<PAGE>   1
NATIONAL LEASING, INC.                           National Leasing, Inc.
MASTER LEASE AGREEMENT                           60 Broad Street, 34th Floor
                                                 New York, NY  10004
                                                 (212) 683-4111
LESSEE:  APPLIED THEORY CORPORATION              Master Lease Agreement No. 7386
ADDRESS: 40 CUTTER MILL ROAD, SUITE 405,         Date:  December 15, 1999
         GREAT NECK, NY  11021

NATIONAL LEASING, INC. ("Lessor") hereby leases to Lessee and Lessee leases from
Lessor, in accordance with the terms and conditions hereinafter set forth, the
equipment and property purchased by Lessor for lease to the Lessee hereunder
together with all replacement parts, additions, accessories, alterations and
repairs incorporated therein or now hereafter affixed thereto Add-on Items (as
defined herein) (herein collectively referred to as the "Equipment") described
in each Schedule which may be executed by Lessor and Lessee from time to time
(individually a "Schedule" and collectively, the "Schedules"), each of which is
made a part hereof. For all purposes of this Master Lease Agreement ("Lease"),
each Schedule relating to one or more items of Equipment shall be deemed a
separate lease incorporating all of the terms and provisions of this Lease. In
the event of a conflict between the terms of this Lease and the terms and
conditions of any Schedule, the terms and conditions of the Schedule shall
govern and control that Schedule.

1. TERM AND RENTAL. The term of this Lease (the "Initial Lease Term") for any
item Equipment shall be set forth in the Schedule relating to such item of
Equipment and shall commence (the "Commencement Date") on the Acceptance Date.
The "Acceptance Date" with respect to each Schedule shall be the applicable of
either: (1) the date of delivery to Lessee of all of the Equipment to be leased
thereunder; (2) in the case of Equipment which is the subject of a sale and
leaseback between Lessor and Lessee, the date upon which Lessor purchases such
Equipment from Lessee; or (3) in the case of Equipment requiring installation,
the date of installation of the Equipment. If the Acceptance Date is other than
the first day of a calendar quarter, then the Commencement Date of the Initial
Lease Term set forth in any Schedule shall be the first day of the calendar
quarter following the month which includes the Acceptance Date and Lessee shall
pay to Lessor, in addition to all other sums due hereunder, an amount equal to
one-thirtieth of the amount of the average monthly rental payment due or to
become due hereunder multiplied by the number of days from and including the
Acceptance Date to the Commencement Date of the Initial Lease Term set forth in
the Schedule. During the entire Initial Lease Term and any extension or renewal
of the term of this Lease, Lessee agrees to pay the total rental due hereunder
which shall be the total amount of all rental payments set forth in the Schedule
plus such additional amounts as may become due hereunder or pursuant to any
written modification hereof or additional written agreement hereto. Except as
otherwise specified in the Schedule, rental payments payable hereunder shall be
due monthly and shall be payable in advance on the first day of each month
during the term of this Lease beginning with the Commencement Date of the
Initial Lease Term. All rental payments due hereunder shall be sent to the
address of the Lessor specified in this Lease or in the Schedule or as otherwise
directed by the Lessor in writing. Rental payments or any other payments due
hereunder not made by their schedule due date shall be overdue and shall be
subject to a service charge in an amount equal to two percent (2%) per month or
the maximum rate permitted by law whichever is less (the "Service Charge Rate")
applied to amount of the overdue payments from the date due until paid. If
Lessor shall at any time accept a rental payment after it shall become due, such
acceptance shall not constitute or be construed as a waver of any or all of
Lessor's rights hereunder, including without limitation those rights of Lessor
set forth in Sections 12 and 13 hereof.

2. TITLE. This is an agreement of lease only. Except as otherwise provided in
any applicable Schedule, Lessee shall have no right, title or interest in or to
the Equipment leased hereunder, except as to the lawful use thereof subject to
the terms and conditions of this Lease. All of the Equipment shall remain
personal property (whether or not the Equipment may at any time become attached
or affixed to real property). The Equipment is and shall remain the sole and
exclusive property of Lessor or its assignees. All replacement parts,
modifications, repairs, alterations, additions and accessories now or hereafter
incorporated in or affixed to the Equipment whether before or after the
Commencement Date (herein collectively called "Add-on Items") are hereby
included in the definition of "Equipment." All Add-on Items shall become the
property of Lessor upon being so incorporated or affixed to the Equipment and
shall be returned to Lessor as provided in Section 3 (other than alterations,
additions and accessions that are attached or affixed by Lessee with notice to
Lessor after the Commencement Date for which the Lessor has not given value or
purchased and which are readily removable by Lessee from the Equipment without
any value or functionality to the Equipment). Upon the request of Lessor, Lessee
will affix to the Equipment labels or other markings supplied by Lessor
indicating its ownership of the Equipment and shall keep the same affixed for
the entire term of this Lease. Lessee agrees to promptly execute and deliver or
cause to be executed and delivered to Lessor and Lessor is hereby authorized to
record or file, any statement and/or instrument reasonably requested by Lessor
for the purpose of showing Lessor's interest in the Equipment, including without
limitation, financing statements, security agreements and waivers with respect
to rights in the Equipment form any owners of mortgagees of any real estate
where the Equipment may be located. In the event that Lessee fails or refuses to
execute and/or file Uniform Commercial Code financing statements or other
instruments or recordings which Lessor or its assignee reasonably deems
necessary to perfect or maintain perfection of Lessor's or its assignee's
interests hereunder, Lessee hereby appoints Lessor as Lessee's limited
attorney-in-fact to execute and record all documents necessary to perfect or
maintain the

                                       1
<PAGE>   2
perfection of Lessor's interests hereunder. Lessee shall pay Lessor for any
costs or fees relating to any filings hereunder including, but not limited to
actual out of pocket costs, fees, searches, documentation preparation,
documentary stamps, privilege taxes and reasonably attorneys' fees. If any item
of Equipment includes computer software purchased by Lessor for which Lessor has
given Lessee value, Lessee shall upon request made by Lessor, execute and
deliver and shall cause Seller (as hereinafter defined) to deliver all such
documents as are necessary to effectuate assignment of all software licenses to
Lessor.

