GROUND LEASE

Exhibit 10.5

GROUND LEASE

          This Ground Lease (this “ Lease ”) is dated for reference purposes as of November 30, 2005, and is executed on the dates set forth with the signatures below by and between AEROJET-GENERAL CORPORATION, an Ohio corporation (“ Lessor ”), and AMPAC FINE CHEMICALS LLC, a California limited liability company (“ Lessee ”).

RECITALS

          A. Lessor owns approximately eight thousand five hundred (8,500) acres of land located south of State Highway 50 and east of Sunrise Boulevard and bordering the southern edge of Folsom Boulevard and the northern edge of White Rock Road, in Sacramento County, California, including the buildings and other improvements thereon (collectively, the “ Aerojet Site ”). The Aerojet Site serves as Lessor’s business headquarters, and some of the Aerojet Site is used for the development and production of various products, including, but not limited to, explosives and propellants (collectively, the “ Aerojet Site Adjoining Uses ”). Some of the Aerojet Site Adjoining Uses, as well as some of the Reserved Uses (defined below), require compliance with Quantity/Distance Restrictions (defined below).

          B. Among the improvements located on the Aerojet Site are private roadways (collectively, the “ Roadways ”) by which Lessor and Lessor’s invitees, licensees, grantees, tenants, employees, agents, and representatives enjoy ingress and egress to, from, and among all portions of the Aerojet Site. As of the Term Commencement Date (defined below), Lessor owns, maintains, and controls all of the Roadways.

          C. Lessor’s ownership and use of most of the Aerojet Site are subject to the Partial Consent Decree (defined below) and may, in the future, become subject to other or different decrees or administrative orders or demands issued by, at the request or with the consent of the PCD Agencies (defined below), or by any court of competent jurisdiction (collectively, including any modifications and supplements thereto issued from time to time, the “ Governmental Decrees and Orders ”).

          D. The Partial Consent Decree currently imposes use restrictions and other requirements upon most of the Aerojet Site, and such restrictions and requirements may, in the future, become changed, supplemented, extended, or terminated, in whole or in part, pursuant to amendments to the Partial Consent Decree, other Governmental Decrees and Orders, or the Risk Assessment (defined below) (collectively, as effective and amended from time to time, the “ Governmental Restrictions ”).

          E. The scope of the Partial Consent Decree includes a remedial investigation/feasibility study and may include a risk assessment (a “ Risk Assessment ”). The Partial Consent Decree does not establish the extent of remedial action that may be required. Remedial design/remedial action (“ RD/RA ”) activities are anticipated to be governed by either an amendment to the Partial Consent Decree or other Governmental Decrees and Orders. The nature and extent of any RD/RA activities that may be required and the Governmental

Restrictions resulting from, or related to, such activities are not and cannot be known as of the execution and delivery of this Lease.

          F. Lessee desires to lease and use a certain portion of the Aerojet Site, which portion is hereinafter defined as the “ Demised Land .” Lessor desires to demise the Demised Land to Lessee and to provide to Lessee access to the Demised Land and to the AFC Buildings (defined below) across certain of the Roadways. Some of Lessee’s uses of the Demised Land and the AFC Buildings will require compliance with Air Emissions Requirements (defined below).

          G. Prior to, or concurrently with, the execution and delivery of this Lease, Lessor conveyed, or is conveying, to Lessee fee title to the AFC Buildings. Lessor has not conveyed, and in no event shall Lessor convey as part of this transaction, to Lessee fee title to any of the Roadways, the Demised Land, the Aerojet Buildings (defined below), or other Improvements (defined below) located within the Demised Land except the AFC Buildings.

          H. In addition to the Aerojet Site Adjoining Uses, Lessor or its successor or successors in title will be obtaining land use entitlements for, subdividing, and constructing improvements upon various portions of the Aerojet Site that are adjacent to, or near, the Demised Land (collectively, “ Adjacent Development ”). Adjacent Development will be a mixed-use development, including single-family and multiple-family housing, schools, day-care centers, parks, retail stores, offices, and other types of uses.

          I. The purpose of this Lease is to set forth all of the terms and conditions under which Lessor leases to Lessee, and Lessee leases from Lessor, the Demised Land for Lessee’s use as permitted under this Lease, as well as to set forth all of the terms and conditions under which Lessee’s Access Rights (defined below) are provided by Lessor to Lessee and Lessor’s Reserved Rights are retained by Lessor, all subject and subordinate to the Governmental Restrictions. In addition, this Lease sets forth commitments by Lessor and Lessee to facilitate their compliance with the Quantity/Distance Restrictions and the Air Emissions Requirements, respectively, and to accommodate Adjacent Development.

          NOW, THEREFORE, and in reference to the foregoing recitals (collectively, the “ Recitals ”), Lessor and Lessee, in consideration of the various obligations set forth in this Lease, agree as follows:

ARTICLE 1.

DEFINITIONS

          In addition to other definitions of terms set forth elsewhere in this Lease, the following words and phrases shall have the indicated meanings wherever used in this Lease:

          1.1 “ Acquired Business ” means the business of developing, manufacturing, selling, marketing and distributing chemicals (excluding propellants, explosives and other

chemicals currently used in Lessor’s propulsion and fire protection business), with the primary focus on pharmaceutical fine chemicals.

          1.2 “ Adjacent Development ” is defined in Recital H.

          1.3 “ Aerojet Buildings ” means collectively all buildings that are located on the Demised Land and are not AFC Buildings;

          1.4 “ Aerojet Site ” is defined in Recital A;

          1.5 “ Aerojet Site Adjoining Uses ” is defined in Recital A;

          1.6 “ Aerojet Temporary Use Building ” means that AFC Building known as Building 5-0122;

          1.7 “ AFC Buildings ” means collectively those certain improvements that are designated on Exhibit “B” attached hereto as “AFC Buildings”;

          1.8 “ Air Emissions Requirements ” means the governmental rules and regulations applicable to some of Lessee’s uses of the Premises that forbid various activities within specified radii measured from the location of said uses;

          1.9 “ Arbitration Notice ” is defined in Section 15.16(g);

          1.10 “ Base Rent ” is defined in Section 3.1;

          1.11 “ Controversy Notice ” is defined in Section 15.16(c);

          1.12 “ Current Air Emissions Requirements ” means the Air Emissions Requirements in accordance with the Law in effect as of the Term Commencement Date;

          1.13 “ Current Air Emissions Requirements Boundaries ” means those portions of the Aerojet Site located outside the Demised Land that are affected by the Current Air Emissions Requirements and specifically identified on Exhibit “D” attached hereto;

          1.14 “ Default by Lessee ” is defined in Section 11.1;

          1.15 “ Demised Land ” means the surface of the underlying real property consisting of approximately two hundred forty-one (241) acres, as more particularly described on Exhibit “A” hereto and made a part hereof; and as also described in that certain ALTA/ACSM Land Title Survey prepared for Lessor by MacKay & Somps and dated as of August 31, 2005. The Demised Land shall include all of the utility lines located thereon and the Lessee Controlled Roadways;

          1.16 “ Dispute ” is defined in Section 15.16(b);

          1.17 “ Easements ” is defined in Section 2.5(f);

          1.18 “ Election Notice ” is defined in Section 2.4;

          1.19 “ Encumbered Property ” is defined in Section 15.15(a);

          1.20 “ Encumbrances ” is defined in Section 2.1;

          1.21 “ Existing Improvements ” means Improvements existing upon the Demised Land as of the Term Commencement Date;

          1.22 “ Governmental Decrees and Orders ” is defined in Recital C;

          1.23 “ Governmental Restrictions ” is defined in Recital D;

          1.24 “ Hazardous Substance ” shall mean any material, substance, waste, compound, pollutant or contaminant listed, defined, designated or classified as hazardous, toxic, flammable, explosive, reactive, corrosive, infectious, carcinogenic, mutagenic or radioactive or otherwise regulated by any Governmental Authority or under any Environmental Law, including petroleum or petroleum products (including crude oil) and any derivative or by-products thereof, natural gas, synthetic gas and any mixtures thereof, or any substance that is or contains polychlorinated biphenyls (“ PCBs ”), urea formaldehyde, or lead; provided that Hazardous Substance shall not include (i) asbestos-containing materials except for asbestos-containing materials that, to the Knowledge of Lessor, are damaged and friable on the Term Commencement Date, (ii) radon gas, and (iii) substances naturally present on the Premises and which have not been previously disturbed.

          1.25 “ Expiration Date ” is defined in Section 2.4;

          1.26 “ Force Majeure ” shall mean any event or circumstance or combination of events or circumstances beyond the reasonable control of the party concerned, including, without limitation, Lessor in the case of Lessor Supplied Services, that directly results in or causes a failure or delay by or hindrance to or interference with such party in the fulfillment wholly or in part of any of its obligations under this Lease or the enjoyment by such party of its rights under or pursuant to this Lease, which circumstances cannot be overcome by the exercise of reasonable efforts by the party concerned, and shall include the following events and circumstances to the extent that they satisfy the above requirements: riots, wars (declared or undeclared), insurrections, sabotage, rebellions, terrorist acts, civil disturbances, embargoes, blockages, acts of God, lightning, earthquakes, floods, storms, hurricanes, freezes, cyclones, tidal waves, tornadoes, unusual weather conditions, epidemics, plagues, explosions, chemical contaminations, fires, major equipment failures, strikes or labor disputes, interruptions of fuel supply, or product distribution, including, but not limited to, Lessor Supplied Services;

          1.27 “ Improvements ” means all paving, landscaping, utility lines, pipes, fences, walls, buildings, and other structures located on the Demised Land, whether presently in existence or hereafter erected or placed upon the Demised Land, including all alterations and

additions thereto, without regard to whether ownership thereof is in Lessor or Lessee, including, but not limited to, the AFC Buildings, the Aerojet Buildings, and the Lessee Controlled Roadways (defined below);

          1.28 “ JAMS ” is defined in Section 4.1(c);

          1.29 “ Knowledge of Lessor ” means the actual knowledge of the persons identified on Exhibit “L” hereto.

          1.30 “ Law ” is defined in Section 4.3(a);

          1.31 “ Lessee Controlled Roadways ” means Roadways located within the boundaries of the Demised Land;

          1.32 “ Lessee Material Adverse Effect ” shall mean an effect that either individually or in the aggregate is directly and substantially adverse to Lessee’s leasehold interest in, access to, use or occupancy of the Premises, or the Permitted Uses;

          1.33 “ Lessee’s Access Rights ” is defined in Section 2.2;

          1.34 “ Lessee’s Default ” is defined in Section 11.1;

          1.35 “ Lessee’s Improvements ” means all of those Improvements that are owned by Lessee, including, but not limited to, the AFC Buildings, as now existing or as hereafter constructed, installed, erected, or placed on the Demised Land by Lessee pursuant to any right of Lessee hereunder to so construct, erect, install, or place any Improvement on the Demised Land;

          1.36 “ Lessee’s Utilities Rights ” is defined in Section 4.4(e).

          1.37 “ Lessor Controlled Roadways ” means Roadways located outside the boundaries of the Demised Land;

          1.38 “ Lessor Material Adverse Effect ” shall mean an effect that either individually or in the aggregate is directly and substantially adverse to Lessor’s (i) reversionary interest in the Premises, (ii) Adjacent Development, or (iii) operation of its businesses;

          1.39 “ Lessor’s Improvements ” means all of those Improvements that are owned by Lessor, including, but not limited to, the Aerojet Buildings, the Lessee Controlled Roadways, and all utility lines, as now existing or as hereafter constructed, installed, erected, or placed on the Demised Land;

          1.40 “ Lessor’s Reserved Rights ” means collectively Lessor’s rights under the Encumbrances (defined above) the Reserved Roadway Rights (defined below), and the Reserved Uses (defined below);

          1.41 “ Liens ” is defined in Section 8.4;

          1.42 “ New Improvements ” means all Improvements that are not Existing Improvements or alterations or additions to Existing Improvements;

          1.43 “ Official Records ” means the official records of Sacramento County, California;

          1.44 “ Off-Site Aerojet Buildings ” means collectively buildings owned by Lessor, located outside the area of the Demised Land, in which energetic materials are used, manufactured, or stored, which uses require compliance with some of the Quantity/Distance Restrictions that affect the Demised Land;

          1.45 “ Partial Consent Decree ” or “ PCD ” means that certain Partial Consent Decree affecting all of the Aerojet Site and entered on June 23, 1989 in consolidated actions United States v. Aerojet-General Corporation and State of California v. Aerojet-General Corporation , Case Numbers CIVS-86-0063-EJG and CIVS-86-0064-EJG, in the United States District Court, Eastern District, California, as amended from time to time; paragraph 11 of which Partial Consent Decree is set forth in full in that certain Order Re: Partial Consent Decree recorded in the Official Records on July 20, 1989, in Book 890720, at Page 1004; a copy of which paragraph 11 is attached hereto as Exhibit “F” ; and issues related thereto are included in Exhibit “G,” which imposes obligations on Lessor and Lessee and is incorporated herein;

          1.46 “ PCD Agencies ” means collectively the Environmental Protection Agency of the United States of America; the Department of Toxic Substances Control of the State of California; the California Regional Water Quality Control Board, Central Valley Region; any court through which the foregoing agencies may exercise any of their rights, duties, or jurisdictions, and other governmental agencies as may succeed to the rights, duties, or jurisdictions of any of the foregoing agencies;

          1.47 “ Permitted Uses ” is defined in Section 4.1;

          1.48 “ Personal Property ” means all furnishings, equipment, inventory, fixtures, and other personal property owned by Lessee or by any other person or entity holding an interest under Lessee in the Demised Land or any portion thereof and located, from time to time, on or about the Demised Land and not included in the definition of Improvements set forth above;

          1.49 “ Pre-Term Environmental Liabilities ” shall mean any and all liabilities for ongoing or future Remedial Actions, civil or criminal penalties, personal injury, property damage, natural resources damages or attorneys’ fees, or any investigative, corrective or remedial obligations resulting from the Release of any Hazardous Substances at, in, by, from, or related to the Premises to the extent that it arose, commenced, occurred or existed on or prior to the Term Commencement Date.

