Section 6.1 Conduct of Business of NorthPoint Pending the Effective Time.

NorthPoint covenants and agrees that between the date hereof and the Effective Time, unless Verizon shall otherwise consent in writing, and except as described in Section 6.1 of the NorthPoint Disclosure. Schedule or as otherwise expressly contemplated hereby, the business of NorthPoint and its Subsidiaries shall be conducted only in, and such entities shall not hake any action except in, the ordinary course of business and in a manner consistent with past practice; and each of NorthPoint and its Subsidiaries will use its commercially reasonable. efforts to preserve substantially intact their business organizations, to keep available the services of those of their present officers, employees and consultants who are integral to the operation of their businesses as presently conducted and to preserve their present relationships with significant customers and suppliers and with other Persons with whom they have significant business relations. Byway of amplification and not limitation, except as set forth in Section 6.1 of the NorthPoint Disclosure Schedule or as otherwise expressly contemplated by this Agreement or in the Employee Matters

Agreement, NorthPoint and its Subsidiaries will not, between the date hereof and the Effective Time, directly or indirectly, do any of the following without the prior written consent of Verizon:

(a)

(i) issue, sell, pledge, dispose of, encumber, authorize, or propose the issuance, sale, pledge, disposition, encumbrance or authorization of any shares of capital stock of any class, or any options, warrant, convertible securities or other rights of any kind to acquire any shares of capital stock of, or any other ownership interest in, NorthPoint or any of its Subsidiaries (excluding such as may arise upon the exercise of existing rights), except for

(A) the issuance. of shares of NorthPoint Common Stock in order to satisfy obligations under the NorthPoint Plans in effect on the date hereof and NorthPoint Equity Rights issued thereunder, which issuances shall be consistent with its existing policy and past practice;
(B) grants of stock options with respect to NorthPoint Common Stock to employees in the ordinary course of business and in amounts and in a manner consistent with past practice; and
(C) the issuance of securities by a Subsidiary of NorthPoint to any Person which is directly or indirectly wholly owned by NorthPoint;

(ii) amend or propose to amend the Certificate of Incorporation or By-laws of NorthPoint or any of its Subsidiaries or adopt, amend or propose to amend any stockholder rights plan or related rights agreement;
(iii) split, combine or reclassify any outstanding shares of NorthPoint Common Stock, or declare, set aside or pay any dividend or distribution payable in cash, stock, property or otherwise with respect to shares of NorthPoint Common Stock;
(iv) redeem, purchase or otherwise acquire or offer to redeem, purchase. or otherwise acquire any shares of its capital stock (provided that in the case of any repurchase of shares of NorthPoint Common Stock upon the termination of employment of one of the five founders of NorthPoint at the contractual price but in no event more than $0.08 per share, Verizon shall be deemed to have consented to such repurchase five business days after receiving written notice from NorthPoint of its intent to effect such repurchase, unless Verizon shall have objected to such repurchase within such five business day period); or
(v) authorize or propose or enter into any contract, agreement, commitment or arrangement with respect to any of the matters prohibited by this Section 6.l(a);

(b)

(i) acquire (by merger, consolidation, or acquisition of stock or assets) any corporation, partnership or other business organization or division thereof or make any investment in another entity (other than an entity which is a wholly owned Subsidiary of NorthPoint as of the date hereof and other than incorporation of a wholly owned Subsidiary of NorthPoint), except for acquisitions or investments in NorthPoint's Line of Business which do not exceed $5,000,000 individually or $10,000,000 in the aggregate for all such acquisitions or investments;

(ii) sell, pledge, dispose of, or encumber or authorize or propose the sale, pledge, disposition or encumbrance of any assets of NorthPoint or any of its Subsidiaries, except in the ordinary course of business consistent with past practice;
(iii) otherwise enter into any line of business which is outside of NorthPoint's Line of Business; or
(iv) authorize, enter into or amend any contract, agreement, commitment or arrangement with respect to any of the matters prohibited by this Section 6.1(b);