3. ACCEPTANCE AND RETURN OF EQUIPMENT. Lessor shall, at any time prior to
unconditional acceptance of all Equipment by Lessee, have the right to cancel
this Lease with respect to such Equipment (and if the Equipment or any portion
thereof has not previously been delivered, Lessor may refuse to pay for the
Equipment or any portion thereof or refuse to cause the same to be delivered)
if: (a) the Acceptance Date with respect to any item of Equipment to be leased
pursuant to any Schedule has not occurred within ninety (90) days of the
estimated Acceptance Date set forth in such Schedule or (b) there shall be, in
the reasonable judgement of Lessor, a material adverse change in the financial
condition or credit standing of Lessee or of any guarantor of Lessee's
performance under this Lease since the date of the most recent financial
statements of Lessee or of such guarantor submitted to Lessor. Upon any
cancellation by Lessor pursuant to this Section or the provisions of any
Schedule, Lessee shall forthwith reimburse to Lessor all sums paid by Lessor
with respect to such Equipment plus all costs and expenses of Lessor incurred in
connection with such Equipment and any interest or rentals due hereunder in
connection with such Equipment and shall pay to Lessor all other sums then due
hereunder, whereupon if Lessee is not then in default and has fully performed
all of its obligations hereunder, Lessor will, upon request of Lessee, transfer
to Lessee without warranty or recourse any rights that Lessor may then have with
respect to such Equipment.

Lessee agrees to promptly execute and deliver to Lessor (in no event later than
15 days after the Acceptance Date) a confirmation by Lessee of unconditional
acceptance of the Equipment in the form supplied by Lessor (the "Equipment
Acceptance"). Lessee agrees, before execution of the aforesaid Equipment
Acceptance, to inform Lessor in writing of any defects in the Equipment, or in
the installation thereof, which have come to the attention of Lessee or its
agents and which might give rise to a claim by Lessee against the Seller or any
other person. If Lessee fails to give notice to Lessor of any such defects or
fails to deliver to Lessor the Equipment Acceptance as provided herein, it shall
be deemed an acknowledgement by Lessee (for purposes of this Lease only) that no
such defects in the Equipment or its installation exist and it shall be
conclusively presumed, solely as between Lessor and its assignees and Lessee,
that such Equipment has been unconditionally accepted by Lessee for lease
hereunder.

Except as otherwise provided in any Schedule, upon expiration or the
cancellation or termination of the Lease with respect to any Equipment, Lessee
shall return the Equipment to Lessor as provided herein. Lessee shall provide
Lessor with not less than ninety (90) days prior written notice of its intention
to return the Equipment upon expiration of the Initial Lease Term. Upon
expiration or the cancellation or termination of the Lease with respect to any
Equipment, Lessee shall, at its own expense, assemble, crate, insure and deliver
all of the Equipment and all of the service records and all software and
software documentation subject to this Lease and any Schedules hereto to Lessor
in the same good condition and repair as when received, reasonable wear and tear
resulting only from proper use thereof excepted, to such reasonable destination
within the continental United States as Lessor shall designate with all packing,
drayage and freight charges to the return destination designated by Lessor
prepaid by Lessee with evidence of transit insurance on all items of Equipment
at no less than their estimated fair market value as specified by Lessor. Lessee
shall, immediately prior to such return of each item of Equipment or commercial
unit of Equipment, provide to Lessor a letter from the manufacturer of the
equipment or another service organization reasonably acceptable to Lessor
certifying that said items is in good working order, with reasonable wear and
tear resulting from proper use thereof excepted, whether such item is eligible
for a maintenance agreement by such manufacturer, and all software and related
attachments are included thereon. If any computer software requires relicensing
when removed from Lessee's premises, Lessee shall bear all costs of such
relicensing. Except as otherwise expressly provided in the Schedule, if Lessee
fails for any reason to provide the notice set forth above or Lessee fails to
redeliver the Equipment back to Lessor accordance with the terms set forth
above, Lessee shall pay to Lessor, at Lessor's election, an amount equal to the
highest monthly payment set forth in the Schedule for a period of not less than
three (3) months and at the end of such period of time ("Holdover Period").
Except as otherwise expressly provided in the Schedule, if Lessee fails or
refuses to return the Equipment as provided herein at the end of any Holdover
Period, Lessee shall pay to Lessor, at Lessor's option, an amount equal to the
highest monthly rental payment set forth in the Schedule for each month or
portion thereof, until Lessee so returns the Equipment to Lessor. Should Lessor
permit use by Lessee of any Equipment beyond the Initial Lease Term, or, if
applicable, any exercised extension or renewal term, the lease obligations of
Lessee shall continue and such permissive use shall not be construed as a
renewal of the term thereof, or as a waver of any right or continuation of any
obligation of Lessor hereunder, and Lessor may take possession of any such
Equipment at any time upon demand.

4. DISCLAIMER OF WARRANTIES. LESSEE HAS EXCLUSIVELY SELECTED AND CHOSEN THE
TYPE, DESIGN, CONFIGURATION, SPECIFICATION AND QUALITY OF THE EQUIPMENT HEREIN
LEASED AND THE VENDOR, DEALER, SELLER, MANUFACTURER OR SUPPLIER THEREOF (HEREIN
COLLECTIVELY CALLED "SELLER"), AS SET FORTH IN THE SCHEDULES, LESSOR MAKES NO
REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO ANY MATTER
WHATSOEVER, INCLUDING WITHOUT LIMITATION, THE CONDITION OF THE

