3. Terms of the Lease

The initial term of the lease to Montalvo is 30 years, with two 10-year renewal terms. The lessee would pay annual base rent of $95,000 for the first 10 years. The base rent would be adjusted on the 11^th and 21^st year of the lease term and upon each renewal option based upon then current fair rental value of the property, excluding the value of Montalvo improvements.

The agreement provides that the lessee's activities must not interfere with the operation of the electrical transmission facilities that cross the site. Montalvo would not be permitted to store hazardous substances on the site, and the company would be required to maintain at least a 17-foot clearance from all overhead electrical conductors. SCE also would require the lessee to maintain a 50-foot radius around all tower legs and a 10-foot radius around all steel and wood poles. The lessee would provide and maintain access roads on the property. The lessee would be responsible for obtaining all permits and approvals for construction, as well as any zoning changes or use permits required for the operation of a self-storage facility.

Under the lease, Montalvo would be responsible for all personal property taxes and fees levied against the property and improvements, and would maintain comprehensive liability insurance, auto insurance and workers' compensation insurance. The company would indemnify SCE against all liability for damages or injury to persons or property not caused by SCE's negligent or willful misconduct.