Document:

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                                                                   EXHIBIT 10.40

                            ASSET PURCHASE AGREEMENT

                                     BETWEEN

              NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP

                                       AND

                        CEQUEL III COMMUNICATIONS I, LLC

                                      DATED

                                FEBRUARY 2, 2005

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                            ASSET PURCHASE AGREEMENT

            THIS ASSET PURCHASE AGREEMENT is dated February 2, 2005 by and
between and NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP, a Washington
limited partnership ("SELLER" or "NCP-7"), and CEQUEL III COMMUNICATIONS I, LLC,
a Delaware limited liability company ("BUYER").

                                    RECITALS:

            A. Seller owns and operates cable television system serving certain
communities in Texas (as set forth more particularly in Schedule 1.28) and,

            B. Seller desires to sell, and Buyer wishes to buy, substantially
all of Seller's assets used in the operation of the System, as such term is
defined in Section 1.28, and the business related thereto (collectively the
"BROADBAND BUSINESS") for the price and on the terms and conditions set forth in
this Agreement.

                                   AGREEMENTS:

            In consideration of the above recitals and the covenants and
agreements contained herein, Buyer and Seller agree as follows:

1.    DEFINED TERMS

            The following terms shall have the following meanings in this
Agreement:

      1.1. "ACCOUNTS RECEIVABLE" means the rights of Seller to payment for
services rendered by Seller (including, without limitation, those billed to
subscribers of the System and those for services and advertising time provided
by Seller) which have been unpaid as of the Closing Date.

      1.2. "AGREEMENT" means this Asset Purchase Agreement.

      1.3. "ASSETS" means all the tangible and intangible assets owned by Seller
and used in connection with the conduct of the business or operations of the
Systems, but excluding those specified in Section 2.2.

      1.4 "CABLE ACT" means Title VI of the Communications Act of 1934, as
amended, 47 U.S.C. Section 151 et seq., and all other provisions of the Cable
Communications Policy Act of 1984, Pub. L. No. 98-549, and the Cable Television
Consumer Protection and Competition Act of 1992, Pub. L. No. 102-385, and the
Telecommunications Act of 1996, Pub. L. No. 104-104, as such statutes may be
amended from time to time, and the rules and regulations promulgated thereunder,
as in effect from time to time.

      1.5. "CLOSING" means the consummation of the transactions contemplated by
this Agreement in accordance with the provisions of Section 7.

      1.6. "CLOSING DATE" means the date of the Closing specified in Section 7.

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      1.7. "CODE" means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder, or any subsequent legislative enactment thereof, as in
effect from time to time.

      1.8. "COMPENSATION ARRANGEMENT" means any written plan or compensation
arrangement other than an Employee Plan or a Multi-employer Plan that provides
to employees of Seller employed at the System any compensation or other
benefits, whether deferred or not, in excess of base salary or wages and
excluding overtime pay, including, but not limited to, any bonus or incentive
plan, deferred compensation arrangement, stock purchase plan, severance pay plan
and any other perquisites and employee fringe benefit plan.

      1.9. "CONSENTS" means the consents, permits or approvals of governmental
authorities and other third parties (including Seller's lenders) listed in
Schedule 3.8.

      1.10. "CONTRACTS" means the agreements listed in Schedule 3.7,
subscription agreements with customers for the cable services provided by the
System, miscellaneous service agreements terminable by Seller at will without
penalty, agreements involving liabilities less than or equal to $10,000 (in the
aggregate), agreements involving material non-monetary obligations, and
agreements entered into by Seller in the ordinary course of business of the
System between the date hereof and the Closing Date in accordance with the
provisions hereof.

      1.11. "EMPLOYEE PLAN" means any written pension, retirement,
profit-sharing, deferred compensation, vacation, severance, bonus, incentive,
medical, vision, dental, disability, life insurance or any other employee
benefit plan as defined in Section 3(3) of ERISA (other than a Multi-employer
Plan) to which Seller contributes or which Seller sponsors or maintains or by
which Seller otherwise is bound, that provides benefits to employees of Seller
employed at the System.

      1.12. "ENVIRONMENTAL LAWS" shall mean the following: (a) Clean Air Act (42
U.S.C. Section 7401, et seq.); (b) Clean Water Act (33 U.S.C. Section 1251 et
seq.); (c) Resource Conservation and Recovery Act (42 U.S.C. Section 6901, et
seq.); (d) Comprehensive Environmental Response, Compensation and Liability Act
of 1980 (42 U.S.C. Section 9601, et seq.; (e) Safe Drinking Water Act (42 U.S.C.
Section 300f et seq.); (f) Toxic Substances Control Act (15 U.S.C. Section 2601,
et seq.); (g) Rivers and Harbors Act of 1899 (33 U.S.C. Section 401, et seq.);
(h) Endangered Species Act of 1973 (16 U.S.C. Section 1531, et seq.); (i)
Occupational Safety and Health Act of 1970 (29 U.S.C. Section 651, et seq.);and
(j) other federal, state or local laws related to the environment; all as
amended.

      1.13. "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and the regulations thereunder, as in effect from time to time.

      1.14. "FAA" means the Federal Aviation Administration.

      1.15. "FCC" means the Federal Communications Commission.

      1.16. "FRANCHISES" means all franchises, and franchise applications (if
any), granted to Seller by any Franchising Authorities, including all amendments
thereto and modifications thereof.

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      1.17. "FRANCHISING AUTHORITIES" means all governmental authorities which
have issued franchises relating to the operation of the System or before which
are pending any franchise applications filed by Seller relating to the operation
of the System.

      1.18 "GENERAL PARTNER" means Northland Communications Corporation, a
Washington Corporation, the acting general partner of NCP-7 or any other entity
acting in that capacity under the Limited Partnership Agreement of NCP-7.

      1.19 "KNOWLEDGE OF SELLER" means the actual knowledge of a particular
matter of certain of the executive officers of Seller's managing general partner
or on-site general manager of the System, each of whom is named on Schedule
1.19.

      1.20. "MATERIAL ADVERSE EFFECT" means a material adverse effect on the
operations, assets or financial condition of any of the System, other than (a)
matters affecting the cable television industry generally (including, without
limitation, legislative, regulatory or litigation matters), (b) matters relating
to or arising from local or national economic conditions (including, without
limitation, financial and capital markets) and (c) any changes resulting from or
relating to the taking of any action contemplated by this Agreement.

      1.21. "MULTI-EMPLOYER PLAN" means a plan, as defined in ERISA Section
3(37) or Section 4001(a)(3), to which Seller or any trade or business which
would be considered a single employer with Seller under Section 4001(b)(1) of
ERISA contributed, contributes or is required to contribute that provides
benefits to employees of Seller employed at the System.

      1.22. "PERMITTED ENCUMBRANCES" means any of the following liens or
encumbrances: (a) landlord's liens and liens for current taxes, assessments and
governmental charges not yet due or being contested in good faith by appropriate
proceedings; (b) statutory liens or other encumbrances that are minor or
technical defects in title that do not individually or in the aggregate
materially affect the value, marketability or utility of the Assets as presently
utilized; (c) such liens, liabilities or encumbrances as are Assumed
Liabilities; (d) leased interests in property leased to others and disclosed on
Schedule 3.5; (e) restrictions set forth in, or rights granted to Franchising
Authorities as set forth in, the Franchises or applicable laws relating thereto;
(f) zoning, building or similar restrictions, easements, rights-of-way,
reservations of rights, conditions or other restrictions relating to or
affecting the Real Property, that do not materially interfere with the use of
such Real Property in the operation of the Systems as presently conducted; (g)
as to Real Property, all matters disclosed in Schedule 3.5 other than liens and
encumbrances referred to in clause (h) of this Section 1.22; and (h) any other
liens or encumbrances that are identified in Section 3.5 that relate to
liabilities and obligations that are to be discharged in full at Closing or that
will be removed prior to or at Closing.

      1.23. "PERSONAL PROPERTY" means all of the machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant, inventory,
spare parts, supplies and other tangible and intangible personal property,
including, without limitation, the Franchises, the Contracts and the Accounts
Receivable, that are owned or leased by Seller and used, useful or held for use
as of the date hereof in the conduct of the business or operations of the
System, plus such additions thereto and deletions therefrom arising in the
ordinary course of business and permitted by this Agreement between the date
hereof and the Closing Date.

