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                                                                    EXHIBIT 10.3

                                                                  EXECUTION COPY


                            GROUND LEASE AGREEMENT
                            ----------------------

     THIS GROUND LEASE AGREEMENT ("Lease") is made as of May 31, 2001, by and
between HERCULES INCORPORATED, a Delaware corporation ("Hercules" or Landlord")
and GEO SPECIALTY CHEMICALS, INC., an Ohio corporation ("GEO" or "Tenant").

                                   RECITALS

     A.   Hercules is the owner of certain land situated in the town of
Greenwich, Gloucester County, New Jersey, more particularly described in
Schedule A attached hereto and made a part hereof (the "Hercules Land").
----------

     B.   Pursuant to the terms of that certain Sale and Purchase Agreement
dated as of March 27, 2001, entered into by Hercules and GEO, Hercules has
agreed to sell to GEO, and GEO has agreed to purchase from Hercules, inter alia,
the peroxides business (the "Peroxides Business") of Hercules located on the
Hercules Land (the Sale and Purchase Agreement and all schedules, supplemental
or exhibits thereto, and including the Environmental Annex which is a part
thereof (the "Environmental Annex"), are herein collectively referred to as the
"SPA").  Only a portion of the Hercules Land is utilized for the Peroxides
Business, and the land so utilized for the Peroxides Business is more
particularly described on Schedule B attached hereto (the "Premises").
                          ----------

     C.   The SPA provides, inter alia, that (i) the Hercules Land is to be
subdivided so that the Premises shall consist of a separate tax parcel (the
"Subdivision"), (2) if the Subdivision has been fully effected and completed
prior to the Closing Date under the SPA (the "Initial Closing"), then the
Premises are to be conveyed by Hercules to GEO on the Initial Closing, (3) if
the Subdivision has not been fully effected and completed by the Initial
Closing, then the parties are to enter into this Ground Lease, which is to
remain in effect until the Subdivision is completed and the Premises are
conveyed to GEO pursuant to the SPA, and (4) the balance of the Hercules Land
(i.e. all of the Hercules Land except the Premises) is to be retained by
Hercules (herein, the "Retained Land").

     D.   Hercules has not completed the Subdivision by the Initial Closing, and
the parties desire to enter into this Lease as contemplated by the SPA.

     NOW THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:

     1.   Demise; Easements; Reserved Rights.  (a) Landlord hereby demises and
          ----------------------------------
lets the Premises to Tenant, and Tenant leases the Premises from Landlord, on
the terms and conditions set forth herein.
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     (b)  In addition, Landlord hereby grants and conveys to Tenant the
following perpetual, non-exclusive easements pertaining to the right to use (in
common with others entitled to the use thereof) certain improvements and
utilities on and over the Retained Land which are appurtenant to and an integral
part of the use and operation of the Peroxides Business at the Premises:

          (i)  the right of ingress and egress over and through the  "Reciprocal
Access Easement" to and from the Premises, which Reciprocal Access Easement is
identified on the Site Plan attached hereto and made a part hereof as in
Schedule 1(b)(i) (the "Reciprocal Access Easement "); and
----------------

          (ii) the exclusive right to use, operate, maintain, repair and replace
the waste water pipeline which extends from the waste water treatment plant on
Premises to the Delaware River, which pipeline is described on Schedule 1(b)(ii)
                                                               -----------------
attached hereto and made a part hereof (the "Waste Water Effluent Pipeline
Easement").

The Reciprocal Access Easement and the Waste Water Effluent Pipeline Easement
(collectively the "Tenant Easements") may be used by Tenant and its officers,
directors, employers, agents, servants, employees, agents, visitors and invitees
(collectively "Permittees").  Such use shall be governed and controlled by the
terms and conditions of separate [easement agreements /declaration of easements]
to be executed concurrently herewith and filed of record in the applicable land
records, and no other right, privilege, license, easement or other interest is
granted or created by this Lease so as to authorize or permit Tenant to utilize,
occupy (for storage or other purposes) or access any other area or part of the
Retained Land.

          (c)  Landlord reserves the right to enter upon the Premises for the
purpose of performing its obligations under the Environmental Annex and as
provided in the Declaration of Easements and Restrictions made by Landlord and
dated of even date herewith, and agrees that such entry shall not unreasonably
interfere with Tenant's beneficial use and occupancy of the Premises.

     2.   Lease Term.    (a) The initial term of this Lease (the "Initial Term")
          ----------
shall be for ninety eight (98) years, commencing on the date hereof (the
"Commencement Date") and automatically terminating without further notice or
demand on the expiration of the ninety eighth (98th) anniversary of the
Commencement Date; provided, that this Lease shall terminate on such earlier
date that Tenant acquires fee simple title to the Premises as provided in the
SPA.

          (b)  Provided that no Event of Default has occurred which remains
uncured by Tenant, Tenant shall have the right and option to extend the Term of
this Lease for an unlimited number of successive terms of Ninety Eight (98)
years each (each an "Extension Term") (the Initial Term and any Extension Term,
as applicable, are collectively referred to as the "Term"), upon the same terms
and conditions applying to the Initial Term. Tenant shall exercise such option
to extend the Term by providing written notice to Landlord no less than one (1)
year prior to the expiration of the Initial Term or the then current Extension
Term, as applicable. Notwithstanding the foregoing, the parties desire to avoid
the inadvertent failure of Tenant of exercising the option to extend the Term.
Accordingly, Landlord agrees that, if Tenant

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does not give written notice to Landlord of its election to exercise the
extension option prior to the notice deadline set forth above, such option to
extend shall remain in effect until the later of one year prior to the
expiration of the Initial Term or the then current Extension Term, as
applicable, or the expiration of thirty (30) days following Tenant's receipt of
written notice from Landlord stating that Tenant's option to extend must be
exercised or will lapse; provided, further, that Landlord may provide such
reminder notice at any time within three (3) years prior to the scheduled
expiration of the Initial Term or the then current Extension Term, as the case
may be.

     (c)  Notwithstanding anything contained herein to the contrary, in the
event any of the Extension Term rights granted under this Lease shall be
unlawful or void for violation of (a) the rule against perpetuities or some
analogous common law or statutory provision, (b) the rules restricting
restraints on alienation, or (c) any other statutory or common law rule imposing
time limits, then Landlord and Tenant acknowledge and agree that any such rights
or provisions contained in this Lease shall be amended, modified, or changed so
as to comply with any such common law or statutory provision(s), including, but
not limiting to modifying the term of this Lease to the period calculated by the
death of President George W. Bush plus twenty (20) years.

     3.   Rent.  (a) The base rent for the Premises during the Term (the "Base
          ----
Rent") shall be the sum of One Dollar ($1.00) per annum, payable in advance on
the Commencement Date of this Lease.  Landlord acknowledges receipt of the sum
of Ninety Eight Dollars ($98.00), representing payment of Base Rent for the
entire Term.

