Exhibit 10.53

 

 

 

ASSET PURCHASE AGREEMENT

between

NORTHLAND CABLE PROPERTIES EIGHT LIMITED PARTNERSHIP

and

NORTHLAND CABLE TELEVISION, INC.

Dated as of October 21, 2011

 

 

 

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ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT (the “Agreement”), dated as of October 21, 2011
(the “Effective Date”), between Northland Cable Properties Eight Limited
Partnership, a Washington limited partnership (“Seller”), and Northland Cable
Television, Inc., a Washington corporation (“Purchaser”).

W I T N E S S E T H:

WHEREAS, Seller owns and operates television cable Systems (as defined below)
providing video, high-speed internet and telephony services serving the
communities set forth in Schedule 1.0 hereto (each a “Community” and
collectively, the “Communities”);

WHEREAS, Seller desires to sell, transfer and assign to Purchaser, and Purchaser
desires to acquire and assume from Seller, all of the Purchased Assets and
Assumed Liabilities, all as more specifically provided herein (the
“Transaction”); and

WHEREAS, certain terms used in this Agreement are defined in Section 1.1;

NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter contained, the parties hereby agree as follows:

ARTICLE I

DEFINITIONS

1.1 Certain Definitions.

For purposes of this Agreement, the following terms shall have the meanings
specified in this Section 1.1:

“Accounts Receivable” means the rights of Seller to receive payment for services
rendered by Seller (including those billed to subscribers of the Systems and
those for services and advertising time provided by Seller) which have been
unpaid as of the Closing Date.

“Affiliate” means, with respect to any Person, any other Person that, directly
or indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, such Person, and the term “control” (including
the terms “controlled by” and “under common control with”) means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through ownership of voting
securities, by contract or otherwise.

“Affiliate Services Agreement” means that certain Trademark License Agreement
dated September 28, 2001 between Seller and Northland Telecommunications
Corporation, that certain Sales Representation Agreement dated September 29,
2001 between Seller and Cable Ad-Concepts, Inc. and that certain Software
License and Support Agreement dated September 28, 2001 between Seller and
Northland Cable Services Corporation.

 

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“Basic Services” means the lowest tier of cable television programming sold to
subscribers as a package, including broadcast and satellite service programming
for which a subscriber pays a fixed monthly fee to Seller, but not including Pay
TV, and other than through the HSI Services.

“Business” means the cable television, telephone, HSI Service and other
revenue-generating businesses that are conducted by Seller or any of its
Affiliates (including through a third party) through the Systems, and operations
relating to the Systems, except for the business and operations of an Affiliate
under an Affiliate Service Agreement or Management Agreement.

“Business Day” means any day of the year on which national banking institutions
in New York are open to the public for conducting business and are not required
or authorized to close.

“Cable Video Services” means the provision of cable television programming
through the Systems, including Basic Services, Expanded Basic Services, a la
carte tiers, premium services, digital services, HDTV, and DVR equipment rental,
Pay TV, and any new product tiers, other than through the HSI Services and the
Telephone Services.

“Closing Date” means the earlier of (i) April 30, 2012, and (ii) the soonest
practical date after all of the conditions set forth in Article IX have been
satisfied or waived; provided, however, in no event shall the Closing Date be
after April 30, 2012.

“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended.

“Code” means the Internal Revenue Code of 1986, as amended.

“Communications Act” means the Communications Act of 1934, as amended by the
Cable Communications Policy Act of 1984, the Cable Television Consumer
Protection and Completion Act of 1992 and the provisions of the
Telecommunication Act of 1996 amending Title VI of the Communications Act of
1934, and as may be further amended, and the Rules and Regulations, policies and
published decisions of the FCC thereunder, as in effect from time to time.

“Confidentiality Agreement” means the agreements of the Parties contained in
Section 7.4 of this Agreement.

“Contract” means any written agreement, indenture, note, bond, mortgage, loan,
instrument, lease, license (other than a Permit, a Franchises or a Programming
Agreement), obligation, promise or undertaking that is legally binding on
Seller, is to be assumed by Purchaser at Closing and which involves the payment
of more than $10,000.

“Copyright Act” means the Copyright Act of 1976 and the rules and regulations
thereunder, each as in effect as of the date of this Agreement and as amended
from time to time.

“Employee” means all individuals as of the Effective Date, who are employed by
Seller primarily in connection with the Business, together with individuals who
are hired as employees in respect of the Business after the Effective Date but
prior to the Closing.

 

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“Encumbrance” means any lien, charge, claim, commitment, conditional sale or
other title retention agreement, demand, easement, encroachment, lease,
limitation, mortgage, pledge restriction, security interest, restriction on
transfer, right of first refusal, title defect or other encumbrance of any kind
or nature whatsoever.

“Environmental Law” means any applicable Law currently in effect relating to the
protection of human health as it relates to environmental protection (but
excluding worker safety), the environment or natural resources, including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. § 9601 et seq.), the Hazardous Materials Transportation
Act (49 U.S.C. App. § 1801 et seq.), the Resource Conservation and Recovery Act
(42 U.S.C. § 6901 et seq.), the Clean Water Act (33 U.S.C. § 1251 et seq.), the
Clean Air Act (42 U.S.C. § 7401 et seq.) the Toxic Substances and Control Act
(15 U.S.C. § 2601 et seq.), the Federal Insecticide, Fungicide, and Rodenticide
Act (7 U.S.C. § 136 et seq.), the Federal Water Pollution Control Act (33 U.S.C.
§ 1251 et seq.), the Oil Pollution Act of 1990, (33 U.S.C. § 2701 et seq.), and
the Safe Drinking Water Act (42 U.S.C. §§ 300f et seq.), as each has been
amended and the rules and regulations promulgated pursuant thereto.

“ERISA” means the Employment Retirement Income Security Act of 1974, as amended.

“ERISA Affiliate” means any Person that together with the Seller is or was at
any time treated as a single employer under section 414 of the Code or section
4001 of ERISA and any general partnership of which the Seller is or has been a
general partner.

“Excluded Contracts” means the Management Agreement, the Affiliate Service
Agreements and the Contracts listed on Schedule 1.1(i) hereto.

“Expanded Basic Services” means an optional tier of video services offered by
the Systems to its customers other than Basic Services, a la carte tiers,
premium services, digital services, HDTV, DVR, Pay TV, and any new product
tiers, and other than through the HSI Services.

“FAA” means the Federal Aviation Administration, or its successor agency.

“FCC” means the Federal Communications Commission, or its successor agency.

“Former Employee” means all individuals who were employed by Seller in
connection with the Business but who are no longer so employed on the Closing
Date.

“Franchises” means all franchise agreements and similar governing agreements,
instruments and resolutions and franchise-related Legal Requirements or
acknowledgements of Governmental Entities, whether written or oral, that are
necessary or required in order to operate the Systems and Business and to
provide the services provided by Seller through the Systems.

“Furniture and Equipment” means all furniture, fixtures, furnishings, equipment,
vehicles, leasehold improvements, and other tangible personal property owned or
used by Seller, including all artwork, desks, chairs, tables, computer hardware,
copiers, telephone lines and numbers, telecopy machines and other
telecommunication equipment, cubicles and miscellaneous office furnishings and
supplies.

 

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“GAAP” means generally accepted accounting principles in the United States.

“Governmental Authorizations” means, collectively, all Franchises, Licenses and
other authorizations, approvals, agreements, Easements, leases, permits,
qualifications, registrations, variances and similar rights for and with respect
to the conduct of the Business, including the construction and operation of the
Systems, issued by or otherwise obtained from Governmental Entities.

“Governmental Entity” means any federal, state, local or foreign government,
court, administrative agency, board or commission, political subdivision, or
other governmental authority or instrumentality.

“Hazardous Substances” means any regulated substance, toxic substance, hazardous
substance, hazardous waste, pollution, pollutant or contaminant, as defined or
referred to in any Environmental Law, as well as words of similar purport or
meaning referred to in any other Legal Requirements, including radon, asbestos,
polychlorinated biphenyls, urea formaldehyde and petroleum products and
petroleum based derivatives. Where one Legal Requirement defines any of these
terms more broadly than another, the broader definition will apply.

“HSI Services” means Internet access and other Internet data services offered by
the Systems to Seller’s customers.

“Intangibles” means all intangible assets, including customer lists, accounts
receivables, claims (excluding any claims relating to Excluded Assets) and
goodwill of the Business as a going concern, if any, owned, used or held by
Seller and used exclusively in the Business, but excluding all trademarks, trade
names, service marks, service names, logos, patents, copyrights, URLs, domain
names and other intellectual property of Seller or any of its Affiliates.

“IRS” means the United States Internal Revenue Service and, to the extent
relevant, the United States Department of Treasury.

“Knowledge of Seller” means, with respect to Seller and a particular fact or
other matter, that any of the persons set forth on Schedule 1.1(ii) or their
direct reports has actual, constructive or imputed knowledge such that such
person should reasonably be aware of such fact following a reasonable
investigation under the circumstances.

“Law” means any foreign, federal, state or local law, statute, code, ordinance,
rule, regulation, order or permit established and applicable under principles of
common law, regulation, statute or treaty.

“Legal Proceeding” means any action, arbitration, suit, audit, hearing,
investigation, litigation or proceeding (public or private) by or before, or
otherwise involving a Governmental Entity or an arbitrator.

 

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“Legal Requirement” means any Law, applied, issued, entered or otherwise adopted
or enacted by any Governmental Entity, including judicial decisions applying or
interpreting any such Legal Requirement.

“Liability” means any debt, liability or obligation (whether direct or indirect,
absolute or contingent, accrued or unaccrued, liquidated or unliquidated, or due
or to become due), and including all costs and expenses relating thereto.

“License” means any license, permit or other authorization or approval (other
than a Franchise) issued by a Governmental Entity, including to the FCC, used in
the operation of the Purchased Assets, the Business or the Systems.

“Management Agreement” means that certain Amended and Restated Agreement of
Limited Partnership of Northland Cable Properties Eight Limited Partnership,
dated September 30, 1987, by and between Northland Communications Corporation,
FN Equities Joint Venture, Richard I. Clark, and remaining parties who now or
hereafter from time to time are accepted by the General Partner as Limited
Partners of Northland Cable Properties Eight Limited Partnership, as amended and
the Amended and Restated Management Agreement, dated January 3, 1990, between
Northland Cable Properties Eight Limited Partnership and Northland
Communications Corporation and the replacement Exhibit A, updated January 1,
1998.

“Material Adverse Effect” means any change or effect that is materially adverse
to the Business, the operations, properties, condition (financial or otherwise)
or results of the operations of the Business taken as a whole, or the ability of
Seller to perform its obligations under this Agreement, or the validity, binding
effect or enforceability of this Agreement, other than an effect resulting from
(i) any change in the United States or foreign economies or securities or
financial markets; (ii) any change that affects any industry in which Seller
operates; (iii) any change arising in connection with hostilities, acts of war,
sabotage or terrorism or military actions or any escalation or material
worsening of any such hostilities, acts of war, sabotage or terrorism or
military actions existing or underway as of the Effective Date; (iv) any action
taken by Purchaser or its Affiliates with respect to the transactions
contemplated hereby or with respect to Seller; (v) any changes in GAAP; or
(vi) any effect resulting from any changes resulting from or relating to the
taking of any action contemplated by this Agreement.

“NCC” means Northland Communications Corporation, a Washington corporation.

“Order” means any award, decision, resolution, subpoena, order, injunction,
judgment, decree, ruling, writ, assessment or arbitration award of a
Governmental Entity or arbitrator.

“Ordinary Course of Business” means with respect to any action taken by any
Person, any action that is in the ordinary and usual course of normal day to day
operations of such Person.

“Permits” means any approvals, authorizations, consents, licenses, permits or
certificates of a Governmental Entity other than Franchises.

“Permitted Encumbrances” means (i) all Encumbrances for Taxes or assessments,
special or otherwise, either not due and payable or being contested in good
faith and fully

 

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accrued or adequately reserved or otherwise provided for; (ii) all Encumbrances
representing inchoate mechanics’, materialmen’s, carriers’, warehousemen’s,
landlords’ and other statutory or similar liens arising in the Ordinary Course
of Business and not yet due and payable; and (iii) with respect to Real
Property, any current commitment, easement or claim of easement, encroachment,
limitation, restriction or other exception to title or title defect (other than
liens) that does not individually or in the aggregate materially impair the
current use, value, or operation of individual piece of the Real Property to
which it relates.

“Person” means any individual, corporation, partnership, limited liability
company, firm, joint venture, association, joint-stock company, trust,
unincorporated organization, Governmental Entity or other entity.

“Pole Attachment Agreement” means a System Contract relating to the use of any
public utility facilities, including pole line, joint pole and master contracts
for pole attachment rights and the use of conduits.