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      1.24. "REAL PROPERTY" means all of the real property interests of Seller,
including, without limitation, fee interests in real estate (together with the
buildings and other improvements located thereon), leasehold interests in real
estate, easements, licenses, rights to access, rights-of-way and other real
property interests that are (a) leased by Seller and used as of the date hereof
in the business or operations of the System, or (b) owned by Seller and used as
of the date hereof in the business or operations of the System, plus such
additions thereto and deletions therefrom arising in the ordinary course of
business and permitted by this Agreement between the date hereof and the Closing
Date.

      1.25. RESERVED.

      1.26. "SUBSCRIBER" means an active customer (as hereinafter defined) of
the System who subscribes for basic cable service in a single household
(excluding "second connections" and any account duplication), commercial
establishment or multiple dwelling unit ("MDU") (including motels and hotels)
and has paid the applicable full non-discounted rate for at least one (1)
month's basic cable service (including any applicable deposit and installation
charges); provided, that the number of customers in an MDU or commercial
establishment that obtains service on a "bulk-rate" basis shall be determined by
dividing the gross bulk-rate revenue for basic cable service or expanded basic
service (but not revenues from tier or premium services, installation or
converter rental) attributable to such MDU or commercial establishment in the
System by Seller's standard rate for that level of basic service or expanded
basic, as applicable, in the System. For purposes hereof, an "active customer"
means a customer whose account does not have an outstanding balance (other than
an amount of $5.00 or less) more than sixty (60) days past due (with an account
being past due one day after the first day of the period to which the applicable
billing relates), does not have a disconnect pending, has not been obtained
during the twelve months proceeding any relevant date of computation of the
number of subscribers by offers or promotions, other than offers or promotions
listed in Schedule 5.1(d) ,or does not come within the definition of
"Subscriber" because such account (or any part thereof) has been compromised or
written off other than in the ordinary course consistent with past practices.

      1.27 "SUPERIOR PROPOSAL" means any bona fide written offer made by a third
party to consummate a tender offer, exchange offer, merger, recapitalization,
reclassification, business combination, consolidation or similar transaction
which would result in such third party (or in the case of a direct merger
between such third party and the Seller, stockholders of such third party)
owning, directly or indirectly, 40% or more of the voting power of the Seller
then outstanding (or of the surviving entity in a merger) or all or
substantially all of the assets of the Seller, which the General Partner
determines in its good faith judgment (following consultation with outside
counsel) (i) to be more favorable to the Seller's partners from a financial
point of view than the transaction contemplated by this Agreement taking into
account all of the terms and conditions of such proposal and this Agreement
(including any changes to the terms of this Agreement proposed by Buyer in
response to such Superior Proposal or otherwise), and (ii) to be reasonably
capable of being completed, taking into account all legal, financial, regulatory
and other aspects of the proposal.

      1.28. "SYSTEM" means that cable television system owned and operated by
Seller and listed by headend and community on Schedule 1.28.

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      1.29 "TAKEOVER PROPOSAL" means (i) any inquiry proposal or offer from any
person relating to, or that would reasonably be expected to lead to, any direct
or indirect acquisition or purchase, in one transaction or a series of
transactions, of all or any part of the Assets or of the General Partnership
interest in Seller or more than 10% of the limited partnership interests, any
tender offer or exchange offer that if consummated would result in any such
acquisition, or any merger, consolidation, business combination,
recapitalization, reclassification, share exchange, liquidation, dissolution or
similar transaction or series of transactions involving the Seller, other than
the transactions contemplated hereby.

      1.30. LIST OF ADDITIONAL DEFINITIONS. The following is a list of some
additional terms used in this Agreement and a reference to the Section hereof in
which such term is defined:

<TABLE>
<CAPTION>
Term                               Section
----                               -------
<S>                                <C>
Acquisition Agreement              5.16
Adverse Recommendation Change      5.16
Assumed Liabilities                2.6
Broadband Business                 Recital B
Buyer's 401(k) Plan                5.10.5
Claimant                           9.4.1
Copyright Act                      3.18.2
Deductible                         9.5.1
Deposit                            2.3
Escrow Agent                       2.3
Escrow Agreement                   2.3
Excluded Assets                    2.2
Final Report                       2.5.7
Floor                              6.2.4
Force Majeure Event                2.5.5
Holdback                           2.4.2
Indemnifying Party                 9.4.1
Likely Superior Proposal           5.16
MDU                                1.26
Monthly Reporting Date             5.17
New Buyer Proposal                 5.16
Notice of Superior Proposal        5.16
Preliminary Report                 2.5.6
</TABLE>

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<TABLE>
<S>                                <C>
Purchase Price                     2.4
Seller's 401(k) Plan               5.10.5
Seller's Financial Statements      3.10
Taxes                              3.13
Termination Fee                    8.2.3
Transaction Document               10.16.1
Transferred Employees              5.10.1
</TABLE>

2.    SALE AND PURCHASE OF ASSETS

      2.1. AGREEMENT TO SELL AND PURCHASE. Subject to the terms and conditions
set forth in this Agreement, Seller hereby agrees to sell, transfer and deliver
to Buyer on the Closing Date, and Buyer agrees to purchase from Seller on the
Closing Date, all of the Assets, free and clear of any claims, liabilities,
mortgages, liens, pledges, conditions, charges or encumbrances of any nature
whatsoever except for Permitted Encumbrances, which Assets include the
following:

            2.1.1. the Personal Property;

            2.1.2. the Real Property;

            2.1.3. the Franchises;

            2.1.4. the Contracts;

            2.1.5. the Accounts Receivable;

            2.1.6. all of Seller's technical information and data, machinery and
equipment warranties, maps, computer discs and tapes, plans, diagrams,
blueprints and schematics, including filings with the Franchising Authorities
and the FCC relating to the System (other than the materials described in
Section 2.2 hereof);

            2.1.7 all payments and sums deposited or advanced by Seller to a
landlord, utility, governmental agency or any other party as a security deposit
or in exchange for initiation of a service, other than performance bonds or
payments received related to programming;

            2.1.8 subject to Section 2.2, all books and records relating to the
business or operations of the Systems, customer records and all records required
by the Franchising Authorities to be kept, subject to the right of Seller to
have such books and records made available to Seller for a period of three years
from the Closing Date; and

            2.1.9. the going concern value and, subject to Section 2.2.5, any of
Seller's other intangible assets, if any, with respect to the System.

      2.2. EXCLUDED ASSETS. The Assets shall exclude the following assets (the
"EXCLUDED ASSETS"):

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            2.2.1. Seller's cash on hand, (other than petty cash for which an
adjustment shall be made under Section 2.5), as of the Closing Date and all
other cash in any of Seller's bank or savings accounts, including, without
limitation, customer advance payments and deposits; any and all bonds, surety
instruments, insurance policies and all rights and claims thereunder, letters of
credit or other similar items and any cash surrender value in regard thereto,
and any stocks, bonds, certificates of deposit and similar investments;

            2.2.2. Any books and records that Seller is required by law to
retain and any correspondence, memoranda, books of account, tax reports and
returns and the like related to the System other than those described in Section
2.1.8, subject to the right of Buyer to have access to and to copy for a
reasonable period, not to exceed three years from the Closing Date, and 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;

            2.2.3. Any claims, rights and interest in and to any refunds of
federal, state or local franchise, income or other taxes or fees of any nature
whatsoever for periods prior to the Closing Date including, without limitation,
fees paid to the U.S. Copyright Office or any causes of action relating to such
refunds;

            2.2.4. All programming agreements and retransmission consent
agreements of Seller, including those relating to or benefiting the System.

            2.2.5. All trademarks, trade names, service marks, service names,
logos and similar proprietary rights of Seller or its affiliates, whether or not
used in the business of the System;

            2.2.6. Except as specifically set forth herein, any Employee Plan,
Compensation Arrangement or Multi-employer Plan;

            2.2.7. All rights to receive fees or services from any affiliate of
Seller other than fees for services, if any, rendered by Buyer after Closing;

            2.2.8 Any and all assets and rights of Seller unrelated to the
System;

            2.2.9. All equipment, software, licenses and agreements related to
Seller's customer billing system;

            2.2.10. Any contracts, agreements or other arrangements between
Seller and any affiliate of Seller;

            2.2.11 Those choses in action of Seller whether or not related to
the System of the type set forth on Schedule 2.2.11, which shall exclude such
choses in action that relate solely to the System and which accrue after
Closing; and

            2.2.12. The assets listed on Schedule 2.2.12

      2.3. EARNEST MONEY DEPOSIT. Upon execution and delivery of this Agreement
by Seller and Buyer, Buyer shall deliver to U.S. Bank National Association (the
"ESCROW AGENT")

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the amount of ONE HUNDRED THOUSAND DOLLARS AND 00/100 ($100,000.00) (the
"DEPOSIT"), to secure the obligations of Buyer to close under this Agreement.
The Deposit shall be held in an account and applied pursuant to the terms of
that certain Escrow Agreement, substantially in the form attached hereto as
Exhibit A ("ESCROW AGREEMENT"), to be executed concurrently herewith by Buyer,
Seller and Escrow Agent. Upon the Closing, the amount of the Deposit, together
with interest thereon, shall be delivered to Seller and credited against the
Purchase Price. In the event of a termination of this Agreement, the Deposit
together with interest therein shall be paid in accordance with Section 8.2
hereof.

