AROTECH CORP
<DOCUMENT>
<TYPE>EX-10.88
<SEQUENCE>7
<FILENAME>v02378_ex10-88.txt
<TEXT>


                                                                   Exhibit 10.88


                               AGREEMENT OF LEASE





                    FISK BUILDING ASSOCIATES L.L.C., Landlord





                                       and



                           AROTECH CORPORATION, Tenant







Premises:  The Fisk Building - Suite 310
           250 West 57th Street
           New York, New York


Date:      As of March 22, 2004


<PAGE>

LEASE made as of the 22nd day of March, 2004,  between FISK BUILDING  ASSOCIATES
L.L.C., a New York limited liability  company,  with an address at 250 West 57th
Street,  New York, New York 10107,  hereinafter  referred to as "Landlord",  and
AROTECH CORPORATION,  a Delaware  corporation,  with an address at 250 West 57th
Street, New York, New York 10107, hereinafter referred to as "Tenant".

                                   WITNESSETH:

Landlord  hereby leases to Tenant and Tenant  hereby hires from  Landlord  those
certain premises known as Suites 310,  described on Exhibit A annexed hereto and
made part hereof  (said  premises  are  hereinafter  referred to as the "demised
premises"  or the  "premises"),  in the  building  known as 250 West 57th Street
("the  building"),  in the County of New York,  City of New York,  for a term to
commence on the 15th day of April,  2004, and to expire on the 30th day of June,
2009,  or until  such term  shall  sooner  end as herein  provided,  both  dates
inclusive, upon the terms and conditions hereinafter provided.

Landlord and Tenant covenant and agree:

1.       PURPOSE

         Tenant shall use and occupy the demised  premises  only for general and
executive  offices relating to Tenant's  technology  business,  and for no other
purpose.  Without  limiting the  generality  of the  foregoing,  it is expressly
understood  that no portion of the demised  premises shall be used as, by or for
(a) retail operations of any retail or branch bank, trust company, savings bank,
industrial  bank,  savings and loan  association,  credit union or personal loan
operation, or (b) a public stenographer or typist, (c) barber shop, beauty shop,
beauty  parlor or shop,  (d)  telephone or telegraph  agency,  (e)  telephone or
secretarial  service,  (f) messenger service,  (g) travel or tourist agency, (h)
employment agency, (i) restaurant or bar, (j) commercial  document  reproduction
or offset printing service, (k) public vending machines,  (l) retail,  wholesale
or discount shop for sale of books, magazines, audio or video tapes, CD ROM, DVD
ROM or other  devices  for the  recording  or  transmitting  of audio or  visual
signals,  images,  music or speech,  electronic equipment and accessories or any
other  merchandise,  (m) retail  service  shop,  (n) labor union,  (o) school or
classroom, (p) governmental or quasi-governmental  bureau, department or agency,
including an autonomous governmental corporation,  embassy or consular office of
any  country  or  other  quasi-autonomous  or  sovereign  organization,  (q)  an
advertising  agency,  (r)  a  firm  whose  principal  business  is  real  estate
brokerage, (s) a company engaged in the business of renting office or desk space
or (t) any person, organization,  association, corporation, company, partnership
entity or other agency immune from service or suit in the courts of the State of
New York or the assets of which may be exempt from  execution by Landlord in any
action for  damages.  Tenant  shall not affix any sign to any window or exterior
surface of the demised premises nor install or place any sign within the demised
premises that may be seen from the outside.

2.       RENT

         Tenant  agrees  to pay  each of the  types  of rent  set  forth in this
Article 2, as herein provided,  at the office of Landlord or such other place as
Landlord  may  designate,  payable  in United  States  legal  tender by good and
sufficient  check drawn on a bank  having a branch in the Borough of  Manhattan,
City of New York,  and  without  any notice  (except as  specifically  set forth
herein), set off or deduction  whatsoever.  Any sum other than fixed annual rent
payable  under  this  lease  shall be deemed  additional  rent and due on demand
unless otherwise specifically provided.  Landlord shall have the same rights and
remedies hereunder with respect to Tenant's non-payment of additional rent as it
has with respect to Tenant's non-payment of fixed annual rent.

         A. Fixed  Annual  Rent:  There is herein  reserved to Landlord  for the
entire term of this lease fixed annual rent equal to the aggregate amount of the
sums  hereinafter  set  forth.  Fixed  annual  rent  shall be paid in advance as
follows:  Commencing  on April 15,  2004,  and on the  first  day of each  month
thereafter  throughout  the term of this lease,  Tenant  shall pay to  Landlord,
without notice,  deduction,  set off or reduction  (except as  specifically  set
forth  herein),  monthly  payments  of fixed  annual  rent equal to  one-twelfth
(1/12th) of each of the following annual amount (except that the first month and
a half of fixed annual rent (including electricity), in the amount of $4,045.02,
is being paid upon the execution hereof):

<PAGE>

                  April 15, 2004 through  April 30, 2005:  Forty-Three  Thousand
                  Two  Hundred  and  00/100   ($43,200.00)   Dollars  per  annum
                  ($3,600.00 per month);

                  May 1, 2005 through  April 30, 2006:  Forty-Four  Thousand Six
                  Hundred Ninety-Six and 00/100  ($44,696.00)  Dollars per annum
                  ($3,708.00 per month);

                  May 1, 2006 through April 30, 2007:  Forty-Five Thousand Eight
                  Hundred  Thirty  and  88/100  ($45,830.88)  Dollars  per annum
                  ($3,819.24 per month);

                  May 1, 2007 through April 30, 2008:  Forty-Seven  Thousand Two
                  Hundred  Five  and  81/100  ($47,205.81)   Dollars  per  annum
                  ($3,933.82) per month); and

                  May 1, 2008 through June 30,  2009:  Forty-Eight  Thousand Six
                  Hundred Twenty-One and 98/100  ($48,621.98)  Dollars per annum
                  ($4,051.83 per month).

         If and so long as Tenant is not in  default  of any  obligation  on its
part to be  performed  hereunder,  Tenant  shall  receive  a rent  credit of Ten
Thousand Eight Hundred and 00/100  ($10,800.00)  Dollars, to be applied in three
(3)  equal  monthly  installments  of Three  Thousand  Six  Hundred  and  00/100
($3,600.00) Dollars each against the third,  fifteenth and twenty-eighth monthly
installments of fixed annual rent (without  electricity) payable hereunder (i.e.
June, 2004; May, 2005; and May, 2006).

         B. Tax Escalation:  Tenant shall pay to Landlord,  as additional  rent,
tax escalation in accordance with this paragraph B:

         (i)  Definitions:  For the  purpose  of  this  Article,  the  following
         definitions shall apply:

                  (a) The term "base tax year" as hereinafter  set forth for the
                  determination  of real estate tax  escalation,  shall mean the
                  New York City real estate tax year commencing July 1, 2004 and
                  ending June 30, 2005.

                  (b) The term "The  Percentage",  for purposes of computing tax
                  escalation, shall mean .227 percent (.227%).

                  (c) The term "the building  project"  shall mean the aggregate
                  combined  parcel of land on a portion on which the building is
                  constructed and the building.

                  (d) The term  "comparative  year"  shall mean the twelve  (12)
                  months following the base tax year, and each subsequent period
                  of twelve  (12)  months (or such other  period of twelve  (12)
                  months  occurring  during the term of this lease as  hereafter
                  may be duly  adopted  as the tax  year  for  real  estate  tax
                  purposes by the City of New York).

                  (e) The term "real  estate  taxes" shall mean the total of all
                  taxes and  special or other  assessments  levied,  assessed or
                  imposed  at any  time by any  governmental  authority  upon or
                  against the building  project,  and also any tax or assessment
                  levied,  assessed  or imposed at any time by any  governmental
                  authority  in  connection  with the receipt of income or rents
                  from said building project to the extent that same shall be in
                  lieu of all or a  portion  of any of the  aforesaid  taxes  or
                  assessments,  or  additions  or  increases  thereof,  upon  or
                  against said building  project.  If, due to a future change in
                  the method of taxation or in the taxing authority,  or for any
                  other reason, a franchise,  income,  transit,  profit or other
                  tax or governmental imposition,  however designated,  shall be
                  levied against  landlord in  substitution  in whole or in part
                  for the  real  estate  taxes,  or in lieu of  additions  to or
                  increases  of said real  estate  taxes,  then such  franchise,
                  income,   transit,   profit  or  other  tax  or   governmental
                  imposition   shall  be  deemed  to  be  included   within  the
                  definition of "real estate taxes" for the purposes hereof.  As
                  to special assessments which are payable over a period of time
                  extending  beyond  the  term of this  lease,  only a pro  rata
                  portion thereof covering the portion of the term of this lease
                  unexpired at the time of the  imposition  of such  assessment,
                  shall be  included  in "real  estate  taxes."  If by law,  any


                                       2
<PAGE>

                  assessment may be paid in installments, then, for the purposes
                  hereof  (a) such  assessment  shall  be  deemed  to have  been
                  payable in the maximum number of installments permitted by law
                  and (b) there shall be included in real estate taxes, for each
                  comparative  year in which such  installments may be paid, the
                  installments  of such  assessment so becoming  payable  during
                  such comparative  year,  together with interest payable during
                  such comparative year.

                  (f) Where more than one  assessment  is imposed by the City of
                  New York for any tax  year,  whether  denominated  an  "actual
                  assessment" or  "transitional  assessment" or otherwise,  then
                  the phrases herein  "assessed value" and  "assessments"  shall
                  mean whichever of the actual, transitional or other assessment
                  is  designated  by  the  City  of  New  York  as  the  taxable
                  assessment for that tax year.

                  (g) The phrase "real estate taxes payable  during the base tax
                  year"  shall mean that  amount  obtained  by  multiplying  the
                  assessed  value  of the  land and  buildings  of the  building
                  project for the base tax year by the tax rate for the base tax
                  year for each $100 of such assessed value.

         (ii)     (a) In the event that the real  estate  taxes  payable for any
                  comparative  year shall  exceed the amount of the real  estate
                  taxes  payable  during the base tax year,  Tenant shall pay to
                  Landlord,  as additional  rent for such  comparative  year, an
                  amount equal to The Percentage of the excess.  Before or after
                  the start of each comparative year,  Landlord shall furnish to
                  Tenant a statement of the real estate  taxes  payable for such
                  comparative  year,  and a statement  of the real estate  taxes
                  payable  during the base tax year.  If the real  estate  taxes
                  payable for such comparative year exceed the real estate taxes
                  payable  during  the base tax year,  additional  rent for such
                  comparative  year, in an amount equal to The Percentage of the
                  excess,  shall  be due  from  Tenant  to  Landlord,  and  such
                  additional  rent shall be payable by Tenant to Landlord within
                  ten (10) days after  receipt of the aforesaid  statement.  The
                  benefit of any discount for any earlier  payment or prepayment
                  of real  estate  taxes shall  accrue  solely to the benefit of
                  Landlord,  and such discount shall not be subtracted  from the
                  real estate taxes payable for any comparative year.

                           Additionally,   Tenant  shall  pay  to  Landlord,  on
                  demand,  a  sum  equal  to  The  Percentage  of  any  business
                  improvement   district  assessment  payable  by  the  building
                  project.

                  (b) Should the real estate taxes  payable  during the base tax
                  year be reduced by final  determination of legal  proceedings,
                  settlement or otherwise,  then,  the real estate taxes payable
                  during the base tax year shall be correspondingly revised, the
                  additional rent theretofore paid or payable  hereunder for all
                  comparative  years  shall be  recomputed  on the basis of such
                  reduction,  and Tenant  shall pay to  Landlord  as  additional
                  rent,  within ten (10) days after being billed  therefor,  any
                  deficiency  between  the  amount  of such  additional  rent as
                  theretofore  computed and the amount thereof due as the result
                  of such  recomputations.  Should the real estate taxes payable
                  during  the  base  tax  year  be   increased   by  such  final
                  determination of legal  proceedings,  settlement or otherwise,
                  then  appropriate  recomputation  and adjustment also shall be
                  made.

                  (c) As long as Tenant is a tenant and is not in default of any
                  material  obligation  hereunder,  if Tenant  shall have made a
                  payment of  additional  rent under  this  paragraph,  Landlord
                  shall receive a refund of any portion of the real estate taxes
                  payable  for any  comparative  year after the base tax year on
                  which such payment of  additional  rent shall have been based,
                  as a result of a reduction  of such real estate taxes by final
                  determination of legal  proceedings,  settlement or otherwise,
                  Landlord  shall  promptly  after  receiving  the refund pay to
                  Tenant The  Percentage  of the refund less The  Percentage  of
                  expenses (including  attorneys' and appraisers' fees) incurred
                  by  Landlord  in  connection  with  any  such  application  or
                  proceeding.   If  prior  to  the  payment  of  taxes  for  any
                  comparative year,  Landlord shall have obtained a reduction of
                  that  comparative  year's  assessed  valuation of the building
                  project,  and  therefore  of said  taxes,  then the term "real
                  estate  taxes"  for that  comparative  year shall be deemed to
                  include the amount of  Landlord's  expenses in obtaining  such
                  reduction  in assessed  valuation,  including  attorneys'  and
                  appraisers' fees.


                                       3
<PAGE>

                  (d) The  statement of the real estate taxes to be furnished by
                  Landlord as provided  above shall be certified by Landlord and
                  shall constitute a final determination as between Landlord and
                  Tenant of the real estate  taxes for the  Periods  represented
                  thereby,  unless Tenant within thirty (30) days after they are
                  furnished  shall  give a written  notice to  Landlord  that it
                  disputes their accuracy or their appropriateness, which notice
                  shall specify the  particular  respects in which the statement
                  is  inaccurate  or  inappropriate.  If Tenant shall so dispute
                  said statement  then,  pending the resolution of such dispute,
                  Tenant shall pay the additional rent to Landlord in accordance
                  with the statement furnished by Landlord.

                  (e) In no event  shall the fixed  annual rent under this lease
                  (exclusive  of the  additional  rents  under this  Article) be
                  reduced by virtue of this Article.

                  (f) If the commencement  date of the term of this lease is not
                  the  first  day  of  the  first  comparative  year,  then  the
                  additional rent due hereunder for such first  comparative year
                  shall be a proportionate share of said additional rent for the
                  entire comparative year, said proportionate  share to be based
                  upon  the  length  of time  that  the  lease  term  will be in
                  existence during such first comparative year. Upon the date of
                  any   expiration   or   termination   of  this  lease  (except
                  termination  because of Tenant's  default) whether the same be
                  the date  hereinabove set forth for the expiration of the term
                  or any prior or subsequent date, a proportionate share of said
                  additional  rent for the  comparative  year during  which such
                  expiration or termination  occurs shall immediately become due
                  and payable by Tenant to Landlord,  if it was not  theretofore
                  already billed and paid. The said proportionate share shall be
                  based upon the length of time that this lease  shall have been
                  in existence  during such  comparative  year.  Landlord  shall
                  promptly  cause  statements of said  additional  rent for that
                  comparative  year to be  prepared  and  furnished  to  Tenant.
                  Landlord  and  Tenant   shall   thereupon   make   appropriate
                  adjustments of amounts then owing.

                  (g)   Landlord's   and  Tenant's   obligations   to  make  the
                  adjustments referred to in subdivision (f) above shall survive
                  any expiration or termination of this lease.

                  (h) Any  delay or  failure  of  Landlord  in  billing  any tax
                  escalation  hereinabove provided shall not constitute a waiver
                  of or in any way impair the continuing obligation of Tenant to
                  pay such tax escalation hereunder.

         C. Failure to Bill: Landlord's failure to bill on a timely basis all or
any portion of any amount  payable  pursuant to this lease for any period during
the term  hereof  shall  neither  constitute  a waiver  of  Landlord's  right to
ultimately  collect  such  amount  or to  bill  Tenant  at any  subsequent  time
retroactively for the entire amount so un-billed.  Landlord's  failure to render
an Escalation Statement with respect to any comparative year shall not prejudice
Landlord's  right to  thereafter  render an  Escalation  Statement  with respect
thereto or with respect to any subsequent  comparative year. Tenant's obligation
to pay any fixed annual rent and additional rent shall survive the expiration or
earlier termination of this lease.

         D. No Right to Apply Security: Tenant shall not have the right to apply
any  security  deposited to assure  Tenant's  faithful  performance  of Tenant's
obligation  hereunder to the payment of any  installment of fixed annual rent or
additional rent.

         E. No  Reduction  in Fixed  Annual  Rent:  In no event  shall the fixed
annual rent under this lease be reduced by virtue of any  decrease in the amount
of any additional rent payment under this Article or any other provision of this
lease.  If Landlord  receives  from Tenant any payment  less than the sum of the
fixed annual rent and additional rent then due and owing pursuant to this lease,
Tenant  hereby  waives its right,  if any, to designate  the items to which such
payment  shall be applied and agrees that  Landlord in its sole  discretion  may
apply such payment in whole or in part to any fixed annual rent, additional rent
or to any combination  thereof then due and payable  hereunder.  Unless Landlord
shall  otherwise  expressly  agree in writing,  acceptance of any portion of the
fixed  annual rent or  additional  rent from anyone  other than Tenant shall not
relieve Tenant of any of its other obligations  under this lease,  including the
obligation  to pay other fixed  annual rent and  additional  rent,  and Landlord
shall  have the right at any time,  upon  notice to Tenant,  to  require  Tenant
(rather  than  someone  other  than  Tenant)  to pay the fixed  annual  rent and
additional  rent  payable  hereunder  directly to  Landlord.  Furthermore,  such


                                       4
<PAGE>

acceptance  of fixed  annual  rent and  additional  rent  shall not be deemed to
constitute  Landlord's consent to an assignment of this lease or a subletting or
other  occupancy  of the demised  premises by anyone  other than  Tenant,  nor a
waiver of any of Landlord's right or Tenant's obligations under this lease.

