SUPPLEMENTAL AGREEMENT

BETWEEN

VERIZON NORTHWEST INCORPORATED

f/k/a GTE NORTHWEST INCORPORATED

AND

SBC TELECOM, INC.

SUPPLEMENTING ADOPTED INTERCONNECTION AGREEMENT

THIS SUPPLEMENTAL AGREEMENT is by and between Verizon Northwest Incorporated (“Verizon”) f/k/a GTE Northwest Incorporated (“GTE”) and SBC Telecom, Inc. (“SBCT”), Verizon and SBCT being referred to collectively as the “Parties” and individually as a “Party”). This Supplemental Agreement covers services in the state of Washington (the “State”).

WHEREAS, SBCT has previously adopted the Interconnection Agreement between AT&T of the Pacific Northwest and GTE (the “Underlying Agreement”) pursuant to Section 252(i) of the Telecommunications Act of 1996 (the “Act”);

WHEREAS, the Underlying Agreement was approved by the Washington Utilities and Transportation Commission’s (“WUTC”) Order dated September 25, 1997 in Docket No. UT-960307and SBCT’s adoption of the Adopted Terms was approved by the WUTC’s Order dated December 29, 1999 in Docket No. UT-993019;

WHEREAS, the Underlying Agreement does not include an unbundled network element for a DS-3 loop;

WHEREAS, subsequent to the effective date of the Underlying Agreement, SBCT notified Verizon that it desired to supplement the Underlying Agreement to add an unbundled network element for a DS-3 loop; and

WHEREAS, pursuant to Section 252(a)(1) of the Act, and without waiving any of their reservation of rights set forth in the Underlying Agreement, the Parties now wish to supplement the Underlying Agreement as follows.

NOW, THEREFORE, in consideration of the mutual promises, provisions and covenants herein contained, the sufficiency of which is hereby acknowledged, the Parties agree as follows:

1.Verizon will offer unbundled network element DS-3 loops (“DS-3 loops”) to SBCT subject to the following terms and conditions.

  1. The terms and conditions of the Underlying Agreement will apply to the provision of DS-3 loops, except to the extent inconsistent with any terms and conditions contained herein (if any provision in the Underlying Agreement conflicts with this Supplemental Agreement, this Supplemental Agreement shall control).[1]
  1. Description.

DS-3 loops will support the transmission of isochronous bipolar serial data at a rate of 44.736 Mbps. The DS-3 loop provides the equivalent of 28 DS-1 channels and shall include the electronics at either end.

  1. Rates and charges.

The monthly recurring rate is $ 2584.44 per DS-3 loop.

The nonrecurring charges for ordering and provisioning of DS-3 loops unbundled network elements are:

Ordering

100% Manual$ 40.56

Semi Mechanized$ 25.03

Provisioning

Initial Unit$569.13

Additional Unit$303.39

Ordering

Initial Service Order (ISO) applies to each Local Service Request (LSR) and Access Service Request (ASR) for new service. Charge is Manual (e.g., for a faxed order) or Semi-Mechanized (e.g., for an electronically transmitted order) based upon the method of submission used by SBCT.

Provisioning

Initial Unit applies per ISO for the first unit installed. The Additional Unit applies for each additional unit installed on the same ISO.

5.Rate Changes.

The rates and charges set forth in this Supplemental Agreement are subject to change and/or modification based on the following contingencies:

5.1GTE and SBCT agree that if any generic rate proceeding or other proceeding initiated during the term of this Supplemental Agreement results in a Commission Order adjusting or modifying, in whole or in part,the rates and/or charges set forth in this Supplemental Agreement, then the rates and/or charges set forth in this Supplemental Agreement shall be deemed to have been automatically amended, and such amendment shall be effective upon the date of the applicable Order. If such an order issues during the term of this Supplemental Agreement, such adjusted or modified rates and charges will be applied prospectively pending the issuance of a final, binding and non-appealable order in the subject proceeding. At such time as the applicable Order becomes final, binding and non-appealble, the adjusted or modified rates and charges established therein shall be applied retroactively to the Effective Date of this Supplemental Agreement. The Parties will true-up any resulting over or under billing. Such true-up payments, if any, shall also include interest computed at the prime rate of the Bank of America, N.A. in effect at the date of said final, binding and non-appealable Order. Any underpayment shall be paid, and any overpayment shall be refunded, within forty-five (45) Business Days after the date on which such Order becomes final, binding and non-appealable. The Parties agree that the provisions of this Section 5.1 shall survive the termination, rescission, modification or expiration of this Supplemental Agreement without limit as to time.Each Party acknowledges that the other Party may seek to enforce the provisions in this Section 5.1 before a commission or court of competent jurisdiction.

