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         EMPLOYMENT AGREEMENT dated as of February 10,1997, between LOREN
LEMCKE, residing at One Fairwind Court, Northport, NY 11768("Employee"), and
INTEGRATED TECHNOLOGY USA, INC., a Delaware corporation(the "Company").

                                    Preamble

         The parties hereto desire to enter into this Agreement in order to set
forth the terms pursuant to which the Company will employ Employee and Employee
will serve as an employee of the Company.

         Accordingly, in consideration of the mutual agreements set forth
herein, the parties hereto agree as follows:

                                    ARTICLE I

                              Employment and Duties

         SECTION 1.1. Employment. Subject to the terms and conditions of this
Agreement, the Company agrees to employ Employee, and Employee agrees to serve
as an employee of the Company, during the term provided for herein.

         SECTION 1.2. Duties. During his employment hereunder, Employee shall
serve as Executive Vice President and Chief Operating Officer of the Company and
shall perform such duties compatible with his position as may from time to time
be assigned to him by the President of the Company. Employee's authority shall
be subject at all times to the direction and control of the Company's Board of
Directors and to its discretion to determine the Company's policies. Employee
shall perform his duties hereunder faithfully, diligently and competently.

         SECTION 1.3. Extent of Services. During his employment hereunder,
Employee shall devote his full business time, energy, attention and skill to the
performance of his duties hereunder and (subject to the following sentence)
shall not, directly or indirectly, engage in any other business or professional
activity (whether or not such activity is pursued for gain, profit or other
pecuniary advantage and whether or not during normal business hours) or have any
interest in any such other business or professional activity. Notwithstanding
the foregoing, Employee may:

                  (i) invest in any business, provided that (a) the investment
         is passive (i.e., Employee is not required to, and in fact does not,
         provide any services to or on behalf of such business) and (b) the
         business invested in is not competitive with any aspect of the business
         of the Company (except that the limitation imposed by this clause (b)
         shall not apply to an investment in the securities of a publicly

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         traded company as long as Employee does not own at any time 5% or more
         of any class of the equity securities of such company); and

                  (ii) participate in charitable or community activities or in
         trade or professional organizations and/or publish papers or books,

         provided that the Board of Directors shall have the right to limit such
         activities on the part of Employee whenever the Board of Directors
         reasonably believes that the time spent by Employee on such activities
         infringes upon the time required by Employee for the performance of his
         duties hereunder.

         SECTION 1.4. Place of Employment. During his employment hereunder,
Employee's principal place of employment shall be located at the Company's
headquarters in Teaneck, New Jersey (or such other location selected by the
Company that is in Manhattan, NY, or within 50 miles of Manhattan, NY);
provided, however, that Employee may be required to travel for business purposes
(it being understood by Employee that extensive travel may be required).

                                   ARTICLE II

                                  Compensation

         As full consideration for his services under this Agreement, Employee
shall be entitled to the following compensation:

         SECTION 2.1. Base Salary. The Company shall pay Employee a base salary
("Base Salary"), in equal semi-monthly installments, at a rate per annum
determined from the table below.

Period during term                                  Base Salary (rate per annum)
------------------                                  ----------------------------

12-month period commencing on
  the Commencement Date (as
  defined in Section 3.1
  hereof) ................................................ $140,000

12-month period commencing on
  the first anniversary of the
  Commencement Date....................................... $150,000

12-month period commencing on
 the second anniversary of the
 Commencement Date........................................ $160,000

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         SECTION 2.2. Incentive Compensation. (a) The following terms shall have
the following meanings:

         "Adjusted Net Sales" with respect to any calendar year shall equal (i)
the Company's consolidated net sales for such year minus (ii) the amount of such
consolidated net sales (if any) that is attributable to Excluded Products (as
hereinafter defined). For purposes of the foregoing, "Excluded Products" means
new products that the Company may hereafter acquire through acquisition
transactions; provided, however, that a product acquired through an acquisition
transaction will cease to be an Excluded Product commencing on the first day of

the calendar year immediately following the calendar year in which the
acquisition is completed. (For example, if the Company completes an acquisition
in June 1997, the products acquired through such acquisition would be Excluded
Products until January 1, 1998, and sales attributable to such products would be
excluded in calculating 1997 Adjusted Net Sales and included in calculating 1998
Adjusted Net Sales.)

