EXHIBIT 10.41 ASSET PURCHASE AGREEMENT DATED AS OF FEBRUARY 24, 2005 BETWEEN MCDONALD INVESTMENT COMPANY, INC., AND NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP

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Title: EXHIBIT 10.41 ASSET PURCHASE AGREEMENT DATED AS OF FEBRUARY 24, 2005 BETWEEN MCDONALD INVESTMENT COMPANY, INC., AND NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP
Governing Law: Washington Date: 3/31/2005

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EXHIBIT 10.41

ASSET PURCHASE AGREEMENT

DATED AS OF FEBRUARY 24, 2005

BETWEEN

MCDONALD INVESTMENT COMPANY, INC.,

AND

NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP

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TABLE OF CONTENTS

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1. Assets Sold and Purchased; Purchase Price............................................................... 1

1.1 Purchased Assets............................................................................... 1

1.2 Excluded Assets................................................................................ 2

1.3 Assumed Liabilities............................................................................ 3

1.4 Purchase Price................................................................................. 4

1.5 Adjustments to Purchase Price.................................................................. 4

1.6 Final Adjustment Amount........................................................................ 6

1.7 Transfer Taxes................................................................................. 7

1.8 Allocation..................................................................................... 7

2. Closing Date and Place.................................................................................. 7

3. Seller's Representations and Warranties................................................................. 7

3.1 Organization and Standing of Seller............................................................ 7

3.2 Authority; Enforceability...................................................................... 7

3.3 Authorizations and CATV Instruments............................................................ 8

3.4 Properties..................................................................................... 10

3.5 Contracts Listed; No Defaults.................................................................. 10

3.6 Approvals and Consents......................................................................... 11

3.7 Financial Statements; Change in Condition of Assets............................................ 11

3.8 Certain Information............................................................................ 12

3.9 Compliance with Laws and Agreements; Litigation................................................ 13

3.10 Trademarks, Trade Names, Copyright............................................................. 13

3.11 Taxes and Fees................................................................................. 14

3.12 Condition of System............................................................................ 14

3.13 Employees; Compensation; Unions................................................................ 15

3.14 Insurance...................................................................................... 15

3.15 No Restoration................................................................................. 16

3.16 Federal Aviation Authority..................................................................... 16

3.17 Additional FCC Matters......................................................................... 16

3.18 Environmental Matters.......................................................................... 16

3.19 Books and Records.............................................................................. 17

3.20 Disclosure..................................................................................... 18

4. Buyer's Representations and Warranties.................................................................. 18

4.1 Organization and Standing of Buyer............................................................. 18

4.2 Authority; Enforceability...................................................................... 18

4.3 Approvals and Consents......................................................................... 18

4.4 Disclosure..................................................................................... 18

4.5 Legal Proceedings.............................................................................. 18

4.6 Financing...................................................................................... 19

5. Covenants............................................................................................... 19

5.1 Conduct of Business Pending Closing............................................................ 19

5.2 Regulatory and Other Authorizations; Consents.................................................. 21

5.3 Access to Information.......................................................................... 21

5.4 Contracts Not To Be Assumed.................................................................... 22

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5.5 Confidentiality................................................................................ 22

5.6 Preservation of Records........................................................................ 22

5.7 Rate Practices................................................................................. 23

5.8 Employees...................................................................................... 23

5.9 Proof of Performance; Signal Leakage; Electrical Requirements.................................. 23

5.10 Public Announcements........................................................................... 24

5.11 Real Property Matters.......................................................................... 24

5.12 Notification................................................................................... 25

5.13 Inventory; Commercially Reasonable Efforts..................................................... 25

6. Conditions to Buyer's Obligations....................................................................... 25

6.1 Consents and Acknowledgments................................................................... 26

6.2 No Material Adverse Changes.................................................................... 26

6.3 Representations True and Agreements Performed.................................................. 26

6.4 Seller's Deliveries............................................................................ 26

6.5 Real Property Matters.......................................................................... 26

6.6 Legal Proceedings.............................................................................. 26

7. Conditions of Seller's Obligations...................................................................... 27

7.1 Representations True and Agreements Performed.................................................. 27

7.2 Consents....................................................................................... 27

7.3 Buyer's Deliveries............................................................................. 27

7.4 Legal Proceedings.............................................................................. 27

8. Seller's Deliveries at Closing.......................................................................... 27

8.1 Documents of Conveyance and Transfer........................................................... 27

8.2 Officer's Certificate of Seller................................................................ 28

8.3 Lien Search.................................................................................... 28

8.4 Release of Encumbrances........................................................................ 28

8.5 Other Documents................................................................................ 28

8.6 Power of Attorney.............................................................................. 29

8.7 Opinion of Counsel............................................................................. 29

8.8 Opinion of FCC Counsel......................................................................... 29

8.9 Noncompetition Agreement....................................................................... 29

8.10 Escrow Agreement............................................................................... 29

8.11 Post Closing Agreement......................................................................... 29

9. Buyer's Deliveries at Closing........................................................................... 29

9.1 Officer's Certificate of Buyer................................................................. 29

9.2 Opinion of Counsel............................................................................. 29

9.3 Assumption of Obligations...................................................................... 29

9.4 Payment........................................................................................ 29

9.5 Noncompetition Agreement....................................................................... 29

9.6 Escrow Agreement............................................................................... 30

9.7 Post Closing Agreement. The TransitionalServices Agreement, substantially in the form of

Exhibit I, duly executed by Buyer.............................................................. 30

