has breached its obligation to pay Rent when due and Landlord incurs attorneys’ fees and/or other costs and expenses in connection with collecting such delinquent Rent and enforcing its rights under this Lease, or (b) in any bankruptcy case, assignment for the benefit of creditors, or other insolvency, liquidation or reorganization proceeding involving Tenant or this Lease.

11.04 BANKRUPTCY

The following provisions shall apply in the event of the bankruptcy or insolvency of Tenant:

(a) In connection with any proceeding under Chapter 7 of the Bankruptcy Code where the trustee of Tenant elects to assume this Lease for the purposes of assigning it, such election or assignment, may only be made upon compliance with the provisions of (b) and (c) below, which conditions Landlord and Tenant acknowledge to be commercially reasonable. In the event the trustee elects to reject this Lease then Landlord shall immediately be entitled to possession of the Premises without further obligation to Tenant or the trustee.

(b) Any election to assume this Lease under Chapter 11 or 13 of the Bankruptcy Code by Tenant as debtor-in-possession or by Tenant's trustee (the "Electing Party") must provide for:

The Electing Party to cure or provide to Landlord adequate assurance that it will cure all monetary defaults under this Lease within fifteen (15) days from the date of assumption and it will cure all nonmonetary defaults under this Lease within thirty (30) days from the date of assumption. Landlord and Tenant acknowledge such condition to be commercially reasonable.

(c) If the Electing Party has assumed this Lease or elects to assign Tenant's interest under this Lease to any other person, such interest may be assigned only if the intended assignee has provided adequate assurance of future performance (as herein defined), of all of the obligations imposed on Tenant under this Lease.

For the purposes hereof, "adequate assurance of future performance" means that Landlord has ascertained that each of the following conditions has been satisfied:

(i) The assignee has submitted a current financial statement, certified by its chief financial officer, which shows a net worth and working capital in amounts sufficient to assure the future performance by the assignee of Tenant's obligations under this Lease; and

(ii) Landlord has obtained consents or waivers from any third parties which may be required under a lease, mortgage, financing arrangement, or other agreement by which Landlord is bound, to enable Landlord to permit such assignment.

(d) Landlord's acceptance of rent or any other payment from any trustee, receiver, assignee, person, or other entity will not be deemed to have waived, or waive, the requirement of Landlord's consent, Landlord's right to terminate this Lease for any transfer of Tenant's interest under this Lease without such consent, or Landlord's claim for any amount of Rent due from Tenant.

11.05 LANDLORD’S DEFAULT

Landlord shall be in default hereunder in the event Landlord has not begun and pursued with reasonable diligence the cure of any failure of Landlord to meet its obligations hereunder within thirty (30) days after the receipt by Landlord of written notice from Tenant of the alleged failure to perform. In no event shall Tenant have the right to terminate or rescind this Lease as a result of Landlord's default as to any covenant or agreement contained in this Lease. Tenant hereby waives such remedies of termination and rescission and hereby agrees that Tenant's remedies for default hereunder and for breach of any promise or inducement shall be limited to a suit for damages and/or injunction. In addition, Tenant hereby covenants that, prior to the exercise of any such remedies, it will give Mortgagee notice and a reasonable time to cure any default by Landlord.

ARTICLE TWELVE

SURRENDER OF PREMISES

12.01 IN GENERAL

Upon the Termination Date, Tenant shall surrender and vacate the Premises immediately and deliver possession thereof to Landlord in a clean, good and tenantable condition, ordinary wear and tear, and damage caused by Landlord excepted. Tenant shall deliver to Landlord all keys to the Premises. Tenant shall remove from the Premises all movable personal property of Tenant and Tenant's trade fixtures, including, subject to Section 6.04, cabling for any of the foregoing. Tenant shall be entitled to remove such Tenant Additions which at the time of their installation Landlord and Tenant agreed may be removed by Tenant. Tenant shall also remove such other Tenant Additions as required by Landlord, including any Tenant Additions containing Hazardous Material. Tenant immediately shall repair all damage resulting from removal of any of Tenant's property, furnishings, Tenant’s Personal Property or Tenant Additions, shall close all floor, ceiling and roof openings and shall restore the Premises to a tenantable condition as reasonably determined by Landlord. If any of the Tenant Additions which were installed by Tenant involved the lowering of ceilings, raising of floors or the installation of specialized wall or floor coverings or lights, then Tenant shall also be obligated to return such surfaces to their condition prior to the commencement of this Lease. Tenant shall also be required to close any staircases or other openings between floors. Notwithstanding any of the foregoing to the contrary, if so requested by Tenant in writing (and prominently in all capital and bold lettering which also states that such request is pursuant to Section 12.01 of the Lease) at the time Tenant requests approval of any Tenant Work or subsequent Tenant Alterations, Landlord shall advise Tenant at the time of Landlord’s approval of such Tenant Work or Tenant Alterations as to whether Landlord will require that such Tenant Work or Tenant Alterations be removed by Tenant from the Premises; provided, however, regardless of the foregoing, in any event, Landlord may require removal of any Tenant Additions containing Hazardous Material and all Tenant’s trade fixtures, and, subject to Section 6.03, cabling and wiring installed for Tenant’s personal property or trade fixtures. In the event possession of the Premises is not delivered to Landlord when required hereunder, or if Tenant shall fail to remove those items described above, Landlord may (but shall not be obligated to), at Tenant's expense, remove any of such property and store, sell or otherwise deal with such property as provided in Section 11.02(b), including the waiver and indemnity obligations provided in that Section, and undertake, at Tenant's expense, such restoration work as Landlord deems necessary or advisable.

12.02 LANDLORD'S RIGHTS

All property which may be removed from the Premises by Landlord shall be conclusively presumed to have been abandoned by Tenant and Landlord may deal with such property as provided in Section 11.02(b), including the waiver and indemnity obligations provided in that Section. Tenant shall also reimburse Landlord for all costs and expenses incurred by Landlord in removing any of Tenant Additions required to be removed pursuant to Section 12.01 above and in restoring the Premises to the condition required by this Lease at the Termination Date.

ARTICLE THIRTEEN

HOLDING OVER

Tenant shall pay Landlord the greater of (i) 150% of the monthly Rent payable for the month immediately preceding the holding over (including increases for Rent Adjustments which Landlord may reasonably estimate) or, (ii) 150% of the fair market rental value of the Premises as reasonably determined by Landlord for each month or portion thereof that Tenant retains possession of the Premises, or any portion thereof, after the Termination Date (without reduction for any partial month that Tenant retains possession). Tenant shall also pay all damages sustained by Landlord by reason of such retention of possession. The provisions of this Article shall not constitute a waiver by Landlord of any re‑entry rights of Landlord and Tenant's continued occupancy of the Premises shall be as a tenancy in sufferance.

ARTICLE FOURTEEN

DAMAGE BY FIRE OR OTHER CASUALTY

14.01 SUBSTANTIAL UNTENANTABILITY

(a) If any fire or other casualty (whether insured or uninsured) renders all or a substantial portion of the Premises or the Building untenantable, Landlord shall, with reasonable promptness after the occurrence of such damage, estimate the length of time that will be required to substantially complete the repair and restoration and shall by notice advise Tenant of such estimate ("Landlord's Notice"). If Landlord estimates that the amount of time required to substantially complete such repair and restoration will exceed one hundred eighty (180) days from the date such damage occurred, then Landlord, or Tenant if all or a substantial portion of the Premises is rendered untenantable, shall have the right to terminate this Lease as of the date of such damage upon giving written notice to the other at any time within twenty (20) days after delivery of Landlord's Notice, provided that if Landlord so chooses, Landlord's Notice may also constitute such notice of termination.

(b) In the event that the Building is damaged or destroyed to the extent of more than twenty-five percent (25%) of its replacement cost or to any extent if no insurance proceeds or insufficient insurance proceeds are receivable by Landlord, or if the buildings at the Project shall be damaged to the extent of fifty percent (50%) or more of the replacement value or to any extent if no insurance proceeds or insufficient insurance proceeds are receivable by Landlord, and regardless of whether or not the Premises be damaged, Landlord may elect by written notice to Tenant given within thirty (30) days after the occurrence of the casualty to terminate this Lease in lieu of so restoring the Premises, in which event this Lease shall terminate as of the date specified in Landlord's notice, which date shall be no later than sixty (60) days following the date of Landlord's notice.

(c) Unless this Lease is terminated as provided in the preceding Subsections 14.01 (a) and (b), Landlord shall proceed with reasonable promptness to repair and restore the Premises to its condition as existed prior to such casualty, subject to reasonable delays for insurance adjustments and Force Majeure delays, and also subject to zoning Laws and building codes then in effect. Landlord shall have no liability to Tenant, and Tenant shall not be entitled to terminate this Lease if such repairs and restoration are not in fact completed within the time period estimated by Landlord so long as Landlord shall proceed with reasonable diligence to complete such repairs and restoration.

(d) Tenant acknowledges that Landlord shall be entitled to the full proceeds of any insurance coverage, whether carried by Landlord or Tenant, for damages to the Premises, except for those proceeds of Tenant's insurance of its own personal property and equipment which would be removable by Tenant at the Termination Date. All such insurance proceeds shall be payable to Landlord whether or not the Premises are to be repaired and restored, provided, however, if this Lease is not terminated and the parties proceed to repair and restore Tenant Additions at Tenant's cost, to the extent Landlord received proceeds of Tenant's insurance covering Tenant Additions, such proceeds shall be applied to reimburse Tenant for its cost of repairing and restoring Tenant Additions.

(e) Notwithstanding anything in this Article Fourteen to the contrary: (i) Landlord shall have no duty pursuant to this Section to repair or restore any portion of any Tenant Additions or to expend for any repair or restoration of the Premises or Building amounts in excess of insurance proceeds paid to Landlord and available for repair or restoration; and (ii) Tenant shall not have the right to terminate this Lease pursuant to this Section if any damage or destruction was caused by the gross negligence or willful and wrongful act of Tenant, its agent or employees. Whether or not the Lease is terminated pursuant to this Article Fourteen, in no event shall Tenant be entitled to any compensation or damages for loss of the use of the whole or any part of the Premises or for any inconvenience or annoyance occasioned by any such damage, destruction, rebuilding or restoration of the Premises or the Building or access thereto.

(f) Any repair or restoration of the Premises performed by Tenant shall be in accordance with the provisions of Article Nine hereof.

14.02 INSUBSTANTIAL UNTENANTABILITY

Unless this Lease is terminated as provided in the preceding Subsections 14.01 (a) and (b), then Landlord shall proceed to repair and restore the Premises other than Tenant Additions, with reasonable promptness, unless such damage is to the Premises and occurs during the last six (6) months of the Term, in which event either Tenant or Landlord shall have the right to terminate this Lease as of the date of such casualty by giving written notice thereof to the other within twenty (20) days after the date of such casualty. Notwithstanding the foregoing, Landlord’s obligation to repair shall be limited in accordance with the provisions of Section 14.01 above.

14.03 RENT ABATEMENT

Except for (i) the willful and wrongful act of Tenant or its agents, employees, contractors or invitees, or (ii) the gross negligence of Tenant or its agents, employees, contractors or invitees only if and to the extent Landlord receives rental abatement insurance proceeds covering abatement of the Rent hereunder, then, if all or any part of the Premises are rendered untenantable by fire or other casualty and this Lease is not terminated, Monthly Base Rent and Rent Adjustments shall abate for that part of the Premises which is untenantable on a per diem basis from the date of the casualty until Landlord has Substantially Completed the repair and restoration work in the Premises which it is required to perform, provided, that as a result of such casualty, Tenant does not occupy the portion of the Premises which is untenantable during such period.

14.04 WAIVER OF STATUTORY REMEDIES

The provisions of this Lease, including this Article Fourteen, constitute an express agreement between Landlord and Tenant with respect to any and all damage to, or destruction of, the Premises or the Property or any part of either, and any Law, including Sections 1932(2), 1933(4), 1941 and 1942 of the California Civil

Code, with respect to any rights or obligations concerning damage or destruction shall have no application to this Lease or to any damage to or destruction of all or any part of the Premises or the Property or any part of either, and are hereby waived.

ARTICLE FIFTEEN

EMINENT DOMAIN

15.01 TAKING OF WHOLE OR SUBSTANTIAL PART

In the event the whole or any substantial part of the Building or of the Premises is taken or condemned by any competent authority for any public use or purpose (including a deed given in lieu of condemnation) and is thereby rendered untenantable, this Lease shall terminate as of the date title vests in such authority or any earlier date on which possession is required to be surrendered to such authority, and Monthly Base Rent and Rent Adjustments shall be apportioned as of the Termination Date. Further, if at least twenty-five percent (25%) of the rentable area of the Project is taken or condemned by any competent authority for any public use or purpose (including a deed given in lieu of condemnation), and regardless of whether or not the Premises be so taken or condemned, Landlord may elect by written notice to Tenant to terminate this Lease as of the date title vests in such authority or any earlier date on which possession is required to be surrendered to such authority, and Monthly Base Rent and Rent Adjustments shall be apportioned as of the Termination Date. Landlord may, without any obligation to Tenant, agree to sell or convey to the taking authority the Premises, the Building, Tenant's Phase, the Project or any portion thereof sought by the taking authority, free from this Lease and the right of Tenant hereunder, without first requiring that any action or proceeding be instituted or, if instituted, pursued to a judgment. Notwithstanding anything to the contrary herein set forth, in the event the taking of the Building or Premises is temporary (for less than the remaining term of the Lease), Landlord may elect either (i) to terminate this Lease or (ii) permit Tenant to receive the entire award attributable to the Premises in which case Tenant shall continue to pay Rent and this Lease shall not terminate.

15.02 TAKING OF PART

In the event a part of the Premises is taken or condemned by any competent authority (or a deed is delivered in lieu of condemnation) and this Lease is not terminated, the Lease shall be amended to reduce or increase, as the case may be, the Monthly Base Rent and Tenant's Share to reflect the Rentable Area of the Premises or Building, as the case may be, remaining after any such taking or condemnation. Landlord, upon receipt and to the extent of the award in condemnation (or proceeds of sale) shall make necessary repairs and restorations to the Premises (exclusive of Tenant Additions) and to the Building to the extent necessary to constitute the portion of the Building not so taken or condemned as a complete architectural and economically efficient unit. Notwithstanding the foregoing, if as a result of any taking, or a governmental order that the grade of any street or alley adjacent to the Building is to be changed and such taking or change of grade makes it necessary or desirable to substantially remodel or restore the Building or prevents the economical operation of the Building, Landlord shall have the right to terminate this Lease upon ninety (90) days prior written notice to Tenant.

15.03 COMPENSATION

Landlord shall be entitled to receive the entire award (or sale proceeds) from any such taking, condemnation or sale without any payment to Tenant, and Tenant hereby assigns to Landlord Tenant's interest, if any, in such award; provided, however, Tenant shall have the right separately to pursue against the condemning authority a separate award in respect of the loss, if any, to Tenant Additions paid for by Tenant without any credit or allowance from Landlord, for fixtures or personal property of Tenant, or for relocation or business interruption expenses, so long as there is no diminution of Landlord's award as a result.

ARTICLE SIXTEEN

INSURANCE

16.01 TENANT'S INSURANCE

Tenant, at Tenant's expense, agrees to maintain in force, with a company or companies acceptable to Landlord, during the Term: (a) Commercial General Liability Insurance on a primary basis and without any right of contribution from any insurance carried by Landlord covering the Premises on an occurrence basis against all claims for personal injury, bodily injury, death and property damage, including contractual liability covering the indemnification provisions in this Lease. Such insurance shall be for such limits that are reasonably required by Landlord from time to time but not less than a combined single limit of Five Million and No/100 Dollars ($5,000,000.00); (b) Workers' Compensation and Employers' Liability Insurance to the extent required by and in accordance with the Laws of the State of California; (c) "All Risks" property insurance in an amount adequate to cover the full replacement cost of all Tenant Additions to the Premises, equipment, installations, fixtures and contents of the Premises in the event of loss; (d) In the event a motor vehicle is to be used by Tenant in connection with its business operation from the Premises, Comprehensive Automobile Liability Insurance coverage with limits of not less than Three Million and No/100 Dollars ($3,000,000.00) combined

single limit coverage against bodily injury liability and property damage liability arising out of the use by or on behalf of Tenant, its agents and employees in connection with this Lease, of any owned, non-owned or hired motor vehicles; and (e) such other insurance or coverages as Landlord reasonably requires.

16.02 FORM OF POLICIES

Each policy referred to in 16.01 shall satisfy the following requirements. Each policy shall (i) name Landlord and the Indemnitees as additional insureds (except Workers’ Compensation and Employers’ Liability Insurance), (ii) be issued by one or more responsible insurance companies licensed to do business in the State of California reasonably satisfactory to Landlord, (iii) where applicable, provide for deductible amounts satisfactory to Landlord and not permit co-insurance, (iv) shall provide that such insurance may not be canceled or amended without thirty (30) days' prior written notice to the Landlord, and (v) each policy of "All-Risks" property insurance shall provide that the policy shall not be invalidated should the insured waive in writing prior to a loss, any or all rights of recovery against any other party for losses covered by such policies. Tenant shall deliver to Landlord, certificates of insurance and at Landlord's request, copies of all policies and renewals thereof to be maintained by Tenant hereunder, not less than ten (10) days prior to the Commencement Date and not less than ten (10) days prior to the expiration date of each policy.

16.03 LANDLORD'S INSURANCE

Landlord agrees to purchase and keep in full force and effect during the Term hereof, including any extensions or renewals thereof, insurance under policies issued by insurers of recognized responsibility, qualified to do business in the State of California on the Building in amounts not less than the greater of eighty (80%) percent of the then full replacement cost (without depreciation) of the Building (above foundations and excluding Tenant Additions to the Premises) or an amount sufficient to prevent Landlord from becoming a co-insurer under the terms of the applicable policies, against fire and such other risks as may be included in standard forms of all risk coverage insurance reasonably available from time to time. Landlord agrees to maintain in force during the Term, Commercial General Liability Insurance covering the Building on an occurrence basis against all claims for personal injury, bodily injury, death and property damage. Such insurance shall be for a combined single limit of Five Million and No/100 Dollars ($5,000,000.00). Neither Landlord's obligation to carry such insurance nor the carrying of such insurance shall be deemed to be an indemnity by Landlord with respect to any claim, liability, loss, cost or expense due, in whole or in part, to Tenant's negligent acts or omissions or willful misconduct. Without obligation to do so, Landlord may, in its sole discretion from time to time, carry insurance in amounts greater and/or for coverage additional to the coverage and amounts set forth above.

16.04 WAIVER OF SUBROGATION

(a) Landlord agrees that, if obtainable at no, or minimal, additional cost, and so long as the same is permitted under the laws of the State of California, it will include in its "All Risks" policies appropriate clauses pursuant to which the insurance companies (i) waive all right of subrogation against Tenant with respect to losses payable under such policies and/or (ii) agree that such policies shall not be invalidated should the insured waive in writing prior to a loss any or all right of recovery against any party for losses covered by such policies.

(b) Tenant agrees to include, if obtainable at no, or minimal, additional cost, and so long as the same is permitted under the laws of the State of California, in its "All Risks" insurance policy or policies on Tenant Additions to the Premises, whether or not removable, and on Tenant's furniture, furnishings, fixtures and other property removable by Tenant under the provisions of this Lease appropriate clauses pursuant to which the insurance company or companies (i) waive the right of subrogation against Landlord and/or any tenant of space in the Building with respect to losses payable under such policy or policies and/or (ii) agree that such policy or policies shall not be invalidated should the insured waive in writing prior to a loss any or all right of recovery against any party for losses covered by such policy or policies. If Tenant is unable to obtain in such policy or policies either of the clauses described in the preceding sentence, Tenant shall, if legally possible and without necessitating a change in insurance carriers, have Landlord named in such policy or policies as an additional insured. If Landlord shall be named as an additional insured in accordance with the foregoing, Landlord agrees to endorse promptly to the order of Tenant, without recourse, any check, draft, or order for the payment of money representing the proceeds of any such policy or representing any other payment growing out of or connected with said policies, and Landlord does hereby irrevocably waive any and all rights in and to such proceeds and payments.

(c) Provided that Landlord's right of full recovery under its policy or policies aforesaid is not adversely affected or prejudiced thereby, Landlord hereby waives any and all right of recovery which it might otherwise have against Tenant, its servants, agents and employees, for loss or damage occurring to the Real Property and the fixtures, appurtenances and equipment therein, except Tenant Additions, to the extent the same is covered by Landlord's insurance, notwithstanding that such loss or damage may result from the negligence or fault of Tenant, its servants, agents or employees. Provided that Tenant's right of full recovery under its aforesaid policy or policies is not adversely affected or prejudiced thereby, Tenant hereby waives any

and all right of recovery which it might otherwise have against Landlord, its servants, and employees and against every other tenant in the Real Property who shall have executed a similar waiver as set forth in this Section 16.04 (c) for loss or damage to Tenant Additions, whether or not removable, and to Tenant's furniture, furnishings, fixtures and other property removable by Tenant under the provisions hereof to the extent the same is covered or coverable by Tenant's insurance required under this Lease, notwithstanding that such loss or damage may result from the negligence or fault of Landlord, its servants, agents or employees, or such other tenant and the servants, agents or employees thereof.

(d) Landlord and Tenant hereby agree to advise the other promptly if the clauses to be included in their respective insurance policies pursuant to subparagraphs (a) and (b) above cannot be obtained on the terms hereinbefore provided and thereafter to furnish the other with a certificate of insurance or copy of such policies showing the naming of the other as an additional insured, as aforesaid. Landlord and Tenant hereby also agree to notify the other promptly of any cancellation or change of the terms of any such policy which would affect such clauses or naming. All such policies which name both Landlord and Tenant as additional insureds shall, to the extent obtainable, contain agreements by the insurers to the effect that no act or omission of any additional insured will invalidate the policy as to the other additional insureds.

16.05 NOTICE OF CASUALTY

Tenant shall give Landlord notice in case of a fire or accident in the Premises promptly after Tenant is aware of such event.

ARTICLE SEVENTEEN

WAIVER OF CLAIMS AND INDEMNITY

17.01 WAIVER OF CLAIMS

To the extent permitted by Law, Tenant releases the Indemnitees from, and waives all claims for, damage to person or property sustained by the Tenant or any occupant of the Premises or the Property resulting directly or indirectly from any existing or future condition, defect, matter or thing in and about the Premises or the Property, or any part of either, or any equipment or appurtenance therein, or resulting from any accident in or about the Premises or the Property, or resulting directly or indirectly from any act or neglect of any tenant or occupant of the Property or of any other person, including Landlord's agents and servants, except to the extent caused by the gross negligence or willful and wrongful act of any of the Indemnitees. If any such damage, whether to the Premises or the Property or any part of either, or whether to Landlord or to other tenants in the Property, results from any act or neglect of Tenant, its employees, servants, agents, contractors, invitees or customers, Tenant shall be liable therefor and Landlord may, at Landlord's option, repair such damage and Tenant shall, upon demand by Landlord, as payment of additional Rent hereunder, reimburse Landlord within ten (10) days of demand for the total cost of such repairs, in excess of amounts, if any, paid to Landlord under insurance covering such damages. Tenant shall not be liable for any such damage caused by its acts or neglect to the extent that Landlord or a tenant has recovered any amount of the damage from proceeds of insurance policies and the insurance company has waived its right of subrogation against Tenant.

17.02 INDEMNITY BY TENANT

To the extent permitted by Law, Tenant hereby indemnifies, and agrees to protect, defend and hold the Indemnitees harmless, against any and all actions, claims, demands, liability, costs and expenses, including reasonable attorneys' fees and expenses for the defense thereof, arising from Tenant's occupancy of the Premises, from the undertaking of any Tenant Additions or repairs to the Premises, from the conduct of Tenant's business on the Premises, or from any breach or default on the part of Tenant in the performance of any covenant or agreement on the part of Tenant to be performed pursuant to the terms of this Lease, or from any willful act or negligence of Tenant, its agents, contractors, servants, employees, customers or invitees, in or about the Premises or the Property or any part of either. In case of any action or proceeding brought against the Indemnitees by reason of any such claim, upon notice from Landlord, Tenant covenants to defend such action or proceeding by counsel chosen by Landlord, in Landlord's sole discretion. Landlord reserves the right to settle, compromise or dispose of any and all actions, claims and demands related to the foregoing indemnity. The foregoing indemnity shall not operate to relieve an Indemnitee of liability to the extent such liability is caused by the gross negligence or willful and wrongful act of such Indemnitee. Further, the foregoing indemnity is subject to and shall not diminish any waivers in effect in accordance with Section 16.04 by Landlord or its insurers to the extent of amounts, if any, paid to Landlord under its "All-Risks" property insurance.

17.03 WAIVER OF CONSEQUENTIAL DAMAGES

To the extent permitted by law, Tenant hereby waives and releases the Indemnitees from any consequential damages, compensation or claims for inconvenience or loss of business, rents or profits as a result of any injury or damage, whether or not caused by the willful and wrongful act of any of the Indemnitees.

ARTICLE EIGHTEEN

RULES AND REGULATIONS

18.01 RULES

Tenant agrees for itself and for its subtenants, employees, agents, and invitees to comply with all reasonable rules and regulations for use of the Premises, the Phase and the Project imposed by Landlord, as the same may be revised from time to time, including the following: (a) Tenant shall comply with all of the requirements of Landlord's emergency response plan, as the same may be amended from time to time; and (b) Tenant shall not place any furniture, furnishings, fixtures or equipment in the Premises in a manner so as to obstruct the windows of the Premises to cause the Building, in Landlord's good faith determination, to appear unsightly from the exterior. Such rules and regulations are and shall be imposed for the cleanliness, good appearance, proper maintenance, good order and reasonable use of the Premises, the Phase and the Project and as may be necessary for the enjoyment of the Project by all tenants and their clients, customers, and employees.

