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360Network-CN031223EXECUTION VERSION W338155.03 ASSUMPTION AGREEMENT THIS ASSUMPTION AGREEMENT, dated as of December 23, 2003, is entered into by and among Touch America Holdings, Inc., a Delaware corporation (including any successor, "Touch America "), and the subsidiaries of Touch America listed on the signature pages hereto, (including their respective successors, e ach a "Seller" and together with Touch America, the "Sellers "); and 360networks (USA) inc., a Nevada corporation, as assignee of 360networks Corporation (including its successors and permitted assigns, "Purchaser "). RECITALS WHEREAS; Purchaser and Sellers have entered into a certain Amended and Restated Asset Purchase Agreement, dated as of September 10, 2003 (the "Asset Purchase Agreement "), pursuant to which Sellers have agreed to sell, transfer, convey, assign and deliver to Purchaser and Purchaser has agreed to purchase from Sellers certain of the assets of Sellers used in, of, or related to the Relevant Business, and Purchaser has agreed, in partial consideration therefor, to assume certain obligations in connection therewith pursuant to Article II of the Asset Purchase Agreement, by executing this Assumption Agreement; WHEREAS, 360networks Corporation assigned its rights and obligations under the APA to 360networks (USA) inc.; WHEREAS, Purchaser and Sellers have entered into a certain Settlement Agreement Amendment No. 1 to Amended and Restated Asset Purchase Agreement and Election under Section 6.9(e), dated November 10, 2003 (the "Settlement and Amendment Agreement "); WHEREAS, capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Asset Purchase Agreement or the Settlement and Amendment Agreement as the case may be; and WHEREAS, pursuant to Section 2.2 of the Asset Purchase Agreement, Purchaser is required to execute and deliver to Sellers an Assumption Agreement whereby Purchaser assumes certain obligations. NOW, THEREFORE, for and in consideration of the mutual covenants contained herein and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, Purchaser hereby undertakes and agrees from and after the date hereof, subject to the limitations contained herein and in the Asset Purchase Agreement, to assume and to pay, perform and discharge when due the Assumed Liabilities specified to be assumed by Purchaser under the Asset Purchase Agreement. Nothing contained herein shall require Purchaser to pay or discharge any debts or obligations expressly assumed hereby so long as Purchaser shall in good faith contest or cause to be contested the amount or validity thereof. Purchaser shall not assume the Excluded Liabilities, which shall remain the sole obligation of Sellers, their successors and assigns. No Person other EXECUTION VERSION W3381SS.03 This Assumption Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. This Assumption Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to a contract executed and performed in such State without giving effect to the conflicts of laws principles thereof, except that if it is necessary in any other jurisdiction to have the law of such other jurisdiction govern this Assumption Agreement in order for this Assumption Agreement to be effective in any respect, then the laws of such other jurisdiction shall govern this Assumption Agreement to such extent. [SIGNATURE PAGE FOLLOWS] �. e . _.. _u \':. ci;:.Si: to execute this Assumption Aareement on the day and year first above written, SELLERS PURCHASER TOUCH AMERIC LDINGS, INC. 360NETWORKS (USA) INC. By: By. Name: Mi hael J. M dahl Name: Title: President an COO Title: > TOUCH AMERICA By: Name: Michael J. Mel hl Title: President and 00 SIERRA TOUCH LLC By: i 6 Name: Michael J. Mel 1 Title: President and O TOUCH AMERICA PURCHASING COMPANY, LLC By: Name: Michael annd Mel 1 Title: President C O TOUCH AMERICA INTANGIBLE HOLDING COMPA LC By: Name: Michael J. Me ahl Title: President and 00 AMERICAN FIBER LLC By: Name: Michael J. Me ahl Title: President and 00 ENTECH, LLC By.