Common use of Base Rent During Option Term Clause in Contracts

Base Rent During Option Term. (a) During the first year of each Option Term, if it occurs, Tenant shall pay to Landlord Base Rent equal to “Market Rent” (as defined below) for the Premises determined as of the commencement date of such Option Term adjusted annually during the Option Term as provided below in this Section 8. As used herein, “Market Rent” shall mean the price that a ready and willing tenant would pay, at commencement of the Option Term, as monthly base rent to a ready and willing landlord of similar space in the geographical area of San Diego County known as Del Mar Heights if such office space were offered for lease on the open market for a reasonable period of time and be the product of the fair market annual rental rate per rentable square foot multiplied by the Rentable Area of the Premises (as set forth in the Basic Lease Information), determined as follows: (a) as mutually agreed by Landlord and Tenant within ten (10) days of Landlord’s delivery to Tenant of Landlord’s opinion of the Market Rent for the first year of the Option Term (“Landlord Rent Notice”, which shall be delivered to Tenant within ten (10) days of receipt of Tenant’s written Extension Notice; or (b) in the event that Landlord and Tenant are unable to so agree, the Market Rent shall be determined by concurrent appraisals pursuant to Section 8(b) below. In determining Market Rent, appraisers shall take into account the duration of the Option Term, the quality, condition and prestige of the Building and Premises (as tenant improvements are maintained as required by the terms and conditions of this Lease), recent monthly rental rates and annual base rent escalations for buildings of similar size and location imputed to the commencement of the Option Term, condition and quality of comparable tenant improvements in buildings of similar quality and location and all relevant economic terms of this Lease, including free rent and other economic inducements, it being the intent that Market Rent, as so determined, should reflect the total economic package which would be offered at the time of commencement of the Option Term to a new tenant for the Premises, or substantially similar space in a building of similar quality, condition, and location and with similar tenant improvements under a lease with substantially the same terms and provisions as the applicable terms and provisions of this Lease (“Market for Similar Space”) without discounting the rent for the creditworthiness of the Tenant or for the cost of real estate leasing commissions. Landlord’s Rent Notice, and any determination of Market Rent by appraisal as described herein, shall also set forth the market annual base rent escalation rate then prevailing in the relevant marketplace, which shall be used for purposes of determining Base Rent adjustments during the Option Term.

Base Rent During Option Term. (a) During the first year of each Option Term, if it occurs, Tenant shall pay to Landlord The Base Rent payable by Tenant during the Option Term shall be equal to “the Fair Market Rent” (as defined below) Rent for the Premises determined as of the commencement date of such Option Term adjusted annually during the Option Term as provided below in this Section 8. As used herein, “Market Rent” shall mean the price that a ready and willing tenant would pay, at commencement of the Option Term. The "Fair Market Rent" shall be equal to the rent, including all escalations, at which tenants, as monthly base rent to a ready and willing landlord of similar space in the geographical area of San Diego County known as Del Mar Heights if such office space were offered for lease on the open market for a reasonable period of time and be the product of the fair market annual rental rate per rentable square foot multiplied by the Rentable Area of the Premises (as set forth in the Basic Lease Information), determined as follows: (a) as mutually agreed by Landlord and Tenant within ten (10) days of Landlord’s delivery to Tenant of Landlord’s opinion of the Market Rent for the first year of the Option Term (“Landlord Rent Notice”, which shall be delivered to Tenant within ten (10) days of receipt of Tenant’s written Extension Notice; or (b) in the event that Landlord and Tenant are unable to so agree, the Market Rent shall be determined by concurrent appraisals pursuant to Section 8(b) below. In determining Market Rent, appraisers shall take into account the duration of the Option Term, the quality, condition and prestige of the Building and Premises (as tenant improvements are maintained as required by the terms and conditions of this Lease), recent monthly rental rates and annual base rent escalations for buildings of similar size and location imputed to the commencement of the Option TermTerm are leasing non-sublease, condition non-encumbered, non-equity space comparable in size, location and quality to the Premises, for a similar lease term, in an arm's length transaction, which comparable space is located in the Project and in the "Comparable Buildings," as that term is defined hereinbelow (collectively, the "Comparable Transactions"), and which Comparable Transactions have been entered into within the twelve (12) month period prior to Landlord's delivery of the "Rent Notice," as that term is defined in Section 4.3 below, taking into consideration only the following concessions (the "Concessions"): (i) rental abatement concessions, if any, being granted such tenants in connection with such comparable space, and (ii) tenant improvements or allowances provided or to be provided for