         "Maximum Bonus Amount" with respect to any calendar year indicated
below shall equal the amount specified below with respect to such year:

Calendar Year                                              Maximum Bonus Amount
-------------                                              --------------------

1997...................................................... $60,000

1998......................................................  65,000

1999......................................................  75,000

         "Sales Target" with respect to any calendar year indicated below shall
equal the amount specified below with respect to such year:

Calendar Year                                              Sales Target
-------------                                              ------------

1997...................................................... $ 7,900,000

1998......................................................  10,300,000

1999......................................................  13,500,000

         All accounting terms used in this Section 2.2(a) shall, unless
otherwise specifically provided, have the meanings customarily given them in
accordance with generally accepted U.S. accounting principles, and all financial
computations hereunder shall, unless otherwise specifically provided, be
computed in accordance with generally accepted U.S. accounting principles
consistently applied.

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         (b) The Company shall be obligated to pay Employee bonuses based upon
the Company's achieving sales targets to the extent set forth below:

                  (i) if in a calendar year the Company's Adjusted Net Sales is
         equal to or greater than 130% of the Sales Target Amount for such year,
         the Company shall pay Employee a bonus in respect of such year equal to
         the Maximum Bonus Amount for such year;

                  (ii) if in a calendar year the Company's Adjusted Net Sales is
         equal to or less than 70% of the Sales Target Amount for such year, the
         Company shall not be required to pay Employee any bonus in respect of
         such year;


                  (iii) if in any calendar year the Company's Adjusted Net Sales
         is greater than 70% of the Sales Target Amount for such year and less
         than 130% of such Sales Target Amount, the bonus amount that the
         Company is required to pay shall be extrapolated from the bonus amounts
         provided for in the preceding two clauses by using a linear progression
         to increase the bonus amount from zero to the Maximum Bonus Amount
         (e.g., if Adjusted Net Sales is exactly equal to the Sales Target
         Amount, the bonus would equal 50% of the Maximum Bonus Amount).

         The bonus provided for above is expressed mathematically as follows:

         Bonus Amount*= the lesser of (x) the Maximum Bonus Amount and
         (y)[(actual Adjusted Net Sales for year divided by Sales Target for
         year) minus 1)] multiplied by (Maximum Bonus Amount for year divided by
         0.6) plus (50% of Maximum Bonus Amount for such year)

         *If the bonus amount is a negative number it will be treated
         as zero.

         For example, if 1997 Adjusted Net Sales is equal to $7,800,000, the
         bonus amount would be calculated as follows:

         Bonus Amount= the lesser of (x) $60,000 and (y) [($7,800,000 divided by
         $7,900,000) minus 1)] multiplied by ($60,000 divided by 0.6) plus (50%
         of $60,000)=$28,734

The potential bonuses provided for in this Section 2.2(b) shall apply to 1997
and to any calendar year subsequent to 1997 that commences during the specified
term of this Agreement (or during any period thereafter during which the Company
is required to compensate Employee pursuant to Section 3.1(b) hereof). Any
compensation that the Company is required to pay pursuant to this Section 2.2(b)
is referred to as "Incentive Compensation". Employee understands and
acknowledges that the Company may at any

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time in its sole discretion discontinue marketing any or all of its products
notwithstanding the fact that such course of action may reduce or eliminate
Employee's ability to earn Incentive Compensation.

         (c) Any Incentive Compensation payable to Employee with respect to any
calendar year shall be paid within 120 days after the end of such year. All
calculations relating to Incentive Compensation shall be made by the independent
public accountants of the Company. Any determination of such accountants shall
be final and binding upon the parties.

         (d) If Employee's employment hereunder terminates for any reason other
than at the end of a calendar year, Employee's Incentive Compensation for that
year (if any) shall be prorated, based upon the number of days in the year that
elapsed prior to such termination; provided, however, that Employee shall not be
entitled to receive any Incentive Compensation with respect to a year, if prior

to the end of such year Employee's employment hereunder is terminated for Cause
pursuant to Section 3.2 hereof or as a result of Employee's voluntary
resignation.