18.02 ENFORCEMENT

Nothing in this Lease shall be construed to impose upon the Landlord any duty or obligation to enforce the rules and regulations as set forth above or as hereafter adopted, or the terms, covenants or conditions of any other lease as against any other tenant, and the Landlord shall not be liable to the Tenant for violation of the same by any other tenant, its servants, employees, agents, visitors or licensees. Landlord shall use reasonable efforts to enforce the rules and regulations of the Building in a uniform and non-discriminatory manner.

ARTICLE NINETEEN

LANDLORD'S RESERVED RIGHTS

Landlord shall have the following rights exercisable without notice to Tenant and without liability to Tenant for damage or injury to persons, property or business and without being deemed an eviction or disturbance of Tenant's use or possession of the Premises or giving rise to any claim for offset or abatement of Rent: (1) to change the Building's name or street address upon thirty (30) days' prior written notice to Tenant; (2) to install, affix and maintain all signs on the exterior and/or interior of the Building; (3) to designate and/or approve prior to installation, all types of signs, window shades, blinds, drapes, awnings or other similar items, and all internal lighting that may be visible from the exterior of the Premises; (4) upon reasonable notice to Tenant, to display the Premises to prospective purchasers at reasonable hours at any time during the Term and to prospective tenants at reasonable hours during the last twelve (12) months of the Term; (5) to grant to any party the exclusive right to conduct any business or render any service in or to the Building, provided such exclusive right shall not operate to prohibit Tenant from using the Premises for the purpose permitted hereunder; (6) to change the arrangement and/or location of entrances or passageways, doors and doorways, corridors, elevators, stairs, washrooms or public portions of the Building, and to close entrances, doors, corridors, elevators or other facilities, provided that such action shall not materially and adversely interfere with Tenant's access to the Premises; (7) to have access for Landlord to any mail chutes and boxes located in or on the Premises as required by any applicable rules of the United States Post Office; and (8) to close the Building after Standard Operating Hours, except that Tenant and its employees and invitees shall be entitled to admission at all times, under such regulations as Landlord prescribes for security purposes.

ARTICLE TWENTY

ESTOPPEL CERTIFICATE

20.01 IN GENERAL

Within fifteen (15) days after request therefor by Landlord, Mortgagee or any prospective mortgagee or owner, Tenant agrees as directed in such request to execute an Estoppel Certificate in recordable form, binding upon Tenant, certifying (i) that this Lease is unmodified and in full force and effect (or if there have been modifications, a description of such modifications and that this Lease as modified is in full force and effect); (ii) the dates to which Rent has been paid; (iii) that Tenant is in the possession of the Premises if that is the case; (iv) that Landlord is not in default under this Lease, or, if Tenant believes Landlord is in default, the nature thereof in detail; (v) that Tenant has no offsets or defenses to the performance of its obligations under this Lease (or if Tenant believes there are any offsets or defenses, a full and complete explanation thereof); (vi) that the Premises have been completed in accordance with the terms and provisions hereof, that Tenant has accepted the Premises and the condition thereof and of all improvements thereto and has no claims against Landlord or any other party with respect thereto; (vii) that if an assignment of rents or leases has been served upon the Tenant by a Mortgagee, Tenant will acknowledge receipt thereof and agree to be bound by the provisions thereof; (viii) that Tenant will give to the Mortgagee copies of all notices required or permitted to be given by Tenant to Landlord; and (ix) to any other information reasonably requested.

20.02 ENFORCEMENT

In the event that Tenant fails to deliver an Estoppel Certificate within three (3) business days after Tenant has received notice from Landlord of Tenant’s failure to deliver an Estoppel Certificate within the time prescribed in Section 20.01 above, then such failure shall be a Default for which there shall be no additional cure or grace period. In addition to any other remedy available to Landlord, Landlord may impose a charge equal to $500.00 for each day that Tenant fails to deliver an Estoppel Certificate and Tenant shall be deemed to have irrevocably appointed Landlord as Tenant's attorney-in-fact to execute and deliver the subject Estoppel Certificate that Tenant has failed to deliver.

ARTICLE TWENTY‑ONE

INTENTIONALLY OMITTED

ARTICLE TWENTY‑TWO

REAL ESTATE BROKERS

Landlord and Tenant represent to each other that in connection with this Lease they are represented by Tenant's Broker identified in Section 1.01(19) and Landlord’s Broker identified in Section 1.01(19), and that except for Tenant’s Broker and Landlord’s Broker, neither has dealt with any real estate broker, sales person, or finder in connection with this Lease, and no such person initiated or participated in the negotiation of this Lease. Landlord and Tenant hereby indemnify and agree to protect, defend and hold the other harmless from and against all claims, losses, damages, liability, costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses) by virtue of any broker, agent or other person claiming a commission or other form of compensation by virtue of alleged representation of, or dealings or discussions with, Landlord or Tenant, as applicable, with respect to the subject matter of this Lease, except for Landlord’s Broker and except for a commission payable to Tenant’s Broker to the extent provided for in a separate written agreement between Tenant’s Broker and Landlord’s Broker. Tenant is not obligated to pay or fund any amount to Landlord's Broker, and Landlord hereby agrees to pay such commission, if any, to which Landlord's Broker is entitled in connection with the subject matter of this Lease pursuant to Landlord's separate written agreement with Landlord's Broker. Such commission shall include an amount to be shared by Landlord’s Broker with Tenant’s Broker to the extent that Tenant's Broker and Landlord's Broker have entered into an agreement between themselves to share the commission paid to Landlord's Broker by Landlord. The provisions of this Section shall survive the expiration or earlier termination of the Lease.

ARTICLE TWENTY‑THREE

MORTGAGEE PROTECTION

23.01 SUBORDINATION AND ATTORNMENT

This Lease is and shall be expressly subject and subordinate at all times to (i) any ground or underlying lease of the Real Property, now or hereafter existing, and all amendments, extensions, renewals and modifications to any such lease, and (ii) the lien of any mortgage or trust deed now or hereafter encumbering fee title to the Real Property and/or the leasehold estate under any such lease, and all amendments, extensions, renewals, replacements and modifications of such mortgage or trust deed and/or the obligation secured thereby, unless such ground lease or ground lessor, or mortgage, trust deed or Mortgagee, expressly provides or elects that the Lease shall be superior to such lease or mortgage or trust deed. If any such mortgage or trust deed is foreclosed (including any sale of the Real Property pursuant to a power of sale), or if any such lease is terminated, upon request of the Mortgagee or ground lessor, as the case may be, Tenant shall attorn to the purchaser at the foreclosure sale or to the ground lessor under such lease, as the case may be, provided, however, that such purchaser or ground lessor shall not be (i) bound by any payment of Rent for more than one month in advance except payments in the nature of security for the performance by Tenant of its obligations under this Lease; (ii) subject to any offset, defense or damages arising out of a default of any obligations of any preceding Landlord; or (iii) bound by any amendment or modification of this Lease made without the written consent of the Mortgagee or ground lessor; or (iv) liable for any security deposits not actually received in cash by such purchaser or ground lessor. This subordination shall be self‑operative and no further certificate or instrument of subordination need be required by any such Mortgagee or ground lessor. In confirmation of such subordination, however, Tenant shall execute promptly any reasonable certificate or instrument that Landlord, Mortgagee or ground lessor may request. Tenant hereby constitutes Landlord as Tenant's attorney‑in‑fact to execute such certificate or instrument for and on behalf of Tenant upon Tenant's failure to do so within fifteen (15) days of a request to do so. Upon request by such successor in interest, Tenant shall execute and deliver reasonable instruments confirming the attornment provided for herein.

23.02 MORTGAGEE PROTECTION

Tenant agrees to give any Mortgagee or ground lessor, by registered or certified mail, a copy of any notice of default served upon the Landlord by Tenant, provided that prior to such notice Tenant has received notice (by way of service on Tenant of a copy of an assignment of rents and leases, or otherwise) of the address of such

Mortgagee or ground lessor. Tenant further agrees that if Landlord shall have failed to cure such default within the time provided for in this Lease, then the Mortgagee or ground lessor shall have an additional thirty (30) days after receipt of notice thereof within which to cure such default or if such default cannot be cured within that time, then such additional notice time as may be necessary, if, within such thirty (30) days, any Mortgagee or ground lessor has commenced and is diligently pursuing the remedies necessary to cure such default (including commencement of foreclosure proceedings or other proceedings to acquire possession of the Real Property, if necessary to effect such cure). Such period of time shall be extended by any period within which such Mortgagee or ground lessor is prevented from commencing or pursuing such foreclosure proceedings or other proceedings to acquire possession of the Real Property by reason of Landlord's bankruptcy. Until the time allowed as aforesaid for Mortgagee or ground lessor to cure such defaults has expired without cure, Tenant shall have no right to, and shall not, terminate this Lease on account of default. This Lease may not be modified or amended so as to reduce the Rent or shorten the Term, or so as to adversely affect in any other respect to any material extent the rights of the Landlord, nor shall this Lease be canceled or surrendered, without the prior written consent, in each instance, of the ground lessor or the Mortgagee.

ARTICLE TWENTY‑FOUR

NOTICES

(a) All notices, demands or requests provided for or permitted to be given pursuant to this Lease must be in writing and shall be personally delivered, sent by Federal Express or other reputable overnight courier service, or mailed by first class, registered or certified United States mail, return receipt requested, postage prepaid.

(b) All notices, demands or requests to be sent pursuant to this Lease shall be deemed to have been properly given or served by delivering or sending the same in accordance with this Section, addressed to the parties hereto at their respective addresses listed in Sections 1.01(2) and (3).

(c) Notices, demands or requests sent by mail or overnight courier service as described above shall be effective upon deposit in the mail or with such courier service. However, the time period in which a response to any such notice, demand or request must be given shall commence to run from (i) in the case of delivery by mail, the date of receipt on the return receipt of the notice, demand or request by the addressee thereof, or (ii) in the case of delivery by Federal Express or other overnight courier service, the date of acceptance of delivery by an employee, officer, director or partner of Landlord or Tenant. Rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was given, as indicated by advice from Federal Express or other overnight courier service or by mail return receipt, shall be deemed to be receipt of notice, demand or request sent. Notices may also be served by personal service upon any officer, director or partner of Landlord or Tenant, and shall be effective upon such service.

(d) By giving to the other party at least thirty (30) days written notice thereof, either party shall have the right from time to time during the term of this Lease to change their respective addresses for notices, statements, demands and requests, provided such new address shall be within the United States of America.

ARTICLE TWENTY-FIVE

EXERCISE FACILITY

Tenant agrees to inform all employees of Tenant of the following: (i) the exercise facility is available for the use of the employees of tenants of the Project only and for no other person; (ii) use of the facility is at the risk of Tenant or Tenant's employees, and all users must sign a release; (iii) the facility is unsupervised; and (iv) users of the facility must report any needed equipment maintenance or any unsafe conditions to the Landlord immediately. Landlord may discontinue providing such facility at Landlord's sole option at any time without incurring any liability. As a condition to the use of the exercise facility, Tenant and each of Tenant's employees that uses the exercise facility shall first sign a written release in form and substance acceptable to Landlord. Landlord may change the rules and/or hours of the exercise facility at any time, and Landlord reserves the right to deny access to the exercise facility to anyone due to misuse of the facility or noncompliance with rules and regulations of the facility. To the extent permitted by Law, Tenant hereby indemnifies, and agrees to protect, defend and hold the Indemnitees harmless, against any and all actions, claims, demands, liability, costs and expenses, including reasonable attorneys' fees and expenses for the defense thereof, arising from use of the exercise facility in the Project by Tenant, Tenant's employees or invitees, except to the extent due to the gross negligence or willful and wrongful act of Landlord or Indemnitees. In case of any action or proceeding brought against the Indemnitees by reason of any such claim, upon notice from Landlord, Tenant covenants to defend such action or proceeding by counsel chosen by Landlord, in Landlord's sole discretion. Landlord reserves the right to settle, compromise or dispose of any and all actions, claims and demands related to the foregoing indemnity.

ARTICLE TWENTY-SIX

OFAC

Landlord advises Tenant hereby that the purpose of this Article is to provide to the Landlord information and assurances to enable Landlord to comply with the law relating to OFAC.

Tenant hereby represents, warrants and covenants to Landlord, either that (i) Tenant is regulated by the SEC, FINRA or the Federal Reserve (a “Regulated Entity”) or (ii) neither Tenant nor any person or entity that directly or indirectly (a) controls Tenant or (b) has an ownership interest in Tenant of twenty-five percent (25%) or more, appears on the list of Specially Designated Nationals and Blocked Persons (“OFAC List”) published by the Office of Foreign Assets Control (“OFAC”) of the U.S. Department of the Treasury.

If, in connection with this Lease, there is one or more Guarantors of Tenant’s obligations under this Lease, then Tenant further represents, warrants and covenants either that (i) any such Guarantor is a Regulated Entity or (ii) neither Guarantor nor any person or entity that directly or indirectly (a) controls such Guarantor or (b) has an ownership interest in such Guarantor of twenty-five percent (25%) or more, appears on the OFAC List.

Tenant covenants that during the term of this Lease to provide to Landlord information reasonably requested by Landlord including without limitation, organizational structural charts and organizational documents which Landlord may deem to be necessary (“Tenant OFAC Information”) in order for Landlord to confirm Tenant’s continuing compliance with the provisions of this Article. Tenant represents and warrants that the Tenant OFAC Information it has provided or to be provided to Landlord or Landlord’s Broker in connection with the execution of this Lease is true and complete.

ARTICLE TWENTY‑SEVEN

MISCELLANEOUS

27.01 LATE CHARGES

(a) The Monthly Base Rent, Rent Adjustments and Rent Adjustment Deposits shall be due when and as specifically provided above. Except for such payments and late charges described below, which late charge shall be due when provided below (without notice or demand), all other payments required hereunder to Landlord shall be paid within ten (10) days after Landlord's demand therefor. All Rent and charges, except late charges, not paid when due shall bear interest from the date due until the date paid at the Default Rate in effect on the date such payment was due.

(b) In the event Tenant is more than five (5) days late in paying any installment of Rent due under this Lease, Tenant shall pay Landlord a late charge equal to five percent (5%) of the delinquent installment of Rent. The parties agree that (i) such delinquency will cause Landlord to incur costs and expenses not contemplated herein, the exact amount of which will be difficult to calculate, including the cost and expense that will be incurred by Landlord in processing each delinquent payment of rent by Tenant, and (ii) the amount of such late charge represents a reasonable estimate of such costs and expenses and that such late charge shall be paid to Landlord for each delinquent payment in addition to all Rent otherwise due hereunder. The parties further agree that the payment of late charges and the payment of interest provided for in subparagraph (a) above are distinct and separate from one another in that the payment of interest is to compensate Landlord for its inability to use the money improperly withheld by Tenant, while the payment of late charges is to compensate Landlord for its additional administrative expenses in handling and processing delinquent payments.

(c) Payment of interest at the Default Rate and/or of late charges shall not excuse or cure any default by Tenant under this Lease, nor shall the foregoing provisions of this Article or any such payments prevent Landlord from exercising any right or remedy available to Landlord upon Tenant's failure to pay Rent when due, including the right to terminate this Lease.

27.02 NO JURY TRIAL; VENUE; JURISDICTION

Each party hereto (which includes any assignee, successor, heir or personal representative of a party) shall not seek a jury trial, hereby waives trial by jury, and hereby further waives any objection to venue in the County in which the Project is located, and agrees and consents to personal jurisdiction of the courts of the State of California, in any action or proceeding or counterclaim brought by any party hereto against the other on any matter whatsoever arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant, Tenant's use or occupancy of the Premises, or any claim of injury or damage, or the enforcement of any remedy under any statute, emergency or otherwise, whether any of the foregoing is based on this Lease or on tort law. No party will seek to consolidate any such action in which a jury has been waived with any other action in which a jury trial cannot or has not been waived. It is the intention of the parties that these provisions shall be subject to no exceptions. By execution of this Lease the parties agree that this provision may be filed by any party hereto with the clerk or judge before whom any action is instituted, which filing shall constitute the written consent to a waiver of jury trial pursuant to and in accordance with Section 631 of the California

Code of Civil Procedure. No party has in any way agreed with or represented to any other party that the provisions of this Section will not be fully enforced in all instances. The provisions of this Section shall survive the expiration or earlier termination of this Lease.

27.03 DEFAULT UNDER OTHER LEASE

It shall be a Default under this Lease if Tenant or any Affiliate holding any other lease with Landlord for premises in the Project defaults under such lease and as a result thereof such lease is terminated or terminable.

27.04 OPTION

This Lease shall not become effective as a lease or otherwise until executed and delivered by both Landlord and Tenant. The submission of the Lease to Tenant does not constitute a reservation of or option for the Premises, but when executed by Tenant and delivered to Landlord, the Lease shall constitute an irrevocable offer by Tenant in effect for fifteen (15) days to lease the Premises on the terms and conditions herein contained.

27.05 TENANT AUTHORITY

Tenant represents and warrants to Landlord that it has full authority and power to enter into and perform its obligations under this Lease, that the person executing this Lease is fully empowered to do so, and that no consent or authorization is necessary from any third party. Landlord may request that Tenant provide Landlord evidence of Tenant's authority.

27.06 ENTIRE AGREEMENT

This Lease, the Exhibits and Riders attached hereto contain the entire agreement between Landlord and Tenant concerning the Premises and there are no other agreements, either oral or written, and no other representations or statements, either oral or written, on which Tenant has relied. This Lease shall not be modified except by a writing executed by Landlord and Tenant.

27.07 MODIFICATION OF LEASE FOR BENEFIT OF MORTGAGEE

If Mortgagee of Landlord requires a modification of this Lease which shall not result in any increased cost or expense to Tenant or in any other material and adverse change in the rights and obligations of Tenant hereunder, then Tenant agrees that the Lease may be so modified.

27.08 EXCULPATION

Tenant agrees, on its behalf and on behalf of its successors and assigns, that any liability or obligation of Landlord in connection with this Lease shall only be enforced against Landlord's equity interest in the Property up to a maximum of Five Million Dollars ($5,000,000.00) and in no event against any other assets of the Landlord, or Landlord's officers or directors or partners, and that any liability of Landlord with respect to this Lease shall be so limited and Tenant shall not be entitled to any judgment in excess of such amount.

27.09 ACCORD AND SATISFACTION

No payment by Tenant or receipt by Landlord of a lesser amount than any installment or payment of Rent due shall be deemed to be other than on account of the amount due, and no endorsement or statement on any check or any letter accompanying any check or payment of Rent shall be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord's right to recover the balance of such installment or payment of Rent or pursue any other remedies available to Landlord. No receipt of money by Landlord from Tenant after the termination of this Lease or Tenant's right of possession of the Premises shall reinstate, continue or extend the Term. Receipt or acceptance of payment from anyone other than Tenant, including an assignee of Tenant, is not a waiver of any breach of Article Ten, and Landlord may accept such payment on account of the amount due without prejudice to Landlord's right to pursue any remedies available to Landlord.

27.10 LANDLORD'S OBLIGATIONS ON SALE OF BUILDING

In the event of any sale or other transfer of the Building, Landlord shall be entirely freed and relieved of all agreements and obligations of Landlord hereunder accruing or to be performed after the date of such sale or transfer (provided, however, that Landlord shall not be freed and relieved of its obligation for reimbursement of the Security to Tenant unless Landlord has transferred to such transferee the unapplied balance of Tenant’s Security held by Landlord at such time), and any remaining liability of Landlord with respect to this Lease shall

be limited to Five Million Dollars ($5,000,000.00) and Tenant shall not be entitled to any judgment in excess of such amount.

27.11 BINDING EFFECT

Subject to the provisions of Article Ten, this Lease shall be binding upon and inure to the benefit of Landlord and Tenant and their respective heirs, legal representatives, successors and permitted assigns.

27.12 CAPTIONS

The Article and Section captions in this Lease are inserted only as a matter of convenience and in no way define, limit, construe, or describe the scope or intent of such Articles and Sections.

27.13 TIME; APPLICABLE LAW; CONSTRUCTION

Time is of the essence of this Lease and each and all of its provisions. This Lease shall be construed in accordance with the Laws of the State of California. If more than one person signs this Lease as Tenant, the obligations hereunder imposed shall be joint and several. If any term, covenant or condition of this Lease or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such term, covenant or condition to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and each item, covenant or condition of this Lease shall be valid and be enforced to the fullest extent permitted by Law. Wherever the term "including" or "includes" is used in this Lease, it shall have the same meaning as if followed by the phrase "but not limited to". The language in all parts of this Lease shall be construed according to its normal and usual meaning and not strictly for or against either Landlord or Tenant.

27.14 ABANDONMENT

In the event Tenant vacates or abandons the Premises but is otherwise in compliance with all the terms, covenants and conditions of this Lease, Landlord shall (i) have the right to enter into the Premises in order to show the space to prospective tenants, (ii) have the right to reduce the services provided to Tenant pursuant to the terms of this Lease to such levels as Landlord reasonably determines to be adequate services for an unoccupied premises and (iii) during the last six (6) months of the Term, have the right to prepare the Premises for occupancy by another tenant upon the end of the Term. Tenant expressly acknowledges that in the absence of written notice pursuant to Section 11.02(b) or pursuant to California Civil Code Section 1951.3 terminating Tenant's right to possession, none of the foregoing acts of Landlord or any other act of Landlord shall constitute a termination of Tenant's right to possession or an acceptance of Tenant's surrender of the Premises, and the Lease shall continue in effect.

27.15 LANDLORD'S RIGHT TO PERFORM TENANT'S DUTIES

If Tenant fails timely to perform any of its duties under this Lease, Landlord shall have the right (but not the obligation), to perform such duty on behalf and at the expense of Tenant without prior notice to Tenant, and all sums expended or expenses incurred by Landlord in performing such duty shall be deemed to be additional Rent under this Lease and shall be due and payable upon demand by Landlord.

27.16 SECURITY SYSTEM

Landlord shall not be obligated to provide or maintain any security patrol or security system. Landlord shall not be responsible for the quality of any such patrol or system which may be provided hereunder or for damage or injury to Tenant, its employees, invitees or others due to the failure, action or inaction of such patrol or system.

27.17 NO LIGHT, AIR OR VIEW EASEMENTS

Any diminution or shutting off of light, air or view by any structure which may be erected on lands of or adjacent to the Project shall in no way affect this Lease or impose any liability on Landlord.

27.18 RECORDATION

Neither this Lease, nor any notice nor memorandum regarding the terms hereof, shall be recorded by Tenant. Any such unauthorized recording shall be a Default for which there shall be no cure or grace period. Tenant agrees to execute and acknowledge, at the request of Landlord, a memorandum of this Lease, in recordable form.

27.19 SURVIVAL

The waivers of the right of jury trial, the other waivers of claims or rights, the releases and the obligations of Tenant under this Lease to indemnify, protect, defend and hold harmless Landlord and/or Indemnitees shall survive the expiration or termination of this Lease, and so shall all other obligations or agreements which by their terms survive expiration or termination of the Lease.

27.20 EXHIBITS OR RIDERS

All exhibits, riders and/or addenda referred to in this Lease as an exhibit, addenda or rider hereto or attached hereto, are hereby incorporated into and made a part of this Lease.

27.21 Pursuant to California Civil Code Section 1938, Landlord hereby notifies Tenant that as of the date of this Lease, the Premises has not undergone inspection by a “Certified Access Specialist” (“CASp”) to determine whether the Premises meet all applicable construction-related accessibility standards under California Civil Code Section 55.53. Landlord hereby discloses pursuant to California Civil Code Section 1938 as follows: “A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the premises.” Landlord and Tenant hereby acknowledge and agree that in the event that Tenant elects to perform a CASp inspection of the Premises hereunder (the “Inspection”), such Inspection shall be (a) performed at Tenant’s sole cost and expense, (b) limited to the Premises and (c) performed by a CASp who has been approved or designated by Landlord prior to the Inspection. Any Inspection must be performed in a manner which minimizes the disruption of business activities in the Building, and at a time reasonably approved by Landlord. Landlord reserves the right to be present during the Inspection. Tenant agrees to: (i) promptly provide to Landlord a copy of the report or certification prepared by the CASp inspector upon request (the “Report”), and (ii) keep the information contained in the Report confidential, except to the extent required by Law, or to the extent disclosure is needed in order to complete any necessary modifications or improvements required to comply with all applicable accessibility standards under state or federal Law, as well as any other repairs, upgrades, improvements, modifications or alterations required by the Report or that may be otherwise required to comply with applicable Laws or accessibility requirements (the “Access Improvements”). If Tenant performs an Inspection, Tenant shall be solely responsible for the cost of Access Improvements to the Premises or the Building necessary to correct any such violations of construction-related accessibility standards identified by such Inspection as required by Law, which Access Improvements may, at Landlord’s option, be performed in whole or in part by Landlord at Tenant’s expense, payable as additional rent within ten (10) days following Landlord’s demand.

27.22 UTILITY USAGE INFORMATION

If Tenant is billed directly by a public utility with respect to Tenant’s electrical usage at the Premises, then, upon request, Tenant shall provide monthly electrical utility usage for the Premises to Landlord for the period of time requested by Landlord (in electronic or paper format) or, at Landlord’s option, provide any written authorization or other documentation required for Landlord to request information regarding Tenant's electricity usage with respect to the Premises directly from the applicable utility company.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, this Lease has been executed as of the date set forth in Section 1.01(4) hereof.

