MaxLinear
Annual Report 2015

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 FORM 10-KþANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934For the Fiscal Year Ended December 31, 2015OR¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT OF 1934For the Transition Period From toCommission file number: 001-34666MaxLinear, Inc.(Exact name of Registrant as specified in its charter) Delaware 14-1896129(State or other jurisdiction ofincorporation or organization) (I.R.S. EmployerIdentification No.) 5966 La Place Court, Suite 100Carlsbad, California 92008(Address of principal executive offices) (Zip Code)(760) 692-0711(Registrant’s telephone number, including area code)Securities registered pursuant to Section 12(b) of the Act:Title of each class Name of the exchange on which registeredClass A Common Stock, $0.0001 par value New York Stock ExchangeSecurities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No þIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No þIndicate 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 of1934 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 filingrequirements for the past 90 days. Yes þ No ¨Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data Filerequired to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorterperiod that the registrant was required to submit and post such files). Yes þ No ¨Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, andwill not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of thisForm 10-K or any amendment to this Form 10-K. þIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.Large accelerated filer ¨ Accelerated filer þNon-accelerated filer ¨ (Do not check if a smaller reporting company) Smaller reporting company ¨Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þThe aggregate market value of the registrant’s common stock, $0.0001 par value per share, held by non-affiliates of the registrant on June 30, 2015, thelast business day of the registrant’s most recently completed second fiscal quarter, was $649.5 million (based on the closing sales price of the registrant’sClass A common stock on that date). Shares of the registrant’s Class A or Class B common stock held by each officer and director and each person known tothe registrant to own 10% or more of the outstanding voting power of the registrant have been excluded in that such persons may be deemed to be affiliates.This determination of affiliate status is not a determination for other purposes.As of February 10, 2015, the registrant has 55,750,809 shares of Class A common stock, par value $0.0001, and 6,666,777 shares of Class B commonstock, par value $0.0001, outstanding._________________________________________DOCUMENTS INCORPORATED BY REFERENCEInformation required by Part III of this Form 10-K is incorporated by reference to the registrant’s proxy statement (the “Proxy Statement”) for the 2016 annualmeeting of stockholders, which proxy statement will be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal yearcovered by this Form 10-K.Table of ContentsMAXLINEAR, INC.TABLE OF CONTENTS Part IPageItem 1.Business3Item 1A.Risk Factors13Item 1B.Unresolved Staff Comments35Item 2.Properties35Item 3.Legal Proceedings36Item 4.Mine Safety Disclosures38 Part II Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities39Item 6.Selected Financial Data41Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations42Item 7A.Quantitative and Qualitative Disclosures About Market Risk55Item 8.Financial Statements and Supplementary Data56Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure56Item 9A.Controls and Procedures56Item 9B.Other Information58 Part III Item 10.Directors, Executive Officers and Corporate Governance59Item 11.Executive Compensation59Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters59Item 13.Certain Relationships and Related Transactions, and Director Independence59Item 14.Principal Accounting Fees and Services59 Part IV Item 15.Exhibits, Financial Statement Schedules602Table of ContentsMAXLINEAR, INC.PART IForward-Looking StatementsThe information in this Annual Report on Form 10-K for the fiscal year ended December 31, 2015, or this Form 10-K, contains forward-lookingstatements and information within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, whichare subject to the “safe harbor” created by those sections. These forward-looking statements include, but are not limited to, statements concerning ourstrategy, future operations, future financial position, future revenues, projected costs, prospects and plans and objectives of management. The words“anticipates”, “believes”, “estimates”, “expects”, “intends”, “may”, “plans”, “projects”, “will”, “would” and similar expressions are intended to identifyforward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentionsor expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results orevents could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. These forward-lookingstatements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including,without limitation, the risks set forth in Part I, Item 1A, “Risk Factors” in this Form 10-K. We do not assume any obligation to update any forward-lookingstatements except as required by law.ITEM 1.BUSINESSCorporate InformationWe incorporated in the State of Delaware in September 2003. Our executive offices are located at 5966 La Place Court, Suite 100, Carlsbad, California92008, and our telephone number is (760) 692-0711. In this Form 10-K, unless the context otherwise requires, the “Company,” “we,” “us” and “our” refer toMaxLinear, Inc. and its wholly owned subsidiaries. Our website address is www.maxlinear.com. The contents of our website are not incorporated by referenceinto this Form 10-K. We provide free of charge through a link on our website access to our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Qand Current Reports on Form 8-K, as well as amendments to those reports, as soon as reasonably practical after the reports are electronically filed with, orfurnished to, the Securities and Exchange Commission, or SEC. Refer to Intellectual Property Rights section below for a list of our trademarks and tradenames. All other trademarks and trade names appearing in this Form 10-K are the property of their respective owners.Overview We are a provider of radio frequency, or RF, and mixed-signal integrated circuits for cable and satellite broadband communications, the connectedhome, and for data center, metro, and long-haul fiber networks. Our high performance RF receiver products capture and process digital and analog broadbandsignals to be decoded for various applications. These products include both RF receivers and RF receiver systems-on-chip (SoCs), which incorporate ourhighly integrated radio system architecture and the functionality necessary to receive and demodulate broadband signals, and physical medium devices thatprovide a constant current source, current-to-voltage regulation, and data alignment and retiming functionality in optical interconnect applications. Throughour acquisition of Entropic Communications, Inc., or Entropic, in April of 2015, we provide semiconductor solutions for the connected home, ranging fromMoCA® (Multimedia over Coax Alliance) solutions that transform how traditional HDTV broadcast and Internet Protocol- (IP) based streaming videocontent is seamlessly, reliably, and securely delivered, processed, and distributed into and throughout the home, to digital set-top box (STB) components andsystem solutions for the global satellite, terrestrial, cable and IP television (IPTV) markets. Our products enable the distribution and display of broadbandvideo and data content in a wide range of electronic devices, including Pay-TV operator set-top boxes and voice and data gateways, hybrid analog anddigital televisions, Direct Broadcast Satellite outdoor units, and optical modules for data center, metro, and long-haul transport network applications.We combine our high performance RF and mixed-signal semiconductor design skills with our expertise in digital communications systems, softwareand embedded systems to provide highly integrated semiconductor devices that are manufactured using a range of semiconductor manufacturing processes,including low-cost complementary metal oxide semiconductor, or CMOS, process technology, Silicon Germanium, Gallium Arsenide, BiCMOS and IndiumPhosphide process technologies due to our acquisitions of Physpeed and Entropic. Our ability to design analog and mixed-signal circuits in CMOS allows usto efficiently combine analog and digital signal processing functionality in the same integrated circuit. As a result, our3Table of ContentsRF receivers and RF receiver SoCs have high levels of functional integration and performance, small silicon die size and low power consumption. Moreover,our proprietary CMOS-based radio system architecture provides to our customers the benefits of superior RF system performance, shorter design cycles,significant design flexibility and low system cost across a wide range of broadband communications applications. It is our intention to drive future opticalinterconnect products to CMOS versus existing Silicon Germanium BiCMOS and Indium Phosphide process technology designs.We sell our products to original equipment manufacturers, or OEMs, module makers and original design manufacturers, or ODMs. During 2015, wesold our products to more than 179 end customers. For the year ended December 31, 2015, our net revenue was $300.4 million as compared to $133.1 millionin the year ended December 31, 2014.Recent DevelopmentsOn April 30, 2015, we completed its acquisition of Entropic Communications, Inc., or Entropic. Pursuant to the terms of the merger agreement dated asof February 3, 2015, by and among the Company, Entropic, and two wholly-owned subsidiaries of the Company, all of the Entropic outstanding shares wereconverted into the right to receive consideration consisting of cash and shares of our Class A common stock. We paid an aggregate of $111.1 million andissued an aggregate of 20.4 million shares of our Class A common stock to the stockholders of Entropic. In addition, we assumed all outstanding Entropicstock options and unvested restricted stock units that were held by continuing service providers (as defined in the merger agreement). We used Entropic’scash and cash equivalents to fund a significant portion of the cash portion of the merger consideration and, to a lesser extent, our own cash and cashequivalents.As a result of the acquisition, we believe we have benefited from the economies of scale across engineering and supply chain operations, as well asfrom elimination of redundancy across engineering, sales, and general and administrative functions. Entropic had been recognized for pioneering theMoCA® (Multimedia over Coax Alliance) home networking standard and inventing Direct Broadcast Satellite outdoor unit, or DBS ODU, solutions whichconsist of band translation switch, or BTS, and channel stacking switch, or CSS, products which simplify the installation required to support simultaneousreception of multiple channels from multiple satellites over a single cable. We believe the acquisition of Entropic added significant scale to ouranalog/mixed-signal business and expanded our addressable market and enhanced the strategic value of the Company’s offerings to broadband and accesspartners, OEM customers, and service providers. For a discussion of specific risks and uncertainties that could affect our ability to achieve these and otherstrategic objectives of the acquisition, please refer to Part I, Item 1A, “Risk Factors” under the subsection captioned “Risks Relating to the ProposedAcquisition of Entropic.”Industry BackgroundTechnological advances in the broadband data, broadcast TV, voice, and wired and wireless data markets are driving dramatic changes in the wayconsumers access the internet and experience multimedia content. These advances include the ongoing worldwide conversion from analog to digitaltelevision broadcasting; the increasing availability of high-speed broadband and wireless data connectivity; the resolution transitions from standard-definition, to high-definition to ultra-high-definition/4K video television; the proliferation of multi-channel digital video recording, or DVR; theproliferation of multimedia content being both accessible and stored in the cloud through cable, satellite and telecommunications carrier services. As a result,system designers are adding enhanced multimedia functionality to set-top boxes and digital televisions, and expanding voice, video and data accessfunctions and capabilities to home broadband gateways and mobile devices, which in turn is creating demand for higher speed optical interconnects in datacenter, metro, and long-haul transport network applications. We believe that several trends, across multiple target markets, are creating revenue opportunitiesfor providers of RF and analog/mixed-signal solutions. These trends include the following:•Service Provider/Operator: Competing cable, satellite, and other broadband service providers differentiate their services by providingconsumers with bundled video, voice, and broadband data access, referred to as triple-play services. These services include advanced featuressuch as; channel guide information, video-on-demand, multi-channel digital video recording, or DVR, and picture-in-picture viewing. Manyset-top boxes, including those used for triple-play services, now enable consumers to simultaneously access, and manage multimedia contentfrom multiple locations in the same house. These advanced features require either a home gateway or a set-top box to simultaneously receive,demodulate, and decode multiple signals spread across several channels of frequency bandwidth. Traditional architectures would require thateach simultaneously accessed signal require a dedicated RF receiver. In these emerging home gateway or media servers, where content may bedelivered using internet protocol or IP, there may be “thin or remote clients” that may not have traditional TV tuners, but necessarily include abroadband RF receiver such as MoCA or WiFi. This greatly increases the number of RF receivers required to be deployed in each set-top box. Inaddition, in order to deliver increasing data bandwidth to4Table of Contentsthe home, cable MSOs have deployed DOCSIS 3.0 equipment and services, which enable channel bonding, or the concurrent reception ofmultiple channels, resulting in higher aggregate “sum of the channels” bandwidth available to DOCSIS 3.0 cable subscribers.•Infrastructure and Non-Operator Terrestrial: Growth in data traffic generated from smartphones and tablets, over-the-top, or OTT, streamingvideo, cloud computing and data analytics in hyper-scale data centers is creating demand for higher speed interconnect products addressingenterprise and telecommunications infrastructure market applications. These solutions provide the interconnect function between the top-of-rack to the core-router within a datacenter, and the metro and long haul connections within a service provider network. Datacenter links areconsistently increasing in performance/speed and are currently changing from 1Gbps to 10Gbps on the servers and from 10/40Gbps to 100Gbpson the routers and switches, and we believe that over the next several years they will likely migrate to 400Gbps. In the markets for non-operatorterrestrial solutions, consumers are utilizing a broad array of consumer electronic devices beyond the television, such as personal computers,netbooks, tablets, and mobile phones to access broadcast television and other multimedia content. Specifically, with the increased popularity ofaccessing multimedia content over-the-top, or OTT, via broadband-enabled streaming services, consumers are increasingly augmenting theseOTT multimedia content services with local free-to-air broadcast programming. Consumers can access these terrestrial broadcasts through set-top boxes containing terrestrial RF receiver solutions.As a result of these trends, RF and analog/mixed signal receiver technology is being deployed in a variety of devices for the terrestrial, cable, satellite,datacenter, and metro and long-haul telecom transport network markets. The proliferation of applications with advanced features has led to an increase in thenumber of devices with multiple RF receivers and RF receiver SoCs. RF receivers incorporate RF, digital and analog signal processing functions.Challenges Faced by Providers of Systems and RF Receivers and Optical InterconnectsThe stringent performance requirements of broadband communications and optical interconnect applications and the distinct technological challengesassociated with the terrestrial, cable, satellite, datacenter, and metro and long-haul telecom transport markets present significant obstacles to service providersand system designers. In particular, designing and implementing RF receivers to capture broadcast digital television signals is extremely challenging due inpart to the wide frequency band across which broadcast digital television signals are transmitted. As compared to other digital radio technologies, such asthose found in cellular, WiFi and Bluetooth applications, television signals that are broadcast over air, on cable, and by satellite are acquired over a muchwider frequency band and encounter many more sources of interference. As a result, traditionally, design and implementation of these RF receivers have beenaccomplished using conventional radio system architectures that employ multiple discrete components and are fabricated using expensive special purposesemiconductor manufacturing processes, such as silicon germanium, gallium arsenide, and special purpose CMOS-based RF process technologies.The core challenges of capturing and processing high quality broadband communications signals are common to the terrestrial, cable, and satellitemarkets. These challenges include:•Design Challenges of Receiving Multiple RF Signals. System designers and service providers across various markets seek to enhance consumerappeal through the addition of new features in their products. Incorporating more than one channel of RF reception in an electronic deviceenables many of these features and advanced applications that are rapidly becoming a part of the standard offering from device makers andservice providers. For example, in the cable set-top box market, it is necessary to support the simultaneous reception of multiple channels forvoice, video and data applications in many system designs. In order to meet such requirements, OEMs must employ either multiple narrow orwideband RF receivers or Full Spectrum Capture (FSCTM) receiver SoCs in their system design. Each additional RF receiver poses newchallenges to the system designer, such as increased design complexity, overall cost, circuit board space, power consumption and heatdissipation. In addition, a high level of integration in multiple-receiver designs is necessary to combat the reliability and signal interferenceissues arising from the close proximity of sensitive RF elements.•Signal Clarity Performance Requirements. Television reception requires a robust and clear signal to provide an adequate user experience. Oneof the core attributes of system performance is signal clarity, often measured by the signal-to-noise ratio parameter, which measures the strengthof the desired signal relative to the combined noise and undesired signal strength in the same channel. Television reception requires an RFreceiver that has a wide dynamic range and the ability to isolate the desired signal from the undesired signals, which include the noise5Table of Contentsgenerated by extraneous radio waves and interferers produced by home networking systems such as wireless local area network, or WLAN, andBluetooth. Traditional RF receiver implementations utilized expensive discrete components, such as band-pass filters, resonance elements andvaractor diodes to meet the stringent requirements imposed by broadband television reception. In high speed mobile environments, a methodknown as diversity combining of radio signals, in which the desired signal is captured using multiple RF receivers and reconstructed into asingle signal, has been employed to improve the signal-to-noise ratio. Diversity combining of radio signals requires substantial RF, digitalsignal processing and software expertise. Both the traditional broadband reception and diversity combining of RF signals in mobileenvironments are difficult to implement and pose challenges to RF receiver providers.•Multiple Standards. Worldwide, there are several regional standards for the transmission and reception of broadband analog and digital TVsignals. Technical performance, feature requirements and the predominance of a particular means of TV transmission vary regionally. Further,each major geographic region has adopted its own TV standard for cable, terrestrial, and satellite transmissions, such as DVB-T/T2/C/C2/S/S2,ATSC, NTSC, ISDB-T, PAL, SECAM, DTMB, CMMB, etc. As a result of these multiple standards, there are region-specific RF receiverrequirements and implementations, which make global standards compliance extremely challenging. Many system designers prefer a multiplestandards and protocol compliant solution that was previously not possible. Providers of RF receivers face the design challenge of providingthis flexibility to the system designer without any increase in power consumption, or any loss of performance quality or competitiveness.•Power Consumption. Power consumption is an important consideration for consumers and a critical design specification for system designers.For example, in battery-operated devices such as netbooks and notebooks, and voice-enabled cable modems, long battery life is adifferentiating device attribute. In addition, government sponsored programs, such as Energy Star in the U.S., induce consumers to purchasemore energy efficient products. For example, in September 2009, the U.S. Environmental Protection Agency announced that Energy Starcompliant televisions would be required to be 40% more energy efficient than their noncompliant counterparts. The addition of one or more RFreceivers to a system in order to enable digital TV functionality significantly increases the overall power consumption imposing severe platformlevel design constraints on multiple channel receiver systems. In fact, in some multiple receiver system designs, a majority of the system’soverall power consumption is attributable to the RF receiver and related components. Providers of RF receivers and RF receiver SoCs areconfronted with the design challenge of lowering power consumption while maintaining or improving device performance.•Size. The size of electronic components, such as RF receivers, is a key consideration for system designers and service providers. Given theproliferation of the number of RF receivers in broadband service provider video and data gateways market, size can be a determining factor forwhether or not a particular component, such as an RF receiver is designed into the product. In the television market, as system designers createthinner flat-screen displays, the size of RF receivers is becoming a significant consideration, especially when multiple RF receivers areincorporated in a single system.The challenges of processing high-speed optical interconnect signals for datacenter, metro and long-haul telecommunications transport marketsinclude:•Optical Fiber Channel Impairments. The optical properties of the fiber material results in impairments to the optical signal that is beingpropagated across the fiber. These impairments include loss of light intensity, modal, chromatic and polarization dispersion as the lightpropagates through the fiber. These impairments result in degradation of signal integrity which contributes to effective reduction in datathroughput.•Optical Device Technology. The state-of-art in optical device technology today lags the speeds contemplated for data traffic within cloud datacenters and transport links between telecom data centers. So, there are severe physical limits to the conversion of electrical signals to opticalsignals and vice versa at extremely high speeds. These limitations arise from bandwidth, nonlinearities, and noise properties in lasers,modulators, and photo detectors.•Form Factor. The form factor of the face plates in server, storage, switch, and networking racks in data centers limits the capacity to dissipateheat generated by electrical and optical devices inside the transceivers to which optical fibers are connected. As data rates increase dramatically,the physical form of the face plates and connectors does not scale to cope with accompanying increase in power density.6Table of ContentsOur RF Receiver SolutionWe are a provider of integrated, radio-frequency and mixed-signal integrated circuits for broadband communications and data center, metro, and long-haul transport network applications. Our products enable the display of broadband video and data content in a wide range of electronic devices, includingcable and terrestrial and satellite set-top boxes, DOCSIS data and voice gateways, hybrid analog and digital televisions, satellite low-noise blockertransponders or outdoor units and optical modules for data center, metro, and long-haul transport network applications.We combine our high performance analog and mixed-signal semiconductor design skills with our expertise in digital communications systems,software and embedded systems to develop RF receivers and RF receiver SoCs. We integrate our RF receivers with digital demodulation and othercommunications functions in standard CMOS process technology. Our solutions have the following key features:•Proprietary Radio Architecture. Digital signal processing is at the core of our RF receivers and RF receiver SoCs. Using our proprietary CMOS-based radio architecture, we leverage both analog and digital signal processing to improve system performance across multiple products. Thepartitioning of the signal processing in the chip between analog and digital domains is designed to deliver high performance, small die size andlow power for a given application. Moreover, our architecture is implemented in standard CMOS process technology, which enables us torealize the integration benefits of analog and digital circuits on the same integrated circuit. This allows us to predictably scale the on-chipdigital circuits in successive advanced CMOS process technology nodes. Our solutions have been designed into products in markets withextremely stringent specifications for quality, performance and reliability, such as the television and automotive markets. We believe that oursuccess in these markets demonstrates that our solution can be implemented successfully across multiple markets and applications.•High Signal Clarity Performance. We design our RF receivers and RF receiver SoCs to provide high signal clarity performance regardless of theapplication in which they are employed. For example, in the set-top box market, we deploy our core RF and mixed-signal CMOS processtechnology platform and radio system architecture to overcome the interference from in-home networks that can degrade cable broadbandsignals. We believe that signal clarity is more critical in television compared to other communications applications such as voice and data,because signal loss and interference have a more adverse impact on the end user experience.•Highly Integrated. Our products integrate on a single chip the functionality associated with traditional analog and digital integrated circuitsand other expensive discrete components. This high level of integration has the cost benefits associated with smaller silicon die area, fewerexternal components and lower power. Our CMOS-based RF receiver SoC eliminates analog interface circuit blocks and external componentssituated at the interface between discrete analog and digital demodulator chips and reduces the cost associated with multiple integrated circuitpackages and related test costs. We are also able to integrate multiple RF receivers along with a demodulator onto a single die to createapplication-specific configurations for our customers. Thus, our highly integrated solution reduces the technical difficulties associated withovercoming the undesired interactions between multiple discrete analog and digital integrated circuits comprising a single system. Oursolutions reduce the technical burden on system designers in deploying enhanced television functionality in their products.•Low Power. Our products enable our customers to reduce power consumption in consumer electronic devices without compromising thestringent performance requirements of applications such as broadcast television. In addition, our products enable our customers to decreaseoverall system costs by reducing the power consumption and heat dissipation requirements in their systems. For example, in cable boxessupporting voice applications, low power consumption may enable a reduction in the number of batteries or battery capacity required to supportstandby and lifeline telephony. In certain set-top boxes, reduced overall power consumption may allow system designers to eliminate one ormore cooling fans required to dissipate the heat generated by high power consumption. The benefits of low power consumption increase withthe number of RF receivers included in a system.•Scalable Platform. Our product families share a highly modular, core radio system architecture, which enables us to offer RF receiver and RFreceiver SoC solutions that meet the requirements of a wide variety of geographies, broadcast standards and applications. This is in contrast tolegacy solutions that require significant customization to conform to regional standards, technical performance and feature requirements.Moreover, by leveraging our flexible core architecture platform, our integrated circuit solutions can be deployed across multiple device7Table of Contentscategories. As a result, our customers can minimize the design resources required to develop applications for multiple target markets. Inaddition, our engineering resources can be deployed more efficiently to design products for larger addressable markets. We believe that our coretechnology platform also can be applied to other communications markets with similar performance requirements.•Space Efficient Solution. Our highly integrated CMOS-based RF receivers and RF receiver SoCs have an extremely small silicon die size,require minimal external components and consume very little power. Our unique radio architecture, more specifically our Full-SpectrumCapture™ technology, not only enables us to integrate multiple RF receivers in a chip, but also results in a reduction in the incremental powerand die area required per each additional channel of reception. This enables our customers to design multi-receiver applications, such as cablemodems and set-top boxes, in an extremely small form factor. In addition, our products are easily adapted to space-constrained devices such asflat screen televisions, netbooks, and laptops.Our StrategyOur objective is to be the leading provider of mixed-signal RF receivers and RF receiver SoCs for broadband video and data communications,datacenter, and metro and long-haul telecom transport market applications and, in the future, to leverage this core competency to expand into othercommunications markets with similar performance requirements. The key elements of our strategy are:•Extend Technology Leadership in RF Receivers and RF Receiver + Demodulator SoCs. We believe that our success has been, and will continueto be, largely attributable to our RF and mixed-signal design capability, as well as advanced digital design, which we leverage to develop high-performance, low-cost semiconductor solutions for broadband communications applications. The broadband RF receiver market presentssignificant opportunities for innovation through the further integration of RF and mixed-signal functionality with digital signal processingcapability in CMOS process technology. By doing so, we will be able to deliver products with lower power consumption, superior performanceand increased cost benefits to system designers and service providers. We believe that our core competencies and design expertise in this marketwill enable us to acquire more customers and design wins over time. We will continue to invest in this capability and strive to be an innovationleader in this market.•Leverage and Expand our Existing Customer Base. We target customers who are leaders in their respective markets. We intend to continue tofocus on sales to customers who are leaders in our current target markets, and to build on our relationships with these leading customers todefine and enhance our product roadmap. By solving the specific problems faced by our customers, we can minimize the risks associated withour customers’ adoption of our new integrated circuit products, and reduce the length of time from the start of product design to customerrevenue. Further, our engagements with market leaders will enable us to participate in emerging technology trends and new industry standards.•Target Additional High-Growth Markets. Our core competency is in RF analog and mixed-signal integrated circuit design in CMOS processtechnology for broadband communications applications. Several of the technological challenges involved in developing RF solutions for videobroadcasting and broadband reception are common to a majority of broadband communication markets. We intend to leverage our corecompetency in developing highly integrated RF receiver and RF receiver SoCs in standard CMOS process technology to address additionalmarkets within broadband communications, communications infrastructure, and connectivity markets that we believe offer profitable highgrowth potential.•Expand Global Presence. Due to the global nature of our supply chain and customer locations, we intend to continue to expand our sales,design and technical support organization both in the United States and overseas. In particular, we expect to increase the number of employeesin Asia, Europe and the United States to provide regional support to our increasing base of customers. We believe that our customers willincreasingly expect this kind of local capability and support.•Attract and Retain Top Talent. We are committed to recruiting and retaining highly talented personnel with proven expertise in the design,development, marketing and sales of communications integrated circuits. We believe that we have assembled a high-quality team in all theareas of expertise required at a semiconductor communications company. We provide an attractive work environment for all of our employees.We believe that our ability to attract the best engineers is a critical component of our future growth and success in our chosen markets.8Table of ContentsProductsOur products are integrated into a wide range of electronic devices, including cable and terrestrial and satellite set-top boxes, DOCSIS data and voicegateways, hybrid analog and digital televisions, satellite low-noise blocker transponders or outdoor units and physical medium devices that go into opticalmodules for data center, metro, and long-haul transport network applications.We provide our customers with guidelines, known as reference designs, so that they can efficiently use our products in their product designs. Wecurrently provide the following types of semiconductors:•RF Receivers. These semiconductor products combine RF receiver technology that traditionally required multiple external discrete components,such as very high frequency, or VHF, and ultra-high frequency, or UHF, tracking filters, surface acoustic wave, or SAW, filters, intermediate-frequency, or IF, amplifiers, low noise amplifiers and transformers. All of these external components have been either eliminated or integratedinto a single semiconductor produced entirely in standard CMOS process technology.•RF Receiver SoCs. These semiconductor products combine the functionality of RF receivers, and demodulators in a single chip. In someconfigurations, these products may incorporate multiple RF receivers and single or multiple demodulators in a single chip to provideapplication or market specific solutions to customers.•Laser Modulator Drivers. These semiconductor products reside in optical modules and provide a constant current source that delivers exactlythe current to the laser diode that it needs to operate for a particular application•Transimpedance Amplifiers. These semiconductor products reside in optical modules and provide current-to-voltage conversion, converting thelow-level current of a sensor to a voltage.•Clock and Data Recovery Circuits. These semiconductor products generate a clock from an approximate frequency reference, and then phase-aligns to the transitions in the data stream with a phase-locked loop, or PLL.CustomersWe sell our products, directly and indirectly, to original equipment manufacturers, or OEMs, module makers and original design manufacturers, orODMs, and refer to these as our end customers. By providing a highly integrated reference design solution that our customers can incorporate in theirproducts with minimal modifications, we enable our customers to design cost-effective high performance digital RF receiver and RF receiver SoC solutionsrapidly. In the year ended December 31, 2015, we sold our products to more than 179 end customers. A significant but declining portion of our sales to theseand other customers are through distributors based in Asia, and we do not consider distributors as our end customers, despite selling the products to and beingpaid by the distributors.A significant portion of our net revenue has historically been generated by a limited number of customers. In the years ended December 31, 2015, 2014and 2013, ten customers accounted for approximately 76%, 67% and 72% of our net revenue, respectively. In the years ended December 31, 2015, 2014 and2013, Arris Group, Inc., or Arris, represented 28%, 31% and 28% of revenue. Sales to Arris as a percentage of revenue include sales to Motorola Home, whichwas acquired by Arris in April 2013, for the years ended December 31, 2015, 2014 and 2013. In the year ended December 31, 2015, Cisco Systems, Inc., orCisco, represented 13% of revenue. In November 2015, Technicolor completed its purchase of Cisco’s connected devices business. The revenue percentagedid not include the 1% revenue percentage for Technicolor.Products shipped to Asia accounted for 91%, 94% and 93% of our net revenue in the years ended December 31, 2015, 2014 and 2013, respectively.Products shipped to Japan accounted for 1%, 7% and 9% of our net revenue in the years ended December 31, 2015, 2014 and 2013, respectively. Productsshipped to China and Taiwan accounted for 77% and 8%, respectively, of our net revenue in the year ended December 31, 2015. Products shipped to Chinaand Taiwan accounted for 71% and 6%, respectively, of our net revenue in the year ended December 31, 2014. Products shipped to China and Taiwanaccounted for 68% and 8%, respectively, of our net revenue in the year ended December 31, 2013. Although a large percentage of our products are shipped toAsia, we believe that a significant number of the systems designed by these customers and incorporating our semiconductor products are then sold outsideAsia. For example, we believe revenue generated from sales of our digital terrestrial set-top box products during the years ended December 31, 2015, 2014and 2013 related principally to sales to Asian set-top box manufacturers delivering products into Europe, Middle East, and Africa, or EMEA, markets.Similarly, revenue generated from sales of our cable modem products during the years ended December 31, 2015, 2014 and 2013 related principally to salesto Asian ODM’s and contract manufacturers delivering products into European and North American9Table of Contentsmarkets. To date, all of our sales have been denominated in United States dollars. See Note 11 to our consolidated financial statements, included in Part IV,Item 15 of this Report for a discussion of total revenue by geographical region for 2015, 2014 and 2013.Sales and MarketingWe sell our products worldwide through multiple channels, using our direct sales force, third party sales representatives, and a network of domestic andinternational distributors. We have direct sales personnel covering the United States, Europe and Asia, and operate customer engineering support offices inCarlsbad, Irvine, and San Jose in California; Atlanta in Georgia; Tokyo in Japan; Shanghai and Shenzhen in China; Hsinchu in Taiwan; Seoul in SouthKorea; and Bangalore, India. We also employ a staff of field applications engineers to provide direct engineering support locally to some of our customers.Our distributors are independent entities that assist us in identifying and servicing customers in a particular territory, usually on a non-exclusive basis.Sales through distributors accounted for approximately 13%, 28% and 29% of our net revenue in the years ended December 31, 2015, 2014 and 2013,respectively.Our sales cycles typically require a significant amount of time and a substantial expenditure of resources before we can realize revenue from the sale ofproducts, if any. Our typical sales cycle consists of a multi-month sales and development process involving our customers’ system designers andmanagement. The typical time from early engagement by our sales force to actual product introduction runs from nine to twelve months for the consumermarket, to as much as 18 to 24 months for the cable and satellite markets. If successful, this process culminates in a customer’s decision to use our products inits system, which we refer to as a design-win. Volume production may begin within three to nine months after a design-win, depending on the complexity ofour customer’s product and other factors upon which we may have little or no influence. Once our products have been incorporated into a customer’s design,they are likely to be used for the life cycle of the customer’s product. Thus, a design-win may result in an extended period of revenue generation. Conversely,a design-loss to our competitors, may adversely impact our financial results for an extended period of time.We generally receive purchase orders from our customers approximately six to twenty-four weeks prior to the scheduled product delivery date. Thesepurchase orders may be cancelled without charge upon notification, so long as notification is received within an agreed period of time in advance of thedelivery date. Because of the scheduling requirements of our foundries and assembly and test contractors, we generally provide our contractors productionforecasts and place firm orders for products with our suppliers, up to twenty-four weeks prior to the anticipated delivery date, often without a purchase orderfrom our own customers. Our standard warranty provides that products containing defects in materials, workmanship or product performance may be returnedfor a refund of the purchase price or for replacement, at our discretion.ManufacturingWe use third-party foundries and assembly and test contractors to manufacture, assemble and test our semiconductor products. This outsourcedmanufacturing approach allows us to focus our resources on the design, sale and marketing of our products. Our engineers work closely with our foundriesand other contractors to increase yield, lower manufacturing costs and improve product quality.Wafer Fabrication. We utilize an increasing range of process technologies to manufacture our products, from standard CMOS to more exotic processesincluding SiGe and GaAs. Within this range of processes, we use a variety of process technology nodes ranging from 0.18µ down to 28 nanometer. Wedepend on independent silicon foundry manufacturers to support our wafer fabrication requirements. Our key foundry partners include UnitedMicroelectronics Corporation or UMC in Taiwan and Singapore, Taiwan Semiconductor Manufacturing Corporation or TSMC in Taiwan, SemiconductorManufacturing International Corporation or SMIC in China, Global Foundries Inc. in Singapore, Silterra Malaysia Sdn. Bhd. in Malaysia, Tower-Jazz inNewport Beach California, and WIN Semiconductor in Taiwan.Assembly/packaging and Test. Upon completion of the silicon processing at the foundry, we forward the finished silicon wafers to independentassembly/packaging and test service subcontractors. The majority of our assembly/packaging and test requirements are supported by the followingindependent subcontractors: Advanced Semiconductor Engineering or ASE in Taiwan (assembly/packaging and test), Giga Solution Technology Co. Ltd. inTaiwan (test only), Amkor Technology in Korea, Philippines, and China (assembly/packaging and test), United Test and Assembly Center or UTAC HoldingsLtd. in Singapore and China (assembly/packaging and test), King Yuan Electronics Co. Ltd. or KYEC in Taiwan (test only), SIGURD Microelectronics Corp.in Taiwan (test only), Siliconware Precision Industries Co. Ltd. or SPIL in Taiwan (assembly/packaging only) and Unisem (M) Berhad in China(assembly/packaging only).10Table of ContentsQuality Assurance. We have implemented significant quality assurance procedures to assure high levels of product quality for our customers. Weclosely monitor the work-in-progress information and production records maintained by our suppliers, and communicate with our third-party contractors toassure high levels of product quality and an efficient manufacturing time cycle. Upon successful completion of the quality assurance procedures, all of ourproducts are stored and shipped to our customers or distributors directly from our third-party contractors in accordance with our shipping instructions.Research and DevelopmentWe believe that our future success depends on our ability to both improve our existing products and to develop new products for both existing andnew markets. We direct our research and development efforts largely to the development of new high performance, mixed-signal semiconductor solutions forbroadband communications, datacenter, and metro and long-haul telecommunications transport market applications. We target applications that requirestringent overall system performance and low power consumption. As new and challenging communication applications proliferate, we believe that many ofthese applications may benefit from our SoC solutions combining analog and mixed-signal processing with digital signal processing functions. We haveassembled a team of highly skilled semiconductor and embedded software design engineers with expertise in broadband RF and mixed-signal integratedcircuit design, digital signal processing, communications systems and SoC design. As of December 31, 2015, we had approximately 345 employees in ourresearch and development group. Our engineering design teams are located in Carlsbad, Irvine, Camarillo and San Jose in California; Atlanta in Georgia;Shenzhen in China; and Bangalore in India. Our research and development expense was $85.4 million, $56.6 million and $53.1 million in 2015, 2014 and2013, respectively.CompetitionWe compete with both established and development-stage semiconductor companies that design, manufacture and market analog and mixed-signalbroadband RF receiver and optical interconnect products. Our competitors include companies with much longer operating histories, greater namerecognition, access to larger customer bases and substantially greater financial, technical and operational resources. In addition, our industry is experiencingsubstantial consolidation. As a result, our competitors are increasingly large multi-national semi-conductor companies with substantial market influence. Ourcompetitors may develop products that are similar or superior to ours. We consider our primary competitors to be companies with a proven track record ofsupporting market leaders and the technical capability to develop and bring to market competing broadband RF receiver and RF receiver SoC and opticalinterconnect products. Our primary competitors include NXP B.V. in cable and terrestrial TV markets, Silicon Laboratories in terrestrial TV markets, RDAMicroelectronics and Rafael Microelectronics, Inc. in TV and terrestrial set-top-box markets, Broadcom Corporation in terrestrial, cable, and satellite markets.Competitors we face in our development initiatives targeting datacenter, and metro and long-haul telecommunications transport applications include Inphi,M/A-COM, Semtech, Qorvo, Broadcom, and Microsemi amongst others. In addition, it is quite likely that a number of other public and private companies,including some of our customers and semiconductor platform partners, could be developing competing products for broadband communications, datacenter,and metro and long-haul telecommunications transport applications.The market for analog and mixed-signal semiconductor products is highly competitive, and we believe that it will grow more competitive as a result ofcontinued technological advances. We believe that the principal competitive factors in our markets include the following:•product performance;•features and functionality;•energy efficiency;•size;•ease of system design;•customer support;•product roadmap;•reputation;•reliability; and11Table of Contents•price.We believe that we compete favorably as measured against each of these criteria. However, our ability to compete in the future will depend upon thesuccessful design, development and marketing of compelling RF and mixed-signal semiconductor integrated solutions for high growth communicationsmarkets. In addition, our competitive position will depend on our ability to continue to attract and retain talent while protecting our intellectual property.Intellectual Property RightsOur success and ability to compete depend, in part, upon our ability to establish and adequately protect our proprietary technology and confidentialinformation. To protect our technology and confidential information, we rely on a combination of intellectual property rights, including patents, tradesecrets, copyrights and trademarks. We also protect our proprietary technology and confidential information through the use of internal and external controls,including contractual protections with employees, contractors, business partners, consultants and advisors. Protecting mask works, or the “topography” orsemiconductor material designs, of our integrated circuit products is of particular importance to our business and we seek to prevent or limit the ability ofothers to copy, reproduce or distribute our mask works.We have 662 issued patents and 327 patent applications pending in the United States. We also have 262 issued foreign patents and 147 other pendingforeign patent applications, based on our issued patents and pending patent applications in the United States. Of the total 924 domestic and foreign issuedpatents, 753 are related to Entropic and 171 are related to Maxlinear. Of the total 474 domestic and foreign pending patents, 204 are related to Entropic and270 are related to Maxlinear.We are the owner of twelve trademarks (“MxL,” “MxLWare,” “Full-Spectrum Capture, “FSC,” “Full Spectrum Transceiver,” “Full-SpectrumTransceiver,” “FST,” “C.LINK,” “ENTROPIC,” “ENTROPIC and Design,” ENTROPIC BUILT-IN and Design,” and “ENTROPIC COMMUNICATIONS andDesign”) that have been registered and/or published for opposition in the United States. We also own foreign counterparts (including eight foreignregistrations) of certain of these registered trademarks in Argentina, Brazil, Chile, China, the EU, Israel, India, Japan, Korea and Taiwan. We also claimcommon law rights in certain other trademarks that are not registered.We may not gain any competitive advantages from our patents and other intellectual property rights. Our existing and future patents may becircumvented, designed around, blocked or challenged as to inventorship, ownership, scope, validity or enforceability. It is possible that we may be providedwith information in the future that could negatively affect the scope or enforceability of either our present or future patents. Furthermore, our pending andfuture patent applications may or may not be granted under the scope of the claims originally submitted in our patent applications. The scope of the claimssubmitted or granted may or may not be sufficiently broad to protect our proprietary technologies. Moreover, we have adopted a strategy of seeking limitedpatent protection with respect to the technologies used in or relating to our products.We are a party to a number of license agreements for various technologies, such as a license agreement with Intel Corporation relating to demodulatortechnologies that are licensed specifically for use in our products for cable set-top boxes. The agreement was originally entered into with Texas Instrumentsbut was subsequently assigned to Intel Corporation as part of Intel Corporation’s acquisition of Texas Instruments’ cable modem product line in 2010. Thelicense agreement with Intel Corporation has a perpetual term, but Intel Corporation may terminate the agreement for any uncured material breach or in theevent of bankruptcy. If the agreement is terminated, we would not be able to manufacture or sell products that contain the demodulator technology licensedfrom Intel Corporation, and there would be a delay in the shipment of our products containing the technology until we found a replacement for thedemodulator technology in the marketplace on commercially reasonable terms or we developed the demodulator technology itself. We believe we could finda substitute for the currently licensed demodulator technology in the marketplace on commercially reasonable terms or develop the demodulator technologyourselves. In either case, obtaining new licenses or replacing existing technology could have a material adverse effect on our business, as described in “RiskFactors—Risks Related to Our Business—We utilize a significant amount of intellectual property in our business. If we are unable to protect our intellectualproperty, our business could be adversely affected.”The semiconductor industry is characterized by frequent litigation and other vigorous offensive and protective enforcement actions over rights tointellectual property. Moreover, there are numerous patents in the semiconductor industry, and new patents are being granted rapidly worldwide. Ourcompetitors may obtain patents that block or limit our ability to develop new technology and/or improve our existing products. If our products were found toinfringe any patents or other intellectual property rights held by third parties, we could be prevented from selling our products or be subject to litigation fees,statutory fines and/or other significant expenses. We may be required to initiate litigation in order to enforce any patents issued to us, or to determine thescope or validity of a third-party’s patent or other proprietary rights. We may in the future be12Table of Contentscontacted by third parties suggesting that we seek a license to intellectual property rights that they may believe we are infringing. In addition, in the future,we may be subject to lawsuits by third parties seeking to enforce their own intellectual property rights, as described in “Risk Factors—Risks Related to OurBusiness—We recently settled and are currently a party to intellectual property litigation and may face additional claims of intellectual propertyinfringement. Current litigation and any future litigation could be time-consuming, costly to defend or settle and result in the loss of significant rights” andin “Item 3—Legal Proceedings.”EmployeesAs of December 31, 2015, we had approximately 500 employees, including 345 in research and development, 69 in sales and marketing, 19 inoperations and semiconductor technology and 67 in administration. None of our employees is represented by a labor organization or under any collectivebargaining arrangement, and we have never had a work stoppage. We consider our employee relations to be good.BacklogOur sales are made primarily pursuant to standard purchase orders. Because industry practice allows customers to reschedule, or in some cases, cancelorders on relatively short notice, we do not believe that backlog is a good indicator of our future sales.Geographic InformationDuring our last three years, substantially all of our revenue was generated from products shipped to China, Japan and Taiwan, and substantially all ofour long-lived assets are located within the United States.SeasonalityThe semiconductor industry is highly cyclical and is characterized by constant and rapid technological change, rapid product obsolescence and priceerosion, evolving technical standards, short product life cycles and wide fluctuations in product supply and demand. From time to time, these and otherfactors, together with changes in general economic conditions, cause significant upturns and downturns in the industry, and in our business in particular.In addition, our operating results are subject to substantial quarterly and annual fluctuations due to a number of factors, such as the demand forsemiconductor solutions for broadband communications applications, the timing of receipt, reduction or cancellation of significant orders, the gain or loss ofsignificant customers, market acceptance of our products and our customers’ products, our ability to timely develop, introduce and market new products andtechnologies, the availability and cost of products from our suppliers, new product and technology introductions by competitors, intellectual propertydisputes and the timing and extent of product development costs.ITEM 1A.RISK FACTORSThis Annual Report on Form 10-K, or Form 10-K, including any information incorporated by reference herein, contains forward-looking statementswithin the meaning of Section 27A of the Securities Act of 1933, as amended, referred to as the Securities Act, and Section 21E of the Securities ExchangeAct of 1934, as amended, referred to as the Exchange Act. In some cases, you can identify forward-looking statements by terms such as “may,” “will,”“should,” “expect,” “plan,” “intend,” “forecast,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue” or the negative of these terms orother comparable terminology. The forward-looking statements contained in this 10-K involve known and unknown risks, uncertainties and situations thatmay cause our or our industry’s actual results, level of activity, performance or achievements to be materially different from any future results, levels ofactivity, performance or achievements expressed or implied by these statements. These factors include those listed below in this Item 1A and those discussedelsewhere in this Form 10-K. We encourage investors to review these factors carefully. We may from time to time make additional written and oral forward-looking statements, including statements contained in our filings with the SEC. We do not undertake to update any forward-looking statement that may bemade from time to time by or on behalf of us, whether as a result of new information, future events or otherwise, except as required by law.Before you invest in our securities, you should be aware that our business faces numerous financial and market risks, including those describedbelow, as well as general economic and business risks. The following discussion provides information concerning the material risks and uncertainties thatwe have identified and believe may adversely affect our business, our13Table of Contentsfinancial condition and our results of operations. Before you decide whether to invest in our securities, you should carefully consider these risks anduncertainties, together with all of the other information included in this Form 10-K and in our other public filings.On April 30, 2015, we completed our acquisition of Entropic Communications, Inc., or Entropic, and promptly following such acquisition, Entropicmerged with and into Excalibur Subsidiary, LLC, with Excalibur Subsidiary, LLC continuing as the surviving entity and changing its name to EntropicCommunications, LLC. For the risks relating to our acquisition of Entropic, please refer to the section of these risk factors captioned “Risks Relating to OurRecent Acquisition of Entropic.”Risks Related to Our BusinessWe face intense competition and expect competition to increase in the future, which could have an adverse effect on our revenue, revenue growthrate, if any, and market share.The global semiconductor market in general, and the RF receiver market in particular, are highly competitive. We compete in different target marketsto various degrees on the basis of a number of principal competitive factors, including our products’ performance, features and functionality, energyefficiency, size, ease of system design, customer support, product roadmap, reputation, reliability and price, as well as on the basis of our customer support,the quality of our product roadmap and our reputation. We expect competition to increase and intensify as a result of industry consolidation and the resultingcreation of larger semiconductor companies. In addition, we expect the internal resources of large, integrated original equipment manufacturers, or OEMs,may continue to enter our markets. Increased competition could result in price pressure, reduced profitability and loss of market share, any of which couldmaterially and adversely affect our business, revenue, revenue growth rates and operating results.As our products are integrated into a variety of electronic devices, we compete with suppliers of both can tuners and traditional silicon RF receivers,and with providers of physical medium devices for optical interconnect markets. Our competitors range from large, international companies offering a widerange of semiconductor products to smaller companies specializing in narrow markets and internal engineering groups within television, set-top box, datamodems and gateway, satellite low-noise blocker, and optical module manufacturers, some of which may be our customers. Our primary competitors includeSilicon Labs, NXP B.V., RDA Microelectronics, Inc., Broadcom Ltd (recently created through the merger of Broadcom Corporation and Avago TechnologiesLimited), and Rafael Microelectronics, Inc. Inphi Corporation, M/A-COM Technology Solutions Holdings, Inc., Semtech Corporation, Qorvo Inc., andMicrosemi Corporation (which recently acquired PMC-Sierra) are competitors. It is quite likely that competition in the markets in which we participate willincrease in the future as existing competitors improve or expand their product offerings. In addition, it is quite likely that a number of other public andprivate companies are in the process of developing competing products for digital television and other broadband communication applications. Because ourproducts often are building block semiconductors which provide functions that in some cases can be integrated into more complex integrated circuits, wealso face competition from manufacturers of integrated circuits, some of which may be existing customers or platform partners that develop their ownintegrated circuit products. If we cannot offer an attractive solution for applications where our competitors offer more fully integratedtuner/demodulator/video processing products, we may lose significant market share to our competitors. Certain of our competitors have fully integratedtuner/demodulator/video processing solutions targeting high performance cable, satellite, or DTV applications, and thereby potentially provide customerswith smaller and cheaper solutions. Some of our targeted customers for our optical interconnect solutions are module makers who are vertically integrated,where we compete with internally supplied components.Our ability to compete successfully depends on factors both within and outside of our control, including industry and general economic trends. Duringpast periods of downturns in our industry, competition in the markets in which we operate intensified as manufacturers of semiconductors reduced prices inorder to combat production overcapacity and high inventory levels. Many of our competitors have substantially greater financial and other resources withwhich to withstand similar adverse economic or market conditions in the future. Moreover, the competitive landscape is changing as a result of consolidationwithin our industry as some of our competitors have merged with or been acquired by other competitors, and other competitors have begun to collaboratewith each other. These developments may materially and adversely affect our current and future target markets and our ability to compete successfully inthose markets.We depend on a limited number of customers, that have undergone or are subject to pending consolidation and who themselves are dependent on aconsolidating set of service provider customers, for a substantial portion of our revenue, and the loss of, or a significant reduction in orders from one ormore of our major customers could have a material adverse effect on our revenue and operating results.14Table of ContentsFor fiscal 2015, two customers accounted for 41% of our net revenue, and our ten largest customers accounted for 76% of our net revenue. For fiscal2014, one customer accounted for approximately 31% of our net revenue, and our ten largest customers collectively accounted for approximately 67% of ournet revenue. For fiscal 2013, one customer accounted for approximately 28% of our net revenue, and our ten largest customers collectively accounted forapproximately 72% of our net revenue. We expect that our operating results for the foreseeable future will continue to depend on sales to a relatively smallnumber of customers and on the ability of these customers to sell products that incorporate our RF receivers or RF receiver SoCs, digital STB video SoCs,DBS ODU, and MoCA® connectivity solutions. In the future, these customers may decide not to purchase our products at all, may purchase fewer productsthan they did in the past, or may defer or cancel purchases or otherwise alter their purchasing patterns. Factors that could affect our revenue from these largecustomers include the following:•substantially all of our sales to date have been made on a purchase order basis, which permits our customers to cancel, change or delay productpurchase commitments with little or no notice to us and without penalty;•some of our customers have sought or are seeking relationships with current or potential competitors which may affect their purchasingdecisions; and•service provider and OEM consolidation across cable, satellite, and fiber markets could result in significant changes to our customers’technology development and deployment priorities and roadmaps, which could affect our ability to forecast demand accurately and could leadto increased volatility in our business.In addition, delays in development could impair our relationships with our strategic customers and negatively impact sales of the products underdevelopment. Moreover, it is possible that our customers may develop their own product or adopt a competitor’s solution for products that they currentlybuy from us. If that happens, our sales would decline and our business, financial condition and results of operations could be materially and adverselyaffected.Our relationships with some customers may deter other potential customers who compete with these customers from buying our products. To attract newcustomers or retain existing customers, we may offer these customers favorable prices on our products. In that event, our average selling prices and grossmargins would decline. The loss of a key customer, a reduction in sales to any key customer or our inability to attract new significant customers couldseriously impact our revenue and materially and adversely affect our results of operations.A significant portion of our revenue is attributable to demand for our products in markets for broadband and pay-TV operator applications, andconsolidation among cable and satellite television operators could adversely affect our future revenues and operating results.For fiscal 2015, revenue directly attributable to operator applications accounted for approximately 75% of our net revenue. For fiscal 2014, revenuedirectly attributable to these applications accounted for approximately 76% of our net revenue. For fiscal 2013, revenue directly attributable to cable andsatellite operator applications accounted for approximately 77% of our net revenue. Delays in the development of, or unexpected developments in theoperator applications markets could have an adverse effect on order activity by manufacturers in these markets and, as a result, on our business, revenue,operating results and financial condition. In addition, consolidation trends among television operators may continue, which could have a material adverseeffect on our future operating results and financial condition.If we fail to penetrate new markets, specifically the market for satellite set-top and gateway boxes and outdoor units, our revenue, revenue growthrate, if any, and financial condition could be materially and adversely affected.Currently, we sell most of our products to manufacturers of applications for television, to Chinese manufacturers of terrestrial set-top boxes for sale invarious markets worldwide, broadband voice and data modems and gateways, and pay-TV set-top boxes and gateways, to manufacturers of satellite outdoorunits or LNB’s, and to manufacturers of optical modules for long-haul and metro telecommunications markets. Our future revenue growth, if any, will dependin part on our ability to expand beyond these markets with analog and mixed-signal solutions targeting the markets for high-speed optical interconnects fordatacenter, metro, and long-haul optical modules, telecommunications wireless infrastructure, and cable infrastructure products supporting future Cableoperator deployments of DOCSIS 3.1. Each of these markets presents distinct and substantial risks. If any of these markets do not develop as we currentlyanticipate, or if we are unable to penetrate them successfully, it could materially and adversely affect our revenue and revenue growth rate, if any.We expect broadband data modems/gateways and pay-TV and satellite set-top boxes and video gateways to represent our largest North American andEuropean target market. The North American and European pay-TV set-top box market is15Table of Contentsdominated by only a few OEMs, including Cisco Systems, Inc. (whose connected devices business was acquired by Technicolor in November 2015), ArrisGroup, Inc., Pace plc, Humax Co., Ltd., Samsung Electronics Co., Ltd., and Technicolor S.A. These OEMs are large multinational corporations withsubstantial negotiating power relative to us and are undergoing significant consolidation. Securing design wins with any of these companies requires asubstantial investment of our time and resources. Even if we succeed, additional testing and operational certifications will be required by the OEMs’customers, which include large pay-TV television companies such as Comcast Corporation, Time Warner Cable Inc., DIRECTV, and EchoStar Corporation. Inaddition, our products will need to be compatible with other components in our customers’ designs, including components produced by our competitors orpotential competitors. There can be no assurance that these other companies will support or continue to support our products.If we fail to penetrate these or other new markets upon which we target our resources, our revenue and revenue growth rate, if any, likely will decreaseover time and our financial condition could suffer.We may be unable to make the substantial and productive research and development investments which are required to remain competitive in ourbusiness.The semiconductor industry requires substantial investment in research and development in order to develop and bring to market new and enhancedtechnologies and products. Many of our products originated with our research and development efforts and we believe have provided us with a significantcompetitive advantage. For fiscal 2015, our research and development expense was $85.4 million. For fiscal 2014, our research and development expensewas $56.6 million. For fiscal 2013, our research and development expense was $53.1 million. For fiscal 2014 and 2015, we continued to increase our researchand development expenditures as part of our strategy of devoting focused research and development efforts on the development of innovative andsustainable product platforms. We are committed to investing in new product development internally in order to stay competitive in our markets and plan tomaintain research and development and design capabilities for new solutions in advanced semiconductor process nodes such as 40nm and 28nm and beyond.We do not know whether we will have sufficient resources to maintain the level of investment in research and development required to remain competitive assemiconductor process nodes continue to shrink and become increasingly complex. In addition, we cannot assure you that the technologies which are thefocus of our research and development expenditures will become commercially successful.The complexity of our products could result in unforeseen delays or expenses caused by undetected defects or bugs, which could reduce the marketacceptance of our new products, damage our reputation with current or prospective customers and adversely affect our operating costs.Highly complex products like our RF receivers and RF receiver SoCs and physical medium devices for optical modules may contain defects and bugswhen they are first introduced or as new versions are released. We have previously experienced, and may in the future experience, defects and bugs and, inparticular, have identified liabilities of several million dollars arising from warranty claims related to legacy Entropic products. Where any of our products,including legacy Entropic products, contain defects or bugs, or have reliability, quality or compatibility problems, we may not be able to successfully correctthese problems. Consequently, our reputation may be damaged and customers may be reluctant to buy our products, which could materially and adverselyaffect our ability to retain existing customers and attract new customers, and our financial results. In addition, these defects or bugs could interrupt or delaysales to our customers. If any of these problems are not found until after we have commenced commercial production of a new product (as in the case of thelegacy Entropic products experiencing warranty claims), we may be required to incur additional development costs and product recall, repair or replacementcosts, and our operating costs could be adversely affected. These problems may also result in warranty or product liability claims against us by our customersor others that may require us to make significant expenditures to defend these claims or pay damage awards. In the event of a warranty claim, we may alsoincur costs if we compensate the affected customer. We maintain product liability insurance, but this insurance is limited in amount and subject to significantdeductibles. There is no guarantee that our insurance will be available or adequate to protect against all claims. We also may incur costs and expensesrelating to a recall of one of our customers’ products containing one of our devices. The process of identifying a recalled product in devices that have beenwidely distributed may be lengthy and require significant resources, and we may incur significant replacement costs, contract damage claims from ourcustomers and reputational harm. Costs or payments made in connection with warranty and product liability claims and product recalls could materiallyaffect our financial condition and results of operations.Average selling prices of our products could decrease rapidly, which could have a material adverse effect on our revenue and gross margins.We may experience substantial period-to-period fluctuations in future operating results due to the erosion of our average selling prices. From time totime, we have reduced the average unit price of our products due to competitive pricing pressures,16Table of Contentsnew product introductions by us or our competitors, and for other reasons, and we expect that we will have to do so again in the future. If we are unable tooffset any reductions in our average selling prices by increasing our sales volumes or introducing new products with higher margins, our revenue and grossmargins will suffer. To support our gross margins, we must develop and introduce new products and product enhancements on a timely basis and continuallyreduce our and our customers’ costs. Our inability to do so would cause our revenue and gross margins to decline.If we fail to develop and introduce new or enhanced products on a timely basis, our ability to attract and retain customers could be impaired and ourcompetitive position could be harmed.We operate in a dynamic environment characterized by rapidly changing technologies and industry standards and technological obsolescence. Tocompete successfully, we must design, develop, market and sell new or enhanced products that provide increasingly higher levels of performance andreliability and meet the cost expectations of our customers. The introduction of new products by our competitors, the market acceptance of products based onnew or alternative technologies, or the emergence of new industry standards could render our existing or future products obsolete. Our failure to anticipate ortimely develop new or enhanced products or technologies in response to technological shifts could result in decreased revenue and our competitors winningmore competitive bid processes, known as “design wins.” In particular, we may experience difficulties with product design, manufacturing, marketing orcertification that could delay or prevent our development, introduction or marketing of new or enhanced products. If we fail to introduce new or enhancedproducts that meet the needs of our customers or penetrate new markets in a timely fashion, we will lose market share and our operating results will beadversely affected.In particular, we believe that we will need to develop new products in part to respond to changing dynamics and trends in our end user markets,including (among other trends) consolidation among cable and satellite operators, potential industry shifts away from the hardware devices and othertechnologies that incorporate our products, and changes in consumer television viewing habits and how consumers access and receive broadcast content anddigital broadband services. We cannot predict how these trends will continue to develop or how or to what extent they may affect our future revenues andoperating results. We believe that we will need to continue to make substantial investments in research and development in an attempt to ensure a productroadmap that anticipates these types of changes; however, we cannot provide any assurances that we will accurately predict the direction in which ourmarkets will evolve or that we will be able to develop, market, or sell new products that respond to such changes successfully or in a timely manner, if at all.We recently settled and are currently a party to intellectual property litigation and may face additional claims of intellectual property infringement.Current litigation and any future litigation could be time-consuming, costly to defend or settle and result in the loss of significant rights.The semiconductor industry is characterized by companies that hold large numbers of patents and other intellectual property rights and thatvigorously pursue, protect and enforce intellectual property rights. Third parties have in the past and may in the future assert against us and our customersand distributors their patent and other intellectual property rights to technologies that are important to our business. In particular, from time to time, wereceive correspondence from competitors seeking to engage us in discussions concerning potential claims against us, and we receive correspondence fromcustomers seeking indemnification for potential claims related to infringement claims asserted against down-stream users of our products. We investigatethese requests as received and could be required to enter license agreements with respect to third party intellectual property rights or indemnify third parties,either of which could have an adverse effect on our future operating results.On January 21, 2014, CrestaTech Technology Corporation, or CrestaTech, filed a complaint for patent infringement against us in the United StatesDistrict Court of Delaware (the “District Court Litigation”). In its complaint, CrestaTech alleges that we infringe U.S. Patent Nos. 7,075,585 (the “’585Patent”) and 7,265,792. In addition to asking for compensatory damages, CrestaTech alleges willful infringement and seeks a permanent injunction.CrestaTech also names Sharp Corporation, Sharp Electronics Corp. and VIZIO, Inc. as defendants based upon their alleged use of our television tuners. OnJanuary 28, 2014, CrestaTech filed a complaint with the U.S. International Trade Commission, or ITC, again naming, among others, us, Sharp, SharpElectronics, and VIZIO (the “ITC Investigation”).On December 1-5, 2014, the ITC held a trial in the ITC Investigation. On February 27, 2015, the Administrative Law Judge issued a written InitialDetermination (“ID”), ruling that the Company Respondents do not violate Section 1337 in connection with CrestaTech’s asserted patents becauseCrestaTech failed to satisfy the economic prong of the domestic industry requirement pursuant to Section 1337(a)(2). In addition, the ID stated that certain ofour television tuners and televisions incorporating those tuners manufactured and sold by certain customers infringe three claims of the ‘585 Patent, andthese three17Table of Contentsclaims were not determined to be invalid. On April 30, 2015, the ITC issued a notice indicating that it intended to review portions of the ID finding noviolation of Section 1337, including the ID’s findings of infringement with respect to, and validity of, the ‘585 Patent, and the ID’s finding that CrestaTechfailed to establish the existence of a domestic industry within the meaning of Section 1337.The ITC requested additional briefing from the parties on certain issues under review by the Commission. The ITC subsequently issued its opinion,which terminated its investigation. The opinion affirmed the findings of the administrative law judge that no violation of Section 1337 had occurred becauseCrestaTech had failed to establish the economic prong of the domestic industry requirement. The ITC also affirmed the administrative law judge's finding ofinfringement with respect to the three claims of the '585 Patent that were not held to be invalid. On November 30, 2015, CrestaTech filed an appeal of the ITCdecision with the United States Court of Appeals for the Federal Circuit (the "Federal Circuit").In addition, we have filed four petitions for inter partes review ("IPR") by the US Patent Office of the two CrestaTech patents asserted against us. ThePatent Trial and Appeal Board (“PTAB”) did not institute two of these IPRs as being redundant to IPRs filed by another party that are already underway forthe same CrestaTech patent. The remaining two petitions were instituted or instituted-in-part and, together with the IPRs filed by third parties, there arecurrently six IPR proceedings filed involving the two CrestaTech patents asserted against us. In October 2015, the PTAB issued final decisions in two of thesix IPR proceedings, holding that all of the reviewed claims are unpatentable. Included in these decisions was one of the three claims mentioned above.CrestaTech is appealing the PTAB’s decisions at the Federal Circuit.We cannot predict the outcome of the District Court Litigation or the IPRs. Any adverse determination in the District Court Litigation could have amaterial adverse effect on our business and operating results.Claims that our products, processes or technology infringe third-party intellectual property rights, regardless of their merit or resolution and includingthe CrestaTech claims, are costly to defend or settle and could divert the efforts and attention of our management and technical personnel. In addition, manyof our customer and distributor agreements require us to indemnify and defend our customers or distributors from third-party infringement claims and paydamages in the case of adverse rulings. Claims of this sort also could harm our relationships with our customers or distributors and might deter futurecustomers from doing business with us. In order to maintain our relationships with existing customers and secure business from new customers, we have beenrequired from time to time to provide additional assurances beyond our standard terms. If any future proceedings result in an adverse outcome, we could berequired to:•cease the manufacture, use or sale of the infringing products, processes or technology;•pay substantial damages for infringement;•expend significant resources to develop non-infringing products, processes or technology;•license technology from the third-party claiming infringement, which license may not be available on commercially reasonable terms, or at all;•cross-license our technology to a competitor to resolve an infringement claim, which could weaken our ability to compete with that competitor;or•pay substantial damages to our customers or end users to discontinue their use of or to replace infringing technology sold to them with non-infringing technology.Any of the foregoing results could have a material adverse effect on our business, financial condition and results of operations.We utilize a significant amount of intellectual property in our business. If we are unable to protect our intellectual property, our business could beadversely affected.Our success depends in part upon our ability to protect our intellectual property. To accomplish this, we rely on a combination of intellectual propertyrights, including patents, copyrights, trademarks and trade secrets in the United States and in selected foreign countries where we believe filing for suchprotection is appropriate. Effective patent, copyright, trademark and trade secret protection may be unavailable, limited or not applied for in some countries.Some of our products and technologies are not covered by any patent or patent application. We cannot guarantee that:18Table of Contents•any of our present or future patents or patent claims will not lapse or be invalidated, circumvented, challenged or abandoned;•our intellectual property rights will provide competitive advantages to us;•our ability to assert our intellectual property rights against potential competitors or to settle current or future disputes will not be limited by ouragreements with third parties;•any of our pending or future patent applications will be issued or have the coverage originally sought;•our intellectual property rights will be enforced in jurisdictions where competition may be intense or where legal protection may be weak;•any of the trademarks, copyrights, trade secrets or other intellectual property rights that we presently employ in our business will not lapse or beinvalidated, circumvented, challenged or abandoned; or•we will not lose the ability to assert our intellectual property rights against or to license our technology to others and collect royalties or otherpayments.In addition, our competitors or others may design around our protected patents or technologies. Effective intellectual property protection may beunavailable or more limited in one or more relevant jurisdictions relative to those protections available in the United States, or may not be applied for in oneor more relevant jurisdictions. If we pursue litigation to assert our intellectual property rights, an adverse decision in any of these legal actions could limit ourability to assert our intellectual property rights, limit the value of our technology or otherwise negatively impact our business, financial condition and resultsof operations.Monitoring unauthorized use of our intellectual property is difficult and costly. Unauthorized use of our intellectual property may have occurred ormay occur in the future. Although we have taken steps to minimize the risk of this occurring, any such failure to identify unauthorized use and otherwiseadequately protect our intellectual property would adversely affect our business. Moreover, if we are required to commence litigation, whether as a plaintiffor defendant as has occurred with CrestaTech, not only will this be time-consuming, but we will also be forced to incur significant costs and divert ourattention and efforts of our employees, which could, in turn, result in lower revenue and higher expenses.We also rely on customary contractual protections with our customers, suppliers, distributors, employees and consultants, and we implement securitymeasures to protect our trade secrets. We cannot assure you that these contractual protections and security measures will not be breached, that we will haveadequate remedies for any such breach or that our suppliers, employees or consultants will not assert rights to intellectual property arising out of suchcontracts.In addition, we have a number of third-party patent and intellectual property license agreements. Some of these license agreements require us to makeone-time payments or ongoing royalty payments. Also, a few of our license agreements contain most-favored nation clauses or other price restriction clauseswhich may affect the amount we may charge for our products, processes or technology. We cannot guarantee that the third-party patents and technology welicense will not be licensed to our competitors or others in the semiconductor industry. In the future, we may need to obtain additional licenses, renewexisting license agreements or otherwise replace existing technology. We are unable to predict whether these license agreements can be obtained or