THIRD LEASE MODIFICATION AGREEMENT

          THIS THIRD LEASE MODIFICATION AGREEMENT,  made this 26 day of October,
1998 by and between HARTZ MOUNTAIN PARSIPPANY,  a New Jersey general partnership
having an office at 400 Plaza Drive,  Secaucus,  New Jersey  07094  (hereinafter
referred to as "Landlord")  and EMERSON  RADIO  CORP.,  a Delaware  corporation
having  an  office  at 9 Entin  Road,  Parsippany,  NJ  07054-0430  (hereinafter
referred to as "Tenant").

                                   WITNESSETH:

          WHEREAS,  by Agreement  of Lease dated March 26,  1993,  as amended by
First Lease  Modification  Agreement  dated July 23,  1993,  Landlord  leased to
Tenant and Tenant hired from  Landlord  approximately  40,646.75  square feet of
Floor  Space  located on the second  floor of 9 Entin  Road in  Parsippany,  New
Jersey (hereinafter the "Original Demised Premises"); and

          WHEREAS,  pursuant to that certain Second Lease Modification Agreement
dated May 15, 1998, Landlord and Tenant agreed, inter alia, to reduce the square
footage  being leased by Tenant by  21,430.75  square feet such that the Tenant,
after said reduction, leased a total of 19,216 square feet of Floor Space on the
second floor of the  Building  located at 9 Entin Road,  Parsippany,  New Jersey
(said 19,216 square feet of Floor Space hereinafter  referred to as the "Reduced
Demised  Premises";  the  Lease of March  26,  1993,  First  Lease  Modification
Agreement dated July 23, 1993, and Second Lease Modification Agreement dated May
15, 1998, hereinafter collectively referred to as the "Lease") and to extend the
Term of the Lease through and including July 31, 2003; and

          WHEREAS,  Landlord and Tenant wish to further  modify the Lease (a) to
reflect an  increase  in the area of the  Reduced  Demised  Premises  and (b) to
extend  the Term of the Lease  such that the Term of the Lease as it  relates to
all the Floor  Space  Leased by Tenant  shall run for a period of five (5) years
commencing on the Commencement  Date of the Additional  Premises (as those terms
are defined hereinbelow) and amend the Lease accordingly;

          NOW,  THEREFORE,  for and in  consideration  of the Lease,  the mutual
covenants herein contained and the consideration  set forth herein,  the parties
agree as follows:

1.   All terms set forth  herein are as defined  in the Lease  unless  otherwise
specifically described hereinbelow.

2. Landlord hereby leases to Tenant,  and Tenant hereby hires from Landlord,  an
additional  two  thousand two hundred  ninety three (2293)  square feet of Floor
Space  which  Floor  Space is  outlined  in red on the  attached  Exhibit A (the
"Additional Premises");  The Floor Space encompassed by both the Reduced Demised
Premises  (19,216  square feet) and the  Additional  Premises (2293 square feet)
shall  constitute and be hereinafter  referred to  collectively  as the "Demised
Premises". All reference in the Lease to the Demised Premises shall be deemed to
refer to the Demised Premises as defined in the preceding sentence.

<PAGE>

3. The Commencement Date of the Additional Premises shall be October 2, 1998.

4. The Term of the Lease of the Demised  Premises  (i.e.,  the  Reduced  Demised
Premises and the Additional  Premises)  shall be for a period of five (5) years,
commencing on the Commencement  Date of the Additional  Premises and expiring on
the date that is the day before the fifth  anniversary of the Commencement  Date
of the Additional  Premises if the Commencement Date of the Additional  Premises
is the first day of the month,  or the fifth  anniversary of the last day of the
month in which the  Commencement  Date of the Additional  Premises occurs if the
Commencement Date of the Additional Premises is not the first day of a month.

5. Effective upon the Commencement Date of the Additional Premises, Tenant shall
pay Landlord,  as and for Fixed Rent for said Additional Premises,  at a rate of
Twenty Three dollars  ($23.00) per square foot of Floor Space of the  Additional
Premises per annum throughout the Term.

6. Effective upon the  Commencement  Date of the Additional  Premises,  Tenant's
Fraction  shall be  increased  by one  percent  (1%) to reflect  the  Additional
Premises such that Tenant's Fraction shall, in total, be eleven percent (11%).

7. Tenant shall pay Landlord,  as Additional Rent, the sum of Eight thousand and
no/100 dollars ($8,000.00) as its sole contribution to Landlord's Work; said sum
to be paid upon execution of this third Lease Modification  Agreement.  The term
"Landlord's  Work",  as it relates  to the  Additional  Premises  shall mean the
relocation of the demising  wall demising the Demised  Premises so as to include
the Additional Premises.

8. Effective upon the Commencement Date of the Additional  Premises,  the number
of Tenant's reserved parking spaces will be increased to nine (9).

9. Both parties  represent that no broker was  instrumental in bringing about or
consummating this Third Lease Modification  Agreement and that neither party had
conversations  or  negotiations  with any broker  concerning  this  Third  Lease
Modification.  Tenant agrees to indemnify and hold harmless Landlord against and
from any claims  for any  brokerage  commissions  and all  costs,  expenses  and
liabilities in connection therewith,  including, without limitation,  reasonable
attorneys' fees and expenses,  arising out of any  conversations or negotiations
had by Tenant with any broker.

10. Except as provided  herein,  all of the terms and conditions of the Lease as
amended  above are in full force and effect  and are  confirmed  as if fully set
forth herein.

          IN WITNESS  WHEREOF,  the parties  hereto have caused this Third Lease
Modification  Agreement  to be duly  executed as of the day and year first above
written.


ATTEST:                                     HARTZ MOUNTAIN PARSIPPANY
                                            BY:  HARTZ MOUNTAIN INDUSTRIES, INC.

                                            By:  /s/ Irwin A. Horowitz
                                                 Irwin A. Horowitz
                                                 Executive Vice President

ATTEST:                                     EMERSON RADIO CORP.

/s/ Ken Corby                               By:  /s/ John P. Walker
                                                 John P. Walker
                                                 Chief Financial Officer