(c) incur any indebtedness other than borrowings under the Debt Financing, the Preferred Financing and the Company's existing senior secured credit facility (as in effect on the date hereof); provided, however, that the Company may incur indebtedness (excluding indebtedness convertible into equity of NorthPoint) after January 1, 2001, if such indebtedness is incurred on an arm's length basis with nationally recognized financial institutions or with Verizon and the incurrence of such indebtedness does not exceed, individually or in the aggregate with all other incurrence of indebtedness (including any indebtedness incurred under the Debt Financing), $200,000,000 per calendar quarter;

(d) except as provided in a side letter to be entered into by Verizon and NorthPoint within thirty days after the date hereof, take any action with respect to the grant of any severance or termination pay, stay bonus, or other incentive arrangements (otherwise than pursuant to any NorthPoint Plan or any policies, arrangements and agreements of NorthPoint which were in effect on, or offered or approved to be offered by the board of directors or senior management of NorthPoint prior to the date hereof, or pursuant to any renewal or extension subsequent to the date hereof of the duration of the term of any such benefit plans, policies, arrangements or agreements), or with respect to any increase in benefits payable under its severance or termination pay policies, or stay bonus or other incentive arrangements in effect on the date hereof;

(e) except in the ordinary course of business consistent with past practice, take any action with respect to increases in employee compensation, take any action to adjust the exercise price or number of shares underlying options awarded under any NorthPoint Plan or make any payments under any NorthPoint Plan to any director or employee of, or independent contractor or consultant to, NorthPoint or any of its Subsidiaries, adopt or otherwise materially amend any NorthPoint Plan or enter into or amend any employment or consulting agreement, or grant or establish any new awards under any such existing NorthPoint Plan or agreement;

(f) change in any material respect its accounting policies, methods or procedures except as required by GAAP or change any material Tax election or enter into any material settlement for Taxes;

(g) take any action which it believes when taken could reasonably be expected to adversely affect or delay in any material respect the ability of any of the parties hereto to obtain any approval of any Governmental Entity required to consummate the transactions contemplated hereby;

(h) other than pursuant to this Agreement, take any action to cause the shares of NorthPoint Common Stock to cease to be quoted on Nasdaq;

(i)

(i) other than as consistent with past practice, issue stock appreciation rights, performance shares, restricted stock, or similar equity based rights;
(ii) materially modify (with materiality to be determined with respect to the benefit plan in question) any actuarial cost method, assumption or practice used in determining benefit obligations, annual expense and funding for any Benefit Plan, except to the extent required by GAAP;
(iii) materially modify (with materiality to be determined with respect to the Benefit Plan trust in question) the investment philosophy of the Benefit Plan trusts or maintain an asset allocation which is not consistent with such philosophy, subject to any ERISA fiduciary obligation;
(iv) subject to any ERISA fiduciary obligation, enter into any outsourcing agreement, or any other material contract relating to the Benefit Plans or management of the Benefit Plan trusts;
(v) offer any new or extend any existing retirement incentive, "window" or similar benefit program;
(vi) grant any ad hoc pension increase;
(vii) establish any new or fund any existing "rabbi" or similar trust (except in accordance with the current terms of such mist), or enter into any other arrangement for the purpose of securing non-qualified benefits or deferred compensation;
(viii) adopt any corporate owned life insurance program; or
(ix) adopt or implement any "split dollar" life insurance program; or

(j) take any action which it believes when taken would cause its representations and warranties contained herein to become inaccurate in any material respect.

Nothing in this Section 6.1 shall restrict the ability of NorthPoint's wholly owned Subsidiaries to do any of the following:

(a) pay dividends (in cash or otherwise), or make any other distributions, to NorthPoint or any of its wholly owned

Subsidiaries in respect of its capital stock or in respect of any other interest participating in, or measured by, its profits or pay any indebtedness owed to NorthPoint or any of its Subsidiaries;

(b) make loans or advances to NorthPoint or any of its wholly owned Subsidiaries; or

(c) transfer any of its property or assets to NorthPoint or any of its wholly owned Subsidiaries.

