<PAGE>


1525500015
BES:PAL
FIRST WILLOW, LLC
OFFICE LEASE
MANCHESTER
040297
052197
060497
061697


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                                      LEASE

                       - - - - - - - - - - - - - - - - - -




                               FIRST WILLOW, LLC,

                                      Landlord,

                                       And

                       MANCHESTER EQUIPMENT COMPANY, INC.,

                                     Tenant







                                    Premises

                              The Fifth (5th) Floor
                                       At
                               469 Seventh Avenue
                            New York, New York 10018






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<PAGE>


1525500015
BES:PAL
FIRST WILLOW, LLC
OFFICE LEASE
MANCHESTER
040297
052197
060497
061697





                      TABLE OF CONTENTS TO PRINTED PORTION

                          STANDARD FORM OF OFFICE LEASE


  ARTICLE                                   CAPTION                       PAGE



         1.                Rent..............................................1

         2.                Occupancy.........................................1

         3.                Tenant Alterations................................1

         4.                Maintenance and Repairs...........................1

         5.                Window Cleaning...................................1

         6.                Requirements of Law, Fire Insurance,
                           Floor Loads.......................................1

         7.                Subordination.....................................2

         8.                Property Loss, Damage Reimbursement
                           Indemnity.........................................2

         9.                Destruction, Fire and Other Casualty..............2

         10.               Eminent Domain....................................2

         11.               Assignment, Mortgage, Etc.........................2

         12.               Electric Current..................................2

         13.               Access to Premises................................2

         14.               Vault, Vault Space, Area..........................3

         15.               Occupancy.........................................3

         16.               Bankruptcy........................................3

         17.               Default...........................................3

         18.               Remedies of Owner and Waiver of
                           Redemption........................................3

         19.               Fees and Expenses.................................3

         20.               Building Alterations and Management...............3

         21.               No Representations by Owner.......................3


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                                        i

<PAGE>


1525500015
BES:PAL
FIRST WILLOW, LLC
OFFICE LEASE
MANCHESTER
040297
052197
060497
061697




         22.               End of Term......................................4

         23.               Quiet Enjoyment..................................4


         24.               Failure to give Possession.......................4

         25.               No Waiver........................................4

         26.               Waiver of Trial by Jury..........................4

         27.               Inability to Perform.............................4

         28.               Bills and Notices................................4

         29.               Deleted prior to execution.......................4

         30.               Captions         ................................4

         31.               Definitions......................................4

         32.               Adjacent Excavation-Shoring......................4

         33.               Rules and Regulations............................4

         34.               Deleted prior to execution.......................5

         35.               Estoppel Certificate.............................5

         36.               Successors and Assigns...........................5

                  Testimonium and Signatures................................5

                  Acknowledgments...........................................6



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                           TABLE OF CONTENTS TO RIDER

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   ARTICLE                                           CAPTION                PAGE


         37.               TERM; RENTAL..................................  1

         38.               ADJUSTMENTS OF RENT...........................  4

         39.               USE........................................... 10

         40.               LANDLORD'S WORK............................... 10

         41.               CONSTRUCTION, GOVERNING LAW; CONSENTS......... 11

         42.               SUBORDINATION................................. 12

         43.               LEASE NOT BINDING UNLESS EXECUTED............. 14

         44.               CONFLICTS..................................... 15

         45.               ELECTRICITY................................... 15

         46.               FURTHER PROVISIONS AS TO DEFAULT.............. 17

         47.               HEAT AND AIR-CONDITIONING..................... 18

         48.               LANDLORD'S OTHER SERVICES..................... 19

         49.               SECURITY DEPOSIT.............................. 20

         50.               PARTIES BOUND................................. 23

         51.               BROKER........................................ 23

         52.               HAZARDOUS MATERIALS........................... 24

         53.               ARBITRATION................................... 24

         54.               ASSIGNMENT AND SUBLETTING..................... 25

         55.               INSURANCE..................................... 29

         56.               TENANT'S CHANGES.............................. 33

         57.               HOLDING OVER.................................. 36

         58.               CERTAIN DEFINITIONS AND CONSTRUCTION.......... 36


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<PAGE>


1525500015
BES:PAL
FIRST WILLOW, LLC
OFFICE LEASE
MANCHESTER
040297
052197
060497
061697





         59.               ADDENDUM TO ARTICLE 17.......................... 37

         60.               NOTICES......................................... 38

         EXHIBIT A-FLOOR PLAN OF DEMISED PREMISES.......................... 39

         EXHIBIT B-DEFINITIONS............................................. 40

         EXHIBIT C-LANDLORD'S WORK......................................... 43

         EXHIBIT D-CERTIFICATE OF OCCUPANCY................................ 47




I:\DATA\WPDOCS\15255_00.015\RES_LEAL\97021622


<PAGE>


1525500015
BES:PAL
FIRST WILLOW, LLC
OFFICE LEASE
MANCHESTER
040297
052197
060497
061697

         AGREEMENT OF LEASE made as of this 23rd day of June 1997, between FIRST
WILLOW,  LLC, a New York  limited  liability  company,  having an office at 1110
Second Avenue,  New York, New York 10022,  party of the first part,  hereinafter
referred to as "OWNER" or "LANDLORD" and MANCHESTER  EQUIPMENT COMPANY,  INC., a
New York corporation  having an address at 50 Marcus Boulevard,  Hauppauge,  New
York, 11788, party of the second party, hereinafter referred to as "TENANT".

         WITNESSETH:  Owner hereby leases to Tenant and Tenant hereby hires from
Owner the fifth (5th) floor  (hereinafter  referred to as the "Demised Premises"
or "demised premises" or "Premises"),  as shown on the floor plan annexed hereto
as Exhibit A annexed in the building known as 469 Seventh Avenue,  New York, New
York  10018  (hereinafter  referred  to as the  "Building"),  for the term at an
annual rate as set forth in Article 37 hereof.

         In the event that, at the  commencement  of the term of this lease,  or
thereafter,  Tenant shall be in default in the payment of rent to Owner pursuant
to the  terms of  another  lease  with  Owner  or with  Owner's  predecessor  in
interest,  Owner may at  Owner's  option  and  without  notice to Tenant add the
amount of such arrears to any monthly  installment of rent payable hereunder and
the same shall be payable to Owner as additional rent.

     The parties hereto, for themselves,  their heirs, distributees,  executors,
administrators,  legal representatives,  successors and assigns, hereby covenant
as follows:
Rent:            1.   Tenant shall pay the rent as above and as hereinafter
                      provided.
Occupancy:       2.   Tenant shall use and occupy demised premises for the
                      purposes set forth in Article 39 and for no other purpose.

TENANT ALTERATION: 3. Tenant shall make no changes in or to the demised premises
of any  nature  without  Owner's  prior  written  consent.  Subject to the prior
written  consent of Owner,  and to the  provisions of this article,  Tenant,  at
tenant's expense, may make alterations, installations, additions or improvements
which are  non-structural  and which do not affect utility  services or plumbing
and  electrical  lines,  in or to the interior of the demised  premises by using
contractors or mechanics first approved in each instance by Owner. Tenant shall,
before making any alterations,  additions, installations or improvements, at its
expense,  obtain  all  permits,  approvals  and  certificates  required  by  any
governmental or quasi-governmental  bodies and (upon completion) certificates of
final  approval  thereof  and  shall  deliver  promptly  duplicates  of all such
permits, approvals and certificates to Owner and Tenant agrees to carry and will
cause  Tenant's   contractors  and   sub-contractors  to  carry  such  workman's
compensation, general liability, personal and property damage insurance as Owner
may require.  If any mechanic's lien is filed against the demised  premises,  or
the  building of which the same forms a part for work  claimed to have been done
for, or materials  furnished  to,  Tenant,  whether or not done pursuant to this
article,  the same shall be discharged by Tenant within thirty days  thereafter,
at Tenant's expense, by payment or filing the bond required by law. All fixtures
and all paneling, partitions, railings and like installations,  installed in the
premises  at any time,  either by Tenant or by Owner on Tenant's  behalf,  shall
upon  installation,  become the  property of Owner and shall  remain upon and be
surrendered  with the demised premises unless Owner by notice to Tenant no later
than  twenty  days prior to the date  fixed as the  termination  of this  lease,
elects to  relinquish  Owner's right thereto and to have them removed by Tenant,
in which event the same shall be removed  from the  premises by Tenant  prior to
the expiration of the lease, at Tenant's expense.  Nothing in this Article shall
be  construed  to give Owner  title to or to prevent  Tenant's  removal of trade
fixtures, moveable office furniture and equipment, but upon removal of such from
the premises or upon removal of other installations as may be required by Owner,
Tenant shall immediately and at its expense,  repair and restore the premises to
the  condition  existing  prior to  installation  and  repair  any damage to the
demised premises or the building due to such removal.  All property permitted or
required  to be  removed,  by  Tenant  at the end of the term  remaining  in the
premises  after  Tenant's  removal  shall be deemed  abandoned  and may,  at the
election of Owner, either be retained as Owner's property or may be removed from
the premises by Owner, at tenant's expense. See Article 56.

Maintenance and Repairs: 4. Tenant shall, throughout the term of this lease take
good care of the demised  premises and the fixtures and  appurtenances  therein.
Tenant shall be responsible for all damage or injury to the demised  premises or
any other part of the building and the systems and  equipment  thereof,  whether
<PAGE> requiring structural or nonstructural repairs caused by or resulting from
carelessness,   omission,  neglect  or  improper  conduct  of  Tenant,  Tenant's
subtenants,  agents, employees, invitees or licensees, or which arise out of any
work,  labor,  service  or  equipment  done for or  supplied  to  Tenant  or any
subtenant or arising out of the  installation,  use or operation of the property
or equipment of Tenant or any subtenant.  Tenant shall also repair all damage to
the building and the demised premises caused by the moving of Tenant's fixtures,
furniture and equipment.  Tenant shall promptly make, at Tenant's  expense,  all
repairs in and to the demised  premises for which Tenant is  responsible,  using
only the contractor for the trade or trades in question, selected from a list of
at least two contractors  per trade submitted by Owner.  Any other repairs in or
to the  building  or the  facilities  and systems  thereof  for which  Tenant is
responsible  shall be performed by Owner at the  Tenant's  expense.  Owner shall
maintain  in good  working  order and repair  the  exterior  and the  structural
portions  of the  building,  including  the  structural  portions of its demised
premises,  and the public  portions of the  building  interior  and the building
plumbing,  electrical,  heating  and  ventilating  systems  (to the extent  such
systems  presently  exist) serving the demised  premises.  Tenant agrees to give
prompt notice of any defective  condition in the premises for which Owner may be
responsible  hereunder.  There shall be no allowance to Tenant for diminution of
rental value and no  liability on the part of Owner by reason of  inconvenience,
annoyance  or injury to business  arising from Owner or others  making  repairs,
alterations,  additions or  improvements in or to any portion of the building or
the  demised  premises or in and to the  fixtures,  appurtenances  or  equipment
thereof.  It is  specifically  agreed that  Tenant  shall not be entitled to any
setoff or reduction of rent by reason of any failure of Owner to comply with the
covenants  of this or any  other  article  of this  Lease.  Tenant  agrees  that
Tenant's  sole  remedy at law in such  instance  will be by way of an action for
damages for breach of contract. The provisions of this Article 4 shall not apply
in the case of fire or other casualty which are dealt with in Article 9 hereof.,

Window Cleaning:  5. Tenant will not clean nor require,  permit, suffer or allow
any window in the demised  premises to be cleaned  from the outside in violation
of Section 202 of the Labor Law or any other  applicable  law or of the Rules of
the Board of  Standards  and  Appeals,  or of any other  Board or body having or
asserting jurisdiction.

Requirements of Law, Fire Insurance,  Floor Loads: 6. Prior to the  commencement
of the lease term, if Tenant is then in possession, and at all times thereafter,
Tenant,  at  Tenant's  sole cost and  expense,  shall  promptly  comply with all
present and future laws, orders and regulations of all state, federal, municipal
and local governments,  departments, commissions and boards and any direction of
any public officer pursuant to law, and all orders, rules and regulations of the
New York Board of Fire  Underwriters,  Insurance Services Office, or any similar
body which shall impose any  violation,  order or duty upon Owner or Tenant with
respect to the demised  premises,  whether or not arising out of Tenant's use or
manner of use thereof,  (including  Tenant's permitted use), or, with respect to
the  building if arising out of Tenant's use or manner of use of the premises or
the building (including the use permitted under the lease). Nothing herein shall
require Tenant to make structural  repairs or alterations  unless Tenant has, by
its  manner of use of the  demised  premises  or method  of  operation  therein,
violated any such laws, ordinances,  orders, rules,  regulations or requirements
with respect thereto.  Tenant may, after securing Owner to Owner's  satisfaction
against all  damages,  interest,  penalties  and  expenses,  including,  but not
limited to, reasonable  attorney's fees, by cash deposit or by surety bond in an
amount and in a company satisfactory to owner, contest and appeal any such laws,
ordinances,  orders,  rules,  regulations or requirements  provided same is done
with all reasonable  promptness and provided such appeal shall not subject Owner
to prosecution for a criminal offense or constitute a default under any lease or
mortgage  under which Owner may be obligated,  or cause the demised  premises or
any part thereof to be  condemned or vacated.  Tenant shall not do or permit any
act or thing to be done in or to the demised  premises which is contrary to law,
or which will invalidate or be in conflict with public liability,  fire or other
policies of  insurance  at any time  carried by or for the benefit of Owner with
respect to the demised  premises or the  building of which the demised  premises
form a part,  or  which  shall  or  might  subject  Owner  to any  liability  or
responsibility  to any  person or for  property  damage.  Tenant  shall not keep
anything in the demised  premises  except as now or  hereafter  permitted by the
Fire Department, Board of Fire underwriters,  Fire Insurance rating Organization
or other authority  having  jurisdiction,  and then only in such manner and such
quantity so as not to increase  the rate for fire  insurance  applicable  to the
building,  nor use the  premises in a manner which will  increase the  insurance
rate for the building or any property  located therein over that in effect prior
to the commencement of Tenant's occupancy. Tenant shall pay all costs, expenses,
<PAGE> fine, penalties, or damages, which may be imposed upon Owner by reason of
tenant's  failure to comply with the provisions of this article and if by reason
of such failure the fire insurance rate shall, at the beginning of this lease or
any time  thereafter,  be higher than it  otherwise  would be, then Tenant shall
reimburse  Owner,  as additional  rent  hereunder,  for that portion of all fire
insurance  premiums  thereafter  paid by Owner  which  shall  have been  charged
because of such failure by Tenant. In any action or proceeding wherein owner and
Tenant are parties,  a schedule or "make-up" of rate for the building or demised
premises  issued by the New York Fire  Insurance  exchange  or other body making
fire insurance rates applicable to said premises shall be conclusive evidence of
the facts  therein  stated  and of the  several  items and  charges  in the fire
insurance rates then applicable to said premises.  Tenant shall not place a load
upon any floor of the demised premises  exceeding the floor load per square foot
area which it was designed to carry and which is allowed by law.  Owner reserves
the right to prescribe the weight and position of all safes,  business  machines
and mechanical  equipment.  Such installations shall be placed and maintained by
Tenant, at Tenant's  expense,  in settings  sufficient in Owner's  judgment,  to
absorb and prevent vibration, noise and annoyance. See Article 55.

Subordination:  7.  This  lease is  subject  and  subordinate  to all  ground or
underlying  leases and to all mortgages  which may now or hereafter  affect such
leases or the real  property  of which  demised  premises  are a part and to all
renewals, modifications, consolidations, replacements and extensions of any such
underlying  leases and  mortgages.  This clause shall be  self-operative  and no
further  instrument  of  subordination  shall  be  required  by  any  ground  or
underlying lessor or by any mortgagee,  affecting any lease or the real property
of which the demised premises are a part. In confirmation of such subordination,
Tenant shall from time to time execute  promptly any certificate  that Owner may
request. See Article 42.

Property Loss, Damage Reimbursement  Indemnity: 8. Owner 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 loss of or damage to any property of tenant
by theft or  otherwise  , nor for any injury or damage to  persons  or  property
resulting from any clause of whatsoever  nature,  unless caused by or due to the
negligence of Owner, its agents, servants or employees. Owner or its agents will
not be liable for any such damage caused by other tenants or persons in, upon or
about said  building or caused by  operations  in  construction  of any private,
public or quasi public work. If any time any windows of the demised premises are
temporarily closed,  darkened or bricked up (or permanently closed,  darkened or
bricked  up, if required by law) for any reason  whatsoever  including,  but not
limited to Owner's own acts, Owner shall not be liable for any damage Tenant may
sustain  thereby and Tenant shall not be entitled to any  compensation  therefor
nor abatement or  diminution of rent nor shall the same release  Tenant from its
obligations  hereunder nor  constitute an eviction.  Tenant shall  indemnify and
save  harmless  Owner  against and from all  liabilities,  obligations  damages,
penalties, claims, costs and expenses for which owner shall not be reimbursed by
insurance,  including reasonable attorneys fees, paid, suffered or incurred as a
result  of any  breach  by  Tenant,  Tenant's  agents,  contractors,  employees,
invitees,  or  licensees,  of any covenant or  condition  of this lease,  or the
carelessness,  negligence or improper  conduct of the Tenant,  Tenant's  agents,
contractors,  employees,  invitees or licensees.  Tenant's  liability under this
lease  extends  to the acts  and  omissions  of any  subtenant,  and any  agent,
contractor,  employee,  invitee or licensee of any subtenant. In case any action
or proceeding is brought against Owner by reason of any such claim, Tenant, upon
written  notice from  Owner,  will at  Tenant's  expense,  resist or defend such
action or proceeding by counsel approved by Owner in writing,  such approval not
to be unreasonably withheld.

Destruction,  Fire and Other Casualty: 9. (a)If the demised premises or any part
thereof shall be damaged by fire or other casualty,  Tenant shall give immediate
notice  thereof to Owner and this lease shall  continue in full force and effect
except as  hereinafter  set forth.  (b) If the demised  premises  are  partially
damaged or rendered  partially  unusable by fire or other casualty,  the damages
thereto  shall be repaired by and at the expense of Owner and the rent and other
items of additional rent,  until such repair shall be  substantially  completed,
shall be apportioned  from the day following the casualty  according to the part
of the premises which is usable. (c) If the demised premises are totally damaged
or rendered wholly  unusable by fire or other casualty,  then the rent and other
items  of  additional   rent  as   hereinafter   expressly   provided  shall  be
proportionately  paid up to the time of the casualty and thenceforth shall cease
until the date when the premises  shall have been repaired and restored by Owner
(or  sooner  reoccupied  in part by Tenant  then rent  shall be  apportioned  as
provided  in  subsection  (b) above),  subject to Owner's  right to elect not to
<PAGE> restore the same as hereinafter provided. (d) If the demised premises are
rendered wholly unusable or (whether or not the demised  premises are damaged in
whole or in part) if the building shall be so damaged that Owner shall decide to
demolish  it or to rebuild  it,  then,  in any such  events,  Owner may elect to
terminate  this lease by written  notice to Tenant,  given  within 90 days after
such fire or casualty,  or 30 days after  adjustment of the insurance  claim for
such fire or casualty, whichever is sooner, specifying a date for the expiration
of the lease, which date shall not be more than 60 days after the giving of such
notice,  and upon the date specified in such notice the term of this lease shall
expire  as  fully  and  completely  as if such  date  set  forth  above  for the
termination of this lease and Tenant shall forthwith quit,  surrender and vacate
the  premises  without  prejudice  however,  to  Landlord's  rights and remedies
against Tenant under the lease  provisions in effect prior to such  termination,
and any rent owing  shall be paid up to such date and any  payments of rent made
by Tenant which were on account of any period  subsequent  to such date shall be
returned to Tenant.  Unless Owner shall serve a  termination  notice as provided
for herein,  Owner shall make the repairs and restorations  under the conditions
of (b) and (c) hereof, with all reasonable expedition,  subject to delays due to
adjustment  of  insurance  claims,  labor  troubles  and causes  beyond  Owner's
control.   After  any  such  casualty,   Tenant  shall  cooperate  with  Owner's
restoration  by removing from the premises as promptly as  reasonably  possible,
all of Tenant's  salvageable  inventory and moveable equipment,  furniture,  and
other  property.  Tenant's  liability  for rent shall resume five (5) days after
written notice from Owner that the premises are substantially ready for Tenant's
occupancy. (e) Nothing contained hereinabove shall relieve Tenant from liability
that  may  exist  as  a  result  of   damage   from  fire  or  other   casualty.
Notwithstanding  the foregoing,  including  Owner's  obligation to restore under
subparagraph  (b) above,  each party  shall look first to any  insurance  in its
favor before  making any claim  against the other party for recovery for loss or
damage  resulting  form  fire or other  casualty  and to the  extent  that  such
insurance is in force and collectible and to the extent  permitted by law, Owner
and Tenant each hereby releases and waives all right of recovery with respect to
subparagraphs  (b),  (d),  and (e) above,  against the other or any one claiming
through or under each of them by way of  subrogation  or otherwise.  The release
and waiver  herein  referred to shall be deemed to include any loss or damage to
the  demised  premises  and/  or to  any  personal  property,  equipment,  trade
fixtures,  goods and  merchandise  located  therein.  The foregoing  release and
waiver shall be in force only if both releasors'  insurance  policies  contain a
clause  providing  that  such a  release  or waiver  shall  not  invalidate  the
insurance.  If, and to the extent , that such waiver can be obtained only by the
payment of additional premiums,  then the party benefiting from the waiver shall
pay such premium within ten days after written demand or shall be deemed to have
agreed that the party obtaining  insurance coverage shall be free of any further
obligations  under the provisions  hereof with respect to waiver of subrogation.
Tenant  acknowledges  that Owner will not carry insurance on Tenant's  furniture
and/or furnishings or any fixtures or equipment,  improvements, or appurtenances
removable  by Tenant and agrees that Owner will not be  obligated  to repair any
damage  thereto or replace the same.  (f) Tenant hereby waives the provisions of
Section  227 of the Real  Property  Law and agrees that the  provisions  of this
article shall govern and control in lieu thereof.

