Document:

<PAGE>   1
                                                                   EXHIBIT 10.11

                           THE SUTHERLAND GROUP, LTD.
                          STANDARD TERMS AND CONDITIONS

                             AGREEMENT FOR SERVICES

This Agreement, including the attached Statement of Work (collectively
"Agreement") effective as of the date of the latest signature below, by and
between THE SUTHERLAND GROUP, LTD., a New York corporation with offices at 1160
Pittsford-Victor Road, Pittsford, New York 14534 ("SGL") and Telocity, Inc, with
offices at 10355 North De Anza Blvd., Cupertino, CA 95014 ("Client").

Client desires to obtain, and SGL desires to provide, services in relation to
the staffing and management of a program to be referred to as Technical Support
Program ("Program").

SCOPE:

SGL shall perform services at levels authorized by Client and shall manage and
supervise the Program as more specifically set forth in the attached Statement
of Work (the "Services").

SGL shall and does hereby acknowledge that SGL is an independent contractor
providing services to Client. SGL may perform its obligations through the use of
independent contractors, provided, however, SGL will not be relieved of its
obligations under this Agreement by use of any subcontractors.

OPERATIONS:

SGL shall provide the necessary personnel who shall have that level of training
and experience which is appropriate to the nature of the Services described in
the attached Statement of Work.

SGL shall comply at all times with all Federal, state and local authorities,
statutes, rules and regulations applicable to its business activities and shall
provide worker's compensation insurance in amounts required by applicable law.

SGL and its personnel shall comply at all times with all rules and regulations,
policies and practices applicable to Client's business activities which are
communicated to SGL management by Client.

FEES:

Client shall pay SGL for its services and costs as described in the attached
Statement of Work. Unless another payment schedule has been agreed upon and set
forth in the attached Statement of Work, SGL shall invoice on the first (1st)
day of the month in which services are to be rendered. Payment shall be due
within thirty (30) days of date of an invoice from SGL and, if not paid within
that time, will bear interest from that date, until paid, at the rate of one and
one-half percent (1-1/2%) per month.

<PAGE>   2
Notwithstanding anything to the contrary in this Agreement, if Client fails to
make any payment when due SGL past 60 days, SGL will have the right to
immediately suspend its performance under this Agreement. Any suspension of
performance will not limit or affect SGL's right to recover amounts owed by
Client prior to such suspension, or any other rights or remedies SGL may have.

TERM OF THE AGREEMENT:

The term of this Agreement shall be that specified in the attached Statement of
Work (the "Term"), subject to the right of the parties to terminate this
Agreement pursuant to the provisions of this Agreement.

Client may terminate for convenience all or any portion of SGL's Services
hereunder effective, upon ninety (90) days written notice to SGL; provided that
Client shall remain liable to SGL for amounts due up to the date of termination
(including, amounts due for services rendered and costs during the notice
period). As an alternative, Client may provide SGL with written demand that SGL
immediately cease performance of all services upon receipt of such demand, but
in that case, Client shall remain liable to SGL for service fees and costs for a
period of ninety (90) days from receipt of the demand at the same rates and in
the same amounts as if SGL had provided services during that period.

Client shall have the option to increase the SGL staffing from that provided in
the Statement of Work by giving thirty (30) days written notice to SGL and
paying SGL the associated personnel cost fee. SGL shall not modify its staffing
levels with respect to the Services without written concurrence from the Client.

In the event either party fails to perform any of its obligations under this
Agreement unless (i) such failure is cured within thirty (30) days after written
notice (10 days for payment default) to the defaulting party specifying the
nature of the failure or, (ii) the defaulting party is diligently proceeding
with the cure of such default, the non-defaulting party may, in addition to any
other remedies available at law or in equity, terminate the Agreement on the
date thirty (30) days after such notice to the defaulting party (10 days for
payment default). If Client terminates the Agreement, Client shall pay SGL for
all services rendered prior to the effective date of termination, including
services rendered during the relevant notice period.

UNAVOIDABLE DELAYS:

Neither party shall be responsible for delays or errors in its performance under
this agreement occurring by reasons or circumstances beyond its control,
including acts of civil or military authority, national emergencies, labor
difficulties, fire, flood or catastrophe, acts of God, insurrection, war, riots,
or failure of transportation, communication or power supply; provided, however,
that should any such delay continue for more than forty-five (45) days, the
Agreement may be terminated upon written notice by the party whose performance
is not affected by the delay.

                                       -2-
<PAGE>   3
WARRANTY OF SGL AND LIMITATION OF LIABILITY:

SGL represents and warrants that the Services to be provided by SGL hereunder
shall be done in a workmanlike manner and conform at all times in all material
respects to the descriptions and levels of Service set forth in this Agreement.

EXCEPT AS SET FORTH IN THIS AGREEMENT, THE SERVICES TO BE PROVIDED BY SGL TO
CLIENT HEREUNDER ARE PROVIDED WITHOUT ANY WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING BUT NOT LIMITED TO THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE. IN NO EVENT WILL SGL HAVE ANY LIABILITY, WHETHER BASED ON
CONTRACT, TORT (INCLUDING, WITHOUT LIMITATION, NEGLIGENCE), WARRANTY OR ANY
OTHER LEGAL OR EQUITABLE GROUNDS, FOR ANY LOSS OF INTEREST, PROFIT OR REVENUE BY
THE OTHER PARTY OR FOR ANY CONSEQUENTIAL, INDIRECT, INCIDENTAL, SPECIAL,
PUNITIVE OR EXEMPLARY DAMAGES SUFFERED BY THE OTHER PARTY, ARISING FROM OR
RELATED TO THIS AGREEMENT, EVEN IF SGL HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH LOSSES OR DAMAGES.

