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                                                                    EXHIBIT 10.1

                           INDUSTRIAL LEASE AGREEMENT

      THIS LEASE AGREEMENT (the "Lease") is made as of the "Effective Lease
Date" (as defined in Section 37 herein) by and between Industrial Developments
International, Inc., a Delaware corporation ("Landlord"), and Priority
fulfillment services, inc., a Delaware corporation ("Tenant") (the words
"Landlord" and "Tenant" to include their respective legal representatives,
successors and permitted assigns where the context requires or permits).

                              W I T N E S S E T H:

      1.    Basic Lease Provisions. The following constitute the basic
            provisions of this Lease:

            (a)   Demised Premises Address:        8474 Market Place
                                                   Suite 101
                                                   Southaven, Mississippi  38671

            (b)   Demised Premises Square Footage: approximately 434,900 sq. ft.

            (c)   Building Square Footage: approximately 602,500 sq. ft.

            (d)   Annual Base Rent:

                     Lease Years 1-4     $1,226,418.00 (plus the prorated amount
                                         for any Fractional Month per Section 3
                                         hereof, if applicable) (annualized,
                                         where applicable)

            (e)   Monthly Base Rent Installments:

                    Lease Years 1-4 $102,201.50 (plus the prorated amount for
                                                any Fractional Month per
                                                Section 3 hereof, if applicable)

            (f)   Lease Commencement Date: October 1, 2004

            (g)   Base Rent Commencement Date: October 1, 2004

            (h)   Expiration Date: December 31, 2007

            (i)   Primary Term: Thirty-nine (39) months plus, in the event the
                  Base Rent Commencement Date does not occur on the first (1st)
                  day of a calendar month, the period from and including the
                  Base Rent Commencement Date to and including the last day of
                  the calendar month in which the Base Rent Commencement Date
                  occurs (if applicable, the "Fractional Month")

            (j)   Tenant's Operating Expense Percentage: 72.18%

            (k)   Security Deposit: $102,201.50

            (l)   Permitted Use: Storage and distribution of durable and
                  non-durable consumer and business goods and products, and
                  office and administrative uses reasonably ancillary thereto
                  (collectively, the "Initial Use"), or, subject to the
                  limitations hereinafter specified, for any other lawful
                  distribution center and/or warehousing use; provided, however,
                  that Tenant shall obtain Landlord's prior written consent to a
                  use which is different from the Initial Use and which involves
                  the distribution, warehousing or other handling or use of
                  either (1) Hazardous Substances (as defined in Section 16) not
                  used by Tenant in its Initial Use and which would materially
                  increase the risk of Contamination (as defined in Section 16)
                  or materially adversely affect the value or marketability of
                  the Demised Premises if a Contamination involving such
                  Hazardous Substances were to occur, or (2) noxious substances
                  not used by Tenant in its Initial Use and which would likely
                  cause or create a nuisance or trespass for, or otherwise
                  disturb the quiet enjoyment of, any other tenant and occupant
                  of the Building (as hereinafter defined), and provided
                  further, however, that Tenant's use of the Demised Premises
                  (i) shall never include any use prohibited by any provision
                  contained in this Lease (including, without limitation,
                  Section 16 hereof), (ii) shall never extend to or allow the
                  use or storage of radioactive or biohazardous materials at the
                  Demised Premises, or any use



                  wherein a Hazardous Substance (as defined in Section 16)
                  constitutes the principal or primary product of the business
                  to be conducted at the Demised Premises, (iii) shall never
                  include any heavy manufacturing, and (iv) must not result in a
                  material increase in the wear and tear on the Demised
                  Premises, as compared to the Initial Use.

            (m)   Address for notice:

                  Landlord:          Industrial Developments International, Inc.
                                     c/o IDI, Inc.
                                     3424 Peachtree Road, N.E., Suite 1500
                                     Atlanta, Georgia  30326
                                     Attn:  Manager - Lease Administration

                  Tenant:            Priority Fulfillment Services, Inc.
                                     500 North Central Expressway
                                     Plano, Texas  75074
                                     Attn:  Chief Financial Officer

            (n)   Address for rental payments:

                                     Industrial Developments International, Inc.
                                     c/o IDI Services Group, LLC
                                     P.O. Box 281464
                                     Atlanta, Georgia  30384-1464

            (o)   Broker(s):         Commercial Advisors

            (p)   Guarantor(s):      PFSWeb, Inc.
                                     500 North Central Expressway
                                     Plano, Texas 74074
                                     Attn: Chief Financial Officer

      2. Demised Premises. For and in consideration of the rent hereinafter
reserved and the mutual covenants hereinafter contained, Landlord does hereby
lease and demise unto Tenant, and Tenant does hereby hire, lease and accept,
from Landlord all upon the terms and conditions hereinafter set forth the
following premises, referred to as the "Demised Premises", as outlined on
Exhibit A attached hereto and incorporated herein: an agreed upon approximately
434,900 square feet of space, approximately 6,000 square feet of which is office
space, having an address as set forth in Section 1(a), located within Building E
(the "Building"), which contains a total of an agreed upon approximately 602,500
square feet and is located within Airways Distribution Center (the "Project"),
located in DeSoto County, Mississippi. The parties acknowledge that the number
of square feet recited above has been conclusively determined and is not subject
to contest by either party.

      3. Term. To have and to hold the Demised Premises for a preliminary term
(the "Preliminary Term") commencing on the Effective Lease Date and ending on
the day immediately preceding the Lease Commencement Date as set forth in
Section 1(f), and a primary term (the "Primary Term") commencing on the Lease
Commencement Date and terminating on the Expiration Date as set forth in Section
1(h), as the Lease Commencement Date and the Expiration Date may be revised
pursuant to Section 17 (the Preliminary Term, the Primary Term, and any and all
extensions thereof, herein referred to as the "Term"). The term "Lease Year", as
used in this Lease, shall mean the 12-month period commencing on the Base Rent
Commencement Date, and each 12-month period thereafter during the Term;
provided, however, that (i) if the Base Rent Commencement Date occurs after the
Lease Commencement Date, the first Lease Year will include the period between
the Lease Commencement Date and the Base Rent Commencement Date, and (ii) if the
Base Rent Commencement Date is a day other than the first day of a calendar
month, the first Lease Year shall include the resulting Fractional Month and
shall extend through the end of the twelfth (12th) full calendar month following
the Base Rent Commencement Date.

      4. Base Rent. Tenant shall pay to Landlord at the address set forth in
Section 1(n), as base rent for the Demised Premises, commencing on the Base Rent
Commencement Date and continuing throughout the Term in lawful money of the
United States, the annual amount set forth in Section 1(d) payable in equal
monthly installments as set forth in Section 1(e) (the "Base Rent"), payable in
advance, without demand and without abatement, reduction, set-off or deduction,
on the first day of each calendar month during the Term. If the Base Rent
Commencement Date shall fall on a day other than the first day of a calendar
month, the Base Rent shall be apportioned pro rata on a per diem basis for the
resulting Fractional Month (which pro rata payment shall be due and payable on
the Base Rent Commencement Date). No payment by Tenant or receipt by Landlord of
rent hereunder shall be deemed to be other than on account of the amount due,
and no endorsement or statement on any check or any letter accompanying any
check or payment of rent shall be deemed an accord and satisfaction, and
Landlord may accept such check as payment without prejudice to Landlord's right
to recover the balance of such installment or payment of rent or pursue any
other remedies available to Landlord.

                                      -2-


          5. Security Deposit.

            (a) Upon Tenant's execution of this Lease, Tenant will pay to
Landlord the sum set forth in Section 1(k) (the "Cash Security Deposit") as
security for the full and faithful performance by Tenant of each and every term,
covenant and condition of this Lease. In the alternative, Tenant shall have the
right, within five (5) business days of Tenant's execution of this Lease, to
deliver to Landlord an Irrevocable Letter of Credit (the "Letter of Credit") in
the amount set forth in Section 1(k) (the "LC Security Deposit"; the Cash
Security Deposit or the LC Security Deposit, as applicable, being referred to
herein as the "Security Deposit"), in a form and from a financial institution
acceptable to Landlord, and shall cause the same to be maintained in full force
and effect throughout the Term, as may be extended, and during the thirty (30)
day period after the later of (a) the Expiration Date or (b) the date that
Tenant delivers possession of the Demised Premises to Landlord, as security for
the full and faithful performance by Tenant of each and every term, covenant and
condition of this Lease. In the event that, during the Term, Tenant fails to
deliver to Landlord a renewal of or replacement to the letter of credit by a
date no later than thirty (30) days prior to its expiration date, Landlord shall
have the right to demand and receive payment in full under the letter of credit
and to hold the cash proceeds as the Security Deposit under this Lease. The
acceptance by Landlord of the Security Deposit paid by Tenant shall not render
this Lease effective unless and until Landlord shall have executed and delivered
to Tenant a fully executed copy of this Lease. The Security Deposit, if in the
form of cash, may be commingled with Landlord's other funds or held by Landlord
in a separate interest bearing account, with interest paid to Landlord, as
Landlord may elect. In the event that Tenant is in default under this Lease,
Landlord may retain or draw on the security Deposit for the payment of any sum
due Landlord or which Landlord may expend or be required to expend by reason of
Tenant's default or failure to perform; provided, however, that any such
retention by Landlord shall not be or be deemed to be an election of remedies by
Landlord or viewed as liquidated damages, it being expressly understood and
agreed that Landlord shall have the right to pursue any and all other remedies
available to it under the terms of this Lease or otherwise. In the event all or
any portion of the Security Deposit is so retained by Landlord, Tenant shall,
within five (5) days of demand therefor from Landlord, replenish the Security
Deposit to the full amount set forth in Section 1(k) (and Tenant's failure to do
so shall constitute an immediate "Event of Default", as defined in Section 22
hereof, without any further notice or demand from Landlord). In the event that
Tenant shall comply with all of the terms, covenants and conditions of this
Lease, the security deposit shall be returned to Tenant within thirty (30) days
after the later of (a) the Expiration Date or (b) the date that Tenant delivers
possession of the Demised Premises to Landlord. In the event of a sale of the
Building, Landlord shall have the right to transfer the security deposit to the
purchaser, and upon acceptance by such purchaser, Landlord shall be released
from all liability for the return of the security deposit. Tenant shall not
assign or encumber the money deposited as security, and neither Landlord nor its
successors or assigns shall be bound by any such assignment or encumbrance.

            (b) Notwithstanding the foregoing, if at the end of the first (1st)
Lease Year, (i) Tenant has not previously committed an Event of Default (as
defined below) and (ii) as of the date on which such reduction is to occur, no
Event of Default exists and no facts exist which, with the passage of time or
giving of notice would constitute an Event of Default, the amount of the
Security Deposit shall be reduced by Fifty-One Thousand One Hundred and 75/100
Dollars ($51,100.75) (the "Reduction Amount") (such that, after such reduction,
the Security Deposit shall be in an amount equal to $51,100.75, which is the
equivalent of one half (1/2) installment of monthly Base Rent). In connection
with each such reduction, if applicable, Landlord will either (i) refund to
Tenant the Reduction Amount within thirty (30) days after the expiration of the
first (1st) Lease Year (if the Security Deposit is in the form of a cash
deposit), or (ii) within thirty (30) days of demand therefor from Tenant,
execute any reasonable documentation presented to Landlord by Tenant which is
necessary to cause a reduction in the Letter of Credit by the Reduction Amount
(if the Security Deposit is in the form of the Letter of Credit). If the
Security Deposit is initially in the form of a Letter of Credit, Tenant shall
nevertheless have the right at any time after the reduction in the Security
Deposit in accordance herewith to deliver to Landlord, in cash, the amount of
the then required Security Deposit (i.e., $51,100.75), which shall thereafter be
held by Landlord as a cash Security Deposit pursuant to the terms of subsection
(a) above, whereupon Landlord shall surrender the Letter of Credit to Tenant

      6. Operating Expenses and Additional Rent.

            (a) Tenant agrees to pay as Additional Rent (as defined in Section
6(b) below) its proportionate share of Operating Expenses (as hereinafter
defined). "Operating Expenses" shall be defined as, without duplication, all
reasonable expenses for operation, repair, replacement and maintenance as
necessary to keep the Building and the common areas, driveways, and parking
areas associated therewith (collectively, the "Building Common Area") fully
operational and in good order, condition and repair, including but not limited
to, utilities for the Building Common Area, expenses associated with the
driveways and parking areas (including sealing and restriping, and trash, snow
and ice removal), security systems, fire detection and prevention systems,
lighting facilities, landscaped areas, walkways, painting and caulking,
directional signage, curbs, drainage strips, sewer lines, all charges assessed
against or attributed to the Building pursuant to any applicable easements,
covenants, restrictions, agreements, declaration of protective covenants or
development standards, property management fees, all real property taxes and
special assessments imposed upon the Building, the Building Common Area and the
land on which the Building and the Building Common Area are constructed, all
costs of insurance paid by Landlord with respect to the Building and the
Building Common Area (including, without limitation, commercially reasonable
deductibles), and costs of improvements to the Building and the Building Common
Area

                                      -3-


required by any law, ordinance or regulation enacted or promulgated after the
Lease Commencement Date and applicable to the Building and the Building Common
Area generally (and not because of the particular use of the Building or the
Building Common Area by a particular tenant), which cost shall be amortized on a
straight line basis over the useful life of such improvement, as reasonably
determined by Landlord. Operating Expenses shall not include expenses for the
costs of any maintenance and repair required to be performed by Landlord at its
own expense under Section (10)(b) or advertising, marketing or commission
expenses. Further, Operating Expenses shall not include the costs for capital
improvements unless such costs are incurred for the purpose of causing a
material decrease in the Operating Expenses of the Building or the Building
Common Area or are incurred with respect to improvements made to comply with
laws, ordinances or regulations as described above. Operating Expenses shall be
accounted for in accordance with generally accepted accounting principles
consistently applied ("GAAP"). The proportionate share of Operating Expenses to
be paid by Tenant shall be a percentage of the Operating Expenses based upon the
proportion that the square footage of the Demised Premises bears to the total
square footage of the Building (such figure referred to as "Tenant's Operating
Expense Percentage" and set forth in Section 1(j)); provided that, as to
management fees, Tenant shall pay Landlord the management fees directly
attributable to the Rent (as hereinafter defined) payable hereunder with respect
to the Demised Premises, and not Tenant's Operating Expense Percentage of the
management fees payable on the entire Building, and, for each Lease Year during
the Primary Term (and in no event during any extended term), such management
fees shall not exceed two percent (2%) of the total amount of Base Rent and
Operating Expenses payable hereunder during each such Lease Year during the
Primary Term. Notwithstanding the foregoing, Landlord shall, in Landlord's
reasonable discretion, have the right to adjust Tenant's proportionate share of
individual components of Operating Expenses if Tenant's Operating Expense
Percentage thereof would not equitably allocate to Tenant its share of such
component of Operating Expenses in light of Tenant's particular use, manner of
use and/or level of tenant improvements in the Demised Premises (and Landlord
shall use good faith, diligent efforts to include in every other lease in the
Building language substantially similar to the foregoing so as to entitle
Landlord to make similar adjustments with respect to such other tenants'
Operating Expenses as and where appropriate). Prior to or promptly after the
beginning of each calendar year during the Term, Landlord shall estimate the
total amount of Operating Expenses to be paid by Tenant during each such
calendar year and Tenant shall pay to Landlord one-twelfth (1/12) of such sum on
the first day of each calendar month during each such calendar year, or part
thereof, during the Term. Within a reasonable time after the end of each
calendar year, Landlord shall submit to Tenant a statement of the actual amount
of Operating Expenses for such calendar year, and the actual amount owed by
Tenant, and within thirty (30) days after receipt of such statement, Tenant
shall pay any deficiency between the actual amount owed and the estimates paid
during such calendar year, or in the event of overpayment, Landlord shall credit
the amount of such overpayment toward the next installment of Operating Expenses
owed by Tenant or remit such overpayment to Tenant if the Term has expired or
has been terminated and no Event of Default exists hereunder. The obligations in
the immediately preceding sentence shall survive the expiration or any earlier
termination of this Lease. If the Lease Commencement Date shall fall on other
than the first day of the calendar year, and/or if the Expiration Date shall
fall on other than the last day of the calendar year, Tenant's proportionate
share of the Operating Expenses for such calendar year shall be apportioned
prorata.

            (b) Any amounts required to be paid by Tenant hereunder (in addition
to Base Rent) and any charges or expenses incurred by Landlord on behalf of
Tenant under the terms of this Lease shall be considered "Additional Rent"
payable in the same manner and upon the same terms and conditions as the Base
Rent reserved hereunder except as set forth herein to the contrary (all such
Base Rent and Additional Rent sometimes being referred to collectively herein as
"Rent"). Any failure on the part of Tenant to pay such Additional Rent when and
as the same shall become due shall entitle Landlord to the remedies available to
it for non-payment of Base Rent. Tenant's obligations for payment of Additional
Rent shall begin to accrue on the Lease Commencement Date regardless of the Base
Rent Commencement Date.

            (c) If applicable in the jurisdiction where the Demised Premises are
located, Tenant shall pay and be liable for all rental, sales, use and inventory
taxes or other similar taxes, if any, on the amounts payable by Tenant hereunder
levied or imposed by any city, state, county or other governmental body having
authority, such payments to be in addition to all other payments required to be
paid Landlord by Tenant under the terms of this Lease. Such payment shall be
made by Tenant directly to such governmental body if billed to Tenant, or if
billed to Landlord, such payment shall be paid concurrently with the payment of
the Base Rent, Additional Rent, or such other charge upon which the tax is
based, all as set forth herein.

            (d) Landlord currently reasonably estimates that Tenant's
proportionate share of Operating Expenses for calendar year 2004 (not including
property taxes and property insurance) will be $.17 per square foot of the
Demised Premises.

      7. Use of Demised Premises.

            (a) The Demised Premises shall be used for the Permitted Use set
forth in Section 1(l) and for no other purpose without Landlord's prior written
consent, which consent shall not be unreasonably withheld.

            (b) Tenant will permit no liens to attach or exist against the
Demised Premises, and shall not commit any waste.

                                      -4-


            (c) The Demised Premises shall not be used for any illegal purposes,
and Tenant shall not allow, suffer, or permit any vibration, noise, odor, light
or other effect to occur within or around the Demised Premises that could
constitute a nuisance or trespass for Landlord or any occupant of the Building
or an adjoining building, its customers, agents, or invitees. Upon notice by
Landlord to Tenant that any of the aforesaid prohibited uses are occurring,
Tenant agrees to promptly remove or control the same.

            (d) Tenant shall not in any way violate any law, ordinance or
restrictive covenant affecting the Demised Premises, and shall not in any manner
use the Demised Premises so as to cause cancellation of, prevent the use of, or
increase the rate of, the fire and extended coverage insurance policy required
hereunder. Landlord makes no (and does hereby expressly disclaim any) covenant,
representation or warranty as to the Permitted Use being allowed by or being in
compliance with any applicable laws, rules, ordinances or restrictive covenants
now or hereafter affecting the Demised Premises, and any zoning letters, copies
of zoning ordinances or other information from any governmental agency or other
third party provided to Tenant by Landlord or any of Landlord's agents or
employees shall be for informational purposes only, Tenant hereby expressly
acknowledging and agreeing that Tenant shall conduct and rely solely on its own
due diligence and investigation with respect to the compliance of the Permitted
Use with all such applicable laws, rules, ordinances and restrictive covenants
and not on any such information provided by Landlord or any of its agents or
employees.

            (e) In the event insurance premiums pertaining to the Demised
Premises, the Building, or the Building Common Area, whether paid by Landlord or
Tenant, are increased over the least hazardous rate available due to the nature
of the use of the Demised Premises by Tenant, Tenant shall pay such additional
amount as Additional Rent. Landlord shall promptly notify Tenant of any such
increase.

      8. Insurance.

            (a) Tenant covenants and agrees that from and after the Lease
Commencement Date or any earlier date upon which Tenant enters or occupies the
Demised Premises or any portion thereof, Tenant will carry and maintain, at its
sole cost and expense, the following types of insurance, in the amounts
specified and in the form hereinafter provided for:

                  (i) Liability insurance in the Commercial General Liability
form (including Broad Form Property Damage and Contractual Liabilities or
reasonable equivalent thereto) covering the Demised Premises and Tenant's use
thereof against claims for bodily injury or death, property damage and product
liability occurring upon, in or about the Demised Premises, such insurance to be
written on an occurrence basis (not a claims made basis), to be in combined
single limits amounts not less than $1,000,000.00 and to have general aggregate
limits of not less than $2,000,000.00 with "umbrella" coverage with limits of
not less than $5,000,000.00 for each policy year. The insurance coverage
required under this Section 8(a)(i) shall, in addition, extend to any liability
of Tenant arising out of the indemnities provided for in Section 11 and, if
necessary, the policy shall contain a contractual endorsement to that effect.

                  (ii) Insurance covering (A) all of the items included in the
leasehold improvements constructed in the Demised Premises by or at the expense
of Landlord (collectively, the "Improvements"; and, except to the extent
otherwise provided herein, the Improvements shall be deemed to include any
"Additional Improvements" constructed pursuant to Special Stipulation 1 on
Exhibit C hereto), including but not limited to demising walls and the heating,
ventilating and air conditioning system and (B) Tenant's trade fixtures,
merchandise and personal property from time to time in, on or upon the Demised
Premises, in an amount not less than one hundred percent (100%) of their full
replacement value from time to time during the Term, providing protection
against perils included within the standard form of "all-risk" fire and casualty
insurance policy, together with insurance against sprinkler damage, vandalism
and malicious mischief. Any policy proceeds from such insurance relating to the
Improvements shall be used solely for the repair, construction and restoration
or replacement of the Improvements damaged or destroyed unless this Lease shall
cease and terminate under the provisions of Section 20.

            (b) All policies of the insurance provided for in Section 8(a) shall
be issued in form reasonably acceptable to Landlord by insurance companies with
a rating of not less than "A," and financial size of not less than Class X, in
the most current available "Best's Insurance Reports", and licensed to do
business in the state in which the Building is located. Each and every such
policy:

                  (i) shall name Landlord, Lender (as defined in Section 24),
and any other party reasonably designated by Landlord, as an additional insured.
In addition, the coverage described in Section 8(a)(ii)(A) relating to the
Improvements shall also name Landlord as "loss payee";

                  (ii) shall be delivered to Landlord, in the form of an
insurance certificate acceptable to Landlord as evidence of such policy, prior
to the Lease Commencement Date and thereafter within thirty (30) days prior to
the expiration of each such policy, and, as often as any such policy shall
expire or terminate. Renewal or additional policies shall be procured and
maintained by Tenant in like manner and to like extent;

                                      -5-


                  (iii) shall contain a provision that the insurer will give to
Landlord and such other parties in interest at least thirty (30) days notice in
writing in advance of any material change, cancellation, termination or lapse,
or the effective date of any reduction in the amounts of insurance; and

                  (iv) shall be written as a primary policy which does not
contribute to and is not in excess of coverage which Landlord may carry.

            (c) In the event that Tenant shall fail to carry and maintain the
insurance coverages set forth in this Section 8, Landlord may upon thirty (30)
days notice to Tenant (unless such coverages will lapse in which event no such
notice shall be necessary) procure such policies of insurance and Tenant shall
promptly reimburse Landlord therefor.

            (d) Landlord and Tenant hereby waive any rights each may have
against the other on account of any loss or damage occasioned to Landlord or
Tenant, as the case may be, their respective property, the Demised Premises, its
contents or to the other portions of the Building, arising from any risk covered
by "all-risk" fire and extended coverage insurance of the type and amount
required to be carried hereunder, provided that such waiver does not invalidate
such policies or prohibit recovery thereunder. The parties hereto shall cause
their respective insurance companies insuring the property of either Landlord or
Tenant against any such loss, to waive any right of subrogation that such
insurers may have against Landlord or Tenant, as the case may be.

      9. Utilities. During the Term, Tenant shall promptly pay as billed to
Tenant all rents and charges for water and sewer services and all costs and
charges for gas, steam, electricity, fuel, light, power, telephone, heat and any
other utility or service used or consumed in or servicing the Demised Premises
and all other costs and expenses involved in the care, management and use
thereof as charged by the applicable utility companies to Tenant. All such
utilities shall be separately metered and billed to Tenant, and Tenant shall
establish an account with the utility provider with respect to each such
separately metered utility. Tenant's obligation for payment of all utilities
shall commence on the earlier of the Lease Commencement Date or the date of
Tenant's actual occupancy of all or any portion of the Demised Premises,
including any period of occupancy prior to the Lease Commencement Date,
regardless of whether or not Tenant conducts business operations during such
period of occupancy. If Tenant fails to pay any utility bills or charges,
Landlord may, at its option and upon reasonable notice to Tenant, pay the same
and in such event, the amount of such payment, together with interest thereon at
the Interest Rate as defined in Section 32 from the date of such payment by
Landlord, will be added to Tenant's next payment due as Additional Rent.

      10. Maintenance and Repairs.

            (a) Tenant shall, at its own cost and expense, maintain in good
condition and repair and replace as necessary the interior of the Demised
Premises, including but not limited to the heating, air conditioning and
ventilation systems, glass, windows and doors, sprinkler, all plumbing and
sewage systems, fixtures, interior walls, floors (including floor slabs),
ceilings, storefronts, plate glass, skylights (excluding seals between skylights
and the roof, which shall be a Landlord obligation as hereinafter set forth),
all electrical facilities and equipment including, without limitation, lighting
fixtures, lamps, fans and any exhaust equipment and systems, electrical motors,
and all other appliances and equipment (including, without limitation, dock
levelers, dock shelters, dock seals and dock lighting) of every kind and nature
located in, upon or about the Demised Premises, except as to such maintenance,
repair and replacement as is the obligation of Landlord pursuant to Section
10(b). During the Term, Tenant shall maintain in full force and effect a service
contract for the maintenance of the heating, ventilation and air conditioning
systems with an entity reasonably acceptable to Landlord; provided, however,
that during the one year period following the Lease Commencement Date, such
service contract shall be maintained with the contractor that installed the
heating, ventilation and air conditioning systems and shall provide for at least
two preventive maintenance service calls during such one year period. Tenant
shall deliver to Landlord (i) a copy of said service contract prior to the Lease
Commencement Date, and (ii) thereafter, a copy of a renewal or substitute
service contract within thirty (30) days prior to the expiration of the existing
service contract. Tenant's obligation shall exclude any maintenance, repair and
replacement required because of the act or negligence of Landlord, its
employees, contractors or agents, which shall be the responsibility of Landlord.

            (b) Landlord shall, at its own cost and expense, maintain in good
condition and repair the foundation (beneath the floor slab), structural frame,
external walls (exclusive of painting and caulking, the cost of which will be
included in Operating Expenses in accordance with Section 6 hereof) and roof of
the Building(including the seals between the skylights and the roof). Landlord's
obligation shall exclude the cost of any maintenance or repair required because
of the act (exclusive of ordinary wear and tear resulting from the Permitted
Use) or negligence of Tenant or any of Tenant's subsidiaries or affiliates, or
any of Tenant's or such subsidiaries' or affiliates' agents, contractors,
employees, licensees or invitees (collectively, "Tenant's Affiliates"), the cost
of which shall be the responsibility of Tenant. Landlord shall never have any
obligation to repair, maintain or replace, pursuant to this subsection 10(b) or
any other provision of this Lease, any Tenant's Change (as defined in Section 18
hereof).

            (c) Unless the same is caused solely by the negligent action or
inaction of Landlord, its employees or agents, and is not covered by the
insurance required to be carried by Tenant pursuant to the terms of this Lease,
Landlord shall not be liable to Tenant or to any other person for any damage
occasioned

                                      -6-


by failure in any utility system or by the bursting or leaking of any vessel or
pipe in or about the Demised Premises, or for any damage occasioned by water
coming into the Demised Premises or arising from the acts or neglects of
occupants of adjacent property or the public.

      11. Tenant's Personal Property; Indemnity. All of Tenant's personal
property in the Demised Premises shall be and remain at Tenant's sole risk.
Landlord, its agents, employees and contractors, shall not be liable for, and
Tenant hereby releases Landlord from, any and all liability for theft thereof or
any damage thereto occasioned by any act of God or by any acts, omissions or
negligence of any persons. Landlord, its agents, employees and contractors,
shall not be liable for any injury to the person or property of Tenant or other
persons in or about the Demised Premises, Tenant expressly agreeing to indemnify
and save Landlord, its agents, employees and contractors, harmless, in all such
cases, except, in the case of personal injury only, to the extent caused by the
negligence of Landlord, its agents, employees and contractors. Tenant further
agrees to indemnify and reimburse Landlord for any costs or expenses, including,
without limitation, reasonable attorneys' fees, that Landlord reasonably may
incur in investigating, handling or litigating any such claim against Landlord
by a third person, unless such claim arose from the negligence of Landlord, its
agents, employees or contractors. The provisions of this Section 11 shall
survive the expiration or earlier termination of this Lease with respect to any
damage, injury or death occurring before such expiration or termination.

      12. Tenant's Fixtures. Tenant shall have the right to install in the
Demised Premises trade fixtures required by Tenant or used by it in its
business, and if installed by Tenant, to remove any or all such trade fixtures
from time to time during and upon termination or expiration of this Lease,
provided no Event of Default, as defined in Section 22, then exists; provided,
however, that Tenant shall repair and restore any damage or injury to the
Demised Premises (to the condition in which the Demised Premises existed prior
to such installation) caused by the installation and/or removal of any such
trade fixtures. In all cases, however, any fixtures, equipment and personal
property contained in the Demised Premises owned by Philip Morris (as
hereinafter defined) may be removed at any time, and Landlord shall not prohibit
access to the Demised Premises for such purpose, provided that prior to any such
entry and removal Philip Morris shall have executed and delivered for the
benefit of Landlord an entry and indemnification agreement in form reasonably
acceptable to Landlord.

      13. Signs. No sign, advertisement or notice shall be inscribed, painted,
affixed, or displayed on the windows or exterior walls of the Demised Premises
or on any public area of the Building, except in such places, numbers, sizes,
colors and styles as are approved in advance in writing by Landlord, and which
conform to all applicable laws, ordinances, or covenants affecting the Demised
Premises. Notwithstanding the foregoing, Tenant shall have the right to affix
one (1) identification sign to the exterior of the Demised Premises and to
install one (1) monument identification sign in the Building Common Area,
provided Tenant and such signs otherwise comply with the terms and conditions of
this Section 13. Any and all signs installed or constructed by or on behalf of
Tenant pursuant hereto shall be installed, maintained and removed by Tenant at
Tenant's sole cost and expense.

      14. Reserved.

      15. Governmental Regulations. Tenant shall promptly comply throughout the
Term, at Tenant's sole cost and expense, with all present and future laws,
ordinances, orders, rules, regulations or requirements of all federal, state and
municipal governments and appropriate departments, commissions, boards and
officers thereof (collectively, "Governmental Requirements") relating to (a) all
or any part of the Demised Premises, and (b) the use or manner of use of the
Demised Premises and the Building Common Area; provided, however, that Landlord
shall be solely responsible for making all changes necessitated by violations of
applicable Governmental Requirements that are in effect as of the Lease
Commencement Date. Tenant shall also observe and comply with the requirements of
all policies of public liability, fire and other policies of insurance at any
time in force with respect to the Demised Premises. Without limiting the
foregoing, if as a result of one or more Governmental Requirements it is
necessary, from time to time during the Term, to perform an alteration or
modification of the Demised Premises, the Building, or the Building Common Area
(a "Code Modification") which is made necessary as a result of the specific use
being made by Tenant of the Demised Premises or a Tenant's Change, then such
Code Modification shall be the sole and exclusive responsibility of Tenant in
all respects; any such Code Modification shall be promptly performed by Tenant
at its expense in accordance with the applicable Governmental Requirement and
with Section 18 hereof. If as a result of one or more Governmental Requirements
it is necessary from time to time during the Term to perform a Code Modification
which (i) would be characterized as a capital expenditure under GAAP and (ii) is
not made necessary as a result of the specific use being made by Tenant of the
Demised Premises (as distinguished from an alteration or modification which
would be required to be made by the owner of any warehouse-office building
comparable to the Building irrespective of the use thereof by any particular
occupant) or a Tenant's Change, then (a) Landlord shall have the obligation to
perform the Code Modification at its expense, (b) the cost of such Code
Modification shall be amortized on a straight-line basis over the useful life of
the item in question, in accordance with GAAP, and (c) to the extent the Code
Modification relates to the Building or the Building Common Area (and not to any
portion of the Demised Premises), Tenant shall be obligated to pay (as
Additional Rent, payable in the same manner and upon the same terms and
conditions as the Base Rent reserved hereunder) for (i) Tenant's proportionate
share (based on Tenant's Operating Expense Percentage) of the portion of such
amortized costs attributable to the remainder of the Term, including any
extensions thereof, with respect to any Code Modification respecting the
Building or the Building Common Area, and (ii) to the extent the Code

                                      -7-


Modification relates to the Demised Premises (and not any other portion of the
Building), the entire portion of such amortized costs attributable to the
remainder of the Term, including any extensions thereof, with respect to any
Code Modification respecting the Demised Premises. Tenant shall promptly send to
Landlord a copy of any written notice received by Tenant requiring a Code
Modification.

      16. Environmental Matters.

            (a) For purposes of this Lease:

                  (i) "Contamination" as used herein means the presence of or
release of Hazardous Substances (as hereinafter defined) into any environmental
media from, upon, within, below, into or on any portion of the Demised Premises,
the Building, the Building Common Area or the Project so as to require
remediation, cleanup or investigation under any applicable Environmental Law (as
hereinafter defined).

                  (ii) "Environmental Laws" as used herein means all federal,
state, and local laws, regulations, orders, permits, ordinances or other
requirements, which exist now or as may exist hereafter, concerning protection
of human health, safety and the environment, all as may be amended from time to
time including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. 9601 et seq. ("CERCLA") and the
Resource Conservation and Recovery Act, 42 U.S.C. 6901 et seq. ("RCRA").

                  (iii) "Hazardous Substances" as used herein means any
hazardous or toxic substance, material, chemical, pollutant, contaminant or
waste as those terms are defined by any applicable Environmental Laws and any
solid wastes, polychlorinated biphenyls, urea formaldehyde, asbestos,
radioactive materials, radon, explosives, petroleum products and oil.

            (b) Landlord represents that, except as revealed to Tenant in
writing by Landlord, to Landlord's actual knowledge, Landlord has not treated,
stored or disposed of any Hazardous Substances upon or within the Demised
Premises, nor, to Landlord's actual knowledge, has any predecessor owner of the
Demised Premises.

            (c) Tenant covenants that all its activities, and the activities of
Tenant's Affiliates (as defined in Section 10(b)), on the Demised Premises, the
Building, or the Project during the Term will be conducted in compliance with
Environmental Laws. Tenant warrants that it is currently in compliance with all
applicable Environmental Laws and that there are no pending or threatened
notices of deficiency, notices of violation, orders, or judicial or
administrative actions involving alleged violations by Tenant of any
Environmental Laws. Tenant, at Tenant's sole cost and expense, shall be
responsible for obtaining all permits or licenses or approvals under
Environmental Laws necessary for Tenant's operation of its business on the
Demised Premises and shall make all notifications and registrations required by
any applicable Environmental Laws. Tenant, at Tenant's sole cost and expense,
shall at all times comply with the terms and conditions of all such permits,
licenses, approvals, notifications and registrations and with any other
applicable Environmental Laws. Tenant warrants that it has obtained, or will
obtain prior to the date required by the applicable Governmental Requirements,
all such permits, licenses or approvals and made, or will make prior to the date
required by the applicable Governmental Requirements, all such notifications and
registrations required by any applicable Environmental Laws necessary for
Tenant's operation of its business on the Demised Premises.

            (d) Tenant shall not cause or permit any Hazardous Substances to be
brought upon, kept or used in or about the Demised Premises, the Building, or
the Project in violation of any Environmental Law without the prior written
consent of Landlord, which consent shall not be unreasonably withheld; provided,
however, that the consent of Landlord shall not be required for the use at the
Demised Premises of cleaning supplies, toner for photocopying machines and other
similar materials, in containers and quantities reasonably necessary for and
consistent with normal and ordinary use by Tenant in the routine operation or
maintenance of Tenant's office equipment or in the routine janitorial service,
cleaning and maintenance for the Demised Premises. For purposes of this Section
16, Landlord shall be deemed to have reasonably withheld consent if Landlord
determines that the presence of such Hazardous Substance within the Demised
Premises could result in a risk of harm to person or property or otherwise
negatively affect the value or marketability of the Building or the Project.

            (e) Tenant shall not cause or permit the release of any Hazardous
Substances by Tenant or Tenant's Affiliates into any environmental media such as
air, water or land, or into or on the Demised Premises, the Building or the
Project in any manner that violates any Environmental Laws. If such release
shall occur, Tenant shall (i) take all steps reasonably necessary to contain and
control such release and any associated Contamination, (ii) clean up or
otherwise remedy such release and any associated Contamination to the extent
required by, and take any and all other actions required under, applicable
Environmental Laws and (iii) notify and keep Landlord reasonably informed of
such release and response.

            (f) Regardless of any consents granted by Landlord pursuant to
Section 16(d) allowing Hazardous Substances upon the Demised Premises, Tenant
shall under no circumstances whatsoever cause or permit (i) any activity on the
Demised Premises which would cause the Demised Premises to become subject to
regulation as a hazardous waste treatment, storage or disposal facility under

                                      -8-


RCRA or the regulations promulgated thereunder, (ii) the discharge of Hazardous
Substances into the storm sewer system serving the Project or (iii) the
installation of any underground storage tank or underground piping on or under
the Demised Premises.

