UNITEL VIDEO INC/DE, 10-K, 1996-11-27

UNITEL VIDEO INC/DE
10-K, 1996-11-27
ALLIED TO MOTION PICTURE PRODUCTION

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<PAGE>

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- -------- SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)

For the Fiscal Year Ended August 31, 1996
----------------------------------------

- -------- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

For the transition period from to
-------------- --------------

Commission file number 1-8654
------

UNITEL VIDEO, INC.
______________________________________________________________________
(Exact name of registrant as specified in its charter)

Delaware 23-1713238
- ------------------------------ ------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

555 West 57th Street, New York, New York 10019
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)

Registrant's telephone no., including area code: (212) 265-3600
---------------

Securities registered pursuant to Section 12(b) of the Act:

Name of each exchange
Title of Each Class on which registered
------------------- -------------------
Common Stock, $.01 par value American Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.

Yes X No
--- ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K ( ).
---

(Cover Page: 1 of 2 Pages)

<PAGE>

The aggregate market value of the voting stock (based on the closing price of
such stock on the American Stock Exchange) held by non-affiliates of the
Registrant at November 22, 1996 was approximately $17,504,631.

There were 2,674,565 shares of Common Stock outstanding at November 22, 1996.

DOCUMENTS INCORPORATED BY REFERENCE

PART III Certain portions of the Registrant's Proxy Statement
for the Registrant's 1996 Annual Meeting of Stockholders.

<PAGE>

PART I

ITEM 1. BUSINESS

GENERAL

Unitel Video, Inc. (the "COMPANY") provides a full range of services to the
video communications industry for the recording, editing and duplication of
television programs, commercials and corporate and other communications on
videotape. The Company's services are provided primarily in the following
areas: studio videotape recording, mobile videotape recording and live
telecasting, film to videotape transfer, editing, computer graphics and
videotape duplication. The Company also designs and produces custom CD-ROM, CD-
I, videodisc and networked multimedia presentations.

The Company's services are provided at facilities located in New York City
and Los Angeles and through the Company's Mobile division based in Pittsburgh.
The Company's Mobile division provides "on-location" services, including
technical personnel, for videotape recording and live telecasting of sports,
entertainment, cultural and other events throughout North America.

As the Company is in a service industry, it does not use raw materials. It
does, however, use videotape. Videotape is readily available from numerous
sources and the Company has not experienced, nor does it anticipate
experiencing, difficulty in obtaining videotape for its operations. In
addition, the Company has service contracts with its customers, generally for
facilities and personnel at specific times or on a project or job-by-job basis
(as more fully described below under the caption "Marketing") and, accordingly,
does not have backlog as such.

The Company's cost structure is such that depreciation, selling expenses
and general and administrative expenses do not generally fluctuate from quarter
to quarter during a fiscal year based on sales volume. Furthermore, a majority
of production costs are fixed. Accordingly, relatively small variations in
quarterly sales historically have resulted in disproportionately greater
variations in net earnings. In part due to the foregoing, during fiscal years
1996, 1995 and 1994, the Company recognized a significantly greater proportion
of net earnings in the first quarter as compared to the other quarters of the
fiscal year. See Note K to Notes to Consolidated Financial Statements.

SERVICES

STUDIO VIDEOTAPE RECORDING. The Company provides the studios, equipment
and skilled technical personnel needed to record television programs,
commercials and corporate and other videotape communications. The equipment
provided by the Company includes color television cameras, videotape recorders,
sound monitoring and mixing equipment and lighting equipment. The Company does
not generally provide program direction or other artistic or non-technical
production services, such as the preparation of scripts, the hiring of
performers or the supplying of special props or scenery. The Company operates
eight studios in New York City.

<PAGE>

Among the programs produced at the Company's studio facilities are "The
Sally Jessy Raphael Show", "Inside Edition", "The Montel Williams Show", "The
Rolonda Watts Show", "American Journal" and "The Gordon Elliot Show". Studio
recording accounted for approximately 18%, 16% and 15% of the Company's revenues
during the fiscal years ended August 31, 1996, 1995 and 1994, respectively.

MOBILE VIDEOTAPE RECORDING AND LIVE TELECASTING. The Company's Mobile
division provides videotape recording and live telecasting services "on-
location" by transporting videotape and other related equipment in its mobile
vehicles. These vehicles have been designed to serve as the production control
center for events in sports arenas, concert halls, theaters and other locations.
The Company also arranges for the skilled technical personnel required to
perform these services. The Company's ten mobile vehicles are equipped to
travel on a continuous basis throughout North America and can be maintained in
the field. The Company's Mobile division accounted for approximately 27%, 21%
and 19% of the Company's revenues during the fiscal years ended August 31, 1996,
1995 and 1994, respectively. Some of the events handled by the Company's mobile
production units include "Live from the Met", "Live from Lincoln Center", "The
Grammy Awards", "The Emmy Awards", "The Academy Awards", major golf and tennis
tournaments, broadcast of Pittsburgh Pirates, Montreal Expos and Toronto Blue
Jays major league baseball games, Major League Baseball's Allstar game, the
international broadcast of the "Super Bowl," the 1996 Summer Olympics and the
1996 Democratic and Republican National Conventions.

FILM TO VIDEOTAPE TRANSFER. The Company provides the facilities and
technical personnel for transferring 16mm and 35mm motion picture positive and
negative film and slides to videotape. Through the use of computers, the color
of the picture may be corrected, altered or enhanced frame by frame to meet
client needs. Film to videotape transfer accounted for approximately 10%, 9%
and 9% of the Company's revenues during the fiscal years ended August 31, 1996,
1995 and 1994, respectively. The Company has performed this service for major
theatrical motion pictures such as "The Ghost and the Darkness", "Heat",
"Casino", and "City Hall", and television programs such as "Star Trek:Voyager",
"Star Trek: Deep Space Nine", "Murder She Wrote", and "The Simpsons".

EDITING. The Company provides editing equipment and skilled personnel
required to perform the editing, special optical and audio effects, titling and
other technical work necessary to produce a master videotape suitable for
broadcast, cablecast, duplication or other distribution. Using computer-
controlled electronic editing equipment, video and audio tape recorders and
special effects and titling equipment, videotape recorded by the Company or
others is processed into a finished product. Additionally, the Company provides
creative editorial and editorial supervision through the post production process
and consultative storyboard services directly to production companies and
advertising agencies. Editing accounted for approximately 30%, 35% and 37% of
the Company's revenues during the fiscal years ended August 31, 1996, 1995 and
1994, respectively. Among the programs edited at the Company's facilities are
"Star Trek:Voyager", "Star Trek: Deep Space Nine", "Cybill", and "The Nanny".

<PAGE>

COMPUTER GRAPHICS. The Company offers creative consultation, technical
assistance and full-service facilities for the creation of computer-generated
graphics, special effects and animation in the digital format in both 2-D and 3-
D. These services accounted for approximately 8%, 9% and 10% of the Company's
revenues during the fiscal years ended August 31, 1996, 1995 and 1994,
respectively. The Company's projects in this area include various commercials
for Toyota, Sears and Nike.

VIDEOTAPE DUPLICATION. The Company furnishes videotape duplication
services in all formats, including formats available for broadcast and cablecast
in the United States as well as the multiple formats used abroad. Duplication
services accounted for approximately 4%, 4% and 5% of the Company's revenues
during the fiscal years ended August 31, 1996, 1995 and 1994, respectively.

INTERACTIVE MULTIMEDIA PRODUCTION. The Company designs and produces custom
internet websites, CD-ROM, CD-I, videodisc and networked multimedia
presentations for clients in the publishing, financial services, pharmaceutical,
entertainment, advertising, retail, telecommunications and utility industries.
Extensive use of other Company resources are integrated into these productions,
including video compression, digital to video transfers, 3-D computer graphic
creation and studio and location recording. The Company also provides MPEG
services for Softkey, Sony Interactive, Grey Advertising and Muffinhead.
Interactive multimedia production accounted for approximately 1% of the
Company's revenues during each of the fiscal years ended August 31, 1996, 1995
and 1994.

MARKETING

The Company markets its services principally to cable television program
suppliers, independent producers, national television networks, local television
stations, motion picture studios, advertising agencies, and program syndicators
and distributors through the direct efforts of its internal sales personnel and
through advertising in certain trade publications. The Company has no material
patents. The Company markets its services through the use of the Unitel, Editel
and Windsor names.

Customers for editing services, film-to-tape transfer, computer graphics
and videotape recording of television commercials generally make arrangements
for the Company's services without significant advance notice, on a project or
job-by-job basis. Customers for studio and "on-location" videotape recording or
live telecasting of programs generally make arrangements longer in advance of
the time when the facilities and services are required. The Company has entered
into arrangements with several customers for periods ranging up to three years
to provide editing, mobile videotape recording and/or studio videotape recording
services. No customer accounted for more than 10% of the Company's total sales
for the fiscal years ended August 31, 1996, 1995 and 1994.

COMPETITION

The video services industry is highly competitive. Certain videotape
service businesses (both independent companies and divisions of diversified
companies) provide most of the same services provided by the Company, while
others specialize in one or several of these services. Editing and videotape
recording services are also subject to competition from the film industry.
While the Company does not perform any services directly on film it does provide
services for the motion picture industry including film to videotape transfer,
film in film out and special high resolution digital effects work on feature
films.

<PAGE>

Many competitors of the Company, some with greater financial resources, are
located in the New York City and the Los Angeles areas, the principal markets
for the Company's services other than "on-location" video services. "On-
location" video services provided by the Company compete on a nationwide basis
with companies located throughout North America.

The Company competes on the basis of the overall quality of the services it
provides, state-of-the-art equipment, breadth of services, reputation in the
industry and location. The Company also competes on the basis of its ability to
attract and retain qualified, highly skilled personnel. The Company believes
that prices for its services are competitive within its industry, although some
competitors may offer certain of their services at lower rates than the Company.
The video services industry has been and is likely to continue to be subject to
technological change to which the Company must respond in order to remain
competitive.

EMPLOYEES

At August 31, 1996, the Company had 355 full-time employees. The Company's
Unitel New York division post-production personnel (23 employees) are members of
the National Association of Broadcast Employees and Technicians, AFL-CIO, under
a contract with the Company which expires in April 1997. The technical
personnel of the Company's Editel Los Angeles division (47 employees) are
represented by the International Alliance of Theatrical Stage Employees, under a
contract which expires in November 1997. The technical personnel of the
Company's Mobile division (39 employees) are represented by the International
Brotherhood of Electrical Workers, under a contract which expires in August
1997.

The Company believes that its employee relations are generally
satisfactory.

DEVELOPMENTS

In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed Of" ("FASB Statement No.
121") which provides guidance on when to assess and how to measure impairment of
long-lived assets, certain intangibles and goodwill related to those assets to
be held and used, and for long-lived assets and certain identifiable intangibles
to be disposed of. The Company adopted FASB Statement No. 121 as of August 31,
1995.

<PAGE>

Based on the Company's decision to sell the Editel divisions, the Company
recorded an impairment charge of approximately $2,000,000 in fiscal 1996
relating to the assets at all three Editel divisions. The impairment charge
recorded represents management's estimate of the decrease in value of these
assets during the period such assets were held for sale based upon the
depreciation method which the Company has used in the past and which management
has found to be reasonable and appropriate.

On February 22, 1996, the Company announced the closure of its Editel
Chicago division and subsequently distributed the majority of that division's
assets throughout the Company. The balance of the Editel Chicago division
equipment was sold in an auction which was held in May 1996. In March 1996, the
Company terminated the lease for its Editel Chicago division by making a lump
sum payment to the landlord of $1,600,000. The restructuring charge of
$1,246,000 recorded in the quarter ended May 31, 1996, reflects this payment
less the reversal of $354,000 of accrued rent which would have been due under
the terms of the lease. Previously, in May of 1995, the Company adopted a plan
to downsize the operations of its Editel Chicago division and reorganize and
reduce its corporate management which resulted in recording a restructuring
charge of $400,000 for severance and early retirement expense.

During the months of March through May 1996, the editorial and computer
graphics departments of the Editel New York division were closed. In May 1996,
the Company reached an agreement in principle to sell the film-to-tape transfer
business of Editel New York, which was the remaining operating department, to a
group of employees backed by a private investor. The Company operated the film-
to-tape transfer business through August 31, 1996, at which time discussions
with the employee led group were terminated and the business was closed. During
the negotiations, the majority of the editorial and computer graphics assets
were distributed throughout the Company. At August 31, 1996, the Company
estimated the revised value of the remaining assets held for sale to be
approximately $1,587,000 and classified them on the balance sheet as short-term.
In November 1996, the Company sold the majority of those assets to an unrelated
third party for $1,400,000. The balance of the assets will be redeployed
throughout the Company or disposed of through an auction. Proceeds from the
sale of assets are used by the Company to repay outstanding debt.

Also in May 1996, after reevaluating the potential of the Editel Los
Angeles division, the Company decided to retain and expand this division and,
accordingly, discontinued seeking a buyer for this business.

<PAGE>

ITEM 2. PROPERTIES.

The following table sets forth, as of August 31, 1996, certain information
concerning the Company's facilities. The lease expiration dates exclude option
extension periods which exist in certain leases.

<TABLE>
<CAPTION>
Lease
Approximate Expiration
Location Square Feet Primary Use Date
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
515 West 57 Street 40,000 Television studios and post- Owned
New York, New York production facilities.

508-510 West 57 Street 15,000 Television studio and March 1999
New York, New York support space.

841 Ninth Avenue 21,000 Television studio and August 2003
New York, New York support space.

503 West 33 Street 8,000 Television studio and April 2001
New York, New York support space.

402 East 76 Street 30,000 Television studio and June 1998
New York, New York support space.

8 West 38 Street 20,000 Post-production, March 2001
New York, New York administrative offices
and production offices.

222 East 44 Street 43,000 Former Editel NY Dec. 1999
New York, New York facility subleased to
third parties.

433-435 West 53 Street 14,000 Television studio and Owned
New York, New York support space.

4100 Steubenville Pike 18,000 Mobile production Sept. 1997
Pittsburgh, Pennsylvania headquarters and garage.

729 North Highland 26,000 Post-production, Owned
Los Angeles, California film-to-tape transfer and
computer graphics facilities,
and administrative offices.

3330 Cahuenga Blvd. W. 15,000 Post-production, film- Dec. 1998
Los Angeles, California to-tape transfer and
administrative offices.

3330 Cahuenga Blvd. W. 15,000 Office space June 1997
Los Angeles, California

1101 Isabel Street 15,000 Mobile field shop and Month to
Burbank, California garage. Month

555 West 57th Street 3,000 Office space Dec. 2000
New York, New York

423 West 55th Street 21,000 Office Space Aug. 1999
New York, New York
</TABLE>

<PAGE>

All of the Company's facilities are well maintained structures, in good
physical condition and are adequate to meet the Company's current and reasonably
foreseeable needs.

ITEM 3. LEGAL PROCEEDINGS.

(a) There are no material pending legal proceedings to which the Company
or any of its subsidiaries is a party or of which any of their property is the
subject.

(b) No material pending legal proceeding was terminated during the fourth
quarter of the Company's fiscal year ended August 31, 1996.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Not Applicable.

EXECUTIVE OFFICERS OF THE REGISTRANT

Officer
Name Age Since Positions with the Company
- ----------------------------------------------------------------------------

Barry Knepper 46 1982 President, Chief
Executive Officer and Director

Richard L. Clouser 56 1982 Senior Vice President -
Corporate, President of
the Mobile Division and
Director

Karen Ceil Lapidus 37 1994 Vice President, General
Counsel and Secretary

Mark Miller 48 1995 President of the Unitel
Hollywood Division

Jill Debin Cohen 44 1995 President of the Unitel NY
Post Division

Albert Walton 51 1995 President of the Editel
Los Angeles Division

Tom Eyring 44 1995 Chief Technology Officer

Edwin Levine 57 1996 President of the Unitel NY
Studios Division

George C. Horowitz 44 1996 Chief Financial Officer

<PAGE>

CERTAIN INFORMATION CONCERNING THE EXECUTIVE OFFICERS OF THE COMPANY

Mr. Knepper has been President and CEO of the Company since April 1996. He was
Senior Vice President-Finance and Administration and Director since May 1995,
Chief Financial Officer of the Company since 1982 and has served as its
Treasurer since 1983.

Mr. Clouser has been President of the Mobile division of the Company since 1982,
Senior Vice President-Corporate since April 1996 and a Director since
October 1996.

Ms. Lapidus has been General Counsel and Secretary of the Company since 1994 and
a Vice President since 1996.

Mr. Miller has been President of the Unitel Hollywood division since April 1995.
From 1990 through April 1995 he was Vice President of Engineering and Operations
of the Unitel Hollywood division. From 1984 through 1990 he was Vice President
of Engineering of the Unitel Hollywood division.

Ms. Debin Cohen has been President of the Unitel NY Post division since August
1996. From June 1995 to August 1996 she was President of the Windsor Video
division which became a part of the Unitel NY Post division in August 1996.
From November 1993 to June 1995 she was the Vice President/General Manager of
the Windsor Video division. Ms. Debin Cohen was the Vice President of
Operations for the Editel New York division from 1988 through November 1993.

Mr. Walton has been President of the Editel Los Angeles division since July
1995. From May 1994 through July 1995 he was the Director of New Business
Development for the Editel Los Angeles division. He served as Vice President of
CIS from 1988 through 1994, a Hollywood based specialized visual effects
company.

Mr. Eyring has been Chief Technology Officer since June 1995. From 1991 to June
1995 he was Vice President of Engineering of the Editel New York division and
from 1982 through 1991 he was Director of Engineering Services for the Editel
New York division.

Mr. Levine has been President of the Unitel NY Studios division since August
1996. From June 1975 to August 1996, he was Vice President of Technical
Operations for the Unitel NY division of the Company.

Mr. Horowitz has been Chief Financial Officer of the Company since April 1996.
From May of 1993 through June of 1996 he was Director of Finance for the
Company.

The term of office of each executive director of the Company expires as
specified by the Board of Directors of the Company and when his or her
respective successor is elected and has qualified.

<PAGE>

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.

The Company's Common Stock is traded on the American Stock Exchange under
the symbol UNV. The following table sets forth, for fiscal years 1996 and 1995,
the high and low sales prices of the Common Stock as furnished by the American
Stock Exchange:

Fiscal Year 1996: Low High
--- ----
First Quarter....................... 4 7/8 6 13/16
Second Quarter...................... 5 1/8 8
Third Quarter....................... 4 7/8 7 3/8
Fourth Quarter...................... 5 1/4 6 1/4

Fiscal Year 1995: Low High
--- ----
First Quarter....................... 4 7/8 6 1/2
Second Quarter...................... 4 7/8 7 3/4
Third Quarter....................... 5 7/8 7 1/2
Fourth Quarter...................... 5 3/4 8 1/2

As of November 22, 1996 there were approximately 382 holders of the
Company's Common Stock.

Since its inception in 1969, the Company has not declared or paid cash
dividends on its Common Stock, and it does not anticipate declaring or paying
cash dividends in the foreseeable future. The declaration, payment and amount
of future dividends will be determined by the Board of Directors in light of
conditions then existing, including the Company's earnings, financial condition,
capital requirements and other factors. In connection with its financing
arrangements, the Company is subject to certain restrictions which prohibit the
payment of cash dividends. (See Note B to Notes to Consolidated Financial
Statements, and Management's Discussion and Analysis of Financial Condition and
Results of Operations).

<PAGE>

Item 6. Selected Financial Data
- -------
1996 1995 1994 1993 1992(b)
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Sales $79,287,000 $83,285,000 $80,498,000 $79,390,000 $63,000,000
Cost of sales (c) $65,501,000 $69,219,000 $64,391,000 $62,418,000 $48,382,000
Interest expense, net $ 3,686,000 $ 3,649,000 $ 2,388,000 $ 2,815,000 $ 2,072,000
Earnings(loss)before
income taxes $(5,084,000) $(9,341,000) $ 1,519,000 $ 924,000 $ 3,097,000
Net earnings(loss)(a) $(5,124,000) $(6,547,000) $ 859,000 $ 711,000 $ 1,728,000

FINANCIAL POSITION:
Total assets $67,618,000 $74,186,000 $73,245,000 $69,052,000 $62,269,000
Working capital
(deficiency) $(8,356,000)(e) $(3,467,000)(e) $(8,055,000)(d) $ (705,000) $ 2,577,000
Current ratio .60 to 1 (e) .82 to 1(e) .64 to 1 (d) .95 to 1 1.22 to 1
Property & equipment-net $50,466,000(f) $34,491,000(f) $55,425,000 $51,166,000 $43,679,000
Long-term debt, less
current maturities $19,706,000 $19,936,000 $14,142,000(d) $21,835,000 $27,904,000
Stockholders' equity $17,810,000 $22,526,000 $28,828,000 $27,673,000 $17,727,000

DATA PER COMMON SHARE:
Net earnings(loss)per
common share $ (1.96) $ (2.53) $ .33 $ .30 $ 1.07

Weighted average number of
common and common equivalent
shares outstanding 2,613,000 2,582,000 2,617,000 2,066,000 1,580,000

</TABLE>

(a) Federal and state tax credits of approximately $15,000 in 1996, $28,000 in
1995, $58,000 in 1994, $30,000 in 1993 and $211,000 in 1992 have been
applied as a reduction of the provision for income taxes.

(b) Includes the results of Editel-New York, Chicago and Los Angeles since
March 1, 1992.

(c) Gain on sale or disposal of equipment and amortization of goodwill have
been reclassified to depreciation expense to conform with fiscal 1994, 1995
and 1996 presentation. (See Note H to Notes to Consolidated Financial
Statements).

(d) The revolving credit portion of the long-term debt which expired in May
1995, was included in current liabilities. In December 1995, the Company
refinanced its revolving credit and term loans outstanding with its
bank lenders.

(e) The working capital deficiency is primarily due to the inclusion of
$3,750,000 in 1995 and $6,588,000 in 1996 of Term Loan B in current
liabilities.

(f) The decrease in property and equipment is due to the reclassification of
the Editel divisions' net assets to assets held for sale, a separate
line in the long-term asset section of the balance sheet. In 1996 the
Company decided to retain its Editel Los Angeles division and also
redeployed the majority of the assets of the Editel New York and Editel
Chicago divisions throughout the Company. These assets were no longer
considered assets held for sale and were reclassified to property and
equipment.

<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.

LIQUIDITY AND CAPITAL RESOURCES.

The Company is committed to keeping pace with technological developments as
well as taking advantage of new business opportunities in the video
communications industry. Capital expenditures were $9,134,000 during fiscal
1996 as compared to $9,738,000 (exclusive of the acquisition of GC & Co.) and
$15,002,000 during fiscal years 1995 and 1994, respectively. Expenditures made
during fiscal 1996 were for equipment used in the production, post production
and computer graphics service areas throughout the Company.

The net change in cash in the fiscal years ended August 31, 1996, 1995 and
1994 was $31,000, $(1,132,000) and $285,000, respectively. The net cash
increase in fiscal 1996 was the result of net cash provided by operating
activities of $7,130,000 and financing activities of $884,000 which was offset
by $7,983,000 related to investing activities. For the year ended 1996, the
large reduction in accounts receivables and payables was primarily due to the
closing of the Company's Editel Chicago and Editel New York divisions. The
increase in deferred financing costs and the majority of the net cash provided
by financing activities are due to the refinancing of the Company's debt in
December of 1995. The majority of the proceeds generated from the disposal of
assets are related to the closure of the Editel Chicago and Editel New York
divisions. The decrease in fiscal 1995 was the result of cash provided by
operating activities of $8,134,000 and financing activities of $1,420,000 less
cash used in investing activities of $10,686,000. The net cash decrease in
fiscal 1995 was primarily due to the Company's fixed asset expenditures for the
year exceeding the cash generated by operations. The increase in fiscal 1994
was the result of cash provided by operating activities of $11,116,000 and
financing activities of $2,480,000 in excess of cash used in investing
activities of $13,311,000. The net cash increase in fiscal 1994 is primarily
due to the cash generated by the Company's operations and net loan proceeds
exceeding the net cash used to purchase capital assets.

In December 1995, the Company entered into a $26 million revolving credit
and term loan agreement with a financial institution, consisting of an $11
million revolving credit facility and two $7.5 million term loans. Term loan A
is payable in 59 monthly principal payments of $89,000 through November 2000 and
a payment of $2,249,000 at December 2000. Term loan B is repayable from the
proceeds of sales of fixed assets. As of August 31, 1996 $912,000, has been
repaid leaving a balance of $6,588,000 for term loan B. Subsequent to the
fiscal year end, the Company repaid an additional $1,943,000 from asset sales,
leaving a balance of $4,645,000 related to this portion of the term loan as of
November 25, 1996. The remaining balance of term loan B is due in full on
December 31, 1996.

Additionally, in December 1995, the Company obtained from a bank a
$4,000,000 mortgage on its property located on West 57th Street in New York
City. The mortgage is payable in equal monthly installments of $22,000 through
November 2002, with a final payment of $2,152,000 due in December 2002.

<PAGE>

The proceeds of the $15 million term loan, the $4 million mortgage and $2.5
million drawn by the Company under the revolving credit facility were used to
refinance the term loan ($8,577,000) and revolving credit facility ($9,975,000)
and to repay the City of New York Industrial Revenue Bond obligation ($265,000)
all then outstanding to the Company's bank lenders. The remaining $2,683,000
was used for closing costs and for payment of prior capital expenditures. The
terms of the Company's new revolving credit and term loan agreement provide that
the lender receive a first lien on all property, equipment and accounts
receivable that are not encumbered by another lender. At August 31, 1996,
$5,706,000 was outstanding under the revolving portion of the credit facility.

See Note B to Notes to Consolidated Financial Statements with respect to
compliance with certain financial covenants.

In February 1995, the Company purchased the business and assets of GC & Co.
(formerly known as Greene, Crowe & Company), a Burbank, California based
supplier of "on-location" services for the videotaping and live telecasting of
concerts, cultural and other events, including the " The Academy Awards", the
"The Grammy Awards" and "The American Music Awards". The purchase price was
$6,750,000, consisting of $6,000,000 in cash and $750,000 of convertible
subordinated promissory notes. The notes bear interest at 1% over prime and are
due in full in August 1997 and are also convertible into the Company's common
stock at $10.00 per share. The cash portion of the purchase price was financed
by a $4,700,000 five year capital lease with a fixed rate of interest of 8.2%,
payable in sixty equal monthly payments of principal and interest of $82,000 and
a balloon payment at the end of the lease period of $940,000. Additionally, the
Company obtained a $1,800,000 loan with a fixed interest rate of 9.3% payable in
sixty equal monthly payments of principal and interest of $33,000 and a balloon
payment at the end of the five year period of $360,000. The $500,000 available
to the Company from these two financings after the payment of the cash portion
of the GC & Co. acquisition price was used to repay a $500,000 note payable to
Banta Corporation from the purchase of the Editel Los Angeles building.

In October 1993, the Company purchased a building located on West 53rd
Street in New York City for a purchase price of $2,800,000. The Company is
utilizing the building, which contains approximately 14,000 square feet, as a
videotape recording studio. The Company also entered into a $2,700,000
equipment financing agreement with a leasing company in October 1993. The
proceeds of this financing were used towards payment of the purchase price of
the 53rd Street property. The equipment financing is repayable in 60 monthly
installments of $53,000, including principal and interest, at a fixed rate of
7%. The Company obtained a $1,875,000 mortgage financing on this property in
June 1994 with a fixed rate of interest of 8.6%. The mortgage principal is
payable in equal monthly payments through June, 2004 with options to extend the
maturity date through June, 2019.

In connection with certain of its financings, the Company must adhere to
particular financial ratios and restrictions including restrictions on future
payment of dividends. The Company anticipates that the restrictions will not
impair its ability to keep pace with technological developments.

The enactment of the Tax Reform Act of 1986 has limited the Company's
ability to defer the payment of taxes due to the imposition of an alternative
minimum tax which effectively results in the treatment of certain timing
differences as tax preference items.

<PAGE>

RESULTS OF OPERATIONS

Sales were $79,287,000, $83,285,000 and $80,498,000 for the fiscal years
ended August 31, 1996, 1995 and 1994, respectively. The sales decrease of
$3,998,000 was primarily due to the closing of the Company's Editel Chicago
division in February of 1996 and the restructuring during the year and
subsequent closure of the Company's Editel New York division. Sales increased
by approximately $4,000,000, in the aggregate, at the Company's other divisions,
but was offset by a reduction in sales of $8,000,000 at the Editel Chicago and
Editel New York divisions. The fiscal year 1995 sales increase of $2,787,000
was primarily due to revenues generated by the Company's studio production and
mobile facilities as a result of the addition of a studio in New York City and
the acquisition of the GC & Co. mobile units which was offset by declines in
sales at the Company's Editel divisions. In fiscal year 1994, sales increased
$1,108,000 which was primarily due to a higher demand for the Company's mobile
services. Sales remained flat for the Company's Editel-Chicago and both Los
Angeles divisions due to severe price competition in these markets.

The Company recorded net losses of $5,124,000 and $6,547,000 in the fiscal
years ended August 31, 1996 and 1995 and net income of $859,000 in fiscal 1994.
The net loss of $5,124,000 incurred in fiscal 1996 is attributable to costs
relating to the closure of the Company's Editel New York and Editel Chicago
divisions and the operating costs of running these divisions until they were
closed. The net loss of $6,547,000 incurred in fiscal 1995 is due primarily to
the pretax charge of $7,681,000 taken for the impairment of assets of the Editel
New York, Editel Chicago, Editel Los Angeles and Windsor Video divisions and the
pretax charge of $400,000 for the restructuring of the Editel Chicago division.

Production costs, the main component of cost of sales, consist primarily of
direct labor, equipment maintenance expenses and occupancy costs. The Company's
production costs, as a percentage of sales, were 72.7%, 71.1% and 68.4%, for the
fiscal years ended August 31, 1996, 1995 and 1994, respectively. The increase
in production costs as a percent of sales in fiscal 1996 is due to the decrease
in sales and incremental severance costs associated with the closure of the
Company's Editel New York and Editel Chicago divisions. During 1996, the
Company implemented a program to reduce production costs by closing unprofitable
divisions and streamlining operations wherever possible. The increase in
production costs for fiscal 1995 as compared with the prior years, is due
primarily to an increase in studio and mobile production revenues which incur
variable expenses at a higher rate than the Company's other services.
Production costs increased as a percentage of sales in fiscal 1994 because
production costs increased during that year while sales remained flat with the
prior year. Since most of the Company's costs are fixed and a large portion of
the costs are subject to price increases, flat sales from year to year result in
production costs which are an increased percentage of sales. This same dynamic
applies for both selling expenses and general and administrative expenses.

Depreciation, as a percentage of sales, was 9.9%, 12.1% and 11.5% in fiscal
1996, 1995 and 1994, respectively. Depreciation expense decreased in fiscal
1996 due to the reclassification of the net property and equipment of the Editel
divisions to net assets held for sale at August 31, 1995. The impairment charge
recorded represents management's estimate of the decrease in value of these
assets during the period such assets were held for sale in fiscal 1996 based
upon the method of depreciation which the Company has used in the past and which
management has found to be reasonable and appropriate.

<PAGE>

The Editel Chicago division was closed in February 1996 and the Editel New York
division was closed in August 1996. Depreciation expense increased in 1995 as a
result of the $4,750,000 equipment portion of the GC & Co. acquisition and
capital expenditures made during the year totaling $9,738,000. Depreciation
expense increased as a percentage of sales in 1994 due to the purchase of
$15,002,000 in fixed assets during the year. Depreciation expense, during
fiscal 1996 included loss on disposal of assets of $58,000. Depreciation was
offset by a gain on disposal of assets of $352,000 and $817,000 in fiscal 1995
and 1994 respectively. Had the gain on disposal of assets been excluded from
depreciation expense, depreciation as a percentage of sales for 1995 and 1994
would have been 12.5%.

Selling expenses, as a percentage of sales, during fiscal years 1996, 1995
and 1994 were 2.9%, 3.4% and 3.5%, respectively. The decrease in selling
expenses during fiscal 1996 is primarily due to a decrease in the sales staff at
the Editel Chicago and Editel New York divisions. In 1995 and 1994, selling
expenses as a percentage of sales decreased due to significant cost reductions
which became effective in 1993.

General and administrative expenses as a percentage of sales during fiscal
years 1996, 1995 and 1994 were 12.2%, 10.6% and 11.8%, respectively. The
increase in general and administrative costs in fiscal 1996 is due primarily to
severance pay at the Editel Chicago and Editel New York divisions. Cost
reductions put into effect in 1994, including the addition of in-house counsel
and a resulting reduction in professional fee expense, were reflected in fiscal
years 1995 and 1994 by a decrease of approximately 1% from each of the prior
years.

Interest expense, as a percentage of sales, during fiscal years 1996, 1995,
and 1994 was 4.6%, 4.4% and 3.0%, respectively. Although interest expense
increased slightly in 1996, the percent to sales increase to 4.6% in 1996 versus
4.4% in 1995 is due to lower sales in the current fiscal year. The increase in
interest expense in fiscal 1995 was due to additional interest incurred relating
to the mortgage financings for the Editel Los Angeles building purchased by the
Company in June 1994 and financing obtained for the acquisition of GC & Co. in
February 1995. During fiscal 1995 the Company wrote off $214,000 of deferred
financing costs related to its bank debt which was refinanced in December 1995.
Additionally, interest rates were significantly higher in 1995 as compared with
the prior year resulting in higher interest payments on the floating rate
portion of the Company's debt. The decrease in interest expense in 1994 is due
to the renegotiation of the rate payable on the Company's indebtedness to its
primary bank lenders, a reduction in the amortization of deferred financing
costs charged to interest expense and the capitalization of approximately
$300,000 of interest relating to construction on the Editel Los Angeles and 53rd
Street, New York City locations.

The Company's effective tax rates were (1%), (30%) and 43.4% in fiscal
years 1996, 1995 and 1994, respectively. The 1996 effective tax rate reflects
the current year net operating loss for which no tax benefit was provided. The
effective tax rate in 1995 differs from prior years primarily due to the impact
of the nondeductible goodwill write off and the impairment of assets charge.
(See Note F to Notes to Consolidated Financial Statements.) During fiscal 1994,
the effective rate exceeded the Federal statutory rate of 34.0% due to state and
local income taxes, and the effect of certain non-deductible expenses.

<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

UNITEL VIDEO, INC.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

PAGE

REPORT OF GRANT THORNTON LLP INDEPENDENT ACCOUNTANTS.........18

CONSOLIDATED FINANCIAL STATEMENTS:
BALANCE SHEETS - AUGUST 31, 1996 AND 1995............. 19-20
STATEMENTS OF OPERATIONS - YEARS ENDED
AUGUST 31, 1996, 1995 AND 1994.................. 21
STATEMENT OF STOCKHOLDERS' EQUITY - YEARS ENDED
AUGUST 31, 1996, 1995 AND 1994................... 22
STATEMENTS OF CASH FLOWS - YEARS ENDED
AUGUST 31, 1996, 1995 AND 1994................... 23-25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS............ 26-37

SUPPLEMENTARY FINANCIAL SCHEDULE........................... 44

Selected Quarterly Financial Data is set forth in
Note K to Notes to the Consolidated Financial Statements.

<PAGE>

REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Shareholders
Unitel Video, Inc.

We have audited the accompanying consolidated balance sheets of Unitel Video,
Inc. (a Delaware corporation) at August 31, 1996 and 1995 and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the three years in the period ended August 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Unitel
Video, Inc. as of August 31, 1996 and 1995, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
August 31, 1996, in conformity with generally accepted accounting principles.

As discussed in Note J to the consolidated financial statements, the Company
adopted the provisions of the Financial Accounting Standards Board's Statement
of Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" during fiscal
1995.

We have also audited Schedule II of Unitel Video, Inc. for each of the three
years in the period ended August 31, 1996. In our opinion, this schedule
presents fairly, in all material respects, the information required to be set
forth therein.

/s/GRANT THORNTON LLP
- -----------------------------------

New York, New York
November 19, 1996

<PAGE>

UNITEL VIDEO, INC.

CONSOLIDATED BALANCE SHEETS

August 31,

ASSETS 1996 1995

Current assets:
Cash $ 192,000 $ 161,000
Accounts receivable, less
allowance for doubtful accounts
of $712,000 in 1996 and
$686,000 in 1995 8,701,000 12,700,000
Other receivables 333,000 362,000
Prepaid income taxes 142,000 567,000
Prepaid expenses 735,000 1,340,000
Net assets held for sale 1,587,000 --
Deferred tax asset 844,000 760,000
---------- ----------
Total current assets 12,534,000 15,890,000

Property and equipment - at cost
Land, buildings and
improvements 19,915,000 13,541,000
Video equipment 97,023,000 78,145,000
Automobiles -- 50,000
Furniture and fixtures 3,502,000 2,736,000
---------- ----------
120,440,000 94,472,000

Less accumulated depreciation
and amortization 69,974,000 59,981,000
---------- ----------
50,466,000 34,491,000

Net assets held for sale -- 19,270,000

Deferred tax asset 1,625,000 1,745,000
Goodwill 1,859,000 1,997,000
Other assets 1,134,000 793,000
---------- ----------
$67,618,000 $74,186,000
---------- ----------
---------- ----------

See accompanying notes.

<PAGE>

UNITEL VIDEO, INC.

CONSOLIDATED BALANCE SHEETS
(Continued)

August 31,

LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1995
- ------------------------------------ ---- ----

Current liabilities:
Accounts payable $ 4,967,000 $ 7,339,000
Accrued expenses 1,450,000 1,620,000
Payroll and related taxes 2,947,000 2,931,000
Current maturities of long-term
debt 8,362,000 5,492,000
Current maturities of subordinated debt 1,166,000 104,000
Current maturities of ESOP loan 166,000 186,000
Current maturities of capital lease
obligations 1,832,000 1,685,000
----------- ------------
Total current liabilities 20,890,000 19,357,000

Deferred rent 325,000 864,000
Long-term debt, less current maturities 19,706,000 19,936,000
Subordinated debt, less current
maturities 1,979,000 3,146,000
ESOP loan, less current maturities -- 152,000
Long-term leases, less current
maturities 5,604,000 7,064,000
Accrued retirement 1,304,000 1,141,000

Stockholders' equity:
Common stock, par value $.01 per
share:
Authorized-5,000,000 shares
Issued-3,532,554 shares in 1996
and 3,491,454 shares in 1995,
and outstanding 2,666,265 shares
in 1996 and 2,625,165 shares in
1995 26,000 26,000
Additional paid-in capital 27,545,000 27,351,000
Accumulated deficit/Retained earnings (1,592,000) 3,532,000
Common stock held in treasury, at cost
(866,289 shares in 1996 and 1995) (7,974,000) (7,974,000)
------------ ------------
18,005,000 22,935,000
Unearned employee benefit expense (195,000) (409,000)
------------ ------------
Total stockholders' equity 17,810,000 22,526,000
------------ ------------
$ 67,618,000 $74,186,000
------------ ------------
------------ ------------

See accompanying notes.

<PAGE>

UNITEL VIDEO, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year ended August 31,
1996 1995 1994
---- ---- ----

<S> <C> <C> <C>
Sales $79,287,000 $83,285,000 $80,498,000
------------ ------------ ------------

Cost of sales:
Production costs 57,661,000 59,174,000 55,097,000
Depreciation and
amortization 7,840,000 10,045,000 9,294,000
------------ ------------ ------------
65,501,000 69,219,000 64,391,000
------------ ------------ ------------
Gross profit 13,786,000 14,066,000 16,107,000

Operating expenses:
Selling 2,275,000 2,843,000 2,852,000
General and
administrative 9,690,000 8,832,000 9,512,000
Interest 3,686,000 3,649,000 2,388,000
Restructuring charge 1,246,000 400,000 --
Impairment charge 2,000,000 7,681,000 --
------------ ------------ ------------
18,897,000 23,405,000 14,752,000
------------ ------------ ------------

Earnings(loss)from
operations (5,111,000) (9,339,000) 1,355,000

Other income (loss) 27,000 (2,000) 164,000
------------ ------------ ------------
Earnings(loss)before
income taxes (5,084,000) (9,341,000) 1,519,000
Income taxes (benefit) 40,000 (2,794,000) 660,000
Net earnings (loss) ------------ ------------ ------------
applicable to common
stock $ (5,124,000) $(6,547,000) $ 859,000
------------ ------------ ------------
------------ ------------ ------------

Net earnings (loss)
per common share $ (1.96) $ (2.53) $ .33
------------- ------------ -----------
------------- ------------ -----------

Weighted average number
of common and common
equivalent shares
outstanding 2,613,000 2,582,000 2,617,000
------------ ------------ ------------
------------ ------------ ------------
</TABLE>

See accompanying notes.

<PAGE>

UNITEL VIDEO, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
YEARS ENDED AUGUST 31, 1996, 1995 AND 1994

Common Stock Additional Common Stock
------------ Paid-In Retained Held in Unearned Employee
Shares Amount Capital Earnings Treasury Benefit Expense
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, August 31, 1993 2,595,879 $26,000 $27,259,000 $9,220,000 $(7,974,000) $(858,000)
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
Net earnings 859,000
Exercise of stock options 250 1,000
Employee stock purchase plan 20,336 106,000
Repayment of loan to ESOP 169,000
Public offering expense
reimbursement 20,000
------------------------------------------------------------------------------------------------
BALANCE, August 31, 1994 2,616,465 26,000 27,386,000 10,079,000 (7,974,000) (689,000)
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------

Net loss (6,547,000)
Exercise of stock options 5,000 32,000
Employee stock purchase plan 3,700 20,000
Allocation of ESOP shares (87,000) 280,000
------------------------------------------------------------------------------------------------

BALANCE, August 31, 1995 2,625,165 26,000 27,351,000 3,532,000 (7,974,000) (409,000)
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------

Net loss (5,124,000)
Exercise of stock options 30,000 174,000
Employee stock purchase plan 11,100 49,000
Allocation of ESOP shares (29,000) 214,000
------------------------------------------------------------------------------------------------
BALANCE, August 31, 1996 2,666,265 $26,000 $27,545,000 $(1,592,000) $(7,974,000) $(195,000)
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------

</TABLE>

See accompanying notes.

<PAGE>

UNITEL VIDEO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended August 31,

1996 1995 1994
---- ---- ----
Cash Flows From Operating
Activities:

Net (loss) earnings $(5,124,000) $(6,547,000) $859,000
Adjustments to reconcile ------------ ------------ ------------
net (loss) earnings to
net cash provided by
operating activities:
Depreciation and
amortization 7,782,000 10,397,000 10,111,000
Net loss (gain) on disposal
of assets 58,000 (352,000) (817,000)
Impairment charge 2,000,000 7,681,000 --
Amortization of deferred
financing costs 252,000 603,000 500,000
Accretion of subordinated
debt -- -- 317,000
Recognition of
deferred gain -- (117,000) (200,000)
Royalties received in
equipment -- -- (189,000)
Payments made on accrued
acquisition costs -- -- (75,000)
Deferred rent (539,000) (123,000) (44,000)
Accrued retirement
expense 163,000 172,000 206,000
Accrued restructuring -- 273,000 --
Deferred income taxes 36,000 (2,520,000) 140,000
Decrease (increase), net
of acquired assets and
liabilities, in:
Accounts receivable, net 3,999,000 (1,928,000) 720,000
Other receivables 29,000 20,000 (336,000)
Prepaid expenses 605,000 213,000 (309,000)
Prepaid taxes 425,000 (486,000) 438,000
Other assets (30,000) (222,000) 14,000
Increase (decrease), net
of acquired assets and
liabilities, in:
Accounts payable (2,372,000) 835,000 (1,486,000)
Accrued expenses (170,000) 559,000 533,000
Payroll and related
taxes 16,000 (324,000) 734,000
------------ ------------ ------------
12,254,000 14,681,000 10,257,000
------------ ------------ ------------

Net cash provided by operating
activities 7,130,000 8,134,000 11,116,000
------------ ------------ ------------

<PAGE>

UNITEL VIDEO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

Year Ended August 31,

<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Cash Flows From Investing
Activities:
Capital expenditures $(9,134,000) $(9,738,000) $(15,002,000)
Acquisition of GC & Co.
assets -- (1,300,000) --
Proceeds from disposal
of assets 1,151,000 352,000 1,691,000
--------- ---------- ----------

Net cash used in investing
activities (7,983,000) (10,686,000) (13,311,000)
--------- ---------- ----------

Cash Flows From Financing
Activities:
Reimbursement of public
offering expenses -- -- 20,000
Proceeds from long-term
financing 25,717,000 6,120,000 9,518,000
Principal repayments (24,495,000) (4,187,000) (7,060,000)
Deferred Financing Costs (574,000) (90,000) (122,000)
Repayment of note to Banta -- (500,000) --
Proceeds from issuance of
common stock 223,000 52,000 107,000
Repayment of loan to ESOP (172,000) (168,000) 17,000
Release of ESOP quarterly
shares 185,000 193,000 --
--------- ---------- ----------

Net cash provided by
financing activities 884,000 1,420,000 2,480,000

Net Increase(Decrease) In Cash 31,000 (1,132,000) 285,000

Cash, Beginning of Year 161,000 1,293,000 1,008,000
--------- ---------- ----------

Cash, End of Year $ 192,000 $ 161,000 $ 1,293,000
--------- ---------- ----------
--------- ---------- ----------

Schedule of income taxes and
interest paid:

Income Taxes Paid $ 85,000 $ 162,000 $ 155,000
Interest Paid 3,374,000 3,256,000 1,713,000
--------- ---------- ----------

$ 3,459,000 $ 3,418,000 $ 1,868,000
--------- ---------- ----------
--------- ---------- ----------

</TABLE>

<PAGE>

UNITEL VIDEO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(continued)
<TABLE>
<CAPTION>
Year Ended August 31,

1996 1995 1994
<S> <C> <C> <C>
Supplemental schedule of non-
cash investing and financing
activities:

Capital lease obligations: $2,622,000 $ 2,690,000
------------ ------------
------------ ------------

Detail of acquisition of GC & Co.:
Fair value of assets acquired $6,750,000
Subordinated note to seller (750,000)
Capital lease obligation (4,700,000)
------------
Net cash paid for acquisition $1,300,000
------------
------------
</TABLE>

See accompanying notes.