                                       2
<PAGE>   3
EQUIPMENT, ITS MERCHANTABILITY OR ITS FITNESS, ADAPTABILITY, ANY IMPLIED
WARRANTY OR QUIET ENJOYMENT OR NON-INTERFERENCE OR SUITABILITY FOR ANY
PARTICULAR PURPOSE, AND, LESSEE LEASES, HIRES AND RENTS THE EQUIPMENT "AS IS,
WHERE IS." Lessee understands and agrees that neither Seller, nor any agent of
Seller, is an agent of Lessor or is in any manner authorized to waive or alter
any term or condition of this Lease. Lessor shall not be liable for any loss or
damage suffered by Lessee or by any other person or entity, direct or indirect
or consequential, including, but not limited to, business interruption and
injury to persons or property, resulting from non-delivery or late delivery,
installation, failure or faulty operation, condition, suitability or use of the
Equipment leased by Lessee hereunder, or for any failure of any representations,
warranties or covenants made by the Seller. Any claims of Lessee, with respect
to claims discussed in the preceding sentences, shall be made against Lessor but
shall be made, if at all, solely and exclusively against Seller, or any persons
other than the lessor. Lessor hereby authorizes Lessee to enforce during the
term of this Lease, in its name, but at Lessee's sole effort and expense, all
warranties, agreements or representations, if any, which may have been made by
Seller to Lessor or to Lessee, and Lessor hereby assigns to Lessee solely for
the limited purpose of making and prosecuting any such claim, all rights which
Lessor may have against Seller for breach of warranty or other representation
respecting the Equipment.

5. CARE, TRANSFER AND USE OF EQUIPMENT. Lessee, at its own expense, shall
maintain the Equipment in good operating condition, repair and appearance in
accordance with all Seller's specifications and in compliance with all laws and
regulations applicable to the Equipment, Lessee and its business and shall
protect the Equipment from deterioration except for reasonable wear and tear
resulting only from proper use thereof. When generally offered with respect to
the Equipment, Lessee shall, at its expense, keep a maintenance contract in full
force and effect, throughout the term of this Lease and any Schedule hereto
unless otherwise agreed on the Schedule. The disrepair or inoperability of the
Equipment regardless of the cause thereof shall not relieve Lessee of the
obligation to pay rental hereunder. Lessee shall not make any modification,
alteration or addition to the Equipment (other than normal operating accessories
or controls). Lessee will not, and will not permit anyone other than the
authorized field engineering representatives of Seller or other maintenance
organization reasonably acceptable to Lessor to effect any inspection,
adjustment, preventative or remedial maintenance or repair to the Equipment.
LESSEE MAY NOT (A) RELOCATE OR OPERATE THE EQUIPMENT AT LOCATIONS OTHER THAN THE
PREMISES OF LESSEE SPECIFIED IN THE APPLICABLE SCHEDULE (THE "PREMISES"), EXCEPT
WITH LESSOR'S PRIOR WRITTEN CONSENT, WHICH SHALL NOT BE UNREASONABLY WITHHELD IF
SUCH OTHER LOCATION WITHIN THE CONTINENTAL UNITED STATES, OR (B) SELL, CONVEY,
TRANSFER, ENCUMBER, PART WITH POSSESSION OF, OR ASSIGN ANY ITEM OF EQUIPMENT OR
ANY OF ITS RIGHTS HEREUNDER, AND ANY SUCH PURPORTED TRANSACTION SHALL BE NULL
AND VOID AND OF NO FORCE OR EFFECT. In the event of a relocation of the
Equipment or any item thereof to which Lessor consents, all costs (including any
additional property taxes or other taxes and any additional expense of insurance
coverage) resulting from any such relocation, shall be promptly pad by Lessee
upon presentation to Lessee of evidence supporting such cost. Lessor shall have
the right during normal hour upon reasonable notice to Lessee, subject to
applicable laws and regulations, to enter Lessee's Premises in order to inspect,
observe, affix labels or other markings, or to exhibit the Equipment to
prospective purchasers or future lessees thereof, or to otherwise protect
Lessor's interest therein.

6. NET LEASE. THIS LEASE AND ANY SCHEDULE HERETO IS A NET LEASE, AND ALL
PAYMENTS HEREUNDER ARE NET TO LESSOR. All taxes, assessments, licenses, and
other charges (including, without limitation personal property taxes and sales
taxes, use taxes, leasing taxes and all other taxes based on gross receipts) and
penalties and interest on such taxes imposed, levied or assessed on the
ownership, possession, rental or use of the Equipment after delivery of the
Equipment to Lessee and thereafter dung the term of this Lease and any Schedule
hereto (except for Lessor's federal or state net income taxes) shall be paid by
Lessee when due and before the same shall become delinquent, whether such taxes
are assessed or would ordinarily be assessed against Lessor or Lessee. To the
extent possible under applicable law, for persons property or ad valorem tax
return purposes only. Lessee shall include the Equipment on such reports and
returns as may be required by local law, which returns shall be timely filed by
it. Lessee shall provide Lessor with evidence that Lessee has complied with the
foregoing provisions. In any event, Lessee shall file all tax returns required
for itself or Lessor with respect to the Equipment and this Lease and Lessor
hereby appoints Lessee as its attorney-in-fact for such purpose. In case of
failure by Lessee to so pay said taxes, assessments, licenses or other charges,
Lessor may pay all or any part of such items, in which event the amount so paid
by Lessor including any interest or penalties thereon and reasonable attorneys'
fees incurred by Lessor in pursuing its fights against Lessee or defending
against any claims or defenses asserted by or through Lessee shall be
immediately paid by Lessee to Lessor as additional rental hereunder. Lessee
shall promptly pay all costs, expenses and obligations of every kind and nature
incurred in connection with the use or operation of the Equipment which may
arise or become due during the term of this Lease and any Schedule hereto,
whether or not specifically mentioned herein. In case of failure by Lessee to
comply with any provision of this Lease and any Schedule hereto, Lessor shall
have the right, but not the obligation, to effect such compliance on behalf of
Lessee. In such event, all costs and expenses incurred by Lessor in effecting
such compliance shall be immediately payable by Lessee to Lessor as additional
rental hereunder.