renewedor the technology can be replaced on acceptable terms, or at all.When we settled a trademark dispute with Linear Technology Corporation, we agreed not to register the “MAXLINEAR” mark or any other markscontaining the term “LINEAR”. We may continue to use “MAXLINEAR” as a corporate identifier, including to advertise our products and services, but maynot use that mark on our products. The agreement does not affect our ability to use our registered trademark “MxL”, which we use on our products. Due to ouragreement not to register the “MAXLINEAR” mark, our ability to effectively prevent third parties from using the “MAXLINEAR” mark in connection withsimilar products or technology may be affected. If we are unable to protect our trademarks, we may experience difficulties in achieving and maintainingbrand recognition and customer loyalty.Our business, revenue and revenue growth, if any, will depend in part on the timing and development of the global transition from analog to digitaltelevision, which is subject to numerous regulatory and business risks outside our control.In the year ended December 31, 2015, sales of our RF receiver products used in digital terrestrial television applications, or DTT, including digitaltelevisions, terrestrial set-top boxes, and terrestrial receivers in satellite video gateways represented a declining, but not insignificant, portion of our revenues.We expect a declining but not insignificant portion of our revenue in19Table of Contentsfuture periods to continue to depend on the demand for DTT applications. In contrast to the United States, where the transition from analog to digitaltelevision occurred on a national basis in June 2009, in Europe and other parts of the world, the digital transition is being phased in on a local and regionalbasis and is expected to occur over many years. Many countries in Eastern Europe and Latin America are expected to convert to digital television by the endof 2018, with other countries targeting dates as late as 2024. As a result, our future revenue will depend in part on government mandates requiring conversionfrom analog to digital television and on the timing and implementation of those mandates. If the ongoing global transition to digital TV standards does notcontinue to progress or experiences significant delays, our business, revenue, operating results and financial condition would be materially and adverselyaffected. If during the transition to digital TV standards, consumers disproportionately purchase TV’s with digital or hybrid tuning capabilities, this coulddiminish the size of the market for our digital-to-analog converter set-top box solutions, and as result our business, revenue, operating results and financialcondition would be materially and adversely affected.Global economic conditions, including factors that adversely affect consumer spending for the products that incorporate our integrated circuits,could adversely affect our revenues, margins, and operating results.Our products are incorporated in numerous consumer devices, and demand for our products will ultimately be driven by consumer demand for productssuch as televisions, automobiles, cable modems, and set-top boxes. Many of these purchases are discretionary. Global economic volatility and economicvolatility in the specific markets in which the devices that incorporate our products are ultimately sold can cause extreme difficulties for our customers andthird-party vendors in accurately forecasting and planning future business activities. This unpredictability could cause our customers to reduce spending onour products, which would delay and lengthen sales cycles. Furthermore, during challenging economic times our customers may face challenges in gainingtimely access to sufficient credit, which could impact their ability to make timely payments to us. These events, together with economic volatility that mayface the broader economy and, in particular, the semiconductor and communications industries, may adversely affect, our business, particularly to the extentthat consumers decrease their discretionary spending for devices deploying our products.We rely on a limited number of third parties to manufacture, assemble and test our products, and the failure to manage our relationships with ourthird-party contractors successfully could adversely affect our ability to market and sell our products.We do not have our own manufacturing facilities. We operate an outsourced manufacturing business model that utilizes third-party foundry andassembly and test capabilities. As a result, we rely on third-party foundry wafer fabrication and assembly and test capacity, including sole sourcing for manycomponents or products. Currently, all of our products are manufactured by United Microelectronics Corporation, or UMC, Silterra Malaysia Sdn Bhd,Global Foundries, Semiconductor Manufacturing International Corporation, or SMIC, Taiwan Semiconductor Manufacturing Corp, or TSMC, JazzSemiconductor, and WIN Semiconductor at foundries in Taiwan, Singapore, Malaysia, China, and the United States. We also use third-party contractors forall of our assembly and test operations.Relying on third party manufacturing, assembly and testing presents significant risks to us, including the following:•failure by us, our customers, or their end customers to qualify a selected supplier;•capacity shortages during periods of high demand;•reduced control over delivery schedules and quality;•shortages of materials;•misappropriation of our intellectual property;•limited warranties on wafers or products supplied to us; and•potential increases in prices.The ability and willingness of our third-party contractors to perform is largely outside our control. If one or more of our contract manufacturers or otheroutsourcers fails to perform its obligations in a timely manner or at satisfactory quality levels, our ability to bring products to market and our reputationcould suffer. For example, in the event that manufacturing capacity is reduced or eliminated at one or more facilities, including as a response to the recentworldwide decline in the semiconductor industry, manufacturing could be disrupted, we could have difficulties fulfilling our customer orders and our netrevenue could decline. In addition, if these third parties fail to deliver quality products and components on time and at reasonable prices, we20Table of Contentscould have difficulties fulfilling our customer orders, our net revenue could decline and our business, financial condition and results of operations would beadversely affected.Additionally, our manufacturing capacity may be similarly reduced or eliminated at one or more facilities due to the fact that our fabrication andassembly and test contractors are all located in the Pacific Rim region, principally in China, Taiwan, Singapore and Malaysia. The risk of earthquakes inthese geographies is significant due to the proximity of major earthquake fault lines, and Taiwan in particular is also subject to typhoons and other Pacificstorms. Earthquakes, fire, flooding, or other natural disasters in Taiwan or the Pacific Rim region, or political unrest, war, labor strikes, work stoppages orpublic health crises, such as outbreaks of H1N1 flu, in countries where our contractors’ facilities are located could result in the disruption of our foundry,assembly or test capacity. Any disruption resulting from these events could cause significant delays in shipments of our products until we are able to shift ourmanufacturing, assembly or test from the affected contractor to another third-party vendor. There can be no assurance that alternative capacity could beobtained on favorable terms, if at all.We do not have any long-term supply contracts with our contract manufacturers or suppliers, and any disruption in our supply of products ormaterials could have a material adverse effect on our business, revenue and operating results.We currently do not have long-term supply contracts with any of our third-party vendors, including UMC, Silterra Malaysia Sdn Bhd, GlobalFoundries, SMIC, TSMC, Jazz Semiconductor, and WIN Semiconductor. We make substantially all of our purchases on a purchase order basis, and neitherUMC nor our other contract manufacturers are required to supply us products for any specific period or in any specific quantity. Foundry capacity may not beavailable when we need it or at reasonable prices. Availability of foundry capacity has in the past been reduced from time to time due to strong demand.Foundries can allocate capacity to the production of other companies’ products and reduce deliveries to us on short notice. It is possible that foundrycustomers that are larger and better financed than we are, or that have long-term agreements with our foundry, may induce our foundry to reallocate capacityto them. This reallocation could impair our ability to secure the supply of components that we need. We expect that it would take approximately nine totwelve months to transition performance of our foundry or assembly services to new providers. Such a transition would likely require a qualification processby our customers or their end customers. We generally place orders for products with some of our suppliers approximately four to five months prior to theanticipated delivery date, with order volumes based on our forecasts of demand from our customers. Accordingly, if we inaccurately forecast demand for ourproducts, we may be unable to obtain adequate and cost-effective foundry or assembly capacity from our third-party contractors to meet our customers’delivery requirements, or we may accumulate excess inventories. On occasion, we have been unable to adequately respond to unexpected increases incustomer purchase orders and therefore were unable to benefit from this incremental demand. None of our third-party contractors has provided any assuranceto us that adequate capacity will be available to us within the time required to meet additional demand for our products.To address capacity considerations, we are in the process of qualifying additional semiconductor fabricators. Qualification will not occur if we identifya defect in a fabricator’s manufacturing process or if our customers choose not to invest the time and expense required to qualify the proposed fabricator. Iffull qualification of a fabricator does not occur, we may not be able to sell all of the materials produced by this fabricator or to fulfill demand for our products,which would adversely affect our business, revenue and operating results. In addition, the resulting write-off of unusable inventories would have an adverseeffect on our operating results.We may have difficulty accurately predicting our future revenue and appropriately budgeting our expenses particularly as we seek to enter newmarkets where we may not have prior experience.Our recent operating history has focused on developing integrated circuits for specific terrestrial, cable and satellite television, and broadband voiceand data applications, and as part of our strategy, we seek to expand our addressable market into new product categories. For example, we have recentlyexpanded into the market for and physical medium devices for the optical interconnect markets, and are attempting to enter the markets fortelecommunications wireless infrastructure and cable infrastructure. Our limited operating experience in new markets or potential markets we may enter,combined with the rapidly evolving nature of our markets in general, substantial uncertainty concerning how these markets may develop and other factorsbeyond our control, reduces our ability to accurately forecast quarterly or annual revenue. We are currently expanding our staffing and increasing ourexpense levels in anticipation of future revenue growth. If our revenue does not increase as anticipated, we could incur significant losses due to our higherexpense levels if we are not able to decrease our expenses in a timely manner to offset any shortfall in future revenue.21Table of ContentsWe may not sustain our growth rate, and we may not be able to manage future growth effectively.We have been experiencing significant growth in a short period of time. Our net revenue increased from approximately $97.7 million in 2012, to$119.6 million in 2013, to $133.1 million in 2014 and $300.4 million in 2015. We may not achieve similar growth rates in future periods. You should notrely on our operating results for any prior quarterly or annual periods as an indication of our future operating performance. If we are unable to maintainadequate revenue growth, our financial results could suffer and our stock price could decline.To manage our growth successfully and handle the responsibilities of being a public company, we believe we must effectively, among other things:•recruit, hire, train and manage additional qualified engineers for our research and development activities, especially in the positions of designengineering, product and test engineering and applications engineering;•add sales personnel and expand customer engineering support offices;•implement and improve our administrative, financial and operational systems, procedures and controls; and•enhance our information technology support for enterprise resource planning and design engineering by adapting and expanding our systemsand tool capabilities, and properly training new hires as to their use.If we are unable to manage our growth effectively, we may not be able to take advantage of market opportunities or develop new products and we mayfail to satisfy customer requirements, maintain product quality, execute our business plan or respond to competitive pressures.If we are unable to attract, train and retain qualified personnel, especially our design and technical personnel, we may not be able to execute ourbusiness strategy effectively.Our future success depends on our ability to retain, attract and motivate qualified personnel, including our management, sales and marketing andfinance, and especially our design and technical personnel. We do not know whether we will be able to retain all of these personnel as we continue to pursueour business strategy. Historically, we have encountered difficulties in hiring and retaining qualified engineers because there is a limited pool of engineerswith the expertise required in our field. Competition for these personnel is intense in the semiconductor industry. As the source of our technological andproduct innovations, our design and technical personnel represent a significant asset. The loss of the services of one or more of our key employees, especiallyour key design and technical personnel, or our inability to retain, attract and motivate qualified design and technical personnel, could have a materialadverse effect on our business, financial condition and results of operations.Our business would be adversely affected by the departure of existing members of our senior management team.Our success depends, in large part, on the continued contributions of our senior management team. None of our senior management team is bound bywritten employment contracts to remain with us for a specified period. In addition, we have not entered into non-compete agreements with members of oursenior management team. The loss of any member of our senior management team could harm our ability to implement our business strategy and respond tothe rapidly changing market conditions in which we operate.Our customers require our products and our third-party contractors to undergo a lengthy and expensive qualification process which does not assureproduct sales.Prior to purchasing our products, our customers require that both our products and our third-party contractors undergo extensive qualificationprocesses, which involve testing of the products in the customer’s system and rigorous reliability testing. This qualification process may continue for sixmonths or more. However, qualification of a product by a customer does not assure any sales of the product to that customer. Even after successfulqualification and sales of a product to a customer, a subsequent revision to the RF receiver or RF receiver SoC and physical medium devices for opticalmodules, changes in our customer’s manufacturing process or our selection of a new supplier may require a new qualification process, which may result indelays and in us holding excess or obsolete inventory. After our products are qualified, it can take six months or more before the customer commencesvolume production of components or devices that incorporate our products. Despite these uncertainties, we devote substantial resources, including design,engineering, sales, marketing and management efforts, to qualifying our products with customers in anticipation of sales. If we are unsuccessful or delayed inqualifying any of our products with a customer, sales of this product to the customer may be precluded or delayed, which may impede our growth and causeour business to suffer.22Table of ContentsWe are subject to risks associated with our distributors’ product inventories and product sell-through. Should any of our distributors cease or beforced to stop distributing our products, our business would suffer.We currently sell a significant but declining portion of our products to customers through our distributors, who maintain their own inventories of ourproducts.For fiscal 2015, sales through distributors accounted for 13% of our net revenue. For fiscal 2014, sales through distributors accounted for 28% of ournet revenue. For fiscal 2013, sales through distributors accounted for 29% of our net revenue. For these distributor transactions, revenue is not recognizeduntil product is shipped to the end customer and the amount that will ultimately be collected is fixed or determinable. Upon shipment of product to thesedistributors, title to the inventory transfers to the distributor and the distributor is invoiced, generally with 30 day terms. On shipments to our distributorswhere revenue is not recognized, we record a trade receivable for the selling price as there is a legally enforceable right to payment, relieving the inventoryfor the carrying value of goods shipped since legal title has passed to the distributor, and record the corresponding gross profit in the consolidated balancesheet as a component of deferred revenue and deferred profit, representing the difference between the receivable recorded and the cost of inventory shipped.Future pricing credits and/or stock rotation rights from our distributors may result in the realization of a different amount of profit included our futureconsolidated statements of operations than the amount recorded as deferred profit in our consolidated balance sheets.If our distributors are unable to sell an adequate amount of their inventories of our products in a given quarter to manufacturers and end users or if theydecide to decrease their inventories of our products for any reason, our sales through these distributors and our revenue may decline. In addition, if somedistributors decide to purchase more of our products than are required to satisfy end customer demand in any particular quarter, inventories at thesedistributors would grow in that quarter. These distributors likely would reduce future orders until inventory levels realign with end customer demand, whichcould adversely affect our product revenue in a subsequent quarter.Our reserve estimates with respect to the products stocked by our distributors are based principally on reports provided to us by our distributors,typically on a weekly basis. To the extent that this resale and channel inventory data is inaccurate or not received in a timely manner, we may not be able tomake reserve estimates for future periods accurately or at all.We are subject to order and shipment uncertainties, and differences between our estimates of customer demand and product mix and our actualresults could negatively affect our inventory levels, sales and operating results.Our revenue is generated on the basis of purchase orders with our customers rather than long-term purchase commitments. In addition, our customerscan cancel purchase orders or defer the shipments of our products under certain circumstances. Our products are manufactured using a silicon foundryaccording to our estimates of customer demand, which requires us to make separate demand forecast assumptions for every customer, each of which mayintroduce significant variability into our aggregate estimate. We have limited visibility into future customer demand and the product mix that our customerswill require, which could adversely affect our revenue forecasts and operating margins. Moreover, because our target markets are relatively new, many of ourcustomers have difficulty accurately forecasting their product requirements and estimating the timing of their new product introductions, which ultimatelyaffects their demand for our products. Historically, because of this limited visibility, actual results have been different from our forecasts of customer demand.Some of these differences have been material, leading to excess inventory or product shortages and revenue and margin forecasts above those we wereactually able to achieve. These differences may occur in the future, and the adverse impact of these differences between forecasts and actual results couldgrow if we are successful in selling more products to some customers. In addition, the rapid pace of innovation in our industry could render significantportions of our inventory obsolete. Excess or obsolete inventory levels could result in unexpected expenses or increases in our reserves that could adverselyaffect our business, operating results and financial condition. Conversely, if we were to underestimate customer demand or if sufficient manufacturingcapacity were unavailable, we could forego revenue opportunities, potentially lose market share and damage our customer relationships. In addition, anysignificant future cancellations or deferrals of product orders or the return of previously sold products due to manufacturing defects could materially andadversely impact our profit margins, increase our write-offs due to product obsolescence and restrict our ability to fund our operations.Winning business is subject to lengthy competitive selection processes that require us to incur significant expenditures. Even if we begin a productdesign, customers may decide to cancel or change their product plans, which could cause us to generate no revenue from a product and adversely affect ourresults of operations.We are focused on securing design wins to develop RF receivers and RF receiver SoCs, MoCA SoCs, DBS-ODU SoCs, physical medium devices foroptical modules, and SoC solutions targeting infrastructure opportunities within the23Table of Contentstelecommunications, wireless, and cable operator markets for use in our customers’ products. These selection processes typically are lengthy and can requireus to incur significant design and development expenditures and dedicate scarce engineering resources in pursuit of a single customer opportunity. We maynot win the competitive selection process and may never generate any revenue despite incurring significant design and development expenditures. Theserisks are exacerbated by the fact that some of our customers’ products likely will have short life cycles. Failure to obtain a design win could prevent us fromoffering an entire generation of a product, even though this has not occurred to date. This could cause us to lose revenue and require us to write off obsoleteinventory, and could weaken our position in future competitive selection processes. After securing a design win, we may experience delays in generatingrevenue from our products as a result of the lengthy development cycle typically required. Our customers generally take a considerable amount of time toevaluate our products. The typical time from early engagement by our sales force to actual product introduction runs from nine to twelve months for theconsumer market, to as much as 36 months for the cable operator market. The delays inherent in these lengthy sales cycles increase the risk that a customerwill decide to cancel, curtail, reduce or delay its product plans, causing us to lose anticipated sales. In addition, any delay or cancellation of a customer’splans could materially and adversely affect our financial results, as we may have incurred significant expense and generated no revenue. Finally, ourcustomers’ failure to successfully market and sell their products could reduce demand for our products and materially and adversely affect our business,financial condition and results of operations. If we were unable to generate revenue after incurring substantial expenses to develop any of our products, ourbusiness would suffer.Our operating results are subject to substantial quarterly and annual fluctuations and may fluctuate significantly due to a number of factors thatcould adversely affect our business and our stock price.Our revenue and operating results have fluctuated in the past and are likely to fluctuate in the future. These fluctuations may occur on a quarterly andon an annual basis and are due to a number of factors, many of which are beyond our control. These factors include, among others:•changes in end-user demand for the products manufactured and sold by our customers;•the receipt, reduction or cancellation of significant orders by customers;•fluctuations in the levels of component inventories held by our customers;•the gain or loss of significant customers;•market acceptance of our products and our customers’ products;•our ability to develop, introduce and market new products and technologies on a timely basis;•the timing and extent of product development costs;•new product announcements and introductions by us or our competitors;•incurrence of research and development and related new product expenditures;•seasonality or cyclical fluctuations in our markets;•currency fluctuations;•fluctuations in IC manufacturing yields;•significant warranty claims, including those not covered by our suppliers;•changes in our product mix or customer mix;•intellectual property disputes;•loss of key personnel or the shortage of available skilled workers;•impairment of long-lived assets, including masks and production equipment; and•the effects of competitive pricing pressures, including decreases in average selling prices of our products.24Table of ContentsThese factors are difficult to forecast, and these, as well as other factors, could materially adversely affect our quarterly or annual operating results. Wetypically are required to incur substantial development costs in advance of a prospective sale with no certainty that we will ever recover these costs. Asubstantial amount of time may pass between a design win and the generation of revenue related to the expenses previously incurred, which can potentiallycause our operating results to fluctuate significantly from period to period. In addition, a significant amount of our operating expenses are relatively fixed innature due to our significant sales, research and development costs. Any failure to adjust spending quickly enough to compensate for a revenue shortfallcould magnify its adverse impact on our results of operations.We are subject to the cyclical nature of the semiconductor industry.The semiconductor industry is highly cyclical and is characterized by constant and rapid technological change, rapid product obsolescence and priceerosion, evolving standards, short product life cycles and wide fluctuations in product supply and demand. Any future downturns may result in diminishedproduct demand, production overcapacity, high inventory levels and accelerated erosion of average selling prices. Furthermore, any upturn in thesemiconductor industry could result in increased competition for access to third-party foundry and assembly capacity. We are dependent on the availabilityof this capacity to manufacture and assemble our all of our products. None of our third-party foundry or assembly contractors has provided assurances thatadequate capacity will be available to us in the future. A significant downturn or upturn could have a material adverse effect on our business and operatingresults.The use of open source software in our products, processes and technology may expose us to additional risks and harm our intellectual property.Our products, processes and technology sometimes utilize and incorporate software that is subject to an open source license. Open source software istypically freely accessible, usable and modifiable. Certain open source software licenses require a user who intends to distribute the open source software as acomponent of the user’s software to disclose publicly part or all of the source code to the user’s software. In addition, certain open source software licensesrequire the user of such software to make any derivative works of the open source code available to others on unfavorable terms or at no cost. This can subjectpreviously proprietary software to open source license terms.While we monitor the use of all open source software in our products, processes and technology and try to ensure that no open source software is usedin such a way as to require us to disclose the source code to the related product, processes or technology when we do not wish to do so, such use couldinadvertently occur. Additionally, if a third party software provider has incorporated certain types of open source software into software we license from suchthird party for our products, processes or technology, we could, under certain circumstances, be required to disclose the source code to our products, processesor technology. This could harm our intellectual property position and have a material adverse effect on our business, results of operations and financialcondition.We rely on third parties to provide services and technology necessary for the operation of our business. Any failure of one or more of our partners,vendors, suppliers or licensors to provide these services or technology could have a material adverse effect on our business.We rely on third-party vendors to provide critical services, including, among other things, services related to accounting, billing, human resources,information technology, network development, network monitoring, in-licensing and intellectual property that we cannot or do not create or provideourselves. We depend on these vendors to ensure that our corporate infrastructure will consistently meet our business requirements. The ability of these third-party vendors to successfully provide reliable and high quality services is subject to technical and operational uncertainties that are beyond our control.While we may be entitled to damages if our vendors fail to perform under their agreements with us, our agreements with these vendors limit the amount ofdamages we may receive. In addition, we do not know whether we will be able to collect on any award of damages or that these damages would be sufficientto cover the actual costs we would incur as a result of any vendor’s failure to perform under its agreement with us. Any failure of our corporate infrastructurecould have a material adverse effect on our business, financial condition and results of operations. Upon expiration or termination of any of our agreementswith third-party vendors, we may not be able to replace the services provided to us in a timely manner or on terms and conditions, including service levelsand cost, that are favorable to us and a transition from one vendor to another vendor could subject us to operational delays and inefficiencies until thetransition is complete.Additionally, we incorporate third-party technology into and with some of our products, and we may do so in future products. The operation of ourproducts could be impaired if errors occur in the third-party technology we use. It may be more difficult for us to correct any errors in a timely manner if at allbecause the development and maintenance of the technology is25Table of Contentsnot within our control. There can be no assurance that these third parties will continue to make their technology, or improvements to the technology,available to us, or that they will continue to support and maintain their technology. Further, due to the limited number of vendors of some types oftechnology, it may be difficult to obtain new licenses or replace existing technology. Any impairment of the technology or our relationship with these thirdparties could have a material adverse effect on our business.Unanticipated changes in our tax rates or unanticipated tax obligations could affect our future results.Since we operate in different countries and are subject to taxation in different jurisdictions, our future effective tax rates could be impacted by changesin such countries’ tax laws or their interpretations. Both domestic and international tax laws are subject to change as a result of changes in fiscal policy,changes in legislation, evolution of regulation and court rulings. The application of these tax laws and related regulations is subject to legal and factualinterpretation, judgment and uncertainty. We cannot determine whether any legislative proposals may be enacted into law or what, if any, changes may bemade to such proposals prior to their being enacted into law. If U.S. or international tax laws change in a manner that increases our tax obligation, it couldresult in a material adverse impact on our net income and our financial position.The Federal examination by the Internal Revenue Service for the years 2010 and 2011 was completed during the three months ended March 31, 2014.The Company is still subject to examination for 2012 through 2015. In the event we are determined to have any unaccrued tax obligation arising from futureaudits, our operating results would be adversely affected.Our future effective tax rate could be unfavorably affected by unanticipated changes in the valuation of our deferred tax assets and liabilities. Changesin our effective tax rate could have a material adverse impact on our results of operations. We record a valuation allowance to reduce our net deferred taxassets to the amount that we believe is more likely than not to be realized. In assessing the need for a valuation allowance, we consider historical levels ofincome, expectations and risks associated with estimates of future taxable income and ongoing prudent and practical tax planning strategies. On a periodicbasis we evaluate our deferred tax asset balance for realizability. To the extent we believe it is more likely than not that some portion of our deferred taxassets will not be realized, we will recognize a valuation allowance against the deferred tax asset. Realization of our deferred tax assets is dependent primarilyupon future U.S. taxable income. During the year ended December 31, 2015, we maintained a full valuation allowance on our net federal and state deferredtax assets net of deferred tax liabilities related to indefinite-lived intangibles for which no future realization can be expected.Our business, financial condition and results of operations could be adversely affected by the political and economic conditions of the countries inwhich we conduct business and other factors related to our international operations.We sell our products throughout the world. Products shipped to Asia accounted for 91% of our net revenue in the year ended December 31, 2015. Inaddition, approximately 33% of our employees are located outside of the United States. All of our products are manufactured, assembled and tested in Asia,and all of our major distributors are located in Asia. Multiple factors relating to our international operations and to particular countries in which we operatecould have a material adverse effect on our business, financial condition and results of operations. These factors include:•changes in political, regulatory, legal or economic conditions;•restrictive governmental actions, such as restrictions on the transfer or repatriation of funds and foreign investments and trade protectionmeasures, including export duties and quotas and customs duties and tariffs;•disruptions of capital and trading markets;•changes in import or export licensing requirements;•transportation delays;•civil disturbances or political instability;•geopolitical turmoil, including terrorism, war or political or military coups;•public health emergencies;•differing employment practices and labor standards;•limitations on our ability under local laws to protect our intellectual property;26Table of Contents•local business and cultural factors that differ from our customary standards and practices;•nationalization and expropriation;•changes in tax laws;•currency fluctuations relating to our international operating activities; and•difficulty in obtaining distribution and support.In addition to a significant portion of our wafer supply coming from Singapore, China and Malaysia, substantially all of our products undergopackaging and final testing in Taiwan. Any conflict or uncertainty in this country, including due to natural disaster or public health or safety concerns, couldhave a material adverse effect on our business, financial condition and results of operations. In addition, if the government of any country in which ourproducts are manufactured or sold sets technical standards for products manufactured in or imported into their country that are not widely shared, it may leadsome of our customers to suspend imports of their products into that country, require manufacturers in that country to manufacture products with differenttechnical standards and disrupt cross-border manufacturing relationships which, in each case, could have a material adverse effect on our business, financialcondition and results of operations. We also are subject to risks associated with international political conflicts involving the U.S. government. For example,in 2008 we were instructed by the U.S. Department of Homeland Security to cease using Polar Star International Company Limited, a distributor based inHong Kong, that delivered third-party products, to a political group that the U.S. government did not believe should have been provided with the products inquestion. As a result, we immediately ceased all business operations with that distributor. The loss of Polar Star as a distributor did not materially delayshipment of our products because Polar Star was a non-exclusive distributor and we had in place alternative distribution arrangements. However, we cannotprovide assurances that similar disruptions of distribution arrangements in the future will not result in delayed shipments until we are able to identifyalternative distribution channels, which could include a requirement to increase our direct sales efforts. Loss of a key distributor under similar circumstancescould have an adverse effect on our business, revenues and operating results.If we suffer losses to our facilities or distribution system due to catastrophe, our operations could be seriously harmed.Our facilities and distribution system, and those of our third-party contractors, are subject to risk of catastrophic loss due to fire, flood or other naturalor man-made disasters. A number of our facilities and those of our contract manufacturers are located in areas with above average seismic activity. Thefoundries that manufacture all of our wafers are located in Taiwan, Singapore, Malaysia, Southern California and China, and all of the third-party contractorswho assemble and test our products also are located in Asia. In addition, our headquarters are located in Southern California. The risk of an earthquake in thePacific Rim region or Southern California is significant due to the proximity of major earthquake fault lines. For example, in 2002 and 2003, majorearthquakes occurred in Taiwan. Any catastrophic loss to any of these facilities would likely disrupt our operations, delay production, shipments and revenueand result in significant expenses to repair or replace the facility.Our business is subject to various governmental regulations, and compliance with these regulations may cause us to incur significant expenses. If wefail to maintain compliance with applicable regulations, we may be forced to recall products and cease their manufacture and distribution, and we couldbe subject to civil or criminal penalties.Our business is subject to various international and U.S. laws and other legal requirements, including packaging, product content, labor, import/exportcontrol regulations, and the Foreign Corrupt Practices Act. These regulations are complex, change frequently and have generally become more stringent overtime. We may be required to incur significant costs to comply with these regulations or to remedy violations. Any failure by us to comply with applicablegovernment regulations could result in cessation of our operations or portions of our operations, product recalls or impositions of fines and restrictions on ourability to conduct our operations. In addition, because many of our products are regulated or sold into regulated industries, we must comply with additionalregulations in marketing our products.Our products and operations are also subject to the rules of industrial standards bodies, like the International Standards Organization, as well asregulation by other agencies, such as the U.S. Federal Communications Commission. If we fail to adequately address any of these rules or regulations, ourbusiness could be harmed.For example, the SEC adopted a final rule to implement Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, whichrequires new disclosures concerning the use of conflict minerals, generally tantalum, tin, gold, or tungsten that originated in the Democratic Republic of theCongo or an adjoining country. These disclosures are required whether or not these products containing conflict minerals are manufactured by us or thirdparties. Verifying the source of any27Table of Contentsconflict minerals in our products has created and will continue to create additional costs in order to comply with the new disclosure requirements and we maynot be able to certify that the metals in our products are conflict free, which may create issues with our customers. In addition, the new rule may affect thepricing, sourcing and availability of minerals used in the manufacture of our products.We must conform the manufacture and distribution of our semiconductors to various laws and adapt to regulatory requirements in all countries as theserequirements change. If we fail to comply with these requirements in the manufacture or distribution of our products, we could be required to pay civilpenalties, face criminal prosecution and, in some cases, be prohibited from distributing our products in commerce until the products or component substancesare brought into compliance.In addition to our acquisitions of Entropic and Physpeed, we may, from time to time, make additional business acquisitions or investments, whichinvolve significant risks.In addition to the acquisitions of Entropic, which we completed in the second quarter of fiscal 2015, and Physpeed, which we completed in the fourthquarter of fiscal 2014, we may, from time to time, make acquisitions, enter into alliances or make investments in other businesses to complement our existingproduct offerings, augment our market coverage or enhance our technological capabilities. However, any such transactions could result in:•issuances of equity securities dilutive to our existing stockholders;•substantial cash payments;•the incurrence of substantial debt and assumption of unknown liabilities;•large one-time write-offs;•amortization expenses related to intangible assets;•a limitation on our ability to use our net operating loss carryforwards;•the diversion of management’s time and attention from operating our business to acquisition integration challenges;•stockholder or other litigation relating to the transaction;•adverse tax consequences; and•the potential loss of key employees, customers and suppliers of the acquired business.Additionally, in periods subsequent to an acquisition, we must evaluate goodwill and acquisition-related intangible assets for impairment. If suchassets are found to be impaired, they will be written down to estimated fair value, with a charge against earnings.Integrating acquired organizations and their products and services, including the integration of Entropic and Physpeed following completion of theacquisitions, may be expensive, time-consuming and a strain on our resources and our relationships with employees, customers and suppliers, and ultimatelymay not be successful. The benefits or synergies we may expect from the acquisition of complementary or supplementary businesses may not be realized tothe extent or in the time frame we initially anticipate. Some of the risks that may affect our ability to successfully integrate acquired companies, includingEntropic and Physpeed, include those associated with:•failure to successfully further develop the acquired products or technology;•conforming the acquired company’s standards, policies, processes, procedures and controls with our operations;•coordinating new product and process development, especially with respect to highly complex technologies;•loss of key employees or customers of the acquired company;•hiring additional management and other critical personnel;•in the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particulareconomic, currency, political and regulatory risks associated with specific countries;28Table of Contents•increasing the scope, geographic diversity and complexity of our operations;•consolidation of facilities, integration of the acquired company’s accounting, human resource and other administrative functions andcoordination of product, engineering and sales and marketing functions;•the geographic distance between the companies;•liability for activities of the acquired company before the acquisition, including patent and trademark infringement claims, violations of laws,commercial disputes, tax liabilities and other known and unknown liabilities; and•litigation or other claims in connection with the acquired company, including claims for terminated employees, customers, former stockholdersor other third parties.We may be subject to information technology failures, including data protection breaches and cyber-attacks, that could disrupt our operations,damage our reputation and adversely affect our business, operations, and financial results.We rely on our information technology systems for the effective operation of our business and for the secure maintenance and storage of confidentialdata relating to our business and third party businesses. Although we have implemented security controls to protect our information technology systems,experienced programmers or hackers may be able to penetrate our security controls, and develop and deploy viruses, worms and other malicious softwareprograms that compromise our confidential information or that of third parties and cause a disruption or failure of our information technology systems. Anysuch compromise of our information technology systems could result in the unauthorized publication of our confidential business or proprietary information,result in the unauthorized release of customer, supplier or employee data, result in a violation of privacy or other laws, expose us to a risk of litigation, ordamage our reputation. The cost and operational consequences of implementing further data protection measures either as a response to specific breaches oras a result of evolving risks, could be significant. In addition, our inability to use or access our information systems at critical points in time could adverselyaffect the timely and efficient operation of our business. Any delayed sales, significant costs or lost customers resulting from these technology failures couldadversely affect our business, operations and financial results.Third parties with which we conduct business, such as foundries, assembly and test contractors, and distributors, have access to certain portions of oursensitive data. In the event that these third parties do not properly safeguard our data that they hold, security breaches could result and negatively impact ourbusiness, operations and financial results.Investor confidence may be adversely impacted if we are unable to comply with Section 404 of the Sarbanes-Oxley Act of 2002, and as a result, ourstock price could decline.We are subject to rules adopted by the Securities Exchange Commission, or SEC, pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, orSarbanes-Oxley Act, which require us to include in our Annual Report on Form 10-K our management’s report on, and assessment of the effectiveness of, ourinternal controls over financial reporting.If we fail to maintain the adequacy of our internal controls, there is a risk that we will not comply with all of the requirements imposed by Section 404.Moreover, effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and areimportant to helping prevent financial fraud. Any of these possible outcomes could result in an adverse reaction in the financial marketplace due to a loss ofinvestor confidence in the reliability of our consolidated financial statements and could result in investigations or sanctions by the SEC, the New York StockExchange, or NYSE, or other regulatory authorities or in stockholder litigation. Any of these factors ultimately could harm our business and could negativelyimpact the market price of our securities. Ineffective control over financial reporting could also cause investors to lose confidence in our reported financialinformation, which could adversely affect the trading price of our common stock.Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. However, our management,including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures will prevent all error andall fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of thecontrol system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must beconsidered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that allcontrol issues and instances of fraud, if any, have been detected.29Table of ContentsOur products must conform to industry standards in order to be accepted by end users in our markets.Generally, our products comprise only a part of a communications device. All components of these devices must uniformly comply with industrystandards in order to operate efficiently together. We depend on companies that provide other components of the devices to support prevailing industrystandards. Many of these companies are significantly larger and more influential in driving industry standards than we are. Some industry standards may notbe widely adopted or implemented uniformly, and competing standards may emerge that may be preferred by our customers or end users. If larger companiesdo not support the same industry standards that we do, or if competing standards emerge, market acceptance of our products could be adversely affected,which would harm our business.Products for communications applications are based on industry standards that are continually evolving. Our ability to compete in the future willdepend on our ability to identify and ensure compliance with these evolving industry standards. The emergence of new industry standards could render ourproducts incompatible with products developed by other suppliers. As a result, we could be required to invest significant time and effort and to incursignificant expense to redesign our products to ensure compliance with relevant standards. If our products are not in compliance with prevailing industrystandards for a significant period of time, we could miss opportunities to achieve crucial design wins. We may not be successful in developing or using newtechnologies or in developing new products or product enhancements that achieve market acceptance. Our pursuit of necessary technological advances mayrequire substantial time and expense.Risks Relating to Our Class A Common StockThe dual class structure of our common stock as contained in our charter documents will have the effect of allowing our founders, executive officers,employees and directors and their affiliates to limit your ability to influence corporate matters that you may consider unfavorable.We sold Class A common stock in our initial public offering. Our founders, executive officers, directors and their affiliates and employees hold sharesof our Class B common stock, which is not publicly traded. Until March 29, 2017, the dual class structure of our common stock will have the followingeffects with respect to the holders of our Class A common stock:•allows the holders of our Class B common stock to have the sole right to elect two management directors to the Board of Directors;•with respect to change of control matters, allows the holders of our Class B common stock to have ten votes per share compared to the holders ofour Class A common stock who will have one vote per share on these matters; and•with respect to the adoption of or amendments to our equity incentive plans, allows the holders of our Class B common stock to have ten votesper share compared to the holders of our Class A common stock who will have one vote per share on these matters, subject to certain limitations.Thus, our dual class structure will limit your ability to influence corporate matters, including with respect to transactions involving a change ofcontrol, and, as a result, we may take actions that our stockholders do not view as beneficial, which may adversely affect the market price of our Class Acommon stock. In addition to the additional voting rights granted to holders of our Class B common stock, which is held principally by certain of ourexecutive officers and founders, we have entered change of control agreements with our executive officers, which could have an adverse effect on a thirdparty’s willingness to consider acquiring us, either because it may be more difficult to retain key employees with change of control benefits or because of theincremental cost associated with these benefits.The concentration of our capital stock ownership with our founders will limit your ability to influence corporate matters and their interests maydiffer from other stockholders.As of December 31, 2015, our founders who are existing employees of the Company, including our Chairman, President and Chief Executive Officer,Dr. Seendripu, together control approximately 10% of our outstanding capital stock, representing approximately 49% of the voting power of our outstandingcapital stock with respect to change of control matters and the adoption of or amendment to our equity incentive plans. Dr. Seendripu and the other founderstherefore have significant influence over our management and affairs and over all matters requiring stockholder approval, including the election of two ClassB directors and significant corporate transactions, such as a merger or other sale of MaxLinear or its assets, for the foreseeable future.30Table of ContentsOur management team may use our available cash, cash equivalents, and liquid investment assets in ways with which you may not agree or in wayswhich may not yield a return.We use our cash, cash equivalents, and liquid investment assets for general corporate purposes, including working capital. We may also use a portionof these assets to acquire complementary businesses, products, services or technologies. Our management has considerable discretion in the application ofour cash, cash equivalents, and investment resources, and you will not have the opportunity to assess whether these liquid assets are being used in a mannerthat you deem best to maximize your return. We may use our available resources for corporate purposes that do not increase our operating results or marketvalue. In addition, our cash, cash equivalents, and liquid investment resources may be placed in investments that do not produce significant income or thatmay lose valueAnti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us more difficult, limit attempts by ourstockholders to replace or remove our current management and limit the market price of our Class A common stock.Provisions in our certificate of incorporation and bylaws, as amended and restated, may have the effect of delaying or preventing a change of control orchanges in our management. These provisions provide for the following:•authorize our Board of Directors to issue, without further action by the stockholders, up to 25,000,000 shares of undesignated preferred stock;•require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent;•specify that special meetings of our stockholders can be called only by our Board of Directors, our Chairman of the Board of Directors, ourPresident or by unanimous written consent of our directors appointed by the holders of Class B common stock;•establish an advance notice procedure for stockholder approvals to be brought before an annual meeting of our stockholders, includingproposed nominations of persons for election to our Board of Directors;•establish that our Board of Directors is divided into three classes, Class I, Class II and Class III, with each class serving staggered terms and withone Class B director being elected to each of Classes II and III;•provide for a dual class common stock structure, which provides our founders, current investors, executives and employees with significantinfluence over all matters requiring stockholder approval, including the election of directors and significant corporate transactions, such as amerger or other sale of our Company or its assets;•provide that our directors may be removed only for cause;•provide that vacancies on our Board of Directors may be filled only by a majority of directors then in office, even though less than a quorum,other than any vacancy in the two directorships reserved for the designees of the holders of Class B common stock, which may be filled only bythe affirmative vote of the holders of a majority of the outstanding Class B common stock or by the remaining director elected by the Class Bcommon stock (with the consent of founders holding a majority in interest of the Class B common stock over which the founders then exercisevoting control);•specify that no stockholder is permitted to cumulate votes at any election of directors; and•require supermajority votes of the holders of our common stock to amend specified provisions of our charter documents.These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficultfor stockholders to replace members of our Board of Directors, which is responsible for appointing the members of our management. In addition, because weare incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally prohibits aDelaware corporation from engaging in any of a broad range of business combinations with any “interested” stockholder for a period of three years followingthe date on which the stockholder became an “interested” stockholder.31Table of ContentsOur share price may be volatile as a result of limited trading volume and other factors.Our shares of Class A common stock began trading on the New York Stock Exchange in March 2010. An active public market for our shares on theNew York Stock Exchange may not be sustained. In particular, limited trading volumes and liquidity may limit the ability of stockholders to purchase or sellour common stock in the amounts and at the times they wish. Trading volume in our Class A common stock tends to be modest relative to our totaloutstanding shares, and the price of our Class A common stock may fluctuate substantially (particularly in percentage terms) without regard to news about usor general trends in the stock market. An inactive market may also impair our ability to raise capital to continue to fund operations by selling shares and mayimpair our ability to acquire other companies or technologies by using our shares as consideration.In addition, the trading price of our Class A common stock could become highly volatile and could be subject to wide fluctuations in response tovarious factors, some of which are beyond our control. These factors include those discussed in this “Risk Factors” section of this Annual Report on Form 10-K and others such as:•actual or anticipated fluctuations in our financial condition and operating results;•overall conditions in the semiconductor market;•addition or loss of significant customers;•changes in laws or regulations applicable to our products;•actual or anticipated changes in our growth rate relative to our competitors;•announcements of technological innovations by us or our competitors;•announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments;•additions or departures of key personnel;•competition from existing products or new products that may emerge;•issuance of new or updated research or reports by securities analysts;•fluctuations in the valuation of companies perceived by investors to be comparable to us;•disputes or other developments related to proprietary rights, including patents, litigation matters and our ability to obtain intellectual propertyprotection for our technologies;•the recently completed acquisition of Entropic may not be accretive and may cause dilution to our earnings per shares;•announcement or expectation of additional financing efforts;•sales of our Class A or Class B common stock by us or our stockholders;•share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; and•general economic and market conditions.Furthermore, the stock markets recently have experienced extreme price and volume fluctuations that have affected and continue to affect the marketprices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of thosecompanies. These broad market and industry fluctuations, as well as general economic, political and market conditions such as recessions, interest ratechanges or international currency fluctuations, may negatively impact the market price of our Class A common stock. In the past, companies that haveexperienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigationin the future. Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns, whichcould seriously harm our business.If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, especially dueto our dual-class voting structure, our share price and trading volume could decline.32Table of ContentsThe trading market for our Class A common stock depends in part on the research and reports that securities or industry analysts publish about us orour business, especially with respect to our unique dual-class voting structure as to the election of directors, change of control matters and matters related toour equity incentive plans. We do not have any control over these analysts. If one or more of the analysts who cover us downgrade our shares or change theiropinion of our shares, our share price would likely decline. If one or more of these analysts cease coverage of our Company or fail to regularly publish reportson us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.Future sales of our Class A common stock in the public market could cause our share price to decline.Sales of a substantial number of shares of our Class A common stock in the public market, or the perception that these sales might occur, could depressthe market price of our Class A common stock and could impair our ability to raise capital through the sale of additional equity securities. As ofDecember 31, 2015, we had 55.7 million shares of Class A common stock and 6.7 million shares of Class B common stock outstanding.All shares of Class A common stock are freely tradable without restrictions or further registration under the Securities Act of 1933, as amended, or theSecurities Act, except for any shares held by our affiliates as defined in Rule 144 under the Securities Act.We have filed registration statements on Form S-8 under the Securities Act to register 18.9 million shares of our Class A common stock for issuanceunder our 2010 Equity Incentive Plan and 2010 Employee Stock Purchase Plan in addition to 3.2 million awards that were assumed and remain outstandingin connection with the Entropic acquisition. These shares may be freely sold in the public market upon issuance and once vested, subject to other restrictionsprovided under the terms of the applicable plan and/or the option agreements entered into with option holder.Our Executive Incentive Bonus Plan permits the settlement of awards under the plan in the form of shares of its Class A common stock. For the 2013performance period, actual awards under the Executive Incentive Bonus Plan were settled in Class A common stock issued under our 2010 Equity IncentivePlan, as amended, with the number of shares issuable to plan participants determined based on the closing sales price of our Class A common stock asdetermined in trading on the New York Stock Exchange on May 9, 2014. Additionally, we settled all bonus awards for all other employees for the 2013performance period in shares of its Class A common stock. We issued 0.6 million shares of our Class A common stock for the 2013 performance period uponsettlement of the bonus awards on May 9, 2014. We issued 0.2 million shares of our Class A common stock for the 2014 performance period upon settlementof the bonus awards on May 14, 2015. We issued 0.3 million shares of our Class A common stock for the January 1, 2015 to June 30, 2015 performanceperiod upon settlement of the bonus awards on August 20, 2015. We expect to issue shares of our Class A common stock for the July 1, 2015 to December 31,2015 performance period upon settlement of the bonus awards in May 2016.These shares may be freely sold in the public market immediately following theissuance of such shares and the issuance of such shares may have an adverse effect on our share price once they are issued.We do not intend to pay dividends for the foreseeable future.We have never declared or paid any cash dividends on our common stock and do not intend to pay any cash dividends in the foreseeable future. Weanticipate that we will retain all of our future earnings for use in the development of our business and for general corporate purposes. Any determination topay dividends in the future will be at the discretion of our Board of Directors. Accordingly, investors must rely on sales of their Class A common stock afterprice appreciation, which may never occur, as the only way to realize any future gains on their investments.Risks Relating to Our Acquisition of EntropicActual financial and operating results could differ materially from any expectations or guidance provided by us concerning future results, including(without limitation) expectations or guidance with respect to the financial impact of any cost savings and other potential synergies resulting from ouracquisition of Entropic.We currently expect to continue realizing material cost savings and other synergies as a result of our acquisition of Entropic, and as a result, wecurrently believe that the acquisition will continue to be accretive to our earnings per share, excluding upfront non-recurring charges, transaction relatedexpenses, and the amortization of purchased intangible assets. The expectations and guidance we have provided with respect to the potential financialimpact of the acquisition are subject to numerous assumptions, however, including assumptions derived from our diligence efforts concerning the status ofand prospects for Entropic’s business, and assumptions relating to the near-term prospects for the semiconductor industry generally33Table of Contentsand the markets for the legacy Entropic products in particular. Additional assumptions we have made relate to numerous matters, including (withoutlimitation) the following:•projections of future revenues in the legacy Entropic businesses;•the anticipated financial performance of legacy Entropic products and products currently in development;•anticipated cost savings and other synergies associated with the acquisition, including potential revenue synergies;•the amount of goodwill and intangibles that will result from the acquisition;•certain other purchase accounting adjustments that we have recorded in our financial statements in connection with the acquisition;•acquisition costs, including restructuring charges and transactions costs payable to our financial, legal, and accounting advisors; and•our ability to maintain, develop, and deepen relationships with customers of the legacy Entropic business.We cannot provide any assurances with respect to the accuracy of our assumptions, including our assumptions with respect to future revenues orrevenue growth rates, if any, of the legacy Entropic business, and we cannot provide assurances with respect to our ability to realize further cost savings.Risks and uncertainties that could cause our actual results to differ materially from currently anticipated results include, but are not limited to, risks relatingto our ability to integrate the legacy Entropic business successfully; currently unanticipated additional incremental costs that we may incur in connectionwith integrating the two companies; risks relating to our ability to continue to realize incremental revenues from the acquisition in the amounts that wecurrently anticipate; risks relating to the willingness of legacy Entropic customers and other partners to continue to conduct business with MaxLinear; andnumerous risks and uncertainties that affect the semiconductor industry generally and the markets for our products and those of the legacy Entropic businessspecifically. Any failure to integrate the legacy Entropic business successfully and to continue to realize the financial benefits we currently anticipate fromthe acquisition would have a material adverse impact on our future operating results and financial condition and could materially and adversely affect thetrading price or trading volume of our Class A common stock.Failure to integrate our business and operations successfully with those of Entropic in the expected time-frame or otherwise may adversely affect ouroperating results and financial condition.We do not have a substantial history of acquiring other companies and had never pursued an acquisition of the size and complexity of Entropic. Thesuccess of the acquisition of Entropic depends, in substantial part, on our ability to integrate Entropic’s business and operations successfully with those ofMaxLinear and to realize fully the anticipated benefits and potential synergies from combining our companies, including, among others, cost savings fromeliminating duplicative functions; operational efficiencies in our respective supply chains and in research and development investments; and revenue growthresulting from the addition of Entropic’s product portfolio. If we are unable to achieve these objectives, the anticipated benefits and potential synergies fromthe acquisition may not be realized fully, or may take longer to realize than expected. Any failure to timely realize these anticipated benefits would have amaterial adverse effect on our business, operating results, and financial condition.We completed our acquisition of Entropic in April 2015. While we believe the integration process is substantially complete, we cannot ensure thatremaining integration objectives will not adversely affect our operating results. In connection with the integration process, we could experience the loss ofkey customers, decreases in revenues relative to current expectations and increases in operating costs, as well as the disruption of our ongoing businesses, anyor all of which could limit our ability to achieve the anticipated benefits and potential synergies from the acquisition and have a material adverse effect onour business, operating results, and financial condition.Our business relationships, including customer relationships, and those of Entropic may be subject to disruption due to uncertainty associated withthe acquisition.In response to the completion of the acquisition, customers, vendors, licensors, and other third parties with whom we do business or Entropic didbusiness or otherwise have relationships may experience uncertainty associated with the acquisition, and this uncertainty could materially affect theirdecisions with respect to existing or future business relationships with us. Moreover, with respect to Entropic’s prior acquisition of certain television and set-top box assets from Trident Microsystems, Inc., or Trident, we were unable to conduct substantial diligence with respect to certain licenses and intellectualproperty rights34Table of Contentsbecause Entropic acquired these assets through Trident’s bankruptcy proceedings. As a result, we are in many instances unable to evaluate the impact of theacquisition on certain assumed contract rights and obligations, including intellectual property rights.These business relationships may be subject to disruption as customers and others may elect to delay or defer purchase or design-win decisions orswitch to other suppliers due to the uncertainty about the direction of our offerings, any perceived unwillingness on our part to support existing legacyEntropic products, or any general perceptions by customers or other third parties that impute operational or business challenges to us arising from theacquisition. In addition, customers or other third parties may attempt to negotiate changes in existing business relationships, which may result in additionalobligations imposed on us. These disruptions could have a material adverse effect on our business, operating results, and financial condition. Any loss ofcustomers, customer products, design win opportunities, or other important strategic relationships could have a material adverse effect on our business,operating results, and financial condition and could have a material and adverse effect on the trading price or trading volume of our Class A common stock.We have incurred and expect to continue to incur substantial expenses related to the integration of MaxLinear and Entropic.We have incurred and expect to continue to incur substantial expenses in connection with integrating the operations, technologies, and businesssystems of MaxLinear and Entropic. Business systems integration between the two companies requires, and we expect it to continue to require into theforeseeable future, substantial management attention, including integration of information management, purchasing, accounting and finance, sales, andregulatory compliance functions. Numerous factors, many of which, are beyond our control, could affect the total cost or the timing of expected integrationexpenses. Moreover, many of the expenses that will be incurred are by their nature difficult to estimate accurately at the present time. These expenses couldreduce the savings that we expect to achieve from the elimination of duplicative expenses and the realization of economies of scale and cost savings relatedto the integration of the businesses. These integration expenses have resulted in MaxLinear’s taking significant charges against earnings following thecompletion of the acquisition.We have recorded goodwill that could become impaired and adversely affect our future operating results.The acquisition is accounted for as an acquisition by MaxLinear in accordance with accounting principles generally accepted in the United States.Under the acquisition method of accounting, the assets and liabilities of Entropic have been recorded, as of completion, at their respective fair values andadded to our assets and liabilities. Our reported financial condition and results of operations after completion of the acquisition reflect Entropic’s balancesand results but are not restated retroactively to reflect the historical financial position or results of operations of Entropic for periods prior to the acquisition.As a result, comparisons of future results against prior period results will be more difficult for investors.Under the acquisition method of accounting, the total purchase price is allocated to Entropic’s tangible assets and liabilities and identifiableintangible assets based on their fair values as of the date of completion of the acquisition. The excess of the purchase price over those fair values is recordedas goodwill. The acquisition has resulted in the creation of goodwill based upon the application of the acquisition method of accounting. To the extent thevalue of goodwill or intangibles becomes impaired, we may be required to incur material charges relating to such impairment. Any such impairment chargecould have a material impact on our operating results in future periods, and the announcement of a material impairment could have an adverse effect on thetrading price and trading volume of our Class A common stock. For example, in the quarter ended December 31, 2015, we recognized IPR&D impairmentlosses of $21.6 million related principally to acquired Entropic assets. As of December 31, 2015, our balance sheet reflected goodwill of $49.8 million, andwe could recognize impairment charges in the future.ITEM 1B.UNRESOLVED STAFF COMMENTSNone.ITEM 2.PROPERTIESOur corporate headquarters occupy approximately 68,000 square feet in Carlsbad, California under a lease that expires in June 2022. A full range ofbusiness and engineering functions are represented at our corporate headquarters, including a laboratory for research and development and manufacturingoperations. On November 11, 2015, we entered into a real property35Table of Contentslease with The Northwestern Mutual Life Insurance Company, a Wisconsin corporation, with respect to the lease of approximately 50,235 square feet ofoffice and laboratory space located at 50 Parker in Irvine, California. We expect to relocate our current operations in Irvine, California to the new facility in2016. In addition to our principal office spaces in Carlsbad, we have leased facilities in Irvine, California; Bangalore in India; Singapore; Taiwan; andShenzhen in China. ITEM 3.LEGAL PROCEEDINGSEntropic Communications Merger LitigationThe Delaware ActionsBeginning on February 9, 2015, eleven stockholder class action complaints (captioned Langholz v. Entropic Communications, Inc., et al., C.A. No.10631-VCP (filed Feb. 9, 2015); Tomblin v. Entropic Communications, Inc., C.A. No. 10632-VCP (filed Feb. 9, 2015); Crill v. Entropic Communications,Inc., et al., C.A. No. 10640-VCP (filed Feb. 11, 2015); Wohl v. Entropic Communications, Inc., et al., C.A. No. 10644-VCP (filed Feb. 11, 2015); Parshall v.Entropic Communications, Inc., et al., C.A. No. 10652-VCP (filed Feb. 12, 2015); Saggar v. Padval, et al., C.A. No. 10661-VCP (filed Feb. 13, 2015); Iyer v.Tewksbury, et al., C.A. No. 10665-VCP (filed Feb. 13, 2015); Respler v. Entropic Communications, Inc., et al., C.A. No. 10669-VCP (filed Feb. 17, 2015); Galv. Entropic Communications, Inc., et al., C.A. No. 10671-VCP (filed Feb. 17, 2015); Werbowsky v. Padval, et al., C.A. No. 10673-VCP (filed Feb. 18, 2015);and Agosti v. Entropic Communications, Inc., C.A. No. 10676-VCP (filed Feb. 18, 2015)) were filed in the Court of Chancery of the State of Delaware onbehalf of a putative class of Entropic Communications, Inc. stockholders. The complaints name Entropic, the board of directors of Entropic, MaxLinear,Excalibur Acquisition Corporation, and Excalibur Subsidiary, LLC as defendants. The complaints generally allege that, in connection with the proposedacquisition of Entropic by MaxLinear, the individual defendants breached their fiduciary duties to Entropic stockholders by, among other things,purportedly failing to take steps to maximize the value of Entropic to its stockholders and agreeing to allegedly preclusive deal protection devices in themerger agreement. The complaints further allege that Entropic, MaxLinear, and/or the merger subsidiaries aided and abetted the individual defendants in thealleged breaches of their fiduciary duties. The complaints seek, among other things, an order enjoining the defendants from consummating the proposedtransaction, an order declaring the merger agreement unlawful and unenforceable, in the event that the proposed transaction is consummated, an orderrescinding it and setting it aside or awarding rescissory damages to the class, imposition of a constructive trust, damages, and/or attorneys’ fees and costs.On March 27, 2015, plaintiffs Ankur Saggar, Jon Werbowsky, and Angelo Agosti filed an amended class action complaint. Also on March 27, 2015,plaintiffs Martin Wohl and Jeffrey Park filed an amended class action complaint. On April 1, 2015, plaintiff Mark Respler filed an amended class actioncomplaint.On April 16, 2015, the Court entered an order consolidating the Delaware actions, captioned In re Entropic Communications, Inc. ConsolidatedStockholders Litigation, C.A. No. 10631-VCP (the “Consolidated Action”). The April 16, 2015 order appointed plaintiffs Rama Iyer and Jon Werbowsky asCo-Lead Plaintiffs and designated the amended complaint filed by plaintiffs Ankur Saggar, Jon Werbowsky, and Angelo Agosti as the operative complaint(the “Amended Complaint”).The Amended Complaint names as defendants Entropic, the board of directors of Entropic, the Company, Excalibur Acquisition Corporation, andExcalibur Subsidiary, LLC. The Amended Complaint generally alleges that, in connection with the proposed acquisition of Entropic by the Company, theindividual defendants breached their fiduciary duties to Entropic stockholders by, among other things, purportedly failing to maximize the value of Entropicto its stockholders, engaging in a purportedly unfair and conflicted sale process, agreeing to allegedly preclusive deal protection devices in the mergeragreement, and allegedly misrepresenting and/or failing to disclose all material information in connection with the proposed transaction. The AmendedComplaint further alleges that the Company and the merger subsidiaries aided and abetted the individual defendants in the alleged breaches of their fiduciaryduties. The Amended Complaint seeks, among other things: an order declaring the merger agreement unlawful and unenforceable, an order rescinding, to theextent already implemented, the merger agreement, an order enjoining defendants from consummating the proposed transaction, imposition of a constructivetrust, and attorneys’ and experts’ fees and costs.On April 24, 2015, the parties to the Consolidated Action entered into a memorandum of understanding regarding a proposed settlement of theDelaware actions. The proposed settlement is subject to negotiation of the settlement papers by the parties and is subject to court approval after notice and anopportunity to object is provided to the proposed settlement class. There can be no assurance that the parties will reach agreement regarding the final terms ofthe settlement agreement or that the Court of Chancery will approve the settlement.36Table of ContentsBased on the above, we have determined that an unfavorable outcome is probable or reasonably possible; or determined that the amount or range ofany possible loss is reasonably estimable. The reasonably estimable loss is not material.CrestaTech LitigationOn January 21, 2014, CrestaTech Technology Corporation, or CrestaTech, filed a complaint for patent infringement against us in the United StatesDistrict Court of Delaware (the “District Court Litigation”). In its complaint, CrestaTech alleges that we infringe U.S. Patent Nos. 7,075,585 (the “’585Patent”) and 7,265,792. In addition to asking for compensatory damages, CrestaTech alleges willful infringement and seeks a permanent injunction.CrestaTech also names Sharp Corporation, Sharp Electronics Corp. and VIZIO, Inc. as defendants based upon their alleged use of our television tuners. OnJanuary 28, 2014, CrestaTech filed a complaint with the U.S. International Trade Commission, or ITC, again naming, among others, us, Sharp, SharpElectronics, and VIZIO (“the “ITC Investigation”). On May 16, 2014 the ITC granted CrestaTech’s motion to file an amended complaint adding six OEMRespondents, namely, SIO International, Inc., Hon Hai Precision Industry Co., Ltd., Wistron Corp., Wistron Infocomm Technology (America) Corp., TopVictory Investments Ltd. and TPV International (USA), Inc. (collectively, with us, Sharp and VIZIO, the “Company Respondents”). CrestaTech’s ITCcomplaint alleged a violation of 19 U.S.C. § 1337 through the importation into the United States, the sale for importation, or the sale within the United Statesafter importation of the Company’s accused products that CrestaTech alleges infringe the same two patents asserted in the Delaware action. Through its ITCcomplaint, CrestaTech sought an exclusion order preventing entry into the United States of certain of our television tuners and televisions containing suchtuners from Sharp, Sharp Electronics, and VIZIO. CrestaTech also sought a cease and desist order prohibiting the Company Respondents from engaging in theimportation into, sale for importation into, the sale after importation of, or otherwise transferring within the United States certain of our television tuners ortelevisions containing such tuners.On December 1-5, 2014, the ITC held a trial in the ITC Investigation. On February 27, 2015, the Administrative Law Judge issued a written InitialDetermination (“ID”), ruling that the Company Respondents do not violate Section 1337 in connection with CrestaTech’s asserted patents becauseCrestaTech failed to satisfy the economic prong of the domestic industry requirement pursuant to Section 1337(a)(2). In addition, the ID stated that certain ofour television tuners and televisions incorporating those tuners manufactured and sold by certain customers infringe three claims of the ‘585 Patent, andthese three claims were not determined to be invalid. On April 30, 2015, the ITC issued a notice indicating that it intended to review portions of the IDfinding no violation of Section 1337, including the ID’s findings of infringement with respect to, and validity of, the ‘585 Patent, and the ID’s finding thatCrestaTech failed to establish the existence of a domestic industry within the meaning of Section 1337.The ITC has subsequently issued its opinion, which terminated its investigation. The opinion affirmed the findings of the administrative law judgethat no violation of Section 1337 had occurred because CrestaTech had failed to establish the economic prong of the domestic industry requirement. The ITCalso affirmed the administrative law judge's finding of infringement with respect to the three claims of the '585 Patent that were not held to be invalid. OnNovember 30, 2015, CrestaTech filed an appeal of the ITC decision with the United States Court of Appeals for the Federal Circuit (the "Federal Circuit").The District Court Litigation remains stayed pending resolution of the appeal to the ITC. In addition, we have filed four petitions for inter partesreview ("IPR") by the US Patent Office of the two CrestaTech patents asserted against us. The Patent Trial and Appeal Board (“PTAB”) did not institute two ofthese IPRs as being redundant to IPRs filed by another party that are already underway for the same CrestaTech patent. The remaining two petitions wereinstituted or instituted-in-part and, together with the IPRs filed by third parties, there are currently six IPR proceedings filed involving the two CrestaTechpatents asserted against us. In October 2015, the PTAB issued final decisions in two of the six IPR proceedings, holding that all of the reviewed claims areunpatentable. Included in these decisions was one of the three claims mentioned above. CrestaTech is appealing the PTAB’s decisions at the Federal Circuit.We cannot predict the outcome of any appeal by CrestaTech, the District Court Litigation, or the IPRs. Any adverse determination in the District CourtLitigation could have a material adverse effect on our business and operating results.37Table of ContentsOther MattersIn addition, from time to time, we are subject to threats of litigation or actual litigation in the ordinary course of business, some of which may bematerial. Other than the Entropic and CrestaTech litigation described above, we believe that there are no other currently pending matters that, if determinedadversely to us, would have a material effect on our business or that would not be covered by our existing liability insurance maintained by us.ITEM 4.MINE SAFETY DISCLOSURESNot applicable.38Table of ContentsPART II — FINANCIAL INFORMATIONITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OFEQUITY SECURITIESMarket Information and HoldersIn March 2010, we completed the initial public offering of our Class A common stock. Our Class A common stock is traded on the New York StockExchange, or the NYSE, under the symbol MXL. The following table sets forth, for the periods indicated, the high and low sale prices for our Class Acommon stock as reported by the NYSE: Year Ended December 31, 2015 High LowFirst Quarter (January 1, 2015 to March 31, 2015)$9.21 $7.15Second Quarter (April 1, 2015 to June 30, 2015)$13.33 $8.06Third Quarter (July 1, 2015 to September 30, 2015)$12.96 $9.00Fourth Quarter (October 1, 2015 to December 31, 2015)$17.75 $11.76 Year Ended December 31, 2014 High LowFirst Quarter (January 1, 2014 to March 31, 2014)$11.32 $8.94Second Quarter (April 1, 2014 to June 30, 2014)$10.33 $7.74Third Quarter (July 1, 2014 to September 30, 2014)$10.80 $6.63Fourth Quarter (October 1, 2014 to December 31, 2014)$8.09 $6.25On December 31, 2015, the last reported sales price of our common stock was $14.73 and, according to our transfer agent, as of February 10, 2016,there were 83 record holders of our Class A common stock and 49 record holders of our Class B common stock.Our Class B common stock is not publicly traded. Each share of Class B common stock is convertible at any time at the option of the holder into oneshare of Class A common stock and in most instances automatically converts upon sale or other transfer.Dividend PolicyWe have never declared or paid cash dividends on our common stock. We currently intend to retain all available funds and any future earnings for usein the operation of our business and do not anticipate paying any dividends on our common stock in the foreseeable future. Any