<PAGE>

UNITEL VIDEO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED AUGUST 31, 1996, 1995 AND 1994

A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Business -- The Company provides facilities for studio production,
videotape editing, mobile production, computer graphics, film-to-tape transfer
and duplication of videotape in all formats, to the entire video communications
industry. The Company's facilities are used to produce television programs,
corporate communications and commercials on videotape. The Company's mobile
division provides "on-location" services for the videotape recording and live
telecasting of sports, cultural and other events throughout the United States.
The Company also designs and produces custom CD-ROM, CD-I, videodisc and
networked multimedia presentations. Customers for the Company's services
include cable television program suppliers, independent producers, national
television networks, local television stations and advertising agencies.

(2) Consolidation -- The consolidated financial statements include the accounts
of the Company and its wholly-owned subsidiary. Significant intercompany
accounts and transactions have been eliminated.

(3) Depreciation -- Depreciation is provided on a straight-line basis over the
estimated useful lives of assets which are: 30-40 years for buildings; 15-30
years for building improvements; length of lease for leasehold improvements; 5-7
years for video equipment; 5-7 years for furniture and fixtures; and 3 years for
automobiles. Gain on disposal of assets is included in depreciation and
amortization expense for all years reported.
(See Note H to Notes to Consolidated Financial Statements).

(4) Goodwill -- Goodwill relating to acquisitions represents the excess of cost
over the fair value of net assets acquired and is amortized over 15 years.
Accumulated amortization at August 31, 1996, 1995 and 1994 totaled $207,000,
$69,000 and $266,000, respectively. (See Note J to Notes to Consolidated
Financial Statements).

(5) Deferred Financing Costs -- Costs incurred in obtaining long-term debt
financing are included in other assets. These costs are being amortized using
the interest method over the term of the related obligations.

(6) Interest Cost -- The Company had capitalized construction period
interest costs of $303,000 in 1994.

(7) Income Taxes -- Deferred income taxes arise primarily from the use of
different depreciation methods and lives for tax and financial
statement purposes, differences in the timing of the deduction for the
impairment charge and net operating loss and alternative minimum tax credit
carryforwards.

(8) Receivables -- The Company grants credit to customers, substantially all of
whom are in the entertainment, advertising or corporate communications
industries.

(9) Earnings per common share were determined by dividing net earnings by the
weighted average of common and common equivalent shares outstanding.

(10) Revenue Recognition -- Revenue is recorded when services are provided.

<PAGE>

(11) Financial Instruments -- The Company's principal financial instruments
consist of accounts receivable, accounts payable and long-term debt. The
Company believes that the carrying amount of such instruments approximates fair
value.

(12) Use of Estimates -- In preparing financial statements in conformity with
generally accepted accounting principles, management makes estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements, as well as the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

(13) Stock-Based Compensation -- Statement of Financial Accounting Standards No.
123 (SFAS No. 123), "Accounting for Stock Based Compensation," provided
companies a choice in the method of accounting used to determine stock-based
compensation. Companies may account for such compensation either by using the
intrinsic value-based method provided by APB Opinion No. 25 ("APB No. 25"),
"Accounting for Stock Issued to Employees," or the fair market value-based
method provided in SFAS No. 123. This statement is required to be adopted by
the Company during its fiscal year ending August 31, 1997. The Company intends
to use the intrinsic value-based method provided in APB No. 25 to determine
stock-based compensation. The sole effect of the adoption of SFAS No. 123 is
the obligation imposed on the Company to comply with the new disclosure
requirements provided thereunder.

<PAGE>

B. LONG-TERM DEBT
AUGUST 31,

1996 1995
---- ----

Notes payable to financial institution:
Term portion A payable in monthly
installments of $89,000 through November
2000 plus interest on the declining
balance at Prime plus 1.00% or LIBOR
plus 2.75% and final payment of
$2,249,000 due December 2000. $6,787,000 $7,500,000

Term portion B payable from the sale of
assets with interest payable monthly at
Prime plus 1.25% or LIBOR plus 3.00%
due December 1996. 6,588,000 7,500,000

Revolving portion payable in full in
December 2000 with interest payable monthly
at Prime plus .75% or LIBOR plus 2.50%. 5,706,000 860,000

Mortgage payable to a bank, due in monthly
installments of principal of $22,000
through November 2002, plus interest on
the declining balance at Prime plus .75%
or LIBOR plus 2.50% with a final payment
of $2,152,000 due December 2002. 3,822,000 4,000,000

Mortgage payable to a bank, at a fixed interest
rate of 8.6%, due in monthly installments
of principal of $6,250, plus interest on the
declining balance, through June 2019. 1,719,000 1,794,000

Mortgage payable to an insurance company, at a
fixed interest rate of 8.9%, due in monthly
installments of $22,000 through July 2009. 2,010,000 2,090,000

Note payable to an insurance company, at a
fixed rate of 9.3%, due in monthly installments
of $33,000 through February 2000. 1,436,000 1,684,000

Subordinated debt consisting of convertible
subordinated promissory notes payable to prior
owners of GC & Co. at an interest rate of Prime
plus 1% due in full August 1997 and a
subordinated promissory note payable to
Scanline Communications at an interest rate
of Prime plus 2% due in monthly installments
of principal of $35,000 with a final payment
of $1,250,000 due May 1999. 3,145,000 3,250,000
------------ ------------
31,213,000 28,678,000

Less current maturities 9,528,000 5,596,000
------------ ------------
$21,685,000 $23,082,000
------------ ------------
------------ ------------

<PAGE>

In December 1995, the Company entered into a $26 million revolving credit
and term loan agreement with a financial institution, consisting of an $11
million revolving credit facility and two $7.5 million term loans. Term loan A
is payable in 59 monthly principal payments of $89,000 through November 2000 and
a payment of $2,249,000 at December 2000. Term loan B is repayable from the
proceeds of sales of fixed assets. As of August 31, 1996 $912,000 has been
repaid, leaving a current balance of $6,588,000 for term loan B. Subsequent to
the fiscal year-end, the Company repaid an additional $1,943,000 from asset
sales, leaving a balance of $4,645,000 related to this portion of the term loan
as of November 25, 1996. The terms of the agreement provide that the lender
receive a first lien on all property and equipment and accounts receivable that
are not encumbered by another lender.

Additionally, in December 1995, the Company obtained a $4,000,000 mortgage
on its property located on West 57th Street in New York City, from the Company's
bank lender. The mortgage is payable in equal monthly installments of $22,000
through November 2002, with a final payment of $2,152,000 due in December 2002.

The closure of the Company's Editel Chicago and Editel New York divisions
and the sale of related assets necessitated the waiver at August 31, 1996 of
compliance with certain financial covenants, and amendment of those covenants,
by the Company's lenders of its $26,000,000 revolving credit and term loan
facility and its $4,000,000 mortgage on the Company's property on West 57th
Street, New York City.

In June 1994, the Company purchased for $3,500,000 from Scanline the
building occupied by the Editel Los Angeles division. Financing for the
purchase consisted of a $2,175,000, 15-year mortgage payable to an insurance
company lender, a $500,000 note payable to the seller, Scanline Communications,
and the balance from working capital. The note was paid in full in February
1995.

In October 1993, the Company purchased for $2,800,000 land and a building
located on West 53rd Street, New York City, which has been converted into a
videotape recording studio. In June 1994, the Company obtained a mortgage on
the West 53rd Street property in the amount of $1,875,000 from a bank. The
mortgage loan is payable in equal monthly principal payments through June 2004
with options to extend the maturity date through June 2019. Proceeds from this
mortgage were used for working capital purposes.

In February 1995, the Company purchased the business and assets of GC & Co.
The purchase price was $6,750,000, consisting of $6,000,000 in cash and $750,000
of convertible subordinated promissory notes. The cash portion of the purchase
price was financed by a $4,700,000, five-year capital lease and a $1,800,000
loan with a fixed interest rate of 9.3% payable in sixty equal monthly payments
of principal and interest of $33,000 and a balloon payment at the end of the
five-year period of $360,000.

Property, equipment and accounts receivable with a carrying value of
$60,754,000 at August 31, 1996 are pledged as collateral for all long-term debt
outstanding.

<PAGE>

The agreements relating to certain of these long-term obligations include
covenants which, among other terms, place restrictions on the Company's capital
expenditures, the maintenance of certain financial ratios (including minimum
levels of net worth and debt-to-equity restrictions, all as defined in the
agreements) and the payment of dividends.

At August 31, 1996, maturities of long-term debt for the next five years
are as follows:

Year Ended August 31,
----------------------

1997 $ 9,528,000
1998 2,224,000
1999 3,408,000
2000 7,770,000
2001 2,968,000
2002 and thereafter 5,315,000
----------
$31,213,000
-----------
-----------

C. OBLIGATIONS UNDER CAPITAL LEASE AGREEMENTS

The Company has entered into various capital lease agreements for video
equipment. The leases expire at various times through 2000.

Property recorded under capital leases includes the following:

August 31,
1996 1995
---- ----
Video equipment $10,447,000 $10,012,000
Accumulated depreciation (2,496,000) (1,240,000)
------------ ------------
$ 7,951,000 $ 8,772,000
------------ ------------
------------ ------------

Future minimum lease payments, as of August 31, 1996 are as follows:

Year Ended Capital
August 31, leases
- ---------- ----------

1997 $ 2,382,000
1998 2,344,000
1999 1,815,000
2000 2,157,000
2001 18,000
---------

Net minimum lease payments 8,716,000
Amount representing interest (1,280,000)
------------

Obligation under capital
lease agreements $ 7,436,000
------------
------------

Current portion $ 1,832,000

Long-term portion 5,604,000
------------
$ 7,436,000
------------
------------

<PAGE>

D. STOCK OPTION PLANS

In January 1986, the Company's Board of Directors approved a Non-Statutory
Stock Option Plan (the "Non-Statutory Plan") to grant as many as 50,000 shares
to the Company's non-employee directors. Under the Non-Statutory Plan options
to purchase 10,000 shares were outstanding at August 31, 1996.

In July 1988, the Company's Board of Directors approved a Non-Qualified
Stock Option Plan (the "Non-Qualified Plan") to grant as many as 125,000 shares
primarily to key employees. Options to purchase 10,000 shares granted to
several officers under the Non-Qualified Plan were outstanding at August 31,
1996.

In July 1992, the Company's shareholders approved adoption of the 1992
Stock Option Plan (the "1992 Plan") to grant as many as 350,000 shares primarily
to key employees and non-employee directors. Prior to July 1992, the Company
granted options under the plans described above. All future grants will be
granted under the 1992 Plan. Options to purchase 195,500 shares were
outstanding to key employees and non-employee directors under the 1992 Plan at
August 31, 1996.

Under all plans, options have generally been granted to purchase stock at
the fair market value of the shares at the date of grant as determined by the
Board of Directors. Under the Non-Qualified Plan, the options expire five years
after the date of grant and under the Incentive Plan and Non-Statutory Plan,
options expire ten years after the date of grant.

The status of stock options under the Company's stock option plans is
summarized below:
<TABLE>
<CAPTION>

Number of Option Price
Shares Per Share
------ ---------

<S> <C> <C> <C>
Options Outstanding, August 31, 1993 326,950 $5.75 - $13.18

Granted 5,000 $6.00
Exercised (250) $5.75
Expired and canceled (92,000) $5.875 - $10.81
----------

Options Outstanding, August 31, 1994 239,700 $5.75 - $13.18

Granted 34,000 $6.625 - $ 7.25
Exercised (5,000) $6.50
Expired and canceled (43,000) $5.875 - $13.18
----------

Options Outstanding, August 31, 1995 225,700 $5.75 - $13.18

Granted 111,500 $5.13 - $ 5.28
Exercised (30,000) $5.75 - $ 5.87
Expired and canceled (91,700) $5.75 - $10.81
----------

Options Outstanding, August 31, 1996 215,500
----------
----------
</TABLE>

At August 31, 1996, a total of 309,500 shares were reserved for future
option grants for all plans and options to purchase 215,500 shares were
outstanding.

<PAGE>

E. EMPLOYEE STOCK OWNERSHIP PLAN

In June 1987, the Employee Stock Ownership Plan (the "ESOP") obtained
financing from a bank amounting to $1,250,000, which was used in acquiring
115,849 shares of newly issued Company stock. The bank loan bears interest at a
fixed rate of 10% and is guaranteed by the Company. The ESOP is funded by
Company contributions as required to provide the ESOP with the funds necessary
to meet its debt service requirements.

The loan obligation of the ESOP is considered unearned employee benefit
expense and is recorded as a separate reduction of the Company's
shareholders' equity. Both the loan obligation and the unearned benefit expense
are reduced by the amount of any loan repayments made by the ESOP. The loan
requires monthly payments of principal of $15,000 and interest at a fixed rate
of 10% through June 1997. The aggregate principal maturities of the ESOP
obligation subsequent to August 31, 1996 are as follows:

1997.............................. $166,000

In fiscal 1991, the ESOP purchased 25,810 shares of the Company's Common
Stock. These purchases have been financed by a ten-year loan from the Company
for $229,193. The loan requires monthly payments of principal and interest at
10%. The Company's related receivable from the ESOP has been classified as a
reduction of shareholders' equity.

401(K) EMPLOYEE SAVINGS AND STOCK OWNERSHIP PLAN

Effective July 1, 1992, the ESOP merged into the Unitel Video, Inc.
Retirement Investment Plan (a 401(k) Plan), which became the Unitel Video, Inc.
401(k) Employee Savings and Stock Ownership Plan (the "Plan"). The Plan
requires the Company to match employee contributions to the 401(k) portion of
the Plan in shares of the Company's Common Stock up to the maximum amount set
forth in the Plan. The minimum contribution required to be made each year by
the Company is the amount necessary to meet its debt service requirements. The
Plan combines a 401(k) plan with certain features of an employee stock ownership
plan.

Total contributions to the ESOP and the Plan for each of the years ended
August 31 are as follows:

1996 ............................. $248,000
1995 ............................. $336,000
1994 ............................. $253,000

The Company adopted Statement of Position 93-6 (SOP 93-6), "Employers'
Accounting for Employee Stock Ownership Plans" during 1995. In accordance with
SOP 93-6, compensation cost and liabilities associated with providing the
employer's 401(k) match are recognized the way they would be if an ESOP had not
been used to fund the benefit.

<PAGE>

The Plan's compensation expense was $158,000 and $191,000 for the years ended
August 31, 1996 and 1995, respectively. A summary of the Plan's shares is as
follows:
1996 1995
------ ------
Allocated shares 96,666 75,095
Shares released for allocation 8,608 19,234
Unreleased shares 27,575 42,939
-------- --------
132,849 137,268
-------- --------

Fair value of unreleased shares
at August 31 $155,000 $274,000
-------- --------
-------- --------

Prior to adoption of SOP 93-6, the unreleased shares were considered outstanding
for the earnings per share computation. Accordingly, for the years ended August
31, 1996 and 1995, shares were no longer considered outstanding. The effect of
adopting SOP 93-6 was not material on the net loss, and resulted in a decrease
of approximately 1% on the net loss per share for years ended August 31, 1996
and 1995.

F. INCOME TAXES

Deferred income taxes reflect the tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
and the amounts used for income tax purposes. Significant components of the
Company's deferred tax liabilities and assets are as follows:

August 31,

1996 1995
---- ----

Current portion of deferred
tax assets (liabilities)

Employee medical benefits $ 449,000 $ 308,000
Bad debt reserves 395,000 452,000
---------- ----------
844,000 760,000
---------- ----------

Long-term portion of deferred
tax assets (liabilities)

Accrued rent 139,000 371,000
Accrued retirement 560,000 491,000
Net assets held for sale 1,646,000 2,534,000
Net operating loss
carryforwards 997,000 330,000
ITC carryforwards-Federal
and State (net of valuation
allowance) 467,000 386,000
AMT credit carryforwards 2,540,000 2,570,000
Other - net 362,000 211,000
Tax over book depreciation (5,086,000) (5,148,000)
--------- ---------
1,625,000 1,745,000
--------- ---------
Net deferred tax asset
(liability) $2,469,000 $2,505,000
---------- ----------
---------- ----------

<PAGE>

The provision for income taxes is comprised of the following:

Year Ended August 31,

1996 1995 1994
---- ---- ----

Current:
Federal $ -0- $(270,000) $454,000
State 40,000 36,000 215,000
--------- --------- --------
40,000 (234,000) 669,000
Deferred:
Federal -0- (1,610,000) 3,000
State -0- (950,000) (12,000)
--------- ----------- ---------
-0- (2,560,000) (9,000)
--------- --------- --------
$ 40,000 $(2,794,000) $660,000
--------- ----------- ---------
--------- ----------- ---------

The Company's effective tax rate was (1%) in 1996, (30%) in 1995 and 43.4% in
1994. The components of the reconciliation of the Company's effective tax rate
to the U.S. statutory rate of 34% are as follows:

Year Ended August 31,

1996 1995 1994
------- ------- -------
Tax expense computed
at statutory rate $(1,729,000) $(3,176,000) $ 516,000

State income tax, net of
Federal income tax
benefit 26,000 (607,000) 157,000

Loss without benefit 1,634,000 -0- -0-
Goodwill 47,000 649,000 17,000
Other 62,000 340,000 (30,000)
----------- ----------- ----------

Actual tax expense $ 40,000 $(2,794,000) $ 660,000
----------- ------------ ----------
----------- ----------- ----------

The Company's total alternative minimum tax credit carryforward is
approximately $2,400,000, which can be used against the Company's future regular
tax liability.

At August 31, 1996, the Company had available for tax purposes in excess of
$2,000,000 of State of New York tax credits that will expire from August 31,
1996 through August 31, 2002. The State of New York limits the use of these
credits on an annual basis. For financial reporting purposes, a valuation
allowance of $1,900,000 has been recognized to offset the deferred tax assets
related to those carryforwards for the fiscal year ended August 31, 1995.

The deferred tax asset relating to the net operating loss carryforward is
attributable to the unused portions of Federal net operating losses generated in
fiscal 1996 and 1993 of $665,000 and $515,000, respectively, which are scheduled
to expire in 2011 and 2008, respectively, as well as state net operating losses
generated in fiscal 1995 of various amounts scheduled to expire at various times
through 2008. A valuation allowance of $2,065,000 has been recognized to offset
the deferred tax asset related to the remaining net operating loss carryforward
for the fiscal year ending August 31, 1996.

<PAGE>

Internal Revenue Code Section 382 places a limitation on the utilization of
Federal net operating loss and other credit carryforwards when an ownership
change, as defined by the tax law, occurs. Generally, this occurs when a
greater than 50 percentage point change in ownership occurs. Accordingly, the
actual utilization of the alternative minimum tax credit carryforwards and other
deferred tax assets for tax purposes may be limited annually to the percentage
(about 6%) of the fair market value of the Company at the time of any such
ownership changes.

G. COMMITMENTS AND CONTINGENCIES

Operating Leases -- The following is a schedule by years of future minimum
rental payments under operating leases that have an initial non-cancelable lease
term in excess of one year:

1997 $ 4,275,000
1998 4,230,000
1999 3,030,000
2000 1,739,000
2001 956,000
2002 and thereafter $ 1,000,000
------------
$ 15,230,000
------------
------------

The aggregate rental expense for the years ended August 31, 1996, 1995,
and 1994 was $3,874,000, $3,867,000 and $3,381,000, respectively.

The Company maintains cash balances at financial institutions located in
New York, New York, Pittsburgh, Pennsylvania, and Los Angeles, California.
These balances are insured by the Federal Deposit Insurance Corporation up to
$100,000. At August 31, 1996, uninsured amounts held at these financial
institutions were approximately $19,000.

The Company has contracts with several unions that expire in April, August
and November 1997.

There are various lawsuits claiming amounts against the Company. It is the
opinion of the Company's management that the ultimate liabilities, if any, in
these cases will not have a material effect on the Company's financial
statements.

H. NET GAIN ON DISPOSITION OF FIXED ASSETS

In June 1990, the Company sold to CBS Inc. a building it owned at 508-510
West 57th Street, New York, New York. The sale price of the property was
$4,650,000 payable in cash at the closing. As part of the transaction, the
Company entered into an Indenture of Lease with CBS, pursuant to which the
Company, as tenant, leased back the premises. The Company recognized a net gain
on the disposition of $2,277,000. In addition, under the provisions of
Statement of Financial Accounting Standards No. 98, the Company deferred
$922,000 of additional gain from the sale, representing the present value of the
future minimum rental payment under the portion of the lease which was not
subject to early termination. The remaining balance of the deferred gain of
$117,000 was recognized in the year ended August 31, 1995 as a reduction of rent
expense.

The Company has accelerated its efforts to sell equipment which is not
fully utilized. In order to properly reflect the sale of equipment as part of
the Company's operations, in 1996, 1995 and 1994, $(58,000), $352,000 and
$817,000, respectively, of (loss)/gain on disposal of assets was included in
depreciation expense.

<PAGE>

I. ACCRUED RETIREMENT

Under the terms of employment agreements with two former officers of the
Company, retirement payments are due commencing September 1, 1996. At August
31, 1996, a liability of approximately $1,304,000 has been recorded, based upon
the present value of these payments. Approximately $163,000, $172,000 and
$206,000 has been charged to operations for the years ended August 31, 1996,
1995 and 1994, respectively.

J. IMPAIRMENT AND RESTRUCTURING CHARGES

The Company has determined to focus its resources toward providing services
to the entertainment and corporate communications areas, which represent the
Company's strength. As part of this strategy, the Company decided to sell its
Editel New York, Editel Chicago and Editel Los Angeles divisions, which
specialize in the highly competitive commercial advertising portion of the video
facilities industry. During the 1995 fiscal year, the three Editel divisions
incurred a pretax loss of $3,682,000. As a result, the Company identified
property, plant and equipment associated with these divisions, which after an
impairment charge of $4,700,000 recorded as of August 31, 1995, had a carrying
value of approximately $19,300,000 that it no longer needed for its current and
future operations. During the fourth quarter of fiscal 1995, the Company
committed to a plan to dispose of the Editel divisions and in the first quarter
of fiscal 1996 began marketing these divisions to potential buyers.
Additionally, the Company reevaluated its investment in the Windsor division in
the fourth quarter of fiscal 1995 and determined that, based upon this
division's operating results, the goodwill associated with the purchase of this
division and certain property, plant and equipment that will not provide any
future benefits to the Company were impaired. The Company recognized an
impairment charge of approximately $3,000,000 included in impairment charges
during the fourth quarter of fiscal 1995 which represents the remaining balances
of these assets.

<PAGE>

the terms of the lease. Previously, in May of 1995, the Company adopted a plan
to downsize the operations of its Editel Chicago division and reorganize and
reduce its corporate management which resulted in recording a restructuring
charge of $400,000 for severance and early retirement expense.

During the months of March through May 1996, the editorial and computer
graphics departments of the Editel New York division were closed. In May 1996,
the Company reached an agreement in principle to sell the film-to-tape transfer
business of Editel New York, which was the remaining operating department, to a
group of employees backed by a private investor. The Company operated the film-
to-tape transfer business through August 31, 1996, at which time discussions
with the employee-led group were terminated and the business was closed. During
the negotiations, the majority of the editorial and computer graphics assets
were distributed throughout the Company. At August 31, 1996, the Company
estimated the revised value of the remaining assets held for sale to be
approximately $1,587,000 and classified them on the balance sheet as short-term.
In November 1996, the Company sold the majority of those assets to an unrelated
third party for $1,400,000. The balance of the assets will be redeployed
throughout the Company or disposed of through an auction. Proceeds from the
sale of assets are used by the Company to repay outstanding debt.

K. QUARTERLY FINANCIAL DATA (UNAUDITED)

Year Ended Primary Net
August 31, Gross Net Earnings Loss
1996 Sales Profit Earnings(Loss) Per Share
------------------------------------------------------------------------

1st quarter $22,940,000 $5,805,000 $ 522,000 $ .20
2nd quarter 20,529,000 3,171,000 (1,379,000) (.53)
3rd quarter 19,281,000 3,166,000 (2,290,000) (.88)
4th quarter 16,537,000 1,644,000 (1,977,000) (.75)

Year Ended Primary Net
August 31, Gross Net Earnings(Loss)
1995 Sales Profit Earnings(Loss) Per Share
----------------------------------------------------------------------

1st quarter $21,233,000 $4,548,000 $439,000 $ .17
2nd quarter 20,581,000 3,560,000 50,000 .02
3rd quarter 20,831,000 3,345,000 (798,000) (.31)
4th quarter 20,640,000 2,613,000 (6,238,000) (2.41)

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.

Not Applicable.

<PAGE>

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
OF THE REGISTRANT.

The information required by this item is incorporated herein by
reference to the Company's definitive Proxy Statement relating to the
Registrant's 1996 Annual Meeting of Stockholders to be filed pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended.

ITEM 11. EXECUTIVE COMPENSATION.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT.

ITEM 13. CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS.

The information required by this item is incorporated herein by
reference to the Company's definitive Proxy Statement relating to the
Registrant's 1996 Annual Meeting of Stockholders to by filed pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended.

<PAGE>

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K

(a) 1. The following financial statements of the Company are
included in Part II, Item 8:

Page
----

Report of Grant Thornton LLP Independent Accountants....................18
Consolidated Balance Sheets - August 31, 1996 and 1995...............19-20
Consolidated Statements of Operations - Years Ended
August 31, 1996, 1995, and 1994.......................................21
Consolidated Statement of Stockholders' Equity - Years
Ended August 31, 1996, 1995 and 1994..................................22
Consolidated Statements of Cash Flows -
Years Ended August 31, 1996, 1995 and 1994.........................23-25
Notes to Consolidated Financial Statements...........................26-37

2. The following schedule is included
in Part IV:

Consolidated Financial Statement
Schedule

Schedule II - Valuation and Qualifying Accounts and Reserves...44

All other schedules are omitted because they are not applicable, not
required or the required information is included in the consolidated financial
statements or notes thereto.

(b) Reports on Form 8-K. No reports on Form 8-K were filed by
the Company during the three months ended August 31, 1996.

1. Exhibit 3(A). Certificate of Incorporation, as amended
(incorporated by reference to Exhibit 3(A) of the Registrant's Annual Report on
Form 10-K filed November 24, 1992 (File No. 1-8654)).

2. Exhibit 3(B). Amended and Restated By-laws (incorporated by
reference to Exhibit 3(ii) of the Registrant's Quarterly Report on form 10-Q
filed April 15, 1996 (file No. 1-8654)).

3. Exhibit 4(A). Specimen of Stock Certificate (incorporated by
reference to Exhibit 4 of the Registrant's Annual Report on form 10-K filed
November 29, 1984 (File No. 1-8654)).

4. Exhibit 4(B). Amended and Restated Loan and Security
Agreement dated as of December 12, 1995 among Unitel Video, Inc., R Squared,
Inc., and Heller Financial, Inc. as agent and lender (incorporated by reference
to Exhibit 4(B) of the Registrant's Annual Report on form 10-K filed December
14, 1995 (File No. 1-8654)).

<PAGE>

5. Exhibit 4(C). Second Amended and Restated Credit Agreement
dated as of December 12, 1995 between Unitel Video, Inc. and The Chase Manhattan
Bank, N.A. (incorporated by reference to Exhibit 4(C) of the Registrant's Annual
Report on form 10-K filed December 14, 1995 (File No. 1-8654)).

6. Exhibit 4(D). First Amendment and Limited Waiver to Loan and
Security Agreement.

7. Exhibit 4(E). Waiver and Agreement to Amend Financial
Covenants dated November 27, 1996.

8. Exhibit 10. Material Contracts:

10(A) Amended Non-Qualified Stock Option Plan of Unitel Video,
Inc.

10(B) Lease Agreement between Unitel Video, Inc. and Educational
Broadcasting Corporation dated July 16, 1993 (incorporated by reference to
Exhibit 10(B) of the Registrant's Annual Report on Form 10-K filed November 26,
1993 (File No. 1-8654)).

10(C) Amended Non-Statutory Stock Option Plan of Unitel Video,
Inc.

10(D) Amended Employee Stock Purchase Plan of Unitel Video, Inc.

10(E) Employment & Consulting Agreement between Unitel Video,
Inc. and Herbert Bass dated as of May 26, 1988 (incorporated by reference to
Exhibit 10(R) of the Registrant's Annual Report on Form 10-K filed December 13,
1989 (File No. 1-8654)).*

10(F) Employment & Consulting Agreement between Unitel Video,
Inc. and Alex Geisler dated as of May 26, 1988 (incorporated by reference to
Item 14(C)4(S) of the Registrant's Annual Report on form 10K filed December 13,
1989 (File No. 1-8654)).*

10(G) Amendment to Employment and Consulting Agreement dated as
of February 14, 1996 between Unitel Video, Inc. and Alex Geisler.*

10(H) Lease Agreement between UNV, Inc. and HBWC Limited
Partnership dated as of August 12, 1988 (incorporated by reference to Exhibit
10(U) of the Registrant's Annual Report on Form 10-K filed December 13, 1989
(File No. 1-8654)).

10(I) Lease Agreements between Windsor Video, Inc. and Time
Equities Inc. dated as of September 4, 1986 (incorporated by reference to
Exhibit 10(V) of the Registrant's Annual Report on form 10-K filed December 13,
1989 (File No. 1-8654)).

10(J) Amendment to each Lease Agreement between Windsor Video,
Inc. and Time Equities Inc. dated as of July 13, 1994 and July 18, 1994
(incorporated by reference to Exhibit 10(K) of the Registrant's Annual Report on
form 10-K filed November 28, 1994 (File No. 1-8654)).

10(K) Lease Agreement between Unitel Video, Inc. and CBS, Inc.
dated as of June 15, 1990 (incorporated by reference to Exhibit 10(Y) of the
Registrant's Annual Report on Form 10-K filed November 26, 1990 (File No. 1-
8654)).

10(L) Amendment to Lease Agreement dated July 11, 1996 between
Unitel Video, Inc. and CBS, Inc.

<PAGE>

10(M) Assumption and Assignment of Lease between Unitel Video,
Inc. and VCA/Teletronics Inc. dated May 19, 1990 (incorporated by reference to
Exhibit 10(AA) of the Registrant's Annual Report on Form 10-K filed November 26,
1990 (File No. 1-8654)).

10(N) Amendment to Lease between Unitel Video, Inc. and Stage 57
Co. dated May 14, 1990 (incorporated by reference to Exhibit 10(BB) of the
Registrant's Annual Report on Form 10-K filed November 26, 1990 (File No. 1-
8654)).

10(O) Second Amendment to Lease between Unitel Video, Inc. and
Stage 57 Co. dated as of May 1, 1994 (incorporated by reference to Exhibit 10(O)
of the Registrant's Annual Report on Form 10-K filed November 28, 1994 (File No.
1-8654)).

10(P) Amended 1992 Stock Option Plan.*

10(Q) Lease Termination and Release Agreement dated as of March
13, 1996 between Unitel Video, Inc. and Putman Publishing Company.

10(R) Assignment, Assumption and Acceptance of Lease between
Scanline Communications and Unitel Video, Inc. (incorporated by reference to
Exhibit 10(V) of the Registrant's Annual Report on Form 10-K filed November 24,
1992 (File No. 1-8654)).

10(S) Asset Purchase Agreement dated as of May 5, 1992 between
Unitel Video, Inc. and Scanline Communications (incorporated by reference to
Exhibit 2.1 of the Registrant's Current Report on Form 8-K dated May 15, 1992
(File No. 1-8654)).

10(T) Amendment dated as of October 29, 1992 to Asset Purchase
Agreement dated as of May 5, 1992 between Unitel Video, Inc. and Scanline
Communications (incorporated by reference to Exhibit 10(X) of the Registrant's
Annual Report on Form 10-K filed November 24, 1992 (File No. 1-8654)).

10(U) Lease Agreement between First East Associates and Unitel
Video, Inc. dated May 26, 1993 and Sublease dated May 26, 1993 between Unitel
Video, Inc. and KingWorld Productions, Inc.(incorporated by reference to Exhibit
10(U) of the Registrant's Annual Report on Form 10-K filed November 26, 1993
(File No. 1-8654)).

10(V) Sublease Agreement dated April 1, 1987 between R.E.
Graphics, Inc. (f/k/a Micor, Inc.) and Scanline Communications, together with
Modification dated February 1989 of Sublease Agreement (incorporated by
reference to Exhibit 10(AA) of the Registrant's Annual Report on Form 10-K filed
November 24, 1992 (File No. 1-8654)).

10(W) Sublease Agreement dated January 1, 1982 between Columbia
Pictures Industries, Inc. and Bell & Howell/Columbia Pictures Video Services,
together with letter dated April 3, 1989 from Columbia Pictures to Scanline
Communications and undated Letter from Columbia Pictures to 43rd Street Estates
Corp. (incorporated by reference to Exhibit 10(BB) of the Registrant's Annual
Report on Form 10-K filed November 24, 1992 (File No. 1-8654)).

10(X) Third Tier Sublease, dated May 14, 1996, between Unitel
Video, Inc. and Photo-Magnetic Sound Studios Inc.

<PAGE>

10(Y) Sublease Agreement dated as of July 3, 1996 between Unitel
Video, Inc. and Henry Dreyfuss Associates and Second Tier Sublease dated as of
July 3, 1996 between Unitel Video, Inc. and Paramount Pictures Corporation.

10(Z) 401K Employee Savings and Stock Ownership Plan of Unitel
Video, Inc. effective July 1, 1992 (incorporated by reference to Exhibit 10(X)
of the Registrant's Annual Report on Form 10-K filed November 26, 1993 (File No.
1-8654)).*

10(AA) Asset Purchase Agreement dated as of February 24, 1995
between Jee See & Co., Inc. and Unitel Video, Inc. (incorporated by reference to
Exhibit 2-1 of the Registrant's Current Report on Form 8-K dated February 24,
1995 (File No. 1-8654)).

10(BB) Two Third Tier Sublease agreements dated November 22,
1996 between Unitel Video, Inc. and Digital Universe II, Inc.

9. Exhibit 23. Accountant's consent.

10. Exhibit 24. Power of Attorney from officers and directors to
Barry Knepper (included on signature page).

11. Exhibit 27. Financial Data Schedule.

* Management contract or compensatory plan or arrangement required to be noted
as provided in Item 14(a)(3).

<PAGE>

UNDERTAKING

The Company hereby undertakes to furnish to the Securities and Exchange
Commission, upon request, all constituent instruments defining the rights of
holders of long-term debt of the Company and its consolidated subsidiaries not
filed herewith. Such instruments have not been filed since none are, nor are
being, registered under Section 12 of the Securities and Exchange Act of 1934
and the total amount of securities authorized under any of such instruments does
not exceed 10% of the total assets of the Company and its subsidiary on a
consolidated basis.

<PAGE>

UNITEL VIDEO, INC.

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

COLUMN A COLUMN B COLUMN C1 COLUMN D COLUMN E
-------- -------- --------- -------- --------

Balance at Charged to Balance
Beginning Costs and at End
Description of Period Expenses Deductions of Period
----------- --------- -------- ---------- ---------
<S> <C> <C> <C> <C>
YEAR ENDED AUGUST 31, 1996
Allowance for doubtful
accounts $686,000 $407,000 $381,000 $712,000
-------- -------- -------- --------
-------- -------- -------- --------
YEAR ENDED AUGUST 31, 1995
Allowance for doubtful
accounts $690,000 $125,000 $129,000 $686,000
-------- -------- -------- --------
-------- -------- -------- --------

YEAR ENDED AUGUST 31, 1994
Allowance for doubtful
accounts $676,000 $386,000 $372,000 $690,000
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>

COLUMN D

Uncollectible accounts written off.

COLUMN E

Deducted in balance sheet from accounts receivable.

<PAGE>

For the purposes of complying with the amendments to the rules governing Form S-
8 (effective July 13, 1990) under the Securities Act of 1933, the undersigned
Registrant hereby undertakes as follows, which undertaking shall be incorporated
by reference into registrant's Registration Statement on form S-8 Nos. 33-7306
(filed July 15, 1986), 33-13660 (filed April 20, 1987),
33-14654 (filed May 28, 1987) and 33-00613 (filed February 8, 1996).

Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such directors, officers or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1993 and will be governed by the final adjudication of such issue.

<PAGE>

SIGNATURE AND POWER OF ATTORNEY

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

UNITEL VIDEO, INC.

November 26, 1996 By: /s/ Barry Knepper
- ------------ -------------------------
Barry Knepper
Chief Executive Officer

<PAGE>

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Barry Knepper, his true and lawful attorney-in-
fact and agent, with full power of substitution and resubstitution, for him and
in his name, place and stead, in any and all capacities, to sign any and all
amendments to this report, and to file the same, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes he might or could do in person, hereby ratifying and confirming all
that said attorney-in fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.

<PAGE>

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons in the capacities and on
the dates indicated.

Signature Title Date

/s/ Barry Knepper Chief Executive Officer; November 26, 1996
- ------------------------- President and Director
Barry Knepper

/s/ Richard L. Clouser Senior Vice President - November 26, 1996
- ------------------------- Corporate, President
Richard L. Clouser of the Mobile Division
and Director

/s/ Herbert Bass
- ------------------------- Director November 26, 1996
Herbert Bass

/s/ Alex Geisler
- ------------------------- Director November 26, 1996
Alex Geisler

/s/ Walter G. Arader
- ------------------------- Director November 26, 1996
Walter G. Arader

/s/ Philip Birsh
- ------------------------- Director November 26, 1996
Philip Birsh

<PAGE>
Exhibit 4(D)

FIRST AMENDMENT AND LIMITED WAIVER
TO LOAN AND SECURITY AGREEMENT

This First Amendment and Waiver to Loan and Security Agreement
("Amendment") is dated November 26, 1996, and entered into by and among
HELLER FINANCIAL, INC., as Agent ("Agent") and Lender ("Lender"), UNITEL
VIDEO, INC. ("Borrower") and R Squared, Inc. ("Corporate Guarantor").

WHEREAS, Agent, Lender, Borrower and Corporate Guarantor have entered into
a Loan and Security Agreement (the "Agreement") dated December 12, 1995;
and

WHEREAS, Events of Default are in existence under subsection 8.1(C) of
the Agreement as a result of Borrower's breach of (i) the Tangible Net Worth
covenant contained in subsection 6.1 for the fiscal quarter ending August
31, 1996, (ii) the Fixed Charge Coverage covenant contained in subsection 6.3
for the three fiscal quarters ending August 31, 1996 and (iii) the Leverage
Ratio covenant contained in subsection 6.4 for the fiscal quarter ending
August 31, 1996 (collectively, the "Existing Events of Default"); and

WHEREAS, Borrower and Corporate Guarantor have requested that Agent and
Requisite Lenders waive the Existing Events of Default and amend the
covenants set forth above; and

WHEREAS, Borrower and Corporate Guarantor have requested that Agent and
Requisite Lenders defer the payment due date of Term Loan B from October
31, 1996 to December 31, 1996; and

WHEREAS, Agent and Requisite Lenders have agreed to waive the Existing
Events of Default, amend the Tangible Net Worth, Fixed Charge and Leverage
Ratio covenants and defer the payment due date of Term Loan B until
December 31, 1996, subject to the following terms and conditions;

NOW THEREFORE, in consideration of the mutual conditions and agreements
set forth in the Agreement and this Amendment, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties, intending to be legally bound, hereby agree as follows:

ARTICLE I. DEFINITIONS

Section 1.01. DEFINITIONS. Capitalized terms used in this Amendment, to
the extent not otherwise defined herein, shall have the same meanings as in
the Agreement, as amended hereby.

<PAGE>

ARTICLE II. AMENDMENTS

Section 2.01. AMENDMENT TO SUBSECTION 1.1 "CERTAIN DEFINED TERMS."
Subsection 1.1 shall be, and the same is hereby amended by adding the
following new definitions, in proper alphabetical order, to said subsection:

"Excess Availability" means, as of any date, the amount (if any) by
which the Maximum Revolving Loan Amount exceeds the outstanding principal
balance of the Revolving Loan.

"Special Reserve" means a reserve in the amount of $500,000, which shall
be in effect until the earlier to occur of (a) the repayment in full of
Term Loan B or (b) Agent's receipt of equipment appraisals, which in
Agent's sole discretion, reflect equipment values sufficient to adequately
collateralize the Term Loans.

Section 2.02. AMENDMENT TO SUBSECTION 2.1(A)(2) "TERM LOAN
B". Subsection 2.1(A)(2) shall be, and the same is hereby amended by
deleting the defined term "Scheduled Installment of Term Loan B" appearing
in the second paragraph of said subsection and substituting the following
therefor:

"Scheduled Installment of Term Loan B" means the principal installment in
an amount equal to $6,581,452.70, payable, subject to the provisions of
subsection 2.4(B), on or before December 31, 1996 or earlier to occur of
(i) the Termination Date or (ii) the acceleration of the Obligations in
accordance with the provisions of subsection 8.3, at which time the entire
unpaid principal amount thereof plus accrued interest thereon shall be due
and payable.

Section 2.03. AMENDMENT TO SUBSECTION 2.1(B) "REVOLVING LOAN",
Subsection 2.1(B) shall be, and the same is hereby amended by deleting the
definition of "Maximum Revolving Loan Amount" appearing in paragraph (1) in
its entirety and substituting the following therefor.

"Maximum Revolving Loan Amount" means, as of any date of determination,
the lesser of (a) the Revolving Loan Commitment MINUS the Letter of
Credit Reserve.

Section 2.04. AMENDMENT TO SUBSECTION 6.1 "TANGIBLE NET
WORTH". Subsection 6.1 shall be, and the same is hereby deleted in its
entirety and the following substituted therefor:

<PAGE>

Borrower shall at all times maintain Tangible Net Worth plus Subordinated
Debt of at least $18,000,000.

Section 2.05. AMENDMENT TO SUBSECTION 6.3 "FIXED CHARGE
COVERAGE". Subsection 6.3 shall be, and the same is hereby deleted in
its entirety and the following substituted therefor:

Borrower shall not permit its Fixed Charge Coverage to be less than the
ratios set forth below for the periods set forth below:

PERIOD RATIO
------ -----

The fiscal quarter ending 2/29/96 1.0:1.0
The 2 fiscal quarters ending 5/31/96 1.0:1.0
The 3 fiscal quarters ending 8/31/96 1.0:1.0
The fiscal quarter ending 11/30/96 .8:1.0
The 2 fiscal quarters ending 2/28/97 .8:1.0
The 3 fiscal quarters ending 5/31/97 .8:1.0
The 4 fiscal quarters ending 8/31/97 1.0:1.0
and each fiscal quarter thereafter,
on a rolling four quarter basis

Section 2.06. AMENDMENT TO SUBSECTION 6.4 "LEVERAGE RATIO".
Subsection 6.4 shall be, and the same is hereby amended by deleting the table
appearing in said subsection and the substituting the following therefor:

PERIOD RATIO
------ -----

Closing Date and on the last day of each 3.25 to 1.00
fiscal quarter thereafter, through
and including 8/31/96
The fiscal quarter ending 11/30/96 4.00 to 1.00
The fiscal quarter ending 2/28/97 3.75 to 1.00
The fiscal quarter ending 5/31/97 3.50 to 1.00
The fiscal quarter ending 8/31/97 3.25 to 1.00
On the last day of each fiscal quarter 2.75 to 1.00
thereafter

Section 2.07. AMENDMENT TO SECTION 6 "FINANCIAL COVENANTS".
A new subsection 6.5, entitled "Excess Availability" shall be added to
section 6 immediately after subsection 6.4, as follows:

<PAGE>

6.5 "EXCESS AVAILABILITY". Borrower shall not permit at any
time its Excess Availability to be less than $250,000 for the period
commencing September 1, 1996 and ending May 31, 1997.

ARTICLE III. LIMITED WAIVER

Section 3.01. WAIVER OF FINANCIAL COVENANT DEFAULTS. Agent and
Requisite Lenders hereby waive the Existing Events of Default. This is a
limited waiver and shall not be deemed to contribute a waiver of any other
existing Events of Default or any future breach of the Agreement or any of
the other Loan Documents (including, without limitation, a breach of the
covenants causing the Existing Events of Default for any periods other than
those specified herein).

ARTICLE IV. MISCELLANEOUS

Section 4.01. CONDITIONS. The effectiveness of this Amendment is
subject to the satisfaction of the following conditions precedent (unless
specifically waived in writing by Agent and Requisite Lenders):

(a) there shall have occurred no material adverse change in the business,
operations, financial conditions, profits or prospects, or in the
Collateral of the Borrower;

(b) Borrower and Corporate Guarantor shall have executed and delivered such
other documents and instruments as Agent may require;

(c) all corporate proceedings taken in connection with the transactions
contemplated by this Amendment and all documents, instruments and other
legal matters incident thereto shall be satisfactory to Agent and its
legal counsel.

Section 4.02 RATIFICATION. The terms and provisions set forth in
this Amendment shall modify and supersede all inconsistent terms and
provisions set forth in the Agreement and, except as expressly modified and
superseded by this Amendment, the terms and provisions of the Agreement, are
ratified and confirmed and shall continue in full force and effect.

Section 4.03 CORPORATE ACTION. The execution, delivery and
performance of this Amendment have been authorized by all requisite
corporate action on the part of Borrower and Corporate Guarantor and will
not violate the Articles of Incorporation or Bylaws of either Borrower or
Corporate Guarantor.

