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                                                                   EXHIBIT 10.35

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                                                     Agreement No. BSG-9912-294


                         SPRINT CUSTOM SERVICE AGREEMENT

This Custom Service Agreement ("Agreement") between Sprint Communications
Company L.P. ("Sprint"), and AppliedTheory Corporation, formerly known as
AppliedTheory Communications, Inc. ("AppliedTheory", "ATC" or "Customer")
establishes the terms and conditions governing Sprint's provision of
telecommunications products and services ("Services" and "Equipment") to
Customer. This Agreement supersedes the Agreement between the parties dated
August 11, 1994.

Sprint is a common carrier providing telecommunications services pursuant to
tariffs on file with the Federal Communications Commission ("FCC") and state
regulatory commissions ("Tariff(s)"). Sprint provides enhanced voice and data
telecommunications services pursuant to Sprint's standard terms and conditions
for non-tariffed services.

In the event of a conflict between and among the provisions and attachments of
this Agreement, the inconsistency will be resolved by giving precedence in the
following order:

1.    The Terms and Conditions of this Agreement, Articles 1 - 24
2.    Attachment E: Sprint's Acceptable Conduct Policy for Sprint IP Products
      and Services
3.    Attachment A: Price Schedule dated December 30, 1999
4.    Attachment B: Revised Statement of Work dated December 30, 1999
5.    Attachment C: Sprint IP Services Standard Terms and Conditions (Rev.
      01.99) and Terms and Conditions for Internet and Intranet Dedicated and
      Dial Services (Rev. 01.99)
6.    Attachment D: Sprint Terms and Conditions for Internet Service Providers
7.    Sprint Internet Services, Customer Reference Guide (Ver. 1.0)
8.    Attachment F: Domestic Sprint Internet and Intranet IP Products and
      Services Port Availability Service Level Agreement - Performance Guarantee
      (Rev. 10/23/98) and Network Delay Service Level Agreement - Performance
      Guarantee (Rev. 10/23/98)
9.    Attachment G: Sprint Customer Premise Equipment Standard Terms and
      Conditions - Maintenance Only
10.   Applicable Sprint Tariffs
11.   Order(s) for Data Communication Products and Services Form (Appendix 1)

1.    TERM

      1.1      AGREEMENT TERM. The term of this Agreement ("Agreement Term") and
               the period during which Customer may place orders, as accepted by
               Sprint (as defined in 9.2 below), under this Agreement will begin
               on November 1, 1999 and will expire on October 31, 2002, unless
               extended by mutual agreement of both parties (except as outlined
               in 6.2C below). Upon expiration or other termination of this
               Agreement, Sprint will provide Services to Customer, subject to
               Tariffs or Sprint's standard terms and conditions for
               non-tariffed services, at then current Tariff or standard list
               prices.

      1.2      ORDER TERM. The term for each order ("Order Term") for the
               Services will be stated on each Order and will begin on the first
               day of the month following the date the Services are installed
               and accepted by Customer, in accordance with Clause 4, Acceptance
               Criteria, below. The terms, conditions and prices established
               under this Agreement will govern all Orders in force and effect
               beyond the termination or expiration of this Agreement.

2.    RATES AND DISCOUNTS

      2.1.     SERVICES' PRICING. Customer will receive the rates and discounts
               ("Discounts") on Services and Equipment in Attachment A, subject
               to the terms of Sprint's Tariffs and this Agreement.

      2.2.     FIXED RATES. Fixed rates will remain fixed for the Agreement
               Term. Percentage Discounts will remain fixed for the Agreement
               Term, but Sprint may modify the underlying tariff rate (or list
               price for non-tariffed services) against which Sprint applies
               Discounts.

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3.    PAYMENT TERMS

      3.1.     PAYMENT DATE. Customer will fully pay Sprint's monthly
               invoice in U.S. currency within 45 days of the invoice date.
               Customer will pay any applicable sales, use, excise and like
               taxes that are stated separately on each invoice.

      3.2.     INTEREST CHARGES. If Customer fails to pay all valid charges
               for Services within 45 days of the invoice date, Sprint may
               charge Customer interest on those charges equal to the lesser of
               1 1/2% per month or the maximum rate allowed by law. If Customer
               fails to pay for Services six (6) months in arrears, Sprint
               reserves the right, in addition to other remedies, to discontinue
               Discounts until such failure to pay for Services is cured by
               Customer.

      3.3      INVOICING. Sprint will begin charging Customer for Services
               on the date they are installed by Sprint and accepted by
               Customer, in accordance with Clause 4, Acceptance Criteria,
               below. Sprint will prorate fixed recurring charges for partial
               months on a 30-day basis.

      3.4      DISPUTED INVOICE CHARGES. Customer may in good faith withhold
               payment of any disputed charges. But Customer will pay all
               undisputed charges. A charge is not "disputed" until Customer
               provides Sprint with written explanation of the disputed charge.
               Customer will cooperate with Sprint, in good faith to resolve any
               disputed charge expeditiously.

      3.5      AUDIT PROVISION. Customer has the right to request copies of
               all backup documentation from Sprint for items invoiced for the
               purposes of verifying costs.