“Programming Agreements” means all contracts regarding the carriage of satellite
delivered television programming carried by the System.

“Release” means any release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, or leaching into the environment.

“Remedial Action” means all actions required under Environmental Laws to clean
up, remove, treat or address any Hazardous Substances in the environment at
levels exceeding those allowed by applicable Environmental Laws, including
pre-remedial studies and investigations or post-remedial monitoring and care.

“Required Consents” means all authorizations, approvals and consents required
under or in connection with any Legal Requirement or under any Purchased Assets,
Licenses, Real Property or System Contracts for (i) Seller to transfer the
Purchased Assets and the Business to Purchaser, (ii) Purchaser to conduct the
Business in accordance with applicable Legal Requirements and to own, lease, use
and operate the Purchased Assets and the Business at the places and in the
manner in which the Business is conducted and the Business are operated as of
the date of this Agreement and at all times prior to the Closing Date or
(iii) Purchaser to assume and perform the System Contracts and Governmental
Authorizations included in the Purchased Assets.

“Real Property” means the assets owned or leased by Seller and used in the
Business consisting of realty, including appurtenances, improvements (including
towers, headend storage buildings and earth stations) and fixtures located on
such realty, and any other interests in real property, including fee interests,
rights to minerals, oil, gas and other hydrocarbons, water rights, leasehold
interests and easements, rights of access, licenses, rights of entry and wire
crossing permits (but not including interests in real property granted in System
Contracts in connection with services provided by Seller to the residents or
occupants of such real property, including access and service System Contracts
with the owners of multiple dwelling unit complexes), options, and rights of
first refusal.

 

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“Required Regulatory Approval” means any Required Consent of any Governmental
Entity.

“SEC” means the United States Securities and Exchange Commission.

“Subsidiary” means any Person of which a majority of the outstanding share
capital, voting securities or other voting equity interests are owned, directly
or indirectly, by Seller or any Person as to which Seller has a contractual
right to elect or appoint a majority of the members of such Person’s governing
body.

“Systems” means the cable television, telephone and high-speed data reception
and distribution systems owned, operated or used by Seller in the conduct of the
cable television, telephone and high-speed Internet businesses and all of the
activities and operations ancillary to such businesses, including advertising
services and other income generating businesses, conducted or carried on in the
Franchises.

“System Contract” means any crossing agreement, easement, lease, license,
multiple dwelling, bulk billing or commercial service agreement, pole line
agreement, retransmission consent agreement, subscriber agreement, underground
conduit agreement, interconnection, switching maintenance or installation
support or other contract or agreement (other than a Governmental Authorization)
held for use or used in connection with, or relating to the operation of, the
Systems or all or a portion of the Business and to which Seller is a party or
that is otherwise binding on Seller or the Systems and is in effect on the date
of this Agreement or is entered into between the date of this Agreement and the
Closing Date in compliance with this Agreement.

“Tax” or “Taxes” means (i) any and all federal, state, local or foreign taxes,
charges, fees, imposts, levies or other assessments, including all net income,
gross receipts, capital, sales, use, ad valorem, value added, transfer,
franchise, profits, inventory, capital stock, license, withholding, payroll,
employment, social security, unemployment, excise, severance, stamp, occupation,
property, escheat, unclaimed property, and estimated taxes, customs duties,
fees, assessments and charges of any kind whatsoever; and (ii) all interest,
penalties, fines, additions to tax or additional amounts imposed by any Taxing
Authority in connection with any item described in clause (i), and including any
liability for the payment of the foregoing obligations of another Person as a
result of (a) being or having been a member of an affiliated, consolidated,
combined, unitary or aggregate group; (b) being or having been a party to any
tax sharing agreement or any express or implied obligation to indemnify any
Person; and (c) being or having been a transferee, successor, or otherwise
assuming the obligations of another Person to pay the foregoing amounts.

“Taxing Authority” means the IRS and any other Governmental Entity responsible
for the administration of any Tax.

“Tax Return” means any return, report or statement required to be filed with
respect to any Tax (including any attachments thereto, and any amendment
thereof), including any information return, claim for refund, amended return or
declaration of estimated Tax.

 

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“Telephone Services” means local and long distance telephone and related voice
services offered by the Business.

“Transaction Documents” means this Agreement, and all other documents and
instruments to be executed and delivered in connection with the transactions
contemplated by this Agreement.

“WARN” shall mean the Worker Adjustment and Retraining Notification Act of 1988,
as amended, and the regulations promulgated thereunder.

1.2 Terms Defined Elsewhere in this Agreement.

For purposes of this Agreement, the following terms have meanings set forth in
the sections indicated:

 

Term

   Section Agreement    Preamble

Asset Acquisition Statement

   2.6

Assumed Liabilities

   2.3

Base Purchase Price

   3.2

Closing

   4.1

Commitment Properties

   7.15(a)

Community

   Preamble

Consents

   5.3

Consent Condition

   7.3(b)

Easements

   5.9(b)

Effective Date

   Preamble

Exchange Act

   7.10(b)

Employee Benefit Plans

   5.11(b)

Employee Schedule

   5.11(a)

Escrow Account

   3.3(b)

Escrow Agent

   3.3(b)

Escrow Funds

   3.3(b)

Estimated Adjustments Amount

   3.4(e)

Excluded Assets

   2.2

Excluded Liabilities

   2.4

Final Report

   3.4(f)

Financial Statements

   5.5

Indemnification Claim

   10.4(b)

Indemnity Escrow Agreement

   3.3(b)

Independent Accountants

   3.3(f)

Leased Real Property

   5.9(c)

Limited Partners’ Meeting

   7.10(a)

Losses

   10.2(a)

Non-Competition Period

   7.13

Nonassignable Assets

   2.5(b)

 

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Owned Real Property

   5.9(a)

Phase I Assessment

   7.18

Phase II Assessment

   7.18

Preliminary Report

   3.4(e)

Proxy Statement

   7.10(b)

Purchase Price

   3.2

Purchase Price Adjustments

   3.4(e)

Purchased Assets

   2.1

Purchaser

   Preamble

Purchaser Documents

   6.2

Purchaser Indemnified Parties

   10.2(a)

Purchaser Objection Notice

   3.4(e)

Qualified Plans

   5.11(c)

Real Property Leases

   5.9(b)

Restricted Area

   7.13

Restricted Party

   7.13

Revised Statements

   2.6

Seller

   Preamble

Seller Documents

   5.2

Seller Indemnified Parties

   10.3(a)

Seller Marks

   7.6

Title Commitments

   7.15(a)

Title Company

   7.15(a)

Title Defect

   7.15(c)

Title Policies

   7.15(b)

Total Consideration

   3.2

Transferred Employees

   8.1(a)

Transition Services Agreement

   7.7

1.3 Other Definitional and Interpretive Matters.

(a) Unless otherwise expressly provided, for purposes of this Agreement, the
following rules of interpretation shall apply:

(i) Calculation of Time Period. When calculating the period of time before
which, within which or following which, any act is to be done or step taken
pursuant to this Agreement, the date that is the reference date in calculating
such period shall be excluded. If the last day of such period is a non-Business
Day, the period in question shall end on the next succeeding Business Day.

(ii) Dollars. Any reference in this Agreement to $ shall mean U.S. dollars.

(iii) Exhibits/Schedules. The Exhibits and Schedules to this Agreement are
hereby incorporated and made a part hereof and are an integral part of this
Agreement. All Exhibits and Schedules annexed hereto or referred to herein are
hereby incorporated in and made a part of this Agreement as if set forth in full
herein. Any matter or

 

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item disclosed on a Schedule shall be deemed to have been disclosed in all other
relevant Schedules. Disclosure of any item on any Schedule shall not constitute
an admission or indication that such item or matter is material or would have a
Material Adverse Effect. No disclosure on a Schedule relating to a possible
breach or violation of any Contract, Law or Order shall be construed as an
admission or indication that breach or violation exists or has actually
occurred. Any capitalized terms used in any Schedule or Exhibit but not
otherwise defined therein shall be defined as set forth in this Agreement.

(iv) Gender and Number. Any reference in this Agreement to gender shall include
all genders, and words imparting the singular number only shall include the
plural and vice versa.

(v) Headings. The provision of a Table of Contents, the division of this
Agreement into Articles, Sections and other subdivisions and the insertion of
headings are for convenience of reference only and shall not affect or be
utilized in construing or interpreting this Agreement. All references in this
Agreement to any “Section” are to the corresponding Section of this Agreement
unless otherwise specified.

(b) The parties hereto have participated jointly in the negotiation and drafting
of this Agreement and, in the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as jointly drafted by
the parties hereto and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provision of this
Agreement.

1.4 Exhibits

 

  A Indemnity Escrow Agreement

  B Reserved

  C Reserved

  D Reserved

  E Form of Bill of Sale

  F Form of Warranty Deed

  G Reserved

  H Form of Assignment and Assumption Agreement

ARTICLE II

PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES

2.1 Purchase and Sale of Assets.

On the terms and subject to the conditions set forth in this Agreement, at the
Closing Purchaser shall purchase, acquire and accept from Seller, and Seller
shall sell, transfer, assign, convey and deliver to Purchaser all of Seller’s
property, privileges, rights and claim, tangible or intangible, real, personal
or mixed, owned or leased, used or otherwise held by Seller or hereafter
acquired prior to the Closing Date and used or held for use principally in the
conduct of the Business, including the System Contracts, Easements, Furniture
and

 

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Equipment, Governmental Authorizations, Intangibles, Real Property and all
accounts receivable and prepaid expenses relating exclusively to the Assets or
the operation of the Systems and the Records, but not including the Excluded
Assets (all of such assets and properties being referred to herein as the
“Purchased Assets”), free and clear of all liens, except for Permitted
Encumbrances.

2.2 Excluded Assets.

Nothing herein contained shall be deemed to sell, transfer, assign or convey the
Excluded Assets to Purchaser and the Purchased Assets shall exclude the Excluded
Assets. Seller shall retain all right, title and interest to, in and under the
Excluded Assets. “Excluded Assets” shall mean the following assets:

(a) the Excluded Contracts;

(b) all cash, cash equivalents, bank deposits or similar cash items of Seller;

(c) any intellectual property rights of Seller;

(d) books and records that Seller is required by Law to retain or that Seller
determines are necessary or advisable to retain; provided, however, that
Purchaser shall have the right to make copies of any portions of such retained
books and records that relate to the Business, the Systems or any of the
Purchased Assets for a reasonable period after Closing but in no event exceeding
3 years after Closing;

(e) Seller’s partnership books and records and other books and records related
to internal partnership matters and financial relationships with Seller’s
lenders and affiliates;

(f) any claim, right or interest of Seller in or to any refund, rebate,
abatement or other recovery for Taxes, from any Governmental Entity, for any
Franchise fees (in each case except to the extent such Taxes relate to the
Purchased Assets in respect of the post-Closing Tax period or the portion of a
period allocable to the post-Closing Tax period), together with any interest due
thereon or penalty rebate arising therefrom;

(g) all insurance policies or rights to proceeds thereof relating to the
Business;

(h) all Tax Returns and financial statements of Seller, the Systems and the
Business and all records (including working papers) related thereto;

(i) all prepaid charges, expenses or rent under the Real Property Leases, any
personal property leases or any such other leases or in respect of the Owned
Real Property that is attributable to any period beginning prior to and ending
before the Closing;

(j) all Employee Benefit Plans;

(k) all Programming Agreements and retransmission consent agreements;

 

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(l) advertising insertion equipment owned by third parties;

(m) all patents, copyrights, trademarks, trade names, service marks, service
names, logos and similar proprietary rights owned by Seller or its Affiliates,
whether or not used in the business of the Systems;

(n) all of Seller’s causes of action, claims, credits, demands or rights of
set-off against third parties, to the extent related to any Excluded Asset;

(o) All rights to receive fees for services from any Affiliate of Seller other
than fees for services, if any, rendered by Purchaser after Closing to an
Affiliate of Seller;

(p) Any and all assets or rights of Seller unrelated to the Business;

(q) Any contracts, agreements or other arrangements between Seller and any
Affiliate of Seller;

(r) all rights that accrue to Seller under this Agreement; and

(s) the assets listed on Schedule 2.2 hereto.