future determination todeclare dividends will be made at the discretion of our Board of Directors and will depend on our financial condition, operating results, capital requirements,general business conditions and other factors that our Board of Directors may deem relevant.Stock Performance GraphNotwithstanding any statement to the contrary in any of our previous or future filings with the SEC, the following information relating to the priceperformance of our common stock shall not be deemed “filed” with the SEC or “Soliciting Material” under the Exchange Act, or subject to Regulation 14Aor 14C, or to liabilities of Section 18 of the Exchange Act except to the extent we specifically request that such information be treated as soliciting materialor to the extent we specifically incorporate this information by reference.The graph below compares the cumulative total stockholder return on our Class A common stock with the cumulative total return on The NYSEComposite Index and The Philadelphia Semiconductor Index. The period shown commences on March 23, 2010 and ends on December 31, 2015, the end ofour last fiscal year. The graph assumes an investment of $100 on March 23, 2010, and the reinvestment of any dividends. In addition, the graph assumes thevalue of our common stock on March 23, 2010 was the initial public offering price of $14.00 per share.39Table of ContentsThe comparisons in the graph below are required by the Securities and Exchange Commission and are not intended to forecast or be indicative ofpossible future performance of our common stock.Recent Sales of Unregistered SecuritiesIn the year ended December 31, 2015, we issued an aggregate of 0.2 million shares of our Class B common stock to certain employees upon theexercise of options awarded under our 2004 Stock Plan. We received aggregate proceeds of approximately $0.4 million in the year ended December 31, 2015as a result of the exercise of these options. We believe these transactions were exempt from the registration requirements of the Securities Act in reliance onRule 701 thereunder as transactions pursuant to compensatory benefit plans and contracts relating to compensation as provided under Rule 701. As ofDecember 31, 2015, options to purchase an aggregate of 1.5 million shares of our Class B common stock remain outstanding. All issuances of shares of ourClass B common stock pursuant to the exercise of these options will be made in reliance on Rule 701. All option grants made under the 2004 Stock Plan weremade prior to the effectiveness of our initial public offering. No further option grants will be made under our 2004 Stock Plan.None of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering.Each share of our Class B common stock is convertible at any time at the option of the holder into one share of our Class A common stock. In addition,each share of our Class B common stock will convert automatically into one share of Class A common stock upon any transfer, whether or not for value,except for certain transfers described in our certificate of incorporation.40Table of ContentsITEM 6.SELECTED FINANCIAL DATAWe have derived the selected consolidated statement of operations data for the years ended December 31, 2015, 2014 and 2013 and selectedconsolidated balance sheet data as of December 31, 2015 and 2014 from our consolidated financial statements and related Notes included elsewhere in thisreport. We have derived the statement of operations data for the years ended December 31, 2012 and 2011 and the balance sheet data as of December 31,2013, 2012 and 2011 from our consolidated financial statements not included in this report. Our historical results are not necessarily indicative of the resultsto be expected for any future period. The following selected consolidated financial data should be read in conjunction with “Management’s Discussion andAnalysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included elsewhere in this report. Years Ended December 31, 2015 2014 2013 2012 2011 (in thousands, except per share amounts)Consolidated Statement of Operations Data: Net revenue$300,360 $133,112 $119,646 $97,728 $71,937Cost of net revenue144,937 51,154 46,683 37,082 26,690Gross profit155,423 81,958 72,963 60,646 45,247Operating expenses: Research and development85,405 56,625 53,132 46,458 40,157Selling, general and administrative77,981 34,191 32,181 27,254 20,216Impairment loss21,600 — — — —Restructuring expense14,086 — — — —Total operating expenses199,072 90,816 85,313 73,712 60,373Loss from operations(43,649) (8,858) (12,350) (13,066) (15,126)Interest income275 236 222 282 292Other income (expense), net468 (123) (203) (127) (197)Loss before income taxes(42,906) (8,745) (12,331) (12,911) (15,031)Provision (benefit) for income taxes(575) (1,704) 402 341 6,993Net loss(42,331) (7,041) (12,733) (13,252) (22,024)Net loss attributable to common stockholders:$(42,331) $(7,041) $(12,733) $(13,252) $(22,024)Net loss per share attributable to common stockholders: Basic$(0.79) $(0.19) $(0.37) $(0.40) $(0.68)Diluted$(0.79) $(0.19) $(0.37) $(0.40) $(0.68)Shares used to compute net loss per share: Basic53,378 36,472 34,012 33,198 32,573Diluted53,378 36,472 34,012 33,198 32,573 As of December 31, 2015 2014 2013 2012 2011 (in thousands)Consolidated Balance Sheet Data: Cash, cash equivalents and short- and long-term investments, available-for-sale$130,498 $79,351 $86,354 $77,256 $85,736Working capital134,170 67,668 56,558 68,450 76,585Total assets334,505 135,711 124,929 110,597 112,376Capital lease obligations, net of current portion— — — — 2Total stockholders’ equity262,924 99,102 86,674 80,233 93,02541Table of ContentsITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSForward-Looking StatementsThe following discussion and analysis of the financial condition and results of our operations should be read in conjunction with the consolidatedfinancial statements and related notes included elsewhere in this report. This discussion contains forward-looking statements that involve risks anduncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, butare not limited to, those identified below, and those discussed in the section titled “Risk Factors” included elsewhere in this report.OverviewWe are a provider of radio frequency, or RF, and mixed-signal integrated circuits for cable and satellite broadband communications, the connectedhome, and for data center, metro, and long-haul fiber networks. Our high performance RF receiver products capture and process digital and analog broadbandsignals to be decoded for various applications. These products include both RF receivers and RF receiver systems-on-chip (SoCs), which incorporate ourhighly integrated radio system architecture and the functionality necessary to receive and demodulate broadband signals, and physical medium devices thatprovide a constant current source, current-to-voltage regulation, and data alignment and retiming functionality in optical interconnect applications. Throughour acquisition of Entropic Communications, Inc., or Entropic, in April of 2015, we provide semiconductor solutions for the connected home, ranging fromMoCA® (Multimedia over Coax Alliance) solutions that transform how traditional HDTV broadcast and Internet Protocol- (IP) based streaming videocontent is seamlessly, reliably, and securely delivered, processed, and distributed into and throughout the home. Our products enable the reception,distribution and display of broadband video and data content in a wide range of electronic devices, including Pay-TV operator set-top boxes and voice anddata gateways, hybrid analog and digital televisions and consumer terrestrial set-top boxes, Direct Broadcast Satellite outdoor units, and optical modules fordata center, metro, and long-haul transport network applications.Our net revenue has grown from approximately $0.6 million in fiscal 2006 to $300.4 million in fiscal 2015. In fiscal 2015, our net revenue was derivedprimarily from sales of RF receivers and RF receiver systems-on-chip and MoCA connectivity solutions into operator voice and data modems and gatewaysand global analog and digital RF receiver products for analog and digital television applications. These analog and digital television applications includeDirect Broadcast Satellite outdoor unit (DBS ODU) solutions, which consist of our translation switch (BTS) and channel stacking switch (CSS) products.These products simplify the installation required to support simultaneous reception of multiple channels from multiple satellites over a single cable. Ourability to achieve revenue growth in the future will depend, among other factors, on our ability to further penetrate existing markets; our ability to expandour target addressable markets by developing new and innovative products; and our ability to obtain design wins with device manufacturers, in particularmanufacturers of set-top boxes, data modems, and gateways for the broadband service provider and Pay-TV industries, manufacturers selling into the Cableinfrastructure market, and manufacturers of optical module and telecommunications infrastructure equipment.Products shipped to Asia accounted for 91%, 94% and 93% of net revenue during the years ended December 31, 2015, 2014 and 2013, respectively. Asignificant but declining portion of these sales in Asia is through distributors. Although a large percentage of our products is shipped to Asia, we believe thata significant number of the systems designed by these customers and incorporating our semiconductor products are then sold outside Asia. For example, webelieve revenue generated from sales of our digital terrestrial set-top box products during the years ended December 31, 2015, 2014 and 2013 relatedprincipally to sales to Asian set-top box manufacturers delivering products into Europe, Middle East, and Africa, or EMEA markets. Similarly, revenuegenerated from sales of our cable modem products during the years ended December 31, 2015, 2014 and 2013 related principally to sales to Asian ODMs andcontract manufacturers delivering products into European and North American markets. To date, most of our sales have been denominated in United Statesdollars.42Table of ContentsA significant portion of our net revenue has historically been generated by a limited number of customers. In the year ended December 31, 2015, twoof our customers, Arris and Cisco, accounted for 41% of our net revenue, and our ten largest customers collectively accounted for 76% of our net revenue. InNovember 2015, Technicolor completed its purchase of Cisco’s connected devices business. The revenue percentage did not include the 1% revenuepercentage for Technicolor. In the year ended December 31, 2014, one of our customers, Arris, accounted for 31% of our net revenue, and our ten largestcustomers collectively accounted for 67% of our net revenue. In the year ended December 31, 2013, one of our customers, Arris, accounted for 28% of our netrevenue, and our ten largest customers collectively accounted for 72% of our net revenue. For the years ended December 31, 2014 and 2013, sales to Arris asa percentage of revenue include sales to Motorola Home, which was acquired by Arris in April 2013. For certain customers, we sell multiple products intodisparate end user applications such as cable modems and both cable and satellite cable set-top boxes and broadband gateways.Our business depends on winning competitive bid selection processes, known as design wins, to develop semiconductors for use in our customers’products. These selection processes are typically lengthy, and as a result, our sales cycles will vary based on the specific market served, whether the designwin is with an existing or a new customer and whether our product being designed in our customer’s device is a first generation or subsequent generationproduct. Our customers’ products can be complex and, if our engagement results in a design win, can require significant time to define, design and result involume production. Because the sales cycle for our products is long, we can incur significant design and development expenditures in circumstances wherewe do not ultimately recognize any revenue. We do not have any long-term purchase commitments with any of our customers, all of whom purchase ourproducts on a purchase order basis. Once one of our products is incorporated into a customer’s design, however, we believe that our product is likely toremain a component of the customer’s product for its life cycle because of the time and expense associated with redesigning the product or substituting analternative chip. Product life cycles in our target markets will vary by application. For example, in the hybrid television market, a design-in can have aproduct life cycle of 9 to 18 months. In the terrestrial retail digital set-top box market, a design-in can have a product life cycle of 18 to 24 months. In thecable operator modem and gateway sectors, a design-in can have a product life cycle of 24 to 48 months. In the satellite operator gateway and DBS ODUsectors, a design-in can have a product life cycle of 24 months to 60 months and beyond.On April 30, 2015, the Company completed its acquisition of Entropic. Pursuant to the terms of the merger agreement or merger agreements dated as ofFebruary 3, 2015, by and among Maxlinear, Entropic, and two wholly-owned subsidiaries of the Company, all of the Entropic outstanding shares wereconverted into the right to receive consideration consisting of cash and shares of our Class A common stock. We paid an aggregate of $111.1 million in cashand issued an aggregate of 20.4 million shares of our Class A common stock to the stockholders of Entropic. In addition, we assumed all outstandingEntropic stock options and unvested restricted stock units that were held by continuing service providers (as defined in the merger agreement). The Companyused Entropic’s cash and cash equivalents to fund a significant portion of the cash portion of the merger consideration and, to a lesser extent, our own cashand cash equivalents.Critical Accounting Policies and EstimatesManagement’s discussion and analysis of our financial condition and results of operations is based upon our financial statements which are preparedin accordance with accounting principles that are generally accepted in the United States. The preparation of these financial statements requires us to makeestimates and judgments that affect the reported amounts of assets and liabilities, related disclosure of contingent assets and liabilities at the date of thefinancial statements, and the reported amounts of revenues and expenses during the reporting period. We continually evaluate our estimates and judgments,the most critical of which are those related to revenue recognition, allowance for doubtful accounts, inventory valuation, income taxes and stock-basedcompensation. We base our estimates and judgments on historical experience and other factors that we believe to be reasonable under the circumstances.Materially different results can occur as circumstances change and additional information becomes known.We believe that the following accounting policies involve a greater degree of judgment and complexity than our other accounting policies.Accordingly, these are the policies we believe are the most critical to understanding and evaluating our consolidated financial condition and results ofoperations.Revenue RecognitionRevenue is generated from sales of our integrated circuits. We recognize revenue when all of the following criteria are met: 1) there is persuasiveevidence that an arrangement exists, 2) delivery of goods has occurred, 3) the sales price is fixed or determinable and 4) collectability is reasonably assured.Title to product transfers to customers either when it is shipped to or received by the customer, based on the terms of the specific agreement with thecustomer.Revenue is recorded based on the facts at the time of sale. Transactions for which we cannot reliably estimate the amount that will ultimately becollected at the time the product has shipped and title has transferred to the customer are deferred until43Table of Contentsthe amount that is probable of collection can be determined. Items that are considered when determining the amounts that will be ultimately collected are acustomer’s overall creditworthiness and payment history, customer rights to return unsold product, customer rights to price protection, customer paymentterms conditioned on sale or use of product by the customer, or extended payment terms granted to a customer.A portion of our revenues are generated from sales made through distributors under agreements allowing for pricing credits and/or stock rotation rightsof return. Revenues from sales through our distributors accounted for 13%, 28% and 29% of net revenue during the years ended December 31, 2015, 2014and 2013, respectively. Pricing credits to our distributors may result from our price protection and unit rebate provisions, among other factors. These pricingcredits and/or stock rotation rights prevent us from being able to reliably estimate the final sales price of the inventory sold and the amount of inventory thatcould be returned pursuant to these agreements. As a result, for sales through distributors, we have determined that it does not meet all of the required revenuerecognition criteria at the time we deliver our products to distributors as the final sales price is not fixed or determinable.For these distributor transactions, revenue is not recognized until product is shipped to the end customer and the amount that will ultimately becollected is fixed or determinable. Upon shipment of product to these distributors, title to the inventory transfers to the distributor and the distributor isinvoiced, generally with 30 day terms. On shipments to our distributors where revenue is not recognized, we record a trade receivable for the selling price asthere is a legally enforceable right to payment, relieving the inventory for the carrying value of goods shipped since legal title has passed to the distributor,and record the corresponding gross profit in our consolidated balance sheet as a component of deferred revenue and deferred profit, representing thedifference between the receivable recorded and the cost of inventory shipped. Future pricing credits and/or stock rotation rights from our distributors mayresult in the realization of a different amount of profit included in our future consolidated statements of operations than the amount recorded as deferredprofit in our consolidated balance sheets.We record reductions in revenue for estimated pricing adjustments related to price protection agreements with our end customers in the same periodthat the related revenue is recorded. Price protection pricing adjustments are recorded at the time of sale as a reduction to revenue and an increase in ouraccrued liabilities. The amount of these reductions is based on specific criteria included in the agreements and other factors known at the time. We accrue100% of potential price protection adjustments at the time of sale and do not apply a breakage factor. We de-recognize the accrual for unclaimed priceprotection amounts as specific programs contractually end or when we believe unclaimed amounts are no longer subject to payment and will not be paid. SeeNote 4 for a summary of our price protection activity.Allowance for Doubtful AccountsWe perform ongoing credit evaluations of our customers and adjust credit limits based on each customers’ credit worthiness, as determined by ourreview of current credit information. We monitor collections and payments from our customers and maintain an allowance for doubtful accounts based uponour historical experience, our anticipation of uncollectible accounts receivable and any specific customer collection issues that we have identified. While ourcredit losses have historically been insignificant, we may experience higher credit loss rates in the future than we have in the past. Our receivables areconcentrated in relatively few customers. Therefore, a significant change in the liquidity or financial position of any one significant customer could makecollection of our accounts receivable more difficult, require us to increase our allowance for doubtful accounts and negatively affect our working capital.Inventory ValuationWe assess the recoverability of our inventory based on assumptions about demand and market conditions. Forecasted demand is determined based onhistorical sales and expected future sales. Inventory is stated at the lower of cost or market. Cost approximates actual cost on a first-in, first-out basis andmarket reflects current replacement cost (e.g. net replacement value) which cannot exceed net realizable value or fall below net realizable value less anallowance for an approximately normal profit margin. We reduce our inventory to its lower of cost or market on a part-by-part basis to account for itsobsolescence or lack of marketability. Reductions are calculated as the difference between the cost of inventory and its market value based upon assumptionsabout future demand and market conditions. Once established, these adjustments are considered permanent and are not revised until the related inventory issold or disposed of. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be requiredthat may adversely affect our operating results. If actual market conditions are more favorable, we may have higher gross profits when products are sold.Production MasksProduction masks with alternative future uses or discernible future benefits are capitalized and amortized over their estimated useful life of two years.To determine if the production mask has alternative future uses or benefits, we evaluate risks44Table of Contentsassociated with developing new technologies and capabilities, and the related risks associated with entering new markets. Production masks that do not meetthe criteria for capitalization are expensed as research and development costs.Business CombinationsWe apply the provisions of ASC 805, Business Combinations, in the accounting for our acquisitions. ASC 805 requires the us to recognize separatelyfrom goodwill the assets acquired and the liabilities assumed, at the acquisition date fair values. Goodwill as of the acquisition date is measured as the excessof consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While we use our best estimatesand assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, ourestimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisitiondate, we record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurementperiod or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to theconsolidated statements of operations.Costs to exit or restructure certain activities of an acquired company or our internal operations are accounted for as termination and exit costs pursuantto ASC 420, Exit or Disposal Cost Obligations, and are accounted for separately from the business combination. A liability for costs associated with an exitor disposal activity is recognized and measured at its fair value in the consolidated statement of operations in the period in which the liability is incurred.When estimating the fair value of facility restructuring activities, assumptions are applied regarding estimated sub-lease payments to be received, which candiffer materially from actual results. This may require us to revise our initial estimates which may materially affect the results of operations and financialposition in the period the revision is made.For a given acquisition, we may identify certain pre-acquisition contingencies as of the acquisition date and may extend our review and evaluation ofthese pre-acquisition contingencies throughout the measurement period in order to obtain sufficient information to assess whether we include thesecontingencies as a part of the fair value estimates of assets acquired and liabilities assumed and, if so, to determine their estimated amounts.If we cannot reasonably determine the fair value of a pre-acquisition contingency (non-income tax related) by the end of the measurement period,which is generally the case given the nature of such matters, we will recognize an asset or a liability for such pre-acquisition contingency if (i) it is probablethat an asset existed or a liability had been incurred at the acquisition date and (ii) the amount of the asset or liability can be reasonably estimated.Subsequent to the measurement period, changes in estimates of such contingencies will affect earnings and could have a material effect on results ofoperations and financial position.In addition, uncertain tax positions and tax related valuation allowances assumed in connection with a business combination are initially estimated asof the acquisition date. We reevaluate these items quarterly based upon facts and circumstances that existed as of the acquisition date with any adjustments tothe preliminary estimates being recorded to goodwill if identified within the measurement period. Subsequent to the measurement period or finaldetermination of the tax allowance’s or contingency’s estimated value, whichever comes first, changes to these uncertain tax positions and tax relatedvaluation allowances will affect the provision for income taxes in the consolidated statement of operations and could have a material impact on the results ofoperations and financial position.Goodwill and Intangible AssetsGoodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the acquired nettangible and intangible assets. Intangible assets represent purchased intangible assets including developed technology and in-process research anddevelopment, or IPR&D, and technologies acquired or licensed from other companies. Purchased intangible assets with definitive lives are capitalized andamortized over their estimated useful life. Technologies acquired or licensed from other companies are capitalized and amortized over the greater of the termsof the agreement, or estimated useful life, not to exceed three years. We capitalize IPR&D projects acquired as part of a business combination. On completionof each project, IPR&D assets are reclassified to developed technology and amortized over their estimated useful lives.Impairment of Goodwill and Long-Lived AssetsGoodwill is the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations accounted for under thepurchase method. Goodwill is not amortized but is tested for impairment using a qualitative assessment, and subsequently the two-step method as needed.This involves comparing the fair value of each reporting unit, which we have determined to be the entity itself, with its carrying amount, including goodwill.If the fair value45Table of Contentsof a reporting unit exceeds the carrying amount, the goodwill of the reporting unit is considered not impaired and the second step of the impairment test isunnecessary. If the carrying amount of a reporting unit exceeds its fair value, the second step of the impairment test is performed to measure the amount ofimpairment loss, if any. We test by reporting unit, goodwill and other indefinite-lived intangible assets for impairment at October 31 or more frequently if webelieve indicators of impairment exist.During development, IPR&D is not subject to amortization and is tested for impairment annually or more frequently if events or changes incircumstances indicate that the asset might be impaired. We review indefinite-lived intangible assets for impairment as of October 31, the date of our annualgoodwill impairment review or whenever events or changes in circumstances indicate the carrying value may not be recoverable. Recoverability ofindefinite-lived intangible assets is measured by comparing the carrying amount of the asset to the future discounted cash flows that asset is expected togenerate. Once an IPR&D project is complete, it becomes a definite lived intangible asset and is evaluated for impairment in accordance with our policy forlong-lived assets.We regularly review the carrying amount of our long-lived assets, as well as the useful lives, to determine whether indicators of impairment may existwhich warrant adjustments to carrying values or estimated useful lives. An impairment loss would be recognized when the sum of the expected futureundiscounted net cash flows is less than the carrying amount of the asset. Should impairment exist, the impairment loss would be measured based on theexcess of the carrying amount of the asset over the asset’s fair value.Income TaxesWe provide for income taxes utilizing the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes representthe future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. The provision for income taxesgenerally represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferred taxes result from thedifferences between the financial and tax bases of our assets and liabilities and are adjusted for changes in tax rates and tax laws when changes are enacted.Valuation allowances are recorded to reduce deferred tax assets when a judgment is made that is considered more likely than not that a tax benefit will not berealized. A decision to record a valuation allowance results in an increase in income tax expense or a decrease in income tax benefit. If the valuationallowance is released in a future period, income tax expense will be reduced accordingly.The calculation of tax liabilities involves dealing with uncertainties in the application of complex global tax regulations. The impact of an uncertainincome tax position is recognized at the largest amount that is “more likely than not” to be sustained upon audit by the relevant taxing authority. Anuncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. If the estimate of tax liabilities proves to be lessthan the ultimate assessment, a further charge to expense would result.In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred taxassets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in whichthose temporary differences become deductible. We will continue to assess the need for a valuation allowance on the deferred tax asset by evaluating bothpositive and negative evidence that may exist. Any adjustment to the net deferred tax asset valuation allowance would be recorded in the income statementfor the period that the adjustment is determined to be required.Stock-Based CompensationWe measure the cost of employee services received in exchange for equity incentive awards, including stock options, employee stock purchase rights,restricted stock units and restricted stock awards based on the grant date fair value of the award. We use the Black-Scholes valuation model to calculate thefair value of stock options and employee stock purchase rights granted to employees. We calculate the fair value of restricted stock units and restricted stockawards based on the fair market value of our Class A common stock on the grant date. Stock-based compensation expense is recognized over the periodduring which the employee is required to provide services in exchange for the award, which is usually the vesting period. We recognize compensationexpense over the vesting period using the straight-line method and classify these amounts in the statements of operations based on the department to whichthe related employee reports. We calculate the weighted-average expected life of options using the simplified method as prescribed by guidance provided bythe Securities and Exchange Commission. This decision was based on the lack of historical data due to our limited number of stock option exercises underthe 2010 Equity Incentive Plan. We will continue to assess the appropriateness of the use of the simplified method as we develop a history of optionexercises.46Table of ContentsWe account for stock options issued to non-employees in accordance with authoritative guidance for equity based payments to non-employees. Stockoptions issued to non-employees are accounted for at their estimated fair value determined using the Black-Scholes option-pricing model. The fair value ofoptions granted to non-employees is re-measured as they vest, and the resulting increase in value, if any, is recognized as expense during the period therelated services are rendered. We calculate the fair value of restricted stock units issued to non-employees based on the fair market value of our Class Acommon stock on the grant date and the resulting stock-based compensation expense is recognized over the period during which the non-employee isrequired to provide services in exchange for the award, which is usually the vesting period.Results of OperationsThe following describes the line items set forth in our consolidated statements of operations.Net Revenue. Net revenue is generated from sales of integrated radio frequency analog and mixed signal semiconductor solutions for broadbandcommunication applications. A significant but declining portion of our end customers purchases products indirectly from us through distributors. Althoughwe actually sell the products to, and are paid by, the distributors, we refer to these end customers as our customers.Cost of Net Revenue. Cost of net revenue includes the cost of finished silicon wafers processed by third-party foundries; costs associated with ouroutsourced packaging and assembly, test and shipping; costs of personnel, including stock-based compensation, and equipment associated withmanufacturing support, logistics and quality assurance; amortization of certain production mask costs; cost of production load boards and sockets; and anallocated portion of our occupancy costs.Research and Development. Research and development expense includes personnel-related expenses, including stock-based compensation, newproduct engineering mask costs, prototype integrated circuit packaging and test costs, computer-aided design software license costs, intellectual propertylicense costs, reference design development costs, development testing and evaluation costs, depreciation expense and allocated occupancy costs. Researchand development activities include the design of new products, refinement of existing products and design of test methodologies to ensure compliance withrequired specifications. All research and development costs are expensed as incurred.Selling, General and Administrative. Selling, general and administrative expense includes personnel-related expenses, including stock-basedcompensation, distributor and other third-party sales commissions, field application engineering support, travel costs, professional and consulting fees, legalfees, depreciation expense and allocated occupancy costs.Impairment Losses. Impairment losses are attributed to the impairment charges to intangible assets.Restructuring Charges. Restructuring charges consist of employee severance and stock compensation expenses, and lease and leasehold impairmentcharges related to our restructuring plan entered into as a result of our acquisition of Entropic, and an adjustment related to restructuring plan implementedby Entropic prior to acquisition.Interest Income. Interest income consists of interest earned on our cash, cash equivalents and investment balances.Other Income (Expense). Other income (expense) generally consists of income (expense) generated from non-operating transactions.Provision (Benefit) for Income Taxes. We make certain estimates and judgments in determining income tax expense for financial statement purposes.These estimates and judgments occur in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition ofrevenue and expenses for tax and financial statement purposes and the realizability of assets in future years.47Table of ContentsThe following table sets forth our consolidated statement of operations data as a percentage of net revenue for the periods indicated: Years Ended December 31, 2015 2014 2013Net revenue100% 100% 100%Cost of net revenue48 38 39Gross profit52 62 61Operating expenses: Research and development28 42 44Selling, general and administrative26 26 27IPR&D impairment losses7 — —Restructuring charges5 — —Total operating expenses66 68 71Loss from operations(14) (6) (10)Interest income— — —Other income (expense), net— — —Loss before income taxes(14) (6) (10)Provision (benefit) for income taxes— (1) —Net loss(14)% (5)% (10)%Net Revenue Years Ended December 31, % Change 2015 2014 2013 2015 2014 (dollars in thousands) Operator$225,265 $101,393 $91,904 122 % 10%% of net revenue75% 76% 77% Infrastructure and other29,585 31,719 27,742 (7)% 14%% of net revenue10% 24% 23% Legacy video SoC45,510 — — N/A N/A% of net revenue15% — — Total net revenue$300,360 $133,112 $119,646 126 % 11%Our acquisition of Entropic in April 2015 has changed the composition, breadth, and diversity of MaxLinear’s technology portfolio. In particular,MoCA technologies have expanded our technology platform in cable, satellite, and telecommunications applications, and analog channel stacking solutionshave expanded our presence in Direct Broadcast Satellite outdoor unit applications. In addition, we increased our investment in new technologydevelopment targeting infrastructure markets, while reducing our investment in retail-oriented and legacy technologies such as terrestrial tuners, hybrid TVtuners, and legacy video processing technologies. As a result of these changes, we have realigned our revenue composition to reflect our strategic investmentfocus and platform presence. We have illustrated these changes with the market terms operator, infrastructure and other, and legacy video SoC.Within the operator category, the primary revenue contributors are our broadband RF receivers, MoCA connectivity solutions, and analog and digitalchannel stacking satellite outdoor unit solutions. Within the infrastructure and other category, the primary revenue contributors are hybrid TV tuners andterrestrial set-top box TV tuners for digital television adapters, or DTAs, that are sold through retail channels, high-speed interconnect products for the datacenter, metro, and long haul markets, and access technologies for last mile high-speed data access and distribution solutions for multi-dwelling units. Thelegacy video SoC category includes video processing technologies used primarily in cable high definition digital-to-analog converters and other client IPdevices; consistent with Entropic’s previously announced plans, MaxLinear is supporting existing product shipments in this market but does not plan to useits resources to expand the legacy SoC technology portfolio.48Table of ContentsThe increase in net revenue in the year ended December 31, 2015, as compared to the year ended December 31, 2014, was primarily due to $123.9million of growth in operator applications, contributed primarily by analog channel-stacking, or aCSS, and MoCA products related to our Entropicacquisition, as well as organic growth across each of our other operator sub-categories. An increase of $45.5 million in our legacy video SoC products wasattributable to our acquisition of Entropic. Declines in infrastructure and other revenues of $2.1 million were primarily driven by hybrid-TV and consumerdigital-to-analog terrestrial set-top box applications, which offset growth in retail MoCA products related to our Entropic acquisition and high-speedinterconnect products related to our Physpeed acquisition.The increase in net revenue in the year ended December 31, 2014, as compared to the year ended December 31, 2013, was primarily due to $9.5million of growth in operator applications, contributed primarily by growth in cable data product revenue and, to a lesser extent, growth in terrestrial set-topbox and satellite gateway products, offset by a decline in cable video sales. An increase in infrastructure and other revenue of $4.0 million was driven byroughly equivalent dollar growth in hybrid-TV and consumer digital-to-analog terrestrial set-top box applications.Cost of Net Revenue and Gross Profit Years Ended December 31, % Change 2015 2014 2013 2015 2014 (dollars in thousands) Cost of net revenue$144,937 $51,154 $46,683 183% 10%% of net revenue48% 38% 39% Gross profit155,423 81,958 72,963 90% 12%% of net revenue52% 62% 61% The decrease in gross profit percentages for the year ended December 31, 2015, as compared to the year ended December 31, 2014, was primarily dueto revaluation of inventory amortization of $14.2 million and amortization of intellectual property costs of $4.2 million related to the Entropic acquisition.The gross margin decline was also driven by the significant increase in Entropic-related product revenue, which has historically generated lower gross marginthan our previous corporate average.The increase in gross profit percentages in the year ended December 31, 2014, as compared to the year ended December 31, 2013, was primarily due tothe absence of production mask impairments of $1.1 million in the year ended December 31, 2014, which was offset by an increase in sales of lower marginproducts.We currently expect that gross profit percentage will fluctuate in the future, from period-to-period, based on changes in product mix, average sellingprices, and average manufacturing costs.Research and Development Years Ended December 31, % Change 2015 2014 2013 2015 2014 (dollars in thousands) Research and development$85,405 $56,625 $53,132 51% 7%% of net revenue28% 42% 44% The increase in research and development expense for the year ended December 31, 2015, as compared to the year ended December 31, 2014, wasprimarily due to an increase in headcount-related items (including stock-based compensation) of $16.6 million, and the combined increases in design tools,prototype, compensation to employees in relation to the Physpeed transaction, amortization, travel, and occupancy expenses of $11.9 million. In 2015,headcount-related items increased primarily due to increases in our average full-time-equivalent headcount compared to prior year. The non-headcountrelated increases are primarily due to increased project related design tools usage.The increase in research and development expense for the year ended December 31, 2014, as compared to the year ended December 31, 2013, wasprimarily due to a $4.4 million increase in headcount-related items (including stock-based compensation) and combined increases in design tools andoccupancy expenses of $1.5 million, offset by a decrease in performance based compensation of $1.4 million and prototype expenses of $1.0 million. In2014, headcount-related items increased primarily due to increases in our average full-time-equivalent headcount compared to prior year. The non-headcountrelated increases are primarily due to increased project related design tools usage and several facilities relocation and facilities expansions in Bangalore,India and Carlsbad, California.49Table of ContentsWe expect our research and development expenses to increase as we continue to focus on expanding our product portfolio and enhancing existingproducts.Selling, General and Administrative Years Ended December 31, % Change 2015 2014 2013 2015 2014 (dollars in thousands) Selling, general and administrative$77,981 $34,191 $32,181 128% 6%% of net revenue26% 26% 27% The increase in selling, general and administrative expense in the year ended December 31, 2015, as compared to the year ended December 31, 2014,was primarily due to the amortization of purchased intangible assets of $25.0 million and transaction costs of $5.4 million associated with our Entropicacquisition, an increase in headcount-related items (including stock-based compensation) of $5.1 million, and an increase in commission, outside services,professional fees, occupancy, and other expenses of $10.0 million while legal fees decreased $1.7 million. In 2015, headcount-related items increasedprimarily due to increases in our average full-time-equivalent headcount compared to prior year. The non-headcount related increases are primarily due ourfacilities expansion efforts.The increase in selling, general and administrative expense in the year ended December 31, 2014, as compared to the year ended December 31, 2013,was primarily attributable to a $1.9 million increase in headcount-related items (including stock-based compensation) and combined increases inprofessional, consulting and outside services, travel-related, and occupancy expenses of $2.0 million, offset by a decrease in performance basedcompensation of $0.3 million and non-recurring legal expenses of $1.6 million. In 2014, headcount-related items increased primarily due to increases in ouraverage full-time-equivalent headcount compared to prior year. The non-headcount related increases are primarily due to our acquisition of Physpeed andseveral facilities relocation and facilities expansions in Bangalore, India and Carlsbad, California. Non-recurring legal fees decreased due to the completionof our litigation with Silicon Laboratories in the prior year.We expect selling, general and administrative expenses to increase in the future as we expand our sales and marketing organization to enableexpansion into existing and new markets and continue to build our international administrative infrastructure.IPR&D Impairment Losses Years Ended December 31, % Change 2015 2014 2013 2015 2014 (dollars in thousands) IPR&D impairment losses$21,600 $— $— N/A N/A% of net revenue7% —% —% During the year ended December 31, 2015, we recorded $21.6 million related to impairment losses on in-process research and development assets, orIPR&D. These assets were acquired as part of the Physpeed and Entropic acquisitions.Restructuring charges Years Ended December 31, % Change 2015 2014 2013 2015 2014 (dollars in thousands) Restructuring charges$14,086 $— $— N/A N/A% of net revenue5% —% —% Restructuring charges for the year ended December 31, 2015 consisted of employee severance and stock compensation expenses of $5.5 million, leaseand leasehold impairment charges of $8.2 million and contract restructuring of $0.3 million.50Table of ContentsInterest and Other Income (Expense) Years Ended December 31, % Change 2015 2014 2013 2015 2014 (dollars in thousands) Interest income$275 $236 $222 17 % 6 %Other income (expense), net468 (123) (203) (480)% (39)%Interest income has increased from 2013 to 2015 due to higher cash and cash equivalent and investment balances. Other income (expense), netincreased from 2013 to 2015 primarily due to gains on foreign currency transactions at the Entropic Asia subsidiaries.Provision (Benefit) for Income Taxes Years Ended December 31, % Change 2015 2014 2013 2015 2014 (dollars in thousands) Provision (benefit) for income taxes$(575) $(1,704) $402 (66)% (524)%The benefit for income taxes for the year ended December 31, 2015 was $0.6 million or approximately 1% of pre-tax loss compared to a benefit forincome taxes of $1.7 million or approximately 19% of pre-tax loss for the year ended December 31, 2014. The provision for income taxes in the year endedDecember 31, 2013 was $0.4 million or approximately 3% of pre-tax loss.The benefit for income taxes for the years ended December 31, 2015 and 2014 primarily relates to the release of valuation allowance in connectionwith the Entropic and Physpeed acquisitions in 2015 and 2014, respectively, partially offset by income taxes in foreign jurisdictions and accruals for taxcontingencies. We continue to maintain a valuation allowance to offset the federal and California deferred tax assets as realization of such assets does notmeet the more-likely-than-not threshold required under accounting guidelines. We will continue to assess the need for a valuation allowance on the deferredtax assets by evaluating positive and negative evidence that may exist. Until such time that we remove the valuation allowance against our federal andCalifornia deferred tax assets, our provision for income taxes will primarily consist of taxes associated with our foreign subsidiaries.Additionally, theCompany completed the acquisition of Entropic in the second quarter of 2015. As a result of the acquisition, there was a valuation allowance releaseresulting in a tax benefit of $1.8 million. Furthermore, we do not incur expense or benefit in certain tax free jurisdictions in which we operate.Income tax expense in the foreign jurisdictions in which we are subject to tax is expected to remain relatively constant due to the cost plus nature ofthese entities and the relatively consistent operating expenses in each jurisdiction. Fluctuations in world-wide income occur mostly outside of thesejurisdictions and therefore have an insignificant effect on our provision for income taxes. We expect this relationship to continue until the time that we eitherrecognize all or a portion of our federal and California deferred tax assets or implement changes to our global operations.Liquidity and Capital ResourcesAs of December 31, 2015, we had cash and cash equivalents of $68.0 million, short- and long-term investments of $62.5 million, and net accountsreceivable of $42.4 million.Our primary uses of cash are to fund operating expenses, purchases of inventory and the acquisition of property and equipment. Cash used to fundoperating expenses excludes the impact of non-cash items such as depreciation and stock-based compensation and is impacted by the timing of when we paythese expenses as reflected in the change in our outstanding accounts payable and accrued expenses.Our primary sources of cash are cash receipts on accounts receivable from our shipment of products to distributors and direct customers. Aside from thegrowth in amounts billed to our customers, net cash collections of accounts receivable are impacted by the efficiency of our cash collections process, whichcan vary from period to period depending on the payment cycles of our major distributor customers.51Table of ContentsFollowing is a summary of our working capital and cash and cash equivalents for the periods indicated: December 31, 2015 2014 (in thousands)Working capital$134,170 $67,668Cash and cash equivalents$67,956 $20,696Short-term investments43,300 48,399Long-term investments19,242 10,256Total cash and cash equivalents and investments$130,498 $79,351Following is a summary of our cash flows provided by (used in) operating activities, investing activities and financing activities for the periodsindicated: Years Ended December 31, 2015 2014 2013 (in thousands)Net cash provided by operating activities$55,041 $12,234 $12,890Net cash used in investing activities(11,059) (17,466) (9,537)Net cash provided by (used in) by financing activities4,003 (506) 1,270Effect of exchange rates on cash and cash equivalents(725) (16) 17Net increase (decrease) in cash and cash equivalents$47,260 $(5,754) $4,640Cash Flows from Operating ActivitiesNet cash provided by operating activities was $55.0 million for the year ended December 31, 2015. Net cash provided by operating activities primarilyconsisted of $103.1 million in non-cash operating expenses, partially offset by $5.7 million in changes in operating assets and liabilities and a net loss of$42.3 million. Non-cash items included in net loss for the year ended December 31, 2015 included depreciation and amortization expense of $40.6 million,impairment charges on intangibles assets of $21.6 million, stock-based compensation of $19.3 million, amortization of inventory step-up of $14.2 million,impairment and restructuring on leases of $8.2 million and amortization of net investment premiums of $0.6 million, offset by deferred income taxes of $1.9million.Net cash provided by operating activities was $12.2 million for the year ended December 31, 2014. Net cash provided by operating activities consistedof $18.6 million in non-cash operating expenses and $0.7 million in changes in operating assets and liabilities, partially offset by a net loss of $7.0 million.Non-cash items included in net loss for the year ended December 31, 2014 included stock-based compensation of $15.0 million, depreciation andamortization expense of $5.1 million and amortization of net investment premiums of $0.7 million.Net cash provided by operating activities was $12.9 million for the year ended December 31, 2013. Net cash provided by operating activitiesprimarily consisted of $6.9 million in changes in operating assets and liabilities and $18.7 million in non-cash operating expenses, partially offset by a netloss of $12.7 million. Non-cash items included in net loss for the year ended December 31, 2013 included depreciation and amortization expense of $3.7million, amortization of net investment premiums of $1.0 million, stock-based compensation of $13.0 million, and impairment of long-lived assets of $1.2million.Cash Flows from Investing ActivitiesNet cash used in investing activities was $11.1 million for the year ended December 31, 2015. Net cash provided by investing activities consisted of$73.4 million in purchases of securities, $3.6 million used in our acquisition of Entropic, $3.0 million in purchases of property and equipment and $0.1million used in the purchase of intangibles, offset by $69.0 million in maturities of securities.Net cash used in investing activities was $17.5 million for the year ended December 31, 2014. Net cash used in investing activities consisted of $56.7million in purchases of securities, $9.1 million cash used in the acquisition of Physpeed and $8.8 million in purchases of property and equipment, offset by$57.2 million in maturities of securities.52Table of ContentsNet cash used in investing activities was $9.5 million for the year ended December 31, 2013. Net cash used in investing activities primarily consistedof $70.6 million in purchases of securities, $3.2 million in purchases of property and equipment and $1.0 million in purchases of intangibles, offset by $65.2million in maturities of securities.Cash Flows from Financing ActivitiesNet cash provided by financing activities was $4.0 million for the year ended December 31, 2015 consisted primarily of $10.0 million in net proceedsfrom issuance of common stock, offset by $5.1 million in minimum tax withholding paid on behalf of employees for restricted stock units, equity issuancecosts of $0.7 million and repurchases of common stock of $0.1 million.Net cash used in financing activities was $0.5 million for the year ended December 31, 2014 consisted primarily of $3.3 million in net proceeds fromissuance of common stock, offset by $3.8 million in minimum tax withholding paid on behalf of employees for restricted stock units.Net cash provided by financing activities was $1.3 million for the year ended December 31, 2013. Net cash provided by financing activities consistedprimarily of proceeds from issuance of common stock of $2.6 million partially offset by $1.4 million in minimum tax withholding paid on behalf ofemployees for restricted stock units and payments on capital leases.We believe that our $68.0 million of cash and cash equivalents and $62.5 million in short- and long-term investments at December 31, 2015 will besufficient to fund our projected operating requirements for at least the next twelve months. Our cash and cash equivalents as of December 31, 2015 have beenfavorably affected by our implementation of an equity-based bonus program. In connection with that bonus program, in August 2015, we issued 0.3 millionfreely-tradable shares of our Class A common stock in settlement of bonus awards for the January 1, 2015 to June 30, 2015 performance period under ourbonus plan. In May 2015, we issued 0.2 million freely-tradable shares of our Class A common stock in settlement of bonus awards for the fiscal 2014performance period under our bonus plan. In May 2014, we issued 0.6 million freely-tradable shares of our Class A common stock in settlement of bonusawards for the fiscal 2013 performance period under our bonus plan. We expect to implement a similar equity-based plan for the second half of fiscal 2015,but our compensation committee retains discretion to effect payment in cash, stock, or a combination of cash and stock.Notwithstanding the foregoing, we may need to raise additional capital or incur additional indebtedness to continue to fund our operations in thefuture. Our future capital requirements will depend on many factors, including our rate of revenue growth, the expansion of our engineering, sales andmarketing activities, the timing and extent of our expansion into new territories, the timing of introductions of new products and enhancements to existingproducts, the continuing market acceptance of our products and potential material investments in, or acquisitions of, complementary businesses, services ortechnologies. Additional funds may not be available on terms favorable to us or at all. If we are unable to raise additional funds when needed, we may not beable to sustain our operations.Warranties and IndemnificationsIn connection with the sale of products in the ordinary course of business, we often make representations affirming, among other things, that ourproducts do not infringe on the intellectual property rights of others, and agree to indemnify customers against third-party claims for such infringement.Further, our certificate of incorporation and bylaws require us to indemnify our officers and directors against any action that may arise out of their services inthat capacity, and we have also entered into indemnification agreements with respect to all of our directors and certain controlling persons.Off-Balance Sheet ArrangementsAs part of our ongoing business, we do not participate in transactions that generate relationships with unconsolidated entities or financial partnerships,such as entities often referred to as structured finance or special purpose entities, or SPEs, which would have been established for the purpose of facilitatingoff-balance sheet arrangements or other contractually narrow or limited purposes. As of December 31, 2015, we were not involved in any unconsolidated SPEtransactions.53Table of ContentsContractual ObligationsAs of December 31, 2015, future minimum payments under non-cancelable operating leases, other obligations and inventory purchase obligations areas follows: Operating Leases Other Obligations Inventory PurchaseObligations (dollars in thousands)2016$8,178 $10,282 $13,62520176,814 4,687 —20185,935 700 —20195,678 — —20205,947 — —Thereafter7,667 — —Total minimum payments$40,219 $15,669 $13,62554Table of ContentsITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKForeign Currency RiskTo date, our international customer and vendor agreements have been denominated mostly in United States dollars. Accordingly, we have limitedexposure to foreign currency exchange rates and do not enter into foreign currency hedging transactions. The functional currency of certain foreignsubsidiaries is the local currency. Accordingly, the effects of exchange rate fluctuations on the net assets of these foreign subsidiaries’ operations areaccounted for as translation gains or losses in accumulated other comprehensive income within stockholders’ equity. We do not believe that a change of 10%in such foreign currency exchange rates would have a material impact on our financial position or results of operations.Interest Rate RiskWe had cash and cash equivalents of $68.0 million at December 31, 2015 which was held for working capital purposes. We do not enter intoinvestments for trading or speculative purposes. We do not believe that we have any material exposure to changes in the fair value of these investments as aresult of changes in interest rates due to their short-term nature. Declines in interest rates, however, will reduce future investment income.Investments in fixed rate interest earning instruments carry a degree of interest rate risk. Fixed rate securities may have their market value adverselyimpacted due to rising interest rates. Due in part to these factors, our future investment income may fall short of expectations due to changes in interest rates.Investments RiskOur investments, consisting of U.S. Treasury and agency obligations and corporate notes and bonds, are stated at cost, adjusted for amortization ofpremiums and discounts to maturity. In the event that there are differences between fair value and cost in any of our available-for-sale securities, unrealizedgains and losses on these investments are reported as a separate component of accumulated other comprehensive income (loss).55Table of ContentsITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAThe financial statements and supplementary data required by this item are included in Part IV, Item 15 of this Report.ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURENone.ITEM 9A. CONTROLS AND PROCEDURESEvaluation of Disclosure and ProceduresWe maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic reports filed withthe SEC is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information isaccumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow fortimely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controlsand procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and noevaluation of controls and procedures can provide absolute assurance that all control issues and instances of fraud, if any, within a company have beendetected. Management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.As required by Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, prior to filing this Form 10-K, we carried outan evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer,of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act)as of the end of the period covered by this Form 10-K. Based on their evaluation, our principal executive officer and principal financial officer concluded thatour disclosure controls and procedures were effective as of the end of the period covered by this Form 10-K.Management’s Annual Report on Internal Controls over Financial ReportingOur management, including our principal executive officer and principal financial officer, is responsible for establishing and maintaining adequateinternal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our management, including our principalexecutive officer and principal financial officer, evaluated the effectiveness of our internal control over financial reporting based on criteria established in theInternal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based uponthat evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2015. The effectiveness of ourinternal control over financial reporting as of December 31, 2015 has been audited by Ernst & Young LLP, an independent registered public accounting firm,and Ernst & Young LLP has issued a report on our internal control over financial reporting, as stated within their report which is included herein.Changes in Internal Control over Financial ReportingAn evaluation was performed under the supervision and with the participation of our management, including our principal executive officer andprincipal financial officer, to determine whether any change in our internal control over financial reporting occurred during the fiscal quarter endedDecember 31, 2015 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. On April 30, 2015, weacquired Entropic and, as a result, we have been integrating the processes, systems and controls relating to Entropic into our existing system of internalcontrol over financial reporting in accordance with our integration plans through the fiscal quarter ended December 31, 2015. As of December 31, 2015, wehave substantially completed integrating the internal controls over financial reporting related to Entropic. There were no changes, except for the integrationmentioned above, in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 orRule 15d-15 of the Securities Exchange Act of 1934, as amended, that has materially affected, or is reasonably likely to materially affect, our internal controlover financial reporting.56Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMThe Board of Directors and Stockholders of MaxLinear, Inc.We have audited MaxLinear, Inc.’s internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). MaxLinear,Inc.’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internalcontrol over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is toexpress an opinion on the company’s internal control over financial reporting based on our audit.We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in allmaterial respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weaknessexists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures aswe considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’sinternal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of thecompany are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assuranceregarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on thefinancial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degreeof compliance with the policies or procedures may deteriorate.In our opinion, MaxLinear, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, basedon the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balancesheets of MaxLinear, Inc. as of December 31, 2015 and 2014, and the related consolidated statements of operations, comprehensive loss, stockholders’ equityand cash flows for each of the three years in the period ended December 31, 2015 and the financial statement schedule listed in the Index at Item 15(a)(2) ofMaxLinear, Inc. and our report dated February 17, 2016 expressed an unqualified opinion thereon./s/ Ernst & Young LLPIrvine, CaliforniaFebruary 17, 201657Table of ContentsITEM 9B.OTHER INFORMATIONAppointment of Connie Kwong as Corporate Controller and Principal Accounting OfficerOn February 15, 2016, we appointed Connie Kwong as Corporate Controller and Principal Accounting Officer, effective February 15, 2016.Ms. Kwong, age 37, has served as our Assistant Corporate Controller since March 2015. Prior to joining the Company, Ms. Kwong was the corporatecontroller of Interush, Inc. from October 2013 to March 2015 and a senior audit manager of SingerLewak LLP from May 2008 to October 2013. Ms. Kwongreceived a B.A. in business economics from the University of California, Los Angeles in 2002.Ms. Kwong does not have a family relationship with any member of the Board or any executive officer of the Company, and Ms. Kwong has not been aparticipant or had an interest in any transaction with the Company that is reportable under Item 404(a) of Regulation S-K.Compensation Arrangements with Connie Kwong In connection with the appointment of Ms. Kwong to her position as the Corporate Controller and Principal Accounting Officer, Ms. Kwong willreceive an annual base salary of $190,000 and will be eligible to receive an annual bonus with a target level of 30% of her base salary. In addition, thecompensation committee of our board of directors approved a grant of 10,000 restricted stock units, vesting over a four (4) year period at a rate of one forty-eighth (1/48th) per month, subject to Ms. Kwong’s continued employment at each vesting date. Ms. Kwong will also enter into the Company’s standardindemnification agreement in the form previously approved by the Board.Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of CertainOfficers.On November 16, 2015, the compensation committee of our board of directors approved (i) increases to the base salaries of our named executiveofficers for fiscal year 2016 and (ii) target bonus awards for our named executive officers under our Executive Incentive Bonus Plan for the 2016 corporateperformance period, as follows: Bonus Targets:2016 Corporate Performance PeriodExecutive OfficerAnnual Base Salary 2016(1)% of Base Salary$ TargetKishore Seendripu, Ph.D.$465,000(2)100%$465,000Adam C. Spice$330,000(3)65%$214,500Curtis Ling, Ph.D.$275,000(4)50%$137,500Madhukar Reddy, Ph.D.$285,000(5)50%$142,500Michael J. LaChance$285,000(6)50%$142,500____________________________(1)Effective January 1, 2016.(2)Represents an increase of approximately 16.3% in annual base salary.(3)Represents an increase of approximately 6.5% in annual base salary.(4)Represents an increase of approximately 5.8% in annual base salary.(5)Represents an increase of approximately 5.6% in annual base salary.(6)Represents an increase of approximately 9.6% in annual base salary. 58Table of ContentsPART IIIITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEThe information required by Item 10 with respect to our directors and executive officers will be either (i) included in an amendment to this AnnualReport on Form 10-K or (ii) incorporated by reference to our Definitive Proxy Statement to be filed in connection with our 2016 Annual Meeting ofStockholders, or the 2016 Proxy Statement. Such amendment in the 2016 Proxy Statement will be filed with the Securities and Exchange Commission nolater than 120 days after December 31, 2015.Item 405 of Regulation S-K calls for disclosure of any known late filing or failure by an insider to file a report required by Section 16(a) of theExchange Act. This information will be contained under the caption “Related Person Transactions and Section 16(a) Beneficial Ownership ReportingCompliance” in either an amendment to this Annual Report on Form 10-K or the 2016 Proxy Statement and is incorporated herein by reference.Code of ConductWe have adopted a code of ethics and employee conduct that applies to our board of directors and all of our employees, including our chief executiveofficer and principal financial officer.Our code of conduct is available at our website by visiting www.maxlinear.com and clicking through “Investors,” “Corporate Governance,” and “Codeof Conduct.” When required by the rules of the New York Stock Exchange, or NYSE, or the Securities and Exchange Commission, or SEC, we will discloseany future amendment to, or waiver of, any provision of the code of conduct for our chief executive officer and principal financial officer or any member ormembers of our board of directors on our website within four business days following the date of such amendment or waiver.The information required by Item 10 with respect to our audit committee is incorporated by reference from the information set forth under the caption“Corporate Governance and Board of Directors — Board Committees” in either an amendment to this Annual Report on Form 10-K or the 2016 ProxyStatement.ITEM 11. EXECUTIVE COMPENSATIONThe information required by Item 11 is incorporated by reference from the information set forth under the captions “Compensation of Non-EmployeeDirectors” and “Executive Compensation" in either an amendment to this Annual Report on Form 10-K or our 2016 Proxy Statement.ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERMATTERSThe information required by Item 12 is incorporated by reference from the information set forth under the captions “Executive Compensation —Equity Compensation Plan Information” and “Security Ownership” in either an amendment to this Annual Report on Form 10-K or our 2016 ProxyStatement.ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEThe information required by Item 13 is incorporated by reference from the information set forth under the captions “Corporate Governance and Boardof Directors — Director Independence” and “Related Person Transactions and Section 16(a) Beneficial Ownership Reporting Compliance” in either anamendment to this Annual Report on Form 10-K or our 2016 Proxy Statement.ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICESThe information required by Item 14 is incorporated by reference from the information set forth under the caption “Proposal Number 4 — Ratificationof Appointment of Independent Registered Public Accounting Firm” in either an amendment to this Annual Report on Form 10-K or our 2016 ProxyStatement.59Table of ContentsPART IV — FINANCIAL INFORMATIONITEM 15.EXHIBITS, FINANCIAL STATEMENT SCHEDULESa) Documents filed as part of the report1. Financial StatementsOur consolidated financial statements are attached hereto and listed on the Index to Consolidated Financial Statements set forth on page F-1 of thisAnnual Report on Form 10-K.2. Financial Statement SchedulesSchedule II. Valuation and Qualifying Accounts—Years ended December 31, 2015, 2014 and 2013All other schedules are omitted as the required information is inapplicable, or the information is presented in the financial statements or related notes.SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS (in thousands):Classification Balance at beginning ofyear Additions charged toexpenses (Deductions) Balance at end ofyearAllowance for doubtful accounts 2015 $57 $179 $— $2362014 57 — — 572013 132 — (75) 57Inventory reserves 2015 $350 $26 $— $3762014 533 39 (222) 3502013 152 533 (152) 533Valuation allowance for deferred tax assets 2015 $29,399 $69,136 $— $98,5352014 28,628 3,106 (2,335) 29,3992013 22,243 6,385 — 28,62860Table of Contents3. ExhibitsExhibit Number Exhibit Title2.1 Agreement and Plan of Merger and Reorganization, dated as of February 3, 2015, by and among MaxLinear, Inc., a Delawarecorporation, Entropic Communications, Inc., a Delaware corporation, Excalibur Acquisition Corporation, a Delaware corporation and awholly-owned subsidiary of MaxLinear, and Excalibur Subsidiary, LLC, a Delaware limited liability company and wholly-ownedsubsidiary of MaxLinear (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed on February 4,2015 (File No. 001-34666)).3.1 Registrant’s Amended and Restated Certificate of Incorporation, as filed with the Secretary of State of the State of Delaware on March29, 2010 (incorporated by reference to Exhibit 3.5 of the Registrant’s Registration Statement on Form S-1 and all amendments thereto(File No. 333-162947)).3.2 Registrant’s Amended and Restated Bylaws, as amended to date (incorporated by reference to Exhibit 3.1 to the Registrant’s CurrentReport on Form 8-K filed on November 10, 2015 (File No. 001-34666)).+4.1 Specimen common stock certificate of Registrant (incorporated by reference to Exhibit 4.1 of the Registrant’s Registration Statementon Form S-1 and all amendments thereto (File No. 333-162947)).+10.1 Form of Director and Executive Officer Indemnification Agreement (incorporated by reference to Exhibit 10.1 of the Registrant’sRegistration Statement on Form S-1 and all amendments thereto (File No. 333-162947)).+10.2 Form of Director and Controlling Person Indemnification Agreement (incorporated by reference to Exhibit 10.2 of the Registrant’sRegistration Statement on Form S-1 and all amendments thereto (File No. 333-162947)).+10.3 2004 Stock Plan, as amended (incorporated by reference to Exhibit 10.3 of the Registrant’s Annual Report on Form 10-K filed onFebruary 6, 2013 (File No. 001-34666)).+10.4 Form of Stock Option Agreement under the 2004 Stock Plan (incorporated by reference to Exhibit 10.4 of the Registrant’s RegistrationStatement on Form S-1 and all amendments thereto (File No. 333-162947)).+10.5 Amendment No. 1 to the form of Stock Option Agreement under the 2004 Stock Plan (incorporated by reference to Exhibit 10.5 of theRegistrant’s Registration Statement on Form S-1 and all amendments thereto (File No. 333-162947)).+10.6 2010 Equity Incentive Plan, as amended (incorporated by reference to Exhibit 10.6 of the Registrant’s Current Report on Form 8-K filedon May 23, 2014 (File No. 001-34666)).+10.7 Form of Agreement under the 2010 Equity Incentive (incorporated by reference to Exhibit 10.10 of the Registrant’s Quarterly Report onForm 10-Q filed on July 28, 2011 (File No. 001-34666)).+10.8 2010 Employee Stock Purchase Plan, as amended (incorporated by reference to Exhibit 10.8 of the Registrant’s Annual Report on Form10-K filed on February 6, 2013 (File No. 001-34666)).+10.9 Employment Offer Letter, dated December 20, 2010, between the Registrant and Adam C. Spice (incorporated by reference to Exhibit99.2 to the Registrant’s Current Report on Form 8-K filed on December 28, 2010).+10.10 Employment Offer Letter, dated June 24, 2011, between the Registrant and Brian Sprague (incorporated by reference to Exhibit 10.10of the Registrant’s Quarterly Report on Form 10-Q filed on July 28, 2011 (File No. 001-34666)).+10.11 Employment Offer Letter, dated September 12, 2011, by and between the Registrant and Justin Scarpulla (incorporated by reference toExhibit 10.1 of the Registrant’s Current Report on Form 8-K filed on March 15, 2012 (File No. 001-34666)).+*10.12 Form of Change in Control Agreement for Chief Executive Officer and Chief Financial Officer.+*10.13 Form of Change in Control Agreement for Executive Officers.10.14 Lease Agreement, dated May 18, 2009, between the Registrant and JCCE - Palomar, LLC (incorporated by reference to Exhibit 10.14 ofthe Registrant’s Registration Statement on Form S-1 and all amendments thereto (File No. 333-162947)).†10.15 Sublease Agreement, dated May 9, 2009, between the Registrant and CVI Laser, LLC (incorporated by reference to Exhibit 10.15 of theRegistrant’s Registration Statement on Form S-1 and all amendments thereto (File No. 333-162947)).†10.16 Intellectual Property License Agreement, dated June 18, 2009, between the Registrant and Intel Corporation, (incorporated by referenceto Exhibit 10.16 of the Registrant’s Registration Statement on Form S-1 and all amendments thereto (File No. 333-162947)).61Table of Contents†10.17 Employment Offer Letter, dated November 9, 2012, between the Registrant and Will Torgerson (incorporated by reference to Exhibit10.17 of the Registrant’s Annual Report on Form 10-K filed on February 6, 2013 (File No. 001-34666)).†10.18 Distributor Agreement, dated June 5, 2009, between the Registrant and Moly Tech Limited (incorporated by reference to Exhibit 10.18of the Registrant’s Registration Statement on Form S-1 and all amendments thereto (File No. 333-162947)).†10.19 Distributor Agreement, dated October 3, 2005, between the Registrant and Tomen Electronics Corporation (incorporated by reference toExhibit 10.19 of the Registrant’s Registration Statement on Form S-1 and all amendments thereto (File No. 333-162947)).†10.20 Distributor Agreement, dated August 19, 2009, between the Registrant and Lestina International Ltd. (incorporated by reference toExhibit 10.20 of the Registrant’s Registration Statement on Form S-1 and all amendments thereto (File No. 333-162947)).+*10.21 MaxLinear, Inc. Executive Bonus Plan, as amended.10.22 Employment Offer Letter, dated April 22, 2011, between the Registrant and Michael LaChance (incorporated by reference to Exhibit10.22 of the Registrant’s Annual Report on Form 10-K filed on March 14, 2012 (File No. 001-34666)).10.23 Stock Repurchase Agreement, dated August 21, 2012, by and among the Registrant, Mission Ventures III, L.P., Mission VenturesAffiliates III, L.P., and U.S. Venture Partners VIII, L.P. (incorporated by reference to Exhibit 10.23 of the Registrant’s Current Report onForm 8-K filed on August 22, 2012 (File No. 001-34666)).+10.24 Stock Repurchase Agreement, dated October 31, 2012, by and among the Registrant, U.S. Venture Partners VIII, L.P, USVP VIIIAffiliates Fund, L.P., USVP Entrepreneur Partners VIII-A, L.P. and USVP Entrepreneur Partners VIII-B, L.P. (incorporated by reference toExhibit 10.24 of the Registrant’s Current Report on Form 8-K filed on October 31, 2012 (File No. 001-34666)).10.25 Separation Agreement, dated March 15, 2012, by and between the Registrant and Patrick E. McCready (incorporated by reference toExhibit 10.2 of the Registrant’s Current Report on Form 8-K filed on March 15, 2012 (File No. 001-34666)).+10.26 Lease Agreement, dated December 17, 2013, between Registrant and The Campus Carlsbad, LLC (incorporated by reference to Exhibit10.26 of the Registrant’s Annual Report on Form 10-K filed on February 7, 2014 (File No. 001-34666)).+10.27 Separation Agreement and Release, dated December 15, 2014, by and between the Registrant and Brian J. Sprague (incorporated byreference to Exhibit 10.27 of the Registrant’s Current Report on Form 8-K filed on December 16, 2014 (File No. 001-34666)).10.28 Form of MaxLinear Voting Agreement (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filedon February 4, 2015 (File No. 001-34666)).10.29 Form of Entropic Voting Agreement (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed onFebruary 4, 2015 (File No. 001-34666)).10.30 First Amendment to Lease, dated May 6, 2015, between Registrant, on the one hand, and Brookwood CB I, LLC and Brookwood CB II,LLC, as tenants in common and successors-in-interest to The Campus Carlsbad, LLC, on the other hand (incorporated by reference toExhibit 10.1 of Registrant’s Quarterly Report on Form 10-Q filed on August 10, 2015 (File No. 333-34666)).+10.31 Entropic Communications, Inc. 2007 Equity Incentive Plan and Form of Option Agreement, Form of Option Grant Notice thereunderand Notice of Exercise (incorporated herein by reference to Entropic Communication, Inc.’s Annual Report on Form 10-K filed onMarch 3, 2008 (File No. 001-33844)).+10.32 Entropic Communications, Inc. 2007 Non-Employee Directors’ Stock Option Plan and Form of Option Agreement, Forms of GrantNotice, and Notice of Exercise thereunder (incorporated herein by reference to Entropic Communications, Inc.’s Registration Statementon Form S-1 filed on July 27, 2007 (No. 333-144899)).*10.33 Lease Agreement, dated November 11, 2015, between Registrant and The Northwestern Mutual Life Insurance Company.*11.1 Statement re computation of income (loss) per share (included on pages F-14 through F-15 of this Form 10-K).*21.1 Subsidiaries of the Registrant.*23.1 Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.*24.1 Power of Attorney (included on the signature page of this Form 10-K).*31.1 Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.62Table of Contents*31.2 Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.#*32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.101.INS XBRL Instance Document101.SCH XBRL Taxonomy Extension Schema Document101.CAL XBRL Taxonomy Extension Calculation Linkbase Document101.DEF XBRL Taxonomy Extension Definition Linkbase Document101.LAB XBRL Taxonomy Extension Label Linkbase Document101.PRE XBRL Taxonomy Extension Presentation Linkbase Document*Filed herewith.#In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 33-8238 and 34-47986, Final Rule: Management’s Reports on InternalControl Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports, the certifications furnished pursuant to this itemwill not be deemed “filed” for purposes of Section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of that section. Suchcertification will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent thatthe registrant specifically incorporates it by reference.+Indicates a management contract or compensatory plan.†Confidential treatment has been requested and received for certain portions of these exhibits.(b) ExhibitsThe exhibits filed as part of this report are listed in Item 15(a)(3) of this Form 10-K.(c) SchedulesThe financial statement schedules required by Regulation S-X and Item 8 of this form are listed in Item 15(a)(2) of this Form 10-K.63Table of ContentsSIGNATURESPursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by theundersigned thereunto duly authorized. MAXLINEAR, INC. (Registrant) By: /s/ KISHORE SEENDRIPU, PH.D Kishore Seendripu, Ph.D President and Chief Executive OfficerDate: February 17, 2016 (Principal Executive Officer)POWER OF ATTORNEYKNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Kishore Seendripu, Ph.D.and Adam C. Spice, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, to sign any and allamendments (including post-effective amendments) to this Annual Report on Form 10-K and to file the same, with all exhibits thereto and other documentsin connection therewith, with the Securities and Exchange Commission, granting unto each of said attorneys-in-fact and agents, full power and authority todo and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or shemight or could do in person, hereby ratifying and confirming all that each of said attorneys-in-facts and agents, or his substitute or substitutes, or any of them,shall do or cause to be done by virtue hereof.Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of theregistrant and in the capacities and on the dates indicated:Signature Title Date/s/ KISHORE SEENDRIPU, PH.D President and Chief Executive Officer February 17, 2016Kishore Seendripu, Ph.D (Principal Executive Officer) /s/ ADAM C. SPICE Chief Financial Officer February 17, 2016Adam C. Spice (Principal Financial and Accounting Officer) /s/ THOMAS E. PARDUN Lead Director February 17, 2016Thomas E. Pardun /s/ STEVEN C. CRADDOCK Director February 17, 2016Steven C. Craddock /s/ CURTIS LING, PH.D Director February 17, 2016Curtis Ling, Ph.D /s/ ALBERT J. MOYER Director February 17, 2016Albert J. Moyer /s/ DONALD E. SCHROCK Director February 17, 2016Donald E. Schrock /s/ THEODORE TEWSBURY Director February 17, 2016Theodore Tewksbury 64Table of ContentsMaxLinear, Inc.Index to Consolidated Financial StatementsReport of Independent Registered Public Accounting FirmF-2Consolidated Balance SheetsF-3Consolidated Statements of OperationsF-4Consolidated Statements of Comprehensive LossF-5Consolidated Statements of Stockholders’ EquityF-6Consolidated Statements of Cash FlowsF-7Notes to Consolidated Financial StatementsF-8F-1Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMThe Board of Directors and Stockholders of MaxLinear, Inc.We have audited the accompanying consolidated balance sheets of MaxLinear, Inc. as of December 31, 2015 and 2014, and the related consolidatedstatements of operations, comprehensive loss, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2015. Ouraudits also included the financial statement schedule listed in the Index at Item 15(a)(2). These financial statements and schedule are the responsibility of theCompany's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our auditsprovide a reasonable basis for our opinion.In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of MaxLinear, Inc. atDecember 31, 2015 and 2014, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31,2015, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered inrelation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), MaxLinear, Inc.’s internalcontrol over financial reporting as of December 31, 2015, based on criteria established in Internal Control-Integrated Framework issued by the Committee ofSponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 17, 2016 expressed an unqualified opinion thereon./s/ Ernst & Young LLPIrvine, CaliforniaFebruary 17, 2016F-2Table of ContentsMAXLINEAR, INC.CONSOLIDATED BALANCE SHEETS(in thousands, except par amounts) December 31, December 31, 2015 2014 Assets Current assets: Cash and cash equivalents$67,956 $20,696Short-term investments, available-for-sale43,300 48,399Accounts receivable, net42,399 18,523Inventory32,443 10,858Prepaid expenses and other current assets3,904 2,438Total current assets190,002 100,914Property and equipment, net21,858 12,441Long-term investments, available-for-sale19,242 10,256Intangible assets, net51,355 10,386Goodwill49,779 1,201Other long-term assets2,269 513Total assets$334,505 $135,711Liabilities and stockholders’ equity Current liabilities: Accounts payable$6,389 $7,509Deferred revenue and deferred profit4,066 3,612Accrued price protection liability20,026 10,018Accrued expenses and other current liabilities15,368 5,548Accrued compensation9,983 6,559Total current liabilities55,832 33,246Deferred rent11,427 2,177Other long-term liabilities4,322 1,186 Commitments and contingencies Stockholders’ equity: Preferred stock, $0.0001 par value; 25,000 shares authorized, no shares issued or outstanding— —Common stock, $0.0001 par value; 550,000 shares authorized, no shares issued or outstanding— —Class A common stock, $0.0001 par value; 500,000 shares authorized, 55,737 and 30,927 shares issued andoutstanding at December 31, 2015 and 2014, respectively5 3Class B common stock, $0.0001 par value; 500,000 shares authorized, 6,665 and 6,984 shares issued andoutstanding at December 31, 2015 and 2014, respectively1 1Additional paid-in capital384,961 177,912Accumulated other comprehensive loss(822) (25)Accumulated deficit(121,221) (78,789)Total stockholders’ equity262,924 99,102Total liabilities and stockholders’ equity$334,505 $135,711See accompanying notes.F-3Table of ContentsMAXLINEAR, INC.CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except per share data) Years Ended December 31, 2015 2014 2013Net revenue $300,360 $133,112 $119,646Cost of net revenue 144,937 51,154 46,683Gross profit 155,423 81,958 72,963Operating expenses: Research and development 85,405 56,625 53,132Selling, general and administrative 77,981 34,191 32,181IPR&D impairment losses 21,600 — —Restructuring charges 14,086 — —Total operating expenses 199,072 90,816 85,313Loss from operations (43,649) (8,858) (12,350)Interest income 275 236 222Other income (expense), net 468 (123) (203)Loss before income taxes (42,906) (8,745) (12,331)Provision (benefit) for income taxes (575) (1,704) 402Net loss $(42,331) $(7,041) $(12,733)Net loss: Basic $(0.79) $(0.19) $(0.37)Diluted $(0.79) $(0.19) $(0.37)Shares used to compute net loss per share: Basic 53,378 36,472 34,012Diluted 53,378 36,472 34,012See accompanying notes.F-4Table of ContentsMAXLINEAR, INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS(in thousands) Year Ended December 31, 2015 2014 2013Net loss$(42,331) $(7,041) $(12,733)Other comprehensive income (loss), net of tax: Unrealized gain (loss) on investments, net of tax $0 in 2015 and 2014, $5 in2013(93) (60) 8Less: Reclassification adjustments of unrealized gain, net of tax $0 in2015, 2014 and 201321 — —Unrealized gain (loss) on investments, net of tax(72) (60) 8Foreign currency translation adjustments, net of tax benefit of $184 in 2015,and $0 in 2014 and 2013 (1)(725) (23) 15Less: Reclassification adjustments of foreign currency translationadjustments, net of tax of $0 in 2015, 2014 and 2013— — —Foreign currency translation adjustments, net of tax(725) (23) 15Other comprehensive income (loss)(797) (83) 23Total comprehensive loss$(43,128) $(7,124) $(12,710)___________________________(1) Tax amount recognized in Other Long-Term Liabilities of the Consolidated Balance Sheets as part of long-term deferred tax liabilities.See accompanying notes.F-5Table of ContentsMAXLINEAR, INC.CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY(in thousands, except share amounts) Class ACommon Stock Class BCommon Stock AdditionalPaid-InCapital AccumulatedOtherComprehensiveIncome (Loss) AccumulatedDeficit Total Stockholders’Equity Shares Amount Shares Amount Balance at December 31, 2012 23,181 $2 9,673 $1 $139,210 $35 $(59,015) $80,233Conversion of Class B common stock to Class Acommon stock 1,377 — (1,377) — — — — —Common stock issued pursuant to equity awards,net 1,940 1 42 — 3,726 — — 3,727Employee stock purchase plan 504 — — — 2,438 — — 2,438Stock-based compensation — — — — 12,986 — — 12,986Other comprehensive income — — — — — 23 — 23Net loss — — — — — — (12,733) (12,733)Balance at December 31, 2013 27,002 $3 8,338 $1 $158,360 $58 $(71,748) $86,674Conversion of Class B common stock to Class Acommon stock 1,405 — (1,405) — — — — —Common stock issued pursuant to equity awards,net 2,043 — 51 — 1,486 — — 1,486Employee stock purchase plan 477 — — — 3,058 — — 3,058Stock-based compensation — — — — 15,008 — — 15,008Other comprehensive loss — — — — — (83) — (83)Net loss — — — — — — (7,041) (7,041)Balance at December 31, 2014 30,927 $3 6,984 $1 $177,912 $(25) $(78,789) $99,102Shares Repurchased — — — — — — (101) (101)Conversion of Class B common stock to Class Acommon stock 500 — (500) — — — — —Common stock issued pursuant to equity awards,net 3,420 — 181 — 6,603 — — 6,603Issuance of common stock for merger withEntropic Communications, Inc. 20,373 2 — — 177,559 — — 177,561Employee stock purchase plan 517 — — — 3,619 — — 3,619Stock-based compensation — — — — 19,268 — — 19,268Other comprehensive loss — — — — — (797) — (797)Net loss — — — — — — (42,331) (42,331)Balance at December 31, 2015 55,737 $5 6,665 $1 $384,961 $(822) $(121,221) $262,924See accompanying notes.F-6Table of ContentsMAXLINEAR, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands) Years Ended December 31,2015 2014 2013Operating Activities Net loss$(42,331) $(7,041) $(12,733)Adjustments to reconcile net loss to cash provided by operating activities: Amortization and depreciation40,641 5,107 3,715Impairment of IPR&D assets21,600 — —Provision for losses on accounts receivable178 — —Provision for inventory reserves155 — —Amortization of investment premiums, net554 724 974Amortization of inventory step-up14,244 — —Stock-based compensation19,268 15,008 12,986Deferred income taxes(1,906) (2,281) (166)Loss (gain) on disposal of property and equipment74 — —Gain on sale of available-for-sale securities(21) (3) —Impairment of long-lived assets153 29 1,231Impairment of lease8,163 — —Changes in operating assets and liabilities: Accounts receivable5,160 1,982 (5,500)Inventory(6,402) (757) (141)Prepaid and other assets4,495 (752) (308)Accounts payable, accrued expenses and other current liabilities(21,903) 83 (627)Accrued compensation5,320 3,911 5,587Deferred revenue and deferred profit454 961 362Accrued price protection liability6,522 (4,999) 7,137Other long-term liabilities623 262 373Net cash provided by operating activities55,041 12,234 12,890Investing Activities Purchases of property and equipment(2,996) (8,800) (3,162)Purchases of intangible assets(100) — (955)Cash used in acquisition, net of cash acquired(3,615) (9,136) —Purchases of available-for-sale securities(73,377) (56,702) (70,620)Maturities of available-for-sale securities69,029 57,172 65,200Net cash used in investing activities(11,059) (17,466) (9,537)Financing Activities Payments on capital leases— — (2)Repurchases of common stock(101) — —Net proceeds from issuance of common stock9,950 3,304 2,647Minimum tax withholding paid on behalf of employees for restricted stock units(5,141) (3,810) (1,375)Equity issuance costs(705) — —Net cash provided by (used in) financing activities4,003 (506) 1,270Effect of exchange rate changes on cash and cash equivalents(725) (16) 17Increase in cash and cash equivalents47,260 (5,754) 4,640Cash and cash equivalents at beginning of period20,696 26,450 21,810Cash and cash equivalents at end of period$67,956 $20,696 $26,450Supplemental disclosures of cash flow information: Cash paid for interest— — 1Cash paid for income taxes$41 $187 $186Supplemental disclosures of non-cash activities: Issuance of accrued share-based bonus plan$5,459 $5,050 $4,836Accrued purchases of property and equipment$249 $849 $2Lease incentive for leasehold improvements$4,255 $2,008 $—See accompanying notes.F-7Table of ContentsMAXLINEAR, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except per share amounts and percentage data) 1. Organization and Summary of Significant Accounting PoliciesDescription of BusinessMaxLinear, Inc. (the Company) was incorporated in Delaware in September 2003. The Company is a provider of integrated, radio-frequency andmixed-signal integrated circuits for broadband communication and data center, metro, and long-haul transport network applications whose customers includemodule makers, original equipment manufacturers, or OEMs, and original design manufacturers, or ODMs, who incorporate the Company’s products in awide range of electronic devices including cable and terrestrial and satellite set-top boxes, DOCSIS data and voice gateways, hybrid analog and digitaltelevisions, satellite low-noise blocker transponders or outdoor units and optical modules for data center, metro, and long-haul transport networkapplications. The Company is a fabless semiconductor company focusing its resources on the design, sales and marketing of its products.Basis of Presentation and Principles of ConsolidationThe consolidated financial statements include the accounts of MaxLinear, Inc. and its wholly owned subsidiaries. All intercompany transactions andinvestments have been eliminated in consolidation.The functional currency of certain foreign subsidiaries is the local currency. Accordingly, assets and liabilities of these foreign subsidiaries aretranslated at the current exchange rate at the balance sheet date and historical rates for equity. Revenue and expense components are translated at weightedaverage exchange rates in effect during the period. Gains and losses resulting from foreign currency translation are included as a component of stockholders’equity. Foreign currency transaction gains and losses are included in the results of operations and, to date, have not been significant.Use of EstimatesThe preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles, or GAAP, requires managementto make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes of the consolidatedfinancial statements. Actual results could differ from those estimates.Business CombinationsThe Company applies the provisions of ASC 805, Business Combinations, in the accounting for its acquisitions. It requires the Company to recognizeseparately from goodwill the assets acquired and the liabilities assumed, at the acquisition date fair values. Goodwill as of the acquisition date is measured asthe excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While the Companyuses its best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration,where applicable, its estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one yearfrom the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Uponthe conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequentadjustments are recorded to the consolidated statements of operations.Costs to exit or restructure certain activities of an acquired company or the Company's internal operations are accounted for as termination and exitcosts pursuant to ASC 420, Exit or Disposal Cost Obligations, and are accounted for separately from the business combination. A liability for costsassociated with an exit or disposal activity is recognized and measured at its fair value in the consolidated statement of operations in the period in which theliability is incurred. When estimating the fair value of facility restructuring activities, assumptions are applied regarding estimated sub-lease payments to bereceived, which can differ materially from actual results. This may require the Company to revise its initial estimates which may materially affect the resultsof operations and financial position in the period the revision is made.For a given acquisition, the Company may identify certain pre-acquisition contingencies as of the acquisition date and may extend its review andevaluation of these pre-acquisition contingencies throughout the measurement period in order to obtain sufficient information to assess whether theCompany includes these contingencies as a part of the fair value estimates of assets acquired and liabilities assumed and, if so, to determine their estimatedamounts.F-8Table of ContentsMAXLINEAR, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except per share amounts and percentage data) If the Company cannot reasonably determine the fair value of a pre-acquisition contingency (non-income tax related) by the end of the measurementperiod, which is generally the case given the nature of such matters, the Company will recognize an asset or a liability for such pre-acquisition contingencyif: (i) it is probable that an asset existed or a liability had been incurred at the acquisition date and (ii) the amount of the asset or liability can be reasonablyestimated. Subsequent to the measurement period, changes in estimates of such contingencies will affect earnings and could have a material effect on resultsof operations and financial position.In addition, uncertain tax positions and tax related valuation allowances assumed in connection with a business combination are initially estimated asof the acquisition date. The Company reevaluates these items quarterly based upon facts and circumstances that existed as of the acquisition date with anyadjustments to the preliminary estimates being recorded to goodwill if identified within the measurement period. Subsequent to the measurement period orfinal determination of the tax allowance’s or contingency’s estimated value, whichever comes first, changes to these uncertain tax positions and tax relatedvaluation allowances will affect the provision for income taxes in the consolidated statement of operations and could have a material impact on the results ofoperations and financial position.Acquisition of Entropic Communications, Inc.On April 30, 2015, the Company completed its acquisition of Entropic Communications, Inc. (Entropic). Pursuant to the terms of the merger agreementdated as of February 3, 2015, by and among the Company, Entropic, and two wholly-owned subsidiaries of the Company, all of the Entropic outstandingshares were converted into the right to receive consideration consisting of cash and shares of the Company’s Class A common stock. The Company paid anaggregate of $111.1 million and issued an aggregate of 20.4 million shares of the Company’s Class A common stock, to the stockholders of Entropic. Inaddition, the Company assumed all outstanding Entropic stock options and unvested restricted stock units that were held by continuing service providers (asdefined in the merger agreement). The Company used Entropic’s cash and cash equivalents to fund a significant portion of the cash portion of the mergerconsideration and, to a lesser extent, its own cash and cash equivalents. The Company has made all of the material remaining disclosures required by ASC805-10-50-2, Business Combinations. See Note 3.In connection with the Company’s acquisition of Entropic and to address issues primarily relating to the integration of the Company and Entropicbusinesses, the Company terminated the employment of 87 Entropic employees during the year ended December 31, 2015. See Note 4.Cash and Cash EquivalentsThe Company considers all liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash equivalents arerecorded at cost, which approximates market value.Accounts ReceivableThe Company performs ongoing credit evaluations of its customers and adjusts credit limits based on each customer's credit worthiness, as determinedby the Company’s review of current credit information. The Company monitors collections and payments from its customers and maintains an allowance fordoubtful accounts based upon its historical experience, its anticipation of uncollectible accounts receivable and any specific customer collection issues thatthe Company has identified. As of December 31, 2015 and 2014, the Company had recorded an allowance for doubtful accounts of $0.2 million and $0.1million, respectively.InventoryThe Company assesses the recoverability of its inventory based on assumptions about demand and market conditions. Forecasted demand isdetermined based on historical sales and expected future sales. Inventory is stated at the lower of cost or market. Cost approximates actual cost on a first-in,first-out basis and market reflects current replacement cost (e.g. net replacement value) which cannot exceed net realizable value or fall below net realizablevalue less an allowance for an approximately normal profit margin. The Company reduces its inventory to its lower of cost or market on a part-by-part basis toaccount for its obsolescence or lack of marketability. Reductions are calculated as the difference between the cost of inventory and its market value basedupon assumptions about future demand and market conditions. Once established, these adjustments are considered permanent and are not revised until therelated inventory is sold or disposed of.F-9Table of ContentsMAXLINEAR, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except per share amounts and percentage data) Investments, Available-for-SaleThe Company classifies all investments as available-for-sale, as the sale of such investments may be required prior to maturity to implementmanagement strategies. These investments are carried at fair value, with unrealized gains and losses reported as accumulated other comprehensive incomeuntil realized. The cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and accretion, aswell as interest and dividends, are included in interest income. Realized gains and losses from the sale of available-for-sale investments, if any, aredetermined on a specific identification basis and are also included in interest income.Fair Value of Financial InstrumentsThe carrying amount of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses and compensation are considered tobe representative of their respective fair value because of the short-term nature of these items. Investment securities, available-for-sale, are carried at fair value.Property and EquipmentProperty and equipment is carried at cost and depreciated over the estimated useful lives of the assets, ranging from two to five years, using thestraight-line method. Leasehold improvements are stated at cost and amortized over the shorter of the estimated useful lives of the assets or the lease term.Depreciation expense for the years ended December 31, 2015 and 2014 was $8.7 million and $2.6 million, respectively.Production MasksProduction masks with alternative future uses or discernible future benefits are capitalized and amortized over their estimated useful life of two years.To determine if the production mask has alternative future uses or benefits, the Company evaluates risks associated with developing new technologies andcapabilities, and the related risks associated with entering new markets. Production masks that do not meet the criteria for capitalization are expensed asresearch and development costs.Goodwill and Intangible AssetsGoodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the acquired nettangible and intangible assets. Intangible assets represent purchased intangible assets including developed technology, in-process research and development,or IPR&D, technologies acquired or licensed from other companies, customer backlog and tradenames. Purchased intangible assets with definitive lives arecapitalized and amortized over their estimated useful lives. Technologies acquired or licensed from other companies, customer backlog and tradenames arecapitalized and amortized over the lesser of the terms of the agreement, or estimated useful life. The Company capitalizes IPR&D projects acquired as part ofa business combination. On completion of each project, IPR&D assets are reclassified to developed technology and amortized over their estimated usefullives.Impairment of Goodwill and Long-Lived AssetsGoodwill is the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations accounted for under thepurchase method. Goodwill is not amortized but is tested for impairment using a qualitative assessment, and subsequently the two-step method as needed.Step one is the identification of potential impairment. This involves comparing the fair value of each reporting unit, which the Company has determined tobe the entity itself, with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds the carrying amount, the goodwill of thereporting unit is considered not impaired and the second step of the impairment test is unnecessary. If the carrying amount of a reporting unit exceeds its fairvalue, the second step of the impairment test is performed to measure the amount of impairment loss, if any. The Company tests by reporting unit, goodwilland other indefinite-lived intangible assets for impairment as of October 31 or more frequently if it believes indicators of impairment exist.During development, IPR&D is not subject to amortization and is tested for impairment annually or more frequently if events or changes incircumstances indicate that the asset might be impaired. The Company reviews indefinite-lived intangible assets for impairment as of October 31, the date ofits annual goodwill impairment review or whenever events or changes in circumstances indicate the carrying value may not be recoverable. Recoverability ofindefinite-lived intangible assets is measured by comparing the carrying amount of the asset to the future discounted cash flows that asset is expected togenerate. In certain cases, the Company utilizes the relief-from-royalty method when appropriate, and a fair value will be obtained based on analysis over thecosts saved by owning the right instead of leasing it. F-10Table of ContentsMAXLINEAR, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except per share amounts and percentage data) Once an IPR&D project is complete, it becomes a definite lived intangible asset and is evaluated for impairment both immediately prior to its changein classification and thereafter in accordance with the Company's policy for long-lived assets.The Company regularly reviews the carrying amount of its long-lived assets, as well as the useful lives, to determine whether indicators of impairmentmay exist which warrant adjustments to carrying values or estimated useful lives. An impairment loss would be recognized when the sum of the expectedfuture undiscounted net cash flows is less than the carrying amount of the asset. Should impairment exist, the impairment loss would be measured based onthe excess of the carrying amount of the asset over the asset’s fair value.During 2015, we performed our annual impairment assessment of goodwill and IPR&D assets on October 31, 2015. As a result, the Companydetermined there was no impairment associated with goodwill. On the other hand, the Company impaired $21.6 million in IPR&D assets. Refer to Goodwilland Intangible Assets, Note 5 for more information.Revenue RecognitionRevenue is generated from sales of the Company’s integrated circuits. The Company recognizes revenue when all of the following criteria are met:1) there is persuasive evidence that an arrangement exists, 2) delivery of goods has occurred, 3) the sales price is fixed or determinable and 4) collectability isreasonably assured. Title to product transfers to customers either when it is shipped to or received by the customer, based on the terms of the specificagreement with the customer.Revenue is recorded based on the facts at the time of sale. Transactions for which the Company cannot reliably estimate the amount that willultimately be collected at the time the product has shipped and title has transferred to the customer are deferred until the amount that is probable of collectioncan be determined. Items that are considered when determining the amounts that will be ultimately collected are: a customer’s overall creditworthiness andpayment history; customer rights to return unsold product; customer rights to price protection; customer payment terms conditioned on sale or use of productby the customer; or extended payment terms granted to a customer.A portion of the Company’s revenues are generated from sales made through distributors under agreements allowing for pricing credits and/or stockrotation rights of return. Revenues from sales through the Company’s distributors accounted for 13%, 28% and 29% of net revenue for the years endedDecember 31, 2015, 2014 and 2013, respectively. Pricing credits to the Company’s distributors may result from its price protection and unit rebateprovisions, among other factors. These pricing credits and/or stock rotation rights prevent the Company from being able to reliably estimate the final salesprice of the inventory sold and the amount of inventory that could be returned pursuant to these agreements. As a result, for sales through distributors, theCompany has determined that it does not meet all of the required revenue recognition criteria at the time it delivers its products to distributors as the finalsales price is not fixed or determinable.For these distributor transactions, revenue is not recognized until product is shipped to the end customer and the amount that will ultimately becollected is fixed or determinable. Upon shipment of product to these distributors, title to the inventory transfers to the distributor and the distributor isinvoiced, generally with 30 day terms. On shipments to the Company’s distributors where revenue is not recognized, the Company records a trade receivablefor the selling price as there is a legally enforceable right to payment, relieving the inventory for the carrying value of goods shipped since legal title haspassed to the distributor, and records the corresponding gross profit in the consolidated balance sheet as a component of deferred revenue and deferred profit,representing the difference between the receivable recorded and the cost of inventory shipped. Future pricing credits and/or stock rotation rights from theCompany’s distributors may result in the realization of a different amount of profit included in the Company’s future consolidated statements of operationsthan the amount recorded as deferred profit in the Company’s consolidated balance sheets.The Company records reductions in revenue for estimated pricing adjustments related to price protection agreements with the Company’s endcustomers in the same period that the related revenue is recorded. Price protection pricing adjustments are recorded at the time of sale as a reduction torevenue and an increase in the Company’s accrued liabilities. The amount of these reductions is based on specific criteria included in the agreements andother factors known at the time. The Company accrues 100% of potential price protection adjustments at the time of sale and does not apply a breakagefactor. The Company de-recognizes the accrual for unclaimed price protection amounts as specific programs contractually end and when the Companybelieves unclaimed amounts are no longer subject to payment and will not be paid. See Note 4 for a summary of the Company's price protection activity.F-11Table of ContentsMAXLINEAR, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except per share amounts and percentage data) WarrantyThe Company generally provides a warranty on its products for a period of one to three years. The Company makes estimates of product return ratesand expected costs to replace the products under warranty at the time revenue is recognized based on historical warranty experience and any known productwarranty issues. If actual return rates and/or replacement costs differ significantly from these estimates, adjustments to recognize additional cost of netrevenue may be required in future periods. At December 31, 2015 and 2014, the Company recorded $0.2 million, $0.1 million for warranty costs based on theCompany’s analysis. At December 31, 2013, the Company recorded no warranty costs.Segment InformationThe Company operates in one segment as it has developed, marketed and sold primarily only one class of similar products, integrated radio frequencyanalog and mixed signal semiconductor solutions for broadband communication applications.Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly bythe chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. The Company’s chiefoperating decision maker is its Chief Executive Officer. The Company’s Chief Executive Officer reviews financial information presented on a consolidatedbasis for purposes of allocating resources and evaluating financial performance. The Company has one business activity and there are no segment managerswho are held accountable for operations, operating results and plans for products or components below the consolidated unit level. Accordingly, theCompany reports as a single operating segment.Stock-based CompensationThe Company measures the cost of employee services received in exchange for equity incentive awards, including stock options, employee stockpurchase rights, restricted stock units and restricted stock awards based on the grant date fair value of the award. The Company uses the Black-Scholesvaluation model to calculate the fair value of stock options and employee stock purchase rights granted to employees. The Company calculates the fair valueof restricted stock units and restricted stock awards based on the fair market value of its Class A common stock on the grant date. Stock-based compensationexpense is recognized over the period during which the employee is required to provide services in exchange for the award, which is usually the vestingperiod. The Company recognizes compensation expense over the vesting period using the straight-line method and classifies these amounts in the statementsof operations based on the department to which the related employee reports.The Company accounts for stock options issued to non-employees in accordance with authoritative guidance for equity based payments to non-employees. Stock options issued to non-employees are accounted for at their estimated fair value determined using the Black-Scholes option-pricing model.The fair value of options granted to non-employees is re-measured as they vest, and the resulting increase in value, if any, is recognized as expense during theperiod the related services are rendered. The Company calculates the fair value of restricted stock units issued to non-employees based on the fair marketvalue of our Class A common stock on the grant date and the resulting stock-based compensation expense is recognized over the period during which thenon-employee is required to provide services in exchange for the award, which is usually the vesting period.Research and DevelopmentCosts incurred in connection with the development of the Company’s technology and future products are charged to research and developmentexpense as incurred.Income TaxesThe Company provides for income taxes utilizing the asset and liability approach of accounting for income taxes. Under this approach, deferred taxesrepresent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. As such deferred taxes arepresented as net and as noncurrent and presented net in accordance with ASU 2015-17, which was adopted early for the year ended December 31, 2015. Theprovision for income taxes generally represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferredtaxes result from the differences between the financial and tax bases of the Company’s assets and liabilities and are adjusted for changes in tax rates and taxlaws when changes are enacted. Valuation allowances are recorded to reduce deferred tax assets when a judgment is made that is considered more likely thannot that a tax benefit will not be realized. A decision to record aF-12Table of ContentsMAXLINEAR, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except per share amounts and percentage data) valuation allowance results in an increase in income tax expense or a decrease in income tax benefit. If the valuation allowance is released in a future period,income tax expense will be reduced accordingly.The calculation of tax liabilities involves dealing with uncertainties in the application of complex global tax regulations. The impact of an uncertainincome tax position is recognized at the largest amount that is “more likely than not” to be sustained upon audit by the relevant taxing authority. Anuncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. If the estimate of tax liabilities proves to be lessthan the ultimate assessment, a further charge to expense would result.In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred taxassets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in whichthose temporary differences become deductible. The Company will continue to assess the need for a valuation allowance on the deferred tax asset byevaluating both positive and negative evidence that may exist. Any adjustment to the net deferred tax asset valuation allowance would be recorded in theincome statement for the period that the adjustment is determined to be required.Comprehensive Income (Loss)Comprehensive income (loss) is defined as the change in equity (net assets) of a business entity during a period from transactions and other events andcircumstances from nonowner sources. Other comprehensive income (loss) includes certain changes in equity that are excluded from net income (loss), suchas unrealized holding gains and losses on available-for-sale investments, net of tax, and translation gains and losses.Net Income (Loss) per ShareBasic net income (loss) per share is computed by dividing net income (loss) attributable to the Company by the weighted average number of shares ofClass A and Class B common stock outstanding during the period. For diluted net income (loss) per share, net income attributable to the Company is dividedby the sum of the weighted average number of shares of Class A and Class B common stock outstanding and the potential number of shares of dilutive ClassA and Class B common stock outstanding during the period.Litigation and Settlement CostsLegal costs are expensed as incurred. The Company is involved in disputes, litigation and other legal actions in the ordinary course of business. TheCompany continually evaluates uncertainties associated with litigation and records a charge equal to at least the minimum estimated liability for a losscontingency when both of the following conditions are met: (i) information available prior to issuance of the financial statements indicates that it is probablethat an asset had been impaired or a liability had been incurred at the date of the financial statements and (ii) the loss or range of loss can be reasonablyestimated.Recent Accounting PronouncementsIn May 2014, the Financial Accounting Standards Board, or FASB, issued new accounting guidance related to revenue recognition. This new standardwill replace all current U.S. GAAP guidance on this topic and eliminate all industry-specific guidance. The new revenue recognition standard provides aunified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer ofpromised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goodsor services. This guidance will be effective for the Company beginning in the first quarter of fiscal year 2018 and can be applied either retrospectively to eachperiod presented or as a cumulative-effect adjustment as of the date of adoption. The Company is evaluating the impact of adopting this new accountingstandard on its financial statements.In August 2014, the FASB issued new accounting guidance related to the disclosures around going concern. The new standard provides guidancearound management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to providerelated footnote disclosures. This guidance will be effective for the Company beginning in the first quarter of fiscal year 2017. Early adoption is permitted.The Company does not expect the adoption of this standard to significantly impact its financial statements.In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory, which requires inventory to be subsequently measured usingthe lower of cost and net realizable value, and thereby eliminating the market value approach. The FASB has defined net realizable value to be the “estimatedselling prices in the ordinary course of business, less reasonablyF-13Table of ContentsMAXLINEAR, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except per share amounts and percentage data) predictable costs of completion, disposal and transportation.” ASU 2015-11 is effective for reporting periods beginning after December 15, 2016 and isapplied prospectively. We are currently evaluating the impact that this guidance will have on our financial statements and disclosure.In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments, which affects entities that havereported provisional amounts for items in a business combination for which the accounting is incomplete by the end of the reporting period in which thecombination occurs and during the measurement period have an adjustment to provisional amounts recognized. Under this ASU, acquirers must recognizemeasurement-period adjustments in the period in which they determine the amounts, including the effect on earnings of any amounts they would haverecorded in previous periods if the accounting had been completed at the acquisition date. For public business entities, the new standard is effective forinterim and annual periods beginning after December 15, 2015. Early adoption is permitted for all entities. The Company does not expect the adoption ofthis standard to significantly impact its financial statements; however, disclosures in accordance with ASU 2015-16 are made within Note 3, BusinessCombinations.The FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes in November 2015. Currently, entities are required to report deferredtaxes for each jurisdiction as a net current asset or liability and net noncurrent asset or liability. With the implementation of this ASU, deferred tax assets andliabilities and the related valuation allowance are classified as noncurrent on the balance sheet. This new guidance will be effective for public businessentities in fiscal years beginning after December 15, 2016, including interim periods within those years, i.e. in the first quarter for 2017. Early adoption ispermitted. As a result, the Company has opted for early adoption of ASU 2015-17 on a prospective basis during the year ended December 31, 2015, and therelated disclosures are made within Note 9, Income Taxes. The impact of adoption to the prior year is insignificant due to the Company’s valuationallowance. 2. Net Loss Per ShareNet loss per share is computed as required by the accounting standard for earnings per share, or EPS. Basic EPS is calculated by dividing net loss bythe weighted-average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted EPS is computedby dividing net income by the weighted-average number of common shares outstanding for the period and the weighted-average number of dilutive commonstock equivalents outstanding for the period determined using the treasury-stock method. For purposes of this calculation, common stock options, restrictedstock units and restricted stock awards are considered to be common stock equivalents and are only included in the calculation of diluted EPS when theireffect is dilutive. The Company did not have any dilutive shares during the years-ended December 31, 2015, 2014 and 2013.The Company has two classes of stock outstanding, Class A common stock and Class B common stock. The economic rights of the Class A commonstock and Class B common stock, including rights in connection with dividends and payments upon a liquidation or merger are identical, and the Class Acommon stock and Class B common stock will be treated equally, identically and ratably, unless differential treatment is approved by the Class A commonstock and Class B common stock, each voting separately as a class. The Company computes basic earnings per share by dividing net loss by the weightedaverage number of shares of Class A and Class B common stock outstanding during the period. For diluted earnings per share, the Company divides net lossby the sum of the weighted average number of shares of Class A and Class B common stock outstanding and the potential number of shares of dilutiveClass A and Class B common stock outstanding during the period.F-14Table of ContentsMAXLINEAR, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except per share amounts and percentage data) Years Ended December 31, 2015 2014 2013 (in thousands, except per share amounts)Numerator: Net loss$(42,331) $(7,041) $(12,733)Denominator: Weighted average common shares outstanding—basic53,378 36,472 34,012Dilutive common stock equivalents— — —Weighted average common shares outstanding—diluted53,378 36,472 34,012Net loss per share: Basic$(0.79) $(0.19) $(0.37)Diluted$(0.79) $(0.19) $(0.37)The Company excluded 3.0 million, 3.1 million and 3.5 million common stock equivalents for the twelve months ended December 31, 2015, 2014 and2013, respectively, resulting from outstanding equity awards for the calculation of diluted net loss per share due to their anti-dilutive nature.3. Business CombinationAcquisition of Entropic Communications, Inc.On April 30, 2015, the Company completed its acquisition of Entropic Communications, Inc. ("Entropic"). Pursuant to the terms of the mergeragreement dated as of February 3, 2015, by and among the Company, Entropic, and two wholly-owned subsidiaries of the Company ("the MergerAgreement"), all of the Entropic outstanding shares were converted into the right to receive consideration consisting of cash and shares of the Company’sClass A common stock. The Company paid an aggregate of $111.1 million and issued an aggregate of 20.4 million shares of the Company’s Class A commonstock, to the stockholders of Entropic. In addition, the Company assumed all outstanding Entropic stock options and unvested restricted stock units that wereheld by continuing service providers (as defined in the Merger Agreement). The Company used Entropic’s cash and cash equivalents to fund a significantportion of the cash portion of the merger consideration and, to a lesser extent, its own cash and cash equivalents.As a result of the acquisition, the Company has benefitted from the economies of scale across engineering and supply chain operations, as well as fromelimination of redundancy across engineering, sales, and general and administrative functions. Entropic has been recognized for pioneering the MoCA®(Multimedia over Coax Alliance) home networking standard and inventing Direct Broadcast Satellite outdoor unit (“DBS ODU”) solutions which consist ofband translation switch ("BTS") and channel stacking switch ("CSS") products which simplify the installation required to support simultaneous reception ofmultiple channels from multiple satellites over a single cable. Entropic has a rich history of innovation and deep expertise in RF, analog/mixed signal anddigital signal processing technologies. Entropic’s silicon solutions have been broadly deployed across major cable, satellite, and fiber service providers. TheCompany expects the acquisition of Entropic to add significant scale to the Company's analog/mixed-signal business, expand the Company’s addressablemarket and enhance the strategic value of the Company’s offerings to broadband and access partners, OEM customers, and service providers.The merger has been accounted for under the acquisition method of accounting in accordance with ASC 805, Business Combinations, with MaxLineartreated as the accounting acquirer. Under this method of accounting, the Company recorded the acquisition based on the fair value of the consideration givenand the cash consideration paid. The Company allocated the acquisition consideration paid to the identifiable assets acquired and liabilities assumed basedon their respective preliminary fair values at the date of completion of the merger. Any excess of the value of consideration paid over the aggregate fair valueof those net assets has been recorded as goodwill.The total consideration for the Entropic acquisition of $289.4 million is comprised of the equity value of shares of the Company's common stock thatwere issued in the transaction of $173.8 million, the portion of outstanding equity awards deemed to have been earned as of April 30, 2015 of $4.5 millionand cash of $111.1 million. The portion of outstanding equity awards deemed not to have been earned of $9.3 million as of April 30, 2015 will be expensedover the remaining future vesting period, including $3.6 million for year ended December 31, 2015. Assumed equity awards consisted of 1.9 million of theCompany's stock options and 1.3 million restricted stock units.F-15Table of ContentsMAXLINEAR, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except per share amounts and percentage data) The Company capitalized $0.7 million of costs related to the registration and issuance of the 20.4 million shares of the Company’s Class A commonstock to Entropic’s stockholders upon completion of the merger. In addition, the Company registered an additional 3.2 million shares related to shares of theCompany’s Class A common stock which may be issued pursuant to outstanding equity awards under the former Entropic Stock Plans.The estimated fair value of the purchase price consideration consisted of the following: Consideration Paid(in thousands)Cash$111,125Class A common stock issued173,781Equity awards assumed4,485Total purchase consideration$289,391Pursuant to the Company's business combinations accounting policy, the Company estimated the fair values of net tangible and intangible assetsacquired and the excess of the consideration transferred over the aggregate of such fair values was recorded as goodwill. At December 31, 2015, the Companycompleted its purchase price allocation.The following table summarizes the allocation of the assets acquired and liabilities assumed at the acquisition date: Fair Value(in thousands)Cash, cash equivalents and short-term investments$107,510Accounts receivable29,214Inventory29,582Prepaid expenses5,680Property and equipment, net18,914Other long-term assets2,419Intangible assets92,400Accounts payable(17,552)Accrued price protection liability(3,486)Accrued expenses and other current liabilities(10,968)Accrued compensation(3,517)Deferred tax liability(1,876)Other long-term liabilities(7,507)Total identifiable net assets240,813Goodwill48,578Fair value of net assets acquired$289,391In connection with the acquisition of Entropic, the Company has assumed liabilities related to Entropic product quality issues, warranty claims andcontract obligations which are included in accrued expenses and other current liabilities in the purchase price allocation above.None of the goodwill recognized is expected to be deductible for income tax purposes.The fair value of inventories acquired included an acquisition accounting fair market value step-up of $14.2 million, which was fully amortized as ofDecember 31, 2015. During the year ended December 31, 2015, the Company recognized the $14.2 million expense as a component of cost of sales as theinventory acquired on April 30, 2015 was sold to the Company’s customers.Acquisition and integration-related costs of $5.5 million were included in selling, general, and administrative expenses in the Company's statement ofoperations for the year ended December 31, 2015.F-16Table of ContentsMAXLINEAR, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except per share amounts and percentage data) The following table presents details of the identified intangible assets acquired through the acquisition of Entropic: Estimated Useful Life(in years) Fair Value(in thousands)Developed technology7.0 $43,600In-process research and developmentn/a 18,200Trademarks and trade names7.0 1,700Customer relationships5.0 4,700Backlog0.7 24,200Total intangible assets $92,400The fair value of the $92.4 million of identified intangible assets acquired in connection with the Entropic acquisition was estimated using an incomeapproach. Under the income approach, an intangible asset's fair value is equal to the present value of future economic benefits to be derived from ownershipof the asset. Indications of value are developed by discounting future net cash flows to their present value at market-based rates of return. More specifically,the fair value of the developed technology, IPR&D and backlog assets was determined using the multi-period excess earnings method, or MPEEM. MPEEMis an income approach to fair value measurement attributable to a specific intangible asset being valued from the asset grouping’s overall cash-flow stream.MPEEM isolates the expected future discounted cash-flow stream to its net present value. Significant factors considered in the calculation of the developedtechnology and IPR&D intangible assets were the risks inherent in the development process, including the likelihood of achieving technological success andmarket acceptance. Each project was analyzed to determine the unique technological innovations, the existence and reliance on core technology, theexistence of any alternative future use or current technological feasibility and the complexity, cost, and time to complete the remaining development. Futurecash flows for each project were estimated based on forecasted revenue and costs, taking into account the expected product life cycles, market penetration,and growth rates. Developed technology will begin amortization immediately and IPR&D will begin amortization upon the completion of each project. Ifany of the projects are abandoned, the Company will be required to impair the related IPR&D asset.In connection with the Company’s acquisition of Entropic and to address issues primarily relating to the integration of the Company and Entropicbusinesses, the Company entered into a restructuring plan. See Note 4.The following unaudited pro forma financial information presents the combined results of operations for each of the periods presented, as if theacquisition had occurred at the beginning of fiscal year 2014: Years Ended December 31, 2015 2014 (in thousands)Net revenues$371,730 $324,731Net income (loss)$5,436 $(138,382)The following adjustments were included in the unaudited pro forma financial information (negative amounts below represent decreases to expenseand positive amounts are increases to expense): Years Ended December 31, 2015 2014 (in thousands)Amortization and depreciation of intangible assets and property, plantand equipment acquired$(24,969) $21,672Amortization of inventory step-up(14,244) 14,244Acquisition and integration expenses(13,622) —Restructuring charges(14,086) — $(66,921) $35,916F-17Table of ContentsMAXLINEAR, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except per share amounts and percentage data) The pro forma data is presented for illustrative purposes only and is not necessarily indicative of the consolidated results of operations of thecombined business had the merger actually occurred at the beginning of fiscal year 2014 or of the results of future operations of the combined business. Theunaudited pro forma financial information does not reflect any operating efficiencies and cost saving that may be realized from the integration of theacquisition in the Company's Consolidated Statements of Operations.For the year ended December 31, 2015, $143.5 million of revenue and $60.5 million of gross profit of former Entropic operations since the acquisitiondate are included in the Company's Consolidated Statements of Operations.Acquisition of Physpeed, Co., Ltd.On October 31, 2014, the Company acquired 100% of the outstanding common shares of Physpeed Co., Ltd. (“Physpeed”), a privately held developerof high-speed physical layer interconnect products addressing enterprise and telecommunications infrastructure market applications. The Company paid $9.3million in cash in exchange for all outstanding shares of capital stock and equity of Physpeed. $1.1 million of the consideration payable to the formershareholders of Physpeed was placed into escrow pursuant to the terms of the definitive merger agreement. The escrow release date is twelve monthsfollowing the closing date of October 31, 2014 and has been paid out as of December 31, 2015.In addition, the definitive merger agreement provided for potential consideration of $1.7 million of held back merger proceeds for the former principalshareholders of Physpeed which will be paid over a two year period contingent upon continued employment and potential earn-out consideration of up to$0.75 million to the former shareholders of Physpeed for the achievement of certain 2015 and 2016 revenue milestones. As of December 31, 2015, $1.0million of held back merger proceeds have been paid. As of December 31, 2015, we have accrued $0.4 million in earn-out consideration for the achievementof the 2015 actual revenue milestones and 2016 projected revenue milestones. The Company had also entered into retention and performance-basedagreements with Physpeed employees for up to$3.25 million to be paid in cash or shares of MaxLinear Class A common stock based on the achievement ofcertain 2015 and 2016 revenue milestones. As of December 31, 2015, we have accrued $1.9 million related to this arrangement.As a result of the acquisition, the Company expects to reduce costs through economies of scale. The acquisition of Physpeed significantly acceleratesthe Company's total addressable market expansion efforts into infrastructure for data center, as well as metro and long-haul telecommunications operators.Physpeed’s expertise in high-speed analog design, combined with the Company's proven low-power digital CMOS mixed signal-integration and DSPcapabilities, is expected to bring to market solutions that will uniquely enable the data traffic growth generated from smartphones and tablets, and over-the-top, or OTT, streaming video, in addition to cloud computing and data analytics in hyper-scale data centers. The goodwill of $1.2 million arising from theacquisition consists largely of the synergies and economies of scale expected from combining the operations of the Company and Physpeed. None of thegoodwill recognized is expected to be deductible for income tax purposes.In accordance with accounting principles generally accepted in the United States, the Company accounted for the merger using the acquisition methodof accounting for business combinations. Under this method of accounting, the Company recorded the acquisition based on the fair value of theconsideration given and the cash consideration paid in the merger at the time of the merger. The Company allocated the purchase price to the identifiableassets acquired and liabilities assumed based on their respective fair values at the date of the completion of the merger. Any excess of the value ofconsideration paid over the aggregate fair value of those net assets has been recorded as goodwill.The following table summarizes the consideration paid for Physpeed: Consideration Paid(in thousands)Cash$9,250Contingent consideration265Fair value of total consideration transferred$9,515F-18Table of ContentsMAXLINEAR, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except per share amounts and percentage data) The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date. The Company completed thepurchase price allocation for its acquisition of Physpeed as of December 31, 2014: Fair Value(in thousands)Financial assets$114Accounts receivable447Prepaid expenses28Inventory69Fixed assets56Identifiable intangible assets10,000Financial liabilities(65)Net deferred tax liability(2,335)Total identifiable net assets8,314Goodwill1,201 $9,515Acquisition-related costs of $0.3 million were included in selling, general, and administrative expenses in the Company's statement of operations forthe year ended December 31, 2014.The fair value of the acquired identifiable intangible assets of $10.0 million consists of developed technology of $2.7 million and IPR&D of $7.3million. Both the developed technology and IPR&D are related to optical interconnect interface physical layers products and the estimated useful lives havebeen assessed to be seven years for the developed technology. Developed technology will be amortized immediately and IPR&D will begin amortizationupon the completion of each project. If any of the projects are abandoned, the Company will be required to impair the related IPR&D asset. The fair value ofthe developed technology and IPR&D was determined using the multi-period excess earnings method, or MPEEM. MPEEM is an income approach to fairvalue measurement attributable to a specific intangible asset being valued from the asset grouping’s overall cash-flow stream. MPEEM isolates the expectedfuture discounted cash-flow stream to their net present value. Significant factors considered in the calculation were the risks inherent in the developmentprocess, including the likelihood of achieving technological success and market acceptance. Each project was analyzed to determine the uniquetechnological innovations, the existence and reliance on core technology, the existence of any alternative future use or current technological feasibility andthe complexity, cost, and time to complete the remaining development. Future cash flows for each project were estimated based on forecasted revenue andcosts, taking into account the expected product life cycles, market penetration, and growth rates.Compensation ArrangementsIn connection with the acquisition of Physpeed, the Company has agreed to pay additional consideration in future periods. There was a holdback ofthe merger proceeds whereby the former principal shareholders of Physpeed will be paid a quarterly amount of $0.2 million beginning on January 31, 2015and ending on October 31, 2016 for a total of $1.7 million. Certain employees of Physpeed will be paid a total of $0.1 million of which $0.07 million will bepaid in 2015 and $0.05 million will be paid in 2016. These payments are accounted for as transactions separate from the business combination as thepayments are contingent upon continued employment and will be recorded as post-combination compensation expense in the Company's financialstatements during the service period. The Company also agreed to a working capital adjustment of $0.04 million that was settled by December 31, 2014.Earn-OutThe contingent earn-out consideration had an estimated fair value of $0.3 million at the date of acquisition. The earn-out is payable up to $0.75million to the former shareholders of Physpeed. The 2015 earn-out is based on $0.375 million multiplied by the 2015 revenue percentage as defined in thedefinitive merger agreement. The 2016 earn-out is based on $0.375 million multiplied by the 2016 revenue percentage as defined in the definitive mergeragreement. Subsequent changes to the fair value will be recorded through earnings. The fair value of the earn-out was $0.4 million and $0.3 million atDecember 31, 2015 and December 31, 2014, respectively. The change in the fair value of the earn-out was primarily due to revisions to the Company'sexpectations of earn-out achievement.F-19Table of ContentsMAXLINEAR, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except per share amounts and percentage data) RSU AwardsThe Company will grant restricted stock units, or RSUs, under its equity incentive plan to Physpeed continuing employees if certain 2015 and 2016revenue targets are met contingent upon continued employment. The total maximum values of these RSUs are $3.25 million. These participants will beeligible to receive $1.625 million of the RSUs in 2015 and $1.625 million in 2016.The 2015 performance grant, if any earned, will be based on the calculation of the 2015 maximum revenue RSU amount multiplied by the 2015revenue percentage as defined in the definitive merger agreement. The 2015 maximum revenue RSU amount is 50% of the aggregate maximum RSU awardvalue divided by the 2015 average company share price (the average closing sales prices of stock trading on the New York Stock exchange over fiveconsecutive trading days ending on the trade date that is the third trading date prior to the 2015 determination date (no later than ten business days afterfiling the Form 10-K for the 2015 fiscal year)). Qualifying revenues are the net revenues recognized in the 2015 fiscal year directly attributable to sales ofPhyspeed products or the Company’s provision of non-recurring engineering services exclusively with respect to the Physpeed products in accordance withU.S. GAAP reflected in the Company’s audited financial statements.The 2016 performance grant, if any earned, will be based on the calculation of the 2016 maximum revenue RSU amount multiplied by the 2016revenue percentage as defined in the definitive merger agreement. The 2016 maximum revenue RSU amount is 50% of the aggregate maximum RSU awardvalue divided by the 2016 average company share price (the average closing sales prices of stock trading on the New York Stock exchange over fiveconsecutive trading days ending on the trade date that is the third trading date prior to the 2016 determination date (no later than ten business days afterfiling the Form 10-K for the 2016 fiscal year). Qualifying revenues are the net revenues recognized in the 2016 fiscal year directly attributable to sales ofPhyspeed products or the Company’s provision of non-recurring engineering services exclusively with respect to the Physpeed products in accordance withU.S. GAAP reflected in the Company’s audited financial statements.The Company recorded compensation expense for the 2015 RSUs over a 14 month service period from October 31, 2014 through December 31, 2015.The Company will record compensation expense for the 2016 RSUs over a 26 month service period from October 31, 2014 through December 31, 2016. TheCompany has recorded an accrual for the stock-based compensation expense for the 2015 and 2016 RSUs of $1.9 million and $0.3 million at December 31,2015 and 2014, respectively.4. Restructuring ActivityIn connection with the Company's acquisition of Entropic, the Company entered into a restructuring plan to address matters primarily relating to theintegration of the Company and Entropic businesses. In connection with this plan, the Company terminated the employment of 87 Entropic employeesduring the year ended December 31, 2015. The Company recognized associated employee separation charges of approximately $5.5 million in the yearended December 31, 2015 related to these terminations. Included in these employee separation charges is $1.5 million of stock compensation for acceleratedstock options and RSUs vesting due to double trigger change of control agreements and other special agreements in effect with certain Entropic employees.Additionally, in connection with the restructuring plan, the Company ceased use of the majority of Entropic's former headquarters. Accordingly, theCompany recognized lease impairment charges of $2.7 million based on the adjustment to the net present value of the remaining lease obligation on thecease use date. The Company also recorded impairment charges of $5.2 million related to leasehold improvements on the unused premises.F-20Table of ContentsMAXLINEAR, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except per share amounts and percentage data) The following table presents the activity related to the plan, which is included in restructuring charges in the Consolidated Statements of Operations: Year Ended December 31, 2015 (in thousands)Employee separation expenses$5,533Lease related impairment (1)8,163Other390 $14,086____________________________(1)Includes $1.2 million in restructuring charges related to an Entropic lease that was restructured prior to the completion of the acquisition. The Companyrecorded an adjustment to the lease restructuring due to changes in market conditions.The following table presents a roll-forward of the Company's restructuring liability as of December 31, 2015, which is included in accrued expensesand other current liabilities in the Consolidated Balance Sheets: Employee SeparationExpenses Lease RelatedImpairment Other Total (in thousands)Liability as of December 31, 2014$— $— $— $—Restructuring charges (1)5,533 8,163 390 14,086Cash payments(3,913) (1,082) (100) (5,095)Non-cash charges(1,545) (5,524) (289) (7,358)Liability as of December 31, 2015$75 $1,557 $1 $1,633____________________________(1)Includes $1.2 million in restructuring charges related to an Entropic lease that was restructured during to the completion of the acquisition. TheCompany recorded an adjustment to the lease restructuring due to changes in market conditions.5. Goodwill and Intangible AssetsGoodwillGoodwill arises from the acquisition method of accounting for business combinations and represents the excess of the purchase price over the fairvalue of the net assets and other identifiable intangible assets acquired. The preliminary fair values of net tangible assets and intangible assets acquired werebased upon preliminary valuations and the Company's estimates and assumptions are subject to change within the measurement period (up to one year fromthe acquisition date). As of December 31, 2015, the Company completed its purchase price allocation.The following table presents the changes in the carrying amount of goodwill for the period indicated: Goodwill (in thousands)Balance as of December 31, 2014$1,201Acquisition of Entropic on April 30, 201548,578Balance as of December 31, 2015$49,779The Company performs an annual impairment review on October 31st. In testing goodwill, the Company utilizes a qualitative assessment, i.e., the “Step0 Test," as a precursor to the traditional two-step quantitative process. If the Company fails the Step 0 Test, we proceed to test for impairment using thetraditional two-step method. Step one is the identification of potential impairment. This involves comparing the fair value of each reporting unit, which theCompany has determined to be the entity itself, with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds the carryingamount,F-21Table of ContentsMAXLINEAR, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except per share amounts and percentage data) the goodwill of the reporting unit is considered not impaired and the second step of the impairment test is unnecessary. If the carrying amount of a reportingunit exceeds its fair value, the second step of the impairment test is performed to measure the amount of impairment loss, if any.Using the Step 0 Test, the Company assessed qualitative factors to determine that it is more likely than not that the fair value of the reporting unit is notless than its carrying value. Based on our review of these qualitative factors and their respective weightings, we determined there were no indications ofimpairment associated with goodwill. As a result, no goodwill impairment was recognized as of October 31, 2015. In addition to its annual review, theCompany performs a test of impairment when indicators of impairment are present. As of December 31, 2015, there were no indications of impairment of theCompany's goodwill balances.Acquired IntangiblesFinite-lived Intangible Assets The following table sets forth the Company’s finite-lived intangible assets resulting from business acquisitions and technology licenses purchased, whichcontinue to be amortized: December 31, 2015 December 31, 2014 WeightedAverageUseful Life(in Years) Gross CarryingAmount AccumulatedAmortization Net CarryingAmount Gross CarryingValue AccumulatedAmortization Net CarryingAmount (in thousands)Licensed technology3 $2,921 $(2,725) $196 $2,821 $(2,390) $431Developed technology7 47,000 (4,652) 42,348 2,700 (45) 2,655Trademarks and trade names7 1,700 (162) 1,538 — — —Customer relationships5 4,700 (627) 4,073 — — —Backlog1 24,200 (24,200) — — — — $80,521 $(32,366) $48,155 $5,521 $(2,435) $3,086The amortization expense related to intangible assets for the years ended December 31, 2015, 2014 and 2013 were $29.9 million, $0.4 million and$0.5 million, respectively.The following table sets forth the Company’s activities related to finite-lived intangible assets resulting from purchases, additions and the relatedamortization of acquired finite-lived intangible assets: Gross Carrying Amount (in thousands)Balance as of December 31, 2014$3,086Purchased finite-lived intangible assets from Entropic74,200Addition100Transfers to developed technology from IPR&D700Amortization(29,931)Balance as of December 31, 2015$48,155The Company regularly reviews the carrying amount of its long-lived assets, as well as the useful lives, to determine whether indicators of impairmentmay exist which warrant adjustments to carrying values or estimated useful lives. An impairment loss would be recognized when the sum of the expectedfuture undiscounted net cash flows is less than the carrying amount of the asset. Should impairment exist, the impairment loss would be measured based onthe excess of the carrying amount of the asset over the asset’s fair value. During the year ended December 31, 2015, no impairment losses related to finite-lived intangible assets were recognized.Indefinite-lived Intangible AssetsF-22Table of ContentsMAXLINEAR, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except per share amounts and percentage data) The following table sets forth the Company’s indefinite-lived intangible assets from additions to IPR&D through an acquisition, impairments, andtransfers to developed technologies: Gross Carrying Amount (in thousands)Balance as of December 31, 2014$7,300Purchased Entropic indefinite-lived intangible asset18,200Transfers to developed technology from IPR&D(700)IPR&D impairment losses1(21,600)Balance as of December 31, 2015$3,200___________________________1 IPR&D impairment losses related to a $3.8 million abandonment of IPR&D and a $17.8 million loss upon an updated fair value analysis of an asset priorto transfer from IPR&D to developed technology.The Company assessed IPR&D intangible assets and trade name intangible assets with indefinite lives for impairment on October 31, 2015. In testingindefinite-lived intangible assets, the Company utilized the qualitative test as a precursor to the Step 2 fair value determination. Based on the qualitative test,if it was more likely than not that indicators of impairment existed, the Company proceeded to perform fair value determination analysis, unless wedetermined that an asset would be fully abandoned. As a result, the Company recorded $21.6 million in IPR&D impairment losses during the year endedDecember 31, 2015. The Company recorded a $17.8 million impairment loss for its CSS/FBC IPR&D asset, which was transferred to developed technologyon October 31, 2015. This intangible asset was obtained through the Entropic acquisition, having an initial fair value of $18.1 million. Due to updatedcustomer demand information obtained in the fourth quarter, the Company revised its net revenue forecast and utilized the relief-from-royalty method todetermine the fair value of the asset. In addition, the Company fully impaired its CDR IPR&D asset, which contributed to a $3.8 million impairment loss. Thisasset was obtained as part of the Physpeed acquisition with an initial fair value of $3.8 million.6. Financial InstrumentsThe composition of financial instruments is as follows: December 31, 2015AmortizedCost Gross Unrealized FairValueGains Losses (in thousands)Assets Money market funds$17,144 $— $— $17,144Government debt securities17,303 — (30) 17,273Corporate debt securities45,353 — (84) 45,269 79,800 — (114) 79,686Less amounts included in cash and cash equivalents(17,144) — — (17,144) $62,656 $— $(114) $62,542 Fair Value atDecember 31, 2015 (in thousands)Liabilities Contingent Consideration$395Total$395F-23Table of ContentsMAXLINEAR, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except per share amounts and percentage data) December 31, 2014AmortizedCost Gross Unrealized FairValueGains Losses (in thousands)Assets Money market funds$1,858 $— $— $1,858Government debt securities27,154 5 (8) 27,151Corporate debt securities31,543 3 (42) 31,504 60,555 8 (50) 60,513Less amounts included in cash and cash equivalents(1,858) — — (1,858) $58,697 $8 $(50) $58,655 Fair Value atDecember 31, 2014 (in thousands)Liabilities Contingent Consideration$265Total$265As of December 31, 2015, the Company held 36 government and corporate debt securities with an aggregate fair value of $52.8 million that were in anunrealized loss position for less than 12 months. The gross unrealized losses of $0.1 million at December 31, 2015 represent temporary impairments ongovernment and corporate debt securities related to multiple issuers, and were primarily caused by fluctuations in U.S. interest rates. The Company evaluatessecurities for other-than-temporary impairment on a quarterly basis. Impairment is evaluated considering numerous factors, and their relative significancevaries depending on the situation. Factors considered include the length of time and extent to which fair value has been less than the cost basis, the financialcondition and near-term prospects of the issuer; including changes in the financial condition of the security’s underlying collateral; any downgrades of thesecurity by a rating agency; nonpayment of scheduled interest, or the reduction or elimination of dividends; as well as our intent and ability to hold thesecurity in order to allow for an anticipated recovery in fair value.All of the Company’s long-term available-for-sale securities were due between 1 and 2 years as of December 31, 2015.The fair values of the Company’s financial instruments are the amounts that would be received in an asset sale or paid to transfer a liability in anorderly transaction between unaffiliated market participants and are recorded using a hierarchal disclosure framework based upon the level of subjectivity ofthe inputs used in measuring assets and liabilities. The levels are described below:Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities.Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.Level 3: Unobservable inputs are used when little or no market data is available.F-24Table of ContentsMAXLINEAR, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except per share amounts and percentage data) The Company classifies its financial instruments within Level 1 or Level 2 of the fair value hierarchy on the basis of valuations using quoted marketprices or alternate pricing sources and models utilizing market observable inputs, respectively. The Company’s money market funds were valued based onquoted prices for the specific securities in an active market and were therefore classified as Level 1. The government and corporate debt securities have beenvalued on the basis of valuations provided by third-party pricing services, as derived from such services’ pricing models. The pricing services may use aconsensus price which is a weighted average price based on multiple sources or mathematical calculations to determine the valuation for a security, and havebeen classified as Level 2. The Company reviews Level 2 inputs and fair value for reasonableness and the values may be further validated by comparison toindependent pricing sources. In addition, the Company reviews third-party pricing provider models, key inputs and assumptions and understands the pricingprocesses at its third-party providers in determining the overall reasonableness of the fair value of its Level 2 financial instruments. As of December 31, 2015and December 31, 2014, the Company has not made any adjustments to the prices obtained from its third party pricing providers. The contingent liability isclassified as Level 3 as of December 31, 2015 and December 31, 2014 and is valued using an internal rate of return model. The assumptions used in preparingthe internal rate of return model include estimates for future revenues related to Physpeed products and services and a discount factor of 0.41% atDecember 31, 2015 and 0.54% and 0.33% at December 31, 2014. The assumptions used in preparing the internal rate of return model include estimates foroutcome if milestone goals are achieved, the probability of achieving each outcome and discount rates. Significant changes in any of the unobservableinputs used in the fair value measurement of contingent consideration in isolation could result in a significantly lower or higher fair value. A change inestimated future revenues would be accompanied by a directionally similar change in fair value.The following table presents a summary of the Company’s financial instruments that are measured on a recurring basis: Fair Value Measurements at December 31, 2015 Balance at December 31, 2015 Quoted Pricesin ActiveMarkets forIdentical Assets(Level 1) SignificantOtherObservableInputs(Level 2) SignificantUnobservableInputs(Level 3) (in thousands)Assets Money market funds$17,144 $17,144 $— $—Government debt securities17,273 — 17,273 —Corporate debt securities45,269 — 45,269 — $79,686 $17,144 $62,542 $—Liabilities Contingent consideration$395 $— $— $395 $395 $— $— $395 Fair Value Measurements at December 31, 2014 Balance atDecember 31,2014 Quoted Pricesin ActiveMarkets forIdentical Assets(Level 1) SignificantOtherObservableInputs(Level 2) SignificantUnobservableInputs(Level 3) (in thousands)Assets Money market funds$1,858 $1,858 $— $—Government debt securities27,151 — 27,151 —Corporate debt securities31,504 — 31,504 — $60,513 $1,858 $58,655 $—Liabilities Contingent consideration$265 $— $— $265 $265 $— $— $265F-25Table of ContentsMAXLINEAR, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except per share amounts and percentage data) The following summarizes the activity in Level 3 financial instruments: Year Ended December 31,2015 (in thousands)Contingent Consideration (1) Beginning balance$265Loss recognized in earnings (2)130Ending balance$395Net loss for the period included in earnings attributable to contingent consideration held at the end of the period:$130(1)In connection with the acquisition of Physpeed, the Company recorded contingent consideration based upon the expected achievement of certain 2015and 2016 revenue milestones. Changes to the fair value of contingent consideration due to changes in assumptions used in preparing the valuationmodel are recorded in selling, general and administrative expense in the statement of operations.(2)Changes to the estimated fair value of contingent consideration were primarily due to revisions to the Company's expectations of earn-out achievement.There were no transfers between Level 1, Level 2 or Level 3 securities in the year ended December 31, 2015.7. Balance Sheet DetailsCash and cash equivalents and investments consist of the following: December 31, 2015 December 31, 2014 (in thousands)Cash and cash equivalents$67,956 $20,696Short-term investments43,300 48,399Long-term investments19,242 10,256 $130,498 $79,351Inventory consists of the following: December 31, 2015 December 31, 2014 (in thousands)Work-in-process$15,713 $4,169Finished goods16,730 6,689 $32,443 $10,858F-26Table of ContentsMAXLINEAR, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except per share amounts and percentage data) Property and equipment consist of the following: Useful Life(in Years) December 31, 2015 December 31, 2014 (in thousands)Furniture and fixtures5 $2,458 $735Machinery and equipment3 -5 23,679 12,695Masks and production equipment2 8,062 8,672Software3 3,017 905Leasehold improvements4 -5 9,573 4,451Construction in progressN/A 62 276 46,851 27,734Less accumulated depreciation and amortization (24,993) (15,293) $21,858 $12,441Intangible assets, net consist of the following: WeightedAverageAmortizationPeriod(in Years) December 31, 2015 December 31, 2014 (in thousands)Licensed technology3 $2,921 $2,821Developed technology7 47,000 2,700Trademarks and trade names7 1,700 —Customer relationships5 4,700 —Backlog1 24,200 —Less accumulated amortization (32,366) (2,435) 48,155 3,086In-process research and development 3,200 7,300 $51,355 $10,386The following table presents future amortization of the Company’s intangible assets at December 31, 2015: Amortization(in thousands)2016$8,04320177,93120187,91420197,89720207,270Thereafter9,100Total$48,155F-27Table of ContentsMAXLINEAR, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except per share amounts and percentage data) Deferred revenue and deferred profit consist of the following: December 31, 2015 December 31, 2014 (in thousands)Deferred revenue—rebates$118 $21Deferred revenue—distributor transactions5,695 5,585Deferred cost of net revenue—distributor transactions(1,747) (1,994) $4,066 $3,612Accrued price protection liability consists of the following activity: Year Ended December 31, 2015 2014 (in thousands)Beginning balance$10,018 $15,017Additional liability from acquisition3,486 —Charged as a reduction of revenue39,304 22,466Reversal of unclaimed rebates(158) (413)Payments(32,624) (27,052)Ending balance$20,026 $10,018Accrued expenses and other current liabilities consist of the following: December 31, 2015 December 31, 2014 (in thousands)Accrued technology license payments$3,000 $3,000Accrued professional fees1,196 422Accrued restructuring1,633 —Accrued litigation costs534 560Accrued royalty2,042 195Other6,963 1,371 $15,368 $5,5488. Stock-Based Compensation and Employee Benefit PlansCommon StockAt December 31, 2015, the Company had 500 million authorized shares of Class A common stock and 500 million authorized shares of Class Bcommon stock. Holders of the Company’s Class A and Class B common stock have identical voting rights, except that holders of Class A common stock areentitled to one vote per share and holders of Class B common stock are entitled to ten votes per share with respect to transactions that would result in achange of control of the Company or that relate to the Company’s equity incentive plans. In addition, holders of Class B common stock have the exclusiveright to elect two members of the Company’s Board of Directors, each referred to as a Class B Director. The shares of Class B common stock are not publiclytraded. Each share of Class B common stock is convertible at any time at the option of the holder into one share of Class A common stock and in mostinstances automatically converts upon sale or other transfer.F-28Table of ContentsMAXLINEAR, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except per share amounts and percentage data) Employee Benefit PlansAt December 31, 2015, the Company had stock-based compensation awards outstanding under the following plans: the 2004 Stock Plan, the 2010Equity Incentive Plan and the 2010 Employee Stock Purchase Plan as well as the following former Entropic plans: the RF Magic 2000 Incentive Stock Plan,the 2001 Stock Option Plan, the 2007 Equity Incentive Plan, the 2007 Non-Employee Director's Plan and the 2012 Inducement Award Plan. All current stockawards are issued under the 2010 Equity Incentive Plan and 2010 Employee Stock Purchase Plan.2010 Equity Incentive PlanThe 2010 Plan provides for the grant of incentive stock options, non-statutory stock options, restricted stock awards, restricted stock unit awards, stockappreciation rights, performance-based stock awards, and other forms of equity compensation, or collectively, stock awards. The aggregate number of sharesof Class A common stock that may be issued pursuant to stock awards under the 2010 Plan will increase by any shares subject to stock options or otherawards granted under the 2004 Stock Plan that expire or otherwise terminate without having been exercised in full and shares issued pursuant to awardsgranted under the 2004 Stock Plan that are forfeited to or repurchased by the Company. In addition, the number of shares of common stock reserved forissuance will automatically increase on the first day of each fiscal year, equal to the lesser of: 2.6 million shares of the Company’s Class A common stock;four percent (4%) of the outstanding shares of the Company’s Class A common stock and Class B common stock on the last day of the immediately precedingfiscal year; or such lesser amount as the Company’s board of directors may determine. Options granted will generally vest over a four year period and the termcan be from seven to ten years.2010 Employee Stock Purchase PlanThe ESPP authorizes the issuance of shares of the Company’s Class A common stock pursuant to purchase rights granted to the Company’s employees.The number of shares of the Company’s common stock reserved for issuance will automatically increase on the first day of each fiscal year, equal to the leastof: 1.0 million shares of the Company’s Class A common stock; one and a quarter percent (1.25%) of the outstanding shares of the Company’s Class Acommon stock and Class B common stock on the first day of the fiscal year; or such lesser amount as may be determined by our board of directors or acommittee appointed by our board of directors to administer the ESPP. The ESPP is implemented through a series of offerings of purchase rights to eligibleemployees. Under the ESPP, the Company may specify offerings with a duration of not more than 27 months, and may specify shorter purchase periods withineach offering. Each offering will have one or more purchase dates on which shares of the Company’s common stock will be purchased for employeesparticipating in the offering. An offering may be terminated under certain circumstances. Generally, all regular employees, including executive officers,employed by the Company may participate in the ESPP and may contribute up to 15% of their earnings for the purchase of the Company’s common stockunder the ESPP. Unless otherwise determined by the Company’s board of directors, Class A common stock will be purchased for accounts of employeesparticipating in the ESPP at a price per share equal to the lower of (a) 85% of the fair market value of a share of the Company’s Class A common stock on thefirst date of an offering or (b) 85% of the fair market value of a share of the Company’s Class A common stock on the date of purchase.Executive Incentive Bonus PlanIn April 2012, the Company's compensation committee amended its Executive Incentive Bonus Plan to, among other things, permit the settlement ofawards under the plan in the form of shares of its Class A common stock. In May 2013, the Company's compensation committee amended its ExecutiveIncentive Bonus Plan to permit the settlement of awards under the plan in any combination of cash or shares of its Class A common stock. For the January 1,2015 to June 30, 2015, 2014 and 2013 performance period, actual awards under the Executive Incentive Bonus Plan were settled in Class A common stockissued under its 2010 Equity Incentive Plan with the number of shares issuable to plan participants determined based on the closing sales price of theCompany's Class A common stock as determined in trading on the New York Stock Exchange on August 20, 2015, May 14, 2015 and May 9, 2014,respectively. Additionally, the Company settled all bonus awards for all other employees for the January 1, 2015 to June 30, 2015, 2014 and 2013performance period in shares of its Class A common stock. The Company issued 0.3 million shares of its Class A common stock for the January 1, 2015 toJune 30, 2015 performance period upon settlement of the bonus awards on August 20, 2015. The Company issued 0.2 million shares of its Class A commonstock for the 2014 performance period upon settlement of the bonus awards on May 14, 2015. The Company issued 0.6 million shares of its Class A commonstock for the 2013 performance period upon settlement of the bonus awards on May 9, 2014.F-29Table of ContentsMAXLINEAR, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except per share amounts and percentage data) At December 31, 2015, an accrual of $4.1 million was recorded for bonus awards for employees for the July 1, 2015 - December 31, 2015 performanceperiod, which the Company intends to settle in shares of its Class A common stock issued under its 2010 Equity Incentive Plan, as amended, with the numberof shares issuable to plan participants determined based on the closing sales price of the Company’s Class A common stock as determined in trading on theNew York Stock Exchange at a date to be determined. The Company's compensation committee retains discretion to effect payment in cash, stock, or acombination of cash and stock.Stock-Based CompensationStock-based compensation expense is classified in the consolidated statements of operations based on the department to which the related employeereports. The Company recognized stock-based compensation in the statements of operations as follows: Years Ended December 31, 2015 2014 2013 (in thousands)Cost of net revenue$213 $131 $108Research and development13,205 9,686 8,258Selling, general and administrative5,850 5,191 4,320 $19,268 $15,008 $12,686The total unrecognized compensation cost related to unvested stock options as of December 31, 2015 was $1.6 million, and the weighted averageperiod over which these equity awards are expected to vest is 1.42 years. The total unrecognized compensation cost related to unvested restricted stock unitsand restricted stock awards as of December 31, 2015 was $26.6 million, and the weighted average period over which these equity awards are expected to vestis 2.59 years.The Company records equity instruments issued to non-employees as expense at their fair value over the related service period as determined inaccordance with the authoritative guidance and periodically revalues the equity instruments as they vest. Stock-based compensation expense related to non-employee consultants totaled $0.7 million, $0.1 million and $0.2 million for 2015, 2014 and 2013, respectively.In connection with the acquisition of Entropic, the Company assumed stock options and RSUs originally granted by Entropic. Stock-basedcompensation expense in the year ended December 31, 2015 included $0.2 million and $3.4 million, respectively, related to assumed Entropic stock optionsand RSUs.Stock OptionsThe Company uses the Black-Scholes valuation model to calculate the fair value of stock options and employee stock purchase rights granted toemployees. Stock-based compensation expense is recognized over the vesting period using the straight-line method and is classified in the consolidatedstatements of operations based on the department to which the related employee reports.The fair values of stock options and employee stock purchase rights (related to the Company's ESPP) were estimated at their respective grant dateusing the following assumptions:Stock Options Years Ended December 31, 2015 (1) 2014 2013Weighted-average grant date fair value per shareN/A $4.03 $3.24Risk-free interest rateN/A 1.70% 0.71%Dividend yieldN/A —% —%Expected life (in years)N/A 4.56 4.75VolatilityN/A 51.00% 56.00%__________________(1)No options granted during 2015.F-30Table of ContentsMAXLINEAR, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except per share amounts and percentage data) Employee Stock Purchase Rights Years Ended December 31, 2015 2014 2013Weighted-average grant date fair value per share$2.25 - $5.02 $2.03 - $2.47 $1.85 - $2.09Risk-free interest rate0.09 - 0.33% 0.05 - 0.07% 0.09 - 0.10%Dividend yield—% —% —%Expected life (in years)0.50 0.50 0.50Volatility32.65 - 59.14% 47.75 - 46.82% 39.24 - 41.58%The risk-free interest rate assumption was based on the United States Treasury’s rates for U.S. Treasury zero-coupon bonds with maturities similar tothose of the expected term of the award being valued. The assumed dividend yield was based on the Company’s expectation of not paying dividends in theforeseeable future. The weighted-average expected life of options was calculated using the simplified method as prescribed by guidance provided by theSEC. This decision was based on the lack of historical data due to the Company’s limited number of stock option exercises under the 2010 Equity IncentivePlan. In addition, due to the Company’s limited historical data, the estimated volatility incorporates the historical volatility of comparable companies whoseshare prices are publicly available. Effective for the year ended December 31, 2014, the Company is no longer incorporating the historical volatility ofcomparable companies in determining estimated volatility.A summary of the Company’s stock option activity is as follows: Number ofOptions(in thousands) Weighted-AverageExercise Price Weighted-AverageContractual Term(in years) AggregateIntrinsic Value(in thousands)Outstanding at December 31, 20143,963 $5.69 Granted (1)— N/A Assumed (2)1,894 13.83 Exercised(1,080) 5.97 Canceled(1,205) 14.86 Outstanding at December 31, 20153,572 $6.83 3.66 $29,567Vested and expected to vest at December 31, 20153,549 $6.82 3.64 $29,408Exercisable at December 31, 20152,887 $6.75 3.45 $24,362___________________________(1)No options granted during 2015.