            (g) Tenant shall and hereby does indemnify Landlord and hold
Landlord harmless from and against any and all expense, loss, and liability
suffered by Landlord (except to the extent that such expenses, losses, and
liabilities arise out of Landlord's own negligence or willful act), by reason of
the storage, generation, release, handling, treatment, transportation, disposal,
or arrangement for transportation or disposal, of any Hazardous Substances
(whether accidental, intentional, or negligent) by Tenant or Tenant's Affiliates
or by reason of Tenant's breach of any of the provisions of this Section 16.
Such expenses, losses and liabilities shall include, without limitation, (i) any
and all reasonable expenses that Landlord may incur to comply with any
Environmental Laws; (ii) any and all reasonable costs that Landlord may incur in
studying or remedying any Contamination at or arising from the Demised Premises,
the Building, or the Project; (iii) any and all reasonable costs that Landlord
may incur in studying, removing, disposing or otherwise addressing any Hazardous
Substances; (iv) any and all fines, penalties or other sanctions assessed upon
Landlord; and (v) any and all reasonable legal and professional fees and costs
incurred by Landlord in connection with the foregoing. The indemnity contained
herein shall survive the expiration or earlier termination of this Lease.

      17. Construction of Demised Premises.

            (a) Within thirty (30) days after the Effective Lease Date, Landlord
shall prepare, at Landlord's sole cost and expense, and submit to Tenant a set
of plans and specifications and/or construction drawings (collectively, the
"Plans and Specifications") based on the preliminary plans and specifications
and/or preliminary floor plans set forth on Exhibit B attached hereto and
incorporated herein, covering all work to be performed by Landlord in
constructing the Improvements (as defined in Section 8(a)(ii)). Tenant shall
have ten (10) days after receipt of the plans and specifications in which to
review and to give to Landlord written notice of its approval of the plans and
specifications or its requested changes to the Plans and Specifications. Tenant
shall have no right to request any changes to the plans and specifications which
would materially alter either the Demised Premises or the exterior appearance or
basic nature of the Building, as the same are contemplated by the preliminary
Plans. If Tenant fails to approve or request changes to the Plans and
Specifications by ten (10) days after its receipt thereof, then Tenant shall be
deemed to have approved the Plans and Specifications and the same shall
thereupon be final. If Tenant requests any changes to the Plans and
Specifications, Landlord shall make those changes which are reasonably requested
by Tenant and shall within ten (10) days of its receipt of such request submit
the revised portion of the Plans and specifications to Tenant. Tenant may not
thereafter disapprove the revised portions of the Plans and specifications
unless Landlord has unreasonably failed to incorporate reasonable comments of
Tenant and, subject to the foregoing, the Plans and specifications, as modified
by said revisions, shall be deemed to be final upon the submission of said
revisions to Tenant. Landlord and Tenant shall at all times in their respective
preparation or review of the plans and specifications, and of any revisions
thereto, act reasonably and in good faith. Tenant acknowledges that the
Improvements are being constructed on a "fast track" basis and that Landlord
shall have the right and option to submit various parts of the proposed Plans
and Specifications from time to time during said thirty (30) day period and the
time period for approval of any part of the proposed plans and specifications
shall commence upon receipt of each submission. After Tenant has approved the
Plans and Specifications or the Plans and Specifications have otherwise been
finalized pursuant to the procedures set forth hereinabove, any subsequent
changes to the Plans and Specifications requested by Tenant (herein referred to
as a "Change Order") shall be at Tenant's sole cost and expense and subject to
Landlord's written approval, which approval shall not be unreasonably withheld,
conditioned or delayed. In the event Landlord approves any such requested Change
Order, Landlord shall give written notice thereof to Tenant, which notice will
specify the Change Order approved by Landlord as well as the estimated
incremental cost thereof. The cost to Tenant for Change Orders shall be
Landlord's incremental cost plus fifteen percent (15%) of such amount as
Landlord's overhead. Tenant acknowledges and agrees that Landlord shall be under
no obligation to proceed with any work related to the approved Change Order
unless and until Tenant delivers to Landlord an amount equal to the full
estimated incremental cost of such approved Change Order as set forth in
Landlord's notice. When the final incremental cost of any such Change Order has
been determined and incurred, Landlord and Tenant each agree to pay or refund
the amounts owed to the other with respect to such Change Order, based on the
estimated payment made to Landlord. If after the Plans and specifications have
been finalized pursuant to the procedures set forth hereinabove Tenant requests
a Change Order or any further changes to the Plans and specifications and, as a
result thereof, Substantial Completion (as hereinafter defined) of the
Improvements is delayed, then for purposes of establishing the Lease
Commencement Date and any other date tied to the date of Substantial Completion,
Substantial Completion shall be deemed to mean the date when Substantial
Completion would have been achieved but for such Tenant delay.

            (b) Landlord shall use reasonable speed and diligence to
Substantially Complete the Improvements, at Landlord's sole cost and expense,
and have the Demised Premises ready for occupancy on or before the anticipated
Lease Commencement Date of October 1, 2004 set forth in Section 1(f). If the
Demised Premises are not Substantially Complete on that date, such failure to
complete shall not in any way affect the obligations of Tenant hereunder except
that the Lease Commencement Date and the Base Rent Commencement Date shall be
postponed one day for each day Substantial Completion is delayed until the
Demised Premises are Substantially Complete, unless the delay is caused by (i)
Tenant's failure to approve or disapprove the Plans and Specifications as set
forth in Section 17(a), (ii) change orders requested by

                                      -9-


Tenant after approval of the Plans and Specifications, (iii) this Lease not
being executed and delivered by Tenant on or before August 17, 2004, (iv) any
delay in construction of the Improvements as a result of the construction of any
Additional Improvements required pursuant to Special Stipulation 1 on Exhibit C
attached hereto, and/or (v) any other act or omission of Tenant or Tenant's
Affiliates (collectively, "Tenant Delays"). No liability whatsoever shall arise
or accrue against Landlord by reason of its failure to deliver or afford
possession of the Demised Premises, and Tenant hereby releases and discharges
Landlord from and of any claims for damage, loss, or injury of every kind
whatsoever as if this Lease were never executed. Notwithstanding the foregoing,
if Landlord fails to achieve Substantial Completion on or before the seventieth
(70th) day following the date on which the Plans and Specifications are
finalized pursuant to subsection 17(a) above, as such date may be extended by
Delay (as hereinafter defined) (the "Outside Improvements Date"), Tenant will
have the right, as its sole and exclusive remedy (subject to the additional
termination remedy set forth hereinbelow), to a credit against Base Rent equal
to $1,000.00 for each day Substantial Completion of the Improvements was delayed
beyond the Outside Improvements Date (excluding any days of Delay, as defined
below) until said credit is fully realized by Tenant. Notwithstanding the
foregoing, in the event that Landlord is unable to Substantially Complete the
Improvements on or before the one hundredth twentieth (120th) day after the
Outside Improvements Date, as extended by Delay, Tenant may, at its option and
as its sole and exclusive remedy, terminate this Lease by written notice to
Landlord given within thirty (30) days following the expiration of such one
hundred twenty (120)-day period (provided that Substantial Completion has not
occurred prior to Landlord's receipt of said termination notice), and thereafter
neither Landlord nor Tenant shall have any further obligation hereunder. For
purposes of this Lease, "Delay" shall mean (i) Tenant Delays, and (ii) such
additional time as is equal to the time lost by Landlord or Landlord's
contractors or suppliers in connection with the construction of the Improvements
due to strikes or other labor troubles (but in no event due to Landlord's
failure to pay such contractors or suppliers as and when due), governmental
restrictions and limitations, war or other national emergency, non-availability
of materials or supplies, delay in transportation, accidents, floods, fire,
damage or other casualties, weather or other conditions, and other matters not
within the reasonable control of Landlord.

            (c) Upon Substantial Completion of the Demised Premises, a
representative of Landlord and a representative of Tenant together shall inspect
the Demised Premises and generate a punchlist of defective or uncompleted items
relating to the completion of construction of the Improvements (the
"Punchlist"). Landlord shall, within a reasonable time after the Punchlist is
prepared and agreed upon by Landlord and Tenant, complete such incomplete work
and remedy such defective work as is set forth on the Punchlist. All
construction work performed by Landlord shall be deemed approved by Tenant in
all respects except for items of said work which are not completed or do not
conform to the Plans and Specifications and which are included on the Punchlist.

            (d) Reserved.

            (e) Landlord hereby warrants to Tenant, which warranty shall survive
for the one (1) year period following the Lease Commencement Date, that (i) the
materials and equipment furnished by Landlord's contractors in the completion of
the Improvements will be of good quality and new, and (ii) such materials and
equipment and the work of such contractors shall comply with all applicable
laws, rules, regulations, building codes and insurance requirements and shall be
completed in accordance with the Plans and Specifications in all material
respects in a good and workmanlike manner and free from defects not inherent in
the quality required or permitted hereunder. This warranty shall exclude damages
or defects caused by Tenant or Tenant's Affiliates, improper or insufficient
maintenance, improper operation, and normal wear and tear under normal usage.

            (f) For purposes of this Lease, the term "Substantial Completion"
(or any variation thereof) shall mean completion of construction of the
Improvements in accordance with the Plans and Specifications, subject only to
Punchlist items established pursuant to Section 17(c), as established by the
delivery by Landlord to Tenant of a certificate of occupancy or its equivalent
(or temporary certificate of occupancy or its equivalent) for the Demised
Premises issued by the appropriate governmental authority, if a certificate is
so required by a governmental authority, or if not so required or if unavailable
because of unfinished work to be performed by Tenant, then by the delivery by
Landlord to Tenant of a Certificate of Substantial Completion for the
Improvements on Standard AIA Form G-704 certified by Landlord's architect. In
the event Substantial Completion is delayed because of Tenant's failure to
approve or disapprove the Plans and Specifications as set forth in Section
17(a), by change orders requested by Tenant after approval of the Plans and
Specifications (including, without limitation, Tenant's request for additional
improvements in accordance with Special Stipulation 2 on Exhibit C hereto) or by
any other delay caused by Tenant or Tenant's Affiliates, then for the purpose of
establishing the Lease Commencement Date and any other date tied to the date of
Substantial Completion, Substantial Completion shall be deemed to mean the date
when Substantial Completion would have been achieved but for such delay.

      18. Tenant Alterations and Additions.

            (a) Tenant shall not make or permit to be made any alterations,
improvements, or additions to the Demised Premises (a "Tenant's Change"),
without first obtaining on each occasion Landlord's prior written consent (which
consent Landlord agrees not to unreasonably withhold) and Lender's prior written
consent (if such consent is required). As part of its approval process, Landlord
may require that Tenant submit plans and specifications to Landlord, for
Landlord's approval or disapproval, which approval shall

                                      -10-


not be unreasonably withheld. All Tenant's Changes shall be performed in
accordance with all legal requirements applicable thereto and in a good and
workmanlike manner with first-class materials. Tenant shall maintain insurance
reasonably satisfactory to Landlord during the construction of all Tenant's
Changes. If Landlord at the time of giving its approval to any Tenant's Change
notifies Tenant in writing that approval is conditioned upon restoration, then
Tenant shall, at its sole cost and expense and at Landlord's option upon the
termination or expiration of this Lease, remove the same and restore the Demised
Premises to its condition prior to such Tenant's Change. Landlord may withhold
consent to any Tenant's Change which is structural in nature or impairs the
structural strength of the Building, in Landlord's sole discretion, or reduces
its value, in Landlord's reasonable discretion. Tenant shall pay the full cost
of any Tenant's Change. Except as otherwise provided herein and in Section 12,
or as otherwise agreed at the time of a Tenant's Change is approved, all
Tenant's Changes and all repairs and all other property attached to or installed
on the Demised Premises by or on behalf of Tenant (excluding racks, conveyers
and related equipment) shall immediately upon completion or installation thereof
be and become part of the Demised Premises and the property of Landlord without
payment therefor by Landlord and shall be surrendered to Landlord upon the
expiration or earlier termination of this Lease.

            (b) To the extent permitted by law, all of Tenant's contracts and
subcontracts for such Tenant's Changes shall provide that no lien shall attach
to or be claimed against the Demised Premises or any interest therein other than
Tenant's leasehold interest in the Demised Premises, and that all subcontracts
let thereunder shall contain the same provision. Whether or not Tenant furnishes
the foregoing, Tenant agrees to hold Landlord harmless from, and defend against
(with legal counsel acceptable to Landlord) all liens, claims and liabilities of
every kind, nature and description which may arise out of or in any way be
connected with such work. Tenant shall not permit the Demised Premises to become
subject to any mechanics', laborers' or materialmen's lien on account of labor,
material or services furnished to Tenant or claimed to have been furnished to
Tenant in connection with work of any character performed or claimed to have
been performed for the Demised Premises by, or at the direction or sufferance of
Tenant and if any such liens are filed against the Demised Premises, Tenant
shall promptly discharge the same; provided, however, that Tenant shall have the
right to contest, in good faith and with reasonable diligence, the validity of
any such lien or claimed lien if Tenant shall give to Landlord, within fifteen
days after demand, such security as may be reasonably satisfactory to Landlord
to assure payment thereof and to prevent any sale, foreclosure, or forfeiture of
Landlord's interest in the Demised Premises by reason of non-payment thereof;
provided further that on final determination of the lien or claim for lien,
Tenant shall immediately pay any judgment rendered, with all proper costs and
charges, and shall have the lien released and any judgment satisfied. If Tenant
fails to post such security or does not diligently contest such lien, Landlord
may, without investigation of the validity of the lien claim, discharge such
lien and Tenant shall reimburse Landlord upon demand for all costs and expenses
incurred in connection therewith, which expenses shall include any attorneys'
fees, paralegals' fees and any and all costs associated therewith, including
litigation through all trial and appellate levels and any costs in posting bond
to effect a discharge or release of the lien. Nothing contained in this Lease
shall be construed as a consent on the part of Landlord to subject the Demised
Premises to liability under any lien law now or hereafter existing of the state
in which the Demised Premises are located.

      19. Services by Landlord. Landlord shall be responsible for providing for
maintenance of the Building Common Area, and, except as required by Section
10(b) hereof or as otherwise specifically provided for herein, Landlord shall be
responsible for no other services whatsoever. Tenant, by payment of Tenant's
share of the Operating Expenses, shall pay Tenant's pro rata share of the
expenses incurred by Landlord hereunder.

      20. Fire and Other Casualty. In the event the Demised Premises are damaged
by fire or other casualty insured by Landlord, Landlord agrees to promptly
restore and repair the Demised Premises at Landlord's expense, including the
Improvements to be insured by Tenant, but only to the extent Landlord receives
insurance proceeds therefor, including the proceeds from the insurance required
to be carried by Tenant on the Improvements (Landlord being responsible for any
deductible under Landlord's insurance policies and the amount of any risk
retained by Landlord to the extent Landlord does not carry coverage at one
hundred percent (100%) of the replacement value of the Building, exclusive of
fixtures and property required to be insured by Tenant under this Lease).
Notwithstanding the foregoing, in the event that the Demised Premises are (i) in
the reasonable opinion of Landlord, so destroyed that they cannot be repaired or
rebuilt within one hundred eighty (180) days after the date of such damage; or
(ii) destroyed by a casualty which is not covered by Landlord's insurance, or if
such casualty is covered by Landlord's insurance but Lender or other party
entitled to insurance proceeds fails to make such proceeds available to Landlord
in an amount sufficient for restoration of the Demised Premises, then Landlord
shall give written notice to Tenant of such determination (the "Determination
Notice") within sixty (60) days of such casualty. Either Landlord or Tenant may
terminate and cancel this Lease effective as of the date of such casualty by
giving written notice to the other party within thirty (30) days after Tenant's
receipt of the Determination Notice. Upon the giving of such termination notice,
all obligations hereunder with respect to periods from and after the effective
date of termination shall thereupon cease and terminate. If no such termination
notice is given, Landlord shall, to the extent of the available insurance
proceeds, make such repair or restoration of the Demised Premises to the
approximate condition existing prior to such casualty, promptly and in such
manner as not to unreasonably interfere with Tenant's use and occupancy of the
Demised Premises (if Tenant is still occupying the Demised Premises). Base Rent
and Additional Rent and all other amounts payable by Tenant hereunder shall
equitably abate during the time that the Demised Premises or any part thereof
are unusable by reason of any such damage thereto.

                                      -11-


      21. Condemnation.

            (a) If all of the Demised Premises is taken or condemned for a
public or quasi-public use, or if a material portion of the Demised Premises is
taken or condemned for a public or quasi-public use and the remaining portion
thereof is not usable by Tenant in the reasonable opinion of Landlord, this
Lease shall terminate as of the earlier of the date title to the condemned real
estate vests in the condemnor or the date on which Tenant is deprived of
possession of the Demised Premises. In such event, the Base Rent herein reserved
and all Additional Rent and other sums payable hereunder shall be apportioned
and paid in full by Tenant to Landlord to that date, all Base Rent, Additional
Rent and other sums payable hereunder prepaid for periods beyond that date shall
forthwith be repaid by Landlord to Tenant, and neither party shall thereafter
have any liability hereunder, except that any obligation or liability of either
party, actual or contingent, under this Lease which has accrued on or prior to
such termination date shall survive.

            (b) If only part of the Demised Premises is taken or condemned for a
public or quasi-public use and this Lease does not terminate pursuant to Section
21(a), Landlord shall, to the extent of the award it receives, restore the
Demised Premises to a condition and to a size as nearly comparable as reasonably
possible to the condition and size thereof immediately prior to the taking, and
there shall be an equitable adjustment to the Base Rent and Additional Rent
based on the actual loss of use of the Demised Premises suffered by Tenant from
the taking.

            (c) Landlord shall be entitled to receive the entire award in any
proceeding with respect to any taking provided for in this Section 21, without
deduction therefrom for any estate vested in Tenant by this Lease, and Tenant
shall receive no part of such award. Nothing herein contained shall be deemed to
prohibit Tenant from making a separate claim, against the condemnor, to the
extent permitted by law, for the value of Tenant's moveable trade fixtures,
machinery and moving expenses, provided that the making of such claim shall not
and does not adversely affect or diminish Landlord's award.

      22. Tenant's Default.

            (a) The occurrence of any one or more of the following events shall
constitute an "Event of Default" of Tenant under this Lease:

                  (i) if Tenant fails to pay Base Rent or any Additional Rent
hereunder as and when such rent becomes due and such failure shall continue for
more than ten (10) days after Landlord gives written notice to Tenant of such
failure; provided, however, that Landlord shall only be required to give such a
notice of default three (3) times in any twelve (12) month period during the
Term, it being understood and agreed that any failure to pay Base Rent or any
Additional Rent on time thereafter within such twelve (12) month period shall
constitute an immediate Event of Default hereunder;

                  (ii) reserved;

                  (iii) if the Demised Premises become deserted or abandoned for
more than twenty (20) consecutive days or if Tenant fails to take possession of
the Demised Premises on the Lease Commencement Date or within twenty (20) days
thereafter;

                  (iv) if Tenant permits to be done anything which creates a
lien upon the Demised Premises and fails to discharge or bond such lien, or post
security with Landlord acceptable to Landlord within thirty (30) days after
receipt by Tenant of written notice thereof;

                  (v) if Tenant fails to maintain in force all policies of
insurance required by this Lease and such failure shall continue for more than
ten (10) business days after Landlord gives Tenant written notice of such
failure;

                  (vi) if any petition is filed by or against Tenant or any
guarantor of this Lease under any present or future section or chapter of the
Bankruptcy Code, or under any similar law or statute of the United States or any
state thereof (which, in the case of an involuntary proceeding, is not
permanently discharged, dismissed, stayed, or vacated, as the case may be,
within ninety (90) days of commencement), or if any order for relief shall be
entered against Tenant or any guarantor of this Lease in any such proceedings;

                  (vii) if Tenant or any guarantor of this Lease becomes
insolvent or makes a transfer in fraud of creditors or makes an assignment for
the benefit of creditors;

                  (viii) if a receiver, custodian, or trustee is appointed for
the Demised Premises or for all or substantially all of the assets of Tenant or
of any guarantor of this Lease, which appointment is not vacated within ninety
(90) days following the date of such appointment; or

                  (ix) if Tenant fails to perform or observe any other term of
this Lease and such failure shall continue for more than thirty (30) days after
Landlord gives Tenant written notice of such failure, or, if such failure cannot
be corrected within such thirty (30) day period, if Tenant does not

                                      -12-


commence to correct such default within said thirty (30) day period and
thereafter diligently prosecute the correction of same to completion within a
reasonable time.

            (b) Upon the occurrence of any one or more Events of Default,
Landlord may, at Landlord's option, without any demand or notice whatsoever
(except as expressly required in this Section 22):

                  (i) Terminate this Lease by giving Tenant notice of
termination, in which event this Lease shall expire and terminate on the date
specified in such notice of termination and all rights of Tenant under this
Lease and in and to the Demised Premises shall terminate. Tenant shall remain
liable for all obligations under this Lease arising up to the date of such
termination, and Tenant shall surrender the Demised Premises to Landlord on the
date specified in such notice; or

                  (ii) Terminate this Lease as provided in Section 22(b)(i)
hereof and recover from Tenant all damages Landlord may incur by reason of
Tenant's default, which shall be calculated at the date of such termination, as
follows: (1) the value of the excess, if any, of (A) the Base Rent, Additional
Rent and all other sums which would have been payable hereunder by Tenant for
the period commencing with the day following the date of such termination and
ending with the Expiration Date had this Lease not been terminated (the
"Remaining Term"), over (B) the aggregate reasonable rental value of the Demised
Premises for the Remaining Term (which excess, if any shall be discounted to
present value at the "Treasury Yield" as defined below for the Remaining Term);
plus (2) the costs of recovering possession of the Demised Premises and all
other expenses incurred by Landlord due to Tenant's default, including, without
limitation, reasonable attorney's fees; plus (3) the unpaid Base Rent and
Additional Rent earned as of the date of termination plus any interest and late
fees due hereunder, plus other sums of money and damages owing on the date of
termination by Tenant to Landlord under this Lease or in connection with the
Demised Premises. The amount as calculated above shall be deemed immediately due
and payable. The payment of the amount calculated in subparagraph (ii)(1) shall
not be deemed a penalty but shall merely constitute payment of liquidated
damages, it being understood and acknowledged by Landlord and Tenant that actual
damages to Landlord are extremely difficult, if not impossible, to ascertain.
"Treasury Yield" shall mean the rate of return in percent per annum of Treasury
Constant Maturities for the length of time specified as published in document
H.15(519) (presently published by the Board of Governors of the U.S. Federal
Reserve System titled "Federal Reserve Statistical Release") for the calendar
week immediately preceding the calendar week in which the termination occurs. If
the rate of return of Treasury Constant Maturities for the calendar week in
question is not published on or before the business day preceding the date of
the Treasury Yield in question is to become effective, then the Treasury Yield
shall be based upon the rate of return of Treasury Constant Maturities for the
length of time specified for the most recent calendar week for which such
publication has occurred. If no rate of return for Treasury Constant Maturities
is published for the specific length of time specified, the Treasury Yield for
such length of time shall be the weighted average of the rates of return of
Treasury Constant Maturities most nearly corresponding to the length of the
applicable period specified. If the publishing of the rate of return of Treasury
Constant Maturities is ever discontinued, then the Treasury Yield shall be based
upon the index which is published by the Board of Governors of the U.S. Federal
Reserve System in replacement thereof or, if no such replacement index is
published, the index which, in Landlord's reasonable determination, most nearly
corresponds to the rate of return of Treasury Constant Maturities. In
determining the aggregate reasonable rental value pursuant to subparagraph
(ii)(1)(B) above, the parties hereby agree that, at the time Landlord seeks to
enforce this remedy, all relevant factors should be considered, including, but
not limited to, (a) the length of time remaining in the Remaining Term, (b) the
then current market conditions in the general area in which the Building is
located, (c) the likelihood of reletting the Demised Premises for a period of
time equal to the remainder of the Term, (d) the net effective rental rates then
being obtained by landlords for similar type space of similar size in similar
type buildings in the general area in which the Building is located, (e) the
vacancy levels in the general area in which the Building is located, (f) current
levels of new construction that will be completed during the Remaining Term and
how this construction will likely affect vacancy rates and rental rates and (g)
inflation; or

                  (iii) without terminating this Lease, declare immediately due
and payable the sum of the following: (1) the present value (calculated using
the "Treasury Yield") of all Base Rent and Additional Rent due and coming due
under this Lease for the entire remaining Term (as if by the terms of this Lease
they were payable in advance), plus (2) the cost of recovering and reletting the
Demised Premises and all other expenses incurred by Landlord in connection with
Tenant's default, plus (3) any unpaid Base Rent, Additional Rent and other
rentals, charges, assessments and other sums owing by Tenant to Landlord under
this Lease or in connection with the Demised Premises as of the date this
provision is invoked by Landlord, plus (4) interest on all such amounts from the
date due at the Interest Rate, and Landlord may immediately proceed to distrain,
collect, or bring action for such sum, or may file a proof of claim in any
bankruptcy or insolvency proceedings to enforce payment thereof; provided,
however, that such payment shall not be deemed a penalty or liquidated damages,
but shall merely constitute payment in advance of all Base Rent and Additional
Rent payable hereunder throughout the Term, and provided further, however, that
upon Landlord receiving such payment, Tenant shall be entitled to receive from
Landlord all rents received by Landlord from other assignees, tenants and
subtenants on account of said Demised Premises during the remainder of the Term
(provided that the monies to which Tenant shall so become entitled shall in no
event exceed the entire amount actually paid by Tenant to Landlord pursuant to
this subparagraph (iii)), less all costs, expenses and attorneys' fees of
Landlord incurred but not yet reimbursed by Tenant in connection with recovering
and reletting the Demised Premises; or

                                      -13-


                  (iv) Without terminating this Lease, in its own name but as
agent for Tenant, enter into and upon and take possession of the Demised
Premises or any part thereof. Any property remaining in the Demised Premises may
be removed and stored in a warehouse or elsewhere at the cost of, and for the
account of, Tenant without Landlord being deemed guilty of trespass or becoming
liable for any loss or damage which may be occasioned thereby unless caused by
Landlord's negligence, provided, however, that to the extent any property
contained in the Demised Premises is owned by Philip Morris, Landlord shall give
Philip Morris five (5) days prior written notice of such removal, provided that
Philip Morris shall have executed and delivered for the benefit of Landlord an
entry and indemnification agreement in form reasonably acceptable to Landlord.
Thereafter, Landlord may, but shall not be obligated to, lease to a third party
the Demised Premises or any portion thereof as the agent of Tenant upon such
terms and conditions as Landlord may deem necessary or desirable in order to
relet the Demised Premises. The remainder of any rentals received by Landlord
from such reletting, after the payment of any indebtedness due hereunder from
Tenant to Landlord, and the payment of any costs and expenses of such reletting,
shall be held by Landlord to the extent of and for application in payment of
future rent owed by Tenant, if any, as the same may become due and payable
hereunder. If such rentals received from such reletting shall at any time or
from time to time be less than sufficient to pay to Landlord the entire sums
then due from Tenant hereunder, Tenant shall pay any such deficiency to
Landlord. Notwithstanding any such reletting without termination, Landlord may
at any time thereafter elect to terminate this Lease for any such previous
default provided same has not been cured; or

                  (v) Without terminating this Lease, and with or without notice
to Tenant, enter into and upon the Demised Premises and, without being liable
for prosecution or any claim for damages therefor, maintain the Demised Premises
and repair or replace any damage thereto or do anything or make any payment for
which Tenant is responsible hereunder. Tenant shall reimburse Landlord
immediately upon demand for any expenses which Landlord incurs in thus effecting
Tenant's compliance under this Lease and Landlord shall not be liable to Tenant
for any damages with respect thereto; or

                  (vi) Without liability to Tenant or any other party and
without constituting a constructive or actual eviction, suspend or discontinue
furnishing or rendering to Tenant any property, material, labor, utilities or
other service, wherever Landlord is obligated to furnish or render the same as
long as an Event of Default exists under this Lease; or

                  (vii) With or without terminating this Lease, allow the
Demised Premises to remain unoccupied and collect rent from Tenant as it comes
due; or

                  (viii) Pursue such other remedies as are available at law or
equity.

            (c) If this Lease shall terminate as a result of or while there
exists an Event of Default hereunder, any funds of Tenant held by Landlord may
be applied by Landlord to any damages payable by Tenant (whether provided for
herein or by law) as a result of such termination or default.

            (d) Neither the commencement of any action or proceeding, nor the
settlement thereof, nor entry of judgment thereon shall bar Landlord from
bringing subsequent actions or proceedings from time to time, nor shall the
failure to include in any action or proceeding any sum or sums then due be a bar
to the maintenance of any subsequent actions or proceedings for the recovery of
such sum or sums so omitted.

            (e) No agreement to accept a surrender of the Demised Premises and
no act or omission by Landlord or Landlord's agents during the Term shall
constitute an acceptance or surrender of the Demised Premises unless made in
writing and signed by Landlord. No re-entry or taking possession of the Demised
Premises by Landlord shall constitute an election by Landlord to terminate this
Lease unless a written notice of such intention is given to Tenant. No provision
of this Lease shall be deemed to have been waived by either party unless such
waiver is in writing and signed by the party making such waiver. Landlord's
acceptance of Base Rent or Additional Rent in full or in part following an Event
of Default hereunder shall not be construed as a waiver of such Event of
Default. No custom or practice which may grow up between the parties in
connection with the terms of this Lease shall be construed to waive or lessen
either party's right to insist upon strict performance of the terms of this
Lease, without a written notice thereof to the other party.

            (f) If an Event of Default shall occur, Tenant shall pay to
Landlord, on demand, all reasonable expenses incurred by Landlord as a result
thereof, including reasonable attorneys' fees, court costs and expenses actually
incurred.

      23. Landlord's Right of Entry. Tenant agrees to permit Landlord and the
authorized representatives of Landlord and of Lender to enter upon the Demised
Premises at all reasonable times for the purposes of inspecting the Demised
Premises and Tenant's compliance with this Lease, and making any necessary
repairs thereto; provided that, except in the case of an emergency, Landlord
shall give Tenant reasonable prior notice of Landlord's intended entry upon the
Demised Premises. Nothing herein shall imply any duty upon the part of Landlord
to do any work required of Tenant hereunder, and the performance thereof by
Landlord shall not constitute a waiver of Tenant's default in failing to perform
it. Landlord shall not be liable for inconvenience, annoyance, disturbance or
other damage to Tenant by reason

                                      -14-


of making such repairs or the performance of such work in the Demised Premises
or on account of bringing materials, supplies and equipment into or through the
Demised Premises during the course thereof, and the obligations of Tenant under
this Lease shall not thereby be affected; provided, however, that Landlord shall
use reasonable efforts not to disturb or otherwise interfere with Tenant's
operations in the Demised Premises in making such repairs or performing such
work. Landlord also shall have the right to enter the Demised Premises at all
reasonable times to exhibit the Demised Premises to any prospective purchaser,
mortgagee or, during the last six (6) months of the Term, tenant thereof.

      24. Lender's Rights.

            (a) For purposes of this Lease:

                  (i) "Lender" as used herein means the holder of a Mortgage;

                  (ii) "Mortgage" as used herein means any or all mortgages,
deeds to secure debt, deeds of trust or other instruments in the nature thereof
which may now or hereafter affect or encumber Landlord's title to the Demised
Premises, and any amendments, modifications, extensions or renewals thereof.

            (b) Subject to the receipt by Tenant of a non-disturbance agreement,
substantially in the form of Exhibit F attached hereto, this Lease and all
rights of Tenant hereunder are and shall be subject and subordinate to the lien
and security title of any Mortgage. Tenant recognizes and acknowledges the right
of Lender to foreclose or exercise the power of sale against the Demised
Premises under any Mortgage.

            (c) Tenant shall, in confirmation of the subordination set forth in
Section 24(b) and notwithstanding the fact that such subordination is
self-operative, and no further instrument or subordination shall be necessary,
upon demand, at any time or times, execute, acknowledge, and deliver to Landlord
or to Lender any and all reasonable instruments requested by either of them to
evidence such subordination which are consistent with the form of Exhibit F
attached hereto.

            (d) At any time during the Term, Lender may, by written notice to
Tenant, make this Lease superior to the lien of its Mortgage. If requested by
Lender, Tenant shall, upon demand, at any time or times, execute, acknowledge,
and deliver to Lender, any and all reasonable instruments that may be necessary
to make this Lease superior to the lien of any Mortgage.

            (e) If Lender (or Lender's nominee, or other purchaser at
foreclosure) shall hereafter succeed to the rights of Landlord under this Lease,
whether through possession or foreclosure action or delivery of a new lease,
Tenant shall, if requested by such successor, attorn to and recognize such
successor as Tenant's landlord under this Lease without change in the terms and
provisions of this Lease and shall promptly execute and deliver any reasonable
instrument that may be necessary to evidence such attornment, provided that such
successor shall not be bound by (i) any payment of Base Rent or Additional Rent
for more than one month in advance, except prepayments in the nature of security
for the performance by Tenant of its obligations under this Lease, and then only
if such prepayments have been deposited with and are under the control of such
successor, (ii) any provision of any amendment to the Lease to which Lender has
not consented, (iii) the defaults of any prior landlord under this Lease, or
(iv) any offset rights arising out of the defaults of any prior landlord under
this Lease. Upon such attornment, this Lease shall continue in full force and
effect as a direct lease between each successor landlord and Tenant, subject to
all of the terms, covenants and conditions of this Lease.

            (f) In the event there is a Mortgage at any time during the Term,
Landlord shall, at Tenant's request, use reasonable efforts to cause the Lender
to enter into a subordination, nondisturbance and attornment agreement with
Tenant reasonably satisfactory to Tenant and consistent with this Section 24.

      25. Estoppel Certificate and Financial Statement.

            (a) Landlord and Tenant agree, at any time, and from time to time,
within ten (10) business days after written request of the other, to execute,
acknowledge and deliver a statement in writing in recordable form to the
requesting party and/or its designee certifying that: (i) this Lease is
unmodified and in full force and effect (or, if there have been modifications,
that the same is in full force and effect, as modified), (ii) the dates to which
Base Rent, Additional Rent and other charges have been paid, (iii) whether or
not, to the best of its knowledge, there exists any failure by the requesting
party to perform any term, covenant or condition contained in this Lease, and,
if so, specifying each such failure, (iv) (if such be the case) Tenant has
unconditionally accepted the Demised Premises and is conducting its business
therein, and (v) and as to such additional matters as may be requested, it being
intended that any such statement delivered pursuant hereto may be relied upon by
the requesting party and by any purchaser of title to the Demised Premises or by
any mortgagee or any assignee thereof or any party to any sale-leaseback of the
Demised Premises, or the landlord under a ground lease affecting the Demised
Premises.

            (b) If Landlord desires to finance, refinance, or sell the Building,
Tenant and all guarantors of Tenant's obligations hereunder, if any, shall
deliver to any potential lender or purchaser designated by Landlord such
financial statements of Tenant and such guarantors as may be reasonably

                                      -15-


required by such lender or purchaser, including but not limited to Tenant's
financial statements for the past 3 years; provided, however, that if Priority
Fulfillment Services, Inc. is the Tenant at the time that Landlord desires to
finance, refinance, or sell the Building, then only the guarantors of such
Tenant's obligations hereunder shall be required to provide their financial
statements, in the manner described in this subsection (b), to any such lender
or purchaser. All such financial statements shall be received by Landlord and
such lender or purchaser in confidence and shall be used only for the purposes
herein set forth.

      26. Landlord Liability. NO OWNER OF THE DEMISED PREMISES, WHETHER OR NOT
NAMED HEREIN, SHALL HAVE LIABILITY HEREUNDER AFTER IT CEASES TO HOLD TITLE TO
THE DEMISED PREMISES. NEITHER LANDLORD NOR ANY OFFICER, DIRECTOR, SHAREHOLDER,
PARTNER OR PRINCIPAL OF LANDLORD, WHETHER DISCLOSED OR UNDISCLOSED, SHALL BE
UNDER ANY PERSONAL LIABILITY WITH RESPECT TO ANY OF THE PROVISIONS OF THIS
LEASE. IN THE EVENT LANDLORD IS IN BREACH OR DEFAULT WITH RESPECT TO LANDLORD'S
OBLIGATIONS OR OTHERWISE UNDER THIS LEASE, TENANT SHALL LOOK SOLELY TO THE
EQUITY OF LANDLORD IN THE BUILDING FOR THE SATISFACTION OF TENANT'S REMEDIES. IT
IS EXPRESSLY UNDERSTOOD AND AGREED THAT LANDLORD'S LIABILITY UNDER THE TERMS,
COVENANTS, CONDITIONS, WARRANTIES AND OBLIGATIONS OF THIS LEASE SHALL IN NO
EVENT EXCEED LANDLORD'S EQUITY INTEREST IN THE BUILDING.

      27. Notices. Any notice required or permitted to be given or served by
either party to this Lease shall be deemed given when made in writing, and
either (i) personally delivered, (ii) deposited with the United States Postal
Service, postage prepaid, by registered or certified mail, return receipt
requested, or (iii) delivered by a nationally recognized overnight delivery
service providing proof of delivery, properly addressed to the address set forth
in Section 1(m) (as the same may be changed by giving written notice of the
aforesaid in accordance with this Section 27). If any notice mailed is properly
addressed with appropriate postage but returned for any reason, such notice
shall be deemed to be effective notice and to be given on the date of mailing.
Any notice required or permitted to be given or served by Landlord or Tenant to
this Lease may be given by either an agent, law firm or attorney acting on
behalf of Landlord or Tenant.