2.3 Assumption of Liabilities.

At the Closing, Seller shall sell, transfer, assign and convey to Purchaser, and
Purchaser shall assume, effective as of the Closing, and shall timely perform,
pay and discharge in accordance with their respective terms, the following
Liabilities of Seller (collectively, the “Assumed Liabilities”):

(a) Liabilities of Seller to all customers and advertisers of the Systems for
any advance payments or deposits for which Purchaser shall have received a
credit pursuant to Section 3.4;

(b) Liabilities with respect to the Business, the Purchased Assets, the
Transferred Employees arising after the Closing, to the extent such Liabilities
arise from or are related to any event that occurs on or after the Closing Date;

(c) all Taxes applicable to the transfer of the Purchased Assets pursuant to
this Agreement that are required to be paid by Purchaser pursuant to
Section 11.1(b) and (c);

(d) Liabilities for Taxes relating to the Business, the Purchased Assets, the
Transferred Employees for all taxable periods (or portions thereof) beginning
after the Closing Date;

(e) all accrued expenses and trade accounts payable to the extent arising out of
the Business, the Purchased Assets, the Transferred Employees prior to the
Closing that are outstanding as of 12:01 a.m. on the Closing Date and are taken
into account in adjusting the Base Purchase Price pursuant to Section 3.4(d)
(i), (ii) and (iii); and

 

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(f) Liabilities relating to amounts required to be paid by Purchaser hereunder.

2.4 Excluded Liabilities.

Purchaser is assuming only the Assumed Liabilities and shall not assume or be
liable for any other Liabilities of Seller (or any predecessor owner of all or
part of its business and assets) of whatever nature, whether presently in
existence or arising hereafter, known or unknown, contingent or otherwise, other
than Assumed Liabilities. All such Liabilities not being assumed are referred to
herein as the “Excluded Liabilities”).

2.5 Further Conveyances and Assumptions; Consent of Third Parties.

(a) From time to time following the Closing, Seller and Purchaser shall execute,
acknowledge and deliver all such further conveyances, notices, assumptions,
releases and acquittances and such other instruments, and shall take such
further actions, as may be reasonably necessary or appropriate to assure fully
to Purchaser and its successors or assigns, all of the rights, titles and
interests intended to be conveyed to Purchaser under this Agreement and the
Transaction Documents and to assure fully to Seller and its Affiliates and their
successors and assigns, the assumption of the liabilities and obligations
intended to be assumed by Purchaser under this Agreement and the Transaction
Documents, and to otherwise make effective the transactions contemplated hereby
and thereby.

(b) Nothing in this Agreement nor the consummation of the transactions
contemplated hereby shall be construed as an attempt or agreement to assign any
Purchased Asset, including any Contract, Permit, Franchise, Programming
Agreement, certificate, approval, authorization or other right, which by its
terms or by Law is nonassignable without the consent of a third party or a
Governmental Entity or is cancelable by a third party in the event of an
assignment (“Nonassignable Assets”) unless and until such consent shall have
been obtained.

(c) With respect to material System Contracts and Permits, Seller shall use its
commercially reasonable efforts to cooperate with Purchaser at its request for
up to 180 days following the Closing Date in endeavoring to obtain such consents
not obtained prior to Closing; provided, however, that other than as set forth
in Section 7.3 such efforts shall not require Seller or any of its Affiliates to
incur any expenses or Liabilities or provide any financial accommodation or to
remain secondarily or contingently liable for any Assumed Liability to obtain
any such consent. Purchaser and Seller shall use their respective commercially
reasonable efforts to obtain, or cause to be obtained, any consent,
substitution, approval or amendment required to novate all Liabilities under any
and all Contracts or other Liabilities that constitute Assumed Liabilities or to
obtain in writing the unconditional release of Seller and its Affiliates so
that, in any such case, Purchaser shall be solely responsible for such
Liabilities; provided, however, that the allocation between Seller and Purchaser
of payments of consideration, fees and costs payable to any third party (or its
agents) from whom any such consent, substitution, approval or amendment is
requested shall be governed by Section 7.3.

2.6 Reserved

 

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ARTICLE III

CONSIDERATION

3.1 Reserved.

3.2 Consideration.

The aggregate consideration for the Purchased Assets shall be (a) an amount in
cash equal to Five Million Dollars ($5,000,000 ) (the “Base Purchase Price”),
subject to adjustment as provided in Section 3.4 (as adjusted, the “Purchase
Price”), and (b) the assumption of the Assumed Liabilities (together with the
Purchase Price, the “Total Consideration”).

3.3 Payment of Purchase Price.

On the Closing Date, Purchaser shall pay the Purchase Price to Seller as
follows:

(a) Reserved

(b) Four Hundred Thousand Dollars ($400,000) in cash (the “Escrow Funds”) shall
be deposited into an escrow account (the “Escrow Account”), which shall be
established pursuant to an escrow agreement, which escrow agreement (the
“Indemnity Escrow Agreement”) shall be (i) entered into on the Closing Date
among Seller, Purchaser and U.S. Bank National Association, a national banking
association (the “Escrow Agent”) and (ii) substantially in the form of Exhibit
A. On the last day of the twelfth (12) month after Closing, the Escrow Funds,
together with interest thereon, then remaining in the escrow account less any
payments due to Purchaser or pending claims made by Purchaser pursuant to
Section 10 together with interest attributable thereto, shall be delivered to
Seller; and

(c) an amount equal to the Base Purchase Price minus the Escrow Funds and
interest accrued thereon plus or minus (as the case may be) the Purchase Price
Adjustments proposed in the Preliminary Report, or if such amount is disputed,
the Estimated Adjustments Amount, by wire transfer in immediately available
funds.

3.4 Adjustments and Prorations.

(a) The Base Purchase Price shall be adjusted such that all revenues, expenses
and other Liabilities arising from the Systems up until 12:01 a.m. on the
Closing Date, including subscriber and advertising revenues, franchise fees,
pole and other rental charges payable with respect to cable television service,
utility charges, real and personal property taxes and assessments levied against
the Purchased Assets, property and equipment rentals, applicable copyright or
other fees, sales and service charges, taxes (except for taxes arising from the
transfer of the Purchased Assets hereunder which are covered by
Section 11.1(b)), and similar prepaid and deferred items, shall be prorated
between Purchaser and Seller in accordance with the principle that Seller shall
be responsible for all expenses, costs and Liabilities and entitled to all
revenues allocable to the conduct of the Business for the period prior to the
Closing Date, and Purchaser shall be responsible for all expenses, costs and
obligations and entitled to all revenues allocable to the conduct of the
Business on the Closing Date and for the period thereafter, all of which shall
be determined in accordance with GAAP.

 

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(b) At Closing, the Base Purchase Price shall be increased by an amount equal to
(a) 100% of the face amount of all customer Accounts Receivable that are
outstanding on the Closing Date and have been outstanding for 30 or less from
the first day of the period to which any outstanding bill relates, (b) 95% of
the face amount of all customer Accounts Receivable that are outstanding on the
Closing Date and have been outstanding more than 30 days but less than 60 days
from the first day of the period to which any outstanding bill relates, (c) 0%
for all customer Accounts Receivable that are outstanding on the Closing Date
and have been outstanding more than 60 days from the first day of the period to
which any outstanding bill relates, and (d) 100% of the face amount of all
Accounts Receivable related to advertising services and time provided by Seller
prior to Closing.

(c) At Closing, the Base Purchase Price shall be increased by an amount equal to
100% of the face amount of all payments and sums deposited or advanced by Seller
to a landlord, utility, Governmental Body or any other party as a security
deposit or in exchange for initiation of a service and which will inure to the
benefit of Purchaser.

(d) At Closing, the Base Purchase Price shall be reduced by an amount equal to
(i) any customer advance payments (i.e., customer payments received by Seller
prior to the Closing but relating to service to be provided by Purchaser after
the Closing) and deposits (including any interest owing thereon), (ii) except as
set forth in Section 3.4(c), above, any other advance payments (e.g.,
advertising payments received by Seller prior to the Closing but relating to
service to be provided by Purchaser after the Closing) and (iii) all accrued
expenses and trade accounts payable to the extent arising out of the operations
of the Business prior to the Closing that are outstanding as of 12:01 a.m. on
the Closing Date, provided that such Liabilities are assumed by Purchaser.

(e) At least five (5) Business Days prior to the Closing Date, Seller will
deliver to Purchaser a report with respect to the Systems (the “Preliminary
Report”), showing in detail the preliminary estimate of the adjustments referred
to in Section 3.4(a)-(e) (the “Purchase Price Adjustments”), calculated in
accordance with such Section as of the Closing Date (or as of any other date(s)
agreed to by the parties), together with any documents substantiating the
determination of the Purchase Price Adjustments proposed in the Preliminary
Report. The Preliminary Report will include a Schedule setting forth advance
payments and deposits made to or by Seller, as well as Accounts Receivable
information relating to the Systems (showing sums due and their respective aging
as of the Closing Date). The estimated Purchase Price Adjustments shown in the
Preliminary Report will be reflected as adjustments to the Base Purchase Price
payable at the Closing pursuant to Section 3.4. In the event Purchaser objects
to the Seller’s calculation of any Purchase Price Adjustment as set forth in the
Preliminary Report, Purchaser shall deliver to the Seller at least two
(2) Business Days prior to the Closing a written statement in reasonable detail
describing any discrepancies believed to exist (“Purchaser Objection Notice”).
Purchaser and Seller shall use their commercially reasonable efforts to resolve
any of Purchaser’s objections to the Preliminary Report as described in
Purchaser’s Objection Notice, and Seller shall make such revisions to the
Preliminary Report as mutually agreed between Seller and Purchaser, and, if any
changes are made, shall deliver a copy of such

 

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revised Preliminary Report to Purchaser no later than one (1) Business Day prior
to the Closing. With respect to any of Purchaser’s objections that are not
resolved before the Closing Date, the parties shall proceed as follows: (i) if
the aggregate amount of Purchaser’s unresolved objections is $100,000 or less,
the Closing shall proceed with Seller’s estimate of such disputed amounts, and
(ii) if the aggregate of Purchaser’s unresolved objections are greater than
$100,000, then the mid-point between the aggregate of Purchaser’s unresolved
objections and Seller’s estimate of such disputed amounts shall be used for
purposes of proceeding to Closing. The amount used pursuant to subclause (i) or
(ii) of this Section 3.4(e) shall be referred to as the “Estimated Adjustments
Amount.”

(f) Within sixty (60) days after the Closing Date, Purchaser shall deliver to
Seller a report with respect to the Systems (the “Final Report”), showing in
detail its determination of the Purchase Price Adjustments, together with any
documents substantiating its calculation of the adjustments proposed in the
Final Report. If Seller shall conclude that the Final Report does not accurately
reflect the adjustments and prorations to be made to the Purchase Price in
accordance with this Section 3.4, Seller shall, within thirty (30) days after
its receipt of the Final Report, provide to Purchaser a written statement in
reasonable detail describing any discrepancies believed to exist. Purchaser and
Seller shall use good faith efforts to jointly resolve the discrepancies within
fifteen (15) days of Purchaser’s receipt of Seller’s written statement of
discrepancies, which resolution, if achieved, shall be binding upon all parties
to this Agreement and not subject to dispute or judicial review. If Purchaser
and Seller cannot resolve the discrepancies to their mutual satisfaction within
such 15-day period, Purchaser and Seller shall, within the following ten
(10) days, shall jointly designate a nationally recognized independent
accounting firm which is mutually agreeable to, and independent of each of, the
parties (the “Independent Accountants”) to review the Final Report together with
Seller’s discrepancy statement and any other relevant documents. The Independent
Accountants shall report their conclusions as to adjustments pursuant to this
Section 3.4 which shall be conclusive on all parties to this Agreement and not
subject to dispute or judicial review absent clerical errors or fraud. If, after
adjustment as appropriate with respect to the amount of the aforesaid
adjustments paid or credited at the Closing, Purchaser or Seller is determined
to owe an amount to the other, the appropriate party shall pay such amount
thereof to the other, within three (3) Business Days after receipt of such
determination. The cost of retaining the Independent Accountants shall be split
equally between Purchaser and Seller.

ARTICLE IV

CLOSING AND TERMINATION

4.1 Closing Date.

If this Agreement is not earlier terminated in accordance with Section 4.2, the
consummation of the purchase and sale of the Purchased Assets and the assumption
of the Assumed Liabilities provided for in Article II hereof (the “Closing”)
shall take place at the offices of Seller at 101 Stewart Street, Suite 700,
Seattle Washington, 98101, or will be conducted by mail, electronic mail, and
/or telecopies or at such other place as the parties may designate in writing,
at 10:00 a.m. (Pacific Standard Time) on the Closing Date.

 

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4.2 Termination of Agreement.

This Agreement shall terminate and/or may be terminated prior to the Closing as
follows:

(a) Automatically, at the close of business on April 30, 2012 if the Closing
shall not have occurred by the close of business on that day.

(b) By mutual written consent of Seller and Purchaser.