<PAGE>

Section 4.04 SEVERABILITY. Any provision of this Amendment held
by a court of competent jurisdiction to be invalid or unenforceable shall not
impair or invalidate the remainder of this Amendment and the effect thereof
shall be confirmed to the provision so held to be invalid or unenforceable.

Section 4.05 SUCCESSORS AND ASSIGNS. This Amendment is binding
upon and shall inure to the benefit of Agent, Lender, Borrower and Corporate
Guarantor and their respective successors and assigns.

Section 4.06 COUNTERPARTS. This Amendment may be executed in one
or more counterparts, each of which when so executed shall be deemed to be an
original, but all of which when taken together shall constitute one and the
same instrument.

IN WITNESS WHEREOF, the parties have executed this Amendment on the date
first above written.

HELLER FINANCIAL, INC.,
as Agent and Lender

By: /s/Jerry Sepich
Title: Vice President

UNITEL VIDEO, INC.,
as Borrower

By: /s/Barry Knepper
Title: CEO

R SQUARED, INC.,
as Corporate Guarantor

By /s/Barry Knepper
Title: CEO

<PAGE>

Exhibit 4(E)

November 27, 1996

Unitel Video, Inc.
515 West 57th Street
New York, New York 10019

Attention: Barry Knepper - Chief Executive Officer

Re: Waiver and Agreement to Amend Financial Covenants
-------------------------------------------------

Dear Mr. Knepper:

Reference is made to the Second Amended and Restated Credit Agreement
dated as of December 12, 1995, as waived by a Letter Agreement dated April
12, 1996, and as further waived by a Letter Agreement dated July 29, 1996 (as
so waived, the "Credit Agreement") between Unitel Video, Inc. (the
"Borrower") and The Chase Manhattan Bank (successor by merger to The Chase
Manhattan Bank, N.A.; the "Bank"). Any term used herein and not otherwise
defined herein shall have the meaning assigned to such term in the Credit
Agreement.

The Borrower and Bank have agreed to amend and waive certain provisions
of the Credit Agreement as hereinafter set forth.

The Borrower has advised the Bank that because the Borrower and its
Consolidated Subsidiaries had (1) for the Quarterly Date ended August 31,
1996 a Consolidated Tangible Net Worth of Fifteen Million Three Hundred
Eighty-One Dollars (($15,381,000), and (2) for the prior four quarters (taken
as a whole) ending on August 31, 1996 a ratio of (1) the sum of (a)
Consolidated Earnings Before Interest, Taxes and Depreciation for such
period, less (b) Five Million Dollars ($5,000,000) to (2) the sum of (a)
Consolidated Interest Expense for such period, due (b) Consolidated Current
Portion of Long Term Debt as of the first day of such period, plus (c) Cash
Dividends paid during such period, plus (d) Consolidated Taxes payable for
such period, of .31 to 1.00, there are Events of Default due to a violation
of each of Section 7.01, MINIMUM CONSOLIDATED TANGIBLE NET WORTH, and Section
7.03, CASH FLOW RATIO, of the Credit Agreement.

<PAGE>

The Borrower has requested that the Bank waive such Events of Default.
Subject to the conditions of effectiveness set forth below, the Bank hereby
waives the Borrower's and its Consolidated Subsidiaries' compliance with
Section 7.01, MINIMUM CONSOLIDATED TANGIBLE NET WORTH for the Quarterly Date
ended August 31, 1996 and Section 7.03, CASH FLOW RATIO, for the prior four
quarters (taken as a whole) ending on August 31, 1996. The Bank does not waive
any future noncompliance by the Borrower and its Consolidated Subsidiaries
with either such Section.

This is to advise the Borrower that the Bank has agreed to amend the
Credit Agreement by deleting each of the financial convenants set forth in
Article VII, FINANCIAL COVENANTS and by substituting in their place (1)
financial covenants identical to each of the financial covenants set forth in
the First Amendment to Heller Loan Agreement dated November 26, 1996 attached
hereto as Exhibit A, and (2) a Maximum Consolidated Capital Expenditure
covenant identical to Section 6.2 of the Heller Loan Agreement. The Bank's
agreement to amend the financial covenants is subject to the execution of
documentation satisfactory to the Bank to reflect such amendment.

The Waiver and Agreement to Amend shall become effective on the date
when the Borrower shall have paid to the Bank an amendment fee of Five
Thousand Dollars ($5,000).

The execution and delivery of this Waiver and Agreement to Amend shall
not, except as specifically provided above, constitute a waiver of any
right, power or remedy of the Bank under the Credit Agreement or any Loan
Documents or any other document related thereto, and, except as specifically
provided above, the Credit Agreement, each Loan Document and each other
document related thereto shall remain in full force and effect and are hereby
ratified and confirmed.

The Borrower agrees to reimburse the Bank on demand for all
out-of-pocket costs, expenses and charges (including, without limitation, all
fees and charges of external legal counsel for the Bank) incurred by the Bank
in connection with the preparation, reproduction, execution and delivery of
this Waiver and Agreement to Amend, the amendment to financial covenants
contemplated herein and any other instruments and documents to be delivered
hereunder. In addition, the Borrower shall pay any and all stamp and other
taxes and fees payable or determined to be payable in connection with the
execution and delivery, filing or recording of this Waiver and Agreement to
Amend and the other instruments and documents to be delivered hereunder, and
agrees to save the Bank harmless from and against any

<PAGE>

and all liabilities with respect to or resulting from any delay in payling or
omission to pay such taxes or fees.

If the Borrower agrees to the foregoing, please evidence such agreement
by executing at least three (3) counterparts of this Waiver and Agreement to
Amend in the space provided below and by returning said executed
counterparts to the Bank at 1411 Broadway, 5th Floor, New York, New York
10018, Attention: Randall J. Berini, whereupon this Waiver and Agreement to
Amend shall be a binding agreement between the Borrower and the Bank.

This Waiver and Agreement to Amend may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any party hereto may execute this Waiver and Agreement to
Amend by signing any such counterpart.

Very truly yours,

THE CHASE MANHATTAN BANK
(successor by merger to
The Chase Manhattan Bank, N.A.)

By /s/ Randall J. Berini
----------------------------
Name:
Title: Vice President

AGFREED AND ACCEPTED TO:

UNITEL VIDEO, INC.

By /s/ Barry Knepper
------------------------
Name:
Title: CEO

<PAGE>
Exhibit 10(a)

AS AMENDED THROUGH NOVEMBER 1, 1996

UNITEL VIDEO, INC.

1988 NON-QUALIFIED STOCK OPTION PLAN

1. PURPOSE. UNITEL VIDEO, INC., a Delaware corporation (the

"Company"), hereby adopts the Unitel Video, Inc. 1988 Non-Qualified Stock Option

Plan effective July 26, 1988 (the "Plan"). The Plan is intended as an

additional incentive to key employees (together the Optionees") to enter into or

remain in the employ of the Company or any Affiliate (as defined below) and to

devote themselves to the Company's success by providing them with an opportunity

to acquire or increase their proprietary interest in the Company through receipt

of rights (the "Options") to acquire the Company's Common Stock, par value $.01

(the "Common Stock"). For purposes of the Plan, the term "Affiliate" shall mean

a corporation which is a parent corporation or a Subsidiary corporation with

respect to the Company within the meaning of section 425(e) or (f)'of the

Internal Revenue Code of 1986, as amended (the "Code").

2. ADMINISTRATION. The Plan shall be administered by the Board of

Directors of the Company (the "Board"), unless the Board, in compliance with any

applicable by-law or agreement binding on the Company, and to the extent it

shall determine, shall designate a committee of the Board of Directors

consisting of not less than two directors, each of whom shall be a "Non-Employee

Director" within the meaning of Rule 16b-3 (or any successor rule or regulation)

promulgated under the Securities Exchange Act of 1934, as amended, to administer

the Plan in its stead. References in the Plan to determinations and actions by

the Board shall be deemed to include determinations and actions by such

committee.

<PAGE>

(a) MEETINGS. The Board shall hold meetings at such times and

places as it may determine for purposes of administering the Plan.

(b) GRANTS. The Board shall from time to time at its discretion

cause the Company to grant Options pursuant to the terms of the Plan. The Board

shall have plenary authority to determine the Optionees to whom and the times at

which Options shall be granted, the number of Option Shares (as defined in

Section 4) to be granted and the price and other terms and conditions thereof,

subject, however, to the express provisions of the Plan. In making such

determinations the Board may take into account the nature of the Optionee's

services and responsibilities, the Optionee's present and potential contribution

to the Company's success and such other factors as it may deem relevant. The

interpretation and construction by the Board of any provision of the Plan or of

any Option granted under it shall be final, binding and conclusive.

liable for monetary damages as such for any action taken or any failure to take

any action in connection with the administration of the Plan or the granting of

Options thereunder in the absence of bad faith or willful misconduct.

(d) INDEMNIFICATION. Each member of the Board shall be entitled

without further act on his part to indemnity from the Company to the fullest

extent provided by applicable law and the Company's Certificate of Incorporation

and/or by-laws in connection with or arising out of any action, suit or

proceeding with respect to the administration of the Plan or the granting of

Options thereunder in which he may be involved by reason of his being or having

been a member of the Board, whether or not he continues to be such member of the

Board at the time of the action, suit or proceeding.

-2-
<PAGE>

3. ELIGIBILITY. The Board, in its sole discretion, shall determine

whether an individual qualifies as an Optionee. An Optionee may receive more

than one Option, but only on the terms and subject to the restrictions of the

Plan.

4. OPTION SHARES. The aggregate maximum number of shares of the

Common Stock for which Options may be issued under the Plan is 125,000 shares,

adjusted as provided in Section 8 ("Option Shares"). Option Shares shall be

issued from authorized and unissued Common Stock or Common Stock held in or

hereafter acquired for the treasury of the Company. If any outstanding Option

granted under the Plan expires, lapses or is terminated for any reason, the

Option Shares allocable to the unexercised portion of such Option may again be

the subject of an Option granted pursuant to the Plan.

5. TERM OF PLAN. The Plan is effective as of July 26, 1988, the

date on which it was adopted by the Board of Directors. No Option may be

granted under the Plan after July 25, 1998.

6. TERMS AND CONDITIONS OF OPTIONS. Options granted pursuant to the

Plan shall be evidenced by written documents (the "Option Documents") in such

form as the Board shall from time to time approve, which Option Documents shall

comply with and be subject to the following terms and conditions and such other

terms and conditions which the Board shall from time to time require which are

not inconsistent with the terms of the Plan.

(a) NUMBER OF OPTION SHARES. Each Option Document shall state

the number of Option Shares to which it pertains.

(b) OPTION PRICE. Each Option Document shall state the price at

which Option Shares may be purchased (the "Option Price"), which shall be at

least 100% of the fair market

-3-
<PAGE>

value of the Common Stock on the date the Option is granted. Fair market

value per share shall be the mean between the highest and lowest quoted

selling prices of the Common Stock on the American Stock Exchange on the day

the Option is granted, or if not traded on the day of grant, then on the most

recent preceding date on which trading occurred, as reported in customary

financial reporting services.

in cash or by certified check payable to the order of the Company.

(d) TERMINATION OF OPTIONS. No Option shall be exercisable

after the first to occur of the following:

(i) Expiration of the Option term specified in the Option

Document;

(ii) Expiration of three months from the date the Optionee's

employment or service with the Company or its Affiliates terminates for any

reason other than disability (within the meaning of section 22(e)(3) of the

Code), death or as specified in subsection 6(d)(iv) or (v), below;

(iii) Expiration of one year from the date the

Optionee's employment or service with the Company or its Affiliates terminates

due to the Optionee's disability (within the meaning of section 22(e)(3) of the

Code) or death;

(iv) The date set by the Board to be an accelerated

expiration date in the event of the occurrence of a transaction or series of

related transactions in which (A) the Company is dissolved or liquidated or

sells substantially all of its operating assets, (B) the Company is not the

surviving or acquiring entity or (C) the Company becomes an 80% or more owned

-4-
<PAGE>

subsidiary of another company, in which case the Board may take whatever other

action with respect to the Option, including acceleration of any exercise

provisions, it deems necessary or desirable; or

(v) A finding by the Board, after full consideration of the

facts presented on behalf of both the Company and the Optionee, that the

Optionee has breached his employment or service contract with the Company or an

Affiliate, or has been engaged in any sort of disloyalty to the Company or an

Affiliate, including, without limitation, fraud, embezzlement, theft, commission

of a felony or proven dishonesty in the course of his employment or service or

has disclosed trade secrets or confidential information of the Company or an

Affiliate. In such event, in addition to immediate termination of the Option,

the Optionee, upon a determination by the Board, shall automatically forfeit all

Option Shares for which the Company has not yet delivered the share certificates

upon refund by the Company of the Option Price. Notwithstanding anything herein

to the contrary, the Company may withhold delivery of share certificates pending

the resolution of any inquiry that could lead to a finding resulting in a

forfeiture.

(e) TRANSFERS. No Option granted under the Plan may be

transferred except by will or by the laws of descent and distribution. During

the lifetime of the person to whom an Option is granted, such Option may be

exercised only by him or his legal representative in the event of his

incompetence.

(f) OTHER PROVISIONS. The Option Documents shall contain such

other provisions including, without limitation, additional restrictions upon the

exercise of the Option or additional limitations upon the term of the Option, as

the Board shall deem advisable.

-5-
<PAGE>

(g) AMENDMENT. The Board shall have the right to amend Option

Documents issued to an Optionee, subject to his consent, except that the consent

of the Optionee shall not be required for any amendment made under

subsection 6(d)(iv).

7. EXERCISE. No Option shall be deemed to have been exercised prior

to the receipt by the Company of written notice of such exercise and of payment

in full of the Option Price for the Option Shares to be purchased. Each such

notice shall specify the number of Option Shares to be purchased and shall

(unless the Option Shares are covered by a then current registration statement

or a Notification under Regulation A under the Securities Act of 1933, as

amended (the "Act") and then current registrations under all applicable state

securities laws) contain the Optionee's acknowledgment in form and substance

satisfactory to the Company that (a) such Option Shares are being purchased for

investment and not for distribution or resale (other than a distribution or

resale which, in the opinion of counsel satisfactory to the Company, may be made

without violating the registration provisions of the Act and all applicable

state securities laws), (b) the Optionee has been advised and understands that

(i) the Option Shares have not been registered under the Act and are "restricted

securities" within the meaning of Rule 144 under the Act and are subject to

restrictions on transfer and (ii) the Company is under no obligation to register

the Option Shares under the Act or any applicable state securities laws or to

take any action which would make available to the Optionee any exemption from

such registrations, (c) such Option Shares may not be transferred without

compliance with all applicable federal and state securities laws and (d) an

appropriate legend referring to the foregoing restrictions on transfer and any

other restrictions imposed under the Option Documents may be endorsed on the

certificates. Notwithstanding the above, should the Company be advised by

counsel that issuance of shares should be delayed pending (A) registration under

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<PAGE>

federal or state securities laws or (B) the receipt of an opinion that an

appropriate exemption therefrom is available, the Company may defer exercise of

any Option granted hereunder until either such event in (A) or (B) has occurred.

8. ADJUSTMENTS ON CHANGES IN CAPITALIZATION. The aggregate number

of shares and class of shares as to which Options may be granted hereunder, the

number of shares covered by each outstanding Option and the Option Price thereof

shall be appropriately adjusted in the event of a stock dividend, stock split,

recapitalization or other change in the number or class of issued and

outstanding equity securities of the Company resulting from a subdivision or

consolidation of the Common Stock and/or other outstanding equity security or a

recapitalization or other capital adjustment (not including the issuance of

Common Stock on the conversion of other securities of the Company which are

convertible into Common Stock) affecting the Common Stock which is effected

without receipt of consideration by the Company. The Board shall have authority

to determine the adjustments to be made under this Section and any such

determination by the Board shall be final, binding and conclusive.

9. AMENDMENT OF THE PLAN. The Board may amend the Plan from time to

time in such manner as it may deem advisable. No amendment to the Plan that

adversely affects any outstanding Option, however, shall be made without the

consent of the Optionee.

10. NO CONTINUED EMPLOYMENT. The grant of an Option pursuant to the

Plan shall not be construed to imply or to constitute evidence of any agreement,

express or implied, on the part of the Company or any Affiliate to retain the

Optionee in the employ of the Company or an Affiliate.

11. WITHHOLDING OF TAXES. Whenever the Company proposes or is

required to deliver or transfer Option Shares in connection with the exercise of

an Option, the Company shall

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<PAGE>

have the right to (a) require the recipient to remit or otherwise make

available to the Company an amount sufficient to satisfy any federal, state

and/or local withholding tax requirements prior to the delivery or transfer

of any certificate or certificates for such Option Shares or (b) take

whatever action it deems necessary to protect its interests with respect to

tax liabilities, including, without limitation, withholding a portion of any

Option Shares otherwise deliverable pursuant to the Plan. The Company's

obligation to make any delivery or transfer of Option Shares shall be

conditioned on the Optionee's compliance with any withholding requirement to

the Company's satisfaction.

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<PAGE>
Exhibit 10(c)

AS AMENDED THROUGH NOVEMBER 1, 1996

UNITEL VIDEO, INC.

NON-STATUTORY STOCK OPTION PLAN
(1986)

1. PURPOSE. The Plan is intended as an additional incentive to

certain members of the Board of Directors of Unitel Video, Inc. (the "Company")

to devote themselves to the Company's success by providing them with an

opportunity to acquire or increase their proprietary interest in the Company

through receipt of rights (the "Options") to acquire the Company's Common Stock,

par value $.01 per share (the "Common Stock").

2. ADMINISTRATION. The Plan shall be administered by the Board of

Directors which, to the extent it shall determine, may delegate its powers with

respect to the administration of the Plan to a committee of the Board of

Directors (the "Committee") consisting of not less than two directors, each of

whom shall be a "Non-Employee Director" within the meaning of Rule 16b-3 (or any

successor rule or regulation) promulgated under the Securities Exchange Act of

1934, as amended. References in the Plan to determinations or actions by the

Committee shall be deemed to include determinations and actions by the Board of

Directors.

The Committee shall hold meetings at such times and places as it may

determine. Acts approved at a meeting by a majority of the members of the

Committee or acts approved in writing by the unanimous consent of the members of

the Committee shall be valid acts of the Committee.

The Committee shall from time to time at its discretion direct the

Company to grant Options pursuant to the terms of the Plan. The Committee shall

have plenary authority to determine

<PAGE>

the eligible directors (as defined in Section 3) to whom and the time at

which Options shall be granted, the number of Option Shares (as defined in

Section 4) to be granted and the price and other terms and conditions

thereof, subject, however, to the express provisions of the Plan. In making

such determinations the Committee may take into account the nature of the

director's services and responsibilities, his present and potential

contribution to the Company's success and such other factors as it may deem

relevant. The interpretation and construction by the Committee of any

provision of the Plan or of any Option granted under it shall be final,

binding and conclusive. The Committee may amend the plan from time to time

in such manner as it may deem advisable.

No member of the Committee shall be liable, in the absence of bad

faith, for any act or omission with respect to his service on the Committee

relating to this Plan. Service on the Committee shall constitute service as a

director of the Company so that a member of the Committee shall be entitled to

indemnification and reimbursement as a director of the Company for any action or

any failure to act in connection with service on the Committee to the full

extent provided for at any time in the Company's Articles of Incorporation or

By-Laws or in any insurance policy or other agreement intended for the benefit

of the Company's directors.

3. ELIGIBILITY. All members of the Board of Directors of the

Company who are not employees of the Company shall be eligible to receive

Options hereunder. The Committee, in its sole discretion, shall determine

whether an individual qualifies in accordance with the foregoing. An individual

may receive more than one Option, but only on the terms and subject to the

restrictions of the Plan.

4. OPTION SHARES. The aggregate maximum number of shares of the

Common Stock for which Options may be issued under the Plan is 50,000 shares,

adjusted as provided in

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<PAGE>

Section 8 (the "Option Shares"). Option Shares shall be issued from

authorized and unissued Common Stock or Common Stock held in or

hereafter acquired for the treasury of the Company. If any outstanding Option

granted under the Plan expires, lapses or is terminated for any reason, the

Option Shares allocable to the unexercised portion of such Option may again be

the subject of an Option granted pursuant to the Plan.

5. TERM OF PLAN. The Plan is effective January 21, 1986, the date

on which it was adopted by the Board of Directors of the Company. No Option may

be granted under the Plan after January 20,1986.

6. TERMS AND CONDITIONS OF OPTIONS. Options granted pursuant to the

Plan shall be evidenced by written documents (the "Option Documents") in such

form as the Committee shall from time to time approve, which Option Documents

shall comply with and be subject to the following terms and conditions which the

Committee shall from time to time require which are not inconsistent with the

terms of the Plan.

(a) NUMBER OF OPTION SHARES. Each Option Document shall state

the number of Option Shares to which it pertains.

(b) OPTION PRICE. Each Option Document shall state the price at

which Option Shares may be purchased (the "Option Price"). Fair market value

per share shall be the mean between the highest and lowest quoted selling prices

of the Common Stock on the American Stock Exchange on the date in question.

or by certified check payable to the Company.

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<PAGE>

(d) TERMINATION OF OPTIONS. No Option shall be exercisable

after the expiration of the Option term specified in the Option Document.

(e) TRANSFERS. No Option granted under the Plan may be

transferred, except by will or by the laws of descent and distribution. During

the lifetime of the director to whom an Option is granted, such Option may be

exercised only by him.

(f) OTHER PROVISIONS. The Option Documents shall contain such

other provisions including, without limitation, additional restrictions upon the

exercise of the Option or additional limitations upon the terms of the Option,

as the Committee shall deem advisable. The Committee shall have the right,

subject to the consent of the director, to amend Option Documents which have

been issued to such director.

7. ADJUSTMENTS TO CHANGES IN COMMON STOCK. In the even that, prior

to the delivery by the Company of all of the Option Shares in respect of which

the Option is granted, there shall be an increase or decrease in the number of

shares of Common Stock of the Company as a result of a subdivision or

consolidation of shares or other capital adjustment, or the payment of a stock

dividend or other increase or decrease in such shares, effected without receipt

of consideration by the Company, the remaining number of Option Shares still

subject to the Option and Option Price therefor shall be adjusted in a manner

determined by the Committee designated under the Plan so that the adjusted

number of Option Shares and the adjusted Option Price shall be the substantial

equivalent of the remaining number of Option Shares still subject to the Option

and the Option Price thereof prior to such change. For purposes of this

Paragraph no adjustment shall be made as a result of the issuance of Common

Stock upon the conversion of other securities of the Company which are

convertible into Common Stock.

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<PAGE>

EXHIBIT 10(D)

AS AMENDED THROUGH NOVEMBER 1, 1996

UNITEL VIDEO, INC.

EMPLOYEE STOCK PURCHASE PLAN

1. PURPOSE. Unitel Video, Inc. has adopted the Unitel Video, Inc.

Employee Stock Purchase Plan to reward the past service of employees and to

provide an additional incentive to employees to enter into or remain in its

employ or the employ of its Affiliates and to devote themselves to its success

by providing employees with an opportunity to acquire common stock in Unitel

Video, Inc. under favorable terms.

2. DEFINITIONS. When used in this Employee Stock Purchase Plan, the

following terms shall have the meanings indicated:

(a) AFFILIATE. The term "Affiliate" shall mean a corporation

which is a Parent corporation or a Subsidiary corporation with respect to the

Company on the Effective Date or which becomes such while this Plan is in

effect.

(b) BOARD OF DIRECTORS. The term "Board of Directors" shall

mean the Board of Directors of the Company.

of 1986 and the same as may be amended from time to time.

(d) COMMITTEE. The term "Committee" shall mean the Board of

Directors which, to the extent it shall determine, may delegate its powers with

respect to the administration of the Plan to a committee of the Board of

Directors consisting of not less than two directors, each of whom shall be a

"Non-Employee Director" within the meaning of Rule 16b-3 (or any successor

<PAGE>

rule or regulation) promulgated under the Securities Exchange Act of 1934, as

amended, in which case the term "Committee" shall mean the committee so

designated.

(e) COMPENSATION. The term "Compensation" shall mean an

Employee's annualized rate of pay. For an Employee paid on a salaried basis,

the annualized rate of pay for a calendar year shall be the base salary amount

payable for the last pay period completed before January 1st of such year

multiplied by the number of pay periods in a calendar year. For an Employee

paid on an hourly basis, the annualized rate of pay for a calendar year shall be

the hourly rate payable on the last preceding December 31st multiplied by 2,080.

(f) COMMON STOCK. The term "Common Stock" shall mean the common

stock of the Company, par value $.01 per share.

(g) COMPANY. The term "Company" shall mean Unitel Video, Inc.,

a Delaware corporation, and its successors and assigns.

(h) EFFECTIVE DATE. The term "Effective Date" shall mean

April 1, 1987.

(i) EMPLOYEE. The term "Employee" shall mean each employee of

the Company or an Affiliate regularly scheduled to work more than twenty (20)

hours per week.

(j) GRANT DATE. The term "Grant Date" shall mean the Effective

Date and, commencing January 1, 1988, each January 1st while the Plan is in

effect.

(k) PARENT. The term "Parent" with reference to an entity shall

mean a corporation which is a "parent corporation" within the meaning of

section 425(e) of the Code.

(l) PLAN. The term "Plan" shall mean the Unitel Video, Inc.

Employee Stock Purchase Plan as set forth herein and the same as may be amended

from time to time.

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<PAGE>

(m) SHARES. The term "Shares" shall mean shares of the

Company's Common Stock.

(n) SUBSIDIARY. The term "Subsidiary" with reference to an

entity shall mean a corporation which is a "subsidiary corporation" within the

meaning of section 425(f) of the Code.

3. ADMINISTRATION. The Plan shall be administered by the Committee.

The Committee shall hold meetings at such times and places as it may determine.

Acts approved at a meeting by a majority of the members of the Committee or acts

approved in writing by the unanimous consent of the members of the Committee

shall be the valid acts of the Committee. Notwithstanding the foregoing, any

issue related directly to the participation of a member of the Committee shall

be approved by a majority of the Committee, exclusive of and without

participation by the concerned member. The interpretation and construction by

the Committee of any provision of the Plan shall be final, binding and

conclusive.

4. ELIGIBILITY.

(a) Except as provided in subsection 4(b) or 4(c), each Employee

is entitled and eligible to participate in the Plan. Only persons who are

Employees shall be eligible to participate in this Plan.

(b) No Employee shall be entitled to purchase Common Stock under

the plan if such Employee then owns stock possessing five percent (5%) or more

of the total combined voting power or value of all classes of stock of the

Company or an Affiliate. For purposes of this subsection 4(b), the rules of

section 425(d) of the Code shall apply in determining the stock ownership of an

Employee, and Shares or other stock in the Company or an Affiliate which the

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<PAGE>

Employee may purchase under outstanding options, including purchase rights under

this Plan, shall be treated as stock owned by the Employee.

date this Plan initially is adopted shall become eligible to participate if the

Board of Directors so provides by appropriate resolution. In such case,

employment with the entity prior to its becoming an Affiliate shall be credited

for all purposes of the Plan.

5. PURCHASE RIGHTS.

(a) NUMBER OF SHARES. Each Employee eligible to participate in

the Plan, as determined under Section 4, on a Grant Date who had completed six

months of employment with the Company or an Affiliate on such Grant Date, shall

have the right to purchase the number of Shares equal to the lesser of (i) the

number of Shares, to the last even 100, with a fair market value not in excess

of $25,000 on the Grant Date and (ii) the number of Shares, to the nearer even

100, determined by dividing one-third of the Employee's Compensation on the

Grant Date by the fair market value (as determined under subsection 5(c), below)

of a Share on the Grant Date. In all other respects, each Employee eligible to

participate in the Plan shall have the same rights and privileges. If, on any

Grant Date, the maximum number of Shares which then are available for purchase

under this Plan, as provided under Section 6, is less than the aggregate number

of shares which otherwise could be purchased by all eligible Employees pursuant

to this subsection, each eligible Employee's right to purchase shall be reduced

ratably, based on such Employee's right to purchase Shares as set forth above.

(b) TERMINATION OF PURCHASE RIGHTS. A purchase right shall

expire at the close of business on the day before the anniversary of the Grant

Date thereof. However, if the

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<PAGE>

Employee's employment with the Company and its Affiliates terminates for any

reason, then the purchase right shall terminate on the date employment

terminates.

under the Plan shall be 85% of the fair market value of a Share on the day of

purchase. If the Common Stock is traded over-the-counter, then the fair market

value per Share shall be the mean between the closing "bid" and "asked" prices

thereof on the day of purchase as reported in customary financial reporting

services. If the Common Stock is listed upon an established national stock

exchange or exchanges, then the fair market value per Share shall be the mean

between the highest and lowest quoted selling prices of the Common Stock on such

stock exchange or exchanges on the day of purchase.

(d) MEDIUM OF PAYMENT. An Employee shall pay for Shares

acquired under the Plan (i) in cash or (ii) by certified check payable to the

Company's order.

(e) LIMITATION. No Employee may receive a purchase right which

permits his rights to purchase stock under all stock purchase plans (to which

section 423 of the Code is applicable) of the Company and its affiliates, to

accrue at a rate which exceeds $25,000 of fair market value of such stock

(determined at the Grant Date) for each calendar year in which such purchase

right is outstanding at any time. Any purchase right under the Plan shall be

reduced to the extent necessary to satisfy the limitation. For purposes of this

limitation, the right to purchase Shares under the Plan is deemed to accrue on

the Grant Date.

6. LIMITATION. The aggregate maximum number of Shares for which

purchase rights may be issued under the Plan is 200,000 Shares, adjusted as

provided in Section 10. Shares shall be issued from authorized and unissued

Common Stock or Common Stock held in or hereafter acquired for the treasury of

the Company. If any purchase right granted under the Plan expires,

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<PAGE>

lapses or is terminated for any reason, the Shares allocable to the

unexercised portion of such purchase right may again be the subject of

purchase right.

7. TERM OF PLAN. The Plan was approved by the Board of Directors of

the Company on March 3, 1987. The Plan is effective on the Effective Date,

subject to approval by vote of a majority of the voting stock of the Company on

or before March 2, 1988. If the Plan is not so approved, then the Plan shall

terminate on March 2, 1988 and no further purchase rights shall be granted.

However, purchase rights granted prior to such termination may be exercised in

accordance with the Plan.

8. TRANSFERS. No purchase right under the Plan may be transferred.

9. EXERCISE. No purchase right shall be deemed to have been

exercised prior to the receipt by the Company of written notice of such exercise

and of payment in full of the purchase price of the Shares to be purchased.

Each such notice shall specify the number of Shares to be purchased and shall

(unless the Shares are covered by a then current registration statement under

the Securities Act of 1933 (the "Act") and current registrations under all

applicable state securities laws), contain the Employee's acknowledgment in form

and substance satisfactory to the Company that (a) such Shares are being

purchased for investment and not for distribution or resale (other than a

distribution or resale which, in the opinion of counsel satisfactory to the

Company, may be made without violating the registration provisions of the Act

and all applicable state securities laws), (b) the Employee has been advised and

understands that (i) the Shares have not been registered under the Act and are

"restricted securities" within the meaning of Rule 144 under the Act and are

subject to restrictions on transfer and (ii) the Company is under no obligation

to register the Shares under the Act or to take any action which would make

available to the Employee any exemption from such

-6-
<PAGE>

registration, and (c) such Shares may not be transferred without compliance

with all applicable state securities laws.

10. ADJUSTMENTS ON CHANGES IN COMMON STOCK. The aggregate number of

shares of stock and class of shares of stock as to which purchase rights may be

granted hereunder and the number of shares of stock covered by each outstanding

purchase right shall be appropriately adjusted in the event of a stock dividend,

stock split, recapitalization or other change in the number or class of issued

and outstanding equity securities of the Company resulting from a subdivision or

consolidation of the Common Stock and/or other outstanding equity security or a

recapitalization or other capital adjustment (not including the issuance of

Common Stock on the conversion of other securities of the Company which are

convertible into Common Stock) affecting the Common Stock which is effected

without receipt of consideration by the Company. The Committee shall have

authority to determine the adjustments to be made under this Section and any

such determination by the Committee shall be final, binding and conclusive.

11. AMENDMENT OF THE PLAN. The Board of Directors may amend the Plan

from time to time in such manner as it may deem advisable. Nevertheless, the

Board of Directors may not, without obtaining stockholder approval within twelve

months before or after such action, change the class of individuals eligible to

receive purchase rights or increase the maximum number of Shares as to which

purchase rights may be granted, except as provided in Section 10 hereof.

12. WITHHOLDING OF TAXES. Whenever the Company proposes or is

required to issue or transfer Shares, the Company shall have the right to

require the recipient or transferor to remit to the Company an amount sufficient

to satisfy any federal, state and/or local withholding tax requirements prior to

the delivery or transfer of any certificate or certificates for such Shares.

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<PAGE>

13. CONTINUED EMPLOYMENT. The grant of purchase rights pursuant to

the Plan shall not constitute evidence of any agreement, express or implied, on

the part of the Company or any Affiliate to continue to employ an Employee.

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<PAGE>

EXHIBIT 10(G)

AMENDMENT, dated as of February 14, 1996, to EMPLOYMENT AND CONSULTING
AGREEMENT dated as of September 1, 1988, between UNITEL VIDEO, INC. ( the
"Company") and ALEX GEISLER ( "Employee").

WHEREAS, the Company and Employee are parties to an Employment and
Consulting Agreement dated as of September 1, 1998 (the "Employment and
Consulting Agreement") whereby Employee is restricted with respect to his
ability to compete with the business of the Company: and

WHEREAS, the Company desires to amend the Employment and Consulting
Agreement to permit Employee to participate in his son's business on the terms
set forth in this Amendment.

NOW THEREFORE, the parties hereto agree as follows:

1. Consent to Participate in Business.

Notwithstanding the provisions of Section 11(a) of the Employment and
Consulting Agreement, but subject to the conditions set forth in the second
sentence of this paragraph, Employee may provide services to or be financially
interested in a video services business located in Southern Florida in which
employee's son has an equity interest (the "Video Services Business"). In the
event that Employee shall participate in the Video Services Business as provided
in the previous sentence of this paragraph and either (i) the Video Services
Business shall engage in business in the New York metropolitan area, the Chicago
metropolitan area, southern California or any geographic area in which the
Company shall in the future do substantial business as determined by the Board
of directors of the Company (excluding Employee) or (ii) the Board of Directors
of the Company (excluding Employee) shall determine in its discretion that it is
not in the best interest of the Company for Employee to continue his interest in
the Video Services Business, then upon receipt of notice from the Board of
Directors of the Company (which notice the Board of Directors may give or
withhold in its discretion), Employee shall cease providing services or
additional funds to the Video Services Business.

2. Miscellaneous.

Except as specifically provided in this amendment, all of the terms and
conditions of the Employment and Consulting Agreement shall remain in force and
effect.

<PAGE>

IN WITNESS WHEREOF, the parties have executed and delivered this Amendment
on the date first above written.

UNITEL VIDEO, INC.
/s/ Barry Knepper
By _______________________
Name: Barry Knepper
Title: Senior Vice President Finance & Administration

/s/ Alex Geisler
______________________
Alex Geisler

<PAGE>
Exhibit 10(L)

AMENDMENT

THIS AMENDMENT entered into this 11 day of July 1996 by and between CBS
INC., a New York corporation having an office at 51 West 52nd Street, New
York, New York 10019 ("Landlord") and UNITEL VIDEO, INC., a Delaware
corporation having an office at 515 West 57th Street, New York, New York
10019 ("Tenant").

WITNESSETH:

WHEREAS, Landlord and Tenant entered into that certain indenture of lease
dated as of June 15, 1990 for the premises located at 508-510 West 57th
Street, New York, NY (the "Lease");

WHEREAS, Landlord and Tenant wish to amend the Lease to provide for
certain changes to the term thereof, the renewal and termination options
contained therein and the performance of certain improvements and renovations
by Tenant;

NOW, THEREFORE, for the exchange of valuable consideration, the receipt
and sufficiency of which is hereby acknowledged and both intending to be
legally bound, Landlord and Tenant agree to amend the Lease as follows:

1. The granting clause set forth in the recitals to the Lease is deleted
and replaced with the following:

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<PAGE>

"TO HAVE AND TO HOLD the Premises unto Tenant, its successors and
assigns, for a term commencing as of June 15, 1990 (the "Term Commencement
Date") and expiring on June 30, 2001 unless the Lease shall be sooner
terminated as hereinafter provided."

2. Section 1.01(A)(b) is amended to provide that the end of the period
therein described is February 29, 1996 rather than March 31, 1996.

3. Section 1.01(A)(c) is deleted in its entirety and replaced with the
following:

"1.01(c) for the period commencing March 1, 1996 and ending June 30,
2001, at the rate of $240,000 per annum payable in equal monthly
installments of $20,000. To the extent any rent was paid for March 1996
and any month thereafter at the rate of $25,000 per month, a credit of
$5,000 for each month for which such higher rent was paid shall be
earned by Tenant. All such credits shall be deducted from each of the
next subsequent rental payments to be paid hereunder until the total of
such credits is used.

4. Article 17 is deleted in its entirety and replaced with the following:

"ARTICLE 17

RENEWAL PRIVILEGES

Section 17.01. So long as there shall not be an Event of Default and
unless this Lease shall have been terminated pursuant to Article 15 or
ARTICLE 19, Tenant shall have the option to renew the term of this
Lease, by giving notice as provided in SECTION 22.01 for a further period
of 5 years to commence on July 1, 2001 and to expire on June 30, 2006
upon all of the terms,

-2-

<PAGE>

covenants and conditions set forth in this Lease, except as provided in
SECTION 17.03. Such renewal term shall be subject to termination by
Landlord or Tenant pursuant to SECTION 19.01 and Section 19.02.

Section 17.02. Tenant shall exercise its right to a renewal term by
giving Landlord notice of its election so to do on or before June 30,
2000 and upon the giving of such notice this Lease, subject to the
provisions of this Article, shall be deemed to be renewed and the term
thereof extended for the renewal period without the execution of any
further Lease or instrument.

Section 17.03. The basic rent for the renewal term shall be $300,000
per annum payable in equal monthly installments of $25,000."

5. Article 19 is deleted in its entirety and replace with the following:

"ARTICLE 19

RIGHTS OF LANDLORD AND TENANTS TO TERMINATE

Section 19.01. Landlord may terminate this Lease at any time effective
on or after June 30, 1998 by giving Tenant notice on or before December
1 of any calendar year of the term hereof as may be extended, which
notice shall be effective as of June 30 of the following calendar year.

Section 19.02. Tenant may terminate this Lease at any time effective on
or after June 30, 1998 by giving Landlord notice on or before March 31
of any calendar year of the term hereof as may be extended, which notice
shall be effective as of June 30 of that calendar year; provided,
however, that Tenant shall not be entitled to exercise such termination
right in the event, and during the continuance of an Event of Default.

Section 19.03. Upon the giving of a termination notice by either Landlord
or Tenant (to the extent such termination notice is not invalidated
pursuant to Section 19.02), the term of this Lease shall expire on the
following June 30, as if such date were the date herein specifically
fixed for the expiration of the term of this Lease (the "Termination
Date").

Section 19.04. Any occupancy by Tenant of the Premises after the early
termination date as set forth in a termination notice shall be solely as
a holdover

-3-

<PAGE>

tenant, and Landlord shall have all rights under law or equity to evict
and remove Tenant from the Premises from and after such date; provided,
however, that Landlord shall permit Tenant to remain in occupancy as a
holdover tenant for a period not to exceed 2 weeks, provided Tenant shall
pay basic rent and any additional rent for such 2 week holdover period."

6. (a) Tenant shall perform all work necessary to bring the Buildings
and all other parts of the Premises in compliance with all applicable
federal, state or local laws, rules, regulations, ordinances and codes so
that a valid certificate of occupancy therefor can be issued (the "Work").
Tenant shall be responsible to perform all the Work on or before December 31,
1996 and to secure and provide Landlord with a copy of such certificate of
occupancy as soon as reasonable possible. It is understood that issuance of a
final certificate of occupancy is subject to the discretion of the City of
New York. Nevertheless, Tenant hereby covenants to diligently pursue the
issuance of such certificate and to use its best efforts to have it issued as
soon as possible.

(b) Attached hereto as Exhibit "A" is the scope of the Work to be
performed by Tenant pursuant to SECTION 6(a) together with an estimate of the
cost therefor. Tenant shall deposit $95,150 (being 50% of the estimated cost
of the Work with Landlord on or before the earlier of August 1, 1996 or the
commencement of the Work as security for Tenant's faithful and timely
performance of the Work. This sum shall be designated as a security deposit
and shall remain the sole and separate property of Landlord until actually
returned to Tenant. Landlord

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<PAGE>

shall disburse such Security Deposit to Tenant incrementally, reimbursing
Tenant for 50% of progress payments made by Tenant for the Work upon
presentation by Tenant of proof of payment. At Landlord's request, Tenant
shall also present prior to payment by Landlord partial releases of lien for
any of the Work for which reimbursement is sought. Notwithstanding anything
to the contrary herein, Landlord may retain up to 5% of the security deposit
until all the Work is completed, the Certificate of Occupancy is issued and
final releases of lien are received from all contractors and materialmen.
Landlord shall hold the security deposit in an interest bearing account with
interest accruing to the person who receives the funds in the account upon
distribution.

(c) The Work shall be performed by Tenant in accord with all of the
provisions and requirements of ARTICLE 7 and Article 10 ("Tenant
Improvements") of the Lease, including but not limited to any consent
required from Landlord to the specifications of the Work or the contractors
performing it.

7. Article 22 of the Lease is amended so that any notice to Tenant shall
be sent to the attention of the Tenant's President with a copy to Tenant's
General Counsel, both at the address otherwise noted in the Lease for Notice
to Tenant.

8. Except as specifically amended herein to the contrary, all of the
terms and conditions of the Lease are hereby ratified as set forth therein
and shall remain in full force and effect.

-5-

<PAGE>

IN WITNESS WHEREOF, Landlord and Tenant have duly executed and delivered
this Amendment as of the day and year first above written.

CBS INC.

By: /s/ Elliot S. Mertz
------------------------------------

Name: Elliot S. Mertz
----------------------------------

Title: V.P. Real Estate
---------------------------------

UNITEL VIDEO, INC.

By: /s/ Barry Knepper
------------------------------------

Name: Barry Knepper
----------------------------------

Title: CEO
---------------------------------

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<PAGE>
EXHIBIT 10(P)

AS AMENDED THROUGH NOVEMBER 1, 1996

1992 STOCK OPTION PLAN

UNITEL VIDEO, INC.

1. PURPOSES OF THE PLAN. This stock option plan (the "Plan") is
designed to provide an incentive to key employees (including officers and
directors who are key employees) and to directors who are not employees of
Unitel Video, Inc., a Delaware corporation (the "Company"), and its present and
future subsidiary corporations, as defined in Paragraph 18 ("Subsidiaries"), and
to offer an additional inducement in obtaining the services of such individuals.
The Plan provides for the grant of "incentive stock options" ("ISOs") within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), and nonqualified stock options ("NQSOs"), but the Company makes no
warranty as to the qualification of any option as an "incentive stock option"
under the Code.

2. STOCK SUBJECT TO THE PLAN. Subject to the provisions of
Paragraph 12, the aggregate number of shares of Common Stock, $.01 par value per
share, of the Company ("Common Stock") for which options may be granted under
the Plan shall not exceed 350,000. Such shares of Common Stock may, in the
discretion of the Committee (as defined in Paragraph 3), consist either in whole
or in part of authorized but unissued shares of Common Stock or shares of Common
Stock held in the treasury of the Company. The Company shall at all times
during the term of the Plan reserve and keep available such number of shares of
Common Stock as will be sufficient to satisfy the requirements of the Plan.
Subject to the provisions of Paragraph 13, any shares of Common Stock subject to
an option which for any reason expires, is cancelled, is terminated unexercised
or which ceases for any reason to be exercisable shall again become available
for the granting of options under the Plan.

3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by
the Company's Board of Directors which, to the extent that it may determine, may
delegate its powers with respect to the administration of the Plan to a
committee of the Board of Directors of the Company (the "Committee") consisting
of not less than two directors, each of whom shall be a "Non-Employee Director"
within the meaning of Rule 16b-3 (or any successor rule or regulation)
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). References in the Plan to determinations or actions by the Committee
shall be deemed to include determinations and actions by the Board of Directors.

Subject to the express provisions of the Plan, the Committee shall
have the authority, in its sole discretion, with respect to Key Employee Options
(as defined in Paragraph 18): to determine the key employees who shall receive
options; the times when they shall receive options; whether an option shall be
an ISO or a NQSO; the number of shares of Common Stock to be subject to each
option; the term of each option; the date each option shall become exercisable;
whether an

<PAGE>

option shall be exercisable in whole, in part or in installments, and, if in
installments, the number of shares of Common Stock to be subject to each
installment; whether the installments shall be cumulative; the date each
installment shall become exercisable and the term of each installment;
whether to accelerate the date of exercise of any installment; whether shares
of Common Stock may be issued on exercise of an option as partly paid, and,
if so, the dates when future installments of the exercise price shall become
due and the amounts of such installments; the exercise price of each option;
the form of payment of the exercise price; whether to restrict the sale or
other disposition of the shares of Common Stock acquired upon the exercise of
an option and to waive any such restriction; whether to subject the exercise
of all or any portion of an option to the fulfillment of contingencies as
specified in the contract referred to in Paragraph 11 (the "Contract"),
including without limitation, contingencies relating to entering into a
covenant not to compete with the Company and its Parent (as defined in
Paragraph 18) and Subsidiaries, financial objectives for the Company, a
Subsidiary, a division, a product line or other category, and/or the period
of continued employment of the optionee with the Company or its Subsidiaries,
and to determine whether such contingencies have been met; and with respect
to Key Employee Options and Outside Director Options (as defined in
Paragraph 18): to construe the respective Contracts and the Plan; to determine
the amount, if any, necessary to satisfy the Company's obligation to withhold
taxes; with the consent of the optionee, to cancel or modify an option,
provided such option as modified would be permitted to be granted on such
date under the terms of the Plan; to prescribe, amend and rescind rules and
regulations relating to the Plan; and to make all other determinations
necessary or advisable for administering the Plan. The determinations of the
Committee on the matters referred to in this Paragraph 3 shall be conclusive.

