Sublease Agreement

         Sublease  AGREEMENT (the "Sublease")  dated as of the 17th day of June,
1996 by and between LIZ  CLAIBORNE  ACCESSORIES,  INC., a Delaware  corporation,
having an office at One Claiborne  Avenue,  North Bergen,  New Jersey 07047 (the
"Sublandlord")  and KENNETH  COLE  PRODUCTIONS,  INC.,  a New York  Corporation,
having an office at 85 Metro Way, Secaucus, New Jersey 07094 (the "Subtenant").

                                    WHEREAS:

         a. By a lease dated April 16,  1987,  as amended by Lease  Modification
Agreement  dated June 30, 1987,  letter  agreement  dated July 22,  1987,  Lease
Modification  Agreement dated June 5, 1991, and letter agreement dated September
15, 1995 (the  "Overlease")  by and between Hartz Mountain  Metropolitan,  a New
Jersey General Partnership,  as landlord,  (the "Overlandlord") and Sublandlord,
as tenant,  Sublandlord  has leased from  Overlandlord  the entire  premises and
buildings  more fully  described  in the  Overlease  known as Two Emerson  Lane,
Secaucus,  New Jersey,  (the  "Buildings") on the real property which is part of
the Land more fully described in Exhibit A of the Overlease (the "Land"); and

         b. Subtenant desires to sublet from Sublandlord  239,000 square feet of
the  warehouse  and  office  Building  (the  "Sublease  Premises"),  and  obtain
exclusive use of certain portions of the Land and those 225 parking spaces which
are identified by  crosshatching  and more fully  described on Exhibit A annexed
hereto and made a part hereof,  upon the terms and subject to the provisions and
conditions hereinafter set forth; and

         NOW,  THEREFORE,  the parties hereto,  in  consideration  of the mutual
covenants,  conditions and agreements hereinafter contained,  do hereby agree as
follows:

                              W I T N E S S E T H :

1.       Term.

         Sublandlord  hereby  sublets the  Sublease  Premises to  Subtenant  and
Subtenant hereby hires the Sublease Premises from  Sublandlord,  for a term (the
"Term") which shall  commence on October 1, 1996 (the  "Commencement  Date") and
which shall expire on June 29, 2002,  unless the Term shall be sooner terminated
in  accordance  with the  provisions  of this  Sublease  or the  Overlease.  The
Subtenant  acknowledges  that the Term of this Sublease  shall  terminate in the
event that the Overlease is terminated  prior to the expiration date pursuant to
the terms set forth therein.

2.       Sublease Premises Square Footage.

         The  Sublease  Premises  consists of two hundred  thirty-nine  thousand
(239,000)  square feet of the Building.  Subtenant shall also have the exclusive
use of  certain  portions  of the Land  and the two  hundred  twenty-five  (225)
parking spaces ("Subtenant's  Parking



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Area") as identified on Exhibit A attached  hereto.  Subtenant  acknowledges and
agrees that its use of  Subtenant's  Parking Area and of any portion of the area
in which such parking spaces are located, shall not unreasonably interfere with,
impede or restrict  access to or egress from any portion of the  Building or any
other  premises  subject to the Overlease  whether by  Sublandlord or any person
authorized by Sublandlord.

         Sublandlord  acknowledges  and  agrees  that its use of  those  parking
spaces and of any portion of the area in which such  parking  spaces are located
on the Land not permitted to be used by Subtenant  hereunder (the "Sublandlord's
Parking Area") identified on Exhibit A attached hereto, access to which area may
be  restricted  by  signs,  shall not  unreasonably  interfere  with,  impede or
restrict  access to or egress from any portion of the  Sublease  Premises or the
Subtenant's Parking Area.

         Both  parties  agree  that  neither  one shall  not  place  any  fence,
barricade,  or other type of  dividing  barrier or cause any  security  guard to
administer same between Subtenant's Parking Area and Sublandlord's Parking Area.
Subtenant  acknowledges  that,  to the  extent  parking  spaces  are  vacant  in
Subtenant's Parking Area, Sublandlord's customers may be allowed to park in same
during the weekends without penalty, restriction or any charge to Sublandlord.

3.       Fixed Rent.

         The annual fixed rent (the "Fixed  Rent") shall be the amount set forth
below for the following periods:

           Period                       Monthly Fixed Rent     Annual Fixed Rent
           ------                       ------------------     -----------------
October 1, 1996 - September 30, 1997        $40,000.00            $  480,000
October 1, 1997 - September 30, 1998        $48,333.33            $  580,000
October 1, 1998 - September 30, 1999        $56,666.66            $  680,000
October 1, 1999 - September 30, 2000        $65,000.00            $  780,000
October 1, 2000 - September 30, 2001        $75,416.66            $  905,000
October 1, 2001 - June 29, 2002*            $85,833.33            $1,030,000*

*    Such amounts shall be prorated for less than one (1) year.


Subtenant  covenants and agrees to pay the  Sublandlord the annual Fixed Rent in
equal monthly installments in lawful money of the United States in advance on or
prior to the first (1st) day of each  calendar  month during the Term,  together
with additional rent as hereinafter set forth, without any deduction,  offset or
abatement  whatsoever.  All  payments  to be made by  Subtenant  to  Sublandlord
hereunder shall be made at One Claiborne Avenue, North Bergen, New Jersey 07047,
Attn:  Director  - Accounts  Payable,  or such other  place as  Sublandlord  may
hereinafter designate.  All amounts due from Subtenant to Sublandlord under this
Sublease  shall be paid by good and sufficient  check  (subject to  collection).
Notwithstanding anything to the contrary contained herein, all Fixed Rent, Fixed
Tax  Payments (as  hereinafter  defined) for the


<PAGE>

first  month of the Term of this  Lease  shall be paid  simultaneously  with the
execution of this Sublease.


4.       Use of the Sublease Premises.

         Subtenant shall  continuously use and occupy the Sublease  Premises for
warehouse  distribution,  general office and ancillary  retail use in accordance
with all  laws and  ordinances  of all  federal,  state,  county  and  municipal
governments and rules,  regulations,  orders and directives of all  departments,
subdivisions,  bureaus,  agencies or offices thereof and any other governmental,
public or quasi public  authorities  having  jurisdiction  over the Land and the
Building ("Permitted Uses").

5.       Incorporation of Overlease Terms.

         a. Words or terms which are capitalized herein,  shall have the meaning
ascribed to them in the Overlease unless the context clearly requires otherwise.

         b. Except as herein otherwise  expressly  provided in Article 5(c), and
elsewhere  in  this  Sublease,  all  of the  terms,  provisions,  covenants  and
conditions  contained in the Overlease are hereby made a part hereof. The rights
and obligations as are contained in the Overlease are,  during the Term,  hereby
imposed upon the respective  parties hereto,  Sublandlord  being substituted for
the  landlord   thereunder  and  Subtenant  being  substituted  for  the  tenant
thereunder; provided, however, that Sublandlord shall not be liable to Subtenant
for any failure in performance  resulting from the failure in performance by the
Overlandlord under the Overlease of the corresponding covenant of the Overlease,
and Sublandlord's  obligations hereunder are accordingly  conditional where such
obligations  require such parallel  performance by Overlandlord.  The respective
terms,  covenants,  provisions  and  conditions  of the Overlease on the part of
Overlandlord to be performed,  which have been incorporated  herein by reference
or as covenants and obligations of Sublandlord hereunder, are to be performed by
Overlandlord or its respective successors and assigns, Subtenant hereby agreeing
to look  solely to  Overlandlord  for such  performance.  No  representation  or
warranty made by Overlandlord  under the Overlease is deemed made by Sublandlord
hereunder.  Sublandlord  shall not be liable or responsible to Subtenant for any
failure or default on the part of  Overlandlord,  its successors or assigns,  or
any breach of a representation or warranty made by Overlandlord,  its successors
or assigns with respect to any of the terms, covenants, provisions,  conditions,
warranties  and  representations  of or in the  Overlease.  Sublandlord  agrees,
however,  to use reasonable  efforts to enforce its rights  (including,  without
limitation, indemnity obligations of the Overlandlord) pursuant to the Overlease
for the benefit of Subtenant upon  Subtenant's  written  request,  and Subtenant
agrees to reimburse  Sublandlord for any and all reasonable costs it shall incur
in expending such efforts.  If such Sublandlord efforts benefit both Sublandlord
and Subtenant,  the costs of such efforts shall be equitably  pro-rated  between
Sublandlord  and Subtenant on the basis of the benefit  received.  A copy of the
Overlease is attached as Exhibit B hereto.

