ARMY AND AIR FORCE EXCHANGE SERVICE NEGOTIATED CONTRACT – ———————————————————————————————-ISSUED BY CONTRACT NO. CONTRACT CONTROL NO.Army & Air Force Exchange Service 01-001-05-02 (If applicable)SD-V, Telecommunications ——————————————————-3911 S Walton Walker AMOUNT TYPE OF ITEM/SERVICEBlvd Dallas, TX 75234 [ ]Actual $36,000,000.00 Residential Voice, DataTELEPHONE NO. 214-312-4646 [X]Estimated and Video Svs. Kunsan- ———————————————————————————————-1. Contractor agrees to provide the Items/services at the prices set out and inaccordance with the terms of this contract.2. A copy of this contract consisting of the provisions identified in theContents paragraph of the attached Schedule, signed by the contracting officerand approved when required In accordance with applicable AAFES regulationsmailed or otherwise furnished to the contractor will constitute award of thebinding contract3 In the event of an inconsistency between the provisions of this contract asidentified in the Contents paragraph of the attached Schedule, the inconsistencyshall be resolved by giving precedence in the following order (a) the Schedule,(b) General Provisions, (c) other provisions of the contract, whetherIncorporated by reference or otherwise Id) the Specifications, and (e) theDrawings.- ——————————————————————————– CONTRACTOR- ——————————————————————————–CONTRACTOR REPRESENTS (Check appropriate boxes) 1. a That it [ ] is [X] is not a manufacturer or producer of: [ ] is [X] is not a regular dealer in; the items provided [Commodity contracts only) OR b That it [X] is [ ] is not principally engaged in furnishing of services of the type called for herein (Service contracts only) 2. That it operates as an [ ] Individual [ ] Partnership [X] Corporation, incorporated in the State (Country if outside US) of ___________________. 3. That it [X] is [ ] is not a small business. 4. That It [ ] is [X] is not a minority business enterprise (see definition below).* 5. That it [ ] is [X] is not a women-owned business (see definition below). *Check a block for all contracts to be performed in the United States,its possessions and Puerto Rico. The term “minority business” means a business concern (1) which is atleast 51 per cent owned by minority group members, or in the case of anypublicly owned business, at least 51 per cent of the stock of which is owned byone or more minority group members, and (2) whose management and daily businessoperations are controlled by one or more such minority group members For purposeof this definition minority group members include Black Americans. HispanicAmericans, Asian-Pacific Americans, Asian-Indian Americans, and Native Americans(such as American Indians, Eskimos, Aleuts and native Hawaiian*) The term “women-owned business” means a business that is at least 51per cent owned by a woman or women who also control and operate it. “Control” inthis context means exercising the power to make policy decisions. “Operate” inthis context means being actively involved in the day-to-day management. 6. That an owner or officer of the firm or the firm or a related firm [ ] has [X] has not been convicted of a felony related to a business transaction. 7. That an owner or officer of the firm or the firm or a related firm [ ] has [X] has not been suspended or debarred. 8. That the person signing this contract is an individual having the authority to obligate the firm contractually. 9. That the information provided is full, accurate and complete For breach of this warranty, AAFES may terminate this contract and all other AAFES contracts for default.

– ———————————————————————————————————————FULL NAME AND BUSINESS ADDRESS OF CONTRACTOR TELEPHONE NUMBER: FAX NUMBER:(Street, City & Zip Code or Country) (509) 289-9255 (801) 730-4734HomeNet Communications ———————————————————————5252 North Edgewood Drive Suite 310 E-MAIL:Provo, UT 84604 ——————————————————————— SIGNATURE OF PERSON AUTHORIZED TO SIGN CONTRACT DATE /s/ Michael W. Devine 24 Feb 05- ———————————————————————————————————————TIN NO. DUNS NO. TYPED OR PRINTED NAME AND TITLE91-2133121 11-868-8360 Michael W. Devine President, CFO- ——————————————————————————————————————— CONTRACTING OFFICER- ———————————————————————————————————————SIGNATURE TYPED NAME DATE OF AWARD Yvonne Finch/s/ Yvonne Finch Contracting Officer, Army & Air Force Exchange Service 25 Feb 05- ——————————————————————————————————————— AAFES FORM 4450-032 (REV JAN 98) (Prev Edition Usable)

Negotiated Contract 01-001-05-02 SCHEDULE1. General: This is a negotiated contract for the provision of HomeNetCommunications Inc. to construct, operate, and maintain an integrated IPfiber-to-the-Home (FTTH) IP network to deliver voice, video and data and otheremerging technologies as they become available in the marketplace. The terms,conditions, specific location(s) and scope of service is outlined in Exhibit F,Terms & Deliverables and made part of this contract.It is understood that the delivery of service is contingent upon acceptance ofthe proof of concept and project briefing to Kunsan AB command and the PacificAF command in Hawaii. If the proof of concept is not accepted, this contractwill be terminated in whole at no cost to AAFES or the government.2. Contents: This contract consists of AAFES Form 4450-32, “NegotiatedContract”, and the following:a. This Schedule consisting of 3 pages.b. Exhibit A: General Provisions, Contract for Services consisting of 8 pages.c. Exhibit B: Labor Provisions, consisting of 1 pages.d. Exhibit C: Fee Schedule, consisting of 2 pages.e. Exhibit D: Insurance, consisting of 2 pages.f. Exhibit E: Performance & Equipment Specifications, consisting of 5 pages.g. Exhibit F: Terms and Deliverables, consisting of 1 page and attachments.h. Exhibit G: ROK Taxes, consisting of 1 page.i. Exhibit H: Certificate For Tax Exemption, consisting of 3 pages. 3.Phase-Out/Changeover Period: a. The 120 day period following expiration of the contract is aphase-out/changeover period during which time HomeNet Communications Inc. willcontinue operations to correspond with a phase-in of the following contract, asdirected by the contracting officer, to provide continuity of service. b. Upon the request of the contracting officer, HomeNet CommunicationsInc. must remove all switching equipment and cease to market (make widely andreadily available) all telecommunication services offered under this contractwithin the 120 days phase-out/changeover period as approved by the contractingofficer. AAFES shall have the first option to purchase equipment and facilities.4. Business Permit: HomeNet Communication Inc. certifies by submission ofproposal, and/or acceptance of a contract that he will obtain all necessarypermits and licenses relative to operating in the country in which contract willbe performed prior to contract performance. The burden of determiningapplicability of host country business requirements is strictly HomeNetCommunications Inc. responsibility and will not give rise to any claim againstAAFES or a basis for adjusting terms and conditions of the contract.5. Conflict of AAFES Contract and Host Country Laws, Rules, Regulations, andCodes: HomeNet Communications, Inc. and its sub-contractors shall ensure thatall service offered under this contract comply with all applicable host countrylaws, rules, regulations and codes. HomeNet Communications, Inc. must also Kunsan Telecommunications PAGE 1 Negotiated Contract 01-001-05-02indemnify AAFES and the Air Force from any violations of host country laws,rules, regulations and codes and any claims of patent, trademark, service markor copyright infringement by third parties.6. Activity: AAFES grants HomeNet Communications Inc. a nonexclusive concessionto operate the Services outlined in this contract, however, AAFES will notcontract to provide the services covered under this contract during the periodof the contract. This excludes existing and future national or worldwidecontract and services sold through our retail stores. The assignment of spacefor concession is a revocable license, not a tenancy. a.AAFES or the Air Force makes no warranty or representation, expressor implied of Services sold by HomeNet Communications Inc are not restrictedfrom competition on the base and shall have no liability or obligation toHomeNet Communications Inc. in connection with allowing telephone or Internet ortelevision providers, to have access to the Residents on the base. Residents mayselect a service provider of their choice for their telecommunications services. b.HomeNet Communications Inc. will be positioned and marketed withinthe AAFES marketing channels as the provider of choice for telephone, data andvideo services to all Residents. HomeNet Communications Inc. understands andagrees that AAFES will continue to market telecommunication services in AAFESnational telecommunication contracts. c.If premises furnished by or through AAFES are destroyed either inwhole or in substantial part, so as to significantly hinder or prevent normaloperations by HomeNet Communications Inc., by acts of God (such as, but notlimited to, fire, flood, hurricane, unusually severe weather conditions) orunusual occurrence, AAFES nor the Air Force will not be responsible to HomeNetCommunications Inc. for repair/restoration of the premises, lost income, sales,or lost profits, damage to HomeNet Communications Inc. property, employeesalaries, or any consequential costs incurred, or be obligated to relocateHomeNet Communications Inc.. HomeNet Communications Inc. should considerobtaining business insurance to cover risks to its property. d. During the contract period, the contracting officer may requireHomeNet Communications Inc. to relocate from retail space provided by AAFES tobetter meet AAFES needs or those of the base, as determined by the contractingofficer. HomeNet Communications Inc. will be given advance notice. AAFES or theAir Force will not be liable for lost income, profit and/or salaries associatedwith relocating.7. Facilities/Maintenance: HomeNet Communications Inc. investment for buildingswill only be required in those locations where suitable retail space cannot besecured. AAFES will maintain AAFES furnished premises (retail sales outlet)including ordinary running repairs. HomeNet Communications Inc. will be liablefor damage to the premises resulting from acts or omissions of HomeNetCommunications Inc., its employees, or agents. AAFES may inspect the premises atany time. HomeNet Communications Inc. will keep the premises clean, orderly,secure, and sanitary. HomeNet Communications Inc. will comply with thebase/exchange fire, safety and security regulations and applicable health andsanitation and environmental protection