(c) By Seller if there shall have been instituted or threatened any Legal
Proceeding to enjoin or otherwise prevent or prohibit Seller’s consummation of
the transactions contemplated hereby, or any pending or threatened Legal
Proceeding seeking material damages from Seller that relate to or arise out of
this Agreement or the consummation of the transactions contemplated hereby that
Seller shall determine is reasonably likely to be successful on the merits; or
by Purchaser if there shall have been instituted or threatened any Legal
Proceeding to enjoin or otherwise prevent or prohibit Purchaser’s consummation
of the transactions contemplated hereby, or any pending or threatened Legal
Proceeding seeking material damages from Purchaser that relate to or arise out
of this Agreement or the consummation of the transactions contemplated hereby
that Purchaser shall determine is reasonably likely to be successful on the
merits.

(d) By Seller if there shall be in effect a final nonappealable Order of a
Governmental Body of competent jurisdiction restraining, enjoining or otherwise
prohibiting Seller from consummation of the transactions contemplated hereby; or
by Purchaser if there shall be in effect a final nonappealable Order of a
Governmental Body of competent jurisdiction restraining, enjoining or otherwise
prohibiting Purchaser from consummation of the transactions contemplated hereby.

(e) By Purchaser if Purchaser is not in material breach of its obligations under
this Agreement and Seller shall have breached or failed to perform any of its
representations, warranties, covenants or agreements set forth in this Agreement
such that the conditions set forth in Sections 9.1(a) or 9.1(b) would not be
satisfied and such breach is incapable of being cured or, if capable of being
cured, shall not have been cured to Purchaser’s reasonable satisfaction within
the earlier of 10 days following receipt by Seller of written notice of such
breach from Purchaser or April 30, 2012.

(f) By Seller if Seller is not in material breach of its obligations under the
Agreement and Purchaser shall have breached or failed to perform any of its
representations, warranties, covenants or agreements set forth in this Agreement
such that the conditions set forth in Sections 9.2(a) or 9.2(b) would not be
satisfied and such breach is incapable of being cured or, if capable of being
cured, shall not have been cured to Seller’s reasonable satisfaction within the
earlier of 10 days following receipt by Purchaser of written notice of such
breach from Seller or April 30, 2012.

(g) By Seller if and at such time as Seller’s financial advisor informs Seller
that it is not able to issue the Fairness Opinion.

 

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(h) By Purchaser if Seller has not obtained the Fairness Opinion (as defined in
Section 7.18(d), on or before 65 days after the Effective Date.

(i) By Seller if and at such time Seller’s limited partners have rejected the
Transaction.

(j) By Seller, at any time prior to Sixty (60) days after the Effective Date if
Seller has not obtained a commitment of financing reasonably acceptable to
Seller in Seller’s sole and absolute discretion.

4.3 Procedure Upon Termination.

In the event of termination by Purchaser or Seller, or both, pursuant to
Section 4.2 hereof, and except as to termination under to Section 4.2(a),
written notice thereof shall forthwith be given to the other party or parties,
and this Agreement shall terminate, and the purchase of the Purchased Assets
hereunder shall be abandoned, without further action by Purchaser or Seller.

4.4 Effect of Termination.

(a) In the event that this Agreement terminates or is validly terminated in
accordance with Sections 4.2 and 4.3, then each of the parties shall be relieved
of their duties and obligations arising under this Agreement after the date of
such termination; provided, that the obligations of the parties in this
Section 4.4 and Section 7.4 will survive any such termination and; provided,
further, that the obligations of the parties set forth in Articles X and XI
(other than Sections 11.1 and 11.10) hereof shall survive any such termination
and shall be enforceable hereunder.

(b) Nothing in this Section 4.4 shall relieve Purchaser or Seller of any
liability for a breach of any of its covenants or agreements or a breach of any
of its representations and warranties contained in this Agreement that occurred
prior to the date of termination. The damages recoverable by the non-breaching
party shall include all attorneys’ fees reasonably incurred by such party in
connection with the transactions contemplated hereby.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF SELLER

Seller hereby represents and warrants to Purchaser that:

5.1 Organization and Good Standing.

Seller is a limited partnership duly organized, validly existing and in good
standing under the laws of the State of Washington and has all requisite limited
partnership power and authority to own, lease and operate its properties and to
carry on its business as now conducted. Seller is duly qualified or authorized
to do business and is in good standing under the laws of each jurisdiction in
which it owns or leases real property and each other jurisdiction in which the
conduct of its business or the ownership of its properties requires such
qualification or authorization, except where the failure to be so qualified,
authorized or in good standing would not have a Material Adverse Effect. The
jurisdictions in which Seller is qualified or authorized to do business are
listed on Schedule 5.1.

 

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5.2 Authorization of Agreement.

Subject to obtaining the approval of a majority in interest of the limited
partners, (a) Seller has all requisite partnership power and authority to
execute and deliver this Agreement and Seller has all requisite power, authority
and legal capacity to execute and deliver each other agreement, document, or
instrument or certificate contemplated by this Agreement or to be executed by
Seller in connection with the consummation of the transactions contemplated by
this Agreement (the “Seller Documents”), to perform its obligations hereunder
and thereunder and to consummate the transactions contemplated hereby and
thereby; (b) this Agreement and each of the Seller Documents will be at or prior
to the Closing, duly and validly executed and delivered by Seller and, (assuming
the due authorization, execution and delivery by the other parties hereto and
thereto) this Agreement constitutes, and each of the Seller Documents when so
executed and delivered will constitute, legal, valid and binding obligations of
Seller enforceable against Seller in accordance with their respective terms
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws from time to time in effect affecting
the enforcement of creditors’ rights generally, and (ii) 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 therefore may be brought.

5.3 Conflicts; Consents of Third Parties.

Subject to obtaining the approval of a majority in interest of the limited
partners of Seller, except as set forth on Schedule 5.3 (the “Consents”), none
of the execution and delivery by Seller of this Agreement, the consummation of
the transactions contemplated hereby, or compliance by Seller with any of the
provisions hereof or thereof will conflict with, or result in any violation of
or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination or cancellation or acceleration of any obligation
under, or result in the imposition of any lien other than a Permitted
Encumbrance under, any provision of (a) the certificate of limited partnership
and limited partnership agreement, as amended, of Seller; (b) violate any Legal
Requirement in any material respect, (c) require any consent, waiver, approval
or authorization of, or any filing with or notice to, any Governmental Entity or
other Person, or (d) conflict in any material respect with or constitute a
material violation or material breach of or a material default under (without
regard to requirements of notice, lapse of time or elections of other Persons or
any combination thereof), permit or result in the termination, suspension or
material modification of, result in the acceleration of (or give any Person the
right to accelerate) the performance of Seller under, or result in the creation
or imposition of any Encumbrance (other than a Permitted Encumbrance) under, any
System Contract, Franchise or License or any other instrument that is a
Purchased Asset or evidences an Assumed Liability or any instrument or agreement
by which any of the Purchased Assets are bound or affected, except to the extent
listed on Schedule 5.3.

 

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5.4 No Other Consent.

Subject to Section 5.3, no other consent, waiver, approval, or authorization of
any Person or Governmental Entity is required on the part of Seller in
connection with the execution and delivery of this Agreement, the performance by
Seller of its obligations hereunder, or the consummation of the transactions
contemplated hereby, the absence of which would have a Material Adverse Effect.

5.5 Reserved.

5.6 Title to Purchased Assets.

(a) Seller is in possession of and has exclusive, good and marketable title to
or a valid leasehold interest in (or other rights of a lessee or licensee to use
and hold for use) the Purchased Assets (other than Real Property, which is
separately addressed in Section 5.9), free and clear of all Encumbrances other
than those Encumbrances disclosed on Schedule 5.6(a), all of which Seller will
cause to be released prior to Closing, and the Permitted Encumbrances.

(b) The Purchased Assets include inventory of a sufficient quantity to enable
Purchaser to conduct the Business, as it is conducted by Seller as of the date
of this Agreement and as of the Closing Date, for at least a 30-day period
following the Closing Date.

(c) Except as indicated on Schedule 5.6(a) and Schedule 5.6(c), all the
Equipment is owned by Seller free and clear of all Encumbrances (other than
Permitted Encumbrances), is in good operating condition and repair, except for
ordinary wear and tear and routine repairs, and is suitable for the operation of
the Systems, as they are operated as of the date of this Agreement and as of the
Closing Date.

5.7 Reserved.

5.8 Taxes.

(a) All Tax Returns required to be filed by Seller for any pre-Closing Tax
period have been, or will be, timely filed. Such Tax Returns are, or will be,
true, complete and correct in all material respects. All Taxes due and owing by
Seller (whether or not shown on any Tax Return) have been, or will be, timely
paid.

(b) Seller has withheld and paid each Tax required to have been withheld and
paid in connection with amounts paid or owing to any Employee, independent
contractor, creditor, customer, member or other party, and complied with all
information reporting and backup withholding provisions of applicable Law.

(c) No extensions or waivers of statutes of limitations have been given or
requested with respect to any Taxes of Seller.

(d) All deficiencies asserted, or assessments made, against Seller as a result
of any examinations by any taxing authority have been fully paid.

 

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(e) Seller is not party to any claim, action, demand, inquiry, audit, notice of
violation, proceeding, citation, subpoena, or investigation of any nature
(whether civil, criminal, administrative or otherwise) by any taxing authority.
There are no such pending or , to the Knowledge of Seller, threatened claims,
actions, demands, inquiries, audits, notices, proceedings, citations, subpoenas
or investigations by any taxing authority.

(f) There are no Encumbrances for Taxes upon any of the Purchased Assets nor, to
the Knowledge of Seller, is any taxing authority in the process of imposing any
Encumbrances for Taxes on any of the Purchased Assets (other than for current
Taxes not yet due and payable).

(g) Seller is not, and has not been, a party to, or a promoter of, a “reportable
transaction” within the meaning of Section 6707A(c)(1) of the Code and Treasury
Regulations Section 1.6011 4(b).

(h) None of the Purchased Assets is property that Seller is required to treat as
being owned by any other Person pursuant to the so-called “safe harbor lease”
provisions of former Section 168(f)(8) of the Internal Revenue Code of 1954, as
amended.

(i) None of the Purchased Assets is tax-exempt use property within the meaning
of Section 168(h) of the Code.

(j) This Section 5.8 represents the sole and exclusive representation and
warranty of Seller regarding Tax matters.

5.9 Real Property.

(a) Schedule 5.9(a) lists all Real Property owned by Seller (the “Owned Real
Property”). Except as set forth on Schedule 5.9(a):

(i) Seller has good, marketable, and indefeasible fee simple title to all of the
Owned Real Property, free and clear of all Encumbrances other than Permitted
Encumbrances;

(ii) There are no leases or other use or occupancy agreements granting to any
Person a right to occupy or otherwise use any part of the Owned Real Property;

(iii) There are no outstanding options, rights of first offer, rights of first
refusal or other agreements granting to any Person a right to purchase the Owned
Real Property or any part thereof or interest therein;

(iv) There are no arrangements or commitments of any kind pursuant to which the
Owned Real Property (or any part thereof or interest therein) will become
subject to any Encumbrances other than Permitted Encumbrances;

(v) There are no Persons other than Seller in possession of any Owned Real
Property or any part of any Owned Real Property;

 

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(vi) Seller has received no notice in writing or by publication of any
appropriation, condemnation or like proceeding or of any violation of any
applicable zoning-related Legal Requirement relating to or affecting any of the
Owned Real Property, and to the Knowledge of Seller, there is no such
violations.

(b) Schedule 5.9(b) lists (i) all Purchased Assets consisting of real property
leases pursuant to which any real property is leased by Seller (the “Real
Property Leases”) and (ii) all Purchased Assets consisting of other interests in
real property that are not Owned Real Property, and that have been memorialized
in writing, including easements, Licenses, rights to access, rights-of-way and
other real property interests that are used in the operation of the Systems
(collectively, the “Easements”). Each Real Property Lease and Easement is legal,
valid, binding and enforceable against Seller and, to Seller’s Knowledge,
against each other party thereto in accordance with its terms. Except as set
forth on Schedule 5.9(b), Seller has not received any notice of any violation or
breach of, or any default under, any Real Property Lease or Easement and there
are presently no uncured breaches or defaults under any Real Property Lease or
Easement. To Seller’s Knowledge, no event has occurred that, with notice or
passage of time or both, would constitute a violation or breach of, or default
under, any Real Property Lease or Easement by Seller or any other party thereto.