No member or former member of the Committee shall be liable for any
action or determination made in good faith with respect to the Plan or any
option granted hereunder.

4. ELIGIBILITY; GRANTS. The Committee may, consistent with the
purposes of the Plan, grant Key Employee Options from time to time, to key
employees of the Company or any of its Subsidiaries. Key Employee Options
granted shall cover such number of shares of Common Stock as the Committee may
determine; provided, however, that the aggregate fair market value (determined
at the time the option is granted) of the shares of Common Stock for which any
eligible person may be granted ISOs under the Plan or any other plan of the
Company, or of a Parent or a Subsidiary of the Company, which are exercisable
for the first time by such optionee during any calendar year shall not exceed
$100,000. The $100,000 ISO limitation shall be applied by taking ISOs into
account in the order in which they were granted. Any option (or the portion
thereof) granted in excess of such amount shall be treated as a NQSO.

On the date the Plan is adopted by the Board of Directors, each
member of the Board of Directors who is not on such date an employee of the
Company or any of its Subsidiaries shall be granted an Outside Director Option
to purchase 1,000 shares of Common Stock. In addition, on each anniversary of
the date the Plan is adopted by the Board of Directors, each member of the Board
of Directors who is not on that anniversary date an employee of the Company or
any of its Subsidiaries shall be granted an Outside Director Option to purchase
5,000 shares of

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<PAGE>

Common Stock. In the event the remaining shares available for grant under
the Plan are not sufficient to grant the Outside Director Options to such
non-employee directors in any year, the number of shares subject to each
Outside Director Option for such year shall be reduced proportionately. The
Committee shall have no discretion with respect to the selection of directors
to receive Outside Director Options or the amount, the price or the timing
with respect thereto. A director who is not an employee of the Company or
any of its Subsidiaries shall not be entitled to receive any options other
than Outside Director Options as provided herein.

5. EXERCISE PRICE. The exercise price of the shares of Common Stock
under each Key Employee Option shall be determined by the Committee; provided,
however, that the exercise price shall not be less than the fair market value of
the Common Stock subject to such option on the date of grant; and further,
provided, that if, at the time an ISO is granted, the optionee owns (or is
deemed to own under Section 424(d) of the Code) stock possessing more than 10%
of the total combined voting power of all classes of stock of the Company, of
any of its Subsidiaries or of a Parent, the exercise price of such ISO shall not
be less than 110% of the fair market value of the Common Stock subject to such
ISO on the date of grant. The exercise price of the shares of Common Stock
under each Outside Director Option shall be equal to the fair market value of
the Common Stock subject to such option on the date of grant.

The fair market value of the Common Stock on any day shall be (a) if
the principal market for the Common Stock is a national securities exchange, the
average of the highest and lowest sales prices of the Common Stock on such day
as reported by such exchange or on a composite tape reflecting transactions on
such exchange, (b) if the principal market for the Common Stock is not a
national securities exchange and the Common Stock is quoted on the National
Association of Securities Dealers Automated Quotations System ("NASDAQ"), and
(i) if actual sales price information is available with respect to the Common
Stock, the average of the highest and lowest sales prices of the Common Stock on
such day on NASDAQ, or (ii) if such information is not available, the average of
the highest bid and lowest asked prices for the Common Stock on such day on
NASDAQ, or (c) if the principal market for the Common Stock is not a national
securities exchange and the Common Stock is not quoted on NASDAQ, the average of
the highest bid and lowest asked prices for the Common Stock on such day as
reported on the NASDAQ OTC Bulletin Board Service or by National Quotation
Bureau, Incorporated or a comparable service; provided, however, that if
clauses (a), (b) and (c) of this Paragraph are all inapplicable, or if no trades
have been made or no quotes are available for such day, the fair market value of
the Common Stock shall be determined by the Committee by any method consistent
with applicable regulations adopted by the Treasury Department relating to stock
options. The determination of the Committee shall be conclusive in determining
the fair market value of the stock.

6. TERM. The term of each Key Employee Option shall be such term as
is established by the Committee, in its sole discretion, at or before the time
such option is granted. Notwithstanding the foregoing, the term of each ISO
granted pursuant to the Plan shall be for a period not exceeding 10 years from
the date of grant thereof, and further provided, that if, at the time an ISO is
granted, the optionee owns (or is deemed to own under Section 424(d) of the
Code) stock

-3-
<PAGE>

possessing more than 10% of the total combined voting power of all classes of
stock of the Company, of any of its Subsidiaries or of a Parent, the term of
the ISO shall be for a period not exceeding five years from the date of
grant. Each Outside Director Option shall have a term of ten years
commencing on the date of grant. Options shall be subject to earlier
termination as hereinafter provided.

7. EXERCISE. An option (or any part or installment thereof), to the
extent then exercisable, shall be exercised by giving written notice to the
Company at its principal office (at present 555 West 57th Street, New York,
New York 10019, Attn: Barry Knepper, Executive Vice President), stating which
ISO, NQSO or Outside Director Option is being exercised, specifying the number
of shares of Common Stock as to which such option is being exercised and
accompanied by payment in full of the aggregate exercise price therefor (or the
amount due on exercise if the Contract permits installment payments) (a) in cash
or by certified check, or (b) with the consent of the Committee (in the Contract
or otherwise), with previously acquired shares of Common Stock having an
aggregate fair market value, on the date of exercise, equal to the aggregate
exercise price of all options being exercised, or with any combination of cash,
certified check or shares of Common Stock.

A person entitled to receive Common Stock upon the exercise of an
option shall not have the rights of a stockholder with respect to such shares of
Common Stock until the date of issuance of a stock certificate to him for such
shares; provided, however, that until such stock certificate is issued, any
option holder using previously acquired shares of Common Stock in payment of an
option exercise price shall continue to have the rights of a stockholder with
respect to such previously acquired shares.

In no case may a fraction of a share of Common Stock be purchased or
issued under the Plan.

8. TERMINATION OF RELATIONSHIP WITH COMPANY. Any holder of a Key
Employee Option whose employment with the Company (and its Parent and
Subsidiaries), and any holder of an Outside Director Option whose status as a
director of the Company, has terminated for any reason other than his death or
Disability (as defined in Paragraph 18) may exercise such option, to the extent
exercisable on the date of such termination, at any time within three months
after the date of termination, but not thereafter and in no event after the date
the option would otherwise have expired; provided, however, that if his
employment or status as a director shall be terminated either (a) for cause, or
(b) without the consent of the Company, said option shall terminate immediately.
Key Employee Options granted under the Plan shall not be affected by any change
in the status of the holder so long as he continues to be a full-time employee
of the Company, its Parent or any of the Subsidiaries (regardless of having been
transferred from one corporation to another).

Nothing in the Plan or in any option granted under the Plan shall
confer on any individual any right to continue in the employ of the Company, its
Parent or any of its Subsidiaries,

-4-
<PAGE>

or as a director of the Company, or interfere in any way with the right of
the Company, its Parent or any of its Subsidiaries to terminate the
employee's employment at any time for any reason whatsoever without liability
to the Company, its Parent or any of its Subsidiaries.

9. DEATH OR DISABILITY OF AN OPTIONEE. If an optionee dies (a)
while he is employed by the Company, its Parent or any of its Subsidiaries, or
while he is a director of the Company, (b) within three months after the
termination of such relationship (unless such termination was for cause or
without the consent of the Company) or (c) within one year following the
termination of such relationship by reason of Disability, the Key Employee
Options and Outside Director Options, respectively, may be exercised, to the
extent exercisable on the date of his death, by his executor, administrator or
other person at the time entitled by law to his rights under such option, at any
time within one year after death, but not thereafter and in no event after the
date the option would otherwise have expired.

Any optionee whose employment or status as a director has terminated
by reason of Disability may exercise his Key Employee Options and Outside
Director Options, respectively, to the extent they are exercisable upon the
effective date of such termination, at any time within one year after such date,
but not thereafter and in no event after the date the option would otherwise
have expired.

10. COMPLIANCE WITH SECURITIES LAWS. The Committee may require, in
its discretion, among other things, as a condition to the exercise of any option
that either (a) a Registration Statement under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the shares of Common Stock to be
issued upon such exercise shall be effective and current at the time of
exercise, or (b) there is an exemption from registration under the Securities
Act for the issuance of shares of Common Stock upon such exercise. Nothing
herein shall be construed as requiring the Company to register shares subject to
any option under the Securities Act.

The Committee may require the optionee to execute and deliver to the
Company his representation and warranty, in form and substance satisfactory to
it, that the shares of Common Stock to be issued upon the exercise of the option
are being acquired by the optionee for his own account, for investment only and
not with a view to the resale or distribution thereof. In addition, the
Committee may require the optionee to represent and warrant in writing that any
subsequent resale or distribution of shares of Common Stock by such optionee
will be made only pursuant to (i) a Registration Statement under the Securities
Act which is effective and current with respect to the shares of Common Stock
being sold, or (ii) a specific exemption from the registration requirements of
the Securities Act, but in claiming such exemption, the optionee shall, at the
request of the Committee and prior to any offer of sale or sale of such shares
of Common Stock, provide the Company with a favorable written opinion of
counsel, in form and substance satisfactory to the Company, as to the
applicability of such exemption to the proposed sale or distribution.

11. STOCK OPTION CONTRACTS. Each option shall be evidenced by an
appropriate Contract which shall be duly executed by the Company and the
optionee, and shall

-5-
<PAGE>

contain such terms and conditions not inconsistent herewith as may be
determined by the Committee.

12. ADJUSTMENTS UPON CHANGES IN COMMON STOCK. Notwithstanding any
other provisions of the Plan, in the event of any change in the outstanding
Common Stock by reason of a stock dividend, recapitalization, merger or
reorganization, split-up, combination or exchange of shares or the like, (a) the
aggregate number and kind of shares subject to the Plan, (b) the aggregate
number and kind of shares subject to each outstanding option and the exercise
price thereof and (c) the aggregate number and kind of shares to be granted
pursuant to Paragraph 4 to directors who are not employees of the Company shall
each be appropriately adjusted by the Committee, whose determination shall be
conclusive.

13. AMENDMENTS AND TERMINATION OF THE PLAN. The Plan was adopted by
the Board of Directors of the Company on May 1, 1992. No option may be granted
under the Plan after April 30, 2002. The Board of Directors, without further
approval of the Company's stockholders, may at any time and from time to time
suspend or terminate the Plan, in whole or in part, or amend it from time to
time in such respects as it may deem advisable, including without limitation, in
order that ISOs granted hereunder meet the requirements for "incentive stock
options" under the Code, to comply with applicable requirements of the
Securities Act and the Exchange Act, or to conform to any change in applicable
law or to regulations or rulings of administrative agencies; provided, however,
that no amendment shall be effective without the requisite prior or subsequent
stockholder approval which would (a) except as contemplated in Paragraph 12,
increase the maximum number of shares of Common Stock for which options may be
granted under the Plan, (b) materially increase the benefits to participants
under the Plan or (c) change the eligibility requirements for individuals
entitled to receive options hereunder. Notwithstanding the foregoing, the
provisions regarding the selection of directors for participation in, and the
amount, the price or the timing of, Outside Director Options shall not be
amended more than once every six months, other than to comport with changes in
the Code, the Employee Retirement Income Security Act or the rules thereunder.
No termination, suspension or amendment of the Plan shall, without the consent
of the holder of an existing option affected thereby, adversely affect his
rights under such option. The power of the Committee to construe and administer
any options granted under the Plan prior to the termination or suspension of the
Plan nevertheless shall continue after such termination or during such
suspension.

14. NON-TRANSFERABILITY OF OPTIONS. No option granted under the Plan
shall be transferable otherwise than by will or the laws of descent and
distribution, and options may be exercised, during the lifetime of the holder
thereof, only by him or his legal representatives. Except to the extent
provided above, options may not be assigned, transferred, pledged, hypothecated
or disposed of in any way (whether by operation of law or otherwise) and shall
not be subject to execution, attachment or similar process.

15. WITHHOLDING TAXES. The Company may withhold cash and/or shares
of Common Stock to be issued to the optionee having an aggregate fair market
value equal to the

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<PAGE>

amount which it determines is necessary to satisfy its obligation to withhold
Federal, state and local income taxes or other taxes incurred by reason of
the grant or exercise of an option, its disposition, or the disposition of
the underlying shares of Common Stock. Alternatively, the Company may require
the holder to pay to the Company such amount, in cash, promptly upon demand.
The Company shall not be required to issue any shares of Common Stock
pursuant to any such option until all required payments have been made. Fair
market value of the shares of Common Stock shall be determined in accordance
with Paragraph 5.

16. LEGENDS; PAYMENT OF EXPENSES. The Company may endorse such
legend or legends upon the certificates for shares of Common Stock issued upon
exercise of an option under the Plan and may issue such "stop transfer"
instructions to its transfer agent in respect of such shares as it determines,
in its discretion, to be necessary or appropriate to (a) prevent a violation of,
or to perfect an exemption from, the registration requirements of the Securities
Act, (b) implement the provisions of the Plan or any agreement between the
Company and the optionee with respect to such shares of Common Stock, or (c)
permit the Company to determine the occurrence of a "disqualifying disposition,"
as described in Section 421(b) of the Code, of the shares of Common Stock
transferred upon the exercise of an ISO granted under the Plan.

17. SUBSTITUTIONS AND ASSUMPTIONS OF OPTIONS OF CERTAIN CONSTITUENT
CORPORATIONS. Anything in this Plan to the contrary notwithstanding, the
Committee may, without further approval by the stockholders, substitute new
options for prior options of a Constituent Corporation (as defined in
Paragraph 18) or assume the prior options of such Constituent Corporation.

18. DEFINITIONS.

a. Subsidiary. The term "Subsidiary" shall have the same
definition as "subsidiary corporation" in Section 424(f) of the Code.

b. Parent. The term "Parent" shall have the same definition as
"parent corporation" in Section 424(e) of the Code.

c. Constituent Corporation. The term "Constituent Corporation"
shall mean any corporation which engages with the Company, its Parent or any
Subsidiary in a transaction to which Section 424(a) of the Code applies (or
would apply if the option assumed or substituted were an ISO), or any Parent or
any Subsidiary of such corporation.

d. Disability. The term "Disability" shall mean a permanent
and total disability within the meaning of Section 22(e)(3) of the Code.

e. Key Employee Option. The term "Key Employee Option" shall
mean an option granted pursuant to the Plan to a person who, at the time of
grant, is a key employee of the Company or a Subsidiary of the Company.

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<PAGE>

f. Outside Director Option. The term "Outside Director Option"
shall mean a NQSO granted pursuant to the Plan to a person who, at the time of
grant, is a director of the Company but is not an employee of the Company or any
of its Subsidiaries.

19. STOCKHOLDER APPROVAL. The Plan shall be subject to approval by a
majority of the votes present in person or by proxy at the next meeting of its
stockholders at which a quorum is present. No options granted hereunder may be
exercised prior to such approval, provided that the date of grant of any options
granted hereunder shall be determined as if the Plan had not been subject to
such approval. Notwithstanding the foregoing, if the Plan is not approved by a
vote of the stockholders of the Company on or before May 1, 1993, the Plan and
any options granted hereunder shall terminate.

-8-

<PAGE>
Exhibit 10(Q)

LEASE TERMINATION AND RELEASE AGREEMENT

This Lease Termination and Release Agreement is made as of the 13th day
of March, 1996 by and between PUTMAN PUBLISHING COMPANY, a Delaware
corporation ("Putman"), LASALLE NATIONAL TRUST, N.A., SUCCESSOR TRUSTEE TO
LASALLE NATIONAL BANK, as trustee under a Trust Agreement dated March 29,
1977 and known as trust number 52082 and not personally ("Trustee"), and
UNITEL VIDEO, INC., a Delaware corporation ("Lessee").

R E C I T A L S

A. By an office lease agreement dated April 16, 1987 ("Original Lease")
LaSalle National Bank, as trustee under Trust Agreement dated March 29, 1977
and known as Trust No. 52082 ("Original Trustee"), leased to Scanline
Communications, a Wisconsin general partnership, certain portions of the
building located at 301 E. Erie Street, Chicago, Illinois ("Building").
Trustee is Successor Trustee to the Original Trustee. Putman is the
beneficiary of the trust of which Trustee is trustee.

B. The Original Lease, as amended and extended by that certain
Amendment to Lease and Extension Agreement between Trustee and Scanline dated
March 15, 1991 ("First Amendment"), was assigned by Scanline to Lessee by an
Assignment, Assumption and Acceptance of Lease dated as of May 5, 1992.

<PAGE>

C. The Original Lease, as amended and extended by the First Amendment,
was further amended, extended and supplemented by a certain Second Amendment
to Lease and Extension Agreement between Trustee and Lessee dated April 25,
1994 ("Second Amendment"), and by a certain Memo of Agreement between Putman
and Lessee dated January 26, 1995 ("Memo of Agreement"). The Original Lease
as so amended, extended and supplemented and as it may otherwise have been
amended, extended, and supplemented, including by any "standstill"
arrangements, if any, from time to time is hereinafter referred to as the
"Lease".

D. The parties desire to terminate the Lease and release and discharge
Lessee from and any all claims, obligations and other matters, all in
accordance with this Agreement and the Releases to be delivered hereunder.

NOW, THEREFORE, in consideration of the covenants contained herein, and
for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:

1. Upon execution of this Agreement the following matters shall occur:

a. On or prior to March 14, 1996, Lessee shall pay Putman
$1,600,000.00, by wire transfer, in full satisfaction of all of
Lessee's obligations under the Lease and the Lease

2
<PAGE>

shall terminate.

b. Lessee and Putman shall amend that certain Escrow Agreement
between Chicago Title and Trust Company ("CT&T"), Putman and Lessee
dated January 26, 1995 ("Escrow Agreement"), by executing and obtaining
CT&T's execution of an Amendment to Escrow Agreement substantially in the
form of Exhibit "D" attached hereto ("Amendment to Escrow Agreement").

c. The parties acknowledge that Lessee currently owes Putman
$125,798.00 in credits for certain "Services" all as more fully described
in the Memo of Agreement ("Services Credit"). Lessee shall deliver to
Putman the office furniture and equipment listed on Exhibit "A" attached
hereto in full satisfaction of Lessee's obligations for the Services
Credit and the Services Credit shall expire. The parties agree that such
furniture and equipment shall, upon delivery to Putman, become the sole
and exclusive property of Putman and Lessee shall retain no interest in
such furniture and equipment. Lessee represents and warrants to Putman
that it owns such furniture and equipment free and clear of any
encumbrance or lien and that it is fully empowered to transfer to Putman
title to such furniture and equipment.

d. Contemporaneously with payment of the moneys described in
paragraph 1.a above, Putman shall execute and

<PAGE>

deliver to Lessee a Release substantially in the form of Exhibit "B"
attached hereto. Putman shall also execute and deliver to Bernard A.
Schlifke, Esquire, as escrowee, a Release substantially in the form of
Exhibit "C" attached hereto. Mr. Schlifke shall deliver such Release to
Lessee as provided in paragraph 3 of this Agreement.

2. Putman shall continue to provide the services set forth in the
terminated Lease to be provided by Lessor and Lessee shall be entitled to
continue to use and occupy the premises leased under the Lease ("Premises")
without the payment of any rent or other charges but only as provided in this
paragraph 2. Lessee shall be entitled, but only through June 30, 1996, to
use and occupy (but may not sublease such space for use or occupancy by a
third party) that portion of the Premises located on the first and second
floor of the Building which Lessee currently occupies under the Lease and
approximately 2,326 square feet of space on the third floor commonly known as
the "Avid Space" (such space, including the "Avid Space" is hereinafter
referred to as the "First and Second Floor Space"). Lessee shall be
entitled, but only through December 31, 1996, to use and occupy (or sublease
for the use and occupancy by a third party) approximately 3,413 square feet of
space located on the third floor of the Building which Lessee currently
occupies under the Lease, excluding the "Avid Space" (such space excluding
the "Avid Space" is hereinafter referred to as the "Third Floor Space") for
the operation of its sound department. Lessee's use

4
<PAGE>

(or any sublessee's use) of the Premises shall be limited to uses permitted
under the Lease. For so long as Lessee (or any sublessee of Lessee) occupies
any portion of the Building, Lessee shall maintain the insurance it
currently maintains under the Lease.

3. Provided Lessee is not in default of its obligations hereunder, upon
vacation of the First and Second Floor Space as provided in paragraph 2 of
this Agreement, Putman shall direct CT&T to return to Lessee $125,000.00 of
the $150,000.00 deposited with CT&T under the Escrow Agreement in accordance
with the terms and conditions of the Amendment to Escrow Agreement. In the
event Lessee fails to vacate the First and Second Floor Space as required by
this Agreement, Lessee shall pay Putman $3,767.67 for each day Lessee
retains possession of any portion of the First and Second Floor Space after
the date by which Lessee is required to vacate such space as provided in
paragraph 2 of this Agreement.

When Lessee vacates all of the First and Second Floor Space and Third
Floor Space, as provided in paragraph 2 of this Agreement, and provided that
Lessee is not otherwise in default under this Agreement, Putman shall
direct CT&T to return to Lessee all funds remaining on deposit with CT&T
under the Escrow Agreement and shall direct Mr. Schlifke to deliver to Lessee
the Release delivered to Mr Schlifke pursuant to paragraph 1.d of this
Agreement. In the event Lessee (or any sublessee of Lessee) does not vacate
the Third Floor Space on or before December 31, 1996,

5
<PAGE>

Lessee shall pay Putman $428.63 for each day Lessee (or any sublessee of
Lessee) retains possession of any portion of the Third Floor Space after
December 31, 1996.

4. Lessee agrees to indemnify, defend and hold harmless Trustee, Putman
and their respective agents and employees ("Indemnified Parties") from and
against any and all claims, demands, actions, liabilities, damages, costs and
expenses (including reasonable attorneys' fees), for injuries to any persons
or damage to or theft or misappropriation or loss of property occurring in or
about the Building and arising from the use and occupancy of the First and
Second Floor Space or Third Floor Space by Lessee (or any sublessee or
Lessee) or from any activity, work, or thing done, permitted or suffered by
Lessee (or any sublessee of Lessee) in or about the First and Second Floor or
Third Floor Space or due to any other act or omission of Lessee (or any
sublessee of Lessee), their invitees, employees, contractors and agents. If
any such proceeding is filed against any Indemnified Party, Lessee agrees to
defend such Indemnified Party in such proceeding at Lessee's sole cost by
legal counsel reasonably satisfactory to Putman.

5. Lessee shall pay on demand all costs and expenses, including,
without limitation, court costs and reasonable attorneys' fees paid or
incurred by Putman or Trustee in connection with enforcing Lessee's
obligations under this Agreement,

<PAGE>

including, without limitation, such costs and expenses paid or incurred to
obtain possession of the First and Second Floor Space or Third Floor Space.
An amount equal to such costs and expenses may be withdrawn by Putman from
the funds held by CT&T under the Escrow Agreement upon submission by Putman
to CT&T of invoices for such costs and expenses certified by Putman as having
been paid or incurred in connection with enforcement of Lessee's obligations
under this Agreement.

6. Notwithstanding anything herein which may be or appear to be to the
contrary, this Agreement shall be null and void if the conditions set forth
in paragraph 1.a, b, c, and d above are not all satisfied by the close of
business on March 14, 1996, in which case the Lease shall remain in full
force and effect.

7. This Agreement is executed by LaSalle National Trust, N.A.,
Successor Trustee to LaSalle National Bank, not personally but as Trustee
aforesaid, in the exercise of the power and authority conferred upon and
vested in it as such Trustee, and under the express direction of the
beneficiary of a certain Trust Agreement dated March 29, 1977 and known as
Trust No. 52082 at LaSalle National Trust, N.A., Successor Trustee to LaSalle
National Bank. It is expressly understood and agreed that nothing in this
Agreement shall be construed as creating any liability whatsoever against
such Trustee personally, and in particular without limiting the generality of
the foregoing, there shall be no personal

<PAGE>

liability to pay any indebtedness accruing hereunder or to perform any
covenant, either express or implied, herein contained, or to keep, preserve
or sequester any property of such Trust, and that all personal liability of
such Trustee of every sort, if any, is hereby expressly waived by Lessee, and
by every person now or hereafter claiming any right or security hereunder;
and that so far as such Trustee is concerned the owner of any indebtedness or
liability arising hereunder shall look solely to the Building for the payment
thereof. It is further understood and agreed that such Trustee has no agents
or employees and merely holds naked legal title to the property herein
described.

8. This Agreement may be signed in several counterparts, each one of
which shall be an original and all of which shall constitute but one
agreement.

9. This Agreement shall be governed by and construed under the laws of
the State of Illinois.

IN WITNESS WHEREOF, the parties have executed this Lease Termination and
Release Agreement as of the date first above written.

PUTMAN PUBLISHING COMPANY, a
Delaware corporation

By: Grace Cappelletti

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

Its: CEO
--------------------------------------

<PAGE>

UNITEL VIDEO, INC., a Delaware
corporation

By:
--------------------------------------

Its:
--------------------------------------

LASALLE NATIONAL TRUST, N.A., Successor
Trustee to Lasalle National Bank, as
trustee under Trust Agreement dated
March 29, 1977 and known as Trust
No. 52082 and not personally

By: Nancy A. Stack
--------------------------------------

Its: ASSISTANT SECRETARY
--------------------------------------

<PAGE>

UNITEL VIDEO, INC., a Delaware
corporation

By: /s/ David Miccuilla
----------------------------

Its: President/CEO
---------------------------

LASALLE NATIONAL TRUST, N.A.,
Successor Trustee to Lasalle
National Bank, as trustee
under Trust Agreement dated
March 29, 1977 and known as
Trust No. 52082 and not
personally

By:
----------------------------

Its:
---------------------------

<PAGE>

STATE OF NEW YORK )
) SS.
COUNTY OF NEW YORK )

I, Karen Ceil Lapidus, the undersigned, a Notary Public in and for such
County, in the State aforesaid, DO HEREBY CERTIFY THAT David Miccuilla of
UNITEL VIDEO, INC., a Delaware corporation, personally known to me to be the
same person whose name is subscribed to the foregoing instrument as such
President/CEO, appeared before me this day in person and acknowledged that
he/she signed and delivered such instrument as his/her own free and voluntary
act of such Corporation for the uses and purposes therein set forth.

WITNESS my signature and official seal at New York City in the County of
New York and State of New York the 14th day of March, 1996.

(NOTARY SEAL) /s/ Karen Ceil Lapidus
----------------------------------
Notary Public

My Commission Expires:
--------------

KAREN CEIL LAPIDUS
Notary Public, State of New York
No. 02LA5029695
Qualified in New York County
Commission Expires June 27, 1996

<PAGE>

STATE OF ILLINOIS )
) SS.
COUNTY OF COOK )

I, Roberta Zwiener, the undersigned, a Notary Public in and for such
County, in the State aforesaid, DO HEREBY CERTIFY THAT Grace Cappelletti of
PUTMAN PUBLISHING COMPANY, a Delaware corporation, personally known to me to
be the same person whose name is subscribed to the foregoing instrument as
such CEO/Owner, appeared before me this day in person and acknowledged that
he/she signed and delivered such instrument as his/her own free and voluntary
act of such Corporation for the uses and purposes therein set forth.

WITNESS my signature and official seal at _____________ in the County of
Cook and State of Illinois the 14th day of March, 1996.

(NOTARY SEAL) /s/ Roberta Zwiener
----------------------------------
Notary Public

My Commission Expires: 6/13/98
--------
"OFFICIAL SEAL"
ROBERTA ZWIENER
NOTARY PUBLIC, STATE OF ILLINOIS
MY COMMISSION EXPIRES 6/13/98

<PAGE>

STATE OF ILLINOIS )
) SS.
COUNTY OF COOK )

I, Jackie Felden, the undersigned, a Notary Public in and for such
County, in the State aforesaid, DO HEREBY CERTIFY THAT NANCY A. STACK
ASSISTANT SECRETARY of LASALLE NATIONAL TRUST, N.A., a national banking
association, not personally but as Successor Trustee to LaSalle National
Bank, N.A. under Trust Agreement dated March 29, 1977 and known as Trust No.
52082, personally known to me to be the same person whose name is subscribed
to the foregoing instrument as such ASSISTANT SECRETARY appeared before me
this day in person and acknowledged that he/she signed and delivered such
instrument as his/her own free and voluntary act of such Company for the uses
and purposes therein set forth.

WITNESS my signature and official seal at Chicago in the County of Cook
and State of Illinois, the 14th day of March, 1996.

(NOTARY SEAL) /s/ Jackie Felden
------------------------------------
Notary Public

My Commission Expires:
------------

"OFFICIAL SEAL"
JACKIE FELDEN
NOTARY PUBLIC, STATE OF ILLINOIS
MY COMMISSION EXPIRES 12/

<PAGE>

EXHIBIT 10(X)

THIRD TIER SUBLEASE

BETWEEN,

UNITEL VIDEO, INC.,

AS THIRD TIER SUBLESSOR

AND

PHOTO-MAGNETIC SOUND STUDIOS INC.,

AS THIRD TIER SUBLESSEE

PREMISES: A PORTION OF THE 10TH FLOOR
217 - 223 EAST 43RD STREET/
214 - 226 EAST 44TH STREET
NEW YORK, NEW YORK

<PAGE>

TABLE OF CONTENTS

ARTICLE PAGE

1 . . . . . . . . . . . . . . . . . . . . . . . . . . .Demised Premises 2

2.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Term 2

3.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Rent 3

4.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Use 5

5.. . . . . . . . . Major Ground Lease, Prime Sublease and Sub-sublease 5

6.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Service 7

7.. . . . . . . .Utility Services and ElectricEnergy Charge Adjustments 7

8.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Fixtures 8

9.. . . . . . . . . . . . . . . . . . . . . . . Alterations and Repairs 8

10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Insurance 10

11. . . . . . . . . . . . . . . Assignment, Subletting and Encumbrances 10

12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Default 11

13. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Bankruptcy 14

14. . . . . . . . . . . . . . . . . . . . . . . . . . . Indemnification 15

15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Time Limits 16

16. . . . . . . . . . . . . . . . . . . . . . . . . Remedies Cumulative 16

17. . . . . . . . . . . . . . . . . . . . . . Casualty and Condemnation 16

18. . . . . . . . . . . . . . . . . . . . . . . . . . . Quiet Enjoyment 17

19. . . . . . . . . . . . . . . . . . . Release of Third Tier Sublessor 17

20. . . . . . . . . . . . . . . . . . . . . . . . Surrender of Premises 17

21. . . . . . . . . . . . . . . . . . . . . . . . Estoppel Certificates 17

22. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Security 17

23. . . . . . . . . . . . . . . . . . . . . . . . . .Access to Premises 18

24. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notices 18

25. . . . . Groundlessor's, Prime Sublessor's and Sub-sublessor's
Consents Required 18

26. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Broker 18

27. . . . . . . . . . . . . . Waiver of Rights to Jury and Counterclaim 19

28. . . . . . . . . . . . . Third Tier Sublessor's Inability to Perform 19

29. . . . . . . . . . . . . . . . . . . . . . . . . . . . Miscellaneous 19

<PAGE>
THIRD TIER SUBLEASE

THIRD TIER SUBLEASE (this "SUB-SUBLEASE"), dated as of May __, 1996,
between UNITEL VIDEO, INC., a Delaware corporation ("THIRD TIER SUBLESSOR")
having an office at 555 West 57th Street, New York, New York 10019, Attention:
General Counsel, and PHOTO-MAGNETIC SOUND STUDIOS INC., a New York corporation
("THIRD TIER SUBLESSEE") having an office at 222 East 44th Street, New York, New
York 10017.

W I T N E S S E T H:

WHEREAS, by Agreement of Lease, dated as of January 1, 1959, between
Webb & Knapp, Inc. and Carl E. Siegesmund, as landlord, and 43rd St. Estates
Corp. ("PRIME SUBLESSOR"), as tenant, as modified by a letter agreement, dated
August 16, 1961, between Greenpoint Terminal Warehouse, Inc. ("GROUNDLESSOR";
successor by conveyance from Webb & Knapp, Inc. and Carl E. Siegesmund) and
Prime Sublessor, as modified by a Modification of Lease, dated as of September
13, 1961, between Groundlessor and Prime Sublessor, as modified by a
Modification of Lease, dated as of December 20, 1961, between Groundlessor and
Prime Sublessor, as modified (along with a related lease) by an Agreement, dated
January 23, 1963, among Groundlessor, Prime Sublessor and URN Realty Corp., as
modified (along with a related lease) by an Agreement, dated January 29, 1964,
among Groundlessor, Prime Sublessor and URN Realty Corp., and as modified by
Agreement, dated May 10, 1966, among Groundlessor, Prime Sublessor, and Victor
Whitehorn, as leasehold mortgagee (such Agreement of Lease, as so modified, is
the "MAJOR GROUND LEASE");

WHEREAS, by Agreement of Lease, dated August 15, 1961, between Prime
Sublessor, as landlord, and MPO Videotronics, Inc. ("MPO"), as tenant, as
amended by a letter agreement, dated August 31, 1961, between Groundlessor and
MPO (affecting the fourth to the seventh floors) and a letter agreement, dated
December 29, 1961, between Prime Sublessor and MPO, as modified by an Agreement
of Modification of Lease, dated May 31, 1962, between Prime Sublessor and MPO,
as assigned (as indicated in a subsequent lease amendment) by MPO to MPO Grand
Central Studios, Inc. ("MPO GRAND"), as amended by a First (sic) Amendment of
Agreement of Lease, dated July 20, 1970, between Prime Sublessor and MPO Grand,
as amended by a Second (sic) Amendment, dated as of November 26, 1973, between
Prime Sublessor and MPO Grand, as amended by an Amendment of Lease, dated as of
January 1, 1982, between Prime Sublessor and Columbia Pictures Industries, Inc.
("COLUMBIA PICTURES"; successor in interest to MPO Grand) (such Agreement of
Lease, as so amended, modified and assigned, is the "PRIME SUBLEASE");

<PAGE>

Acceptance of Lease, dated as of May 5, 1992, between Scanline Communications
and Third Tier Sublessor (such Sublease Agreement, as so assigned, assumed,
extended and amended, is the "SUB-SUBLEASE"), Sony Pictures Entertainment,
Inc. ("SUB-SUBLESSOR"; successor in interest to Columbia Pictures) leased to
Third Tier Sublessor 34,359.40 square feet consisting of: the entire seventh
floor consisting of 13,127 square feet; the entire eighth floor consisting of
8,060 square feet; a 3,194.50 square foot portion of the basement; a 5,839.90
square foot portion of the fourth floor; and a 4,138 square foot portion of
the tenth floor; all in the building ("BUILDING") known as and located at
217-223 East 43rd Street/214-226 East 44th Street, New York, New York; and

WHEREAS, Third Tier Sublessor desires to sublet to Third Tier
Sublessee, and Third Tier Sublessee desires to hire from Third Tier Sublessor, a
portion of the premises demised under the Sublease upon the terms and conditions
hereinafter set forth;

NOW, THEREFORE, in consideration of the mutual covenants hereinafter
provided, Third Tier Sublessor and Third Tier Sublessee hereby agree as follows:

1. DEMISED PREMISES.

1.01 Third Tier Sublessor hereby sublets to Third Tier Sublessee, and
Third Tier Sublessee hereby sublets and hires from Third Tier Sublessor, the
premises (the "PREMISES") comprising a portion of the 10th Floor (comprising
approximately 4,138 square feet) in the Building as designated by cross-hatching
on the floor plan annexed to this Third Tier Sublease as EXHIBIT A-1 and hereby
incorporated in and made a part of this Third Tier Sublease by reference, for
the term hereinafter stated and for the Rent hereinafter reserved (as
hereinafter defined), subject to all of the terms and provisions hereinafter
provided or incorporated in this Third Tier Sublease by reference.

1.02 Third Tier Sublessee agrees to accept the phase I space (the
"PHASE I SPACE") comprising approximately 1,052 square feet of the Premises, as
designated by cross-hatching on the floor plan annexed to this Third Tier
Sublease as EXHIBIT A-2 and hereby incorporated in and made a part of this Third
Tier Sublease by reference, on the Commencement Date (as hereinafter defined) in
its then condition and Third Tier Sublessor shall not be obligated to perform
any work or furnish any materials in, to or about the Phase I Space in order to
prepare the Phase I Space for occupancy by Third Tier Sublessee or otherwise.
Third Tier Sublessee agrees to accept the phase II space (the "PHASE II SPACE")
comprising approximately 3,086 square feet of the Premises, as designated by
cross-hatching on the floor plan annexed to this Third Tier Sublease as Exhibit
A-3 and hereby incorporated in and made a part of this Third Tier Sublease by
reference, on earlier to occur of (i) August 31, 1996 and (ii) five (5) days
after the delivery of possession of the Phase II Space by Third Tier Sublessor
to Third Tier Sublessee (such earlier date is the "PHASE II COMMENCEMENT DATE")
in its then condition and Third Tier Sublessor shall not be obligated to perform
any work or furnish any materials in, to or about the Phase II Space in order to
prepare the Phase II Space for occupancy by Third Tier Sublessee or otherwise.
Third Tier Sublessee hereby releases Third Tier Sublessor from any and all
liability resulting from (A) any latent or patent defects in the Premises,

<PAGE>

(B) the failure of the Premises to comply with any legal requirements applicable
thereto or (C) the status of the title to the Premises. Third Tier Sublessee
acknowledges that Third Tier Sublessor has made no statements, representations,
covenants or warranties with respect to (x) the condition or manner of
construction of the Building or any improvements constructed in the Premises,
(y) the uses or purposes for which the Premises may be lawfully occupied, or (z)
any encumbrances, covenants, restrictions or agreements affecting title to the
Premises. Third Tier Sublessee also agrees that, in executing this Third Tier
Sublease, it has not relied upon or been induced by any statements,
representations, covenants or warranties of any person other than those, if any,
set forth expressly in this Third Tier Sublease. Third Tier Sublessee has
relied solely on such statements, representations, covenants and warranties, if
any, as are expressly made herein and on such investigations, examinations and
inspections as Third Tier Sublessee has chosen to make or has made.

1.03 Any and all alterations to, work to be performed in or materials
to be supplied for the Premises shall be made, performed and supplied at the
sole cost and expense of Third Tier Sublessee and in conformance with all of the
terms and provisions of this Third Tier Sublease, the Major Ground Lease, the
Prime Sublease and the Sub-sublease.

2. TERM.

2.01 The term ("TERM") of this Third Tier Sublease shall commence five
(5) days after Third Tier Sublessor notifies Third Tier Sublessee that Sub-
sublessor has consented to this Third Tier Sublease ("COMMENCEMENT DATE") and,
unless earlier terminated as herein provided, shall expire on December 30, 1999
("EXPIRATION DATE"). Notwithstanding the foregoing, if prior to the
Commencement Date Third Tier Sublessee takes possession of or causes the
commencement of any work or the moving of any property in, into or about the
Premises, the date upon which Third Tier Sublessee took or caused to be taken
any such action shall be deemed to be the Commencement Date under this Third
Tier Sublease.

2.02 After Third Tier Sublessor shall have determined the Commencement
Date, Third Tier Sublessor and Third Tier Sublessee shall, upon the request of
either of them, execute a statement prepared by Third Tier Sublessor, in
recordable form, setting forth such date. Any failure of Third Tier Sublessee
to execute such statement shall not affect Third Tier Sublessor's determination
of the Commencement Date.

2.03 If the term of the Sub-sublease is terminated for any reason
prior to the Expiration Date, this Third Tier Sublease shall thereupon be
terminated ipso facto without any liability of Third Tier Sublessor to Third
Tier Sublessee by reason of such early termination. References in this Third
Tier Sublease to the "termination" of this Third Tier Sublease include the
stated expiration of the Term and any earlier termination thereof pursuant to
the provisions of this Third Tier Sublease, the Major Ground Lease, the Prime
Sublease, the Sub-sublease or by law. Except as otherwise expressly provided in
this Third Tier Sublease with respect to those obligations of Third Tier
Sublessee which by their nature or under the circumstances can only be, or under
the

<PAGE>

provisions of this Third Tier Sublease may be, performed after the
termination of this Third Tier Sublease, the Term and estate granted hereby
shall end at noon on the date of termination of this Third Tier Sublease as
if such date were the Expiration Date, and neither party shall have any
further obligation or liability to the other after such termination.
Notwithstanding the foregoing, any liability of Third Tier Sublessee to make
any payment under this Third Tier Sublease, whether of Fixed Rent, Additional
Rent (both as hereinafter defined) or otherwise, which shall have accrued
prior to the termination of this Third Tier Sublease, shall survive the
termination of this Third Tier Sublease.

2.04 Third Tier Sublessee waives the right to recover any damages
which may result from Third Tier Sublessor's failure to deliver possession of
(i) the Phase I Space on the Commencement Date or (ii) the Phase II Space on the
Phase II Commencement Date. If Third Tier Sublessor shall be unable to give
possession of either the Phase I Space or the Phase II Space on such respective
scheduled dates, and provided Third Tier Sublessee is not responsible for such
inability to give possession, the applicable Fixed Rent and Additional Rent
reserved and covenanted to be paid herein shall not commence until the date on
which Third Tier Sublessor shall be able to give possession of the Phase I Space
or the Phase II Space, as the case may be, to Third Tier Sublessee, and no such
failure to give possession on such respective scheduled date shall in any wise
affect the validity of this Third Tier Sublease or the obligations of Third Tier
Sublessee hereunder or give rise to any claim for damages by Third Tier
Sublessee or claim for rescission of this Third Tier Sublease, nor shall the
same in any way be construed to extend the Term. If permission is given to
Third Tier Sublessee to enter into the possession of the Premises, Third Tier
Sublessee covenants and agrees that such occupancy shall be deemed to be under
all the terms, covenants, conditions and provisions of this Third Tier Sublease,
including the covenant to pay Rent.

2.05 The parties agree that this Article 2 constitutes an express
provision as to the time at which Third Tier Sublessor shall deliver possession
of the Phase I Space and the Phase II Space to Third Tier Sublessee, and Third
Tier Sublessee hereby waives any rights to rescind this Third Tier Sublease
which Third Tier Sublessee might otherwise have pursuant to Section 223-a of the
Real Property Law of the State of New York or any other law of like import now
or hereafter in force.

3. RENT.

3.01 The rent ("RENT") reserved for the Term under this Third Tier
Sublease shall consist of the following:

(i) annual fixed rent ("FIXED RENT") in the amount of (A)
Seventeen Thousand Eight Hundred Eighty-four ($17,884) Dollars for the period
beginning on the Commencement Date and ending on the day immediately preceding
the Phase II Commencement Date, and (B) Seventy Thousand Three Hundred Forty-six
($70,346) Dollars for the period beginning on the Phase II Commencement Date
and ending on December 30, 1999, which shall be

<PAGE>

payable in advance, in equal monthly installments of, respectively, $1,490.33
and $5,862.17 each. The first installment of Fixed Rent shall be payable by
Third Tier Sublessee upon the execution of this Third Tier Sublease and the
second and subsequent installments shall be payable on the first (1st) day of
the first month following the Commencement Date and subsequent months,
respectively, of the Term. If the Commencement Date shall be a date other
than the first day of a calendar month, the second installment of Fixed Rent
(but no other installment) payable by Third Tier Sublessee hereunder shall be
reduced to an amount which bears the same ratio to the first installment of
Fixed Rent payable hereunder as the number of days from and including the
Commencement Date to the end of the calendar month in which the Commencement
Date occurs bears to the total number of days in such calendar month. If the
Phase II Commencement Date shall be a date other than the first day of a
calendar month, the first installment of First Rent (but no other
installment) payable by Third Tier Sublessee hereunder after the Phase II
Commencement Date shall be increased to an amount equal to the sum of (1)
$5,862.17 and (2) $4,371.84 multiplied by a fraction, the numerator of which
is the number of days from and including the Phase II Commencement Date to
the end of the calendar month in which the Phase II Commencement Date
occurred, and the denominator of which is the number of days in such calendar
month; and

(ii) additional rent ("ADDITIONAL RENT") in an amount equal to
the sum of (A) (1) 3.06% for the period commencing on the Commencement Date and
ending on the day immediately preceding the Phase II Commencement Date and (2)
12.04% for the period commencing on the Phase II Commencement Date and ending on
December 30, 1999, of any and all sums of money, other than the annual fixed
rental ("UNDERLYING FIXED RENT") of $191,359.92 under the Sub-sublease, which is
or may become payable by Third Tier Sublessor to Sub-sublessor under the Sub-
sublease ("UNDERLYING ADDITIONAL RENT"); (B) any and all other sums payable by
Third Tier Sublessee to Third Tier Sublessor hereunder; and (C) any and all
charges of Sub-sublessor under the Sub-sublease for overtime, additional
services or any other matter relating to the Premises, or arising out of Third
Tier Sublessee's failure to perform its obligations hereunder. Additional Rent
shall be payable by Third Tier Sublessee on the date fifteen (15) days before
the date on which the corresponding Underlying Additional Rent is payable to
Sub-sublessor under the Sub-sublease. All other Additional Rent shall be
payable upon demand. Third Tier Sublessor shall have the same remedies with
respect to any default by Third Tier Sublessee in the payment of Additional Rent
as are provided in this Third Tier Sublease, the Sub-sublease or applicable law
with respect to any nonpayment of rent.