TENANT:	GENOMIC HEALTH, INC.,
	a Delaware corporation

	By:		/s/ Kimberly J. Popovits

	Print Name:		Kimberly J. Popovits

	Title:		President and Chief Executive Officer
	(Chairman of Board, President or Vice President)

	By:		/s/ Fredrick Pla

	Print Name:		Fredrick Pla

	Title:		Chief Operating Officer
	(Secretary, Assistant Secretary, CFO or Assistant Treasurer)


LANDLORD:	METROPOLITAN LIFE INSURANCE COMPANY,
	a New York corporation


	By:	MetLife Investment Management, LLC,
		a Delaware limited liability company,
		its investment manager

		By:	/s/ Leland Low
		Print name:	Leland Low
		Its: Authorized Signatory and		Director

EXHIBIT A

PLAN OF PREMISES

Exhibit A - 1

EXHIBIT B

WORKLETTER AGREEMENT

This Workletter Agreement ("Workletter") is attached to and a part of a certain Lease by and between Metropolitan Life Insurance Company, a New York corporation, as Landlord, and Genomic Health, Inc., a Delaware corporation, as Tenant, for the Premises (the "Lease"). Terms used herein and not defined herein shall have the meaning of such terms as defined elsewhere in the Lease. For purposes of this Workletter, references to “State” and “City” shall mean the State and City in which the Building is located.

1. AS IS Condition; Delivery.

Subject to Landlord’s obligation to perform the Landlord Work, Landlord shall deliver the Premises broom clean in its current “as built” configuration with existing build-out of the tenant space, with the Premises and the Building (including the “Base Building”, as defined below) in their AS IS condition, without any express or implied representations or warranties of any kind by Landlord, its brokers, manager or agents, or the employees of any of them; and Landlord shall not have any obligation to construct or install any tenant improvements or alterations or to pay for any such construction or installation except to the extent expressly provided in this Workletter but this shall not relieve Landlord of any of its maintenance, repair or restoration obligations under the Lease. For purposes hereof, the “Base Building” (sometimes also referred to as the “Base Building Work”) shall mean the improvements made and work performed during the Building's initial course of construction and modifications thereto, excluding all original and modified build-outs of any tenant spaces.

Notwithstanding any provision of this Workletter or the Lease to the contrary, if and to the extent that upon delivery of the Premises,

(i) the roof and roof membrane above the Premises;

(ii) foundation (excluding slab) and structural components of the Base Building;

(iii) Landlord’s fire sprinkler and life-safety systems, if any, of the Base Building; and

(iv) the electrical, water, sewer and plumbing systems of the Base Building serving the Premises (but only from the local utility’s systems to the point of entry into the Premises or to the meter or other point after which such system serves exclusively the Premises).

are not in good working order and condition, and if and to the extent that there is any water damage to the walls, hard lid ceilings or ceiling tiles, except to the extent any of the foregoing are to be removed, demolished or altered by Tenant, and within twenty (20) days after the Delivery Date (as defined in Section 2 of Rider 2) Tenant gives Landlord written notice specifying what is not in good operating condition, Landlord shall make necessary repairs to put such item or items in good operating condition; provided, however, that Landlord shall have no obligation under this paragraph to the extent any of the foregoing conditions are caused by or resulting from any act or omission of Tenant or any of Tenant's contractors, employees, agents, customers or invitees, including, without limitation, any work performed by or on behalf of Tenant.

Exhibit B - 1

2. Landlord Work. Subject to delays caused by Force Majeure or Tenant Delay, Landlord, at Landlord’s sole cost and expense, shall perform the “Landlord Work” (defined below) and shall deliver the Premises in the “Delivery Condition”. “Delivery Condition” shall mean that Landlord has replaced, at Landlord’s sole cost and expense (without pass through to Tenant as an Operating Expense or otherwise), any heating, ventilation and air conditioning unit (“HVAC Unit”) serving the Premises that is more than fifteen (15) years old as of the Delivery Date. For purposes of this Workletter, “Force Majeure” shall mean any accident, casualty, act of God, war or civil commotion, terrorism, strike or labor troubles, or any cause whatsoever beyond the reasonable control of Landlord, including, without limitation, water shortages, energy shortages or governmental preemption in connection with an act of God, a national emergency, or by reason of law, or by reason of the conditions of supply and demand which have been or are affected by act of God, war or other emergency. For purposes of this Workletter, “Substantially Complete” and “Substantial Completion” of the Landlord Work shall mean the completion of the Landlord Work, except for minor insubstantial details of construction, decoration or mechanical adjustments which remain to be done and which shall not unreasonably and materially interfere with Tenant’s regular business operations in the Premises. Substantial Completion shall be deemed to have occurred notwithstanding a requirement to complete "punchlist" or similar minor corrective work.

Notwithstanding anything in the Lease to the contrary, Landlord, subject to the terms of this Section 2, shall be responsible for performing any compliance work to the Common Areas (“Common Area Compliance Work”), to the extent necessary to correct any violations of Laws in effect and as interpreted and enforced as of the date hereof, but only to the extent that the correction of such violation with respect to such areas is required by Laws in order for Tenant to obtain a building permit for the Tenant Work (with such corrections, if any, referred to herein as collectively as the “Required Upgrades”). Landlord shall have the right to contest any alleged Required Upgrades in good faith, including, without limitation, the right to apply for and obtain a waiver or deferment of compliance, the right to assert any and all defenses allowed by Law and the right to appeal any decisions, judgments or rulings to the fullest extent permitted by Law, provided that such contest does not unreasonably interfere or delay Tenant Work. Landlord, after the exhaustion of any and all rights to appeal or contest, will perform any Required Upgrades required in accordance with this Section. In the event that Tenant becomes aware of the need for any Required Upgrades, Tenant shall give prompt, written, reasonably detailed notice thereof to Landlord (“Upgrade Notice”). Landlord shall use commercially reasonable efforts, subject to Landlord’s right to dispute or appeal the Required Upgrades as set forth above, to complete the Required Upgrades as soon as practicable following the date of receipt of Tenant’s Upgrade Notice. Landlord and Tenant agree to reasonably cooperate with each other in order to enable the Required Upgrades to be performed in a timely manner so as to not unreasonably interfere or delay Tenant Work. Landlord shall not be subject to any liability for any delays in completion of the Required Upgrades, nor shall the same entitle Tenant to any credit or abatement of rent. Notwithstanding anything to the contrary set forth herein, the Required Upgrades shall specifically exclude any repairs, alterations, improvements or modifications required as a result of Tenant’s specific use of the Premises (and, in such event, Tenant shall, at its sole cost, perform or cause to be performed in accordance with the terms of the Lease, as amended hereby, such repairs, alterations, improvements and/or modifications). For purposes of the Required Upgrades, notwithstanding anything to the contrary in the Lease, Landlord agrees that the cost of any Common Area Compliance Work shall constitute a Building Operating Expense.

3. Tenant's Plans.

3.1. Description. At its expense, Tenant shall employ:

(i) one or more architects reasonably satisfactory to Landlord and licensed by the State ("Tenant's Architect") to prepare architectural drawings and specifications for all layout and Premises improvements not included in, or requiring any change or addition to, the AS IS condition and Landlord Work, if any.

(ii) one or more engineers reasonably satisfactory to Landlord and licensed by the State ("Tenant's Engineers") to prepare structural, mechanical and electrical working drawings and specifications for all Premises improvements not included in, or requiring any change or addition to, the AS IS condition and Landlord Work, if any.

All such drawings and specifications are referred to herein as "Tenant's Plans". Tenant's Plans shall be in form and detail sufficient to secure all applicable governmental approvals. Tenant's Architect shall be responsible for coordination of all engineering work for Tenant's Plans and shall coordinate with any consultants retained by Tenant in connection with the design and installation of improvements to the Premises (the use of such consultants is subject to Landlord’s consent), and Landlord's architect or other representative to assure the consistency of Tenant's Plans with the Base Building Work and Landlord Work (if any).

Tenant shall pay Landlord, within ten (10) days of receipt of each invoice from Landlord, the cost incurred by Landlord for Landlord's architects and engineers to review Tenant's Plans for consistency of same with the Base Building Work and Landlord Work, if any. Tenant's Plans shall also include the following:

Exhibit B - 2

(a) Final Space Plan: The "Final Space Plan" for the Premises shall include a full and accurate description of room titles, floor loads, alterations to the Base Building or Landlord Work (if any) or requiring any change or addition to the AS IS condition, and the dimensions and location of all partitions, doors, aisles, plumbing (and furniture and equipment to the extent same affect floor loading). The Final Space Plan shall (i) be compatible with the design, construction, systems and equipment of the Base Building and Landlord Work, if any; (ii) specify only materials, equipment and installations which are new and of a grade and quality no less than existing components of the Building when they were originally installed (collectively, (i) and (ii) may be referred to as “Building Standard” or “Building Standards”); (iii) comply with Laws, (iv) be capable of logical measurement and construction, and (v) contain all such information as may be required for the preparation of the Mechanical and Electrical Working Drawings and Specifications (including, without limitation, a capacity and usage report, from engineers designated by Landlord pursuant to Section 3.1(b). below, for all mechanical and electrical systems in the Premises).

(b) Mechanical and Electrical Working Drawings and Specifications: Tenant shall employ engineers approved by Landlord to prepare Mechanical and Electrical Working Drawings and Specifications showing complete plans for electrical, life safety, automation, plumbing, water, and air cooling, ventilating, heating and temperature control and shall employ engineers designated by Landlord to prepare for Landlord a capacity and usage report ("Capacity Report") for all mechanical and electrical systems in the Premises.

(c) Issued for Construction Documents: The "Issued for Construction Documents" shall consist of all drawings (1/8" scale) and specifications necessary to construct all Premises improvements including, without limitation, architectural and structural working drawings and specifications and Mechanical and Electrical Working Drawings and Specifications and all applicable governmental authorities plan check corrections.

3.2. Approval by Landlord. Tenant's Plans and any revisions thereof shall be subject to Landlord's approval, which approval or disapproval:

(i) shall not be unreasonably withheld, provided however, that Landlord may disapprove Tenant’s Plans in its sole and absolute discretion if they (a) adversely affect the structural integrity of the Building, including applicable floor loading capacity; (b) adversely affect any of the Building Systems (as defined below), the Common Areas or any other tenant space (whether or not currently occupied); (c) fail to fully comply with Laws, (d) affect the exterior appearance of the Building; (e) provide for improvements which do not meet or exceed the Building Standards; or (f) involve any installation on the roof, or otherwise affect the roof, roof membrane or any warranties regarding either. Building Systems collectively shall mean the structural, electrical, mechanical (including, without limitation, heating, ventilating and air conditioning), plumbing, fire and life-safety (including, without limitation, fire protection system and any fire alarm), communication, utility, gas (if any), and security (if any) systems in the Building.

(ii) shall not be delayed beyond ten (10) business days with respect to initial submissions and major change orders (those which impact Building Systems or any other item listed in subpart (i) of Section 3.2 above) and beyond five (5) business days with respect to required revisions and any other change orders.

If Landlord disapproves of any of Tenant's Plans, Landlord shall advise Tenant of what Landlord disapproves in reasonable detail. After being so advised by Landlord, Tenant shall submit a redesign, incorporating the revisions required by Landlord, for Landlord's approval. The approval procedure shall be repeated as necessary until Tenant's Plans are ultimately approved. Approval by Landlord shall not be deemed to be a representation or warranty by Landlord with respect to the safety, adequacy, correctness, efficiency or compliance with Laws of Tenant's Plans. Tenant shall be fully and solely responsible for the safety, adequacy, correctness and efficiency of Tenant's Plans and for the compliance of Tenant's Plans with any and all Laws.

3.3. Landlord Cooperation. Landlord shall cooperate with Tenant and make good faith efforts to coordinate Landlord's construction review procedures to expedite the planning, commencement, progress and completion of Tenant Work. Landlord shall complete its review of each stage of Tenant's Plans and any revisions thereof and communicate the results of such review within the time periods set forth in Section 3.2 above.

3.4. City Requirements. Any changes in Tenant's Plans which are made in response to requirements of the applicable governmental authorities and/or changes which affect the Base Building Work shall be immediately submitted to Landlord for Landlord's review and approval.

3.5. "As‑Built" Drawings and Specifications. A CADD-DXF diskette file and a set of black line drawings of all "as‑built" drawings and specifications of Tenant’s Work in the Premises (reflecting all field changes and including, without limitation, architectural, structural, mechanical and electrical drawings and specifications) prepared by Tenant's Architect and Engineers or by Contractors (defined below) shall be

Exhibit B - 3

delivered by Tenant at Tenant's expense to the Landlord within thirty (30) days after completion of the Tenant Work. If Landlord has not received such drawings and diskette(s) within thirty (30) days, Landlord may give Tenant written notice of such failure. If Tenant does not produce the drawings and diskette(s) within ten (10) days after Landlord’s written notice, Landlord may, at Tenant’s sole cost which may be deducted from the Allowance, produce the drawings and diskette(s) using Landlord’s personnel, managers, and outside consultants and contractors. Landlord shall receive an hourly rate reasonable for such production.

4. Tenant Work.

4.1. Tenant Work Defined. All tenant improvement work required by the Issued for Construction Documents (including, without limitation, any approved changes, additions or alterations pursuant to Section 7 below) is referred to in this Workletter as "Tenant Work."

4.2. Tenant to Construct. Tenant shall construct all Tenant Work pursuant to this Workletter, and except to the extent modified by or inconsistent with express provisions of this Workletter, pursuant with the provisions of the terms and conditions of Article Nine of the Lease, governing Tenant Alterations (except to the extent modified by this Workletter) and all such Tenant Work shall be considered "Tenant Alterations" for purposes of the Lease.

4.3. Construction Contract. All contracts and subcontracts for Tenant Work shall include any terms and conditions reasonably required by Landlord.

4.4. Contractor. Tenant shall select one or more contractors to perform the Tenant Work ("Contractor") subject to Landlord’s prior written approval, which shall not unreasonably be withheld.

4.5. Division of Landlord Work and Tenant Work. Tenant Work is defined in Section 4.1. above and Landlord Work, if any, is defined in Section 2.

5. Tenant's Expense.

Tenant agrees to pay for all Tenant Work, including, without limitation, the costs of design thereof, whether or not all such costs are included in the “Permanent Improvement Costs” (defined below). Subject to the terms and conditions of this Workletter, Tenant shall apply the “Allowance” (defined below) to payment of the Permanent Improvement Costs. Landlord shall provide Tenant a tenant improvement allowance (“Allowance”) of up to $25.00 per square foot of Rentable Area of the Premises. The Allowance shall be used solely to reimburse Tenant for the Permanent Improvement Costs. The term “Permanent Improvement Costs” shall mean the actual and reasonable costs of construction of that Tenant Work which constitutes permanent improvements to the Premises, actual and reasonable costs of design thereof and governmental permits therefor, costs incurred by Landlord for Landlord’s architects and engineers pursuant to Section 3.1, and Landlord’s construction administration fee (defined in Section 8.10 below). Provided, however, Permanent Improvement Costs shall exclude costs of “Tenant’s FF&E” (defined below). For purposes of this Workletter, “Tenant’s FF&E” shall mean Tenant’s furniture, furnishings, telephone systems, computer systems, equipment, any other personal property or fixtures, and installation thereof, including, without limitation, “Tenant’s Personal Property” described on Exhibit G hereto. If Tenant does not utilize one hundred percent (100%) of the Allowance for Permanent Improvement Costs no later than the date that is thirty-six (36) months following the Delivery Date, Tenant shall have no right to the unused portion of the Allowance.

6. Application and Disbursement of the Allowance.

6.1. Tenant shall prepare a budget for all Tenant Work, including the Permanent Improvement Costs and all other costs of the Tenant Work ("Budget"), which Budget shall be subject to the reasonable approval of Landlord. Such Budget shall be supported by a guaranteed maximum price construction contract and such other documentation as Landlord may require to evidence the total costs. To the extent the Budget exceeds the available Allowance ("Excess Cost"), Tenant shall be solely responsible for payment of such Excess Cost. Further, prior to any disbursement of the Allowance by Landlord, Tenant shall pay and disburse its own funds for all that portion of the Permanent Improvement Costs equal to the sum of (a) the Permanent Improvement Costs in excess of the Allowance; plus (b) the amount of “Landlord’s Retention” (defined below). “Landlord’s Retention” shall mean an amount equal to fifteen percent (15%) of the Allowance, which Landlord shall retain out of the Allowance and shall not be obligated to disburse unless and until after Tenant has completed the Tenant Work and complied with Section 6.4 below. Further, Landlord shall not be obligated to make any disbursement of the Allowance unless and until Tenant has provided Landlord with (i) bills and invoices covering all labor and material expended and used in connection with the particular portion of the Tenant Work for which Tenant has requested reimbursement, (ii) an affidavit from Tenant stating that all of such bills and invoices have either been paid in full by Tenant or are due and owing, and all such costs qualify as Permanent Improvement Costs, (iii) contractors affidavit covering all labor and materials expended and used, (iv) Tenant, contractors and architectural completion affidavits (as applicable), and (v) valid mechanics' lien releases and waivers pertaining to any completed portion of the Tenant Work which shall be conditional or unconditional, as applicable, all as provided pursuant to Section 6.2 and 6.4 below.

Exhibit B - 4

6.2. Upon Tenant's full compliance with the provisions of Section 6, and if Landlord determines that there are no applicable or claimed stop notices (or any other statutory or equitable liens of anyone performing any of Tenant Work or providing materials for Tenant Work) or actions thereon, Landlord shall disburse the applicable portion of the Allowance as follows:

(a) In the event of conditional releases, to the respective contractor, subcontractor, vendor, or other person who has provided labor and/or services in connection with the Tenant Work, upon the following terms and conditions: (i) such costs are included in the Budget, are Permanent Improvement Costs, are covered by the Allowance, and Tenant has completed and delivered to Landlord a written request for payment, in form reasonably approved by Landlord, setting forth the exact name of the contractor, subcontractor or vendor to whom payment is to be made and the date and amount of the bill or invoice, (ii) the request for payment is accompanied by the documentation set forth in Section 6.1; and (iii) Landlord, or Landlord's appointed representative, has inspected and approved the work for which Tenant seeks payment; or

(b) In the event of unconditional releases, directly to Tenant upon the following terms and conditions: (i) Tenant seeks reimbursement for costs of Tenant Work which have been paid by Tenant, are included in the Budget, are Permanent Improvement Costs, and are covered by the Allowance; (ii) Tenant has completed and delivered to Landlord a request for payment, in form reasonably approved by Landlord, setting forth the name of the contractor, subcontractor or vendor paid and the date of payment, (iii) the request for payment is accompanied by the documentation set forth in Section 6.1; and (iv) Landlord, or Landlord's appointed representative, has inspected and approved the work for which Tenant seeks reimbursement.

6.3. Tenant shall provide Landlord with the aforementioned documents by the 15th of the month and payment shall be made by the 30th day of the month following the month in which such documentation is provided.

6.4. Prior to Landlord disbursing the Landlord’s Retention to Tenant, Tenant shall submit to Landlord the following items within thirty (30) days after completion of the Tenant Work or such longer period as Landlord may permit: (i) “As Built” drawings and specifications pursuant to Section 3.5 above, (ii) all unconditional lien releases from all general contractor(s) and subcontractor(s) performing work, (iii) a “Certificate of Completion” prepared by Tenant’s Architect, and (iv) a final budget with supporting documentation detailing all costs associated with the Permanent Improvement Costs.

7. Changes, Additions or Alterations.

If Tenant desires to make any non-de minimis change, addition or alteration or desires to make any change, addition or alteration to any of the Building Systems after approval of the Issued for Construction Documents, Tenant shall prepare and submit to Landlord plans and specifications with respect to such change, addition or alteration. Any such change, addition or alteration shall be subject to Landlord's approval in accordance with the provisions of Section 3.2 of this Workletter. Tenant shall be responsible for any submission to and plan check and permit requirements of the applicable governmental authorities. Tenant shall be responsible for payment of the cost of any such change, addition or alteration if it would increase the Budget and Excess Cost previously submitted and approved pursuant to Section 6 above.

8. Miscellaneous.

8.1. Scope. Except as otherwise set forth in the Lease, this Workletter shall not apply to any space added to the Premises by Lease option or otherwise.

8.2. Intentionally omitted.

8.3. Sprinklers. Subject to any terms, conditions and limitations set forth herein, Landlord shall provide an operative sprinkler system consisting of mains, laterals, and heads "AS IS" on the date of delivery of the Premises to Tenant. Tenant shall pay for piping distribution, drops and relocation of, or additional, sprinkler system heads and Building firehose or firehose valve cabinets, if Tenant's Plans and/or any applicable Laws necessitate such.

8.4. Floor Loading. Floor loading capacity shall be within building design capacity. Tenant may exceed floor loading capacity with Landlord's consent, at Landlord's sole discretion and must, at Tenant's sole cost and expense, reinforce the floor as required for such excess loading.

8.5. Work Stoppages. If any work on the Real Property other than Tenant Work is delayed, stopped or otherwise affected by construction of Tenant Work, Tenant shall immediately take those actions necessary or desirable to eliminate such delay, stoppage or effect on work on the Real Property other than Tenant Work.

Exhibit B - 5

8.6. Life Safety. Tenant (or Contractor) shall employ the services of a fire and life-safety subcontractor reasonably satisfactory to Landlord for all fire and life-safety work at the Building.

8.7. Locks. Tenant may purchase locks, cylinders and keys for the Premises from its own vendor, provided that (a) such vendor and the locks, cylinders and keys to be used are subject to Landlord’s prior written approval; (b) of a make and model which are functional, operable and compatible with Landlord’s master key system; (c) a master key or keys are provided to Landlord, of which Landlord may place one such master key in the “knox box” for use by the fire department and emergency personnel in the event of an emergency and may retain another key for Landlord's use for entry permitted under the Lease; and (d) the contact information for Tenant’s vendor for locks, cylinders and keys used in the Premises shall be provided to Landlord with Tenant’s request for approval.

8.8. Authorized Representatives. Tenant has designated David Quinn to act as Tenant's representative with respect to the matters set forth in this Workletter. Such representative(s) shall have full authority and responsibility to act on behalf of Tenant as required in this Workletter. Tenant may add or delete authorized representatives upon five (5) business days’ notice to Landlord.

8.9. Access to Premises. After Landlord has recovered possession of the Premises from any prior Tenant, prior to delivery of possession to Tenant, Tenant and its architects, engineers, consultants, and contractors shall have access at reasonable times and upon advance notice and coordination with the Building management, to the Premises for the purpose of planning Tenant Work. Such access shall not in any manner interfere with Landlord Work, if any. Such access, and all acts and omissions in connection with it, shall be subject to and governed by all other provisions of the Lease, including, without limitation, Tenant’s indemnification obligations, insurance obligations, etc., except for the payment of Base Rent and Additional Rent. To the extent that such access by Tenant delays the Substantial Completion of the Landlord Work (if any), such delay shall be a Tenant Delay and the Landlord Work shall be deemed Substantially Complete on the date such Landlord Work would have been completed but for such access.

8.10. Fee. Landlord shall receive a fee equal to two percent (2.0%) of the Allowance for Landlord’s review and supervision of construction of the Tenant Work, which fee shall be paid by Landlord applying two percent (2.0%) of the Allowance in payment thereof. Such fee is in addition to Tenant’s reimbursement of costs incurred by Landlord pursuant to other provisions hereof, including, without limitation, for Landlord's architects and engineers to review Tenant's Plans.

9. Force and Effect.

The terms and conditions of this Workletter shall be construed to be a part of the Lease and shall be deemed incorporated in the Lease by this reference. Should any inconsistency arise between this Workletter and the Lease as to the specific matters which are the subject of this Workletter, the terms and conditions of this Workletter shall control.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

Exhibit B - 6

EXHIBIT C

SITE PLAN OF PROJECT

Exhibit C - 1

EXHIBIT D

PERMITTED HAZARDOUS MATERIAL

[LANDLORD REVIEWING LIST]

Permitted Hazardous Material includes insignificant amounts of substances listed below so long as (i) such substances are maintained only in such quantities as are reasonably necessary for Tenant's operations in the Premises, or such other specific quantity limit as specified below, (ii) such substances are used, stored and handled strictly in accordance with the manufacturers' instructions, industry standards and all applicable laws, (iii) such substances are not disposed of in or about the Building or the Project in a manner which would constitute a release or discharge thereof, and (iv) all such substances are removed from the Building and the Project by Tenant no later than the Termination Date.

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Tenant/Company Name: Genomic Health Address: 501 Galveston Drive, Redwood City, CA 94063

Contact Name: David Quinn Telephone: 650-569-2212 (o); 650-207-2812 (c)

PLEASE CHECK BELOW:

1. No: ☐ or Yes ☒: ( if ‘No’, do not proceed further )

Do you use and/or store hazardous materials beyond typical household cleaning products?

2. No: ☐ or Yes ☒:

Have you, or do you plan to submit a ‘Hazardous Materials Business Plan? (San Mateo OES Form 2370) to the San Mateo County Environmental Health Services Division?

