Dated january 7, 2002

Here is my report on what I was told:

The California People (I'll call them "CP") are working on forming alliances with two Hedge Funds that own a combined total of about 20 million shares of NorthPoint stock. I'll call them Fund "A" and Fund "G".

Funds A and G both hold NorthPoint Bonds and NorthPoint Stock (among other investments). Remember how we thought that Bondholders with Shares should be designated BS because we thought they could be "bad guys" who might try to use their shares to "vote" in favor of a settlement offer that was big enough to pay off their bonds, but would leave shareholders out?

The spokesmen for Funds A & G have told CP that they bought their NorthPoint shares because they think the shares will become very valuable if a just outcome is achieved.

Funds A & G are both investigating the possibility of doing some form of alliance with CP and individually with all other Funds, Groups and individual NorthPoint shareholders. Alternatively, CP and Funds A & G may first try a new Petition to the court, asking authorization for a court-recognized Shareholder's Committee. An earlier attempt at getting court authorization for a Shareholder's Committee was denied, but that was when NorthPoint was in Chapter 11 and we are now in Chapter 7.

It will be great if a Shareholder's Committee is authorized, because every share of NorthPoint stock would be instantly covered and represented in the lawsuit.

Funds A & G have legal representation looking into all of this. CP has previously gotten legal advice on this. When everyone has been thoroughly "advised", they will get together and decide how to proceed.

While both Funds A & G are evidently not in as "day-traders" or as manipulators to benefit their bonds, fund G has been particularly forthcoming regarding it's intentions.

Fund G has investigated the case in detail and they want the jury trial. Fund G's spokesman believes that Verizon made a calculated, mistaken move when they terminated the Merger. The Fund G spokesman would like to see Verizon pay. The Fund G spokesman stated that they will oppose a settlement that excludes shareholders. He stated that he is looking for several dollars per share.

Like our (informal) Shareholder's Group, our Trustee and NorthPoint's lawyers, Fund G has studied the Tyson/IBP matter and Fund G's spokesman believes that it is a wonderful precedent for NorthPoint, with NorthPoint being (in the Fund G spokesman's opinion) in an even more favorable position than IBP was when IBP contested the termination of their Merger.

Regardless of whether we are sucessful in getting court authorization for a Shareholder's Committee or whether we form a (formal) Shareholder's Group, Fund G's spokesman thinks that shareholders should be prepared to spend up to $1 million for high-class representation that will give us our best chance at being successful. That's less than $0.01 per share.

CP thinks that they and Funds A & G will be able to decide on how to proceed within about two weeks.