          1.50 “ Premises ” means collectively the Demised Land and all Lessee’s Improvements;

          1.51 “ Property Taxes ” is defined in Section 5.1;

          1.52 “ Purchase Agreement ” is defined in Section 2.8(b);

          1.53 “ Purchase Notice ” is defined in Section 2.5;

          1.54 “ Purchase Option ” is defined in Section 2.5;

          1.55 “ Quantity/Distance Restrictions ” means the governmental rules and regulations applicable to some of Lessor’s uses of the Aerojet Site, including, but not limited to, uses of the Aerojet Temporary Use Building, as well as uses of the Off-Site Aerojet Buildings, as provided in Section 2.1(e) and as described in Exhibit “C” hereto, that forbid various activities within specified radii measured from the location of said uses, which radii do, as shown on Exhibit “E” attached hereto, extend into the area of the Demised Land; provided that said Exhibit “E” shall be modified as appropriate as and when Lessor ceases or reduces the use, manufacture, and/or storage of energetic materials as provided in Section 2.1(e);

          1.56 “ RD/RA ” is defined in Recital E;

          1.57 “ Release ” shall mean any releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, migrating, dumping, or disposing of Hazardous Substances (including the abandonment or discarding of barrels, containers or other closed receptacles containing Hazardous Substances) into the environment, whether intentional or unintentional, negligent or non-negligent, sudden or non-sudden, accidental or non-accidental.

          1.58 “ Renewal Option ” is defined in Section 2.4;

          1.59 “ Renewal Term ” is defined in Section 2.4;

          1.60 “ Reserved Roadway Rights ” is defined in Section 2.1(b);

          1.61 “ Reserved Uses ” is defined in Section 2.1(e);

          1.62 “ Response ” is defined in Section 15.16(c);

          1.63 “ Risk Assessment ” is defined in Recital E;

          1.64 “ Roadways ” is defined in Recital B;

          1.65 “ Senior Party Representatives ” is defined in Section 15.16(b);

          1.66 “ Term ” is defined in Section 2.4;

          1.67 “ Term Commencement Date ” is November ___, 2005;

          1.68 “ Transition Services Agreement ” is defined in Section 3.3(a); and

          1.69 “ Underlying Encumbrance ” is defined in Section 13.1.

ARTICLE 2.

DEMISING PROVISIONS

          2.1 Demised Land . Subject to the terms and conditions of this Lease and for the Term, Lessor hereby leases the Demised Land to Lessee, and grants Lessee Lessee’s Access Rights and Lessee hereby leases the Demised Land from Lessor and accepts Lessee’s Access Rights, subject to all of the following title and use exceptions (collectively, the “ Encumbrances ”):

               (a) Easements, covenants, conditions, restrictions, assessments, bonds, property taxes, deeds of trust, and other liens, encumbrances, and other matters affecting title to the Demised Land or any part thereof, as of the Term Commencement Date, that are disclosed in that certain Preliminary Title Report, dated September 2, 2005, issued by First American Title Insurance Company under Order Number NCS-97132-SAC1 for the Demised Land or by this Lease or in the Official Records, including, but not limited to, the Governmental Decrees and Orders and the Governmental Restrictions and the access and other rights and powers of the PCD Agencies;

               (b) The right and power hereby reserved to Lessor for the benefit of Lessor’s Improvements for the benefit of Lessor, to continue use of the Lessee Controlled Roadways (the “ Reserved Roadway Rights ”) set forth therein;

               (c) The Quantity/Distance Restrictions;

               (d) Conditions, encumbrances, and other matters that would be identified on an accurate survey of the Premises and all Existing Improvements, as of the Term Commencement Date, conforming to the Minimum Standard Detail Requirements jointly established and adopted by ALTA, ACSM and NSPS in 1999;

               (e) The right of Lessor to leave and have all of Lessor’s Improvements, including, but not limited to, the Aerojet Buildings on the Demised Land, and to reasonably use, maintain, alter, demolish, and/or replace the Aerojet Buildings as provided in this Lease and including for the purposes listed on Exhibit “G” (collectively “ Reserved Uses ”); provided that:

                    (i) In none of the Aerojet Temporary Use Building, the Aerojet Buildings or the Off-Site Aerojet Buildings shall energetic materials be used,

manufactured, or stored, except for those buildings designated on Exhibit “C” attached hereto (and for such buildings, only for the time periods listed thereon), except that:

                              (A) In two (2) of the Off-Site Aerojet Buildings, Lessor, at its election, may permanently use, manufacture, or store energetic materials, which two (2) are so designated on Exhibit “C” attached hereto; and

                              (B) In any or all of the Off-Site Aerojet Buildings, energetic materials may be used, manufactured, or stored indefinitely so long as the area or areas affected by the Quantity/Distance Restrictions applicable thereto do not include any portion of the Demised Land.

               (f) Those restrictions set forth in that certain master settlement agreement and release (the “ Master Settlement Agreement ”) dated October 12, 2004, by and among American States Water Company, Southern California Water Company, Lessor, and Cordova Chemical Company. Lessor has provided to Lessee a true and complete copy of the Master Settlement Agreement.

          2.2 Lessee’s Access Rights . Lessor hereby agrees to provide to Lessee, at all times during the Term (and subsequent to the Term if Lessee acquires fee title to the Premises), subject to Force Majeure, reasonable and sufficient ingress to, and egress from, the Premises for the Permitted Uses (provided expansions of Lessee’s use beyond the Acquired Business do not unreasonably burden any of Lessor’s Roadways) across portions of the Aerojet Site to and from public roadways, which may include White Rock Road and/or Folsom Boulevard (“ Lessee’s Access Rights ”). Lessee’s Access Rights shall be deemed to be an easement appurtenant to Lessee’s interests in the Premises and a covenant real, running with the land, that Lessor shall have no right to terminate or restrict during the Term (or subsequent to the Term if Lessee acquires fee title to the Premises), subject to the following provisions:

               (a) Lessee’s Access Rights are non-exclusive;

               (b) Subject to the terms and conditions of Lessee’s Access Rights as set forth in this Lease, and subject to the rights, if any, to use Lessor Controlled Roadways granted by Lessor to others from time to time, whether before or after the execution of this Lease, Lessor shall control the Lessor Controlled Roadways, including, but not limited to, the exclusive right and power:

                  (i) To adopt from time to time and to enforce reasonable rules and regulations respecting use of the Lessor Controlled Roadways by Lessee and others applied on a non-discriminatory basis;

                  (ii) To adopt reasonable security measures designed to prevent or discourage use of the Lessor Controlled Roadways by unauthorized people and to comply with Law, ordinances or regulations, as applicable from time to time, for the operation and security of Aerojet Site Adjoining Uses, including, but not limited to, fencing and locked gates and imposition of background and identity checking and other

procedures for all or some persons entering upon the Aerojet Site or through the Aerojet Site to the Demised Land, all of which shall be applied on a non-discriminatory basis;

                  (iii) To close or restrict temporarily use of the Lessor Controlled Roadways or any portion thereof as may be necessary in the event of any emergency, or to restrict temporarily to make improvements to, or to repair, the Lessor Controlled Roadways, or for security or other legitimate purposes (provided that any such non-emergency restrictions shall provide for reasonable alternative access);

                  (iv) To close, relocate, realign, replace, regrade, repave, improve, abandon, or demolish, from time to time, all or any part of the Lessor Controlled Roadways, in which event any new or different roads that Lessor may, in the future, build upon the Aerojet Site outside the boundaries of the Demised Land shall be deemed part of the “Lessor Controlled Roadways” as that term in used in this Lease; provided that Lessor shall always and continuously during the Term (or subsequent to the Term if Lessee acquires fee title to the Premises) provide reasonable means for Lessee’s exercise of Lessee’s Access Rights;

                  (v) To offer all or any part of the Roadways or other portions of the Aerojet Site located outside the boundaries of the Demised Land for dedication to public use or to any governmental entity, and with respect to any such offer, Lessee agrees fully and promptly to cooperate with Lessor and to execute, acknowledge (when needed), and deliver all appropriate instruments and documents;

                  (vi) To grant easements over, and licenses to use, the Lessor Controlled Roadways or any portion thereof to third parties chosen by Lessor; provided the same do not unreasonably interfere in any material way with Lessee’s exercise of Lessee’s Access Rights;

                  (vii) To conduct, or contract for, all maintenance, repair, and improvement work on the Lessor Controlled Roadways as Lessor, in its sole and absolute discretion, without detriment to Lessee’s Access Rights, may determine is appropriate or necessary from time to time; and

                  (viii) With respect to any portion of the Lessor Controlled Roadways over which Lessee exercises Lessee’s Access Rights, Lessee agrees that, when, if ever, that portion, or some other area as a substitute or alternative for that portion, which is available at all times industrial, becomes a public roadway, whether through acceptance of an offer of dedication made by Lessor or otherwise, then Lessee’s Access Rights shall cease as to that portion or other area, with Lessee relying upon the public nature of that portion or other area to assure access to the Premises. When, if ever, and to the extent that, dedicated public roadways over any portion of the Aerojet Site offer access to the Demised Land acceptable to Lessee in Lessee’s reasonable discretion, Lessee’s Access Rights over Lessor Controlled Roadways shall cease and no longer be a part of this Lease.

               (c) Lessee’s Access Rights shall, from time to time, at the request of either Lessor or Lessee, be exercised over a specific route along designated portions of the Lessor Controlled Roadways as reasonably designated by Lessor and approved by Lessee, which approval shall not be unreasonably withheld or delayed and shall be granted whenever the chosen route is reasonably convenient for Lessee’s purposes under this Lease. To evidence, in the Official Records, the exact location for exercise of Lessee’s Access Rights, and to assure third parties that no other portion of the Lessor Controlled Roadways is then encumbered by Lessee’s Access Rights, Lessor and Lessee shall, from time to time, execute and record in the Official Records amendments to this Lease setting forth in Exhibit “I” attached hereto the then-current location for exercise of Lessee’s Access Rights.

          2.3 Roadway Costs and Expenses .

               (a) Lessor shall keep the Lessor Controlled Roadways used for Lessee’s Access Rights in as good operating condition and repair as at the Term Commencement Date. Lessor shall pay all costs and expenses for repair, maintenance, and improvement of the Lessor Controlled Roadways, and Lessee shall have no obligation to contribute or reimburse Lessor for any portion thereof. Lessor’s obligations under this Section 2.3(a) shall survive the Term if Lessee acquires fee title to the Premises and such obligations shall be evidenced in the Access Easement Agreement.

               (b) Lessee shall pay all such costs and expenses for repair, maintenance, and improvement of the Lessee Controlled Roadways, and Lessor shall have no obligation to contribute or reimburse Lessee for any portion thereof.

          2.4 Term . The term of this Lease (the “ Term ”) shall commence on the Term Commencement Date, and shall expire at the expiration of thirty years (30) from the Term Commencement Date (the “ Expiration Date ”), subject to extension and/or earlier termination as provided elsewhere in this Lease. Subject to the terms of this Section 2.4, Lessee shall have the option (the “ Renewal Option ”) to extend the Term of this Lease for a period of thirty (30) years beyond the Expiration Date (the “ Renewal Term ”). The Renewal Option shall be effective only if no Default by Lessee is occurring under this Lease, either at the time of exercise of the Renewal Option or the time of commencement of the applicable Renewal Term. The Renewal Option must be exercised, if at all, by written notice (“ Election Notice ”) from Lessee to Lessor given not less than six (6) months prior to the Expiration Date. An Election Notice given by Lessee to Lessor shall be irrevocable. If Lessee fails to exercise the Renewal Option in a timely manner, as provided for above, the Renewal Option shall thereafter be null, void and of no further force or effect. The Renewal Term shall be upon the same terms and conditions as the initial Term. The Renewal Option is appurtenant to, and shall not be assigned or transferred by Lessee separate from, a permitted assignment of all of Lessee’s interests under this Lease. Any purported assignment of transfer of the Renewal Option to any Person that is not concurrently receiving a permitted assignment of all of Lessee’s interests under this Lease shall be null and void and a material breach of this Lease by Lessee.