      2.4. PURCHASE PRICE. The purchase price for the Assets shall be EIGHT
MILLION FIVE HUNDRED THOUSAND DOLLARS AND 00/100 ($8,500,000.00) (the "PURCHASE
PRICE"), and shall be paid by Buyer to Seller at the Closing as follows:

            2.4.1. Release to Seller of the Deposit together with the interest
therein in accordance with the provisions of the Escrow Agreement; and

            2.4.2 Buyer shall deliver to the Escrow Agent for deposit into an
escrow account an amount equal to EIGHT HUNDRED FIFTY THOUSAND DOLLARS AND
00/100 ($850,000.00) (the "HOLDBACK") to secure Seller's obligations under
Section 9.2. The Holdback shall be held in an escrow account and applied
pursuant to the terms of the Escrow Agreement. On the eighteen month anniversary
of Closing, the Holdback, together with interest thereon, then remaining in the
escrow account less any payments due to Buyer or pending claims made by Buyer
pursuant to Section 9.4 together with interest attributable thereto, shall be
delivered to Seller.

            2.4.3. Subject to credits for the Deposit and the Holdback, together
with interest thereon, and subject to adjustments and prorations set forth in
Section 2.5 below, by wire transfer of the balance of the Purchase Price in
immediately available funds to Seller.

      2.5. ADJUSTMENTS AND PRORATIONS.

            2.5.1. All revenues, expenses and other liabilities arising from the
System up until midnight on the day prior to 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 Assets,
salesperson advances, property and equipment rentals, applicable copyright or
other fees, sales and service charges, taxes (except for taxes arising from the
transfer of the Assets hereunder), and similar prepaid and deferred items, shall
be prorated between Buyer 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 or operations of the
System for the period prior to the Closing Date, and Buyer shall be responsible
for all expenses, costs and obligations and entitled to all revenues allocable
to the conduct of the business or operations of the System on the Closing Date
and for the period thereafter.

            2.5.2. The Purchase Price shall be increased by an amount equal to
(a) 98% of the face amount of all cable service customer Accounts Receivable
that are outstanding 30 days or less from the first day of the period to which
any outstanding bill relates, and (b) 90% of the

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face amount of all cable service customer Accounts Receivable that are
outstanding more than 30 but fewer than 61 days from the first day of the period
to which any outstanding bill relates.

            2.5.3. RESERVED.

            2.5.4. The 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 agency or any other party as a security
deposit or in exchange for initiation of a service and which will inure to the
benefit of Buyer.

            2.5.5. The Purchase Price shall be reduced by an amount equal to (a)
any customer advance payments (i.e., customer payments received by Seller prior
to the Closing but relating to service to be provided by Buyer after the
Closing) and deposits (including any interest owing thereon), (b) except as set
forth in Section 2.5.4, above, any other advance payments (e.g., advertising
payments received by Seller prior to the Closing but relating to service to be
provided by Buyer after the Closing), and (c) the product of $2,291 and the
number, if any, by which 3,710 exceeds the actual number of Subscribers in
Systems. Notwithstanding, if the System loses fifty (50) or more subscribers in
the thirty (30) days prior to Closing due to a Force Majeure Event, Seller may
delay Closing up to thirty (30) days to engage in attempts to remediate the
event(s) or circumstance(s) that resulted in the loss. For purposes of this
Section 2.5.5, "FORCE MAJEURE EVENT" shall be defined to mean fire, earthquake,
flood, labor disputes, utility curtailments, power failures, explosions, civil
disturbances, hurricanes, tropical storms, tornadoes, and other similar events
that are outside of the control of Seller.

            2.5.6. At least ten (10) business days prior to the Closing, Seller
will deliver to Buyer a report with respect to the System (the "PRELIMINARY
REPORT"), showing in detail the preliminary determination of the adjustments
referred to in this Section 2.5, 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 adjustments
to the Purchase Price 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 System
(showing sums due and their respective aging as of the Closing Date). The
parties shall negotiate in good faith to resolve any dispute and to reach an
agreement prior to the Closing Date on such estimated adjustments as of the
Closing Date or thereafter in accordance with Section 2.5.7 below. The
adjustment shown in the Preliminary Report, as adjusted by agreement of the
parties, will be reflected as an adjustment to the Purchase Price payable at the
Closing.

            2.5.7. Within ninety (90) days after the Closing Date, Buyer shall
deliver to Seller a report with respect to the Systems (the "FINAL REPORT"),
showing in detail the final determination of any adjustments which were not
calculated as of the Closing Date and containing any corrections to the
Preliminary Report, together with any documents substantiating the final
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 2.5,
Seller shall, within thirty (30) days after its receipt of the Final Report,
provide to Buyer its written statement of any discrepancies believed to exist.
Buyer and Seller shall use good faith efforts to jointly resolve the
discrepancies within

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fifteen (15) days of Buyer'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 Buyer and
Seller cannot resolve the discrepancies to their mutual satisfaction within such
15-day period, Buyer and Seller shall, within the following ten (10) days,
jointly designate Deloitte & Touche LLP's Seattle office ("Deloitte") to review
the Final Report together with Seller's discrepancy statement and any other
relevant documents. Deloitte shall report its conclusions as to adjustments
pursuant to this Section 2.5 which shall be conclusive on all parties to this
Agreement and not subject to dispute or judicial review. If, after adjustment as
appropriate with respect to the amount of the aforesaid adjustments paid or
credited at the Closing, Buyer or Seller is determined to owe an amount to the
other, the appropriate party shall pay such amount thereof to the other, within
three days after receipt of such determination. The cost of retaining such
independent public accounting firm shall be split equally between Buyer and
Seller.

      2.6. ASSUMPTION OF LIABILITIES AND OBLIGATIONS. As of the Closing Date,
Buyer shall assume and pay, discharge and perform the following (collectively,
the "ASSUMED LIABILITIES"): (a) all obligations and liabilities of Seller under
the Franchises and the Contracts related to the period after the Closing; (b)
all obligations and liabilities of Seller to all customers and advertisers of
the System for any advance payments or deposits for which Buyer shall have
received a credit pursuant to the adjustments under Section 2.5; (c) all
obligations and liabilities arising out of events occurring on or after the
Closing Date related to the Assets or Buyer's conduct of the business or
operations of the System; and (d) the obligations and liabilities listed on
Schedule 2.6. All other obligations and liabilities of Seller shall remain and
be the obligations and liabilities solely of Seller.

3.    REPRESENTATIONS AND WARRANTIES OF SELLER

      Seller represents and warrants to Buyer, as follows:

      3.1. ORGANIZATION, STANDING AND AUTHORITY. Seller is a limited partnership
duly organized and validly existing under the laws of the State of Washington,
and is qualified to conduct business in each jurisdiction in which the property
owned, leased or operated by it requires it to be so qualified, except where the
failure to so qualify would not have a Material Adverse Effect. Seller has the
requisite partnership power and authority (a) to own, lease and use the Assets
as presently owned, leased and used by it, and (b) to conduct the business and
operations of the Systems as presently conducted by it.

      3.2. AUTHORIZATION AND BINDING OBLIGATION. Seller has the partnership
power and authority to execute and deliver this Agreement and to carry out and
perform all of its other obligations under the terms of this Agreement. All
partnership action by Seller necessary for the authorization, execution,
delivery and performance by it of this Agreement has been taken. This Agreement
has been duly executed and delivered by Seller and this Agreement constitutes
the valid and legally binding obligation of Seller, enforceable against it in
accordance with its terms, except (a) as rights to indemnity, if any, thereunder
may be limited by federal or state securities laws or the public policies
embodied therein, (b) as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws from time to time in
effect affecting the enforcement of creditors' rights generally, and (c) as the
remedy of specific performance and

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injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.

