| a.   | Initial Design      Term.  Cadiz RE has previously paid to ARZC an initial      Rent payment in the amount of Two Hundred Fifty Thousand and No/100      Dollars ($250,000.00), receipt of which is hereby acknowledged by ARZC      (“Initial Rent Payment”).  The Initial Rent Payment is for the      period from the Effective Date through March 6,  2011. |
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| b.   | Design Term      Extension.  On or before March 7, 2011, Cadiz RE      shall make a second payment of Rent in the amount of Two Hundred Fifty      Thousand and No/100 Dollars ($250,000.00) to ARZC (“Design Term Extension      Rent Payment”).  The Design Term Extension Rent Payment is for      the period from March 7, 2011 through March 6,      2013.  In the event that Cadiz RE makes the Construction Rent      Payment (as hereinafter defined) before March 7, 2011, Cadiz RE shall      have no obligation to make the Design Term Extension Rent      Payment. |
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| c.   | Construction and      Operation Term. |
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| i.   | Construction Rent      Payment.  Prior to entering to Premises to construct the      Facilities, Cadiz RE shall pay to ARZC a Rent payment that is determined      based upon the date that Cadiz RE provides ARZC notice of its intent to      commence construction of the Facilities (“Construction Rent      Payment”).  In the event that Cadiz RE provides notice of its      intent to commence construction (a) on or before March 6, 2010,      the Construction Rent Payment shall be Two Million Seven Hundred Fifty      Thousand and No/100 Dollars ($2,750,000.00); (b) if after      March 7, 2010, but before March 6, 2012, the Construction Rent      Payment shall be Three Million and No/100 Dollars ($3,000,000.00); and      (c) if between March 7, 2012 and March 6, 2013, the      Construction Rent Payment shall be Three Million Three Hundred Thousand      and No/100 Dollars ($3,300,000.00). |
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| ii.   | Additional Rent      Payments.  Commencing on or before the first anniversary      of the date that the Construction Rent Payment is paid, and continuing      thereafter on or before each of the next nine (9) anniversaries, Cadiz RE      shall make an additional rent payment based upon the date that Cadiz RE      paid the Construction Rent Payment (each an “Additional Rent      Payment”).  In the event that Cadiz RE pays the Construction      Rent Payment: (a) on or before March 6, 2010, the Additional      Rent Payment amount shall be Two Hundred Fifty Thousand and No/100 Dollars      ($250,000.00), (b) if after March 7, 2010, but before      March 6, 2012, the Additional Rent Payment amount shall be Two      Hundred Seventy-Five Thousand and No/100 Dollars ($275,000.00), and      (c) if between March 7, 2012 and March 6, 2013, the      Additional Rent Payment amount shall be Three Hundred Thousand and No/100      Dollars ($300,000.00). |
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| iii.   | Annual Rental Payments      for Balance of Term.  Commencing as of the first      anniversary after the last Additional Rent Payment is made, and continuing      thereafter on each anniversary through the balance of the Term, annual      Rent payments of One Hundred and No/100 Dollars ($100.00) shall be paid by      Cadiz RE to ARZC. |
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| a.   | Workers’      Compensation Insurance and Employer’s Liability Insurance with limits of      not less than Three Million and No/100 Dollars      ($3,000,000.00). |
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| b.   | Commercial      General Liability Insurance, Property Damage Liability Insurance      including  Products & Completed Operations coverage with a      minimum single combined limit of not less than Two Million and No/100      Dollars ($2,000,000.00) per occurrence, Six Million and No/100 Dollars      ($6,000,000.00) annual aggregate.  Coverage shall include      Railroad Contractual Liability endorsement ISO GL 24 17 or      its equivalent, have a cross-liability clause, name Railroad as an      additional insured with endorsement ISO GL 20 10, and      include a waiver of subrogation in favor of the Railroad.  The      “x,” “c” and “u” exclusions and any exclusions dealing with proximity to      railroad property shall be removed.  The contractual coverage      endorsement shall specifically refer to this Agreement by date, name of      railroad, description and location of work to be  performed. |
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| c.   | During      construction and maintenance, Railroad Protective Liability Insurance with      limits of not less than Two Million and No/100 Dollars ($2,000,000.00) per      occurrence and Six Million and No/100 Dollars ($6,000,000.00) in the      aggregate, with ARZC as the only named insured.  The contractual      coverage endorsement shall specifically refer to this Agreement by date,      name of railroad, description and location of work to be      performed. |