Eminent  Domain:  10. If the whole or any part of the demised  premises shall be
acquired or  condemned  by Eminent  Domain for any public or quasi public use or
purpose,  then  and in that  event,  the  term of this  lease  shall  cease  and
terminate  from the date of title  vesting in such  proceeding  and Tenant shall
have no claim for the value of any  unexpired  term of said lease and assigns to
Owner,  Tenant's entire interest in any such award.  Tenant shall have the right
to make an  independent  claim  to the  condemning  authority  for the  value of
Tenant's  moving expenses and personal  property,  trade fixtures and equipment,
provided  Tenant is  entitled  pursuant to the terms of the lease to remove such
property,  trade  fixture  and  equipment  at the end of the term  and  provided
further such claim does not reduce Owner's award.

Assignment,  Mortgage,  Etc.: 11. Tenant, for itself,  its heirs,  distributees,
executors,   administrators,   legal  representative,   successor  and  assigns,
expressly  covenants  that is  shall  not  assign,  mortgage  or  encumber  this
agreement,  nor underlet,  or suffer or permit the demised  premises or any part
thereof to be used by others, without the prior written consent of Owner in each
instance.  Transfer of the  majority  of the stock of a corporate  Tenant or the
majority  partnership  interest  of a  partnership  Tenant  shall be  deemed  an
assignment.  If this lease be assigned,  or if the demised  premises or any part
thereof be underlet or occupied by anybody other than Tenant,  Owner may,  after
default by Tenant, collect rent from the assignee, under-tenant or occupant, and
apply the net amount collected to the rent herein  reserved,  but no such <PAGE>
assignment,  underletting,  occupancy or collection  shall be deemed a waiver of
this  covenant,  or 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 Owner to an
assignment or underletting  shall not in any wise be construed to relieve Tenant
from obtaining the express consent in writing of Owner to any further assignment
or underletting. See Article 54.

Electric  Current:  12. Rates and  conditions in respect to  submetering or rent
inclusion,  as the case may be,  to be added in RIDER  attached  hereto.  Tenant
covenants  and agrees  that at all times its use of electric  current  shall not
exceed the capacity of existing  feeders to the building or the risers or wiring
installation  and Tenant may not use any electrical  equipment  which in Owner's
opinion,  reasonably  exercised,  will overload such  installations or interfere
with the use thereof by other tenants of the building. The change at any time of
the  character  of  electric  service  shall in no wise  make  Owner  liable  or
responsible  to Tenant,  for any loss,  damages  or  expenses  which  Tenant may
sustain.

Access to Premises:  13. Owner or Owner's agents shall have the right (but shall
not be  obligated)  to enter the demised  premises in any emergency at any time,
and,  at other  reasonable  times,  to  examine  the same to make such  repairs,
replacements  and  improvements  as Owner  may  deem  necessary  and  reasonably
desirable  to the demised  premises or to any other  portion of the  building or
which Owner may elect to perform.  Tenant shall permit Owner to use and maintain
and replace pipes and conduits in and through the demised  premises and to erect
new pipes and conduits  therein  provided they are  concealed  within the walls,
floor,  or ceiling.  Owner may,  during the  progress of any work in the demised
premises,  take all necessary materials and equipment into said premises without
the same  constituting  an  eviction  nor shall the  Tenant be  entitled  to any
abatement of rent while such work is in progress nor to any damages by reason of
loss or interruption of business or otherwise.  Throughout the term hereof Owner
shall have the right to enter the demised  premises at reasonable  hours for the
purpose of showing  the same to  prospective  purchasers  or  mortgagees  of the
building,  and during the last six months of the term for the purpose of showing
the same to prospective  tenants. if Tenant is not present to open and permit an
entry into the  demised  premises,  Owner or  Owner's  agents may enter the same
whenever  such entry may be necessary or  permissible  by master key or forcibly
and provided  reasonable care is exercised to safeguard Tenant's property,  such
entry shall not render  Owner or its agents  liable  therefor,  nor in any event
shall the  obligations of Tenant  hereunder be affected If during the last month
of the term  Tenant  shall have  removed  all or  substantially  all of Tenant's
property  therefrom Owner may immediately enter,  alter,  renovate or redecorate
the demised  premises  without  limitation  or  abatement of rent , or incurring
liability  to Tenant for any  compensation  and such act shall have no effect on
this lease or Tenant's obligations hereunder.

Vault,  Vault Space,  Area: 14. No Vaults,  vault space or area,  whether or not
enclosed  or covered,  not within the  property  line of the  building is leased
hereunder, anything contained in or indicated on any sketch, blue print or plan,
or anything contained  elsewhere in this lease to the contrary  notwithstanding.
Owner makes no  representation  as to the location of the  property  line of the
building.  All vaults and vault space and all such areas not within the property
line of the building,  which Tenant may be permitted to use and/or occupy, is to
be used and/or  occupied under a revocable  license,  and if any such license be
revoked, or if the amount of such space or area be diminished or required by any
federal,  state or  municipal  authority or public  utility,  Owner shall not be
subject to any  liability  nor shall Tenant be entitled to any  compensation  or
diminution  or  abatement  of rent,  nor shall such  revocation,  diminution  or
requisition be deemed constructive or actual eviction. Any tax, fee or charge of
municipal authorities for such vault or area shall be paid by Tenant.

Occupancy: 15. Tenant will not at any time use or occupy the demised premises in
violation of the  certificate of occupancy  issued for the building of which the
demised premises are a part.  Tenant has inspected the premises and accepts them
as is,  subject to the riders  annexed  hereto with respect to Owner's  work, if
any. In any event,  Owner makes no  representation  as to the  condition  of the
premises and Tenant agrees to accept the same subject to violations,  whether or
not of record.

Bankruptcy:   16.  (a)  Anything   elsewhere  in  this  lease  to  the  contrary
notwithstanding, this lease may be canceled by Owner by the sending of a written
notice to Tenant within a reasonable time after the happening of any one or more
<PAGE> of the following events:  (1) the commencement of a case in bankruptcy or
under the laws of any state  naming  Tenant as the debtor;  or (2) the making by
Tenant of an  assignment or any other  arrangement  for the benefit of creditors
under any state statute. Neither Tenant nor any person claiming through or under
Tenant,  or by reason of any  statute  or order of court,  shall  thereafter  be
entitled to  possession  of the premises  demised but shall  forthwith  quit and
surrender the premises.  If this lease shall be assigned in accordance  with its
terms,  the provisions of the Article 16 shall b e applicable  only to the party
then owning Tenant's interest in this lease.
              (b)  it is  stipulated  and  agreed  that  in  the  event  of  the
termination  of this  lease  pursuant  to (a)  hereof,  Owner  shall  forthwith,
notwithstanding any other provisions of this lease to the contrary,  be entitled
to recover  from  Tenant as and for  liquidated  damages an amount  equal to the
difference  between the rent reserved hereunder for the unexpired portion of the
term demised and the fair and  reasonable  rental value of the demised  premises
for the same period.  In the computation of such damages the difference  between
any installment of rent becoming due hereunder after the date of termination and
the fair and reasonable  rental value of the demised premises for the period for
which  such  installment  was  payable  shall  be  discounted  to  the  date  of
termination at the rate of four percent (4%) per annum.  If such premises or any
part thereof be re-let by the Owner for the unexpired term of said lease, or any
part thereof,  before  presentation of proof of such  liquidated  damages to any
court,  commission or tribunal, the amount of rent reserved upon such re-letting
shall be deemed to be the fair and  reasonable  rental value for the part or the
whole of the  premises  so re-let  during  the term of the  re-letting.  Nothing
herein  contained  shall limit or prejudice  the right of the Owner to prove for
and obtain as liquidated damages by reason of such termination,  an amount equal
to the maximum allowed by any statute or rule of law in effect at the time when,
and governing the proceedings in which,  such damages are to be proved,  whether
or not such  amount  be  greater,  equal  to,  or less  than the  amount  of the
difference referred to above.

Default:                             17.  (1)  (Not used).

                 (2) If the notice  provided  for in (1) hereof  shall have been
given,  and the term shall expire as  aforesaid;  then and in any of such events
Owner may  without  notice,  re-enter  the demised  premises  either by force or
otherwise,  and dispossess Tenant by summary  proceedings or otherwise,  and the
legal  representative of Tenant or other occupant of demised premises and remove
their  effects  and hold the  premises  as if this lease had not been made,  and
Tenant  hereby  waives the  service of notice of  intention  for  re-enter or to
institute legal  proceedings to that end. If Tenant shall make default hereunder
prior to the date fixed as the  commencement of any renewal or extension of this
lease,  Owner may cancel and  terminate  such renewal or extension  agreement by
written notice. See Article 59.

Remedies  of Owner and Waiver of  Redemption:  18. In case of any such  default,
re-entry,  expiration and/or dispossess by summary proceedings or otherwise, (a)
the rent shall become due thereupon and be paid up to the time of such re-entry,
dispossess and/or  expiration.  (b) Owner may re-let the premises or any part or
parts  thereof,  either in the name of Owner or otherwise,  for a term or terms,
which  may at  Owner's  option be less than or exceed  the  period  which  would
otherwise have  constituted  the balance of the term of this lease and may grant
concessions  or free rent or  charge a higher  rental  than that in this  lease,
and/or (c) Tenant or the legal representatives of Tenant shall also pay Owner as
liquidated  damages  for the  failure  of Tenant to  observe  and  perform  said
Tenant's  covenants  herein  contained,  any deficiency  between the rent hereby
reserved and/or  covenanted to be paid and the net amount,  if any, of the rents
collected  on account of the lease or leases of the  demised  premises  for each
month of the period which would  otherwise have  constituted  the balance of the
term of this lease.  The failure of Owner to re-let the  premises or any part or
parts thereof  shall not release or affect  Tenant's  liability for damages.  In
computing such  liquidated  damages there shall be added to the said  deficiency
such expenses a Owner may incur in  connection  with  re-letting,  such as legal
expenses, reasonable attorneys' fees, brokerage, advertising and for keeping the
demised  premises in good order or for  preparing the same for  re-letting.  Any
such liquidated  damages shall be paid in monthly  installments by Tenant on the
rent day  specified  in this lease and any suit brought to collect the amount of
the  deficiency for any month shall not prejudice in any way the rights of Owner
to collect the  deficiency  for any  subsequent  month by a similar  proceeding.
owner,  in putting the demised  premises in good order or preparing the same for
re-rental may, at Owner's option, make such alterations,  repairs, replacements,
and/or  decorations in the demised  premises a Owner,  in Owner's sole judgment,
considers  advisable and  necessary  for the purpose of  re-letting  the demised
premises,  and the making of such  alterations,  repairs,  replacements,  and/or
<PAGE>  decorations  shall not operate or be  construed  to release  Tenant from
liability  hereunder as  aforesaid.  owner hall in no event be liable in any way
whatsoever  for failure to re-let the demised  premises or in the event that the
demised premises are re-let,  for failure to collect the rent thereof under such
re-letting,  and in no event shall Tenant be entitled to receive any excess,  if
any,  of such net  rents  collected  over the sums  payable  by  Tenant to Owner
hereunder.  In the vent of a breach or threatened breach by Tenant of any of the
covenants or provisions hereof, Owner shall have the right of injunction and the
right o invoke any remedy  allowed at law or in equity as if  re-entry,  summary
proceedings  and other  remedies were not herein  provided for.  Mention in this
lease of any particular remedy,  shall not preclude Owner from any other remedy,
in law or in  equity.  Tenant  hereby  expressly  waives  any and all  rights of
redemption granted by or under any present or future laws in the event of Tenant
being evicted or dispossessed  for any cause, or in the event of Owner obtaining
possession of demised  premises,  by reason of the violation by Tenant of any of
the covenants and conditions of this lease, or otherwise.

Fees and Expenses:  19. If Tenant shall default in the observance or performance
of any term or covenant on Tenant's part to be observed or performed under or by
virtue of any of the terms or  provisions  in any article of this  lease,  after
notice if required and upon  expiration of any  applicable  grace period if any,
(except in an emergency),  then,  unless  otherwise  provided  elsewhere in this
lease,  Owner may  immediately  or at any time  thereafter  and  without  notice
perform the obligation of Tenant  thereunder.  if Owner,  in connection with the
foregoing  or in  connection  with any default by Tenant in the  covenant to pay
rent hereunder, makes any expenditures or incurs any obligations for the payment
of  money,   including  but  not  limited  to  reasonable  attorneys'  fees,  in
instituting,  prosecuting or defending any action or proceeding, and prevails in
any such action or proceeding  then Tenant will reimburse owner for such sums so
paid or  obligations  incurred with interest and costs.  The foregoing  expenses
incurred by reason of Tenant's  default  shall be deemed to be  additional  rent
hereunder and shall be paid by Tenant to Owner within  ten(10) days of rendition
of any bill or statement to Tenant  therefor.  if Tenant's lease term shall have
expired  at the  time  of  making  of such  expenditures  or  incurring  of such
obligations, such sums shall be recoverable by Owner as damages.

Building Alterations and Management:  20. Owner shall have the right at any time
without the same  constituting  an eviction and without  incurring  liability to
Tenant therefor to change the arrangement  and/or location of public  entrances,
passageways,  doors, doorways , corridors,  elevators,  stairs, toilets or other
public parts of the building and to change the name,  number or  designation  by
which the  building  may be known.  There  shall be no  allowance  to Tenant for
diminution  of rental  value and no  liability on the part of Owner by reason of
inconvenience,  annoyance  or injury to  business  arising  from  owner or other
Tenants  making any repairs in the building or any such  alterations,  additions
and improvements.  Furthermore, Tenant shall not have any claim against Owner by
reason of Owner's  imposition  of such  controls  of the manner of access to the
building by Tenant's social or business visitors as the Owner may deem necessary
for the security of the building and its occupants.

No  Representations by Owner: 21. Neither Owner nor Owner's agents have made any
representations  or  promises  with  respect to the  physical  condition  of the
building,  the land upon which it is erected or the demised premises,  the rent,
leases,  expenses of operation or any other matter or thing affecting or related
to the premises except as herein expressly set forth and no rights, easements or
licenses are acquired by Tenant by implication or otherwise  except as expressly
set forth in the provisions of this lease. Tenant has inspected the building and
the demised  premises and is  thoroughly  acquainted  with their  condition  and
agrees to take the same "as is" and  acknowledges  that the taking of possession
of the demised  premises by Tenant shall be  conclusive  evidence  that the said
premises  and the  building  of  which  the  same  form a part  were in good and
satisfactory  condition at the time such  possession was so taken,  except as to
latent defects.  All understandings  and agreements  heretofore made between the
parties  hereto are merged in this  contract,  which alone fully and  completely
expresses  the agreement  between  Owner and Tenant and any executory  agreement
hereafter made shall be ineffective  to change,  modify,  discharge or effect an
abandonment  of it in whole or in part,  unless such  executory  agreement is in
writing  and  signed  by the  part  against  whom  enforcement  of  the  change,
modification,  discharge or abandonment is sought.  <PAGE> End of Term: 22. Upon
the expiration or other termination of the term of this lease, Tenant shall quit
and  surrender to Owner the demised  premises,  broom  clean,  in good order and
condition,  ordinary  wear and damages which Tenant is not required to repair as
provided  elsewhere  in this lease  excepted,  and Tenant  shall  remove all its
property.  Tenant's obligation to observe or perform this covenant shall survive
the expiration or other  termination of this lease.  If the last day of the term
of this Lease or any renewal thereof,  falls on Sunday,  this lease shall expire
at noon on the preceding  Saturday unless it be a legal holiday in which case it
shall expire at noon on the preceding business day.

Quiet  Enjoyment:  23. Owner  covenants  and agrees with Tenant that upon Tenant
paying the rent and additional  rent and observing and performing all the terms,
covenants, and conditions, on Tenant's part to be observed and performed, Tenant
may  peaceably  and  quietly  enjoy  the  premises  hereby   demised,   subject,
nevertheless,  to the terms and conditions of this lease including,  but limited
to, Article 31 hereof and to the ground leases,  underlying leases and mortgages
hereinbefore mentioned.

Failure to Give  Possession:  24. If Owner is unable to give  possession  of the
demised premises on the date of the commencement of the term hereof,  because of
the  holding-over  or retention of  possession  of any tenant,  undertenant,  or
occupants  or  if  the  demised   premises  are  located  in  a  building  being
constructed,  because such building has not been  sufficiently  complete to make
the premises  ready for occupancy or because of the fact that a  certificate  of
occupancy has not been  procured,  or for any other  reason,  Owner shall not be
subject to any  liability  for failure to give  possession  on said date and the
validity of the lease shall not be impaired under such circumstances,  nor shall
the same be construed in any wise to extend the term of this lease, but the rent
payable  hereunder  shall be  abated  (provided  Tenant is not  responsible  for
Owner's  inability to obtain  possession or complete  construction)  until after
Owner shall have given Tenant  written  notice that the Owner is able to deliver
possession on condition required by this lease. If permission is given to Tenant
to enter into the possession of the demises premises or to occupy premises other
than the demised premises prior to the date specified as the commencement of the
term of this lease,  Tenant  covenants  and agrees that such  possession  and/or
occupancy shall be deemed to be under all the terms,  covenants,  conditions and
provisions of this lease except the  obligation to pay the fixed annual rent set
forth in the preamble to this lease. The provisions of this article are intended
to  constitute  "an express  provision  to the  contrary"  within the meaning of
Section 223-a of the New York Real Property Law.

No Waiver:  25. The  failure of Owner to seek  redress for  violation  of, or to
insist upon the strict performance of any covenant or condition of this lease or
of any of the Rules or  Regulations,  set forth or  hereafter  adopted by Owner,
shall not prevent a subsequent  act which would have  originally  constituted  a
violation  from  having all the force and effect of an original  violation.  The
receipt by Owner of rent and/or  additional rent with knowledge of the breach of
any  covenant  of this lease  shall not be deemed a waiver of such breach and no
provision of this lease shall be deemed to have been waived by Owner unless such
waiver be in writing  signed by Owner.  No payment by Tenant or receipt by Owner
of a lesser amount than the monthly rent herein stipulated shall be deemed to be
other than on account of the earliest stipulated rent, nor shall any endorsement
or  statement  of any check or any letter  accompanying  any check or payment as
rent be deemed an accord and  satisfaction,  and Owner may accept  such check or
payment  without  prejudice to Owner's right to recover the balance of such rent
or pursue any other remedy in this lease provided. No act or thing done by Owner
or Owner's  agents during the term hereby  demised shall be deemed an acceptance
of a surrender of said premises, and no agreement to accept such surrender shall
be valid  unless in writing  signed by Owner.  No  employee  of Owner or Owner's
agent  shall  have any power to accept  the keys of said  premises  prior to the
termination  of the lease and the delivery of keys to any such agent or employee
shall not operate as a termination of the lease or a surrender of the premises.