3.02 The Fixed Rent and, except as otherwise specifically provided in
this Third Tier Sublease, the Additional Rent, shall be paid by Third Tier
Sublessee at the office of Third Tier Sublessor set forth above or such other
place as Third Tier Sublessor may designate, without prior notice or demand
therefor and without any abatement, deduction or setoff. Third Tier Sublessor
may at any time and from time to time by notice direct Third Tier Sublessee to
pay all or any portion of the Fixed Rent or Additional Rent on Third Tier
Sublessor's behalf directly to the Sub-sublessor at such address as Third Tier
Sublessor may at any time and from time to time direct.

<PAGE>

3.03 Third Tier Sublessee shall pay all Rent when due, in lawful money
of the United States which shall be legal tender for the payment of all debts,
public and private, at the time of payment. All sums due and payable as Rent
shall from and after the due date bear interest at four percent (4%) above the
base rate charged by Citibank, N.A. (or any successor thereto) ("PRIME RATE"),
from time to time, but in no event in excess of the maximum legal rate of
interest permitted from time to time under law to be charged, provided, however,
that no further interest shall be payable upon such interest. All interest
accrued under this subsection as hereinabove provided shall be deemed to be
Additional Rent payable hereunder and due at such time or times as the Rent with
respect to which such interest shall have accrued shall be payable under this
Third Tier Sublease.

3.04 If all or any portion of the Rent shall be or become
uncollectible, reduced, or required to be refunded because of any Legal
Requirements (as herein defined), Third Tier Sublessee shall enter into such
agreement(s) and take such other steps (without additional expense to Third Tier
Sublessee) as Third Tier Sublessor may request and as may be legally permissible
to permit Third Tier Sublessor to collect the maximum Rent which from time to
time during the continuance of such legal rent restriction may be legally
permissible (and not in excess of the amounts reserved therefor under this Third
Tier Sublease). Upon the termination of such legal rent restriction, (i) the
Rent shall become and thereafter be payable in accordance with the amounts
reserved herein for the periods following such termination, and (ii) Third Tier
Sublessee shall pay to Third Tier Sublessor, to the maximum extent legally
permissible, an amount equal to (A) the Rent which would have been paid pursuant
to this Third Tier Sublease but for such legal rent restriction, less (B) the
Rent paid by Third Tier Sublessee during the period such legal rent restriction
was in effect.

3.05 Third Tier Sublessee acknowledges that the late payment by Third
Tier Sublessee to Third Tier Sublessor of Rent and other sums due hereunder and
the failure to deliver on time items required to be delivered will cause Third
Tier Sublessor to incur costs not contemplated by this Third Tier Sublease, the
exact amount of which will be extremely difficult to ascertain. Such costs may
include, but are not limited to, administrative, processing and accounting
charges, and late charges which may be imposed on Third Tier Sublessor.
Accordingly, if any sum due from Third Tier Sublessee or any item due from Third
Tier Sublessee hereunder shall not be received by Third Tier Sublessor or Third
Tier Sublessor's designee within five (5) days after the date due, Third Tier
Sublessee shall pay to Third Tier Sublessor, in addition to any interest on
delinquent amounts provided above, a late charge equal to the greater of two
percent (2%) of the delinquent amount or $100.00, as liquidated damages. The
parties agree that such late charge represents a fair and reasonable estimate of
the costs Third Tier Sublessor will incur by reason of late payment or late
delivery by Third Tier Sublessee. Acceptance of such late charge shall not
constitute a waiver of Third Tier Sublessee's default with respect to such
overdue amount or other item, nor prevent Third Tier Sublessor from exercising
any other rights and remedies granted hereunder or by law to Third Tier
Sublessor.

4. USE.

<PAGE>

4.01 Third Tier Sublessee shall occupy and use the Premises only for
such purposes as are permitted under the terms and provisions of the Sub-
sublease and for no other purpose, and in all respects only as permitted under
the terms and provisions of this Third Tier Sublease, the Major Ground Lease,
the Prime Sublease and the Sub-sublease, including, without limiting the
generality of the foregoing, the rules and regulations, if any, under the Major
Ground Lease, the Prime Sublease, the Sub-sublease, and any and all laws,
statutes, ordinances, orders, regulations and requirements of all federal, state
and local governmental, public or quasi-public authorities, whether now or
hereafter in effect, which may be applicable to or in any way affect the
Building or the Premises or any part thereof and all requirements, obligations
and conditions of all instruments of record on the date of this Third Tier
Sublease affecting the Building or the Premises (collectively, "LEGAL
REQUIREMENTS").

4.02 Third Tier Sublessee shall not, without the prior consent of
Third Tier Sublessor, Sub-sublessor, Prime Sublessor and Groundlessor do or
permit anything to be done which may result in a violation of the terms of this
Third Tier Sublease, the Sub-sublease, the Prime Sublease or the Major Ground
Lease or which may make Third Tier Sublessor liable for any damages, claims,
fines, penalties, costs or expenses thereunder.

<PAGE>

5. MAJOR GROUND LEASE, PRIME SUBLEASE AND SUB-SUBLEASE.

5.01 This Third Tier Sublease and all of Third Tier Sublessee's rights
hereunder are and shall remain in all respects subject and subordinate to
(i) all of the terms and provisions of the Major Ground Lease, the Prime
Sublease and the Sub-sublease, substantially true and complete copies of which
have been delivered to and carefully examined by Third Tier Sublessee and are
attached hereto as, respectively, EXHIBIT B-1, EXHIBIT B-2 and EXHIBIT B-3,
(ii) any and all amendments to the Major Ground Lease, the Prime Sublease and
the Sub-sublease, or supplemental agreements relating to any of the same
hereafter made, except for any such amendments to or supplemental agreements
relating to the Sub-sublease between Sub-sublessor and Third Tier Sublessor
which contravene any express rights granted to Third Tier Sublessee hereunder,
and (iii) any and all matters to which the tenancy of Third Tier Sublessor, as
tenant under the Sub-sublease, is or may be subordinate. Third Tier Sublessee
shall in no case have any rights under this Third Tier Sublease greater than
Third Tier Sublessor's rights as tenant under the Sub-sublease. The foregoing
provisions shall be self-operative and no further instrument of subordination
shall be necessary to effectuate such provisions unless required by
Groundlessor, Prime Sublessor, Sub-sublessor or Third Tier Sublessor, in which
event Third Tier Sublessee shall, upon demand by Groundlessor, Prime Sublessor,
Sub-sublessor or Third Tier Sublessor at any time and from time to time,
execute, acknowledge and deliver to Third Tier Sublessor, Sub-sublessor, Prime
Sublessor and Groundlessor any and all instruments that Third Tier Sublessor,
Sub-sublessor, Prime Sublessor or Groundlessor, in the sole discretion of any of
them, may deem necessary or proper to confirm such subordination of this Third
Tier Sublease, and the rights of Third Tier Sublessee hereunder. If Third Tier
Sublessee shall fail to execute, acknowledge and/or deliver any such instrument
of subordination within ten (10) days after Groundlessor's, Prime Sublessor's,
Sub-sublessor's or Third Tier Sublessor's demand therefor, Third Tier Sublessor,
in addition to any other remedies provided under this Third Tier Sublease, the
Sub-sublease, the Prime Sublease, the Major Ground Lease and applicable law, may
execute, acknowledge and deliver such instrument, as Third Tier Sublessee's
attorney-in-fact. Third Tier Sublessee hereby irrevocably constitutes and
appoints Third Tier Sublessor as Third Tier Sublessee's proper and lawful
attorney-in-fact for such purpose, such appointment being coupled with an
interest.

5.02 Third Tier Sublessee shall observe and perform, (i) for the
benefit of Sub-sublessor and Third Tier Sublessor, each and every term,
covenant, condition and agreement of the Sub-sublease, which Third Tier
Sublessor is required to observe or perform with respect to the Premises as
tenant under the Sub-sublease, except for the covenants of Third Tier Sublessor
to pay Sub-sublessor the Underlying Fixed Rent and Underlying Additional Rent,
(ii) for the benefit of Prime Sublessor, Sub-sublessor and Third Tier Sublessor,
each and every term, covenant, condition and agreement of the Prime Sublease
which Third Tier Sublessor is required to observe or perform with respect to the
Premises as tenant under the Sub-sublease and (iii) for the benefit of
Groundlessor, Prime Sublessor, Sub-sublessor and Third Tier Sublessor, each and
every term, covenant, condition and agreement of the Major Ground Lease which
Third Tier Sublessor is required to observe or perform with respect to the
Premises as tenant under the Sub-sublease.

<PAGE>

Except as otherwise specifically provided in this Third Tier Sublease, all of
the terms, covenants, conditions and agreements which Third Tier Sublessor is
required to observe or perform with respect to the Premises under the Major
Ground Lease, the Prime Sublease and the Sub-sublease are hereby incorporated
herein by reference and deemed to constitute terms, covenants, conditions and
agreements which Third Tier Sublessee is required to observe and perform
under this Third Tier Sublease as if set forth herein at length, mutatis
mutandis; Third Tier Sublessor may exercise and shall be entitled to all of
the rights, powers, privileges and remedies reserved to (x) Groundlessor
under the Major Ground Lease, (y) Prime Sublessor under the Prime Sublease
and (z) Sub-sublessor under the Sub-sublease to the same extent as if fully
set forth herein at length, including, without limitation, all releases from
liability to, respectively, Groundlessor, Prime Sublessor and Sub-sublessor
thereunder and all rights and remedies arising out of, or with respect to,
any default by Third Tier Sublessee in payment of Rent hereunder or the
observance or performance of the terms, covenants, conditions and agreements
of this Third Tier Sublease, the Sub-sublease, the Prime Sublease and the
Major Ground Lease (except as specifically provided herein). Notwithstanding
the foregoing, any inconsistencies between the terms of this Third Tier
Sublease, the Sub-sublease, the Prime Sublease and the Major Ground Lease
which shall result from the foregoing incorporation shall be resolved in
favor of this Third Tier Sublease, provided, however, that if such
construction of terms would cause Third Tier Sublessor to be in default under
the terms of the Sub-sublease, the Prime Sublease and/or the Major Ground
Lease, then such inconsistency shall be resolved in favor of the superior
lease out of the Sub-sublease, the Prime Sublease and the Major Ground Lease
under which Third Tier Sublessor would be in default by such construction of
terms.

5.03 Third Tier Sublessee hereby assumes Third Tier Sublessor's
obligations to perform and makes itself personally liable to Sub-sublessor,
Prime Sublessor and Groundlessor for the performance of, all of the terms,
covenants, conditions and agreements to be performed or observed during the Term
on the part of Third Tier Sublessor under, respectively, the Sub-sublease, the
Prime Sublease and the Major Ground Lease with respect to the Premises, except
as herein provided. Third Tier Sublessee shall, promptly upon the request of
Third Tier Sublessor, Sub-sublessor, Prime Sublessor and/or Groundlessor,
execute, acknowledge and deliver to Third Tier Sublessor, Sub-sublessor, Prime
Sublessor and/or Groundlessor, as the case may be, an instrument confirming the
foregoing undertaking in form and content satisfactory to the party or parties
making such request in form suitable for recording.

5.04 Nothing contained in this Article 5 is intended or shall be
construed to confer upon Third Tier Sublessee any rights, powers, privileges or
remedies which are not specifically conferred upon Third Tier Sublessee under
the terms and provisions of this Third Tier Sublease, and, unless specifically
provided otherwise herein, none of the rights, powers, privileges or remedies of
(x) Third Tier Sublessor as tenant under the Sub-sublease, including, without
limitation, the options to review and the right of first refusal contained in,
respectively, paragraphs 6 and 7 of the Sub-sublease, (y) Sub-sublessor as
tenant under the Prime Sublease, and (z) Prime Sublessor as tenant under the
Major Ground Lease shall inure to the benefit of Third Tier Sublessee hereunder.

<PAGE>

5.05 If Third Tier Sublessee shall at any time fail to make any
payment or perform any act on its part to be made or performed hereunder, then
Third Tier Sublessor, after two (2) days' notice to Third Tier Sublessee (or, in
case of any emergency, on such notice, or without notice, as may be reasonable
under the circumstances) and without waiving, or releasing Third Tier Sublessee
from, any obligation of Third Tier Sublessee hereunder, may (but shall not be
required to) make any payment or perform any act on Third Tier Sublessee's part
to be made or performed as in this Third Tier Sublease provided, and may enter
upon the Premises for the purpose thereof and take all such action thereon as
may be necessary therefor. Third Tier Sublessee shall pay to Third Tier
Sublessor, upon demand, the amount of all costs and expenses incurred by Third
Tier Sublessor in the payment or performance of any such obligations of Third
Tier Sublessee.

6. SERVICE.

6.01 Except as otherwise specifically provided in this Third Tier
Sublease, Third Tier Sublessee shall be entitled during the Term to receive all
services, utilities, repairs and facilities which (x) Sub-sublessor is required
to provide pursuant to the Sub-sublease, (y) Prime Sublessor is required to
provide pursuant to the Prime Sublease and (z) Groundlessor is required to
provide pursuant to the Major Ground Lease, insofar as such services, utilities,
repairs and facilities pertain to the Premises. Third Tier Sublessor shall have
no liability of any nature whatsoever to Third Tier Sublessee as a consequence
of the failure or delay on the part of (x) Sub-sublessor in performing any or
all of its obligations under the Sub-sublease, (y) Prime Sublessor in performing
any or all of its obligations under the Prime Sublease and (z) Groundlessor in
performing any or all of its obligations under the Major Ground Lease,
including, without limiting the generality of the foregoing, any action or
omission by, respectively, Sub-sublessor, Prime Sublessor and/or Groundlessor
which results in a breach of the covenant of quiet enjoyment set forth in,
respectively, the Sub-sublease, the Prime Sublease and/or the Major Ground
Lease, and, under no circumstances shall Third Tier Sublessee have any right to
require or obtain the performance by Third Tier Sublessor of any obligations of
Sub-sublessor, Prime Sublessor and/or Groundlessor under, respectively, the Sub-
sublease, the Prime Sublease and/or the Major Ground Lease or otherwise. Third
Tier Sublessee's obligations under this Third Tier Sublease shall not be
impaired, nor shall the performance thereof be excused, because of any failure
or delay on the part of Sub-sublessor, Prime Sublessor and/or Groundlessor in
performing its obligations under, respectively, the Sub-sublease, the Prime
Sublease and/or the Major Ground Lease.

6.02 If at any time during the Term (x) Sub-sublessor shall default in
any of its obligations under the Sub-sublease, (y) Prime Sublessor shall default
in any of its obligations under the Prime Sublease or (z) Groundlessor shall
default in any of its obligations under the Major Ground Lease, to furnish
facilities, services or utilities or to make repairs to the Premises, then, upon
Third Tier Sublessor's receipt of a written notice from Third Tier Sublessee
specifying such default, Third Tier Sublessor shall, at Third Tier Sublessee's
sole cost and expense, use its reasonable efforts to cause Sub-sublessor, Prime
Sublessor or Groundlessor, as the case may be, to cure such default. Any action
or proceeding instituted by Third Tier Sublessor against Sub-

<PAGE>

sublessor, Prime Sublessor or Groundlessor, as the case may be, to enforce
such rights shall be conducted at the expense of Third Tier Sublessee,
provided, however, that Third Tier Sublessor shall bear its fair share of
such expense to the extent such action or proceeding does not relate to the
Premises.

7. UTILITY SERVICES AND ELECTRIC
ENERGY CHARGE ADJUSTMENTS.

7.02 Third Tier Sublessee shall pay all charges, surcharges and other
fees (however denominated) for gas, electricity, telephone and other utility
services used in the Premises during the Term.

8. FIXTURES.

8.01 All movable property, furniture, furnishings and trade fixtures
furnished by or at the sole expense of Third Tier Sublessee ("THIRD TIER
SUBLESSEE'S PROPERTY"), other than those affixed to the Premises so that they
cannot be removed without damage and other than those replacing an item
theretofore furnished and paid for by Third Tier Sublessor or Sub-sublessor or
for which Third Tier Sublessee has received a credit, shall remain the property
of Third Tier Sublessee, and may, unless prohibited pursuant to the Sub-
sublease, be removed by Third Tier Sublessee from time to time prior to the
termination of this Third Tier Sublease.

8.02 All Alterations (as hereinafter defined) made by either party,
including all paneling, decorations, partitions, railings, mezzanine floors,
carpeting, galleries and the like, affixed to the Premises shall become the
property of Third Tier Sublessor or Sub-sublessor and shall be surrendered with
the Premises upon the termination of this Third Tier Sublease. Notwithstanding
the foregoing, Third Tier Sublessor may elect to require Third Tier Sublessee to
remove any Alterations made to the Premises including, without limitation, any
Alteration constructed or installed by Third Tier Sublessee, on behalf of Third
Tier Sublessee or at Third Tier Sublessee's request, at Third Tier Sublessee's
expense, by giving written notice to Third Tier Sublessee not later than five
(5) days prior to the date set forth herein for the termination of this Third
Tier Sublease.

8.03 In any case where Third Tier Sublessee removes any of Third Tier
Sublessee's Property or any Alterations, Third Tier Sublessee shall repair all
damages caused by said removal and shall restore the Premises to good order,
repair and condition. Upon failure of Third Tier Sublessee to do so, Third Tier
Sublessor may repair such damage and restore the Premises to good order, repair
and condition at Third Tier Sublessee's sole expense, and Third Tier Sublessee
shall reimburse Third Tier Sublessor therefor upon demand.

<PAGE>

8.04 Notwithstanding anything herein to the contrary, upon Third Tier
Sublessee's failure to remove any of the Third Tier Sublessee's Property or any
Alterations in accordance with subsections 8.01 and 8.02 above, or upon the
termination of this Third Tier Sublease prior to the date set forth herein for
such termination, Sub-sublessor or Third Tier Sublessor may, at Third Tier
Sublessee's expense, (i) remove all such property and Alterations described in
subsections 8.01 and 8.02 above, (ii) cause the same to be placed in storage or
otherwise disposed of, and (iii) repair any damage caused by said removal and
restore the Premises to good order, repair and condition. Third Tier Sublessee
shall reimburse Third Tier Sublessor for all of the aforesaid expenses upon
demand.

8.05 Notwithstanding anything herein to the contrary, any items of
Third Tier Sublessee's Property or any Alterations not removed by Third Tier
Sublessee may, at the election of Third Tier Sublessor, be deemed to have been
abandoned by Third Tier Sublessee, and Third Tier Sublessor may retain and
dispose of said items at Third Tier Sublessee's cost and expense without any
liability to Third Tier Sublessee and without accounting to Third Tier Sublessee
for the proceeds thereof.

8.06 The provisions of this Article 8 shall survive the termination of
this Third Tier Sublease.

9. ALTERATIONS AND REPAIRS.

9.01 Third Tier Sublessee shall make no alterations, installations,
additions or improvements (collectively, "ALTERATIONS") in or about the Premises
without the prior written consent of Third Tier Sublessor in each instance. Any
Alterations in or about the Premises shall be performed by Third Tier Sublessee,
at its sole cost and expense, and in compliance with the following requirements:

(a) Third Tier Sublessee, at its sole expense, shall comply with all
of the provisions of this Third Tier Sublease, the Sub-sublease, the Prime
Sublease and the Major Ground Lease pertaining to the making of Alterations,
including, without limiting the generality of the foregoing, the provisions
requiring the prior written consent of Sub-sublessor, Prime Sublessor and
Groundlessor before any Alterations may be made in or about the Premises;

(b) Third Tier Sublessee shall submit to Third Tier Sublessor, for
its prior written approval, plans and specifications for such proposed
Alterations, together with the name of the proposed contractor and all proposed
subcontractors, and all other documentation required to be submitted by Third
Tier Sublessor to (x) Sub-sublessor under the Sub-sublease, (y) Prime Sublessor
under the Prime Sublease and (z) Groundlessor under the Major Ground Lease in
respect of such Alterations;

<PAGE>

(c) Prior to the commencement of any Alteration, Third Tier
Sublessee, at its sole expense, shall deliver to Third Tier Sublessor either
(i) a performance bond and a labor and materials bond (issued by a surety
company satisfactory to Third Tier Sublessor and licensed to do business in New
York State), each in the amount equal to 150% of the estimated cost of such
Alteration and otherwise in form satisfactory to Third Tier Sublessor and/or
(ii) such other security as shall be satisfactory to Third Tier Sublessor;

(d) Prior to the commencement of any Alteration, Third Tier Sublessee
shall furnish Third Tier Sublessor with certificates of insurance as shall be
reasonably satisfactory to Third Tier Sublessor, as to coverage and insurer (who
shall be licensed to do business in the State of New York), including, but not
limited to, liability, property damage, and workmen's compensation insurance to
protect Third Tier Sublessor, Sub-sublessor, Prime Sublessor, Groundlessor and
Third Tier Sublessee during the period of the performance of such Alteration;

(e) All such Alterations shall be performed in a good and workmanlike
manner and in compliance with all Legal Requirements and with all requirements
of any insurance policies affecting the Premises or the Building and so as to
cause as little interference as possible with Groundlessor's, Prime Sublessor's,
Sub-sublessor's or Third Tier Sublessor's, or the sublessee's of any of them,
use, occupancy and enjoyment of the Building or the premises of which the
Premises are a part; and

(f) Third Tier Sublessee, at its sole expense, shall obtain all
municipal and other governmental licenses, permits, authorizations, approvals,
and certificates required in connection with such Alteration.

9.02 Third Tier Sublessor shall have no obligations whatsoever to make
any repairs or Alterations in or to the Premises, any systems serving the
Premises, or any equipment, fixtures or furnishings in the Premises, or to
comply with any violations of law with respect thereto, or to restore the
Premises in the event of a fire or other casualty therein or to perform any
other duty with respect to the Premises which (x) Sub-sublessor is required to
perform under the Sub-sublease, (y) Prime Sublessor is required to perform under
the Prime Sublease and (z) Groundlessor is required to perform under the Major
Ground Lease. Third Tier Sublessee shall look solely to Sub-sublessor, Prime
Sublessor and Groundlessor for the making of any and all repairs in the Premises
and the performance of any and all such other work and responsibilities and only
to the extent required by the terms of, respectively, the Sub-sublease, the
Prime Sublease and the Major Ground Lease.

9.03 Third Tier Sublessee will not create or permit to be created or
to remain, and will discharge, any lien, encumbrance or charge (levied on
account of any tax payable by Third Tier

<PAGE>

Sublessee or any mechanic's or materialman's lien by reason of work, labor,
services or materials supplied or claimed to be supplied to Third Tier
Sublessee, or anyone else in the Premises, or any part thereof, or otherwise)
which might be or become a lien, encumbrance or charge upon the Building, the
Premises or any part thereof or the income therefrom. If any such mechanic's
or materialman's lien shall at any time be filed against the Building, the
Premises or any part thereof, Third Tier Sublessee, within fifteen (15) days
after notice of the filing thereof, will cause the same to be discharged of
record by payment, deposit, bond, order of a court of competent jurisdiction
or otherwise.

10. INSURANCE.

10.01 Third Tier Sublessee, at Third Tier Sublessee's sole
expense, shall maintain for the benefit of Third Tier Sublessor, Sub-sublessor,
Prime Sublessor and Groundlessor such policies of insurance required by the Sub-
sublease, the Prime Sublease and/or the Major Ground Lease with respect to the
Premises which shall be reasonably satisfactory to Third Tier Sublessor as to
coverage and insurer (who shall be licensed to do business in the State of New
York) provided that such insurance shall at a minimum include comprehensive
general liability insurance with an aggregate liability amount, on an occurrence
basis, of not less than $3,000,000 combined single limit, protecting and
indemnifying Third Tier Sublessor, Sub-sublessor, Prime Sublessor, Groundlessor
and Third Tier Sublessee against any and all claims and liabilities for injury
or damage to persons or property, occurring upon in or about the Premises, and
the public portions of the Building, caused by or resulting from or in
connection with any act or omission of Third Tier Sublessee, Third Tier
Sublessee's employees, agents or invitees.

10.02 Nothing contained in this Third Tier Sublease shall relieve
Third Tier Sublessee from any liability as a result of damage from fire or other
casualty, but 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. To the extent that such insurance is in
force and collectible and to the extent permitted by law, Third Tier Sublessor
and Third Tier Sublessee each hereby releases and waives all right to recovery
against the other or anyone claiming through or under the other by way of
subrogation or otherwise. The foregoing release and waiver shall be in force
only if the insurance policies of Third Tier Sublessor and Third Tier Sublessee
provide that such release or waiver does not invalidate the insurance; and each
party agrees to use its best efforts to include such a provision in its
applicable insurance policies. If the inclusion of said provision would involve
an additional expense, the party requiring such provision to be inserted in the
other's policy shall pay the cost thereof, unless it elects to waive such
requirement.

11. ASSIGNMENT, SUBLETTING AND ENCUMBRANCES.

<PAGE>

without Third Tier Sublessor's, Sub-sublessor's, Prime Sublessor's and
Groundlessor's prior written consent in each instance. If Third Tier
Sublessee is a corporation or is an unincorporated association or
partnership, the transfer, issuance, assignment or hypothecation of any stock
or interest in such corporation, association or partnership in the aggregate
in excess of twenty-five percent (25%) shall be deemed an assignment within
the meaning and provisions of this Article. Any consent by Third Tier
Sublessor, Sub-sublessor, Prime Sublessor and Groundlessor as hereinabove
required shall not excuse Third Tier Sublessee from its obligation to obtain
the express written consent of Third Tier Sublessor, Sub-sublessor, Prime
Sublessor and Groundlessor to any further action or matter with respect to
which the consent of Third Tier Sublessor, Sub-sublessor, Prime Sublessor and
Groundlessor is hereinabove required. If Third Tier Sublessor,
Sub-sublessor, Prime Sublessor and Groundlessor consent to an assignment of
this Third Tier Sublease or a subletting of the Premises, no such assignment
or subletting shall be, or be deemed to be, effective until the following
conditions have been met:

(i) in the case of an assignment, the assignee shall have
assumed in writing, directly for the benefit of Third Tier Sublessor, all of the
obligations of Third Tier Sublessee hereunder and Third Tier Sublessor shall
have been furnished, prior to the effective date of such assignment, with a
duplicate original of the agreement of assignment and assumption, in form and
substance satisfactory to Third Tier Sublessor; and

(ii) in the case of subletting, Third Tier Sublessor shall have
been furnished with a duplicate original of the sublease, prior to the
commencement of the term of such sublease, which sublease shall (a) be in form
and substance satisfactory to Third Tier Sublessor; (b) be subject and
subordinate to all of the terms, covenants and conditions of this Third Tier
Sublease, the Sub-sublease, the Prime Sublease and the Major Ground Lease; and
(c) restrict the right of the subtenant thereunder to assign such sublease or
further sublet its subleased premises without the prior written consent of Third
Tier Sublessor, Sub-sublessor, Prime Sublessor and Groundlessor in each
instance.

Notwithstanding Third Tier Sublessor's, Sub-sublessor's, Prime Sublessor's and
Groundlessor's consent to any such assignment or subletting, the provisions of
this subsection shall be applicable to each and every subsequent assignment or
subletting, and Third Tier Sublessee shall not be released from any of its
obligations hereunder.

11.02 If this Third Tier Sublease be assigned or if the Premises
or any part thereof be further sublet or occupied by anybody other than Third
Tier Sublessee, Third Tier Sublessor may, after default by Third Tier Sublessee,
collect rent from the assignee, subtenant or occupant, and apply the net amount
collected to the Fixed Rent, Additional Rent and other charges herein reserved,
but no such assignment, subletting, occupancy or collection shall be deemed a
waiver of Third Tier Sublessee's covenants under this Article 11, or the
acceptance by Third Tier Sublessor of the assignee, subtenant or occupant as
tenant hereunder or a release of Third Tier Sublessee from the further
performance by Third Tier Sublessee of any of the terms, covenants and
conditions of this Third Tier Sublease on the part of Third Tier Sublessee to be
performed hereunder.

<PAGE>

11.03 Third Tier Sublessee shall pay on demand the costs and
expenses incurred by Third Tier Sublessor, Sub-sublessor, Prime Sublessor and
Groundlessor, including, without limitation, architect, engineer and attorneys'
fees and disbursements, and a reasonable administrative fee, in connection with
any proposed or actual assignment of this Third Tier Sublease or subletting of
the Premises, or any part thereof, and the review and/or preparation of
documents in connection therewith.

12. DEFAULT.

12.01 This Third Tier Sublease and the Term and estate hereby
granted are subject to the following limitations as modified by the provisions
of Article 15 below:

(a) if Third Tier Sublessee shall fail to pay when due any Rent or
any other sum or amount Third Tier Sublessee may be required to pay hereunder;
or

(b) if Third Tier Sublessee shall default in the observance or
performance of any term, covenant or condition of this Third Tier Sublease on
Third Tier Sublessee's part to be observed, performed or complied with (other
than the payment of Fixed Rent and Additional Rent and other amounts payable
hereunder) and Third Tier Sublessee shall fail to remedy such default within ten
(10) days thereafter, or, if such default is of such a nature that for reasons
beyond Third Tier Sublessee's control it cannot be completely remedied within
said period of ten (10) days, then if Third Tier Sublessee (i) shall not
promptly advise Third Tier Sublessor in writing of Third Tier Sublessee's
intention to duly institute all steps necessary to remedy such situation,
(ii) shall not promptly institute and thereafter diligently prosecute to
completion all steps necessary to remedy the same and (iii) shall not remedy the
same within a reasonable time after the date of default; or

(c) if any event shall occur or any contingency shall arise whereby
this Third Tier Sublease or the estate hereby granted or the unexpired balance
of the Term would, by operation of law or otherwise, devolve upon or pass to any
person or entity other than Third Tier Sublessee, except as is expressly
permitted hereunder; or

(d) if Third Tier Sublessee shall fail to move into or take
possession of the Premises within thirty (30) days after the Commencement Date
or if the Premises shall thereafter become vacant, deserted or abandoned; or

(e) if there shall occur any default under the Sub-sublease, the
Prime Sublease or the Major Ground Lease or there shall occur any event which
with notice or passage of time or both would constitute a default under the Sub-
sublease, the Prime Sublease or the Major Ground Lease, which is due to any act
or omission of Third Tier Sublessee; or

<PAGE>

(f) if Third Tier Sublessee shall default in the observance or
performance of any term, covenant or condition on Third Tier Sublessee's part to
be observed or performed under any other lease or sublease with Third Tier
Sublessor, Sub-sublessor, the Prime Sublessor or the Groundlessor and such
default shall continue beyond any applicable grace period set forth in such
other lease or sublease for the remedying of such default; or

(g) if any execution or attachment shall be issued against Third Tier
Sublessee or any of Third Tier Sublessee's Property whereupon the Premises shall
be taken or occupied or attempted to be taken or occupied by someone other than
Third Tier Sublessee, and such execution or attachments shall not have been
vacated and shall continue for a period of thirty (30) days;

then, in any of said events, Third Tier Sublessor may give to Third Tier
Sublessee notice of its intention and election to end the Term at the expiration
of three (3) days from the date of the giving of such notice, and, in the event
such notice is given, this Third Tier Sublease and the Term and estate hereby
granted (whether or not the Term shall have commenced) shall terminate upon the
expiration of said three (3) days with the same force and effect as if that day
were the Expiration Date, provided, however, that Third Tier Sublessee shall be
and remain liable for the performance of all of its obligations hereunder and
for damages as provided in this Third Tier Sublease.

12.02 Except as otherwise provided for herein, if Third Tier
Sublessee shall default in the payment when due of any Rent or other amount
Third Tier Sublessee may become obligated to pay hereunder, or if this Third
Tier Sublease and the Term shall terminate as provided in subsection 12.01 above
then:

(a) Third Tier Sublessor and Third Tier Sublessor's agents may
immediately, or at any time after such default (and expiration of the applicable
grace period, if any) or after the date upon which this Third Tier Sublease and
the Term shall terminate, re-enter the Premises or any part thereof, without
notice, whether by summary proceedings or by any other permitted action or
proceeding, or by force or otherwise (without being liable to indictment,
prosecution or for damages therefor), and may repossess the Premises and
dispossess Third Tier Sublessee and any other persons from the Premises and
remove any and all of its or their property and effects from the Premises. In
no event shall any such re-entry be deemed an acceptance of Third Tier
Sublessee's surrender of this Third Tier Sublease; and

<PAGE>

liability. Third Tier Sublessor, at its option, may make such repairs,
alterations, additions, improvements, decorations and other physical changes
in and to the Premises as Third Tier Sublessor, in its sole discretion, may
consider advisable in connection with any such reletting or proposed
reletting, without relieving Third Tier Sublessee of any liability under this
Third Tier Sublease or otherwise affecting any such liability.

12.03 Third Tier Sublessee, on its own behalf and on behalf of all
persons claiming through or under Third Tier Sublessee, including all creditors,
does hereby waive any and all rights and privileges, to the extent permitted by
law, which Third Tier Sublessee and all such persons might otherwise have under
any present or future law to (i) the service of any notice of intention to re-
enter or to institute legal proceedings to that end which may otherwise by
required to be given under any present or future law, (ii) to redeem the
Premises, (iii) to re-enter or repossess the Premises, or (iv) to restore the
operation of this Third Tier Sublease, after Third Tier Sublessee shall have
been dispossessed by a judgment or by warrant of any court or judge, or after
any re-entry by Third Tier Sublessor, or after any termination of this Third
Tier Sublease and the Term, whether such dispossession, re-entry or termination
shall be by operation of law or otherwise. The words "re-enter," "re-entry,"
and "re-entered" as used in this Third Tier Sublease shall not be deemed to be
restricted to their technical legal meanings.

12.04 In the event of any breach or threatened breach by Third
Tier Sublessee or any persons claiming through or under Third Tier Sublessee of
any of the terms, covenants or conditions contained in this Third Tier Sublease,
Third Tier Sublessor (i) shall be entitled to enjoin such breach or threatened
breach and (ii) shall have the right to invoke any right and remedy allowed at
law or in equity or by statute or otherwise as if re-entry, summary proceedings
or other specific remedies were not provided for in this Third Tier Sublease.

12.05 If this Third Tier Sublease and the Term shall terminate as
provided in subsection 12.01 above, or by or under any summary proceeding or any
other action or proceeding or if Third Tier Sublessor shall re-enter the
Premises as hereinabove provided or by or under any summary proceeding or any
other action or proceeding, then in any of said events:

(a) Subtenant shall pay to Third Tier Sublessor all Fixed Rent,
Additional Rent and other amounts payable by Third Tier Sublessee hereunder to
the date upon which this Third Tier Sublease and the Term shall have terminated
or to the date of re-entry upon the Premises by Third Tier Sublessor, as the
case may be;

(b) Third Tier Sublessor shall be entitled to retain all monies, if
any, paid by Third Tier Sublessee to Third Tier Sublessor, whether as advance
Rent, security or otherwise, but such monies shall be credited by Third Tier
Sublessor against any Rent due at the time of such termination or re-entry or,
at Third Tier Sublessor's option, against any damages payable by Third Tier
Sublessee;

<PAGE>

(c) Third Tier Sublessee shall be liable for and shall pay to Third
Tier Sublessor, as damages, any deficiency between the Fixed Rent and Additional
Rent payable hereunder for the period which otherwise would have constituted the
unexpired portion of the Term (conclusively presuming the Additional Rent to be
at the same rate as was payable for the year immediately preceding such
termination or re-entry) and the net amount, if any, of rents ("NET RENT")
collected under any reletting effected pursuant to the provisions of subsection
12.02 for any part of such period (after first deducting from the rents
collected under any such reletting all of the Third Tier Sublessor's expenses in
connection with the termination of this Third Tier Sublease or Third Tier
Sublessor's re-entry upon the Premises and in connection with such reletting
including all repossession costs, brokerage commissions, legal expenses,
attorneys' fees, alteration or similar costs and other expenses of preparing the
Premises for such reletting). Any such deficiency shall be paid in monthly
installments by Third Tier Sublessee on the days specified in this Third Tier
Sublease for the payment of installments of Fixed Rent and Additional Rent.
Third Tier Sublessor shall be entitled to recover from Third Tier Sublessee each
monthly deficiency as the same shall arise and no suit to collect the amount of
the deficiency for any month shall prejudice Third Tier Sublessor's right to
collect the deficiency for any subsequent month by a similar proceeding.
Alternatively, suit or suits for the recovery of such deficiencies may be
brought by Third Tier Sublessor from time to time at its election;

(d) In the event that Third Tier Sublessor shall not have collected
any monthly deficiencies as aforesaid, Third Tier Sublessor shall be entitled to
recover from Third Tier Sublessee, and Third Tier Sublessee shall pay to Third
Tier Sublessor, on demand, as and for liquidated and agreed final damages, a sum
equal to the amount by which the Fixed Rent and Additional Rent payable
hereunder for the period which otherwise would have constituted the unexpired
portion of the Term (conclusively presuming the Additional Rent to be at the
same rate as was payable for the year immediately preceding such termination or
re-entry) exceeds the then fair and reasonable rental value of the Premises for
the same period, both discounted to present worth at the rate of four percent
(4%) per annum. If before presentation of proof of such liquidated damages to
any court, commission or tribunal, the Premises, or any part thereof, shall have
been relet by Third Tier Sublessor for the period which otherwise would have
constituted the unexpired portion of the Term, or any part thereof, the amount
of rent upon such reletting shall be deemed, prima facie, to be the fair and
reasonable rental value for the part or the whole of the Premises so relet
during the term of the reletting; and

(e) In no event shall Third Tier Sublessee be entitled to receive any
excess of Net Rent over the sums payable by Third Tier Sublessee to Third Tier
Sublessor hereunder, and in no event shall Third Tier Sublessee be entitled in
any suit for the collection of damages pursuant to this Article to a credit in
respect of any Net Rent from a reletting except to the extent actually received
by Third Tier Sublessor prior to the commencement of such suit.

12.06 (a) If this Third Tier Sublease be terminated as provided
in subsection 12.01 or by any summary proceeding or any other action or
proceeding, or if Third Tier Sublessor shall

<PAGE>

reenter the Premises, Third Tier Sublessee covenants and agrees, that,
notwithstanding anything to the contrary contained in this Third Tier
Sublease:

(i) the Premises shall be, upon such earlier termination or re-
entry, in the same condition as that in which Third Tier Sublessee has agreed to
surrender them to Third Tier Sublessor on the Expiration Date;

(ii) Third Tier Sublessee, on or before the occurrence of any
event of default, shall have performed every covenant contained in this Third
Tier Sublease with respect to the making or restoration of all Alterations; and

(iii) for the breach of either clause (i) or (ii) of
subsection 12.06(a) above, or both, Third Tier Sublessor shall be entitled
immediately, without notice or other action by Third Tier Sublessor, to recover,
and Third Tier Sublessee shall pay, as and for liquidated damages therefor the
then cost of performing such covenant, plus interest thereon at the rate
provided in Section 3.03 hereof for the period between the occurrence of any
event of default and the time when any such work or act should have been
performed under the other provisions of this Third Tier Sublease had such event
of default not occurred.

(b) Each and every covenant contained in this subsection 12.06 shall
be deemed separate and independent of every other provision of this Third Tier
Sublease and the use and occupancy of the Premises by Third Tier Sublessee, and
the performance of any such covenant shall not be considered to be Rent or the
payment of any other amount for the use of the Premises. It is understood that
the consideration for the covenants in this subsection is the making of this
Third Tier Sublease, and damages for failure to perform the same shall be deemed
to be in addition to and separate and independent from the damages accruing by
reason of default in observing any other covenant contained in this Third Tier
Sublease.

12.07 Nothing herein contained shall be construed as limiting or
precluding the recovery by Third Tier Sublessor against Third Tier Sublessee of
any sums or damages to which, in addition to the damages particularly provided
above, Third Tier Sublessor may lawfully be entitled by reason of any default
hereunder on the part of Third Tier Sublessee.

13. BANKRUPTCY.

<PAGE>

of creditors under any state statute. Neither Third Tier Sublessee nor any
person claiming through or under Third Tier Sublessee, or by reason of any
statute or order of court, shall therewith be entitled to possession of the
Premises but shall forthwith quit and surrender the Premises.

13.02 Notwithstanding any other provision of this Third Tier
Sublease, if this Third Tier Sublease shall terminate pursuant to subsection
13.01 above, Third Tier Sublessor shall be entitled to recover from Third Tier
Sublessee as and for liquidated damages an amount equal to the difference
between the Rent receivable hereunder for the unexpired portion of the Term and
the fair and reasonable rental value of the 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 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 the Premises or any part thereof be relet by Third
Tier Sublessor for the unexpired term of this Third Tier Sublease, or any part
thereof, before presentation of proof of such liquidation damages to any court,
commission or tribunal, the amount of Rent reserved upon such reletting shall be
deemed to be the fair and reasonable rental value for the part or the whole of
the Premises so relet during the term of the reletting. Nothing herein
contained shall limit or prejudice the right of Third Tier Sublessor 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.

13.03 If, at any time, (i) Third Tier Sublessee shall be comprised
of two or more persons or entities; (ii) any of Third Tier Sublessee's
obligations under this Third Tier Sublease shall have been guaranteed by any
person or entity other than Third Tier Sublessee; or (iii) Third Tier
Sublessee's interest in this Third Tier Sublease shall have been assigned, the
word "Third Tier Sublessee," as used in subsections 13.01 and 13.02 above, shall
be deemed to mean Third Tier Sublessee or any one or more other persons or
entities primarily or secondarily liable for the performance of Third Tier
Sublessee's obligations under this Third Tier Sublease.

14. INDEMNIFICATION.

14.01 Third Tier Sublessor, Sub-sublessor, Prime Sublessor,
Groundlessor, their respective employees, agents, contractors, licensees and
invitees, shall not be liable to Third Tier Sublessee, its employees, agents,
contractors, licensees or invitees, and Third Tier Sublessee shall indemnify and
hold harmless Third Tier Sublessor, Sub-sublessor, Prime Sublessor and
Groundlessor, and their respective employees, agents, contractors, licensees and
invitees, from and against any and all loss, cost, liability, claim, damage and
expense, including, without limiting the generality of the foregoing, attorneys'
fees and expenses and court costs, penalties and fines, incurred in connection
with or arising from any injury to Third Tier Sublessee or any other person, or
for any damages to, or loss (by theft or otherwise) of, any of the property of
Third Tier Sublessee and/or any other person, irrespective of the cause of such
injury, damage or loss and whether occurring in or about the Premises or the
Building. The foregoing shall not be deemed to affect the

<PAGE>

liability of Third Tier Sublessor, if any, with respect to any of the
foregoing if caused by the gross negligence of Third Tier Sublessor without
contributory negligence on the part of Third Tier Sublessee or any other
party.

14.02 Third Tier Sublessee shall indemnify and hold harmless
Third Tier Sublessor, Sub-sublessor, Prime Sublessor and Groundlessor, and their
respective employees, agents, contractors, licensees and invitees, from and
against any and all loss, cost, liability, claims, damage and expenses,
including, without limiting the generality of the foregoing, attorneys' fees and
expenses and court costs, penalties and fines, incurred in connection with or
arising from (i) any default by Third Tier Sublessee in the observance or
performance of, or compliance with, any of the terms, covenants or conditions of
this Third Tier Sublease, the Sub-Sublease, the Prime Sublease or the Major
Ground Lease on Third Tier Sublessee's part to be observed, performed or
complied with, (ii) the use or occupancy or manner of use or occupancy of the
Premises by Third Tier Sublessee or any person claiming through or under Third
Tier Sublessee or the exercise by Third Tier Sublessee or any person claiming
through or under Third Tier Sublessee of any rights granted to Third Tier
Sublessee hereunder, including, without limiting the generality of the
foregoing, those rights provided under Article 6 above, (iii) any acts,
omissions or negligence of Third Tier Sublessee or any person claiming through
or under Third Tier Sublessee, or the employees, agents, contractors, licensees
or invitees of Third Tier Sublessee or any such person, in or about the Premises
or the Building either prior to, during, or after the termination of this Third
Tier Sublease, or (iv) the condition of the Premises. If any action or
proceeding shall be brought against Third Tier Sublessor, Sub-sublessor, Prime
Sublessor or Groundlessor by reason of any such claim, Third Tier Sublessee,
upon notice from Third Tier Sublessor, Sub-sublessor, Prime Sublessor and
Groundlessor, shall resist and defend such action or proceeding and employ
counsel therefor satisfactory to Third Tier Sublessor. Third Tier Sublessee
shall pay to Third Tier Sublessor on demand all sums which may be owing to Third
Tier Sublessor, Sub-sublessor, Prime Sublessor and Groundlessor by reason of
the provisions of this subsection. Third Tier Sublessee's obligations under
this subsection shall survive the Expiration Date or earlier termination of this
Third Tier Sublease.

<PAGE>

15. TIME LIMITS.

15.01 Except with respect to actions to be taken by Third Tier
Sublessee for which shorter time limits are specifically set forth in this Third
Tier Sublease, which time limits shall control for the purposes of this Third
Tier Sublease, the time limits provided in the Sub-sublease, the Prime Sublease
and the Major Ground Lease for the giving or making of any Notice (as
hereinafter defined) by the tenant thereunder to Sub-sublessor, Prime Sublessor
and Groundlessor, as the case may be, the holder of any mortgage or any other
party, or for the performance of any act, condition or covenant by the tenant
thereunder, or for the exercise of any right, remedy or option by the tenant
thereunder, are changed for the purposes of this Third Tier Sublease, by
shortening the same in each instance by (i) forty (40) days with respect to all
such periods of sixty (60) or more days, (ii) fifteen (15) days with respect to
all such periods of thirty (30) or more days but less than sixty (60) days,
(iii) ten (10) days with respect to all such periods of twenty (20) or more but
less than thirty (30) days, and (iv) three (3) days with respect to all such
periods of less than twenty (20) days.