         SECTION 2.3. Fringe Benefits. (a) Commencing on the first anniversary
of the Commencement Date, Employee shall be entitled to participate in any
medical or dental program from time to time generally made available by the
Company (or any United States subsidiary of the Company) to its employees (but
only to the extent that Employee meets the eligibility requirements for such
programs). Employee understands that the Company does not currently make any
such programs available and has no obligation to do so in the future. Employee
further understands that the Company's foreign subsidiaries may make available
to their respective employees such programs and that Employee will not have any
right to participate in any program of any of the Company's foreign
subsidiaries.

         (b) The Company shall provide Employee with the use of a Company owned
(or Company leased) car of his choice and shall pay or reimburse Employee for
all reasonable expenses incurred in connection with such car for repairs,
maintenance and insurance; provided, however, that the Company shall not be
required to expend more than $750 per month in order to provide Employee with
the benefits provided for by this Section 2.3(b).

         (c) Employee shall be entitled to two weeks of paid vacation per year.
Such vacation shall be taken at such time or times as shall be mutually agreed
to by the President of the Company and Employee.

         SECTION 2.4. Reimbursement of Expenses. (a) The Company shall reimburse
Employee for up to $1,000 of legal expenses incurred by him in connection with
entering into this Agreement.

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         (b) The Company shall reimburse Employee for expenses incurred by him
in connection with the performance of his duties hereunder, in accordance with,
and subject to, the Company's regular policies from time to time in effect
regarding reimbursement of expenses and the documentation required in connection
therewith.

         SECTION 2.5. Stock Options. On the Commencement Date, the Company shall
grant to Employee an option to purchase 175,000 shares of the Company's Common
Stock, such option to provide for the terms set forth in Annex 1 hereto.

         SECTION 2.6. Withholding, Etc. The right of Employee to receive
compensation hereunder shall be subject to all federal, state and local
withholding taxes and social security taxes.

                                   ARTICLE III

                           Term and Early Termination

         SECTION 3.1. Term. (a) The term of Employee's employment hereunder

shall commence on February 10, 1997 (the "Commencement Date") and end on the
third anniversary of the Commencement Date (subject to earlier termination as
provided in Sections 3.2, 3.3, 3.4, 3.5 and 3.6 hereof).

         (b) The fact that Employee may continue to be employed by the Company
after the specified term of this Agreement shall not create any implication that
the term of this Agreement has been extended (i.e., if Employee continues to be
employed by the Company as aforesaid, he will be an employee "at will").
However, during any period that Employee (with the consent of the Company)
continues to be employed by the Company after the specified term of this
Agreement, the Company shall continue to pay employee Base Salary and Incentive
Compensation in accordance with Sections 2.1 and 2.2(b)hereof (unless a new
agreement relating to compensation has been entered into). Any Base Salary
payable pursuant to this Section 3.1(b) shall be at the rate in effect
immediately prior to the end of the specified term of this Agreement.

         SECTION 3.2. Termination by Company For Cause. The Company may at any
time terminate Employee's employment hereunder for Cause by delivering notice of
termination to Employee(such termination to be effective upon delivery of such
notice). For purposes of this Agreement, "Cause" means the occurrence of any of
the following:

                  (i) Employee is convicted of a felony or commits an act of
         moral turpitude;

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                  (ii) any material breach by Employee of any of his obligations
         under this Agreement, which breach is not cured within 10 days after
         Employee receives notice thereof from the Company;

                  (iii) Employee performs his duties hereunder with gross
         negligence or engages in gross misconduct that materially injures the
         Company; or

                  (iv) any material breach by Employee of his fiduciary duties
         as an employee of the Company.

         SECTION 3.3. Termination by Company Upon Employee's Disability. (a) If
Employee becomes Disabled, the Company may elect to terminate Employee's
employment hereunder by delivering notice of termination to Employee (such
termination to be effective upon delivery of such notice). For purposes of this
Agreement, Employee shall be deemed to be "Disabled" if as a result of any
physical or mental disability, Employee shall fail to perform any of his duties
hereunder for 45 days (whether or not consecutive) in any 12-month period.

         (b) The failure of Employee to perform any of his duties
hereunder as a result of any illness or any physical or mental disability shall
not be considered a breach of this Agreement by Employee and he shall continue
to have the right to receive the full compensation provided for herein as long
as he continues to be employed hereunder (but the Company may terminate
Employee's employment to the extent provided in Section 3.3(a) hereof). If,

while employed hereunder, Employee receives any disability payments under any
disability insurance policy provided by the Company, the amount so received
shall be credited against the Company's obligation to pay Base Salary to
Employee.

