AGREEMENT OF LEASE

Made as of this 21st day of August,  2003, by and between HUNTINGTON  QUADRANGLE
2, LLC,  a New York  general  partnership  having  its  principal  office at 100
Jericho  Quadrangle,  Jericho,  New  York  11753,  hereinafter  referred  to  as
"Landlord" and FALCONSTOR  SOFTWARE  INC., a Delaware  corporation  with offices
located at 125 Baylis Road,  Suite 140,  Melville,  New York 11747,  hereinafter
referred to as "Tenant".

     WITNESSETH:  Landlord and Tenant hereby covenant and agree as follows:

SPACE

     1. Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord
the space consisting of the entire second floor, known as Suite # 2S-01 and part
of the first  floor (for UPS room and for storage for  Tenant's  exclusive  use)
substantially as shown on the rental plan initialed by the parties and made part
hereof  as  Exhibit  1 in  the  building  known  as Two  Huntington  Quadrangle,
Melville,  New York  11747  (the  "Building"),  hereinafter  referred  to as the
"Demised Premises".  Additionally,  Tenant shall be permitted to use portions of
the Building as are required in order to interconnect  the equipment  located in
the UPS room with the  equipment  located  in the  Demised  Premises,  including
cabling,  wire and  conduit  now  existing  or  installed  in order to make such
connections  and that  portion of the common  area  located on the second  (2nd)
floor and shown as the  crosshatched  portion of  Exhibit 1 attached  hereto and
made a part  hereof.  The parties  agree that for all purposes of this lease the
total  Demised  Premises  consist of a total of 45,343 of  rentable  square feet
inclusive of three separate spaces:

    Space 1:   22,939 sq. ft. [22,405 on 2nd Floor and 534 sq. ft. on lst Floor]
               ("Space 1")
    Space 2:   11,202 sq. ft. ("Space 2")
    Space 3:   11,202 sq. ft. ("Space 3")

Tenant shall also be permitted to use, on a non-exclusive  basis, in common with
other tenants at the Building,  the common facilities of the Building.  Such use
of such facilities  shall be subject to such reasonable  rules,  regulations and
procedures  governing  the use  thereof  as  Landlord  shall  from  time to time
promulgate.  Tenant shall also be permitted  to use the  easternmost  mechanical
room on the 2nd floor  (denoted  "MR" on attached  Exhibit 1) as it is currently
being utilized.

TERM

     2. The term of this lease shall  commence on November 1, 2003,  hereinafter
referred to as the "Term Commencement Date", and shall terminate on February 28,
2012,   hereinafter  referred  to  as  the  "Expiration  Date",  unless  earlier
terminated or extended as provided herein.

     On the Term  Commencement  Date Tenant shall take possession and control of
Space 1 of the Demised Premises until the Expiration Date or earlier termination
of this lease. On November 1, 2004 (the "Second Space Commencement Date") Tenant
shall take  possession and control of Space 2 of the Demised  Premises until the
Expiration  Date or earlier  termination of this lease. On November 1, 2005 (the
"Third Space  Commencement  Date") Tenant shall take  possession  and control of
Space 3 of the Demised Premises until the Expiration Date or earlier termination
of this lease. In the event that the Demised  Premises shall become vacant prior
to the Term  Commencement  Date,  Tenant shall be permitted  access for the sole
purpose of commencement  of construction  provided that Tenant has delivered all
required  permits and certificates of insurance and Landlord has provided Tenant
written consent for the work to be performed.

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