          (b)  This is a "triple net" lease. Therefore, the payment of the Base
Rent shall be net to the Landlord and shall be in addition to and over and above
all other sums, charges or amounts of whatever nature to be paid by Tenant to
Landlord pursuant to this Lease (the "Additional Rent"). Additional Rent shall
include and encompass all costs, expenses and obligations of every kind and
nature whatsoever relating to the use and occupancy of the Premises by Tenant
and the conduct of the Peroxides Business by Tenant, together with any and all
actual costs and expenses incurred by or imposed upon Landlord with respect to
or arising out of the following:

               (i)  real and personal property taxes assessed against the
Premises and/or the Tenant Assets (as defined below) or this Lease (including
penalties for late payment). All real estate taxes imposed upon the Premises and
the improvements thereon shall, if the same are not separately assessed for real
property tax purposes, be prorated as follows: (A) real estate taxes imposed
upon the land value of the Premises shall be determined by multiplying the total
tax on the land by a fraction, the numerator of which is the area of land
included in the Premises, and the denominator of which is the total land area
covered by the applicable tax bill, and (B) real estate taxes imposed upon the
improvements situated on the Premises shall be determined by multiplying the
total tax on the improvements by a fraction, the numerator of which is the value
of the improvements on the Premises, and the denominator of which is the total
value of the improvements covered by the applicable tax bill, as determined by
reference to the assessed value of improvements as established by the applicable
taxing authority, or, if such separate assessment is not made by such taxing
authority, as determined by the mutual agreement of the parties. In the event of
any dispute concerning the allocation and proration of real property taxes that
is not resolved in accordance with the foregoing, then the parties agree that
such

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dispute shall be determined by arbitration at a mutually agreeable location in
the Commonwealth of Virginia in accordance with the Commercial Arbitration Rules
of the American Arbitration Association (the "AAA"), and each party shall pay
one half of any fees of the AAA in connection therewith.  Any determination by
the AAA shall be final and shall be binding and enforceable in any court of law.

               (ii) charges, costs, expenses and assessments, if any, which are
allocated to Tenant as generally outlined and set forth in SPA.

Each party shall be indemnified and held harmless by the other party from and
against all costs, charges, expenses, assessments and obligations pertaining to
the Premises which a party has not otherwise expressly agreed to accept
responsibility for or control of under this Lease or the SPA.

          (c)  The Base Rent and any Additional Rent shall be considered and
characterized as  "Rent" for purposes of this Agreement.  Tenant shall pay all
Rent to the Landlord without notice, demand, setoff, deduction, counterclaim or
abatement, except as specifically and expressly (and not impliedly) provided in
this Lease, in lawful money to Landlord at the notice address stated herein.
Tenant covenants and agrees to pay to Landlord all Additional Rent within thirty
(30) days after the issuance of a written statement from Landlord documenting
the amounts due directed to Tenant at the notice address states herein.

          (d)  Tenant shall be liable for all taxes levied against the Tenant
Assets as well as any other personal property and trade fixtures owned by and
placed by Tenant in, on or about the Premises. Notwithstanding the foregoing,
Tenant reserves the right to contest any and all such assessments, either in its
own name or that of Landlord, at its own cost and expense, and Landlord will
reasonable cooperate with Tenant in connection therewith. Tenant covenants and
agrees to timely file all personal property returns in its own name with all
applicable taxing and governmental authorities having jurisdiction thereof.
Tenant further agrees to make all such tax payments required directly to the
appropriate taxing authority.

     4.   Condition of Premises.  (a) SUBJECT TO ALL OTHER TERMS AND PROVISIONS
          ---------------------
OF THIS LEASE AND THE SPA, INCLUDING THE PERFORMANCE OF ALL OBLIGATIONS OF
LANDLORD UNDER THE ENVIRONMENTAL ANNEX, THE PREMISES ARE LEASED TO TENANT AND
POSSESSION IS TENDERED AND ACCEPTED BY TENANT IN ITS CURRENT "AS IS, WHERE IS"
CONDITION AS OF THE COMMENCEMENT DATE, AND WITH NO OTHER REPRESENTATIONS AND/OR
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THOSE OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OR OF ANY FUTURE BENEFIT.

          (b)  ALL RIGHTS, DUTIES, OBLIGATIONS AND RESPONSIBILITIES OF THE
PARTIES HERETO WITH RESPECT TO ANY ENVIRONMENTAL CONDITIONS OR MATTERS
PERTAINING TO THE PREMISES, INCLUDING REMEDIATION OF CONTAMINATION AND
COMPLIANCE WITH ENVIRONMENTAL LAWS, SHALL BE GOVERNED BY THE ENVIRONMENTAL ANNEX
ATTACHED TO THE SPA WHICH IS INCORPORATED HEREIN BY REFERENCE. EACH PARTY AGREES
TO PERFORM ALL ITS RESPECTIVE

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OBLIGATIONS UNDER THE ENVIRONMENTAL ANNEX. Notwithstanding any contrary
provision in this Lease, at its expense, Landlord shall comply with, and
Landlord retain all liability arising under, the New Jersey Industrial Site
Recovery Act, N.J.S.A. 13:1K-6 et seq. ("ISRA") arising with respect to the
Premises, including, without limitation, any obligations under ISRA to be
complied with by a lessee or lessor of real property or improvements upon the
expiration or earlier termination of the lease demising such real property or
improvements as required in the Environmental Annex.

     5.   Title to Tenant Assets.  (a) All buildings, facilities, fixtures,
          ----------------------
equipment, inventory and other improvements and personal property located on the
Premises have been conveyed to Tenant on the date hereof by [Bill of Sale]
pursuant to the SPA (the "Tenant Assets") and all such assets are held and owned
by Tenant.  At all times during the Term, title to the Tenant Assets, together
with all other buildings, facilities, fixtures, equipment, inventory and all
other improvements and personal property now or hereafter located, installed or
erected on the Premises shall be and remain vested in Tenant.  It is the
intention of Tenant and Landlord that the retention by Landlord of  fee simple
title to the Premises, and the conveyance to Tenant of title to the Tenant
Assets shall not change the character of the Tenant Assets as real property to
the extent that any of the Tenant Assets constitute real property under
applicable law.

          (b)  Pursuant to the SPA, Landlord has retained title and ownership of
all those certain improvements and facilities located on the Premises which have
been or will be installed, operated and maintained by Landlord with respect to
the environmental remediation as more fully set forth in the Environmental
Annex.

     6.   Use of Premises.  Tenant shall have the right to use and occupy the
          ---------------
Premises for the purpose of manufacturing, distribution and related office uses
and other purposes related to the Peroxides Business and any other business
operations conducted on the Premises (the "Permitted Use"); provided that any
use of the Premises shall (a) be in compliance with all applicable zoning,
subdivision, health and other governmental regulations, ordinances, laws and
similar enactments, and (b) not materially adversely affect Landlord's
environmental remediation activities and responsibilities pursuant to the
Environmental Annex on either the Premises or the Retained Land.