         SECTION 3.4. Termination by Company for Convenience. The Company may at
any time elect to terminate Employee's employment hereunder for convenience by
delivering to Employee a notice of termination that specifically references this
Section 3.4 and states that it is a termination for convenience(such termination
to be effective upon delivery of such notice). If the Company terminates
Employee's employment pursuant to this Section 3.4, the Company shall pay to
Employee on or prior to the 30th day following the effective date of such
termination, a lump-sum payment equal to the lesser of (i)six-month's Base
Salary (calculated based upon the Base Salary rate in effect immediately prior
to the time of termination) and (ii) the aggregate amount of Base Salary that
Employee would have been entitled to receive hereunder in respect of the
Remaining Term (as hereinafter defined) had Employee's employment hereunder
continued until the third anniversary of the Commencement Date (rather than
being terminated earlier pursuant to this Section 3.4). For purposes of the
foregoing, the "Remaining Term" means the period commencing on the date as of
which Employee's employment hereunder is

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terminated pursuant to this Section 3.4 and ending on the third anniversary of
the Commencement Date.

         SECTION 3.5. Termination by Employee. In the event that the Company
breaches any of its obligations hereunder and such breach is not cured within 10
days after the Company receives notice of such breach from Employee, Employee
may terminate his employment hereunder by delivering notice of termination to
the Company (such termination to be effective upon delivery of such notice).

         SECTION 3.6. Termination Upon Death. Employee's employment hereunder
shall automatically terminate upon his death.

         SECTION 3.7. Effect of Termination. Upon termination of Employee's
employment hereunder, this Agreement, and all rights and obligations of the
parties hereunder, shall terminate, subject to the following qualifications and
limitations:

                  (i) such termination shall not release any party hereto from
         liability for any breach by it of its obligations under this Agreement
         prior to or in connection with such termination;

                  (ii) the Company shall continue to be obligated to pay to
         Employee (a) any unpaid Base Salary that accrued prior to such
         termination and (b) any unpaid Incentive Compensation that relates to
         any year that commenced prior to such termination (subject to the
         proration requirements set forth in Section 2.2(d) hereof);

                  (iii) the Company shall continue to have the obligations set

         forth in Sections 2.3(b) and 2.4 hereof with respect to expenses
         incurred by Employee prior to such termination; and

                  (iv) the following provisions of this Agreement shall survive
         the termination of Employee's employment and the termination of this
         Agreement: Sections 3.7, 4.1, 4.3, 4.4, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10
         and Article V.

                                   ARTICLE IV

                              Additional Agreements

                  SECTION 4.1. Representations and Warranties of Employee; Etc.
(a) Employee represents and warrants to the Company that (i) this Agreement is
valid and binding upon him, and enforceable against him, in accordance with its
terms, (ii) he is not bound by or subject to any contractual or other obligation
that would be violated by his execution and performance of this Agreement,
including, without limitation, any non-competition agreement, (iii) his
execution and performance of

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this Agreement will not result in the violation of any provision of applicable
law or any judgment or decree binding upon him, (iv) to his knowledge, he has no
existing medical condition that could impair his ability to perform his
obligations under this Agreement in any material respect, and (v) except as
disclosed on Schedule 4.1 hereto, he is not the subject of any pending or, to
the best of his knowledge, threatened claim, action, judgment, order or
investigation that could adversely affect his ability to perform his obligations
under this Agreement or the business reputation of the Company.

         (b) Employee acknowledges that he is not relying upon any
representations or promises by the Company or any of its officers or employees
regarding the amount of (or any matter that may potentially affect the amount
of) his Incentive Compensation.

         SECTION 4.2. Insurance. The Company may, at its option and for its
benefit, obtain insurance with respect to the death, disability or injury of
Employee. Employee shall submit to such physical examinations and supply such
information as may be reasonably required in order to permit the Company to
obtain such insurance.

         SECTION 4.3. Confidentiality. (a) As used herein, the term
"Confidential Information" with respect to any person means all trade secrets
and confidential information and know-how of such person.