The monetary liability of SGL (including that of its agents and subcontractors)
for all claims resulting from its performance or non-performance under this
Agreement, regardless of the form of the action, and whether in contract, tort
(including, but not limited to, negligence), warranty or other legal or
equitable grounds, will be limited to a cumulative aggregate amount equal to
three (3) times the average monthly invoice for Services rendered by SGL.

WARRANTY OF CLIENT:

Client warrants and represents that at no time during the Term of this Agreement
will the use of any services, information, materials, techniques, or products
provided by Client infringe upon any third party's patent, trademark copyright,
or other intellectual property right, nor make use of any misappropriated trade
secret. No statements contained in any written information furnished to SGL by
or on behalf of Client in connection with this Agreement contain any untrue
statement of a material fact or omit any material fact necessary to make the
statement not misleading.

INDEMNIFICATION:

Client agrees to indemnify, defend and hold SGL harmless from and against any
and all losses, arising from or in connection with, (a) any claims of
infringement made against SGL of any patent, trademark, copyright, or similar
property rights (including without limitation, misappropriation of trade
secrets), alleged to have occurred because of equipment, systems, products or
other resources, information or items provided to SGL by Client hereunder, (b)
any claim made against SGL based upon either the sale or license of any product
or service of Client as a result of the Services performed by SGL, or (c) any
representation made by SGL and approved by Client, whether such claim is based
on contract, tort (including, without limitation, negligence), warranty or any
other legal or equitable grounds.

                                       -3-

<PAGE>   4
CONFIDENTIALITY:

All confidential or proprietary information and documentation ("Confidential
Information") relating to either party shall be held in confidence by the other
party to the same extent that and in at least the same manner as such party
protects its own confidential or proprietary information. Except as is
reasonably necessary to the performance of its duties and obligations under this
Agreement, neither party shall use, disclose, publish, release, transfer or
otherwise make available Confidential Information of the other party in any form
to, or for the use or benefit of, any person or entity without the other
parties' approval. Each party shall be permitted to disclose relevant aspects of
the other parties' Confidential Information to its officers, agents and
employees to the extent that such disclosure is reasonably necessary to the
performance of its duties and its obligations under this Agreement, provided
that such parties shall take all reasonable measurers to insure that
Confidential Information of the other party is not used, disclosed or duplicated
in the contravention of the provisions of this Agreement by such officers,
agents and employees.

All Confidential or Proprietary Information made available in document or other
tangible form must bear an appropriate legend indicating its confidential or
proprietary nature, and, if initially disclosed orally or visually, must be
identified as confidential at the time of disclosure and a written summary
thereof, also marked with such a legend, must be provided reasonably promptly
following the initial disclosure.

The obligations in this "Confidentiality" section shall not restrict any
disclosure by either party pursuant to any applicable law, or by order of any
court or government agency (provided that the disclosing party shall endeavor to
give such notice to the non-disclosing party as may be reasonable under the
circumstances) and shall not apply with respect to information three (3) years
after its disclosure, or that is independently developed by the other party,
becomes part of the public domain (other than through unauthorized disclosure),
is disclosed by the owner of such information to a third party free of any
obligation of confidentiality or which either party gained knowledge or
possession of, free of any obligation of confidentiality.

TAXES:

Client shall, in addition to other payments required hereunder, pay all sales,
use, transfer or service taxes, whether federal or state or local, however
designated, that are levied or assessed on the provision of the Services by SGL
to Client or on the charges to Client under this Agreement, excluding however,
income taxes that may be levied against SGL.

NON-SOLICITATION OF EMPLOYEES:

During the term of this Agreement and for a period of one (1) year after its
termination, neither SGL nor Client shall actively or knowingly solicit any
full-time employee of the other with whom it has had direct contact as a result
of this Agreement (or any such former employee who has left the employ of the
other within the prior one (1) year period), to become its employee or
contractor or through any third party without the consent of the other party to
this Agreement.

                                       -4-

<PAGE>   5
NON-EXCLUSIVE AGREEMENT:

Nothing in this Agreement shall be construed as prohibiting or restricting
Client from independently developing or acquiring materials or services which
are competitive with those delivered hereunder, from marketing such materials or
services or from marketing the Client products or services which are the subject
of the Statement of Work either itself or through a third party. Further,
nothing in this Agreement shall be construed as prohibiting or restricting the
right of SGL to provide similar services to any other entity.

SGL will retain all rights to the ideas, know-how, techniques, and software
related to the contact management system used by SGL in rendering, or to
facilitate the rendering of, the Services or the manner and method by which the
Services are rendered.

NOTICES:

All notices, requests, and demands hereunder will be given in writing and shall
be deemed to have been given if delivered in person, or via a reputable,
receipted overnight courier service, or by United States mail, certified or
registered, with return receipt requested, in either case addressed to the party
at the address for that party first written above (or to such other address as
either party specifies in writing to the other). Any notice, sent as provided
above, will be deemed given upon receipt at the address provided for above.

DISPUTE RESOLUTION:

If a dispute arises between the parties relating to this Agreement, the parties
agree to use the following procedure prior to either party pursuing its right to
binding arbitration:

(a)     Upon written request of either party (the "Dispute Notice"), a "Senior
        Representative" from each of the parties will meet for the purpose of
        endeavoring to resolve the dispute. The meeting shall occur at a
        mutually agreeable time and site (which meeting may be by teleconference
        if mutually agreed upon).

(b)     Each Senior Representative shall, in good faith, give audience to the
        other's presentation of its position, and they shall jointly attempt to
        reach a resolution of the dispute. Promptly following the meeting, a
        memorandum will be prepared for both parties signature setting forth any
        points of agreement between the parties.

(c)     If the dispute is not resolved within fifteen (10) days of the Dispute
        Notice, then the party sending the Dispute Notice may institute
        arbitration of the dispute.

(d)     For the purposes of this section, a party's "Senior Representative"
        shall be a senior level employee or officer not involved with the
        project who has decision making authority regarding the resolution of
        the dispute.