          2.5 Purchase Option . Subject to the terms of this Section 2.5, Lessee shall have a recurring option (the “ Purchase Option ”) to purchase Lessor’s fee simple interest in the

Demised Land and Lessor’s Improvements (including the Aerojet Buildings), together with comparable easements, utility and service rights and obligations as then currently in place under this Lease, at any time, in exchange for payment of a purchase price in the amount of One Thousand Dollars ($1,000.00); provided, however, that Lessee shall not be entitled to exercise the Purchase Option until such time (i) as the United States Environmental Protection Agency has delisted the Demised Land as a Superfund site, (ii) Lessee shall have committed to pay to Seller (as defined in the Purchase Agreement), at or prior to the closing of Lessee’s purchase of the Demised Land, the full principal amount due to Seller under the Notes (as defined in the Purchase Agreement) and any interest owed thereon, and under the Earn Out (as defined in the Purchase Agreement), and (iii) Lessee shall have committed to pay to Seller, at or prior to the closing of Lessee’s purchase of the Demised Land, any and all monies (including interest) due to Seller under the Earn Out (as defined in the Purchase Agreement). The foregoing three (3) conditions are the only conditions to Lessee’s exercise of the Purchase Option; provided, however, that the Purchase Option shall terminate and be of no further force or effect if and when this Lease is terminated, regardless how such termination is effected, and shall not be effective or binding upon Lessor after any such termination of this Lease. The Purchase Option must be exercised, if at all, by written notice (“ Purchase Notice ”) from Lessee to Lessor given not less than six (6) months, or more than twelve (12) months, prior to the date Lessee desires to acquire Lessor’s fee interest. Any such Purchase Notice given by Lessee to Lessor shall be irrevocable, which purchase notice shall not constitute notice under Section 2.8(d). The deed transferring the property to Lessee shall include any environmental and other use restrictions necessary as provided in Section 2.2 of Exhibit “G” . Upon Lessee’s delivery of the Purchase Notice, the parties will execute a purchase agreement substantially in the form of Exhibit “J” attached hereto and made a part hereof, which will provide, among other matters the following:

               (a) At the closing of Lessee’s purchase of the Demised Land and Lessor’s Improvements, Lessor’s grant will be made by grant deed subject only to (1) all matters now of record, (2) all matters that a true, correct and complete survey or visible inspection of the Demised Land or Premises would reveal as of the date of such closing, (3) all taxes, assessments and governmental charges which are not delinquent, (4) all zoning, building, platting and similar restrictions, and (5) and all matters caused by Lessee, its successors, sublessees and assigns, and Lessee will accept the Premises in an “AS IS” and “WITH ALL FAULTS” condition;

               (b) After Lessee exercises the Purchase Option, Lessor will not create or permit through its actions or inactions any additional encumbrances on the Premises without Lessee’s consent;

               (c) Neither Lessee nor Lessor will be responsible for any real estate or brokerage commissions in connection with the sale of the property pursuant to the Purchase Option, and each of Lessor and Lessee agree to indemnify and hold the other harmless in respect of any parties claiming any such real estate or brokerage commissions arising by, through or under the respective indemnifying party;

               (d) Closing shall occur as soon as practicable after six (6) months after Lessee’s written notice of the exercise of the Purchase Option. All closing and escrow costs for such transaction will be allocated as is customary practice in Sacramento County; and

               (e) Lessor and Lessee shall cooperate in all commercially reasonable respects, including executing any additional documents reasonably required, to consummate the transaction as contemplated by this Section 2.5 following Lessee’s exercise of the Purchase Option. Should the parties be unable to agree upon aspects of such transaction, those aspects will be resolved pursuant to the dispute resolution provisions of Section 15.16.

               (f) Following Lessee’s exercise of the Purchase Option, and prior to the closing of Lessee’s purchase of the Demised Land, Lessor and Lessee shall execute and cause to be recorded in the Official Records of Sacramento County, California, at Lessee’s sole cost, easement agreement(s), that are appurtenant to and run with the land, to the extent the same may be necessary to memorialize the then current rights and obligations of Lessor and Lessee, as contemplated by Sections 2.2, 4.1(a), 4.1(b), 4.4 and Exhibit “C” (the “ Easements ”). The Easements shall be in form and substance as may be necessary for First American Title Insurance Company, or a title company reasonably acceptable to Lessee, to include the same as insured easement parcel(s) in the legal description of the title insurance policy to be issued to Lessee at the closing of Lessee’s purchase of the Demised Land and sufficient for such title company to issue a CLTA 103.4 or 103.7 endorsement (or its successor endorsement).

               (g) In the event the conditions for Lessee’s exercise of the Purchase Option as set forth above are satisfied and Lessee gives a Purchase Notice, but Lessor asserts that it is unable to transfer its fee simple interest in the Demised Land and Lessor’s Improvements to Lessee due to the fact that any such transfer would violate Governmental Restrictions, then (1) Lessor shall use its commercially reasonable efforts to satisfy whatever conditions are required to be satisfied under such Governmental Restrictions in order to lawfully transfer fee simple interest in the Demised Land and Lessor’s Improvements to Lessee, and (2) Lessee shall have the option to extend the term of this Lease for an additional ninety-nine (99) years (or such shorter period to the extent required by Law) or until such time as Lessor may lawfully transfer fee simple title to the Demised Landlord and Lessor’s Improvements and such a transfer is consummated.

               2.6 Quiet Enjoyment . Provided that Lessee fully performs all the terms of this Lease on Lessee’s part to be performed, including payment by Lessee of all Base Rent and Additional Rent, Lessee shall peaceably and quietly have, hold and enjoy the Premises during the Term without hindrance, disturbance or molestation from or by Lessor, or any other party claiming through Lessor, subject to the Encumbrances.

               2.7 Termination . Lessee may terminate this Lease in its sole discretion without cause at any time prior to the Expiration Date by giving Lessor no less than two (2) years’ prior written notice of Lessee’s intention to terminate. Upon the date of termination so specified in Lessee’s notice, this Lease and the estate hereby granted shall expire and terminate with the same force and effect as if the date specified in such notice were the Expiration Date, and all rights and obligations of Lessee and Lessor hereunder shall expire and terminate (except for such provisions that expressly survive the termination or earlier expiration of this Lease).

               2.8 Aerojet Buildings .

               (a) Lessor represents that the list attached hereto as Exhibit “H” is a true and complete list of the Aerojet Buildings, with a brief description of the status of such buildings.

               (b) Pursuant to the Purchase Agreement between Lessor, Aerojet Fine Chemicals LLC, and American Pacific Corporation dated as of July 12, 2005 as amended (the “ Purchase Agreement ”), Lessor shall retain ownership of the Aerojet Buildings on and after the Term Commencement Date, and Lessee shall have no interest in them.

               (c) Lessee hereby agrees to provide to Lessor, at all times during the Term (or subsequent to the Term if Lessee acquires fee title to the Premises), subject to the provisions of subpart (d) of this Section 2.8 and subject to Force Majeure, reasonable and sufficient ingress within the Premises for the Reserved Uses (“ Lessor’s Access Rights ”). Lessor’s Access Rights shall be deemed to be an easement appurtenant to Lessee’s interests in the Demised Land and a covenant real, running with the Demised Land. Lessee shall have no right to terminate or restrict Lessor’s Access Rights during the Term (or subsequent to the Term if Lessee acquires fee title to the Premises), subject to the following provisions:

               (i) Lessor’s Access Rights are non-exclusive;

               (ii) Subject to the terms and conditions of Lessor’s Access Rights as set forth in this Lease, and subject to the rights, if any, to use Lessee Controlled Roadways granted by Lessee to others from time to time, whether before or after the execution of this Lease, Lessee shall control the Lessee Controlled Roadways, including, but not limited to, the exclusive right and power;

               (iii) To adopt from time to time and to enforce reasonable rules and regulations respecting use of the Lessee Controlled Roadways by Lessee and others applied on a non-discriminatory basis;

               (iv) To adopt reasonable security measures designed to prevent or discourage use of the Lessee Controlled Roadways by unauthorized people and to comply with Law, ordinances or regulations, as applicable from time to time, for the operation and security of the Premises, including, but not limited to, fencing and locked gates and imposition of background and identity checking and other procedures for all or some persons entering upon the Premises, all of which shall be applied on a non-discriminatory basis;

               (v) To close or restrict temporarily use of the Lessee Controlled Roadways or any portion thereof as may be necessary in the event of any emergency, or to restrict temporarily to make improvements to, or to repair, the Lessee Controlled Roadways, or for security or other legitimate purposes (provided that any such non-emergency restrictions shall provide for reasonable alternative access);

               (vi) To close, relocate, realign, replace, regrade, repave, improve, abandon, or demolish, from time to time, all or any part of the Lessee Controlled Roadways, provided that

Lessee shall always and continuously during the Term provide reasonable means for Lessor’s exercise of Lessor’s Access Rights;

               (vii) To grant easements over, and licenses to use, the Lessee Controlled Roadways or any portion thereof to third parties chosen by Lessee; and

               (viii) To conduct, or contract for, all maintenance, repair, and improvement work on the Lessee Controlled Roadways as Lessee, in its sole and absolute discretion, without detriment to Lessor’s Access Rights, may determine is appropriate or necessary from time to time.

               (d) (i) As part of Lessor’s ongoing operations, Lessor may choose to vacate and/or abandon the Aerojet Buildings and is able to do so subject to the obligations contained in this Lease. Notwithstanding the foregoing, commencing on the fourth (4 ^th ) anniversary of the Term Commencement Date, Lessee may, upon notice to Lessor, request that Lessor vacate and abandon in place all of the Aerojet Buildings. Lessee shall provide Lessor with not greater than 14 months’ and not less than 12 months’ prior written notice of such request. Within 12 months of receipt of such written request, Lessor shall remove all Hazardous Substances from the Aerojet Buildings, and vacate and abandon in place all of the Aerojet Buildings, and leave such Aerojet Buildings in a condition that shall not be an unsafe condition. Lessor’s Access Rights with respect to the use of the Aerojet Buildings shall terminate upon such vacation and abandonment.

               (ii) In the event Lessee exercises its Purchase Option and takes fee title to the Demised Land, at Lessee’s request, Lessor agrees to execute, acknowledge, and deliver to Lessee such grant deed, and such other instruments and documents as Lessee shall reasonably request in order to assure and show in the Official Records Lessee’s fee title to the Demised Land and the Aerojet Buildings free of any interest or claim of Lessor. Prior to Lessee’s purchase of the Demised Land pursuant to the Purchase Option, with respect to Aerojet Buildings that are not razed pursuant to Section 2.8(d)(iii), Lessor shall remove all Hazardous Substances from such Aerojet Buildings, and vacate and abandon in place all of the Aerojet Buildings, and leave such Aerojet Buildings in a condition that shall not be an unsafe condition. Lessor’s obligations under this Section 2.8(d)(ii) shall survive the Term.

               (iii) Alternatively, at the time Lessee exercises its rights under the Purchase Option, Lessee shall have the right at such time to request in a written notice to Lessor, that Lessor demolish down to grade level, any or all of the then remaining Aerojet Buildings and remove the construction debris from the Demised Land, all at Lessor’s cost. As part of such demolition, Lessor shall not be obligated to remove any subsurface infrastructure. The parties agree that Lessor shall have eighteen (18) months from the receipt of such notice to accomplish such demolition. Nothing in this Section 2.8(d) shall diminish or limit Lessor’s obligations with respect to Hazardous Substances under this Lease.

               (e) Upon the vacation and abandonment of each of the Aerojet Buildings, Lessor agrees to seal, lock or otherwise secure such Aerojet Buildings (including in Lessor’s reasonable discretion, fencing). Beginning on the Term Commencement Date, and ending on the

earlier of the Expiration Date and Lessee’s purchase of the Demised Land, Lessor will maintain the Aerojet Buildings in a not unsafe condition, and Lessor shall defend, indemnify and hold harmless fully Lessee for any and all claims, liabilities and losses caused by the Aerojet Buildings or any Hazardous Substances therein.

               (f) On or after the Term Commencement Date and upon the terms and subject to the conditions hereof, each of the parties hereto shall take, or cause to be taken, all appropriate action, and do, or cause to be done, all things necessary, proper or advisable under Law and otherwise to carry into effect the provisions of this Lease regarding the Reserved Uses with respect to the continued existence of the Aerojet Buildings allowed on the Demised Land, including, without limitation, executing such instruments or documents as are necessary or desirable.