     7.   Quiet Enjoyment; Access.  (a) If and so long as Tenant shall keep,
          -----------------------
observe and perform all covenants, conditions and terms requested to be kept,
observed or performed by it hereunder, taking into account all applicable cure
or grace periods permitted hereunder, then Landlord warrants that it will not
take or permit any action which results in the disturbance of the peaceful and
quiet occupation and enjoyment of the Premises by Tenant; provided, however,
Landlord and its agents may enter upon and inspect the Premises upon twenty-four
(24) hours' prior written notice, except in the event of an Emergency (defined
below) in the exercise of its rights or the performance of its obligations
reserved, granted or imposed under this Lease.  For the purpose of this Lease,
the term "Emergency" means an event, circumstance or condition created or
arising out of the use or occupancy of the Premises by Tenant or its Permittees
which may, in the absence of immediate action by Landlord, pose an immediate
threat to Landlord or to Landlord's property.

                                       5
<PAGE>

          (b)  Landlord covenants and warrants to Tenant that Landlord shall, at
its expense, provide to Tenant, its employees, agents and invitees vehicular and
pedestrian access to and from the Premises and a public street. In connection
with the Subdivision as provided under Section 7.9.1 of the SPA, Landlord shall,
at its expense, obtain the consent of the Grantor under that certain Deed of
Easement dated September 28, 1984, and recorded in Book 1509, page 782 of the
Glouchester County Records, so that Tenant may obtain the rights, benefits and
privileges afforded the Grantee under such Deed of Easement.

     8.   Maintenance, Repairs and Replacements.  (a) Subject to the terms and
          -------------------------------------
conditions of the SPA, Tenant shall immediately upon possession of the Premises
and throughout the Term, assume sole responsibility for all costs and expenses
relative to the use, operation, maintenance, repair and replacement of all or
any part of the Premises, together with the Tenant Assets, including necessary
or appropriate replacements, renewals, upgrades, and repairs (structural as well
as non-structural) required to keep and maintain the Premises and the Tenant
Assets in good order and condition.

          (b)  Notwithstanding anything contained in this Lease to the contrary,
in the event Landlord reasonably determines that a condition or circumstance
exists on, in, under or above the Premises with respect to the maintenance,
repair and or replacement obligations of Tenant, which condition or circumstance
constitutes an Emergency, then Landlord shall have the right, but not the
obligation, to take whatever action may be reasonably necessary to address the
risk posed by such emergency.

     9.   Casualty.  (a) In the event the Premises or the Tenant Assets situated
          --------
thereon are partially or totally destroyed by fire or other casualty or damage
(a "Casualty"), Tenant shall have the right, but not the obligation, to cause
such damage to be repaired and restored at Tenant's sole cost and expense. There
shall be no abatement of any Rent or any other payments due Landlord hereunder
on account of any such Casualty, except to the extent of any Additional Rent
which Landlord is able to economically abate without (i) incurring any
unreimbursed costs or expenses to the Landlord (which shall be prepaid by Tenant
to Landlord as a condition precedent to any such abatement, together with such
other assurances of performance if such costs and expenses cannot be precisely
and definitively ascertained at the time) or (ii) causing a material adverse
impact on the operations of the Landlord or other parties, if applicable, within
the Premises or the Retained Land in connection with the Environmental Annex
(the "Casualty Loss Abatement"). Landlord shall have no obligation or
responsibility to repair, maintain or replace any part or all of the Premises or
the Tenant Assets as a result of any such Casualty, except to the extent caused
by the negligence or willful misconduct of Landlord or its Related Parties
(defined below).

          (b)  In the event all or any portion of the Access Road is partially
or totally destroyed by any casualty or damage, Landlord shall have the right,
but not the obligation, to cause such damage to be repaired and restored at
Landlord's sole cost and expense except to the extent that any such casualty or
damage was caused by the negligent acts or omissions of Tenant or its
Permittees, in which event Tenant shall be solely responsible and liable for any
such costs and expenses. In such case, Tenant's liability for the payment of the
Rent and the

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performance of all the covenants, conditions and terms hereof on Tenant's part
to be performed shall continue unabated.

     10.  Compliance with Laws.  Tenant shall not cause or allow any waste on
          --------------------
the Premises or the Access Road or any other portion of the Hercules Land, and
shall at Tenant's expense comply with all applicable laws, rules, ordinances,
orders and regulations of any federal, state and local authority, now or
hereafter applicable to Tenant's use and occupancy thereof, subject, however, to
the covenants and obligations of Landlord under the Environmental Annex.

     11.  Utilities.  Tenant shall pay the cost of all utilities and utility
          ---------
services furnished to the Premises throughout the Term.  Landlord shall pay all
charges incurred with respect to the period prior to the Commencement Date.

     12.  Alterations and Improvements.  Tenant shall have the right to make any
          ----------------------------
alterations, additions or improvements to the Premises (the "Additions"),
provided any such Additions (a) are done at Tenant's sole cost and expense; (b)
comply with and are performed and completed in accordance with all applicable
laws and ordinances of all public authorities having jurisdiction over the
Premises and in accordance with the building, zoning and related codes, rules
and regulations of any such authority; and (c) do not materially adversely
affect Landlord's environmental remediation activities and responsibilities
pursuant to the Environmental Annex at both the Premises and the Retained Land.
Unless otherwise provided herein, or agreed to in writing between Landlord and
Tenant, all Additions, when made, installed in or attached to the Premises,
shall, become part of the Tenant Assets and shall be disposed of as set forth in
Section 20 of this Lease, captioned "Surrender of Premises".
----------

     13.  Signs.  Tenant shall comply with all local, state and federal
          -----
ordinances, laws or regulations concerning signage on the Premises.

     14.  Indemnity and Waiver.  (a) Except as otherwise provided in the SPA,
          --------------------
Tenant agrees to defend, indemnify and save harmless Landlord, its officers,
directors, employees, agents and servants (collectively, "Related Parties") from
and against all liability, loss or expenses (including, but not limited to
penalties, costs and attorneys' fees) for any suit, cause of action, claim,
demand, settlement, award or judgment (hereinafter referred to singly or
collectively as "Claim") to the extent arising out of (i) default by Tenant in
the performance of any of its covenants or obligations hereunder; or (ii) the
incorrectness or incompleteness of any representation or warranty of Tenant made
herein; or (iii) any personal injury, loss or damage to property, including loss
of use thereof, or involving damage to the environment (including (A) releases
of contaminants into or onto the air, water or land, (B) violation of any
federal, state or other environmental statute, law, regulation or other legal
requirement or duty, (C) penalties for such violations and (D) natural resource
damages), sustained by any person or persons (including third parties or
contractors or subcontractors employees, agents or servants), arising out of,
resulting from or in consequence of Tenant's occupancy and use of the Premises
or the Access Road, except to the extent caused by the negligence or willful
misconduct of Landlord or its Related Parties; provided, however, with respect
to any such claim brought against Landlord, Tenant shall, upon Landlord's
request, permit Landlord to participate in the defense or negotiate

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settlement thereof. This indemnification shall survive the expiration or earlier
termination of this Lease.

