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                                                                    EXHIBIT 10.2

                                    STANDARD
                               OFFICE SPACE LEASE


         AGREEMENT made as of this 17th day of September, 1999, by and between
the following parties: 224 HARRISON ASSOCIATES LLC, a New York limited liability
company, having an office at 4 Clinton Square, Syracuse, New York 13202
("Landlord"), and APPLIED THEORY CORPORATION, a corporation duly organized under
the laws of the State of Delaware having its principal office at 125 Elwood
Davis Road, Liverpool, New York 13088 ("Tenant").

                                   WITNESSETH:

                                   ARTICLE 1

                                    PREMISES

1.01     PREMISES

         Landlord hereby leases to Tenant and Tenant hereby leases and hires
from Landlord those certain premises located in the building commonly known as
"THE SYRACUSE BUILDING" (the "Building") which is located at 224 Harrison Street
in the City of Syracuse, County of Onondaga and State of New York, which
premises are outlined on the plan attached as Exhibit "A" (the "Premises"),
together with the right to use, in common with others, the Building Commons
Areas and Outside Common Areas as hereinafter defined. For purposes of this
Paragraph 1.01, the sum of the square feet in the Premises and Tenant's share of
Building Common Areas (as defined in Paragraph 1.02 hereof) shall be the
aggregate of approximately 36,126 SQUARE FEET, being comprised of approximately
(a) 13,416 square feet on each of the 7TH and 8TH floors of the Building, (b)
1,456 leaseable square feet (including the Common Area Factor defined in
Paragraph II of the Addendum of this Lease) located on the 2ND floor of the
Building, and (c) 7,838 leaseable square feet (including the Common Area Factor)
located on the 6TH floor of the Building. The Premises shall include the area
bounded by: the center line of any walls common to adjacent tenants, the
Building Common Area, side of any wall adjoining Building Common Areas (but not
the surface thereof), the line established by the exterior face of the exterior
walls of the Building and the exterior face of any windows in the exterior walls
of the Building, the concrete floor surface of the Premises and the lower
surface of the next higher floor (or roof). Subject to Paragraph X of the
"Addendum" (defined in Section 22.24), Landlord reserves unto itself, its
successors and assigns, the right to install, maintain, use, repair and replace
pipes, ducts, conduits, wires and structural elements leading through the
Premises in locations which will not materially or unreasonably interfere with
Tenant's use of or access to the Premises and which do not diminish the useable
square footage of the Premises. No right to use any part of the exterior of tile
Building and no easement for light or air are included in the lease of the
Premises hereby made.

1.02     DEFINITION OF BUILDING COMMON AREAS

         "Building Common Areas" shall be defined to mean all areas, space,
equipment, and signs made available by Landlord specifically for the Building or
for the common or joint use and

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benefit of all the tenants in the Building, their employees, agents, customers,
visitors and other invitees, including without limitation hallways, corridors,
trash rooms, mechanical and electrical rooms, storage rooms, stairways,
entrances, elevators, rest rooms, lobbies, stairs, loading docks, pedestrian
walks, roofs and basements, janitor's and storage closets within the Building
and all other common rooms and common facilities within the Building.

1.03     DEFINITION OF OUTSIDE COMMON AREAS

         The term "Outside Common Areas" is defined to mean the land described
on Exhibit "B" attached hereto and made a part hereof, or such portion thereof
as may from time to time devoted to uses associated with the Building, and any
adjacent or contiguous land which may from time to time be devoted to such uses,
together with such improvements as may from time to time be erected upon or
under any of such lands, including, but not limited to, surface and subsurface
parking areas, lighting facilities, utility lines, sidewalks, covered walkways,
underground walkways, driveways, plazas, courts, sidewalks, retaining walls,
access roads, truck serviceways, landscaped areas, signs, and equipment.

                                    ARTICLE 2

                                  TERM OF LEASE

2.01     TERM

         The term of this Lease shall be Eight (8) years commencing as of the
Term Commencement Date determined in accordance with Section 2.02, below, and
expiring as of the day which is the day prior to the eighth (8th ) anniversary
of the Term Commencement Date (said date being herein referred to as the
"Expiration Date"), unless earlier terminated pursuant to the provisions of this
Lease.

2.02     TERM COMMENCEMENT

         (a) The term of this Lease shall commence on the earlier to occur of
(i) the expiration of ten (10) days following the date of Tenant's receipt of
"Landlord's Notice of Substantial Completion" (defined in Section 2.02(b),
below, and (ii) the date on which Tenant opens for business in the Premises. The
date of commencement of the term of this Lease is herein referred to as the
"Term Commencement Date". The word "term" shall, unless otherwise expressly
provided to the contrary, be deemed to include the initial and any renewal term
exercised by Tenant.

         (b) The Premises shall be deemed to be "Substantially Complete" on the
date Landlord has completed "Landlord's Work" (defined in Section 4.01, below)
such that:

         (i) Tenant can begin installation of its fixtures and equipment
     without interference from Landlord's workmen;

         (ii) adequate facilities exist for access to and egress from the
     Premises;


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         (iii) Landlord has completed Landlord's Work in accordance with
     Tenant's plans, subject to minor punch-list items, and has secured a
     certificate of occupancy for the Premises, or evidence that the Premises
     qualify for the same based upon completion of Landlord's Work; and

         (iv) all major Building systems, including the electrical, plumbing,
     sprinkler and other fire safety systems, heating, ventilating, and air
     conditioning ("HVAC") systems, utilities and elevators (collectively,
     "Building Systems") are installed and are in good working order.

         Upon Substantial Completion of Landlord's Work, Landlord or its
architect will notify Tenant in writing that the Premises are Substantially
Completed as herein required ("Landlord's Notice of Substantial Completion"),
with the exception of minor punch-list items which will not interfere with
Tenant's installations and work in order to outfit the Premises for Tenant's
use. Landlord will complete the punch-list items of Landlord's Work within
thirty (30) days after Landlord's receipt of Tenant's punch-list. Tenant shall
provide a punch-list to Landlord within thirty (30) days after Tenant's receipt
of Landlord's Notice of Substantial Completion, subject to reasonable
extension(s) as may be required to perform the work and/or obtain necessary
parts or items to perform the work, provided that Landlord continues with all
due diligence to perform the work and obtain such parts/items as may be
necessary to complete the punch-list items within a reasonable period of time.

         (c) Tenant may, prior to the Term Commencement Date, and without
incurring any liability for payment of Fixed Monthly Rent, Additional Rent or
other charges, enter into the Premises to perform work thereto (including the
installation of telephone lines, data and computer lines), and to place and
install Tenant's personal property, equipment and trade fixtures, in any part of
the Premises (collectively, "Tenant's Work"), at Tenant's expense, provided,
however that the performing of Tenant's Work (1) does not cause undue
interference or delay in the completion of Landlord's Work; and (2) shall be at
Tenant's sole risk.

2.03     CONDITION OF PREMISES

         Tenant's taking possession shall be conclusive evidence as against
Tenant that the Premises were in good order and satisfactory condition when
Tenant took possession, excepting (i) any punch-list items of Landlord's Work,
which Landlord will complete with due diligence and minimum disruption to Tenant
in the Premises within thirty (30) days of Landlord's receipt of Tenant's
punch-list, (ii) any condition of Landlord's Work, the Premises as delivered or
any Building System which is unacceptable to Tenant, in Tenant's reasonable
discretion, and of which Tenant gives Landlord written notice within thirty (30)
days following the Warranty Period, as defined in Section 4.01, below, and (iii)
latent defects. At the expiration or sooner termination of this Lease, Tenant
shall return the Premises broom-clean and in as good condition as when Tenant
took possession, ordinary wear and loss by fire or other casualty excepted,
failing which the Landlord may restore the Premises to such condition and Tenant
shall pay the reasonable cost thereof.


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                                   ARTICLE 3

                       RENT, TAXES, LEASE YEAR AND PARKING

3.01     FIXED ANNUAL RENT

         Tenant agrees to pay to Landlord at the offices of Landlord, or at such
other place designated by Landlord, without any prior demand therefor and
without any deduction or set-off whatsoever except as may be specifically herein
permitted, as fixed annual rent,

<TABLE>
<CAPTION>
                                                        FIXED                     FIXED                     PER
MONTH OF INITIAL TERM:                              ANNUAL RENT:              MONTHLY RENT:             SQUARE FOOT:
----------------------                              ------------              -------------             ------------
<S>                                                 <C>                       <C>                       <C>
Term Commencement Date through the sixth
(6th) full calendar month of the initial
term, inclusive:                                        $0.00                     $0.00                    $0.00

Seventh (7th) full calendar month through                                                                  $12.00
the end of the initial term, inclusive:              $433,512.00                36,126.00                per annum
</TABLE>

each equal monthly installments (the "fixed monthly rent") payable in advance
upon the first day of each calendar month during the term hereof. The monthly
installments shall be deemed to have been paid upon such first day only if
actually received by such first day.

         If the term shall commence or expire upon a day other than the first
(or in the case of termination the last) day of a calendar month, Tenant shall
pay, upon the Term Commencement Date, and on the first day of the last calendar
month, a pro rata portion of the fixed monthly rent and additional rent for the
first and last fractional calendar month, respectively, prorated on a per term
basis with respect to such fractional calendar month based upon the actual
number of days in those months.

3.02     TAXES

         (a) Landlord shall in the first instance, during the term of this
Lease, pay to the public officers charged with the collection thereof, all
Building Taxes as hereinafter defined.

         The term "Building Taxes" shall be deemed to include (i) all real
property taxes (which shall be deemed to include all property taxes and
assessments, water and sewer rents, rates and charges, parking surcharges and
any other governmental charges, general and special, ordinary and
extraordinary), which may be levied or assessed by any lawful authority against
the Building, the Building Common Areas and the Outside Common Areas. The amount
required to be paid by Landlord pursuant to any Payment-in-Lieu-of-Tax Agreement
between Landlord and any taxing authority having jurisdiction over the Building
shall, for purposes of this Lease, be deemed to be a real property tax
obligation and included within the definition of Building Taxes.


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         (b) During the term of this Lease, Tenant agrees to pay to Landlord as
additional rent, within fifteen (15) days after receipt of Landlord's invoice
therefor, Tenant's Allocable Share (computed pursuant to Paragraph 22.11(b)
hereof) of the amount by which Building Taxes payable by Landlord under
Paragraph 3.02(a) above for each lease year exceeds said Building Taxes payable
during the Tax Base Year as hereinafter defined. The term "Tax Base Year" for
purposes of this Lease shall mean the calendar year 2000. At the end of each
lease year or partial lease year, Landlord will furnish to Tenant a statement
setting forth the actual Building Taxes payable during such lease year,
comparing such actual Building Taxes with the Building Taxes for Tax Base Year
and also comparing Tenant's Allocable Share of the increase as reasonably
estimated by Landlord and paid by Tenant with Tenant's Allocable Share of the
actual increase in Building Taxes for such lease year. Any overpayment or
underpayment by Tenant shall be promptly adjusted by payment, within fifteen
(15) days of the balance of any underpayment for such year by Tenant to
Landlord, or by Landlord to Tenant of the balance of any overpayment for such
year, or at Landlord's election if any overpayment shall be less than one (1)
month's Fixed Monthly Rent, by applying such overpayment by Tenant as a credit
to the next succeeding monthly installments of Additional Rent. A copy of the
actual tax bill or assessment bill for the Building and the Outside Common Areas
from the appropriate taxing authority and upon which the calculation of Tenant's
Allocable Share is based shall be submitted by Landlord to Tenant with
Landlord's invoice and shall at all times be sufficient evidence of the amount
of Building Taxes levied or assessed against the property to which such bill
relates.

         (c) Tenant shall at all times be responsible for and pay, before
delinquency, all municipal, county, state or federal taxes assessed against its
leasehold interest or any fixtures, furnishings, equipment, stock-in-trade or
other personal property of any kind owned, installed or used in or on the
Premises.

         (d) Should any governmental taxing authority acting under any present
or future law, ordinance or regulation, levy, assess or impose a tax, excise,
surcharge and/or assessment (other than a tax on net rental income or franchise
tax) upon or against the rents payable by Tenant to Landlord, or upon or against
the Building, the Building Common Areas or the Outside Common Areas, by way of
substitution for or in addition to any existing tax on the Building or tax
parcel on which the Building is constructed ("Tax Parcel"), which existing tax
comprises a portion of "Building Taxes", Tenant shall be responsible for and
shall pay Tenant's Allocable Share of such tax, excise, surcharge and/or
assessment in the manner provided in subparagraph (b) above.