Waiver of Trial by Jury:  26. It is  mutually  agreed by and  between  Owner and
tenant that the  respective  parties hereto shall and they hereby do waive trial
by jury in any  action  proceeding  or  counterclaim  brought  by  either of the
parties hereto against the other (except for personal injury or property damage)
on any matter whatsoever arising out of or in any way connected with this lease,
the  relationship  of Owner and Tenant,  Tenant's  use of or  occupancy  of said
<PAGE> premises,  and any emergency  statutory or any other statutory remedy. It
is further  mutually  agreed that in the event Owner commences any proceeding or
action for  possession  including a summary  proceeding  for  possession  of the
premises,  Tenant will not  interpose  any  counterclaim  of whatever  nature or
description  in any such  proceeding  including a  counterclaim  under Article 4
except for statutory mandatory counterclaims.

Inability to Perform:  27. This Lease and the  obligation  of Tenant to pay rent
hereunder  and perform all of the other  covenants and  agreements  hereunder on
part of Tenant to be performed shall in no wise be affected, impaired or excused
because Owner is unable to fulfill any of its obligations under this lease or to
supply or is delayed in  supplying  any service  expressly  or  impliedly  to be
supplied or is unable to make,  or is delayed in making any  repair,  additions,
alterations or decorations or is unable to supply or is delayed in supplying any
equipment, fixtures, or other materials if Owner is prevented or delayed from so
doing by reason of strike or labor troubles or any cause  whatsoever  including,
but limited to, government  preemption or restrictions or by reason of any rule,
order or regulations of any department or subdivision  thereof of any government
agency or by reason of the  conditions  which have been or are affected,  either
directly or indirectly, by war or other emergency.

Bills and Notices:                 28.  See Article 60

Services Provided by Owner:        29.  See Articles 47 and 48.

Captions:                          30.  The Captions are inserted only as a
matter of convenience and for reference and in no way define, limit or describe
 the scope of this lease nor the intent of any provisions thereof.

Definitions:  31. The term "office", or "offices",  wherever used in this lease,
shall not be construed to mean premises used as a store or stores,  for the sale
or display,  at any time, of goods,  wares or merchandise,  of any kind, or as a
restaurant,  shop,  booth,  bootblack or other stand,  barber shop, or for other
similar  purposes or for  manufacturing.  The term  "Owner"  means a landlord or
lessor,  and as used in this lease  means only the owner,  or the  mortgagee  in
possession, for the time being of the land and building (or the owner of a lease
of the building or of the land and building) of which the demised  premises form
a part,  so that in the event of any sale or sales of said land and building and
of said lease,  or in the event of a lease of said building,  or of the land and
building,  the said Owner shall b e and hereby is entirely freed and relieved of
all covenants and  obligations  of Owner  hereunder,  and it shall be deemed and
construed  without further  agreement between the parties or their successors in
interest,  or between the parties and the  purchaser,  at any such sale,  or the
said lessee of the building, or of the land and building,  that the purchaser or
the  lessee of the  building  has  assumed  and  agreed to carry out any and all
covenants  and  obligations  of  Owner,  hereunder.  The  words  "re-enter"  and
"re-entry"  as used in this lease are not  restricted to their  technical  legal
meaning. The term "business days" as used in this lease shall exclude Saturdays,
Sundays  and all days as observed  by the State or Federal  Government  as legal
holidays and those  designated as holidays by the  applicable  building  service
union  employees  service  contract  or by the  applicable  Operating  Engineers
contract with respect to HVAC service. Wherever it is expressly provided in this
lease that consent shall not be unreasonably  withheld such consent shall not be
unreasonably delayed.

Adjacent  Excavation-Shoring:  32.  If an  excavation  shall be made  upon  land
adjacent to the demised  premises,  or shall be authorized to made, Tenant shall
afford to the person causing or authorized to cause such excavation,  license to
enter  upon the  demised  premises  for the  purpose  of doing such work as said
person  shall deem  necessary  to  preserve  the wall or the  building  of which
demised  premises  form a part from  injury or damage and to support the same by
proper foundations  without any claim for damages or indemnity against owner, or
diminution or abatement of rent.

Rules and  Regulations:  33. Tenant and tenant's  servants,  employees,  agents,
visitors, and licensees shall observe faithfully,  and comply strictly with, the
Rules  and  Regulations  and  such  other  and  further   reasonable  Rules  and
Regulations  as Owner or Owner's  agents may from time to time adopt.  Notice of
any additional  rules or regulations  shall be given in such manner as Owner may
<PAGE> elect. In case Tenant disputes the  reasonableness of any additional Rule
or Regulations hereafter made or adopted by Owner or Owner's agents, the parties
hereto  agree to  submit  the  question  of the  reasonableness  of such Rule or
Regulation  for  decision  to the New York  office of the  American  Arbitration
Association,  whose determination shall be final and conclusive upon the parties
hereto.  The right to  dispute  the  reasonableness  of any  additional  Rule or
Regulation  upon  Tenant's  part shall be deemed waived unless the same shall be
asserted by service of a notice,  in writing upon Owner within fifteen (15) days
after the giving of notice  thereof,  Nothing in this lease  contained  shall be
construed to impose upon Owner any duty or  obligation  to enforce the Rules and
Regulations or terms, covenants or conditions in any other lease, as against any
other  tenant and Owner shall not be liable to Tenant for  violation of the same
by any other tenant, its servants, employees, agents, visitors or licensees.

Security:               34.    See Article 49.

Estoppel  Certificate:  35. Tenant,  at any time, and from time to time, upon at
least 10 days' prior notice by Owner, shall execute,  acknowledge and deliver to
Owner,  and/or to any other person,  firm or  corporation  specified by Owner, a
statement  certifying that this Lease is unmodified and 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),  stating the dates to which the rent
and additional  rent have been paid, and stating whether or not there exists any
default by owner under this Lease, and, if so, specifying each such default.

Successors and Assigns:  36. The covenants,  conditions and agreements contained
in this lease  shall bind and inure to the benefit of Owner and Tenant and their
respective  heirs,  distributees,  executors,  administrators,  successors,  and
except as otherwise  provided in this lease,  their  assigns.  Tenant shall look
only  in  Owner's  estate  and  interest  in the  land  and  building,  for  the
satisfaction  of tenant's  remedies for the  collection  of a judgment (or other
judicial  process) against Owner in the event of any default by Owner hereunder,
and no other property or assets of such Owner (or any partner,  member,  officer
or  director  thereof,  disclosed  or  undisclosed),  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 Owner and
Tenant hereunder, or Tenant's use and occupancy of the demised premises.

A Rider  consisting of Articles 37 to 60 and Exhibits A-D is annexed  hereto and
made a part hereof.

              IN WITNESS WHEREOF,  Owner and Tenant have respectively signed and
sealed this lease as of the day and year first above written.

                                 LANDLORD:

                                 FIRST WILLOW, LLC
                                 By:  Flatiron Property Corp.
                                        a member


                                  By:  ss: Bruce McLean
                                  ---------------------


                                  TENANT:

                                  MANCHESTER EQUIPMENT COMPANY, INC.

                                  By:  ss: Barry Steinberg
                                  ------------------------

                                  Tenant's Employer Identification No.

                                          11-2312854
                                          ----------

<PAGE>


1525500015
BES:PAL
FIRST WILLOW, LLC
OFFICE LEASE
MANCHESTER
040297
052197
060497
061697



STATE OF NEW YORK                   )
                                    )ss.:
COUNTY OF NEW YORK)                 )

     On this 26th day of June, 1997,  before me personally came Bruce McLean, to
me  known,  and  known  to  me  to be a  V.P.  of  FLATIRON  PROPERTY  CORP.,  a
corporation,  a managing member in the firm of First Willow, LLC, and the person
described  in and who  executed  the  foregoing  instrument  on  behalf of First
Willow,  LLC in the name of FLATIRON  PROPERTY CORP. and he duly acknowledged to
me that he executed the same on behalf of FLATIRON PROPERTY CORP. for and as the
act and deed of First Willow LLC.

                                ss: Lisa A. Ross
                                                        -----------------
                                                             Notary Public

                                   (Notarized)





STATE OF NEW YORK                   )
                                    )ss.:
COUNTY OF NEW YORK                  )

     On this  20th  day of  June,  1997,  before  me  personally  came  Barry R.
Steinberg,  to me known, who, being by me duly sworn, did depose and say that he
resides  in  Suffolk  County,  State of New York;  that he is the  President  of
MANCHESTER  EQUIPMENT  COMPANY,  INC.,  the  corporation  described in and which
executed  the  foregoing  instrument;  as  TENANT;  and that he signed  his name
thereto by order of the board of directors of said corporation, by like order.

                                ss: Joel Rothlein
                                                         -----------------
                                                               Notary Public

                                   (Notarized)



I:\DATA\WPDOCS\15255_00.015\RES_LEAL\97021622
<PAGE>

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                           TABLE OF CONTENTS TO RIDER

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   ARTICLE                                           CAPTION               PAGE


         37.               TERM; RENTAL..................................  1

         38.               ADJUSTMENTS OF RENT...........................  4

         39.               USE........................................... 10

         40.               LANDLORD'S WORK............................... 10

         41.               CONSTRUCTION, GOVERNING LAW; CONSENTS......... 11

         42.               SUBORDINATION................................. 12

         43.               LEASE NOT BINDING UNLESS EXECUTED............. 14

         44.               CONFLICTS..................................... 15

         45.               ELECTRICITY................................... 15

         46.               FURTHER PROVISIONS AS TO DEFAULT.............. 17

         47.               HEAT AND AIR-CONDITIONING..................... 18

         48.               LANDLORD'S OTHER SERVICES..................... 19

         49.               SECURITY DEPOSIT.............................. 20

         50.               PARTIES BOUND................................. 23

         51.               BROKER........................................ 23

         52.               HAZARDOUS MATERIALS........................... 24

         53.               ARBITRATION................................... 24

         54.               ASSIGNMENT AND SUBLETTING..................... 25

         55.               INSURANCE..................................... 29

         56.               TENANT'S CHANGES.............................. 33

         57.               HOLDING OVER.................................. 36

         58.               CERTAIN DEFINITIONS AND CONSTRUCTION.......... 36


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BES:PAL
FIRST WILLOW, LLC
OFFICE LEASE
MANCHESTER
040297
052197
060497
061697





         59.               ADDENDUM TO ARTICLE 17.......................... 37

         60.               NOTICES......................................... 38

         EXHIBIT A-FLOOR PLAN OF DEMISED PREMISES.......................... 39

         EXHIBIT B-DEFINITIONS............................................. 40

         EXHIBIT C-LANDLORD'S WORK......................................... 43

         EXHIBIT D-CERTIFICATE OF OCCUPANCY................................ 47




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1525500015
BES:PAL
FIRST WILLOW, LLC
OFFICE LEASE
MANCHESTER
040297
052197
060497
061697

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                              RIDER ATTACHED LEASE
                            DATED AS OF JUNE 23, 1997
                                 BY AND BETWEEN
                         FIRST WILLOW, LLC, AS LANDLORD
                                       AND
                  MANCHESTER EQUIPMENT COMPANY, INC., AS TENANT

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37.      TERM; RENTAL

                           A.      The term of this lease, for which the Demised
Premises  are hereby  leased,  shall  commence on the date on which  "Landlord's
Work" (as defined in Article 40 hereof)  has been  substantially  completed  and
Landlord has given Tenant notice thereof which notice,  notwithstanding anything
in this lease to the contrary,  may be hand delivered to Tenant (herein referred
to as the  "Commencement  Date"),  and  shall end at noon of the last day of the
calendar month in which occurs the day preceding the tenth (10th) anniversary of
the  Commencement  Date,  which  ending date is  hereinafter  referred to as the
"Expiration  Date",  or shall end on such  earlier date upon which said term may
expire or be  cancelled  or  terminated  pursuant  to any of the  conditions  or
covenants of this lease or pursuant to law. Promptly  following the Commencement
Date the parties  hereto  (hereinafter  sometimes  referred to as the "parties")
shall enter into a recordable  supplementary  agreement  fixing the dates of the
Commencement  Date and the  Expiration  Date and if they  cannot  agree  thereon
within fifteen (15) days after Landlord's request therefor,  such dates shall be
determined by arbitration in the manner provided in Article 53.

                           B.     The "rents" reserved under this lease, for the
term thereof, shall be and consist of:

                                                       (i)      "fixed rent" of:

                                     (a)      $292,000.00 per annum ($24,333.33
per month) from the  Commencement  Date through the day next preceding the fifth
(5th) anniversary of the Commencement Date, both dates inclusive; and


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BES:PAL
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OFFICE LEASE
MANCHESTER
040297
052197
060497
061697




                                  (b)      $321,200.00 per annum ($26,766.67 per
month) from the fifth (5th)  anniversary of the Commencement Date and continuing
thereafter throughout the remainder of the term of this lease,

all of which shall be payable in equal  monthly  installments  in advance on the
first day of each and every calendar month during the term of this lease (except
that Tenant shall pay,  upon the execution and delivery of this lease by Tenant,
the sum of $27,679.17,  to be applied against the first rents becoming due under
this lease), and

                                                 (ii)     "additional rent" con-
sisting of all such other sums of money as shall  become due from and payable by
Tenant to Landlord  hereunder  (for default in payment of which  Landlord  shall
have the same remedies as for a default in payment of fixed rent),

all to be paid to Landlord at its office,  or such other place, or to such agent
and at such place,  as Landlord  may  designate  by notice to Tenant,  in lawful
money of the United States of America.

                           C.     Tenant shall pay the fixed rent and additional
rent herein reserved promptly as and when the same shall become due and payable,
without  demand  therefor  and  without  any  abatement,   deduction  or  setoff
whatsoever except as expressly provided in this lease.

                           D.     If the Commencement Date occurs on a day other
than the first day of a calendar  month or the  Expiration  Date occurs on a day
other than the last day of a calendar  month,  the fixed rent for such  calendar
month shall be prorated and with respect to the first month,  the balance of the
first month's  fixed rent  theretofore  paid shall be credited  against the next
monthly installment of fixed rent.

                           E.      Notwithstanding anything in this lease to the
contrary,  provided Tenant is not then in default under this lease which default
continues after notice and the expiration of any applicable cure period,  Tenant
shall have no obligation to pay the first five (5) full monthly  installments of
the fixed rent due after the Commencement Date.

                           F.     If, at any time during the term of this lease,
any requirement of public  authority shall have the effect of limiting,  for any
period of time,  the amount of the rents  payable by Tenant,  or  receivable  by
Landlord,  under this lease,  and the maximum  rents so  permitted to be paid by
Tenant,  or received by Landlord,  hereunder shall be less than the rents herein
reserved, then:

                                               (i)      throughout the period of
limitation, Tenant shall remain liable for the maximum amount of
rents that is lawfully payable; and


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OFFICE LEASE
MANCHESTER
040297
052197
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                                              (ii)     if and when the period of
limitation ends, the requirement of public authority imposing such limitation is
repealed,  or such  limitation is restrained  or rendered  unenforceable  by any
order or ruling of a court of appropriate jurisdiction:

                                     (a)      to the extent that the same is not
prohibited by any requirement of public authority, Tenant shall pay to Landlord,
on demand,  all amounts that would have been due from Tenant to Landlord  during
the period of limitation,  but that were not paid because of the requirements of
public authorities; and

                                       (b)      thereafter, Tenant shall pay to
Landlord  all of the rents  reserved  under this  lease,  all of which  shall be
calculated as if there had been no intervening period of limitation.

                           G.       Tenant acknowledges that it has no rights to
any development  rights,  "air rights" or comparable  rights  appurtenant to the
Land  and  Building,  and  consents,  without  further  consideration,   to  any
utilization  of such  rights by  Landlord  and agrees to  promptly  execute  and
deliver  any  instruments   which  may  be  requested  by  Landlord,   including
instruments merging zoning lots, evidencing such acknowledgment and consent. The
provisions  of this Section G shall be deemed to be and shall be construed as an
express  waiver  by  Tenant  of any  interest  Tenant  may have as a  "party  in
interest"  (as such  quoted term is defined in Section  12-10  Zoning Lot of the
Zoning Resolution of the City of New York) in the Land and Building.

                           H.    Notwithstanding anything hereinabove or in this
lease to the contrary,  in the event  Landlord fails to  substantially  complete
Landlord's  Work and  notify  Tenant  thereof  by the date that shall be six (6)
months  from the date of this lease  (hereinafter  referred  to as the  "Outside
Date") for any reason  other than (i) a "Tenant's  Delay" (as defined in Exhibit
C, Part D hereof) or (ii) one of the occurrences set forth in Article 27, Tenant
shall be entitled to terminate this Lease by notice (hereinafter  referred to as
the  "Termination  Notice") to Landlord sent within five (5) business days after
the Outside Date  (hereinafter  referred to as the "Termination  Date").  In the
event Tenant sends the Termination  Notice as set forth above,  this lease shall
terminate  and  neither  party  shall  have any  further  rights or  obligations
hereunder  and said  right of  termination  shall be  Tenant's  sole  remedy for
Landlord's failure to substantially  complete  Landlord's Work and notify Tenant
thereof by the Outside  Date.  In the event of such  termination,  Landlord will
return to Tenant the first  months' rent paid to Landlord upon the execution and
delivery  of this  lease  together  with the cash  security  or Letter of Credit
delivered to Landlord  pursuant to the  provisions of Article 6. If the security
is in the form of Letter of Credit,  Landlord  will  cooperate  with Tenant,  at
Tenant's expense, to have same cancelled.


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BES:PAL
FIRST WILLOW, LLC
OFFICE LEASE
MANCHESTER
040297
052197
060497
061697





38.      ADJUSTMENTS OF RENT

                           A.       Tax Escalation.  For the purpose of Sections
A-F of this Article 38:

                                            (i)      "Taxes" shall mean the real
estate taxes and assessments and special  assessments  imposed upon the Building
and the land upon which same is located  (hereinafter  referred to as the "Land"
or "land") including, without limitation, any assessments for public improvement
or benefit to the  Building  or Land or the  locality  in which the  Building is
situated,  such as a Business Improvement District taxes and assessments.  If at
any time during the term of this lease the methods of taxation prevailing at the
commencement  of the term  hereof  shall be  altered so that in lieu of or as an
addition  to or as a  substitute  for  the  whole  or any  part  of  the  taxes,
assessments,  levies,  impositions or charges now levied, assessed or imposed on
real estate and the  improvements  thereon,  there shall be levied,  assessed or
imposed (a) a tax, assessment, levy, imposition or charge wholly or partially as
capital  levy  or  otherwise  on the  rents  received  therefrom,  or (b) a tax,
assessment,  levy, imposition or charge measured by or based in whole or in part
upon the  Demised  Premises  and  imposed  upon  Landlord,  or (c) a license fee
measured  by the  rents  payable  by Tenant to  Landlord,  then all such  taxes,
assessments,  levies, impositions or charges, or the part thereof so measured or
based,  shall be deemed to be included  within the term "Taxes" for the purposes
hereof.

                       The term "Taxes" shall not include
any income, franchise, excise, profit, transfer,  inheritance,  capital stock or
other  similar  tax imposed on Landlord  unless,  due to a future  change in the
method of taxation, an income, franchise, excise, profit, transfer, inheritance,
capital stock or other tax shall be levied against  Landlord in substitution for
any tax or increase therein which would otherwise constitute "Taxes", as defined
in the first sentence of paragraph  (i), in which event such income,  franchise,
excise,  profit,  transfer,  inheritance,  capital  stock or other  tax shall be
deemed to be  included  in the term  "Taxes"  but any such income or similar tax
shall be  computed  as if the  Building  and the Land were the only  property of
Landlord.

                                            (ii)     "Base Tax Year" shall mean
fiscal year July 1, 1997-June 30, 1998;

                        (iii) "Base Tax Rate" shall mean
the Taxes, as finally determined, for the Base Tax Year.

                                            (iv)     "Tax Year" shall mean the
fiscal year for which Taxes are levied by the governmental
authority.

                                             (v)      "Tenant's Proportionate
Share" shall mean for purposes of this lease and all  calculations in connection
herewith,  6.37%,  which  has been  computed  on the  basis of a  fraction,  the
numerator of which is the agreed rentable square

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OFFICE LEASE
MANCHESTER
040297
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foot area of the Demised Premises as set forth below (which rentable square foot
area is hereinafter  sometimes referred to as the  "Multiplication  Factor") and
the denominator of which is the agreed rentable square foot area of the Building
above grade level as set forth below. The parties agree that the rentable square
foot area of the Demised  Premises  shall be deemed to be 14,600 square feet and
that the agreed  rentable square foot area of the Building shall be deemed to be
229,079 square feet (hereinafter referred to as the "Building Area").