10. Commissions............................................................................................. 30

11. Termination............................................................................................. 30

11.1 Method of Termination.......................................................................... 30

11.2 Rights Upon Termination........................................................................ 31

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12. Indemnification by Seller and Buyer..................................................................... 31

12.1 Indemnification of Buyer....................................................................... 31

12.2 Indemnification of Seller...................................................................... 31

12.3 Defense and Settlement of Claims............................................................... 32

12.4 Indemnification Fund........................................................................... 33

12.5 Limitation of Indemnification.................................................................. 33

12.6 Remedies Exclusive............................................................................. 33

12.7 Time of Claim.................................................................................. 34

7. Non-Assignable Contracts................................................................................ 34

8. Survival of Representations, Warranties and Covenants................................................... 34

9. Risk of Loss and Casualty Damage........................................................................ 34

10. Miscellaneous........................................................................................... 34

10.1 Successors and Assigns......................................................................... 34

10.2 Construction................................................................................... 34

10.3 Notice......................................................................................... 34

10.4 Multiple Counterparts.......................................................................... 35

10.5 Captions....................................................................................... 36

10.6 Exhibits and Schedules......................................................................... 36

10.7 No Third-Party Rights.......................................................................... 36

10.8 Further Assurances............................................................................. 36

10.9 Cure........................................................................................... 36

10.10 Covenant Not To Sue and Nonrecourse to Partners................................................ 36

10.11 Amendments..................................................................................... 37

10.12 Severability................................................................................... 37

10.13 Entire Agreement............................................................................... 37

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INDEX OF SCHEDULES

Schedule 1.1(d) Contracts Not To Be Assigned

Schedule 1.2 Excluded Assets

Schedule 1.4(c) Advertising Receivables

Schedule 1.8 Allocation of Purchase Price

Schedule 3.3(a) Authorizations and CATV Instruments

Schedule 3.3(d) Authority Rights to Purchase the System and Intent to

Provide CATV Services

Schedule 3.3(f) List of all Franchise Areas that are Certified to

Regulate Rates

Schedule 3.3(g) Unfulfilled Promises or Commitments for Capital

Improvements

Schedule 3.4(a)-1 Real Property

Schedule 3.4(a)-2 Personal Property

Schedule 3.5 Business Contracts

Schedule 3.6 Approvals and Consents for Seller

Schedule 3.7 Financial Statements

Schedule 3.8 Technical and Business Information Concerning the

System

Schedule 3.9(a) Noncompliance with Laws and Agreements

Schedule 3.9(b) Modification of Signals Carried on the System

Schedule 3.10 Filings with the United States Copyright Office

Schedule 3.12 Condition of System

Schedule 3.13(a) Employees

Schedule 3.13(b) Employee Benefit Plans

Schedule 3.14 Insurance Policies

Schedule 3.16 Federal Aviation Authority Approvals and Waivers

Schedule 3.17(b) Compliance with Laws

Schedule 3.18(a) Phase I Report

Schedule 3.18(b) Environmental Permits, Licenses

Schedule 4.3 Approvals and Consents for Buyer

Schedule 5.1(c) Inventory and Spare Parts

Schedule 5.1(g) Disconnect Policy

Schedule 5.3 Authorized Employees

Schedule 5.7 Rate Practices

INDEX OF EXHIBITS

Exhibit A Escrow Agreement

Exhibit B Form of Franchise Consent Resolution

Exhibit C Special Warranty Deed

Exhibit D Form of Bill of Sale

Exhibit E Form of Power of Attorney

Exhibit F Opinion of Seller's Counsel

Exhibit G Opinion of Seller's FCC Counsel

Exhibit H Form of Noncompetition Agreement

Exhibit I Transition Billing Services Agreement

Exhibit J Opinion of Buyer's Counsel

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Exhibit K Assignment and Assumption Agreement

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ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of the

24th day of February, 2005, is entered into by and between MCDONALD INVESTMENT

COMPANY, INC., an Alabama corporation ("Buyer"), and NORTHLAND CABLE PROPERTIES

SEVEN LIMITED PARTNERSHIP, a Washington limited partnership ("Seller").

WITNESSETH:

WHEREAS, Seller is the owner and operator of a cable television

("CATV") system and business in respect thereof (the "CATV Business") serving

Bay City, Texas and surrounding areas (said system, but excluding any portion of

the system situated in Matagorda, Texas, and the CATV Business being

collectively referred to herein as the "System"), pursuant to certain

franchises, permits, licenses, consents and other authorizations (collectively

being termed the "Authorizations," the grantors thereof being termed the

"Authorities" and the instruments granting the same being termed the "CATV

Instruments"); and

WHEREAS, Seller desires to sell, and Buyer desires to buy, on the

terms and subject to the conditions contained in this Agreement, the System,

together with the Authorizations, CATV Instruments, assets, contracts and rights

used by Seller in connection with the System, free and clear of all mortgages,

security interests, liens, charges, reservations or exclusions of rights or

interests, or other encumbrances ("Encumbrances"), except as hereinafter

provided;

NOW, THEREFORE, in consideration of the promises, covenants and

agreements set forth herein, the parties hereto agree as follows:

1. Assets Sold and Purchased; Purchase Price.

1.1 Purchased Assets. On the Closing Date, and subject to the

conditions hereinafter set forth, Seller shall sell, and Buyer shall buy, all of

the following assets, properties and rights of Seller (the "Purchased Assets"):

(a) All Authorizations (including the CATV Instruments

relating thereto) that relate solely to the operation of the System;

(b) All real property, including, without limitation, all

towers, fixtures, leaseholds, licenses, easements, rights-of-way, and

other real property interests owned or held by Seller at the Closing Date

(as defined in Section 2), but excluding agreements for the attachment of

cable plant to third-party poles and through conduit, and used exclusively

in connection with the System (collectively, the "Real Property");

Closing Date and used exclusively in connection with the System

(collectively, the "Personal Property");

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(d) All contracts, leases of personal property, pole

attachment (to the extent assignable) and other agreements, licenses,

commitments and understandings exclusively relating to the System, other

than the CATV Instruments, (i) in effect on the date of this Agreement or

(ii) entered into by Seller after the execution of this Agreement which

are made in the ordinary course of business consistent with past practice,

but excluding any collective bargaining agreements, employment agreements

and employee benefit plans (as defined under the Employment Retirement

Income Security Act of 1974, as amended ("ERISA"), and those other

contracts, leases, agreements, licenses, commitments and understandings

set forth on Schedule 1.1(d) as those not to be assigned and assumed

(subject to such exception, the "Business Contracts").

(e) All commitments and orders for CATV service to customers

to be provided by the System existing at the Closing Date;

(f) All telephone numbers and listings exclusively relating to

the System;

(g) All of Seller's right, title and interest in and to

manufacturers' warranties with respect to the Purchased Assets;

(h) All available schematics, blueprints, engineering data,

current customer lists, system maps and other technical information

exclusively relating to the System;

(i) All other assets of whatever nature and wherever located

owned by Seller and exclusively used in connection with the design,

construction or operation of the System, which assets shall include all of

Seller's books and records or copies thereof relating exclusively to the

System; and

(j) All Accounts Receivable (as herein defined) of Seller that

relate exclusively to the System.

1.2 Excluded Assets. Notwithstanding anything in this Agreement to

the contrary, the assets sold to Buyer hereunder shall not include (and Seller

shall retain):

(a) Originals of all partnership books and records, tax

returns and worksheets;

(b) Cash, cash equivalents and marketable securities;

prior to the Closing;

(d) All Personal Property disposed of or consumed in the

ordinary course of business, consistent with past practices and as

permitted under the terms hereof, between the date hereof and the Closing

Date;

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(e) All expenses associated with the system of the Seller

known as the "Matagorda System";

(f) Seller's rights under any Business Contract not assumed by

Buyer pursuant to Section 1.1(d) hereof;

(g) All trademarks, trade names, service marks, service names,

logos and copyright and similar proprietary rights of Seller or its

affiliates, whether or not used in the business of the System;

(h) Any employee benefit plan, compensation arrangement or

multi-employer benefit plan in which System employees currently

participate;

(i) All rights to receive fees or services from any affiliate

of Seller; other than fees for services, if any, rendered by Buyer after

Closing;

(j) Any and all assets and rights of Seller unrelated to the

System;

(k) Subject to Section 8.11 hereof, all equipment, software,

licenses and agreements related to Seller's customer billing system;

(l) Any contracts, agreements or other arrangements between

Seller and any affiliate of Seller;

(m) All choses in action of Seller related solely to the

System;

(n) All insurance policies and bonds and all proceeds,

payments, settlements and other amounts payable under such policies;

(o) All advertising accounts receivables; and (p) The other

assets listed on Schedule 1.2.

1.3 Assumed Liabilities. Buyer will assume and agrees to pay,

perform and discharge when due all of Seller's liabilities and obligations under

all advertising commitments, if any, for which Buyer has received advanced

deposits as listed on Schedule 1.3, the Business Contracts, the Authorizations,

the CATV Instruments, and all customer obligations, in each case relating to

periods from and after the Closing Date (the "Assumed Liabilities"). Except as

expressly set forth in this Agreement, Buyer will not assume any other

liabilities of Seller or related to the System, the Purchased Assets, or the

CATV Business. Without limiting the foregoing, Buyer shall assume no liability

or obligation with respect to the payment of salary or severance or provision of

benefits, including but not limited to the benefits payable under any employee

benefit plan with respect to the employment by Seller of any employee or

independent contractor of Seller or of any former employee of Seller. Seller

shall be responsible for (a) compliance with the COBRA notice and continuation

coverage requirements under Part 6 of Title I of ERISA, with respect to all

employees (and their beneficiaries) experiencing a qualifying event (as defined

in Section 603 of ERISA) on account of the transactions

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contemplated by this Agreement or occurring prior to the Closing and (b) rate

refunds to customers of the System with respect to rates in effect for periods

prior to the Closing Date.

1.4 Purchase Price. (a) The aggregate purchase price (the "Purchase

Price") to be paid by Buyer to Seller for the Purchased Assets shall be an

amount in cash equal to the sum of (a) Ten Million Three Hundred Fifty-Six

Thousand, Fifty-Eight Dollars ($10,356,058), and (b) the amount of the

customer Accounts Receivable of Seller as determined by Section 1.4(b).

