Document:

PLEDGE AGREEMENT
                    (Borrower and Loan Agreement Guarantors)

     This Pledge Agreement ("Agreement") dated October 25, 1999 is by and among
BMC Holdings, LLC ("Borrower"), Brill Media Company, LLC, BMC Holdings, Inc. and
Brill Media Management, Inc., each a Virginia corporation or limited liability
company (each individually, a "Pledgor" and collectively, the "Pledgors") in
favor of Foothill Capital Corporation, a California corporation ("Foothill").
Capitalized terms used and not otherwise defined herein shall have the meanings
assigned to them in the Loan Agreement (described below).

                               W I T N E S S E T H

     WHEREAS, Foothill has entered or is about to enter into a Loan and Security
Agreement (the "Loan Agreement") with Borrower and the other Pledgors pursuant
to which Foothill may make loans and provide other financial accommodations to
Borrower; and

     WHEREAS, Pledgors are affiliates of Borrower and as such will derive direct
and indirect economic benefits from the making of the loans and other financial
accommodations which may be provided to Borrower;

     WHEREAS, Foothill has required as a condition precedent to the extension of
credit to the Borrower, that the Pledgors enter into this Agreement to secure
their respective obligations under the Loan Agreement; and

     NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:

SECTION 1. DEFINITIONS

     All terms used herein which are defined in Article 1 or Article 9 of the
Uniform Commercial Code shall have the meanings given therein unless otherwise
defined in this Agreement. All references to the plural herein shall also mean
the singular and to the singular shall also mean the plural unless the context
otherwise requires. All references to Pledgor, Borrower and Foothill pursuant to
the definitions set forth in the recitals hereto, or to any other person herein,
shall include their respective successors and assigns. The words "hereof,"
"herein," "hereunder," "this Agreement" and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not any particular
provision of this Agreement and as this Agreement now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced. The
word "including" when used in this Agreement shall mean "including, without
limitation." An Event of Default shall exist or continue or be continuing until
such Event of Default is waived or is cured in a manner satisfactory to
Foothill, if such Event of Default is capable of being cured as determined by
Foothill. "US Dollars" and the sign "$" mean lawful money of the United States
of America. Any accounting term used herein unless otherwise defined in this
Agreement shall have the

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meanings customarily given to such term in accordance with GAAP. For purposes of
this Agreement, the following terms shall have the respective meanings given to
them below:

     1.1 "Governmental Authority" means any nation or government, any state,
province, or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.

     1.2 "Issuers" shall have the meaning set forth in Section 2.1 of this
Agreement.

     1.3 "Legal Requirements" means all applicable international, foreign,
federal, state, provincial and local laws, judgments, decrees, orders, statutes,
ordinances, rules, regulations, or Permits.

     1.4 "Lien" means any interest in property securing an obligation owed to,
or a claim by, any Person other than the owner of the property, whether such
interest shall be based on the common law, statute, or contract, whether such
interest shall be recorded or perfected, and whether such interest shall be
contingent upon the occurrence of some future event or events or the existence
of some future circumstance or circumstances, including the lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, adverse
claim or charge, conditional sale or trust receipt, or from a lease,
consignment, or bailment for security purposes and also including reservations,
exceptions, encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases, and other title exceptions and encumbrances affecting Real
Property.

     1.5 "LLCs and Partnerships" shall have the meaning set forth in Section 2.1
of this Agreement.

     1.6 "Obligations" shall mean, with respect to each Pledgor its Obligations
as defined in the Loan Agreement.

     1.7 "Obligor" shall mean any other guarantor, endorser, acceptor, surety or
other person liable on or with respect to any Obligations or who is the owner of
any property which is security for the Obligations, other than a Pledgor.

     1.8 "Permits" of a Person shall mean all rights, franchises, permits,
authorities, licenses, certificates of approval or authorizations, including
licenses and other authorizations issuable by a Governmental Authority, which
pursuant to applicable Legal Requirements are necessary to permit such Person
lawfully to conduct and operate its business as currently conducted and to own
and use its assets.

     1.9 "Person" means and includes natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, limited
liability partnerships, joint ventures, trusts, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.

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     1.10 "Pledged Collateral" shall have the meaning set forth in Section 2.1
of this Agreement.

     1.11 "Pledged Indebtedness" means the Indebtedness evidenced by promissory
notes and instruments listed on Schedule C hereto.

     1.12 "Pledged Interests" shall have the meaning set forth in Section 2.1 of
this Agreement.

     1.13 "Pledged Shares" shall have the meaning set forth in Section 2.1 of
this Agreement.

     1.14 "Securities Act" means the Securities Act of 1933 as amended from time
to time.

     1.15 "UCC" and "Uniform Commercial Code" shall mean Uniform Commercial Code
in effect in Illinois.

SECTION 2. PLEDGE OF STOCK, MEMBERSHIP INTERESTS AND INTERCOMPANY NOTES

     2.1 Pledge. In order to secure prompt repayment of any and all of its
Obligations and in order to secure prompt performance by each Pledgor of each of
its covenants and duties under the Loan Documents to which it is a party, each
Pledgor hereby pledges to Foothill, and grants to Foothill, a security interest
in the following collateral (the "Pledged Collateral"):

          (a) the shares of stock (the "Pledged Shares") described in Schedule A
     hereto next to such Pledgor's name and issued by the corporations listed on
     Schedule A (the "Issuers") and the certificates representing the Pledged
     Shares, and all dividends, cash, instruments, chattel paper and other
     rights, property or proceeds from time to time received, receivable or
     otherwise distributed in respect of or in exchange for such Pledged Shares;

          (b) all additional shares of stock of the Issuers or any of their
     respective Wholly-Owned Subsidiaries, at any time acquired by such Pledgor
     in any manner, and the certificates representing such additional shares
     (any such additional shares shall constitute part of the Pledged Shares),
     and all dividends, cash, instruments, chattel paper, and any other rights,
     property or proceeds from time to time received, receivable or otherwise
     distributed in respect of or in exchange for such shares;

          (c) all membership interests and all partnership interests (the
     "Pledged Interests") described in Schedule B hereto next to such Pledgor's
     name with respect to the entities listed on Schedule B (the "LLCs and
     Partnerships"), and all cash, securities, distributions, rights and other
     property at any time and from time to time received, receivable or
     otherwise distributed in respect of or in exchange for any or all of such
     Pledged Interests;

          (d) all additional membership interests and all additional partnership
     interests in any limited liability companies or partnerships that are
     Wholly-Owned Subsidiaries at any time and from time to time acquired by
     such Pledgor in any manner, and all cash, securities,

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     distributions, rights and other property at any time and from time to time
     received, receivable or otherwise distributed in respect of or in exchange
     for any or all of such membership and partnership interests;

          (e) all voting rights of such Pledgor with respect to the Pledged
     Interests as set forth in the applicable operating agreement;

          (f) all other claims of any kind or nature, and any instruments,
     certificates, chattel paper or other writings evidencing such claims,
     whether in contract or tort and whether arising by operation of law,
     consensual agreement or otherwise, at any time acquired by such Pledgor
     against the Issuers or any of their respective Subsidiaries or the LLCs and
     Partnerships;

          (g) the Pledged Indebtedness and the promissory notes or instruments
     evidencing the Pledged Indebtedness, and all interest, cash, instruments
     and other property and assets from time to time received, receivable or
     otherwise distributed in respect of the Pledged Indebtedness; and

          (h) all additional Indebtedness arising after the date hereof and
     owing to Pledgor and evidenced by promissory notes or other instruments,
     together with such promissory notes and instruments, and all interest,
     cash, instruments and other property and assets from time to time received,
     receivable or otherwise distributed in respect of that Pledged
     Indebtedness;

          (i) all Negotiable Collateral and any hereafter acquired Negotiable
     Collateral; and

          (j) all Accommodation Collateral as described on Schedule A-1 hereto.

     2.2 Delivery of Pledged Collateral. Except as otherwise provided in Section
4.2 of the Loan Agreement, all certificates or instruments representing or
evidencing the Pledged Collateral shall be delivered to and held by or on behalf
of Foothill pursuant hereto and shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to Foothill.
Foothill shall have the right at any time to exchange certificates or
instruments representing or evidencing Pledged Collateral for certificates or
instruments of smaller or larger denominations.

SECTION 3. REPRESENTATIONS AND WARRANTIES OF PLEDGORS

     Each Pledgor represents and warrants as follows:

     3.1 As of the Closing Date, Schedule A hereto truly and accurately sets
forth the number of the issued and outstanding shares owned by each Pledgor of
the capital stock of each of the Issuers and Schedule B hereto truly and
accurately sets forth the percentage of the membership interests or partnership
interests held by each Pledgor in each of the LLCs and Partnerships. The Pledged
Shares constitute 100 percent of the issued and outstanding shares of stock of
the Issuers and there are no outstanding warrants, options, subscriptions or
other contractual arrangements for the purchase of any other shares of stock or
any securities convertible into shares of stock of any Issuer. The Pledged
Interests together with the Pledged

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Interests (as defined in the Manager Subsidiaries General Security and Pledge
Agreement and OPCO Subsidiaries General Security and Pledge Agreement)
constitute 100% of the membership interests and partnership interests of the
LLCs and Partnerships.

     3.2 The delivery of the Pledged Shares to Foothill pursuant to this
Agreement and the filing of the financing statement(s), which have been
delivered to Foothill prior to the date hereof, in the offices shown thereon,
create a valid and perfected first priority security interest in the Pledged
Collateral (other than cash not in the possession of Foothill), securing the
payment of such Pledgor's Obligations, subject only to the pledge of the stock
of NB II, Inc. to QB Broadcasting and the pledge of the stock of St. Johns
Newspapers, Inc. to Rebecca Wood.

     3.3 Except for consents, approvals and authorizations received on or before
the date hereof and as required under Section 4.3 hereof, no consent of any
other party (including, without limitation, any stockholder or creditor of any
Pledgor) and no approval by a Governmental Authority is required either (i) for
the pledge by each Pledgor of the Pledged Collateral pursuant to this Agreement
or for the execution, delivery or performance of this Agreement by each Pledgor
or (ii) for the exercise by Foothill of the voting or other rights provided for
in this Agreement or the remedies in respect of the Pledged Collateral pursuant
to this Agreement (except as may be required in connection with such disposition
by laws affecting the offering and sale of securities generally).

     3.4 None of the Pledged Shares constitutes margin stock, as defined in
Regulation U of the Board of Governors of the Federal Reserve System.

     3.5 No Pledgor owns any share of capital stock of any Wholly-Owned
Subsidiary or any directly-owned Unrestricted Subsidiary other than the Issuers
and the Unrestricted Subsidiaries described on Schedule A-1 or has a membership
interest or partnership interest in any Wholly-Owned Subsidiary or any
directly-owned Unrestricted Subsidiary other than the LLCs and Partnerships and
the Unrestricted Subsidiaries described on Schedule A-1.

     3.6 Each Pledgor is and will be the sole beneficial owner of its Pledged
Collateral, free and clear of any adverse claim and any Lien other than
Permitted Liens and the Liens in favor of Foothill under this Agreement and
other Loan Documents.

     3.7 Each Pledgor has full power and authority and legal right to grant the
security interest in its Pledged Shares and Pledged Interests as provided in
this Agreement.

     3.8 Pledged Shares of each Issuer forming part of the Pledged Collateral
are and will continue to be validly issued, fully paid and non-assessable.

SECTION 4. VOTING RIGHTS; DIVIDENDS

     4.1 So long as no Event of Default shall have occurred:

          (a) Each Pledgor shall be entitled to exercise any and all voting and
     other consensual rights pertaining to the Pledged Collateral or any part
     thereof for any purpose not inconsistent with the terms of this Agreement
     or the Loan Agreement; provided, however, that

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     each Pledgor shall not exercise or refrain from exercising any such right
     if such action or inaction would result in an Event of Default under the
     Loan Agreement.

          (b) Foothill shall execute and deliver (or cause to be executed and
     delivered) to each Pledgor all such proxies and other instruments as such
     Pledgor may reasonably request for the purpose of enabling such Pledgor to
     exercise the voting and other rights which it is entitled to exercise
     pursuant to paragraph (a) above.

     4.2 Subject to Sections 4.3 and 5.3 hereof, upon the occurrence and during
the continuation of an Event of Default:

          (a) All rights of each Pledgor to exercise the voting and other
     consensual rights which it would otherwise be entitled to exercise pursuant
     to Section 8.1(a) shall cease upon notice to such Pledgor by Foothill of
     such Event of Default, and all such rights shall, upon notice by Foothill
     to the Pledgor, become vested in Foothill who shall thereupon have the sole
     right to exercise such voting and other consensual rights.

          (b) All cash dividends and other cash distributions paid or payable
     with respect to any of the Pledged Collateral and any and all instruments
     and other property (other than cash or checks) received, receivable or
     otherwise distributed in respect of, or in exchange for, any Pledged
     Collateral, shall be, and shall be forthwith delivered to Foothill to hold
     as Pledged Collateral and shall, if received by a Pledgor, be received in
     trust for the benefit of Foothill, be segregated from the other property or
     funds of such Pledgor, and be forthwith delivered to Foothill as Pledged
     Collateral in the same form as so received (with any necessary
     endorsement).

     4.3 Notwithstanding anything herein to the contrary, to the extent that the
prior consent of the FCC shall be required under then-applicable law, Foothill
agrees not to exercise the rights granted hereunder to foreclose or otherwise
dispose of the Pledged Shares or Pledged Interests unless and until the FCC
shall have granted its prior consent with respect thereto. So long as no Event
of Default shall have occurred and be continuing, the certificates representing
such Pledged Shares or Pledged Interests shall remain in the name of the
pledgors thereof and such pledgors shall have and exercise all rights of
ownership, including the right to vote such Pledged Shares or Pledged Interests.
Upon the occurrence and during the continuance of an Event of Default and
following notice being given pursuant to Section 4.2(a) hereof, in addition to
the other remedies provided for in this Agreement, Foothill or its nominee shall
be entitled, subject to the prior approval of the FCC to the extent required, to
transfer to or register the Pledged Shares or Pledged Interests in the name of
Foothill or its nominee, and to vote and exercise all of the power of an owner
with respect to such Pledged Shares or Pledged Interests.

SECTION 5. EVENTS OF DEFAULT AND REMEDIES

     5.1 Events of Default. The failure of any Pledgor promptly to perform any
of its duties or agreements hereunder or under its guarantee or the occurrence
or existence and continuation of any Event of Default under the Loan Agreement
shall be referred to herein individually as an "Event of Default," and
collectively as "Events of Default."

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     5.2 Remedies and Subordination of Subrogation and other Rights. Subject to
Section 10.3 hereof,

          (a) At any time an Event of Default exists or has occurred and is
     continuing, Foothill shall have all rights and remedies provided in this
     Agreement, the other Loan Documents, the Uniform Commercial Code and other
     applicable law, all of which rights and remedies may be exercised without
     notice to or consent by any Pledgor or any Obligor, except as such notice
     or consent is expressly provided for hereunder or required by applicable
     law. All rights, remedies and powers granted to Foothill hereunder, under
     any of the other Loan Documents, the Uniform Commercial Code or other
     applicable law, are cumulative, not exclusive and enforceable, in
     Foothill's discretion, alternatively, successively, or concurrently on any
     one or more occasions, and shall include, without limitation, the right to
     apply to a court of equity for an injunction to restrain a breach or
     threatened breach by a Pledgor of this Agreement or any of the other Loan
     Documents. Foothill may, at any time or times, proceed directly against any
     Pledgor or any Obligor to collect the Obligations without prior recourse to
     the Collateral.