      28. Brokers. Tenant represents and warrants to Landlord that, except for
those parties set forth in Section 1(o) (the "Brokers"), Tenant has not engaged
or had any conversations or negotiations with any broker, finder or other third
party concerning the leasing of the Demised Premises to Tenant who would be
entitled to any commission or fee based on the execution of this Lease. Tenant
hereby further represents and warrants to Landlord that Tenant is not receiving
and is not entitled to receive any rebate, payment or other remuneration, either
directly or indirectly, from the Brokers, and that it is not otherwise sharing
in or entitled to share in any commission or fee paid to the Brokers by Landlord
or any other party in connection with the execution of this Lease, either
directly or indirectly. Tenant hereby indemnifies Landlord against and from any
claims for any brokerage commissions (except those payable to the Brokers, all
of which are payable by Landlord pursuant to a separate agreement) and all
costs, expenses and liabilities in connection therewith, including, without
limitation, reasonable attorneys' fees and expenses, for any breach of the
foregoing. Landlord represents and warrants to Tenant that, except for those
parties set forth in Section 1(o) (the "Brokers"), Landlord has not engaged or
had any conversations or negotiations with any broker, finder or other third
party concerning the leasing of the Demised Premises to Tenant who would be
entitled to any commission or fee based on the execution of this Lease. Landlord
hereby further represents and warrants to Tenant that Landlord, apart from the
standard brokerage commission, is not receiving and is not entitled to receive
any rebate, payment or other remuneration, either directly or indirectly, from
the Brokers. Landlord hereby indemnifies Tenant against and from any claims for
any brokerage commissions (except those payable to the Brokers, all of which are
payable by Landlord pursuant to a separate agreement) and all costs, expenses
and liabilities in connection therewith, including, without limitation,
reasonable attorneys' fees and expenses, for any breach of the foregoing. The
foregoing indemnification shall survive the termination of this Lease for any
reason.

      29. Assignment and Subleasing.

            (a) Tenant may not assign, mortgage, pledge, encumber or otherwise
transfer this Lease, or any interest hereunder, or sublet the Demised Premises,
in whole or in part, without on each occasion first obtaining the prior express
written consent of Landlord, which consent Landlord shall not unreasonably
withhold, delay or condition. Any change in control of Tenant resulting from a
merger, consolidation, stock transfer or asset sale shall be considered an
assignment or transfer which requires Landlord's prior written consent. For
purposes of this Section 29, by way of example and not limitation, Landlord
shall be deemed to have reasonably withheld consent if Landlord determines (i)
that the prospective assignee or subtenant is not of a financial strength
similar to Tenant as of the Effective Lease Date, (ii) that the prospective
assignee or subtenant has a poor business reputation, (iii) that the proposed
use of the Demised Premises by such prospective assignee or subtenant
(including, without limitation, a use involving the use or handling of Hazardous
Substances) will negatively affect the value or marketability of the Building or
the Project or (iv) that the prospective assignee or subtenant is a current
tenant in the Project or is a bona-fide third-party prospective tenant.

            (b) Notwithstanding Section 29(a) above, provided that there then
exists no Event of Default under this Lease which remains uncured, Tenant shall
have the right, upon forty-five (45) days' prior written notice to Landlord but
without Landlord's prior consent, to assign this Lease to Philip Morris

                                      -16-


USA, Inc. or to Altria Group, Inc. (either being referred to herein as a
"Pre-Approved Assignee"), provided that upon any such assignment the
Pre-Approved Assignee assumes all of the obligations and liabilities of Tenant
arising under this Lease and shall then have assets, capitalization, tangible
net worth and creditworthiness at least equal to the assets, capitalization,
tangible net worth and creditworthiness of the Guarantor as of the Effective
Lease Date as determined by GAAP. For the purpose hereof, "tangible net worth"
shall mean the excess of the value of tangible assets (i.e. assets excluding
those which are intangible such as goodwill, patents and trademarks) over
liabilities. Following an assignment to a Pre-Approved Assignee as described
hereinabove, such Pre-Approved Assignee may assign this Lease to: (a) an
affiliate of such Pre-Approved Assignee, or (b) as part of a merger or
consolidation or to an entity which acquires the business which is operated by
such Pre-Approved Assignee in the Demised Premises, without Landlord's consent,
but with notice to Landlord, provided such successor entity under (a) or (b)
above assumes the obligations of such Pre-Approved Assignee in writing, and
provided, further, that no such further assignment by such Pre-Approved Assignee
shall relieve such Pre-Approved Assignee from or reduce its obligations under
this Lease. Any sublease or assignment pursuant to and in compliance with this
subsection (b) shall be referred to herein as a "Pre-Approved Assignment". The
provisions of subsection 29(c) below shall not apply to any Pre-Approved
Assignment; provided, however, that the written notice given by Tenant to
Landlord pursuant to this subsection 29(b) must contain sufficient information
and documentation to enable Landlord to confirm that all of the requirements of
this subsection 29(b) have been satisfied.

            (c) If Tenant desires to assign this Lease or sublet the Demised
Premises or any part thereof, other than in connection with a Pre-Approved
Assignment, Tenant shall give Landlord written notice no later than forty-five
(45) days in advance of the proposed effective date of any proposed assignment
or sublease, specifying (i) the name and business of the proposed assignee or
sublessee, (ii) the amount and location of the space within the Demised Premises
proposed to be subleased, (iii) the proposed effective date and duration of the
assignment or subletting and (iv) the proposed rent or consideration to be paid
to Tenant by such assignee or sublessee. Tenant shall promptly supply Landlord
with financial statements and other information as Landlord may reasonably
request to evaluate the proposed assignment or sublease. Landlord shall have a
period of thirty (30) days following receipt of such notice and other
information requested by Landlord within which to notify Tenant in writing that
Landlord elects: (i) to terminate this Lease as to the space so affected as of
the proposed effective date set forth in Tenant's notice, in which event Tenant
shall be relieved of all further obligations hereunder as to such space, except
for obligations under Sections 11 and 28 and all other provisions of this Lease
which expressly survive the termination hereof; or (ii) to permit Tenant to
assign or sublet such space; provided, however, that, if the rent rate agreed
upon between Tenant and its proposed subtenant is greater than the rent rate
that Tenant must pay Landlord hereunder for that portion of the Demised
Premises, or if any consideration shall be promised to or received by Tenant in
consideration of such proposed assignment or sublease (in addition to rent),
then one half (1/2) of such excess rent and other consideration (after payment
of brokerage commissions, attorneys' fees and other disbursements reasonably
incurred by Tenant for such assignment and subletting if acceptable evidence of
such disbursements is delivered to Landlord) shall be considered Additional Rent
owed by Tenant to Landlord, and shall be paid by Tenant to Landlord, in the case
of excess rent, in the same manner that Tenant pays Base Rent and, in the case
of any other consideration, within ten (10) business days after receipt thereof
by Tenant; or (iii) to refuse, in Landlord's reasonable discretion (taking into
account all relevant factors including, without limitation, the factors set
forth in the Section 29(a) above), to consent to Tenant's assignment or
subleasing of such space and to continue this Lease in full force and effect as
to the entire Demised Premises. If Landlord should fail to notify Tenant in
writing of such election within the aforesaid thirty (30) day period, Landlord
shall be deemed to have elected option (iii) above. Tenant agrees to reimburse
Landlord for reasonable legal fees and any other reasonable costs incurred by
Landlord in connection with any requested assignment or subletting, and such
payments shall not be deducted from the Additional Rent owed to Landlord
pursuant to subsection (ii) above. Tenant shall deliver to Landlord copies of
all documents executed in connection with any permitted assignment or
subletting, which documents shall be in form and substance reasonably
satisfactory to Landlord and which shall require such assignee to assume
performance of all terms of this Lease on Tenant's part to be performed.

            (d) No acceptance by Landlord of any rent or any other sum of money
from any assignee, sublessee or other category of transferee shall be deemed to
constitute Landlord's consent to any assignment, sublease, or transfer.
Permitted subtenants or assignees shall become liable directly to Landlord for
all obligations of Tenant hereunder, without, however, relieving Tenant of any
of its liability hereunder. No such assignment, subletting, occupancy or
collection shall be deemed the acceptance of the assignee, tenant or occupant,
as Tenant, or a release of Tenant from the further performance by Tenant of
Tenant's obligations under this Lease. Any assignment or sublease consented to
by Landlord shall not relieve Tenant (or its assignee) from obtaining Landlord's
consent to any subsequent assignment or sublease.

      30. Termination or Expiration.

      (a) No termination of this Lease prior to the normal ending thereof, by
lapse of time or otherwise, shall affect Landlord's right to collect rent for
the period prior to termination thereof. Notwithstanding anything to the
contrary contained herein, if this Lease is rejected in any bankruptcy action or
proceeding filed by or against Tenant, and the effective date of rejection is on
or after the date upon

                                      -17-


which that month's Rent is due and owing, then the Rent owing under this Lease
for the month during which the effective date of such rejection occurs shall be
due and payable in full and shall not be prorated.

            (b) At the expiration or earlier termination of the Term of this
Lease, Tenant shall surrender the Demised Premises and all improvements,
alterations and additions thereto, and keys therefor to Landlord, clean and
neat, and in the same condition as at the Lease Commencement Date, excepting
normal wear and tear, condemnation and casualty other than that required to be
insured against by Tenant hereunder.

            (c) If Tenant remains in possession of the Demised Premises after
expiration of the Term, with or without Landlord's acquiescence and without any
express agreement of the parties, Tenant shall be a tenant-at-sufferance at the
greater of (i) one hundred fifty percent (150%) of the then current fair market
base rental value of the Demised Premises or (ii) one hundred fifty percent
(150%) of the Base Rent in effect at the end of the Term. Tenant shall also
continue to pay all other Additional Rent due hereunder. Notwithstanding the
foregoing, there shall be no renewal of this Lease by operation of law or
otherwise, and, in addition to and without limiting such rights and remedies as
may be available to Landlord at law or in equity as a result of Tenant's holding
over beyond the Term, Landlord shall be entitled to exercise any and all rights
and remedies available to Landlord in respect of an Event of Default hereunder
(it being agreed that any such holdover shall be deemed an immediate Event of
Default hereunder). In addition to the foregoing, Tenant shall be liable for all
damages, direct and consequential, incurred by Landlord as a result of such
holdover. No receipt of money by Landlord from Tenant after the termination of
this Lease or Tenant's right of possession of the Demised Premises shall
reinstate, continue or extend the Term or Tenant's right of possession. The
provisions of this subsection 30(c) shall survive the expiration of the Term.

      31. Reserved.

      32. Late Payments. In the event any installment of rent, inclusive of Base
Rent, or Additional Rent or other sums due hereunder, if any, is not paid within
five (5) days after the due date therefor, Tenant shall pay an administrative
fee (the "Administrative Fee") equal to five percent (5%) of such past due
amount, plus interest on the amount past due at the lesser of (i) the maximum
interest rate allowed by law or (ii) a rate of fifteen percent (15%) per annum
(the "Interest Rate"), in order to defray the additional expenses incurred by
Landlord as a result of such late payment. The Administrative Fee is in addition
to, and not in lieu of, any of the Landlord's remedies hereunder.

      33. Rules and Regulations. Tenant agrees to abide by the rules and
regulations set forth on Exhibit D attached hereto, as well as other reasonable
rules and regulations reasonably promulgated by Landlord from time to time, so
long as such rules and regulations are uniformly enforced against all tenants of
Landlord in the Building and not intended to modify or amend the basic Lease
terms, or that would materially and adversely impact Tenant's cost or ability to
operate.

      34. Quiet Enjoyment. So long as Tenant pays its rent and performs its
obligations hereunder, Landlord agrees that Tenant shall have the right to
quietly use and enjoy the Demised Premises for the Term free from the
disturbance by Landlord or any party by, through or under Landlord.

      35. Miscellaneous.

            (a) The parties hereto hereby covenant and agree that Landlord shall
receive the Base Rent, Additional Rent and all other sums payable by Tenant
hereinabove provided as net income from the Demised Premises, without any
abatement (except as set forth in Section 20 and Section 21), reduction,
set-off, counterclaim, defense or deduction whatsoever.

            (b) If any clause or provision of this Lease is determined to be
illegal, invalid or unenforceable under present or future laws effective during
the Term, then and in that event, it is the intention of the parties hereto that
the remainder of this Lease shall not be affected thereby, and that in lieu of
such illegal, invalid or unenforceable clause or provision there shall be
substituted a clause or provision as similar in terms to such illegal, invalid
or unenforceable clause or provision as may be possible and be legal, valid and
enforceable.

            (c) All rights, powers, and privileges conferred hereunder upon the
parties hereto shall be cumulative, but not restrictive to those given by law.

            (d) Time is of the essence of this Lease.

            (e) No failure of Landlord or Tenant to exercise any power given
Landlord or Tenant hereunder or to insist upon strict compliance by Landlord or
Tenant with its obligations hereunder, and no custom or practice of the parties
at variance with the terms hereof shall constitute a waiver of Landlord's or
Tenant's rights to demand exact compliance with the terms hereof.

            (f) This Lease contains the entire agreement of the parties hereto
as to the subject matter of this Lease and no prior representations,
inducements, letters of intent, promises or agreements, oral or otherwise,
between the parties not embodied herein shall be of any force and effect. Any
future

                                      -18-


amendment to this Lease must be in writing and signed by the parties hereto. The
masculine (or neuter) pronoun, singular number shall include the masculine,
feminine and neuter gender and the singular and plural number.

            (g) This contract shall create the relationship of landlord and
tenant between Landlord and Tenant; no estate shall pass out of Landlord; Tenant
has a usufruct, not subject to levy and sale, and not assignable by Tenant
except as expressly set forth herein.

            (h) Under no circumstances shall Tenant have the right to record
this Lease or a memorandum thereof.

            (i) The captions of this Lease are for convenience only and are not
a part of this Lease, and do not in any way define, limit, describe or amplify
the terms or provisions of this Lease or the scope or intent thereof.

            (j) This Lease may be executed in multiple counterparts, each of
which shall constitute an original, but all of which taken together shall
constitute one and the same agreement.

            (k) This Lease shall be interpreted under the laws of the State
where the Demised Premises are located.

            (l) The parties acknowledge that this Lease is the result of
negotiations between the parties, and in construing any ambiguity hereunder no
presumption shall be made in favor of either party. No inference shall be made
from any item which has been stricken from this Lease other than the deletion of
such item.

      36. Special Stipulations. The Special Stipulations, if any, attached
hereto as Exhibit C, are incorporated herein and made a part hereof, and to the
extent of any conflict between the foregoing provisions and the Special
Stipulations, the Special Stipulations shall govern and control.

      37. Effective Lease Date. For purposes of this Lease, the term "Effective
Lease Date" shall mean the later date upon which this Lease is signed by
Landlord and Tenant.

      38. Authority. If Tenant is not a natural person, Tenant shall cause its
corporate secretary or general partner, as applicable, to execute the
certificate attached hereto as Exhibit E. Tenant is authorized by all required
corporate or partnership action to enter into this Lease and the individual(s)
signing this Lease on behalf of Tenant are each authorized to bind Tenant to its
terms.

      39. No Offer Until Executed. The submission of this Lease by Landlord to
Tenant for examination or consideration does not constitute an offer by Landlord
to lease the Demised Premises and this Lease shall become effective, if at all,
only upon the execution and delivery thereof by Landlord and Tenant. Execution
and delivery of this Lease by Tenant to Landlord constitutes an offer to lease
the Demised Premises on the terms contained herein. The offer by Tenant will be
irrevocable until 6:00 p.m. Eastern time for fifteen (15) days after the date of
execution of this Lease by Tenant and delivery to Landlord. This Lease may be
executed and delivered by facsimile or electronic media and in multiple
counterparts.

      IN WITNESS WHEREOF, the parties hereto have hereunto set their hands under
seals, the day and year first above written.

                                     LANDLORD:

Date:__________________

                                     INDUSTRIAL DEVELOPMENTS INTERNATIONAL, a
                                     delaware corporation

                                     By:_____________________________________
                                          Name:______________________________
                                          Title:_____________________________

                                     Attest:_________________________________
                                            Name:____________________________
                                            Title:___________________________

                                                       [CORPORATE SEAL]

                                      -19-


                                     TENANT:

Date:__________________              PRIORITY FULFILLMENT SERVICES, INC., a
                                     delaware corporation

                                     By:_____________________________________
                                          Name:______________________________
                                          Title:_____________________________

                                     Attest:_________________________________
                                            Name:____________________________
                                            Title:___________________________

                                                       [CORPORATE SEAL]

                                      -20-


                                   ATTESTATION

Landlord - Corporation:

STATE OF_________________

COUNTY OF________________

      BEFORE ME, a Notary Public in and for said County, personally
appeared__________________________ and , known to me to be the person(s) who, as
___________________________________ and ____________________________________,
respectively, of Industrial Developments International, Inc., the corporation
which executed the foregoing instrument in its capacity as Landlord, signed the
same, and acknowledged to me that they did so sign said instrument in the name
and upon behalf of said corporation as officers of said corporation, that the
same is their free act and deed as such officers, respectively, and they were
duly authorized thereunto by its board of directors; and that the seal affixed
to said instrument is the corporate seal of said corporation.

      IN TESTIMONY WHEREOF, I have hereunto subscribed my name, and affixed my
official seal, this__day of_____________________, 20____.

                                ________________________________________
                                Notary Public
                                My Commission Expires:

Tenant - Corporation:

STATE OF_________________

COUNTY OF________________

      BEFORE ME, a Notary Public in and for said County, personally
appeared__________________________ and , known to me to be the person(s) who, as
___________________________________ and ____________________________________,
respectively, of Priority Fulfillment Services, Inc., the corporation which
executed the foregoing instrument in its capacity as Tenant, signed the same,
and acknowledged to me that they did so sign said instrument in the name and
upon behalf of said corporation as officers of said corporation, that the same
is their free act and deed as such officers, respectively, and they were duly
authorized thereunto by its board of directors; and that the seal affixed to
said instrument is the corporate seal of said corporation.

      IN TESTIMONY WHEREOF, I have hereunto subscribed my name, and affixed my
official seal, this_day of___________________, 20___.

                                ________________________________________
                                Notary Public

                                My Commission Expires:

                                      -21-


LEASE INDEX



Section            Subject
- -------            -------
               
   1               Basic Lease Provisions

   2               Demised Premises

   3               Term

   4               Base Rent

   5               Security Deposit

   6               Operating Expenses and Additional Rent

   7               Use of Demised Premises

   8               Insurance

   9               Utilities

  10               Maintenance and Repairs

  11               Tenant's Personal Property; Indemnity

  12               Tenant's Fixtures

  13               Signs

  14               Reserved

  15               Governmental Regulations

  16               Environmental Matters

  17               Construction of Demised Premises

  18               Tenant Alterations and Additions

  19               Services by Landlord

  20               Fire and Other Casualty

  21               Condemnation

  22               Tenant's Default

  23               Landlord's Right of Entry

  24               Lender's Rights

  25               Estoppel Certificate and Financial Statement

  26               Landlord's Liability

  27               Notices

  28               Brokers

  29               Assignment and Subleasing

  30               Termination or Expiration

  31               Reserved 32    Late Payments

  33               Rules and Regulations

  34               Quiet Enjoyment

  35               Miscellaneous

  36               Special Stipulations

  37               Effective Lease Date

  38               Authority

  39               No Offer Until Executed


Exhibit "A"  Demised Premises
Exhibit "A-1"  Parking
Exhibit "A-2"  Access
Exhibit "A-3"  Adjacent Space
Exhibit "B"  Preliminary Plans and Specifications/Work
Exhibit "C"  Special Stipulations
Exhibit "D"  Rules and Regulations
Exhibit "E"  Certificate of Authority
Exhibit "F"  SNDA
Exhibit "G" Guaranty

                                                                    EXHIBIT 10.2

                                    GUARANTY

      THIS GUARANTY (this "Guaranty"), made and entered into this ___ day of
August, 2004, by PFSWeb, Inc., a Delaware corporation (hereinafter referred to
as "Guarantor") in favor of Industrial Developments International, Inc., a
Delaware corporation (hereinafter called "Landlord") and any subsequent owner or
holder of the Lease (as hereinafter defined).

                                R E C I T A L S :

      Landlord has entered into an Industrial Lease Agreement ("Lease") with
      Priority Fulfillment Services, Inc., a Delaware corporation ("Tenant"), in
      which Guarantor has a direct or indirect financial interest or
      affiliation, which Lease was executed by Tenant on August __, 2004, and
      provides for the leasing to Tenant of approximately 434,900 square feet of
      space located in Building E, Airways Distribution Center, DeSoto County,
      Mississippi; and

      Landlord will not enter into the Lease unless Guarantor guarantees the
      obligations of Tenant under the Lease as set forth herein; and

      Guarantor derives benefits from the Lease to Tenant.

      NOW THEREFORE, as a material inducement to Landlord to enter into the
Lease with Tenant, and for other good and valuable consideration, the receipt
and sufficiency of all of which are hereby acknowledged and confessed, Guarantor
does hereby, irrevocably and unconditionally, warrant and represent unto and
covenant and agree with Landlord as follows:

      1. Guaranty - Guarantor hereby unconditionally guarantees the full,
faithful and punctual payment of all rent, additional rent and other amounts due
to Landlord under the Lease by Tenant and the full, faithful and punctual
performance by Tenant of all the terms, provisions and conditions of the Lease,
together with interest or late charges on all of the foregoing as provided in
the Lease and all other costs and expenses of collection (all of the foregoing
sometimes hereinafter referred to as the "Obligations").

      2. No Discharge - This Guaranty by Guarantor shall continue for the
benefit of Landlord notwithstanding (a) any extension, modification, amendment
or alteration of the Lease entered into by Tenant, (b) any assignment of the
Lease, with or without the consent of Landlord, (c) any bankruptcy,
reorganization, or insolvency of Tenant or any successor or assignee thereof, or
(d) any release, extension or modification of the liability of Tenant or any
other party liable under the Lease or any other guaranty of the Lease. This
Guaranty shall in all respects be a continuing, absolute and unconditional
guaranty of payment and performance and shall remain in full force and effect
notwithstanding, without limitation, the death or incompetency of Guarantor or
Tenant, or any proceeding, voluntary or involuntary, involving the bankruptcy,
insolvency, receivership, reorganization, liquidation or arrangement of
Guarantor or Tenant or by any defense which Tenant may have by reason of the
order, decree or decision of any court or administrative body resulting from any
such proceeding.

      3. Primarily Liable - This Guaranty is a guaranty of payment and not of
collection. The liability of Guarantor under this Guaranty shall be joint and
several and primary and direct and in addition to any right of action which
shall accrue to Landlord under the Lease. Landlord shall have the right, at its
option, to proceed against Guarantor (or any one or more parties constituting
Guarantor) without having commenced any action, or having obtained any judgment,
against Tenant or any other party liable under the Lease or any other guaranty
of the Lease.

      4. Default - In the event of a default by Tenant under the Lease, Landlord
shall have the right to enforce its rights, powers and remedies under the Lease,
any other guaranty of the Lease, and under this Guaranty and all rights, powers
and remedies available to Landlord shall be non-exclusive and cumulative of all
other rights, powers and remedies under the Lease, any other guaranty of the
Lease or under this Guaranty or by law or in equity. The obligations of
Guarantor hereunder are independent of the obligations of Tenant or any other
guarantor, and Landlord may proceed directly to enforce all rights under this
Guaranty without proceeding against or joining Tenant, any other guarantor or
any other person or entity. Until all of the

                                      -1-


Obligations have been performed and paid in full, Guarantor shall have no right
of subrogation to Landlord, and Guarantor hereby waives any rights to enforce
any remedy which Landlord may have against Tenant.

      5. Waivers - Guarantor expressly waives and agrees not to assert or take
advantage of: (a) the defense of the statute of limitations in any action
hereunder or in any action for collection of the Obligations, (b) any defense
that may arise by reason of the failure of the Landlord to file or enforce a
claim against Guarantor or Tenant in bankruptcy or in any other proceeding, (c)
any defense based on the failure of Landlord to give notice to Guarantor of the
creation, existence or incurring of any new obligations or on the action or
non-action of any person or entity in connection with the Obligations, (d) any
duty on the part of Landlord to disclose to Guarantor any facts it may know or
may hereafter acquire regarding Tenant, (e) any defense based on lack of
diligence on the part of Landlord in the collection of any and all of the
Obligations, or (f) any demand for payment, presentment, notice of protest or
dishonor, notice of acceptance of this Guaranty and any and all other notices or
demands to which Guarantor might otherwise be entitled by law.

      6. Subordination; Waiver of Subrogation; Preference and Fraudulent
Transfer Indemnity. After a default under the Lease, any indebtedness
(including, without limitation, interest obligations but excluding trade
receivables and trade payables accruing in the ordinary course of business for
fair value) of Tenant to Guarantor now or hereafter existing shall be deferred,
postponed and subordinated to the Obligations. Subject to the limitation on
survival hereinafter set forth, Guarantor hereby unconditionally and irrevocably
agrees that (a) Guarantor will not at any time assert against Tenant (or
Tenant's estate in the event Tenant becomes bankrupt or becomes the subject of
any case or proceeding under the bankruptcy laws of the United States of
America) any right or claim to indemnification, reimbursement, contribution or
payment for or with respect to any and all amounts Guarantor may pay or be
obligated to pay Landlord, including, without limitation, any and all
Obligations which Guarantor may perform, satisfy or discharge, under or with
respect to this Guaranty; (b) Guarantor waives and releases all such rights and
claims and any other rights and claims to indemnification, reimbursement,
contribution or payment which Guarantor, or any of them, may have now or at any
time against Tenant (or Tenant's estate in the event Tenant becomes bankrupt or
becomes the subject of any case or proceeding under any bankruptcy laws); (c)
Guarantor shall have no right of subrogation, and Guarantor waives any right to
enforce any remedy which Landlord now has or may hereafter have against Tenant;
(d) Guarantor waives any benefit of, and any right to participate in, any
security now or hereafter held by Landlord; and (e) Guarantor waives any defense
based upon an election of remedies by Landlord which destroys or otherwise
impairs any subrogation rights of Guarantor or the right of Guarantor to proceed
against Tenant for reimbursement. The waivers hereunder shall continue and
survive only until the ninety first (91st) day after the Obligations are
satisfied in full, provided Tenant has not filed a petition or had a petition
filed against it under any present or future section or chapter of the United
States Bankruptcy Code during the ninety (90) day period following the date on
which the Obligations are so satisfied in full (in which event the same shall
survive without limitation). Guarantor further hereby unconditionally and
irrevocably agrees and guarantees (on a joint and several basis) to make full
and prompt payment to Landlord of any of the Obligations or other sums paid to
Landlord pursuant to the Lease which Landlord is subsequently ordered or
required to pay or disgorge on the grounds that such payments constituted an
avoidable preference or a fraudulent transfer under applicable bankruptcy,
insolvency or fraudulent transfer laws; and Guarantor shall fully and promptly
indemnify Landlord for all costs (including, without limitation, attorney's
fees) incurred by Landlord in defense of such claims of avoidable preference or
fraudulent transfer.

      7. Choice of Law - This Guaranty is to be performed in the State of
Mississippi and shall be governed by and construed in accordance with the laws
of the State of Mississippi, without regard to its conflicts laws or choice of
law rules.

      8. Time of Essence - Time is of the essence of this Guaranty.

      9. Notices - Wherever any notice or other communication is required or
permitted hereunder, such notice or other communication shall be in writing and
shall be delivered by hand, or by nationally-recognized overnight express
delivery service, by U. S. registered or certified mail, return receipt
requested, postage prepaid to the

                                      -2-


addresses set out below or at such other addresses as are specified by written
notice delivered in accordance herewith:

            Landlord:                Industrial Developments International, Inc.
                                     c/o IDI, Inc.
                                     3424 Peachtree Road, N.E., Suite 1500
                                     Atlanta, Georgia  30326
                                     Attn:  Manager - Lease Administration

            Guarantor:               PFSWeb, Inc.
                                     500 North Central Expressway
                                     Plano, Texas  74074
                                     Attn:  Chief Financial Officer

            with a copy to:          PFSWeb, Inc.
                                     500 North Central Expressway
                                     Plano, Texas  74074
                                     Attn:  General Manager

Any notice or other communication mailed as hereinabove provided shall be deemed
effectively given (a) on the date of delivery, if delivered by hand; or (b) on
the date mailed if sent by overnight express delivery or if sent by U.S. mail.
Such notices shall be deemed received (a) on the date of delivery, if delivered
by hand or overnight express delivery service; or (b) on the date indicated on
the return receipt if mailed. If any notice mailed is properly addressed but
returned for any reason, such notice shall be deemed to be effective notice and
to be given on the date of mailing.

            10. Authority - If Guarantor is not a natural person, Guarantor
shall cause its corporate secretary or general partner, as applicable, to
execute the certificate attached hereto as Exhibit A. Guarantor is authorized by
all required corporate or partnership action to enter into this Guaranty and the
individual(s) signing this Guaranty on behalf of Guarantor are each authorized
to bind Guarantor to its terms.

            11. Successors and Assigns - This Guaranty shall be binding upon and
inure to the benefit of the parties hereto and their heirs, legal
representatives, successors and assigns.

                                      -3-


            IN WITNESS WHEREOF, Guarantor has executed under seal and delivered
this Guaranty to Landlord on the date and year above first written.

                                     GUARANTOR:

                                     PFSWEB, INC., a Delaware corporation

                                     By: ___________________________
                                     Name: _________________________
                                     Title: ________________________

                                     Attest: _______________________
                                     Name: _________________________
                                     Title: ________________________

                                            [CORPORATE SEAL]

                                      -4-


                                    EXHIBIT A

                            CERTIFICATE OF AUTHORITY
                                   CORPORATION

      The undersigned, Secretary of PFSWeb, Inc., a Delaware corporation
("Guarantor"), hereby certifies as follows to Industrial Developments
International, Inc., a Delaware corporation ("Landlord"), in connection with the
execution of a Guaranty by Guarantor (the "Guaranty) of that certain Industrial
Lease Agreement dated August __, 2004 between Landlord and Priority Fulfillment
Services, Inc. ("Tenant") (the "Lease") relating to the lease of approximately
434,900 square feet within Building E, at Airways Distribution Center, DeSoto
County, Mississippi (the "Premises"):

      1. Guarantor is duly organized, validly existing and in good standing
under the laws of the State of Delaware, and duly qualified to do business in
the State of Mississippi.

      2. That the following named persons, acting individually, are each
authorized and empowered to negotiate and execute, on behalf of Guarantor, a
Guaranty of the Lease and that the signature opposite the name of each
individual is an authentic signature:

____________________    ____________________    _____________________
      (name)                 (title)                 (signature)

____________________    ____________________    _____________________
      (name)                 (title)                 (signature)

____________________    ____________________    _____________________
      (name)                 (title)                 (signature)

      3. That the foregoing authority was conferred upon the person(s) named
above by the Board of Directors of Guarantor, at a duly convened meeting held
_____________, 20___.

                                               ________________________________
                                               Secretary

                                                         [CORPORATE SEAL]

                                                                    EXHIBIT 10.3

                                      LEASE
                                    (S/N 143)

                           DATED AS OF AUGUST 25, 2004

                                     BETWEEN

                               FLEET NATIONAL BANK
                                    AS LESSOR

                                       AND

                       PRIORITY FULFILLMENT SERVICES, INC.
                                    AS LESSEE

THIS IS COUNTERPART NO. __ OF A TOTAL OF 3 COUNTERPARTS. ONLY COUNTERPART NO. 1
SHALL BE CONSIDERED CHATTEL PAPER FOR PURPOSES OF THE UNIFORM COMMERCIAL CODE
AND A SECURITY INTEREST MAY BE PERFECTED ONLY BY POSSESSION OF COUNTERPART NO.
1.



                                TABLE OF CONTENTS



                                                                            Page
                                                                         
SECTION   1   Lease                                                           3
SECTION   2   Closing Conditions                                              3
SECTION   3   Term and Rent                                                   3
SECTION   4   Title; Quiet Enjoyment                                          4
SECTION   5   Disclaimer and Assignment of Warranties                         4
SECTION   6   Representations, Warranties and Agreements of Lessee            4
SECTION   7   Net Lease                                                       6
SECTION   8   Taxes                                                           6
SECTION   9   Compliance, Use and Maintenance                                 7
SECTION   10  Loss or Damage                                                  8
SECTION   11  Indemnification                                                 9
SECTION   12  Assignment, Sublease, Management and Chartering                10
SECTION   13  Events of Default and Remedies                                 11
SECTION   14  Notices; Reports and Further Assurances                        14
SECTION   15  Transaction Expenses                                           15
SECTION   16  Miscellaneous                                                  15
SECTION   17  Truth in Leasing                                               16


EXHIBIT A - Definitions
EXHIBIT B - Special Tax Indemnity Rider
EXHIBIT C - Warranty Bill of Sale
Insurance Addendum
Closing Terms Addendum
Purchase, Early Purchase and Renewal Option Addendum
Early Termination Option Addendum
Return Addendum
Lease Supplement
        Schedule No. 1 to Lease Supplement
        Schedule No. 2 to Lease Supplement
        Schedule No. 2-A to Lease Supplement
        Schedule No. 3 to Lease Supplement
        Schedule No. 4 to Lease Supplement

                                       2


      This LEASE (S/N 143) (together with all Supplements, Exhibits, Riders and
Addenda hereto, the "Lease") is made and entered into as of AUGUST 25, 2004, by
and between FLEET NATIONAL BANK ("Lessor"), a Rhode Island corporation having an
office at One Financial Plaza, Providence, RI 02903, and PRIORITY FULFILLMENT
SERVICES, INC. ("Lessee"), a Delaware corporation having an office at 500 North
Central Expressway, 5th Floor, Plano, Texas 75074. Certain capitalized terms as
used in this Lease are defined in Exhibit A hereto, and such definitions are
incorporated herein and made a part hereof as though set forth in full herein.

SECTION 1. LEASE. Subject to the terms and conditions provided in this Lease,
Lessor agrees to lease the Aircraft to Lessee, and Lessee agrees to lease the
Aircraft from Lessor. Lessor hereby appoints Lessee as Lessor's agent for the
sole and limited purpose of accepting delivery of the Aircraft from the
Supplier. The execution by Lessee of the Lease Supplement will evidence that the
Aircraft is leased under, and is subject to all of the terms, provisions and
conditions of, this Lease and shall constitute Lessee's unconditional and
irrevocable acceptance of the Aircraft for all purposes of this Lease.

SECTION 2. CLOSING CONDITIONS. Lessor's obligations to purchase the Aircraft
from the Supplier and to lease the Aircraft to Lessee shall be conditioned upon
the satisfaction of all of the following conditions: (a) Lessor receives the
Required Documents and Purchase Documents, in form and substance satisfactory to
Lessor, at least one (1) Business Day prior to the anticipated closing date; (b)
all representations and warranties in this Lease, including the Lease
Supplement, are materially true and correct; (c) Lessee accepts the Aircraft
from Supplier on Lessor's behalf, under the Purchase Documents and under this
Lease, on the Acceptance Date (which date shall be no later than the Last
Acceptance Date); and (d) (i) FAA Counsel confirms to Lessor that (A) it has
received in escrow all of the FAA Documents, and (B) upon filing the FAA
Documents, (1) title to the Airframe and the Engines will be vested in Lessor,
and (2) the Aircraft (including the Airframe and Engines) will be free and clear
of all Liens, other than this Lease, and (ii) Lessee authorizes (A) the release
from escrow of all Required Documents and FAA Documents held by Lessor or its
FAA Counsel or other counsel, and (B) Lessor or FAA Counsel to file the FAA
Documents and any other filings at the FAA and any other applicable filing
offices; provided, such authorization shall be deemed to have been automatically
made by Lessee (whether or not so confirmed) immediately upon the receipt by
Lessee, Supplier or any other Person (as directed in any pay proceeds letter
executed by Lessee in connection with this Lease ) of the funds constituting the
Lessor's Cost. Lessee acknowledges and agrees that (i) any advance of funds by
Lessor prior to the satisfaction of all of the preceding conditions shall not
constitute a waiver by Lessor of any such condition, and (ii) Lessee shall be
irrevocably obligated to satisfy all of such conditions prior to the FAA filing
deadline on the day on which such funds are received.

SECTION 3. TERM AND RENT.

      (a) Term. The lease of the Aircraft to Lessee shall commence on the
Acceptance Date and end on the Expiration Date, unless extended or earlier
terminated or cancelled pursuant to this Lease.

      (b) Rent. Lessee shall pay to Lessor the following daily and periodic rent
amounts ("Basic Rent") (i) on the Acceptance Date, an amount equal to the
product of the Daily Rent Percentage times the Lessor's Cost, for each day
starting with the Acceptance Date, to but excluding the Rent Commencement Date
("Daily Rent"), and (ii) on the First Basic Rent Date and on each Basic Rent
Date following that date, an amount equal to the product of the Lessor's Cost
multiplied by the applicable Basic Rent Percentage set forth on Schedule No. 2A
for the Basic Rent number corresponding to any such Basic Rent Date. Lessee
shall also pay the following amounts as "Supplemental Rent" (together with all
Basic Rent, the "Rent"): (i) as and when due, any other amount that Lessee is
obligated to pay under this Lease to Lessor or others (including, Casualty Value
and/or any amounts due pursuant to any Addendum), (ii) interest accruing at the
Late Payment Rate on any Rent not paid when due, until paid, and (iii) the
Administrative Charge with respect to any Rent not paid when due (as
compensation to Lessor for the expenses attributable to Lessee's failure to pay,
and not as a penalty). Lessee's obligation to pay Supplemental Rent shall
survive the expiration, cancellation or other termination of this Lease. All
payments of Rent shall be made to Lessor, in United States Dollars ("U.S.
Dollars"), in immediately available funds on the date payable hereunder at the
address designated by Lessor for payment, or by wire transfer to an account

                                       3


specified by Lessor, or at such other address or to such other Person as Lessor
may direct by notice in writing to Lessee.