         F. Partial  Comparative  Year: If the commencement  date of the term of
this lease is not the first day of the first  comparative  year commencing prior
to the date hereof,  then the  additional  rent due under any  paragraph of this
Article for the first  comparative  year (as defined in the relevant  paragraph)
shall  be  a  proportionate  share  of  said  additional  rent  for  the  entire
comparative year, said  proportionate  share to be based upon the length of time
that the Lease term will be in  existence  during such first  comparative  year.
Upon the date of any expiration or termination of this lease (except termination
because of Tenant's default) whether the same be the date herein above set forth
for the expiration of the term or any prior or subsequent  date, a proportionate
share of said  additional  rent for such  comparative  year  during  which  such
expiration or  termination  occurs shall  immediately  become due and payable by
Tenant to Landlord,  if it was not theretofore already billed and paid. The said
proportionate share shall be based upon the length of time that this lease shall
have been in existence during such comparative year.  Landlord shall, as soon as
reasonably  practicable,  compute  the  additional  rent  due  from  Tenant,  as
aforesaid,  which  computations shall either be based on that comparative year's
actual  figures  or be  an  estimate  based  upon  the  most  recent  statements
theretofore  prepared by  Landlord  and  furnished  to Tenant as may be required
under any paragraph  above.  If an estimate is used,  then Landlord  shall cause
statements to be prepared on the basis of the comparative  year's actual figures
promptly after they are available, and thereupon, Landlord and Tenant shall make
appropriate adjustments of any estimated payments theretofore made.

         G. Survival of Obligations:  Landlord's and Tenant's obligation to make
the  adjustments  and payments  referred to in the preceding  paragraphs of this
Article shall survive any expiration or termination of this lease.

         H. No  Waiver:  Any delay or  failure of  Landlord  in billing  any tax
escalation  hereinabove  provided shall not constitute a waiver of or in any way
impair the continuing obligation of Tenant to pay the same hereunder.

3.       ELECTRICITY

         Tenant  agrees that  Landlord  may furnish  electricity  to the demised
premises  on,  at  Landlord's   option,   a  "rent  inclusion"  basis  or  on  a
"submetering"  basis.  Electricity and electric service,  as used herein,  shall
mean any element affecting the generation,  transmission,  and/or redistribution
of  electricity,  including but not limited to,  services  which  facilitate the
distribution of service.

         A. Rent Inclusion:  (i) If and so long as Landlord provides electricity
to the demised premises on a rent inclusion basis,  Tenant agrees that the fixed
annual rent shall be increased by the amount of the  Electricity  Rent Inclusion
Factor ("ERIF"), as hereinafter defined. Tenant acknowledges and agrees (a) that
the fixed  annual rent herein above set forth in this lease does not yet, but is
to include an ERIF of $3.20 per  rentable  square  foot per annum to  compensate
Landlord for electrical  wiring and other  installations  necessary for, and for
its obtaining and making  available to Tenant the  redistribution  of,  electric
current as an additional service; and (b) that said ERIF, which shall be subject
to periodic adjustments as hereinafter  provided,  has been partially based upon
an estimate of Tenant's  connected  electrical load, which shall be deemed to be
the  demand  (KW),  and hours of use  thereof,  which  shall be deemed to be the
energy (KWH), for ordinary lighting and light office equipment and the operation
of  typical  small  business  machines,  including  copying  machines,  personal
computers  and  peripheral  equipment  such  as  printers,  telephone  switching
equipment,   facsimile  transmission  machines  (such  lighting,   machines  and
equipment are hereinafter called "Ordinary  Equipment") during ordinary business
hours  ("ordinary  business hours" shall be deemed to mean forty-five (45) hours
per week, 8:00 a.m. to 5:00 p.m., Mondays through Fridays,  including holidays),
with Landlord  providing an average connected load of 4 1/2 watts of electricity
for all purposes per rentable square foot. Any installation and use of equipment
other than Ordinary  Equipment and/or any connected load and/or any energy usage
by Tenant in excess of the  foregoing  shall result in adjustment of the ERIF as
hereinafter  provided.  For purposes of this lease the rentable square foot area
of the demised premises shall be deemed to be 1,128 rentable square feet.

                  (ii) If the cost to Landlord of  electricity  shall have been,
or shall be,  increased  subsequent  to May 1, 1996  (whether such change occurs
prior to or during the term of this lease), (a) by change in Landlord's electric


                                       5
<PAGE>

rates or service classifications,  or electricity charges,  including changes in
market prices,  or (b) by any increase in fuel  adjustments or (c) by charges of
any  kind,  or (d) by  taxes,  imposed  or which may be  imposed  on  Landlord's
electricity purchases,  or on Landlord's electricity  redistribution,  or (e) by
virtue of any other  cause,  then (x) the ERIF,  which is a portion of the fixed
annual rent,  shall be changed in the same percentage as any such change in cost
due to changes in electric rates, service classifications, or market prices and,
also, (y) Tenant's payment  obligation,  for electricity  redistribution,  shall
change from time to time so as to reflect any such  increase in any of the items
listed in (b) through (e) of this paragraph. Sales taxes collectible by Landlord
under  applicable  law  in  connection  with  the  sale  or  re-distribution  of
electricity  to Tenant  shall be paid by Tenant to Landlord as  additional  rent
when billed.  Any such  percentage  change in Landlord's  cost due to changes in
electric rates,  service  classifications  or market prices shall be computed by
the  application of the average  consumption  (energy and demand) of electricity
for the entire building for the twelve (12) full months immediately prior to the
rate and/or service  classification  and/or market price change,  or any changed
methods of or rules on billing for same,  on a consistent  basis to the new rate
and/or service  classification  and/or market price and to the immediately prior
existing rate and/or service  classification and/or market price. If the average
consumption  of electricity  for the entire  building for said prior twelve (12)
months cannot  reasonably be applied and used with respect to changed methods of
or rules on billing,  then the percentage  increase shall be computed by the use
of the average  consumption  (energy and demand) for the entire building for the
first  three (3) months  after such  change,  projected  to a full  twelve  (12)
months, so as to reflect the different  seasons;  and that same consumption,  so
projected,  shall be applied to the rate and/or  service  classification  and/or
market price which existed  immediately  prior to the change.  The parties agree
that a  reputable,  independent  electrical  consultant,  selected  by  Landlord
("Landlord's electrical consultant"),  shall determine the percentage change for
the changes in the ERIF due to Landlord's  changed  costs,  and that  Landlord's
electrical consultant may from time to time make surveys in the demised premises
of the  electrical  equipment  and fixtures and the use of current.  If any such
survey shall reflect a connected load in the demised premises in excess of 4 1/2
watts of  electricity  for all purposes per rentable  square foot and/or  energy
usage in excess of ordinary  business  hours  (each such  excess is  hereinafter
called  "excess  electricity")  then the connected  load and/or the hours of use
portion(s)  of the then existing ERIF shall each be increased by an amount which
is equal to the product  derived from  multiplying  the then  existing ERIF by a
fraction,  the  numerator  of  which is the  excess  electricity  (i.e.,  excess
connected  load  and/or  excess  usage)  and the  denominator  of  which  is the
connected  load and/or the energy usage which was the basis for the  computation
of the then  existing  ERIF.  Such  fractions  shall be determined by Landlord's
electrical  consultant.  The  fixed  annual  rent  shall  then be  appropriately
adjusted,  effective as of the date of any such change in connected  load and/or
usage, as disclosed by said survey.  If such survey shall disclose  installation
and use of other than Ordinary Equipment,  then effective as of the date of said
survey,  there  shall be added to the ERIF  portion  of the  fixed  annual  rent
(computed and fixed as  hereinbefore  described)  an additional  amount equal to
what would be paid under the SC-4 Rate I Service Classification in effect on the
date of this lease (and not the  time-of-day  rate  schedule)  for such load and
usage of  electricity,  with the connected  electrical  load deemed to be demand
(KW) and the hours of use thereof deemed to be the energy (KWH), as hereinbefore
provided, (which addition to the ERIF shall be increased by all electricity cost
increases of Landlord,  as herein above  provided,  from May 1, 1996 through the
date of billing).

                  (iii) In no event, whether because of surveys or for any other
reason, is the originally specified per rentable square foot ERIF portion of the
fixed annual rent (plus any net increase thereof, but not decrease, by virtue of
all electric rate or service  classification  changes subsequent to May 1, 1996)
to be reduced.

         B. Submetering:  If and so long as Landlord provides electricity to the
demised premises on a submetering basis, Tenant covenants and agrees to purchase
the same from  Landlord or  Landlord's  designated  agent at charges,  terms and
rates set, from time to time,  during the term of this lease by Landlord but not
less than those specified in the service classification in effect on the date of
this lease pursuant to which Landlord then purchased  electric  current from the
public  utility  corporation  serving the part of the city where the building is
located;  provided,  however,  said  charges  shall  be  increased  in the  same
percentage as any percentage increase in the billing to Landlord for electricity
for the entire building,  (a) by reason of increase in Landlord's electric rates
or service classifications,  subsequent to January 1, 1970, and so as to reflect
any increase in Landlord's electric charges,  including changes in market prices
for  electricity  from  utilities  and/or  other  providers,   or  (b)  by  fuel
adjustment,  or (c) by taxes or  charges  of any kind  imposed  or which  may be
imposed  on  Landlord's  electricity  purchases,  or on  Landlord's  electricity
redistribution,  or (d) by virtue of any other  cause  subsequent  to January 1,
1970.  Sales taxes  collectible by Landlord  under  applicable law in connection
with the sale or  re-distribution  of  electricity  to  Tenant  shall be paid by
Tenant to Landlord as additional rent when billed. Any such percentage  increase
in  Landlord's  billing  for  electricity  due to  changes  in rates or  service


                                       6
<PAGE>

classifications  or market  prices shall be computed by the  application  of the
average  consumption  (energy and demand) of electricity for the entire building
for the twelve (12) full  months  immediately  prior to the rate and/or  service
classification  change,  or any changed methods of or rules on billing for same,
on a consistent basis to the new rate and/or service  classification  and to the
service  classification in effect on January 1, 1970. If the average consumption
of electricity  for the entire building for said prior twelve (12) months cannot
reasonably  be applied and used with  respect to changed  methods of or rules on
billing,  then  the  percentage  increase  shall be  computed  by the use of the
average  consumption  (energy and demand) for the entire  building for the first
three (3) months after such change,  projected to a full twelve (12) months; and
that  same  consumption,   so  projected,   shall  be  applied  to  the  service
classification  in effect on January 1, 1970. Where more than one meter measures
the service of Tenant in the building,  the service  rendered through each meter
may be computed and billed separately in accordance with the rates herein. Bills
therefor  shall be rendered at such times as Landlord  may elect and the amount,
as  computed  from a meter,  shall be deemed to be,  and be paid as,  additional
rent.  In the event that such bills are not paid  within five (5) days after the
same are rendered, Landlord may, without further notice, discontinue the service
of electric current to the demised  premises  without  releasing Tenant from any
liability  under this lease and without  Landlord or Landlord's  agent incurring
any liability for any damage or loss sustained by Tenant by such  discontinuance
of  service.  If any tax is imposed  upon  Landlord's  receipt  from the sale or
resale  of  electrical  energy  or gas or  telephone  service  to  Tenant by any
Federal,  State or Municipal  Authority,  Tenant covenants and agrees that where
permitted  by  law,  Tenant's  pro  rata  (based  on  consumption  or  estimated
consumption) share of such taxes shall be passed on to, and included in the bill
of, and paid by, Tenant to Landlord.

         C. General Conditions:  (i) The determinations by Landlord's electrical
consultant  shall be binding and  conclusive  on Landlord and on Tenant from and
after the delivery of a copy of each such relevant determination to Landlord and
Tenant, unless, within fifteen (15) days after delivery thereof, Tenant disputes
such  determination.  If Tenant so disputes the determination,  it shall, at its
own expense, obtain from a reputable,  independent electrical consultant its own
determinations  in accordance  with the  provisions  of this  Article.  Tenant's
consultant and Landlord's  consultant  then shall seek to agree.  If they cannot
agree within thirty (30) days,  they shall choose a third  reputable  electrical
consultant,  whose cost shall be shared equally by the parties,  to make similar
determinations  which shall be controlling.  (If they cannot agree on such third
consultant  within ten (10) days,  then  either  party may apply to the  Supreme
Court in the County of New York for such  appointment.)  However,  pending  such
controlling  determinations,   Tenant  shall  pay  to  Landlord  the  amount  of
additional  rent or ERIF in  accordance  with the  determinations  of Landlord's
electrical consultant. If the controlling  determinations differ from Landlord's
electrical  consultant,  then the parties shall promptly make adjustment for any
deficiency owed by Tenant or overage paid by Tenant.

                  (ii) At the option of Landlord, Tenant agrees to purchase from
Landlord or its agents all lamps and bulbs used in the demised  premises  and to
pay for the  cost of  installation  thereof.  If all or part of the  submetering
additional  rent or the ERIF payable in  accordance  with this  Article  becomes
uncollectible  or reduced or refunded by virtue of any law, order or regulation,
the parties agree that, at Landlord's option, in lieu of submetering  additional
rent or ERIF, and in consideration of Tenant's use of the building's  electrical
distribution  system and  receipt of  redistributed  electricity  and payment by
Landlord of consultants' fees and other  redistribution  costs, the fixed annual
rental rate(s) to be paid under this lease shall be increased by an "alternative
charge"  which  shall be a sum equal to $3.20 per  rentable  square  foot of the
demised  premises per year,  changed in the same  percentage as any increases in
the cost to Landlord for electricity  for the entire building  subsequent to May
1, 1996  because of  electric  rate or service  classification  or market  price
changes, as hereinabove provided.
                  (iii)  Landlord  shall not be liable to Tenant for any loss or
damage or expense  which  Tenant may sustain or incur if either the  quantity or
character of electric  service is changed or is no longer  available or suitable
for Tenant's requirements. Tenant covenants and agrees that at all times its use
of electric  current shall never exceed the capacity of existing  feeders to the
building or the risers or wiring installation.  Tenant agrees not to connect any
additional  electrical  equipment to the building electric  distribution  system
which shall increase consumption or demand beyond the capacity and rating of the
electrical system directly servicing the demised premises without the Landlord's
prior written consent,  which shall not be unreasonably  withheld.  Any riser or
risers to supply  Tenant's  electrical  requirements,  upon  written  request of
Tenant,  will be installed by Landlord,  at the sole cost and expense of Tenant,
if, in  Landlord's  sole  judgment,  the same are  necessary  and will not cause
permanent  damage or injury to the  building  or  demised  premises  or cause or
create a dangerous or hazardous  condition or entail  excessive or  unreasonable
alterations,  repairs or expense or interfere  with or disturb  other tenants or
occupants.  In addition to the  installation  of such riser or risers,  Landlord
will also at the sole cost and expense of Tenant,  install  all other  equipment


                                       7
<PAGE>

proper and necessary in connection  therewith subject to the aforesaid terms and
conditions.  The parties acknowledge that they understand that it is anticipated
that electric  rates,  charges,  etc.,  may be changed by virtue of  time-of-day
rates, or other methods of billing, electricity purchases and the redistribution
thereof,  and  fluctuations  in the market  price of  electricity,  and that the
references  in the  foregoing  paragraphs  to  changes in methods of or rules on
billing are intended to include any such changes.  Anything  herein above to the
contrary  notwithstanding,  in no event is the  submetering  additional  rent or
ERIF, or any "alternative  charge", to be less than an amount equal to the total
of Landlord's  payments to public  utilities  and/or others for the  electricity
consumed  by Tenant  (and any  taxes on  Landlord's  purchase  of the same or on
redistribution  of same) plus five (5%) percent for transmission line loss, plus
fifteen  (15%) percent for other  redistribution  costs.  Landlord  reserves the
right,  at any time upon  thirty  (30)  days'  written  notice,  to  change  its
furnishing of electricity to Tenant from a rent inclusion basis to a submetering
basis, or vice versa. Landlord reserves the right to terminate the furnishing of
electricity on a rent  inclusion,  submetering,  or any other basis at any time,
upon thirty (30) days' written notice to Tenant,  in which event Tenant may make
application  directly to the public utility and/or other  providers for Tenant's
entire separate  supply of electric  current and Landlord shall permit its wires
and conduits,  to the extent  available and safely capable,  to be used for such
purpose and only to the extent of Tenant's then  authorized  connected load. Any
meters,   risers  or  other  equipment  or  connections   necessary  to  furnish
electricity  on a  submetering  basis or to enable  Tenant  to  obtain  electric
current  directly from such utility shall be installed at Tenant's sole cost and
expense.  Only rigid conduit or electricity  metal tubing (EMT) will be allowed.
Landlord,  upon the expiration of the aforesaid thirty (30) days' written notice
to Tenant may discontinue  furnishing the electric  current but this lease shall
otherwise remain in full force and effect. If Tenant was provided electricity on
a rent inclusion basis when it was so discontinued,  then commencing when Tenant
receives  such direct  service and as long as Tenant  shall  continue to receive
such  service,  the fixed annual  rental rate payable  under this lease shall be
reduced by the amount of the ERIF which was  payable  immediately  prior to such
discontinuance of electricity on a rent inclusion basis.

                  (iv)  Alternative  Service  Providers:  Landlord  on the  date
hereof  obtains  electric  service for the  building  from  Consolidated  Edison
Company. Notwithstanding anything herein set forth to the contrary, if permitted
by law, Landlord may contract separately with Consolidated Edison Company and/or
one or more other providers  ("Alternative Service Providers") to provide one or
more of the component  services  which  together  make up the entire  package of
electric  service (e.g.,  transmission,  generation,  distribution and ancillary
services) to the building.  If Landlord  elects to contract with any Alternative
Service Provider, Tenant shall cooperate with Landlord and each such Alternative
Service  Provider to effect any change to the method or means of  providing  and
distributing electricity service to the demised premises or any other portion of
the  building by reason of such change in the  provision  of  electricity.  Such
cooperation  shall include but not be limited to providing  Landlord or any such
Alternative  Service  Provider  and any  other  person  unimpeded  access to the
demised premises and to all wiring,  conduit,  lines, feeders, cable and risers,
electricity  panel boxes and any other component of the electrical  distribution
system within or adjacent to the demised premises.  Landlord shall not be liable
to Tenant for any loss or damage or expense which Tenant may sustain or incur if
such change shall  interfere  with  Tenant's  business or either the quantity or
character of electric service is changed,  interrupted or is no longer available
or suitable for Tenant's  requirements by reason of such change in the provision
of  electric  service  nor shall any such  interference,  change,  interruption,
unavailability or unsuitability constitute an actual or constructive eviction of
Tenant.