such comparable space, such value to be based upon the age, condition, design, quality of finishes, and layout of the improvements ; provided, however, that notwithstanding anything to the contrary herein, no consideration shall be given to (x) the fact that Landlord is or is not required to pay a real estate brokerage commission in connection with Tenant's exercise of its right to lease the Premises during the Option Term or the fact that the Comparable Transactions do or do not involve the payment of real estate brokerage commissions, and (y) any period of rental abatement, if any, granted to tenants in Comparable Transactions in connection with the design, permitting and construction of tenant improvements in buildings such comparable spaces. If in determining the Base Rent a tenant improvement allowance is granted under item (ii) above, Landlord may, at Landlord's sole option, elect any or a portion of similar quality the following: (A) to grant some or all of the tenant improvement allowance to Tenant in the form as described above (i.e., as an improvement allowance), and location and all relevant economic terms (B) to adjust the rental rate component of the Base Rent to be an effective rental rate which takes into consideration the total dollar value of the tenant improvement allowance (in which case the tenant improvement allowance evidenced in the effective rental rate shall not be granted to Tenant). For purposes of this Lease, including free rent and the term "Comparable Buildings" shall mean other economic inducements, it being first-class buildings which are comparable to the intent that Market Rent, Building in terms of age (based upon the date of completion of construction or major renovation as so determined, should reflect to the total economic package which would be offered at building containing the time of commencement portion of the Option Term to a new premises in question), tenant for the Premisesmix, or substantially similar space in a building quality of similar qualityconstruction, conditioninstitutional ownership, level of services and amenities, and location size and with similar tenant improvements under a lease with substantially appearance, to the same terms and provisions as the applicable terms and provisions of this Lease (“Market for Similar Space”) without discounting the rent for the creditworthiness of the Tenant or for the cost of real estate leasing commissions. Landlord’s Rent Notice, and any determination of Market Rent by appraisal as described herein, shall also set forth the market annual base rent escalation rate then prevailing extent located in the relevant marketplaceSorrento Valley and Sorrento Mesa area of San Diego, which shall be used for purposes of determining Base Rent adjustments during the Option TermCalifornia.

Base Rent During Option Term. (a) During the first year of each Option Term, if it occurs, Tenant shall pay to Landlord The Base Rent equal to “Market Rent” (as defined below) for the Premises determined as of the commencement date of such Option Term adjusted annually during the Option Term ---------------------------- ("Option Term Base Rent") shall be an amount equal to the greater of (i) the then fair market rental value of the Demised Premises ("Fair Market Rental Value"), as provided below in stated on a monthly basis and determined pursuant to this Section 83.2, or (ii) the Base Rent during the last month of the Initial Term, multiplied by 1.06. As used hereinThe initial Option Term Base Rent during each Option Term shall thereafter be increased in accordance with market rate increases, “if any. Upon receipt by Landlord of Tenant's Extension Notice under Section 1.2, above, Landlord and Tenant shall meet in an effort to negotiate, in good faith, the Option Term Base Rent which shall become effective as of the first day of the Option Term ("Option Term Commencement Date"). If Landlord and Tenant have not agreed upon the Option Term Base Rent (which Option Term Base Rent shall, for purposes of this Section 3.2 , include market rate increases) within thirty (30) days after the delivery of Tenant's Extension Notice, the Option Term Base Rent shall be determined as follows: (a) Landlord and Tenant shall attempt to agree in good faith upon a single appraiser not later than thirty-five (35) days after delivery of Tenant's Extension Notice. If Landlord and Tenant are unable to agree upon a single appraiser within such time period, then Landlord and Tenant shall each appoint one appraiser not later than five (5) days after the deadline for selecting a single appraiser. Landlord and Tenant shall each give written notice to the other as to the name of the appraiser it has selected, as soon as the selection is made. Within ten (10) days thereafter, the two appointed appraisers shall appoint a third appraiser. All appraisers shall be independent from, and disinterested in, both Landlord and Tenant. (b) The only task which the appraiser(s) shall perform shall be forming and reporting to Landlord and Tenant an opinion of the Fair Market Rental Value of the Demised Premises for use in determining the Option Term Base Rent” . (c) If either Landlord or Tenant fails to appoint its appraiser within the prescribed time period, the single appraiser appointed shall determine the Fair Market Rental Value of the Demised Premises. If both parties fail to appoint appraisers within the prescribed time periods, then the first appraiser thereafter selected by a party shall determine the Fair Market Rental Value of the Demised Premises. (d) Each party shall bear the cost of its own appraiser and the parties shall share equally