4. ACCEPTANCE CRITERIA

If the required circuit(s) and hardware are installed by Sprint, the required
software is installed and configured by Sprint, and the Service is capable of
passing traffic, the Services will be deemed accepted by Customer.

5. DELIVERY AND RETURN

      5.1   DELIVERY.

            A.    Delivery Date. All delivery dates are approximate and are
                  based on current lead-times. But Sprint will use commercially
                  reasonable efforts to deliver, or cause to have delivered, the
                  Services by the delivery date specified in the Order.

            B.    Customer-Requested Delay.

                  (1)   Customer may request a delay in the delivery date set
                        forth in the Order ("Original Delivery Date") if: (a)
                        the delay does not exceed 30 calendar days from the
                        Original Delivery Date; (b) Sprint receives Customer's
                        written request for the delay at least 10 days before
                        the Original Delivery Date; and (c) Customer pays any
                        additional charges, including thiry party charges
                        incurred by Sprint, resulting from the delay.

                  (2)   If the Customer-requested delay is more than 30 calendar
                        days from the Original Delivery Date, as approved by
                        Sprint, Customer will pay Sprint all charges imposed on
                        Sprint by third parties, provided that such third
                        parties were promptly notified by Sprint.

                  (3)   If Sprint receives Customer's written notice to cancel
                        the affected Services on or before the 30th calendar day
                        from the Original Delivery Date, Customer will pay
                        Sprint any cancellation charges imposed on Sprint by
                        third parties, provided that such third parties were
                        promptly notified by Sprint.


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      5.2      RETURN OF EQUIPMENT. No Equipment will be returned without prior
               approval and specific shipping instructions from Sprint. In
               addition to all other applicable charges, Customer will pay
               Sprint a restock charge upon the return of Equipment if: (a) the
               return is due to a Customer ordering error; (b) the product has
               been damaged while in Customer's possession; (c) the return is
               due to Customer's late cancellation of an Order; or (d) a restock
               charge is assessed by the manufacturer.

6.    MINIMUM SERVICE COMMITMENTS

               6.1. FIRST MINIMUM SERVICE COMMITMENT. Customer's First Minimum
               Service Commitment ("First MSC") is as follows:

               A.    Minimum Commitment for Term. Subject to the provisions of
                     Section 19 below, Customer's Minimum Commitment ("MC") for
                     the Term is $9,000,000 in MSC Contributory Services, as
                     defined in 6.3 below.

               B.    If Customer fails to meet its MC at the end of the
                     three-year Agreement Term, unless caused by Sprint's
                     material failure to perform under this Agreement or as a
                     result of a Force Majeure event, Customer will pay Sprint,
                     in addition to all other applicable charges for Services
                     rendered, the difference between the MC and Customer's
                     actual MSC Contributory Services Usage Charges for the
                     period in which Customer does not achieve the MC ("First
                     Shortfall Liability").

      6.2      SECOND MINIMUM SERVICE COMMITMENT.  Customer's Second Minimum
               Service Commitment ("Second MSC") is as follows:

               A.    Minimum Annual Commitment. Subject to the provisions of
                     Section 19 below, during each "Contract Year" (defined as
                     the twelve (12) month period commencing on the Commencement
                     Date and each anniversary thereof) of this Agreement,
                     Customer agrees to purchase a minimum of $1,000,000
                     ("Minimum Annual Commitment" or "MAC") in MSC Contributory
                     Services, as defined in 6.3 below.

               B.    Second Shortfall Liability. If Customer fails to meet its
                     MAC, unless caused by Sprint's material failure to perform
                     under this Agreement or as a result of a Force Majeure
                     event, Customer will pay Sprint, in addition to all other
                     applicable charges, the difference between the MAC and
                     Customer's actual MSC Contributory Services Usage Charges
                     for each period in which Customer does not achieve the MAC
                     ("Second Shortfall Liability").

               C. MAC Carry-Forward.

                     1.            Except as specified in Subsection 6.2.C.2
                           below, if Customer does not satisfy its MAC, Customer
                           may, instead of paying the entire Second Shortfall
                           Liability, add a portion of the Second Shortfall
                           Liability, not to exceed 10% of that MAC, to the MAC
                           for the next Contract Year. Customer will pay to
                           Sprint the portion of the Second Shortfall Liability
                           that is not carried forward to the next Contract
                           Year. If Customer does not satisfy its adjusted MAC
                           in this Agreement's last Contract Year, then, at the
                           Customer's option, either: 1) Customer will pay the
                           unsatisfied portion of the re-adjusted MAC, or 2) the
                           last Contract Year may be extended for 12 months. If
                           Customer does not satisfy its adjusted MAC during the
                           last Contract Year as extended, Customer will pay
                           Sprint, in addition to all other charges, the
                           difference between its adjusted MAC and Customer's
                           MSC Contributory Services Usage Charges in the last
                           Contract Year as extended.