4.       ASSIGNMENT

         A.   Tenant,   for   itself,   its  heirs,   distributees,   executors,
administrators,   legal  representatives,   successors  and  assigns,  expressly
covenants  that it shall not  assign,  mortgage  or  encumber  this  lease,  nor
underlet,  or suffer or permit the demised  premises  or any part  thereof to be
used or occupied by others,  without  the prior  written  consent of Landlord in
each instance.  The transfer of a majority of the issued and outstanding capital
stock of any  corporate  tenant or  subtenant of this lease or a majority of the
total  interests  in any  partnership  tenant or  subtenant or any other form of
entity  or  organization,   however  accomplished,   and  whether  in  a  single
transaction  or in a series of  transactions,  and the conversion of a tenant or
subtenant entity to either a limited  liability  company or a limited  liability
partnership,  shall be deemed on assignment  of this lease or of such  sublease.
The merger or  consolidation  of a tenant or subtenant,  whether a  corporation,
partnership,  limited liability company or other form of entity or organization,
where the net worth of the  resulting  or  surviving  corporation,  partnership,
limited liability company or other form of entity or organization,  is less than
the net  worth of  Tenant  or  subtenant  immediately  prior to such  merger  or
consolidation  shall be deemed an assignment of this lease or of such  sublease.
If this lease be  assigned,  or if the demised  premises or any part  thereof be
underlet or occupied by anybody other than Tenant,  Landlord may,  after default


                                       8
<PAGE>

by Tenant,  collect rent from the assignee,  undertenant or occupant,  and apply
the net  amount  collected  to the  rent  herein  reserved,  but no  assignment,
underletting, occupancy or collection shall be deemed a waiver of the provisions
hereof, the acceptance of the assignee,  undertenant or occupant as tenant, or a
release of Tenant from the further  performance  by Tenant of  covenants  on the
part of Tenant  herein  contained.  The consent by Landlord to an  assignment or
underletting  shall not in any way be construed to relieve Tenant from obtaining
the  express  consent  in writing  of  Landlord  to any  further  assignment  or
underletting.  In no event shall any permitted  subtenant assign or encumber its
sublease or further sublet all or any portion of its sublet space,  or otherwise
suffer or permit the sublet  space or any part thereof to be used or occupied by
others,   without   Landlord's  prior  written  consent  in  each  instance.   A
modification,  amendment or extension of a sublease  shall be deemed a sublease.
If any lien is filed  against the demised  premises or the building of which the
same form a part for  brokerage  services  claimed  to have been  performed  for
Tenant,  whether or not  actually  performed,  the same shall be  discharged  by
Tenant within ten (10) days thereafter,  at Tenant's expense, by filing the bond
required by law, or otherwise,  and paying any other  necessary sums, and Tenant
agrees to  indemnify  Landlord  and its agents and hold them  harmless  from and
against any and all claims,  losses or  liability  resulting  from such lien for
brokerage  services  rendered.  For the purposes of this Article,  an "interest"
shall mean a right to participate,  directly or indirectly,  through one or more
intermediaries,  nominees,  trustees or agents,  in any of the profits,  losses,
dividends, distributions, income, gain, losses or capital of any entity or other
organization.

         B. (i) If Tenant  desires to assign  this lease or to sublet all or any
portion of the demised  premises,  it shall first  submit in writing to Landlord
the documents  described in paragraph C below,  and shall offer in writing,  (a)
with  respect to a  prospective  assignment,  to assign  this lease to  Landlord
without  any  payment of moneys or other  consideration  therefor,  or, (b) with
respect to a  prospective  subletting,  to sublet to Landlord the portion of the
demised premises involved ("Leaseback Area") for the term specified by Tenant in
its proposed sublease or, at Landlord's  option,  for the balance of the term of
the Lease less one (1) day, and at the lower of (x) Tenant's proposed  subrental
and (y) at the same rate of fixed rent and additional rent, and otherwise on the
same  terms,   covenants  and  conditions   (including  provisions  relating  to
escalation  rents),  as are contained herein and as are allocable and applicable
to the portion of the demised  premises  to be covered by such  subletting.  The
offer shall specify the date when the Leaseback  Area will be made  available to
Landlord,  which date shall be in no event earlier than forty-five (45) days nor
later than one hundred  eighty (180) days following the acceptance of the offer.
If an offer of sublease is made, and if the proposed sublease will result in all
or substantially  all of the demised premises being sublet,  then Landlord shall
have the option to extend the term of its  proposed  sublease for the balance of
the term of this lease less one (1) day.

                  (ii) Landlord shall have a period of thirty (30) days from the
receipt of such offer (and all documents  required  under  paragraph C below) to
either accept or reject the same. If Landlord shall accept such offer (a) Tenant
shall then execute and deliver to Landlord,  or to anyone designated or named by
Landlord,  an  assignment  or sublease,  as the case may be, in either case in a
form  reasonably  satisfactory  to Landlord's  counsel;  and (b) if the proposed
transaction is a sublease and Landlord  accepts such offer,  Tenant,  on demand,
shall pay to Landlord or its managing  agent (as Landlord shall elect) an amount
equal to the brokerage  commissions and any work  contribution  which would have
been incurred by Tenant but for Landlord's accepting such offer.

                  (iii) If a sublease is so made it shall expressly:

                  (a) permit  Landlord to make  further  subleases of all or any
                  part of the  Leaseback  Area  and (at no  cost or  expense  to
                  Tenant)   to  make  and   authorize   any  and  all   changes,
                  alterations,  installations  and improvements in such space as
                  necessary;

                  (b) provide  that Tenant will at all times  permit  reasonably
                  appropriate  means of ingress to and egress from the Leaseback
                  Area;

                  (c) negate any  intention  that the estate  created under such
                  sublease be merged with any other estate held by either of the
                  parties;

                  (d) provide that Landlord  shall accept the Leaseback Area "as
                  is" except that Landlord,  at Tenant's expense,  shall perform
                  all such work and make all such alterations as may be required


                                       9
<PAGE>

                  physically to separate the  Leaseback  Area from the remainder
                  of the demised premises and to permit lawful occupancy;

                  (e)  provide  that  at the  expiration  of the  term  of  such
                  sublease  Tenant  will accept the  Leaseback  Area in its then
                  existing condition,  subject to the obligations of Landlord to
                  make such repairs  thereto as may be necessary to preserve the
                  Leaseback Area in good order and condition,  ordinary wear and
                  tear excepted;

                  (f) provide  that  Landlord  shall  indemnify  and save Tenant
                  harmless  from  all  obligations  under  this  lease as to the
                  Leaseback  Area  during  the  period of time it is so  sublet,
                  except for fixed annual rent and additional  rent, if any, due
                  under the within  Lease,  which are in excess of the rents and
                  additional sums due under such sublease.

                  (iv) Subject to the foregoing, performance by Landlord, or its
                  designee,  under a  sublease  of the  Leaseback  Area shall be
                  deemed  performance by Tenant of any similar  obligation under
                  this lease and any default under any such  sublease  shall not
                  give rise to a default under a similar obligation contained in
                  this lease,  nor shall Tenant be liable for any default  under
                  this  lease  or  deemed  to be in  default  hereunder  if such
                  default is occasioned by or arises from any act or omission of
                  the  subtenant  under such  sublease  or is  occasioned  by or
                  arises from any act or omission of any occupant  holding under
                  or pursuant to any such sublease.

         C. If Tenant requests  Landlord's  consent to a specific  assignment or
subletting,  it shall  submit in writing to Landlord (i) the name and address of
the proposed  assignee or  subtenant,  (ii) a duly executed  counterpart  of the
proposed  agreement of assignment  or sublease,  (iii)  reasonably  satisfactory
information  as to the nature and  character  of the  business  of the  proposed
assignee or  subtenant,  and as to the nature of its  proposed use of the space,
and (iv) banking, financial or other credit information relating to the proposed
assignee or subtenant reasonably  sufficient to enable Landlord to determine the
financial responsibility and character of the proposed assignee or subtenant.

         D. If Landlord shall not have accepted  Tenant's  offer, as provided in
paragraph B, then Landlord will,  subject to paragraph F below, not unreasonably
withhold or delay its consent to Tenant's  request for consent to such  specific
assignment or subletting, where Tenant will not move the conduct of its business
to another building in New York City. Any consent of Landlord under this Article
shall be  subject  to the terms of this  Article  and the  effectiveness  of any
assignment or sublease under this Article shall be conditioned  upon there being
no default by Tenant, beyond any grace period, under any of the terms, covenants
and  conditions  of this lease at the time that  Landlord's  consent to any such
subletting or assignment is requested and on the date of the commencement of the
term of any proposed sublease or the effective date of any proposed assignment.

         E. Tenant understands and agrees that no assignment or subletting shall
be effective  unless and until Tenant,  upon receiving any necessary  Landlord's
written consent (and unless it was theretofore  delivered to Landlord)  causes a
duly  executed  copy of the sublease or  assignment  to be delivered to Landlord
within ten (10) days after  execution  thereof.  Any such sublease shall provide
that the subtenant shall comply with all applicable terms and conditions of this
lease to be performed by Tenant  hereunder.  Any such  assignment of lease shall
contain  an  assumption  by the  assignee  of all of the  terms,  covenants  and
conditions of this lease to be performed by Tenant.

         F. Anything herein contained to the contrary notwithstanding:

                  (i) Tenant shall not advertise (but may list with brokers) its
space for  assignment  or  subletting at a rental rate lower than the greater of
the then building  rental rate for such space or the rental rate then being paid
by Tenant to Landlord.

                  (ii)  The  transfer  of  outstanding   capital  stock  of  any
corporate tenant,  for purposes of this Article,  shall not include sale of such
stock by persons  other than those deemed  "insiders"  within the meaning of the
Securities  Exchange Act of 1934 as amended,  and which sale is effected through
"over-the-counter market" or through any recognized stock exchange.


                                       10
<PAGE>

                  (iii) No assignment or subletting shall be made:

                    (a)  To any person or entity  which  shall at that time be a
                         tenant,  subtenant  or other  occupant (or an affiliate
                         thereof)  of any  part of the  building  of  which  the
                         demised  premises  form  a  part,  or  who  dealt  with
                         Landlord or  Landlord's  agent  (directly  or through a
                         broker) with  respect to space in the  building  during
                         the twelve (12) months  immediately  preceding Tenant's
                         request for Landlord's consent;

                    (b)  By the legal representatives of Tenant or by any person
                         to whom  Tenant's  interest  under this lease passes by
                         operation  of  law,   except  in  compliance  with  the
                         provisions of this Article;

                    (c)  To any person or entity  for the  conduct of a business
                         which  is not in  keeping  with the  standards  and the
                         general  character of the building of which the demised
                         premises form a part.

                  (iv) Tenant  shall  retain the  building's  managing  agent as
Tenant's  broker in  connection  with any  assignment or  subletting,  except in
connection with a transaction described in paragraph G or paragraph H.

                  (v) The  listing  of any  names  other  than  that of  Tenant,
whether on the doors of the demised premises or on the building  directory shall
not be construed as consent to the occupancy or subletting of all or any portion
of the demised premises or to an assignment of this lease.

         G. Anything herein above contained to the contrary notwithstanding, the
offer back to Landlord  provisions  of paragraph B above shall not apply to, and
Landlord will not unreasonably withhold or delay its consent to an assignment of
this lease, or sublease of all or part of the demised premises, to the parent of
Tenant or to a  wholly-owned  subsidiary  of Tenant or of said parent of Tenant,
provided the net worth of the transferee or subtenant,  after such  transaction,
is equal to or greater than the greater of Tenant's net worth on the date hereof
or immediately  prior to such  transaction,  and provided,  also,  that any such
transaction complies with the other provisions of this Article.

         H. Anything herein above contained to the contrary notwithstanding, the
offer back to Landlord  provisions  of paragraph B above shall not apply to, and
Landlord will not unreasonably withhold or delay its consent to an assignment of
this  lease,  or  sublease  of  all or  part  of the  demised  premises,  to any
corporation (a) to which  substantially all the assets of Tenant are transferred
or (b) into which Tenant may be merged or  consolidated,  provided  that the net
worth,  experience  and  reputation  of such  transferee  or of the resulting or
surviving  corporation,  as the case may be, is equal to or greater than the net
worth,  experience  and  reputation of Tenant and of any guarantor of this lease
immediately  prior  to  such  transfer,  and  provided,   also,  that  any  such
transaction complies with the other provisions of this Article.

         I. No consent from Landlord shall be necessary under paragraphs G and H
above where (a) reasonably  satisfactory proof is delivered to Landlord that the
net worth and other provisions of paragraphs G or H, as the case may be, and the
other  provisions of this  Article,  have been  satisfied  and (b) Tenant,  in a
writing  reasonably  satisfactory  to  Landlord's  attorneys,  agrees  to remain
primarily liable jointly and severally with any transferee or assignee,  for the
obligations of Tenant under this lease.

         J. If Landlord  shall not have  accepted  any required  Tenant's  offer
and/or Tenant effects any assignment or subletting, then Tenant thereafter shall
pay to  Landlord  a sum  equal to (i) any rent or  other  consideration  paid to
Tenant by any subtenant which (after  deducting the costs of Tenant,  if any, in
effecting the subletting, including reasonable alteration costs, commissions and
legal  fees) is in excess of the rent  allocable  strictly  on a per square foot
basis,  without regard to any other  allocation of value, by dividing  aggregate
consideration  by the  rentable  square  feet  of the  area  so  sublet)  to the
subleased  space which is then being paid by Tenant to Landlord  pursuant to the
terms hereof,  and (ii) any other profit or gain (after  deducting any necessary
expenses  incurred)  realized by Tenant from any such  subletting or assignment.
All sums payable  hereunder by Tenant shall be payable to Landlord as additional
rent upon receipt thereof by Tenant.

         K. Each subletting  pursuant to this Article shall be subject to all of
the covenants,  agreements,  terms,  provisions and conditions contained in this
lease. Notwithstanding any such subletting to any subtenant and/or acceptance of


                                       11
<PAGE>

rent or additional  rent by Landlord from any  subtenant,  Tenant shall and will
remain fully liable for the payment of the fixed annual rent and additional rent
due and to become due hereunder and for the  performance  of all the  covenants,
agreements, terms, provisions and conditions contained in this lease on the part
of Tenant to be observed and performed and for all the acts and omissions of any
licensee, subtenant, or any other person claiming under or through any subtenant
that shall be in violation of any of the obligations of this lease, and any such
violation  shall be deemed to be a violation by Tenant.  Tenant  further  agrees
that,  notwithstanding  any such subletting,  no further subletting  (including,
without  limitation,  any extensions or renewals of any initial  sublettings) of
the demised  premises by Tenant,  or any person claiming through or under Tenant
shall,  or will be,  made,  except  upon  compliance  with,  and subject to, the
provisions of this Article.

         L. Any  assignment or transfer  shall be made only if, and shall not be
effective until, the assignee shall execute, acknowledge and deliver to Landlord
an agreement, in form and substance reasonably satisfactory to Landlord, whereby
the assignee  shall assume all of the  obligations  of this lease on the part or
Tenant to be performed or observed and whereby the assignee shall agree that the
provisions contained herein shall,  notwithstanding such assignment or transfer,
continue  to be  binding  upon  it in  respect  of all  future  assignments  and
transfers.  The  original  named  Tenant  covenants  that,  notwithstanding  any
assignment or transfer whether or not in violation of the provisions hereof, and
notwithstanding  the acceptance of fixed annual rent and/or  additional  rent by
Landlord  from an assignee,  transferee or any other party,  the original  named
Tenant  shall  remain  fully liable for the payment of the fixed annual rent and
additional  rent  and for the  other  obligations  of this  lease on the part of
Tenant to be performed or observed.

         M. If Landlord shall decline to give consent to any proposed assignment
or sublease,  or if Landlord shall exercise  Landlord's option under paragraph B
of this Article, Tenant shall indemnify,  defend and hold Landlord harmless from
and against  any and all  losses,  liabilities,  costs and  expenses  (including
reasonable  attorneys'  fees) resulting from any claims that may be made against
Landlord  by the  proposed  assignee  or  subtenant  or by any  brokers or other
persons  claiming a commission or similar  compensation  in connection  with the
proposed assignment or sublease.  This provision shall survive the expiration or
sooner termination of this lease.

         N. The joint and  several  liability  of Tenant  and any  immediate  or
remote  successor  in  interest  to  Tenant,  and  the  due  performance  of the
obligations  of this lease on Tenant's  part to be performed or observed,  shall
not be  discharged,  released or impaired  in any  respect by any  agreement  or
stipulation  made by Landlord  extending  the time of, or  modifying  any of the
obligations  of, this lease,  or by any waiver or failure of Landlord to enforce
any of the obligations of this lease.