7. INDEMNITY. Lessee shall at its expense: (i) indemnify, protect and defend
Lessor's title to the Equipment from and against all persons claiming against or
through Lessee; (ii) at all times keep the Equipment then subject to this Lease
free from any and all liens, encumbrances, attachments, levies,

                                       3
<PAGE>   4
executions, burdens, charges or legal process of any and every type whatsoever;
(iii) give Lessor immediate written notice of any breach of this Lease described
in clause (ii); and (iv) indemnify, protect and save Lessor harmless from any
loss, cost or expense (including reasonable attorneys' fees) caused by the
Lessee's breach of any of the provisions of this Lease, whether incurred by
Lessor in pursuing its rights against Lessee or defending against any claims or
defenses asserted by or through Lessee. Lessee shall and does hereby agree to
indemnify, defend and hold Lessor and its assigns harmless from and against any
and all liability, loss, costs, injury, damage, penalties, suits, judgements,
demands, claims, expenses and disbursements (including without limitation,
reasonable attorneys' fees incurred by Lessor in pursuing its rights against
Lessee or defending against any claims or defenses asserted by or through
Lessee) of any kind whatsoever arising out of, on account of, or in connection
with this Lease and the Equipment leased hereunder, including, without
limitation, its manufacture, selection, purchase, delivery, rejection,
installation, ownership, possession, leasing, renting, operation, control, use,
maintenance and the return thereof except for any such claims or damages from
Lessor's gross negligence or wilful misconduct. This indemnity shall survive the
Initial Lease Term or earlier cancellation or termination of this Lease and any
Schedule hereto.

8. INSURANCE. Commencing on the date that risk of loss or damage passes to
lessor from the Seller of any Equipment covered under this Lease and continuing
until Lessee has re-delivered possession of the Equipment to lessor, Lessee
shall, at its own expense, keep the Equipment (including all Add-on Items
thereto) insured against all risks of loss or damage from every and any cause
whatsoever in such amounts (but in no event less than the greater of the
replacement value thereof or the amount set forth in any applicable Casualty
Schedule, whichever is higher) with such deductibles and exclusions as approved
by Lessor and in such form as is reasonably satisfactory to Lessor. All such
insurance policies shall protect Lessor and Lessor's assignee(s) as loss payees
as their interests may appear. Lessee shall also, at its own expense, carry
public liability insurance, with Lessor and Lessor's assignee(s) as an
additional insured, in such amounts with such companies and in such forms as is
reasonably satisfactory to Lessor, with respect to injury to person or property
resulting from or based in way upon or in any way connected with or relating to
the installation, use or alleged use, or operation of any or all of the
Equipment, or its location or condition.

Not less than ten days prior to the Acceptance Date, Lessee shall deliver to
Lessor satisfactory evidence of such insurance and shall further deliver
evidence of renewal of each policy not less than thirty (30) days prior to
expiration thereof. If the Lessee fails to provide evidence of such insurance or
to deliver evidence of renewal of each such policy then Lessee agrees to pay
Lessor a non-compliance fee equal to 1% of the Equipment Cost for all Equipment
covered under this Lease each month until such evidence is provided to Lessor.
Each such policy shall contain an endorsement providing that the insurer will
give Lessor not less than thirty (30) days prior written notice of the effective
date of any alteration, change, cancellation, or modification of such policy or
the failure by Lessee to timely pay all required premiums, costs or charges with
respect thereto. Upon Lessor's request, Lessee shall cause its insurance
agent(s) to execute and deliver to Lessor Loss Payable Clause Endorsement and
Additional Insured Endorsement (bodily injury and property damage liability
insurance) forms provided to Lessee by Lessor. In case of the failure to procure
or maintain such insurance, Lessor shall have the right, but not the obligation,
to obtain such insurance and any premium paid by Lessor shall be immediately due
and payable by Lessee to Lessor as additional rent hereunder. The maintenance of
any policy or policies of insurance pursuant to this Section shall not limit any
obligation or liability of Lessee pursuant to Sections 7 or 9 or any other
provision of this Lease and any Schedule hereto.

9. RISK OF LOSS. Until such time as the Equipment is returned and delivered to
and accepted by Lessor at the expiration of this Lease, pursuant to the terms of
this Lease and any Schedule hereto, Lessee hereby assumes and shall bear the
entire risk of loss, damage, theft and destruction of the Equipment, or any
portion thereof, from any cause whatsoever ("Equipment Loss"). Without
limitation of the foregoing, no Equipment Loss shall relieve Lessee in any way
from its obligations hereunder. Lessee shall promptly notify Lessor in writing
of any Equipment Loss. In the event of any such Equipment Loss, Lessee shall:
(a) in the event Lessor determines such Equipment to be repairable, promptly
place, at Lessee's expense, the Equipment in good repair, condition and working
order in accordance with Seller's specifications and to the satisfaction of
Lessor, or (b) in the event an actual or constructive total loss of any item of
Equipment, at lessor's option: (i) promptly replace, at Lessee's expense, the
Equipment with like equipment of the same or a later model with the same Add-on
Items as the Equipment, and in good repair, condition and working order in
accordance with the Seller's specifications and to the satisfaction of Lessor;
or (ii) immediately pay to Lessor the sum of (a) any accrued and unpaid rental
or any amounts due hereunder plus (b) an amount equal to the present value of
the total amount of unpaid rentals and all other amounts due and to become due
under any applicable Schedule during the term thereof as of the date of any
payment, discounted at a rate equal to discount rate of the Federal Reserve Bank
of Chicago as of the Commencement Date of the Lease with respect to each
applicable Schedule shall be paid to Lessor by Lessee, plus (c) an additional
amount equal to the present value of the estimated fair market value of the
Equipment at the end of the Initial Lease Term applicable to such Equipment (the
"End of Term Value"). In no event shall the amount of such End of Term Value for
the Equipment be less than twenty percent (20%) of the actual cost of the
Equipment unless a lesser amount is actually specified as the purchase option
price, if any, in the applicable Schedule. If a Casualty Schedule has been made
a part of any applicable Schedule, then in lieu of the amounts specified in
subparagraphs (b)(ii)(b) and (c) Lessee shall pay Lessor the amounts obtained by
multiplying the actual Equipment Cost as specified in the applicable Schedule by
the percentage contained in any applicable Casualty Schedule for the date of
such Equipment Loss.