3. Please fill out the following for your list of chemicals (See OES Form 2731 for definitions and number references):


Common Name *(207)	Chemical Name *(205)	Physical State (Sol/Liq/Gas) *(214)	Single Largest Container *(215)	Average Daily Amount *(217)	Max Storage Amount *(218)	Location(s) Stored: (Interior, Exterior- existing shed, Exterior- proposed shed, Other)
Acetic Acid	Acetic Acid	Liq	1 L	2 L	4 L	Interior
Americlear Clearing Solvent	(+/-)-Limonene	Liq	1 L	6 gal	10 gal	Interior
BIOstic Paraffin Removal Agent	Paraffin Removal Agent	Liq	1 gal	1 gal	2 gal	Interior
Decane	Decane	Liq	1 gal	5 gal	10 gal	Interior
Diesel Fuel	Diesel Fuel	Liq	300 gal	280 gal	300 gal	Exterior
Envirene	Isoalkene	Liq	1 gal	1 gal	2 gal	Interior
Isoamyl Alcohol	Isoamyl Alcohol	Liq	1 L	1 L	1 L	Interior
Mineral Spirits	Aliphatic & alicyclic hydrocarbons	Liq	4 L	30 L	40 L	Interior
Paraclear Xylene Substitute	Petroleum Naptha	Liq	4 L	4 L	4 L	Interior
Shandon Xylene Substitute	Stoddard Solvent	Liq	1 gal	15 gal	20 gal	Interior
Soltrol 100	Isoparaffin	Liq	4 L	20 L	40 L	Interior
Soltrol 250	Isoparaffin	Liq	4 L	20 L	40 L	Interior
1, 3-Diaminopropane	1, 3-Diaminopropane	Liq	1 L	1 L	2 L	Interior

Exhibit D - 1

Common Name *(207)	Chemical Name *(205)	Physical State (Sol/Liq/Gas) *(214)	Single Largest Container *(215)	Average Daily Amount *(217)	Max Storage Amount *(218)	Location(s) Stored: (Interior, Exterior- existing shed, Exterior- proposed shed, Other)
Ethylenediamine	Ethylenediamine	Liq	1 L	1 L	1 L	Interior
Diethyl pyrocarbonate	Diethyl pyrocarbonate	Liq	0.5 L	0.5 L	0.5 L	Interior
Dimethylsulfoxide	Dimethylsulfoxide	Liq	1 L	1 L	2 L	Interior
RNaseZap	RNaseZap	Liq	0.5 L	2 L	3.5 L	Interior
Slidebrite	Slidebrite	Liq	4 L	4 L	4 L	Interior
Soltrol 130	Isoparaffin	Liq	4 L	20 L	40 L	Interior
Triethylamine Acetate Buffer	Triethylammonium acetate	Liq	0.5 L	0.5 L	0.5 L	Interior
Accustain Xylene Substitute	Accustain Xylene Substitute	Liq	1 gal	1 gal	2 gal	Interior
Tridecane	Tridecane	Liq	4 L	4 L	4 L	Interior
Ammonium Hydroxide Solution	Ammonium Hydroxide	Liq	0.5 L	0.5 L	0.5 L	Interior
Bradford Reagent	Phosphoric Acid Solution	Liq	0.5 L	0.5 L	0.5 L	Interior
Formic Acid	Formic Acid	Liq	1 L	1 L	1 L	Interior
Hydrochloric Acid	Hydrochloric Acid	Liq	4 L	4 L	6 L	Interior
N,N’-Dimethyl ethylenediamine	N,N’-Dimethyl ethylenediamine	Liq	0.025 kg	0.025 kg	0.025 kg	Interior
Perchloric Acid Solution	Perchloric Acid Solution	Liq	0.5 L	1 L	1 L	Interior
Phosphoric Acid Solution	Phosphoric Acid Solution	Liq	1 L	2 gal	2 gal	Interior
RNaseZap Wipes	RNaseZap	Liq	0.25 kg	1 kg	1 kg	Interior
Sodium Hydroxide Solution	Sodium Hydroxide	Liq	1 L	1.5 gal	2 gal	Interior
Spermidine	4-Azaoctamethylenediamine	Liq	0.05 kg	0.2 kg	0.5 kg	Interior
Trifluoroacetic Acid	Trifluoroacetic Acid	Liq	1 L	1 L	1 L	Interior
Monoethanolamine	Monoethanolamine	Liq	1 L	2 L	4 L	Interior
Chloroform/ Phenol/ Adipoyl Chloride Solution	Chloroform, Phenol and Adipoyl Chloride	Liq	0.4 L	2 gal	3 gal	Interior
Phenol/ Chloroform Solution	Phenol and Chloroform	Liq	0.4 L	2 gal	3 gal	Interior
Phenol	Phenol	Liq	1 L	2 L	4 L	Interior
Sodium Hydroxide, Pellets	Sodium Hydroxide	Sol	1 kg	1 kg	2 kg	Interior
Tris(2-carboxyethyl) –phosphine Hydrochloride	Tris(2-carboxyethyl)–phosphine Hydrochloride	Sol	0.01 kg	0.01 kg	0.01 kg	Interior
Dry Ice	Carbon Dioxide	Sol	250 lb	200 lb	250 lb	Interior
Liquid Nitrogen	Nitrogen	Liq	400 L	720 L	720 L	Interior
Acetone	Acetone	Liq	1 L	4 L	4 L	Interior
Acetonitrile	Acetonitrile	Liq	2 L	12 L	16 L	Interior
Mounting Medium	Xylene or Butyl Methacrylate	Liq	1 L	2 gal	2 gal	Interior
(+/-) 2-Butanol	Butanol	Liq	0.5 L	1 L	2 L	Interior
2,2,4-Trimethyl pentane	2,2,4-Trimethyl pentane	Liq	1 L	2 L	4 L	Interior
Wash Buffer, RW1	Ethanol	Liq	1 L	1 L	1 L	Interior

Exhibit D - 2

Common Name *(207)	Chemical Name *(205)	Physical State (Sol/Liq/Gas) *(214)	Single Largest Container *(215)	Average Daily Amount *(217)	Max Storage Amount *(218)	Location(s) Stored: (Interior, Exterior- existing shed, Exterior- proposed shed, Other)
Clear Advantage Xylene Substitute	Napthenic Hydrocarbon Blend	Liq	4 L	4 L	4 L	Interior
Cytoseal XYL, Mounting Medium	Xylenes	Liq	0.1 L	3 L	5 L	Interior
Eosin Y	2′,4′,5′,7′-Tetrabromofluorescein	Liq	0.05 kg	0.05 kg	0.05 kg	Interior
Eosin Y, 1% Alcoholic Solution	Eosin Y	Liq	1 gal	3 gal	7 gal	Interior
Ethyl Alcohol, 70-100%, Blends	Ethyl Alcohol	Liq	0.25 gal	120 gal	240 gal	Interior
EZ-DeWax, Tissue Deparaffinization Solution, Ready-to-Use	Isoparaffinic hydrocarbons	Liq	1 L	1 L	1 L	Interior
Harris Hematoxylin	Ethylene Glycol	Liq	1 gal	5 gal	10 gal	Interior
Isopropyl Alcohol	Isopropyl Alcohol	Liq	1 gal	75 gal	150 gal	Interior
Methyl Alcohol	Methyl Alcohol	Liq	1 L	4 L	8 L	Interior
Soltrol 10 Isoparaffin	Isoparaffin	Liq	1 L	20 L	40 L	Interior
Triethylamine	Triethylamine	Liq	1 L	1 L	2.5 L	Interior
Xylenes	o- m- and p-Xylene	Liq	1 gal	45 gal	90 gal	Interior
Isoamyl Acetate	Isoamyl Acetate	Liq	500 mL	1 L	1 L	Interior
n-Butanol	n-Butanol	Liq	500 mL	1 L	2 L	Interior
Xylene Substitute, Neo-Clear	Isoalkanes	Liq	1 L	20 L	40 L	Interior
Chloroform	Chloroform	Liq	1 L	3 L	6 L	Interior
Chloroform/Isoamyl Alcohol	Chloroform/Isoamyl Alcohol	Liq	500 mL	1 L	1 L	Interior
Ethidium Bromide Solution	Ethidium Bromide	Liq	100 mL	0.1 L	0.1 L	Interior
Tetramethylammonium Chloride Solution	Tetramethylammonium Chloride Solution	Liq	500 mL	1 L	2.5 L	Interior
cis-Platinum (II) Diammine Dichloride	cis-Platinum (II) Diammine Dichloride	Sol	1 g	2 g	5 g	Interior
Sodium Azide	Sodium Azide	Sol	0.05 kg	0.1 kg	0.1 kg	Interior
Air, Compressed Gas	Air	Gas	300 ft3	1000 ft3	2000 ft3	Interior
Carbon Dioxide, Compressed Gas	Carbon Dioxide	Gas	300 ft3	1800 ft3	3700 ft3	Interior
Helium, Compressed Gas	Helium	Gas	300 ft3	600 ft3	900 ft3	Interior
Nitrogen, Compressed Gas	Nitrogen	Gas	300 ft3	600 ft3	1800 ft3	Interior
Hydrogen Peroxide, <30%	Hydrogen Peroxide	Liq	0.1 L	0.1 L	0.1 L	Interior
Bleach, Household	Sodium Hypochlorite	Liq	500 mL	10 L	20 L	Interior
Nitric Acid	Nitric Acid	Liq	1 L	2 L	4 L	Interior
Sodium Perchlorate	Sodium Perchlorate	Sol	500 g	1 kg	2.5 kg	Interior
1,4-Dithiothreitol	1,4-Dithiothreitol	Liq	0.025 L	0.05 L	0.1 L	Interior

Exhibit D - 3

Common Name *(207)	Chemical Name *(205)	Physical State (Sol/Liq/Gas) *(214)	Single Largest Container *(215)	Average Daily Amount *(217)	Max Storage Amount *(218)	Location(s) Stored: (Interior, Exterior- existing shed, Exterior- proposed shed, Other)
2-Mercaptoethanol	2-Mercaptoethanol	Liq	0.25 L	0.5 L	1 L	Interior
DAB Chromagen	Diaminobenzidine	Liq	0.25 L	0.5 L	1 L	Interior
Formaldehyde Solutions (<12% formaldehyde)	Formaldehyde	Liq	1 gal	12 gal	24 gal	Interior
Formamide	Formamide	Liq	500 g	1 kg	2 L	Interior
Glutaraldehyde Solutions	Glutaraldehyde Solutions	Liq	1 gal	5 gal	10 gal	Interior
N,N-Dimethylformamide	N,N-Dimethylformamide	Liq	0.25 kg	0.5 kg	1 kg	Interior
Zenker’s Fixative Solution	Mercuric Chloride	Liq	1 gal	1 gal	2 gal	Interior
5-Fluorouracil	5-Fluorouracil	Sol	5 g	10 g	25 g	Interior
Actinomycin D-Mannitol	Actinomycin D-Mannitol	Sol	0.25 g	0.5 g	1 g	Interior
Carboplatin	Carboplatin	Sol	0.25 g	0.5 g	1 g	Interior
Diethylenetriaminepentaacetic Acid	Diethylenetriaminepentaacetic Acid	Sol	2.5 g	5 g	0.01 kg	Interior
Finasteride	Finasteride	Sol	0.25 g	0.5 g	1 g	Interior
Hexadecyltrimethylammonium Bromide	Hexadecyltrimethylammonium Bromide	Sol	0.25 kg	0.5 kg	1 kg	Interior
Lithium Chloride	Lithium Chloride	Sol	0.25 kg	0.25 kg	0.5 kg	Interior
o-Phenylenediamine	o-Phenylenediamine	Sol	100 mL	100 mL	0.25 L	Interior
Oxaliplatin	Oxaliplatin	Sol	100 mg	100 mg	250 mg	Interior
Picoplatin	Picoplatin	Sol	100 mg	100 mg	250 mg	Interior
Potassium Dichromate	Potassium Dichromate	Sol	0.25 kg	0.5 kg	1 kg	Interior
Phenylmethanesulfonyl Fluoride	Phenylmethanesulfonyl Fluoride	Sol	1 g	10 g	10 g	Interior
Clear bath algicide	Alkyl dimethyl benzyl ammonium chloride	Liq	250 mL	1 L	2 L	Interior
Western Blot Stripping Buffer	Organo phosphine	Liq	1 L	2 L	3 L	Interior
1,1,1,3,3,3,-Hexafluoro-2-propanol	1,1,1,3,3,3,-Hexafluoro-2-propanol	Liq	100 mL	500 mL	1 L	Interior
DNA Zap	Hydrogen peroxide solution	Liq	250 mL	10 L	20 L	Interior
2'-Nitroacetanilide, 98%	2'-Nitroacetanilide	Sol	25 gm	25 gm	250 gm	Interior
Leica DAP Part 1	Diaminobenzidine tetrahydrochloride hydrate	Liq	10 mL	100 mL	1 L	Interior
Buffer AW1	Guanidinium chloride	Liq	25 mL	100 mL	1 L	Interior
Binding Buffer AM 11	Guanidinium chloride	Liq	10 mL	100 mL	1 L	Interior
Buffer RLT Lysis Buffer 1	Guanadine thiocyanate	Liq	50 mL	100 mL	1 L	Interior

Exhibit D - 4

EXHIBIT E

FORM OF LETTER OF CREDIT ACCEPTABLE FROM SILICON VALLEY BANK

IRREVOCABLE STANDBY LETTER OF CREDIT NO. SVBSF______

DATED: __________ ___, 20___

BENEFICIARY:

METROPOLITAN LIFE INSURANCE COMPANY

REAL ESTATE INVESTMENTS

425 MARKET STREET, SUITE 1050

SAN FRANCISCO, CA 94105

APPLICANT:

GENOMIC HEALTH, INC.

301 PENOBSCOT DRIVE

REDWOOD CITY, CA 94063

AMOUNT: US $____________

EXPIRATION DATE: ___________, 201_

LOCATION: AT OUR COUNTERS IN SANTA CLARA, CALIFORNIA

DEAR SIR/MADAM:

WE HEREBY ESTABLISH THIS IRREVOCABLE STANDBY LETTER OF CREDIT IN FAVOR OF THE AFORESAID ADDRESSEE (“BENEFICIARY”) FOR DRAWINGS UP TO US $319,674.27 (THREE HUNDRED NINETEEN THOUSAND TWO HUNDRED SEVENTY-FOUR AND 27/100 DOLLARS) EFFECTIVE IMMEDIATELY. THIS LETTER OF CREDIT IS ISSUED, PRESENTABLE AND PAYABLE AT OUR OFFICE AT: 3003 TASMAN DRIVE, MAIL SORT HF210, SANTA CLARA, CA 95054 ATTENTION: GLOBAL FINANCIAL SERVICES – STANDBY LETTER OF CREDIT DEPARTMENT (THE BANK’S OFFICE), AND EXPIRES WITH OUR CLOSE OF BUSINESS ON _____________, 201_.

THE TERM “BENEFICIARY” INCLUDES ANY SUCCESSOR BY OPERATION OF LAW OF THE NAMED BENEFICIARY INCLUDING, WITHOUT LIMITATION, ANY LIQUIDATOR, REHABILITATOR, RECEIVER OR CONSERVATOR.

WE HEREBY UNDERTAKE TO PROMPTLY HONOR YOUR SIGHT DRAFT(S) DRAWN ON US, INDICATING OUR CREDIT NO. SVBSF______, FOR ALL OR ANY PART OF THIS CREDIT IF PRESENTED AT OUR OFFICE SPECIFIED IN PARAGRAPH ONE ON OR BEFORE THE EXPIRY DATE OR ANY AUTOMATICALLY EXTENDED EXPIRY DATE TOGETHER WITH THE ORIGINAL LETTER OF CREDIT AND ALL AMENDMENTS, IF ANY.

EXCEPT AS EXPRESSLY STATED HEREIN, THIS UNDERTAKING IS NOT SUBJECT TO ANY AGREEMENT, CONDITION OR QUALIFICATION. THE OBLIGATION OF SILICON VALLEY BANK UNDER THIS LETTER OF CREDIT IS THE INDIVIDUAL OBLIGATION OF SILICON VALLEY BANK, AND IS IN NO WAY CONTINGENT UPON REIMBURSEMENT WITH RESPECT THERETO.

IT IS A CONDITION OF THIS LETTER OF CREDIT THAT IT IS DEEMED TO BE AUTOMATICALLY EXTENDED WITHOUT AMENDMENT FOR ONE YEAR FROM THE EXPIRY DATE HEREOF, OR ANY FUTURE EXPIRATION DATE, UNLESS AT LEAST THIRTY (30) DAYS PRIOR TO AN EXPIRATION DATE WE NOTIFY YOU BY REGISTERED MAIL/COURIER THAT WE ELECT NOT TO CONSIDER THIS LETTER OF CREDIT EXTENDED FOR ANY SUCH ADDITIONAL PERIOD.

PARTIAL DRAWS ARE ALLOWED.

THIS ORIGINAL LETTER OF CREDIT MUST ACCOMPANY ANY DRAWINGS HEREUNDER FOR ENDORSEMENT OF THE DRAWING AMOUNT AND WILL BE RETURNED TO THE BENEFICIARY UNLESS IT IS FULLY UTILIZED.

THIS LETTER OF CREDIT MAY BE TRANSFERRED ONE OR MORE TIMES BUT IN EACH INSTANCE TO A SINGLE BENEFICIARY AND ONLY IN THE FULL AMOUNT AVAILABLE TO BE DRAWN UNDER

Exhibit E - 1

THIS LETTER OF CREDIT. ANY SUCH TRANSFER MAY BE EFFECTED ONLY UPON PRESENTATION TO US, THE ISSUING BANK, AT THE BANK’S OFFICE SPECIFIED IN THE FIRST PARAGRAPH ABOVE, OF THE ATTACHED EXHIBIT “A” DULY COMPLETED AND EXECUTED BY THE BENEFICIARY AND ACCOMPANIED BY THE ORIGINAL LETTER OF CREDIT AND ALL AMENDMENT(S), IF ANY. ANY TRANSFER OF THIS LETTER OF CREDIT MAY NOT CHANGE THE PLACE OF EXPIRATION OF THE LETTER OF CREDIT FROM OUR SPECIFIED OFFICE. EACH TRANSFER SHALL BE EVIDENCED BY OUR ENDORSEMENT ON THE REVERSE OF THE ORIGINAL LETTER OF CREDIT AND WE SHALL FORWARD THE ORIGINAL LETTER OF CREDIT SO ENDORSED TO THE TRANSFEREE. EACH SUCH TRANSFER WILL BE EFFECTED AT NO COST TO THE BENEFICIARY OR TRANSFEREE. OUR TRANSFER FEE ¼ OF 1% OF THE TRANSFER AMOUNT (MINIMUM US$250.00) WILL BE FOR THE ACCOUNT OF THE APPLICANT. HOWEVER, ANY TRANSFER IS NOT CONTINGENT UPON APPLICANT’S ABILITY TO PAY OUR TRANSFER FEE.

DRAFT(S) AND DOCUMENTS MUST INDICATE THE NUMBER AND DATE OF THIS LETTER OF CREDIT.

THIS LETTER OF CREDIT IS SUBJECT TO AND GOVERNED BY THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (1993 REVISION), INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION NO. 500 AND THE LAWS OF THE STATE OF NEW YORK AND, IN THE EVENT OF ANY CONFLICT, THE LAWS OF THE STATE OF NEW YORK WILL CONTROL. IF THIS CREDIT EXPIRES DURING AN INTERRUPTION OF BUSINESS AS DESCRIBED IN ARTICLE 17 OF SAID PUBLICATION 500, THE BANK HEREBY SPECIFICALLY AGREES TO EFFECT PAYMENT IF THIS CREDIT IS DRAWN AGAINST WITHIN 30 DAYS AFTER THE RESUMPTION OF BUSINESS.

SILICON VALLEY BANK,

_________________________ _________________________

AUTHORIZED SIGNATURE AUTHORIZED SIGNATURE

Exhibit E - 2

EXHIBIT “A”

DATE:

TO: SILICON VALLEY BANK

3003 TASMAN DRIVE

SANTA CLARA, CA 95054

ATTN: GLOBAL FINANCIAL SERVICES

RE: SILICON VALLEY BANK, SANTA CLARA, CALIFORNIA

IRREVOCABLE STANDBY LETTER OF CREDIT NO. SVBSF_____

DATED __________ ___, 20___ AMOUNT: US$_______________.

GENTLEMEN:

FOR VALUE RECEIVED, THE UNDERSIGNED BENEFICIARY HEREBY IRREVOCABLY TRANSFERS TO:

_______________________________________________________________________________

(NAME OF TRANSFEREE)

________________________________________________________________________________

(ADDRESS)

ALL RIGHTS OF THE UNDERSIGNED BENEFICIARY TO DRAW UNDER THE ABOVE LETTER OF CREDIT UP TO ITS AVAILABLE AMOUNT AS SHOWN ABOVE AS OF THE DATE OF THIS TRANSFER.

BY THIS TRANSFER, ALL RIGHTS OF THE UNDERSIGNED BENEFICIARY IN SUCH LETTER OF CREDIT ARE TRANSFERRED TO THE TRANSFEREE. TRANSFEREE SHALL HAVE THE SOLE RIGHTS AS BENEFICIARY THEREOF, INCLUDING SOLE RIGHTS RELATING TO ANY AMENDMENTS, WHETHER INCREASES OR EXTENSIONS OR OTHER AMENDMENTS, AND WHETHER NOW EXISTING OR HEREAFTER MADE. ALL AMENDMENTS ARE TO BE ADVISED DIRECT TO THE TRANSFEREE WITHOUT NECESSITY OF ANY CONSENT OF OR NOTICE TO THE UNDERSIGNED BENEFICIARY.

THE ORIGINAL OF SUCH LETTER OF CREDIT IS RETURNED HEREWITH, AND WE ASK YOU TO ENDORSE THE TRANSFER ON THE REVERSE THEREOF, AND FORWARD IT DIRECTLY TO THE TRANSFEREE WITH YOUR CUSTOMARY NOTICE OF TRANSFER.

SINCERELY,

METROPOLITAN LIFE INSURANCE COMPANY

__________________________

(SIGNATURE OF BENEFICIARY)**

**THIS TRANSFER FORM, EXHIBIT “A”, MUST BE NOTARIZED BY A NOTARY PUBLIC

Exhibit E - 3

EXHIBIT F

FAIR MARKET RENTAL RATE

1. Definition of Fair Market Rental Rate. "Fair Market Rental Rate" shall mean the Monthly Base Rent equal to the monthly base rental per rentable square foot which a tenant would pay and which a willing landlord would accept for first class office/R&D/laboratory space comparable to the Premises in the Building and in other buildings of class A standards in Seaport Centre, including for purposes of this Exhibit Phases I, II and III as described on Exhibit C and excluding Seaport Plaza (“Applicable Market”) for the period for which such rental is to be paid and for a lease on terms substantially similar to those of the Lease (including, without limitation, those applicable to Taxes, Operating Expenses and exclusions, but also considering so-called net and triple net leases, and leases utilizing operating expense stops or base years, and making appropriate adjustment between such leases and this Lease, as described below), based on prevailing market conditions in the Building and in other buildings of class A standards in the Applicable Market at the time such determination is made ("Comparable Transactions"). Without limiting the generality of the foregoing, Comparable Transactions shall be for a term similar to the term of tenancy and for space comparable in use, floor levels, square footage and location within the Building and in other buildings of class A standards in the Applicable Market as the transaction for which Fair Market Rental Rate is being determined; however, leases of unusual or odd shaped spaces shall not be considered. In any determination of Fair Market Rental Rate, the stated or contract monthly net or base rental in Comparable Transactions shall be appropriately adjusted to take into account the different terms and conditions prevailing in such transactions and those present in the Lease, including, without limitation: (a) the extent to which average annual expenses and taxes per rentable square foot payable by tenants in Comparable Transactions vary from those payable by Tenant under the Lease, and so, for example, if the Lease provides for payment of Rent Adjustments and/or certain Operating Expenses on the basis of increases over a base year, then the rate of Monthly Base Rent under the Lease shall be based upon a step-up to change the calendar year which serves as the base year for calculation of the base for such Operating Expenses for the Option Term to be the full calendar year in which the Option Term commences, and such step-up shall be considered in the determination of the Fair Market Rental Rate; (b) tenant improvements, value of existing tenant improvements, the concessions, if any, being given by landlords in Comparable Transactions, such as parking charge abatement, free rent or rental abatement applicable after substantial completion of any tenant improvements (and no adjustment shall be made for any free or abated rent during any construction periods), loans at below-market interest rates, moving allowances, space planning allowances, lease takeover payments and work allowances, as compared to any tenant improvement, refurbishment or repainting allowance given to Tenant under the Lease for the space for which Fair Market Rental Rate is being determined; (c) the brokerage commissions, fees and bonuses payable by landlords in Comparable Transactions (whether to tenant's agent, such landlord or any person or entity affiliated with such landlord), as compared to any such amounts payable by Landlord to the broker(s) identified with respect to the transaction for which Fair Market Rental Rate is being determined; (d) the time value of money; (e) any material difference between the definition of rentable area and the ratio of project rentable to useable square feet in Comparable Transactions, as compared to such figures applicable to the space for which Fair Market Rental Rate is being determined; and (f) the extent to which charges for parking by tenants in Comparable Transactions vary from those payable by Tenant under the Lease.

2. Sealed Estimates. In the event the Lease requires Fair Market Rental Rate to be determined in accordance with this Exhibit, Landlord and Tenant shall meet within ten (10) business days thereafter and each simultaneously submit to the other in a sealed envelope its good faith estimate of Fair Market Rental Rate (the "Estimates"). If the higher Estimate is not more than one hundred five percent (105%) of the lower Estimate, then Fair Market Rental Rate shall be the average of the two Estimates. If such simultaneous submission of Estimates does not occur within such ten (10) business day period, then either party may by notice to the other designate any reasonable time within five (5) business days thereafter and any reasonable place at or near the Building for such meeting to take place. In the event only one party submits an Estimate at that meeting, such Estimate shall be Fair Market Rental. In the event neither party submits an Estimate at that meeting, the transaction for which Fair Market Rental Rate is being determined shall be deemed cancelled and of no further force or effect.

3. Selection of Arbitrators. If the higher Estimate is more than one hundred five percent (105%) of the lower Estimate, then either Landlord or Tenant may, by written notice to the other within five (5) business days after delivery of Estimates at the meeting, require that the disagreement be resolved by arbitration. In the event neither party gives such notice, the transaction for which Fair Market Rental Rate is being determined shall be deemed cancelled and of no further force or effect. Within five (5) business days after such notice, the parties shall select as arbitrators three (3) mutually acceptable independent MAI appraisers with experience in real estate activities, including at least five (5) years’ experience in appraising comparable space in the Applicable Market ("Qualified Appraisers"). If the parties cannot timely agree on such arbitrators, then within the following five (5) business days, each shall select and inform the other party of one (1) Qualified Appraiser and within a third period of five (5) business days, the two appraisers (or if only one (1) has been duly selected, such single appraiser) shall select as arbitrators a panel of three additional Qualified Appraisers, which three arbitrators shall proceed to

Exhibit F- 1

determine Fair Market Rental Rate pursuant to Section 4 of this Exhibit. Both Landlord and Tenant shall be entitled to present evidence supporting their respective positions to the panel of three arbitrators.