5.       DEFAULT

         Landlord may  terminate  this lease on three (3) days'  notice:  (a) if
fixed annual rent or  additional  rent or any other payment due hereunder is not
paid within five (5) business days after written notice from Landlord; or (b) if
Tenant shall have failed to cure a default in the performance of any covenant of
this lease (except the payment of rent),  or any rule or regulation  hereinafter
set forth,  within five (5)  business  days after  written  notice  thereof from
Landlord, or if default cannot be completely cured in such time, if Tenant shall
not promptly proceed to cure such default within said five (5) business days, or
shall not complete the curing of such  default with due  diligence;  or (c) when
and to the extent  permitted by law, if a petition in bankruptcy  shall be filed
by or  against  Tenant or if Tenant  shall  make a  general  assignment  for the
benefit of creditors, or receive the benefit of any insolvency or reorganization
act;  or (d) if a receiver or trustee is  appointed  for any portion of Tenant's
property and such  appointment  is not vacated within twenty (20) business days;
or (e) if an  execution or  attachment  shall be issued under which the premises
shall be taken or occupied or  attempted to be taken or occupied by anyone other
than Tenant;  or (f) if the premises  become and remain vacant or deserted for a
period over ten (10) business  days;  or (g) if Tenant shall default  beyond any
grace period under any other lease between Tenant and Landlord; or (h) if Tenant
shall fail to move into or take  possession of the premises  within fifteen (15)
business  days after  commencement  of the term of this  lease.  Notwithstanding
anything  herein to the  contrary  set forth,  Tenant  shall not commit waste or
cause any damage to any portion of the building  irrespective  of whether within
or  without  the  demised  premises.  The  willful  infliction  of damage on any
property or the  interference  with the quiet enjoyment by any other occupant of
the building shall be deemed to be a conditional  limitation of the term of this
lease.  Tenant  shall not create any  nuisance or other  disturbance  within the
building.


                                       12
<PAGE>

         At the  expiration of the three (3) day notice  period,  this lease and
any rights of renewal or extension  thereof shall  terminate as completely as if
that  were the date  originally  fixed  for the  expiration  of the term of this
lease; but Tenant shall remain liable as hereinafter provided.

6.       RE-LETTING, ETC.

         If Landlord  shall  re-enter the premises on the default of Tenant,  by
summary  proceedings  or otherwise:  (a) Landlord may re-let the premises or any
part thereof as Tenant's  agent,  in the name of Landlord,  or otherwise,  for a
term shorter or longer than the balance of the term of this lease, and may grant
concessions or free rent;  (b) Tenant shall pay Landlord any deficiency  between
the rent herein  reserved and the net amount of any rents  collected by Landlord
for the remaining term of this lease,  through such re-letting.  Such deficiency
shall become due and payable monthly,  as it is determined.  Landlord shall have
no obligation  to re-let the  premises,  and its failure or refusal to do so, or
failure to collect  rent on  re-letting,  shall not  affect  Tenant's  liability
hereunder.  In  computing  the  net  amount  of  rents  collected  through  such
re-letting, Landlord may deduct all expenses incurred in obtaining possession or
re-letting the premises,  including legal expenses and fees, brokerage fees, the
cost of restoring  the premises to good order,  and the cost of all  alterations
and decorations deemed necessary by Landlord to effect  re-letting.  In no event
shall  Tenant be entitled to a credit or  repayment  for  rerental  income which
exceed the sums  payable to Tenant  hereunder or which covers a period after the
original  term of this lease;  (c) Tenant hereby  expressly  waives any right of
redemption  granted by any present or future law.  "Re-enter"  and "re-entry" as
used in this lease are not restricted to their technical  legal meaning.  In the
event of a breach or  threatened  breach of any of the  covenants or  provisions
hereof  Landlord  shall  have the  right of  injunction.  Mention  herein of any
particular  remedy shall not preclude  Landlord from any other available remedy;
and (d) Landlord  shall  recover as liquidated  damages,  in addition to accrued
rent and other  charges,  if  Landlord's  re-entry  is the  result  of  Tenant's
bankruptcy,  insolvency,  or  reorganization,  the full  rental for the  maximum
period allowed by any act relating to bankruptcy, insolvency or reorganization.

         If Landlord re-enters the premises for any cause, or if Tenant abandons
or vacates the premises, and after the expiration of the term of this lease, any
property  left in the premises by Tenant shall be deemed to have been  abandoned
by  Tenant,  and  Landlord  shall  have the right to retain or  dispose  of such
property in any manner without any obligation to account therefor to Tenant.  If
Tenant shall at any time default  hereunder,  and if Landlord shall institute an
action or summary proceeding against Tenant based upon such default, then Tenant
will  reimburse  Landlord for the legal  expenses  and fees thereby  incurred by
Landlord.

7.       LANDLORD MAY CURE DEFAULTS

         If Tenant shall default in performing any covenant or condition of this
lease, Landlord may perform the same for the account of Tenant, and if Landlord,
in connection therewith,  or in connection with any default by Tenant, makes any
expenditures or incurs any  obligations for the payment of money,  including but
not  limited  to  attorneys'  fees  and  disbursements,  such  sums  so  paid or
obligations incurred shall be deemed to be additional rent hereunder,  and shall
be paid by Tenant to Landlord  together with interest at an annual rate equal to
the  average of all prime rates  published  from time to time in The Wall Street
Journal  (Eastern  Edition) plus three (3%) percent  calculated from the date of
each  expenditure by Landlord,  within five (5) days of rendition of any bill or
statement therefor, and if Tenant's lease term shall have expired at the time of
the making of such expenditures or incurring such  obligations,  such sums shall
be recoverable by Landlord as damages.

8.       ALTERATIONS

         A. Tenant shall make no decoration, alteration, addition or improvement
("alteration")  in the premises,  without the prior written consent of Landlord,
and then only by  contractors  or  mechanics  and in such  manner  and with such
materials  as shall be approved  by  Landlord.  All  alterations,  additions  or
improvements  to the  premises,  including  window and central air  conditioning
equipment and duct work, if any, and fixtures,  equipment and built-ins,  except
movable  office  furniture  and  equipment  installed  at the expense of Tenant,
shall,  unless  Landlord  elects  otherwise  in writing,  become the property of
Landlord, and shall be surrendered with the premises at the expiration or sooner
termination  of the term of this  lease.  Any such  alterations,  additions  and


                                       13
<PAGE>

improvements which Landlord shall designate,  shall be removed by Tenant and any
damage repaired, at Tenant's expense prior to the expiration of the term of this
lease.

         B. Anything in this Article to the contrary  notwithstanding,  Landlord
shall not unreasonably  withhold or delay approval of written requests of Tenant
to make  nonstructural  interior  alterations in the demised premises,  provided
that such  alterations do not affect utility services or plumbing and electrical
lines or other systems of the building.  All  alterations  shall be performed in
accordance with the following conditions:

         (i)  All   alterations   requiring  the  submission  of  plans  to  any
governmental  agency  (including  the department of buildings of the City of New
York) shall be  performed  in  accordance  with plans and  specifications  first
submitted to Landlord for its prior written  approval.  Landlord shall be given,
in writing, a good description of all other alterations.

         (ii) All alterations  shall be done in a good and  workmanlike  manner.
Tenant shall,  prior to the  commencement of any such  alterations,  at its sole
cost and  expense,  obtain  and  exhibit to  Landlord  any  governmental  permit
required in connection with such alterations.

         (iii)  All  alterations  shall be done in  compliance  with  all  other
applicable  provisions  of  this  lease,  all  building  regulations  (including
specifications  for  construction  material  and  finishes  criteria  adopted by
Landlord for the building) and with all applicable laws, ordinances, directions,
rules  and  regulations  of  governmental   authorities   having   jurisdiction,
including,  without limitation,  the Americans with Disabilities Act of 1990, as
amended,  New York City Local Law No. 5/73 and New York City Local Law No. 58/87
and similar present or future laws, and regulations issued pursuant thereto, and
also New York City  Local Law No. 76 and  similar  present or future  laws,  and
regulations issued pursuant thereto, on abatement,  storage,  transportation and
disposal of asbestos,  which work,  if  required,  shall be effected at Tenant's
sole cost and expense,  by contractors and consultants  approved by Landlord and
in  strict  compliance  with  the  aforesaid  rules  and  regulations  and  with
Landlord's  rules  and  regulations  thereon.  Notwithstanding  anything  to the
contrary  herein  contained,  Tenant  agrees not to  penetrate  or  disrupt  the
structural  columns of the building  located within the demised  premises or any
area within three feet of any such  structural  column,  in connection  with any
alteration performed for or on behalf of Tenant.

         (iv) All work shall be  performed  with union  labor  having the proper
jurisdictional  qualifications  by contractors  and  subcontractors  approved by
Landlord.

         (v) Tenant shall keep the building  and the demised  premises  free and
clear of all liens for any work or material  claimed to have been  furnished  to
Tenant or to the demised premises.

         (vi) All work to be performed by Tenant shall be done in a manner which
will not interfere  with or disturb other tenants and occupants of the building.
No demolition  or core drilling or welding shall be permitted  between the hours
of 7:00 a.m. and 6:00 p.m. on Mondays through Fridays.

         (vii) All  alterations or other work and  installations  in and for the
demised  premises,  which shall be consented to by Landlord as provided  herein,
including  without  limitation,  Tenant's Initial  Installations (as hereinafter
defined),  if any,  and any  further  changes  in or  additions  to the  demised
premises  after said  initial  work has been  completed,  shall,  at  Landlord's
option,  be effected on Tenant's behalf by Landlord,  its agents or contractors,
and Tenant shall pay to Landlord,  as additional rent promptly when billed,  all
costs for such work,  including labor,  materials and general conditions,  plus,
for supervising and coordinating such work (regardless of whether Landlord,  its
agents or contractors  perform such work), ten percent (10%) of the cost of such
work (including  overhead) for profit plus ten percent (10%) of the cost of such
work for overhead.

         (viii)  Notwithstanding  anything  herein  set  forth to the  contrary,
within thirty (30) days after final  completion of any alteration,  Tenant shall
deliver to the Landlord final record  drawings of the alteration  including,  as
may be pertinent to the work performed, a reflected ceiling plan, mechanical and
electrical drawings, partition plan and any other drawings which may be required
to indicate  accurately the layout and systems of the demised  premises.  Tenant
shall  require its  architect to load and  maintain  such record plans on a CADD
system.


                                       14
<PAGE>

9.       LIENS

         Prior to commencement of its work in the demised premises, Tenant shall
obtain  and  deliver  to  Landlord a written  letter of  authorization,  in form
reasonably satisfactory to Landlord's counsel, signed by architects,  engineers,
designers and consultants to become  involved in such work,  which shall confirm
that any of their  drawings  or plans are to be  removed  from any  filing  with
governmental  authorities,  on  request  of  Landlord,  in the  event  that said
architect,  engineer or designer thereafter no longer is providing services with
respect to the demised  premises.  With respect to contractors,  subcontractors,
materialmen and laborers, and architects,  engineers and designers, for all work
or materials to be furnished to Tenant at the premises,  Tenant agrees to obtain
and deliver to Landlord  written and  unconditional  waivers of mechanics  liens
upon the premises or the  building,  after  payments to the  contractors,  their
subcontractors  and  vendors,  Tenant's  architects,  engineers,  designers  and
consultants,  subject  to  any  then  applicable  provisions  of the  Lien  law.
Notwithstanding the foregoing,  Tenant at its expense shall cause any lien filed
against the premises or the building, for work or materials claimed to have been
furnished to Tenant,  to be  discharged  of record within thirty (30) days after
notice thereof.

10.      REPAIRS

         Tenant  shall  take  good care of the  premises  and the  fixtures  and
appurtenances therein, and shall make all repairs necessary to keep them in good
working  order  and  condition,  including  structural  repairs  when  those are
necessitated  by the act,  omission  or  negligence  of  Tenant  or its  agents,
employees or invitees.  The exterior walls of the building,  the windows and the
portions of all window  sills  outside same and areas above any hung ceiling are
not part of the premises demised by this lease, and Landlord hereby reserves all
rights to such parts of the building.  Landlord shall replace, at the expense of
Tenant,  any plate  glass  and  other  glass  damaged  or broken  from any cause
whatsoever  in and about the demised  premises.  Landlord  may insure,  and keep
insured, at Tenant's expense,  all plate and other glass in the demised premises
for and in the  name of  Landlord.  Bills  for the  premium  therefor  shall  be
rendered by Landlord to Tenant at such times as Landlord  may elect and shall be
due from and payable by Tenant when  rendered  and the amount  thereof  shall be
deemed to be and paid as additional rent.

11.      DESTRUCTION

         If the premises shall be partially  damaged by fire or other  casualty,
the damage shall be repaired at the expense of Landlord,  but without  prejudice
to the rights of subrogation,  if any, of Landlord's insurer. Landlord shall not
be required to repair or restore any of Tenant's  property or any  alteration or
leasehold  improvement made by or for Tenant at Tenant's  expense.  Tenant shall
give Landlord  prompt notice of any damage or destruction  to the premises.  The
rent shall  abate in  proportion  to the portion of the  premises  not usable by
Tenant.  Landlord  shall not be liable to Tenant for any delay in restoring  the
premises, Tenant's sole remedy being the right to an abatement of rent, as above
provided.  If (i) the premises are rendered wholly untenantable by fire or other
casualty  and if Landlord  shall  decide not to restore the  premises,  (ii) the
premises are rendered  wholly  untenantable by fire or other casualty during the
last twenty-four (24) months of the term hereof,  or (iii) if the building shall
be so  damaged  that  Landlord  shall  decide to  demolish  it or to  rebuild it
(whether or not the premises have been damaged), Landlord may within ninety (90)
days  after  such  fire or other  cause  give  written  notice  to Tenant of its
election that the term of this lease shall automatically expire no less than ten
(10) days  after  such  notice is given.  Tenant  hereby  expressly  waives  the
provisions of Section 227 of the Real Property Law and agrees that the foregoing
provisions of this Article shall govern and control in lieu thereof.

12. END OF TERM.

         Tenant shall  surrender  the premises to Landlord at the  expiration or
sooner  termination  of this  lease in good  order  and  condition,  except  for
reasonable wear and tear and damage by fire or other casualty,  and Tenant shall
remove all of its property.  Tenant agrees that any personal property  remaining
in the demised  premises  following the expiration of the term of this lease (or
such  earlier date as of which the term hereof may have been  terminated)  shall
for all  purposes be deemed  conveyed to and to be the  property of Landlord who
shall be free to dispose  of such  property,  at  Tenant's  cost,  in any manner
Landlord  deems  desirable.  Landlord  may retain or assign any salvage or other
residual value of such property.  In  consideration  of Landlord's  disposing of
such property, Tenant shall reimburse Landlord or pay to Landlord any cost which
Landlord  may incur in  disposing  of such  property  within ten (10) days after


                                       15
<PAGE>

demand therefor.  Tenant shall indemnify and save Landlord  harmless against all
costs,  claims,  loss  or  liability  resulting  from  delay  by  Tenant  in  so
surrendering the premises, including, without limitation, any claims made by any
succeeding tenant founded on such delay. Additionally, the parties recognize and
agree that other damage to Landlord  resulting from any failure by Tenant timely
to surrender the premises will be substantial, will exceed the amount of monthly
rent  theretofore  payable  hereunder,   and  will  be  impossible  of  accurate
measurement.  Tenant  therefore agrees that if possession of the premises is not
surrendered  to  Landlord  within  one (1) day  after the  expiration  or sooner
termination  of the  term of this  lease,  then  Tenant  will  pay  Landlord  as
liquidated damages for each month and for each portion of any month during which
Tenant holds over in the premises after expiration or termination of the term of
this  lease,  a sum equal to three times the average  rent and  additional  rent
which was payable  per month under this lease  during the last six months of the
term thereof.  The aforesaid  obligations shall survive the expiration or sooner
termination  of the term of this lease.  Anything in this lease to the  contrary
notwithstanding,  the  acceptance  of any rent shall not preclude  Landlord from
commencing and prosecuting a holdover or summary  eviction  proceeding,  and the
preceding  sentence  shall be deemed  to be an  agreement  expressly  "providing
otherwise"  within the meaning of Section  232-c of the Real Property Law of the
State of New York and any successor law of like import. Tenant expressly waives,
for itself and for any person claiming  through or under the Tenant,  any rights
which the Tenant or any such  Person may have  under the  provisions  of Section
2201 of the New York Civil  Practice Law and Rules and of any  successor  law of
like import then in force in connection  with any holdover  summary  proceedings
which the Landlord may  institute.  Tenant's  obligations  under this  paragraph
shall survive the expiration or sooner termination of the term of this lease. At
any time during the term of this  lease,  Landlord  may exhibit the  premises to
prospective purchasers or mortgagees of Landlord's interest therein.  During the
last year of the term of this  lease,  Landlord  may  exhibit  the  premises  to
prospective tenants.

13.      SUBORDINATION AND ESTOPPEL, ETC.

         A. This lease and Tenant's  rights  hereunder  are and shall be subject
and subordinate to any and all master leases of the building project,  ground or
underlying  leases and to all  mortgages,  building loan  agreements,  leasehold
mortgages, spreader and consolidation agreements and other similar documents and
instruments  (individually,  a "Superior  Interest" and collectively,  "Superior
Interests"),  which may now or hereafter affect such leases or the real property
of  which  the  premises  form  a  part  and  to  all  renewals,  modifications,
consolidations, replacements, extensions, assignments, spreaders, consolidations
and refinancings  thereof and to all advances made or hereafter made thereunder.
This Article shall be self-operative  and no further instrument of subordination
shall be necessary.  In confirmation of such subordination,  Tenant shall within
ten (10) days after written  request  execute any instrument in recordable  form
that Landlord or the holder of any Superior Interest may request.  Tenant hereby
appoints  Landlord  as  Tenant's  irrevocable  attorney-in-fact  to execute  any
document of subordination  on behalf of Tenant.  The foregoing power of attorney
is a power  coupled with an interest and not  revocable  during the term of this
lease.  In the event that the  Master  Lease or any other  ground or  underlying
lease is terminated, or any mortgage foreclosed,  this lease shall not terminate
or be  terminable  by  Tenant  unless  Tenant  was  specifically  named  in  any
termination  or  foreclosure  judgment  or  final  order  for  the  purposes  of
terminating this lease or the interest of Tenant in the premises.