          (b)  Except as otherwise provided in the SPA, Landlord agrees to
defend, indemnify and save harmless Tenant and its Related Parties from and
against all liability, loss or expenses (including, but not limited to
penalties, costs and attorneys' fees) for any suit, causes of action, claim,
demand, settlement, award or judgment (hereinafter referred to singly or
collectively as "claim") to the extent arising out of (i) default by Landlord in
the performance of any of its covenants or obligations hereunder; or (ii) the
incorrectness or incompleteness of any representation or warranty of Landlord
made herein; or (iii) any personal injury, loss or damage to property, including
loss of use thereof, or involving damage to the environment (including (A)
releases of contaminants into or onto the air, water or land, (B) violation of
any federal, state or other environmental statute, law, regulation or other
legal requirement or duty, (C) penalties for such violations and (D) natural
resource damages), sustained by any person or persons (including third parties
or contractors or subcontractors employees, agents or servants), arising out of,
resulting from or in consequence of Landlord's occupancy and use of the Hercules
Land, except to the extent caused by the negligence or willful misconduct of
Tenant; provided, however, with respect to any such claim brought against
Tenant, Landlord shall, upon Tenant's request, permit Tenant to participate in
the defense or negotiate settlement thereof. This indemnification shall survive
the expiration or earlier termination of this Lease.

          (c)  Notwithstanding any provision of this lease to the contrary, but
subject to the terms and provisions of the SPA, Landlord and Tenant hereby waive
any and all right of recovery, claim, action or cause of action by the waiving
party, or anyone claiming through or under the waiving party by way of
subrogation or otherwise, against the other party, its agents or employees, or
any person or party to which or to whom coverage is afforded under any policy
required to be maintained under Section 15 of this Lease, for any loss or damage
to the Premises, as a result of fire or other cause which could be insured
against under the terms of a standard fire, vandalism, malicious mischief and
extended coverage insurance policy or policies, building contents and business
interruption insurance policies, or for which the waiving party may be
reimbursed as a result of insurance coverage affecting any loss suffered by
either party to this Lease, regardless of cause or origin, even if the fire or
other cause shall have been the result of negligent conduct of the other party.

     15.  Insurance.  (a)  Tenant shall during the Term hereof at its cost and
          ---------
expense, maintain valid and enforceable insurance of the following character:

               (i)  commercial general liability insurance with minimum limits
of $2,000,000 per occurrence and $5,000,000 annual aggregate, covering the legal
liability of Tenant against claims for bodily injury, personal injury or
property damage, occurring on, in or about the Premises or as a result of
products or materials manufactured, processed, constructed or sold, or services
rendered, on the Premises. Coverage shall include "premises and operations",
"products and completed operations", "contractual liability", "explosion,
collapse and underground hazards", "personal injury liability" and "independent
contractors";

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<PAGE>

               (ii)   "all risks" or "special causes of loss" property
insurance, or their equivalent in such amount as Tenant may elect;

               (iii)  business automotive liability insurance (covering owned
and leased vehicles) with minimum limits of $2,000,000 combined single limit or
$2,000,000 per occurrence and $2,000,000 annual aggregate; and

               (iv)   workers' compensation insurance in accordance with
applicable laws, unless Tenant is authorized by the appropriate regulatory
agency to self-insure workers' compensation claims in the state where the
Premises is located.

          (b)  Landlord shall during the Term at its cost and expense, maintain
valid and enforceable insurance of the following character:

               (i)    commercial general liability insurance with minimum limits
of $2,000,000 per occurrence and $5,000,000 annual aggregate, covering the legal
liability of Landlord against claims for bodily injury, personal injury or
property damage, occurring on, in or about the Retained Land or as a result of
the use of products or materials manufactured, processed, constructed or sold,
or services rendered, on the Retained Land. Coverage shall include "premises and
operations", "products and completed operations", "contractual liability",
"explosion, collapse and underground hazards", "personal injury liability" and
"independent contractors";

               (ii)   business automotive liability insurance (covering owned
and leased vehicles) with minimum limits of $2,000,000 combined single limit or
$2,000,000 per occurrence and $2,000,000 annual aggregate; and

               (iii)  workers' compensation insurance in accordance with
applicable laws unless Landlord is authorized by the appropriate regulatory
agency to self-insure workers' compensation claims in the state where the
Premises is located.

          (c)  The insurance required by Sections 15(a) and (b) of this Lease
shall be written by companies of recognized financial standing which are rated
at least "A" by A.M. Best rating services. Such insurance may be obtained by
Tenant or Landlord by endorsement on their respective blanket insurance policies
which cover risks at the subject property and other properties of such party.
Tenant and Landlord may maintain self-insurance programs sufficient to provide
the amounts and types of coverage required to be maintained by such party under
this Section 15, provided such party has a net worth equal to or greater than
$50,000,000.

          (d)  Each of Landlord and Tenant shall deliver to the other party,
upon the execution and delivery of this Lease, certificates of insurance or
letters of self insurance, reasonably satisfactory to Landlord and Tenant, as
the case may be, evidencing all the insurance which is then required to be
maintained by Tenant and Landlord, and each party shall, upon written notice,
deliver certificates of insurance evidencing the renewal of such insurance.

                                       9
<PAGE>

          16.  Assignment and Subletting.  Each of Landlord and Tenant shall be
               -------------------------
entitled to assign all or any part of its respective rights and obligations
under this Lease to any other party without the consent of the other.  Upon an
assignment of this lease by either Landlord or Tenant, the assignor shall be
released from all liability hereunder arising following the date of such
assignment.  Tenant shall also have the right to sublease the Premises or any
part thereof to any other party without the consent of Landlord.

          17.  Condemnation. If the whole or part of the Premises shall be taken
               ------------
or condemned by any competent authority for any public use or purpose during the
Term, or any extension or renewal, or if such authority shall take title to the
Premises in lieu of condemnation, Tenant reserves the right to claim and
prosecute its claim at its own cost and expense in all appropriate courts and
agencies for an award or damages for the taking, based upon its leasehold
interest and ownership of all improvements on the Premises, including the Tenant
Assets, interruption of business, moving expenses and other damages available
under applicable law, without impairing any rights of Landlord for the taking of
or injury to the reversion. Landlord shall assign to Tenant all rights of
Landlord in and to any awards or other proceeds payable by reason of any taking.
Tenant shall have the sole right (in the name of Tenant and Landlord or both) to
negotiate for, to agree to and to contest all offers and awards.

          In the event of the taking by eminent domain of the whole or any part
of the Premises to such an extent as to render the remainder of the Premises
untenantable and Tenant is unable to conduct its business thereon, in Tenant's
judgment, then this Lease shall terminate as of the date of the final,
nonappealable award of possession to the condemning authority for the portion of
the Premises so condemned. In any such event, all Rent and other charges payable
hereunder as rent shall be apportioned to the date of termination of this Lease,
and Tenant waives all claims against Landlord for or on account of or incident
to such taking. In the event of a partial taking which does not render the
remainder of the Premises untenantable, then Base Rent and Additional Rent shall
be equitably adjusted as a result of such condemnation.

          18.  Leasehold Mortgages.  (a) Tenant shall have the right, without
               -------------------
Landlord's prior consent, to mortgage all or any part or part of the leasehold
interest created by this Lease, and to refinance the same, at any time and from
time to time, under a leasehold mortgage or deed of trust  on Tenant's leasehold
estate (herein referred to as a "Leasehold Mortgage"; the holder of any such
Leasehold Mortgage is referred to herein as a "Leasehold Mortgagee"), provided
that all rights acquired under such Leasehold Mortgage shall be subject to each
of the covenants, conditions and restrictions set forth in this Lease.