<PAGE>

         c. The  Overlease is modified  solely for the purposes of this Sublease
as follows:

         1. Article 1, Paragraph 1.01:

                  a.  Paragraph A: Delete the word "None" and insert "Fixed Rent
         and Fixed Tax Payments (as hereinafter defined), for the first month of
         the  Term,  shall  be paid  simultaneously  with the  execution  of the
         Sublease;

                  b.       Paragraphs C and D: Delete the paragraphs;

                  c. Paragraph E: Insert the words "warehouse and office" before
         "building" and delete the words "or buildings";

                  d.  Paragraph  H: Delete the words from  "244,525"  to "B" and
         insert "the Sublease Premises as defined in the Sublease".

                  e. Paragraph J: Delete the first (1st) sentence;

                  f. Delete paragraphs O, T, V, and FF.

         2. Article 2, Paragraph 2:01: Delete the first sentence.

         3. Article 3:

                  a. Paragraph 3:01: Delete the first sentence;

                  b. Paragraph  3.05:  Delete the word "ten (10)" and substitute
         "seven (7)".

         4. Article 5: Delete Paragraphs 5.01 and 5.02.

         5. Article 6:

                  a. Paragraph 6.01: Delete the second and third sentences;

                  b. Paragraph 6.02:  Delete the entire paragraph except for the
         first sentence;

         6.  Article 9: In line 10 of  Paragraph  9.01 insert a period "." after
the word "Mortgages" and delete the remainder of the sentence from the words "so
long" to "period".

         7. Article 10: Delete paragraph 10.01 in its entirety.

         8. Article 11: Delete the entire Article.

         9. Article 13: Delete paragraph 13.04 in its entirety.

         10. Article 15:

                  a. Paragraph  15.01:  In lines four and eight delete the words
         "Five Hundred Thousand and 00/100 Dollars ($500,000)" and insert "Three
         Hundred Thousand and 00/100 Dollars ($300,000)".

<PAGE>

                  b.  Paragraph  15.03:  In the third  line  insert a period "."
         after the word "consent" and delete the remainder of the sentence.

<PAGE>


         11. Article 17:

                  a. Paragraph  17.01:  In line fourteen after the word "pounds"
         insert  "and One Hundred  Pounds and Eighty  Pounds" and after the word
         "foot"  insert "for the mezzanine and second floors and the office area
         of the Demised Premises, respectively." Delete the last sentence in the
         paragraph.

                  b. Paragraph 17.02: Delete the last sentence in the paragraph.

         12.  Article 18,  Paragraph  18.01  Delete  the second  sentence in the
         paragraph.

         13. Article 22:

                  a.  Paragraph  22.03:  In line twelve  delete the word "ninety
         (90)" and insert "ninety-five";  in line sixteen delete the word "sixty
         (60)" and insert "fifty five (55)".

         14. Article 25:

                  a.  Paragraph  25.02:  In the third line  delete the word "ten
         (10)" and insert "five (5)" therefor;  in lines seven, nine and sixteen
         delete the word "thirty (30)" and insert the words  "twenty-five  (25)"
         therefor.  In lines  thirty-three and thirty-four delete the word "five
         (5)" and insert "three (3)" therefor.

         15. Article 27:

                  a.  Paragraph  27.04:  In the fifth line delete the word "five
         (5)" and substitute "three (3)" therefor.

         16. Article 31: Delete the entire paragraph.

         17. Article 32: Delete the entire paragraph.

         18. Article 35: Delete the entire paragraph.

         19. Rider to Lease:

                  a. Delete Paragraphs R2 and R4.

         20. Exhibit B: Delete in its entirety.

         21. Exhibit C: Delete in its entirety.

         22. Lease Modification Agreement dated June 5 1991:

                  a. Delete Paragraphs 1, 2, 3, 5, 6, 7, 8, 11, 13, 14 and 15.

                  b. Exhibit A: Delete in its entirety.

                  c. Wherever the Overlease refers to the Demised Premises, such
         reference for the purposes  hereof shall be deemed made to the Sublease
         Premises.

<PAGE>


                  d. Wherever the Overlease refers to "Additional Charges", such
         reference  for the purposes  hereof shall be deemed made to  Additional
         Rent (hereinafter defined).

                  e. To the extent  that there are any  inconsistencies  between
         the  provisions of the Overlease  and the Sublease,  the  provisions of
         this Sublease prevails.

6.       Sublease Subject to Overlease, etc..

         This  Sublease is  expressly  made subject and  subordinate  to all the
terms and  conditions of the Overlease and to the matters to which the Overlease
is or shall be subordinate,  except as specifically  provided to the contrary in
this  Sublease,  to the extent  applicable to the Sublease  Premises.  Subtenant
hereby assumes and covenants that it will,  throughout the term hereof,  observe
all of the provisions of the Overlease, to the extent applicable to the Sublease
Premises,  on the part of Sublandlord  to be performed as the tenant  thereunder
(except  for the  payment of rent or  additional  rent and  except as  otherwise
expressly set forth herein),  and that Subtenant will not do any act,  matter or
thing which will be,  result in, or  constitute  a  violation  or breach of or a
default  under  the  Overlease;  any such  violation,  breach or  default  shall
constitute  the  breach by  Subtenant  of a  substantial  obligation  under this
Sublease.  Subtenant  hereby  agrees  that it shall  indemnify,  defend and hold
Sublandlord  harmless  from  and  against  any and  all  claims,  penalties  and
expenses,  including  reasonable  attorneys'  fees,  based  upon any  default by
Subtenant,  during the Term hereof,  in Subtenant's  performance of those terms,
covenants and  conditions  of the Overlease  which are or shall be applicable to
Subtenant,  as above  provided,  (except to the extent such default is caused by
the  negligence of  Sublandlord or any of its employees or agents) and Subtenant
shall pay to  Sublandlord  as additional  rent  hereunder any and all sums which
Sublandlord  is required to pay to  Overlandlord,  caused in whole or in part by
Subtenant's failure to perform or observe any of the terms and conditions of the
Overlease pertaining to the Sublease Premises,  as above provided, or by any act
or omission  described in the preceding  sentence.  Provided Subtenant is not in
default hereunder, Sublandlord hereby agrees that it shall indemnify, defend and
hold  Subtenant  harmless  from and against any and all  claims,  penalties  and
expenses,  including  reasonable  attorneys'  fees based upon any non-payment by
Sublandlord in the Rental due  Overlandlord  pursuant to the  Overlease.  In any
case where the consent or approval of Overlandlord shall be required pursuant to
the Overlease,  such Overlandlord's consent and Sublandlord's consent shall also
be required hereunder.

         If Subtenant  shall default in the payment of rent or  additional  rent
hereunder or in the performance or observance of any of the terms,  covenants or
conditions of this  Sublease or the  Overlease (to the extent  applicable to the
Sublease  Premises)  on the  part of  Subtenant  to be  performed  or  observed,
Sublandlord  shall  have the right  (but not the  obligation)  to  exercise  all
remedies  available  to it  hereunder  at law or equity.  Without  limiting  the
preceding  sentence,  Sublandlord shall have the right but not the obligation to
all of the same rights and remedies  provided to or reserved by  Overlandlord in
the  Overlease;  however,  the  foregoing  shall in no way be deemed to limit or
impair the


<PAGE>

rights and privileges of the Overlandlord under the Overlease,  or to impose any
obligations  or liabilities on the part of Sublandlord by reason of the exercise
by Overlandlord of any of such rights or privileges with respect to the Sublease
Premises or to the use and occupation  thereof by Subtenant.  Without limitation
of the  foregoing,  Sublandlord  shall have the same rights and  remedies in the
event of  non-payment  by Subtenant of rent or additional  rent hereunder as are
available to Overlandlord  under the Overlease and at law for the non-payment of
rent or of any installment thereof.