                     2.    Customer will not be eligible to add a portion of any
                           Second Shortfall Liability to the MAC for the next
                           Contract Year as set forth above if Customer has
                           ceased to utilize the Services to a material extent
                           (unless due to Sprint's material breach). For purpose
                           of this Subsection 6.2.C.2, Customer will have ceased
                           to use the Sprint Services to a material extent if
                           either: (a) the average monthly MSC Contributory
                           Services Usage Charges over the previous twelve-month
                           period, multiplied by 12, is less than 70% of the
                           MAC.

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      6.3      MSC CONTRIBUTORY SERVICES. The Services contributing to
               Customer's MSC ("MSC Contributory Services") are: Backbone
               Private Lines; Egress Ports; Backbone Engineering Consulting;
               Backbone Management; Backbone Router Initialization and Upgrades
               - Software; Backbone Router Installation and Upgrades - Hardware;
               Installation CPE and Software; Customer Router Management;
               Customer DNS and News Services Usage Charges, calculated after
               all available discounts. "Usage Charges" are the variable
               recurring charges or fixed monthly recurring charge for the
               Services. Except as expressly provided in this Agreement, Usage
               Charges excludes taxes, interest, surcharges, access line
               charges, access facilities charges, other charges associated with
               access, fixed recurring charges (other than specified
               interexchange circuit charges), feature charges, operator service
               surcharges, directory assistance charges, installation charges,
               account charges, set up fees, report charges, and other
               non-recurring charges.

7.    REGULATORY PROGRAMS

      Sprint may impose additional charges on Customer to recover amounts Sprint
      is required by regulatory or other governmental authorities to collect on
      behalf of or pay to others in support of statutory or regulatory programs.
      Examples of these programs include, but are not limited to, the Universal
      Service Fund, the Presubscribed Interexchange Carrier Charge, and
      compensation to payphone service providers for use of their payphones to
      access Sprint's Service.

8.    ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO SERVICES

      Additional terms and conditions for Services are contained in ATTACHMENTS
      B, C, D, E, F AND G to this Agreement.

9.    ORDERS

      9.1. ORDERING PROCEDURES. Customer will order Services pursuant to
      Sprint's standard ordering procedures, subject to Sprint's acceptance,
      that may include signing Sprint's standard Order for Data Communication
      Products and Services form(s) or other applicable order forms designated
      by Sprint ("Orders"). Such applicable forms are included in Appendix 1 to
      this Agreement.

      9.2 SPRINT ORDER ACCEPTANCE. Sprint agrees to provide Customer, subject to
      availability of facilities, the Products and Services set forth in this
      Agreement, provided such Orders are accepted by Sprint (which acceptance
      will not be unreasonably withheld), as evidenced by the execution of the
      Order by both parties. Should an Order be rejected due to the availability
      of facilities or other business reason, Sprint will, upon Customer's
      written request, provide Customer with a technical or business description
      of such rejection. Should the rejection be due to the prior assignment of
      such facilities to another customer, Sprint will accept Customer's Order
      and provision such Order's Products and Services as soon as facilities
      become available. In the event an accepted Order in found to be invalid
      and/or incomplete, both Sprint and Customer may consider such Order null
      and void until the deficiency is corrected.

10.   CUSTOMER RESPONSIBILITIES

      10.1.    PREPARATION FOR SERVICES. Customer will:

               A.    at its own expense, prepare its site(s) to comply with
                     Sprint's installation and maintenance specifications;

               B.    pay Sprint any applicable charges to relocate any installed
                     Services, to the extent such relocation is necessary to
                     provide such Services;

               C.    provide Sprint and its suppliers reasonable access to its
                     premises to perform any required acts; and

               D.    be responsible for cabling that connects equipment not
                     provided by Sprint to Services.

      10.2.    USE OF SERVICES.

               A.    Customer will properly use Services and will not, nor will
                     it permit or assist others to, use Services for any purpose
                     other than their intended purpose, fail to maintain a
                     suitable environment according to the manufacturer's

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                     specifications, or tamper with Services. If Customer fails
                     to comply with this Section, Customer will release Sprint
                     from all liabilities or obligations (including any warranty
                     or indemnity obligation) to Customer under this Agreement
                     and Customer will pay Sprint all costs or damages Sprint
                     incurs.

               B.    Customer will not knowingly permit or assist others to
                     abuse or fraudulently use Services, including, but not
                     limited to, unauthorized or attempted access, alteration,
                     or destruction of another Sprint customer's information, or
                     using Services that cause interference with another
                     customer's or authorized user's use of the Sprint network.
                     If Customer fails to comply with this Section, Sprint may
                     suspend its performance or terminate Order(s) with no
                     further obligation to Customer, if Customer fails within
                     ten (10) days after written notice by Sprint to cure
                     non-compliance to this Section. Notwithstanding anything in
                     this Section, if Customer's failure to comply with this
                     Section adversely affects the performance of Sprint's
                     network, Sprint may take such corrective action, as it
                     deems appropriate, without prior notice to Customer.

11.   CUSTOMER-PROVIDED HARDWARE OR SOFTWARE

      11.1.    CUSTOMER-PROVIDED HARDWARE OR SOFTWARE. Customer will install,
               operate, and maintain any non-Sprint provided hardware or
               software ("Customer-provided"). Sprint is not responsible for the
               information transmitted or received on Customer-provided hardware
               or software. If Customer provides its own router to interface
               with the Services, then Customer is fully responsible for the
               installation, maintenance, and configuration of such
               Customer-provided router, however, Sprint will have the right, in
               cooperation with Customer, to set the initial configuration for
               the router interface into the Services.

