Document:

EXHIBIT 10.6
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                      SHAREHOLDERS JOINT VENTURE AGREEMENT
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This Agreement is made on this the 11th day of March 2000 between:

1.       Communications  Ventures  India  Pvt.  Ltd.,  a Company  organized  and
         existing  under the laws of India and having its  registered  office at
         B-115,  Sarvodya  Enclave,  New Delhi - 110 017,  India  (the  "HOLDING
         COMPANY"):

2.       and  Fusion   Telecommunications   International  Inc.  a,  corporation
         organized and existing  under the laws of the State of Delaware,  U.S.A
         and having its offices at 15 Exchange Place, Suite 530, Jersey City, NJ
         07302, U.S.A. ("FUSION").

WHEREAS

         A.       Estel  Communication  Private Limited, a Company organized and
                  existing  under the laws of India and  having  its  registered
                  office at B-115,  Sarvodya  Enclave,  New Delhi - 110017  (the
                  ESTEL")  is a  wholly  owned  and  subsidiary  of the  HOLDING
                  COMPANY.

         B.       ESTEL  has been  granted  by the  Ministry  of  Communications
                  Government  of India,  a licence No.  820-184/99-LR  dated 9th
                  June 1999 (the "Licence") to set up,  establish and operate an
                  ISP operation including Earth Stations and Gateways as set out
                  in the Licence.

         C.       FUSION is engaged, inter alia, in the business of provision of
                  independent   facilities  based  internet  services  including
                  establishment and operation of earth stations and gateways.

         D.       Parties have agreed to collaborate and to the participation of
                  FUSION  in  ESTEL  with a view to  emerging  as a  competitive
                  access and internet service provider in India.

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         E.       Pursuant to the  foregoing  the Parties  wish to record  their
                  agreement  upon which ESTEL shall be managed and operated as a
                  jointly  owned company and the Parties  relationship  therein;
                  and matters incidental thereto.

1        DEFINITIONS

1.1      As used in this Agreement the following terms shall have the respective
         meanings set forth below:

         (a)      "Affiliate" of a Party shall mean a person which

                  (i)      owns or controls a Party (directly or indirectly)

                  (ii)     which is owned or controlled by a Party  (directly or
                           indirectly)

         (b)      "Acquisition    Project"   means   acquisition   of   business
                  undertaking  owned  by any  Person  and  engaged  in  business
                  similar  to  that  which  ESTEL  is  authorized  to  undertake
                  pursuant  hereto or which the parties may  otherwise  agree in
                  writing.

         (c)      "Audited  Accounts"  mean  the  auditors  report  and  audited
                  accounts of ESTEL for any financial year of ESTEL.

         (d)      "Auditor'  means  such firm of  Chartered  Accountants  as are
                  appointed statutory auditors of ESTEL for the time being.

         (e)      "Board" means the board of Directors of ESTEL.

         (f)      "Budget"  means  the  annual  operating  budget  of  ESTEL  as
                  approved and/or modified from time to time by the Board.

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         (g)      "Control"  shall  mean the  power to elect a  majority  of the
                  Board of  Directors  (or  governing  body) of a person  or the
                  direct or  indirect  ownership  of more  than half in  nominal
                  value of its voting or equity share capital.

         (h)      "Directors"  means the  directors  of ESTEL for the time being
                  and shall include their duly appointed alternates.

         (i)      "DOT" means  Department of  Telecommunications,  Government of
                  India.

         (j)      "Encumbrance" means any mortgage, charge, lien, hypothecation,
                  pledge, or any other security interest or encumbrance.

         (k)      "Equity  Capital"  means the issued  and paid up equity  share
                  capital of ESTEL.

         (l)      "FIPB"  means the Foreign  Investment  promotion  Board of the
                  Government of India ("GOI").

         (m)      "Fair market  Value" means in relation to any Shares of ESTEL,
                  the fair market value  thereof  certified  by the  Independent
                  Valuer (acting as expert and not  arbitrator) on the following
                  assumptions and basis:

                  (i)      that such Shares are the  subject of an arm's  length
                           sale between a willing  vendor under no compulsion to
                           sell and a willing  purchaser  under no compulsion to
                           buy, each with full  knowledge of all relevant  facts
                           and on the footing  that the control of ESTEL is with
                           the vendor;

                  (ii)     that ESTEL shall at the time of such certification be
                           carrying  on  business  as a going  concern  and will
                           continue to do so; and

                  (iii)    that the  available  shares are  capable of  transfer
                           without restriction;

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                           If any difficulty  shall arise in applying any of the
                           foregoing  assumptions or basis then such  difficulty
                           shall be resolved by the  Independent  Valuer in such
                           manner as it may in its absolute discretion deem fit.

         (n)      "Shares" mean the equity shares in the Equity Capital of ESTEL

         (o)      "System"  shall mean ISP Network for the licence  granted,  as
                  described in recital (B) above.

1.2      Construction of certain references

         Except as the context otherwise requires,  references in this Agreement
         to:

         (i)      any document on terms  mutually  agreed shall be to a document
                  in writing in the terms agreed between the Parties thereto and
                  signed  by them or on their  behalf by their  duly  authorised
                  representatives;

         (ii)     information  means books,  records or other information in any
                  form  including  in  writing on paper,  electronically  stored
                  data, magnetic media, film and microfilm;

         (iii)    "this  Agreement"  shall be to this  Agreement as from time to
                  time  amended,  modified or  superseded  and shall include its
                  Schedules.

         (iv)     a "Clause" or "Schedule" shall, unless otherwise stated, be to
                  a Clause or (as the case may be) Schedule of this Agreement.

         (v)      a time of day shall be to Indian time;

         (vi)     the words  denoting  singular  shall  include  plural and vice
                  versa, and words denoting natural persons shall include firms,
                  partnerships,   companies  and  other  bodies   corporate  and
                  entities (whether or not having a separate legal entity);

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         (vii)    any  agreement,  consent,  approval,  authorisation,   notice,
                  communication  or  information  required  under or pursuant to
                  this Agreement from or by any Party to the other of them shall
                  be valid and effectual  only if it is in writing and under the
                  hands of duly authorised  representative of such Party and not
                  otherwise; and

         (viii)   any  reference  to a  statute  or  statutory  provision  shall
                  include  such  statute  or  provision  as is from time to time
                  modified  or  re-enacted  or   consolidated  so  far  as  such
                  modification or re-enactment  or  consolidation  applies or is
                  capable of applying to any transaction  entered into hereunder
                  or pursuant hereto.

         (ix)     Headings are for  convenience  of reference  only and shall be
                  ignored  in  the  construction  or   interpretation   of  this
                  Agreement.

2.       SUBSCRIPTION OF SHARES

2.1      At the date hereof the authorised share capital of ESTEL is Rs.1,00,000
         divided into 10,000  shares of 10 Rupees each,  of which the 20 Founder
         Shares have been subscribed as under:

         1.       Mr. Raj Hajela       10 shares

         2.       Mrs. Suman Hajela    10 shares

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         Upon  closing  each Party shall  subscribe up to a maximum of number of
         shares  in  ESTEL  in cash  indicated  in the  table  below so that the
         percentage   shareholding  in  ESTEL  upon  such   subscription  is  as
         indicated:-

             CAPITAL STRUCTURE FOR JOINT VENTURE - INVESTMENT AMOUNT
             -------------------------------------------------------

         Authorised Capital                                        Rs.60,000,000

         Paidup Capital                                            Rs.56,941,170

         Indian Holding Company       -     51%
         2,904,000 shares of Rs.10 each            Rs.29,040,000

o        Foreign Promoter (FUSION)    -     49%
         2,790,117 shares of Rs.10 each            Rs.27,901,170
         Share Premium     (WILL GO TO GENERAL     Rs.88,258,830
         RESERVE ACCOUNT OF ESTEL )
                                                   --------------
         Fusion's Contribution                     Rs.116,160,000
                                                   ==============
         Total Shareholder's Fund                                 Rs.145,200,000

2.2      FUSION  will give an  interest  free loan of US Dollar  one  million to
         ESTEL and the same will be converted  into Equity Capital of ESTEL at a
         future date when the  capital of the Company is enhanced  and FUSION is
         called upto pay their 49% pro-rata  contribution of Equity; this Clause
         2.2 requires further approval of FUSION.

2.3      Each Party may seek third  Party  financing  for its  required  capital
         contributions   provided  that  the  Party  retains  "control"  of  the
         financing vehicle.

2.4      ESTEL shall have an authorised  Share  Capital of Rs.60  millions and a
         fully paid up share capital of Rs.56,941,170.

3.       MEMORANDUM & ARTICLES OF ASSOCIATION OF ESTEL

         Memorandum & Articles of  Association  of the ESTEL is currently in the
         form shown in Appendix-2 and the Parties shall procure that the same be
         amended as soon as possible  after the date hereof to reflect the terms
         and  provisions  of this  Agreement  to the  extent  permissible  under
         applicable  Indian law. In the event of any conflict  between the terms
         of this  Agreement and the memorandum & Articles of  Association,  then
         the terms of this Agreement shall prevail as between the Parties and be
         binding on them.

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4.       MANAGEMENT OF ESTEL

4.1      ESTEL shall be managed by a Board of Directors  appointed in accordance
         with this Clause,  read with Section 255 and 260 of the Companies  Act.
         The Board shall be  responsible  for the overall policy and the conduct
         of the business,  affairs and  operations of ESTEL except to the extent
         that  applicable   law,  the  Articles  and  this  Agreement   allocate
         responsibility  over any  particular  matter to any of its  members  or
         officers or  otherwise.  The Board shall be entitled to delegate any of
         its powers and  functions to such of its  committees or directors or to
         such  officers of ESTEL as may be deemed  appropriate  by the Board but
         subject  always to applicable  laws and  regulations,  the Articles and
         this  Agreement.  The number of Directors  including the Chairman shall
         not exceed 9 and shall not be less than 3.

4.2(a)   HOLDING COMPANY shall be entitled to nominate the Chairman of the Board
         and in  addition 3 (three)  Directors  for a total of four (4).  FUSION
         shall be entitled to nominate four (4) Directors on the Board. No Party
         other than HOLDING COMPANY and FUSION shall be entitled to nominate the
         Directors on the Board unless their shareholding exceeds 15%. The Board
         shall be entitled to appoint  Additional  Directors in accordance  with
         Section 260 of the Companies Act; provided that the respective votes of
         the Directors  appointed by each Party shall be in the same percentages
         as that contemplated by the first sentence of this paragraph. Directors
         need not be citizens or residents of India.

(b)      Unless otherwise  mutually agreed by the Parties and so long as HOLDING
         COMANY and FUSION are Shareholders each together with its Affiliate and
         Investor  Affiliates holding not less than 15% of the issued and paidup
         Equity Capital of ESTEL;

         (i)      each of them,  shall be entitled  to appoint one  non-retiring
                  Director  each with  right to remove  and  replace or fill any
                  vacancy howsoever caused in their office by a communication in
                  writing to ESTEL;

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         (ii)     HOLDING COMANY and FUSION shall have the representation on the
                  Board in equal proportion.

(c)      In the event either of HOLDING COMPANY or FUSION ceasing to hold 15% or
         more of the issued and paidup Equity  Capital of ESTEL,  representation
         of HOLDING COMANY and FUSION on the Board shall,  subject to provisions
         of  Sub-Clause  (d) below be in proportion  to their  respective  share
         holding in the issued and paidup Equity Capital.

(d)      For the purposes of this  Agreement the Share holding of HOLDING COMANY
         or  FUSION  as  the  case  may  be  shall  mean  the  aggregate  direct
         shareholding  of HOLDING COMANY or FUSION,  as the case may be together
         with the Share holding of its Affiliates and Investor Affiliate.

(e)      In the event fractional entitlement under Sub-Clause (d) above if it is
         equal to or more than 0.5 (zero  point  five) it shall be rounded up to
         the nearest whole and if it is less than 0.5 (zero point five) it shall
         be rounded down to the nearest whole.

(f)      The Chairman shall be ex-officio  Chairman of general meetings of ESTEL
         in accordance with applicable provisions of the Act and the Articles of
         Association.  At all Board meetings if the Chairman be present he shall
         preside,  and in his absence the Managing  Director shall be elected as
         Chairman for that  meeting and shall  preside and in the absence of the
         Managing  Director,  the Board may  elect one of  themselves  to be the
         Chairman for that meeting.

4.3      Subject to the  provision of Clause 5 all  decisions of the Board shall
         be by majority vote.

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4.4      SENIOR MANAGEMENT

(a)      HOLDING COMPANY shall be entitled to nominate the Managing  Director of
         ESTEL (the "MD") who shall be the Chief Executive  Officer of ESTEL and
         be  delegated  with such  powers of day-to day  running of ESTEL as the
         Board  may from  time to time  specify.  FUSION  shall be  entitled  to
         nominate the Deputy Managing  Director and the Chief Financial  Officer
         of ESTEL,  who may at the option of FUSION be residents  of India.  The
         terms of  employment  of all such  appointees  shall be  determined  by
         mutual agreement of the HOLDING COMPANY and FUSION.

(b)      Senior  Managers and other direct  reports of the MD in ESTEL  ("Senior
         Managers") shall be selected by the Executive Committee out of panel of
         names proposed by the MD (minimum three) for each position.

(c)      The MD shall be delegated by the Board  adequate power and authority to
         undertake, conduct and carryon the day to day management,  business and
         affairs  of ESTEL  and  shall  report to and  function  subject  to the
         supervision,  direction  and control of the Board.  The  Parties  shall
         procure  that  the  Board  delegates  appropriate  powers  to the MD to
         discharge his functions and duties.

(d)      Senior Managers selected by the Executive  Committee shall be appointed
         by the MD and  shall  report  to him.  MD shall  assign  to the  Senior
         Managers their duties and functions.

4.5      The Secretary

(a)      ESTEL  shall have a  Secretary  as defined in the  Companies  Act.  The
         Executive Committee shall select the Secretary and recommend him to the
         Board for appointment.  The Board may appoint the person so recommended
         as Secretary, if found suitable by it.

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(b)      The  responsibilities  of the Secretary  shall include  compliances and
         filings  in  accordance  with  the  Companies  Act and  maintenance  of
         statutory records as required by the Companies Act.

(c)      If any Party is not satisfied with the performance of the Secretary, it
         shall be entitled  to require  his  removal.  On such  requisition  the
         Parties shall cause their respective  nominees on the Board to vote and
         remove the  Secretary  from his office.  In the event of such  removal,
         such person's  replacement  shall be appointed in  accordance  with the
         procedure set out herein.

4.6      Nominee Director

(a)      The right of nomination  conferred on a Party  hereunder  shall include
         the right to  require  the other  Party to  procure  that the Board and
         ESTEL  shall  remove at any time and from time to time from office such
         person  nominated  by that  Party as a  Director  and the right of that
         Party at any time and from time to time to determine  the period during
         which such person shall hold the office of Director.

(b)      Whenever a person ceases to be a Director or any vacancy shall occur in
         his office for any reason  whatsoever,  the Party who had nominated him
         shall be entitled to nominate  forthwith another person for appointment
         as  Director in the vacancy so caused.  The Parties  shall  procure the
         appointment of such nominee as a Director.

4.7      Alternate Director

(a)      Alternate  Directors  to be  appointed  for any nominee  Director  (the
         "Original  Director")  of each Party shall be persons  proposed by such
         Party  only  and on such  nomination  the  Parties  shall  cause  their
         respective nominee Directors to vote for and cause the Board to appoint
         him as alternate  Director for such Original  Director.  Such alternate
         Director  shall be  entitled  while  holding  office as such to receive
         notices of meetings of the Board or any committee of the Board to which
         such  Director has been  appointed and to attend and vote as a Director
         at any such  meetings of the Board or subject to  provisions  of Clause
         4.10 at

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         any such  committee at which the  Original  Director is not present and
         generally to exercise all the powers,  rights,  duties and  authorities
         and to perform all functions of the Original Director.

4.8      Sitting Fees

         ESTEL may pay such sitting fees to Directors, not exceeding the maximum
         permissible under the Companies Act, as may be determined by the Board.
         In addition to or in  substitution  of the sitting fee Directors may be
         paid  commission  not  exceeding  the  maximum  permissible  under  the
         Companies Act. A Director shall in addition be entitled to receive such
         remuneration for services performed for ESTEL not exceeding the maximum
         permissible under the Companies Act.

4.9      Board Meetings and Resolutions

(a)      The Board  shall meet at such time or times and at such place or places
         as it may deem  appropriate  provided at least one meeting of the Board
         shall be held in each quarter.

(b)      The Secretary  shall as and when directed by the Chairman and/or the MD
         or any  Director  call a meeting of the Board.  Any  Director  may also
         request the  Chairman  to call a meeting of the Board.  Notice of every
         Board meeting whether first convened or adjourned shall be sent to each
         Director  and his  alternate so as to be received  ordinarily  not less
         than 7 (seven)  days before the day such  meeting is  scheduled to take
         place unless such notice is waived.

(c)      Except in emergent  cases,  (i) at least 7 (seven) days' written notice
         shall be given to all Directors for convening a Board meeting; and (ii)
         such  notice  shall be  accompanied  by an agenda of the  matters to be
         discussed.  In the event the Chairman,  the MD or any Director  (acting
         reasonably  and in good  faith)  deems that  circumstances  exist which
         require a meeting to be convened at shorter notice, the Chairman on his
         own or at the request of such  director  direct the Secretary to call a
         meeting of the Board as aforesaid at shorter notice.

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(d)      Subject  to the  provisions  of  the  Companies  Act  and  Clause  5, a
         resolution  signed by a majority  of the  Directors  for the time being
         shall be valid  and  effectual  as if it is a  resolution  passed  at a
         meeting of the Board of  Directors  duly  convened  and held.  Any such
         resolution  may be  contained  in a single  document  or may consist of
         several  documents,  all in like form.  For the purposes of this Clause
         "in writing" and "signed" shall include approval by facsimile.

4.10     Executive Committee

(a)      The Board shall constitute a 2 (two) member Executive  Committee of the
         Board comprising of one nominee Director each of the HOLDING COMANY and
         FUSION.  It is agreed that  normally  no  alternate  Director  shall be
         permitted to participate in Executive  Committee  Meetings.  However in
         unavoidable   circumstances  alternate  Directors  may  be  allowed  to
         participate  in place of  original  Directors  with the  consent of the
         Parties.

(b)      The  Chairman of the  Executive  Committee  will be on annual  rotation
         basis i.e. for first year HOLDING COMPANY nominee shall be the Chairman
         of the Executive  Committee and for following year FUSION nominee shall
         be its Chairman and so on. Any member of the  Executive  Committee  can
         request the Chairman of the Executive Committee to convene a meeting of
         Executive  Committee and the Chairman of the Executive  Committee shall
         promptly  convene a meeting but not later than 7 (seven)  business days
         of receipt of such request.

(c)      The   Executive   Committee   shall  be  generally   responsible   for,
         finalisation   of  business  plans  and  annual   budgets,   review  of
         operations,  review  of  performance  of  personnel  and  HRD  matters,
         approval of general  meeting  notices etc. It shall also be responsible
         for approval of appointment of the Secretary,  Head (Operations),  Head
         (Marketing) and of such by disciplines (by whatever name called) as the
         Parties may deem appropriate.

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(d)      All matters to be put up to the Board and  specified in Clauses 5.2 and
         5.3  shall in the first  instance  be put up for  consideration  of the
         Executive Committee.  The Executive Committee shall also act as a forum
         for  inter-action  and  resolving  all  matters  inter se  between  the
         Parties.

(e)      All decisions of the Executive Committee shall be by unanimous vote. In
         the absence of  unanimity  in respect of any matter,  the same shall be
         referred to the Board for its decision.

(f)      The  Chairman of the  Executive  Committee  shall be entitled to invite
         such of the Senior Managers of ESTEL as he may determine.

4.11     Annual Budgets And Business Plans

         During each Financial  Year, the Board shall adopt an annual Budget for
         the next  Financial Year and a Business Plan for the succeeding two (2)
         Financial  Years.  Each such annual  Budget and Business  Plan shall be
         prepared under the direction and supervision of the MD and submitted to
         the  Executive  Committee  for its  consideration.  upon  the  approval
         thereof by the  Executive  Committee  or in the event of there being no
         unanimity at the Executive Committee in respect thereof, the same shall
         be submitted to the Board for its approval at least one (1) month prior
         to the end of each Financial Year.

4.12     ESTEL shall not, under any circumstances, purport to oblige director(s)
         of ESTEL to  guarantee  and/or  indemnify  any loan or other  financial
         facility of ESTEL which ESTEL seeks to obtain.

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5.       DECISIONS OF ESTEL

5.1      The following  decisions of ESTEL shall require an affirmative  vote of
         shareholders holding not less than 75% equity in aggregate of the share
         capital  of  ESTEL at a  meeting  at  which a  quorum  of  shareholders
         representing at least 75% of the shares of ESTEL and representatives of
         HOLDING COMPANY and FUSION are present:-

         (a)      Amendments  to  the  Memorandum  &  Articles  of  Associations
                  (including  the issue of any new  classes  of shares or rights
                  attaching to shares).

         (b)      Winding up or dissolution of ESTEL

         (c)      Merger or amalgamation or reorganisation of ESTEL

         (d)      Any  change  in the  authorised  share  capital  of  ESTEL  or
                  preferential issue of Shares to any party or person.

5.2      Without  prejudice to the specific powers which may be delegated by the
         Board to the following  decisions of ESTEL (the "Policy Matters") shall
         not be taken unless supported by an Affirmative vote of at least 1(one)
         nominee  Director  of HOLDING  COMPANY and 1(one)  nominee  Director of
         FUSION:

         (i)      Any change or modification in the rights of the Shareholders;

         (ii)     Any amendment to the Memorandum and/or Articles of Association
                  of ESTEL;

         (iii)    Any increase in authorized or issued Share capital of ESTEL;

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         (iv)     Any  consolidation  of or  reduction  in the Share  capital of
                  ESTEL or creation of new classes of shares,  whether voting or
                  non-voting;

         (v)      Any issue of debentures, bonds or other instrument convertible
                  into equity Shares by ESTEL;

         (vi)     Any proposal for placing of ESTEL in voluntary  dissolution or
                  winding up;

         (vii)    Any  proposal  for  amalgamation  or merger of ESTEL  with any
                  other company;

         (viii)   Any sale,  lease or transfer of the whole or substantial  part
                  of the Undertaking or assets of ESTEL;

         (ix)     the giving of any guarantee,  indemnity or security in respect
                  of the  obligations  of any  third  party  other  than for the
                  business of ESTEL;

         (x)      taking of any loan or other borrowing carrying right or option
                  to  convert  whole or any part  thereof  or  accrued  interest
                  thereon  into  shares  of ESTEL or  conversion  of any debt or
                  obligation of ESTEL into shares of ESTEL;

         (xi)     Any diversification or establishment of any subsidiary;

         (xii)    Investments  in shares or securities of or loans or guarantees
                  to other  firms,  companies  and  bodies  corporate  and other
                  entities excluding guarantees to Governmental  authorities for
                  tax/levy purposes or for the business of ESTEL;

         (xiii)   the  entering  into of any  profit  sharing,  share  option or
                  similar  other  scheme  for the  benefit  of the  officers  or
                  employees  of  ESTEL  or any  material  variation  of any such
                  scheme;

         (xiv)    Grant of any option  over any  shares in the share  capital of
                  ESTEL;

         (xv)     Entering  into of any Contract  with a Party or Affiliate of a
                  Party;

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         (xvi)    the entering into, termination or variation of any contract or
                  arrangement  (whether  legally binding or not) by ESTEL with a
                  Party or any company which is a Affiliate of any Party;

         (xvii)   Agreements  or  material  transactions  between  ESTEL and any
                  Director  or  shareholder  of  ESTEL or an  Affiliate  of such
                  shareholder  or any  service  contracts  with any Party or its
                  Affiliate(s)  for  provision  of  any  service  or  management
                  support or consultancy to ESTEL;

         (xviii)  Creation of any  Encumbrance  on the assets or  Undertaking of
                  ESTEL in favour of any person  other than banks and  financial
                  institutions lending moneys for the business of ESTEL;

         (xix)    any  material  change in the  nature of  ESTEL's  business  as
                  carried on from time to time by ESTEL;

         (xx)     Change in the name of ESTEL;

         (xxi)    Sale or any disposition  surrender or licensing or acquisition
                  (whether by purchase or licence) of any trade mark(s) or brand
                  names(s).

         (xxii)   appointing any Committee of Directors for any purpose;

         (xxiii)  Delegation by the Board of power to any Committee of the Board
                  or to any person in respect of any matter  falling  within the
                  scope of Clause 5.2.

         (xxiv)   The  making of  appropriations  out of profits  including  the
                  distribution of dividends of ESTEL.

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         (xxv)    The acquisition by ESTEL of more than 20% of the share capital
                  of any OTHER company.

         (xxvi)   Entering into any joint venture or partnership by ESTEL.

         (xxvii)  The providing of loan  facilities  or financial  guarantees to
                  other companies.

         (xxviii) Any material change in ESTEL's business.

         (xxix)   Induction of any new partner into ESTEL.

         (xxx)    Any  grant  of any  general  increase  in  rates of pay or any
                  increase in total  compensation  (including  bonuses) or other
                  remuneration to the Management staff of ESTEL .

5.3      No  action or  decision  in  respect  of any of the  following  matters
         ("Special  Matters")  shall be valid and  effective  unless  part of or
         contemplated  by an annual  Budget or  Business  Plan or  approved by a
         resolution  passed by the Board or any Committee thereof by majority of
         the entire Board or Committee.

         (i)      entering  into of any material  contract  (over a value of US$
                  150,000 or equivalent sum Indian Rupees)  outside the ordinary
                  course of its business;

         (ii)     the  incurring of any material  expenditure  or liability of a
                  capital or operating nature exceeding in aggregate US$_150,000
                  or equivalent  sum in Indian Rupees  outside the annual Budget
                  (including for this purpose the acquisition of any asset under
                  lease or hire purchase);

                                       17
<PAGE>

         (iii)    Borrowings  and  creation  of charge on the assets of ESTEL in
                  favour of lenders;

         (iv)     Any  proposal to confess any  judgment of a value in excess of
                  US$_150,000 or equivalent sum in Indian Rupees against ESTEL;

         (v)      approval of transfer of shares.

         (vi)     consenting  to the  assignment  of, or the granting of options
                  over any debentures or other  securities  (other shares in the
                  capital) of ESTEL;

         (vii)    any  delegation  by  the  Board  of any  of  its  powers  to a
                  committee of the Board or to any other person  whatsoever save
                  except as otherwise expressly provided in this Agreement;

         (viii)   Approval of annual budgets and business plans;

         (ix)     commencement of any material (US$ 150,000 or equivalent sum in
                  Indian  Rupees) legal or arbitration  proceedings  (other than
                  routine debt  collection or claims of ESTEL against any vendor
                  or purchaser of goods from ESTEL);

         (x)      remuneration and terms of employment of Senior Managers.

5.4      In the event that any resolution  proposed at a meeting of the Board or
         any Committee thereof is not passed as a result of the operation of the
         provisions  of Clause  5.2,  the matter  shall be  referred to ESTEL in
         general meting and if passed as a special resolution, the same shall be
         binding  and  effective   notwithstanding   anything  to  the  contrary
         contained herein.

5.5      Resolution by Circulation

         Except as otherwise  required by this Agreement,  the Articles,  or the
         Companies Act, all  resolutions  and decisions of Directors shall be by
         vote of a majority of the Directors at a duly convened meeting may also
         be taken by a resolution by circulation signed by all or a

                                       18
<PAGE>

         majority of the  Directors.  Subject to the  provisions  of Clause 5.4,
         Policy  Matters set forth in Clause 5.2 above can be  approved  only by
         the Board with the  affirmative  vote of at least one nominee  Director
         each of HOLDING COMANY and FUSION. No Director shall have a second or a
         casting vote.

6.       Any Party may if it so  desires  waive in part or in whole its right to
         nominate  a Director  on the Board and the Board  shall be deemed to be
         properly constituted notwithstanding such non-nominations.