the cost of any single or third appraiser, if applicable. All appraisers so designated herein shall have at least five (5) years' experience in the appraisal of commercial properties similar to the Demised Premises in San Diego County, California and shall be members of professional organizations such as MAI or its equivalent. (e) For the purpose of such appraisal and this subsection (d), the term "Fair Market Rental Value" shall mean the price that a ready and willing single tenant would pay, at commencement as of the Option TermTerm Commencement Date, as monthly base annual rent to a ready and willing landlord of similar space in a property comparable to the geographical area Demised Premises on the terms of San Diego County known as Del Mar Heights this Lease, if such office space property were offered exposed for lease on the open market for a reasonable period of time time. A "comparable property" shall mean a research and be development and office facility located in the product Sorrento Mesa area of the fair market annual City of San Diego, California (the "Market Area"), with improvements similar in age and character to the Demised Premises, which has been improved with the tenant improvements comparable to those constructed in the Demised Premises; provided, however, that the appraisal shall disregard the value of Tenant's and any other improvements paid for by Tenant (including Tenant Improvements but only to the extent such Tenant Improvements were paid for by Tenant as Excess Tenant Improvement Costs). The appraiser shall give appropriate consideration to all relevant factors, including, without limitation, (i) the fact that this Lease is a "triple net" lease, (ii) rental rate per rentable square foot multiplied concessions and tenant improvement allowances generally being offered by landlords of comparable properties, (iii) the Rentable Area age of the Premises Improvements, (as set forth in iv) the Basic Lease Information), determined as follows: (a) as mutually agreed by Landlord and Tenant within ten (10) days of Landlord’s delivery to Tenant of Landlord’s opinion condition of the Market Rent for Demised Premises on the first year assumption that Tenant has complied with its obligations to maintain and repair the Demised Premises, (v) rental market conditions then in existence, (vi) whether Landlord will or will not be required to pay a real estate brokerage commission in connection with Tenant's exercise of the Option Term (“Landlord Rent Notice”, which shall be delivered to Tenant within ten (10) days of receipt of Tenant’s written Extension Notice; or (b) in the event that Landlord and Tenant are unable to so agree, the Market Rent shall be determined by concurrent appraisals pursuant to Section 8(b) below. In determining Market Rent, appraisers shall take into account the duration of the Option Term, the quality, condition and prestige of the Building and Premises (as tenant improvements are maintained as required by the terms and conditions of this Lease), recent monthly rental rates and annual base rent escalations for buildings of similar size and location imputed to the commencement of the Option Term, condition and quality of comparable tenant improvements in buildings of similar quality and location and all relevant economic terms of this Lease, including free rent and other economic inducements, it being the intent that Market Rent, as so determined, should reflect the total economic package which would be offered at the time of commencement of the Option Term to a new tenant for the Premises, or substantially similar space in a building of similar quality, conditionOption, and location and with similar tenant improvements under a lease with substantially (vii) the same terms and provisions as the applicable terms and provisions of this Lease (“Market for Similar Space”) without discounting the rent for the creditworthiness of fact that the Tenant or for will be accepting the cost of real estate leasing commissions. Landlord’s Rent Notice, and any determination of Market Rent by appraisal as described herein, shall also set forth the market annual base rent escalation rate then prevailing Demised Premises in the relevant marketplace, which shall be used for purposes of determining Base Rent adjustments during the Option Terman "As-Is" condition.

Base Rent During Option Term. (a) During the first year of each Option Term, if it occurs, Tenant shall pay to Landlord The initial Base Rent equal to “Market Rent” (as defined below) for the Premises determined as of the commencement date of such Option Term adjusted annually during the Option Term (“Option Term Base Rent”) shall be an amount equal to the greater of (i) the then fair market rental value of the Demised Premises (“Fair Market Rental Value”), as provided below in stated on a monthly basis and determined pursuant to this Section 83.2, or (ii) 103% of the Base Rent during the last month of the Initial Term. As used hereinThe initial Option Term Base Rent payable during the Option Term shall thereafter be increased as of the first day of the 13th month of the Option Term and every 12 months thereafter during the Option Term (i.e., as of the first day of the second, third, fourth and fifth years of the Option Term) by factor of three percent (3%). Upon receipt by Landlord of Tenant’s Extension Notice under Section 1.2, above, Landlord and Tenant shall meet in an effort to negotiate, in good faith, the Option Term Base Rent which shall become effective as of the first day of the Option Term (“Option Term Commencement Date”). If Landlord and Tenant have not agreed upon the Option Term