      3.3. ABSENCE OF CONFLICTING AGREEMENTS. Subject to obtaining the Consents
listed on Schedule 3.8 and approval of a majority in interest of the limited
partners of Seller, other than as identified on Schedule 3.3, the execution,
delivery and performance of this Agreement by Seller will not: (a) violate the
certificate of limited partnership and limited partnership agreement, as
amended, of Seller; (b) violate any law, judgment, order, ordinance, injunction,
decree, rule or regulation of any court or governmental instrumentality
applicable to Seller with respect to the Assets; or (c) conflict with,
constitute grounds for termination of, result in a breach of, constitute a
default under, accelerate or permit the acceleration of any performance required
by the terms of, any Contract.

      3.4. FRANCHISES. Schedule 3.4 lists all Franchises that are held for use
in connection with the operations of the System, and includes the parties
thereto, the execution date thereof, and the expiration date thereof, and the
franchise fee expressed as a percentage, as further described in the respective
Franchise. True and complete copies of such Franchises (together with any and
all amendments thereto) have been delivered to Buyer. Each of the Franchises
listed on Schedule 3.4 is valid and in full force and effect in accordance with
its terms. No proceedings are pending or, to the Knowledge of Seller,
threatened, to revoke, terminate or cancel any of the Franchises. Except as
listed on Schedule 3.4, or as otherwise disclosed in writing to Buyer, the
Seller and the operations of the System by Seller are in compliance with the
terms and conditions of the Franchises.

      3.5. REAL PROPERTY. Schedule 3.5 lists all Real Property related to the
System and owned by Seller and all leases of Real Property related to the System
and to which Seller is a party (but excluding easements, rights of way and
similar interests in real property) and for each lease provides the parties
thereto, the execution date thereof, the expiration date thereof, and the
current rent payable thereunder. As to the Real Property which is designated in
Schedule 3.5 as being owned by Seller, except as set forth in Schedule 3.5,
Seller has good and marketable title in fee simple to such premises and all
buildings, improvements and fixtures thereon, free and clear of all claims,
liabilities, mortgages, liens, pledges, conditions, charges or encumbrances of
any nature whatsoever, except for Permitted Encumbrances. Seller has delivered
to Buyer true and correct copies of each lease and deed pursuant to which Seller
acquired any parcel of owned Real Property included in the Sale Assets, and any
title opinions, surveys and appraisals relating to such Real Property included
in the sale that are in Seller's possession or under its control and of all
title insurance policies currently in effect with respect to any such parcel of
Real Property. Seller has provided to Buyer true and complete copies of, and
Schedule 3.5 sets forth a list of, all (a) assessments, studies, reports and
surveys relating to the environmental condition of any of the Real Property
included in the Assets that are in each Seller's possession or under its control
and (b) notices and other correspondence received by Seller from any
governmental authority or other person relating to any violations of
Environmental Laws in connection with such Real Property, the Assets or the
operation of the System.

      3.6. PERSONAL PROPERTY. Except as set forth in Schedule 3.6, as to the
System, Seller has, or will have on the Closing Date, good title to all Personal
Property owned by Seller, and as of the Closing Date none of the Personal
Property will be subject to any claims, liabilities,

                                       11

<PAGE>

mortgages, liens, pledges, conditions, charges or encumbrances of any nature
whatsoever, except for Permitted Encumbrances. Schedule 3.6 sets forth all
material Personal Property including, but not limited to, vehicles (listing
make, model and vehicle identification number), test equipment, and current
inventory. Except as set forth in Schedule 3.6, the Personal Property is in
reasonable operating condition and repair.

      3.7. AGREEMENTS. Schedule 3.7 lists all pole attachment and conduit
agreements, railway crossing agreements, easements, rights of way and similar
interests in Real Property, licenses, permits, governmental authorizations
(other than franchises set forth on Schedule 3.4), and other agreements, written
or oral (including any amendments and other modifications thereto), to which
Seller is a party and that relate to the Assets or the business or operations of
the Systems (other than the Franchises, programming agreements and any contracts
that are Excluded Assets) in existence as of the date hereof except for: (a)
subscription agreements with individual residential customers for the cable
services provided by the Systems; (b) oral employment contracts and
miscellaneous service contracts terminable by Seller at will without penalty;
and (c) any contracts involving liabilities less than or equal to $5,000 and
which are not material to the operation of the Broadband Business. Schedule 3.7
includes, for each agreement listed, the parties thereto, the execution date and
the expiration date thereof. Seller has delivered to Buyer true and complete
copies of all written agreements disclosed in Schedule 3.7. All of the
agreements listed on Schedule 3.7 are valid and binding and are in full force
and effect and legally enforceable in accordance with their terms upon the other
parties thereto. There is no material breach or default by Seller under any of
the agreements listed on Schedule 3.7, or, to the Knowledge of Seller, any other
party thereto.

      3.8. CONSENTS. Except for the Consents described in Schedule 3.8, no
consent, approval, permit or authorization of, or declaration to or filing with
any governmental or regulatory authority, or any other third party is required
to consummate this Agreement and the transactions contemplated hereby.

      3.9. INFORMATION ON SYSTEM.

            3.9.1. Schedule 3.9.1 lists as of June 30, 2004 (unless a later date
is specified on Schedule 3.9): (a) the approximate number of miles of energized
cable plant (aerial and underground, in each case stated as a number which such
miles shall not exceed), and the approximate number of dwellings passed; (b) the
total number of Subscribers in the System; (c) the bandwidth capacity of the
System specified in MHz, and (d) the number of channels activated throughout the
System.

            3.9.2. Schedule 3.9.2 sets forth as of June 30, 2004: (a) the rates
charged as of the date of this Agreement to customers for each class of service;
(b) all discounts, regardless of whether standard or offered in the ordinary
course, from the standard rates and charges offered by the Broadband Business;
(c) the dollar amounts of all rate changes within the Broadband Business since
December 31, 2003, and (d) all marketing, advertising and promotional programs
currently in effect and any such programs conducted since December 31, 2003.

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            3.9.3. The System duly and properly carries and delivers the
respective channels indicated in Schedule 3.9.3. Seller has obtained all
required FCC clearances for the operation of the Systems in all necessary
aeronautical frequency bands.

            3.9.4 Seller has attached hereto as Schedules 3.9.4(a), (b) and (c)
respectively: (a) true and complete copies of the most recent proof of
performance tests and cumulative leakage index reports for the System, (b) true
and complete copies of Seller's channel line-ups for the System, including a
designation of which stations are carried under retransmission consent
agreements and pursuant to must-carry elections, and (c) a true and complete
list of each "courtesy" and discount account.

      3.10. FINANCIAL STATEMENTS. Schedule 3.10 contains true and complete
copies of unaudited statements of operations of the Seller with respect to the
System for Fiscal Years 2002, 2003, and 2004 (each ending December 31)
(collectively, the "SELLER'S FINANCIAL STATEMENTS"). The Seller's Financial
Statements have been prepared in accordance with generally accepted accounting
principles consistently applied, except for the absence of balance sheets,
footnotes and statements of cash flows and subject to normal year-end
adjustments. The Seller's Financial Statements are in accordance with the books
and records of Seller and present fairly in all material respects the results of
operations for the periods then ended.

      3.11. EMPLOYEE BENEFIT PLANS.

             3.11.1. All of Seller's Employee Plans and Compensation
Arrangements providing benefits to employees of the Seller who work at the
System as of the date of this Agreement are listed in Schedule 3.11, and copies
of any such Employee Plans and Compensation Arrangements (or related insurance
policies) and any amendments thereto have been delivered to Buyer, along with
copies of any currently available employee handbooks or similar documents
describing such Employee Plans and Compensation Arrangements. Except as
disclosed in Schedule 3.11, there is not now in effect or to become effective
after the date of this Agreement and until the Closing Date, any new Employee
Plan or Compensation Arrangement or any amendment to an existing Employee Plan
or Compensation Arrangement which will affect the benefits of employees or
former employees of the Seller who work at the System.

             3.11.2. Each of Seller's Employee Plans and Compensation
Arrangements has been administered without material exception in compliance with
its own terms and, where applicable, with ERISA, the Code, the Age
Discrimination in Employment Act and any other applicable federal or state laws.
None of Seller or any trade or business which would be considered a single
employer with Seller under Section 4001(b)(1) of ERISA has incurred or could
reasonably be expected to incur material liability under Title IV of ERISA or
the minimum funding requirements under Section 302 of ERISA.