          (b) Without limiting the foregoing, at any time an Event of Default
     exists or has occurred and is continuing, Foothill may, in its discretion
     and without limitation, (i) accelerate the payment of all Obligations and
     demand immediate payment thereof to Foothill (provided, that, upon the
     occurrence of any Event of Default described in Sections 8.5 and 8.6 of the
     Loan Agreement, all Obligations shall automatically become immediately due
     and payable), (ii) with or without judicial process or the aid or
     assistance of others, enter upon any premises on or in which any of the
     Collateral may be located and take possession of such Collateral or
     complete processing, manufacturing and repair of all or any portion of such
     Collateral, (iii) require each Pledgor, at such Pledgor's expense, to
     assemble and make available to Foothill any part or all of such Collateral
     at any place and time designated by Foothill, (iv) collect, foreclose,
     receive, appropriate, setoff and realize upon any and all Collateral, (v)
     remove any or all of such Collateral from any premises on or in which the
     same may be located for the purpose of effecting the sale, foreclosure or
     other disposition thereof or for any other purpose, (vi) sell, lease,
     transfer, assign, deliver or otherwise dispose of any and all Collateral
     (including entering into contracts with respect thereto, public or private
     sales at any exchange, broker's board, at any office of Foothill or
     elsewhere) at such prices or terms as Foothill may deem reasonable, for
     cash, upon credit or for future delivery, with Foothill having the right to
     purchase the whole or any part of the Collateral at any such public sale,
     all of the foregoing being free from any right or equity of redemption of
     any Pledgor, which right or equity of redemption is hereby expressly waived
     and released by each Pledgor. Each Pledgor acknowledges and agrees that any
     such private sale may result in prices and other terms less favorable to
     the seller than if such sale were a public sale. If any of the Collateral
     is sold or leased by Foothill upon credit terms or for future delivery, the
     Obligations shall not be reduced as a result thereof until payment therefor
     is finally collected by Foothill. If notice of disposition of Collateral is
     required by law, ten (10) days prior notice by Foothill to the appropriate
     Pledgor designating the time and place of any public sale or the time after
     which any private sale or other intended disposition of Collateral is to be
     made, shall be deemed to be reasonable notice thereof and each Pledgor
     waives any other notice. Foothill shall not be obligated to make any sale
     of Collateral regardless of notice of sale having been given. Foothill may
     adjourn any public or private sale from time to time by announcement at the
     time and place fixed therefor, and such sale may, without further notice,
     be made at the time and place

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to which it was so adjourned. In the event Foothill institutes an action to
recover any Collateral or seeks recovery of any Collateral by way of prejudgment
remedy, each Pledgor waives the posting of any bond which might otherwise be
required.

          (c) At any time an Event of Default exists or has occurred and is
     continuing, Foothill may apply any cash held by Foothill as Pledged
     Collateral and the cash proceeds of Collateral actually received by
     Foothill from any sale, lease, foreclosure or other disposition of or
     realization upon the Collateral to payment of the Obligations, in whole or
     in part and in such order as Foothill may elect, whether or not then due,
     and in the event that any Pledgor shall at any time have any right of
     contribution against any Borrower or any other right to receive a payment
     that is owed to such Pledgor by such Borrower or any other Obligor, such
     rights are hereby subordinated in right of payment to the indefeasible
     payment in full to Foothill of all obligations or indebtedness owing to
     Foothill under the Loan Agreement and all such amounts and any security and
     guarantees therefor are hereby assigned to Foothill as additional security
     for the Obligations. Each Pledgor shall remain liable to Foothill for the
     payment of any deficiency with interest at the highest rate provided for in
     the Loan Agreement and all costs and expenses of collection or enforcement,
     including attorneys' fees and legal expenses. Any surplus of such cash or
     cash proceeds held by Foothill and remaining after payment in full of all
     the Obligations shall be paid over to the appropriate Pledgor or to
     whomsoever may be lawfully entitled to receive such surplus or as a court
     of competent jurisdiction may direct.

     5.3 Notwithstanding the foregoing or anything to the contrary contained in
this Agreement, Foothill agrees not to exercise any rights or remedies with
respect to the Accommodation Collateral until the date which is six (6) months
after the date on which an Event of Default has occurred (provided that on such
six (6) month date such Event of Default is continuing and has not otherwise
been waived or cured to the satisfaction of Foothill).

SECTION 6. REGISTRATION RIGHTS AND OTHER SALE PROCEDURES

     6.1 If Foothill shall determine to exercise its right to sell all or any of
the Pledged Collateral pursuant to Section 5, each Pledgor agrees that, upon
request of Foothill, such Pledgor will, at its own expense:

          (a) execute and deliver, and cause each issuer of the Pledged
     Collateral contemplated to be sold and the directors and officers thereof
     to execute and deliver, all such instruments and documents, and do or cause
     to be done all such other acts and things, as may be necessary or, in the
     opinion of Foothill, advisable to register such Pledged Collateral under
     the provisions of the Securities Act, and to cause the registration
     statement relating thereto to become effective and to remain effective for
     such period as prospectuses are required by law to be furnished, and to
     make all amendments and supplements thereto and to the related prospectus
     which, in the opinion of Foothill, are necessary or advisable, all in
     conformity with the requirements of the Securities Act and the rules and
     regulations of the Securities and Exchange Commission applicable thereto;

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          (b) use its best efforts to qualify the Pledged Collateral under the
     state securities or "Blue Sky" laws and to obtain all necessary
     Governmental Approvals for the sale of the Pledged Collateral, as requested
     by Foothill;

          (c) cause the issuers of the Pledged Collateral to make available to
     their respective security holders, as soon as practicable, an earnings
     statement which will satisfy the provisions of Section 11(a) of the
     Securities Act and applicable regulations thereunder; and

          (d) do or cause to be done all such other acts and things as may be
     necessary to make such sale of the Pledged Collateral or any part thereof
     valid and binding and in compliance with applicable law.

     6.2 Each Pledgor further acknowledges the impossibility of ascertaining the
amount of damages which would be suffered by Foothill by reason of the failure
by such Pledgor to perform any of the covenants contained in this Section and,
consequently, agrees that, if such Pledgor shall fail to perform any of such
covenants, it shall pay, as liquidated damages and not as a penalty, an amount
equal to the value of the Pledged Collateral (assuming it were sold pursuant to
the request hereunder) on the date Foothill shall demand compliance with this
Section.

     6.3 Notwithstanding the foregoing, each Pledgor recognizes that Foothill
may be unable to effect a public sale of all or part of the Pledged Collateral
and may be compelled to resort to one or more private sales to a restricted
group of purchasers who will be obligated to agree, among other things, to
acquire such Pledged Collateral for their own account, for investment and not
with a view to the distribution or resale thereof. Each Pledgor acknowledges
that any such private sales may be at places and on terms less favorable to the
seller than if sold at public sales and agrees that such private sales shall be
deemed to have been made in a commercially reasonable manner, and that Foothill
has no obligation to delay sale of any such Pledged Collateral for the period of
time necessary to permit the issuers of such Pledged Collateral to register such
Pledged Collateral for public sale under the Securities Act. Each Pledgor
further acknowledges that Foothill shall be under no obligation to delay a sale
of any of the Pledged Shares for the period of time necessary to permit the
issuing corporation of such securities to register such securities for public
sale under the Securities Act, or under applicable state or provincial
securities laws, even if the issuing corporation would agree to do so.

     6.4 If Foothill shall determine to exercise its right to sell all or any of
the Pledged Collateral through a private sale, each Pledgor agrees that, upon
request of Foothill, such Pledgor will, and shall cause the Issuer of its
Pledged Shares to, at such Pledgor's and Issuer's own expense:

          (a) hire an investment banker, selected by Foothill in Foothill's sole
     discretion, and any other Persons as Foothill or such investment banker
     shall designate;

          (b) cooperate fully with Foothill and such investment banker to
     prepare all books, records, financial statements and all other documents
     and information as shall be required by Foothill and such investment banker
     (collectively, the "Due Diligence Materials");

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          (c) maintain the Due Diligence Materials at any reasonable location
     designated by Foothill and such investment banker for disclosure to third
     parties;

          (d) provide any prospective acquiror (and persons designated by such
     acquiror) with complete and unrestricted access to all Due Diligence
     Materials;

          (e) provide Foothill, such investment banker, any potential acquiror,
     and their respective designees with reasonable access to any of such
     Issuer's officers, directors, employees or other Persons associated with
     such Issuer in connection with any matters deemed relevant by Foothill,
     such investment banker, such potential acquiror or their respective
     designees; and

          (f) cooperate fully with all reasonable requests by Foothill and such
     investment banker to assist in Foothill's exercise of its right to sell the
     Pledged Shares.

Each Pledgor acknowledges and understands that any such lack of cooperation may
affect Foothill's ability to obtain the best price for such Pledgor's Pledged
Shares. Each Pledgor further acknowledges and understands that Foothill has no
duty to obtain the best price for such Pledged Shares.

SECTION 7. WAIVERS AND CONSENTS

     7.1 Waiver of Notices. Each Pledgor hereby expressly waives demand,
presentment, protest and notice of protest and notice of dishonor with respect
to any and all instruments and commercial paper, included in or evidencing any
of the Obligations or the Pledged Collateral, and any and all other demands and
notices of any kind or nature whatsoever with respect to the Obligations or the
Pledged Collateral and this Agreement, except such as are expressly provided for
herein. No notice to or demand on any Pledgor which Foothill may elect to give
shall entitle such Pledgor to any other or further notice or demand in the same,
similar or other circumstances.

     7.2 Amendments and Waivers. Neither this Agreement nor any provision hereof
shall be amended, modified, waived or discharged orally or by course of conduct,
but only by a written agreement signed by an authorized officer of Foothill, and
as to amendments, as also signed by an authorized officer of each Pledgor.
Foothill shall not, by any act, delay, omission or otherwise be deemed to have
expressly or impliedly waived any of its rights, powers and/or remedies unless
such waiver shall be in writing and signed by an authorized officer of Foothill.
Any such waiver shall be enforceable only to the extent specifically set forth
therein. A waiver by Foothill of any right, power and/or remedy on any one
occasion shall not be construed as a bar to or waiver of any such right, power
and/or remedy which Foothill would otherwise have on any future occasion,
whether similar in kind or otherwise.

     7.3 Waiver of Counterclaims. Each Pledgor waives all rights to interpose
any claims, deductions, setoffs or counterclaims of any nature (other then
compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Pledged Collateral or any matter arising
therefrom or relating hereto or thereto.

     7.4 Indemnification. Each Pledgor shall indemnify and hold Foothill, and
its directors, Foothills, employees and counsel, harmless from and against any
and all losses, claims,

                                       10

<PAGE>

damages, liabilities, costs or expenses imposed on, incurred by or asserted
against any of them in connection with any litigation, investigation, claim or
proceeding commenced or threatened related to the negotiation, preparation,
execution, delivery, enforcement, performance or administration of this
Agreement, any other Loan Documents, or any undertaking or proceeding related to
any of the transactions contemplated hereby or any act, omission, event or
transaction related or attendant thereto, including amounts paid in settlement,
court costs, and the fees and expenses of counsel. To the extent that the
undertaking to indemnify, pay and hold harmless set forth in this Section may be
unenforceable because it violates any law or public policy, each Pledgor shall
pay the maximum portion which it is permitted to pay under applicable law to
Foothill in satisfaction of indemnified matters under this Section. The
foregoing indemnity shall survive the payment of the Obligations, the
termination of this Agreement and the termination or non-renewal of the Loan
Agreement.

SECTION 8. MISCELLANEOUS

     8.1 Notices. All notices, requests and demands hereunder shall be in
writing and (a) made to Foothill at 11111 Santa Monica Boulevard, Suite 1500,
Los Angeles, California 90025-3333, Attention: Business Finance Division
Manager, and to each Pledgor at the address of Borrower set forth in the Loan
Agreement, or to such other address as such party may designate by written
notice to the other in accordance with this provision, and (b) deemed to have
been given or made: if delivered in person, immediately upon delivery; if by
telex, telegram or facsimile transmission, immediately upon sending and upon
confirmation of receipt; if by nationally recognized overnight courier service
with instructions to deliver the next business day, one (1) business day after
sending; and if by certified mail, return receipt requested, five (5) days after
mailing.

     8.2 Partial Invalidity. If any provision of this Agreement is held to be
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.

     8.3 Successors. This Agreement, the other Loan Documents and any other
document referred to herein or therein shall be binding upon each Pledgor and
its successors and assigns and inure to the benefit of and be enforceable by
Foothill and its successors and assigns, except that such Pledgor may not assign
its rights under this Agreement, the other Loan Documents and any other document
referred to herein or therein without the prior written consent of Foothill.

     8.4 Entire Agreement. This Agreement, the other Loan Documents, any
supplements hereto or thereto, and any instruments or documents delivered or to
be delivered in connection herewith or therewith represents the entire agreement
and understanding concerning the subject matter hereof and thereof between the
parties hereto, and supersede all other prior agreements, understandings,
negotiations and discussions, representations, warranties, commitments,
proposals, offers and contracts concerning the subject matter hereof, whether
oral or written. In the event of any inconsistency between the terms of this
Agreement and any schedule or exhibit hereto, the terms of this Agreement shall
govern.

                                       11

<PAGE>

                            [Signature Page Follows]

                                       12

<PAGE>

     IN WITNESS WHEREOF, each Pledgor has caused these presents to be duly
executed as of the day and year first above written.

                                    BMC HOLDINGS, LLC

                                    By: Brill Media Company, LLC, its manager
                                    by: Brill Media Management, Inc. its manager

                                    By:
                                       ----------------------------------------
                                              a duly authorized officer

                                    BRILL MEDIA COMPANY, LLC

                                    By: Brill Media Management, Inc. its manager

                                    By:
                                       -----------------------------------------
                                              a duly authorized officer

                                    BMC HOLDINGS, INC.

                                    By:
                                       ----------------------------------------
                                              a duly authorized officer

                                    BRILL MEDIA MANAGEMENT, INC.

                                    By:
                                       ----------------------------------------
                                              a duly authorized officer

                                      S-1

<PAGE>

                           ACKNOWLEDGMENT AND CONSENT

     The undersigned hereby acknowledges receipt of a copy of the General
Security and Pledge Agreement dated as of October 25, 1999 (the "Agreement"),
made by the "Pledgors" named therein for the benefit of Foothill Capital
Corporation, as Foothill for lenders ("Foothill"). The undersigned agrees for
the benefit of Foothill as follows:

     1. The undersigned will be bound by the terms of the Agreement and will
comply with such terms insofar as such terms are applicable to the undersigned.

     2. The terms of Sections 4, 5.2 and 6 of the Agreement shall apply to it,
mutatis mutandis, with respect to all actions that may be required of the
undersigned pursuant to Sections 4, 5.2 and 6 of the Agreement.

                                    BRILL RADIO, INC.

                                    By:
                                       ----------------------------------------
                                              a duly authorized officer

                                    TRI-STATE BROADCASTING, INC.

                                    By:
                                       ----------------------------------------
                                              a duly authorized officer

                                    BMC HOLDINGS, LLC

                                    By: Brill Media Company, LLC, its manager
                                    by: Brill Media Management, Inc. its manager

                                    By:
                                       ----------------------------------------
                                              a duly authorized officer

                                    BMC HOLDINGS, INC.

                                    By:
                                       ----------------------------------------
                                              a duly authorized officer

                       [Consent Page to pledge Agreement]

<PAGE>

                                    NORTHERN COLORADO HOLDINGS, LLC

                                    By: Northern Colorado Holdings Management,
                                        Inc., its manager

                                    By:
                                       ----------------------------------------
                                              a duly authorized officer

                                    NCR II, INC.

                                    By:
                                       ----------------------------------------
                                              a duly authorized officer

                                    NCH II, LLC

                                    By: NCR II, Inc., its manager
                                       ----------------------------------------

                                    By:
                                       ----------------------------------------
                                              a duly authorized officer

                                    NORTHERN COLORADO RADIO, INC.

                                    By:
                                       ----------------------------------------
                                              a duly authorized officer

                                    NORTHLAND HOLDINGS MANAGEMENT, INC.

                                    By:
                                       ----------------------------------------
                                              a duly authorized officer

                       [Consent Page to pledge Agreement]

<PAGE>

                                    NORTHLAND HOLDINGS, LLC

                                    By: Northland Holdings Management, Inc.,
                                        its manager
                                       ----------------------------------------

                                    By:
                                       ----------------------------------------
                                              a duly authorized officer

                                    NB II, Inc.

                                    By:
                                       ----------------------------------------
                                              a duly authorized officer

                                    UPPER MICHIGAN HOLDINGS MANAGEMENT, INC.

                                    By:
                                       ----------------------------------------
                                              a duly authorized officer

                                    UPPER MICHIGAN HOLDINGS, LLC

                                    By: Upper Michigan Holdings Management,
                                        Inc., its manager
                                       ----------------------------------------

                                    By:
                                       ----------------------------------------
                                              a duly authorized officer

                                    BRILL NEWSPAPERS, INC.

                                    By:
                                       ----------------------------------------
                                              a duly authorized officer

                       [Consent Page to pledge Agreement]

<PAGE>

                                    HURON HOLDINGS, LLC

                                    By: Huron Holdings Management, Inc.,
                                        its manager
                                       ----------------------------------------

                                    By:
                                       ----------------------------------------
                                              a duly authorized officer

                                    NMG HOLDINGS MANAGEMENT, INC.