               (b)  Landlord agrees that, after its receipt of notice of the
existence of a Leasehold Mortgage and the name and address of the holder
thereof, and thereafter for so long as any such Leasehold Mortgage remains
unsatisfied of record, the following provisions shall apply:

                    (i)  There shall be no cancellation, surrender or
modification of this Lease by joint action of Landlord and Tenant without the
prior written consent of the Leasehold Mortgagee, except as the Leasehold
Mortgage or any other agreement between Tenant and the Leasehold Mortgagee may
provide or permit.

                                       10
<PAGE>

               (ii)   Any notice given to Tenant by Landlord shall
simultaneously be given to the Leasehold Mortgagee at the address furnished to
the Landlord. If such notice pertains to a default or defaults by Tenant, then
any Leasehold Mortgagee shall have the right to cure the default complained of
within the same period from the date of notice to the Leasehold Mortgagee as is
given Tenant pursuant to the applicable provisions of this Lease, and Landlord
agrees to accept the Leasehold Mortgagee's performance in curing the default as
fully as if Tenant had cured the default. If a notice advises that Landlord had
attempted to terminate this Lease because of the default or defaults of Tenant,
then, notwithstanding any provision of this Lease to the contrary, any Leasehold
Mortgagee shall have, at its election, the right:

                      (1)  provided that the default or defaults of Tenant can
be cured by the payment of money, to nullify any attempted termination as fully
as if no default had ever occurred by paying all Rent and other monetary amounts
then in default to Landlord within thirty (30) days after the Leasehold
Mortgagee's receipt of Landlord's notice of termination; or

                      (2) to postpone indefinitely any attempted termination of
this Lease by giving Landlord, within thirty (30) days after the Leasehold
Mortgagee's receipt of Landlord's notice, notice of its intention to foreclose
its Leasehold Mortgage, accompanied by its payment of all Rent and other sums
payable hereunder then in default, and thereafter, commencing and proceeding
with reasonable diligence, to cure any defaults reasonably susceptible of being
cured without actual possession of the Premises and to foreclose its Leasehold
Mortgage, meanwhile paying all amounts due Landlord under this Lease; such
postponement shall continue until confirmation of the foreclosure sale,
whereupon such notice of termination shall be deemed nullified as fully as if no
default had occurred.

               (iii)  Landlord agrees that in the event of any termination of
this Lease not approved by Leasehold Mortgagee and upon notice from the
Leasehold Mortgagee given within sixty (60) days after the date upon which
Leasehold Mortgagee receives written notice of any such termination from
Landlord, Landlord will enter into a new Lease for the Premises with the
Leasehold Mortgagee holding the highest priority, or its designee, for the
remainder of the Term, commencing as of the date this Lease is terminated as to
Tenant but effective as of the date of this Lease and in any event prior to the
interest of any subsequent transferee of Landlord's interest in the Premises, at
the Rent and otherwise upon the same terms and provisions as are herein
contained. Notwithstanding the foregoing, it shall be a condition to Landlord's
obligation to enter into such new Lease that the Leasehold Mortgagee, or its
designee, pay to Landlord, at the time of execution of such new Lease, all sums
due Landlord by reason of Tenant's default hereunder and perform all other
obligations which reasonably can be performed without being in possession,
together with Landlord's reasonable costs and expenses in terminating this
Lease, including reasonable attorneys' fees.

               (iv)   The Leasehold Mortgagee shall be given notice of any
actions or proceedings in bankruptcy or under the United States Bankruptcy Code
by the parties hereto as required by law, and shall have the right to intervene
therein and be made a party to such proceedings at its sole cost and expense.
Any Leasehold Mortgagee which elects not to

                                       11
<PAGE>

intervene or become a party to such proceeding shall have the right to receive
from Tenant a copy of any award or decision made therein.

     19.  Estoppel Certificate.  (a) Tenant agrees at any time and from time to
          --------------------
time, within fifteen (15) days after Landlord's written request, to execute,
acknowledge and deliver to Landlord a written instrument in recordable form
certifying that this Lease is unmodified and in full force and effect (or if
there have been modifications, that it is in full force and effect as modified
and stating the modifications), and the dates to which rent and any other
charges have been paid in advance, if any, and stating whether or not to the
best knowledge of the signer of such certificate the Landlord is in default in
the performance of any covenant, agreement or condition contained in this Lease
and, if so, specifying each such default of which the signer may have knowledge
and the date the Landlord was notified of such default, it being intended that
any such statement delivered pursuant to this section may be relied upon by any
prospective purchaser of the fee or any assignee of Landlord's interest in this
Lease.

          (b)  Landlord agrees at any time and from time to time, within fifteen
(15) days after Tenant's written request, to execute, acknowledge and deliver to
Tenant a written instrument in recordable form certifying that this Lease is
unmodified and in full force and effect (or if there have been modifications,
that it is in full force and effect as modified and stating the modifications),
and the dates to which rent and any other charges have been paid in advance, if
any, and stating whether or not to the best knowledge of the signer of such
certificate the Tenant is in default in the performance of any covenant,
agreement or condition contained in this Lease and, if so, specifying each such
default of which the signer may have knowledge and the date the Tenant was
notified of such default, it being intended that any such statement delivered
pursuant to this section may be relied upon by any prospective purchaser of
Tenant's interest in this Lease or any Leasehold Mortgagee.

     20.  Surrender of Premises/Removal of Property.  The foregoing provisions
          -----------------------------------------
shall apply under this Section only in the event the Lease is not terminated as
a result of the Subdivision of the Premises and the conveyance of fee simple
title to the Premises from Landlord to Tenant as provided in the SPA.

          (a)  Upon the expiration or sooner termination of the Term, Tenant
shall quit and surrender to Landlord possession of the Premises and, unless
otherwise provided herein, all rights of the Tenant under this Lease shall
terminate. In addition, Tenant shall tender possession of the Premises to
Landlord free and clear of all liens and encumbrances created by or through
Tenant.

          (b)  Upon such expiration or sooner termination of the Term of this
Lease, Landlord shall have the following options with respect to the physical
improvements and structures (excluding all personal property and removal trade
fixtures belonging to Tenant) on the Premises:

               (i)  Tenant, at its sole cost and expense, shall convey to
Landlord all buildings and other improvements on the Premises by deed and bill
of sale free and clear of all liens and security interests securing Tenant's
obligations; or

                                       12
<PAGE>

               (ii)      Within twelve (12) months of any such expiration or
termination, Tenant shall, at its sole cost and expense raze and remove all
buildings and other above grade structures and improvements, leaving the
Premises completely in an unimproved and level ground surface condition, clear
of all debris (the "Land Only Condition"). In the event possession of the
Premises is not delivered to Landlord as provided above, then Tenant shall be
liable for all costs and expenses incurred by Landlord to bring the Premises to
the Land Only Condition. The foregoing obligations of Tenant with respect to the
Land Only Condition shall survive the expiration of earlier termination of the
Term.