         Subtenant shall, promptly after receipt thereof,  notify Sublandlord of
any  notice  served  by  Overlandlord  upon  Subtenant  pursuant  to the  terms,
provisions  and  conditions of the  Overlease or with  reference to the Sublease
Premises. Sublandlord shall, promptly after receipt thereof, notify Subtenant of
any notice served by Overlandlord upon Sublandlord relating in any manner to the
Sublease Premises or the services to be provided by Overlandlord to the Sublease
Premises.  Wherever  Overlandlord  requires  Sublandlord,  as  tenant  under the
Overlease, to take any action to prevent a default or to cure any default (other
than a  default  in the  payment  of rent or  additional  rent  pursuant  to the
Overlease) applicable to the Sublease Premises within a period of time stated in
the  Overlease,  Subtenant  shall  complete such action or cure such default not
later than five (5) days prior to the  expiration of such period within the time
periods  set  forth  in  the   Overlease  as  modified  by  Paragraph   5(c)(14)
hereinabove, and shall immediately furnish notice of compliance to Sublandlord.

7.       Sublandlord's Work/As Is Condition.

         Sublandlord agrees to substantially  complete the work described in the
Workletter  ("Sublandlord's  Work") attached hereto as Exhibit C by September 1,
1996 pursuant to the terms set forth herein.  Sublandlord also agrees to deliver
certain  furniture and shelving in the Sublease Premises more fully described in
Exhibit C-2  attached  hereto.  Title to such  furniture  and  shelving  for all
purposes  shall  be  deemed  to  be  transferred  upon  delivery  to  Subtenant.
Sublandlord's Work shall be deemed substantially  completed  notwithstanding the
fact that minor or insubstantial details of construction,  mechanical adjustment
or  decoration  remain to be  performed,  the  noncompletion  of which  does not
substantially  interfere  with the  Subtenant's  use of the  Sublease  Premises.
Sublandlord  and Subtenant  agree to cooperate with each other in the completion
of each party's  respective  work to the Sublease  Premises as set forth herein.
The  taking  of  possession  by  Subtenant  of the  Sublease  Premises  shall be
conclusive evidence as against Subtenant that the Sublease Premises were in good
and satisfactory condition at the time such possession was taken.

         Subtenant  expressly  acknowledges  and agrees that Sublandlord has not
made  and is not  making,  and  Subtenant,  in  executing  and  delivering  this
Sublease,  is not relying upon,  any  warranties,  representations,  promises or
statements,  except to the extent that the same are  expressly set forth in this
Sublease or in any other written agreement which may be made between the parties
concurrently  with  the  execution  and  delivery  of this  Sublease  and  shall
expressly  refer  to  this  Sublease.  This  Sublease  and  said  other  written
agreement(s)  made  concurrently  herewith  are  hereinafter  referred to as the
"Sublease  Documents".  It is


<PAGE>

understood  and agreed that all  understandings  and  agreements  heretofore had
between the parties relating to the Sublease Premises are merged in the Sublease
Documents, which alone fully and completely express their agreements relating to
the   Sublease   Premises  and  that  the  same  are  entered  into  after  full
investigation,  neither party relying upon any statement or  representation  not
embodied in this Sublease,  made by the other.  Except for  Sublandlord's  Work,
Subtenant  acknowledges  that  Sublandlord  is not required to perform any other
work of any kind,  nature or  description  to prepare the Sublease  Premises for
Subtenant's occupancy, and Subtenant hereby accepts the Sublease Premises in its
"as is" condition subject to the specific provisions of this Sublease.

8.       Alterations.

         Subtenant  shall  comply  with  the  provisions  of  Article  15 of the
Overlease in connection  with any changes,  alterations or improvements it shall
make  to  the  Sublease  Premises  (collectively  "Subtenant  Alterations").  No
Subtenant  Alterations  shall  be  made to the  fire  protection  system  in the
Sublease Premises unless such Subtenant Alterations are "HPR" rated and approved
in accordance with the requirements of Sublandlord's  insurers.  Subtenant shall
perform  any  desired  Subtenant  Alterations  at its  sole  cost  and  expense.
Subtenant  shall use its best efforts to minimize  disruption  to  Sublandlord's
business in connection  with the  performance of any Subtenant  Alterations  and
shall  perform  such  Subtenant   Alterations  as  expeditiously  as  reasonably
possible.

9.       Subordination and Non-Disturbance.

         This Sublease, and all rights of Subtenant hereunder,  shall be subject
and  subordinate  to  all  ground  and  underlying  leases  (including   without
limitation,  the Overlease) of the Land and/or the Building and to all Mortgages
affecting the Real Property Land and/or the Building  and/or any of such leases,
whether or not such Mortgages or leases shall also cover lands and/or buildings,
to each and every advance made or hereafter to be made under such  Mortgages and
to all renewals, modifications,  consolidations,  replacements and extensions of
any such leases and such  Mortgages  and spreaders  and  consolidations  of such
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,  holding a lease or mortgage  affecting the Land. In  confirmation of
such  subordination,  Subtenant shall promptly execute,  acknowledge and deliver
any instrument that Sublandlord, the Lessor under any such lease or the Mortgage
of  any  Mortgages,  or any of  their  respective  successors  in  interest  may
reasonably  request to evidence such  subordination;  and, if Subtenant fails to
execute,  acknowledge or deliver any such instrument within eight (8) days after
request  therefor,   Subtenant  hereby  irrevocably   constitutes  and  appoints
Sublandlord  as  Subtenant's  attorney  in fact,  compiled  with an  interest to
execute and deliver any such instruments, for and on behalf of Subtenant.

         Sublandlord shall use its reasonable efforts to obtain a nondisturbance
agreement from  Overlandlord in favor of Subtenant.  However,  in no event shall
Sublandlord be required to commence


<PAGE>

legal  proceedings   against   Overlandlord  or  pay  any  fees  or  charges  to
Overlandlord in connection with such nondisturbance agreement.

10.      Assignment, Subletting and Mortgage.

         a.  Subtenant  will not,  by  operation  of law or  otherwise,  assign,
mortgage or encumber this Sublease,  nor sublet or permit the Sublease  Premises
or any part thereof to be used by others,  without  Sublandlord's  prior written
consent in each  instance,  which consent  shall not be  reasonably  withheld or
delayed  subject  to the terms of this  Article  10,  provided  that at the time
Subtenant requests Sublandlord's  consent,  Subtenant shall not be in default of
any obligations  described  herein beyond any applicable grace and cure periods.
Notwithstanding  the foregoing and without limiting any other provisions  herein
(i) Sublandlord may condition its consent to an assignment of this Sublease upon
(1) Subtenant's delivery to Sublandlord in recordable form, and within three (3)
days after its execution of (x) a duplicate original of the assignment,  and (y)
an agreement  wherein assignee  assumes and agrees to keep,  observe and perform
all of the  covenants  conditions  and  obligations  to be  kept  performed  and
observed under the Sublease and the Overlease on the part of the Subtenant,  and
(2) the  delivery to  Sublandlord  by the assignee of an amount equal to two (2)
months  Fixed Rent and Fixed Tax  Payment  as a  security  deposit to ensure the
performance of the covenants,  conditions and obligations to be kept,  performed
and observed  under the Sublease and the  Overlease on the part of the Subtenant
(the  "Security  Deposit");  (ii)  Sublandlord  may  condition  its consent to a
sublease upon (1) The delivery of the Security Deposit by the Subtenant, and (2)
delivery to Sublandlord of a duplicate original of the Sublease  Agreement.  The
parties  hereto  agree  that  at no  time  shall  there  be  more  than  one (1)
sub-sublease  in effect  with regard to the  Sublease  Premises.  Any  permitted
assignee or sublessee may only use the Sublease Premises for the Permitted Uses.
If this Sublease is assigned, or if the Sublease Premises or any part thereof be
sublet or occupied  by anybody  other than  Subtenant,  Sublandlord  may,  after
default by Subtenant,  collect rent from the assignee, subtenant or occupant and
apply  the  net  amount  collected  to the  rent  herein  reserved  but no  such
assignment, occupancy or collection shall be deemed a waiver of this covenant or
the acceptance of the assignee,  subtenant or occupant as Subtenant or a release
of Subtenant from the further  performance by Subtenant of the terms,  covenants
and conditions of this  Sublessee on the part of Subtenant to be performed.  Any
violation of any provision of this Sublease or the Overlease,  whether by act or
omission,  by any  assignee,  subtenant or similar  occupant,  shall be deemed a
violation of such provision by Subtenant,  it being the intention and meaning of
the parties hereto that Subtenant  shall assure and be liable to Sublandlord for
any and all acts and omissions of any and all assignees,  subtenants and similar
occupants.  The  consent  by  Sublandlord  to  an  assignment,  encumbrance,  or
subletting shall not be construed in any way to relieve Subtenant from obtaining
the  express  consent  in  writing  of  Landlord  to  any  further   assignment,
encumbrance or subletting.

         b. If  Subtenant  desires  to assign  this  lease or all or part of the
Sublease  Premises,  it shall submit in writing to  Sublandlord,  at the time it
requests such consent the following:

<PAGE>

         (i) The name and address of the proposed assignee or subtenant;

         (ii) A  true,  complete  and  accurate  copy of the  agreement  between
Subtenant and a prospective subtenant or assignee;

         (iii) The nature and character of the business of the proposed assignee
or subtenant.