7.       No business shall be transacted at any Board meeting unless a quorum is
         present at the meeting.  In the first  instance the quorum for meetings
         of the Board  shall be at least one  third of the  Board  including  at
         least one Director  each  nominated by the Parties  hereto.  A Director
         represented  by his  alternate  shall be deemed to be  present  for the
         purpose of  determining  quorum.  If within  half an hour from the time
         appointed  for a meeting  a quorum as  aforesaid  is not  present,  the
         meeting  shall stand  adjourned to the same day in the next week at the
         same time and place or to such  other  later day and at such other time
         and place as the Directors may determine.  If at such adjourned meeting
         also, a quorum is not present,  the meeting  shall stand  adjourned for
         further  half an hour and if the  quorum  as  aforesaid  is  still  not
         present but the Directors  present are at least one third of the Board,
         they shall constitute a quorum Provided however,  no matter referred to
         in Clause 5.2 shall be  considered  at such  adjourned  meeting and the
         business  at such  adjourned  meeting  shall  be  confined  only to the
         remaining  items as  specified  in the agenda for such  meeting  and no
         matter not forming part of the agenda  circulated for the meeting shall
         be considered at such adjourned Board meeting.

                                       19
<PAGE>

8.       ISSUE OF SHARE CAPITAL / FINANCING

8.1      In the event of any issue of share capital  consequent upon an increase
         of the authorised  share capital of ESTEL the Board of Directors  shall
         notify  HOLDING  COMPANY  and FUSION in writing and they shall have the
         right  to  subscribe  to the new  shares  in the  proportion  of  their
         respective  shareholdings in ESTEL provided however that if one Parties
         not exercise its right to subscribe  for further share capital then the
         other  Party  will have the right to  subscribe  for the  shortfall  in
         accordance with Clause 8.3 below.

8.2.     Rights Issue

         Subject to the provisions of Clause 8.3:

         8.2.1    In case of a  Rights  Issue  of  Shares  ("Rights  Issue")  in
                  accordance  with this  Agreement,  ESTEL shall offer Shares in
                  Rights   Issue  (the   "Rights   Shares")   to  the   existing
                  shareholders  in proportion to their existing share holding in
                  ESTEL. A Party shall be entitled to subscribe either itself to
                  its  entitlement of such Rights shares or to renounce in favor
                  of its affiliates or Investor Affiliate as defined hereinafter
                  (who  agree  to be  bound  in  writing  by the  terms  of this
                  Agreement)  or to any of the other Parties to subscribe to its
                  entitlement of such Rights Shares.

         8.2.2    If a Party  desires to get its  entitlement  of Rights  Shares
                  (the "non-subscribing party") funded, it may renounce in favor
                  of any  Banks,  mutual  funds  and any other  financiers  (the
                  "Investor  Affiliate")  to  subscribe  to its  entitlement  of
                  Rights Shares (the "Loan  Shares")  provided (i) such Investor
                  Affiliate  and the  Non-Subscribing  Party shall have  entered
                  into  a  firm   buy-back   agreement   whereby  the   Investor
                  Affiliate(s) has agreed to sell and the Non-Subscribing  Party
                  has  agreed to buy back such Loan  Shares  within a period not
                  exceeding 3 (three)  years from the date of  allotment  of the
                  Loan Shares to such  Investor  Affiliate(s)  by ESTEL (ii) the
                  Investor  Affiliate(s) shall have executed a Deed of Adherence
                  in  the  form  at  Schedule   "one"  and  (iii)  the  Investor
                  Affiliate(s) shall not be entitled to transfer,

                                       20
<PAGE>

                  assign,  sell or otherwise encumber or dispose off or transfer
                  such Loan  Shares in any manner  whatsoever  during the said 3
                  (three) year period  without  giving to the other  Parties the
                  right of first  refusal in  accordance  with  Clause 10 below.
                  During  the  said 3  (three)  year  period  for so long as the
                  Investor  Affiliate(s) holds the Loan Shares, for the purposes
                  of determining the rights of the  Non-Subscribing  Party under
                  this  Agreement,  the  aggregate of the  Shareholding  of such
                  Non-Subscribing  Party  and  Investor  Affiliate(s)  shall  be
                  deemed to be the Share holding of such Non-Subscribing Party.

8.2      Should the Non-Subscribing Party fail to acquire the Loan Shares within
         the 3 (three)  year  period  referred  to in Clause 1.2  above,  unless
         otherwise   mutually   agreed   between  the   Parties,   the  Investor
         Affiliate(s)  shall be  entitled  to retain such Loan Shares in its own
         right but subject always to the provisions of this Agreement  including
         Clause 8.4 below,  and in such an event the Agreed  Proportion shall be
         adjusted  by  deduction  of the Loan  Shares so  retained  or sold to a
         person  other  than the  Non-Subscribing  Party,  and the rights of the
         parties under this Agreement shall be adjusted accordingly.

8.3      Subscription  to  Additional  Shares in Rights  Issue.  Notwithstanding
         anything to the  contrary  contained  in Clause 8.2 above if any of the
         Parties  shall  fail to  subscribe  and  pay or  cause  their  Investor
         Affiliate  or  Affiliates  to  subscribe  and pay for any of the Rights
         Shares  offered to it in accordance  with this Agreement (the "Rejected
         Shares")  within such  period not being less than 60 (sixty)  days from
         the date of offer of Rights Shares by ESTEL as the Board may determine,
         the following shall apply to the disposal of such Rejected Shares:

         8.3.1    The Board  shall  offer the  Rejected  Shares to all the other
                  Shareholders (the "Other Shareholders") in proportion to their
                  respective  Shareholding in ESTEL and such Shareholders  shall
                  be entitled to subscribe to such Rejected  Shares  themselves,
                  or if such Shareholder is a Party to this Agreement,  to cause
                  its  Affiliates and Investor  Affiliate(s),  nominated in this
                  behalf by it and who agree(s) in writing to be

                                       21
<PAGE>

                  bound by the terms of this Agreement, to subscribe to the same
                  within the period prescribed in this behalf by the Board.

         8.3.2    The Other  Shareholders  receiving an offer pursuant to Clause
                  8.3.1 above shall be entitled to apply for issue and allotment
                  of  additional  shares i.e. for more Shares than the number of
                  Shares it is  entitled  in a Rights  Issue on the basis of its
                  existing Share holding.  In case of any Rejected  Shares being
                  available after issue and allotment to the Other  Shareholders
                  in proportion to their respective Share holding in ESTEL as on
                  the date of offer of  Rejected  Shares to them  (the  "Surplus
                  Shares"),  such Surplus Shares shall be issued and allotted to
                  such of the Other  Shareholders who had applied for additional
                  Shares in proportion to their existing Share holding as on the
                  date of offer pursuant to Clause 8.3.1.

         8.3.3    Any Rejected Shares,  not accepted by any Share holders and/or
                  their respective Investor Affiliate and/or Affiliates,  may be
                  offered by the Board to any third party or parties on terms no
                  more  favorable  than those offered to the other  Shareholders
                  or, in the alternative, the Board may in its discretion decide
                  to seek  listing  of  Shares  of  ESTEL  on one or more  Stock
                  exchanges  in  India  and/or  abroad.  In  such an  event  the
                  provisions of Clause 8B shall apply.

         8.3.4    For the  purposes of Clauses  8.2,8.3 and 8.4 any offer to the
                  Shareholders  to  subscribe  to any  Shares  must  be  made in
                  writing by the Board.  Any Party or its Investor  Affiliate(s)
                  and/or  Affiliates,  nominated  in this  behalf by such Party,
                  wishing  to accept  such  offer  from the Board  must do so by
                  giving  notice in writing and which notice must be received by
                  the Board no later  than 30  (thirty)  days after the date the
                  offer was made by the Board.

8.4      Additional Issue in Agreed Proportions.  Unless otherwise agreed by the
         Parties  in  writing,  any  additional  issue of Shares by ESTEL in its
         Equity  Capital (other than a Rights Issue) shall be offered and issued
         to the  Parties  in  proportion  to  their  shareholding  (the  "Agreed
         Proportions").

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<PAGE>

8A.      Acquisitions

8A.1     Acquisition Funding and Shareholder Loan Ratios

         8A.1.1   Any Shareholder  loans by any Party to ESTEL will,  except for
                  loans by FUSION  alone in  respect of  Acquisition  Project in
                  cases where HOLDING COMANY elects not to invest and FUSION has
                  lent to ESTEL such loan,  rank  pari-passu  with the equity in
                  the event of insolvency  of ESTEL;  provided that FUSION loans
                  have a  higher  priority  than  the  equity  in the  event  of
                  insolvency of ESTEL.  In case of  Shareholder  loans by FUSION
                  alone in respect of any  Acquisition  Projects,  repayment  of
                  such FUSION loan and interest  and other  outgoings in respect
                  thereof  shall be by ESTEL alone and  HOLDING  COMANY or other
                  Shareholders  shall have no liability or obligation in respect
                  thereof.

         8A.1.2   In case of any opportunity for acquisitions of any Acquisition
                  Project the  provisions  of Clause 8A.4 shall apply.  Upon the
                  Board deciding to proceed with any  Acquisition  Project,  the
                  Board  shall   determine  the   investment   amount  for  such
                  acquisition  (the  "Investment  Amount").  For  this  purpose,
                  unless  HOLDING  COMANY  electing  not to  participate  in any
                  particular  Acquisition Project,  investments and specifically
                  designated  loans will be made to ESTEL by FUSION and  HOLDING
                  COMANY in the ratio of their respective  Shareholding.  In the
                  event of  ESTEL  proceeding  with a  Acquisition  Project  and
                  HOLDING  COMANY   electing  not  to  invest  in  a  particular
                  Acquisition  Project,  FUSION and the  HOLDING  COMANY will be
                  entitled  to invest  and  provide  Shareholder  Loans  bearing
                  interest  at the rates not  exceeding  the State Bank of India
                  Prime Lending Rate then  prevailing in India.  In the event of
                  HOLDING  COMANY not investing in the Shares issued for funding
                  any Acquisition Project, the provisions of Clauses 8.2 and 8.3
                  shall apply.

8A.2     Except  as may  otherwise  expressly  provided  in this  Agreement,  no
         Shareholder  shall be obliged to  subscribe  for  additional  Shares or
         provide Shareholder Loans to ESTEL in excess of the Investment Amount.

8A.3     The Parties acknowledge that it is neither necessary nor incumbent upon
         them to agree on participation in any Acquisition project.

                                       23
<PAGE>

8A.4     The  following  shall  apply for  participation  of the  parties in any
         Acquisition Project:

         (i)      Whichever  Party has identified any  Acquisition  Project,  it
                  shall submit details of such Acquisition Project together with
                  the amount of  investment  estimated to be required to be made
                  by ESTEL for its participation in the Acquisition  Project and
                  shall  furnish  to  the  other  parties  all  such  reasonable
                  clarifications as it may require;

         (ii)     The  Parties  shall  within  60  days  of the  receipt  of the
                  details/information   pursuant  to  sub-paragraph  (i)  above,
                  communicate  to ESTEL and to each other about their  intent to
                  participate in the Acquisition Project.

         (iii)    If all  the  Parties  decide  to  participate  in  Acquisition
                  Project,  the Board shall determine and approve the Investment
                  Amount,  and  Parties  shall  invest in Share  capital  and if
                  required  provide  the  Shareholders  Loans to ESTEL  for such
                  acquisition in agreed proportions.

         (iv)     If any of the Parties  decide not to participate in and invest
                  in any  Acquisition  Project and the other  parties  decide to
                  participate  and  invest  in  such  Acquisition  Project,  the
                  funding  for the  investment  by  ESTEL  in  such  Acquisition
                  Project  shall be  provided by such  parties to ESTEL  through
                  additional  investment in Shares and provision of  Shareholder
                  Loans and in such an event Parties not  participating  in such
                  Acquisition  Project  may  be  diluted  to the  extent  of non
                  subscription by it.

8A.5     Parties agree to contribute the Investment  Amount for the  Acquisition
         Project(s) through ESTEL if they have agreed for participation,  in the
         agreed proportions.

8A.6     To the extent that  raising any debt  determined  to be  necessary  for
         funding any investment by ESTEL in any Acquisition  Project,  which the
         Parties have agreed to fund or FUSION alone is funding, as the case may
         be, requires guarantees of or other security from the Shareholders, the
         same shall severally provided by the Parties where all of them are

                                       24
<PAGE>

         participating,  and by FUSION only in case of Acquisition Project where
         FUSION alone is  participating,  as the case may be. Prior to approving
         or authorizing  any debt or equity  financing by ESTEL shall provide to
         the  Shareholders  with all relevant  documentation  in respect of such
         financing so that each of them may approve of the terms thereof.

8B.      Listing of Shares on Stock Exchanges

8B.1     Circumstances for Listing
         In the event of

         8B.1.1   the Parties agreeing and the Board deciding in accordance with
                  the  provisions of Clause 8.3 to seek listing of the shares on
                  one or more Stock Exchanges in India or listing abroad.

         the provisions of Clause 8B.2 shall apply.

8B.2     Effect of decision to List the Shares In the event:

         8B.2.1   The Parties  mutually  agree to seek listing of Shares for any
                  reason  other  than those  setforth  in  Clauses  8B.1.2,  and
                  8B.1.3,  the Parties shall cause ESTEL to issue and offer such
                  number of  additional  shares as may be  necessary to list the
                  Shares of ESTEL on one or more Stock Exchanges in India and/or
                  abroad in accordance  with applicable laws and regulations and
                  to make public offer thereof for  subscription  at Fair Market
                  value  determined by a Independent  Valuer selected jointly by
                  HOLDING COMANY and FUSION.

         8B.2.2   In the event of the Shares being required to be listed for the
                  reason setforth in Clause 8B.1.2 above, the Shares held by the
                  Selling Member not being less than the minimum number required
                  for securing  listing on a Stock  Exchange shall be offered by
                  such  Selling  Member to public  for sale at such value as the
                  Selling Member may determine.

                                       25
<PAGE>

         8B.2.3   In the event of the Shares  being  required by the Board to be
                  listed for the reason  setforth  in Clause  8B.1.3,  the Board
                  shall offer the Shares available  pursuant to Clause 8.3 above
                  for  subscription  to public  provided the number of Shares so
                  available are sufficient to meet the minimum  number  required
                  under  applicable laws and regulation to secure listing of the
                  Shares on one or more Stock Exchanges in India and/or abroad.

         8B.2.4   The Board shall  determine the Stock  Exchange or Exchanges on
                  which  shall seek  listing  of its shares and shall  offer the
                  shares,  required to be offered for securing such listing,  to
                  public  through  prospectus in  accordance  with the procedure
                  prescribed, and the applicable laws and regulations,  for cash
                  at par or such premium as the Board may in its sole discretion
                  determine  save and  except  in case of offer  for the  reason
                  setforth in Clause  8B.1.2  above,  in which case,  subject to
                  applicable regulations, the offer price shall be as determined
                  by the Selling Party.

         8B.2.5   Costs of all public  offer of Shares  pursuant  to this Clause
                  8B.2 shall be met and be borne by ESTEL

8B.3     Book Building for Listing

         For the  purposes of seeking  listing of Shares of ESTEL on one or more
         Stock  Exchange(s)  pursuant to this  Agreement,  the Parties  agree to
         cause (subject to it being feasible under  applicable  regulations) the
         Board and ESTEL to undertake the same through book building  process in
         accordance  with the  applicable  regulations  and to seek  listing  of
         Shares  through  such book  building  process  not later than 3 (three)
         months from the date the Board  determines  or the  parties  agree or a
         Party  requires  listing,  as the case may be, in  accordance  with the
         provisions of this Agreement.

                                       26
<PAGE>

8B.4     Amendment to the Articles for Listing

         The  Parties  agree and  covenant  that in the event of shares of ESTEL
         being required to be listed in one or more Stock Exchanges  pursuant to
         any provision of this Agreement, the Parties shall cause ESTEL to amend
         its Articles to the extent  necessary and required to permit listing of
         the shares of ESTEL and to facilitate offer of Shares to public for the
         said purpose.  Parties  agree to do all such acts,  deeds and things as
         may be necessary or required or incidental to secure  listing of shares
         of  ESTEL  on one or  more  Stock  Exchanges  in  India  and/or  abroad
         including for offer of shares to public for the purpose.

9.       NON-COMPETITION

9.1      Each Party undertakes that so long as this agreement subsists they will
         not enter into any  business  directly  competing  with the business of
         ESTEL.

9.2      HAJELA is trying to develop a project for Domestic  Long  Distance High
         Speed  Digital  Optical  Fibre  Backbone  and over a period of time may
         develop other  Telecommunication  Service  Projects.  During the period
         that FUSION or its designee continues to hold at least 25% shareholding
         in ESTEL  HAJELA  shall  offer  FUSION a right  of first  refusal  with
         respect to such license or  telecommunications  opportunity in India on
         mutually agreed terms.

10.      TRANSFER OF SHARES

10.1(a)  No Party shall nor permit its  Affiliates  and  Investor  Affiliate  to
         sell,  transfer,  assign, gift or otherwise dispose of its shareholding
         in ESTEL except in accordance  with the provisions of this clause 10 or
         as may otherwise be expressly provided elsewhere in this Agreement.

    (b)  A party and its Affiliate and Investor Affiliates may assign, or create
         any Encumbrance on all or any of the Shares held by it/them in favor of
         any financial institution or other lenders (the "Encumbrance Holder")
         provided it is a term of such Encumbrance that the

                                       27
<PAGE>

         Encumbrance  Holder  thereof  shall  be  bound  by the  terms  of  this
         Agreement  and in the event of any sale of any of the Shares  which are
         subject  to  any  Encumbrance   (the   "Encumbered   Shares")  by  such
         encumbrance  Holder, the same shall be deemed to be a sale by the Party
         or its  Affiliate  or Investor  Affiliate,  as the case may be, who has
         created  such  Encumbrance  and shall always be subject to the right of
         first  refusal of the  Remaining  party  under and in  accordance  with
         Clauses 6.3 and 6.4.

   (c)   Parties  covenant  that  they  shall  abide by the  provisions  of this
         Agreement  and agree and  undertake  that they shall cause ESTEL to not
         register any transfer of Shares in  contravention  of any  provision of
         this Agreement.

10.2     Right of First Refusal.

         subject  to  Clause  10.4  below,  in the  event of any  Party or their
         respective  Investor  Affiliate(s) or Affiliates  holding Shares in the
         Equity Capital  desiring to sell or dispose of its/their  share holding
         in ESTEL, it shall give to the other of them the right of first refusal
         in the manner as provided in Clause 10.3 hereinafter.  If on account of
         applicable laws or regulations any Party or its Affiliate are unable to
         acquire  shares so  offered  to it,  such  Party  will be  entitled  to
         designate a person of its choice to whom the shares in whole or in part
         shall be transferred.

10.3     procedure for Exercise of Right of First Refusal.

         (a)      Subject to Clauses  10.1(b) and 10.4 neither FUSION and/or its
                  Investor Affiliate and/or Affiliates nor HOLDING COMANY and/or
                  its  Affiliates   and/or  Investor   Affiliate  (the  "Selling
                  Member") shall sell,  transfer,  gift, or otherwise dispose of
                  in any  way or  manner  any of  its  Shares  until  (i) it has
                  delivered  to ESTEL and to the  other of them (the  "Remaining
                  Parties") an irrevocable  written offer to sell all or part of
                  its share holding (the "offer") in ESTEL ("Sale  Shares") at a
                  price  (the  "Offer  Price")  stated in the offer and (ii) the
                  Remaining  Parties  shall have  failed to accept the offer for
                  all of the Sale  Shares  within  90  (ninety)  days  after the
                  receipt

                                       28
<PAGE>

                  of the offer. The Remaining  Parties or such of them as accept
                  the offer as the case may be, (the  "Remaining  Party")  shall
                  convey its acceptance, if any, to the Selling Member within 90
                  (ninety)  days of receipt of the offer by it. If the Remaining
                  Party  accepts the offer but does not agree to the Offer Price
                  and the Selling  Member and the Remaining  Party are unable to
                  mutually agree on the sale price within 60 (sixty) days of the
                  date of acceptance of the Offer by the  Remaining  Party,  the
                  Selling Member shall be obliged to sell all the Sale shares to
                  a third  Party  selected by the  Remaining  Party at the Offer
                  Price and if the  Remaining  Party  shall fail to procure  any
                  third  party to purchase  the Sale  Shares  within 30 (thirty)
                  days of its  failure to accept the Offer  Price or to mutually
                  agree on the sale price with the Selling member, which ever is
                  later,  the Selling  Member shall be entitled to sell the Sale
                  Shares  (i) to any third  party at price and on terms not more
                  favorable  than those  setforth  in the offer,  or (ii) in its
                  discretion,  sell on a Stock  Exchange  in India or abroad the
                  Sale Shares  together with such further  Shares from its Share
                  holding in ESTEL as is necessary or required to secure listing
                  of ESTEL's  Shares on Stock  Exchange(s) in India or abroad or
                  such  additional  Shares from its Share holding as the Selling
                  Member may deem appropriate.  If the Selling Member shall fail
                  to sell the Sale Shares to a third party within 90 days of the
                  Remaining  Party's  failure  to  procure  any  third  party to
                  purchase  the Sale  Shares,  the Selling  Member  shall not be
                  entitled to sell the Sale  Shares to any third  party  without
                  first  offering the Sale Shares again to the Remaining  Member
                  and following the procedure seforth in this clause 10.3(a). In
                  the  event of the  Selling  Member  deciding  to sell the Sale
                  Shares on the Stock  Exchange as  setforth in the  immediately
                  preceding  sentence,  the parties  shall cause ESTEL to do all
                  such acts,  deeds and things as are necessary under applicable
                  regulations  including  amendments  to the  articles to enable
                  such  sale on the Stock  Exchange(s)  and the  listing  of the
                  Shares  thereon.  In case  both the  Remaining  Parties  shall
                  accept the Offer,  they shall  entitled to  purchase  the Sale
                  Shares in proportion  to their  Existing  Shareholding  and to
                  exercise  the rights  conferred by this Clause 10.3 in respect
                  of such  Sales  Shares to which  they are  entitled,

                                       29
<PAGE>

                  provided  however if one of the Remaining  parties accepts the
                  offer but does not  agree on the Offer  Price and the other of
                  them  accepts  the Offer  Price,  then in that  event the Sale
                  Shares to which the  Remaining  Party  accepting the Offer but
                  not accepting the Offer Price is entitled  shall be offered to
                  the  Remaining  Party  which has  accepted  the  Offer  Price,
                  notwithstanding    anything   to   the   contrary    contained
                  hereinabove.

         (b)      In  the  event  of  Selling  Member  exercising   pursuant  to
                  sub-clause  (a) above the option to sell the whole or any part
                  of its Share holding on Stock Exchange and provided the Shares
                  proposed  to be  offered  for sale to  public  by the  Selling
                  Member are  sufficient in number to secure  listing of ESTEL's
                  Shares on Stock Exchange(s),  the provisions of clause 5 shall
                  apply.

         (c)      Parties  shall  cause  ESTEL  to  take  all  procedural  steps
                  necessary  for  making  such  sale by  public  offer  on Stock
                  Exchange(s)  pursuant to and in accordance with Clause 10.3(a)
                  read with Clause 5 expeditiously.

         (d)      On  acceptance  of the Offer,  within 60 days thereof the sale
                  and  purchase  of  the  Sale  Shares  shall  take  place  (the
                  "Completion"). At the Completion the Remaining Party shall pay
                  or cause the person or persons nominated by it to purchase and
                  pay the  Offer  Price  for  the  Sale  Shares  in full in cash
                  against  delivery of the Sale Shares together with such number
                  of  duly  executed  share  transfer  deeds  (with  name of the
                  Transferee  left  blank) as the  Remaining  Member or its such
                  nominee may require.

         (e)      if the  transfer  of the Sale Shares  requires  any consent or
                  approval or notice,  the period  prescribed  for Closing under
                  sub-clause  (d) above  shall be extended to the earlier of (i)
                  the date when the  requisite  consents/approvals  are obtained
                  and/or expiry of the notice  period,  or (ii) the end of the 3
                  (three)  calendar  months  immediately  following the month in
                  which the Remaining  Member conveyed its

                                       30
<PAGE>

                  irrevocable written acceptance of the offer in accordance with
                  sub-clause  (a)  above.  If within  the said 3  (three)  month
                  period  described in the  immediately  preceding  sentence the
                  Selling Member or the Remaining Member, as the case may be, is
                  unable to obtain any requisite  consent/approval  for transfer
                  or purchase of the Sale Shares and provided notice period,  if
                  any, prescribed under any applicable  regulations has expired,
                  the Selling  Member's  irrevocable  written  offer to sell the
                  Sale Shares shall,  unless extended by mutual agreement of the
                  Parties,  be deemed to have  expired  and the  Selling  Member
                  shall not be  entitled  to  transfer  the Shares to any person
                  except by again making an irrevocable  written offer under and
                  in accordance with sub-clause (a) above.

10.4     Consequences of Sale Shares in contravention of the Agreement.

         If any person  purports to acquire any of the Shares,  or any  interest
         therein, in a manner not specifically  permitted by this Agreement (the
         "Default  Shares"),  whether by operation of law or by voluntary act or
         otherwise,  the  Remaining  Party  or any  person(s)  nominated  by the
         Remaining  Party  shall  have the  right,  but not the  obligation,  to
         purchase any or all of the Default  Shares  purported to have been thus
         acquired,  at lower of (i) the Fair Market Value minus 20% thereof,  or
         (ii) the apparent consideration paid therefor,  However, the failure of
         the Remaining Party to purchase the Default Shares at lower of the Fair
         Market  Value  minus 20%  thereof or the  apparent  consideration  paid
         therefor  shall not be deemed or construed  to validate  the  purported
         transfer of the Default  Shares in violation of this  Agreement,  which
         purported transfer shall be null and void. As used in this Clause 10.4,
         "Fair  Market  Value"  shall  mean fair  value of  Shares  in  question
         determined by an Independent  Valuer selected by the Board. Fair Market
         Value so determined shall be final,  conclusive,  and binding on ESTEL,
         the Parties and the  person(s)  purporting to have acquired the Default
         Shares in violation of this Agreement,  and their respective successors
         in interest.

                                       31
<PAGE>

10.5     Transfer to Affiliate etc.

         Provisions of Clauses  10.1,10.2,10.3 and 10.4 above shall not apply to
         any  transfer  of Shares  inter-se  between  a Party and its  Affiliate
         and/or  Investor  Affiliates or inter se between its  Affiliate  and/or
         between  Investor  Affiliates and Affiliate who have agreed to be bound
         by the terms of this Agreement and the same shall not be subject to the
         right of  preemption  and first refusal  contained  therein and no such
         transfer shall be deemed to be nor shall it constitute a breach of this
         Agreement.  Notwithstanding  anything  in Clause  10 above the  Parties
         shall  have the right to  transfer  its  shares  to a company  which is
         majority controlled by such Party ("Controlled  Transferee") subject to
         the prior written consent of the other Party. Such consent shall not be
         unreasonably  withheld subject to the conditions that prior to any such
         transfer  the  controlled  Transferee  shall  agree  to be bound by the
         provisions of this  agreement  and the  Controlled  Transferee  and the
         Original  Party  shall  enter into a covenant  with ESTEL and the other
         Parties  under  which  the  shares  in  ESTEL  held  by the  Controlled
         Transferee shall  automatically by re-transferred to the Original Party
         if the Controlled  Transferee  ceases to be majority  controlled by the
         Original Party.

10.6     Consequences of Sales of Affiliate etc. holding Shares

         Notwithstanding  anything to the contrary contained in this Agreement a
         party shall,  before  transferring to any third party its Share holding
         or control in an Affiliate holding any Shares,  cause such Affiliate to
         transfer  or  otherwise  assign its right,  title and  interest  in the
         shares to itself or to any other  Affiliate who agrees in writing to be
         bound  by the  terms  of  this  Agreement.  In  the  event  of a  Party
         transferring  to any third  party its share  holding or control in such
         Affiliate in contravention  of this clause 10.6 and such  contravention
         is not remedied by such defaulting  Party within 30 days of the date of
         receipt of notice in this  behalf  from any of the other  parties,  the
         provision  of Clause  10.4  shall  apply to the shares of ESTEL held by
         such Affiliate.

                                       32
<PAGE>

10.7     Where FUSION exercises its rights pursuant to this clause,  the payment
         for and  transfer  of  shares  in ESTEL  shall be made  only  after all
         necessary  Government  approvals are obtained and HOLDING  COMPANY will
         render all necessary  assistance required for obtaining such approvals.
         No  transfer  of shares in ESTEL by any Party  shall take place  unless
         proper  procedure  as per  investment  approval  procedure or under the
         Licence has been fully complied with. Subject to this, the full payment
         must be made  within  30 days of  receipt  of the  aforesaid  approvals
         (unless the Parties agree otherwise).