15.02 Except with respect to actions to be taken by Third Tier
Sublessor for which longer time limits are specifically set forth in this Third
Tier Sublease, which time limits shall control for the purposes of this Third
Tier Sublease, the time limits provided in the Sub-sublease, the Prime Sublease
and the Major Ground Lease for the giving or making of any Notice by Sub-
sublessor, Prime Sublessor and Groundlessor, as the case may be, or the
performance of any act, covenant or condition by Sub-sublessor, Prime Sublessor
and Groundlessor, as the case may be, or for the exercise of any right, remedy
or option by Sub-sublessor, Prime Sublessor and Groundlessor, as the case may
be, thereunder, are changed for the purposes of this Third Tier Sublease, by
lengthening the same in each instance by (i) fifteen (15) days with respect to
all such periods of sixty (60) or more days, (ii) ten (10) days with respect to
all such periods of thirty (30) or more but less than sixty (60) days,
(iii) seven (7) days with respect to all such periods of twenty (20) or more but
less than thirty (30) days, and (iv) three (3) days with respect to all such
periods of less than twenty (20) days.

16. REMEDIES CUMULATIVE.

16.01 Each right and remedy of Third Tier Sublessor under this
Third Tier Sublease shall be cumulative and be in addition to every other right
and remedy of Third Tier Sublessor under this Third Tier Sublease and now or
hereafter existing at law or in equity, by statute or otherwise.

<PAGE>

17. CASUALTY AND CONDEMNATION.

17.01 Subject to the terms of the Sub-sublease, the Prime Sublease
and the Major Ground Lease, in the event of any taking by governmental or public
authority of all or any part of the Premises, Third Tier Sublessee hereby waives
and relinquishes any and all claims to any award or damages for any such taking
of the Premises, including, without limiting the generality of the foregoing,
any claim for the value of the unexpired term of this Third Tier Sublease or the
value of any furniture, furnishings and trade fixtures installed by Third Tier
Sublessee in the Premises.

17.02 If the term of the Sub-sublease is terminated as provided
therein, or at the election of either party thereto pursuant to the terms
thereof, as a result of any casualty or condemnation affecting the Building or
any portion thereof, this Third Tier Sublease shall thereupon be terminated ipso
facto without any liability of Third Tier Sublessor to Third Tier Sublessee by
reason of such early termination. No event of casualty or condemnation
affecting the Premises shall result in any right or option on the part of the
Third Tier Sublessee hereunder to terminate this Third Tier Sublease, unless
Third Tier Sublessor shall have the right and option to terminate the Sub-
sublease as a result of such casualty or condemnation, and then only to the
extent that Third Tier Sublessee shall have exercised such right and option
within the time limits and as specifically provided for herein.

18. QUIET ENJOYMENT.

18.01 Third Tier Sublessor covenants that, as long as Third Tier
Sublessee shall pay the Fixed Rent and Additional Rent and all other amounts
Third Tier Sublessee shall be required to pay hereunder and shall duly observe,
perform and comply with all of the terms, covenants and conditions of this Third
Tier Sublease on its part to be observed, performed or complied with, Third Tier
Sublessee shall, subject to all of the terms of the Major Ground Lease, the
Prime Sublease, the Sub-sublease and this Third Tier Sublease, peaceably have,
hold and enjoy the Premises during the Term without molestation or hindrance by
Third Tier Sublessor.

19. RELEASE OF THIRD TIER SUBLESSOR.

19.01 The term "Third Tier Sublessor", as used in this Third Tier
Sublease so far as covenants or obligations on the part of Third Tier Sublessee
are concerned, shall be limited to mean and include only the owner or owners at
the time in question of the tenant's interest under the Sub-sublease, and in the
event of any transfer or transfers of the tenant's interest in the Sub-sublease,
Third Tier Sublessor herein named (and in case of any subsequent transfer or
conveyance, the then transferor of the tenant's interest in the Sub-sublease)
shall be automatically freed and relieved from and after the date of such
transfer of all liability with respect to the performance of any covenants or
obligations on the part of Third Tier Sublessor contained in this Third Tier
Sublease theretofore and thereafter to be performed.

<PAGE>

20. SURRENDER OF PREMISES.

20.01 Third Tier Sublessee shall, no later than the termination of
this Third Tier Sublease and in accordance with all of the terms of this Third
Tier Sublease, the Sub-sublease, the Prime Sublease and the Major Ground Lease,
vacate and surrender to Third Tier Sublessor the Premises, together with all
Alterations, in good order, condition and repair, reasonable wear and tear
excepted. Tenant's obligation to observe or perform this covenant shall survive
the termination of this Third Tier Sublease.

20.02 Third Tier Sublessee expressly waives, for itself and for
any person claiming through or under Third Tier Sublessee, any rights which
Third Tier Sublessee or any such person may have under the provisions of Section
2201 of the New York Civil Practice Law and Rules and any successor law of like
import in force in connection with any holdover summary proceedings which Third
Tier Sublessor may institute to enforce the foregoing provisions of this Article
20.

21. ESTOPPEL CERTIFICATES.

21.01 At any time and from time to time within ten (10) days after
a written request from Third Tier Sublessor, Third Tier Sublessee shall execute,
acknowledge and deliver to Third Tier Sublessor a written statement certifying
(i) that this Third Tier Sublease has not been modified and is in full force and
effect or, if there has been a modification of this Third Tier Sublease, that
this Third Tier Sublease is in full force and effect as modified, and stating
such modifications, (ii) the dates to which the Fixed Rent, Additional Rent and
other charges hereunder have been paid, (iii) that to the best of Third Tier
Sublessee's knowledge, no defaults exist under this Third Tier Sublease or, if
any defaults do exist, specifying the nature of each such default, and (iv) as
to such other matters as Third Tier Sublessor may reasonably request.

22. SECURITY.

22.01 Simultaneously with the execution of this Third Tier
Sublease, Third Tier Sublessee shall deposit with Third Tier Sublessor the sum
of Eleven Thousand Seven Hundred Twenty-four and 34/100 Dollars ($11,724.34)
("SECURITY DEPOSIT") as security for the full and faithful performance and
observance by Third Tier Sublessee of all of the terms, covenants and conditions
of this Third Tier Sublease on Third Tier Sublessee's part to be performed and
observed. Third Tier Sublessor may use, apply or retain the whole or any part
of the Security Deposit to the extent required for the payment of any Rent and
any other sums as to which Third Tier Sublessee may be in default hereunder and
for any sum which Third Tier Sublessor may expend or may be required to expend
by reason of Third Tier Sublessee's default in respect of any of the terms,
covenants and conditions of this Third Tier Sublease, including, without
limiting the generality of the foregoing, any and all damages or deficiencies in
the reletting of the Premises, whether such damages or deficiencies shall accrue
before or after summary proceedings or other re-entry by Third Tier Sublessor.
If any portion of said Security Deposit is so used or applied by Third Tier

<PAGE>

Sublessor, the Third Tier Sublessee shall within five (5) days after receipt of
written demand therefore deposit cash with Third Tier Sublessor in an amount
sufficient to restore the Security Deposit to its original amount and Third Tier
Sublessee's failure to do so shall be a material default of this Third Tier
Sublease. In the event that Third Tier Sublessee shall fully and faithfully
comply with all of the terms, provisions, covenants and conditions of this Third
Tier Sublease, the Security Deposit, or so much thereof as shall not have been
applied by Third Tier Sublessor as aforesaid, shall be returned to Third Tier
Sublessee after the Expiration Date (or earlier termination of this Third Tier
Sublease) and after delivery of the entire possession of the Premises to Third
Tier Sublessor, without interest. In the event of an assignment by Third Tier
Sublessor of its interest under the Sub-sublease, Third Tier Sublessor shall
have the right to transfer the Security Deposit to the assignee and Third Tier
Sublessor shall thereupon be released by Third Tier Sublessee from all liability
for the return of such Security Deposit. In such event, Third Tier Sublessee
shall look solely to its new sublessor for the return of said Security Deposit.
The foregoing provisions shall apply to every transfer or assignment made of the
Security Deposit to a new sublessor. Third Tier Sublessee further covenants
that it will not assign or encumber or attempt to assign or encumber the
Security Deposit and that neither Third Tier Sublessor nor its successors and
assigns shall be bound by any such assignment, encumbrance, attempted assignment
or attempted encumbrance.

23. ACCESS TO PREMISES.

23.01 Third Tier Sublessee shall permit Third Tier Sublessor, Sub-
sublessor, Prime Sublessor and Ground lessor and their authorized
representatives to enter upon the Premises at reasonable times (i) to inspect
the same and to perform any work or make any necessary repairs thereto; and
(ii) to exhibit the Premises to others upon reasonable notice to Third Tier
Sublessee.

24. NOTICES.

24.01 All notices, consents, approvals or other communications
(collectively, a "NOTICE") required to be given under this Third Tier Sublease
or pursuant to law shall be in writing and, unless otherwise required by law,
shall be personally delivered or given by registered or certified mail, return
receipt requested, postage prepaid, to the parties at their respective addresses
set forth above or such other address as either may designate by Notice to the
other. A copy of any Notice to Third Tier Sublessor shall be sent to Parker
Chapin Flattau & Klimpl, LLP, 1211 Avenue of the Americas, New York, New York
10036, Attention: William D. Freedman, Esq. Any Notice given pursuant hereto
shall be deemed to have been received upon delivery, if personally delivered, or
on the 2nd day after the mailing thereof if mailed in accordance with the terms
hereof.

25. SUB-SUBLESSOR'S CONSENT REQUIRED.

25.01 This Third Tier Sublease shall be conditioned upon the
receipt by Third Tier Sublessor of the Ground lessor's, Prime Sublessor's and
Sub-sublessor's written consents to this Third Tier Sublease and the delivery of
a copy of the same to the Third Tier Sublessee within thirty (30) days of the
date of this Third Tier Sublease. Third Tier Sublessee covenants and agrees to

<PAGE>

cooperate with Third Tier Sublessor in any request for the Ground lessor's,
Prime Sublessor's and Sub-sublessor's consents and agrees to supply and furnish
any information or documents which may be reasonably requested by Ground lessor,
Prime Sublessor and/or Sub-sublessor.

26. BROKER.

26.01 Third Tier Sublessee represents and warrants to Third Tier
Sublessor that Third Tier Sublessee has dealt with no broker in connection with
this Third Tier Sublease. Third Tier Sublessee shall indemnify and hold
harmless Third Tier Sublessor from and against any and all loss, claims,
liabilities, damages and expenses, including, without limitation, attorneys'
fees and expenses and court costs, arising out of or in connection with any
breach or alleged breach of the above representations or any claim by any person
or entity for brokerage commissions or other compensation in connection with the
consummation of this Third Tier Sublease.

27. WAIVER OF RIGHTS TO JURY AND COUNTERCLAIM.

27.01 Third Tier Sublessor and Third Tier Sublessee each hereby
waive trial by jury in any action, proceeding or counterclaim brought by either
of the parties against the other on any matters whatsoever arising out of or in
any way connected with this Third Tier Sublease, the relationship of Third Tier
Sublessor and Third Tier Sublessee, Third Tier Sublessee's use or occupancy of
the Premises, and/or any claim of injury or damage, or for the enforcement of
any remedy under any statute, emergency or otherwise. Third Tier Sublessor and
Third Tier Sublessee further agree that in the event Third Tier Sublessor
commences any summary proceeding for non-payment of Rent, Third Tier Sublessee
will not interpose any counterclaim of whatever nature or description in any
such proceeding.

27.02 Third Tier Sublessee hereby waives its right to interpose or
counterclaim in any summary proceeding instituted to remove Third Tier Sublessee
from the Premises or in any action or proceeding instituted for the collection
of Fixed Rent, Additional Rent or other amounts Third Tier Sublessee is
obligated to pay Third Tier Sublessor hereunder.

27.03 With respect to any provision of this Third Tier Sublease
which provides, in effect, that Third Tier Sublessor shall not unreasonably
withhold or unreasonably delay any consent or any approval, Third Tier Sublessee
in no event, shall be entitled to make, nor shall Third Tier Sublessee make, any
claim, and Third Tier Sublessee hereby waives any claim, for money damages; nor
shall Third Tier Sublessee claim any money damages by way of setoff,
counterclaim or defense, based upon any claim or assertion by Third Tier
Sublessee that Third Tier Sublessor has unreasonably withheld or unreasonably
delayed any consent or approval; but Third Tier Sublessee's sole remedy shall be
an action or proceeding to enforce any such provision, or for specific
performance, injunction or declaratory judgment.

<PAGE>

28. THIRD TIER SUBLESSOR'S INABILITY TO PERFORM.

28.01 This Third Tier Sublease and the obligation of Third Tier
Sublessee to pay Rent hereunder and perform all of the other covenants and
agreements hereunder on the part of Third Tier Sublessee to be performed shall
in no way be affected, impaired or excused because Third Tier Sublessor is
unable to fulfill any of its obligations under this Third Tier Sublease
expressly or impliedly to be performed by Third Tier Sublessor or because Third
Tier Sublessor is unable to make, or is delayed in making, any repairs,
additions, alterations, improvement or decorations or is unable to supply, or is
delayed in supplying, any equipment or fixtures, if Third Tier Sublessor is
prevented or delayed from so doing by reason of strikes or labor trouble, or by
accident, adjustment of insurance, or by any cause whatsoever reasonably beyond
Third Tier Sublessor's control, including but not limited to, laws, governmental
preemption in connection with a National Emergency or by reason of any rule,
order or regulation or any federal, state, county or municipal authority or any
department or subdivision thereof or any government agency or by reason of the
conditions of supply and demand which have been or are affected by war or other
emergency.

29. MISCELLANEOUS.

29.01 This Third Tier Sublease shall be governed by and construed
in accordance with the laws of the State of New York.

29.02 Third Tier Sublessee shall look solely to Third Tier
Sublessor's estate and interest in the Premises for the satisfaction of any
right of Third Tier Sublessee for the collection of a judgment or other judicial
process or arbitration award requiring the payment of money by Third Tier
Sublessor and not to any other property or assets of Third Tier Sublessor.

29.03 The section headings in this Third Tier Sublease and the
table of contents are inserted only as a matter of convenience for reference and
are not to be given any effect in construing this Third Tier Sublease.

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

29.05 All of the terms and provisions of this Third Tier Sublease
shall be binding upon and inure to the benefits of the parties hereto and,
subject to the provisions of Article 11 hereof, their respective successors and
assigns.

<PAGE>

29.06 Third Tier Sublessor has made no representations, warranties
or covenants to or with Third Tier Sublessee with respect to the subject matter
of this Third Tier Sublease except as expressly provided herein and all prior
negotiations and agreements relating thereto are merged into this Third Tier
Sublease. This Third Tier Sublease may not be amended or terminated, in whole
or in part, nor may any of the provisions be waived, except by a written
instrument executed by the party against whom enforcement of such amendment,
termination or waiver is sought and unless the same is permitted under the terms
and provisions of the Sub-sublease, the Prime Sublease and the Major Ground
Lease.

IN WITNESS WHEREOF, Third Tier Sublessor and Third Tier Sublessee have
executed this Third Tier Sublease as of the day and year first above written.

THIRD TIER SUBLESSOR:
---------------------

UNITEL VIDEO, INC.

By:/s/ Barry Knepper
Name: Barry Knepper
Title: CEO

THIRD TIER SUBLESSEE:
---------------------

PHOTO-MAGNETIC SOUND STUDIOS INC.

By:/s/ Arthur Williams
Name: Arthur Williams
Title: CEO

<PAGE>
Exhibit 10(Y)

SUBLEASE AGREEMENT

The parties to this sublease agreement of July 3, 1996 ("Sublease") are:
HENRY DREYFUSS ASSOCIATES, ("Sublandlord"), a New York partnership with
offices and doing business at 423 West 55th Street, New York, NY 10019; and
Unitel Video, Inc. ("Subtenant"), a Delaware corporation with offices and
doing business at 555 West 57 Street, New York, NY 10019.

WHEREAS, 423 West 55th Street Company ("Landlord") as landlord, being
the successor-in-interest to Gerald Rosenberg and George Feldman, as Trustees
under the Last Will and Testament of Nathan Schulman, Deceased, Consolidated
Investing Company, and Arthur A. Segall, as Executor Under the Last Will and
Testament of Norbert Nathanson, Deceased, the successors-in-interest to
Marion Feldman and Herbert M. Rosenberg, as Executors and Trustees under the
Last Will and Testament of Nathan Schulman, Deceased, Consolidated Investing
Company and Herbert Natanson), and Sublandlord, as tenant, entered into an
agreement of lease dated July 31, 1981 and a first amendment of lease
agreement dated August 11, 1989 (the "Lease") which provide, INTER ALIA, for
Sublandlord to rent from Landlord the entire rentable area of the second
(2nd) floor (the "Demised Premises") of the building known as and located at
423 West 55th Street, in the City, County and State of New York for a term
expiring on August 31, 1999;

WHEREAS, Sublandlord and Subtenant desire to provide for Subtenant to
sublet the Demised Premises from Sublandlord as hereinafter set forth.

NOW THEREFORE, it is mutually agreed as follows:

1. Attached hereto and made a part hereof as Exhibit "A" is a copy of
the Lease. References herein to the "Lease" shall include the Lease with the
express revisions to the Lease made by Landlord and Tenant in the "Sublease
Consent Agreement."

2. The term of this Sublease (the "Term") shall commence on the
"Commencement Date" and it shall expire, unless sooner terminated in
accordance with the provisions hereof, on August 30, 1999.

3. This Sublease is subject to the written consent of the Landlord in
the Sublease Consent Agreement which is attached hereto as Exhibit "B" (the
"Sublease Consent Agreement").

4. The "Commencement Date" is the date that Sublandlord shall deliver
and Subtenant shall accept, keys to and exclusive possession of the Demised
Premises broom clean, free of all liens, claims, damages, occupants and
personal property (other than the personal property described in paragraph 11
below), and otherwise in "as is" condition. Sublandlord will move out and
deliver possession of the Demised Premises as described above by July 13,
1996, or as soon thereafter as practicable, and no later than July 19, 1996,
subject only to FORCE MAJEURE. However, Subtenant shall be given access to
the Demised Premises by July 1, 1996 of the purpose for performing work

SUBLEASE AGREEMENT PAGE 1

<PAGE>

to prepare the Demised Premises for its occupancy, and Subtenant shall move
into and occupy the Demised Premises on July 13, 1996. Subtenant's access
prior to July 13, 1996 to perform work and Subtenant's occupancy on and after
July 13, 1996 pursuant to the provisions of the previous sentence prior to
the Commencement Date shall be subject to all of the provisions of this
Sublease except the obligations to pay "Base Rent" (as defined below) to
Sublandlord. The provisions of this paragraph shall constitute "an express
provisions to the contrary" within the meaning of Section 223-a of the New
York Real Property Law. During the interval from July 1, 1996 to the
Commencement Date, the parties shall cooperate with each other to minimize
interference and maximize coordination between them with respect to their
respective work and operations in the Demised Premises, including, but not
limited to, the relocation of Subtenant's offices into the Demised Premises
and the relocation of Sublandlord's offices out of the Demised Premises. If
Sublandlord does not deliver exclusive possession of the Demised Premises to
Subtenant on or before the "Deadline Date" (defined below), Subtenant may
elect to cancel this Sublease by giving notice of cancellation to Sublandlord
by hand delivery at the Demised Premises no later than the day after the
Deadline Date advising Sublandlord that this Sublease is canceled and
Subtenant (together with any one claiming under or through Subtenant) shall
surrender the Demised Premises to Sublandlord and neither party shall have
any other or further claims arising under this agreement. The "Deadline Date"
shall be July 20, 1996 plus one day for each day that elapses after June 28,
1996 to the date that Subtenant signs and delivers (and Sublandlord receives)
this Sublease and the Sublease Consent Agreement to Sublandlord for
Sublandlord's countersignature. Subtenant shall not sign and deliver this
agreement to Sublandlord and the Sublease Consent Agreement (nor shall
Sublandlord receive this agreement and the Sublease Consent Agreement) on a
Saturday, Sunday or Legal Holiday (i.e., July 4).

5. Sublandlord hereby sublets the Demised Premises to Subtenant for the
Term, subject to the provisions of this Sublease. Subtenant covenants and
agrees to pay Sublandlord the "Rent" (as hereinafter defined) as required in
this Sublease, and to pay, perform, keep and observe all of the terms,
provisions, covenants and conditions required under this Sublease to be paid,
performed, kept and observed by Subtenant under this Sublease.

6. This Sublease is subject and subordinate to the Lease, and any
agreement of record that the Lease is subject to. Subtenant covenants that it
will not violate the Lease or any agreement of record that the Lease is
subject to. Sublandlord covenants that it will not violate the Lease, the
Sublease Consent Agreement and any agreement of record that the Lease is
subject to. (See Exhibit "B".) Sublandlord will not amend or terminate the
Lease without Subtenant's consent if it will affect Subtenant.

7. The Lease describes the Landlord's duties. Sublandlord is not
obligated to perform the Landlord's duties. If the Landlord fails to perform,
Subtenant must send Sublandlord a notice. Upon receipt of the notice,
Sublandlord shall then promptly notify the Landlord and demand that the Lease
agreements be carried out. Sublandlord shall continue the demands until the
Landlord performs, including, but not limited to,

SUBLEASE AGREEMENT PAGE 2

<PAGE>

commencing an action or proceeding if necessary to enforce the Landlord's
obligations under the Lease if and as directed by Subtenant at Subtenant's
expense, or permitting Subtenant to bring such an action or proceeding in
Sublandlord's name if necessary. Subtenant shall furnish to Sublandlord and
Sublandlord shall furnish to Subtenant a copy of all notices from Landlord
promptly upon receipt. Subtenant shall pay, perform, keep and observe all of
the terms, provisions, covenants and conditions required to be paid,
performed kept or observed by Sublandlord under the Lease, except as
expressly provided otherwise in this Sublease and the Sublease Consent
Agreement. Sublandlord shall have all of the rights and remedies against
Subtenant under this Sublease for Subtenant's breach of this Sublease that
the Landlord has against Sublandlord under the Lease for Sublandlord's breach
of the Lease without regard to whether or not the Landlord has exercised
those rights against Sublandlord or resorted to those remedies against
Sublandlord for the acts or omissions of Subtenant. Those rights and remedies
of Sublandlord shall be in addition to, and not in lieu of, whatever other
rights or remedies may exist in law or equity.

8. Except as otherwise provided in the Sublease Consent Agreement
attached hereto as Exhibit "B", all of the provisions of the Lease applicable
to Sublandlord shall apply to Subtenant except the following:

A. In lieu of the "annual base rent" payable to Landlord as
described in the Lease (which Sublandlord shall continue to pay to
Landlord as provided in the Lease), Subtenant covenants and agrees
to pay "Base Rent" to Sublandlord in equal advance monthly
installments, without prior demand, offset or deduction of any kind
whatsoever (except as otherwise provided in the Sublease Consent
Agreement), commencing as of the Commencement Date, and on the first
day of each and every month thereafter for the balance of the Term
(except for the first such monthly installment which shall be paid
upon execution of this Sublease and applied against the first
monthly installments of Base Rent coming due on and after the
Commencement Date), at the following annual rental rate; $231,000.00
per year ($19,250.00 per month) from the Commencement Date (1) to
August 30, 1999.

B. In lieu of the security deposit required under Articles 31 and 42
of the Lease, Subtenant shall furnish Sublandlord with a cash security
deposit upon execution hereof in the sum of $19,250.00 to secure
Subtenant's payment and performance of all of its obligations under
this Sublease as provided in Article 31 of the Lease, but without
limiting Sublandlord's remedies to the amount so secured. If any
portion thereof shall be applied by Sublandlord to a claim for Base
Rent or any other amount required to be paid by Subtenant,
including, but not limited to

- --------------
(1) If the Commencement Date is not the first day of the month, the Base Rent
for the month in which the Commencement Date occurs shall be prorated to
reflect the portion of the month that elapsed prior to the Commencement Date.

SUBLEASE AGREEMENT PAGE 3

<PAGE>

damages for Subtenant's default during the Term, the amount so applied
shall be replenished by Subtenant and shall be due and payable as
additional rent.

C. Article 45 and Article 60 of the Lease is replaced by this
paragraph. Sublandlord represents that it used the services of
Williams Real Estate Co. Inc. ("Williams") and Edward S. Gordon
Co. Inc. ("ESG") in connection with this agreement, and that: its
agreement with Williams provides for Williams to waive any fee or
commission in connection with this Sublease and its agreement with
ESG provides for it to pay the fee or commission of ESG in connection
with this Sublease. Subtenant represents that it used only the
services of ESG in connection with this agreement, and that its
agreement with ESG provides for ESG to collect a commission for this
Sublease from Sublandlord and no fee or commission from Subtenant
for this Sublease. Sublandlord has agreed with ESG to pay a
commission to ESG for this Sublease, if, when and as the Landlord
consents to this Sublease and this Sublease is fully executed and
unconditionally delivered; Sublandlord covenants to pay such
commission to ESG and represents that such commission covers the
services rendered by ESG to Sublandlord and Subtenant for this
Sublease. Sublandlord will indemnify and hold Subtenant harmless
from and against any fee or commission claims of any broker arising
from Sublandlord's dealings with the claimant for this Sublease or
Sublandlord's breach of its representations in this paragraph.
Subtenant will indemnify and hold Sublandlord harmless from and
against any fee or commission claims of any broker arising from the
falsity of Subtenant's representations contained in this paragraph.

D. Articles 46, 49, 58 and 60 of the Lease and paragraphs 2, 3 and 4
of the first lease amendment shall not apply to this Sublease.

E. Sublandlord (and not Subtenant) shall make the payments required
under Article 48 of the Lease. When and as Sublandlord is required
to make a payment to the Landlord under Article 48 of the Lease
("Escalation for Taxes") for any tax year subsequent to tax year
1996/97, Subtenant shall pay Sublandlord an amount equal to the
difference between the Escalation for Taxes in the then current Tax
Year and the Escalation for Taxes in Tax Year 1996/97 (the "Tax
Escalation Payment").

9. Subtenant shall carry the insurance and undertake the indemnification
obligations described in the Lease with respect to the Demised Premises and
Subtenant's operations therein at its sole cost, risk and expense, and
Sublandlord shall be indemnified and named as an additional insured as its
interests may appear. Subtenant may furnish certificates of insurance to
evidence the required coverages

SUBLEASE AGREEMENT PAGE 4

<PAGE>

instead of copies of the insurance policies unless Landlord requires copies
of policies. Sublandlord will have its own insurance in effect as required by
the Lease.

10. Subtenant shall obtain and pay for direct electric service from the
utility company. Sublandlord represents that it has been obtaining direct
electric service from the utility company for the Demised Premises through the
existing electric meter and that such meter is in good working order and
condition and it will be in good working order and condition on the Commencement
Date.

11. Attached hereto as Exhibit "C" is a list of personal property
consisting of furniture in the Demised Premises that is being sold by
Sublandlord to Subtenant on an "as is" basis in consideration of the sum of
$1.00 which is being paid by Subtenant to Sublandlord upon execution of this
agreement.

12. As used herein "Rent" shall mean and include the "Base Rent" and
"additional rent" (defined below). All payments other than the Base Rent
required to be made by Subtenant pursuant to this Sublease (including, but not
limited to, payments for all fees and charges, and any and all damages,
interest, costs, fees and expenses caused by Subtenant's default) shall be
deemed additional rent and, in the event of any nonpayment thereof, Sublandlord
shall have all rights and remedies provided for herein and by law for nonpayment
of the Base Rent in addition to whatever other remedies may be available to
Sublandlord.

13. Except as otherwise provided in the Sublease Consent Agreement,
Subtenant shall not underlet the Demised Premises or assign this Sublease, in
whole or in part, without Sublandlord's prior written consent in each instance
(which consent shall not be unreasonably withheld or delayed), subject to all of
the requirements of the Lease, including, but not limited to the requirement
that the Landlord consent to any subletting or assignment, in whole or in part.
However, Subtenant may, on prior written notice to Sublandlord, without
Sublandlord's prior written consent, assign this Sublease or sub-sublet pursuant
to any sub-sublease or assignment agreement that has been approved in writing by
Landlord prior to the date on which such agreement becomes effective as well as
any sub-sublease or assignment of this Sublease that the Landlord permits
Subtenant to enter into without Landlord's prior written consent. Sublandlord
hereby consents to the dispositions of the Demised Premises and the sub-
subleases that the Landlord is consenting to in the attached Sublease Consent
Agreement. Any sub-sublease of the Demised Premises, in whole or in part, or
assignment of this Sublease shall comply with the applicable provisions of the
Lease and this Sublease, shall not relieve Subtenant of Subtenant's obligations
to Sublandlord under this Sublease, shall not impair the rights of Sublandlord
under this Sublease, and shall be subject and subordinate to this Sublease and
the Lease, but Sublandlord shall not elect to cancel or terminate this Sublease
under subparagraph 50(a) of the Lease. Nothing contained herein and no consent
to any disposition of the Demised Premises (in whole or in part) by Subtenant at
any time shall create privity between Sublandlord and any sub-subtenant.
However, the provisions of any sub-sublease of

SUBLEASE AGREEMENT PAGE 5

<PAGE>

the Demised Premises shall include an acceptance by the sub-subtenant of the
following:

If the Sublease shall be terminated by Sublandlord for the Subtenant's
monetary breach or default under the Sublease (or for any non-monetary
breach or default of Subtenant that is not due to the act or omission
of sub-subtenant) while the sub-sublease remains in effect, Sublandlord
will not evict sub-subtenant or seek to interrupt its rights to
possession of the Demised Premises due to the termination of the
Sublease and the Sublease shall continue as a sublease between
Sublandlord as lessor, and sub-subtenant, as lessee, with the same
force and effect as if Sublandlord, as lessor, and sub-subtenant,
as lessee, had entered into a sublease as of the date of the
termination of the Sublease, containing the same terms, covenants
and conditions as those contained in the Sublease, for a term equal
to the unexpired term of the Sublease as if the Sublease was still in
effect. From and after such termination of the Sublease: sub-subtenant
will attorn to Sublandlord, and Sublandlord will accept such
attornment; and sub-subtenant will assume and perform the obligations
of Subtenant under the Sublease as if it had executed the Sublease as
the Subtenant without prejudice to any claims that Sublandlord may have
against Subtenant for Subtenant's violation of the Sublease.

14. All notices permitted or required under this Sublease shall be sent by
certified mail, "return receipt requested", or sent for next business day
delivery by a national overnight courier service (e.g., Federal Express, DHL,
Airborne Express or Express Mail) and shall be deemed to have been given on the
date of receipt, first refusal or first attempted delivery, to the addresses of
the respective parties hereinabove set forth or to such other address as either
party may designate as the address for notices to it on at least ten (10) days
prior written notice.

15. Subtenant has no authority to make any agreement with the Landlord
about the Demised Premises or the Lease during the Term of the Sublease which
will adversely affect Sublandlord. However, it is acknowledged that certain
rights and obligations of the Subtenant (e.g., to request and pay for "After
Hours" access and the like) may be delegated to a permitted sub-subtenant
without relieving any one of liability to any one else for any breach of the
Lease, the Sublease or any sub-sublease which will exist despite such
delegation. Subtenant may not pay Rent or other charges to the Landlord, but
only to Sublandlord, except as otherwise provided herein, in the Lease or in
Exhibit "B". Sublandlord shall not make any agreement with the Landlord about
the Demised Premises or the Lease during the term of this Sublease which will
adversely affect Subtenant. However, it will not be deemed to adversely affect
Sublandlord if Subtenant enters into a lease agreement for the Demised Premises
for a term commencing after the term of the Lease ends, or any lease agreement
for any other space in the Building at any time. Sublandlord represents that it
has no options to renew the Lease and no agreement providing for it to lease the
Demised Premises after the end of the term of the Lease. Sublandlord will not
enter into a

SUBLEASE AGREEMENT PAGE 6

<PAGE>

new lease of the Demised Premises or any agreement to terminate, renew or extend
the term of the Lease of the Demised Premises.

16. Sublandlord consents to the Subtenant's alterations described in the
Sublease Consent Agreement in accordance with the provisions of Exhibit B.

17. This is the final and complete agreement of the parties as to the
subject matter hereof and it supersedes any other understandings or
communications. If there is any conflict between this agreement and the
Sublease Consent Agreement, the Sublease Consent Agreement shall control. This
Sublease cannot be altered or waived, in whole or in part, except in writing
signed and delivered by both parties. It shall be interpreted without any
presumption against either party as the drafter. Words intentionally deleted
from prior drafts shall be disregarded in determining the meaning and effect of
this Sublease.

18. This Sublease shall be binding on, and inure to the benefit of, the
parties hereof and their legal representatives, successors and assigns, but
there shall be no assignments except if and as provided herein.

IN WITNESS WHEREOF, the parties have signed this Sublease on the date first
written above.

HENRY DREYFUSS ASSOCIATES UNITEL VIDEO, INC.

By: John McGarvey By: /s/ Karen Ceil Lapidus
-------------------------------- --------------------------------

SUBLEASE AGREEMENT PAGE 7

<PAGE>

EXECUTION COPY

SECOND TIER SUBLEASE

1. PARTIES. THIS SECOND TIER SUBLEASE ("Sublease"), dated as of the 3rd day
of July, 1996, is entered into by and between UNITEL VIDEO, INC., a Delaware
corporation ("Sublessor"), and PARAMOUNT PICTURES CORPORATION, a Delaware
corporation ("Sublessee").

2. PREMISES. Sublessor hereby leases to Sublessee, and Sublessee hereby
leases from Sublessor, upon the terms, conditions and covenants set forth
herein, those certain premises containing approximately 16,969 square feet,
being a portion of the second floor of the building (the "Building") located at
423 West 55th Street, New York, New York (the "Premises"), as more particularly
identified on the plan attached hereto as Exhibit "A".

3. TERM. The term of this Sublease ("Term") shall commence (the "Sublease
Commencement Date") on the "Commencement Date" under the Master Sublease
(hereinafter defined) and shall expire on August 30, 1999. Notwithstanding the
foregoing, this Sublease shall terminate (i) upon delivery of the Termination
Notice (hereinafter defined) as provided below and (ii) immediately upon
termination of the Master Sublease for any reason and if Sublessor shall not
have exercised its rights under paragraph 13 of the Consent (hereinafter
defined). If the Commencement Date shall not have occurred under the Master
Sublease and Sublessor shall thereby have the right to terminate the Master
Sublease, Sublessee shall have the right by written notice to Sublessor to
require Sublessor to terminate the Master Sublease. Further notwithstanding the
foregoing, if prior to the Commencement Date Sublessee takes possession of or
causes the commencement of any work or the moving of any property into the
Premises, on the date upon which Sublessee took any such action Sublessee shall
be deemed to be subject to all of the provisions of this Sublease except the
obligation to pay Monthly Rent which shall not commence until the Commencement
Date.

In the event that Sublessee shall not have committed to extend the Term of
that certain Production Facilities Agreement dated as of July 3, 1996 (the
"Facilities Agreement") between Sublessor and Sublessee on or before March 1,
1998 in accordance with paragraph 10 of the Facilities Agreement, Sublessor
shall have the option by written notice (the "Termination Notice") to Sublessee
on or before March 15, 1998 to either (i) terminate this Sublease effective July
21, 1998 or (ii) require Paramount Pictures Corporation ("Assignee") to
immediately assume Sublessor's obligations under the Master Sublease
(hereinafter defined) with respect to the entire premises demised thereunder and
Assignee shall do or cause to be done all things required for such assumption by
assignment in accordance with the Master Sublease.

<PAGE>

4. MASTER LEASE. Sublessor hereby warrants that (i) Sublessor is the
subtenant under that certain Sublease dated July 3, 1996 (the "Master Sublease")
with Henry Dreyfuss Associates ("Master Sublessor"), which Master Sublease is
subject to all of the terms of that certain Sublease Consent Agreement dated
July 3, 1996 among Master Sublessor, Sublessor and the owner of the Building
(the "Landlord")(the "Consent" and for all purposes of this Sublease each
reference to the Master Sublease shall mean such agreement as supplemented by
the Consent), which Master Sublease covers the entire second floor space in the
Building, including the Premises; (ii) the Master Sublease is in full force and
effect and neither Sublessor nor Master Sublessor (to Sublessor's knowledge) is
in default under any provision under the Master Sublease; (iii) a true and
complete copy of the Master Sublease (and any amendments thereto) is attached
hereto as Exhibit "B"; and (iv) the Premises are not subleased to others.
Provided that it is not in default hereunder, Sublessee shall have the peaceful
and quiet enjoyment of the Premises without hindrance on the part of Sublessor,
and Sublessor will warrant and defend the Sublessee in such peaceful and quiet
enjoyment of the Premises against the claims of all persons claiming by, through
or under Sublessor. Sublessor shall keep the Master Sublease in full force and
effect by making timely payments of rent as required by the Master Sublease and
by performing all obligations of the lessee under the Master Sublease not
specifically assumed by the Sublessee hereunder. Sublessor shall neither do nor
permit anything to be done by any party over which Sublessor has control which
would cause the Master Sublease to be terminated or forfeited by reason of any
right of termination or forfeiture reserved or vested in the Master Sublessor
under the Master Sublease and Sublessor shall indemnify and hold harmless
Sublessee from and against all claims, liabilities and damages of any kind
whatsoever by reason of any breach or default on the part of Sublessor.
Sublessor agrees, upon receipt from Sublessee of written notice of any default,
obligation or duty of the Master Sublessor under the Master Sublease to promptly
notify the Master Sublessor of Sublessee's notice and to use its best efforts to
cause Master Sublessor to rectify or fulfill any default, obligation or duty as
listed in Sublessee's notice. Sublessor's obligations and responsibilities under
this paragraph 4 shall not apply with respect to any mortgagee of the Building
or any occurrence caused by any act or omission of Sublessee hereunder.
Notwithstanding the foregoing, Sublessee's obligations hereunder shall not be
excused by reason of any failure or delay of Sublessor, Master Sublessor or the
Landlord in performing their obligations under this Sublease, the Master
Sublease or the Lease (as defined in the Master Sublease), respectively.

The Sublease and each and every provision hereof is and shall remain
subject and subordinate to the Master Sublease and the Lease and each and every
provision thereof. Except as otherwise specifically provided in this Sublease,
the terms, provisions, covenants, rules and regulations, rights, obligations,
remedies and agreements of the Master Sublease are incorporated herein by
reference with the same force and effect as if they were fully set forth herein
except that any reference in the

<PAGE>

Master Sublease to "Sublandlord" and "Subtenant" shall mean Sublessor and
Sublessee, respectively, as such terms are used in this Sublease, and shall,
as between Sublessor and Sublessee constitute the terms of this Sublease
except to the extent they do not relate to the Premises or are inapplicable,
inappropriate, inconsistent with or modified by the provisions of this
Sublease.

As between Sublessor and Sublessee, for the purposes of this Sublease, the
following provisions of the Master Sublease shall be deemed inapplicable:
Paragraphs, 2, 4, 8A, 8B and 8C. In the event of any conflict between the terms
and provisions of the Master Sublease and the terms and provisions of the
Sublease, the terms and provisions of the Sublease shall govern.

5. RENT. Commencing as of the Sublease Commencement Date, Sublessee shall
pay to Sublessor rent in the sum of Fifteen Thousand Five Hundred Fifty Four and
92/100 ($15,554.92) Dollars per month ("Monthly Rent"), payable upon execution
of this Sublease and on the first day of each calendar month during the Term. If
the first day of the Term does not fall on the first day of the month, then rent
for such month shall be proportionately prorated. Monthly Rent shall be
delivered to the Sublessor at the address set forth hereinafter for the delivery
of notices.

In addition to the Monthly Rent, Sublessee shall pay, as additional rent
(i) its proportionate share (81%) of any and all additional rent which Sublessor
is obligated to pay as subtenant under the Master Sublease in respect of Tax
Escalation Payments, (ii) 100% of any and all additional rent which Sublessor is
obligated to pay as subtenant under the Master Sublease and which is not
included in the preceding clause (i) ( the amounts described in this clause (ii)
being, "Master Sublease Additional Rent"), and (iii) any other sums payable by
Sublessee hereunder.Sublessor shall provide Sublessee with all necessary backup
documentation which will enable Sublessee to verify Sublessor's calculation of
additional rent payable hereunder. It is understood that this Sublease is a
triple net sublease and since on the Commencement Date Sublessee shall be the
only tenant of the Demised Premises under the Master Sublease, Sublessee shall
pay 100% of the Master Sublease Additional Rent as provided in the preceding
sentence. However, in the event that Sublessor shall sublease the balance of the
Demised Premises or use it for anything other than storage, then Sublessee shall
only be required to pay its proportionate share (81%) of Master Sublease
Additional Rent due on and after the date of such sublease or other use.
Notwithstanding the foregoing, in the event that Sublessor shall use the air
conditioning in the space on the second floor which is not subleased to
Sublessee hereunder, then Sublessee shall only be required to pay 81% of
electricity charges attributable to air conditioning.

6. IMPROVEMENTS. Sublessee may construct within the Premises, at
Sublessee's cost, certain improvements to the Premises pursuant to the terms of
Exhibit "D" attached hereto in accordance with the terms of the Master Sublease.

<PAGE>

7. CONDITION OF PREMISES. Sublessee shall accept the Premises in its "as
is" condition and Sublessor makes no representation or warranty regarding the
condition of the Premises whatsoever for the benefit of Sublessee, including
with respect to compliance with law, latent or patent defects in the Premises or
title to the Premises. Sublessor shall deliver the HVAC for the Premises to
Sublessee in good working order on the Commencement Date. Thereafter and
throughout the Term, Sublessor shall maintain a service contract for the HVAC
and Sublessee shall reimburse Sublessor the cost of such contract for the HVAC
for the Premises as additional rent hereunder.

8. USE OF THE PREMISES. Sublessee shall use the Premises for general office
purposes and such other related purposes incidental thereto as are permitted
under the Master Sublease. Sublessee shall be afforded such after-hours access
to the Premises as Sublessor is afforded under the Master Sublease.

9. MAINTENANCE AND REPAIRS. Sublessee shall be responsible for all
maintenance and repairs to the Premises which are the obligations of Sublessor
under the Master Sublease.

10. ASSIGNMENT AND SUBLETTING. Sublessee shall not assign this Sublease,
without Sublessor's prior written consent, which consent shall not be
unreasonably withheld or delayed. Notwithstanding anything contained herein (i)
Sublessee shall have the right to assign this Sublease to any affiliate,
subsidiary, parent or successor of Sublessee or to any entity acquiring all or
substantially all of the stock or assets of Sublessee or to any entity with
which Sublessee may merge or consolidate and (ii) any assignment or sublease by
Sublessee (a) while the Facilities Agreement is in effect, may only be to an
entity which at the time of assignment or sublease is the "Production Company"
under the Facilities Agreement, (b) shall be of the entire Premises, (c) shall
not relieve the assignor or sublessor of joint and several liability under this
Sublease and (d) shall be subject to all of the terms set forth in the Master
Sublease.

11. CONSENTS. In those instances where the terms and provisions contained
in either the Master Sublease or this Sublease require that Sublessee obtain the
consent of Sublessor, it is agreed that such consent shall not be unreasonably
withheld or delayed.

12. SURRENDER OF THE PREMISES. Upon the expiration or sooner termination
of the Term of this Sublease, Sublessee shall surrender the Premises to
Sublessor in the condition required by the Master Sublease. All trade fixtures,
equipment and other personal property located on the Premises shall belong to
Sublessee and, upon expiration of this Sublease, Sublessee shall remove from the

<PAGE>

Premises all such trade fixtures, equipment and personal property in accordance
with the provisions of the Master Sublease.

13. NOTICES. Any notice or demand required or desired to be given under
this Sublease shall be in writing and shall be given by certified mail, return
receipt requested, or by a nationally recognized overnight express courier
service, and shall be deemed to have been given within three (3) days of mailing
in the case of certified mail, or the following day in the case of overnight
express. The addresses of Sublessor and Sublessee for notices are as follows:

Sublessee:
Paramount Pictures Corporation
1515 Broadway
New York, New York 10036-5794
Attention: Lori Rhodes

With a copy to:

Viacom Inc.
1515 Broadway
New York, New York 10036-5794
Attention: General Counsel

Sublessor:
Unitel Video, Inc.
555 West 57th Street
New York, New York 10019
Attention: General Counsel

Either party may change its address by giving notice of same in accordance
with this paragraph.

14. PERSONAL PROPERTY. Attached hereto as Exhibit "C" is a list of
personal property consisting of furniture in the Premises that has been
purchased by Sublessor from the Master Sublessor pursuant to the terms of the
Master Sublease. Sublessor hereby sells all such personal property to Sublessee
on an "as is" basis in consideration of the sum of $1.00 which is being paid to
Sublessor upon execution of this Sublease.

15. BROKERS. Sublessor and Sublessee each warrants and represents to the
other that it has had no dealings with real estate broker or agent in connection
with the

<PAGE>

negotiation of this Sublease, and that it knows of no real estate broker or
agent who is or might be entitled to a commission in connection with this
Sublease. Sublessee and Sublessor shall indemnify and hold harmless each
other from and against any and all liabilities or expenses, including
reasonable attorneys' fees, arising out of claims made by any broker or
individual for commissions or fees resulting from the execution of this
Sublease.

16. INSURANCE. Sublessee shall carry the insurance required by the Master
Sublease for the benefit of Sublessor, Master Sublessor and Landlord, naming all
such parties as an additional insured as their interests may appear.