Upon signing, Buyer shall deliver to USBank, as escrow agent (the "Escrow

Agent") the amount of one hundred twenty-five thousand dollars ($125,000)

(the "Deposit") to secure the obligations of Buyer to close under this

Agreement. The Deposit shall be held in an account and applied pursuant to

the terms of an Escrow Agreement, substantially in the form attached

hereto as Exhibit A (the "Escrow Agreement"). Upon the Closing, the

Deposit, together with interest thereon, shall be delivered to Seller and

credited against the Purchase Price. The remainder of the Purchase Price

(the Purchase Price less the amount of the Deposit plus any accrued

interest) shall be payable on the Closing Date by wire transfer to such

account or accounts as Seller shall direct, subject to the adjustments set

forth in Section 1.5, and provided that a portion of the Purchase Price

equal to the "Indemnification Fund" (as defined in Section 12.4), will be

paid on the Closing Date by Buyer into an escrow account pursuant to the

Escrow Agreement and applied as described in Section 12.4.

(b) Accounts Receivable. The Purchase Price shall include an

amount equal to 95% of the amount of the accounts receivable due from

customers of the System existing as of the Closing Date and billed sixty

(60) or less days prior to the Closing Date, as shown on the Estimate

Statement. For purposes of this subparagraph, and for subparagraph 1.5(d),

a month shall be considered as thirty (30) days, regardless of the actual

number of days in the month.

1.5 Adjustments to Purchase Price. The Purchase Price will be

adjusted as follows:

(a) Seller shall prepare and deliver to Buyer, at least seven

(7) days prior to the Closing Date (the "Estimate Statement Due Date"), a

statement (the "Estimate Statement") showing as of the latest date

reasonably possible (i) the amount reasonably estimated by Seller, in good

faith, to be the net amount, if any, of the Purchase Price adjustments

provided for in this Section 1.5, (ii) a list of the System's accounts

receivable prepared in accordance with generally accepted accounting

principles and consistent with Seller's past practices, showing the aging

thereof, and customer deposits, and (iii) a statement as to the number of

Basic Customers (as defined in Section 1.5(c)) accompanied by materials

sufficient to show how such numbers were determined, each certified by

Seller's general partner on behalf of Seller as being true and correct and

prepared in accordance with the terms of this Agreement. Prior to the

Closing, Seller shall provide Buyer with copies of or reasonable access to

such relevant books and records as Buyer may reasonably request for

purposes of verifying the adjustments set forth in the Estimate Statement.

Seller and Buyer agree to work together in good faith to resolve on or

before the Closing Date any disagreement with respect to any matter set

forth in the Estimate Statement. The Purchase Price paid by Buyer shall be

based on the estimated

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adjustment amount set forth in the Estimate Statement agreed to by Seller

and Buyer and shall be adjusted post-Closing, if necessary, pursuant to

Section 1.6.

(b) Prorations and Deposits. The Purchase Price shall be

increased for prepaid expenses (excluding, however, prepaid expenses

relating to any Business Contracts or agreements that will not be assumed

by Buyer and are listed on Schedule 1.1(d)), and shall be reduced for

accrued expenses and prepaid income, all as determined in accordance with

generally accepted accounting principles, to reflect the principle that,

except as qualified in this Section 1.5, all income and expenses

attributable to the System for the period before 12:01 a.m. on the Closing

Date are for the account of Seller, and all income and expenses

attributable to the System for the period on or after 12:01 a.m. on the

Closing Date are for the account of Buyer. Payroll expenses, including

accrued wages, salaries, vacation and sick pay for Seller's employees, and

franchise fees shall be paid by Seller to the day of Closing and shall not

be prorated. The Purchase Price shall be increased by the amount of any

monies relating to the System that are on deposit with third parties as

security for Seller's performance of the Business Contracts as of the

Closing Date. The Purchase Price shall be decreased by the amount of any

monies held by Seller as customer deposits, liability for which is assumed

by Buyer.

1.5(e), if the number of Basic Customers of the System, as shown on the

Estimate Statement, is less than 4,695, the Purchase Price shall be

decreased by an amount equal to the product of (i) $2,205.76 times (ii)

the difference of (A) 4,695 minus (B) the number of Basic Customers.

"Basic Customers" means the number based on an equivalent basic unit base,

which shall include customers for economy basic, standard basic, and the

equivalent customers derived from the result of the bulk customers revenue

divided by the Effective Rate; provided, however, that such result shall

be limited by the terms of Section 1.5(e) hereof. "Effective Rate" is the

result of the sum of the total billings from economy basic and standard

basic customers, divided by the number of economy basic and standard basic

customers. Customers will be included in the calculation if (i) full

payment for at least one month of service has been paid by customer, and

(ii) the account is not more than sixty (60) days past due from the first

day of the month for which services are provided or, if more than sixty

(60) days past due, who owe $5.00 or less with respect to the amount due

for the period beyond sixty (60) days. Notwithstanding any of the

foregoing, if any Basic Customer who has been a customer for less than

thirty (30) days prior to the Closing Date disconnects service within

ninety (90) days after the Closing Date, Seller shall pay to Buyer a

credit for each such customer in an amount calculated in accordance with

the calculation provided above in this Section 1.5(c); provided, however,

that Seller shall pay Buyer such credit only in the case that Buyer during

such ninety (90) day period has not made (i) any rate increases, (ii) any

voluntary deletions of any channels, including any deletions within a tier

of service, (iii) any changes from Seller's pre-Closing disconnect

policies..