         (b) Employee acknowledges that in the course of his employment by the
Company he will acquire Confidential Information of the Company and that such
information constitutes a valuable asset of the Company. Employee shall not,
without the prior written consent of the Company, while employed by the Company
or any time thereafter, use or disclose or enable anyone else to use or disclose
any Confidential Information of the Company (whether or not developed by

Employee), except in the normal course of performing his duties for the Company.

         (c) In the event that Employee shall at any time receive any
Confidential Information of any third party in connection with his employment by
the Company, he shall maintain such Confidential Information in confidence in
accordance with the Company's obligations to such third party.

         (d) While employed by the Company, Employee shall not use, or disclose
to other employees of the Company, any Confidential Information of his former
employers, former business associates or any other third parties, unless (i)
written permission has been given by such third parties to Employee permitting
Employee to use and/or disclose such information and (ii) the Company approves
in writing of such use and/or disclosure.

         SECTION 4.4. Return of Materials. Upon termination of Employee's
employment with the Company for any reason (or prior thereto if requested by the
Company), Employee shall promptly

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deliver to the Company all documents and other materials in his possession,
custody or control (whether prepared by Employee or others) that relate in any
manner to the past, present or anticipated business and affairs of the Company,
including, without limitation, any such documents and materials that contain or
constitute Confidential Information.

         SECTION 4.5. Disclosure of Works and Inventions; Assignment of Patents.
Employee shall promptly disclose to the Company or its nominee any and all
works, inventions, discoveries and improvements that are authored, conceived or
made by Employee while employed by the Company and that relate to the business
or activities of the Company, and Employee hereby assigns and agrees to assign
all of his interest therein to the Company or its nominee. Whenever requested to
do so by the Company, Employee shall execute any and all applications,
assignments or other instruments which the Company shall deem necessary to apply
for and obtain Letters Patent or Copyrights of the United States or any foreign
country or to otherwise protect the Company's interest therein. Such obligations
shall continue after Employee's employment with the Company terminates with
respect to works, inventions, discoveries and improvements authored, conceived
or made by Employee during the period of his employment by the Company, and
shall be binding upon Employee's assigns, executors, administrators and other
legal representatives.

         SECTION 4.6. Work Made for Hire. Employee acknowledges that his duties
at the Company may include the preparation of materials, including written or
graphic materials, and agrees that any such materials conceived or written by
him shall be done as "work made for hire" as defined and used in the Copyright
Act of 1976, 17 USC ss. 1 et seq. In the event of publication of such materials,
Employee understands that since the work is a "work made for hire", the Company
will solely retain and own all rights in such materials, including right of
copyright.

         SECTION 4.7. Non-Solicitation of Employees. Employee shall not, while

employed by the Company and during the 18-month period following the date on
which Employee's employment with the Company terminates for any reason, directly
or indirectly:

                  (i) solicit or induce, or attempt to solicit or induce, any
         employee of the Company to leave the employ of the Company; or

                  (ii) employ, or solicit for employment, on his behalf or on
         behalf of any other person (other than the Company), any person that is
         or was at any time an employee of the Company (excluding clerical
         employees); provided, however, that the foregoing restriction shall
         cease to apply to a former employee of the Company six months after he
         ceases to be employed by the Company.

         SECTION 4.8. Restriction on Competition. (a) As used herein, the
"Specified Period" means the 12-month period

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following the date on which Employee's employment with the Company terminates
for any reason; provided, however, that if the Company terminates Employee's
employment hereunder pursuant to Section 3.4 hereof prior to January 1, 1998,
the Specified Period shall mean the six-month period following the date on which
Employee's employment is so terminated.

         (b) Employee shall not, while employed by the Company and thereafter
during the Specified Period, directly or indirectly:

                  (i) solicit the trade of, or trade with, any customer or
         prospective customer of the Company (except during the term of his
         employment by the Company for the benefit of the Company); provided,
         however, that (x) if the Company terminates Employee's employment
         hereunder pursuant to Section 3.4 hereof, then commencing on the 180th
         day following the effective date of such termination the foregoing
         shall not limit trade that is not directly competitive with any aspect
         of the Company's computer telephony or Internet telephony business and
         (y) in all events, after the Employee's employment with the Company
         terminates, the foregoing shall not limit trade that is not competitive
         with any aspect of the Company's business; or

                  (ii) take any other action detrimental to the relationship of
         the Company with its employees, customers or suppliers.