Verizon covenants and agrees that between the date hereof and the Effective Time, unless NorthPoint shall otherwise consent in writing, except as described in Schedule 6.2 and except in connection with the transactions contemplated hereby, Verizon and its Subsidiaries shall own and operate the Verizon D SL Business only in a manner consistent with past practices, and such entities shall not take any action except in the ordinary course of business and in a manner consistent with the capital expenditure program previously delivered by Verizon to NorthPoint; and each of Verizon and its Subsidiaries will use its commercially reasonable efforts to keep available the services of those of their present officers, employees and consultants who are integral to the operation of the Verizon DSL Business as presently conducted and to preserve their present relationships with significant customers and suppliers of the Verizon DSL Business and with other Persons with whom they have significant business relations with respect to the Verizon DSL Business. By way of amplification and not limitation, except as set forth in Schedule 6.2 or as otherwise expressly contemplated by this Agreement, Verizon and its Subsidiaries will not, between the date hereof and the Effective Time, directly or indirectly, do any of the following without the prior written consent of NorthPoint:

(a) except in the. ordinary course of business consistent with past practice, take any action with respect to increases in compensation of the Transferred Employees, excluding employees who are covered by a collective bargaining agreement to which Verizon or one of its Subsidiaries is a party (the "Non-­represented DSL Employees"), take any action to adjust the exercise price or number of shares underlying options awarded to any Non-represented DSL Employee or make any other payments to any Non-represented DSL Employee;

(b) take any action which it believes when taken could reasonably be expected to adversely affect or delay in any material respect the ability of any of the parties hereto to obtain any approval of any Governmental Entity required to consummate the transaction contemplated hereby; or

(c) take any action which it believes when taken would cause its representations and warranties contained herein to become inaccurate in any material respect.

From and after the date hereof, NorthPoint shall not, nor shall it permit any of its Subsidiaries to, nor shall it authorize or permit any of its, or any of its Subsidiaries', officers, directors or employees or any investment banker, financial advisor, attorney, accountants or other representatives retained by it or any of its Subsidiaries to, directly or indirectly through another Person,

(i) solicit, initiate or encourage (including by way of furnishing information), or knowingly take any other action designed to facilitate, any Alternative Transaction or
(ii) participate in any discussion with or provide any confidential information or data to any Person relating to an Alternative Transaction, or engage in any negotiations concerning an Alternative Transaction, or knowingly facilitate any effort or attempt to make or implement an Alternative Transaction or accept an Alternative Transaction; provided, how ever, that if, at any time prior to approval of the Merger by the holders of NorthPoint Common Stock,

(A) NorthPoint has received an unsolicited bona fide. written proposal relating to an Alternative Transaction which did not result from a breach of this Section 6.3,
(B) the Board of Directors of NorthPoint concludes in good faith (after consultation with a financial advisor of nationally recognized reputation and receiving the advice of its outside counsel) that such proposal constitutes a NorthPoint Superior Proposal and

(iii) that the failure to provide such information or participate in such negotiations or discussions would result in a breach by the Board of Directors of NorthPoint of its fiduciary duties to NorthPoint stockholders under applicable law, NorthPoint may, subject to giving Verizon at least five business days' written notice of its intention to do so,

(x) furnish information with respect to NorthPoint and its Subsidiaries to any Person pursuant to a customary confidentiality agreement containing terms no less restrictive than the terms of the Nondisclosure Agreement dated April 7, 2000 entered into among NorthPoint, Bell Atlantic Corporation and GTE Corporation, as amended (the "Nondisclosure Agreement"), provided that a copy of all such information 15 delivered simultaneously to Verizon if it has not previously been so furnished to Verizon, and
(y) participate in negotiations regarding such proposal.

NorthPoint shall as soon as practicable. (and in any event within 24 hours) notify Verizon orally and in waiting of any request for information or of any proposal in connection with an Alternative Transaction, the temps and conditions of such request or proposal (including a copy thereof, if in writing, and all other documentation and any related correspondence) and the identity of the Person making such request or proposal. NorthPoint will keep Verizon fully informed of the status and details

(including amendments or proposed amendments) of such request or proposal, and any discussions relating thereto, on a current basis. NorthPoint shall, and shall cause its officers, directors and representatives to, immediately cease. and terminate any existing solicitation, initiation, encouragement, activity, discussion or negotiation with any Persons conducted heretofore by NorthPoint or its representatives with respect to the foregoing. NorthPoint agrees that it will use its commercially reasonable efforts to promptly inform its directors, officers, employees and representatives of the. obligations undertaken in this Section 6.3. NorthPoint

(i) agrees not to release any Third Party from, or waive any provision of, or fail to enforce, any standstill agreement or similar agreements to which it is a party related to, or which could affect, an Alternative Transaction and agrees that Verizon shall be entitled to enforce NorthPoint's rights and remedies under and in connection with such agreements and
(ii) acknowledges that the provisions of clause (i) are an important and integral part of this Agreement.

