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Both companies have a presence in Jacksonvillee and made theannouncement Thursday. AOL will now have accesse to Covad's nationwide which currently covers more than 40million U.S. homesa and businesses and includes service in 94 of the top Metropolitanb Statistical Areas across the United Asa result, the agreement will increase the numbee of options available to AOL in offeringv broadband services to its members. "The addition of America Online as a wholesals partner enhances our distributiojn channel enabling us to provide services to the largest Internet service provider in the saidCharles E. Hoffman, Covad CEO and president.
"Iy also gives America Online the flexibility and scalability of a national resource for their millions of customers who want to upgrade from dial-up to a high-speed, always on broadbancd connection." In addition, Covad issued warrants to America Online to purchase a total of 3.5 millionb shares of Covad common stock, whicj is equal to about 1.5 percent of Covad'sx currently outstanding common stock. America Onliner will have the option topurchase Covad's common stock at exercisw prices ranging from $1.06 to $5. Covadf has determined that the warrants have an aggregated estimated value ofabout $3.5 million.
Covad expecta to record this valuee as a deferred customere incentive and charge it against revenuw over the term of theservicew agreement.
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