         B. Any holder of a Superior  Interest  may elect that this lease  shall
have priority over such Superior  Interest and, upon notification by such holder
of a Superior  Interest to Tenant,  this lease shall be deemed to have  priority
over such Superior Interest,  whether this lease is dated prior to or subsequent
to the date of such Superior Interest. In the event that any master lease or any
other ground or underlying lease is terminated as aforesaid, or if the interests
of Landlord under this lease are transferred by reason of or assigned in lieu of
foreclosure or other  proceedings  for  enforcement  of any mortgage,  or if the
holder of any  mortgage  acquires a lease in  substitution  therefor,  or if the
holder of any Superior  Interest shall otherwise succeed to Landlord's estate in
the lease or the  building,  or the rights of Landlord  under this  lease,  then
Tenant  will,  at the option to be  exercised in writing by the lessor under any
such master lease or other ground or underlying  lease,  the holder of any other
Superior Interest or such purchaser, assignee or lessee, as the case may be, (i)
attorn to it and will  perform  for its  benefit  all the terms,  covenants  and
conditions  of this lease on the  Tenant's  part to be  performed  with the same
force and effect as if said  lessor,  mortgagee or such  purchaser,  assignee or
lessee,  were the landlord  originally named in this lease, or (ii) enter into a
new lease with said lessor, mortgagee or such purchaser,  assignee or lessee, as
landlord,  for the remaining term of this lease and otherwise on the same terms,
conditions and rentals as herein provided.  The foregoing provisions shall inure
to the benefit of any such successor landlord, shall apply notwithstanding that,
as a matter  of law,  this  lease  may  terminate  upon the  termination  of any
Superior Interest,  shall be self-operative upon any such request and no further


                                       16
<PAGE>

instrument  shall be  required  to give  effect  to said  provisions;  provided,
however, that upon request of any such successor landlord, Tenant shall promptly
execute and deliver,  from time to time, any instrument in recordable  form that
any  successor  landlord  may  reasonably  request to  evidence  and confirm the
foregoing  provisions  of  this  paragraph,   in  form  and  content  reasonably
satisfactory to each such successor landlord,  acknowledging such attornment and
setting  forth the terms and  conditions of its tenancy.  Upon such  attornment,
this lease  shall  continue in full force and effect as a direct  lease  between
such successor  landlord and Tenant upon all of the then executory terms of this
lease  except  that such  successor  landlord  shall not be:  (a) liable for any
previous act or omission or  negligence of any prior  landlord  under this lease
(including,  without  limitation,  Landlord);  (b) subject to any  counterclaim,
demand,  defense,  deficiency,  credit or offset which Tenant might have against
any prior landlord under this lease (including,  without limitation,  Landlord);
(c) bound by any  modification,  amendment,  cancellation  or  surrender of this
lease or by any  prepayment  of more than one month's rent or  additional  rent,
unless such modification,  cancellation, surrender or prepayment shall have been
approved  in  writing  by the  successor  landlord;  (d)  bound by any  security
deposit,  cleaning  deposit or other prepaid charge which Tenant might have paid
in  advance  to  any  prior  landlord  under  this  lease  (including,   without
limitation,  Landlord), unless such payments have been received by the successor
landlord;  and (e)  bound by any  agreement  of any  landlord  under  the  lease
(including, without limitation,  Landlord) with respect to the completion of any
improvements  affecting the premises, the building, the land or any part thereof
or for the payment or reimbursement to Tenant of any contribution to the cost of
the completion of any such improvements.

         C. If the then current term of any master,  ground or other  underlying
lease to which  this lease is  subordinate  shall  expire  prior to the date set
forth herein for the expiration of this lease, then, unless (i) the term of such
underlying or other lease shall have been extended, which extension Landlord may
arbitrarily  decline to enter into or (ii) the holder of any  Superior  Interest
shall  elect,  in writing,  to have Tenant  attorn to it, the term of this lease
shall  expire  on the date of the  expiration  of any  master,  ground  or other
underlying lease to which this lease is subordinate,  notwithstanding  the later
termination  date herein above set forth.  If any such  master,  ground or other
underlying  lease is  renewed or if the holder of any  Superior  Interest  shall
elect,  in  writing,  to have  Tenant  attorn to it, then the term of this lease
shall expire as herein above set forth and, Tenant shall attorn to the holder of
such  Superior  Interest on the terms and  conditions  set forth in  paragraph B
above for attornment.

         D. From time to time,  Tenant,  on ten (10) days' prior written request
by Landlord,  will deliver to Landlord and the holder of any Superior Interest a
statement in writing  certifying  that this lease is  unmodified  and is in full
force and effect (or if there have been modifications,  that the same is in full
force and effect as modified  and stating  the  modifications)  and the dates to
which the rent and other charges have been paid,  stating the date of expiration
of the term hereof and whether any renewal  options exists (and if so, the terms
thereof), stating whether any defense or counterclaim to the payment of any rent
exists,  whether any allowance or work is due to Tenant from  Landlord,  stating
whether  or not the  Landlord  is in  default in  performance  of any  covenant,
agreement or condition  contained in this lease and, if so, specifying each such
default of which Tenant may have knowledge and containing such other information
as the holder of any  Superior  Interest  may  request.  If Tenant shall fail to
deliver  such a statement  within  such ten (10) day period,  Landlord is hereby
appointed  the true and  lawful  attorney-in-fact  of  Tenant,  coupled  with an
interest,  for the purpose of executing and delivering  such statement on behalf
of  Tenant.  Nothing  contained  herein  will be  deemed to  impair  any  right,
privilege or option of the holder of any Superior  Interest.  If, in  connection
with obtaining, continuing or renewing financing or refinancing for the building
and/or the land, the lender shall request reasonable modifications to this lease
as a condition to such financing or  refinancing,  Tenant will not  unreasonably
withhold,  delay or defer its consent thereto,  provided that such modifications
do not materially  and adversely  increase the  obligations of Tenant  hereunder
(except,  perhaps,  to the extent that Tenant may be required to give notices of
any  defaults by Landlord  to such lender with the  granting of such  additional
time for such curing as may be required for such lender to get possession of the
said  building  and/or land) or materially  and  adversely  affect the leasehold
interest  hereby  created  or the  rights  of Tenant  thereunder.  If any act or
omission by Landlord shall give Tenant the right, immediately or after the lapse
of time,  to  cancel or  terminate  this  lease or to claim a  partial  or total
eviction,  Tenant shall not  exercise  any such right  until:  (a) it shall have
given  written  notice of such act or omission  to each  holder of any  Superior
Interest  of  which it has  written  notice,  and (b) a  reasonable  period  for
remedying such act or omission  shall have elapsed  following such notice (which
reasonable  period  shall be  equal to the  period  to which  Landlord  would be
entitled under this lease to effect such remedy,  plus an additional thirty (30)
day period),  provided such holder or lessor shall,  with reasonable  diligence,
give Tenant  notice of its  intention  to remedy such act or omission  and shall
commence and continue to act upon such intention.


                                       17
<PAGE>

14.      CONDEMNATION

         A. In the  event  that  the  whole  of the  demised  premises  shall be
lawfully  condemned or taken in any manner for any public or quasi-public use or
purpose, this lease and the term and estate hereby granted shall forthwith cease
and terminate as of the date of vesting of title (hereinafter referred to as the
"date of taking"),  and Tenant shall have no claim against Landlord for, or make
any claim for, the value of any unexpired  term of this lease,  and the rent and
additional rent shall be apportioned as of such date.

         B. In the  event  that any  part of the  demised  premises  shall be so
condemned  or taken,  then this  lease  shall be and remain  unaffected  by such
condemnation  or taking,  except that the rent and additional  rent allocable to
the  part so taken  shall be  apportioned  as of the date of  taking,  provided,
however,  that  Tenant  may elect to cancel  this  lease in the event  more than
twenty-five  (25%)  percent of the demised  premises  should be so  condemned or
taken, provided such notice of election is given by Tenant to Landlord not later
than  thirty  (30) days after the date when title  shall vest in the  condemning
authority.  Landlord  shall  promptly give Tenant copies of any notice  received
from the  condemning  authority  as to vesting.  Upon the giving of such notice,
this lease shall  terminate  on the  thirtieth  day  following  the date of such
notice  and the  rent  and  additional  rent  shall  be  apportioned  as of such
termination date. Upon such partial taking and this lease continuing in force as
to any part of the  demised  premises,  the rent and  additional  rent  shall be
diminished by an amount  representing  the part of said rent and additional rent
properly applicable to the portion or portions of the demised premises which may
be so condemned or taken.  If as a result of the partial  taking (and this lease
continuing  in force as to the part of the demised  premises not so taken),  any
part of the  demised  premises  not  taken  is  damaged,  Landlord  agrees  with
reasonable  promptness  to commence  the work  necessary  to restore the damaged
portion to the condition  existing  immediately  prior to the taking (subject to
paragraph D below),  and  prosecute  the same with  reasonable  diligence to its
completion.  In the event  Landlord  and  Tenant  are  unable to agree as to the
amount by which the rent and  additional  rent shall be  diminished,  the matter
shall be determined by arbitration in New York City.

         C.  Nothing  herein  provided  shall  preclude  Tenant from  appearing,
claiming, proving and receiving in the condemnation proceeding,  Tenant's moving
expenses,   and  the  value  of  Tenant's  fixtures,  or  Tenant's  alterations,
installations  and  improvements  which do not become part of the  building,  or
property  of  Landlord;  or, in the case of  temporary  taking,  so long as rent
hereunder  is paid to  Landlord,  Tenant may make a claim for  rental  value and
damages to the demised  premises (which are of a nature that Tenant is obligated
hereunder to repair same) or damages to Tenant's furniture and fixtures.

         D. In the event that only a part of the  demised  premises  shall be so
taken and Tenant shall not have elected to cancel this lease as above  provided,
the entire award for a partial  taking shall be paid to Landlord,  and Landlord,
at  Landlord's  own  expense,  shall to the  extent of the net  proceeds  (after
deducting  reasonable expenses including attorneys' and appraisers' fees) of the
award  restore the  unaffected  part of the building to  substantially  the same
condition and tenability as existed prior to the taking.

         E. Until said unaffected portion is restored,  Tenant shall be entitled
to a  proportionate  abatement of rent for that portion of the premises which is
being  restored and is not usable until the  completion  of the  restoration  or
until the said  portion  of the  premises  is used by Tenant,  whichever  occurs
sooner.  Said unaffected  portion shall be restored within a reasonable time but
not more than six (6) months after the taking; provided, however, if Landlord is
delayed by strike,  lockout,  the elements,  or other causes  beyond  Landlord's
control,  the time for completion  shall be extended for a period  equivalent to
the delay.  Should Landlord fail to complete the restoration within the said six
(6) months or the time as  extended,  Tenant may elect to cancel  this lease and
the term hereby  granted  provided such notice of election is given by Tenant to
Landlord not later than thirty (30) days after the end of said six (6) months of
time or the time as extended.

15.      REQUIREMENTS OF LAW

         A.  Tenant  at its  expense  shall  comply  with all laws,  orders  and
regulations of any governmental  authority having or asserting jurisdiction over
the demised  premises,  which  shall  impose any  violation,  order or duty upon
Landlord or Tenant with respect to the premises or the use or occupancy  thereof
including, without limitation,  compliance in the demised premises with New York
City  Local Law No.  5/73,  and all  City,  State and  Federal  laws,  rules and


                                       18
<PAGE>

regulations  on the  disabled or  handicapped,  on fire safety and on  hazardous
materials.  The foregoing  shall not require  Tenant to do  structural  work but
shall require Tenant to perform work, including asbestos abatement and abatement
of any other hazardous or toxic material that may become  necessary by reason of
any Tenant installation, alteration, improvement or work.

         B. Tenant shall require every person engaged by him to clean any window
in the  premises  from the  outside,  to use the  equipment  and safety  devices
required  by  Section  202 of the Labor  Law and the  rules of any  governmental
authority having or asserting jurisdiction.

         C. Tenant at its expense shall comply with all  requirements of the New
York  Board of Fire  Underwriters,  or any  other  similar  body  affecting  the
premises  and shall not use the  premises in a manner  which shall  increase the
rate of fire  insurance of Landlord or of any other tenant,  over that in effect
prior  to this  lease.  If  Tenant's  use of the  premises  increases  the  fire
insurance rate,  Tenant shall reimburse  Landlord for all such increased  costs.
That the  premises  are being used for the purpose set forth in Article 1 hereof
shall not relieve Tenant from the foregoing duties, obligations and expenses.

16.      CERTIFICATE OF OCCUPANCY

         Tenant will at no time use or occupy the  premises in  violation of any
certificate  of  occupancy  issued  for  or  statute  governing  the  use of the
building.  The  statement  in this  lease of the  nature of the  business  to be
conducted  by  Tenant  shall not be deemed to  constitute  a  representation  or
guaranty  by Landlord  that such use is lawful or  permissible  in the  premises
under the certificate of occupancy for the building or any such statute.

17.      POSSESSION

         If Landlord  shall be unable to give  possession of the premises on the
commencement  date of the term  because of the  retention of  possession  of any
occupant  thereof,  alteration  or  construction  work, or for any other reason,
except as hereinafter  provided,  Landlord shall not be subject to any liability
for such failure. In such event, this lease shall stay in full force and effect,
without  extension of its term.  However,  the rent hereunder shall not commence
until the demised  premises are available  for occupancy by Tenant.  If delay in
possession is due to work,  changes or decorations  being made by or for Tenant,
or is otherwise caused by Tenant,  there shall be no rent abatement and the rent
shall  commence on the date  specified in this lease.  If permission is given to
Tenant  to occupy  the  demised  premises  or other  premises  prior to the date
specified as the  commencement of the term, such occupancy shall be deemed to be
pursuant to the terms of this lease,  except that the parties  shall  separately
agree as to the  obligation  of  Tenant  to pay rent  for  such  occupancy.  The
provisions of this Article are intended to  constitute an "express  provision to
the contrary" within the meaning of Section 223(a), New York Real Property Law.

18.      QUIET ENJOYMENT

         Landlord covenants that if Tenant pays the rent and additional rent and
performs  all of  Tenant's  other  obligations  under  this  lease,  Tenant  may
peaceably  and  quietly  enjoy  the  demised  premises,  subject  to the  terms,
covenants  and  conditions  of this  lease  and to the  Master  Lease  and other
Superior Interests.

19.      RIGHT OF ENTRY

         Tenant shall permit  Landlord to erect and maintain  pipes and conduits
in and through the demised premises. Landlord or its agents shall have the right
to enter or pass  through the demised  premises at all times,  by master key, by
reasonable  force or  otherwise,  to examine  the same,  to exhibit the space to
prospective  tenants,  purchasers,  investors  and  lenders,  and to  make  such
repairs,  installations,  alterations  or  additions  as to the  building or the
demised  premises as may be required by law or as Landlord may deem necessary or
desirable,  and to take into and store within and upon the demised  premises all
material  that may be used in  connection  with any such  repair,  installation,
alteration or addition work. Such entry, storage and work in connection with any
such  repair,  installation,  alteration  or addition  shall not  constitute  an
eviction  (whether  actual  or  constructive)  of  Tenant in whole or in part or
breach  of the  covenant  of  quiet  enjoyment,  shall  not be  grounds  for any
abatement of rent,  and shall not impose any  liability on Landlord to Tenant by
reason of  inconvenience  or  injury  to  Tenant's  business  or to the  demised


                                       19
<PAGE>

premises.  Landlord  shall  have  the  right  at  any  time,  without  the  same
constituting  an actual or  constructive  eviction,  and without  incurring  any
liability to Tenant,  to change the arrangement  and/or location of entrances or
passageways,  windows,  corridors,  elevators,  stairs, toilets, or other public
parts of the building, and to change the name or number by which the building is
known.

20.      VAULT SPACE

         Anything   contained   in  any  plan  or   blueprint  to  the  contrary
notwithstanding,  no vault or other space not within the building  property line
is  demised  hereunder.  Any use of such  space by Tenant  shall be deemed to be
pursuant to a license,  revocable at will by Landlord, without diminution of the
rent payable hereunder. If Tenant shall use such vault space, any fees, taxes or
charges  made by any  governmental  authority  for such  space  shall be paid by
Tenant.

21.      INDEMNITY

         Tenant shall defend,  indemnify and hold harmless Landlord, its agents,
officers, directors,  shareholders,  partners, principals, employees and tenants
in common  (whether  disclosed or  undisclosed)  (hereinafter  collectively  the
"Landlord  Parties")  from and against any and all claims,  demands,  liability,
losses,  damages,  costs and expenses (including  reasonable attorneys' fees and
disbursements)  arising from or in connection with: (a) any breach or default by
Tenant in the full and prompt payment and  performance  of Tenant's  obligations
hereunder; (b) the use or occupancy or manner of use or occupancy of the demised
premises by Tenant or any person claiming under or through Tenant;  (c) any act,
omission  or  negligence  of  Tenant  or  any of its  subtenants,  assignees  or
licensees or its or their partners,  principals,  directors,  officers,  agents,
invitees,  employees,  guests,  customers or contractors during the term hereof;
(d) any accident,  injury or damage  occurring in or about the demised  premises
during the term hereof;  (e) the  performance by Tenant of any alteration in the
demised premises including,  without limitation,  Tenant's failure to obtain any
permit,  authorization  or license  or  failure  to pay in full any  contractor,
subcontractor  or  materialmen  performing  work  on  such  alteration;  and (f)
mechanics lien filed,  claimed or asserted in connection  with any alteration or
any other work, labor, services or materials done for or supplied to, or claimed
to have  been  done for or  supplied  to,  or  claimed  to have been done for or
supplied  to Tenant,  or any person  claiming  through or under  Tenant.  If any
claim, action or proceeding is brought against any of the Landlord Parties for a
matter  covered by this  indemnity,  Tenant,  upon notice  from the  indemnified
person or entity,  shall defend such claim,  action or  proceeding  with counsel
reasonably  satisfactory to Landlord and the indemnified  person or entity.  The
provisions of this Article shall survive the expiration or sooner termination of
this lease.