(d) Gross Revenues. In the alternative to the price adjustment

set forth in Section 1.5(c), at Buyer's option and subject to the

provisions of Section 1.5(e), the Purchase Price may be adjusted downward

to the extent that the "Monthly Recurring Revenue Per Basic Customer" (as

defined below) is less than $46.89 (the "Target Recurring Revenue"). The

amount of any such Purchase Price reduction shall be a dollar

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amount equal to the product of (i) the positive remainder, if any, of the

Monthly Recurring Revenue Per Basic Customer divided by the Target

Recurring Revenue, subtracted from the number one, multiplied by (ii)

$10,356,058. "Monthly Recurring Revenue" shall mean the monthly average

from the most recent advance billing reports for the three (3) months

immediately preceding the Closing Date of Seller's advance monthly

billings to Basic Customers for recurring monthly charges for cable

service, pay services, digital services, converter box rental, Internet

services and franchise fees, but excluding all other charges, including

(without limitation) charges for pass-through of sales taxes, late charges

or installation or disconnect fees or other non-recurring charges,

computed on a per Basic Customer basis using the number of monthly Basic

Customers related to such billings for each of the three (3) full months

immediately preceding the Closing Date. The foregoing amounts shall be

adjusted, on a pro forma basis, for (i) any rate roll back ordered prior

to the Closing Date and (ii) any implemented rate increase to the extent

either adjustment is not fully reflected in the foregoing amounts.

(e) Purchase Price Floor. Notwithstanding anything to the

contrary set forth in Section 1.5(c) or 1.5(d) above, the Purchase Price

shall in no event be reduced below $9,000,000 (the "Floor"). If the

Purchase Price adjustments set forth in Section 1.5(c) or 1.5(d) would

result in a Purchase Price below the Floor, Buyer may elect to set the

Purchase Price at the Floor or, if Buyer does not so elect, Seller may

elect to terminate this Agreement.

1.6 Final Adjustment Amount. Within ninety (90) days after the

Closing Date, Buyer shall deliver to Seller a certificate (the "Adjustment

Certificate") setting forth any changes (based on actual amounts as of the

Closing Date including the number of Basic Customers) in the adjustments made at

Closing pursuant to Section 1.5, together with a copy of any working papers or

other documents relating to the Adjustment Certificate or other documents

supporting the Adjustment Certificate as Seller may reasonably request. Buyer

will provide Seller with copies or reasonable access to all books and records

and other information or documents reasonably requested by Seller for the

limited use of reviewing and analyzing the Adjustment Certificate. To the extent

any item cannot be reasonably determined within ninety (90) days after the

Closing Date, the appropriate party shall furnish such item to the other as soon

as practicable after it is available thereafter, but in no event more than 60

days later, and such item thereafter shall be adjusted under the procedures set

forth in this Section 1.6. If Seller shall conclude that the Adjustment

Certificate does not accurately reflect the changes to be made to the

adjustments made at Closing pursuant to the first sentence of this Section 1.6,

Seller shall, within thirty (30) days after its receipt of the Adjustment

Certificate, provide to Buyer written notice thereof, which notice shall set

forth in reasonable detail the basis for Seller's objections to the Adjustment

Certificate. If Buyer and Seller cannot resolve any dispute to their mutual

satisfaction within fifteen (15) days after Buyer's receipt of Seller's written

notice of objection (the "Resolution Period"), Buyer and Seller hereby designate

Ernst & Young LLP to review the Adjustment Certificate, Seller's discrepancy

statement and any other relevant documents. The cost of retaining such firm

shall be borne by Buyer on the one hand, and Seller, on the other hand, in the

same proportion that the aggregate amount of the disputed items submitted to

Ernst & Young, LLP that is resolved in favor of the Buyer or Seller bears to the

total amount of the disputed items submitted (as finally determined by Ernst &

Young, LLP). Ernst & Young, LLP shall report its conclusions in writing to Buyer

and Seller no later than forty-five (45) days after

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appointment pursuant to this Section 1.6, and such conclusions as to factual and

accounting matters respecting adjustments shall be conclusive on all parties to

this Agreement and not subject to dispute or review. If, as a result of any

adjustments made hereunder, Buyer is finally determined to owe an amount to

Seller, Buyer shall within five (5) business days pay such amount thereof to

Seller, and if Seller is finally determined to owe an amount to Buyer, Seller

shall within five (5) business days pay such amount thereof to Buyer, and if not

so paid, Buyer, at its option, may also make a claim against the Indemnification

Fund for any payments of Seller required under this Section 1.6 (in the event of

any such claim being paid from the Indemnification Fund, Seller shall

immediately replenish the Indemnification Fund in the amount of such payment).

Any payments to be made hereunder shall be made by wire transfer of immediately

available funds to such parties as are designated in writing by the party

receiving payment.

1.7 Transfer Taxes. Any sales, use, transfer, franchise, recording

or other similar taxes, fees or charges due as a result of the transactions

provided for herein shall be shared equally by Seller and Buyer.