                                    By:
                                       ----------------------------------------
                                              a duly authorized officer

                                    NMG HOLDINGS, LLC

                                    By:
                                       ----------------------------------------
                                              a duly authorized officer

                                    ST. JOHNS NEWSPAPERS, INC.

                                    By:
                                       ----------------------------------------
                                              a duly authorized officer

                                    HURON HOLDINGS  MANAGEMENT, INC.

                                    By:
                                       ----------------------------------------
                                              a duly authorized officer

                       [Consent Page to pledge Agreement]

<PAGE>

                                  SCHEDULE A-1

                          [Attach from Loan Agreement]

<PAGE>

                                   SCHEDULE C

                              PLEDGED INDEBTEDNESS

                              [Borrower to provide]================================================================================
                          STANDARD FORM OF OFFICE LEASE
                     The Real Estate Board of New York, Inc.
================================================================================

     AGREEMENT  OF LEASE,  made as of this first day of May,  2000,  between 400
Columbus  Avenue LLC,  having an office at 400 Columbus  Avenue,  Valhalla,  New
York,  party of the first part,  hereinafter  referred to as OWNER, and Candie's
Incorporated,  a  Delaware  corporation  with  offices at 400  Columbus  Avenue,
Valhalla, New York, party of the second part, hereinafter referred to as TENANT,

     WITNESSETH:  Owner  hereby  leases to Tenant and Tenant  hereby  hires from
Owner that portion of the building shown on Exhibit "A" entitled  "Tenant Space"
in the building known as 400 Columbus Avenue,  Valhalla, New York, for a term of
five (5) years and two and  one-half  (2 1/2 months) to commence on May 15, 2000
and to end on July 31, 2005, both dates inclusive,  at the annual rental rate of
two hundred ninety-nine  thousand,  four hundred forty and 50/100  ($299,440.50)
Dollars,  which Tenant  agrees to pay in lawful money of the United States which
shall be legal tender in payment of all debts and dues,  public and private,  at
the time of payment,  in equal monthly  installments in advance on the first day
of each month  during  said term,  at the office of Owner or such other place as
Owner may designate,  without any set off or deduction  whatsoever,  except that
Tenant  shall pay the  first  monthly  installment(s)  on the  execution  hereof
(unless this lease be a renewal).

     In the  event  that,  at the  commencement  of the term of this  lease,  or
thereafter,  Tenant  shall be in default  [Insert  1] in the  payment of rent to
Owner  pursuant  to the  terms of  another  lease  with  Owner  or with  Owner's
predecessor  in  interest,  Owner may at Owner's  option and  without  notice to
Tenant add the amount of such arrears to any monthly installment of rent payable
hereunder and the same shall be payable to Owner as additional rent.

     The parties hereto, for themselves,  their heirs, distributees,  executors,
administrators,  legal representatives,  successors and assigns, hereby covenant
as follows:

Rent: 1. Tenant shall pay the rent as above and as hereinafter provided.

Occupancy: 2. Tenant shall use and occupy the demised premises for

Tenant Alterations 3. Tenant shall make no changes in or to the demised premises
of any  nature  without  Owner's  prior  written  consent.  Subject to the prior
written  consent of Owner,  and to the  provisions  of this  article,  Tenant at
Tenant's expense, may make alterations, installations, additions or improvements
which are non-  structural and which do not affect utility  services or plumbing
and  electrical  lines,  in or to the interior of the demised  premises by using
contractors  or  mechanics  first  approved by Owner.  [Insert 2] Tenant  shall,
before making any alterations,  additions, installations or improvements, at its
expense,  obtain  all  permits,  approvals  and  certificates  required  by  any
governmental or quasi-governmental  bodies and (upon completion) certificates of
final  approval  thereof  and  shall  deliver  promptly  duplicates  of all such
permits, approvals and certificates to Owner and Tenant agrees to carry and will
cause  Tenant's   contractors  and   sub-contractors  to  carry  such  workman's
compensation, general liability, personal and property damage insurance as Owner
may  [Insert 3] require.  If any  mechanic's  lien is filed  against the demised
premises,  or the  building of which the same forms a part,  for work claimed to
have been done for,  or  materials  furnished  to,  Tenant,  whether or not done
pursuant to this  article,  the same shall be discharged by Tenant within thirty
days  thereafter,  at Tenant's expense by payment or filing the bond required by
law. All fixtures and all paneling, partitions, railings and like installations,
installed in the premises at any time,  either by Tenant or by Owner on Tenant's
behalf, shall, upon installation,  become the property of Owner and shall remain
upon and be surrendered  with the demised  premises  unless Owner,  by notice to
Tenant no later than twenty days prior to the date fixed as the  termination  of
this lease,  elects to relinquish Owner's right thereto and to have them removed
by Tenant,  in which event the same shall be removed from the premises by Tenant
prior to the  expiration  of the lease,  at  Tenant's  expense.  Nothing in this
Article shall be construed to give Owner title to or to prevent Tenant's removal
of trade fixtures,  moveable office furniture and equipment, but upon removal of
any such from the  premises  or upon  removal of other  installations  as may be
required by Owner,  Tenant  shall  immediately  and at its  expense,  repair and
restore the premises to the condition  existing prior to installation and repair
any damage to the demised  premises or the  building  due to such  removal.  All
property  permitted or required to be removed,  by Tenant at the end of the term
remaining in the premises after Tenant's  removal shall be deemed  abandoned and
may, at the election of Owner,  either be retained as Owner's property or may be
removed from the premises by Owner, at Tenant's expense.

Maintenance  and Repairs:  4. Tenant shall,  throughout  the term of this lease,
take  good care of the  demised  premises  and the  fixtures  and  appurtenances
therein.  Tenant  shall be  responsible  for all damage or injury to the demised
premises  or any  other  part of the  building  and the  systems  and  equipment
thereof,  whether  requiring  structural or  nonstructural  repairs caused by or
resulting from  carelessness,  omission,  neglect or improper conduct of Tenant,
Tenant's subtenants,  agents,  employees,  invitees or licensees, or which arise
out of any work,  labor,  service or equipment done for or supplied to Tenant or
any  subtenant  or arising  out of the  installation,  use or  operation  of the
property or equipment of Tenant or any  subtenant.  Tenant shall also repair all
damage to the building and the demised premises caused by the moving of Tenant's
fixtures, furniture and equipment. Tenant shall promptly

<PAGE>

make, at Tenant's expense,  all repairs in and to the demised premises for which
Tenant is responsible. Any other repairs in or to the building or the facilities
and systems thereof for which Tenant is responsible  shall be performed by Owner
at the Tenant's  expense.  [Insert 4] Owner shall maintain in good working order
and repair the exterior and the structural  portions of the building,  including
the structural portions of its demised premises,  and the public portions of the
building interior and the building plumbing, electrical, heating and ventilating
systems  (to the extent  such  systems  presently  exist)  serving  the  demised
premises.  Tenant agrees to give prompt notice of any defective condition in the
premises  for  which  Owner  may be  responsible  hereunder.  There  shall be no
allowance to Tenant for  diminution of rental value and no liability on the part
of Owner by reason of  inconvenience,  annoyance  or injury to business  arising
from Owner or others making repairs,  alterations,  additions or improvements in
or to any  portion of the  building  or the  demised  premises  or in and to the
fixtures,  appurtenances or equipment  thereof.  It is specifically  agreed that
Tenant shall not be entitled to any setoff or reduction of rent by reason of any
failure of Owner to comply with the  covenants  of this or any other  article of
this Lease. Tenant agrees that Tenant's sole remedy at law in such instance will
be by way of an action for damages for breach of  contract.  The  provisions  of
this Article 4 shall not apply in the case of fire or other  casualty  which are
dealt with in Article 9 hereof.

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

Requirements of Law, Fire Insurance,  Floor Loads: 6. Prior to the  commencement
of the lease term, if Tenant is then in possession, and at all times thereafter,
Tenant,  at  Tenant's  sole cost and  expense,  shall  promptly  comply with all
present and future laws, orders and regulations of all state, federal, municipal
and local governments,  departments, commissions and boards and any direction of
any public officer pursuant to law, and all orders, rules and regulations of the
New York Board of Fire  Underwriters,  Insurance Services Office, or any similar
body which shall impose any  violation,  order or duty upon Owner or Tenant with
respect to the demised  premises,  arising out of Tenant's  use or manner of use
thereof,  (including Tenant's permitted use) or, with respect to the building if
arising out of  Tenant's  use or manner of use of the  premises or the  building
(including  the use  permitted  under the Lease).  Nothing  herein shall require
Tenant to make  structural  repairs or  alterations  unless  Tenant  has, by its
manner of use of the demised premises or method of operation  therein,  violated
any such laws,  ordinances,  orders,  rules,  regulations or  requirements  with
respect  thereto.  Tenant  may,  after  securing  Owner to Owner's  satisfaction
against all  damages,  interest,  penalties  and  expenses,  including,  but not
limited to, reasonable  attorney's fees, by cash deposit or by surety bond in an
amount and in a company satisfactory to Owner, contest and appeal any such laws,
ordinances,  orders,  rules,  regulations or requirements  provided same is done
with all reasonable  promptness and provided such appeal shall not subject Owner
to prosecution for a criminal offense or constitute a default under any lease or
mortgage  under which Owner may be obligated,  or cause the demised  premises or
any part thereof to be  condemned or vacated.  Tenant shall not do or permit any
act or thing to be done in or to the demised  premises which is contrary to law,
or which will invalidate or be in conflict with public liability,  fire or other
policies of  insurance  at any time  carried by or for the benefit of Owner with
respect to the demised  premises or the  building of which the demised  premises
form a part,  or  which  shall  or  might  subject  Owner  to any  liability  or
responsibility  to any  person or for  property  damage.  Tenant  shall not keep
anything in the demised  premises  except as now or  hereafter  permitted by the
Fire Department, Board of Fire Underwriters,  Fire Insurance Rating Organization
or other authority  having  jurisdiction,  and then only in such manner and such
quantity so as not to increase  the rate for fire  insurance  applicable  to the
building,  nor use the  premises in a manner which will  increase the  insurance
rate for the building or any property  located therein over that in effect prior
to the commencement of Tenant's occupancy. Tenant shall pay all costs, expenses,
fines,  penalties,  or  damages,  which may be  imposed  upon Owner by reason of
Tenant's  failure to comply with the provisions of this article and if by reason
of such failure the fire insurance rate shall, at the beginning of this lease or
at any time thereafter,  be higher than it otherwise would be, then Tenant shall
reimburse  Owner,  as additional  rent  hereunder,  for that portion of all fire
insurance  premiums  thereafter  paid by Owner  which  shall  have been  charged
because of such failure by Tenant. In any action or proceeding wherein Owner and
Tenant are parties,  a schedule or "make-up" of rate for the building or demised
premises  issued by the New York Fire Insurance  Exchange,  or other body making
fire insurance rates applicable to said premises shall be conclusive evidence of
the facts  therein  stated  and of the  several  items and  charges  in the fire
insurance rates then applicable to said premises.  Tenant shall not place a load
upon any floor of the demised premises  exceeding the floor load per square foot
area which it was designed to carry and which is allowed by law.  Owner reserves
the [Insert 5] right to prescribe the weight and position of all safes, business
machines  and  mechanical  equipment.  Such  installations  shall be placed  and
maintained by Tenant, at Tenant's expense,  in settings  sufficient,  in Owner's
[Insert 5] judgement, to absorb and prevent vibration, noise and annoyance.

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

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

<PAGE>

Destruction, Fire and Other Casualty: 9. (a) If the demised premises or any part
thereof shall be damaged by fire or other casualty,  Tenant shall give immediate
notice  thereof to Owner and this lease shall  continue in full force and effect
except as  hereinafter  set forth,  [Insert 6] (b) If the demised  premises  are
partially damaged or rendered partially unusable by fire or other casualty,  the
damages  thereto  shall be  repaired by and at the expense of Owner and the rent
and other items of  additional  rent,  until such repair shall be  substantially
completed, shall be apportioned from the day following the casualty according to
the part of the  premises  which is  usable,  (c) If the  demised  premises  are
totally damaged or rendered wholly unusable by fire or other casually,  then the
rent and other items of additional rent as hereinafter expressly provided, shall
be  proportionately  paid up to the time of the casualty and  thenceforth  shall
cease until the date when the premises  shall have been repaired and restored by
Owner (or sooner  reoccupied in part by Tenant the rent shall be  apportioned as
provided in subsection (b) above, if the building shall be so damaged that Owner
shall decide to demolish it or to rebuild it, then, in any of such events, Owner
may elect to terminate this lease by written  notice to Tenant,  given within 90
days after such fire or casualty,  or 30 days after  adjustment of the insurance
claim for such fire or casualty,  whichever is sooner, specifying a date for the
expiration  of the  lease,  which  date shall not be more than 60 days after the
giving of such  notice,  and upon the date  specified in such notice the term of
this lease shall  expire as fully and  completely  as if such date were the date
set forth above for the  termination  of this lease and Tenant  shall  forthwith
quit, surrender and vacate the premises without prejudice however, to Landlord's
rights and remedies against Tenant under the lease provisions in effect prior to
such  termination,  and any rent  owing  shall  be paid up to such  date and any
payments of rent made by Tenant  which were on account of any period  subsequent
to such date shall be returned to Tenant. Unless Owner shall serve a termination
notice as  provided  for herein,  Owner shall make the repairs and  restorations
under the  conditions  of (b) and (c) hereof,  with all  reasonable  expedition,
subject to delays due to  adjustment  of insurance  claims,  labor  troubles and
causes beyond Owner's control.  After any such casualty,  Tenant shall cooperate
with Owner's restoration by removing from the premises as promptly as reasonably
possible,   all  of  Tenant's  salvageable   inventory  and  movable  equipment,
furniture, and other property.  Tenant's liability for rent shall resume [Insert
7] days after  written  notice from Owner that the  premises  are  substantially
ready for Tenant's  occupancy.  (e) Nothing contained  hereinabove shall relieve
Tenant  from  liability  that may exist as a result of damage from fire or other
casualty. Notwithstanding the foregoing, including Owner's obligation to restore
under  subparagraph  (b) above,  each party shall look first to any insurance in
its favor before  making any claim against the other party for recovery for loss
or damage  resulting  from fire or other  casualty,  and to the extent that such
insurance is in force and collectible and to the extent  permitted by law, Owner
and Tenant each hereby releases and waives all right of recovery with respect to
subparagraphs  (b),  (d),  and (c) above,  against the other or any one claiming
through or under each of them by way of  subrogation  or otherwise.  The release
and waiver  herein  referred to shall be deemed to include any loss or damage to
the demised premises and/or to any personal property, equipment, trade fixtures,
goods and merchandise  located herein. The foregoing release and waiver shall be
in force only if both releasors'  insurance  policies contain a clause providing
that such a release or waiver shall not invalidate the insurance. If, and to the
extent,  that such  waiver can be  obtained  only by the  payment of  additional
premiums,  then the party  benefiting  from the  waiver  shall pay such  premium
within ten days after written  demand or shall be deemed to have agreed that the
party obtaining insurance coverage shall be free of any further obligation under
the provisions hereof with respect to waiver of subrogation. Tenant acknowledges
that Owner will not carry insurance on Tenant's  furniture and/or furnishings or
any fixtures or equipment,  improvements,  or appurtenances  removable by Tenant
and  agrees  that Owner will not be  obligated  to repair any damage  thereto or
replace the same,  (f) Tenant hereby waives the provisions of Section 227 of the
Real  Property Law and agrees that the  provisions  of this article shall govern
and control in lieu thereof.

Eminent  Domain:  10. If the whole [Insert 8] of the demised  premises  shall be
acquired or  condemned  by Eminent  Domain for any public or quasi public use or
purpose,  then  and in that  event,  the  term of this  lease  shall  cease  and
terminate  from the date of title  vesting in such  proceeding  and Tenant shall
have no claim for the value of any  unexpired  term of said lease and assigns to
Owner,  Tenant's entire interest in any such award. Tenants shall have the right
to make an  independent  claim  to the  condemning  authority  for the  value of
Tenant's  moving expenses and personal  property,  trade fixtures and equipment,
provided  Tenant is  entitled  pursuant to the terms of the lease to remove such
property,  trade  fixture  and  equipment  at the end of the term  and  provided
further such claim does not reduce Owner's award.