Nothing contained in this Section 6.3(a) or Section 7.2 hereof shall prohibit NorthPoint from taking and disclosing to its stockholders a position as required by Rule 14e-9 or Rule 14e-2(a) promulgated under the Exchange Act. Notwithstanding anything herein to the contrary, NorthPoint shall submit this Agreement to the stockholders of NorthPoint at the NorthPoint Stockholders' Meeting for the purposes of adopting this Agreement and approving the Merger whether or not the Board of Directors of NorthPoint makes a determination that a proposal constitutes a NorthPoint Superior Proposal.

(a) Within 60 days aver the date hereof, NorthPoint and Verizon shall agree on a plan (the "Regulatory Compliance Plan") to bring NorthPoint's then­-existing network into compliance. with any and all state and federal regulations applicable to Verizon that would become applicable to the operations of NorthPoint from and after the. Effective Time as a result of the consummation of the Asset Contribution and the Merger. Both Parties shall use all commercially reasonable efforts to minimize the cost of implementing the Regulatory Compliance Plan. The Regulatory Compliance Plan shall include the cost of

(i) incremental network facilities,
(ii) incremental equipment in existing facilities,
(iii) non-recurring and monthly recurring charges of new transportation circuits for NorthPoint's customers,
(iv) non-recurring and monthly recurring charges for new transportation circuits for NorthPoint's backbone network,
(v) operating support system.: changes, and
(vi) personnel time and materials required to effect such changes (the "Compliance Expenses").

At the beginning of each calendar month, NorthPoint shall submit to Verizon a detailed report of all Compliance Expenses, describing the nature, date,

amount and location of each Compliance Expense paid during the immediately preceding calendar month and, within five business days of receipt of such report, Verizon shall reimburse NorthPoint for Compliance Expenses incurred during such preceding month which are in accordance with the Regulatory Compliance Plan.

(b) At the Closing, the Cash Amount shall be reduced by an amount equal to 45% of the Compliance Expenses theretofore reimbursed by Verizon.

(c) In the event that ibis Agreement is terminated pursuant to Section 9.1(d)(i)(A) hereof, in addition to any other remedies contained herein, NorthPoint shall be entitled to retain any reimbursement payments made by Verizon in respect of Compliance Expenses.

(d) In the event that this Agreement is terminated pursuant to Section 9.1(d)(ii)(A) hereof, in addition to any other remedies contained herein, NorthPoint shall make a cash payment to Verizon within five business days of such termination in an amount equal to 100% of the reimbursement payments previously made by Verizon in respect of Compliance Expenses.

(e) In the event this Agreement is terminated for any reason other than pursuant to Section 9.1(d)(i)(A) or 9.1(d)(ii)(A) hereof, NorthPoint shall make a cash payment to Verizon within five business days of such termination in an amount equal to 50% of the reimbursement payments previously made by Verizon in respect of Compliance Expenses.

(a) All leases, contracts and arrangements with respect to occupancy by the Verizon Network Equipment Assets of space in the Verizon Central Offices shall be transferred to Parent at the Effective Time and included in the Assumed Verizon Contracts, substantially at the rates offered by Verizon to DLECs generally in the market in which such Verizon Central Office is located. In the event that any rack located in an Verizon Central Office is used in connection with the Verizon DSL Business and is shared with any other Affiliate of Verizon as of the Effective. Time (any such Affiliate of Verizon, together with Parent, are referred to as the "Sharing Parties"), from and after the Effective Time, the Sharing Party which is the primary user of such rack shall retain the payment obligations to the owner of such Verizon Central Office with respect thereto and the Sharing Party

which is not the primary user of such rack shall reimburse such primary user in a planner to be agreed upon.