         (e) Landlord may seek a reduction in the assessed valuation (for real
estate tax purposes) of the Building in which the Premises are situated by
administrative or legal proceedings. Tenant shall pay to Landlord Tenant's
Allocable Share of Landlord's reasonable, out-of-pocket costs for said
proceedings including but not limited to, special counsel, counsel's
reimbursable expenses, and special appraiser if required, Tenant's Allocable
Share of Landlord's costs being computed under Paragraph 22.11(b); and provided,
however, that Tenant's Allocable Share of such costs shall not exceed any tax
savings realized as a result of Landlord's successful reduction in the
assessment of the Building. Upon receipt of any refund resulting from any
proceeding for which Tenant has paid Tenant's Allocable Share of Landlord's
costs and has paid Tenant's Allocable Share of excess Building Taxes under
Paragraph 3.02(b) above, Landlord shall (after deducting Landlord's costs to
obtain such refund) recompute the amount that would have been due from


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Tenant (after subtracting such refund) and pay to Tenant the amount by which
Building Taxes originally paid by Tenant exceed such recomputed amount.

         (f) Should any alteration or improvement performed by Tenant, during
the term of this Lease, be shown to have caused an increase in the assessment of
the Building, Tenant shall pay to Landlord the actual amount of all taxes
resulting from such increase in assessment. Any amount paid separately hereunder
by Tenant to Landlord shall be in addition to any amounts paid by Tenant
pursuant to Paragraph 3.02(b) above.

3.03     PAST DUE RENT

         If, during the term of this Lease, Tenant shall fail to pay any
installment of the fixed monthly rent or additional rent or any other charge
hereunder when the same is due and payable, then interest at the lesser rate of
(i) the prime rate published in the Wall Street Journal (or such other similar
daily business journal, should the Wall Street Journal no longer be in
publication) on or about the due date, plus two percent (2%) per annum, and (ii)
the maximum legal rate (the lesser of such rates is herein called the "Lease
Rate") shall accrue from and after the date on which such sum was due and
payable, and such interest, together with a late charge of Fifty Dollars
($50.00) for each past-due payment to cover the extra expense of handling such
delinquency, shall be paid to Landlord as additional rent and liquidated damages
at the time of payment of such past-due sum. Anything contained in the foregoing
to the contrary notwithstanding, Tenant shall not be obligated to pay the
foregoing interest or Late Charge with respect to the first late payment of any
charge hereunder occurring during any twelve (12) month period; provided,
however, that the same is received by Landlord within five (5) days of Tenant's
receipt of written notice thereof from Landlord. Landlord shall have the right
to apply any payments made by Tenant first to any deficiency in the payment of
the interest and Late Charge provided for herein. Nothing contained in this
Paragraph 3.03 shall be construed to be a limitation of or in substitution of
Landlord's rights and remedies under Article 13 of this Lease.

3.04     DEFINITION OF LEASE YEAR AND PARTIAL LEASE YEAR

         The term "lease year" is defined to mean a period of twelve (12)
consecutive calendar months, the first full lease year commencing on the first
day of the first full calendar month following the Term Commencement Date (if
other than on the first day of a month), and each succeeding lease year
commencing on the anniversary of the commencement of the first full lease year.
Any portion of the term which is less than a lease year shall be deemed a
partial lease year" and computations requiring proration shall be pro-rated on a
per term basis using 365 day year.

3.05     SECURITY DEPOSIT

         INTENTIONALLY DELETED.


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<PAGE>   7

                                   ARTICLE 4

                             CONSTRUCTION, FINANCING
                                 AND ALTERATIONS

4.01     LANDLORD'S OBLIGATION

         Landlord shall, at its sole cost and expense (except as otherwise
specified), construct the Premises for Tenant's use and occupancy in accordance
with plans and specifications prepared by Tenant and as approved by Landlord
(such approval not to be unreasonably withheld, conditioned or delayed,
incorporating all items of work provided in Exhibit "C" attached hereto and made
a part hereof (all of the foregoing, "Landlord's Work"). Landlord hereby
covenants and agrees that it shall warrant all items of Landlord's Work for a
period of twelve (12) full calendar months following the Term Commencement Date
("Warranty Period"), and that Landlord shall correct any defects of any kind or
nature in Landlord's Work within thirty (30) days of written notice thereof from
Tenant, provided, however, that Landlord receives written notice of any such
defect within thirty (30) days following the expiration of the Warranty Period.

4.02     FINANCING

         If Landlord can obtain mortgage financing or refinancing only upon the
basis of reasonable modifications of the terms and provisions of this Lease,
Landlord and Tenant shall enter into a mutually agreeable amendment to this
Lease incorporating such modifications; provided, however, that the lease
modifications referred to herein shall not relate to those provisions pertaining
to length of the term of the lease, amount of rent, additional rent, and other
charges, nor shall the lease modifications otherwise increase Tenant's
obligations hereunder, nor diminish Tenant's rights.

         In the event of a refinancing or a bona fide sale of the Building by
the Landlord, Tenant shall, immediately within five (5) business days of receipt
of written request therefor, provide to Landlord a copy of Tenant's most current
available annual report.

4.03     TENANT'S OBLIGATION

         Tenant shall perform such work in the Premises over and above
Landlord's Work in accordance with the standards described in Exhibit "D"
attached hereto and made a part hereof.

4.04     ALTERATIONS, ADDITIONS AND IMPROVEMENTS

         (a) Except as specifically permitted by the provisions of Section
4.04(b), below, Tenant shall not make any alterations, additions or improvements
in or to the Premises without the prior written consent of Landlord (which
consent shall not be unreasonably withheld, conditioned or delayed), and then
only by contractors approved by Landlord (said approval not to be unreasonably
withheld, conditioned or delayed. Landlord represents to Tenant and Tenant
acknowledges the existence of certain covenants affecting the Building and the
Premises including those portions of the architecturally or historically
significant interior features of the Building which may limit the construction
of, or removal, as the case may be, of certain alterations, additions or
improvements in or to the Premises ("Historical Features"), notwithstanding the


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requirement of consent thereto by Landlord. If Landlord shall grant its consent,
Tenant shall provide Landlord with certificates evidencing the insurance
coverages and limits required by Exhibit "F" to the commencement of any such
work. Tenant shall not make nor permit any defacement, injury or waste in, to or
about said Premises nor make any defacement, injury or waste in, to or about any
part of the Building. Tenant agrees that any improvements (excepting Tenant's
Personal Property, hereinafter defined) as may be installed within and
permanently affixed to the Premises by Tenant pursuant to this paragraph 4.04
(collectively, "Permanent Leasehold Improvements") shall remain as part of the
Premises at the expiration of the Lease or any extension or renewal thereof;
provided, however, that the foregoing shall not apply to Tenant's equipment,
furniture and trade fixtures, nor to any items of personal property (all of the
foregoing, collectively, "Tenant's Personal Property"), which Tenant may, at
Tenant's expense, remove from the Premises no matter how attached, so long as
Tenant shall repair any damage to the Premises caused by said removal. Landlord,
however, shall have the right to require Tenant to remove any alterations,
additions or improvements so made provided that the removal of such alteration,
addition or improvement was made an express condition of Landlord's consent to
Tenant's installation thereof at the time of the granting of such consent.
Tenant shall, at its expense, repair or cause to be repaired any damage to the
Premises caused by such removal.

         (b) Tenant shall have the right to make interior, non-structural
additions, alterations, modifications and improvements to, and to perform such
other work within, the Premises, not to exceed the cost of ten thousand dollars
($10,000) in each instance (herein, "Exempted Alterations"), without Landlord's
prior approval provided, however, that:

     (a)  all Exempted Alterations shall be in conformity with (i) all
          applicable rules and regulations of the Building; (ii) all applicable
          governmental laws, rules, regulations and zoning ordinances; and (iii)
          the applicable requirements of Exhibit D, attached hereto, and

     (b)  the Exempted Alterations do not affect the structural components of
          the Premises, the Historical Features of the Premises, the Building,
          the Common Areas, and/or the Outside Common Areas, nor materially
          impact or affect, or otherwise require any modification of or to any
          Building System not located within the Premises;

     (c)  at least ten (10) days prior to Tenant's commencement of the Exempted
          Alterations, Tenant shall provide Landlord written notice of such
          Exempted Alterations, including a reasonably detailed description of
          the work to be performed, plans and specifications for such work, and
          an insurance certificate evidencing insurance coverage as may be
          required to be maintained by Tenant during the performance of work by
          the provisions of Exhibit "D", naming Landlord as an additional
          insured.

4.05     SIGNS, AWNINGS AND CANOPIES

         Except as specifically provided otherwise in the Addendum, attached
hereto Tenant will not place or maintain or suffer to be placed or maintained on
or in an exterior door, wall or window of the Premises any sign, awning or
canopy, decoration, lettering or advertising matter without first obtaining the
written consent of Landlord thereto, such consent not to be unreasonably
withheld, conditioned or delayed. In the event such consent is received, then
Tenant shall maintain


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such sign, awning, canopy, decoration, lettering or advertising matter as may be
approved in good condition and repair at all times during the term of this
Lease.

                                   ARTICLE 5

                                 USE OF PREMISES

5.01     USE OF PREMISE

         Tenant shall occupy and use the Premises during the term for general
offices and no other purpose whatsoever. Tenant further agrees to comply with
the rules and regulations set forth in Exhibit "E" attached hereto and made a
part hereof and with such reasonable modifications thereof and additions thereto
as Landlord may hereafter from time to time make for the Building, the Building
Common Areas or the Outside Common Areas, provided Tenant has received actual
written notice thereof and to the extent the same are not in contradiction with
the provisions of this Lease. Landlord shall not be responsible for the
nonobservances by any other tenant of any said rules and regulations and shall
not be responsible to Tenant for any violation of the rules and regulations, or
the covenants or agreements contained in any other lease, by any other tenant of
the Building, or its agents or employees; provided, however, that Landlord shall
use commercially reasonable efforts to enforce the rules and regulations in a
uniform and non-discriminatory manner.

                                   ARTICLE 6

                                 OPERATING COSTS

6.01     DEFINITIONS

         (a) The term "Operating Costs" shall be deemed to include (i) the
reasonable and actual costs of operating and maintaining the Building, the
Building Common Areas and the Outside Common Areas, including, but without
limiting the generality of the foregoing, the cost of: gardening and
landscaping; parking lot repair, maintenance and line restriping; janitorial and
cleaning services (which shall be deemed to include labor, materials and
supplies for cleaning any office space in the Building, whether or not leased to
tenants, excluding the Premises); all insurance premiums paid by Landlord for
the insurance coverages required under Paragraphs 10.02 and 10.03 of this Lease;
repairs to the Building and roof; painting and caulking; refinishing; glass
repair; the maintenance and repair of all mechanical systems and facilities in
the Building including electrical, plumbing, sanitary control, and heating,
ventilating and air-conditioning systems and facilities; removal of snow, ice,
trash, waste and refuse; traffic control and policing; fire and security
protection; the cost, as amortized over the useful life of the improvement, as
reasonably and in good faith determined by Landlord, with annual interest at the
lesser rate of ten percent (10%) and the actual rate charged to Landlord to
finance the respective improvement (herein, "Improvement Rate"), of any capital
improvement made after calendar year 2000 in compliance with the requirements of
any federal, state or local law or governmental regulation; subject to the
provisions of Section 6.01(b), below, the cost, as amortized over the useful
life of the improvement, as reasonably and in good faith determined by Landlord,
with interest at the Improvement Rate per annum, of any capital improvement made
after calendar year 2000; maintenance, replacement and


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rental of signs and equipment; depreciation of the capital cost of any
machinery, provided the cost of the machinery had not already been recovered, in
whole or in part, under this Article 6, equipment and vehicles used solely in
connection with the operation and maintenance of the Outside Common Areas and
Building Common Areas; repair and/or (subject to the provisions of Section 6.0 1
(b)) replacement of on-site water lines, sanitary and storm sewer lines; rental
and other charges paid to third parties; personnel costs and management fees,
subject to the provisions of Section 6.01(b); holiday and other decorations; and
related costs to implement such services, plus (ii) a charge equal to eight
percent (8%) of the Operating Expenses for overhead expenses.

