ARMY AND AIR FORCE EXCHANGE SERVICE NEGOTIATED CONTRACT

Independent Contractor Agreement

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Title: ARMY AND AIR FORCE EXCHANGE SERVICE NEGOTIATED CONTRACT
Date: 2/28/2005

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ARMY AND AIR FORCE EXCHANGE SERVICE

NEGOTIATED CONTRACT

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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/SERVICE

Blvd Dallas, TX 75234 [ ]Actual $36,000,000.00 Residential Voice, Data

TELEPHONE NO. 214-312-4646 [X]Estimated and Video Svs. Kunsan

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1. Contractor agrees to provide the Items/services at the prices set out and in

accordance with the terms of this contract.

2. A copy of this contract consisting of the provisions identified in the

Contents paragraph of the attached Schedule, signed by the contracting officer

and approved when required In accordance with applicable AAFES regulations

mailed or otherwise furnished to the contractor will constitute award of the

binding contract

3 In the event of an inconsistency between the provisions of this contract as

identified in the Contents paragraph of the attached Schedule, the inconsistency

shall be resolved by giving precedence in the following order (a) the Schedule,

(b) General Provisions, (c) other provisions of the contract, whether

Incorporated by reference or otherwise Id) the Specifications, and (e) the

Drawings.

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CONTRACTOR

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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)

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 at

least 51 per cent owned by minority group members, or in the case of any

publicly owned business, at least 51 per cent of the stock of which is owned by

one or more minority group members, and (2) whose management and daily business

operations are controlled by one or more such minority group members For purpose

of this definition minority group members include Black Americans. Hispanic

Americans, 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 51

per cent owned by a woman or women who also control and operate it. "Control" in

this context means exercising the power to make policy decisions. "Operate" in

this 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.

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FULL NAME AND BUSINESS ADDRESS OF CONTRACTOR TELEPHONE NUMBER: FAX NUMBER:

(Street, City & Zip Code or Country) (509) 289-9255 (801) 730-4734

HomeNet Communications ---------------------------------------------------------------------

5252 North Edgewood Drive Suite 310 E-MAIL:

Provo, UT 84604 mdevine@gohomenet.net

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SIGNATURE OF PERSON AUTHORIZED TO SIGN CONTRACT DATE

/s/ Michael W. Devine 24 Feb 05

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TIN NO. DUNS NO. TYPED OR PRINTED NAME AND TITLE

91-2133121 11-868-8360 Michael W. Devine President, CFO

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CONTRACTING OFFICER

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SIGNATURE TYPED NAME DATE OF AWARD

Yvonne Finch

/s/ Yvonne Finch Contracting Officer, Army & Air Force Exchange Service 25 Feb 05

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AAFES FORM 4450-032 (REV JAN 98) (Prev Edition Usable)

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Negotiated Contract 01-001-05-02

SCHEDULE

1. General: This is a negotiated contract for the provision of HomeNet

Communications Inc. to construct, operate, and maintain an integrated IP

fiber-to-the-Home (FTTH) IP network to deliver voice, video and data and other

emerging 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 of

the proof of concept and project briefing to Kunsan AB command and the Pacific

AF command in Hawaii. If the proof of concept is not accepted, this contract

will be terminated in whole at no cost to AAFES or the government.

2. Contents: This contract consists of AAFES Form 4450-32, "Negotiated

Contract", 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 a

phase-out/changeover period during which time HomeNet Communications Inc. will

continue operations to correspond with a phase-in of the following contract, as

directed by the contracting officer, to provide continuity of service.

b. Upon the request of the contracting officer, HomeNet Communications

Inc. must remove all switching equipment and cease to market (make widely and

readily available) all telecommunication services offered under this contract

within the 120 days phase-out/changeover period as approved by the contracting

officer. AAFES shall have the first option to purchase equipment and facilities.

4. Business Permit: HomeNet Communication Inc. certifies by submission of

proposal, and/or acceptance of a contract that he will obtain all necessary

permits and licenses relative to operating in the country in which contract will

be performed prior to contract performance. The burden of determining

applicability of host country business requirements is strictly HomeNet

Communications Inc. responsibility and will not give rise to any claim against

AAFES or a basis for adjusting terms and conditions of the contract.