             3.11.3. Except as disclosed in Schedule 3.11, Seller does not
contribute to and is not required to contribute to any Multi-employer Plan with
respect to any employees of the System.

      3.12. LABOR RELATIONS. Schedule 3.12 contains a true and complete list of
(a) the names and dates of hire of all persons employed by Seller in connection
with the operation of the

                                       13

<PAGE>

System and (b) all employment, consulting, non-competition, benefit, severance
and other arrangements with any current employee with respect to the System.
Seller is not a party to or subject to any collective bargaining agreements with
respect to any employees of the System. Seller has no written or oral contracts
of employment with any employee of the System, other than oral employment
agreements terminable by Seller at will without penalty. Seller has delivered to
Buyer true and complete copies of all written agreements set forth on Schedule
3.12. Neither Seller nor the Broadband Business is the subject of any legal
proceeding relating to employment discrimination or unfair labor practices, and
no factual basis exists therefore. Seller has fewer than fifty (50) employees,
and compliance with the federal Worker Adjustment and Retraining Notification
Act (or any comparable state law) is not required in connection with the
transactions contemplated hereby after taking into account other sales
transactions by Seller or its affiliates. Except as set forth on Schedule 3.12,
no affiliate of Seller or of any officer, director, shareholder or employee of
Seller or any of its affiliates is a party, directly or indirectly, to any
transaction with Seller with respect to the Broadband Business, other than (i)
as an employee of Seller or any of its affiliates as set forth on Schedule 3.12
or (ii) pursuant to a management agreement which will terminate as of Closing.
Seller has delivered to Buyer a separate list of compensation payable to
employees.

      3.13. TAXES, RETURNS AND REPORTS. All federal, state and local tax returns
required to be filed by Seller through the date hereof in connection with the
operation of the System with respect to any federal, state or local taxes (the
"TAXES") have been filed. Except as set forth in Schedule 3.13, all Taxes which
are due and payable or disputed in good faith have been properly accrued or paid
or are being contested in good faith by appropriate proceedings.

      3.14. CLAIMS AND LEGAL ACTIONS. Except as set forth in Schedule 3.14, and
except for any investigations and rule-making proceedings affecting the cable
industry generally, there is (a) no legal action, counterclaim, suit,
arbitration or (b) no claim or governmental investigation, pending or to the
Knowledge of Seller, threatened against or relating to the Assets or the
business or operations of the System.

      3.15. ENVIRONMENTAL MATTERS.

             3.15.1. Except as disclosed in Schedule 3.15, to the Knowledge of
Seller, Seller's operations with respect to the Systems and the Real Property
comply with all applicable Environmental Laws. Except as described in Schedule
3.15, no underground storage tanks are located on the Real Property owned by
Seller and, to the Knowledge of Seller, no underground storage tanks are located
on Real Property leased by Seller.

             3.15.2. To the Knowledge of Seller, no hazardous substances,
pollutants, contaminants or petroleum products, as such terms are defined in
Environmental Laws, are present on the Real Property, whether inside or outside
of any building, in such a manner as may require material remediation under any
applicable Environmental Laws.

             3.15.3. Seller has not received written notice from any
governmental authority of any violation by Seller with respect to the System of
any Environmental Laws which violation has not been remedied or cured on or
prior to the date hereof.

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<PAGE>

      3.16. COMPLIANCE WITH LAWS. Seller has complied and is in compliance with
all federal, state and local laws, rules, regulations and ordinances applicable
to the System, except for such noncompliance which would not have a Material
Adverse Effect.

      3.17. CONDUCT OF BUSINESS IN ORDINARY COURSE. Since December 31, 2004
Seller has conducted the business and operations of the System only in the
ordinary course and has not suffered any changes, events or conditions that,
individually or in the aggregate, have had a Material Adverse Effect. The
name(s) "NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP", "Northland Cable
Television", "Northland Cable" and "Northland Express" are the only name(s) that
have been used in the conduct of the Broadband Business during the six (6) years
preceding the date hereof.

      3.18. FCC AND COPYRIGHT COMPLIANCE.

             3.18.1. Seller is permitted under all applicable FCC rules,
regulations and orders to distribute the transmissions of video programming or
other information that the Seller makes available to customers of the System
presently being carried to the customers of and by the System and to utilize all
carrier frequencies generated by the operations of the System, and is licensed
to operate all the facilities required by law to be licensed, including, without
limitation, any business radio and any cable television relay service system,
being operated as part of the System. Except as provided in Schedule 3.18,
Seller's operation of the System and of any FCC-licensed or registered facility
used in conjunction with Seller's operation of the System is in compliance with
the FCC's rules and regulations and the provisions of the Cable Act, and all
required reports to the FCC related to the System are materially true and
correct and have been timely filed, except where such noncompliance would not
have, individually or in the aggregate, a Material Adverse Effect.

             3.18.2. Seller has deposited with the U.S. Copyright Office all
statements of account and other documents and instruments, and paid all
royalties, supplemental royalties, fees and other sums to the U.S. Copyright
Office under the Copyright Act of 1976, as amended (the "COPYRIGHT ACT"), with
respect to the business and operations of the System as are required to obtain,
hold and maintain the compulsory license for cable television systems prescribed
in Section 111 of the Copyright Act. The System are in compliance with the
Copyright Act and the rules and regulations of the U.S. Copyright Office, except
for such noncompliance that would not, individually or in the aggregate, have a
Material Adverse Effect and except as to potential copyright liability arising
from the performance, exhibition or carriage of any music on the System. Except
as provided in Schedule 3.18, to the Knowledge of Seller there is no inquiry,
claim, action or demand pending before the U.S. Copyright Office or from any
other party which questions the copyright filings or payments made by Seller
with respect to the System. All music royalty fees payable with respect to the
System have been timely paid, and, except as disclosed in Schedule 3.18, Seller
has not participated in any industry-wide settlement with BMI, ASCAP, SESAC (or
any other music licensing organization) relating to liability for music
royalties.

             3.18.3. All necessary FAA approvals have been obtained with respect
to the height and location of towers used in connection with the operation of
the System and are listed in Schedule 3.7. The towers are being operated in
compliance with applicable FCC and FAA

                                       15

<PAGE>

rules, except for such noncompliance that would not, individually or in the
aggregate, have a Material Adverse Effect.

            3.18.4. The System meets the requirements under Section 11.11(a) of
the FCC's Rules with respect to broadcast of the Emergency Alert System.

      3.19. BONDS, INSURANCE AND LETTERS OF CREDIT. Each insurance policy,
performance bond, letter of credit, deposits and similar guarantee maintained or
required to be maintained in connection with the System is set forth on Schedule
3.19, together with the amount thereof. Seller has delivered to Buyer true and
complete copies of all such bonds and letters of credit.

      3.20 ACCOUNTS RECEIVABLE. All accounts receivable included in the Assets
are bona fide and are attributable to transactions in the ordinary course.

      3.21 OVERBUILDS. To Seller's Knowledge, within the communities set forth
on Schedule 1.28: (a) no franchise has been issued, and no application therefor
is pending, that relates to the operation of a cable television system by a
person other than Seller; (b) no person other than Seller is providing cable
television service under a franchise granted by any local franchising authority;
and (c) no person is providing cable television service who has not obtained a
franchise permitting the construction, operation and maintenance of a cable
television system.

      3.22. COMPLETE REPRESENTATIONS. No representation or warranty by Seller in
this Agreement or any Schedule hereto or any other agreement or certificate to
be delivered pursuant hereto contains or shall contain any untrue statement of
material fact, or omits to state any material fact required to make the
statements herein or therein not misleading.

4.    REPRESENTATIONS AND WARRANTIES OF BUYER

              Buyer represents and warrants to Seller, as follows:

      4.1. ORGANIZATION, STANDING AND AUTHORITY. Buyer is a limited liability
company, duly organized, validly existing and in good standing under the laws of
the State of Delaware and is qualified to conduct business as a foreign limited
liability company in each jurisdiction in which the property owned, leased or
operated by it requires it to be so qualified, except where the failure to so
qualify would not have a Material Adverse Effect. Buyer has the requisite power
and authority to execute and deliver this Agreement and to perform and comply
with all of the terms, covenants and conditions to be performed and complied
with by Buyer hereunder.