Base Rent within thirty (30) days after the delivery of Tenant’s Extension Notice, the Option Term Base Rent shall be determined as follows: (a) Landlord and Tenant shall attempt to agree in good faith upon a single appraiser not later than thirty-five (35) days after delivery of Tenant’s Extension Notice. If Landlord and Tenant are unable to agree upon a single appraiser within such time period, then Landlord and Tenant shall each appoint one appraiser not later than five (5) days after the deadline for selecting a single appraiser. Landlord and Tenant shall each give written notice to the other as to the name of the appraiser it has selected, as soon as the selection is made. Within ten (10) days thereafter, the two appointed appraisers shall appoint a third appraiser. All appraisers shall be independent from, and disinterested in, both Landlord and Tenant. (b) The only task which the appraiser(s) shall perform shall be forming and reporting to Landlord and Tenant an opinion of the Fair Market Rental Value of the Demised Premises for use in determining the Option Term Base Rent. (c) If either Landlord or Tenant fails to appoint its appraiser within the prescribed time period, the single appraiser appointed shall determine the Fair Market Rental Value of the Demised Premises. If both parties fail to appoint appraisers within the prescribed time periods, then the first appraiser thereafter selected by a party shall determine the Fair Market Rental Value of the Demised Premises. (d) Each party shall bear the cost of its own appraiser and the parties shall share equally the cost of any single or third appraiser, if applicable. All appraisers so designated herein shall have at least five (5) years’ experience in the appraisal of commercial properties similar to the Demised Premises in San Diego County, California and shall be members of professional organizations such as MAI or its equivalent. (e) For the purpose of such appraisal and this subsection (d), the term “Fair Market Rental Value” shall mean the price that a ready and willing single tenant would pay, at commencement as of the Option TermTerm Commencement Date, as monthly base annual rent to a ready and willing landlord of similar space in a Comparable Property on the geographical area terms of San Diego County known as Del Mar Heights this Lease, if such office space Comparable Property were offered exposed for lease on the open market for a reasonable period of time and be time. As used in this Lease, a “Comparable Property” or “Comparable Properties” shall mean two-story concrete tilt-up office buildings located in the product Sorrento Mesa area of the fair market annual rental rate per rentable square foot multiplied by City of San Diego, California (the Rentable Area “Market Area”), of comparable quality to the Premises (as set forth Buildings, with improvements similar in age and character to the Demised Premises, which has been improved with the tenant improvements comparable to those constructed in the Basic Lease Information)Demised Premises; provided, determined as follows: (a) as mutually agreed by Landlord and Tenant within ten (10) days of Landlord’s delivery to Tenant of Landlord’s opinion of however, that the Market Rent for appraisal shall disregard the first year of the Option Term (“Landlord Rent Notice”, which shall be delivered to Tenant within ten (10) days of receipt value of Tenant’s written Extension Notice; or and any other improvements paid for by Tenant. The appraiser shall give appropriate consideration to all relevant factors, including, without limitation, (bi) in rental concessions and tenant improvement allowances generally being offered by landlords of comparable properties, (ii) the event that Landlord and Tenant are unable to so agree, the Market Rent shall be determined by concurrent appraisals pursuant to Section 8(b) below. In determining Market Rent, appraisers shall take into account the duration age of the Option TermImprovements, the quality(iii) rental market conditions then in existence, condition and prestige (iv) whether Landlord will or will not be required to pay a real estate brokerage commission in connection with Tenant’s exercise of the Building and Premises (as tenant improvements are maintained as required by the terms and conditions of this Lease), recent monthly rental rates and annual base rent escalations for buildings of similar size and location imputed to the commencement of the Option Term, condition and quality of comparable tenant improvements in buildings of similar quality and location and all relevant economic terms of this Lease, including free rent and other economic inducements, it being the intent that Market Rent, as so determined, should reflect the total economic package which would be offered at the time of commencement of the Option Term to a new tenant for the Premises, or substantially similar space in a building of similar quality, conditionExtension Option, and location and with similar tenant improvements under a lease with substantially (v) the same terms and provisions as the applicable terms and provisions of this Lease (“Market for Similar Space”) without discounting the rent for the creditworthiness of fact that the Tenant or for will be accepting the cost of real estate leasing commissions. Landlord’s Rent Notice, and any determination of Market Rent by appraisal as described herein, shall also set forth the market annual base rent escalation rate then prevailing Demised Premises in the relevant marketplace, which shall be used for purposes of determining Base Rent adjustments during the Option Terman “As-Is” condition.