         (b) Anything contained in the foregoing to the contrary
notwithstanding, Operating Costs shall not include any of the following:

         (i) inheritance, estate, gift, franchise or income taxes, or any
     capital levy imposed on Landlord; or

         (ii) the cost to Landlord for any work or service performed in any
     instance for any tenant (including Tenant) or other occupant of the
     Building, at the cost of such tenant or occupant; or

         (iii) the cost of improvements performed for tenants or other occupants
     of the Building as Landlord's work;

         (iv) original construction costs of the Building;

         (v) interest and amortization of funds borrowed by Landlord, whether
     secured or unsecured;

         (vi) costs or expenses associated with leasing space in the building or
     the sale of any interest in the building, including, without limitation,
     advertising and marketing, and commissions;

         (vii) ground rents;

         (viii) salaries, wages, or other compensation above reasonable industry
     standards, and any salaries, wages, or other compensation paid to:

                    (A) employees above the level of Building Manager in excess
               of time allocated to the Building, or

                    (B) any partner, shareholder, officer or director of
               Landlord;

         (ix) expenses for repairs, replacements or improvements arising from
     the initial construction of the Building to the extent such expenses are
     either (i) reimbursed to Landlord by virtue of warranties from contractors
     or suppliers or (ii) result by reason of deficiencies in design or
     workmanship except conditions resulting from ordinary wear and tear;


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         (x) accounting or legal fees incurred in tenant disputes, or in
     procuring tenants, or for fees not reasonably related to the operation and
     maintenance of the Building;

         (xi) costs for repairs to and/or maintenance of the Building or the
     Common Areas or Outside Common Areas to the extent the same are reimbursed
     to Landlord by proceeds of insurance (or the amount of reimbursement if
     Landlord would have maintained insurance per Landlord's requirements in the
     Lease), condemnation awards or other reimbursement received by Landlord;

         (xii) interest or penalties arising by reason of Landlord's failure to
     timely pay any Operating Costs, Taxes or Building utilities;

         (xiii) capital improvements to or acquisition of capital equipment for
     the Building, or the Common Areas or Outside Common Areas, except for those
     (A) acquired to reduce Operating Costs, (B) which are required in order to
     comply with the requirements of any federal, state or local law or
     governmental regulation, to the extent that the cost was incurred by
     Landlord after the Term Commencement Date and provided that the respective
     law, ordinance, regulation or order was not required to have been
     implemented prior to the Term Commencement Date, or (C) which are
     reasonably necessary for the efficient and economical operation and
     maintenance of the Building, each as amortized over the useful life of the
     improvement, as reasonably and in good faith determined by Landlord, at the
     Improvement Rate;

         (xiv) repairs or replacements to the Building or the Common Areas or
     Outside Common Areas which, under sound accounting principals and practices
     consistent with the operation of commercial office buildings, should be
     classified as capital expenditures, and/or should be considered a deferred
     expense and spread over a reasonable period of time, as reasonably and in
     good faith determined by Landlord in accordance with the aforementioned
     practices, in which case(s) Operating Costs for any Lease Year occurring
     during the term may include only the proportionate share of the cost of
     such repair or replacement appropriately allocated to such year;

         (xv) costs incurred due to Landlord's violation of or failure to comply
     with any term or condition of this Lease or any other lease or agreement
     relating to the Building or of any law, ordinance or governmental rule,
     code or regulation affecting the Building, the Common Areas and/or the
     Outside Common Areas;

         (xvi) reserves for repairs, maintenance or replacements; or

         (xvii) the cost of any new services which were not included in the
     calculation of Operating Costs as of the "Base Period" (defined below),
     excepting that Tenant shall pay increases in the costs of any such new
     services over the cost incurred for such service during its first twelve
     (12) months of implementation at the Building.

         Landlord covenants and warrants that:

         (A) any management fee included as part of Operating Costs shall be
     reasonable, competitive and consistent with such fees as may be charged in
     the town, county and state


                                       11
<PAGE>   12

     in which the Building is located for the management of buildings of a
     similar nature and operations as the Building;

         (B) no cost, charge or expense charged to Tenant as part of Operating
     Costs is or will be in any manner duplicative of any cost, charge or
     expense either (I) charged to or payable by Tenant under any other
     provision of this Lease or otherwise, or (II) reimbursed or reimbursable to
     Landlord by any source other than through Operating Costs, and

         (C) the Operating Costs for the Base Period shall include any
     management fee and the eight percent (8%) administrative charge heretofore
     described.

6.02     TENANT TO SHARE INCREASES IN OPERATING COSTS

         (a) Tenant agrees to pay to Landlord, as additional rent, monthly (or
less frequently as Landlord shall determine) within ten (10) days after receipt
of Landlord's estimate therefor (and thereafter on the first day of each month
without invoice) an amount equal to one twelfth (1/12) of Tenant's Allocable
Share (computed pursuant to Paragraph 22.11(a) hereof) of the estimated amount
by which Operating Costs for each lease year exceed the Operating Costs for the
Base Period as hereinafter defined. The "Base Period" for purposes of this Lease
shall mean calendar year 2000. In determining the amount of Operating Costs for
any lease year or partial lease year, (1) if less than 100% of the square feet
leaseable in the Building shall have been occupied by tenants at any time during
a lease year or partial lease year, Operating Costs shall be deemed, for
purposes of this Article 6, to be increased to an amount equal to like operating
costs which would normally be expected to be incurred, had such occupancy been
100% during the entire period, or (2) if Landlord is not furnishing any
particular work or service (the cost of which if performed by Landlord would
constitute Operating Costs) to a tenant who has undertaken to perform such work
or service in lieu of the performance thereof by Landlord, Operating Costs shall
be deemed for the purposes of this Article to be increased by an amount equal to
the additional Operating Costs which would reasonably have been incurred during
such period by Landlord if it had at its own expense furnished such work or
service to such tenant.

         (b) Following the end of each lease year (or partial lease year),
Landlord shall furnish to Tenant a comparative statement showing Tenant's
Allocable Share of the Operating Costs during such year and the amounts paid by
Tenant (based on Landlord's estimate of increases in Operating Costs)
attributable to such year. Any overpayment or underpayment by Tenant shall be
promptly adjusted by payment, within fifteen (15) days, of the balance of any
underpayment for such year by Tenant to Landlord, or by Landlord to Tenant of
the balance of any overpayment for such year, or, if any overpayment shall be
less than one (1) month's Fixed Monthly Rent, at Landlord's election, by
applying such overpayment by Tenant as a credit to succeeding monthly
installments of Additional Rent. Landlord and Tenant shall use their best
efforts to minimize such costs of operation, management and maintenance in a
manner consistent with generally accepted office building practices.

6.03     TENANT'S RIGHT TO AUDIT

         Tenant shall have the right to audit Landlord's books and records with
respect to all items of Operating Costs and Additional Rent for which Landlord
has billed Tenant during the


                                       12
<PAGE>   13

preceding calendar year or accounting period, upon ten (10) business days'
advance written notice. Tenant shall have the right to conduct this audit not
more than once each lease year to determine if the Operating Costs and items of
Additional Rent billed to Tenant are correct, and Landlord shall fully cooperate
in such regard. If Tenant shall not conduct any such audit within twelve (12)
months of the date of Tenant's receipt of the respective Operating Expenses'
statement or invoice, as the case may be, which is the subject of such audit,
then, upon the expiration of such twelve (12) month period, the respective
Operating Expenses' statement or invoice shall be deemed conclusive and final.
If an audit discloses that Landlord has overcharged Tenant for any charge
included as part of Operating Expenses, Landlord shall reimburse Tenant for such
overbilled amount within thirty (30) days of Tenant's written demand therefor.
If the audit discloses that any charge to Tenant which is more than five percent
(5%) in excess of the amount actually owed by Tenant, Landlord shall also
reimburse Tenant for the costs of the audit conducted, plus interest from the
date of overpayment at the Lease Rate.

                                   ARTICLE 7

                             ENERGY COSTS AND WATER

7.01     DEFINITIONS

         As used in this Lease, "Premises Electrical Energy Cost" shall mean the
cost of the electrical energy consumed by the lighting fixtures and electrical
convenience outlets within the Premises only. As used in this Lease, "Energy
Costs and Water" shall mean (i) the cost of all energy, including electrical,
oil, gas, solar, steam and any other energy and the cost of all water used in or
at the Building, the Building Common Areas and the Outside Common Areas,
excluding the Premises.

7.02     CHARGE FOR PREMISES ELECTRICAL ENERGY COSTS

         (a) Premises Electrical Energy Costs are included in Fixed Monthly
Rent. If Tenant elects to operate a twenty-four (24) hour Customer Service
Center ("CSC") from the Premises (the difference between the "Building Hours"
established in Section 20.01 and the hours of operation of the CSC are herein
referred to as "Additional Hours") and uses Premises Electric Energy in addition
to that which is used in or at the Premises during such Additional Hours when
Tenant's business is not being operated therefrom ("Base Usage") as such
additional usage is established by the Check Meter, hereinafter provided for,
then Tenant agrees to pay to Landlord, as additional rent, monthly within ten
(10) days after receipt of Landlord's reasonable estimate (based upon the
additional usage established by the Check Meter) (and thereafter on the first
day of each month during which Tenant operates the CSC at the Premises, without
invoice), a charge for Premises Electrical Energy Costs based upon an average
useage established by the use of the Check Meter during the Additional Hours,
and at the rate actually charged to Landlord therefor by the appropriate utility
company or authority supplying such energy. Landlord and Tenant each reserve the
right to survey and calculate Tenant's connected electrical load and hours of
usage thereof from time to time during any portion of the term during which
Tenant is operating a CSC at the Premises (but not more than twice annually) and
to adjust the monthly charge herein set forth by the amount of electrical energy
usage used during the Additional Hours the exceeding Base Usage, at the rate
actually charged to Landlord therefor. Tenant agrees to pay to Landlord, as


                                       13
<PAGE>   14

additional rent, the amount of such monthly charge, as adjusted, within ten (10)
business days following Tenant's receipt of notice of the adjustment (including
reasonable supporting documentation) and on the first day of each calendar month
thereafter during which Tenant operates the CSC at the Premises.

         (b) If Tenant elects to operate a CSC from the Premises, it shall so
notify Landlord in writing and Landlord shall thereafter install and maintain,
at Landlord's cost and expense, a check meter for purposes of measuring Tenant's
electrical usage during the Additional Hours over and above the Base Usage
("Check Meter"). The Check Meter shall be operated and maintained during such
portion of the term that Tenant operates a CSC at the Premises for Additional
Hours and is required to reimburse Landlord for the Premises Electrical Energy
Costs applicable to such Additional Hours in accordance with Section 7.02(a),
above. Following any meter reading period (not to be less than four (4) full
calendar months), all future charges under Section 7.02(a) for Premises
Electrical Energy for the Additional Hours shall be based on the average meter
readings, until such time as Landlord or Tenant reasonably determines Tenant's
usage has changed due to a change in Tenant's operation of business, including
but not limited to, a change in the number of hours or the amount and type of
equipment used in the Premises. Tenant's obligations to pay Additional Rent
pursuant to this Section 7.02 shall continue only for such periods that Tenant
operates the CSC.

7.03     TENANT TO SHARE INCREASES IN ENERGY COSTS AND WATER

         (a) Tenant agrees to pay to Landlord as additional rent, monthly,
within ten (10) business days after receipt of Landlord's reasonable estimate
therefor (and thereafter on the first day of each month, without invoice) an
amount equal to one-twelfth (1/12) of Tenant's Allocable Share (computed under
Paragraph 22.11(a) hereof) of the estimated amount by which Energy Costs and
Water for each lease year (or, in the case of a partial lease year, a
corresponding fractional portion of said amount of Energy Costs) occurring after
the Base Period (as defined in Section 3.02(b), above) exceed the Base Amount as
hereinafter defined. The term "Base Amount" for purposes of this Lease shall be
the amount computed by applying the actual electrical rate charged to Landlord
as of the Term Commencement Date to the total kilowatt hours of usage (computed
monthly) during the Base Period. In determining the amount of Energy Costs and
Water for the purpose of this Article 7 for any lease year or partial lease
year, (i) if less than one hundred percent (100%) of the square feet leaseable
in the Building shall have been occupied by tenants at any time during a lease
year or partial lease year, Energy Costs and Water shall be deemed for the
purposes of this Article to be increased to an amount equal to the like energy
costs and water which would normally be expected to be incurred, had such
occupancy been one hundred percent (100%) during the entire period, or (ii) if
Landlord is not furnishing any particular work or service (the cost of which if
performed by Landlord would constitute Energy Costs and Water) to a tenant who
has undertaken to perform such work or service in lieu of the performance
thereof by Landlord, Energy Costs and Water shall be deemed for the purposes of
this Article to be increased by an amount equal to the additional Energy Costs
and Water which would reasonably have been incurred during such period by
Landlord if it had at its own expense furnished such work or service to such
tenant.