                                       -5-

<PAGE>   6
BINDING ARBITRATION:

The parties agree that any controversy or dispute arising out of or relating to
this Agreement that is not resolved using the Dispute Resolution procedure set
forth above, shall be settled by arbitration in Rochester, New York, in
accordance with the rules of the American Arbitration Association then in force.
The arbitration shall be governed by the United States Arbitration Act, and
judgement upon the award rendered by the arbitrator(s) may be entered by any
court having jurisdiction thereof.

GOVERNING LAW; VENUE:

This Agreement shall be governed and construed in accordance with the laws of
the State of New York without regard to conflicts of law principles. Any action
or proceeding arising out of, or related to, this Agreement may be brought only
in an appropriate state or federal court in Monroe County, New York.

ATTORNEYS' FEES:

Each party shall reimburse the other party on demand for all reasonable
out-of-pocket expenses incurred by the other party, including arbitration/court
costs and fees and reasonable expenses of counsel, as a consequence of or in
connection with, the successful enforcement by such other party of any right or
remedy hereunder.

If any audit or examination reveals that Client has underpaid SGL by more than
two percent (2%) during the period to which the audit relates, the direct and
reasonable costs of such audit shall be borne by Client.

SURVIVAL:

The provisions hereof related to Warranty, Indemnification, and Binding
Arbitration will survive any termination of this Agreement. In addition, any
other terms of this Agreement which by their terms extend beyond the termination
of this Agreement shall remain in effect until fulfilled.

NON-WAIVER:

The failure of either party to enforce at any time of the provisions of this
Agreement or to require any act of performance hereunder shall not be construed
a waiver of such provisions or right to performance nor in any way to affect the
validity of this Agreement or the right of either party to, thereafter, enforce
each and every provision or right to performance.

SAVINGS CLAUSE:

The invalidity of, or inability to enforce any particular provision of this
Agreement will not affect the other provisions of this Agreement, and this
Agreement will be construed in all respects as if any invalid or unenforceable
provision had been omitted.

                                       -6-

<PAGE>   7
CAPTIONS:

The paragraph headings in this Agreement have been inserted for the purpose of
convenience and ready reference. They do not purport to and shall not be deemed
to define, limit or extend the scope or intent of the paragraph to which they
pertain.

ASSIGNMENT, HEIRS AND ASSIGNS:

Client may assign this Agreement and/or the rights granted under this Agreement
in connection with a sale, merger, or other disposition of its business,
provided that the successor agrees to be bound by all the terms and conditions
hereof.

ENTIRE AGREEMENT:

This Agreement, the Statement of Work, any appendices and referenced agreements,
embody the entire agreement of the parties with respect to the subject matter
contained herein. There are no promises, terms, conditions, or obligations other
than those contained herein. This Agreement supersedes all previous and
contemporaneous communications, representations or agreements, either verbal or
written, between the parties. It shall not be modified except by a written
agreement dated subsequent to the date of this Agreement and signed on behalf of
SGL and the Client by their respective duly authorized representatives.

     IN WITNESS WHEREOF, the parties have executed this Agreement.

THE SUTHERLAND GROUP, LTD.

By:  /s/  JAMES H. ROHRER                 By:  /s/  THOMAS A TOPOLINSKI
     -------------------------------           -------------------------------

Name: James H. Rohrer                     Name: Thomas A Topolinski
      ------------------------------            ------------------------------

Title: Customer Care Officer              Title: Vice President
       -----------------------------             -----------------------------

Date: Oct. 8, 1999                        Date: 10/28/99
     -------------------------------           -------------------------------

                                       -7-

<PAGE>   8
                                STATEMENT OF WORK

                                       -8-

<PAGE>   9

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                           InterChange DSL Help Desk
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                               STATEMENT OF WORK

                                    FOR THE

                                [TELOCITY LOGO]

                           INTERCHANGE DSL HELP DESK

                                       BY

                           THE SUTHERLAND GROUP, LTD.

                                 [LOGO]  [LOGO]

                               September 10, 1999
                                  # PTMEB0786
                                      v1.2

/s/ [SIGNATURE ILLEGIBLE]                     /s/ JAMES H. ROHRER        9/16/99
------------------------------                ----------------------------------
The Sutherland Group, Ltd Date                Telocity                   Date

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INTRODUCTION

This Statement of Work (SOW) describes the work and services that The Sutherland
Group, Ltd. (Sutherland) is prepared to perform for Telocity by creating and
maintaining Telocity's InterChange DSL Technical Support Center.

EXECUTIVE SUMMARY

Telocity is in the initial stages of rolling out the InterChange DSL system to
selected markets throughout the United States. The launch will initially target
consumers in the "NFL Cities" market. InterChange DSL consists of a "smart" DSL
modem allowing the end-user to self-install the product, eliminating the need
for onsite installation by technical personnel ("truck roll"). The system is
specifically aimed at the home consumer market; therefore, many end users of
the product will require live technical support as well as associated Pre-Sales
Customer Service.

DELIVERABLES

In the spirit of partnership, Sutherland suggests the following service options
to minimize support costs while still delivering superior service to Telocity
customers:

     o    Pre-Sales Customer Service will be provided from 7 a.m. to 7 p.m.
          Eastern Time (7x12).

     o    Post-Sales Technical Support will be provided from 7 a.m. to 11 p.m.
          Eastern Time (7x16).

     o    Customers will dial a toll-free phone number dedicated to Telocity.
          The call will be picked up by the IVRU (Interactive Voice Response
          Unit) and directed to the dedicated TSE (Technical Support Engineer)

     o    Sutherland will utilize Telocity's OSS software and Remedy to track
          and monitor all calls received by the Help Desk.

     o    Average call duration is expected to be 5 minutes for Pre-Sales
          Customer Service Calls.

     o    Average call duration is expected to be 10 minutes for Help Desk
          Technical Support Calls.

     o    Sutherland will provide service utilizing 15 dedicated Technical
          Support Engineer's (TSE's)

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   o  Telocity will provide Sutherland with a working copy of the latest version
      of InterChange and all associated hardware and software on an ongoing
      basis. Sutherland will institute a lab environment for the use of the
      InterChange DSL system TSE's in order to emulate the user's regular
      environment and attempt to duplicate the problems that are the subject of
      the support calls. This allows the TSE's to become proficient in the use
      and support of Interchange DSL.