10.8     No Party shall acquire through market  purchases  (whether  directly or
         indirectly  through a company  controlled  by such Party) any shares in
         ESTEL which may be listed in the Stock Exchange.

10.9     Notwithstanding  the mutual right of disinvestment  defined here above,
         in the event of HOLDING COMPANY  wishing to disinvest,  FUSION together
         with  HOLDING  COMPANY may jointly find a buyer(s) or go public for the
         entire shareholding of the two partners.

10.10    All the  provisions  regarding  transfer  of  shares  will  subject  to
         applicable law and  regulations  continue to be applicable in the event
         of ESTEL becoming a public company quoted on the stock exchanges

11.      ARMS LENGTH TRANSACTIONS

11.1     It is the intention of the Parties that they shall have a  preferential
         opportunity to enter into  contracts with ESTEL to provide  services or
         material  including expert and technical advice, in connection with the
         deployment  and  operation of the business in  accordance  with ESTEL's
         needs.  Notwithstanding  anything to the contrary in this Agreement all
         contracts  between ESTEL and the Parties and their  Affiliates shall be
         conducted  on an arms  length  basis on  normal  commercial  terms  and
         prices.

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<PAGE>

11.2     The Parties  acknowledge that their respective rights in ESTEL shall be
         regulated by this Agreement and the Articles and agree and undertake to
         be bound by and comply with the  provisions  of this  Agreement and the
         Articles.  The Parties shall procure that ESTEL acts in accordance with
         this  Agreement  and the  Articles  and that the  business  of ESTEL is
         confined to the  Business in  accordance  with the  Business  Plans and
         Budgets.

11.3     The  Parties  shall at all times  respectively  endeavor to the best of
         their ability to promote the Business of ESTEL.

11.4     The  Business  of ESTEL shall at all times be  conducted  independently
         from the business of the Parties,  but subject thereto ESTEL may in its
         discretion  transact  business  with any of the Parties,  including the
         purchase of goods and/or  provision of services  supplied by any of the
         Parties  provided such goods or services are supplied on terms mutually
         agreed between the HOLDING COMPANY and FUSION and are competitive.

11.5     Except as Parties may  otherwise  agree in writing or save as otherwise
         provided or  contemplated  in this  Agreement or in the  Business  Plan
         and/or  Budget,  Parties  shall  exercise  their  rights  and powers in
         relation to ESTEL so as to ensure and procure that:

         (a)      ESTEL  carries on and  conducts  its Business and affairs in a
                  proper and  efficient  manner and for its own  benefit  and in
                  accordance with the Business Plan and Budget;

         (b)      save as may be agreed between the HOLDING  COMPANY and FUSION,
                  shall not enter into any  agreement  or  arrangement  with any
                  Party or its Affiliate  restricting its competitive freedom to
                  take goods and  services  by such means and from such  persons
                  and on such terms as it may think fit;

         (c)      the Business of ESTEL shall be carried on pursuant to policies
                  laid down from time to time by the Board;

                                       34
<PAGE>

         (d)      ESTEL  shall  maintain  adequate  insurance  against all risks
                  usually  insured  against  by  companies  carrying  on same or
                  similar  business and (without  prejudice to the generality of
                  the foregoing) for the full replacement or reinstatement value
                  of all its assets of an insurable value;

         (e)      ESTEL shall keep proper books of account and therein make true
                  and fair entries of all its dealings and  transactions  of and
                  in relation  to its  business so as to give true and fair view
                  of the business and affairs of ESTEL;

         (f)      ESTEL shall adopt such accounting policies consistent with the
                  Companies Act as may from time to time be generally acceptable
                  in India;

         (g)      ESTEL  will  provide  to the  Parties  or to their  respective
                  designated  nominees on the Board within 4 weeks after the end
                  of each  month with  unaudited  management  accounts  for such
                  month,  and such  other  data and  information  regarding  its
                  business  and  operations  as may  reasonably  be requested by
                  them;

         (h)      ESTEL  shall   prepare  such   accounts  in  respect  of  each
                  accounting reference period and Financial year as are required
                  by statute and  applicable  regulations  and procure that such
                  accounts are audited as soon as  practicable  and in any event
                  not  later  than  the  period  permitted  under  the  relevant
                  statute; and

         (i)      ESTEL will use its best  endeavors  to  maintain  in force and
                  effect  the  Operating  Licences  and  such  other  approvals,
                  consents or licenses  as may be required  for  carrying on its
                  business.

11.6     Furnishing of Financial Guarantees to DOT. The Parties agree to provide
         to ESTEL all information and documentation reasonably necessary for the
         preparation  and submission of  applications as required to the DOT for
         grant of such other and  further  licences as ESTEL may require for its
         business. Parties agree that if ESTEL is required to provide to the DOT
         or any other GOI agency for grant of such  licenses  any  financial  or
         bank guarantees, they shall endeavour that ESTEL provides the same from
         its own  resources

                                       35
<PAGE>

         provided however if ESTEL be not in a position to provide the same, the
         Parties shall  provide to ESTEL  guarantees of payment to the extent of
         each Party's  proportionate  economic interest in ESTEL so as to enable
         it to provide the required financial or bank guarantees to DOT.

12.      CO-OPERATION & AGREEMENTS WITH SHAREHOLDERS

12.1     Each of the Parties agree with to co-operate  and exercise their rights
         and do everything  within their powers,  including giving directions to
         their  appointed  Directors and voting at general  meetings of ESTEL to
         procure that full effect to the spirit and intent of this  Agreement is
         given and to  co-operate  with each other to develop  and  promote  the
         business, of ESTEL.

12.2     Unless  otherwise agreed to by HOLDING COMPANY and FUSION in writing in
         each instance,  HOLDING  COMPANY and FUSION  respectively  shall not be
         obliged to  contribute  any  additional  equity or provide  any loan or
         credit facility in ESTEL. If any additional capital is required HOLDING
         COMPANY and FUSION will mutually decide to invite Additional Partner(s)
         in terms of the provision of clause 5.2 (k) of this agreement.

12.3     The Parties agree that ESTEL's books and records shall be maintained as
         per accounting  standard  prescribed  under Indian Laws.  Such accounts
         shall also  separately be reconciled to Generally  Accepted  Accounting
         Principles  in the  United  States  and  the  Regulations  of the  U.S.
         Securities  and  Exchange  Commission  to the  extent  consistent  with
         applicable Indian laws.

12.4     The auditors  ESTEL shall be Price  Waterhouse  Coopers or,  Deloitte &
         Touche (or another  internationally  recognized  auditing firm mutually
         agreed by  HOLDING  COMPANY  and  FUSION),  and an Indian  audit  firm,
         recommended by HOLDING  COMPANY,  will also be taken as the co-auditors
         of the Joint Venture.

                                       36
<PAGE>

13.      CONFIDENTIALITY

13.1     The  Parties  agree that all  information,  data and  material  whether
         relating  to the  financial,  technical,  marketing  or  other  matters
         disclosed by any Party to any other Party ("Confidential  information")
         whether pursuant to this Agreement or otherwise is  confidential.  Such
         information,  data or other  material  shall  not be  utilised  for any
         purpose  save for which it was  disclosed  except  with  prior  written
         consent  of  the  disclosing   Party  and  after  complying  with  such
         conditions as the disclosing Party may require in relation thereto.

13.2     The Parties  shall keep the  existence  and contents of this  Agreement
         confidential  except to their  employees,  directors  and  professional
         advisors and those of their and those of their  Affiliates and Investor
         Affiliate  who have a need to know or  except  as may be  necessary  to
         select and secure the  participation of other Parties,  to professional
         advisors or for performance or exercise of any of their  obligations or
         rights  hereunder  or  for  enforcement  of  this  Agreement  or as may
         otherwise be required by law.

13.3     Each  Party  shall  ensure  that its  employees  and all other  persons
         involved  in the  application  shall  comply  with the  confidentiality
         obligations contained in this clause.

13.4     The confidentiality  obligations  contained in this clause will survive
         termination of this agreement.

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<PAGE>

13.5     Notwithstanding  anything to the contrary,  this clause shall not apply
         to information:-

         (a)      Which is in the  public  domain or  becomes  public  knowledge
                  without the default of the receiving Party; or

         (b)      Was already known by the receiving  Party prior to the date of
                  its receipt from the disclosing Party; or

         (c)      Is obtained by the receiving Party from a bonafide third Party
                  having free right of disposal of such information.

13.6     A Director shall be entitled to inform the Party  appointing him of all
         matters  concerning  ESTEL  affairs.   Each  Director  and  each  Party
         receiving confidential or proprietary information regarding the affairs
         of  ESTEL,  or  any  other   shareholders,   undertakes  to  keep  such
         information confidential and shall not use or disclose any confidential
         information belonging to ESTEL to another shareholder or person for any
         unauthorised purpose and shall take all reasonable  precautions for the
         safe custody of such  confidential  information for so long as it shall
         remain confidential or proprietary.

14.      TERMINATION  AND  REMEDIES  FOR  BREACH

14.1     This  agreement  may  be terminated

         (a)      If so agreed in writing by all of the Parties  hereto;  or

         (b)      by a Party hereto if the other party (the "Defaulting Party"):

                  (i)      shall  fail to  observe or perform or is in breach of
                           any of its material obligations under this agreement,
                           and  fails  to  remedy  the  same  within  60 days of
                           receipt of written  notification  in respect  thereof
                           from the non-defaulting Party; or

                  (ii)     is ordered to be  wound-up  or files for  composition
                           with  its  creditors  or  seeks  its  dissolution  or
                           windingup, other than for merger or amalgamation.

14.2     Upon  termination of this  Agreement or in accordance  with Clause 14.1
         (b) the  following  shall  apply:-

                                       38
<PAGE>

(a)      The  defaulting  Party  shall be  liable  to  compensate  ESTEL and the
         non-defaulting  Parties  for any and all damage  incurred  by them as a
         result of such default and/or such  termination.  The defaulting  Party
         shall not be entitled  to dispose of its shares  save as in  accordance
         with the provision of this agreement.

(b)      Notwithstanding  such  termination  of this  agreement,  the defaulting
         Party  shall  not be  discharged  from any  antecedent  obligations  or
         liabilities to the other Party and/or ESTEL under this agreement unless
         otherwise agreed to by such other Party or ESTEL, as the case may be in
         writing.

14A.     DURATION

14A.1    Consequences  if Minimum  Shareholding  falls  below  10%.  In case the
         voting Share holding of HOLDING  COMANY or FUSION,  as the case may be,
         falls below 10% of the voting share  capital of ESTEL,  then such party
         shall only have the right to appoint Directors on the Board of ESTEL in
         proportion  to its share  holding  but  shall,  cease to have any other
         right or privilege  whatsoever under this Agreement  including right of
         nomination of a member to the Executive  Committee or affirmative  vote
         right under Clause 5.2 above.

14A.2    Consequences  if Minimum  Shareholding  falls below  7.5%.  In case the
         voting share holding of HOLDING  COMANY or FUSION,  as the case may be,
         falls below 7.5% of the voting share  capital of ESTEL,  then either of
         them shall have the right to terminate this Agreement by  communication
         in writing to the other Party  provided  however the  obligation  under
         provisions of Clause 5 shall survive such termination.  Further in such
         an event such Party will procure its nominee  Directors to tender their
         resignations  from  their  respective  offices  as  Directors  of ESTEL
         forthwith  without  any  claim for  compensation  for loss of office or
         otherwise except for salary (if any) and any other  entitlements  which
         may have accrued upto the date of their resignation.

                                       39
<PAGE>

14A.3    Computation  of  Shareholding.  For the purposes of this Clause 14A the
         Share holding of a party shall be determined in accordance  with Clause
         9.3(c) above.

14B.     Tag along rights

14B.1    Tag-Along Sales.

         (a)      Subject  to Clause  14B.2,  in the event  that a party  hereto
                  directly  or  indirectly  at any  time or from  time to  time,
                  enters into an agreement (whether oral or written) to transfer
                  Shares  (the  "Existing  party")  to any  Person  other than a
                  stockholder  of ESTEL  (a  "Third  Party")  which  when  taken
                  together with all prior  transfers of Shares  exceeds 5% (five
                  percent) of the then outstanding  Shares (a "Tag-Along Sale"),
                  then the other  remaining party (the "Other Party') shall have
                  the right,  but not the  obligation,  to  participate  in such
                  Tag-Along Sale.

         (b)      Existing Party shall not consummate a Tag-Along Sale unless:

                  (i)      it shall have given to the Other  Party  ("Tag  Along
                           Shareholders")  an  opportunity to exercise the right
                           of first refusal described in Clause 10; and

                  (ii)     the terms of such Tag  Along-Sale  shall  include  an
                           offer by the prospective  purchaser or Existing party
                           to all Tag-Along  Shareholders to purchase the Shares
                           held by such  Tag-  Along  Shareholders  at the  same
                           price,  and on the same terms and conditions  offered
                           to  Existing  Party.  The Third  Party shall offer to
                           purchase from Tag - Along  Shareholders the number of
                           Shares owned by such Tag-Along  Shareholders equaling
                           the number derived by multiplying the total number of
                           Shares  to be  purchased  by  the  Third  Party  by a
                           fraction,  the numerator of which is the total number
                           of Shares in the issued and subscribed Equity Capital
                           of ESTEL  owned by the  Tag-Along  Shareholders  that
                           such  Tag-Along  Shareholders  desire to require  the
                           Third Party to purchase and the  denominator of which
                           is the total number of ESTEL Shares then outstanding.

         (c)      Tag-Along Procedures.

                                       40
<PAGE>

                  (i)      At the time the Existing  Party  proposes to transfer
                           any  Shares  in a  Tag-Along  Sale  subject  to  this
                           Section,  it shall  notify,  or cause to be notified,
                           all  Tag-Along  Shareholders  in writing of each such
                           proposed  transfer.  Such notice shall set forth: (i)
                           the name  and  address  of the  Third  Party  and the
                           number of ESTEL  Shares  proposed to be  transferred,
                           (ii) the  proposed  amount and form of  consideration
                           and terms and  conditions  of payment  offered by the
                           Third Party (the "Third Party  Terms") and (iii) that
                           the Third Party has been  informed  of the  tag-along
                           right provided for in this Clause 14B, and has agreed
                           to,  purchase  Shares in accordance with the terms of
                           this Clause 14B; and

                  (ii)     The tag-along right may be exercised by the Tag-Along
                           Shareholders  by delivery of a written  notice to the
                           Existing  Party  proposing  the  Tag-Along  Sale (the
                           "Tag-Along Notice") within thirty (30) days following
                           receipt  of the  notice  specified  in the  preceding
                           clause.  The Tag-Along  Notice shall state the number
                           of  ESTEL  Shares  that  the  Tag-Along  Shareholders
                           collectively  wish to include in such transfer to the
                           Third Party, which number may exceed the total number
                           of shares  proposed to be  transferred  but which may
                           not  exceed the total  number of shares  owned by the
                           Tag-Along Shareholders.

         (d)      Subject to Sub-Clause  (b) above limiting the number of Shares
                  the Third Party is required to purchase,  upon the giving of a
                  Tag-Along Notice, each Tag-Along Shareholder shall be entitled
                  and  obligated  to sell the  number of Shares set forth in the
                  Tag-Along  Notice to the Third Party on the Third Party Terms.
                  After  expiration of the 30-day period  referred to above,  if
                  the  provisions  of this Clause 14B Section have been complied
                  with in all respects,  the Existing party shall have the right
                  for a 120 day  period to  transfer  ESTEL  Shares to the Third
                  Party on the Third Party Terms without  further  notice to the
                  Tag-Along  Shareholders who have not given a Tag-Along Notice,
                  but after such 120 day period,  no such  transfer  may be made
                  without again giving notice to all Tag-Along  Shareholders  of
                  the proposed  transfer and complying with the  requirements of
                  this Clause 14B.1

                                       41
<PAGE>

         (e)      At the  closing of the  Tag-Along  Sale to any Third Party (of
                  which the Existing party shall give the Tag-Along Shareholders
                  who have  exercised  tag-along  rights at least  ten  business
                  days' prior written  notice),  the Third Party or the Existing
                  Party  shall  remit to each  such  Tag-Along  Shareholder  the
                  consideration  (including  a  certified  check  for  the  cash
                  portion  of  such  consideration)  subject  applicable  Indian
                  regulations  and grant of requisite  approvals if any required
                  from concerned  Indian  authorities for the sales price of the
                  Shares of such Tag-Along  Shareholders  sold pursuant  hereto,
                  against   delivery   by   such   Tag-Along   Shareholders   of
                  certificates for such shares together with duly executed share
                  transfer   deeds  and  the   compliance   by  such   Tag-Along
                  Shareholders  with any other  conditions to closing  generally
                  applicable to the Existing party and/or such sale.

15.      The Parties  agreed that Mr.  Virendra  Hajela,  the first  Chairman of
         ESTEL and Mr.  Raj  Hajela,  the  Managing  Director  of ESTEL  will be
         included in the Employees Stock Option Plan of FUSION.

16.      INDUCTION OF NEW PARTY

         The Parties recognise the possibility of inviting other Parties to join
         this Joint  Venture.  The  induction of any Party to the Joint  Venture
         shall always require  unanimous  written consent by HOLDING COMPANY and
         FUSION,  as long as the aggregate  shareholding  of HOLDING COMPANY and
         FUSION is more than 51%.

         The newly inducted  Joint Venture  partner shall always be bound by the
         terms and conditions of this Agreement.  The new proposed  Party(s) (if
         inducted)  would be entitled to nominate its  Directors to the Board of
         ESTEL only in the event its shareholding in ESTEL exceeds 15%.

                                       42
<PAGE>

17.      PUBLICITY

         The Parties  shall not issue any  information,  document or article for
         publication  in any news or  communications  media  or make any  public
         statement  in relation  to this  agreement  without  the prior  written
         consent  of the other  Parties  unless  required  to do so by law or to
         comply with the rules of a recognised stock exchange. Without prejudice
         to the foregoing any information  which is intended to be issued to the
         media shall be  coordinated  between  the  Parties  and  through  prior
         consultation.

18.      AMENDMENT

         No  modification,  variation or amendment of this agreement shall be of
         any  force  unless  it is in  writing  and has been  signed  by all the
         Parties.

19.      ENTIRE AGREEMENT

         This agreement  comprises the entire agreement between the Parties with
         respect  to  the  subject   matter  hereof  and  supersedes  all  prior
         representations, negotiations, writings, memorandum and agreements with
         respect  thereto and including  without  limitation  the  Memorandum of
         Understanding between HAJELA and FUSION dated 24th August 1999.

20.      NO ASSIGNMENT / NO PARTNERSHIP

20.1     No Party shall assign or agree to assign this  agreement in whole or in
         part without the prior written consent of all the other Parties.

20.2     No Party shall have the right or  authority  to bind any other Party or
         to act as agent of any other Party.

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<PAGE>

21.      GOVERNING LAW & ARBITRATION

21.1     This  agreement  shall be governed by and construed in accordance  with
         the laws of England.

21.2     All disputes arising in connection with the present  agreement shall be
         finally  settled under the rules of  Conciliation  & Arbitration of the
         Singapore  Center for  International  Arbitration by a Sole  Arbitrator
         appointed in accordance with the said Rules.

         The venue of such arbitration  shall be Singapore.  The language of the
         arbitration shall be English. The law applicable will be English Law.

22.      FORCE MAJEURE

22.1     No Party  shall be  liable  to any other for  failure  to  perform  any
         obligations hereunder to the extent and for such period as such failure
         is due to reasons  outside that Party's  reasonable  control  including
         fire,  flood  or  other  natural   catastrophe,   war,  riot  or  civil
         disturbance  or  governmental  action,  order or  decree.  The Party so
         affected shall continue to take all actions reasonably within its power
         to comply as far as possible with its  obligations.  The affected Party
         shall  promptly  notify the other  Party  after the  occurrence  of the
         relevant  event and shall use every  reasonable  effort to minimise the
         effects of such event.

22.2     Nothing in this agreement shall require any Party to perform any act in
         violation of any law or government regulation of any country.

                                       44
<PAGE>

23.      NOTICES

23.1     Any notice,  request,  consent or other  communication to be given by a
         Party under this agreement shall be in the English  language in writing
         addressed in accordance  with the  particulars for that Party appearing
         in the  statement  of the names of the Party at the  beginning  of this
         agreement  or to such other  address  for a Party as may be notified in
         writing by that Party to the other Party. All important  notices should
         be dispatched by such means where receipt is evidenced.

24.      COUNTERPARTS

         This agreement shall be executed in any number of counterparts, each of
         which shall be deemed an original but all of which shall constitute one
         and the same instrument.

25.      EFFECTIVE DATE

         The effective date of this agreement shall be the date forementioned.

26.      WAIVER

         No waiver  by any  Party at any time of any  breach of any of the terms
         and conditions of this agreement  shall be  incorporated as a waiver of
         any  subsequent  breach,  whether  of the same or any  other  terms and
         conditions of this Agreement.

27.      SEVERABILITY

         In the event any provision of this Agreement  shall be determined to be
         invalid or  unenforceable  under  applicable law, all other  provisions
         shall continue to be in full force and effect,  unless such  invalidity
         or  enforceability  causes  substantial  deviation  from the underlying
         intent of the Parties expressed in this Agreement.

28.      EFFECTIVENESS

         This agreement shall be effective subject to the approval of Government
         of India and its various concerned departments.

                                       45
<PAGE>

IN WITNESS WHEREOF the authorised representatives of the Parties have hereunto
duly executed and delivered this agreement the day and year first above written.

Signed                                  )       .../s/..........................

for and on behalf of                    )       Duly authorised

HOLDING COMPANY                         )       Raj Hajela

Signed                                  )       .../s/..........................

for and on behalf of                    )       Duly authorised

FUSION                                  )       Eric D. Ram

                                       46EXHIBIT 10.8

Lease made as of the                 day of                   2000,  between SLG
Graybar Sublease LLC, a New York limited  liability  company having an office at
420  Lexington  Avenue,  New York,  New York 10170  Hereinunder  referred  to as
"Landlord"  or "Lessor,"  and Fusion  Telecommunications  International,  Inc. a
corporation  having an office at 15 Exchange  Place,  Jersey  City,  New Jersey,
07302. hereinafter referred to as "Tenant" or "Lessee."

Withnesseth:  Landlord  hereby  leases to Tenant  and Tenant  hereby  hires from
Landlord Rooms 518-25 on the fifth (5th) floor of the Building  approximately as
indicated in the plan  attached  hereto and made a part  thereof  (said space is
hereinafter  called  the  "Premises")  in the  building  known  as  The  Graybar
Building, 420 Lexington Avenue (the "Building") In the County of New York , City
of New York,  for a term of ten (10) years to  commence  on: See  Article 55, or
until such term shall sooner end as in Article 12 and elsewhere herein provided,
both dates inclusive,  at a fixed annual rental (subject to Articles 23{REMOVED}
and 40) at the annual rate of: See rent schedule attached hereto and made a part
hereof as  Exhibit A payable  in equal  monthly  installments  in advance on the
first  (1st) day of each moth,  except  that the first  installment  of rent due
under this  Lease  shall be paid by Tenant  upon its  execution  of this  Lease,
unless this Lease be a renewal.

Landlord and Tenant covenant and agree:

                                    PURPOSE.

     1. Tenant  shall use and occupy the Premises  only for offices  relating to
Tenant's business, and for no other purpose.

                            RENT AND ADDITIONAL RENT.

     2. Tenant  agrees to pay rent as herein  provided at the office of Landlord
or such other place as Landlord may  designate,  payable in United  States legal
tender,  by  cash,  or by good and  sufficient  check  drawn on a New York  City
Clearing House Bank, and without any set off or deduction  whatsoever  except as
otherwise  set forth  herein.  Any sum other than fixed rent  payable  hereunder
shall be deemed additional rent and due on demand.

                                   ASSIGNMENT.

     3. Neither  Tenant nor Tenant's  legal  representatives  or  successors  in
interest by operation of law or otherwise,  shall assign,  mortgage or otherwise
encumber this Lease,  or sublet or permit all or part of the Premises to be used
by others,  without the prior written consent of Landlord in each instance.  The
transfer  of a  majority  of the  issued and  outstanding  capital  stock of any
corporate  tenant or sublessee of this Lease or a majority of the total interest
in any partnership Tenant or sublessee,  however accomplished,  and whether in a
single transaction or in a series of related or unrelated transactions,  and the
conversion of a tenant or sublessee entity to either a limited liability company
or a limited  liability  partnership shall be deemed as assignment of this Lease
or of such  sublease.  The  merger or  consolidation  of a  corporate  tenant or
sublessee where the net worth of the resulting  corporation is less than the net
worth  of  the  Tenant  or  sublessee   immediately  prior  to  such  merger  or
consolidation  shall be deemed an assignment of this Lease or of such  sublease.
If without  Landlord's  written consent this Lease is assigned,  or the Premises
are sublet or occupied by anyone other than the Tenant,  Landlord may accept the
rent from such assignee, subtenant or occupant, and apply the net amount thereof
to the rent herein reserved,  but no such assignment,  subletting,  occupancy or
acceptance  of rent  shall be  deemed  a waiver  of this  covenant.  Consent  by
Landlord  to an  assignment  or  subletting  shall not  relieve  Tenant from the
obligation to obtain  Landlord's  written  consent to any further  assignment or
subletting.  In no event shall any  permitted  sublessee  assign or encumber its
sublease or further sublet all or any portion of its sublet space,  or otherwise
suffer or permit the sublet  space or any part thereof to be used or occupied by
others,   without   Landlord's  prior  written  consent  in  each  instance.   A
modification, amendment or extension of a sublease shall be deemed a sublease.

                                     DEFAULT

     4. Landlord may terminate this Lease on five (5) days' notice:  (a) if rent
or additional  rent is not paid within five (5) days after  written  notice from
Landlord;  or  (b) if  Tenant  shall  have  failed  to  cure  a  default  in the
performance  of any covenant of this Lease (except the payment of rent),  or any
rule or regulation  hereinafter set forth, within thirty (30) days after written
notice thereof from Landlord,  or if default cannot be completely  cured in such
time,  if Tenant  shall not promptly  proceed to cure such  default  within said
thirty (30) days,  or shall not  complete  the curing of such  default  with due
diligence;  or (c) when and to the extent  permitted  by law,  if a petition  in
bankruptcy shall be filed by or against Tenant or if Tenant shall make a general
assignment  for  the  benefit  of  creditors,  or  receive  the  benefit  of any
insolvency or  reorganization  act; or (d) if a receiver or trustee is appointed
for any portion of Tenant's  property and such appointment is not vacated within
(30) days; or (e) if an execution or attachment  shall be issued under which the
Premises  shall be taken or  occupied  or  attempted  to be taken or occupied by
anyone other than Tenant;  or (f) if the Premises  become  abandoned;  or (g) if
Tenant  shall  default  beyond any grace  period  under any other lease  between
Tenant and Landlord.

     At the  expiration  of the five (5) day notice  period,  this Lease and any
rights or renewal or extension  thereof shall terminate as completely as if that
were the date originally fixed for the expiration of the term of this Lease, but
Tenant shall remain liable as hereinafter provided.

                                 RELETTING, ETC.

     5. If Landlord shall re-enter the Premises on the default of Tenant,  after
notice and beyond the expiration of any applicable cure period set forth herein,
by summary proceeding or otherwise:  (a) Landlord may re-let the Premises or any
part thereof as Tenant's  agent,  in the name of Landlord,  or otherwise,  for a
term shorter or longer than the balance of the term of this Lease, and may grant
concession of free rent.  (b) Tenant shall pay Landlord any  deficiency  between
the rent hereby  reserved and the net amount of any rents  collected by Landlord
for the remaining term of this Lease,  through such re-letting.  Such deficiency
shall become due and payable monthly,  as it is determined.  Landlord shall have
no obligation  to re-let the  Premises,  and its failure or refusal to do so, or
failure to collect  rent on  re-letting,  shall not  affect  Tenant's  liability
hereunder.  In  computing  the  net  amount  of  rents  collected  through  such
re-letting, Landlord may deduct all expenses incurred in obtaining possession or
re-letting the Premises,  including legal expenses and fees, brokerage fees, the
cost of restoring  the Premises to good order,  and the cost of all  alterations
and decorations deemed necessary by Landlord to affect  re-letting.  In no event
shall Tenant be entitled to a credit or  repayment  for  re-rental  income which
exceeds the sums payable by Tenant  hereunder or which covers a period after the
original  term of this Lease.  (c) Tenant hereby  expressly  waives any right of
redemption  granted by any present or future law.  "Re-enter"  and "re-entry" as
used in this Lease are not restricted to their technical  legal meaning.  In the
event of a breach or  threatened  breach of any of the  covenants or  provisions
hereof,  Landlord  shall  have the right of  injunction.  Mention  herein of any
particular  remedy shall not preclude  Landlord form any other available remedy.
(d) Landlord  shall recover as liquidated  damages,  in addition to accrued rent
and other charges, if Landlords' re-entry is the result of Tenant's  bankruptcy,
insolvency, or reorganization, the full rental for the maximum period allowed by
any act relating to bankruptcy, insolvency or reorganization.