(c) To Seller’s Knowledge, each parcel of Owned Real Property and real property
covered by a Real Property Lease (“Leased Real Property”), including any
improvements constructed thereon and the current use thereof, conform in all
material respects to all applicable Legal Requirements and any restrictive
covenants or other Encumbrances affecting all or any part of such Real Property.
There are no material physical, structural, or mechanical defects on, and all of
the fixtures and improvements, including leasehold improvements, to the Owned
Real Property and Leased Real Property, and the Owned Real Property and Leased
Real Property are in good condition and repair, except for ordinary wear and
tear and routine repairs, are operating, and are sufficient to enable the Owned
Real Property and Leased Real Property to be used in all material respects in
the manner in which it is currently being used and operated by Seller. Each
parcel of Owned Real Property and to the Knowledge of Seller, each parcel of
Leased Real Property has access, ingress and egress, or a valid, perpetual
easement to a public right-of-way providing access, ingress and egress adequate
for their current use.

5.10 System Contracts.

(a) Schedule 5.10 sets forth a complete list of all the System Contracts (other
than Real Property Leases, Easements and railroad crossings) and a written
summary of each oral System Contract that is not terminable on 30 days prior
notice).

(b) The Pole Attachment Agreements disclosed on Schedule 5.10 represent all
contracts, permits, privileges and other authorizations necessary to permit
Seller to maintain, operate and use utility poles and conduits as are currently
used in the Systems or are necessary for the operation of the Systems and the
Purchased Assets in accordance with the Franchises and applicable Legal
Requirements.

 

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(c) All services and products sold, leased, provided or delivered by Seller to
customers of the Business prior to the Closing Date conform in all material
respects to applicable contractual commitments, express and implied warranties,
product and service specifications and quality standards, and to the Knowledge
of Seller there is no basis for any liability or other damages in connection
with such services and products. Seller has no liability and to the Knowledge of
Seller, there is no basis for any liability arising out of any injury to a
Person or property as a result of the ownership, possession, provision or use of
any service or product sold, leased, provided or delivered by the Business prior
to the Closing Date.

5.11 Reserved.

5.12 Reserved.

5.13 Reserved.

5.14 Governmental Authorizations.

(a) Schedule 5.14(a) is a list of the Governmental Authorizations held by
Seller.

5.15 Retransmission Consent, Must-Carry and Tower Registration.

(a) Set forth in Schedule 5.15 is a list of the broadcast television stations
carried by the Systems that have elected “must-carry” or retransmission consent
status pursuant to the Cable Act.

(b) Schedule 5.15 provides the FCC required 854R registration number, if any,
with respect to each antenna structure owned by Seller relating to the Systems.

5.16 System Information.

(a) Schedule 5.16(a) sets forth a true and accurate statement of the following
information with respect to the System, as of the date or dates set forth
therein:

(i) the approximate number of aerial miles of plant included in the Systems and
the approximate number of underground miles of plant included in the Systems,
listed by headend;

(ii) the approximate number of homes passed by the Systems;

(iii) the approximate miles of plant operating at the applicable megahertz
capacity; and

(iv) the approximate number of subscribers to basic, expanded basic, premium and
digital cable service, HDTV, DVR, telephone and HSI service, respectively, in
each case showing for residential and commercial customers, served by the
Systems by subscriber type.

 

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5.17 Compliance with Laws.

The ownership, leasing and use of the Purchased Assets as they are currently
owned, leased and used, and the operation of the Systems as currently operated,
do not violate or infringe in any material respect any Legal Requirements
currently in effect (except as to Environmental Laws, as to which Section 5.20
only applies.) Seller has not taken or omitted to take any action, and, to the
Knowledge of Seller, no event has occurred or circumstance exists, that is
reasonably likely to (with or without the passage of time or the giving of
notice) result in a violation of, conflict with, or failure on the part of
Seller to conduct the operations of the Systems in compliance with any
applicable Law where such failure would have a Material Adverse Effect.

5.18 Bonds, Insurance and Letters of Credit.

Each insurance policy, material performance bond, letter of credit, and similar
guarantee maintained or required to be maintained in connection with the Systems
is set forth on Schedule 5.18.

5.19 Accounts Receivable. All Accounts Receivable included in the Purchased
Assets are bona fide and are attributable to transactions in the ordinary
course. To Seller’s Knowledge, there are no contests, claims, defenses or rights
of setoff against the Accounts Receivable relating to the amount or validity of
such Accounts Receivable that that would have, in the aggregate, a Material
Adverse Effect.

5.20 Environmental Matters.

(a) Seller has, at all times, occupied, used and operated the Real Property in
compliance with all Environmental Laws.

(b) Seller has not received any written notice of any alleged violation of any
Environmental Law with respect to the Real Property and has not been ordered by
any Governmental Entity to undertake any cleanup of any of the Real Property.

(c) There is no civil, criminal or administrative claim, demand, hearing,
investigation, notice, suit, proceeding or other action with respect to the Real
Property pending or, to Seller’s Knowledge, threatened against Seller relating
to any Environmental Laws.

(d) There are no facts, circumstances, conditions or occurrences regarding
Seller that could reasonably be expected to form the basis of a claim of
violation or liability against Seller under any Environmental Law or result in
any violation by Seller of any Environmental Law with respect to the Real
Property.

(e) Except as set forth in Schedule 5.20, there are no underground or above
ground storage tanks, active, inactive or abandoned on the Owned Real Property
and, to Seller’s Knowledge, have not been on the Owned Real Property in the
past, and none of the Owned Real Property has been used at any time as a dry
cleaning facility, gasoline service station or a facility for storing, pumping,
dispensing or producing gasoline or any other petroleum products (other than
such storage, pumping and dispensing of fuels and lubricants as is incidental to
operation of the System) or Hazardous Substances.

 

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(f) All chemicals, chemical compounds and mixtures that are included among the
assets of Seller are integral to and used for the conduct of its business, have
not been and are not intended to be discarded or abandoned, and are not waste or
waste materials.

(g) Seller has made available to Purchaser true, complete and correct copies of
all analyses, audits, correspondence, investigations, reviews, reports and
studies on environmental matters relating to the Real Property that are in the
possession or control of Seller.

5.21 Intellectual Property.

To Seller’s Knowledge, Seller owns all right, title and interest in and to, or
has a valid and enforceable license or other right to use, all the intellectual
property used by it in connection with the Business, which constitutes all
intellectual property rights necessary for it to operate the Systems as
currently operated, and no Person is challenging or, to Seller’s Knowledge,
infringing or otherwise violating any intellectual property owned by Seller.
Except as set forth on Schedule 5.21, Seller has not received any notice of any
claim that any intellectual property used by Seller in the operation of the
Business infringes on any intellectual property rights of any other Person.

5.22 Reserved.

5.23 Insurance.

Seller is covered by fire and casualty, general liability, professional
liability, workers compensation, theft and automobile insurance in scope and
amount customary and reasonable for the business in which it is engaged.

5.24 Reserved.

5.25 Reserved.

5.26 Disclosure.

None of the documents or information provided to Purchaser by Seller or any
agent or employee of Seller in the course of Purchaser’s due diligence
investigation and the negotiation of this Agreement (including the Schedules)
and the Transaction Documents, including the Financial Statements, contains any
untrue statement of any material fact or omits to state a material fact
necessary in order to make the statements contained in this Agreement or such
documents or information not misleading in light of the circumstances in which
it was made. The information set forth in the Schedules is accurate and complete
in all material respects.

5.27 Reserved.

5.28 No Other Representations or Warranties; Schedules.

EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS ARTICLE V (AS
MODIFIED BY THE SCHEDULES HERETO) OR IN ANY OTHER TRANSACTION DOCUMENT, NEITHER
SELLER NOR ANY OTHER PERSON MAKES

 

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ANY OTHER EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY WITH RESPECT TO SELLER,
THE BUSINESS, THE PURCHASED ASSETS, THE ASSUMED LIABILITIES OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT, AND SELLER DISCLAIMS ANY OTHER REPRESENTATIONS
OR WARRANTIES, WHETHER MADE BY SELLER, ANY AFFILIATE OF SELLER OR ANY OF THEIR
RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES. EXCEPT FOR
THE REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE V HEREOF (AS MODIFIED BY
THE SCHEDULES HERETO) OR IN ANY OTHER TRANSACTION DOCUMENT, SELLER (I) EXPRESSLY
DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESSED OR IMPLIED, AT COMMON LAW,
BY STATUTE, OR OTHERWISE, RELATING TO THE CONDITION OF THE PURCHASED ASSETS
(INCLUDING ANY IMPLIED OR EXPRESSED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, OR OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS) AND (II)
HEREBY DISCLAIMS ALL LIABILITY AND RESPONSIBILITY (OTHER THAN WITH RESPECT TO
CLAIMS OF FRAUD, WILLFUL MISCONDUCT AND INTENTIONAL MISREPRESENTATION) FOR ANY
REPRESENTATION, WARRANTY, PROJECTION, FORECAST, STATEMENT, OR INFORMATION MADE,
COMMUNICATED, OR FURNISHED (ORALLY OR IN WRITING) TO PURCHASER OR ITS AFFILIATES
OR REPRESENTATIVES (INCLUDING ANY OPINION, INFORMATION, PROJECTION, OR ADVICE
THAT MAY HAVE BEEN OR MAY BE PROVIDED TO PURCHASER BY ANY DIRECTOR, OFFICER,
EMPLOYEE, AGENT, CONSULTANT, OR REPRESENTATIVE OF SELLER OR ANY OF ITS
AFFILIATES). SELLER MAKES NO REPRESENTATIONS OR WARRANTIES TO PURCHASER
REGARDING THE PROBABLE SUCCESS OR PROFITABILITY OF THE BUSINESS.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser hereby represents and warrants to Seller that:

6.1 Organization and Good Standing.

Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of Washington and has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business.

6.2 Authorization of Agreement.

(a) Purchaser has full corporate power and authority to execute and deliver this
Agreement and each other agreement, document, instrument or certificate
contemplated by this Agreement or to be executed by Purchaser in connection with
the consummation of the transactions contemplated hereby and thereby (the
“Purchaser Documents”), and to consummate the transactions contemplated hereby
and thereby; (b) the execution, delivery and performance by Purchaser of this
Agreement and each Purchaser Document have been duly authorized by all necessary
corporate action on behalf of Purchaser; (c) This Agreement has been, and each

 

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Purchaser Document will be at or prior to the Closing, duly executed and
delivered by Purchaser and (assuming the due authorization, execution and
delivery by the other parties hereto and thereto) this Agreement constitutes,
and each Purchaser Document when so executed and delivered will constitute, the
legal, valid and binding obligation of Purchaser, enforceable against Purchaser
in accordance with its terms, except (i) as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws from time to
time in effect affecting the enforcement of creditors’ rights generally, and
(ii) 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 therefore may be brought.

6.3 Conflicts; Consents of Third Parties.

(a) None of the execution and delivery by Purchaser of this Agreement, the
consummation of the transactions contemplated hereby, or the compliance by
Purchaser with any of the provisions hereof will conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination or cancellation under, any
provision of (i) the certificate of formation (or other organizational and
governing documents) of Purchaser, (ii) any Contract or Permit to which
Purchaser is a party or by which Purchaser or its properties or assets are
bound, (iii) any Order of any Governmental Entity applicable to Purchaser or by
which any of the properties or assets of Purchaser are bound or (iv) any
applicable Law.

(b) No consent, waiver, approval, Order, Permit or authorization of, or
declaration or filing with, or notification to, any Person or Governmental
Entity is required on the part of Purchaser in connection with the execution and
delivery of this Agreement, the compliance by Purchaser with any of the
provisions hereof, the consummation of the transactions contemplated hereby, or
for Purchaser to conduct the Business, except for compliance with the applicable
requirements of the Hart-Scott Rodino Antitrust Improvements Act of 1976 such
other consents, waivers, approvals, Orders, Permits or authorizations the
failure of which to obtain would not have a Material Adverse Effect upon
Purchaser’s ability to consummate the transactions contemplated by this
Agreement.

6.4 Litigation.

There are no Legal Proceedings pending or, to the Knowledge of Purchaser,
threatened against Purchaser, or to which Purchaser is otherwise a party before
any Governmental Entity, which, if adversely determined, would reasonably be
expected to have a material adverse effect on the ability of Purchaser to
perform its obligations under this Agreement or to consummate the transactions
hereby. Purchaser is not subject to any Order of any Governmental Entity except
to the extent the same would not reasonably be expected to have a material
adverse effect on the ability of Purchaser to perform its obligations under this
Agreement or to consummate the transactions contemplated hereby.

6.5 Reserved.

 

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ARTICLE VII

COVENANTS

7.1 Reserved.

7.2 Conduct of the Business Pending the Closing.

Between the Effective Date and the Closing, except (i) as required by applicable
Law or Contract in effect as of the Effective Date, (ii) as otherwise expressly
provided for in this Agreement or (iii) with the prior written consent of
Purchaser (which consent shall not be unreasonably withheld, delayed or
conditioned), Seller shall operate the Business in the Ordinary Course of
Business. Except as otherwise required by any Legal Requirement or any
Governmental Entity or as permitted by this Agreement, until the Closing, Seller
will not, without the prior written consent of Purchaser:

(a) make any sale, assignment, transfer, conveyance, abandonment or other
disposition of any of the Purchased Assets, except for dispositions of inventory
or worn-out or obsolete equipment for fair or reasonable value in the Ordinary
Course of Business;

(b) subject any of the Purchased Assets, or any part thereof, to any Encumbrance
except Permitted Encumbrances; or,

(c) commit to do any of the foregoing.

