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10 a 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 KEVIN V. RYAN (CSBN 118321 Ghnoa Stace Atomey FILED THOMAS 0. BARNETT (DCBN 426840) FEB 2 2 2006 Acting Assistant Attorney General RICHARD W. WIEKING Y “tN JORTHERI GISTRICT OF CALIFORNIA UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION UNITED STATES OF AMERICA, No. CR 06-0086 CRB Plaintiff, VIOLATIONS: 15 U.S.C. §1 - Sherman Antitrust Act; 18 U.S.C. §§1341 and 2 - Mail Fraud and Aiding and Abetting PLEA AGREEMENT v PREMIO, INC., fik/a PREMIO COMPUTER, INC., Defendant. PREMIO, INC., (formerly known as PREMIO COMPUTER, INC., and hereafter, “defendant”), a corporation organized and existing under the laws of Illinois, with its principal place of business in the City of Industry, California, and the United States Department of Justice, by and through the United States Attomey’s Office for the Northern District of California and the Antitrust Division of the Department of Justice (hereafter “the government”), enter into this, written plea agreement (the “Agreement”) pursuant to Rule 11(c(1)(C) of the Federal Rules of Criminal Procedure: ‘The Defendant's Promises 1. Pursuant to Rule 7(b) of the Federal Rules of Criminal Procedure, the defendant agrees to waive Indictment and plead guilty to a two-count felony Information charging the defendant with a conspiracy to suppress and eliminate competition in violation of the Sherman Antitrust Act, 15 U.S.C. § 1, and with mail fraud and aiding and abetting in violation of 18 U.S.C. §§ 1341 and 2. The defendant agrees that the elements of the offenses and the maximum penalties are as follows: PLEA AGREEMENT CR 06-0086 CRB 10 aa 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 a7 28 Elements of Count One ~ Sherman Act Antitrust Offense: a, a. The conspiracy, agreement, or understanding described in the information was knowingly formed, and was existing at or about the time alleged; ‘The defendant knowingly became a member of the conspiracy, agreement, or understanding, as charged; The alleged conspiracy, agreement, or understanding constituted an unreasonable restraint of interstate commerce; and The offense was carried out, in part, in the Central District of California. Maximum Penalties: a, b, ©, 4. Five years probation; A fine in the amount of $10 million or twice the loss (or gain) from the offense, whichever is greater; Mandatory special assessment of $400; and Restitution. Elements of Count Two ~ Mail Fraud: f. Defendant participated in a scheme to defraud or a plan for obtaining money or property by making false promises or statements; Defendant knew that the promises or statements were false; ‘The promises or statements were material; Defendant acted with the intent to defraud; Defendant used or caused to be used the mails to carry out or attempt to carry out an essential part of the scheme; and The offense was carried out, in part, in the Central District of California. Maximum Penalties: a b. PLEA AGREEMENT Five years probation; A fine in the amount of $500,000 or twice the amount of loss (or gain) from the offense, whichever is greater; Mandatory special assessment of $400; 2 CR 06-0086 CRB 10 a 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4. Restitution. 2. The defendant agrees that it is guilty of the offenses to which it will plead guilty, and it agrees that the following facts are true: FACTUAL BASIS FOR SHERMAN ACT OFFENSE CHARGED a. Fromat least December 1998 to approximately December 1999, (hereafter, in this Agreement, “the relevant period”) the defendant sold and installed telecommunication equipment, including servers to be used for Internet access. It also provided maintenance and other services as needed for the equipment that it supplied. b. During the relevant period, E-Rate, a program authorized by Congress in the Telecommunications Act of 1996, operated under the auspices of the Federal Communications Commission (“FCC”) to provide funding to better enable school districts and libraries to connect to the Internet. The FCC designated the Universal Service Administrative Company (“USAC”), a nonprofit corporation, to administer the E-Rate program. All participating school districts were required to fund a percentage of the cost of the equipment and services acquired under the E-Rate program. That percentage was determined based on the number of students in the district qualifying for the United States Department of Agriculture's school lunch program, with the needi st school districts eligible for the highest percentage of funding. ©. During the relevant period, applications for E-Rate funding far exceeded the funding available. To ensure that E-Rate funding was distributed to the widest number of applicants, USAC required all applicants to comply with various rules and procedures including (1) only certain equipment and services, would be eligible for funding; (2) school districts were required to follow both competitive bidding procedures in accordance with local and state law and FCC rules to ensure that the school districts received the lowest possible prices and most cost-effective proposals from the responsive bidders; (3) service providers or their agents could not participate in the vendor selection process or the completion of forms necessary for the schools to receive E-Rate funding in order to avoid a conflict of interest or even the appearance ofa conflict of interest; and (4) school districts were required to enter into contracts with the PLEA AGREEMENT 3 CR 06-0086 CRB