5. Conflict of AAFES Contract and Host Country Laws, Rules, Regulations, and

Codes: HomeNet Communications, Inc. and its sub-contractors shall ensure that

all service offered under this contract comply with all applicable host country

laws, rules, regulations and codes. HomeNet Communications, Inc. must also

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Negotiated Contract 01-001-05-02

indemnify AAFES and the Air Force from any violations of host country laws,

rules, regulations and codes and any claims of patent, trademark, service mark

or copyright infringement by third parties.

6. Activity: AAFES grants HomeNet Communications Inc. a nonexclusive concession

to operate the Services outlined in this contract, however, AAFES will not

contract to provide the services covered under this contract during the period

of the contract. This excludes existing and future national or worldwide

contract and services sold through our retail stores. The assignment of space

for concession is a revocable license, not a tenancy.

a.AAFES or the Air Force makes no warranty or representation, express

or implied of Services sold by HomeNet Communications Inc are not restricted

from competition on the base and shall have no liability or obligation to

HomeNet Communications Inc. in connection with allowing telephone or Internet or

television providers, to have access to the Residents on the base. Residents may

select a service provider of their choice for their telecommunications services.

b.HomeNet Communications Inc. will be positioned and marketed within

the AAFES marketing channels as the provider of choice for telephone, data and

video services to all Residents. HomeNet Communications Inc. understands and

agrees that AAFES will continue to market telecommunication services in AAFES

national telecommunication contracts.

c.If premises furnished by or through AAFES are destroyed either in

whole or in substantial part, so as to significantly hinder or prevent normal

operations by HomeNet Communications Inc., by acts of God (such as, but not

limited to, fire, flood, hurricane, unusually severe weather conditions) or

unusual occurrence, AAFES nor the Air Force will not be responsible to HomeNet

Communications Inc. for repair/restoration of the premises, lost income, sales,

or lost profits, damage to HomeNet Communications Inc. property, employee

salaries, or any consequential costs incurred, or be obligated to relocate

HomeNet Communications Inc.. HomeNet Communications Inc. should consider

obtaining business insurance to cover risks to its property.

d. During the contract period, the contracting officer may require

HomeNet Communications Inc. to relocate from retail space provided by AAFES to

better meet AAFES needs or those of the base, as determined by the contracting

officer. HomeNet Communications Inc. will be given advance notice. AAFES or the

Air Force will not be liable for lost income, profit and/or salaries associated

with relocating.

7. Facilities/Maintenance: HomeNet Communications Inc. investment for buildings

will only be required in those locations where suitable retail space cannot be

secured. AAFES will maintain AAFES furnished premises (retail sales outlet)

including ordinary running repairs. HomeNet Communications Inc. will be liable

for damage to the premises resulting from acts or omissions of HomeNet

Communications Inc., its employees, or agents. AAFES may inspect the premises at

any time. HomeNet Communications Inc. will keep the premises clean, orderly,

secure, and sanitary. HomeNet Communications Inc. will comply with the

base/exchange fire, safety and security regulations and applicable health and

sanitation and environmental protection regulations.

8. Prohibited Activities: HomeNet Communications Inc. will take no actions

counter to the purpose of this contract or which have the effect of diverting

sales from the base activity to HomeNet Communications Inc. commercial business

activities. Facilities will not be used for performance or support of other

AAFES contracts or commercial business activities.

9. Authorized Customers: HomeNet Communications Inc. will sell service or

merchandise under this contract only to personnel authorized to use AAFES

facilities.

10. Customer Complaints and Claims: HomeNet Communications Inc. will adhere to

AAFES' policy of customer satisfaction guaranteed. All customer complaints and

claims will be resolved at HomeNet Communications Inc. expense. Any disagreement

that cannot be resolved between HomeNet Communications Inc. and the customer

will be decided by the contracting officer, whose decision will be final and not

subject to

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Negotiated Contract 01-001-05-02

the Disputes clause. If HomeNet Communications Inc. fails to process complaints

and claims timely, AAFES may, in addition to other rights and remedies available

under this contract, settle customer complaints and claims and charge them to

HomeNet 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 otherwise

provided in the contract. AAFES will not be liable for losses caused by

interruptions of utility service. HomeNet Communications Inc. will pay for

connecting and disconnecting utilities to HomeNet Communications Inc. furnished

equipment.