         (b) Following the end of each lease year (or partial lease year)
occurring after the Base Period, Landlord shall furnish to Tenant a comparative
statement showing Tenant's Allocable Share of the Cost of Energy and Water
during such year and the amounts paid by Tenant


                                       14
<PAGE>   15

(based on Landlord's estimates of the Energy Costs and Water) attributable to
such year, together with copies of all invoices from appropriate utility
suppliers upon which the respective comparative statement is based. Any
overpayment or underpayment by Tenant shall be promptly adjusted by payment,
within fifteen (15) days, of the balance of any underpayment for such year by
Tenant to Landlord, or by Landlord to Tenant of the balance of any overpayment
for such year, or, if any overpayment shall be less than one (1) month's Fixed
Monthly Rent, then at Landlord's election by applying such overpayment for such
year as a credit to succeeding monthly installments of Additional Rent. The
Energy Costs and Water hereinabove described in this Article 7 shall be subject
to review by Tenant at Landlord's office, and Landlord and Tenant shall use
their best efforts to minimize such Energy Costs and Water.

7.04     PERIODIC INCREASES

         Energy Costs and Water are subject to periodic increases or taxes by
various utility companies, fuel companies, municipalities, governmental agencies
and others. Landlord may revise the estimate of the Energy Costs and Water
referred to in Paragraph 7.03(a) above and revise Tenant's monthly payment of
Energy Costs and Water (but not more than once during any lease year) based upon
actual changes in amounts payable by Landlord to the appropriate utility
suppliers. Tenant agrees to pay to Landlord, as additional rent, the amount of
such monthly charge, as adjusted, within ten (10) business days following
Tenant's receipt of notice of the adjustment (including reasonable supporting
documentation) and on the first day of each calendar month thereafter without
notice or invoice.

                                   ARTICLE 8

                                     REPAIRS

8.01     REPAIRS

         Tenant shall give to Landlord prompt written notice of any damage to,
or defective condition in any part of or appurtenance to the Building's
plumbing, electrical, heating, ventilating, air-conditioning or other systems
serving, located in, or passing through the Premises. Subject to the provisions
of Article 11 of this Lease and Landlord's warranty of Landlord's Work, Tenant
shall, at Tenant's own expense, keep the Premises, including everything therein
(except the heating and air-conditioning and other Building Systems and any
structural portions of the Building), in good order, condition and repair during
the term. Landlord shall, as part of the Operating Costs set forth in Article 6
of this Lease, maintain the heating, ventilating and air-conditioning and other
Building Systems throughout the Building (including the Premises) and the
outside walls, outside windows, floors, foundations, and roof of the Building in
good order and repair. Repairs made by Landlord required due to negligence or
fault of Tenant, its contractors, agents or employees shall be made at Tenant's
expense plus a 19% administrative charge.

         Tenant, at Tenant's expense, shall comply with all laws or ordinances,
and all rules and regulations of all governmental authorities and of all
insurance bodies at any time in force, applicable to the Premises or to Tenant's
use thereof, except that Tenant shall not hereby be under any obligation to
comply with any law, ordinance, rule or regulation requiring any structural
alteration of or capital improvement to the Premises or with respect to the
Premises, or which may


                                       15
<PAGE>   16

require change(s) in or to the Buildings Systems not exclusively serving and
located in the Premises, compliance with which shall be Landlord's sole
responsibility unless such alteration or improvement to the Premises or change
to the Building System(s) is required by reason of a condition which has been
created by, or at the instance of, Tenant, or is required by reason of a breach
of any of Tenant's covenants and agreements hereunder. All repairs made by
Tenant shall be made using contractors approved by Landlord which approval shall
not be unreasonably withheld, conditioned or delayed.

                                   ARTICLE 9

                                    INDEMNITY

9.01     INDEMNIFICATION BY TENANT

         (a) Tenant does hereby indemnify and shall defend Landlord and its
constituent shareholders, members or partners (and such other persons as are in
privity of estate with Landlord) and save it harmless from and against any and
all claims, actions, damages, liability and expense in connection with loss of
life, personal injury and/or damage to property arising from or out of any
occurrence in, upon or at the Premises, from or out of the occupancy or use by
Tenant of the Premises or any part thereof, or occasioned wholly or in part by
any act or omission of Tenant, its agents, contractors, employees, lessees or
concessionaires, except to the extent arising from or out of any act or omission
of Landlord, its agents, employees, contractors or lessees (all of the foregoing
collectively and individually, "Landlord Party"); and provided, however, that
nothing contained in this Lease shall be deemed to relieve Landlord of liability
for its acts, omissions, or negligence or the acts, omissions or negligence of
any Landlord Party, and Landlord does hereby indemnify, defend and to hold
Tenant and its constituent shareholders, partners, members or other owners,
harmless from and against any and all claims, actions, damages, liability and
expense (including reasonable attorneys' fees) incurred in connection with the
loss of life, personal injury and/or damage to property arising from or out of
such acts, omissions or negligence.

         (b) In case either party shall, without fault on its part, be made a
party to any litigation commenced by or against the other, then each party
agrees to protect and hold the party without fault harmless and to pay all
costs, expenses and reasonable attorney's fees incurred or paid by said party
without fault in connection with such litigation. Each party further agrees also
to pay all costs, expenses and reasonable attorney's fees that may be incurred
or paid by the other party in enforcing the covenants and agreements in this
Lease.

         (c) The provisions of this Article 9 shall survive the expiration or
earlier termination of this Lease with respect to any injury, illness, death or
damage occurring prior to such expiration or termination.


                                       16
<PAGE>   17

                                   ARTICLE 10

                                    INSURANCE

10.01    LIABILITY INSURANCE

         At all during the term of this Lease, Tenant shall, at its sole cost
and expense, for the mutual benefit of Landlord and Tenant, maintain personal
injury, death or property damage occurring on, in or about the Premises during
the term of this Lease in an amount of not less than One Million Dollars
($1,000,000.00) with respect to personal injury, death or property damage and
including contractual indemnity coverage. In the event that Tenant shall not
have delivered to Landlord a policy or certificate evidencing such insurance
fifteen (15) days prior to the Term Commencement Date and fifteen (15) days
prior to the expiration dates of each expiring policy, Landlord may, upon at
least three (3) business days prior notice to Tenant affording Tenant the
opportunity to provide evidence of such insurance, obtain such insurance as it
may reasonably require to protect its interest. The reasonable cost for such
policies shall be paid by Tenant to Landlord as additional rent within ten (10)
business days of receipt of written demand (including reasonable supporting
documentation), plus eighteen percent (18%) administrative charge. All insurance
policies required hereunder shall be issued by insurers of recognized
responsibility and licensed to conduct business in the State of New York.

10.02    ALL RISKS AND DIFFERENCE IN CONDITIONS INSURANCE

         At all times during the term of this Lease, Landlord shall, as part of
the Operating Costs set forth in Article 6 of this Lease, keep the Building
insured for the benefit of Landlord against loss or damage by risks now or
hereafter embraced by "All Risks," "Difference in Conditions", and loss of rent
coverages, and against such other risks as Landlord from time to time reasonably
may designate in amounts sufficient to prevent Landlord from becoming a
co-insurer.

         In any event, the amount applicable to "All Risks" shall be ninety
percent (90%) of the then full replacement cost (being the cost of replacing the
Building, exclusive of the costs of excavations and footings below the lowest
grade level). Such full replacement cost shall be determined from time to time
(but not more frequently than once in any twelve (12) calendar months) by an
appraiser, architect or other person or firm designated by Landlord.

         The parties agree that Landlord shall not provide any insurance
coverage for Tenant's merchandise, trade fixtures, furnishings, equipment and
other personal property of Tenant.

10.03    INSURANCE ON COMMON AREAS

         At all times during the term of this Lease, Landlord shall, as part of
the Operating Costs set forth in Article 6 of this Lease, keep the Common Areas
insured for personal injury and property damage liability, "All Risk" property
coverage, "Difference in Conditions," workers' compensation, employee's
liability and any other casualty or risk insurance which Landlord or Landlord's
insurance carrier deems necessary or appropriate, provided such other
insurance(s) are reasonable and customary for buildings, operations, and
property similar to those of the Building in the area in which the Building is
located.


                                       17
<PAGE>   18

10.04    INCREASE IN FIRE INSURANCE PREMIUM

         Tenant covenants and agrees to promptly pay to Landlord as additional
rent, within ten (10) business days of receipt of written demand (including
reasonable supporting documentation), the amount of any increase in the rate of
insurance on the Premises or on any part of the Building that (but for Tenant's
act(s) or Tenant's permitting certain activities to take place which result in
an increase in said rate of insurance) would not otherwise have been in effect.

10.05    WAIVER OF SUBROGATION

         Each of the parties shall have a waiver of subrogation clause attached
to, and made a part of, its insurance policy or policies in the following or
equivalent form: "This insurance shall not be invalid should the insured waive
in writing, prior to a loss, any or all rights of recovery against any party for
loss occurring to the property described herein. Notice is hereby accepted that
the insured has agreed in writing, prior to a loss, to waive any and all of its
rights of recovery from (the Landlord or the Tenant as the case may be)."

                                   ARTICLE 11

                              DAMAGE BY FIRE, THEFT
                                AND WATER DAMAGE

11.01    UNTENANTABILITY

         If the Premises are made untenantable in whole or in part by fire or
other casualty, the fixed monthly rent, additional rent and other charges, until
repairs shall be made or the Lease terminated as hereinafter provided, shall be
proportionately abated on a per diem basis according to the part of the Premises
which is reasonably usable by Tenant for the normal operation of its business.
If such damage shall be so extensive that the Premises cannot be restored by
Landlord within a period of four (4) months, Landlord and Tenant shall have the
right to cancel this Lease by notice to the other given at any time within
thirty (30) days after the date of such damage. If a portion of the Building
other than the Premises shall be so damaged that in the reasonable judgment of
Landlord the Building should be restored in such a way as to alter the Premises
materially, Landlord may cancel this Lease by notice to Tenant given at any time
within thirty (30) days after the date of such damage. In the event of giving
effective notice pursuant to this paragraph, this Lease and the term and the
estate hereby granted shall expire on the earlier to occur of (i) the date
fifteen (15) days after the giving of such notice and (ii) the date on which
Tenant is forced to cease normal operation of its business from the Premises as
a result of such damage, as fully and completely as if such date were the date
hereinbefore set for the expiration of the term of this Lease. If this Lease is
not so terminated, Landlord will promptly (taking into account the time
necessary to effectuate a satisfactory settlement with Landlord's insurance
company) restore the damage to the Building and/or the Premises, as the case may
be. Tenant hereby expressly waives the provisions of Section 227 of the New York
Real Property Law and agrees that the foregoing provisions of this Paragraph
11.01 shall govern and control in lieu thereof. Anything contained in the
foregoing to the contrary notwithstanding, if the Premises, or any material
portion thereof and/or Tenant's reasonable access thereto, and/or Tenant's
reasonable use of the Designated Parking Spaces (or reasonable alternative
parking facilities) shall be so damaged or impaired that Tenant's


                                       18
<PAGE>   19

use of the Premises is unreasonably interfered with and Landlord shall not have
commenced repair of the same within ninety (90) days of the date of damage, or
having commenced repairs during such time, if Landlord shall fail to thereafter
diligently and continuously prosecute the repairs toward completion, Tenant
shall have the right to terminate this Lease upon written notice to Landlord
given at any time after the expiration of such ninety (90) days, but prior to
such date as repairs to the Premises and access thereto are Substantially
Completed.