Sutherland has the ability to add foreign language support as the need arises..
Sutherland currently provides international Help Desk support to a variety of
clients from our San Diego, CA, Rochester, NY, and Syracuse, NY support
centers. Support is provided in a variety of languages, including English,
German, French, Spanish, Portuguese, Japanese, and Chinese, among others.

SCOPE OF SERVICES

The Sutherland/Telocity Help Desk will provide InterChange DSL customers access
to a team of qualified information technology personnel. The following
functions will be delivered through the Pre-Sales and Post-Sales Support Help
Desk:

Post-Installation Support Help Desk Services to include:

   o  Interchange DSL Support
   o  Related application support (software necessary for using Interchange DSL)
   o
   o  Tracking of all calls to final resolution (defined as a satisfied
      customer).
   o  Reports detailing activities and service levels
   o  Escalation services

HOURS OF SERVICE

The Telocity Post-Installation Support Help Desk will be accessible 7 days per
week 16 hours per day (7 am to 11 p.m. Eastern Time). Access will be primarily
provided via telephone using a dedicated toll-free number. Access will be
additionally provided through E-mail and Fax.

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Access to the Help Desks via IVRU (Interactive Voice Response Unit) can be
provided to implement menu choices and specialized routing based on input.

SERVICE LEVELS

Service levels will be monitored by Sutherland and are reported to Telocity for
performance evaluation. This information will be utilized to make adjustments
to the program for higher quality results. The following are representative
metrics and goals for this program, starting 90 days after program inception,
scheduled for October 15, 1999:

[*]

Service level metrics reviews and renegotiation can be requested by either
party at any time following the standard change control process.

STAFFING

All staff on the Help Desk will be highly skilled, experienced, professionals
who are career employees, not contractors, of The Sutherland Group, Ltd.

[*]

[*] The Registrant has requested confidential treatment for certain portions of
this exhibit. The omitted portions have been separately filed with the
Commission.

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[*]

DEDICATED MODEL

Sutherland normally utilizes a dedicated program model for staffing technical
support projects. No customer program "sharing" is designed into our employee
model except for carefully planned overflow scenarios (controlled at the ACD).
We manage our program teams as such and locate them in common areas. It is
common that the teams stay together for long periods and become "attached" to
the customer for whom they are providing support. Sutherland's employee model
includes a guideline for one year minimum on each assignment, whenever possible.

GREETING/REPRESENTATION

The Technical Support Engineers (TSE) will represent themselves at all times
over any communication mode as Telocity personnel and will not disclose or
allude to an outsourced arrangement. The greeting will be similar to: "Thank
you for calling the Telocity InterChange Help Desk. This is FIRST NAME, how may
I help you?"

DIFFERENTIATORS

Among the differences between Sutherland and our competition is our approach to
the design and management of our programs. From inception of the program to its
execution, Sutherland excels at providing the optimal solution for our clients'
needs. [*]

[*] The Registrant has requested confidential treatment for certain portions of
this exhibit. The omitted portions have been separately filed with the
Commission.

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[*]

SUTHERLAND'S TECHNICAL ENVIRONMENT

CALL PROCESSING ARCHITECTURE (TELEPHONY)

Sutherland's telecommunications environment includes a collection of hardware,
software, and firmware that enables our call centers to implement and manage
complex telephony operations efficiently and consistently. Sutherland's call
centers utilize [*]

NETWORK ARCHITECTURE AND MANAGEMENT

[*] The Registrant has requested confidential treatment for certain portions of
this exhibit. The omitted portions have been separately filed with the
Commission.

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Sutherland's Network Infrastructure is based on industry standard products and
tools used to establish both our corporate local and wide area networking
communications as well as our external connectivity to our clients and strategic
partners. [*]

CALL MANAGEMENT SYSTEM

Sutherland will use Telocity's OSS enrollment application and Remedy for call
management and problem resolution. All necessary hardware, software licenses,
and requisite training will be provided to Sutherland by Telocity.

[*] The Registrant has requested confidential treatment for certain portions of
this exhibit. The omitted portions have been separately filed with the
Commission.

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The following standard reports are available and are delivered weekly (or on an
as-needed basis) and are available via e-mail:

[*]

Other standard reports will be available depending upon the capabilities of the
OSS application and Remedy AR. These reports will be developed jointly by
Telocity and Sutherland during the detailed requirements definitions phase.

Additional reporting requirements for Telocity will be determined during
program start up. Ad-hoc reports are available at an additional charge.

IMPLEMENTATION PLAN

Sutherland's implementation approach typically spans [*] days from initiation
to transition of calls to the Help Desk at Sutherland. The following describe
the primary activities associated with program setup.

KICKOFF MEETING

As soon as possible following final contract negotiations, a kickoff meeting
will be held to ensure clear understanding of the program objectives and
methods by both parties. The implementation plan developed by the Sutherland
team will be reviewed at that time, as will timetables for subsequent meetings
between Telocity and Sutherland.

PERSONNEL HIRING AND STAFFING

By virtue of our long term growth and experience in setting up information
technology centers, Sutherland has become extremely adept at staffing the
appropriate people for the task at hand. Selection of employees for specific
programs is based [*]. Sutherland has established thorough and rigid hiring
practices to ensure the proper selection of our support engineers.