          (c)  Tenant shall, within sixty (60) days following the termination of
this Lease, remove all equipment, inventory and other personal property from the
Premises unless otherwise approved by Landlord. If Tenant shall fail to remove
any such personal property which Tenant is required to remove as set forth
above, Landlord may remove same without any liability to Tenant. In addition,
any of such personal property which is required to be removed from the Premises
by Tenant but which is not so removed shall be conclusively presumed to have
been abandoned by Tenant and title to such property shall pass to Landlord
without any payment or credit, and Landlord may, at its option and at Tenant's
expense, store, keep and/or dispose of such property.

     21.  Events of Default by Tenant and Remedies of Landlord.
          ----------------------------------------------------

          (a)  It shall be an event of default under this Lease ("Event of
Default") if Tenant:

               (i)    does not pay in full when due and without demand any and
all installments of Rent or any other charges or payments whether or not herein
included as rent and fails to cure such default within sixty (60) days following
the receipt of written notice by Tenant from Landlord thereof; or

               (ii)   violates or fails to perform or otherwise breaches any
agreement, term, covenant or condition herein contained or any other obligation
herein imposed upon Tenant and fails to cure such default within one hundred
twenty (120) days following the receipt of written notice by Tenant from
Landlord thereof (provided, that if such default cannot reasonably be cured
within such time period, and if Tenant commences the cure of such default within
such time period, then the time period for cure shall be extended so long as
Tenant diligently prosecutes the cure of same); or

               (iii)  becomes insolvent or bankrupt or makes an assignment for
the benefit of creditors, or offers a composition or settlement to creditors, or
calls a meeting of creditors for any such purpose, or files a petition in
bankruptcy or for reorganization or for an arrangement with creditors under any
federal or state act, or files a bill in equity or otherwise initiates
proceedings in any court for the appointment of a receiver, trustee, liquidator,
custodian, conservator or similar official for any of Tenant's assets, or if any
of the real or personal property of Tenant shall be levied upon by any sheriff,
marshal or constable; or

                                       13
<PAGE>

                    (iv)   A petition in bankruptcy or for reorganization or for
an arrangement with creditors under any federal or state act is filed against
Tenant, or if a bill in equity or other proceeding is filed in any court by any
creditor of Tenant for the appointment of a receiver, trustee, liquidator,
custodian, conservator or similar official for any of Tenant's assets.

               (b)  In the event of a breach or threatened breach by Tenant of
any of the covenants or provisions hereof, Landlord may recover from Tenant all
damages it may incur by reason of such breach, and shall have the right of
injunction and the right to invoke any remedy allowed at law or in equity,
except that Landlord shall have no right to terminate this Lease or Tenant's
possession of the Leased Premises. Tenant acknowledges that the remedy of
injunction is an essential remedy in instances in which Tenant's acts or failure
to act may cause damage to Landlord or its property and specifically agrees not
to interpose any objections to Landlord's motions for injunction in such
instances. Mention in this Lease of any particular remedy shall not preclude
Landlord from any other remedies under this Lease, or now or hereafter existing
at law or in equity or by statute.

               (c)  If Tenant is in default hereunder, Landlord, after the lapse
of any time period and notice as may be applicable thereto, shall also have the
right, without prejudice to any other right or remedy provided for hereunder or
otherwise available, to cure the default; and in such case, all of Landlord's
cost and expenses in so doing, plus interest thereon at a rate of 8% per annum,
shall be due and payable to Landlord, upon written demand, as Additional Rent
hereunder.

               (d)  Except as provided above, each right and remedy provided for
in this Lease shall be cumulative and shall be in addition to every other right
or remedy provided for in this Lease or now or hereafter existing at law or in
equity or by statute or otherwise, and the exercise by either party of any one
or more of the rights or remedies provided for in this Lease or now or hereafter
existing at law or in equity or by statute or otherwise shall not preclude the
simultaneous or later exercise by such party of any or all other rights or
remedies provided for in this Lease or now or hereafter existing at law or in
equity or by statute or otherwise. Nor shall this Lease abrogate or diminish
Tenant's responsibilities to Landlord under any other agreement, nor Landlord's
responsibilities to Tenant, under any other agreement.

          22.  Events of Default by Landlord and Remedies of Tenant.
               ----------------------------------------------------

               (a)  It shall be an event of default under this Lease if
Landlord:

                    (i)   does not pay in full when due and without demand any
payments or sums due Tenant and fails to cure such default within sixty (60)
days following the receipt of written notice by Landlord from Tenant thereof; or

                    (ii)  violates or fails to perform or otherwise breaches any
agreement, term, covenant or condition herein contained or any other obligation
herein imposed upon Landlord and fails to cure such default within one hundred
twenty (120) days following the receipt of written notice by Landlord from
Tenant thereof (provided, that if such default cannot reasonably be cured within
such time period, and if Landlord commences the cure of such default

                                       14
<PAGE>

within such time period, then the time period for cure shall be extended so long
as Landlord diligently prosecutes the cure of same).

                    (b)  In the event of a breach or threatened breach by
Landlord of any of the covenants or provisions hereof, Tenant shall have the
right of injunction and the right to invoke any remedy allowed at law or in
equity. Landlord acknowledges that the remedy of injunction is an essential
remedy in instances in which Landlord's acts or failure to act may cause a
default and specifically agrees not to interpose any objections to Tenant's
motions for injunction in such instances. Mention in this Lease of any
particular remedy shall not preclude Tenant from any other remedies under this
Lease, or now or hereafter existing at law or in equity or by statute.

                    (c)  Notwithstanding the foregoing, if Landlord is in
default hereunder, Tenant, after the lapse of any time period and notice as may
be applicable thereto, shall have the right, without prejudice to any other
right or remedy provided for hereunder or otherwise available, to cure the
default; and in such case, all of Tenant's cost and expenses in so doing, plus
interest thereon at a rate of 8% per annum shall be due and payable to Tenant,
upon written demand.

               23.  Non-Liability.  (a) Landlord shall not be liable for any
                    -------------
damage or injury which may be sustained by Tenant or any third party, as a
consequence of the failure, breakage, leakage or obstruction of any utility
lines or facilities, or consequence thereof, except to the extent resulting from
the gross negligence or willful misconduct of Landlord or Landlord's agents or
employees.

                    (b)  Tenant shall not be liable for any damage or injury
which may be sustained by Landlord or any third party, as a consequence of the
failure, breakage, leakage or obstruction of any utility lines or facilities, or
consequence thereof, except to the extent resulting from the gross negligence or
willful misconduct of Tenant or Tenant's agents or employees.

               24.  Non-Waiver.  The various rights, remedies, options and
                    ----------
elections of the parties, expressed herein, are cumulative. The failure or
either party to enforce strict performance by the other of the conditions and
covenants of this Lease, or to exercise any election or option, or to resort to
or have recourse to any remedy herein conferred, shall not be construed or
deemed to be a waiver or a relinquishment for the future by the non-breaching
party of any such conditions and covenants, options, elections or remedies, but
such conditions and covenants shall continue in full force and effect.