                                              (vi)     "Tenant's Projected Share
of Taxes" shall mean the Tax Payment (as hereinafter  defined),  if any, made by
Tenant for the prior Tax Year  divided  by twelve  (12) and  payable  monthly by
Tenant to Landlord as additional rent.

                           B.       If the Taxes for any Tax Year shall be more
than the Base Tax Rate,  Tenant shall pay, as additional rent for such Tax Year,
an amount equal to Tenant's Proportionate Share of the amount by which the Taxes
for such Tax Year are greater  than the Base Tax Rate.  (The  amount  payable by
Tenant is hereinafter referred to as the "Tax Payment"). The Tax Payment and the
Base Tax Rate shall be appropriately  prorated, if necessary, to correspond with
that  portion of a Tax Year  occurring  within the Term of this  lease.  The Tax
Payment  shall be  payable by Tenant  within  ten (10) days  after  receipt of a
demand from Landlord  therefor,  which demand shall be  accompanied by a copy of
the tax bill together with  Landlord's  computation  of the Tax Payment.  If the
Taxes for any Tax Year are  payable to the taxing  authority  on an  installment
basis,  Landlord may serve such demands  upon,  and the Tax Payment for such Tax
Year shall be payable by Tenant, on a corresponding installment basis.

                           C.     Notwithstanding the fact that the increase in
rent is measured by an increase in taxes,  such increase is additional  rent and
shall be paid by Tenant as provided  herein  regardless  of the fact that Tenant
may be exempt,  in whole or in part,  from the payment of any taxes by reason of
Tenant's  diplomatic  or  other  tax  exempt  status  or for  any  other  reason
whatsoever.

                           D.       Only Landlord shall be eligible to institute
tax reduction or other proceedings to reduce the assessed  valuation of the Land
and Building.  Should  Landlord be successful in any such reduction  proceedings
and obtain a rebate or a reduction in assessment for periods during which Tenant
has paid or is  obligated to pay  Tenant's  Proportionate  Share of increases in
Taxes then either (i) Landlord shall, in the event a rebate is obtained,  return
Tenant's Proportionate Share of such rebate to Tenant after deducting Landlord's
expenses,  including  without  limitation,  attorneys' fees and disbursements in
connection with such rebate (such expenses  incurred with respect to a rebate or
reduction in assessment being  hereinafter  referred to as "Tax Expenses"),  or,
(ii) if a reduction in assessment is obtained  prior to the date Tenant would be
required to pay Tenant's Proportionate Share of

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BES:PAL
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OFFICE LEASE
MANCHESTER
040297
052197
060497
061697




such  increase in Taxes,  Tenant  shall pay to Landlord,  upon written  request,
Tenant's Proportionate Share of such Tax Expenses.

                           E.       Commencing with the first Tax Year after
Landlord  shall be entitled to receive a Tax Payment,  at  Landlord's  election,
Tenant shall pay to Landlord, as additional rent for the then Tax Year, Tenant's
Projected Share of Taxes. Upon each date that a Tax Payment or an installment on
account  thereof  shall be due from  Tenant  pursuant  to the terms of Section B
hereof,  Landlord  shall apply the  aggregate  of the  installments  of Tenant's
Projected  Share of Taxes then on account with Landlord  against the Tax Payment
or  installment  thereof then due from Tenant.  In the event that such aggregate
amount  shall be  insufficient  to  discharge  such Tax Payment or  installment,
Landlord  shall so notify Tenant in a demand served upon Tenant  pursuant to the
terms of Section B, and the amount of Tenant's  payment  obligation with respect
to such Tax Payment or  installment  pursuant to Section B shall be equal to the
amount of the insufficiency. If, however, such aggregate amount shall be greater
than the Tax Payment or installment, Landlord shall forthwith either (i) pay the
amount of excess directly to Tenant  concurrently with the notice or (ii) permit
Tenant to credit the amount of such excess  against the next payment of Tenant's
Projected Share of Taxes due hereunder and, if the credit of such payment is not
sufficient to liquidate the entire  amount of such excess,  Landlord  shall then
pay the amount of any difference to Tenant.

                           F.            (i)      Anything in this Article
38 to the contrary notwithstanding, in the event that the holder of any mortgage
or the lessor of any superior  lease (as such terms are defined in Section A. of
Article  42) shall  require  advance  payments  from the  Landlord on account of
Taxes, then Tenant will pay Tenant's Proportionate Share of any amounts required
to be paid in advance  (but not more often than  monthly) by  Landlord  with the
holder of the  superior  mortgage  or the  lessor of the  superior  lease to the
extent  that such  payments  made by  Landlord  exceed  the Base Tax  Rate.  Any
payments to be made by Tenant  under this Section 38 F(i) shall be made ten (l0)
days prior to the date  Landlord is required to make such payments to the holder
of the superior mortgage or the lessor of the superior lease;

                                          (ii)     Anything in Sections A
through F to the  contrary  notwithstanding,  in no event  whatsoever  shall the
fixed rent be reduced  below the fixed  rent  initially  set forth in Article 37
hereof as same may be increased by  provisions of this lease other than Sections
38A-F.

                           G.        Expense Escalation.  For purposes of
Sections G-L of this Article 38:

     (i)  "Operating  Expenses"  shall  mean  any or all  expenses  incurred  by
Landlord in connection with the operation of the Building including all expenses
incurred  as a result  of  Landlord's  compliance  with  any of its  obligations
hereunder and such expenses shall include: (a) salaries, wages,
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OFFICE LEASE
MANCHESTER
040297
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medical, surgical and general welfare benefits (including group life insurance),
pension  payments and other fringe benefits of employees of Landlord  engaged in
the operation and  maintenance  of the Building (The salaries and other benefits
aforesaid of such employees  servicing the Building shall be comparable to those
of employees servicing buildings similar to the Building, located in the Borough
of  Manhattan.);  (b) payroll  taxes,  worker's  compensation,  uniforms and dry
cleaning for the employees  referred to in subdivision  (a); (c) the cost of all
charges for steam,  heat,  ventilation,  air  conditioning  and water (including
sewer rental)  furnished to the Building  and/or used in the operation of all of
the  service  facilities  of the  Building  and  the  cost  of all  charges  for
electricity  furnished to the public and service  areas of the  Building  and/or
used in the operation of all of the service facilities of the Building including
any  taxes on any of such  utilities;  (d) the  cost of all  charges  for  rent,
casualty,  war risk insurance (if obtainable from the United States  government)
and of liability insurance for the Building to the extent that such insurance is
required to be carried by Landlord under any superior lease or superior mortgage
or if not required  under any superior  lease or superior  mortgage  then to the
extent  such  insurance  is carried  by owners of  Buildings  comparable  to the
Building;  (e) the cost of all  building  and  cleaning  supplies for the common
areas of the Building and charges for telephone  for the Building;  (f) the cost
of all charges for management,  security, cleaning and service contracts for the
Building (if no managing agent is employed by Landlord,  there shall be included
in  Operating  Expenses  a sum  equal to 2.5% of all  rents  and  other  charges
collected from tenants or other  permitted  occupants of the Building);  (g) the
cost of rentals of capital equipment designed to result in savings or reductions
in  Operating  Expenses;  and (h) the  cost  incurred  in  connection  with  the
maintenance and repair of the Building. Operating Expenses shall not include (1)
administrative  wages and salaries;  (2) renting  commissions;  (3) franchise or
income  taxes of  Landlord;  (4)  Taxes on the Land and  Building;  (5) costs of
painting and decorating for any occupant's  space; (6) interest and amortization
under mortgages;  and (7) expenditures for capital improvements except (A) those
which under  generally  applied real estate practice are expensed or regarded as
deferred  expenses,  (B)  capital  improvements  required  by law or (C) capital
improvements  that are designed to result in a saving in the amount of Operating
Expenses,  in any of such cases the cost thereof  shall be included in Operating
Expenses for the Operational Year in which the costs are incurred and subsequent
Operational  Years,  amortized  on a straight  line  basis over the useful  life
thereof as determined by generally accepted accounting  principles  consistently
applied (except that, with respect to a capital improvement which is of the type
specified in clause (C),  such cost shall be amortized  over such period of time
as Landlord  reasonably  estimates such savings in Operating Expenses will equal
Landlord's cost for such capital improvement), with an interest factor in any of
such cases equal to two (2%) percent above the prime rate (hereinafter  referred
to as the "Base Rate") of The Chase  Manhattan  Bank (or  Citibank,  N.A. if The
Chase Manhattan Bank shall not then have an established prime rate; or the prime
rate of any major banking institution doing

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MANCHESTER
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business  in  New  York  City,   as  selected  by  Landlord,   if  none  of  the
aforementioned banks shall be in existence or have an established prime rate) at
the time of Landlord's having incurred said expenditure;

                                               (ii)     "Operational Year" shall
mean each calendar year during the Term hereof.

                          (iii) "Base Operational Year"
shall be calendar year 1998;

                                               (iv)     "Operating Expense Base"
shall mean Operating Expenses for the Base Operational Year;

                                               (v)     "Tenant's Projected Share
of Operating  Expenses" shall mean Tenant's  Operating Expense Payment,  if any,
for the prior  Operational  Year  divided by twelve (12) and payable  monthly by
Tenant to Landlord as additional rent.

                  If  during  all or part of the  Base  Operational  Year or any
other  Operational  Year,  Landlord shall not furnish any particular  item(s) of
work  or  service  (which  would  otherwise   constitute  an  Operating  Expense
hereunder)  to office  portions  of the  Building  due to the fact that (A) such
portions  are not  occupied  or leased,  (B) such item of work or service is not
required or desired by the tenant of such portion,  or (C) such tenant is itself
obtaining and providing such item of work or service,  then, for the purposes of
computing Operating Expenses, the amount for such item and for such period shall
be  deemed  to be  increased  by an  amount  equal to the  additional  costs and
expenses  which  would  reasonably  have been  incurred  during  such  period by
Landlord if it had at its own expense furnished such item of work or services to
such portion of the Building or to such tenant.

                           H.       After the expiration of the Base Operational
Year,  Landlord  shall  furnish  Tenant a statement  setting forth the aggregate
amount  of the  Operating  Expenses  for the Base  Operational  Year.  After the
expiration of each Operational Year, after the Base Operational  Year,  Landlord
shall  furnish  Tenant a statement  setting  forth the  aggregate  amount of the
Operating Expenses for such Operational Year. The statement furnished under this
Section H is hereinafter referred to as an "Operating Statement".

                           I.     If the Operating Expenses for any Operational
Year,  including the Operational Year in effect on the Commencement  Date, shall
be more than the Operating  Expense Base,  Tenant shall pay, as additional  rent
for such Operational  Year, an amount equal to Tenant's  Proportionate  Share of
the amount by which the Operating Expenses for such Operational Year are greater
than the Operating  Expense Base.  (The amount  payable by Tenant is hereinafter
referred to as the "Operating  Expense  Payment".) The Operating Expense Payment
shall  be  prorated,  if  necessary,  to  correspond  with  that  portion  of an
Operational Year occurring within the Term of this lease. The Operating  Expense
Payment shall

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be payable by Tenant within ten (10) days after receipt of the Operating
Statement.

                           J.       Commencing with the first Operational Year
after Landlord shall be entitled to receive an Operating Expense Payment, Tenant
shall pay to Landlord as additional rent for the then Operational Year, Tenant's
Projected Share of Operating  Expenses.  If the Operating Statement furnished by
Landlord  to Tenant at the end of then  Operational  Year  shall  indicate  that
Tenant's  Projected Share of Operating  Expenses  exceeded the Operating Expense
Payment,  Landlord shall forthwith  either (i) pay the amount of excess directly
to Tenant  concurrently  with the  notice or (ii)  permit  Tenant to credit  the
amount of such excess against the subsequent  payment of rent due hereunder;  if
such  Operating  Statement  furnished  by  Landlord  to Tenant  hereunder  shall
indicate that the Operating Expense Payment exceeded Tenant's Projected Share of
Operating Expenses for the then Operational Year, Tenant shall forthwith pay the
amount of such excess to Landlord.

                           K.       Every Operating Statement given by Landlord
pursuant to Section H shall be  conclusive  and binding  upon Tenant  unless (i)
within 30 days after the receipt of such Operating Statement Tenant shall notify
Landlord that it disputes the correctness of the Operating Statement, specifying
the  particular  respects  in which the  Operating  Statement  is  claimed to be
incorrect,  and (ii) if such dispute  shall not have been settled by  agreement,
shall  submit the  dispute to  arbitration  within 90 days after  receipt of the
Operating  Statement.  Pending the determination of such dispute by agreement or
arbitration as aforesaid,  Tenant shall within thirty (30) days after receipt of
such Operating  Statement,  pay additional  rent, if due, in accordance with the
Operating  Statement  and such  payment  shall be without  prejudice to Tenant's
position.  If the dispute shall be determined in Tenant's favor, Landlord shall,
on  demand,  pay Tenant the amount of  Tenant's  overpayment  of rents,  if any,
resulting from compliance with the Operating Statement. Landlord agrees to grant
Tenant  reasonable  access to  Landlord's  books and  records for the purpose of
verifying Operating Expenses incurred by Landlord and to have and make copies of
any and all bills and vouchers  relating thereto and subject to reimbursement by
Tenant as herein provided.

                           L.       Landlord's failure during the lease term to
prepare and deliver any of the tax bills, statements,  notice or bills set forth
in this Article 38, or Landlord's failure to make a demand, shall not in any way
cause  Landlord  to  forfeit  or  surrender  its  rights to  collect  any of the
foregoing  items of additional rent which may have become due during the term of
this lease.  Tenant's  liability  for the amounts due under this  Article 38 and
Landlord's  obligation  to make any payments due to Tenant under this Article 38
shall survive the expiration of the Term.


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39.      USE

                           A.       Tenant shall use and occupy the demised
premises  for  executive  and  general  offices,   and  for  no  other  purpose.
Notwithstanding  the foregoing and subject to the provisions of Sections B and C
of  this  Article  39,  the  demised  premises  may be used  for  the  following
additional  uses: a conference  facility,  sales,  training  facility,  computer
related  service and  maintenance  facility,  showroom  and  demonstration  room
facility.

                           B.     If any governmental license or permit shall be
required for the proper and lawful  conduct of Tenant's  business in the demised
premises,  or any part thereof,  Tenant, at its expense,  shall duly procure and
thereafter maintain such license or permit and submit the same for inspection by
Landlord. Tenant shall at all times comply with the terms and conditions of each
such license or permit.

                           C.     Tenant shall not at any time use or occupy, or
suffer or permit anyone to use or occupy, the demised premises,  or do or permit
anything to be done in the demised premises,  in violation of the Certificate of
Occupancy  for the demised  premises or for the  Building or in violation of any
superior  mortgage  or superior  lease.  A copy of the  current  Certificate  of
Occupancy for the Building is annexed hereto as Exhibit D.

                           D.     Landlord hereby represents to Tenant that the
existing  leases for the fourth  (4th) and sixth (6th) floors of the Building do
not permit such spaces to be used as a factory and  Landlord  agrees that during
the term of this lease, it will not permit such floors to be used as a factory.

40.      LANDLORD'S WORK

                           A.     Landlord agrees to perform, at Landlord's sole
cost and expense,  the work (hereinafter  referred to as "Landlord's  Work") set
forth on, and in accordance with, the provisions of Exhibit C.

                           B.       Tenant has fully inspected the demised
premises,  is fully  familiar  with the  condition  thereof  and (except for the
performance  of the  Landlord's  Work) agrees to take  possession of the demised
premises in their  present  "as-is"  condition.  Tenant shall  perform all other
necessary or desirable work in connection  with  preparing the demised  premises
for its initial  occupancy  (hereinafter  referred to as "Tenant's Work") at its
sole cost and expense  pursuant  to the terms of Articles 3 and 56 hereof,  as a
Tenant's Change (as defined in Article 56 below).

                           C.       Except as set forth on Exhibit C, Tenant may
not perform any Tenant's  Work (or any other work) until after the  Commencement
Date has occurred,  unless Landlord,  in its sole judgment,  determines that the
performance of the Tenant's Work will

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MANCHESTER
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not interfere with or delay the completion of the Landlord's Work,
and so notifies Tenant.

                           D.      Landlord's Work shall be deemed substantially
complete  notwithstanding  the fact  that  minor  or  insubstantial  details  of
construction,  mechanical adjustment, or decoration remain to the performed, the
noncompletion  of which does not materially  interfere  with the  performance of
Tenant's Work or with Tenant's use of the Demised  Premises after the completion
of Tenant's  Work.  Landlord's  Work shall be performed in a workmanlike  manner
and,  subject to the  provisions  of Exhibit C, in  accordance  with laws and/or
requirements of governmental authorities having jurisdiction.


41.      CONSTRUCTION, GOVERNING LAW; CONSENTS

                           A.     If any of the provisions of this lease, or the
application  thereof to any person or  circumstances,  shall, to any extent,  be
invalid or  unenforceable,  the remainder of this lease,  or the  application of
such provision or provisions to persons or circumstances  other than those as to
whom or  which  it is held  invalid  or  unenforceable,  shall  not be  affected
thereby, and every provision of this lease shall be valid and enforceable to the
fullest extent permitted by law.

                           B.       This lease shall be governed in all respects
by the laws of the State of New York.

                           C.      If Tenant shall request Landlord's consent or
approval  pursuant  to any of the  provisions  of this lease or  otherwise,  and
Landlord shall fail or refuse to give, or shall delay in giving, such consent or
approval,  Tenant shall in no event make, or be entitled to make,  any claim for
damages (nor shall Tenant  assert,  or be entitled to assert,  any such claim by
way of defense,  set-off,  or counterclaim) based upon any claim or assertion by
Tenant that Landlord  unreasonably  withheld or delayed its consent or approval,
and Tenant  hereby  waives any and all rights  that it may have,  from  whatever
source derived,  to make or assert any such claim.  Tenant's sole remedy for any
such failure,  refusal, or delay shall be an action for a declaratory  judgment,
specific  performance,  or  injunction,  or for a  determination  as to  whether
Landlord  reasonably  withheld its consent pursuant to either (i) the Simplified
Procedure For Court  Determination  of Disputes as set forth in the CPLR ss.3031
et seq. (or any  successor  thereto),  or (ii)  arbitration  under the Expedited
Procedures  provisions  (presently  Rules 53 through  57, as same may be amended
from  time to  time)  of the  American  Arbitration  Association  (or  successor
thereto) in the City of New York (and the fees and expenses of such  arbitration
shall be borne by the unsuccessful  party),  and, if Tenant elects either (i) or
(ii) above,  the decision  shall be final and  conclusive  on the parties.  Such
remedies shall be available only in those instances where Landlord has expressly
agreed in writing not to unreasonably withhold or delay its consent or

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MANCHESTER
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approval or where, as a matter of law, Landlord may not unreasonably withhold
or delay the same.

42.      SUBORDINATION

                           A.      For the purposes of this lease, the mortgages
referred  to in  Article  7 of  this  lease  are  herein  defined  as  "superior
mortgages"  and the leases  referred to in said Article 7 are herein  defined as
"superior  leases." In the event of any act or  omission of Landlord  that would
give Tenant the right, immediately or after lapse of a period of time, to cancel
or terminate this lease, or to claim a partial or total  eviction,  Tenant shall
not  exercise  such right (i) until it has given  written  notice of such act or
omission to the holder of each superior mortgage and the lessor of each superior
lease whose name and address shall  previously  have been furnished to Tenant in
writing and (ii) unless such act or omission shall be one that is not capable of
being  remedied by Landlord or such holder or lessor within a reasonable  period
of time, until a reasonable period for remedying such act or omission shall have
elapsed  following  the giving of such notice and  following  the time when such
holder or lessor  shall have become  entitled  under such  superior  mortgage or
superior lease, as the case may be, to remedy the same (which  reasonable period
shall in no event be less than the period to which  Landlord  would be  entitled
under this lease or  otherwise,  after similar  notice,  to effect such remedy),
provided  that such  holder or lessor  shall give Tenant  written  notice of its
intention to remedy such act or omission and shall, with due diligence, commence
and continue to do so.

