This settlement agreement and mutual release (“Agreement”), dated as of July 23, 2002, is entered into by and between E. Lynn Schoenmann, the chapter 7 trustee (“Trustee”) for the Chapter 7 estates of NorthPoint Communications Group, Inc., NorthPoint Communications, Inc., NorthPoint Communications of Virginia, Inc., and NorthPoint International, Inc. (collectively, the “Debtors”); and Verizon Communications Inc. (“Verizon”). The Trustee and Verizon are collectively the “”Parties” or individually a “Party”.

WHEREAS, NorthPoint Communications Group, Inc. and NorthPoint Communications, Inc. (“NorthPoint”) entered into the Merger Agreement and Plan of Merger dated as of August 7, 2000 and related Funding Agreement (collectively, the “Merger Agreement”) with Verizon;

WHEREAS, subject to various provisions and requirements, the Merger Agreement expressly provided that Verizon could terminate the merger if NorthPoint suffered a “Material Adverse Effect” as defined in the Merger Agreement;

WHEREAS, on November 29, 2000 Verizon terminated the Merger Agreement based on an alleged occurrence of a Material Adverse Effect;

WHEREAS, NorthPoint disputes that a Material Adverse Effect had occurred or that Verizon was entitled to terminate the Merger Agreement;

WHEREAS,, Verizon filed a complaint against NorthPoint for declaratory relief that a Material Adverse Effect had occurred in the Superior Court for the State of Delaware, New Castle County, on November 29, 2000 entitled Verizon Communications Inc. v. Northpoint Communications Group, Inc. and Northpoint Communications, Inc. (the “Delaware Action”);

WHEREAS, NorthPoint Communications, Inc. and NorthPoint Communications Group, Inc. (“collectively “NorthPoint”) filed a lawsuit on or about December 8, 2000 against Verizon in Superior Court of San Francisco, California entitled Northpoint Communications Group, Inc. and Northpoint Communications, Inc. v. Verizon Communications, Inc. (f/k/a Bell Atlantic Corp.), Case No. 317249 (the “State Court Litigation”);

WHEREAS, in the State Court Litigation, NorthPoint filed a complaint, twice amended, against Verizon asserting;
(i) a claim for breach of contract asserting that Verizon breached the Merger Agreement by, among other things, its alleged wrongful termination of the Merger Agreement, its alleged reneging on its promises to invest $800 million in cash and over $500 million in assets in NorthPoint, and its alleged failure to continue with and diligently pursue the NorthPoint-Verizon merger,
(ii) a claim for fraud, asserting, among other things, that Verizon fraudulently induced NorthPoint to enter into the Merger Agreement, to continue performing under the Merger Agreement, to disclose confidential, proprietary and trade secret information to Verizon, to spend capital, and to forego other purported business strategies and opportunities and that Verizon used and misappropriated NorthPoint trade secret information and engaged in unfair and predatory business practices and pricing;
(iii) a claim for negligent misrepresentation, asserting, among other things, that Verizon negligently made material misrepresentations to

EXHIBIT 1

Induce NorthPoint to enter into the Merger Agreement, to continue performing under the Merger Agreement, to disclose confidential, proprietary and trade secret information to Verizon, to spend capital, and to forego other purported business strategies and opportunities, and (iv) a claim for violation of California Business & Professions Code section 17200, asserting that Verizon committed and continues to commit alleged unfair business practices in violation of that statute (collectively, these claims are referred to as the “NorthPoint Claims”);

WHEREAS, on or about January 16, 2001, the Debtors filed voluntary petitions for relief under chapter 11 of the United States Bankruptcy Code in the Bankruptcy Court for the Northern District of California (San Francisco Division) (“Bankruptcy Court”) currently pending and jointly administered as Case No. 01-30127-C7) (the “Bankruptcy Case”);

WHEREAS, the Bankruptcy Case was converted to a case under chapter 7 under the United States Bankruptcy Code on or about June 12, 2001 and the Trustee was appointed;