               (g) Title to all fixtures, equipment, furnishings, and trade fixtures owned by Lessee upon the Premises shall remain in Lessee, and replacements, substitutions, and modifications thereof may be made by Lessee throughout the Term.

ARTICLE 3.

RENT

               3.1 Amount of Base Rent . In addition to any and all other amounts payable from Lessee to Lessor pursuant to this Lease, Lessee agrees to pay to Lessor, and Lessor agrees to accept from Lessee, as rent for the use and occupancy of the Demised Land, during the Term, a minimum annual base rent equal to the parties’ good faith estimate of reasonable and actual costs incurred by Aerojet in connection with the administration of this Lease, which the parties agree shall be Five Thousand Dollars per year ($5,000) for the first five lease years, and Zero Dollars ($0) for the remainder of the Term of the Lease (the “ Base Rent ”).

               3.2 Payment of Base Rent . The Base Rent shall be paid, in lawful money of the United States of America, at such place or places as Lessor shall designate from time to time. The Base Rent shall be paid in equal monthly installments, three months in advance, on the first (1 ^st ) day of each month during that portion of the Term for which Base Rent is payable, subject to prorations as follows:

                    (a) If the date as of which Base Rent commences to accrue is not the first (1 ^st ) day of a calendar month, then a prorated portion, based upon a thirty (30)-day month, of Base Rent shall be due and payable on the date as of which Base Rent commences to accrue; and

                    (b) If the date as of which the Term expires is not the last day of a calendar month, then the last monthly payment of Base Rent during the Term shall be prorated, based upon a thirty (30)-day month, to the date the Term expires.

               3.3 Additional Rent . This Lease is intended to be net to Lessor, and Lessee shall pay to Lessor, net throughout the Term, the Base Rent prescribed by Section 3.1 free of any

offset, abatement, or other deduction, except as may be expressly set forth herein. Lessor shall not be required to make any payment of any kind with respect to the Premises, except as may be expressly set forth elsewhere in this Lease. Accordingly:

                    (a) Except as otherwise set forth herein, Lessee agrees to pay, to Lessor or the appropriate party or governmental entity, as applicable (and such amounts payable to Lessor shall be deemed “ Additional Rent ”), in addition to Base Rent, all other payments, costs, expenses, charges, and other obligations of every kind whatsoever attributable to the Premises and the operation thereof, including Lessee’s insurance premiums, real property taxes, assessments, and assessment installments (excluding matters that are paid in connection with the Transition Services Agreement between Lessor and Lessee dated as of the same date hereof (the “ Transition Services Agreement ”)) as they become due and payable during the Term; and

                    (b) Lessee shall make those payments, whether such payments are owned to Lessor or must be made to a third party in order to fulfill an obligation of Lessee set forth in this Lease, at whatever time is necessary to prevent delinquency or penalty for late payment unless Lessee has duly contested said payments in the manner permitted and prescribed in this Lease. Lessor shall invoice Lessee for any non-regularly scheduled sums payable to Lessor hereunder, which shall be due no sooner than 30 days following Lessee’s receipt of such invoice.

               3.4 No Offset . All Base Rent and Additional Rent becoming owed to Lessor under this Lease shall be due and payable without necessity of notice or demand and shall be paid without offset or deduction of any kind, except as may be expressly provided elsewhere in this Lease.

               3.5 Interest on Arrearages . Lessee agrees to pay to Lessor interest on any Base Rent or Additional Rent not paid within ten (10) days following receipt of notice from Lessor that such amounts are past due, whether or not such amounts constitute rent, as follows:

                    (a) Said interest shall accrue from the date the rent or other amount becomes due and continue until the rent or other amount is paid in full;

                    (b) Said interest shall become due and payable daily as it accrues, without necessity of demand for payment, and shall be calculated at a rate equal to ten percent (10%) per annum, but in no event shall such interest rate exceed the maximum interest rate allowed under the California Usury Law; and

                    (c) Lessor may apply all payments received under this Lease first to interest accrued, and second to delinquent rent and other monetary obligations.

               3.6 Refunds . If Lessor receives any refunds or rebates of any Additional Rent paid by Lessee to Lessor under this Lease, Lessor will pay such refund or rebate (or Lessee’s pro rata share of such refund or rebate, as reasonably calculated) to Lessee within five days after Lessor’s receipt thereof. Lessor shall aid Lessee in all reasonable respects in obtaining any such refund or rebate, provided that all costs of obtaining the same shall be paid by Lessee. Lessee

may, in its own name and at its own cost, contest with the applicable governmental entity the full or partial amount of any tax or other charge (or any portion or subdivision thereof) for which Lessee is responsible hereunder or the validity thereof. Lessor may contest with the applicable governmental entity any such tax or charge concerning the Premises, so long as such contest also relates to Lessor’s Property and does not disproportionately affect the Premises. Lessor and Lessee will reasonably cooperate with each other in the event that either elects to challenge any tax assessment or other governmental entity charge under this Section 3.6. In connection with the foregoing, Lessor shall provide Lessee with assessor’s valuation notices promptly following the receipt of same and shall provided Lessee with any assessor’s work sheets or such other information as may be reasonably available relating to the taxes or other charges which are the subject of Lessee’s challenge. Nothing in this Lease shall be construed to require either party to pay any tax or governmental entity charge of any kind that is or may be imposed upon the other party, its successors or assigns with respect to such other party’s property.

ARTICLE 4.

USE OF PREMISES

               4.1 Permitted Uses . Lessee shall use the Premises solely for the purposes of (i) the Acquired Business and other pharmaceutical uses, such as developing, manufacturing, distributing, and testing chemicals and their derivatives and uses and activities directly related thereto, such as, but not limited to, laboratories and administrative offices, (ii) developing, manufacturing and distributing aerospace products (but specifically excluding the right to conduct activities which involve either perchlorate, trichloroethylene (TCE), or N-nitrosodimethylamine (NDMA) and/or (iii) any lawful uses compatible with the Adjacent Development, (collectively, the “ Permitted Uses ”) which may include uses which compete with other Lessor businesses or the Adjacent Development); provided , however , that no use shall be considered a Permitted Use that would impose on Lessor or any of its successors or assigns, an obligation to remedy or remove any environmental contamination on the Demised Land or on property owned by Lessor or any of its successors or assigns adjacent to the Demised Land to a standard or degree that exceeds the most cost-effective, remedial alternative that is protective of human health and the environment and is consistent with and meets the requirements of any applicable Environmental Law and any Governmental Authority based upon the use of the property as industrial property. In all cases, such uses shall be conducted in compliance with all Law and requirements herein. Except as provided above, Lessee shall not use the Premises for any other use whatsoever without the prior written consent of Lessor, which consent may be granted or withheld arbitrarily for any reason or no reason. Lessee’s use of the Premises and Aerojet Site Adjoining Uses shall always be conducted with knowledge of, and reasonable accommodation for, each other. In connection with said requirement for reasonable accommodation for each other, and without limiting the generality of the foregoing provisions of this Section 4.1, Lessor and Lessee agree specifically as follows:

                    (a) Lessor agrees not to voluntarily do, permit, or suffer any activity on that portion of the Aerojet Site, whether located inside or outside the area of the Demised Land, that would cause Lessee to violate or fail to comply with the Current Air Emissions

Requirements or that would expand the areas affected by the Quantity/Distance Restrictions as provided in Exhibit “C” ;

                    (b) Lessee agrees not to voluntarily do, permit, or suffer any activity on the Premises or any portion thereof that would cause Lessor to violate or fail to comply with the Quantity/Distance Restrictions or that would expand the area affected by the Air Emissions Requirements outside the Demised Land plus those other portions of the Aerojet Site located within the areas of the radii shown on Exhibit “D” attached hereto; and

                    (c) If infrastructure financing done in connection with Adjacent Development includes, or is proposed by Lessor to include, imposition of Mello-Roos bonds or improvement bonds or assessments or the creation of any special district or districts with any form of taxing authority which affect the Demised Land, Lessee and Lessor agree to discuss the appropriate allocation, if any, of responsibility for payment of such assessments based on the relative benefit to the Demised Land. If the parties are unable to agree on an appropriate allocation of such assessments, the matter will be submitted to an arbitrator appointed by Judicial Arbitration and Mediation Services, Inc. (“ JAMS ”) on a date which is acceptable to both parties. The arbitration shall be conducted in San Francisco, California in accordance with the procedures established by JAMS. Any determination by the arbitrator shall be final and judgment and upon the award rendered by the arbitrator may be entered in any court having jurisdiction. The parties hereby waive any right to appeal or challenge such award in any court or otherwise. The parties shall each pay one half of the costs and fees of the arbitrator and the cost of the arbitration. The obligations set forth in this Section 4.1 shall survive the Term.

          4.2 Prohibited Uses . In no event shall the Premises or any portion thereof ever be used for purposes defined in paragraph 11(B)(1) of the Partial Consent Decree or as may in the future be defined as prohibited in any Governmental Decrees and Orders. Lessee agrees not to do or permit anything to be done on or about the Premises and agrees not to bring or keep anything thereon that constitutes a violation of Section 4.1 or a nuisance or constitutes waste or damages to the Premises or any part thereof.

          4.3 Compliance with Law .

                    (a) Lessee shall not use the Premises or permit anything to be done in or about the Premises that will in any material respect conflict with any law, whether that law be a state or federal statute, an ordinance adopted by any city or county, a judicial or administrative decision, including, but not limited, the Governmental Restrictions and the Governmental Decrees and Orders, or any other governmental rule, regulation, permit, or requirement, and whether that law is now in force or is hereafter adopted, and including the rules and requirements of any board of fire insurance underwriters or equivalent (collectively, “ Law ”); provided that Lessor shall have given Lessee reasonable notice of any applicable Governmental Restrictions in such manner so that Lessee has the opportunity to comply. Without limiting Lessor’s obligations with respect to Hazardous Substances under this Lease, Lessee shall, at its own cost and expense, promptly and properly observe and comply with all Law relating to or arising from the use or occupancy, condition or maintenance, improvement, or operation of the Premises or any part thereof that is from time to time permitted to it under this Lease, and shall do all things required

to comply with all Law and to maintain all permits, licenses, certifications, and approvals necessary and appropriate for the operation of the Premises or Lessee’s business.

                    (b) Except as set forth in Section 5.1(b) of Exhibit “G” hereto, (A) Lessee shall, at all times, indemnify, defend, protect, and forever save Lessor harmless from and against all fines, penalties, losses, damages, costs, expenses and other charges (including, but not limited to, attorneys’ fees, court costs and other expenses incurred by Lessor in defending itself in connection therewith, including those on appeal) imposed for or resulting from any violations by Lessee or any of its employees, agents, representatives, lessees, sublessees, licensees, or contractors at, on, or about the Premises, of any Law; and (B) Lessor shall, at all times, indemnify, defend, protect, and forever save Lessee harmless from and against all fines, penalties, losses, damages, costs, expenses and other charges (including, but not limited to, attorneys’ fees, court costs and other expenses incurred by Lessee in defending itself in connection therewith, including those on appeal) imposed for or resulting from any violations by Lessor or any of its employees, agents, representatives, lessees, sublessees, licensees, or contractors at, on, or about the Premises, of any Law.

                    (c) The judgment of any court of competent jurisdiction or the admission of either party in any action against such party, that such party has violated any Law shall be conclusive of the fact as between Lessor and Lessee.