1.8 Allocation. For federal income and other applicable tax

purposes, the Purchase Price shall be allocated among the Purchased Assets as

set forth on Schedule 1.8, such allocation to be made as provided in Section

1060 of the Internal Revenue Code of 1986, as amended (the "Code"). Buyer and

Seller shall not take any position on the respective federal income tax or other

applicable tax returns that is inconsistent with the allocation of the Purchase

Price as agreed to in Schedule 1.8 or as adjusted as a result of a subsequent

increase or decrease in the Purchase Price.

2. Closing Date and Place. Unless this Agreement is terminated pursuant to

Section 11, the date of closing ("Closing") hereunder (the "Closing Date") shall

be the last day of the month following the date on which the conditions set

forth in Sections 6 and 7 (other than the delivery of documents to be delivered

at Closing) have been satisfied. The Closing shall, to the extent practicable,

be handled by fax, mail and express mail; if a physical Closing shall be

necessary, the Closing shall be held at the offices of the System in Bay City,

Texas.

3. Seller's Representations and Warranties. Seller represents and warrants that:

3.1 Organization and Standing of Seller. Seller is a limited

partnership duly organized, validly existing, and in good standing under the

laws of the State of Washington, and is qualified to do business and in good

standing in the State of Texas. Seller has all requisite partnership power and

authority to execute, deliver, and perform this Agreement, and has all requisite

power as is necessary and required to operate the System at the places where and

in the manner in which the System is operated. Seller is not a participant in

any joint venture, partnership or similar arrangement with any other person or

party with respect to any part of the System or the Purchased Assets.

3.2 Authority; Enforceability. The execution, delivery and

performance of this Agreement have been duly and validly authorized by Seller,

and the execution, delivery and (assuming receipt of the consents of third

parties required for transfer of the Authorizations, CATV Instruments and

Business Contracts to be assumed by Buyer) performance of this

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Agreement by Seller will not: (i) result in a breach or violation by Seller of,

(ii) constitute a default by Seller under, or (iii) create or impose any

Encumbrance upon any of the Purchased Assets pursuant to, any CATV Instrument,

Business Contract or other agreement or instrument, charter or by-law provision,

statute, ordinance, rule, regulation, or order to which Seller is a party or by

which Seller or the Purchased Assets is bound, except for such breaches,

defaults and encumbrances as could not reasonably be expected to result in a

Material Adverse Effect on the System as a whole. (For purposes of this

Agreement, the term "Material Adverse Effect" shall mean monetary consequences

to a party of $32,500 or more in any single event or series of related events.)

This Agreement constitutes the legal, valid, and binding obligation of Seller

enforceable against Seller in accordance with its terms, except (a) as rights to

indemnity hereunder may be limited by federal or state securities laws or the

public policies embodied therein, (b) as enforceability may be limited by

bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the

enforcement of creditors' rights generally, and (c) as the remedy of specific

performance and injunctive and other forms of equitable relief may be subject to

equitable defenses and to the discretion of the court before which any

proceeding therefor may be brought.

3.3 Authorizations and CATV Instruments.

(a) Schedule 3.3(a) contains a true and complete list of all

current Authorizations and CATV Instruments issued to Seller by the

Federal Communications Commission (the "FCC") and any other Authority,

including, but not limited to, all licenses, franchises, ordinances,

permits, registrations and certifications and of all compliance

certificates, reports to the FCC (including, but not limited to, reports

on Schedule 1 and 2 to Form 325 and Form 395-A and schedules thereto),

reports by Seller to any municipal authority granting any licenses or

franchises, any license or franchise application and those Authorizations

relating to business radio services and community antenna relay services,

and for the System's earth stations, the information contained in the

latest of each of such reports being accurate and complete in all material

respects as of the date filed with the respective agency. All of the

agreements listed on Schedule 3.3(a) are valid and binding and are in full

force and effect and are legally enforceable in accordance with their

terms. To Seller's knowledge, there are no facts that constitute a valid

basis for revocation, suspension, termination or denial of the granting of

a new Authorization upon the expiration thereof, or elimination of any

rights under any Authorization or CATV Instrument. Subject to Seller

obtaining the required consents of applicable Authorities and third

parties, the execution, delivery and performance of this Agreement will

not entitle any person or entity to cancel, suspend, terminate or diminish

the rights of Seller under any Authorization or CATV Instrument, all of

which rights are being assigned to Buyer to the full extent held by

Seller. No conditions or restrictions, except as stated in the

Authorizations or CATV Instruments, apply to the Authorizations or CATV

Instruments. Seller has furnished to Buyer true and complete copies of all

documents listed on Schedule 3.3(a) and all correspondence between Seller

and any Authorities having a material relevance thereto. Seller has

furnished accurate written summaries of all oral agreements and

understandings binding on Seller with respect to any Authorizations or

CATV Instruments. Except as set forth on Schedule 3.3(a), Seller has not

received any written notice from the FCC or any other Authority within the

last 5 years that Seller or the System is not in material compliance with

all Seller Authorizations and CATV Instruments.

<PAGE>

(b) The Authorizations duly authorize Seller, and Buyer as

successor-in-interest to Seller (assuming all required consents are

obtained for the assignment of such Authorizations to Buyer and Buyer's

eligibility to hold such Authorizations), to operate the System as and

where it is presently operated.

appropriate official of each Authority by Seller's System Manager, no

Authority has granted a franchise to any person other than Seller or

Buyer, nor has any person applied to any Authority for a franchise to

build or operate a CATV system within the geographical area covered by the

franchise granted to Seller as listed on Schedule 3.3(a), except as set

forth on Schedule 3.3(a).