7.3 Consents.

(a) Seller will employ commercially reasonable efforts to promptly request and
obtain each Required Consent, and Purchaser will cooperate with Seller in all
commercially reasonable respects to obtain each Required Consent. Seller and
Purchaser shall each pay fifty percent (50%) of any commercially reasonable
consideration, fees and costs payable to any third party (or its agents) from
whom consent or approval is requested. Notwithstanding anything to the contrary
contained in this Section 7.3, Seller’s obligations hereunder with respect to
pursuing a Required Consent shall be fully satisfied with respect to (i) the
transfer of pole attachment or conduit contracts, if Purchaser has executed a
new contract with the respective pole company or if such pole company has
indicated in writing that it is willing to execute a new contract at or prior to
the Closing with Purchaser on terms substantially the same as the current terms
thereof; and (ii) the transfer of railroad crossing permits or contracts, if
Purchaser has executed a new permit or contract with the respective railroad
company or if such railroad company has indicated in writing that it is willing
to execute a new permit or contract at or prior to the Closing with Purchaser on
terms substantially the same as the current terms thereof.

7.4 Reserved.

7.5 Reserved.

 

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7.6 Reserved

7.7 Reserved.

7.8 Bonds, Letters of Credit, Etc.

Purchaser shall execute and deliver all reasonably necessary documents, to
insure that on or before Closing, Purchaser has delivered each such bonds,
letters of credit, indemnity agreements and similar instruments currently
maintained and in effect as set forth in Schedule 5.18 in such amounts and in
favor of such entities requiring the same in connection with the Purchased
Assets, including all Permits, Franchises and Contracts.

7.9 Reserved.

7.10 Limited Partners Approval.

(a) Promptly after receipt of the Fairness Opinion concluding that the sale of
Seller’s assets, in the aggregate, is fair from a financial point of view to
Seller’s limited partners, and after completing SEC review of the Proxy
Statement, NCC shall call, give notice of, convene and hold a meeting of
Seller’s limited partners (the “Limited Partners’ Meeting”) for the purpose of
approving this Agreement and the sale of the System, Business and Purchased
Assets to Purchaser pursuant to the terms of the Seller’s limited partnership
agreement and applicable limited partnership law. Subject to the Fairness
Opinion concluding that the sale of Seller’s assets, in the aggregate, is fair
from a financial point of view to Seller’s limited partners, Seller shall
solicit from Seller’s limited partners proxies in favor of the approval of this
Agreement and the sale of the Systems, Business and Purchased Assets.

(b) In connection with the Sellers’ Limited Partners’ Meeting, Seller shall
prepare and file with the SEC a proxy statement, letter to shareholders, notice
of meeting and form of proxy accompanying the Proxy Statement that will be
provided to Seller’s limited partners in connection with the solicitation of
proxies for use at the Sellers’ Limited Partners’ Meeting, and any schedules
required to be filed with the SEC in connection therewith (collectively, as
amended or supplemented, the “Proxy Statement”). Subject to all applicable Laws,
Seller shall use its commercially reasonable best efforts to cause the Proxy
Statement to be cleared by the SEC and disseminated to the Seller’s limited
partners as promptly as practicable following the filing thereof with the SEC.

7.11 Reserved.

7.12 Reserved.

7.13 Reserved.

7.14 Reserved.

7.15 Title Insurance Policies.

 

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(a) Seller will provide to Purchaser, at Seller’s expense, within 120 days after
the date of this Agreement, commitments to issue title insurance policies on the
1992 ALTA owner’s form (or its local equivalent in any state in which ALTA
policies are not available) (“Title Commitments”) by an agent writing for
Chicago Title or another nationally recognized title insurance company (the
“Title Company”) and legible photocopies of all recorded items described as
exceptions therein, committing to insure fee simple title in the Purchaser to
each parcel of Owned Real Property and tenant’s leasehold interest in each
parcel of Leased Real Property containing a headend or tower (collectively, the
“Commitment Properties”), subject only to Permitted Encumbrances. In addition,
Purchaser may obtain, at Purchaser’s sole cost and expense, a current survey of
all Commitment Properties prepared by a duly licensed surveyor reasonably
acceptable to Purchaser.

(b) Promptly following Closing, Seller shall cause the Title Company, at
Seller’s sole cost and expense, to issue policies of title insurance (“Title
Policies”) with respect to each of the Commitment Properties with policy limits
equal to the appraised value of the property; provided, however, that Purchaser
shall be solely responsible for obtaining and paying for the cost of any such
appraisal and, in the event Purchaser elects not to do so, the policy limits
shall be equal to the fair market value of the property. The cost to obtain such
Title Commitments and Title Policies with respect to the Commitment Properties
will be paid by Seller; provided, however, that the Purchaser will pay the
premiums and charges other than with respect to the Commitment Properties and
for any additional endorsements it requests with respect to any Title Policy
other than the endorsements to delete or insure over any Title Defects.

(c) If the Purchaser notifies Seller within 90 days after the date of this
Agreement of (i) any Encumbrance (other than a Permitted Encumbrance),
(ii) other matter that prevents access to any Owned Real Property or Leased Real
Property, or (iii) any other matter that, individually or in the aggregate could
have a material adverse effect on the use or value of such Owned Real Property
or Leased Real Property (each a “Title Defect”), Seller will exercise
commercially reasonable efforts to (A) remove such Title Defect, or (B) subject
to Purchaser’s approval, cause the Title Company to commit to insure over each
such Title Defect prior to the Closing. If such Title Defect cannot be removed
prior to Closing or the Title Company does not commit to insure over such Title
Defect prior to Closing and if the Purchaser elects to waive such Title Defect
and proceed towards consummation of the transaction in accordance with this
Agreement, Purchaser and Seller will enter into a written agreement at Closing
containing the commitment of Seller to use commercially reasonable efforts to
remedy the Title Defect following Closing on terms satisfactory to Purchaser in
its reasonable discretion. At the Closing, each Party will deliver such
reasonable affidavits and other customary closing documents as are required by
the Title Company in order to issue Title Policies or to delete or insure over
any Title Defects, provided that such affidavits do not expand or limit the
special or limited warranties of Seller contemplated in the applicable deed
described in Section 7.15(b).

7.16 Additional Information.

Seller will from time to time prior to the Closing promptly supplement or amend
the Schedules relating to ARTICLE V with respect to any matter (i) that existed
as of the date of this

 

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Agreement and should have been set forth or described in such Schedules or Such
disclosure by Seller pursuant to this Section 7.16 will be deemed to amend or
supplement such Schedules or to have qualified the representations and
warranties contained in this Agreement

7.17 Capital Leases; Evidence of Terminations.

Prior to the Closing, Seller will pay the remaining balances on any capital or
vehicle lease under which it leases any of the Purchased Assets and will deliver
such Purchased Assets to Purchaser at Closing free and clear of any Encumbrances
(other than Permitted Encumbrances). Seller will provide to Purchaser at the
Closing evidence reasonably satisfactory to Purchaser that all Encumbrances
(other than Permitted Encumbrances) affecting or encumbering the Purchased
Assets have been terminated.

7.18 Environmental Assessments. Seller acknowledges and agrees that Purchaser
may commission, at Purchaser’s sole cost and expense, a Phase I environmental
site assessment of the Real Property (a “Phase I Assessment”). If Purchaser, in
its sole discretion, determines based on the Phase I Assessment or any other
information known to Purchaser (including information disclosed in connection
with the negotiation of this Agreement or described in the Schedules hereto)
further assessment (including collection and analysis of environmental media) or
other additional testing or analysis of the Real Property (a “Phase II
Assessment”) is advisable, Purchaser may conduct or caused to be conducted such
testing and analysis at Purchaser’s sole cost and expense. Seller will comply
with any reasonable request for information made by Purchaser or its agents in
connection with any such investigation, but in no event will Seller be required
to disclose any materials constituting attorney-client privileged
communications. Upon request by Purchaser, Seller will afford Purchaser and its
agents or representatives access to the Real Property at reasonable times and in
a reasonable manner in connection with any such investigation (subject, in the
case of Leased Real Property to the consent rights of the landlord); provided
that Purchaser shall not unreasonably interfere with Seller’s use and operation
of the Real Property. Should Purchaser commission such an investigation, such
investigation will have no effect upon the representations and warranties made
by Seller to Purchaser under this Agreement, except that if any Phase I
Assessment or Phase II Assessment documents an environmental condition that
would reasonably be construed to be a breach of Seller’s representations or
warranties herein and such breach is capable of being cured, Seller will be
deemed not to have breached such representation or warranty if Seller cures such
breach, at no cost to Purchaser, in accordance with the provisions of this
Agreement.

7.19 Fairness Opinion. Seller shall engage its financial advisor to deliver,
within 65 days of the date of this Agreement, an opinion on whether the purchase
price for sale of Seller’s assets in the aggregate, including the sale of Seller
systems not included in this Agreement, is fair, in the aggregate, from a
financial point of view, to Seller’s limited partners. Seller shall cooperate
with and provide all information reasonably requested by its financial advisor
in order to obtain the opinion.

ARTICLE VIII

RESERVED

 

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ARTICLE IX

CONDITIONS TO CLOSING

9.1 Conditions Precedent to Obligations of Purchaser.

The obligation of Purchaser to consummate the transactions contemplated by this
Agreement is subject to the fulfillment or waiver, on or prior to the Closing
Date, of each of the following conditions (any or all of which may be waived by
Purchaser in whole or in part to the extent permitted by applicable Law):

(a) each of the representations and warranties contained in Article V that are
not qualified by reference to materiality, Material Adverse Effect or similar
language shall have been true and correct in all material respects as of the
Effective Date and shall be true and correct in all material respects on and as
of the Closing Date (except for representations and warranties which contemplate
a different date which need only be true and correct in all material respects as
of such date) as though such representations and warranties had been made on and
as of such date, and each of the representations and warranties contained in
Article V that are qualified by reference to materiality, Material Adverse
Effect or similar language shall have been true and correct in all respects when
made on the Effective Date and shall be true and correct in all respects on and
as of the Closing Date (except for representations and warranties which
contemplate a different date which need only be true and correct in all respects
as of such date) as though such representations and warranties had been made on
and as of such date;

(b) Seller shall have performed and complied in all material respects with all
covenants and agreements required in this Agreement to be performed or complied
with by it prior to the Closing Date;

(c) there shall not have been instituted or threatened any Legal Proceeding to
enjoin or otherwise prevent or prohibit the consummation of the transactions
contemplated hereby, or any pending or threatened Legal Proceeding seeking
material damages that relate to or arise out of this Agreement or the
consummation of the transactions contemplated hereby or result or could result
in a Material Adverse Effect;

(d) all Required Regulatory Approvals will have been obtained and be in effect
as of the Closing Date, will be final and nonappealable, and will be in form and
substance reasonably acceptable to Purchaser;

(e) Purchaser shall have evidence reasonably satisfactory to Purchaser that all
Encumbrances (other than Permitted Encumbrances) affecting or encumbering the
Assets have been terminated, released or waived, as appropriate;

(f) between the Effective Date and the Closing Date, there will not have
occurred any event, condition or circumstance that, individually or in the
aggregate, has had a Material Adverse Effect that has not been cured by Seller
or waived by Purchaser in accordance with this Agreement;

 

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(g) Seller shall have completed to Purchaser’s reasonable satisfaction all
corrective actions required of Seller that are expressly required to be
performed by Seller as a condition of Closing in the Schedules;

(h) Seller shall have delivered or caused to be delivered each of the following
documents, agreements, instruments and other deliverables:

(i) a duly executed Bill of Sale, in the form attached hereto as Exhibit E;

(ii) duly executed warranty deeds for the Owned Real Property in the form
attached hereto as Exhibit F;

(iii) a duly executed Assignment and Assumption Agreement in the form of Exhibit
H hereto;

(iv) a duly executed assignment and assumption of leases agreements for the Real
Property Leases in forms reasonably acceptable to Purchaser;

(v) motor vehicle titles, separate bills of sale for specific Purchased Assets
as required by any applicable Legal Requirement, and all other documents as are
reasonably necessary to transfer title to the Purchased Assets to Purchaser;

(vi) a duly executed Non-foreign Affidavit as required by the Foreign Investors
in Real Property Tax Act;

(vii) a duly executed Indemnity Escrow Agreement in the form of Exhibit A
hereto;

(vii) certificate of existence of Seller issued by the Office of the Secretary
of State of the State of Washington;

(viii) one or more certificates, dated as of the Closing Date, executed by the
Secretary of the general partner of Seller, without personal liability:
(A) certifying that the resolutions, as attached to such certificate, were duly
adopted by the Board of Directors of Seller’s general partner, authorizing and
approving the execution of this Agreement on behalf of Seller and the
consummation of the transactions contemplated hereby and that such resolutions
remain in full force and effect; (B) certifying that the resolutions, as
attached to such certificate, were duly adopted by a majority in interest of
Seller’s limited partners, authorizing and approving the execution of this
Agreement on behalf of Seller and the consummation of the transactions
contemplated hereby and that such resolutions remain in full force and effect;
(C) certifying as to the incumbency of the person signing this Agreement and any
other documents on behalf of the general partner of Seller; (D) the Certificate
of Formation of Seller (copies of which shall be attached to the Certificate),
certified by the Secretary of State of its state of formation; and (E) the
Partnership Agreement of Seller (copies of which shall be attached to the
Certificate); and,

 

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(ix) a tax clearance certificate from each jurisdiction in which Seller operates
the Business.