               4.4 Utilities . Except as otherwise specifically set forth in this Section 4.4, and subject to a Force Majeure (including the failure on the part of the underlying provider of such services (i.e., SMUD; Pacific Gas & Electric; and Folsom)) Lessor shall provide all the utilities set forth below. Lessee shall pay for all utilities and services that Lessee uses at or about the Demised Land during the Term, including, without limitation, all water, natural gas, electricity, telephone, and other utilities and services supplied to the Premises, and except with respect to those utilities and services for which Lessee is required to pay to Lessor hereunder, only to the extent that if not paid, any of the foregoing can become a lien on Lessor’s interest in the Demised Land, together with any and all taxes thereon, and for any and all hook up charges and cost of installation of utility lines and meters (including, but not limited to, the costs of bringing such utilities to the Demised Land, if any, and if at the action of Lessee) only to the extent that any of the forgoing, if not paid can become a lien on Lessor’s interest in the Demised Land. To the extent such charges are regularly scheduled payments from Lessee to Lessor and can be calculated in advance, Lessee shall make such payments to Lessor three (3) months in advance. Respecting the provision of water, electricity, and natural gas to the Premises, Lessor and Lessee agree specifically as follows:

                    (a) From Lessor’s supplies of water delivered pursuant to its agreements with the City of Folsom, as those agreements currently exist or are, from time to time, amended or re-negotiated by Lessor and the City of Folsom (or, at Lessor’s option, a comparable replacement source), Lessor shall, subject to the provisions of Section 4.4(f), to provide to Lessee at and for the Premises, during the Term, up to ten thousand (10,000) gallons per day of potable water and up to fifty thousand (50,000) gallons per day of non-potable water and Lessee agrees to reimburse Lessor monthly for Lessee’s proportionate share (based upon the ratio of the quantity of Lessee’s use compare to the quantity of total use) of Lessor’s supply costs

incurred at the rates set forth in said agreements with the City of Folsom. To the extent that water deliveries under said agreements with the City of Folsom are terminated or reduced, Lessor and Lessee agree to work cooperatively with each other, using commercially reasonable efforts, in attempting to identify and arrange for replacement water, and if replacement water is arranged, Lessor and Lessee shall each pay its fair share of all costs incurred in securing and delivering such replacement water;

                    (b) Lessor, at its sole cost and expense, shall install and maintain, for so long as Lessor has an obligation to and does supply water under Section 4.4(a), water meters, at a location mutually agreed upon by Lessor and Lessee, serving the Premises, for measuring and monitoring water usage, which installation shall be effected as soon as reasonably practical following mutual execution hereof. Following installation of such meters, for so long as Lessor has the obligation to and does supply water under Section 4.4(a), Lessee shall pay to Lessor, Lessee’s proportionate share of the cost for such water as reimbursement to Lessor for providing water to the Premises, as set forth in (a) above. All payments under this Section 4.4(b) shall be paid, in arrears, at the end of each month during the Term, prorated, based upon a 30-day month, for any partial months at the beginning and ending of the Term;

                    (c) Subject to the provisions of Section 4.4(f), Lessee shall, with respect to natural gas, be responsible for obtaining and paying directly for, Lessee’s metered supply from Pacific Gas & Electric or other provider through lines crossing the Aerojet Site. Lessor covenants and agrees to maintain such lines (to the extent not maintained by PG&E or any successor public utility) and to provide any and all necessary easements to the natural gas provider sufficient for such existing lines, or in Lessor’s discretion, such replacement lines, crossing the Aerojet Site. To the extent that such lines entering the Demised Land carrying natural gas purchased by Lessee also supply natural gas to buildings that are either Aerojet Buildings or are located outside the area of the Demised Land, Lessor shall reimburse Lessee for its proportionate share of the cost to Lessee of such natural gas. Said reimbursement shall be paid in arrears, at the end of each month during the Term, prorated based upon a 30-day month, for any partial months at the beginning and ending of the Term. When and to the extent any of such buildings are no longer used by Lessor’s proportionate share shall be adjusted;

                    (d) Subject to the provisions of Section 4.4(f), Lessor shall, with respect to electricity, be responsible for supplying and paying (subject to reimbursement by Lessee as provided below) directly for, the supply currently in place from the Sacramento Municipal Utility District through lines crossing the Aerojet Site, and Lessee shall install a meter on said lines from the Prairie City Substation, at a location reasonably acceptable to Lessee and Lessor. If Lessor is required to pay for such electricity directly to SMUD, Lessee shall reimburse Lessor, within twenty (20) days after presentation of each invoice, for Lessee’s share of SMUD’s charges for electricity. To the extent that such lines also supply electricity to buildings that are either Aerojet Buildings, Aerojet Temporary Use Buildings or are located outside the area of the Demised Land, Lessee shall not be responsible for (and Lessee may deduct from its said reimbursement to Lessor) Lessor’s proportionate share of such electricity. Said reimbursement shall be paid, in arrears, at the end of each month during the Term, prorated, based upon a thirty (30)-day month, for any partial months at the beginning and ending of the

Term. When and to the extent any of such buildings are no longer used by Lessor’s proportionate share shall be adjusted;

                    (e) Lessee’s rights under this Section 4.4 with respect to utilities (“ Lessee’s Utilities Rights ”) shall be deemed to be an easement appurtenant to Lessee’s interests in the Premises and a covenant real, running with the land that Lessor shall have no right to terminate or restrict during the Term (or subsequent to the Term if Lessee acquires fee title to the Premises), subject to the following provisions:

                         (i) Lessee’s Utilities Rights are non-exclusive;

                         (ii) Said easement for Lessee’s Utilities Rights shall be exercised initially over, and encumber only, the areas described in Exhibit “K” attached hereto and made a part hereof; provided that Lessor reserves the right to change the description set forth in Exhibit “K” at any time, and from time to time, and upon any such change, Lessee’s Utilities Rights shall be exercised over, and encumber only, the new area as chosen by Lessor. Any such change in the area described in Exhibit “K” shall be effective when Lessor gives to Lessee written notice thereof. Promptly upon request by Lessor, Lessee shall execute and deliver an amendment to this Lease setting forth in a new Exhibit “K” describing the new area for exercise of Lessee’s Utilities Rights as so changed by Lessor; and

                    (f) Notwithstanding any other provision of this Section 4.4, Lessee and Lessor acknowledge that Adjacent Development may include installation of additional public utility lines, including water, natural gas, and electricity. Lessor and Lessee agree to coordinate reasonably with each other concerning Lessee’s transition to said public utilities. In connection therewith, in the event public utility lines become available within a one thousand (1,000) foot radius of the point at which the existing utility lines enter the Demised Land, then either Lessor or Lessee shall have the right to cause to be installed all infrastructure necessary for the public utilities to deliver to Lessee the utilities contemplated by this Section 4, and, in connection therewith, Lessor shall execute and record reasonable easement agreements for such infrastructure that are appurtenant to and run with the Demised Land. The party exercising such right shall bear all costs and expenses in connection with the installation of such infrastructure as well as all reasonable third-party costs and expenses associated with the preparation and recording of such easements. In the event public utilities that are functionally equivalent to those currently used in connection with the Acquired Business are installed and made available to Lessee from a public utility company in accordance with this Section 4.4(f), then Lessor shall have no further obligations to Lessee, under subparts (a) through (e) of this Section 4.4 (except for reimbursement of utility use in Aerojet Buildings), all easements granted pursuant to Section 4.4(e) hereof (but not any easements granted in connection with this Section 4.4(f)) shall cease to exist, and Lessee shall have no further obligations to Lessor under such subparts, and Lessee shall, at its sole cost and expense, arrange for obtaining its utility services exclusively from such public utility provider.

               4.5 Sewer Outfall . Subject to the last sentence of this Section 4.5, to the extent the sewer outfall commonly used in connection with the Acquired Business operated at the Premises as of the Term Commencement Date, identified in the Acquired Business’s

discharge permit as “SRCSD manhole #072-023-018,” (“ Sewer Outfall ”) is located on the Aerojet Site, then Lessor shall permit Lessee to use such Sewer Outfall and Lessee’s Access Rights shall be deemed to include reasonable and sufficient access to and from the Sewer Outfall; provided that Lessor reserves the right at any time, and from time to time, to substitute a functionally equivalent alternative sewer outfall on the Aerojet Site to which Lessee has reasonably equivalent access (a “ Substitute Sewer Outfall ”) and upon any such change, Lessee’s rights hereunder shall be exercised with respect to such Substitute Sewer Outfall. Lessor shall, during the Term, reasonably maintain the Sewer Outfall or the Substitute Sewer Outfall, as appropriate. Each party shall indemnify, defend, protect, and hold harmless the other party from and against any liability to the extent arising out of such party’s wastewater discharge. Lessee shall reimburse Lessor for Lessee’s pro-rata share of the costs of wastewater discharge based upon the measured volume of wastewater discharged by Lessee, as compared to the measured volume of all wastewater discharged from the Aerojet Site. In the event a public sewer on fair and non-discriminatory terms which would provide adequate service to the Acquired Business is installed by Lessor as part of the Adjacent Development to the boundary of the Demised Premises, then Lessee shall, at its sole cost and expense, arrange for the connection to and the use thereof and upon such connection Lessor shall have no further obligations to Lessee under this Section 4.5.

               4.6 Entry by Lessor . In addition to any and all other rights of entry granted or reserved to Lessor by this Lease, Lessee agrees to permit Lessor, its agents, representatives, contractors, and licensees to enter the Demised Land at all reasonable times upon reasonable advance written notice (with accommodations as may be necessary to enable Lessee to have a representative accompany Lessor) (i) to post notices of nonresponsibility; and (ii) to perform Lessor’s obligations and exercise Lessor’s rights under this Lease; provided, however, that except as provided elsewhere in this Lease, in the event of an emergency, (a) Lessee may require that a representative of Lessee be present during any such entry, (b) such entry shall comply with Lessee’s reasonable security measures, (c) such entry shall not unreasonably interfere with Lessee’s access to, use or occupancy of the Premises, (d) such entry shall not adversely affect the rights of Lessee or Lessee’s Mortgagee hereunder, and (e) such entry shall not cause any Lessee Material Adverse Effect. The obligations set forth in this Section 4.5 shall survive the Term with but only respect to Lessor’s duties set forth in Exhibit “G” .

               4.7 Additional Restrictions . Notwithstanding anything contained in this Lease to the contrary, Lessee shall not have any possessory or other right to any groundwater at the Demised Land or at the Aerojet Site and, as amplification of the forgoing, Lessee shall not have any right to access, extract, use or produce groundwater from the Demised Land or the Aerojet Site. Without limiting the forgoing, with respect to the Demised Land or any of the Aerojet Site, Lessee shall not (i) drill any extraction or injection wells; (ii) extract any groundwater or inject any fluids into any existing wells; or (iii) construct any unlined ponds. The obligations set forth in this Section 4.6 shall survive the Term.

               4.8 Control of Premises . Except as specifically provided in this Lease, or as specifically provided for in Section 4.5, (i) Lessee shall have complete control over the planning, design, engineering, development, commissioning, construction, management, operation and maintenance of the Premises; (ii) Lessor shall have no liability or responsibility whatsoever for

any repairs made by or for Lessee to the Premises or for any aspects of the future design, development or construction by or for Lessee on the Premises; and (iii) Lessee may, without Lessor’s consent, modify or destroy any part of the Premises at its expense and in its sole discretion at any time upon providing prior written notice to Lessor, provided that such modification or destruction does not result in a Lessor Material Adverse Effect. Lessee will complete any such modification or destruction without cost or expense to Lessor, and Lessee shall secure final certificates of occupancy or equivalent use certificates or permits, if required, with regard to the Premises and any improvements thereto.

               4.9 Adjacent Development . Lessee, on behalf of itself and its Affiliates, successors and assignees, agrees not to object, publicly or privately, to, encourage or support others in objecting to, or take any action for the purpose of impeding or delaying, Adjacent Development or land use entitlements, subdivisions, improvements, or uses that are part of Adjacent Development. The preceding sentence shall not be construed to prohibit or limit any person or entity, or impose any liability on such person or entity due to from (i) responding to any inquiry by a governmental authority for information;(ii) reporting suspected illegal activity to any governmental authority; (iii) responding to any legal process, including by way of example, subpoena, deposition, interrogatories or the like; or (iv) otherwise performing an act required by law. The sole remedy for a violation of this prohibition shall be an action for damages, and shall not constitute a default under this Lease. The obligations set forth in this Section 4.8 shall survive the Term.

ARTICLE 5.

PROPERTY TAXES

               5.1 Definition . For purposes of this Lease, the term “ Property Taxes ”:

                    (a) means and includes all taxes, assessments, and other governmental charges of every kind and nature whatsoever, whether general or special, ordinary or extraordinary, including, but not limited to, assessments for public improvements or benefits and bonds, including, but not limited to Mello-Roos bonds, issued to finance such improvements or benefits, that have been heretofore or shall be during the term of this Lease as allocated to Lessee as provided in Section 4.1(c) hereto (i) assessed, levied, or imposed upon, or become due and payable and a lien upon, the Premises or any part thereof; or (ii) assessed, levied, or imposed by reason of the use or occupancy or change in ownership of the Premises or any part thereof; or (iii) assessed, levied, or imposed upon this Lease or Lessee’s rental obligations or Lessor’s right to receive rents or other sums under this Lease; or (iv) subject to (b) below, assessed, levied, or imposed by reason of Lessor’s ownership or interest in all or any part of the Premises, this Lease, or rents or other sums accruing under this Lease, including, but not limited to, a tax or excise on rents; or (v) assessed, levied, or imposed in lieu of any of the foregoing taxes, assessments, or other governmental charges; or (vi) assessed by reason of any Improvements made for or on behalf of Lessee; but

                    (b) does not mean or include franchise, estate, inheritance, successor, capital levy, transfer, net income, or excess profit taxes imposed upon Lessor, nor does the term “ Property Taxes ” include any taxes, assessments, or other governmental charges assessed, levied, or imposed upon, or attributable to the value of Lessor’s ownership of, the Aerojet Buildings; and

                    (c) if, at any time during the Term of this Lease, any portion of the Premises is jointly assessed, for property tax purposes, with other real property that is not a part of the Premises, then Lessor and Lessee shall make a reasonable allocation of the taxes, assessments, or other governmental changes that are assessed, levied, or imposed thereon, and only the portion thereof reasonably attributable to the Premises shall be deemed Property Taxes payable by Lessee as set forth in Section 5.2, which allocation may be based upon any and all records, memoranda, and notes available at the Assessor’s Office, calculations of respective square footage, evaluation of respective permanent improvements and uses, and other relevant evidence available to Lessor at no substantial cost or provided by Lessee. Lessor shall provide Lessee with written evidence of Lessor’s payment of any taxes, charges or assessments affecting the Premises which Lessor is obligated to pay at least three (3) business days prior to delinquency. If Lessor fails to pay any such taxes, charges or assessments, Lessee shall have the right to pay such taxes, charges or assessments and deduct the amount of such payment from Base Rent.