11.02    LOSS OF PROPERTY AND WATER DAMAGE

         Except as herein provided, Landlord shall not be responsible to Tenant
for any loss or theft or damage of or to any property left with any employee of
Landlord, except to the extent due to the negligence or willful misconduct of
Landlord or any Landlord Party. Landlord shall not be liable for any damage
caused by water, rain, snow or ice, or by breakage, stoppage or leakage of
water, gas, heating, air conditioning, sewer or other pipes or conduits, or
arising from any other cause, in, upon, about or adjacent to the Premises, or
the Building in which said Premises are located, except to the extent due to the
negligence or willful misconduct of Landlord or any Landlord Party, or to the
extent covered by any insurance carried or required to be carried by Landlord
pursuant to the provisions of Article 10 of this Lease.

                                   ARTICLE 12

                                 EMINENT DOMAIN

12.01    EMINENT DOMAIN

         (a) In the event that title to the whole or any part of the Premises
shall be lawfully condemned or taken in any manner for any public or
quasi-public use, this Lease and the term and estate hereby granted shall
forthwith cease and terminate as of the date of vesting of title and Landlord
shall be entitled to receive the entire award, Tenant hereby assigning to
Landlord Tenant's interest therein, if any.

         (b) In the event that title to a part of the Building other than the
Premises shall be so condemned or taken and if in the opinion of Landlord, the
Building should be restored in such a way as to alter the Premises materially,
Landlord may terminate this Lease and the term and estate hereby granted by
notifying Tenant of such termination within sixty (60) days following the date
of vesting of title, and this Lease and the term and estate hereby granted shall
expire on the earlier to occur of (i) the date specified in the notice of
termination, which date shall be not less than sixty (60) days after the giving
of such notice, and (ii) the date Tenant is forced to cease normal operation of
its business from the Premises as a result of any such taking, as fully and
completely as if such date were the date hereinbefore set for the expiration of
the term of this Lease, and the fixed monthly rent, additional rent, and other
charges hereunder shall be apportioned as if such date. In such event, Tenant
shall not be entitled to any portion of Landlord's award hereunder, if any, nor
shall Tenant have any claim against Landlord for the value of the unexpired
portion of the term.

         (c) Nothing in this Article 12 shall be deemed to prevent Tenant from
claiming and receiving from the condemning authority, if legally payable,
compensation for the taking of


                                       19
<PAGE>   20

Tenant's own tangible property, equipment and/or trade fixtures, any leasehold
improvements constructed by Tenant, and such amount as may be payable by statute
or ordinance or otherwise recoverable by Tenant toward Tenant's damages for
Tenant's loss of or interruption and/or damage to business, removal and
relocation expenses.

                                   ARTICLE 13

                                 BANKRUPTCY AND
                               DEFAULT PROVISIONS

13.01    CONDITIONAL LIMITATIONS

         This Lease and the demised term are subject to the limitation that if,
at any time prior to or during the term, any one or more of the following events
(herein called an "Event of Default") shall occur, that is to say:

         (a) If Tenant shall make an assignment for the benefit of its
creditors; or

         (b) If the leasehold estate hereby created shall be taken on execution
or by other process of law; or

         (c) If any petition shall be filed against Tenant in any court, whether
or not pursuant to any statute of the United States or of any State, in any
bankruptcy, reorganization, composition, extension, arrangement, or insolvency
proceedings, and Tenant shall thereafter be adjudicated bankrupt, or such
petition shall be approved by the court, or the court shall assume jurisdiction
of the subject matter and if any such proceedings shall not be dismissed within
sixty (60) days after the institution of the same, or if any such petition shall
be so filed by the Tenant, or

         (d) If in any proceedings a receiver or trustee be appointed for
Tenant's property, and such receivership or trusteeship shall not be vacated or
set aside within sixty (60) days after the appointment of such receiver or
trustee; or

         (e) INTENTIONALLY OMITTED; or

         (f) If Tenant shall fail to pay any installment of the fixed monthly
rent or any part thereof when the same shall become due and payable, and such
failure shall continue for ten (10) days following Tenant's receipt of written
notice thereof from Landlord; or

         (g) If Tenant shall fail to pay any other charge required to be paid by
Tenant hereunder, and failure shall continue for ten (10) days after Tenant's
receipt of written notice thereof from Landlord to Tenant; or

         (h) If Tenant shall fall to perform or observe any other requirement of
this Lease (not hereinbefore in this paragraph specifically referred to) on the
part of Tenant to be performed or observed, and such failure shall continue for
thirty (30) days after notice thereof from Landlord to Tenant; provided,
however, that if the cure of Tenant's failure to perform shall be of such a
nature so as to reasonably require more than thirty (30) days to complete,
Tenant shall not be deemed in


                                       20
<PAGE>   21
default of this Section 13.01(h) of the Lease if Tenant commences the cure
within such thirty (30) day period, and shall thereafter diligently prosecute
the cure to completion within a reasonable time;

then, upon the happening of any one or more of the aforementioned Events of
Default, and the expiration of the period of time prescribed above, Landlord may
give Tenant a notice (hereinafter called "notice of termination") of its
intention to end the term of this Lease at the expiration of five (5) days from
the date of service of such notice of termination, and at the expiration of such
five (5) days, this Lease and the term hereof, as well as all of the right,
title and interest of Tenant hereunder, shall wholly cease and expire in the
same manner and with the same force and effect as if the date of expiration of
such five (5) day period were the date originally specified herein for the
expiration of this Lease and the demised term, and Tenant shall then quit and
surrender the Premises to Landlord, but Tenant shall remain liable as
hereinafter provided.

13.02    LANDLORD'S REMEDIES

         (a) If this Lease shall be terminated as in Paragraph 13.01 provided,
Landlord or Landlord's agents or employees may immediately or at any time
thereafter re-enter the Premises and remove therefrom Tenant, its agents,
employees, licensees, and any subtenants and other persons, firms or
corporations, and all or any of its or their property therefrom either by
summary dispossess proceedings or by any suitable action or proceeding at law,
without being liable to indictment, prosecution or damages therefor except to
the extent of gross negligence or willful misconduct, and repossess and enjoy
said Premises, together with all alterations, additions and improvements
thereto.

         (b) In case of any such termination, re-entry or dispossess by summary
proceedings, the rents and all other charges required to be paid up to the time
of such termination, re-entry or dispossess, shall be paid by Tenant and Tenant
shall also pay to Landlord all reasonable and actual expenses which Landlord may
then or thereafter incur for legal expenses, attorneys' fees, brokerage
commissions and all other reasonable and actual costs paid or incurred by
Landlord for restoring the Premises to good order and condition and for altering
and otherwise preparing the same for reletting and for reletting thereof,
provided, however, that Landlord's recovery of costs hereunder with respect to
and incurred in connection with altering and otherwise preparing the Premises
for reletting shall not be greater than the reasonable and actual cost to
Landlord of restoring the Premises to good order and condition and returning the
same to "vanilla shell" using Landlord's standard building criteria package, and
shall not include the cost of any specialized improvements or alterations for a
specific tenant's use or business operations. Landlord may, at any time and from
time to time, relet the Premises, in whole or in part, for any rental then
obtainable either in its own name or as agent of Tenant, for a term of terms
which, at Landlord's option, may be for the remainder of the then current term
of this Lease or for any longer or shorter period.

         (c) If this Lease be terminated as aforesaid, Tenant nevertheless
covenants and agrees, notwithstanding any entry or reentry by Landlord whether
by summary proceedings, termination, or otherwise, to pay and be liable for on
the days originally fixed herein for the payment thereof, amounts equal to the
several installments of fixed monthly rent, additional rent and other charges as
they would, under the terms of this Lease, become due if this Lease had not


                                       21
<PAGE>   22

been terminated or if Landlord had not entered or re-entered as aforesaid, and
whether the Premises be relet or remain vacant in whole or in part or for a
period less than the remainder of the term, and for the whole thereof. But in
the event the Premises be relet by Landlord, Tenant shall be entitled to a
credit in the net amount of rent received by Landlord in reletting the Premises
after deduction of all reasonable and actual expenses and costs incurred or paid
as aforesaid in reletting the Premises and in collecting the rent in connection
therewith.

         (d) Tenant hereby expressly waives, so far as permitted by law, for and
on behalf of itself and all persons claiming through or under Tenant also waives
any and all right of redemption or re-entry or repossession under present or
future laws including specifically but without limitation Section 761 of the New
York Real Property Actions and Proceedings law including any amendments
hereafter, or to restore the operation of this Lease. In case Tenant shall be
dispossessed by a judgment or by warrant of any court or judge or in case of
reentry or repossession by Landlord or in case of any expiration or termination
of this Lease, Landlord and Tenant, so far as permitted by law, waive and will
waive trial by jury in any action, proceeding or counterclaim brought by either
of the parties hereto against the other on any matters whatsoever arising out of
or in any way connected with this Lease, the relationship of Landlord and
Tenant, Tenant's use or occupancy of said Premises, or any claim or injury or
damage. The terms "enter," "entry," or "re-entry" as used in this Lease are not
restricted to their technical legal meaning.

         (e) No failure by Landlord to insist upon the strict performance of any
covenant, agreement, term or condition of this Lease or to exercise any right or
remedy consequent upon a breach thereof, and no acceptance of full or partial
rent during the continuance of any such breach, shall constitute a waiver of any
such breach or of such covenant, agreement, term and condition. No waiver of any
breach shall affect or alter this Lease, but each and every covenant, agreement,
term and condition of this Lease shall continue in full force and effect with
respect to any other than existing or subsequent breach thereof. No payment by
Tenant or receipt by Landlord of a lesser amount than the monthly installments
of rent or additional rent stipulated in this Lease shall be deemed to be other
than on account of the earliest stipulated rent nor shall any endorsement or
statement on any check or letter accompanying a check for payment of rent be
deemed any accord and satisfaction, and Landlord may accept such check or
payment without prejudice to Landlord's right to recover the balance of such
rent or to pursue any other remedy provided by this Lease.

         (f) In the event of any breach or threatened breach by Tenant of any of
the covenants, agreements, terms or conditions contained in this Lease, Landlord
shall be entitled to seek to enjoin such breach or threatened breach and shall
have the right to invoke any right and remedy allowed at law or in equity or by
statute or otherwise.

         (g) Each right and remedy of Landlord provided for in this Lease shall
be cumulative and shall be in addition to every other right or remedy provided
for in this Lease or now or hereafter existing at law or in equity or by statute
or otherwise.


                                       22
<PAGE>   23

                                   ARTICLE 14

                                MECHANIC'S LIENS

14.01    MECHANIC'S LIENS

         Tenant agrees to pay when due all sums of money that may become due
for, or purporting to be due for, any labor, services, materials, supplies or
equipment furnished or to be furnished to or for Tenant in, upon or about the
Premises and/or Landlord's interest therein. If any mechanic's lien shall be
filed against the Premises or the Building based upon any act of Tenant or
anyone claiming through Tenant, Tenant, after notice thereof from Landlord (or
any person in privity of estate with Landlord) forthwith shall commence such
action by bonding, deposit, payment or otherwise, as will remove or satisfy such
lien within fifteen (15) business days. In the event Tenant does not remove or
satisfy said lien with said fifteen (15) business day period, Landlord shall
have the right to do so by posting a bond or undertaking and Tenant agrees to
reimburse Landlord for any and all expenses incurred by Landlord in connection
therewith within five (5) days after receipt by Tenant of Landlord's invoice
therefor, including reasonable supporting documentation. These expenses include,
but are not limited to filing fees, reasonable legal fees and bond premiums.
However, nothing in this Article 14 shall be deemed or construed as (a)
Landlord's consent to any person, firm or corporation for the performance of any
work or services or the supply of any materials to the Premises, or (b) giving
Tenant or any other person, firm or corporation any right to contract for or to
perform or supply any work, services or materials that would permit or give rise
to a lien against the Premises or the Building.

                                   ARTICLE 15

                        MORTGAGES, ASSIGNMENTS, SUBLEASES
                       AND TRANSFERS OF TENANT'S INTEREST

15.01    LIMITATION ON TENANT'S RIGHTS

         Except as hereinafter otherwise provided, during the term of this
Lease, in each case, without the prior written consent of Landlord first had and
received (such consent not to be unreasonably withheld, conditioned or delayed),
neither this Lease nor the interest of Tenant in this Lease, or in any sublease,
or in any rentals under any sublease shall be sold, assigned, transferred,
mortgaged, pledged, hypothecated or otherwise disposed of, whether by operation
of law or otherwise, nor shall the Premises be sublet.