         (iv) At least one banking  reference  and a financial  statement of the
proposed,  subtenant or assignee,  certified by an officer of such entity, for a
twelve (12) month  period  ending not earlier  than six (6) months  prior to the
request.

         c. In the event that  Subtenant  desires  to assign  this  Sublease  or
sublet more than twenty-five (25%) percent of the Sublease Premises, Sublandlord
shall  have  the  right  within  twenty-six  (26)  days  after  receipt  of said
application  (unless it has given its consent or has  exercised the right it may
have to withhold  its  consent) to terminate  the  Sublease  without  payment or
premium therefore by giving Subtenant notice of its election to do so and unless
Subtenant  withdraws  its  application  within  seven (7) days of  Sublandlord's
termination  notice,  thereby voiding such  termination,  such termination shall
become  effective  thirty  days after the giving of such  notice,  and the Fixed
Rent, Fixed Tax Payments,  rent and all other charges payable by Subtenant shall
be so adjusted and apportioned as of the date of termination of this Sublease.

         d. If  Sublandlord's  consent to a subletting  or  assignment  has been
obtained,  Subtenant shall pay to Sublandlord,  as additional rent hereunder, if
applicable, in the event of a subletting, an amount equal to fifty (50%) percent
of the  monthly  sublet rent  received  in excess of the monthly  Fixed Rent and
Fixed Tax payments  payable  hereunder  due within five (5) days of  Subtenant's
receipt of such excess amount, except that if the sublet is for less than all of
the Sublease  Premises,  an  appropriate  pro rata  adjustment  shall be made in
determining  the excess of sublet rental over the prorated  rental payable under
this  Sublease and in the event of an  assignment an amount equal to fifty (50%)
percent of any  consideration  paid on account of the  assignment due within ten
(10) days of receipt  thereof by Subtenant.  In no event shall this paragraph be
interpreted  or construed to permit  Subtenant to remit less than the Fixed Rent
and Fixed Tax payments and  additional  rent under all other  provisions of this
Sublease.  The  provisions of this  paragraph  shall  survive the  expiration or
earlier termination of this Sublease.

         e.  The   parties   agree   that   Sublandlord   shall  not  be  deemed
"unreasonable"  if it  withholds  its consent to any  subletting  or  assignment
because Overlandlord has not given its consent to such subletting or assignment.

         f. If Sublandlord shall not have exercised any of its options described
above within the time limits set forth above, Sublandlord shall notify Subtenant
in  writing if it  consents  to or denies a  proposed  assignment,  or sublet or
occupancy,  within thirty (30) days of its receipt of a request for such consent
together with the information described herein above.

<PAGE>

         g.  If  a  Sublandlord  consents  to  such  subletting  or  assignment,
Subtenant shall,  following the execution of a Sublease or assignment  agreement
and prior to the  effectiveness  of such  Sublease  or  assignment,  deliver  to
Sublandlord,  a duplicate,  executed original of the instrument of assignment or
Sublease  as the case may be,  duly  executed  by the  appropriate  party and if
Subtenant assigns its interest in this Sublease,  said assignee shall assure the
obligation for performance of Subtenant's  obligations  thereafter arising under
this Sublease and shall become  jointly and severally  liable with Subtenant for
the performance thereof pursuant to the instrument of assignment.

         h.  Each of the  foregoing  provisions  shall  apply to each and  every
assignment or subletting. An assignment of the Sublease or a subletting as above
provided,  shall not discharge or release from liability  hereunder Subtenant or
any other  person,  firm or  corporation  which  shall have  previously  assumed
Subtenant's  obligations hereunder such liability to remain and continue for the
balance of the term with the same force and  effect as though no  assignment  or
subletting had been made.

         i. Subtenant  shall pay the  reasonable  expenses,  including,  but not
limited to reasonable attorneys' fees incurred by Sublandlord in connection with
the review and/or  preparation  and/or  execution of any documents  submitted to
Sublandlord  relating  to a request  for  Sublandlord's  consent  to a  proposed
assignment or subletting not to exceed $1000.00 in any one instance.  Such $1000
limit shall be increased by $100 each calendar  year during the term  commencing
in 1998.

         j.  Any  attempted  assignment  or  subletting  made  contrary  to  the
provisions of this Article shall be null and void. No consent by  Sublandlord or
Overlandlord  to any assignment or subletting  shall in any manner be considered
to relieve  Subtenant  from  obtaining  Sublandlord  or  Overlandlord's  express
written consent to any further assignment or subletting.

11.      Additional Rent.

         a.  General.  In  addition to the Fixed  Rent,  Subtenant  shall pay to
Sublandlord  during the Term, the charges  described in Articles 6 and 18 of the
Overlease,  as such share and/or charge is determined  pursuant to this Sublease
and the provisions of the Overlease  attached hereto as Exhibit B, in the manner
and at the times  provided  therein,  except as modified by this Article 11 (the
"Additional  Rent") and all other  amounts  payable by Subtenant to  Sublandlord
pursuant to the provisions herein.

         b. Taxes.  Subtenant's Real Estate Tax payments as defined in Article 6
of the Overlease  shall be the following in lieu of any Real Estate Tax payments
required under the Overlease:  (i) the fixed amounts as follows: (the "Fixed Tax
Payment"):


<PAGE>


                                             Monthly Fixed         Annual Tax
            Period                            Tax Payment           Payment
            ------                            -----------           -------
October 1, 1996 - September 30, 1997          $14,166.66       $170,000.00
October 1, 1997 - September 30, 1998          $16,250.00       $195,000.00
October 1, 1998 - September 30, 1999          $18,333.33       $220,000.00
October 1, 1999 - September 30, 2000          $20,416.66       $245,000.00
October 1, 2000 - September 30, 2001          $20,416.66       $245,000.00
October 1, 2001 - June 29, 2002               $20,416.66       $245,000.00*

*  Such amounts shall be prorated for less than one (1) year.

Subtenant  covenants and agrees to pay the  Sublandlord the Fixed Tax Payment in
lawful money of the United  States in advance on or prior to the first (1st) day
of each calendar month of the Term,  without any deduction,  offset or abatement
whatsoever.  All  such  Fixed  Tax  Payments  shall  be  made  by  Subtenant  to
Sublandlord simultaneously with Fixed Rent as described hereinabove in Paragraph
3.

                  (ii) In addition to the above Fixed Tax Payment, commencing on
January  1,1997 and each year  thereafter  Subtenant  shall be  responsible  for
paying 84.6% of any increase in the Real Estate Taxes due,  above the  1995/1996
Real Estate Tax bill for the Building and the Land which  1995/1996  Real Estate
tax  bill is equal to  $309,450.00  (the  "Additional  Tax  Payment").  Any such
Additional  Tax Payment  shall be due within  twenty (20) days of  Sublandlord's
invoice  therefor which shall include a copy of any applicable  subsequent  Real
Estate tax bill for the Building and the Land.