SECTION 4. TITLE; QUIET ENJOYMENT. Lessee acknowledges and agrees that upon
Lessor's acquiring the Aircraft on the Acceptance Date, Lessor is and shall
remain the owner of the Aircraft (unless Lessor sells the Aircraft pursuant to
an applicable provision of this Lease), and Lessee shall not acquire any right,
title or interest in or to the Aircraft except the right to use the Aircraft
pursuant to the terms of this Lease. Lessor warrants that during the Term, so
long as no Event of Default has occurred, Lessee's possession and use of the
Aircraft shall not be interfered with by Lessor or anyone rightfully claiming an
interest through Lessor. The preceding warranty is in lieu of all other
warranties by Lessor, whether written, oral or implied, with respect to this
Lease or the Aircraft, and without limiting the provisions of Section 7, any
actual or purported breach of this warranty shall not give rise to any
Abatement, and Lessor shall not be deemed to have modified in any respect the
obligations of Lessee pursuant to Section 7, which obligations are and shall
remain absolute, irrevocable and unconditional under all events and
circumstances whatsoever.

SECTION 5. DISCLAIMER AND ASSIGNMENT OF WARRANTIES. LESSOR SHALL NOT BE DEEMED
TO HAVE MADE, AND HEREBY DISCLAIMS, ANY REPRESENTATION OR WARRANTY, EITHER
EXPRESS OR IMPLIED, AS TO THE AIRCRAFT, INCLUDING ANY ENGINE, PART OR RECORD, OR
ANY MATTER WHATSOEVER, INCLUDING, THE AIRCRAFT'S DESIGN, CONDITION,
MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE, TITLE, ABSENCE OF ANY
PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENT OR LATENT DEFECT (WHETHER OR NOT
DISCOVERABLE BY LESSEE), COMPLIANCE OF THE AIRCRAFT WITH ANY APPLICABLE LAW,
CONFORMITY OF THE AIRCRAFT TO THE PROVISIONS AND SPECIFICATIONS OF ANY PURCHASE
DOCUMENT OR TO THE DESCRIPTION SET FORTH IN THIS LEASE, OR ANY INTERFERENCE OR
INFRINGEMENT (EXCEPT AS EXPRESSLY PROVIDED IN SECTION 4), OR ARISING FROM ANY
DEFECTS OR FROM ANY COURSE OF DEALING, COURSE OF PERFORMANCE, OR USAGE OF TRADE,
NOR SHALL LESSOR BE LIABLE, FOR ANY INDIRECT, INCIDENTAL, SPECIAL OR
CONSEQUENTIAL DAMAGES OR FOR STRICT OR ABSOLUTE LIABILITY IN TORT; AND LESSEE
HEREBY WAIVES ANY CLAIMS ARISING OUT OF ANY OF THE FOREGOING. Without limiting
the foregoing, Lessor will not be responsible to Lessee or any other Person with
respect to, and Lessee agrees to bear sole responsibility for, any risk or other
matter that is the subject of Lessor's disclaimer. So long as no Event of
Default has occurred, Lessee may exercise Lessor's rights, if any, under any
warranty of Manufacturer or Supplier with respect to the Aircraft. Lessee's
exercise of such rights shall be at its sole cost and risk, shall not result in
any prejudice to Lessor, and may be exercised only during the Term. Lessee shall
not attempt to enforce any such warranty by legal proceeding without Lessor's
prior written approval.

SECTION 6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF LESSEE. Lessee
represents, warrants and agrees as follows:

      (a) Due Organization, Name, Organizational Number, Etc. Lessee has the
form of business organization indicated and is and will remain duly organized
and existing in good standing under the laws of the state specified in Schedule
No. 2 and is duly qualified to do business wherever necessary to perform its
obligations under this Lease, including the jurisdiction of the Primary Hangar
Location. Lessee's exact legal name is as shown in the caption of this Lease;
Lessee's organizational identification number and the address of Lessee's mail,
chief executive offices and principal place of business are all as respectively
set forth in Schedule No. 2. Lessee agrees that it shall not change its name,
organizational number or any such address without prior written notice to
Lessor. Within the previous four (4) years Lessee has not changed its name, done
business under any other name, changed its chief place of business from its
present location, or merged or been the surviving entity of any merger, except
as disclosed to Lessor in writing.

      (b) Due Authorization; No Violation. This Lease has been duly authorized
by all necessary action on the part of Lessee consistent with its form of
organization, does not require the approval of, or giving notice to, any
governmental authority and does not contravene or constitute a default under any
Applicable

                                       4


Law, certificate or articles of incorporation or organization or by-laws or
partnership certificate or agreement, or any agreement, indenture, or other
instrument to which Lessee is a party or by which it may be bound.

      (c) Enforceability. This Lease has been duly executed and delivered by
authorized representatives of Lessee and constitutes a legal, valid and binding
obligation of Lessee enforceable in accordance with its terms except to the
extent that the enforcement of remedies may be limited under applicable
bankruptcy and insolvency laws, and the equitable discretion of any court of
competent jurisdiction.

      (d) Litigation; Claims There are no proceedings pending or, so far as the
officers, managers, or members of Lessee know, threatened against or affecting
Lessee or any of its property before any court, administrative officer or
administrative agency that could impair Lessor's title to the Aircraft, or that,
if decided adversely, could affect the financial condition or operations of
Lessee or the ability of Lessee to perform its obligations under this Lease.
Lessee has no pending claims and has no knowledge of any facts upon which a
future claim may be based, against any prior owner, the Manufacturer or Supplier
of the Aircraft, or of any Engine or part thereof for breach of warranty or
otherwise.

      (e) Good Title. Lessor will be the owner of the Aircraft as of the
Acceptance Date and will have good and marketable title to the Aircraft, free
and clear of all Liens other than any Liens created in favor of Lessor under
this Lease.

      (f) No Competing Lienholders. No Lien exists, or will hereafter attach,
against the Aircraft, the Rent or any other rights under this Lease, or any
Collateral, or any interest of Lessee or Lessor therein (other than any Lessor's
Liens), pursuant to any mortgage, conditional sale or security agreement or
other agreement to which Lessee or any Person claiming through Lessee is a
party, nor will any of the transactions contemplated under this Lease constitute
a breach of any provision of any such agreement.

      (g) MSP Contract. Commencing on the Acceptance Date and continuing
throughout the Term, the MSP Contract shall be maintained in full force and
effect and Lessee will provide Lessor with evidence satisfactory to Lessor of
the acknowledgment of Honeywell, Inc. of the Lessor's rights and interests under
such MSP Contract.

      (h) Wholly-owned Corporation. Lessee shall at all times during the Term of
this Lease be a wholly-owned and controlled corporation of the Guarantor;
provided, however, that any such ownership and/or control shall be in compliance
with all Applicable Law and any and all FARs.

      (i) Due Organization and Authorization, Etc. Guarantor has the form of
business organization indicated and is and will remain duly organized and
existing in good standing under the laws of the state as specified in the
Guaranty and is duly qualified to perform its obligations under the Guaranty.
The Guaranty has been duly authorized by all necessary action on the part of
Guarantor consistent with its form of organization, does not require the
approval of, or giving notice to, any governmental authority and does not
contravene or constitute a default under any Applicable Law, certificate or
articles of incorporation or organization or by-laws or partnership certificate
or agreement, or any agreement, indenture, or other instrument to which
Guarantor is a party or by which it may be bound.

      (j) Binding Obligation. The Guaranty does not contravene or constitute a
default under any Applicable Law, or any contract, mortgage, agreement,
indenture, or other instrument to which Guarantor is a party or by which it may
be bound.

      (k) Enforceability. The Guaranty has been duly executed and delivered by
Guarantor and constitutes a legal, valid and binding obligation of Guarantor
enforceable in accordance with its terms except to the extent that the
enforcement of remedies may be limited under applicable bankruptcy and
insolvency laws, and the equitable discretion of any court of competent
jurisdiction.

      (l) Litigation. There are no proceedings pending or, so far as the
officers, managers, or members of Guarantor know, threatened against or
affecting Guarantor or any of its property before any court, administrative
officer or administrative agency that, if decided adversely, could materially
affect the

                                       5


financial condition or operations of Guarantor or the ability of Guarantor to
perform its obligations under the Guaranty.

      (m) Not a Consumer Transaction. The transaction contemplated in this Lease
is not a "consumer transaction" as defined in the UCC and the Aircraft and any
Collateral was not or will not be purchased or held primarily for personal,
family, or household purposes.

      (n) Guarantor Obligations. Lessee shall cause the Guarantor to fully and
timely comply with all the terms and provisions of the Guaranty, including,
without limitation, any financial reporting requirements or obligations, and/or
any financial covenants, requirements or obligations, set forth in such
Guaranty.

SECTION 7. NET LEASE. This Lease is a net lease, and Lessee acknowledges and
agrees that (a) Lessee's obligation to pay, and Lessor's right to receive, all
Rent in accordance with this Lease shall be absolute, irrevocable, independent
and unconditional and shall not be subject to (and Lessee hereby waives and
agrees not to assert) any abatement, reduction, setoff, defense, counterclaim or
recoupment (collectively, "Abatements") for any reason or under any circumstance
whatsoever as to any such Rent, and without limiting the foregoing, Lessee also
hereby waives any and all existing and future claims to any Abatement against or
as to such Rent, (b) it will pay all such Rent regardless of any Abatement, and
(c) this Lease, and Lessee's payment and other obligations hereunder, are
non-cancelable and non-terminable by Lessee (except as expressly provided in any
Addendum).

SECTION 8. TAXES. Lessee agrees to: (a) (i) if permitted by law, file in
Lessee's own name or on Lessor's behalf, directly with all appropriate taxing
authorities all registrations, declarations, returns, inventories and other
documentation with respect to any personal property taxes (or any other taxes in
the nature of or imposed in lieu of property taxes) due or to become due with
respect to the Aircraft, and if not so permitted by law, to promptly notify
Lessor and provide it with all information required in order for Lessor to
timely file all such declarations, returns, inventories, or other documentation,
and (ii) pay on or before the date when due all such taxes assessed, billed or
otherwise payable with respect to the Aircraft directly to the appropriate
taxing authorities, (b) (i) pay when due as requested by Lessor, and (ii) defend
and indemnify Lessor on a net after-tax basis against liability for all license
and/or registration fees, assessments, and sales, use, property, excise,
privilege, value added and other taxes (including any related interest or
penalties) or other charges or fees now or hereafter imposed by any governmental
body or agency upon the Aircraft or with respect to landing, airport use,
manufacturing, ordering, shipment, purchase, ownership, delivery, installation,
leasing (pursuant to this Lease, any sublease, or otherwise), chartering,
operation, possession, use, return, or other disposition thereof or the Rent or
other rentals hereunder (other than taxes on or measured solely by the net
income of Lessor), and (c) defend and indemnify Lessor against any penalties,
charges, interest or costs imposed with respect to any items referred to in (a)
and (b) above (the items referred to in (a), (b), and (c) above being referred
to herein as "Impositions"). Any Impositions which are not paid when due and
which are paid by Lessor shall, at Lessor's option, become immediately due from
Lessee to Lessor. Notwithstanding the foregoing, Lessee shall pay, indemnify
Lessor for, and hold Lessor harmless on a net after-tax basis from and against,
any Imposition on or measured by the net income of Lessor imposed against Lessor
by any local or foreign government or other local or foreign taxing authority if
and to the extent that Lessor would not have incurred such Imposition but for
the operation or presence of the Aircraft within the jurisdiction imposing it.
Lessee's obligations under this Section 8 shall survive any expiration,
cancellation or other termination of this Lease.

                                       6


SECTION 9. COMPLIANCE, USE AND MAINTENANCE.

      (a) Compliance and Use. On the Acceptance Date, and at all times
thereafter until the Aircraft is returned to Lessor pursuant to this Lease,
Lessee shall cause the Aircraft to be and remain duly registered in only the
Lessor's name at the FAA, in accordance with the Transportation Code. Lessee
agrees to comply with all Applicable Law related to this Lease and/or the
Aircraft, including its operation, maintenance and security. Lessee will operate
the Aircraft under and in compliance with Part 91 of the FARS, for purposes that
are incidental to Lessee's business, and in a manner that is consistent with the
transactions hereunder being deemed commercial (and not consumer) transactions
under Applicable Law. This Lease is being made and the Aircraft will be used for
business or commercial purposes, and not primarily for personal, family, or
household purposes. Unless otherwise expressly permitted hereunder, Lessee shall
not operate or permit the Aircraft to be operated for air taxi operations or
otherwise under Part 135 of the FARS. The Aircraft shall be used solely in a
passenger configuration for which Lessee is duly authorized by the FAA. Lessee
will not operate or permit the Aircraft to be operated in any manner at any time
or in any geographic area when or where insurance required by the provisions
hereof shall not be in effect. Unless otherwise expressly permitted by Section
12 of this Lease, Lessee shall (i) retain operational control of the Aircraft at
all times from the Acceptance Date until returning the Aircraft in accordance
with this Lease; and (ii) base the Aircraft at the Primary Hangar Location set
forth in Schedule No. 2. The Aircraft will, at all times be operated by duly
qualified pilots having (a) the required FAA type rating for the Aircraft, (b)
the required FAA pilot certificates and ratings, (c) a valid FAA Medical
Certificate, (d) satisfied all security requirements imposed by any governmental
authority having jurisdiction and (e) met any and all requirements established
and specified by (i) the FAA, the Transportation Security Administration and any
other applicable governmental authority and (ii) the insurance policies required
under this Lease.

      (b) Use Outside of U.S. The Aircraft shall not be operated, used or
located outside the Continental U.S. except that it may be flown temporarily to
any country in the world for any purpose expressly permitted under this Lease.
Notwithstanding the foregoing, the Aircraft shall not be flown, operated, used
or located in, to or over any such country or area (temporarily or otherwise),
(i) which is excluded from the required insurance coverages, or would otherwise
cause Lessee to be in breach of the insurance requirements or other provisions,
of this Lease, (ii) with which the U.S. does not maintain favorable diplomatic
relations, (iii) in any area of recognized or threatened hostilities, (iv) in
violation of any Applicable Law, including any U.S. law or United Nations
Security Council Directive, or (v) in a manner that causes it to be deemed to
have been used or operated "predominantly" outside of the United States, as that
phrase is used in Section 168(g)(1)(A) of the Code.

      (c) Maintenance and Operation. During the Term, Lessee shall (i) maintain,
inspect, service, repair, overhaul and test the Airframe and each Engine and any
APU in accordance with all Maintenance Requirements, all Applicable Law, and
(ii) maintain (in the English language) all Records in accordance with the
Applicable Law and all Maintenance Requirements, and as required under this
Lease. All maintenance procedures shall be performed in accordance with all
Applicable Law and by properly trained, licensed, and certified maintenance
sources and maintenance personnel utilizing replacement parts approved by the
FAA and the Manufacturer, so as to keep the Airframe and each Engine, any APU
and each Part in good operating condition, ordinary wear and tear, from proper
use alone, excepted, and to enable the airworthiness certificate for the
Aircraft to be continually maintained. Without limiting the foregoing, Lessee
shall comply with all mandatory service bulletins and airworthiness directives
by causing compliance to such bulletins and/or directives to be completed
through corrective modification in lieu of operating manual restrictions.

      (d) Loaner Engines. In the event any Engine is damaged, being inspected,
repaired or overhauled and provided no Event of Default or Default has occurred
and is continuing, Lessee, at its option, may temporarily substitute another
engine of the same make and model as the Engine being repaired or overhauled
(any such substitute engine being hereinafter referred to as a "Loaner Engine")
during the period of such repair or overhaul, and provided further (i)
installation of the Loaner Engine is performed by a maintenance facility
certified by the FAA and manufacturer with respect to an aircraft of this type,
(ii) the Loaner Engine is removed and the repaired or overhauled original Engine
is reinstalled on the Airframe promptly upon completion of the repair or
overhaul but in no event later than the earlier of ninety (90) days

                                       7


after removal, or the expiration, cancellation or earlier termination of this
Lease, and (iii) the Loaner Engine is free and clear of any Lien that might
impair Lessor's rights or interests in the Aircraft and is maintained in
accordance herewith.

      (e) Additions, Alterations and Replacement Parts. Lessee may install on
the Aircraft any additional accessory, device or equipment ("Additions") but
only if such Additions (i) are ancillary to the Aircraft; (ii) are not required
to render the Aircraft complete for its intended use by Lessee; (iii) will not
impair the originally intended function or use of the Aircraft or diminish the
value of the same; (iv) can be readily removed without causing material damage
to the Aircraft; and (v) do not result in a Tax Loss. Title to each Addition not
removed prior to the return of the Aircraft to Lessor shall immediately vest in
Lessor upon such return without any payment by, or any cost or expense to,
Lessor. Lessee shall make any alteration or modification ("Alterations") to the
Aircraft that may at any time during the Term be required to comply with
airworthiness directives or other Applicable Law. Lessee will promptly replace
all Parts which become worn out, lost, stolen, taken, destroyed, damaged beyond
repair or permanently rendered or declared unfit for use for any reason
whatsoever. Lessee shall repair all damage to the Aircraft resulting from the
installation and removal of Additions and/or Alterations so as to restore the
Aircraft to its condition prior to installation. Alterations and/or replacement
parts shall be deemed accessions, and title thereto shall be immediately vested
in Lessor without cost or expense to Lessor. Except as permitted under this
Section 9(e) or as expressly permitted in the Aircraft Purchase Agreement,
Lessee will not modify the Aircraft (including any change in configuration) or
affix or remove any accessory to the Aircraft leased hereunder.

      (f) Aircraft Marking. Lessee agrees to (i) prominently display on the
Aircraft the FAA Registration number, specified in Schedule No. 1 or such other
"N" number as has been approved by and exclusively reserved to Lessor in its
name and duly recorded with the FAA; and (ii) notify Lessor in writing thirty
(30) days prior to making any change in the appearance or coloring of the
Aircraft.

      (g) Security. Without limiting Lessee's indemnities and other agreements
under this Lease, Lessee hereby: (i) expressly assumes sole responsibility for
the determination and implementation of all security measures and systems
reasonably necessary or appropriate for the proper protection of the Aircraft
(whether on the ground or in flight) against theft, vandalism, hijacking,
destruction, bombing, terrorism or similar acts directly or indirectly affecting
the Aircraft, any part thereof, or any persons who (whether or not on board the
Aircraft) may sustain any injury or damage as a result of any such acts, and
(ii) agrees to provide to Lessor promptly upon request with evidence of Lessee's
compliance with its obligations under this Section 9(g) (but in no event shall
Lessor, in its capacity as lessor, owner or otherwise, be deemed to have any
duty with respect to any security measures imposed by this Lease or applicable
law, whether or not complied with by Lessee, as the full and exclusive
assumption of responsibility by Lessee of such responsibility is of the essence
of this Lease, and a condition to Lessor's participation in the transactions
contemplated herein).

SECTION 10. LOSS OR DAMAGE.

      (a) Event of Loss with Respect to the Aircraft. Upon the occurrence of any
Event of Loss with respect to the Airframe and/or Aircraft, Lessee shall notify
Lessor within five (5) days of the date thereof. On (i) the second (2nd) Basic
Rent Date immediately following the date of such notice, or (ii) if such Event
of Loss occurs after the Last Basic Rent Date, within sixty (60) days after such
notice (any such date described in subclause (i) or (ii) above the "Casualty
Payment Date"), Lessee shall pay to Lessor any Rent then due, plus the Casualty
Value of the Aircraft determined as of the Casualty Payment Date, (but if the
Casualty Payment Date is after the last Basic Rent Date, the Casualty Value for
such date shall be the amount equal to the Lessor's Cost multiplied by the
applicable percentage set forth on Schedule No. 3 for the last Basic Rent Date
or the corresponding Basic Rent number), together with interest at the Late
Payment Rate for the period (if any) from the Casualty Payment Date through the
date of payment. Upon making the applicable payment required hereby, Lessee's
obligation to pay further Basic Rent for the Aircraft subsequent to such payment
shall cease, but Lessee shall remain liable for, and pay as and when due, all
Supplemental Rent. If recoverable, Lessor shall be entitled to recover
possession of the Aircraft and to any salvage value in excess of the Casualty
Value paid to Lessor, but subject to the requirements of any third party
insurance carrier in order to settle an insurance claim. Lessor shall be
entitled to receive and retain all amounts

                                       8


payable by the Manufacturer with respect to a Return to Manufacturer or by any
governmental authority with respect to any Requisition of Use, as the case may
be, except that such amounts received in good collected funds shall be applied
against Lessee's obligation to pay Casualty Value or, so long as no Event of
Default has occurred, remitted to Lessee (up to the amount of the Casualty Value
paid by Lessee to Lessor in good and indefeasible funds). Lessor shall be under
no duty to Lessee to pursue any claim against any Person in connection with an
Event of Loss.

      (b) Event of Loss with Respect to an Engine or an APU. Upon an Event of
Loss with respect to any Engine or any APU, but not the Airframe on which it was
installed, Lessee shall (i) give Lessor prompt written notice thereof, (ii) by
the earlier of the ninetieth (90th) day after the occurrence of such Event of
Loss or the receipt of the applicable insurance proceeds, if any, duly convey to
Lessor title to an engine or APU, as applicable, of the same make and model
number as the Engine or any APU suffering the Event of Loss, and (iii) comply
with the other provisions of this Section 10(b). Such engine or any APU, as
applicable, shall be free and clear of all Liens, have a value, utility, and
useful life at least equal to, and be in as good an operating condition as, the
Engine or any APU suffering the Event of Loss, assuming such Engine or any APU
was in the condition and repair required by the terms hereof immediately prior
to the occurrence of such Event of Loss. Lessee shall furnish to Lessor such
documents to evidence such conveyance as Lessor shall request. Upon full
compliance by Lessee with the terms of this paragraph, Lessor will transfer to
Lessee all of Lessor's right, title and interest, if any, in and to such Engine
or any APU, which transfer shall be "AS-IS, WHERE-IS". Each such replacement
engine or APU, as applicable, shall, after such conveyance to Lessor, be deemed
an "Engine" or "APU", as applicable, as defined herein and shall be deemed part
of the same Aircraft as was the Engine or any APU replaced thereby.

      (c) Risk of Loss. Lessee shall bear the risk of loss, theft, confiscation,
taking, unavailability, damage or partial destruction of the Aircraft and shall
not be released from its obligations hereunder in the event of any damage or
Event of Loss to the Aircraft or any part thereof. Without limiting any other
provision hereof, Lessee shall repair all damage to the Aircraft from any and
all causes, including as provided in Sections 9(c) and (e), and shall provide
written notice to Lessor of any Material Damage concurrently with its report of
same to the applicable governmental authority, and if no such report is
required, within ten (10) days of the occurrence of such damage. The required
notice must be provided together with any damage reports provided to the FAA or
any other governmental authority, the insurer or Supplier, and any documents
pertaining to the repair of such damage, including copies of work orders, and
all invoices for related charges.

      (d) Credit for Insurance Payments. If Lessor receives a payment under an
insurance policy required under this Lease in connection with an Event of Loss
of an Airframe and/or an Engine or any APU, and such payment is both
unconditional and indefeasible, then provided no Default or Event of Default
shall have occurred and be continuing, and Lessee shall have complied with the
provisions of Section 10(a) or 10(b), Lessor shall either (i) remit such
proceeds to Lessee up to an amount equal to (A) the amount paid by Lessee to
Lessor as the Casualty Value pursuant to Section 10(a), or (B) the amount of the
replacement costs actually incurred by Lessee with respect to the replacement of
any Engine or APU pursuant to Section 10(b), or (ii) credit such proceeds
against any amounts owed by Lessee pursuant to Section 10(a). Any excess
insurance proceeds shall be retained by Lessor.

SECTION 11. INDEMNIFICATION. Lessee shall indemnify, protect, save, defend and
keep harmless Lessor, its agents, employees, officers, directors, shareholders,
subsidiaries, affiliates and Assignees (each an "Indemnitee"), on a net
after-tax basis, from and against any and all liabilities, obligations, losses,
damages, penalties, claims, actions, suits, demands, costs, expenses and
disbursements (including legal fees and expenses) of any kind and nature
whatsoever ("Claims") which may be imposed on, incurred by or asserted against
any Indemnitee, whether or not such Indemnitee shall also be indemnified as to
any such Claim by any other Person, in any way relating to or arising out of (a)
this Lease or any of the other Lease Documents, or the performance, breach
(including any Default or Event of Default) or enforcement of any of the terms
hereof or thereof, or (b) the Aircraft, including the assertion or enforcement
of any manufacturer's, vendor's, dealer's or other supplier's warranties on the
Aircraft or any part thereof, or the manufacture, inspection, construction,
purchase, pooling, interchange, acceptance, rejection, ownership, titling or
re-titling, delivery, lease, sublease, charter, possession, use,

                                       9


operation, maintenance, management, security, condition, registration or
re-registration, sale, return, removal, repossession, storage or other
disposition of the Aircraft or any part thereof or any accident in connection
therewith, including, Claims involving or alleging environmental damage,
criminal acts, hijacking, acts of terrorism or similar acts, product liability
or strict or absolute liability in tort, latent and other defects (whether or
not discoverable), for patent, trademark or copyright infringement and for any
other risk or matter, the responsibility for which Lessee has agreed to bear in
Section 5, including any of the same that result in injuries, death,
destruction, or other harm or loss to Persons or property, without regard as to
who may have operational control of the Aircraft from time to time.
Notwithstanding the foregoing, Lessee shall not be required to indemnify an
Indemnitee under this Section 11 for (i) any Claim caused solely and directly by
the gross negligence or willful misconduct of such Indemnitee (except as imputed
by law), (ii) any Impositions, or (iii) any Claim in respect of the Aircraft
arising from acts or events which occur after (A) the Aircraft has been
redelivered to such Indemnitee in accordance with this Lease, and (B) any and
all other obligations of any kind whatsoever of the Lessee under this Lease have
been fully paid or performed, as the case may be, unless any such Claims were
caused by Lessee, or anyone claiming through Lessee, or resulted directly or
indirectly, from any acts, events or omissions of any kind whatsoever during the
Term of this Lease. Lessee's obligations under this Section 11 shall survive any
expiration, cancellation or other termination of this Lease. If any Claim is
made against Lessee or an Indemnitee, the party receiving notice of such Claim
shall promptly notify the other, but the failure of the party receiving notice
to so notify the other shall not relieve Lessee of any obligation hereunder.

SECTION 12. ASSIGNMENT, MANAGEMENT AND CHARTERING.

      (a) Lessee's Conveyances; and Liens. Except as expressly permitted below,
Lessee shall not sell (or offer or advertise the sale of), assign, charter,
sublease, timeshare, pool, interchange, convey, mortgage or otherwise transfer
or encumber this Lease, the Aircraft, including any Engine, any APU or any Part
or any Collateral, or its interest with respect thereto, and any such transfer
or encumbrance, whether by operation of law or otherwise, shall be null and
void, in all respects. In addition, Lessee shall not relinquish possession of
the Airframe, any APU, or any Engine or Part or install any APU or any Engine or
Part, or permit any APU or any Engine or Part to be installed, on any Airframe
other than the Airframe leased hereunder except as expressly set forth herein.
The foregoing shall not be deemed to prohibit the delivery of possession of the
Aircraft, any APU, any Engine or Part to another Person for testing, service,
repair, maintenance, overhaul or, to the extent permitted hereby, for alteration
or modification. Lessee will not create or suffer to exist any Liens on or with
respect to the Aircraft, any APU, any Engine or Part, any Collateral, or
Lessee's interest therein other than Permitted Liens. Lessee will promptly take
such action as directed by Lessor to duly discharge any such Lien. If Lessee
fails to remove a Lien, Lessor may take such action as it deems appropriate to
remove such Lien, but without waiving its other rights hereunder. Lessee shall
reimburse Lessor on demand for any costs incurred by Lessor in connection with
such action, together with interest at the Late Payment Rate.

      (b) Lessor's Conveyances. Lessor, may at any time, with or without notice
to Lessee, grant a security interest in, sell, assign or otherwise transfer (an
"Assignment") all or any part of its interest in the Lease Documents or the
Aircraft or any Rent due or to become due hereunder, and Lessee shall perform
all of its obligations under the Lease Documents, to the extent so transferred,
for the benefit of the beneficiary of such Assignment (such beneficiary,
including any successors and assigns, an "Assignee") except that the interest of
any such Assignee shall be subject to Lessee's rights to the extent provided in
this Lease. Lessee waives any right and agrees not to assert against any
Assignee any defense, setoff, recoupment, claim, counterclaim or any other
Abatement that Lessee may have against Lessor, unless expressly assumed by such
Assignee, in which case, Lessor shall be relieved of any such assumed
obligations. The foregoing waiver is not intended to contradict or otherwise
limit or modify the provisions of Section 7. If so directed in writing, Lessee
shall pay all Rent and all other sums due or to become due under the Lease
Documents directly to the Assignee or any other party designated in writing by
Lessor. Lessee acknowledges and agrees that Lessor's right to enter into an
Assignment is essential to Lessor, and, accordingly, waives any restrictions
under Applicable Law with respect to an Assignment and any related remedies.
Upon the request of Lessor or any Assignee, Lessee also agrees (a) to promptly
execute and deliver to Lessor or to such Assignee an acknowledgment of
assignment in form and substance satisfactory to the requesting party, an
insurance certificate and such other documents and assurances reasonably

                                       10


requested by Lessor or Assignee, and (b) to comply with the reasonable
requirements of any such Assignee in order to perfect any such assignment or
transfer.

      (c) Successors and Assigns. This Lease shall be binding upon and inure to
the benefit of, and may be enforced by (i) Lessor and its successors and other
Assignees, or other express third party beneficiaries, and (ii) Lessee and its
successors and assigns (subject to Section 12(a)).

      Notwithstanding the foregoing, provided that no Default or Event of
Default has occurred and is continuing, Lessee may contract with the Manager to
provide certain management services with respect to the Aircraft, and to charter
the Aircraft to any customer of the Manager from time to time pursuant to the
Management Agreement, in each case, as specified in the Consent to Management
Agreement, subject to the satisfaction of the following conditions: (a) Manager
is and remains a solvent, domestic corporation holding a current and valid Air
Carrier Certificate issued by the FAA; (b) the average annual flight hours in
charter operation shall not exceed 40% percent of the total average annual
flight hours of the operation of the Aircraft and/or the charter operation (or
chartering) shall not result in any loss of any Assumed Tax Benefits, and (c)
the Management Agreement and any such charter entered into pursuant thereto (i)
do not convey any Lien or other interest in or against the Aircraft, and (ii)
expressly (A) remain, subject and subordinate to the Lease and the rights of
Lessor hereunder and in and to the Aircraft (including, without limitation,
Lessor's right to repossess the Aircraft and to avoid such Management Agreement
or charter pursuant to Section 13(b) hereof), (B) do not permit any further
disposition, (C) do not contain provisions that are inconsistent with the
provisions of this Lease or cause Lessee to breach any of its representations,
warranties or agreements under this Lease, and (D) otherwise conform to the
Consent to Management Agreement. Lessor acknowledges that certain of the duties
and obligations of Lessee hereunder may be performed by Manager, however, this
acknowledgment on the part of Lessor does not constitute an acceptance by Lessor
of such performance by Manager of such duties and obligations unless the
performance of such duties and obligations fully and completely satisfies the
requirements of the Lease. The terms and conditions of the Consent to Management
Agreement are hereby incorporated herein by their reference. No such arrangement
by Lessee will reduce any of the obligations of Lessee hereunder or the rights
of Lessor hereunder, and all of the obligations of Lessee hereunder shall be and
remain primary and shall continue in full force and effect as the obligations of
a principal and not of a guarantor or surety.

SECTION 13. EVENTS OF DEFAULT AND REMEDIES.

      (a) Events of Default. The term "Event of Default" means (i) non-payment
of any Basic Rent, Supplemental Rent (including Casualty Value, if applicable)
and/or any other amount due pursuant to any Rider, Addendum or Supplement hereto
within ten (10) days after any or all of the same shall become due and payable,
or, upon demand, any other amount required to be paid herein or in connection
with any Rider, Addendum or Supplement hereto or under any other agreement with
Lessor; (ii) failure to maintain, use, or operate the Aircraft in compliance
with Applicable Law; (iii) any use of the Aircraft outside of the U.S. that is
prohibited by this Lease, or use for any illegal purpose; (iv) failure to
obtain, maintain and/or comply with all of the insurance coverages required
under this Lease; (v) any prohibited transfer or encumbrance, or the existence
of any unpermitted Lien, or any other action or circumstance that is prohibited
by, or any violation of, Section 12(a); (vi) failure to return the Aircraft to
Lessor on the date and in the manner required by this Lease; (vii) a default by
Lessee under any loan, note, security agreement, lease, guaranty, conditional
sale or other agreement with, or other financial obligation to, Lessor or its
Affiliates; (viii) a default by Lessee in any payment or other obligation to any
Person other than Lessor or its Affiliates, if the aggregate amount of such
respective payment or obligation, or if the aggregate amount of the underlying
agreement, document or obligation regarding any such default, is in excess of
$1,000,000.00; (ix) a material inaccuracy in any representation or breach of
warranty by Lessee (including any false or misleading representation or
warranty) in any financial statement or Lease Document; (x) the commencement of
any bankruptcy, insolvency, receivership or similar proceeding by or against
Lessee or any of its properties or business (unless, if involuntary, the
proceeding is dismissed within sixty (60) days of the filing thereof) or the
rejection of this Lease or any other Lease Document in any such proceeding; (xi)
the failure by Lessee generally to pay its debts as they become due and its
admission in writing of such inability; (xii) the occurrence of any of

                                       11


the following events: (A) Lessee enters into any transaction of merger or
consolidation, unless Lessee is the surviving corporation; (B) Lessee ceases to
do business as a going concern, or liquidates, or dissolves; (C) Lessee sells,
transfers, or otherwise disposes of all or substantially all of its assets or
property, or enters into a leveraged buyout; (D) Lessee changes the form of
organization of its business; (E) if privately owned, Lessee permits any
substantial change in the ownership or control of its capital stock or
membership interests such that less than 50% of such equity interest remain with
the holder(s) of such equity interests as of the date of this Lease; or (F) if
publicly held when it entered into this Lease, any change so that Lessee is no
longer subject to the reporting requirements of the Securities Exchange Act of
1934, as amended, or no longer registered under Section 12 of the Securities Act
of 1933, as amended, if it so reported or registered as of the date of this
Lease; (xiii) a material adverse change in the business, operations, financial
reporting, or financial condition of the Lessee or in its ability to comply with
any Lease Documents since the date of this Lease as determined by Lessor, in its
sole discretion and in good faith; (xiv) failure by Lessee to notify Lessor of
any Default or Event of Default within ten (10) business days of its occurrence;
(xv) breach by Lessee of any other covenant, condition or agreement (other than
those in items (i)-(xiv)) under this Lease or any of the other Lease Documents
that continues for thirty (30) days after Lessor's written notice to Lessee (but
such notice and cure period will not be applicable unless such breach is curable
by practical means within such notice period); (xvi) the repudiation or
rescission, or attempted repudiation or rescission, or unenforceability of the
Guaranty or any other Lease Document to which Guarantor is a party, or any
allegation that the Guaranty or any such Lease Document is unenforceable; (xvii)
Guarantor's failure generally to pay its debts as they become due and its
admission in writing of such inability; (xviii) a material adverse change in the
business, operations, financial reporting, or financial condition of Guarantor
or in its ability to comply with the Guaranty or any other Lease Documents to
which it is a party since the date of the Guaranty as determined by Lessor, in
its sole discretion and in good faith; (xix) failure by Guarantor to notify
Lessor of any Event of Default or event, which with the giving of notice or
passing of time or both, would constitute an Event of Default, in each case,
pertinent to Guarantor or the Guaranty, within ten (10) business days of its
occurrence; (xx) any event or condition set forth in subsections (vii) through
(xii) of this Section 13(a) shall occur with respect to Guarantor or any other
guarantor or other Person responsible, in whole or in part, for payment or
performance of this Lease; (xxi) to the extent not already covered in any other
subsection of this Section 13(a), any Default (as defined in the Guaranty) shall
occur; or (xxii) if Lessee contracts with the Manager to provide, among other
things, certain management services with respect to the Aircraft pursuant to
Section 12 of this Lease, any event or condition set forth in subsections (ii)
through (v) and subsection (x) of this Section 13(a) shall occur with respect to
the Manager.

      (b) Remedies. If an Event of Default occurs, Lessor may exercise any one
or more of the following remedies (in its sole discretion): (i) proceed at law
or in equity, to enforce specifically Lessee's performance or to recover
damages; (ii) declare this Lease in default, and/or cancel this Lease or
otherwise terminate Lessee's right to use of the Aircraft and Lessee's other
rights, but not its obligations under this Lease, and Lessee shall immediately
return the Aircraft to Lessor in accordance with the terms of this Lease; (iii)
enter the premises where the Aircraft is located and take immediate possession
of and remove (or disable in place) the Aircraft (and/or the APU, any Engines
and Parts then unattached to the Aircraft) by self-help, summary proceedings or
otherwise without liability; (iv) use Lessee's premises for storage as set forth
in this Lease without liability; (v) sell, re-lease or otherwise dispose of the
Aircraft (or any Engine or Part), whether or not in Lessor's possession, at
public or private sale, with or without notice to Lessee, and apply or retain
the net proceeds of such disposition, with Lessee remaining liable for any
deficiency and with any excess being retained by Lessor, or keep the Aircraft
idle; (vi) apply any deposit or other cash collateral, or any proceeds of any
Collateral, at any time to reduce any amounts due to Lessor; (vii) demand and
recover from Lessee the Liquidated Damages and other Rent whenever the same
shall be due; (viii) terminate any Management Agreement and any charter, without
regard as to the existence of any event of default thereunder and recover or
cause Lessee and Manager to relinquish possession and return the Aircraft,
including the Engines and Parts, pursuant to this Section 13, and/or exercise
any and all other remedies under the Consent to Management Agreement, or in
Lessee's stead, to the extent provided for under, or otherwise available to
Lessee in connection with any Management Agreement; and (ix) exercise any and
all other remedies allowed by Applicable Law, including the UCC. Without
limiting the generality of the foregoing, (A) upon the occurrence of an Event of
Default, Lessor may, among other things, demand and recover from Lessee the
Casualty Value (calculated as contemplated in the definition of Liquidated
Damages) or other applicable Liquidated Damages (in lieu of

                                       12


future Basic Rent, and not as a penalty) and other Rent then due, and/or demand
that Lessee return the Aircraft in accordance with this Lease; and (B) if Lessee
returns the Aircraft, and after Lessor disposes of it, Lessor will determine the
amount, if any, of any credit or reimbursement or deficiency, as applicable,
with respect to Lessee's obligation to pay such Casualty Value or other
Liquidated Damages (all as contemplated in the definition of such term).