��Name: Michael J. Meld I Title: President and 0 IN WITNESS WHEREOF, the undersigned have caused their duly authorized officers to execute this Assumption Agreement on the day and year first above written. SELLERS PURCHASER TOUCH AMERICA HOLDINGS, INC. 360NE7RK SA) IN,5 J By: By: �� Name: Michael J. Meldahl Name: Title: President and COO Title: S �� TOUCH AMERICA, INC. By: Name: Michael J. Meldahl Title: President and COO SIERRA TOUCH AMERICA, LLC By: Name: Michael J. Meldahl Title: President and COO TOUCH AMERICA PURCHASING COMPANY, LLC By: Name: Michael J. Meldahl Title: President and COO TOUCH AMERICA INTANGIBLE HOLDING COMPANY, LLC By: Name: Michael J. Meldahl Title: President and COO AMERICAN FIBER TOUCH LLC By: Name: Michael J. Meldahl Title: President and COO ENTECH, LLC By- v_une: �,iicha�l '. Ll�lcial�i Execution Version W337355.08 CLOSING AGREEMENT This CLOSING AGREEMENT (this "Closing Agreement "), dated December 23, 2003, is entered into by and among Touch America Holdings, Inc., a Delaware corporation, and the subsidiaries of Touch America listed on the signature pages hereto (collectively, the "Sellers "), and 360networks (USA) inc., a Nevada corporation (the "Purchaser "). Sellers and Purchaser are referred to herein collectively as the "Parties" and individually as a "Party ". The Parties agree as follows: I. GENERAL A. Closing Date. On the date hereof, the Closing Date occurred with respect to the transactions contemplated by the Amended and Restated Asset Purchase Agreement by and between the Sellers and Purchaser dated as of September 10, 2003 (the "APA ") as amended pursuant to (i) that certain Settlement Agreement Amendment No. 1 to Amended and Restated Asset Purchase Agreement and Election under 6.9(e) dated November 10, 2003 (the "Settlement and Amendment Agreement ") and (ii) that certain letter agreement between Sellers and Purchaser dated December 5, 2003 (the "Letter Agreement "). The APA, the Settlement and Amendment Agreement and the Letter Agreement shall be referred to herein collectively as the "Transaction Agreement ". Capitalized terms used in this Closing Agreement and not otherwise defined shall have the meanings ascribed to them in the Transaction Agreement. B. Assignment. 360networks Corporation assigned its rights and obligations under the APA and the Settlement and Amendment Agreement to Purchaser pursuant to a certain Assignment and Assumption Agreement, dated November 14, 2003. Sellers received a copy of such Assignment and Assumption Agreement. C. Intention. This Closing Agreement is intended to document the actions taken and deliveries made at the Closing, and to reflect certain agreements and understandings of the Parties reached at the Closing. The Parties and the Committee acknowledge and agree that (i) this Closing Agreement is delivered by the Parties at the Closing in accordance with and as contemplated by Sections 9.2(g) and 9.3(d) of the APA, (ii) where this Closing Agreement amends or supplements the APA, such amendments and supplements are not material, and (iii) the covenants and agreements contained in this Closing Agreement shall be considered covenants and agreements under the APA for all purposes, including indemnification under Article X thereof. D. Miscellaneous. For the convenience of the Parties, any number of counterparts of this Closing Agreement may be executed by any one or more Parties, and each such executed counterpart shall be, and shall be deemed to be, an original, but all of which shall constitute, and shall be deemed to constitute, in the aggregate but one and the same instrument. The Parties agree that, for all purposes, signatures on original documents relating to the Closing transmitted by facsimile shall be treated as originals provided that the original signatures are delivered to Purchaser's counsel prior to December 31, 2003. Execution