(2)Assumed options from the Entropic acquisition.The intrinsic value of stock options exercised during 2015, 2014 and 2013 was $6.6 million, $0.6 million and $0.3 million, respectively.Restricted Stock Units and Restricted Stock AwardsThe Company calculates the fair value of restricted stock units and restricted stock awards based on the fair market value of the Company’s Class Acommon stock on the grant date. Stock-based compensation expense is recognized over the vesting period using the straight-line method and is classified inthe consolidated statements of operations based on the department to which the related employee reports.F-31Table of ContentsMAXLINEAR, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except per share amounts and percentage data) A summary of the Company’s restricted stock unit and restricted stock award activity is as follows: Number of Shares(in thousands) Weighted-AverageGrant-Date FairValue per ShareOutstanding at December 31, 20143,512 $7.00Granted2,963 10.41Assumed (1)1,303 8.79Vested(3,022) 7.92Canceled(1,114) 8.45Outstanding at December 31, 20153,642 9.19________________________(1)Assumed awards from the Entropic acquisition.The intrinsic value of restricted stock units and restricted stock awards vested during 2015, 2014 and 2013 was $53.6 million, $21.9 million, and$14.9 million, respectively. The intrinsic value of restricted stock units and restricted stock awards outstanding at December 31, 2015 was $31.4 million.Shares Reserved for Future IssuanceAs of December 31, 2015, common stock reserved for future issuance is as follows: Number of Shares(in thousands)Stock options outstanding3,572Restricted stock units and restricted stock awards outstanding3,642Authorized for future grants under 2010 Equity Incentive Plan4,694Authorized for future issuance under 2010 Employee Stock Purchase Plan1,247Total13,1559. Income TaxesThe domestic and international components of loss before provision (benefit) from income taxes are presented as follows: Years Ended December 31, 2015 2014 2013 (in thousands)Domestic$(44,094) $(9,631) $(12,770)Foreign1,188 886 439Loss before income taxes$(42,906) $(8,745) $(12,331)F-32Table of ContentsMAXLINEAR, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except per share amounts and percentage data) Income tax provision (benefit) consists of the following: Years Ended December 31, 2015 2014 2013 (in thousands)Current: Federal$— $— $—State16 1 —Foreign942 577 574Total current958 578 574Deferred: Federal(13,759) (3,341) (5,217)State(1,034) 253 (1,174)Foreign126 54 (166)Valuation allowance release due to acquisition(1,757) (2,335) —Change in valuation allowance14,891 3,087 6,385Total deferred(1,533) (2,282) (172)Total income tax provision (benefit)$(575) $(1,704) $402The actual income tax provision (benefit) differs from the amount computed using the federal statutory rate as follows: Years Ended December 31, 2015 2014 2013 (in thousands)Provision (benefit) at statutory rate$(14,588) $(2,973) $(4,191)State income taxes (net of federal benefit)275 (391) 1Research and development credits(2,083) (66) (3,630)Foreign rate differential(62) (31) (80)Stock compensation549 609 460Foreign deemed dividend279 — 835Transaction costs1,329 — —Uncertain tax positions600 304 266Foreign tax credits(144) — —Permanent and other96 92 356Valuation allowance release due to acquisition(1,757) (2,335) —Valuation allowance14,931 3,087 6,385Total provision (benefit) for income taxes$(575) $(1,704) $402F-33Table of ContentsMAXLINEAR, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except per share amounts and percentage data) The components of the deferred income tax assets are as follows: December 31, 2015 2014 (in thousands)Deferred tax assets: Net operating loss carryforwards$27,996 $9,878Research and development credits48,531 12,784Accrued expenses and other13,654 1,271Accrued compensation1,747 1,380Stock-based compensation4,245 4,516Intangible assets7,198 3,173 103,371 33,002Less valuation allowance(98,535) (28,753) 4,836 4,249Deferred tax liability: Fixed assets(2,322) (3,523)Unremitted foreign earnings(2,628) (614)Net deferred tax assets$(114) $112At December 31, 2015, the Company had federal and state tax net operating loss carryforwards of approximately $96.5 million and $37.1 million,respectively. These amounts include share-based compensation for federal and state of $22.9 million and $3.8 million, that will be recorded to contributedcapital when realized. The federal and state tax loss carryforwards will begin to expire in 2020 and 2016, respectively, unless previously utilized.At December 31, 2015, the Company had federal and state tax credit carryforwards of approximately $33.2 million and $37.0 million, respectively.The federal tax credit carryforward will begin to expire in 2020, unless previously utilized. The state tax credits do not expire. In addition, the Company hasfederal alternative minimum tax credit carryforwards of $1.0 million that can be carried forward indefinitely.The Company evaluated its net deferred income taxes, which included an assessment of the cumulative income or loss over the prior three-year periodand future periods, to determine if a valuation allowance is required. After considering its recent history of losses and management's expectations ofadditional near-term losses, the Company recorded a valuation allowance on its net federal and state deferred tax assets net of deferred tax liabilities relatedto indefinite-lived intangibles for which no future realization can be expected. During 2015, the Company maintained a valuation allowance against all of itsfederal and state deferred tax assets as realization of such assets does not meet the more-likely-than-not threshold required under accounting guidelines. TheCompany will continue to assess the need for a valuation allowance on the deferred tax assets by evaluating positive and negative evidence that may exist.The change in valuation allowance during 2015 related to operations was $14.9 million. Additionally, the Company completed the acquisition ofEntropic in the second quarter. As a result of the acquisition, there was a valuation allowance release resulting in a tax benefit of $1.8 million.At December 31, 2015, the Company’s unrecognized tax benefits totaled $26.1 million, $20.7 million of which, if recognized at a time when thevaluation allowance no longer exists, would affect the effective tax rate. The Company will recognize interest and penalties related to unrecognized taxbenefits as a component of income tax expense. At December 31, 2015, the Company had accrued approximately $0.1 million of interest and penalties. TheCompany expects a decrease to its unrecognized tax benefits of $0.1 million within twelve months.F-34Table of ContentsMAXLINEAR, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except per share amounts and percentage data) The following table summarizes the changes to the unrecognized tax benefits during 2015, 2014 and 2013: (in thousands)Balance as of December 31, 2012$3,750Additions based on tax positions related to the current year1,689Additions based on tax positions of prior years23Balance as of December 31, 20135,462Additions based on tax positions related to the current year3,158Additions based on tax positions of prior years2,188Balance as of December 31, 201410,808Additions based on tax positions related to the current year2,585Additions related to Entropic acquisition13,733Decreases based on tax positions of prior year(1,073)Balance as of December 31, 2015$26,053The Company is subject to federal and state income tax in the United States and is also subject to income tax in certain other foreign tax jurisdictions.At December 31, 2015, the Company is no longer subject to federal, state or foreign income tax examinations for the years before 2012, 2011 and 2007,respectively. However, to the extent allowed by law, the tax authorities may have the right to examine prior periods where net operating losses or tax creditswere generated and carried forward, and make adjustments up to the amount of the net operating loss or credit carryforward amount.At December 31, 2013, the Company was under examination by the federal tax authorities for the tax years 2010 and 2011. This examination closed inJanuary, 2014. The impact of any adjustments was reflected in 2013. At December 31, 2012, the Company was under examination by the California taxauthorities for the tax years 2008 and 2009. This examination closed during the three months ended March 31, 2013 with no adjustment to taxable income.The Company is not currently under federal, state or foreign examination.On January 2, 2013, the American Taxpayer Relief Act of 2012 was enacted. The Act included several provisions related to corporate income taxincluding the reinstatement of the credit for qualified research and development. The credit was reinstated for years beginning after January 1, 2012. OnDecember 19, 2014, the Tax Increase Prevention Act was enacted. The Act included several business tax provisions including the extension of the credit forqualified research and development through 2014. On December 18, 2015, the Protecting Americans from Tax Hikes Act of 2015 was enacted. The Actincluded several business tax provisions including the permanent extension of the credit for qualified research and development.10. Employee Retirement PlanThe Company has a 401(k) defined contribution retirement plan (the 401(k) Plan) covering all eligible employees. Participants may voluntarilycontribute on a pre-tax basis an amount not to exceed a maximum contribution amount pursuant to Section 401(k) of the Internal Revenue Code. TheCompany is not required to contribute, nor has it contributed, to the 401(k) Plan for any of the periods presented.F-35Table of ContentsMAXLINEAR, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except per share amounts and percentage data) 11. Commitments and ContingenciesLease Commitments and Other Contractual ObligationsThe Company leases facilities and certain equipment under operating lease arrangements expiring at various years through fiscal 2022. As ofDecember 31, 2015, future minimum payments under non-cancelable operating leases, other obligations and inventory purchase obligations are as follows: Operating Leases Other Obligations Inventory PurchaseObligations (in thousands)2016$8,178 $10,282 $13,62520176,814 4,687 —20185,935 700 —20195,678 — —20205,947 — —Thereafter7,667 — —Total minimum payments$40,219 $15,669 $13,625On December 17, 2013, the Company amended a lease arrangement with The Campus Carlsbad, LLC, so that the current Carlsbad office space ofapproximately 45,000 square feet will be expanded to include an additional 24,000 square feet of space. The original lease, which had a term of three yearsand seven months with an original expiration date of November 30, 2019, was extended to an expiration date of June 30, 2022. During 2015, the Companyhas begun significant tenant improvement activities to expand into this office space. The Company was provided a tenant improvement allowance ofapproximately $1,543,000 for tenant improvement costs and related fees and expenses.On November 11, 2015, the Company entered into a real property lease with The Northwestern Mutual Life Insurance Company, a Wisconsincorporation, with respect to the lease of approximately 50,235 square feet of office and laboratory space located at 50 Parker in Irvine, California. TheCompany expects to relocate current operations in Irvine, California to the new facility in 2016.The lease has an initial term of six years and two months, commencing on the later of (i) April 1, 2016 or (i) the date upon which certain building andtenant improvements have been substantially completed and possession of the substantially completed premises has been tendered by the landlord to us. Thebase monthly rent under the lease is approximately $68,000 per month during the first year of the initial lease term, increasing to approximately $86,000 permonth during the last year of the initial lease term. The lease contains an option to extend the lease term for a single, five-year period. If the lease term isextended for the optional five-year period, the monthly base rent will be adjusted based on the fair market rental value. In addition to base rent, the Companyhas agreed to pay for a proportional share of the common area operating expenses and real property taxes. The lease includes customary provisions providingfor late fees for unpaid rent, landlord access to the property, insurance obligations and events of default. In addition, this agreement includes tenantimprovement incentives of $2.7 million.Entropic Communications Merger LitigationThe Delaware ActionsBeginning on February 9, 2015, eleven stockholder class action complaints (captioned Langholz v. Entropic Communications, Inc., et al., C.A. No.10631-VCP (filed Feb. 9, 2015); Tomblin v. Entropic Communications, Inc., C.A. No. 10632-VCP (filed Feb. 9, 2015); Crill v. Entropic Communications,Inc., et al., C.A. No. 10640-VCP (filed Feb. 11, 2015); Wohl v. Entropic Communications, Inc., et al., C.A. No. 10644-VCP (filed Feb. 11, 2015); Parshall v.Entropic Communications, Inc., et al., C.A. No. 10652-VCP (filed Feb. 12, 2015); Saggar v. Padval, et al., C.A . No. 10661-VCP (filed Feb. 13, 2015); Iyer v.Tewksbury, et al., C.A. No. 10665-VCP (filed Feb. 13, 2015); Respler v. Entropic Communications, Inc., et al., C.A. No. 10669-VCP (filed Feb. 17, 2015); Galv. Entropic Communications, Inc., et al., C.A. No. 10671-VCP (filed Feb. 17, 2015); Werbowsky v. Padval, et al., C.A. No. 10673-VCP (filed Feb. 18, 2015);and Agosti v. Entropic Communications, Inc., C.A. No. 10676-VCP (filed Feb. 18, 2015)) were filed in the Court of Chancery of the State of Delaware onbehalf of a putative class of Entropic Communications, Inc. stockholders. The complaints name Entropic, the board of directors of Entropic, MaxLinear,Excalibur Acquisition Corporation, and Excalibur Subsidiary, LLC as defendants. The complaintsF-36Table of ContentsMAXLINEAR, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except per share amounts and percentage data) generally allege that, in connection with the proposed acquisition of Entropic by MaxLinear, the individual defendants breached their fiduciary duties toEntropic stockholders by, among other things, purportedly failing to take steps to maximize the value of Entropic to its stockholders and agreeing toallegedly preclusive deal protection devices in the merger agreement. The complaints further allege that Entropic, MaxLinear, and/or the merger subsidiariesaided and abetted the individual defendants in the alleged breaches of their fiduciary duties. The complaints seek, among other things, an order enjoining thedefendants from consummating the proposed transaction, an order declaring the merger agreement unlawful and unenforceable, in the event that the proposedtransaction is consummated, an order rescinding it and setting it aside or awarding rescissory damages to the class, imposition of a constructive trust,damages, and/or attorneys’ fees and costs.On March 27, 2015, plaintiffs Ankur Saggar, Jon Werbowsky, and Angelo Agosti filed an amended class action complaint. Also on March 27, 2015,plaintiffs Martin Wohl and Jeffrey Park filed an amended class action complaint. On April 1, 2015, plaintiff Mark Respler filed an amended class actioncomplaint.On April 16, 2015, the Court entered an order consolidating the Delaware actions, captioned In re Entropic Communications, Inc. ConsolidatedStockholders Litigation, C.A. No. 10631-VCP (the “Consolidated Action”). The April 16, 2015 order appointed plaintiffs Rama Iyer and Jon Werbowsky asCo-Lead Plaintiffs and designated the amended complaint filed by plaintiffs Ankur Saggar, Jon Werbowsky, and Angelo Agosti as the operative complaint(the “Amended Complaint”).The Amended Complaint names as defendants Entropic, the board of directors of Entropic, the Company, Excalibur Acquisition Corporation, andExcalibur Subsidiary, LLC. The Amended Complaint generally alleges that, in connection with the proposed acquisition of Entropic by the Company, theindividual defendants breached their fiduciary duties to Entropic stockholders by, among other things, purportedly failing to maximize the value of Entropicto its stockholders, engaging in a purportedly unfair and conflicted sale process, agreeing to allegedly preclusive deal protection devices in the mergeragreement, and allegedly misrepresenting and/or failing to disclose all material information in connection with the proposed transaction. The AmendedComplaint further alleges that the Company and the merger subsidiaries aided and abetted the individual defendants in the alleged breaches of their fiduciaryduties. The Amended Complaint seeks, among other things: an order declaring the merger agreement unlawful and unenforceable, an order rescinding, to theextent already implemented, the merger agreement, an order enjoining defendants from consummating the proposed transaction, imposition of a constructivetrust, and attorneys’ and experts’ fees and costs.On April 24, 2015, the parties to the Consolidated Action entered into a memorandum of understanding regarding a proposed settlement of theDelaware actions. The proposed settlement is subject to negotiation of the settlement papers by the parties and is subject to court approval after notice and anopportunity to object is provided to the proposed settlement class. There can be no assurance that the parties will reach agreement regarding the final terms ofthe settlement agreement or that the Court of Chancery will approve the settlement.Based on the above, we have determined that an unfavorable outcome is probable or reasonably possible; or determined that the amount or range ofany possible loss is reasonably estimable. The reasonably estimable loss is not material.CrestaTech LitigationOn January 21, 2014, CrestaTech Technology Corporation, or CrestaTech, filed a complaint for patent infringement against us in the United StatesDistrict Court of Delaware (the “District Court Litigation”). In its complaint, CrestaTech alleges that we infringe U.S. Patent Nos. 7,075,585 (the “’585Patent”) and 7,265,792. In addition to asking for compensatory damages, CrestaTech alleges willful infringement and seeks a permanent injunction.CrestaTech also names Sharp Corporation, Sharp Electronics Corp. and VIZIO, Inc. as defendants based upon their alleged use of our television tuners. OnJanuary 28, 2014, CrestaTech filed a complaint with the U.S. International Trade Commission, or ITC, again naming, among others, us, Sharp, SharpElectronics, and VIZIO (“the “ITC Investigation”). On May 16, 2014 the ITC granted CrestaTech’s motion to file an amended complaint adding six OEMRespondents, namely, SIO International, Inc., Hon Hai Precision Industry Co., Ltd., Wistron Corp., Wistron Infocomm Technology (America) Corp., TopVictory Investments Ltd. and TPV International (USA), Inc. (collectively, with us, Sharp and VIZIO, the “Company Respondents”). CrestaTech’s ITCcomplaint alleged a violation of 19 U.S.C. § 1337 through the importation into the United States, the sale for importation, or the sale within the United Statesafter importation of the Company’s accused products that CrestaTech alleges infringe the same two patents asserted in the Delaware action. Through its ITCcomplaint, CrestaTech sought an exclusion order preventing entry into the United States of certain of our television tuners and televisions containing suchtuners from Sharp, Sharp Electronics, and VIZIO. CrestaTech also sought a cease and desist order prohibiting the Company Respondents from engaging in theimportation into, sale for importation into, the sale after importation of, or otherwise transferring within the United States certain of our television tuners ortelevisions containing such tuners.F-37Table of ContentsMAXLINEAR, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except per share amounts and percentage data) On December 1-5, 2014, the ITC held a trial in the ITC Investigation. On February 27, 2015, the Administrative Law Judge issued a written InitialDetermination (“ID”), ruling that the Company Respondents do not violate Section 1337 in connection with CrestaTech’s asserted patents becauseCrestaTech failed to satisfy the economic prong of the domestic industry requirement pursuant to Section 1337(a)(2). In addition, the ID stated that certain ofour television tuners and televisions incorporating those tuners manufactured and sold by certain customers infringe three claims of the ‘585 Patent, andthese three claims were not determined to be invalid. On April 30, 2015, the ITC issued a notice indicating that it intended to review portions of the IDfinding no violation of Section 1337, including the ID’s findings of infringement with respect to, and validity of, the ‘585 Patent, and the ID’s finding thatCrestaTech failed to establish the existence of a domestic industry within the meaning of Section 1337.The ITC has subsequently issued its opinion, which terminated its investigation. The opinion affirmed the findings of the administrative law judgethat no violation of Section 1337 had occurred because CrestaTech had failed to establish the economic prong of the domestic industry requirement. The ITCalso affirmed the administrative law judge's finding of infringement with respect to the three claims of the '585 Patent that were not held to be invalid. OnNovember 30, 2015, CrestaTech filed an appeal of the ITC decision with the United States Court of Appeals for the Federal Circuit (the "Federal Circuit").The District Court Litigation remains stayed pending resolution of the appeal to the ITC. In addition, we have filed four petitions for inter partesreview ("IPR") by the US Patent Office of the two CrestaTech patents asserted against us. The Patent Trial and Appeal Board (“PTAB”) did not institute two ofthese IPRs as being redundant to IPRs filed by another party that are already underway for the same CrestaTech patent. The remaining two petitions wereinstituted or instituted-in-part and, together with the IPRs filed by third parties, there are currently six IPR proceedings filed involving the two CrestaTechpatents asserted against us. In October 2015, the PTAB issued final decisions in two of the six IPR proceedings, holding that all of the reviewed claims areunpatentable. Included in these decisions was one of the three claims mentioned above. CrestaTech is appealing the PTAB’s decisions at the Federal Circuit.We cannot predict the outcome of any appeal by CrestaTech, the District Court Litigation, or the IPRs. Any adverse determination in the District CourtLitigation could have a material adverse effect on our business and operating results.12. Concentration of Credit Risk and Significant CustomersFinancial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents andaccounts receivable. The Company limits its exposure to credit loss by placing its cash with high credit quality financial institutions. At times, such depositsmay be in excess of insured limits. The Company has not experienced any losses on its deposits of cash and cash equivalents.The Company markets its products and services to manufacturers of wired and wireless communications equipment throughout the world. TheCompany makes periodic evaluations of the credit worthiness of its customers and does not require collateral for credit sales.F-38Table of ContentsMAXLINEAR, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except per share amounts and percentage data) Customers greater than 10% of net revenues for each of the periods presented are as follows: Years Ended December 31, 2015 2014 2013Percentage of total net revenue Arris128% 31% 28%Cisco213% * * * Represents less than 10% of the net revenue for the respective period.1 Includes sales to Motorola Home, which was acquired by Arris in April 2013, for all periods presented.2 In November 2015, Technicolor completed its purchase of Cisco’s connected devices business. The revenue percentage did not include the 1% revenuepercentage for Technicolor.Products shipped to international destinations representing greater than 10% of net revenue for each of the periods presented are as follows: Years Ended December 31, 2015 2014 2013Percentage of total net revenue China77% 71% 68%The determination of which country a particular sale is allocated to is based on the destination of the product shipment.Balances greater than 10% of accounts receivable are as follows: December 31, 2015 2014Percentage of gross accounts receivable Pegatron Corporation17% 41%WNC Corporation16% *Sernet Technologies Corporation14% 11%MTI Jupiter Technologies13% * * Represents less than 10% of the gross accounts receivable for the respective period end.13. Selected Quarterly Financial Data (Unaudited)The following table presents the Company’s unaudited quarterly financial data for each of the eight quarters in the period ended December 31, 2015.In management’s opinion, this information has been presented on the same basis as the audited consolidated financial statements included in a separatesection of this report, and all necessary adjustments, consisting only of normal recurring adjustments, have been included in the amounts below to presentfairly the unaudited quarterly results when read in conjunction with the audited consolidated financial statements and related notes. The operating results forany quarter should not be relied upon as necessarily indicative of results for any future period.F-39Table of ContentsMAXLINEAR, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except per share amounts and percentage data) Year Ended December 31, 2015 First Quarter Second Quarter Third Quarter Fourth Quarter (in thousands, except per share amounts)Net revenue$35,396 $70,824 $95,191 $98,949Gross profit$21,671 $26,942 $51,050 $55,760Net income (loss)$(4,722) $(30,647) $1,582 $(8,544)Net income (loss) per share: Basic$(0.12) $(0.58) $0.03 $(0.14)Diluted$(0.12) $(0.58) $0.03 $(0.14) Year Ended December 31, 2014 First Quarter Second Quarter Third Quarter Fourth Quarter (in thousands, except per share amounts)Net revenue$32,501 $35,592 $32,541 $32,478Gross profit$20,053 $22,246 $19,909 $19,750Net loss$(862) $(612) $(3,205) $(2,362)Net loss per share: Basic$(0.02) $(0.02) $(0.09) $(0.06)Diluted$(0.02) $(0.02) $(0.09) $(0.06)F-40EXHIBIT 10.12[CEO/CFO FORM OF CHANGE IN CONTROL AGREEMENT]MAXLINEAR, INC.CHANGE IN CONTROL AND SEVERANCE AGREEMENTThis Change in Control and Severance Agreement (the “Agreement”) is made and entered into by and between ____________(“Executive”) and MaxLinear, Inc. (the “Company” and, together with the “Executive,” the “Parties”), effective as of__________________ (the “Effective Date”).RECITALS1. It is expected that the Company from time to time will consider the possibility of an acquisition by another company orother change in control. The Board of Directors of the Company (the “Board”) recognizes that such consideration can be a distractionto Executive and can cause Executive to consider alternative employment opportunities. The Board has determined that it is in the bestinterests of the Company and its stockholders to assure that the Company will have the continued dedication and objectivity ofExecutive, notwithstanding the possibility, threat or occurrence of a Change in Control (as defined herein) of the Company.2. The Board believes that it is in the best interests of the Company and its stockholders to provide Executive with certainseverance benefits upon Executive’s termination of employment under certain circumstances, provided that Executive is a Section 16Officer immediately prior to the Change in Control or date of termination. For this purpose, a “Section 16 Officer” is an employee ofthe Company who has been designated by the Board, at its discretion and consistent with applicable law, as being subject to thereporting requirements of Section 16 of the Securities Exchange Act of 1934, as amended. These benefits will provide Executive withenhanced financial security and incentive and encouragement to remain with the Company notwithstanding the possibility of a Changein Control.3. Certain capitalized terms used in the Agreement are defined in Section 6 below.AGREEMENTNOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties hereto agree as follows:1. Term of Agreement. This Agreement will have an initial term of three (3) years commencing on the Effective Date (the“Initial Term”). On the third anniversary of the Effective Date, the Agreement will renew automatically for an additional three (3) yearterm (each, an “Additional Term”), unless either party provides the other party with written notice of non-renewal at least ninety (90)days prior to the date of automatic renewal. This Agreement will terminate upon the earlier of (A) the date the term of the Agreementexpires, as described above, (B) the date that all of the obligationsof the Parties with respect to this Agreement have been satisfied, or (C) any time prior to the Change in Control if the Executive hasceased to be a Section 16 Officer. Notwithstanding the foregoing, (a) if a Change in Control occurs and there are less than twenty-four(24) months remaining in the term of this Agreement, the term of this Agreement will extend automatically through the date that istwenty-four (24) months following the effective date of the Change in Control, or (b) if an initial occurrence of an act or omission bythe Company constituting the grounds for “Good Reason” in accordance with Section 6(f) hereof has occurred (the “Initial Grounds”),and the expiration date of the Company cure period (as described in Section 6(f)(B)) with respect to such Initial Grounds could occurfollowing the expiration of the Initial Term or the Additional Term, the term of this Agreement will extend automatically through thedate that is fifteen (15) days following the expiration of such cure period, but such extension of the term will only apply with respect tothe Initial Grounds.2. At-Will Employment. The Company and Executive acknowledge that Executive’s employment is and will continue to beat-will, as defined under applicable law.3. Severance Benefits.(a) Involuntary Termination Not in Connection with a Change in Control. If (i) Executive terminates his or her employmentwith the Company (or any parent, subsidiary, or successor of the Company) for Good Reason or (ii) the Company (or any parent,subsidiary or successor of the Company) terminates Executive’s employment without Cause, and, in each case, such terminationoccurs outside of the Change in Control Period, then, subject to the Executive signing and not revoking the release of claims asrequired by Section 4, Executive will receive the following severance benefits from the Company:(i) Severance Payment. Executive will receive a single lump sum severance payment (less applicable withholding taxes) in anamount equal to six (6) months of Executive’s annual salary determined at a rate equal to the Executive’s then-current annual salary asof the date of such termination.(ii) Extended Post-Termination Exercise Period / Equity Awards. Notwithstanding any other provision in any applicableequity compensation plan and/or individual Equity Award agreement, (i) Executive’s outstanding and vested stock options and/orstock appreciation rights as of the Executive’s termination of employment date will remain exercisable until the six (6) monthanniversary of the termination date; provided, however, that the post-termination exercise period for any individual stock option willnot extend beyond its original maximum term, and (ii) Executive’s outstanding Equity Awards (other than the Equity Awardsdescribed in (i) of this sentence) will remain outstanding until the three (3) month anniversary of Executive’s termination ofemployment date, and if no Change in Control has occurred as of such date, such Equity Awards (other than the Equity Awardsdescribed in (i) of this sentence) will terminate.(iii) Continuation Coverage. If Executive elects continuation coverage pursuant to the Consolidated Omnibus BudgetReconciliation Act of 1985, as amended (“COBRA”) within the time period prescribed pursuant to COBRA for Executive andExecutive’s eligible dependents, then the Company will reimburse Executive for the COBRA premiums for such-2-coverage (at the coverage levels in effect immediately prior to Executive’s termination) until the earlier of (A) a period of twelve (12)months from the date of termination or (B) the date upon which Executive and/or Executive’s eligible dependents become coveredunder similar plans. The reimbursements will be made by the Company to Executive consistent with the Company’s normal expensereimbursement policy. Notwithstanding the first sentence of this Section 3(a)(iii), if the Company determines in its sole discretion that itcannot provide the foregoing benefit without potentially violating, or being subject to an excise tax under, applicable law (including,without limitation, Section 2716 of the Public Health Service Act), the Company will in lieu thereof provide to Executive a taxablemonthly payment in an amount equal to the monthly COBRA premium that Executive would be required to pay to continueExecutive’s group health coverage in effect on the termination of employment date (which amount will be based on the premium forthe first month of COBRA coverage), which payments will be made regardless of whether Executive elects COBRA continuationcoverage and will commence on the month following Executive’s termination of employment and will end on the earlier of (x) the dateupon which Executive obtains other employment or (y) the date the Company has paid an amount equal to twelve (12) months. For theavoidance of doubt, the taxable payments in lieu of COBRA reimbursements may be used for any purpose, including, but not limitedto continuation coverage under COBRA, and will be subject to all applicable tax withholdings.(b) Involuntary Termination in Connection with a Change in Control. If (i) Executive terminates his or her employment withthe Company (or any parent, subsidiary, or successor of the Company) for Good Reason or (ii) the Company (or any parent, subsidiaryor successor of the Company) terminates Executive’s employment without Cause, and, in each case, such termination occurs within theChange in Control Period, then, subject to the Executive signing and not revoking the release of claims as required by Section 4,Executive will receive the following severance benefits from the Company:(i) Severance Payment. Executive will receive a single lump sum severance payment (less applicable withholding taxes) in anamount equal to twenty-four (24) months of Executive’s annual salary determined at a rate equal to the greater of (A) Executive’sannual salary as in effect immediately prior to the Change in Control, or (B) Executive’s then-current annual salary as of the date ofsuch termination. For the avoidance of doubt, if (x) Executive incurred a termination prior to a Change in Control that qualifiesExecutive for severance payments under Section 3(a)(i); and (y) a Change in Control occurs within the three (3)-month periodfollowing Executive’s termination of employment that qualifies Executive for the superior benefits under this Section 3(b)(i), thenExecutive shall be entitled to a lump-sum payment of the amount calculated under this Section 3(b)(i), less amounts already paid underSection 3(a)(i) and such lump-sum amount shall be payable upon the later of: (A) the Change in Control, (B) the date the release ofclaims required by Section 4 is effective and irrevocable; or (C) such later date required by Section 10.(ii) Bonus Payment. Executive will receive a lump sum cash payment (less applicable withholding taxes) in an amount equalto (A) the Executive’s target annual bonus for the year immediately preceding the year of the Change in Control multiplied by (B) afraction, the numerator of which is the number of days between (and including) the start of the year in which the Executive’stermination occurs and the date of termination and the denominator of which is 365.-3-(iii) Accelerated Vesting of Equity Awards. One hundred percent (100%) of Executive’s unvested Equity Awards willbecome vested and will otherwise remain subject to the terms and conditions of the applicable Equity Award agreement.(iv) Extended Post-Termination Exercise Period. Notwithstanding any other provision in any applicable equity compensationplan and/or individual stock option agreement, Executive’s outstanding and vested stock options and/or stock appreciation rights as ofthe Executive’s termination of employment date will remain exercisable until the twelve (12) month anniversary of the terminationdate; provided, however, that the post-termination exercise period for any individual stock option will not extend beyond its originalmaximum term.(v) Continuation Coverage. If Executive elects continuation coverage pursuant COBRA within the time period prescribedpursuant to COBRA for Executive and Executive’s eligible dependents, then the Company will reimburse Executive for the COBRApremiums for such coverage (at the coverage levels in effect immediately prior to Executive’s termination) until the earlier of (A) aperiod of eighteen (18) months from the date of termination or (B) the date upon which Executive and/or Executive’s eligibledependents become covered under similar plans. The reimbursements will be made by the Company to Executive consistent with theCompany’s normal expense reimbursement policy. Notwithstanding the first sentence of this Section 3(b)(v), if the Companydetermines in its sole discretion that it cannot provide the foregoing benefit without potentially violating, or being subject to an excisetax under, applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the Company will in lieuthereof provide to Executive a taxable monthly payment in an amount equal to the monthly COBRA premium that Executive would berequired to pay to continue Executive’s group health coverage in effect on the termination of employment date (which amount will bebased on the premium for the first month of COBRA coverage), which payments will be made regardless of whether Executive electsCOBRA continuation coverage and will commence on the month following Executive’s termination of employment and will end onthe earlier of (x) the date upon which Executive obtains other employment or (y) the date the Company has paid an amount equal toeighteen (18) months. For the avoidance of doubt, the taxable payments in lieu of COBRA reimbursements may be used for anypurpose, including, but not limited to continuation coverage under COBRA, and will be subject to all applicable tax withholdings.(c) Timing of Severance Payments. Unless otherwise required pursuant to Section 10 of this Agreement, the Company willpay the cash severance payments to which Executive is entitled under Sections 3(a)(i) and 3(b)(i) and (ii) of this Agreement in a lumpsum on the first regularly scheduled payroll date following the date the release of claims required by Section 4 becomes effective andirrevocable, provided, however, that such payment will be delayed to the extent required by Section 3(b)(i), Section 4 and/or Section10 of this Agreement. Except to the extent payment is delayed pursuant to Section 3(b)(i) or Section 10(b), all cash severancepayments under Sections 3(a)(i) and 3(b)(i) and (ii) of this Agreement will be paid no later than March 15 of the year following theyear in which the termination occurs. If taxable cash payments become required under Sections 3(a)(iii) and 3(b)(v), such paymentsshall be paid on the last day of a given month that Executive would have otherwise been entitled to COBRA premium reimbursements,subject to the provisions of Sections 4(a) and 10.-4-(d) Voluntary Resignation; Termination For Cause. If Executive’s employment with the Company terminates (i) voluntarilyby Executive (other than for Good Reason) or (ii) for Cause by the Company, then Executive will not be entitled to receive severanceor other benefits except for those (if any) as may then be established under the Company’s then existing severance and benefits plansand practices or pursuant to other written agreements with the Company, including, without limitation, any Equity Award agreement.(e) Disability; Death. If the Company terminates Executive’s employment as a result of Executive’s Disability, or Executive’semployment terminates due to his or her death, then Executive will not be entitled to receive severance or other benefits except forthose (if any) as may then be established under the Company’s then existing written severance and benefits plans and practices orpursuant to other written agreements with the Company, including, without limitation, any Equity Award agreement.(f) Exclusive Remedy. In the event of a termination of Executive’s employment upon or within twenty-four (24) monthsfollowing a Change in Control, the provisions of this Section 3 are intended to be and are exclusive and in lieu of any other rights orremedies to which Executive or the Company may otherwise be entitled, whether at law, tort or contract, in equity, or under thisAgreement. Executive will be entitled to no benefits, compensation or other payments or rights upon termination of employmentfollowing a Change in Control other than those benefits expressly set forth in this Section 3, except as may be provided in any EquityAward agreement.4. Conditions to Receipt of Severance.(a) Release of Claims Agreement. The receipt of any severance or other benefits pursuant to Section 3 will be subject toExecutive signing and not revoking a release of claims agreement in a form reasonably acceptable to the Company, and such releasebecoming effective and irrevocable within sixty (60) days of Executive’s termination or such earlier deadline required by the release(such deadline, the “Release Deadline”). No severance or other benefits will be paid or provided until the release of claims agreementbecomes effective and irrevocable, and any severance amounts or benefits otherwise payable between the date of Executive’stermination and the date such release becomes effective shall be paid on the effective date of such release. Notwithstanding theforegoing, and subject to the release becoming effective and irrevocable by the Release Deadline, any severance payments or benefitsunder this Agreement that would be considered Deferred Compensation Separation Benefits (as defined in Section 10(b)) shall be paidon the sixtieth (60th) day following Executive’s “separation from service” within the meaning of Section 409A of the Code, or, if later,such time as required by Section 3(b)(i) or Section 10(b). If the release does not become effective by the Release Deadline, Executivewill forfeit all rights to severance payments and benefits under this Agreement.(b) Other Requirement. Executive’s receipt of any payments or benefits under Section 3 will be subject to Executivecontinuing to comply with the terms of any form of confidential information agreement.-5-(c) No Duty to Mitigate. Executive will not be required to mitigate the amount of any payment contemplated by thisAgreement, nor will any earnings that Executive may receive from any other source reduce any such payment.5. Limitation on Payments. In the event that the severance and other benefits provided for in this Agreement or otherwisepayable to Executive (i) constitute “parachute payments” within the meaning of Section 280G of the Code and (ii) but for this Section5, would be subject to the excise tax imposed by Section 4999 of the Code, then Executive’s severance benefits under Section 3 willbe either:(a) delivered in full, or(b) delivered as to such lesser extent which would result in no portion of such severance benefits being subject to excise taxunder Section 4999 of the Code, whichever of the foregoing amounts, taking into account the applicable federal, state and local incometaxes and the excise tax imposed by Section 4999, results in the receipt by Executive on an after-tax basis, of the greatest amount ofseverance benefits, notwithstanding that all or some portion of such severance benefits may be taxable under Section 4999 of the Code.Unless the Company and Executive otherwise agree in writing, any determination required under this Section 5 will be made in writingby the Company’s independent public accountants immediately prior to a Change in Control or a “Big Four” national accounting firmselected by the Company and approved by Executive (the “Accountants”), whose determination will be conclusive and binding uponExecutive and the Company for all purposes. For purposes of making the calculations required by this Section 5, the Accountants maymake reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretationsconcerning the application of Sections 280G and 4999 of the Code. The Company and Executive will furnish to the Accountants suchinformation and documents as the Accountants may reasonably request in order to make a determination under this Section. TheCompany will bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 5.Any reduction in payments and/or benefits required by this Section 5 shall occur in the following order: (1) reduction of cash paymentsin reverse chronological order (that is, the cash payment owed on the latest date following the occurrence of the event triggering theexcise tax will be the first cash payment to be reduced); (2) cancellation of Equity Awards that were granted “contingent on a changein ownership or control” within the meaning of Code Section 280G (if two or more Equity Awards are granted on the same date, eachaward will be reduced on a pro-rata basis); (3) reduction of the accelerated vesting of Equity Awards in the reverse order of date ofgrant of the awards (i.e., the vesting of the most recently granted Equity Awards will be cancelled first and if more than one EquityAward was made to Executive on the same date of grant, all such awards will have their acceleration of vesting reduced pro rata); and(4) reduction of employee benefits in reverse chronological order (i.e., the benefit owed on the latest date following the occurrence ofthe event triggering the excise tax will be the first benefit to be reduced). In no event-6-will Executive exercise any discretion with respect to the ordering of any reduction of payments or benefits pursuant to this Section 5.6. Definition of Terms. The following terms referred to in this Agreement will have the following meanings:(a) Cause. For purposes of this Agreement, “Cause” will mean:(i) Executive’s willful and continued failure to perform the duties and responsibilities of his position (other than as a result ofExecutive’s illness or injury) after there has been delivered to Executive a written demand for performance from the Board whichdescribes the basis for the Board’s belief that Executive has not substantially performed his duties and provides Executive with areasonable period (as determined in the sole discretion of the Board, but not to exceed twenty (20) days) to take corrective action;(ii) Any material act of personal dishonesty taken by Executive in connection with his responsibilities as an employee of theCompany with the intention that such action may result in the substantial personal enrichment of Executive;(iii) Executive’s conviction of, or plea of nolo contendere to, a felony that the Board reasonably believes has had or will havea material detrimental effect on the Company’s reputation or business;(iv) A willful breach of any fiduciary duty owed to the Company by Executive that has a material detrimental effect on theCompany’s reputation or business;(v) Executive being found liable in any Securities and Exchange Commission or other civil or criminal securities law action(regardless of whether or not Executive admits or denies liability), which the Board determines, in its reasonable discretion, will have amaterial detrimental effect on the Company’s reputation or business;(vi) Executive entering any cease and desist order with respect to any action which would bar Executive from service as anexecutive officer or member of a board of directors of any publicly-traded company (regardless of whether or not Executive admits ordenies liability);(vii) Executive (A) obstructing or impeding; (B) endeavoring to obstruct or impede, or (C) failing to materially cooperate with,any investigation authorized by the Board or any governmental or self-regulatory entity (an “Investigation”). However, Executive’sfailure to waive attorney-client privilege relating to communications with Executive’s own attorney in connection with an Investigationwill not constitute “Cause”; or(viii) Executive’s disqualification or bar by any governmental or self-regulatory authority from serving in the capacitycontemplated by this Agreement, if (A) the disqualification or bar continues for more than thirty (30) days, and (B) during that periodthe Company uses its commercially reasonable efforts to cause the disqualification or bar to be lifted. While any disqualification or barcontinues during Executive’s employment, Executive will serve in the capacity-7-contemplated by this Agreement to whatever extent legally permissible and, if Executive’s employment is not permissible, Executivewill be placed on administrative leave (which will be paid to the extent legally permissible).Other than for a termination pursuant to Section 6(a)(iii), Executive shall receive notice and an opportunity to be heard beforethe Board with Executive’s own attorney before any termination for Cause is deemed effective. Notwithstanding anything to thecontrary, the Board may immediately place Executive on administrative leave (with full pay and benefits to the extent legallypermissible) and suspend all access to Company information, employees and business should Executive wish to avail himself of hisopportunity to be heard before the Board prior to the Board’s termination for Cause. If Executive avails himself of his opportunity to beheard before the Board, and then fails to make himself available to the Board within five (5) business days of such request to be heard,the Board may thereafter cancel the administrative leave and terminate Executive for Cause.(b) Change in Control. For purposes of this Agreement, “Change in Control” shall mean the occurrence of any of thefollowing events:(i) A change in the ownership of the Company which occurs on the date that any one person, or more than one person actingas a group (“Person”), acquires ownership of the stock of the Company that, together with the stock held by such Person, constitutesmore than 50% of the total voting power of the stock of the Company; provided, however, that for purposes of this subsection (i), theacquisition of additional stock by any one Person, who is considered to own more than 50% of the total voting power of the stock ofthe Company will not be considered a Change in Control; or(ii) A change in the effective control of the Company which occurs on the date that a majority of members of the Board isreplaced during any twelve (12) month period by Directors whose appointment or election is not endorsed by a majority of themembers of the Board prior to the date of the appointment or election. For purposes of this clause (ii), if any Person is considered to bein effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered aChange in Control; or(iii) A change in the ownership of a substantial portion of the Company’s assets which occurs on the date that any Personacquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person orpersons) assets from the Company that have a total gross fair market value equal to or more than 50% of the total gross fair marketvalue of all of the assets of the Company immediately prior to such acquisition or acquisitions; provided, however, that for purposes ofthis subsection (iii), the following will not constitute a change in the ownership of a substantial portion of the Company’s assets: (A) atransfer to an entity that is controlled by the Company’s stockholders immediately after the transfer, or (B) a transfer of assets by theCompany to: (1) a stockholder of the Company (immediately before the asset transfer) in exchange for or with respect to theCompany’s stock, (2) an entity, 50% or more of the total value or voting power of which is owned, directly or indirectly, by theCompany, (3) a Person, that owns, directly or indirectly, 50% or more of the total value or voting power of all the outstanding stock ofthe Company, or (4) an entity, at least 50% of the total value or voting power of which is owned, directly or indirectly, by a Persondescribed in this subsection (iii)(B)(3). For purposes of this subsection (iii), gross fair market value means the-8-value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associatedwith such assets.For purposes of this Section 6(b), persons will be considered to be acting as a group if they are owners of a corporation thatenters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company.(c) Change in Control Period For the purposes of this Agreement, “Change in Control Period” means the period beginningthree (3) months prior to, and ending twenty-four (24) months following, a Change in Control.(d) Disability. For purposes of this Agreement, “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code.(e) Equity Award. For purposes of this Agreement, “Equity Award” shall mean each then outstanding award relating to theCompany’s common stock (whether stock options, stock appreciation rights, shares of restricted stock, restricted stock units,performance shares, performance units or other similar awards.(f) Good Reason. For purposes of this Agreement and any Equity Award agreement, “Good Reason” means the occurrenceof any of the following, without Executive’s express written consent:(i) A material reduction of Executive’s authority, duties or responsibilities;(ii) A material reduction in Executive’s base compensation;(iii) A material change in the geographic location at which Executive must perform his or her services; provided that in noinstance will the relocation of Executive to a facility or a location of fifty (50) miles or less from Executive’s then current officelocation be deemed material for purposes of this Agreement;(iv) failure of the Company to obtain the assumption of this Agreement by any successor to the Company; or(v) any material breach or material violation of a material provision of this Agreement by the Company (or any successor tothe Company. provided, however, that before Executive may resign for Good Reason, (A) Executive must provide the Company withwritten notice within ninety (90) days of the initial event that Executive believes constitutes “Good Reason” specifically identifying thefacts and circumstances claimed to constitute the grounds for Executive’s resignation for Good Reason and the proposed terminationdate (which will not be more than forty-five (45) days after the giving of written notice hereunder by Executive to the Company), and(B) the Company must have an opportunity of at least thirty (30) days following delivery of such notice to cure the Good Reasoncondition and the Company must have failed to cure such Good Reason condition.Executive specifically acknowledges and agrees that the definition of “Good Reason” in this Section 6(f) shall operate with respect toall rights to severance and/or accelerated vesting of any Equity Award-9-paid upon a termination upon or after a Change in Control and shall supersede and replace in its entirety any other definitions of “GoodReason,” “Involuntary Termination,” or other similar terms that may exist in any other employment agreement, offer letter, severanceplan or policy, Equity Award agreement or Company stock incentive plan document.7. Successors.(a) Company Successors. Any successor to the Company (whether direct or indirect and whether by purchase, merger,consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets will assume the obligationsunder this Agreement and agree expressly to perform the obligations under this Agreement in the same manner and to the same extentas the Company would be required to perform such obligations in the absence of a succession. For all purposes under this Agreement,the term “Company” will include any successor to the Company’s business and/or assets which executes and delivers the assumptionagreement described in this Section 7(a) or which becomes bound by the terms of this Agreement by operation of law.(b) Executive’s Successors. The terms of this Agreement and all rights of Executive hereunder will inure to the benefit of, andbe enforceable by, Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees andlegatees.8. Notice.(a) General. Notices and all other communications contemplated by this Agreement will be in writing and will be deemed tohave been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested andpostage prepaid. In the case of Executive, mailed notices will be addressed to him or her at the home address which he or she mostrecently communicated to the Company in writing. In the case of the Company, mailed notices will be addressed to its corporateheadquarters, and all notices will be directed to the attention of its President.(b) Notice of Termination. Any termination by the Company for Cause or by Executive for Good Reason or as a result of avoluntary resignation will be communicated by a notice of termination to the other party hereto given in accordance with Section 8(a)of this Agreement. Such notice will indicate the specific termination provision in this Agreement relied upon, will set forth inreasonable detail the facts and circumstances claimed to provide a basis for termination under the provision so indicated, and willspecify the termination date. The failure by Executive to include in the notice any fact or circumstance which contributes to a showingof Good Reason will not waive any right of Executive hereunder or preclude Executive from asserting such fact or circumstance inenforcing his or her rights hereunder.9. Arbitration. The Company and Executive each agree that any and all disputes arising out of the terms of this Agreement,Executive’s employment by the Company, Executive’s service as an officer or director of the Company, or Executive’s compensationand benefits, their interpretation and any of the matters herein released, will be subject to binding arbitration. In the event of a dispute,the parties (or their legal representatives) will promptly confer to select a single arbitrator mutually acceptable to both parties. If theparties cannot agree on an arbitrator, then the moving party may file-10-a demand for arbitration with the Judicial Arbitration and Mediation Services (“JAMS”) in San Diego County, California, who will beselected and appointed consistent with the Employment Arbitration Rules and Procedures of JAMS (the “JAMS Rules”), except thatsuch arbitrator must have the qualifications set forth in this paragraph. Any arbitration will be conducted in a manner consistent withthe JAMS Rules, supplemented by the California Rules of Civil Procedure. The parties further agree that the prevailing party in anyarbitration will be entitled to injunctive relief in any court of competent jurisdiction to enforce the arbitration award. The partieshereby agree to waive their right to have any dispute between them resolved in a court of law by a judge or jury. Thisparagraph will not prevent either party from seeking injunctive relief (or any other provisional remedy) from any court havingjurisdiction over the parties and the subject matter of their dispute relating to Executive’s obligations under this Agreement and theCompany’s form of confidential information agreement.10. Code Section 409A.(a) Any amount paid under this Agreement that satisfies the requirements of the “short-term deferral” rule set forth in Section1.409A-1(b)(4) of the regulations issued under Section 409A of the Code (the “Treasury Regulations”) shall not constitute DeferredCompensation Separation Benefits for purposes of Section 10(b) below, and consequently shall be paid to Executive promptlyfollowing termination as required by Section 3 of this Agreement. It is intended that all cash severance payments under this Agreement,if any, satisfy the short-term deferral rule.(b) Notwithstanding anything to the contrary in this Agreement, no Deferred Compensation Separation Benefits (as defined inthis Section 10(b)) will become payable under this Agreement until Executive has a “separation from service” within the meaning ofSection 409A of the Code, and any proposed or final regulations and guidance promulgated thereunder (“Section 409A”). Further, ifExecutive is a “specified employee” within the meaning of Section 409A at the time of Executive’s separation from service (other thandue to Executive’s death), and the severance payable to Executive, if any, pursuant to this Agreement, when considered together withany other severance payments or separation benefits, are considered deferred compensation under Section 409A (together, the“Deferred Compensation Separation Benefits”), such Deferred Compensation Separation Payments that are otherwise payable withinthe first six (6) months following Executive’s termination of employment will become payable on the first payroll date that occurs on orafter the date six (6) months and one (1) day following the date of Executive’s separation from service. All subsequent DeferredCompensation Separation Benefits, if any, will be payable in accordance with the payment schedule applicable to each payment orbenefit. Notwithstanding anything herein to the contrary, if Executive dies following his or her separation from service but prior to thesix (6) month anniversary of his or her separation from service, then any payments delayed in accordance with this paragraph will bepayable in a lump sum as soon as administratively practicable after the date of Executive’s death and all other Deferred CompensationSeparation Benefits will be payable in accordance with the payment schedule applicable to each payment or benefit. Each payment andbenefit payable under this Agreement is intended to constitute a separate payment for purposes of Section 1.409A-2(b)(2) of theTreasury Regulations.(c) Any amount paid under this Agreement that qualifies as a payment made as a result of an involuntary separation fromservice pursuant to Section 1.409A-1(b)(9)(iii) of the Treasury-11-Regulations that does not exceed the Section 409A Limit (as defined below) shall not constitute Deferred Compensation SeparationBenefits for purposes of Section 10(b) above. For purposes of this Section 10(c), “Section 409A Limit” will mean two (2) times thelesser of: (i) Executive’s annualized compensation based upon the annual rate of pay paid to Executive during Executive’s taxable yearpreceding the Executive’s taxable year of Executive’s separation from service as determined under Treasury Regulation 1.409A-1(b)(9)(iii)(A)(1); or (ii) the maximum amount that may be taken into account under a qualified plan pursuant to Section 401(a)(17) of theCode for the year in which Executive’s separation from service occurs.(d) The foregoing provisions are intended to comply with the requirements of Section 409A so that none of the severancepayments and benefits to be provided hereunder will be subject to the additional tax imposed under Section 409A, and any ambiguitiesherein will be interpreted to so comply.11. Miscellaneous Provisions.(a) Waiver. No provision of this Agreement will be modified, waived or discharged unless the modification, waiver ordischarge is agreed to in writing and signed by Executive and by an authorized officer of the Company (other than Executive). Nowaiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party will beconsidered a waiver of any other condition or provision or of the same condition or provision at another time.(b) Headings. All captions and section headings used in this Agreement are for convenient reference only and do not form apart of this Agreement.(c) Choice of Law. The validity, interpretation, construction and performance of this Agreement will be governed by the lawsof the State of California (with the exception of its conflict of laws provisions).(d) Integration. This Agreement, together with the form of confidential information agreement and the standard forms ofEquity Award agreement that describe Executive’s outstanding Equity Awards (other than as such Equity Award agreements havebeen revised pursuant to this Agreement), represents the entire agreement and understanding between the parties as to the subjectmatter herein and supersedes all prior or contemporaneous agreements whether written or oral. With respect to Equity Awards grantedon or after the date of this Agreement, the acceleration of vesting provisions provided herein will apply to such Equity Awards exceptto the extent otherwise explicitly provided in the applicable Equity Award agreement. No waiver, alteration, or modification of any ofthe provisions of this Agreement will be binding unless in a writing and signed by duly authorized representatives of the parties hereto.In entering into this Agreement, no party has relied on or made any representation, warranty, inducement, promise, or understandingthat is not in this Agreement. To the extent that any provisions of this Agreement conflict with those of any other agreement betweenthe Executive and the Company, the terms in this Agreement will prevail.(e) Severability. In the event that any provision or any portion of any provision hereof becomes or is declared by a court ofcompetent jurisdiction to be illegal, unenforceable, or void, this-12-Agreement will continue in full force and effect without said provision or portion of provision. The remainder of this Agreement shallbe interpreted so as best to effect the intent of the Company and Executive.(f) Withholding. All payments made pursuant to this Agreement will be subject to withholding of applicable income andemployment taxes.(g) Counterparts. This Agreement may be executed in counterparts, each of which will be deemed an original, but all ofwhich together will constitute one and the same instrument.-13-IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorizedofficer, as of the day and year set forth below.Executive understands and acknowledges that the definition of “Good Reason” contained in this Agreement shall supersedeany and all such similar definitions contained in employment agreements, offer letters, severance policies and plans and Equity Awardagreements to the extent such other agreements provide for benefits contingent on a Change in Control, and that by executing thisAgreement, Executive acknowledges such other arrangements have been amended accordingly.COMPANY MAXLINEAR, INC.By: Title: EXECUTIVE By: Title: -14-EXHIBIT 10.13MAXLINEAR, INC.CHANGE IN CONTROL AND SEVERANCE AGREEMENTThis Change in Control and Severance Agreement (the “Agreement”) is made and entered into by and between ____________(“Executive”) and MaxLinear, Inc. (the “Company,” and, together with the “Executive,” the “Parties”), effective as of __ (the“Effective Date”).RECITALS1. It is expected that the Company from time to time will consider the possibility of an acquisition by another company orother change in control. The Board of Directors of the Company (the “Board”) recognizes that such consideration can be a distractionto Executive and can cause Executive to consider alternative employment opportunities. The Board has determined that it is in the bestinterests of the Company and its stockholders to assure that the Company will have the continued dedication and objectivity ofExecutive, notwithstanding the possibility, threat or occurrence of a Change in Control (as defined herein) of the Company.2. The Board believes that it is in the best interests of the Company and its stockholders to provide Executive with certainseverance benefits upon Executive’s termination of employment under certain circumstances, provided that Executive is a Section 16Officer immediately prior to the Change in Control or date of termination. For this purpose, a “Section 16 Officer” is an employee ofthe Company who has been designated by the Board, at its discretion and consistent with applicable law, as being subject to thereporting requirements of Section 16 of the Securities Exchange Act of 1934, as amended. These benefits will provide Executive withenhanced financial security and incentive and encouragement to remain with the Company notwithstanding the possibility of a Changein Control.3. Certain capitalized terms used in the Agreement are defined in Section 6 below.AGREEMENTNOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties hereto agree as follows:1. Term of Agreement. This Agreement will have an initial term of three (3) years commencing on the Effective Date (the“Initial Term”). On the third anniversary of the Effective Date, the Agreement will renew automatically for an additional three (3) yearterm (each, an “Additional Term”), unless either party provides the other party with written notice of non-renewal at least ninety (90)days prior to the date of automatic renewal. This Agreement will terminate upon the earlier of (A) the date the term of the Agreementexpires, as described above, (B) the date that all of the obligations of the Parties with respect to this Agreement have been satisfied, or(C) any time prior to the Change in Control if the Executive has ceased to be a Section 16 Officer. Notwithstanding the foregoing, (a)if a Change in Control occurs and there are less than twenty-four (24) months remaining in the term of this Agreement, the term of thisAgreement will extend automatically through the date that is twenty-four (24) months following the effective date of the Change inControl, or (b) if an initial occurrence-1-of an act or omission by the Company constituting the grounds for “Good Reason” in accordance with Section 6(f) hereof hasoccurred (the “Initial Grounds”), and the expiration date of the Company cure period (as described in Section 6(f)(B)) with respect tosuch Initial Grounds could occur following the expiration of the Initial Term or the Additional Term, the term of this Agreement willextend automatically through the date that is fifteen (15) days following the expiration of such cure period, but such extension of theterm will only apply with respect to the Initial Grounds.2. At-Will Employment. The Company and Executive acknowledge that Executive’s employment is and will continue to beat-will, as defined under applicable law.3. Severance Benefits.(a) Involuntary Termination Not in Connection with a Change in Control. If the Company (or any parent, subsidiary, orsuccessor of the Company) terminates Executive’s employment without Cause and such termination occurs outside of the Change inControl Period, then, subject to the Executive signing and not revoking the release of claims as required by Section 4, Executive willreceive the following severance benefits from the Company:(i) Severance Payment. Executive will receive a single lump sum severance payment (less applicable withholding taxes) in anamount equal to six (6) months of Executive’s annual salary determined at a rate equal to the Executive’s then-current annual salary asof the date of such termination.(ii) Extended Post-Termination Exercise Period / Equity Awards. Notwithstanding any other provision in any applicableequity compensation plan and/or individual Equity Award agreement, (i) Executive’s outstanding and vested stock options and/orstock appreciation rights as of the Executive’s termination of employment date will remain exercisable until the three (3) monthanniversary of the termination date; provided, however, that the post-termination exercise period for any individual stock option willnot extend beyond its original maximum term, and (ii) Executive’s outstanding Equity Awards (other than the Equity Awardsdescribed in (i) of this sentence) will remain outstanding until the three (3) month anniversary of Executive’s termination ofemployment date, and if no Change in Control has occurred as of such date, such Equity Awards (other than the Equity Awardsdescribed in (i) of this sentence) will terminate.(iii) Continuation Coverage. If Executive elects continuation coverage pursuant to the Consolidated Omnibus BudgetReconciliation Act of 1985, as amended (“COBRA”) within the time period prescribed pursuant to COBRA for Executive andExecutive’s eligible dependents, then the Company will reimburse Executive for the COBRA premiums for such coverage (at thecoverage levels in effect immediately prior to Executive’s termination) until the earlier of (A) a period of six (6) months from the dateof termination or (B) the date upon which Executive and/or Executive’s eligible dependents become covered under similar plans. Thereimbursements will be made by the Company to Executive consistent with the Company’s normal expense reimbursement policy.Notwithstanding the first sentence of this Section 3(a)(iii), if the Company determines in its sole discretion that it cannot provide theforegoing benefit without-2-potentially violating, or being subject to an excise tax under, applicable law (including, without limitation, Section 2716 of the PublicHealth Service Act), the Company will in lieu thereof provide to Executive a taxable monthly payment in an amount equal to themonthly COBRA premium that Executive would be required to pay to continue Executive’s group health coverage in effect on thetermination of employment date (which amount will be based on the premium for the first month of COBRA coverage), whichpayments will be made regardless of whether Executive elects COBRA continuation coverage and will commence on the monthfollowing Executive’s termination of employment and will end on the earlier of (x) the date upon which Executive obtains otheremployment or (y) the date the Company has paid an amount equal to six (6) months. For the avoidance of doubt, the taxablepayments in lieu of COBRA reimbursements may be used for any purpose, including, but not limited to continuation coverage underCOBRA, and will be subject to all applicable tax withholdings.(b) Involuntary Termination in Connection with a Change in Control. If (i) Executive terminates his or her employment withthe Company (or any parent, subsidiary, or successor of the Company) for Good Reason or (ii) the Company (or any parent, subsidiaryor successor of the Company) terminates Executive’s employment without Cause, and, in each case, such termination occurs within theChange in Control Period, then, subject to the Executive signing and not revoking the release of claims as required by Section 4,Executive will receive the following severance benefits from the Company:(i) Severance Payment. Executive will receive a single lump sum severance payment (less applicable withholding taxes) in anamount equal to twelve (12) months of Executive’s annual salary determined at a rate equal to the greater of (A) Executive’s annualsalary as in effect immediately prior to the Change in Control, or (B) Executive’s then-current annual salary as of the date of suchtermination. For the avoidance of doubt, if (x) Executive incurred a termination prior to a Change in Control that qualifies Executivefor severance payments under Section 3(a)(i); and (y) a Change in Control occurs within the three (3)-month period followingExecutive’s termination of employment that qualifies Executive for the superior benefits under this Section 3(b)(i), then Executive shallbe entitled to a lump-sum payment of the amount calculated under this Section 3(b)(i), less amounts already paid under Section 3(a)(i)and such lump-sum amount shall be payable upon the later of: (A) the Change in Control, (B) the date the release of claims required bySection 4 is effective and irrevocable; or (C) such later date required by Section 10.(ii) Bonus Payment. Executive will receive a lump sum cash payment (less applicable withholding taxes) in an amount equalto (A) the Executive’s target annual bonus for the year immediately preceding the year of the Change in Control multiplied by (B) afraction, the numerator of which is the number of days between (and including) the start of the year in which the Executive’stermination occurs and the date of termination and the denominator of which is 365.(iii) Accelerated Vesting of Equity Awards. One hundred percent (100%) of Executive’s unvested Equity Awards willbecome vested and will otherwise remain subject to the terms and conditions of the applicable Equity Award agreement.-3-(iv) Extended Post-Termination Exercise Period. Notwithstanding any other provision in any applicable equity compensationplan and/or individual stock option agreement, Executive’s outstanding and vested stock options and/or stock appreciation rights as ofthe Executive’s termination of employment date will remain exercisable until the six (6) month anniversary of the termination date;provided, however, that the post-termination exercise period for any individual stock option will not extend beyond its originalmaximum term.(v) Continuation Coverage. If Executive elects continuation coverage pursuant COBRA within the time period prescribedpursuant to COBRA for Executive and Executive’s eligible dependents, then the Company will reimburse Executive for the COBRApremiums for such coverage (at the coverage levels in effect immediately prior to Executive’s termination) until the earlier of (A) aperiod of twelve (12) months from the date of termination or (B) the date upon which Executive and/or Executive’s eligible dependentsbecome covered under similar plans. The reimbursements will be made by the Company to Executive consistent with the Company’snormal expense reimbursement policy. Notwithstanding the first sentence of this Section 3(b)(v), if the Company determines in its solediscretion that it cannot provide the foregoing benefit without potentially violating, or being subject to an excise tax under, applicablelaw (including, without limitation, Section 2716 of the Public Health Service Act), the Company will in lieu thereof provide toExecutive a taxable monthly payment in an amount equal to the monthly COBRA premium that Executive would be required to pay tocontinue Executive’s group health coverage in effect on the termination of employment date (which amount will be based on thepremium for the first month of COBRA coverage), which payments will be made regardless of whether Executive elects COBRAcontinuation coverage and will commence on the month following Executive’s termination of employment and will end on the earlierof (x) the date upon which Executive obtains other employment or (y) the date the Company has paid an amount equal to twelve (12)months. For the avoidance of doubt, the taxable payments in lieu of COBRA reimbursements may be used for any purpose, including,but not limited to continuation coverage under COBRA, and will be subject to all applicable tax withholdings.(c) Timing of Severance Payments. Unless otherwise required pursuant to Section 10 of this Agreement, the Company willpay the cash severance payments to which Executive is entitled under Sections 3(a)(i) and 3(b)(i) and (ii) of this Agreement in a lumpsum on the first regularly scheduled payroll date following the date the release of claims required by Section 4 becomes effective andirrevocable, provided, however, that such payment will be delayed to the extent required by Section 3(b)(i), Section 4 and/or Section10 of this Agreement. Except to the extent payment is delayed pursuant to Section 3(b)(i) or Section 10(b), all cash severancepayments under Sections 3(a)(i) and 3(b)(i) and (ii) of this Agreement will be paid no later than March 15 of the year following theyear in which the termination occurs. If taxable cash payments become required under Sections 3(a)(iii) and 3(b)(v), such paymentsshall be paid on the last day of a given month that Executive would have otherwise been entitled to COBRA premium reimbursements,subject to the provisions of Sections 4(a) and 10.(d) Voluntary Resignation; Termination For Cause. If Executive’s employment with the Company terminates (i) voluntarilyby Executive (other than for Good Reason) or (ii) for Cause by the Company, then Executive will not be entitled to receive severanceor other benefits except for those (if any) as may then be established under the Company’s then existing severance and benefits plansand-4-practices or pursuant to other written agreements with the Company, including, without limitation, any Equity Award agreement.(e) Disability; Death. If the Company terminates Executive’s employment as a result of Executive’s Disability, or Executive’semployment terminates due to his or her death, then Executive will not be entitled to receive severance or other benefits except forthose (if any) as may then be established under the Company’s then existing written severance and benefits plans and practices orpursuant to other written agreements with the Company, including, without limitation, any Equity Award agreement.(f) Exclusive Remedy. In the event of a termination of Executive’s employment upon or within twenty-four (24) monthsfollowing a Change in Control, the provisions of this Section 3 are intended to be and are exclusive and in lieu of any other rights orremedies to which Executive or the Company may otherwise be entitled, whether at law, tort or contract, in equity, or under thisAgreement. Executive will be entitled to no benefits, compensation or other payments or rights upon termination of employmentfollowing a Change in Control other than those benefits expressly set forth in this Section 3, except as may be provided in any EquityAward agreement.4. Conditions to Receipt of Severance.(a) Release of Claims Agreement. The receipt of any severance or other benefits pursuant to Section 3 will be subject toExecutive signing and not revoking a release of claims agreement in a form reasonably acceptable to the Company, and such releasebecoming effective and irrevocable within sixty (60) days of Executive’s termination or such earlier deadline required by the release(such deadline, the “Release Deadline”). No severance or other benefits will be paid or provided until the release of claims agreementbecomes effective and irrevocable, and any severance amounts or benefits otherwise payable between the date of Executive’stermination and the date such release becomes effective shall be paid on the effective date of such release. Notwithstanding theforegoing, and subject to the release becoming effective and irrevocable by the Release Deadline, any severance payments or benefitsunder this Agreement that would be considered Deferred Compensation Separation Benefits (as defined in Section 10(b)) shall be paidon the sixtieth (60th) day following Executive’s “separation from service” within the meaning of Section 409A of the Code, or, if later,such time as required by Section 3(b)(i) or Section 10(b). If the release does not become effective by the Release Deadline, Executivewill forfeit all rights to severance payments and benefits under this Agreement.(b) Other Requirement. Executive’s receipt of any payments or benefits under Section 3 will be subject to Executivecontinuing to comply with the terms of any form of confidential information agreement.(c) No Duty to Mitigate. Executive will not be required to mitigate the amount of any payment contemplated by thisAgreement, nor will any earnings that Executive may receive from any other source reduce any such payment.5. Limitation on Payments. In the event that the severance and other benefits provided for in this Agreement or otherwisepayable to Executive (i) constitute “parachute payments” within the-5-meaning of Section 280G of the Code and (ii) but for this Section 5, would be subject to the excise tax imposed by Section 4999 of theCode, then Executive’s severance benefits under Section 3 will be either:(a) delivered in full, or(b) delivered as to such lesser extent which would result in no portion of such severance benefits being subject to excise taxunder Section 4999 of the Code, whichever of the foregoing amounts, taking into account the applicable federal, state and local incometaxes and the excise tax imposed by Section 4999, results in the receipt by Executive on an after-tax basis, of the greatest amount ofseverance benefits, notwithstanding that all or some portion of such severance benefits may be taxable under Section 4999 of the Code.Unless the Company and Executive otherwise agree in writing, any determination required under this Section 5 will be made in writingby the Company’s independent public accountants immediately prior to a Change in Control or a “Big Four” national accounting firmselected by the Company (the “Accountants”), whose determination will be conclusive and binding upon Executive and the Companyfor all purposes. For purposes of making the calculations required by this Section 5, the Accountants may make reasonableassumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning theapplication of Sections 280G and 4999 of the Code. The Company and Executive will furnish to the Accountants such informationand documents as the Accountants may reasonably request in order to make a determination under this Section. The Company willbear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 5. Any reductionin payments and/or benefits required by this Section 5 shall occur in the following order: (1) reduction of cash payments in reversechronological order (that is, the cash payment owed on the latest date following the occurrence of the event triggering the excise taxwill be the first cash payment to be reduced); (2) cancellation of Equity Awards that were granted “contingent on a change inownership or control” within the meaning of Code Section 280G (if two or more Equity Awards are granted on the same date, eachaward will be reduced on a pro-rata basis); (3) reduction of the accelerated vesting of Equity Awards in the reverse order of date ofgrant of the awards (i.e., the vesting of the most recently granted Equity Awards will be cancelled first and if more than one EquityAward was made to Executive on the same date of grant, all such awards will have their acceleration of vesting reduced pro rata); and(4) reduction of employee benefits in reverse chronological order (i.e., the benefit owed on the latest date following the occurrence ofthe event triggering the excise tax will be the first benefit to be reduced). In no event will Executive exercise any discretion withrespect to the ordering of any reduction of payments or benefits pursuant to this Section 5.6. Definition of Terms. The following terms referred to in this Agreement will have the following meanings:(a) Cause. For purposes of this Agreement, “Cause” will mean:(i) Executive’s willful and continued failure to perform the duties and responsibilities of his position (other than as a result ofExecutive’s illness or injury) after there has been delivered to Executive a written demand for performance from the Board whichdescribes the basis for the Board’s belief that Executive has not substantially performed his duties and provides-6-Executive with a reasonable period (as determined in the sole discretion of the Board, but not to exceed twenty (20) days) to takecorrective action;(ii) Any material act of personal dishonesty taken by Executive in connection with his responsibilities as an employee of theCompany with the intention that such action may result in the substantial personal enrichment of Executive;(iii) Executive’s conviction of, or plea of nolo contendere to, a felony that the Board reasonably believes has had or will havea material detrimental effect on the Company’s reputation or business;(iv) A willful breach of any fiduciary duty owed to the Company by Executive that has a material detrimental effect on theCompany’s reputation or business;(v) Executive being found liable in any Securities and Exchange Commission or other civil or criminal securities law action(regardless of whether or not Executive admits or denies liability), which the Board determines, in its reasonable discretion, will have amaterial detrimental effect on the Company’s reputation or business;(vi) Executive entering any cease and desist order with respect to any action which would bar Executive from service as anexecutive officer or member of a board of directors of any publicly-traded company (regardless of whether or not Executive admits ordenies liability);(vii) Executive (A) obstructing or impeding; (B) endeavoring to obstruct or impede, or (C) failing to materially cooperate with,any investigation authorized by the Board or any governmental or self-regulatory entity (an “Investigation”). However, Executive’sfailure to waive attorney-client privilege relating to communications with Executive’s own attorney in connection with an Investigationwill not constitute “Cause”; or(viii) Executive’s disqualification or bar by any governmental or self-regulatory authority from serving in the capacitycontemplated by this Agreement, if (A) the disqualification or bar continues for more than thirty (30) days, and (B) during that periodthe Company uses its commercially reasonable efforts to cause the disqualification or bar to be lifted. While any disqualification or barcontinues during Executive’s employment, Executive will serve in the capacity contemplated by this Agreement to whatever extentlegally permissible and, if Executive’s employment is not permissible, Executive will be placed on administrative leave (which will bepaid to the extent legally permissible).Other than for a termination pursuant to Section 6(a)(iii), Executive shall receive notice and an opportunity to be heard beforethe Board with Executive’s own attorney before any termination for Cause is deemed effective. Notwithstanding anything to thecontrary, the Board may immediately place Executive on administrative leave (with full pay and benefits to the extent legallypermissible) and suspend all access to Company information, employees and business should Executive wish to avail himself of hisopportunity to be heard before the Board prior to the Board’s termination for Cause. If Executive avails himself of his opportunity to beheard before the Board, and then fails to make himself-7-available to the Board within five (5) business days of such request to be heard, the Board may thereafter cancel the administrativeleave and terminate Executive for Cause.