regulations.8. Prohibited Activities: HomeNet Communications Inc. will take no actionscounter to the purpose of this contract or which have the effect of divertingsales from the base activity to HomeNet Communications Inc. commercial businessactivities. Facilities will not be used for performance or support of otherAAFES contracts or commercial business activities.9. Authorized Customers: HomeNet Communications Inc. will sell service ormerchandise under this contract only to personnel authorized to use AAFESfacilities.10. Customer Complaints and Claims: HomeNet Communications Inc. will adhere toAAFES’ policy of customer satisfaction guaranteed. All customer complaints andclaims will be resolved at HomeNet Communications Inc. expense. Any disagreementthat cannot be resolved between HomeNet Communications Inc. and the customerwill be decided by the contracting officer, whose decision will be final and notsubject to Kunsan Telecommunications PAGE 2 Negotiated Contract 01-001-05-02the Disputes clause. If HomeNet Communications Inc. fails to process complaintsand claims timely, AAFES may, in addition to other rights and remedies availableunder this contract, settle customer complaints and claims and charge them toHomeNet Communications Inc.11. Utilities: AAFES will pay for all utilities, to include heat, power, water,and sewage service, at AAFES furnished retail sales outlets unless otherwiseprovided in the contract. AAFES will not be liable for losses caused byinterruptions of utility service. HomeNet Communications Inc. will pay forconnecting and disconnecting utilities to HomeNet Communications Inc. furnishedequipment.12. Internal Controls: HomeNet Communications Inc. will keep a complete andaccurate accounting of all transactions including, but not limited to, customerbilling, facility sales, organization sales, etc. Customer billing will be inaccordance with industry standards. a. The AAFES contracting officer, or any person designated by thecontracting officer, may conduct inspections to ensure compliance by HomeNetCommunications Inc. with all provisions of this contract. This includes visitingthe HomeNet Communications Inc. computer operations center, or other appropriatefacility, to inspect electronic reporting activities such as record keepingdetermining integrity of results reporting. HomeNet Communications Inc. mustagree to provide access to all necessary records, files, personnel, equipmentand other information or resources deemed necessary by AAFES to satisfactorilycomplete its review. Reasonable notice will be provided to HomeNetCommunications Inc. in advance of AAFES audit activities. b. HomeNet Communications Inc. is liable and will pay AAFES for lossesunder this contract detected by surveillance or otherwise discovered orincurred.13. Taxes: HomeNet Communications Inc. is responsible for determining theapplicability of and for payment of all federal, state, local or host countrytaxes taxes applicable to the property, income, and transactions of HomeNetCommunications Inc. If required by applicable laws and regulations, HomeNetCommunications Inc. will collect and remit sales taxes to the appropriateauthority.14. Employees: HomeNet Communications Inc. will discontinue the use of anyemployee for performance of this contract upon written notice from thecontracting officer that the individual is not (or no longer) acceptable forperformance under this contract.15. Insurance: HomeNet Communications Inc. will maintain in full force andeffect, during the contract, at least the insurance coverage in the InsuranceRequirement Exhibit. HomeNet Communications Inc. will be liable for damage, lossor injury to property or persons resulting from acts or omissions of HomeNetCommunications Inc. employees or agents, whether or not covered by requiredinsurance.16. Refunds: HomeNet Communications Inc. will be responsible for refunds tocustomers for customer dissatisfaction with Service(s) or for any overcharges tocustomers. Should HomeNet Communications Inc. refuse or fail to promptly makeany refund of overcharges to a customer, AAFES may make the refund and chargeHomeNet Communications Inc. Kunsan Telecommunications PAGE 3 Negotiated Contract 01-001-05-02 EXHIBIT A GENERAL PROVISIONS Contract for Services (August 2004) 1. AUTHORITY TO BIND (JAN 94). 2. LEGAL STATUS (AUG 92). 3. PROCUREMENT INTEGRITY (AUG 92). 4. ORAL REPRESENTATIONS (JAN 94). 5. MODIFICATIONS AND ADDITIONS (JUN 94). 6. SUBCONTRACTING (JUN 94). 7. ASSIGNMENT – SERVICES (DEC 97). 8. TERMINATION (AUG 04). 9. PERMITS, LICENSES AND APPLICABLE LAWS (JAN 94). 10. INDEMNIFY AND HOLD HARMLESS (MAY 89). 11. DISPUTES (FEB 95). 12. NON-WAIVER OF DEFAULTS (MAY 89). 13. ADVERTISEMENTS (MAY 89). 14. EXAMINATION OF RECORDS (MAR 94). 15. CONTRACTOR PERSONNEL AND REPRESENTATIVES (JAN 94). 16. ENVIRONMENTAL PROTECTION (MAR 94). 17. CONTRACTOR LIABILITY – SERVICES (MAR 94). 18. DRUG-FREE WORKPLACE (AUG 92). 19. RESTRICTIONS ON PURCHASES OF FOREIGN GOODS (AUG 95). 20. YEAR 2000 COMPLIANT (APR 98). 21. PAYMENT BY ELECTRONIC FUNDS TRANSFER (OCT 98). 22. PRIVACY ACT (APR 1984) Kunsan Telecommunications PAGE 4 Negotiated Contract 01-001-05-02 GENERAL PROVISIONS Contract for Services1. AUTHORITY TO BIND (JAN 94). a. “Contracting Officer” means a person authorized by the Commander, AAFES to execute and administer contracts, purchase orders, or other agreements on behalf of AAFES. Only contracting officers may waive or change contract terms; impose additional contract requirements; issue cure, show-cause and termination notices; issue claims against contractors, and issue final decisions on contractor claims. a. Other AAFES and government officials may be authorized by thecontracting officer to perform actions of an administrative nature, forwardingrequests for contract changes to the contracting officer; collecting contractpayments, and processing routine documents. These officials are not contractingofficers, as defined in a. above. b. AAFES has no obligation to recognize or accept waivers or changes tothis contract that result from the actions of officials other than thecontracting officer. Claims based on such actions may be denied. Questionsconcerning the authority of other AAFES or government officials should bereferred to the contracting officer.2. LEGAL STATUS (AUG 92). The Army and Air Force Exchange Service, including itsactivities, offices, individual exchanges and overseas exchange systems, is anintegral part of the Departments of the Army and Air Force and is anonappropriated fund instrumentality of the United States Government. AAFEScontracts are United States contracts; however, they do not obligateappropriated funds of the United States except for a judgment or a compromisesettlement in suits brought under the provisions of the Contract Disputes Act(41 USC 601-613), in which event AAFES will reimburse the United StatesGovernment (31 USC 1304[c]). (Note: AAFES procurement policy is established bythe Department of Defense and the Army and Air Force in DoD Directive 4105.67,AR 60-10/AFR 147-7, and AR 60-20/AFR 147-14. The Armed Services Procurement Actand Federal Acquisition Regulation do not apply to AAFES due to its status as anonappropriated fund instrumentality).3. PROCUREMENT INTEGRITY (AUG 92). a. By submission of an offer or performance of this contract, HomeNetCommunications Inc. certifies with respect to this AAFES purchase action: (1) that no discussion, offer or promise of future employment orbusiness opportunity has been or will be made to AAFES civilian or militarypersonnel who participated personally and substantially in the purchase action; (2) that no offer, promise or gift of any gratuity, entertainment,money, or other thing of value has been or will be made to any AAFES civilian ormilitary personnel or any other employee of the United States Government ormember of their family or household; (3) that no information proprietary to other offerors or otherpurchasing information (listing of offerors, prices offered, technicalevaluations or rankings, etc.) has been or will be sought, obtained or given toany person not authorized by the contracting officer, until it would beavailable to the public under AAFES procedures. (4) that no person or selling agency has been employed or retained tosecure this contract upon an agreement or understanding for a commission,percentage, brokerage or contingent fee except bona fide employees or bona fideestablished commercial selling agencies retained by the or the purpose ofsecuring business. Kunsan Telecommunications PAGE 1 Negotiated Contract 01-001-05-02 b. HomeNet Communications Inc. certifies that no gratuities(entertainment, gifts, money, kickbacks or other things of value) were or willbe solicited or accepted by the HomeNet Communications Inc., or any personrepresenting HomeNet Communications Inc., from any subcontractor or personrepresenting the subcontractor, for the purpose of obtaining or rewardingfavorable treatment in connection with this contract or any subcontract underit. c. HomeNet Communications Inc. will report in writing to the Director,Loss Prevention Division, any possible violation of this clause when HomeNetCommunications Inc. has reasonable grounds to believe a violation may haveoccurred. HomeNet Communications Inc. shall cooperate fully with any federalagency investigation of a possible violation of this clause. d. For breach of any of these certifications, AAFES may terminate thiscontract for default and/or deduct from amounts due under this or othercontracts, or charge HomeNet Communications Inc. for, the total value of anycontingent fee, gratuity or kickback or other loss to AAFES arising out of thebreach.4. ORAL REPRESENTATIONS (JAN 94). This contract represents the entire agreementof the parties. Any changes or amendments thereto may not be recognized by AAFESunless committed to writing and incorporated by reference into the contract bythe contracting officer.5. MODIFICATIONS AND ADDITIONS (JUN 94). Except as otherwise specificallyprovided in this contract, all changes, modifications, additions or deletions tothis contract must be prepared in writing as formal amendments signed by bothparties and approved in accordance with provisions of applicable regulations.6. SUBCONTRACTING (JUN 94). HomeNet Communications Inc. shall not subcontractany part of the work to be performed without the prior written consent of thecontracting officer. Any HomeNet Communications Inc. sub-contractor used inconnection with this contract is the agent of the HomeNet Communications Inc.and not the agent of AAFES.7. ASSIGNMENT – SERVICES (DEC 97). The Assignment of Claims Acts, 31 U.S.C. 3727and 41 U.S.C. 15, are not