Version W337355.08 D. Actions of Third Parties: 1. Execution and delivery of Escrow Agreement by the Escrow Agent 2. Execution and delivery of Agreement Regarding Wireless Assets by Corban Communications, Inc. 3. Execution and delivery of New IRU Agreement by and between Qwest and Sellers E. Certain Determinations With Respect to Payments under the Agreements: BASE PRICE: $28,000,000.00 less Option Fee with respect to Item #4 on Schedule 1.3 to the APA: ($150,000.00) ADJUSTED BASE PRICE: $27,850,000.00 less Transaction Payment Holdback: ($3,750,000.00) Credit for Asset Prepayment Amount ($1,000,000.00) Base Price Payable at Closing: $23,100,000.00 Base Price Paid to Escrow Agent per Letter Agreement: $23,100,000.00 BURN: November 1, 2003 through November 30, 2003 $0.00 December 1, 2003 through Closing Date $0.00 Total Amount Payable under Primary Transaction Agreements on account of Burn: $0.00 Transaction Payment Holdback payable at Closing of Qwest transaction: $3,750,000.00 F. Summary of Payments Made at Closing Date and Wire Instructions: Amount of Base Price Escrow Fund payable to Escrow Agent pursuant to Section 2.5(b) of APA to be transferred to the following account: $5,570,000.00 Bank Name: Wells Fargo Bank, National Association ABA Number: 121000248 Account Name: Corporate Trust Clearing Account Number: 0001038377 For credit to: Touch America/360networks Escrow, Account No. 15302400 Execution Version W337355.08 Portion of Base Price Escrow Fund payable to Sellers to be wired to the following account: $16,879,259.58 Bank Name: US BANK NA MONTANA ABA Number: 092900383 Account Name: TOUCH AMERICA, INC. GENERAL ACCOUNT Account Number: 156210881249 Portion of Base Price Escrow Fund payable to Sellers' Counsel, Young Conaway, relating to the Nortel dispute, to be wired to the following account: $650,740.42 Bank Name: WILMINGTON TRUST COMPANY, WILMINGTON DELAWARE ABA Number: 031100092 Account Name: YOUNG CONAWAY STARGATT & TAYLOR, LLP ESCROW ACCOUNT FBO Account Number: 2782 -4358 Transaction Payment Holdback payable to Sellers at closing of Qwest transaction to be wired by Purchaser to the following account: Bank Name: US BANK NA MONTANA ABA Number: 092900383 Account Name: TOUCH AMERICA, INC. GENERAL ACCOUNT Account Number: 156210881249 Burn Amount Payable to Sellers at Closing: III. Actions To Be 'Taken After Closing Date. $3,750,000.00 $0.00 A. Immediately after the Closing, Sellers shall execute a payment receipt with respect to (i) the Base Price Escrow Amount paid to Sellers by Escrow Agent, (ii) the Base Price Escrow Amount paid to Sellers' counsel by Escrow Agent, and (iii) the Transaction Payment Holdback paid to Sellers by Purchaser. IV. Additional Agreements of the Parties with respect to Closing. A. The APA Closing Procedure. The Parties acknowledge and agree that the Closing was effectuated by following the APA Closing Procedure, except as provided in the Agreement Regarding Wireless Assets. As a result of not effectuating the Closing by following the Alternative Closing Procedure, the Parties acknowledge and agree that the Management Services Agreement, dated November 19, 2003, by and among Sellers and Purchaser never became effective. Without limiting the foregoing, the Parties hereby terminate the Management Services Agreement with no Party owing any other Party any obligations thereunder or related thereto. Execution Version W337355.08 B. Extension of Purchase Right. (i) The Parties agree that, until the expiration of the Relevant Period (as defined below), Purchaser shall have the right and ability (the "Extended Purchase Right ") to purchase, as Purchased Assets pursuant to the APA, from Sellers the specific optical fibers and conduit identified on Schedules A -1 and A -2 (collectively, the "Relevant Assets ") attached hereto. The Extended Purchase Right may be exercised by Purchaser at any time during the Relevant Period by delivering a written notice of exercise to Sellers