(b) Change in Control. For purposes of this Agreement, “Change in Control” shall mean the occurrence of any of thefollowing events:(i) A change in the ownership of the Company which occurs on the date that any one person, or more than one person actingas a group (“Person”), acquires ownership of the stock of the Company that, together with the stock held by such Person, constitutesmore than 50% of the total voting power of the stock of the Company; provided, however, that for purposes of this subsection (i), theacquisition of additional stock by any one Person, who is considered to own more than 50% of the total voting power of the stock ofthe Company will not be considered a Change in Control; or(ii) A change in the effective control of the Company which occurs on the date that a majority of members of the Board isreplaced during any twelve (12) month period by Directors whose appointment or election is not endorsed by a majority of themembers of the Board prior to the date of the appointment or election. For purposes of this clause (ii), if any Person is considered to bein effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered aChange in Control; or(iii) A change in the ownership of a substantial portion of the Company’s assets which occurs on the date that any Personacquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person orpersons) assets from the Company that have a total gross fair market value equal to or more than 50% of the total gross fair marketvalue of all of the assets of the Company immediately prior to such acquisition or acquisitions; provided, however, that for purposes ofthis subsection (iii), the following will not constitute a change in the ownership of a substantial portion of the Company’s assets: (A) atransfer to an entity that is controlled by the Company’s stockholders immediately after the transfer, or (B) a transfer of assets by theCompany to: (1) a stockholder of the Company (immediately before the asset transfer) in exchange for or with respect to theCompany’s stock, (2) an entity, 50% or more of the total value or voting power of which is owned, directly or indirectly, by theCompany, (3) a Person, that owns, directly or indirectly, 50% or more of the total value or voting power of all the outstanding stock ofthe Company, or (4) an entity, at least 50% of the total value or voting power of which is owned, directly or indirectly, by a Persondescribed in this subsection (iii)(B)(3). For purposes of this subsection (iii), gross fair market value means the value of the assets of theCompany, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.For purposes of this Section 6(b), persons will be considered to be acting as a group if they are owners of a corporation thatenters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company.(c) Change in Control Period. For the purposes of this Agreement, “Change in Control Period” means the period beginningthree (3) months prior to, and ending twenty-four (24) months following, a Change in Control.-8-(d) Disability. For purposes of this Agreement, “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code.(e) Equity Award. For purposes of this Agreement, “Equity Award” shall mean each then outstanding award relating to theCompany’s common stock (whether stock options, stock appreciation rights, shares of restricted stock, restricted stock units,performance shares, performance units or other similar awards.(f) Good Reason. For purposes of this Agreement and any Equity Award agreement, “Good Reason” means the occurrenceof any of the following, without Executive’s express written consent:(i) A material reduction of Executive’s authority, duties or responsibilities;(ii) A material reduction in Executive’s base compensation;(iii) A material change in the geographic location at which Executive must perform his or her services; provided that in noinstance will the relocation of Executive to a facility or a location of fifty (50) miles or less from Executive’s then current officelocation be deemed material for purposes of this Agreement;(iv) failure of the Company to obtain the assumption of this Agreement by any successor to the Company; or(v) any material breach or material violation of a material provision of this Agreement by the Company (or any successor tothe Company.provided, however, that before Executive may resign for Good Reason, (A) Executive must provide the Company with writtennotice within ninety (90) days of the initial event that Executive believes constitutes “Good Reason” specifically identifying the factsand circumstances claimed to constitute the grounds for Executive’s resignation for Good Reason and the proposed termination date(which will not be more than forty-five (45) days after the giving of written notice hereunder by Executive to the Company), and (B)the Company must have an opportunity of at least thirty (30) days following delivery of such notice to cure the Good Reason conditionand the Company must have failed to cure such Good Reason condition.Executive specifically acknowledges and agrees that the definition of “Good Reason” in this Section 6(f) shall operate with respect toall rights to severance and/or accelerated vesting of any Equity Award paid upon a termination upon or after a Change in Control andshall supersede and replace in its entirety any other definitions of “Good Reason,” “Involuntary Termination,” or other similar termsthat may exist in any other employment agreement, offer letter, severance plan or policy, Equity Award agreement or Company stockincentive plan document.7. Successors.(a) Company Successors. Any successor to the Company (whether direct or indirect and whether by purchase, merger,consolidation, liquidation or otherwise) to all or substantially all of the-9-Company’s business and/or assets will assume the obligations under this Agreement and agree expressly to perform the obligationsunder this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in theabsence of a succession. For all purposes under this Agreement, the term “Company” will include any successor to the Company’sbusiness and/or assets which executes and delivers the assumption agreement described in this Section 7(a) or which becomes boundby the terms of this Agreement by operation of law.(b) Executive’s Successors. The terms of this Agreement and all rights of Executive hereunder will inure to the benefit of, andbe enforceable by, Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees andlegatees.8. Notice.(a) General. Notices and all other communications contemplated by this Agreement will be in writing and will be deemed tohave been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested andpostage prepaid. In the case of Executive, mailed notices will be addressed to him or her at the home address which he or she mostrecently communicated to the Company in writing. In the case of the Company, mailed notices will be addressed to its corporateheadquarters, and all notices will be directed to the attention of its President.(b) Notice of Termination. Any termination by the Company for Cause or by Executive for Good Reason or as a result of avoluntary resignation will be communicated by a notice of termination to the other party hereto given in accordance with Section 8(a)of this Agreement. Such notice will indicate the specific termination provision in this Agreement relied upon, will set forth inreasonable detail the facts and circumstances claimed to provide a basis for termination under the provision so indicated, and willspecify the termination date. The failure by Executive to include in the notice any fact or circumstance which contributes to a showingof Good Reason will not waive any right of Executive hereunder or preclude Executive from asserting such fact or circumstance inenforcing his or her rights hereunder.9. Arbitration. The Company and Executive each agree that any and all disputes arising out of the terms of this Agreement,Executive’s employment by the Company, Executive’s service as an officer or director of the Company, or Executive’s compensationand benefits, their interpretation and any of the matters herein released, will be subject to binding arbitration. In the event of a dispute,the parties (or their legal representatives) will promptly confer to select a single arbitrator mutually acceptable to both parties. If theparties cannot agree on an arbitrator, then the moving party may file a demand for arbitration with the Judicial Arbitration andMediation Services (“JAMS”) in San Diego County, California, who will be selected and appointed consistent with the EmploymentArbitration Rules and Procedures of JAMS (the “JAMS Rules”), except that such arbitrator must have the qualifications set forth in thisparagraph. Any arbitration will be conducted in a manner consistent with the JAMS Rules, supplemented by the California Rules ofCivil Procedure. The parties further agree that the prevailing party in any arbitration will be entitled to injunctive relief in any court ofcompetent jurisdiction to enforce the arbitration award. The parties hereby agree to waive their right to have any dispute betweenthem resolved in a court of law by a judge or jury. This paragraph will not prevent either party from seeking injunctive relief (orany other provisional remedy) from any court-10-having jurisdiction over the parties and the subject matter of their dispute relating to Executive’s obligations under this Agreement andthe Company’s form of confidential information agreement.10. Code Section 409A.(a) Any amount paid under this Agreement that satisfies the requirements of the “short-term deferral” rule set forth in Section1.409A-1(b)(4) of the regulations issued under Section 409A of the Code (the “Treasury Regulations”) shall not constitute DeferredCompensation Separation Benefits for purposes of Section 10(b) below, and consequently shall be paid to Executive promptlyfollowing termination as required by Section 3 of this Agreement. It is intended that all cash severance payments under this Agreement,if any, satisfy the short-term deferral rule.(b) Notwithstanding anything to the contrary in this Agreement, no Deferred Compensation Separation Benefits (as defined inthis Section 10(b)) will become payable under this Agreement until Executive has a “separation from service” within the meaning ofSection 409A of the Code, and any proposed or final regulations and guidance promulgated thereunder (“Section 409A”). Further, ifExecutive is a “specified employee” within the meaning of Section 409A at the time of Executive’s separation from service (other thandue to Executive’s death), and the severance payable to Executive, if any, pursuant to this Agreement, when considered together withany other severance payments or separation benefits, are considered deferred compensation under Section 409A (together, the“Deferred Compensation Separation Benefits”), such Deferred Compensation Separation Payments that are otherwise payable withinthe first six (6) months following Executive’s termination of employment will become payable on the first payroll date that occurs on orafter the date six (6) months and one (1) day following the date of Executive’s separation from service. All subsequent DeferredCompensation Separation Benefits, if any, will be payable in accordance with the payment schedule applicable to each payment orbenefit. Notwithstanding anything herein to the contrary, if Executive dies following his or her separation from service but prior to thesix (6) month anniversary of his or her separation from service, then any payments delayed in accordance with this paragraph will bepayable in a lump sum as soon as administratively practicable after the date of Executive’s death and all other Deferred CompensationSeparation Benefits will be payable in accordance with the payment schedule applicable to each payment or benefit. Each payment andbenefit payable under this Agreement is intended to constitute a separate payment for purposes of Section 1.409A-2(b)(2) of theTreasury Regulations.(c) Any amount paid under this Agreement that qualifies as a payment made as a result of an involuntary separation fromservice pursuant to Section 1.409A-1(b)(9)(iii) of the Treasury Regulations that does not exceed the Section 409A Limit (as definedbelow) shall not constitute Deferred Compensation Separation Benefits for purposes of Section 10(b) above. For purposes of thisSection 10(c), “Section 409A Limit” will mean two (2) times the lesser of: (i) Executive’s annualized compensation based upon theannual rate of pay paid to Executive during Executive’s taxable year preceding the Executive’s taxable year of Executive’s separationfrom service as determined under Treasury Regulation 1.409A-1(b)(9)(iii)(A)(1); or (ii) the maximum amount that may be taken intoaccount under a qualified plan pursuant to Section 401(a)(17) of the Code for the year in which Executive’s separation from serviceoccurs.-11-(d) The foregoing provisions are intended to comply with the requirements of Section 409A so that none of the severancepayments and benefits to be provided hereunder will be subject to the additional tax imposed under Section 409A, and any ambiguitiesherein will be interpreted to so comply.11. Miscellaneous Provisions.(a) Waiver. No provision of this Agreement will be modified, waived or discharged unless the modification, waiver ordischarge is agreed to in writing and signed by Executive and by an authorized officer of the Company (other than Executive). Nowaiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party will beconsidered a waiver of any other condition or provision or of the same condition or provision at another time.(b) Headings. All captions and section headings used in this Agreement are for convenient reference only and do not form apart of this Agreement.(c) Choice of Law. The validity, interpretation, construction and performance of this Agreement will be governed by the lawsof the State of California (with the exception of its conflict of laws provisions).(d) Integration. This Agreement, together with the form of confidential information agreement and the standard forms ofEquity Award agreement that describe Executive’s outstanding Equity Awards (other than as such Equity Award agreements havebeen revised pursuant to this Agreement), represents the entire agreement and understanding between the parties as to the subjectmatter herein and supersedes all prior or contemporaneous agreements whether written or oral. With respect to Equity Awards grantedon or after the date of this Agreement, the acceleration of vesting provisions provided herein will apply to such Equity Awards exceptto the extent otherwise explicitly provided in the applicable Equity Award agreement. No waiver, alteration, or modification of any ofthe provisions of this Agreement will be binding unless in a writing and signed by duly authorized representatives of the parties hereto.In entering into this Agreement, no party has relied on or made any representation, warranty, inducement, promise, or understandingthat is not in this Agreement. To the extent that any provisions of this Agreement conflict with those of any other agreement betweenthe Executive and the Company, the terms in this Agreement will prevail.(e) Severability. In the event that any provision or any portion of any provision hereof becomes or is declared by a court ofcompetent jurisdiction to be illegal, unenforceable, or void, this Agreement will continue in full force and effect without said provisionor portion of provision. The remainder of this Agreement shall be interpreted so as best to effect the intent of the Company andExecutive.(f) Withholding. All payments made pursuant to this Agreement will be subject to withholding of applicable income andemployment taxes.(g) Counterparts. This Agreement may be executed in counterparts, each of which will be deemed an original, but all ofwhich together will constitute one and the same instrument.-12-IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorizedofficer, as of the day and year set forth below.Executive understands and acknowledges that the definition of “Good Reason” contained in this Agreement shall supersedeany and all such similar definitions contained in employment agreements, offer letters, severance policies and plans and Equity Awardagreements to the extent such other agreements provide for benefits contingent on a Change in Control, and that by executing thisAgreement, Executive acknowledges such other arrangements have been amended accordingly.COMPANY MAXLINEAR, INC.By: Title: EXECUTIVE By: Title: -13-EXHIBIT 10.21MAXLINEAR, INC.EXECUTIVE INCENTIVE BONUS PLAN(As amended April 3, 2012, May 14, 2013, and December 4, 2015)SECTION 1BACKGROUND, PURPOSE AND DURATION1.1 Effective Date. The Plan was adopted effective as of March 23, 2010.1.2 Purpose of the Plan. The Plan is intended to increase shareholder value and the success of the Company by motivatingselected employees (a) to perform to the best of their abilities and (b) to achieve the Company’s objectives.SECTION 2DEFINITIONSThe following words and phrases shall have the following meanings unless a different meaning is plainly required by thecontext:2.1 “Actual Award” means as to any Performance Period, the actual award (if any) payable to a Participant under the Plan forthe Performance Period, subject to the Administrator’s authority under Section 3.4 to modify the award. 2.2 “Administrator” means the Compensation Committee of the Board or officers of the Company as delegated by theCompensation Committee of the Board. The Compensation Committee of the Board may appoint different officers to administer thePlan with respect to different groups of Employees and/or Participants.2.3 “Affiliate” means any corporation or other entity (including, but not limited to, partnerships and joint ventures) controlling,controlled by, or under common control with the Company.2.4 “Base Salary” means as to any Performance Period, the Participant’s annualized salary rate on the last day of thePerformance Period. Such Base Salary shall be before both (a) deductions for taxes or benefits, and (b) deferrals of compensationpursuant to Company sponsored plans and Affiliate sponsored plans.2.5 “Board” means the Board of Directors of the Company.2.6 “Bonus Pool” means the pool of funds available for distribution to Participants. Subject to the terms of the Plan, theAdministrator establishes the Bonus Pool for each Performance Period.2.7 “Company” means MaxLinear, Inc., a Delaware corporation, or any successor thereto.2.8 “Disability” means a permanent and total disability determined in accordance with uniform and nondiscriminatory standardsadopted by the Administrator from time to time.2.9 “Employee” means any employee of the Company or of an Affiliate, whether such individual is so employed at the time thePlan is adopted or becomes so employed subsequent to the adoption of the Plan.2.10 “Fiscal Year” means the fiscal year of the Company.2.11 “Participant” means as to any Performance Period, an Employee who has been selected by the Administrator forparticipation in the Plan for that Performance Period.2.12 “Performance Period” means the period of time for the measurement of the performance criteria that must be met toreceive an Actual Award, as determined by the Administrator in its sole discretion. A Performance Period may be divided into one ormore shorter periods if, for example, but not by way of limitation, the Administrator desires to measure some performance criteria over12 months and other criteria over 3 months. Multiple, overlapping Performance Periods (of different durations) may be in effect at anyone time.2.13 “Plan” means the Executive Incentive Bonus Plan, as set forth in this instrument and as hereafter amended from time totime.2.14 “Target Award” means the target award, at 100% performance achievement, payable under the Plan to a Participant forthe Performance Period, as determined by the Administrator in accordance with Section 3.2.2.15 “Termination of Service” means a cessation of the employee-employer relationship between an Employee and theCompany or an Affiliate for any reason, including, but not by way of limitation, a termination by resignation, discharge, death,Disability, retirement, or the disaffiliation of an Affiliate, but excluding any such termination where there is a simultaneousreemployment by the Company or an Affiliate.SECTION 3SELECTION OF PARTICIPANTS AND DETERMINATION OF AWARDS3.1 Selection of Participants. The Administrator, in its sole discretion, shall select the Employees who shall be Participants forany Performance Period. Participation in the Plan is in the sole discretion of the Administrator, and shall be determined on aPerformance Period by Performance Period basis. Accordingly, an Employee who is a Participant for a given Performance Period inno way is guaranteed or assured of being selected for participation in any subsequent Performance Period or Periods. Notwithstandingany contrary provision of the Plan, unless explicitly determined otherwise by the Administrator, any Employee who is a participant inany other Company-sponsored bonus plan or program will not be eligible to participate in the Plan.3.2 Determination of Target Awards. The Administrator, in its sole discretion, shall establish a Target Award for eachParticipant.3.3 Bonus Pool. Each Performance Period, the Administrator, in its sole discretion, may establish a Bonus Pool. ActualAwards for the relevant Performance Period shall be paid from any such Bonus Pool.3.4 Discretion to Modify Awards. Notwithstanding any contrary provision of the Plan, the Administrator may, in its solediscretion and at any time, (a) increase, reduce or eliminate a Participant’s Actual Award, and/or (b) increase, reduce or eliminate theamount allocated to the Bonus Pool. The Administrator may determine the amount of any reduction on the basis of such factors as itdeems relevant, and shall not be required to establish any allocation or weighting with respect to the factors it considers.3.5 Discretion to Determine Criteria. Notwithstanding any contrary provision of the Plan, the Administrator shall, in its solediscretion, determine the performance requirements applicable to any Target Award. The requirements may be on the basis of anyfactors the Administrator determines relevant, and may be on an individual, divisional, business unit or Company-wide basis. Failure tomeet the requirements will result in a failure to earn the Target Award, except as provided in Section 3.4.3.6 Discretion to Grant Awards Outside the Plan. Notwithstanding any contrary provision of the Plan, the Board or a dulyconstituted committee of the Board (or their delegates) may, in its sole discretion and at any time, grant awards to Employees andParticipants outside the Plan.SECTION 4PAYMENT OF AWARDS4.1 Right to Receive Payment. Each Actual Award shall be paid solely from the general assets of the Company. No provisionof the Plan shall require the Company, for the purpose of satisfying any obligations under the Plan, to purchase assets or place anyassets in a trust or other entity to which contributions are made or otherwise to segregate any assets, nor shall the Company maintainseparate bank accounts, books, records or other evidence of the existence of a segregated or separately maintained or administered fundfor such purposes. Participants shall have no rights under the Plan other than as unsecured general creditors of the Company.4.2 Timing of Payment. Payment of each Actual Award shall be made as soon as administratively practicable as determined bythe Administrator after the end of the Performance Period during which the Actual Award was earned and after the Actual Award isapproved by the Administrator, but in no event later than (a) the 15th day of the third month following the end of the Company’staxable year in which the date the Participant’s Actual Award has been earned and is no longer subject to a substantial risk offorfeiture, or (b) March 15th of the calendar year following the calendar year in which the date the Participant’s Actual Award hasbeen earned and is no longer subject to a substantial risk of forfeiture. Notwithstanding the foregoing, Participants may be permitted, inthe sole discretion of the Administrator, to defer the delivery of shares of Class A Common Stock issued pursuant to an Actual Awardpaid in the form of restricted stock units, in accordance with the terms and conditions of a deferral program approved by theAdministrator. Notwithstanding anything herein to the contrary, in order to be eligible to earn any payments under the Plan for a givenPerformance Period, a Participant must be employed by the Company or any Affiliate on the date payments under the Plan are actuallymade (or granted if paid in the form of restricted stock units) and no payments under the Plan shall be deemed to be earned prior tosuch date.4.3 Form of Payment. Each Actual Award, as determined by the Administrator in its sole and absolute discretion, may besettled in cash, Class A Common Stock (in the form of vested shares or restricted stock units) issued under the Company’s 2010 EquityIncentive Plan, as amended, or any successor equity plan of the Company, or any combination of cash and such stock (includingrestricted stock units).4.4 Repayment and Forfeiture of Actual Awards. Notwithstanding anything in this Plan or any participation agreement to thecontrary, if the Administrator determines that the Employee engaged in an act of embezzlement, fraud or breach of a fiduciary dutyduring the Employee’s employment that contributed to an obligation to restate the Company’s financial statements (“ContributingMisconduct”), the Employee shall be required to repay to the Company, in cash and upon demand, the Excess Proceeds (as definedbelow) if the Actual Award was paid at any time during the twelve-month period following the first public issuance or filing with theSEC of the financial statements required to be restated. The term “Excess Proceeds” means, with respect to any Actual Award, anamount determined appropriate by the Administrator to reflect the effect of the restatement on the applicable performance criteria usedunder the Plan in the applicable Performance Period. The return of the Excess Proceeds is in addition to and separate from any otherrelief available to the Company due to the Employee’s Contributing Misconduct. Any determination by the Administrator with respectto the foregoing shall be final, conclusive and binding on all interested parties.SECTION 5ADMINISTRATION5.1 Administrator Authority. It shall be the duty of the Administrator to administer the Plan in accordance with the Plan’sprovisions. The Administrator shall have all powers and discretion necessary or appropriate to administer the Plan and to control itsoperation, including, but not limited to, the power to (a) determine which Employees shall be granted awards, (b) prescribe the termsand conditions of awards, (c) interpret the Plan and the awards, (d) adopt such procedures and subplans as are necessary or appropriateto permit participation in the Plan by Employees who are foreign nationals or employed outside of the United States, (e) allow aParticipant to defer the delivery of shares of Class A Common Stock issued pursuant to an Actual Award paid in the form of restrictedstock units, (f) adopt rules for the administration, interpretation and application of the Plan as are consistent therewith, and (g) interpret,amend or revoke any such rules.5.2 Decisions Binding. All determinations and decisions made by the Administrator, the Board, and any delegate of theAdministrator pursuant to the provisions of the Plan shall be final, conclusive, and binding on all persons, and shall be given themaximum deference permitted by law.5.3 Delegation of Administration. The Administrator, in its sole discretion and on such terms and conditions as it may provide,may delegate all or part of its authority and powers under the Plan to one or more directors and/or officers of the Company. If theAdministrator delegates any authority for the administration of the Plan, the term “Administrator” shall include the individualsdelegated such authority. 5.4 Indemnification of Administrator. The Company shall indemnify and hold harmless members of the Administrator, or anyofficer or employee of the Company delegated authority with respect to the administration of the Plan, for any expense, liability, orloss, including attorneys’ fees, judgments, fines, penalties, amounts paid or to be paid in settlement, any interest, assessments, or othercharges imposed thereon, any federal, state, local, or foreign taxes, and all other costs and obligations, paid or incurred in connectionwith any action, determination or interpretation made in good faith with respect to the Plan or any payments under the Plan. TheCompany shall bear all expenses and liabilities that members of the Administrator, or any officer of the Company delegated authoritywith respect to the administration of the Plan, incur in connection with the administration of the Plan.SECTION 6GENERAL PROVISIONS6.1 Tax Withholding. The Company shall withhold from any distributions or awards under the Plan any amount required tosatisfy the Company’s income, employment and other tax withholding obligations under applicable law. Each Participant, as acondition to participating in the Plan, agrees to make appropriate arrangements with the Company (or the Affiliate employing orretaining the Participant) for the satisfaction of all Federal, state, local and foreign income, employment and other tax withholdingrequirements applicable to any Actual Award payable or awarded hereunder.6.2 No Effect on Employment or Service. Nothing in the Plan shall interfere with or limit in any way the right of the Companyto terminate any Participant's employment or service at any time, with or without cause. For purposes of the Plan, transfer ofemployment of a Participant between the Company and any one of its Affiliates (or between Affiliates) shall not be deemed aTermination of Service. Employment with the Company and its Affiliates is on an at-will basis only. The Company expressly reservesthe right, which may be exercised at any time and without regard to when during a Performance Period such exercise occurs, toterminate any individual’s employment with or without cause, and to treat him or her without regard to the effect that such treatmentmight have upon him or her as a Participant.6.3 Participation. No Employee shall have the right to be selected to receive an award under this Plan, or, having been soselected, to be selected to receive a future award.6.4 Successors. All obligations of the Company under the Plan, with respect to awards granted hereunder, shall be binding onany successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger,consolidation, or otherwise, of all or substantially all of the business or assets of the Company.6.5 Nontransferability of Awards. No award granted under the Plan may be sold, transferred, pledged, assigned, or otherwisealienated or hypothecated, other than by will, by the laws of descent and distribution, or to the limited extent provided in Section 6.5.All rights with respect to an award granted to a Participant shall be available during his or her lifetime only to the Participant.6.6 Section 409A of the Code. It is intended that the Plan shall be exempt from, or comply with, Section 409A of the InternalRevenue Code of 1986, as amended (“Section 409A”), including for awards of cash or vested shares, pursuant to the requirement thatsuch payments hereunder shall be paid within the applicable short-term deferral period as set forth in Section 1.409A-1(b)(4) of thefinal regulations issued under Section 409A. The Administrator shall administer and interpret the Plan in a manner consistent with thisintent and any other regulations or other Internal Revenue Service guidance issued with respect to Section 409A.SECTION 7AMENDMENT, TERMINATION AND DURATION7.1 Amendment, Suspension or Termination. The Company, by action of the Board or a duly constituted committee ofmembers of the Board to whom the Board has delegated the authority to amend or terminate the Plan, in its sole discretion, may amendor terminate the Plan, or any part thereof, at any time and for any reason. The amendment, suspension or termination of the Plan shallnot, without theconsent of the Participant, alter or impair any rights or obligations under any Actual Award theretofore earned by such Participant. Noaward may be granted during any period of suspension or after termination of the Plan.7.2 Duration of the Plan. The Plan shall commence on the date specified herein, and subject to Section 7.1 (regarding theCompany’s right to amend or terminate the Plan), shall remain in effect thereafter.SECTION 8LEGAL CONSTRUCTION8.1 Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shall includethe feminine; the plural shall include the singular and the singular shall include the plural.8.2 Severability. In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidityshall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had notbeen included.8.3 Requirements of Law. The granting of awards under the Plan shall be subject to all applicable laws, rules and regulations,and to such approvals by any governmental agencies or national securities exchanges as may be required.8.4 Governing Law. the Plan and all awards shall be construed in accordance with and governed by the laws of the State ofCalifornia, but without regard to its conflict of law provisions.8.5 Bonus Plan. This Plan is intended to be a “bonus program” as defined under U.S. Department of Labor regulation section2510.3-2(c) and shall be construed and administered by the Company in accordance with such intention.8.6 Captions. Captions are provided herein for convenience only, and shall not serve as a basis for interpretation or constructionof the Plan.EXHIBIT 10.33STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE - NET AIR COMMERCIAL REAL ESTATE ASSOCIATION1. Basic Provisions (“Basic Provisions”).1.1 Parties: This Lease (“Lease”), dated for reference purposes only November 4 , 2015 is made by and between THENORTHWESTERN MUTUAL LIFE INSURANCE COMPANY, a Wisconsin corporation (“Lessor”) and MaxLinear, Inc., a Delawarecorporation (“Lessee”), (collectively the “Parties”, or individually a “Party”).1.2(a) Premises: That certain portion of the Project (as defined below), including all improvements therein or to be providedby Lessor under the terms of this Lease, commonly known by the street address of 50 Parker located in the City of Irvine, County ofOrange, State of California, with zip code 92618, as outlined on Exhibit “A” attached hereto (“Premises”) and generally described as(describe briefly the nature of the Premises): an approximately 50,235 square foot industrial building in addition to Lessee’s rights touse and occupy the Premises as hereinafter specified, Lessee shall have non-exclusive rights to the Common Areas (as defined inParagraph 27 below) as hereinafter specified, but shall not have any rights to the roof, exterior walls or utility raceways of the buildingcontaining the Premises (“Building”) or to any other buildings in the Project. The Premises, the Building, the Common Areas, the landupon which they are located, along with all other buildings and improvements thereon, are herein collectively referred to as the“Project.” (See also Paragraph 2)1.2(b) Parking: 165 unreserved vehicle parking spaces (“Unreserved Parking Spaces”); and 15 reserved vehicle parkingspaces located at the front of the Building as shown on Exhibit “B” attached hereto (“Reserved Parking Spaces”) for a total of 180parking spaces. (See also Paragraph 2.6) See Paragraph 78 of the Lease Addendum. Notwithstanding anything to the contrary set forthherein, in the event the City of Irvine determines that based upon the plans and specifications for Lessee’s Improvements (i) fewer than180 parking spaces, or (ii) greater than 180 parking spaces, are required for the issuance of a building permit, Lessor and Lessee herebyagree that the number of unreserved parking spaces (but not the reserved parking spaces) shall be increased or decreased to satisfy theactual number of aggregate required parking spaces (not to exceed a total of 201 parking spaces, which includes both non-reserved andreserved parking spaces, which is the maximum required by the City of Irvine regulations for the Premises), whichever shall beapplicable.1.3 Term: Six (6) years and Two (2) months (“Original Term”) commencing on the later to occur of (i) April 1, 2016, and(ii) the date upon which the Base Building and Lessee Improvements construction is Substantially Complete and possession of theSubstantially Complete Premises has been tendered by Lessor to Lessee (“Commencement Date”) and ending six (6) years and two (2)months thereafter (“Expiration Date”). (See also Paragraph 3) For purposes of this Lease, “Substantially Complete” shall mean the dateLessor’s architect certifies in writing that the Base Building Improvements and Lessee’s Improvements (as said terms are defined inParagraph 73 of the Lease Addendum) are complete except for punchlist items.1.4 Early Possession: Provided that Lessee has obtained the insurance required by Paragraph 68(12) of the Lease Addendumand has delivered to Lessor the required certificates of insurance thereto, Lessee shall be entitled access to the Premises during the sixty(60) day period immediately prior to the projected Commencement Date, notice of which 60-day period shall be delivered by Lessor toLessee at such time as Lessor’s architect shall inform Lessor of its estimate of the date that the Base Building Improvements and LesseeImprovements shall be completed (except for punchlist items) in approximately sixty (60) days. Said early access__________INITIALSPage 1 of 26__________INITIALS©1999 – AIR COMMERCIAL REAL ESTATE ASSOCIATIONshall be for the purpose of installing furniture, fixtures, trade fixtures, personal property, telecommunications, cabling and equipmentwhich are exclusive of any Lessee Improvements; provided, however, that such access shall in no way interfere with Landlord’sconstruction of the Base Building Improvements or the Lessee Improvements. Any such early access/occupancy shall be subject to theterms and conditions of the Lease, except the obligation under the Lease to Base Rent, Common Area Operating Expenses, and utilitycosts (including HVAC). (“Early Possession Date”).(See also Paragraphs 3.2 and 3.3)1.5 Base Rent: $67, 817. 00 per month (“Base Rent”), payable on the first (1st) day of each month commencing on theCommencement Date. In the event the Commencement Date is not in the first calendar day of the month, Lessee’s first payment of BaseRent shall include the pro rata portion of the month in which the Commencement Date occurs. (See also Paragraph 4)þ If this box is checked, there are provisions in this Lease for the Base Rent to be adjusted.1.6 Lessee’s Share of Common Area Operating Expenses: twelve and 3/10th percent (12.3%) (“Lessee’s Share”). Lessee’sShare of Common Area Operating Expenses is based upon the ratio of the square footage of the Premises to the square footage of all ofthe buildings in the Project, i.e., 408,502 square feet. In the event that the square footage of the Premises or the other buildings in theProject shall hereafter change, Lessor shall compute the revised Lessee’s Share of Common Area Operating Expenses and informLessee in writing thereof. In the event the Commencement Date is not in the first calendar day of the month, Lessee’s first payment ofCommon Area Operating Expenses shall include the pro rata portion of the month in which the Commencement Pate occurs.1.7 Base Rent and Other Monies Paid Upon Execution:(a)Base Rent: $67,817.00 for the period first full calendar month of the Lease Term.(b)Common Area Operating Expenses: $14,066.00 for the period first full calendar month of the Lease Term.(c)Security Deposit: $102,354.00 (“Security Deposit”). (See also Paragraph 5)(d)Other: $N/A for N/A(e)Total Due Upon Execution of this Lease: $184,237.00.1.8 Agreed Use: General office, sales, training, research and development, engineering, design and testing of semiconductorequipment, systems, chips, and related goods and incidental uses , subject to applicable municipal, zoning, state and federal regulations,and applicable CC&Rs. (See also Paragraph 6)See paragraphs 52.1 through 52.9 of Lease Addendum.1.9 Insuring Party. Lessor is the “Insuring Party”. (See also Paragraph 8) and Paragraph 68 of the Lease Addendum.1.10 Real Estate Brokers: (See also Paragraph 15)(a) Representation: The following real estate brokers (the “Brokers”) and brokerage relationships exist in thistransaction (check applicable boxes):þ Voit Real Estate Services represents Lessor exclusively (“Lessor’s Broker”);þ Cushman & Wakefield represents Lessee exclusively (“Lessee’s Broker”); or¨ ____________________ represents both Lessor and Lessor exclusively (“Dual Agency”);__________INITIALSPage 2 of 26__________INITIALS©1999 – AIR COMMERCIAL REAL ESTATE ASSOCIATION(b) Payment to Brokers: Upon execution and delivery of this Lease by both Parties, Lessor shall pay to the Brokersthe brokerage fee agreed to in a separate written agreement.1.11 Guarantor. The obligations of the Lessee under this Lease are to be guaranteed by N/A (“Guarantor”). (See alsoParagraph 37)1.12 Addenda and Exhibits. Attached hereto is an Addendum or Addenda consisting of Paragraphs 50 through 78 andExhibits “A” through “K” , all of which constitute a part of this Lease.2. Premises.2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the Premises, for the term, at the rental,and upon all of the terms, covenants and conditions set forth in this Lease. Unless otherwise provided herein, any statement of size setforth in this Lease, or that may have been used in calculating Rent, is an approximation which the Parties agree is reasonable and anypayments based thereon are not subject to revision whether or not the actual size is more or less. Lessee shall be entitled to possessionof the premises twenty-four (24) hours a day, 365 days per year,2.2 Condition. Lessor shall deliver that portion of the Premises contained within the Building (‘Unit”) to Lessee broom cleanand free of debris on the Commencement Date, and, warrants that the existing electrical, plumbing, fire sprinkler, lighting, heating,ventilating and air conditioning systems (“HVAC”), loading doors, if any, and all other such elements in the Unit, other than thoseconstructed by Lessee, shall be in good operating condition on said date and that the structural elements of the roof, bearing walls andfoundation of the Unit shall be free of material defects. If a non-compliance with such warranty exists as of the Commencement Date,or if one of such systems or elements should malfunction or fail within the appropriate warranty period, Lessor shall, as Lessor’s soleobligation with respect to such matter, except as otherwise provided in this Lease, promptly after receipt of written notice from Lesseesetting forth with specificity the nature and extent of such non-compliance, malfunction or failure, rectify same at Lessors expense. Thewarranty periods shall be one (1) year following the Commencement Date. If Lessee does not give Lessor the required notice withinsaid 1-year warranty period, correction of any such non-compliance, malfunction or failure shall be governed by the terms of this Lease(e.g., the repairs to the fire sprinkler systems, roof, foundations, and/or bearing walls - see Paragraph 7), and the replacement of an itemthat is a capital expense for federal income tax purposes, which shall be governed by Paragraph 7.1(d)). Lessor’s warranty as set forthherein shall not apply to any damage caused by Lessee.2.3 Compliance. Lessor warrants that the improvements on the Premises and the Common Areas comply with the buildingcodes that were in effect at the time that each such improvement, or portion thereof, was constructed, and also with all applicable laws,covenants or restrictions of record, regulations, and ordinances in effect on the Commencement Date (“Applicable Requirements”).Said warranty does not apply to the specific and unique use to which Lessee will put the Premises or to any Alterations or UtilityInstallations (as defined in Paragraph 7.3(a)) made or to be made by Lessee. As used herein, the term “specific and unique use” shallmean sales, training, research and design and testing of semiconductor equipment, systems, chips and related goods. NOTE: Lessee isresponsible for determining whether or not the Applicable Requirements, and especially the zoning, are appropriate for Lessee’sintended use, and acknowledges that past uses of the Premises may no longer be allowed. If the Premises do not comply with saidwarranty, Lessor shall, except as otherwise provided, promptly after receipt of written notice from Lessee setting forth with specificitythe nature and extent of such non-compliance, rectify the same at Lessor’s expense. If Lessee does not give Lessor written notice of anon-compliance with this warranty within 12 months following the Commencement Date, correction of that__________INITIALSPage 3 of 26__________INITIALS©1999 – AIR COMMERCIAL REAL ESTATE ASSOCIATIONnon-compliance shall be governed by the terms of this Lease (e.g., non-compliance with respect to the fire sprinkler systems, roof,excluding roof membrane, foundations, and/or bearing walls - see Paragraph 7, and replacement of an item which is a capital expenseunder generally accepted accounting principles (“GAAP”), shall be governed by Paragraph 7.1(d)). If the Applicable Requirements arehereafter changed so as to require during the term of this Lease the construction of an addition to or an alteration of the Unit, Premisesand/or Building, or the reinforcement or other physical modification of the Unit, Premises and/or Building (“Capital Expenditure”),Lessor and Lessee shall allocate the cost of such work as follows:(a) Subject to Paragraph 2.3(c) below, if such Capital Expenditures are required as a result of the specific and uniqueuse of the Premises by Lessee as compared with uses by tenants in general, Lessee shall be fully responsible for the cost thereof.(b) If such Capital Expenditure is not the result of the specific and unique use of the Premises by Lessee (such as,governmentally mandated seismic modifications), then Lessor and Lessee shall allocate the obligation to pay for the portion of suchcosts reasonably attributable to the Premises pursuant to the formula set out in Paragraph 7.1(d).(c) Notwithstanding the above, the provisions concerning Capital Expenditures are intended to apply only to non-voluntary, unexpected, and new Applicable Requirements. Notwithstanding anything to the contrary set forth herein, Lessor shall beresponsible for compliance with Applicable Requirements, including compliance with the Americans with Disabilities Act, relating tothe exterior of the Building and Common Areas, and the Base Building Improvements and the Lessee Improvements construction.Lessee shall be responsible for all compliance with the Applicable Requirements, including compliance with the Americans withDisabilities Act, arising from all future improvements made by Lessee and from any change in use by Lessee. If the CapitalExpenditures are instead triggered by Lessee as a result of an actual or proposed change in use, change in intensity of use, ormodification to the Premises then, and in that event, Lessee shall be fully responsible for the cost thereof, and Lessee shall not have anyright to terminate this Lease under this subsection.2.4 Acknowledgements. Lessee acknowledges that: (a) it has been advised by Lessor and/or Brokers to satisfy itself withrespect to the condition of the Premises (including but not limited to the electrical, HVAC and fire sprinkler systems, security,environmental aspects, and compliance with Applicable Requirements and the Americans with Disabilities Act), and their suitability forLessee’s intended use, (b) Lessee has made such investigation as it deems necessary with reference to such matters and assumes allresponsibility therefor as the same relate to its occupancy of the Premises, and (c) neither Lessor, Lessor’s agents, nor Brokers havemade any oral or written representations or warranties with respect to said matters other than as set forth in this Lease. In addition,Lessor acknowledges that: (i) Brokers have made no representations, promises or warranties concerning Lessee’s ability to honor theLease or suitability to occupy the Premises, and (ii) it is Lessors sole responsibility to investigate the financial capability and/orsuitability of all proposed tenants.2.6 Vehicle Parking. See Paragraph 78 of the Lease Addendum. Lessee shall be entitled to use the number of UnreservedParking Spaces and Reserved Parking Spaces specified in Paragraph 1.2(b) on those portions of the Common Areas designated fromtime to time by Lessor for parking. Lessee shall not use more parking spaces than said number. Said parking spaces shall be used forparking by vehicles no larger than full-size passenger automobiles or pick-up trucks, herein called “Permitted Size Vehicles.” Lessormay regulate the loading and unloading of vehicles by adopting Rules and Regulations as provided in Paragraph 2.9. No vehicles otherthan Permitted Size Vehicles may be parked in the Common Area without the prior written permission of Lessor.__________INITIALSPage 4 of 26__________INITIALS©1999 – AIR COMMERCIAL REAL ESTATE ASSOCIATION(a) Lessee shall not permit or allow any vehicles that belong to or are controlled by Lessee or Lessee’s employees,suppliers, shippers, customers, contractors or invitees to be loaded, unloaded, or parked in areas other than those designated by Lessorfor such activities.(b) Lessee shall not service or store any vehicles in the Common Areas.(c) If Lessee permits or allows any of the prohibited activities described in this Paragraph 2.6, then Lessor shall havethe right upon reasonable prior notice, or without notice in the case of an emergency, in addition to such other rights and remedies thatit may have, to remove or tow away the vehicle involved and charge the cost to Lessee, which cost shall be immediately payable upondemand by Lessor.2.7 Common Areas - Definition. The term “Common Areas” is defined as all areas and facilities outside the Premises andwithin the exterior boundary line of the Project and interior utility raceways and installations within the Unit that are provided anddesignated by the Lessor from time to time for the general non-exclusive use of Lessor, Lessee and other tenants of the Project and theirrespective employees, suppliers, shippers, customers, contractors and invitees, including parking areas, loading and unloading areas,trash areas, roadways, walkways, driveways and landscaped areas, but excluding fences and gates provided by Lessor for the exclusiveuse of Lessee.2.8 Common Areas - Lessee’s Rights. Lessor grants to Lessee, for the benefit of Lessee and its employees, suppliers,shippers, contractors, customers and invitees, during the term of this Lease, the non-exclusive right to use, in common with othersentitled to such use, the Common Areas as they exist from time to time, subject to any rights, powers, and privileges reserved by Lessorunder the terms hereof or under the terms of any rules and regulations or restrictions governing the use of the Project. Under nocircumstances shall the right herein granted to use the Common Areas be deemed to include the right to store any property, temporarilyor permanently, in the Common Areas. Any such storage shall be permitted only by the prior written consent of Lessor or Lessor’sdesignated agent, which consent may be revoked at any time. In the event that any unauthorized storage shall occur then Lessor shallhave the right upon reasonable prior notice, or without notice in the case of an emergency, in addition to such other rights and remediesthat it may have, to remove the property and charge the cost to Lessee, which cost shall be immediately payable upon demand byLessor.2.9 Common Areas - Rules and Regulations. Lessor or such other person(s) as Lessor may appoint shall have the exclusivecontrol and management of the Common Areas and shall have the right, from time to time, to establish, modify, amend and enforcereasonable rules and regulations (“Rules and Regulations”) for the management, safety, care, and cleanliness of the grounds, theparking and unloading of vehicles and the preservation of good order, as well as for the convenience of other occupants or tenants ofthe Building and the Project and their invitees. A copy of the Rules and Regulations is attached hereto as Exhibit “C”. Lessee agrees toabide by and conform to all such Rules and Regulations, and to cause its employees, suppliers, shippers, customers, contractors andinvitees to so abide and conform. Lessor shall not be responsible to Lessee for the non-compliance with said Rules and Regulations byother tenants of the Project.2.10 Common Areas - Changes. Provided that Lessor shall not unreasonably interfere with Lessee’s use of the Premises orLessee’s parking rights, Lessor shall have the right, in Lessor’s sole discretion, from time to time:(a) To make changes to the Common Areas, including, without limitation, changes in the location, size, shape andnumber of driveways, entrances, parking spaces, parking areas, loading and unloading areas, ingress, egress, direction of traffic,landscaped areas, walkways and utility raceways;__________INITIALSPage 5 of 26__________INITIALS©1999 – AIR COMMERCIAL REAL ESTATE ASSOCIATION(b) To close temporarily any of the Common Areas for maintenance purposes so long as reasonable access to thePremises remains available;(c) To designate other land outside the boundaries of the Project to be a part of the Common Areas;(d) To add additional buildings and improvements to the Common Areas;(e) To use the Common Areas while engaged in making additional improvements, repairs or alterations to the Project,or any portion thereof; and(f) To do and perform such other acts and make such other changes in, to or with respect to the Common Areas andProject as Lessor may, in the exercise of sound business judgment, deem to be appropriate.3. Term.3.1 Term. The Commencement Date, Expiration Date and Original Term of this Lease are as specified in Paragraph 1.3.3.2 Early Possession. If Lessee totally or partially occupies the Premises prior to the Commencement Date, the obligation topay Base Rent shall be abated for the period of such early possession. Any such early possession shall not affect the Expiration Date.3.3 Delay In Possession. Lessor agrees to use its best commercially reasonable efforts to deliver possession of the Premises toLessee by the Projected Completion Pate (as said Term is defined in Paragraph 73(12) of the Lease Addendum). If, despite said efforts,Lessor is unable to deliver possession as agreed, Lessor shall not be subject to any liability therefor, nor shall such failure affect thevalidity of this Lease. Lessee shall not, however, be obligated to pay Rent or perform its other obligations until the CommencementDate; provided, however, that Lessee must maintain the insurance required by Paragraph 68(12) of the Lease Addendum during theEarly Possession period it receives possession of the Premises. If possession is not delivered within 60 days after the ProjectedCompletion Date, Lessee may, at its option, by notice in writing within 10 days after the end of such 60 day period, cancel this Lease,in which event the Parties shall be discharged from all obligations hereunder. If such written notice is not received by Lessor within said10 day period, Lessee’s right to cancel shall terminate. Except as otherwise provided, if possession is not tendered to Lessee by theProjected Completion Date and Lessee does not terminate this Lease, as aforesaid, any period of rent abatement that Lessee wouldotherwise have enjoyed shall run from the date of delivery of possession and continue for a period equal to what Lessee wouldotherwise have enjoyed under the terms hereof.3.4 Lessee Compliance. Lessor shall not be required to tender possession of the Premises to Lessee on the CommencementPate until Lessee complies with its obligation to provide evidence of insurance (Paragraph 8.5). Pending delivery of such evidence,Lessee shall be required to perform all of its obligations under this Lease from and after the Commencement Date, including thepayment of Rent, notwithstanding Lessor’s election to withhold possession pending receipt of such evidence of insurance.4. Rent.4.1 Rent Defined. All monetary obligations of Lessee to Lessor under the terms of this Lease (except for the Security Deposit)are deemed to be rent (“Rent”).__________INITIALSPage 6 of 26__________INITIALS©1999 – AIR COMMERCIAL REAL ESTATE ASSOCIATION4.2 Common Area Operating Expenses. Lessee shall pay to Lessor during the term hereof, in addition to the Base Rent,Lessee’s Share (as specified in Paragraph 1.6) of all Common Area Operating Expenses, as hereinafter defined, during each calendaryear of the term of this Lease, in accordance with the following provisions:(a) “Common Area Operating Expenses” are defined, for purposes of this Lease, in paragraph 67 of the LeaseAddendum.(b) Any Common Area Operating Expenses and Real Property Taxes that are specifically attributable to the Unit, theBuilding or to any other building in the Project or to the operation, repair and maintenance thereof, shall be allocated entirely to suchUnit, Building, or other building. However, any Common Area Operating Expenses and Real Property Taxes that are not specificallyattributable to the Building or to any other building or to the operation, repair and maintenance thereof, shall be equitably allocated byLessor to all buildings in the Project.(c) The inclusion of the improvements, facilities and services set forth in Subparagraph 4.2(a) shall not be deemed toimpose an obligation upon Lessor to either have said improvements or facilities or to provide those services unless the Project alreadyhas the same, Lessor already provides the services, or Lessor has agreed elsewhere in this Lease to provide the same or some of them.(d) Lessee’s Share of Common Area Operating Expenses shall be payable by Lessee within 30 days after a reasonablydetailed statement of actual expenses is presented to Lessee. At Lessor’s option, however, an amount may be estimated by Lessor fromtime to time of Lessee’s Share of annual Common Area Operating Expenses and the same shall be payable monthly or quarterly, asLessor shall designate, during each 12 month period of the Lease term, on the same day as the Base Rent is due hereunder. Lessor shalldeliver to Lessee within 60 days after the expiration of each calendar year a reasonable detailed statement showing Lessee’s Share ofthe actual Common Area Operating Expenses incurred during the preceding year. If Lessee’s payments under this Paragraph 4.2(d)during the preceding year exceed Lessee’s Share as indicated on such statement, lessor shall credit the amount of such over-paymentagainst Lessee’s Share of Common Area Operating Expenses next becoming due. If Lessee’s payments under this Paragraph 4.2(d)during the preceding year were less than Lessee’s Share as indicated on such statement, Lessee shall pay to Lessor the amount of thedeficiency within 30 days after the delivery by Lessor to Lessee of the statement.4.3 Payment. Lessee shall cause payment of Rent to be received by Lessor in lawful money of the United States, withoutoffset or deduction (except as specifically permitted in this Lease), on or before the day on which it is due. Rent for any period duringthe term hereof which is at its address stated herein or to such other persons or place as Lessor may from time to time designate inwriting. Acceptance of a payment which is less than the amount then due shall not be a waiver of Lessor’s rights to the balance of suchRent, regardless of Lessor’s endorsement of any check so stating. In the event that any check, draft , or other instrument of paymentgiven by Lessee to Lessor is dishonored for any reason, Lessee agrees to pay to Lessor the sum of $25 in addition to any late chargeswhich may be due.5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof the Security Deposit as security for Lessee’s faithfulperformance of its obligations under this Lease. If Lessee fails to pay Rent, or otherwise Defaults under this Lease, Lessor may useapply or retain all or any portion of said Security Deposit for the payment of any amount due Lessor or to reimburse or compensateLessor for any liability, expense, loss or damage which Lessor may suffer or incur by reason thereof. If Lessor uses or applies all or anyportion of the Security Deposit, Lessee shall within 10 days after written request therefor deposit monies with Lessor sufficient__________INITIALSPage 7 of 26__________INITIALS©1999 – AIR COMMERCIAL REAL ESTATE ASSOCIATIONto restore said Security Deposit to the full amount required by this Lease. Lessor shall not be required to keep the Security Depositseparate from its general accounts. Within 14 days after the expiration or termination of this Lease, if Lessor elects to apply the SecurityDeposit only to unpaid Rent, and otherwise within 30 days after the Premises have been vacated pursuant to Paragraph 7.4 below,Lessor shall return that portion of the Security Deposit not used or applied by Lessor. No part of the Security Deposit shall beconsidered to be held in trust, to bear interest or to be prepayment for any monies to be paid by Lessee under this Lease.6. Use.6.1 Use. Subject to all of the covenants and restrictions set forth in this Lease, Lessee shall use and occupy the Premises onlyfor the Agreed Use, or any other legal use which is reasonably comparable thereto, and for no other purpose. Lessee shall not use orpermit the use of the Premises in a manner that is unlawful, creates damage, waste or a nuisance, or that disturbs occupants of or causesdamage to neighboring premises or properties. Lessor shall not unreasonably without or delay its consent to any written request for amodification of the Agreed Use, so long as the same will not impair the structural integrity of the improvements on the Premises or themechanical or electrical systems therein, will not increase the risk of contamination with Hazardous Substance, and/or is notsignificantly more burdensome to the Premises. If Lessor elects to withhold consent, Lessor shall within 7 days after such request givewritten notification of same, which notice shall include an explanation of Lessor’s objections to the change in the Agreed Use.6.2 Hazardous Substances. See paragraph 56 of the Lease Addendum.(g) Lessor Termination Option. If a Hazardous Substance Condition (see Paragraph 9.1(e)) occurs during the term ofthis Lease, unless Lessee is legally responsible therefor (in which case Lessee shall make the investigation and remediation thereofrequired by the Applicable Requirements and this Lease shall continue in full force and effect, but subject to Lessor’s rights underParagraph 56 of the Lease Addendum 6.2(d) and Paragraph 13), Lessor may shall, at Lessor’s option, written notice of which shall bedelivered to Lessee within ten (10) days following the occurrence of Grounds for Termination (as said term is fined herein below),either (i) investigate and remediate such Hazardous Substance Condition, if required, as soon as reasonably possible at Lessor’sexpense, in which event this Lease shall continue in full force and effect, or (ii) if the estimated cost to remediate such conditionexceeds 12 times the then monthly Base Rent or $100,000, whichever is greater, or by reason of the Hazardous Substance the Premisesshall not be safe to occupy for a period of six (6) months or longer (jointly, the “Grounds for Termination”), give written notice toLessee, within 30 days after receipt by Lessor of knowledge of the occurrence of such Hazardous Substance Condition, of Lessor’sdesire to terminate this Lease as of the first to occur of (i) the date 60 days following the date of such notice, or (ii) at such time as thePremises are not longer safe to occupy. In the event Grounds for Termination arise and Lessor elects not to terminate this Lease, Lesseeshall have the right to terminate this Lease by written notice to Lessor within ten (10) days following receipt from Lessor of its electionnot to terminate.6.3 Lessee’s Compliance with Applicable Requirements. Except as otherwise provided in this Lease, Lessee shall, at Lessee’ssole expense, fully, diligently and in a timely manner, materially comply with all Applicable Requirements, the requirements of anyapplicable fire insurance underwriter or rating bureau, and the recommendations of Lessor’s engineers and/or consultants which relatein any manner to Lessee’s use of the Premises, without regard to whether said requirements are now in effect or become effective afterthe Start Date. Lessee shall, within 10 days after receipt of Lessor’s written request, provide Lessor with copies of all permits and otherdocuments, and other information evidencing Lessee’s compliance with any Applicable Requirements specified by Lessor, and shallimmediately upon receipt, notify Lessor in writing (with copies of any documents__________INITIALSPage 8 of 26__________INITIALS©1999 – AIR COMMERCIAL REAL ESTATE ASSOCIATIONinvolved) of any threatened or actual claim, notice, citation, warning, complaint or report pertaining to or involving the failure of Lesseeor the Premises to comply with any Applicable Requirements.6.4 Inspection; Compliance. Lessor and Lessor’s “Lender” (as defined in Paragraph 30) and consultants shall have the rightto enter into Premises at any time, in the case of an emergency, and otherwise at reasonable times, for the purpose of inspecting thecondition of the Premises and for verifying compliance by Lessee with this Lease. The cost of any such inspections shall be paid byLessor, unless a violation by Lessee of Applicable Requirements, or a contamination is found to exist or be imminent for which Lesseeis responsible under this Lease. In such case, Lessee shall upon request reimburse Lessor for the cost of such inspection, so long assuch inspection is reasonably related to the violation or contamination. In no event shall any inspection undertaken by Lessor relieveLessee of its obligation to maintain and repair the Premises or for liability to Lessor and/or third parties for Lessee’s failure toadequately maintain and repair the Premises as required by this Lease.7. Maintenance; Repairs, Utility Installations; Trade Fixtures and Alterations.7.1 Lessee’s Obligations.(a) In General. Subject to the provisions of Paragraph 2.2 (Condition), 2.3 (Compliance), 6.3 (Lessee’s Compliancewith Applicable Requirements), 7.2 (Lessor’s Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee shall, atLessee’s sole expense, keep the Premises, Utility Installations (intended for Lessee’s exclusive use, no matter where located), andAlterations in good order, condition and repair (whether or not the portion of the Premises requiring repairs, or the means of repairingthe same, are reasonably or readily accessible to Lessee, and whether or not the need for such repairs occurs as a result of Lessee’s use,any prior use, the elements or the age of such portion of the Premises), including, but not limited to, all equipment or facilities, such asplumbing, lighting facilities, boilers, pressure vessels, fixtures, interior walls, interior surfaces of exterior walls, ceilings, roofmembrane, floors, fences and gates made available for Lessee’s exclusive use, windows, doors, plate glass, and skylights but excludingany items which are the responsibility of Lessor pursuant to Paragraph 7.2. Lessee, in keeping the Premises in good order, conditionand repair, shall exercise and perform good maintenance practices. Lessee’s obligations shall include restorations, replacements orrenewals when necessary to keep the Premises and all improvements thereon or a part thereof in good order, condition and state ofrepair, and free of any dangerous conditions. Lessee shall routinely (but not less often than every twelve months) inspect the Premisesto determine whether maintenance or repair of any portion thereof is required in accordance with the terms of this Lease, and shallprovide Lessor with a written report of the results of its inspection. Lessee shall immediately notify Lessor in writing if it believes adangerous condition exists on the Premises and shall promptly take such action as may be required to eliminate said dangerouscondition.(b) Service Contracts. Subject to reimbursement pursuant to the provisions of Paragraph 4.2, above, Lessor shallprocure and maintain contracts in customary form and substance for, and with contractors specializing and experienced in themaintenance of the following equipment and improvements, if any, if and when installed on the Premises: (i) HVAC equipment, (ii)boiler and pressure vessels, (iii) clarifiers, and (iv) any other equipment, if reasonably required by Lessor. See Paragraph 67(a) of theLease Addendum regarding the cost of repairs and replacements of the HVAC system which constitute capital expenditures.(c) Failure to Perform. If Lessee fails to perform Lessee’s obligations under this Paragraph 7.1, Lessor may enterupon the Premises after 10 days’ prior written notice to Lessee (except in the case of an emergency, in which case no notice shall berequired), perform such obligations on Lessee’s behalf, and put the Premises in good order, condition and repair, and Lessee shallpromptly reimburse Lessor for the cost thereof.__________INITIALSPage 9 of 26__________INITIALS©1999 – AIR COMMERCIAL REAL ESTATE ASSOCIATION(d) Replacement. Subject to Paragraphs 2.2 and 2.3, above, Lessee’s indemnification of Lessor as set forth inParagraph 8.7 below, and without relieving Lessee of liability resulting from Lessee’s failure to exercise and perform good maintenancepractices, if the replacement or major repair of an item described in Paragraph 7.1(a) and 7.1(b) is required to be capitalized underGAAP, then such item shall be replaced by Lessor, and the cost thereof shall be prorated between the Parties and Lessee shall only beobligated to pay, each month during the remainder of the term of this Lease, on the date on which Base Rent is due, an amount requiredto fully amortize such cost based upon the useful life thereof as determined by Lessor in its reasonable judgment using an interest rateequal to the greater of (i) seven and one half percent (7.5%) per annum, and (ii) the Wall Street Journal Prime Rate plus 400 basispoints, not to exceed ten percent (10% per annum. Lease may, however, prepay its obligation at any time.7.2 Lessor’s Obligations. Subject to the provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance), 4.2 (Common AreaOperating Expenses), 6 (Use), 7.1 (Lessee’s Obligations), 9 (Damage or Destruction) and 14 (Condemnation), Lessor, subject toreimbursement pursuant to Paragraph 4.2, shall keep in good order, condition and repair the foundations, exterior walls, structuralcondition of interior bearing walls, exterior roof, fire sprinkler system, HVAC system, Common Area fire alarm and/or smoke detectionsystems, fire hydrants, parking lots, walkways, parkways, driveways, landscaping, fences, signs and utility systems serving theCommon Areas and all parts thereof, as well as providing the services for which there is a Common Area Operating Expense pursuantto Paragraphs 4.2 and 67. Lessor shall not be obligated to paint the exterior or interior surfaces of exterior walls nor shall Lessor beobligated to maintain, repair or replace windows, doors or plate glass of the Premises. Lessee expressly waives the benefit of any statutenow or hereafter in effect to the extent it is inconsistent with the terms of this Lease. Notwithstanding anything to the contrary set forthherein, (i) Lessor, at its sole cost and expense, and not as a Common Area Operating Expense, shall be responsible for maintenance andrepair of the structural portions of the Premises only, including the foundation, exterior walls and roof (excluding the roof membrane),(ii) Lessor shall be responsible for maintenance and repair of the HVAC system and life safety system, the cost of which shall be aCommon Area Operating Expense, and (iii) Lessee shall, at Lessee’s sole cost and expense, be responsible for maintenance, repair andreplacement of the HVAC system and equipment installed to serve Lessee’s laboratory areas.7.3 Utility Installations; Trade Fixtures; Alterations.(a) Definitions. The term “Utility Installations” refers to all floor and window coverings, air lines, power panels,electrical distribution, security and fire protection systems, communication systems, lighting fixtures, HVAC equipment, plumbing, andfencing and gates in or on the Premises. The term “Trade Fixtures” shall mean Lessee’s machinery and equipment that can beremoved without doing material damage to the Premises. The term “Alterations” shall mean any modification of the improvements,other than Utility Installations or Trade Fixtures, whether by addition or deletion. “Lessee Owned Alterations and/or UtilityInstallations” are defined as Alterations and/or Utility Installations made by Lessee that are not yet owned by Lessor pursuant toParagraph 7.4(a).(b) Consent. Lessee shall not make any Alterations or Utility Installations to the Premises without Lessor’s prior writtenconsent. Lessee may, however, make non-structural Utility Installations to the interior of the Premises (excluding the roof) without suchconsent but upon notice to Lessor, as long as they are not visible from the outside, do not involve puncturing, relocating or removingthe roof, the roof membrane, or any existing walls, and the cumulative cost thereof during this Lease as extended does not exceed asum equal to 3 month’s Base Rent in the aggregate or a sum equal to one month’s Base Rent in any one year. Notwithstanding theforegoing, Lessee shall not make or permit any roof penetrations and/or install anything on the roof without the prior written approvalof Lessor. Lessor may, as a precondition to granting such approval, require Lessee to__________INITIALSPage 10 of 26__________INITIALS©1999 – AIR COMMERCIAL REAL ESTATE ASSOCIATIONutilize a contractor chosen and/or approved by Lessor. Any Alterations or Utility Installations that Lessee shall desire to make andwhich require the consent of the Lessor shall be presented to Lessor in written form with detailed plans. Consent shall be deemedconditioned upon Lessee’s: (i) acquiring all applicable governmental permits, (ii) furnishing Lessor with copies of both the permits andthe plans and specifications prior to commencement of the work, and (iii) compliance with all conditions of said permits and otherApplicable Requirements in a prompt and expeditious manner. Any Alterations or Utility Installations shall be performed in aworkmanlike manner with good and sufficient materials. Lessee shall promptly upon completion furnish Lessor with as-built plans andspecifications. For work which costs an amount in excess of one month’s Base Rent, Lessor may condition its consent upon Lesseeproviding a lien and completion bond in an amount equal to 150% of the estimated cost of such Alteration or Utility Installation and/orupon Lessee’s posting an additional Security Deposit with Lessor.(c) Indemnification. Lessee shall pay, when due, all claims for labor or materials furnished or alleged to have beenfurnished to or for Lessee at or for use on the Premises, which claims are or may be secured by any mechanic’s or materialman’s lienagainst the Premises or any interest therein. Lessee shall give Lessor not less than 10 days notice prior to the commencement of anywork in, on or about the Premises, and Lessor shall have the right to post notices of non-responsibility. If Lessee shall contest thevalidity of any such lien, claim or demand, then Lessee shall, at its sole expense defend and protect itself, Lessor and the Premisesagainst the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the enforcement thereof. IfLessor shall require, Lessee shall furnish a surety bond in an amount equal to 150% of the amount of such contested lien, claim ordemand, indemnifying Lessor against liability for the same. If Lessor elects to participate in any such action, Lessee shall pay Lessor’sattorneys’ fees and costs.7.4 Ownership; Removal; Surrender; and Restoration.(a) Ownership. Subject to Lessor’s right to require removal or elect ownership as hereinafter provided, all Alterationsand Utility Installations made by Lessee shall be the property of Lessee, but considered a part of the Premises. Lessor may, at any time,elect in writing to be the owner of all or any specified part of the Lessee Owned Alterations and Utility Installations. Unless otherwiseinstructed per paragraph 7.4(b) hereof, all Lessee Owned Alterations and Utility Installations shall, at the expiration or termination ofthis Lease, become the property of Lessor and be surrendered by Lessee with the Premises.(b) Removal. By delivery to Lessee of written notice from Lessor at the time it consents to such improvements, Lessormay require that any or all improvements to the Electronic Lab Areas (as said term is defined in Paragraph 73(b) of the LeaseAddendum) of the Premises, and any or all Lessee Owned Alterations or Utility Installations, be removed by the expiration ortermination of this Lease. Lessor may require the removal at any time of all or any part of any Lessee Owned Alterations or UtilityInstallations made without the required consent and return of such areas to shell warehouse conditions.(c) Surrender; Restoration. Lessee shall surrender the Premises by the Expiration Date or any earlier termination date,with all of the improvements, parts and surfaces thereof broom clean and free of debris, and in good operating order, condition andstate of repair, (i) ordinary wear and tear, (ii) casualty items that are not Lessee’s responsibility to maintain, repair, or restore (unlessdamaged by Lessee) and Hazardous Substances for which Lessee is not responsible under the provisions of Paragraph 56 of the Lease,and (iii) condemnation, excepted. “Ordinary wear and tear” shall not include any damage or deterioration that would have beenprevented by good maintenance practice. Lessee shall repair any damage occasioned by the installation, maintenance or removal ofTrade Fixtures, Lessee owned Alterations and/or Utility Installations, furnishings, and equipment as well as the removal of any storagetank installed by or for Lessee. Lessee shall also completely__________INITIALSPage 11 of 26__________INITIALS©1999 – AIR COMMERCIAL REAL ESTATE ASSOCIATIONremove from the Premises any and all Hazardous Substances brought onto the Premises by or for Lessee, or any third party (exceptHazardous Substances which were deposited via underground migration from areas outside of the Project) even if such removal wouldrequire Lessee to perform or pay for work that exceeds statutory requirements. Trade Fixtures shall remain the property of Lessee andshall be removed by Lessee. The failure by Lessee to timely vacate the Premises pursuant to this Paragraph 7.4(c) without the expresswritten consent of Lessor shall constitute a holdover under the provisions of Paragraph 26 below.8. Insurance; Indemnity.8.1 Payment of Premiums. The cost of the premiums for the insurance policies required to be carried by Lessor, pursuant toParagraphs 8.2(b), 8.3(a) and 8.3(b), shall be a Common Area Operating Expense. Premiums for policy periods commencing prior to,or extending beyond, the term of this Lease shall be prorated to coincide with the corresponding Start Date or Expiration Date.8.2 Liability Insurance. See paragraph 68 of the Lease Addendum.8.5 Insurance Policies. Insurance required herein shall be by companies duly licensed or admitted to transact business in thestate where the Premises are located, and maintaining during the policy term a “General Policyholders Rating” of at least A-, VI, as setforth in the most current issue of “Best’s Insurance Guide”, or such other rating as may be required by a Lender. Lessee shall not do orpermit to be done anything which invalidates the required insurance policies. Lessee shall, prior to the Start Date, deliver to Lessorcertified copies of policies of such insurance or certificates and endorsements evidencing the existence and amounts of the requiredinsurance. No such policy shall be cancelable or subject to modification except after 30 days prior written notice to Lessor, except fornon-payment of premiums, upon which only ten (10) days notice shall be required. Lessee shall, at least 30 days prior to the expirationof such policies, furnish Lessor with evidence of renewals or “insurance binders” evidencing renewal thereof, or Lessor may order suchinsurance and charge the cost thereof to Lessee, which amount shall be payable by Lessee to Lessor upon demand. Such policies shallbe for a term of at least one year, or the length of the remaining term of this Lease, whichever is less. If either Party shall fail to procureand maintain the insurance required to be carried by it, the other Party may, but shall not be required to, procure and maintain the same.8.6 Waiver of Subrogation. Notwithstanding anything to the contrary in this Lease, Lessee and Lessor each hereby releaseand relieve the other, and waive their entire right to recover damages against the other, for loss of or damage to its property arising outof or incident to the perils required to be insured against herein. The effect of such releases and waivers is not limited by the amount ofinsurance carried or required, or by any deductibles applicable hereto. The Parties agree to have their respective property damageinsurance carriers waive any right to subrogation that such companies may have against Lessor or Lessee, as the case may be, so longas the insurance is not invalidated thereby.8.7 Indemnity. Except for Lessor’s gross negligence, or willful misconduct, or Breach of this Lease, Lessee shall indemnify,protect, defend and hold harmless the Premises, Lessor and its agents, including without limitation Lessor’s property managers (WilliamA. Budge, Inc., and McKennaco, dba McKenna & Co.), Lessor’s master or ground lessor, partners and Lenders, from and against anyand all claims, loss of rents and/or damages, liens, judgments, penalties, attorneys’ and consultants’ fees, expenses and/or liabilitiesarising out of, involving, or in connection with, the use and/or occupancy of the Premises by Lessee. If any action or proceeding isbrought against Lessor by reason of any of the foregoing matters, Lessee shall upon notice defend the same at Lessee’s expense bycounsel reasonably satisfactory to Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not have first paid anysuch claim in order to be defended or indemnified.__________INITIALSPage 12 of 26__________INITIALS©1999 – AIR COMMERCIAL REAL ESTATE ASSOCIATION8.8 Exemption of Lessor from Liability. Lessor shall not be liable for injury or damage to the person or goods, wares,merchandise or other property of Lessee, Lessee’s employees, contractors, invitees, customers, or any other person in or about thePremises, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, or from the breakage,leakage, obstruction or other defects of pipes, fire sprinklers, wires, appliances, plumbing, HVAC or lighting fixtures, or from any othercause, whether the said injury or damage results from conditions arising upon the Premises or upon other portions of the Building, orfrom other sources or places. Lessor shall not be liable for any damages arising from any act or neglect of any other tenant of Lessornor from the failure of Lessor to enforce the provisions of any other lease in the Project. Notwithstanding Lessor’s negligence or breachof this Lease, Lessor shall under no circumstances be liable for injury to Lessee’s business or for any loss of income or profit therefrom.9. Damage or Destruction.9.1 Definitions.(a) “Premises Partial Damage” shall mean damage or destruction to the improvements on the Premises, other thanLessee Owned Alterations and Utility Installations, which can reasonably be repaired in 180 days or less from the date of the damage ordestruction, and the cost thereof does not exceed a sum equal to 6 month’s Base Rent. Lessor shall notify Lessee in writing within 30 60days from the date of the damage or destruction as to whether or not the damage is Partial or Total.(b) “Premises Total Destruction” shall mean damage or destruction to the improvements on the Premises, other thanLessee Owned Alterations and Utility Installations and Trade Fixtures, which cannot reasonably be repaired in 180 days or less from thedate of the damage or destruction and/or the cost thereof exceeds a sum equal to 6 month’s Base Rent. Lessor shall notify Lessee inwriting within 30 days from the date of the damage or destruction as to whether or not the damage is Partial or Total.(c) “Insured Loss” shall mean damage or destruction to improvements on the Premises, other than Lessee OwnedAlterations and Utility Installations and Trade Fixtures, which was caused by an event required to be covered by the insurancedescribed in Paragraph 8.3(a), irrespective of any deductible amounts or coverage limits involved.(d) “Replacement Cost” shall mean the cost to repair or rebuild the improvements owned by Lessor at the time of theoccurrence to their condition existing immediately prior thereto, including demolition, debris removal and upgrading required by theoperation of Applicable Requirements, and without deduction for depreciation.(e) “Hazardous Substance Condition” shall mean the occurrence or discovery of a condition involving the presenceof, or a contamination by, a Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the Premises.9.2 Partial Damage - Insured Loss. If a Premises Partial Damage that is an Insured Loss occurs, then Lessor shall, at Lessor’sexpense, repair such damage (but not Lessee’s Trade Fixtures or Lessee Owned Alterations and Utility Installations) as soon asreasonably possible and this Lease shall continue in full force and effect. Notwithstanding the foregoing, if the required insurance wasnot in force or the insurance proceeds are not sufficient to effect such repair, the Insuring Party shall promptly contribute the shortage inproceeds as and when required to complete said repairs. In the event, however, such shortage was due to the fact that, by reason of theunique nature of the improvements, full replacement cost insurance coverage was not commercially reasonable and available, Lessorshall have no obligation to pay for the shortage in insurance proceeds or to fully__________INITIALSPage 13 of 26__________INITIALS©1999 – AIR COMMERCIAL REAL ESTATE ASSOCIATIONrestore the unique aspects of the Premises unless Lessee provides Lessor with the funds to cover same, or adequate assurance thereof,within 10 days following receipt of written notice of such shortage and request therefor. If Lessor receives said funds or adequateassurance thereof within said 10 day period, the party responsible for making the repairs shall complete them as soon as reasonablypossible and this Lease shall remain in full force and effect. If such funds or assurance are not received, Lessor may nevertheless electby written notice to Lessee within 10 days thereafter to: (i) make such restoration and repair as is commercially reasonable with Lessorpaying any shortage in proceeds, in which case this Lease shall remain in full force and effect, or (ii) have this Lease terminate 30 daysthereafter. Lessee shall not be entitled to reimbursement of any funds contributed by Lessee to repair any such damage or destruction.Premises Partial Damage due to flood or earthquake shall be subject to Paragraph 9.3, notwithstanding that there may be someinsurance coverage, but the net proceeds of any such insurance shall be made available for the repairs if made by either Party.9.3 Partial Damage - Uninsured Loss. If a Premises Partial Damage that is not an Insured Loss occurs, unless caused by anegligent or willful act of Lessee (in which event Lessee shall make the repairs at Lessee’s expense), Lessor may either: (i) repair suchdamage as soon as reasonably possible at Lessor’s expense, in which event this Lease shall continue in full force and effect, or (ii)terminate this Lease by giving written notice to Lessee within 30 days after receipt by Lessor of knowledge of the occurrence of suchdamage. Such termination shall be effective 60 days following the date of such notice. In the event Lessor elects to terminate this Lease,Lessee shall have the right within 10 days after receipt of the termination notice to give written notice to Lessor of Lessee’s commitmentto pay for the repair of such damage without reimbursement from Lessor. Lessee shall provide Lessor with said funds or satisfactoryassurance thereof within 30 days after making such commitment. In such event this Lease shall continue in full force and effect, andLessor shall proceed to make such repairs as soon as reasonably possible after the required funds are available. If Lessee does not makethe required commitment, this Lease shall terminate as of the date specified in the termination notice.9.4 Total Destruction. Notwithstanding any other provision hereof, if a Premises Total Destruction occurs, this Lease shallterminate 60 days following such Destruction.9.5 Damage Near End of Term. If at any time during the last 6 months of this Lease there is damage for which the cost torepair exceeds one month’s Base Rent, whether or not an Insured Loss, Lessor may terminate this Lease effective 60 days following thedate of occurrence of such damage by giving a written termination notice to Lessee within 30 days after the date of occurrence of suchdamage. Notwithstanding the foregoing, if Lessee at that time has an exercisable option to extend this Lease or to purchase thePremises, then Lessee may preserve this Lease by, (a) exercising such option and (b) providing Lessor with any shortage in insuranceproceeds (or adequate assurance thereof) needed to make the repairs on or before the earlier of (i) the date which is 10 days afterLessee’s receipt of Lessor’s written notice purporting to terminate this Lease, or (ii) the day prior to the date upon which such optionexpires. if Lessee duly exercises such option during such period and provides Lessor with funds (or adequate assurance thereof) tocover any shortage in insurance proceeds, Lessor shall, at Lessor’s commercially reasonable expense, repair such damage as soon asreasonably possible and this Lease shall continue in full force and effect. If Lessee fails to exercise such option and provide such fundsor assurance during such period, then this Lease shall terminate on the date specified in the termination notice and Lessee’s option shallbe extinguished.9.6 Abatement of Rent; Lessee’s Remedies.