     If Landlord  re-enters the Premises for any cause, or if Tenant abandons or
vacates the Premises,  and after the  expiration of the term of this Lease,  any
property  left in the Premises by Tenant shall be deemed to have been  abandoned
by  Tenant,  and  Landlord  shall  have the right to retain or  dispose  of such
property in any manner without any obligation to account therefor to Tenant.  If
Tenant  shall at any  time  default  hereunder,  after  notice  and  beyond  the
expiration of any applicable cure period set forth herein, and if Landlord shall
institute  an action or  summary  proceedings  against  Tenant  based  upon such
default,  the Tenant will reimburse  Landlord for the reasonable  legal expenses
and fees thereby incurred by Landlord.

                           LANDLORD MAY CURE DEFAULTS.

     6. If Tenant shall default in performing  any covenant or condition of this
Lease,  after notice and beyond the  expiration of any  applicable  cure period,
Landlord  may perform the same for the account of Tenant,  and if  Landlord,  in
connection therewith,  or in connection with any default by Tenant, after notice
and beyond the expiration of any applicable cure period,  makes any expenditures
or incurs any obligations for the payment of money, including but not limited to
reasonable  attorney's fees, such sums so paid or obligations  incurred shall be
deemed to be additional rent

<PAGE>

hereunder,  and  shall be paid by  Tenant to  Landlord  within  ten (10) days of
rendition of any bill or statement  therefor,  and if Tenant's  Lease term shall
have expired at the time of the making of such expenditures or incurring of such
obligations, such sums shall be recoverable by Landlord as damages.

                                  ALTERATIONS.

     7. Tenant shall make no decoration,  alteration, addition or improvement in
the Premises,  without the prior written  consent of Landlord,  and then only by
contractors  or mechanics and in such manner and with such materials as shall be
approved  by  Landlord  which  shall not be  unreasonably  withheld  or delayed.
Notwithstanding  the foregoing,  however,  Landlord's prior negative  experience
with,   concerns  regarding  the  financial   stability  or,  and  any  criminal
proceedings pending against,  any such contractor or mechanic shall be deemed to
be a reasonable  basis upon which for Landlord to refuse to grant its  approval.
All alterations, additions or improvements to the Premises, including window and
central  air  conditioning  equipment  and  duct  work,  except  movable  office
furniture  and  equipment  installed  at the  expense of Tenant,  shall,  unless
Landlord elects otherwise in writing, become the property of Landlord, and shall
be surrendered with Premises at the expiration or sooner termination of the term
of this Lease. Any such alterations,  additions and improvements  which Landlord
shall designate, shall be removed by Tenant and any damage repaired, at Tenant's
expense,  prior to the  expiration  of the term of this  Lease.  Notwithstanding
anything to the  contrary  set forth  above,  Landlord  agrees that it shall not
require Tenant to remove any alterations,  additions or improvements  made in/or
to the  Premises  other than (i) those  which are not  customarily  found in the
Premises  used for the purposes  permitted  under this Lease and those which are
not of a building standard nature, (ii) those which would require  extraordinary
effort for  Landlord to remove  (iii) those  raises  computer  floors,  internal
staircase, dumbwaiters,  pneumatic tubes, vertical and horizontal transportation
systems, vaults, safes, and medical installations,  if any, and any alterations,
additions or improvements  made specifically in connection with any food service
and/or  food  preparation   facilities   installed  by  Tenant  (e.g.,   without
limitation,   vents,   hoods,   grease  traps,  sinks,  etc.)  in  the  Premises
(collectively  "Special  Alterations"),  and (iv) those which are  installed  or
performed  without the prior written  consent of Landlord where same is required
by the terms of this Lease. In any of the foregoing events,  Tenant shall remove
the foregoing  from the Premises at Tenant's  expense prior to the expiration or
sooner  termination of this Lease.  Upon such removal,  Tenant shall immediately
and at its expense,  repair and restore the Premises to the  condition  existing
prior to such alternation, addition or improvement and repair any and all damage
to the Premises or the Building due to such removal.

                                     LIENS.

     8. Prior to commencement of its work in the demised Premises,  Tenant shall
obtain  and  deliver  to  Landlord a written  letter of  authorization,  in form
satisfactory  to  Landlord's  counsel,  signed  by  architects,   engineers  and
designers to become involved in such work, which shall confirm that any of their
drawings  or  plans  are  to  be  removed  from  any  filing  with  governmental
authorities, on request of Landlord, in the event that said architect, engineer,
or designer  thereafter  no longer is  providing  services  with  respect to the
demised Premises. With respect to contractors,  subcontractors,  materialmen and
laborers, and architects,  engineers and designers, for all work or materials to
be furnished to Tenant at the  Premises,  Tenant agrees to obtain and deliver to
Landlord written and  unconditional  waiver of mechanics liens upon the Premises
or the Building,  after payments to the contractors,  etc.,  subject to any then
applicable provisions on the Lien law. Notwithstanding the foregoing,  Tenant at
its expense shall cause any lien filed against the Premises or the Building, for
work or materials  claimed to have been furnished to Tenant, to be discharged of
record within twenty (20) days after notice thereof.

                                    REPAIRS.

     9.  Tenant  shall  take  good care of the  Premises  and the  fixtures  and
appurtenances therein, and shall make all repairs necessary to keep them in good
working  order  and  condition,  including  structural  repairs  when  those are
necessitated  by the act,  omission  or  negligence  of  Tenant  or its  agents,
employees  or  invitees  other  than due to a  casualty  covered  by  Landlord's
insurance.  During  the term of this  Lease,  Tenant may have the use of any air
conditioning  equipment located in the Premises, and Tenant, at its own cost and
expense,  shall maintain and repair such equipment and shall reimburse Landlord,
in accordance  with Article 40 of this Lease,  for  electricity  consumed by the
equipment.  The exterior walls of the Building,  the windows and the portions of
all window  sills  outside same and areas above any hung ceiling are not part of
the Premises  demised by this Lease,  and Landlord hereby reserves all rights to
such parts of the Building.  Landlord agrees that during the term of this Lease,
it shall be responsible  for the  maintenance  and repair of the common areas of
the Building and those portions of Building-wide  systems not located within the
Premises,  provided  same  does  not in any  way  modify  or  reduce  Landlord's
obligations  with  respect  to the air  conditioning  equipment  and  facilities
servicing the Premises, as expressly set forth in Article 45 hereof.

                                  DESTRUCTION.

     10. If the Premises shall be partially  damaged by fire or other  casualty,
the damage to the Building and to the core and shell of the Premises  (excluding
the Tenant improvements and betterments and Tenant's personal property) shall be
repaired at the expense of  Landlord,  but  without  prejudice  to the rights of
subrogation,  if any, of Landlord's  insurer.  Landlord shall not be required to
repair or restore  any of  Tenant's  property  or any  alteration  or  leasehold
improvement made by or for Tenant at Tenant's  expense.  The rent shall abate in
proportion  to the portion of the  Premises not usable by Tenant or, if elevator
access to the Premises is  unavailable  and renders the  Premises  inaccessible,
fixed annual rent and  additional  rent shall abate until the  Premises  becomes
accessible,  Landlord  shall not be liable to Tenant for any delay in  restoring
the  Premises,  Tenant's sole remedy being the right to an abatement or rent, as
above  provided.  If the Premises are rendered  wholly  untenantable  by fire or
other casualty and if Landlord  shall decide not to restore the Premises,  or if
the Building  shall be so damaged that  Landlord  shall decide core and shell of
the Premises  (excluding the Tenant  improvements  and  betterments and Tenant's
personal  property) to demolish it or to rebuild it (whether or not the Premises
have been damaged), Landlord may within sixty (60) days after such fire or other
cause give written  notice to Tenant of its election that the term of this Lease
shall  automatically  expire no less than fifteen (15) days after such notice is
given.  If the Premises are rendered  wholly  untenantable  due to fire or other
casualty and Landlord has not  substantially  restored the core and shell of the
Premises or elevator  access thereto within one hundred and eighty (1800 days of
such fire or casualty,  then, and in such event, Tenant may elect to cancel this
Lease upon giving written  notice to Landlord  within thirty (30) days after the
end of such one hundred  and eighty  (180) day period and the term of this Lease
shall expire on the date set forth  therein  which shall be not less than thirty
(30) days after the date such notice is given (the "Cancellation Date") provided
that Landlord does not substantially  restore the core and shell of the Premises
prior to the  Cancellation  Date.  Notwithstanding  the foregoing,  Landlord and
Tenant  acknowledge and agree in the event that the Premises are rendered wholly
untenantable or Landlord is unable to provide elevator access thereto,  and as a
result Tenant cannot and does not use the entire Premises,  due to fire or other
casualty  during the last six (6)  months of the term of the  Lease,  Tenant may
elect to cancel this Lease upon giving ten (10) days' written notice to Landlord
that the term of this Lease  shall  expire on the date set forth  therein  which
shall be not less  than ten (10)  days  after  the date  such  notice  is given.
Notwithstanding  the foregoing,  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  from fire or other  casualty,  and to the extent that such
insurance  is in force  and  collectible  and to the  extent  permitted  by law,
Landlord  and Tenant  each  hereby  releases  and  waives all right of  recovery
against  the other or any one  claiming  through or under each of them by way of
subrogation  or otherwise.  The  foregoing  release and waiver shall be in force
only if both releasers'  insurance policies contain a clause providing that such
a release or waiver shall not invalidate  the insurance and also,  provided that
such a policy can be obtained without additional premiums,  but if an additional
premium is required,  Landlord or Tenant,  as the case may be, shall be entitled
to pay same if it so desires.  Tenant hereby  expressly waives the provisions of
Section 227 of the Real Property law and agrees that the foregoing provisions of
this Article shall govern and control in lieu thereof.

                                  END OF TERM.

     11. Tenant shall  surrender  the Premises to Landlord at the  expiration or
sooner  termination  of this  Lease in good  order  and  condition,  except  for
reasonable wear and tear and damage by fire or other casualty,  and Tenant shall
remove all of its property.  Tenant agrees it shall  indemnify and save Landlord
harmless against all costs,  claims,  loss or liability  resulting from delay by
Tenant in so  surrendering  the Premises,  including,  without  limitation,  any
claims made by any succeeding  tenant founded on such delay.  Additionally,  the
parties  recognize  and agree that other damage to Landlord  resulting  from any
failure by Tenant  timely to surrender the Premises  will be  substantial,  will
exceed the amount of monthly rent  theretofore  payable  hereunder,  and will be
impossible of accurate  measurement.  Tenant therefore agrees that if possession
of the Premises is not surrendered to Landlord within one (1) day after the date
of the expiration or sooner  termination of the term of this Lease,  then Tenant
will pay Landlord as  liquidated  damages for each month and for each portion of
any month during which Tenant  holds over in the Premises  after  expiration  or
termination  of the term of this Lease, a sum equal to two (2) times the average
rent and additional rent which was payable per month under this Lease during the
last six (6) months of the term thereof. The aforesaid obligations shall survive
the  expiration  or sooner  termination  of the term of this Lease.  At any time
during the term of this Lease upon  prior  reasonable  notice to Tenant,  during
business hours and provided  Tenant has an opportunity to have a  representative
present,  Landlord  may  exhibit  the  Premises  to  prospective  purchasers  or
mortgagees of Landlord's  interest therein.  During the last year of the term of
this Lease,  Landlord may exhibit the Premises to prospective Tenants upon prior
reasonable  notice to Tenant,  during  business hours and provided Tenant has an
opportunity to have a representative present.

                        SUBORDINATION AND ESTOPPEL, ETC.

     12. Tenant has been informed and understands that Landlord is the subtenant
under a lease of the land and entire  Building of which the Premises form a part
(hereinafter called the "Master Lease").  This Lease is and shall be subject and
subordinate to the Master Lease and all other ground and  underlying  leases and
to all  mortgages  which may now or  hereafter  affect  such  leases or the real
property of which the Premises form a part, and to all renewals,  modifications,
consolidations,  replacements  and  extensions  thereof.  This Article  shall be
self-operative and no further  instruments of subordination  shall be necessary.
In  confirmation  of such  subordination,  Tenant  shall  execute  promptly  any
certificate  that  Landlord

<PAGE>

may  request.   Tenant  hereby   appoints   Landlord  as  Tenant's   irrevocable
attorney-in-fact  to execute any document of  subordination on behalf of Tenant,
provided  that Tenant fails to execute and return to Landlord any such  document
within  twenty-one  (21) days of its  receipt  of same.  In the event the Master
Lease or any other  ground or  underlying  Lease is  terminated  or any mortgage
foreclosed, this Lease shall not terminate or be terminable by Tenant (except as
hereinafter  provided as to Master Lease  expiration  of term) unless Tenant was
specifically names in any termination of foreclosure judgment or final order. In
the event  that the  Master  Lease or any other  ground or  underlying  Lease is
terminated  as  aforesaid,  or  expires  (as  hereinafter  provided),  or if the
interests of Landlord under this Lease are  transferred by reason of or assigned
in lieu of foreclosure or other proceedings for enforcement of any mortgage,  or
if the holder of any mortgage  acquires a lease in substitution  therefor,  then
Tenant  will,  at the option to be  exercised  in writing by Landlord  under the
Master  Lease or such  purchaser,  assignee or lessee,  as the cause may be, (i)
attorn to it and will  perform  for its  benefit  all the terms,  covenants  and
conditions  of this Lease on the  Tenant's  part to be  performed  with the same
force and effect as if said Landlord or such purchaser, assignee or lessee, were
the landlord  originally named in this Lease or (ii) enter into a new lease with
said  lessor  or such  purchaser,  assignee  or  lessee,  as  landlord,  for the
remaining  term of this Lease and  otherwise on the same terms,  conditions  and
rentals as herein provided. If the current term of the Master Lease shall expire
prior to the date set forth  herein  for the  expiration  of this  Lease,  then,
unless Landlord,  at its sole option,  shall have elected to extend or renew the
term of the Master  Lease,  or unless the lessor  under the Master  Lease elects
that the Tenant attorn or enter into a new lease as aforesaid,  the term of this
Lease  shall   expire  on  the  date  of   expiration   of  the  Master   Lease,
notwithstanding  the later  expiration date hereinabove set forth. If the Master
Lease is renewed,  then the term of this Lease shall expire as  hereinabove  set
forth.  From time to time,  Tenant,  on at least ten (10)  days'  prior  written
request by Landlord  will deliver to Landlord a statement in writing  certifying
that this Lease is  unmodified  and in full force and effect (or if there  shall
have been  modifications,  that the same is in full force and effect as modified
and stating the  modification) and the dates to which the rent and other charges
have  been  paid and  stating  whether  or not the  Landlord  is in  default  in
performance  of any covenant,  agreement,  or condition  contained in this Lease
and, if so,  specifying  each such default of which  Tenant may have  knowledge.
Landlord  represents  that the term of the Master  Lease is  scheduled to expire
after the term of this Lease is set to expire,  that the execution of this Lease
does not  violate  any  provision  of the  Master  Lease,  and  that  Landlord's
execution of this Lease is not prohibited by the terms of the Master Lease.

                                  CONDEMNATION.

     13.  If the  whole or any  substantial  part  (substantial  being  any such
portion that prevents Tenant from operating its business in the Premises for the
uses  permitted  hereunder) of the Premises shall be condemned by eminent domain
or acquired by private  purchase in lieu thereof for any public or  quasi-public
purpose,  this Lease shall terminate on the date of the vesting of title through
such proceeding or purchase, and Tenant shall have no claim against Landlord for
the value of any unexpired portion of the term of this lese, nor shall Tenant be
entitled to any part of the  condemnation  award or private  purchase  price. If
less than a substantial part of the Premises is condemned,  this Lease shall not
terminate,  but rent shall abate in  proportion  to the portion of the  Premises
condemned.

                              REQUIREMENTS OF LAW.

     14.  (a)  Tenant at is  expense  shall  comply  with all laws,  orders  and
regulations of any governmental  authority having or asserting jurisdiction over
the Premises,  which shall impose any violation,  order or duty upon Landlord or
Tenant with respect to the Premises or the use or occupancy  thereof  including,
without limitation,  compliance in the Premises with all City, State and Federal
laws,  rules and regulations on the disabled or handicapped,  on fire safety and
on hazardous materials.  The foregoing shall not require Tenant to do structural
work.  Landlord shall use reasonable  efforts,  at its sole cost and expense, to
cure within  thirty (30) days after the  commence net of the term of this Lease,
any New York City  Building  Department  violations  pertaining  to the Premises
which are a matter of public record as of the  commencement  of the term of this
Lease. In connection with the foregoing,  Landlord shall use reasonable  efforts
to minimize interference with Tenant's business,  provided, however, that Tenant
acknowledges  and agrees  that all such  efforts  shall be  performed  on normal
business days during normal business hours.

     (b) Tenant shall require every person engaged by him to clean any window in
the remises from the outside,  to use the equipment and safety devices  required
by  Section  202 of the labor law and the  rules of any  governmental  authority
having or asserting jurisdiction.

     (c) Tenant at its expense  shall  comply with all  requirements  of the New
York  Board of Fire  Underwriters,  or any  other  similar  body  affecting  the
Premises  and shall not use the  Premises in a manner  which shall  increase the
rate of fire  insurance of Landlord or of any other tenant,  over that in effect
prior  to this  Lease.  If  Tenant's  use of the  Premises  increases  the  fire
insurance rate,  Tenant shall reimburse  Landlord for all such increased  costs.
That the  Premises  are being used for the purpose set forth in Article 1 hereof
shall not relieve Tenant from the foregoing duties, obligations and expenses.

                           CERTIFICATION OF OCCUPANCY.

     15.  Tenant will at not time use or occupy the Premises in violation of the
certificate of occupancy issued for the Building. The statement in this Lease of
the nature of the  business  to be  conducted  by Tenant  shall not be deemed to
constitute a  representation  or guaranty by Landlord that such use is lawful or
permissible in the Premises under the certificate of occupancy for the Building.

                                   POSSESSION.

     16. If Landlord  shall be unable to give  possession of the Premises on the
Commencement  Date of the term  because of the  retention of  possession  of any
occupant thereof alteration or construction work, or for any other reason except
as hereinafter provided, Landlord shall not be subject to any liability for such
failure. In such event, this Lease shall stay in full force and effect,  without
extension of its term. However,  the rent hereunder shall not commence until the
Premises are available for occupancy by Tenant. If delay in possession is due to
work, changes or decorations being made by or for Tenant, or is otherwise caused
by Tenant,  there shall be no rent  abatement and the rent shall commence on the
date  specified in this Lease.  If  permission  is given to Tenant to occupy the
demised  Premises  or  other  premises  prior  to  the  date  specified  as  the
commencement  of the term,  such occupancy shall be deemed to be pursuant to the
terms of this Lease,  except that the parties shall  separately  agree as to the
obligation  of Tenant to pay rent for such  occupancy.  The  provisions  of this
Article are intended to constitute an "express provision to the contrary" within
the meaning of Section 223(a), New York Real Property Law.

                                QUIET ENJOYMENT.

     17.  Landlord  covenants  that if Tenant pays the rent and  performs all of
Tenant's  other  obligations  under  this  Lease,  prior  to  expiration  of any
applicable  notice  and beyond the cure  period  set forth  therein,  Tenant may
peaceably  and  quietly  enjoy  the  demised  Premises,  subject  to the  terms,
covenants  and  conditions  of this Lease and to the ground  leases,  underlying
leases and mortgages hereinbefore mentioned.

                                 RIGHT OF ENTRY.

     18. Tenant shall permit  Landlord to erect and maintain  pipes and conduits
in and through the Premises  provided  that they are  concealed,  erected  along
perimeter  walls wherever  possible and are installed in a manner which does not
interfere  with Tenant's use of the Premises.  Landlord or its agents shall have
the right to enter or pass through the Premises at all times, by master key upon
reasonable  oral prior notice to Tenant at  reasonable  times and by  reasonable
force in the  event of an  Emergency  Situation  without  notice to  Tenant,  to
examine the same,  and to make such repairs,  alterations or additions as it may
deem  necessary or desirable  to the Premises or the  Building,  and to take all
material  into and upon the Premises that may be required  therefor.  Such entry
and work shall not  constitute an eviction of Tenant in whole or in part,  shall
not be grounds for any  abatement  of rent,  and shall  impose no  liability  on
Landlord by reason of  inconvenience  or injury to Tenant's  business.  Landlord
shall have the right at any time,  without  the same  constituting  an actual or
constructive  eviction, and without incurring any liability to Tenant, to change
the arrangement and/or location of entrances or passageways, windows, corridors,
elevators, stairs, toilets, or other public parts of the Building, and to change
the name or number by which the Building is known.  Landlord  shall exercise due
diligence  to  prosecute  to  completion  any repairs  which it is  obligated or
permitted to make pursuant to this Lease and when  performing such repairs shall
do so in a good and  workmanlike  manner  using  new,  equal or  better  quality
materials  to  those  then  existing  in the  Premises  in  accordance  with all
applicable laws and shall use reasonable  efforts to minimize  interference with
Tenant's  permitted  use  of  the  Premises,   provided,  however,  that  Tenant
acknowledges  and agrees  that all such  efforts  shall be  performed  on normal
business days during normal business hours.

                                  VAULT SPACE.

     19.   Anything   contained  in  any  plan  or  blueprint  to  the  contrary
notwithstanding,  no vault or other space not within the Building  property line
is  demised  hereunder.  Any use of such  space by Tenant  shall be deemed to be
pursuant to a license,  revocable at will by Landlord, without diminution of the
rent payable  hereunder.  If Tenant shall use such vault space,  the  percentage
(hereinafter  defined) of any fees,  taxes or charges  made by any  governmental
authority for such space shall be aid by Tenant.

                                   INDEMNITY.

     20.  Tenant shall  indemnity,  defend and save  Landlord  harmless from and
against any liability or reasonable  expense  arising from the use or occupation
of the Premises by Tenant, or anyone on the Premises with Tenant's permission or
from any breach of this Lease beyond notice and the expiration of any applicable
cure periods set forth therein.

                              LANDLORD'S LIABILITY.

     21. This Lease and the  obligations of Tenant  hereunder  shall,  except as
otherwise set forth herein,  in no way be affected because Landlord is unable to
fulfill any of its obligations or to supply any service,  by reason of strike or
other  cause not  within  Landlord's  control.  Landlord  shall  have the right,
without  incurring  any  liability  to Tenant,  to stop any  service  because of
accident or emergency, or for repairs, alterations or improvements, necessary or
desirable  in the  judgment of  Landlord,  until such  repairs,  alterations  or
improvements  shall have been completed.  Landlord shall not be liable to Tenant
or anyone else, for any loss or damage to person,

<PAGE>

property or business,  unless due to the  negligence  or willful  misconduct  of
Landlord nor shall  Landlord be liable for any latent defect the Premises or the
Building.  Tenant,  during the term of this Lease,  shall carry public liability
and property damage insurance,  from a company  authorized to do business in New
York, with  limitations  acceptable to Landlord,  which policy or policies shall
name the Landlord  and its  designees as  additional  insureds.  Evidence of the
policies,  and of their timely renewal, shall be delivered to Landlord. All such
insurance shall contain an agreement by the insurance company that the policy or
policies  will not be  cancelled or the coverage  changed,  without  thirty (30)
days' prior  written  notice to the  Landlord.  Tenant  agrees to look solely to
Landlord's  estate and  interest in the land and  Building,  or the Lease of the
Building  or of the land  and  Building,  and the  demised  Premises,  including
rentals,  refinancing proceeds,  condemnation awards and insurance proceeds, for
the  satisfaction  of any  right or remedy of  Tenant  for the  collection  of a
judgment (or other judicial process)  requiring he payment of money by Landlord,
in the event of any  liability by Landlord,  and no other  property or assets of
Landlord 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  hereinunder,  or Tenant's use and occupancy
of the demised Premises or any other liability of Landlord to Tenant (except for
negligence).

                             CONDITION OF PREMISES.

     22.  Tenant  acknowledges  that  Landlord  has  made no  representation  or
promise,  except as herein  expressly  set  forth.  Tenant  agrees to accept the
Premises  "as is," except for any work which  Landlord has  expressly  agreed in
writing to  perform.  Landlord  shall be  responsible  for  compliance  will all
applicable  laws,  rules  and  regulations   (including,   without   limitation,
environmental  laws and the American with  Disabilities Act) in the common areas
of the Building.

                                 TAX ESCALATION.

     23. Tenant shall pay to Landlord,  as additional  rent,  tax  escalation in
accordance with this Article:

     (a) For  purposes  of this  Lease  the  rentable  square  foot  area of the
presently  demised  Premises  shall be  deemed to be eight  thousand  sixty-four
(8,064) square feet.

     (b) Definitions: For the purpose of this Article, the following definitions
shall apply:

          (i) The  term  "base  tax  year"  as  hereinafter  set  forth  for the
     determination  of real estate tax escalation,  shall mean the New York City
     real estate tax year commencing July 1, 1999 and ending June 30, 2000.

          (ii)  The  term  "The  Percentage,"  for  purposes  of  computing  tax
     escalation, shall mean point seven two five (.725%) percent. The Percentage
     has been computed on the basis of a fraction, the numerator of which is the
     rentable  square foot area of the demised  Premises and the  denominator of
     which is the total  rentable  square foot area of the office and commercial
     space in the building project.  The parties  acknowledge and agree that the
     total rentable  square foot area of the office and commercial  space in the
     building  project  shall be deemed to be one  million  one  hundred  twelve
     thousand four hundred twenty-four (1,112,424) square feet.

          (iii)  the term  "the  building  project"  shall  mean  the  aggregate
     combined parcel of land on a portion of which are the improvements of which
     the demised Premises form a part, with all the improvements  thereon,  said
     improvements  being a part of the block and lot for tax purposes  which are
     applicable to the aforesaid land.

          (iv) The term  "comparative  year"  shall mean the twelve  (12) months
     following  the base tax year,  and each  subsequent  Period of twelve  (12)
     months (or such other  Period of twelve  (12) months  occurring  during the
     term of this  Lease as  hereafter  may be duly  adopted as the tax year for
     real estate tax purposes by the City of New York).

          (v) The term "real estate taxes" shall mean the total of all taxes and
     special or other assessments levied, assessed or imposed at any time by any
     governmental  authority upon or against the building project,  and also any
     tax assessment levied,  assessed or imposed at any time by any governmental
     authority  in  connection  with the  receipt  of income or rents  from said
     building  project  to the  extent  that  same  shall be in lieu of all or a
     portion of any of the  aforesaid  taxes or  assessments,  or  additions  or
     increases  thereof,  upon or against said  building  project.  If, due to a
     future change in the method of taxation or in the taxing authority,  or for
     any other  reason,  a franchise,  income,  transit,  profit or other tax or
     governmental  imposition,  however  designated,  shall  be  levied  against
     Landlord in  substitution  in whole or in part for real estate taxes, or in
     lieu of  additions to or  increases  of said real estate  taxes,  then such
     franchise,  income, transit, profit or other tax or governmental imposition
     shall be deemed to be included within the definition of "real estate taxes"
     for the purposes hereof. As to special assessments which are payable over a
     period of time  extending  beyond the terms of this Lease,  only a pro rata
     portion thereof covering the portion of the term of this Lease unexpired at
     the time of the imposition of such  assessment,  shall be included in "real
     estate taxes." If by law, any assessment may be paid in installments, then,
     for the purposes  hereof (a) such  assessment  shall be deemed to have been
     payable in the  maximum  number of  installments  permitted  by law and (b)
     there shall be included in real estate taxes,  for each comparative year in
     which such installments may be paid, the installments of such assessment to
     becoming  payable  during such  comparative  year,  together  with interest
     payable during such comparative year.  Notwithstanding  anything  contained
     herein to the  contrary,  real estate taxes shall not, for purposes of this
     Lease,  be deemed to include  franchise  taxes,  excise taxes,  gift taxes,
     capital stock taxes,  inheritance  taxes or real estate taxes. In addition,
     Tenant  shall have no  obligation  to pay any interest or penalties on real
     estate taxes  imposed on Landlord as a result of late  payments by Landlord
     (unless resulting from a late payment by Tenant).