(d) Except as set forth on Schedule 3.3(d), no Authority has

any right to purchase the System or any portion thereof, and no Authority

that has granted a franchise to Seller has notified Seller in writing of

any intention to provide any CATV services.

(e) Seller has timely made all filings relating to the System

in order to preserve its rights pursuant to Section 626 of the

Communications Act of 1934, as amended (the "Communications Act") and

otherwise has diligently pursued the renewal of any franchise relating to

the System due to expire by its terms within 36 months of the date of this

Agreement in order to obtain such renewal on commercially reasonable

terms. Seller is in compliance in all material respects with all federal,

state and local laws, including any franchise, relating to the System, and

has no reason to believe that any franchise relating to the System will

not be renewed on reasonable terms.

(f) Seller has filed all rate regulation forms required to be

filed with the FCC and/or appropriate Authority for the System. Seller has

made available to Buyer true and complete copies of such forms. Set forth

on Schedule 3.3(f) is an accurate list of all franchise areas that are

certified to regulate the basic rates of the System pursuant to the laws

and regulations of the FCC and a list of all franchise areas in which a

complaint regarding cable programming services has been filed with the FCC

within the past 36 months. All factual statements made by or on behalf of

the System in any such form are, in all material respects, accurate and

complete. Schedule 3.3(f) sets forth a true and complete listing of all

current rate disputes and/or rate settlements with the FCC and/or

appropriate Authority relating to the System. To Seller's knowledge, no

basis exists under Section 623 of the Communications Act or relevant rules

of the FCC, as in effect at the date of this Agreement, for any rollback

of rates for basic service, cable programming service or any rollback or

refund of rates for any premium or pay service, with respect to the

System.

(g) Except as may be set forth on Schedule 3.3(g) or as

required by law, no unfulfilled promises or commitments for capital

improvements in connection with the CATV Business have been made by Seller

regarding the System.

<PAGE>

(h) Seller has made all submissions required under the

Communications Act, FCC rules and the Authorizations and CATV

Instruments to operate the System. Seller has received no written

notice from any Authority regarding a failure to make any such

submission regarding the System.

3.4 Properties.

(a) Schedule 3.4-(a)-1 contains a complete and correct list of

all Real Property specifying Seller's interest therein, and Schedule

3.4-(a)-2 contains a complete and current list of all material items

(including, without limitation, all headend equipment, test equipment,

office equipment and motor vehicles (year and model)) of Personal Property

(other than inventory) and a list of the inventory that Seller will

deliver to Buyer at Closing (which list can be revised by Seller, upon

prior notification and consent by Buyer, if items to be delivered at

Closing are different from those set forth on Schedule 3.4-(a)-2). Except

for Permitted Encumbrances, (i) Seller has good and marketable title, free

and clear of any Encumbrance or adverse claim to all Purchased Assets, and

(ii) none of the Purchased Assets is subject to any restriction (except

for any consents required for transfer or assignment) which would prevent

or materially adversely affect the use presently made thereof or the

transfer of the CATV Business and related assets contemplated by this

Agreement or the value of the Purchased Asset(s) to which such restriction

pertains, and, upon such transfer, Buyer shall acquire such title as

Seller herein represents and warrants Seller has. "Permitted Encumbrances"

means any and all Encumbrances: (i) for Taxes if the same shall at the

time not be delinquent or are being contested in good faith; (ii)

consisting of easements, zoning restrictions, encumbrances or other

restrictions on the use of the Real Property that do not materially affect

the value of the Purchased Assets encumbered thereby as they are used in

the CATV Business or materially impair the ability of Seller to use such

Purchased Assets in the CATV Business; (iii) standard exceptions reflected

on the Title Commitment, and any title or survey objections which are

waived or deemed waived by Buyer pursuant to Section 5.11; (iv) resulting

from deposits to secure payments of workers' compensation, employment

insurance or other social security programs; (v) that are to be removed at

closing; (vi) associated with the Assumed Liabilities; (vii) arising by

operation of law or in the ordinary course of business with respect to

obligations to vendors, carriers, warehousemen, repairmen, mechanics,

workers, materialmen, that are not yet due or that are being contested in

good faith.

(b) Assuming Buyer's qualification to transact business in the

State of Texas, the receipt of all necessary Authorizations by Buyer and

subject to the employment of necessary personnel by Buyer subsequent to

Closing, Buyer obtaining or possessing its own customer billing system and

any other replacement for necessary Excluded Assets, the Purchased Assets

collectively constitute all assets and rights reasonably required to

enable Buyer to operate the System as a going enterprise and as

successor-in-interest to Seller.