               5.2 Payment .

                    (a) Lessee agrees to pay to Lessor or the appropriate governmental entity, as applicable, prior to delinquency, as Additional Rent additional to all other rent reserved in this Lease, all Property Taxes for each fiscal tax year or portion thereof that is within the Term, for each fiscal tax year that is not entirely within the Term in the same ratio as the number of days of such fiscal tax year that are within the Term bears to the number of such days that are outside the Term.

                    (b) With respect to Property Taxes that may, under the Law then in force, be paid in installments, Lessee shall be required to pay hereunder only such installments, prorated between Lessor and Lessee for partial fiscal tax years as above provided.

                    (c) In the event that Lessee fails to pay any Property Taxes, Lessor shall have the right and option, but no obligation, to pay such Property Taxes or any portion thereof before or after the delinquency date and any and all fines, penalties, and interest thereon, and Lessee agrees to reimburse Lessor immediately for the total amount so paid by Lessor, as Additional Rent additional to all other rent reserved in this Lease.

                    (d) In the event that Lessor has paid, before the Term Commencement Date, any Property Taxes or installment thereof for a fiscal tax year or portion thereof that is in part within the Term, Lessee agrees to pay to Lessor, on the Term Commencement Date, Lessee’s prorata portion thereof.

                    (e) Notwithstanding anything contained in this Section 5.2 to the contrary, for the first three (3) years of the Term, Lessor agrees to pay one-half (1/2) of that portion of Property Taxes attributable to said three (3) years that is the amount of the increase in Property Taxes triggered by the change in ownership effected by the execution and delivery of this Lease.

               5.3 Personal Property Taxes .

                    (a) Lessee agrees to pay, or cause to be paid, directly to the taxing authority or authorities before delinquency, any and all taxes that are levied or assessed upon Personal Property.

                    (b) If any such taxes upon Personal Property are assessed, levied, or imposed upon Lessor or upon all or any part of the Premises or on Lessor’s interest in the Premises or this Lease, or if such taxes upon Personal Property become a lien upon or may be enforced against Lessor or all or any part of the Premises or against Lessor’s interest in the Premises or in this Lease, Lessor shall as soon as practicable notify Lessee of same, and Lessor shall have the right and option, but no obligation, to pay such taxes upon Personal Property or any portion thereof before or after the delinquency date, and Lessee agrees to reimburse Lessor immediately therefor, including, but not limited to, any and all late payment penalties or fines and interest paid by Lessor, as Additional Rent additional to all other rent reserved in this Lease.

               5.4 Contests . Nothing herein shall prevent Lessee from contesting, and Lessee may contest and institute all proceedings reasonably necessary to contest, in good faith, the validity or amount of any Property Taxes, including, but not limited to, any applicable or potentially applicable exemptions from Property Taxes, provided Lessee protects the Premises and the interests of Lessor by payment by Lessee of the Property Taxes under protest not later than thirty (30) days before delinquency, and provided, further, that Lessee shall indemnify, defend, protect, and hold harmless Lessor from and against any liability for the payment of said Property Taxes. Lessor shall aid Lessee in all reasonable respects in obtaining any such refund or rebate, provided that all costs of obtaining the same shall be paid by Lessee. In connection with the foregoing, Lessor shall provide Lessee with assessor’s valuation notices promptly following the receipt of same and shall provided Lessee with any assessor’s work sheets or such other information as may be reasonably available relating to the taxes or other charges which are the subject of Lessee’s challenge. Notwithstanding anything to the contrary herein, Lessee may postpone payment of any contested tax, assessment or other charge pending timely prosecution of any such challenge and appeals of any ruling related thereto. Nothing in this Lease shall be construed to require either party to pay any tax or governmental entity charge of any kind that is or may be imposed upon the other party, its successors or assigns with respect to such other party’s property.

               5.5 Survival . The obligations set forth in this Article 5 shall survive the Term.

ARTICLE 6.

INDEMNITY AND INSURANCE

          6.1 Lessee’s Indemnity .

          (a) Except to the extent the same arise from Lessor’s actions or omissions, Lessee agrees to indemnify, defend, and protect Lessor and its agents and employees from and against and hold Lessor and its agents and employees harmless and free from any and all liability, loss, cost, expense, or obligation (including without limitation reasonable attorneys’ fees, court costs, and other expenses, including those of appeal) on account of or arising out of, injury to or death of any person or persons or damage to or loss of use of property, from whatever cause, occurring during the Term, in any way connected with the condition of, or Lessee’s maintenance or use of, the Premises, the alteration or improvement of the Premises (including without limitation, the demolition of Improvements and the construction of New Improvements), or the Personal Property or connected with any activities of Lessee or of any of its employees, agents, sublessees, invitees, contractors, or licensees, including, without limitation, any and all liability for injury to or death of, or damage to or loss of the use of the property of, Lessee or any of Lessee’s employees, agents, invitees, contractors, or licensees

               (b) Nothing contained in this Section 6.1 shall apply to, or affect in any way, Lessor and Lessee’s obligations and rights respecting, any Release, threat of Release, or the presence of any Hazardous Substance, all of which are governed by other provisions of this Lease, particularly by Sections 2.5 and 5.1 of Exhibit “G” . The obligations set forth in this Section 6.1 shall survive the Term.

          6.2 Liability Insurance .

               (a) Lessee agrees to procure and maintain, at its sole cost and expense, during the Term, commercial general liability insurance, occurrence basis, as broad as the most common generally available ISO Commercial General Liability, policy form CG 00 01, insuring against liabilities related to the condition of or use of the Premises in an amount that is not less than Two Million Dollars ($2,000,000.00), combined single limit, for bodily injury or death and for damage to or loss of use of property. Tenant shall also maintain an umbrella policy in excess of the foregoing coverages in an amount not less than Fifteen Million Dollars ($15,000,000.00). Such insurance shall be subject to periodic increases as provided below and shall specifically (i) insure performance by Lessee of its indemnity obligations under Section 6.1; (ii) provide that the coverage is primary and that any coverage that Lessor or any mortgage holder may maintain shall be in excess thereof; (iii) name Lessor and such mortgage holder as additional insureds; (iv) provide that the policy cannot be canceled or modified without thirty (30) days’ prior written notice to Lessor and to the mortgage holder; and (v) include a cross-liability or severability-of-interests endorsement in the event that the basic policy obtained by Lessee does not contain such a provision, which cross-liability or severability-of-interests endorsement shall apply to all additional insureds, as well as the named insureds, and shall be referenced in the additional insureds endorsement. Any self-insured retention respecting said liability insurance shall not exceed Five Hundred Thousand Dollars ($500,000) per occurrence.

               (b) Neither the maintenance nor the amount of any such general liability insurance shall be construed to limit in any way Lessee’s obligations under any indemnity, defense, or hold harmless agreements set forth in this Lease.

               (c) At the request of Lessor, the amount of said general liability insurance shall be increased periodically as may be reasonable, from time to time (but not more than once in any two year period), based upon advice from a professional insurance consultant selected by Lessor and approved by Lessee, to an amount equal to that which customarily would be carried for a business similar to the Acquired Business and a lease of similarly-situated property and usage.

               (d) Lessee shall also procure such other insurance as may be required by applicable Law. Lessee shall also from time to time procure any modifications to or endorsements for the insurance policies provided for in this Lease as may reasonably be required in order to adequately insure against the risks contemplated in this Article 6 in a manner comparable to other prudent operators of comparable facilities, including increases in the amounts of insurance coverage as may be appropriate in Lessee’s reasonable judgment to reflect inflation.

          6.3 Waiver of Subrogation . Lessee and Lessor each hereby release and relieve the other from, and if and to the extent permitted by their insurance policies, waive their entire right of recovery against the other for, direct or consequential loss or damage arising out of or incident to the perils covered by the property insurance carried by such party, whether due to the negligence of Lessor or Lessee or their agents, employees, or invitees. If necessary, all property insurance policies, if any, maintained by Lessor or Lessee, shall be endorsed to so provide. Lessee and Lessor each waive any rights to recover indirect, consequential, punitive, special or exemplary damages or any claim for a multiplier effect or any capitalization of out-of-pocket expenses or lost profits, provided , however , that the foregoing shall not be construed to preclude recovery by the indemnified party in respect of losses directly incurred from third-party claims. Each of Lessee and Lessor shall use commercially reasonable efforts to mitigate their damages.

          6.4 General . Each insurance policy required by this Lease to be procured and maintained by Lessee shall be issued by a company authorized to do insurance business in the State of California, having a rating in Best’s Key Rating Guild of not less than A-VII. Lessee agrees to deliver to Lessor (i) on or before the Term Commencement Date, a copy of each such policy, or binder therefor, and a certificate certifying that it contains the provisions required by this Lease, and (ii) not later than five (5) days prior to the expiration of the policy, a renewal binder therefor.

          6.5 Lessor’s Insurance . During the Term of this Lease, Lessor shall maintain general liability, workers’ compensation and employer’s liability, and business automobile liability insurance, covering Lessor’s operations and activities on the Aerojet Site, use of the Aerojet Buildings and Lessor’s exercise of Lessor’s Access Rights.

          6.6 Environmental Remediation and Related Matters . The parties’ respective obligations regarding environmental remediation, environmental matters and related matters are set forth in Exhibit “G” which is incorporated herein by reference in its entirety. Such obligations shall survive the Term if Lessee acquires fee title to the Premises.

ARTICLE 7.

MAINTENANCE AND REPAIRS

          7.1 Lessor’s Obligations . Lessor shall keep the Aerojet Buildings in as good a condition, and repair as at the Term Commencement Date, and free from hazards, including replacements as needed. Subject to the foregoing and except as otherwise set forth in this Lease, Lessor shall not be obligated to make or bear the cost of any repairs, replacements, rebuilding, or renewals of any kind, nature, or description whatsoever related to the Premises or any portion thereof, except to the extent such maintenance, repair or replacement is required as a result of the negligence or willful misconduct of Lessor or its agents, employees, representatives, invitees, guests, contractors, subcontractors or any other Person acting for or on behalf of Lessor.

          7.2 Lessee’s Obligations .

               (a) Except to the extent that the demolition of Improvements by Lessee is permitted under Article 8, and subject to other provisions of this Lease that govern the maintenance and repair of utility lines and the Roadways, and the obligations of Lessor with respect to Pre-Term Environmental Liabilities, Lessee shall, at its own cost, and without expense to Lessor, keep and maintain the Premises in good condition, and repair, and free from hazards, including replacements as needed (provided that nothing herein shall require Lessee to improve the Premises or any part thereof to a better condition than exists as of the Term Commencement Date.).

               (b) Lessee hereby waives the benefit of any Law that would otherwise accord Lessee the right to make repairs at Lessor’s expense or to terminate this Lease because of Lessor’s failure to keep the Premises or any portion thereof in good order, condition, or repair.

          7.3 Surrender of the Premises .

     (a) The parties acknowledge that Lessee owns fee title to the AFC Buildings and all of the Lessee Improvements. Lessor shall have no rights or obligations with respect to the Lessee Improvements, except as expressly provided in the Lease; provided that Lessor agrees to execute, acknowledge and record from time to time such additional written documents of conveyance and assignment as may be required by any title insurance company for the issuance to Lessee or Lessee’s Mortgagee of a title insurance policy showing Lessee to be the fee owner of any such Lessee Improvements. Upon the expiration or termination of the Term, Lessee shall quit and surrender the Premises to Lessor in their then “As-Is” “Where-Is” condition, subject only to the obligations of Lessee pursuant to the terms and conditions elsewhere in this Lease. Notwithstanding the foregoing, Lessee shall not leave any of the Lessee Improvements,

including but not limited to the AFC Buildings, in an unsafe condition. Lessee agrees to execute, acknowledge, and deliver to Lessor such quitclaim deed and such other instruments and documents as Lessor shall reasonably request in order to assure and show in the Official Records Lessor’s fee title to the Demised Land and the AFC Buildings free of any interest or claim of Lessee or Lessee’s mortgagee.

     (b) Title to all fixtures, equipment, furnishings, and trade fixtures owned by Lessee upon the Premises shall remain in Lessee, and replacements, substitutions, and modifications thereof may be made by Lessee throughout the Term.

ARTICLE 8.