WHEREAS, the Trustee took over the prosecution of the State Court Litigation, now styled E. Lynn Schoenmann, Trustee for the Chapter 7 Estates of NorthPoint Communications Group, Inc. and NorthPoint Communications, Inc. v. Verizon Communications Inc., Case No. 317249 in the Superior Court of the State of California for the City and County of San Francisco’

WHEREAS, trial had been set to go forward in the State Court Litigation on July 29, 2002;

WHEREAS, Verizon and its affiliated entities have filed proofs of claim in the Bankruptcy Case identified at section 1.6 herein;

WHEREAS, the Parties now desire to effect between themselves a full, complete and final settlement and global release of any and all claims, proofs of claim, counterclaims and other differences that do, could or may hereafter exist between them, or could have been brought on their behalf, including without limitation, any and all claims and causes of action relating to the Merger Agreement and the NorthPoint Claims;

NOW THEREFORE, in consideration of the mutual promises contained herein, the sufficiency of which is acknowledged and intended to be binding, the Parties agree as follows:

The following definitions shall have the following meanings. Other definitions are as set forth in this Agreement. Capitalized terms not defined herein shall have the meaning ascribed to them under the Bankruptcy Code, 11U.S.C.§§ 101-1330, et seq.

Section 1.1 “Affiliate”

shall have the meaning ascribed to it under Bankruptcy Code section 101(2).

Section 1.2 ”Bankruptcy Court Order”

shall mean the entry by the Bankruptcy Court of an order, in substantially the form attached hereto as Exhibit “A”, approving this Agreement.

Section 1.3 ”NorthPoint Released Parties”

shall mean the Trustee, the Debtors and the Debtors’ estates and all companies owned or controlled by Debtors, including subsidiaries and Affiliates of Debtors, the Trustee, and each of their past and present officers, directors, employees and agents.

Section 1.4 ”Settlement Effective Date”

shall be the date of the entry of the Bankruptcy Court Order.

Section 1.5 ”Verizon Released Parties”

shall mean Verizon, its affiliates listed on Exhibit “B” hereto (collectively, with Verizon, the Verizon Group”), and all companies owned or controlled by Verizon, including subsidiaries and Affiliates of Verizon, and each of their past and present officers, directors, employees and agents.

Section 1.6 ”Verizon Group’s Proofs of Claims”

shall mean any and all proofs of claim filed by the Verizon Group and/or Affiliates of Verizon in the Bankruptcy Case, including without limitation:

Section 2.1 Settlement Amount.

As consideration for the release and settlement of all Northpoint Released Claims (defined herein), including the dismissal with prejudice of the State Court Litigation by the Trustee, Verizon shall pay to the Trustee the sum of One Hundred Seventy Five Million Dollars ($175,000,000) in good funds (the “Settlement Amount”).

Payment of the Settlement Amount shall be made within ten (10) calendar days of the Settlement Effective Date. Payment of the Settlement Amount shall be made by wire transfer in immediately available United States funds to the following account as designated by the Trustee:

Section 2.2 Withdrawal of Verizon Group’s Proofs of Claim.

As further consideration for release and settlement of all NorthPoint Released Claims (defined herein), Verizon agrees that Verizon Group’s Proofs of Claims shall be deemed withdrawn and expunged for all purposes without need for further action by Verizon Group pursuant to the terms set forth at section 6.2 herein.

Section 3.1 Mutual Waiver and Release.

( a ) Immediately effective upon the receipt of the Settlement Amount, the Trustee, for herself as Trustee and on behalf of the Debtors’ estates, hereby waives, releases and forever discharges the Verizon Released Parties from any and all claims, attorneys’ fees, losses, obligations, demands, actions, causes of action and liabilities, of whatsoever kind and nature, character and description, whether in law or equity, whether sounding in tort, contract or other applicable law, whether known or unknown, and whether anticipated or unanticipated, of the Trustee and/or Debtors, which Trustee and/or the Debtors Affiliates and their respective successors and assigns ever had, now have or may ever have, or which could be asserted on behalf of, either the Trustee and/or the Debtors estates, arising from any event, transaction, matter, circumstance or fact, including, without limitation, any and all claims, obligations, demands, actions, causes of action and liabilities in any way arising out of, related to or in connection with, or based in whole or in part on the Merger Agreement, the State Court Litigation, or the NorthPoint Claims (the “NorthPoint Released Claims”). Notwithstanding the foregoing, the Trustee does not waive, release or discharge Verizon from any of its obligations’ under this Agreement.