      11.2.    SERVICE IMPAIRMENT. Customer will ensure that Customer-provided
               hardware or software is compatible with Services, except if such
               hardware and software is based upon specifications provided by
               Sprint. If Customer-provided hardware or software, which does not
               comply with Sprint specifications, impairs Customer's use of
               Services, Customer will continue to pay Sprint for Services. Upon
               notice from Sprint that the hardware or software not provided by
               Sprint is causing or is likely to cause hazard, interference, or
               service obstruction Customer will eliminate such hazard,
               interference, or service obstruction. Sprint reserves the right
               to disconnect the Services until such hazard, interference, or
               service obstruction is corrected. If requested by Customer,
               Sprint may, at its then-current rates, troubleshoot difficulties
               caused by hardware or software not provided by Sprint.

      11.3     EQUIPMENT ALTERATION.  Customer is responsible for making any
               alteration or attachment ("Equipment Alteration") to Equipment
               for its use, and for the results of the Equipment Alteration.

      11.4     REPLACEMENT OF CUSTOMER-PROVIDED HARDWARE OR SOFTWARE. At
               Customer's request, Sprint will replace Customer-provided
               hardware or software (except for Equipment Alteration) when those
               parts are directly interchangeable with Sprint maintenance parts.
               Those parts will be replaced at Sprint's then-current public list
               prices.

      11.5     SERVICE CHANGES. Sprint is not liable if any changes in Services
               cause Customer-provided hardware or software to become obsolete,
               require alteration, or affect performance of the
               Customer-provided hardware or software.

      11.6     ROUTERS.  Customer may provide its own routers if Sprint gives
               advance written approval for those routers (including associated
               software), which shall not be unreasonably withheld or delayed.


12.   PERSONAL INJURY AND PROPERTY DAMAGE

      Each party will indemnify the other party, its directors, employees,
      agents and their successors against all claims, damages or liabilities,
      including costs and reasonable attorneys' fees, for claims that arise
      directly from performance of this Agreement made for personal injury,
      death, or damage to personal property resulting from the negligent or
      willful misconduct, errors, or omissions of the indemnifying party or its
      subcontractors, directors, employees or agents. If the claim of a party's
      employee is covered under applicable workers' compensation laws, that
      claim will not be indemnified under this Agreement.

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13.   THIRD PARTY CLAIMS

      Customer will indemnify Sprint against all claims, damages, or
      liabilities, including reasonable attorneys' fees, third party claims for
      libel, slander, invasion of privacy, or private record or data invasion or
      alteration arising from the use of the Services, unless such claims result
      from any action or inaction of Sprint or from any service provided by
      Sprint pursuant to this Agreement.

14.   LIMITATIONS OF LIABILITY

      14.1.    REMEDIES. Customer's exclusive remedies are those in Sprint's
               Tariffs, Sprint's standard terms and conditions for non-tariffed
               services, and this Agreement.

      14.2.    DIRECT DAMAGES. Sprint's entire liability for direct and
               liquidated damages caused by its failure to perform its
               obligations under this Agreement will not exceed monthly charges
               paid by Customer for Products and Services in the most recent
               preceding twelve (12) month period, excluding Service Credits.
               Sprint is not liable for any incidental damage to Customer's
               premises for Services installation. This limitation of liability
               will not apply to claims under Sections 12, 13 or 15.

      14.3.    CONSEQUENTIAL DAMAGES. NEITHER PARTY WILL BE LIABLE FOR ANY
               CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES FOR ANY CAUSE OF
               ACTION, WHETHER IN CONTRACT OR TORT. Consequential, incidental,
               and indirect damages include, but are not limited to, lost
               profits, lost revenues, and loss of business opportunity, whether
               or not the other party was aware or should have been aware of the
               possibility of these damages.

      14.4.    DISCLAIMER. THE WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
               PARTICULAR PURPOSE, WARRANTIES OF NON-INFRINGEMENT, AND ALL OTHER
               WARRANTIES, EXPRESS OR IMPLIED, NOT EXPLICITLY STATED IN THIS
               AGREEMENT ARE EXCLUDED FROM THE SERVICES AND THIS AGREEMENT.

      14.5.    UNAUTHORIZED ACCESS. Sprint is not liable in contract or tort for
               unauthorized access by an individual or entity to Customer's
               transmission facilities or Customer premise equipment, or for
               unauthorized access to, or alteration, theft, or destruction of
               Customer's data files, programs or other information through
               accident, wrongful means or any other cause, unless such
               unauthorized access is caused by the gross negligence of Sprint.

      14.6.    SERVICES ON CUSTOMER PREMISES. Customer is liable for all damages
               to Services located on Customer's premises excluding reasonable
               wear and tear, and Sprint-caused damages. After an Order or this
               Agreement expires or terminates, Customer will surrender to
               Sprint any Sprint-owned property.