22.      LANDLORD'S LIABILITY

         This lease and the  obligations of Tenant  hereunder shall in no way be
affected  because  Landlord  is unable to fulfill any of its  obligations  or to
supply any service (e.g.,  heat,  electricity,  air conditioning (if Landlord is
obligated hereunder to furnish the same), elevators, water), by reason of strike
or other cause not within  Landlord's  control.  Landlord  shall have the right,
without  incurring  any  liability  to Tenant,  to stop any  service  because of
accident or emergency, or for repairs, alterations or improvements, necessary or
desirable in the  judgment of Landlord to the building or the demised  premises,
until such  repairs,  alterations  or  improvements  shall have been  completed.
Landlord shall not be liable to Tenant or anyone else, for any loss or damage to
person, property or business, unless due to the negligence of Landlord nor shall
Landlord  be  liable  for any  latent  defect  in the  demised  premises  or the
building.  Landlord or its agents shall not be liable for any damage to property
of Tenant or of others  entrusted  to employees of the building nor for the loss
of or damage to any  property of Tenant by theft or  otherwise.  Landlord or its
agents  shall not be liable  for any  injury or damage to  persons  or  property
resulting from fire, explosion,  falling ceilings,  falling plaster, steam, gas,
electricity, water, rain or snow or leaks from any part of said building or from
the pipes,  appliances or plumbing works or from the roof,  street or subsurface
or from any  other  place or by  dampness  or by any other  cause or  whatsoever
nature,  including  but not limited to the making or repairs  and  improvements,
unless caused by or due to the negligence of Landlord,  its agents,  servants or
employees; nor shall Landlord or its agents be liable for any such damage caused
by other  tenants  or  persons  in said  building  or  caused by  operations  in
construction of any private,  public or quasi public work; nor shall Landlord be
liable for any latent defect in the demised premises or in the building.  Tenant
shall give  immediate  notice to  Landlord in case of fire or  accidents  in the
demised  premises or in the building or of defects therein or in any fixtures or
equipment. TENANT AGREES TO LOOK SOLELY TO LANDLORD'S ESTATE AND INTEREST IN THE


                                       20
<PAGE>

LAND AND BUILDING, OR THE LEASE OF THE BUILDING OR OF THE LAND AND BUILDING, AND
THE DEMISED PREMISES,  FOR THE SATISFACTION OF ANY RIGHT OR REMEDY OF TENANT FOR
THE COLLECTION OF A JUDGMENT (OR OTHER JUDICIAL  PROCESS)  REQUIRING THE PAYMENT
OF MONEY BY LANDLORD,  IN THE EVENT OF ANY  LIABILITY BY LANDLORD,  AND NO OTHER
PROPERTY  OR ASSETS OF  LANDLORD  SHALL BE SUBJECT TO LEVY,  EXECUTION  OR OTHER
ENFORCEMENT  PROCEDURE FOR THE  SATISFACTION OF TENANT'S  REMEDIES UNDER OR WITH
RESPECT TO THIS LEASE,  THE  RELATIONSHIP OF LANDLORD AND TENANT  HEREUNDER,  OR
TENANT'S  USE AND  OCCUPANCY OF THE DEMISED  PREMISES OR ANY OTHER  LIABILITY OF
LANDLORD TO TENANT (EXCEPT FOR NEGLIGENCE, IN WHICH CASE TENANT MAY ALSO LOOK TO
THE  PROCEEDS  OF ANY  INSURANCE  CARRIED  BY  LANDLORD  AND NOT  PAYABLE  UNDER
INSURANCE TO BE MAINTAINED BY TENANT PURSUANT TO THE TERMS HEREOF).  IN NO EVENT
SHALL TENANT BE ENTITLED TO MAKE, NOR SHALL TENANT MAKE,  ANY CLAIM,  AND TENANT
HEREBY  WAIVES ANY CLAIM,  FOR MONEY  DAMAGES  (NOR SHALL TENANT CLAIM ANY MONEY
DAMAGES BY WAY OF  SET-OFF,  COUNTERCLAIM  OR  DEFENSE)  BASED UPON ANY CLAIM OR
ASSERTION BY TENANT THAT  LANDLORD  HAS  UNREASONABLY  WITHHELD OR  UNREASONABLY
DELAYED  ITS  CONSENT OR  APPROVAL TO A PROPOSED  ASSIGNMENT  OR  SUBLETTING  AS
PROVIDED  FOR IN  THIS  LEASE.  TENANT'S  SOLE  REMEDY  SHALL  BE AN  ACTION  OR
PROCEEDING  TO  ENFORCE  ANY  SUCH  PROVISION,   OR  FOR  SPECIFIC  PERFORMANCE,
INJUNCTION OR DECLARATORY JUDGMENT.

23.      CONDITION OF PREMISES

         Tenant  expressly  acknowledges  that  it  has  inspected  the  demised
premises and is fully  familiar  with the  physical  condition  thereof.  Tenant
agrees  to accept  the  demised  premises  in their  "as is"  condition.  Tenant
acknowledges  that  Landlord  (i) has  made  no  representation  respecting  the
physical  condition  of  the  demised  premises,   including  the  existence  or
non-existence  of  any  hazardous  substances,  any  defects  or  other  matters
concerning their physical  condition and (ii) shall have no obligation to do any
work in and to the demised premises in order to make them suitable and ready for
occupancy and use by Tenant.

24.      SERVICES

         Landlord shall provide no services, except as specifically set forth in
this lease.  Tenant  acknowledges  that it has been  advised  that the  cleaning
contractor  for the  building  may be a  subdivision  or  affiliate of Landlord.
Tenant agrees to employ said  contractor,  or such other  contractor as Landlord
may from time to time designate, for any waxing, polishing and other maintenance
work  in or to  the  demised  premises  and  Tenant's  furniture,  fixtures  and
equipment, provided that the prices charged by said contractor are comparable to
the prices charged by other contractors for the same work. Tenant agrees that it
shall  not  employ  any  other  cleaning  and  maintenance  contractor,  nor any
individual,  firm or  organization  for such purpose  without  Landlord's  prior
written consent. If Landlord and Tenant cannot agree on whether the prices being
charged by the  contractor  designated  by the Landlord are  comparable to those
charged by other  contractors,  Landlord  and Tenant  shall each obtain two bona
fide bids for such work from reputable contractors,  and the average of the four
bids thus obtained  shall be the standard of  comparison.  Landlord shall not be
obligated to provide cleaning services in excess of the specifications set forth
in Exhibit B annexed hereto and made part hereof.

25.      JURY WAIVER, DAMAGES

         THE PARTIES HERETO HEREBY WAIVE TO THE FULLEST EXTENT PERMITTED BY LAW,
TRIAL BY JURY IN ANY ACTION,  PROCEEDING  OR  COUNTERCLAIM  BROUGHT BY EITHER OF
SUCH PARTIES AGAINST THE OTHER WITH RESPECT TO ANY MATTER WHATSOEVER ARISING OUT
OF OR IN ANY WAY CONNECTED  WITH THIS LEASE,  THE  RELATIONSHIP  OF LANDLORD AND
TENANT,  TENANT'S  USE  OR  OCCUPANCY  OF  THE  DEMISED  PREMISES,  OR  FOR  THE
ENFORCEMENT OF ANY REMEDY WHETHER PURSUANT TO STATUTE,  IN CONTRACT OR TORT, AND
IRRESPECTIVE  OF THE  NATURE  OR  BASIS  OF THE  CLAIM  INCLUDING  BREACH  OF AN
OBLIGATION  TO MAKE  ANY  PAYMENT,  FRAUD,  DECEIT,  MISREPRESENTATION  OF FACT,
FAILURE TO PERFORM ANY ACT, NEGLIGENCE, MISCONDUCT OF ANY NATURE OR VIOLATION OF


                                       21
<PAGE>

STATUTE, RULE, REGULATION OR ORDINANCE. IF LANDLORD COMMENCES AGAINST TENANT ANY
SUMMARY PROCEEDING OR OTHER ACTION TO RECOVER POSSESSION OF THE DEMISED PREMISES
OR TO RECOVER ANY RENT,  TENANT SHALL NOT INTERPOSE ANY COUNTERCLAIM OF WHATEVER
NATURE OR  DESCRIPTION  IN ANY SUCH  PROCEEDING  OR ACTION.  NO DAMAGES SHALL BE
AWARDED  AND  TENANT  HEREBY  WAIVES  ANY CLAIM  FOR  DAMAGES  (WHETHER  ACTUAL,
COMPENSATORY,  CONSEQUENTIAL,  SPECIAL OR PUNITIVE) IN ANY ACTION OR  PROCEEDING
(WHETHER  JUDICIAL  OR  AN  ARBITRATION)  RELATING  TO  LANDLORD'S  WITHHOLDING,
DELAYING OR CONDITIONING  ANY CONSENT OR APPROVAL OR THE  REASONABLENESS  OF ANY
SUCH WITHHOLDING, DELAY OR CONDITION.

26.      NO WAIVER, ETC.

         No act or omission of Landlord or its agents shall constitute an actual
or  constructive  partial or total eviction or give rise to a right of Tenant to
terminate  this Lease or receive an abatement of any portion of its rent,  or to
be relieved of any other obligation  hereunder or to be compensated for any loss
or injury  suffered by it, except as otherwise  explicitly set forth herein.  In
the event that any  payment  herein  provided  for by Tenant to  Landlord  shall
become  overdue  for a period  in excess of ten (10)  days,  then at  Landlord's
option a "late charge"  shall become due and payable to Landlord,  as additional
rent, from the date it was due until payment is made at the following rates: for
individual and  partnership  Tenants,  said late charge shall be computed at the
maximum legal rate of interest; for corporate or governmental entity Tenants the
late charge  shall be computed at two (2%)  percent per month unless there is an
applicable  maximum  legal rate of interest  which then shall be used. No act or
omission of Landlord or its agents shall constitute acceptance of a surrender of
the demised premises,  except a writing signed by Landlord. The delivery of keys
to Landlord or its agents shall not  constitute a termination of this lease or a
surrender of the demised premises.  Acceptance by Landlord of less than the rent
herein provided shall at Landlord's option be deemed on account of earliest rent
remaining  unpaid.  No endorsement on any check,  or letter  accompanying  rent,
shall be deemed an accord and satisfaction, and such check may be cashed without
prejudice  to  Landlord.  No  waiver of any  provision  of this  lease  shall be
effective,  unless  such  waiver be in writing  signed by  Landlord.  This lease
contains the entire agreement between the parties,  and no modification  thereof
shall be binding  unless in writing  and signed by the party  concerned.  Tenant
shall  comply  with the rules and  regulations  set forth in the Rider  attached
hereto  and made a part  hereof,  and any  reasonable  modifications  thereof or
additions  thereto.  Landlord shall not be liable to Tenant for the violation of
such rules and  regulations by any other tenant.  Failure of Landlord to enforce
any provision of this lease,  or any rule or regulation,  shall not be construed
as the waiver of any subsequent  violation of a provision of this lease,  or any
rule or  regulation.  This lease shall not be affected by nor shall  Landlord in
any way be liable for the  closing,  darkening  or bricking up of windows in the
demised premises, for any reason, including as the result of construction on any
property of which the demised premises are not a part or by Landlord's own acts.

27.      OCCUPANCY AND USE BY TENANT

         A. Tenant  acknowledges  that its  continued  occupancy  of the demised
premises,  and the  regular  conduct  of its  business  therein,  are of  utmost
importance  to the Landlord in the renewal of other leases in the  building,  in
the renting of vacant space in the building,  in the  providing of  electricity,
air conditioning,  steam and other services to the tenants in the building,  and
in the  maintenance of the character and quality of the tenants in the building.
Tenant  therefore  covenants  and agrees that it will occupy the entire  demised
premises, and will conduct its business therein in the regular and usual manner,
throughout  the  term  of this  lease.  Tenant  acknowledges  that  Landlord  is
executing this lease in reliance upon these covenants,  and that these covenants
are a material  element of  consideration  inducing the Landlord to execute this
lease. Tenant further agrees that if it vacates the demised premises or fails to
so conduct  its  business  therein,  at any time  during the term of this lease,
without the prior written consent of the Landlord,  then all rent and additional
rent reserved in this lease from the date of such breach to the expiration  date
of this lease shall become immediately due and payable to Landlord.

         B. The  parties  recognize  and  agree  that  the  damage  to  Landlord
resulting  from any  breach  of the  covenants  in  paragraph  A hereof  will be
extremely substantial, will be far greater than the rent payable for the balance
of the term of this lease, and will be impossible of accurate  measurement.  The
parties  therefore  agree that in the event of a breach or threatened  breach of
the said covenants,  in addition to all of Landlord's other rights and remedies,
at law or in equity or otherwise, Landlord shall have the right of injunction to


                                       22
<PAGE>

preserve  Tenant's  occupancy and use. The words "become  vacant or deserted" as
used elsewhere in this lease shall include  Tenant's failure to occupy or use as
by this Article required.

         C. If Tenant breaches either of the covenants in paragraph A above, and
this lease shall be  terminated  because of such  default,  then, in addition to
Landlord's  right of reentry,  restoration,  preparation  for and rerental,  and
anything elsewhere in this lease to the contrary notwithstanding, Landlord shall
retain its right to judgement on and collection of Tenant's aforesaid obligation
to make a single payment to Landlord of a sum equal to the total of all rent and
additional  rent  reserved for the remainder of the original term of this lease,
subject to future credit or repayment to Tenant in the event of any rerenting of
the demised premises by Landlord, after first deducting from rerental income all
expenses  incurred by Landlord in reducing to judgment or  otherwise  collecting
Tenant's  aforesaid  obligation,  and  in  obtaining  possession  of  restoring,
preparing for and re-letting the demised  premises.  In no event shall Tenant be
entitled to a credit or  repayment  for rerental  income which  exceeds the sums
payable by Tenant  hereunder or which covers a period after the original term of
this lease.

                  D. Tenant shall not obstruct or permit the  obstruction of the
light, halls,  areas, roof, stairway or entrances to the building,  and will not
affix,  erect  or  inscribe  any  signs,   projections,   awnings,   signals  or
advertisements  of any kind to any part of the demised  premises  including  the
inside or outside of the windows or doors thereof and will not paint the outside
of the doors thereof or the inside or outside of the windows  thereof unless and
until the style,  size,  color,  construction  and  location  thereof  have been
approved in writing by Landlord.  Landlord shall have the right to withdraw such
approval  at  any  time  and  to  require  Tenant  to  remove  any  such  signs,
projections,  awnings,  signals or  advertisements.  Landlord  also  reserves to
itself the sole right to designate the person,  firm or corporation  which shall
do the work of lettering  and erecting of any and all signs to be affixed to the
demised premises or the building.  In the event that said work is done by Tenant
through any person, firm or corporation, other than that designated by Landlord,
Landlord is hereby given the right to remove said signs  without being liable to
Tenant  by  reason  thereof  and to  charge  the cost of so doing to  Tenant  as
additional  rent  payable on the first day of the next  following  month,  or at
Landlord's option, on the first day of any subsequent month.

28.      NOTICES

         Any bill,  notice or demand from  Landlord to Tenant,  may be delivered
personally at the demised premises or sent by registered or certified mail. Such
bill,  notice  or  demand  shall be  deemed  to have  been  given at the time of
delivery or mailing.  Any notice from Tenant to Landlord  must be in writing and
sent by registered or certified  mail to the last address  designated in writing
by Landlord and shall be deemed to have been given when received.

29.      WATER

         Tenant  shall pay the amount of  Landlord's  cost for all water used by
Tenant for any purpose other than ordinary  lavatory uses, and any sewer rent or
tax based thereon.  Landlord may install a water meter to measure Tenant's water
consumption for all purposes and Tenant agrees to pay for the  installation  and
maintenance  thereof and for water consumed as shown on said meter.  If water is
made available to Tenant in the building or the demised premises through a meter
which also supplies other premises, or without a meter, then Tenant shall pay to
Landlord a reasonable charge per month for water.

30.      SPRINKLER SYSTEM

         If there shall be a "sprinkler  system" in the demised premises for any
period during this lease,  Tenant shall pay a reasonable  charge per month,  for
sprinkler supervisory service. If such sprinkler system is damaged by any act or
omission of Tenant or its agents, employees, licensees or visitors, Tenant shall
restore the system to good working condition at its own expense. If the New York
Board of Fire Underwriters,  the New York Fire Insurance Exchange, the Insurance
Services Office or any governmental  authority  requires the installation or any
alteration to a sprinkler  system by reason of Tenant's  occupancy or use of the
demised  premises,  including  any  alteration  necessary  to  obtain  the  full
allowance for a sprinkler system in the fire insurance rate of Landlord,  or for
any other reason,  Tenant shall make such  installation or alteration  promptly,
and at its own expense.


                                       23
<PAGE>

31. HEAT, AIR-CONDITIONING, ELEVATOR, ETC.

         A. Landlord  shall provide  elevator  service during all usual business
hours  including  Saturdays  until 1 P.M.,  except on Sundays,  State  holidays,
Federal  holidays,  or  Building  Service  Employees  Union  Contract  holidays;
provided,  however,  at least one (1)  passenger  or freight  elevator  shall be
available  on a call  basis at all times.  Landlord  shall  furnish  heat to the
demised  premises  during the same hours on the same days in the cold  season in
each  year.  Landlord  shall  cause the  demised  premises  to be kept  clean in
accordance  with the  cleaning  specifications  set  forth on  Exhibit B annexed
hereto  and made  part  hereof,  provided  they  are  kept in  order by  Tenant.
Landlord,  its cleaning  contractor and their employees  shall have  after-hours
access to the demised premises and the use of Tenant's light, power and water in
the demised  premises as may be reasonably  required for the purpose of cleaning
the demised premises. Landlord may remove Tenant's extraordinary refuse from the
building and Tenant shall pay the cost thereof. If the elevators in the building
are manually operated,  Landlord may convert to automatic elevators at any time,
without in any way affecting Tenant's obligations hereunder.