             (iii) If Sublandlord receives any credits or refunds on Real Estate
Taxes for past or future Real Estate Tax bills, Sublandlord shall be entitled to
receive  and  retain  the entire  amount of such  credit or refund.  Sublandlord
agrees  that it shall  file  protests  as to the  valuation  of the Land and the
Building every tax year.

         c.       Utilities.   Modifying  Article 18  of  the  Overlease:

                  (i) Subtenant  shall be responsible for paying all charges for
gas, water, sewer, electricity, heat or other utility or service supplied to the
Premises,  Building  and the Land  relating to  Subtenant's  use and any cost of
repair,   maintenance,   replacement   and  reading  of  any  meters   measuring
consumption,  if  applicable.  The usage of  electricity  and gas are  currently
separately  metered for the Sublease  Premises by gas meter  number  2209067 and
electric meter number  598001407.  Additionally,  the usage of domestic and fire
protection  water  services are  currently  separately  metered for the Sublease
Premises  by  water  meter  numbers  88230613  and  28606257.  As of the date of
commencement of this Sublease, Subtenant shall assume the accounts corresponding
to these respective meters and pay the respective utility companies promptly for
all charges  billed.  Subtenant  shall be responsible  for paying to Sublandlord
84.6% of the sewer charges and any other  utility  charges  attributable  to the
Subtenant's usage which are incurred for the Building and the Land within twenty
(20) days of  Sublandlord's  delivery of a bill therefor.  Provided  Sublandlord
receives payment


<PAGE>

from  Subtenant as described  herein,  Sublandlord  agrees to pay such sewer and
other utility charges for which it is responsible hereunder for the Building and
Land  within  the time  periods  required  by the  utility  companies.  Provided
Sublandlord receives payment from Subtenant as described herein, Subtenant shall
not be  responsible  for any fines or penalties for late payments as a result of
Sublandlord's failure to pay such utility charges in a timely manner.  Subtenant
expressly  agrees that  Sublandlord  shall not be responsible for the failure of
supply to  Subtenant  of any of the  aforesaid,  or any other  utility  service.
Sublandlord shall not be responsible for any public or private telephone service
to be installed in the Sublease Premises, particularly conduit if required.

         (ii) Subtenant's use of electric energy in the Sublease  Premises shall
not at any time exceed the  capacity  of any of the  electrical  conductors  and
equipment in or otherwise serving the Sublease Premises which is currently 3,000
amps,  480 volt, 3 phase.  In order to insure that such capacity is not exceeded
and to avert  possible  adverse  effect upon the  Building's  electric  service,
Subtenant  shall not,  without  Sublandlord's  prior  consent in each  instance,
(which shall not be unreasonably  withheld) connect any fixtures,  appliances or
equipment  to the  Building's  electric  distribution  system  of  the  Sublease
Premises existing on the date hereof. Should Sublandlord grant such consent, all
additional  risers or other  equipment  required  thereof  shall be  provided by
Sublandlord  and the cost thereof shall be paid by Subtenant to  Sublandlord  on
demand.

         d. Operating Expenses. Modifying Article 6 of the Overlease,  Subtenant
shall be  responsible  for  paying  only the  following  amounts  for  Operating
Expenses  (as  defined in the  Overlease)  pursuant  to the  provisions  of this
Sublease:

         (i) 84.6% of any  Operating  Expense  payments  due by  Sublandlord  to
Overlandlord  pursuant  to the  Overlease,  provided  that such  charges are not
incurred  solely for services or  facilities  furnished to the Premises  demised
under the Overlease other than the Sublease Premises;

         (ii) 84.6% of Sublandlord's cost for the provision of the All Risk
Property Insurance in respect of the Building and other improvements on the Land
(except for such  insurance  described in Article 13.02 of the  Overlease  which
Subtenant shall be obligated to procure and maintain) and rent insurance as more
particularly described in Article 13.01 of the Overlease.

         e.  Pro-Rations.  In the event  that  additional  rent is due under the
Overlease with respect to any period which includes the Commencement Date or the
date of expiration of the Sublease term,  Subtenant's  obligations  hereunder on
account of such additional rent shall be appropriately pro-rated. The provisions
of this paragraph shall survive termination of this Sublease.

         f.  Additional  Charges  under  Overlease.  Subtenant  agrees to pay to
Sublandlord  within twenty (20) days of delivery of an invoice therefor 84.6% or
an amount equal to Subtenant's  actual usage,  if applicable,  of any additional
charges that  Sublandlord may agree or be obligated,  pursuant to the Overlease,
by lease


<PAGE>

amendment or otherwise,  to pay to  Overlandlord,  provided such charges are not
incurred solely for services or facilities furnished to portions of the premises
demised  under the  Overlease  other than the Sublease  Premises  (i.e.,  do not
discriminate  against Subtenant) and, in the reasonable judgment of Sublandlord,
it is not feasible to exclude the Sublease Premises. Any such additional charges
shall  be  equitably   pro-rated   with   respect  to  the  Sublease   Premises.
Notwithstanding  anything to the  contrary set forth  herein,  there shall be no
duplicate  charges  payable  by  Subtenant  pursuant  to this  Subparagraph  and
Subparagraph (d) above.

12.      Repairs/Maintenance.

         Modifying Article 17 of the Overlease,  the exterior areas described in
the third  sentence in such Article  required to be repaired and  maintained  by
Subtenant  are  depicted  by outline in red in  Exhibit D attached  hereto  (the
"Exterior  Sublease  Premises").  The Term "Exterior  Common Areas" set forth in
Article  17 of the  Overlease  for  purposes  of this  Sublease  shall  mean the
Exterior  Sublease  Premises and the exterior  areas of the premises  demised to
Sublandlord pursuant to the Overlease.

         As  more  particularly  described  in  Article  17  of  the  Overlease,
Subtenant  shall be responsible  for the prompt removal of snow, ice and rubbish
(including litter)  accumulation from the Exterior Sublease Premises.  Subtenant
shall  obtain  a  reputable   contractor(s)   to  perform  such  service   which
contractor(s)   Subtenant   shall  advise  to  Sublandlord.   Additionally,   at
Sublandlord's  election,  Subtenant  shall require such  contractor to provide a
quote for service to the Sublandlord's  Exterior Premises (defined  hereinafter)
and if satisfactory to Sublandlord,  such contractor  shall remove snow, ice and
rubbish  (including  litter)  accumulation  in the parking areas,  sidewalks and
areas  immediately  surrounding the Building demised to Sublandlord  pursuant to
the Overlease  excluding the Exterior  Sublease  Premises  (depicted as the area
crosshatched  on  Exhibit  D)  (the  "Sublandlord's   Exterior  Premises").   If
Subtenant's contractor provides the services described in this paragraph to both
the Exterior Sublease Premises and the Sublandlord's Exterior Premises,  then in
the event that any snow or ice  accumulates  from  Monday 8:00 a.m. to Friday at
6:00 p.m., Subtenant shall be required to contact the contractor to perform such
services  for the  Exterior  Sublease  Premises  as  well  as the  Sublandlord's
Exterior Premises (the "Snow Contract Areas"). In the event that any snow or ice
accumulates from Friday at 6:01 p.m. to Monday 7:59 a.m.,  Sublandlord  shall be
required to contact the  contractor  to remove such  accumulation  from the Snow
Contract Areas. If Sublandlord elects to have Subtenant's contractor provide the
services  described in this  paragraph,  Subtenant shall be required to promptly
pay its contractor for the services  described  herein and Sublandlord  shall be
required  to  reimburse  to the  Subtenant  its share of the  invoices  rendered
therefor for the Sublandlord's Exterior Premises.

13.      Amendments to Overlease.

         Subtenant agrees to be bound, for all purposes of this Sublease, by any
subsequent  amendments  to the  Overlease.  Sublandlord  agrees  not to amend or
modify the Overlease in any way that would discriminate  against  Subtenant,  or
which would

<PAGE>

materially  affect  Subtenant's  rights or obligations  hereunder or which would
increase   Subtenant's  Fixed  Rent,  Fixed  Tax  Payments  or  Additional  Rent
hereunder. Upon the request of Sublandlord at anytime during the

<PAGE>


term of this Sublease,  Subtenant  agrees to confirm in writing its agreement to
be bound by subsequent amendments to Overlease.


