SECOND LEASE MODIFICATION AGREEMENT


         Agreement made this 23 day of May 1996 between 200 Madison  Associates,
L.P., c/o George Comfort & Sons,  Inc., 200 Madison  Avenue,  New York, New York
(hereinafter called "Landlord") and FAB INDUSTRIES, INC., a New York Corporation
with an office at 200  Madison  Avenue,  New York,  New York 10016  (hereinafter
called "Tenant").

                                   WITNESSETH
                                   ----------

         WHEREAS,  Landlord as successors in interest to Glockhurst Corporation,
N.V., and Tenant entered into a lease, dated as of December 8, 1988 for Part 7th
Floor as  modified  by  Agreement  dated  April 2nd,  1991 ("the  Lease") in the
building known as 200 Madison Avenue, New York, New York (hereinafter called the
"building"); and


         WHEREAS, Landlord and Tenant wish to further modify the foregoing lease
in respect set forth.


         NOW,  THEREFORE,  in  consideration  of the  premises and of the mutual
promises  herein  contained,  the  receipt  and  sufficiency  of which is hereby
acknowledged,  it is agreed  that the  foregoing  lease be, and same  hereby is,
modified as follows:


          1.   The term shall be extended for an  additional  period of ten (10)
               years to commence on May 1, 1996 and to expire on April 30, 2006.


<PAGE>



          2.   The "fixed annual rental" for said additional period shall be:

          a)   For the period of May 1, 1996 through April 30, 1999, Six Hundred
               Ninety Three Thousand and 00/100 ($693,000.00) Dollars.

          b)   For the  period of May 1, 1999  through  April 30,  2002 shall be
               Seven   Hundred  Forty  Two  Thousand  Five  Hundred  and  00/100
               ($742,500.00) Dollars.

          c)   For the period of May 1, 2002 through  April 30,  2006,  shall be
               Eight   Hundred   Eight   Thousand   Five   Hundred   and  00/100
               ($808,500.00) Dollars.

         2.  Provided  that  Tenant  is not in  default  of any of the  terms or
conditions  of the as  modified  beyond any  applicable  grace,  notice and cure
periods, Tenant shall receive credits against the payment of fixed annual rental
as follows:

         a)       For  the  period of  May 1, 1996 through  April 30, 2001,  Two
                  Hundred  Ten  Thousand  and 00/100  ($210,000.00)  Dollars per
                  annum in  monthly  installments  of  Seventeen  Thousand  Five
                  Hundred and 00/100 (17,500.00) dollars
                  per month.

         b)       For the  period of May 1, 2001  through  April 30,  2002,  Two
                  Hundred Seventy Five Thousand and 00/100 ($275,000.00) Dollars
                  per annum in monthly  installments of Twenty Two Thousand Nine
                  Hundred Sixteen and 67/100 (22,916.67) Dollars per month.

         c)       For the  period of May 1, 2002  through  April 30,  2006,  One
                  Hundred Thousand and 00/100 ($100,000.00) Dollars per annum in
                  monthly  installments  of Eight  Thousand Three Hundred Thirty
                  Three and 33/100 ($8,333.33)
                  Dollars per month.


         3. Provided Tenant is not in default of any of the terms and conditions
of the Lease as modified beyond any applicable grace periods,  Tenant shall have
the right to cancel the Lease


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<PAGE>

effective  April 30, 2001 provided  prior written notice is given to Landlord by
July 31, 2000, time being of the essence.


         4. Effective as of May 1, 1996, Article 33 and 56 of the Lease shall be
replaced by the following new Article 33 on May 1, 1996;


ELECTRICITY


         A. Landlord  agrees to furnish up to six (6) watts of electric  current
per rentable square foot for Tenant's use in the demised premises  (exclusive of
the currently  existing building air conditioning  system),  upon and subject to
the  terms  and  conditions  set  forth  in this  Article  33.  Tenant  is to be
responsible  for the  distribution  of such  electricity  throughout the demised
premises.  From and after the  Commencement  Date,  Tenant  shall  purchase  all
electric  current  consumed in the demised  premises from Landlord or Landlord's
designated  agent on the basis of  Consolidated  Edison Company of New York rate
schedule for which Landlord purchases  electricity (or the rate schedule closest
thereto if such rate schedule no longer  exists),  as applied to all electricity
consumed in the demised premises during the applicable billing period.  Tenant's
consumption  of  electrical  energy at the demised  premises will be measured by
submeters  installed by Landlord at  Landlord's  expense.  Tenant also shall pay
Landlord an  administrative  charge, as additional rent, of five (5%) percent of
each bill to reimburse Landlord for the costs incurred in reading such submeters
and the billing and  collection  of amounts  payable by Tenant  pursuant to this
Article 33.