[*] The Registrant has requested confidential treatment for certain portions of
this exhibit. The omitted portions have been separately filed with the
Commission.

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DETAILED REQUIREMENTS DEFINITION

This effort will ensure that the program design and operations meet Telocity's
expectations and integrates seamlessly with existing operations. Tasks include
[*]

PHONE/ACD SETUP

The setup of the phone system and ACD is critical to the success of the program
and includes assignment of extensions for the Telocity/Sutherland team, setup
of the inbound call queue, custom call routing design and setup, call
accounting codes setup, voice-mail, and testing of all components.

CALL FLOW PROCESSES

[*]

TRAINING

Training the Telocity/Sutherland team includes thorough understanding of
[*]

MONITORING AND REMOTE MONITORING

In accordance with our ISO 9002 certification all employees are monitored
regularly by their supervisors. [*]

[*] The Registrant has requested confidential treatment for certain portions of
this exhibit. The omitted portions have been separately filed with the
Commission.

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REPRESENTATION

Sutherland has the permission to use Telocity's name when answering the phone
on their behalf. Representation does not grant Sutherland the right to
represent Telocity beyond answering the phone or responding by e-mail or
letter. Sutherland does not have the right to make arrangements, commitments,
or promises on Telocity's behalf.

TERMINATION

Either party may cancel this agreement with 90 days written notice of
termination to the other party.

PROGRAM MANAGERS

Sutherland will assign a Program Manager for this program to be the main
contact for Telocity. The Program Manager's goal is to ensure that all
deliverables are met for Telocity. Telocity will assign a Program Manager who
will be the primary contact for setup and implementation for Sutherland. All
changes to this SOW or any other agreements must be approved in writing by each
Program Manager.

CHANGE CONTROL PROCESS

The Sutherland Program Manager and Telocity Program Manager must agree upon any
changes to this Statement of Work in writing. All written requests for changes
must be responded to in writing within 5 business days.

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                        [THE SUTHERLAND GROUP LID. LOGO]

October 18, 1999

Mr. James Rohrer
Vice President & Customer Care Officer Telocity, Inc.
10355 N. De Anza Blvd.

Cupertino, CA 95014-2027

Dear Jim:

This letter will outline some of the changes/additions to the
Telocity/Sutherland partnership.

1.)      Program Headcount Pricing:
         Any additions to program headcount will be invoiced to Telocity,
         effective the month in which they are added to the program, at the
         effective rate of Six Thousand ($6000) dollars per support
         representative. If representatives are added during the month, the
         associated fee will be prorated over the remainder of that month, on a
         full week basis, at the prevailing rates.

2.)      Program Expansion:
         Effective October 25, 1999, SGL will add, at your request, an
         additional five (5) headcount to the existing Telocity inbound
         technical support center. These individuals will be added at our San
         Diego facility. This will bring the program headcount to twenty (20)
         support representatives.

3.)      Headcount Reduction:
         According the Terms and Condition of the Telocity/SGL contract, we
         require 30 days notice to increase the size of the program. Should it
         be necessary to reduce the size of the program, outside of a formal
         termination notice, SGL will require 30 days notice for this process as
         well. However, in both instances, we will add/delete headcount as
         quickly as possible to meet your schedules.

These changes, except for the addition of personnel, will be documented as an
addendum to the original Statement Of Work. The addition of personnel will only
require written permission to add them, as outlined in this letter.

Jim, I hope this additional information is helpful to you. SGL is very excited
about this program, and the ensuing relationship. We will do everything
necessary to ensure the success of it as well as your company.

Please indicate your acceptance of these terms below.

Sincerely,

Thomas J. McGrath
Director, Business Development
<PAGE>   20

I have read, and agree with, the terms and conditions, as outlined above

/s/ JIM ROHRER                                      10/19/99
-----------------------                       ----------------------
Jim Rohrer, Customer Care Officer                     Date

<PAGE>   21

                        [THE SUTHERLAND GROUP LID. LOGO]

October 18, 1999

Mr. James Rohrer

Vice President & Customer Care Officer
Telocity
10355 N. De Anza Blvd.
Cupertino, CA 95014-2027

Dear Jim:

This will outline our understanding, and the subsequent pricing, for the call
flow routing you have requested between SGL and your customer care vendor.

To review, all calls to the 1-888-SPEED49 Telocity branded toll free number will
come into an AT&T central cloud where they will be routed, based on customer
selection, to the appropriate location. The customers will hear the IVR greeting
saying "press 1 for sales.. press 2 for tech support.. etc." then make their
choice. All calls for pre-sales support, sales or customer service will be
routed through the cloud to your customer care vendor. All calls for technical
support will be routed to SGL.

The costs involved include a combination of the number of calls AND the average
amount of time they listen to this greeting before making their choice. Again,
these costs below include the switching technology only, and do not include any
of the actual usage charges on the lines themselves.

The pricing plan formula will be as follows:

         (Number of Inbound calls x $0.12 per call) (+) (Number of Inbound calls
         x Average Greeting Play Time (in min) x $0.10).

Jim, if you are in agreement with this, please indicate your acceptance of these
terms below.

Sincerely,

Thomas J. McGrath
Director, Business Development

I have read, and agree with, the terms and conditions, as outlined above

/s/ JIM ROHRER                                      10/19/99
-----------------------                       ----------------------
Jim Rohrer, Customer Care Officer                     Date<PAGE>   1
                                                                   EXHIBIT 10.12

                              EMPLOYMENT AGREEMENT

        This Employment Agreement is made and entered into by and between
Telocity, Inc. (the "Company") and Patricia Manuel ("Manuel") as of May 5, 1999
(the "Effective Date").