      (c) Lessor's Performance. If Lessee fails to perform any of its agreements
contained in this Lease, including its obligations to keep the Aircraft free of
Liens, comply with Applicable Law, or obtain the requisite insurance coverages,
Lessor shall have the right, but shall not be obligated, to effect such
performance and any expenses incurred by Lessor in connection with effecting
such performance, together with interest thereon at the Late Payment Rate, shall
be payable by Lessee promptly upon demand. Any such action shall not be a cure
or waiver of any Default or Event of Default hereunder.

      (d) Power-of-Attorney. Lessee irrevocably appoints Lessor as its
attorney-in-fact to act in Lessee's name and on its behalf to make, execute,
deliver and file any instruments or documents (including any filings at the
FAA), settle, adjust, receive payment, make claim or proof of loss, endorse
Lessee's name on any checks, drafts or other instruments in payment of any
insurance claims and to take any action as Lessor deems reasonably necessary or
appropriate to carry out the intent of this Lease; provided, however, Lessor
agrees that it will not exercise this power unless an Event of Default has
occurred or a Default has occurred and is continuing. This appointment is
coupled with an interest, is irrevocable, and shall terminate only upon payment
in full of the obligations set forth in this Lease and/or any other Lease
Documents.

      (e) Enforcement Costs. Lessee shall be liable for, and pay to Lessor upon
demand, all costs, charges and expenses incurred by Lessor in enforcing or
protecting its rights under this Lease, whether by reason of any Default or
Event of Default, or otherwise, including, legal fees, disbursements, insurance,
expert witness fees, consultant fees, repossession, taxes, lien removal,
recovery, storage, inspection, appraisal, repair, costs of transportation,
refurbishing, advertising and brokers' fees, and other carrying costs and costs
of sale, re-lease or other disposition of the Aircraft.

      (f) Cumulative Remedies, Etc. No right or remedy is exclusive. Each may be
used successively and cumulatively and in addition to any other right or remedy
referred to above or otherwise available to Lessor at law or in equity,
including, such rights and/or remedies as are provided for in the UCC, but in no
event shall Lessor be entitled to recover any amount in excess of the maximum
amount recoverable under applicable law with respect to any Event of Default. No
express or implied waiver by Lessor of any Default or Event of Default hereunder
shall in any way be, or be construed to be, a waiver of any future or subsequent
Default or Event of Default. The failure or delay of Lessor in exercising any
rights granted it hereunder upon the occurrence of any of the contingencies set
forth herein shall not constitute a waiver of any such right upon the
continuation or reoccurrence of any such contingencies or similar contingencies,
and any single or partial exercise of any particular right by Lessor shall not
exhaust the same or constitute a waiver of any other right provided for or
otherwise referred to herein. Lessee hereby waives any rights under the UCC to
cancel or repudiate this Lease or any of the other Lease Documents, to reject or
revoke acceptance of the Aircraft or any component thereof, to suspend
performance, and to recover from Lessor any general, special, incidental or
consequential damages, for any reason whatsoever. All remedies set forth herein
shall survive the expiration, cancellation or other termination of this Lease
for any reason whatsoever.

                                       13


SECTION 14. NOTICES, REPORTS, FURTHER ASSURANCES AND INSPECTIONS.

      (a) Notices. All communications and notices provided for herein shall be
in writing and shall become effective (i) upon hand delivery, or (ii) upon
delivery by an overnight delivery service, or (iii) upon two (2) Business Days
after being deposited in the U.S. mail with proper postage for first-class mail
prepaid, sent by registered or certified mail, return receipt requested, and
addressed to Lessor or Lessee at their respective addresses set forth under the
signatures hereto or such other address as either party may hereafter designate
by written notice to the other, or (iv) when sent by telecopy (with customary
confirmation of receipt of such telecopy) on the Business Day when sent or upon
the next Business Day if sent on other than a Business Day.

      (b) Reports. Lessee will provide Lessor with the following in writing
within the time periods specified: (i) notice of any Lien which attaches to the
Aircraft, and the full particulars of the Lien, within ten (10) days after
Lessee becomes aware of the Lien; (ii) (A) Guarantor's consolidated balance
sheet and statement of retained earnings, prepared in accordance with GAAP,
certified by a recognized firm of certified public accountants, within ninety
(90) days of the close of each fiscal year of Guarantor, (B) Guarantor's
consolidated quarterly financial report certified by the chief financial officer
of Guarantor, within forty-five (45) days of the close of each fiscal quarter of
Guarantor, (C) all of Guarantor's Forms 10-K and 10-Q, if any, filed with the
SEC within thirty (30) days after the date on which they are filed (by
furnishing these SEC Forms, or making them publicly available in electronic
form, Lessee shall be deemed to have satisfied the requirements of clauses
(b)(ii)(A), (B), or (C)); (iii) notice to Lessor of any change of the Primary
Hangar Location, ten (10) days prior to any such change; (iv) notice of any loss
or damage to the Aircraft in accordance with Section 10; (v) notice of any
accident involving the Aircraft causing bodily injury or property damage to
third parties, within five (5) days of such accident; and (vi) ten (10) days
prior to the policy expiration date for any insurance coverage required by this
Lease, evidence (having the form and substance consistent with Section 2(g) of
the Closing Terms Addendum) of the renewal or replacement of such coverage
complying with the terms hereof. Lessee will also provide Lessor with the
following in writing promptly upon Lessor's request: (i) a copy of any insurance
policy required by this Lease; (ii) notice to Lessor of the Aircraft's location,
and the location of all Records relating to the Aircraft and its use,
maintenance and/or condition; (iii) such information as may be necessary to
enable Lessor to file any reports required by any governmental authority due to
Lessor's ownership of the Aircraft; (iv) copies of any manufacturer's
maintenance service program contract for the Airframe or Engines; (v) copies of
all Records evidencing Lessee's compliance with FAA airworthiness directives and
mandatory service bulletins and of compliance with the provisions of Section 9
hereof and of the Return Addendum, and any other requested Records; and (vi)
such other reports or information as Lessor may reasonably request.

      (c) Further Assurances. Lessee will promptly execute or otherwise
authenticate any documents, filings and other records, including, amendments to
this Lease, UCC and FAA filings and acknowledgments of assignment, and will take
such further action as Lessor may reasonably request in order to carry out more
effectively the intent and purposes of this Lease and to establish and protect
Lessor's rights and remedies under this Lease, or otherwise with respect to the
Aircraft and/or the Collateral. Lessee irrevocably authorizes Lessor to file
UCCs with respect to the Aircraft or Collateral. Lessee agrees not to file any
corrective or termination statements with respect to any UCC or other filings
relating to the Aircraft or any Collateral. Lessee agrees to cause Guarantor to
furnish to Lessor, from time to time, such information relating to Guarantor as
Lessor shall reasonably request.

      (d) Inspection. Lessor shall have the right, but not the duty, to inspect
the Aircraft, any component thereof and/or the Records, at any reasonable time
and from time to time, wherever located, upon reasonable prior written notice to
Lessee; except that no advance notice shall be necessary prior to any inspection
conducted, and such inspection may be conducted at any time, after the
occurrence of a Default or an Event of Default. Upon request of Lessor, Lessee
shall promptly confirm to Lessor the location of the Aircraft and/or the
Records. Lessee shall be responsible for the cost of any inspection conducted
after the occurrence of a Default or an Event of Default, and shall pay Lessor
such amount as additional Rent within ten (10) days of demand.

                                       14


SECTION 15. TRANSACTION EXPENSES. Without limiting any other provision of this
Lease, Lessee shall perform and comply with all of its obligations, and possess,
use, operate, insure, maintain, and comply with Applicable Law, service, return
and/or store the Aircraft (or cause any or all of the same to be done) and take
all other actions contemplated in this Lease and the other Lease Documents at
its sole risk, cost and expense. Lessee shall pay all fees, costs and expenses
actually incurred by or on behalf of Lessor at any time in connection with this
Lease, whether or not the transactions contemplated hereby are consummated,
including, without limitation, appraisal and inspection fees, Lessor's counsel
(provided, that the fees, costs and expenses relating only to the execution and
delivery of this Lease and the Lease Supplement and payable by the Lessee shall
not, in the aggregate, exceed $30,000.00, but shall not be limited as to any
other fees, costs and expenses, including, without limitation, attorneys' fees
and expenses, incurred by or behalf of Lessor at any time after the execution
and delivery of this Lease and the Lease Supplement) and FAA Counsel's fees and
expenses, UCC, FAA or other applicable title and lien searches, reports, filing
and recording fees, charges and taxes, and costs and expenses incurred in
connection with Lessee's exercise of any option or other right granted under, or
any amendment or other modification to any of, the Lease Documents.

SECTION 16.  MISCELLANEOUS.

      (a) Interpretation. Time is of the essence in the payment and performance
of all of Lessee's obligations under this Lease. Any provision of this Lease
which may be determined to be prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective in such jurisdiction to the
extent thereof without invalidating the remaining provisions of this Lease. The
division of this Lease into sections, the provision of a table of contents and
the insertion of headings are for convenience of reference only and shall not
affect the construction or interpretation of this Lease. The execution hereof on
behalf of Lessee and Lessor shall be deemed to constitute the acceptance by
Lessee and Lessor of the terms and conditions of each and every addendum, rider,
supplement, schedule, annex and exhibit hereto as if such document was
separately and individually executed on behalf of such party hereto and shall
constitute a part of this Lease. THIS LEASE MAY BE EXECUTED IN ANY NUMBER OF
COUNTERPARTS AND BY THE PARTIES HERETO ON SEPARATE COUNTERPARTS. ONLY
COUNTERPART NO. 1 OF THIS LEASE AND THE LEASE SUPPLEMENT SHALL BE CONSIDERED
"CHATTEL PAPER" FOR PURPOSES OF THE UCC.

      (b) Granting Clause. In order to secure the prompt and full payment and
performance as and when due of any and all obligations and indebtedness of
Lessee to Lessor, now existing or hereafter created of any kind whatsoever,
Lessee hereby collaterally assigns, grants, and conveys to Lessor, a security
interest in and lien on all of Lessee's right, title and interest in and to all
of the following (the "Collateral"): (i) this Lease and any present and future
subleases, management agreements, interchange agreements, charter agreements,
purchase agreements and any other present and future agreements of any kind
whatsoever relating to the Aircraft or any part thereof and all rent, charter
payments, reimbursements and other disbursements, remittances or other amounts
payable with respect thereto; (ii) (in the event that contrary to the intentions
of Lessee and Lessor, a court determines that this Lease is not a "true" lease
under the UCC) the Aircraft and all present and future parts, accessories,
accessions and attachments thereto, and all present and future replacements,
substitutions and exchanges for such goods; and (iii) proceeds of the foregoing,
including all related goods, accounts, chattel paper, documents, instruments,
general intangibles, letters of credit, letters of credit rights, investment
property, deposit accounts, and supporting obligations, insurance proceeds,
warranty and requisition payments, and all present and future books and records
relating to any of the foregoing and/or the Aircraft (including, without
limitation, all tapes, cards, computer programs, computer runs and computer data
in the possession or control of the Lessee, any computer service bureau, or
other third party). The collateral assignment, security interest and lien
granted herein shall survive the termination, cancellation or expiration of this
Lease until such time as Lessee's obligations under this Lease are fully and
indefeasibly discharged.

      (c) Entire Agreement. This Lease, and each of the other Lease Documents,
the Purchase Documents, and Required Documents, collectively constitute, and are
intended to collectively constitute, the complete and exclusive statement of the
terms of the agreement between Lessor and Lessee with respect to the purchase
and leasing of the Aircraft. This Lease, the Purchase Documents, and the other
Required

                                       15


Documents cancel and supersede any and all prior or contemporaneous oral or
written understandings, memoranda, negotiations, communications, agreements, and
other records, with respect thereto including, any proposal letter, commitment
letter, and/or term sheet delivered to the Lessee by Lessor, or to Lessor by
Lessee. NO TERM OR PROVISION OF THIS LEASE MAY BE AMENDED, ALTERED, WAIVED,
DISCHARGED, OR TERMINATED EXCEPT IN A WRITING SIGNED BY A DULY AUTHORIZED
OFFICER OF THE PARTY AGAINST WHOM THE ENFORCEMENT OF THE AMENDMENT, ALTERATION,
WAIVER, DISCHARGE OR TERMINATION IS SOUGHT.

      (d) Governing Law, Choice of Forum and Jury Trial Waiver. Lessee
acknowledges and agrees that this Lease has been executed and delivered in Rhode
Island; however, BOTH PARTIES AGREE THAT THIS LEASE SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF BOTH PARTIES SHALL BE GOVERNED
BY, THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT
OF LAWS PRINCIPLES OF SUCH STATE), INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY, AND PERFORMANCE. Lessee hereby irrevocably consents and agrees that
any legal action, suit, or proceeding arising out of or in any way in connection
with this Agreement may be instituted or brought in the courts of the State of
New York or the U.S. District Court for the Southern District of New York, as
Lessor may elect, and by execution and delivery of this Lease, Lessee hereby
irrevocably accepts and submits to, for itself and in respect of its property,
generally and unconditionally, the non-exclusive jurisdiction of any such court,
and to all proceedings in such courts. LESSEE ALSO HEREBY KNOWINGLY AND FREELY
WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY LITIGATION ARISING HEREFROM OR IN
RELATION HERETO.

SECTION 17. TRUTH IN LEASING. THE AIRCRAFT, AS EQUIPMENT, BECAME SUBJECT TO THE
MAINTENANCE REQUIREMENTS OF PARTS 91 AND/OR 135, AS APPLICABLE, OF THE FEDERAL
AVIATION REGULATIONS ("FARS") UPON THE REGISTRATION OF THE AIRCRAFT WITH THE
FAA. LESSEE CERTIFIES THAT DURING THE TWELVE (12) MONTHS (OR PORTION THEREOF
DURING WHICH THE AIRCRAFT HAS BEEN SUBJECT TO U.S. REGISTRATION) PRECEDING THE
EXECUTION OF THIS LEASE, THE AIRCRAFT HAS BEEN MAINTAINED AND INSPECTED UNDER
PARTS 91 AND/OR 135, AS APPLICABLE, OF THE FARS. LESSEE CERTIFIES THAT THE
AIRCRAFT WILL BE MAINTAINED AND INSPECTED UNDER PARTS 91 AND/OR 135, AS
APPLICABLE, OF THE FARS FOR OPERATIONS TO BE CONDUCTED UNDER THIS LEASE. UPON
EXECUTION OF THIS LEASE, AND DURING THE TERM HEREOF, THE LESSEE, WHOSE NAME AND
ADDRESS ARE SET FORTH IMMEDIATELY BELOW, ACTING BY AND THROUGH THE SIGNATORY
HERETO, WHO EXECUTES THIS SECTION SOLELY IN HER/HIS CAPACITY OF THE LESSEE SET
FORTH BELOW HER/HIS SIGNATURE, CERTIFIES THAT LESSEE SHALL BE RESPONSIBLE FOR
THE OPERATIONAL CONTROL OF THE AIRCRAFT UNDER THIS LEASE (WHILE IT HAS
POSSESSION OF THE AIRCRAFT), UNLESS OPERATIONAL CONTROL OF THE AIRCRAFT IS
PROVIDED TO AN AIR TAXI OPERATOR CERTIFICATED UNDER PART 135 OF THE FARS, IF AND
TO THE EXTENT PERMITTED HEREUNDER. THE LESSEE FURTHER CERTIFIES THAT IT
UNDERSTANDS ITS RESPONSIBILITIES FOR COMPLIANCE WITH APPLICABLE FARS, PROVIDED
HOWEVER, THAT THE LESSEE SHALL NOT BE DEEMED TO BE RESPONSIBLE FOR THE
OPERATIONAL CONTROL OF THE AIRCRAFT FOR SO LONG AS THE AIRCRAFT IS IN POSSESSION
OF ANY SUCH AIR TAXI OPERATOR HAVING OPERATIONAL CONTROL TO THE EXTENT PERMITTED
HEREUNDER. AN EXPLANATION OF FACTORS BEARING ON OPERATIONAL CONTROL AND
PERTINENT FARS CAN BE OBTAINED FROM THE NEAREST FEDERAL AVIATION FLIGHT STANDARD
DISTRICT OFFICE, GENERAL AVIATION DISTRICT OFFICE, OR AIR CARRIER DISTRICT
OFFICE.

                      [this space intentionally left blank]

                                       16


      IN WITNESS WHEREOF, the parties hereto have caused this Lease to be duly
executed as of the date first written above by their respective officers
thereunto duly authorized.

Lessor:                                   Lessee:
FLEET NATIONAL BANK                       PRIORITY FULFILLMENT SERVICES, INC.

By:__________________________________     By:__________________________________

Title:_______________________________     Title:_______________________________

Print Name:__________________________     Print Name:__________________________

Address: c/o Fleet Capital Corporation    Address: 500 North Central Expressway,
         One Financial Plaza, 5th Floor             5th Floor Plano, Texas 75074
         Providence, RI  02903

THIS IS COUNTERPART NO. __ OF A TOTAL OF 3 COUNTERPARTS. ONLY COUNTERPART NO. 1
SHALL BE CONSIDERED CHATTEL PAPER FOR PURPOSES OF THE UNIFORM COMMERCIAL CODE
AND A SECURITY INTEREST MAY BE PERFECTED ONLY BY POSSESSION OF COUNTERPART NO.
1.

                                       17


                                    EXHIBIT A

                                   DEFINITIONS

(a) All References in the Lease to designated Sections and other subdivisions
are to such designated Sections and other subdivisions only, and the words
"herein," "hereof" and "hereunder" and other words of similar import refer to
the Lease as whole and not to any particular Section or other subdivision.

(b) Except as otherwise indicated, all the agreements and instruments defined
herein or in the Lease shall mean such agreements and instruments as the same
may from time to time be supplemented or amended, or as the terms thereof may be
expressly waived or modified to the extent permitted by, and in accordance with,
the terms thereof.

(c) The word "including" means including without limitation.

(d) The terms defined herein and in the Lease shall, for purposes of the Lease
and the Lease Supplement, addenda, riders, annexes, schedules, and exhibits
thereto, have the meanings assigned to them and shall include the plural as well
as the singular as the context requires.

(e) The following terms shall have the following meanings for all purposes of
the Lease:

Basic Rent Date, Basic Rent Percentage, Basic Term, Renewal Term, Daily Rent
Percentage, Expiration Date, First Basic Rent Date, Last Acceptance Date, Last
Basic Rent Date, Lessor's Cost, Primary Hangar Location, and Rent Commencement
Date shall have the meanings set forth in Schedules No. 2 and 2-A to the Lease.

Abatements shall have the meaning set forth in Section 7 of the Lease.

Acceptance Date shall mean the date on which Lessee irrevocably and
unconditionally accepts the Aircraft for lease under the Lease as evidenced by
the execution and delivery of the Lease Supplement dated such date (and is set
forth in the Lease Supplement).

Additions shall have the meaning set forth in Section 9 of the Lease.

Administrative Charge shall mean an amount equal to five percent (5%) of the
amount payable to which such charge applies.

Affiliate shall mean any affiliated person, firm or entity controlling,
controlled by or under common control with Lessee or Lessor, as applicable.

Aircraft Purchase Agreement shall mean that certain Swap Agreement dated as of
August 10, 2004 between Lessee and Supplier and any and all schedules,
supplements, riders, consents, amendments or modifications to said Swap
Agreement and any exhibits executed or delivered in connection therewith.

Alterations shall have the meaning set forth in Section 9 of the Lease.

Aircraft shall mean (i) the Airframe, (ii) the Engines, (iii) any APU, and (iv)
the Records.

Airframe shall mean (i) the Aircraft described in Schedule No. 1, and shall not
include the Engines or any APU, and (ii) any and all Parts from time to time
incorporated in, installed on, or attached to such Aircraft and any and all
Parts removed therefrom so long as title thereto shall remain vested in Lessor
in accordance with the applicable terms of the Lease after removal from the
Aircraft.

Applicable Law shall mean all applicable laws including all statutes, treaties,
conventions, judgments, decrees, injunctions, writs and orders of any court,
governmental agency or authority and rules,

                                       18


regulations, orders, directives, licenses and permits of any governmental body,
instrumentality, agency or authority as amended and revised, and any judicial or
administrative interpretation, of any of the same, including the airworthiness
certificate issued with respect to the Aircraft, all FARS, Supplemental FARS,
airworthiness directives, and/or any of the same relating to noise, the
environment, national security, public safety, exports or imports or contraband.

APU shall mean any auxiliary power unit described and listed by manufacturer's
serial number in Schedule No. 1 and currently installed on the Airframe whether
or not thereafter installed on such Airframe or any other airframe from time to
time; (ii) any auxiliary power unit which may from time to time be substituted,
pursuant to the applicable terms of the Lease, for any auxiliary power unit
leased hereunder; and (iii) in each case set forth in clauses (i) and (ii)
hereof, with any and all Parts incorporated in or installed on or attached to
any such auxiliary power unit, engine or any and all Parts removed therefrom so
long as title thereto shall remain vested in Lessor in accordance with the
applicable terms of the Lease after removal from any such auxiliary power unit.
The term "APU" means, as of any date of determination, any auxiliary power unit
leased hereunder.

AS-IS, WHERE-IS shall mean "AS-IS WHERE-IS", AND "WITH ALL FAULTS", WITHOUT ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OF ANY KIND WHATSOEVER, BY, OR
ANY RECOURSE OF ANY KIND WHATSOEVER TO, LESSOR.

Assignee shall have the meaning set forth in Section 12 of the Lease.

Assignment shall have the meaning set forth in Section 12 of the Lease.

Assumed Tax Benefits shall have the meaning set forth in the Special Tax
Indemnity Rider to the Lease.

Basic Rent shall have the meaning set forth in Section 3 of the Lease.

Business Day shall mean any day other than a Saturday, Sunday or other day on
which banks located in Providence, Rhode Island are closed or are authorized to
close.

Casualty Payment Date shall have the meaning set forth in Section 10(a) of the
Lease.

Casualty Value for any Basic Rent Date shall be the amount equal to the Lessor's
Cost multiplied by the applicable percentage set forth on Schedule No. 3 for
such Basic Rent Date (or the corresponding Basic Rent number), or if the
Casualty Payment Date is after the last Basic Rent Date, the Casualty Value for
such date shall be the amount equal to the Lessor's Cost multiplied by the
applicable percentage set forth on Schedule No. 3 for the last Basic Rent Date
(or the corresponding Basic Rent number); provided, however, in the case of an
Event of Loss covered by the insurance covering loss or damage to the Aircraft
required to be maintained by Lessee pursuant to the Lease (or which would have
been covered by such insurance, had such insurance been maintained as required),
Casualty Value shall mean the higher of Fair Market Sales Value or the amount
equal to the Lessor's Cost multiplied by the applicable percentage set forth on
Schedule No. 3 for the applicable Basic Rent Date (or the corresponding Basic
Rent number).

Claims shall have the meaning set forth in Section 11 of the Lease.

Collateral shall have the meaning set forth in Section 17(b) of the Lease.

Code shall have the meaning set forth in the Special Tax Indemnity Rider.

Consent to Management Agreement shall mean any Consent to Management Agreement
(Charter) Agreement and Assignment required by Lessor in connection with the
Lease and which shall be in form and substance satisfactory in all respects to
Lessor.

Daily Rent shall have the meaning set forth in Section 3 of the Lease.

                                       19


Default shall mean an event or circumstance which, after the giving of notice or
lapse of time, or both, would become an Event of Default.

Early Purchase Date shall mean each of the Basic Rent Number(s) designated as
such on Schedule No. 2-A to the Lease Supplement.

Early Purchase Option Amount shall be the amount payable by the Lessee in the
event that it exercises its option to purchase the Aircraft pursuant to
paragraph (e) of the Purchase, Early Purchase and Renewal Option Addendum to the
Lease, and shall be determined by multiplying the Lessor's Cost of the Aircraft
by the percentage set forth opposite the applicable Early Purchase Date set
forth on Schedule No. 2-A to the Lease Supplement.

Engine shall mean (i) each of the engines described and listed by manufacturer's
serial numbers in Schedule No. 1 and currently installed on the Airframe covered
by such Lease Supplement whether or not thereafter installed on such Airframe or
any other airframe from time to time; (ii) any engine which may from time to
time be substituted, pursuant to the applicable terms of the Lease, for an
Engine leased hereunder; and (iii) in each case set forth in clauses (i) and
(ii) hereof, with any and all Parts incorporated in or installed on or attached
to such Engine, engine or any and all Parts removed therefrom so long as title
thereto shall remain vested in Lessor in accordance with the applicable terms of
the Lease after removal from such Engine. The term "Engines" means, as of any
date of determination, all Engines leased hereunder.

Estimated Annual Hours shall mean the anticipated number of average annual
flight hours as shown on Schedule No. 2-A.

Event of Default shall have the meaning set forth in Section 13 of the Lease.

Event of Loss with respect to the Aircraft, the Airframe or any Engine or any
APU, shall mean any of the following events with respect to such property (i)
loss of such property or the use thereof due to theft, disappearance,
destruction, damage beyond repair or rendition of such property permanently
unfit for normal use for any reason whatsoever; (ii) any damage to such property
which results in an insurance settlement with respect to such property on the
basis of a total loss or constructive total loss; (iii) the condemnation,
confiscation or seizure of, or requisition of title to or use of, such property
by the act of any government (foreign or domestic) or of any state or local
authority or any instrumentality or agency of the foregoing ("Requisition of
Use"); (iv) as a result of any rule, regulation, order or other action by any
government (foreign or domestic) or governmental body (including, without
limitation, the FAA or any similar foreign governmental body) having
jurisdiction, the use of such property shall have been prohibited, or such
property shall have been declared unfit for use, for a period of six (6)
consecutive months, unless Lessee, prior to the expiration of the six-month
period, shall have undertaken and, in the reasonable opinion of the Lessor,
shall be diligently carrying forward all steps which are necessary or desirable
to permit the normal use of such property by Lessee or, in any event, if use
shall have been prohibited, or such property shall have been declared unfit for
use, for a period of twelve (12) consecutive months (unless waived by Lessor in
its sole and absolute discretion) or such prohibition shall exist on the
expiration or earlier cancellation or termination of the Lease; (v) with respect
to an Engine or any APU, the removal thereof from the Airframe for a period of
six (6) consecutive months or longer, whether or not such Engine or any APU, as
the case may be, is operational, or (unless waived by Lessor in its sole and
absolute discretion) such prohibition shall exist on the expiration or earlier
cancellation or termination of the Lease; (vi) an Engine or any APU is returned
to the Manufacturer, other than for modification in the event of patent
infringement or for repair or replacement (any such return being herein referred
to as a "Return to Manufacturer"); or (vii) (unless waived by Lessor in its sole
and absolute discretion) the Aircraft is not returned to Lessor upon the
expiration or earlier termination or cancellation of the Lease, unless Lessee or
a third party purchaser purchases the Aircraft pursuant to Lessee's exercise of
an option contemplating such purchase under any applicable provision of the
Lease. The date of such Event of Loss shall be the date of such theft,
disappearance, destruction, damage, Requisition of Use, prohibition, unfitness
for use for the stated period, removal for the stated period or Return to
Manufacturer. An Event of Loss with respect to the Aircraft shall be deemed to
have occurred if an Event of Loss occurs with respect to the Airframe. An Event
of Loss with

                                       20


respect to any Engine or any APU shall not, without loss of the Airframe, be
deemed an Event of Loss with respect to the Aircraft.

Excess Hours shall have the meaning set forth in the definition of Fair Market
Sales Value.

FAA shall mean the U.S. Federal Aviation Administration and/or the Administrator
of the Federal Aviation Administration and the Department of Transportation, or
any person, governmental department, bureau, authority, commission or agency
succeeding to the functions of any of the foregoing, including, where
applicable, the Transportation Security Administration.

FAA Counsel shall mean Daugherty, Fowler, Peregrin & Haught, 204 North Robinson,
Suite 900, Oklahoma City, Oklahoma 73102, or such other counsel as Lessor may
designate.

FAA Documents shall have the meaning set forth in the Closing Terms Addendum.

Fair Market Sales Value and Fair Market Rental Value shall mean those certain
values determined on the following basis: (i) the subject value shall be the
amount which would be obtained in an arm's length transaction between an
informed and willing buyer or lessee (who is neither a lessee in possession nor
a used equipment dealer), and an informed and willing seller or lessor, as the
case may be, under no compulsion to sell or lease, as the case may be; (ii) the
costs of removal of the Aircraft from its then location shall not be a deduction
from such value; and (iii) in determining any such value, it shall be assumed
(whether or not the same be true) (A) that the Aircraft has been maintained by
Lessee and is in the condition in which it is required to be returned to Lessor,
in each case, in accordance with the Lease, (B) such value has not been
diminished due to the existence of any damage history, and (C) that the total
number of Airframe hours (including any component with hourly overhaul
schedules) accumulated from the Acceptance Date to the Expiration Date or other
date of termination or cancellation do not exceed the product of Estimated
Annual Hours times the number of twelve month periods and any portion thereof,
from the Acceptance Date to such expiration, termination, or cancellation date
(any such excess, the "Excess Hours").

FARs shall mean the Federal Aviation Regulations, any Supplemental Federal
Aviation Regulations and all successor regulations thereto.

GAAP shall mean generally accepted accounting principles consistently applied.

Guarantor shall mean PFSWeb, Inc., a Delaware corporation with its principal
place of business and chief executive office at 500 North Central Expressway,
5th Floor, Plano, Texas 75074.

Guaranty shall mean the Guaranty dated as of August 25, 2004 executed by PFSWeb,
Inc., a Delaware corporation, having an office at 500 North Central Expressway,
5th Floor, Plano, Texas 75074, in favor of the Lessor and any and all schedules,
supplements, riders, consents, amendments or modifications to said Guaranty and
any exhibits executed or delivered in connection therewith.

Impositions shall have the meaning set forth in Section 8 of the Lease.

Late Payment Rate shall mean the lesser of a rate equal to 1.5% per month or the
highest rate permitted by Applicable Law. The Late Payment Rate shall be
computed on the basis of a 360 day year and a 30 day month.

Lease Documents shall mean the Lease (including the Lease Supplement), and all
documents, instruments and agreements entered into or provided by Lessee, any
guarantors and or other third party pursuant to or in connection with the Lease.

Lease Supplement shall mean a supplement to the Lease to be entered into as of
the Acceptance Date by Lessee, which supplement shall be substantially in the
form as attached to the Lease, and upon execution by Lessee shall constitute a
part of the Lease.

                                       21


Lessor's Liens shall mean any Liens created or granted by Lessor resulting from
claims against Lessor not related to Lessor's ownership of the Aircraft or
otherwise contemplated under the Lease.

Liens shall mean all liens, charges, security interests, leaseholds, and
encumbrances of every nature and description whatever, including, without
limitation, any of the same arising in connection with or created by any
Impositions, (other than Lessor's Liens) and rights of third parties under
management, charter, pooling, interchange, sublease, timeshare, overhaul, repair
or other similar agreements or arrangements.

Liquidated Damages shall mean the liquidated damages (all of which, Lessee
hereby acknowledges and agrees, are damages to be paid in lieu of future Basic
Rent and are reasonable in light of the anticipated harm arising by reason of an
Event of Default, and are not a penalty) described in parts (i), (ii), or (iii)
below, as determined by whether the Aircraft is returned or otherwise recovered,
and if returned or recovered, the time and manner of the disposition of the
Aircraft:

      (i) If Lessor recovers and sells the Aircraft, or Lessee has not returned
the Aircraft in the manner and condition required by the Lease, an amount
calculated as the Casualty Value of the Aircraft (determined as of the next
Basic Rent Date after the date of the occurrence of the subject Event of
Default), together with all other Rent due hereunder as of such determination
date, less a credit for any disposition proceeds, if applicable pursuant to the
application provisions in the next sentence. If Lessor demands the liquidated
damages under this part (i), and recovers and sells the Aircraft, any proceeds
of such disposition by Lessor, to the extent received by Lessor in good and
indefeasible funds, shall be applied by Lessor (A) first, to pay all costs,
charges and expenses, payable pursuant to Section 13, (B) second, to pay to
Lessor an amount equal to any unpaid Rent due and payable, together with the
liquidated damage amounts specified in this part (i), to the extent not
previously paid, (C) third, to pay to Lessor any interest accruing on the
amounts covered by the preceding clauses, at the Late Payment Rate, from and
after the date the same become due and payable pursuant to the terms hereof
through the date of payment, and (D) fourth, to reimburse Lessee for such
amounts to the extent paid by Lessee as liquidated damages pursuant to this part
(i) (up to the amount of the Casualty Value calculated as provided in the first
sentence of this part (i)). Any amount remaining thereafter shall be retained by
Lessor as owner of the Aircraft.

      (ii) If Lessor recovers the Aircraft and disposes of it pursuant to a
lease which is substantially similar to the Lease, then an amount equal to the
sum of (A) any accrued and unpaid Rent under the Lease as of the date of
commencement (the "Commencement Date") of the term of the new lease, plus (B)
the present value as of the Commencement Date of the total Basic Rent for the
then remaining term of the Lease, minus (C) the present value as of the
Commencement Date of the rent payable under the new lease, but only for the
period of the new lease term which commences on the commencement date of the new
lease and expires on the Expiration Date of the Lease.

      (iii) If Lessor recovers the Aircraft and disposes of it by a lease that
is not substantially similar to the Lease, or elects not to dispose of the
Aircraft, an amount equal to the sum of (A) any accrued and unpaid Rent as of
the date Lessor repossesses the Aircraft or such earlier date as Lessee tenders
possession of the Aircraft to Lessor, plus (B) the present value as of the date
of delivery under clause (A) of the total Basic Rent for the then remaining Term
of the Lease, minus (C) the present value, as of that certain date which may be
determined by taking into account Lessor's having a reasonable opportunity to
repossess and remarket the Aircraft, of the "market rent" (as computed pursuant
to Article 2-A of the UCC) in the continental U.S. on that date, computed for
the same lease term; provided, however, Lessee acknowledges and agrees that if
Lessor is unable after reasonable effort to dispose of the Aircraft at a
reasonable price or the circumstances reasonably indicate that such an effort
will be unavailing, the "market rent" in such event will be deemed to be $0.00,
but in the event that Lessor does eventually re-lease or otherwise dispose of
the Aircraft, it will apply the net proceeds of such disposition, to the extent
received in good and indefeasible funds, as a credit or reimbursement, as
applicable, in a manner consistent with the applicable provisions of Article
2-A.

                                       22


For purposes of computing liquidated damages under parts (ii) or (iii) above
only, any amounts discounted to present value, shall be discounted at the rate
of the Index Rate plus one percent (1%) per annum, compounded annually. For
purposes of computing liquidated damages under parts (ii) or (iii) above only,
"Index Rate" shall mean the "one-month" "London Interbank Offered Rate (LIBOR)"
as published in The Wall Street Journal in effect, as the case may be, two days
prior to the Acceptance Date. Lessor shall have no obligation to make any of the
remittances to Lessee that are contemplated in any part of this definition if
Lessor has paid such amounts to any guarantor or other Person having a right of
subrogation with respect to such amounts, or such guarantor or other Person has
demanded the payment of such amount.

Loaner Engine shall have the meaning set forth in Section 9(d) of the Lease.

Maintenance Requirements shall mean, with respect to the Airframe, any Engine,
any APU or any Part, all compliance requirements set forth in or under (i) all
maintenance manuals initially furnished with respect thereto, including any
subsequent amendments or supplements to such manuals issued by the Manufacturer
or Supplier from time to time, (ii) all mandatory service bulletins issued,
supplied, or available by or through the Manufacturer and/or the Manufacturer of
any Engine, any APU or Part with respect thereto, (iii) all applicable
airworthiness directives issued by the FAA or similar regulatory agency having
jurisdictional authority, (iv) all conditions to the enforcement of any
warranties pertaining thereto, (v) Lessee's FAA approved maintenance program
with respect thereto, and (vi) all additional requirements, if any, set forth in
the Supplemental Maintenance Addendum.

Management Agreement shall mean all of the documents and agreements constituting
the management agreement referenced in the Consent to Management Agreement,
which documents and agreements shall be in form and substance satisfactory in
all respects to Lessor.

Manager shall mean the manager referenced in the Consent to Management
Agreement, which manager shall be satisfactory in all respects to Lessor.

Manufacturer shall mean each manufacturer identified on Schedule No. 1 and its
successors and assigns.

Material Damage shall mean any damage: (a) required to be reported pursuant to
any governmental reporting requirement, (b) with respect to which an insurance
claim is being made, or (c) requiring that the Aircraft or any Engine be taken
out of service for more than one (1) day to repair.

MSP Contract shall mean a Honeywell Maintenance Service Plan or such other
maintenance agreements which shall be entered into from time to time between
Honeywell, Inc. (or such other vendor as Lessor may designate or approve in its
sole discretion) and Lessee, and which shall be in form and substance
satisfactory in all respects to Lessor in its sole discretion, which provide for
the maintenance and/or overhaul of the Engines and the APU.