9.2 Conditions Precedent to Obligations of Seller.

The obligations of Seller to consummate the transactions contemplated by this
Agreement are subject to the fulfillment or waiver, prior to or on the Closing
Date, of each of the following conditions (any or all of which may be waived by
Seller in whole or in part to the extent permitted by applicable Law):

(a) Each of the representations and warranties contained in Article VI that are
not qualified by reference to materiality or similar language shall have been
true and correct in all material respects when made on the Effective Date and
shall be true and correct in all material respects on and as of the Closing Date
(except for representations and warranties which contemplate a different date
which need only be true and correct in all material respects as of such date) as
though such representations and warranties had been made on and as of such date,
and each of the representations and warranties contained in Article VI that are
qualified by reference to materiality or similar language shall have been true
and correct in all respects when made on the Effective Date and shall be true
and correct in all respects on and as of the Closing Date (except for
representations and warranties which contemplate a different date which need
only be true and correct in all respects as of such date) as though such
representations and warranties had been made on and as of such date;

(b) Purchaser shall have performed and complied in all material respects with
all covenants and agreements required by this Agreement to be performed or
complied with by Purchaser on or prior to the Closing Date;

(c) there shall not have been instituted or threatened any Legal Proceeding to
enjoin or otherwise prevent or prohibit the consummation of the transactions
contemplated hereby, or any pending or threatened Legal Proceeding seeking
material damages that relate to or arise out of this Agreement or the
consummation of the transactions contemplated hereby;

(d) a majority in interest of the limited partners of Seller shall have
consented to the transactions contemplated by this Agreement in accordance with
the terms of Seller’s partnership agreement and applicable securities laws;

(e) [Reserved]; and

(f) Purchaser shall have delivered, or caused to be delivered, to Seller the
following documents, agreements, instruments and other deliverables:

(i) the Purchase Price in accordance with Article III

(ii) a duly executed Indemnity Escrow Agreement in the form attached hereto as
Exhibit A hereto

(ii) a duly executed Assignment and Assumption Agreement in the form attached
hereto as Exhibit H hereto;

 

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(iii) certificate of existence of Purchaser issued by the office of the
Secretary of State of the State of Delaware; and,

(iv) certificate of the Secretary of Purchaser, dated the Closing Date and
certifying: (A) that attached thereto are true and complete copies of all
resolutions authorizing the execution, delivery and performance of this
Agreement, including the consummation of the transactions contemplated hereby,
and that all such resolutions are in full force and effect and are all the
resolutions adopted in connection with the transactions contemplated by this
Agreement, and (B) to the incumbency and specimen signature of each officer of
Purchaser executing this Agreement and/or the Transaction Documents and a
certification by another officer of Purchaser as to the incumbency and signature
of the Secretary of Purchaser.

9.3 Frustration of Closing Conditions.

Neither Seller nor Purchaser may refuse to close on the grounds that a condition
to such party’s obligation to close under Section 9.1 or 9.2, respectively, has
not been satisfied unless the failure to satisfy such condition was caused by
such other party’s material breach of this Agreement.

ARTICLE X

INDEMNIFICATION

10.1 Survival of Representations, Warranties and Covenants.

(a) A claim for indemnification pursuant to Section 10.2 must be made in writing
to Seller on or before the date that is 18 months following the Closing Date,
other than with respect to claims based on a breach of the representations and
warranties relating to ERISA, Taxes, Environmental Laws, or Hazardous
Substances, which must be made in writing to Seller prior to the expiration of
the applicable statute of limitations relating to the matters covered by such
representations and warranties. A claim for indemnification pursuant to
Section 10.3 must be made in writing to Purchaser on or before the date that is
12 months following the Closing Date. Notwithstanding the foregoing or any other
provision to the contrary contained herein, with respect to claims based on the
following, such claim made in writing prior to the expiration of the applicable
statute of limitations relating to the matters covered by such representations
and warranties: (a) based on a breach of the representations and warranties
regarding Seller’s title to the Assets or either Party’s corporate power and
authority or (b) for indemnification brought pursuant to Sections 10.2(a)(i),
10.2(a)(iii), 10.2(a)(iv), 10.2(a)(v), 10.2(a)(vi), 10.2(a)(vii), 10.3(a)(i) or
10.3(a)(iii).

 

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10.2 Indemnification by Seller.

(a) Subject to Section 10.5 hereof, Seller hereby agrees to indemnify and hold
Purchaser and its directors, officers, employees, Affiliates, stockholders,
agents, attorneys, representatives, successors and permitted assigns
(collectively, the “Purchaser Indemnified Parties”) harmless from and against
any and all losses, liabilities, claims, demands, judgments, damages, fines,
suits, actions, costs and expenses (individually, a “Loss” and, collectively,
“Losses”):

(i) Any breach or default in the performance by Seller of any covenant or
agreement of Seller contained in this Agreement or any Transaction Document to
which it is a party;

(ii) Any breach of any representation or warranty made by Seller in this
Agreement, in any Transaction Document to which it is a party or in any
schedule, exhibit, certificate or other instrument delivered by or on behalf of
Seller pursuant this Agreement or any Transaction Document;

(iii) Any liability (other than an Assumed Liability) arising out of or relating
to Seller’s ownership or operation of the Purchased Assets, Business or Systems
prior to the Closing (without regard to whether a claim is asserted before or
after the Closing);

(iv) Any claim that the transactions contemplated by this Agreement violate WARN
or any similar state or local law or any bulk transfer of any jurisdiction;

(v) Any rate refund ordered by a Governmental Entity for periods prior to the
Closing Date;

(vi) The presence, generation, removal or transportation of a Hazardous
Substance on or from any of the Owned Real Property caused by Seller prior to
the Closing Date, including the costs of removal and clean-up of such Hazardous
Substance and other compliance with provisions of Environmental Laws (without
regard to whether a claim is asserted before or after the Closing); and

(vii) Any failure of Seller to perform its obligations in respect of the
Excluded Liabilities.

10.3 Indemnification by Purchaser.

(a) Subject to Section 10.5, Purchaser hereby agrees to indemnify and hold
Seller and its directors, officers, employees, Affiliates, agents, attorneys,
representatives, successors and permitted assigns (collectively, the “Seller
Indemnified Parties”) harmless from and against, and pay to the applicable
Seller Indemnified Parties the amount of, any and all Losses:

(i) Any breach or default in the performance by Purchaser of any covenant or
agreement of Purchaser contained in this Agreement or any Transaction Document
to which it is a party;

(ii) Any breach of any representation or warranty made by Purchaser in this
Agreement, in any Transaction Document to which it is a party or in any
schedule, exhibit, certificate or other instrument delivered by or on behalf of
Purchaser pursuant this Agreement or any Transaction Document; or

 

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(iv) Any failure of Purchaser to perform its obligations in respect of the
Assumed Liabilities.

10.4 Indemnification Procedures.

(a) A claim for indemnification for any matter not involving a third-party claim
may be asserted by prompt notice to the party from whom indemnification is
sought.

(b) In the event that any Legal Proceedings shall be instituted or that any
claim or demand shall be asserted by any third party in respect of which payment
may be sought under Sections 10.2 or 10.3 hereof (regardless of the limitations
set forth in Section 10.5) (an “Indemnification Claim”), the indemnified party
shall promptly cause prompt written notice of the assertion of any
Indemnification Claim of which it has knowledge and that is covered by this
indemnity to be forwarded to the indemnifying party. The failure of the
indemnified party to give reasonably prompt notice of any Indemnification Claim
shall not release, waive or otherwise affect the indemnifying party’s
obligations with respect thereto except to the extent that the indemnifying
party is prejudiced as a result of such failure. The indemnifying party shall
have the right, at its sole option and expense, to be represented by counsel of
its choice, which must be reasonably satisfactory to the indemnified party, and
to defend against, negotiate, settle or otherwise deal with any Indemnification
Claim which relates to any Losses indemnified against by it hereunder, provide
defense, negotiation, settlement or other actions shall not cost or prejudice
the indemnified party. If the indemnifying party elects to defend against,
negotiate, settle or otherwise deal with any Indemnification Claim which relates
to any Losses indemnified against by it hereunder, it shall within 30 days (or
sooner, if the nature of the Indemnification Claim so requires) notify the
indemnified party of its intent to do so. If the indemnifying party elects not
to defend against, negotiate, settle or otherwise deal with any Indemnification
Claim which relates to any Losses indemnified against hereunder, the indemnified
party may defend against, negotiate, settle or otherwise deal with such
Indemnification Claim. If the indemnifying party shall assume the defense of any
Indemnification Claim, the indemnified party may participate, at his or its own
expense, in the defense of such Indemnification Claim. The parties hereto agree
to cooperate fully with each other in connection with the defense, negotiation
or settlement of any such Indemnification Claim. Notwithstanding anything in
this Section 10.4 to the contrary, neither the indemnifying party nor the
indemnified party shall, without the written consent of the other party, settle
or compromise any claim in which any relief other than the payment of money
damages is sought against any indemnified party or, in the case of any claim
relating to an indemnified party’s liability for any Tax, if the effect of such
settlement or compromise would be to increase the indemnified party’s liability
for the payment of any Tax unless the indemnified party consents in writing to
such settlement or compromise. If the indemnifying party makes any payment on
any Indemnification Claim, the indemnifying party shall be subrogated, to the
extent of such payment, to all rights and remedies of the indemnified party to
any insurance benefits or other claims of the indemnified party with respect to
such Indemnification Claim.

(c) After any final decision, judgment or award shall have been rendered by a
Governmental Entity of competent jurisdiction and the expiration of the time in
which to appeal therefrom, or a settlement shall have been consummated, or the
indemnified party and the indemnifying party shall have arrived at a mutually
binding agreement with respect to an

 

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Indemnification Claim hereunder, the indemnified party shall forward to the
indemnifying party notice of any sums due and owing by the indemnifying party
pursuant to this Agreement with respect to such matter.

10.5 Certain Limitations on Indemnification.

(a) Except as set forth in Section 10.5(b) and (c), notwithstanding the
provisions of this Article X, neither Seller nor Purchaser shall have any
indemnification obligations for Losses under Sections 10.2 or 10.3, (i) for any
individual item, or group of items arising out of or related to the same event
or circumstances or series of related events or circumstances, where the Loss
relating thereto is less than Five Thousand and no/100 Dollars ($5,000.00), at
which point the indemnifying party shall become liable for the entire amount of
the Loss, and not just the amount in excess of Five Thousand and no/100 Dollars
($5,000.00) (the “Sub-Basket”) and (ii) unless the aggregate amount of all
Losses (following the application of clause (i)) exceeds Ten Thousand Dollars
($10,000.00) (the “Basket”), and then only to the extent of such amounts in
excess of the Basket.

(b) Subject to Section 10.5(c), in no event shall the aggregate indemnification
to be paid by Seller under Section 10.2(a) or Purchaser under Section 10.3(a)
exceed the Escrow Funds (the “Cap”).

(c) Notwithstanding anything in this Article X, the Cap, Basket and Sub-Basket
limitations set forth in Sections 10.5(a) and 10.5(b) shall not apply to claims
for indemnification in respect of Losses related to or arising out of the
(i) Specified Representations, (ii) Post Closing Covenants (iii) third party
claims or (iv) any claims for indemnification in respect of Losses related to or
arising out of fraud, willful misconduct or intentional misrepresentation.