17. INDEMNITY. Sublessee shall indemnify and hold harmless Sublessor from
and against any and all loss, cost, liability, claims, damage and expenses,
including reasonable attorneys' fees and expenses and court costs, incurred in
connection with or arising from (i) any default by Sublessee in the observance
or performance of, or compliance with, any of the terms, covenants or conditions
of this Sublease on Sublessee's part to be observed, performed or complied with
and (ii) any acts, omissions or negligence of Sublessee or any person claiming
through or under Sublessee, or the employees, agents, contractors, licensees or
invitees of Sublessee or any such person, in or about the Premises.

18 GENERAL.

A. Captions. The captions and headings used in this Sublease are for
the purpose of convenience only and shall not be construed to limit or extend
the meaning of any part of this Sublease.

B. Time. Time is of the essence for the performance of each term,
condition and covenant of this Sublease.

C. Severability. In case any one or more of the provisions contained
herein shall for any reason be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality, or unenforceability shall not affect
any other provision of this Sublease, but this Sublease shall be construed as if
such invalid, illegal or unenforceable provision had not been contained herein.

D. Choice of Law. This Sublease shall be construed and enforced in
accordance with the laws of New York.

E. Gender, Singular, Plural. When the context of this Sublease
requires the neuter gender includes the masculine, the feminine, a partnership
or corporation or joint venture, and the singular includes the plural.

<PAGE>

F. Binding Effect. The covenants and agreements contained in this
Sublease shall be binding on the parties hereto and on their respective
successors and assigns.

G. Entire Agreement. This Sublease is the entire agreement between the
parties with regard to the subject matter hereof and there are no agreements or
representations with regard thereto between the parties except as expressed
herein. Except as otherwise provided herein, no subsequent change or addition to
this Sublease shall be binding unless in writing and signed by the parties
hereto.

H. Attorneys' Fees. In the event either party shall bring any action
or legal proceeding for an alleged breach of any provision of this Sublease, the
prevailing party shall be entitled to recover as a part of such action or
proceedings, or in a separate action bought for that purpose, reasonable
attorneys' fees and court costs.

IN WITNESS WHEREOF, the parties have executed this Sublease as of the date
first written.

SUBLESSOR:
UNITEL VIDEO, INC.

By/s/ Karen Lapidus
Vice President

SUBLESSEE:
PARAMOUNT PICTURES CORPORATION

By/s/ Peter Kane
Vice President

<PAGE>

EXHIBIT (BB)

THIRD TIER SUBLEASE

BETWEEN,

UNITEL VIDEO, INC.,

AS THIRD TIER SUBLESSOR

AND

DIGITAL UNIVERSE II, INC.

AS THIRD TIER SUBLESSEE

PREMISES: A PORTION OF THE 9TH FLOOR
217 - 223 EAST 43RD STREET/
214 - 226 EAST 44TH STREET
NEW YORK, NEW YORK

<PAGE>
THIRD TIER SUBLEASE

THIRD TIER SUBLEASE (this "SUB-SUBLEASE"), dated as of November 22,
1996, between UNITEL VIDEO, INC., a Delaware corporation ("THIRD TIER
SUBLESSOR") having an office at 555 West 57th Street, New York, New York 10019,
Attention: President, and DIGITAL UNIVERSE II, INC., a New York corporation
("THIRD TIER SUBLESSEE") having an office at 219 East 44th Street, New York, New
York 10017, Attention: President.

W I T N E S S E T H:

WHEREAS, by Agreement of Lease, dated as of January 1, 1959, between
Webb & Knapp, Inc. and Carl E. Siegesmund, as landlord, and 43rd St. Estates
Corp. ("PRIME SUBLESSOR"), as tenant, as modified by a letter agreement, dated
August 16, 1961, between Greenpoint Terminal Warehouse, Inc. ("GROUNDLESSOR";
successor by conveyance from Webb & Knapp, Inc. and Carl E. Siegesmund) and
Prime Sublessor, as modified by a Modification of Lease, dated as of
September 13, 1961, between Groundlessor and Prime Sublessor, as modified by a
Modification of Lease, dated as of December 20, 1961, between Groundlessor and
Prime Sublessor, as modified (along with a related lease) by an Agreement, dated
January 23, 1963, among Groundlessor, Prime Sublessor and URN Realty Corp., as
modified (along with a related lease) by an Agreement, dated January 29, 1964,
among Groundlessor, Prime Sublessor and URN Realty Corp., and as modified by
Agreement, dated May 10, 1966, among Groundlessor, Prime Sublessor, and Victor
Whitehorn, as leasehold mortgagee (such Agreement of Lease, as so modified, is
the "MAJOR GROUND LEASE");

WHEREAS, by Agreement of Lease, dated November 5, 1986, between Prime
Sublessor, as landlord, and Micor, Inc., as tenant, (such Agreement of Lease, is
the "PRIME SUBLEASE");

WHEREAS, by Sublease Agreement, dated April 1, 1987, between R.E.
Graphics, Inc. (Formerly known as Micor, Inc.) ("Sub-sublessor"), as landlord,
and Scanline Communications, a Wisconsin partnership, as tenant, as modified by
a Modification dated February, 1989, between landlord and tenant, as assigned
and assumed pursuant to an Assignment, Assumption and Acceptance of Lease, dated
as of May 5, 1992, between Scanline Communications and Third Tier Sublessor
(such Sublease Agreement, as so assigned, assumed, extended and modified, is the
"SUB-SUBLEASE"), Sub-sublessor leased to Third Tier Sublessor approximately
7,700 square feet consisting of the entire ninth floor in the building
("BUILDING") known as and located at 217-223 East 43rd Street/214-226 East
44th Street, New York, New York; and

NOW, THEREFORE, in consideration of the mutual covenants hereinafter
provided, Third Tier Sublessor and Third Tier Sublessee hereby agree as follows:

<PAGE>

1. DEMISED PREMISES.

1.01 Third Tier Sublessor hereby sublets to Third Tier Sublessee,
and Third Tier Sublessee hereby sublets and hires from Third Tier Sublessor, the
premises (the "PREMISES") comprising a portion of the 9th Floor (comprising
approximately 5,720 square feet) in the Building as designated by cross-hatching
on the floor plan annexed to this Third Tier Sublease as EXHIBIT A and hereby
incorporated in and made a part of this Third Tier Sublease by reference, for
the term hereinafter stated and for the Rent hereinafter reserved (as
hereinafter defined), subject to all of the terms and provisions hereinafter
provided or incorporated in this Third Tier Sublease by reference.

1.02 Third Tier Sublessee agrees to accept the Premises on the
Commencement Date (as hereinafter defined) in its then condition and Third Tier
Sublessor shall not be obligated to perform any work or furnish any materials
in, to or about the Premises in order to prepare the Premises for occupancy by
Third Tier Sublessee or otherwise. Third Tier Sublessee hereby releases Third
Tier Sublessor from any and all liability resulting from (A) any latent or
patent defects in the Premises, (B) the failure of the Premises to comply with
any legal requirements applicable thereto or (C) the status of the title to the
Premises. Third Tier Sublessee acknowledges that Third Tier Sublessor has made
no statements, representations, covenants or warranties with respect to (x) the
condition or manner of construction of the Building or any improvements
constructed in the Premises, (y) the uses or purposes for which the Premises may
be lawfully occupied, or (z) any encumbrances, covenants, restrictions or
agreements affecting title to the Premises. Third Tier Sublessee also agrees
that, in executing this Third Tier Sublease, it has not relied upon or been
induced by any statements, representations, covenants or warranties of any
person other than those, if any, set forth expressly in this Third Tier
Sublease. Third Tier Sublessee has relied solely on such statements,
representations, covenants and warranties as are expressly made herein and on
such investigations, examinations and inspections as Third Tier Sublessee has
chosen to make or has made.

1.03 Third Tier Sublessor represents and warrants to Third Tier
Sublessee that (A) the Sub-Sublease is in full force and effect and a true copy
of the most recent rent bill relating to the premises of which the Premises is a
part is attached as a part of Exhibit B-3, (B) to Third Tier Sublessor's
knowledge (i) Third Tier Sublessor and Sub-sublessor are not in default under
the Sub-sublease, (ii) no condition exists which, with the passage of time, or
the giving of notice, or both, would constitute a default under the Sub-sublease
and (iii) the Major Ground Lease and the Prime Sublease are in full force and
effect, no party is in default under the Mayor Ground Lease or the Prime
Sublease and no condition exists which, with the passage of time, or the giving
of notice, or both, would constitute a default under the Mayor Ground Lease or
the Prime Sublease and (C) basic rent under the Sub-sublease is $14,116.67 per
month through March 31, 1997 and $15,400.00 per month from April 1, 1997 through
December 31, 1999.

2
<PAGE>

1.04 Any and all alterations to, work to be performed in or
materials to be supplied for the Premises shall be made, performed and supplied
at the sole cost and expense of Third Tier Sublessee and in conformance with all
of the terms and provisions of this Third Tier Sublease, the Major Ground Lease,
the Prime Sublease and the Sub-sublease.

2. TERM.

2.01 The term ("TERM") of this Third Tier Sublease shall commence
November 22, 1996 ("COMMENCEMENT DATE") and, unless earlier terminated as herein
provided, shall expire on December 30, 1999 ("EXPIRATION DATE").
Notwithstanding the foregoing, if prior to the Commencement Date Third Tier
Sublessee takes possession of or causes the commencement of any work or the
moving of any property in, into or about the Premises, the date upon which Third
Tier Sublessee took or caused to be taken any such action shall be deemed to be
the Commencement Date under this Third Tier Sublease.

2.02 Third Tier Sublessor and Third Tier Sublessee shall, upon the
request of either of them, execute a statement prepared by Third Tier Sublessor,
in recordable form, setting forth the Commencement Date.

2.03 Except as otherwise provided in paragraph 2.03.1, if the term
of the Sub-sublease is terminated for any reason prior to the Expiration Date,
this Third Tier Sublease shall thereupon be terminated ipso facto without any
liability of Third Tier Sublessor to Third Tier Sublessee by reason of such
early termination. References in this Third Tier Sublease to the "termination"
of this Third Tier Sublease include the stated expiration of the Term and any
earlier termination thereof pursuant to the provisions of this Third Tier
Sublease, the Major Ground Lease, the Prime Sublease, the Sub-sublease or by
law. Except as otherwise expressly provided in this Third Tier Sublease with
respect to those obligations of Third Tier Sublessee which by their nature or
under the circumstances can only be, or under the provisions of this Third Tier
Sublease may be, performed after the termination of this Third Tier Sublease,
the Term and estate granted hereby shall end at noon on the date of termination
of this Third Tier Sublease as if such date were the Expiration Date, and
neither party shall have any further obligation or liability to the other after
such termination. Notwithstanding the foregoing, any liability of Third Tier
Sublessee to make any payment under this Third Tier Sublease, whether of Fixed
Rent, Additional Rent (both as hereinafter defined) or otherwise, which shall
have accrued prior to the termination of this Third Tier Sublease, shall survive
the termination of this Third Tier Sublease.

3
<PAGE>

continue to pay rent and additional rent required to be paid by Third Tier
Sublessor thereunder. If Third Tier Sublessor shall fail to pay any rent or
additional rent required to be paid by Third Tier Sublessor under any of the
Major Ground Lease, Prime Sublease or Sub-sublease other than any rent or
additional rent that Third Tier Sublessee has failed to pay to Third Tier
Sublessor under this Third Tier Sublease, it shall be a breach of this Third
Tier Sublease.

2.04 Third Tier Sublessee waives the right to recover any damages
which may result from Third Tier Sublessor's failure to deliver possession of
the Premises on the Commencement Date. If Third Tier Sublessor shall be unable
to give possession of the Premises on the Commencement Date, and provided Third
Tier Sublessee is not responsible for such inability to give possession, the
applicable Fixed Rent and Additional Rent reserved and covenanted to be paid
herein shall not commence until the date on which Third Tier Sublessor shall be
able to give possession of the Premises to Third Tier Sublessee, and no such
failure to give possession on such scheduled date shall in any wise affect the
validity of this Third Tier Sublease or the obligations of Third Tier Sublessee
hereunder or give rise to any claim for damages by Third Tier Sublessee or claim
for rescission of this Third Tier Sublease, nor shall the same in any way be
construed to extend the Term. If permission is given to Third Tier Sublessee to
enter into the possession of the Premises, Third Tier Sublessee covenants and
agrees that such occupancy shall be deemed to be under all the terms, covenants,
conditions and provisions of this Third Tier Sublease, including the covenant to
pay Rent.

2.05 The parties agree that this Article 2 constitutes an express
provision as to the time at which Third Tier Sublessor shall deliver possession
of the Premises to Third Tier Sublessee, and Third Tier Sublessee hereby waives
any rights to rescind this Third Tier Sublease which Third Tier Sublessee might
otherwise have pursuant to Section 223-a of the Real Property Law of the State
of New York or any other law of like import now or hereafter in force.

2.06 Third Tier Sublessee shall have the option (the "Renewal
Option") to extend the term of this Third Tier Sublease for one additional
period commencing on December 31, 1999 and ending on November 30, 2012
(the "Renewal Term"), provided that (a) this Third Tier Sublease shall not
have been previously terminated, (b) no Event of Default shall have occurred
and be continuing (x) on the date Third Tier Sublessee gives Third Tier
Sublessor written notice (the "Renewal Notice") of Third Tier Sublessee's
election to exercise the Renewal Option, and (y) on the Expiration Date, (c) at
Third Tier Sublessor's request, Third Tier Sublessee shall cause Sub-Sublessor
to (x) permit Third Tier Sublessor to assign its entire interest in the
Sub-sublease to Third Tier Sublessee and Third Tier Sublessee shall assume Third
Tier Sublessor's obligations under the Sub-sublease, the Prime Sublease and the
Major Ground Lease and (y) fully and completely release Third Tier Sublessor
from its obligations under this Third Tier Sublease, the Sub-sublease, the Prime
Sublease and the Major Ground Lease whereupon this Third Tier Sublease shall be
of no further force and effect, (d) at Third Tier Sublessor's request, Third
Tier Sublessee shall assume Third Tier Sublessor's obligations to EUE Screen
Gems ("EUE") with respect to any space on the

4
<PAGE>

9th floor (the "EUE Space") of the Building and obtain the complete release
of Third Tier Sublessor with respect to any such space and (e) all of the
conditions to the exercise of the Renewal Option under the Sub-sublease shall
have been complied with or otherwise satisfied. With respect to items (c)
and (d) of this paragraph 2.06, it is the agreement of the parties that at
Third Tier Sublessor's option, Third Tier Sublessee may only exercise the
Renewal Option if it is able to secure the full and complete release of Third
Tier Sublessor from its obligations under this Third Tier Sublease, the
Sub-Sublease, the Prime Sublease, the Major Ground Lease and otherwise with
respect to the entire 9th floor in the Building. The renewal option shall be
exercisable by Third Tier Sublessee delivering the Renewal Notice to Third
Tier Sublessor not later than February 1, 1999 and not earlier than December 1,
1998. Time is of the essence with respect to the giving of the Renewal Notice.
The Renewal Option may be exercised only once. If Third Tier Sublessee
exercises the Renewal Option, the Fixed Rent during the Renewal Term shall be
as provided in the Sub-sublease and the Renewal Term shall otherwise be on
the same terms, covenants and conditions as those contained in this Third
Tier Sublease, modified to reflect any increase in the size of the Premises
resulting from any assumption of the EUE Space. Notwithstanding anything in
this paragraph 2.06 to the contrary, the Renewal Option is subject to all
other conditions to the exercise of the renewal option in the Sub-sublease.

3. RENT.

3.01 The rent ("RENT") reserved for the Term under this Third Tier
Sublease shall consist of the following:

(i) annual fixed rent ("FIXED RENT") in the amount of (A) One
Hundred Twenty-Five Thousand Three Hundred Fifty Six and 08/100 ($125,356.08)
Dollars for the period beginning on the Commencement Date and ending on
March 31, 1997, and (B) One Hundred Thirty-Six Thousand Seven Hundred Fifty-two
($136,752.00) Dollars for the period beginning on April 1, 1997 and ending on
December 30, 1999, which shall be payable in advance, in equal monthly
installments of, respectively, $10,446.34 and $11,396.00 each. The first
installment of Fixed Rent shall be payable by Third Tier Sublessee upon the
execution of this Third Tier Sublease and the second and subsequent installments
shall be payable on the first (1st) day of the first month following the
Commencement Date and subsequent months, respectively, of the Term. If the
Commencement Date shall be a date other than the first day of a calendar month,
the second installment of Fixed Rent (but no other installment) payable by Third
Tier Sublessee hereunder shall be reduced to an amount which bears the same
ratio to the first installment of Fixed Rent payable hereunder as the number of
days from and including the Commencement Date to the end of the calendar month
in which the Commencement Date occurs bears to the total number of days in such
calendar month; and

(ii) additional rent ("ADDITIONAL RENT") in an amount equal to
the sum of (A) 74%, of any and all sums of money, other than the annual fixed
rental ("UNDERLYING FIXED

5
<PAGE>

RENT") under the Sub-sublease, which is or may become payable by Third Tier
Sublessor to Sub-sublessor under the Sub-sublease ("UNDERLYING ADDITIONAL
RENT"); (B) any and all other sums payable by Third Tier Sublessee to Third
Tier Sublessor hereunder; and (C) any and all charges of Sub-sublessor under
the Sub-sublease or of any other third party for overtime, additional
services or any other matter relating to the Premises, or arising out of
Third Tier Sublessee's failure to perform its obligations hereunder.
Additional Rent shall be payable by Third Tier Sublessee on the date
fifteen (15) days before the date on which the corresponding Underlying
Additional Rent is payable to Sub-sublessor under the Sub-sublease. All other
Additional Rent shall be payable upon demand. Third Tier Sublessor shall
have the same remedies with respect to any default by Third Tier Sublessee in
the payment of Additional Rent as are provided in this Third Tier Sublease,
the Sub-sublease or applicable law with respect to any nonpayment of rent.

(iii) Anything in paragraphs 3.01(i) and 3.01(ii)
notwithstanding, the obligation of Third Tier Sublessee to pay Fixed Rent or any
Additional Rent in respect of Taxes (as defined in the Sub-sublease) shall begin
on January 1, 1997, it being the intent of Third Tier Sublessor and Third Tier
Sublessee that Third Tier Sublessor waives the right to collect rent and
additional rent in respect of Taxes due for the period from the Commencement
Date through December 31, 1996.

3.02 The Fixed Rent and, except as otherwise specifically provided
in this Third Tier Sublease, the Additional Rent, shall be paid by Third Tier
Sublessee at the office of Third Tier Sublessor set forth above or such other
place as Third Tier Sublessor may designate, without prior notice or demand
therefor and without any abatement, deduction or setoff. Third Tier Sublessor
may at any time and from time to time by notice direct Third Tier Sublessee to
pay all or any portion of the Fixed Rent or Additional Rent on Third Tier
Sublessor's behalf directly to the Sub-sublessor at such address as Third Tier
Sublessor may at any time and from time to time direct.

3.03 Third Tier Sublessee shall pay all Rent when due, in lawful
money of the United States which shall be legal tender for the payment of all
debts, public and private, at the time of payment. All sums due and payable as
Rent shall from and after the due date bear interest at four percent (4%) above
the base rate charged by Citibank, N.A. (or any successor thereto) ("PRIME
RATE"), from time to time, but in no event in excess of the maximum legal rate
of interest permitted from time to time under law to be charged, provided,
however, that no further interest shall be payable upon such interest. All
interest accrued under this subsection as hereinabove provided shall be deemed
to be Additional Rent payable hereunder and due at such time or times as the
Rent with respect to which such interest shall have accrued shall be payable
under this Third Tier Sublease.

6
<PAGE>

permit Third Tier Sublessor to collect the maximum Rent which from time to
time during the continuance of such legal rent restriction may be legally
permissible (and not in excess of the amounts reserved therefor under this
Third Tier Sublease). Upon the termination of such legal rent restriction,
(i) the Rent shall become and thereafter be payable in accordance with the
amounts reserved herein for the periods following such termination, and
(ii) Third Tier Sublessee shall pay to Third Tier Sublessor, to the maximum
extent legally permissible, an amount equal to (A) the Rent which would have
been paid pursuant to this Third Tier Sublease but for such legal rent
restriction, less (B) the Rent paid by Third Tier Sublessee during the period
such legal rent restriction was in effect.

3.05 Third Tier Sublessee acknowledges that the late payment by
Third Tier Sublessee to Third Tier Sublessor of Rent and other sums due
hereunder and the failure to deliver on time items required to be delivered will
cause Third Tier Sublessor to incur costs not contemplated by this Third Tier
Sublease, the exact amount of which will be extremely difficult to ascertain.
Such costs may include, but are not limited to, administrative, processing and
accounting charges, and late charges which may be imposed on Third Tier
Sublessor. Accordingly, if any sum due from Third Tier Sublessee or any item due
from Third Tier Sublessee hereunder shall not be received by Third Tier
Sublessor or Third Tier Sublessor's designee within five (5) days after the date
due, Third Tier Sublessee shall pay to Third Tier Sublessor, in addition to any
interest on delinquent amounts provided above, a late charge equal to the
greater of two percent (2%) of the delinquent amount or $100.00, as liquidated
damages. The parties agree that such late charge represents a fair and
reasonable estimate of the costs Third Tier Sublessor will incur by reason of
late payment or late delivery by Third Tier Sublessee. Acceptance of such late
charge shall not constitute a waiver of Third Tier Sublessee's default with
respect to such overdue amount or other item, nor prevent Third Tier Sublessor
from exercising any other rights and remedies granted hereunder or by law to
Third Tier Sublessor.

4. USE.

4.01 Third Tier Sublessee shall occupy and use the Premises only for
such purposes as are permitted under the terms and provisions of the Sub-
sublease and for no other purpose, and in all respects only as permitted under
the terms and provisions of this Third Tier Sublease, the Major Ground Lease and
the Prime Sublease, including, without limiting the generality of the foregoing,
the rules and regulations, if any, under the Major Ground Lease, the Prime
Sublease, the Sub-sublease, and any and all laws, statutes, ordinances, orders,
regulations and requirements of all federal, state and local governmental,
public or quasi-public authorities, whether now or hereafter in effect, which
may be applicable to or in any way affect the Building or the Premises or any
part thereof and all requirements, obligations and conditions of all instruments
of record on the date of this Third Tier Sublease affecting the Building or the
Premises (collectively, "LEGAL REQUIREMENTS").

7
<PAGE>

5. MAJOR GROUND LEASE, PRIME SUBLEASE AND SUB-SUBLEASE.

5.01 This Third Tier Sublease and all of Third Tier Sublessee's
rights hereunder are and shall remain in all respects subject and subordinate to
(i) all of the terms and provisions of the Major Ground Lease, the Prime
Sublease and the Sub-sublease, substantially true and complete copies of which
have been delivered to and carefully examined by Third Tier Sublessee and are
attached hereto as, respectively, EXHIBIT B-1, EXHIBIT B-2 and EXHIBIT B-3,
(ii) any and all amendments to the Major Ground Lease, the Prime Sublease and
the Sub-sublease, or supplemental agreements relating to any of the same
hereafter made, except for any such amendments to or supplemental agreements
relating to the Sub-sublease between Sub-sublessor and Third Tier Sublessor
which contravene any express rights granted to Third Tier Sublessee hereunder,
and (iii) any and all matters to which the tenancy of Third Tier Sublessor, as
tenant under the Sub-sublease, is or may be subordinate. Third Tier Sublessee
shall in no case have any rights under this Third Tier Sublease greater than
Third Tier Sublessor's rights as tenant under the Sub-sublease. The foregoing
provisions shall be self-operative and no further instrument of subordination
shall be necessary to effectuate such provisions unless required by
Groundlessor, Prime Sublessor, Sub-sublessor or Third Tier Sublessor, in which
event Third Tier Sublessee shall, upon demand by Groundlessor, Prime Sublessor,
Sub-sublessor or Third Tier Sublessor at any time and from time to time,
execute, acknowledge and deliver to Third Tier Sublessor, Sub-sublessor, Prime
Sublessor and Groundlessor any and all instruments that Third Tier Sublessor,
Sub-sublessor, Prime Sublessor or Groundlessor, in the sole discretion of any of
them, may deem necessary or proper to confirm such subordination of this Third
Tier Sublease, and the rights of Third Tier Sublessee hereunder. If Third Tier
Sublessee shall fail to execute, acknowledge and/or deliver any such instrument
of subordination within ten (10) days after Groundlessor's, Prime Sublessor's,
Sub-sublessor's or Third Tier Sublessor's demand therefor, Third Tier Sublessor,
in addition to any other remedies provided under this Third Tier Sublease, the
Sub-sublease, the Prime Sublease, the Major Ground Lease and applicable law, may
execute, acknowledge and deliver such instrument, as Third Tier Sublessee's
attorney-in-fact. Third Tier Sublessee hereby irrevocably constitutes and
appoints Third Tier Sublessor as Third Tier Sublessee's proper and lawful
attorney-in-fact for such purpose, such appointment being coupled with an
interest.

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Premises as tenant under the Sub-sublease, except for the covenants of Third
Tier Sublessor to pay Sub-sublessor the Underlying Fixed Rent and Underlying
Additional Rent, (ii) for the benefit of Prime Sublessor, Sub-sublessor and
Third Tier Sublessor, each and every term, covenant, condition and agreement
of the Prime Sublease which Third Tier Sublessor is required to observe or
perform with respect to the Premises as tenant under the Sub-sublease and
(iii) for the benefit of Groundlessor, Prime Sublessor, Sub-sublessor and
Third Tier Sublessor, each and every term, covenant, condition and agreement
of the Major Ground Lease which Third Tier Sublessor is required to observe
or perform with respect to the Premises as tenant under the Sub-sublease.
Except as otherwise specifically provided in this Third Tier Sublease, all of
the terms, covenants, conditions and agreements which Third Tier Sublessor is
required to observe or perform with respect to the Premises under the Major
Ground Lease, the Prime Sublease and the Sub-sublease are hereby incorporated
herein by reference and deemed to constitute terms, covenants, conditions and
agreements which Third Tier Sublessee is required to observe and perform
under this Third Tier Sublease as if set forth herein at length, mutatis
mutandis; Third Tier Sublessor may exercise and shall be entitled to all of
the rights, powers, privileges and remedies reserved to (x) Groundlessor
under the Major Ground Lease, (y) Prime Sublessor under the Prime Sublease
and (z) Sub-sublessor under the Sub-sublease to the same extent as if fully
set forth herein at length, including, without limitation, all releases from
liability to, respectively, Groundlessor, Prime Sublessor and Sub-sublessor
thereunder and all rights and remedies arising out of, or with respect to,
any default by Third Tier Sublessee in payment of Rent hereunder or the
observance or performance of the terms, covenants, conditions and agreements
of this Third Tier Sublease, the Sub-sublease, the Prime Sublease and the
Major Ground Lease (except as specifically provided herein). Notwithstanding
the foregoing, any inconsistencies between the terms of this Third Tier
Sublease, the Sub-sublease, the Prime Sublease and the Major Ground Lease
which shall result from the foregoing incorporation shall be resolved in
favor of this Third Tier Sublease, provided, however, that if such
construction of terms would cause Third Tier Sublessor to be in default under
the terms of the Sub-sublease, the Prime Sublease and/or the Major Ground
Lease, then such inconsistency shall be resolved in favor of the superior
lease out of the Sub-sublease, the Prime Sublease and the Major Ground Lease
under which Third Tier Sublessor would be in default by such construction of
terms.

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<PAGE>

5.04 Nothing contained in this Article 5 is intended or shall be
construed to confer upon Third Tier Sublessee any rights, powers, privileges or
remedies which are not specifically conferred upon Third Tier Sublessee under
the terms and provisions of this Third Tier Sublease, and, unless specifically
provided otherwise herein, none of the rights, powers, privileges or remedies of
(x) Third Tier Sublessor as tenant under the Sub-sublease, (y) Sub-sublessor as
tenant under the Prime Sublease, and (z) Prime Sublessor as tenant under the
Major Ground Lease shall inure to the benefit of Third Tier Sublessee hereunder.

6. SERVICE.

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<PAGE>

Prime Sublessor and/or Groundlessor in performing its obligations under,
respectively, the Sub-sublease, the Prime Sublease and/or the Major Ground
Lease.

6.02 If at any time during the Term (x) Sub-sublessor shall default
in any of its obligations under the Sub-sublease, (y) Prime Sublessor shall
default in any of its obligations under the Prime Sublease or (z) Groundlessor
shall default in any of its obligations under the Major Ground Lease, to furnish
facilities, services or utilities or to make repairs to the Premises, then, upon
Third Tier Sublessor's receipt of a written notice from Third Tier Sublessee
specifying such default, Third Tier Sublessor shall, at Third Tier Sublessee's
sole cost and expense, use its reasonable efforts to cause Sub-sublessor, Prime
Sublessor or Groundlessor, as the case may be, to cure such default. Any action
or proceeding instituted by Third Tier Sublessor against Sub-sublessor, Prime
Sublessor or Groundlessor, as the case may be, to enforce such rights shall be
conducted at the expense of Third Tier Sublessee, provided, however, that Third
Tier Sublessor shall bear its fair share of such expense to the extent such
action or proceeding does not relate to the Premises.

7. UTILITY SERVICES AND ELECTRIC
ENERGY CHARGE ADJUSTMENTS.

7.01 Electric energy will be furnished to the Premises through
presently existing electrical facilities in accordance with Article 6 above for
Third Tier Sublessee's reasonable use of such lighting and other electrical
fixtures, appliances and equipment presently existing in the Premises or as
Third Tier Sublessor may permit Third Tier Sublessee to install in the Premises.
Upon Third Tier Sublessor's request, Third Tier Sublessee shall open an account
with Con Edison in order to pay Con Edison directly for electricity in respect
of the Premises.

7.02 Third Tier Sublessee shall pay all charges, surcharges and
other fees (however denominated) for water, steam, gas, electricity, telephone
and other utility services used in the Premises during the Term.

8. FIXTURES.

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8.02 All Alterations (as hereinafter defined) made by either party,
including all paneling, decorations, partitions, railings, mezzanine floors,
carpeting, galleries and the like, affixed to the Premises shall become the
property of Third Tier Sublessor or Sub-sublessor and shall be surrendered with
the Premises upon the termination of this Third Tier Sublease. Notwithstanding
the foregoing, Third Tier Sublessor may elect to require Third Tier Sublessee to
remove any Alterations made to the Premises including, without limitation, any
Alteration constructed or installed by Third Tier Sublessee, on behalf of Third
Tier Sublessee or at Third Tier Sublessee's request, at Third Tier Sublessee's
expense, by giving written notice to Third Tier Sublessee not later than
five (5) days prior to the date set forth herein for the termination of this
Third Tier Sublease.

8.03 In any case where Third Tier Sublessee removes any of Third
Tier Sublessee's Property or any Alterations, Third Tier Sublessee shall repair
all damages caused by said removal and shall restore the Premises to good order,
repair and condition. Upon failure of Third Tier Sublessee to do so, Third Tier
Sublessor may repair such damage and restore the Premises to good order, repair
and condition at Third Tier Sublessee's sole expense, and Third Tier Sublessee
shall reimburse Third Tier Sublessor therefor upon demand.

8.04 Notwithstanding anything herein to the contrary, upon Third
Tier Sublessee's failure to remove any of the Third Tier Sublessee's Property
or any Alterations in accordance with subsections 8.01 and 8.02 above, or upon
the termination of this Third Tier Sublease prior to the date set forth herein
for such termination, Sub-sublessor or Third Tier Sublessor may, at Third Tier
Sublessee's expense, (i) remove all such property and Alterations described in
subsections 8.01 and 8.02 above, (ii) cause the same to be placed in storage or
otherwise disposed of, and (iii) repair any damage caused by said removal and
restore the Premises to good order, repair and condition. Third Tier Sublessee
shall reimburse Third Tier Sublessor for all of the aforesaid expenses upon
demand.

8.06 The provisions of this Article 8 shall survive the termination
of this Third Tier Sublease.

9. ALTERATIONS AND REPAIRS.

9.01 Third Tier Sublessee shall make no alterations, installations,
additions or improvements (collectively, "ALTERATIONS") in or about the Premises
without the prior written

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<PAGE>

consent of Third Tier Sublessor in each instance. Any Alterations in or
about the Premises shall be performed by Third Tier Sublessee, at its sole
cost and expense, and in compliance with the following requirements:

(a) Third Tier Sublessee, at its sole expense, shall comply with
all of the provisions of this Third Tier Sublease, the Sub-sublease, the Prime
Sublease and the Major Ground Lease pertaining to the making of Alterations,
including, without limiting the generality of the foregoing, the provisions
requiring the prior written consent of Sub-sublessor, Prime Sublessor and
Groundlessor before any Alterations may be made in or about the Premises;

(d) Prior to the commencement of any Alteration, Third Tier
Sublessee shall furnish Third Tier Sublessor with certificates of insurance as
shall be reasonably satisfactory to Third Tier Sublessor, as to coverage and
insurer (who shall be licensed to do business in the State of New York),
including, but not limited to, liability, property damage, and workmen's
compensation insurance to protect Third Tier Sublessor, Sub-sublessor, Prime
Sublessor, Groundlessor and Third Tier Sublessee during the period of the
performance of such Alteration;

(e) All such Alterations shall be performed in a good and
workmanlike manner and in compliance with all Legal Requirements and with all
requirements of any insurance policies affecting the Premises or the Building
and so as to cause as little interference as possible with Groundlessor's, Prime
Sublessor's, Sub-sublessor's or Third Tier Sublessor's, or any of them, use,
occupancy and enjoyment of the Building or the premises of which the Premises
are a part; and

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<PAGE>

9.02 Third Tier Sublessor shall have no obligations whatsoever to
make any repairs or Alterations in or to the Premises, any systems serving the
Premises, or any equipment, fixtures or furnishings in the Premises, or to
comply with any violations of law with respect thereto, or to restore the
Premises in the event of a fire or other casualty therein or to perform any
other duty with respect to the Premises which (x) Sub-sublessor is required to
perform under the Sub-sublease, (y) Prime Sublessor is required to perform under
the Prime Sublease and (z) Groundlessor is required to perform under the Major
Ground Lease. Third Tier Sublessee shall look solely to Sub-sublessor, Prime
Sublessor and Groundlessor for the making of any and all repairs in the Premises
and the performance of any and all such other work and responsibilities and only
to the extent required by the terms of, respectively, the Sub-sublease, the
Prime Sublease and the Major Ground Lease.

9.03 Third Tier Sublessee will not create or permit to be created or
to remain, and will discharge, any lien, encumbrance or charge (levied on
account of any tax payable by Third Tier Sublessee or any mechanic's or
materialman's lien by reason of work, labor, services or materials supplied or
claimed to be supplied to Third Tier Sublessee, or anyone else in the Premises,
or any part thereof, or otherwise) which might be or become a lien, encumbrance
or charge upon the Building, the Premises or any part thereof or the income
therefrom. If any such mechanic's or materialman's lien shall at any time be
filed against the Building, the Premises or any part thereof, Third Tier
Sublessee, within fifteen (15) days after notice of the filing thereof, will
cause the same to be discharged of record by payment, deposit, bond, order of a
court of competent jurisdiction or otherwise.

10. INSURANCE.

10.01 Third Tier Sublessee, at Third Tier Sublessee's sole expense,
shall maintain for the benefit of Third Tier Sublessor, Sub-sublessor, Prime
Sublessor and Groundlessor such policies of insurance required by the Sub-
sublease, the Prime Sublease and/or the Major Ground Lease with respect to the
Premises which shall be reasonably satisfactory to Third Tier Sublessor as to
coverage and insurer (who shall be licensed to do business in the State of New
York) provided that such insurance shall at a minimum include comprehensive
general liability insurance with an aggregate liability amount, on an occurrence
basis, of not less than $3,000,000 combined single limit, protecting and
indemnifying Third Tier Sublessor, Sub-sublessor, Prime Sublessor, Groundlessor
and Third Tier Sublessee against any and all claims and liabilities for injury
or damage to persons or property, occurring upon, in or about the Premises, and
the public portions of the Building, caused by or resulting from or in
connection with any act or omission of Third Tier Sublessee, Third Tier
Sublessee's employees, agents or invitees.

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<PAGE>

10.03 Third Tier Sublessee shall provide to Third Tier Sublessor,
on the Commencement Date and on each anniversary of the Commencement Date, a
certificate evidencing the insurance required by this Section 10.

11. ASSIGNMENT, SUBLETTING AND ENCUMBRANCES.

11.01 Third Tier Sublessee shall not, either voluntarily or by
operation of law, assign, sell, encumber, pledge or otherwise transfer all or
any part of Third Tier Sublessee's leasehold estate hereunder, or permit the
Premises to be occupied by anyone other than Third Tier Sublessee or Third Tier
Sublessee's employees, or sublet the Premises or any portion thereof, without
Third Tier Sublessor's, Sub-sublessor's, Prime Sublessor's and Groundlessor's
prior written consent in each instance. If Third Tier Sublessee is a
corporation or is an unincorporated association or partnership, the transfer,
issuance, assignment or hypothecation of any stock or interest in such
corporation, association or partnership in the aggregate in excess of twenty-
five percent (25%) shall be deemed an assignment within the meaning and
provisions of this Article. Any consent by Third Tier Sublessor, Sub-
sublessor, Prime Sublessor and Groundlessor as hereinabove required shall not
excuse Third Tier Sublessee from its obligation to obtain the express written
consent of Third Tier Sublessor, Sub-sublessor, Prime Sublessor and Groundlessor
to any further action or matter with respect to which the consent of Third Tier
Sublessor, Sub-sublessor, Prime Sublessor and Groundlessor is hereinabove
required. If Third Tier Sublessor, Sub-sublessor, Prime Sublessor and
Groundlessor consent to an assignment of this Third Tier Sublease or a
subletting of the Premises, no such assignment or subletting shall be, or be
deemed to be, effective until the following conditions have been met:

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<PAGE>

of such assignment, with a duplicate original of the agreement of assignment
and assumption, in form and substance satisfactory to Third Tier Sublessor;
and

(ii) in the case of subletting, Third Tier Sublessor shall
have been furnished with a duplicate original of the sublease, prior to the
commencement of the term of such sublease, which sublease shall (a) be in form
and substance satisfactory to Third Tier Sublessor; (b) be subject and
subordinate to all of the terms, covenants and conditions of this Third Tier
Sublease, the Sub-sublease, the Prime Sublease and the Major Ground Lease; and
(c) restrict the right of the subtenant thereunder to assign such sublease or
further sublet its subleased premises without the prior written consent of Third
Tier Sublessor, Sub-sublessor, Prime Sublessor and Groundlessor in each
instance.

11.03 Third Tier Sublessee shall pay on demand the costs and expenses
incurred by Third Tier Sublessor, Sub-sublessor, Prime Sublessor and
Groundlessor, including, without limitation, architect, engineer and attorneys'
fees and disbursements, and a reasonable administrative fee, in connection with
any proposed or actual assignment of this Third Tier Sublease or subletting of
the Premises, or any part thereof, and the review and/or preparation of
documents in connection therewith.

12. DEFAULT.

12.01 This Third Tier Sublease and the Term and estate hereby granted
are subject to the following limitations as modified by the provisions of
Article 15 below:

(a) if Third Tier Sublessee shall fail to pay when due any Rent or
any other sum or amount Third Tier Sublessee may be required to pay hereunder;
or

16
<PAGE>

(b) if Third Tier Sublessee shall default in the observance or
performance of any term, covenant or condition of this Third Tier Sublease on
Third Tier Sublessee's part to be observed, performed or complied with (other
than the payment of Fixed Rent and Additional Rent and other amounts payable
hereunder) and Third Tier Sublessee shall fail to remedy such default within
ten (10) days thereafter, or, if such default is of such a nature that for
reasons beyond Third Tier Sublessee's control it cannot be completely remedied
within said period of ten (10) days, then if Third Tier Sublessee (i) shall not
promptly advise Third Tier Sublessor in writing of Third Tier Sublessee's
intention to duly institute all steps necessary to remedy such situation,
(ii) shall not promptly institute and thereafter diligently prosecute to
completion all steps necessary to remedy the same and (iii) shall not remedy the
same within a reasonable time after the date of default; or

(c) if any event shall occur or any contingency shall arise
whereby this Third Tier Sublease or the estate hereby granted or the unexpired
balance of the Term would, by operation of law or otherwise, devolve upon or
pass to any person or entity other than Third Tier Sublessee, except as is
expressly permitted hereunder; or

(f) if Third Tier Sublessee shall default in the observance or
performance of any term, covenant or condition on Third Tier Sublessee's part to
be observed or performed under any other lease or sublease with Third Tier
Sublessor, and such default shall continue beyond any applicable grace period
set forth in such other lease or sublease for the remedying of such default; or

(g) if any execution or attachment shall be issued against Third
Tier Sublessee or any of Third Tier Sublessee's Property whereupon the Premises
shall be taken or occupied or attempted to be taken or occupied by someone other
than Third Tier Sublessee, and such execution or attachments shall not have been
vacated and shall continue for a period of thirty (30) days;

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<PAGE>

expiration of said three (3) days with the same force and effect as if that
day were the Expiration Date, provided, however, that Third Tier Sublessee
shall be and remain liable for the performance of all of its obligations
hereunder and for damages as provided in this Third Tier Sublease.

(b) Third Tier Sublessor, at Third Tier Sublessor's option, may
relet the whole or any part or parts of the Premises from time to time, either
in the name of Third Tier Sublessor or otherwise, to such tenant or tenants, for
such term or terms, at such rental or rentals and upon such other terms and
conditions, which may include concessions and free rent periods, as Third Tier
Sublessor, in its sole discretion, may determine. Third Tier Sublessor shall
have no obligation to relet the Premises or any part thereof and shall in no
event be liable for refusal or failure to collect any rent due upon any such
reletting and no such refusal or failure shall operate to relieve Third Tier
Sublessee from any liability under this Third Tier Sublease or otherwise affect
any such liability. Third Tier Sublessor, at its option, may make such repairs,
alterations, additions, improvements, decorations and other physical changes in
and to the Premises as Third Tier Sublessor, in its sole discretion, may
consider advisable in connection with any such reletting or proposed reletting,
without relieving Third Tier Sublessee of any liability under this Third Tier
Sublease or otherwise affecting any such liability.

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<PAGE>

entry by Third Tier Sublessor, or after any termination of this Third Tier
Sublease and the Term, whether such dispossession, re-entry or termination
shall be by operation of law or otherwise. The words "re-enter," "re-entry,"
and "re-entered" as used in this Third Tier Sublease shall not be deemed to
be restricted to their technical legal meanings.

12.04 In the event of any breach or threatened breach by Third Tier
Sublessee or any persons claiming through or under Third Tier Sublessee of any
of the terms, covenants or conditions contained in this Third Tier Sublease,
Third Tier Sublessor (i) shall be entitled to enjoin such breach or threatened
breach and (ii) shall have the right to invoke any right and remedy allowed at
law or in equity or by statute or otherwise as if re-entry, summary proceedings
or other specific remedies were not provided for in this Third Tier Sublease.

(a) Third Tier Sublessee shall pay to Third Tier Sublessor all
Fixed Rent, Additional Rent and other amounts payable by Third Tier Sublessee
hereunder to the date upon which this Third Tier Sublease and the Term shall
have terminated or to the date of re-entry upon the Premises by Third Tier
Sublessor, as the case may be;

(c) Third Tier Sublessee shall be liable for and shall pay to Third
Tier Sublessor, as damages, any deficiency between the Fixed Rent and Additional
Rent payable hereunder for the period which otherwise would have constituted the
unexpired portion of the Term (conclusively presuming the Additional Rent to be
at the same rate as was payable for the year immediately preceding such
termination or re-entry) and the net amount, if any, of rents ("NET RENT")
collected under any reletting effected pursuant to the provisions of
subsection 12.02 for any part of such period (after first deducting from the
rents collected under any such reletting all of the Third Tier Sublessor's
expenses in connection with the termination of this Third Tier Sublease or Third
Tier Sublessor's re-entry upon the Premises and in connection with such
reletting including all repossession costs, brokerage commissions, legal
expenses, attorneys' fees, alteration or similar costs and other expenses of
preparing the Premises for such reletting). Any such deficiency shall be paid
in monthly installments by Third Tier Sublessee on the days specified in this
Third Tier Sublease for the payment of installments of Fixed Rent and Additional
Rent. Third Tier Sublessor

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<PAGE>

shall be entitled to recover from Third Tier Sublessee each monthly
deficiency as the same shall arise and no suit to collect the amount of the
deficiency for any month shall prejudice Third Tier Sublessor's right to
collect the deficiency for any subsequent month by a similar proceeding.
Alternatively, suit or suits for the recovery of such deficiencies may be
brought by Third Tier Sublessor from time to time at its election;

(e) In no event shall Third Tier Sublessee be entitled to receive
any excess of Net Rent over the sums payable by Third Tier Sublessee to Third
Tier Sublessor hereunder, and in no event shall Third Tier Sublessee be entitled
in any suit for the collection of damages pursuant to this Article to a credit
in respect of any Net Rent from a reletting except to the extent actually
received by Third Tier Sublessor prior to the commencement of such suit.

12.06 (a) If this Third Tier Sublease be terminated as provided
in subsection 12.01 or by any summary proceeding or any other action or
proceeding, or if Third Tier Sublessor shall reenter the Premises, Third Tier
Sublessee covenants and agrees, that, notwithstanding anything to the contrary
contained in this Third Tier Sublease:

(i) the Premises shall be, upon such earlier termination or
re-entry, in the same condition as that in which Third Tier Sublessee has agreed
to surrender them to Third Tier Sublessor on the Expiration Date;

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<PAGE>

(b) Each and every covenant contained in this subsection 12.06
shall be deemed separate and independent of every other provision of this Third
Tier Sublease and the use and occupancy of the Premises by Third Tier Sublessee,
and the performance of any such covenant shall not be considered to be Rent or
the payment of any other amount for the use of the Premises. It is understood
that the consideration for the covenants in this subsection is the making of
this Third Tier Sublease, and damages for failure to perform the same shall be
deemed to be in addition to and separate and independent from the damages
accruing by reason of default in observing any other covenant contained in this
Third Tier Sublease.