14.      Commercial Rent or Occupancy Tax.

         If any commercial  rent or occupancy tax shall be levied with regard to
the  Sublease  Premises,  Subtenant  shall  pay the same  either  to the  taxing
authority, or, if appropriate,  to Sublandlord, as additional rent, on or before
the due date of such  payment.  In the event that any such tax payment  shall be
made to Sublandlord,  Sublandlord  shall remit the amount of such payment to the
taxing authority on Subtenant's behalf.

15.      Insurance and Indemnity.

         a. Notwithstanding anything to the contrary set forth herein and in the
Overlease,  Sublandlord  shall remain  responsible  for maintaining the All Risk
insurance in respect of the Building and other improvements on the Land and rent
insurance as more  particularly  described in the provisions of Article 13.01 of
the Overlease. Subtenant shall be responsible for paying to Sublandlord 84.6% of
such costs  pursuant to Article 11 herein  within twenty (20) days of a delivery
of an invoice therefor by Sublandlord.

         b. All insurance  required to be carried by the  Subtenant  pursuant to
the  terms of  Article  13.02  of the  Overlease,  shall  name  Sublandlord  and
Overlandlord  and any  requested  superior  Lessor or  mortgages  as  additional
insureds,  as their  interests  may appear.  Notwithstanding  anything set forth
herein or in the Overlease to the contrary,  neither  Subtenant nor  Sublandlord
shall be liable or  responsible  for, and each party  hereby  releases the other
from, all liability and  responsibility to the other and any person claiming by,
through or under the other, by way of subrogation or otherwise,  for any injury,
loss or damage to any person or property,  in or around the Land, or Building or
to the other's business  covered by insurance  carried or required to be carried
hereunder  irrespective  of the cause of such  injury,  loss or damage  and each
party shall  require its  insurers to include in all of such  party's  insurance
policies  which  could give rise to a right of  subrogation  against the other a
clause or  endorsement  whereby  the  insurer  waives any rights of  subrogation
against the other.  Subtenant  shall deliver a certificate  of such insurance to
Sublandlord  within  one (1)  business  day  prior to  taking  occupancy  of the
Sublease  Premises;  and  certificates of renewal policies shall be delivered at
least thirty (30) days prior to the expiration of the then current policies.  If
Subtenant  shall fail to obtain and deliver such  policies in the manner  herein
provided,  Sublandlord  may, upon three (3) days' prior written  notice,  obtain
such  coverage  and charge the cost  thereof to  Subtenant  as  Additional  Rent
hereunder, to be paid by Subtenant, as and when billed.

         c. Subtenant  shall  indemnify,  defend and hold harmless  Sublandlord,
Overlandlord  and all  Superior  Lessors and their  respective  partners,  joint
venturers,  directors, officers, agents, servants and employees from and against
any and all claims,  liabilities,  demands,  suits, actions,  judgments,  costs,
damages and recoveries for, or on account of, damage or injury (including


<PAGE>

death)  to  property  or  persons  (collectively  "Claims")  arising  from or in
connection with (1) the conduct or management of the Sublease Premises or of any
business therein, or any work or thing whatsoever done, or any condition created
(other than by Sublandlord) in the Sublease Premises, or the Subtenant's Parking
Area, or the Exterior Sublease Premises, during the Term or during the period of
time, if any, prior to the Commencement  Date that subtenant may have been given
access  to the  Sublease  Premises;  (2) any  act,  omission  or  negligence  of
Subtenant or any of its subtenants or licensees or its or their partners,  joint
venturers,  directors,  officers,  agents,  employees  or  contractors;  (3) any
accident,  injury  (including death) or damage to persons or property (except to
the  extent  caused  by  Sublandlord's  negligence)  occurring  in the  Sublease
Premises,  the Subtenant's Parking Area, or the Exterior Sublease Premises;  and
(4) any breach or  default  by  Subtenant  in the full and  prompt  payment  and
performance  of Subtenant's  obligations  under this Sublease and the Overlease,
together with all costs, expenses and liabilities incurred or in connection with
each such Claim brought thereon,  including,  without limitation, all attorney's
fees and expenses. In the event that any action or proceeding is brought against
Sublandlord,  any  Superior  Lessor,  or the  Overlandlord  and/or  its or their
partners,  joint venturers,  directors,  officers,  agents,  and/or employees by
reason of any such Claim,  Subtenant,  upon notice  from  Sublandlord,  Superior
Lessor or  Overlandlord,  shall resist and defend,  at Subtenant's  own cost and
expense,  such  action or  proceeding  by  counsel  reasonably  satisfactory  to
Sublandlord.  In  the  event  Subtenant  fails  to  defend  such  a  proceeding,
Sublandlord  may,  at its option,  retain  counsel of its own  choosing  and the
reasonable cost thereof (including  reasonable  disbursements) shall be borne by
Subtenant.  Any counsel  retained by Subtenant  pursuant to this paragraph shall
have no authority to settle,  compromise or otherwise  resolve any claim against
Sublandlord,  any Superior  Lessor or  Overlandlord  without such party's  prior
consent,  such  consent not to be  unreasonably  withheld or delayed;  provided,
however,  consent  may  be  withheld  in  Sublandlord's,  Superior  Lessor's  or
Overlandlord's  sole discretion if the  settlement,  compromise or resolution of
the Claim affects the rights and privileges of  Sublandlord,  Superior Lessor or
Overlandlord and requires any respective party to pay any sums of money.

         d.  Subject  to  the  provisions  of  Paragraphs  (a)  and  (b)  above,
Sublandlord shall indemnify, defend and save Subtenant harmless from and against
any and  all  Claims  resulting  from  (1)  the  conduct  or  management  of the
Sublandlord's  Premises  (defined  in  Paragraph  27 below)  or of any  business
therein,  or any work or thing  whatsoever done or any condition  created (other
than by  Subtenant)  in the  Sublandlord's  Premises  during  the Term;  (2) any
accident,  injury  (including death) or damage to persons or property (except to
the extent  caused by  Subtenant's  negligence)  occuring  in the  Sublandlord's
Premises,  and (3) any act,  omission or negligence of Sublandlord or any of its
subtenants or licensees  (other than Subtenant) or its or their partners,  joint
venturers,  directors,  officers, agents, employees or contractors. In the event
that any action or proceeding is brought against  Subtenant and/or its partners,
joint venturers,  directors,  officers, agents and/or employees by reason of any
such Claim, Sublandlord, upon notice from Subtenant, shall resist and defend, at
Sublandlord's  own cost  and  expense  such  action  or  proceeding  by  counsel
reasonably


<PAGE>

satisfactory  to  Subtenant.  In the event  Sublandlord  fails to defend  such a
proceeding, Subtenant may, at its option, retain counsel of its own choosing and
the reasonable cost thereof (including reasonable  disbursements) shall be borne
by Sublandlord.  Any counsel retained by Sublandlord  pursuant to this paragraph
shall have no authority  to settle,  compromise  or otherwise  resolve any claim
against  Subtenant,   without  its  prior  consent,   such  consent  not  to  be
unreasonably withheld or delayed; provided,  however, consent may be withheld in
Subtenant's sole discretion if the settlement,  compromise or resolutions of the
Claim affects the rights and  privileges of Subtenant and requires  Subtenant to
pay any sums of money.

         Subtenant's and  Sublandlord's  obligations under this Article 15 shall
survive the expiration or other termination of this Sublease.

16.      Brokerage.

         Sublandlord  and Subtenant  each  represents  that it has dealt with no
broker other than Charles  Klatskin  Company,  Inc. (the "Broker") in connection
with this Sublease and Sublandlord  agrees to pay the Broker its fee pursuant to
a separate agreement.  Each party agrees to indemnify,  defend and hold harmless
the other against any claim,  including reasonable attorneys' fees by any person
or entity  claiming to have dealt with the  indemnifying  party with  respect to
this  Sublease.  The provisions of this Article 16, shall survive the expiration
or earlier termination of this Sublease.

17.      Assignment of Overlease.

         The term  "Sublandlord"  as used in this Sublease means only the tenant
under  the  Overlease  at the  time in  question,  so that if the  Overlease  is
assigned by the tenant thereunder,  the assignor shall be thereupon released and
discharged  from  all  covenants,   conditions  and  agreements  of  Sublandlord
hereunder  accruing  from  and  after  the  date of such  assignment,  but  such
covenants,  conditions  and  agreements  shall be binding on the assignee  until
thereafter  assigned  and,  provided,  however  that such  assignee  assumes the
obligations of the Sublandlord as set forth herein.