Base Rent During Option Term. (a) During In the first year event that Tenant elects to exercise its Option to extend the Term of each Option Termthis Lease in accordance with the terms of Section 3.2, if it occurs, Tenant shall pay to Landlord the Base Rent for the Option Term shall be equal to “Market Rent” (as defined below) the then-market rate for similarly improved space in comparable buildings for comparable use in the Premises determined as of South Seattle-Tukwila region; provided, however, that in no event shall the commencement date of such Option Term adjusted annually Base Rent during the Option Term as provided below in this Section 8. As used herein, “Market Rent” shall mean be less than the price that a ready and willing tenant would pay, at commencement of the Option Term, as monthly base rent to a ready and willing landlord of similar space in the geographical area of San Diego County known as Del Mar Heights if such office space were offered for lease on the open market for a reasonable period of time and be the product of the fair market annual rental rate per rentable square foot multiplied by the Rentable Area of the Premises (as set forth in the Basic Lease Information), determined as follows: (a) as mutually agreed by Landlord and Tenant within ten (10) days of Landlord’s delivery to Tenant of Landlord’s opinion of the Market Base Rent for the last year of the initial Lease Term. The adjusted Base Rent shall commence on and be payable on the first year day of the Option Term (“Landlord Rent Notice”, which and shall continue thereafter throughout the Option Term. The market rate shall be delivered to Tenant within ten (10) days of receipt of Tenant’s written Extension Notice; or (b) determined on a triple net basis by analyzing comparable lease transactions and lease renewals in the event that South Seattle/Tukwila office market. In analyzing comparable transactions, all reasonable factors affecting rent only shall be taken into consideration, including, but not limited to, the office building age, size, style and condition and the date of the comparable lease. If Landlord and Tenant are unable cannot agree on a market rate for the Option Term prior to so agreeone hundred twenty (120) days before Lease termination, then both parties agree to use the Market Rent appraisal process, outlined as follows: Each party will hire an MAI appraiser. Each appraiser must have a minimum of five (5) years appraisal experience in the South Seattle/Tukwila area. Each appraiser shall complete his/her appraisal within thirty (30) days. If the appraisers' opinion of the market rate differs by less than ten percent (10%) of the amount of the higher appraisal; then the market rate shall be determined by concurrent appraisals pursuant to Section 8(b) below. In determining Market Rent, appraisers shall take into account the duration average of the Option Term, two appraisals. If the quality, condition and prestige appraiser's opinion of market rate differs by more than ten percent (10%) of the Building higher appraisal then a third MAI appraiser satisfying the same qualifications shall be mutually hired and Premises (as tenant improvements are maintained as required paid for by both parties. The third appraiser will evaluate the terms and conditions of this Lease), recent monthly rental rates and annual base rent escalations for buildings of similar size and location imputed to market using the commencement same parameters outlined in the preceding paragraph. The market rate estimate of the third appraiser shall be averaged with the market rate estimate of the appraiser closest to it. The Base Rent for the Option Term, condition and quality Term shall be the higher of comparable tenant improvements in buildings of similar quality and location and all relevant economic terms of the resultant average rent utilizing this Lease, including free rent and other economic inducements, it process or the Base Rent being the intent that Market Rent, as so determined, should reflect the total economic package which would be offered paid at the time of commencement of the Option Term to a new tenant for the Premises, or substantially similar space in a building of similar quality, condition, and location and with similar tenant improvements under a lease with substantially the same terms and provisions as the applicable terms and provisions of this Lease (“Market for Similar Space”) without discounting the rent for the creditworthiness of the Tenant or for the cost of real estate leasing commissions. Landlord’s Rent Notice, and any determination of Market Rent by appraisal as described herein, shall also set forth the market annual base rent escalation rate then prevailing in the relevant marketplace, which shall be used for purposes of determining Base Rent adjustments during the Option Termrenewal.

Base Rent During Option Term. (a) During the first year of each Option Term, if it occurs, Tenant shall pay to Landlord Base Rent equal to “Market Rent” (as defined below) for the Premises determined shall be adjusted as of the commencement date of such Option Term adjusted annually during the Option Term (the "Base Rent Adjustment Date") to equal the then "Fair Market Rental Value" of the Premises determined in the following manner: Not later than one hundred fifty (150) days prior to the Base Rent Adjustment Date, Landlord and Tenant shall meet in an effort to negotiate in good faith the Fair Market Rental Value of the Premises as provided below of the Base Rent Adjustment Date. If Landlord and Tenant have not agreed upon the Fair Market Rental Value of the Premises at lease one hundred twenty (120) days prior to the Base Rent Adjustment Date, the Fair Market Rental Value shall be determined by the following appraisal method: (a) If Landlord and Tenant are not able to agree upon the Fair Market Rental Value of the Premises within the time period prescribed above, then