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City of San Marcos Airport <br />forth in this LEASE. Without limiting the generality of the preceding sentence, <br />LESSEE shall be obligated to construct a development comparable to the <br />FACILITIES on such portion of the RIGHT OF FIRST REFUSAL AREA that is the <br />subject of the bona fide expression of interest. LESSOR shall prepare, and <br />LESSOR and LESSEE will execute and deliver, within 10 days after LESSOR's <br />receipt of the Response Notice, a Lease in form substantially similar to this LEASE. <br />LESSOR is not obligated to offer any portion of the FIRST RIGHT OF REFUSAL <br />AREA to LESSEE, and LESSEE may not exercise its option to lease any part of the <br />FIRST RIGHT OF REFUSAL AREA, if at the time LESSOR would otherwise be <br />obligated to give the notice to LESSEE, LESSEE is in default under this LEASE. <br />LESSEE may not assign this option to lease the FIRST RIGHT OF REFUSAL AREA <br />to any assignee of the LEASE, nor may any sublessee or assignee exercise this <br />option. The option granted to LESSEE under this paragraph shall expire on the <br />fifth anniversary of the date of this LEASE. <br />16.02 Provided no event of default exists at the time of such election, LESSEE may lease <br />any portion or all of the FIRST RIGHT OF REFUSAL AREA upon the same terms <br />and conditions set forth in this LEASE by delivering to LESSOR, on or before the <br />fifth anniversary of the date hereof, written notice of LESSEE's election to lease <br />the FIRST RIGHT OF REFUSAL AREA and specifying the portion of such area <br />LESSEE desires to lease. If LESSEE timely exercises its option, then LESSOR shall <br />prepare, and LESSOR and LESSEE will execute and deliver, within 10 days after <br />LE55EE's election notice, a Lease in form substantially similar to this LEASE. <br />LESSEE's rights under this paragraph shall terminate if (a) this LEASE or <br />LESSEE's right to possession of the LEASED PREMISES is terminated, or (b) <br />LESSEE fails to timely exercise its option under this paragraph, time being of the <br />essence with respect to LESSEE's exercise thereof. <br />Provided no event of default exists at the time of election, LESSOR hereby grants <br />to LESSEE the first right to lease the LEASED PREMISES upon the same terms <br />and conditions set forth in this LEASE, but subject to then prevailing rental rates <br />(i) at the expiration of the term of this LEASE, or (ii) in the event LESSOR receives <br />a letter of intent or expression of interest to lease the LEASED PREMISES from a <br />third party. LESSEE may exercise this right to lease the LEASED PREMISES by <br />delivering to LESSOR written notice of LESSEE's election to lease the LEASED <br />PREMISES, (i) no later than 30 days prior to the expiration of this LEASE, or (ii) <br />within 15 business days of ter receipt of notice from LESSOR of LESSOR'S receipt <br />of a letter of intent or expression of interest regarding the LEASED PREMISES <br />from a third party. If LESSEE timely exercises its option, then LESSOR shall <br />prepare, and LESSOR and LESSEE will execute and deliver, within 10 days after <br />LESSEE's election notice, a LEASE in form substantially similar to this LEASE, <br />reflecting the terms and conditions set forth in this LEASE. LESSEE's rights under <br />this paragraph shall terminate if (a) this LEASE or LESSEE's right to possession of <br />the LEASED PREMISES is terminated pursuant to the provisions of this LEASE, or <br />(b) LESSEE fails to timely exercise its option under this paragraph, time being of <br />the essence with respect to LESSEE's exercise thereof. <br />Commercial Land Lease Page 20 of 22 <br />