The Agreement

The agreement grants Chuka Foods the option to lease the site for the development and operation of a retail shopping center facility. The initial term of the lease is 20 years, beginning on the date Chuka Foods exercises the option.

Under the agreement, Chuka Foods will pay an annual base lease fee starting at $51,929 in Year 1 and escalating to $122,233 in Year 10. The base rent will be further adjusted upon the exercise of each renewal option to reflect the then fair rental value of the site, excluding the value of Chuka Foods' property improvements. In no event, however, will the adjusted base lease fee be less than the base lease fee otherwise payable immediately prior to such adjustment, or increase more than 3% per year compounded annually for ten years or compounded annually for eight years with respect to the third renewal option.

The agreement provides that Chuka Foods' activities must not interfere with the operation of the electrical transmission facilities that cross the site. Chuka Foods is not allowed to use or store hazardous substances, explosives or flammable materials on the site. Any equipment used by Chuka Foods on or adjacent to the property will be operated to maintain a minimum clearance of 35 feet from all overhead electrical conductors. SCE also requires Chuka Foods to maintain a minimum 100-foot radius around all tower legs, and a 10-foot radius around all steel and wood poles. Chuka Foods will provide and maintain access roads on the property.

SCE retains the right and authority to enter the site at all reasonable times to inspect the site. SCE also has the right to impose temporary restrictions on Chuka Foods' right to enter, occupy and use the site to thereby allow SCE to perform work, if necessary, on the electrical facilities located on the site. SCE also retains the right to take all or a part of the leasehold by eminent domain or inverse condemnation.

Chuka Foods is responsible for all personal property taxes, as well as other general or special assessments or fees levied against the site or the improvements thereon. Chuka Foods is also responsible for obtaining all permits and approvals for construction and any zone changes or use permits required for the operation of a retail shopping center facility from any agency having jurisdiction. Chuka Foods must also maintain appropriate comprehensive general liability insurance, comprehensive auto liability insurance, and workers' compensation insurance. Chuka Foods further agrees to indemnify SCE against all liability for damages or injury to persons or property on the site except to the extent caused by SCE's negligent or willful misconduct.