12. Internal Controls: HomeNet Communications Inc. will keep a complete and

accurate accounting of all transactions including, but not limited to, customer

billing, facility sales, organization sales, etc. Customer billing will be in

accordance with industry standards.

a. The AAFES contracting officer, or any person designated by the

contracting officer, may conduct inspections to ensure compliance by HomeNet

Communications Inc. with all provisions of this contract. This includes visiting

the HomeNet Communications Inc. computer operations center, or other appropriate

facility, to inspect electronic reporting activities such as record keeping

determining integrity of results reporting. HomeNet Communications Inc. must

agree to provide access to all necessary records, files, personnel, equipment

and other information or resources deemed necessary by AAFES to satisfactorily

complete its review. Reasonable notice will be provided to HomeNet

Communications Inc. in advance of AAFES audit activities.

b. HomeNet Communications Inc. is liable and will pay AAFES for losses

under this contract detected by surveillance or otherwise discovered or

incurred.

13. Taxes: HomeNet Communications Inc. is responsible for determining the

applicability of and for payment of all federal, state, local or host country

taxes taxes applicable to the property, income, and transactions of HomeNet

Communications Inc. If required by applicable laws and regulations, HomeNet

Communications Inc. will collect and remit sales taxes to the appropriate

authority.

14. Employees: HomeNet Communications Inc. will discontinue the use of any

employee for performance of this contract upon written notice from the

contracting officer that the individual is not (or no longer) acceptable for

performance under this contract.

15. Insurance: HomeNet Communications Inc. will maintain in full force and

effect, during the contract, at least the insurance coverage in the Insurance

Requirement Exhibit. HomeNet Communications Inc. will be liable for damage, loss

or injury to property or persons resulting from acts or omissions of HomeNet

Communications Inc. employees or agents, whether or not covered by required

insurance.

16. Refunds: HomeNet Communications Inc. will be responsible for refunds to

customers for customer dissatisfaction with Service(s) or for any overcharges to

customers. Should HomeNet Communications Inc. refuse or fail to promptly make

any refund of overcharges to a customer, AAFES may make the refund and charge

HomeNet Communications Inc.

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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

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Negotiated Contract 01-001-05-02

GENERAL PROVISIONS

Contract for Services

1. 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 the

contracting officer to perform actions of an administrative nature, forwarding

requests for contract changes to the contracting officer; collecting contract

payments, and processing routine documents. These officials are not contracting

officers, as defined in a. above.

b. AAFES has no obligation to recognize or accept waivers or changes to

this contract that result from the actions of officials other than the

contracting officer. Claims based on such actions may be denied. Questions

concerning the authority of other AAFES or government officials should be

referred to the contracting officer.

2. LEGAL STATUS (AUG 92). The Army and Air Force Exchange Service, including its

activities, offices, individual exchanges and overseas exchange systems, is an

integral part of the Departments of the Army and Air Force and is a

nonappropriated fund instrumentality of the United States Government. AAFES

contracts are United States contracts; however, they do not obligate

appropriated funds of the United States except for a judgment or a compromise

settlement in suits brought under the provisions of the Contract Disputes Act

(41 USC 601-613), in which event AAFES will reimburse the United States

Government (31 USC 1304[c]). (Note: AAFES procurement policy is established by

the 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 Act

and Federal Acquisition Regulation do not apply to AAFES due to its status as a

nonappropriated fund instrumentality).

3. PROCUREMENT INTEGRITY (AUG 92).

a. By submission of an offer or performance of this contract, HomeNet

Communications Inc. certifies with respect to this AAFES purchase action:

(1) that no discussion, offer or promise of future employment or

business opportunity has been or will be made to AAFES civilian or military

personnel 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 or

military personnel or any other employee of the United States Government or

member of their family or household;

(3) that no information proprietary to other offerors or other

purchasing information (listing of offerors, prices offered, technical

evaluations or rankings, etc.) has been or will be sought, obtained or given to

any person not authorized by the contracting officer, until it would be

available to the public under AAFES procedures.