(b)

(i) All leases, contracts and arrangements with respect to the occupancy of premises not located in an Verizon Central Office which are used exclusively in connection with the Verizon DSL Business as of the Effective Time shall be transferred to Parent at the Effective Time and included in the Assumed Verizon Contracts, except to the extent subject to a regulatory prohibition or the imposition of incremental obligations on Verizon or its Affiliates, including a non­discrimination obligation. Any changes from and after the Effective Time with respect to such leases, contracts and arrangements relating to such facilities shall be made at the sole. discretion of, and the. expense of, Parent.
(ii) All leases, contracts and arrangements with respect to the occupancy of premises not located in an Verizon Central Office which at the Effective Time are shared by the Verizon DSL Business with another Affiliate or business of Verizon (the "Shared Facilities") shall be transferred to Parent at the Effective Time (provided that Parent shall assume. only a pro rated portion of the obligations under such leases, contracts and arrangements based on the relative uses of such premises) and included in the Assumed Verizon Contracts, except to the extent subject to a regulatory prohibition or the imposition of incremental obligations on Verizon or its Affiliates, including a non-discrimination obligation; provided, however, that as soon as practicable following the Closing Date, but in no event later than the six-month anniversary of the Closing Date, Part shall have the right, exercisable one time, to notify Verizon (the "Lease Rejection Notice") that it desires to reassign to Verizon any of the leases, contracts and arrangements related to Shared Facilities that in the sole discretion of Parent it does not choose to continue to use. The Lease Rejection Notice shall specify all Shared Leases to be reassigned. Such reassignment of each such Shared Lease shall be effected promptly upon vacation of the particular subject premises by Parent, and Parent shall be responsible for the payment of all amounts accrued with respect to such Shared Lease up to the date of such reassignment.
(iii) Transferred Employees that at the Effective Time are in facilities covered by Shared Leases included in the Lease Rejection Notice are referred to herein as "Relocated Employees."

(a) Commencing as soon as practicable. after the date hereof, NorthPoint will use its commercially reasonable efforts to review the facilities locations of the Verizon DSL Business with a view toward determining what infrastructure Parent shall require and shall submit to Verizon, not later than the six-­month anniversary of the Closing Date, a detailed listing by facility of the Facilities Related Payments (as defined below). Upon the written request of any Party, the Parties will resolve any dispute, controversy or claim arising out of or relating to the determination of the Facilities Related Payments (a "Dispute") in accordance with the procedures set forth in Section 6.6(d) hereof. Within five business days of the final determination of the amount of the Facilities Related Payments, Verizon will reimburse NorthPoint in cash in an amount, if any, equal to the lesser of (x) the Facilities Related Payments and (y) $20 million. The term "Facilities Related Payments" shall mean the sum of the Facilities Assets Amounts plus any Capitalized Co-Location Fees paid by NorthPoint as a direct result of the transactions contemplated by this Agreement, reduced by any payments made by Verizon or an Affiliate of Verizon with respect to Capitalized Co-Location Fees directly resulting from the transactions contemplated by this Agreement.

(b) "Facilities Assets" means tenant improvements, shared information technology ("IT") infrastructure (e.g., local area network/wide area network, printer, copier, fax), individual IT infrastructure (e.g., personal computer, software licenses, telephone, PBX, pager), office furniture (e.;., cubicle, desk, chair, filing cabinet and common area furnishings), office supply inventory, and field technician assets (e.g., tools, test equipment, field vehicles).

(c) "Capitalized Co-Location Fees" means capitalized central office co-location fees and co-location application fees, capitalized engineering charges related to central office co-location, and capitalized upfront ILEC technician training expenses for any of the Verizon Central Offices, but shall not include capitalized labor and other costs associated with the installation, provisioning, modification and upgrading of equipment.

(d)