( b ) Immediately effective upon the receipt of the Settlement Amount by the Trustee, Verizon Group, for itself and its Affiliates, by and on behalf of its successors and assigns, hereby waives, releases and forever discharges the NorthPoint Released Parties from any and all claims, proofs of claim, attorneys’ fees, losses, obligations, demands, actions, causes of action and liabilities, of whatsoever kind and nature, character and description, whether in law or equity, whether sounding in tort, contract or other applicable law, whether known or unknown, and whether anticipated or unanticipated, of the Verizon Group, which Verizon Group and its Affiliates, successors and assigns ever had, now have or may ever have, arising from any event, transaction, matter, circumstance or fact including, without limitation, any and all claims, obligations, demands, actions, causes of action and liabilities in any way arising out of, related to or in connection with, or based in whole or in part on the Merger Agreement, the State Court Litigation, or the NorthPoint Claims and the Verizon Group’s Proofs of Claims (the “Verizon

Released Claims”). Nothwithstanding the foregoing, Verizon does not waive, release or discharge the Trustee from any of her obligations under this Agreement.

( c ) To the extent applicable law would not otherwise recognize the provisions of subsections (a) and (b) of this Section 3.1 as constituting a full and final release applying to all unknown and unanticipated Claims, as well as those now known or disclosed, the Parties hereby expressly waive all rights or benefits which either one or both of them may have now or in the future under such applicable law.

Section 3.2 Waiver of California Civil Code § 1542.

For the purpose of the releases set forth in Section 3.1 above, each of the Parties, upon such releases becoming effective, shall be deemed to have expressly, knowingly and intentionally waived for themselves and for their respective legal successors and assigns, the benefits and rights of section 1542 of the California Civil Code, which states as follows:

“A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.” Cal. Civ. Code § 1542.

The Parties each acknowledge that they have received independent legal advice from their attorneys with respect to waiving the provisions of California Civil Code § 1542 and acknowledge that this waiver is a material inducement to and consideration for each party’s execution of the Agreement. Each of the Parties shall likewise be deemed to have waived the benefits of any statute, rule or doctrine, or common law principle of any jurisdiction whatsoever of similar effect to section 1542 of the California Civil Code.

Section 4.1 Trustee’s Authority.

The Trustee is the duly appointed trustee for the Debtors’ chapter 7 estates and has all necessary power and authority to execute, deliver and perform the obligations under this Agreement both for herself as Trustee and for the Debtors’ estates, subject to the entry of the Bankruptcy Court Order.

Section 4.2 Enforceability.

This Agreement has been duly executed and delivered on behalf of the Trustee and, upon entry of the Bankruptcy Court Order, constitutes a legal, valid and binding obligation of the Trustee on behalf of the Debtors’ estates enforceable against the estates in accordance with its terms.

Section 4.3 No Assignment.

Except for the liens and rights granted to Monarch Global Capital Associates LLC pursuant to the Loan Agreement and the Security Agreement both dated as of October 15, 2001 and the Bankruptcy Court’s Order Approving: (1) Post-petition Financing for the Chapter 7 Estates; (2) Bidding Procedures; and (3) Breakup fee filed November 6, 2001, among other things, approving and authorizing those agreements, the Trustee represents and warrants that she has not assigned, granted or transferred the NorthPoint Released Claims to any

person or entity before the execution hereof and agrees not to further assign, grant or transfer any such NorthPoint Released Claims.

Section 5.1 Verizon’s Authority.