18.      Payments.

         Notwithstanding  anything  contained  elsewhere herein to the contrary,
unless  directed  in  writing  by  Sublandlord  to  make  payments  directly  to
Overlandlord,  Subtenant shall make all payments  hereunder to Sublandlord.  The
due date of each such  payment  shall be as set forth in this  Sublease or if no
due date is set forth  herein,  twenty (20)  business  days after  Subtenant has
received from Sublandlord a statement for such amounts due.

19.      Binding Effect.

         The covenants,  conditions  and  agreements  contained in this Sublease
shall bind and inure to the benefit of the parties  hereto and their  respective
legal   representatives,   successors  and  assigns  (to  the  extent  permitted
hereunder).

<PAGE>

20.      Modification, Waiver, etc.

         No  modification or waiver of any of the terms hereof shall be valid or
binding on either party,  unless in writing duly executed by both of the parties
hereto.  No waiver by either  party  hereto of any  breach  hereof or default or
delinquency  hereunder  by the other and no  failure by either  party  hereto to
require performance or satisfaction of any provision of this Sublease,  shall be
deemed a waiver of any subsequent breach,  default or delinquency of the same or
similar  nature by the other,  or as a waiver of the provision  itself or of the
full right of the claiming party to require such  performance or satisfaction at
any time  thereafter.  No failure of either  party hereto to exercise any right,
privilege,  discretion  or power  given it  hereunder,  or to insist upon strict
compliance  by the other  party with any  obligation  in this  Sublease,  and no
custom or practice of either party hereto (or  otherwise)  at variance  with the
terms hereof shall  constitute a waiver or  modification  of its right to demand
exact compliance with the terms hereof.

21.      Right of Sublandlord to Perform Subtenant's Covenants, etc.

         If Subtenant  shall have  defaulted in the observance or performance of
any term or covenant on Subtenant's part to be observed or performed under or by
virtue  of any of the  terms  or  provisions  of  this  Sublease,  then,  unless
otherwise  provided  elsewhere  in this  Sublease,  if, after notice of default,
Subtenant  has not itself cured the default at least three (3) days prior to the
date that  Overlandlord  has the right to cure such default  under Article 25 of
the Overlease,  then  Sublandlord may at any time thereafter and without further
notice perform the same for the account of Subtenant,  and if Sublandlord  makes
any  expenditures  or  incurs  any  obligations  for the  payment  of  money  in
connection therewith including,  but not limited to, reasonable  attorneys' fees
in  instituting,  prosecuting or defending any action or  proceeding,  such sums
paid or  obligations  incurred  with  interest  and costs  shall be deemed to be
additional  rent hereunder and shall be paid by Subtenant to Sublandlord  within
five (5) days of rendition of any bill or statement to Subtenant therefor.

22.      Acceptance of Rent; Surrender.

         The receipt by  Sublandlord of rent with knowledge of the breach of any
covenant  of this  Sublease  shall not be deemed a waiver of such  breach and no
provision of this  Sublease  shall be deemed to have been waived by  Sublandlord
unless such waiver is in writing signed by Sublandlord.  No payment by Subtenant
or receipt by  Sublandlord  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 Sublandlord may accept such check or payment without prejudice
to  Sublandlord's  right to recover the balance of such rent or pursue any other
remedy  provided  in this  Sublease.  No act or  thing  done by  Sublandlord  or
Sublandlord's  agents  during the term hereof shall be deemed an acceptance of a
surrender  of the Sublease  Premises  and no agreement to accept such  surrender
shall be  valid  unless  in  writing  signed  by  Sublandlord.  No  employee  of
Sublandlord  or  Sublandlord's  agent shall have any power to accept the keys to

<PAGE>

the  Sublease  Premises  prior  to the  termination  of this  Sublease,  and the
delivery  of  keys  to any  such  agent  or  employee  shall  not  operate  as a
termination of this Sublease or a surrender of the Sublease Premises.

23.      Waiver of Jury Trial; Counterclaims.

         It is agreed by Sublandlord and Subtenant that they shall and hereby do
waive trial by jury in any action,  proceeding or counterclaim brought by either
of them against the other (except for personal injury or property damage) on any
matter whatsoever arising out of or in any way connected with this Sublease, the
relationship of Sublandlord  and Subtenant,  Subtenant's use or occupancy of the
Sublease Premises, and any emergency statutory or any other statutory remedy. It
is further mutually agreed that in the event  Sublandlord  commences any summary
proceeding,  Subtenant will not interpose any counterclaim of whatever nature or
description in any such proceeding,  except for any counterclaim  which would by
virtue of not being  interposed by Subtenant in any such  proceeding,  be deemed
permanently waived in any other or future action or proceeding.

24.      At End of Term.

         Upon the expiration or sooner termination of the Term,  Subtenant shall
vacate and surrender the Sublease Premises in broom-clean condition, restore the
Sublease  Premises as may be required  under the  provisions of the Overlease as
herein incorporated  including,  without  limitation,  removing the shelving and
furniture  transferred  to Subtenant at the  commencement  of this  Sublease and
repair any  damage to the  Sublease  Premises  caused by any  permitted  removal
therefrom  except for ordinary wear and tear and such damage or  destruction  as
Overlandlord  is  required  to repair or  restore  under the  provisions  of the
Overlease.

25.      Notices.

         Any notice or demand  which  under the terms of this  Sublease or under
any  statute  must or may be given or made by the  parties  hereto,  shall be in
writing,  and shall only be effective  if given or made by personal  delivery or
recognized overnight courier, delivery receipt requested, or by mailing the same
by registered or certified  mail,  return receipt  requested,  postage  prepaid,
addressed to the parties at the following addresses:


         If to Sublandlord:                 Liz Claiborne Accessories, Inc.
                                    One Claiborne Avenue
                                    North Bergen, NJ  07047
                                    Attn:  Legal Department

         If to Subtenant:                    Kenneth Cole Productions, Inc.
                                   85 Metro Way
                                   Secaucus, NJ  07094
                                   Attn:  Chief Financial Officer

         with a copy to:                    Kenneth Cole Productions
                                   85 Metro Way
                                            Secaucus, NJ  07094
                                   Attn:  General Counsel
<PAGE>


After  the  Commencement  Date  any  notices  delivered  to  Subtenant  shall be
addressed to the Sublease  Premises.  Either  party,  however,  may designate in
writing  such  new or other  address  to  which  such  notice  or  demand  shall
thereafter be so given, made or mailed. Any notice given hereunder shall only be
deemed  delivered  three (3) days  after  being  deposited  in a post  office or
earlier, as noted on a signed delivery receipt,  maintained by the United States
Government,  enclosed in a registered or certified  prepaid wrapper addressed as
hereinbefore provided, or when hand delivered or upon the next business day when
delivered by recognized overnight courier (as evidenced by a delivery receipt).

26.      Miscellaneous.

         This  Sublease is made in the State of New Jersey and shall be governed
by and construed  under the laws thereof.  The headings in this Sublease are for
purposes of reference  only and shall not limit or otherwise  affect the meaning
hereof.  This  Sublease  shall not be binding upon  Sublandlord  for any purpose
whatsoever  unless and until  Sublandlord  has  delivered  to  Subtenant a fully
executed copy hereof.

27.      Access to Sublease Premises and Reservation by Sublandlord.

         Sublandlord,   Sublandlord's   agents,   employees   and   contractors,
Overlandlord and Overlandlord's agents,  employees and contractor shall have the
right to enter the Sublease  Premises (in an emergency at any time without prior
notice),  during  reasonable  business hours,  upon reasonable  notice to obtain
access to Sublandlord's Premises (defined below),  Sublandlord's cable and other
wiring  associated  with its telephone and data  communications  services and to
examine  the  Sublease   Premises  and  to  make  such  repairs,   replacements,
improvements  and alterations as Sublandlord or Overlandlord  may be required to
make hereunder or pursuant to the provisions of the Overlease and to enforce its
rights herein.