13. BANKRUPTCY.

13.01 Notwithstanding any other provision of this Third Tier
Sublease, Third Tier Sublessor may cancel this Third Tier Sublease by written
notice to Third Tier Sublessee within a reasonable period of time after the
happening of either one or both of the following events: (i) a case is
commenced in bankruptcy or under the laws of any state naming Third Tier
Sublessee as debtor; and (ii) Third Tier Sublessee makes an assignment or any
other arrangement for the benefit of creditors under any state statute. Neither
Third Tier Sublessee nor any person claiming through or under Third Tier
Sublessee, or by reason of any statute or order of court, shall therewith be
entitled to possession of the Premises but shall forthwith quit and surrender
the Premises.

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<PAGE>

unexpired term of this Third Tier Sublease, or any part thereof, before
presentation of proof of such liquidation damages to any court, commission or
tribunal, the amount of Rent reserved upon such reletting shall be deemed to
be the fair and reasonable rental value for the part or the whole of the
Premises so relet during the term of the reletting. Nothing herein contained
shall limit or prejudice the right of Third Tier Sublessor 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.

14. INDEMNIFICATION.

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<PAGE>

observed, performed or complied with, (ii) the use or occupancy or manner of
use or occupancy of the Premises by Third Tier Sublessee or any person
claiming through or under Third Tier Sublessee or the exercise by Third Tier
Sublessee or any person claiming through or under Third Tier Sublessee of any
rights granted to Third Tier Sublessee hereunder, including, without limiting
the generality of the foregoing, those rights provided under Article 6 above,
(iii) any acts, omissions or negligence of Third Tier Sublessee or any person
claiming through or under Third Tier Sublessee, or the employees, agents,
contractors, licensees or invitees of Third Tier Sublessee or any such
person, in or about the Premises or the Building either prior to, during, or
after the termination of this Third Tier Sublease, or (iv) the condition of
the Premises. If any action or proceeding shall be brought against Third
Tier Sublessor, Sub-sublessor, Prime Sublessor or Groundlessor by reason of
any such claim, Third Tier Sublessee, upon notice from Third Tier Sublessor,
Sub-sublessor, Prime Sublessor and Groundlessor, shall resist and defend such
action or proceeding and employ counsel therefor satisfactory to Third Tier
Sublessor. Third Tier Sublessee shall pay to Third Tier Sublessor on demand
all sums which may be owing to Third Tier Sublessor, Sub-sublessor, Prime
Sublessor and Groundlessor by reason of the provisions of this subsection.
Third Tier Sublessee's obligations under this subsection shall survive the
Expiration Date or earlier termination of this Third Tier Sublease.

14.03 Third Tier Sublessor shall indemnify and hold harmless Third
Tier Sublessee from and against any and all loss, cost, liability, claims,
damage and expenses, including without limitation, reasonable attorneys fees and
expenses and court costs, penalties and fines, incurred in connection with or
arising from the breach of its representations and warranties set forth in
paragraph 1.03. Third Tier Sublessor's obligations under this subsection shall
survive the Expiration Date or earlier termination of this Third Tier Sublease.

14.04 The provisions of this Section 14 are not intended to make
Third Tier Sublessee responsible for claims against Third Tier Sublessor, Prime
Sublessor, Groundlessor or Sub-sublessor or the Premises that arose out of
events that occurred prior to the Commencement Date.

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<PAGE>

15. TIME LIMITS.

16. REMEDIES CUMULATIVE.

16.01 Each right and remedy of Third Tier Sublessor under this Third
Tier Sublease shall be cumulative and be in addition to every other right and
remedy of Third Tier Sublessor under this Third Tier Sublease and now or
hereafter existing at law or in equity, by statute or otherwise.

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<PAGE>

17. CASUALTY AND CONDEMNATION.

18. QUIET ENJOYMENT.

19. RELEASE OF THIRD TIER SUBLESSOR.

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<PAGE>

Sublease thereafter to be performed, provided that the transferee of Third Tier
Sublessor's interests in this Third Tier Sublease agrees to assume Third Tier
Sublessor's covenants and obligations arising hereunder after the date of such
transfer and notice thereof is given to Third Tier Sublessee.

20. SURRENDER OF PREMISES.

20.02 Third Tier Sublessee expressly waives, for itself and for
any person claiming through or under Third Tier Sublessee, any rights which
Third Tier Sublessee or any such person may have under the provisions of
Section 2201 of the New York Civil Practice Law and Rules and any successor law
of like import in force in connection with any holdover summary proceedings
which Third Tier Sublessor may institute to enforce the foregoing provisions of
this Article 20.

21. ESTOPPEL CERTIFICATES.

22. SECURITY.

22.01 Simultaneously with the execution of this Third Tier Sublease,
Third Tier Sublessee shall deposit with Third Tier Sublessor the sum of Ten
Thousand Four Hundred Fourty-Six and 34/100 Dollars ($10,446.34) ("SECURITY
DEPOSIT") (which amount shall increase to $11,396.00 on April 1, 1997) as
security for the full and faithful performance and observance by Third Tier
Sublessee of all of the terms, covenants and conditions of this Third Tier
Sublease on Third Tier Sublessee's part to be performed and observed. Third
Tier Sublessor may use, apply or retain the whole or any part of the Security
Deposit to the extent required for the payment of any Rent and any other sums as
to which Third Tier Sublessee may be in default hereunder and for any

26
<PAGE>

sum which Third Tier Sublessor may expend or may be required to expend by
reason of Third Tier Sublessee's default in respect of any of the terms,
covenants and conditions of this Third Tier Sublease, including, without
limiting the generality of the foregoing, any and all damages or deficiencies
in the reletting of the Premises, whether such damages or deficiencies shall
accrue before or after summary proceedings or other re-entry by Third Tier
Sublessor. If any portion of said Security Deposit is so used or applied by
Third Tier Sublessor, the Third Tier Sublessee shall within five (5) days
after receipt of written demand therefore deposit cash with Third Tier
Sublessor in an amount sufficient to restore the Security Deposit to its
original amount and Third Tier Sublessee's failure to do so shall be a
material default of this Third Tier Sublease. In the event that Third Tier
Sublessee shall fully and faithfully comply with all of the terms,
provisions, covenants and conditions of this Third Tier Sublease, the
Security Deposit, or so much thereof as shall not have been applied by Third
Tier Sublessor as aforesaid, shall be returned to Third Tier Sublessee after
the Expiration Date (or earlier termination of this Third Tier Sublease) and
after delivery of the entire possession of the Premises to Third Tier
Sublessor, without interest. In the event of an assignment by Third Tier
Sublessor of its interest under the Sub-sublease, Third Tier Sublessor shall
have the right to transfer the Security Deposit to the assignee and Third
Tier Sublessor shall thereupon be released by Third Tier Sublessee from all
liability for the return of such Security Deposit. In such event, Third Tier
Sublessee shall look solely to its new sublessor for the return of said
Security Deposit. The foregoing provisions shall apply to every transfer or
assignment made of the Security Deposit to a new sublessor. Third Tier
Sublessee further covenants that it will not assign or encumber or attempt to
assign or encumber the Security Deposit and that neither Third Tier Sublessor
nor its successors and assigns shall be bound by any such assignment,
encumbrance, attempted assignment or attempted encumbrance.

23. ACCESS TO PREMISES.

23.01 Third Tier Sublessee shall permit Third Tier Sublessor, Sub-
sublessor, Prime Sublessor and Groundlessor and their authorized representatives
to enter upon the Premises at reasonable times (i) to inspect the same and to
perform any work or make any necessary repairs thereto and (ii) as may be
necessary to obtain access to any adjacent space.

24. NOTICES.

24.01 All notices, consents, approvals or other communications
(collectively, a "NOTICE") required to be given under this Third Tier Sublease
or pursuant to law shall be in writing and, unless otherwise required by law,
shall be personally delivered or given by registered or certified mail, return
receipt requested, postage prepaid, to the parties at their respective addresses
set forth above or such other address as either may designate by Notice to the
other. A copy of any Notice to Third Tier Sublessor shall be sent to its
General Counsel at the address for Third Tier Sublessor set forth above. Any
Notice given pursuant hereto shall be deemed to have been received

27
<PAGE>

upon delivery, if personally delivered, or on the 5th day after the mailing
thereof if mailed in accordance with the terms hereof.

25. SUB-SUBLESSOR'S CONSENT REQUIRED.

25.01 This Third Tier Sublease shall be conditioned upon the receipt
by Third Tier Sublessor of Sub-sublessor's written consent to this Third Tier
Sublease and the delivery of a copy of the same to the Third Tier Sublessee.
Third Tier Sublessee covenants and agrees to cooperate with Third Tier Sublessor
in any request for Sub-sublessor's consent and agrees to supply and furnish any
information or documents which may be reasonably requested by Groundlessor,
Prime Sublessor and/or Sub-sublessor. Third Tier Sublessee shall pay or
reimburse Third Tier Sublessor for any expense charged by Sub-sublessor,
Groundlessor or Prime Sublessor in connection with the consent by any of them to
this Third Tier Sublease.

26. BROKER.

26.01 Third Tier Sublessor and Third Tier Sublessee each represents
that, other than Josephthal, Lyon & Ross, Inc. ("Josephthal"), it has dealt with
no broker, agent or finder in connection with this Third Tier Sublease or the
transactions to which it relates, and each shall indemnify and hold the other
harmless from and against the fee or commission claims of any broker, agent or
finder that it dealt with. Third Tier Sublessor has engaged Josephthal and
shall be solely liable for its fee, if any. However, if any of the Major
Groundlease, the Prime Sublease or the Sub-sublease, or the landlord thereunder,
requires that such landlord or any agent, manager or broker be paid a
commission, fee or any other form of compensation in connection with the consent
for this Third Tier Sublease, the Third Tier Sublessee will pay the same.

27. WAIVER OF RIGHTS TO JURY AND COUNTERCLAIM.

27.01 Third Tier Sublessor and Third Tier Sublessee each hereby waive
trial by jury in any action, proceeding or counterclaim brought by either of the
parties against the other on any matters whatsoever arising out of or in any way
connected with this Third Tier Sublease, the relationship of Third Tier
Sublessor and Third Tier Sublessee, Third Tier Sublessee's use or occupancy
of the Premises, and/or any claim of injury or damage, or for the enforcement of
any remedy under any statute, emergency or otherwise. Third Tier Sublessor and
Third Tier Sublessee further agree that in the event Third Tier Sublessor
commences any summary proceeding for non-payment of Rent, Third Tier Sublessee
will not interpose any counterclaim of whatever nature or description in any
such proceeding.

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<PAGE>

28. THIRD TIER SUBLESSOR'S INABILITY TO PERFORM.

29. MISCELLANEOUS.

29.01 This Third Tier Sublease shall be governed by and construed in
accordance with the laws of the State of New York.

29
<PAGE>

29.03 The section headings in this Third Tier Sublease are inserted
only as a matter of convenience for reference and are not to be given any effect
in construing this Third Tier Sublease.

IN WITNESS WHEREOF, Third Tier Sublessor and Third Tier Sublessee have
executed this Third Tier Sublease as of the day and year first above written.

THIRD TIER SUBLESSOR:

UNITEL VIDEO, INC.

By: /s/ BARRY KNEPPER
----------------------------------------
Name: Barry Knepper
Title: CEO

THIRD TIER SUBLESSEE:

30
<PAGE>

DIGITAL UNIVERSE II, INC.

By/s/ Walter Lefler
Name: Walter Lefler
Title: President

<PAGE>

THIRD TIER SUBLEASE

BETWEEN,

UNITEL VIDEO, INC.,

AS THIRD TIER SUBLESSOR

AND

DIGITAL UNIVERSE II, INC.

AS THIRD TIER SUBLESSEE

PREMISES: A PORTION OF THE BASEMENT AND 4TH FLOORS AND THE ENTIRE 7TH AND 8TH
FLOORS
217 - 223 EAST 43RD STREET/
214 - 226 EAST 44TH STREET
NEW YORK, NEW YORK

<PAGE>

THIRD TIER SUBLEASE

W I T N E S S E T H:

WHEREAS, by Sublease Agreement, effective as of January 1, 1982,
between Columbia Pictures, as landlord, and Bell & Howell/Columbia Pictures
Video Services, as tenant, as assigned and assumed pursuant to an Assignment of
Sublease Acceptance of Assignment, dated December 12, 1984, between Bell &
Howell/Columbia Pictures Video Services and Scanline Communications, as
supplemented by that certain inter-office memorandum, dated May 28, 1985, as
amended by extension letter dated April 3, 1989 from Columbia Pictures to
Scanline Communications, and as assigned and assumed pursuant to an Assignment,
Assumption and Acceptance of Lease, dated as of May 5, 1992, between Scanline
Communications and Third Tier Sublessor, and as further amended by Amendment No.
1 effective the date hereof between Sony Pictures Entertainment, Inc. and Third
Tier Sublessor (such Sublease Agreement, as so assigned, assumed, extended and
amended, is the "SUB-SUBLEASE"), Sony Pictures Entertainment, Inc. ("SUB-
SUBLESSOR"; successor in interest to Columbia Pictures) leased to Third Tier
Sublessor 34,359.40

<PAGE>

square feet consisting of: the entire seventh floor consisting of 13,127
square feet; the entire eighth floor consisting of 8,060 square feet; a
3,194.50 square foot portion of the basement; a 5,839.90 square foot portion
of the fourth floor; and a 4,138 square foot portion of the tenth floor; all
in the building ("BUILDING") known as and located at 217-223 East 43rd
Street/214-226 East 44th Street, New York, New York; and

NOW, THEREFORE, in consideration of the mutual covenants hereinafter
provided, Third Tier Sublessor and Third Tier Sublessee hereby agree as follows:

1. DEMISED PREMISES.

1.01 Third Tier Sublessor hereby sublets to Third Tier Sublessee, and
Third Tier Sublessee hereby sublets and hires from Third Tier Sublessor, the
premises (the "PREMISES") comprising a portion of the basement (comprising
approximately 1,962.50 square feet), a portion of the 4th floor (comprising
approximately 3,852.20 square feet), the entire 7th floor (comprising
approximately 13,127 square feet) and the entire 8th floor (comprising
approximately 8,060 square feet) in the Building as designated by cross-hatching
on the floor plans annexed to this Third Tier Sublease as EXHIBIT A and hereby
incorporated in and made a part of this Third Tier Sublease by reference, for
the term hereinafter stated and for the Rent hereinafter reserved (as
hereinafter defined), subject to all of the terms and provisions hereinafter
provided or incorporated in this Third Tier Sublease by reference.

<PAGE>

sublease, (ii) no condition exists which, with the passage of time, or the
giving of notice, or both, would constitute a default under the Sub-sublease
and (iii) the Major Ground Lease and the Prime Sublease are in full force and
effect, no party is in default under the Mayor Ground Lease or the Prime
Sublease and no condition exists which, with the passage of time, or the
giving of notice, or both, would constitute a default under the Mayor Ground
Lease or the Prime Sublease and (C) basic rent under the Sub-sublease is
$15,946.66 per month through December 31, 1999.

1.04 Any and all alterations to, work to be performed in or materials
to be supplied for the Premises shall be made, performed and supplied at the
sole cost and expense of Third Tier Sublessee and in conformance with all of the
terms and provisions of this Third Tier Sublease, the Major Ground Lease, the
Prime Sublease and the Sub-sublease.

2. TERM.

2.03 Except as otherwise provided in paragraph 2.03.1, if the term of
the Sub-sublease is terminated for any reason prior to the Expiration Date, this
Third Tier Sublease shall thereupon be terminated ipso facto without any
liability of Third Tier Sublessor to Third Tier Sublessee by reason of such
early termination. References in this Third Tier Sublease to the "termination"
of this Third Tier Sublease include the stated expiration of the Term and any
earlier termination thereof pursuant to the provisions of this Third Tier
Sublease, the Major Ground Lease, the Prime Sublease, the Sub-sublease or by
law. Except as otherwise expressly provided in this Third Tier Sublease with
respect to those obligations of Third Tier Sublessee which by their nature or
under the circumstances can only be, or under the provisions of this Third Tier
Sublease may be, performed after the termination of this Third Tier Sublease,
the Term and estate granted hereby shall end at noon on the date of termination
of this Third Tier Sublease as if such date were the Expiration Date, and
neither party shall have any further obligation or liability to the other after
such termination. Notwithstanding the foregoing, any liability of Third Tier
Sublessee to make any payment under this Third Tier Sublease, whether of Fixed
Rent, Additional Rent (both as hereinafter defined) or otherwise, which shall
have accrued prior to the termination of this Third Tier Sublease, shall survive
the termination of this Third Tier Sublease.

2.03.1 Third Tier Sublessor shall not amend or cancel the Major
Ground Lease, the Prime Sublease or the Sub-sublease or breach any provision of
any of such leases (which breach is not caused by any breach by Third Tier
Sublessee hereunder) and Third Tier Sublessor shall continue to pay rent and
additional rent required to be paid by Third Tier Sublessor thereunder. If Third
Tier Sublessor shall fail to pay any rent or additional rent required to be paid
by Third Tier

<PAGE>

Sublessor under any of the Major Ground Lease, the Prime Sublease or the
Sub-sublease, other than any rent or additional rent that Third Tier
Sublessee has failed to pay to Third Tier Sublessor under this Third Tier
Sublease, it shall be a breach of this Third Tier Sublease.

2.06 Notwithstanding anything to the contrary in this Third Tier
Sublease, Third Tier Sublessee agrees (at no cost to Third Tier Sublessor) to
permit Third Tier Sublessor to (1) maintain Third Tier Sublessor's equipment
(the "Third Tier Sublessor Equipment") on the 7th and 8th floors of the Premises
through March 30, 1997 (for the purpose of sale or auction off-site of the Third
Tier Sublessor Equipment) and have access to the Premises, together with Third
Tier Sublessor's invitees, on one business day's prior notice, for the purpose
of inspecting and removing the Third Tier Sublessor Equipment and (2) maintain
Third Tier Sublessor's equipment and furniture, and Third Tier Sublessor's
employees to operate such equipment, in the sound rooms (the "Sound Rooms")
designated by Third Tier Sublessor on the 4th floor of the Premises through
February 28, 1997. Third Tier Sublessee will protect and insure the Third Tier
Sublessor Equipment while on the Premises (at no cost to Third Tier Sublessor)
on Third Tier Sublessee's property insurance policy against loss or damage, name
Third Tier Sublessor as an additional insured/loss payee on such policy and
deliver a certificate of insurance to such effect on the Commencement Date.
Third Tier Sublessee will not permit any employee or invitee of Third Tier
Sublessee to enter the Sound Rooms prior to the removal of Third Tier
Sublessor's equipment therefrom on or before February 28, 1997. Third Tier
Sublessor shall notify Third Tier Sublessee, in writing, upon removal of all of
its equipment from the Sound Rooms.

2.07 Third Tier Sublessee shall have the option (the "Renewal Option")
to extend the term of this Third Tier Sublease for one additional period
commencing on December 31, 1999 and ending on December 30, 2012 (the "Renewal
Term"), provided that (a) this Third Tier Sublease shall not have been
previously terminated, (b) no Event of Default shall have occurred and be
continuing (x) on the date Third Tier Sublessee gives Third Tier Sublessor
written notice (the

<PAGE>

"Renewal Notice") of Third Tier Sublessee's election to exercise the Renewal
Option, and (y) on the Expiration Date, (c) at Third Tier Sublessor's
request, Third Tier Sublessee shall cause Sub-Sublessor to (x) permit Third
Tier Sublessor to assign its entire interest in the Sub-sublease to Third
Tier Sublessee and Third Tier Sublessee shall assume Third Tier Sublessor's
obligations under the Sub-sublease, the Prime Sublease and the Major Ground
Lease and (y) fully and completely release Third Tier Sublessor from its
obligations under the Sub-sublease, the Prime Sublease and the Major Ground
Lease whereupon Third Tier Sublessor shall be completely released from its
obligations under this Third Tier Sublease and this Third Tier Sublease shall
be terminated and of no further force and effect, (d) at Third Tier
Sublessor's option, the Premises demised hereunder for the Renewal Term shall
include either one or both of the following (i) the portion of the 10th floor
subleased by Third Tier Sublessor to Photo-Magnetic Sound Studios, Inc. and
(ii) the entire Prime Lease Premises (as defined in the Sub-sublease) or any
portion thereof and (e) all of the conditions to the exercise of the second
renewal option under the Sub-sublease shall have been complied with or
otherwise satisfied. With respect to item (c) of this paragraph 2.06, it is
the agreement of the parties that at Third Tier Sublessor's option, Third
Tier Sublessee may only exercise the Renewal Option if it is able to secure
the full and complete release of Third Tier Sublessor from its obligations
under this Third Tier Sublease, the Sub-Sublease, the Prime Sublease and the
Major Ground Lease. With respect to item (d) of this paragraph 2.06, it is
the agreement of the parties that, if Third Tier Sublessee exercises the
Renewal Option, at the option of Third Tier Sublessor, Third Tier Sublessee
shall be required to sublease hereunder for the Renewal Term, in addition to
the Premises, all or any portion of any other space in the Building which
Third Tier Sublessor subleases under the Sub-sublease pursuant to the second
renewal option under the Sub-sublease. The Renewal Option shall be
exercisable by Third Tier Sublessee delivering the Renewal Notice to Third
Tier Sublessor not later than February 1, 1999 and not earlier than December
1, 1998. Time is of the essence with respect to the giving of the Renewal
Notice. The Renewal Option may be exercised only once. If Third Tier
Sublessee exercises the Renewal Option, Third Tier Sublessee shall pay Fixed
Rent and all other charges provided under the Sub-sublease in proportion to
the amount of space leased by Third Tier Sublessee during the Renewal Term in
addition to all other charges provided under this Third Tier Sublease
(excluding Fixed Rent and the charges provided for in the Sub-sublease)(it
being the intent of the parties that Third Tier Sublessor shall incur no
expense with respect to the premises subleased by Third Tier Sublessee during
the Renewal Term) and the Renewal Term shall otherwise be on the same terms,
covenants and conditions as those contained in this Third Tier Sublease,
modified to reflect any increase in the size of the Premises.
Notwithstanding anything in this paragraph 2.06 to the contrary, the Renewal
Option is subject to all other conditions to the exercise of the renewal
option in the Sub-sublease.

3. RENT.

3.01 The rent ("RENT") reserved for the Term under this Third Tier
Sublease shall consist of the following:

(i) annual fixed rent ("FIXED RENT") in the amount of (A) One
Hundred Fifty Thousand Three Hundred Eighty-Nine and 76/100 ($150,389.76)
Dollars for the period beginning on the Commencement Date and ending on December
30, 1999, which shall be payable, in advance, in equal monthly installments of
$12,532.48 each. The first installment of Fixed Rent shall be payable by Third
Tier Sublessee upon the execution of this Third Tier Sublease and the second and
subsequent installments shall be payable on the first (1st) day of the first
month following the Commencement Date and subsequent months, respectively, of
the Term. If the

<PAGE>

Commencement Date shall be a date other than the first day of a calendar
month, the second installment of Fixed Rent (but no other installment)
payable by Third Tier Sublessee hereunder shall be reduced to an amount which
bears the same ratio to the first installment of Fixed Rent payable hereunder
as the number of days from and including the Commencement Date to the end of
the calendar month in which the Commencement Date occurs bears to the total
number of days in such calendar month; and

(ii) additional rent ("ADDITIONAL RENT") in an amount equal to
the sum of (A) 78.59%, of any and all sums of money, other than the annual fixed
rental ("UNDERLYING FIXED RENT") under the Sub-sublease, which is or may become
payable by Third Tier Sublessor to Sub-sublessor under the Sub-sublease
("UNDERLYING ADDITIONAL RENT"); (B) any and all other sums payable by Third Tier
Sublessee to Third Tier Sublessor hereunder; and (C) any and all charges of Sub-
sublessor under the Sub-sublease or of any other third party (including without
limitation EUE Screen Gems Ltd.) for overtime, additional services or any other
matter relating to the Premises, or arising out of Third Tier Sublessee's
failure to perform its obligations hereunder. Additional Rent shall be payable
by Third Tier Sublessee on the date fifteen (15) days before the date on which
the corresponding Underlying Additional Rent is payable to Sub-sublessor under
the Sub-sublease. All other Additional Rent shall be payable upon demand.
Third Tier Sublessor shall have the same remedies with respect to any default by
Third Tier Sublessee in the payment of Additional Rent as are provided in this
Third Tier Sublease, the Sub-sublease or applicable law with respect to any
nonpayment of rent.

(iii) Anything in paragraphs 3.01(i) and 3.01 (ii)
notwithstanding, the obligation of Third Tier Sublessee to pay Fixed Rent or any
Additional Rent in respect of real estate taxes shall begin on January 1, 1997,
it being the intent of Third Tier Sublessor and Third Tier Sublessee that Third
Tier Sublessor waives the right to collect Rent and Additional Rent in respect
of real estate taxes due for the period from the Commencement Date through
December 31, 1996.

3.02 The Fixed Rent and, except as otherwise specifically provided in
this Third Tier Sublease, the Additional Rent, shall be paid by Third Tier
Sublessee at the office of Third Tier Sublessor set forth above or such other
place as Third Tier Sublessor may designate, without prior notice or demand
therefor and without any abatement, deduction or setoff. Third Tier Sublessor
may at any time and from time to time by notice direct Third Tier Sublessee to
pay all or any portion of the Fixed Rent or Additional Rent on Third Tier
Sublessor's behalf directly to the Sub-sublessor or another party at such
address as Third Tier Sublessor may at any time and from time to time direct.

<PAGE>

4. USE.

4.01 Third Tier Sublessee shall occupy and use the Premises only for
such purposes as are permitted under the terms and provisions of the Sub-
sublease and for no other purpose, and in all respects only as permitted under
the terms and provisions of this Third Tier Sublease, the Major Ground Lease and
the Prime Sublease, including, without limiting the generality of the foregoing,
the rules and regulations, if any, under the Major Ground Lease, the Prime
Sublease, the Sub-sublease, and any and all laws, statutes, ordinances, orders,
regulations and requirements of all federal, state and local governmental,
public or quasi-public authorities, whether now or hereafter in effect, which
may be applicable to or in any way affect the Building or the Premises or any
part thereof and all requirements, obligations and conditions of all instruments
of record on the date of this Third Tier Sublease affecting the Building or the
Premises (collectively, "LEGAL REQUIREMENTS").

4.02 Third Tier Sublessee shall not, without the prior consent of
Third Tier Sublessor, Sub-sublessor, Prime Sublessor and Groundlessor do or
permit anything to be done

<PAGE>

which may result in a violation of the terms of this Third Tier Sublease, the
Sub-sublease, the Prime Sublease or the Major Ground Lease or which may make
Third Tier Sublessor liable for any damages, claims, fines, penalties, costs
or expenses thereunder.

5. MAJOR GROUND LEASE, PRIME SUBLEASE AND SUB-SUBLEASE.

<PAGE>

conditions and agreements which Third Tier Sublessor is required to observe
or perform with respect to the Premises under the Major Ground Lease, the
Prime Sublease and the Sub-sublease are hereby incorporated herein by
reference and deemed to constitute terms, covenants, conditions and
agreements which Third Tier Sublessee is required to observe and perform
under this Third Tier Sublease as if set forth herein at length, mutatis
mutandis; Third Tier Sublessor may exercise and shall be entitled to all of
the rights, powers, privileges and remedies reserved to (x) Groundlessor
under the Major Ground Lease, (y) Prime Sublessor under the Prime Sublease
and (z) Sub-sublessor under the Sub-sublease to the same extent as if fully
set forth herein at length, including, without limitation, all releases from
liability to, respectively, Groundlessor, Prime Sublessor and Sub-sublessor
thereunder and all rights and remedies arising out of, or with respect to,
any default by Third Tier Sublessee in payment of Rent hereunder or the
observance or performance of the terms, covenants, conditions and agreements
of this Third Tier Sublease, the Sub-sublease, the Prime Sublease and the
Major Ground Lease (except as specifically provided herein). Notwithstanding
the foregoing, any inconsistencies between the terms of this Third Tier
Sublease, the Sub-sublease, the Prime Sublease and the Major Ground Lease
which shall result from the foregoing incorporation shall be resolved in
favor of this Third Tier Sublease, provided, however, that if such
construction of terms would cause Third Tier Sublessor to be in default under
the terms of the Sub-sublease, the Prime Sublease and/or the Major Ground
Lease, then such inconsistency shall be resolved in favor of the superior
lease out of the Sub-sublease, the Prime Sublease and the Major Ground Lease
under which Third Tier Sublessor would be in default by such construction of
terms.

5.04 Nothing contained in this Article 5 is intended or shall be
construed to confer upon Third Tier Sublessee any rights, powers, privileges or
remedies which are not specifically conferred upon Third Tier Sublessee under
the terms and provisions of this Third Tier Sublease, and, unless specifically
provided otherwise herein, none of the rights, powers, privileges or remedies of
(x) Third Tier Sublessor as tenant under the Sub-sublease including without
limitation any option to renew or right of first refusal, (y) Sub-sublessor as
tenant under the Prime Sublease, and (z) Prime Sublessor as tenant under the
Major Ground Lease shall inure to the benefit of Third Tier Sublessee hereunder.

<PAGE>

in this Third Tier Sublease provided, and may enter upon the Premises for the
purpose thereof and take all such action thereon as may be necessary
therefor. Third Tier Sublessee shall pay to Third Tier Sublessor, upon
demand, the amount of all costs and expenses incurred by Third Tier Sublessor
in the payment or performance of any such obligations of Third Tier
Sublessee.

6. SERVICE.

7. UTILITY SERVICES AND ELECTRIC
ENERGY CHARGE ADJUSTMENTS.

<PAGE>

Upon Third Tier Sublessor's request, Third Tier Sublessee shall open an account
with Con Edison in order to pay Con Edison directly for electricity in respect
of the Premises; provided, however, that the parties acknowledge that on the
Commencement Date EUE Screen Gems Ltd. provides electricity for a portion of the
Premises and bills Third Tier Sublessor for such electricity which cost shall be
paid by Third Tier Sublessee pursuant to paragraph 3.01(b).

7.02 Third Tier Sublessee shall pay all charges, surcharges and other
fees (however denominated) for water, steam, gas, electricity, telephone and
other utility services used in the Premises during the Term.

8. FIXTURES.

<PAGE>

8.06 The provisions of this Article 8 shall survive the termination of
this Third Tier Sublease.

9. ALTERATIONS AND REPAIRS.

(e) All such Alterations shall be performed in a good and workmanlike
manner and in compliance with all Legal Requirements and with all requirements
of any insurance policies

<PAGE>

affecting the Premises or the Building and so as to cause as little
interference as possible with Groundlessor's, Prime Sublessor's,
Sub-sublessor's or Third Tier Sublessor's, or any of them, use, occupancy and
enjoyment of the Building or the premises of which the Premises are a part;
and

10. INSURANCE.

10.01 Third Tier Sublessee, at Third Tier Sublessee's sole
expense, shall maintain for the benefit of Third Tier Sublessor, Sub-sublessor,
Prime Sublessor and Groundlessor such policies of insurance required by the Sub-
sublease, the Prime Sublease and/or the Major Ground Lease with respect to the
Premises which shall be reasonably satisfactory to Third Tier Sublessor as to
coverage and insurer (who shall be licensed to do business in the State of New
York) provided that such insurance shall at a minimum include comprehensive
general liability insurance with an aggregate liability amount, on an occurrence
basis, of not less than $3,000,000 combined single limit, protecting and
indemnifying Third Tier Sublessor, Sub-sublessor, Prime Sublessor, Groundlessor
and Third Tier Sublessee against any and all claims and liabilities for injury
or damage to persons or property, occurring upon, in or about the Premises, and
the public portions of the Building, caused by or resulting from or in
connection with any act or omission of Third Tier Sublessee, Third Tier
Sublessee's employees, agents or invitees.

10.02 Nothing contained in this Third Tier Sublease shall relieve
Third Tier Sublessee from any liability as a result of damage from fire or other
casualty, but each party shall

<PAGE>

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. To the extent that such insurance is in force and collectible and
to the extent permitted by law, Third Tier Sublessor and Third Tier Sublessee
each hereby releases and waives all right to recovery against the other or
anyone claiming through or under the other by way of subrogation or
otherwise. The foregoing release and waiver shall be in force only if the
insurance policies of Third Tier Sublessor and Third Tier Sublessee provide
that such release or waiver does not invalidate the insurance; and each party
agrees to use its best efforts to include such a provision in its applicable
insurance policies. If the inclusion of said provision would involve an
additional expense, the party requiring such provision to be inserted in the
other's policy shall pay the cost thereof, unless it elects to waive such
requirement.

11. ASSIGNMENT, SUBLETTING AND ENCUMBRANCES.

<PAGE>

without the prior written consent of Third Tier Sublessor, Sub-sublessor,
Prime Sublessor and Groundlessor in each instance.

12. DEFAULT.

12.01 This Third Tier Sublease and the Term and estate hereby
granted are subject to the following limitations as modified by the provisions
of Article 15 below:

(a) if Third Tier Sublessee shall fail to pay when due any Rent or
any other sum or amount Third Tier Sublessee may be required to pay hereunder;
or

(c) if any event shall occur or any contingency shall arise whereby
this Third Tier Sublease or the estate hereby granted or the unexpired balance
of the Term would, by

<PAGE>

operation of law or otherwise, devolve upon or pass to any person or entity
other than Third Tier Sublessee, except as is expressly permitted hereunder;
or

(f) if Third Tier Sublessee shall default in the observance or
performance of any term, covenant or condition on Third Tier Sublessee's part to
be observed or performed under any other lease or sublease with Third Tier
Sublessor, and such default shall continue beyond any applicable grace period
set forth in such other lease or sublease for the remedying of such default; or

(b) Third Tier Sublessor, at Third Tier Sublessor's option, may relet
the whole or any part or parts of the Premises from time to time, either in the
name of Third Tier Sublessor or

<PAGE>

otherwise, to such tenant or tenants, for such term or terms, at such rental
or rentals and upon such other terms and conditions, which may include
concessions and free rent periods, as Third Tier Sublessor, in its sole
discretion, may determine. Third Tier Sublessor shall have no obligation to
relet the Premises or any part thereof and shall in no event be liable for
refusal or failure to collect any rent due upon any such reletting and no
such refusal or failure shall operate to relieve Third Tier Sublessee from
any liability under this Third Tier Sublease or otherwise affect any such
liability. Third Tier Sublessor, at its option, may make such repairs,
alterations, additions, improvements, decorations and other physical changes
in and to the Premises as Third Tier Sublessor, in its sole discretion, may
consider advisable in connection with any such reletting or proposed
reletting, without relieving Third Tier Sublessee of any liability under this
Third Tier Sublease or otherwise affecting any such liability.

(a) Third Tier Sublessee shall pay to Third Tier Sublessor all Fixed
Rent, Additional Rent and other amounts payable by Third Tier Sublessee
hereunder to the date upon which this Third Tier Sublease and the Term shall
have terminated or to the date of re-entry upon the Premises by Third Tier
Sublessor, as the case may be;

<PAGE>

13. BANKRUPTCY.

<PAGE>

Premises so relet during the term of the reletting. Nothing herein contained
shall limit or prejudice the right of Third Tier Sublessor 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.

14. INDEMNIFICATION.

14.02 Third Tier Sublessee shall indemnify and hold harmless
Third Tier Sublessor, Sub-sublessor, Prime Sublessor and Groundlessor, and their
respective employees, agents, contractors, licensees and invitees, from and
against any and all loss, cost, liability, claims, damage and expenses,
including, without limiting the generality of the foregoing, reasonable
attorneys' fees and expenses and court costs, penalties and fines, incurred in
connection with or arising from (i) any default by Third Tier Sublessee in the
observance or performance of, or compliance with, any of the terms, covenants or
conditions of this Third Tier Sublease, the Sub-Sublease, the Prime Sublease or
the Major Ground Lease on Third Tier Sublessee's part to be observed, performed
or complied with, (ii) the use or occupancy or manner of use or occupancy of the
Premises by Third Tier Sublessee or any person claiming through or under Third
Tier Sublessee or the exercise by Third Tier Sublessee or any person claiming
through or under Third Tier Sublessee of any rights granted to Third Tier
Sublessee hereunder, including, without limiting the generality of the
foregoing, those rights provided under Article 6 above, (iii) any acts,
omissions or negligence of Third Tier Sublessee or any person claiming through
or under Third Tier Sublessee, or the employees, agents, contractors, licensees
or invitees of Third Tier Sublessee or any such person, in or about the Premises
or the Building either prior to, during, or after the termination of this Third
Tier Sublease, or (iv) the condition of the Premises. If any action or
proceeding shall be

<PAGE>

brought against Third Tier Sublessor, Sub-sublessor, Prime Sublessor or
Groundlessor by reason of any such claim, Third Tier Sublessee, upon notice
from Third Tier Sublessor, Sub-sublessor, Prime Sublessor and Groundlessor,
shall resist and defend such action or proceeding and employ counsel therefor
satisfactory to Third Tier Sublessor. Third Tier Sublessee shall pay to
Third Tier Sublessor on demand all sums which may be owing to Third Tier
Sublessor, Sub-sublessor, Prime Sublessor and Groundlessor by reason of the
provisions of this subsection. Third Tier Sublessee's obligations under this
subsection shall survive the Expiration Date or earlier termination of this
Third Tier Sublease.

15. TIME LIMITS.

<PAGE>

(20) or more but less than thirty (30) days, and (iv) three (3) days with
respect to all such periods of less than twenty (20) days.

16. REMEDIES CUMULATIVE.

17. CASUALTY AND CONDEMNATION.

18. QUIET ENJOYMENT.

19. RELEASE OF THIRD TIER SUBLESSOR.

<PAGE>

relieved from and after the date of such transfer of all liability with
respect to the performance of any covenants or obligations on the part of
Third Tier Sublessor contained in this Third Tier Sublease thereafter to be
performed, provided that the transferee of Third Tier Sublessor's interests
in this Third Tier Sublease agrees to assume Third Tier Sublessor's covenants
and obligations arising hereunder after the date of such transfer and notice
thereof is given to Third Tier Sublessee.

20. SURRENDER OF PREMISES.

21. ESTOPPEL CERTIFICATES.

22. SECURITY.

22.01 Simultaneously with the execution of this Third Tier
Sublease, Third Tier Sublessee shall deposit with Third Tier Sublessor the sum
of Twelve Thousand Five Hundred Thirty-Two and 48/100 Dollars ($12,532.48)
("SECURITY DEPOSIT") as security for the full and faithful performance and
observance by Third Tier Sublessee of all of the terms, covenants and conditions
of this Third Tier Sublease on Third Tier Sublessee's part to be performed and
observed. Third Tier Sublessor may use, apply or retain the whole or any part
of the Security Deposit to the extent required for the payment of any Rent and
any other sums as to which Third Tier Sublessee may be in default hereunder and
for any sum which Third Tier Sublessor may expend or may be required to expend
by reason of Third Tier Sublessee's default in respect of any of the terms,
covenants and conditions of this Third Tier Sublease, including, without
limiting the generality of the foregoing, any and all damages or deficiencies in
the reletting of the Premises, whether such damages or deficiencies shall accrue
before or after summary proceedings or other re-entry by Third Tier Sublessor.
If any portion of said Security Deposit is so used or applied by Third Tier

<PAGE>

23. ACCESS TO PREMISES.

23.01 Third Tier Sublessee shall permit Third Tier Sublessor, Sub-
sublessor, Prime Sublessor and Groundlessor and their authorized representatives
to enter upon the Premises at reasonable times (i) to inspect the same and to
perform any work or make any necessary repairs thereto and (ii) as may be
necessary in accordance with the agreements set forth in paragraph 2.06.

24. NOTICES.

24.01 All notices, consents, approvals or other communications
(collectively, a "NOTICE") required to be given under this Third Tier Sublease
or pursuant to law shall be in writing and, unless otherwise required by law,
shall be personally delivered or given by registered or certified mail, return
receipt requested, postage prepaid, to the parties at their respective addresses
set forth above or such other address as either may designate by Notice to the
other. A copy of any Notice to Third Tier Sublessor shall be sent to its
General Counsel at the address for Third Tier Sublessor set forth above. Any
Notice given pursuant hereto shall be deemed to have been received upon
delivery, if personally delivered, or on the 5th day after the mailing thereof
if mailed in accordance with the terms hereof.

25. SUB-SUBLESSOR'S CONSENT REQUIRED.

25.01 This Third Tier Sublease shall be conditioned upon the
receipt by Third Tier Sublessor of Sub-sublessor's written consent to this Third
Tier Sublease and the delivery of a copy of the same to the Third Tier
Sublessee. Third Tier Sublessee covenants and agrees to cooperate with Third
Tier Sublessor in any request for Sub-sublessor's consent and agrees to supply
and furnish any information or documents which may be reasonably requested by
Groundlessor, Prime Sublessor and/or Sub-sublessor. Third Tier Sublessee shall
pay or reimburse Third Tier Sublessor for any expense charged by Sub-sublessor,
Groundlessor or Prime Sublessor in connection with the consent by any of them to
this Third Tier Sublease.

<PAGE>

26. BROKER.

26.01 Third Tier Sublessor and Third Tier Sublessee each
represents that, other than Josephthal, Lyon & Ross, Inc. ("Josephthal"), it has
dealt with no broker, agent or finder in connection with this Third Tier
Sublease or the transactions to which it relates, and each shall indemnify and
hold the other harmless from and against the fee or commission claims of any
broker, agent or finder that it dealt with. Third Tier Sublessor has engaged
Josephthal and shall be solely liable for its fee, if any. However, if any of
the Major Groundlease, the Prime Sublease or the Sub-sublease, or the landlord
thereunder, requires that such landlord or any agent, manager or broker be paid
a commission, fee or any other form of compensation in connection with the
consent for this Third Tier Sublease, the Third Tier Sublessee will pay the
same.

27. WAIVER OF RIGHTS TO JURY AND COUNTERCLAIM.

28. THIRD TIER SUBLESSOR'S INABILITY TO PERFORM.

<PAGE>

Tier Sublessor is prevented or delayed from so doing by reason of strikes or
labor trouble, or by accident, adjustment of insurance, or by any cause
whatsoever reasonably beyond Third Tier Sublessor's control, including but
not limited to, laws, governmental preemption in connection with a National
Emergency or by reason of any rule, order or regulation or any federal,
state, county or municipal authority or any department or subdivision thereof
or any government agency or by reason of the conditions of supply and demand
which have been or are affected by war or other emergency.

29. MISCELLANEOUS.

29.01 This Third Tier Sublease shall be governed by and construed
in accordance with the laws of the State of New York.

29.03 The section headings in this Third Tier Sublease are
inserted only as a matter of convenience for reference and are not to be given
any effect in construing this Third Tier Sublease.

<PAGE>

IN WITNESS WHEREOF, Third Tier Sublessor and Third Tier Sublessee have
executed this Third Tier Sublease as of the day and year first above written.

THIRD TIER SUBLESSOR:
---------------------

UNITEL VIDEO, INC.

By: /s/ Barry Knepper
-----------------------------------
Name: Barry Knepper
Title: CEO

THIRD TIER SUBLESSEE:
---------------------

DIGITAL UNIVERSE II, INC.

By: /s/ Walter Lefler
-----------------------------------
Name: Walter Lefler
Title: President

<PAGE>

EXHIBIT 23

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We have issued our report dated November 19, 1996, accompanying the consolidated
financial statements and schedule included in the Annual Report of Unitel Video,
Inc. on Form 10-K for the year ended August 31, 1996. We hereby consent to the
incorporation by reference of said report in the Registration Statement of
Unitel Video, Inc. on Form S-8, filed on July 15, 1986 (File No. 33-7306), the
Registrant's Registration Statement on Form S-8 filed on April 20, 1987 (File
No. 33-13660), the Registrant's Registration Statement on Form S-8 filed on May
28, 1987 (File No. 33-14654) the Registrant's Registration Statement on Form S-8
filed on February 1, 1996 (File No. 333-00613) and the Registrant's Registration
Statement on Form S-3 (File No. 33-38839).

GRANT THORNTON LLP

/s/ Grant Thornton LLP

New York, New York
November 19, 1996

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNITEL VIDEO
INC.'S FORM 10K FOR THE YEAR ENDED AUGUST 31, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-START> SEP-01-1995
<PERIOD-END> AUG-31-1996
<CASH> 192
<SECURITIES> 0
<RECEIVABLES> 9,413
<ALLOWANCES> 712
<INVENTORY> 0
<CURRENT-ASSETS> 12,534
<PP&E> 120,440
<DEPRECIATION> 69,974
<TOTAL-ASSETS> 67,618
<CURRENT-LIABILITIES> 20,890
<BONDS> 38,815
0
0
<COMMON> 26
<OTHER-SE> 17,784
<TOTAL-LIABILITY-AND-EQUITY> 67,618
<SALES> 79,287
<TOTAL-REVENUES> 79,287
<CGS> 65,501
<TOTAL-COSTS> 65,501
<OTHER-EXPENSES> 18,897
<LOSS-PROVISION> 407
<INTEREST-EXPENSE> 3,686
<INCOME-PRETAX> (5,084)
<INCOME-TAX> 40
<INCOME-CONTINUING> (5,124)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,124)
<EPS-PRIMARY> (1.96)
<EPS-DILUTED> 0

</TABLE>