applicable to amounts due under AAFES contracts.HomeNet Communications Inc. may not assign its rights or delegate itsobligations under this contract, and AAFES will neither consent to, norrecognize, any purported assignment. HomeNet Communications Inc. may requestpermission from the contracting officer to have contract payments forwarded to athird party.8. TERMINATION (JUN 94). Relative to termination of this contract, it ismutually agreed: a. This contract may be terminated in whole or in part by either partyimmediately upon written notice to the other party in the event of breach ofthis contract by the other party. b. This contract may be terminated in whole or in part by either partyfor cause upon 120 days notice in writing to the other party. c. At the end of the contract term, and should HomeNet CommunicationsInc. not win a follow on contract, HomeNet Communications, Inc. shall remove attheir expense all uninstalled equipment. Kunsan Telecommunications PAGE 2 Negotiated Contract 01-001-05-02 d. Upon or within 120 days after the expiration or termination of thiscontract, the HomeNet Communications Inc. shall, at its sole cost, shall leaveany conduits, risers and wiring or cabling located in the ground, walls,ceilings, floors, risers and conduits in its then “as is” condition and properlylabeled and in conformance with then applicable laws and codes. This contract isautomatically terminated upon the dispatch of written notice to HomeNetCommunications Inc. in the event the exchange is inactivated or the installationat which the exchange is located is inactivated. If this contract coversservices to be performed at various exchanges or installations and only one ormore of the exchanges or installations are inactivated, then only that portionof the contract being performed at the inactivated exchange or installation isterminated.9. PERMITS, LICENSES AND APPLICABLE LAWS (JAN 94). HomeNet Communications Inc.warrants that all necessary permits and licenses have been obtained and that themerchandise, services, supplies, and/or equipment provided under this contractare in compliance with applicable laws.10. INDEMNIFY AND HOLD HARMLESS (MAY 89). a. HomeNet Communications Inc. will indemnify, hold harmless and defendAAFES and all other agencies and Instrumentalities of the United States, theiragents, representatives, employees and customers from any and all suits,judgments and claims, including those established by or pursuant to courtdecisions, to international agreements, or duly promulgated regulations of theUnited States Government, and all charges and expenses incident thereto whicharise out of any of the following: (1) The alleged or established violation or infringement of any patent,copyright or trademark rights asserted by any third party with regard to itemsor services provided by HomeNet Communications Inc.; (2) Loss, damage, or injury alleged or established to have arisen outof or in connection with items or services provided by HomeNet CommunicationsInc., unless such loss, damage, or injury was caused by or resulted solely fromthe acts or omissions of AAFES, its agents, representatives, or employees; (3) Any loss, damage, or injury alleged or established to have arisenout of or in connection with any other acts or omissions of HomeNetCommunications Inc.. b. AAFES will give HomeNet Communications Inc. notice and anopportunity to defend.11. DISPUTES (FEB 95). a. This contract is subject to the Contract Disputes Act of 1978, asamended (41 U.S.C. 601-613). Except as provided in the Act, all disputes arisingunder or relating to this contract shall be resolved under this clause. b. “Claim” as used in this clause means a written demand or writtenassertion by one of the contracting parties seeking the payment of money in asum certain or other relief arising under or relating to this contract. Avoucher, invoice, or other routine request for payment that is not in disputewhen submitted is not a claim under the Contract Disputes Act. c. A claim by HomeNet Communications Inc. shall be made in writing andsubmitted to the contracting officer for a written decision. A claim by AAFESagainst HomeNet Communications Inc. shall be made by a written decision by thecontracting officer. d. For HomeNet Communications Inc. claims exceeding $100,000, HomeNetCommunications Inc. shall submit with the claim a signed certification that: (1) The claim is made in good faith; (2) Supporting data are accurate and complete to the best of HomeNetCommunications Inc.’s knowledge and belief, and Kunsan Telecommunications PAGE 3 Negotiated Contract 01-001-05-02 (3) The amount requested accurately reflects the contract adjustmentfor which HomeNet Communications Inc. believes AAFES is liable. e. The claim must be executed by an individual with authority to bindHomeNet Communications Inc. f. The contracting officer will mail or otherwise furnish a writtendecision in response to a HomeNet Communications Inc. claim, within the timeperiods specified by law. Such decision will be final and conclusive unless: (1) Within 90 calendar days from the date of HomeNet CommunicationsInc.’s receipt of the final decision HomeNet Communications Inc. appeals thedecision to the Armed Services Board of Contract appeals (ASBCA), or (2) Within 12 months from the date of HomeNet Communications Inc.’sreceipt of the final decision HomeNet Communications Inc. brings an action inthe United States Court of Federal Claims. g. Pending final resolution on any request for relief, claim, appeal,or action arising under or relating to this contract, HomeNet CommunicationsInc. will proceed diligently with the performance of this contract and willcomply with the contracting officer’s decisions. h. Submission of false claims to AAFES is a violation of federal lawand may result in civil and/or criminal penalties. If HomeNet CommunicationsInc. cannot support all or part of its claim as a result of fraud ormisrepresentation of fact, then in addition to other remedies or penaltiesprovided for by law, HomeNet Communications Inc. will pay AAFES an amount equalto the unsupported part of the claim and all AAFES’ costs attributable toreviewing that part of the claim.12. NON-WAIVER OF DEFAULTS (MAY 89). Any failure by AAFES at any time, or fromtime to time, to enforce or require strict performance of any terms orconditions of this contract will not constitute waiver thereof and will notaffect or impair such terms and conditions in any way or AAFES’ right at anytime to avail itself of such remedies as it may have for breach or breaches ofsuch terms and conditions.13. ADVERTISEMENTS (MAY 89). HomeNet Communications Inc. will not represent inany manner, expressly or by implication, that products purchased under thiscontract are approved or endorsed by any element of the United StatesGovernment. Any advertisement, including cents off coupons, by HomeNetCommunications Inc., which refers to AAFES, will contain a statement that theadvertisement was neither paid for nor sponsored, in whole or in part, by AAFES.14. EXAMINATION OF RECORDS (MAR 94). a. This clause is applicable if the amount of this contract exceeds$10,000 and the contract was entered into by means of negotiation. HomeNetCommunications Inc. agrees that the contracting officer (CO) or CO dulyauthorized representative shall have the right to examine and audit the booksand records of HomeNet Communications Inc. directly pertaining to the contractduring the period of the contract and until the expiration of three years afterfinal payment under the contract. b. HomeNet Communications Inc. agrees to include clause “a” in allsubcontracts hereunder which exceed $10,000.15. HOMENET COMMUNICATIONS INC. PERSONNEL AND REPRESENTATIVES (JAN 94). a. HomeNet Communications Inc. will discontinue the use of anyindividual for performance of this contract in exchange facilities upon writtennotice from the contracting officer that the individual is not (or no Kunsan Telecommunications PAGE 4 Negotiated Contract 01-001-05-02longer) acceptable for performance under this contract. HomeNet CommunicationsInc. will not use any such person to perform other AAFES contracts without theprior written consent of the applicable contracting officer. b. HomeNet Communications Inc. will not employ for performance inexchange facilities any individual under this contract who has been determinedunacceptable for performance under any other AAFES contract without the priorwritten consent of the contracting officer. c. HomeNet Communications Inc. personnel will abide by applicableregulations and directives and conduct themselves so as not to reflect discrediton AAFES. d. HomeNet Communications Inc. will not represent itself to be an agentor representative of AAFES, or any other agency or instrumentality of the UnitedStates.16. ENVIRONMENTAL PROTECTION (MAR 94). a. This clause shall apply to any contract in excess of $100,000, andindefinite quantity contracts estimated to exceed $100,000 in one year; however,it shall not apply to use of facilities located outside the United States or tocontracts otherwise exempt in accordance with 40 CFR Part 15. b. Unless this contract is exempt, by acceptance of this contract,HomeNet Communications Inc. (and, where appropriate, sub-contractors)stipulates: (1) that any facility to be utilized in the performance of anynonexempt contract or subcontract is not listed on the EPA List of ViolatingFacilities as of the date of contract award; (2) its agreement to comply with all requirements of Section 114 of theAir Act and Section 308 of the Water Act relating to inspection, monitoring,entry, reports, and information, as well as all other requirements specified insections 114 and 308 of the Air Act and the Water Act, respectively, and allregulations and guidelines issued thereunder; (3) that as a condition of award of contract, HomeNet CommunicationsInc. shall promptly notify the contracting officer of the receipt of anycommunication from the Director, Office of Federal Activities, U.S.Environmental Protection Agency, or delegatee, indicating that a facility to beutilized for the contract is under consideration to be listed on the EPA List ofViolating Facilities; (4) its agreement to include the criteria and requirements insubparagraphs (1) through (4) in every nonexempt subcontract, and to take suchactions the Government may direct as a means of enforcing such provisions.17. HOMENET COMMUNICATIONS INC. LIABILITY – SERVICES (MAR 94). a. Except as set out specifically elsewhere in the contract, HomeNetCommunications Inc. will be liable for costs to AAFES and/or other agencies ofthe United States associated with termination for default as follows: (1)Incidental damages, including expenses reasonably incurred in connection withrepurchase of the service and any other reasonable expense incident to thebreach. (2) Consequential damages including, but not limited to, lost feesresulting from lapses in service, unscheduled facility closures, sales declines,lower fees received on repurchase, and injury to person or property proximatelyresulting from any breach of warranty. b. HomeNet Communications Inc. will not be liable for incidental orconsequential damages if the failure to perform arises out of causes beyond thecontrol and without the fault or negligence of HomeNet Communications Inc.. Suchcauses may include, but are not restricted to, acts of God or of the publicenemy, Kunsan Telecommunications PAGE 5 Negotiated Contract 01-001-05-02acts of the government in either its sovereign or contractual capacity, fires,floods, epidemics, quarantine restrictions, strikes, freight embargoes, andunusually severe weather; but in every case the failure to perform must bebeyond the control and without the fault or negligence of HomeNet CommunicationsInc. In such case HomeNet Communications Inc. must provide prompt written noticeto the contracting officer; the contracting officer, at his option may acceptlate, partial or substituted performance, or may terminate the contract in wholeor in part effective immediately upon receipt of written notice by HomeNetCommunications Inc..18. DRUG-FREE WORKPLACE (AUG 92). HomeNet Communications Inc. agrees to make agood faith effort to establish and maintain a drug-free workplace in connectionwith the performance of this contract. Consistent with the size and organizationof its work force, HomeNet Communications Inc. may wish to consider taking thefollowing or other appropriate actions in establishing a drug-free workplace:publicizing a drug-free workplace policy, initiating an employee drug awarenessprogram or encouraging participation in existing community/installation programsand informing employees of the general availability of drug counseling programs.19. RESTRICTIONS ON PURCHASES OF FOREIGN GOODS (AUG 95). a. HomeNet Communications Inc. will not acquire for use in theperformance of this contract any merchandise, equipment, supplies or servicesoriginating from, processed in, or transported from or through, the countriesprohibited from commerce by the United States Government. A current list ofprohibited countries is available from the contracting officer. This restrictionshall include merchandise, equipment, supplies or services from any othercountry that is restricted by law, regulation or executive order at any timeduring performance of the contract. b. HomeNet Communications Inc. agrees to insert the provisions of thisclause, including this paragraph, in its subcontracts.20. YEAR 2000 COMPLIANT (APR 98). b. All computer hardware, software, and firmware products used in the performance of this contract, individually or in combination, must be Year-2000 Compliant. Year-2000 Compliant means that the information technology used will accurately process date and date- related data (including, but is not limited to, calculating, comparing, and sequencing) from, into, and between the twentieth and twenty-first century, the years 1999, 2000 and 2001, and all leap year calculations. c. Failure to perform this contract due to the use of information technology that is not Year- 2000 Compliant will not be considered to be beyond the control and without the fault or negligence of the HomeNet Communications Inc.. In the event of problems in recognition, calculation, indication of a century, the HomeNet Communications Inc. will promptly make all adjustments necessary, at no cost to AAFES, to ensure that their systems are Year-2000 Compliant.21. PAYMENT BY ELECTRONIC FUNDS TRANSFER (OCT 98). The following will apply forall payments made by AAFES to HomeNet Communications Inc. under the terms ofthis contract. a. Method of payment. (1) All payments by AAFES under this contract shall be made byelectronic funds transfer (EFT). The term “EFT” refers to the funds transfer andmay also include the payment information transfer. (2) If AAFES is unable to release payment by EFT, HomeNetCommunications Inc. agrees to either (I) accept payment by check or some othermutually agreeable method of payment, or (ii) request AAFES to extend thepayment due date until such time as AAFES can make payment by EFT. Kunsan Telecommunications PAGE 6 Negotiated Contract 01-001-05-02 b. AAFES shall make payment to HomeNet Communications Inc. using theEFT information provided by HomeNet Communications Inc. In the event that theEFT information changes, the HomeNet Communications Inc. shall be responsiblefor providing the updated information to AAFES, not less than thirty days priorto the effective date. c. If HomeNet Communications Inc.’s EFT information in the AAFESdatabase is incorrect AAFES need not make payment to HomeNet Communications Inc.under this contract until correct EFT information is entered into the AAFESdatabase; and any invoice shall be deemed not to be a proper invoice for thepurpose of prompt payment under this contract. d. If HomeNet Communications Inc. has identified multiple paymentreceiving points in the AAFES database, and HomeNet Communications Inc. has notnotified AAFES of the payment receiving point applicable to this contract, AAFESshall make payment to the first payment receiving point listed in the AAFESdatabase. e. The payment or disbursing office shall forward to HomeNetCommunications Inc. available payment information. AAFES shall send the paymentinformation to the remittance address contained in the AAFES database.22. Privacy Act (APR 1984)(a) HomeNet Communications Inc. agrees to (1) Comply with the Privacy Act of 1974 (the Act) and Department of Defense rules and regulations issued under the Act in the design, development, or operation of any system of records on individuals to accomplish an agency function when the contract specifically identifies — (i) The systems of records; and (ii) The design, development, or operation work that the HomeNet Communications Inc. is to perform; (2) Include the Privacy Act notification contained in this contract in every solicitation and resulting subcontract and in every subcontract awarded without a solicitation, when the work statement in the proposed subcontract requires the redesign, development, or operation of a system of records on individuals that is subject to the Act; and (3) Include this clause, including this subparagraph (3), in all subcontracts awarded under this contract, which requires the design, development, or operation of such a system of records.(b) In the event of violations of the Act, a civil action may be brought againstAAFES when the violation concerns the design, development, or operation of asystem of records on individuals to accomplish an AAFES function, and criminalpenalties may be imposed upon the officers or employees of AAFES when theviolation concerns the operation of a system of records on individuals toaccomplish an AAFES function. For purposes of the Act, when the contract is forthe operation of a system of records on individuals to accomplish an AAFESfunction, HomeNet Communications Inc. is considered to be an employee of AAFES(c) (1) “Operation of a system of records,” as used in this clause, meansperformance of any of the activities associated with maintaining the system ofrecords, including the collection, use, and dissemination of records. (2) “Record,” as used in this clause, means any item, collection, or grouping of information about an individual that is maintained by an agency, including, but not limited to, education, financial transactions, medical history, and criminal or employment history and that contains the person’s name, or the identifying number, symbol, or other identifying particular assigned to the individual, such as a fingerprint or voiceprint or a photograph. Kunsan Telecommunications PAGE 7 Negotiated Contract 01-001-05-02 (3) “System of records on individuals,” as used in this clause, means a group of any records under the control of any agency from which information is retrieved by the name of the individual or by some identifying number, symbol, or other identifying particular assigned to the individual.(d) The system or systems of records identified for this contract is/are:The system of records refers to information collected, compiled, and/or utilizedto build a customer database for potential and/or current/follow-on services.Instruments used to collect information in written or electronic formatsinclude, but are not limited to, application for services, verification ofcredit rating, customer inquiries/comments, data for invoicing currentcustomers, change of address notifications, information used for marketingpurposes, etc.(e) Subcontracting/outsourcing customer data outside CONUS is not acceptable forDoD Operational Security (OPSEC) purposes. Kunsan Telecommunications PAGE 8 Negotiated Contract # 01-001-05-02 EXHIBIT B LABOR PROVISIONS1. Equal Employment Opportunity/Employment of the Handicapped; During theperformance of this contract, HomeNet Communications Inc. agrees insofar asallowed by the laws of the country in which the contract is being performed, tothe following: a. HomeNet Communications Inc. will not discriminate against anyemployee or applicant for employment because of race, color, religion, sex,national origin, age, marital status, or physical or mental handicap of anotherwise qualified person. HomeNet Communications Inc. will take affirmativeaction to ensure that applicants are employed, and that employees are treatedequally during employment without regard to their race, color, religion, sex,national origin, age, marital status, or physical or mental handicap of anotherwise qualified person. Such action shall include but not be limited to thefollowing: employment, upgrading, demotion, transfer, recruitment or recruitmentadvertising, layoff or termination, rates of pay, or other forms ofcompensation, selection for training, including apprenticeship. HomeNetCommunications Inc. agrees to post in conspicuous places available to employeesand applicants for employment, notices to be provided by the contracting officersetting forth the provisions of this non-discrimination clause. b. HomeNet Communications Inc. will, in solicitation or advertisementsfor employees placed by or on behalf of the contractor, state that all qualifiedapplicants will receive consideration for employment without regard to race,color, religion, sex, national origin, age, marital status, or physical ormental handicap of an otherwise qualified person. c. HomeNet