          (vi) Where more than one assessment is imposed by the City of New York
     for  any  tax  year,  whether  denominated  an  "actual  assessment"  or  a
     "transitional  assessment" or otherwise,  then the phrases herein "assessed
     value" and "assessments"  shall mean whichever of the actual,  transitional
     or other  assessment  is  designated by the City of New York as the taxable
     assessment for that tax year.

     (c) 1. In the event that the real estate taxes payable for any  comparative
year shall  exceed the amount of the real estate taxes  payable  during the base
tax year, Tenant shall pay to Landlord,  as additional rent for such comparative
year,  an amount equal to The  Percentage  of this  excess.  Before or after the
start of each comparative year,  Landlord shall furnish to Tenant a statement of
the real estate taxes payable for such comparative  year, and a statement of the
real estate  taxes  payable  during the base tax year.  If the real estate taxes
payable for such  comparative  year exceed the real estate taxes payable  during
the base tax year, additional rent for such comparative year, in an amount equal
to The Percentage of the excess, shall be due from Tenant to Landlord,  and such
additional  rent  shall be payable  by Tenant to  Landlord  within ten (10) days
after  receipt of the aforesaid  statement.  The benefit of any discount for any
earlier  payment or  prepayment  of real estate taxes shall accrue solely to the
benefit of Landlord,  and such discount  shall not be  subtracted  from the real
estate taxes payable for any comparative year.

     Additionally,  Tenant shall pay to Landlord,  on demand, a sum equal to The
Percentage  of any  business  improvement  district  assessment  payable  by the
building project.

     2. Should the real estate taxes payable during the base tax year be reduced
by final determination of legal proceedings,  settlement or otherwise,  then the
real  estate  taxes  payable  during the base tax year shall be  correspondingly
revised,  the  additional  rent  theretofore  paid or payable  hereunder for all
comparative years shall be recomputed on the basis of such reduction, and Tenant
shall pay to  Landlord  as  additional  rent,  within ten (10) days after  being
billed  therefor,  any deficiency  between the amount of such additional rent as
theretofore  computed  and  the  amount  thereof  due  as  the  result  of  such
recomputations. Should the real estate taxes payable during the base tax year be
increased  by such  final  determination  of legal  proceedings,  settlement  or
otherwise, then appropriate recomputation and adjustment also shall be made.

     3. If after Tenant shall have made a payment of additional  rent under this
subdivision  (c),  Landlord  shall  receive a refund of any  portion of the real
estate taxes payable for any  comparative  year after the base tax year on which
such  payment  of  additional  rent  shall  have  been  based,  as a result of a
reduction of such real estate taxes by final determination of legal proceedings,
settlement or otherwise, Landlord shall within ten (10) days after receiving the
refund pay to Tenant The Percentage of the refund.

     4. The  statements  of the real estate taxes to be furnished by Landlord as
provided  above shall be  certified  by Landlord  and shall  constitute  a final
determination  as between  Landlord  and Tenant of the real estate taxes for the
periods represented,  thereby,  unless Tenant within ninety (90) days after they
are furnished  shall give a written  notice to Landlord  that it disputes  their
accuracy or their  appropriateness,  which notice shall  specify the  particular
respects in which the statement is inaccurate or inappropriate.  If Tenant shall
so dispute said settlement then, pending the resolution of such dispute,  Tenant
shall pay the  additional  rent to Landlord  in  accordance  with the  statement
furnished by Landlord.

     5. In no event shall the fixed annual rent under this Lease  (exclusive  of
the additional rents under this Article) be reduced by virtue of this Article.

     6. If the Commencement  Date of the term of this Lease is not the first day
of the first  comparative  year, then the additional rent due hereunder for such
first  comparative  year shall be a proportionate  share of said additional rent
for the entire comparative year, said  proportionate  share to be based upon the
length of time  that the  Lease  term will be in  existence  during  such  first
comparative  year.  Upon the date of any expiration or termination of this Lease
(except  termination  because of Tenant's  default) whether the same be the date
hereinabove  set forth for the expiration of the term or any prior or subsequent
date, a proportionate  share of said  additional  rent for the comparative  year
during which such expiration or termination  occurs shall immediately become due
and payable by Tenant to Landlord,  if it was not theretofore already billed and
paid. The said  proportionate  share shall be based upon the length of time that
this Lease shall have been in existence during such comparative  year.  Landlord
shall promptly cause  statements of said  additional  rent for that  comparative
year to be prepared and furnished to lessee. Landlord and Tenant shall thereupon
make appropriate adjustments or amounts then owing.

<PAGE>

     7. Landlord's and Tenant's  obligations to make the adjustments referred to
in  subdivision  (6) above shall survive any  expiration or  termination of this
Lease.

     8. Any delay or failure of lessor in billing any tax escalation hereinabove
provided  shall not  constitute a waiver of or in any way impair the  continuing
obligation  of  lessee  or pay  such tax  escalation  hereunder  (provided  such
statement is rendered within two (2) years of the expiration of the term of this
Lease).

     9. In  addition  to all  fixed  annual  rent and  additional  rent  payable
pursuant  to the  terms of this  Lease  and this  Article,  Tenant  shall pay to
Landlord,  as additional  rent,  within ten (10) days after  Landlord shall have
delivered to Tenant a statement  therefor,  the Percentage of all  out-of-pocket
expenses  incurred by Landlord in reviewing or contesting the validity or amount
of  any  Real  Estate  Taxes,  including  without  limitation,   the  reasonable
attorneys'   fees  and  fees  and   disbursements   of  attorneys,   third-party
consultants, experts and others.

                                    SERVICES.

     24.  Tenant  acknowledges  that  it has  been  advised  that  the  cleaning
contractor for the Building may be a division or affiliate of Landlord.  Subject
to Article 31 hereof,  Tenant  agrees to employ said  contractor,  or such other
contractor  as  Landlord  shall  from time to time  designate,  for any  waxing,
polishing and other maintenance work of the demised Premises and of the Tenant's
furniture,  fixtures and  equipment,  provided  that the prices  charged by said
contractor are comparable to prices  charged by other  contractors  for the same
work.  Tenant agrees that it shall not employ any other cleaning and maintenance
contractor,  nor any  individual,  firm or  organization  for such  purpose.  If
Landlord  and Tenant  cannot  agree on whether the prices  being  charged by the
contractor  designated by the Landlord are  comparable to those charged by other
contractors,  Landlord  and Tenant shall each obtain two bona fide bids for such
work from reputable contractors,  and the average of the four bids thus obtained
shall be the standard for comparison.

                                  JURY WAIVER.

     25.  Landlord  and  Tenant  hereby  waive  trial  by  jury  in any  action,
proceeding or counterclaim  involving any matter whatsoever arising out of or in
any way  connected  with this Lease,  the  relationship  of Landlord and Tenant.
Tenant's  use or  occupancy  of the  Premises  (except  for  personal  injury or
property  damage)  or  involving  the right to any  statutory  relief or remedy.
Tenant  will  not  interpose  any  counterclaim  of any  nature  in any  summary
proceedings, except for compulsory counterclaims.

                                 NO WAIVER, ETC.

     26. No act or omission of Landlord or its agents shall constitute an actual
or  constructive  eviction,  unless  Landlord shall have first received  written
notice of Tenant's claim and shall have had reasonable  opportunity to meet such
claim.  In the event that any payment herein  provided for by Tenant to Landlord
shall become overdue for a period in excess of ten (10) days, then at Landlord's
option a "late charge"  shall become due and payable to Landlord,  as additional
rent, from the date it was due until payment is made at the following rates: for
individual and  partnership  Tenants,  said late charge shall be computed at the
maximum legal rate of interest;  for corporate or  governmental  entity Tenants,
the late charge  shall be computed at two (2%) percent per month unless there is
an applicable maximum legal rate of interest which then shall be used. No act or
omission of Landlord or its agents shall constitute an acceptance of a surrender
of the Premises,  except a writing  signed by Landlord.  The delivery of keys to
Landlord or its agents  shall not  constitute a  termination  of this Lease or a
surrender of the  Premises.  Acceptance by Landlord of less than the rent herein
provided  shall at  Landlord's  option be deemed on  account  of  earliest  rent
remaining  unpaid.  No endorsement on any check,  or letter  accompanying  rent,
shall be deemed an accord and satisfaction, and such check may be cashed without
prejudice  to  Landlord.  No  waiver of any  provision  of this  Lease  shall be
effective  unless  such  waiver be in  writing  signed by  Landlord.  This Lease
contains the entire agreement between the parties,  and no modification  thereof
shall be binding  unless in writing  and signed by the party  concerned.  Tenant
shall  comply  with the rules and  regulations  printed in this  Lease,  and any
reasonable  modifications thereof or additions therefore.  Landlord shall not be
liable to Tenant for the  violation of such rules and  regulations  by any other
tenant.  Failure of Landlord to enforce any provision of this Lease, or any rule
or regulation,  shall not be construed as the waiver of any subsequent violation
of a provision of this Lease, or any rule or regulation. This Lease shall not be
affected by nor shall  Landlord in any way be liable for the closing,  darkening
or bricking up of windows in the  Premises,  for any  reason,  including  as the
result of  construction  on any property of which the Premises are not a part or
by  Landlord's  own  acts.  Notwithstanding  anything  contained  herein  to the
contrary, Landlord and Tenant agree that if seventy (70%) percent or more of the
windows  located in the Premises are brickened up in excess of thirty (30) days,
then,  and in such  event,  Tenant may elect to cancel  this  Lease upon  giving
written notice to Landlord within fifteen (15) days after the end of such thirty
(30) day period and the term of this  Lease  shall  expire on the date set forth
herein which shall be not less than fifteen (15) days after the date such notice
is given (the "Cancellation Date") provided that Landlord does not substantially
restore such brickening prior to the Cancellation Date.

                          OCCUPANCY AND SUE BY TENANT.

     27.  If  Tenant  breaches  the  covenants  in  subdivision  (A) above (?A -
REMOVED?),  and this Lease be  terminated  because  of such  default,  then,  in
addition to  Landlord's  rights of re-entry,  restoration,  preparation  for and
re-rental, and anything elsewhere in this Lease to be contrary  notwithstanding,
Landlord  shall  retain its right to  judgment  on and  collection  of  Tenant's
aforesaid  obligation to make a single payment to Landlord of a sum equal to the
total of all rent and additional rent reserved for the remainder of the original
term of the Lease,  subject to future credit or repayment to Tenant in the event
of any  re-renting  of the  Premises by  Landlord,  after first  deducting  from
re-rental  income all  expenses  incurred by Landlord in reducing to judgment or
otherwise collecting Tenant's aforesaid obligation,  and in obtaining possession
of restoring,  preparing  for and  re-letting  the  Premises.  In no event shall
Tenant be entitled to a credit or repayment for  re-rental  income which exceeds
the sums payable by Tenant hereunder or which covers a period after the original
term of this Lease.

                                    NOTICES.

     28. Any bill,  notice or demand from  Landlord to Tenant,  may be delivered
personally at the Premises or sent by registered or certified mail or by Federal
Express or other reputable overnight courier.  Such bill, notice or demand shall
be deemed to have been  given at the time of  delivery  or three (3) days  after
mailing.  Any notice  from  Tenant to  Landlord  must be sent by  registered  or
certified mail to the last address designated in writing by Landlord.

                                     WATER.

     29.  Tenant shall pay the amount of  Landlord's  cost for all water used by
Tenant for any purpose  other than  ordinary  lavatory and pantry uses,  and any
sewer rent or tax based  thereon.  Landlord may install a water meter to measure
Tenant's  water  consumption  for all  purposes  and  Tenant  agrees  to pay for
installation  and maintenance  thereof,  and for water consumed as shown on said
meter.  If water is made  available  to Tenant in the  Building  or the  demised
Premises through a meter which also supplies other premises, or without a meter,
then Tenant shall pay to Landlord $ per month for water.

                                SPRINKLER SYSTEM.

     30. If there shall be a "sprinkler  system" in the demised Premises for any
period  during  this  Lease,  Tenant  shall  pay  $  per  month,  for  sprinkler
supervisory  service. If such sprinkler system is damaged by any act or omission
of Tenant or its agents, employees,  licensees or visitors, Tenant shall restore
the system to good working  condition at its own expense.  If the New York Board
of Fire  Underwriters,  the New York  Fire  Insurance  Exchange,  the  Insurance
Services Office or any governmental  authority  requires the installation or any
alteration to a sprinkler  system by reason of Tenant's  occupancy or use of the
Premises, including any alteration necessary to obtain in the full allowance for
a sprinkler  system in the fire  insurance  rate of  Landlord,  or for any other
reason,  Tenant shall make such installation or alteration promptly,  and at its
own expense.

                              HEAT, ELEVATOR, ETC.

     31.  Landlord  shall  provide  a  minimum  of one  (1)  passenger  elevator
twenty-four  (24) hours a day seven (7) days a week and provide elevator service
during all usual business hours,  including  Saturdays  until 1 P.M.,  except on
Sundays,  State holidays,  Federal holidays, or Building Service Employees Union
Contract  holidays.  Landlord shall furnish heat to the Premises during the same
hours on the same days in the cold season in each year. Landlord shall cause the
Premises to be kept clean in accordance with Landlord's  customary standards for
the Building,  provided they are kept in order by Tenant. Landlord, its cleaning
contractor  and their  employees  shall have after  hours  access to the demised
Premises and the use of Tenant's light,  power and water in the demised Premises
as may be reasonably  required for the purpose of cleaning the demised Premises.
Landlord may remove Tenant's  extraordinary  refuse from the Building and Tenant
shall pay the cost  thereof.  If the  elevators  in the  Building  are  manually
operated,  Landlord may convert to automatic  elevators at any time,  without in
any way affecting Tenant's obligations hereunder.

                                SECURITY DEPOSIT.

     32. Tenant has deposited  with Landlord the sum of  $120,885.20 as security
for the  performance by Tenant of the terms of this Lease.  Landlord may use any
part of the Security to satisfy any default of Tenant,  which is not cured after
notice and beyond the expiration of any applicable  cure period set forth herein
and any reasonable  expenses  arising from such default,  which was not so cured
within any applicable  cure period,  including but not limited to any damages or
rent deficiency before or after re-entry by Landlord. Tenant shall, upon demand,
deposit with Landlord the full amount to be used,  in order that Landlord  shall
have the full  security  deposit  on hand at all times  during the terms of this
Lease.  If Tenant shall comply fully with the terms of this Lease,  the security
shall be returned to Tenant  within thirty (30) days after the date fixed as the
end of the Lease. In the event of a sale or Lease of the Building containing the
Premises,  Landlord may transfer  the security to the  purchaser or tenant,  and
Landlord shall  thereupon,  provided any such transferee  assumes in writing all
obligations of Landlord under this Lease, be released from all liability for the
return  of the  security.  This  provision  shall  apply  to every  transfer  or
assignment of the security to a new  Landlord.  Tenant shall have no legal power
to assign or encumber the security herein described.

<PAGE>

                                  ELECTRICITY.

     33. Terms and conditions  with respect to electricity  rent  inclusion,  or
with respect to  sub-metering,  as the case may be, and general  conditions with
respect to either,  are set forth in Article 40 in the Rider annexed to and made
part of this Lease.

                                  RENT CONTROL.

     34.  In the  event the fixed  annual  rent or  additional  rent or any part
thereof  provided to be paid by Tenant under the provisions of this Lease during
the demised term shall become  uncollectible  or shall be reduced or required to
be reduced or  refunded by virtue of any  Federal,  State or County or City law,
order or regulation, or by any direction of a public officer or body pursuant to
law, or the orders,  rules code or  regulations  of any  organization  or entity
formed  pursuant  to law,  whether  such  organization  or  entity  be public or
private, then Landlord, at its option, may at any time thereafter terminate this
Lease,  by not less than thirty (30) days' written  notice to Tenant,  on a date
set forth in said  notice,  in which event this Lease and the term hereof  shall
terminate  and come to an end on the date  fixed in said  notice  as if the said
date were the date  originally  fixed herein for the  termination of the demised
term.  Landlord  shall not have the right so to  terminate  this Lease if Tenant
within such period of thirty (30) days shall in writing  lawfully agree that the
rentals  herein  reserved are a  reasonable  rental and agree to continue to pay
said rentals,  and if such agreement by Tenant shall then be legally enforceable
by Landlord.

                                    SHORING.

     35. Tenant shall permit any person authorized to make an excavation on land
adjacent  to the  Building  containing  the  Premises  to do any work within the
Premises  necessary to preserve the wall of the Building  from injury or damage,
and Tenant shall have no claim against Landlord for damages or abatement of rent
by reason thereof.

                           EFFECT OF CONVEYANCE, ETC.

     36. If the Building  containing the Premises shall be sold,  transferred or
leased, or the Lease thereof  transferred or sold, Landlord shall be relieved of
all future obligations and liabilities  hereunder and the purchaser,  transferee
or Tenant of the Building  shall be deemed to have assumed and agreed to perform
all such  obligations and liabilities  for Landlord  hereunder.  In the event of
such sale,  transfer or lease,  Landlord  shall also be relieved of all existing
obligations and liabilities hereunder,  provided that the purchaser,  transferee
or tenant of the Building assumes in writing such obligations and liabilities.

                        RIGHTS OF SUCCESSORS AND ASSIGNS.

     37. This Lease shall bind and inure to the benefit of the heirs, executors,
administrators,  successors,  and,  except as  otherwise  provided  herein,  the
assigns of the parties hereto.  In any provision of any Article of this Lease or
the application thereof to any person or circumstances  shall, to any extent, be
invalid or unenforceable,  the remainder of that Article,  or the application of
such  provision or persons or  circumstances  other than those as to which it is
held invalid or unenforceable, shall not be affected thereby, and each provision
of said  Article and of this Lease shall be valid and be enforced to the fullest
extent permitted by law.

                                    CAPTIONS.

     38. The captions  herein are inserted only for  convenience,  and are in no
way to be construed  as a part of this Lease or as a limitation  of the scope of
any provision of this Lease.

                                LEASE SUBMISSION.

     39. Landlord and Tenant agree that this Lease is submitted to Tenant on the
understanding  that it shall  not be  considered  an offer  and  shall  not bind
Landlord in any way unless and until (i) Tenant has duly  executed and delivered
duplicate  originals  thereof to Landlord  and (ii)  Landlord  has  executed and
delivered one (1) of said originals to Tenant.

<PAGE>

                  SEE RIDER(S) ANNEXED HERETO AND MADE A PART HEREOF  consisting
of pages 1 through 35, containing rules and regulations, Articles 40 through 60,
a location plan, cleaning specifications and Exhibit A.

     In Witness Whereof,  Landlord and Tenant have executed this Lease as of the
day and year first above written.

<TABLE>
<CAPTION>
<S>                                                               <C>
SLG Graybar Sublease LLC, a New York                              Fusion Telecommunications International, Inc.
------------------------------------------------------            ------------------------------------------------------
limited liability company

By:  SLG Graybar Sublease Corp, A New York                        By:
------------------------------------------------------            ------------------------------------------------------
corporation, its Managing Member

By:                                                               By:
    --------------------------------------------------                --------------------------------------------------
      (Name)                             (Title)                        (Name)                             (Title)
</TABLE>

                                ACKNOWLEDGEMENTS

<TABLE>
<CAPTION>
<S>                                                                    <C>
                                                                       State of New Jersey  )
                                                                                            ss.:
                                                                       County of Hudson     )
                                                                       On the day of                       , 20    , before me
State of New York   )                                                  personally came
                     ss.:                                              to me known, who being by me duly sworn, did depose and
County of New York  )                                                  say that he resides at No.
On the   day of                     , 20    , before me                that he is the                      of
personally came                                                        the corporation described in, and which executed, the
to me known and known to me to be the individual described in,         foregoing instrument; and that he signed h  name thereto
and who executed, the foregoing instrument, and acknowledged           by authority of the Board of Directors of said corporation.
to me that he executed the same.

                 ---------------------------------------------                       ----------------------------------------------
                                                 Notary Public                                                        Notary Public

IN WITNESS WHEREOF, the undersigned has     set      hand and seal this         day of  20

                                                                                                                             (L.S.)
--------------------------------------------------------------         ------------------------------------------------------------

                                                                                                                             (L.S.)
--------------------------------------------------------------         ------------------------------------------------------------
                                                                       To me known and kwon to me to  be the  individual  described
                                                                       in, and who executed the foregoing Guaranty and acknowledged
                                                                       to me that he executed the same

State of New York )

                  Ss:

County of New York)

On the   day of           , 20     , before me personally came

                                                                                     ----------------------------------------------
                                                                                                                      Notary Public
</TABLE>

<PAGE>

                                    EXHIBIT A

Upon the occurrence of the Commencement  Date (as defined in Article 55 hereof),
Tenant shall pay fixed annual rent to Landlord, subject to provisions of Article
53 hereof,  at the annual rate of (i)  $298,368.00  per annum  beginning  on the
Commencement  Date through the last day of the month  immediately  preceding the
second (2nd) anniversary of the Commencement Date of the Lease; (ii) $314,496.00
per annum for the period  commencing  on the  second  (2nd)  anniversary  of the
Commencement  Date of the Lease  through  the last day of the month  immediately
preceding the fifth (5th) anniversary of the Commencement Date of the Lease; and
(iii)  $330,624.00  per annum  commencing on the fifth (5th)  anniversary of the
Commencement Date of the Lease through the expiration of the term of this Lease.

<PAGE>

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

          RIDER ANNEXED TO AND MADE A PART OF THE LEASE BETWEEN
               SLG GRAYBAR SUBLEASE LLC                         LANDLORD
               -------------------------------------------------
          AND FUSION TELECOMMUNICATIONS INTERNATIONAL, INC.     TENANT
              --------------------------------------------------

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

                 RULES AND REGULATIONS REFERRED TO IN THIS LEASE

     1. No animals, birds, bicycles or vehicles shall be brought into or kept in
the Premises.  The Premises  shall not be used for  manufacturing  or commercial
repairing or for sale or display of merchandise  or as a lodging  place,  or for
any  immoral or illegal  purpose,  nor shall the  Premises  be used for a public
stenographer  or  typist;  barber  or beauty  shop,  telephone,  secretarial  or
messenger service;  employment,  travel or tourist agency;  school or classroom;
commercial  document  reproduction;  or for any business other than specifically
provided  for in the  Tenant's  lease.  Tenant  shall not cause or permit in the
Premises  any  disturbing  noises  which may  interfere  with  occupants of this
neighboring  buildings,  any cooking or objectionable  odors, or any nuisance of
any  kind,  or any  inflammable  or  explosive  fluid,  chemical  or  substance.
Canvassing,  soliciting  and peddling in the Building are  prohibited,  and each
Tenant shall cooperate so as to prevent the same.

     2. The toilet  rooms and other  water  apparatus  shall not be used for any
purposes  other than those for which they were  constructed,  and no  sweepings,
rags, ink,  chemicals or other  unsuitable  substances  shall be thrown therein.
Tenant shall not throw  anything  out of doors,  windows of  skylights,  or into
hallways,  stairways or elevators,  nor place foot or objects on outside  window
sills. Tenant shall not obstruct or cover the halls, stairways and elevators, or
use them for any  purpose  other than  ingress  and  egress to or from  Tenant's
Premises, nor shall skylights, windows, doors and transoms that reflect or admit
light into the Building be covered or obstructed in any way.

     3. Tenant  shall not place a load upon any floor of the  Premises in excess
of the load per square foot which such floor was  designed to carry and which is
allowed by law. Landlord reserves the right to prescribe the weight and position
of all safes in the Premises.  Business machines and mechanical  equipment shall
be placed and maintained by Tenant,  at Tenant's  expense,  only with Landlord's
consent which consent  Landlord shall not  unreasonably  withhold,  condition or
delay  and  in  settings  approved  by  Landlord  which  approval  shall  not be
unreasonably withheld to control weight, vibration, noise and annoyance. Smoking
or carrying lighted cigars, pipes or cigarettes in the elevators of the Building
is  prohibited.  If the Premises are on the ground  floor of the  Building,  the
Tenant  thereof at its expense shall keep the sidewalks and curb in front of the
Premises clean and free from ice, snow, dirt and rubbish.

     4. Tenant  shall not move any heavy or bulky  materials  into or out of the
Building  without  Landlord's prior written consent which consent Landlord shall
not unreasonably  withhold,  condition or delay and then only during such manner
as Landlord  shall  approve  which consent  Landlord  shall not be  unreasonably
withheld.  If any material or equipment requires special handling,  Tenant shall
employ only persons holding a Master  Rigger's  License to do such work, and all
such work shall comply with all legal requirements.  Landlord reserves the right
to inspect  all  freight to be brought  into the  Building,  and to exclude  any
freight which violates any rule, regulation or other provision of this Lease.

     5. No sign, advertisement,  notice or thing shall be inscribed,  painted or
affixed  on any part of the  Building,  without  the prior  written  consent  of
Landlord which consent  Landlord shall not unreasonable  withhold,  condition or
delay. Landlord may remove anything installed in violation of this provision and
Tenant  shall  pay  the  cost of such  removal.  Interior  signs  on  doors  and
directories  shall be  inscribed  or affixed by Landlord at Tenant's  reasonable
expense.  Landlord  shall  control the color,  size,  style and  location of all
signs,  advertisements  and notices.  No advertising of any kind by Tenant shall
refer to the Building  (other than its address) unless first approved in writing
by Landlord.

     6. No article  shall be  fastened  to, or holes  drilled or nails or screws
driven into, the ceilings,  walls, doors or other portions of the Premises,  nor
shall any part of the Premises be painted,  papered or otherwise covered,  or in
any way marked or broken,  without the prior written consent of Landlord,  which
consent  Landlord shall not  unreasonably  withhold,  condition or delay.

     7. No existing locks shall be changed,  nor shall any  additional  locks or
bolts of any kind be placed upon any door or window by Tenant, without the prior
written consent of Landlord,  which consent shall not be unreasonably  withheld,
conditioned  or  delayed,  provided  that a copy of all such keys are  delivered
simultaneously  to  Landlord.  At the  termination  of this Lease,  Tenant shall
deliver to Landlord all keys for any portion of the Premises or Building. Before
leaving the  Premises at any time,  Tenant shall close all windows and close and
lock all doors.

     8. No Tenant  shall  purchase or obtain for use in the  Premises any spring
water,  ice,  towels,  food,  boot  blacking,  barbering  or other such  service
furnished  by any company or person not  approved  by  Landlord.  Any  necessary
exterminating  work in the Premises shall be done at Tenant's  expense,  at such
times,  in such manner and by such company as Landlord shall  require.  Landlord
reserves  the right to exclude from the  Building,  from 6:00 p.m. to 8:00 a.m.,
and at all hours on Sunday and legal holidays,  all persons who do not present a
pass to the Building  signed by Landlord.  Landlord  will furnish  passes to all
persons  reasonably  designated by Tenant.  Tenant shall be responsible  for the
acts of all persons to whom passes are issued at Tenant's request.

     9.  Whenever  Tenant shall submit to Landlord any plan,  agreement or other
document for  Landlord's  consent or approval,  Tenant agrees to pay Landlord as
additional  rent,  on  demand,  an  administrative  fee  equal to the sum of the
reasonable fees of any architect,  engineer or attorney  employed by Landlord to
review said plan, agreement or document and Landlord's  administrative costs for
same.

     10. The use in the demised Premises of auxiliary  heating devices,  such as
portable electric heaters,  heat lamps or other devices whose principal function
at the time of operation is to produce space heating, is prohibited.

     11. Tenant shall keep all doors from the hallway to the Premises  closed at
all times except for use during ingress to and egress from the Premises.  Tenant
acknowledges that a violation of the terms of this paragraph may also constitute
a violation of codes, rules or regulations of governmental authorities having or
asserting  jurisdiction over the Premises, and Tenant agrees to indemnify lessor
for many fines,  penalties,  claims,  action or increase in fire insurance rates
which might result from Tenant's violation of the terms of this paragraph.

     12.  Tenant  shall be  permitted  to maintain an  "in-house"  messenger  or
delivery  service  within the Premises,  provided that Tenant shall require that
any messengers in its employ affix  identification to the breast pocket of their
outer garment, which shall bear the following information:  name of Tenant, name
of employee and photograph of the employee.  Messengers in Tenant's employ shall
display such  identification at all time. In the event that Tenant or any agent,
servant or employee of Tenant  violates  the terms of this  paragraph,  Landlord
shall be entitled  to  terminate  Tenant's  permission  to  maintain  within the
Premises  in-house  messenger or delivery service upon written notice to Tenant.