Parts shall mean all appliances, avionics, parts, instruments, appurtenances,
accessories, furnishings and other equipment or property of whatever nature
(other than Additions or Engines), which may from time to time be incorporated
or installed in or attached to the Airframe or any Engine or any APU for so long
as title thereto shall be vested in Lessor in accordance with the applicable
terms of the Lease.

Permitted Liens shall mean (a) the respective rights of others under subleases,
management agreements, or charters, if any, to the extent expressly provided and
permitted by the terms of Section 12 of the Lease, (b) Lessor's Liens, and (c)
Liens for taxes either not yet due or being contested by Lessee in good faith,
and inchoate materialmen's, mechanic's, workmen's, repairmen's, employee's, or
other like Liens arising in the ordinary course of business of Lessee for sums
not yet delinquent or being contested in good faith, (and for the payment of
which adequate assurances and/or security have, in Lessor's sole judgment, been
provided to Lessor) with due diligence and by appropriate proceedings, if Lessor
shall have determined in its sole judgment that the nonpayment of any such tax
or Lien or the contest of any such payment in such proceedings does not and will
not adversely affect the title, property or rights of Lessor.

                                       23


Person shall mean any individual, partnership, corporation, limited liability
company, trust, association, joint venture, joint stock company, or
non-incorporated organization or government or any department or agency thereof,
or any other entity of any kind whatsoever.

Purchase Documents shall mean all fully executed purchase agreements in
connection with the acquisition of the Aircraft, including the Engines,
assignments of any or all of the Purchase Documents, in form and substance
satisfactory to Lessor, invoices and bills of sale from Supplier, naming Lessor
as purchaser and any other documents required in Section A.1(a) of the Closing
Terms Addendum.

Records shall mean any and all logs, manuals, certificates and data and
inspection, modification, maintenance, engineering, technical, and overhaul
records (whether in written or electronic form) with respect to the Aircraft
(whether in existence as of, or created at any time after, the Acceptance Date),
including, without limitation, all records required to be maintained by the FAA
or any other governmental agency or authority having jurisdiction with respect
to the Aircraft or any Manufacturer or Supplier of the Aircraft (or any part
thereof) with respect to the enforcement of warranties or otherwise, which
Records shall be at all times the property of the Lessor after the Acceptance
Date.

Rent shall have the meaning set forth in Section 3 of the Lease.

Required Documents shall have the meaning set forth in the Closing Terms
Addendum.

Requisition of Use shall have the meaning set forth in the Event of Loss
definition contained herein.

Return to Manufacturer shall have the meaning set forth in the Event of Loss
definition contained herein.

Schedules No. 1, 2, 2-A, 3 or 4 shall mean any of Schedules No. 1, 2, 2-A, 3 or
4, as applicable, to the Lease Supplement.

SEC shall mean the Securities and Exchange Commission.

Supplemental Rent shall have the meaning set forth in Section 3 of the Lease.

Supplier shall mean the "Supplier" or "Suppliers", as the case may be,
identified as such on Schedule No. 1 and their respective successors and
assigns.

Tax Loss shall have the meaning set forth in the Tax Rider.

Term shall mean the Basic Term together with (i) the period, if any, from and
including the Acceptance Date through, but not including, the Rent Commencement
Date, and (ii) any Renewal Term or Renewal Terms, if any, entered into pursuant
to the Lease.

Transportation Code shall mean Title 49, Subtitle VII of the United States Code,
as then in effect.

UCC shall mean the Uniform Commercial Code as in effect in the applicable
jurisdiction.

Warranty Bill of Sale shall mean a warranty bill of sale in the form of Exhibit
C hereto or such other form of warranty bill of sale as Lessor in its sole
discretion shall deem satisfactory.

                                       24


                                    EXHIBIT B

      SPECIAL TAX INDEMNITY RIDER ("Tax Rider") to Lease (S/N 143) dated as of
August 25, 2004, (the "Lease") by and between FLEET NATIONAL BANK, as lessor
("Lessor"), and PRIORITY FULFILLMENT SERVICES, INC., as lessee ("Lessee").

      All capitalized terms not defined in this Tax Rider are defined in the
Lease. Execution of the Lease by Lessee and Lessor shall be deemed to constitute
execution and acceptance of the terms and conditions of this Tax Rider, and it
shall supplement and be a part of the Lease.

1. LESSOR'S ASSUMPTIONS. In entering into the Lease and the transactions
contemplated thereby, Lessor has assumed that: (a) Lessor will be entitled, for
federal, state and local income tax purposes, to the following tax benefits (the
"Assumed Tax Benefits"): (i) cost recovery deductions under section 168 of the
Internal Revenue Code of 1986, as amended (the "Code") commencing in Lessor's
taxable year which includes the Acceptance Date, calculated using the 200%
declining balance method, switching to the straight line method for the first
taxable year for which that method yields a larger deduction, (ii) the half year
convention, (iii) a basis equal to 100% of Lessor's Cost, (iv) zero salvage
value, and (v) a recovery period of 5 years. and (b) Lessor will be taxed for
federal, state and local corporate income and franchise tax purposes at an
effective combined tax rate of 37.50% (the "Assumed Tax Rate").

2. LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS. Lessee represents,
warrants, and covenants that: (a) the Aircraft will not constitute "property
used predominantly outside the United States", "public utility property", or
"tax-exempt use property" within the meaning of Sections 168(i)(10) or 168(h) of
the Code and (b) neither Lessee nor any member of any group of corporations,
limited liability companies, partnerships, or other organizations with which
Lessee files consolidated, combined or unitary income or franchise tax returns
will file any tax return or other document which is inconsistent with the
treatment of the Lessor as the owner of the Aircraft for income tax purposes.

3. INDEMNITY FOR LESSEE'S ACTS OR OMISSIONS.

      (a) Indemnity. Upon the occurrence of any Tax Loss, Lessee shall pay to
Lessor at Lessor's option either: (i) an amount or amounts that, after reduction
by the net amount of all federal, state and local taxes required to be paid by
Lessor with respect to the receipt of such amount or amounts, equals the
aggregate additional federal, state and local income taxes payable by Lessor as
a result of such Tax Loss plus any interest, fines, additions to tax or
penalties relating to or in connection with such Tax Loss, which amount shall be
payable within thirty (30) days after written notice from Lessor to Lessee that
a Tax Loss has occurred, or (ii) additional Rent on each Basic Rent Date,
beginning on the Basic Rent Date specified in written notice from Lessor to
Lessee that a Tax Loss has occurred, in such amounts as are necessary to
maintain Lessor's net after-tax economic yield and overall net after-tax cash
flow for the entire Term at the same level that would have been available if
such Tax Loss had not occurred, plus any interest, penalties or additions to tax
that may be imposed in connection with such Tax Loss. In the event of any Tax
Loss, the Casualty Value and any affected option amounts shall be adjusted
appropriately by Lessor. Any amount payable by Lessee with respect to a Tax Loss
shall be calculated based on the assumptions set forth in Section 1 above.

      (b) Tax Loss. For the purposes of this indemnity, any of the following
events shall constitute a "Tax Loss": (i) as the result of any act or failure to
act of Lessee (regardless of whether any such act or failure to act is permitted
by the terms of the Lease or otherwise), or the breach of any of Lessee's
representations, warranties, or covenants set forth in this Tax Rider, Lessor
shall lose, or shall not have the right to claim, or shall suffer a disallowance
or recapture with respect to, or shall receive a lower than anticipated economic
benefit from, all or any portion of the Assumed Tax Benefits; (ii) for federal,
foreign, state or local income tax purposes, any item of income, loss or
deduction with respect to the Aircraft is treated as derived from, or allocable
to, sources outside the U.S., and as a result Lessor's allowable foreign tax
credit for federal income tax purposes for any year is less than the credit to
which Lessor would have been entitled if all such income, loss and deduction had
been from U.S. sources; or (iii) during the Term there shall be included in
Lessor's gross income for federal, state or local income tax purposes any amount

                                       25


on account of any Addition, Alteration or other modification or improvement to
or in respect of the Aircraft made or paid for by Lessee, or due to an exchange
of the Aircraft or any portion of the Aircraft, which results in any reduction
to Lessor's anticipated net after-tax economic yield and overall net after-tax
cash flow from or as to the Lease.

4. BENEFICIARIES OF THE INDEMNITY. For purposes of this Tax Rider, (a) "Lessor"
includes any entity identified as the Lessor, its successors in interest, each
assignee and each of their respective successors in interest and assigns, any
Consolidated Group (hereinafter defined) of which Lessor or any such assignee or
any of their respective successors in interest or assigns is, or may become a
member, and each member of such Consolidated Group; and (b) "Consolidated Group"
means an affiliated group (within the meaning of Section 1504 of the Code) that
files consolidated returns for federal income tax purposes and any group filing
combined, unitary or consolidated returns pursuant to the rules of any state
taxing authority.

5. SURVIVAL. The indemnification obligations of Lessee under this Tax Rider
shall survive the expiration, cancellation or termination of the Lease. Provided
that Lessee fully, timely and indefeasibly performs its indemnification
obligations under this Tax Rider in accordance with the terms hereof and of the
Lease, Lessor shall have no additional remedies with respect to the occurrence
of a Tax Loss.

                                       26


      IN WITNESS WHEREOF, the parties hereto have each caused this Tax Rider to
be duly executed by their respective officers, thereunto duly authorized as of
the date first written above.

                                          FLEET NATIONAL BANK

                                          By:__________________________________

                                          Name:________________________________

                                          Title:_______________________________

                                          PRIORITY FULFILLMENT SERVICES,
                                           INC.

                                          By:__________________________________

                                          Name:________________________________

                                          Title:_______________________________

                                       27


                                    EXHIBIT C
                              WARRANTY BILL OF SALE

      Bombardier Aerospace Corporation (the "Seller"), in consideration of the
sum of __________________________________ and __/100 Dollars ($____________)
paid by FLEET NATIONAL BANK (the "Buyer"), receipt of which is acknowledged,
hereby grants, sells, assigns, transfers and delivers to Buyer the aircraft
described below together with the engines installed thereon and all appliances,
parts, instruments, appurtenances, accessories, furnishings, avionics,
components and other equipment of whatever nature installed on said aircraft and
all logbooks, manuals, certificates, data and inspection, modification,
maintenance, engineering, technical, overhaul and all other books and records
(including all computerized data, records and materials) as pertain to the
operation and maintenance of such aircraft (all of the foregoing hereinafter
collectively referred to as the "Aircraft"), along with whatever claims and
rights Seller may have against the manufacturer and/or supplier of the Aircraft,
including, but not limited to, all warranties and representations. At Buyer's
request, Seller will cause the manufacturer and/or supplier of the Aircraft to
execute an Acknowledgment in form and substance satisfactory to Buyer in its
sole discretion.

                             DESCRIPTION OF AIRCRAFT

Learjet Inc. Model 31A aircraft bearing U.S. Registration Mark N122BX (formerly
known as N122FX) and manufacturer's serial number 143 and two (2) Honeywell TFE
731-2-3B aircraft engines respectively bearing manufacturer's serial numbers
P-99407 and P-99406.

(See also Schedule A attached hereto and made a part hereof for further
description of the Aircraft.)

      Seller represents, warrants and agrees to Buyer that (1) Seller is the
lawful owner of the full title to the Aircraft and that Buyer will acquire by
the terms of this Warranty Bill of Sale good and merchantable full title to the
Aircraft free and clear of all mortgages, leases, security interests, claims,
charges, liens and encumbrances of any kind whatsoever; (2) Seller has the right
to sell the Aircraft as aforesaid; (3) there have been no Form 337's issued
concerning any damage history to the Aircraft; (4) to the best of Seller's
knowledge, all logs and records relating to the Aircraft are complete and
accurate; (5) Seller shall warrant and defend title to the Aircraft and
indemnify Buyer against the claims of any person, party, firm, corporation or
entity of any kind whatsoever; and (6) the Aircraft had been delivered to Buyer
in good order and condition and conforms to the specifications and the
requirements and standards applicable thereto.

      Seller agrees to save and hold harmless Buyer from and against any and all
foreign, Federal, state, municipal and local license fees and taxes of any kind
or nature, including, without limiting the generality of the foregoing, any and
all excise, personal property, privilege, use and sales taxes, and from and
against any and all liabilities, obligations, losses, damages, penalties,
claims, actions and suits, including, without limitation, attorney's fees,
resulting therefrom and imposed upon, incurred by or asserted against Buyer as a
consequence of the sale of the Aircraft to the Buyer.

      Seller agrees and acknowledges that the terms and conditions of this
Warranty Bill of Sale, including, without limitation, all representations,
warranties and agreements for the benefit of Buyer, shall survive the delivery
of the Aircraft and the delivery, execution and recording of this Warranty Bill
of Sale or any Federal Aviation Administration Bill of Sale.

      IN WITNESS WHEREOF, Seller has executed this Warranty Bill of Sale this
____ day of August, 2004.

                                          SELLER:
                                          Bombardier Aerospace Corporation

                                          By: ____________________________
                                          Name: __________________________
                                          Title: _________________________

                                       28


                                   SCHEDULE A

One (1) Learjet Inc. Model 31A aircraft bearing U.S. Registration Mark N122BX
(formerly known as N122FX) and manufacturer's serial number 143

      Together with:

Two (2) Honeywell TFE 731-2-3B aircraft engines respectively bearing
manufacturer's serial numbers P-99407 and P-99406

AVIONICS

Bendix King KFC-3100 System:
Dual Bendix King KCP 420 Digital Flight Guidance Computers
Dual Bendix King KDC 481T Air Data Computers
Universal UNS-1M Flight Management System
Dual Bendix King KAU 461 AHRS Computers
ED 551A Five Tube EFIS/MFD with 5" Displays
KST488 Speed/Temperature Display
Triple Bendix King SG 465 Symbol Generators
Bendix King RDR-2000 Weather Radar
Dual Bendix King VN-411B Nav Units
Dual Bendix King DM-441B DME
Bendix King DF-431B Automatic Direction Finder
Dual Bendix King VC-401B Comm Units
Dual MST-67A Mode S Transponders
Bendix King TPU-67A TCAS II
Universal CVR-30A Cockpit Voice Recorder
Bendix King KRA 405 Rad Alt
Bendix King DM441B DME
Dual KAV 485T Altimeter Vertical Speed / RA Indicators
Dual KAI 487 Airspeed Indicators
Allied Signal Mark VII GPWS

ADDITIONAL EQUIPMENT

Dee Howard TR-4000 Thrust Reversers
Dual Davtron Chronometers Cockpit Clocks
Heads Up Technology Cabin Briefer System
Artex ELT 406 w/Nav Interface
36" Main Cabin Cargo Door
Allied Signal Digital Electronic Engine Controls (DEEC's)
B&D 2700 Cabin Display
Magnastar C-2000
Raisbeck Aft Storage Locker

INTERIOR

Configuration: Eight (8) passengers including a belted lavatory. The forward
               cabin features a belted private lavatory with a bulkhead divider
               to separate it from the cabin. The right hand side has an
               additional storage cabinet. The mid-cabin has two (2) aft facing
               and two (2) fwd facing club seats with a foldout executive table
               on either side. The aft cabin has a 3-place divan. The interior
               is FIREBLOCKED and is FAR 25.853 (a) and FAR 25.853 (c)
               compliant.

                                       29


 Colors:    The cabin seats, armrests and lower side panels are covered with
            dark blue leather. The headliner and upper side panels are covered
            with doe colored ultra leather. The cabinets are covered with medium
            color laminate. The carpet is Kalogridis loop "Carrington"
            parchment.

EXTERIOR    Wichita Executive Aircraft, January 2004

            Aircraft base color is Matterhorn White with 2 stripes that run from
            the radome to the tail. The stripes are Navy Blue and Gray in color.

AND ALL STANDARD EQUIPMENT, ALL ADDITIONS, ACCESSIONS, MODIFICATIONS,
IMPROVEMENTS, REPLACEMENTS, SUBSTITUTIONS, AND ACCESSORIES THERETO AND THEREFOR,
ALL AVIONICS, ONBOARD EQUIPMENT, LOOSE EQUIPMENT LOCATED IN THE AIRCRAFT,
RECORDS, MANUALS, AND LOGBOOKS, IN BOTH WRITTEN AND COMPUTER DATA FORM, AND
WHETHER NOW EXISTING OR HEREAFTER ACQUIRED.

                                       30


      INSURANCE ADDENDUM ("Insurance Addendum") to Lease (S/N 143) dated as of
August 25, 2004, (the "Lease") by and between FLEET NATIONAL BANK, as lessor
("Lessor"), and PRIORITY FULFILLMENT SERVICES, INC., as lessee ("Lessee").

      All capitalized terms not defined in this Insurance Addendum are defined
in the Lease. Execution of the Lease by Lessee and Lessor shall be deemed to
constitute execution and acceptance of the terms and conditions of this
Insurance Addendum, and it shall supplement and be a part of the Lease.

      (a) Liability Insurance. Lessee shall maintain at its sole cost and
expense for the entire Term with insurers of recognized reputation and
responsibility satisfactory to Lessor (but in no event having an A.M. Best or
comparable agency rating of less than "A-") (i) comprehensive aircraft and
general liability insurance against bodily injury or property damage claims
including, without limitation, contractual liability, public liability, death
and property damage liability, public and passenger legal liability coverage,
and sudden accident pollution coverage, in an amount not less than
$50,000,000.00 for each single occurrence (provided, however, that in the event
the Aircraft is chartered to any Person pursuant to Section 12 of the Lease or
otherwise, such insurance coverage amount shall not be in an amount of less than
$100,000,000.00 for each single occurrence), and (ii) personal injury liability
in an amount not less than $25,000,000.00.

      (b) "All-Risk" Hull Insurance. Lessee shall maintain at its sole cost and
expense for the entire Term with insurers of recognized reputation and
responsibility satisfactory to Lessor (but in no event having an A.M. Best or
comparable agency rating of less than "A-"), "all-risk" ground, taxiing, and
flight hull insurance on an agreed-value basis, covering the Aircraft, provided
that such insurance shall at all times be in an amount not less than the
Casualty Value of the Aircraft (such amount determined at the Acceptance Date
and at each anniversary of the Rent Commencement Date for each succeeding year
throughout the Term).

      (c) War Risk and Allied Perils. Lessee shall also maintain war risk and
allied perils (including confiscation, appropriation, expropriation, terrorism
and hijacking insurance) in the amounts required in Paragraph (a) and Paragraph
(b), as applicable.

      (d) Additional Policy Requirements. Any policies of insurance carried in
accordance with this Insurance Addendum and any policies taken out in
substitution or replacement of any such policies (i) shall be endorsed to name
Lessor as the owner of the Aircraft and as additional insured as its interests
may appear (but without responsibility for premiums), (ii) with respect to
insurance carried in accordance with Paragraphs (b) or (c), as applicable, shall
provide that any amount payable thereunder shall be paid to Lessor and Lessee as
joint loss payees, (iii) shall provide for thirty (30) days written notice by
such insurer of cancellation, material change, or non-renewal; provided,
however, that as to only any nonpayment of premium, shall provide for ten (10)
days written notice by such insurer of cancellation with regard to any such
nonpayment of premium, (iv) include a severability of interest clause providing
that such policy shall operate in the same manner as if there were a separate
policy covering each insured, (v) waive any right of set-off against Lessee or
Lessor, and any rights of subrogation against Lessor, (vi) shall provide that in
respect of the interests of Lessor in such policies, the insurance shall not be
invalidated by any action or inaction of Lessee or any other Person operating or
in possession of the Aircraft regardless of any breach or violation of any
warranties, declarations or conditions contained in such policies by or binding
upon Lessee or any other Person operating or in possession of the Aircraft, and
(vii) shall be primary, not subject to any co-insurance clause and shall be
without right of contribution from any other insurance. Notwithstanding clause
(ii) of the preceding sentence, so long as no Default has occurred and is
continuing, and no Event of Default or Event of Loss with respect to the
Aircraft has occurred, the amounts referred to in clause (ii) may be paid, as
applicable, either (A) if $100,000.00, or more, in the aggregate, to Lessor and
Lessee, jointly, as their interests may appear, and released by Lessor to Lessee
or other appropriate Persons in payment of the costs actually incurred with
respect to repairs made to the Aircraft so as to restore it to the operating
condition required by the Return Addendum or any other applicable provision of
the Lease, or shall be disbursed by Lessor as otherwise required by the Lease,
or (B) if less than $100,000.00 in the aggregate, to Lessee (and such amounts
shall be applied by Lessee to pay the costs of such repairs).

                                       31


      (e) World Wide Coverage. All of the coverages required in this Insurance
Addendum shall be in full force and effect worldwide throughout any geographical
areas to, in, or over which the Aircraft is operated.

      (f) No Right To Self-Insure. Lessee shall not self-insure (by deductible,
premium adjustment, or risk retention arrangement of any kind) the insurance
required to be maintained hereunder.

      (g) U.S. Dollars. All insurance proceeds payable under the requisite
policies shall be payable in U.S. Dollars.

      (h) Adjustments to Coverage. Lessee agrees that it shall obtain and
maintain such other insurance coverages, or cause adjustments to be made to the
scope, amount or other aspects of the existing insurance coverages, promptly
upon Lessor's request, as and when Lessor reasonably determines such additional
insurance coverages or modifications to be appropriate in light of any changes
in Applicable Law, prudent industry practices, the insurance market, Lessee's
anticipated use of the Aircraft or other pertinent circumstances.

                                       32


      CLOSING TERMS ADDENDUM ("Closing Terms Addendum") to Lease (S/N 143) dated
as of August 25, 2004, (the "Lease") by and between FLEET NATIONAL BANK, as
lessor ("Lessor"), and PRIORITY FULFILLMENT SERVICES, INC. ("Lessee").

      All capitalized terms not defined in this Closing Terms Addendum are
defined in the Lease. Execution of the Lease by Lessee and Lessor shall be
deemed to constitute execution and acceptance of the terms and conditions of
this Closing Terms Addendum, and it shall supplement and be a part of the Lease.

      A. Purchase and Required Documents. On or prior to the Acceptance Date and
at least one full Business Day prior to closing, Lessee shall have delivered or
caused to be delivered the following to Lessor, as applicable:

      1. "Purchase Documents" including copies of the following:

      (a) All purchase and warranty agreements entered into by Lessee or any
predecessors in connection with the acquisition of the Aircraft, including the
assignment of such purchase agreements to Lessor; (b) warranty bills of sale
conveying title to the Aircraft, including the Engines, from Supplier to Lessor;
(c) invoices in Lessor's name for the purchase of the Aircraft, including the
Engines; (d) evidence of Lessee's tax exempt status for purposes of sales and
use tax in evidence and form satisfactory to Lessor, if applicable; and (e) all
exhibits, addenda, supplements and revisions, and such other documents relating
to the purchase or conveyance of title as Lessor may request.

      2. "Required Documents" shall mean and include the following:

      (a) All Lease Documents, including four (4) executed counterparts of the
Lease, Lease Supplement and Schedules thereto.

      (b) UCC assignments, releases and/or termination statements, where needed,
relating to the Aircraft and the Collateral in all places which are, in Lessor's
opinion, necessary or appropriate to protect Lessor's interest therein.

      (c) [This subsection (c) intentionally left blank].

      (d) Certificate(s) of good standing for each of Lessee and Guarantor from
its state of its organization and the state(s) where the Primary Hangar Location
and each of Lessee's and Guarantor's chief executive offices and principal place
of business are located.

      (e) A certificate or certificates, executed by the secretary or other
authorized representative for each of Lessee and Guarantor certifying: (i) that
such party's executing, delivering and performing the Lease and all ancillary
documentation and entering into the transactions contemplated hereby and thereby
have been authorized, and (ii) the name(s) of the person(s) authorized to
execute and deliver such documents on behalf of such party together with
specimen signature(s) of such person.

      (f) Copies of the articles of incorporation or organization and by-laws,
or manager's or member's certificate, certificate of formation, and operating
agreement, as applicable, for each of Lessee and Guarantor.

      (g) Evidence in form and substance satisfactory to Lessor as to the
insurance coverage required under the Insurance Addendum, including, but not
limited to, a certificate of insurance, copies of endorsements (including a
Lessor endorsement), applicable policies and written confirmation from the
insurance underwriter or broker that the insurance coverage provided is in
compliance with the requirements of the Insurance Addendum of the Lease.

      (h) If required by Lessor, an inspection report and/or appraisal
satisfactory to Lessor with respect to the Aircraft prepared by inspector(s) or
appraiser(s) acceptable to Lessor.

                                       33


      (i) Three (3) duplicate original counterparts of the Guaranty.

      (j) Such other documents, certificates and opinions, and evidence of such
other matters, as Lessor, Lessor's counsel or FAA Counsel may reasonably
request.

      B. FAA Documents. On or prior to the Acceptance Date and at least one full
Business Day prior to closing, Lessee shall have delivered to FAA counsel the
following "FAA Documents", as applicable:

      1. Evidence of reservation of a FAA registration number for the Aircraft
and/or an Assignment of Special Registration Number (FAA AC Form 8050-64)
assigning rights in such "N" number to Lessor with respect to the Aircraft.

      2. Evidence of the issuance by the FAA of a Standard Airworthiness
Certificate (FAA AC Form 8100-2) for the Aircraft.

      3. (a) The executed FAA Aircraft Bill of Sale (FAA AC Form 8050-2) (the
"FAA Bill of Sale") in the name of Lessor; (b) the executed FAA Aircraft
Registration Application (FAA AC Form 8050-1) (the "Registration Application")
(except for the pink copy which shall be available to be placed on the Aircraft
upon acceptance thereof); (c) executed releases of any Liens in form and
substance satisfactory to FAA Counsel, Lessor's counsel and/or Lessor; (d) one
(1) fully executed counterpart of the Lease, and the Lease Supplement and
Schedules thereto, all the foregoing being in proper form for filing with the
FAA; (e) such other documents as are necessary, in the opinion of FAA Counsel,
to vest good title to the Aircraft in the name of Lessor, free and clear of
Liens; (f) a Declaration of International Operations if Lessee will fly the
Aircraft out of the continental U.S. within thirty (30) days after Closing; and
(g) if applicable, a LLC Application or statement acceptable to the FAA.

      C. Conditions Subsequent.

      1. On or subsequent to the Acceptance Date, but not later than the date of
the Aircraft's first flight under the leasehold conveyed herein, Lessee shall
confirm to Lessor that pertinent copies of the Registration Application,
Standard Airworthiness Certificate, and the Lease, including the Lease
Supplement, have been properly placed on the Aircraft. In addition, for all
operations outside the continental U.S., the Lessee shall maintain either a
permanent Certificate of Registration or "fly-time wire" (FAA Standard Form 14)
on-board the Aircraft.

      2. Lessee shall confirm to Lessor that (a) within 24 hours following
execution thereof, a copy of the Lease was mailed to the Flight Standards
Technical Division of the FAA; and (b) Lessee has notified the FAA (such
notification to have been given by facsimile transmission, telephone, or in
person to the FAA Flight Standards District Office, General Aviation District
Office nearest the airport where such flight will originate) concerning the
first flight of the Aircraft under the Lease at least forty-eight (48) hours
prior to takeoff.

      3. Within five (5) business days after the closing, Lessor shall receive
an opinion of FAA Counsel satisfactory to Lessor that title to the Airframe is
vested in Lessor, that Lessor has a valid and perfected security interest in the
Engines, and that the Aircraft (including the Airframe and Engines) is free and
clear of all other Liens of record.

                                       34


      PURCHASE, EARLY PURCHASE AND RENEWAL OPTION ADDENDUM ("Option Addendum")
to Lease (S/N 143) dated as of August 25, 2004, (the "Lease"), by and between
FLEET NATIONAL BANK, as lessor ("Lessor"), and PRIORITY FULFILLMENT SERVICES,
INC., as lessee ("Lessee").

      All capitalized terms not defined in this Option Addendum are defined
herein in the Lease. Execution of the Lease by Lessee and Lessor shall be deemed
to constitute execution and acceptance of the terms and conditions of this
Option Addendum, and it shall supplement and be a part of the Lease.

Purchase and Renewal Options.

      (a) End of Term Purchase Option. So long as (i) no Event of Default shall
have occurred, and (ii) Lessee shall not have exercised its renewal option
pursuant to Paragraph (b) hereof, Lessee may, upon giving its irrevocable
written notice to Lessor at least one hundred fifty (150) days but no more than
two hundred forty (240) days prior to the Expiration Date, purchase the Aircraft
at the expiration of the Basic Term for an amount, payable in immediately
available funds, equal to the Fair Market Sales Value of the Aircraft as of the
end of the Basic Term determined in accordance with Paragraph (c) hereof plus
any applicable Impositions resulting from such sale, together with any Basic
Rent due and payable on or before the Expiration Date and all other accrued and
unpaid Rent. Lessor's sale of the Aircraft shall be on an "AS-IS WHERE-IS"
basis.

      (b) Renewal Option. So long as (i) no Default or Event of Default shall
have occurred, and (ii) Lessee shall not have exercised its purchase options
pursuant to either Paragraph (a) or (e) hereof, Lessee may renew the Lease for
the Renewal Term referred to on Schedule 2-A commencing upon the expiration of
the Basic Term. Lessee's option to renew the Lease for a Renewal Term shall be
exercisable by giving irrevocable written notice to Lessor at least one hundred
eighty (180) days but no more than two hundred forty (240) days prior to the
expiration of the Basic Term. All of the provisions of the Lease shall be
applicable during the Renewal Term, except that, the Basic Rent shall be an
amount equal to the Aircraft's Fair Market Rental Value, which shall be
determined in accordance with Paragraph (c) hereof and the Expiration Date shall
be the last day of the Renewal Term. During the Renewal Term, Basic Rent shall
be payable in the same manner and frequency as the Basic Rent was payable during
the Basic Term, which payment dates shall be deemed "Basic Rent Dates" for
purposes of the Lease.

      (c) Determination of Fair Market Sales and Rental Values. If Lessee has
elected either of the options specified above, then as soon as practicable
thereafter, Lessor and Lessee shall consult for the purpose of determining the
Fair Market Sales Value or Fair Market Rental Value, as applicable, of the
Aircraft as of the end of the Basic Term, and any values agreed upon in writing
between Lessor and Lessee shall be binding on both parties. If Lessor and Lessee
fail to agree upon any such value prior to one hundred thirty-five (135) days
before the expiration of the Basic Term, Lessor shall then appoint an
independent appraiser (reasonably acceptable to Lessee) to determine the
applicable value, and such determination by the independent appraiser shall be
made within thirty (30) days after such appointment and shall be binding on
Lessor and Lessee. The independent appraiser shall make any such determination
utilizing the definition of Fair Market Sales Value or Fair Market Rental Value,
as the case may be, including all assumptions. Lessee agrees to pay the costs
and expenses of any such determination and appraisal.

      (d) Time to Exercise Option. Notwithstanding the provisions of Paragraphs
(a) and (b), Lessee shall be deemed to have waived the foregoing purchase option
and renewal option unless Lessee provides Lessor with written notice of its
irrevocable election to exercise the applicable option within one hundred eighty
(180) days prior to the expiration of the Basic Term.

      (e) Early Purchase Option. So long as no Default or Event of Default shall
have occurred, Lessee may, upon giving its irrevocable written notice to Lessor
at least one hundred twenty (120) days but no more than one hundred eighty (180)
days prior to the proposed Early Purchase Date, purchase the Aircraft on the
Early Purchase Date for an amount, payable in immediately available funds, equal
to the applicable Early Purchase Option Amount, plus any applicable Impositions
resulting from such sale, together with any Basic Rent due and payable on or
before the Early Purchase Date and all other accrued

                                       35


and unpaid Rent. Lessor's sale of the Aircraft shall be on an "AS-IS WHERE-IS"
basis. The Lease shall not be deemed terminated unless, on the Early Purchase
Option Date, (i) Lessor receives the amounts specified in the preceding sentence
in indefeasible funds, and (ii) Lessee satisfies any and all other conditions
imposed by Lessor with respect to the sale of the Aircraft.

                                       36


      EARLY TERMINATION ADDENDUM ("Early Termination Addendum") to Lease (S/N
143) dated as of August 25, 2004, (the "Lease"), by and between FLEET NATIONAL
BANK, as lessor ("Lessor"), and PRIORITY FULFILLMENT SERVICES, INC., as lessee
("Lessee").

      All capitalized terms not defined in this Early Termination Addendum are
defined herein in the Lease. Execution of the Lease by Lessee and Lessor shall
be deemed to constitute execution and acceptance of the terms and conditions of
this Early Termination Addendum, and it shall supplement and be a part of the
Lease.

      So long as no Default or Event of Default shall have occurred and be
continuing hereunder and provided that Lessee shall have made a good faith
determination that the Aircraft is economically obsolete or surplus to its
needs, Lessee shall be entitled, at its option, upon at least one hundred twenty
(120) days prior written notice to Lessor to terminate this Lease as of any
Early Termination Date.

      During the period from the giving of such notice until the proposed Early
Termination Date, Lessee, as agent for Lessor and at no cost or expense to
Lessor of any kind whatsoever, shall use its best efforts to obtain the highest
possible bids for the purchase of the Aircraft. Lessor may, but shall be under
no obligation to, solicit bids for the purchase of the Aircraft. Lessee shall
promptly certify to Lessor in writing the amount and terms of each bid received
by Lessee and the name and address of the person submitting such bid. All of
such bids shall be subject to the prior written approval of Lessor and Lessee
shall inform all bidders of such requirement when requesting any bids. Without
limiting the generality of any terms of the Lease, prior to soliciting bids for
the sale of the Aircraft, the Aircraft shall be in the condition required under
the Lease. On the Early Termination Date, Lessor shall sell the Aircraft for
cash to the bidder who shall have submitted the highest bid prior to such date,
and title to the Aircraft shall be transferred by Lessor to such bidder on an
"AS-IS WHERE-IS" basis. Lessor may, at its option, elect not to sell the
Aircraft and retain title to the Aircraft whereupon the lease of the Aircraft
shall be terminated as of the Early Termination Date. The total sale price
realized at such sale shall be retained by Lessor and, in addition, on the Early
Termination Date, Lessee will pay to Lessor (1) the excess, if any, of (A) the
greater of the Fair Market Sales Value and the Early Termination Amount of the
Aircraft on the Early Termination Date, over (B) the sale price of the Aircraft
after deducting all taxes, costs and expenses (including legal fees and
expenses) incurred or paid by Lessor in connection with such sale; plus (2) all
Basic Rent due for the Aircraft on such Early Termination Date together with all
accrued and unpaid Rent then due and owing for the Aircraft (all of the amounts
set forth in this subclauses (2) collectively the "outstanding termination
amounts"). If for any reason no sale shall occur on the Early Termination Date,
the lease of the Aircraft hereunder shall continue in full force and effect or,
at Lessor's option, the Lessee shall pay to Lessor the greater of the Fair
Market Sales Value and the Early Termination Amount of the Aircraft on the Early
Termination Date together with the outstanding termination amounts and all
taxes, costs and expenses (including legal fees and expenses) incurred or paid
by Lessor in connection with such any proposed sale whereupon the lease of the
Aircraft shall be terminated as of the Early Termination Date and title to the
Aircraft shall be transferred by Lessor to Lessee on an "AS-IS WHERE-IS" basis.

For purposes of this Early Termination Addendum, the following terms shall have
the following meanings:

      "Early Termination Amount" for any Basic Rent Date designated as an Early
Termination Date on Schedule No. 4 to the Lease Supplement to the Lease shall be
the amount determined by multiplying the Lessor's Cost of the Aircraft by the
percentage set forth opposite the applicable Early Termination Date set forth on
Schedule No. 4 to the Lease Supplement.

      "Early Termination Date" shall mean each of the Basic Rent Number(s)
designated as such on Schedule No. 4 to the Lease Supplement.

      "Fair Market Sales Value" shall mean the value of the Aircraft determined
on the following basis: (i) the value shall be the amount which would be
obtained in an arm's length transaction between an informed and willing buyer or
lessee (who is neither a lessee in possession nor a used equipment dealer), and
an informed and willing seller or lessor, as the case may be, under no
compulsion to sell or lease, as

                                       37


the case may be; (ii) the costs of removal of the Aircraft from its then
location shall not be a deduction from such value; and (iii) in determining any
such value, it shall be assumed (whether or not the same be true) (A) that the
Aircraft has been maintained by Lessee and is in the condition in which it is
required to be returned to Lessor, in each case, in accordance with the Lease,
(B) such value has not been diminished due to the existence of any damage
history, and (C) that the total number of Airframe hours (including any
component with hourly overhaul schedules) accumulated from the Acceptance Date
to the Early Termination Date or other date of termination or cancellation do
not exceed the product of Estimated Annual Hours times the number of twelve
month periods and any portion thereof, from the Acceptance Date to such Early
Termination Date or such other termination or cancellation date.

                                       38


      RETURN ADDENDUM ("Return Addendum") to Lease (S/N 143) dated as of August
25, 2004, (the "Lease") by and between FLEET NATIONAL BANK, as lessor
("Lessor"), and PRIORITY FULFILLMENT SERVICES, INC., as lessee ("Lessee").

      All capitalized terms not defined in this Return Addendum are defined in
the Lease. Execution of the Lease by Lessee and Lessor shall be deemed to
constitute execution and acceptance of the terms and conditions of this Return
Addendum, and it shall supplement and be a part of the Lease.