                           B.    If the lessor of a superior lease or the holder
of a superior mortgage shall succeed to the rights of Landlord under this lease,
whether through  possession or foreclosure  action or delivery of a new lease or
deed,  then,  at the request of the party so  succeeding  to  Landlord's  rights
(herein  sometimes  referred  to as the  "successor  landlord")  and  upon  such
successor  landlord's  written agreement to accept Tenant's  attornment,  Tenant
shall attorn to and recognize such successor landlord as Tenant's landlord under
this lease,  and shall  promptly  execute and deliver any  instrument  that such
successor landlord may reasonably request to evidence such attornment. Upon such
attornment,  this lease shall  continue in full force and effect as, or as if it
were, a direct lease between the successor landlord and Tenant,  upon all of the
terms,  conditions  and  covenants  as are set forth in this  lease and shall be
applicable after such attornment,  except that the successor  landlord shall not
be:

                                           (i)      liable for any previous act
or omission of Landlord (or its  predecessor  in interest)  under this lease but
should such act or omission continue after such successor landlord shall acquire
title  to the  Building,  successor  landlord  shall be  liable  for such act or
omission from and after the date it acquires title to the Building;


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                                                 (ii)     bound by any previous
modification of this lease, not expressly  provided for in this lease, or by any
previous   prepayment  of  more  than  one  month's  fixed  rent,   unless  such
modification or prepayment shall have been expressly  approved in writing by the
lessor of the superior lease or the holder of the superior  mortgage  through or
by reason of which the successor  landlord shall have succeeded to the rights of
Landlord under this lease;

                        (iii) responsible for any monies
owing by Landlord to the credit of Tenant;

                                                (iv)     subject to any credits,
offsets, claims, counterclaims, demands or defenses which Tenant
may have against Landlord (or its predecessors in interest);

                                                 (v)    bound by any covenant to
undertake or complete any  construction  of the Demised  Premises or any portion
thereof or pay for or reimburse Tenant for any costs incurred in connection with
such construction;

                        (vi) required to account for any
security deposit other than any security deposit actually delivered to the
successor landlord;

                        (vii) bound by any obligation to
make any  payment  to  Tenant  or grant or be  subject  to any  credits  (except
pursuant  to  Section  37E),  except  for  services,  repairs,  maintenance  and
restoration  provided  for under  this lease to be  performed  after the date of
attornment, it being expressly understood,  however, that the successor landlord
shall not be bound by an  obligation  to make  payment to Tenant with respect to
construction performed by or on behalf of Tenant at the Demised Premises.

                           C.     If, in connection with obtaining financing or
refinancing  for the  Building of which the  Demised  Premises  form a part,  or
Landlord's  estate and  interest  therein,  a lender  shall  request  reasonable
modifications  to this lease as a condition to such  financing  or  refinancing,
Tenant will not withhold, delay or defer its consent thereto, provided that such
modifications  do not  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 and/or permit the curing of such defaults by
such lender  together with the granting of such  additional time for such curing
as may be  required  for  such  lender  to get  possession  of the  Building  or
Landlord's  interest  therein)  or  materially  adversely  affect the  leasehold
interest hereby created. In no event shall a requirement that the consent of any
such  lender be given for any  modification  of this  lease or,  subject  to the
provisions of this lease for any assignment or sublease, be deemed to materially
adversely affect the leasehold interest hereby created.


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                           D.       Notwithstanding anything to the contrary set
forth in  Article  7 or this  Article  42,,  this  lease  shall be  subject  and
subordinate  to (i) any  superior  mortgages  now  existing  or made by Landlord
subsequent  to the date  hereof and (ii) any  superior  leases now  existing  or
entered into by Landlord  subsequent  to the date hereof  provided that Landlord
shall  obtain  a  Subordination,   Non-Disturbance   and  Attornment   Agreement
(hereinafter referred to as an "SNDA") for the benefit of Tenant from the holder
of such  superior  mortgage or from the lessor under such  superior  lease which
SNDA shall be in form and content then utilized by such holder or lessor,  shall
not increase  Tenant's  obligations or reduce  Tenant's rights under this lease,
and  which  shall  contain,  in  substance,  the  provisions  set  forth  in the
subsections (a) and (b) below:

                                       (a)      From the lessor under a superior
lease:An agreement,  for the benefit of Tenant, to the effect,  inter alia, that
as long as Tenant is not in default in the  payment of fixed rent or  additional
rent or any other term,  covenant or condition of this lease and provided Tenant
attorns to such lessor  under the terms and  provisions  of this lease,  (1) its
rights  as  Tenant  hereunder  shall  not be  affected  or  terminated,  (2) its
possession  of the Demised  Premises  shall not be  disturbed,  (3) no action or
proceeding  shall be  commenced  to remove or evict  Tenant,  and (4) this lease
shall at all  times  continue  in full  force  and  effect  notwithstanding  the
termination  or expiration  of the superior  lease,  prior to the  expiration or
termination of this lease.

                                          (b)      From the holders of superior
mortgages:An  agreement,  for the benefit of Tenant, to the effect,  inter alia,
that as long as  Tenant  is not in  default  in the  payment  of  fixed  rent or
additional rent or any other term,  covenant or condition of this lease, (1) its
rights as Tenant  hereunder  shall not be terminated  and (2) the  possession of
Tenant shall not be disturbed by the mortgagee or by any proceedings on the debt
which  any such  superior  mortgage  secures  or by  virtue  of a right or power
contained in any such superior  mortgage or the bond or note secured thereby and
(3) that any sale at foreclosure will be subject to this lease.

                           E.       Landlord represents that as of the date of
execution  hereof,  (i) there are no existing  superior  mortgages  other than a
mortgage held by Credit Suisse First Boston Mortgage  Capital LLC and (ii) there
are no existing superior leases.

43.      LEASE NOT BINDING UNLESS EXECUTED

         Submission  by Landlord  of this lease for  execution  by Tenant  shall
confer no rights nor impose any  obligations  on either  party  unless and until
both Landlord and Tenant shall have executed this lease and duplicate  originals
thereof shall have been delivered to the respective parties.


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44.      CONFLICTS

         In the event of any conflict  between the  provisions of this Rider and
the printed portion of this lease, the provisions of this Rider shall control.

45.      ELECTRICITY

                           A.                 (i)      The Building is equipped
with  risers,  feeders  and wiring to furnish  electric  service to the  Demised
Premises.  Additionally  a meter  system  will be  furnished  and  installed  by
Landlord,  as part of  Landlord's  Work,  to measure  the amount of "Usage"  (as
defined in Section  B(i))  solely to the Demised  Premises.  Where more than one
meter  measures the amount of Usage,  Usage through each meter shall be computed
and billed separately in accordance with the provisions of this Article 45;

                                               (ii)     Any additional risers,
feeders or other  equipment or service  proper or  necessary to supply  Tenant's
electrical  requirements,  will, upon written request of Tenant, 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 the  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.
Rigid conduit only will be allowed.

                           B. For purposes of Sections B and C:

                         (i) "Usage" shall mean Tenant's
actual usage of electricity in the Demised Premises as measured by the aforesaid
metering  system for each calendar  month or such other period as Landlord shall
determine  during the term of this lease and shall include the quantity and peak
demand  (kilowatt  hours and kilowatts) and all  applicable  taxes,  surcharges,
demand charges, energy charges, fuel adjustment charges, time of day charges and
other adjustments made from time to time by the public utility company supplying
electric  current  to  the  Building  or  any   governmental   authority  having
jurisdiction;

                                               (ii)     "Landlord's Rate" shall
mean the service  classification  (including all applicable  taxes,  surcharges,
demand charges, energy charges, fuel adjustment charges, time of day charges and
other sums  payable in respect  thereof)  pursuant to which  Landlord  purchases
electric  current for the Building  from the public  utility  company  supplying
electric current to the Building;

                          (iii) "Basic Cost" shall mean
the product of (a) Usage multiplied by (b) Landlord's Rate.

                                            (iv)     "Tenant's Cost" shall mean
an amount equal to the sum of (a) the Basic Cost plus (b) ten (10%)percent

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of the Basic Cost for Landlord's overhead and expenses in connection with
submetering.

                           C.     Landlord shall, from time to time but not more
often than monthly,  furnish Tenant with an invoice indicating the period during
which the Usage was measured  and the amount of Tenant's  Cost payable by Tenant
to Landlord  for such  period.  Within five (5) days after  receipt of each such
invoice,  Tenant  shall pay the  amount of  Tenant's  Cost set forth  thereon to
Landlord as additional rent. In addition, if any tax is imposed upon Landlord by
any  municipal,  state or  federal  agency or  subdivision  with  respect to the
purchase  or sale of  electrical  energy  supplied to Tenant  hereunder,  Tenant
covenants and agrees that, where permitted by law, Tenant's  Proportionate Share
of such taxes shall be passed on to, included in the bill to and paid by, Tenant
to Landlord, as additional rent.

                           D.       Landlord shall not in anywise be liable or
responsible 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.

                           E.       In no event shall Tenant use or install any
fixtures,  equipment  or  machines  the use of which in  conjunction  with other
fixtures,  equipment  and  machines in the Demised  Premises  would result in an
overload of the electrical circuits servicing the Demised Premises.

                           F.      Tenant covenants and agrees that at all times
its use of electric current shall never exceed the capacity of the then existing
feeders to the Building or the risers or wiring installation. After the original
installation thereof by Landlord,  Tenant shall furnish, install and replace, as
required,  all lighting tubes, lamps, bulbs and ballasts required in the Demised
Premises,  at Tenant's sole cost and expense.  All lighting tubes,  lamps, bulbs
and ballasts so installed shall become  Landlord's  property upon the expiration
or sooner termination of this lease.

                          G.       In the event the metering system installed in
the Demised  Premises for the  measurement  of  electricity  consumption  in the
Demised Premises or any alternative  submetering system installed by Landlord at
a later date,  becomes prohibited from use, then Landlord,  at its expense,  may
cause an  independent  electrical  engineer  chosen by Landlord or an electrical
consulting firm selected by Landlord (hereinafter referred to as the "Electrical
Consultant")  to survey and determine  Usage in, and Basic Cost for, the Demised
Premises from time to time, at least once per twelve (12) month period,  and the
Electrical  Consultant shall make such  determination  using criteria  generally
accepted in the Metropolitan New York City area and Landlord's Rate in effect at
the time,  and shall include the quantity and peak demand,  for all  electricity
consumed  by Tenant,  plus ten (l0%)  percent  of the Basic Cost for  Landlord's
expenses and administration  fees. Subject to the provisions of Section H below,
the determination

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made by the Electrical  Consultant  shall be binding on both Landlord and Tenant
and such amount shall be deemed Tenant's Cost.

                           H.       Notwithstanding anything in Section G to the
contrary,  Tenant shall have the right as hereinafter  provided,  to contest any
amounts determined by the Electrical  Consultant  pursuant to Section G as shall
be due to  Landlord  as a result of any such  survey.  In the event that  Tenant
fails  to  send a  written  notice  (hereinafter  referred  to as an  "Objection
Notice") to Landlord  within  thirty (30) days after the date of the  Electrical
Consultant's  notice  containing  said Usage and Basic Cost,  such notice  shall
become conclusive and binding upon Tenant. If Tenant disputes any such notice by
sending an  Objection  Notice  within  the time and in the  manner  hereinbefore
provided,  then Tenant  shall,  at its sole cost and expense,  have the right to
engage  an  electrical  engineer  or  electrical  consulting  firm  (hereinafter
referred  to  as  "Tenant's  Consultant")  who  shall  promptly  make  a  survey
(hereinafter   referred  to  as  the  "Disputing  Survey")  indicating  Tenant's
electrical usage in the Demised Premises.  In the event that Landlord and Tenant
are  unable to agree on the amount of Usage and Basic Cost  within  thirty  (30)
days  after the date  Tenant  furnishes  Landlord  with a copy of the  Disputing
Survey,  then the Electrical  Consultant and Tenant's  Consultant shall select a
mutually   acceptable   electrical   engineer  or  electrical   consulting  firm
(hereinafter  referred to as the "Third  Consultant") within ten (l0) days after
the  expiration of such thirty (30) day period.  The  Electrical  Consultant and
Tenant's  Consultant  shall submit the dispute to the Third  Consultant  and the
determination  by the Third  Consultant  shall be  conclusive  and binding  upon
Landlord and Tenant.  During the pendency of any such dispute,  Tenant shall pay
to Landlord the amount set forth in the Electrical Consultant's notice until the
dispute is finally  determined in accordance with the provisions of this Section
and,  in the event  that such  final  determination  is less than the amount set
forth  in the  Electrical  Consultant's  notice,  Landlord  shall,  at  Tenant's
election,  refund to Tenant the amount of such excess payment or credit any such
excess  against any  amounts  then due or  becoming  due to Landlord  under this
lease.  The cost of the Third  Consultant shall be borne equally by Landlord and
Tenant.

46.      FURTHER PROVISIONS AS TO DEFAULT

                         A.       If Tenant is late in making any payment due to
Landlord  from Tenant under this lease for ten (10) or more days,  then interest
shall  become due and owing to Landlord on such payment from the date upon which
it was due, which interest shall be computed at the following rates:

(i)  for an individual or  partnership  tenant,  computed at the maximum  lawful
     rate of interest;

(ii) for a  corporate  tenant,  computed  at the  greater  of (a) one and 25/100
     (1.25%) percent per month or (b) two (2%) percent per annum over the Base

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Rate as  defined in Section  38(G)(i)  but in no event in excess of the  maximum
lawful rate of interest chargeable to corporations in the State of New York.

                        B.       Bills for any expenses incurred by Landlord in
connection with any  performance by it for the account of Tenant,  and bills for
all costs,  expenses  and  disbursements  of every  kind and nature  whatsoever,
including  reasonable  counsel fees,  involved in collecting or  endeavoring  to
collect the fixed rent or  additional  rent or any part  thereof or enforcing or
endeavoring to enforce any rights against  Tenant,  under or in connection  with
this  lease,  or  pursuant  to  law,   including  any  such  cost,  expense  and
disbursement  involved in instituting and prosecuting  summary  proceedings,  as
well  as  bills  for  any  property,  material,  labor,  or  services  provided,
furnished,  or rendered,  by Landlord to Tenant at Tenant's request, may be sent
by Landlord to Tenant monthly,  or immediately,  at Landlord's option, and shall
be due and payable in accordance with the terms of such bills.

47.      HEAT AND AIR-CONDITIONING

                           A.       Any use of the demised premises, or any part
thereof,  or  rearrangement  of  partitioning  in a manner that  interferes with
normal  operation  of  the  heat,   ventilation  or   air-conditioning   systems
(hereinafter  referred  to as the  "systems")  servicing  the same,  may require
changes in such systems.  Such changes, so occasioned,  shall be made by Tenant,
at its expense,  subject to Landlord's  prior written  approval of such changes,
which approval may be withheld for any reason. Tenant shall not make any change,
alteration,   addition  or  substitution  to  the  system   providing   heating,
ventilating and  air-conditioning  without  Landlord's  prior written  approval,
which may be withheld for any reason.

                           B.       Landlord, at its expense, shall maintain and
operate the systems (inclusive of the package  air-conditioning unit serving the
Demised   Premises)  and  subject  to  energy   conservation   requirements   of
governmental  authorities,  shall  furnish  heat  and  ventilating  (hereinafter
collectively  referred  to as the  "service")  in the  demised  premises  during
"regular  hours"  (that is  between  the  hours of 8:00 A.M.  and 6:00  P.M.) of
"business  days"  (which term is used herein to mean all days except  Saturdays,
Sundays  and days now or  hereafter  observed  by the  Federal or New York State
government  as legal  holidays  and those  now or  hereafter  designated  by the
applicable   building  service  union  employees  service  contract  or  by  the
applicable  Operating  Engineers  contract) as may be required  for  comfortable
occupancy  of  the  demised  premises.   If  Tenant  shall  require  heating  or
ventilating  service  at any  other  time  (hereinafter  referred  to as  "after
hours"), Landlord shall furnish such after hours service upon reasonable advance
notice  from  Tenant,   and  Tenant  shall  pay  on  demand   Landlord's   cost.
Air-conditioning  shall be  provided  to the  Demised  Premises  by means of the
packaged  air-conditioning  units  servicing the Demised  Premises  which may be
operated by Tenant,  at Tenant's  option,  at any time, seven (7) days per week,
twenty-four (24) hours per day. All

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electricity used in connection with such packaged  air-conditioning  units shall
be  supplied  in  accordance  with,  and shall be subject  to, all of the terms,
covenants and conditions in Article 45 hereof.

48.      LANDLORD'S OTHER SERVICES

                           A.     Landlord, at its expense, shall provide public
elevator  service by elevators  serving the floor on which the demised  premises
are situated  during regular hours of business days, and shall have at least one
passenger elevator operating at all other times.

                           B.     Notwithstanding anything in this lease to the
contrary, Tenant shall, at its sole cost and expense, cause the Demised Premises
to be cleaned in a manner  reasonably  satisfactory  to  Landlord,  utilizing  a
cleaning  contractor   approved  by  Landlord,   which  approval  shall  not  be
unreasonably  withheld or delayed.  Tenant shall,  at its sole cost and expense,
store, receive and transport all refuse and rubbish from the Demised Premises in
compliance  with all present and future laws,  orders,  rules and regulations of
any governmental or quasi-governmental authority having jurisdiction thereof and
shall  deposit  such  refuse and  rubbish on a daily  basis in a location in the
Building designated by Landlord.

                           C.       Landlord, at its expense, and on Tenant's
request,  shall maintain the original listings on the Building  directory of the
names of Tenant,  Tenant's  subsidiaries  and the names of any of their officers
and employees, provided that the names so listed shall not take up more than six
(6)  lines  on  the  Building  directory.  In the  event  Tenant  shall  require
additional or substitute listings on the Building directory,  Landlord shall, to
the  extent  space for such  additional  or  substitute  listing  is  available,
maintain  such  listings  and Tenant  shall pay to Landlord  an amount  equal to
Landlord's reasonable charge for such listings.

                           D.       Landlord reserves the right, without any
liability to Tenant (except as otherwise  expressly  provided in this lease), to
stop  operating any of the heating,  ventilating,  air  conditioning,  electric,
sanitary,  elevator, or other building systems serving the demised premises, and
to stop the rendition of any of the other  services  required of Landlord  under
this lease, whenever and for so long as may be necessary by reason of accidents,
emergencies,  strikes,  or the making of repairs or  changes  that  Landlord  is
required  by this lease or by law to make or in good faith deems  necessary,  by
reason  of  difficulty  in  securing  proper  supplies  of fuel,  steam,  water,
electricity,  labor,  or  supplies,  or by  reason  of any  other  cause  beyond
Landlord's reasonable control.

                           E.       Landlord shall furnish hot and cold water to
the Demised Premises through the presently existing facilities.


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                           F.       Except as provided in Articles 47 and 48,
Landlord  shall have no  responsibility  or obligation  for the rendition of any
services or utilities to Tenant or to the Demised Premises.

                           G.       Landlord agrees that the Building will be
maintained in its present  condition,  normal wear and tear  excepted.  Landlord
further  agrees that it shall continue to provide the services it is responsible
to provide to Tenant  pursuant to the provisions of this lease at the same level
as presently provided.

49.      SECURITY DEPOSIT

                           A.      Tenant has deposited with Landlord the sum of
$140.000.0,  either in cash or by Letter of  Credit  as  provided  in  Section C
hereof, as security for the faithful performance, observance and compliance with
all of the terms,  covenants  and  conditions  of this lease on Tenant's part to
perform,  observe or comply with.  Tenant  agrees that, in the event that Tenant
defaults in respect of any of such terms,  covenants or conditions of this lease
(including,  without limitation, the payment of any installment of fixed rent or
any amount of additional rent),  Landlord may use, apply, or retain the whole or
any part of the cash  security so  deposited  or may notify the Issuing Bank (as
such term is defined  in  Section C hereof)  and  thereupon  receive  all of the
monies  represented by the said Letter of Credit and use,  apply,  or retain the
whole or any part of such  proceeds,  or both, as the case may be, to the extent
required for the payment of any fixed rent,  additional  rent, or any other sums
as to which Tenant is in default, or for any sum that Landlord may expend or may
be required to expend by reason of any such  default  (including  any damages or
deficiency  accrued  before or after summary  proceedings  or other  re-entry by
Landlord).  In the event that Landlord  applies or retains any portion or all of
such cash  security or proceeds of such Letter of Credit,  or both,  as the case
may be, the amount not so used, applied or retained shall continue to be treated
as Tenant's security deposit,  and Tenant shall restore the amount so applied or
retained within five (5) days after Landlord's demand therefor, so that, subject
to the  provisions  of Section F, at all times,  the amount  deposited  shall be
$140,000.00. In the event that Tenant shall fully and faithfully comply with all
of the terms, provisions,  covenants and conditions of this lease, that portion,
if any, of the cash  security or Letter of Credit,  or both, as the case may be,
not used,  applied or retained  shall be returned to Tenant after the Expiration
Date and  after  delivery  of  possession  of the  entire  demised  premises  to
Landlord,  in accordance with, and subject to, the applicable provisions of this
lease.