Verizon has all necessary power and authority to execute, deliver and perform its obligations under this Agreement, including, without limitation, authority to withdraw the Verizon Group’s Proofs of Claim, subject to the entry of the Bankruptcy Court Order.

Section 5.2 Enforceability.

This Agreement has been duly executed and delivered on behalf of Verizon and upon entry of the Bankruptcy Court Order, constitutes a legal, valid and binding obligation of Verizon enforceable against it in accordance with its terms.

Section 5.3 No Assignment.

Verizon represents and warrants that none of the Verizon Released Claims have been assigned, granted or transferred in any way to any Person or Entity before the execution hereof and Verizon agrees not to assign, grant or transfer any such Verizon Released Claims.

Section 6.1 Settlement Effective Date.

Except for the provisions of section 7.13 of this Agreement, the Agreement is conditioned upon the entry of the Bankruptcy Court Order and will become effective and binding on the Parties upon the entry of the Bankruptcy Court Order.

Section 6.2 Performance of Settlement.

( a )Within ten (10) calendar days’ of the Settlement Effective Date:

(i) Verizon shall pay the Settlement Amount to the Trustee pursuant to the provisions of section 2.1 herein;
(ii) To the extent not already reimbursed, the Parties shall pay the other sides’ expert fees and costs pursuant to California Code of Civil Procedure section 2034(i)(2).
(iii) Verizon will cause the Delaware Action to be dismissed with prejudice, each party to bear its own attorneys’ fees and costs.

( b ) Upon the receipt of the Settlement Funds, the Trustee shall promptly cause the State Court Litigation to be dismissed with prejudice, each Party to bear its own attorneys’ fees and costs, except as provided herein at section 6.2(a)(ii).

( c ) Upon the dismissal of the State Court Litigation, Verizon Group’s Proofs of Claims shall be deemed withdrawn and expunged and Verizon shall cause members of the Verizon Group that are not Parties to the Agreement to deliver to Trustee an executed release in accordance with Section 3.1(b) of this Agreement.

Section 7.1 Notices.

All notices, demands, and other communications hereunder shall be in writing and shall be deemed to have been duly given:

(a) when personally delivered;
(b) upon receipt during normal business hours, otherwise on the first business day thereafter, if transmitted by facsimile with confirmation of receipt;
(c) when mailed by certified mail, return receipt request, postage prepaid; or
(d) when sent by overnight courier; in each case, to the following addressees, or to such other addressees as a Party may from time to time specify by notice to the other Party given pursuant hereto.

If to Trustee to: E. Lynn Schoenmann 800 Powell Street San Francisco, CA 94108 Telephone: (415) 336-0415 Facsimile: (415) 362-0416 With copies to: Pachulski, Stang, Ziehl, Young & Jones P.C. Three Embarcadero Center, Suite 1020 San Francisco, CA 94111 Attn: Kenneth H. Brown, Esq. Telephone: (415) 263-7000 Facisimile: (415) 263-7010 Folger Levin & Kahn Embarcadero Center West 275 Batter Street, 23rd Floor Attn: Doug Sullivan, Esq. Telephone: (415) 986-2800 Facsimile: (415) 986-2827 If to Verizon Group, to: Verizon Communications Inc. 1095 Avenue of the Americas New York, New York 10036

Attn: Pandal S. Milch, Esq. Senior Vice President & Deputy General Counsel Telephone: (212) 395-1752 Facsimile: (212) 597-2975 With a copy to: Kirkland & Ellis 153 East 53rd St. New York, New York 10022 Attn: Theodore L. Freedman, Esq. Telephone: (212) 446-4800 Facsimile: (212) 446-4900

Section 7.2 Cooperation.

The Parties will cooperate in seeking Bankruptcy Court approval of this Agreement.

Section 7.3 Governing Law/Jurisdiction.

This Agreement and rights and duties of the Parties hereunder will be governed by and construed, enforced and performed in accordance with the law of the state of California, without giving effect to the principles of conflicts of laws that would require the application of the law of any other jurisdiction.

Section 7.4 Entire Agreement.