         It is understood and agreed between the parties that, should Tenant
request Landlord's consent to a proposed assignment of this Lease or a
subletting of all or any portion of the Premises, Landlord will, in addition to
any other requirements which may be imposed as conditions to Landlord's consent,
require that Tenant execute and deliver to Landlord an agreement whereby Tenant
obligates itself, as additional rent, to pay over to Landlord fifty percent
(50%) of the amount, if any, of all rent, additional rent and any other
consideration paid by such assignee or sublessee to Tenant pursuant to such
assignment or sublease which is in excess of rent and additional rent due and
payable from time to time from Tenant to Landlord pursuant to this Lease (such
excess, subject to the following "notwithstanding" provision, is herein called
"Assignment


                                       23
<PAGE>   24

Profit"). Anything contained in the foregoing to the contrary notwithstanding,
"Assignment Profit" shall be deemed to mean rent and/or other consideration
received by Tenant specifically as consideration for: (i) the assignment of this
Lease and/or of Tenant's leasehold interest in the Premises (including all
"Permanent Leasehold Improvements", excepting "Tenant's Personal Property", as
such terms are defined in Section 4.04, above), or (ii) a subletting of the
Premises, including all Permanent Improvements, excepting Tenant's Personal
Property, after the deduction by Tenant of all reasonable and out-of-pocket
expenses incurred in connection with any such transfer, but shall specifically
exclude any money or other consideration received by Tenant for, and
appropriately and reasonably allocable to, Tenant's Personal Property, and/or
for Tenant's business and/or its good will, stock, and/or other tangible and
intangible items not comprising a portion of the Premises or Tenant's interest
therein (all of the foregoing, collectively, "Tenant's Business Property"). Any
consideration received by Tenant for Tenant's Business Property shall remain the
sole property of Tenant.

         No consent by Landlord to an assignment of this Lease and no assignment
made as hereinafter permitted, shall be effective until there shall have been
delivered to Landlord (a) an agreement, in recordable form, executed by Tenant
and the proposed assignee, wherein and whereby such assignee assumes due
performance of the obligation on Tenant's part to be performed under this Lease
to the end of the term hereof, and (b) the written consent of such assignment of
the holder of any fee or leasehold mortgage to which this Lease is then subject
shall have been obtained and delivered to Landlord if so required by the terms
of such fee or leasehold mortgage.

         Notwithstanding the assumption by such assignee of due performance,
Tenant shall continue to be fully responsible for the due performance of
Tenant's obligations hereunder in the same manner and to the same extent as if
no such assignment had been made.

         Any assignment, mortgage, pledge, sublease or hypothecation of this
Lease, or of the interest of Tenant hereunder, without full compliance with any
and all requirements set forth in this Lease shall be a breach of this Lease
and, if not cured within thirty (30) days of notice from Landlord (or such
extended period of time, to the extent reasonably required), a default
hereunder.

15.02    EFFECT OF LANDLORD'S CONSENT

         Any consent by Landlord to a sale, assignment, sublease, mortgage,
pledge, hypothecation, or transfer of this Lease, shall apply only to the
specific transaction thereby authorized and shall not relieve Tenant from the
requirement of obtaining prior written consent of Landlord to any further sale,
assignment, sublease, mortgage, pledge, hypothecation, or transfer of this
Lease. In instances where the consent of Landlord is required hereunder to any
proposed assignment or sublease of this Lease, or to the mortgaging, pledging or
hypothecation of this Lease, contemporaneously with the request of Tenant
therefor Tenant shall submit in writing information reasonably sufficient to
enable Landlord to decide with respect thereto. Landlord shall reply to Tenant
within ten (10) days after receipt of the request as aforementioned.

         With respect to any of the consents requested by Tenant under the
provisions of this Article 15, whether or not the Landlord shall have consented
thereto, Tenant shall pay to the Landlord all reasonable counsel fees and other
out-of-pocket expenses incurred by the Landlord in


                                       24
<PAGE>   25

connection therewith up to a maximum amount of five hundred dollars ($500.00) in
connection with any one (1) request for consent from Tenant.

15.03    SALE OF STOCK OR PARTNERSHIP OR MEMBERSHIP INTEREST

         INTENTIONALLY DELETED.

15.04    TRANSFER TO RELATED ENTITIES

         Anything contained in this Lease to the contrary notwithstanding,
Tenant shall have the right to assign and/or transfer this Lease and/or sublet
all or any portion of the Premises without the prior written consent of
Landlord, and without affording Landlord any right to receive any portion of any
"Assignment Profits" (defined in Section 15.01, above), to:

         (i) any corporation or other entity that is a parent, subsidiary or
     affiliate of Tenant;

         (ii) any corporation or other entity which is a successor (immediate or
     remote) to the initial Tenant hereunder, either by merger or consolidation,
     in accordance with applicable law, provided the surviving entity assumes
     the liabilities of Tenant;

         (iii) any corporation or other entity a majority of whose voting stock
     is owned by Tenant;

         (iv) any corporation or other entity which has the power to direct
     Tenant's management and operation or whose management and operation is
     controlled by Tenant; and

         (v) any purchaser of all or substantially all of the assets or
     substantially all of the voting stock and equity interests in Tenant,
     provided the purchasing entity assumes the liabilities and obligations of
     Tenant hereunder;

(all of the foregoing collectively hereinafter referred to as "Related
Entities").

Tenant shall provide Landlord with written notice of any such assignment or
subletting within thirty (30) days of the effective date thereof, which notice
shall include the correct name and address of the assignee or sublessee. Tenant
shall not be released by any such assignment or sublet.

                                   ARTICLE 16

                             SUBORDINATION OF LEASE

16.01    SUBORDINATION TO MORTGAGES AND GROUND LEASES

         This Lease and all the rights of Tenant hereunder are and shall be
automatically subject and subordinate to the lien of any ground or underlying
leases and to any mortgage or mortgages, whether fee or leasehold mortgages,
which may now affect the Premises or the Building


                                       25
<PAGE>   26

or the land under the Building and to all renewals, modifications,
consolidations, and extensions thereof, and advances thereunder. In order to
confirm such subordination, Tenant shall execute and deliver such instruments
upon commercially reasonable terms, and in the event Tenant fails to do so
within ten (10) business days after written demand therefor, the same, at
Landlord's option, may be treated as a default hereunder, subject to any
applicable notice provisions of Article 13, above. Landlord agrees that it shall
use commercially reasonable efforts to provide Tenant with a written agreement
from the holder(s) of any liens superior to Landlord's and existing as of the
Lease Date wherein such party (i) acknowledges this Lease and Tenant's rights
hereunder, and (ii) agrees that so long as no Event of Default shall occur and
continue, such party shall not disturb the tenancy hereby created (any such
agreement herein called a "Non-Disturbance Agreement "). Tenant shall, within
ten (10) business days of Landlord's written request, subordinate this Lease to
any future lien placed by Landlord upon the Building and/or the land on which
the Building is constructed, provided that the intended lien holder executes and
delivers to Tenant a Non-Disturbance Agreement upon commercially reasonable
terms.

16.02    OTHER AGREED MATTERS

         Tenant will not knowingly do, suffer or permit any act, happening or
occurrence or any condition to occur or remain which may be prohibited under the
terms or provisions of any ground or underlying lease or mortgage to which this
Lease is subject or which will create a default thereunder except that Tenant
shall not be obligated to pay the principal indebtedness or any installment
thereof or interest thereon.

         So long as any such mortgage or lease shall remain a lien on the
Premises, Tenant agrees simultaneously with the giving of any notice to Landlord
which is required to be given by this Lease to give a duplicate copy thereof to
any mortgagee or ground lessor, notice of whose name and address have been given
by written notice to Tenant. Further, Tenant agrees that if Landlord defaults in
the performing of any of its covenants under this Lease and if such default
allows Tenant to cancel or surrender said Lease, the mortgagee or ground lessor
may cure said default with the same effect as if cured by Landlord, and if
necessary, enter upon the Premises for the purpose of curing any such default,
provided that the mortgagee or ground lessor must cure the default within the
time which Landlord is obligated to cure such default in the Lease. The giving
of any such notice to Landlord shall not be properly given under the terms of
this Lease and shall not be of any force and effect until a duplicate copy
thereof shall also have been given to the mortgagee or ground lessor pursuant to
this paragraph.

                                   ARTICLE 17

                                ENTRY TO PREMISES

17.01    ENTRY TO PREMISES BY LANDLORD

         Landlord shall have the right to enter the Premises upon reasonable
prior written notice, at all reasonable times, during normal business hours
(except in the event of an emergency), for the purpose of:

         (a) inspecting the same, and


                                       26
<PAGE>   27

         (b) making any repairs to the Premises and performing any work therein
that may be necessary by reason of Tenant's default under the terms of this
Lease continuing beyond the applicable periods of grace,

         (c) exhibiting the Premises for the purpose of sale, ground lease or
mortgage, and

         (d) exhibiting the Premises to prospective tenants within six (6)
months prior to the expiration of the term hereof.

         Tenant reserves the right to require that, except in the event of an
emergency, Landlord, any of Landlord's Agents and/or any contractors, servicemen
and/or prospective transferees and/or tenant(s) be accompanied by Tenant's
designated representatives at all times during any showing.

                                   ARTICLE 18

                                   NOTICES AND
                                  CERTIFICATES

18.01    NOTICES

         Any notice, statement, certificate, request or demand required or
permitted to be given in this Lease shall be in writing sent by recognized
overnight courier service providing for a receipt upon delivery, or by
registered or certified mail, postage prepaid, return receipt requested,
addressed, as the case may be, to Landlord at the mailing address shown at the
beginning of this Lease, and to Tenant at the address shown at the beginning of
this Lease, with copies of each notice to: Applied Theory Corporation, 1500
Broadway, Suite 300, New York, New York 10036, Attention: Diane Barker; and to
the Premises; or to such other addresses as Landlord or Tenant shall designate
in the manner herein provided. Such notice, statement, certificate, request or
demand shall be deemed to have been given on the date deposited with such
courier or on the date mailed as aforesaid in any post office or branch post
office regularly maintained by the United States Government, except for notice
of change of address or revocation of a prior notice, which shall only be
effective upon receipt.

         At any time or times when Tenant's interest herein shall be vested in
more than one person, firm or corporation, jointly in common or in severally, a
notice given by Landlord to any one such person, firm or corporation shall be
conclusively deemed to have been given to all such persons, firms or
corporations. Any notice by Tenant pursuant to the provisions hereof shall be
void and ineffective unless signed by all such persons, firms and corporations,
unless all such persons, firms and corporations shall have previously given
notice to Landlord, signed by each of them designating and authorizing one or
more of them to give the notice referred to, and such notice shall then be
unrevoked by any notice to Landlord.


                                       27
<PAGE>   28

18.02    CERTIFICATE BY TENANT AND LANDLORD

         Within fifteen (15) days after request by the other party, Landlord and
Tenant from time to time and without charge shall deliver to the requesting
party or to a person, firm or corporation, thereby specified, a duly executed
and acknowledged instrument certifying:

         (a) that this Lease is unmodified and in full force and effect, or if
there has been any modification, that the Lease is in full force and effect, as
modified, and identifying the date of any such modification; and

         (b) whether said party knows or does not know, as the case may be, of
any default by the requesting party in the performance thereby of the terms,
covenants, and conditions of this Lease, and specifying the nature of such
defaults, if any; and

         (c) whether or not there are any then existing set-offs or defenses by
Tenant to the enforcement by Landlord of the terms, covenants and conditions of
this Lease and any modification thereof, and if so, specifying them; and

         (d) the date to which the fixed monthly rent has been paid.

Such certification shall not estop the party delivering the same from thereafter
asserting any existing default of which said party did not have actual knowledge
on the date of execution thereof.

                                   ARTICLE 19

                                   COVENANT OF
                                 QUIET ENJOYMENT

19.01    COVENANT OF QUIET ENJOYMENT

         Tenant, subject to the terms and provisions of this Lease, on payment
of the rent and observing, keeping and performing all the terms and provisions
of this Lease on its part to be observed, kept and performed shall lawfully,
peaceably and quietly have, hold and enjoy the Premises during the term hereof
on and after the Term Commencement Date without hindrance or ejection by
Landlord and any other persons lawfully claiming possession to the Premises, or
portion thereof, subject nevertheless to terms and conditions of this Lease and
to any ground or underlying lease and/or mortgages.