not later than ten (10) Business Days prior to the expiration of the Relevant Period. Sellers shall transfer and assign the Relevant Assets, as Purchased Assets pursuant to the APA, on the tenth (101') Business Day following Sellers' receipt of the exercise notice. Upon transfer and assignment of the Relevant Assets, Purchaser shall pay to Sellers the sum of $1.00. Notwithstanding the foregoing, Sellers shall be obligated to transfer and assign the Relevant Assets only if either (x) Purchaser assumes all rights, obligations and liabilities under the agreements identified on Schedules B -1 and B -2 (each a "Relevant Agreement" and collectively, the "Relevant Agreements "), in which case Sellers shall assume and assign to Purchaser such Relevant Agreements in Sellers' Bankruptcy Case pursuant to the terms and conditions of the APA relating to Assumed Contracts, (y) each Seller is unconditionally released of all liabilities and obligations arising under or from, and all claims relating to, the Relevant Agreements (clauses (x) and (y) being collectively, the "Transfer Conditions "), or if the Parties otherwise mutually agree in writing. (ii) During the Relevant Period, Purchaser shall attempt to reach a business resolution with the Broadwing Communications Services Inc. (including its permitted successors and assigns) ( "Broadwing ") and Wiltel Communications, LLC, as successor to Williams Communications, Inc. (including its permitted successors and assigns) ( "Wiltel ") with respect to the Relevant Assets and the Relevant Agreements. For clarity, in the event Purchaser determines that it will not be able to reach a business solution with Wiltel and/or Broadwing, it shall not be obligated hereunder to continue such negotiations. Each of the Sellers and the Committee covenant that it will support, and will not hinder, impair, interfere with or otherwise cause any adverse effect or event to occur with respect to, Purchaser's negotiations with Broadwing and /or Wiltel. (iii) Each of the Parties agrees that it shall keep the existence of the agreements contained in this section IV.B., and the contents thereof, strictly confidential; provided, however, any Party may disclose such provisions, or the existence thereof, under seal (if permitted by court order), to the extent compelled to do so by a court of competent jurisdiction, including but not limited to the Bankruptcy Court. (iv) During the Relevant Period, the Sellers shall not reject any Relevant Agreement without the consent of the Purchaser. (v) The Parties acknowledge and agree that this Extended Purchase Right is severable as between the Relevant Assets and the Relevant Agreements pertaining to Broadwing (Schedules A -1 and B -1) and the Relevant Assets and the Relevant Agreements pertaining to Wiltel (Schedules A -2 and B -2) and may be exercised, or not, independent of the other. Execution Version W337355.08 (vi) F or p urposes o f t his S ection IV. B., " Relevant P eriod" in eans, unl ess t he Parties mutually agree, the period commencing immediately following Closing and ending at the earliest of (a) the effective date of a plan of reorganization in the Sellers' Bankruptcy Case, (b) 180 days following Closing, (c) Purchaser reaching a business resolution with Broadwing and/or Wiltel with respect to the Relevant Assets and the Relevant Agreements, or (d) in the event Purchaser informs Sellers in writing that it intends (1) to exclude the Relevant Agreements and (2) not to exercise its Extended Purchase Right hereunder with respect to the Relevant Assets, effective on the certain date specified in such notice (provided that such date shall be no less than thirty (30) days from the notice date) unless Purchaser retracts such notice prior to such date, provided, however, that this clause (d) shall not extend the Relevant Period beyond 180 days following Closing. C. Without limiting anything to the contrary, to the extent Bankruptcy Court