      (a) Condition Upon Return. Unless purchased by Lessee, upon the
expiration, cancellation, or other termination of the Lease, Lessee will return
the Aircraft (together with all Records) to Lessor at a location specified by
the Lessor within the continental U.S. The Aircraft shall be fully equipped with
the Engines or the same number, make, and model of engines as are set forth on
Schedule No. 1, which shall fully comply with the Lease, and which, in the
opinion of Lessor, have the same or improved utility, value, useful life,
performance, and efficiency (normal wear and tear excepted) as the Engines had
on the Acceptance Date and are suitable for use on the Airframe and owned by
Lessor and properly installed thereon. The Aircraft, at Lessee's expense, upon
redelivery pursuant hereto (i) shall have a currently effective FAA
airworthiness certificate; (ii) shall be free and clear of all Liens other than
the Lease and any Lessor's Liens; (iii) shall be in the same configuration,
coloring and appearance and in the same operating condition, ordinary wear and
tear excepted, as when delivered to Lessee on the Acceptance Date or, at
Lessor's option, Lessee shall pay to Lessor an amount equal to the actual cost
of such restoration; (iv) shall be in good operating condition, physical
condition and appearance (ordinary wear and tear excepted), with all systems
operating normally; (v) shall have no damage history, unless such damage has
been repaired in accordance with the Lease; (vi) shall have no open mandatory
service bulletins or airworthiness directives, and if terminating action is
required within six (6) months of the date of return, Lessee shall comply with
each of the same by terminating action, and shall be in compliance with all
other Applicable Law and Maintenance Requirements; and (vii) shall be otherwise
in the condition and repair required under the Lease.

      (b) Damage History and Excess Use Compensation.

            (i) Damage History. If Lessor is of the opinion that the Aircraft's
fair market sales value is diminished due to the existence of any damage
history, Lessor and Lessee shall consult for the purpose of determining the
Diminution Amount (as defined below), and any values agreed upon in writing
between Lessor and Lessee shall be binding on both parties. The "Diminution
Amount" shall mean the amount by which (A) the Fair Market Sales Value of the
Aircraft without such damage history, exceeds (B) the Fair Market Sales Value of
the Aircraft with such damage history (and as to this sub-clause (B), without
making the assumption in clause (iii)(B) of the definition of Fair Market Sales
Value). If Lessee and Lessor fail to agree within ten (10) days after the return
of the Aircraft to Lessor, then Lessor shall appoint an independent appraiser
(reasonably acceptable to Lessee) to determine the Diminution Amount. Lessee
agrees to pay the costs and expenses of any such determination and appraisal.
The independent appraiser shall be required to complete such determination as
promptly as practicable, but in any event, not later than forty (40) days after
the date on which it is appointed. A final determination by the independent
appraiser regarding the extent of any Diminution Amount shall be binding on
Lessee and Lessor. Lessee shall pay to Lessor within ten (10) days after the
independent appraiser's determination an amount equal to the Diminution Amount,
if any.

            (ii) Excess Use. Upon the return of the Aircraft to Lessor, Lessor
and Lessee shall consult for the purpose of determining the Excess Use Amount
(as defined below), if any, and any amount so agreed upon in writing between
Lessor and Lessee shall be binding on both parties. The "Excess Use Amount"
shall mean the amount, if any, by which (A) the Fair Market Sales Value of the
Aircraft without such Excess Hours, exceeds (B) the Fair Market Sales Value of
the Aircraft with such Excess Hours (and as to this subclause (B), without
making the assumption in clause (iii)(C) of the definition of Fair Market Sales
Value). If Lessor and Lessee fail to agree within ten (10) days after the return
of the Aircraft to Lessor, then Lessor shall appoint a fully qualified and
independent appraiser (reasonably acceptable to Lessee) to determine the Excess
Use Amount. Lessee agrees to pay the costs and

                                       39


expenses of any such determination and appraisal. The independent appraiser
shall be required to complete such determination as promptly as practicable, but
in any event, not later than forty (40) days after the date on which it is
appointed. A final determination by the independent appraiser regarding the
extent of the Excess Use Amount, if any, shall be binding on Lessor and Lessee.
Lessee shall pay to Lessor within ten (10) days after the independent
appraiser's determination an amount equal to the Excess Use Amount.

      (c) Mid-Life Condition. Upon return (i) each Engine and APU shall have
available operating hours or months until the next scheduled "hot section"
inspection, mid-life inspection or the next scheduled major overhaul of not less
than fifty percent (50%) of the total operating hours or months available
between such hot section inspection, mid-life inspection, or major overhaul, as
the case may be; (ii) the Airframe shall have remaining not less than (aa) fifty
percent (50%) of the available operating hours allowed between major airframe
inspections; and (bb) fifty percent (50%) of the number of available operating
months allowed between major airframe inspections until the next scheduled major
airframe inspection; and (iii) all life limited parts and components shall have
remaining not less than fifty percent (50%) of the available hours, cycles
and/or months, as the case may be, until the next scheduled replacement. In
addition to the requirements set forth in clauses (i), (ii), and (iii) above,
all inspections and scheduled maintenance required to be performed on the
Airframe, Engines and APU and all life limited parts and components within one
hundred twenty (120) days of the date of return and/or one hundred (100) hours
of additional operation shall have been performed by Lessee.

      (d) Engines. If any Engine does not comply with Paragraph (c)(i) above,
for each such Engine, Lessee shall pay Lessor an amount equal to the sum of (i)
the current estimated cost of the next scheduled "hot section" or mid-life
inspection, as the case may be (including in such estimated cost, all required
replacements of life limited parts) multiplied by the fraction wherein the
numerator shall be the greater of (A) zero, and (B) the remainder of (x) the
actual number of operating hours or months since the previous hot section or
mid-life inspection, as the case may be, minus (y) fifty percent (50%) of the
total operating hours or months allowable between hot section or mid-life
inspections, as the case may be, and the denominator shall be the total
operating hours or months allowable between hot section or mid-life inspection,
as the case may be, plus (ii) for each such Engine, the product of the current
estimated cost of the next scheduled major overhaul (including in such estimated
cost, all required replacements of life limited parts) multiplied by the
fraction wherein the numerator shall be the greater of (A) zero, and (B) the
remainder of (x) the actual number of hours of operation since the previous
major overhaul minus (y) fifty percent (50%) of the total operating hours
allowable between major overhauls, and the denominator shall be the total
operating hours allowable between major overhauls. Lessee shall, immediately
upon request, assign to Lessor its rights under any manufacturer's maintenance
service contract or extended warranty for the Aircraft, any engine, any APU, or
part.

      (e) Airframe. If the Airframe does not comply with Paragraph (c)(ii)
above, Lessee shall pay to Lessor an amount equal to the sum of the product of
the current estimated cost of the next scheduled major airframe inspection
(including in such estimated cost, all required replacement of life limited
parts) multiplied by the fraction wherein the numerator shall be the greater of
(i) zero, and (ii) the remainder of (x) the actual number of respective
operating hours or months of operation since previous major airframe inspection,
minus (y) 50% of the respective total operating hours or months of operation
allowable between scheduled major airframe and pressure vessel inspections, and
the denominator shall be the respective total operating hours or months of
operation between scheduled major airframe inspections.

      (f) Maintenance Contracts. Lessee need not compensate Lessor as
contemplated in Paragraphs (d) or (e), as the case may be, if at the time of the
return of the Aircraft to Lessor:

      (i) in the case of Paragraph (d),

            (A) both of the Engines are covered by a service and maintenance
      contract in form and substance satisfactory to Lessor which provides for
      the maintenance and/or overhaul of such property,

                                       40


            (B) either (x) adequate reserves for future required maintenance
      and/or overhaul shall have been provided for pursuant to such maintenance
      contract, or (y) all amounts due and payable pursuant to such maintenance
      contract shall have been paid in full through the date of return, and

            (C) the entity which provides the maintenance and/or overhaul
      services under such maintenance contract shall either (x) recognize the
      transfer by Lessee to Lessor of the rights and interests of Lessor (or its
      designee) under such maintenance contract, or (y) acknowledge the rights
      and interests of Lessor (or its designee) under such maintenance contract,
      and

      (ii) in the case of Paragraph (e),

            (A) the Airframe is covered by a service and maintenance contract in
      form and substance satisfactory to Lessor which provides for the
      maintenance and/or overhaul of such property,

            (B) either (x) adequate reserves for future required maintenance
      and/or overhaul shall have been provided for pursuant to such maintenance
      contract, or (y) all amounts due and payable pursuant to such maintenance
      contract shall have been paid in full through the date of return, and

            (C) the entity which provides the maintenance and/or overhaul
      services under such maintenance contract shall either (x) recognize the
      transfer by Lessee to Lessor of the rights and interests of Lessor (or its
      designee) under such maintenance contract, or (y) acknowledge the rights
      and interests of Lessor (or its designee) under such maintenance contract.

      (g) Parts and Components. If any life limited part or component does not
comply with Paragraph (c)(iii) above, Lessee shall pay to Lessor with respect to
each part or component for which said requirement is not met the dollar amount
obtained by multiplying (i) the ratio that the life expended in excess of fifty
percent (50%) of the available hours, cycles and/or months, as the case may be,
until the next scheduled replacement bears to the total allowable life (measured
in hours, cycles and/or months, as the case may be) for such part or component
by (ii) Lessor's cost of replacement of such part or component. Lessor's cost of
replacement of a part or component shall include Lessor's then current cost of
purchasing the part or component itself and all of Lessor's then current costs
associated with the replacement.

      (h) Inspection Overhaul Charges. All restoration costs and prorated
inspection and/or overhaul charges, if any, shall be due upon presentation to
Lessee of an invoice setting forth in reasonable detail the calculation of such
amounts due, including the names of all sources used for the required cost
estimates. Unless both Lessor and Lessee agree to an alternative source, or as
provided herein, the Manufacturers of the Airframe and Engines shall be used as
the sources for all cost estimates.

      (i) Fuel. Upon return, each fuel tank shall contain no less than fifty
percent (50%) of its full capacity, or in the case of differences in such
quantity, an appropriate adjustment will be made at the then current market
price of fuel.

      (j) Records. Lessee shall deliver all Records to Lessor, including:

            (i) All of the following: (A) all records of maintenance,
      preventative maintenance, alterations and major repairs, (B) all Airframe
      and Engine logbooks endorsed for current total time and cycles for the
      airframe, total time and cycles for each Engine and an entry for total
      time and cycles since overhaul and hot section inspection for each Engine;
      and the Airframe logbook must include all appropriate endorsements (i.e.,
      maintenance releases) verifying that the avionics have been periodically
      tested and inspected in accordance with all applicable provisions of the
      FARS and the applicable maintenance program, (C) a current written summary
      certified by a FAA-licensed mechanic listing the status of all applicable
      airworthiness directive and service bulletins for the Airframe, Engines,
      any APU, Parts and appliances, and (D) a written summary certified by a
      FAA-licensed mechanic of the current status of life limited and/or
      overhauled components for the Airframe, Engines (in accordance with the
      Manufacturer's recommended intervals), Engine

                                       41


      accessories, any APU, Parts and appliances as defined in the most current
      revision(s) of all Manufacturers' maintenance publications applicable to
      the Aircraft.

            (ii) The following documentation and data for each component having
      an overhaul or inspection requirement of life limit, which components are
      identified in pertinent sections of the maintenance program applicable to
      the Aircraft as follows: (A) an airworthiness release certificate or
      maintenance release tag, (B) the Vendor work order or copy thereof
      verifying the details of each component overhaul, and (C) an appropriate
      record certifying the date and expended time status of the component when
      installed (i.e., copy of log or inspection squawk card), all of which must
      be properly organized and provided on board the Aircraft at the time it is
      returned to Lessor.

            (iii) To the extent not covered above, Lessee will also deliver to
      Lessor all work cards, computerized maintenance history, component
      serviceability tags, STCs, 337s, maintenance manuals, and structural
      repair manuals.

      All manuals or other documents delivered to Lessor which are subject to
periodic revision will be fully up-to-date and current to the latest revision
standard of any particular manual or document. If the Aircraft is on a
computerized maintenance program, such program will be up-to-date in accordance
with the Manufacturer's recommended maintenance schedule and fully assignable to
Lessor at redelivery. Lessee will provide all of the following Records to Lessor
upon return of the Aircraft to Lessor, regardless of whether Lessee has
conducted its periodic inspections of the Aircraft pursuant to pertinent
sections of the Maintenance Program or in accordance with an inspection program
approved by the FAA. In the event any Records are missing or incomplete, Lessor
shall have the right to cause any such Records to be reconstructed at Lessee's
expense. All Records shall be in English.

      (k) Storage. Upon the expiration, cancellation or other termination of the
Lease, Lessee will, if requested by Lessor, permit Lessor to store the Aircraft
at the Primary Hangar Location for up to thirty (30) days. During such storage
period Lessee will, at its own expense, keep the Aircraft properly hangared and
will permit Lessor or any Person designated by Lessor, including the authorized
representatives of any prospective purchaser, lessee or user of the Aircraft to
inspect the same. Lessee shall bear the risk of loss and shall pay any and all
expenses connected with insuring and maintaining the Aircraft during such
storage period. Notwithstanding the foregoing, upon the cancellation or
termination of the Lease in connection with an Event of Default, the storage
period provided for in this paragraph and the obligation to hangar and insure
the Aircraft shall be unlimited.

      (l) Replacement Engines. If any engine not owned by Lessor shall be
installed on the returned Airframe as set forth in Paragraph (a) hereof, then
Lessee will, concurrently with such delivery, at its own expense, furnish Lessor
with a full warranty bill of sale, in form and substance satisfactory to Lessor
with respect to each such engine and with a written opinion of FAA Counsel to
the effect that, upon such return, Lessor will acquire a valid and perfected
interest in such engine free and clear of all Liens (except Lessor's Liens).
Thereupon, unless a Default or Event of Default shall have occurred and be
continuing, Lessor will transfer to Lessee, on an "AS-IS, WHERE-IS" basis, all
of Lessor's right, title and interest in and to any Engine not installed on the
Airframe at the time of the return of such Airframe.

      (m) Inspections. Not more than forty-five (45) days prior to the
expiration of the Lease, upon the written request of Lessor, Lessee shall
certify to Lessor that the Aircraft is in the condition required by this Return
Addendum, or indicate what maintenance or repair is needed to bring the Aircraft
to the specified condition. Without limiting the provisions of Section 14(d) of
the Lease, Lessor shall have the right, but not the duty, to inspect the
Aircraft, any component thereof and/or the Records, at any reasonable time and
from time to time, wherever located, upon reasonable prior written notice to
Lessee except that no advance notice shall be necessary prior to any inspection
conducted, and such inspection may be conducted at any time, after the
occurrence of a Default or an Event of Default. Upon request of Lessor, Lessee
shall promptly confirm to Lessor the location of the Aircraft and/or the
Records. Lessee shall be responsible for the cost of such inspection and shall
pay Lessor such amount as additional Rent within ten (10) days of demand. If the
results of such inspection indicate that the Aircraft, any Engine, any APU or
Part, has not

                                       42


been maintained or returned in accordance with the provisions of the Lease, in
addition to all other Rent due under the Lease, Lessee shall pay to Lessor
within ten (10) days of demand, as liquidated damages, the estimated cost of
servicing or repairing any such non-complying item. Such amount shall be
determined by Lessor by obtaining two quotes for such service or repair work and
taking their average. Lessee shall bear the cost, if any, incurred by Lessor in
obtaining such quotes.

      (n) Holdover Rent. If Lessee fails to return the Aircraft (including the
Records) at the time, place and in the condition specified in this Return
Addendum, all of Lessee's obligations under the Lease shall continue until it is
so returned to Lessor, as liquidated damages, and not as a penalty, and, in
addition to all other Rent due under the Lease, Lessee shall pay to Lessor an
amount equal to the greater of the fair market rent value (which for the
purposes of this Section shall be as determined by Lessor) or the Daily Rent for
each day after the end of the Term to, but excluding the day the Aircraft is
actually returned in accordance with this Return Addendum; provided, however,
that the obligation to pay any such holdover or additional rent shall neither
extend the time to return, nor constitute a waiver of any Default or Event of
Default arising by reason of such failure to return. Such amount shall be
payable upon the earlier of Lessor's demand or the return of the Aircraft in
accordance with the Lease.

      (o) Lease Termination. Lessee agrees to execute, if requested by Lessor, a
lease termination statement.

      (p) Supplemental Rent. All of the amounts payable under this Return
Addendum shall constitute Supplemental Rent.

      (q) Survival. The provisions of this Return Addendum shall survive the
expiration, cancellation or other termination of the Lease and the return of the
Aircraft to Lessor for any reason whatsoever.

      (r) Injunctive Relief. Without limiting any other terms or conditions of
the Lease, the provisions of this Return Addendum are of the essence of the
Lease, and upon application to any court of equity having jurisdiction, Lessor
shall be entitled to a decree against Lessee requiring specific performance of
the covenants of Lessee set forth herein.

                                       43

                                                                    EXHIBIT 10.4

                                    GUARANTY

Whereas, PFSWeb, Inc., among others, has requested that Fleet National Bank
enter into the Agreement (as such term is defined below) with Priority
Fulfillment Services, Inc.; and

Whereas, PFSWeb, Inc. is the majority holder and owner of all of the stock of
Priority Fulfillment Services, Inc. and also intends to benefit from the use of
the aircraft subject to the Agreement (in accordance with all applicable law,
including, without limitation, all applicable Federal Aviation Administration
rules and regulations); and

Whereas, in order to induce Fleet National Bank to enter into the Agreement with
Priority Fulfillment Services, Inc., PFSWeb, Inc., has offered and agreed to
guarantee all of the obligations of Priority Fulfillment Services, Inc. to Fleet
National Bank under, among other things, the Agreement; and

Whereas, Fleet National Bank has agreed to enter into the Agreement, subject to
the terms and conditions of the Agreement and its receipt of, among other
things, this Guaranty from PFSWeb, Inc.

This Guaranty (this "GUARANTY") is executed and delivered as of the date set
forth below by the undersigned guarantor (the "GUARANTOR") in favor of FLEET
NATIONAL BANK, located at c/o Fleet Capital Corporation, One Financial Plaza,
Fifth Floor, Providence, RI 02903-2305 ("FLEET"). Priority Fulfillment Services,
Inc. located at 500 North Central Expressway, 5th Floor, Plano, Texas 75074
("CUSTOMER") has requested that Fleet enter into that certain Lease (S/N 143)
dated as of August 25, 2004 (as amended, supplemented or restated from time to
time, and together with any and all other documents, instruments, certificates
and other agreements relating thereto, including, without limitation, any
promissory notes relating thereto, the "AGREEMENT"), between Fleet and Customer,
and this Guaranty is a condition to Fleet's entering into the Agreement. The
term "CUSTOMER," if defined to include more than one party, shall mean "CUSTOMER
AND EACH OF THEM" and this Guaranty shall secure payment of all of their
respective Obligations (hereinafter defined) to Fleet. Fleet is unwilling to
enter the Agreement with Customer, unless Guarantor absolutely and
unconditionally guarantees to Fleet the payment and performance of all such
Obligations of Customer at any time owing to Fleet. With knowledge that Fleet
will enter into the Agreement with or otherwise extend financial accommodations
to Customer in reliance upon the existence of this Guaranty and the validity and
enforceability of the obligations and liabilities of Guarantor to Fleet
contemplated hereby, Guarantor agrees with Fleet as follows:

1. GUARANTY. Guarantor guarantees to Fleet the prompt payment and/or performance
of all indebtedness, obligations and liabilities of Customer at any time owing
to Fleet, whether direct or indirect, matured or unmatured, primary or
secondary, certain or contingent, or acquired by or otherwise created in favor
of Fleet, including without limitation any and all rent, loan, purchase or other
installment payments, principal balances, taxes, indemnities, liquidated
damages, accelerated amounts, return deficiency charges, casualty value
payments, transaction expenses and other reimbursements, administrative charges,
all interest, including late charge interest, attorneys' fees or enforcement and
other costs, which may at any time be payable in connection with the Agreement,
together with all claims for damages arising from or in connection with the
failure to punctually and completely pay or perform such obligations, whether or
not such obligations are from time to time reduced or extinguished and
thereafter increased or incurred (collectively, the "OBLIGATIONS"). This
Guaranty is a guaranty of payment and performance, and not a guaranty of
collection, and Guarantor hereby undertakes and agrees, that if Customer or
Guarantor is in Default (defined below) hereunder for any reason, Guarantor
shall (i) punctually pay any such Obligations requiring the payment of money, as
an obligation for payment due and owing directly from Guarantor to Fleet and
without any abatement, reduction, setoff, defense, counterclaim or recoupment,
and (ii) punctually perform any and all Obligations not requiring the payment of
money for the benefit of Fleet, as an obligation for performance due and owing
directly from Guarantor to Fleet. Guarantor shall be deemed to be primarily
liable for each Obligation and not merely as a surety thereof.

2. ABSOLUTE, UNCONDITIONAL, JOINT AND SEVERAL NATURE OF GUARANTY. The
obligations of Guarantor hereunder are absolute, unconditional and irrevocable,
may not be cancelled, terminated, repudiated or rescinded for any reason, and
shall be joint and several with each Guarantor executing this Guaranty and each
other party that may be liable, directly or indirectly, for the payment or
performance of any Obligations. If this Guaranty is executed by more than one
party, the term "GUARANTOR" as used herein shall mean (unless the context
otherwise requires) "THE GUARANTOR AND EACH OF THEM" and each and every
undertaking shall be their joint and several undertaking. If Customer is a
partnership or a limited liability company, the obligations of Guarantor herein
contained shall remain in full force and effect notwithstanding any changes in
the individuals or members comprising the partnership or the limited liability
company, and the term "CUSTOMER" shall include any altered or successive
partnerships or limited liability companies. Guarantor shall not be released
from any obligations under or in respect of this Guaranty for any reason, nor
shall such obligations be reduced, diminished or discharged for any reason,
including:

      (a)   MODIFICATIONS ;INDULGENCES; PAYMENT APPLICATIONS. Any modifications,
            renewals, or alterations of any agreement, document or instrument
            relating to any Obligation; any indulgences, adjustments,
            preferences, extensions or compromises made by Fleet in favor of
            Customer or Guarantor or any other party; or the application of any
            payments and receipts, by whomever paid and/or however realized, to
            any amounts owing by Guarantor or Customer to Fleet in such manner
            as Fleet shall determine in its sole discretion.

      (b)   CONDITION OF CUSTOMER OR GUARANTOR. Any insolvency, bankruptcy,
            arrangement, adjustment, composition, liquidation, disability,
            dissolution, appointment of a receiver for, or other similar
            proceeding affecting Customer or Guarantor; any sale, lease or other
            disposition of any of the assets of Customer or Guarantor; any
            reorganization of, or change in the composition of the shareholders,
            partners or members of, Customer or Guarantor; or any termination
            of, or other change in, the relationship between Customer and
            Guarantor.

      (c)   INVALIDITY OF OBLIGATIONS OR OTHER AGREEMENTS. The invalidity,
            illegality or unenforceability of any Obligation for any reason
            whatsoever, including, but not limited to: the existence of valid
            defenses, counterclaims or off-sets to any Obligation; the violation
            of applicable usury or other laws by any Obligation; or the lack of
            authenticity or genuineness of any document or instrument relating
            to the Obligations. This Guaranty shall be in addition to any other
            guaranty or other security for the Obligations, and it shall not be
            prejudiced or rendered unenforceable by the invalidity or
            unenforceability of any such other guaranty or security.

      (d)   RELEASE OF CUSTOMER. Any complete or partial release of Customer or
            any other party liable for any Obligation for any reason.

      (e)   RELEASE AND CARE OF COLLATERAL; STATUS OF LIENS. Any sale, transfer,
            release, surrender, exchange, deterioration, waste, loss or
            impairment of any property transferred or assigned by Customer,
            Guarantor or any other party as collateral in respect of any
            Obligation, or otherwise acquired by Fleet for lease to Customer, in
            connection with the Agreement (collectively, the "COLLATERAL"),
            whether negligent or willful; the failure of Fleet or any other
            party to exercise reasonable care in the care, custody,
            preservation, protection, sale or other treatment of any of any
            Collateral; the failure of Fleet or any other party to create or
            properly perfect Fleet's rights, title or interests in any
            Collateral, or any mortgage, pledge, security interest, transfer or
            assignment of any Collateral (a "LIEN"); the unenforceability of any
            Lien; the creation of any lien or encumbrance on any Collateral in
            favor of any other party, or the subordination of any Lien in favor
            of Fleet to any such other lien or encumbrance; or the taking or
            accepting by Fleet of any other security for, or assurance of
            payment of, any Obligation.

      (f)   OTHER ACTION OR INACTION. Any other action or inaction on the part
            of Fleet, whether or not such action or inaction prejudices
            Guarantor or increases the likelihood or amount that Guarantor will
            be required to pay or perform in connection with any Obligation
            pursuant to the terms hereof.

It is the obligation of Guarantor to discharge the Obligations when due,
notwithstanding any occurrence, circumstance, event, action or omission
whatsoever, whether or not particularly described herein. Guarantor is not
entering into this Guaranty in reliance on the value or the availability of any
Collateral. Guarantor acknowledges that Guarantor may be required to pay the
Obligations, in full, without the assistance or support of any other party.
Guarantor has not been induced to enter into this Guaranty on the basis that any
party other than Customer will be liable to perform any Obligations or that
Fleet will look to any other party to perform any Obligation. Fleet may release,
or settle with, the Customer, any Guarantor, or any other party liable, directly
or indirectly, for the performance of any Obligation, all without affecting the
liability of any other party to this Guaranty. To the extent that this Guaranty
is secured by property of Guarantor, Fleet shall not be obligated to release its
security interest in such property until all applicable preference periods have
passed with respect to payments of Obligations made to Fleet.

3. WAIVERS. Guarantor waives:

      (a)   ACTION AGAINST OTHERS. Any right to require Fleet to: institute suit
            or exhaust remedies against Customer or any other party liable for
            any Obligation; enforce Fleet's rights in any of the Collateral or
            other security which is at any time given to secure any Obligation;
            enforce Fleet's rights against any other Guarantor or any other
            party liable on any Obligation; join Customer or any other party
            liable for any Obligation in any action seeking to enforce this



            Guaranty; or exhaust any other remedies available to Fleet or resort
            to any other means of obtaining payment or performance of any
            Obligation.

      (b)   NOTICES. Notice of the execution, delivery or acceptance by Fleet,
            Customer or any other party, of this Guaranty or any document,
            agreement or instrument evidencing any Obligation; notice of the
            amount of credit extended by Fleet to Customer at any time, whether
            primary or secondary; notice of modifications or extensions of any
            Obligation; notice of defaults, or other non-performance by Customer
            in connection with any Obligation; notice of the transfer or
            disposition by Fleet of any Obligation; notice of the repossession,
            sale or other disposition of any of the Collateral; notice of the
            acceptance of this Guaranty by Fleet; demand and presentation for
            payment upon Customer or any other party liable for any Obligation;
            protest, notice of intention to accelerate or notice of acceleration
            of any Obligation, notice of protest and diligence in bringing suit
            against Customer or any other party; and any other action or
            inaction on the part of Fleet in connection with this Guaranty or
            any Obligation.

      (c)   SUBROGATION. Any right which Guarantor may at any time have against
            Customer, or any other party liable for any Obligation, as a result
            of the performance by Guarantor of its obligations under this
            Guaranty, including, but not limited to contractual, statutory and
            common law rights of subrogation, reimbursement, indemnification,
            set-off or contribution, until all Obligations owing to Fleet have
            been paid and performed in full.

      (d)   SURETYSHIP DEFENSES. Any defenses which Guarantor may have or assert
            against the enforcement of this Guaranty or any Obligation based
            upon suretyship principles or any impairment of Collateral.

4. REPRESENTATIONS; WARRANTIES; COVENANTS. Guarantor hereby represents,
warrants, covenants and agrees that:

      (a)   BENEFIT. Guarantor is the owner of 50% or more of the capital stock
            or membership interests or other equity ownership of the Customer,
            and has received, or will receive, substantial benefit from the
            agreements and transactions giving rise to the Obligations and this
            Guaranty.

      (b)   AUTHORIZATION; ENFORCEABILITY. Guarantor has the form of business
            organization indicated below and is and will remain duly organized
            and existing in good standing under the laws of the state of its
            organization and is duly qualified to do business wherever necessary
            to perform its obligations under this Guaranty. This Guaranty has
            been duly authorized by all necessary action on the part of
            Guarantor consistent with its form of organization, does not require
            the approval of, or giving of notice to, any governmental authority
            and does not contravene Guarantor's certificate or articles of
            incorporation or organization or by-laws or partnership or operating
            certificate or agreement or similar organizational documents, This
            Guaranty does not contravene or constitute a default under any
            applicable laws, or any contract, mortgage, agreement, indenture, or
            other instrument to which Guarantor is a party or by which it may be
            bound. This Guaranty has been duly executed and delivered by
            Guarantor and constitutes the legal, valid and binding obligations
            of Guarantor enforceable in accordance with their terms except to
            the extent that the enforcement of remedies hereunder may be limited
            under applicable bankruptcy and insolvency laws, and the equitable
            discretion of any court of competent jurisdiction. To Guarantor's
            knowledge, there are no actions or proceedings pending or threatened
            against or affecting Guarantor or any of Guarantor's property before
            any court, administrative officer or administrative agency that, if
            decided adversely, could affect the financial condition or
            operations of Guarantor or the ability of Guarantor to perform its
            obligations hereunder.

      (c)   ACCESS TO INFORMATION; NO REPRESENTATION BY FLEET. Guarantor has
            adequate means to obtain continuing and sufficient information
            concerning the financial and business condition of the Customer and
            other parties liable in respect of the Obligations. Neither Fleet
            nor any other party has made any representation, warranty or
            statement to Guarantor in order to induce Guarantor to execute this
            Guaranty.

      (d)   SUBORDINATION. All present and future indebtedness of Customer to
            Guarantor ("SUBORDINATED DEBT") shall be and hereby is subordinated
            to the prior payment and performance of all Obligations, and is
            hereby assigned and transferred to Fleet and pledged as additional
            security for the payment of the Obligations of the Customer and the
            obligations of the Guarantor hereunder. Except for the
            capitalization of the Subordinated Debt, Guarantor shall not demand
            or accept payment of, or otherwise cancel, set-off or otherwise
            discharge any part of, the Subordinated Debt without the prior
            written consent of Fleet, provided, however, that for so long as
            there is no default hereunder or in connection with the Obligations
            or the Subordinated Debt, Guarantor may receive and Customer may pay
            (but not prepay ,whether or not permitted or contemplated by the
            terms of the Subordinated Debt) principal and/or interest or other
            scheduled installment payments of Subordinated Debt from Customer.
            Upon the request of Fleet, Guarantor shall deliver to Fleet a
            certified statement of the outstanding Subordinated Debt, specifying
            in detail the time at which permitted payments of Subordinated Debt
            were made, if any, and such other information as Fleet may request.

      (e)   FINANCIAL CONDITION; SOLVENCY. As of the date hereof, and after
            giving effect to this Guaranty and the contingent obligations
            contained herein, Guarantor is solvent and has assets which, when
            fairly valued, exceed its liabilities. The performance of the
            obligations of Guarantor hereunder will not cause Guarantor to
            exceed its ability to pay its debts as they mature, and this
            Guaranty is made without any intent to hinder, delay or defraud
            either present or future creditors, purchasers or other interested
            persons.

      (f)   FINANCIAL REPORTS. Guarantor will provide Fleet with: (i) (A)
            Guarantor's consolidated balance sheet and related consolidated
            statements of income and retained earnings certified by a recognized
            firm of certified public accountants (acceptable to Fleet), within
            90 days of the close of each fiscal year of Guarantor, (B) if
            requested by Fleet, Guarantor's quarterly consolidated balance sheet
            and consolidated related statements of income and retained earnings
            certified by the chief financial officer of Guarantor, within
            forty-five (45) days of the close of each fiscal quarter of
            Guarantor, (C) all of Guarantor's Forms 10-K and 10-Q, if any, filed
            with the SEC within thirty (30) days after the date on which they
            are filed (by furnishing these SEC Forms, or making them publicly
            available in electronic form, Guarantor shall be deemed to have
            satisfied the requirements of clauses (i)(A), (B), or (C)); and (ii)
            such other reports or information relating to the Guarantor and/or
            Customer (or any affiliates of Guarantor or Customer) promptly upon
            Fleet's request. Financial reports provided pursuant to clauses
            (i)(A) and (i)(B) above shall be prepared in accordance with
            generally accepted accounting principles consistently applied, each
            on a comparative basis with the corresponding period of the prior
            year. All credit, financial and other information provided by
            Guarantor or at Guarantor's direction is, and all such information
            hereafter furnished will be, true, correct and complete in all
            material respects.

      (g)   ASSIGNMENT. Fleet may, at any time and without the consent of, or
            notice to, Guarantor, assign all or any portion of its rights
            hereunder to any other party to which all or any portion of the
            Obligations are transferred, assigned or negotiated (an "ASSIGNEE").
            Guarantor shall promptly execute and deliver to Fleet or its
            Assignee an acknowledgment of assignment in form and substance
            satisfactory to the requesting party which, among other things,
            reaffirms the basic terms and conditions of the Obligations and this
            Guaranty, and shall comply with the reasonable demands of Fleet or
            any such Assignee in order to perfect any such assignment or
            transfer. This Guaranty shall not be deemed to create any right in
            any party except as provided herein and shall inure to the benefit
            of, and be binding upon, the successors and assigns of Guarantor and
            Fleet, provided that Guarantor shall not assign or delegate any of
            its rights or obligations hereunder without the prior written
            consent of Fleet.

      (h)   FURTHER ASSURANCES. Guarantor will promptly execute any documents
            and other records, including, amendments to this Guaranty, and will
            take such further action as Fleet may reasonably request in order to
            carry out more effectively the intent and purposes of this Guaranty
            and to establish, perfect and protect Fleet's rights and remedies
            hereunder and in any Collateral or Subordinated Debt.

5. DEFAULT; PERFORMANCE OF OBLIGATIONS. If (a) Customer defaults in the payment
or performance of any Obligation, or (b) if there exists any event or condition
which, with notice and/or the passage of time, would constitute a default under
the Agreement (including any default relating to Guarantor or this Guaranty), or
(c) any representation or warranty of Guarantor herein or in any certificate,
agreement, statement or document furnished at any time to Fleet by or on behalf
Guarantor (including without limitation, any financial information), shall prove
to be or to have been false or incorrect in any material respect; or (d)
Guarantor shall fail to perform or observe any covenant (including without
limitation, any financial covenants), condition or agreement required to be
performed or observed by it hereunder or in connection with any Obligation, and
such failure shall continue for 10 days after written notice thereof to
Guarantor; or (e) if there is a liquidation, bankruptcy, assignment for the
benefit of creditors or similar proceeding affecting the status, existence,
assets or obligations of Customer or any Guarantor or other party liable to
Fleet in respect of the Obligations (each of the foregoing being hereinafter
referred to as a "DEFAULT"), then the Obligations of Customer shall, at the sole
option of Fleet, be deemed to be accelerated and become immediately due and
payable by Guarantor for all purposes of this Guaranty, and Guarantor shall (i)
immediately pay directly to Fleet all such Obligations owing to Fleet by reason
of acceleration or otherwise (including without limitation, any rent, liquidated
damages, principal or interest payments or balances, fees, other installments or
any other accrued or unaccrued amounts with respect to such Obligations),
irrespective of whether a Default exists relating to Customer, and
notwithstanding any stay, injunction or other prohibition preventing
acceleration of any Obligations against Customer, and (ii) promptly perform all
other Obligations. Guarantor shall be liable, as principal obligor and not as a
surety or guarantor only, for all attorneys' fees and other costs and expenses
incurred by Fleet in connection with Fleet's enforcement of this Guaranty,
together with interest on all amounts recoverable under this Guaranty,
compounded monthly in arrears, from the time such amounts become due and payable
until the date of payment at the lesser of Fleet's then current late charge rate
of interest or the highest rate permitted by applicable law. If Fleet is
required to return any payment made to Fleet by or on behalf of Customer,
whether as a result of Customer's bankruptcy, reorganization or otherwise,
Guarantor acknowledges that this Guaranty covers all such amounts,
notwithstanding that the original of this Guaranty may have been returned to
Guarantor and/or otherwise canceled.

6. GOVERNING LAW; MISCELLANEOUS. THIS GUARANTY AND THE LEGAL RELATIONS OF THE
PARTIES HERETO SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES

                                       2


REGARDING THE CHOICE OF LAW. GUARANTOR CONSENTS TO THE JURISDICTION AND VENUE OF
THE COURTS OF THE STATE OF NEW YORK OR THE UNITED STATES COURTS FOR THE SOUTHERN
DISTRICT OF NEW YORK, AS FLEET MAY ELECT OR IN ANY OTHER STATE OR FEDERAL COURT
AS FLEET SHALL DEEM APPROPRIATE, IN CONNECTION WITH FLEET'S ENFORCEMENT OF ANY
OBLIGATIONS UNDER OR IN RESPECT OF THIS GUARANTY. GUARANTOR HEREBY EXPRESSLY
WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO
THIS GUARANTY. Time is of the essence in the payment and performance of all
Obligations and all of Guarantor's obligations and liabilities owing to Fleet
hereunder. This Guaranty constitutes the entire agreement of Guarantor and Fleet
relative to the subject matter hereof, and there are no prior or contemporaneous
understandings or agreements, whether oral or in writing, between the parties
hereto with respect to the subject matter hereof. No subsequent modification of,
or supplement to, this Guaranty shall be enforceable against any party hereto
unless the same is in writing and is duly signed by an authorized officer or
representative of the party against whom enforcement is sought. All
communications and notices provided for herein shall be in writing and shall
become effective (i) upon hand delivery, (ii) upon delivery by an overnight
delivery service, (iii) upon two (2) business days after being deposited in the
U.S. mail with proper postage for first-class mail prepaid, sent by registered
or certified mail, return receipt requested, and addressed to Fleet or Guarantor
at their respective addresses set forth herein, or such other address as either
party may hereafter designate by written notice to the other, or (iv) when sent
by telecopy (with customary confirmation of receipt of such telecopy) on the
business day when sent or upon the next business day if sent on other than a
business day.

The undersigned, pursuant to due corporate, limited liability company or
partnership authority, as appropriate, has or have caused this Guaranty to be
executed as of the date set forth below.