4. Arbitration Procedure. Once a panel of arbitrators has been selected as provided above, then as soon thereafter as practicable each arbitrator shall select one of the two Estimates as the one which, in its opinion, is closer to Fair Market Rental Rate. Upon an Estimate's selection by two (2) of the arbitrators, it shall be the applicable Fair Market Rental Rate and such selection shall be binding upon Landlord and Tenant. If the arbitrators collectively determine that expert advice is reasonably necessary to assist them in determining Fair Market Rental Rate, then they may retain one or more qualified persons, including but not limited to legal counsel, brokers, architects or engineers, to provide such expert advice. The party whose Estimate is not chosen by the arbitrators shall pay the costs of the arbitrators and any experts retained by the arbitrators. Any fees of any counsel or expert engaged directly by Landlord or Tenant, however, shall be borne by the party retaining such counsel or expert.

5. Rent Pending Determination of Fair Market Rental Rate. In the event that the determination of Fair Market Rental Rate has not been concluded prior to commencement of the applicable rental period for the applicable space for which the Fair Market Rental Rate is being determined, Tenant shall pay Landlord Monthly Base Rent and Rent Adjustment Deposits as would apply under Landlord’s Estimate pursuant to Section 2 of this Exhibit until the Fair Market Rental Rate is determined. In the event that the Fair Market Rental Rate subsequently determined is different from the amount paid for the applicable period, then within thirty (30) days after such determination, Tenant shall pay Landlord any greater amounts due and Landlord shall credit Tenant (against the next Monthly Base Rent installments due) for any reduction in the amounts due.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

Exhibit F- 2

EXHIBIT G

TENANT’S PERSONAL PROPERTY

Tenant’s Personal Property shall mean the following items belonging to Tenant, it being acknowledged that if any of the following are affixed to the Premises in the normal manner for such item, it shall still be deemed to be Tenant’s Personal Property:

1. Water deionization/purification systems;

2. Facility vacuum system;

3. Facility clean dry air system;

4. Telecommunications systems;

5. Computer, storage, and networking systems;

6. Waste neutralization and monitoring systems;

7. Trash compactor system;

8. Satellite and/or radio frequency signal receivers/transmitters;

9. Compressed gas distribution system;

10. Audio-visual equipment;

11. Electronic security, monitoring and surveillance systems;

12. Back-up and emergency electrical power equipment;

13. Laboratory casework including fume hoods;

14. Moveable benches and tables;

15. Office furniture and equipment;

16. Bicycle lockers;

17. Shower room and personnel lockers;

18. Laboratory equipment including autoclaves, glass washers, ice makers, cage washers, dryers, environmental chambers;

19. Servery equipment (i.e., equipment, including all appliances, used for food service, in the break area or kitchen area)

20. Fermentation system equipment; and

21. Electric Vehicle charging station equipment; and

22. Such other items installed in the Premises by Tenant at Tenant’s expense during the term of the Lease as are agreed to in writing by Tenant and Landlord to be Tenant’s Personal Property.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

Exhibit G- 1

EXHIBIT H

FORM OF LETTER OF CREDIT

FOR INTERNAL IDENTIFICATION PURPOSES ONLY

Our No. __________ Other __________

Applicant ___________________________

TO: [Name of Beneficiary]

[Address]

Attention: Director, EIM

IRREVOCABLE LETTER OF CREDIT NO. ___________

We hereby establish this irrevocable Letter of Credit in favor of the aforesaid addressee (“Beneficiary”) for drawings up to United States $____________________ effective immediately. This Letter of Credit is issued, presentable and payable at our office at [issuing bank’s address in City specified by Landlord] and expires with our close of business on ___________, 20__.

The term “Beneficiary” includes any successor by operation of law of the named Beneficiary including, without limitation, any liquidator, rehabilitator, receiver or conservator.

We hereby undertake to promptly honor your sight draft(s) drawn on us, indicating our Credit No. ________, for all or any part of this Credit if presented at our office specified in paragraph one on or before the expiry date or any automatically extended expiry date.

Except as expressly stated herein, this undertaking is not subject to any agreement, condition or qualification. The obligation of [issuing bank] under this Letter of Credit is the individual obligation of [issuing bank], and is in no way contingent upon reimbursement with respect thereto.

It is a condition of this Letter of Credit that it is deemed to be automatically extended without amendment for one (1) year from the expiry date hereof, or any future expiration date, unless at least thirty (30) days prior to an expiration date we notify you by registered mail that we elect not to consider this Letter of Credit renewed for any such additional period.

This Letter of Credit is transferable by the Beneficiary and by any successive transferees at no charge or cost to Beneficiary or any transferee. Transfers of this Letter of Credit are subject to receipt of Beneficiary's (and subsequently, transferee’s) instructions in the form attached hereto as Schedule 1 accompanied by the original Letter of Credit and amendments(s) if any.

This Letter of Credit is subject to and governed by the Laws of the State of New York and the 2007 revision of the Uniform Customs and Practice for Documentary Credits of the International Chamber of Commerce (Publication 600) and, in the event of any conflict, the Laws of the State of New York will control. If this Credit expires during an interruption of business as described in article 36 of said Publication 600, the bank hereby specifically agrees to effect payment if this Credit is drawn against within 30 days after the resumption of business.

Very truly yours,

_________________________

[issuing bank]

Exhibit H - 1

SCHEDULE 1 TO LETTER OF CREDIT

[Bank – then current issuer of Letter of Credit]

c/o _________________________

____________________________

Attention:____________________

Re: Irrevocable Letter of Credit No. ________________

Ladies & Gentlemen:

The undersigned acknowledges receipt of your advice No. _________________ of a credit issued in our favor, the terms of which are satisfactory. We now irrevocably transfer the said credit and all amendments and extensions thereof, if any, to:

__________________________

[Name of Transferee]

__________________________

[Address]

You are to inform the transferee of this transfer and such transferee shall have sole rights as beneficiary under the credit, including any amendments, extension or increases thereof, without notice to or further assent from us.

This transfer is at no charge or cost to Beneficiary or the transferee.


	Yours very truly,

	Beneficiary

	By:

Acknowledged and agreed by Bank [then current issuer of Letter of Credit]:


	(Bank – then current issuer of Letter of Credit)

Exhibit H - 2

RIDER 1

COMMENCEMENT DATE AGREEMENT

METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation ("Landlord"), and GENOMIC HEALTH, INC., a Delaware corporation ("Tenant"), have entered into a certain Lease dated ___________________, 2019 (the "Lease").

WHEREAS, Landlord and Tenant wish to confirm and memorialize the Commencement Date and Expiration Date of the Lease as provided for in Section 2.02(b) of the Lease;

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants contained herein and in the Lease, Landlord and Tenant agree as follows:

1. Unless otherwise defined herein, all capitalized terms shall have the same meaning ascribed to them in the Lease.

2. The Commencement Date of the Term of the Lease is .

3. The Expiration Date of the Term of the Lease is .

4. Tenant hereby confirms the following:

(a) That it has accepted possession of the Premises pursuant to the terms of the Lease;

(b) That the Landlord Work, if any, is Substantially Complete; and

5. Except as expressly modified hereby, all terms and provisions of the Lease are hereby ratified and confirmed and shall remain in full force and effect and binding on the parties hereto.

6. The Lease and this Commencement Date Agreement contain all of the terms, covenants, conditions and agreements between the Landlord and the Tenant relating to the subject matter herein. No prior other agreements or understandings pertaining to such matters are valid or of any force and effect.

Rider 1 - 1

IN WITNESS WHEREOF, Landlord and Tenant have executed this Commencement Date Agreement and such execution and delivery have been duly authorized.


TENANT:	GENOMIC HEALTH, INC.,
	a Delaware corporation

	By:

	Print Name:

	Title:
	(Chairman of Board, President or Vice President)

	By:

	Print Name:

	Title:
	(Secretary, Assistant Secretary, CFO or Assistant Treasurer)

LANDLORD:	METROPOLITAN LIFE INSURANCE COMPANY,
	a New York corporation


	By:	MetLife Investment Management, LLC,
		a Delaware limited liability company,
		its investment manager

		By:
		Print name:
		Its: Authorized Signatory and

Rider 1 - 2

RIDER 2

ADDITIONAL PROVISIONS

This Rider 2 ("Rider") is attached to and a part of a certain Lease by METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation, as Landlord, and GENOMIC HEALTH, INC., a Delaware corporation, as Tenant, for the Premises as described therein (the "Lease").

SECTION 1. DEFINED TERMS; FORCE AND EFFECT

Capitalized terms used in this Rider shall have the same meanings set forth in the Lease except as otherwise specified herein and except for terms capitalized in the ordinary course of punctuation. This Rider forms a part of the Lease. Should any inconsistency arise between this Rider and any other provision of the Lease as to the specific matters which are the subject of this Rider, the terms and conditions of this Rider shall control.

SECTION 2. PREMISES; CONDITION; DELIVERY; COMMENCEMENT DATE

(a) Landlord shall tender to Tenant possession of the Premises in the condition specified in the Workletter (free of all prior occupants and their personal property) on or about October 1, 2019 (the “Projected Delivery Date”). On the date Landlord actually tenders to Tenant possession of the Premises (the “Delivery Date”), all the conditions and covenants of the Lease shall apply, and Tenant shall observe and perform all conditions and covenants of the Lease, including all that are specified to apply during the Term (for example only, Tenant’s insurance and indemnification obligations), except as otherwise expressly provided in this Rider. The Term of this Lease shall be as shown in Section 1.01(5) of the Basic Lease Provisions and the “Commencement Date” of the Term shall be as set forth in Section 1.01(6). During the period following the Delivery Date and ending on the Commencement Date, Tenant shall be permitted to conduct business in the Premises, without the payment of Monthly Base Rent and Rent Adjustments, provided that no more than twenty (20) employees of Tenant are using the Premises.

(b) Within thirty (30) days following the occurrence of the Commencement Date, upon request by Landlord or Tenant, Tenant and Landlord shall enter into an agreement (which is attached to this Lease as Rider 1) confirming the Commencement Date and the Expiration Date. If Tenant fails to enter into such agreement, then the Commencement Date and the Expiration Date shall be the dates designated by Landlord in such agreement.

(c) If Landlord shall be unable to give possession of the Premises on the Projected Delivery Date by reason of the following: (i) the holding over or retention of possession of any tenant, tenants or occupants, or (ii) for any other reason beyond Landlord’s reasonable control, then Landlord shall not be subject to any liability for the failure to give possession on said date. Under such circumstances, the Commencement Date shall be delayed by a number of days equal to the days of delay in Landlord’s delivery of possession to Tenant. No such failure to deliver possession on the originally scheduled Projected Delivery Date shall affect the validity of this Lease or the obligations of the Tenant hereunder.

SECTION 3. OFFER RIGHT.

(a) Tenant shall have a one-time right to lease an Offer Space (defined below) if and to the extent such space is Available (as defined in Section 3(b) below) during the period beginning on the Commencement Date and ending twelve (12) months prior to the Expiration Date of the Term unless, prior to or concurrent with such expiration Tenant exercises its Option to Extend pursuant to Section 4 below, in which case Tenant’s right to lease the Offer Space shall expire twelve (12) months prior to the expiration of the Option Term (the “Offer Period”), upon and subject to the terms and conditions of this Section (the "Offer Right"), and provided that at the time of exercise of such right: (i) Tenant or a Permitted Transferee which has satisfied the requirements of Sections 10.01 and 10.05 of the Lease must be conducting regular, active, ongoing business in, and be in occupancy (and occupancy by a subtenant, licensee or other party permitted or suffered by Tenant shall not satisfy such condition) of the entire Premises; and (ii) there has been no material adverse change in Tenant's financial position from such position as of the date of execution of the Lease, as certified by Tenant's independent certified public accountants, and as supported by Tenant's certified financial statements, copies of which shall be delivered to Landlord with Tenant's written notice exercising its right hereunder. Without limiting the generality of the foregoing, Landlord may reasonably conclude there has been a material adverse change if Tenant's independent certified public accountants do not certify there has been no such change.

Rider 2 - Page 1

(b) “Offer Space” shall mean the space comprised of 11,020 square feet of Rentable Area and known as 501 Chesapeake in the Project at the time such space becomes Available. The term "Available" shall mean that the space in question is either: (1) vacant and free and clear of all “Prior Rights” (defined below); or (2) space as to which Landlord has received a proposal, or Landlord is making a proposal, for a lease or rights of any nature applicable in the future when such space would be free and clear of all Prior Rights. “Prior Rights” shall mean rights of Codexis, Inc., a Delaware corporation, s to lease or occupy the Offer Space that predate the execution and delivery of this Lease.

(c) Nothing herein shall be deemed to limit or prevent Landlord from marketing, discussing or negotiating with any other party for a lease of, or rights of any nature as to, any part of any Offer Space, but during the Offer Period before Landlord makes any written proposal to any other party (other than a party with Prior Rights) for any Offer Space which becomes Available (including giving a written response to any proposal or offer received from another party), or contemporaneously with making any such proposal, and in any event within thirty (30) days after such space becomes vacant and free and clear of all “Prior Rights”, Landlord shall give Tenant written notice ("Landlord's Notice") that the subject Offer Space is Available and Landlord’s estimate of the projected date such space will be vacant and deliverable to Tenant Landlord’s estimate of the applicable Fair Market Rental Rate, as defined in Exhibit F hereto (“Landlord’s Estimate”), and if applicable, base year or base amount (if different from that for the rest of the Premises) with respect to Operating Expenses. Unless otherwise specified in Landlord’s Notice, the Offer Space shall be offered on the same terms and conditions contained in the Lease except as follows (the “Offer Space Terms”): (i) Tenant shall accept the Offer Space in its then “AS IS” condition, but broom clean and free of all tenants or occupants, without any obligation of Landlord to repaint, remodel, improve or alter such space for Tenant’s occupancy or to provide Tenant any allowance therefor, except to the extent tenants leasing space in Comparable Transactions receive an allowance pursuant to the definition of Fair Market Rental Rate, provided, however, Landlord, by notice given to Tenant within thirty (30) days after receipt of Tenant’s Election Notice, may elect to provide, in lieu of such allowance for alterations to the Offer Space, a rent credit equal to the amount of the allowance that would have otherwise been given, credited toward the rents applicable only to the Offer Space and due starting after such rent obligation commences; (ii) Landlord shall deliver the Offer Space to Tenant no later than thirty (30) days after the later of the date on which Landlord regains possession of such space; (iii) upon such delivery, the Offer Space shall be part of the Premises under the Lease, such that the term “Premises” in the Lease thereafter shall mean both the space leased immediately prior to such delivery and the Offer Space, and shall be leased for the remaining term of the Lease (including any extension pursuant to the Option to Extend); (iv) starting on the “Offer Space Rent Commencement Date”, which shall be the earlier to occur of (A) one hundred and twenty (120) days after the Offer Space is delivered to Tenant, or (B) the date Tenant commences its business operations in the Offer Space, Tenant shall pay Monthly Base Rent equal to the Fair Market Rental Rate, with Fair Market Rental Rate defined and determined as set forth herein and in Exhibit F; (v) starting on the Offer Space Rent Commencement Date, with respect to the Offer Space Tenant shall additionally pay Tenant’s Share of Operating Expenses and Taxes, or increases therein, as applicable under the Lease, with Tenant’s Share recalculated to reflect addition of the Offer Space or with a separate Tenant’s Share for the Offer Space if the Lease provides for a base year or base amount for calculation of Operating Expenses and if the base year or base amount for the Offer Space is different from that for the rest of the Premises; (vi) starting on such delivery date, Tenant shall additionally pay other charges payable by Tenant for utilities with respect to the Offer Space; (vii) starting on the Offer Space Rent Commencement Date, with respect to the Offer Space, Tenant shall additionally have the right to use (pursuant to the terms of 2.06(c) of the Lease) additional unreserved parking spaces at the rate of three and three tenths (3.3) spaces per one thousand (1,000) square feet of Rentable Area; and (vii) the Security Deposit shall be increased to an amount that is the same percentage or proportion of Rent (after including Rent for the Offer Space) as the prior amount of Security Deposit was in relation to prior Rent. For the period of ten (10) business days after Landlord gives Landlord's Notice (the "Election Notice Period"), Tenant shall have the right to give Landlord irrevocable written notice (“Election Notice”) of Tenant’s election to lease all (and not less than all) the Offer Space identified in Landlord’s Notice, on the terms set forth in Landlord’s Notice.

(d) In the event Tenant duly and timely delivers its Election Notice to Landlord, such exercise shall thereby create and constitute a binding lease of the subject Offer Space by and to Tenant.

(e) Landlord’s Estimate set forth in Landlord’s Notice shall be conclusive and binding as the Monthly Base Rent payable for the Offer Space in Landlord’s Notice unless Tenant notifies Landlord in Tenant’s Election Notice that Tenant elects to lease the subject Offer Space but disputes Landlord’s Estimate and specifies in detail the reasons therefor and states Tenant’s good faith estimate of the Fair Market Rental Rate. If the dispute is not resolved within ten (10) business days after Landlord receives Tenant’s Election Notice as described above, then the Fair Market Rental Rate shall be determined in accordance with the terms of Exhibit F.

(e) If Tenant either fails or elects not to exercise its Offer Right as to the Offer Space covered by Landlord's Notice by not giving its Election Notice within the Election Notice Period, then Tenant's Offer Right shall terminate, and be null and void, as to the subject space identified in the applicable Landlord’s Notice (but not as to any Offer Space subject to this Offer Right which has not become Available and been included in a

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Landlord’s Notice), and at any time thereafter Landlord shall be free to lease and/or otherwise grant options or rights to the subject space or any portion thereof on any terms and conditions whatsoever free and clear of the Offer Right.

(f) During any period that Tenant does not occupy the entire Premises or that there is an uncured default by Tenant under the Lease, or any state of facts which with the passage of time or the giving of notice, or both, would constitute such a default, the Offer Right shall not apply and shall be ineffective and suspended, and Landlord shall not be obligated to give a Landlord’s Notice as to any space which becomes Available during such suspension period, and Landlord shall not be obligated to negotiate (or enter any amendment) with respect to any Offer Space which was the subject of a pending Landlord’s Notice for which an amendment has not been fully executed, and during such suspension period Landlord shall be free to lease and/or otherwise grant options or rights to such space on any terms and conditions whatsoever free and clear of the Offer Right. The Offer Right shall terminate upon any of the following: (1) the termination of the Lease upon the occurrence of a Tenant default or otherwise; (2) Landlord's recovery of possession of the Premises upon the occurrence of a Tenant default or otherwise; (3) rejection of the Lease in any bankruptcy proceeding; or (4) the failure of Tenant timely to exercise, give any notices, perform or agree, within any applicable time period specified above, with respect to any Offer Space which was the subject of any Landlord’s Notice.

(f) Promptly after final determination of the Fair Market Rental Rate, Landlord shall prepare a memorandum confirming the specific dates, amounts and terms of the lease of the subject Offer Space in accordance with the terms and conditions of this Offer Right, in the form of an amendment to the Lease. Tenant shall execute such amendment within five (5) business days after receipt of the proposed amendment and Landlord shall execute it promptly after Tenant. Notwithstanding any of the foregoing to the contrary, the failure of Landlord to prepare such amendment or of either party to execute an amendment shall not affect the validity and effectiveness of the lease of the Offer Space in accordance with the terms and conditions of this Offer Right.

(g) The Offer Right is personal to Genomic, and may not be used by, and shall not be transferable or assignable (voluntarily or involuntarily) to any person or entity other than a Permitted Transferee which is an assignee of the Lease and which has satisfied the requirements of Sections 10.01 and 10.05 of the Lease, and such Permitted Transferee may exercise the right without Tenant joining in or consenting to such exercise, and notwithstanding anything to the contrary, Tenant shall remain liable for all obligations under the Lease, including those resulting from any such exercise with the same force and effect as if Tenant had joined in such exercise.

SECTION 4. MUST-TAKE EXPANSION.

(a) Tenant shall have the one-time right and obligation (the “Must-Take Expansion”) to lease all (and not less than all) of the Must-Take Space (defined below) in the event that the Must-Take Space becomes “Available” (as Available is defined below) on or before June 10, 2022 (the “Must-Take Outside Date”). The “Must-Take Space” shall mean the space designated as the Must-Take Space adjacent to the Premises, as shown on Exhibit A hereto, which Must-Take Space is conclusively deemed to be 15,393 square feet of Rentable Area located at 525 Chesapeake Drive.

(b) In the event that the Must-Take Space becomes Available, then within thirty (30) days after such space becomes vacant and free and clear of all “Prior Rights”, Landlord shall give Tenant written notice ("Landlord's Notice") that the Must-Take Space is Available and Landlord’s estimate of the projected date such space will be vacant and deliverable to Tenant. The term "Available" shall mean that the space in question is either: (1) vacant and free and clear of all “Prior Rights” (defined below); or (2) space as to which Landlord has received a proposal, or Landlord is making a proposal, for a lease or rights of any nature applicable in the future when such space would be free and clear of all Prior Rights. The term “Prior Rights” shall mean the rights of the existing tenant under that certain written lease dated as of February 11, 2013, between Landlord, as landlord, and Impossible Foods, Inc., a Delaware corporation, as tenant (as successor in interest to Maraxi Inc., a Delaware corporation), as amended from time to time.

(c) Giving of Landlord’s Notice shall thereby create and constitute a binding lease of the Must-Take Space by and to Tenant, upon and subject to the same terms and conditions contained in the Lease except as follows (the “Must-Take Terms”): (i) Tenant shall accept the Must-Take Space in its then “AS IS” condition, but broom clean and free of all tenants or occupants, without any obligation of Landlord to repaint, remodel, improve or alter such space for Tenant’s occupancy or to provide Tenant any allowance therefor, except that Landlord shall provide an allowance at the same rate as the Allowance applicable for the initial Premises set forth in Exhibit B (which shall be prorated based on the length of term for the Must-Take Space); (ii) Landlord shall deliver the Must-Take Space to Tenant no later than thirty (30) days after the date on which Landlord regains possession of such space; (iii) upon such delivery, the Must-Take Space shall be part of the Premises under the Lease, such that the term “Premises” in the Lease thereafter shall mean both the space leased immediately prior to such delivery and the Must-Take Space, and shall be leased for the remaining term of the Lease (including any extension pursuant to the Option to Extend); (iv) starting on the “Must-Take Rent

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Commencement Date”, which shall be the earlier to occur of (A) one hundred twenty (120) days after the Must-Take Space is delivered to Tenant, or (B) the date Tenant commences its business operations in the Must-Take Space, Tenant shall pay Monthly Base Rent with respect to the Must-Take Space at the same rate per rentable square foot then and thereafter applicable for the initial Premises as set forth in Section 1.01 of the Lease; (v) starting on the Must-Take Rent Commencement Date, with respect to the Must-Take Space Tenant shall additionally pay Tenant’s Share of Operating Expenses and Taxes, or increases therein, as applicable under the Lease, with Tenant’s Share recalculated to reflect addition of the Must-Take Space; (vi) starting on such delivery date, Tenant shall additionally pay other charges payable by Tenant for utilities and services set forth in this Lease with respect to the Must-Take Space; (vii) starting on the Must-Take Rent Commencement Date, with respect to the Must-Take Space, Tenant shall additionally have the right to use (pursuant to the terms of 2.06(c) of the Lease) additional unreserved parking spaces at the rate of three and three tenths (3.3) spaces per one thousand (1,000) square feet of Rentable Area; and (vii) the Security Deposit shall be increased to an amount that is the same percentage or proportion of Rent (after including Rent for the Must-Take Space) as the prior amount of Security Deposit was in relation to prior Rent.

Notwithstanding any provision of this Section 4 or the Lease to the contrary, if and to the extent that upon delivery of the Must-Take Space,

(i) the roof and roof membrane above the Must-Take Space;

(ii) the heating, ventilation and air conditioning units serving the Must-Take Space (the “HVAC Units”);

(iii) foundation (excluding slab) and structural components of the Base Building;

(iv) Landlord’s fire sprinkler and life-safety systems, if any, of the Base Building; and

(v) the electrical, water, sewer and plumbing systems of the Base Building serving the Must-Take Space (but only from the local utility’s systems to the point of entry into the Must-Take Space or to the meter or other point after which such system serves exclusively the Must-Take Space).

are not in good working order and condition, and if and to the extent that there is any water damage to the walls, hard lid ceilings or ceiling tiles, and provided that within twenty (20) days after Landlord’s delivery of the Must-Take Space to Tenant, Tenant gives Landlord written notice specifying what is not in good operating condition, Landlord shall make necessary repairs to put such item or items in good operating condition; provided, however, that Landlord shall have no obligation under this paragraph (A) to the extent any of the foregoing are to be removed, demolished or altered by Tenant prior to Landlord’s delivery of the Must-Take Space, and (B) to the extent any of the foregoing conditions are caused by or resulting from any act or omission of Tenant or any of Tenant's contractors, employees, agents, customers or invitees, including, without limitation, any work performed by or on behalf of Tenant in the Must-Take Space or the original Premises. Landlord shall complete and deliver to Tenant a survey of the HVAC Units prior the Must-Take Commencement Date, which survey shall identify the HVAC Units serving the Must-Take Space, the condition of such HVAC Units and the age of such HVAC Units. Prior to the Must-Take Commencement Date, subject to delays caused by Force Majeure or Tenant Delay, Landlord, at Landlord’s sole cost and expense, shall replace, at Landlord’s sole cost and expense (without pass through to Tenant as an Operating Expense or otherwise), any HVAC Unit serving the Must-Take Space that is more than fifteen (15) years old as of the date that Landlord delivers the Must-Take Space to Tenant.