     13.  Tenant  will be entitled to five (5)  listings on the  Building  lobby
directory  board,  and the directory board on the floor of the Building on which
the Premises is located,  without charge.  Any additional  directory listing (if
space is available),  or any change in a prior listing,  with the exception of a
deletion,  will be subject to a fourteen ($14.00) dollar service charge, payable
as additional rent.

     In case of any conflict or  inconsistency  between any  provisions  of this
Lease and any of the rules and regulations  originally or as hereafter  adopted,
the provisions of this Lease shall control.

<PAGE>

                                  ELECTRICITY.

     40.  Tenant agrees that  Landlord  may,  subject to the  provisions of this
Article,  furnish electricity to Tenant on a "sub-metering"  basis or an a "rent
inclusion basis." Electricity and electric service,  as used herein,  shall mean
any element  affecting the  generation,  transmission,  and/or  distribution  or
redistribution  of  electricity,  including  but not limited to  services  which
facilitate the  distribution  of service.  Landlord  covenants that it shall not
alter the method by which it presently furnishes electricity to the Premises for
Tenant's use therein from a "rent  inclusion"  basis to a  "sub-metering"  basis
unless  it alters  the  method by which it  furnishes  electricity  from a "rent
inclusion"  basis to a  "sub-metering"  basis for Tenant's  leasing  fifty (50%)
percent or more of the rentable space in the Building.

         A. Sub-metering: If and so long as Landlord provides electricity to the
demised  Premises  on a  sub-metering  basis,  Tenant  covenants  and  agrees to
purchase the same from Landlord or Landlord's designated agent at charges, terms
and rates set, from time to time,  during the term of this Lease by Landlord but
not more than those specified in the service classification in effect on January
1, 1970 pursuant to which  Landlord  then  purchased  electric  current from the
public  utility  corporation  serving the part of the city where the Building is
located;  provided  however,  said  charges  shall  be  increased  in  the  same
percentage as any percentage increase in the billing to Landlord for electricity
for the entire Building,  by reason of increase in Landlord's  electric rates or
service classifications, subsequent to January 1, 1970, and so as to reflect any
increase in Landlord's electric charges,  including changes in market prices for
electricity  from utilities  and/or other  providers,  in fuel adjustments or by
taxes or charges of any kind  imposed on  Landlord's  electricity  purchases  or
redistribution,  or for any other such reason, subsequent to said date. Any such
percentage  increase in  Landlord's  billing for  electricity  due to changes in
rates,  service  classifications  or market  prices,  shall be  computed  by the
application of the average  consumption  (energy and demand) of electricity  for
the entire  Building  for the twelve (12) full months  immediately  prior to the
rate and/or service classification change, or any changed methods of or rules on
billing for same,  applied on a consistent  basis to the new rate and/or service
classification or market price, and to the  classification and rate in effect on
January  1, 1970.  If the  average  consumption  of  electricity  for the entire
Building for said prior twelve (12) months cannot reasonably be applied and used
with  respect to changed  methods of or rules on  billing,  then the  percentage
shall be computed by the use of the average  consumption (energy and demand) for
the entire Building for the first three (3) months after such change,  projected
to a full twelve (12) months, so as to reflect the different  seasons;  and that
same consumption,  so projected,  shall be applied to the service classification
and rate in effect on January 1, 1970.  Where more than one meter  measures  the
service of Tenant in the Building,  the service  rendered through each meter may
be computed and billed separately in accordance with the rates herein specified.
Bills, therefore,  shall be rendered at such times as Landlord may elect and the
amount,  as  computed  from a meter,  shall  be  deemed  to be,  and be paid as,
additional  rent.  In the event that such bills are not paid within  thirty (30)
days  after  the  same are  rendered,  Landlord  may,  without  further  notice,
discontinue  the service of electric  current to the  demised  Premises  without
releasing  Tenant from any  liability  under this Lease and without  Landlord or
Landlord's  agent  incurring any  liability for any damage or loss  sustained by
Tenant by such  discontinuance of service. If any tax is imposed upon Landlord's
receipt  from the  sale,  resale  or  redistribution  of  electricity  or gas or
telephone service to Tenant by any Federal, State or Municipal authority, Tenant
covenants and agrees that where  permitted by law,  Tenant's  pro-rata  share of
such  taxes  shall be passed  on to and  included  in the bill of,  and paid by,
Tenant to Landlord.

         B. Rent Inclusion:  If and so long as Landlord provides  electricity to
the demised  Premises on a rent  inclusion  basis,  Tenant agrees that the fixed
annual rent shall be increased by the amount of the  Electricity  Rent Inclusion
Factor ("ERIF"), as hereinafter defined. Tenant acknowledges and agrees (i) that
the fixed annual rent  hereinabove  set forth in this Lease does not yet, but is
to  include  an ERIF of  three  ($3.00)  dollars  per  rentable  square  foot to
compensate Landlord for electrical wiring and other installations necessary for,
and for its  obtaining  and making  available  to Tenant the  redistribution  of
electric current as an additional service;  and (ii) that said ERIF, which shall
be subject to periodic adjustments as hereinafter  provided,  has been partially
based upon an estimate of the Tenant's  connected  electrical  load, in whatever
manner  delivered to Tenant,  which shall be deemed to be the demand  (KW),

                                     - 1 -
<PAGE>

and hours of use  thereof,  which  shall be deemed to be the energy  (KWH),  for
ordinary  lighting and light  office  equipment  and the  operation of the usual
small  business  machines,   including  facsimile  machines,   desktop  personal
computers  and  printers,  desktop  document  scanners,  Xerox or other  copying
machines  (such  lighting  and  equipment  are  hereinafter   called   "Ordinary
Equipment") during ordinary business hours ("ordinary  business hours") shall be
deemed to mean fifty (50) hours per week,  with  Landlord  providing  an average
connected load of four and a half (4 1/2) watts of electricity  for all purposes
per  rentable  square foot.  Any  installation  and use of equipment  other than
Ordinary  Equipment  and/or any connected  load and/or energy usage by Tenant in
excess of the foregoing  shall result in  adjustment of the ERIF as  hereinafter
provided.  For  purposes of this  Lease,  the  rentable  square foot area of the
presently  demised  Premises  shall be  deemed to be eight  thousand  sixty-four
(8,064) square feet.

         If the cost to Landlord of  electricity  shall have been,  or shall be,
increased or decreased  subsequent  to May 1, 1996  (whether  such change occurs
prior to or during the term of this  Lease),  by change in  Landlord's  electric
rates or service classifications,  or electricity charges,  including changes in
market  prices or by an increase,  subsequent  to the last such electric rate or
service  classification  change or market price change,  in fuel  adjustments or
charges of any kind, or by taxes, imposed on Landlord's electricity purchases or
on Landlord's  redistribution,  or for any other such reason, then the aforesaid
ERIF portion of the fixed annual rent shall be changed in the same percentage as
any  such   change  in  cost  due  to  changes  in   electric   rates,   service
classifications  or market prices,  and, also Tenant's payment  obligation,  for
electricity redistribution,  shall change from time to time so as to reflect any
such  increase  in fuel  adjustments  or  charges,  and  such  taxes.  Any  such
percentage  change in Landlord's cost due to change in Landlord's  electric rate
or service  classifications or market prices,  shall be computed on the basis of
the average consumption of electricity for the Building for the twelve (12) full
months  immediately  prior to the rate  change or other  such  changes  in cost,
energy and  demand,  and any  changed  methods of or rules on billing  for same,
applied on a consistent basis to the new electric rate or service classification
or market price and to the  immediately  prior exiting  electric rate or service
classification or market price. If the average  consumption  (energy and demand)
for the entire  Building for said prior twelve (12) months cannot  reasonably be
applied and used with  respect to changed  methods of or rules on billing,  then
the percentage  increase shall be computed by the use of the average consumption
(energy and demand) for the entire Building for the first three (3) months after
such  change,  projected  to a fill  twelve  (12)  months,  so as to reflect the
different seasons; and that same consumption,  so projected, shall be applied to
the rate and/or service classification or market price which existed immediately
prior to the change. The parties agree that a reputable,  independent electrical
consultant  firm,  selected by Landlord,  ("Landlord's  electrical  consultant")
shall determine the percentage  change for the changes in ERIF due to Landlord's
changed costs, and that Landlord's  electrical  consultant may from time to time
make surveys in the demised  Premises at Landlord's sole cost and expense of the
electrical  equipment and fixtures and use of current,  except in the event that
any such survey is made at Tenant's request, in which event, Tenant shall pay on
demand as additional  rent  hereunder  the cost of any such survey.  (i) If such
survey shall reflect an adjusted demand  electrical load in the demised Premises
in excess of four and a half (4 1/2) watts of  electricity  for all purposes per
rentable  square foot and/or energy usage in excess of ordinary  business  hours
(each such excess  hereinafter  called "excess  electricity")  then the adjusted
demand  electrical  load and/or the hours of use portion(s) of the then existing
ERIF shall be  increased  by an amount  which is equal to a fraction of the then
existing ERIF, the numerator of which is the excess  electricity  (i.e.,  excess
adjusted  demand load and/or excess usage) and the  denominator  of which is the
adjusted  demand  load  and/or the energy  usage which was the basis of the then
existing  ERIF.  Such  fractions  shall be determined  by Landlord's  electrical
consultant.  The  fixed  annual  rent  shall  then  be  appropriately  adjusted,
effective  as of the date of any such  change in  adjusted  demand  load  and/or
usage,  as  disclosed  by  said  survey.  (ii)  If such  survey  shall  disclose
installation and use of other than Ordinary Equipment,  then effective as of the
date of said  survey,  there shall be added to the ERIF  portion of fixed annual
rent (computed and fixed as hereinbefore  described) an additional  amount equal
to what would be paid under the SC-4 Rate I Service  Classification in effect on
May 1,  1999  (and not the time of day rate  schedule)  or the  comparable  rate
schedule  (and not the time of day rate  schedule) of any utility other than Con
Ed then providing  electrical service to the Building as same shall be in effect
on the date of such  survey  for such  load and usage of  electricity,  with the
connected  electrical  load  deemed to be the  demand  (KW) and the

                                     - 2 -
<PAGE>

hours of use thereof  deemed to be the energy (KWH),  as  hereinbefore  provided
(which  addition to the ERIF shall be increased or decreased by all  electricity
cost changes of Landlord, as hereinabove provided,  from May 1, 1999 through the
date of billing).

         In no event, whether because of surveys,  rates or cost changes, or for
any reason,  is the  originally  specified  three  ($3.00)  dollars per rentable
square foot ERIF portion of the fixed annual rent to be reduced.

         C. General  Conditions:  The  determination  by  Landlord's  electrical
consultant shall be binding and conclusive on Landlord and Tenant from and after
the delivery of copies of such  determinations  to Landlord and Tenant,  unless,
within  thirty  (30)  days  after  delivery   thereof,   Tenant   disputes  such
determination.  If Tenant so disputes the  determination,  it shall,  at its own
expense,  obtain from a reputable,  independent  electrical  consultant  its own
determinations  in accordance  with the  provisions  of this  Article.  Tenant's
consultant and Landlord's  consultant  then shall seek to agree.  If they cannot
agree within thirty (30) days,  they shall choose a third  reputable  electrical
consultant,  whose cost shall be shared equally by the parties,  to make similar
determinations  which shall be controlling.  (If they cannot agree on such third
consultant  within ten (10) days,  then  either  party may apply to the  Supreme
Court in the County of New York for such  appointment.)  However,  pending  such
controlling  determinations,   Tenant  shall  pay  to  Landlord  the  amount  of
additional  rent or ERIF in  accordance  with the  determinations  of Landlord's
electrical consultant. If the controlling  determinations differ from Landlord's
electrical  consultant,  then the parties shall promptly make adjustment for any
deficiency owed by Tenant or overage paid by Tenant.

         Supplementing  Article  34 hereof,  if all or part of the  sub-metering
additional rent or the ERIF payable in accordance with Subdivision (A) or (B) of
this Article becomes  uncollectible or reduced or refunded by virtue of any law,
order or regulations,  the parties agree that, at Landlord's  option, in lieu of
sub-metering,  additional rent or ERIF, and in  consideration of Tenant's use of
the  Building's  electrical  distribution  system and  receipt of  redistributed
electricity   and   payment  by  Landlord   of   consultant's   fees  and  other
redistribution  costs,  the fixed  annual  rental  rate(s) to be paid under this
Lease shall be increased by an  "alternative  charge" which shall be a sum equal
to three  ($3.00)  dollars  per year per  rentable  square  foot of the  demised
Premises, changed in the same percentage as any increase in the cost to Landlord
for electricity for the entire  Building  subsequent to May 1, 1999,  because of
electric rate, service  classification or market price changes,  such percentage
change to be computed as in Subdivision (B) provided.

         Landlord  shall  not be  liable  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, unless caused by the negligence or willful misconduct of Landlord.
Notwithstanding  the foregoing,  in no event shall Landlord be liable to Tenant,
or anyone claiming through Tenant, for consequential  damages.  Tenant covenants
and agrees that at all times its use of electric  current shall never exceed the
capacity of existing  feeders to the  Building  or wiring  installation.  Tenant
agrees  not to connect  any  additional  electrical  equipment  to the  Building
electric distribution system, other than lamps, typewriters, facsimile machines,
desktop personal  computers and printers,  desktop  document  scanners and other
small office machines which consume comparable  amounts of electricity,  without
Landlord's  prior  written  consent,  which  consent  shall not be  unreasonably
withheld. Any riser or risers to supply Tenant's electrical  requirements,  upon
written request of Tenant,  will 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 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.  In addition to the  installation of such riser or risers,
Landlord  will also at the sole cost and  expense of Tenant,  install  all other
equipment proper and necessary in connection  therewith subject to the aforesaid
terms and conditions.  The parties  acknowledge  that they understand that it is
anticipated that electric rates, charges, etc., may be changed by virtue of time
of day rates or changes in other methods of billing and/or electricity purchases
and  the

                                     - 3 -
<PAGE>

redistribution thereof, and fluctuation in the market price of electricity,  and
that the  references  in the  foregoing  paragraphs  to changes in methods of or
rules on billing are intended to include any such changes.  Anything hereinabove
to the contrary notwithstanding, in no event is the sub-metering additional rent
or ERIF,  or any  "alternative  charge," to be less than an amount  equal to the
total  Landlord's  payments to public  utilities  and/or other providers for the
electricity  consumed by Tenant (and any taxes thereon or on  redistribution  of
same) plus five (5%) percent  thereof for  transmission  line loss, plus fifteen
(15%) percent thereof for other  redistribution  costs.  The Landlord  reserves,
subject to the introductory paragraph of this Article 40, the right, at any time
upon thirty (30) days written notice, to change its furnishing of electricity to
Tenant from a rent inclusion basis to a sub-metering basis, or vice versa, or to
change to the  distribution  of less  than all the  components  of the  existing
service to Tenant.  The Landlord  reserves the right to terminate the furnishing
of  electricity  on a rent  inclusion,  sub-metering,  or any other basis at any
time, upon sixty (60) days written notice to the Tenant,  provided the foregoing
change (i) is required by law,  (ii) is required by the public  utility  company
supplying electricity to the Building or (iii) applies to fifty (50%) percent or
more of the office  tenants in the Building,  in which event the Tenant may make
application  directly  to the public  utility  and/or  other  providers  for the
Tenant's entire  separate  supply of electric  current and Landlord shall permit
its wires and conduits,  to the extent available and safely capable,  to be used
for such purpose,  but only to the extent of Tenant's then authorized  load. Any
meters,   risers,  or  other  equipment  or  connections  necessary  to  furnish
electricity  on an  sub-metering  basis or to enable  Tenant to obtain  electric
current  directly from such utility and/or other providers shall be installed at
Landlord's sole cost and expense. Only rigid conduit or electricity metal tubing
(EMT) will be allowed. The Landlord, upon expiration of the aforesaid sixty (60)
days'  written  notice to the Tenant may  discontinue  furnishing  the  electric
current but this Lease shall otherwise remain in full force and effect, provided
such direct service is available to Tenant.  If Tenant was provided  electricity
on a rent inclusion  basis when it was so  discontinued,  then  commencing  when
Tenant  receives  such direct  service and as long as Tenant  shall  continue to
receive such  service,  the fixed annual rent payable  under this Lease shall be
reduced by the amount of the ERIF which was  payable  immediately  prior to such
discontinuance of electricity on a rent inclusion basis.

                                     - 4 -
<PAGE>

                                     DEFAULT

     41. Supplementing Article 4 hereof:

         A. In the  event  that  Tenant  is in  arrears  for rent or any item of
additional  rent,  after notice and beyond the expiration of any applicable cure
period set forth  herein,  Tenant  waives its rights,  if any, to designate  the
items against which  payments made by Tenant are to be credited and Landlord may
apply any payments made by Tenant to any items due hereunder  which  Landlord in
its sole  discretion may elect  irrespective  of any designation by Tenant as to
the items against which any such payment should be credited.

         B. If Landlord, as a result of any default by Tenant in its performance
of any of the terms,  covenants,  conditions and provisions of this Lease, which
default  continues after applicable  notice and the expiration of any applicable
cure period, makes any expenditures or incurs any obligations for the payment of
money  including,  without  limitation,  attorneys'  fees,  then any such  cost,
expense or disbursement shall be deemed to be additional rent hereunder and paid
by Tenant to  Landlord  upon  demand  and,  if  Tenant's  Lease terms shall have
expired after such  expenditures  or obligations  have been incurred,  such sums
shall be recoverable from Tenant as damages.

         C.  Tenant  shall not seek to remove  and/or  consolidate  any  summary
proceeding brought by Landlord with any action commenced by Tenant in connection
with this Lease or Tenant's use and/or occupancy of the Premises.

         D. In the event of a default by  Landlord  hereunder,  no  property  or
assets of Landlord,  or any principal,  shareholders,  officers, or directors of
Landlord, whether disclosed or undisclosed, other than the Building in which the
Premises are located and the land upon which the  Building is situated,  and any
refinancing proceeds, insurance proceeds, condemnation awards and rents relating
to the land and/or the  Building  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 and occupancy of the Premises.

                                     - 5 -
<PAGE>

                                   DESTRUCTION

     42. Supplementing Article 10 hereof:

         In no event that the Premises or portion thereof are damaged by fire or
other  casualty and Landlord  has elected not to  terminate  this Lease,  Tenant
shall  cooperate  with  Landlord in the  restoration  of the  Premises and shall
remove from the  Premises as promptly  as  reasonably  possible  all of Tenant's
salvageable inventory, movable equipment, furniture and other property. Tenant's
liability  for rent  shall  resume  sixty (60) days after  written  notice  from
Landlord that Landlord's  restoration work to the core and shell of the Premises
and Landlord's  restoration to all components of work in the Premises  performed
by Landlord  prior to its delivery of possession  to Tenant on the  Commencement
Date shall have been substantially completed.

                                     - 6 -
<PAGE>

                                    INSURANCE

     43. 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, or permit
anything to be done, or keep or permit anything to be kept in the Premises which
would subject Lessor to any liability or  responsibility  for personal injury or
death or property  damage,  or which would  increase the fire or other  casualty
insurance rate on the Building or the property therein over the rate which would
otherwise  then be in  effect  (unless  Tenant  pays the  resulting  premium  as
provided in Section C hereof) or which would  result in  insurance  companies of
good standing  refusing to insure the Building or any of such property in amount
reasonably satisfactory to Lessor.

         B. Tenant covenants to provide on or before the earlier to occur of (i)
the  Commencement  Date, and (ii) ten (10) days from the date of this Lease, and
to keep in force during the term hereof the following  insurance  coverage which
coverage shall be effective on the Commencement Date:

            (a) A comprehensive policy of liability insurance naming Landlord as
an  additional  insured  protecting  Landlord and Tenant  against any  liability
whatsoever  occasioned by accident on or about the Premises or any appurtenances
thereto.  Such  policy  shall have  limits of  liability  of not less than three
million  ($3,000,000.00)  dollars  combined  single  limit  coverage  on  a  per
occurrence basis, including property damage. Such insurance may be carried under
a blanket policy  covering the Premises and other  locations of Tenant,  if any,
provided  such a policy  contains  an  endorsement  (i)  naming  Landlord  as an
additional  insured,  (ii)  specifically  referencing  the  Premises;  and (iii)
guaranteeing  a minimum limit  available for the Premises equal to the limits of
liability required under this Lease;

            (b) Fire and  Extended  coverage in an amount  adequate to cover the
cost  of  replacement  of  all  personal  property,  fixtures,  furnishings  and
equipment, including Tenant's Alteration Work, located in the 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
canceled or modified  unless  Landlord and any  additional  insured 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  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  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  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  as
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  and 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

                                     - 7 -
<PAGE>

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  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 of 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  options,  Landlord  shall  cause  Tenant to be named in such policy or
policies as one of the insureds,  but if any additional premium shall be imposed
for the inclusion of Tenant as such as insured, Tenant shall pay such additional
premium  upon  demand.  In the event that Tenant shall have been named as one of
the insureds in any of the 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 nay
such policy or any other  payment  growing out of or connected  with said policy
and Tenant hereby  irrevocably  waives any and all right 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
insureds,  but if any  additional  premium shall be imposed for the inclusion of
Landlord as such an 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
insureds in any of Tenant's policies in accordance with this 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, 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  14 or  Section A above,  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 provide  and  maintained  by Tenant  under  Section B 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
in other similar office  buildings in the Borough of Manhattan.  Notwithstanding
the foregoing,  Landlord and Tenant acknowledge and agree that in no event shall
the amount of insurance to be provided and  maintained by Tenant under the terms
of this Article be increased prior to the first  anniversary of the commencement
of the term of this  Lease and in no event  shall the  amount of said  insurance
provided and  maintained by Tenant during the term of this Lease be greater than
the sum of five million ($5,000,000.00) dollars.

                                     - 8 -
<PAGE>

         F. A schedule or make up of rates for the Building or the 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.

         G. Each policy  evidencing  the insurance to be carried by Tenant under
this Lease shall  contain a clause that such policy and the  coverage  evidenced
thereby shall be primary with respect to any policies  carried by Landlord,  and
that any coverage carried by Landlord shall be excess insurance.

                                     - 9 -
<PAGE>

                                  SUBORDINATION

     44. Supplementing the provisions of Article 12 hereof:

         A. This Lease is and shall be subject  and  subordinate  to all present
and future ground leases,  underlying  leases and to all subleases of the entire
Premises  demised by that certain ground lease  (hereinafter  referred to as the
"Mense  Lease")  dated  December  30,  1957 and  recorded  in the  office of the
Register of the City of New York in the County of New York on December 31, 1957,
in Liber 5024 of Conveyances, Page 430 of which the Premises hereby demised form
a part  (the  Mense  Lease  and any or all  present  and  future  ground  leases
underlying  leases and  subleases  of the entire  Premises  demised by the Mense
Lease are  hereunder  referred  to as the  "ground  lease" and the  lessors  and
lessees  thereunder  are  hereinafter  referred to  respectively  as the "ground
lessors" and "ground lessees") and to all renewals, modifications,  replacements
and  extensions of the ground  leases,  and to all present and future  mortgages
affecting such ground leases (such mortgages are hereinafter  referred to as the
"mortgages"  and the mortgagees  thereunder are  hereinafter  referred to as the
"the  mortgagees")  including,  without  limitation,  that  certain  Amended and
Restated  Indenture  of  Leasehold  Mortgage,   Security  Agreement,   Financing
Statement, Fixture Filing and Assignment of leases, Rents and Security Deposits,
dated as of May 21,  1999 by and  between  SLG  Graybar  Mense Lease LLC and SLG
Graybar Sublease LLC, a mortgagor,  and German American Capital Corporation,  as
mortgagee,  and to all renewals,  modifications,  replacements and extensions of
the  mortgages.  Landlord  represents  that the Mense Lease is in full force and
effect and that the term  thereof is  scheduled to expire after the term of this
Lease is scheduled to expire.

         B. Notwithstanding the subordination of this Lease to all ground leases
and  mortgages,  this Lease shall not  terminate or be  terminable  by Tenant by
reason of the expiration or earlier  termination or  cancellation  of any ground
lease in  accordance  with its  terms or by reason  of the  foreclosures  of any
mortgage, except that this Lease may be terminated if Tenant is named as a party
and served with process in a summary or other  proceeding  brought by the lessor
under the Mense Lease  (hereinafter  referred to as the "Mense  Lessor") for the
possession of the Premises  demised by the Mense Lease or the space  occupied by
Tenant,  or in such  proceeding  brought  with the written  consent of the Mense
Lessor  delivered  to Tenant,  and a final order or  judgment is entered,  and a
warrant for possession of such space issued and executed  against the defendants
or respondents in such proceedings.

         C. Tenant agrees that if this Lease terminates,  expires or is canceled
for any  reason or by any means  whatsoever  (other  than by a summary  or other
proceeding  brought  by the  Mense  Lessor or with the  Mense  Lessor's  written
consent delivered to Tenant, in which summary or other proceeding Tenant is made
a party and in which a final  order or  judgment  is  entered  and  warrant  for
possession is issued and executed  against  Tenant) and Mense Lessor or a ground
lessor so elects by written notice to Tenant,  this Lease shall automatically be
reinstated  for the balance of the term which would have  remained  but for such
termination,  expiration or cancellation,  at the same rental, and upon the same
agreements, covenants, conditions, restrictions and provisions herein contained,
with the same  rental,  and upon  the same  agreements,  covenants,  conditions,
restrictions and provisions herein contained,  with the same force and effect as
if no such  termination,  expiration  or  cancellation  had taken place.  Tenant
covenants to execute and deliver any instrument required to confirm the validity
of the foregoing.  Anything  herein  contained to the contrary  notwithstanding,
this Lease shall not be deemed to be automatically  reinstated as aforesaid, nor
shall Tenant be obligated to execute and deliver any instrument  confirming such
reinstatement, if Tenant has delivered to the Mense Lessor and any ground lessor
so  electing a notice  that in  Tenant's  option  this Lease has so  terminated,
expired or been  canceled,  and neither the Mense  Lessor nor such other  ground
lessor has,  within  thirty (30) days after  receipt of such notice from Tenant,
delivered  notice to Tenant of its  election  automatically  to  reinstate  this
Lease.

         D. Tenant  hereby  consents  to any and all  assignment  of  Landlord's
interest in this Lease to any ground lessor or mortgagee as collateral  security
for the  payment of the ground  rent or monies  due under any  mortgage.  Tenant
agrees to attorn to and pay rent to any such  ground  lessor's or  mortgagee  in

                                     - 10 -
<PAGE>

accordance  with the  provisions  of any such  assignment  provided  such rental
payments shall be applied against rent due hereunder.

         E.  Tenant  agrees  that no act,  or  failure  to act,  on the  part of
Landlord, which would entitle Tenant under the terms of this Lease, or by law to
be relived of Tenant's  obligations  hereunder or to terminate this Lease, shall
result in a release or  termination  of such  obligations or termination of this
Lease unless (i) Tenant shall have first given written  notice of Landlord's act
or failure to act to the ground  lessors under all then existing  ground leases,
to all then existing  mortgages who have requested such notice from Tenant,  and
to  German  American  Capital  Corporation,  as  mortgagee,  at (i) 31 West 52nd
Street, New York, New York 10019, Attn.:  General Counsel,  and at (ii) Skadden,
Arps,  Slate,  Meagher & Flom, LLP, 919 Third Avenue,  New York, New York 10022,
Attn.:  Harvey Uris,  Esq.,  specifying the act or failure to act on the part of
Landlord which could or would given basis to Tenant's rights and (ii) the ground
lessors  and such  mortgagees,  after  receipt of such  notice,  have  failed or
refused to correct or cure the condition  complained of within a reasonable time
thereafter but nothing herein contained shall be deemed to impose any obligation
on any ground lessor or such mortgagee to correct or cure any such condition

         F. This Lease may not be  modified or amended so as to reduce the rent,
shorten  the term,  or  otherwise  materially  affect  the  rights  of  Landlord
hereunder,  or be canceled or surrendered except as provided in subparagraph (E)
of this Article 44,  without the prior  written  consent in each instance of the
ground lessors and of any mortgagees whose mortgages shall require such consent.
Any such  modification,  agreement,  cancellation or surrender made without such
prior written consent shall be null and void.