                           B.       To the extent Tenant has deposited with
Landlord  a cash  security,  Landlord  agrees to deposit  same into an  interest
bearing account in a bank or savings and loan  association to be selected,  from
time to time, by Landlord in its sole discretion.  Landlord  agrees,  further to
hold  said  security  in such an  account  for the  entire  term of this  lease,
subject,  however,  to the terms of  Section A above  with  respect  to the use,
application

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or retention of such  security.  To the extent  permitted by law,  Tenant agrees
that  Landlord  shall be entitled to receive  and retain,  as an  administrative
expense,  a sum equal to one (1%)  percent  per annum  upon such  security,  and
Landlord shall have the right to withdraw such sum from time to time as Landlord
shall  determine in is sole  discretion.  The balance of the interest  earned on
such security  shall,  provided  Tenant is not then in default under this lease,
and to the extent that same shall not be used,  applied or retained  pursuant to
the terms of Section A above, be paid to Tenant upon the request of Tenant,  but
not more than once during any  calendar  year of the term of this lease.  Unless
and until such interest shall be paid to Landlord and Tenant as herein provided,
the same shall be held as a part of the security  deposited  by Tenant,  subject
to, and in accordance with, the terms of Section A above.  Landlord shall not be
required to credit any security  with the  interest for any period  during which
Landlord does not receive interest thereon.

                           C.      In lieu of a cash deposit, Tenant may deliver
to Landlord as such security, a clean,  irrevocable,  transferable (without cost
to Landlord)  and  unconditional  Letter of Credit  issued by and drawn upon any
commercial bank reasonably  acceptable to Landlord  (hereinafter  referred to as
the "Issuing  Bank") with  offices for banking  purposes in the City of New York
and  having  a net  worth  of not  less  than One  Hundred  Million  and  00/100
($100,000,000.00)  Dollars, which Letter of Credit shall have a term of not less
than one year,  be in form and  content  satisfactory  to  Landlord,  be for the
account  of  Landlord  and,  subject to the  provisions  of Section F, be in the
amount of $140,000.00. The Letter of Credit shall provide that:

                                  (a)      The Issuing Bank shall pay to
Landlord or its duly authorized  representative  an amount up to the face amount
of the  Letter of Credit  upon  presentation  of only the Letter of Credit and a
sight draft in the amount to be drawn;

                                   (b)      The Letter of Credit shall be deemed
to be automatically renewed,  without amendment,  for consecutive periods of one
year each, unless the Issuing Bank sends written notice (hereinafter referred to
as the "Non-Renewal Notice") to Landlord by certified or registered mail, return
receipt  requested,  not less than  thirty  (30) days  next  preceding  the then
expiration date of the Letter of Credit,  that it elects not to have such Letter
of Credit renewed;

                                   (c)      Landlord, after its receipt of the
Non-Renewal Notice, shall have the right,  exercisable by a sight draft only, to
receive the moneys  represented  by the Letter of Credit  (which moneys shall be
held by Landlord as a cash deposit pursuant to the terms of this Article pending
the  replacement  of such Letter of Credit) (and Landlord  shall have such right
regardless of whether the Letter of Credit expressly gives Landlord such right);
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                                          (d)      In the event of a sale or the
transfer  of the Land or the  Building,  or  Landlord's  interest  in any of the
foregoing,  or a leasing  by  Landlord  or any of the  foregoing  or  Landlord's
interest  therein,  the Letter of Credit  shall be  transferable  by Landlord as
provided in Section D below,  at no cost or expense to Landlord and Tenant shall
be notified of any such transfer.

                         .       In the event of a sale or transfer of the land
or the Building, or the then Landlord's interest in the land or the Building, or
a leasing by the then  Landlord  of the land or the  Building  or of  Landlord's
interest  therein,  Landlord  shall  have the  right,  at no cost or  expense to
Landlord, to transfer or assign such cash security or Letter of Credit, or both,
as the case may be, to the vendee,  transferee  or lessee,  and  Landlord  shall
notify  Tenant,  by certified  mail,  return  receipt  requested,  of such sale,
transfer or lease, together with the name and address of such vendee, transferee
or lessee who shall  acknowledge,  in  writing,  receipt of such  security,  and
Landlord shall thereupon be released by Tenant from all liability for the return
of such cash security or Letter of Credit. In such event,  Tenant agrees to look
solely to the new  landlord  for the return of said cash  security  or Letter of
Credit. It is agreed that the provisions hereof shall apply to every transfer or
assignment made of said cash security or Letter of Credit to a new Landlord.

                           E.       Tenant covenants that it will not assign or
encumber,  or attempt to assign or  encumber,  such cash  security  or Letter of
Credit,  and that neither  Landlord nor its successors or assigns shall be bound
by  any  such  assignment,   encumbrance,  attempted  assignment,  or  attempted
encumbrance.

                           F.              (i)      Notwithstanding anything in
this  Article 49 to the  contrary,  if, on the fifth  (5th)  anniversary  of the
Commencement  Date,  Tenant is not in default  under this lease,  which  default
continues after notice and the expiration of any applicable cure period,  Tenant
may upon notice to Landlord  (hereinafter referred to as the "Security Reduction
Notice") request that Landlord return to Tenant  $40,000.00 of the cash security
deposited by Tenant  pursuant to Section 49A or, if Tenant has provided a letter
of  credit,  exchange  the then  existing  Letter of Credit  for a new Letter of
Credit in the amount of $100,000.00  and otherwise  meeting the  requirements of
Section 49B.

                                             (ii)     Provided Tenant is not in
default under the lease, which default continues after notice and the expiration
of any  applicable  cure  period,  on the date  Landlord  receives  the Security
Reduction Notice and on the date payment is to be made to Tenant or the existing
Letter of Credit is to be  exchanged,  Landlord will return to Tenant the sum of
$40,000.00  out of the cash  security or exchange  the then  existing  Letter of
Credit for the new Letter of Credit as set forth in Section 49F(i).

                           G.          Notwithstanding anything in this Article
49 to the contrary, the security required to be deposited hereunder

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may be a  combination  of cash  security and Letter of Credit  provided that the
total amount thereof  aggregates  the total security to be maintained  hereunder
and  such  components  of  the  combined  security  otherwise  comply  with  the
requirements of this Article 49.

50.      PARTIES BOUND

                           A.       If Landlord shall be an individual, joint
venture, tenancy in common,  partnership,  unincorporated  association, or other
unincorporated aggregate of individuals and/or entities or a corporation, Tenant
shall look only to such  Landlord's  estate and property in the building (or the
proceeds  thereof)  and,  where  expressly so provided in this lease,  to offset
against the rents payable  under this lease,  for the  satisfaction  of Tenant's
remedies for the collection of a judgment (or other judicial process)  requiring
the  payment  of money by  Landlord  in the  event of any  default  by  Landlord
hereunder,  and no other  property or assets of such  Landlord  or any  partner,
member, officer, or director thereof, disclosed or undisclosed, 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 or  occupancy  of the demised
premises.

                           B.       If there shall be more than one person named
as tenant  herein,  then all such persons shall be deemed to be joint tenants in
the leasehold estate demised hereby, with joint and several liability hereunder.

                           C.     Landlord hereby represents that it is the fee
owner of the Land and Building.

51.      BROKER

                           A.     Tenant covenants, warrants and represents that
there  were no  brokers  or  finders  except  Edward  S.  Gordon  Company,  Inc.
(hereinafter  referred to as "Broker")  instrumental in consummating this lease,
and that no conversations or negotiations were had by Tenant with any brokers or
finders except the Broker concerning the renting of the demised premises. Tenant
agrees to hold Landlord  harmless against any claims for a brokerage  commission
or consultation  fees arising out of any  conversations  or negotiations  had by
Tenant with any brokers or finders except for the Broker.

                           B.       Based upon the foregoing representation,
Landlord  has  agreed to pay,  pursuant  to  separate  agreements,  a  brokerage
commission to the Broker.

                           C.       Landlord covenants, warrants and represents
that  there  were no brokers  or  finders  except  the  Broker  instrumental  in
consummating  this lease, and that no conversations or negotiations  were had by
Landlord with any brokers or finders except the Broker concerning the renting of
the demised premises. Landlord agrees to hold Tenant harmless against any claims
for a

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brokerage  commission or consultation  fees arising out of any  conversations or
negotiations had by Landlord with any brokers or finders including the Broker.

52.      HAZARDOUS MATERIALS

         Tenant  shall not cause or permit  "Hazardous  Materials"  (as  defined
below) to be used, transported, stored, released, handled, produced or installed
in,  on or from the  Demised  Premises  or the  Building.  The  term  "Hazardous
Materials"  shall,  for the purposes  hereof,  mean any flammable,  explosive or
radioactive  materials,  hazardous  wastes,  hazardous  and toxic  substances or
related materials,  asbestos or any material containing  asbestos,  or any other
substance or material,  as now or hereafter defined as a hazardous material or a
hazardous  substance  by any  federal,  state or local law,  ordinance,  rule or
regulation,  now  or  at  any  time  hereafter  in  effect,  including,  without
limitation, the Comprehensive  Environmental Response Compensation and Liability
Act of 1980, as amended, the Hazardous Materials Transportation Act, as amended,
the Resource  Conservation and Recovery Act, as amended,  and in the regulations
adopted and publications  promulgated pursuant to each of the foregoing.  In the
event of a breach of the provisions of this Article, Landlord shall, in addition
to all of its rights and remedies under this lease and pursuant to law,  require
Tenant  to  remove  any or all of such  Hazardous  Materials  from  the  Demised
Premises  or the  Building  in the  manner  prescribed  for such  removal by all
requirements   of  law.   Tenant   acknowledges   that   Landlord  has  made  no
representation,  warranty,  covenant or agreement with respect to the existence,
removal, encapsulation or other treatment or remediation of Hazardous Materials,
and that  Landlord  shall  not in any way be  liable  for the  existence  of any
Hazardous Materials or be obligated to remove, encapsulate or otherwise treat or
remediate  same.  The provisions of this Article shall survive the expiration or
sooner termination of this lease.

53.      ARBITRATION

                           A.       Either party may request arbitration of any
matter in dispute with  respect to which  arbitration  is expressly  provided in
this lease as the appropriate remedy. The party requesting  arbitration shall do
so by giving  notice to that effect to the other party,  and both parties  shall
promptly  thereafter jointly apply to the American  Arbitration  Association (or
any organization  successor  thereto) in the City and County of New York for the
appointment of a single arbitrator.

                           B.       The arbitration shall be conducted in
accordance  with  the  then  prevailing   rules  of  the  American   Arbitration
Association (or any  organization  successor  thereto) in the City and County of
New York and,  subject  to the  terms of the  immediately  succeeding  sentence,
judgment on the award rendered by the arbitrator may entered in any court having
jurisdiction thereof. In rendering such decision and award, the arbitrator shall
not add to, subtract from, or otherwise modify the provisions of this lease.

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                           C.       If, for any reason whatsoever, a written
decision  and award of the  arbitrator  shall not be rendered  within sixty (60)
days after the  appointment  of such  arbitrator,  then, at any time  thereafter
before such decision and award shall have been rendered,  either party may apply
to the  Supreme  Court of the  State of New York or to any  other  court  having
jurisdiction and exercising the functions similar to those now exercised by such
court,  by  action,  proceeding,  or  otherwise  (but  not by a new  arbitration
proceeding)  as may be proper to determine the question in dispute  consistently
with the provisions of this lease.

                           D.       All the expenses of the arbitration shall be
borne by the parties equally.

54.      ASSIGNMENT AND SUBLETTING

                           A.       If Tenant shall, at any time or times during
the term of this lease, desire to assign this lease or sublet all or part of the
demised  premises,  Tenant shall give notice  thereof to Landlord,  which notice
shall be  accompanied  by: (i) a conformed or  photostatic  copy of the proposed
assignment or sublease, the effective or commencement date of which shall be not
less than  sixty  (60) nor more than  ninety  (90) days after the giving of such
notice;  (ii) a statement setting forth, in reasonable  detail,  the identity of
the proposed assignee or subtenant,  the nature of its business and its proposed
use of the  demised  premises;  and (iii)  current  financial  information  with
respect  to the  proposed  assignee  or  subtenant,  including  its most  recent
financial report.

                           B.       In the event that Tenant complies with the
provisions  of Section A of this Article 54 and  provided  that Tenant is not in
default of any of Tenant's  obligations  under this lease  after  notice and the
expiration of any applicable grace period,  Landlord's consent (which must be in
writing  and in  form  reasonably  satisfactory  to  Landlord)  to the  proposed
assignment or sublease shall not be  unreasonably  withheld or delayed  provided
that Tenant has complied with the following conditions:

                                               (i)      in Landlord's reasonable
judgment,  the proposed assignee or subtenant is engaged in such a business, and
the demised  premises,  or the  relevant  part  thereof,  will be used in such a
manner,  that: (x) is limited to the use expressly permitted under this lease or
a similar use;  and (y) such similar use will not violate any negative  covenant
as to use  contained  in any other  lease of space in the  Building  about which
Tenant has been informed following its request to Landlord for such information.
Landlord  represents  that the use of the  demised  Premises  by Tenant  for the
purposes set forth in Section 39A does not violate any  negative  covenant as to
use contained in any other lease for space in the Building;

                                             (ii)     the proposed assignee or
subtenant is a reputable person of good character and with sufficient  financial
worth considering the responsibility  involved,  and Landlord has been furnished
with reasonable proof thereof;

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                                           (iii)     neither (i) the proposed
assignee  or  sublessee  nor (ii)  any  person  that,  directly  or  indirectly,
controls,  is  controlled  by, or is under  common  control  with,  the proposed
assignee  or  sublessee  or any person who  controls  the  proposed  assignee or
sublessee, is then an occupant or tenant of any part of the building;

                                            (iv)    the proposed assignee or
sublessee is not a person with whom  Landlord is then, or shall have been during
the previous six (6) month period, negotiating to lease space in the building;

                                            (v)      the proposed sublease shall
be in form reasonably satisfactory to Landlord and shall comply
with the applicable provisions of this Article;

                                            (vi)     there shall not be more
than three (3) entities (excluding entities controlled by Tenant),
including Tenant, occupying the demised premises;

                                            (vii)    the rental and other terms
and conditions of the sublease are the same as those contained in
the proposed sublease furnished to Landlord pursuant to Section A;

                                           (viii)     Tenant shall reimburse
Landlord on demand for any reasonable  costs that may be incurred by Landlord in
connection with said assignment or sublease,  including, without limitation, the
reasonable  costs  of  making  investigations  as to  the  acceptability  of the
proposed assignee or subtenant and reasonable legal costs incurred in connection
with the  review of any term  sheet,  proposed  assignment  or  sublease  or any
documentation   in  connection   therewith  and  in  the   preparation   of  any
documentation  in  connection  with any  request  for  consent,  whether  or not
granted;

                                             (ix)     Tenant shall not have: (a)
advertised  or publicized in any way the  availability  of the demised  premises
without  prior notice to, and approval by,  Landlord,  which  approval  Landlord
agrees not to  unreasonably  withhold,  nor shall any  listing or  advertisement
advertise the demised premises for subletting at a proposed rental less than the
fixed rent and additional rent at which Landlord is then offering to lease other
space in the building;

                                             (x)      the sublease shall not
allow use of the demised  premises  or any part  thereof:  (a) as a  restaurant,
luncheonette, or otherwise for the preparation and/or sale of food for on or off
premises consumption;  (b) as a discount store; (c) as a multiple tenancy store;
(d) by a foreign or domestic  governmental  agency;  (e) as a betting  parlor or
gambling casino; or (f) by a utility company; and

                                             (xi)     the sublease shall not
provide for an option on behalf of the  subtenant  thereunder to extend or renew
the term of such sublease.

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                           C.       Each subletting pursuant to this Article 54
shall be subject to all of the  covenants,  agreements,  terms,  provisions  and
conditions  contained in this lease.  Notwithstanding any such subletting and/or
acceptance of rent or additional  rent by Landlord  from any  subtenant,  Tenant
shall and will  remain  fully  liable  for the  payment  of the  fixed  rent and
additional rent due, and to become due, hereunder, for the performance of all of
the covenants,  agreements,  terms,  provisions and conditions contained in this
lease on the part of Tenant to be  performed  and for all 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 other and further
subletting of the demised premises by Tenant,  or any person claiming through or
under Tenant  (except as provided in Section K of this Article  54),  shall,  or
will be, made,  except upon  compliance  with, and subject to, the provisions of
this  Article.  If Landlord  shall  decline to give its consent to any  proposed
assignment or sublease,  or if Landlord  shall exercise any of its options under
Section B, Tenant shall  indemnify,  defend and hold Landlord  harmless from and
against any and all losses, liabilities,  damages, costs and expenses (including
reasonable  counsel  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.

                           D.       With respect to each and every sublease or
subletting, it is agreed that:

                                             (i)      no subletting shall be for
a term ending later than one day prior to the expiration date of this lease;

                                            (ii)     no sublease shall be valid,
and no  subtenant  shall take  possession  of the  demised  premises or any part
thereof,  until an executed  counterpart  of such sublease has been delivered to
Landlord; and

                                            (iii)     each sublease shall
provide that it is subject and  subordinate  to this lease and to the matters to
which  this  lease  is or  shall  be  subordinate,  and  that,  in the  event of
termination, re-entry, or dispossess by Landlord under this lease, Landlord may,
at its  option,  take over all of the  right,  title and  interest  of Tenant as
sublandlord under such sublease, and such subtenant shall, at Landlord's option,
attorn to Landlord  pursuant to the then executory  provisions of such sublease,
except that Landlord shall not (x) be liable for any previous act or omission of
Tenant under such sublease, (y) be subject to any offset, not expressly provided
in such sublease,  that theretofore  accrued to such subtenant against Tenant or
(z) be bound by any previous  modification  of such  sublease or by any previous
prepayment of more than one month's fixed rent or any additional rent then due.

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                           E.      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  satisfactory  to
Landlord, whereby the assignee shall assume all of the obligations of this lease
on the part of Tenant to be performed or observed and whereby the assignee shall
agree that the  provisions  contained in Section A 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  of this lease,  and  notwithstanding  the  acceptance  of fixed 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 rent and additional  rent and for the other  obligations of this lease
on the part of Tenant to be performed or observed.

                           F.       If Landlord shall give its consent to any
assignment of this lease or to any  sublease,  Tenant  shall,  in  consideration
therefor, pay to Landlord, as additional rent:

                                                      (i)      in the case of an
assignment,  an amount equal to 50% of all sums and other considerations paid to
Tenant by the assignee for or by reason of such assignment  (including,  but not
limited to, sums paid for the sale of Tenant's fixtures, leasehold improvements,
equipment  (excluding  any equipment  intended for sale to the general public in
Tenant's business), furniture,  furnishings or other personal property, less, in
the case of a sale  thereof,  the then net  unamortized  or  undepreciated  cost
thereof determined on the basis of Tenant's federal income tax returns) and less
the reasonable costs (hereinafter referred to as the "Assignment Expenses") paid
by Tenant for alteration costs (or contributions in lieu thereof),  advertising,
brokerage or consulting  fees or commissions  and legal fees in connection  with
such assignment; and

                                            (ii)     in the case of a sublease,
an amount equal to 50% of any rents,  additional  charge or other  consideration
payable under the sublease to Tenant by the subtenant  which is in excess of the
fixed rent and  additional  rent  accruing  during the term of the  sublease  in
respect of the  subleased  space (at the rate per square foot  payable by Tenant
hereunder)  pursuant to the terms  hereof  (including,  but not limited to, sums
paid  for the sale or  rental  of  Tenant's  fixtures,  leasehold  improvements,
equipment  (excluding  any equipment  intended for sale to the general public in
Tenant's business),  furniture or other personal property,  less, in the case of
the sale  thereof,  the then  net  unamortized  or  undepreciated  cost  thereof
determined  on the basis of Tenant's  federal  income tax  returns) and less the
reasonable costs (hereinafter referred to as the "Subletting  Expenses") paid by
Tenant for alteration  costs (or  contributions  in lieu thereof),  advertising,
brokerage or consulting  fees or commissions  and legal fees in connection  with
such subletting. The sums payable under Sections 54(F)(i) and (ii) shall be paid
to Landlord as and when

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paid by the  assignee or  subtenant,  as the case may be, to Tenant and upon the
execution  and  delivery of such  assignment  or  sublease,  as the case may be,
Tenant  shall  provide to Landlord a  statement  of the  Assignment  Expenses or
Subletting  Expenses,  as the case may be, certified as correct by an officer or
principal of Tenant.