5.2 Verizon and SBCT further agree that the rates and charges set forth in this Supplemental Agreement and any rates or charges that are adjusted or modified pursuant to Section 5.1 are further subject to change and/or modification resulting from future orders or decisions of any commission, court or other governmental authority having competent jurisdiction that address, without limitation, the following: (1) Verizon’s unrecovered costs (e.g., actual costs, contribution, undepreciated reserve deficiency, or similar unrecovered Verizon costs (including Verizon’s interim universal service support charge)); (2) the establishment of a competitively neutral universal service system; (3) any and all actions seeking to invalidate, stay, vacate or otherwise modify any FCC Order in effect as of the Effective Date, or during the term, of this Supplemental Agreement that impact the rates and/or charges set forth in this Supplemental Agreement or any rates or charges as adjusted or modified pursuant to Section 5.1, including, without limitation, the current appeal of the FCC pricing rules pending before the Eighth Circuit Court of Appeals (See Docket No. 96-321) and any appeal of the FCC’s new UNE rules; or (4) any other relevant appeal or litigation. The Parties agree that if the rates or charges set forth in this Supplemental Agreement or any rates or charges as adjusted or modified pursuant to Section 5.1 are deemed to be unlawful or otherwise modified pursuant to such an order or decision, or are otherwise stayed, enjoined or impacted, or the methodology from which they were derived is held to be unlawful or otherwise invalid, in whole or in part, by such an order or decision, then this Supplemental Agreement shall be deemed to have been automatically amended as of the date of the order or decision to reflect the modifiied rates or charges, or, as appropriate, replacement rates and/or charges (“new rates”), which the Parties agree to negotiate in good faith within ninety (90) calendar days of the applicable decision or order. Such new rates will be applied prospectively pending the issuance of a final, binding and non-appealable Order in the subject proceeding. At such time as the applicable Order becomes final, binding and non-appealble, the new rates shall be applied retroactively to the Effective Date of this Supplemental Agreement. The Parties will true-up any resulting over or under billing. Such true-up payments, if any, shall also include interest computed at the prime rate of the Bank of America, N.A. in effect at the date of said final, binding and non-appealable Order. Any underpayment shall be paid, and any overpayment shall be refunded within forty-five (45) Business Days after the date on which such Order becomes final, binding and non-appealable. The Parties agree that the provisions of this Section 5.2 shall survive the termination, rescission, modification or expiration of this Supplemental Agreement without limit as to time and that in the event that the Eighth Circuit Court of Appeals or any other court or commission of competent jurisdiction issues an order or decision as contemplated in this Section 5.2 after this Supplemental Agreement terminates or expires, either Party may require a true-up of the affected rates or charges based on that decision or order retroactive to the Effective Date of this Supplemental Agreement. Each Party acknowledges that the other Party may seek to enforce the provisions in this Section 5.2 before a commission or court of competent jurisdiction.

6. The Parties acknowledge and agree that this Supplemental Agreement shall terminate simultaneously with the termination or expiration of the Underlying Agreement but that the true up obligations set forth in Paragraph 5 of this Supplemental Agreement shall survive its termination.

7.This Supplemental Agreement constitutes the entire agreement of the Parties pertaining to the subject matter hereof and supercedes all prior agreements, negotiations, proposals, and representations, whether written or oral, and all contemporaneous oral agreements, negotiations, proposals, and representations concerning such subject matter. No representations, understandings, agreements, or warranties, expressed or implied, have been made or relied upon in the making of this Supplemental Agreement other than those specifically set forth herein.

IN WITNESS WHEREOF, each Party has executed this Supplemental Agreement and it shall be effective upon execution by both Parties.*

VERIZON NORTHWEST INCORPORATEDSBC TELECOM, INC.

By: By:

Name: Name:

Title: Title:

Date: Date:

* Verizon has agreed to allow this Supplement to become effective upon execution in order to permit SBCT to proceed with implementation of its competitive business strategies and plans prior to the approval of the Supplement by the Commission. In light of this, SBCT hereby agrees that the Parties’ obligations under this Supplement shall remain in effect pending the final disposition of the Commission review and approval process.

[1] The Parties’ reservation of rights and positions set forth in the Underlying Agreement are incorporated by reference and restated as if fully set forth herein. Furthermore, the Parties expressly reserve their rights pursuant to the Underlying Agreement, in the event that such Rules are later modified or eliminated due to changes in legal requirements, including, but not limited to, the right to incorporate the decision of the United StatesCourt ofAppeals for the Eighth Circuit on July 18, 2000 (See Iowa Utilities Board, et. al. v. Federal Communications Commission and the United States of America, No. 96-3321 (and consolidated cases).