        1. Position and Duties: Manuel shall be employed by the Company as its
President and Chief Executive Officer ("CEO"), reporting only to the Company's
Board of Directors (the "Board") effective as of Michael Solomon's resignation
which the Company expects to occur no later than July 22, 1999. As its President
and CEO, Manuel agrees to devote her full business time, energy and skill to her
duties at the Company. These duties shall include all those duties customarily
performed by the President and CEO, as well as those duties that may be assigned
by the Board from time to time. In addition, the Company will undertake its best
efforts to have its shareholders approve the nomination and election of Manuel
to the Board, which approval the Company anticipates will occur.

        As a member of the Company's Board, Manuel shall be subject to the
provisions of the Company's bylaws and all applicable general corporation laws
relative to her position on the Board. In addition to the Company's bylaws, as a
member of the Board, Manuel shall also be subject to the statement of powers,
both specific and general, as set forth in the Company's Articles of
Incorporation.

        2. Term of Employment: Manuel's employment with the Company will be for
no specified term, and may be terminated by Manuel or the Company at any time,
with or without cause. Upon the termination of Manuel's employment with the
Company, for any reason, neither Manuel nor the Company shall have any further
obligation or liability under this Employment Agreement to the other, except as
set forth in paragraphs 4, 5, 6, 7, 8 and 9, below.

        3 . Compensation: Manuel shall be compensated by the Company for her
services as follows:

               (a) Base Salary: As Chief Executive Officer, Manuel shall be paid
a monthly Base Salary of $25,000 per month ($300,000 on an annualized basis),
subject to applicable withholding, in accordance with the Company's normal
payroll procedures. Manuel's salary shall be reviewed on at least an annual
basis and may be modified as appropriate. In the event of such a modification,
the new amount shall become Manuel's Base Salary.

               (b) Benefits: Manuel shall have the right, on the same basis as
other members of senior management of the Company, to participate in and to
receive benefits under any of the Company's employee benefit plans, as such
plans may be modified from time to time. In addition, Manuel shall be entitled
to the benefits afforded to other members of senior management under the
Company's vacation, holiday and business expense reimbursement policies.

                                       1

<PAGE>   2
               (c) Bonuses: Manuel shall be entitled to the following bonuses:

                      (i) Signing Bonus: Within ninety (90) business days of the
Effective Date, the Company will pay Manuel a signing bonus in the total amount
of $150,000, less applicable withholding. In the event that Manuel voluntarily
resigns from her employment during the first year following the Effective Date,
Manuel agrees that she shall repay a pro-rata share of the signing bonus based
on the time remaining in the first year of service.

                      (ii) Guaranteed Bonus: At the conclusion of her first year
of service as CEO of the Company, Manuel shall receive a bonus in the total
amount of $100,000, less applicable withholding. The bonus payment shall be made
in accordance with the Company's normal payroll procedures for bonuses.

                      (iii) Performance Bonus: At the conclusion of her second
year of service as CEO of the Company, and each year of employment thereafter,
Manuel shall have the opportunity to earn a Performance Bonus that will be
payable in accordance with the Company's Performance Bonus Plan, as such plan
may be adopted and modified over time. (Manuel is expected to prepare and
present a form of Performance Bonus Plan for review and approval by the Board
and it is expected that such Performance Bonus Plan will set the minimum target
bonus at fifty percent (50%) of Manuel's then current base salary for the
achievement of minimum objectives approved by the Board). This Performance Bonus
shall be based upon the achievement of certain fiscal and performance-based
objectives as agreed to by Manuel and the Board and such payment to be made in
accordance with the Company's normal payroll procedures for bonuses. All bonus
payments made pursuant to this subsection are subject to the approval of the
Board.

                      (d) Attorneys' Fees In Negotiating Agreement: The Company
shall reimburse Manuel for all reasonable attorneys fees she incurs in the
review and negotiation of this Employment Agreement up to a maximum of $5000.

        4. Stock Options: Manuel shall be granted the option to purchase
1,613,137 shares of the Common Stock of the Company, which represents seven
percent (7%) of the Company's fully-diluted, as converted equity, at an exercise
price per share equal to the fair market value of a share of Common Stock of the
Company on the date of grant as determined by the Board in its sole discretion.
To the extent possible, such Option will be an incentive stock option. The
Company currently anticipates (but does not guaranty) that the fair market value
of the Common Stock of the Company on the date of grant shall be $.70 per share.
Manuel's options shall vest monthly at the rate of 1/48 per month. Upon the
termination of Manuel's employment in accordance with the provisions of
paragraph 6(b), below, the options shall vest as described in those paragraphs.
Except as provided in paragraph 6(b), below, Manuel's options shall be subject
to the terms of the Company's Stock Option Plan, a copy of which is attached
hereto as Exhibit A, and the standard option agreement provided pursuant to the
plan. Manuel will be permitted to exercise the option in full prior to vesting
in the underlying shares, subject to the

                                       2
<PAGE>   3
Company's right to repurchase any unvested shares at Manuel's original cost upon
her termination of employment. In addition, the Company shall permit Manuel to
pay the option exercise price with a full recourse loan (secured by the shares
acquired with the loan) at the lowest interest rate available to avoid the
imposition of imputed income under the tax laws to assist Manuel to exercise her
options. Such loan shall be repayable upon the earlier of: (i) the fifth year
anniversary of the Effective Date; (ii) the termination of Manuel's employment
for any reason; or (iii) the date twelve (12) months after Manuel is first
eligible to sell shares of the Company's stock that she holds following an
initial public offering of the Company's shares; provided, however, that in the
event of Manuel's Termination Without Cause, such loan shall be repayable upon
the earlier of the events stated in clauses (i) or (iii) immediately preceding.

        For purposes of the resale of the underlying shares under the Option,
the Company covenants to use its good faith efforts to make available Rule 701
under the Securities Act of 1933, as amended (the "Securities Act"), or to
register the shares on Form S-1 or S-3 under the Securities Act (in the case
where the Company registers shares for its own account or for others holding
registration rights) or on Form S-8 under the Securities Act.