Dated as of:  August 25, 2004

Witness/Attest/Notary Public:              PFSWeb, Inc., a Delaware corporation
                                           (Organization ID: 3062550)

      _______________________________        By:________________________________

Print Name:__________________________      Print Name: _________________________

Print Address:_______________________      Print Title:_________________________

GUARANTOR NOTICE ADDRESS:________________  Guarantor's Taxpayer ID:___________
                         ________________

                                       3

                                                                    EXHIBIT 10.5

                        AMENDMENT NO. 3 TO AIRCRAFT LEASE

      This Amendment No. 3 dated as of August 25, 2004 to Aircraft Lease
(N166DT) dated as of March 3, 1999 ("Amendment") is executed by and between
Fleet National Bank ("Lessor") with a place of business at c/o Fleet Capital
Corporation, One Financial Plaza, Providence, RI 02903, and Priority Fulfillment
Services, Inc., a Delaware corporation ("Lessee") having its principal place of
business and chief executive office at 500 North Central Expressway, 5th Floor,
Plano, Texas 75074.

                               W I T N E S S E T H

      WHEREAS, Lessor and Daisytek, Incorporated entered into a certain Aircraft
Lease (N166DT) dated as of March 3, 1999 and related Lease Supplement No. 1
dated March 3, 1999 and Lease Supplement No. 2 dated March 3, 1999, all of which
documents were recorded as one document by the Federal Aviation Administration
("FAA") on March 6, 1999 as Conveyance No. X139002 (said Aircraft Lease, Lease
Supplement No. 1 and Lease Supplement No. 2 sometimes hereinafter collectively
referred to as the "Aircraft Lease") regarding a certain 1999 Learjet Inc. Model
31A aircraft, bearing manufacturer's Serial No. 166 and U.S. Registration Mark
N166DT (hereinafter referred to as the "Original Aircraft"), two (2)
AlliedSignal Model TFE731-2-3B engines respectively bearing manufacturer's
Serial Nos. 99456 and 99459, each of which engines has 750 or more rated takeoff
horsepower or the equivalent of such horsepower (collectively, the "Original
Engines") and certain other equipment leased under the Aircraft Lease, all as
more particularly described in the Aircraft Lease (said Original Aircraft,
Original Engines and all other equipment sometimes hereinafter collectively
referred to as the "Original Leased Equipment"); and

      WHEREAS, the Lessor and Daisytek, Incorporated amended the Aircraft Lease
pursuant to a certain Amendment No. 1 dated as of September 15, 1999 to Aircraft
Lease and Lease Supplement No. 1 ("Amendment No. 1"), which Amendment was
recorded by the FAA on October 12, 1999 as Conveyance No. PP012904, and which
Amendment provided for the replacement of the Original Aircraft with a certain
Learjet Inc. Model 31A aircraft, bearing manufacturer's Serial No. 183 and U.S.
Registration Mark N183ML (hereinafter referred to as the "Learjet Aircraft"),
two (2) AlliedSignal Model TFE731-2-3B engines respectively bearing
manufacturer's Serial Nos. 99492 and 99491, each of which engines has 750 or
more rated takeoff horsepower or the equivalent of such horsepower
(collectively, the "Engines") and certain other equipment leased under the
Aircraft Lease, all as more particularly described in the Aircraft Lease, as
amended by Amendment No. 1 (said Learjet Aircraft and Engines sometimes
hereinafter collectively referred to as the "Aircraft"); and

      WHEREAS, pursuant to the terms of Amendment No. 1, the Original Aircraft
and the other Original Lease Equipment were replaced with the Aircraft for all
purposes under the Aircraft Lease, as amended by Amendment No. 1; and

      WHEREAS, pursuant to a certain Aircraft Lease Assignment, Assumption and
Amendment Agreement dated as of July 3, 2000 ("Assignment Agreement") between
Daisytek, Incorporated, the Lessee and the Lessor, which Assignment Agreement
was recorded by the FAA on August 17, 2000 as Conveyance No. HKO18697, (i)
Daisytek, Incorporated assigned to the Lessee all of Daisytek, Incorporated's
right, title and interest in and to the Aircraft Lease, as amended by Amendment
No. 1, and the Aircraft, (ii) the Lessee assumed all of Daisytek, Incorporated's
right, title and interest in and to the Aircraft Lease, as amended by Amendment
No. 1, and the Aircraft and all of Daisytek, Incorporated's obligations
thereunder, (iii) the Aircraft Lease, as amended by Amendment No. 1, was further
amended, and (iv) the Lessor consented to the assignment and assumption of the
Aircraft Lease, as amended by Amendment No. 1, and the Aircraft, and the further
amendment of the Aircraft Lease, as evidenced by the Assignment Agreement; and



      WHEREAS, the Lessor and the Lessee further entered into a certain
Amendment dated as of May 10, 2001 to Aircraft Lease (N166DT) dated as of March
3, 1999 ("2001 Amendment"), which 2001 Amendment was not recorded by the FAA;
(the 2001 Amendment together with the Assignment Agreement, Amendment No. 1 and
the Aircraft Lease sometimes hereinafter collectively referred to as the
"Lease"); and

      WHEREAS, the Lessee has requested that the Lessor allow the Lessee to
terminate the Lease and to purchase the Aircraft from the Lessor prior to the
end of the term of said Lease notwithstanding the fact that the Lessee is not
entitled, or does not have the right, to do so at this time; and

      WHEREAS, the Lessor has agreed to the foregoing requests but only on the
terms and conditions contained in this Amendment.

      NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:

      1. Capitalized terms used in this Amendment and not otherwise defined
herein shall have the respective meanings given to such terms in the Lease and
in any other schedules, supplements, instruments, amendments, modifications,
documents, instruments or agreements executed and/or delivered in connection
with the Lease (all of the foregoing, other than the Lease, sometimes
hereinafter collectively referred to as the "Other Lease Documents").

      2. Effective as of August 26, 2004 (or such earlier or later date as is
acceptable to Lessor in its sole discretion) (hereinafter the "Termination
Date") and expressly subject to satisfaction of the conditions precedent set
forth in this Amendment, the Lease and the Other Lease Documents shall terminate
on the date the Lessor has irrevocably received (i) all of the applicable
amounts provided in Section 4 of this Amendment, and (ii) the duly executed
Delivery Receipt (as such term is defined in Section 5 of this Amendment), as
well as all of the duly executed documents, agreements and instruments required
by the Lessor pursuant to Section 4 (or any other applicable section) of this
Amendment. Lessee hereby further acknowledges and agrees that, from and after
the date hereof, all purchase options, early purchase options, early termination
option, upgrade options and options to renew pursuant to the Lease and the Other
Lease Documents and any rights or options to assign the Lease and the Other
Lease Documents or to sublease the Aircraft shall be hereby deemed automatically
canceled, terminated and/or declined, as the case may be; provided, however,
that any such purchase options, early purchase options, early termination
option, upgrade options and options to renew shall be automatically reinstated
pursuant to the terms of Section 16 of this Amendment in the event that, on or
prior to the Termination Date, any of Bombardier Aerospace Corporation
("Bombardier"), Lessee and/or PFSWeb, Inc. (the "Guarantor"), as the case may
be, fail to fully and timely comply with any of the terms and provisions of
Section 4 and/or subclauses (i) through (viii) of Section 16 of this Amendment.

      3. The Lessee's obligations and duties under the Lease and the Other Lease
Documents, including, without limitation, the obligation to pay Basic Rent,
shall continue unabated until the Lessee has fully and timely complied with all
of the terms and conditions of this Amendment and the Lessor has irrevocably
received (i) all of the applicable amounts provided in Section 4 of this
Amendment, and (ii) the duly executed Delivery Receipt, as well as all of the
duly executed documents, agreements and instruments required by the Lessor
pursuant to Section 4 (or any other applicable section) of this Amendment.
Notwithstanding the foregoing or otherwise, the Lessee hereby further
acknowledges and agrees that all of its indemnification obligations and
agreements, and waivers, in favor of the Lessor (and/or any related parties or
entities as provided in the Lease and the Other Lease Documents) shall remain in
full force and effect in accordance with the original terms and conditions of
the Lease and/or the Other Lease Documents. In addition, the Lessee hereby
further agrees to indemnify, protect, save, defend and keep harmless the Lessor
and its agents, employees, officers, directors, shareholders, subsidiaries,
affiliates, successors and assigns (Lessor and such other parties sometimes
hereinafter collectively referred to as the "Indemnified Parties"), on a net
after-tax basis, from and against any and all liabilities, obligations, losses,

                                       2


damages, penalties, claims (including, without limitation, claims involving or
alleging product liability or strict or absolute liability in tort), actions,
suits, demands, costs, expenses and disbursements (including, without
limitation, legal fees and expenses) of any kind and nature whatsoever which may
be imposed on, incurred by, or asserted against, any of the Indemnified Parties,
whether or not any of the Indemnified Parties shall also be indemnified as to
any such matters by any other Person, in any way relating to or arising out of
the Aircraft, the sale of the Aircraft by Lessor to Lessee pursuant to this
Amendment (including, without limitation, any sales or other taxes, or any
broker's fees, expenses or commissions, due, payable, owing or outstanding in
connection with said sale, other than any taxes on or measured solely by the net
income of Lessor), this Amendment, the Lease, the Other Lease Documents or any
documents, agreements or instruments related to any of the foregoing
notwithstanding anything to the contrary contained in this Amendment, the Lease,
the Other Lease Documents or otherwise, including, without limitation, (i) the
Lessee's and the Lessor's respective execution and delivery of this Amendment,
the FAA Lease Termination (as such term is defined in Section 4 of this
Amendment) and/or the 2004 Aircraft Lease (as such term is defined in Section 4
of this Amendment), (ii) the Lessee's execution and delivery of the Delivery
Receipt, the Swap Agreement (as such term is defined in the 4 of this
Amendment), the 2004 Additional Aircraft Lease Documents (as such term is
defined in Section 4 of this Amendment) and any documents, agreements or
instruments related to the 2004 Aircraft Lease, the Swap Agreement and/or the
2004 Additional Aircraft Lease Documents, (iii) the Guarantor's execution and
delivery of the 2004 Guaranty (as such term is defined in Section 4 of this
Amendment), the Guarantor Consent (as such term is defined in Section 4 of this
Amendment), the 2004 Additional Guaranty Documents (as such term is defined in
Section 4 of this Amendment), the Additional Guarantor Consent Documents (as
such term is defined in Section 4 of this Amendment) and any documents,
agreements or instruments related to the 2004 Guaranty, the Guarantor Consent,
the 2004 Additional Guaranty Documents and/or the Additional Guarantor Consent
Documents, and/or (iv) the Lessor's execution and/or delivery, as the case may
be, of the Bill of Sale (as such term is defined in Section 4 of this
Amendment), the FAA Bill of Sale (as such term is defined in Section 4 of this
Amendment), the UCC Termination Statements (as such term is defined in Section 4
of this Amendment) and/or any documents, agreements or instruments related
thereto. Moreover, and notwithstanding anything to the contrary contained in
this Amendment or otherwise, each of the Lessee and the Lessor hereby further
acknowledges and agrees that the termination contained in this Amendment shall
not terminate, or otherwise adversely affect, prejudice or limit, in any way
whatsoever any other documents, agreements or instruments of any kind whatsoever
executed and/or delivered by the Lessee or any other party, person or entity of
any kind whatsoever in favor of the Lessor (including, without limitation, the
2004 Aircraft Lease, the 2004 Additional Aircraft Lease Documents, the 2004
Guaranty, the 2004 Additional Guaranty Documents, the Guarantor Consent and the
Additional Guarantor Consent Documents) or any obligations, liabilities, or
agreements of the Lessee or any other party, person or entity of any kind
whatsoever in favor of the Lessor pursuant to any such other documents,
agreements, instruments or otherwise (including, without limitation, the 2004
Aircraft Lease, the 2004 Additional Aircraft Lease Documents, the 2004 Guaranty,
the 2004 Additional Guaranty Documents, the Guarantor Consent and the Additional
Guarantor Consent Documents). The indemnification agreements, obligations and
liabilities of the Lessee set forth in the Lease, this Section 3 and any other
applicable section of this Amendment shall survive the execution and delivery of
this Amendment, the Delivery Receipt, the Bill of Sale, the FAA Bill of Sale,
the FAA Lease Termination, the UCC Termination Statements, the Swap Agreement,
the 2004 Aircraft Lease, the 2004 Additional Aircraft Lease Documents, the 2004
Guaranty, the 2004 Additional Guaranty Documents, the Guarantor Consent, the
Additional Guarantor Consent Documents and/or any other documents, agreements or
instruments related to any of the foregoing, and shall also survive the
termination of the Lease and the Other Lease Documents, for all purposes.

      4. On the Termination Date (and/or on any later date acceptable to the
Lessor in its sole discretion), the Lessee shall (i) cause Bombardier to timely
and fully sell, convey and transfer a certain Learjet Inc. Model 31A aircraft
bearing U.S. Registration Mark N122BX and manufacturer's serial number 143 (the
"2004 Aircraft") to Lessor strictly in accordance with the terms of a certain
swap or trade-in agreement dated August 10, 2004 (the "Swap Agreement") between
Lessee and Bombardier with regard to the Aircraft and the 2004 Aircraft Lease,
(ii) cause Bombardier to pay Lessor, in immediately available funds via wire
transfer, $820,566.00 with regard to the Swap Agreement, (iii) execute and
deliver to Lessor a certain Lease (S/N 143) dated as of August 25, 2004 (the
"2004 Aircraft Lease") between the Lessor and the Lessee and any and all
documents, agreements or instruments required or requested by

                                       3


Lessor in connection therewith (any such other documents, agreements or
instruments required or requested by Lessor sometimes hereinafter collectively
referred to as the "2004 Additional Aircraft Lease Documents"), which 2004
Aircraft Lease and 2004 Additional Aircraft Lease Documents shall be in form and
substance satisfactory in all respects to Lessor, (iv) accept the 2004 Aircraft
for lease under or in connection with the 2004 Aircraft Lease and execute and
deliver to Lessor a certain Lease Supplement to such 2004 Aircraft Lease, which
Lease Supplement shall be in form and substance satisfactory in all respects to
Lessor, (v) fully and timely comply with any and all terms and provisions of the
2004 Aircraft Lease, (vi) cause the Guarantor to execute and deliver to Lessor a
certain Guaranty dated as of August 25, 2004 (the "2004 Guaranty") in favor of
the Lessor and any and all documents, agreements or instruments required or
requested by Lessor in connection therewith (any such other documents,
agreements or instruments required or requested by Lessor sometimes hereinafter
collectively referred to as the "2004 Additional Guaranty Documents"), which
2004 Guaranty and 2004 Additional Guaranty Documents shall be in form and
substance satisfactory in all respects to Lessor, (vii) cause the Guarantor to
execute and deliver to Lessor a certain Guarantor's Acknowledgment, Agreement
and Consent dated as of August 25, 2004 (the "Guarantor Consent") in favor of
the Lessor and any and all documents, agreements or instruments required or
requested by Lessor in connection therewith (any such other documents,
agreements or instruments required or requested by Lessor sometimes hereinafter
collectively referred to as the "Additional Guarantor Consent Documents"), which
Guarantor Consent and Additional Guarantor Consent Documents shall be in form
and substance satisfactory in all respects to Lessor, (viii) pay to Lessor, in
immediately available funds via wire transfer, the August 5, 2004 Basic Rent
payment (which August 5, 2004 Basic Rent payment has been received by Lessor)
together with all other Rent and any other amounts then due and payable under
the Lease and the Other Lease Documents on, as of, or prior to, the Termination
Date (excluding any Supplemental Rent which may be due or payable prior to, on,
or after the Termination Date, which Supplemental Rent, however, shall continue
to be due and payable by the Lessee), and (ix) pay to Lessor, in immediately
available funds via wire transfer, any applicable sales, excise or other taxes
imposed as a result of the sale of the Aircraft to the Lessee (other than gross
or net income taxes attributable to such sale) (all of said amounts set forth in
subclauses (ii), (viii) and (ix) hereinafter collectively referred to as the
"Outstanding Termination Amounts"); provided, however, that the Lessee shall
continue to be liable, obligated and responsible for any Supplemental Rent which
may be due or payable prior to, on, or after the Termination Date and for any
other amounts or payments due, payable or outstanding relating to the Lease, any
Other Lease Documents and/or this Amendment after the Termination Date
(including, without limitation, any amounts or payments relating to any
indemnification or tax agreements, obligations or liabilities, including, but
not limited to, any indemnification agreements, obligations or liabilities set
forth in Section 3 of this Amendment), other than for any Basic Rent due after
the Termination Date.

      Upon the Lessor's receipt of the Outstanding Termination Amounts and this
Amendment duly executed by the Lessee and any other documents required by this
Amendment (including, without limitation, the Delivery Receipt, the FAA Lease
Termination, the 2004 Aircraft Lease, 2004 Additional Aircraft Lease Documents,
the 2004 Guaranty, the 2004 Additional Guaranty Documents, the Guarantor Consent
and the Additional Guarantor Consent Documents), the Lessor hereby further
agrees (i) to sell the Aircraft to the Lessee on an "AS-IS WHERE-IS" AND "WITH
ALL FAULTS" BASIS, WITHOUT ANY REPRESENTATION BY, OR RECOURSE OR WARRANTY,
EXPRESS OR IMPLIED, OF ANY KIND WHATSOEVER TO, LESSOR, (ii) to deliver the
Aircraft, at the Lessee's sole cost and expense, to the Lessee at any airport
located in the State of Kansas (or at any other location acceptable to Lessor
and Lessee), (iii) to execute and deliver to the Lessee an "As-Is Where-Is" Bill
of Sale ("Bill of Sale") which Bill of Sale shall be in the form attached hereto
and made a part hereof as Exhibit 1, (iv) to execute and deliver to the Lessee
an FAA Bill of Sale ("FAA Bill of Sale") which FAA Bill of Sale shall be in the
form attached hereto and made a part hereof as Exhibit 2, (v) to execute and
deliver to the Lessee an FAA Lease Termination Agreement ("FAA Lease
Termination") which FAA Lease Termination shall be in the form attached hereto
and made a part hereof as Exhibit 3, and (vi) to deliver to the Lessee Uniform
Commercial Code ("UCC") Termination Statements (collectively, the "UCC
Termination Statements") which shall terminate any existing UCC Financing
Statements concerning only the Aircraft (or, in the event that any existing UCC
Financial Statements concerning the Aircraft also concern additional aircraft or
other collateral, UCC Partial Releases as to the Aircraft only).

                                       4


      5. Concurrently with the delivery of the Aircraft to the Lessee, the
Lessee shall execute and deliver to the Lessor a delivery receipt ("Delivery
Receipt") which Delivery Receipt shall be in the form attached hereto and made a
part hereof as Exhibit 4 and the FAA Lease Termination. The Lessee's acceptance
of the Aircraft by executing the Delivery Receipt shall be deemed conclusive
evidence that (i) the Lessee has inspected the Aircraft, and any logbooks and
all other records relating thereto, to the Lessee's complete satisfaction, (ii)
the Aircraft is in good order, repair and condition, (iii) the Aircraft complies
with the terms of this Amendment, and (iv) the Lessee has irrevocably and
unconditionally accepted delivery of the Aircraft for all purposes.

      6. On the Termination Date (or on any other date requested by the Lessor),
and in order to further induce the Lessor to enter into this Amendment, the
Lessee hereby further agrees to pay all actual costs and expenses incurred by,
or on behalf of, the Lessor in connection with any of this Amendment, the
termination of the Lease and purchase of the Aircraft contemplated hereunder,
including, but not limited to, the fees and expenses of any escrow agent and/or
of the Lessor's counsel and FAA counsel; provided, however, that the foregoing
costs and expenses payable by the Lessee shall not, in the aggregate, exceed
$30,000.00; provided, further, however, that the foregoing $30,000.00
limitation, and the Lessee's payment of any costs and expenses, pursuant to this
Section 6 shall not limit, or waive, or be applicable to, in any way whatsoever
any other costs and/or expenses or other legal fees or costs and expenses
incurred by or on behalf of the Lessor in connection with (x) the exercise or
enforcement of any of the rights or remedies of the Lessor in connection with
the Lease, the Other Lease Documents, this Amendment and/or any and all other
documents, agreements and/or instruments executed and/or delivered in connection
therewith or herewith, as the case may be, or at law or in equity or otherwise
after the date hereof, (y) any indemnification agreements, obligations and
liabilities of the Lessee set forth in the Lease, Section 3 of this Amendment
and any other applicable section of this Amendment, and/or (z) the failure by
the Lessee to perform or observe any term or condition contained in any of the
Lease, the Other Lease Documents, this Amendment and/or any and all other
documents, agreements and/or instruments executed and/or delivered in connection
therewith or herewith, as the case may be.

      7. The Lessee hereby further acknowledges and agrees that it shall have no
claim, right, title or interest of any kind whatsoever to any amounts or any
sales, use or similar tax paid to or by the Lessor or otherwise in connection
with the acquisition, the leasing, or any sale of the Aircraft, except for any
claim, right, title or interest of the Lessee with regard to any sale of the
Aircraft by the Lessee after the Lessee purchases the Aircraft from the Lessor
pursuant to the terms of this Amendment.

      8. Each of the Lessee and the Lessor hereby further (i) affirms and
ratifies their respective obligations under or in connection with the Lease and
any Other Lease Documents, and (ii) agrees that the Lease and the Other Lease
Documents are in full force and effect without variance, qualification,
discharge or diminution of any kind whatsoever (except as otherwise expressly
provided in this Amendment).

      9. Each of the parties represents and warrants to the other party that (i)
such party's execution and delivery of this Amendment and any other documents,
agreements and instruments executed or delivered in connection herewith have
been duly authorized on its part; (ii) such party has full power and authority
to execute, deliver and perform its obligations under this Amendment and any
other documents, agreements and instruments executed or delivered in connection
herewith; and (iii) all required consents for such party's execution, delivery
and performance of this Amendment and any other documents, agreements and
instruments executed or delivered in connection herewith have been duly
obtained.

      10. This Amendment shall be binding upon the Lessee and its
representatives, successors, transferees and assigns and the benefits hereof
shall extend to and include the Lessor and its successors, representatives,
transferees and assigns.

      11. This Amendment may be executed by one or more of the parties to this
Amendment on any number of separate counterparts and all said counterparts taken
together shall be deemed and constitute one and the same instrument.

                                       5


      12. Unless the context otherwise requires, singular nouns and pronouns,
when used herein, shall be deemed to include the plural and vice versa, and
impersonal pronouns shall be deemed to include the personal pronoun of the
appropriate gender.

      13. If any provision in this Amendment or any part thereof is held invalid
or unenforceable, such invalidity or unenforceability shall not affect or impair
the validity or the enforceability of the remaining provisions, or any part
thereof, of this Amendment.

      14. This Amendment shall be deemed to have been executed in Rhode Island
by virtue of the Lessor having countersigned and accepted this Amendment in
Rhode Island and shall be deemed to be performed in Rhode Island by virtue of
the payment of the Outstanding Termination Amounts to be made to Lessor in Rhode
Island, and this Amendment shall be delivered for closing purposes in Lessor's
office at One Financial Plaza, Providence, Rhode Island. Notwithstanding the
foregoing, however, this Amendment shall in all respects be governed by, and
construed in accordance with, the laws of the State of New York, without giving
effect to principles of conflicts of law or choice of law, including all matters
of construction, validity and performance. The Lessee hereby irrevocably
consents and agrees that any legal action, suit or proceeding arising out of or
in any way in connection with this Amendment, the Lease and/or the Other Lease
Documents may be instituted or brought in the courts of the State of New York or
the United States District Court for the Southern District of New York, as the
Lessor may elect, and by execution and delivery of this Amendment, the Lessee
hereby irrevocably accepts and submits to, for itself and in respect of its
property, generally and unconditionally, the non-exclusive jurisdiction of any
such court, and to all proceedings in such courts.

      15. THIS AMENDMENT SHALL NOT BE MODIFIED, ALTERED, AMENDED OR WAIVED IN
WHOLE OR IN PART EXCEPT IN WRITING DULY SIGNED BY EACH PARTY. ANY WAIVER SHALL
BE EFFECTIVE ONLY IN THE SPECIFIC INSTANCE AND FOR THE SPECIFIC PURPOSE FOR
WHICH IT IS GIVEN. NO FAILURE TO EXERCISE, OR DELAY IN EXERCISING, ANY RIGHT
HEREUNDER SHALL OPERATE AS A WAIVER THEREOF; NOR SHALL ANY FAILURE TO EXERCISE,
OR PARTIAL EXERCISE OF, ANY RIGHT HEREUNDER PRECLUDE ANY OTHER OR FURTHER
EXERCISE THEREOF OR THE EXERCISE OF ANY OTHER RIGHT.

      16. Notwithstanding anything to the contrary contained in this Amendment
or otherwise, the Lessee shall not be entitled to terminate the Lease and the
Other Lease Documents pursuant to the terms of this Amendment in the event that,
on or prior to the Termination Date, (i) Bombardier does not, for any reason
whatsoever, timely and fully sell, convey and transfer the 2004 Aircraft to
Lessor strictly in accordance with the terms of the Swap Agreement, (ii)
Bombardier does not, for any reason whatsoever, pay Lessor, in immediately
available funds via wire transfer, $820,566.00 with regard to the Swap
Agreement, (iii) Lessee does not, for any reason whatsoever, execute and deliver
to Lessor the 2004 Aircraft Lease and the 2004 Additional Aircraft Lease
Documents, (iv) the Lessee does not, for any reason whatsoever, (x) accept the
2004 Aircraft for lease under or in connection with the 2004 Aircraft Lease and
execute and deliver to Lessor a certain Lease Supplement to such 2004 Aircraft
Lease, which Lease Supplement shall be in form and substance satisfactory in all
respects to Lessor, and/or (y) fully and timely comply with any and all terms
and provisions of the 2004 Aircraft Lease, (v) the Guarantor does not, in any
way whatsoever, execute and deliver to Lessor the 2004 Guaranty and the 2004
Additional Guaranty Documents, (vi) the Guarantor does not, in any way
whatsoever, execute and deliver to Lessor the Guarantor Consent and the
Additional Guarantor Consent Documents, (vii) the Lessee does not timely and
fully pay the Lessor the Outstanding Termination Amounts pursuant to the terms
of Section 4 of this Amendment, and/or (viii) Lessee does not fully and timely
comply with all of the terms and conditions of this Amendment. Upon the
occurrence of any such failure by any of Bombardier, the Lessee and/or the
Guarantor, as the case may be, to fully and timely comply with any of the terms
and provisions of subclauses (i) through (viii) above, the Lease and the Other
Lease Documents shall not be terminated and such documents shall remain, and
continue to be, in full force and effect and the Lessee shall be obligated to
continue to timely and fully comply with all the terms and conditions of said
Lease and Other Lease

                                       6


Documents, including, without limitation, timely and fully paying all Basic Rent
and other amounts due or payable in connection with the Lease and/or the Other
Lease Documents.

      17. Except as expressly modified or amended in this Amendment, the terms
and conditions of the Lease and the Other Lease Documents shall remain in full
force and effect in accordance with their respective original tenor. Without
limiting the generality of the foregoing or any other terms of this Amendment,
nothing contained herein shall be interpreted or construed in any way whatsoever
to limit the various provisions of the Lease and/or the Other Lease Documents
except as otherwise expressly provided herein.

      18. The terms and provisions of this Amendment shall be effective as of
the date hereof, except as otherwise provided in the first sentence of Section 2
of this Amendment.

                      [this space intentionally left blank]

                                       7


      IN WITNESS WHEREOF, the parties have executed this Amendment by their
respective duly authorized representatives as of the date and year first above
written.

                                     FLEET NATIONAL BANK

                                     By:_________________________________

                                     Name:_______________________________

                                     Title:____________________________

                                     PRIORITY FULFILLMENT SERVICES, INC.

                                     By:_________________________________

                                     Name:_______________________________

                                     Title:____________________________

                                       8


                                    EXHIBIT 1

                                  BILL OF SALE

      Fleet National Bank (the "Seller"), in consideration of the sum of Ten and
00/100 U. S. Dollars ($10.00) and other good and valuable consideration paid by
Priority Fulfillment Services, Inc. (the "Buyer"), receipt of which is
acknowledged, hereby grants, sells, assigns and transfers to Buyer the aircraft
and the engines specifically described in the immediately succeeding paragraph
together with all appliances, parts, instruments, appurtenances, accessories,
furnishings, avionics, components and other equipment of whatever nature
installed on said aircraft (other than, however, any loaner engines or any other
loaner appliances, parts, instruments, appurtenances, accessories, furnishings,
avionics, components and equipment of whatever nature) and all logbooks,
manuals, certificates, data and inspection, modification, maintenance,
engineering, technical, overhaul and all other books and records (including all
computerized data, records and materials) as pertain to the operation and
maintenance of such aircraft and which are in Seller's possession (all of the
foregoing hereinafter collectively referred to as the "Aircraft"), along with
whatever claims and rights Seller may have against the manufacturer and/or
supplier of the Aircraft, including, but not limited to, all warranties and
representations, but only to the extent that any of such claims or rights or
representations or warranties (i) are existing or in effect as of the date of
this Bill of Sale and (ii) are permitted to be assigned by Seller to Buyer
pursuant to the terms of any warranty or maintenance agreements or contracts
relating solely to the Aircraft; provided, however, that the Seller is not
selling, assigning or otherwise transferring in any way whatsoever any existing
maintenance or repair programs in the name of Seller concerning or relating in
any way to the Aircraft (or any portion thereof) and any such maintenance or
repair programs are hereby excluded from the term "Aircraft" and are also
excluded from this Bill of Sale for all purposes.

                             DESCRIPTION OF AIRCRAFT

      One used Learjet Inc. Model 31A aircraft bearing manufacturer's Serial No.
183 and U.S. Registration Mark N183ML and two (2) AlliedSignal Model TFE731-2-3B
engines respectively bearing manufacturer's Serial Nos. 99492 and 99491.

      BUYER IS PURCHASING THE AIRCRAFT IN RELIANCE UPON ITS PERSONAL INSPECTION
AND KNOWLEDGE OF THE AIRCRAFT AND IN AN "AS-IS, WHERE-IS" AND "WITH ALL FAULTS"
CONDITION. SELLER HAS NOT AND SHALL NOT BE DEEMED TO HAVE MADE ANY
REPRESENTATIONS, GUARANTIES OR WARRANTIES WHATSOEVER WITH RESPECT TO (i) THE
AIRCRAFT (INCLUDING, WITHOUT LIMITATION, ANY ACCESSORIES, ACCESSIONS, ENGINES,
EQUIPMENT, LOGBOOKS, CERTIFICATES AND MAINTENANCE RECORDS RELATED THERETO), (ii)
TITLE, POSSESSION, QUIET ENJOYMENT OR THE LIKE IN THIS DISPOSITION OR SALE OF
THE AIRCRAFT, AND/OR (iii) THIS BILL OF SALE, INCLUDING, BUT NOT LIMITED TO, ANY
REPRESENTATIONS, WARRANTIES OR GUARANTIES CONCERNING THE AIRWORTHINESS,
CONDITION, DESIGN, CAPACITY OR DURABILITY OF THE AIRCRAFT, COMPLIANCE OF THE
AIRCRAFT WITH ANY LAW, RULE, REGULATION OR STANDARD PERTAINING THERETO OR THE
CONFORMITY OF THE AIRCRAFT TO THE SPECIFICATIONS AND/OR PROVISIONS OF THIS BILL
OF SALE OR OF ANY OTHER DOCUMENT OR AGREEMENT OR OTHERWISE, QUALITY OF THE
MATERIALS OR WORKMANSHIP, MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE,
USE, OPERATION, VALUE OR SAFETY, THE ABSENCE OF ANY PATENT, TRADEMARK OR
COPYRIGHT INFRINGEMENT OR LATENT DEFECT (WHETHER OR NOT DISCOVERABLE BY BUYER OR
ANY OTHER PARTY, PERSON OR ENTITY OF ANY KIND WHATSOEVER); AND SELLER HEREBY
DISCLAIMS AND BUYER (ON ITS BEHALF AND ON BEHALF OF ANY OTHER PARTY, PERSON OR
ENTITY OF ANY KIND WHATSOEVER) BY ITS ACCEPTANCE OF THIS BILL OF SALE HEREBY
WAIVES, RELEASES AND RENOUNCES ALL WARRANTIES, GUARANTIES, OBLIGATIONS AND
LIABILITIES OF SELLER AND RIGHTS, CLAIMS AND REMEDIES OF BUYER (OR OF ANY OTHER
PARTY, PERSON OR ENTITY OF ANY KIND WHATSOEVER) AGAINST SELLER, EXPRESS



OR IMPLIED, ARISING BY LAW OR OTHERWISE, WITH RESPECT TO ANY OF THE AIRCRAFT,
THE TITLE, POSSESSION, THE QUIET ENJOYMENT OR THE LIKE IN THIS DISPOSITION OR
SALE OF THE AIRCRAFT AND/OR ANY NON-CONFORMANCE OR DEFECT (PATENT OR LATENT,
WHETHER OR NOT DISCOVERABLE BY BUYER OR ANY OTHER PARTY, PERSON OR ENTITY OF ANY
KIND WHATSOEVER) CONCERNING THE AIRCRAFT, INCLUDING BUT NOT LIMITED TO (a) THE
QUALITY, CONTENT AND CONDITION OF THE AIRCRAFT, ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, (b) ANY IMPLIED WARRANTY
ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE, (c) ANY
OBLIGATIONS, LIABILITY, RIGHT, CLAIM OR REMEDY IN CONTRACT OR IN TORT (STRICT,
ABSOLUTE OR OTHERWISE), WHETHER OR NOT ARISING FROM THE NEGLIGENCE OF SELLER,
ACTUAL, ACTIVE, PASSIVE OR IMPUTED, AND (d) ANY OBLIGATION, LIABILITY, RIGHT,
CLAIM OR REMEDY FOR DELAY OR NON-DELIVERY OF THE AIRCRAFT, COST OF "COVER", LOSS
OF OR DAMAGE TO THE AIRCRAFT, ANY DIRECT OR INDIRECT DAMAGE TO PERSONS OR
PROPERTY, LOSS OF USE, REVENUE OR PROFIT WITH RESPECT TO THE AIRCRAFT OR FOR ANY
OTHER DIRECT, INDIRECT, SPECIAL, EXEMPLARY, INCIDENTAL, CONSEQUENTIAL OR
PUNITIVE DAMAGES EVEN IF THE SELLER IS ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.

      IN WITNESS WHEREOF, Seller has executed this Bill of Sale this ____ day of
August, 2004.

                                     FLEET NATIONAL BANK

                                     By: ______________________________

                                     Name:_____________________________

                                     Title:_____________________________

                                       2


                                    Exhibit 2

                                FAA BILL OF SALE



                                    Exhibit 3

                         FAA LEASE TERMINATION AGREEMENT

      Fleet National Bank and Priority Fulfillment Services, Inc., as lessor and
lessee, respectively, under that certain Aircraft Lease, as more particularly
described in Annex I attached hereto (the "Lease"), with respect to the
Aircraft, as more particularly described in Annex I attached hereto, hereby
terminate the Lease and release the Aircraft from all of the terms and
conditions thereof.

      This FAA Lease Termination Agreement may be executed in counterparts, each
of which when executed and delivered shall be deemed an original and all
together shall constitute one and the same instrument.

      Dated as of August __, 2004.

                                     Lessor:

                                     FLEET NATIONAL BANK

                                     By:__________________________________

                                     Name:________________________________

                                     Title:____________________________

                                     Lessee:

                                     PRIORITY FULFILLMENT SERVICES, INC.

                                     By:__________________________________

                                     Name:________________________________

                                     Title:____________________________



                   ANNEX I TO FAA LEASE TERMINATION AGREEMENT

                              Description of Lease

      Aircraft Lease (N166DT) dated as of March 3, 1999 between Fleet National
Bank, as lessor, and Priority Fulfillment Services, Inc. (as assignee of
Daisytek, Incorporated), as lessee, which was recorded by the Federal Aviation
Administration on March 6, 1999 and assigned Conveyance No. X139002, as
supplemented and amended by the following described instruments:



FAA                       Date Of FAA                 FAA              FAA
Instrument                 Instrument            Recording Date   Conveyance No.
- ----------                 ----------            --------------   --------------
                                                         
Lease Supplement        as of 03/03/99             03/06/99          X139002
No. 1

Lease Supplement        as of 03/03/99             03/06/99          X139002
No. 2

Amendment No. 1         as of 09/15/99             10/12/99          PP012904

Aircraft Lease
Assignment,
Assumption and
Amendment
Agreement               as of 07/03/00             08/17/00          HK018697


                             Description of Aircraft

Learjet Inc. Model 31A aircraft which consists of the following components:

      (a) Airframe bearing U. S. Registration Mark N183ML and manufacturer's
serial number 183.

      (b) Two (2) AlliedSignal Model TFE731-2-3B aircraft engines respectively
bearing manufacturer's serial numbers 99492 and 99491 (which has 750 or more
rated takeoff horsepower or the equivalent of such horsepower).



                                    Exhibit 4

                                DELIVERY RECEIPT

      Priority Fulfillment Services, Inc. hereby acknowledges and accepts
receipt of, and delivery from, Fleet National Bank of the following Aircraft:

Learjet Inc. Model 31A aircraft which consists of the following components:

      (a) Airframe bearing U. S. Registration Mark N183ML and manufacturer's
serial number 183.

      (b) Two (2) AlliedSignal Model TFE731-2-3B aircraft engines respectively
bearing manufacturer's serial numbers 99492 and 99491 (which has 750 or more
rated takeoff horsepower or the equivalent of such horsepower).

DELIVERY DATE: ____________________

DELIVERY LOCATION: ________________

                                     PRIORITY FULFILLMENT SERVICES, INC.

                                     By:________________________________

                                     Name:_____________________________

                                     Title:____________________________

fleet\daisy\5-2004 lease termination