This Agreement contains the entire agreement between the Parties with respect to the subject matter hereof and there are no agreements, understandings, representations or warranties between the Parties other than those set forth or referred to herein.

Section 7.5 Severability.

In case any provision of this Agreement shall be determined to be invalid, illegal or unenforceable for any reason, the remaining provisions and portions of this Agreement shall be unaffected and unimpaired thereby, and shall remain in full force and effect, to the fullest extent permitted by applicable law.

Section 7.6 Survival of Representations.

All representations, warranties, agreements, covenants and obligations made by the Parties herein are material, shall be deemed to have been relied upon by the other Party, and shall survive the Settlement Effective Date.

Section 7.7 Successors and Assigns.

This Settlement Agreement shall be binding upon and inure to the benefit of the Parties hereto an their respective successors and assigns.

Section 7.8 No Admission of Liability.

This Settlement Agreement is not an admission of any liability but is a compromise and this Agreement shall not be treated as an admission of liability. All communications (whether oral or in writing) between and/or among the Parties, their counsel and/or their respective representatives relating to, concerning or in connection with this Agreement, or the matters covered hereby and thereby, shall be governed and protected in accordance with the Federal Rule of Evidence 408, California Evidence Code section 1152 and California Code of Civil Procedure section 1775.10 to the fullest extent permitted by law.

Section 7.9 Attorney’s Fees.

Each Party shall be responsible for the payment of its own attorneys’ fees and costs, and all of its expenses in connection with the matters referred to in this Agreement. Nevertheless, in any action or proceeding to enforce this Agreement, the prevailing Party shall be entitled to its attorneys’ fees and costs.

Section 7.10 Captions.

The captions of this Agreement are for convenience only and are not a part of the Agreement and do not in any way limit or amplify the terms and provisions of this Agreement and shall have no effect on its interpretation.

Section 7.11 Counterparts.

This Agreement may be executed in counterparts, by either an original signature or signature transmitted by facsimile transmission or other similar process and each copy so executed shall be deemed to be an original and all copies so executed shall constitute one and the same agreement.

Section 7.12 Modification.

This Agreement may not be modified, amended or supplemented by the Parties except in accordance with by written agreement of the Parties and further order of the Bankruptcy Court.

Section 7.13 Inadmissibility of Documents.

In the event the Bankruptcy Court Order is not entered; (a) the Agreement and the recitals contained herein shall be without force or effect, and neither this Agreement, nor any of the statements contained herein, shall be admissible in any proceeding involving the Parties; and (b) neither the motion to obtain the Bankruptcy Court Order nor any of the pleadings or declarations filed in support of the motion shall be admissible in any proceeding involving the Parties Nothing herein shall prevent any Party from seeking to offer this Agreement in evidence after the entry of the Bankruptcy Court Order for the purpose of enforcing the terms of the Agreement The terms of this section 7.13 shall be binding on the Parties even if the Bankruptcy Court Order is not entered.

CHAPTER 7 TRUSTEE By: ________________________________ Name: E.Lynn Shoenmann Title: Chapter 7 Trustee, on behalf of the Debtors VERIZON COMMUNICATIONS INC. By: ________________________________ Name: Marianne Drost Title: Secretary

ACKNOWLEDGEMENT AND ACCEPTANCE BY MONARCH GLOBAL CAPITAL ASSOCIATES LLC:

Monarch Global Capital Associates LLC hereby consents to the Settlement Agreement, including, without limitation, the Trustee’s releases of Verizon Communications, Inc. and its affiliates set forth herein and acknowledges that its rights and interests in the NorthPoint Claims pursuant to the Loan Agreement and the Security Agreement both dated as of October 15, 2001 and the Bankruptcy Court’s Order Approving: (1) Post-petition Financing for the Chapter 7 Estates, (2) Bidding Procedures; and (3) Breakup Fee filed November 6, 2001, among other things, approving and authorizing those agreements, shall be limited to the proceeds of the settlement.


MONARCH GLOBAL CAPITAL ASSOCIATES LLC


By: _________________________