         B. During the term of this lease,  Tenant may use any  air-conditioning
equipment located in the demised  premises.  Landlord shall at Tenant's expense,
inspect,  maintain, repair and replace as necessary any such equipment and shall
bill Tenant for each such repair and replacement  work performed by or on behalf
of Landlord at rates that are competitive in the market and Tenant shall pay the
same upon demand as additional rent  hereunder.  All such equipment is and shall
remain  the  property  of  Landlord.  Tenant  shall  not  abuse  or use any such
equipment,  except in accordance with the  instructions  that may accompany such
equipment and the design and performance  specifications therefor.  Tenant shall
reimburse Landlord upon demand for any damage to such equipment caused by Tenant
or any invitee of Tenant and for any  replacement  equipment  made  necessary by
reason of Tenant's breach of the covenant  contained in the preceding  sentence.
This obligation shall survive the expiration or earlier  termination of the term
hereof.   Notwithstanding  the  preceding  provisions  of  this  paragraph,   if
air-conditioning  is  provided  to the  demised  premises  by means of a central
system or  package  or other  units that also  provide  air-conditioning  to any
portion  of the  building  other  than  the  demised  premises,  Landlord  shall
maintain,  repair and replace the same as  hereinabove  provided but the charges
therefor  shall be prorated  among all persons  who are the  recipients  of such
service  based  upon the  ratio of  rentable  square  feet  leased  to each such
recipient of service and the  aggregate  rentable  square feet  serviced by such
equipment.  For the purposes of this  paragraph,  rentable  square feet shall be
determined  pursuant to standards then being applied  throughout the building by
Landlord   for  new   leases.   In  any  case  where   Landlord   is   providing
air-conditioning  or if Landlord is providing  chilled water or condensor  water
for  air-conditioning  units serving only the demised  premises,  Landlord shall
supply such  service  between May 15, and October 15, each year  throughout  the
term and Tenant shall reimburse  Landlord,  in accordance with Article 3 of this
lease, for electricity consumed by the equipment.

         C.  In  no  event  shall   Landlord   be  required  to  furnish   heat,
air-conditioning  or  ventilation  during hours other than those as set forth in
paragraphs A or B above, as applicable;  provided,  however, that Landlord shall
provide  after-hours  air-conditioning or after-hours heating at Landlord's then
existing schedule of rates for overtime air-conditioning and after-hours heating
for tenants in the Building, provided that Tenant shall give notice to Landlord,
requesting such after-hours  air-conditioning or heating,  prior to 3:00 p.m. in
the case of after hours service on weekdays and prior to 1:00 p.m. on Fridays in
the case of after-hours service on weekends.

         D.  Tenant  shall be  permitted  access to the  demised  premises  on a
twenty-four  hour per day,  seven  day a week  basis,  subject  to  emergencies,
requirements of law and the provisions of this lease.

32.      SECURITY DEPOSIT

         A. Tenant has deposited  with Landlord the sum of $7,200.00 as security
for the  performance by Tenant of the terms of this lease.  Landlord may use any
part of the security to satisfy any default of Tenant and any  expenses  arising
from such default,  including but not limited to any damages or rent  deficiency
before or after re-entry by Landlord.  Tenant shall,  upon demand,  deposit with
Landlord  the full amount so used,  in order that  Landlord  shall have the full
security  deposit on hand at all times during the term of this lease.  If Tenant
shall comply fully with the terms of this lease,  the security shall be returned
to Tenant after the date fixed as the end of this lease.  In the event of a sale
or Lease of the building containing the demised premises,  Landlord may transfer
the  security to the  purchaser  or tenant,  and  Landlord  shall  thereupon  be
released from all liability for the return of the security. This provision shall


                                       24
<PAGE>

apply to every transfer or assignment of the security to a new Landlord.  Tenant
shall no legal power to assign or encumber the security herein described.

         B.  Landlord  may,  in its sole  discretion,  hold such  security in an
interest-bearing  savings account, in which case Tenant shall be entitled to the
interest earned thereon annually, less the maximum administrative fee allowed by
law to which Landlord shall be entitled under law.

         C. It is agreed that in the event Tenant  defaults in respect of any of
the terms, provisions and conditions of this lease,  including,  but not limited
to, the payment of fixed  annual rent and  additional  rent,  Landlord  may use,
apply or retain the whole or any part of the security so deposited to the extent
required  for the payment of any fixed  annual rent and  additional  rent or any
other sum as to which  Tenant is in  default or for any sum which  Landlord  may
expend or may be required to expend by reason of Tenant's  default in respect of
any of the terms,  covenants and  conditions of this lease,  including,  but not
limited to, any damages or deficiency in the reletting of the demised  premises,
whether such damages or deficiency  accrued before or after summary  proceedings
or other  re-entry  by  Landlord.  In the  event  that  Tenant  shall  fully and
faithfully comply with all of the terms, provisions, covenants and conditions of
this lease,  the  security  deposit  shall be returned to Tenant  after the date
fixed as the end of the Lease and after  delivery  of entire  possession  of the
demised premises to Landlord in the condition required  hereunder.  In the event
of a sale of the land and building or leasing of the  building,  Landlord  shall
have the right to transfer  the  security  to the vendee or lessee and  Landlord
shall  thereupon be released by Tenant from all liability for the return of such
security;  and Tenant  agrees to look  solely to the new owner for the return of
said security,  and it is agreed that the provisions hereof shall apply to every
transfer  or  assignment  made of the  security to a new owner.  Tenant  further
covenants  that it shall not assign or encumber or attempt to assign or encumber
the monies or the letter to credit deposited herein as security and that neither
Landlord nor its  successors or assigns  shall be bound be any such  assignment,
encumbrance,  attempted  assignment  or  attempted  encumbrance.  In  the  event
Landlord applies or retains any portion or all of the security deposited, Tenant
shall  forthwith  restore the amount so applied or retained so that at all times
the amount  deposited  shall be the amount  herein  above  then  required  to be
maintained as the security deposit, exclusive of accrued interest.

33.      RENT CONTROL

         In the event  the  fixed  annual  rent or  additional  rent or any part
thereof  provided to be paid by Tenant under the provisions of this lease during
the demised term shall become  uncollectible  or shall be reduced or required to
be reduced or  refunded  by virtue of any  Federal,  State,  County or City law,
order or regulation, or by any direction of a public officer or body pursuant to
law, or the orders,  rules,  codes or regulations of any  organization or entity
formed  pursuant  to law,  whether  such  organization  or  entity  be public or
private,  then Landlord, at its option, may at anytime thereafter terminate this
lease,  by not less than thirty (30) days' written  notice to Tenant,  on a date
set forth in said  notice,  in which event this lease and the term hereof  shall
terminate  and come to an end on the date  fixed in said  notice  as if the said
date were the date  originally  fixed herein for the  termination of the demised
term.  Landlord  shall not have the right so to  terminate  this lease if Tenant
within such period of thirty (30) days shall in writing  lawfully agree that the
rentals  herein  reserved are a  reasonable  rental and agree to continue to pay
said rentals,  and if such agreement by Tenant shall then be legally enforceable
by Landlord.

34.      SHORING

         Tenant shall permit any person authorized to make an excavation on land
adjacent to the building  containing the demised  premises to do any work within
the demised premises  necessary to preserve the wall of the building from injury
or  damage,  and Tenant  shall have no claim  against  Landlord  for  damages or
abatement of rent by reason thereof.


                                       25
<PAGE>

35.      EFFECT OF CONVEYANCE, ETC.

         If  the  building  containing  the  demised  premises  shall  be  sold,
transferred or leased, or the lease thereof  transferred or sold, Landlord shall
be  relieved  of all  future  obligations  and  liabilities  hereunder  and  the
purchaser,  transferee or tenant of the building shall be deemed to have assumed
and  agreed  to  perform  all  such  obligations  and  liabilities  of  Landlord
hereunder.  In the event of such sale, transfer or lease, Landlord shall also be
relieved of all existing  obligations and liabilities  hereunder,  provided that
the  purchaser,  transferee  or tenant of the  building  assumes in writing such
obligations and liabilities.

36.      RIGHTS OF SUCCESSORS AND ASSIGNS

         This lease shall bind and inure to the benefit of the heirs, executors,
administrators,  successors,  and,  except as  otherwise  provided  herein,  the
assigns of the parties hereto.  If any provision of any Article of this lease or
the application thereof to any person or circumstances  shall, to any extent, be
invalid or unenforceable,  the remainder of that Article,  or the application of
such  provision to persons or  circumstances  other than those as to which it is
held invalid or unenforceable, shall not be affected thereby, and each provision
of said  Article and of this lease shall be valid and be enforced to the fullest
extent permitted by law.

37.      CAPTIONS

         The captions  herein are inserted only for  convenience,  and are in no
way to be construed  as a part of this lease or as a limitation  of the scope of
any provision of this lease.

38.      LEASE SUBMISSION

         Landlord and Tenant agree that this lease is submitted to Tenant on the
understanding  that it shall  not be  considered  an offer  and  shall  not bind
Landlord in any way unless and until (i) Tenant has duly  executed and delivered
duplicate  originals  thereof to Landlord  and (ii)  Landlord  has  executed and
delivered one of said originals to Tenant.

39.      ELEVATORS AND LOADING

         A. There shall be no major loading or unloading in the building between
7:30  a.m.  and  6:00  p.m.  or on  any  Saturday,  Sunday  or  holiday.  Tenant
acknowledges  it has been  advised  that the  freight  elevators  servicing  the
building can be used from 7:30 a.m. to 4:45 p.m. on business  days only for less
than truck load deliveries which will not unreasonably interfere with use of the
freight  elevator  by or on behalf of  Landlord  and the  other  tenants  of the
building.

         B.  It is the  intention  of  Landlord  to  maintain  in the  building,
operatorless automatic control elevators.  However, Landlord may, at its option,
maintain in the building  either  manually  operated  elevators or  operatorless
automatic  control  elevators or part one and part the other, and Landlord shall
have the right from time to time  during  said term,  to change,  in whole or in
part,  from one to the other  without  notice to Tenant  and  without in any way
constituting  an  eviction  of Tenant or  affecting  the  obligations  of Tenant
hereunder or incurring any liability to Tenant hereunder.

40.      BROKERAGE

         Tenant represents and warrants that it neither consulted nor negotiated
with any broker or finder with regard to the demised premises other than Cushman
& Wakefield,  Inc. and Manhattan  Office Space (Jeff Zegarac).  Tenant agrees to
indemnify,  defend and save  Landlord  harmless  from and against any claims for
fees or  commissions  from  anyone  other than  Cushman &  Wakefield,  Inc.  and
Manhattan  Office Space (Jeff  Zegarac) with whom Tenant has dealt in connection
with the demised  premises or this lease.  Landlord agrees to pay any commission
or fee owing to the aforesaid  Cushman & Wakefield,  Inc. and  Manhattan  Office
Space (Jeff Zegarac) pursuant to separate  agreements with them. Nothing in this
Article 40 shall be construed to be a third party beneficiary contract.


                                       26
<PAGE>

41.      ARBITRATION

         In each case  specified  in this lease in which  resort to  arbitration
shall be required,  such arbitration (unless otherwise  specifically provided in
other  Sections of this Lease)  shall be in  Manhattan  in  accordance  with the
Commercial  Arbitration  Rules of the American  Arbitration  Association and the
provisions  of  this  lease,  and  judgment  upon  the  award  rendered  by  the
arbitrators may be entered in any court having jurisdiction thereof.

42.      INSURANCE

         The following requirements (collectively, the "Insurance Requirements")
shall be complied with by Tenant at all times during the term hereof:

         A. At all times  during the term  hereof,  Tenant  shall  maintain,  at
Tenant's expense, the following insurance coverage:

                  (i) all risk  property  insurance,  including  theft  and,  if
applicable,  boiler and machinery coverage, written at replacement cost value in
an adequate  amount to avoid  coinsurance  and a  replacement  cost  endorsement
insuring  Tenant's  trade  fixtures,  furnishings,  equipment  and all  items of
personal  property of Tenant and  including  property of Tenant's  customers  or
clients, as the case may be, located in the demised premises;

                  (ii) broad form commercial general liability insurance written
on a per  occurrence  basis  with  a per  occurrence  limit  of  not  less  than
$2,000,000 and with other limits reasonably satisfactory to Landlord;

                  (iii) business  interruption  insurance  covering risk of loss
due to the  occurrence  of any of the  hazards  covered by the  insurance  to be
maintained by Tenant  described in paragraph A(i) with coverage in a face amount
of not less than the aggregate  amount,  for a period of 12 months following the
insured-against  peril,  of 100% of all fixed annual rent and additional rent to
be paid by Tenant under this Lease;

                  (iv) worker's compensation  insurance and employer's liability
coverage  in  statutory  limits,  and New York  State  disability  insurance  as
required by law, covering all employees; and

                  (v) such other  coverage as Landlord  may  reasonably  require
with respect to the demised  premises,  its use and occupancy and the conduct or
operation of business therein.

                  Landlord may, from time to time, but not more  frequently than
once every year, adjust the minimum limits set forth above.

         B. All insurance policies to be maintained as set forth above (i) shall
be issued by companies of recognized responsibility, licensed and admitted to do
business  in the State of New  York,  reasonably  acceptable  to  Landlord,  and
maintaining    a   rating   of   A-/XII   or   better   in   Best's    Insurance
Reports-Property-Casualty  (or  an  equivalent  rating  in any  successor  index
adopted by Best's or its  successor),  (ii) shall  provide  that they may not be
canceled or modified unless Landlord and all additional insureds and loss payees
thereunder  are given at least  thirty  (30) days prior  written  notice of such
cancellation  or  modification,   (iii)  shall  name,  as  additional  insureds,
Landlord,  the  managing  agent of the  building  and any other person or entity
whose name and  address  shall have been  furnished  to Tenant and (iv) shall be
primary and  non-contributory  in all respects.  All policies providing fire and
extended coverage property  insurance  coverage pursuant to paragraph A(i) shall
name Landlord as loss payee with respect to improvements  and  alterations,  and
shall name Tenant as loss payee with respect to Tenant's property.

         C. Prior to the  commencement  date of the term  hereof,  Tenant  shall
deliver  to  Landlord  certificates  of  insurance  for the  insurance  coverage
required by  paragraph A and, if required by  Landlord,  copies of the  policies
therefore,  in each  case in  form  and  providing  for  deductibles  reasonably
satisfactory  to  Landlord.  Tenant  shall  procure and pay for renewals of such
insurance  from time to time before the  expiration  thereof,  and Tenant  shall
deliver to Landlord certificates of renewal at least thirty (30) days before the
expiration  of any existing  policy.  If Tenant fails to procure or maintain any
insurance  required by this Lease and to pay all premiums and charges  therefor,
Landlord  may (but shall not be  obligated  to) pay the same,  and Tenant  shall
reimburse Landlord, within twenty (20) days after demand, for all such sums paid


                                       27
<PAGE>

by Landlord.  Any such payment  shall not cure or waive any default by Tenant in
the performance of its obligations  hereunder,  nor shall the foregoing right of
Landlord to make such payment in any way limit,  reduce,  diminish or impair the
rights of Landlord  under the terms of this Lease or at law or in equity arising
as a result of any such default.

         D. Tenant shall not carry separate or additional insurance,  concurrent
in form or  contributing  in the event of any loss or damage with any  insurance
required to be obtained by Tenant under this Lease  unless the parties  required
by  paragraph  B above  to be  named  as  additional  insureds  or  loss  payees
thereunder are so named.  Tenant may carry any insurance coverage required of it
hereunder  pursuant to blanket  policies of  insurance  so long as the  coverage
afforded Landlord and the other additional  insureds or loss payees  thereunder,
as the case may be, shall not be less than the  coverage  that would be provided
by direct policies.

         E. Tenant agrees to include,  if  obtainable at no additional  cost, in
its fire insurance  policy or policies on its furniture,  furnishings,  fixtures
and other  property  removable  by Tenant under the  provisions  of its lease of
space in the  building  appropriate  clauses  pursuant  to which  the  insurance
company or companies (i) waive the right of subrogation  against Landlord and/or
any tenant of space in the building  with respect to losses  payable  under such
policy or policies  and/or (ii) agree that such policy or policies  shall not be
invalidated should the insured waive in writing prior to a loss any or all right
of recovery against any party for losses covered by such policy or policies. But
should any additional premium be exacted for any such clause or clauses,  Tenant
shall be released from the  obligation  hereby  imposed  unless  Landlord or the
other tenants shall agree to pay such additional premium.

43. CHANGE OF LOCATION

         A. Tenant  covenants and agrees that  Landlord  shall have the absolute
and  unqualified  right,  upon  notice to Tenant,  to  designate  as the demised
premises  that  part of any  other  floor  in the  building  that  approximately
corresponds to the premises demised hereunder;  provided, however, that (a) such
substituted   space   (hereinafter   called   "Substituted   Space")   shall  be
substantially  the  equivalent in the  appearance  of the demised  premises upon
completion of Landlord's  work, if any, to make the  Substitute  Space ready for
Tenant's  occupancy and (b) Landlord shall move Tenant to the Substituted  Space
at Landlord's  cost.  Such notice shall  specify and  designate the  Substituted
Space so substituted for the demised premises. Notwithstanding such substitution
of space,  this lease and all the terms,  provisions,  covenants and  conditions
contained  in this lease  shall  remain and  continue  in full force and effect,
except that the demised  premises shall be and be deemed to be such  substituted
space,  with  the  same  force  and  effect  as if the  Substituted  Space  were
originally specified in this lease as the premises demised hereunder.

         B. In the event of the substitution of space as provided in paragraph A
above,  Tenant, upon three (3) months' prior written notice given by Landlord to
Tenant,  shall move to the  Substituted  Space at Landlord's  expense,  and upon
failure of Tenant to so move to the Substituted Space, Landlord may, as Tenant's
agent, remove Tenant from the demised premises to the Substituted Space. Failure
of Tenant to move to the  Substituted  Space  pursuant to this Article  shall be
deemed a substantial breach of this lease.

         C. Following such  substitution  of space (pursuant to this Article) if
any, Landlord and Tenant shall, promptly at the request of either party, execute
and deliver an agreement in recordable  form setting forth such  substitution of
space and the effective date thereof.