Communications Inc. will send to each labor union orrepresentative of workers with whom he has a collective bargaining agreement orother contract of understanding a notice to be provided by the agencycontracting officer, advising the labor union worker’s representative of thecontractor’s commitments under this Equal Employment Opportunity/ Employment ofthe Handicapped Clause, and shall post copies of the notice in conspicuousplaces available to employees and applicants for employment. d. HomeNet Communications Inc. will furnish all information and permitaccess to his books, records, and accounts by the contracting agency for thepurpose of investigation to ascertain compliance with the Equal EmploymentOpportunity/Employment of the Handicapped Clause. Kunsan Telecommunications Page 1 Negotiated Contract # 00-001-05-02 EXHIBIT C Fee Schedule1. HomeNet Communications Inc. will pay AAFES the fee percentages identified inExhibit F, Terms & Deliverables for the entire term of the contract. Fee will becomputed on the total combined gross revenues billed to customers each month forall services and locations covered under this contract.2. Items exempt from Fee: (1) Refunds and credits to customer (2) Directory assistance charges that are “pass through” (3) Promotions as approved by the contracting officer (4) Government Imposed Fees (5) Administrative Charges (i.e. late payment penalty, returned check fee)3.Fee Payment & Settlement Reports: a. The reporting period will be by calendar month. Settlement reportsand fee payments are due at HQ AAFES on the 25th day of the month following themonth of performance. Payments due on Saturday, Sunday or federal holidays willbe due the next workday. b. If fee payments to AAFES are not made by the due date, HomeNetCommunications Inc. will pay AAFES interest calculated in accordance with thesemiannual interest rate determination by the Secretary of the Treasury underauthority of the Renegotiation Act for each day the payment is late. This chargewill be in addition to other remedies provided by the contract. c. Monthly reports should contain at a minimum, the data requested inExhibit C – Attachment 1. d. Settlement reports must be electronically transferred to the belowe-mail address on the 25th day of the month following the month of performance.An additional copy of the settlement report should be provided to the ServicesBusiness Manager at each exchange. faircloth@aafes.comIf electronic copies are not possible due to Internet inoperability, fax or mailthe settlement reports to: HQ AAFES ATTN: FA-C/AR P.O. BOX 660202 Dallas, Texas 75266-0202 e. Fee payments must be electronically transferred to: Kunsan Telecommunications Page 1 Negotiated Contract # 00-001-05-02 Wachovia Bank of Georgia Atlanta, GA ABA: 061000010 FCT: Army and Air Force Exchange Service ACCT: 15-011-847 f. HomeNet Communications Inc. will be required to furnish managementreports as described in Exhibit F, paragraph 14, Fee to AAFES, showing theaggregate number of lines, minutes of use, number of calls, number of Internetcustomers, number of television service customers, and HomeNet CommunicationsInc.’s sales and the fee to AAFES for each service. Kunsan Telecommunications Page 2 Negotiated Contract # 01-001-05-02 Exhibit D Insurance1. HomeNet Communications Inc. agrees to purchase and maintain at its expense aninsurance company or companies acceptable to AAFES the insurance coverage listedherein for the period of this contract, and furnish a certificate of insuranceevidencing such insurance to be in effect, no later than ten days after award ofcontract (and indicating on the certificate of insurance that, in the event ofmodification, cancellation or nonrenewal, AAFES will be given 30 days priornotice). All liability insurance contracts shall name the United States andAAFES as additional and several insured with respect to claims, demands andexpenses arising out of or in connection with any loss, damage or injuryresulting from acts or omissions of contractor, its agents, representatives oremployees. The certificate of insurance must show the United States and AAFES asadditional insured for all liability coverage shown below. This insurance policywill be written on an “occurrence” basis and will include contractual liability.A policy written on a “claims made” basis is not acceptable. (1) Commercial General Liability Insurance with minimum limits asfollows:- ——————————————————————————-Any one occurrence, Bodily Injury and Property Damage Combined $1,000,000- ——————————————————————————-Property & Completed Operations, Per Occurrence $1,000,000- ——————————————————————————-General Aggregate Limit, Per Project $2,000,000- ——————————————————————————-HomeNet Communications Inc. Protective Liability Insurance in the limitsspecified in subparagraph “(1)” above. (2) Builder’s Risk Insurance covering loss or damage from the hazard offire and from the risks included within Extended Coverage Endorsement. HomeNetCommunications Inc. shall increase the amount of such insurance at periodicintervals so that 100% coverage of the value of materials delivered and laborperformed shall be maintained; and certificate of insurance furnished AAFESshall be amended periodically to show such revision. a. HomeNet Communications Inc. also agrees to purchase from sourcesreferred to in clause “a” above the following insurance coverage with limitscomplying with state or military installation requirements, whichever isgreater, where the contract is performed: (1) Worker’s Compensation Employer’s Liability Insurance. (2) Automobile Bodily Injury and Property Damage Liability for vehiclesoperated in performance of this contract by HomeNet Communications Inc.’s agentsor employees on the military installation, whether or not owned by thecontractor. b.HomeNet Communications Inc. agrees to require that all subcontractorswill purchase and maintain, at their expense in insurance company or companiesacceptable to AAFES, the following insurance and furnish AAFES with certificatesof insurance, evidencing that required coverage is in effect, no later than 10days after award of contract and that not less than 30 days prior written noticewill be given AAFES in the event of modification, cancellation, or nonrenewal. (1) Worker’s Compensation and Employer’s Liability Insurance withminimum limits specified in subparagraph “b” above. Kunsan Telecommunications Page 1 Negotiated Contract # 01-001-05-02 (2) Commercial General Liability Insurance with minimum limitsspecified in subparagraph “a (1)” above. This insurance policy will be writtenon an “occurrence” basis. A policy written on a “claims made” basis is notacceptable.Automobile Bodily Injury and Property Damage Liability Insurance as specified insubparagraph “b (2)” above. Kunsan Telecommunications Page 2 Negotiated Contract # 01-001-05-02 EXHIBIT E Performance & Equipment Specifications1. HomeNet Communications Inc. will be responsible to install, own, upgrade andmaintain their System and the Facilities necessary for the provision of allServices covered under this contract. HomeNet Communications Inc. will beresponsible for providing all services required by this solicitation includingsales to the customer, service activation and installation, equipmentmaintenance and customer service, billing, collections, and managementinformation reports. All items required for each type of service must befurnished at each facility where the services are offered.2. HomeNet Communications Inc. will be required to furnish the followingservices in connection with this contract: a. Provision of literature to each Resident customer explaining detail how each service works, the rates and charges, billing and payment schedules. b. Collection services to permit payment by Residents by check, cash,or credit card. c.Responsible for all fraudulent, uncollectible and unbillabletransactions. AAFES will bear no responsibility for fraudulent, uncollectible orunbillable Services. Resident will be responsible to pay administrative chargesif payment is not received within the required due date. Late fee charges cannotexceed those fee’s charged in the local market. d.Provide all sales materials, including displays, brochures, etc, tomarket services to the Residents. The Resident will be notified that theiragreement is with the contractor and not AAFES and that resolution of disputesshould be with the contractor. Special emphasis will be placed on the term ofthe contract, the price, features and terms of the service. e.Coordinating program policies with AAFES that impact customeraccounts, prior to implementing new policies. f.Establishing a single point-of-contact for program management withHeadquarters AAFES in Dallas, Texas. g. Obtaining permission for right-of-way and to gain required permitsand licenses to perform the installation, provide the Services, and maintain thetechnology platform over the term of the contract. h. Upgrading or enhancing the technology and delivery platform toaccommodate new and emerging features and services over the term of the contractas these services become available in each local market as mutually agreed uponthe contracting officer and HomeNet Communications Inc. i. Billing and collection for all products and services sold. Billpayment may be mailed or accepted at the on-base sales location. Financialarrangements for services offered is a matter solely between HomeNetCommunications Inc. and the customer. j. Ensure that AAFES is indemnified from any financial or legalexposure that may result from any fraudulent calls that may be originated orterminated from equipment or services provided under this contract. Kunsan Telecommunications Page 1 Negotiated Contract # 01-001-05-02 k. Reimbursement to Air Force for any construction damage that isassociated with the installation of the services. 