3.5 Contracts Listed; No Defaults. All Business Contracts (except

employment agreements terminable at will and items listed on Schedule 1.1(d))

are listed and correctly described on Schedule 3.5. Seller has furnished to

Buyer true and complete copies of

<PAGE>

all Business Contracts listed on Schedule 3.5. Each of the CATV Instruments and

Business Contracts is in full force and effect and constitutes a valid and

binding obligation of Seller, enforceable against Seller in accordance with its

terms; Seller and, to Seller's knowledge, each other party thereto, has complied

with all material provisions thereof and are not in default thereunder; and all

payments required to be made and currently due thereunder have been made by the

parties required to do so, except to the extent that any payments are being

contested in good faith. There are not (i) any currently threatened

cancellations of any Business Contracts, (ii) any outstanding disputes under any

Business Contract or (iii) to Seller's knowledge, any basis for any claim of

breach or default thereunder, except in the case of each of the foregoing, that

would not cause a Material Adverse Effect on the System. The execution, delivery

and performance of this Agreement will not entitle any other party to a Business

Contract to cancel, suspend or terminate such Business Contract except for such

Business Contracts that require the consent to such assignment by such other

party. Except as set forth in Schedule 3.5, in the case of any CATV Instruments

and Business Contracts to which Seller was not an original party, Seller's

rights thereunder have been duly assigned to Seller by written instrument, and

where required, such assignment has been consented to in writing by the other

party or parties thereto, and Seller has furnished Buyer with true and complete

copies of all such assignments and consents.

3.6 Approvals and Consents. Schedule 3.6 sets forth all the persons

or parties whose approval of or consent to Seller's execution, delivery or

performance of this Agreement and the transactions contemplated hereby, or with

whom the filing of any certificate, notice, application, report or other

documents, is legally or contractually required or is necessary to preclude any

cancellation, suspension, or termination of or diminution of rights under any of

the CATV Instruments or Business Contracts or to enable Buyer to continue to

operate the CATV Business as is presently conducted. Seller is not subject to

any restriction which would prevent consummation of the transactions

contemplated by this Agreement other than such approvals and consents set forth

on Schedule 3.6.

3.7 Financial Statements; Change in Condition of Assets.

(a) Attached hereto as Schedule 3.7 are true and complete

copies of unaudited System statements of income for the nine months ended

December 31, 2004 and unaudited System statements of income for the years

ended December 31, 2003, December 31, 2002 and December 31, 2001, and

capital expenditures, proceeds from asset dispositions and distributions

to partners for the time periods indicated above (collectively, the

"Financial Statements"), each of which was prepared from books and records

of account of Seller kept in the normal course of business and in

accordance with generally accepted accounting principles, consistently

applied in accordance with Seller's past practices, as such Financial

Statements are reflected in prior audited financial statements of Seller,

and together present fairly and accurately the results of its operations

for the periods covered thereby. Since December 31, 2003, there has been

no material adverse change to the condition of the Purchased Assets as a

whole or to the CATV Business, no portion of the movable Personal Property

has been removed from the System since such time except in the ordinary

course of business, and Seller has not acted to cause, and has experienced

no occurrence of, any circumstance, event, condition, or state of facts of

any character, whether or not in the ordinary course of business and

whether or not covered by insurance,

<PAGE>

which might reasonably be expected to result in any material adverse

change to the Purchased Assets as a whole or the CATV Business or the

System's financial condition, results of operations or prospects.

(b) The Financial Statements do not, because of the provision

of services or the bearing of costs and expenses by any other person,

related or unrelated, or for any other reason, understate the actual costs

and expenses of the operating System or otherwise conducting the CATV

Business.

nature, whether accrued, absolute, contingent or otherwise relating to the

System, except for (i) obligations under Authorizations and CATV

Instruments listed on Schedule 3.3(a), (ii) contractual obligations under

Business Contracts listed (or not required to be listed) on Schedule 3.5,

(iii) obligations accrued and reflected on the Financial Statements, (iv)

obligations arising in the ordinary course of business and which, either

individually or in the aggregate, are immaterial (v) Permitted

Encumbrances, or (vi) which otherwise would not result in or cause a

Material Adverse Effect.

3.8 Certain Information. Attached hereto as Schedule 3.8 is the

following current technical and business information concerning the System,

which information is correct and complete except to the extent noted thereon in

order for the same not to be materially misleading: (i) a list of all System

maps; (ii) a summary of strand miles of plant showing the number of linear

miles, aerial, underground and total, (showing approximately 154 miles of

distribution plant) and number of homes passed (showing approximately 8,300

homes passed); (iii) a description of the System's channel capacity by headend,

including channels available for use; (iv) a list of all stations or signals

carried by the System, with a breakdown as to those being carried by microwave

and off-air reception and those which must be carried pursuant to the

Communications Act and those for which there are retransmission agreements; (v)

a list of all performance bonds or other security required by the Authorizations

and Business Contracts and the amount so required; (vi) a description of current

standard monthly customer rates for CATV services by franchise area, which rates

are in material compliance with all Authorizations, laws, CATV Instruments and

Business Contracts, and the current franchise fees being charged; (vii) a list

of names of the licensors of each System pole attachment and conduit license and

an attached copy of the most recent invoice with respect thereto showing all

pole attachments and conduit rentals for which the System is being billed;

(viii) a list of all grantors of crossing permits, permit numbers, general

location for which the permit is granted and an attached copy of the most recent

invoice with respect thereto showing all crossing permits for which the System

is being billed; (ix) the number of basic customers as of the respective dates

of the Financial Statements, and a breakdown of the number of System customers,

showing as separate items basic, commercial outlets, basic bulk, pay, pay bulk

and additional outlets for which a charge is made, if any, calculated for each

System franchise and consolidated for the system as a whole, and each of such

items showing separate data for subscriptions for a term of one year or less and

for more than one year from the date hereof; (x) a list of all courtesy customer

accounts; and (xi) a list of all bulk an

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