         B. Where more than one  submeter  measures  Tenant's  electric  service
(including  such electric energy as is consumed in connection with the operation
of  the  ventilation  and  air  conditioning  equipment  servicing  the  demised
premises), the service rendered through each submeter may be computed and billed
at Landlord's  option  separately as above set forth or as an aggregate total in
accordance with the provisions  hereof.  Bills therefor any be rendered  monthly
and shall be payable on demand as additional  rent. In the event that such bills
are not paid within sixty (60) 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's agent incurring


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<PAGE>

any liability for any damage or loss sustained by Tenant by such
discontinuance of service.


         C. Landlord is not in any way liable or  responsible  to Tenant for any
loss, 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.  Any riser or risers  necessary to supply
Tenant's  electrical  requirements  in excess of those  specified in Paragraph A
will, upon written request of Tenant,  be installed by landlord at the sole cost
and  expense  of Tenant  if, in  Landlord's  reasonable  judgment,  the same are
necessary  and will not cause  adverse  damage or injury to the  building or the
operation  thereof  or the  demised  premises,  cause or create a  dangerous  or
hazardous condition,  entail excessive or unreasonable  alterations,  repairs or
expense or interfere  with or disturb other tenants or occupants.  Landlord will
not, nor will it be required to,  commence  such  installation  unless and until
Tenant approves in writing all costs in connection therewith. 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  proper  and  necessary  in
connection therewith subject to the aforesaid terms and conditions. Tenant's use
of electric  current  shall  never  exceed the  capacity of existing  feeders or
risers to, or wiring  installations  in, the building and the demised  premises.
All of such costs and expense shall be paid by Tenant to Landlord  within thirty
(30) days after rendition of any bill or statement to Tenant therefor.

         D.  Provided  Landlord  is  discontinuing  such  service of  electrical
current to a majority of tenants in the building,  Landlord may discontinue such
service of  electric  current  upon  thirty  (30) days notice to Tenant (or such
longer  period of time as is  necessary  for Tenant to obtain  electric  current
directly from another source provided Tenant  diligently  makes  application for
the same)  without  being  liable  to Tenant  therefor  and  without  in any way
affecting  this  lease  or the  liability  of  Tenant  hereunder  or  causing  a
diminution  of fixed  rent.  Such  discontinuance  is not to be  deemed  to be a
lessening  or  diminution  of  service  within the  meaning of any law,  rule or
regulation  now or  hereafter  enacted,  promulgated  or issued.  If Landlord so
discontinues  furnishing  electric  current to Tenant,  Tenant shall  arrange to
obtain electric current  directly from the public utility company  servicing the
building (the  "Utility  Company").  Such  electric  current may be furnished to
Tenant by means of the then existing building system feeders,  risers and wiring
to the extent that the same are available,  suitable and safe for such purposes.
All  meters and  additional  panel  boards,  feeders,  risers,  wiring and other
conductors  and  equipment  that may be  required  to  obtain  electric  current
directly from the


                                      - 4 -


<PAGE>

Utility  Company  shall be installed  and  maintained  by Landlord,  at Tenant's
expense.

         E.  Tenant  agrees  not to make any  alterations  or  additions  to the
electric equipment and/or appliances presently installed in the demised premises
without the prior written  consent of Landlord in each  instance.  Rigid conduit
only will be allowed.

         F. If any tax is  imposed  upon  Landlord's  receipt  from  the sale or
resale  of  electric  energy  to  Tenant  by any  federal,  state  or  municipal
authority,  where  permitted  by law,  Tenant  agrees to pay  Landlord on demand
Tenant's pro-rata share of such taxes, as additional rent

         G.  Anything in  Paragraph B to the  contrary  notwithstanding,  if the
Commencement  Date occurs prior to the installation and property  calibration of
the  submeters,  then Tenant  shall pay Landlord  for  Tenant's  consumption  of
electricity in the demised premises at rates reasonably  estimated by Landlord's
electrical   consultant  that  Tenant  would  pay  if  such  meters  were  fully
operational.  In addition,  if during any time during the Term, it is determined
that the submeters  servicing the demised  premises are or were  malfunctioning,
Tenant  shall  pay  Landlord  an  amount  reasonably   estimated  by  Landlord's
electrical  consultant  to be the amount that would have been  payable by Tenant
had such malfunction not occurred.