      4.2. AUTHORIZATION AND BINDING OBLIGATION. Buyer has the limited liability
company power and authority to execute and deliver this Agreement and to carry
out and perform all of its other obligations under the terms of this Agreement.
All corporate action by Buyer necessary for the authorization, execution,
delivery and performance by Buyer of this Agreement has been taken. This
Agreement has been duly executed and delivered by Buyer and this Agreement
constitutes the valid and legally binding obligation of Buyer, enforceable
against it in accordance with its terms, except (a) as rights to indemnity, if
any, thereunder may be limited by federal or state securities laws or the public
policies embodied therein, (b) as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws from time to time in

                                       16

<PAGE>

effect affecting the enforcement of creditors' rights generally, and (c) as the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.

      4.3. ABSENCE OF CONFLICTING AGREEMENTS. Subject to obtaining the Consents
listed on Schedule 3.8, the execution, delivery and performance of this
Agreement by Buyer will not: (a) require the consent, approval, permit or
authorization of, or declaration to or filing with any governmental or
regulatory authority, or any other third party; (b) violate the governing
documents of Buyer; (c) violate any material law, judgment, order, ordinance,
injunction, decree, rule or regulation of any court or governmental
instrumentality; or (d) conflict with, constitute grounds for termination of,
result in a breach of, constitute a default under, or accelerate or permit the
acceleration of any performance required by the terms of, any material
agreement, instrument, license or permit to which Buyer is a party or by which
Buyer may be bound, such that Buyer could not perform hereunder and acquire or
operate the Assets.

      4.4. BUYER QUALIFICATION. Buyer knows of no reason why it cannot become
the franchisee pursuant to the Franchises, and to its knowledge has the
requisite qualifications to own and operate the System.

      4.5. AVAILABILITY OF FUNDS. Buyer will have available on the Closing Date
sufficient unrestricted funds to enable it to consummate the transactions
contemplated hereby.

5.    COVENANTS OF THE PARTIES

      5.1. CONDUCT OF THE BUSINESS OF THE SYSTEMS. Except as contemplated by
this Agreement, disclosed on Schedule 5.1 or with the prior written consent of
Buyer (which consent shall not be unreasonably withheld or delayed), between the
date hereof and the Closing Date, Seller shall operate the System in the
ordinary course of business in accordance with past practices and shall as to
the System:

            (a) not enter into any contract or commitment, which is either not
terminable at any time without penalty to Buyer or which involves the payment of
more than $10,000, and requires Buyer to assume obligations under such contract
or commitment;

            (b) not sell, assign, lease or otherwise dispose of any of the
Assets, except for assets consumed or disposed of in the ordinary course of
business, where no longer used or useful in the business or operations of the
System or in conjunction with the acquisition of replacement property of
equivalent kind and value;

            (c) not create, assume or permit to exist any claim, liability,
mortgage, lien, pledge, condition, charge or encumbrance upon the Assets, except
for Permitted Encumbrances;

            (d) Except as set forth on Schedule 5.1(d), not change customer
rates for any level of service or charges for remotes or installation, or change
billing, disconnect or marketing practices; and.

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<PAGE>

            (e) not engage in any marketing or promotion other than set forth on
Schedule 5.1(d).

      5.2. ACCESS TO INFORMATION. Seller shall allow Buyer and its authorized
representatives reasonable access upon reasonable advance notice and at Buyer's
expense during normal business hours to the Assets and to all other properties,
equipment, books, records, Contracts and documents relating to the System for
the purpose of inspection, and furnish or cause to be furnished to Buyer or its
authorized representatives all information ordinarily prepared by Seller and
available with respect to the affairs and business of the System as Buyer may
reasonably request, it being understood that the rights of Buyer hereunder shall
not be exercised in such a manner as to interfere with the operations of
Seller's business. Buyer shall promptly disclose to Seller, in writing, any and
all facts that a Responsible Officer has reason to believe may give rise to a
material claim under this Agreement. A Responsible Officer of Buyer shall mean
any of the following individuals: Heather Wood, Craig Rosenthal, and Jake
Sturdy..

      5.3. CONFIDENTIALITY. Each party shall keep secret and hold in confidence
for a period of three years following the date hereof, any and all information
relating to the other party that is proprietary to such other party, other than
the following: (a) information that has become generally available to the public
other than as a result of a disclosure by such party; (b) information that
becomes available to such party or an agent of such party on a non-confidential
basis from a third party having no obligation of confidentiality to a party to
this Agreement; (c) information that is required to be disclosed by applicable
law, judicial order or pursuant to any listing agreement with, or the rules or
regulations of, any securities exchange on which securities of such party or any
such affiliate are listed or traded; and (d) disclosures made by any party as
shall be reasonably necessary in connection with obtaining the Consents. In
connection with disclosure of confidential information under (c) and (d) above,
the disclosing party shall give the other party hereto timely prior notice of
the anticipated disclosure and the parties shall cooperate in designing
reasonable procedural and other safeguards to preserve, to the maximum extent
possible, the confidentiality of such material. Upon Closing, Buyer shall have
the unilateral right, as Buyer so chooses, to disclose information pertaining to
the Assets and/or System, and such disclosure right shall in no way be limited
or governed by any other portion of this Section 5.3. Buyer hereby acknowledges
Seller's public filing obligations with respect to the solicitation of the
approval of a majority in interest of Seller's limited partners to the
consummation of the transactions contemplated hereby.

      5.4. PUBLICITY. Prior to Closing, neither party hereto will issue any
press release or otherwise make any public statement with respect to this
Agreement and the transactions contemplated hereby without the prior written
consent of the other, except (a) either party may, without the other party's
prior written consent, disclose information to its financing sources and
professional advisors, including accountants, attorneys, investors, financial
advisors, bankers and other experts, (b) Seller may, without Buyer's prior
written consent, make public statements with respect to this Agreement and the
transactions contemplated hereby to its general and limited partners, (c) either
party may make public statements or disclosures as may be required by applicable
laws, including SEC requirements, in which event the party required to make the
release or announcement shall, if possible, allow the other party reasonable
time to comment on such release or announcement in advance of such issuance and
(d) Seller may make such filings

                                       18

<PAGE>

with the Securities and Exchange Commission as Seller deems necessary to solicit
approval of the transaction contemplated by this Agreement from Seller's limited
partners.

      5.5. CONSENTS. Following the execution hereof, Seller shall make such
applications to the Franchising Authorities and other third parties for the
Consents, and shall otherwise use its commercially reasonable efforts to obtain
the Consents as expeditiously as possible. In no event shall Seller be required,
as a condition of obtaining such Consents, to expend any monies on, before or
after the Closing Date (other than expenses typically incurred in connection
with the efforts to obtain such Consents), or to offer or grant any
accommodations or concessions adverse to Seller or to engage in litigation or
other adversarial proceedings. Buyer shall use its commercially reasonable
efforts to promptly assist Seller and shall take such prompt and affirmative
actions as may reasonably be necessary in obtaining such Consents and shall
cooperate with Seller in the preparation, filing and prosecution of such
applications as may reasonably be necessary, including, without limitation,
making management and other personnel of Buyer available to assist in obtaining
such Consents. The parties agree to use commercially reasonable efforts to
obtain consents to (i) the transfer of the Franchises in substantially the form
attached hereto as Exhibit B-1, and (ii) the transfer of the leases and other
Contracts in substantially the form attached hereto as Exhibit B-2. Seller shall
not agree to any adverse change in any Franchise or Contract as a condition to
obtaining any authorization, consent, order or approval necessary for the
transfer of such Franchise or Contract unless Buyer shall otherwise consent.
Buyer agrees that it shall not, without the prior written consent of Seller
(which may be withheld at Seller's sole discretion), seek amendments or
modifications to Franchises or Contracts. To the extent reasonably practicable,
Seller shall notify Buyer in advance of all meetings, conference calls and other
similar events relating to any of the Consents such that Buyer will have the
opportunity to attend and/or participate therein. If providing such notice is
not reasonably practicable or if Buyer is unable to attend or participate in
such meeting, conference call or other similar event, Seller shall, within a
reasonable time period thereafter, provide Buyer with an update with respect to
the matters discussed therein. Buyer shall be entitled to review the form(s) of
consent and all notices and filings being submitted prior to the submission
thereof. Seller shall promptly deliver to Buyer a true and correct copy of each
Consent as each such Consent is obtained. Seller expressly acknowledge that
nothing contained in this Agreement shall prevent Buyer, its officers,
employees, Affiliates, representatives or other agents from making statements or
inquiries to, making presentations to or responding to requests initiated by any
person from which any Consent is sought. Buyer shall not be required to accept
any consent or approval the terms of which contain any change in the underlying
instrument that would be adverse to Buyer. Buyer shall, at Seller's request,
promptly furnish Seller with copies of such documents and information with
respect to Buyer, including financial information and information relating to
the cable and other operations of Buyer and any of its affiliated or related
companies, as Seller may reasonably request in connection with the obtaining of
any of the Consents or as may be reasonably requested by any person in
connection with any Consent. Notwithstanding anything to the contrary contained
in this Section 5.6, Seller's obligations hereunder with respect to pursuing any
Consent shall be fully satisfied with respect to: (x) the transfer of pole
attachment or conduit contracts, if Buyer, solely on its own behalf, has
executed a new contract with the respective pole company or if such pole company
has indicated in writing to Buyer that it is willing to execute a new contract
with Buyer on terms that are substantially the same as the terms of the existing
agreement and that Buyer may remain on the poles of the respective pole company
while such contract is being negotiated, in either case on or

                                       19

<PAGE>

before Closing; and (y) the transfer of railroad crossing permits or contracts,
if Buyer, solely on its own behalf, has executed a new permit or contract with
the respective railroad company or if such railroad company has indicated in
writing to Buyer that it is willing to execute a new permit or contract with
Buyer on terms that are substantially the same as the terms of the existing
agreement, in either case on or before Closing.