                                     - 11 -
<PAGE>

                                AIR CONDITIONING

     45.  Supplementing  the  provisions  of  Article 9 hereof,  Landlord  shall
provide  air  conditioning  to the  Premises,  through  the  presently  existing
equipment and facilities  servicing the Premises,  from May 15th to October 15th
in each year during the term of the Lease.  Monday through Friday from 8 a.m. to
6  p.m.,  and  on  Saturdays  from  8:00  am to  12:00  Noon  (after  hours  air
conditioning  to be furnished,  after  reasonable  advance  request by Tenant in
writing,  at Landlord's  then standard  building  rates for same).  Tenant shall
reimburse Landlord, in accordance with Article 40 of this Lease, for electricity
consumed by such equipment and facilities in providing air  conditioning  to the
Premises. Tenant acknowledges and agrees that the air conditioning equipment and
facilities servicing the Premises are Landlord's property, however, Tenant shall
keep,  maintain and repair such equipment and all of the  facilities  including,
without limitation,  the ducts,  dampers,  registers,  grilles and appurtenances
utilized in connection therewith:  In connection therewith,  Tenant shall at all
times during the term hereof  contract for and maintain  regular service of said
air  conditioning  equipment  and  related  facilities  through an  independent,
licensed,  professional third-party maintenance company approved by Landlord and
shall,  within (30) days of the commencement of the term of this Lease,  forward
to Landlord a fully executed  original copy of such contract.  Tenant shall also
forward to Landlord  within  thirty (30) days of their  execution by the parties
thereto any and all renewals and  modifications  thereof.  Said  contract  shall
include the thorough  overhauling of the air conditioning systems and facilities
servicing  the  Premises  at least once each year during the term of this Lease.
Any  restoration  or  replacement  by  Tenant  of  all or any  part  of the  air
conditioning  equipment shall be in quality and class equal to the original work
or installations.  In the event that Tenant fails to perform the  aforementioned
maintenance and repair of the existing air conditioning equipment and facilities
servicing  the  Premises  or fails to enter  into and  maintain  the  referenced
service  contract  Landlord may following  twenty (20) days'  written  notice to
Tenant and Tenant's failure to cure such non-performance,  at Tenant's sole cost
and expense payable by Tenant upon demand as additional rent hereunder,  perform
any necessary  maintenance or enter into such service contract for the Premises.
Provided  that Tenant  performs  the  referenced  maintenance  and repair of the
existing air conditioning equipment and enters into the above-referenced service
contract,  Landlord shall be responsible for the replacement,  as necessary,  of
major components of the air  conditioning  mechanical  equipment (e.g.,  without
limitation,  the compressor and pumps),  provided that any such  replacement are
not  necessitated  by the  negligence  or  willful  misconduct  of  Tenant,  its
employees, representatives, servants or invitees, in which event Tenant shall be
solely  responsible  for the cost of same.  If  supplementary  air  conditioning
equipment and/or  facilities are required to accommodate  Tenant's special usage
areas   (e.g.,   without   limitation   computer   rooms,    conference   rooms,
cafeteria/lunchrooms or any special usage which subjects a portion or the entire
Premises to a high density of office personnel and/or heat generating  machinery
or  appliances),  it shall  be  Tenant's  responsibility  to  furnish,  install,
maintain,  repair and operate,  subject to Landlord's  written  approval,  which
approval shall not be unreasonably  withheld,  any necessary  supplementary  air
conditioning equipment and/or facilities at its sole cost and expense.  Landlord
reserve the right to suspend the operation of all air conditioning equipment and
facilities at any time that Landlord, in its sole judgment,  deems it necessary,
including without limitation,  accidents,  emergencies, repairs, alterations, or
improvements  in the  Premises  or the  Building.  Tenant  agrees  that any such
suspension in the operation of the air conditioning  equipment and/or facilities
may continue until such time as the basis for such  suspension has been remedied
and that Landlord  shall not be  responsible or liable to Tenant for any damages
suffered by Tenant in  connection  therewith  subject to the terms of this Lease
and unless resulting from Landlord's  negligence or willful  misconduct.  Tenant
further  agrees that Landlord shall not be responsible or liable for any damages
suffered  by  Tenant  if  operation  of the air  conditioning  equipment  and/or
facilities is prevented by labor unrest, strikes,  shortages or accidents or any
cause beyond Landlord's  reasonable  control, or by the orders or regulations of
any Federal,  State,  County or local  authority or by failure of the  equipment
and/or facilities or electrical  current,  steam and/or water or other necessary
power source.

                                     - 12 -
<PAGE>

                             CHANGES AND ALTERATIONS

     46.  Anything in Article 7 to the contrary  notwithstanding,  Landlord will
not  unreasonably  withhold,  condition or delay approval of written requests of
Tenant to make nonstructural  interior alterations,  decorations,  additions and
improvements  (herein  referred to as  "alterations")  in the demised  Premises,
provided that such  alterations  do no affect  utility  services or plumbing and
electrical  lines or other systems of the  Building.  All  alterations  shall be
preformed in accordance with the following conditions:

         (a) All  alterations  costing more than fifteen  thousand  ($15,000.00)
dollars shall be performed in  accordance  with plans and  specifications  first
submitted to Landlord for its prior written  approval.  Landlord shall be given,
in writing, a good description of all other alterations.

         (b) All  alterations  shall be done in a good and  workmanlike  manner.
Tenant shall,  prior to commencement of any such  alterations,  at its sole cost
and  expense,  obtain  or cause to be  obtained  and  exhibit  to  Landlord  any
governmental permit required in connection with such alterations.

         (c) All  alterations  shall  be  done  in  compliance  with  all  other
applicable  provisions of this Lease and with all applicable  laws,  ordinances,
directions,   rules  and   regulations  of   governmental   authorities   having
jurisdiction, including, without limitation, the Americans with Disabilities Act
of 1990 and New York City  Local Law No.  57/87 and  similar  present  or future
laws, and regulations issued, pursuant thereto, and also New York City Local Law
No. 76 and  subject to the terms of Article  56, and  similar  present or future
laws,  and  regulations   issued  pursuant  thereto,   on  abatement,   storage,
transportation  and disposal of  asbestos,  which work,  if  required,  shall be
effected at Tenant's  sole cost and  expense,  by  contractors  and  consultants
approved by  Landlord  and in strict  compliance  with the  aforesaid  rules and
regulations and with Landlord's rules and regulations thereon.

         (d) All work  shall be  performed  with union  labor  having the proper
jurisdictional qualifications.

         (e) Tenant shall keep the Building  and the demised  Premises  free and
clear of all liens for any work or material  claimed to have been  furnished  to
Tenant or to the demised Premises.

         (f)  Prior to the  commencement  of any work by or for  Tenant,  Tenant
shall furnish to Landlord certificates evidencing the existence of the following
insurance:

            (i) Workmen's  compensation  insurance covering all persons employed
for such work and with  respect to whom death or bodily  injury  claims could be
asserted against Landlord, Tenant or the demised Premises.

            (ii) Board form general liability insurance written on an occurrence
basis  naming  Tenant as an insured and naming  Landlord  and its  designees  as
additional  insureds,  with limits not less than three  million  ($3,000,000.00)
dollars  combined single limit for personal  injury in any one  occurrence,  and
with limits of not less than five  hundred  thousand  ($500,000.00)  dollars for
property  damage  (the  foregoing  limits  may be  revised  from time to time by
Landlord  to such  higher  limits  as  Landlord  from  time  to time  reasonably
requires).  Tenant at its sole cost and expense,  shall cause all such insurance
to be  maintained  at all time when the work to be performed for or by Tenant is
in progress.  All such insurance shall be obtained from a company  authorized to
do business  in New York and shall  provide  that it cannot be canceled  without
thirty  (30)  days'  prior  written  notice  to  Landlord.   All  policies,   or
certificates  therefor,  issued by the insurer and bearing notations  evidencing
the payment of premiums, shall be delivered to Landlord.  Blanket coverage shall
be acceptable, provided that coverage meeting the requirements of this paragraph
is assigned to Tenant's location at the demised Premises.

         (g) All work to be  performed by Tenant shall be done in a manner which
will not  unreasonably  interfere with or disturb other tenants and occupants of
the Building.

                                     - 13 -
<PAGE>

         (h) Any  alterations  or other  work and  installations  in and for the
demised Premises,  which shall be consented to by Landlord as provided herein if
effected on  Tenant's  behalf at Tenant's  requests by  Landlord,  its agents or
contractors,  and shall be paid for by the Tenant promptly when billed,  at cost
plus ten (10%) percent  thereof for  supervision  and  overhead,  plus ten (10%)
percent for general conditions, as additional rent hereunder.

                                     - 14 -
<PAGE>

                                 LANDLORD'S WORK

     47. (a) Tenant has  examined  and agrees to accept the leased  Premises  in
their existing  condition and state of repair and understands that no work is to
be  performed  by  Landlord,  except that  Landlord's  designated,  wholly owned
affiliate Emerald City Construction Corp., with reasonable dispatch,  subject to
delay by causes beyond its control or by the action or inaction of Tenant, shall
perform the following work at Landlord's  expense,  subject to the provisions of
(b), below:

            Landlord  shall perform work in the Premises in a building  standard
manner utilizing  building  standard  materials  pursuant to the layout and work
letter prepared by Design Consortium,  drawing number PSA-5A, dated November 17,
1999  attached  hereto and made a part  hereof  (the  "Layout").  In  supplement
thereof,  Tenant  shall  prepare,  at its sole cost and  expense,  and submit to
Landlord  within  fourteen (14) days of the execution and delivery of this Lease
by the parties hereto  construction  documents necessary for Landlord to perform
the  work  contained  in the  Layout  ("Landlord's  Work"),  which  construction
documents  shall be subject to the prior  approval,  provided that any variation
between said construction documents and the Layout shall not increase Landlord's
cost in its performance of Landlord's Work in the Premises.  The  aforementioned
construction  documents prepared by Tenant shall be suitable for filing with the
Building  Department  of the City of New York.  The  performance  by Landlord of
Landlord's Work is expressly  conditioned upon compliance by Tenant with all the
terms and conditions of this Lease, including payment of rent.

            The   performance  by  Landlord  of  Landlord's  work  is  expressly
conditioned  upon compliance by Tenant with all the terms and conditions of this
Lease, including payment of rent.

         (b) Any changes in or additions to the work and installations mentioned
in  paragraph  (a) above which shall be  consented to by Landlord as provided in
Article 7 hereof,  and further  changes in or additions  to be demised  Premises
after said work has been completed  which shall be so consented to shall be made
by Landlord, or its agents, but shall be paid for by Tenant promptly when billed
at COST PLUS ONE AND ONE  QUARTER  (1 1/4%)  PERCENT  FOR  INSURANCE,  TEN (10%)
PERCENT FOR OVERHEAD AND TEN (10%)  PERCENT FOR GENERAL  CONDITIONS,  and in the
event of the failure of Tenant so to pay for said changes or additions, Landlord
at its option may  consider the cost  thereof,  PLUS THE ABOVE  PERCENTAGES,  as
additional rent payable by Tenant and collectible as such hereunder,  as part of
the rent for the next ensuing months.

         (c) If Landlord's  Work is  substantially  completed  prior to the date
first  above set forth for the  commencement  of the term,  then the term  shall
commence  on the day ten  (10)  days  following  notice  of such  completion  of
Landlord's  Work or upon  occupancy of the Premises and shall expire on date set
forth above as the expiration date. If the  commencement  term is other than the
first (1st) day of a month, rent for the first (1st) month shall be adjusted.

         (d) If Landlord's Work is not substantially completed and is delayed by
acts,  omissions or changes made or requested by Tenant, its agents,  designers,
architects  or any other party acting or apparently  acting on Tenant's  behalf,
then Tenant shall pay as hereinbefore provided rent and additional rent on a per
diem basis for each day of delay of Landlord's  substantial completion caused by
Tenant or any of the aforementioned parties.

         (e)  Landlord's  Work  shall be  deemed to be  substantially  completed
notwithstanding   that  (i)  minor  or  non-material  details  of  construction,
mechanical adjustment or decoration remain to be performed,  provided, that said
"Punch List Items"  shall be  completed  by Landlord  within a  reasonable  time
thereafter  or  (ii)  a  portion  of  Landlord's  Work  is  incomplete   because
construction  scheduling  requires  that  such  work  be done  after  incomplete
finishing or after other work to be done by or on behalf of Tenant is completed.

         (f) Tenant  acknowledges  and agrees that  Landlord  may be  performing
Landlord's Work or portion thereof  simultaneously with Tenant's  performance of
its initial  alteration work in the demised

                                     - 15 -
<PAGE>

Premises,  and that  Tenant  shall use  reasonable  efforts to  coordinate  with
Landlord's  affiliate,  Emerald City Construction Corp., any such work performed
by or on behalf of Tenant in the demised Premises.

                                     - 16 -
<PAGE>

                                      SIGNS

     48. Supplementing Article 5 of the Rules and Regulations:

         Tenant shall be permitted to affix a suitable  sign,  plaque or applied
lettering made of brass or bronze on the entrance door of the demised  Premises,
subject to the prior  written  approval of Landlord  with  respect to  location,
number, type, size, shape and design thereof,  and subject,  also, to compliance
by  Tenant,  at  its  expense,   with  all  applicable  legal   requirements  or
regulations.

                                     - 17 -
<PAGE>

                                    BROKERAGE

     49. A. Tenant  represents  and warrants to Landlord that it did not consult
or negotiate with any broker,  finder, or consultant with regard to the Premises
other  than SL  Green  Leasing,  Inc.,  and  that no  other  broker,  finder  or
consultant  participated in procuring this Lease.  Tenant hereby indemnifies and
agrees to defend and hold Landlord, its agents,  servants and employees harmless
from any suit, action,  proceeding,  controversy,  claim or demand whatsoever at
law or in equity that may be instituted  against Landlord by anyone for recovery
of  compensation or damages for procuring this Lease or by reason of a breach or
purported breach of the representations and warranties contained herein.

         B. Landlord  represents  and warrants to Tenant that it did not consult
or negotiate with any broker,  finder, or consultant with regard to the Premises
other  than SL  Green  Leasing,  Inc.,  and  that no  other  broker,  finder  or
consultant participated in procuring this Lease. Landlord hereby indemnifies and
agrees to defend and hold Tenant,  its agents,  servants and employees  harmless
from any suit, action,  proceeding,  controversy,  claim or demand whatsoever at
law or in equity that may be instituted  against  Tenant by those who dealt with
Tenant for recovery of  compensation  or damages for procuring  this Lease or by
reason of a breach or purported  breach of the  representations  and  warranties
contained herein.

                                     - 18 -
<PAGE>

                           FAILURE TO PROVIDE CONSENT

     50. In no event shall Tenant be entitled to make, nor shall Tenant make any
claim,  and Tenant  hereby  waives any claim for money damages (nor shall Tenant
claim any money damages by way of set-off,  counterclaim  or defense) based upon
any claim or  assertion  by Tenant  that  Landlord  had  unreasonably  withheld,
delayed or  conditioned  its  consent or  approval to any request by Tenant made
under a provision  of this  Lease.  Tenant's  sole remedy  shall be an action or
proceeding  to  enforce  any such  provision,  or for  specific  performance  or
declaratory  judgment  which may be sought by  arbitration  before the  American
Arbitration  Association on an expedited basis. In the event that Tenant demands
arbitration  under this  Article,  Landlord and Tenant shall  jointly  select an
independent arbitrator (the "Arbitrator).  In the event that Landlord and Tenant
shall be unable to jointly agree on the  designation  of the  Arbitrator  within
five (5) days  after  they are  requested  to do so by  either  party,  then the
parties agree to allow the American  Arbitration  Association,  or any successor
organization   to  designate  the  Arbitrator  in  accordance  with  the  rules,
regulations  and/or  procedures for expedited  proceedings then obtaining of the
American Arbitration Association of any successor  organization.  The Arbitrator
shall conduct such hearings and  investigations  as he may deem  appropriate and
shall, within (10) days after the date of designation of the Arbitrator issue as
determination as to whether Landlord's refusal to consent was unreasonable.  The
determination  of the  Arbitrator  shall be conclusive and binding upon Landlord
and Tenant and shall be set forth, along and with the Arbitrator's rationale for
such choice,  in a written report  delivered to Landlord and Tenant.  Each party
shall pay its own counsel  fees and  expenses,  if any, in  connection  with any
arbitration  under this  Article.  The  Arbitrator  appointed  pursuant  to this
Article shall be an independent real estate  professional with at least ten (10)
years' experience in leasing of properties which are similar in character to the
Building.  The  Arbitrator  shall not have the power to add to, modify or change
any of the provisions of this Lease but shall have the power to direct  Landlord
to consent to such request.

                                     - 19 -
<PAGE>

                            ASSIGNMENT AND SUBLETTING

     51. Supplementing Articles 3 and 27 hereof:

         A.   Tenant,   for   itself,   its  heirs,   distributees,   executors,
administrators,   legal  representatives,   successors  and  assigns,  expressly
covenants  that it shall  not  assign,  mortgage  or  encumber  this  Lease,  no
underlet,  or suffer or permit the demised  Premises  or any part  thereof to be
used or occupied by others,  without  the prior  written  consent of Landlord in
each instance.  The merger or  consolidation  of a corporate tenant or subtenant
where the net worth of the resulting or surviving  corporation  is less than the
net  worth of the  tenant  or  subtenant  immediately  prior to such  merger  or
consolidation  shall be deemed an assignment of this Lease or of such  sublease.
If this Lease be  assigned,  or if the demised  Premises or any part  thereof be
underlet or occupied by anybody other than Tenant,  Landlord may,  after default
by Tenant, after notice and beyond the expiration of any applicable cure period,
collect  rent from the  assignee,  undertenant  or  occupant,  and apply the net
amount collected to the rent herein reserved,  but no assignment,  underletting,
occupancy or collection shall be deemed a waiver of the provisions  hereof,  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 Landlord to an assignment or underletting shall
not in any way be construed to relieve Tenant from obtaining the express consent
in writing of Landlord to any further  assignment or  underletting.  In no event
shall any permitted  subtenant assign or encumber its sublease or further sublet
all or any portion of its sublet space, or otherwise suffer or permit the sublet
space or any part thereof to be used or occupied by others,  without  Landlord's
prior written consent in each instance.  A modification,  amendment or extension
of a  sublease  shall be deemed a  sublease.  If any lien is filed  against  the
demised  Premises or the  Building  of which the same form a part for  brokerage
services  claimed  to have been  performed  for  Tenant,  other than by SL Green
Leasing,  Inc., whether or not actually performed,  the same shall be discharged
by Tenant within ten (10) days after Tenant receives notice thereof, at Tenant's
expenses, by filing the bond required by law, or otherwise, and paying any other
necessary sums, and Tenant agrees to indemnify  Landlord and its agents and hold
them harmless from and against any and all claims, losses or liability resulting
from such lien for brokerage services rendered.

         B. If Tenant  desires  to  assign  this  Lease or to sublet  all or any
portion of the demised  Premises,  it shall first  submit in writing to Landlord
the  documents  described in Section C hereof,  and shall offer in writing,  (i)
with  respect to a  prospective  assignment,  to assign  this Lease to  Landlord
without  any  payment  of moneys or other  consideration  thereof,  or (ii) with
respect to a  prospective  subletting,  to sublet to Landlord the portion of the
demised Premises involved ("Leaseback Area") for the term specified by Tenant in
its proposed  sublease or, at  Landlord's  option for the balance of the term of
the Lease less one (1) day, and at the lower of (a) Tenant's proposed  subrental
or (b) at the same rate of fixed rent and additional  rent, and otherwise on the
same  terms,   covenants  and  conditions   (including  provisions  relating  to
escalation  rents),  as are contained herein and as are allocable and applicable
to the portion of the demised  Premises  to be covered by such  subletting.  The
offer shall specify the date when the Leaseback  Area will be made  available to
Landlord,  which date shall be in no event  earlier  than  thirty  (30) days nor
later than one hundred  eighty (180) days following the acceptance of the offer.
If an offer of sublease is made, and if the proposed sublease will result in all
or substantially  all of the demised Premises being sublet,  then Landlord shall
have the option to extend the term of its  proposed  sublease for the balance of
the term of this Lease less one (1) day.

            Landlord shall have a period of thirty (30) days from the receipt of
such offer to either  accept or reject the same.  If Landlord  shall accept such
offer,  Tenant  shall  then  execute  and  deliver  to  Landlord,  or to  anyone
designated or named by Landlord,  an assignment or sublease, as the case may be,
in either case in a form reasonably satisfactory to Landlord's counsel.

            If a sublease is so made it shall expressly:

                                     - 20 -
<PAGE>

            (a) permit Landlord to make further  subleases of all or any part of
the  Leaseback  Area and (at no cost or expense to Tenant) to make and authorize
any and all changes,  alterations,  installations and improvements in such space
as  necessary,  provided  that  Tenant  shall have no  liability  to restore any
alterations made by Landlord or its subtenant;

            (b)  provide  the  Tenant  will  at  all  times  permit   reasonably
appropriate means of ingress to and egress from the Leaseback Area;

            (c) negate any intention that the estate created under such sublease
be merged with any other estate held by either of the parties;

            (d) provide that Landlord  shall accept the  Leaseback  Area "as is"
except that Landlord,  at Tenant's  reasonable  expense,  shall perform all such
work and make all such alterations as may be required physically to separate the
Leaseback  Area from the remainder of the demised  Premises and to permit lawful
occupancy,  it being intended that Tenant shall have no other cost or expense in
connection with the subletting of the Leaseback Area;

            (e) provide that the expiration of the term of such sublease  (which
shall be one day prior to the expiration  date of this Lease) Tenant will accept
the Leaseback Area in its then existing condition, subject to the foregoing, and
subject to the  obligations  of Landlord to make such repairs  thereto as may be
necessary to preserve the Leaseback Area in good order and  condition,  ordinary
wear and tear excepted.

            Landlord  shall   indemnify  and  save  Tenant   harmless  from  all
obligations  under this Lease as to the Leaseback Area during the period of time
it is so sublet,  except for fixed annual rent and additional  rent, if any, due
under the within Lease, which are in excess of the rents and additional sums due
under such sublease.

            Subject to the foregoing,  performance by Landlord, or its designee,
under a sublease of the Leaseback Area shall be deemed  performance by Tenant of
any similar  obligation under this Lease and any default under any such sublease
shall not give rise to a default  under a similar  obligation  contained in this
Lease,  nor shall Tenant be liable for any default under this Lease or deemed to
be in default  hereunder if such default is occasioned by or arises from any act
or omission of the Tenant under such sublease or is occasioned by or arises from
any act or  omission  of any  occupant  holding  under or  pursuant  to any such
sublease.

         C. If Tenant requests  Landlord's  consent to a specific  assignment or
subletting,  it shall  submit in writing to Landlord (i) the name and address of
the proposed  assignee or  subtenant,  (ii) a duly executed  counterpart  of the
proposed  agreement of assignment  or sublease,  (iii)  reasonably  satisfactory
information  as to the nature and  character  of the  business  of the  proposed
assignee or subtenant and as to the nature of its proposed use of the space, and
(iv)  banking,  financial or other credit  information  relating to the proposed
assignee or subtenant reasonably  sufficient to enable Landlord to determine the
financial responsibility and character of the proposed assignee or subtenant.

         D. If Landlord shall not have accepted  Tenant's  offer, as provided in
Section B, then Landlord will not unreasonably  withhold or delay its consent to
Tenant's  request for consent to such  specific  assignment or  subletting.  Any
consent of  Landlord  under this  Article  shall be subject to the terms of this
Article and conditioned upon there being no default by Tenant,  beyond any grace
period,  under any of the terms,  covenants and  conditions of this Lease at the
time that  Landlord's  consent to any such subletting or assignment is requested
and on the date of the commencement of the term of any proposed  sublease or the
effective date of any proposed assignment.

         E. Tenant understands and agrees that no assignment or subletting shall
be effective  unless and until Tenant,  upon receiving any necessary  Landlord's
written consent (and unless it was theretofore

                                     - 21 -
<PAGE>

delivered to Landlord) causes a duly executed copy of the sublease or assignment
to be delivered to Landlord  within ten (10) days after execution  thereof.  Any
such sublease shall provide that the subtenant  shall comply with all applicable
terms and conditions of this Lease to be performed by the Tenant  hereunder with
respect to the space so sublet.  Any such  assignment  of Lease shall contain an
assumption by the assignee of all of the terms, covenants and conditions of this
Lease to be performed by the Tenant arising from and after the effective date of
such assignment.

         F. Anything herein contained to the contrary notwithstanding:

            1. Tenant shall not advertise  (but may list with brokers) its space
for assignment or subletting at a rental rate lower than the greater of the then
Building rental rate for such space or the rental rate then being paid by Tenant
to Landlord.

            2. The transfer of a majority of the issued and outstanding  capital
stock of, or a  controlling  interest in, any  corporate  tenant or subtenant of
this Lease or a majority  of the total  interest  in any  partnership  Tenant or
subtenant,  however  accomplished,  and whether in a single  transaction or in a
series of related or unrelated  transactions,  shall be deemed an  assignment of
this Lease of such sublease.  The transfer of  outstanding  capital stock of any
corporate tenant,  for purposes of this Article,  shall not include sale of such
stock by persons  other than those deemed  "insiders"  within the meaning of the
Securities  Exchange Act of 1934 as amended,  and which sale is affected through
"over-the-counter market" or through any recognized stock exchange.

            3. No assignment or subletting shall be made:

               (a) To any person or entity which shall at that time be a tenant,
subtenant  or other  occupant  of any part of the  Building of which the demised
Premises form a part, or who dealt with Landlord or Landlord's  agent  (directly
or through a broker) with  respect to space in the  Building  during the six (6)
months immediately proceeding Tenant's request for Landlord's consent;

               (b) By legal  representatives  of the  Tenant or by any person to
whom Tenant's  interest  under this Lease passes by operation of law,  except in
compliance with the provision of this Article;

               (c) To any person or entity for the  conduct of a business  which
is not in keeping with the standards  and the general  character of the Building
of which the demised Premises form a part.

               (d) To any entity  which is entitled to  diplomatic  or sovereign
immunity  or which is not subject to service of process in the State of New York
or to the  jurisdiction  of the  courts of the State of New York and the  United
States located in New York County.

         G. Anything hereinabove contained to the contrary notwithstanding,  the
offer back to Landlord  pursuant to the provisions of Section B hereof shall not
apply to, and Landlord will not unreasonably withhold or delay its consent to an
assignment of this Lease, or sublease of all or part of the demised Premises, to
the parent of Tenant or to a wholly-owned subsidiary of Tenant or of said parent
of Tenant,  provided  the net worth of  transferor  or  sublandlord,  after such
transaction, is equal to or greater than its net worth immediately prior to such
transaction, and provided also that any such transaction complies with the other
provisions of this Article.

         H. Anything hereinabove contained to the contrary notwithstanding,  the
offer back to Landlord  pursuant to the provisions of Section B hereof shall not
apply to, and Landlord will not unreasonably withhold or delay its consent to an
assignment of this Lease, or sublease of all or part of the demised Premises, to
any  corporation  (i) to  which  substantially  all the  assets  of  Tenant  are
transferred  or (ii) into which Tenant may be merged or  consolidated,  provided
that the net worth,  experience  and

                                     - 22 -
<PAGE>

reputation of such transferee or of the resulting or surviving  corporation,  as
the  case may be,  is equal to or  greater  than the net  worth  experience  and
reputation  of Tenant and of any  guarantor of this Lease  immediately  prior to
such transfer and provided,  also, that any such  transaction  complies with the
other provisions of this Article.

            No consent from Landlord shall be necessary under  Subdivision G and
H hereof where (i) reasonably  satisfactory  proof is delivered to Landlord that
the net worth and other  provisions of G or H, as the case may be, and the other
provisions of this Article,  have been  satisfied and (ii) Tenant,  in a writing
reasonably  satisfactory  to Landlord's  attorneys,  agrees to remain  primarily
liable  jointly  and  severally  with  any  transferee  or  assignee,   for  the
obligations  of Tenant under this Lease,  except that such writing  shall not be
necessary with regard to Subdivision H(ii).

         I. If Landlord  shall not have  accepted  any required  Tenant's  offer
and/or Tenant effects any assignment or subletting, then Tenant thereafter shall
pay to  Landlord  a sum equal to fifty  (50%)  percent  of (a) any rent or other
consideration  paid to Tenant by any  subtenant  which (after (i)  deducting the
cost of Tenant,  if any,  in  effecting  the  subletting,  including  reasonable
alteration  costs,  commissions and legal fees and (ii) excluding from such sums
any  consideration  paid  solely for the sale of  Tenant's  business or Tenant's
assets) is in excess of the rent  allocable to the subleased  space which is ten
being paid by Tenant to Landlord pursuant to the terms hereof, and (b) any other
profit or gain (after  deducting any necessary  expenses  incurred)  realized by
Tenant from any such  subletting or  assignment.  All sums payable  hereunder by
Tenant shall be payable to Landlord as additional  rent upon receipt  thereof by
Tenant,  provided  that Tenant shall be entitled to recoup the sums set forth in
(a)(1) above prior to paying any such profits to Landlord.