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

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

Access to Premises:  13. Owner or Owner's agents shall have the right (but shall
not be  obligated)  to enter the demised  premises in any emergency at any time,
and, at other reasonable times,  [Insert 9] to examine the same and to make such
repairs,   replacements  and  improvements  as  Owner  may  deem  necessary  and
reasonably  desirable  to the demised  premises  or to any other  portion of the
building or which Owner may elect to perform.  Tenant  shall permit Owner to use
and maintain and replace pipes and conduits in and through the demised  premises
and to erect new pipes and conduits  therein  provided they are concealed within
the walls, floor, or ceiling.  Owner may, during the progress of any work in the
demised premises,  lake all necessary materials and equipment into said premises
without the same  constituting  an eviction  nor shall the Tenant be entitled to
any  abatement  of rent while  such work is in  progress  nor to any  damages by
reason of loss or  interruption  of business or otherwise.  Throughout  the term
hereof  Owner shall have the right  [Insert 9] to enter the demised  premises at
reasonable  hours for the purpose of showing the same to prospective  purchasers
or mortgagees  of the  building,  and during the last six months of the term for
the purpose of showing the same to prospective tenants. If Tenant is not present
to open and  permit an entry  into the  premises,  [Insert  10] Owner or Owner's
agents may enter the same whenever such entry may be necessary or permissible by
master key or forcibly  and provided  reasonable  care is exercised to safeguard
Tenant's  property,  such  entry  shall not render  Owner or its  agents  liable
therefor,  nor in any  event  shall  the  obligations  of  Tenant

<PAGE>

hereunder  be  affected.  If during the last month of the term Tenant shall have
removed  all or  substantially  all of  Tenant's  property  therefrom  Owner may
immediately  enter,  alter,  renovate or redecorate the demised premises without
limitation  or  abatement  of rent,  or  incurring  liability  to Tenant for any
compensation  and  such act  shall  have no  effect  on this  lease or  Tenant's
obligations hereunder.

Vault, Vault Space, Area:  14.

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

Bankruptcy:   16.  (a)  Anything   elsewhere  in  this  lease  to  the  contrary
notwithstanding,  this  lease  may be  cancelled  by Owner by the  sending  of a
written notice to Tenant within a reasonable time after the happening of any one
or more of the following events: (1) the commencement of a case in bankruptcy or
under the laws of any state  naming  Tenant as the debtor:  or (2) the making by
Tenant of an  assignment or any other  arrangement  for the benefit of creditors
under any state statute. Neither Tenant nor any person claiming through or under
Tenant,  or by reason of any  statute  or order of court,  shall  thereafter  be
entitled to  possession  of the premises  demised but shall  forthwith  quit and
surrender the premises.  If this lease shall be assigned in accordance  with its
terms,  the provisions of this Article 16 shall be applicable  only to the party
then owning Tenant's interest in this lease.

     (b) it is  stipulated  and agreed that in the event of the  termination  of
this lease pursuant to (a) hereof,  Owner shall forthwith,  notwithstanding  any
other  provisions  of this lease to the  contrary,  be entitled to recover  from
Tenant as and for liquidated  damages an amount equal to the difference  between
the rent reserved  hereunder  for the unexpired  portion of the term demised and
the fair  and  reasonable  rental  value of the  demised  premises  for the same
period.  In  the  computation  of  such  damages  the  difference   between  any
installment of rent becoming due hereunder after the date of termination and the
fair and  reasonable  rental  value of the demised  premises  for the period for
which  such  installment  was  payable  shall  be  discounted  to  the  date  of
termination at the rate of four percent (4%) per annum.  If such premises or any
part thereof be re-let by the Owner for the unexpired term of said lease, or any
part thereof,  before  presentation of proof of such  liquidated  damages to any
court,  commission or tribunal, the amount of rent reserved upon such re-letting
shall be deemed to be the fair and  reasonable  rental value for the part or the
whole of the  premises  so re-let  during  the term of the  re-letting.  Nothing
herein  contained  shall limit or prejudice  the right of the Owner to prove for
and obtain as liquidated damages by reason of such termination,  an amount equal
to the maximum allowed by any statute or rule of law in effect at the time when,
and governing the proceedings in which,  such damages are to be proved,  whether
or not such  amount  be  greater,  equal  to,  or less  than the  amount  of the
difference referred to above.

Default:  17. (1) If Tenant  defaults in fulfilling any of the covenants of this
lease other than the covenants for the payment of rent or additional rent; or if
the  demised  premises  becomes  vacant  or  deserted,  or if any  execution  or
attachment shall be issued against Tenant or any of Tenant's property  whereupon
the demised premises shall be taken or occupied by someone other than Tenant; or
if this lease be rejected under ss.235 of Title 11 of the U.S. Code  (bankruptcy
code);  then,  in any one or more of such events,  upon Owner  serving a written
fifteen (15) days notice upon Tenant  specifying  the nature of said default and
upon the  expiration  of said fifteen (15) days,  if Tenant shall have failed to
comply  with  or  remedy  such  default,  or if the  said  default  or  omission
complained of shall be of a nature that the same cannot be  completely  cured or
remedied  within  said  fifteen  (15) day period,  and if Tenant  shall not have
diligently  commenced  during such default  within such fifteen (15) day period,
and shall not thereafter with reasonable diligence and in good faith, proceed to
remedy  or cure such  default,  then  Owner  may serve a written  five (5) days'
notice of  cancellation  of this lease upon Tenant,  and upon the  expiration of
said five (5) days this  lease and the term  thereunder  shall end and expire as
fully and  completely as if the  expiration of such five (5) day period were the
day herein  definitely  fixed for the end and  expiration  of this lease and the
term thereof and Tenant shall then quit and  surrender  the demised  premises to
Owner but Tenant shall remain liable as hereinafter provided.

     (2) If the notice provided for in (1) hereof shall have been given, and the
term shall expire as aforesaid  [Insert 10A]: or if Tenant shall make default in
the payment of the rent reserved  herein or any item of  additional  rent herein
mentioned or any part of either or in making any other payment herein  required:
then and in any of such events  Owner may without  notice,  re-enter the demised
premises  either  by  force or  otherwise,  and  dispossess  Tenant  by  summary
proceedings  or  otherwise,  and the  legal  representative  of  Tenant or other
occupant of demised  premises and remove their  effects and hold the premises as
if this lease had not been made,  and Tenant hereby waives the service of notice
of  intention  to re-enter or to  institute  legal  proceedings  to that end. If
Tenant shall make default  hereunder prior to the date fixed as the commencement
of any renewal or extension of this lease,  Owner may cancel and terminate  such
renewal or extension agreement by written notice.

Remedies  of Owner and Waiver of  Redemption:  18. In case of any such  default,
re-entry,  expiration and/or dispossess by summary proceedings or otherwise, (a)
the rent shall become due thereupon and be paid up to the time of such re-entry,
dispossess and/or  expiration,  (b) Owner may re-let the premises or any part or
parts  thereof,  either in the name of Owner or otherwise,  for a term or terms,
which  may at  Owner's  option be less than or exceed  the  period  which  would
otherwise have  constituted  the balance of the term of this lease and may grant
concessions  or free rent or  charge a higher  rental  than that in this  lease,
and/or (c) Tenant or the legal representatives of Tenant shall also pay Owner as
liquidated  damages  for the  failure  of Tenant to  observe  and  perform  said
Tenant's  covenants  herein  contained,  any deficiency  between the rent hereby
reserved and/or  covenanted to be paid and the net amount,  if any, of the rents
collected  on account of the lease or leases of the  demised  premises  for each
month of the period which would  otherwise have  constituted  the balance of the
term of this lease.  The failure of Owner to re-let the  premises or any part or
parts thereof  shall not release or affect  Tenant's  liability for damages.  In
computing such  liquidated  damages there shall be added to the said  deficiency
such [Insert 11] expenses as Owner may incur in connection with re-letting, such
as legal expenses,  attorneys' fees,  brokerage  advertising and for keeping the
demised  premises in good order or for  preparing the same for  re-letting.  Any
such liquidated  damages shall be paid in monthly  installments by Tenant on the
rent day  specified  in this lease and any suit brought to collect the amount of
the  deficiency for any month shall not prejudice in any way the rights of Owner
to collect  the  deficiency  for any month  shall not  prejudice  in any way the
rights of Owner to collect the deficiency of any  subsequent  month by a similar
proceeding.  Owner,  in putting the demised  premises in good order or preparing
the same for re-rental may, at Owner's option,  make such alterations,  repairs,
replacements,  and/or  decorations in the demised  premises as Owner, in Owner's
[Insert 11]  judgment,  considers  advisable  and  necessary  for the purpose of
re-letting the demised premises,  and the making of such  alterations,  repairs,
replacements,  and/or  decorations  shall not operate or be construed to release
Tenant from liability hereunder as aforesaid.  Owner shall in no event be liable
in any way  whatsoever  for  failure to re-let the demised  premises,  or in the
event that the  demised  premises  are  re-let,  for failure to collect the rent
thereof  under such  re-letting,  and in no event  shall  Tenant be  entitled to
receive any excess, if any, of such net rents collected over the sums payable by
Tenant

<PAGE>

to Owner hereunder.  In the event of a breach or threatened  breach by Tenant of
any of the  covenants  or  provisions  hereof,  Owner  shall  have the  right of
injunction  and the right to invoke any remedy allowed at law or in equity as if
re-entry,  summary  proceedings and other remedies were not herein provided for.
Mention in this lease of any  particular  remedy,  shall not preclude Owner from
any other remedy in law or in equity. Tenant hereby expressly waives any and all
rights of redemption granted by or under any present or future laws in the event
of Tenant being evicted or dispossessed  for any cause, or in the event of Owner
obtaining  possession of demised premises,  by reason of the violation by Tenant
of any of the covenants and conditions of this lease, or otherwise.

Fees and Expenses:  19. If Tenant shall default in the observance or performance
of any term or covenant on Tenant's part to be observed or performed under or by
virtue of any of the terms or  provisions  in any article of this  lease,  after
notice if required and upon  expiration of any  applicable  grace period if any,
(except in an emergency),  then,  unless  otherwise  provided  elsewhere in this
lease,  Owner may [Insert 12]  immediately or at any time thereafter and without
notice perform the obligation of Tenant thereunder. If Owner, in connection with
the foregoing or in connection with any default by Tenant in the covenant to pay
rent hereunder, makes any expenditures or incurs any obligations for the payment
of  money,  [Insert  12]  including  but not  limited  to  attorney's  fees,  in
instituting, prosecuting or defending any action or proceeding. then Tenant will
reimburse Owner for such sums so paid or obligations  incurred with interest and
costs.  The foregoing  expenses  incurred by reason of Tenant's default shall be
deemed  to be  additional  rent  hereunder  and shall be paid by Tenant to Owner
within ten (10) days of rendition  of any bill or statement to Tenant  therefor.
If  Tenant's  lease  term  shall  have  expired  at the time of  making  of such
expenditures or incurring of such obligations, such sums shall be recoverable by
Owner, as damages.

Building Alterations and Management:  20. [Insert 13] Owner shall have the right
at any time  without the same  constituting  an eviction  and without  incurring
liability to Tenant therefor to change the arrangement and/or location of public
entrances,  passageways,  doors, doorways, corridors, elevators. stairs, toilets
or other  public  parts of the  building  and to  change  the  name,  number  or
designation  by which the building may be known.  There shall be no allowance to
Tenant for  diminution  of rental value and no liability on the part of Owner by
reason of  inconvenience,  annoyance or injury to business arising from Owner or
other  Tenants  making any  repairs  in the  building  or any such  alterations,
additions and improvements. Furthermore, Tenant shall not have any claim against
Owner by reason of Owner's  imposition  of such controls of the manner of access
to the  building by Tenant's  social or business  visitors as the Owner may deem
[Insert 14] necessary for the security of the building and its occupants.

No  Representations by Owner: 21. Neither Owner nor Owner's agents have made any
representations  or  promises  with  respect to the  physical  condition  of the
building,  the land upon which it is erected or the demised premises, the rents,
leases.  expenses of operation or any other matter or thing affecting or related
to the premises except as herein expressly set forth and no rights, easements or
licenses are acquired by Tenant by implication or otherwise  except as expressly
set forth in the provisions of this lease. Tenant has inspected the building and
the demised  premises and is  thoroughly  acquainted  with their  condition  and
agrees to take the same "as is" and  acknowledges  that the taking of possession
of the demised  premises by Tenant shall be  conclusive  evidence  that the said
premises  and the  building  of  which  the  same  form a part  were in good and
satisfactory  condition at the time such  possession was so taken,  except as to
latent defects.  All understandings  and agreements  heretofore made between the
parties  hereto are merged in this  contract,  which alone fully and  completely
expresses  the  agreement  between  Owner and Tenant and any executor  agreement
hereafter made shall be ineffective  to change,  modify,  discharge or effect an
abandonment  of it in whole or in part,  unless such  executor  agreement  is in
writing  and  signed  by the  party  against  whom  enforcement  of the  change,
modification, discharge or abandonment is sought.

End of Term:  22. Upon the  expiration or other  termination of the term of this
lease,  Tenant  shall quit and  surrender to Owner the demised  premises,  broom
clean,  in good order and  condition,  ordinary wear and damages which Tenant is
not required to repair as provided elsewhere in this lease excepted,  and Tenant
shall remove all its  property.  Tenant's  obligation to observe or perform this
covenant shall survive the expiration or other termination of this lease. If the
last day of the term of this Lease or any renewal thereof, falls on Sunday, this
lease  shall  expire  at noon on the  preceding  Saturday  unless  it be a legal
holiday in which case it shall expire at noon on the preceding business day.

Quiet  Enjoyment:  23. Owner  covenants  and agrees with Tenant that upon Tenant
paying the rent and additional  rent and observing and performing all the terms,
covenants and conditions,  on Tenant's part to be observed and performed  Tenant
may  peaceably  and  quietly  enjoy  the  premises  hereby   demised,   subject,
nevertheless,  to the terms and  conditions  of this  lease  including,  but not
limited to,  Article 31 hereof and to the ground leases,  underlying  leases and
mortgages hereinbefore mentioned.

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

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

<PAGE>

any power to accept the keys of said premises  prior to the  termination  of the
lease and the  delivery of keys to any such agent or employee  shall not operate
as a termination of the lease or a sun render of the premises.

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

Inability to Perform:  27. This Lease and the  obligation  of Tenant to pay rent
hereunder  and perform all of the other  covenants and  agreements  hereunder on
part of Tenant to be performed shall in no wise be affected, impaired or excused
because Owner is unable to fulfill any of its obligations under this lease or to
supply or is delayed in  supplying  any service  expressly  or  impliedly  to be
supplied or is unable to make,  or is delayed in making any  repair,  additions,
alterations or decorations or is unable to supply or is delayed in supplying any
equipment,  fixtures or other materials if Owner is prevented or delayed [Insert
15] from so doing by reason of strike or labor troubles or any cause  whatsoever
including, but not limited to, government preemption or restriction or by reason
of any rule, order or regulation of any department or subdivision thereof of any
government agency or by reason of the conditions which have been or are affected
either directly or indirectly by war or other emergency.

Bills and  Notices:  28.  Except as otherwise  in this lease  provided,  a bill,
statement, notice or communication which Owner may desire or be required to give
to  Tenant,  shall be deemed  sufficiently  given or  rendered  if, in  writing,
delivered to Tenant  personally or sent by registered or certified  mail [Insert
16]addressed to Tenant at the building of which the demised premises form a part
or at the last known business  address of Tenant or left at any of the aforesaid
premises  addressed  to Tenant,  and the time of the  rendition  of such bill or
statement and of the giving of such notice or  communication  shall be deemed to
be the  time  when the  same is  delivered  to  Tenant,  mailed,  or left at the
premises  as herein  provided.  Any  notice by Tenant to Owner must be served by
registered or certified mail [Insert 16] addressed to Owner at the address first
hereinabove  given or at such other address as Owner shall  designate by written
notice.