         5.  Effective as of May 1, 1996, the "Base Tax Year" as provided for in
Article 40 section A.2. shall become the New York City Tax Year  commencing July
1,  1996  and  ending  on June  30,  1997.  Notwithstanding  the  foregoing,  no
additional  rent shall be due by Tenant for  increase in Real Estate Taxes prior
to January 1, 1998.


         6.  Effective  as of May 1,  1996,  Article 40 C. of the Lease is to be
removed in its entirety and replaced with the following new Article 40.C.


         In lieu of paying  additional  rents  related to increases in the Labor
Rate, Tenant agrees to pay the following to Landlord:


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<PAGE>

          1.   For the period of May 1, 1996 through April 30, 1997, none.

          2.   For the  period  of May 1,  1997  through  April  30,  1998,  Six
               Thousand  Six Hundred and 00/100  ($6,600.00)  Dollars per annum,
               Five Hundred Fifty and 00/100 ($550.00) Dollars per month.

          3.   For the period of May 1, 1998 through  April 30,  1999,  Thirteen
               Thousand Eight Hundred Sixty and 00/100 ($13,860.00)  Dollars per
               annum, One Thousand One Hundred Fifty Five and 00/100 ($1,155.00)
               Dollars per month.

          4.   For the period of May 1, 1999 through April 30, 2000,  Twenty One
               Thousand Seven Hundred Eighty and 00/100 ($21,780.00) Dollars per
               annum,  One Thousand  Eight  Hundred  Fifteen  Dollars and 00/100
               ($1,815.00) Dollars per month.

          5.   For the  period of May 1, 2000  through  April 30,  2001,  Thirty
               Thousand Three Hundred Sixty and 00/100 ($30,360.00)  Dollars per
               annum,  Two Thousand Five Hundred  Thirty and 00/100  ($2,530.00)
               Dollars per month.

          6.   For the period of May 1, 2001 through April 30, 2002, Thirty Nine
               Thousand Six Hundred and 00/100  ($39,600.00)  Dollars per annum,
               Three Thousand Three Hundred and 00/100  ($3,300.00)  Dollars per
               month.

          7.   For the period of May 1, 2002 through April 30, 2003,  Forty Nine
               Thousand Five Hundred and 00/100 ($49,500.00)  Dollars per annum,
               Four  Thousand  One Hundred  Twenty  Five and 00/100  ($4,125.00)
               Dollars per month.

          8.   For the  period of May 1, 2003  through  April  30,  2004,  Sixty
               Thousand Sixty and (00/100)  ($60,060.00) Dollars per annum, Five
               Thousand Five and 00/100 ($5,005.00) Dollars per month.

          9.   For the period of May 1, 2004 through April 30, 2005, Seventy One
               Thousand Two Hundred Eighty and 00/100  ($71,280.00)  Dollars per
               annum,  Five Thousand  Nine Hundred Forty and 00/100  ($5,940.00)
               Dollars per month.

          10.  For the  period of May 1, 2005  through  April 30,  2006,  Eighty
               Three Thousand One Hundred Sixty and 00/100


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               ($83,160.00)  Dollars per annum, Six Thousand Nine Hundred Thirty
               and 00/100 ($6,930.00) Dollars per month.


          7.   Effective as of May 1, 1996,  Article 45 of the Lease as modified
is replaced with the following new Article 45:


BROKER:


         Tenant  and  Landlord  each  represent  and  warrant to each other that
neither  consulted nor  negotiated  with any broker or finder with regard to the
rental of the demised  premises from Landlord  other than George Comfort & Sons,
Inc.,  and Jeffrey  Management  Corp.  Each party agrees to  indemnify  and hold
Landlord  harmless  from any  claims,  damages,  costs and  expenses  (including
attorneys' fees and disbursements) suffered or incurred by Landlord by reason of
any breach of the foregoing representation.

         Landlord  agrees  to pay  George  Comfort  & Sons,  Inc.,  and  Jeffrey
Management  Corp., any commissions  which become due related to the extension of
the term of the Lease in accordance  with separate  agreement to be entered into
by George Comfort & Sons, Inc., and Jeffrey Management Corp. with Landlord.


         7. Except as herein modified, all other terms, covenants and conditions
of the Lease are and shall remain in full force and effect.


         IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as
of the day and year first above written.


                                       200 MADISON ASSOCIATES, L.P., LANDLORD


                                       By:  LOEB PARTNERS REALTY AND 
                                             DEVELOPMENT CORP., General Partner

                                            By: /s/
                                               ----------------------
                                            Title:  V.P.

                                       FAB INDUSTRIES, INC., - TENANT


                                        By: /s/ Samson Bitensky
                                           ---------------------
                                               Chairman

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