15.   PROPRIETARY RIGHTS

      15.1.    THIRD PARTY CLAIMS. If Customer notifies Sprint promptly in
               writing of a third party claim, and gives Sprint full and
               complete authority, information and assistance (at Sprint's
               expense) for the claim's defense and settlement, and if Customer
               or its agents do not by any act (including any admission or
               acknowledgement) materially impair or compromise a claim's
               defense, Sprint will defend any third party claim, and pay all
               court-awarded damages or out of court settlements agreed to by
               Sprint, brought against Customer based on an allegation that
               Sprint-provided Services or Customer's use of the Services as
               provided by Sprint infringe any copyright, trade-secret, or
               patent, protected under United States law. For any third party
               claims that Sprint receives, or to minimize the potential for a
               claim, Sprint may at its option and expense either (1) procure
               the right for Customer to continue using the Services; (2)
               replace or modify the Services with comparable Services; or (3)
               terminate the Services with a pro-rata refund of all monies paid
               in advance by Customer.

      15.2.    PATENT INDEMNIFICATION. Customer will indemnify Sprint against
               all claims, damages and liabilities for claims for patent or
               copyright infringement from the use of Customer-provided
               hardware or software.

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16.   PROPERTY RIGHTS PROTECTION

      16.1.    LICENSE.

               A.    Sprint grants Customer a non-exclusive and non-transferable
                     license to use Sprint-provided software, including any
                     related documentation, solely to enable Customer to use the
                     Services for its own internal operation. Customer, as
                     licensee, is granted no rights to use software on behalf of
                     others, except incidental where such use is necessary to
                     permit Customer to use Services, and Sprint grants no
                     rights for time share or service bureau activities.

               B.    Sprint grants no rights to Customer to any source code and
                     Customer will not reverse engineer, decompile, modify,
                     enhance, copy or prepare any derivative works from the
                     Sprint-provided software. Sprint grants no licenses to
                     modify the Services or software, or combine the Services or
                     software with any other services not provided by Sprint.

               C.    Customer will keep a current record of the location of any
                     Sprint-provided software and Customer will return the
                     software to Sprint when Customer ceases using the software,
                     or no later than 15 days after termination of Services for
                     any reason. If Sprint authorizes in writing the making of
                     any software copies, the copies must reproduce the
                     copyright or any other proprietary legends appearing on the
                     original copy.

      16.2.    TITLE.

               A.    Sprint-Provided Software or Equipment. Sprint or its
                     suppliers will retain title and property rights to
                     Sprint-Provided software and equipment, whether or not they
                     are embedded or attached to realty. Customer neither owns
                     nor will it acquire any claim or right of ownership to:

                     1.    Sprint-provided equipment not purchased by Customer;

                     2.    software (including the original media and all
                           subsequent copies of the software, regardless of the
                           media's form) and associated documentation (including
                           copies);

                     3.    any patents, copyrights, trademarks, or other
                           intellectual property related to Section 14.1; or

                     4.    IP addresses assigned to Customer, except Class C
                           address 169.130 and Autonomous System Number 1785,
                           which are in the process of being transferred to
                           Customer. The Customer will assume all responsibility
                           for acquiring and maintaining IP address from the
                           assigning authority.

               B.    Title to Customer-Purchased Equipment. Sprint will pass
                     title to purchased Equipment to Customer upon delivery.
                     Sprint will retain a security interest in
                     Customer-purchased Equipment until the Equipment is paid
                     for in full. Sprint may require that plates or markings be
                     affixed to specific Equipment to: (a) indicate Sprint's
                     ownership interest in the Equipment until Sprint receives
                     full payment of the purchase price; and (b) identify the
                     specific Equipment on which Sprint will provide Maintenance
                     Service.

      16.3.    TRADE SECRET PROTECTION. Sprint Services are valuable trade
               secrets of Sprint or its suppliers. Customer will protect any
               software it uses that is provided with or included in Services.
               Customer will not examine, copy, alter, reverse engineer or
               misuse the software.

      16.4     DAMAGES. Sprint will pass risk of loss or damage to equipment to
               Customer upon delivery and inspection. Sprint will pass title to
               purchased equipment to Customer upon delivery. Sprint will retain
               a security interest in purchased equipment until the equipment is
               paid for in full.

17.   ALLOWANCE FOR SERVICE INTERRUPTIONS (SERVICE CREDITS)

      17.1     Sprint will provide Services to Customer that meet applicable
               service level agreements ("SLAs"). Customer will be entitled to
               the SLA's exclusive remedies in lieu of other remedies (other
               than as provided under Section 19. 1D), if the Services fail to
               meet the performance guarantees outlined in Attachment F,
               Domestic Sprint Internet and Intranet IP Products and Services
               Port Availability Service Level Agreement - Performance
               Guarantee (Rev. 10/23/98) and Network Delay Service Level
               Agreement - Performance Guarantee (Rev. 10/23/98). Customer
               shall not receive Service Credit(s) if an interruption is (a)
               caused by the negligence or willful misconduct of

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            Customer or others authorized by Customer to use the Services
            provided by Sprint: (b) due to failure of power, or any problem of
            any type occurring at the Customer's side of the Service
            Demarcation; (c) caused by the failure of access to Customer's
            network, unless such failure is solely caused by Sprint; (d) a
            result of scheduled maintenance, or (e) due to any cause beyond
            Sprint's control.