         (c) Employee shall not, while employed by the Company and thereafter
during the Specified Period, directly or indirectly:

                  (i) engage in any business anywhere in the world that is
         competitive with any aspect of the business that is being conducted, or
         planned, by the Company at the time Employee's employment with the
         Company terminates; provided, however, that, if the Company terminates
         Employee's employment hereunder pursuant to Section 3.4 hereof, then
         commencing on the 180th day following the effective date of such

         termination the restriction set forth in this clause (i) shall only
         apply to a business that is directly competitive with any computer
         telephony or Internet telephony business that is being conducted, or
         planned, by the Company at the time Employee's employment with the
         Company terminates; or

                  (ii) have any interest or association (including, without
         limitation, as a shareholder, partner, director, officer, employee,
         consultant, sales representative, supplier, distributor, agent or
         lender) in or with any person engaged in a business that Employee is
         prohibited from engaging in pursuant to clause (i) above; provided,
         however, that the foregoing shall not prohibit Employee from owning
         securities of any publicly traded company that is engaged in any such
         business as long as Employee does not own at any time 5% or more of any
         class of the equity securities of such company.

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         SECTION 4.9. Equitable Relief. Employee acknowledges that any remedy at
law for any breach of any of the covenants contained in Sections 4.2, 4.3, 4.4,
4.5, 4.6, 4.7 or 4.8 hereof may be inadequate. Accordingly, the Company shall be
entitled (without the necessity of showing any actual damage or posting a bond
or furnishing other security) to specific performance or any other mode of
injunctive and/or other equitable relief to enforce its rights under such
Sections or any other relief a court might award, such rights to be cumulative
with and not exclusive of any other remedy.

         SECTION 4.10. Maintenance of D&O Insurance. (a) The Company hereby
covenants and agrees with Employee that, subject to Section 4.10(b) hereof, the
Company shall maintain in full force and effect directors' and officers'
liability insurance ("D&O Insurance") from established and reputable insurers.
Subject to Section 4.10(b) hereof, the amounts of such insurance shall not be
less than the amounts in effect upon the date hereof. In all policies of D&O
Insurance, Employee shall be named as an insured. The Company's obligation under
this Section 4.10(a) shall remain in effect as long as Employee is an officer of
the Company and thereafter for seven years.

         (b) Notwithstanding the foregoing, the Company shall have no obligation
to maintain D&O Insurance as provided in Section 4.10(a) hereof if the Company
determines in good faith that the premium costs for such insurance are (i)
disproportionate to the amount of coverage provided after giving effect to
exclusions, and (ii) substantially more burdensome to the Company than the
premiums charged to the Company for its D&O Insurance in effect on the date
hereof. If the Company determines to discontinue maintaining D&O Insurance
pursuant to this Section 4.10(b), the Company shall notify Employee of such
determination at least seven days prior to discontinuing such insurance.

         (c) If the Company discontinues maintaining D&O Insurance pursuant to
Section 4.10(b) hereof, Employee, at his option, may resign his position as an
officer of the Company. If Employee resigns as an officer of the Company as
aforesaid, this Agreement will continue in full force and effect without
modification, except that thereafter Employee will serve as a non-officer

employee of the Company (with such title as the Company shall determine).

                                    ARTICLE V

                                  Miscellaneous

         SECTION 5.1. Assignment. Neither party hereto may assign its rights or
delegate its duties hereunder; provided, however, that the Company may assign
its rights hereunder to any subsidiary of the Company or to any person that (i)
acquires substantially all of the business and assets of the Company (whether by
merger, consolidation, purchase of assets or other

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acquisition transaction) and (ii) agrees in writing to assume the obligations of
the Company hereunder.

         SECTION 5.2. Entire Agreement. This Agreement contains, and is intended
as, a complete statement of all the terms of the arrangements between the
parties with respect to the matters provided for, supersedes any previous
agreements and understandings between the parties with respect to those matters,
and cannot be changed or terminated orally.