(d) Promptly after giving Landlord’s Notice, Landlord shall prepare a memorandum confirming the specific dates, amounts and terms of the lease of the subject Must-Take Space in accordance with the terms and conditions of this Must-Take Expansion, in the form of an amendment to the Lease, and Tenant shall execute such amendment within ten (10) business days after Landlord and Tenant agree to the form of the proposed amendment and Landlord shall execute it promptly after Tenant. Notwithstanding any of the foregoing to the contrary, the failure of Landlord to prepare such amendment or of either party to execute an amendment shall not affect the validity and effectiveness of the lease of the Must-Take Space in accordance with the terms and conditions of this Must-Take Expansion.

SECTION 5. OPTION TO EXTEND.

(a) Landlord hereby grants Tenant a single option to extend the Term of the Lease for an additional period of five (5) years (such period may be referred to as the "Option Term"), as to the entire Premises as it then exists, upon and subject to the terms and conditions of this Section (the "Option To Extend"), and provided that at the time of exercise of such option (and each Option, if more than one Option is granted): (i) Tenant or a Permitted Transferee which has satisfied the requirements of Sections 10.01 and 10.05 of the Lease must be conducting regular, active, ongoing business in, and be in occupancy (and occupancy by a subtenant, licensee or other party permitted or suffered by Tenant shall not satisfy such condition) of the entire Premises; and (ii) there has been no material adverse change in Tenant's financial position from such position as of the date of execution of the Lease, as certified by Tenant's independent certified public accountants, and as supported by Tenant's certified financial statements, copies of which shall be delivered to Landlord with Tenant's written notice exercising its right hereunder. Without limiting the generality of the foregoing, Landlord

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may reasonably conclude there has been a material adverse change if Tenant's independent certified public accountants do not certify there has been no such change.

(b) Tenant's election (the "Election Notice") to exercise the Option To Extend must be given to Landlord in writing during the period starting twelve (12) months before and ending nine (9) months before the scheduled Expiration Date of the initial Term. If Tenant either fails or elects not to exercise the Option to Extend by not timely giving its Election Notice, then the Option to Extend shall be null and void, including, if more than one Option is granted, the then applicable Option to Extend and all further Options to Extend.

(c) The Option Term (and each Option Term, if more than one Option is granted) shall commence immediately after the expiration of the preceding Term of the Lease. Tenant's leasing of the Premises during the Option Term shall be upon and subject to the same terms and conditions contained in the Lease except that (i) Tenant shall pay the "Option Term Rent", defined and determined in the manner set forth in the immediately following Subsection; (ii) the Security shall be increased to an amount that is the same percentage or proportion of Option Term Rent as the prior amount of Security was in relation to Rent for the Term prior to the Option Term, but in no event shall the Security be decreased; and (iii) Tenant shall accept the Premises in its "as is" condition without any obligation of Landlord to repaint, remodel, repair, improve or alter the Premises or to provide Tenant any allowance therefor, except to the extent tenants leasing space in Comparable Transactions receive an allowance pursuant to the definition of Fair Market Rental Rate defined in Exhibit F hereto, provided, however, Landlord by notice given to Tenant within thirty (30) days after final determination of the Fair Market Rental Rate, may elect to provide, in lieu of such allowance for alterations to the Premises, a rent credit equal to the amount of the allowance that would have otherwise been given, credited toward the rents applicable only to the Premises and due starting after such rent obligation commences. If Tenant timely and properly exercises the Option To Extend, references in the Lease to the Term shall be deemed to mean the preceding Term as extended by the Option Term unless the context clearly requires otherwise.

(d) The Option Term Rent shall mean the sum of the Monthly Base Rent at the Fair Market Rental Rate (as defined in Exhibit F) plus Rent Adjustments and/or certain Operating Expenses (if applicable, based upon a step-up to change the base year or base amount for calculation of Operating Expenses in connection with determination of the Fair Market Rental Rate) plus other charges pursuant to the Lease payable to Landlord. The determination of Fair Market Rental Rate and Option Term Rent shall be made by Landlord, in the good faith exercise of Landlord's business judgment. Within forty-five (45) days after Tenant's exercise of the Option To Extend, Landlord shall notify Tenant of Landlord's determination of the Fair Market Rental Rate and Option Term Rent for the Premises. Tenant may, within fifteen (15) days after receipt thereof, deliver to Landlord a written notice either: (i) accepting Landlord's determination, in which case the extension shall be effective and binding (subject to Subsection (f) below) at the accepted rate; or (ii) setting forth Tenant's good faith estimate, in which case Landlord and Tenant will promptly confer and attempt to agree upon the Fair Market Rental Rate and Option Term Rent. Tenant's failure to timely deliver such notice within such fifteen (15) day period shall be deemed its cancellation of the Option. In the event Tenant has delivered notice setting forth Tenant’s different estimate, but no agreement in writing between Tenant and Landlord on Fair Market Rental Rate and Option Term Rent is reached within thirty (30) days after Landlord's receipt of Tenant's estimate, the Fair Market Rental Rate shall be determined in accordance with the terms of Exhibit F. Notwithstanding any of the foregoing to the contrary, at no time during the Option Term shall the Option Term Rent be less than the “Preceding Rent” (defined below). The Preceding Rent shall mean the sum of the Monthly Base Rent payable by Tenant under this Lease calculated at the rate applicable for the last full month of the Term preceding the Option Term plus the Rent Adjustments payable by Tenant under the Lease (if applicable, using the base year for calculation of Base Operating Expenses applicable for the last full month of the Term preceding the Option Term), plus other charges pursuant to the Lease payable to Landlord. To the extent that Tenant pays directly the utility or service provider for utilities or services which Tenant is to obtain directly pursuant to the Lease, Tenant shall continue to pay such amounts, but such amounts shall not be counted as part of the Preceding Rent or the Fair Market Rental Rate as used herein. Further, in the event that Landlord notifies Tenant that the Option Term Rent shall equal the Preceding Rent, such determination shall be conclusive and binding to set the Preceding Rent as the Option Term Rent for the Option Term, Tenant shall not be entitled to dispute or contest such determination, and the extension shall be effective and binding (subject to Subsection (f) below).

(e) Promptly after final determination of the Fair Market Rental Rate, Landlord shall prepare a memorandum confirming the specific dates, amounts and terms of the extension for the Option Term in accordance with the terms and conditions of this Option to Extend, in the form of an amendment to the Lease, and Tenant shall execute such amendment within five (5) business days after Landlord and Tenant agree to the form of the proposed amendment and Landlord shall execute it promptly after Tenant. Notwithstanding any of the foregoing to the contrary, the failure of Landlord to prepare such amendment or of either party to execute an amendment shall not affect the validity and effectiveness of the extension for the Option Term in accordance with the terms and conditions of this Option to Extend.

(f) Upon the occurrence of any of the following events, Landlord shall have the option, exercisable at any time prior to commencement of the Option Term, to terminate all of the provisions of this Section with

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respect to the Option to Extend, whereupon any prior or subsequent exercise of this Option to Extend shall be of no force or effect:

(i) Tenant's failure to timely exercise or timely to perform the Option to Extend in strict accordance with the provisions of this Section.

(ii) The existence at the time Tenant exercises the Option to Extend or at the commencement of the Option Term of a Default on the part of Tenant under the Lease or of any state of facts which with the passage of time or the giving of notice, or both, would constitute such a Default.

(iii) Tenant's third Default under the Lease prior to the commencement of the Option Term, notwithstanding that all such Defaults may subsequently be cured.

(g) Without limiting the generality of any provision of the Lease, time shall be of the essence with respect to all of the provisions of this Section.

(h) This Option to Extend is personal to Genomic, and may not be used by, and shall not be transferable or assignable (voluntarily or involuntarily) to any person or entity other than a Permitted Transferee which is an assignee of the Lease and which has satisfied the requirements of Sections 10.01 and 10.05 of this Lease, and such Permitted Transferee may exercise the right without Tenant joining in or consenting to such exercise, and notwithstanding anything to the contrary, Tenant shall remain liable for all obligations under the Lease, including those resulting from any such exercise with the same force and effect as if Tenant had joined in such exercise.

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Exhibit 10.12

FOURTH AMENDMENT TO LEASE

This Fourth Amendment to Lease (“Amendment”) is entered into, and dated for reference purposes, as of October 4, 2019 (the “Execution Date”) by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation (“Landlord”), and GENOMIC HEALTH, INC., a Delaware corporation (“Tenant”), with reference to the following facts (“Recitals”):

A. Landlord and Tenant are the parties to that certain lease which is comprised of the following (collectively, the “Existing Lease”): that certain Lease, dated September 23, 2005, entered into by and between Tenant, as tenant and Landlord, as landlord (“Original Lease”); as amended by that certain First Amendment to Lease, dated September 5, 2006, and that certain Second Amendment to Lease, dated November 30, 2010 (the “Second Amendment”) and that certain Third Amendment to Lease, dated as of November 11, 2015 (the “Third Amendment”), for certain “Premises” described therein containing approximately 47,900 rentable square feet of the Building (located at 301 and 351 Penobscot Drive, Redwood City, California), all as more particularly described in the Existing Lease.

B. Landlord and Tenant desire to provide for (i) the extension of the Term of the Existing Lease; and (ii) other amendments of the Existing Lease as more particularly set forth below.

NOW, THEREFORE, in consideration of the foregoing, and of the mutual covenants set forth herein and of other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

SECTION 1. SCOPE OF AMENDMENT; DEFINED TERMS. Except as expressly provided in this Amendment, the Existing Lease shall remain in full force and effect. Should any inconsistency arise between this Amendment and the Existing Lease as to the specific matters which are the subject of this Amendment, the terms and conditions of this Amendment shall control. All capitalized terms used in this Amendment and not defined herein shall have the meanings set forth in the Existing Lease unless the context clearly requires otherwise; provided, however, that the term “Lease” as used herein and, from and after the Execution Date, in the Existing Lease shall refer to the Existing Lease as modified by this Amendment.

SECTION 2. EXTENSION OF TERM. Landlord and Tenant acknowledge and agree that, notwithstanding any provision of the Existing Lease to the contrary, the current Term pursuant to the Existing Lease will expire on March 31, 2023, and that the Term of the Lease is hereby extended for the period of seventy-two (72) months (the “Third Extended Term”) commencing on April 1, 2023 (the “Third Extension Commencement Date”) and expiring March 31, 2029 (hereafter, the “Expiration Date” in lieu of the date provided in the Existing Lease), unless sooner terminated or extended pursuant to the terms of the Lease. Landlord and Tenant acknowledge and agree that the Option to Extend set forth in Section 4 of Rider 2 to the Existing Lease, as amended by Section 2 of the Second Amendment and Section 2 of the Third Amendment, shall apply to the Third Extended Term, except that (i) the phrase “Third Extended Term” is inserted in place of reference to the “Second Extended Term” in the Option to Extend, and amended, and (ii) the Expiration Date shall mean the Expiration Date of the Third Extended Term.

SECTION 3. MONTHLY BASE RENT FOR THIRD EXTENDED TERM. Notwithstanding any provision of the Existing Lease to the contrary, commencing on the Third Extension Commencement Date and continuing through the Expiration Date of the Third Extended Term, the amount of Monthly Base Rent payable by Tenant for the Premises shall be as follows:

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Period from/to	Monthly Base Rent
April 1, 2023 to March 31, 2024	$236,147.00
April 1, 2024 to March 31, 2025	$243,231.41
April 1, 2025 to March 31, 2026	$250,528.35
April 1, 2026 to March 31, 2027	$258,044.20
April 1, 2027 to March 31, 2028	$265,785.53
April 1, 2028 to March 31, 2029	$273,759.10

SECTION 4. TENANT’S SHARE. During the Third Extended Term, Tenant shall pay all additional Rent payable under the Lease, including Tenant’s Share of Operating Expenses. Notwithstanding any provisions of the Existing Lease to the contrary, Tenant’s Building Share shall continue to be 100.00%, Tenant’s Phase Share shall continue to be 20.3293%, and Tenant’s Project Share shall continue to be 8.9126%.

SECTION 5. “AS IS” CONDITION.

(a) Condition of Premises. Notwithstanding any provision of the Existing Lease to the contrary, Tenant hereby leases for the Third Extended Term and accepts the Premises in its “AS IS” condition existing on the Execution Date, without any express or implied representations or warranties of any kind by Landlord, its brokers, manager or agents, or the employees of any of them regarding the Premises; and Landlord shall not have any obligation to construct or install any tenant improvements or alterations or to pay for any such construction or installation, except as expressly set forth in this Section 5.

(b) Tenant Work Generally. Landlord and Tenant acknowledge and agree that notwithstanding any provisions of the Existing Lease to the contrary: (a) Tenant may desire to do certain alterations, additions or improvements in connection with this extension of the Term, and for purposes of this Amendment any such work is referred to as “Tenant Work”; (b) all Tenant Work, if any, shall be done subject to and in compliance with this Amendment, and except to the extent modified by or inconsistent with the express provisions of this Amendment, pursuant to the provisions of Article Nine of the Original Lease applicable to such Tenant Alterations; (c) without limiting the generality of any provisions of Article Nine, Tenant’s selection of Tenant’s space planner and/or architect (“Tenant's Architect”) and Tenant’s selection of a general contractor shall be subject to Landlord’s prior written approval, which approval shall not be unreasonably withheld, conditioned or delayed; (d) all plans and specifications prepared by Tenant’s space planner or architect shall be subject to review by Landlord’s architect and to Landlord’s prior written approval, which shall not be unreasonably withheld, conditioned or delayed beyond ten (10) business days with respect to any initial submissions, change orders, and any revisions thereto; (e) Tenant shall retain one or more engineers reasonably satisfactory to Landlord and licensed by the State of California to prepare structural, mechanical, and electrical working drawings and specifications for all Premises improvements, not included in, or requiring any changes to the HVAC, fire and/or life safety, mechanical and electrical work; (f) if the Tenant Work does not exceed the amount of the Allowance (as defined below), Tenant shall not be required to obtain a completion and lien indemnity bond for the Tenant Work; (g) such work, including all design, plan review, obtaining all approvals and permits, and construction shall be at Tenant's sole cost and expense (subject to reimbursement to the extent of the Allowance), including delivery to Landlord of plans and specifications of such Tenant Work (including an as-built mylar and digitized (to the extent available) set of as-built plans and specifications upon completion) to the extent such work is more than recarpeting and/or repainting, and (h) Tenant shall pay Landlord a fee (“Construction Monitoring Fee”) for monitoring such design, construction and work by Tenant equal to two percent (2%) of the Allowance, which fee shall be paid by Landlord applying two percent (2%) of the Allowance in payment thereof.

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(c) Design & Construction Responsibility for any Tenant Work. Tenant shall be responsible for the suitability for the Tenant's needs and business of the design and function of all Tenant Work and for its construction in compliance with (i) all laws, rules, orders, ordinances, directions, regulations and requirements of all governmental authorities, agencies, offices, departments, bureaus and boards having jurisdiction thereof, (ii) all rules, orders, directions, regulations and requirements of the pacific Fire Rating Bureau, or of any similar insurance body or bodies, and (iii) all reasonable rules and regulations of Landlord which have been provided to Tenant in writing (collectively, referred to herein as “Laws”). Without limiting the generality of the foregoing, Landlord and Tenant acknowledge and agree that (a) such Laws include all building codes and regulations, Title 24, and the Americans with Disabilities Act of 1990 (42 U.S.C. Sec. 12101 et. seq.) and regulations and guidelines promulgated thereunder, as all of the same may be amended and supplemented from time to time (collectively referred to herein as the “ADA”); and (b) in the event that any work by Tenant triggers any upgrades or modifications of existing improvements in the Premises required to comply with Law, Tenant shall also be responsible for such upgrades and modifications, at Tenant’s sole cost and expense (subject to reimbursement by Landlord to the extent of the Allowance). Tenant, through Tenant's Architect, shall prepare all architectural plans and specifications, and engineering plans and specifications, for the real property improvements to be constructed by Tenant in the Premises in sufficient detail to be submitted to Landlord for approval, to the extent required pursuant to Article Nine of the Existing Lease and this Amendment, and to be submitted by Tenant for governmental approvals and building permits and to serve as the detailed construction drawings and specifications for the contractor, and shall include, among other things, all partitions, doors, heating, ventilating and air conditioning installation and distribution, ceiling systems, light fixtures, plumbing installations, electrical installations and outlets, telephone installations and outlets, any other installations required by Tenant, fire and life-safety systems, wall finishes and floor coverings, whether to be newly installed or requiring changes from the as-is condition of the Premises as of the date of execution of the Existing Lease. Tenant shall be responsible for the oversight, supervision and construction of all Tenant Work in compliance with this Existing Lease, including compliance with all Laws.

(d) Allowance: Amount; Reimbursable Costs & Payment. Allowance means an amount up to a maximum of One Million Fifty-Three Thousand Eight Hundred and 00/100 Dollars ($1,053,800.00) to reimburse Tenant for the actual costs of design, engineering, plan review, obtaining all approvals and permits, and construction of Tenant Work in the Premises (including the Construction Monitoring Fee), and shall be payable as provided below. In no event shall the Allowance be used to reimburse Tenant for Tenant’s FF&E (as such term is defined herein). For purposes of this Amendment, “Tenant’s FF&E” shall mean Tenant’s furniture, furnishings, telephone systems, computer systems, equipment, any other personal property or fixtures, and installation thereof, including without limitation, "Tenant’s Personal Property" described on Exhibit “G” to the Original Lease. The Allowance shall be paid to Tenant within thirty (30) days after the later of final completion of the Tenant Work and Landlord's receipt of (i) a certificate of completion prepared by Tenant’s Architect, (ii) final as-built plans and specifications pursuant to this Amendment, (iii) full, final, unconditional lien releases, and (iv) reasonable substantiation of costs incurred by Tenant with respect to the Tenant Work. Tenant must prior to the date that is thirty-six (36) months from the Execution Date of this Amendment submit written application with the items required above for disbursement or reimbursement for any reimbursable costs out of the Allowance, and to the extent of any funds for which application has not been made prior to that date or if and to the extent that the reimbursable costs of the Tenant Work are less than the amount of the Allowance, then any balance remaining thereafter shall be retained by Landlord as its sole property and Landlord shall have no obligation or liability to Tenant with respect to such excess.

SECTION 6. TIME OF ESSENCE. Without limiting the generality of any other provision of the Existing Lease, time is of the essence to each and every term and condition of this Amendment.

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identified below, Tenant has not dealt with any real estate broker, sales person, or finder in connection with this Amendment, and no such person initiated or participated in the negotiation of this Amendment. Except for Tenant’s Broker and Landlord’s Broker identified below, Landlord has not dealt with any real estate broker, sales person, or finder in connection with this Amendment, and no such person initiated or participated in the negotiation of this Amendment. Each party hereby indemnifies and agrees to protect, defend and hold the other party harmless from and against all claims, losses, damages, liability, costs and expenses (including, without limitation, attorneys’ fees and expenses) by virtue of any broker, agent or other person claiming a commission or other form of compensation by virtue of alleged representation of, or dealings or discussions with, the indemnifying party with respect to the subject matter of this Amendment, except for Landlord’s Broker and Tenant’s Broker. Tenant is not obligated to pay or fund any amount to Landlord’s Broker, and Landlord hereby agrees to pay such commission, if any, to which Landlord’s Broker is entitled in connection with the subject matter of this Amendment pursuant to Landlord’s separate written agreement with Landlord’s Broker (which may be shared with Tenant’s Broker to the extent that Tenant’s Broker and Landlord’s Broker have an agreement between themselves to share in such commission). The provisions of this Section shall survive the expiration or earlier termination of the Lease.

SECTION 8. ATTORNEYS’ FEES. Each party to this Amendment shall bear its own attorneys’ fees and costs incurred in connection with the discussions preceding, negotiations for and documentation of this Amendment. Section 11.03 of the Lease is hereby deleted in its entirety and of no further force and effect.

SECTION 9. EFFECT OF HEADINGS; RECITALS: EXHIBITS. The titles or headings of the various parts or sections hereof are intended solely for convenience and are not intended and shall not be deemed to or in any way be used to modify, explain or place any construction upon any of the provisions of this Amendment. Any and all Recitals set forth at the beginning of this Amendment are true and correct and constitute a part of this Amendment as if they had been set forth as covenants herein. Exhibits, schedules, plats and riders hereto which are referred to herein are a part of this Amendment.

SECTION 10. ENTIRE AGREEMENT; AMENDMENT. This Amendment taken together with the Existing Lease, together with all exhibits, schedules, riders and addenda to each, constitutes the full and complete agreement and understanding between the parties hereto and shall supersede all prior communications, representations, understandings or agreements, if any, whether oral or written, concerning the subject matter contained in this Amendment and the Existing Lease, as so amended, and no provision of the Lease as so amended may be modified, amended, waived or discharged, in whole or in part, except by a written instrument executed by all of the parties hereto.

SECTION 11. OFAC. Landlord advises Tenant hereby that the purpose of this Section is to provide to the Landlord information and assurances to enable Landlord to comply with the law relating to OFAC.

If, in connection with the Lease, there is one or more Guarantors of Tenant’s obligations under the Lease, then Tenant further represents, warrants and covenants either that (i) any such Guarantor is a Regulated Entity or (ii) neither Guarantor nor any person or entity that directly or indirectly (a) controls such Guarantor or (b) has an ownership interest in such Guarantor of twenty-five percent (25%) or more, appears on the OFAC List.

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Tenant covenants that during the term of the Lease to provide to Landlord information reasonably requested by Landlord including without limitation, organizational structural charts and organizational documents which Landlord may deem to be necessary (“Tenant OFAC Information”) in order for Landlord to confirm Tenant’s continuing compliance with the provisions of this Section. Tenant represents and warrants that the Tenant OFAC Information it has provided or to be provided to Landlord or Landlord’s Broker in connection with the execution of this Amendment is true and complete.

SECTION 12. RATIFICATION. Tenant represents to Landlord that: (a) the Existing Lease is in full force and effect and has not been modified except as provided by this Amendment; (b) as of the Execution Date, to Tenant’s current, actual knowledge, there are no uncured defaults or unfulfilled obligations on the part of Landlord or Tenant; and (c) Tenant is currently in possession of the entire Premises as of the Execution Date, and neither the Premises, nor any part thereof, is occupied by any subtenant or other party other than Tenant.

SECTION 13. AUTHORITY. Each party represents and warrants to the other that it has full authority and power to enter into and perform its obligations under this Amendment, that the person executing this Amendment is fully empowered to do so, and that no consent or authorization is necessary from any third party. Landlord may request that Tenant provide Landlord evidence of Tenant’s authority.

SECTION 14. DISCLOSURE REGARDING CERTIFIED ACCESS SPECIALIST. Pursuant to California Civil Code Section 1938, Landlord hereby notifies Tenant that as of the date of this Amendment, the Premises have not undergone inspection by a “Certified Access Specialist” (“CASp”) to determine whether the Premises meet all applicable construction-related accessibility standards under California Civil Code Section 55.53. Landlord hereby discloses pursuant to California Civil Code Section 1938 as follows: “A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the premises.” Landlord and Tenant hereby acknowledge and agree that in the event that Tenant elects to perform a CASp inspection of the Premises hereunder (the “Inspection”), such Inspection shall be (a) performed at Tenant’s sole cost and expense, (b) limited to the Premises and (c) performed by a CASp who has been approved or designated by Landlord prior to the Inspection. Any Inspection must be performed in a manner which minimizes the disruption of business activities in the Building, and at a time reasonably approved by Landlord. Landlord reserves the right to be present during the Inspection. Tenant agrees to: (i) promptly provide to Landlord a copy of the report or certification prepared by the CASp inspector upon request (the “Report”), and (ii) keep the information contained in the Report confidential, except to the extent required by Law, or to the extent disclosure is needed in order to complete any necessary modifications or improvements required to comply with all applicable accessibility standards under state or federal Law, as well as any other repairs, upgrades, improvements, modifications or alterations required by the Report or that may be otherwise required to comply with applicable Laws or accessibility requirements (the “Access Improvements”). If Tenant performs and Inspection, Tenant shall be solely responsible for the cost of Access Improvements to the Premises or the Building necessary to correct any such violations of construction-related accessibility standards identified by such Inspection as required by Law, which Access Improvements may, at Landlord’s option, be performed in whole or in part by Landlord at Tenant’s expense, payable as Additional Rent within ten (10) days following Landlord’s demand.

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SECTION 15. NO CANNABIS. Tenant shall not bring upon the Premises or any portion of the [Project] or use the Premises or permit the Premises or any portion thereof to be used for the growing, manufacturing, administration, distribution (including without limitation, any retail sales), possession, use or consumption of any cannabis, marijuana or cannabinoid product or compound, regardless of the legality or illegality of the same.

SECTION 16. COUNTERPARTS. This Amendment may be executed in duplicates or counterparts, or both, and such duplicates or counterparts together shall constitute but one original of the Amendment, and the signature of any party to any counterpart shall be deemed a signature to, and may be appended to, any other counterpart. Each duplicate and counterpart shall be equally admissible in evidence, and each original shall fully bind each party who has executed it.

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first set forth above.


TENANT:	GENOMIC HEALTH, INC.,
	a Delaware corporation

	By:	/s/ Kimberly J. Popovits

	Print Name:	Kimberly J. Popovits

	Title:	President and Chief Executive Officer
	(Chairman of Board, President or Vice President)

	By:	/s/ Fredrick Pla

	Print Name:	Fredrick Pla

	Title:	Chief Operating Officer
	(Secretary, Assistant Secretary, CFO or Assistant Treasurer)


LANDLORD:	METROPOLITAN LIFE INSURANCE COMPANY,
	a New York corporation

	By:	MetLife Investment Management, LLC,
		a Delaware limited liability company,
		its investment manager

		By:	/s/ Leland Low
		Print name:	Leland Low
		Its:	Authorized Signatory and Director

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Exhibit 10.13

THIRD AMENDMENT TO LEASE

This Third Amendment to Lease (“Amendment”) is entered into, and dated for reference purposes, as of October 4, 2019 (the “Execution Date”) by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation (“Landlord”), and GENOMIC HEALTH, INC., a Delaware corporation (“Tenant”), with reference to the following facts (“Recitals”):

A. Landlord and Tenant are the parties to that certain lease which is comprised of the following (collectively, the “Existing Lease”): that certain Lease, dated January 4, 2007, entered into by and between Tenant, as tenant and Landlord, as landlord (“Original Lease”); as amended by that certain First Amendment to Lease, dated November 30, 2010 (the “First Amendment”), and that certain Second Amendment to Lease, dated November 11, 2015 (the “Second Amendment”), for certain “Premises” described therein containing approximately 47,186 rentable square feet of the Building (located at 101 Galveston Drive, Redwood City, California), all as more particularly described in the Existing Lease.