Services  Provided by Owners:  29. Owner shall provide:  (a) necessary  elevator
facilities on business days from 8 a.m. to 6 p.m. and have one elevator  subject
to call at all  other  times;  (b)  heat to the  demised  premises  when  and as
required by law, on business days from 8 a.m. to 6 p.m.;  (c) water for ordinary
lavatory  purposes,  but if Tenant uses or consumes water for any other purposes
or in unusual  quantities  (of which fact Owner shall be the sole judge),  Owner
may install a water meter at Tenant's  expense  which  Tenant  shall  thereafter
maintain at Tenant's  expense in good working  order and repair to register such
water consumption and Tenant shall pay for water consumed as shown on said meter
as additional rent as and when bills are rendered;  (d) cleaning service for the
demised  premises on business days at Owner's expense provided that the same are
kept in order by Tenant.  If,  however,  said  premises  are to be kept clean by
Tenant, it shall be done at Tenant's sole expense,  in a manner  satisfactory to
Owner and no one other than  persons  approved  by Owner shall be  permitted  to
enter said  premises or the building of which they are a part for such  purpose.
(e) If the demised premises are serviced by Owner's air conditioning/cooling and
ventilating  system, air  conditioning/cooling  will be furnished to tenant from
May 15th through  September  30th on business  days  (Mondays  through  Fridays,
holidays  excepted)  from  8:00  a.m.  to 6:00  p.m.,  and  ventilation  will be
furnished  on  business  days  during  the  aforesaid   hours  except  when  air
conditioning/cooling  is being  furnished  aforesaid.  If  Tenant  requires  air
conditioning/cooling  or  ventilation  for more extended  hours or on Saturdays,
Sundays or on  holidays,  Owner will furnish the same at Tenant's  expense;  (f)
Owner reserves the right to stop services of the heating,  elevators,  plumbing,
air-conditioning, electric, power systems or cleaning or other services, if any,
when necessary by reason of accident or for repairs,  alterations,  replacements
or improvements  necessary or desirable in the judgement of Owner for as long as
may be  reasonably  required  by reason  thereof.  If the  building of which the
demised premises are a part supplies  manually-operated elevator services, Owner
at any  time may  substitute  automatic-control  elevator  service  and  proceed
diligently with  alterations  necessary  therefor  without in any wise affecting
this lease or the obligation of Tenant hereunder.

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

Definitions:  31. The term "office", or "offices",  wherever used in this lease,
shall not be construed to mean premises used as a store or stores,  for the sale
or display,  at any time, of goods,  wares or merchandise,  of any kind, or as a
restaurant,  shop,  booth,  bootblack or other stand,  barber shop, or for other
similar  purposes or for  manufacturing.  The term '.Owner"  means a landlord or
lessor,  and as used in this lease  means only the owner,  or the  mortgagee  in
possession, for the time being of the land and building (or the owner of a lease
of the building or of the land and building) of which the demised  premises form
a part,  so that in the event of any sale or sales of said land and  building or
of said lease,  or in the event of a lease of said building,  or of the land and
building,  the said Owner shall be and hereby is entirely  freed and relieved of
all covenants and  obligations  of Owner  hereunder,  and it shall be deemed and
construed  without further  agreement between the parties or their successors in
interest, or between the panics and the purchaser, at any such sale, or the said
lessee of the building,  or of the land and building,  that the purchaser or the
lessee of the building has assumed and agreed to carry out any and all covenants
and  obligations  of Owner,  hereunder.  [Insert  17] The words  "re-enter"  and
"re-entry"  as used in this lease are not  restricted to their  technical  legal
meaning. The term "business days" as used in this lease shall exclude Saturdays,
Sundays  and all days  observed  by the  State or  Federal  Government  as legal
holidays and those  designated as holidays by the  applicable  building  service
union  employees  service  contract  or by the  applicable  Operating  Engineers
contract with respect to HVAC service. Wherever it is expressly provided in this
lease that consent shall not be unreasonably withheld, such consent shall not be
unreasonably delayed.

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

Rules and  Regulations:  33. Tenant and Tenant's  servants,  employees,  agents,
visitors, and licensees shall observe faithfully,  and comply strictly with, the
Rules  and  Regulations  and  such  other  and  further   reasonable  Rules  and
Regulations  as Owner or  Owner's  agents may from time to time  adopt.  In case
Tenant  disputes  the  reasonableness  of  any  additional  Rule  or  Regulation
hereafter made or adopted by Owner or Owner's  agents,  the parties hereto agree
to submit the  question of the  reasonableness  of such Rule or  Regulation  for
decision to the New York office of the American Arbitration  Association,  whose
determination  shall be final and

<PAGE>

conclusive upon the parties hereto.  The right to dispute the  reasonableness of
any  additional  Rule or  Regulation  upon  Tenant's part shall be deemed waived
unless the same shall be asserted by service of a notice,  in writing upon Owner
within  fifteen  (15) days after the giving of notice  thereof.  Nothing in this
lease  contained  shall be construed to impose upon Owner any duty or obligation
to enforce the Rules and  Regulations  or terms,  covenants or conditions in any
other lease, as against any other tenant and Owner shall not be liable to Tenant
for violation of the same by any other tenant, its servants,  employees, agents,
visitors or licensees.

Security:  34.  Tenant will deposit with Owner the sum of $49,906.75 as security
for the faithful  performance and observance by Tenant of the terms,  provisions
and  conditions  of this lease;  it is agreed that in the event Tenant  defaults
[Insert 18] in respect of any of the terms,  provisions  and  conditions of this
lease,  including,  but not limited to, the payment of rent and additional rent,
Owner  may use,  apply or  retain  the  whole  or any  part of the  security  so
deposited to the extent required for the payment of any rent and additional rent
or any other sum as to which  Tenant is in  default  [Insert  18] or for any sum
which  Owner may  expend  or may be  required  to  expend by reason of  Tenant's
default [Insert 18] in respect of any of the terms,  covenants and conditions of
this lease,  including  but not limited  to, any  damages or  deficiency  in the
re-letting of the premises, whether such damages or deficiency accrued before or
after summary  proceedings or other re-entry by Owner.  In the event that Tenant
shall fully and faithfully comply with all of the terms,  provisions,  covenants
and conditions of this lease, the security shall be returned to Tenant after the
date fixed as the end of the Lease and after  delivers of entire  possession  of
the demised  premises to Owner.  In the event of a sale of the land and building
or leasing of the building,  of which the demised  premises  form a part,  Owner
shall have the right to transfer  the security to the vendee or lessee and Owner
shall  thereupon be released by Tenant from all liability for the return of such
security;  and Tenant  agrees to look to the new Owner  solely for the return of
said security,  and it is agreed that the provisions hereof shall apply to every
transfer  or  assignment  made of the  security to a new Owner.  Tenant  further
covenants  that it will not assign or  encumber or attempt to assign or encumber
the  monies  deposited  herein  as  security  and  that  neither  Owner  nor its
successors  or  assigns  shall be bound  by any  such  assignment,  encumbrance,
attempted assignment or attempted encumbrance.

Estoppel  Certificate:  35. [Insert 19] at any time, and from time to time, upon
at least 10 days' prior notice by Owner, shall execute,  acknowledge and deliver
to [Insert 20],  and/or to any other person,  firm or  corporation  specified by
Owner,  a statement  certifying  that this Lease is unmodified and in full force
and effect (or, if there have been modifications, that the same is in full force
and effect as  modified  and stating  the  modifications),  stating the dates to
which the rent and additional  rent have been paid,  and stating  whether or not
there exists any default by [Insert 19] under this Lease, and, if so, specifying
each such default.

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

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

Witness for Owner:                          400 COLUMBUS AVENUE, INC.

/s/ Maria Zackadar                          By: /s/ Jim Diamond
-----------------------------------            ---------------------------------

Witness for Tenant:                         CANDIE'S INCORPORATED

/s/ Deborah Sorell Stehr                    By: /s/ Neil Cole
-----------------------------------            ---------------------------------
                                                CEO

<PAGE>

                                 ACKNOWLEDGMENTS

CORPORATE OWNER
STATE OF NEW YORK,    ss.:
County of

     On this       day of                     , 19   , before me personally came
                             to me known, who being by me duly sworn, did depose
and say that he resides in
that he is the                          of                                   the
corporation described in and which executed the foregoing instrument,  as OWNER;
that he knows  the seal of said  corporation;  that  the  seal  affixed  to said
instrument is such corporate  seal; that it was so affixed by order of the Board
of  Directors of said  corporation,  and that he signed his name thereto by like
order.

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

INDIVIDUAL OWNER
STATE OF NEW YORK,    ss.:
County of

     On this       day of                     , 19   , before me personally came
                                to me known and known to me to be the individual
described  in  and  who,  as  OWNER,   executed  the  foregoing  instrument  and
acknowledged to me that he executed the same

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

CORPORATE TENANT
STATE OF NEW YORK,    ss.:
County of

     On this       day of                     , 19   , before me personally came
                             to me known, who being by me duly sworn, did depose
and say that he resides in                                                     ;
that he is the                          of                                   the
corporation described in and which executed the foregoing instrument, as TENANT;
that he knows  the seal of said  corporation;  that  the  seal  affixed  to said
instrument is such corporate  seal; that it was so affixed by order of the Board
of  Directors of said  corporation,  and that he signed his name thereto by like
order.

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

INDIVIDUAL TENANT
STATE OF NEW YORK,    ss.:
County of

     On this       day of                      , 19  , before me personally came
                                to me known and known to me to be the individual
described  in  and  who,  as  TENANT,  executed  the  foregoing  instrument  and
acknowledged to me that he executed the same

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

                                    GUARANTY

     FOR VALUE RECEIVED, and in consideration for, and as an inducement to Owner
making the within  lease  with  Tenant,  the  undersigned  guarantees  to Owner,
Owner's  successors and assigns,  the full performance and observance of all the
Covenants,  conditions  and  agreements,  therein  provided to be performed  and
observed by Tenant,  including the "Rules and Regulations" as therein  provided,
without requiring any notice of non-payment, non-performance, or non-observance,
or proof, or notice, or demand,  whereby to charge the undersigned therefor, all
of which the undersigned  hereby  expressly waives and expressly agrees that the
validity of this agreement and the obligations of the guarantor  hereunder shall
in no wise be  terminated,  affected or impaired by reason of the  assertion  by
Owner against Tenant of any of the rights or remedies reserved to Owner pursuant
to the provisions of the within lease.  The  undersigned  further  covenants and
agrees that this  guaranty  shall remain and continue in full force and effect a
sot any renewal,  modification  or execution of this lease and during any period
when  Tenant is  occupying  he premises  as a  "statutory  tenant.' As a further
inducement to Owner to make this lease and in consideration  thereof,  Owner and
the undersigned  covenant and agree that in any action or proceeding  brought by
either  Owner or the  undersigned  against the other on any  matters  whatsoever
arising  out of,  under,  or by  virtue  of the  terms of this  lease or of this
guaranty that Owner and the undersigned shall and do hereby waive trial by jury.

Dated: __________________________19____

_______________________________________
Guarantor

_______________________________________
Witness

_______________________________________
Guarantor's Residence

_______________________________________
Business Address

_______________________________________
Firm Name

STATE OF NEW YORK          )  ss.:

COUNTY OF                            )

On this         day of                        , 19   , before me personally came
                                               to me known and known to me to be
the  individual  described  in, and who  executed  the  foregoing  Guaranty  and
acknowledged to me that he executed the same.

                                         _______________________________________
                                              Notary

<PAGE>

                           o IMPORTANT - PLEASE READ o

     RULES  AND  REGULATIONS  ATTACHED  TO AND  MADE A PART  OF  THIS  LEASE  IN
ACCORDANCE WITH ARTICLE 33.

     1.  The  sidewalks,  entrances,  driveways,  passages,  courts,  elevators,
vestibules,  stairways, corridors or halls shall not be obstructed or encumbered
by any Tenant or used for any purpose  other than for ingress or egress from the
demised  premises and for delivery of merchandise  and equipment in a prompt and
efficient manner using elevators and passageways designated for such delivery by
Owner.  There  shall  not be used in any  space,  or in the  public  hall of the
building,  either by any  Tenant or by  jobbers  or  others in the  delivery  or
receipt of merchandise, any hand trucks, except those equipped with rubber tires
and sideguards.

     2. The water and wash closets and plumbing  fixtures  shall not be used for
any purposes other than those for which they were designed or constructed and no
sweepings,  rubbish, rags, acids or other substances shall be deposited therein,
and the [Insert 21] expense of any breakage,  stoppage, or damage resulting from
the  violation  of this rule shall be borne by the Tenant who, or whose  clerks,
agents, employees or visitors, shall have caused it.

     3. No  carpet,  rug or other  article  shall be hung or  shaken  out of any
window of the building, and no Tenant shall sweep or throw or permit to be swept
or thrown from the demised premises any dirt or other substances into any of the
corridors  or halls,  elevators,  or out of the doors or windows or stairways of
the  building  and Tenant  shall not use,  keep or permit to be used or kept any
foul or noxious gas or  substance in the demised  premises,  or permit or suffer
the demised premises to be occupied or used in a manner [Insert 21] offensive or
objectionable  to Owner or other  occupants of the buildings by reason of noise,
odors, and/or vibrations, or [Insert 22] interfere in any way with other Tenants
or those having business  therein,  nor shall any animals or birds be kept in or
about the  building.  Smoking or carrying  lighted  cigars or  cigarettes in the
elevators of the building is prohibited.

     4. No awnings or other  projections  shall be attached to the outside walls
of the building without the prior written consent of Owner.

     5. No sign,  advertisement,  notice or other  lettering shall be exhibited,
inscribed,  painted or  affixed by any Tenant on any part of the  outside of the
demised premises or the building or on the inside of the demised premises if the
same is visible  from the  outside of the  premises  without  the prior  written
consent of Owner, except that the name of Tenant may appear on the entrance door
of the  premises.  In the event of the violation of the foregoing by any Tenant,
Owner may remove same without any liability, and may charge the expense incurred
by such  removal to Tenant or Tenants  violating  this rule.  Interior  signs on
doors and  directory  tablet  shall be  inscribed,  painted or affixed  for each
Tenant by Owner at the expense of such Tenant, and shall be of a size, color and
style acceptable to Owner.

     6. No Tenant shall mark,  paint,  drill into, or in any way deface any part
of the demised  premises or the  building of which they form a part.  No boring,
cutting or stringing of wires shall be permitted,  except with the prior written
consent of Owner,  and as Owner may direct.  No Tenant  shall lay  linoleum,  or
other similar floor covering, so that the same shall come in direct contact with
the floor of the demised  premises,  and, if  linoleum  or other  similar  floor
covering is desired to be used an interlining of builder's  deadening felt shall
be first affixed to the floor, by a paste or other  material,  soluble in water,
the use of cement or other similar adhesive material being expressly prohibited.

     7. No additional locks or bolts of any kind shall be placed upon any of the
doors or windows by any Tenant,  nor shall any changes be made in existing locks
or mechanism  thereof.  Each Tenant must,  upon the  termination of his Tenancy,
restore to Owner all keys of stores,  offices and toilet rooms, either furnished
to, or otherwise  procured by, such Tenant,  and in the event of the loss of any
keys, so furnished, such Tenant shall pay to Owner the cost thereof.

     8. Freight, furniture, business equipment,  merchandise and bulky matter of
any description  shall be delivered to and removed from the premises only on the
freight  elevators  and through the service  entrances and  corridors,  and only
during hours and in a manner  approved by Owner.  Owner reserves the [Insert 21]
right to inspect all freight to be brought into the building and to exclude from
the building all freight which  violates any of these Rules and  Regulations  of
the lease or which these Rules and Regulations are a part.

     9.  Canvassing,  soliciting  and peddling in the building is prohibited and
each Tenant shall cooperate to prevent the same.

     10.  Owner  reserves the right to exclude from the building all persons who
do not present a pass to the building signed by Owner. Owner will furnish passes
to persons from whom any Tenant  requests same in writing.  Each Tenant shall be
responsible  for all persons for whom he requests  such pass and shall be liable
to Owner for all acts of such  persons.  Tenant  shall not have a claim  against
Owner by reason of Owner  excluding  from the  building  any person who does not
present such pass.

     11.

     12.  Tenant  shall not bring or permit to be  brought  or kept in or on the
demised  premises,  any inflammable,  combustible or explosive fluid,  material,
chemical  or  substance,  or cause or  permit  any  odors  of  cooking  or other
processes, or any unusual or other objectionable odors to permeate in or emanate
from the demised premises.

     13. If the building  contains  central air  conditioning  and  ventilation,
Tenant agrees to keep all windows  closed at all times and to abide by all rules
and  regulations  issued by the Owner with respect to such  services.  If Tenant
requires air  conditioning  or ventilation  after the usual hours,  Tenant shall
give notice in writing to the building  superintendent prior to 3:00 p.m. in the
case of services  required on week days, and prior to 3:00 p.m. on the day prior
in the case of after hours service  required on weekends or on holidays.  Tenant
shall  cooperate with Owner in obtaining  maximum  effectiveness  of the cooling
system by lowering and closing  venetian  blinds  and/or drapes and curtain when
the sun's rays fall directly on the windows of the demised premises.

     14. Tenant shall not move any safe, heavy machinery, heavy equipment, bulky
matter, or fixtures into or out of the building without Landlord's prior written
consent. If such safe, machinery,  equipment,  bulky matter or fixtures requires
special  handling,  all work in connection  therewith  shall comply with and all
other laws and  regulations  applicable  thereto  and shall be done  during such
hours as Owner may [Insert 23] designate.