         SECTION 5.3. Notices. All notices, requests, claims, consents, demands
and other communications hereunder shall be in writing and shall be deemed to
have been duly given when delivered in person or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties as
follows:

         if to the Company:

                  Integrated Technology USA, Inc.
                  545 Cedar Lane
                  Teaneck, NJ 07666
                  Attention: President

         if to Employee:

                  to the address set forth in the first paragraph of
                  this Agreement

                  with a copy to:

                  Kirkland Grant, Esq.
                  300 Nassau Road
                  Huntington, NY 11743

or to such other address as the party to whom notice is given may have
previously furnished to the other in writing in the manner set forth above.

         SECTION 5.4. Severability; Construction. The invalidity or
unenforceability of any provision of this Agreement shall not affect the

validity or enforceability of any other provision of this Agreement, which shall
remain in full force and effect. If any court construes any portion of any of
the covenants in this Agreement to be unenforceable because of its duration or
the area covered, the court shall reduce the duration or area to the extent
necessary so that the provision is enforceable, and the provision, as reduced,
shall then be enforced.

         SECTION 5.5. Waiver. Either party may waive compliance by the other
party with any provision of this Agreement. The failure of a party to insist on
strict adherence to any term of this Agreement on any occasion shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this

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Agreement.  No waiver of any provision shall be construed as a
waiver of any other provision.  Any waiver must be in writing.

         SECTION 5.6. Headings. The headings in this Agreement are solely for
convenience of reference and shall not affect its interpretation.

         SECTION 5.7. Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of New York applicable to
agreements made and to be performed in that state.

         SECTION 5.8. No Third Party Beneficiaries. Nothing in this Agreement
shall create, or be deemed to create, any third party beneficiary rights in any
person, including, without limitation, any employee of the Company other than
Employee.

         SECTION 5.9. Certain Definitions. (a) The term "person" shall mean an
individual, corporation, partnership, joint venture, trust or unincorporated
organization or a government or agency thereof.

         (b) Whenever from the context it appears appropriate, pronouns stated
in either the masculine, feminine or neuter gender shall include the masculine,
feminine and neuter.

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

                                            INTEGRATED TECHNOLOGY USA, INC.

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

                                                       /s/ Loren Lemke
                                               ----------------------------
                                                 Name: Loren Lemcke

                                       14

<PAGE>


                                                           Annex 1 to Employment
                                                           Agreement

                                  OPTION GRANT

             INTEGRATED TECHNOLOGY USA, INC. 1996 STOCK OPTION PLAN

          This instrument evidences that Integrated Technology USA, Inc. (the
"Company"), has granted to the optionee named below ("Optionee") the stock
option described below (the "Option"). The Option was granted pursuant to the
Company's 1996 Stock Option Plan (the "Plan") on the grant date set forth below.
A copy of the Plan is attached as Exhibit A hereto and should be read carefully.

IMPORTANT: Please sign the extra copy of this grant instrument and return it to
the Company in order to confirm your acceptance of the Option and the terms set
forth herein.

Optionee:                           Loren Lemcke
Grant date:                         February 10, 1997
Number of shares
  subject to option:                175,000
Purchase price per share:           $1.6875
Expiration Date:                    February 10,  2002
Terms of the option:                The Option is subject in all respect to the
                                    terms and conditions of the Plan and to the
                                    terms set forth below.

         1. General Description. Optionee has been granted an Option to purchase
from the Company the number of shares of the Company's Common Stock set forth
above at the purchase price per share set forth above. The Option is
nonstatutory (i.e, it is not an incentive stock option as defined in Section 422
of the Internal Revenue Code of 1986, as amended).

         2. Time When Option Becomes Exercisable. The Option is not currently
exercisable. The Option will become exercisable on a cumulative basis as
provided in the following two paragraphs.

         On each date indicated below (each such date being referred to as a
"Vesting Date"), the Option will become exercisable with respect to the number
of shares indicated below with respect to such Vesting Date; provided, however,
that if Optionee is not an employee of the Company on

                                       15


<PAGE>

a Vesting Date for any reason (including, without limitation, termination of
Optionee's employment by the Company for cause or convenience; Optionee's death
or disability; or Optionee's voluntary resignation) the Option will not become
exercisable with respect to additional shares on such Vesting Date.


                                        Number of Shares with Respect to which
Vesting Date                            Option Becomes Exercisable
------------                            ---------------------------------------
First anniversary of grant date         50,000
Second anniversary of grant date        50,000
Third anniversary of grant date         75,000

         Subject to the following sentence, if Optionee's employment with the
Company terminates by reason of his death, then on the date of Optionee's death
the Option will become exercisable with respect to the number of shares
specified in the table above with respect to the Vesting Date immediately
succeeding the date of death. The foregoing shall not apply if the date of
Optionee's death is a Vesting Date or is after the third anniversary of the
grant date.