                           G.      If Tenant is a corporation, the provisions of
Article 11 shall apply to a transfer (by one or more transfers) of a majority of
the stock of Tenant,  as if such  transfer  of a majority of the stock of Tenant
were an  assignment of this lease;  but said  provisions  and the  provisions of
Section F above shall not apply to, and Landlord's consent shall not be required
in connection  with,  transactions  with a corporation  (i) into, or with which,
Tenant is merged or consolidated,  (ii) to which  substantially  all of Tenant's
assets are  transferred;  or (iii) that controls,  is controlled by, or is under
common control with Tenant  ("control" having the meaning set forth in Paragraph
(p) of Exhibit B),  provided  that, in the events of a transaction  set forth in
(i) or (ii): (x) the successor to Tenant has a net worth, computed in accordance
with generally accepted accounting principles,  at least equal to the greater of
(1) the net worth of Tenant immediately prior to such merger, consolidation,  or
transfer or (2) the net worth of Tenant  herein named on the date of this lease;
and (y)  proof  satisfactory  to  Landlord  of such net  worth  shall  have been
delivered to Landlord at least ten (l0) days prior to the effective  date of any
such transaction.

                           H.     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.

                           I.       The listing of any name other than that of
Tenant, whether on the doors of the demised premises, on the building directory,
if any,  or  otherwise,  shall not operate to vest any right or interest in this
lease or in the  demised  premises,  nor shall it be deemed to be the consent of
Landlord to any  assignment  or transfer of this lease,  to any  sublease of the
demised premises, or to the use or occupancy thereof by others.

55.      INSURANCE

                           A.       Tenant shall not violate, or permit the
violation of, any condition  imposed by the standard fire insurance  policy then
issued for office  buildings in the Borough of Manhattan,  City of New York, and
shall not do, permit  anything to be done,  keep, or permit anything to be kept,
in the demised  premises  that would:  (i) subject  Landlord to any liability or
responsibility for personal injury, death, or property damage; (ii) increase the
fire or other casualty  insurance  rate on the building or the property  therein
over the rate that would otherwise then be

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in effect (unless Tenant pays the resulting  premium as provided in Section F of
this  Article  55); or (iii)  result in  insurance  companies  of good  standing
refusing to insure the  building or any of such  property in amounts  reasonably
satisfactory to Landlord.

                           B.       Tenant covenants to provide on or before the
Commencement  Date and to keep in force  during the term  hereof  the  following
insurance coverage:

                                             (i)      A comprehensive policy of
liability  insurance  containing  an  omnibus  named  insured  provision  naming
Landlord as an additional  insured  protecting  Landlord and Tenant  against any
liability whatsoever  occasioned by accident on or about the Demised Premises or
any appurtenances  thereto.  The limits of liability of such policy shall not be
less than Five Million ($5,000,000.00) Dollars combined single limit coverage on
a per occurrence basis,  including property damage.  Such policy shall contain a
contractual   liability   coverage   endorsement   with   respect  to   Tenant's
indemnification  obligations  under this lease.  Such  insurance  may be carried
under a blanket  policy  covering the Demised  Premises  and other  locations of
Tenant, if any, provided such policy contains an endorsement (a) naming Landlord
as an additional insured, (b) specifically  referencing the Demised Premises and
(c) guaranteeing a minimum limit available for the Demised Premises equal to the
limits of liability required under this lease.

                                            (ii)     Fire and Extended coverage
in an amount adequate to cover the cost of replacement of all personal property,
fixtures,  furnishing  and  equipment,  including  Tenant's  Work located in the
Demised Premises.

     All such policies shall be issued by companies of recognized responsibility
licensed to do business in New York State and rated by Best's Insurance  Reports
or any successor  publication of comparable standing and carrying a rating of A+
VIII or better or the then  equivalent  of such  rating,  and all such  policies
shall  contain a  provision  whereby the same  cannot be  cancelled  or modified
unless Landlord and any additional  insureds are given at least thirty (30) days
prior written notice of such cancellation or modification.

     Prior to the time such  insurance is first required to be carried by Tenant
and  thereafter,  at least fifteen (15) days prior to the expiration of any such
policies,  Tenant shall deliver to Landlord  either  duplicate  originals of the
aforesaid  policies or certificates  evidencing  such insurance  together with a
certified  copy of the  endorsement  naming  Landlord as an additional  insured,
together  with  evidence  of  payment  for  the  policy.   If  Tenant   delivers
certificates as aforesaid,  Tenant,  upon reasonable prior notice from Landlord,
shall make available to Landlord at the Demised Premises duplicate  originals of
such policies from which Landlord may make copies thereof,  at Landlord's  cost.
Tenant's failure to provide and keep in force the aforementioned insurance

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shall be  regarded  as a  material  default  hereunder,  entitling  Landlord  to
exercise  any or all of the  remedies  as provided in this lease in the event of
Tenant's default. In addition,  in the event Tenant fails to provide and keep in
force the insurance  required by this lease,  at the times and for the durations
specified in this lease,  Landlord shall have the right, but not the obligation,
at any time and from time to time, and without notice, to procure such insurance
and or pay the  premiums  for such  insurance  in which event Tenant shall repay
Landlord within five (5) days after demand by Landlord,  as additional rent, all
sums so paid by  Landlord  together  with any  costs  or  expenses  incurred  by
Landlord in  connection  therewith  without  prejudice  to any other  rights and
remedies of Landlord under this lease.

                           C.       Landlord and Tenant shall each endeavor to
secure an appropriate  clause in, or an endorsement  upon, each fire or extended
coverage policy obtained by it and covering the Building,  the Demised  Premises
or the personal  property,  fixtures and equipment  located  therein or thereon,
pursuant to which the respective insurance companies waive subrogation or permit
the insured,  prior to any loss,  to agree with a third party to waive any claim
it might have against said third party.  The waiver of subrogation or permission
for waiver of any claim  hereinbefore  referred to shall extend to the agents of
each party and its  employees  and, in the case of Tenant,  shall also extend to
all other  persons  and  entities  occupying  or using the  Demised  Premises in
accordance  with the terms of this lease.  If and to the extent that such waiver
or permission  can be obtained  only upon payment of an additional  charge then,
except as provided in the following two  paragraphs,  the party  benefiting from
the waiver or permission  shall pay such charge upon demand,  or shall be deemed
to have agreed that the party obtaining the insurance coverage in question shall
be free of any further  obligations under the provisions hereof relating to such
waiver or permission.

                  In the  event  that  Landlord  shall be  unable at any time to
obtain one of the provisions referred to above in any of its insurance policies,
at Tenant's  option  Landlord  shall cause  Tenant to be named in such policy or
policies as one of the assureds,  but if any additional premium shall be imposed
for the inclusion of Tenant as such as assured, Tenant shall pay such additional
premium  upon  demand.  In the event that Tenant shall have been named as one of
the assureds in any of  Landlord's  policies in accordance  with the  foregoing,
Tenant shall endorse promptly to the order of Landlord,  without  recourse,  any
check,  draft or order for the payment of money representing the proceeds of any
such policy or any other  payment  growing out of or connected  with said policy
and Tenant hereby  irrevocably waives any and all rights in and to such proceeds
and payments.

                           In the event that Tenant shall be unable at any time
to  obtain  one of the  provisions  referred  to above  in any of its  insurance
policies,  Tenant shall cause Landlord to be named in such policy or policies as
one of the  assureds,  but if any  additional  premium  shall be imposed for the
inclusion of Landlord as such an

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assured,  Landlord shall pay such additional premium upon demand or Tenant shall
be  excused  from its  obligations  under  this  paragraph  with  respect to the
insurance  policy  or  policies  for which  such  additional  premiums  would be
imposed. In the event that Landlord shall have been named as one of the assureds
in any of Tenant's  policies in accordance  with the  foregoing,  Landlord shall
endorse promptly to the order of Tenant,  without recourse,  any check, draft or
order for the payment of money  representing  the proceeds of any such policy or
any other  payment  growing out of or  connected  with said policy and  Landlord
hereby  irrevocably  waives  any and all  rights  in and to  such  proceeds  and
payments.

                           Subject to the foregoing provisions of this Section
C of Article 55, and insofar as may be permitted  by the terms of the  insurance
policies carried by it, each party hereby releases the other with respect to any
claim  (including a claim for negligence)  which it might otherwise have against
the other party for loss, damages or destruction with respect to its property by
fire or other casualty (including rental value or business interruption,  as the
case may be) occurring during the term of this lease.

                           D.    If, by reason of a failure of Tenant to comply
with the  provisions  of Article 6 or Section A of Article  55, the rate of fire
insurance with extended  coverage on the Building or equipment or other property
of Landlord shall be higher than it otherwise  would be, Tenant shall  reimburse
Landlord,  on  demand,  for that part of the  premiums  for fire  insurance  and
extended  coverage  paid by  Landlord  because  of such  failure  on the part of
Tenant.

                           E.      Landlord may, from time to time, require that
the amount of the  insurance  to be  provided  and  maintained  by Tenant  under
Section  B of  Article  55  hereof  be  increased  so that  the  amount  thereof
adequately  protects Landlord's interest but in no event in excess of the amount
that would be required by other tenants  conducting  similar business in similar
sized space in first-class office buildings in the borough of Manhattan.

                           F.   If any dispute shall arise between Landlord and
Tenant with  respect to the  incurrence  or amount of any  additional  insurance
premium  referred to in Section C of Article 55, the dispute shall be determined
by arbitration.

                           G.    A schedule or make up of rates for the Building
or the  Demised  Premises,  as the case  may be,  issued  by the New  York  Fire
Insurance  Rating  Organization  or other  similar  body  making  rates for fire
insurance and extended coverage for the premises concerned,  shall be conclusive
evidence of the facts therein stated and of the several items and charges in the
fire insurance rate with extended coverage then applicable to such premises.

                           H.    Each policy evidencing the liability insurance
to be carried by Tenant under this lease shall contain a clause that such policy
and the coverage evidenced thereby shall be

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primary with respect to any policies carried by Landlord,  and that any coverage
carried by Landlord shall be excess insurance.

                           (I)   It is acknowledged that solely for purposes of
insurance  required to be procured by Tenant under this lease, that Landlord and
Tenant each have  insurable  interests in and to betterments  and  improvements,
including Landlord's Work as defined in Exhibit C. Moreover, Landlord has agreed
and  undertaken  to  perform  the  improvements  referred  to  in  Exhibit  C as
Landlord's Work at Landlord's  expense and Landlord's costs will, in effect,  be
recouped  through the rents to be paid by Tenant  hereunder.  As such,  Tenant's
interest in the betterments and improvements  shall be a leasehold interest only
and shall be insurable as such, and Landlord's  interests in the betterments and
improvements shall be a fee interest and insurable as such.  Landlord and Tenant
agree to  cooperate  with each  other in  adjusting  any claim made by the other
under  any  policy  of  insurance   providing   insurance  for  betterments  and
improvements  including,  but not limited to,  acknowledging the interest of the
other  and  providing  access  to the  Demised  Premises  for  claims  adjusting
purposes.  In addition,  Tenant shall retain an insurable  leasehold interest in
any additional  betterments an improvements directly purchased by Tenant and not
provided as part of  Landlord's  Work.  Notwithstanding  anything  herein to the
contrary,  nothing  herein  shall be  construed  to give Tenant the right to any
abatement,  setoff,  or other reduction in rent or additional  rent, of any kind
whatsoever,  as a  result  of any  change,  modification,  destruction,  damage,
deterioration,   wear  and  tear  or  obsolescence   of  such   betterments  and
improvements.


56.      TENANT'S CHANGES

                           A.     (a)      Tenant may, from time to time during
the  term  of  this  lease  and at its  sole  expense,  make  such  alterations,
additions,   installations,    substitutions,   improvements   and   decorations
(hereinafter  collectively  referred to as "changes"  and, as applied to changes
provided  for in this  Article  56,  "Tenant's  Changes"  in and to the  demised
premises  (excluding  structural  changes  and  changes  that  affect any of the
Building's  systems or services,  for which  Landlord's  prior written  approval
shall be required in all  instances,  which approval may be withheld by Landlord
in its  sole  and  absolute  discretion),  as  Tenant  may  reasonably  consider
necessary for the conduct of its business therein, on the following conditions:

                                             (i)      the outside appearance or
strength of the Building, or of any of its structural parts, shall
not be affected;

                                            (ii)     no part of the Building
outside of the demised premises shall be physically affected;

                                           i)             the proper functioning
of any of the mechanical, electrical, sanitary and other

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service systems of the Building shall not be adversely affected, and the usage
of such systems by Tenant shall not be increased;

                                              (iv)   in performing the work
involved in making such changes,  Tenant shall observe,  and be bound by, all of
the conditions and covenants contained in this Article 56;

                                               (v)    before proceeding with any
change (except for decorations  that do not affect the  mechanical,  electrical,
sanitary  and/or other service  systems),  Tenant shall submit to Landlord,  for
Landlord's  approval,  not to be  unreasonably  withheld or  delayed,  plans and
specifications  for the work to be done and the name of the  contractor or major
sub-contractors  performing  such work.  Landlord  may,  as a  condition  of its
consent, require Tenant to make revisions in and to the plans and specifications
and to post a bond or other  security  reasonably  satisfactory  to  Landlord to
insure the completion of such change; and

                                              (vi)     Tenant shall not make any
change,  alteration,  addition or  substitution to the  air-conditioning  system
without Landlord's prior written approval, which may be withheld for any reason.

                           B.       Tenant shall, at its expense, obtain all
necessary  governmental  permits  and  certificates  for  the  commencement  and
prosecution  of Tenant's  Changes,  and,  upon  completion,  for final  approval
thereof,  and  shall  cause  Tenant's  Changes  to be  performed  in  compliance
therewith,  as well as with all  applicable  laws  and  requirements  of  public
authorities and all applicable  requirements of insurance  bodies, in a good and
workmanlike manner,  using new materials and equipment of a quality and class at
least equal to the original  installations  in the  Building.  Tenant's  Changes
shall be performed  in such a manner as not to  unreasonably  interfere  with or
delay,  and (unless  Tenant shall  indemnify  Landlord  therefor to the latter's
reasonable  satisfaction) as not to impose any additional  expense upon Landlord
in, the maintenance or operation of the Building.  Throughout the performance of
Tenant's Changes, Tenant shall, at its expense, carry, or cause to be carried by
Tenant's  contractor,  worker's  compensation  insurance in statutory limits and
general  liability  insurance for any occurrence in or about the Building as set
forth in Article 55 hereof.  All such insurance policies shall name Landlord and
its agents as parties  insured,  be in such  limits as Landlord  may  reasonably
prescribe  and be placed with  insurers  reasonably  satisfactory  to  Landlord.
Tenant shall furnish Landlord with satisfactory  evidence that such insurance is
in effect at or before the commencement of Tenant's Changes and, on request,  at
reasonable  intervals  thereafter during the continuance of Tenant's Changes. If
any of Tenant's Changes shall involve the removal of any fixtures, equipment, or
other  property in the demised  premises,  such  fixtures,  equipment,  or other
property shall be promptly  replaced,  at Tenant's  expense,  with new fixtures,
equipment, or other property (as the case may be) of like utility and at least

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equal value unless Landlord shall otherwise  expressly  consent in writing,  and
Tenant shall, upon Landlord's request, store and preserve, at Tenant's sole cost
and  expense,  any such  fixtures,  equipment,  or property so removed and shall
return same to Landlord upon the expiration or sooner termination of this lease.
All Tenant's  Changes  shall be performed by  contractors  approved by Landlord,
which approval shall not be unreasonably withheld or delayed. Landlord will upon
request of Tenant  furnish to Tenant a list of approved  contractors  containing
not less than four (4) approved contractors.

                           C.    Tenant shall, at its expense and with diligence
and dispatch,  procure the cancellation or discharge of all notices of violation
arising from, or otherwise connected with, Tenant's Changes that shall be issued
by the  Department  of Buildings or any other public or  quasi-public  authority
having or  asserting  jurisdiction.  Tenant  shall  defend,  indemnify  and save
Landlord  harmless from and against any and all mechanic's and other liens filed
in  connection  with  Tenant's  Changes,  including  the  liens of any  security
interest in,  conditional  sales of, or chattel  mortgages  upon, any materials,
fixtures,  or  articles so  installed  in and  constituting  part of the demised
premises,  and against all costs, expense and liabilities incurred in connection
with any such lien, security interest,  conditional sale, or chattel mortgage or
any action or proceeding brought thereon.  Tenant, at its expense, shall procure
the  satisfaction  or discharge of all such liens within fifteen (15) days after
Landlord makes written demand therefor.  However, nothing herein contained shall
prevent Tenant from contesting,  in good faith and at its own expense,  any such
notice of violation,  provided  that Tenant shall comply with the  provisions of
Article 6 hereof.

                           D.      Tenant agrees that the exercise of its rights
pursuant to the provisions of this Article 56 shall not be done in a manner that
would: (i) create any work stoppage,  picketing,  labor disruption,  or dispute;
(ii) violate Landlord's union contracts  affecting the land and/or Building;  or
(iii)  interfere  with the business of Landlord or any Tenant or occupant of the
Building.  In the  event of the  occurrence  of any  condition  described  above
arising from Tenant's  exercise of any of its rights  pursuant to the provisions
of this Article 56, Tenant shall,  immediately upon notice from Landlord,  cease
the manner of exercise of such right giving rise to such condition. In the event
that Tenant  fails to cease such manner of exercise of its rights as  aforesaid,
Landlord,  in  addition  to any  rights  available  to it under  this  lease and
pursuant to law, shall have the right to injunction without notice. With respect
to  Tenant's  Changes,  Tenant  shall  make all  arrangements  for,  and pay all
expenses incurred in connection with, use of the freight elevators servicing the
demised  premises  which use shall be on an after hours  basis.  Tenant shall be
charged  for use of the  freight  elevators  for after  hours use of the freight
elevator at the then standard Building charge therefor which presently is $75.00
per hour (with a minimum of four (4) hours if requested  on other than  business
days or for a period commencing after 6:00 p.m. on business days) which amount

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shall be increased as Landlord's actual out-of-pocket costs for such after hours
freight elevator service  increase.  All amounts due from Tenant hereunder shall
be paid as  additional  rent  within  fifteen  (15) days from  receipt  of bills
therefor.

                           E.       Notwithstanding anything in Article 3 to the
contrary,   Landlord  will  not   unreasonably   withhold  its  consent  to  (a)
alterations,  installations,  additions or  improvements  to the interior of the
Demised Premises by Tenant which are  non-structural and which do not affect any
of the Building systems or plumbing or electrical lines.

57.      HOLDING OVER

         Tenant  acknowledges  that  possession of the demised  premises must be
surrendered to Landlord at the  expiration or sooner  termination of the term of
this lease.  Tenant agrees to indemnify and save Landlord  harmless  against all
liabilities, costs, suits, demands, charges, and expenses of any kind or nature,
including attorneys' fees and disbursements, resulting from a delay by Tenant in
so surrendering the demised premises,  including, without limitation, any claims
made by any succeeding  tenant founded on such delay. The parties  recognize and
agree that the damage to Landlord resulting from any failure by Tenant to timely
surrender  possession  of the demised  premises as  aforesaid  will be extremely
substantial,   will  exceed  the  amount  of  fixed  rent  and  additional  rent
theretofore  payable  hereunder and will be impossible of accurate  measurement.
Tenant,  therefore,  agrees that if  possession  of the demised  premises is not
surrendered  to  Landlord  within  twenty-four  (24) hours after the date of the
expiration or sooner  termination  of the term of this lease,  then Tenant shall
pay to Landlord,  as  liquidated  damages,  a sum equal to two (2) times the per
diem fixed rent and additional  rent which was payable during the calendar month
preceding  the calendar  month in which the term ended for each day Tenant holds
over and fails to deliver  possession of the demised  premises.  Nothing  herein
contained  shall be deemed to permit Tenant to retain  possession of the demised
premises after the  expiration or sooner  termination of the term of this lease.
Landlord,  by  availing  itself of the  rights  and  privileges  granted by this
provision and the acceptance of the liquidated  damages,  shall not be deemed to
have waived any of its rights and privileges granted in other provisions of this
lease,  and the rights  granted in this Article shall be considered in any event
as in addition to and not in exclusion of such other rights and privileges.  The
aforesaid  provisions  of this Article  shall  survive the  expiration or sooner
termination of the term of this lease.