      17.2  If Sprint's Standard Service Level Agreements for those Services
            covered by the SLAs in Attachment F are or become more favorable
            than the SLAs in Attachment F, Sprint will apply the Standard
            Service Level Agreements to those applicable Services.


18.   TRANSITION

      Upon execution of this Agreement, the parties will begin to transition the
      network and services procured under the Agreement dated August 11, 1994.
      Sprint acknowledges that Customer has met all commitments required under
      the 9/11/94 Agreement, including minimum revenue guarantees, and will not
      assess any termination penalties, except for third party charges imposed
      on Sprint, which may be associated with early termination of the 8/11/94
      Agreement, disconnection of any circuits, leases or other services and
      products under the Agreement.

19.   TERMINATION

      19.1. SERVICE ELEMENT TERMINATION.

           A. If Customer terminates any Order before the end of the Order Term,
              Sprint may charge Customer the Termination Charges as stated
              below.

              1. Customer will pay Sprint a lump-sum amount equal to the
                 difference between the rates applicable to the Order Term and
                 the rates applicable to the actual last 12-month term completed
                 in effect before termination of the Order, multiplied by the
                 actual number of months in effect before termination of the
                 Order. For example, if Customer has a 3-year Order Term and
                 terminates the Order effective in the 16th month of the Order
                 Term, Customer will pay Sprint the difference between the
                 3-year Order Term rates and the 1-year Order Term rates,
                 multilied by 16.

              2. Customer will pay Sprint any third-party charges incurred by
                 Sprint resulting from termination of the Order.

              3. Installation Waivers. Customer will pay Sprint a pro-rated
                 amount of any waived installation charges based on the number
                 of months remaining in the Initial Order Term.

           B..   Replacement Service. Customer will not be liable for the
                 Termination Charges, as specified in subsections 19.1 A above,
                 if another Sprint service, with an equal or greater monthly
                 price, is ordered at the same time the notice of termination is
                 received. In addition, the replacement service must have an
                 Order Term no less than the number of remaining months in the
                 Initial Term, or 1 year, whichever is greater.

           C.    Failure to Meet Service Level Agreement. If Sprint fails to
                 meet the Service Level Agreements set forth in Attachment F,
                 Customer will notify Sprint. If Sprint does not cure the
                 problem within 60 days from the date of Customer's notice, then
                 Customer may, upon written notice to Sprint, terminate the
                 affected Service and not be liable for the Termination Charges
                 specified in subsections 19.1 A above.

      19.2.    TERMINATION OF THIS AGREEMENT. The Discounts in this Agreement
               are based on Customer's commitment to purchase Services for the
               entire Agreement Term. If Sprint terminates this Agreement due to
               Customer's material breach, or Customer terminates this Agreement
               prior to the expiration of the Agreement Term (unless due to
               Sprint's material breach), Customer will pay to Sprint, in
               addition to all other applicable charges for Services rendered,
               and any unpaid

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               shortfall in the Second MSC for previous completed Contract
               Years, the applicable Termination Charge from the table below
               based on the Contract Year in which termination occurs:

<TABLE>
<CAPTION>
<S>                                    <C>
 ------------------------------------- --------------------------------
 Contract Year in which termination     Termination Charge
 occurs
 ------------------------------------- --------------------------------
                  1                    $4,500,000
 ------------------------------------- --------------------------------
                  2                    $2,000,000
 ------------------------------------- --------------------------------
                  3                    $1,000,000
 ------------------------------------- --------------------------------
 </TABLE>

               The Termination Charges contained in this Section 19.2 are
               Sprint's exclusive remedies for Customer's termination of the
               Agreement prior to the expiration of the Agreement term.

20.   MATERIAL FAILURE BY SPRINT

      If Sprint materially fails to provide Services in accordance with the
      Agreement or breaches a material term of this Agreement, Customer will
      provide prompt written notice to Sprint detailing the failure. If Sprint
      does not cure the failure within a reasonable time, not to exceed 30 days,
      then Customer may, upon five (5) days' written notice to permit internal
      management escalation, terminate this Agreement without incurring any
      termination liability, except Customer will repay all Service Credits
      attributable to such failure, issued under this Agreement. Sprint's
      material failure does not include a failure caused by circumstances beyond
      Sprint's control including, but not limited to, a failure caused by: (1) a
      local exchange carrier; (2) Customer premise equipment (not provided by
      Sprint); or (3) Customer.

21.   PROPRIETARY INFORMATION

      21.1.    NONDISCLOSURE AGREEMENT. This Agreement and any information
               concerning its terms and conditions are Sprint's proprietary
               information and are governed by the parties' nondisclosure
               agreement. The term of the parties' nondisclosure agreement is
               extended to be coterminous with the Agreement Term. Customer
               agrees not to disclose this Agreement or any information in this
               Agreement to any third party. Notwithstanding the foregoing, both
               parties may make such disclosures, as necessary, to comply with
               Securities and Exchange Commission (SEC) regulations.