(4) that no person or selling agency has been employed or retained to

secure this contract upon an agreement or understanding for a commission,

percentage, brokerage or contingent fee except bona fide employees or bona fide

established commercial selling agencies retained by the or the purpose of

securing business.

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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 will

be solicited or accepted by the HomeNet Communications Inc., or any person

representing HomeNet Communications Inc., from any subcontractor or person

representing the subcontractor, for the purpose of obtaining or rewarding

favorable treatment in connection with this contract or any subcontract under

it.

c. HomeNet Communications Inc. will report in writing to the Director,

Loss Prevention Division, any possible violation of this clause when HomeNet

Communications Inc. has reasonable grounds to believe a violation may have

occurred. HomeNet Communications Inc. shall cooperate fully with any federal

agency investigation of a possible violation of this clause.

d. For breach of any of these certifications, AAFES may terminate this

contract for default and/or deduct from amounts due under this or other

contracts, or charge HomeNet Communications Inc. for, the total value of any

contingent fee, gratuity or kickback or other loss to AAFES arising out of the

breach.

4. ORAL REPRESENTATIONS (JAN 94). This contract represents the entire agreement

of the parties. Any changes or amendments thereto may not be recognized by AAFES

unless committed to writing and incorporated by reference into the contract by

the contracting officer.

5. MODIFICATIONS AND ADDITIONS (JUN 94). Except as otherwise specifically

provided in this contract, all changes, modifications, additions or deletions to

this contract must be prepared in writing as formal amendments signed by both

parties and approved in accordance with provisions of applicable regulations.

6. SUBCONTRACTING (JUN 94). HomeNet Communications Inc. shall not subcontract

any part of the work to be performed without the prior written consent of the

contracting officer. Any HomeNet Communications Inc. sub-contractor used in

connection 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. 3727

and 41 U.S.C. 15, are not applicable to amounts due under AAFES contracts.

HomeNet Communications Inc. may not assign its rights or delegate its

obligations under this contract, and AAFES will neither consent to, nor

recognize, any purported assignment. HomeNet Communications Inc. may request

permission from the contracting officer to have contract payments forwarded to a

third party.

8. TERMINATION (JUN 94). Relative to termination of this contract, it is

mutually agreed:

a. This contract may be terminated in whole or in part by either party

immediately upon written notice to the other party in the event of breach of

this contract by the other party.

b. This contract may be terminated in whole or in part by either party

for cause upon 120 days notice in writing to the other party.

c. At the end of the contract term, and should HomeNet Communications

Inc. not win a follow on contract, HomeNet Communications, Inc. shall remove at

their expense all uninstalled equipment.

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Negotiated Contract 01-001-05-02

d. Upon or within 120 days after the expiration or termination of this

contract, the HomeNet Communications Inc. shall, at its sole cost, shall leave

any conduits, risers and wiring or cabling located in the ground, walls,

ceilings, floors, risers and conduits in its then "as is" condition and properly

labeled and in conformance with then applicable laws and codes. This contract is

automatically terminated upon the dispatch of written notice to HomeNet

Communications Inc. in the event the exchange is inactivated or the installation

at which the exchange is located is inactivated. If this contract covers

services to be performed at various exchanges or installations and only one or

more of the exchanges or installations are inactivated, then only that portion

of the contract being performed at the inactivated exchange or installation is

terminated.

9. PERMITS, LICENSES AND APPLICABLE LAWS (JAN 94). HomeNet Communications Inc.

warrants that all necessary permits and licenses have been obtained and that the

merchandise, services, supplies, and/or equipment provided under this contract

are in compliance with applicable laws.

10. INDEMNIFY AND HOLD HARMLESS (MAY 89).

a. HomeNet Communications Inc. will indemnify, hold harmless and defend

AAFES and all other agencies and Instrumentalities of the United States, their

agents, representatives, employees and customers from any and all suits,

judgments and claims, including those established by or pursuant to court

decisions, to international agreements, or duly promulgated regulations of the

United States Government, and all charges and expenses incident thereto which

arise out of any of the following:

(1) The alleged or established violation or infringement of any patent,

or services provided by HomeNet Communications Inc.;

(2) Loss, damage, or injury alleged or established to have arisen out

of or in connection with items or services provided by HomeNet Communications

Inc., unless such loss, damage, or injury was caused by or resulted solely from

the acts or omissions of AAFES, its agents, representatives, or employees;

(3) Any loss, damage, or injury alleged or established to have arisen

out of or in connection with any other acts or omissions of HomeNet

Communications Inc..

b. AAFES will give HomeNet Communications Inc. notice and an

opportunity to defend.