               25.  Validity and Interpretation of Lease.  The terms,
                    ------------------------------------
conditions, covenants and provisions of this Lease shall be deemed to be
severable. If any clause, provision of section herein contained shall be
adjudged to be invalid or unenforceable by a court of competent jurisdiction or
by operation of any applicable law, it shall not affect the validity of any
other clause, provision or section herein, but such other clauses, provisions or
sections shall remain in full force and effect. Each party accepts equal
responsibility for the preparation of this Lease so there shall be no
presumption against either party as the sole drafter of this Lease.

                                       15
<PAGE>

          26.  Attorneys' Fees.
               ---------------

               (a)  Each party shall pay upon demand all of the other party's
costs, charges and expenses including the reasonable fees and out-of-pocket
expenses of counsel, agents and others retained by the other party incurred in
enforcing the party's obligations hereunder, if the other party obtains an
enforceable judgment against the party.

               (b)  Should Landlord be named as a defendant or other party in
any suit brought against Tenant in connection with or arising out of Tenant's
occupancy or use hereunder, Tenant shall pay, except to the extent of Landlord's
fault found in such suit, to Landlord, as Additional Rent hereunder, Landlord's
costs and expenses incurred in such suit, including a reasonable attorney's fee.

          27.  Mechanics' Liens.  If any mechanics' or other liens shall be
               ----------------
created or filed against the Premises or any other portion of the Hercules Land
by reason of labor performed or materials furnished for Tenant in the erection,
construction, completion, alteration, repair or addition of any existing
improvement, or Additions or other improvements, Tenant shall, within twenty-one
(21) days thereafter, at Tenant's own cost and expense, cause such lien or liens
to be satisfied and discharged of record, together with any notices of intention
that may have been filed. Failure to do so shall entitle Landlord to such
remedies as are provided herein in the case of any default of this Lease, in
addition to such as are permitted by law or equity.

          28.  Entire Contract; Superseding Effect.  This Lease and the SPA
               -----------------------------------
and the instruments referenced herein contain the entire agreement between the
parties with respect to the Premises. No representative, agent or employee of
Landlord has been authorized to make any representations or promises with
reference to the within letting or to vary, alter or modify the terms hereof. No
additions, changes or modification, renewals or extensions of this Lease shall
be binding unless reduced to writing and signed by Landlord and Tenant. In the
event of any conflict between the terms of the Environmental Annex and the terms
of this Lease, the Environmental Annex shall govern and control.

          29.  Force Majeure.  (a) In the event that Landlord shall be delayed,
               -------------
or hindered or prevented from the performance of any act required hereunder, by
reason of a force majeure, including an act of God, fire, casualty, action of
the elements, strikes, lockouts, other labor troubles, inability to procure, or
general shortage of labor, equipment, facilities, materials or supplies, failure
of transportation or of power, restrictive governmental laws or regulations,
riots, insurrection, war or any other cause beyond the control of Landlord (a
"Force Majeure Event") the time for performance of such act shall be extended
for a reasonable period of time not to exceed sixty (60) days following
cessation of the Force Majeure Event.

               (b)  In the event that Tenant shall be delayed, or hindered or
prevented from the performance of any act required hereunder, by reason of a
Force Majeure Event, the time for performance of such act shall be extended for
a reasonable period of time not to exceed sixty (60) days following cessation of
the Force Majeure Event.

                                       16
<PAGE>

     30.  No Merger.  The leasehold created hereby shall not merge with the fee
          ---------
notwithstanding the fact that such interests may be held by the same person,
unless the holder of such interests and all holders of mortgages upon such
interest shall consent to the merger.

     31.  Landlord's Access.  Tenant shall permit Landlord or its authorized
          -----------------
representatives to enter upon the Premises during regular business hours of
Tenant or subtenant, as the case may be, and upon reasonable notice for the
purposes of: (a) performing engineering and scientific testing and inspections
required for Landlord to comply with any environmental laws, regulations or
orders applicable to the Premises as provided under this Lease; and (b) making
any necessary repairs to the Premises and performing any work thereon that may
be necessary to comply with any laws or orders and to prevent waste or
deterioration and as required under the Environmental Annex (collectively, the
"Access Activities"). Only such notice as is reasonable under the circumstances
shall be required for the Access Activities in case of an Emergency (defined
above).

     32.  Successors and Assigns.  All the terms, covenants and conditions
          ----------------------
herein contained shall inure to the benefit of and shall bind the respective
parties hereto and their successors and assigns.

     33.  Landlord's Reservation of Rights Regarding Subdivision of Premises.
          ------------------------------------------------------------------

          (a)  The parties covenant and agree to cooperate with each other to
effect the Subdivision and shall execute and deliver such documents as may be
necessary in order to complete the approval and recordation of the Subdivision,
including but not limited to the execution and delivery of a subdivision plan,
applications, documents, easements, undertakings and agreements as are
reasonably required to complete the proposed Subdivision.

          (b)  Notwithstanding the foregoing, Landlord shall assume full
responsibility for obtaining the Subdivision, any paying all costs therefor,
including, but not limited to:

               (i)   the preparation of and obtaining all governmental approvals
and authorizations;

               (ii)  the issuance by all controlling governmental bodies or
authorities of such permits, licenses, certificates or authorizations for the
continued operation and use of the existing utilities which service the
Premises;

               (iii) the issuance by all controlling governmental bodies of
authorities of such final, irrevocable, incontestable and unappealable permits
and approvals (all being referred to herein as the "Permits") including, without
limitation (i) the approval and recordation of the subdivision plan of the
Premises as prepared by Landlord and its agents pursuant to the applicable
local, county and state subdivision ordinances, laws, enactments and codes; (ii)
and any other licenses and other approvals, certificates, exceptions,
authorizations, changes, variances and special exceptions, from any local,
county, state or federal governmental entity having jurisdiction over the
Hercules Land, which may be required or reasonably necessary in connection with
the Subdivision. Tenant hereby covenants and agrees to cooperate with

                                       17
<PAGE>

Landlord and to execute and deliver all necessary documents in connection with
application for and processing of the Permits, and any appeals in connection
therewith, each of which shall be sought in Landlord's name;

               (iv)  resolving any actual or officially proposed moratoriums,
restrictions or regulations prohibiting, limiting or placing special charges or
conditions upon the availability or use of sewer, water, electricity, roads, new
construction, building materials, increased traffic, or the rental, use or
occupancy of the Premises or the Hercules Land with respect to the Subdivision;
and

               (v)   resolving any exactions required by any governmental agency
or department, by any utility, or by any civic or homeowners association, as a
condition to favorable governmental action for the Subdivision.

          (c)  Landlord shall be responsible for all expenses associated with
the Subdivision including legal, civil engineering and application fees. All
other costs and expenses associated with the transfer of fee simple title to the
Premises subsequent to the Subdivision such as preparation of the deed, title
insurance, recording fees, transfer taxes and stamp taxes shall be allocated and
paid for as provided in the SPA.