                                       4
<PAGE>   5
If no Casualty Schedule has been made a part of any applicable Schedule, an
amount equal to the present value of the total amount of unpaid rentals and all
other amounts due and to become due under any applicable Schedule during the
term thereof as of the date of any payment, discounted at a rate equal to
discount rate of the Federal Reserve Bank of Chicago as of the Commencement Date
of the Lease with respect to each applicable Schedule shall be paid to Lessor by
Lessee, plus an additional amount equal to the estimated fair market value of
die Equipment at the end of the initial Lease Term applicable to such Equipment
(the "End of Term Value"). In no event shall the amount of such End of Term
Value for the Equipment be less than twenty percent (20%) of the actual cost of
the Equipment unless a purchase option is granted (or other end of term payment
is required) under this Lease for other there the fair market value of the
Equipment then the actual amount of such Purchase Option Price (or other end of
term payment) specified in the applicable Equipment Schedule shall be due and
payable to Lessor as the End of Term Value undo the section or such lesser or
greater amount specified in the applicable Schedule.

In the event Lessee is required to repair or replace any such item of Equipment
pursuant to Subsections (a) or (b)(i) of the preceding sentence, the insurance
proceeds received 6t' Lessor, if any, pursuant to Section 8, after the use of
such funds to pay any unpaid amounts then due hereunder, shall be paid to Lessee
or, if applicable, to a third party repairing or replacing the Equipment upon
Lessee's furnishing proof reasonably satisfactory to Lessor that such repair or
replacement has been completed in a reasonably satisfactory manner. In the event
Lessor elects option (b)(ii), Lessee shall be entitled to a credit against the
payment required by said Subsection in an amount equal to such insurance
proceeds actually received by Lessor pursuant to Section 8 on account of such
Equipment, and, upon payment by Lessee to Lessor of all of the sums required
pursuant to Subsection (b)(ii), the applicable Schedule shall terminate with
respect to such item of Equipment and Lessee shall be entitled to whatever
interest Lessor may have in such item AS IS, WHERE IS AND WITH ALL FAULTS in its
then condition and location without warranties of any type whatsoever, express
or implied.

10. COVENANTS OF LESSEE. Lessee agrees that its obligations under this Lease and
any Schedule hereto, including without limitation, the obligation to pay rental,
are irrevocable and absolute, shall not abate for any reason whatsoever
(including any claims against Lessor), and shall continue in full force and
effect regardless of say inability of Lessee to use the Equipment or arty part
thereof for any reason whatsoever including, without limitation, war, act of
God, storms, governmental regulations, strike or other labor troubles, loss,
damage, destruction, disrepair, obsolescence, failure of or delay in delivery of
the Equipment or failure of the Equipment to properly operate for any cause. In
the event of any alleged claim (including a claim which would otherwise be in
the nature of a set-off) against Lessor, Lessee shall fully perform and pay its
obligations hereunder (including the payment of all tarts, without set-off or
defense of any kind) and its only exclusive recourse against Lessor shall be by
a separate action. Lessee agrees to furnish promptly to Lessor the annual
financial statements of Lessee (and of any guarantors of Lessee's performance
trader this Lease and any Schedule hereto), prepared in accordance with
generally accepted accounting principles and such interim financial statements
of Lessee as Lessor may reasonably require during the entire term of the Lease
and any Schedule hereto. Either independent certified public accountants or the
Lessee's chief financial officer as requested by Lessor shall certify all such
annual financial statements. Lessee, if requested by Lessor prior to the initial
purchase by Lessor of Equipment for lease hereunder, shall provide at Lessee's
expense an opinion of its counsel acceptable to Lessor affirming the covenants,
representations and warranties of Lessee under this Lease and any Schedule
hereto. So long as there are amounts due Lessor under this Lease, Lessee shall
supply Lessor with such other financial and operating performance data as is
provided to its outside investors or commercial lenders and, if applicable,
required to be provided to shareholder by the Security and Exchange Commission,
and Lessee shall immediately notify Lessor of any material adverse change in its
financial condition or business prospects.

11. REPRESENTATIONS AND WARRANTIES. In order to induce Lessor to enter into this
Lease and any Schedule hereto and to lease the Equipment to Lessee hereunder,
Lessee represents and warrants that: (a) FINANCIAL STATEMENTS. (i) applications,
financial statements, and reports which have been submitted by Lessee and any
Obligors (as hereinafter defined) to Lessor are, and all information hereafter
furnished by Lessee and Obligors to Lessor will be, true and correct in all
material respects as of the date submitted; (ii) as of the date hereof, the date
of any Schedule and any Acceptance Date, there has been no material adverse
change in any matter stated in such applications, financial statements and
reports; and, (iii) none of the foregoing omit or omitted to state any material
fact which would make any of the foregoing false or misleading. (b)
ORGANIZATION. Lessee is an organizational entity described on the signature page
hereof and is duly organized, validly existing and is duly qualified to do
business and is in good standing or subsisting or in other similar active status
in each State in which the Equipment will be located. (c) AUTHORITY. Lessee has
full power, authority and right to execute, deliver and perform this Lease and
any Schedule hereto, and the execution, delivery and performance hereof has been
authorized by all necessary action of Lessee. (d) ENFORCEABILITY. This Lease and
any Schedule or other document executed in connection therewith has been duly
executed and delivered by Lessee and any Obligor and constitutes a legal, valid
and binding obligation of Lessee and any Obligor enforceable in accordance with
its terms. (e) CONSENTS. The execution, delivery and performance of this Lease
and any Schedule hereto does not require any approval of consent of any
stockholders, partners or proprietors or of any trustee or holders of any
indebtedness or obligations of Lessee, and will not contravene any law,
regulation, judgment or decree applicable to Lessee, or the certificate or
articles of incorporation, partnership agreement, by-laws or other governing
documents of Lessee, or contravene the provisions of, or constitute a default
under, or result in the creation of any lien upon any property of Lessee under
any mortgage, instrument or other agreement to which

                                       5
<PAGE>   6
Lessee is a party by which Lessee or its assets may be bound or affected. Except
as disclosed, no authorization, approval, license, filing or registration with
any court or governmental agency or instrumentality is necessary in connection
with the execution, delivery, performance, validity and enforceability of this
Lease and any Schedule hereto. (f) TITLE. On each Commencement Date, Lessor
shall have good and marketable title to the items of Equipment which is subject
to this Lease and any Schedule hereto on such date, free and clear of all liens,
except the lien of Seller which will be released upon receipt of payment. Lessee
warrants that no party has a security interest in the Equipment which will not
be released on or before payment by Lessor to Seller of the Equipment and that
the Equipment is and shall at all times remain personal property regardless of
how it may be affixed to any real property. (g) LITIGATION. There is no action,
suit, investigation or proceeding by or before any court, arbitrator, agency or
governmental authority pending or threatened against or affecting Lessee: (i)
which involves the Equipment or the transactions contemplated by this Lease and
any Schedule hereto; or (ii) which, if adversely determined, could have a
material adverse effect on the financial condition. business or operation of
Lessee.