      21.2.    NONDISCLOSURE REQUIREMENTS. If the parties have not executed a
               nondisclosure agreement, the following provisions will govern the
               parties' exchange of information.

               A.    During the Agreement Term and for a 3 year period after the
                     Agreement Term, neither party will disclose any Agreement
                     terms, including pricing, or the other party's proprietary
                     information. Proprietary information will remain the
                     property of the disclosing party. The obligation not to
                     disclose software and related information will survive
                     after this 3 year period. Customer will only disclose the
                     software to its employees who have a need to know.

               B.    The receiving party may use the proprietary information
                     only to further the proposed relationship between the
                     parties. Proprietary information may not be disclosed to
                     any third party except upon written consent of the
                     disclosing party. No rights, licenses, trademarks,
                     inventions, copyrights, or patents are granted under this
                     Agreement.

               C.    Proprietary information disclosed to the other party must
                     be clearly identified. Written proprietary information must
                     be clearly marked in a conspicuous place as proprietary.
                     Verbal proprietary information must be confirmed in writing
                     within 15 days following disclosure. Proprietary
                     information includes, but is not limited to, all tangible,
                     intangible, present and future information such as:

                      (1) financial information including pricing;

                      (2) technical information including software, research,
                          development, procedures, algorithms, data, designs and


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                  know-how; and

                  (3) business information including operations, planning,
                  marketing interests and products.

               D. Proprietary information does not include information that is:

                  (1)   published or is in the public domain through no fault
                        of the receiving party;
                  (2)   within the receiving party's legitimate possession
                        prior to disclosure with no confidentiality
                        obligations;
                  (3)   lawfully received from a third party having rights
                        with no restriction;
                  (4)   independently developed by the receiving party
                        without breaching this Agreement; or
                  (5)   revealed with the disclosing party's consent.

               E. If the proprietary information is required to be produced
                  by court order or government authority, the receiving party
                  must immediately notify the disclosing party of that
                  obligation. The disclosing party may move the ordering
                  court or authority for a protective order or other
                  appropriate relief.

22.   FORCE MAJEURE

      22.1.    FORCE MAJEURE LIABILITY. Neither party will be responsible for
               any delay, interruption or other failure to perform under this
               Agreement due to acts beyond the control of the responsible
               party. Force majeure events include, but are not limited to:
               natural disasters (e.g. lightning, earthquakes, hurricanes,
               floods); wars, riots, terrorist activities, and civil commotions;
               cable cuts, local exchange carriers' activities, and other acts
               of third parties; explosions and fires; embargoes, strikes, and
               labor disputes; and governmental decrees.

      22.2.    TERMINATION. The affected party will give notice to the other
               party of any force majeure event. Upon notice, either party may
               cancel or delay performance without liability (except for payment
               of any outstanding amounts due the other party) during the force
               majeure event. If the event continues for more than 60 days and
               adversely and materially impacts the affected party, that party
               may terminate any affected elements of Services without
               liability, or the Agreement without liability (except for payment
               of a prorated portion of all Credits issued under this Agreement)
               if a majority of Services are affected.

23.   TARIFFS

      23.1.    APPLICABILITY. All terms and conditions in Sprint FCC Tariff No.
               12 apply to this Agreement. Rates, charges and discounts for call
               types, service elements, features and other Services not in this
               Agreement are in the applicable Sprint Tariff(s) or public price
               list(s).

      23.2.    TARIFF WITHDRAWAL. If Sprint withdraws any tariff that applies to
               Services in this Agreement, the tariff terms and conditions then
               in effect will continue to apply to this Agreement. After Sprint
               withdraws any applicable tariff, this Agreement will control over
               any inconsistent provision in the withdrawn tariff. But Sprint
               may modify any tariff rate or list price that is not fixed by
               this Agreement.

24.   MISCELLANEOUS TERMS AND CONDITIONS

      24.1.    YEAR 2000 COMPLIANCE. Sprint's Services will operate as specified
               in this Agreement during the 20th and 21st centuries. Sprint will
               make reasonable efforts to cure any material failure to provide
               Services caused solely by year 2000 defects in Sprint's hardware,
               software or systems. Due to the interdependence among
               telecommunications companies and the interrelationship with
               non-Sprint processes, equipment and systems, Sprint is not
               responsible for failures caused by circumstances beyond its
               control including, but not limited to, failures caused by: (1) a
               local exchange carrier; (2) Customer premise equipment not
               provided by Sprint; or (3) Customer. In addition, Sprint does not
               ensure compatibility between Sprint Services and non-Sprint
               Services used by Customer.

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      24.2.    RELIANCE. In accepting this Agreement, Customer is not relying on
               any representations or promises not in this Agreement. When
               signed by the parties this Agreement will: (1) constitute the
               parties' entire understanding regarding Services; and (2)
               supersede all agreements or discussions, oral or written,
               regarding Services, unless explicitly stated in this Agreement.