          (d)  The parties acknowledge and agree that the cooperation of the
Tenant with respect to the Subdivision shall not be unreasonably withheld or
delayed; provided, however, that the cooperation of the Tenant will not directly
or indirectly cause a material adverse affect on the equitable or leasehold
interest of the Tenant in the Premises or the legal interest of the Tenant
subsequent to the transfer of fee simple title to the Premise or the use and
enjoyment of the Premises as it exists on the date of this Lease. Landlord
covenants and agrees that the exercise of the rights and activities by Landlord
under this Section with respect to the Subdivision shall be performed and
conducted in such a manner as to not interfere with the use and occupancy of the
Premises by Tenant as provided under this Lease, nor shall the zoning applicable
to the Premises be changed.

          (e)  Landlord and Tenant further covenant and agree to cooperate and
assist each other in the creation, establishment, granting or conveying, either
by easement, declaration, license or any other instrument or agreements (whether
recorded or unrecorded) as the parties may deem necessary or reasonably
advisable (and subject to the consent of the other party, which consent shall
not be unreasonably withheld, conditioned or delayed) to provide for the
continued and uninterrupted use of the existing utilities, services and roadways
which are appurtenant to and a part of the current or proposed operation and use
of the Premises, which shall include a non-exclusive and perpetual waterline
easement in favor of Tenant to operate, use, maintain, repair and replace the
existing waste water pipeline (owned by Tenant) from the waste water treatment
plant on Premises to the Delaware River (the "Tenant's Agreements and
Easements"), and as may be required or necessary with respect to the performance
of Landlord's environmental remediation obligations at the Premises and the
Hercules Land as more fully set forth in the Environmental Annex (the
"Landlord's Agreements and Easements"). The Tenant's Agreements and Easements
and the Landlord's Agreements and Easements are sometimes collectively referred
to as the "Subdivision Agreements and Easements."

                                       18
<PAGE>

               (f)  The Parties covenant and agree to fully cooperate and assist
the other in creating, establishing or granting of the Subdivision Agreements
and Easements and all related or associated activities or undertakings as may be
necessary with respect to the Subdivision.

          34.  Miscellaneous Provisions.
                ------------------------

               (a)  Construction.  In all references herein to any parties,
                    ------------
persons, entities or corporations, the use of any particular gender or the
plural or singular number is intended to include the appropriate gender or
number as the text of this Lease may require. The term "including," when used in
this Lease, shall mean "including, without limitation" and shall be construed as
a term of illustration and not a term of limitation.

               (b)  Headings.  The Section headings shall not be a substantive
                    --------
part of this Lease and shall not be used to interpret the meaning hereof. The
headings are for convenience in reference only.

               (c)  Recording.  This Lease shall be recorded in the appropriate
                    ---------
 land records in Gloucester County, New Jersey.

               (d)  Notices.  Any notice, request, instruction or other
                    -------
document to be given hereunder by any party to any other party shall be in
writing and delivered personally, by telecopy and confirmed by mail, or sent by
registered or certified mail, postage prepaid, or sent by overnight courier
(e.g., Federal Express, Airborne or UPS) (a "Notice"):

                               (i)  if to Hercules to:

                               Hercules Incorporated
                               Hercules Plaza
                               1313 North Market Street
                               Wilmington, Delaware  19894-0001
                               Telecopier: (302) 594-7252
                               Attention: Israel J. Floyd,
                               Executive Vice President,
                               Secretary and General Counsel

                               with copies to:

                               Hercules Incorporated
                               Hercules Plaza
                               1313 North Market Street
                               Wilmington, Delaware  19894-0001
                               Telecopier: (302) 594-5210
                               Attention: Director of Corporate Real Estate

                                       19
<PAGE>

                          (ii) if to Tenant to:
                               Geo Specialty Chemicals, Inc.
                               28601 Chagrin Boulevard, Suite 210
                               Cleveland, Ohio 44122
                               Telecopier: (216) 765-1307
                               Attention: Mr. George Ahearn

                               and with a copy to:
                               Thompson Hine LLP
                               127 Public Square
                               3900 Key Center
                               Cleveland, Ohio  44114
                               Telecopier: (216) 566-5800
                               Attention: Stuart Welburn, Esq.

or at such other address for a party as shall be specified by like Notice.  Any
Notice which is delivered in the manner provided herein shall be deemed to have
been duly given to the party to whom it is directed upon actual receipt by such
party (evidenced, in the case of a telecopy, by the receipt of the correct
telecopier confirmation).

               (e)  Holding Over.  Any holding over after the expiration or
                    ------------
earlier termination of the Lease, or of any extension or renewal thereof,
without the written consent of Landlord shall, at Landlord's option, be
construed to be a tenancy from month to month and shall otherwise be on the same
terms and conditions hereinbefore specified.

               (f)  Further Documentation.  Landlord and Tenant shall each
                    ---------------------
execute and deliver any and all documents, in recordable form if required, as
may be reasonably necessary for either party hereto to carry out the intent and
purpose of this Lease.

               (g)  Governing Law.  This Lease and all covenants contained
                    -------------
herein shall be construed in accordance with the laws of the State of New
Jersey.

               (h)  Counterparts.  This Lease may be executed in two
                    ------------
counterparts, which together shall constitute one and the same instrument.

                            [Signature Page Follows]

                                       20
<PAGE>

     IN WITNESS WHEREOF, this instrument has been duly executed by the parties
as of the date first set forth above.

                                           TENANT:

                                           GEO SPECIALTY CHEMICALS, INC., an
                                           Ohio corporation


Attest:___________________________         By:_______________________________

Name:_____________________________         Name:_____________________________

Title:____________________________         Title:____________________________


                                           LANDLORD:

                                           HERCULES INCORPORATED, a
                                           Delaware corporation


Attest:___________________________         By:_______________________________

Name:_____________________________         Name:_____________________________

Title:____________________________         Title:____________________________

                                       21
<PAGE>

                                 ACKNOWLEDGMENT
                                 --------------


STATE OF DELAWARE        )
-----------------
                         ) SS.
COUNTY OF NEW CASTLE     )


     Be it remembered that on May _____, 2001, ____________________________ and

                                appeared before me, and each such person

acknowledged under oath, to my satisfaction, that:

     (a)  they did sign, seal, deliver and/or attest to the attached document on
behalf of HERCULES INCORPORATED, a Delaware corporation, the grantor named in
this document; and

     (b)  this document was signed and made by the grantor as its duly
authorized and voluntary act and deed.


                                                 ________________________(SEAL)

                                      NOTARY PUBLIC

                                      PRINT NAME:_________________________

                                      COMMISSION EXPIRES:_________________

                                       22
<PAGE>

                                ACKNOWLEDGMENT
                                --------------


STATE OF                      )

                              ) SS.

COUNTY OF                     )



          Be it remembered that on May _____, 2001, _______________________ and

                                appeared before me, and each such person

acknowledged under oath, to my satisfaction, that:

     (a)  they did sign, seal, deliver and/or attest to the attached document on
behalf of GEO SPECIALTY CHEMICALS, INC., the Grantee named in this document; and

     (b)  this document was signed and made by said grantee as its duly
authorized and voluntary act and deed.


                                                ________________________(SEAL)

                                        NOTARY PUBLIC

                                        PRINT NAME:_______________________

                                        COMMISSION EXPIRES:_______________

                                       23