58.      CERTAIN DEFINITIONS AND CONSTRUCTION

                           A.       For the purposes of this lease and all
agreements supplemental to this lease, unless the context otherwise requires the
definitions set forth in Exhibit B annexed hereto shall be utilized.


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                           B.       The various terms which are italicized and
defined in other  Articles  of this lease or are  defined  in  Exhibits  annexed
hereto,  shall  have the  meanings  specified  in such other  Articles  and such
Exhibits for all purposes of this lease and all agreements supplemental thereto,
unless the context shall otherwise require.

59.      ADDENDUM TO ARTICLE 17

         The following is added to the Lease as Section 17.1:

                  "This lease and the term and estate hereby granted are
subject to the limitation that:

                                   (a)      whenever Tenant shall default in the
payment of any  installment  of fixed rent, or in the payment of any  additional
rent or any other charge  payable by Tenant to  Landlord,  on any day upon which
the same ought to be paid,  and such  default  shall  continue for ten (10) days
after  Landlord  shall have given Tenant a notice in accordance  with Article 60
specifying such default; or

                                    (b)      whenever Tenant shall do or permit
anything to be done, whether by action or inaction,  contrary to any of Tenant's
obligations  hereunder,  and if such  situation  shall continue and shall not be
remedied by Tenant  within thirty (30) days after  Landlord  shall have given to
Tenant a notice in accordance  with Article 60 specifying  the same,  or, in the
case of a happening or default which cannot with due diligence be cured within a
period of thirty (30) days and the  continuance of which for the period required
for  cure  will  not  subject  Landlord  to the risk of  criminal  liability  or
termination of any superior lease or  foreclosure of any superior  mortgage,  if
Tenant  shall not,  (i) within said thirty  (30) day period  advise  Landlord of
Tenant's  intention  to duly  institute  all  steps  necessary  to  remedy  such
situation,  (ii)  duly  institute  within  said  thirty  (30)  day  period,  and
thereafter  diligently prosecute to completion all steps necessary to remedy the
same and (iii)  complete  such  remedy  within  such time  after the date of the
giving of said notice of Landlord as shall reasonably be necessary; or

                                  (c)      whenever any event shall occur or any
contingency  shall arise whereby this lease or the estate hereby  granted or the
unexpired  balance of the term hereof  would,  by operation of law or otherwise,
devolve  upon or pass to any  person,  firm or  corporation  other than  Tenant,
except as expressly permitted by Articles 11 and 54; or

                                   (d)      whenever Tenant shall abandon the
Demised Premises (unless as a result of a casualty),

then in any of said cases set forth in the foregoing  Subsections  (a), (b), (c)
and (d),  Landlord  may give to Tenant a notice of  intention to end the term of
this lease at the  expiration  of five (5) days from the date of the  service of
such notice of intention,

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and upon the expiration of said five (5) days this lease and the term and estate
hereby granted, whether or not the term shall theretofore have commenced,  shall
terminate  with the same  effect as if that day were the  Expiration  Date,  but
Tenant shall remain liable for damages as provided in Article 18."

60.      NOTICES

                           A.       Except for rent bills and emergency repair
notices (which may be  hand-delivered or sent via facsimile machine and shall be
deemed given upon receipt) any notice, statement,  demand or other communication
required  or  permitted  to be given,  rendered  or made by either  party to the
other,  pursuant to this lease or pursuant to any  applicable law or requirement
of public authority,  shall be in writing (whether or not so stated elsewhere in
this lease) and shall be deemed to have been properly  given,  rendered or made,
if sent by registered or certified mail, return receipt requested,  addressed to
the other  party at the address  hereinabove  set forth  (except  that after the
Commencement  Date,  Tenant's  address,  unless  Tenant shall give notice to the
contrary,  shall be the Building),  or sent via nationally  recognized overnight
courier providing for receipted delivery and shall be deemed to have been given,
rendered or made (a) if so mailed,  on the day so mailed,  unless mailed outside
of the State of New York,  in which case it shall be deemed to have been  given,
rendered or made on the  expiration of the normal period of time for delivery of
mail from the post-office of origin to the post-office of destination and (b) if
sent via nationally recognized overnight courier, on the date of receipt. Either
party may, by notice as  aforesaid,  designate a different  address or addresses
for notices, statements, demands or other communications intended for it.


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                                   - - - - - - - - - - - - - - - - - - - - - - -

                                    EXHIBIT A
                         FLOOR PLAN OF DEMISED PREMISES

                                   - - - - - - - - - - - - - - - - - - - - - - -

                               Follows Immediately



(Floor plan attached)
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                  - - - - - - - - - - - - - - - - - - - - - - -

                                    EXHIBIT B
                                   DEFINITIONS

                  - - - - - - - - - - - - - - - - - - - - - - -

                                 (a)      The term "mortgage" shall include an
indenture  of  mortgage  and deed of trust to a  trustee  to  secure an issue of
bonds, and the term "mortgagee" shall include such a trustee.

                                 (b)      The terms "include", "including" and
"such as" shall each be  construed as if followed by the phrase  "without  being
limited to".

                                  (c)      The term "obligations of this lease",
and words of like import,  shall mean the  covenants to pay rent and  additional
rent under this lease and all of the other covenants and conditions contained in
this  lease.  Any  provision  in this  lease that one party or the other or both
shall do or not do or shall cause or permit or not cause or permit a  particular
act,  condition,  or  circumstance  shall be deemed  to mean that such  party so
covenants or both parties so covenant, as the case may be.

                                  (d)      The term "Tenant's obligations
hereunder",  and  words  of like  import,  and the term  Landlord's  obligations
hereunder,  and words of like import,  shall mean the  obligations of this lease
which are to be performed or observed by Tenant, or by Landlord, as the case may
be.  Reference to  performance of either  party's  obligations  under this lease
shall be construed as "performance and observance".

                                   (e)      Reference to Tenant being or not
being "in default hereunder", or words of like import, shall mean that Tenant is
in default in the performance of one or more of Tenant's obligations  hereunder,
or  that  Tenant  is  not  in  default  in the  performance  of any of  Tenant's
obligations hereunder, or that a condition of the character described in Section
25.01 has occurred and  continues or has not occurred or does not  continue,  as
the case may be.

     (f)  References  to Landlord as having "no  liability  to Tenant" or "being
without  liability  to  Tenant",  shall  mean  that  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.

     (g) The term laws and/or  requirements  of public  authorities and words of
like import shall mean laws and
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ordinances  of any  or all of the  Federal,  state,  city,  county  and  borough
governments  and rules,  regulations,  orders  and/or  directives  of any or all
departments, subdivisions, bureaus, agencies or offices thereof, or of any other
governmental,  public or quasi-public  authorities,  having  jurisdiction in the
premises, and/or the direction of any public officer pursuant to law.

                                     (h)    The term "requirements of insurance"
bodies and words of like import shall mean rules, regulations,  orders and other
requirements of the New York Board of Fire Underwriters and/or the New York Fire
Insurance Rating  Organization and/or any other similar body performing the same
or similar  functions  and having  jurisdiction  or  cognizance  of the Building
and/or the Demised Premises.

                                    (i)     The term "repair" shall be deemed to
include  restoration  and  replacement  as may be  necessary  to achieve  and/or
maintain good working order and condition.

                                    (j)      Reference to "termination of this
lease" includes  expiration or earlier  termination of the term of this lease or
cancellation of this lease pursuant to any of the provisions of this lease or to
law. Upon a termination of this lease, the term and estate granted by this lease
shall  end at noon of the date of  termination  as if such date were the date of
expiration  of the term of this lease and  neither  party shall have any further
obligation or liability to the other after such  termination (i) except as shall
be expressly  provided for in this lease,  or (ii) except for such obligation as
by its nature or under the  circumstances  can only be, or by the  provisions of
this lease, may be, performed after such termination,  and, in any event, unless
expressly  otherwise  provided in this lease,  any liability for a payment which
shall  have  accrued  to or with  respect  to any  period  ending at the time of
termination shall survive the termination of this lease.

                                  (k)      The term "in full force and effect"
when herein used in reference  to this lease as a condition to the  existence or
exercise of a right on the part of Tenant shall be construed in each instance as
including the further  condition  that at the time in question no default on the
part of Tenant  exists,  and no event has occurred  which has continued to exist
for such period of time (after the notice,  if any,  required by this lease), as
would entitle Landlord to terminate this lease or to dispossess Tenant.

                                   (l)      The term "Tenant" shall mean Tenant
herein  named or any  assignee  or other  successor  in interest  (immediate  or
remote) of Tenant  herein  named,  while such  Tenant or such  assignee or other
successor  in  interest,  as the case may be, is in  possession  of the  Demised
Premises as owner of the Tenant's estate and interest  granted by this lease and
also, if Tenant is not an individual or a corporation, all of the persons, firms
and corporations then comprising Tenant.


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                                 (m)      Words and phrases used in the
singular  shall be deemed to include  the plural and vice  versa,  and nouns and
pronouns  used in any  particular  gender  shall be deemed to include  any other
gender.

                                  (n)    The rule of "ejusdem generis" shall not
be  applicable  to  limit a  general  statement  following  or  referable  to an
enumeration of specific  matters to matters similar to the matters  specifically
mentioned.

                                  (o)      All references in this lease to
numbered  Articles,  numbered  Sections and lettered  Exhibits are references to
Articles and Sections of this lease,  and Exhibits  annexed to (and thereby made
part of) this lease, as the case may be, unless expressly  otherwise  designated
in the context.

                                  (p)      The terms "control" shall mean (i)
ownership  of more  than  fifty  (50%)  percent  of all the  voting  stock  of a
non-publically  traded  corporation  or more than fifty (50%) percent of all the
legal and equitable interest in any other non-publically  traded entity and (ii)
with respect to a publically traded corporation or entity, the possession of the
power to direct or cause the  direction of the  management  and policies of such
corporation or entity through the ownership of voting securities or interests or
by contract or otherwise.

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                  - - - - - - - - - - - - - - - - - - - - - - -

                                    EXHIBIT C
                                 LANDLORD'S WORK

                  - - - - - - - - - - - - - - - - - - - - - - -


PART A: 1. Tenant has  submitted to Landlord and  Landlord  hereby  approves the
detailed  architectural  working drawings and specifications for Landlord's Work
sealed by Tenant's licensed architect, and the electrical, mechanical, plumbing,
sprinkler and engineering plans based upon such detailed  architectural  working
drawings  and  specifications   set  forth  in  Part  E  hereof(such   drawings,
specifications and plans are hereinafter  collectively  referred to as the "Work
Plans").

                  2. The Work Plans  shall  comply with and conform to the plans
of the Building  filed with the Department of Buildings of the City of New York,
and with all rules,  regulations  and/or other  requirements of any governmental
department  having  jurisdiction  over the preparation of the Demised  Premises.
Landlord  shall  file  all  necessary  architectural  plans,  together  with any
mechanical plans and specifications,  in such form (building notice, alteration,
or other form) as may be necessary,  with the appropriate governmental agencies.
Any changes required by any governmental  department affecting the completion of
the Demised  Premises  shall be  described  in detail to Tenant  (prior to their
implementation)   and   provided   (i)   Tenant   agrees  in  writing  to  their
implementation  (which agreement shall not be unreasonably withheld or delayed),
or (ii) such governmental  department  requires such changes be implemented in a
particular  manner designated by such  governmental  department,  Landlord shall
notify  Tenant  thereof and the same shall be  complied  with by Landlord in the
completion of the Demised  Premises and shall not be deemed to be a violation of
the Work Plans or any provisions of this Exhibit C. In the event Tenant does not
agree to the  implementation  of any such change (which  agreement  shall not be
unreasonably  withheld or delayed)  where such  governmental  department has not
required that such change be  implemented in a particular  manner  designated by
such  governmental  department,  Landlord and Tenant shall cooperate in revising
the  Work  Plans in a  manner  acceptable  to both  parties  and the  applicable
governmental  agency. The granting by Landlord of its approval to the Work Plans
shall  in no  manner  constitute  or be  deemed  to  constitute  a  judgment  or
acknowledgment by Landlord as to their legality or compliance with governmental,
quasi-governmental or other requirements.

                  3. Tenant  shall have the right to make  changes  from time to
time in the Work Plans  subsequent  to the  approval  thereof by  submitting  to
Landlord   revised  plans  and   specifications   (herein  referred  to  as  the
"Revisions").  All  Revisions  shall be  subject  to  Landlord's  prior  written
approval,  which shall not be unreasonably withheld or delayed. In the event any
Revisions  increase the cost of the Landlord's Work above the cost of performing
same in

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accordance with the approved Work Plans,  provided  Landlord gave written notice
of the estimated  amount of such increase to Tenant prior to  implementing  such
Revisions  and Tenant gave  written  approval of such amount to Landlord  within
four (4) business  days of receipt of such notice,  or failed to respond  within
such  period,  Tenant  shall be deemed to have  approved  such  amount  and such
increase shall be paid by Tenant.  If Tenant  disapproves  the estimated cost of
any  Revision  within  four (4) days of  receipt  of such  estimated  cost  from
Landlord,   Landlord   shall  have  no  obligation  to  perform  such  Revision.
Additionally,  in the event any Revisions  delay the  substantial  completion of
Landlord's  Work,  (provided  Landlord  notified  Tenant in writing prior to the
implementation of such Revisions as to the estimated delay to be caused thereby)
Landlord's  Work shall be deemed  substantially  completed  as the date it would
otherwise have been completed but for such Revisions.

                  4. All amounts  payable by Tenant  pursuant to this  Exhibit C
shall be paid by Tenant within ten (10)  business  days after the  submission to
Tenant of statements,  bills or invoices and reasonable  back-up  materials with
respect  thereto.  Such  statements,  bills or invoices  shall be conclusive and
binding on Tenant  unless  Tenant  shall  notify  Landlord  within such ten (10)
business day period that it disputes the  correctness  thereof,  specifying  the
particular  respects  in which the  statement,  bill or invoice is claimed to be
incorrect.  Pending the  resolution  of such  dispute by  agreement  between the
parties or otherwise,  Tenant shall pay all amounts due in  accordance  with the
statement,  bill or invoice,  but such  payment  shall be without  prejudice  to
Tenant's  right to dispute  same.  If the dispute  shall be resolved in Tenant's
favor,  Landlord shall,  within ten (10) business days, pay Tenant the amount of
the overpayment, if any, resulting from Tenant's compliance with such statement,
bill or invoice.

PART B: 1.  Landlord  shall  provide the materials and install and complete same
and prepare the Demised Premises for Tenant's occupancy (hereinafter referred to
as "Landlord's  Work") in accordance  with the approved Work Plans at Landlord's
sole cost and expense except as set forth in Part A,  Paragraph 3 above.  Tenant
shall be entitled  to the  benefit of any  warranties  and  guaranties  given to
Landlord in connection with Landlord's Work.  Notwithstanding anything herein to
the  contrary,  as  part of  Landlord's  Work,  Landlord  shall,  to the  extent
required,  make all repairs to the air-conditioning system servicing the Demised
Premises so that same is in good working order on the Commencement Date.

PART C:           Tenant's Performance of Items of Tenant's Work:
-------           -----------------------------------------------

                  1.  Landlord  shall permit Tenant and its agents to enter upon
the Demised Premises prior to the Commencement Date so that Tenant or its agents
or  architect  may examine  Landlord's  Work and may perform  Tenant's  Work (as
defined in Article 40) utilizing its own  contractors,  (to be first approved in
writing  by  Landlord  which  approval  shall not be  unreasonably  withheld  or
delayed) and in

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accordance  with plans and  specifications  as  approved  in writing by Landlord
(which  approval shall not be  unreasonably  withheld or delayed).  The approved
contractors  performing Tenant's Work may perform Tenant's Work at the same time
that  Landlord's  contractors  are  working in the Demised  Premises,  provided,
however,  that (a)  Landlord's  Work  shall  have  reached a point at which,  in
Landlord's reasonable judgment,  the performance of Tenant's Work will not delay
or  hamper  Landlord  in the  completion  of the  same  and (b)  Tenant  and its
contractors  shall work in harmony  and shall not  interfere  with  Landlord  or
Landlord's  contractors.  Landlord may, at any time,  deny access to the Demised
Premises to Tenant and/or to any of its  contractors  in the event that Landlord
shall, in its reasonable discretion, determine that the performance or manner of
performance  of Tenant's Work  interferes  with,  delays,  hampers,  or prevents
Landlord from  proceeding with the completion of Landlord's Work at the earliest
possible time. In connection  with the foregoing  sentence,  within  twenty-four
(24) hours after  Landlord's  direction  (which need not be given in writing and
may be given by Landlord or its agents or contractors to Tenant or its agents or
contractors),  Tenant shall,  and cause its  contractors  to,  withdraw from the
Building and the Demised Premises and cease all work being performed by it or on
its behalf by any person,  firm, or corporation  (other than  Landlord).  Tenant
shall pay to Landlord, as additional rent, within ten (10) days after submission
to Tenant of a  statement  therefor,  an amount  equal to all costs  incurred by
Landlord in connection with such early entry by Tenant.

                  2.  In the  event  that  Tenant  or its  contractor  shall  be
permitted  to enter upon the Demised  Premises  prior to the  Commencement  Date
pursuant  to the terms of  paragraph  1 above,  such entry shall be deemed to be
upon all of the terms,  provisions and conditions of the Lease, except as to the
covenant to pay fixed rent and additional rent. In connection therewith,  Tenant
and/or its  contractors  shall  provide to Landlord,  and shall  maintain at all
times during the  performance of any Tenant's  Work,  Builder's  Risk,  worker's
compensation,  public liability and property damage insurance  policies,  all of
which  shall  contain  limits,  be with  companies  and be in  form as  required
pursuant to Article 55 of the Lease. Certificates of the same shall be furnished
to Landlord before Tenant or its contractors  commence to perform Tenant's Work.
Landlord shall not be liable in any way for any injury,  loss or damage that may
occur  to  any of  Tenant's  or  Tenant's  contractors'  decorations,  fixtures,
installations,  supplies, materials, or equipment prior to the Commencement Date
unless due to the  negligence or wilful  misconduct of Landlord or its agents or
contractors  (it being  understood and agreed that Landlord has no obligation to
secure same or take any action with respect thereto). Except as set forth in the
preceding  sentence,  any such entry by Tenant and/or its  contractors  being at
their sole risk.

PART D:           Delays Caused By Tenant; Additional Expenses:
-------           ---------------------------------------------

         Tenant has been  advised of the  importance  to Landlord of  completing
Landlord's  Work in an expeditious  manner and of the financial loss to Landlord
that would result from a delay in such

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1525500015
BES:PAL
FIRST WILLOW, LLC
OFFICE LEASE
MANCHESTER
040297
052197
060497
061697




completion. If Tenant, or persons within Tenant's control, cause an actual delay
in the progress or completion of Landlord's  Work by (i)  submitting one or more
Revisions to Landlord  (provided  Landlord  gives Tenant  notice as to the delay
such  Revisions  would cause  pursuant  to Part A  Paragraph  5 above);  or (ii)
otherwise  interfering  with, or delaying,  Landlord's  completion of Landlord's
Work (any such delay set forth in (i) or (ii) above being herein  referred to as
a "Tenant's Delay"), then the date of substantial  completion of Landlord's Work
shall be  deemed to be the date  upon  which  Landlord's  Work  would  have been
substantially completed but for Tenant's Delay.

PART E:           Work Plans:
-------           -----------

                  Follows immediately.

(Site plans and project plans attached)

                                      -46-


I:\DATA\WPDOCS\15255_00.015\RES_LEAL\97021622

<PAGE>


1525500015
BES:PAL
FIRST WILLOW, LLC
OFFICE LEASE
MANCHESTER
040297
052197
060497
061697




                  - - - - - - - - - - - - - - - - - - - - - - -

                                    EXHIBIT D
                            CERTIFICATE OF OCCUPANCY

                  - - - - - - - - - - - - - - - - - - - - - - -

                              (Follows immediately)

(Certificate attached)

                                      -47-


I:\DATA\WPDOCS\15255_00.015\RES_LEAL\97021622