12. EVENTS OF DEFAULT. An event of default ("Event of Default") shall occur
hereunder if Lessee or any Obligor ("Obligor" shall include any guarantor or
surety of any obligations of Lessee to Lessor under this Lease and any Schedule
hereto): (i) fails to pay any installment of rent or other payment required
hereunder within five (5) days after its due date; or (ii) attempts to or does
remove from the Premises (except a relocation with Lessor's consent as provided
in Section 5), sell, transfer, encumber, part with possession of, or sublet any
item of the Equipment; or (iii) shall suffer or have suffered, in the reasonable
judgement of Lessor, a material adverse change in its financial condition since
the date of the last financial statements submitted to Lessor, and as a result
thereof Lessor in good faith deems itself to be insecure; or (iv) breaches or
shall have breached any representation or warranty made or given by Lessee or
Obligor in this Lease or in any other document furnished to Lessor in connection
herewith, or any such representation or warranty shall be untrue or, by reason
of failure to state a material fact or otherwise, shall be misleading or any of
the statements or other documents or information submitted at any time
heretofore or hereafter by Lessee or Obligor to Lessor shall be untrue or, by
reason of failure to state a material fact or otherwise, shall be misleading or
(v) fails to perform or observe any other covenant, condition or agreement to be
performed or observed by it hereunder, and such failure or breach shall continue
unremedied for a period of ten days after the date on which notice thereof shall
be given by Lessor to Lessee (unless such remedial action cannot be completed
within such ten day period but Lessee has in good faith commenced to remedy such
breach or failure and such remedy is in fact achieved within a time period
agreed to by Lessor); or (vi) shall become insolvent or bankrupt or make an
assignment of the benefit of creditors or consent to the appointment of a
trustee or receiver, or a trustee or receiver shall be appointed for a
substantial part of its property without its consent, or bankruptcy or
reorganization or insolvency proceeding shall be instituted by or against Lessee
or Obligor and Lessee fails to continue to pay all rentals becoming due
hereunder during the pendency of such proceedings and fails to assume this Lease
within sixty (60) days after the commencement of such proceedings; or (vii)
conveys, sells, transfers or assigns substantially all of Lessee's or Obligor's
assets or ceases doing business as a going concern, or, if a corporation, ceases
to be in good standing or files a statement of intent to dissolve, or abandons
any or all of the Equipment; or (viii) shall be in breach of or default under
any lease or other agreement at any time executed with Lessor or any other
lessor or with any lender to Lessee or Obligor such that Lessee's obligations
thereunder have been or are being accelerated.

13. REMEDIES. Upon the occurrence and during any continuance of any Event of
Default (the "Default Date") set forth in Section 12, Lessor may, in its sole
and absolute discretion, do any one or more of the following: (a) upon notice to
Lessee cancel all or any portion of this Lease or any Schedules executed
pursuant thereto; (b) enter Lessee's Premises and without removal of the
Equipment, render the Equipment unusable or, require Lessee to assemble the
Equipment and make it available to Lessor at a place designated by lessor,
and/or dispose of the Equipment by sale or otherwise (all of which
determinations may be made by Lessor in its sole and absolute discretion); (c)
declare immediately due and payable all sums due and to become due hereunder for
the full term of the Lease (including any renewal or purchase obligations which
Lessee has contracted to pay); (d) with or without canceling this Lease, recover
from Lessee damages, in an amount equal to the sum of: (i) all unpaid rent and
other amounts that became due and payable on, or prior to, the Default Date,
(ii) the present value of all future rentals and other amounts described in the
Lease and not included in the above discounted to the Default Date at a rate
equal to the discount rate of the Federal Reserve Bank of Chicago as of the
Commencement Date of the Lease with respect to each Schedule (which discount
rate, Lessee agrees is a commercially reasonable rate which takes into account
the facts and circumstances at the time such Schedule commenced), (iii) all
commercially reasonable costs and expenses incurred by Lessor in enforcing
Lessor's rights under this Lease, or defending against any claims or defenses
asserted by or through Lessee, including but not limited to, costs of
repossession, recovery, storage, repair, sale, re-lease and reasonable
attorneys' fees, (iv) the estimated residual value of the Equipment as of the
expiration of the Lease, (v) any indemnity amount payable to Lessor hereunder;
and (vi) interest on all of the foregoing from the Default Date until the date
payment is received by lessor at 2% per month or the highest rate permitted by
law, whichever is less; (e) exercise any other right or remedy which may be
available to it under the Uniform Commercial Code or any other applicable law.