11. DISPUTES (FEB 95).

a. This contract is subject to the Contract Disputes Act of 1978, as

amended (41 U.S.C. 601-613). Except as provided in the Act, all disputes arising

under or relating to this contract shall be resolved under this clause.

b. "Claim" as used in this clause means a written demand or written

assertion by one of the contracting parties seeking the payment of money in a

sum certain or other relief arising under or relating to this contract. A

voucher, invoice, or other routine request for payment that is not in dispute

when submitted is not a claim under the Contract Disputes Act.

c. A claim by HomeNet Communications Inc. shall be made in writing and

submitted to the contracting officer for a written decision. A claim by AAFES

against HomeNet Communications Inc. shall be made by a written decision by the

contracting officer.

d. For HomeNet Communications Inc. claims exceeding $100,000, HomeNet

Communications 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 HomeNet

Communications Inc.'s knowledge and belief, and

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Negotiated Contract 01-001-05-02

(3) The amount requested accurately reflects the contract adjustment

for which HomeNet Communications Inc. believes AAFES is liable.

e. The claim must be executed by an individual with authority to bind

HomeNet Communications Inc.

f. The contracting officer will mail or otherwise furnish a written

decision in response to a HomeNet Communications Inc. claim, within the time

periods specified by law. Such decision will be final and conclusive unless:

(1) Within 90 calendar days from the date of HomeNet Communications

Inc.'s receipt of the final decision HomeNet Communications Inc. appeals the

decision to the Armed Services Board of Contract appeals (ASBCA), or

(2) Within 12 months from the date of HomeNet Communications Inc.'s

receipt of the final decision HomeNet Communications Inc. brings an action in

the 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 Communications

Inc. will proceed diligently with the performance of this contract and will

comply with the contracting officer's decisions.

h. Submission of false claims to AAFES is a violation of federal law

and may result in civil and/or criminal penalties. If HomeNet Communications

Inc. cannot support all or part of its claim as a result of fraud or

misrepresentation of fact, then in addition to other remedies or penalties

provided for by law, HomeNet Communications Inc. will pay AAFES an amount equal

to the unsupported part of the claim and all AAFES' costs attributable to

reviewing that part of the claim.

12. NON-WAIVER OF DEFAULTS (MAY 89). Any failure by AAFES at any time, or from

time to time, to enforce or require strict performance of any terms or

conditions of this contract will not constitute waiver thereof and will not

affect or impair such terms and conditions in any way or AAFES' right at any

time to avail itself of such remedies as it may have for breach or breaches of

such terms and conditions.

13. ADVERTISEMENTS (MAY 89). HomeNet Communications Inc. will not represent in

any manner, expressly or by implication, that products purchased under this

contract are approved or endorsed by any element of the United States

Government. Any advertisement, including cents off coupons, by HomeNet

Communications Inc., which refers to AAFES, will contain a statement that the

advertisement 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. HomeNet

Communications Inc. agrees that the contracting officer (CO) or CO duly

authorized representative shall have the right to examine and audit the books

and records of HomeNet Communications Inc. directly pertaining to the contract

during the period of the contract and until the expiration of three years after

final payment under the contract.

b. HomeNet Communications Inc. agrees to include clause "a" in all

subcontracts hereunder which exceed $10,000.

15. HOMENET COMMUNICATIONS INC. PERSONNEL AND REPRESENTATIVES (JAN 94).

a. HomeNet Communications Inc. will discontinue the use of any

individual for performance of this contract in exchange facilities upon written

notice from the contracting officer that the individual is not (or no

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Negotiated Contract 01-001-05-02

longer) acceptable for performance under this contract. HomeNet Communications

Inc. will not use any such person to perform other AAFES contracts without the

prior written consent of the applicable contracting officer.

b. HomeNet Communications Inc. will not employ for performance in

exchange facilities any individual under this contract who has been determined

unacceptable for performance under any other AAFES contract without the prior

written consent of the contracting officer.

c. HomeNet Communications Inc. personnel will abide by applicable

regulations and directives and conduct themselves so as not to reflect discredit

on AAFES.

d. HomeNet Communications Inc. will not represent itself to be an agent

or representative of AAFES, or any other agency or instrumentality of the United

States.