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| d.   | Automobile      Liability Insurance with limits of not less than Two Million and No/100      Dollars ($2,000,000.00).  ARZC shall be named as an additional      insured with respect to thiscoverage. |
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| e.   | Before      entering the Access Areas, Cadiz RE shall provide ARZC with both a      certificate of insurance and true and complete copy of the policy or      policies of insurance for all above required insurance      coverage.  The policies shall be endorsed to provide thirty (30)      days’ prior written notice to ARZC in the event of termination of the      insurance prior to normal expiration date or any material change in      coverage.  ARZC, in its sole discretion, may increase the limits      of the insurance coverage required upon ninety (90) days’ notice to Cadiz      RE, but any such increases in required coverage shall not exceed the      corresponding increase in the Cost of Living Index over the same time      period.  In the event Cadiz RE engages any contractor to perform      work on the Facilities, each contractor shall provide ARZC with evidence      that it has obtained and currently maintains insurance of the foregoing      types, with limits not less than those stated above and naming ARZC as an      additional insured, before entering the Access  Areas. |
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| a.   | Cadiz      RE understands that ARZC occupies, uses and possesses lands, rights-of-way      and rail corridors under all forms and qualities of      ownership.  Accordingly, nothing in this Agreement shall act as      or be deemed to act as any warranty, guaranty or representation of the      quality of ARZC’s title for the Property occupied, used or enjoyed in any      manner by Cadiz RE under any rights created in this      Agreement.  It is expressly understood that ARZC does not      warrant title to the Property, and Cadiz RE will accept the grants and      privileges contained herein subject to all lawful outstanding existing      liens, mortgages and superior rights in and to the Property, and all other      leases, licenses and easements or other interests previously granted to      others therein. |
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| b.   | Cadiz      RE agrees it shall not have or make any claim against ARZC for damages on      account of any deficiencies in title to the Property in the event of      failure or insufficiency of ARZC’s title to any portion thereof arising      from Cadiz RE’s use or occupancythereof. |
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| c.   | Cadiz      RE further agrees to defend, indemnify and hold ARZC, and the Property,      harmless from all claims or litigation for slander of title, overburden of      easement, or similar claims, arising because of or based upon Cadiz RE’s      placement, or the presence, of Cadiz RE’s facilities or structures in, on      or along the Access Areas, except for that portion of such claims which      relate solely to ARZC’s right to continue rail operations in or over such      Property, and to defend, indemnify and hold ARZC harmless from any such      litigation or defense costs, and any judgment  therefrom. |
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| d.   | At      no cost to it, ARZC will cooperate with Cadiz RE’s efforts to acquire any      additional property rights necessary to construct, operate and maintain      Facilities along the Access Areas. |
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| e.   | With      respect to any mortgage, loan or obligation that is secured by a lien      against the Property, upon the request of Cadiz RE, ARZC agrees to      exercise its best efforts to provide Cadiz RE with a Subordination,      Non-Disturbance and Attornment Agreement, on a form reasonably acceptable      to Cadiz RE, pursuant to which the holder of such lien shall recognize      this Agreement and the interest of Cadiz RE in the Property, and agree not      to disturb Cadiz RE in the event that the holder of such lien becomes the      owner of the Property. |
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| If      to ARZC:Arizona      & California Railroad CompanyAttn:      General Manager1301      California AvenueParker,      AZ  85344With      a copy to:Arizona      & California Railroad Companyc/o      RailAmerica, Inc.Attn:      General Counsel7411      Fullerton Street, Suite 300Jacksonville,      FL  32256 | If      to Cadiz RE:Cadiz      Real Estate, L.L.C.550      S. Hope, Suite 2850Los      Angeles, CA  90071With      a copy to:GreshamSavageAttn:      President (ref: JMW)550      East Hospitality Lane, Suite 300San      Bernardino, CA  92408With      a copy to:Paragon      PartnersAttn:      Manager5762      Bolsa Avenue, Suite 201Huntington      Beach, CA  92649 |
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