      5.6. TAXES, FEES AND EXPENSES. Buyer and Seller shall equally split all
sales, use, transfer, purchase taxes and fees, filing fees, recordation fees and
application fees, if any, arising out of the transactions contemplated herein;
provided however, that in the event a Franchising Authority seeks compensation
for the cost and expense associated with reviewing Buyer's qualifications,
Seller shall independently bear all such costs and expenses other than
additional costs which result from Buyer's failure to reasonably cooperate with
information requests from such Franchising Authority, in which event Buyer shall
bear such additional costs. Each party shall pay its own expenses incurred in
connection with the authorization, preparation, execution and performance of
this Agreement, including all fees and expenses of counsel, accountants, agents
and other representatives.

      5.7. BROKERS. Each of Buyer and Seller represents and warrants that
neither it nor any person or entity acting on its behalf has incurred any
liability for any finders' or brokers' fees or commissions in connection with
the transaction contemplated by this Agreement, except that Seller has retained
Daniels & Associates, L.P., whose fees shall be paid by Seller. Buyer agrees to
defend, indemnify and hold harmless Seller against any fee, commission, loss or
expense arising out of any claim by any broker or finder employed or alleged to
have been employed by Buyer, and Seller agrees to defend, indemnify and hold
harmless Buyer against any fee, commission, loss or expense arising out of any
claim by Daniels & Associates, L.P., or any other broker or finder employed or
alleged to have been employed by Seller.

      5.8. RISK OF LOSS. The risk of loss, damage or destruction to the Systems
from fire, theft or other casualty or cause shall be borne by Seller at all
times up to the Closing Date. It is expressly understood and agreed that in the
event of any material loss or damage to any portion of the Assets from fire,
casualty or other cause prior to the Closing Date, Seller shall promptly notify
Buyer of same in writing. Such notice shall report the loss or damage incurred,
the cause thereof, if known, and any insurance coverage related thereto.

      5.9. TRANSITIONAL MATTERS. For a period of one hundred and twenty (120)
days following the Closing, Buyer may continue to operate the System using the
tradename Northland Cable Television and related names and marks used in the
System on the Closing Date, to the extent reasonably necessary, but in any event
in accordance with the trademark usage guidelines attached hereto as Exhibit G;
provided, however, that Buyer shall have no obligation at any time to remove or
discontinue using any such name or mark that is affixed to converters or other
items in or to be used in customer homes or properties or as are used in similar
fashion, making such removal or discontinuation impracticable. Pursuant to the
terms of a transitional billing services agreement, substantially in the form
attached hereto as Exhibit H, for a period of up to one hundred and twenty (120)
days after the Closing, Seller shall provide Buyer with access to a support
regarding the use of Seller's customer billing system, all at Buyer's sole cost
and expense. Seller shall cooperate with Buyer, prior to and after Closing, at
Buyer's sole cost and expense, including reasonable compensation for any time
and assistance in excess of ten hours of

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<PAGE>

transition support, to transition billing services from Seller's billing systems
to Buyer's billing systems. With respect to the System, Seller shall maintain
inventory including, but not limited to, spare parts, equipment, fiber, cable
and supplies in amount, type and quality substantially the same as set forth on
Schedule 3.6.

      5.10. EMPLOYEE BENEFIT MATTERS.

             5.10.1. It is clearly understood that Buyer has no obligation to
employ any of Seller's employees employed at the System and that Seller shall be
responsible for and shall cause to be discharged and satisfied in full all
amounts owed to any employee, including, without limitation, wages, salaries,
accrued vacation, any employment, incentive, compensation or bonus agreements or
other benefits or payments on account of termination. Buyer agrees that it will
provide Seller with notice of which, if any, employees of the System Buyer
intends to hire (the "TRANSFERRED EMPLOYEES") at least twenty (20) days before
the estimated Closing Date.

             5.10.2. As of the Closing Date, Seller shall terminate employment
of all Transferred Employees.

             5.10.3. Buyer shall offer health plan coverage to all of the
full-time Transferred Employees, on terms and conditions generally applicable to
all of Buyer's similarly-situated full-time employees. For purposes of providing
such coverage, Buyer shall waive all preexisting condition limitations for all
such employees of the System covered by the Seller's health care plan as of the
Closing Date (other than preexisting conditions which were excluded by Seller's
health care plan) and shall provide such health care coverage effective as of
the Closing Date without the application of any eligibility period for coverage.
In addition, Buyer shall credit all employee payments toward deductible and
co-payment obligation limits under Seller's health care plans for the plan year
which includes the Closing Date as if such payments had been made for similar
purposes under Buyer's health care plans during the plan year which includes the
Closing Date, with respect to Transferred Employees.

             5.10.4. For each Transferred Employee, Buyer shall give past
service credit for all crediting purposes under each of its employee benefit
plans that, on or after the Closing Date, provides coverage to Transferred
Employees to the same extent such employment service was credited for similar
purposes under Seller's employee benefit plans prior to the Closing Date.

             5.10.5. Within a reasonable period of time after the Closing,
Seller shall cause the trustee for the Northland Telecommunications Corporation
401(k) Plan (the "Seller's 401(k) Plan") to effect "direct rollovers" of the
account balances under the Seller's 401(k) Plan (the "Buyer's 401(k) Plan") of
all Transferred Employees who request such a rollover to Buyer's 401(k) Plan.
The direct rollovers contemplated by this Section 5.10.5 shall be in cash or a
combination of cash and in kind, as may be mutually agreeable to Seller and
Buyer; provided, that the Buyer's 401(k) Plan shall be obligated to accept as a
part of such rollovers, as applicable, any promissory notes with respect to
Transferred Employees that have taken participant loans from the Seller's 401(k)
Plan and that are outstanding as of the Closing Date. Prior to the date of such
rollovers, and as a precondition thereto, Buyer shall deliver to Seller a copy
of the most recently issued IRS determination letter (or other proof reasonably
satisfactory to counsel for the Seller) that the Buyer's 401(k) Plan is
qualified under the Code. Subsequent to the

                                       21

<PAGE>

above-described rollovers to the Buyer's 401(k) Plan, neither Seller nor the
Seller's 401(k) Plan shall retain any liability with respect to such Transferred
Employees to provide them with benefits in accordance with the terms of the
Seller's 401(k) Plan. On or prior to the Closing Date, Seller shall deliver to
Buyer a list of all Transferred Employees, indicating thereon the total amount
deferred in pre-tax dollars to the Seller's 401(k) Plan by each Transferred
Employee under the terms of Section 402(g) of the Code with respect to the
calendar year in which the Closing occurs.

             5.10.6. Seller shall be responsible, and Buyer shall have no
responsibility or liability, for providing health care continuation coverage and
notice of such coverage to any employee of Seller who may be terminated by
Seller before or after Closing or their eligible dependents, without regard to
whether the entitlement to such coverage (or notice of such coverage) arises in
connection with the transactions contemplated by this Agreement. Seller's
obligations with respect to continuation coverage shall continue for the full
continuation coverage period set forth in Section 602(2)(A) of ERISA and in
accordance with the applicable Treasury regulations under Section 4980B of the
Code. Buyer shall notify Seller as soon as Transferred Employees become eligible
and elect to participate under Buyer's health care plan following the Closing.

