43. As stated above, in Connection with its execution of the Merger Agreement, representatives of Verizon also represented that events similar to those which Verizon has raised as the purported basis for terminating the Merger Agreement would not constitute a "Material Adverse Effect." While NorthPoint continued to incur losses during and as a result of the expansion of its operations, it was understood and agreed by Verizon that NorthPoint would incur millions of dollars of losses during this expansion effort, consistent with its obligations under the Merger Agreement, and the losses which NorthPoint experienced in the Third Quarter of 2000 (upon which Verizon relied in terminating the merger) were within the guidelines of NorthPoint's bank loans. Also, while there has been a deterioration at the "data Industry" and the technology industry (as reflected In the stock market), any facts, events, changes or effects attributable to those items are not deemed to be "Material Adverse Effects;" as that term is defined in the Merger Agreement or in the Funding Agreement.

44. Verizon terminated the merger under false pretenses. The true reasons for Verizon's termination were that Verizon and its management were criticized for having entered into the Merger Agreement by stock market analysts, and Verizon's stock had dropped precipitously after the announcement of the merger. As the stock market dropped between August and November 2000, Verizon (including Mr. Smith, Ms. Toben and Mr. Babbio) were aware of criticisms of Verizon for entering into the merger and lamented how Verizon could have bought NorthPoint cheaper had Verizon waited for NorthPoint's stock price to drop along with the rest of the stock market. Verizon and its management (including Messrs. Babble and Smith and Ms. Toben) were, therefore, desirous of renegotiating the financial terms of the transaction even before Verizon had any alleged basis for contending that there had been a "Material Adverse Effect" on NorthPoint. Thus, by at least October 14, 2000, Verizon (including Mr. Smith) had prepared an internal memorandum proposing "renegotiation" at the transaction to acquire 100% (not 55%) of NorthPoint at a fraction of the overall cost. In addition Verizon (including Mr. Babbio and other senior management) desired to void the transaction and the investment and funding obligations to NorthPoint (even if there were no legal basis for doing so) so that Verison could announce Increased near-term earnings estimates for Verizon and thereby inflate the stock price of Verizon. In fact, the day after announcing the termination, Verizon increased its earnings estimates to account for the canceled merger. In addition, Verizon and its management determined that Verizon could destroy NorthPoint's business by reneging on the merger and Could then usurp the DSL business opportunities of NorthPoint. In fact, contemporaneously with notifying NorthPoint and the public of the termination of the merger, Verizon launched an aggressive sales and marketing strategy to expand Verszon's DSL business and to exploit the damage done to NorthPoint by Verizon's bad faith termination. Also, even after the termination, Verizon (including Mr. Smith) used and misappropriated trade secret information of NorthPoint, including NorthPoint's business forecasts and pricing, despite the fact that Verizon knew or should have known that the trade secrets had economic value in not being publicly known and that NorthPoint had taken reasonable efforts to maintain their secrecy. Verizon was under a duty not to use or disclose NorthPoint's trade secrets, but failed to do so.

45. Verizon also wrongfully terminated the Merger Agreement so that it would not have to disclose to NorthPoint and others information about Verizon's DSL business, as required by the Merger Agreement, which NorthPoint is informed and believes would have revealed unfair and predatory business practices and pricing. In this regard, pursuant to Section 7.1 of the Merger Agreement, Verizon was to "promptly as practicable" prepare a "registration Statement" which necessarily involved disclosing to NorthPoint financial information related to the Verizon DSL business. In material breach of its obligations under the Merger Agreement, following August 7, 2000, Verizon continuously failed to produce that information, instead, ultimately terminating the Merger Agreement without providing, and in order not to provide, the information.

46. Rather than taking action to consummate the merger and to provide interim financing, as required by the Merger Agreement and Funding Agreement, following the termination notice on November 29, 2000 Verizon immediately took wrongful action to prevent the ultimate merger. In this regard, on or about November 30, 2000, Verizon notified the United States Department of Justice, Antitrust Division, and United States Federal Trade Commission that it was withdrawing the "Premerger Notification and Report" form which had been filed with those departments on September 19, 2000. Verizon has also advised that it will not be producing further documents or interrogatory responses in response to requests by the Department of Justice, Antitrust Division. Under the terms of the Merger Agreement, however, Verizon was not allowed to take these wrongful and harmful actions.

G. Verizon Continued to Defraud NorthPoint After Entering Into the merger Agreement,

47. In order to induce NorthPoint to Continue with activities in anticipation of the merger (rather than taking action to mitigate damages associated with Verizon's anticipatory breach of the merger, including, but not limited to, pursuing other business opportunities, drawing down on a line of credit of over $100 million, and conserving available cash resources), to induce NorthPoint to disclose confidential, proprietary, trade secret information to Verizon, and to induce NorthPoint to spend millions of precious dollars expanding its infrastructure (rather than taking action to conserve necessary cash resources)