authorization is necessary or desirable to effectuate or confirm (i) the covenants and agreements contained herein or (ii) the transfer and assignment of any rights of Sellers under any Assumed Contract, Assumed Lease or Purchased Asset, Sellers shall obtain such Bankruptcy Court authorization as soon as reasonably practicable. Without limiting any obligation of Sellers under the T ransaction A greement o r t he im mediately preceding s entence, S ellers a gree t hat, t o t he extent any party to an agreement listed on the relevant Schedules to the General Assignment and Bill of Sale delivered at Closing, including without limitation Schedule 3.3.2 thereto, was not served with notice of the assumption of such agreement by Sellers and assignment of such agreement to Purchaser, the Sellers shall promptly take appropriate corrective measures reasonably acceptable to Purchaser, which may include, among other things, the filing and service o f r enewed o r s upplemental in otions a nd no tices w ith t he Ba nkruptcy C ourt s eeking approval o r r atification o f t he a ssumption a nd a ssigament o f a ny s uch a greements, p rovided however, that any contracts that are the subject of such corrective measures shall be specifically identified by Purchaser. D. Except as otherwise specifically set forth herein and in the Agreement Regarding Regarding Wireless Assets, all rights and obligations of the Parties under the Transaction Agreement shall remain in full force and effect and shall not be waived, modified or otherwise altered by this Agreement. Except as provided in the Agreement Regarding Wireless Assets, all representations and warranties contained in the APA and all covenants and agreements of the Parties contained in this Closing Agreement, the APA, the Settlement and Amendment Agreement and the Letter Agreement shall survive the Closing. E. Nothing contained in this Closing Agreement shall confer any rights, benefits or remedies upon any person or entity, including without limitation Wiltel and Broadwing, other than the parties hereto and their respective permitted successors and assigns. [REMAINDER OF PAGE INTENTIONALLY BLANK; SIGNATURE PAGE FOLLOWS] Execution Version W337355.08 IN WITNESS WHEREOF, the undersigned have caused their duly authorized officers to execute this Closing Agreement on the day and year first above written. SELLERS PURCHASER TOUCH AMERICA HOLDINGS, INC. 360NETWORKS (USA) INC. By: By: Name: Michael J. Meldahl Name: Title: President and COO Title: TOUCH AMERICA, INC. OFFICIAL COMMITTEE OF UNSECURED By: CREDITORS OF THE DEBTORS AND Name: Michael J. Meldahl DEBTORS IN POSSESSION Title: President and COO By: Name: Title: SIERRA TOUCH AMERICA, LLC By: Name: Michael J. Meldahl Title: President and COO TOUCH AMERICA PURCHASING COMPANY, LLC By: Name: Michael J. Meldahl Title: President and COO TOUCH AMERICA INTANGIBLE HOLDING COMPANY, LLC By: Name: Michael J. Meldahl Title: President and COO AMERICAN FIBER TOUCH LLC By: Name: Michael J. Meldahl Title: President and COO ENTECH, LLC By: Name: Michael J. Meldahl Title: President and COO i Schedules to Closing Agreement Schedule A -1 48 fibers and 1 conduit on the following route segments: S eg # Segment A Segment Z ULR Provider Route Mileage (approximate) 150 Denver MCI 'unction Pueblo TA 168.3 151 Pueblo Amarillo TA 369.2 152 marillo Lubbock TA 130.7 153 Lubbock Wichita Falls TA 232.3 154 ichita Falls Irvin A 125.4 155 Irving jDallas Dallas iDynamic 11.5 Schedule A -2 24 fibers on the following route segments: Seg # Segment A Segment Z ULR Provider Route Mileage (approximate) 150 Denver MCI 'unction Pueblo TA 168.3 151 IPueblo Amarillo TA 369.2 152 marillo Lubbock TA 130.7 153 Lubbock Wichita Falls TA 232.3 154 Wichita Falls TA 125.4 155 _Irving Irving Dallas 11.5 156 Colorado Springs JCT -Dynamic Colorado Spgs POP TA 61.6 157 Pueblo 'ct Pueblo POP TA 5.5 158 Amarillo 'ct Amarillo POP TA 32.1 159 Lubbock 'ct Lubbock POP TA 47.2 160 