16. ENVIRONMENTAL PROTECTION (MAR 94).

a. This clause shall apply to any contract in excess of $100,000, and

indefinite 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 to

contracts 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 any

nonexempt contract or subcontract is not listed on the EPA List of Violating

Facilities as of the date of contract award;

(2) its agreement to comply with all requirements of Section 114 of the

Air Act and Section 308 of the Water Act relating to inspection, monitoring,

entry, reports, and information, as well as all other requirements specified in

sections 114 and 308 of the Air Act and the Water Act, respectively, and all

regulations and guidelines issued thereunder;

(3) that as a condition of award of contract, HomeNet Communications

Inc. shall promptly notify the contracting officer of the receipt of any

communication from the Director, Office of Federal Activities, U.S.

Environmental Protection Agency, or delegatee, indicating that a facility to be

utilized for the contract is under consideration to be listed on the EPA List of

Violating Facilities;

(4) its agreement to include the criteria and requirements in

subparagraphs (1) through (4) in every nonexempt subcontract, and to take such

actions 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, HomeNet

Communications Inc. will be liable for costs to AAFES and/or other agencies of

the United States associated with termination for default as follows: (1)

Incidental damages, including expenses reasonably incurred in connection with

repurchase of the service and any other reasonable expense incident to the

breach. (2) Consequential damages including, but not limited to, lost fees

resulting from lapses in service, unscheduled facility closures, sales declines,

lower fees received on repurchase, and injury to person or property proximately

resulting from any breach of warranty.

b. HomeNet Communications Inc. will not be liable for incidental or

consequential damages if the failure to perform arises out of causes beyond the

control and without the fault or negligence of HomeNet Communications Inc.. Such

causes may include, but are not restricted to, acts of God or of the public

enemy,

Kunsan Telecommunications PAGE 5

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Negotiated Contract 01-001-05-02

acts of the government in either its sovereign or contractual capacity, fires,

floods, epidemics, quarantine restrictions, strikes, freight embargoes, and

unusually severe weather; but in every case the failure to perform must be

beyond the control and without the fault or negligence of HomeNet Communications

Inc. In such case HomeNet Communications Inc. must provide prompt written notice

to the contracting officer; the contracting officer, at his option may accept

late, partial or substituted performance, or may terminate the contract in whole

or in part effective immediately upon receipt of written notice by HomeNet

Communications Inc..

18. DRUG-FREE WORKPLACE (AUG 92). HomeNet Communications Inc. agrees to make a

good faith effort to establish and maintain a drug-free workplace in connection

with the performance of this contract. Consistent with the size and organization

of its work force, HomeNet Communications Inc. may wish to consider taking the

following or other appropriate actions in establishing a drug-free workplace:

publicizing a drug-free workplace policy, initiating an employee drug awareness

program or encouraging participation in existing community/installation programs

and 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 the

performance of this contract any merchandise, equipment, supplies or services

originating from, processed in, or transported from or through, the countries

prohibited from commerce by the United States Government. A current list of

prohibited countries is available from the contracting officer. This restriction

shall include merchandise, equipment, supplies or services from any other

country that is restricted by law, regulation or executive order at any time

during performance of the contract.

b. HomeNet Communications Inc. agrees to insert the provisions of this

clause, 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 for

all payments made by AAFES to HomeNet Communications Inc. under the terms of

this contract.

a. Method of payment.

(1) All payments by AAFES under this contract shall be made by

electronic funds transfer (EFT). The term "EFT" refers to the funds transfer and

may also include the payment information transfer.

(2) If AAFES is unable to release payment by EFT, HomeNet

Communications Inc. agrees to either (I) accept payment by check or some other

mutually agreeable method of payment, or (ii) request AAFES to extend the

payment due date until such time as AAFES can make payme

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