Landlord and Tenant shall attempt to agree in this Section 8good faith upon a single appraiser not later than one hundred five (105) days prior to the Base Rent Adjustment Date. As used hereinIf Landlord and Tenant are unable to agree upon a single appraiser within such time period, “then Landlord and Tenant shall each appoint one appraiser not later than ninety-five (95) days prior the Base Rent Adjustment Date, and Landlord and Tenant shall each give notice to the other of such appointment at the time of such appointment. Within ten (10) days thereafter, the two appointed appraisers shall appoint a third appraiser. If either Landlord or Tenant fails to appoint its appraiser and to give written notice thereof to the other party within the prescribed time period, the single appraiser appointed shall determine the Fair Market Rent” Rental Value of the Premises. If both parties fail to appoint appraisers within the prescribed time periods, then an appraiser shall be selected by the presiding judge of the Los Angeles Superior Court upon application by either party, which appraiser shall determine the Fair Market Rental Value of the Premises. Each party shall bear the costs of its own appraiser and the parties shall share equally the cost of the single or third appraiser if applicable. All appraisers shall have at least five (5) years' experience in the appraisal of commercial/industrial real property in the area in which the Premises is located and shall be members of professional organizations such as MAI or its equivalent. (b) For the purpose of such appraisal, the term "Fair Market Rental Value" shall mean the price that a ready and willing tenant would pay, at commencement as of the Option TermBase Rent Adjustment Date, as monthly base rent rent, to a ready and willing landlord of similar space in property comparable to the geographical area of San Diego County known as Del Mar Heights Premises if such office space property were offered exposed for lease on the open market for a reasonable period of time and be the product taking into account all of the fair purposes for which such property may be used. Such determination of Fair Market Rental Value shall be based upon the rental of space of comparable age, construction, size and location as the Premises with the improvements then existing in the Premises and shall take into account Tenant's obligation to pay additional rent under this Lease and the then prevailing market annual for rental rate per rentable square foot multiplied by increases during the Rentable Area Option Term. If a single appraiser is chosen, then such appraiser shall determine the Fair Market Rental Value of the Premises. Otherwise, the Fair Market Rental Value of the Premises shall be the arithmetic average of the three appraisals, provided that any appraisal which is more then ten percent (as set forth in 10%) above or below the Basic Lease Information), determined as follows: (a) as mutually agreed by middle appraisal shall be disregarded. Landlord and Tenant shall instruct the appraiser(s) to complete their determination of Fair Market Rental Value not later than sixty (60) days prior to the Base Rent Adjustment Date. If the Fair Market Rental Value is not determined prior to the Base Rent Adjustment Date, then Tenant shall continue to pay to Landlord the monthly Base Rent applicable to the Premises immediately prior to the Base Rent Adjustment Date until the Fair Market Rental Value is determined. When the Fair Market Rental Value is determined, Landlord shall deliver notice thereof to Tenant, and Tenant shall pay to Landlord within ten (10) days after receipt of Landlord’s delivery such notice, the difference between the monthly Base Rent actually paid by Tenant to Tenant of Landlord’s opinion Landlord for the period from and after the Base Rent Adjustment Date and the new monthly Base Rent determined hereunder effective as of the Market Base Rent for the first year of the Option Term (“Landlord Rent Notice”, which shall be delivered to Tenant within ten (10) days of receipt of Tenant’s written Extension Notice; or (b) in the event that Landlord and Tenant are unable to so agree, the Market Rent shall be determined by concurrent appraisals pursuant to Section 8(b) belowAdjustment Date. In determining Market Rent, appraisers shall take into account the duration of the Option Term, the quality, condition and prestige of the Building and Premises (as tenant improvements are maintained as required by the terms and conditions of this Lease), recent monthly rental rates and annual base rent escalations for buildings of similar size and location imputed Notwithstanding anything to the commencement of the Option Term, condition and quality of comparable tenant improvements in buildings of similar quality and location and all relevant economic terms of this Lease, including free rent and other economic inducements, it being the intent that Market Rent, as so determined, should reflect the total economic package which would be offered at the time of commencement of the Option Term to a new tenant for the Premises, or substantially similar space in a building of similar quality, condition, and location and with similar tenant improvements under a lease with substantially the same terms and provisions as the applicable terms and provisions of this Lease (“Market for Similar Space”) without discounting the rent for the creditworthiness of the Tenant or for the cost of real estate leasing commissions. Landlord’s Rent Notice, and any determination of Market Rent by appraisal as described contrary contained herein, in no event shall also set forth the market annual base rent escalation rate then prevailing in the relevant marketplace, which shall be used for purposes of determining monthly Base Rent adjustments during be reduced below the Option Termmonthly Base Rent applicable to the Premises immediately prior to the Base Rent Adjustment Date.