     15.  Refuse and Trash.  (1)  Compliance  by Tenant.  Tenant  covenants  and
agrees,  at its sole cost and  expense,  to comply  with all  present and future
laws,  orders  and  regulations  of all  state,  federal,  municipal,  and local
governments,  departments,  commissions,  and board,  regarding the  collection,
sorting,  separation and recycling of waste products, garbage, refuse and trash.
Tenant shall sort and separate such waste  products,  garbage,  refuse and trash
into such  categories as provided by law.  Each  separately  sorted  category of
waste  products,   garbage,  refuse  and  trash  shall  be  placed  in  separate
receptacles  reasonably  approved by Owner.  Such separate  receptacles  may, at
Owner's  option,  be removed  from the  demised  premises in  accordance  with a
collection  schedule  prescribed  by law.  Tenant shall  remove,  or cause to be
removed by a contractor  acceptable to Owner, at Owner's sole  discretion,  such
items  as  Owner  may  expressly  designate.  (2)  Owner's  Rights  in  Event of
Noncompliance.  Owner has the option to refuse to collect or accept  from Tenant
waste products, garbage, refuse or trash (a) that is not separated and sorted as
required  by law,  or (b) which  consists  of such items as Owner may  expressly
designate  for  Tenant's  removal,  and to require  Tenant to  arrange  for such
collection   at  Tenant's   sole  cost  and  expense,   utilizing  a  contractor
satisfactory to Owner. Tenant shall pay all costs, expenses,  fines,  penalties,
or damages that may be imposed on Owner or Tenant by reason of Tenant's  failure
to comply with the  provisions  of this  Building Rule 15, and, at Tenant's sole
cost and expense,  shall  indemnify,  defend and hold Owner harmless  (including
reasonable  legal fees and  expenses)  from and against any actions,  claims and
suits arising from such noncompliance, utilizing counsel reasonably satisfactory
to Owner.

<PAGE>

                               [FIRST FLOOR PLAN]

<PAGE>

                               [SECOND FLOOR PLAN]

<PAGE>

              RIDER ANNEXED TO AND FORMING A PART OF LEASE BETWEEN
                    400 COLUMBUS AVENUE LLC, AS LANDLORD and
            CANDIE'S INCORPORATED, A DELAWARE CORPORATION, AS TENANT.

37-39 INTENTIONALLY OMITTED

40.  CONFLICTS

     Where  there may be a  conflict  between  the terms and  conditions  of the
     printed portion of the Lease and the terms and conditions of the Rider, the
     Rider shall prevail.

41.  DEFINITIONS OF "LANDLORD" AND "OWNER"

     The terms  "Owner" and  "Landlord",  whenever used in this lease shall have
     the same meaning.

42.  LATE PAYMENT

     The  following  provisions  shall  govern the payment of Rent:  (i) if this
     Lease  commences or ends on a day other than the first day or last day of a
     calendar year,  respectively,  the Rent for the year in which this Lease so
     begins or ends shall be  prorated  and the  monthly  installments  shall be
     adjusted  accordingly;  (ii) all Rent  shall  be paid to  Landlord  without
     counterclaim,  offset or  deduction,  and the covenant to pay Rent shall be
     independent of every other  covenant in this Lease;  (iii) any sum due from
     Tenant to Landlord  which is not paid when due shall bear interest from the
     date due until the date paid at the rate of two (2%) percent over the Prime
     Rate,  as of the date when due, per annum,  but in no event higher than the
     maximum  rate  permitted  by law (the  "Default  Rate");  and, in addition,
     Tenant shall pay Landlord a late charge for any Rent payment  which is paid
     more than five days  after its due date  equal to two (2%)  percent of such
     payment,  however, Tenant shall not be charged a late charge the first time
     Tenant is late  during  each  twelve  (12)  month  period  during  the Term
     commencing on the Lease  Commencement Date until Tenant, as to such time in
     each  twelve  (12)  month  period  is given  five (5) days'  notice  and an
     opportunity to cure said nonpayment  within said notice period and fails to
     cure said  nonpayment  within said time;  (iv) each amount owed to Landlord
     under this Lease for which the date of payment is not expressly fixed shall
     be due on the same date as the Rent listed on the  statement  showing  such
     amount is due.

43.  BROKERAGE

     Tenant  and Owner  represent  and  warrant  to each  other  that it neither
     consulted  nor  negotiated  with any  broker or finder  with  regard to the
     Demised Premises other than McCarthy  O'Callaghan  ("Brokers").  Tenant and
     Owner agree to indemnify (including reasonable attorney's fees), defend and
     save each other harmless from and against any claims or fees or commissions
     from any one due to the acts or omissions of Tenant or Owner other than the
     Brokers  with whom  Tenant or Owner  dealt in  connection  with the Demised
     Premises  or this  Lease.  Landlord  agrees  to pay any or fee owing to the
     Brokers  in  accordance  with the  terms  of a  written  agreement  between
     Landlord and Brokers notwithstanding.

44.  TENANT'S WORK - ALTERATIONS

     (A) Supplementing  Article 3, subject to Tenant's prior compliance with the
     applicable   provisions  of  this  Lease  and  the  Building's   Rules  and
     Regulations  Governing Tenant  Alterations,  (a copy of which is annexed to
     the Lease as  Exhibit  A)  Landlord  shall not  unreasonably  withhold  its
     consent   to   Tenant's   performance   of   non-structural    alterations,

<PAGE>

     installations,  additions or  improvements  which are of at least  building
     standards   quantity  and  quality,   as  outlined  in  Building   Standard
     Installations  (a copy of  which is  available  at the  Building  Manager's
     office)  and  which  have no  adverse  effect on the  building's  operating
     systems and facilities ("Tenant's Work").

     (B)  Tenant  hereby  constitutes  and  appoints  __________________  as its
     representative to deal with Landlord in connection with Landlord's Work and
     Tenant's   Work.   Any  notice  and/or   approval   given  to  or  by  said
     representative, in writing, shall be binding upon Tenant. Tenant may change
     such designation by notice, in writing, to Landlord.

45.  ASSIGNMENT AND SUBLETTING

     Subject to the provisions of this article,  Landlord shall not unreasonably
     withhold, condition or delay its consent to an assignment of this Lease, or
     to a  whole  or  partial  subletting  of the  premises  demised  hereunder,
     provided that, at the time of such assignment or sublease, the Tenant shall
     not be in default beyond notice and cure periods with respect to any of the
     terms, covenants or conditions of the within Lease.

     In connection  with the granting of any such consent,  Landlord  shall have
     the right to require that;

     (1)  Tenant  shall  submit  to  the  Landlord   references   and  financial
     information  of the  prospective  assignee(s)  or  subtenant(s)  which  the
     Landlord deems reasonably necessary.

     (2)  Any  assignment  or  subletting  be  effected  pursuant  to a  written
     instrument in form reasonably  satisfactory to Landlord or its counsel: and
     that a duplicate  original thereof be delivered to Landlord within five (5)
     days  following  the date of its execution or within five (5) days from its
     effective date, whichever shall be sooner.

                                      -2-

<PAGE>

     (3) Any assignment  shall include the security  deposited  under the within
     lease.

     (4) In the event of an  assignment,  the  assignee(s)  agrees in writing to
     assume all the terms,  covenants  and  conditions of this Lease on Tenant's
     part to be  performed,  and a duplicate  original  thereof be  delivered to
     Landlord within five (5) days following the date of its execution or within
     five (5) days from its effective date, whichever shall be sooner.

     (5) The liability of Tenant hereunder, and the liability of any assignee(s)
     of this  Lease,  shall  survive  any  assignment  or  subletting,  and such
     liability  shall be unaffected by any extension of time which  Landlord may
     grant to any  assignee(s) or subtenant for the payment of any rent or other
     charges due hereunder,  or for the performance of any other term,  covenant
     or condition of this Lease, but not for any renewal beyond what is provided
     in the Lease,  nor any  amendment  affecting  any term or  condition of the
     Lease.

     (6) Whenever Tenant shall submit to Landlord any plan, agreement,  sublease
     or other  document  for  Landlord's  consent or  approval in respect of the
     alteration  of  the  demised  premises,   the  subletting  thereof  or  the
     assignment of this Lease,  and Landlord shall require the expert opinion of
     Landlord's counsel or architect as to the form or substance thereof, tenant
     agrees to pay the reasonable fee of such architect  and/or such counsel for
     reviewing the said plan or instrument.

     (B) It is  expressly  understood  and agreed that any request by the Tenant
     for the Landlord's  consent to any subleasing  and/or  assignment  shall be
     deemed to be an  irrevocable  offer to the Landlord to surrender the within
     Lease  effective  on  the  date   contemplated  in  the  subleasing  and/or
     assignment for which the Tenant requests the Landlord's consent and if said
     offer is accepted by the Landlord,  there shall be no further obligation on
     the part of either the  Landlord or the Tenant  after the date set forth in
     this

                                      -3-
<PAGE>

     article.  Landlord shall respond to Tenant's request for Landlord's consent
     to a proposed  subleasing  or  assignment  within ten (10) business days of
     Landlord's  receipt of all the documentation  with respect thereto required
     by this Article 45.

     (C) Nothing  contained in this paragraph shall be constituted as permitting
     an  assignment  or a  subletting  for any  purpose  other than the  purpose
     expressly permitted under the terms of this Lease.

     If  consent  to any  assignment  or  subletting  for any other  purpose  is
     requested,  the Landlord  shall be the sole judge whether he wishes to give
     his consent on the terms  outlined in sections A and B of this  Article and
     the Landlord's judgment shall be final.

     If Landlord  should fail to exercise the  election  granted to it hereunder
     and if Tenant should sublet or assign the Demised  Premises for a rental in
     excess of the sum of Fixed  Rent  stipulated  herein  and  additional  rent
     arising hereunder,  then Tenant shall pay to Landlord,  as additional rent,
     50% of such excess  amount,  except for the rental or other  payments which
     are  attributable  to the  amortization  over the term of this Lease of the
     cost of Tenant's  leasehold  improvements which are part of the assigned or
     sublet  portion of the  demised  premises,  and after first  deducting  the
     following  (a) the  brokerage  fees,  attorneys  fees,  and other costs and
     expenses incurred in connection with the sublease or assignment and (b) the
     amortization of improvements made for the subtenant or assignee.

     Notwithstanding  anything to the contrary  contained in this Lease,  Tenant
     shall have the right,  without the prior  consent of Landlord  (and without
     triggering the Landlord's  recapture right as provided  herein),  to assign
     this Lease or sublet  the whole or any part of the  demised  premises  to a
     corporation or entity which: (a) is Tenant's parent organization; or (b) is
     a wholly-owned subsidiary of Tenant or Tenant's parent corporation;  or (c)
     is a corporation of

                                      -4-
<PAGE>

     which  Tenant or Tenant's  parent owns in excess of fifty (50%)  percent of
     the outstanding  capital stock;  or (d) as a result of a  consolidation  or
     merger  with  Tenant  and/or   Tenant's  parent   corporation,   shall  own
     substantially  all of the  capital  stock  of  Tenant  or  Tenant's  parent
     corporation;  or (e) is the transferee of substantially all of the Tenant's
     assets;  (each, a "Permitted  Transfer").  Any Permitted  Transfer shall be
     subject to the following  conditions:  (a) Tenant shall remain fully liable
     during  the  unexpired  term of this  Lease;  and (b) any such  assignment,
     sublease, or transfer shall be subject to all of the terms, covenants,  and
     conditions of this Lease; and (c) such assignee,  sublessee,  or transferee
     shall  expressly  assume  the  obligations  of Tenant  under the Lease by a
     document  reasonably  satisfactory  to Landlord.  For the purposes  hereof,
     Tenant's "parent  corporation" and "parent" shall be deemed to refer to any
     entity which  directly or  indirectly  owns Tenant.  Except for a Permitted
     Transfer,  Landlord's  consent shall be required for any assignment of this
     Lease or any subletting of the demised premises,  provided,  however, that,
     subject to the  Landlord's  right to recapture  the demised  premises,  the
     Landlord agrees that it will not unreasonably withhold or delay its consent
     to a request by Tenant for an  assignment  of this Lease or a subletting of
     the demised premises.

     Tenant hereby waives any claim against  Landlord for money damages which it
     may have based upon any assertion that Landlord has  unreasonably  withheld
     or unreasonably delayed any consent to an assignment or subletting pursuant
     to this  Article.  Tenant agrees that its sole remedy shall be an action or
     proceeding to enforce such provision or for specific performance.

     If this Lease is assigned or sublet and Landlord consents  thereto,  Tenant
     covenants and agrees that the terms, covenants and conditions of this Lease
     may be changed,  altered or

                                      -5-
<PAGE>

     modified in any manner whatsoever by Landlord and the assignee or subtenant
     without  the  prior  written  consent  of Tenant  and that no such  change,
     alteration or modification  shall release Tenant from the performance by it
     of any of the terms,  covenants and  conditions on its part to be performed
     under this Lease. Any such change,  alteration or modification to the Lease
     by Owner and any  Subtenant  or  Assignee  which  would  have the effect of
     increasing or enlarging  Tenant's  obligations  or  liabilities  under this
     lease shall not, to the extent only of such increases or  enlargements,  be
     binding upon Tenant.

46.  SUBMISSION TO JURISDICTION, ETC.

     This Lease  shall be deemed to have been made in  Westchester  County,  New
     York,  and shall be construed in  accordance  with the laws of the State of
     New York. All actions or proceedings relating,  directly or indirectly,  to
     this  Lease  shall  litigate  only in courts  located  within the County of
     Westchester.  Tenant and their  successors  and  assignees  hereby  subject
     themselves to the jurisdiction of any State or Federal Court located within
     such county.

     Whenever any default, request, action or inaction by Tenant causes Landlord
     to incur  attorney's fees and/or any other cost or expenses,  Tenant agrees
     that it  shall  pay  and/or  reimburse  Landlord  for such  fees,  costs or
     expenses within ten (10) days after being billed therefore.

     The  submission  of this Lease to Tenant shall not  constitute  an offer by
     Landlord to execute and exchange a Lease with Tenant and is made subject to
     Landlord's acceptance, execution and delivery thereof.

                                      -6-
<PAGE>

47.  PREPARATION FOR OCCUPANCY AND POSSESSION

     Owner agrees to contribute up to $80,748.00  for  improvements  to Tenant's
     space  ("Tenant  Alterations"),  which  improvements  shall  be  deemed  to
     include, without limitation, all architectural engineering fees incurred by
     Tenant.

     In  the  event  Owner  performs  Tenant  Alterations  for  Tenant,  Owner's
     contribution  shall be applied to cover the costs of Tenant Alterations and
     the cost for work performed by Owner beyond its contribution  shall be paid
     by Tenant to Owner in the form of progress  payments on a weekly basis.  In
     the event the work performed by Owner does not exceed Owner's contribution,
     or in  the  event  Owner  does  not  perform  Tenant  Alterations,  Owner's
     contribution  shall be paid to Tenant  upon the  completion  of the  Tenant
     Alterations.

48.  COMMENCEMENT AND EXPIRATION DATES

     The Lease  Commencement  Date shall be May 15, 2000.  The Lease  Expiration
     Date shall be July 31,  2005,  unless  this Lease is sooner  terminated  as
     herein provided. The Rent Commencement Date shall be August 1, 2000.

49.  ELECTRICITY

     (A)  Landlord  shall  furnish to Tenant,  through  transmission  facilities
     installed by it in the Building, alternating electric current to be used by
     the Tenant in the demised  premises in such amount shall be sufficient  for
     the  operation of Tenant's  lighting  fixtures and  customary  small office
     machines;  provided,  however,  that  Landlord  shall not be  obligated  to
     provide  electric  current  in an  amount  in  excess  of five (5) watts of
     electric  current  per square foot of space in the  demised  premises  (the
     "Electric Capacity"). Landlord shall not be liable in any way to Tenant for
     any failure or defect in supply or character of electric current  furnished
     to the demised  premises unless such is due to Landlord's act,  omission or
     negligence.  Tenant

                                      -7-
<PAGE>

     shall  use said  electric  current  for  lighting,  for  operation  of such
     equipment  as is  normally  used in  connection  with  the  operation  of a
     business  office.  The  portion of the fixed  annual rent  attributable  to
     electric current so furnished to Tenant, constituting the fixed annual rent
     payable from time to time during the term less the then  applicable  amount
     pursuant to Article 49 (E), is herein  referred to as the  "Factor".  In no
     event is the factor to be less than the  factor on the date of this  Lease,
     as thereafter increased pursuant to Subdivision (E) below.