If Lessor elects to dispose of any Equipment recovered from the possession of
Lessee after an Event of Default, Lessor shall dispose of such Equipment in a
commercially reasonable manner, Lessor reserves the right, in its sole and
absolute discretion, to control the timing and negotiate the terms of any
re-leasing or re-sale of any or all of the Equipment at a public

                                       6
<PAGE>   7
auction or in a private sale, at such time, on such terms and with such notice
as Lessor shall in its sole and absolute discretion deem commercially
reasonable. In such event, without any duty on Lessor's part to effect any such
re-lease or sale of the Equipment, Lessor will credit the present value of any
proceeds from such sale or re-lease actually received and retainable by it (net
of any and all costs or expenses) discounted from the date of Lessor's receipt
thereof to the Default Date at 2 1/2% in excess of the Prime Rate (or its
equivalent) per annum in effect at the First National Bank of Chicago on the
date of such payment to the amounts due to Lessor from Lessee under the
provisions of (c), (d) and/or (e) above. A cancellation of this Lease shall
occur only upon notice by Lessor and only as to such items of Equipment as
Lessor specifically elects to cancel and this Lease shall continue in full force
and effect as to the remaining items of Equipment, if any. If this Lease and/or
any Schedule is deemed at any time to be one intended as security, Lessee agrees
that the Equipment shall secure, in addition to the indebtedness set forth
herein, any other indebtedness at any time owing by Lessee to Lessor. No remedy
referred to in this Section is intended to be exclusive, but shall be cumulative
and in addition to any other remedy referred to above or otherwise available to
Lessor at law or in equity. No express or implied waiver by Lessor of any
default shall constitute a waiver of any other default by Lessee or a waiver of
any of Lessor's rights.

14. ASSIGNMENT BY LESSOR. LESSOR MAY, (WITH OR WITHOUT NOTICE TO LESSEE) SELL,
TRANSFER, ASSIGN OR GRANT A SECURITY INTEREST IN ALL OR ANY PART OF ITS INTEREST
IN THIS LEASE, ANY SCHEDULE, ANY ITEMS OF EQUIPMENT OR ANY AMOUNT PAYABLE
HEREUNDER. In such an event, Lessee shall, upon receipt of written notice,
acknowledge any such sale, transfer, assignment or grant of a security interest
and shall pay its obligations hereunder or amounts equal thereto to the
respective transferee, assignee or secured party in the manner specified in any
instructions received from Lessor. Notwithstanding any such sale, transfer,
assignment or grant of a security interest by Lessor and so long as no Event of
Default shall have occurred hereunder, neither Lessor nor any transferee,
assignee or secured party shall interfere with Lessee's right of use or quiet
enjoyment of the Equipment. In the event of such sale, transfer, assignment or
grant of a security interest in all or any part of this Lease and any Schedule
hereto, or in the Equipment or in sums payable hereunder, as aforesaid, Lessee
agrees to execute such documents as may be reasonably necessary to evidence,
secure and complete such sale, transfer, assignment or grant of a security
interest and to perfect the transferee's assignee's or secured party's interest
therein (with any filing fees at Lessor's expense) and Lessee further agrees
that the rights of any transferee, assignee or secured party shall not be
subject to any defense, set-off or counterclaim that Lessee may have against
Lessor or any other party, including the Seller, which defenses, set-offs and
counterclaims shall be asserted only against such party, and that any such
transferee, assignee or secured party shall have all or Lessor's rights
hereunder, but shall assume none of Lessor's obligations hereunder. Lessee
acknowledges that any assignment or transfer by Lessor shall not materially
change Lessee's duties or obligations under this Lease and shall not materially
increase the burdens and risks imposed upon Lessee.

15. MISCELLANEOUS. All notices and demands relating hereto shall be in writing
and sent by either any nationally recognized overnight air courier or by
certified mail, return receipt requested, to Lessor or Lessee at their
respective addresses above or shown in the Schedule, or at any other address
designated by notice served in accordance herewith. Notice by overnight air
courier shall be effective one (1) business day after delivery. Notice by
certified mail shall become effective five (5) business days after deposit in
the United States mail, with proper postage prepaid, to the party intended to be
served at the address designated herein. All obligations of Lessee shall survive
the termination or expiration of this Lease and any Schedule hereto. If more
than one Lessee is named in this Lease, the liability of each hereunder to
Lessor shall be joint and several. Any general partner executing this Lease on
behalf of the Lessee agrees that its liability to Lessor hereunder shall be
absolute, primary and direct, and that Lessor shall not be required to pursue
any right or remedy it may have against the Lessee under the Lease (and shall
not be required to first commence any action or obtain any judgment against
Lessee) before enforcing this liability against such general partner, and that
such general partner will, upon demand, pay Lessor the amount of all sums then
due under the Lease, the payment of which, by Lessee, is in default under the
Lease, and will, upon demand, perform all other obligations of Lessee, the
performance of which, by Lessee, is in default under the Lease. Lessee shall,
upon request of Lessor from time to time, perform all acts and execute and
deliver to Lessor all documents which Lessor deems reasonably necessary to
implement this Lease and any Schedule hereto, including, without limitation,
certificates addresses to such persons as Lessor may direct stating that this
Lease and the Schedule hereto is in full force and effect, that there are no
amendments or modifications thereto, that Lessor is not in default hereof or
breach hereunder, setting forth the date to which rentals due hereunder have
been paid, and stating such other matters as Lessor may reasonably request. This
Lease and any Schedule hereto shall be binding upon the parties and their
successors, legal representatives and assigns. Lessee's successor and assigns
shall include, without limitation, a receiver, debtor-in-possession, or trustee
of or for Lessee. If any person, firm, corporation or other entity shall
guarantee this Lease and the performance by Lessee of its obligations hereunder,
all of the terms and provisions hereof shall be duly applicable to such Obligor.

16. CONDITIONS PRECEDENT TO LEASING. (i) Lessor shall have no obligation to
purchase any Equipment for lease to Lessee under any Schedule hereunder unless
or until acceptable documentation, the form of which will be provided by Lessor
has been executed by Lessee and delivered to Lessor; (ii) Lessor has confirmed
with Lessee that no material adverse change in Lessee's financial condition and
business prospects has occurred prior to each purchase of Equipment.

17. INVALIDITY. In the event that any provision of this Lease and any Schedule
hereto shall be unenforceable in whole or in

                                       7
<PAGE>   8
party, such provision shall be limited to the extent necessary to render the
same valid, or shall be excised from this Lease or any Schedule hereto, as
circumstances may require, and this Lease and the applicable Schedule shall be
construed as if said provision had been incorporated herein as so limited, or as
if said provision had not been included herein, as the case may be without
invalidating any of the remaining provisions hereof.