(a) Abatement. In the event of Premises Partial Damage or Premises Total Destruction or a Hazardous SubstanceCondition for which Lessee is not responsible under this Lease, the Rent payable by Lessee for the period required for the repair,remediation or restoration of such damage shall be abated in__________INITIALSPage 14 of 26__________INITIALS©1999 – AIR COMMERCIAL REAL ESTATE ASSOCIATIONproportion to the degree to which Lessee’s use of the Premises is impaired, but not to exceed the proceeds received from the RentalValue insurance. All other obligations of Lessee hereunder shall be performed by Lessee, and Lessor shall have no liability for any suchdamage, destruction, remediation, repair or restoration except as provided herein.(b) Remedies. If Lessor shall be obligated to repair or restore the Premises and does not commence, in a substantialand meaningful way, such repair or restoration within 90 days after such obligation shall accrue, Lessee may, at any time prior to thecommencement of such repair or restoration, give written notice to Lessor and to any Lenders of which Lessee has actual notice, ofLessee’s election to terminate this Lease on a date not less than 60 days following the giving of such notice. If Lessee gives such noticeand such repair or restoration is not commenced within 30 days thereafter, this Lease shall terminate as of the date specified in saidnotice. If the repair or restoration is commenced within such 30 days, this Lease shall continue in full force and effect. “Commence”shall mean either the unconditional authorization of the preparation of the required plans, or the beginning of the actual work on thePremises, whichever first occurs.9.7 Termination; Advance Payments. Upon termination of this Lease pursuant to Paragraph 6.2(g) or Paragraph 9, anequitable adjustment shall be made concerning advance Base Rent and any other advance payments made by Lessee to Lessor. Lessorshall, in addition, return to Lessee so much of Lessee’s Security Deposit as has not been, or is not then required to be, used by Lessor.9.8 Waive Statutes. Lessor and Lessee agree that the terms of this Lease shall govern the effect of any damage to ordestruction of the Premises with respect to the termination of this Lease and hereby waive the provisions of any present or future statuteto the extent inconsistent herewith.10. Real Property Taxes.10.1 Definition. As used herein, the term “Real Property Taxes” shall include any form of assessment; real estate, general,special, ordinary or extraordinary, or rental levy or tax (other than inheritance, personal income or estate taxes); improvement bond;and/or license fee imposed upon or levied against any legal or equitable interest of Lessor in the Project, Lessor’s right to other incometherefrom, and/or Lessor’s business of leasing, by any authority having the direct or indirect power to tax and where the funds aregenerated with reference to the Project address and where the proceeds so generated are to be applied by the city, county or other localtaxing authority of a jurisdiction within which the Project is located. The term “Real Property Taxes” shall also include any tax, fee,levy, assessment or charge, or any increase therein, imposed by reason of events occurring during the term of this Lease, including butnot limited to, a change in the ownership of the Project or any portion thereof or a change in the improvements thereon. In calculatingReal Property Taxes for any calendar year, the Real Property Taxes for any real estate tax year shall be included in the calculation ofReal Property Taxes for such calendar year based upon the number of days which such calendar year and tax year have in common.10.2 Payment of Taxes. Lessor shall pay the Real Property Taxes applicable to the Common Area Project, and all suchamounts shall be included in the calculation of Common Area Operating Expenses in accordance with the provisions of Paragraph 4.2.Lessor shall pay the Real Property Taxes on the parcel on which the Premises are located with respect to the Premises is one hundredpercent (100%) of such tax parcel. Lessee shall reimburse Lessor therefor in equal monthly payments at the same time as Base Kent isdue and payable hereunder.__________INITIALSPage 15 of 26__________INITIALS©1999 – AIR COMMERCIAL REAL ESTATE ASSOCIATION10.3 Additional improvements. Common Area Operating Expenses shall not include Real Property Taxes specified in the taxassessor’s records and work sheets as being caused by additional improvements placed upon the Project by other lessees or by Lessorfor the exclusive enjoyment of such other lessees. Notwithstanding Paragraph 10.2 hereof, Lessee shall, however, pay to Lessor at thetime Common Area Operating Expenses are payable under Paragraph 4.2, the entirety of any increase in Real Property Taxes ifassessed solely by reason of Alterations, Trade Fixtures or Utility Installations placed upon the Premises by Lessee or at Lessee’srequest.10.4 Joint Assessment. If the Building is not separately assessed, Real Property Taxes allocated to the Building shall be anequitable proportion of the Real Property Taxes for all of the land and improvements included within the tax parcel assessed, suchproportion to be determined by Lessor from the respective valuations assigned in the assessor’s work sheets or such other informationas may be reasonably available. Lessor’s reasonable determination thereof, in good faith, shall be conclusive.10.5 Personal Property Taxes. Lessee shall pay prior to delinquency all taxes assessed against and levied upon LesseeOwned Alterations and Utility Installations, Trade Fixtures, furnishings, equipment and all personal property of Lessee contained in thePremises. When possible, Lessee shall cause its Lessee Owned Alterations and Utility Installations, Trade Fixtures, furnishings,equipment and all other personal property to be assessed and billed separately from the real property of Lessor. If any of Lessee’s saidproperty shall be assessed with Lessor’s real property, Lessee shall pay Lessor the taxes attributable to Lessee’s property within 10 daysafter receipt of a written statement setting forth the taxes applicable to Lessee’s property.11. Utilities. Effective as of the Commencement Date, Lessee shall pay for all water, gas, heat, light, power, telephone, trash disposaland other utilities and services supplied to the Premises, together with any taxes thereon. Upon request by Lessor, Lessee shall deliverto Lessor copies of Lessee’s utility bill in order to permit Lessor to satisfy its energy management reporting requirements.12. Assignment and Subletting.12.1 Lessor’s Consent Required. See paragraphs 53.1 through 53.7 of the Lease Addendum.13. Default; Breach; Remedies.13.1 Default; Breach. A “Default” is defined as a failure by the Lessee to comply with or perform any of the terms,covenants, conditions or Rules and Regulations under this Lease. A “Breach” is defined as the occurrence of one or more of thefollowing Defaults, and the failure of Lessee to cure such Default within any applicable grace period:(a) The abandonment of the Premises.; or the which shall be deemed to include vacating of the Premises withoutproviding a commercially reasonable level of security, or where the coverage of the property insurance described in Paragraph 68(a) isjeopardized as a result thereof, or without providing reasonable assurances to minimize potential vandalism.(b) The failure of Lessee to make any payment of Rent or any Security Deposit required to be made by Lesseehereunder, whether to Lessor or to a third party, when due, to provide reasonable evidence of insurance or surety bond, or to fulfill anyobligation under this Lease which endangers or threatens life or property, where such failure continues for a period of 3 business daysfollowing written notice to Lessee.(c) The failure by Lessee to provide (i) reasonable written evidence of compliance with Applicable Requirements, (ii)the service contracts, (iii) the rescission of an unauthorized assignment or__________INITIALSPage 16 of 26__________INITIALS©1999 – AIR COMMERCIAL REAL ESTATE ASSOCIATIONsubletting, (iv) an Estoppel Certificate, (v) a requested subordination, (vi) evidence concerning any guaranty and/or Guarantor, (vii) anydocument requested under Paragraph 41 (easements), or (viii) any other documentation or information which Lessor may reasonablyrequire of Lessee under the terms of this Lease, where any such failure continues for a period of 10 days following written notice toLessee.(d) A Default by Lessee as to the terms, covenants, conditions or provisions of this Lease, or of the rules adopted underParagraph 2.9 hereof, other than those described in subparagraphs 13.1(a), (b) or (c), above, where such Default continues for a periodof 30 days after written notice; provided, however, that if the nature of Lessee’s Default is such that more than 30 days are reasonablyrequired for its cure, then it shall not be deemed to be a Breach if Lessee commences such cure within said 30 day period and thereafterdiligently prosecutes such cure to completion.(e) The occurrence of any of the following events: (i) the making of any general arrangement or assignment for thebenefit of creditors; (ii) becoming a “debtor” as defined in 11 U.S.C. 5 101 or any successor statute thereto (unless, in the case of apetition filed against Lessee, the same is dismissed within 60 days); (iii) the appointment of a trustee or receiver to take possession ofsubstantially all of Lessee’s assets located at the Premises or of Lessee’s interest in this Lease, where possession is not restored to Lesseewithin 30 days; or (iv) the attachment, execution or other judicial seizure of substantially all of Lessee’s assets located at the Premises orof Lessee’s interest in this Lease, where such seizure is not discharged within 30 days; provided, however, in the event that anyprovision of this subparagraph (e) is contrary to any applicable law, such provision shall be of no force or effect, and not affect thevalidity of the remaining provisions.13.2 Remedies. If Lessee Breaches fails-to-perform any of its affirmative duties or obligations, within 10 days after writtennotice (or in case of an emergency, without notice), Lessor may, at its option, perform such duty or obligation on Lessee’s behalf,including but not limited to the obtaining of reasonably required bonds, insurance policies, or governmental licenses, permits orapprovals. The costs and expenses of any such performance by Lessor shall be due and payable by Lessee upon receipt of invoicetherefor. If any check given to Lessor by Lessee shall not be honored by the bank upon which it is drawn, Lessor, at its option, mayrequire all future payments to be made by Lessee to be by cashier’s check. In the event of a Breach, Lessor may, with or without furthernotice or demand, and without limiting Lessor in the exercise of any right or remedy which Lessor may have by reason of such Breach:(a) Terminate Lessee’s right to possession of the Premises by any lawful means, in which case this Lease shallterminate and Lessee shall immediately surrender possession to Lessor. In such event Lessor shall be entitled to recover from Lessee: (i)the unpaid Rent which had been earned at the time of termination; (ii) the worth at the time of award of the amount by which the unpaidrent which would have been earned after termination until the time of award exceeds the amount of such rental loss that the Lesseeproves could have been reasonably avoided; (iii) the worth at the time of award of the amount by which the unpaid rent for the balanceof the term after the time of award exceeds the amount of such rental loss that the Lessee proves could be reasonably avoided; and (iv)any other amount necessary to compensate Lessor for all the detriment proximately caused by the Lessee’s failure to perform itsobligations under this Lease or which in the ordinary course of things would be likely to result therefrom, including but not limited tothe cost of recovering possession of the Premises, expenses of reletting, including necessary renovation and alteration of the Premises,reasonable attorneys’ fees, and that portion of any leasing commission aria tenant improvements construction costs paid by Lessor inconnection with this Lease applicable to the unexpired term of this Lease. The worth at the time of award of the amount referred to inprovision (iii) of the immediately preceding sentence shall be computed by discounting such amount at the discount rate of the FederalReserve Bank of the District within which the Premises are located at the time of award plus one percent. Efforts by Lessor to mitigatedamages caused by Lessee’s__________INITIALSPage 17 of 26__________INITIALS©1999 – AIR COMMERCIAL REAL ESTATE ASSOCIATIONBreach of this Lease shall not waive Lessor’s right to recover damages under Paragraph 12. If termination of this Lease is obtainedthrough the provisional remedy of unlawful detainer, Lessor shall have the right to recover in such proceeding any unpaid Rent anddamages as are recoverable therein, or Lessor may reserve the right to recover all or any part thereof in a separate suit. If a notice andgrace period required under Paragraph 13.1 was not previously given, a notice to pay rent or quit, or to perform or quit given to Lesseeunder the unlawful detainer statute shall also constitute the notice required by Paragraph 13.1. In such case, the applicable grace periodrequired by Paragraph 13.1 and the unlawful detainer statute shall run concurrently, and the failure of Lessee to cure the Default withinthe greater of the two such grace periods shall constitute both an unlawful detainer and a Breach of this Lease entitling Lessor to theremedies provided for in this Lease and/or by said statute.(b) Continue the Lease and Lessee’s right to possession and recover the Rent as it becomes due, in which event Lesseemay sublet or assign, subject only to reasonable limitations. Acts of maintenance, efforts to relet, and/or the appointment of a receiver toprotect the Lessor’s interests, shall not constitute a termination of the Lessee’s right to possession.(c) Pursue any other remedy now or hereafter available under the laws or judicial decisions of the state wherein thePremises are located. The expiration or termination of this Lease and/or the termination of Lessee’s right to possession shall not relieveLessee from liability under any indemnity provisions of this Lease as to matters occurring or accruing during the term hereof or byreason of Lessee’s occupancy of the Premises.13.3 Inducement Recapture. Any agreement for free or abated rent or other charges, or for the giving or paying by Lessor toor for Lessee of any cash or other bonus, inducement or consideration for Lessee’s entering into this Lease, including, withoutlimitation the Allowance set forth in Paragraph 73(7), all of which concessions are hereinafter referred to as “Inducement Provisions”,shall be deemed conditioned upon Lessee’s full and faithful performance of all of the terms, covenants and conditions of this Lease.Upon Breach of this Lease by Lessee resulting in the termination of this Lease, any such Inducement Provision shall automatically bedeemed deleted from this Lease and of no further force or effect, and that percentage of any rent, other charge, bonus, inducement orconsideration theretofore abated, given or paid by Lessor under such an Inducement Provision applicable during the Lease Termremaining at the time of Lessee’s breach shall be immediately due and payable by Lessee to Lessor. The acceptance by Lessor of rentor the cure of the Breach which initiated the operation of this paragraph shall not be deemed a waiver by Lessor of the provisions of thisparagraph unless specifically so stated in writing by Lessor at the time of such acceptance.13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee of Rent will cause Lessor to incur costs notcontemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to,processing and accounting charges, and late charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent shallnot be received by Lessor within 5 days after such amount shall be due, then, without any requirement for notice to Lessee, Lessee shallpay to Lessor a one-time late charge equal to 6% 10% of each such overdue amount or $100, whichever is greater. The parties herebyagree that such late charge represents a fair and reasonable estimate of the costs Lessor will incur by reason of such late payment.Acceptance of such late charge by Lessor shall in no event constitute a waiver of Lessee’s Default or Breach with respect to suchoverdue amount, nor prevent the exercise of any of the other rights and remedies granted hereunder. In the event that a late charge ispayable hereunder, whether or not collected, for 3 consecutive installments of Base Rent, then notwithstanding any provision of thisLease to the contrary, Base Rent shall, at Lessor’s option, become due and payable quarterly in advance.__________INITIALSPage 18 of 26__________INITIALS©1999 – AIR COMMERCIAL REAL ESTATE ASSOCIATION13.5 Interest. Any monetary payment due Lessor hereunder, other than late charges, not received by Lessor, when due as toscheduled payments (such as Base Rent) or within 30 days following the date on which it was due for non-scheduled payment, shallbear interest from the date when due, as to scheduled payments, or the 31st day after it was due as to non-scheduled payments. Theinterest (“Interest”) charged shall be equal to the prime rate reported in the Wall Street Journal as published closest prior to the datewhen due plus 4%, but shall not exceed the maximum rate allowed by law. Interest is payable in addition to the potential late chargeprovided for in Paragraph 13.4.13.6 Breach by Lessor.(a) Notice of Breach. Lessor shall not be deemed in breach of this Lease unless Lessor fails within a reasonable time toperform an obligation required to be performed by Lessor. For purposes of this Paragraph, a reasonable time shall in no event be lessthan 30 days after receipt by Lessor, and any Lender whose name and address shall have been furnished Lessee in writing for suchpurpose, of written notice specifying wherein such obligation of Lessor has not been performed; provided, however, that if the nature ofLessor’s obligation is such that more than 30 days are reasonably required for its performance, then Lessor shall not be in breach ifperformance is commenced within such 30 day period and thereafter diligently pursued to completion.(b) Performance by Lessee on Behalf of Lessor. In the event that neither Lessor nor Lender cures said breach within30 days after receipt of said notice, or if having commenced said cure they do not diligently pursue it to completion, then Lessee mayelect to cure said breach at Lessee’s expense and offset from Rent an amount equal to the greater of one month’s Base Rent or theSecurity Deposit, and to pay an excess of such expense under protest, reserving Lessee’s right to reimbursement from Lessor. Lesseeshall document the cost of said cure and supply said documentation to Lessor.14. Condemnation. If the Premises or any portion thereof are taken under the power of eminent domain or sold under the threat ofthe exercise of said power (collectively “Condemnation”), this Lease shall terminate as to the part taken as of the date the condemningauthority takes title or possession, whichever first occurs. If more than 10% of the floor area of the Unit, or more than 25% of Lessee’sReserved Parking Spaces, is taken by Condemnation, Lessee may, at Lessee’s option, to be exercised in writing within 10 days afterLessor shall have given Lessee written notice of such taking (or in the absence of such notice, within 10 days after the condemningauthority shall have taken possession) terminate this Lease as of the date the condemning authority takes such possession. If Lesseedoes not terminate this Lease in accordance with the foregoing, this Lease shall remain in full force and effect as to the portion of thePremises remaining, except that the Base Rent shall be reduced in proportion to the reduction in utility of the Premises caused by suchCondemnation. Condemnation awards and/or payments shall be the property of Lessor, whether such award shall be made ascompensation for diminution in value of the leasehold, the value of the part taken, or for severance damages; provided, however, thatLessee shall be entitled to any compensation for Lessee’s relocation expenses, loss of business goodwill and/or Trade Fixtures, withoutregard to whether or not this Lease is terminated pursuant to the provisions of this Paragraph. All Alterations and Utility Installationsmade to the Premises by Lessee, for purposes of Condemnation only, shall be considered the property of the Lessee and Lessee shall beentitled to any and all compensation which is payable therefor. In the event that this Lease is not terminated by reason of theCondemnation, Lessor shall repair any damage to the Premises caused by such Condemnation.15. Brokerage Fees.15.3 Representations and Indemnities of Broker Relationships. Lessee and Lessor each represent and warrant to the otherthat it has had no dealings with any person, firm, broker or finder (other than the Brokers,__________INITIALSPage 19 of 26__________INITIALS©1999 – AIR COMMERCIAL REAL ESTATE ASSOCIATIONif any) in connection with this Lease, and that no one other than said named Brokers is entitled to any commission or finder’s fee inconnection herewith. Lessee and Lessor do each hereby agree to indemnify, protect, defend and hold the other harmless from andagainst liability for compensation or charges which may be claimed by any such unnamed broker, finder or other similar party byreason of any dealings or actions of the indemnifying Party, including any costs, expenses, attorneys’ fees reasonably incurred withrespect thereto.16. Estoppel Certificates. See paragraphs 54, 71, and 72 of the Lease Addendum.17. Definition of Lessor. The term “Lessor” as used herein shall mean the owner or owners at the time in question of the fee title tothe Premises, or, if this is a sublease, of the Lessee’s interest in the prior lease. In the event of a transfer of Lessor’s title or interest in thePremises or this Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit) any unused Security Deposit held byLessor. Except as provided in Paragraph 15, upon such transfer or assignment and delivery of the Security Deposit, as aforesaid, theprior Lessor shall be relieved of all liability with respect to the obligations and/or covenants under this Lease thereafter to be performedby the Lessor. Subject to the foregoing, the obligations and/or covenants in this Lease to be performed by the Lessor shall be bindingonly upon the Lessor as hereinabove defined. Notwithstanding the above, and subject to the provisions of Paragraph 20 below, theoriginal Lessor under this Lease, and all subsequent holders of the Lessor’s interest in this Lease shall remain liable and responsiblewith regard to the potential duties and liabilities of Lessor pertaining to Hazardous Substances as outlined in Paragraph 6.2 above.18. Severability. The invalidity of any provision of this Lease, as determined by a court of competent jurisdiction, shall in no wayaffect the validity of any other provision hereof.19. Days. Unless otherwise specifically indicated to the contrary, the word “days” as used in this Lease shall mean and refer tocalendar days.20. Limitation on Liability. Subject to the provisions of Paragraph 17 above, the obligations of Lessor under this Lease shall notconstitute personal obligations of Lessor, the individual partners of Lessor or its or their individual partners, directors, officers orshareholders, and Lessee shall look to the Premises, and to no other assets of Lessor, for the satisfaction of any liability of Lessor withrespect to this Lease, and shall not seek recourse against the individual partners of Lessor, or its or their individual partners, directors,officers or shareholders, or any of their personal assets for such satisfaction.21. Time of Essence. Time is of the essence with respect to the performance of all obligations to be performed or observed by theParties under this Lease.22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all agreements between the Parties with respect to anymatter mentioned herein, and no other prior or contemporaneous agreement or understanding shall be effective. Lessor and Lessee eachrepresents and warrants to the Brokers that it has made, and is relying solely upon, its own investigation as to the nature, quality,character and financial responsibility of the other Party to this Lease and as to the use, nature, quality and character of the Premises.Brokers have no responsibility with respect thereto or with respect to any default or breach hereof by either Party. The liability(including court costs and attorneys’ fees), of any Broker with respect to negotiation, execution, delivery or performance by eitherLessor or Lessee under this Lease or any amendment or modification hereto shall be limited to an amount up to the fee received bysuch Broker pursuant to this Lease; provided, however, that the foregoing limitation on each Broker’s liability shall not be applicable toany gross negligence or willful misconduct of such Broker.23. Notices.__________INITIALSPage 20 of 26__________INITIALS©1999 – AIR COMMERCIAL REAL ESTATE ASSOCIATION23.1 Notice Requirements. All notices required or permitted by this Lease or applicable law shall be in writing and may bedelivered in person (by hand or by courier) or may be sent by regular, certified or registered mail or U.S. Postal Service Express Mail,with postage prepaid, or by facsimile transmission, and shall be deemed sufficiently given if served in a manner specified in thisParagraph 23. The addresses noted adjacent to a Party’s signature on this Lease shall be that Party’s address for delivery or mailing ofnotices. Either Party may by written notice to the other specify a different address for notice, except that upon Lessee’s takingpossession of the Premises, the Premises shall constitute Lessee’s address for notice. A copy of all notices to Lessor shall beconcurrently transmitted to such party or parties at such addresses as Lessor may from time to time hereafter designate in writing.23.2 Date of Notice. Any notice sent by registered or certified mail, return receipt requested, shall be deemed given on thedate of delivery shown on the receipt card, or if no delivery date is shown, the postmark thereon. If sent by regular mail the notice shallbe deemed given three (3) business days after the same is addressed as required herein and mailed with postage prepaid. Noticesdelivered by United States Express Mail or overnight courier that guarantee next day delivery shall be deemed given one (1) businessday after delivery of the same to the Postal Service or courier. If notice is received on a Saturday, Sunday or legal holiday, it shall bedeemed received on the next business day.24. Waivers. No waiver by Lessor of the Default or Breach of any term, covenant or condition hereof by Lessee, shall be deemed awaiver of any other term, covenant or condition hereof, or of any subsequent Default or Breach by Lessee of the same or of any otherterm, covenant or condition hereof. Lessor’s consent to, or approval of, any act shall not be deemed to render unnecessary theobtaining of Lessor’s consent to, or approval of, any subsequent or similar act by Lessee, or be construed as the basis of an estoppel toenforce the provision or provisions of this Lease requiring such consent. The acceptance of Rent by Lessor shall not be a waiver of anyDefault or Breach by Lessee. Any payment by Lessee may be accepted by Lessor on account of moneys or damages due Lessor,notwithstanding any qualifying statements or conditions made by Lessee in connection therewith, which such statements and/orconditions shall be of no force or effect whatsoever unless specifically agreed to in writing by Lessor at or before the time of deposit ofsuch payment.26. No Right to Holdover. See Paragraph 77 of the Lease Addendum.27. Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulativewith all other remedies at law or in equity.28. Covenants and Conditions; Construction of Agreement. All provisions of this Lease to be observed or performed by Lessee areboth covenants and conditions. In construing this Lease, all headings and titles are for the convenience of the Parties only and shall notbe considered a part of this Lease. Whenever required by the context, the singular shall include the plural and vice versa. This Leaseshall not be construed as if prepared by one of the Parties, but rather according to its fair meaning as a whole, as if both Parties hadprepared it.29. Binding Effect; Choice of Law. This Lease shall be binding upon the parties, their personal representatives, successors andassigns and be governed by the laws of the State in which the Premises are located. Any litigation between the Parties hereto concerningthis Lease shall be initiated in the county in which the Premises are located.30. Subordination; Attornment; Non-Disturbance.30.1 Subordination. This Lease and any Option granted hereby shall be subject and subordinate to any ground lease,mortgage, deed of trust, or other hypothecation or security device (collectively, “Security__________INITIALSPage 21 of 26__________INITIALS©1999 – AIR COMMERCIAL REAL ESTATE ASSOCIATIONDevice”), now or hereafter placed upon the Premises, to any and all advances made on the security thereof, and to all renewals,modifications, and extensions thereof. Lessee agrees that the holders of any such Security Devices (in this Lease together referred to as“Lender”) shall have no liability or obligation to perform any of the obligations of Lessor under this Lease. Any Lender may elect tohave this Lease and/or any Option granted hereby superior to the lien of its Security Device by giving written notice thereof to Lessee,whereupon this Lease and such Options shall be deemed prior to such Security Device, notwithstanding the relative dates of thedocumentation or recordation thereof.30.2 Attornment. In the event that Lessor transfers title to the Premises, or the Premises are acquired by another upon theforeclosure or termination of a Security Device to which this Lease is subordinated (i) Lessee shall, subject to the non-disturbanceprovisions of Paragraph 30.3, attorn to such new owner, and upon request, enter into a new lease, containing all of the terms andprovisions of this Lease, with such new owner for the remainder of the term hereof, or, at the election of such new owner, this Leaseshall automatically become a new Lease between Lessee and such new owner, upon all of the terms and conditions hereof, for theremainder of the term hereof, and (ii) Lessor shall thereafter be relieved of any further obligations hereunder and such new owner shallassume all of Lessor’s obligations hereunder, except that such new owner shall not: (a) be liable for any act or omission of any priorlessor or with respect to events occurring prior to acquisition of ownership; (b) be subject to any offsets or defenses which Lessee mighthave against any prior lessor, (c) be bound by prepayment of more than one month’s rent, or (d) be liable for the return of any securitydeposit paid to any prior lessor.30.3 Non-Disturbance. With respect to Security Devices entered into by Lessor after the execution of this Lease, Lessee’ssubordination of this Lease shall be subject to receiving a commercially reasonable non-disturbance agreement (a “Non-DisturbanceAgreement”) from the Lender which Non-Disturbance Agreement provides that Lessee’s possession of the Premises, and this Lease,including any options to extend the term hereof, will not be disturbed so long as Lessee is not in Breach hereof and attorns to the recordowner of the Premises. Further, within 60 days after the execution of this Lease, Lessor shall use its commercially reasonable efforts toobtain a Non-Disturbance Agreement from the holder of any pre-existing Security Device which is secured by the Premises. In theevent that Lessor is unable to provide the Non-Disturbance Agreement within said 60 days, then Lessee may, at Lessee’s option,directly contact Lender and attempt to negotiate for the execution and delivery of a Non-Disturbance Agreement.30.4 Self-Executing. The agreements contained in this Paragraph 30 shall be effective without the execution of any furtherdocuments; provided, however, that, upon written request from Lessor or a Lender in connection with a sale, financing or refinancingof the Premises, Lessee and Lessor shall execute such further writings as may be reasonably required to separately document anysubordination, attornment and/or Non-Disturbance Agreement provided for herein.31. Attorneys’ Fees. If any Party or Broker brings an action or proceeding involving the Premises whether founded in tort, contractor equity, or to declare rights hereunder, the Prevailing Party (as hereafter defined) in any such proceeding, action, or appeal thereon,shall be entitled to reasonable attorneys’ fees. Such fees may be awarded in the same suit or recovered in a separate suit, whether or notsuch action or proceeding is pursued to decision or judgment. The term, “Prevailing Party” shall include, without limitation, a Party orBroker who substantially obtains or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or theabandonment by the other Party or Broker of its claim or defense. The attorneys’ fees award shall not be computed in accordance withany court fee schedule, but shall be such as to fully reimburse all attorneys’ fees reasonably incurred. In addition, Lessor shall beentitled to attorneys’ fees, costs and expenses incurred in the preparation and service of notices of Default and consultations inconnection therewith, whether__________INITIALSPage 22 of 26__________INITIALS©1999 – AIR COMMERCIAL REAL ESTATE ASSOCIATIONor not a legal action is subsequently commenced in connection with such Default or resulting Breach ($200 is a reasonable minimumper occurrence for such services and consultation).32. Lessor’s Access; Showing Premises; Repairs. Lessor and Lessor’s agents shall have the right to enter the Premises at any time, inthe case of an emergency, and otherwise upon not less than one (1) business day’s prior notice, for the purpose of showing the same toprospective purchasers, lenders, or during the last 12 months of the Lease Term, tenants, and making such alterations, repairs,improvements or additions to the Premises as Lessor may deem necessary. All such activities shall be without abatement of rent orliability to Lessee. Lessor may at any time place on the Premises any ordinary “For Sale” signs and Lessor may during the last 6 monthsof the term hereof place on the Premises any ordinary “For Lease” signs. Lessee may at any time place on the Premises any ordinary“For Sublease” sign.33. Auctions. Lessee shall not conduct, nor permit to be conducted, any auction upon the Premises without Lessor’s prior writtenconsent. Lessor shall not be obligated to exercise any standard of reasonableness in determining whether to permit an auction.34. Signs. Except for ordinary “For Sublease” signs which may be placed only on the Premises, Lessee shall not place any sign uponthe Project without Lessor’s prior written consent. All signs must comply with all Applicable Requirements and Lessor’s Sign Criteria, acopy of which is attached hereto as Exhibit “D”. Lessee shall have exclusive right to all signage on the Building’s exterior.35. Termination; Merger. Unless specifically stated otherwise in writing by Lessor, the voluntary or other surrender of this Lease byLessee, the mutual termination or cancellation hereof, or a termination hereof by Lessor for Breach by Lessee, shall automaticallyterminate any sublease or lesser estate in the Premises; provided, however, that Lessor may elect to continue any one or all existingsubtenancies. Lessor’s failure within 10 days following any such event to elect to the contrary by written notice to the holder of anysuch lesser interest, shall constitute Lessor’s election to have such event constitute the termination of such interest.36. Consents. Except as otherwise provided herein, wherever in this Lease the consent of a Party is required to an act by or for theother Party, such consent shall not be unreasonably withheld or delayed. Lessor’s actual reasonable out-of-pocket costs and expenses(including but not limited to architects’, attorneys’, engineers’ and other consultants’ fees) incurred in the consideration of, or responseto, a request by Lessee for any Lessor consent, including but not limited to consents to an assignment, a subletting or the presence oruse of a Hazardous Substance, shall be paid by Lessee upon receipt of an invoice and supporting documentation therefor. Lessor’sconsent to any act, assignment or subletting shall not constitute an acknowledgment that no Default or Breach by Lessee of this Leaseexists, nor shall such consent be deemed a waiver of any then existing Default or Breach, except as may be otherwise specifically statedin writing by Lessor at the time of such consent. The failure to specify herein any particular condition to Lessors consent shall notpreclude the imposition by Lessor at the time of consent of such further or other conditions as are then reasonable with reference to theparticular matter for which consent is being given. In the event that either Party disagrees with any determination made by the otherhereunder and reasonably requests the reasons for such determination for such determination, the determining party shall furnish itsreasons in writing and in reasonable detail within 10 business days following such request.38. Quiet Possession. Subject to payment by Lessee of the Rent and performance of all of the covenants, conditions and provisionson Lessee’s part to be observed and performed under this Lease, Lessee shall have quiet possession and quiet enjoyment of thePremises during the term hereof.39. Options. See paragraph 60 of the Lease Addendum.__________INITIALSPage 23 of 26__________INITIALS©1999 – AIR COMMERCIAL REAL ESTATE ASSOCIATION40. Security Measures. Lessee hereby acknowledges that the Rent payable to Lessor hereunder does not include the cost of guardservice or other security measures, and that Lessor shall have no obligation whatsoever to provide same. Lessee assumes allresponsibility for the protection of the Premises, Lessee, its agents and invitees and their property from the acts of third parties.41. Reservations. Lessor reserves the right: (i) to grant, without the consent or joinder of Lessee, such easements, rights anddedications that Lessor deems necessary, (ii) to cause the recordation of parcel maps and restrictions, and (iii) to create and/or installnew utility raceways, so long as such easements, rights, dedications, maps, restrictions, and utility raceways do not unreasonablyinterfere with the use of the Premises by Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to effectuate suchrights.42. Performance Under Protest. If at any time a dispute shall arise as to any amount or sum of money to be paid by one Party to theother under the provisions hereof, the Party against whom the obligation to pay the money is asserted shall have the right to makepayment “under protest” and such payment shall not be regarded as a voluntary payment and there shall survive the right on the part ofsaid Party to institute suit for recovery of such sum. If it shall be adjudged that there was no legal obligation on the part of said Party topay such sum or any part thereof, said Party shall be entitled to recover such sum or so much thereof as it was not legally required topay.43. Authority. If either Party hereto is a corporation, trust, limited liability company, partnership, or similar entity, such entityrepresents and warrants that the individual executing this Lease on its behalf is duly authorized to execute and deliver this Lease on itsbehalf. Each party shall, within 30 days after request, deliver to the other party satisfactory evidence of such authority.44. Conflict. Any conflict between the printed provisions of this Lease and the typewritten or handwritten provisions shall becontrolled by the typewritten or handwritten provisions.45. Offer. Preparation of this Lease by either party or their agent and submission of same to the other Party shall not be deemed anoffer to lease to the other Party. This Lease is not intended to be binding until executed and delivered by all Parties hereto.46. Amendments. This Lease may be modified only in writing, signed by the Parties in interest at the time of the modification. Aslong as they do not materially change Lessee’s obligations hereunder, Lessee agrees to make such reasonable non-monetarymodifications to this Lease as may be reasonably required by a Lender in connection with the obtaining of normal financing orrefinancing of the Premises.47. Multiple Parties. If more than one person or entity is named herein as either Lessor or Lessee, such multiple Parties shall havejoint and several responsibility to comply with the terms of this Lease.48. Waiver of Jury Trial. The Parties hereby waive their respective rights to trial by jury in any action or proceeding involving theProperty or arising out of this Agreement.49. Mediation and Arbitration of Disputes. An Addendum requiring the Mediation and/or the Arbitration of all disputes between theParties and/or Brokers arising out of this Lease ¨ is þ is not attached to this Lease.50. Accessibility: Americans with Disabilities Act.(a) The Premises: (X) have not undergone an inspection by a Certified Access Specialist (CASp). ( ) have undergone aninspection by a Certified Access Specialist (CASp) and it was determined that the Premises__________INITIALSPage 24 of 26__________INITIALS©1999 – AIR COMMERCIAL REAL ESTATE ASSOCIATIONmet all applicable construction-related accessibility standards pursuant to California Civil Code §55.51 et seq. ( ) have undergone aninspection by a Certified Access Specialist (CASp) and it was determined that the Premises did not meet all applicable construction-related accessibility standards pursuant to California Civil Code §55.51 et seq.(b) Since compliance with the Americans with Disabilities Act (ADA) is dependent upon Lessee’s specific and unique use ofthe Premises, except as set forth in Paragraph 2.3, Lessor makes no warranty or representation as to whether or not the Premises complywith ADA or any similar legislation. In the event that Lessee’s specific and unique use of the Premises requires modifications oraddition to the Premises in order to be in ADA compliance, Lessee agrees to make any such necessary modifications and/or additions atLessee’s expense.LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISIONCONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARYCONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMSOF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSORAND LESSEE WITH RESPECT TO THE PREMISES.ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AIR COMMERCIAL REAL ESTATEASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCESOF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO:1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE PREMISES.SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE OF HAZARDOUSSUBSTANCES, THE ZONING OF THE PREMISES, THE STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOFAND OPERATING SYSTEMS, COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT AND THESUITABILITY OF THE PREMISES FOR LESSEE’S INTENDED USE.WARNING: IF THE PREMISES ARE LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS OFTHE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE STATE IN WHICH THE PREMISESARE LOCATED.The parties hereto have executed this Lease at the place and on the dates specified above their respective signatures.Executed at: Newport Beach, CAExecuted at: 16275 Laguna Canyon Rd, #16,On: 11-11-15Irvine, CA 92618On: November 10, 2015By LESSOR:By LESSEE:THE NORTHWESTERN MUTUAL LIFEMAXLINEAR, INC., a Delaware corporationINSURANCE COMPANY, a WisconsinCorporationBy: Northwestern Mutual Investment ManagementBy: /s/ Adam C. Spice__________INITIALSPage 25 of 26__________INITIALS©1999 – AIR COMMERCIAL REAL ESTATE ASSOCIATIONCompany, LLC, a Delaware limited liabilityName Printed: Adam C Spicecompany, its wholly-owned affiliateTitle: CFOBy: /s/ Don MortonBy: Name Printed: Don MortonName Printed: Title: Director – Asset Mgmt.Title: Address: By: Telephone: 760-692-0711Name Printed: Facsimile: 760-444-8596Title: Federal ID No. 14-1896129Address: Telephone: (___) Facsimile: (___) Federal ID No. BROKER:BROKER: Att: Att: Title: Title: Address:. Address: Telephone: (___) Telephone: (___) Facsimile: (___) Facsimile: (___) Federal ID No. Federal ID No. These forms are often modified to meet changing requirements of law and needs of the industry. Always write or call to makesure you are utilizing the most current form: AIR Commercial Real Estate Association, 700 South Flower Street, Suite 600, LosAngeles, CA 90017. (213) 687-8777.©Copyright 1999 By AIR Commercial Real Estate Association.All rights reserved.No part of these works may be reproduced in any form without permission in writing.__________INITIALSPage 26 of 26__________INITIALS©1999 – AIR COMMERCIAL REAL ESTATE ASSOCIATIONLEASE ADDENDUM(NET LEASE - MULTI-TENANT)This Addendum to the Lease dated November 4, 2015, made by and between The Northwestern Mutual Life InsuranceCompany (“Lessor”) and MaxLinear, Inc. (“Lessee”) for certain premises located at 50 Parker, Irvine, CA (the “Premises”) (this“Addendum”), is hereby incorporated into the Lease. Capitalized terms used but not defined herein shall have the meaning ascribed tosuch terms in the Lease. The provisions of the Lease are modified as set forth below. In the event of any inconsistency between thisAddendum and the Lease, the terms of this Addendum shall prevail.50. PREMISES SIZE. Lessor and Lessee acknowledge that they have stipulated to the area of the Premises and that theactual size of such area is not subject to dispute. Lessee agrees that Lessor shall have no liability in the event that the size of thePremises is other than the amount specified and Lessee shall have no right to terminate this Lease should such discrepancy bediscovered. Lessor agrees not to charge Lessee additional Operating Expenses or Rent due to a re-measurement of the Premises.51. NO PAYMENT TO LESSEE IF LESSEE IN DEFAULT. In the event of any Breach by Lessee under any provisionof this Lease, then notwithstanding any provision of this Lease to the contrary which requires Lessor to make any payment to Lessee,Lessor shall not be obligated to make such payment to Lessee, but may instead apply the amount of such payment against Rent orAdditional Rent past due; and against any costs incurred by Lessor to cure any default by Lessee.52. USE OF THE PREMISES.52.1 Compliance. Lessor shall deliver the Premises to Lessee on the Commencement Date in compliance withall municipal, county and state laws, ordinances and regulations governing and regulating the use of the Premises. Lesseeacknowledges its lease of the Premises is subject to all applicable zoning, municipal, county and state laws, ordinances and regulationsgoverning and regulating the use of the Premises, and any covenants or restrictions of record, and accepts this Lease subject thereto andto all matters disclosed thereby and by any exhibits attached hereto. Lessee shall not use the Premises which will in any way conflictwith any law, statute, zoning restriction, ordinance or governmental law, rule, regulation or requirement of any duly constituted publicauthority having jurisdiction over the Premises now in force or which may hereafter be in force, or any covenants, conditions,easements or restrictions now or hereafter encumbering the Premises. Lessee shall not commit any public or private nuisance or anyother act or thing that might or would disturb the quiet enjoyment or any other Lessee of Lessor or any occupant of nearby property.Lessee shall place no loads upon the floors, walls or ceilings in excess of the maximum designed load specified by Lessor or whichmay damage the building or outside areas; nor place any harmful liquids in the drainage systems; nor dump or store waste materials,refuse or other materials or allow such to remain outside the building, except in the enclosed trash areas provided.52.2 Compliance With Governmental Regulations. Notwithstanding anything to the contrary set forth in thisLease, if and to the extent modifications or improvements to the structure of the Premises or any portion thereof or to any fireprevention or other emergency system are deemed necessary by any governmental authority or Applicable Requirements, Lessor shallmake such modifications and improvements and Lessee shall cooperate with Lessor in the making of any such modifications orimprovements. Notwithstanding the foregoing sentence, Lessor shall not be responsible for the costs and expenses of suchmodifications or improvements in the event that such improvements or modifications are required after the Commencement Date as theresult of Lessee’s specific and unique use of the Premises or conduct including, but_____Lessee Initials _____Lessor Initialsnot limited to, Lessee’s alterations, improvements or modifications of the Premises. In the event that any alterations, modifications orimprovements undertaken by either party pursuant to this Section result in any interruption of the business of Lessee, Lessor shall haveno liability to Lessee for such interruption and Lessee shall be limited to such business interruption insurance coverage, if any, as it mayelect to carry.52.3 Lessee ADA Obligations. Lessor shall deliver the Premises to Lessee on the Commencement Date incompliance with the requirements of Title III of the Americans with Disabilities Act of 1990 (42 U.S.C. 12181, et seq., the ProvisionsGoverning Public Accommodations and Services Operated by Private Entities) (hereinafter collectively referred to as the “ADA”). At alltimes during the term of this Lease following the Commencement Date, Subject to the provisions of Paragraph 2.3 of this Lease, Lessee,at Lessee’s sole cost and expense, shall cause the Premises, and all alterations and improvements in the Premises, and Lessee’s use andoccupancy of the Premises, and Lessee’s performance of its obligations under this Lease, to comply with the ADA, and all regulationspromulgated thereunder, and all amendments, revisions or modifications thereto now or hereafter adopted or in effect in connectiontherewith and to take such actions and make such alterations and improvements as are necessary for such compliance; provided,however, that Lessee shall not make any such alterations or improvements except upon Lessor’s prior written consent pursuant to theterms and conditions of this Lease. If Lessee fails to diligently take such actions or make such alterations or improvements as arenecessary for such compliance, Lessor may, but shall not be obligated to, take such actions and make such alterations andimprovements and may recover all of the costs and expenses of such actions, alterations and improvements from Lessee as additionalrent. No act or omission of Lessor, including any approval, consent or acceptance by Lessor or Lessor’s agents, employees or otherrepresentatives, shall be deemed an agreement, acknowledgment, warranty or other representation by Lessor that Lessee has compliedwith the ADA or that any action, alteration or improvement by Lessee complies or will comply with the ADA or constitutes a waiver byLessor of Lessee’s obligations to comply with the ADA under this Lease or otherwise. Notwithstanding anything to the contrary setforth herein, Lessor shall be responsible for all compliance with law requirements, including compliance with the ADA, relating to theexterior of the Building and Common Areas, and the construction of the Base Building Improvements and the Lessee Improvements.Notwithstanding anything to the contrary herein, any upgrades to the Building or the exterior areas required to bring the Premises intocompliance with building codes, including the ADA requirements, that are triggered by the Base Building Improvements and/or werenot in compliance with law prior to the Commencement Date shall be performed at Lessor’s sole cost and expense, and shall not befunded or paid for out of the Allowance. From and after completion of the Base Building Improvements and the Lessee Improvements,Lessee shall be responsible for compliance with law requirements due to Lessee’s particular use of the Premises, including compliancewith the ADA, arising from all future improvements, Utility Installations, and Alterations made by Lessee and from any change in useby Lessee.52.4 Forklift Restrictions. Asphaltic cement cannot withstand noninflatable forklift tires. In the event the slab isdamaged by Lessee’s use of a forklift with noninflatable tires, it shall be Lessee’s obligation to repair the damaged asphaltic cement atLessee’s sole expense.52.5 Battery Chargers. Battery charging units not equipped with an automatic shut-off feature can causesubstantial and expensive damage to warehouse floors resulting from battery acid spills from over-charged batteries. Lesseeacknowledges and agrees that Lessee shall be solely and fully liable for the expense of repair or replacement of floors within thePremises, including concrete slab floors, required as a result of damage caused by battery charging units installed by or used by Lessee.In order to reduce the risk that any such damage shall occur, all battery charging units operated or maintained by Lessee at the Premisesshall be equipped with an original equipment automatic shut-off feature, or shall have an after-market automatic shut-off device addedthereto._____Lessee Initials2_____Lessor Initials52.6 Department of Treasury Restrictions. Lessee warrants and represents to Lessor that Lessee and all personsand entities (i) owning (directly or indirectly) an ownership interest in Lessee, (ii) whom or which are an assignee of Lessee’s interest inthis Lease; (iii) whom or which are a guarantor of Lessee’s obligations under this Lease; or (iv) executing any separate indemnityagreement in favor of Lessee in connection with this Lease or with the leasing of the Premises: (a) is not, and shall not become, a personor entity with whom Lessor is restricted from doing business with under regulations of the Office of Foreign Asset Control (“OFAC”) ofthe Department of Treasury (including, but not limited to, those named on OFAC’s Specifically Designated and Blocked Persons list) orunder any statute, executive order (including, but not limited to, the September 24, 2001, Executive Order Blocking Property andProhibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism), or other governmental action, (b) isnot knowingly engaged in, and shall not knowingly engage in any dealings or transaction or be otherwise associated with such personsor entities described in clause (a) above; and (c), is not, and shall not become, a person or entity whose activities are regulated by theInternational Money Laundering Abatement and Financial Anti-Terrorism Act of 2001 or the regulations or orders thereunder.52.7 Mold and Mildew Control. Lessee shall not use the Premises in any manner that will cause mold, mildewor similar conditions to arise at the Premises. Lessee shall keep all ice and coffee machines that Lessee places in the Premises in goodcondition and repair and immediately remove any water discharged or spilled from such ice or coffee machines. Lessee shall regularlymonitor the Premises for the presence of mold or mildew or any conditions that can reasonably be expected to contribute to the growthof mold or mildew and shall immediately report to Lessor (i) any evidence of a water leak or excessive moisture in the Premises, and (ii)any evidence of mold or mildew in the Premises. Lessee shall indemnify and hold Lessor harmless from any cost or expense incurredby Lessor in order to remove or eradicate any mold, mildew or similar condition at the Premises caused by Lessee’s Breach of itsobligations under this Paragraph 52.7.52.8 Lender’s Request for Lessor’s Consent. If at any time during the Lease Term, or any extension thereof,Lessee shall make and enter into any secured financing or other transaction in which a lender to Lessee shall request the consent of theLessor to the granting of a security interest by Lessee in any assets of Lessee that may be located at the Premises, together with Lessor’sconsent to permit such lender access to the Premises for the purpose of assembling and/or selling any such collateral, Lessor will enterinto a Landlord’s Waiver and Consent in the form attached hereto as Exhibit “E” (“the “Approved Consent Form”). In the event Lesseenonetheless requests Lessor to modify the Approved Consent Form or enter into a form provided by Lessee’s Lender, such request shallbe in writing and shall be accompanied by the fee referred to below. As a condition to Lessor’s requirement to consider any requestfrom Lessee for such consent, Lessee shall first pay to Lessor, as Additional Rent, the sum of $2,500.00 as a fixed fee to compensateLessor for expenses to be incurred by Lessor in reviewing such request and preparing such Landlord’s Waiver and Consent (whether ornot Lessor and Lessee actually execute any such instrument), the parties hereto agreeing that such sum is a reasonable approximation ofthe cost of Northwestern’s expenses relating thereto, the exact cost thereof being impractical to determine. Lessee acknowledges andagrees that Lessor is under no obligation whatsoever to modify such Approved Consent Form or enter into any such agreement on aform supplied by any lender to Lessee._____Lessee Initials3_____Lessor Initials(1152.9 Intentionally Deleted.52.10 Use of the HVAC. Lessee shall be entitled to operate the building-standard HVAC equipment servingthe Premises and any specialized air conditioning / air handling equipment or systems installed in the Premises as it relates to Tenant’selectronics laboratory and server room at no additional after-hours charge to Lessee, twenty-four (24) hours per day, seven (7) days perweek. All costs of electricity to operate the HVAC shall be included in the utilities bill that Lessee is responsible to separately contractfor under the Lease.53. ASSIGNMENT AND SUBLETTING.53.1 Consent Required. Lessee shall not, without the prior written consent of Lessor, assign, transfer, convey,mortgage, pledge, hypothecate or encumber this Lease or any interest herein, sublease the Premises or any part thereof or any right orprivilege appurtenant thereto, or permit the use or occupancy of the Premises by any other person other than Lessee and Lessee’srepresentatives and invitees or Permitted Transferees. Each of the foregoing acts, transactions and events are sometimes referred toherein as a “Transfer.” The person in whose favor such Transfer is made is sometimes referred to herein as a “Transferee.” If Lesseeshall complete any Transfer without such consent the Transfer shall be void and shall constitute a material default and breach of thisLease by Lessee. This Lease or any interest herein shall not be assignable or otherwise transferable by operation of law, as to theinterest of Lessee, without the prior written consent of Lessor and any such assignment or other Transfer shall be void and shall be amaterial default and breach of this Lease by Lessee.53.2 Request for Transfer. If at any time during the Lease Term, or any extension thereof, Lessee desires theconsent of the Lessor to a Transfer of this Lease, Lessee’s request to Lessor for such consent shall be in writing and shall include theinformation and documents described below, hereinafter referred to as “Lessee’s Request for Transfer”. Lessee agrees to pay Lessor, asAdditional Rent, all expenses reasonably incurred by Lessor in reviewing any information in order to determine whether consent to arequested Transfer should be given (whether or not such consent is given) in an amount not to exceed $500.00, including, but notlimited to, costs and expenses incurred for credit investigations, reasonable attorneys’ fees and the costs of preparation of any necessarydocuments. The information and documents to be included with Lessee’s Request for Transfer are as follows:(a) A statement that Lessee requests consent to the proposed Transfer and the type of Transferproposed;(b) The name of the proposed Transferee;(c) The nature of the use or business to be carried on in the Premises by the proposed Transferee;(d) A description of the area of the Premises to be covered by the Transfer;_____Lessee Initials4_____Lessor Initials(e) The terms and provisions of the proposed Transfer including a copy of the proposed document ofTransfer and any other agreements to be entered into concurrently therewith;(f) Such financial information as Lessor may reasonably request concerning the proposed Transferee;and(g) To the extent that the proposed Transfer is other than an assignment or sublease, the informationdescribed in (a) through (f) above shall be modified to correspond to the type of Transfer for which consent is requested.53.3 Lessor’s Option. Within twenty (20) calendar days after Lessor’s receipt of Lessee’s Request for Transfer,Lessor may, in its reasonable discretion, exercise either of the options described below by providing written notice to Lessee of Lessor’selection. If for any reason, Lessor fails to give Lessee written notice of Lessor’s election as authorized by this subparagraph 53.3 withinthe said twenty (20) calendar day period, Lessor shall be deemed to have elected to consent to the Transfer. The options available toLessor are as follows:(a) Consent to the requested Transfer (subject in all circumstances to the provisions of subparagraph53.5, whether or not so expressly stated in the Notice to Lessee setting forth such consent); or(b) Withhold consent to the requested Transfer. If Lessor withholds consent, Lessor shall inform Lesseeof the reasons therefor.53.4 Lessor Entitled to Withhold Consent to Transfer in its Reasonable Discretion. Lessor shall notunreasonably withhold its consent to any Transfer.53.5 Consent Given. The provisions of this subsections (a) and (c) of this Section 53.5 shall not apply to aPermitted Transferee. Should Lessor consent to a Transfer, Lessor may impose upon such Transfer all such reasonable conditions asLessor may desire, i.e., the following conditions:(a) Lessee completing the negotiations for a valid and bona fide Transfer to the Transferee identified inLessee’s Request for Transfer within sixty (60) days after the date of Lessor’s consent and such Transfer being in accordance with allthe terms and provisions contained in Lessee’s Request for Transfer. If for any reason this condition fails, any consent given by Lessorshall be deemed of no force and effect and Lessee shall be required to again comply with all conditions of this Paragraph 53 as if noconsent had been given.(b) Lessee delivering to Lessor, prior to the earlier of the date the Transfer occurs or the date theTransferee takes possession of the Premises or any part thereof, executed originals of the document of transfer and any other agreemententered into in connection with such Transfer. If the Transfer is by way of assignment, the form of assignment shall expressly state thatthe Transferee assumes all of Lessee’s obligations under this Lease. If the Transfer is by way of sublease, the sublease shall expresslystate that: It is subject to the provisions of this Lease; it does not extend beyond the Termination Date; the sublessee’s right to transfer itsinterest in the sublease is subject to Lessor’s rights under this Paragraph 53.(c) Lessee paying to Lessor as Additional Rent under this Lease, without affecting or reducing anyother obligations of Lessee under this Lease, fifty percent (50%) of any sums of money or other economic consideration received byLessee as result of such Transfer in excess of Lessee’s Base Rent_____Lessee Initials5_____Lessor Initialsand Additional Rent (but not any loan proceeds if the Transfer is a bona fide loan), including, but not limited to: Bonuses, key moneyor the like; any payment made to Lessee by the Transferee, however denominated, which is attributed to either the amortization of thecost of any improvements made to the Premises which were paid by Lessee and are to be used by the Transferee; and, if the Transfer isa subletting, all rentals, whether so denominated or not under the sublease. All sums due Lessor pursuant to this subparagraph 53.5(c)shall, provided the Transfer is a subletting, be prorated if the sublease covers less than all of the Premises Area according to the ratiothat the Premises area transferred bears to the total Premises area. Notwithstanding the foregoing, Lessee shall be entitled to deduct fromsuch amounts payable to Lessor pursuant to this Section such reasonable costs and expenses as Lessee actually incurs in obtaining aTransferee, i.e., commissions paid to brokers in connection with such transfer, advertising costs paid by Lessee in connection with suchTransfer, the cost of any improvements made by Lessee, at its cost, for the Transferee, concessions, reasonable legal fees and similaritems. Lessee shall be obligated, however, to provide evidence to Lessor substantiating such costs and expenses to Lessor’s reasonablesatisfaction.53.6 Transfer to a Related Party. The provisions of this Section 53 to the contrary notwithstanding, Lessee shallhave the right, without Lessor’s consent, to assign or otherwise transfer this Lease, or to sublet the Premises, (i) to any parent orsubsidiary of Lessee, and (ii) to any successor to Lessee by way of merger, consolidation, sale of substantially all of Lessee’s assets orthe like (each, a “Permitted Transferee”); provided that Lessor is notified in writing of the assignment prior to the effective date thereof,unless notice is restricted due to the confidential nature of the underlying transaction, in which case such notice shall be given promptlyafter the transaction and the assignee (if Lessee is not the surviving entity) assumes in writing for the direct benefit of Lessor all ofLessee’s obligations under this Lease arising on and after the effective date of the assignment (except in the case of a sublease, theprovisions dealing with the amount of rent payable). A sale, transfer or issuance of Lessee’s capital stock shall not be deemed anassignment, subletting or any other transfer of the Lease or the Premises.53.7 No Release of Liability. No Transfer shall release Lessee of its obligations to pay the Rent and to performall the other obligations to be performed by Lessee under this Lease. The acceptance of Rent by Lessor from any person shall not bedeemed to be the waiver by Lessor of any provision of this Lease or to be a consent to any assignment or subletting. A consent to oneTransfer shall not be deemed to be a consent to any subsequent Transfer. In the event of default by a Transferee in the performance ofany of the terms of this Lease, Lessor may proceed directly against Lessee without the necessity of exhausting its remedies against theTransferee. If Lessee enters into a sublease, with or without Lessor’s consent, Lessee shall be deemed to have immediately andirrevocably assigned to Lessor, as security for Lessee’s obligations under this Lease, all subrent or other sums due to Lessee under thesublease, and Lessor, as assignee and as attorney-in-fact for Lessee, or a receiver for Lessee appointed on Lessor’s application, maycollect such subrent or other sums due and apply it towards Lessee’s obligations under this Lease, except, that, until and during thecontinuance the occurrence of a Breach by Lessee, Lessee shall have the right to collect such subrent or other sums due. Lessor may, asa condition to Lessor’s consent to any proposed sublease, require Lessee and the proposed sublessee to enter into an agreement withLessor whereby the proposed sublessee agrees: To pay subrent or all other sums due directly to Lessor upon notice from Lessor ofLessee’s default; and, notwithstanding Lessor’s receipt of subrent or other sums due, Lessor shall not be liable to the proposedsublessee for anything under the sublease or under this Lease and Lessor may pursue any remedy available to it under this Lease._____Lessee Initials6_____Lessor Initials54. NON-DISTURBANCE AND ATTORNMENT; LESSEE STATEMENT. Lessor represents that as of the date of thisLease, there is no loan encumbering the Building. [At such time during the Lease Term as Lessor shall elect to encumber the Premiseswith a deed of trust, mortgage, or other form of security agreement, Lessor shall cause such trust deed beneficiary or mortgagee tomake and enter into a form of Non-Disturbance and Attornment Agreement with Lessee in a commercially reasonable form reasonableacceptable to Lessee and such beneficiary or mortgagee and the subordination of the Lease to such loan is conditioned upon Lessee’sreceipt of such an agreement. In addition, Lessee shall within ten (10) business days following written request by Lessor execute anddeliver to Lessor any documents reasonably requested by Lessor, including estoppel certificates, in a commercially reasonable formprepared by Lessor.55. LESSEE’S REMEDIES. The obligations of Lessor do not constitute the personal obligation of the individualpartners, trustees, directors, officers or shareholders of Lessor or its constituent partners. If Lessor shall fail to perform any covenant,term or condition of this Lease upon Lessor’s part to be performed, Lessee shall be required to deliver to Lessor written notice of thesame. If, as a consequence of such default, Lessee shall recover a money judgment against Lessor, such judgment shall be satisfiedonly out of the proceeds of sale received upon execution of such judgment and levied thereon against the right, title and interest ofLessor in the Premises and out of Rent or other income from such property receivable by Lessor or out of consideration received byLessor from the sale or other disposition of all or any part of Lessor’s right, title or interest in the project of which the Premises are apart, and no action for any deficiency may be sought or obtained by Lessee.56. HAZARDOUS SUBSTANCES.(a) For purposes of this Lease, the term “Hazardous Substances” includes (i) any “hazardous material” asdefined in Section 25501(o) of the California Health and Safety Code, (ii) hydrocarbons, polychlorinated biphenyls or asbestos, and (iii)any toxic or hazardous materials, substances, wastes or materials as defined pursuant to any other present or future applicable state,federal or local law or regulation.(b) Lessee shall not cause or permit its agents, employees, invitees, licensees, or contractors to cause anyHazardous Substances to be brought upon, stored, used, generated, released or disposed of on, under, from or about the Premises(including without limitation the soil and groundwater thereunder) without the prior written consent of Lessor, which consent may begiven or withheld in Lessor’s reasonable discretion, taking into account the potential risk to person and property and the potentiallysubstantial cost of remediation. Notwithstanding the foregoing, Lessee shall have the right, without obtaining prior written consent ofLessor, to utilize within the Premises a reasonable quantity of standard office products that may contain Hazardous Substances (such asphotocopy toner, “White Out”, janitorial products, and the like), provided however, that (i) Lessee shall maintain such products in theiroriginal retail packaging, shall follow all instructions on such packaging with respect to the storage, use and disposal of such products,and shall otherwise comply with all applicable laws with respect to such products, and (ii) all of the other terms and provisions of thisParagraph 56 shall apply with respect to Lessee’s storage, use and disposal of all such products. Lessor may, in its reasonablediscretion, place such conditions as Lessor deems appropriate with respect to Lessee’s use of any such Hazardous Substances, and mayfurther require that Lessee demonstrate that any such Hazardous Substances are necessary or useful to Lessee’s business and will begenerated, stored, used and disposed of in a manner that complies with all Applicable Requirements and regulations pertaining theretoand with good business practices. Lessee understands that Lessor may utilize an environmental consultant to assist in determiningconditions of approval in connection with the storage, generation, release, disposal or use of Hazardous Substances by Lessee on orabout the Premises, and/or to conduct periodic inspections of the storage, generation, use, release and/or disposal of such HazardousSubstances by Lessee on and from the Premises, and Lessee agrees that any costs_____Lessee Initials7_____Lessor Initialsincurred by Lessor in connection therewith shall be reimbursed by Lessee to Lessor as additional rent hereunder upon demand.(c) Prior to the execution of this Lease, Lessee shall complete, execute and deliver to Lessor an EnvironmentalQuestionnaire and Disclosure Statement (the “Environmental Questionnaire”) in the form of Exhibit “F” attached hereto. The completedEnvironmental Questionnaire shall disclose all Hazardous Substances Lessee intends to bring upon, store, use, generate, release ordispose of on, under, from or about the Premises, and shall be deemed incorporated into this Lease for all purposes, and Lessor shall beentitled to rely fully on the information contained therein. In the event at any time during the Lease Term Lessee intends to bring upon,store, use, generate, release or dispose of on, under, from or about the Premises any Hazardous Materials not previously disclosed on aLessor approved Environmental Questionnaire, prior to the introduction thereof to the Premises Lessee shall deliver to Lessor forLessor’s prior approval an updated Environmental Questionnaire disclosing each such additional Hazardous Material. Only uponLessor’s written approval of said updated Environmental Questionnaire may said additional Hazardous Materials be present at thePremises; provided, however, once the presence and quantity of specific Hazardous Materials has been listed by Lessee on anEnvironmental Questionnaire required by hereby and has been approved by Lessor, Lessor shall not unreasonably withhold its approvalof substitutions of any such approved Hazardous Materials with other Hazardous Materials serving the same purpose of that for which ithas been substituted. In addition, to the extent Lessee is permitted to utilize Hazardous Substances upon the Premises, Lessee shallpromptly provide Lessor with complete and legible copies of all the following environmental documents relating thereto: reports filedpursuant to any self-reporting requirements; permit applications, permits, monitoring reports, emergency response or action plans,workplace exposure and community exposure warnings or notices and all other reports, disclosures, plans ordocuments (even those which may be characterized as confidential, subject to Lessor entering into a reasonable confidentialityagreement with respect thereto) relating to water discharges, air pollution, waste generation or disposal, and underground storage tanksfor Hazardous Substances; orders, reports, notices, listings and correspondence (even those which may be considered confidential) ofor concerning the release, investigation of, compliance, cleanup, remedial and corrective actions, and abatement of HazardousSubstances; and all complaints, pleadings and other legal documents filed by or against Lessee related to Lessee’s use, handling,storage, release and/or disposal of Hazardous Substances.(d) Lessor and its agents shall have the right, but not the obligation, to inspect, sample and/or monitor thePremises and/or the soil or groundwater thereunder at any time to determine whether Lessee is complying with the terms of thisParagraph 56, and in connection therewith Lessee shall provide Lessor with full access to all facilities, records and personnel relatedthereto. Within the 90-day period prior to the expiration of this Lease, or within the 90-day period following the early termination of thisLease as a result of Lessee’s Breach thereof, Lessor, at Lessor’s cost and expense, shall cause its environmental consultants toundertake a comprehensive environmental audit of the Premises to determine whether Hazardous Substances are located at the Premisesfor which Lessee is responsible under the terms of this Lease; provided, however, if Hazardous Substances for which Lessee isresponsible under this Lease are found to be located at the Premises, Lessee shall reimburse Lessor for the cost of said audit. If Lessee,either during the Lease Term or upon the expiration or earlier termination thereof, is not in compliance with any of the provisions of thisParagraph 56, or in the event of a release of any Hazardous Material on, under or about the Premises caused or permitted by Lessee, itsagents, employees, contractors, licensees or invitees, Lessor and its agents shall have the right at any_____Lessee Initials8_____Lessor Initialstime, but not the obligation, without limitation upon any of Lessor’s other rights and remedies under this Lease, to immediately enterupon the Premises without notice and to discharge Lessee’s obligations under this Paragraph 56 at Lessee’s expense, including withoutlimitation the taking of emergency or long-term remedial action and notwithstanding that Lessee may have already commencedremediation and/or reconstruction activities. Lessor and its agents shall endeavor to minimize interference with Lessee’s business inconnection therewith, but shall not be liable for any such interference. In addition, Lessor, at Lessee’s expense, shall have the right, butnot the obligation, to join and participate in any legal proceedings or actions initiated in connection with any claims arising out of thestorage, generation, use, release and/or disposal by Lessee or its agents, employees, contractors, licensees or invitees of HazardousSubstances on, under, from or about the Premises. In the event Lessor shall elect to perform Lessee’s obligations under this Paragraph56 as permitted above, Lessee shall reimburse Lessor all costs and expenses incurred by Lessor within twenty (20) days of receipt fromLessor of an invoice therefor, accompanied by reasonable evidence of such costs and expenses. Lessor shall have the right to providesuch invoices to Lessee monthly during the period of time that Lessor is in the process of performing such Lessee obligations hereunderin order to obtain reimbursement from Lessee of costs and expenses incurred by Lessor as of the date of each such invoice.(e) If the presence of any Hazardous Substances on, under, from or about the Premises or the Project causedby Lessee or its agents, employees, contractors, licensees or invitees or permitted in the Premises by Lessee or its agents, employees,contractors, licensees or invitees (excluding as a result of the actions or omissions of Lessor or its agents, employees, contractors,licensees or invitees) results in (i) injury to any person, (ii) injury to or any contamination of the Premises or theProject, or (iii) injury to or contamination of any real or personal property wherever situated, Lessee, at its expense, shall promptlycommence and diligently complete all actions necessary to return the Premises and the Project and any other affected real or personalproperty owned by Lessor to the condition required by Applicable Requirements and to remedy or repair any such injury orcontamination, including without limitation, any cleanup, remediation, removal, disposal, neutralization or other treatment of any suchHazardous Substances. Notwithstanding the foregoing, Lessee shall not, without Lessor’s prior written consent to the remediation andreconstruction activities to be undertaken by Lessee, which consent may be given or withheld in Lessor’s reasonable discretion, takeany remedial action in response to the presence of any Hazardous Substances on, from, under or about the Premises or the Project orany other affected real or personal property owned by Lessor or enter into any similar agreement, consent, decree or other compromisewith any governmental agency with respect to any Hazardous Substances claims; provided however, Lessor’s prior written consentshall not be necessary in the event that the presence of Hazardous Substances on, under or about the Premises or the Project or anyother affected real or personal property owned by Lessor (i) imposes an immediate threat to the health, safety or welfare of anyindividual and (ii) is of such a nature that an immediate remedial response is necessary and it is not possible to obtain Lessor’s consentbefore taking such action. In the event that the permissible levels or concentrations of Hazardous Substances are subject to ambiguousregulatory standards or different regulatory standards of governmental agencies having jurisdiction (including without limitation theState of California under Proposition 65), Lessor shall have the right to identify the applicable standard for remediation to which Lesseemust adhere in performing its obligations under this Lease. To the fullest extent permitted by law, Lessee shall indemnify, holdharmless, protect and defend (with attorneys acceptable to Lessor) Lessor and any successors to all or any portion of Lessor’s interest inthe Premises and the Project and any other real or personal property owned by Lessor from and against any and all liabilities, losses,damages, diminution in value, judgments, fines, demands, claims,_____Lessee Initials9_____Lessor Initialsrecoveries, deficiencies, costs and expenses (including without limitation attorneys’ fees, court costs and other professional expenses),whether foreseeable or unforeseeable, arising directly or indirectly out of the use, generation, storage, treatment, release, on-site or off-site disposal or transportation of Hazardous Substances on, into, from, under or about the Premises, the Building or the Project and anyother real or personal property owned by Lessor caused by Lessee, its agents, employees, contractors, licensees or invitees or permittedin the Premises by Lessee or its agents, employees, contractors, licensees or invitees (excluding as a result of the actions or omissions ofLessor or its agents, employees, contractors, licensees or invitees). Such indemnity obligation shall specifically include, withoutlimitation, the cost of any required or necessary repair, restoration, cleanup or detoxification of the Premises, the Building and theProject and any other real or personal property owned by Lessor, the preparation of any closure or other required plans, whether or notsuch action is required or necessary during the Term or after the expiration of this Lease and any loss of rental due to the inability tolease the Premises or any portion of the Building or Project as a result of such Hazardous Material or remediation thereof. If it is at anytime discovered that Hazardous Substances have been released on, into, from, under or about the Premises during the Term, and thatLessee or its agents, employees, contractors, licensees or invitees may have caused the release of a Hazardous Material on, under, fromor about the Premises, the Building or the Project or any other real or personal property owned by Lessor, Lessee shall, at Lessor’srequest, immediately prepare and submit to Lessor a comprehensive plan, subject to Lessor’s approval, specifying the actions to betaken by Lessee to return the Premises, the Building or the Project or any other real or personal property owned by Lessor to thecondition required by Applicable Requirements. Upon Lessor’s approval of such cleanup plan, Lessee shall, at its expense, and withoutlimitation of any rights and remedies of Lessor under this Lease or at law or in equity, immediately implement such plan and proceed tocleanup such Hazardous Substances in accordance with all applicable laws and as required by such plan and this Lease. The provisionsof this Paragraph 56 shall expressly survive the expiration or sooner termination of this Lease. Notwithstanding anything to the contraryherein, Lessee’s indemnity of Lessor shall not apply to any such release or presence of Hazardous Substances on the Premises causedor permitted by anyone other than Lessee and its agents, employees, contractors, licensees or invitees, and Lessee shall not beresponsible for any such costs (whether as a Common Area Operating Expense or otherwise).(f) Lessor hereby represents and warrants that it has no actual knowledge of the presence of any HazardousSubstances on, under, from or about the Premises as of the Commencement Date. To the fullest extent permitted by law, Lessor shallindemnify, hold harmless, protect and defend (with attorneys acceptable to Lessee) Lessee and any successors to all or any portion ofLessee’s interest in the Premises from and against any and all liabilities, losses, damages, judgments, fines, demands, claims, recoveries,deficiencies, costs and expenses (including without limitation attorneys’ fees, court costs and other professional expenses), whetherforeseeable or unforeseeable, arising directly or indirectly out of the use, generation, storage, treatment, release, on-site or off-sitedisposal or transportation of Hazardous Substances on, into, from, under or about the Premises, the Building or the Project caused orpermitted by Lessor, its agents, employees, contractors, licensees or invitees.57. RENT ADJUSTMENT. Monthly Base Rent during the Lease Term shall be adjusted at the times and to theamounts set forth below:_____Lessee Initials10_____Lessor InitialsMonth of Lease Term Monthly Base Rent1 - 12 $67,817.00 NNN13 - 24 $70,530.00 NNN25 - 36 $73,351.00 NNN37 - 48 $76,285.00 NNN49 - 60 $79,337.00 NNN60 - 72 $82,510.00 NNN73 - 74 $85,811.00 NNNProvided that Lessee is not at the time in material Breach under this Lease, Lessee shall be entitled to abatement of the Base Rent for thesecond (2nd) month and third (3rd) month of the Term; provided, however, Lessee shall continue to be obligated to pay Common AreaOperating Expenses, insurance, and Real Property Taxes during said months.58. NO RECORDATION. This Lease shall not be recorded.59. FORCE MAJEURE. If either Lessor or Lessee cannot perform any of its obligations (other thanLessee’s obligation to pay Rent hereunder) due to events beyond such party’s reasonable control, the time provided for performingsuch obligations shall be extended by a period of time equal to the duration of such events. Events beyond a party’s reasonable controlinclude, but are not limited to, acts of God, war, civil commotion, labor disputes, strikes, fire, flood or other casualty, shortages of laboror material, government regulation or restriction and weather conditions.60. EXTENSION OPTION. Lessee is given the option to extend the Term of this Lease on all of the terms andconditions of this Lease, except for rent and the construction Allowance, for one (1) five (5) year period (the “Extended Term”)following the expiration of the initial Term, by the giving of notice of the exercise of the option (the “Option Notice”) to Lessor at leastnine (9) months, but not more than twelve (12) months, before the expiration of the original term. Notwithstanding the above, Lesseeshall have no extension option if Lessee is in material Breach on the date of giving the Option Notice, in which event the Option Noticeshall be totally ineffective, and, if Lessee is in material Breach on the date the Extended Term is to commence, at the election of Lessor,the Extended Term shall not commence and the Lease shall expire at the end of the then effective Term. In addition, the option grantedhereby is personal to the original Lessee named in paragraph 1.1 of this Lease, and cannot be voluntarily or involuntarily assigned orexercised by any person or entity other than said original Lessee. The option granted to Lessee and any Permitted Transferee hereby isnot assignable, either as part of an assignment of this Lease or apart therefrom, and said option may not be separated from this Lease inany manner, by reservation or otherwise.Base Rent for the five (5)-year option period shall be at one hundred percent (100%) of the prevailing market rental ratein the area determined in the manner described below. In determining the fair market rental rate, the parties shall take into account (i)that the Premises will be leased in its “As-Is” condition and (ii)_____Lessee Initials11_____Lessor Initialscurrent free rent concessions, and tenant improvement allowances, if any, being offered by other lessors of comparable projects in thevicinity of the Project (which concessions and allowances shall not be offered by Lessor, but shall be accounted for in determining themarket rent if such items are present in the comparable projects). Base Rent for each successive year shall be at prevailing market rateincreases over the first year Base Rent.The parties shall have thirty (30) days after Lessor receives the Option Notice in which to agree on monthly Base Rent forthe first year of the applicable extended term and on market rate increases, if any, in one or more successive years thereafter. If theparties are unable to agree on the minimum monthly Base Rent within that period, then within ten (10) days after the expiration of thatperiod, then either (i) Lessor and Lessee shall appoint a mutually acceptable appraiser or broker to establish the new market rental rateand terms (“MRRT”) in the area within the next thirty (30) days, including market rate increases during one or more successive years ofthe extended term (all costs associated with said appraisal shall be split equally between Lessor and Lessee), or (ii) each of Lessor andLessee shall select and pay the appraiser or broker of their choosing to establish a MRRT within the next 30 days. If for any reasoneither one of the appraisals is not completed within the next 30 days as stipulated, then the appraisal that is completed at that time shallautomatically become the new MRRT. If both appraisals are completed and the two appraisers/brokers cannot agree on a reasonableaverage MRRT then they shall immediately select a mutually acceptable appraiser or broker to establish which of the two appraisals isclosest to the MRRT. Whichever appraisal is determined by the third broker/appraiser to be closest to the MRRT shallbe the new MRRT. The new Base Rent shall be the MRRT as determined by said broker/appraiser. In determining the MRRT, theappraisers shall take into account that Lessor is not making any tenant improvements, or giving Lessee any free rent.Lessee InitialsAfter the new monthly Base Rent has been set for the extended term, the appraisers shall immediately notify the parties.61. RELATIONSHIP OF PARTIES. Neither the method of computation of rent nor any other provisions contained inthis Lease nor any acts of the parties shall be deemed or construed by the parties or by any third person to create the relationship ofprincipal and agent or of partnership or of joint venture or of any association between Lessor and Lessee, other than the relationship ofLessor and Lessee.62. SINGULAR AND PLURAL. When required by the context of this Lease, the singular shall include the plural, theplural shall include the singular, and the masculine gender shall include the feminine and neuter gender.63. CAPTIONS. The captions and titles of the Articles and Paragraphs, are for convenience only and do not in anyway define, limit or construe the content of such Articles or Paragraphs and shall have no effect on their interpretation.64. NO OFFER TO LEASE. The submission of this Lease to Lessee by Lessor, its agent and/or real estate broker issolely for the purpose of examination and negotiations and does not constitute an_____Lessee Initials12_____Lessor Initialsoffer to lease, a reservation of, or option for the Premises. If this Lease is acceptable to Lessee, it should be executed and delivered toLessor and shall thereafter be deemed an offer by Lessee to lease the Premises upon the terms and conditions in this Lease. Lessor shallnot be bound by the terms and conditions of this Lease until Lessor has fully executed and delivered this Lease to Lessee.65. NO LIEN. Lessor at no time shall have any security interest, lien or similar such right with respect to any propertyof Lessee, whether located at the Premises or otherwise; provided, however, that nothing herein shall preclude Lessor from obtainingany attachment, judgment, and/or execution lien against Lessee and Lessee’s property in any action against Lessee by Lessor.66. RENT PAYMENT. If any person to whom Lessee shall not then be required to pay rent under this Lease shalldemand payment or rent from Lessee alleging his or her right to receive such rent as a result of a transfer of Lessor’s interest in thisLease or otherwise, Lessee shall not be obligated to honor such demand unless Lessee shall have received written instructions to do sofrom the person to whom Lessee shall then be paying rent or shall otherwise receive written evidence satisfactory to Lessee of the rightof such person making the demand.67. COMMON AREA OPERATING EXPENSES.