     (B) Tenant's use of electric  current in the demised  premises shall not at
     any time exceed the Electric Capacity. Tenant shall not make or perform, or
     permit the making or performing of, any alterations to wiring installations
     or other  electrical  facilities in or serving the demised  premises  other
     than  lamps,  typewriters,  personal  computers,  and  other  small  office
     machines  which  consume  comparable  amounts of  electricity,  without the
     Landlord's prior written  consent,  which consent shall not unreasonably be
     withheld.  Should Landlord grant any such consent, all additional risers or
     other equipment  required  therefore shall be installed by Landlord and the
     reasonable and competitive cost thereof plus all costs incurred by Landlord
     to any  electrical  engineer  retained by Landlord to review the electrical
     work required by Tenant shall be paid by Tenant, as additional rent, thirty
     (30) days after  demand.  As a  condition  to  granting  any such  consent,
     Landlord  may require  that Tenant agree to an increase in the fixed annual
     rent payable hereunder by an amount which will reflect the cost to Owner of
     the additional electric current to be made available to Tenant. If Landlord
     and Tenant  cannot  agree  thereon,  such amount shall be  determined  by a
     reputable independent electrical engineer or consultant,  to be selected by
     Landlord and Tenant and paid equally by both  parties.  The findings of the
     consultant  or  engineer  in all such  instances

                                      -8-
<PAGE>

     shall be conclusive  and binding upon the parties.  When the amount of such
     increase is so  determined,  the  parties  shall  execute  and  exchange an
     agreement supplementary hereto to reflect the increase in the amount of the
     fixed  annual  rent  payable  hereunder,   effective  from  the  date  such
     additional  service is made available to Tenant, but such increase shall be
     effective  from  such  date  even if such  supplementary  agreement  is not
     executed.

     (C) Landlord may, upon reasonable notice, at any time or from time to time,
     retain a reputable independent electrical engineer or consultant,  selected
     by Landlord and paid by Landlord, to make a survey of the electrical wiring
     and power load to  determine  what the value  would be to Tenant if it were
     purchasing electricity directly from the utility company at Landlord's rate
     schedule,  provided, however, that under no circumstances may the Factor be
     reduced  below the amount  set forth in  Subdivision  (A)  above.  When the
     amount of such  value is so  determined,  the  parties  shall  execute  and
     exchange  an  agreement  supplementary  hereto to reflect  any  appropriate
     increase  in the  amount  of  the  fixed  annual  rent  payable  hereunder,
     effective  from  the  date of such  survey,  but  such  increase  shall  be
     effective  from  such  date  even if such  supplementary  agreement  is not
     executed.  Tenant  shall have the right to dispute  such  determination  by
     retaining its own independent electrical engineer or consultant, and if the
     Landlord's  and Tenant's  consultants  fail to agree,  the two  consultants
     shall choose a third,  independent  electrical  engineer or consultant  who
     shall determine the cost of such services.

     (D) If any tax is imposed upon Landlord in connection  with the  furnishing
     of electric  current to Tenant by any  Federal,  State or Local  Government
     Subdivision or Authority, Tenant shall pay Landlord an amount equal to such
     tax, where permitted by law.

                                      -9-
<PAGE>

     (E) Provided  Landlord  has  arranged for the Tenant to obtain  electricity
     from the  public  utility  company  at  Landlord's  sole cost and  expense,
     Landlord reserves the right to discontinue  furnishing  electric current to
     Tenant in the  demised  premises at any time upon not less than thirty (30)
     days'  written  notice to  Tenant.  If  Landlord  exercises  such  right of
     termination,  this lease shall  continue in full force and effect and shall
     not be affected thereby,  except that, from and after the effective date of
     such  termination,  Landlord  shall not be  obligated  to furnish  electric
     current to Tenant and the fixed  annual  rent  payable  hereunder  shall be
     reduced by  $30,280.50  per year ("the  Factor")  and shall be known as the
     "Net Rent".  If Landlord so  discontinues  furnishing  electric  current to
     Tenant,  Tenant shall arrange to obtain electric  current directly from the
     public utility company  furnishing  electric current to the building.  Such
     electric  current may be furnished to Tenant by means of the then  existing
     building system feeders,  risers and wiring to the extent that the same are
     available,  suitable and safe for such purposes.  All meters and additional
     panel boards,  feeders,  risers,  wiring and other conductors and equipment
     which may be required to obtain electric  current directly from such public
     utility  company  shall be  installed  and  maintained  by  Tenant,  at its
     expense.

     (F) Tenant may purchase all replacement  lighting tubes,  lamps,  bulbs and
     ballasts used in the Demised  Premises from Landlord,  at Tenant's  option,
     and if so  furnished by Landlord,  Tenant shall pay  Landlord's  reasonable
     competitive,  actual  charges for providing  and  installing  same,  within
     thirty (30) days of billing, as additional rent.

     (G) For the purposes of this article,  "small office  machines"  shall mean
     those machines typically found in executive offices.

                                      -10-
<PAGE>

50.  INSURANCE

     Tenant shall at its own cost and expenses  obtain and keep in force, at all
     times during the term of this Lease, a policy of public liability insurance
     protecting Owner from any liability due to an accident or occurrence in our
     about the  premise.  Such  policy  shall be  issued  by a good and  solvent
     insurance  company  satisfactory  to Owner in the amount of  $1,000,000  in
     respect of injury or death to any one person,  and $2,000,000 in respect to
     any one accident,  and $250,000 in respect to any property damages.  In the
     event  Tenant  shall fail to  procure  or to keep in force said  insurance,
     Owner may, after 10-day notice to Tenant,  procure same for Owner's benefit
     and pay the  premium  therefore,  in  which  event  the  amount  so paid or
     advanced by Owner shall be deemed  "additional  rent" payable to Owner with
     the next succeeding  installment of the base rent reserved  herein.  Tenant
     further  agrees  that within ten (10) days prior to the  expiration  of any
     policy in force during the period of this Lease,  it will deliver a renewal
     policy to Owner.

51.  ANNUAL RENTAL INCREASE

     The parties have agreed that the annual rental shall  increase on the first
     anniversary  of  the  Rent   Commencement   Date  and  on  each  subsequent
     anniversary of the Rent Commencement Date by an amount equal to 3.5% of the
     Net Rent (annual rental rate less Factor) then in effect.

     The parties  have also agreed that  Tenant  shall be  responsible  for it's
     Proportionate  Share of increases in the Town of Mt.  Pleasant  School Tax,
     and Town of Mt.  Pleasant  County/Town  Tax over the amount of theses taxes
     for the fiscal year 2000/200 1. Tenant's Proportionate Share shall be equal
     to 9.843% of said increases.

                                      -11-
<PAGE>

     The  parties  have also agreed that  Tenant  shall not be  responsible  for
     increase in the operating expenses of the building.

52.  PARKING

     Landlord  shall  provide 41 parking  spaces for  Tenant's  use. The parking
     spaces will be  distributed  as  follows:  21 in Lot A (4 of which shall be
     reserved);  20 in  Lot  B.  Tenant  acknowledges  that  there  shall  be no
     overnight  parking in the parking area except in such portion thereof which
     may from time to time be designated by Landlord for such use.

53.  HVAC

     (A) The HVAC  system  in the  demised  premises  shall be  constructed  per
     building standards. Landlord shall, during regular hours (8:00 a.m. to 6:00
     p.m., Monday through Friday, except legal holidays),  maintain the premises
     at a temperature  that is deemed  comfortable by Landlord.  The HVAC system
     shall be  maintained  by Landlord in good working order so as to adequately
     heat, air condition and ventilate the premise.

     Whenever  the  cooling  system  is in  operation.  Tenant  shall  close the
     venetian blinds and/or drapes in the Demised Premises.

     (B) If Tenant  desires to have  Landlord  provide heat or air  conditioning
     during  times  other  than  Regular  Hours,   Tenant  shall  give  Landlord
     reasonable  notice and Tenant  shall pay  Landlord,  as  additional  rent a
     charge  of  $30.00   per  hour  for  heat  and  $40.00  per  hour  for  air
     conditioning.

54.  RESTRICTIONS ON USE

     (A) Anything in Article 2 to the contrary notwithstanding, Tenant shall not
     use or permit all or any part of the  demised  premises to be used for the:
     (1) storage for  purpose of sale of any  alcoholic  beverage in the demised
     premises; (3) conduct of a manufacturing or printing

                                      -12-

<PAGE>

     business;  (4)  rendition of any health or related  services,  conduct of a
     school (other than occasional  seminars for Tenant's  employees or clients)
     or conduct of any  business  which  results in the  presence of the general
     public in the  demised  premises;  and (5)  conduct of any public  auction,
     gathering, meeting or exhibition.

     (B) Tenant shall not use or permit all or any part of the demised  premises
     to be used so as to impair the  Building's  character  or dignity or impose
     any additional burden upon Landlord in its operation.

55.  LEASE AS COMPLETE AGREEMENT

     This Lease and the exhibits and Rider, if any,  attached hereto and forming
     a  part  hereof  set  forth  all of the  covenants,  promises,  agreements,
     conditions and  understandings  between Landlord and Tenant  concerning the
     Demised  Premises  and  there  are  no  covenants,   promises,  agreements,
     conditions  and  understandings  either oral or written  between them other
     than  are  herein  set  forth.  Except  as  herein  otherwise  provided  no
     subsequent alteration,  amendment,  change or additions to this Lease shall
     be binding upon Landlord or Tenant, unless reduced to writing and signed by
     the party to be charged.

56.  MODIFICATIONS REQUESTED BY MORTGAGEE

     If any prospective mortgage of the Land, Building or any leasehold interest
     therein  requires,  as a  condition  precedent  to  issuing  its loan,  the
     modification  of this Lease in such  manner as does not  materially  lessen
     Tenant's  rights or increase its  obligations  hereunder,  Tenant shall not
     delay or withhold its consent to such  modification  and shall  execute and
     deliver such  reasonable  confirming  documents  therefor as such mortgagee
     requires.

                                      -13-
<PAGE>

57.  HOLDING OVER

     If the  Tenant  retains  possession  of the  demised  premises  or any part
     thereof  after the  termination  of the term by lapse of time or otherwise,
     without  prior  written  approval of Owner,  the Tenant shall pay the Owner
     rent at 2 times the monthly rental rate then being paid by Tenant specified
     in Article I and as  otherwise  increased in  accordance  with the terms of
     this  lease for the time the Tenant  thus  remains  in  possession,  and in
     addition thereto shall pay the Owner all damages,  consequential as well as
     direct  (including  fees of  counsel  incurred  in  connection  therewith),
     sustained by reason of the Tenant's  retention of possession The provisions
     of this  Section do not exclude the Owner's  right of re-entry or any other
     right hereunder,  including without limitation,  all rights given at law or
     in equity,  in the case of holdovers,  to remove Tenant and anyone claiming
     through or under Tenant.

58.  SECURITY DEPOSIT

     If Tenant is in monetary  default  under this Lease more than two (2) times
     within any twelve-month period, irrespective of whether or not such default
     is cured,  then,  without  limiting  Landlord's  other  rights and remedies
     provided for in this Lease or at law or equity,  the Security Deposit shall
     automatically be increased by an amount equal to the greater, of

          a.   Three (3) times the original Security Deposit; or

          b.   Three (3) months' Minimum Rent,  which shall be paid by Tenant to
               Landlord forthwith on demand.

59.  WORK STATIONS

     Tenant shall have use of the Herman  Miller work  stations that are located
     in the  Tenant  Space as long as this  Lease is in full  force and  effect.
     Tenant   shall   be   responsible   for  any   maintenance   or   necessary
     reconfiguration of these units for the term of this Lease.

                                      -14-
<PAGE>

60.  RENEWAL OPTION

     (A) Upon  expiration  of the term of this lease for the  Demised  Premises,
     provided  that the same is then in full  force and effect and Tenant is not
     in default  hereunder,  beyond notice and cure  periods,  Tenant may extend
     such term for a renewal term of 5 years by giving  Landlord  written notice
     that it desires  such  extension.  Such  notice must be given not less than
     nine months  before the term  expires.  The renewal  term shall be upon the
     same terms, provisions,  covenants, and conditions as are contained in this
     Lease,  except as to the annual rent rate, and any other  provision  herein
     which by its terms is  applicable  only to the  initial  term.  The  annual
     rental rate  during the renewal  term shall be the greater of the rent last
     payable in the initial term or the "Prevailing Rate" as defined below.

     (B)  Tenant  shall have no  further  option to renew this Lease  beyond the
     expiration of the renewal period created by this section.

     (C) The term  "prevailing  rate," as used in this  Section,  means the fair
     market rental rate then being charged for like space similarly  situated in
     office buildings similar to and reasonably proximate to the Building in the
     same city and/or  geographical  area. In the event the parties cannot reach
     an agreement as to the  prevailing  rate,  the same shall be  determined by
     appraisal in accordance with the following provisions.

     If, by the day that is one hundred fifty (150) days prior to the expiration
     of the  original  term of this  Lease,  the  parties are unable to agree in
     writing  on  the  prevailing  rate,  then  the  prevailing  rate  shall  be
     established by appraisers chosen and who shall act in the following manner:
     Landlord  and Tenant  shall each  nominate  one  appraiser  deemed by them,
     respectively, to be fit, reputable and impartial, to appraise and determine
     the prevailing rate for the renewal term of this Lease. The nomination must
     be in  writing  and must be given by

                                      -15-
<PAGE>

     each party to the other  within one hundred  twenty (120) days prior to the
     expiration  of the original  term of the Lease.  If only one party shall so
     nominate  an  appraiser,  then that  appraiser  shall have the power to act
     alone,  and that  appraiser's  decision as to the  prevailing  rate made in
     accordance  with the provisions  hereof shall be binding upon both parties.
     If the two appraisers  nominated and appointed as appraisers by the parties
     shall  differ in  judgment  as to such  prevailing  rate,  then they  shall
     appoint a third  appraiser who is a fit,  reputable  and impartial  person.
     However, if they cannot agree upon such person, then the Westchester County
     Board of Realtors  shall appoint a fit,  reputable and impartial  person to
     act as the third  appraiser.  If the two  appraisers  agree in writing upon
     such  prevailing  rate,  then that  determination  shall be  binding on the
     parties,  but if they are  unable to agree  within  thirty  (30) days after
     second  of the two has been  appointed,  then the  selection  of the  third
     appraiser  shall be made,  as above  provided  for,  within  ten (10)  days
     thereafter,  and the three appraisers then named shall act with promptness,
     and the decision of a majority of such  appraisers  shall be the expense of
     its own appraiser, but the fees of third appraiser shall be shared equally.

     No person  shall be qualified  for  appointment  as an appraiser  hereunder
     unless he or she is a licensed  real  estate  broker or agent with at least
     ten (10) years of experience in leasing office space.  Any appraiser may be
     removed by the parties or other persons who appointed  that  appraiser,  as
     the case may be, for  failure to perform  his or her duties  expeditiously,
     and a successor  appraiser  shall be promptly  appointed by such parties or
     person(s),  as the  case  may be.  If the  prevailing  rate  has  not  been
     determined and evidence by an appropriate  amendment to this Lease prior to
     the expiration of the original term of this Lease, then

                                      -16-

<PAGE>

     Tenant  shall pay as the annual  rental rate an amount  equal to the annual
     rental rate for the last year of the original term.

     (D) If: (i) Tenant fails to exercise the renewal  option  during the period
     in which it is available and in the manner  required  hereby,  or (ii) this
     Lease is no longer in full force and effect for any reason, or (iii) Tenant
     is in default under this Lease beyond notice and cure periods,  at the time
     of such  exercise,  the renewal option shall  terminate,  be void and of no
     further force or effect.

     Unless otherwise  herein expressly  provided any reference in this Lease to
     the "term of this  Lease"  shall  mean the  original  term  hereof  and the
     renewal  period,  if validly  exercised by Tenant pursuant to its option to
     renew set forth in this  Section,  except to the extent  that the  original
     term or  renewal  period may be sooner  terminated  or  canceled  under any
     provision of this Lease.

61.  RIGHT OF FIRST OFFER

     Landlord shall give Tenant written notice of the  availability  of space on
     the same floor of the leased  premises  ("First Offer Space")  whenever and
     each time  during  the term of this  Lease the First  Offer  Space  becomes
     available to Landlord for re-leasing. The notice shall set out the rent for
     the First Offer Space. Tenant shall have the right to lease the First Offer
     Space subject to the following terms and  conditions:  (a) Tenant is not in
     default  under  this  Lease  beyond  notice  and cure  periods;  (b) Tenant
     delivers to Landlord written notice exercising its right to lease the First
     Offer  Space  within ten (10) days of receipt of  Landlord's  notice of the
     rent  payable for the First Offer  Space;  and (c) such first offer  rights
     shall be  subordinate to any option right in the First Offer space existing
     as of the date this Lease.