Base Rent During Option Term. (a) During If Tenant exercises either Option to Extend, the first year of Base Rent for the Premises during each Option Term shall be equal to 95% of the then prevailing market rental rate in Comparable Buildings (the "PMRR"); the PMRR shall not take into account any leasehold improvement work paid for by Tenant, and no rate "floor" will be established. Within thirty days after the date that Landlord receives written notice of Tenant's interest in exercising its Option to Extend, Landlord shall give Tenant written notice of its determination of the PMRR and the Base Rent for the Option Term. If Tenant does not accept the Base Rent proposed by Landlord, the parties agree to negotiate in good faith for a period not to exceed thirty days. Provided that Tenant has given Landlord written notice of its interest in exercising its option at least sixteen months prior to the expiration of the then current Term, if Tenant believes that agreement cannot be reached, Tenant shall have the right, within forty days after receipt of Landlord's determination of Base Rent for the Option Term to demand that the PMRR be determined by appraisal, in which case, Landlord and Tenant shall each select a Qualified Appraiser to determine the PMRR, and if the two appraisals are no more than 10% apart the PMRR shall be the average of the two, and if the difference is greater than 10%, the two appraisers shall select a third Qualified Appraiser and the PMRR shall be the average of the two appraisals that are closest (or if neither is closer to the third appraisal, the PMRR shall be based on the third appraisal). The first two appraisals shall be completed within thirty days, and if a third appraisal is required, it occursshall be completed within thirty days thereafter. Each party shall be responsible for the timely completion of the appraisal by its selected appraiser. If either party fails to designate a Qualified Appraiser within ten days after notice, the first party may request its appraiser to designate the second appraiser. Nothing herein shall be deemed to have extended the time within which Tenant must exercise its Option to Extend, provided, however, Tenant shall have the right to withdraw the exercise of its Option to Extend with respect to the Option Term by written notice to Landlord within thirty days after the determination of the PMRR (time being of the essence), provided that the Term of the Lease shall continue for a period of twelve months after Tenant withdraws such option exercise, and during the period following the expiration of the prior Term and continuing to the expiration of the twelve month extension, Tenant shall pay to Landlord Base Rent equal to “Market Rent” (as defined below) for the Premises determined as 95% of the commencement date of such Option Term adjusted annually during the Option Term PMRR as provided below in this Section 8. As used herein, “Market Rent” shall mean the price that a ready and willing tenant would pay, at commencement of the Option Term, as monthly base rent to a ready and willing landlord of similar space in the geographical area of San Diego County known as Del Mar Heights if such office space were offered for lease on the open market for a reasonable period of time and be the product of the fair market annual rental rate per rentable square foot multiplied by the Rentable Area of the Premises (as set forth in the Basic Lease Information), determined as follows: (a) as mutually agreed by Landlord and Tenant within ten (10) days of Landlord’s delivery to Tenant of Landlord’s opinion of the Market Rent for the first year of the Option Term (“Landlord Rent Notice”, which shall be delivered to Tenant within ten (10) days of receipt of Tenant’s written Extension Notice; or (b) in the event that Landlord and Tenant are unable to so agree, the Market Rent shall be determined by concurrent appraisals pursuant to Section 8(b) below. In determining Market Rentappraisal, appraisers shall take into account plus all Additional Rent due in accordance with the duration of the Option Term, the quality, condition and prestige of the Building and Premises (as tenant improvements are maintained as required by the terms and conditions TCCs of this Lease), recent monthly rental rates and annual base rent escalations for buildings of similar size and location imputed to the commencement of the Option Term, condition and quality of comparable tenant improvements in buildings of similar quality and location and all relevant economic terms of this Lease, including free rent and other economic inducements, it being the intent that Market Rent, as so determined, should reflect the total economic package which would be offered at the time of commencement of the Option Term to a new tenant for the Premises, or substantially similar space in a building of similar quality, condition, and location and with similar tenant improvements under a lease with substantially the same terms and provisions as the applicable terms and provisions of this Lease (“Market for Similar Space”) without discounting the rent for the creditworthiness of the Tenant or for the cost of real estate leasing commissions. Landlord’s Rent Notice, and any determination of Market Rent by appraisal as described herein, shall also set forth the market annual base rent escalation rate then prevailing in the relevant marketplace, which shall be used for purposes of determining Base Rent adjustments during the Option Term.