10.6 Calculation of Losses.

(a) The amount of any Losses for which indemnification is provided under this
Article X shall be net of any amounts actually recovered or recoverable by the
indemnified party under insurance policies or otherwise with respect to such
Losses (net of any expenses, other than Tax, incurred in connection with such
recovery). Purchaser shall use its commercially reasonable efforts to recover
under insurance policies for any Losses prior to seeking indemnification under
this Agreement.

(b) No party shall, in any event, be liable to any other Person for any
consequential, incidental, indirect, special or punitive damages of such other
Person, including loss of revenue, income or profits, diminution of value or
loss of business reputation or opportunity relating to the breach or alleged
breach hereof (other than consequential, incidental, indirect, special or
punitive damages (including loss of revenue, income or profits, diminution of
value or loss of business reputation or opportunity relating to the breach or
alleged breach hereof) owing to a third party) to the extent such loss of
revenue, income or profits, diminution of value or loss of business reputation
or opportunity is determined to be consequential, incidental, indirect, special
or punitive damages; provided, however, that such limitations with respect to
lost profits or diminution of value shall not limit Seller’s right to recover
contract damages in connection with Purchaser’s failure or refusal to close in
violation of this Agreement.

 

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(c) The amount of any Loss for which indemnification is provided under this
Article X shall not be reduced to take into account any tax benefit realized by
the indemnified party arising from the incurrence or payment of any such Loss.

10.7 Tax Treatment of Indemnity Payments.

Seller and Purchaser agree to treat any indemnity payment made pursuant to this
Article X as an adjustment to the Purchase Price for federal, state, local and
foreign income tax purposes unless otherwise required by Law.

10.8 Exclusive Remedy.

Except with respect to claims based on fraud, or claims for injunctive or other
equitable relief from and after the Closing, the sole and exclusive remedy for
any breach or failure to be true and correct, or alleged breach or failure to be
true and correct, of any representation or warranty or any covenant or agreement
in this Agreement or the other Transaction Documents, shall be indemnification
in accordance with this Article X. In furtherance of the foregoing, each of the
parties hereby waive, to the fullest extent permitted by applicable Law, any and
all other rights, claims and causes of action (including rights of
contributions, if any) known or unknown, foreseen or unforeseen, which exist or
may arise in the future, that it may have against Seller or Purchaser, as the
case may be, arising under or based upon any federal, state or local Law
(including any such Law relating to environmental matters or arising under or
based upon any securities Law, common Law or otherwise).

ARTICLE XI

MISCELLANEOUS

11.1 Tax Matters.

(a) Each of Purchaser and Seller will cooperate fully, as and to the extent
reasonably requested by the other Party, in connection with the filing of Tax
Returns and any audit, litigation or other proceeding with respect to Taxes.
Such cooperation will include the retention and, upon the other Party’s request,
the provision of records and information that are reasonably relevant to any
such audit, litigation or other proceeding and making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder. Purchaser and Seller will (i) retain all books
and records with respect to Tax matters pertinent to the Purchased Assets
relating to any taxable period beginning before the Closing Date until the
expiration of the statute of limitations (and, to the extent notified by
Purchaser or Seller, any extensions thereof) of the respective taxable periods,
(ii) abide by all record retention agreements entered into with any taxing
authority, and (iii) give the other Party reasonable written notice prior to
transferring, destroying or discarding any such books and records and, if the
other Party so requests, allow the other Party to take possession of such books
and records. Purchaser and Seller, upon request, will use their commercially
reasonable efforts to obtain (or cause their respective Affiliates to obtain)
any

 

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certificate or other document from any authority or any other Person as may be
necessary to mitigate, reduce or eliminate any Tax that could be imposed
(including with respect to the transactions contemplated hereby). Seller will
further obtain, prior to Closing, a tax clearance certificate from each
jurisdiction in which Seller operates the Business.

(b) Payment of Sales, Use or Similar Taxes. Purchaser and Seller shall each be
responsible for (and shall indemnify and hold harmless each other and their
directors, officers, employees, Affiliates, agents, successors and permitted
assigns against) 50% of any sales taxes applicable to the Purchased Assets and
for all other applicable sales, use, stamp, documentary, filing, recording,
transfer or similar fees or taxes or governmental charges (including real
property transfer gains taxes, UCC 3 filing fees, FAA, ICC, DOT, real estate and
motor vehicle registration, title recording or filing fees and other amounts
payable in respect of transfer filings) in connection with the transactions
contemplated by this Agreement (other than taxes measured by or with respect to
income imposed on Seller or its Affiliates).

(c) Proration. All real property taxes, personal property taxes, or ad valorem
obligations and similar recurring taxes and fees on the Purchased Assets for
taxable periods beginning on or before, and ending after, the Closing Date,
shall be prorated between Purchaser and Seller as of the close of business on
the Closing Date on a daily basis and, for all purposes of this Agreement, such
Taxes shall be allocated between the pre-closing tax period and post-closing tax
period accordingly. Seller shall be responsible for all such taxes and fees on
the Purchased Assets accruing under such daily proration methodology during any
period up to and including the day prior to the Closing Date. Purchaser shall be
responsible for all such taxes and fees with respect to the Purchased Assets
accruing under such daily proration methodology during any period beginning on
or after the Closing Date. With respect to taxes described in this
Section 11.1(c), Seller shall timely file all Tax Returns due before the Closing
Date with respect to such Taxes and Purchaser shall prepare and timely file all
Tax Returns due after the Closing Date with respect to such Taxes. If one party
remits to the appropriate Taxing Authority payment for taxes, which are subject
to proration under this Section 11.1(c) and such payment includes the other
party’s share of such Taxes, such other party shall promptly reimburse the
remitting party for its share of such Taxes.

11.2 Expenses.

Except as otherwise provided in this Agreement, each of Seller and Purchaser
shall bear its own expenses incurred in connection with the negotiation and
execution of this Agreement and each other agreement, document and instrument
contemplated by this Agreement and the consummation of the transactions
contemplated hereby and thereby. Notwithstanding the foregoing, Purchaser and
Seller shall each be responsible for 50% of any filing fees lawfully payable to
or at the request of any Governmental Entity in connection with this Agreement,
the Seller Documents, the Purchaser Documents and the consummation of the
transactions contemplated hereby and thereby.

11.3 Submission to Jurisdiction; Consent to Service of Process; Waiver of Jury
Trial.

EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL
BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY.

 

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11.4 Entire Agreement; Amendments and Waivers.

This Agreement (including the schedules and exhibits hereto), the Transaction
Documents and the Confidentiality Agreement represent the entire understanding
and agreement between the parties hereto with respect to the subject matter
hereof and thereof. This Agreement can be amended, supplemented or changed, and
any provision hereof can be waived, only by written instrument making specific
reference to this Agreement signed by the party against whom enforcement of any
such amendment, supplement, modification or waiver is sought. No action taken
pursuant to this Agreement, including any investigation by or on behalf of any
party, shall be deemed to constitute a waiver by the party taking such action of
compliance with any representation, warranty, covenant or agreement contained
herein. The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a further or continuing waiver of
such breach or as a waiver of any other or subsequent breach. No failure on the
part of any party to exercise, and no delay in exercising, any right, power or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of such right, power or remedy by such party preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.

11.5 Governing Law.

This Agreement shall be governed by and construed in accordance with the laws of
the State of Washington applicable to contracts made and performed in such State
without giving effect to the choice of law principles of such State that would
require or permit the application of the laws of another jurisdiction.

11.6 Notices.

All notices and other communications under this Agreement shall be in writing
and shall be deemed given (i) when delivered personally by hand, (ii) when sent
by facsimile (with written confirmation of transmission), (iii) one business day
following the day sent by overnight courier or (iv) three days after mailing by
certified mail, in each case at the following addresses and facsimile numbers
(or to such other address or facsimile number as a party may have specified by
notice given to the other party pursuant to this provision):

If to Seller, to:

c/o Northland Communications Corporation

101 Stewart Street, Suite 700

Seattle Washington, 98101

Facsimile: (206) 748-5061

Attention: Gary S. Jones, President

If to Purchaser, to

 

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Northland Cable Television, Inc.

101 Stewart Street, Suite 700

Seattle Washington, 98101

Facsimile: (206) 748-5061

Attention: Gary S. Jones, President

11.7 Severability.

If any term or other provision of this Agreement is invalid, illegal, or
incapable of being enforced by any law or public policy, all other terms or
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal, or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby are consummated as originally contemplated to the greatest extent
possible.

11.8 Binding Effect; Assignment.

This Agreement will be binding upon Seller and Purchaser and their respective
successors and assigns. No right, benefit or obligation under this Agreement may
be assigned by either Party without the prior written consent of the other
Party, except that Purchaser will have the right, without the consent of Seller
and without being released from any of its obligations hereunder, (i) to
transfer, pledge or assign this Agreement as security for any financing or
(ii) transfer or assign this Agreement, in whole or in part, to any Affiliate of
Purchaser. In the event of an assignment by Purchaser to an Affiliate, such
assignee will execute and deliver to Seller an agreement containing the
assumption by such assignee of the performance and observance of each covenant
and condition of this Agreement to be performed or observed by Purchaser.

11.9 Non-Recourse.

No past, present or future director, officer, employee, incorporator, member,
partner, stockholder, Affiliate, agent, attorney or representative of Seller or
its Affiliates shall have any liability for any obligations or liabilities of
Seller under this Agreement or the Seller Documents of or for any claim based
on, in respect of, or by reason of, the transactions contemplated hereby and
thereby.

11.10 Specific Performance.

In the event of failure or threatened failure by a party hereto to comply with
the terms of this Agreement, any other party shall be entitled to an injunction
restraining such failure or threatened failure and to enforcement of this
Agreement by a decree of specific performance requiring compliance with this
Agreement.

 

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11.11 Counterparts.

This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.

11.12 No Third Party Beneficiaries.

This Agreement shall not confer any rights or remedies upon any person other
than the Purchaser and the Seller and their respective successors and permitted
assigns.

11.13 Attorneys’ Fees.

If either Seller or Purchaser initiates any legal action or lawsuit against the
other involving this Agreement, the prevailing party in such action or suit
shall be entitled to receive reimbursement from the other party for all
reasonable attorneys’ fees and other costs and expenses incurred by the
prevailing party in respect of that litigation, including any appeal, and such
reimbursement may be included in the judgment or final order issued in such
proceeding.

11.14 Covenant Not To Sue and Nonrecourse to Partners.

(a) Purchaser agrees that notwithstanding any other provision in this Agreement,
any agreement, instrument, certificate or document entered into pursuant to or
in connection with this Agreement or the transactions contemplated herein or
therein and any other Transaction Document and any rule of law or equity to the
contrary, to the fullest extent permitted by law, Seller’s obligations and
liabilities under all Transaction Documents and in connection with the
transactions contemplated therein shall be nonrecourse to all general and
limited partners of Seller. As used herein, the term “nonrecourse” means that
the obligations and liabilities are limited in recourse to the assets of Seller
(for those purposes, any capital contribution obligations of the general and
limited partners of Seller or any negative capital account balances of such
partners shall not be deemed to be assets of Seller) and are not guaranteed
directly or indirectly by, or the primary obligations of, any general or limited
partner of Seller, and neither Seller nor any general or limited partner or any
incorporator, stockholder, officer, director, partner, employee or agent of
Seller or of any general or limited partner of any successor partnership or
trust, either directly or indirectly, shall be personally liable in any respect
for any obligation or liability of Seller under any Transaction Document or any
transaction contemplated therein.

(b) Purchaser hereby covenants for itself, its successors and assigns that it,
its successors and assigns will not make, bring, claim, commence, prosecute,
maintain, cause or permit any action to be brought, commenced, prosecuted,
maintained, either at law or equity, in any court of the United States or any
state thereof against any general or limited partner of Seller or any
incorporator, stockholder, officer, director, partner, employee or agent of
Seller or of any general or limited partner of Seller for (a) the payment of any
amount or the performance of any obligation under any Transaction Document or
(b) the satisfaction of any liability arising in connection with any such
payment or obligation or otherwise, including without limitation, liability
arising in law for tort (including, without limitation, for active and passive
negligence, negligent misrepresentation and fraud), equity (including, without
limitation, for indemnification and contribution) and contract (including,
without limitation, monetary damages for the breach of representation or
warranty or performance of any of the covenants or obligations contained in any
Transaction Document or with the transactions contemplated herein or therein).

[signature page follows]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective authorized officers as of the date first written above.

 

NORTHLAND CABLE PROPERTIES EIGHT LIMITED PARTNERSHIP By:   Northland
Communications Corporation Its:   General Partner By:  

/S/ Richard I. Clark

  Name: Richard I. Clark   Title: Executive Vice President NORTHLAND CABLE
TELEVISION, INC. By:  

/S/ Gary S. Jones

  Name: Gary S. Jones   Title: President

ASSET PURCHASE AGREEMENT