                                   ARTICLE 20

                                    SERVICES

20.01    SERVICES

         (a) During the term of this Lease, Landlord shall furnish to the
Premises electricity sufficient to operate the Premises for their intended
purpose(s), lighting, elevator service, and water to the plumbing fixtures, if
any, twenty-four (24) hours per day, seven (7) days a week,


                                       28
<PAGE>   29

and, heating, ventilating, air conditioning, on Monday through Friday from 8:00
A.M. to 6:00 P.M. and on Saturday from 8:30 A.M. to 1:00 P.M., principal legal
holidays excepted ("Building Hours"). Use of any of these services by Tenant
outside these days and hours could result in an additional charge to Tenant as
provided by the terms of Section 7.02 of this Lease, which charge shall be paid
by Tenant to Landlord, as additional rent, within fifteen (15) days following
the receipt of an invoice. Landlord shall also furnish janitorial services to
the Premises in accordance with the Janitorial Specifications set forth in
Exhibit "G", attached.

         (b) In addition to the obligations as set forth and described in the
Lease, Landlord hereby covenants and warrants to:

         (i) maintain the Building Systems, including, without limitation, their
     availability to the Premises, in good working order and repair;

         (ii) maintain the outside walls, outside windows, roof, foundation and
     other structural portions of the Premises and the Building and the garage
     in good order and repair;

         (iii) cause such of the Common Areas as are exposed to the elements to
     be properly drained and kept reasonably free from ice and snow;

         (iv) maintain the parking lot, parking garage and landscaping (if any)
     of the Outside Common Areas in a good and clean condition and repair;

         (v) maintain adequate facilities such that utility services, including
     water, sewer, electricity, and telephone services, are and shall continue
     to be available to the Building throughout the Lease term, subject,
     however, to the provisions of Section 20.02, below;

         (vi) maintain adequate parking facilities for the Building in
     compliance with municipal requirements;

         (vii) maintain reasonable elevator service to the Premises;

20.02    INTERRUPTION OF SERVICE

         No diminution or abatement of rent or other compensation shall be
claimed or allowed for inconvenience or discomfort arising from the making of
repairs or improvements to the Building or its appurtenances; provided, however
that the same do not materially interfere with Tenant's reasonable access to and
from the Premises, or otherwise interfere in any material way with Tenant's
ability to conduct its normal business operations from the Premises. Except as
hereinafter provided, there shall be no diminution or abatement of rent or any
other compensation for interruption or curtailment of any service or utility
herein expressly or impliedly agreed to be furnished by Landlord when such
interruption or curtailment shall be due to accident, alterations, repairs
desirable or necessary, or to inability or difficulty in securing supplies or
labor, or to some other cause not negligence on the part of Landlord or of any
Landlord Party. No such interruption or curtailment shall be deemed a
constructive eviction. Tenant agrees that Landlord shall not be responsible for
interruption of utility service caused by any utility company or governmental
regulatory agency. Anything contained in the foregoing to the contrary
notwithstanding, if any interruption or curtailment of service, or other
condition of the Premises or any part of the Building


                                       29
<PAGE>   30

or the Building Common Areas or Outside Common Areas shall unreasonably
interfere with Tenant's access to and from the Premises and/or Tenant's normal
business operations at the Premises, and such condition shall continue for more
than three (3) consecutive Business Days, or for more than ten (10)
nonconsecutive Business Days during any thirty (30) day period, all obligation
of Tenant to pay Fixed Monthly Rent, Additional Rent and/or other charges
hereunder shall abate until the services are restored in full and/or the
condition is remedied such that Tenant's access and/or business operations may
resume to normal operations.

                                   ARTICLE 21

                                 CERTAIN RIGHTS
                              RESERVED TO LANDLORD

21.01    CERTAIN RIGHTS RESERVED TO LANDLORD

         Landlord reserves the following rights:

         (a) To name the Building and to change the name or street address of
the Building, provided that the Building shall not be named for a person or
entity whose business is in competition with Tenant;

         (b) To install and maintain a sign or signs on the exterior or interior
of the Building;

         (c) To designate all sources furnishing sign painting, and lettering,
and like services used on the Premises;

         (d) During the last ninety (90) days of the term, if during or prior to
that time Tenant vacates the Premises, upon at least five (5) business days
prior written notice to Tenant, to decorate, remodel, repair, alter or otherwise
prepare the Premises for reoccupancy, including the placing of a notice of
reasonable size on or in the Premises offering said Premises "For Rent" or "For
Lease", all without affecting Tenant's obligation to pay Fixed Monthly Rental
for the Premises, but such entry and work shall be at LANDLORD'S SOLE RISK, and
Landlord hereby acknowledges and agrees that Landlord, by such entry, waives any
and all claim of any kind or nature against Tenant or Tenant's insurance carrier
for any condition of the Premises, Additional Rent accruing after such date,
and/or any injury to person (including death) occurring on, in or about the
Premises; Tenant may require that Landlord acknowledge the foregoing in a signed
writing before permitting Landlord to commence any such work;

         (e) To constantly have pass keys to the Premises;

         (f) At any time in the event of an emergency, or otherwise at
reasonable times upon reasonable prior written notice to Tenant and subject to
all other provisions of this Lease, to take any and all reasonable measures,
including inspections, repairs, alterations, additions and improvements to the
Premises or to the Building, as may be reasonably necessary for the safety,
protection or preservation of the Premises or the Building or the Landlord's
interests, or as may be


                                       30
<PAGE>   31

necessary in the operations or improvement of the Building or in order to comply
with all laws, orders and requirements of governmental or other authority; and

         Nothing in this Lease shall imply any duty on the part of the Landlord
to do work which, under any of the provisions of this Lease Tenant may be
required to perform, and the performance thereof by Landlord shall not
constitute a constructive eviction nor a waiver of Tenant's default in failing
to so perform. In the event Landlord performs or causes any such work to be
performed following appropriate notice to Tenant as may be required by the terms
of this Lease, Tenant shall pay the reasonable and actual cost thereof to
Landlord forthwith as additional rent upon receipt of Landlord's invoice
therefor, including reasonable supporting documentation of all amounts spent. No
exercise by Landlord of any rights provided in this paragraph 21.01 or elsewhere
in this Lease shall entitle Tenant to any damages for inconvenience,
disturbance, loss of business or other damage to Tenant occasioned thereby nor
to any abatement of rent or additional rent, except as may be provided otherwise
by the terms of this Lease.

                                   ARTICLE 22

                            MISCELLANEOUS PROVISIONS

22.01    HOLDOVER

         Should Tenant continue to occupy the Premises after the expiration of
the term hereof or after a forfeiture incurred, whether with or against the
consent of Landlord, such tenancy shall be from month-to-month, and such
month-to-month tenancy shall be under all the terms, covenants and conditions of
this Lease, and at one and one-half (1 and 1/2) times the fixed monthly rent
reserved herein.

22.02    LIMITATION ON PERSONAL LIABILITY

         (a) It is understood and agreed that Tenant shall look solely to the
estate and property of Landlord in the Building, the Outside Common Areas
(including, without limitation, the garage and any adjacent property owned by
Landlord and/or its affiliates, to the extent the same are used in connection
with the Building and/or the Outside Common Areas, the costs of which are
included as part of Operating Costs, together with any "Proceeds", hereinafter
defined), for the satisfaction of Tenant's remedies for the collection of a
judgment (or other judicial process) requiring the payment of money by Landlord
in the event of any default or breach by Landlord with respect to any of the
terms, covenants and conditions of this Lease to be observed and/or performed by
Landlord and any other obligation of Landlord created by or under this Lease and
no other property or assets of Landlord or of its partners, beneficiaries,
co-tenants, shareholders, or principals (as the case may be) shall be subject to
levy, execution or other enforcement procedures. For purposes of this Section
22.02, "Proceeds" shall mean:

         (i) proceeds of sale by Landlord of its interest in the Building, the
     Outside Common Areas (including, without limitation, the garage and any
     adjacent property the costs of which are included as part of Operating
     Costs, hereinafter, "Garage" and "Adjacent Property", respectively), or any
     portions thereof, to the extent such sums are in excess of


                                       31
<PAGE>   32

     sums necessary to discharge or pay-off any third party outstanding loan,
     including reasonable expenses paid by Landlord in connection with the sale;

         (ii) condemnation awards received by Landlord in connection with the
     taking the Building, the Outside Common Areas, the Garage and any Adjacent
     Property (or portions thereof), to the extent said proceeds are made
     available to Landlord by any holder of any outstanding mortgage or other
     lien on such property, and are not used for the repair the Building so
     taken; and

         (iii) insurance proceeds received by Landlord in connection with any
     damage or destruction to the Building, the Outside Common Areas, the Garage
     and any Adjacent Property (or portions thereof), to the extent said
     proceeds are made available to Landlord by any holder of any outstanding
     mortgage or other lien on such property and are not used for the repair or
     restoration of the Building or Property so damaged.

         (b) The term "Landlord," as used in subparagraph 22.02(a) above and
throughout this Lease, so far as covenants and agreements on the part of the
Landlord are concerned, shall be limited to mean and include only the owner or
owners at the time in question of the Building and Lease. Further, in the event
of any transfer or transfers of the title to the said Lease and/or the Building,
upon the express written assumption of all of the obligations of "Landlord"
hereunder by the grantee of such interest (a copy of which must be delivered to
Tenant), Landlord herein named (and in case of any subsequent transfers or
conveyances, the then grantor), including each of its partners, beneficiaries,
co-tenants, shareholders, or principals (as the case may be), shall be
automatically freed and relieved from and after the effective date of such
assumption made in connection with such transfer and conveyance of the accrual
of any further liability as respects the performance of any covenants and
agreements on the part of Landlord. Landlord or the grantor shall turn over to
the grantee all monies and security, if any, then held by Landlord or such
grantor on behalf of Tenant and shall assign to such grantee all right, title
and interest of Landlord or such grantor thereto, it being intended that the
covenants and agreements contained in this Lease on the part of Landlord to be
performed shall, subject as aforesaid, be binding on Landlord, its successors
and assigns.

22.03    NO REPRESENTATIONS BY LANDLORD

         Landlord or Landlord's agents have made no representations or promises
with respect to the Building, the land upon which the Building is erected or the
Premises except as herein expressly set forth in the provisions of this Lease.

22.04    LEASE BINDING

         All covenants of this Lease (other than those regarding the payment of
Fixed Monthly Rent, Additional Rent or other charges) which are binding upon
Tenant shall be construed to be equally applicable to and binding upon Tenant's
agents, employees and others claiming the right to be in the Premises or in the
Building through or under Tenant.

         If more than one individual, firm or corporation shall join as Tenant,
the singular context shall be construed to be plural wherever necessary and the
covenants of Tenant shall be the joint and several obligations of each entity
named as Tenant, and, when the parties named as


                                       32
<PAGE>   33

Tenant are partners, shall be the joint and several obligations of the firm and
of the individual members thereof.

22.05    VAULTS, VAULT SPACE, ETC.

         No vaults, vault space or space not within the property line of the
Building is leased hereunder, anything contained in or indicated on any sketch,
blueprint or plan, or anything contained elsewhere in this Lease to the contrary
notwithstanding. Landlord makes no representations as to the location of the
property line of the Building. All vaults and vault space and all space not
within the property line of the Building, which Tenant may be permitted to use
and/or occupy, is to be used and/or occupied under a revocable license, and if
any such license be revoked, or if the amount of such space be diminished or
required by any Federal, State, Municipal Authority or public utility, Landlord
shall not be subject to any liability nor shall Tenant be entitled to any
compensation or diminution or abatement of rent, nor shall such revocation,
diminution or requisition be deemed constructive or actual eviction. Any fee or
charge of municipal authorities for and attributable to any vault space, or
portion thereof, actually used by Tenant, only, shall be paid by Tenant.