      24.3.    DOMESTIC DEFINITION. The term "Domestic" means the 48 contiguous
               states of the United States and the District of Columbia for:
               Sprint Frame Relay Products and Services; Sprint Enhanced Frame
               Relay Products and Services; Sprint IP Services; Sprint Managed
               Network Products and Services; Sprint X.25 Products and Services;
               and Sprint ATM Services. Otherwise, "Domestic" and other
               geographic terms are defined in the applicable Sprint Tariffs.

      24.4.    INDEPENDENT CONTRACTOR. Sprint is an independent contractor under
               this Agreement. The parties' relationship and this Agreement will
               not constitute or create an association, joint venture,
               partnership, or other form of legal entity or business enterprise
               between the parties, their agents, employees or affiliates.

      24.5.    NO WAIVER OF RIGHTS. If either party fails to enforce any right
               or remedy under this Agreement, that failure is not a waiver of
               the right or remedy for any other breach or failure by the other
               party.

      24.6.    NO THIRD PARTY BENEFICIARIES. This Agreement's benefits do not
               extend to any third party, unless expressly stated in this
               Agreement.

      24.7     USE OF NAME, SERVICE MARKS, TRADEMARKS OR TRADE SECRETS. In
               suitable advertising, press releases and sales presentations,
               Customer may only identify Sprint as its service-provider and
               Sprint may only identify Customer as its customer. Other than the
               aforementioned identification, Sprint and Customer will not use
               the name, service marks, trademarks, or trade secrets of the
               other party or any of its affiliates for any purpose without the
               other party's written consent, which will not be unreasonably
               withheld.

      24.8.    AMENDMENT. Customer and Sprint may modify this Agreement only by
               written amendment signed by the parties' officers or authorized
               designees. Any oral agreement contrary to this Agreement's terms
               is not admissible in any dispute, whether in a court of law or
               arbitration.

      24.10    NON-ASSIGNMENT. Neither party will assign or delegate its rights
               or obligations under this Agreement to any person, corporation,
               or other entity without the other party's written consent, which
               consent shall not be unreasonably withheld. Notwithstanding the
               foregoing, either party may assign this Agreement to another
               entity, which 1) controls, is under common control with or is
               controlled by such party or 2) succeeds (whether by merger,
               reorganization, sale of assets or otherwise) to the business of
               the party.

      24.11.   SEVERABILITY. If any provision of this Agreement is illegal or
               unenforceable, the Agreement's unaffected provisions will remain
               in effect. Sprint and Customer will negotiate a mutually
               acceptable replacement provision for the illegal or unenforceable
               provision consistent with the parties' original intent.

      24.12.   GOVERNING LAW. This Agreement will be governed by applicable
               federal laws and regulations and the law of Delaware excluding
               choice of law principles.

      24.13.   WAIVER OF JURY TRIAL. The parties mutually, expressly,
               irrevocably and unconditionally waive trial by jury for any
               proceedings arising out of, under, or in connection with this
               Agreement. This Section survives the termination of the
               Agreement.

      24.14.   ARBITRATION. Any dispute arising out of or relating to this
               Agreement may, at the option of the parties, be finally settled
               by arbitration. If the parties agree to arbitration, it will be
               in accordance with the rules of the American Arbitration
               Association. The arbitration will be governed by the United
               States Arbitration Act, 9 U.S.C. Sect. 1 et seq., and judgment
               upon the award may be entered by any court with jurisdiction.
               The arbitration will be held in a jurisdiction mutually agreed
               to by the parties.

      24.15.   RULES OF CONSTRUCTION. No rule of construction requiring
               interpretation against the draftsman will apply in this
               Agreement's interpretation.

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      24.16.   NOTICE. Any notice required under this Agreement or related to
               a dispute must be submitted in writing to the appropriate
               party's address shown below. If a notice relates to a dispute,
               Customer must provide a copy to Sprint at 8140 Ward Parkway,
               Kansas City, Missouri 64114, Attention: Law
               Department/Marketing and Sales.

      24.17.   HEADINGS. Headings are for reference only and have no effect on
               any provision's meaning.

      24.18.   ALTERATIONS. Alterations to this Agreement will not be valid
               unless accepted in writing by a Sprint officer or authorized
               designee.

      24.19.   EFFECTIVE DATE. To become effective, this Agreement must be
               signed by a Customer representative, delivered to Sprint on or
               before December 31, 1999, and signed by a Sprint officer or
               authorized designee.

<TABLE>
<S>                                           <C>
APPLIEDTHEORY COMMUNICATIONS, INC.             SPRINT COMMUNICATIONS COMPANY L.P.

By: /s/ Angelo A. Gencarelli III               By: /s/ Steven T. Van Dorselaer
   --------------------------------------         -------------------------------------
Name:   Angelo A. Gencarelli III               Name:   Steven T. Van Dorselaer
     ------------------------------------           -----------------------------------
(Print/Type)                                   (Print/Type)
Title:  Vice President                          Title: Vice President
      -----------------------------------             ----------------------------------
Date:   12/31/99                                Date:  1/12/00
     ------------------------------------       -----------------------------------

Address for Notice:                             Address for Notice:
                                                2002 Edmund Halley Drive
                                                Reston, VA  20191
</TABLE>

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