         J. In no event shall Tenant be entitled to make, nor shall Tenant make,
any claim,  and Tenant  hereby  waives any claims,  for money damages (nor shall
Tenant claim any money damages by way of set-off, counterclaim or defense) based
upon any claim or assertion by Tenant that Landlord has unreasonably withheld or
unreasonably  delayed  its  consent  or  approval  to a proposed  assignment  or
subletting  as provided for in this  Article.  Tenant's  sole remedy shall be an
action or proceeding to enforce any such provision, or for specific performance,
injunction or declaratory judgment which may be sought by arbitration before the
American Arbitration Association on an expedited basis. In the event that Tenant
demands arbitration under this Article, Landlord and Tenant shall jointly select
an independent  arbitrator  (the  "Arbitrator").  In the event that Landlord and
Tenant shall be unable to jointly  agree on the  designation  of the  Arbitrator
within five (5) days after they are requested to do so by either party, then the
parties agree to allow the American  Arbitration  Association,  or any successor
organization   to  designate  the  Arbitrator  in  accordance  with  the  rules,
regulations  and/or  procedures for expedited  proceedings then obtaining of the
American Arbitration Association of any successor  organization.  The Arbitrator
shall conduct such hearings and  investigations  as he may deem  appropriate and
shall,  within ten (10) days  after the date of  designation  of the  Arbitrator
issue  a  determination  as  to  whether   Landlord's  refusal  to  consent  was
unreasonable.  The  determination  of the  Arbitrator  shall be  conclusive  and
binding  upon  Landlord  and Tenant  and shall be set forth,  along and with the
Arbitrator's  rationale  for such  choice,  in a  written  report  delivered  to
Landlord and Tenant. Each party shall pay its own counsel fees and expenses,  if
any, in  connection  with any  arbitration  under this Article.  The  Arbitrator
appointed  pursuant  to  this  Article  shall  be  an  independent  real  estate
professional  with at least ten (10) years'  experience in leasing of properties
which are similar in character to the Building.  The  Arbitrator  shall not have
the power to add to,  modify or change any of the  provisions  of this Lease but
shall have the power to direct Landlord to consent to such request.

                                     - 23 -
<PAGE>

                            PORTER'S WAGE ESCALATION

     52.  Tenant  shall pay to  Landlord,  as  additional  rent,  Porter's  Wage
escalation, in accordance with this Article:

         (a)  DEFINITIONS:  For the  purpose  of  this  Article,  the  following
definitions shall apply:

            (i)  The  term  "Base  Rate"  as  hereinafter   set  forth  for  the
determination of Porter's Wage escalation,  shall mean the labor rate determined
as  hereinafter  provided,  as of the first day of the  calendar  year 1999 (the
"base year").  The term  "comparative  year" shall mean each  calendar  year, or
portion thereof, subsequent to the base year.

            (ii) For purposes of this Lease,  the  rentable  square foot area of
the presently demised Premises shall be deemed to be 8,064 square feet.

            (iii) The term  "labor  rate"  shall mean the average of the premium
regular hourly wage rate,  (without fringe  benefits) plus any taxes  applicable
thereto, (1) for a porter and (2) for an office cleaner, determined as follows:

                  (1) The minimum regular hourly wage rate for porters with five
                      (5) years' service in Class A office buildings,  from time
                      to  time  established  by  Agreement  between  the  Realty
                      Advisory Board on Labor Relations, Inc., and Local 32B-32J
                      of the  Building  Service  Employees  International  Union
                      AFL-CIO  or by the  successors  to either or both of them;
                      (this  rate  shall  be used  in  computations  under  this
                      Article whether or not porters' wages are actually paid by
                      or for the  Landlord  or by  independent  contractors  who
                      furnish  such  services to the demised  Premises or to the
                      Building).

                  (2) The minimum  regular hourly wage rate for office  cleaners
                      with five (5) years' service in Class A office  buildings,
                      from time to time  established  by  agreement  between the
                      Realty Advisory Board on Labor Relations,  Inc., and Local
                      32B-32J of the Building  Service  Employees  International
                      Union  AFL-CIO or by the  successors  to either or both of
                      them; (this rate shall be used in computations  under this
                      Article whether or not office cleaners' wages are actually
                      paid by or for the Landlord or by independent  contractors
                      who furnish  such  services to the demised  Premises or to
                      the Building).

                  (3) As used herein,  the term  "porters"  and the term "office
                      cleaners" shall mean, respectively, that classification of
                      employee engaged in the general  maintenance and operation
                      of  office  buildings  most  nearly   comparable  to  that
                      classification   now   applicable  to  porters  or  office
                      cleaners, as the case may be, in the 1996-98 Agreement, as
                      renewed with said Local 32B-32J (which  classification  is
                      presently termed "others" in said Agreement).

                  (4) If any such union  agreement  shall  require  the  regular
                      employment of porters or office cleaners on days or during
                      hours  when  overtime  or other  premium  pay rates are in
                      effect,  then the  minimum  "regular  hourly wage rate" as
                      used above and subject to the other  adjustments  provided
                      for  herein,  shall be deemed to mean the  average  hourly
                      wage rate for the hours in a calendar  week  during  which
                      porters or office  cleaners  are  required to be regularly
                      employed (e.g., if, for example, as of October 1, 1997, an
                      agreement  between RAB and Local 32B-32J shall require the
                      regular  employment  of  Building  porters  for forty (40)
                      hours during a calendar

                                     - 24 -
<PAGE>

                      week at a regular hourly rate of three ($3.00) dollars for
                      the first  thirty  (30)  hours,  and  premium or  overtime
                      hourly wage rate of four  dollars and fifty cents  ($4.50)
                      for  the  remaining  ten  (10)  hours,  then  the  regular
                      straight time hourly wage rate under this  Article,  as of
                      October  1, 1998,  shall be deemed to be the total  weekly
                      wage rate of one hundred  thirty-five  ($135.00)  dollars,
                      divided  by  the  total   number  of  required   hours  of
                      employment, forty (40) or $3.375).

                  (5) Subject  to  the  provisions  herein  contained,   and  at
                      Landlord's  option,  computation  of the  minimum  regular
                      hourly  wage  rate  shall be based on the  number of hours
                      that a porter or office cleaner is expected to work in any
                      comparison  year.  In  determining  said  number of hours,
                      Landlord  may make  reasonable  estimates  of the  average
                      number of days or hours not worked by an average porter or
                      office cleaner, where such days or hours are not specified
                      by, or vary with individual circumstances pursuant to, the
                      union agreement.

         If there is no such union  agreement  in effect at any time or prior to
the term of this Lease, then all computations and payments shall,  nevertheless,
be made,  but shall be on the basis of the regular  hourly wage rates,  plus any
taxes  applicable  thereto,  actually  being paid or accrued at such time by the
Landlord or by the contractor  performing the cleaning services for Landlord for
such  porters or office  cleaners,  as the case may be, or, if there are no such
persons employed at the Building,  then such  computation  shall be based on the
wage rates (without fringe benefits) of porters or office cleaners,  as the case
may  be,  at  the  Empire  State  Building,  New  York,  New  York.  Appropriate
retroactive  adjustment shall thereafter be made if and when the minimum regular
hourly wage rate  pursuant to such  agreement is finally  determined;  provided,
however,  that if as of the last day of any comparative year, no union agreement
shall be in effect  January 1,  occurring  in such  comparative  year,  then the
minimum  regularly  hourly wage rate  computed as  aforedescribed  shall for all
purposes hereof be deemed to be the minimum regular hourly wage rate of purposes
of this Article,  and that no retroactive  adjustment shall be made with respect
thereto.

         (b) The  parties  acknowledge  that the labor rate is intended to be an
index in the nature of a cost of living or other such index;  it is not intended
to reflect the actual costs of wages or expenses for the Building.

         (c) In the event that the labor rate in effect for the comparative year
2000 and any comparative  year  thereafter  following the base year shall exceed
the Base Rate,  then Tenant shall pay to Landlord,  as additional  rent for such
comparative year, an amount equal to the product obtained by multiplying (i) the
rentable square foot area of the demised Premises, by (ii) one (1) cent for each
cent (including any fraction of a cent) by which the labor rate in effect during
such comparative year exceeds the Base Rate.  Subject to subdivision (f) hereof,
each such annual  amount of  additional  rent shall  commence to be payable,  in
equal  monthly  installments,  as of the first day of the  period for which such
labor rate shall have changed;  and, after Landlord shall furnish Tenant with an
escalation  statement  relating to such increase in the labor rate,  all monthly
installments  of rent  shall  contain  an  item  of  additional  rent  equal  to
one-twelfth  (1/12) of the annual amount  determined  above,  until a new change
shall take place in the labor rate. In the event that the  escalation  statement
is  furnished  to the Tenant after the  commencement  or  effective  date of any
change in the labor rate, there shall be promptly paid by Tenant to Landlord the
amount  theretofore  accrued or allocable to the period to the furnishing of the
said escalation statement.  In the event that the labor rate shall be changed or
shall change more frequently than once a year, the adjustment shall similarly be
made by Landlord in an additional escalation statement furnished by Landlord, so
as to reflect such change in the monthly installments,  as of the effective date
of each such change.

                                     - 25 -
<PAGE>

         (d) The statements  furnished by Landlord to Tenant, as provided above,
shall be  prepared  in  reasonable  detail  by  Landlord.  The  statements  thus
furnished to Tenant shall  constitute a final  determination as between Landlord
and Tenant of the labor rate and Porter's Wage  escalation  additional  rent for
the periods  represented  thereby,  unless  Tenant within ninety (90) days after
they  are  furnished  shall  in  writing   challenge  their  accuracy  or  their
appropriateness, which notice shall specify the particular respects in which the
statement is inaccurate or inappropriate.

            If  Tenant  shall  so  dispute  said  statement  then,  pending  the
resolution of such dispute,  Tenant shall pay the additional rent to Landlord in
accordance with the statements furnished by Landlord.

         (e) In no event shall the fixed annual rent payable under this Lease be
reduced by virtue of this Article.

         (f) If the rent Commencement Date of this Lease is not the first day of
the first  comparative  year,  then the  additional  rent due hereunder for such
first  comparative  year shall be a proportionate  share of said additional rent
for the entire comparative year, said  proportionate  share to be based upon the
length of time that this  Lease's  term will be in  existence  during such first
comparative  year.  Upon the date of any expiration or termination of this Lease
(except termination  because of Tenant's default),  whether the same be the date
hereinabove set forth for the expiration for the term or any prior or subsequent
date, a proportionate  share of said  additional  rent for the comparative  year
during which such expiration or termination  occurs shall immediately become due
and payable by Tenant to Landlord.  The said proportionate  share shall be based
upon the length of time that this Lease shall have been in existence during such
comparative  year.  Prior to or promptly after said  expiration or  termination,
Landlord  shall  compute  the  additional  rent,  if any,  due  from  Tenant  as
aforesaid,  which  computations shall either be based on that comparative year's
labor  rate(s)  or be  an  estimate,  based  upon  the  most  recent  statements
theretofore  prepared by Landlord  and  furnished  to Tenant.  If an estimate is
used,  then  Landlord  thereafter  shall cause  statements to be prepared on the
basis of that  comparative  year's  actual labor  rate(s) and,  upon  Landlord's
furnishing such statement to Tenant.  Landlord and Tenant shall make appropriate
adjustments of amounts then owing or estimated payments theretofore made.

         (g) Notwithstanding any cancellation or termination of the term of this
Lease prior to the Lease's expiration date (except in the case of a cancellation
by mutual agreement or Tenant's cancellation as of right) Tenant's obligation to
pay any and all additional  rent under this Article shall continue and cover all
periods up to the Lease expiration date.  Landlord's and Tenant's  obligation to
make the  adjustments  referred to in  subdivision  (f) above shall  survive any
expiration or sooner termination of the term of this Lease.

         (h) Any delay or failure of Landlord in billing for any additional rent
payable as  hereinabove  provided shall not constitute a waiver of or in any way
impair  the  continuing  obligation  of  Tenant  to  pay  such  additional  rent
hereunder,  provided such failure does not continue for two (2) years beyond the
expiration of the term of this Lease.

                                     - 26 -
<PAGE>

                                   RENT CREDIT

     53. If and so long as Tenant is not in default  under this Lease beyond any
grace  period,  Tenant  shall be  entitled  to a rent  credit  in the  amount of
$49,728.00,  to be applied  against  the first  (1st) and second  (2nd)  monthly
installments  of fixed annual rent  (without  electricity)  accruing  under this
Lease after the  Commencement  Date (as  defined in Article  55), so that Tenant
shall  occupy  the  demised  Premises  free of such fixed  annual  rent for that
period;  except that Tenant shall  nevertheless  be obligated from and after the
Commencement  Date of the term, to pay  additional  rents  hereunder and to make
payment  of the ERIF  portion  of the fixed  annual  rent due under  Article  40
hereof, (anything in said Article 40 to the contrary notwithstanding).

         Anything  contained  hereinabove  to the contrary  notwithstanding,  if
Tenant  at any  time  during  the  term of this  Lease,  breaches  any  material
covenant,  condition  or  provision  of this Lease and fails to cure such breach
within any applicable  grace period,  and provided that this Lease is terminated
by Landlord  because of such  material  default,  then, in addition to all other
damages and  remedies  herein  provided  and to which  Landlord may be otherwise
entitled,  Landlord  shall also be entitled to the repayment in full of any rent
credit  theretofore  enjoyed by Tenant,  which repayment  Tenant shall make upon
demand  therefor  provided , however,  that the amount of such rent credit to be
repaid hereunder shall be multiplied by a fraction,  the denominator of which is
one hundred  twenty  (120),  and the numerator of which is the number of months,
including  portions  thereof,  remaining in the  originally  stated term of this
Lease following such breach.

                                     - 27 -
<PAGE>

                                  MISCELLANEOUS

     54. A. This Lease  constitutes  the entire  agreement  between  the parties
hereto and no earlier  statement or prior written matter shall have any force or
effect.  Tenant  agrees  that  it is  not  relying  on  any  representations  or
agreements other than those contained in this Lease. This agreement shall not be
modified or canceled  except by written  instrument  subscribed by both parties.
The covenants,  conditions and agreements contained in this Lease shall bind and
inure to the  benefit  of  Landlord  and  Tenant  and  their  respective  heirs,
distributees, executors, administrators, successors and their permitted assigns.

         B. This Rider modifies and supersedes certain provisions of the printed
portion of this Lease. In the event any term,  covenant,  condition or agreement
contained in this Rider to the Lease shall conflict or be inconsistent  with any
term, covenant,  condition or agreement contained in the printed portion of this
Lease, then the parties agree that the Rider provision shall prevail.

         C. This Lease shall be construed  without regard to any  presumption or
other rule  requiring  construction  against the party  causing this Lease to be
drafted.

                                     - 28 -
<PAGE>

                              COMMENCEMENT OF TERM

     55. A. The Premises are leased for a term of  approximately  ten (10) years
("Term") which shall commence on a date ("Commencement Date") which shall be the
earlier of:

            (i) the date upon which Landlord's Work is substantially  completed,
or

            (ii) the date Tenant or anyone  claiming by, under or though  Tenant
first  shall  occupy  any  part of the  Premises  for the  conduct  of  Tenant's
business,  and shall end on the last day of the calendar  month in which the day
preceding  the  tenth  (10th)   anniversary  of  the  Commencement  Date  occurs
("Expiration  Date") unless the term shall  terminate  sooner pursuant to any of
the terms of this Lease or pursuant to law. Landlord shall notify Tenant (i) ten
(10) days prior to the date upon which it estimates that Landlord's Work will be
substantially completed.

         B. When the Commencement Date has occurred, Tenant, upon the request of
Landlord,   shall  execute  a  statement  prepared  by  Landlord,   stating  the
Commencement Date unless Tenant disputes the correctness thereof. Any failure of
Tenant to execute  such  statement  shall not affect  the  Commencement  Date as
determined by Landlord.

         C. Except as  provided in this  Article,  Tenant  expressly  waives any
right to rescind this Lease under  Section  223-a of the New York Real  Property
Law or under any present or future  statute of similar  import then in force and
further  expressly waives the right to recover any damages,  direct or indirect,
which may result form Landlord's  failure to deliver  possession of the Premises
on the Commencement  Date. Tenant agrees that the provisions of this Article and
Article 16 are intended to  constitute  "an express  provision to the  contrary"
within the meaning of said Section 223-a.

                                     - 29 -
<PAGE>

                                       ACM

     56.  Notwithstanding  anything to the contrary  contained in this Lease, in
the event of the existence of any  asbestos-containing  material  (collectively,
"ACM")  within  the  Premises,  Landlord  shall (at its sole  cost and  expense)
remove,  enclose,  encapsulate  or  otherwise  manage  such ACM as  required  by
applicable law and shall use reasonable  efforts to minimize  interference  with
Tenant's  permitted  use of the  Premises  in  complying  with  its  obligations
pursuant to said law,  provided,  however,  that Tenant  acknowledges and agrees
that all such efforts  shall be performed on normal  business days during normal
business  hours,  and  provided to the extent that Tenant has not (i)  disturbed
such ACM, (ii) caused such ACM to become friable by the  performance of any work
or alterations in the Premises or (iii) installed same; in the event that any of
the foregoing occur, then Tenant shall remove, enclose, encapsulate or otherwise
manage such ACM as required by applicable law at its sole cost and expense.

                                     - 30 -
<PAGE>

                              HAZARDOUS SUBSTANCES

     57.  Notwithstanding  anything  contained herein to the contrary,  Landlord
represents and warrants to Tenant that no proceeding has been instituted and, to
the best of Landlord's knowledge,  no proceeding is threatened,  by any party or
governmental  body in any way  relating to the  existence of  substances  in the
Premises deemed to be hazardous as a matter of law.

                                     - 31 -
<PAGE>

                            INTERRUPTION OF SERVICES

     58. If Landlord fails to make any repair or provide any service Landlord is
obligated to provide under this Lease and as a result  thereof,  Tenant shall be
not able to use and shall have discontinued its occupancy of all or any affected
portion of the  Premises  for a period of thirty (30)  consecutive  days or more
after notice thereof to Landlord then,  except as provided in Article 10 hereof,
Tenant  shall be  entitled  to an  abatement  of rent with  respect to the Fixed
Annual Rent and Additional  Rent allocable to such portion of the Premises which
is not usable and is unoccupied for each day after said thirty (30)  consecutive
day  period   until  said  repair  is   substantially   completed   or  services
substantially restored by Landlord provided further,  however,  Tenant shall not
be entitled to an abatement of rent in the event that such failure  results from
(i) any installation, alteration or improvement which is not performed by Tenant
in a good workmanlike  manner,  (ii) Tenant's failure to perform its obligations
hereunder, or (iii) the negligence or tortious conduct of Tenant.

                                     - 32 -
<PAGE>

                                FREIGHT ELEVATOR

     Supplementing Article 4 of the Rules and Regulations:

     59. No heavy or bulky  materials  including,  but not limited to furniture,
office equipment,  packages,  or merchandise ("Freight Items") shall be received
in the  Premises or Building by Tenant or removed  from the Premises or Building
by Tenant except on Mondays  through  Fridays between the hours of 7:30 a.m. and
5:00 p.m.  ("Freight  Hours") and by means of the freight elevators only. In the
event that Tenant requires  additional  freight  elevator service at hours other
than  those  set  forth  above,  Tenant  shall  provide  Landlord  with at least
twenty-four (24) hours' prior notice. In such event, Tenant agrees that it shall
pay to Landlord the charge  prescribed for such  additional  freight service and
further agrees that, in the event that  additional  freight service is requested
for a weekend,  the minimum charge  prescribed by Landlord shall be for four (4)
hours.  Any damage done to the  Building or Premises by Tenant,  its  employees,
agents, servants, representatives and/or contractors in the course of moving any
Freight  Items shall be paid by Tenant upon demand by Landlord.  Notwithstanding
anything to the contrary  contained in this Lease and the Rules and Regulations,
at the time Tenant commences or vacates  occupancy of the Premises,  all Freight
Items and other  personal  property of Tenant  shall be  delivered to or removed
from the Building or Premises  upon not les than  twenty-four  (24) hours' prior
notice to Landlord and at times prescribed by Landlord.

         Tenant shall not be charged for its use of freight  service  during its
move  into the  Premises  in  connection  with its  initial  occupancy  thereof,
provided  that such use is during  normal  Freight Hours an provided that Tenant
acknowledges and agrees that such use shall be on a  non-exclusive,  first-come,
first-served basis.

                                     - 33 -
<PAGE>

                                LETTER OF CREDIT

     60. A. At any time  during the term of this  Lease,  Tenant  shall have the
option to  deposit  with  Landlord  in  substitution  for or in lieu of the cash
security  deposit,  deposited  with  Landlord  pursuant  to  Article  32  hereof
simultaneously  with the  execution of this Lease by Tenant,  an  unconditional,
irrevocable,  negotiable,  commercial  letter  of  credit  in a sum equal to one
hundred  twenty  thousand  eight  hundred  eighty-five  dollars and twenty cents
($120,885.20) (any such letter of credit deposited hereunder  hereinafter called
the "Credit"),  to be held and used under the security deposit provisions of the
Lease.  Any such  Credit  shall be issued by a bank which is a member of the New
York Cleaning House Association,  naming Landlord (or its successor as Landlord)
as  beneficiary  and  authorizing  the  beneficiary  to draw on the bank in said
amount, or any portion thereof,  available by the sight draft of the beneficiary
(which may be  executed  on behalf of the  beneficiary  by its  agent),  without
presentation of any other documents,  statements or  authorizations.  The Credit
shall have a term of at least twelve (12)  months,  and it shall by its terms be
renewed, automatically,  each year, by the bank, the last renewal of which shall
be for a term set to expire not earlier than the date occurring ninety (90) days
following  the  expiration  of the term of this  Lease,  unless  the bank  gives
written notice to the  beneficiary,  at least  forty-five (45) days prior to the
expiration date of the then existing Credit, that the bank elects that it not so
be renewed. The Credit shall be transferable. All transfer fees shall be payable
by Tenant.  The bank shall further agree with drawers,  endorsers,  and all bona
fide  holders that drafts  drawn under and in  compliance  with the terms of the
Credit will be duly  honored  upon  presentation  to the bank at its main office
located  in New York,  New York.  The Credit  shall be  subject  to the  Uniform
Customs and Practice  for  Documentary  Credits  (1993  Revision)  International
Chamber of Commerce Publication No. 500.

         B. If during the term of this Lease,  the Credit and/or the proceeds of
all or part of said  Credit  become  less than the full  amount of the  security
hereinabove required,  then and in such event Tenant shall, upon demand, deposit
with Landlord the amount of any  security/Credit  theretofore used or applied by
Landlord pursuant to the terms hereof in order that Landlord shall have the full
security  on  hand at all  times  during  the  term  of  this  Lease.  If at the
expiration of the term of this Lease, Landlord holds all or part of said Credit,
and Tenant is not in default under any of the terms, covenants and conditions of
this Lease,  then  Landlord will turn over said Credit to Tenant or assign it to
the designee of Tenant.

         C. It shall be the  obligation  of Tenant during the term of this Lease
to deliver to Landlord at lest thirty (30) days prior to the expiration  date of
the then existing  Credit, a renewal or extension of said Credit or a substitute
Credit (each fully complying with the foregoing). If for any reason Landlord has
not received such renewal or extension or  substitute  Credit within twenty (20)
days prior to the expiration date of the then existing Credit,  then and in such
event  Landlord  shall be free to draw on the  Credit and hold and use and apply
the proceeds thereof in accordance with the security deposit  provisions of this
Lease.  Tenant agrees to reimburse  Landlord for any reasonable  attorneys' fees
incurred by Landlord  in  connection  with  reviewing  the Credit and  renewals,
extensions or substitutions therefor, ensuring that the provisions of the Credit
and  any  renewals,   extensions  or  substitutions  therefor  comply  with  the
provisions  of this  Article,  drawing down upon the proceeds of Credit,  or any
renewals,   extensions   or   substitution   therefor,   or  ensuring  that  the
security/Credit is maintained as required under this Lease.

         D.  Landlord  and Tenant  acknowledge  and agree that Tenant may reduce
either the amount of the cash  security  deposit or the Credit,  as the case may
be, by the sum of  thirty-nine  thousand  eight hundred  ninety-two  dollars and
thirteen cents  ($39,892.13) on the fifth (5th)  anniversary of the Commencement
Date,  so that the amount of the cash  security  deposit  or the Credit  held by
Landlord from the fifth (5th)  anniversary of the Commencement  Date through the
expiration  of the term of this  Lease  shall be eighty  thousand  nine  hundred
ninety-three dollars and seven cents ($80,993.07)  provided that (x) at the time
of notice or the effective date of said reductions in the cash security  deposit
or the  Credit,  Tenant  shall not then or at any time  during  the term of this
Lease  been in  default in any of its  obligations  under this Lease  beyond the
expiration of any notice and cure period,  (y) Tenant gives Landlord thirty

                                     - 34 -
<PAGE>

(30) days' written  notice of its intent to so reduce the cash security  deposit
or the Credit (z) provides  Landlord  with an amendment to said Credit issued by
the bank which issued the Credit at the time of the foregoing reduction.

                                     - 35 -
<PAGE>

                             CLEANING SPECIFICATIONS

A)   GENERAL CLEANING - NIGHTLY

     -   Dust sweep all stone,  ceramic  tile,  marble  terrazzo,  asphalt tile,
         linoleum, rubber, vinyl and other types of flooring

     -   Carpet sweep all carpets and rugs four (4) times per week

     -   Vacuum clean all carpets and rugs, once (1) per week

     -   Police all private stairways and keep in clean condition

     -   Empty and clean all wastepaper baskets, ash trays and receptacles; damp
         dust as necessary

     -   Clean all cigarette urns and replace sand or water as necessary

     -   Remove all normal wastepaper and tenant rubbish to a designated area in
         the Premises.  (Excluding  cafeteria  waste,  bulk  materials,  and all
         special materials such as old desks, furniture, etc.)

     -   Dust all furniture and window sills as necessary

     -   Dust clean all glass furniture tops

     -   Dust all chair rails, trim and similar objects as necessary

     -   Dust all baseboards as necessary

     -   Wash clean all water fountains

     -   Keep locker and service closets in clean and orderly condition

B)   LAVATORIES - NIGHTLY (EXCLUDING PRIVATE & EXECUTIVE LAVATORIES)

     -   Sweep and mop all flooring

     -   Wipe clean all  mirrors,  powder  shelves  and bright  work,  including
         flushometers, piping and toilet seat hinges

     -   Wash and disinfect all basins, bowls and urinals

     -   Wash both sides of all toilet seats

     -   Dust all partitions, tile walls, dispensers and receptacles

     -   Empty and clean paper towel and sanitary disposal receptacles

     -   Fill toilet  tissue  holders,  soap  dispensers  and towel  dispensers;
         materials to be furnished by Landlord

     -   Remove all wastepaper and refuse to designated area in the Premises

                                     - 36 -
<PAGE>

C)   LAVATORIES - PERIOD CLEANING (EXCLUDES PRIVATE & EXECUTIVE LAVATORIES)

     -   Machine scrub flooring as necessary

     -   Wash all  partitions,  tile walls,  and enamel  surfaces  periodically,
         using proper disinfectant when necessary

D)   DAY SERVICES - DUTIES OF THE DAY PORTERS

     -   Police  ladies'  restrooms  and  lavatories,   keeping  them  in  clean
         condition

     -   Fill toilet dispensers; materials to be furnished by Landlord

     -   Fill sanitary napkin dispensers; materials to be furnished by Landlord

E)   SCHEDULE OF CLEANING

     -   Upon completion of the nightly chores,  all lights shall be turned off,
         windows  closed,  doors  locked and offices  left in a neat and orderly
         condition

     -   All day, nightly and periodic cleaning services as listed herein, to be
         done five nights each week,  Monday  through  Friday,  except Union and
         Legal Holidays

     -   All  windows  from the second  (2nd)  floor to the roof will be cleaned
         inside out quarterly, weather permitting

                                     - 37 -

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