CONSTRUCTION ACTIVITIES

          8.1 Construction of New Improvements and Construction in General . Subject to the terms of this Lease, and in accordance with all Law and Government Restrictions, Lessee is, in the course of operating the Premises, authorized to do all things necessary to construct, operate, maintain and adapt the Acquired Business or Lessee’s other lawful use, including, but not limited to, making new improvements (including buildings, structures, fixtures, equipment, paving, landscaping and other physical improvements), removing, razing and/or destroying such improvements, trees, plants, shrubs, and topsoil located on the Premises and making such excavations as Lessee may deem necessary, subject to the provisions of this Lease, including, without limitation, this Article 8. Lessee may (but is not obligated to) construct New Improvements upon the Demised Land and Lessee may demolish, alter, and make additions to Lessee’s Improvements and replace obsolete Lessee’s Improvements; provided that all such construction activities, as well as any rebuilding or restoration of damaged or destroyed Improvements under Article 9, shall comply with the following requirements:

               (a) All New Improvements and all such demolitions, alterations, and additions shall be designed and constructed in a good and workmanlike manner and in accordance with Law, this Lease, and with approval by the PCD Agencies, to the extent required by Law.

               (b) The design and construction of all such New Improvements and all such demolitions, alterations, and additions shall comply with all Law and with all Governmental Decrees and Orders.

               (c) At Lessee’s sole cost and expense, Lessor will (i) notify the PCD Agencies of Lessee’s proposed designs and drawings or demolition, alteration, or construction plans and (ii) seek the approval of the PCD Agencies pursuant to paragraph 11 of the Partial Consent Decree or other applicable Governmental Decrees and Orders, all prior to the commencement of any construction activities at the Premises.

               (d) No New Improvement or the use thereof shall expand the area affected by the Air Emissions Requirements outside the area of the Demised Land plus the Current Air Emissions Requirements Boundaries.

               (e) Lessee, at Lessee’s sole cost and expense, shall procure all necessary permits, approvals, and other authorizations that may be necessary or appropriate, including, but not limited to, compliance with the requirements of Section 2.5 of Exhibit “G” hereto, and shall reimburse Lessor for its direct costs and expenses incurred in submitting designs, drawings, and plans to, and seeking the approval of, the PCD Agencies.

               (f) Lessee shall diligently prosecute such construction.

               (g) The entire cost of construction of all New Improvements and of accomplishing such demolitions, alterations, and additions, including, but not limited to, any off site work, plans and specifications, and all permits, fees, and licenses therefore, shall be paid by Lessee.

               (h) In the event Lessee desires to locate a New Improvement on the Demised Land in accordance with the terms of this Lease and all Law and Government Restrictions, and there exist Hazardous Substances (that are Pre-Term Environmental Liabilities) at, on or under that portion of the Demised Land chosen by Lessee for the location of such New Improvement, then Lessor and Lessee shall cooperate in identifying an alternative location for such New Improvement where there are fewer or no such Hazardous Substances (that are Pre-Term Environmental Liabilities) present and where such location would allow Lessee to comply with the terms of Section 8.1(d) and the other provisions of this Lease. If after consultation with Lessor, Lessee cannot locate a New Improvement on the Demised Land in compliance with Section 8.1(d) due to the presence of Hazardous Substances (that are Pre-Term Environmental Liabilities), then the parties shall cooperate in identifying another location on the Demised Premises, including a location that would otherwise cause Lessee to breach the terms of Section 8.1(d). Such alternative location will be mutually agreed to by Lessor and Lessee and shall be chosen with goal of reducing the impact on Aerojet Site Adjoining Uses and the Adjacent Development or plans. Lessor shall be responsible for the additional cost, if any, incurred by Lessee to locate such New Improvement to the alternative location rather than the location selected initially by Lessee.

          8.2 Relocation of Utilities . Lessee shall be responsible, at Lessee’s sole cost and expense, for obtaining all agreements, consents, and permits that may be required to relocate any utility improvement that may be necessary or appropriate in connection with the construction and installation of any New Improvements or any demolitions, alterations, or additions.

          8.3 Personal Property . Personal Property may be removed from the Premises by Lessee at any time during the Term and shall be removed from the Premises by Lessee upon the expiration or termination of the Term.

          8.4 Liens and Notices of Violation Prohibited . Lessee shall not enter into any contract or agreement that purports to permit any contractors, subcontractors, or materialmen

engaged by Lessee with respect to the Premises to make, file, or maintain a mechanic’s or other lien or claim of any kind or character against any real property or personal property of Lessor, including Lessor’s Property and any other property interest owned, held, occupied, or otherwise possessed by Lessor or its affiliates, for or on account of any labor, materials, fixtures, tools, machinery, equipment, or any other things furnished, or any other work done or performance given under, arising out of, or in any manner connected with Lessee’s ownership or operation of the Acquired Business (or other Permitted Uses) or possession of the Premises (such liens or claims being collectively referred to herein as “ Liens ”). If any Lien is made, filed or maintained against the fee interest in the Demised Land, Lessee shall within thirty (30) days following Lessor’s written request therefore either contest such Lien by appropriate proceedings which operate to preclude the enforcement of such Lien during the pendency of such contest, or obtain and maintain a mechanics’ lien release bond or such other bond as shall result in the removal of any Lien under applicable law, or otherwise address the Lien in a commercially reasonable manner. Lessee shall not have any liability hereunder under any circumstances for any lien or claim filed by any person for or on account of any labor, materials, fixtures, tools, machinery, equipment, or any other things furnished, or any other work alleged to be done or performed by or on behalf of Lessor.

          8.5 Mechanics’ Liens .

          (a) Lessee agrees:

          (i) To pay for all labor, services and materials used by or furnished to Lessee or any contractor employed by Lessee with respect to the Premises or any part thereof, whether or not such labor, services, or materials were related to trade fixtures or other works of improvement;

          (ii) to indemnify, defend, and protect Lessor and the Premises from and against, and to hold Lessor and the Premises free and harmless from, any and all liabilities, claims, liens, encumbrances, and judgments created or suffered in connection with such labor, services, or materials; and

          (iii) to permit Lessor to post and maintain notices of nonresponsibility on the Premises in accordance with California Civil Code Section 3094 or other similar statute hereafter enacted; provided that, nothing herein shall prevent Lessee from contesting in good faith the validity or amount of any lien, claim, encumbrance, or judgment, provided that, in the case of a mechanics’ or materialman’s lien, Lessee obtains and records an appropriate bond as provided by Law to remove the record lien created thereby.

          (b) Should a judgment on any lien, charge, encumbrance, order, notice or violation be rendered against the Premises for which Lessor is not responsible hereunder, and should Lessee fail to discharge such judgment or take action to protest such judgment as provided herein, Lessor shall have the right, but not the obligation, to discharge said judgment. If Lessor exercises that option, any amount paid by Lessor shall be due from Lessee as Additional Rent, and subject to interest as provided above. Lessor shall be responsible for any lien, charge, encumbrance, order, notice or violation rendered against the Premises arising out of

any work performed by or on behalf of Lessor or any contractor on behalf of Lessor, except to the extent such work is performed as a result of Lessee’s failure to comply with its obligations as provided in this Lease.

          8.6 Permits or Approvals . Except as otherwise provided in any provision of this Lease, Lessor agrees to join with Lessee, at Lessee’s request, at Lessee’s sole cost and expense, as required for any permits, applications and other governmental approvals related to, and Lessee agrees to indemnify and hold Lessor harmless from and against all liabilities arising from such joinder by Lessor with Lessee in connection with, Lessee’s construction of New Improvements or any demolitions, alterations, or additions, at no cost or expense to Lessor excepting any requirements of the PCD Agencies as to which Lessor shall be responsible.

          8.7 Signs . Lessee may, without cost or expense to Lessor, at any time and from time to time during the Lease Term, place or permit to be placed signs on or about the Premises (and at the applicable entrances to the Aerojet Site, in locations reasonably acceptable to Lessor), and to remove them or permit them to be removed, provided the same is done in full compliance with all Law, Government Restrictions and requirements pertaining thereto. Lessor hereby agrees to execute any applications and consents that are required by Law with regard to such signs, provided that Lessee reimburses Lessor for any actual external cost it is required to pay to a third party upon delivery by Lessor to Lessee of written documentation, in reasonable detail, evidencing Lessor’s payment of such cost.

ARTICLE 9.

DESTRUCTION

          9.1 Rebuild . In the event that Lessee’s Improvements or any of them are damaged or destroyed in whole or in part by any casualty, whether or not covered by insurance, Lessee may, in its sole and absolute judgment, elect to rebuild or restore them with such alterations as Lessee may reasonably desire, subject to compliance with Article 8. In the event Lessee elects not to rebuild or restore such Lessee’s Improvements, it shall have the option to terminate this Lease, effective as of ninety (90) days from the date such damage or destruction occurs, which option may be exercised only by giving to Lessor, within said ninety (90) days, a written notice of termination. Lessor and Lessee shall have no further obligations to each other after said effective date of termination respecting the Premises, except those obligations that, by the terms of this Lease or provisions of Law, shall survive the termination of this Lease.

          9.2 No Abatement of Rent . Unless this Lease is terminated by Lessee as provided in Section 9.1, there shall be no abatement of rent by reason of damage to or destruction of the Premises in whole or in part. Lessee hereby waives the provision of Section 1932, Subdivision 2, and Section 1933, Subdivision 4, of the California Civil Code, and all present and future amendments thereto, and all other Law that would permit or cause termination of a lease or abatement of rental obligations upon damage to or destruction of the property subject thereto.

          9.3 Insurance Proceeds . All insurance proceeds payable with respect to Lessee’s Improvements shall be payable to Lessee and Lessor shall have no interest in such proceeds.

ARTICLE 10.

CONDEMNATION

          10.1 Definitions of terms . For the purposes of this Lease, the following definitions shall apply:

          (a) “ Taking ” means a taking of the Premises or an interest therein pursuant to, or damage related to the exercise of, the power of condemnation and includes a voluntary conveyance to any agency, authority, public utility, person, corporation, or other entity empowered to condemn property in lieu of court proceedings;

          (b) “ Total Taking ” means a Taking of the entire Premises or so much thereof as to prevent or substantially impair the use thereof by Lessee for the uses provided in this Lease;

          (c) “ Partial Taking ” means a Taking of only a portion of the Premises that does not constitute a Total Taking;

          (d) “ Date of Taking ” means the date upon which title to the Premises, an interest therein, or a portion thereof passes to and vests in the condemnor, or the date damage related to the exercise of the power of condemnation is suffered, or the effective date of any order for possession if that order is issued prior to the date title vests in the condemnor;

          (e) “ Award ” means the amount of any award made, compensation paid, or damages ordered as a result of a Taking;

          (f) “ Total Temporary Taking ” means a Total Taking for a temporary term ending prior to the expiration of the Term;

          (g) “ Partial Temporary Taking ” means a Partial Taking for a temporary term ending prior to the expiration of the Term hereof.

          10.2 Rights . Lessor and Lessee agree that, in the event of a Taking, all rights between them and in and to an Award shall be as set forth herein, and Lessor and Lessee shall have no right to any Award except as set forth herein. In no event shall any portion of the Award that is attributable to Lessee’s leasehold interest in the Demised Land be paid to Lessor, and Lessor hereby assigns to Lessee the portion, if any, of the Award that is attributable to Lessee’s leasehold interest in the Demised Land. Lessee also shall be entitled to such portion of the Award allocable to Lessee’s Improvements, and Lessor shall have no right or interest therein or thereto.

          10.3 Total Permanent Taking . In the event of a Total Taking during the Term that is not a Total Temporary Taking:

          (a) the rights of Lessee under this Lease and the leasehold estate of Lessee in and to the Demised Land shall cease and terminate as of the Date of Taking;

          (b) Lessor shall refund to Lessee any prepaid Base Rent or Additional Rent prorated as of the Date of Taking;

          (c) Lessee shall pay to Lessor any Base Rent and Additional Rent due to Lessor under this Lease prorated as of the Date of Taking, with no further obligations thereafter accruing under this Lease;

          (d) Lessee shall receive from the Award those portions of the Award that are attributable to (i) removal, relocation, and replacement of Personal Property, (ii) any special damages to Lessee that Lessee recovers directly as its own claim without diminution of any claim by Lessor, such as for loss of business goodwill or business moving expenses, and (iii) the value of Lessee’s Improvements and its Leasehold interest; and

          (e) the remainder of the Award, which shall include the value of the Demised Land unencumbered by this Lease and the value of Lessor’s Improvements, shall be paid to Lessor.

          10.4 Partial Permanent Taking . In the event of a Partial Taking during the Term that is not a Partial Temporary Taking,

          (a) The rights of Lessee under this Lease and the leasehold estate of Lessee in and to the portion of the Demised Land taken shall cease and terminate as of the Date of Taking, with no further obligations thereafter accruing under this Lease with respect to that portion;

          (b) Base Rent or Additional Rent and other charges hereunder shall be abated based on the proportion by which Lessee’s use and enjoyment of the Premises has been reduced by such Partial Taking;

          (c) Lessee shall receive from the Award those portions of the Award that are attributable to (i) removal, relocation, and replacement of the Personal Property, (ii) any special damages to Lessee that Lessee recovers directly as its own claim without diminution of any claim by Lessor, such as loss of business goodwill or business moving expenses, and (iii) the value of Lessee’s Improvements taken and its Leasehold interest; and

          (d) the remainder of the Award, which shall include value of the portion taken of the Demised Land unencumbered by this Lease and the value of the portion taken of Lessor’s Improvements, shall be paid to and be the property of Lessor.