        The agreement for the Options shall contain the following additional
provisions: (i) in the event that Manuel resigns from her position for "Good
Reason" (as defined below) within twelve (12) months following a Change of
Control of the Company (as also defined below), one half of the unvested shares
subject to the Options, or any other option grants made to Manuel, shall become
vested immediately prior to Manuel's resignation. For purposes of this
Employment Agreement, a "Change of Control" shall mean an "Ownership Change
Event" (as defined below) or a series of related Ownership Change Events
(collectively, the "Transaction") wherein the stockholders of the Company
immediately before the Transaction do not retain immediately after the
Transaction direct or indirect beneficial ownership of more than fifty percent
(50%) of the total combined voting power of the outstanding voting stock of the
Company or the corporation or corporations to which the assets of the Company
were transferred (the "Transferee Corporation(s)"), as the case may be. For
purposes of the preceding sentence, indirect beneficial ownership shall include,
without limitation, an interest resulting from ownership of the voting stock of
one or more corporations which, as a result of the Transaction, own the Company
or the Transferee Corporation(s), as the case may be, either directly or through
one or more subsidiary corporations. The Board shall have the right to determine
whether multiple sales or exchanges of the voting stock of the Company or
multiple Ownership Change Events are related, and its determination shall be
final, binding and conclusive.

        For purposes of this Employment Agreement, an "Ownership Change Event"
shall be deemed to have occurred if any of the following occurs with respect to
the Company:

                      (1) the direct or indirect sale or exchange in a single or
series of related transactions by the stockholders of the Company of more than
fifty percent (50%) of the voting stock of the Company;

                      (2) a merger or consolidation in which the Company is a
party;

                                       3
<PAGE>   4
                      (3) the sale, exchange, or transfer of all or
substantially all of the assets of the Company; or

                      (4) a liquidation or dissolution of the Company.

        For purposes of this Employment Agreement, "Good Reason" means any of
the following conditions, which condition(s) remain(s) in effect 15 days after
written notice to the Board from Manuel of such condition(s):

                      (1) a decrease in Manuel's Base Salary and/or a material
decrease in Manuel's Performance Bonus Plan or employee benefits;

                      (2) a material, adverse change in Manuel's title,
authority, responsibilities or duties, as measured against Manuel's title,
authority, responsibilities or duties immediately prior to such change;

                      (3) the relocation of Manuel's work place to a location
outside the San Francisco Bay Area (i.e., Marin County, Contra Costa County,
Alameda County, San Francisco County, San Joaquin County, San Mateo County or
Santa Clara County);

                      (4) any material breach by the Company of any provision of
this Employment Agreement, which breach is not cured within thirty (30) days
following written notice of such breach from Manuel; or

                      (5) any failure of the Company to obtain the assumption of
this Employment Agreement by any successor or assign of the Company.

        5 . Benefits Upon Termination: In the event of Manuel's voluntary
termination from employment with the Company, or in the event that Manuel's
employment terminates as a result of her death or continued disability for
ninety (90) days ("disability" defined as the inability to perform the essential
functions of Manuel's position), Manuel shall be entitled to no compensation or
benefits from the Company other than those earned under paragraph 3 above
through the date of her termination or in the case of any stock options, vested
through the date of her termination. In the event that Manuel voluntarily
resigns from her employment with the Company she shall simultaneously resign
from any position she holds on the Company's Board.

        6. Benefits Upon Other Termination. Manuel agrees that her employment
may be terminated by the Company at any time, with or without cause. In the
event of the termination of Manuel's employment by the Company for the reasons
set forth below, she shall be entitled to the following:

               (a) Termination for Cause: If Manuel's employment is terminated
by the Company for "Cause" as defined below, Manuel shall be entitled to no
compensation or benefits from the Company other than those earned under
paragraph 3, or in the case of any stock options, vested through the date of her
termination.

                                       4

<PAGE>   5
        For purposes of this Employment Agreement, a termination for "Cause"
occurs if Manuel is terminated for any of the following reasons:

                      (1) theft, dishonesty, or falsification of any employment
or Company records;

                      (2) conviction of a felony or any act involving moral
turpitude;

                      (3) Manuel's refusal to perform any reasonable, assigned
duties after written notice from the Company of, and a reasonable opportunity to
correct, such refusal;

                      (4) improper disclosure of the Company's confidential or
proprietary information;

                      (5) any intentional act by Manuel that has a material
detrimental effect on the Company's reputation or business; or

                      (6) any material breach of this Employment Agreement,
which breach, if curable, is not cured within thirty (30) days following written
notice of such breach from the Company.

               (b) Termination Without Cause: If Manuel's employment is
terminated by the Company for any reason other than for Cause, it shall be
deemed a "Termination Without Cause." In such case, Manuel shall be entitled to
the following separation benefits:

                  (i) in the event that: (i) Manuel's employment is
terminated prior to the closing date of an initial public offering of the common
stock of the Company; and (ii) such termination is effective during the first
year following the Effective Date, Manuel shall be entitled to receive the
greater of:

                      (A)

                           (1) all accrued compensation and benefits earned
through the date of termination;

                           (2) continued payment of Manuel's salary at her Base
Salary rate, less applicable withholding, for six (6) months following her
termination;

                           (3) payment of the Guaranteed Bonus described above;
and

                           (4) additional vesting in the Options described in
paragraph 4, above, or any other options granted to Manuel by the Board as if
Manuel continued to vest in the options for an additional six months; or

                                       5

<PAGE>   6
                      (B)

                           (1) all accrued compensation and benefits earned
through the date of termination;

                           (2) continued payment of the Base Salary as provided
in paragraph 3(a) until the one year anniversary of the Effective Date;

                           (3) payment of the Guaranteed Bonus described in
paragraph 3(c)(ii), above, on the one year anniversary of the Effective Date;
and

                           (4) continued vesting in the Options described in
paragraph 4, above, and any other options granted to Manuel by the Board until
the one year anniversary of the Effective Date.