B. Landlord and Tenant desire to provide for (i) the extension of the Term of the Existing Lease; and (ii) other amendments of the Existing Lease as more particularly set forth below.

SECTION 2. EXTENSION OF TERM. Landlord and Tenant acknowledge and agree that, notwithstanding any provision of the Existing Lease to the contrary, the current Term pursuant to the Existing Lease will expire on March 31, 2021, and that the Term of the Lease is hereby extended for the period of eighty-four (84) months (the “Third Extended Term”) commencing on April 1, 2021 (the “Third Extension Commencement Date”) and expiring March 31, 2028 (hereafter, the “Expiration Date” in lieu of the date provided in the Existing Lease), unless sooner terminated or extended pursuant to the terms of the Lease. Landlord and Tenant acknowledge and agree that the Option to Extend set forth in Section 4 of Rider 2 to the Original Lease, as amended by Section 2 of the First Amendment and Section 2 of the Second Amendment, shall apply to the Third Extended Term, except that (i) the phrase “Third Extended Term” is inserted in place of reference to the “Second Extended Term” in the Option to Extend, as amended, and (ii) the Expiration Date shall mean the Expiration Date of the Third Extended Term.

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Period from/to	Monthly Base Rent
April 1, 2021 to March 31, 2021	$219,414.90
April 1, 2022 to March 31, 2023	$225,997.35
April 1, 2023 to March 31, 2024	$232,777.27
April 1, 2024 to March 31, 2025	$239,760.59
April 1, 2025 to March 31, 2026	$246,953.41
April 1, 2026 to March 31, 2027	$254,362.01
April 1, 2027 to March 31, 2028	$261,992.87

SECTION 4. TENANT’S SHARE; BASE YEAR. During the Third Extended Term, Tenant shall pay all additional Rent payable under the Lease, including Tenant’s Share of Operating Expenses. Notwithstanding any provisions of the Existing Lease to the contrary, Tenant’s Building Share shall continue to be 100.00%, Tenant’s Phase Share shall continue to be 20.0263%, and Tenant’s Project Share shall continue to be 8.7797%.

SECTION 5. “AS IS” CONDITION.

(b) Tenant Work Generally. Landlord and Tenant acknowledge and agree that notwithstanding any provisions of the Existing Lease to the contrary: (a) Tenant may desire to do certain alterations, additions or improvements in connection with this extension of the Term, and for purposes of this Amendment any such work is referred to as “Tenant Work”; (b) all Tenant Work, if any, shall be done subject to and in compliance with this Amendment, and except to the extent modified by or inconsistent with the express provisions of this Amendment, pursuant to the provisions of Article Nine of the Original Lease applicable to such Tenant Alterations; (c) without limiting the generality of any provisions of Article Nine, Tenant’s selection of Tenant’s space planner and/or architect ("Tenant's Architect") and Tenant’s selection of a general contractor shall be subject to Landlord’s prior written approval, which approval shall not be unreasonably withheld, conditioned or delayed; (d) all plans and specifications prepared by Tenant’s space planner or architect shall be subject to review by Landlord’s architect and to Landlord’s prior written approval, which shall not be unreasonably withheld, conditioned or delayed beyond ten (10) business days with respect to any initial submissions, change orders, and any revisions thereto; (e) Tenant shall retain one or more engineers reasonably satisfactory to Landlord and licensed by the State of California to prepare structural, mechanical, and electrical working drawings and specifications for all Premises improvements, not included in, or requiring any changes to the HVAC, fire and/or life safety, mechanical and electrical work; (f) if the Tenant Work does not exceed the amount of the Allowance (as defined below), Tenant shall not be required to obtain a completion and lien indemnity bond for the Tenant Work; (g) such work, including all design, plan review, obtaining all approvals and permits, and construction shall be at Tenant's sole cost and expense (subject to reimbursement by Landlord to the extent of the Allowance), including delivery to Landlord of plans and specifications of such Tenant Work (including an as-built mylar and digitized (to the extent available) set of as-built plans and specifications upon completion) to the extent such work is more than recarpeting and/or repainting, and (h) Tenant shall pay Landlord a fee (“Construction Monitoring Fee”) for monitoring such design, construction and work

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by Tenant equal to two percent (2%) of the Allowance, which fee shall be paid by Landlord applying two percent (2%) of the Allowance in payment thereof.

(c) Design & Construction Responsibility for any Tenant Work. Tenant shall be responsible for the suitability for the Tenant's needs and business of the design and function of all Tenant Work and for its construction in compliance with (i) all laws, rules, orders, ordinances, directions, regulations and requirements of all governmental authorities, agencies, offices, departments, bureaus and boards having jurisdiction thereof, (ii) all rules, orders, directions, regulations and requirements of the pacific Fire Rating Bureau, or of any similar insurance body or bodies, and (iii) all reasonable rules and regulations of Landlord which have been provided to Tenant in writing (collectively, referred to herein as “Laws”). Without limiting the generality of the foregoing, Landlord and Tenant acknowledge and agree that (a) such Laws include all building codes and regulations, Title 24, and the Americans with Disabilities Act of 1990 (42 U.S.C. Sec. 12101 et. seq.) and regulations and guidelines promulgated thereunder, as all of the same may be amended and supplemented from time to time (collectively referred to herein as the “ADA”); and (b) in the event that any work by Tenant triggers any upgrades or modifications of existing improvements in the Premises required to comply with Law, Tenant shall also be responsible for such upgrades and modifications, at Tenant’s sole cost and expense (subject to reimbursement to the extent of the Allowance). Tenant, through Tenant's Architect, shall prepare all architectural plans and specifications, and engineering plans and specifications, for the real property improvements to be constructed by Tenant in the Premises in sufficient detail to be submitted to Landlord for approval, to the extent required pursuant to Article Nine of the Existing Lease and this Amendment, and to be submitted by Tenant for governmental approvals and building permits and to serve as the detailed construction drawings and specifications for the contractor, and shall include, among other things, all partitions, doors, heating, ventilating and air conditioning installation and distribution, ceiling systems, light fixtures, plumbing installations, electrical installations and outlets, telephone installations and outlets, any other installations required by Tenant, fire and life-safety systems, wall finishes and floor coverings, whether to be newly installed or requiring changes from the as-is condition of the Premises as of the date of execution of the Existing Lease. Tenant shall be responsible for the oversight, supervision and construction of all Tenant Work in compliance with this Existing Lease, including compliance with all Laws.

(d) Allowance: Amount; Reimbursable Costs & Payment. Allowance means an amount up to a maximum of One Million Thirty-Eighty Thousand Ninety-Two and 00/100 Dollars ($1,038,092.00) to reimburse Tenant for the actual costs of design, engineering, plan review, obtaining all approvals and permits, and construction of Tenant Work in the Premises (including the Construction Monitoring Fee), and shall be payable as provided below. In no event shall the Allowance be used to reimburse Tenant for Tenant’s FF&E (as such term is defined herein). For purposes of this Amendment, “Tenant’s FF&E” shall mean Tenant’s furniture, furnishings, telephone systems, computer systems, equipment, any other personal property or fixtures, and installation thereof, including without limitation, “Tenant’s Personal Property” described on Exhibit “G” to the Original Lease. The Allowance shall be paid to Tenant within thirty (30) days after the later of final completion of the Tenant Work and Landlord's receipt of (i) a certificate of completion prepared by Tenant’s Architect, (ii) final as-built plans and specifications pursuant to this Amendment, (iii) full, final, unconditional lien releases, and (iv) reasonable substantiation of costs incurred by Tenant with respect to the Tenant Work. Tenant must prior to the date that is thirty-six (36) months from the Execution Date of this Amendment submit written application with the items required above for disbursement or reimbursement for any reimbursable costs out of the Allowance, and to the extent of any funds for which application has not been made prior to that date or if and to the extent that the reimbursable costs of the Tenant Work are less than the amount of the Allowance, then any balance remaining thereafter shall be retained by Landlord as its sole property and Landlord shall have no obligation or liability to Tenant with respect to such excess.

SECTION 6. TIME OF ESSENCE. Without limiting the generality of any other provision of the Existing Lease, time is of the essence to each and every term and condition of this Amendment.

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SECTION 7. BROKERS. Notwithstanding any other provision of the Existing Lease to the contrary, Tenant represents that in connection with this Amendment it is represented by Kidder Mathews (“Tenant’s Broker”) and Landlord represents that in connection with this Amendment it is represented by Newmark Cornish & Carey (“Landlord’s Broker”). Except for Tenant’s Broker and Landlord’s Broker identified below, Tenant has not dealt with any real estate broker, sales person, or finder in connection with this Amendment, and no such person initiated or participated in the negotiation of this Amendment. Except for Tenant’s Broker and Landlord’s Broker identified below, Landlord has not dealt with any real estate broker, sales person, or finder in connection with this Amendment, and no such person initiated or participated in the negotiation of this Amendment. Each party hereby indemnifies and agrees to protect, defend and hold the other party harmless from and against all claims, losses, damages, liability, costs and expenses (including, without limitation, attorneys’ fees and expenses) by virtue of any broker, agent or other person claiming a commission or other form of compensation by virtue of alleged representation of, or dealings or discussions with, the indemnifying party with respect to the subject matter of this Amendment, except for Landlord’s Broker and Tenant’s Broker. Tenant is not obligated to pay or fund any amount to Landlord’s Broker, and Landlord hereby agrees to pay such commission, if any, to which Landlord’s Broker is entitled in connection with the subject matter of this Amendment pursuant to Landlord’s separate written agreement with Landlord’s Broker (which may be shared with Tenant’s Broker to the extent that Tenant’s Broker and Landlord’s Broker have an agreement between themselves to share in such commission). The provisions of this Section shall survive the expiration or earlier termination of the Lease.

SECTION 11. OFAC. Landlord advises Tenant hereby that the purpose of this Section is to provide to the Landlord information and assurances to enable Landlord to comply with the law relating to OFAC.

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Guarantor or (b) has an ownership interest in such Guarantor of twenty-five percent (25%) or more, appears on the OFAC List.

SECTION 12. RATIFICATION. Tenant represents to Landlord that: (a) the Existing Lease is in full force and effect and has not been modified except as provided by this Amendment; (b) as of the Execution Date, there are no uncured defaults or unfulfilled obligations on the part of Landlord or Tenant; and (c) Tenant is currently in possession of the entire Premises as of the Execution Date, and neither the Premises, nor any part thereof, is occupied by any subtenant or other party other than Tenant.

SECTION 14. DISCLOSURE REGARDING CERTIFIED ACCESS SPECIALIST. Pursuant to California Civil Code Section 1938, Landlord hereby notifies Tenant that as of the date of this Amendment, the Premises have not undergone inspection by a “Certified Access Specialist” (“CASp”) to determine whether the Premises meet all applicable construction-related accessibility standards under California Civil Code Section 55.53. Landlord hereby discloses pursuant to California Civil Code Section 1938 as follows: “A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the premises.” Landlord and Tenant hereby acknowledge and agree that in the event that Tenant elects to perform a CASp inspection of the Premises hereunder (the “Inspection”), such Inspection shall be (a) performed at Tenant’s sole cost and expense, (b) limited to the Premises and (c) performed by a CASp who has been approved or designated by Landlord prior to the Inspection. Any Inspection must be performed in a manner which minimizes the disruption of business activities in the Building, and at a time reasonably approved by Landlord. Landlord reserves the right to be present during the Inspection. Tenant agrees to: (i) promptly provide to Landlord a copy of the report or certification prepared by the CASp inspector upon request (the “Report”), and (ii) keep the information contained in the Report confidential, except to the extent required by Law, or to the extent disclosure is needed in order to complete any necessary modifications or improvements required to comply with all applicable accessibility standards under state or federal Law, as well as any other repairs, upgrades, improvements, modifications or alterations required by the Report or that may be otherwise required to comply with applicable Laws or accessibility requirements (the “Access Improvements”). If Tenant performs an Inspection, Tenant shall be solely responsible for the cost of Access Improvements to the Premises or the Building necessary to correct any such violations of construction-related accessibility standards identified by such Inspection as required by Law, which Access Improvements may, at Landlord’s option, be performed in whole or in part by Landlord at Tenant’s expense, payable as Additional Rent within ten (10) days following Landlord’s demand.

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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first set forth above.

TENANT:	GENOMIC HEALTH, INC.,
	a Delaware corporation

	By:		/s/ Kimberly J. Popovits

	Print Name:		Kimberly J. Popovits

	Title:		President and Chief Executive Officer
	(Chairman of Board, President or Vice President)

	By:		/s/ Fredrick Pla

	Print Name:		Fredrick Pla

	Title:		Chief Operating Officer
	(Secretary, Assistant Secretary, CFO or Assistant Treasurer)

LANDLORD:	METROPOLITAN LIFE INSURANCE COMPANY,
	a New York corporation

	By:	MetLife Investment Management, LLC,
		a Delaware limited liability company,
		its investment manager

		By:		/s/ Leland Low
		Print name:		Leland Low
		Its:		Authorized Signatory and Director

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Exhibit 10.14

THIRD AMENDMENT TO LEASE

A. Landlord and Tenant are the parties to that certain lease which is comprised of the following (collectively, the “Existing Lease”): that certain Lease, dated August 30, 2013, entered into by and between Tenant, as tenant and Landlord, as landlord (“Original Lease”); as amended by that certain First Amendment to Lease, dated June 30, 2014 and that certain Second Amendment to Lease (“Second Amendment”), dated as of November 11, 2015, for certain “Premises” described therein containing approximately 23,880 rentable square feet of the Building (located at 701 Galveston Drive, Redwood City, California), all as more particularly described in the Existing Lease.

B. Landlord and Tenant desire to provide for (i) the extension of the Term of the Existing Lease; and (ii) other amendments of the Existing Lease as more particularly set forth below.

SECTION 2. EXTENSION OF TERM. Landlord and Tenant acknowledge and agree that, notwithstanding any provision of the Existing Lease to the contrary, the current Term pursuant to the Existing Lease will expire on March 31, 2023, and that the Term of the Lease is hereby extended for the period of seventy-two (72) months (the “Second Extended Term”) commencing on April 1, 2023 (the “Second Extension Commencement Date”) and expiring March 31, 2029 (hereafter, the “Expiration Date” in lieu of the date provided in the Existing Lease), unless sooner terminated or extended pursuant to the terms of the Lease. Landlord and Tenant acknowledge and agree that the Option to Extend set forth in Section 6 of Rider 2 to the Original Lease, as amended by Section 2 of the Second Amendment, shall apply to the Second Extended Term except that (i) the phrase “Second Extended Term” is inserted in place of reference to the “Extended Term” in the Option to Extend, as amended, and (ii) the Expiration Date shall mean the Expiration Date of the Second Extended Term.

SECTION 3. MONTHLY BASE RENT FOR SECOND EXTENDED TERM. Notwithstanding any provision of the Existing Lease to the contrary, commencing on the Second Extension Commencement Date and continuing through the Expiration Date of the Second Extended Term, the amount of Monthly Base Rent payable by Tenant for the Premises shall be as follows:

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Period from/to	Monthly Base Rent
April 1, 2023 to March 31, 2024	$117,728.40
April 1, 2024 to March 31, 2025	$121,260.25
April 1, 2025 to March 31, 2026	$124,898.06
April 1, 2026 to March 31, 2027	$128,645.00
April 1, 2027 to March 31, 2028	$132,504.35
April 1, 2028 to March 31, 2029	$136,479.48

SECTION 4. TENANT’S SHARE. During the Second Extended Term, Tenant shall pay all additional Rent payable under the Lease, including Tenant’s Share of Operating Expenses. Notwithstanding any provisions of the Existing Lease to the contrary, Tenant’s Building Share shall continue to be 100.00%, Tenant’s Phase Share shall continue to be 7.91%, and Tenant’s Project Share shall continue to be 4.44%.

SECTION 5. “AS IS” CONDITION.

(a) Condition of Premises. Notwithstanding any provision of the Existing Lease to the contrary, Tenant hereby leases for the Second Extended Term and accepts the Premises in its “AS IS” condition existing on the Execution Date, without any express or implied representations or warranties of any kind by Landlord, its brokers, manager or agents, or the employees of any of them regarding the Premises; and Landlord shall not have any obligation to construct or install any tenant improvements or alterations or to pay for any such construction or installation, except as expressly set forth in this Section 5.

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(d) Allowance: Amount; Reimbursable Costs & Payment. Allowance means an amount up to a maximum of Five Hundred Twenty-Five Thousand Three Hundred Sixty and 00/100 Dollars ($525,360.00) to reimburse Tenant for the actual costs of design, engineering, plan review, obtaining all approvals and permits, and construction of Tenant Work in the Premises (including the Construction Monitoring Fee), and shall be payable as provided below. In no event shall the Allowance be used to reimburse Tenant for Tenant’s FF&E (as such term is defined herein). For purposes of this Amendment, “Tenant’s FF&E” shall mean Tenant’s furniture, furnishings, telephone systems, computer systems, equipment, any other personal property or fixtures, and installation thereof, including without limitation, "Tenant’s Personal Property" described on Exhibit “G” to the Original Lease. The Allowance shall be paid to Tenant within thirty (30) days after the later of final completion of the Tenant Work and Landlord's receipt of (i) a certificate of completion prepared by Tenant’s Architect, (ii) final as-built plans and specifications pursuant to this Amendment, (iii) full, final, unconditional lien releases, and (iv) reasonable substantiation of costs incurred by Tenant with respect to the Tenant Work. Tenant must prior to the date that is thirty-six (36) months from the Execution Date of this Amendment submit written application with the items required above for disbursement or reimbursement for any reimbursable costs out of the Allowance, and to the extent of any funds for which application has not been made prior to that date or if and to the extent that the reimbursable costs of the Tenant Work are less than the amount of the Allowance, then any balance remaining thereafter shall be retained by Landlord as its sole property and Landlord shall have no obligation or liability to Tenant with respect to such excess.

SECTION 6. TIME OF ESSENCE. Without limiting the generality of any other provision of the Existing Lease, time is of the essence to each and every term and condition of this Amendment.

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EFFECT OF HEADINGS; RECITALS: EXHIBITS. The titles or headings of the various parts or sections hereof are intended solely for convenience and are not intended and shall not be deemed to or in any way be used to modify, explain or place any construction upon any of the provisions of this Amendment. Any and all Recitals set forth at the beginning of this Amendment are true and correct and constitute a part of this Amendment as if they had been set forth as covenants herein. Exhibits, schedules, plats and riders hereto which are referred to herein are a part of this Amendment.

SECTION 9. ENTIRE AGREEMENT; AMENDMENT. This Amendment taken together with the Existing Lease, together with all exhibits, schedules, riders and addenda to each, constitutes the full and complete agreement and understanding between the parties hereto and shall supersede all prior communications, representations, understandings or agreements, if any, whether oral or written, concerning the subject matter contained in this Amendment and the Existing Lease, as so amended, and no provision of the Lease as so amended may be modified, amended, waived or discharged, in whole or in part, except by a written instrument executed by all of the parties hereto.

SECTION 10. OFAC. Landlord advises Tenant hereby that the purpose of this Section is to provide to the Landlord information and assurances to enable Landlord to comply with the law relating to OFAC.

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SECTION 11. RATIFICATION. Tenant represents to Landlord that: (a) the Existing Lease is in full force and effect and has not been modified except as provided by this Amendment; (b) as of the Execution Date, to Tenant’s current, actual knowledge, there are no uncured defaults or unfulfilled obligations on the part of Landlord or Tenant; and (c) Tenant is currently in possession of the entire Premises as of the Execution Date, and neither the Premises, nor any part thereof, is occupied by any subtenant or other party other than Tenant.

SECTION 12. AUTHORITY. Each party represents and warrants to the other that it has full authority and power to enter into and perform its obligations under this Amendment, that the person executing this Amendment is fully empowered to do so, and that no consent or authorization is necessary from any third party. Landlord may request that Tenant provide Landlord evidence of Tenant’s authority.

SECTION 13. DISCLOSURE REGARDING CERTIFIED ACCESS SPECIALIST. Pursuant to California Civil Code Section 1938, Landlord hereby notifies Tenant that as of the date of this Amendment, the Premises have not undergone inspection by a “Certified Access Specialist” (“CASp”) to determine whether the Premises meet all applicable construction-related accessibility standards under California Civil Code Section 55.53. Landlord hereby discloses pursuant to California Civil Code Section 1938 as follows: “A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the premises.” Landlord and Tenant hereby acknowledge and agree that in the event that Tenant elects to perform a CASp inspection of the Premises hereunder (the “Inspection”), such Inspection shall be (a) performed at Tenant’s sole cost and expense, (b) limited to the Premises and (c) performed by a CASp who has been approved or designated by Landlord prior to the Inspection. Any Inspection must be performed in a manner which minimizes the disruption of business activities in the Building, and at a time reasonably approved by Landlord. Landlord reserves the right to be present during the Inspection. Tenant agrees to: (i) promptly provide to Landlord a copy of the report or certification prepared by the CASp inspector upon request (the “Report”), and (ii) keep the information contained in the Report confidential, except to the extent required by Law, or to the extent disclosure is needed in order to complete any necessary modifications or improvements required to comply with all applicable accessibility standards under state or federal Law, as well as any other repairs, upgrades, improvements, modifications or alterations required by the Report or that may be otherwise required to comply with applicable Laws or accessibility requirements (the “Access Improvements”). If Tenant performs an Inspection, Tenant shall be solely responsible for the cost of Access Improvements to the Premises or the Building necessary to correct any such violations of construction-related accessibility standards identified by such Inspection as required by Law, which Access Improvements may, at Landlord’s option, be performed in whole or in part by Landlord at Tenant’s expense, payable as Additional Rent within ten (10) days following Landlord’s demand.

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SECTION 14. NO CANNABIS. Tenant shall not bring upon the Premises or any portion of the [Project] or use the Premises or permit the Premises or any portion thereof to be used for the growing, manufacturing, administration, distribution (including without limitation, any retail sales), possession, use or consumption of any cannabis, marijuana or cannabinoid product or compound, regardless of the legality or illegality of the same.

SECTION 15. COUNTERPARTS. This Amendment may be executed in duplicates or counterparts, or both, and such duplicates or counterparts together shall constitute but one original of the Amendment, and the signature of any party to any counterpart shall be deemed a signature to, and may be appended to, any other counterpart. Each duplicate and counterpart shall be equally admissible in evidence, and each original shall fully bind each party who has executed it.

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first set forth above.


TENANT:	GENOMIC HEALTH, INC.,
	a Delaware corporation

	By:	/s/ Kimberly J. Popovits

	Print Name:	Kimberly J. Popovits

	Title:	President and Chief Executive Officer
	(Chairman of Board, President or Vice President)

	By:	/s/ Fredrick Pla

	Print Name:	Fredrick Pla

	Title:	Chief Operating Officer
	(Secretary, Assistant Secretary, CFO or Assistant Treasurer)



LANDLORD:	METROPOLITAN LIFE INSURANCE COMPANY,
	a New York corporation

	By:	MetLife Investment Management, LLC,
		a Delaware limited liability company,
		its investment manager

		By:	/s/ Leland Low
		Print name:	Leland Low
		Its:	Authorized Signatory and Director

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Exhibit 10.15

SECOND AMENDMENT TO LEASE

This Second Amendment to Lease (“Amendment”) is entered into, and dated for reference purposes, as of October 4, 2019 (the “Execution Date”) by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation (“Landlord”), and GENOMIC HEALTH, INC., a Delaware corporation (“Tenant”), with reference to the following facts (“Recitals”):

A. Landlord and Tenant are the parties to that certain Lease (the “Original Lease”), dated October 1, 2009, entered into by and between Tenant, as tenant and Landlord, as landlord, and that certain First Amendment to Lease (the “First Amendment”), dated November 11, 2015 (collectively, the “Existing Lease”), for certain “Premises” described therein containing approximately 30,528 rentable square feet of the Building (located at 301 Chesapeake Drive, Redwood City, California), all as more particularly described in the Existing Lease.

B. Landlord and Tenant desire to provide for (i) the extension of the Term of the Existing Lease; and (ii) other amendments of the Existing Lease as more particularly set forth below.

SECTION 2. EXTENSION OF TERM. Landlord and Tenant acknowledge and agree that, notwithstanding any provision of the Existing Lease to the contrary, the current Term pursuant to the Existing Lease will expire on March 31, 2021, and that the Term of the Lease is hereby extended for the period of eighty-four (84) months (the “Second Extended Term”) commencing on April 1, 2021 (the “Second Extension Commencement Date”) and expiring March 31, 2028 (hereafter, the “Expiration Date” in lieu of the date provided in the Existing Lease), unless sooner terminated or extended pursuant to the terms of the Lease. Landlord and Tenant acknowledge and agree that the Option to Extend set forth in Section 5 of Rider 2 to the Existing Lease, as amended by Section 2 of the First Amendment, shall apply to the Second Extended Term, except that (i) the phrase “Second Extended Term” is inserted in place of reference to the “Extended Term” in the Option to Extend, as amended, and (ii) the Expiration Date shall mean the Expiration Date of the Second Extended Term.