         Sublandlord reserves the right to place,  maintain,  repair and replace
such  telephone  and data  communications  cables and wiring in and  through the
Sublease Premises as is necessary to service Sublandlord's business. Such cables
and wiring shall not unreasonably  interfere with Subtenant's  operations in the
Sublease Premises.

         For purposes of this Sublease, "Sublandlord's Premises" shall be deemed
those  portions of the Building and Land demised to and  permitted to be used by
Sublandlord  under the Overlease  which  Subtenant is not demising  hereunder or
exclusively using pursuant to the terms hereof.

28.      Status of Landlord/Tenant Under Overlease.

         Sublandlord hereby represents to Subtenant that to its knowledge, as of
the date hereof,  (a) the  Overlease is in full force and effect  subject to the
bankruptcy  laws and other equitable  remedies,  (b) it, as the tenant under the
Overlease,  is  not in  violation  of any of  the  terms  or  provisions  of the
Overlease, and (c) the Overlandlord, as the Landlord under the Overlease, is not
in violation of any of the terms or provisions of the Overlease.

<PAGE>

29.      Overlandlord Consent/HMDC Approval.

         This Sublease is conditional upon (i) the approval of the Overlandlord,
and (ii)  the  approval  of and  issuance  of an  occupancy  certificate  by the
Hackensack Meadowland Development  Commission (HMDC).  Sublandlord shall use its
reasonable efforts to obtain the Overlandlord's  consent which shall not include
any  obligation to institute  legal  proceedings  or the payment of any monetary
sum.  Subtenant  shall submit the required  application  and fee to the HMDC and
Subtenant shall be required to promptly  complete all information  necessary for
such  application.  In addition  the  Subtenant  shall be required to obtain any
applicable  approvals  and/or  any  occupancy  certificates  from  the  Town  of
Secaucus.  In the event that the  approvals set forth in  subparagraphs  (i) and
(ii) are not received  within ninety (90) days after the  execution  date hereof
either party has the right to terminate  this  Sublease upon ten (10) days prior
written  notice  to the  other.  In the  event of  termination  pursuant  to the
provisions of this paragraph,  title to the furniture and shelving  described in
Paragraph 7 above shall  revert to  Sublandlord.  Sublandlord  shall  return the
Fixed Rent and Fixed Tax  Payment  for the first month of the term of this lease
paid by  Subtenant  upon  the  execution  hereof  within  five  (5) days of such
termination.

30.      Quiet Enjoyment.

         Sublandlord  covenants and agrees with Subtenant that upon  Subtenant's
paying  the Fixed  Rent,  the Fixed Tax  Payment,  Additional  Tax  Payment  and
additional  rent in accordance with the terms of this Sublease and observing and
performing all the terms,  covenants and  conditions on  Subtenant's  part to be
observed  and  performed  under the Sublease and the  Overlease.  Subtenant  may
peaceably and quietly enjoy the Sublease Premises subject,  nevertheless, to the
terms and conditions of this  Sublease,  and the Overlease and to the matters to
which the Sublease or the Overlease is or shall be subordinate.

31.      Hazardous Materials.

         Sublandlord  hereby  represents that to its knowledge,  Sublandlord has
not  placed  or  stored  materials,   substances  or  waste  including,  without
limitation, asbestos, deemed hazardous, dangerous, toxic or a pollutant pursuant
to  Applicable  Environmental  Laws  (defined  below)  (collectively  "Hazardous
Waste"),  on, in or about the  Sublease  Premises  in  violation  of  applicable
federal, state or local laws, rules and regulations  ("Applicable  Environmental
Laws"). Sublandlord and Subtenant agree that neither shall cause or permit to be
brought upon, released,  stored, treated,  disposed of, generated or used in, on
or about the Building, the Sublease Premises or the Land, any Hazardous Waste in
violation of  Applicable  Environmental  Laws except such  deminimus  quantities
normally used in the operation of their respective  businesses  provided same is
in compliance with all Applicable  Environmental Laws.  Subtenant shall promptly
notify  Sublandlord of any activity or operation to be conducted by Subtenant at
the Sublease  Premises which involves the use,  release,  handling,  generation,
treatment, storage or disposal of any Hazardous Waste.

<PAGE>

         If at any time any Hazardous Waste is found in or on the Building,  the
Sublease Premises or the Land which was caused by or is the result of actions of
Sublandlord,  Sublandlord at its sole cost and expense,  shall remediate same to
the extent required by and in accordance with all Applicable Environmental Laws.
Sublandlord  shall indemnify,  defend and hold harmless  Subtenant its officers,
directors,  agents and  employees  from and  against  all  claims,  obligations,
demands, actions, proceedings, judgments, loss, damages, liability and all costs
(including  reasonable  attorney  fees) that Subtenant may sustain or incur as a
result of or on account  of the  noncompliance  of the  Sublease  Premises  with
Applicable Environmental Laws caused by Sublandlord's actions.

         If at any time any Hazardous  Waste is found on the Sublease  Premises,
the Building or the Land, which was caused by or is the result of the actions of
Subtenant,  Subtenant,  at its sole cost and expense, shall promptly remove same
in accordance  with all Applicable  Environmental  Laws and shall  indemnify and
hold harmless Sublandlord,  its officers,  directors,  agents and employees from
and  against  all  claims,  obligations,   demands,  actions,   proceedings  and
judgments,  loss,  damages  and  liability  and  any and  all  costs  (including
reasonable  attorneys fees) which may be imposed or which  Sublandlord may incur
as a result of or on account of the  noncompliance of the Sublease Premises with
Applicable Environmental Laws caused by the actions of Subtenant, its employees,
agents  or  contractors   or  the  use,   treatment,   generation,   production,
manufacture,  storage,  sale or release or  disposal of  Hazardous  Waste on the
Sublease Premises on or after the Subtenant's  possession of the Premises or the
breach of the covenants contained herein.

         Notwithstanding  anything set forth herein to the  contrary,  Subtenant
shall not be obligated to remove or remediate any  Hazardous  Waste found on the
Sublease  Premises,  the  Building,  or the  Land  which  existed  prior  to its
possession of the Sublease Premises.

         It is Sublandlord's  understanding  that the  Overlandlord  removed one
10,000  gallon No. 2 heating oil  underground  storage tank the ("UST") from the
Land on or about 1988. Sublandlord makes no representations with respect to such
UST. Without limiting the immediately  preceding sentence,  Sublandlord makes no
representations with respect to the UST removal procedure, any remediation which
Overlandlord  may have  performed or the condition of the area  surrounding  the
previous location of the UST.

         The  provisions of this  Paragraph 31 shall  survive the  expiration or
earlier termination of this Sublease.

         IN WITNESS  WHEREOF,  Sublandlord and Subtenant have duly executed this
Sublease as of the day and year first written above.

                                SUBLANDLORD:

                                Liz Claiborne Accessories, Inc.


                                By:  _____________________________
                                Title: Vice President General Counsel
<PAGE>


                                SUBTENANT:

                                Kenneth Cole Productions, Inc.


                                By:
                                Title:


<PAGE>


                                   EXHIBIT A


Depiction of the Sublease  Premises and  Sublandlord's  and Subtenant's  Parking
Spaces and Access Driveways to Sublease Premises





<PAGE>


EXHIBIT B


Overlease

                                    EXHIBIT C


                        Workletter/Inventory of Furniture


Sublandlord  shall  complete  the  following  work in the  Sublease  Premises by
September 1, 1996:

(i)               Sublandlord  shall paint and carpet the office area  including
                  repairing all baseboards and plastering all holes in the walls
                  (depicted in the Exhibit C-1 attached hereto) at a cost not to
                  exceed $80,000.

(ii)              Sublandlord  shall deliver to HVAC system,  sprinkler  system,
                  electrical  system,  plumbing and  mechanical  systems for the
                  Sublease Premises in working order.

(iii)             Replace water damaged ceiling tiles;

(iv)              Repair floor in kitchen area; and

(v)               Repair floor in bathroom area.


<PAGE>


                                   EXHIBIT C-1


Outline of Office Area to be Painted and Carpeted


<PAGE>


                                   EXHIBIT C-2


                       Inventory of Furniture and Shelving


<PAGE>


                                    EXHIBIT D


Depiction of Exterior Area that Subtenant is Required to Repair and Maintain