                  (ii) in the event that: (i) Manuel's employment is
terminated prior to the closing date of an initial public offering of the common
stock of the Company; and (ii) such termination is effective following the one
year anniversary of the Effective Date, Manuel shall receive:

                      (A) all accrued compensation and benefits earned through
the date of termination;

                      (B) continued payment of Manuel's salary at her Base
Salary rate, less applicable withholding, for six (6) months following her
termination;

                      (C) a pro rata portion of Manuel's target Performance
Bonus for the year in which the termination occurs; and

                      (D) an additional six (6) months vesting in the Options
described in paragraph 4, above and any other options granted to Manuel by the
Board.

                  (iii) in the event that Manuel's employment is terminated
on or following the closing date of an initial public offering of the common
stock of the Company, Manuel shall receive:

                           (A) all accrued compensation and benefits earned
through the date of termination;

                           (B) continued payment of Manuel's salary at her Base
Salary rate, less applicable withholding, for twelve (12) months following her
termination;

                           (C) a pro rata portion of Manuel's target Performance
Bonus for the year in which the termination occurs; and

                                       6

<PAGE>   7
                           (D) an additional twelve (12) months' vesting in the
Options described in paragraph 4, above and any other options granted to Manuel
by the Board.

                  (iv) in the event that Manuel's employment is terminated
by the Company or she voluntarily resigns from the Company for Good Reason
within sixty (60) days prior to or twelve (12) months following a Change of
Control, Manuel shall receive in a lump sum:

                           (A) a severance payment equal to (1) twelve (12)
months salary at her then current Base Salary Rate and (2) her target annual
Performance Bonus for the term in which her employment terminated;

                           (B) continued benefits for up to twelve (12) months
following termination; and

                           (C) accelerated vesting as described in Paragraph 4.

        7. Employee Inventions and Proprietary Rights Assignment Agreement:
Manuel agrees to abide by the terms and conditions of the Company's standard
Employee Inventions and Proprietary Rights Assignment Agreement.

        8. Non-Solicitation: Manuel agrees that for a period of one year after
the date of the termination of her employment for any reason, she shall not,
either directly or indirectly: (i) solicit the services, or attempt to solicit
the services, of any employee of the Company to any other person or entity; or
(ii) solicit or otherwise encourage any customer, supplier or other business
contact of the Company to withdraw, curtail or cancel their business with the
Company.

        9. Indemnification: The Company agrees to make Manuel a party to its
standard form of indemnification agreement as signed by the Company's other
officers and directors.

        10. Dispute Resolution: In the event of any dispute or claim relating to
or arising out of this Employment Agreement (including, but not limited to, any
claims of breach of contract, wrongful termination or age, sex, race or other
discrimination), Manuel and the Company agree that all such disputes shall be
fully and finally resolved by binding arbitration conducted by the American
Arbitration Association in San Francisco, California in accordance with its
National Employment Dispute Resolution rules, as those rules are currently in
effect (and not as they may be modified in the future). Manuel acknowledges that
by accepting this arbitration provision she is waiving any right to a jury trial
in the event of such dispute. Provided, however, that this arbitration provision
shall not apply to any disputes or claims relating to or arising out of the
misuse or misappropriation of trade secrets or proprietary information.

        11. Attorneys' Fees: The prevailing party shall be entitled to recover
from the losing party its attorneys' fees and costs incurred in any action
brought to enforce any right arising out of this Employment Agreement.

                                       7

<PAGE>   8
        12. Interpretation: Manuel and the Company agree that this Employment
Agreement shall be interpreted in accordance with and governed by the laws of
the State of California.

        13. Successors and Assigns: This Employment Agreement shall inure to the
benefit of and be binding upon the Company and its successors and assigns. In
view of the personal nature of the services to be performed under this
Employment Agreement by Manuel, she shall not have the right to assign or
transfer any of her rights, obligations or benefits under this Employment
Agreement, except as otherwise noted herein.

        14. Entire Agreement: This Employment Agreement constitutes the entire
employment agreement between Manuel and the Company regarding the terms and
conditions of her employment, with the exception of (i) the agreement described
in paragraph 7 and (ii) any stock option agreements between Manuel and the
Company. To the extent that there is any inconsistency between this Employment
Agreement and any other agreement between Manuel and the Company, the terms of
this Employment Agreement will govern. This Employment Agreement (including the
documents described in (i) and (ii) herein) supersedes all prior negotiations,
representations or agreements between Manuel and the Company, whether written or
oral, concerning Manuel's employment by the Company.

        15. Validity: If any one or more of the provisions (or any part thereof)
of this Employment Agreement shall be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions (or any part thereof) shall not in any way be affected or impaired
thereby.

        16. Modification: This Employment Agreement may only be modified or
amended by a supplemental written agreement signed by Manuel and the Company.

        17. Counterparts: This Employment Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.

                                       8

<PAGE>   9
        IN WITNESS WHEREOF, the parties have executed this Employment Agreement
as of the date and year written below.

                                         TELOCITY, INC.

Date: April 30, 1999                     By: Illegible
     ----------------------------           -----------------------------

                                         Its: Director
                                             ----------------------------

Date:
     ----------------------------        --------------------------------
                                         Patricia Manuel

<PAGE>   10
        IN WITNESS WHEREOF, the parties have executed this Employment Agreement
as of the date and year written below.

                                         TELOCITY, INC.

Date:                                    By:
     ----------------------------           -----------------------------

                                         Its:
                                             ----------------------------

Date: 5-5-99                             /s/ PATRICIA MANUEL
     ----------------------------        --------------------------------
                                         Patricia Manuel

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