1. Provide complete drawings of all installed property, according tothe industry standard, showing the locations of all facilities to each base. m. Provision of service where service currently does not exist in newbuildings. n. All customer agreements for voice, video and data services shallgive the customer the right to terminate service at any time without penalty andcharge to the customer. o. Establishing a program that allows suspension of service duringperiods of involuntary temporary duty for periods of 30 days or more. p. Configure satellite dishes to minimize the number required. ( dish for multiple family or dormitory buildings or one dish to covermultiple or single family dwellings.) q. Install Automated Voice Response system that is available 24 hours aday, 7 days a week and accessible from all locations via a toll free number r. Provide an automated electronic billing system for all servicesoffered under this contract. System software must be able generate a subscribersales report (computer print-out). s. Maintenance services 24 hours per day, seven days per week. Anyroutine out of service calls must be cleared/repaired within the time specifiedbelow. Additionally, HomeNet Communications Inc. is responsible for maintenanceand repair of all inside and outside wiring for all homes where Services areprovided. Service requests taken on major holidays will be cleared the nextbusiness day. (1) Any out of service request affecting one resident will be restoredwithin 2 business days. (2) Any out of service request affecting more than one resident will berestored within 1 business day. (3) Major failures affecting more than 10 rooms will be restored within4 hours. (4) Failure to repair and/or restore service within the timelinesspecified above will result in each affected Resident receiving a credit totheir monthly bill of 150% of the outage time period for each Service. t. Provide a telephone directory to all residents on the base.3. AAFES agrees to: a. Establish a single point-of-contact (POC) at its headquarters inDallas, Texas. b. Establish a single point-of-contact (POC) at each location whereAAFES for monitoring these programs and assisting in the local marketingefforts. c. At HomeNet Communications Inc. option and expense, under conditionsmutually agreed to by the parties, cooperate in an effort to provide HomeNetCommunications Inc. information from AAFES check and credit verification filesfor the sole purpose of HomeNet Communications Inc. reference in consideringacceptance of any service agreement and/or purchase. Kunsan Telecommunications Page 2 Negotiated Contract # 01-001-05-02 d. AAFES will make available marketing channels including direct mail,tabloid, in-store marketing and AAFES radio at HomeNet Communications Inc. Useof these marketing channels is optional. AAFES will assist with the distributionpromotional materials within its stores or other marketing channels.4. Billing Equipment: a. Billing equipment must be provided by HomeNet Communications Inc. atits expense to enable the detailed billing of charges to each individual housingResidence. Residents may select an individual bill for each of the Services or amultiple billing option.. b. Statements produced by HomeNet Communicaitons Inc. billing equipment must furnish the following details to each customer. If VoiP is offered, the below details are not required for unlimited calling plans. (1) Account number. (2) Called number. (3) Time of day. (4) Place called. (5) Date. (6) Duration of call. (7) Cover sheet which shows monthly service fees, toll charges,enhanced service charges for all services offered to each Resident and anyapplicable taxes.5. Construction: HomeNet Communications Inc. shall construct, install, own, afiber-to-the-home (FTTH) IP infrastructure network and maintain the System andthe Facilities necessary for the provision of all Services to the Residents.Prior to the commencement of any construction and/or installation work, HomeNetCommunications Inc. shall prepare and deliver to the Air Force, the proposeddesign and technical specifications for approval. HomeNet Communications Inc.will design the specifications in accordance with the Air Force requirements. Nowork shall commence until the Air Force has approved the plans. In no eventshall the Air Force approval of the plans be deemed a representation that theplans comply with applicable laws, rules or regulations, such responsibilityremaining with HomeNet Communication Inc. HomeNet Communication Inc. shall atits sole cost and expense: a. perform all such construction in a safe, good and workmanlikemanner; c. perform all such construction and work in such a way as to avoid, tothe fullest extent possible using all commercially reasonably efforts,interference with (1) the provision of any other telecommunications or otherservices at the Premises by other providers authorized to provide services; and(2) Resident’s use and enjoyment of the Premises; d. obtain, prior to the commencement of any construction and work, allnecessary federal, state, city, host nation, and base permits, licenses andapprovals; e. complete all work with dispatch, in compliance with all municipal,federal, state, local and host laws and regulations and rules and regulations ofthe base and without any mechanics or other liens (and the contractor shall bondor otherwise discharge any such liens within ten (10) days after the contractorreceives notice of the lien); Kunsan Telecommunications Page 3 Negotiated Contract # 01-001-05-02 e. represent that the installation of the HomeNet Communication Inc.System shall be in compliance with all applicable laws, rules and regulationsand; f. use licensed and insured contractors that have been approved byAAFES and the Developer, such approval not to be unreasonably withheld ordelayed. g. On request, HomeNet Communications Inc.will provide a detailedreport listing all service calls for the time period specified.6. Construction and Maintenance Costs. All costs of construction, installation,upgrades and maintenance of HomeNet Communications Inc. System and theFacilities on the Premises shall be paid by HomeNet Communications Inc. todeliver the required Services.7. Conduit Space and Inside Wiring: (a) HomeNet Communications Inc is required to install the conduit todeliver the required Services to all residents. Ownership of the Conduits shallat all times remain with HomeNet Communications Inc. during the term hereof, andis responsible to maintain, replace or repair the Conduits or provide access toalternate conduits at any time. (1) HomeNet Communication Inc. will install above ground pedestals andpull boxes as well as any related equipment to provide the Services to theResidents. (2) HomeNet Communication Inc. will have rights to existing poles torun the fiberoptic cable. In the event the electrical systems are placedunderground, HomeNet Communications Inc. will be required to place allcommunication systems underground. (b) HomeNet Communications Inc. shall, at its own cost and expense,install wire inside each of the single and family Residents in accordance withthe “Inside Wiring Specifications” approved by the Air Force. HomeNetCommunications Inc. certifies that the Inside Wiring Specifications arecompatible with the voice, high-speed data, and television services provided bythe technology.8. Ownership of contractors System and Facilities. HomeNet Communication Inc.shall construct, install, own, control, upgrade, and maintain HomeNetCommunications Inc. Systems and the Facilities.9. Additional requirements: At all times during the term of this contract,including during any installation, construction, alteration, repair ormaintenance: (a) HomeNet Communications Inc. shall promptly and adequately repairany damage to the Premises caused by HomeNet Communications Inc. and its agentsand contractors by restoring the damaged area(s) to the preexisting conditions; (b) HomeNet Communications Inc. shall keep detailed records of thelocation and description of all Facilities/Systems, label all new System wiringand Facilities and shall provide the Air Force with such other relatedinformation as requested. HomeNet Communication Inc. shall not during any workor otherwise, block access to or in any way obstruct, interfere with or hinderthe operation or use of the streets, sidewalks, entrances, garages, parkingareas or other common areas or Resident space. All new construction shall beseparate from the Air Forces infrastructure as much as practically possible. (c) HomeNet Communication Inc. shall provide all necessary maintenanceservices for its System and Facilities, and keep the System and Facilities ingood working order, repair and condition throughout the term of this contract. Kunsan Telecommunications Page 4 Negotiated Contract # 01-001-05-02 (d) HomeNet Communication Inc. shall be responsible for all electricalservices and electricity as necessary to operate its System and Facilities(electricity will be furnished at no cost to Homenet Communications Inc),however, Homenet needs to ensure backup power service is available. HomenetCommunication Inc. is responsible to provide such alternate cable routing andredundant switching capability and responsible for all necessary ventilation orair-conditioning of its equipment. AAFES makes no representation that theutilities are adequate for the Homenet Communication Inc. System and Facilities (e) HomeNet Communication Inc. shall not install or introduce anyhazardous substance or material into the Premises in violation of applicableenvironmental laws. In the event that any hazardous materials are installed orbrought into the Premise by or on behalf of HomeNet Communication Inc., then, atits own cost, cause the removal of same and shall indemnify and hold AAFES andthe base harmless from any claim, loss, cost, damage or expense resulting fromsuch hazardous materials installed or brought into the Premises by or on behalfof HomeNet Communication Inc. Kunsan Telecommunications Page 5 Negotiated Contract # 01-001-05-02 Exhibit F Terms and Deliverables1. Kunsan AB, Korea (February 2005, Attachment 1) Privatized Housing Communicaitons Page 1 Negotiated Contract 01-001-05-02 ATTACHMENT 1 TERMS & DELIVERABLES ARMY & AIR FORCE INSTALLATIONS/BASES, HAWAII TELECOMMUNICATIONS1. Contract Period: The contract period will become effective upon the executionof this contract by the contracting officer and shall remain in effect for 15years with five, one-year options for a maximum contract period of 20 years.Following the initial contract period, AAFES may extend the contract period bymutual agreement between AAFES, the Air Force and HomeNet Communication Inc. Norepresentation that this contract will be extended beyond its original period isbinding on AAFES unless sooner terminated according to the Exhibit A, GeneralProvisions, “Termination” (para.8). Annual performance reviews will be conductedto discuss contract objectives.2. Sales or Unit Potential/Market Penetration Potential: It is estimated thatgross sales will average approximately $150,000 per month for all single andfamily housing Residents. Contractor expressly acknowledges that AAFES makes noguarantee, express or implied concerning the sales estimates contained in thiscontract. The contractor releases AAFES from any and all liability based on thesales estimates, to include claims from subcontractors.3. Technology: The services, as more particularly described herein, shall bedelivered by HomeNet Communication Inc. to all