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Period from/to	Monthly Base Rent
April 1, 2021 to March 31, 2021	$141,955.20
April 1, 2022 to March 31, 2023	$146,213.86
April 1, 2023 to March 31, 2024	$150,600.28
April 1, 2024 to March 31, 2025	$155,118.29
April 1, 2025 to March 31, 2026	$159,771.84
April 1, 2026 to March 31, 2027	$164,565.00
April 1, 2027 to March 31, 2028	$169,501.95

SECTION 4. TENANT’S SHARE. During the Second Extended Term, Tenant shall pay all additional Rent payable under the Lease, including Tenant’s Share of Operating Expenses. Notwithstanding any provisions of the Existing Lease to the contrary, Tenant’s Building Share shall continue to be 100.00%, Tenant’s Phase Share shall continue to be 10.114%, and Tenant’s Project Share shall continue to be 5.680%.

SECTION 5. “AS IS” CONDITION.

(b) Tenant Work Generally. Landlord and Tenant acknowledge and agree that notwithstanding any provisions of the Existing Lease to the contrary: (a) Tenant may desire to do certain alterations, additions or improvements in connection with this extension of the Term, and for purposes of this Amendment any such work is referred to as “Tenant Work”; (b) all Tenant Work, if any, shall be done subject to and in compliance with this Amendment, and except to the extent modified by or inconsistent with the express provisions of this Amendment, pursuant to the provisions of Article Nine of the Existing Lease applicable to such Tenant Alterations; (c) without limiting the generality of any provisions of Article Nine, Tenant’s selection of Tenant’s space planner and/or architect (“Tenant's Architect”) and Tenant’s selection of a general contractor shall be subject to Landlord’s prior written approval, which approval shall not be unreasonably withheld, conditioned or delayed; (d) all plans and specifications prepared by Tenant’s space planner or architect shall be subject to review by Landlord’s architect and to Landlord’s prior written approval, which shall not be unreasonably withheld, conditioned or delayed beyond ten (10) business days with respect to any initial submissions, change orders, and any revisions thereto; (e) Tenant shall retain one or more engineers reasonably satisfactory to Landlord and licensed by the State of California to prepare structural, mechanical, and electrical working drawings and specifications for all Premises improvements, not included in, or requiring any changes to the HVAC, fire and/or life safety, mechanical and electrical work; (f) if the Tenant Work does not exceed the amount of the Allowance (as defined below), Tenant shall not be required to obtain a completion and lien indemnity bond for the Tenant Work; (g) such work, including all design, plan review, obtaining all approvals and permits, and construction shall be at Tenant's sole cost and expense (subject to reimbursement to the extent of the Allowance), including delivery to Landlord of plans and specifications of such Tenant Work (including an as-built mylar and digitized (to the extent available) set of as-built plans and specifications upon completion) to the extent such work is more than recarpeting and/or repainting, and (h) Tenant shall pay Landlord a fee (“Construction Monitoring Fee”) for monitoring such design, construction and work by

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Tenant equal to two percent (2%) of the Allowance, which fee shall be paid by Landlord applying two percent (2%) of the Allowance in payment thereof.

(c) Design & Construction Responsibility for any Tenant Work. Tenant shall be responsible for the suitability for the Tenant's needs and business of the design and function of all Tenant Work and for its construction in compliance with (i) all laws, rules, orders, ordinances, directions, regulations and requirements of all governmental authorities, agencies, offices, departments, bureaus and boards having jurisdiction thereof, (ii) all rules, orders, directions, regulations and requirements of the pacific Fire Rating Bureau, or of any similar insurance body or bodies, and (iii) all reasonable rules and regulations of Landlord which have been provided to Tenant in writing (collectively, referred to herein as “Laws”). Without limiting the generality of the foregoing, Landlord and Tenant acknowledge and agree that (a) such Laws include all building codes and regulations, Title 24, and the Americans with Disabilities Act of 1990 (42 U.S.C. Sec. 12101 et. seq.) and regulations and guidelines promulgated thereunder, as all of the same may be amended and supplemented from time to time (collectively referred to herein as the “ADA”); and (b) in the event that any work by Tenant triggers any upgrades or modifications of existing improvements in the Premises required to comply with Law, Tenant shall also be responsible for such upgrades and modifications, at Tenant’s sole cost and expense (subject to reimbursement by Landlord to the extent of the Allowance). Tenant, through Tenant’s Architect, shall prepare all architectural plans and specifications, and engineering plans and specifications, for the real property improvements to be constructed by Tenant in the Premises in sufficient detail to be submitted to Landlord for approval, to the extent required pursuant to Article Nine of the Existing Lease and this Amendment, and to be submitted by Tenant for governmental approvals and building permits and to serve as the detailed construction drawings and specifications for the contractor, and shall include, among other things, all partitions, doors, heating, ventilating and air conditioning installation and distribution, ceiling systems, light fixtures, plumbing installations, electrical installations and outlets, telephone installations and outlets, any other installations required by Tenant, fire and life-safety systems, wall finishes and floor coverings, whether to be newly installed or requiring changes from the as-is condition of the Premises as of the date of execution of the Existing Lease. Tenant shall be responsible for the oversight, supervision and construction of all Tenant Work in compliance with this Existing Lease, including compliance with all Laws.

(d) Allowance: Amount; Reimbursable Costs & Payment. Allowance means an amount up to a maximum of Six Hundred Seventy-One Thousand Six Hundred Sixteen and 00/100 Dollars ($671,616.00) to reimburse Tenant for the actual costs of design, engineering, plan review, obtaining all approvals and permits, and construction of Tenant Work in the Premises (including the Construction Monitoring Fee), and shall be payable as provided below. In no event shall the Allowance be used to reimburse Tenant for Tenant’s FF&E (as such term is defined herein). For purposes of this Amendment, “Tenant’s FF&E” shall mean Tenant’s furniture, furnishings, telephone systems, computer systems, equipment, any other personal property or fixtures, and installation thereof, including without limitation, "Tenant’s Personal Property" described on Exhibit “G” to the Existing Lease. The Allowance shall be paid to Tenant within thirty (30) days after the later of final completion of the Tenant Work and Landlord's receipt of (i) a certificate of completion prepared by Tenant’s Architect, (ii) final as-built plans and specifications pursuant to this Amendment, (iii) full, final, unconditional lien releases, and (iv) reasonable substantiation of costs incurred by Tenant with respect to the Tenant Work. Tenant must prior to the date that is thirty-six (36) months from the Execution Date of this Amendment submit written application with the items required above for disbursement or reimbursement for any reimbursable costs out of the Allowance, and to the extent of any funds for which application has not been made prior to that date or if and to the extent that the reimbursable costs of the Tenant Work are less than the amount of the Allowance, then any balance remaining thereafter shall be retained by Landlord as its sole property and Landlord shall have no obligation or liability to Tenant with respect to such excess.

SECTION 6. TIME OF ESSENCE. Without limiting the generality of any other provision of the Existing Lease, time is of the essence to each and every term and condition of this Amendment.

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SECTION 11. OFAC. Landlord advises Tenant hereby that the purpose of this Section is to provide to the Landlord information and assurances to enable Landlord to comply with the law relating to OFAC.

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Guarantor or (b) has an ownership interest in such Guarantor of twenty-five percent (25%) or more, appears on the OFAC List.

SECTION 14. DISCLOSURE REGARDING CERTIFIED ACCESS SPECIALIST. Pursuant to California Civil Code Section 1938, Landlord hereby notifies Tenant that as of the date of this Amendment, the Premises have not undergone inspection by a “Certified Access Specialist” (“CASp”) to determine whether the Premises meet all applicable construction-related accessibility standards under California Civil Code Section 55.53. Landlord hereby discloses pursuant to California Civil Code Section 1938 as follows: “A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the premises.” Landlord and Tenant hereby acknowledge and agree that in the event that Tenant elects to perform a CASp inspection of the Premises hereunder (the “Inspection”), such Inspection shall be (a) performed at Tenant’s sole cost and expense, (b) limited to the Premises and (c) performed by a CASp who has been approved or designated by Landlord prior to the Inspection. Any Inspection must be performed in a manner which minimizes the disruption of business activities in the Building, and at a time reasonably approved by Landlord. Landlord reserves the right to be present during the Inspection. Tenant agrees to: (i) promptly provide to Landlord a copy of the report or certification prepared by the CASp inspector upon request (the “Report”), and (ii) keep the information contained in the Report confidential, except to the extent required by Law, or to the extent disclosure is needed in order to complete any necessary modifications or improvements required to comply with all applicable accessibility standards under state or federal Law, as well as any other repairs, upgrades, improvements, modifications or alterations required by the Report or that may be otherwise required to comply with applicable Laws or accessibility requirements (the “Access Improvements”). If Tenant performs an Inspection, Tenant shall be solely responsible for the cost of Access Improvements to the Premises or the Building necessary to correct any such violations of construction-related accessibility standards identified by such Inspection as required by Law, which Access Improvements may, at Landlord’s option, be performed in whole or in part by Landlord at Tenant’s expense, payable as Additional Rent within ten (10) days following Landlord’s demand.

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[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first set forth above.


TENANT:	GENOMIC HEALTH, INC.,
	a Delaware corporation

	By:	/s/ Kimberly J. Popovits

	Print Name:	Kimberly J. Popovits

	Title:	President and Chief Executive Officer
	(Chairman of Board, President or Vice President)

	By:	/s/ Fredrick Pla

	Print Name:	Fredrick Pla

	Title:	Chief Operating Officer
	(Secretary, Assistant Secretary, CFO or Assistant Treasurer)



LANDLORD:	METROPOLITAN LIFE INSURANCE COMPANY,
	a New York corporation

	By:	MetLife Investment Management, LLC,
		a Delaware limited liability company,
		its investment manager

		By:	/s/ Leland Low
		Print name:	Leland Low
		Its:	Authorized Signatory and Director

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Exhibit 10.16

FIRST AMENDMENT TO LEASE

This First Amendment to Lease (“Amendment”) is entered into, and dated for reference purposes, as of October 4, 2019 (the “Execution Date”) by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation (“Landlord”), and GENOMIC HEALTH, INC., a Delaware corporation (“Tenant”), with reference to the following facts (“Recitals”):

A. Landlord and Tenant are the parties to that certain Lease, dated November 11, 2015, entered into by and between Tenant, as tenant and Landlord, as landlord (the “Existing Lease”), for certain “Premises” described therein containing approximately 31,166 rentable square feet of the Building (located at 501 Galveston Drive, Redwood City, California), all as more particularly described in the Existing Lease.

B. Landlord and Tenant desire to provide for (i) the extension of the Term of the Existing Lease; and (ii) other amendments of the Existing Lease as more particularly set forth below.

SECTION 2. EXTENSION OF TERM. Landlord and Tenant acknowledge and agree that, notwithstanding any provision of the Existing Lease to the contrary, the current Term pursuant to the Existing Lease will expire on March 31, 2023, and that the Term of the Lease is hereby extended for the period of seventy-two (72) months (the “Extended Term”) commencing on April 1, 2023 (the “Extension Commencement Date”) and expiring March 31, 2029 (hereafter, the “Expiration Date” in lieu of the date provided in the Existing Lease), unless sooner terminated or extended pursuant to the terms of the Lease. Landlord and Tenant acknowledge and agree that the Option to Extend set forth in Section 5 of Rider 2 to the Existing Lease shall apply to the Extended Term, except that (i) the phrase “Extended Term” is inserted in place of reference to the “initial Term” in the Option to Extend, as amended, and (ii) the Expiration Date shall mean the Expiration Date of the Extended Term.

SECTION 3. MONTHLY BASE RENT FOR EXTENDED TERM. Notwithstanding any provision of the Existing Lease to the contrary, commencing on the Extension Commencement Date and continuing through the Expiration Date of the Extended Term, the amount of Monthly Base Rent payable by Tenant for the Premises shall be as follows:

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Period from/to	Monthly Base Rent
April 1, 2023 to March 31, 2024	$153,648.38
April 1, 2024 to March 31, 2025	$158,257.83
April 1, 2025 to March 31, 2026	$163,005.57
April 1, 2026 to March 31, 2027	$167,895.73
April 1, 2027 to March 31, 2028	$172,932.61
April 1, 2028 to March 31, 2029	$178,120.58

SECTION 4. TENANT’S SHARE. During the Extended Term, Tenant shall pay all additional Rent payable under the Lease, including Tenant’s Share of Operating Expenses. Notwithstanding any provisions of the Existing Lease to the contrary, Tenant’s Building Share shall continue to be 100%, Tenant’s Phase Share shall continue to be 10.32%, and Tenant’s Project Share shall continue to be 5.80%.

SECTION 5. “AS IS” CONDITION.

(a) Condition of Premises. Notwithstanding any provision of the Existing Lease to the contrary, Tenant hereby leases for the Extended Term and accepts the Premises in its “AS IS” condition existing on the Execution Date, without any express or implied representations or warranties of any kind by Landlord, its brokers, manager or agents, or the employees of any of them regarding the Premises; and Landlord shall not have any obligation to construct or install any tenant improvements or alterations or to pay for any such construction or installation, except as expressly set forth in this Section 5.

(b) Tenant Work Generally. Landlord and Tenant acknowledge and agree that notwithstanding any provisions of the Existing Lease to the contrary: (a) Tenant may desire to do certain alterations, additions or improvements in connection with this extension of the Term, and for purposes of this Amendment any such work is referred to as “Tenant Work”; (b) all Tenant Work, if any, shall be done subject to and in compliance with this Amendment, and except to the extent modified by or inconsistent with the express provisions of this Amendment, pursuant to the provisions of Article Nine of the Existing Lease applicable to such Tenant Alterations; (c) without limiting the generality of any provisions of Article Nine, Tenant’s selection of Tenant’s space planner and/or architect (“Tenant's Architect”) and Tenant’s selection of a general contractor shall be subject to Landlord’s prior written approval, which approval shall not be unreasonably withheld, conditioned or delayed; (d) all plans and specifications prepared by Tenant’s space planner or architect shall be subject to review by Landlord’s architect and to Landlord’s prior written approval, which shall not be unreasonably withheld, conditioned or delayed beyond ten (10) business days with respect to any initial submissions, change orders, and any revisions thereto; (e) Tenant shall retain one or more engineers reasonably satisfactory to Landlord and licensed by the State of California to prepare structural, mechanical, and electrical working drawings and specifications for all Premises improvements, not included in, or requiring any changes to the HVAC, fire and/or life safety, mechanical and electrical work; (f) if the Tenant Work does not exceed the amount of the Allowance (as defined below), Tenant shall not be required to obtain a completion and lien indemnity bond for the Tenant Work; (g) such work, including all design, plan review, obtaining all approvals and permits, and construction shall be at Tenant's sole cost and expense (subject to reimbursement to the extent of the Allowance), including delivery to Landlord of plans and specifications of such Tenant Work (including an as-built mylar and digitized (to the extent available) set of as-built plans and specifications upon completion) to the extent such work is more than recarpeting and/or repainting, and (h) Tenant shall pay Landlord a fee (“Construction Monitoring Fee”) for monitoring such design, construction and work by Tenant equal to two percent (2%) of the Allowance, which fee shall be paid by Landlord applying two percent (2%) of the Allowance in payment thereof.

(c) Design & Construction Responsibility for any Tenant Work. Tenant shall be responsible for the suitability for the Tenant's needs and business of the design and function of all Tenant Work and

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for its construction in compliance with (i) all laws, rules, orders, ordinances, directions, regulations and requirements of all governmental authorities, agencies, offices, departments, bureaus and boards having jurisdiction thereof, (ii) all rules, orders, directions, regulations and requirements of the pacific Fire Rating Bureau, or of any similar insurance body or bodies, and (iii) all reasonable rules and regulations of Landlord which have been provided to Tenant in writing (collectively, referred to herein as “Laws”). Without limiting the generality of the foregoing, Landlord and Tenant acknowledge and agree that (a) such Laws include all building codes and regulations, Title 24, and the Americans with Disabilities Act of 1990 (42 U.S.C. Sec. 12101 et. seq.) and regulations and guidelines promulgated thereunder, as all of the same may be amended and supplemented from time to time (collectively referred to herein as the “ADA”); and (b) in the event that any work by Tenant triggers any upgrades or modifications of existing improvements in the Premises required to comply with Law, Tenant shall also be responsible for such upgrades and modifications, at Tenant’s sole cost and expense (subject to reimbursement by Landlord to the extent of the Allowance). Tenant, through Tenant’s Architect, shall prepare all architectural plans and specifications, and engineering plans and specifications, for the real property improvements to be constructed by Tenant in the Premises in sufficient detail to be submitted to Landlord for approval, to the extent required pursuant to Article Nine of the Existing Lease and this Amendment, and to be submitted by Tenant for governmental approvals and building permits and to serve as the detailed construction drawings and specifications for the contractor, and shall include, among other things, all partitions, doors, heating, ventilating and air conditioning installation and distribution, ceiling systems, light fixtures, plumbing installations, electrical installations and outlets, telephone installations and outlets, any other installations required by Tenant, fire and life-safety systems, wall finishes and floor coverings, whether to be newly installed or requiring changes from the as-is condition of the Premises as of the date of execution of the Existing Lease. Tenant shall be responsible for the oversight, supervision and construction of all Tenant Work in compliance with this Existing Lease, including compliance with all Laws.

(d) Allowance: Amount; Reimbursable Costs & Payment. Allowance means an amount up to a maximum of Six Hundred Eighty-Five Thousand Six Hundred Fifty-Two and 00/100 Dollars ($685,652.00) to reimburse Tenant for the actual costs of design, engineering, plan review, obtaining all approvals and permits, and construction of Tenant Work in the Premises (including the Construction Monitoring Fee), and shall be payable as provided below. In no event shall the Allowance be used to reimburse Tenant for Tenant’s FF&E (as such term is defined herein). For purposes of this Amendment, “Tenant’s FF&E” shall mean Tenant’s furniture, furnishings, telephone systems, computer systems, equipment, any other personal property or fixtures, and installation thereof, including without limitation, "Tenant’s Personal Property" described on Exhibit “G” to the Existing Lease. The Allowance shall be paid to Tenant within thirty (30) days after the later of final completion of the Tenant Work and Landlord's receipt of (i) a certificate of completion prepared by Tenant’s Architect, (ii) final as-built plans and specifications pursuant to this Amendment, (iii) full, final, unconditional lien releases, and (iv) reasonable substantiation of costs incurred by Tenant with respect to the Tenant Work. Tenant must prior to the date that is thirty-six (36) months from the Execution Date of this Amendment submit written application with the items required above for disbursement or reimbursement for any reimbursable costs out of the Allowance, and to the extent of any funds for which application has not been made prior to that date or if and to the extent that the reimbursable costs of the Tenant Work are less than the amount of the Allowance, then any balance remaining thereafter shall be retained by Landlord as its sole property and Landlord shall have no obligation or liability to Tenant with respect to such excess.

SECTION 6. TIME OF ESSENCE. Without limiting the generality of any other provision of the Existing Lease, time is of the essence to each and every term and condition of this Amendment.

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Except for Tenant’s Broker and Landlord’s Broker identified below, Landlord has not dealt with any real estate broker, sales person, or finder in connection with this Amendment, and no such person initiated or participated in the negotiation of this Amendment. Each party hereby indemnifies and agrees to protect, defend and hold the other party harmless from and against all claims, losses, damages, liability, costs and expenses (including, without limitation, attorneys’ fees and expenses) by virtue of any broker, agent or other person claiming a commission or other form of compensation by virtue of alleged representation of, or dealings or discussions with, the indemnifying party with respect to the subject matter of this Amendment, except for Landlord’s Broker and Tenant’s Broker. Tenant is not obligated to pay or fund any amount to Landlord’s Broker, and Landlord hereby agrees to pay such commission, if any, to which Landlord’s Broker is entitled in connection with the subject matter of this Amendment pursuant to Landlord’s separate written agreement with Landlord’s Broker (which may be shared with Tenant’s Broker to the extent that Tenant’s Broker and Landlord’s Broker have an agreement between themselves to share in such commission). The provisions of this Section shall survive the expiration or earlier termination of the Lease.

SECTION 11. OFAC. Landlord advises Tenant hereby that the purpose of this Section is to provide to the Landlord information and assurances to enable Landlord to comply with the law relating to OFAC.

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documents which Landlord may deem to be necessary (“Tenant OFAC Information”) in order for Landlord to confirm Tenant’s continuing compliance with the provisions of this Section. Tenant represents and warrants that the Tenant OFAC Information it has provided or to be provided to Landlord or Landlord’s Broker in connection with the execution of this Amendment is true and complete.

SECTION 14. DISCLOSURE REGARDING CERTIFIED ACCESS SPECIALIST. Pursuant to California Civil Code Section 1938, Landlord hereby notifies Tenant that as of the date of this Amendment, the Premises have not undergone inspection by a “Certified Access Specialist” (“CASp”) to determine whether the Premises meet all applicable construction-related accessibility standards under California Civil Code Section 55.53. Landlord hereby discloses pursuant to California Civil Code Section 1938 as follows: “A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the premises.” Landlord and Tenant hereby acknowledge and agree that in the event that Tenant elects to perform a CASp inspection of the Premises hereunder (the “Inspection”), such Inspection shall be (a) performed at Tenant’s sole cost and expense, (b) limited to the Premises and (c) performed by a CASp who has been approved or designated by Landlord prior to the Inspection. Any Inspection must be performed in a manner which minimizes the disruption of business activities in the Building, and at a time reasonably approved by Landlord. Landlord reserves the right to be present during the Inspection. Tenant agrees to: (i) promptly provide to Landlord a copy of the report or certification prepared by the CASp inspector upon request (the “Report”), and (ii) keep the information contained in the Report confidential, except to the extent required by Law, or to the extent disclosure is needed in order to complete any necessary modifications or improvements required to comply with all applicable accessibility standards under state or federal Law, as well as any other repairs, upgrades, improvements, modifications or alterations required by the Report or that may be otherwise required to comply with applicable Laws or accessibility requirements (the “Access Improvements”). If Tenant performs an Inspection, Tenant shall be solely responsible for the cost of Access Improvements to the Premises or the Building necessary to correct any such violations of construction-related accessibility standards identified by such Inspection as required by Law, which Access Improvements may, at Landlord’s option, be performed in whole or in part by Landlord at Tenant’s expense, payable as Additional Rent within ten (10) days following Landlord’s demand.

SECTION 15. ENERGY UTILITY USAGE. If Tenant is billed directly by a public utility with respect to Tenant’s energy usage at the Premises, then, within ten (10) business days’ following Tenant’s receipt of Landlord’s written request therefor, Tenant shall provide monthly energy utility usage for the Premises to Landlord for the period of time requested by Landlord (in electronic or paper format) or, at Landlord’s option, provide any written authorization or other documentation required for Landlord to request information regarding Tenant’s energy usage with respect to the Premises directly from the applicable utility company.

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SECTION 16. NO CANNABIS. Tenant shall not bring upon the Premises or any portion of the [Project] or use the Premises or permit the Premises or any portion thereof to be used for the growing, manufacturing, administration, distribution (including without limitation, any retail sales), possession, use or consumption of any cannabis, marijuana or cannabinoid product or compound, regardless of the legality or illegality of the same.

SECTION 17. COUNTERPARTS. This Amendment may be executed in duplicates or counterparts, or both, and such duplicates or counterparts together shall constitute but one original of the Amendment, and the signature of any party to any counterpart shall be deemed a signature to, and may be appended to, any other counterpart. Each duplicate and counterpart shall be equally admissible in evidence, and each original shall fully bind each party who has executed it.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first set forth above.


TENANT:	GENOMIC HEALTH, INC.,
	a Delaware corporation

	By:	/s/ Kimberly J. Popovits

	Print Name:	Kimberly J. Popovits

	Title:	President and Chief Executive Officer
	(Chairman of Board, President or Vice President)

	By:	/s/ Fredrick Pla

	Print Name:	Fredrick Pla

	Title:	Chief Operating Officer
	(Secretary, Assistant Secretary, CFO or Assistant Treasurer)



LANDLORD:	METROPOLITAN LIFE INSURANCE COMPANY,
	a New York corporation

	By:	MetLife Investment Management, LLC,
		a Delaware limited liability company,
		its investment manager

		By:	/s/ Leland Low
		Print name:	Leland Low
		Its:	Authorized Signatory and Director

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Exhibit 31.1

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

CERTIFICATION

I, Kimberly J. Popovits, certify that:

I have reviewed this quarterly report on Form 10-Q of Genomic Health, Inc. for the period ended September 30, 2019;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: October 30, 2019	/s/ Kimberly J. Popovits
	Kimberly J. Popovits
	President and Chief Executive Officer (Principal Executive Officer)

Exhibit 31.2

Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

CERTIFICATION

I, G. Bradley Cole, certify that:

I have reviewed this quarterly report on Form 10-Q of Genomic Health, Inc. for the period ended September 30, 2019;

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: October 30, 2019	/s/ G. Bradley Cole
	G. Bradley Cole
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

Exhibit 32.1

STATEMENT OF CHIEF EXECUTIVE OFFICER

UNDER 18 U.S.C. § 1350

I, Kimberly J. Popovits, the chief executive officer of Genomic Health, Inc. (the “Company”), do hereby certify for the purposes of section 1350 of chapter 63 of title 18 of the United States Code that, to the best of my knowledge,

(i)

the Quarterly Report of the Company on Form 10-Q for the period ended September 30, 2019 (the “Report”) fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934, and

(ii)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

ay
Date: October 30, 2019	/s/ Kimberly J. Popovits
	Kimberly J. Popovits
	President and Chief Executive Officer (Principal Executive Officer)

Exhibit 32.2

STATEMENT OF CHIEF FINANCIAL OFFICER

UNDER 18 U.S.C. § 1350

I, G. Bradley Cole, the chief financial officer of Genomic Health, Inc. (the “Company”), do hereby certify for the purposes of section 1350 of chapter 63 of title 18 of the United States Code that, to the best of my knowledge,

(i)

(ii)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

ay
Date: October 30, 2019	/s/ G. Bradley Cole
	G. Bradley Cole
	Chief Financial Officer
	(Principal Financial and Accounting Officer)