          10.5 Temporary Taking . In the event of a Total or Partial Temporary Taking during the Term for a period ending on or before the expiration of the Term,

          (a) this Lease shall continue in full force and effect;

          (b) that portion of the Award attributable to the rental value of the Demised Land and of Lessor’s Improvements for the period of the Total or Partial Temporary Taking shall be paid to Lessor and credited by Lessor to the benefit of Lessee to the Base Rent and Additional Rent that become due during the period of the Total or Partial Temporary Taking;

          (c) any excess of the Award over the amounts paid to Lessor under subpart (b) of this Section 10.5, shall be paid to Lessee; and

          (d) Rent and other charges hereunder shall be abated based on the proportion by which Lessee’s use and enjoyment of the Premises has been reduced by such Temporary Taking.

ARTICLE 11.

DEFAULT AND REMEDIES

          11.1 Default Defined . For the purposes of this Lease, the terms “ Default by Lessee ” and “ Lessee’s Default ” both mean the occurrence of any one or more of the following events:

          (a) failure of Lessee to pay any Base Rent and Additional Rent within thirty (30) days after Lessee receives notice from Lessor that such Base Rent and Additional Rent are past due;

          (b) breach by Lessee of any provision of this Lease, except those mentioned in subpart (a) of this Section 11.1, not cured within sixty (60) days after Lessor gives Lessee (and Lessee receives) written notice of the breach, or, in the case of breaches reasonably requiring more than sixty (60) days to cure, not cured within a reasonable time after the giving of such notice, provided that the curing of the breach is commenced within said sixty (60) days after the giving of such notice and is diligently prosecuted to completion thereafter.

          11.2 Lessor’s Right to Terminate . Subject to the rights of Lessee’s Mortgagee herein, in the event of a Default by Lessee, Lessor shall have, in addition to any other remedies now or later available to Lessor at law or equity, the right to terminate this Lease and Lessee’s right to possession of the Premises by giving written notice of termination to Lessee and Lessee’s Mortgagee (and if no minimum notice is specified in this Lease, then Lessor will provide not less than sixty (60) days’ written notice, to Lessee and Lessee’s Mortgagee, of its intention to terminate this Lease) and to recover from Lessee:

               (a) the worth at the time of award (computed by including interest at the rate specified elsewhere in this Lease for arrearages) of the unpaid Base Rent and Additional Rent required to be paid by Lessee under this Lease that had been earned at the time of termination;

               (b) the worth at the time of award (computed by including interest at the rate specified elsewhere in this Lease for arrearages) of the amount by which the unpaid Base Rent and Additional Rent required to be paid by Lessee under this Lease that would have been earned after termination until the time of award exceeds the amount of such rental loss that Lessee proves could have been reasonably avoided;

               (c) the worth at the time of award (computed by discounting at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%)) of the amount by which the unpaid Base Rent and Additional Rent required to be paid by Lessee under this Lease for the balance of the Term after the time of award exceeds the amount of such rental loss that Lessee proves could be reasonably avoided; and

               (d) any and all other amounts necessary to compensate Lessor for detriment proximately caused by the Default by Lessee or which in the ordinary course of events would be likely to result therefrom.

Notwithstanding the foregoing, Lessor shall have no right to terminate this Lease as a result of the bankruptcy or insolvency of Lessee, so long as Base Rent, Additional Rent and other obligations hereunder are being paid and satisfied in accordance with this Lease.

          11.3 Lessor’s Right Not to Terminate . Unless and until Lessor elects to terminate this Lease and Lessee’s right to possession as provided in Section 11.2, this Lease shall continue in full force and effect after Default by Lessee, and Lessor may enforce all of its rights and remedies under this Lease, including, but not limited to, the right to recover or enforce payment of Base Rent and Additional Rent as they become due under this Lease.

          11.4 Extension of Cure Periods . In the case of a bona fide dispute between Lessor and Lessee regarding whether a Default by Lessee has actually occurred, the cure periods set forth above shall be extended by the amount of time reasonably necessary to resolve such dispute in accordance with the provisions of Section 15.16.

          11.5 General . Efforts by Lessor to mitigate damages caused by any Default by Lessee shall not constitute a waiver by Lessor of any of Lessor’s rights or remedies under this

Lease, and nothing contained in this Lease shall affect the right of Lessor under this Lease to indemnification for liability for personal injuries or property damages arising prior to termination of this Lease. Neither reasonable acts of repair, alteration, maintenance, reletting, or preservation of the Premises, nor the appointment of a receiver or trustee, whether in bankruptcy proceedings or otherwise, upon initiative of Lessor to protect Lessor’s interests under this Lease, shall constitute an election by Lessor to terminate this Lease or Lessee’s right to possession of the Premises. If Lessor permits this Lease to continue in full force and effect after a Default by Lessee, Lessor may, nevertheless, at any time thereafter elect to terminate this Lease (after following the procedures set forth above) and Lessee’s right to possession of the Premises under the provisions of Section 11.2, for such previous Default by Lessee, provided the Default by Lessee has not then been cured. The rights and remedies of Lessor under this Article 11 shall be additional to all other rights and remedies provided to Lessor in this Lease or by law, whether now in force or hereafter enacted, including, but not limited to, injunctions and other equitable relief.

          11.6 Lessor’s Default . If Lessor shall be in default hereunder, then Lessee, after sixty (60) days written notice that Lessee intends to cure such default, or without notice if in Lessee’s reasonable judgment an emergency shall exist, shall have the right, but not the obligation, to cure such default, and Lessor shall pay to Lessee upon demand the reasonable cost thereof. If Lessor shall default or fail in the performance in any respect of a covenant or agreement on its part to be performed under this Lease, and such default shall not have been cured for a period of sixty (60) days after receipt by Lessor of written notice of said default from Lessee, or if such default cannot, with due diligence, be cured within sixty (60) days, and Lessor shall not have commenced the remedying thereof within such period or shall not be proceeding with due diligence to remedy it with thirty (30) days following the initial sixty (60) day period (it being intended in connection with a default not susceptible of being cured by Lessor with due diligence within sixty (60) days that the time period within which to remedy the same shall be extended for an additional thirty (30) days), then Lessee may declare Lessor in default of this Lease upon written notice to Lessor, seek any compensatory damages which may be available to Lessee in an action at law or equity, and in addition to its other remedies, cure any default of Lessor at Lessor’s cost and deduct the cost of such cure from Base Rent.

          11.7 Right of Lessor to Perform . Subject to the rights of Lessee’s Mortgagee herein, Lessor may, but shall not be obligated, to make any payment or perform any obligation required of Lessee under this Lease that Lessee fails timely to pay or perform as provided herein, and Lessor may do so with or without giving further notice of Lessor’s intention to do so. No such payment or performance by Lessor shall constitute a waiver of, or release Lessee from, Lessee’s said obligation or any other obligation of Lessee under this Lease, nor shall such payment or performance by Lessor diminish or affect in any way other rights and remedies of Lessor set forth elsewhere in this Lease that may be applicable by reason of such failure by Lessee to pay or perform its obligation.

ARTICLE 12.

LOAN OR SALE

          12.1 Estoppel Certificates, etc . Each party (both Lessor and Lessee) agrees within twenty (20) days following request by the other to execute and deliver to the requesting party an estoppel certificate (i) certifying that this Lease is unmodified and in full force and effect, or, if modified, stating the nature of such modification and certifying that this Lease, as so modified, is in full force and effect, and certifying the date to which the Base Rent and Additional Rent and any other charges are paid in advance, if any, and (ii) acknowledging that there are not, to such party’s knowledge, any uncured defaults on the part of either party hereunder, or specifying such defaults if they are claimed) evidencing the status of this Lease. The statement shall also state the dates to which the Base Rent and Additional Rent has been paid in advance. The statement shall be such that it can be relied on by any other auditor, creditor, commercial banker, and investment banker of either party and by any prospective purchaser or encumbrancer of the Premises or Improvements or both or of all or any part or parts of Lessee’s or Lessor’s interests under this Lease.

          12.2 Liability of Transferee . In the event that Lessor shall sell or otherwise transfer its title to the Premises, after the effective date of such sale or transfer, and upon assumption of Lessor’s obligations hereunder, whether expressly or by operation of law, Lessor shall have no further liability under this Lease to Lessee except as to matters of liability which have accrued before, and are unsatisfied as of, the date of sale or transfer, and Lessee shall thereafter seek performance solely from Lessor’s successor.

ARTICLE 13.

MORTGAGE HOLDER PROTECTIONS

          13.1 Subordination or Superiority . The rights of Lessee under this Lease shall be superior to any mortgage or deed of trust (including a consolidated mortgage or deed of trust) constituting a lien on Lessor’s title to the Premises, whether such mortgage or deed of trust has heretofore been, or may hereafter be, executed by Lessor (any such mortgage herein called an “ Underlying Encumbrance ”). To further assure the foregoing superiority, prior to the Term Commencement Date and as a condition to Lessor’s rights and Lessee’s obligations under this Lease (or any new lease executed pursuant to Section 13.5(k)), Lessor shall either (a) obtain a release of any and all existing Underlying Encumbrances with respect to the Premises, or (b) obtain an SNDA from each holder of an existing Underlying Encumbrance in form and substance acceptable to Lessee and Lessee’s Mortgagee providing for the unqualified recognition of Lessee’s and Lessee’s Mortgagee’s interests under this Lease (or any new lease executed pursuant to Section 13.5(k)), and each of their respective successors and assigns, in the event of a foreclosure of such holder’s security interest so long as no a Default by Lessee has occurred and is continuing hereunder. All future Underlying Encumbrances shall contain clauses acceptable to Lessee and Lessee’s Mortgagee which automatically subordinate the lien of such Underlying Encumbrance not only to the lien of this Lease but to that of any new lease executed pursuant to

Section 13.5(k). Nothing herein shall be construed to give the holder of any Underlying Encumbrance any right, title or interest in or to, or any lien on or security interest in, any rights or interests of Lessee under or created by this Lease, including without limitation Lessee’s leasehold estate and the fee interest of Lessee in any buildings, improvements or personal property now or hereafter situated on or used in connection with the Premises.

          13.2 Attornment . Subject to the rights of Lessee’s Mortgagee hereunder, Lessee agrees (i) to attorn to any Mortgage Holder and to any party acquiring title to the Premises or any portion thereof by judicial foreclosure, trustee’s sale, or deed in lieu of foreclosure, and (ii) to execute an attornment agreement reasonably acceptable to Lessee and Lessee’s Mortgagee to confirm same.

          13.3 SNDA Form . Lessor and Lessee agree to act reasonably with each other and with the Mortgage Holder in reviewing and approving the SNDA form described in Section 13.1 above, and agree that the Mortgage Holder and Lessee shall be entitled to have the customary protections expected in such an agreement, including provisions on subject matters that are not expressly mentioned in this Lease.

          13.4 Mortgage Holder’s Right to Cure Lessor’s Defaults . In the event of any default on the part of Lessor under this Lease, Lessee agrees to give notice by certified mail to any Mortgage Holder whose address shall have been furnished to Lessee, and offer such Mortgage Holder, except in the case of emergency, a reasonable opportunity, not to exceed thirty (30) days (or such longer period as is specifically required under this Lease), to cure the default, which cure period shall be in addition to any cure period provided Lessor hereunder.

          13.5 Leasehold Mortgage .

          (a) Notwithstanding anything to the contrary in this Lease regarding any assignment of this Lease, but subject to the provisions of this Section 13.5, Lessee shall have the right at any time and from time to time to encumber the leasehold estate created by this Lease and Lessee’s Improvements during the Term by mortgage, deed of trust or other security instrument, including, without limitation, an assignment of the rents, issues and profits from the Premises (a “ Leasehold Mortgage ”), to secure repayment of a loan (and associated obligations) made to Lessee by an Institutional Lender for any purpose whatsoever; provided that the Leasehold Mortgage shall contain an express acknowledgment and agreement by the mortgagee that its interest are subject to all of the terms and conditions of this Lease. Lessee shall deliver to Lessor not later than thirty (30) days prior to, and promptly after, execution by Lessee a true copy of any Leasehold Mortgage, and any amendment, modification or extension thereof, together with the name and address of the owner and holder thereof (“ Lessee’s Mortgagee ”).

          (b) During the continuance of any Leasehold Mortgage until such time as the lien of such Leasehold Mortgage has been extinguished, and if a true copy of such Leasehold Mortgage shall have been delivered to Lessor together with a written notice of the name