Wichita Falls 'ct Wichita falls POP A 20.44 Schedules to Closing Agreement Schedule B -1 IRU Agreement (SWAP) between IXC Communications Services, Inc. (Salt Lake City, Utah to Denver, Colorado) and Touch America, Inc. (Denver, Colorado to Dallas, Texas) dated March 24, 1999. Schedule B -2 IRU Agreement between Williams Communications, Inc and Touch America, Inc. dated March 31, 2000. ELLET S I PURCHASER '1,jUCHAMER H DINGS, INC. By: Name: M%ichael J. eldahl Title: President d COO 360NETWORKS (USA) INC. By: _ Name: Title: TOUCH AMEBIC , I C. OFFICIAL COMMITTEE OF UNSECURED B y: ` CREDITORS OF THE DEBTORS AND Name: Michael J. eldahl DEBTORS IN POSSESSION Title: President a d COO By: Name: Title: SIERRA TOUCH AMeI A, LLC Name: Michael J. M dahl Title: President and COO TOUCH AMERICA PURCHASING COMPANY, LLC Name: Michael J. Mel ahl Title: President and 00 TOUCH AMERICA INTANGIBLE ( 14 HOLDING CO LLC 15 �B}JG /L c Name: ichael J. eldahl 1 Title: President d COO i AMERICAN FIBER CH LLC 17 18 Name: Michael J. M dahl j rule: President an COO ;I 1s > i TEC , LLC '1 Na me: Michael J. Title dah( President an COO �� -�s�� _far c. y.r...�� . � �_ ,... -• �r- ,r�.�:^� -�, : -:,..� _.:�,_�,_. 6 OL LL Zl. 1 Execution Version W337355.08 IN WITNESS WHEREOF, the undersigned have caused their duly authorized officers to execute this Closing Agreement on the day and year first above written. SELLERS PURCHASER TOUCH AMERICA HOLDINGS, INC. 360NETWORKS (USA) INC. By: By: Name: Michael J. Meldahl Name: Title: President and COO Title: TOUCH AMERICA, INC. OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF THE DEBTORS AND By: DEBTORS IN POSSESSION Name: Michael J. Meldahl Title: President and COO B y: Name: Title: SIERRA TOUCH AMERICA, LLC By: Name: Michael J. Meldahl Title: President and COO TOUCH AMERICA PURCHASING COMPANY, LLC By: Name: Michael J. Meldahl Title: President and COO TOUCH AMERICA INTANGIBLE HOLDING COMPANY, LLC By: Name: Michael J. Meldahl Title: President and COO AMERICAN FIBER TOUCH LLC By: Name: Michael J. Meldahl Title: President and COO ENTECH,LLC Bv: tiamc: \Ilch.lcl J :\.1C1d:1h1 -- Execution Version W337355.08 IN WITNESS WHEREOF, the undersigned have caused their duly authorized officers 1 execute this Closing Agreement on the day and year first above written. SELLERS TOUCH AMERICA HOLDINGS, INC. By: Name: Michael J. Meldahl Title: President and COO PURCHASER 360NETWORKS (USA) INC. By: Name: Title: TOUCH AMERICA, INC. OFFICIAL COMMITTEE OF CREDITORS OF THE DEB ORSCt By. Name: Michael J. Meldahl DEBTORS IN POSSESSION Title: President and COO By Name: Title: SIERRA TOUCH AMERICA, LLC J By: Name: Michael J. Meldahl Title: President and COO TOUCH AMERICA PURCHASING — — COMPANY, LLC By: Name: Michael J. Meldahl Title: President and COO TOUCH AMERICA INTANGIBLE HOLDING COMPANY, LLC By: Name: Michael J. Meldahl Title: President and COO AMERICAN FIBER TOUCH LLC By: Name: Michael J. Meldahl Title: President and COO ENTECH,LLC By: Name: Michael J. Meldahl Title: President and COO �Rk t .} Y it z S i L 8 OL LL �L E3 Execution Version W337355.08 IN WITNESS WHEREOF, the undersigned have caused their duly authorized officers 1 execute this Closing Agreement on the day and year first above written. SELLERS TOUCH AMERICA HOLDINGS, INC. By: Name: Michael J. Meldahl Title: President and COO PURCHASER 360NETWORKS (USA) INC. By: Name: Title: TOUCH AMERICA, INC. OFFICIAL COMMITTEE OF CREDITORS OF THE DEB ORSCt By. Name: Michael J. Meldahl DEBTORS IN POSSESSION Title: President and COO By Name: Title: SIERRA TOUCH AMERICA, LLC J By: Name: Michael J. Meldahl Title: President and COO TOUCH AMERICA PURCHASING — — COMPANY, LLC By: Name: Michael J. Meldahl Title: President and COO TOUCH AMERICA INTANGIBLE HOLDING COMPANY, LLC By: Name: Michael J. Meldahl Title: President and COO AMERICAN FIBER TOUCH LLC By: Name: Michael J. Meldahl Title: President and COO ENTECH,LLC By: Name: Michael J. Meldahl Title: President and COO