(a) The term “Common Area Operating Expenses” shall mean and include all Project Costs, as defined immediatelybelow, and Real Property Taxes, as defined in Paragraph 10.1 of this Lease, and are estimated to be $0.28 per square foot duringcalendar year 2016. Attached hereto as Exhibit “G” is the calendar year 2016 budget of Common Area Operating Expenses. The term“Project Costs” shall include all expenses of operation, repair and maintenance of the Building and the Project, including withoutlimitation all appurtenant Common Areas, and shall include the following charges by way of illustration but not limitation: water andsewer charges; insurance premiums; license, permit, and inspection fees; heat; light; power; janitorial services to any interior CommonAreas; air conditioning; supplies; materials; equipment; tools; the cost of any environmental, insurance, tax or other consultant utilizedby Lessor in connection with the Building and/or Project; establishment of reasonable reserves for replacements and/or repairs, costsincurred in connection with compliance with any laws or changes in laws applicable to the Building or the Project from and after theCommencement Date; the cost of any capital investments or replacements (other than tenant improvements for specific tenants) to theextent of the amortized amount thereof over the useful life of such capital investments or replacements calculated at the greater of 7.5%and the Wall Street Journal Prime Rate plus 400 basis points, but not to exceed ten percent (10%) per annum, for each such year ofuseful life during the Term; costs associated with the maintenance of an air conditioning, heating and ventilation service agreement, andmaintenance of an intrabuilding network cable service agreement for any intrabuilding network cable telecommunications lines withinthe Project, costs associated with periodic inspections of Common Area improvements to determine their good working condition, andany other installation, maintenance, repair and replacement costs associated with such lines; labor; reasonable allocated wages andsalaries, fringe benefits, and payroll taxes for administrative and other personnel directly applicable to the Building and/or Project,including both Lessor’s personnel and outside personnel; any expense incurred pursuant to Paragraphs 7.2 and 68, except asspecifically excluded; and a reasonable overhead/management fee for the professional operation of the Project. It is understood andagreed that Project Costs may include competitive charges for direct services provided by any subsidiary, division or affiliate of Lessor.(b) Common Area Operating Expenses exclude the following:_____Lessee Initials13_____Lessor Initials(i)costs associated with the correction or abatement of Hazardous Substances (unless Lessee is responsiblefor such contamination pursuant to Paragraph 56 of the Lease)(ii)costs incurred by Lessor in connection with the construction, expansion or renovation of the Buildingand/or Project or the correction of defects in such construction;(iii)fines or penalties assessed against Lessor or the Building and/or Project due to the Building’s and/orProject’s violation of or failure to comply with any Applicable Requirements as of the CommencementDate;(iv)advertising or promotional expenditures;(v)maintenance, repairs or replacements necessitated by the negligent act or omission of or Breach of theLease by Lessor, its agents, servants, employees, licensees or invitees;(vi)amounts paid to entities related to Lessor in excess of the arm’s length cost of such services;(vii)interest, late charges or penalties incurred as a result of Lessor’s failure to pay bills in a timely manner;Lessee Initials or Initials(viii)interest or payments on any financing for the Building and/or Project;(ix)cost of correcting defects or any other inadequacy in the design or construction of the Building and/orProject or repair and replacement of any of the original materials or equipment required as a result ofsuch defects or inadequacies;(x)amounts for which Lessor received reimbursement or compensation from insurers, tenants (other thanpayments of their share of Common Area Operating expenses) or other third parties;(xi)the cost of legal, accounting, and other professional services incurred by Lessor for reasons not inconnection with the day-to-day operation of the Building and/or Project;(xii)any bad debt loss, rent loss or reserves for bad debts, rent loss, or replacements;(xiii)the cost of providing improvements within the premises of any other tenants in the Building and/orProject at any time;(xiv)any and all costs associated with the operation of the business of the entity which constitutes Lessor,which costs are not directly related to the operation, management, maintenance and repair of theBuilding and/or Project [by way_____Lessee Initials14_____Lessor Initialsof example, without limiting the foregoing, the formation of the entity, internal accounting and legalmatters, including but not limited to preparation of tax returns and financial statements and gathering ofdata therefor, costs of defending any lawsuits (including, without limitation, expenses and legal feesincurred in enforcing leases against tenants), costs of selling, syndicating, financing, mortgaging orhypothecating any of Lessor’s interest in the Building and/or Project, and costs of any disputes betweenLessor and its employee];(xv)rent, fees or other amounts payable under any superior lease or other encumbrance;(xvi)leasing and brokerage expenses and commission and other costs or concessions related to leasing spacein the Building and/or Project;(xvii)salaries of Lessor’s or its manager’s executive personnel (above the grade of building manager);(xviii)fees for management of the Building and/or Project in excess of (a) four percent (4%) of the annual Rentunder Project leases during the initial Lease Term, and (ii) market rate for first class managementcompanies during the Extended Term;(xix)utility costs and services separately metered or contracted for and paid directly by Lessee or othertenants;(xx)the costs of negotiating or enforcing leases of other tenants;(xxi)the cost of acquiring sculpture or other artwork;(xxii)costs of services, utilities, or other benefits which are not offered to Lessee for which Lessee is chargeddirectly but which are provided to another tenant or occupant of the Building;(xxiii)Lessor’s general corporate overhead and general and administrative expenses;(xxiv)costs of or arising from Lessor’s charitable or political contributions;(xxv)costs incurred in removing and storing the property of former tenants or occupants of the Building;(xxvi)the cost of any work or services performed for any tenant (including Lessee) at such tenant’s cost;(xxvii)lease “takeover” expenses, including, but not limited to, the expenses incurred by Lessor with respect tospace located in another building outside the Project of any kind or nature in connection with the leasingof space in the Project;(xxviii)any costs, fees, dues, contributions or similar expenses for industry associations or similar organizations;_____Lessee Initials15_____Lessor Initials(xxix)insurance deductibles in excess of $50,000 per claim;(xxx)any costs to operate, maintain, repair or replace any other Building in the Project if such costs are of atype that Tenant is required to pay for under this Lease (other than as part of Common Area Expenses);(xxxi)expense reserves (other than amortization of capital expenditures permitted hereunder); and(xxxii)environmental insurance.Notwithstanding the foregoing in this Article 67, Lessee shall not be required to pay any expenses or taxes (other than RealProperty Taxes) otherwise due hereunder if Lessor first notifies Lessee of such expenses or taxes, in a statement received by Lesseemore than twenty-four (24) months after such expenses or taxes are incurred.(c) Upon the expiration of earlier termination of this Lease, even though this Lease has terminated and Lessee hasvacated the Premises, when the final determination is made of Lessee’s Share of Common Area Operating Expenses for the calendaryear in which this Lease terminated, Lessee shall within thirty (30) days of written notice pay the entire increase over the estimatedLessee’s Share of Common Area Operating Expenses already paid for the portion of the year Lessee occupied the Premises.Conversely, any overpayment by Lessee shall be rebated by Lessor to Lessee not later than thirty (30) days after such finaldetermination.68. INSURANCE.(a) Lessor’s Insurance. At all times during the Lease Term, Lessor shall procure and keep in full force and effect thefollowing insurance:(i) Special Causes of Loss property insurance (including earthquake if coverage is available and commerciallyreasonable) insuring the replacement value of the Building and Alterations and Utility Installations owned by Landlord pursuant toParagraph 74(a), Lessor’s equipment and Common Area furnishings, with such deductibles as Lessor reasonably considers appropriate.Lessor shall not be obligated to insure any furniture, inventory, or other personal property which Lessee may keep or maintain in thePremises, or any Alterations which Lessee may make to the Premises(ii) Commercial General Liability insuring its interest in the Building and Improvements.(iii) Rental Value insurance, in the name of Lessor, with loss payable to Lessor, insuring the full rental andother charges payable by Lessee to Lessor under this Lease for one (1) year (including all real estate taxes, insurance costs, and anyscheduled rental increases. Said insurance shall provide that in the event the Lease is terminated by reason of an insured loss, the periodof indemnity for such coverage shall be extended beyond the date of the completion of the repairs or replacement of the Premises, toprovide one full year’s loss of rental revenues from the date of any such loss. Said insurance shall contain the agreed valuationprovision in lieu of any coinsurance clause, and the amount of any coverage shall be adjusted annually to reflect the projected rentalincome, property taxes, insurance premium costs and other expenses, if any, otherwise payable by Lessee, for the next twelve (12)month period. Lessee shall be liable for any deductible amount in the event of such loss._____Lessee Initials16_____Lessor Initials(iv) Such other insurance as Lessor reasonably determines from time to time.(b) Lessee’s Insurance. Lessee shall, at its sole cost and expense, keep in full force and effect the following insurance:(i) Special Causes of Loss insurance on “Lessee’s Property” for the full replacement costthereof. Such policy shall contain an agreed amount endorsement in lieu of a coinsurance clause. “Lessee’s Property” is defined to beall Trade Fixtures, Utility Installations, improvements, betterments and personal property of Lessee located in or on the Premises,Common Area, or Building, excluding that which may be covered by Lessor’s Special Causes of Loss property insurance as set forth inParagraph 23.01(a), above.(ii) Commercial General Liability insurance insuring Lessee against any liability arising out of its use,occupancy or maintenance of the Premises or the business operated by Lessee pursuant to this Lease. Such insurance shall be in theamount of at least $3,000,000 per occurrence which may be accomplished by a combination of primary and umbrella insurancecoverages. Such policy shall name Lessor, Lessor’s wholly owned subsidiaries and agents, including without limitation Lessor’sproperty managers (William A. Budge, Inc. and McKennaco, Inc., dba McKenna & Company) and any mortgagees, as additionalinsureds on a separate endorsement form at least as broad as the Insurance Service Organization’s “Additional Insured — Managers orLessors of Premises” Endorsement.(iii) Business automobile liability with a combined single limit of $1,000,000.(iv) Worker’s Compensation insurance as required by state law.(v) Any other form or forms of insurance or increased amounts of insurance typically required by lessees ofcomparable projects in the same rental market area as the Premises as Lessor and any mortgagees of Lessor may reasonably requirefrom time to time.All such policies shall be written in a form and with an insurance company reasonably satisfactory to Lessor and anymortgagees of Lessor, and shall provide that Lessor, and any mortgagees of Lessor, shall receive not less than thirty (30) days’ priorwritten notice of any cancellation except for nonpayment of premium, upon which only ten (10) days’ notice shall be required. Prior toor at the time that Lessee takes possession of the Premises, Lessee shall deliver to Lessor copies or certificates evidencing the existenceof the amounts and forms of coverage required under the Lease. Lessee shall deliver to Lessor copies of or actual Endorsement ofadditional insureds within thirty (30) days of possession of the Premises by Lessee. Lessee shall, prior to the expiration of such policies,furnish Lessor with renewals or “binders” thereof, or Lessor may order such insurance and charge the cost thereof to Lessee asadditional rent.(c) Forms of Policies. Insurance required herein shall be by companies duly licensed or admitted to transact businessin the state where the Premises are located, and maintaining during the policy term a “General Policyholders Rating” of at least A-, VI,as set forth in the most current issue of “Best’s Insurance Guide”. Lessee shall not do or permit to be done anything which invalidatesthe required insurance policies. Lessee shall, prior to the Start Date, deliver to Lessor certificates and endorsements evidencing theexistence_____Lessee Initials17_____Lessor Initialsand amounts of the required insurance. All policies maintained by Lessee will provide that they may not be terminated nor maycoverage be reduced except after thirty (30) days’ prior written notice to Lessor. All Commercial General Liability and All-Riskproperty policies maintained by Lessee shall be written as primary policies, not contributing with and not supplemental to the coveragethat Lessor may carry.(d) Waiver of Subrogation. See Paragraph 8.6 of the Lease.(e) Adequacy of Coverage. Lessor, its subsidiaries, agents and employees make no representation that the limits ofliability specified to be carried by Lessee pursuant to this Lease are adequate to protect Lessee. If Lessee believes that any of suchinsurance coverage is inadequate, Lessee will obtain such additional insurance coverage as Lessee deems adequate, at Lessee’s solecost and expense.(f) Certain Insurance Risks. Lessee shall not do or permit to be done any act or thing upon the Premises or the projectof which the Premises area part which would (i) jeopardize or be in conflict with fire insurance policies covering the project or fixturesand property in the project, (ii) increase the rate of fire insurance applicable to the project to an amount higher than it otherwise wouldbe for the Permitted Use set forth at paragraph 1.8 of the Lease, or (iii) subject Lessor to any liability or responsibility for the injury toany person or persons or to property by reason of any business or operation being carried on upon the Premises.(h) Form of Certificate of Insurance and Endorsement. Attached hereto as Exhibit “H” is the required form of Lessee’sCertificate of Insurance and Endorsement.69. INDEMNIFICATION, WAIVER AND RELEASE. Except for any injury to persons or damage to property that iscaused by or results from the negligence or willful misconduct of Lessor, its employees, or agents, and subject to the provisions ofparagraph 68, above, Lessee shall indemnify and hold Lessor, Lessor’s wholly owned subsidiaries and the employees and agents ofLessor and Lessor’s wholly owned subsidiaries, including without limitation Lessor’s property managers (William A. Budge, Inc. andMaureen M. Corona Corporation, dba McKenna & Co.), Lessor’s master or ground lessor, partners, and lenders (hereinafter collectivelyreferred to as the “Indemnified Parties” and individually as an “Indemnified Party”) harmless from and against any and all demands,claims, causes of action, fines, penalties, damages, liabilities, judgments, and expenses (including without limitation reasonableattorneys’ fees) incurred in connection with or arising from:(a) the use or occupancy or manner of use or occupancy of the Premises by Lessee or any person claiming underLessee.(b) any activity, work, or thing done or permitted by Lessee in or about the Premises, the Building, or the Project.(c) any breach by Lessee or its employees, agents, contractors, or invitees of this Lease.(d) any injury or damage to the person, property, or business of Lessee, its employees, agents, contractors, or inviteesentering upon the Premises under the express or implied invitation of Lessee.(e) any alleged violation by Lessee of the ADA and/or any other law, rule, code or regulation.(f) any injury or damage to the person, property, or business of Lessee, its employees, agents, contractors, or inviteesentering upon the Premises, caused by the occurrence of any terrorist activity or any act of god._____Lessee Initials18_____Lessor InitialsIf any action or proceeding is brought against an Indemnified Party by reason of the foregoing, Lessee,upon written notice from such Indemnified Party, shall defend the same at Lessee’s expense, with legal counsel reasonably satisfactoryto Lessor.70. WAIVER AND RELEASE. Lessee, as a material part of the consideration for this Lease, by this paragraph 70waives and releases all claims against Lessor, Lessor’s wholly owned subsidiaries, and all of Lessor’s and its wholly ownedsubsidiaries’ employees and agents with respect to all matters for which Lessor has disclaimed liability pursuant to the provisions of thisLease.71. LESSEE STATEMENT. Lessee shall within ten (10) business days following written request by Lessor execute anddeliver to Lessor any documents, including estoppel certificates, in a mutually acceptable form prepared by Lessor which shall providethe following information:(a) certifying that this Lease is unmodified and in full force and effect or, if modified, stating the nature of suchmodification and certifying that this Lease, as so modified, is in full force and effect and the date to which the Rent and other chargesare paid in advance, if any;(b) acknowledging that there are not, to Lessee’s knowledge, any uncured defaults on the part of the Lessor orstating the nature of any uncured defaults;(c) certifying the current Rent amount and the amount and form of Security Deposit on deposit with Lessor;and(d) certifying to such other information as Lessor, Lessor’s agents, mortgagees, prospective mortgagees andpurchasers may reasonably request.Lessee’s failure to deliver an estoppel certificate within ten (10) business days after delivery of Lessor’s written request therefor shall beconclusive upon Lessee:(a) that this Lease is in full force and effect, without modification except as may be represented by Lessor;(b) that there are now no uncured defaults in Lessor’s performance;(c) that not more than one (1) month’s Rent has been paid in advance; and(d) that the other information requested by Lessor is correct as stated in the form presented by Lessor.72. FINANCIAL INFORMATION. Lessee shall, upon Lessor’s request, deliver to Lessor the current financialstatements of Lessee, and financial statements of the two (2) years prior to the current financial statement’s year, certified to be true,accurate and completed by the chief financial officer of Lessee, including a balance sheet and profit and loss statement for the mostrecent prior year, which statements shall accurately and completely reflect the financial condition of Lessee. Lessor agrees that it willkeep such financial_____Lessee Initials19_____Lessor Initialsstatements confidential, except that Lessor shall have the right to deliver the same to any proposed purchaser of the Premises, or anyportion thereof and to the mortgagees or beneficiaries of Lessor or such purchaser, provided that such parties agree inwriting to keep such statements confidential. Notwithstanding anything to the contrary set forth herein, as of the date hereof, Lessee is apublicly traded company and for such period as Lessee is a reporting company under Section 13(a) of the Securities Exchange Act of1934, Lessee shall not be required to deliver financial statements to Lessor.Lessee Initials73. IMPROVEMENTS TO THE PREMISES. Subject to the terms set forth below, Lessor shall construct certainimprovements to the base Building described in clause (a) below (the “Base Building Improvements”) and certain additionalimprovements requested by Lessee and relating to Lessee’s use of the Premises described in clause (b) below (the “LesseeImprovements”), as follows:(a) Base Building Improvements. Lessor shall deliver the Premises to Lessee in a clean, “shell” condition withthe demolition of all existing interior improvements. Lessor shall prepare plans and specifications for the Base Building Improvements,subject to the mutual approval of Lessor and Lessee. As part of the Base Building Improvements, Lessor shall provide, at its sole costand expense, adequate HVAC units in place on the roof with drops and/or plenums to serve Lessee’s requirements, either new or lessthan five (5) years old in good working condition, not to exceed a 175 ton capacity. In addition, as part of the Base BuildingImprovements, Lessor, at its sole cost and expense, shall deliver the Building with the exterior Building improvements mutuallyapproved by Lessor and Lessee completed (including repainting the Building exterior), a newly designed main entryway constructed onthe South end of the Building where a patio presently exists, and the area where the main entry presently exists shall be converted to asecondary exit and patio area, together with required ADA, hardscape, and landscaping. Lessor warrants that the roof, windows andseals, structural components, and all HVAC, electrical and plumbing and other Building systems and equipment serving the Buildingand Premises shall be in good working condition for a period of one year from Commencement Date; provided, however, that thiswarranty shall not apply to any damage caused or permitted by Lessee. Lessor shall also white coat the roof prior to its delivery of thePremises to Lessee on the Commencement Date, and such roof work shall carry a 10-year warranty.(b) Lessee Improvements. Lessor shall also cause to have constructed additional general purpose and Lesseespecial purpose improvements to the Premises (including Lessee’s server room, as well as the electronic laboratory areas which shall beused by Lessee for the research and development/design and testing of semiconductor equipment, systems, chips and related goods)(the “Electronic Lab Areas”), but excluding Lessee’s furniture and equipment, based upon plans and specifications to be hereafterreasonably approved by Lessor and Lessee (the “Lessee Improvements”). Lessor and Lessee shall mutually agree upon the final spaceplan upon which construction plans and specifications shall be based. In accordance with the terms of that certain letter agreement, acopy of which is attached hereto as Exhibit “I”, Lessee authorized preparation of its preliminary space plan with Shlemmer AlgazeAssociates (the architect mutually selected by Lessor and Lessee as described below) prior to execution of this Lease. Attached heretoas Exhibit “J” is the current preliminary space plan for Lessee Improvements which space plan has been approved by Lessor, and,subject to revisions required by Lessee, shall be the Mutually Approved Space Plan (as said term is defined below). The_____Lessee Initials20_____Lessor Initialsparties intend for the final space plan to be complete by November 16, 2015, which space plan shall be consistent with the preliminaryspace plan attached as Exhibit “J” unless otherwise agreed to by the parties.. Not later than November 12, 2015, Lessee shall deliver toLessor a revised draft of the space plan reflecting such changes, if any, requested by Lessee. No later thanNovember 13, 2015, Lessor shall deliver to Lessee a revised draft of the space plan reflecting such changes requested by Lessee thatLessor reasonably approves. This process shall continue until the space plan is approved by both parties (the “Mutually ApprovedSpace Plan”). The parties intend the final design and development plans and specifications to be complete by November 16, 2015. Nolater than November 12, 2015, Lessee shall deliver to Lessor the design and development plan programming information based uponthe Mutually Approved Space Plan (the “Design and Development Plans”). No later than November 13, 2015, Lessor shall deliver toLessee a revised draft of the Design and Development Plans reflecting such changes requested by Lessor that Lessor reasonablyapproves. This process shall continue until the Design and Development Plans are approved by both parties (the “Mutually ApprovedDesign and Development Plans”). If the Mutually Approved Space Plan and the Mutually Approved Design and Development planshave been finalized within the time frames set forth above, construction of Lessee Improvements is projected to be complete on May 1,2016 (the “Projected Completion Date”), and Lessor shall cause to be prepared a construction schedule reflecting said ProjectedCompletion Date In the event Lessor and Lessee fail to achieve a Mutually Approved Space Plan and a Mutually Approved Design andDevelopment Plan by November 16, 2015, Lessor and Lessee agree that the Projected Completion Date may need to be updated , TheProjected Completion Date must be updated to reflect delays resulting from change orders requested by Lessee, revisions to plans andspecifications required by the City of Irvine in order to obtain and building permit, and any events beyond the control of either Lessoror Lessee in accordance with the provisions of Paragraph 59, above. Lessor shall assist Lessee in selecting the floor sealant that willproperly seal the foundations/floors of the Building to prevent moisture intrusion and accommodate Lessee’s flooring materials;provided, however, that Lessee shall be solely responsible for the selection of such floor sealant capable of satisfying Lessee’soperational requirements, and Lessor makes no representation or warranty with regard to the suitability of the floor sealer selected byLessee or its ability to satisfy Lessee’s operational requirements. Lessor has heretofore approved Lessee’s selection of Shlemmer AlgazeAssociates as the architect, and that the architect shall select and contract with all required engineers. As soon as practicable followingachievement of the Mutually Approved Space Plan and the Mutually Approved Design and Development Plan, Lessor and Lessee shallmutually agree on the selection of the general contractor based upon not less than three (3) bids from contractors mutually acceptable toLessor and Lessee. Notwithstanding, Lessee shall have the right to select two (2) general contractors who shall be included in the bidprocess. Lessor shall retain the best qualified engineer and contractor; Lessee shall be invited to review the contractor bids andparticipate in the contractor selection process. Lessor acknowledges that the contractor selection will include factors such as experience,quality of work, availability and reputation as well as cost. Lessor shall provide a $54.00 per square foot allowance (the “Allowance”)toward the cost of said Lessee Improvements excluding Lessee’s furniture and equipment; i.e., the aggregate sum of $2,712,690). In theevent the approved bid for said Lessee Improvements exceeds the Allowance, Lessee shall be solely responsible for all costs in excessof the $2,712,690 Allowance, and shall pay such amount to Lessor one-third (1/3rd) at the commencement of construction, with thebalance funded by Lessee in equal monthly installments beginning on the tenth (10th) day of the first calendar month following the dateon which construction has commenced, and on the 10th day of each month thereafter until all construction is Substantially Complete (assaid term is defined in Paragraph 1.3 of the Lease. The amount of each monthly payment shall be determined at_____Lessee Initials21_____Lessor Initialssuch time as the final Cost Estimate (as said term is defined herein below) has been determined following approval by the City of Irvineand the issuance of a building permit, by dividing the amount by which the final Cost Estimate exceeds $2,712,690, bythe number of months set forth by the contractor in the construction schedule time-line. For example, if the final Cost Estimate is$1,000,000 greater than the Allowance, and if the construction schedule time line is six (6) months, then each monthly payment shallbe $166,666.66 throughout the construction process. Said monthly payment amount shall be adjusted each time the Cost Estimateincreases or decreases as a result of an approved change order based upon the formula set forth above, taking into account the numberof months of time remaining in the construction schedule time line. Lessee shall have the right to provide construction supervision ofsaid Lessee Improvements at Lessee’s sole cost and expense and not from the Allowance. Any Lessor supervision fee charged byLessor’s construction manager shall be paid for by Lessor at its sole cost and expense and shall not be charged to Lessee ordeducted/charged to the Allowance. In addition, neither the Lessee nor the contractor selected to construct the Lessee Improvementsshall be charged directly or indirectly for the use of water, electricity, HVAC, security, or parking prior to the Commencement Date ofthe Lease.Notwithstanding Lessee’s right to approve the general contractor, the general contractor is the contractor only of Lessorand Lessee shall have no liability to the general contractor on the construction contract. At such time as Lessor and Lessee shall havethe Mutually Approved Space Plan, Lessor shall cause to be prepared, as quickly as reasonably possible, final plans, specifications andworking drawings of the Lessee Improvements (“Final Plans”), as well as an estimate of the total cost for the Lessee Improvements(“Cost Estimate”), all of which conform to or represent logical evolutions of or developments from the Preliminary Plans. The FinalPlans and Cost Estimate shall be delivered to Lessee immediately upon completion. Within five (5) business days after receipt thereof,Lessee may deliver to Lessor the specific written changes to such plans that are necessary, in Lessee’s opinion, to conform such plansto the final approved space plan or to reduce costs. Within three (3) business days after receipt thereof, Lessor shall deliver to Lessee itsresponse to Lessee’s requested changes. This process shall continue until the parties have reached agreement on the Final Plans. If afterfinal approval of the Final Plans and Cost Estimate Lessee desires further changes, Lessor shall not unreasonably withhold its approvalof such changes and the parties shall confer and negotiate in good faith to reach agreement on modifications to the Final Plans, and theCost Estimate as a consequence of such change. As soon as approved by Lessor and Lessee, Lessor shall submit the Final Plans to allappropriate governmental agencies and thereafter the Lessor shall use its best efforts to obtain required governmental approvals as soonas practicable. Except as otherwise set forth herein, Lessor shall respond to any written request by Lessee for approval of changeswithin five (5) business days of Lessor’s receipt of Lessee’s request or such request shall be deemed approved.After the Final Plans have been approved by Lessor and Lessee as provided above, neither party shall have the right to requireextra work or change orders with respect to the construction of the Lessee Improvements without the prior written consent of the other,which consent shall not be unreasonably withheld or delayed; provided, however, that the City of Irvine may require changes andconditions to the issuance of a building Permit that may require extra work and/or extra expense. All change orders shall specify anychange in the Cost Estimate and the amount of any delay in the substantial completion of the Lessee Improvements as a consequence ofthe change order. Lessor shall thereafter commence construction of the Lessee Improvements and shall diligently prosecute suchconstruction to completion. The Lessee Improvements shall be constructed by Lessor in accordance with all rules, regulations, codes,ordinances, statutes, and laws of any governmental or quasi-_____Lessee Initials22_____Lessor Initialsgovernmental authority and in accordance with the Final Plans as amended. When the Lessee Improvements areSubstantially Complete, Lessor shall deliver possession of the Premises to Lessee.The cost of the Lessee Improvements to be provided at Lessor’s sole expense shall include (and Lessee shall have noresponsibility for and the Allowance shall not be used for) the following: (a) costs for Lessee Improvements which are not shown on ordescribed in the Final Plans on which the building permit was issued unless approved by Lessee; (c) costs incurred due to the presenceof Hazardous Materials in the Premises or the surrounding area; (d) attorneys’ fees incurred in connection with negotiation ofconstruction contracts, and attorneys’ fees, experts’ fees and other costs in connection with disputes with third parties; (e) interest andother costs of financing construction costs; (f) costs incurred as a consequence of delay (unless the delay is caused by Lessee),construction defects or default by a contractor; (g) costs recoverable by Lessor upon account of warranties and insurance; (h)restoration costs in excess of insurance proceeds as a consequence of casualties; (i) penalties and late charges attributable to Lessor’sfailure to pay construction costs; (j) wages, labor and overhead for overtime and premium time unless approved by Lessee; (k) offsitemanagement or other general overhead costs incurred by Lessor; (1) construction management, profit and overhead charges; and (m)construction costs in excess of the final Cost Estimate, except for increases set forth in approved change orders.(c) Representatives.(i) Lessor hereby designates Loren Brucker, address: P.O. Box 1743, Newport Beach, CA 92659 telephone: (949)723-1600, e-mail: cadcolb@gmail.com, (“Lessor’s Representative”) as Lessor’s representative and agent for receiving all matters ofnotices from Lessee related to the Lessee Improvements, with copies of notices to also be sent to Don Morton, Landlord’s Director —Field Asset Manager, and William A. Budge, address: 19 Hammond, Suite 501, Irvine, California 92618, telephone: (949) 285-7670, e-mail: wabudge@aol.com. Lessor’s Representative shall serve as a liaison between Lessor and Lessee with respect to the LesseeImprovements. Lessor may amend the designation of the foregoing individual at any time upon delivery of written notice to Lessee.(ii) Lessee hereby designates Todd Zanowick of MaxLinear, Inc., address: 5966 La Place Court, Suite 100, Carlsbad,California 92008, telephone: (760) 517-1294, e-mail: tzanowick@maxlinear.com (“Lessee’s Representative”), as Lessee’s primaryrepresentative and agent for receiving all matters of notices from Lessor related to the Lessee Improvements, with copies of notices toalso be sent to Sameer V. Rao of MaxLinear, Inc., address: 16275 Laguna Canyon Road, Suite 120, Irvine, California 92618,telephone: (949) 333-0112, e-mail: srao@maxlinear.com, and Lessor shall deliver to such person all such notices from Lessor to begiven hereunder with respect to same. Lessee’s Representative shall serve as a liaison between Lessor and Lessee with respect to theLessee Improvements. Lessee may amend the designation of the foregoing individuals at any time upon delivery of written notice toLessor.74. RIGHT OF FIRST NOTICE. 60 Parker, Irvine California, is a building in the Project adjacent to the Premises and iscurrently vacant. Lessor is currently negotiating with a prospective lessee for the 60 Parker building. Commencing on November 4,2016, should 60 Parker be vacant and available for Lease, Lessor shall deliver written notice to Lessee that Lessee shall have theongoing right to lease 60 Parker for the remaining Term of this Lease (but not during any Extended Term), and on the same terms andconditions as are_____Lessee Initials23_____Lessor Initialsthen being offered by Lessor to other prospective tenants, which terms and conditions shall be set forth in such notice, but in no eventshall Lessee be required to pay Base Rent for 60 Parker in excess of the Base rent schedule then in effect under this Lease (the “60Parker Lease Terms”). In order to exercise its right hereunder to Lease 60 Parker, Lessee must notify Lessor in writing within ten (10)calendar days from the date Lessee receives said notice from Lessor that it elects to lease 60 Parker on said terms and conditions.Notwithstanding anything to the contrary set forth herein, if the prospective tenant for 60 Parker with which Lessor is presentlynegotiating elects not to lease the adjacent space within the first (1st) year of the Term of this Lease, Lessor shall deliver to Lessee thesame notice of right to lease 60 Parker described above, and Lessee shall have the right to lease 60 Parker on the 60 Parker Lease Termsby delivering written notice to Lessor within 10 days of Lessee’s receipt of said notice from Lessor. In the event said prospective tenanthas not elected to lease 60 Parker during the first year of the Term of this Lease, and Lessor has delivered the notice to Lessee to lease60 Parker in the manner described above, should Lessee elect not to lease 60 Parker as set forth in Lessor’s notice, then Lessor shallhave the right without any notice to Lessee to lease said adjacent space during the first year of the Lease Term. The Right of First Noticeshall only be applicable during the initial Lease Term.75. ROOF EQUIPMENT. Subject to compliance with all Applicable Requirements, Lessee shall have the right to installon the Building, satellite and/or microwave antennae(s) for the reception and transmission of electromagnetic signals (the “RoofEquipment”) subject to Lessor’s receipt and approval of plans and specifications therefor, including without limitation specificationsheets and weight load information. No roof equipment may be installed that does not satisfy the requirements of Lessor’s structuralengineer. Lessee shall be responsible for the cost of installation, any structural upgrades required to the roof, maintenance and removalof the Roof Equipment (and the repair to the roof membrane if necessary). Lessor shall have the right to approve the location, weightload, method of installation, size and shielding requirements, which approval shall not be unreasonably withheld, delayed orconditioned (except for any weight load limitations). The route provided by Lessor to the roof from the Premises shall be the leastexpensive functional route available given the Building’s characteristics. Such use shall be subject to all required government approvalsand shall not interfere with Building systems. All required roof penetrations must be made by Lessor’s roof contractor. Such roof spaceshall be made available throughout the Initial Term of the Lease and any extended term at no additional charge to Tenant. In addition,Lessee shall also have access to any standard Cable TV available within the Project.76. INTENTIONALLY LEFT BLANK.77. HOLDOVER. Upon prior written notice (the “Holdover Notice”) to Lessor at least ninety (90) days prior to theexpiration of the Lease Term, Lessee shall be permitted to retain occupancy of its Premises at the end of its Lease Term for a period notto exceed four (4) months, the exact number of months of the holdover (which must be in monthly increments) shall be set forth in theHoldover Notice. Base Rent for a holdover up to three (3) months shall be One Hundred Twenty-Five Percent (125%) of the thencurrent Base Rent plus Lessee’s continued payment of the then current Common Area Operating Expenses. Holdover by Lessee for afourth (4th) month shall be at One Hundred and Fifty Percent (150%) of Lessee’s Base Rent amount on the original Lease terminationdate plus Lessee’s continued payment of its proportionate share of Operating Expenses. A holdover shall remain a tenancy for a fixedterm for the number of months set forth in the Holdover Notice and shall not be a month-to-month tenancy.78. RESERVED PARKING. Notwithstanding the foregoing, Landlord agrees that Landlord shall designate fifteen (15)reserved parking spaces adjacent to the Building as shown on Exhibit “B” attached hereto which Lessee may mark with the words“MaxLinear Reserved” or “MaxLinear Visitor Parking”; provided, however, that such designations and markings are being undertakenas an accommodation to Lessee only, and Lessor shall have no obligation or responsibility for (and Lessee hereby releases Lessor andLessor’s agents_____Lessee Initials24_____Lessor Initialsfrom) enforcing the parking of vehicles within such spaces in accordance with such designations and markings. Nothing containedherein shall preclude Lessee from enforcing the parking of vehicles within such designations and markings provided that Lesseecomplies with all Applicable Requirements, CC&Rs, and Rules and Regulations.____________ ________________________ ____________Lessee Initials Lessor Initials_____Lessee Initials25_____Lessor InitialsFLOOR PLAN OF THE PREMISESEXHIBIT “A”RESERVED PARKINGEXHIBIT “B”RULES AND REGULATIONSEXHIBIT “C”PARKER IRVINE BUSINESS CENTERLessee initialsRULES & REGULATIONSThis Exhibit sets forth the Rules and Regulations governing Tenant’s use of the Common Area and the Premises leased to Tenantpursuant to the terms, covenants and conditions of the Lease to which this Exhibit is attached and therein made part thereof. Unlessotherwise defined, capitalized terms used herein shall have the same meanings as set forth in the Lease. In the event of any conflict orinconsistency between this Exhibit and the Lease, the Lease shall control.1.Tenant shall not place anything or allow anything to be placed near the glass of any window, door, partition or wall which mayappear unsightly from outside the Premises.2.The walls, walkways, sidewalks, entrance passages, courts and vestibules shall not be obstructed or used for any purpose otherthan ingress and egress of pedestrian travel to and from the Premises, and shall not be used for loitering or gathering, or todisplay, store, or place any merchandise, equipment or devices, or for any other purpose. The walkways, entrance passageways,courts, vestibules and roofs are not for the use of the general public and Landlord shall in all cases retain the right to control andprevent access thereto by all persons whose presence in the judgment of the Landlord shall be prejudicial to the safety,character, reputation and interest of the Building and its tenants, provided that nothing herein contained shall be construed toprevent such access to persons with whom Tenant normally deals in the ordinary court of Tenant’s business unless such personsare engaged in illegal activities. No tenant or employee or invitee of any tenant shall be permitted upon the roof of the Building.3.No awnings or other projection shall be attached to the outside walls of the Building. No security bars or gates, curtains, blinds,shades or screens shall be attached to or hung in, or used in connection with, any window or door of the Premises without theprior written consent of Landlord. Neither the interior nor exterior of any windows shall be coated or otherwise sunscreenedwithout the express written consent of Landlord.4.No sign, placard, picture, aerial display, balloons, advertisement, name or notice shall be installed or displayed on any part ofthe Premises or the Project (or within public rights-of-ways adjacent to the Project through the use of truck signs, sign trailers orsimilar items) without the prior written consent of Landlord. Landlord shall have the right to remove, at Tenant’s expense andwithout notice, any sign installed or displayed in violation of this rule. All approved signs or lettering on doors, walls andservice areas of the Premises shall be printed, painted, affixed or inscribed at the expense of Tenant by a licensed signcontractor approved by Landlord.Prior to installation of any sign, Tenant must obtain Landlord’s written approval as follows: Tenant shall submit to Landlord completeworking drawing showing the text, typestyle, color, construction and size of the sign as well as its placement on the Building (includingthe distances from any chamfer lines or edges). Landlord reserves_____Lessee Initials _____Lessor Initialsthe right, in its sole discretion, to require changes or modifications to the proposed sign to ensure compliance with city requirementsand any applicable CC&R’s and in its reasonable discretion as to aesthetic conformity to the rest of the Project. Once acceptabledrawings have been submitted, Landlord will issue a written approval, after which Tenant’s contractor may obtain all necessary permitsand commence construction. Tenant shall be solely responsible, at its sole cost, for obtaining all permits for Tenant’s signs and forensuring that its signs comply with all applicable building codes.Notwithstanding anything to the contrary herein, Lessee shall have the exclusive right to all available signage on the Building’sexterior, including the rooftop.5.Tenant shall not in any way deface any part of the Premises or the Building. Tenant shall not lay linoleum, tile, carpet or othersimilar floor covering so that the same shall be affixed to the floor of the Premises in any manner except as approved byLandlord in writing. The expense of repairing any damage resulting from a violation of this rule or removal of any floorcovering shall be borne by the Tenant.6.The toilet rooms, urinals, wash bowls and other plumbing apparatus shall not be used for any purpose other than that for whichthey were constructed and no foreign substance of any kind whatsoever shall be thrown therein. The expense of any breakage,stoppage or damage resulting from the violation of this rule shall be borne by the Tenant.7.Landlord shall direct electricians as to the manner and location of any future telephone wiring. No boring or cutting for wireswill be allowed without the prior consent of Landlord. The locations of the telephones, call boxes and other office equipmentaffixed to the Premises shall be subject to the prior written approval of Landlord.8.No exterior storage shall be allowed at any time without the prior written approval of Landlord. The Premises shall not be usedfor cooking except for typical pantry / kitchen / cafeteria uses by Lessee or washing clothes without the prior written consent ofLandlord, or for lodging or sleeping of for any illegal purposes.9.Tenant shall not make, or permit to be made, any unseemly or disturbing noises or disturb or interfere with occupants of this orneighboring buildings or premises or those having business with them, whether by the use of any musical instrument, radio,phonograph, machinery, or otherwise. Tenant shall not use, keep or permit to be used, or kept, any foul or obnoxious gas orsubstance in the Premises or permit or suffer the Premises to be used or occupied in any manner offensive or objectionable toLandlord or other occupants of this or neighboring buildings or premises by reason of any odors, fumes or gases.10.Neither Tenant nor any of Tenant’s Agents shall at any time bring or keep upon the Premises any toxic, hazardous,inflammable, combustible or explosive fluid, chemical or substance without the prior written consent of Landlord.11.No animals shall be permitted at any time within the Premises.12.Tenant shall not use the name of the Building or the Project in connection with or in promoting or advertising the business ofTenant, except as Tenant’s address, without the prior written consent of Landlord. Landlord shall have the right to prohibit anyadvertising by Tenant which, in Landlord’s reasonable opinion, tends to impair the reputation of the Project or its desirability ofits intended uses, and upon written notice from Landlord Tenant shall refrain from or discontinue such advertising._____Lessee Initials2_____Lessor Initials13.Canvassing, soliciting, peddling, parading, picketing, demonstrating or otherwise engaging in any conduct that unreasonablyimpairs the value or use of the Premises or the Project are prohibited and Tenant shall cooperate to prevent the same._____Lessee Initials3_____Lessor Initials14.All equipment of any electrical or mechanical nature shall be placed by Tenant on the Premises, in settings approved byLandlord in writing, in such a way as to best minimize, absorb and prevent any vibration, noise or annoyance. No equipmentor any type shall be placed on the Premises which in Landlord’s opinion, exceeds the load limits of the floor or otherwisethreatens the soundness of the structure or improvements of the building.15.All furniture, equipment and freight shall be moved in and out of the building only at hours and in accordance with rulesreasonably established by Landlord, and shall not impair vehicular and pedestrian circulation in the Common Area. Landlordwill not be responsible for loss or damage to any furniture, equipment, or other personal property of Tenant from any cause.16.No air conditioning unit or other similar apparatus shall be installed or used by Tenant without the prior written consent ofLandlord.17.No aerial antenna shall be erected on the roof or exterior walls of the Premises, or on the grounds, without in each instance theprior written consent of Landlord. Any aerial or antenna so installed by or on behalf of Tenant without such written consentshall be subject to removal by Landlord at any time without prior notice at the expense of Tenant, and Tenant shall, uponLandlord’s demand, pay a removal fee to Landlord of not less than $200.00.18.The entire Premises, including vestibules, entrances, doors, fixtures, windows and plate glass, shall at all times be maintained ina safe, neat and clean conditions by Tenant. All trash, refuse and waste material shall be regularly removed from the Premisesby Tenant and placed in the containers at the locations designated by Landlord for refuse collection. All cardboard boxes mustbe “broken down” prior to being placed in the trash containers. All Styrofoam chips must be bagged or otherwise containedprior to placement in the trash containers so as not to constitute a nuisance. Pallets may not be disposed or in the trashcontainers or enclosures. The burning of trash, refuse or waste materials is prohibited.19.Tenant shall use, at Tenant’s cost, such pest extermination contractor as Landlord may direct and at such intervals as Landlordmay require.20.All keys for the Premises shall be provided to Tenant by Landlord and Tenant shall return to Landlord any of such keys soprovided upon the terminations of the Lease. Tenant shall not change locks or install other locks on doors of the Premiseswithout the prior written consent of Landlord. In the event of loss of any key furnished by Landlord for Tenant, Tenant shallpay to Landlord the costs thereof.21.No person shall enter or remain within the Project while intoxicated or under the influence of liquor or drugs. Landlord shallhave the right to exclude or expel from the Project any person who, in the absolute discretion of Landlord, is under theinfluence of liquor or drugs.Tenant agrees to comply with all such Rules and Regulations. Should Tenant not abide by these Rules and Regulations, Landlord or an“Operator”, “Association”, or “Declarant” under any Restrictions may serve a Three (3) Day Notice to correct the deficiencies. IfTenant has not corrected the deficiencies by the end of the notice period, Tenant will be in default of the Lease, and Landlord and/or itsdesignee shall have the right, without further notice, to cure the violation at Tenant’s expense._____Lessee Initials4_____Lessor InitialsLandlord reserves the right to amend or supplement the foregoing Rules and Regulations and to adopt and reasonably promulgateadditional rules and regulations applicable to the Premises so long as such rules do not unreasonably interfere with Lessee’s use of thePremises or its parking rights. Notice of such rules and regulations and amendments and supplements thereto, if any, shall be given tothe Tenant.Lessee Initials LessorNeither Landlord nor Landlord’s Agents or any other person or entity shall be responsible to Tenant or to any other person for theignorance or violation of these Rules and Regulations by any other tenant or other person. Tenant shall be deemed to have read theseRules and Regulations and to have agreed to abide by them as a condition precedent, waivable only by Landlord, to Tenant’soccupancy of the Premises._____Lessee Initials5_____Lessor InitialsSIGN CRITERIAEXHIBIT “D”Parker Irvine Business CenterSign CriteriaNo sign, placard, picture, aerial display, balloons, advertisement, name or notice shall be installed or displayed on any part of thePremises or the Project (or within public rights-of-ways adjacent to the Project through the use of truck signs, sign trailers or similaritems) without the prior written consent of Lessor, not to be unreasonably withheld, conditioned or delayed. Lessor shall have the rightto remove, at Lessee’s expense and without notice, any sign installed or displayed in violation of this rule. All approved signs orlettering on doors, walls and service areas of the Premises shall be printed, painted, affixed or inscribed at the expense of Lessee by alicensed sign contractor approved by Lessor.Prior to installation of any sign, Lessee must obtain Lessor’s written approval as follows: Lessee shall submit to Lessor completeworking drawing showing the text, typestyle, color, construction and size of the sign as well as its placement on the Building (includingthe distances from any chamfer lines or edges). Lessor reserves the right, in its sole reasonable discretion, to require changes ormodifications to the proposed sign to ensure compliance with the Applicable Requirements as well as aesthetic conformity to the rest ofthe Project. Once acceptable drawings have been submitted, Lessor will issue a written approval, after which Lessee’s contractor mayobtain all necessary permits and commence construction. Lessee shall be solely responsible, at its sole cost, for obtaining all permits forLessee’s signs and for ensuring that its signs comply with all applicable building codes._____Lessee Initials _____Lessor InitialsLANDLORD’S WAIVER AND CONSENT_____Lessee InitialsEXHIBIT “E”_____Lessor InitialsIRE ___________ Investment NameLANDLORD’S LIEN SUBORDINATION AGREEMENTTHIS LANDLORD’S LIEN SUBORDINATION AGREEMENT (“Agreement”) is entered into as of the __ day of ________201_ between The Northwestern Mutual Life Insurance Company (“Northwestern”), ______________________________(“Tenant”) and ______________________________ (“Lender”).WITNESSETH:WHEREAS, Northwestern is the owner of an interest in certain industrial real property commonly known as____________________________ and located at ______________________________ (“Property”);WHEREAS, Northwestern and Tenant have entered into that certain lease dated as of ______________________________(“Lease”), pursuant to which Northwestern has leased to Tenant certain space in a building at the Property, all as more particularlydescribed in the Lease (“Premises”);WHEREAS, Lender has or is about to enter into a financing transaction with Tenant, as borrower, to secure financing. Inconnection therewith, Tenant has granted or is about to grant to Lender a security interest in equipment, trade fixtures, furnishings,machinery, inventory or other personal property of the Tenant which is stored or otherwise located at the Premises as specificallydescribed on Exhibit A attached hereto (the “Collateral”) which Collateral shall not include any property which is permanently affixedto the Premises or is otherwise considered real property under applicable law;WHEREAS, Lender hereby requests that Northwestern (i) subordinate any liens, claims, demands or rights Northwestern mayhave or hereafter acquire with respect to the Collateral, and (ii) consent to Lender’s right to enter upon the Premises to exercise its rightsand remedies with respect to the Collateral, subject to the terms of this Agreement; andWHEREAS, Northwestern is willing to so consent and subordinate its interest subject to the terms of this Agreement.NOW THEREFORE, in consideration of the mutual promises and agreements contained herein, and other good and valuableconsideration, the receipt and sufficiency of which each party hereto acknowledges, Lender, Tenant and Northwestern hereby agree asfollows:1. Subject to the terms and conditions of this Agreement, Northwestern hereby subordinates any and all liens, claims,demands or rights which Northwestern may now have or hereafter acquire, by statute, contract, operation of law or otherwise, on or inany of the Collateral to the lien or security interest of Lender therein.2. At any time prior to the termination of the Lease, and subject to its terms and provisions, Lender or its representatives may,upon prior written notice to Northwestern’s Property Manager (pursuant to paragraph 8 of this Agreement), enter upon the Premisesduring normal business hours to inspect, remove, transfer, take control of or make any other disposition of the Collateral; provided,however that if Lender shall take any action with respect to the Collateral other than inspecting the same, then Lender shall first furnishNorthwestern with reasonable evidence of its right to do the same, it being understood that a certified copy of an in-force UCC-1security filing shall be deemed sufficient evidence. Upon prior written notice to Northwestern, Lender may advertise for sale and/orconduct public auctions or private sales of the Collateral within the Premises (but not in any common areas of the Property including,without limitation, any parking areas located thereon) subject to the rights of other tenants at the Property.3. Northwestern shall have no obligation whatsoever to provide Lender with any notice of Tenant’s default under the Lease.However, upon termination of Tenant’s right to occupy the Premises, Northwestern shall deliver to Lender a copy of any notice oftermination which Northwestern has delivered to Tenant provided, however, that Northwestern shall have no liability for failure todeliver such notice.4. In the event that Northwestern takes possession of the Premises upon termination of the Lease, then Northwestern shallallow the Collateral to remain on the Premises for a period of sixty (60) days following such termination of the Lease (“DispositionPeriod”) for purposes of Lender’s inspection, removal, transferring or otherwise disposing of the same provided that, and as conditionsprecedent thereto:(i) Lender shall deliver written notice to Northwestern within five (5) business days of Lender’s receipt of notice oftermination of the Lease requesting that Northwestern allow the Collateral to so remain on the Property during the Disposition Period.Failure of Lender to deliver such notice to Northwestern shall be deemed to be Lender’s election to waive its rights with respect to theCollateral as set forth in this Agreement;(ii) Lender shall deliver to Northwestern, at the time of delivery of the notice referred to in Section (i) of this paragraph 4.,above, all sums due under the Lease relating to the Disposition Period, including, without limitation, monthly base rent and additionalrent (regardless of the defined terms used to describe such payments in the Lease). Lender shall not be liable for any past due rentaccrued prior to the commencement of the Disposition Period;(iii) At any time prior to Lender’s entry onto the Property, Lender (or its contractor, vendor or other third party claiming underLender, as applicable) shall (a) obtain and keep in full force and effect, insurance as set forth below, naming Northwestern, its agents,representatives and wholly owned subsidiaries, as additional insureds on the Commercial General Liability and Business Automobileinsurance policies, and (b) deliver to Northwestern, and obtain the approval of Northwestern to, certificates of insurance evidencingsuch insurance.TypeLimitsWorker’s Compensation Employer’s LiabilityStatutory/$500,000Commercial Liability$1,000,000/occurrence $2,000,000/aggregateBusiness Automobile Liability$1,000,000 Combined Single Limit_____Lessee Initials2_____Lessor InitialsThe aforesaid coverages shall be maintained throughout the Disposition Period. In the event that any suchcoverages are written on a “claims-made” basis, such coverages shall be kept in force either by renewal thereof or the purchase of anextended reporting period for a minimum of one (1) year following the expiration or earlier termination of this Agreement. Nothingherein contained, including but not limited to insurance carried by Lender, shall in any way be deemed to limitLender’s liability under applicable law; and_____Lessee Initials3_____Lessor Initials(iv) Lender shall deliver to Northwestern, at the time of delivery of the notice referred to in Section (i) of this paragraph 4.,above, reasonable evidence of its right to remove the Collateral or any portion thereof, it being understood that a certified copy of an in-force UCC-1 security filing shall be deemed sufficient evidence.Upon failure of Lender to deliver the notice referred to in paragraph 4.(i), above or the later expiration of the Disposition Periodby lapse of time, this Agreement shall be deemed terminated and of no further force or effect whether or not Lender has removed,transferred, taken control of or otherwise disposed of the Collateral. Northwestern shall thereafter be deemed to have any and all rightswith respect to the Collateral that it would have had absent this Agreement and may dispose of the Collateral or any portion thereofand/or apply any and all proceeds therefrom in accordance with the Lease. Lender shall promptly execute any and all documentsfurnished to it by Northwestern or Tenant necessary in the discretion of Northwestern or Tenant, as the case may be, to evidence thetermination of this Agreement.5. Lender shall observe all appropriate safety precautions while on the Property. Further, at Northwestern’s option, Lendershall either (i) promptly repair, at Lender’s sole expense, any physical damage to the Property caused by Lender’s entry onto theProperty and/or removal of the Collateral by Lender or its agents or representatives or (ii) promptly reimburse Northwestern for thereasonable costs of repair of any damage done to the Property by Lender, its agents or representatives as a result of entry onto theProperty pursuant to this Agreement. Lender’s obligation to so repair or reimburse Northwestern shall survive the expiration ortermination of this Agreement.6. Lender acknowledges that Northwestern has entered into this agreement solely as an accommodation to Tenant and Lendershall indemnify and shall hold Northwestern harmless from and against any losses, damages, expenses, liabilities, demands and causesof action, and any expenses incidental to the defense thereof by Northwestern, resulting from injury to or death of persons, or damageto Property directly or indirectly growing out of or in connection with any acts of Lender or Lender’s agents or representatives inconnection with entry upon the Property pursuant to this Agreement. Lender’s sole and exclusive remedies against Northwestern inconnection with this Agreement shall be to exercise its rights with respect to the Collateral. Lender’s obligation to so indemnifyNorthwestern shall survive the expiration or earlier termination of this Agreement.7. This Agreement shall be binding upon the successors, transferees or assignees of Northwestern, Lender and Tenant. ThisAgreement may be modified only by an agreement in writing executed by the parties hereto or their successors or assigns.8. All notices, demands, requests and other instruments required or which may be given under this Agreement or the law shallbe given in writing and shall be deemed received upon the occurrence of any of the following: (i) when refused or noted unable todeliver, if addressed pursuant to this section, (ii) when received via nationally recognized overnight courier/delivery service, or (iii)when received via facsimile, provided that a copy is also delivered within one business day pursuant to the method set forth in section(ii) immediately above. In each case the notice shall be addressed to Northwestern and to Lender at the addresses set forth below, or tosuch other addresses as may be requested by Northwestern and Lender by giving notice to the other interested parties in accordancewith this paragraph._____Lessee Initials4_____Lessor InitialsTo Northwestern: The Northwestern Mutual LifeInsurance Companyc/o Northwestern Mutual InvestmentManagement Company Attn: Phone: Fax: Email: With a copy to Northwestern’sProperty Manager: Attn: Phone: Fax: Email: To Lender: Attn: Phone: Fax: Email: To Tenant: Attn: Phone: Fax: Email: 9. For purposes of executing this Agreement, a document signed and transmitted by facsimile machineor email (in the form of a PDF) shall be treated as an original document. The signature of any party thereon shall be considered as anoriginal signature, and the document transmitted shall be considered to have the same binding legal effect as an original signature on anoriginal document. Any facsimile or emailed document shall be re-executed by both parties in original form. No party hereto may raisethe use of a facsimile machine or email or the fact that any signature was transmitted through the use of a facsimile machine or email asa defense to the validity or enforcement of this Agreement or any amendment executed in compliance with this Paragraph 9. Thisparagraph does not supersede the requirements of paragraph 8 of this Agreement._____Lessee Initials5_____Lessor Initials10. As a condition precedent to Northwestern’s execution of this Agreement, payment to Northwestern in the sum of FiveHundred Dollars ($500) to compensate Northwestern for the cost of preparing, negotiating and delivering this Agreement shall be madeto Northwestern by either Lender or Tenant, in good and negotiable funds, the parties hereto agreeing that such sum is a reasonableapproximation of the cost of Northwestern’s expenses relating thereto, the exact cost thereof being impractical to determine.11. This Agreement, and the terms thereof, shall be governed and controlled by the laws of the state in which the Property islocated. This Agreement will not be recorded in the land or real estate records.12. This Agreement may be executed in any number of counterparts each of which, when so executed and delivered, shall bedeemed to be an original and all of which taken together shall constitute one and the same document.IN WITNESS WHEREOF, this Agreement has been executed as of the date first set forth above.LENDER: By: Name: Title: TENANT: By: Name: Title: NORTHWESTERN: THE NORTHWESTERN MUTUALLIFE INSURANCE COMPANY,a Wisconsin corporationBy:Northwestern Mutual InvestmentManagement, LLC a Delaware limitedliability company, its wholly-ownedaffiliateBy Name: Its: Managing Director_____Lessee Initials6_____Lessor InitialsENVIRONMENTAL QUESTIONNAIREEXHIBIT “F”EXHIBIT “F”ENVIRONMENTAL QUESTIONNAIRE AND DISCLOSURE STATEMENTThe purpose of this form is to obtain information regarding the use of hazardous substances on the premises. Prospective tenants shouldanswer the questions in light of their proposed operations on the premises. Existing tenants should answer the questions as they relate toon-going operations on the premises and should update any information previously submitted. If additional space is needed to answerthe questions, you may attach separate sheets of paper to this form.Your cooperation in this matter is appreciated. Any questions should be directed to, and when completed, the form should be mailed to:1. GENERAL INFORMATIONCompany Name: MaxLinearCheck Applicable Status: Prospective Tenant: ü Current Tenant: ____Mailing Address: 16275 Laguna Canyon Road, Suite 120, Irvine, CA 92618Contact Person & Title: Sameer Roo, Director of FinancePhone #: (949) 333-0112Address Leased Premises: 50 Parker, Irvine, CADescribe the proposed operations to take place on the property, including principal products manufactured or services to be conducted.Existing tenants should describe any proposed changes to on-going operations.Engineering Research & Development and product testing.2. STORAGE OF HAZARDOUS MATERIALSWill any hazardous materials be used or stored on site?Wastes Yes _____ No : ü Chemical Products Yes _____ No : ü Attach the list of any hazardous materials to be used or stored, the quantities that will be on site at any given time, and the location andmethod of storage.3. STORAGE TANKS & SUMPS3.1 Is any above or below ground storage of gasoline, diesel, or other hazardous substances in tanks or sumps proposed or currentlyconducted on the premises?Yes _____ No : ü If yes, describe the materials to be stored, and the type, size and construction of the sump or tank. Attach copies of any permitsobtained for the storage of such substances.3.2 Have any of the tanks or sumps been inspected or tested for leakage?Yes _____ No _____If so, attach results.3.3 Have any spills or leaks occurred from such tanks or sumps?Yes _____ No _____If so, describe.3.4 Were any regulatory agencies notified of the spill or leak?Yes _____ No _____If so, attach copies of any spill reports filed, any clearance letters or other correspondence from regulatory agencies relating tothe spill or leak.3.5 Have any underground storage tanks or sumps been taken out of service or removed?Yes _____ No _____If yes, attach copies of any closure permits and clearance obtained from regulatory agencies relating to closure and removal ofsuch tanks.4. SPILLS4.1 During the past year, have any spills occurred on the premises?Yes _____ No : ü If so, please describe the spill and attach the results of any testing conducted to determine the extent of such spills.4.2 Were any agencies notified in connection with such spills?Yes _____ No _____If so, attach copies of any spill reports or other correspondence with regulatory agencies.4.3 Were any clean up actions undertaken in connection with the spill?Yes _____ No _____If so, briefly describe the actions taken. Attach copies of any clearance letters obtained from any regulatory agencies involvedand the results of any final soil or ground water sampling done upon completion of the clean up work.5. WASTE MANAGEMENT5.1 Has your company been issued an EPA Hazardous Waste Generator I.D. number?Yes _____ No : ü 5.2 Has your company filed a biennial report as a hazardous waste generator?Yes _____ No : ü If so, attach a copy of the most recent report files.5.3Attach a list of the hazardous waste, if any, generated or to be generated at the premises, its hazard class and the quantitygenerated on a monthly basis.5.4Describe the method(s) of disposal for each waste. Indicate where and how often disposal will take place. 5.5Indicate the name of the person(s) responsible for maintaining copies of hazardous manifests completed for off-site shipmentsof hazardous waste. 5.6Is any treatment or processing of hazardous wastes currently conducted or proposed to be conducted at the premises:Yes _____ No : ü If yes, please describe any existing or proposed treatment methods. 5.7Attach copies of any hazardous waste permits or licenses issued to your company with respect to its operations on the premises.6.WASTE WATER TREATMENT/DISCHARGE6.1Do you discharge waste water to:____ storm drain? ____ sewer?____ surface water? ü no industrial discharge6.2Is your waste water treated before discharge?Yes _____ No _____If yes, describe the type of treatment conducted.6.3Attach copies of any waste water discharge permits issued to your company with respect to its operations on the premises.7.AIR DISCHARGES7.1Do you have any air filtration systems or stacks that discharge into the air?Yes _____ No : ü 7.2Do you operate any of the following types of equipment, or any other equipment requiring an air emissions permit?____ Spray booth____ Dip tank____ Drying oven____ Incinerator____ Other ____________________ ü No Equipment Requiring Air Permits7.3Are air emissions from your operation monitored?Yes _____ No _____If so, indicate the frequency of monitoring and a description of the monitoring results.7.4Attach copies of any air emissions permits pertaining to your operations on the premises.8. 8. HAZARDOUS MATERIALS DISCLOSURES8.1Does your company handle hazardous materials in a quantity equal to or exceeding an aggregate of 500 pound, 5 gallons, or200 cubic feet? No8.2Has your company prepared a hazardous materials management plan (“business plan”) pursuant to Orange County FireDepartment requirements?Yes _____ No : ü 8.3Are any of the chemicals used in your operation regulated under Proposition 65?Yes _____ No : ü If so, describe the actions taken, or proposed actions to be taken, to comply with the proposition.8.4Describe the procedure followed to comply with OSHA Hazard Communication Standard requirements. N/A9.ENFORCEMENT ACTIONS, COMPLAINTS9.1Has your company ever been subject to any agency enforcement actions, administrative orders, or consent decrees?Yes _____ No : ü If so describe the actions and any continuing compliance obligations imposed as a result of these actions.9.2Has your company ever received requests for information, notice or demand letters, or any other inquiries regarding itsoperation?Yes _____ No : ü 9.3Have there ever been, or are there now pending, any lawsuits against the company regarding any environmental or health andsafety concerns?Yes _____ No : ü 9.4Has an environmental audit ever been conducted at your company’s current facility?Yes _____ No : ü 9.5Have there been any problems or complaints from neighbors at the company’s current facility? No10SUMMARY PAGELessee shall describe on the attached summary page all Hazardous Substances to be located at the Premises by Lessee or itsagents. Lessee certifies that the information set forth on the summary following on the next page is true and correct.MaxLinear, Inc. CompanyBy: /s/ Title: Director, FinanceDate: 07/07/2015Property Name: Parker Irvine Business Center Property Address: 50 Parker, Irvine, CA 92618 Northwestern Investment Number: IRE-334040 Tenant Name: MaxLinearTenant’s primary business activities as this tenant space: Engineering Research & Development and product testingChemical Name(Manufacturer’sName)Primary and/orHazardousConstituentsMaterial SafetyData Sheet Name(attach. copies ofMSDS’s)Size/Quantity ofContainerMax Number ofOnsite Containersper monthMax Quantity ofMaterial on- siteper MonthDescribe storagemethod for thisproductNOT APPLICABLE 2016 BUDGET OF COMMON AREA OPERATING EXPENSESEXHIBIT “G”EXHIBIT “G”2016 COMMON AREA EXPENSE ESTIMATEMaintenance and Repairs/Association Fees/Landscape:$346,567.00Trash, smoke alarms and Misc. service: $43,500.00$43,500.00Utilities — Electric and Water — Common Area:$24,000.00Misc. Expenses — Administration and Management:$217,000.00Insurance — Liability and Property:$179,920.00Property Taxes — Common area and buildings:$546,900.00 ($67,362.00 for 50 Parker)TOTAL ANNUAL EXPENSES:$1,357,887.00Apx. $0.28 per square foot per monthFor 408,502 square foot ProjectEXHIBIT “G”FORM OF CERTIFICATE OF INSURANCEEXHIBIT “H”MCKENNA & COMPANYPO Box 578, Apple Valley, CA 92307949 768 5840 Voice Mail 949 266 5897 Faxjcirillo@mckennaco.comRe: Distribution Tenant Insurance Requirements - Certificate of Insurance & Endorsements for Parker Irvine Business Center, Irvine,CA 92618Please forward Accord Certificates of Insurance and actual Endorsements which includes the requirements below and send toone of the following as soon as possible: McKenna & Company, PO Box 578, Apple Valley, CA 92307 or Fax to 949 266-5897 oremail to jcirillo@mckennaco.com1. The Certificate Holder should read: “The Northwestern Mutual Life Insurance Co, and it’s wholly owned subsidiaries andagents, William A. Budge Inc., Maureen M. Corona Corp. dba McKenna & Co., PO Box 578, Apple Valley, CA 92307”2. Actual Endorsement of “Form CG 20 11, Additional Insured—Managers or Lessors of Premises” or at least as broad as theISO’s equivalent Endorsement.If you submit a Blanket Endorsement, the additional insured names must be listed on the Certificate with reference ofEndorsement Form number. Additional Insured Endorsement names to read as: “The Northwestern Mutual Life Insurance Co, and it’swholly owned subsidiaries and agents, William A. Budge Inc„ Maureen M. Corona Corp. dba McKenna & Co. and their respectiveMembers, Managers, Officers, Affiliates, and Employees”. Please include the Policy number on Endorsements.3. Please make reference of the entity name on our Lease Agreement as well as any dba.4. The certificate should reference the address & Suite(s) # of the premises you occupy.5. General Liability insurance must be for a minimum of $2,000,000.00 per occurrence.6. All-Risk property insurance on “Lessee’s Property” for the full replacement value. Such policy shall contain an agreedamount endorsement in lieu of a coinsurance clause. “Lessee’s Property” is defined to be all improvements, betterments and personalproperty of Lessee located in or on the Premises, Common Areas or Building.7. Worker’s Compensation insurance as required by state law.Your assistance in this matter is greatly appreciated. Should you have any questions, please feel free to email as email is themost reliable source in reaching me.Regards,Judi CirilloInsurance AdministratorMcKenna & Co.Parker Irvine Business CenterRev. 01.26.11MCKENNA & COMPANYPO Box 578, Apple Valley, CA 92307949 768 5840 Voice Mail 949 266-5897 Faxjcirillo@mckennaco.comExample of Proper EndorsementPOLICY # XXXXXXXXTHIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.ADDITIONAL INSURED -- MANAGERS OR LESSORS OF PREMISESThis endorsement modifies insurance provided under the following:COMMERCIAL GENERAL LIABILITY COVERAGE PARTSCHEDULEDesignation of Premises (Part Leased To You)Parker Irvine Business CenterXX Hammond, Suite XXXIrvine, CA 92618Name Of Additional Insured Person(s) Or Organization(s):The Northwestern Mutual Life Insurance Co. and it’s wholly owned subsidiaries and agents, William A. Budge Inc., Maureen M.Corona Corp. dba McKenna & Co. and their respective Members, Managers, Officers, Affiliates, and Employees.Etc. etcForm CG 20 11 XX XXRev. 01.26.11LETTER AGREEMENT REGARDING DESIGN WORKEXHIBIT “I”Northwestern Mutual*October 20, 2015Northwestern Mutual Real Estate610 Newport Center Drive. Suite 850Newport Beach. CA 92660949 759 5555 office949 640 5721 faxVia E-mail & US MailMr. Adam SpiceMaxLinear, Inc.5966 La Place CourtSuite 100Carlsbad, California 92008RE: 50 Parker, Irvine, CADear Adam,With reference to the proposed lease transaction between The Northwestern Mutual Life Insurance Company, a Wisconsin corporation,as Landlord, and MaxLinear, Inc., a Delaware corporation, as Tenant, pertaining to approximately 50,236 square feet of that certainbuilding addressed at 50 Parker, Irvine, Ca. (the “Premises”) it is anticipated that a lease will be negotiated and executed basedsubstantially upon the terms (the “Agreed Terms”) set forth in that contain Letter of Intent, dated September 18, 2015. Although it isanticipated that the lease will be executed and delivered sometime in the near future, the parties wish to proceed with the preparation ofpreliminary design drawings, and certain other pre-construction work (collectively, “Design Work”) for the leasehold improvementscontemplated for such space as soon as possible.Landlord is prepared to authorize its space planners, architects, engineers and other suppliers and contractors (collectively, “Vendors”)to begin to undertake such Design Work prior to execution of the lease at a cost not to exceed $26,500.00 as itemized in Exhibit “A”attached hereto. However, this authorization shall be in consideration of the countersignature of this letter by Tenant, by whichcountersignature Tenant agrees to reimburse Landlord for any of such sums paid by Landlord to the Vendors retained for the DesignWork. Tenant’s reimbursement obligation hereunder shall be subject to a limitation of $26,500.00, and a condition precedent to theeffectiveness of such reimbursement obligation shall be that a lease agreement is not entered into between the parties for such space. Ifthe parties enter into a lease for the Premises, the lease shall control and Landlord and Tenant shall be subject to their respectiveobligations under the lease and this letter shall be null and void. Such Design Work shall cease immediately upon receipt by theVendors of a written request to stop such work, delivered by Tenant or by Landlord. Invoices for costs incurred to the date such work isstopped shall be delivered to Tenant, together with a reasonably particular breakdown of such invoices, and Tenant agrees to promptlypay to Landlord the amounts owed, if any, pursuant to this letter.If the foregoing meets with your approval, please countersign this letter and the additional enclosed copy of this letter, retain this letterfor your files, and return the countersigned copy to me, as soon as possible.Very truly yours,Don Morton,Director — Asset ManagementThe foregoing is agreed to and accepted this 21 day of Oct 2015:“Tenant”MaxLinear, Inc„ a Delaware CorporationBy: Adam C. SpiceIts: CFOcc: William A. Budge Loren BudgeExhibit “A”Design Work CostsProgramming - $4,000.00Test Fit plans - $5,500.00As-build - $4,500.00Office planning - $5,500.00Collaborative Workshop lab - $7,000.00Total: $26,500.00PRELIMINARY SPACE PLANEXHIBIT “J”EXHIBIT 21.1SIGNIFICANT SUBSIDIARIES OF MAXLINEAR, INC. Name Jurisdiction MaxLinear Asia Limited Malaysia Entropic Communications LLC United States EXHIBIT 23.1Consent of Independent Registered Public Accounting FirmWe consent to the incorporation by reference in the following Registration Statements:(1)Registration Statement (Form S-8 No. 333-165770) pertaining to the 2010 Equity Incentive Plan and the 2010 Employee stock Purchase Plan ofMaxLinear, Inc.,(2)Registration Statement (Form S-8 No. 333-172418) pertaining to the 2010 Equity Incentive Plan and the 2010 Employee stock Purchase Plan ofMaxLinear, Inc.,(3)Registration Statement (Form S-8 No. 333-180666) pertaining to the 2010 Equity Incentive Plan and the 2010 Employee stock Purchase Plan ofMaxLinear, Inc.,(4)Registration Statement (Form S-8 No. 333-187395) pertaining to the 2010 Equity Incentive Plan and the 2010 Employee stock Purchase Plan ofMaxLinear, Inc.,(5)Registration Statement (Form S-8 No. 333-194856) pertaining to the 2010 Equity Incentive Plan and the 2010 Employee stock Purchase Plan ofMaxLinear, Inc.,(6)Registration Statement (Form S-8 No. 333-203034) pertaining to the 2010 Equity Incentive Plan and the 2010 Employee stock Purchase Plan ofMaxLinear, Inc.,(7)Registration Statement (Form S-8 No. 333-204017) pertaining to the RF Magic, Inc. 2000 Incentive Stock Plan, Entropic Communications, Inc. 2001Stock Option Plan, Entropic Communications, Inc. 2007 Non-Employee Directors’ Stock Option Plan and Entropic Communications, Inc. 2012Inducement Award Plan,(8)Registration Statement (Form S-4 No. 333-202679) pertaining to the registration of Class A Common Stock securities related to the EntropicCommunications, Inc. merger.of our reports dated February 17, 2016, with respect to the consolidated financial statements and schedule of MaxLinear, Inc., and the effectiveness ofinternal control over financial reporting of MaxLinear, Inc., included in this Annual Report (Form 10-K) of MaxLinear, Inc., for the year ended December 31,2015./s/ Ernst & Young LLPIrvine, CaliforniaFebruary 17, 2016EXHIBIT 31.1Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002I, Kishore Seendripu, Ph.D., certify that: 1.I have reviewed this Form 10-K of MaxLinear, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct 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 theregistrant and have: a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared;b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles;c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscalquarter (registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant's internal control over financial reporting; and 5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant's ability to record, process, summarize and report financial information; andb)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control overfinancial reporting.Date: February 17, 2016 /s/ Kishore Seendripu, Ph.D. Kishore Seendripu, Ph.D. President and Chief Executive Officer (Principal Executive Officer)EXHIBIT 31.2Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002I, Adam C. Spice, certify that: 1.I have reviewed this Form 10-K of MaxLinear, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct 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 theregistrant and have: a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared;b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles;c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscalquarter (registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant's internal control over financial reporting; and 5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant's ability to record, process, summarize and report financial information; andb)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control overfinancial reporting.Date: February 17, 2016 /s/ Adam C. Spice Adam C. Spice Chief Financial Officer (Principal Financial and Accounting Officer)EXHIBIT 32.1CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TO SECTION 906 OFTHE SARBANES-OXLEY ACT OF 2002I, Kishore Seendripu, Ph.D., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report ofMaxLinear, Inc. on Form 10-K for the fiscal year ended December 31, 2015 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934and that information contained in such Annual Report on Form 10-K fairly presents in all material respects the financial condition and results of operations of MaxLinear, Inc.Date: February 17, 2016 By: /s/ Kishore Seendripu, Ph.D. Name: Kishore Seendripu, Ph.D. Title: President and Chief Executive OfficerI, Adam C. Spice, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report ofMaxLinear, Inc. on Form 10-K for the fiscal year ended December 31, 2015 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934and that information contained in such Annual Report on Form 10-K fairly presents in all material respects the financial condition and results of operations of MaxLinear, Inc. Date: February 17, 2016 By: /s/ Adam C. Spice Name: Adam C. Spice Title: Chief Financial Officer

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