                                      -17-
<PAGE>

     If Tenant fails to timely exercise its right to lease the First Offer Space
     following Landlord's notice of availability,  Landlord shall have the right
     to enter into a lease of the First  Offer Space with a  perspective  tenant
     upon  terms  and  condition  that are equal to or  greater  than 90% of the
     economic  terms  initially  offered to tenant.  For purposes of determining
     whether an offer to any other tenant is equal to or greater than 90% of the
     economic  terms  offered to Tenant,  the net  effective  rent of each offer
     shall be  controlling.  The net effective rent  calculation  for each offer
     shall  include the term,  the annual rent,  tenant  improvements  provided,
     commissions  (if any), and other tenant  inducements.  If the net effective
     rent under any lease  offered to any other  tenant is equal to or less than
     90% of the net effective rent offered to Tenant, Landlord will re-offer the
     First  Offer Space to Tenant upon the same  economic  terms and  conditions
     offered  to the  other  prospective  tenant.  Tenant  shall  have  five (5)
     business days to either accept or reject the more favorable  economic terms
     and  conditions.  If Tenant fails to exercise  its right to the  re-offered
     First Offer Space,  Tenant  shall have no further  right to lease the First
     Offer Space until such space again becomes available.

     A lease of First Offer Space shall contain the following: (a) the terms and
     conditions applicable to the demised premises shall also apply to the First
     Offer Space,  with the exception of rent,  which shall be determined as set
     forth  above;  (b) the  commencement  date for the lease of the First Offer
     Space; (c) the term shall end on the expiration or earlier termination date
     of this Lease,  subject to the same  options to extend as this Lease but in
     no event shall be less than five (5) years;  and (d) tenant  shall take the
     space  in its  "as is"  condition  with  all  improvements  to be  Tenant's
     responsibility at Tenant's cost.

                                      -18-
<PAGE>

     Within fifteen (15) days of receipt from Landlord, Tenant shall execute and
     deliver to Landlord  those  mutually  acceptable  instruments  Landlord may
     reasonably request to evidence the lease by Tenant of First Offer Space.

62.  SIGNAGE

     Landlord  shall  provide,  at no expense  to Tenant,  signage in the tenant
     directories in the street-level  elevator lobbies and in the elevator lobby
     on the floor of the demised  premises,  which  signage  shall be  generally
     consistent with Landlord's building standard signage. Should Tenant wish to
     install more extensive  signage in the elevator lobbies on the floor of the
     demised premises, the excess actual cost of such signage (above the cost of
     building standard signage) shall be payable by Tenant.  This more extensive
     signage  shall  be  subject  to  Landlord  approval,  which  shall  not  be
     unreasonably withheld.

63.  NON-DISTURBANCE

     Landlord   shall  use  its  best   efforts   to  provide   tenant   with  a
     non-disturbance agreement from the mortgagee of the building.

64.  ASBESTOS

     (A) Owner  represents to the best of its knowledge that the Premises do not
     contain any asbestos  containing  material in violation of local,  state or
     federal laws, rules and/or regulations.

     (B) In the  event  any  asbestos  containing  materials  are  found  on the
     Premises (a) which were there at the Lease  Commencement  and (b) which are
     in violation of local,  state or federal  laws,  rules and/or  regulations,
     Owner  agrees  to abate  such  condition  by  removal  or other  acceptable
     procedure.

                                      -19-
<PAGE>

                                                 400 COLUMBUS AVENUE, LLC

                                                 By Diamond Properties, LLC,
                                                 its Sole Member

                                                 By: /s/ Jim Diamond
                                                     ---------------------------
                                                     Jim Diamond, Member

                                                 CANDIES, INCORPORATED

                                                 By: /s/ Neil Cole
                                                     ---------------------------
                                                     CEO

                                      -20-

<PAGE>

                                    EXHIBIT C
                RULES & REGULATIONS GOVERNING TENANT ALTERATIONS

I.   a) Complete  architectural,  mechanical,  and structural drawings including
     but not limited to demolition plans, electrical plans, heating, ventilation
     and air  conditioning  (HVAC) plans and  plumbing  plans at a scale of 1/4"
     equaling  one  foot,  and any  elevations,  sections,  details  and  finish
     schedules  relative to the work must be submitted to the Owner ("Owner") of
     the building for approval prior to the  commencement of work.  Where new or
     altered work affects the  building's  mechanical,  electrical or structural
     facilities, the Tenant's drawings may be referred to the Owner's consulting
     engineers for review.  The working drawings will be referred to the Owner's
     Building Code  Consultant  for review.  The  reasonable  actual cost of all
     reviews shall be borne by the Tenant.

     b)  Tenant  agrees  further  to  comply  with all  reasonable  changes  and
     requirements  that  may be  recommended  in  writing  by Owner  and/or  its
     consultant.

     c) Tenant shall be responsible for any disturbance or deficiency created in
     the air conditioning or other mechanical, electrical, or structural systems
     within the building as a result of the alteration.  If such  disturbance or
     deficiency results, it shall be the Tenant's  responsibility to correct the
     resulting conditions and restore the services to the complete  satisfaction
     of the Owner, its architect and engineers.

<PAGE>

d) Tenant will provide Owner with complete working drawings and  specifications,
one set sepias and three sets of black and white prints.

e) A complete list of all contractors  (general  contractor and  subcontractors)
must be submitted to the Owner for its approval prior to the commencement of any
work, which approval shall not be unreasonably withheld or delayed.

f) All work  involving  mechanical  systems  within  the  building  (electrical,
plumbing, air conditioning, etc.) must be accomplished by the building's service
contractors.

II. All workmanship and materials  furnished shall comply with applicable  lease
provisions and shall be at least equal to Building Standard  Installations which
are attached and other  specifications  that are  available  from the Owner upon
request.  All work shall be performed at the Tenant's sole cost and expense. The
Owner shall have no  responsibility  for in connection with the work, and Tenant
will remedy at Tenant's sole cost and expense and be responsible for any and all
defects in all such work that may appear during or after the completion  thereof
whether the same shall  affect the  premises in  particular  or any parts of the
building in general.

III. All work shall comply with the codes,  rules and  regulations  of the town,
state and federal government  agencies having  jurisdiction.  Tenant's architect
and  contractor.  Duplicate  originals of all  Department of Buildings  approved
documents and drawings are to be submitted to Owner prior to the commencement of
any work.

                                      -2-

<PAGE>

IV.  Before   commencement  of  work,   Tenant's   general   contractor   and/or
     subcontractor   shall  furnish  to  the  Owner   Certificates  of  Worker's
     Compensation  Insurance and  Certificates  of  Comprehensive  Liability and
     Property  Damage  Insurance on an occurrence and per project basis covering
     all workers employed in the execution of the contract,  including those all
     subcontractors  in a  combined  limit  of  Liability  of  $2,000,000,  or a
     combined  limit of  Liability  of  $1,000,000,  and a minimum  Umbrella  of
     $1,000,000 (naming Owner and managing agent as additional insured).

     Contractors  insurance  to  include  Contractual  Liability  and  completed
     Operations coverage.

     In addition,  the general contractor must submit to the Owner the following
     Indemnify and Save Harmless Clause:

          "We  indemnify  and save harmless the Owner and its managing
          agent against loss or expense by reason of liability imposed
          by law upon the Owner and agent because of bodily  injuries,
          including   death,   at  any   time   resulting   therefrom,
          accidentally  sustained  by  any  person  or  persons  or on
          account  of  damage  to  property   arising  out  of  or  in
          consequence of the performance of the contract  whether such
          injuries  to  persons  or damage to  property  are due to or
          claimed to be due to any negligence of the contractors,  the
          tenant's, the owners, their employees or agents or any other
          persons.  We will repair or replace,  or at Owner's election
          reimburse  Owner for the cost of repairing or replacing  any
          portion of the Owner's real or personal property so damaged,
          lost or destroyed in the performance of this work."

                                  -3-
<PAGE>

     All insurance  certificates are to be made out to the Owner of the building
     and its  managing  agent  in the  form of the  sample  Certificate  annexed
     hereto,  with  notice  given  thirty  (30) days in advance if  canceled  or
     modified.

V.   The Tenant and/or  Tenant's  contractors  shall submit the following to the
     Owner upon completion of work:

     a) As-built reproducible drawings for partitioning,  lighting, outlets, air
     conditioning ductwork and diffusers, and plumbing.

     b)  Duplicate  originals  of all  approvals  and  sign-offs  as required by
     governmental agencies having jurisdiction.

     c) Electrical certificates as required by governmental agencies.

          Written  acknowledgment  on Owner approved forms from all contractors,
          subcontractors, and materialmen involved in the work that all of their
          charges for the work performed and materials  furnished have been paid
          in full.

VI.  a) Tenant and its  contractors or  materialmen  shall comply with the rules
     and requirements of the building including but not limited to unions having
     jurisdiction, noise abatement and cleaning, etc.

     b) Freight elevator use for handling construction material,  equipment, and
     debris will be restricted to regular  business days Monday  through  Friday
     inclusive to the hours between 9:00 a.m. and noon and between 1:00 p.m. and
     5:00 p.m. Specific  arrangements for freight elevator use at any other time
     must be requested a minimum of 48 hours in advance with the Engineering and
     Maintenance  Manager or the Chief  Engineer at the  building.  Best efforts
     will be utilized to secure the requested  service.  It is understood by all
     parties that

                                      -4-
<PAGE>

     such freight elevator service will not be exclusive and will be coordinated
     with  other  normal  freight  service  for the  building.  Tenant  shall be
     required to pay for the actual cost to Landlord freight elevator service at
     such other times.

     c) If any work being done shall cause  excessive  noise and  disturbance to
     any other tenant,  said work shall be stopped  immediately on the advice of
     the Engineering  and Maintenance  Manager or Chief Engineer at the Building
     and completed only after a reschedule has been approved by the Owner.

     d) When demolition or construction is in progress,  all proper  precautions
     shall be taken to  prevent  any dust or odors  from  escaping  to  adjacent
     tenant areas, building corridors, or mechanical areas.

     e) All construction  debris must be kept inside to Tenant's  premises until
     removed  from the job site.  No stock piling of debris that  constitutes  a
     fire hazard will be allowed.

     f) Where openings on Public Corridor Walls are made, the General Contractor
     will provide  suitable  protection to insure against dust and  interference
     with other tenants.

     g) All  demolition  and  rubbish  removal  must be done before 7:00 a.m. or
     after  7:00 p.m.  on  business  days,  Monday  through  Friday.  A Building
     Engineer must be present during all demolition.  Tenant will be required to
     pay reasonable overtime costs for the Engineer.

     h) All trades  men/material  men are to follow specific  instructions  from
     both the Chief  Engineer and  Engineering  and  Maintenance  Manager of the
     building with regard to building systems and operations.

     i) The  delivery and handling of  materials,  equipment  and debris must be
     arranged to avoid any inconvenience and annoyance to other tenants.

                                      -5-
<PAGE>

     j) A copy of the approved  plans and permits  shall be kept on the premises
     (Chief Engineer's office), available for inspection at all times.

     k) All labor employed by Tenant, directly or indirectly, in connection with
     Tenant's work shall be harmonious and compatible with labor employed by the
     Owner.

     l) All work involving mechanical systems that affect the building operation
     or other  tenants  must be  accomplished  after normal  business  hours and
     coordinated with the Chief Engineer of the building .

VII. Before the  commencement of work,  other than the Tenant  Alterations to be
     performed prior to Tenant's  occupancy,  a copy of the executed contract or
     contracts between Tenant and contractors substantially indicating the terms
     of the agreement must be submitted to the Owner. With Owner's acceptance of
     all plans, specifications,  and other documents required herein, and if the
     estimated  cost of  improvements  are greater  than  $25,000 the Owner will
     require either of the following:

     a) A deposit of monies in the amount of Owner's  reasonably  estimated cost
     of  Tenant's  Alteration  ("Cost"),  which shall be held and  disbursed  as
     hereinafter provided; or

     b) A letter of credit in the amount of the Cost,  issued by a New York City
     commercial bank and in the form annexed hereto ("Letter of Credit").

     If Tenant  furnished  a Letter of  Credit,  Owner  shall only draw down the
     proceeds  thereof if (a) a Mechanic's Lien is filed against the building in
     connection  with the work which is not discharged of record within ten (10)
     days  after  Owner  notified  Tenant of the filing  thereof;  or (b) within
     thirty (30) days prior to the  expiration  of the Letter of Credit,  or (c)
     thirty (30)

                                      -6-
<PAGE>

     days after the date Owner  determines to be appropriate  for the completion
     of the work to Owner's reasonable satisfaction and submit to Owner;

     (i) written  acknowledgment  on Owner approved forms from all  contractors,
     subcontractors,  and  materialmen  involved  in the work  that all of their
     charges for the work  performed and materials  furnished  have been paid in
     full;

     (ii) all duplicate original final approvals and sign-offs from governmental
     bodies having jurisdiction, and

     (iii) as built  reproducible  drawings and operating  manuals for equipment
     installed.

     If Owner holds a deposit of monies,  or if Owner  draws down such  proceeds
     from the  Letter of  Credit,  it shall hold and  disburse  such  deposit or
     monies as follows:  Owner may, at any time thereafter,  discharge of record
     any then or subsequently  arising  outstanding  Mechanic's Liens within ten
     (10) days  after  Owner  notified  Tenant  of the  filing  thereof  and the
     remaining  proceeds or monies shall be held until Tenant has  completed the
     applicable work to Owner's satisfaction and has submitted to Owner:

     (i) written  acknowledgment  on Owner approved forms from all  contractors,
     subcontractors  and  materialmen  involved  in the  Work  that all of their
     charges for the Work  performed and materials  furnished  have been paid in
     full;

     (ii)  duplicate   original  of  all  final  approvals  and  sign-offs  from
     governmental bodies having jurisdiction; and,

     (iii) as-built  reproducible  drawings and operating  manuals for equipment
     installed.

     After completion of the foregoing,  any remaining  proceeds or monies shall
     promptly  be  returned  to  Tenant.  However,  if such Work has not been so
     completed and such

                                      -7-
<PAGE>

     acknowledgments  have not been  submitted to Owner within  thirty (30) days
     after the date Owner  determines to be  appropriate  for the  completion of
     such work,  Owner may apply such proceeds or monies to the extent necessary
     to so complete  such work and obtain such  acknowledgments,  whereupon  any
     remaining proceeds or monies shall be promptly returned to Tenant.

     Upon  satisfactory  compliance  by  the  Tenant  with  all  the  Rules  and
     Regulations  and adherence to the Building  Standard  Installations,  Owner
     will give written approval for Tenant to proceed with proposed work.

                                      -8-

<PAGE>

                             [MAP OF AREA COVERED]

<PAGE>

                Inserts to Lease between 400 Columbus Avenue LLC,
                Owner/Landlord, and Candies Incorporated, Tenant

1.   after notice and applicable cure periods

2.   such approval not to be unreasonably withheld, conditioned or delayed

3.   reasonably

4.   which must be reasonable and Landlord's  actual  expenses,  and in no event
     shall cover or pertain to repairs which are the obligation of Owner.

5.   reasonable

6.   If Landlord is unable to restore  the demised  premises  within one hundred
     eighty (180) days after the event of  casualty,  Tenant may elect to cancel
     and terminate the Lease on ninety (90) days'  notice,  unless,  within such
     ninety (90) day period,  Landlord provides evidence reasonably satisfactory
     to Tenant that Landlord will be able to restore the demised premises within
     the aforesaid one hundred  eighty (180) days. In the event Landlord has not
     commenced its work to restore the demised  premises within ninety (90) days
     after the event of casualty, the Tenant may elect to terminate the Lease on
     sixty (60) days' notice to Landlord.

7.   ten (10) days

8.   Substantially all

9.   On prior reasonable notice

10.  In an emergency

10A. Beyond a ten (10) day grace period

11.  Reasonable

12.  After notice and expiration of any applicable cure period

13.  Provided  same to not  adversely  affect  Tenant's  access  to the  demised
     premises

14.  Reasonably

15.  Beyond Owner's reasonable control

16.  Or nationally recognized overnight delivery service

17.  Arising thereafter

18.  After written notice and beyond any applicable cure period

<PAGE>

19.  Either Tenant or Landlord

20.  The other party

21.  Reasonable

22.  Unreasonably

23.  Reasonably

                                      -2-

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