18. END OF TERM OPTIONS. Provided that the Lease has not been terminated and
that no Event of Default or event which, with notice or lapse of time or both,
would become an Event of Default shall have occurred and shall be continuing,
Lessee shall at the end of the Initial Lease Term of the first Schedule be
entitled to elect and to exercise one of the options, if any, indicated in the
applicable Schedule which election shall be binding on Lessee with respect to
all Schedules entered into between Lessor and Lessee under this Lease. The
foregoing options granted hereunder shall be exercised by written notice
delivered to Lessor by Lessee not more than 180 days and not less than ninety
(90) days prior to the expiration of the Initial Lease Term of the Equipment,
subject to Schedule No. 001.

19. PROGRESS PAYMENTS. If requested by Lessee, progress payments will be made
for any amount over the Minimum Invoice Amount specified on each Progress
Payment Authorization per invoice to vendors in accordance with Lessor's
standard procedures. Unless otherwise agreed by Lessor the minimum progress
payment amount shall not be less than the Minimum Progress Payment Amount
specified on the Progress Payment Authorization. Interim rent, on progress
payments, shall be payable from the date progress payments are made by Lessor to
the Commencement Date of the corresponding Schedule. Interim rent shall be
calculated at the daily equivalent of the Monthly Lease Rate Factor. Lessee
shall deliver to Lessor a Progress Payment Authorization, not less than 30 days
prior to the due date thereof and in a form acceptable to Lessor, to make a
progress payment and, provided on such due date no Events of Default have
occurred and be continuing hereunder or under the Lease, Lessor shall make the
progress payment set forth to the manufacturer(s) or supplier(s) as set forth in
such authorization.

20. LAW. This Lease and any Schedule hereto shall be binding only when accepted
by Lessor and shall in all respects be governed and construed, and the rights
and the liabilities of the parties hereto determined, except for local filing
requirements, in accordance with the laws of the State of Illinois, the
principle place of business of LINC Capital, Inc., the intended assignee of this
lease. LESSEE WAIVES TRIAL BY JURY AND SUBMITS TO THE JURISDICTION OF THE
FEDERAL DISTRICT COURT OR ANY STATE COURT LOCATED WITHIN COOK COUNTY IN THE
STATE OF ILLINOIS AND WAIVES ANY RIGHT TO ASSERT THAT ANY ACTION INSTITUTED BY
LESSOR IN ANY SUCH COURT IS IN THE IMPROPER VENUE OR SHOULD BE TRANSFERRED TO A
MORE CONVENIENT FORUM.

                                                     LESSEE'S INITIALS _________

21. AMENDMENTS. This Lease and any Schedule hereto contain the entire agreement
between the parties with respect to the Equipment, this Lease and any Schedule
hereto and there is not agreement or understanding oral or written, which is not
set forth herein. This Lease and any Schedule hereto may not be altered,
modified, terminated or discharged except by a writing signed by the party
against whom such alteration, modification, termination or discharge is sought.

                                                     LESSEE'S INITIALS _________

22. LESSEE'S WAIVERS. To the extent permitted by applicable law, Lessee hereby
waives any and all rights and remedies conferred upon a Lessee by Article 2A of
the Uniform Commercial Code as adopted in any jurisdiction, including but not
limited to Lessee's rights to: (i) cancel this Lease; (ii) repudiate this Lease;
(iii) reject the Equipment; (iv) revoke acceptance of the Equipment; (v) recover
damages from Lessor for any breaches of warranty or for any other reason related
to the Equipment; (vi) claim a security interest in the Equipment in Lessee's
possession or control for any reason (vii) deduct all or any part of any claimed
damages resulting from Lessor's default, if any, under this Lease; (viii) accept
partial delivery of the Equipment; (ix) "cover" by making any purchase or lease
of or contract to purchase or lease Equipment in substitution for those due from
Lessor; (x) recover any general, special, incidental, or consequential damages
for any reason whatsoever; and (xi) specific performance, replevin, detinue,
sequestration, claim, and delivery of the like for any Equipment identified to
this Lease. To the extent permitted by applicable law (unless expressly
otherwise agreed hereunder), Lessee also hereby waives any rights now or
hereafter conferred by statute or otherwise which may require Lessor to sell,
lease or otherwise use any Equipment in mitigation of Lessor's damages as set
forth in Paragraph 13 or which may otherwise limit or modify any of Lessor's
rights or remedies under Paragraph 13. Any action by Lessee against Lessor for
any default by Lessor under this Lease, including breach of warranty or
indemnify, shall be commenced within one (1) year after any such cause of action
accrues.

                                                     LESSEE'S INITIALS _________

23. COUNTERPARTS. This Lease may be executed in any number of counterparts, each
of which shall be deemed an original. Each Schedule shall be executed in three
(3) serially numbered counterparts each of which shall be deemed an original but
only counterpart number 1 shall constitute "chattel paper" or "collateral"
within the meaning of the Uniform Commercial Code in any jurisdiction.

24. ADDENDUM. ("X" if applicable) [__] See Addendum(s) attached hereto and made
a part hereof.

                                       8
<PAGE>   9
THE PERSON EXECUTING THIS LEASE FOR AND ON BEHALF OF LESSEE WARRANTS AND
REPRESENTS, WHICH WARRANTY AND REPRESENTATION SHALL SURVIVE THE EXPIRATION OR
TERMINATION OF THIS LEASE, THAT THIS LEASE AND THE EXECUTION HEREOF HAS BEEN
DULY AND VALIDLY AUTHORIZED BY LESSEE, CONSTITUTES A VALID AND BINDING
OBLIGATION OF LESSEE AND THAT HE HAS AUTHORITY TO MAKE SUCH EXECUTION FOR AND ON
BEHALF OF LESSEE.

IN WITNESS WHEREOF, this Lease has been executed by Lessee as of the date first
stated above.

APPLIEDTHEORY CORPORATION                   ACCEPTED BY:
Lessee                                      NATIONAL LEASING, INC.
                                            Lessor

By:    /s/ Angelo A. Gencarelli III         By: /s/ Illegible
   ---------------------------------           ---------------------------------
Title: Vice President                       Title: VP Operations
      ------------------------------              ------------------------------
                                            Date: 01/20/00
                                                 -------------------------------


                                       9