Residents. HomeNet CommunicationInc. shall design, build and maintain at its sole cost and expense, an IPintegrated network fiber-to-the-home (FTTH) network solution for the purpose ofdelivering voice, video data services and other emerging technologies.HomeNet will perform a site survey and consequently a design for how to providethe new high-speed connectivity to all of the residential facilities. This willinclude Fiber-Optic Cabling, Free Space-Optics, and Inside Plant Category 5Ecabling to support the services. The technology will be dictated by technicalrequirement, physical attributes, and finally economy.Where technically and economically feasible, HomeNet intends to utilize FreeSpace Optic technology to interconnect high occupancy facilities or areas thatare hard to reach with Fiber Optic Cabling (i.e. across runways). Free SpaceOptics is a wireless communications equipment technology that utilizes modulatedlight (light pulses) as the communication medium through the air. Superficially,it is identical to normal fiber optic data transmission equipment, minus thefiber. FSO is used for point-to-point connectivity utilizing a pair oftransceivers aligned towards each other, where the transceiver pair forms alink.HomeNet Communication Inc. is required to submit the proof ofconcept/demonstration within 45 days of contract award based on the requirementsset forth below. If the proof of concept is accepted by the Air Force, thecontracting officer will notify HomeNet Communication Inc to bring theimplementation to construct, install and implement the FTTH solution within 5months.4. Services: At a minimum, the required Services and Features are: a. Video Service: State of the art bundled video services will beprovided to include basic channels, standard, premium channels, digital premiumservices, and video on demand, and high definition entertainment. Two channelswill be dedicated for the sole use of the Air Force for the purpose of communityannouncements and information. 1. The video service (U.S. content combined with AFN local programming): Kunsan Telecommmunications Page 1 Negotiated Contract 01-001-05-02 2. 30-40 Channels of legacy analog CATV. 3. 100+ Channels of IP Video (CATV services delivered via IP packets). 4. Digital DVD quality video 5. Dolby Digital (AC3) surround sound 6. Full functionality (play, pause, FF, etc.) 7. Video on Demand (DVD quality, 100 streams) via IP, VCR functionality 7. Subsciption VOD (Starz, Cinemax, HBO, Showtime). 8. DMX type digital music. 9. Ability to integrate locally produced content and local events. 10. Custom program guide (Welcome to Kunsan AB, etc). 11. Interactive program guide 12. Emergency pop-up notification to all users by base. 13. Ability to edit programming 14. Ability to access library of over 600,000 MP3’s b. High Speed Internet: Data services will include the standard suiteof services currently available to customers at no additional fee. Data servicesmust meet or exceed the speed and performance levels offered in the localmarket. 1. Unlimited, always-on Internet, 3Mb/s symmetrical. 2. 100 Mb/s local transfer rate and guaranteed transfer rates. 3. Video conferencing capabilities. 4. HomeNet-USA provided email accounts. 5. High speed interactive gaming. 6. Local website hosting capabilities. 7. Access to on-line degree/distance learning. 8. Virus detection and quarantine. 9. Intrusion protection systems. 10. Ability to offer wireless hotspots and connectivity to support customer requirements. 11. Parental controls c. Voice Services: HomeNet Communication Inc. will install and maintaina full feature telephony service to all residents. Each phone line will beavailable on a 24-hour basis for lifeline services (911 service) and VOIP willprovide CLASS Calling Features identified below. Residents will have the optionto select a local or country calling plan or unlimited local and long distancecalling plan. 1. Unlimited U.S./Canada calling. 2. Flat-rate international calling available in some markets. 3. Standard U.S. telephone number 4. Local dial tone (at no charge) and long distance service. 5. Integrated voice mail with Television. 6. User administration of services via the web. 11. Telephony T-l, PRI, etc. 12. Capability to extend unlimited US/Canada calling to family and friends in the U.S. 9. Capability to ring all phones (or by building, squadron etc.) at once with recorded message (Recall). 10. Secure telephone Virtual Private Network to protect the conversations across the Internet. 11. Calling features such as call forwarding, speed dial, last call return, call waiting with long distance alert, call waiting VIP, remote administration and voice mail. 12. HomeNet-USA Soft Phone: is a premium SIP-based User Agent with all the features and functionality of a small business phone system. Open standards-based design allows for maximum network interoperation and integration. Advanced controls allow for low-level adjustments and personalization of the SIP Soft phone for each Kunsan AB user. The quick configure option allows for Kunsan Telecommmunications Page 2 Negotiated Contract 01-001-05-02instant sign-up. Conferencing provides business capabilities to Kunsan ABoperators by combining up to seven PSTN & IP connections simultaneously. HomeNet-USA Soft phone Features: o Acoustic Echo Cancellation o Message Waiting Indicator o Touch-tones [DTMF] o 6 Lines o Line Hold o Line Transfer o Do Not Disturb o Inbound Call ‘Ignore’ o Inbound Call ‘Go to Voicemail’ o Call Forwarding URI/URL o Voicemail URL o 10 Party Conferencing [IP & PSTN] o Auto-conference o Dial/ Redial/Hang-up o Auto-answer o Dynamic CODEC Selection o Caller ID [SIP ID] o Call Timer o Silence Threshold o Backspace/Clear/Delete o Mute o Microphone & Speakers Levels o Microphone & Speakers Meters o Last Caller-ID o Recent Calls Dialed o Recent Calls Received o Sound Device Selection o Direct IP to IP Calling o New Familiar-looking Menu o Phonebook [Import/Export CSV] o Speed Dial HomeNet-USA Soft Phone Benefits o Travels with you wherever you go o Easy to install, intuitive user interface & Menu Easy to navigate and configure Kunsan Telecommmunications Page 3 Negotiated Contract 01-001-05-02 o G.711, G.729a, SPX , iLBC, GSM codecs included [G.729a for X-PRO Mac OS X and Pocket PC is available with a minimum order of 20,000 units.] o NAT/Firewall support o Specify NAT IP to be written in SIP messages o Supports Windows 98se/NT4/ME/2000/XP/Pocket PC o Supports Mac OS X o 7 party [PSTN + IP] Tele-Conferencing reduces costs for any business o Multiple Network support reduces technical fuss and expense HomeNet SoftPhone is an add-on service. You need to have a HomeNet plan to get HomeNet SoftPhone. Whether customers travel across the globe or just into the next room, carrying on a conversation doesn’t have to mean carrying extra equipment. HomeNet SoftPhone is a screen-based interface that works just like a customers telephone keypad. Customers can make a call, receive a call, and pick up voicemails too. Soft Phone also includes Caller ID with Name, Call Forwarding, and more. HomeNet SoftPhone usage is a mobile activity. 911 Dialing is not possible from a customers HomeNet SoftPhone. d. Mass notification capabilities including: 1. Pop up alerts on TV’s by organization, building, or individual. 2. Ticker tape capabilities with local base administration. 3. Integration of data from local or distant web based information. 4. Ability to consecutively ring all phones with recorded messages.5. HomeNet Communication Inc. will design, build and maintain, a virtualcustomer service site to facilitate ordering and scheduling of all Servicesoffered. The design and operation of this site will be mutually agreed upon byHomeNet Communication Inc. and AAFES.6. Oil-site Office: HomeNet Communication Inc will be required to have anon-site sales office. The location and hours of operation will mutually agreedupon between HomeNet Communications Inc. and AAFES.7. Contingency Network Failover Configuration: HomeNet will provide acontingency plan of operations to Kunsan AB by utilizing the networkinfrastructure deployed for residential voice, video and data services.Interconnectivity between the two autonomous systems will be accomplishedbetween HomeNet external routers and Kunsan AB firewalls. Separate firewallinterfaces will provide the capability to deploy specific filtering rules andstateful inspection to traffic that traverses the two separate network entities.Kunsan AB and HomeNet will exchange routing information using the defactostandard Inter-Autonomous System routing protocol, BGPv4. To ensure that returntraffic is routed symmetrically, BGP attribute manipulation will be utilized tostrip the base AS number and inject the HomeNet AS number. BGP relationships andfiltering will need to be coordinated between HomeNet and DISA to ensuresuccessful bidirectional IP forwarding is achieved. If encryption is required, aFIPS 140-2 compliant algorithm will be used between HomeNet and Kunsan AB.8. Prices: HomeNet Communication Inc. will offer bundled and unbundled pricingoptions offering Resident’s a savings when selecting two or more Services.Pricing must remain competitive within the local market and any price changesmust be coordinated and approved by the contracting officer. Kunsan Telecommmunications Page 4 Negotiated Contract 01-001-05-02 a.Market surveys will be conducted as the market dictates or asrequested by the Contracting Officer or its representative(s). Market surveyswill reflect regular non-promotional prices and/or service features from otherproviders. Market surveys will be conducted by reviewing local providers forlike services offered in the local area. Like services are defined as local,long distance, high speed Internet and video services and other emergingtechnologies as amended to this contract. Pricing and/or service featurediscrepancies will be elevated to HomeNet Communication Inc. who in turn willnotify the contracting officer of steps to be taken to bring pricing and/orservice features in line with the market survey findings. b.No fees or deposits will be charged with the exception of areconnection fee for non-payment of Services(s) and administrative charges suchas late payment fees and return check fees. Customary fees and charges will bewaived for those Residents that are deployed or TDY for more than 60 days. c.Payment of Services by the Residents to HomeNet Communication Inc.can be made by a credit card, automatic bank debit, checks and cash. Residentscan either submit payments online, through the on-site retail office or by mail.Bundled Plans HomeNet Triple Play (High Speed Internet / Digital TV / Telephone) Option 1 – $109.99 1.5 Mbps Internet, Digital TV with 55 channels, Telephone with unlimited US & Canada Option 2–$114.99 5 Mbps Internet, Digital TV with 80+ channels, Telephone with unlimited US & Canada Option 3 –$139.99 10 Mbps Internet, Digital TV with 80+ channels+ HBO, Telephone with unlimited local, US/ Canada calling HomeNet Double Play (High Speed Internet / Telephone) Option 1 – $74.99 1.5 Mbps Internet, Telephone with unlimited calling to US & Canada Option 2 — $81.99 5 Mbps Internet, Telephone with unlimited calling to US and Canada HomeNet Double Play (High Speed Internet / Digital TV) Option 1 – $69.99 1.5 Mbps Internet, 55 channels digital TVUnbundled Plans Ultra High Speed Internet Features: Five HomeNet email accounts ( domain) Symmetrical data speeds (data upload and download speeds are the same) Parental Controls 1.5 Mbps Service: $39.99 3 Mbps Service: $49.99 5 Mbps Service: $69.99 Kunsan Telecommmunications Page 5 Negotiated Contract 01-001-05-02Digital TV Features Over 80 pure digital programming channels available Online program guide & parental controls Local Channels/AFN included Video on Demand (VOD) and Premium Movie packages available Basic (80+ channels) $49.99 US Based HBO The Works $14.99, (On-Demand) US Based Show Time Unlimited $13.99, (On-Demand) US Based Star Encore Super Pak $11.99 (On-Demand) US Based Cinemax $11.99 (On-Demand) HomeNet Family Package (HBO Family, Starz Family, Starz Kids, ShowTime Family) $39.99 (On-Demand) New Release Video on-Demand $3.99 per movie Additional Set Top Boxes One set top box for video comes with each subscription, each additional set top box (Needed for additional televisions) $3.00/monthVoice:Unlimited local calling that includes U.S. and Canada, service includes callerID, call waiting, and voice mail. Service works with customers existingtouch-tone telephone equipment. Basic $34.99 Unlimited calling to Asia Pacific or Western Europe* add $15.00 Unlimited calling to Mexico* add $31.00 Any 5 additional calling features $9.99 HomeNet Soft Phone HomeNet Only Calling $2.99 Unlimited US and Canada $16.99 Friends and Family HomeNet VoIP This includes a device to convert existing telephones to VoIP technology Unlimited US and Canada $29.99 ** Broadband connectivity is required for this option.Public Wireless LAN: Daily Access Account 1 day of unlimited access $5.99/Day Kunsan Telecommmumcations Page 6 Negotiated Contract 01-001-05-02 Monthly Access Account 1 month of unlimited access 1 HomeNet email account with 10MB of storage $19.99/Month9. Upon execution of a Service Order between HomeNet Communication Inc. and aResident, such Resident shall become a Customer of HomeNet Communication Inc.and shall provide Services to such Customer. HomeNet Communication Inc. willdirectly invoice Customer and will assume all billing and collectionresponsibilities for the Services provided. AAFES shall have no right orobligation to bill or collect any payments from Customers or potential Customersfor Services provided or to be provided hereunder.10. Plan and Specifications: HomeNet Communications Inc. will provide finaldrawings and specifications to the Air Force electronically and in hard copy inthe format and date specified by the Air Force for review and approval.11. Fee to AAFES: HomeNet Communication Inc. will pay AAFES the fee percentagesset forth below. The fee for performance after the 15 years is set forth below,however, the contracting officer reserves the right to renegotiate the fee inconjunction with the extension of the contract period beyond 15 years.Year Fee 0-10 7%11-15 9% Kunsan Telecommmunications Page 7 Negotiated Contract 01-001-05-02 EXHIBIT G ROK TAXESTAXES:1. The Status of Forces Agreement between the Republic of Korea and UnitedStates exempts the US Forces, including Korea Area Exchange, from paying any andall ROK taxes; including commodity, traffic, petroleum, electricity, gas, andbusiness taxes plus all other taxes found to constitute a significant andreadily identifiable part of the gross purchase price of materials, supplies,equipment, and services. Also, the SOFA excludes USFK including Korea AreaExchange from payment of customs tax on items imported specifically for the USFKcontract.2. The following listed taxes are exempted from Korean taxes for items orservices used on this contract: a. Value Added Taxed Items: This clause is in implementation of ArticleXVI of the Status of Forces Agreement between the Republic of Korea and theUnited States granting contractors exemption from Republic of Korea Value AddedTaxes. At the time this contract is awarded, the contractor will certify to thecontracting officer that all supplies, services, and construction he willpurchase for the contract have been proposed to the government value added taxexclusive and further that the contract price includes no value added taxwhatsoever. He will indicate to the contracting officer the total amount ofvalue added tax excluded from the contract price. The contractor will purchasesupplies, services, and construction for use on the contract value added taxinclusive. Sample certificate format to be submitted by the concessionaire isprovided in Exhibit H to this contract. He will be required to obtain refundsfor these value added tax amounts from his ROK District Tax Office. Theserefunds will be accomplished by a contractor submission to his governing ROKDistrict Tax Office of the tax invoices obtained from purchases of supplies,services, and construction for the USFK contract. The first purchase tax invoicesubmission will be accompanied by a copy of the USFK contract. Subsequentpurchase tax invoice submissions will be accompanied by a letter reference tothe USFK contract previously submitted. The contractor’s ROK District Tax Officewill refund to the contractor the full amount of value added tax paid by thecontractor in the purchase price of the supplies, services, and construction. b. Special Excise Taxed Items: This clause is in implementation ofArticle XVI of the Status of Forces Agreement between the Republic of Korea andthe United States granting contractors exemption from Republic of Korea SpecialExcise Taxes. At the time this contract is awarded the contractor will indicateto the contracting officer which items he will purchase for the contract aresubject to special excise tax. He will indicate the name of the item, the numberof units to be purchased, the cost per unit w/o tax, the percentage of tax, thetax amount per unit, the total tax, and the manufacturer of the item. Thecontracting officer will verify the reasonableness of the quantities claimed.Sample certificate format to be submitted by the concessionaire is provided inExhibit H to this contract. The contractor will purchase the special excisetaxed items from the item manufacturer tax inclusive. For construction andsingle delivery type supply and service contracts he will employ the followingprocedure: At the time he purchases the items he will present the manufacturerwith a notification letter requesting refund of the special excise tax. (Copiesof this letter can be obtained from the KOSA contracting officer). Themanufacturer will make subsequent refund to the contractor. Requests for refundunder requirements type contracts will be submitted monthly and will beaccompanied by copies of the USFK delivery orders issued during the monthlyperiod. Kunsan Telecommmunications Page 8 Negotiated Contract 01-001-05-02 EXHIBIT H CERTIFICATE FOR TAX EXEMPTIONTO: AAFES Contracting Office, Korea APO AP 96205-0003TAX INFORMATION (JULY 1977)A. References: 1. Special Provisions Clause entitled “Taxes (Feb 1989)”. 2. US/ROK Status of Forces Agreement (SOFA) Articles IX and XVI. 3. ROK Custom Tax Law #32, dated 30 December 1972, or any superseding law. 4. ROK Value Added Tax Law, dated 8 December 1976 (effective date 1 July 1977). 5. ROK Special Excise Tax Law, dated 8 December 1976 (effective date 1 July 1977).B. US Government Procurement Regulations require the Contracting Officer toobtain and make a part of the contract file specific taxes and the amountsthereof, normally applicable to the contract, from which the US Government isexempt under the provisions of applicable tax agreements.C. In addition to the ROK Tax Laws cited above, the SOFA and its interpretationsexempts US Government contractors from the following Korean taxes uponappropriate certification in advance by the US Armed Forces: 1. Custom Tax. 2. Value Added Tax (VAT). 3. Special Excise Tax (SET).D. Request an estimate be furnished for type and amount of taxes that wouldnormally apply to the transaction but are exempt from this proposal. 1. Custom Tax: Cost/UnitType of Tax Number of Units W/O Tax % of Tax Tax/Unit Tax Total- ———– ————— ——- ——– ——– ———__________________________________________________Name of ItemThis item will be imported specifically for this contract? Yes/No Cost/UnitType of Tax Number of Units W/O Tax % of Tax Tax/Unit Tax Total- ———– ————— ——- ——– ——– ———__________________________________________________Name of ItemThis item will be imported specifically for this contract? Yes/No Kunsan Telecommmunications Page 9 Negotiated Contract 01-001-05-02 Cost/UnitType of Tax Number of Units W/O Tax % of Tax Tax/Unit Tax Total- ———– ————— ——- ——– ——– ———__________________________________________________Name of ItemThis item will be imported specifically for this contract? Yes/No 2. Value Added Tax (VAT): Input VAT on materials purchased for this contract. 10% Input VAT on transportation leased/rented for this contract. 10% Input VAT on equipment leased/rented for this contract. 10% Input VAT on services purchased for this contract. 10% Output VAT on total contract amount. 10% 3. Special Excise Tax (SET): __________________________________________________ Name of Item Name of item manufacturer __________________________________________________ Name of Item Name of item manufacturer __________________________________________________ Name of Item Name of item manufacturerE. Request an estimate be furnished for type and amount of any taxes that arenot exempt from this transactions and are included in the proposed price: Cost/UnitType of Tax Number of Units W/O Tax % of Tax Tax/Unit Tax Total- ———– ————— ——- ——– ——– ——— Kunsan Telecommmunications Page 10 Negotiated Contract 01-001-05-02F. I certify by this submission that all supplies and services to be purchasedfor this contract have been proposed Value Added Tax and Special Excise TaxExclusive. I also certify that the prices on all items to be imported for thiscontract do not contain any customs tax. ________________________________ Signed (Chop) Kunsan Telecommmunications Page 11