Base Rent During Option Term. The Base Rent during the Option ---------------------------- Term ("OPTION TERM BASE RENT") shall be an amount equal to the greater of (i) ninety five percent (95%) of the then fair market rental value of the Demised Premises ("FAIR MARKET RENTAL VALUE"), as stated on a monthly basis and determined pursuant to this Section 3.2, or (ii) the Base Rent during the last month of the Initial Term, multiplied by 1.05. The Option Term Base Rent shall be increased to an amount equal to 1.04 times the then applicable Option Term Base Rent, as may have been previously adjusted pursuant to this Section 3.2, every twenty-four (24) months during the Option Term. Upon receipt by Landlord of Tenant's Extension Notice under Section 1.2, above, Landlord and Tenant shall meet in an effort to negotiate, in good faith, the Option Term Base Rent which shall become effective as of the first day of the Option Term ("OPTION TERM COMMENCEMENT DATE"). If Landlord and Tenant have not agreed upon the Option Term Base Rent within thirty (30) days after the delivery of Tenant's Extension Notice, the Option Term Base Rent shall be determined as follows: (a) During the first year of each Option Term, if it occurs, Landlord and Tenant shall pay attempt to agree in good faith upon a single appraiser not later than thirty-five (35) days after delivery of Tenant's Extension Notice. If Landlord and Tenant are unable to agree upon a single appraiser within such time period, then Landlord and Tenant shall each appoint one appraiser not later than five (5) days after the deadline for selecting a single appraiser. Landlord and Tenant shall each give written notice to the other as to the name of the appraiser it has selected, as soon as the selection is made. Within ten (10) days thereafter, the two appointed appraisers shall appoint a third appraiser. All appraisers shall be independent from, and disinterested in, both Landlord and Tenant. (b) The only task which the appraiser(s) shall perform shall be forming and reporting to Landlord Base Rent equal to “Market Rent” (as defined below) for the Premises determined as and Tenant an opinion of the commencement date Fair Market Rental Value of such Option Term adjusted annually during the Demised Premises for use in determining the Option Term Base Rent. (c) If either Landlord or Tenant fails to appoint its appraiser within the prescribed time period, the single appraiser appointed shall determine the Fair Market Rental Value of the Demised Premises. If both parties fail to appoint appraisers within the prescribed time periods, then the first appraiser thereafter selected by a party shall determine the Fair Market Rental Value of the Demised Premises. (d) Each party shall bear the cost of its own appraiser and the parties shall share equally the cost of any single or third appraiser, if applicable. All appraisers so designated herein shall have at least five (5) years' experience in the appraisal of commercial properties similar to the Demised Premises in San Diego County, California and shall be members of professional organizations such as provided below in MAI or its equivalent. (e) For the purpose of such appraisal and this Section 8. As used hereinsubsection (d), “the term "Fair Market Rent” Rental Value" shall mean the price that a ready and willing single tenant would pay, at commencement as of the Option TermTerm Commencement Date, as monthly base annual rent to a ready and willing landlord of similar space in a property comparable to the geographical area Demised Premises on the terms of San Diego County known as Del Mar Heights this Lease, if such office space property were offered exposed for lease on the open market for a reasonable period of time time. A "COMPARABLE PROPERTY" shall mean a headquarters, assembly and be research and development facility located in the product northern portion of the fair market annual rental rate per rentable square foot multiplied by City of San Diego, California (the Rentable Area "MARKET AREA"), with improvements similar in age and character to the Demised Premises, which has been improved with the tenant improvements comparable to those constructed in the Demised Premises; provided, however, that the appraisal shall disregard the value of the Premises (as set forth in equipment which Tenant is entitled to remove at the Basic Lease Information), determined as follows: (a) as mutually agreed by Landlord and Tenant within ten (10) days of Landlord’s delivery to Tenant of Landlord’s opinion expiration or termination of the Market Rent for the first year of the Option Term (“Landlord Rent Notice”, which shall be delivered to Tenant within ten (10) days of receipt of Tenant’s written Extension Notice; or (b) in the event that Landlord and Tenant are unable to so agree, the Market Rent shall be determined by concurrent appraisals pursuant to Section 8(b) below. In determining Market Rent, appraisers shall take into account the duration of the Option Term, the quality, condition and prestige of the Building and Premises (as tenant improvements are maintained as required by the terms and conditions of this Lease). The appraiser shall give appropriate consideration to all relevant factors, recent monthly rental rates including, without limitation, (i)the fact that this Lease is a "triple net" lease, (ii)rental concessions and annual base rent escalations for buildings tenant improvement allowances generally being offered by landlords of similar size and location imputed to comparable properties, (iii) the commencement age of the Option TermImprovements, (iv) the condition and quality of comparable tenant improvements in buildings of similar quality and location and all relevant economic terms of this Lease, including free rent and other economic inducements, it being the intent that Market Rent, as so determined, should reflect the total economic package which would be offered at the time of commencement of the Option Term Demised Premises on the assumption that Tenant has complied with its obligations to a new tenant for maintain and repair the Demised Premises, (v)rental market conditions then in existence, (vi) whether Landlord will or substantially similar space will not be required to pay a real estate brokerage commission in a building connection with Tenant's exercise of similar quality, conditionthe Extension Option, and location and with similar tenant improvements under a lease with substantially (vii) the same terms and provisions as the applicable terms and provisions of this Lease (“Market for Similar Space”) without discounting the rent for the creditworthiness of fact that the Tenant or for will be accepting the cost of real estate leasing commissions. Landlord’s Rent Notice, and any determination of Market Rent by appraisal as described herein, shall also set forth the market annual base rent escalation rate then prevailing Demised Premises in the relevant marketplace, which shall be used for purposes of determining Base Rent adjustments during the Option Terman "As-Is" condition.