22.06    FAILURE TO GIVE POSSESSION

         If the Building is not in the course of construction, and Landlord is
unable to give possession of the Premises on the Term Commencement Date by
reason of the holding over or retention of possession of any tenant, tenants, or
occupants or for any other reason, or if repairs, improvements or decoration of
the Premises or of the Building are not completed, such inability by Landlord
shall not constitute a default under this Lease but the Term Commencement Date
shall be postponed until such date as such holdover tenant or occupant shall
give up possession of the Premises and the term of this Lease shall be deemed to
commence on such Term Commencement Date as postponed (and the termination date
of the term of the Lease shall be extended by the same period as the Term
Commencement Date is postponed). Anything contained in the foregoing to the
contrary notwithstanding, if Landlord's Work is not Substantially Completed and
possession of the Premises delivered to Tenant by the expiration of one hundred
and twenty (120) days following the later to occur of (i) the Lease Date, and
(ii) Landlord's receipt of Tenant's proposed floor plan for the Premises; and
any delay in Substantial Completion shall not be due to Force Majeure (not to
exceed an aggregate of fifteen (15) business days), nor to any act or omission
of Tenant, Tenant's contractors, agents or employees (collectively, "Tenant
Delay"), then, in such case, Tenant shall receive one (1) day of free Minimum
Rent for each day expiring between the expiration said one hundred and twenty
(120) day period (as may have been extended due to Force Majeure or Tenant
Delay) and the date on which Tenant receives "Landlord's Notice of Substantial
Completion" (defined in Section 2.02(b)). If Landlord's Work is not
Substantially Completed by the expiration of one hundred and eighty (180) days
following the Lease Date, then, until Tenant shall receive Landlord's Notice of
Substantial Completion in accordance with the provisions of Section 2.02, Tenant
shall have the option to terminate upon written notice to Landlord.

22.07    RELOCATION OF TENANT

         INTENTIONALLY DELETED.


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<PAGE>   34

22.08    FORCE MAJEURE

         The period of time during which either party is prevented or delayed,
in the performance or the making of any improvements or repairs or fulfilling
any obligation other than the payment of fixed monthly rent or additional rent
required under this Lease due to unavoidable delays caused by fire, catastrophe,
strikes or labor trouble, civil commotion, Acts of God or the public enemy,
governmental prohibitions or regulation or inability to obtain materials by
reason thereof, or other causes beyond such party's reasonable control, shall be
added to such party's time for performance thereof, and such party shall have no
liability by reason thereof, subject to the express terms of this Lease.

22.09    ATTORNMENT BY TENANT

         If at any time during the term of this Lease Landlord hereunder shall
be the holder of a leasehold estate covering premises which include the Premises
and if such leasehold estate shall be cancelled or otherwise terminated prior to
the expiration date thereof and prior to the expiration of the term of this
Lease or in the event of the surrender thereof whether voluntary, involuntary or
by operation of law, Tenant shall make full and complete attornment to the
lessor of such leasehold estate for the balance of the term of this Lease upon
the same covenants and conditions as are contained herein upon the written
assumption of the respective lessor of all of the obligations of "Landlord"
hereunder (a copy of which must be provided to Tenant), so as to establish
direct privity between such lessor and Tenant and with the same force and effect
as though this Lease was made directly from such lessor to the Tenant. As of the
effective date of the assumption, Tenant shall make all rent payments thereafter
directly to such lessor, and Landlord waives any right to recover the same from
Tenant. In the event any proceedings are brought for the foreclosure of, or in
the event of conveyance by deed in lieu of foreclosure of, or in the event of
exercises of the power of sale under any mortgage or deed of trust made by
Landlord covering the leases Premises, or in the event Landlord sells, conveys
or otherwise transfers its interest in the Building or any portion thereof
containing the leased Premises, upon Tenant's receipt of evidence that the
respective transferee has assumed all of the obligations of "Landlord" under
this Lease, Tenant shall attorn to and hereby covenants and agrees to execute an
instrument in writing reasonably satisfactory to the new owner whereby Tenant
attorns to such successor in interest and recognizes such successor as the
Landlord under this Lease.

22.10    LANDLORD MAY PAY TENANT'S OBLIGATIONS

         All costs and expenses which Tenant assumes or agrees to pay under the
provisions of this Lease shall at Landlord's election be treated as additional
rent, and in the event of nonpayment, subject to any applicable period of notice
or cure, Landlord shall have all the rights and remedies herein provided for in
case of nonpayment of rent or of a breach of covenant. If Tenant shall default
in making any payment required to be made by Tenant (other than the payment of
rent as provided by Article 3 above), said failure continuing for more than ten
(10) days following Tenant's receipt of written notice thereof from Landlord, or
shall default in performing any term, covenant or condition of this Lease on the
part of Tenant to be performed which shall involve the expenditure of money by
Tenant, continuing for more than thirty (30) days following Tenant's receipt of
written notice thereof from Landlord, then, Landlord at Landlord's option may,
but shall not be obligated to, make such payment or, on behalf of Tenant, expend
such sum as may


                                       34
<PAGE>   35

be reasonably necessary to perform and fulfill such term, covenant or condition,
and any and all sums so expended by Landlord, with interest thereon at the
"Lease Rate" defined in Section 3.03, above, from the date of such expenditure,
shall be and be deemed to be additional rent, in addition to the rent provided
in Article 3 and shall be repaid by Tenant to Landlord on written demand
(including reasonable supporting documentation of all amounts), but no such
payment or expenditures by Landlord shall be deemed a waiver of Tenant's default
nor shall it affect any other remedy of Landlord by reason of such default.

22.11    DEFINITION OF "TENANT'S ALLOCABLE SHARE"

         (a) For purposes of determining Tenant's Allocable Share herein, except
as provided in subparagraph(b) below, such share shall be the percentage
resulting from dividing the number of square feet set forth in Paragraph 1.01
above, by the total number of square feet leaseable in the Building as of the
beginning of each lease year or partial lease year. As of the Lease Date, the
Building contains 108,000 leaseable square feet of premises.

         (b) For purposes of determining Tenant's Allocable Share for Paragraph
3.02, such share shall be the percentage resulting from dividing the number of
square feet set forth in Paragraph 1.01 above, by the total number of square
feet leaseable in the Building as of the beginning of each lease year or partial
lease year.

22.12    DIVISION OF COST

         Landlord may construct and operate other office buildings located
adjacent to the Building and Tenant agrees that Landlord may treat the Building
and the adjacent buildings as one unit for the purpose of purchasing and
providing energy and water, insurance and common services included within the
definition of Operating Costs. Landlord shall equitably allocate such costs
between the Building and the adjacent building(s) for each lease year or partial
lease year.

22.13    EFFECT OF CAPTIONS

         The captions or legends on this Lease are inserted only for convenient
reference or identification of the particular paragraphs. They are in no way
intended to describe, interpret, define or limit the scope, extent or intent of
this Lease, or any paragraph or provision thereof.

22.14    AUTHORIZED TO DO BUSINESS IN NEW YORK

         Landlord and Tenant represent and covenant to the other that it is and
throughout the term of this Lease shall be authorized to do business in the
State of New York. Landlord further represents and warrants that it is the owner
of the Building and the Outside Common Areas as of the Lease Date and that it
has full power and authority to enter into to this Lease and to perform all of
the obligations of "Landlord" hereunder.

22.15    EXECUTION IN COUNTERPARTS

         This Lease may be executed in one or more counterparts, any one or all
of which shall constitute but one agreement.


                                       35
<PAGE>   36

22.16    MEMORANDUM OF LEASE

         This Lease may not be recorded. Both parties agree that, if requested
by the other party, it shall execute a Memorandum of Lease in recordable form
pursuant to Section 291-c of the Real Property Law of the State of New York, the
recording of which shall be paid for by the requesting party.

22.17    LAW GOVERNING EFFECT AND GENDER

         This Lease shall be construed in accordance with the laws of the State
of New York and shall be binding upon the parties hereto and their respective
legal representatives, successors and assigns except as expressly provided
otherwise. Use of the neuter gender shall be deemed to include the masculine or
feminine, as the sense requires. Any reference to successors and assigns of
Tenant is not intended to constitute a consent to any assignment by Tenant but
has reference only to those instances in which Landlord may later give consent
to a particular assignment as required by the provisions of Article 15 hereof.

22.18    AMENDMENTS

         The parties hereto mutually agree that so long as a mortgage or any
extension thereof shall be a lien upon the Premises, they will not reduce the
rents from that provided for in this Lease, provide for payments of rents prior
to the time herein provided for, nor terminate said Lease prior to the end of
the term, except as otherwise provided in this Lease or otherwise permitted by
the provisions of the mortgage, without first obtaining the consent of the
mortgagee in writing, and that any such proposed modification or termination
without said mortgagee's consent shall be void as against said mortgagee.

22.19    COMPLETE AGREEMENT

         This Lease (including the Addendum and Exhibits hereto) contains and
embraces the entire agreement between the parties hereto and it or any part of
it may not be changed, altered, modified, limited, terminated, or extended
orally or by any agreement between the parties unless such agreement be
expressed in writing, signed and acknowledged by the parties hereto, their legal
representative, successors or assigns, except as may be expressly otherwise
provided herein.

22.20    INVALIDITY OF PARTICULAR PROVISIONS

         If any term or provision of this Lease or the application thereof to
any person or circumstances shall to any extent, be invalid or unenforceable,
the remainder of this Lease, or the application of such term or provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby and each term and provision of this
Lease shall be valid and be enforced to the fullest extent permitted by law.

22.21    EXECUTION OF LEASE BY LANDLORD

         The submission of this document for examination and negotiation does
not constitute an offer to lease, or a reservation of, or option for, the
Premises and this document becomes effective and binding only upon the execution
and delivery hereof by Landlord and by


                                       36
<PAGE>   37

Tenant. All negotiations, considerations, representations and understandings
between Landlord and Tenant are incorporated herein and may be modified or
altered only by agreement in writing between Landlord and Tenant, and no act or
omission of any employee or other agent of Landlord shall alter, change or
modify any of the provisions hereof.

22.22    RELATIONSHIP OF THE PARTIES

         Nothing contained herein shall be deemed or construed by the parties
hereto nor by any third party as creating the relationship of principal and
agent or of partnership or of joint venture between the parties hereto, it being
understood and agreed that neither the method of computation of rent nor any
other provision herein contained, nor any acts of the parties hereto, shall be
deemed to create any relationship between the parties hereto other than Landlord
and Tenant.

22.23    GUARANTY OF LEASE

         INTENTIONALLY DELETED.

22.24    OTHER PROVISIONS

         There is attached hereto and incorporated herein an addendum containing
additional provisions to this Lease ("Addendum"), said Addendum consisting of
four (4) pages, containing Paragraphs (I) through (XVIII). Should there be or
arise any conflict between the foregoing provisions of the Lease and the
Addendum, the provisions of the Addendum shall in all instances govern and
control.


                                       37

<PAGE>   38

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


LANDLORD:                              TENANT:
224 HARRISON ASSOCIATES, LLC           APPLIED THEORY CORPORATION


By: /s/ John P. Funiciello             By: /s/ Angelo A. Gencarelli III
    --------------------------             ------------------------------------
Printed Name:  John P. Funiciello      Printed Name: Angelo A. Gencarelli III
Title:  Member                         Title:  Sr. Director of Accounting &
                                               Controller


                           (Acknowledgement of TENANT)


STATE OF NEW YORK}
                                      SS.:
COUNTY OF ONONDAGA}

         On this 17th day of September, 1999, before me personally came Angelo
A. Gencarelli III, to me personally known, who, being by me duly sworn, did
depose and say that (s)he resides at 4007 Arrowhead Lane, Liverpool, New York,
that (s)he is the Senior Director of Accounting and Controller of APPLIED THEORY
CORPORATION, the corporation described in, and which executed the within Lease
as "Tenant"; and who further acknowledged to me that (s)he executed said Lease
for, on behalf and in the name of said corporation by and with the authorization
thereof.

                                      /s/ Margaret A. Smallman
                                      ---------------------------------
                                      NOTARY PUBLIC


                          (Acknowledgement of LANDLORD)


STATE OF NEW YORK}
                     SS.:
COUNTY OF ONONDAGA}

         On this 17th day of September, 1999, before me personally came John P.
Funiciello, to me personally known, who, being by me duly sworn, did depose and
say that (s)he resides at 3184 Olive Drive, Baldwinsville, New York, that (s)he
is one (1) of the Members of 224 HARRISON ASSOCIATES, LLC, the entity named and
described in, and which executed, the within Lease as "Landlord"; and who
further acknowledged to me that (s)he executed said Lease for, on behalf and in
the name of said entity by and with the authorization thereof.


                                       /s/ Margaret A. Smallman
                                       --------------------------------
                                       NOTARY PUBLIC


                                       38