         3. Termination of Option. The Option may not be exercised after the
Expiration Date set forth above. The Option is subject to early termination as
provided in the Plan and as hereinafter provided. The Option shall terminate
immediately upon the termination of Optionee's employment with the Company,
subject to the following exceptions: (i) if such termination is by reason of the
death or disability of Optionee, the unexercised portion of the Option shall
(subject to the Plan) continue to be exercisable for 12 months after such
termination (but only to the extent, if any, that the Option is exercisable
pursuant to paragraph 2 above as of the date of such termination) and (ii) if
the termination is for any other reason, excluding termination for cause, the
unexercised portion of such options shall (subject to the Plan) continue to be
exercisable for three months after such termination (but only to the extent, if
any, that the Option is exercisable pursuant to paragraph 2 above as of the date
of such termination). For purposes of this paragraph 3, the term "Company" shall
have the meaning given in the Plan.

         4. Procedure For Exercise. Optionee may exercise all or any portion of
the Option, to the extent it is exercisable pursuant to the terms hereof, at any
time and from time to time prior to its termination, by (i) delivering to the
Company written notice containing the information and representations appearing
on the form attached as Exhibit B hereto and (ii) paying to the Company the
purchase price for the shares being purchased (such payment to be made as
provided in the Plan). Notwithstanding the foregoing, the Option may not be
exercised with respect to fractional shares.

         5. Withholding Taxes. As provided in the Plan, the Plan Administrator
(as defined in the Plan) shall have the right to require that Optionee remit to
the Company an amount sufficient to satisfy any federal, state, or local
withholding tax requirements (or make other arrangements satisfactory to the
Company with regard to such taxes) prior to the delivery of any stock pursuant
to the exercise of the Option.

                                        16

<PAGE>

         6. Restrictions On Transfer. The Option may not be transferred other
than by will or by the laws of descent and distribution, and during the lifetime

of Optionee may be exercised only by Optionee; provided, however, that the
Option may be otherwise transferred to the extent, if any, permitted by the Plan
Administrator (as defined in the Plan).

         7. Conformity with Plan. The Option is intended to conform in all
respects with, and is

                                       17

<PAGE>

subject to all applicable provisions of, the Plan, which is incorporated herein
by reference. Any inconsistencies between this instrument and the Plan shall be
resolved in accordance with the terms of the Plan.

         IN WITNESS WHEREOF, the undersigned has executed this instrument.

                                            INTEGRATED TECHNOLOGY USA, INC.

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

         The undersigned by signing below confirms that the undersigned accepts
the Option on the terms set forth above and that the undersigned has received a
copy of the Plan.


---------------------------------------
Name:

                                       18


<PAGE>

                                                                       Exhibit B

Integrated Technology USA, INC.

Gentlemen:

         I have heretofore been granted the stock option identified below (the
"Option):

                  Date of grant:
                                ------------------------------------------------

                  Exercise price per share:
                                           -------------------------------------

                  Number of shares subject
                    to option when granted:
                                           -------------------------------------

                  Number of shares currently subject to option:
                                                               -----------------

I am hereby exercising the Option with respect to the following number of
shares:
       -------------------

         In connection with this exercise, [check one]

                  _____ I enlose a certified check (or bank draft or money
         order) in the amount of $__________;

                  _____ I am delivering irrevocable instructions to a broker to
         sell shares acquired upon exercise and promptly to deliver to the
         Company a portion of the proceeds thereof equal to the exercise price.

         I hereby agree to execute whatever other documents are necessary in
order to comply with the Plan and any applicable legal requirements in
connection with the issuance of the stock to me pursuant to the Plan.

---------------------------                    ----------------------------
Optionee (Signature)                           Social Security Number


---------------------------                    ----------------------------
Please print name


---------------------------                    ----------------------------
Date                                                    Address


<PAGE>

                                                                   Schedule 4.1

         Employee has drawn the Company's attention to the third paragraph under
Item 3 of the Report on Form 10-K of Employee's current employer.

                                     20