(i) The Parties agree to seek resolution of any Dispute in accordance with the procedures set forth in this Section 6.6(d) upon the written request of any Party. The Parties shall first attempt in good faith to reach resolution of such Dispute through discussions at the non-executive level. If such Dispute is not resolved within 15 days aver the date of receipt by any Party of a written request for discussions at the non-executive level, the matter may be referred to a senior-­level employee at the level of vice president or above of each Party (each a "Dispute Representative") in accordance with the. following procedures. Either Party may submit a written notice ("Second Written Notice") following the end of the 15 day period referred to above. The notice shall set out the nature of the Dispute and shall identify the Dispute Representative in the notifying Party's organization, who shall have the authority to agree to final resolution of the Dispute. Within five business days of receipt of such notice, the receiving Party shall respond in writing with designation of its Dispute Representative, who shall have the authority to agree to final resolution of the Dispute. The Dispute Representatives shall meet within five business days after the receiving party's notice. was received and shall negotiate to resolve the Dispute. The discussions shall be left to the discretion of the Dispute Representatives, who may agree to utilize other alternative dispute resolution procedures such as mediation to assist in the negotiations. Discussions and correspondence among the Dispute Representatives for purposes of these negotiations shall be treated as confidential information developed for purposes of settlement, shall be exempt from discovery and production, and shall not be admissible in any arbitration or lawsuit without the concurrence of all Parties. Documents identified in or provided with such communications, which are not prepared for purposes of the negotiations, are not so exempted and may, if otherwise admissible, be admitted in evidence in an arbitration or lawsuit. The Parties agree to pursue resolution under this section for a minimum of 45 days following the Second Written Notice requesting initiation of these dispute resolution procedures before pursing arbitration as set forth in Section 6.6(d)(ii) below.
(ii) If the Parties cannot resolve the claim or dispute covered by the procedure set forth in Section 6.6(d)(i) above in accordance with the negotiation procedure set forth therein, any Party shall have the right to cause the other Parties to enter into binding arbitration in accordance with the rules of the American Arbitration Association then in effect. A Party must initiate such arbitration no later than 30 days following conclusion of the. dispute resolution process set forth in Section 6.6(d)(i) above. The arbitration shall be conducted on an expedited basis in the. County of New York, in the State of New York. Three

arbitrators, each having at least five years of experience in the telecommunications field, shall be appointed, one by each Party, and then one selected jointly by those two arbitrators, for such arbitration. Any award rendered therein shall specify the. findings of fact of the arbitrators and the reasons for such award, with reference to and reliance on relevant law. The award, if any, shall be final and binding upon the Parties, and shall be the sole and exclusive remedy between the Parties regarding the claim or dispute submitted for arbitration pursuant to this Section 6.6(d)(ii). Judgment upon any award may be entered in any court having jurisdiction. The Parties shall each be responsible for their own costs in the arbitration and shall share equally in the cost of the arbitrator and any related costs such as meeting space and the like.

(e) Verizon will provide Facilities Assets for Transferred Employees either through the transfer of pre-existing used and useful Facilities Assets or through the payment of Facilities Assets Amounts as hereinafter set forth. Under no circumstances will Facilities Assets Amounts be payable with respect to any employees other than Relocated Employees or any facilities not included in the Lease Rejection Notice.

(f) "Facilities Assets Amounts" shall mean, with respect to Relocated Employees only, a one-time fee of $26,600 per management employee, $1 9,200 per non-management employee, and $19,500 per field technician employee, offset in each case by the net book value of any Facilities Assets associated with such Relocated Employee.

After the Closing Date, operations support systems ("OSS")will be obtained by Parent from Verizon or its Affiliates on a service bureau. basis. These. systems and services will be of the type described on Schedule 6.7. The systems and services will be provided through a contract, which shall include appropriate service level standards, at a cost not to exceed $4 million per month for base functionality at the Closing Date, increasing by $333,333 per month commencing on the thirteenth month following the Closing Date, and such contract shall be for a term of not in excess of 18 months. Any additional enhancements and features beyond those provided for in the contract shall be separately negotiated and gill be provided on an arm's-length basis. Such contract will be terminable by Parent on 90 days prior written notice.

The parties hereto acknowledge that after the Closing from time to time Parent may desire to contract with Verizon or its Affiliates for certain ongoing services. The parties agree to use commercially reasonable efforts to negotiate arm's-length contracts or arrangements relating to the provision of any such services as may be requested by Parent from time to time.

Concurrently with the execution of this Agreement, the parties hereto are entering into a Master Services Agreement in the form attached as Exhibit H hereto.

Verizon shall use its commercially reasonable efforts (including requesting consents from vendors where required) to enable Parent, from and after the Effective Time, to make purchases under vendor contracts applicable to Affiliates of Verizon to the extent permitted by such vendor contracts, provided that the making by Parent of such purchases would not (i) require the payment of compensation or other consideration by Verizon and its Affiliates other than Parent to any third party or (ii) have any adverse effect upon Verizon and its Affiliates.