44.      LATE CHARGES

         If Tenant shall fail to pay all or any part of any installment of fixed
annual rent or additional  rent for more than ten (10) days after the same shall
have become due and payable,  Tenant shall pay, upon demand,  as additional rent
hereunder  to Landlord a late charge of four ($.04) cents for each dollar of the
amount of such fixed  annual rent or  additional  rent which shall not have been
paid to  Landlord  within  such ten (10) days after  becoming  due and  payable.
Tenant acknowledges that the payment of rent after the date when first due shall
result  in loss  and  injury  to  Landlord  the  exact  amount  of  which is not
susceptible  of reasonable  calculation  and that the  aforesaid  amount of late
charge  represents  a  reasonable  estimate of such losses and injury  under the
circumstances,  especially  after taking into  account the grace  period  hereby
afforded  Tenant  before  such late  charge is to be  imposed.  The late  charge
payable  pursuant  to this  Article  44 shall  be  without  prejudice  to any of
Landlord's  rights and remedies  hereunder at law and equity for  non-payment or


                                       28
<PAGE>

late  payment  of rent or other  sums and in  addition  to any such  rights  and
remedies,  including  the right to institute  and  prosecute a proceeding  under
Article 7 of the Real  Property  Actions  and  Proceedings  Law.  No  failure by
Landlord to insist upon the strict performance by Tenant of Tenant's  obligation
to pay late  charges as provided in this  Article  shall  constitute a waiver by
Landlord of its right to enforce the  provisions of this Article in any instance
thereafter  occurring.  The provisions of this Article shall not be construed in
any way to extend the grace periods or notice periods  provided for elsewhere in
this lease.

45.      ENVIRONMENTAL COMPLIANCE

         A.  (i)  Tenant  shall  comply  with  all  federal,   state  and  local
environmental protection and regulatory laws applicable to the demised premises.
                  (ii) Tenant  shall not use,  generate,  manufacture,  store or
dispose of any hazardous  substance  on, under or about the demised  premises or
the  building  nor  transport  any  hazardous  substance  thereto.  Tenant shall
immediately  advise  the  Landlord,  in  writing  of any  and  all  enforcement,
clean-up,  remediation,  removal or other  governmental  or  regulatory  actions
instituted,  completed or threatened pursuant to any applicable laws relating to
any  hazardous  substances;  and all claims,  made or  threatened  by any person
(including a governmental  authority)  against the demised  premises,  Tenant or
Landlord relating to any damage, injury, costs, remedial action or cost recovery
compensation  arising out of or due to the existence of any hazardous  substance
in or about the demised premises or the building.

         B. Tenant shall defend,  indemnify and hold Landlord  harmless from and
against  all  actions,  causes  of  action,  claims,  lawsuits,   administrative
proceedings,  hearings,  judgments,  awards, fines, penalties,  costs (including
legal,  engineers',  experts',  investigatory  and  consulting  fees),  damages,
remediation  activities and clean-up  costs,  liens,  and all other  liabilities
incurred by Landlord  whenever  incurred,  arising  out of any  Tenant's  act or
failure to act resulting in (i) the existence or presence (or alleged  existence
or presence) on or about the building of any hazardous  substance or the release
of any hazardous  substance into the  environment;  (ii) any personal  injury or
property damage resulting from any hazardous substance in or about the building;
(iii) the violation of any federal, state or municipal environmental  protection
or regulatory  law; or (iv) the  commencement  or prosecution of any judicial or
administrative  procedure arising out of any claims under any federal,  state or
municipal  environmental  protection  or  regulatory  law or common law cause of
action  in which  Landlord  is named a party or in which it may  intervene.  The
obligations  of Tenant under this  paragraph B shall  survive the  expiration or
earlier termination of the term hereof.

         C. "Hazardous  substance"  means any hazardous  substance as defined in
the  Comprehensive  Environmental  Response,  Compensation  and Liability Act of
1980, 42 U.S.C. ss.ss. 9601 et seq., as amended by the Superfund  Amendments and
Reauthorization  Act of  1986;  hazardous  waste  as  defined  in  the  Resource
Conservation and Recovery Act of 1976, 42 U.S.C.  ss.ss. 6901 et seq., as any of
the foregoing may be amended or superseded; oil; petroleum product,  derivative,
compound or mixture; mineral, including asbestos;  chemical; gas; medical waste;
polychlorinated   biphenyls  (pcb's);   methane;  radon;  radioactive  material;
volatile hydrocarbons;  or other material, whether naturally occurring, man-made
or the  by-product  of any  process,  which is toxic,  harmful or  hazardous  or
acutely  hazardous to the  environment or public health or safety;  or any other
substance the existence of which on or at any property  would be the basis for a
claim for damages,  clean-up costs or remediation  costs,  fine, penalty or lien
under any federal, state or municipal environmental protection or regulatory law
or applicable common law.

46.      LEASE FULLY NEGOTIATED

         In  construing  this lease,  it shall be deemed to be a document  fully
negotiated and drafted  jointly by counsel to Landlord and counsel to Tenant and
the  authorship of any term or provision  hereof shall not be deemed  germane to
its meaning.  The  existence or  non-existence  in any prior draft hereof of any
term or provision  whether  included  herein or not shall not be relevant to the
establishment  of the intent of the parties hereto or the meaning of any term or
provision hereof and may not be used as evidence to establish any such intent or
meaning.


                                       29
<PAGE>

47.      SMOKING RESTRICTIONS

         Landlord  hereby  prohibits all smoking of  cigarettes,  cigars,  other
tobacco  products  or any  other  substances  and the  use of  pipes  and  other
paraphernalia  for such purposes  within the building and the premises.  Without
limiting  Landlord's rights under the preceding  sentence,  Tenant shall enforce
within the demised premises all applicable laws, rules and regulations regarding
smoking.

48.      ADDITIONAL DEFINITIONS

         The term "real estate taxes" shall,  in addition to the items  referred
to in Article 2, include assessments, impositions and levies imposed by business
special tax districts.  "Business days" shall mean all days,  except  Saturdays,
Sundays, and all days celebrated as holidays under union contracts applicable to
the building.  The words "herein," "hereof,"  "hereto,"  "hereunder" and similar
words shall be interpreted as being  references to this lease as a whole and not
merely the clause, paragraph, Section or Article in which such word appears. The
term "demised premises" is used  interchangeably  with the term "premises".  The
words  "shall"  and  "will"  are  interchangeable,  each  imposing  a  mandatory
obligation  upon the party to whom such verb applies.  The words  ""include" and
"including"  shall be interpreted to mean "including,  without  limitation." The
word  "control"  and the  variations  thereof  used in this lease shall have the
meanings ascribed to them under the Securities Act of 1933, as amended,  and the
regulations  promulgated under it. Wherever appropriate in this lease,  personal
pronouns shall be deemed to include the other genders and the singular or plural
of any defined term or other word shall,  as the context may require,  be deemed
to include,  as the case may be, either the singular or the plural.  All Article
and  paragraph and  subsection  references  set forth herein  shall,  unless the
context otherwise  specifically  requires, be deemed references to the Articles,
paragraphs and subsections of this lease.  Wherever herein Tenant is required to
comply with laws, orders and regulations of any governmental authority having or
asserting  jurisdiction  over  the  demised  premises,  such  laws,  orders  and
regulations shall include, as and where applicable to the demised premises:  the
Americans with  Disabilities Act of 1990, Local Law 5/1973,  Local Laws 16/1984,
and 16/1987, Local Law 58/1987, Local Law 76/1985 and Local Law 80/1985, as each
may be amended and any successor statutes of like or similar import.  References
to Landlord  as having no  liability  to Tenant or being  without  liability  to
Tenant shall mean that,  except as otherwise  provided in this lease,  Tenant is
not  entitled  to  terminate  this  lease,  or to claim  actual or  constructive
eviction,  partial or total,  or to receive any abatement or diminution of rent,
or to be relieved in any manner of any of its other obligations hereunder, or to
be  compensated  for loss or injury  suffered  or to  enforce  any other kind of
liability  whatsoever  against  Landlord  under or with respect to this lease or
with respect to tenant's use or occupancy of the demised premises.

         50.      SUBSTITUTE LEASE

         If Tenant shall  consummate  a lease with  Landlord in the building for
vacant  space at least fifty  percent  (50%)  larger than the  premises  demised
hereunder,   Tenant  shall  have  the  right  to  cancel  this  lease  but  such
cancellation  right  shall be  effective  only upon strict  compliance  with the
following terms and conditions:

         (a)  Tenant   shall  notify   Landlord   within  five  (5)  days  after
consummating  such  new  lease  of its  intention  to  cancel  this  lease.  The
cancellation date shall be either:  (i) within ninety (90) days of the effective
date of the new lease for  larger  space;  or (ii) any April 30 or  October  31,
during the remaining period the term of this lease.

         (b) It is understood and agreed that the aforesaid  cancellation  right
is  conditioned  upon  Tenant's  not being in  default  under any of the  terms,
covenants and conditions of this lease,  beyond any grace period, at the date of
delivery  of  any  such  cancellation  notice  and  on  the  cancellation  date.
Notwithstanding  any such cancellation by Tenant hereunder,  Tenant shall remain
liable to cure any default under any of the terms,  covenants and  conditions of
this lease  existing on the  cancellation  date.  Such liability of Tenant shall
survive any such cancellation.

         (c) Tenant shall vacate the premises  demised  hereunder  and surrender
possession  thereof to  Landlord,  in broom clean  condition  and  otherwise  in
accordance with all terms, conditions and covenants of this lease on or prior to
the cancellation date.


                                       30
<PAGE>

         IN WITNESS WHEREOF,  Landlord and Tenant have executed this lease as of
the day and year first above written.



                                         LANDLORD:

                                         FISK BUILDING ASSOCIATES L.L.C.

                                         By: Cushman & Wakefield, Inc., as Agent



                                         By:
                                             -----------------------------
                                             Name:

                                             Title:



                                         TENANT:

                                         AROTECH CORPORATION



                                         By:
                                             -----------------------------
                                             Name:

                                             Title:




                                       31
<PAGE>




                                    EXHIBIT A

                                    to lease

                                     between

                    Fisk Building Associates L.L.C., Landlord

                                       and

                           Arotech Corporation, Tenant

                           Diagram of Demised Premises



<PAGE>

                                    EXHIBIT B

                                    to lease

                                     between

                    Fisk Building Associates L.L.C., Landlord

                                       and

                           Arotech Corporation, Tenant



                                Cleaning Schedule
                                -----------------

1.       General

         All flooring swept nightly.
         All carpeted  areas and rugs  carpet-swept  nightly and vacuum  cleaned
         weekly.
         Wastepaper  baskets and ashtrays emptied nightly (excluding kitchen and
         kitchenette areas and all so-called "wet" garbage) and damp dusted when
         necessary.
         All baseboards, chair rails and trim dusted nightly.
         All water fountains washed clean nightly.

2.       Lavatories (other than Tenant's private and executive lavatories)

         All flooring swept and washed nightly.
         All  basins,  bowls,  urinals  and toilet  seats  (both  sides)  washed
         nightly. All partitions,  tile walls, dispensers and receptacles dusted
         nightly.
         Paper  towel and  sanitary  disposal  receptacles  emptied  and cleaned
         nightly (and replenished at Tenant's expense).

3.       High Dusting - Office Area

         Do  all  high  dusting  approximately  once  a  month,   including  the
         following:

         Dust all pictures,  frames,  charts, graphs and panel wall hangings not
         reached in nightly cleaning.
         Dust all  vertical  surfaces  such as  walls,  partitions,  ventilating
         louvres and other surfaces not reached in nightly cleaning.
         Dust all lighting  fixtures  (exterior only).
         Dust all overhead pipes, sprinklers, etc.
         Dust all Venetian blinds and window frames approximately once every two
         months.

4.       Periodic Cleaning - Office Area

         Wipe clean all interior metal as necessary.
         Dust all door  louvres  and  other  ventilating  louvres  within  reach
         weekly.

5.       Periodic  Cleaning  -  Lavatories  (other  than  Tenant's  private  and
         executive lavatories)

         Machine-scrub flooring when necessary.
         Wash all partitions, tile walls and enamel surfaces monthly with proper
         disinfectant when necessary.
         Dust exterior of lighting fixtures monthly.

6.       Windows

Clean outside windows, when necessary, approximately 2 times a year, weather and
scaffold conditions permitting.


<PAGE>

                                   SCHEDULE A

                         RULES AND REGULATIONS REFERRED
                                TO IN THIS LEASE

1.   No animals,  birds,  bicycles or vehicles  shall be brought into or kept in
     the  premises.  The  premises  shall  not  be  used  for  manufacturing  or
     commercial  repairing or for sale or display or merchandise or as a lodging
     place,  or for any immoral or illegal  purpose,  nor shall the  premises be
     used for a public stenographer or typist; barber or beauty shop; telephone,
     secretarial or messenger  service;  employment,  travel or tourist  agency;
     school or classroom;  commercial document reproduction; or for any business
     other than  specifically  provided for in the tenant's lease.  Tenant shall
     not  cause or  permit  in the  premises  any  disturbing  noises  which may
     interfere with occupants of this or  neighboring  building,  any cooking or
     objectionable  odors,  or any nuisance of any kind, or any  inflammable  or
     explosive fluid, chemical or substance. Canvassing, soliciting and peddling
     in the building are  prohibited,  and each tenant shall  cooperate so as to
     prevent the same.

2.   The  toilet  rooms  and  other  water  apparatus  shall not be used for any
     purposes  other  than  those,  for  which  they  were  constructed,  and no
     sweepings,  rags, ink,  chemicals or other  unsuitable  substances shall be
     thrown  therein.  Tenant shall not throw anything out of doors,  windows or
     skylights  or into  hallways,  stairways  or  elevators,  nor place food or
     objects on outside  windowsills.  Tenant  shall not  obstruct  or cover the
     halls,  stairways  and  elevators,  or use them for any purpose  other than
     ingress  and  egress to or from  tenant's  premises,  nor shall  skylights,
     windows,  doors and transoms  that reflect or admit light into the building
     be covered or obstructed n any way.

3.   Tenant  shall not place a load upon any floor of the  premises in excess of
     the load per square foot,  which such floor was designed to carry and which
     is allowed by law.  Landlord reserves the right to prescribe the weight and
     position of all safes in the  premises.  Business  machines and  mechanical
     equipment  shall be placed and maintained by tenant,  at tenant's  expense,
     only with  Landlord's  consent  and in  settings  approved  by  Landlord to
     control weight, vibration, noise and annoyance. Smoking or carrying lighted
     cigars, pipes or cigarettes in the elevators of the building is prohibited.
     If the premises are on the ground floor of the building the tenant  thereof
     at its expense  shall keep the  sidewalks and curb in front of the premises
     clean and free from ice, snow, dirt and rubbish.

4.   Tenant  shall  not move any  heavy  or bulky  materials  into or out of the
     building without  Landlord's  prior written  consent,  and then only during
     such hours and in such manner as landlord shall approve. If any material or
     equipment  requires  special  handling,  tenant  shall  employ only persons
     holding a Master Rigger's  License to do such work, and all such work shall
     comply with all legal requirements.  Landlord reserves the right to inspect
     all  freight to be brought  into the  building,  and to exclude any freight
     which violates any rule, regulation or other provision of this lease.

5.   No sign,  advertisement,  notice or thing  shall be  inscribed,  painted or
     affixed on any part of the building,  without the prior written  consent of
     Landlord.  Landlord  may remove  anything  installed  in  violation of this
     provision, and Tenant shall pay the cost of such removal. Interior signs on
     doors and directories shall be inscribed or affixed by Landlord at Tenant's
     expense.  Landlord shall control the color, size, style and location of all
     signs,  advertisement  and notices.  No  advertising  of any kind by Tenant
     shall refer to the building, unless first approved in writing by Landlord.

6.   No article shall be fastened to, or holes drilled or nails or screws driven
     into, the ceilings,  walls,  doors or other  portions of the premises,  nor
     shall any part of the premises be painted, papered or otherwise covered, or
     in any way marked or broken, without the prior written consent of Landlord.

7.   No existing locks shall be changed, nor shall any additional locks or bolts
     of any kind be placed upon any door or window by Tenant,  without the prior
     written consent of Landlord. At the termination of this lease, Tenant shall
     deliver to Landlord  all keys for any portion of the  premises or building.
     Before leaving the premises at any time, Tenant shall close all windows and
     close and lock all doors.

8.   No Tenant  shall  purchase  or obtain  for use in the  premises  any spring
     water, ice, towels, food,  bootblacking,  barbering, or other such services
     furnished by any company or person not approved by Landlord.  Any necessary
     exterminating work in the premises shall be done at Tenant's  expenses,  at
     such times,  in such manner and by such company as Landlord  shall require.
     Landlord reserves the right to exclude from the building, from 6:00 p.m. to
     8:00 a.m., and at all hours on Sunday and legal  holidays,  all persons who
     do not present a pass to the  building  signed by Landlord.  Landlord  will
     furnish passes to all persons reasonably designated by Tenant. Tenant shall
     be  responsible  for the acts of all  persons to whom  passes are issued at
     Tenant's request.

9.   Whenever  Tenant  shall  submit to Landlord  any plan,  agreement  or other
     document for Landlord's consent or approval,  Tenant agrees to pay Landlord
     as additional rent, on demand,  and  administrative fee equal to the sum of
     the  reasonable  fees of any  architect,  engineer or attorney  employed by
     Landlord   review  said  plan,   agreement  or  document   and   Landlord's
     administrative costs for same.

<PAGE>

10.  The use in the  demised  premises of  auxiliary  heating  devices,  such as
     portable  electric  heaters,  heat lamps or other devices  whose  principal
     function  at  the  time  of  operation  is to  produce  space  heating,  is
     prohibited.

In case of any conflict or  inconsistency  between any  provisions of this lease
and any of the rules and regulations as originally or as hereafter adopted,  the
provisions of this lease shall control.


</TEXT>
</DOCUMENT>