      5.11. BONDS, LETTERS OF CREDIT, ETC. Buyer shall take all reasonably
necessary steps, and execute and deliver all reasonably necessary documents, to
insure that within 15 days after the Closing Buyer has delivered each such
bonds, letters of credit, indemnity agreements and similar instruments currently
maintained and in effect as set forth in Schedule 3.19 in such amounts and in
favor of such Franchising Authorities and other third parties requiring the same
in connection with the Franchises and the Contracts. Buyer shall not be
obligated under this Section 5.11 to deliver any instrument not set forth in
Schedule 3.19.

      5.12. NON-COMPETITION. Seller and its General Partner covenants and agrees
that, unless Buyer shall otherwise give its prior written consent, for a period
of twenty four (24) months from Closing it will not directly or indirectly (i)
own, manage, operate, control or engage, directly or indirectly, in the business
of operating a wireline video cable television system within the franchise area
currently serviced by the System or (ii) solicit any person who was employed by
Seller at the System, and accepts a position of employment by Buyer.
Notwithstanding the foregoing, nothing herein shall be construed to prohibit or
restrict the ownership of a company's securities listed on a national securities
exchange or the National Association of Securities Dealers Automated Quotations
System, which (x) constitutes less than 5% of the outstanding voting stock of
such company, (y) does not constitute control over such company and (z) is held
solely for investment purposes. Notwithstanding anything to the contrary herein,
no provision of clause (i) of the foregoing non-competition covenant shall
restrict Seller's general partners or any of their affiliates activities outside
of the franchise area served by the System.

      5.13. TITLE INSURANCE. Seller shall cooperate with Buyer if Buyer elects
to obtain title insurance policies or surveys (including any environmental
impact statements) on any Real Property owned in fee or leased. Buyer shall have
the sole responsibility for obtaining and paying for such policies and surveys.
The parties agree that the obtaining of title insurance and

                                       22

<PAGE>

surveys on any Real Property shall not be a condition to the obligation of Buyer
to consummate the transactions contemplated hereby.

      5.14. LIEN SEARCHES. As soon as practicable, Seller shall obtain and
deliver to Buyer copies of the results of complete lien, tax and judgment
searches conducted with respect to the entire System (including states and
counties, and including federal tax and judgment searches) and with respect to
all corporate, fictitious and assumed names used by Seller in connection with
the Broadband Business during the six (6) years preceding the date hereof. Buyer
and Seller shall share equally all fees and costs arising out of any lien, tax
and judgment searches.

      5.15. NOTICE. To the extent of Knowledge of Seller, Seller shall promptly
notify Buyer of any material adverse change relating to Seller, the Broadband
Business, or the Assets and of any fact, event or condition that, if existing as
of the date hereof, would have been required to be disclosed in any of the
Schedules hereto.

      5.16. NO SOLICITATION. (a) Seller shall not, nor shall it authorize or
permit the General Partner or any other person to, directly or indirectly (i)
solicit, initiate or encourage or knowingly take any other action to facilitate,
the submission of, any Takeover Proposal, (ii) enter into any agreement with
respect to any Takeover Proposal, or (iii) enter into, continue or otherwise
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes, or could
reasonably be expected to lead to, any Takeover Proposal. Notwithstanding the
foregoing, prior to obtaining the approval of the limited partners of Seller of
the transactions contemplated hereby, Seller may, in response to a Superior
Proposal or a bona fide, written Takeover Proposal that the General Partner
determines in good faith (after consultation with outside counsel and with a
financial consultation with outside counsel is or is reasonably likely to lead
to a Superior Proposal (a "LIKELY SUPERIOR PROPOSAL"), in each case that did not
otherwise result from a breach or a deemed breach of this Section 5.16 to the
extent that the General Partner determines in good faith (after consultation
with outside counsel) that such action is or is reasonably likely to be required
by its fiduciary duties, (x) furnish information with respect to the Seller or
the Assets to the person making such Superior Proposal or Likely Superior
Proposal and its representatives pursuant to a customary confidentiality
agreement; and (y) participate in discussions or negotiations with the person
making such Superior Proposal or Likely Superior Proposal and its
representatives regarding such Superior Proposal or Likely Superior Proposal. In
such event, the Seller shall, (A) no less than 24 hours prior to furnishing any
such information or participating in any such discussions, inform Buyer of the
material terms and conditions of such Superior Proposal or Likely Superior
Proposal, (B) promptly inform Buyer of the substance of any material discussions
relating to such Superior Proposal or Likely Superior Proposal and (C) promptly
keep Buyer fully informed of the status, including any change to the material
details of, any such Superior Proposal or Likely Superior Proposal.

            (b) Neither the General Partner nor any representative of the Seller
shall (i) withdraw (or modify in a manner adverse to Buyer) or publicly propose
to withdraw (or modify in a manner adverse to Buyer) the approval or
recommendation by the General Partner of this Agreement except that at any time
prior to obtaining the approval of the limited partners in Seller, the General
Partner may withdraw or modify, or propose to withdraw or modify, its

                                       23

<PAGE>

recommendation of this Agreement to the extent (each such action being referred
to as an "ADVERSE RECOMMENDATION CHANGE") (A) it determines in good faith (after
consultation with outside counsel) that the failure to make an Adverse
Recommendation Change would be reasonably likely to result in a breach of its
fiduciary duties under applicable Law, and (B) (x) only at a time that is after
the third business day following Buyer's receipt of written notice advising
Buyer that the General Partner is prepared to take such action (during which
period the Seller shall negotiate in good faith with Buyer concerning any New
Buyer Proposal (as defined below)) and the reasons for such action and (y) if
such action is in response to a Superior Proposal, after taking into account any
amendment to the terms of this Agreement by any proposal by Buyer to amend the
terms of this Agreement (a "NEW BUYER PROPOSAL"), (ii) adopt, approve or
recommend, or propose publicly to adopt, approve or recommend, or propose
publicly to adopt, approve or recommend, any Takeover Proposal, or resolve or
agree to take any such action, or (iii) cause or permit the Seller to enter into
any letter of intent, memorandum of understanding, agreement in principle,
acquisition agreement, merger agreement, option agreement, joint venture
agreement, partnership agreement or another agreement (each, an "ACQUISITION
AGREEMENT") constituting or related to, or which is intended to or would
reasonably be expected to lead to, any Takeover Proposal (other than a
confidentiality agreement referred to in Section 5.16(a)(x) entered into under
the circumstances referred to in Section 5.16(a)). Notwithstanding the
foregoing, at any time prior to obtaining the approval of the Seller's limited
partners, the General Partner may, in response to a Superior Proposal, cause the
Seller to terminate this Agreement and concurrently enter into an Acquisition
Agreement; provided, that the Seller shall not have the right to terminate this
Agreement unless the Seller shall have paid to Buyer the Termination Fee (as
defined in Section 5.6(b)) prior to or concurrently with such termination; and
provided, further, that the Seller shall not be entitled to exercise its right
to terminate this Agreement pursuant to Section 8.1.2 until after the third
business day following Buyer's receipt of a written notice (a "NOTICE OF
SUPERIOR PROPOSAL") from the Seller advising Buyer that the Seller has received
a Superior Proposal and specifying the material terms and conditions of such
Superior Proposal (it being understood and agreed that any amendment to the
price or any other material term of a Superior Proposal shall require a new
Notice of Superior Proposal and a new three business day period).

            (c) In addition to the obligations of the Seller set forth in
paragraphs (a) and (b) of this Section 5.16, the Seller shall promptly (and in
no event later than 48 hours) advise Buyer orally and in writing of any request
for information that the Seller reasonably believes could lead to or
contemplates a Takeover Proposal or of any Takeover Proposal, or any inquiry the
Seller reasonably believes could lead to any Takeover Proposal, the material
terms and conditions of such request, Takeover Proposal or inquiry (including
any subsequent amendment or other modification to such terms and conditions) and
the identity of the person making any such request, Takeover Proposal or
inquiry. The Seller shall promptly keep Buyer informed in all materials respects
of the status and details (including material amendments or proposed amendments)
of any such request, Takeover Proposal or inquiry.

      5.17. MONTHLY REPORTS. Seller shall provide Buyer, following the date
hereof and until Closing, on a monthly basis and promptly upon preparation but
no later than within thirty (30) days after the Monthly Reporting Date (as
defined hereafter): (a) the number of Subscribers in the System as of the
Monthly Reporting Date; (b) billing reports for the Systems

                                       24

<PAGE>

for the one (1) month period ending on the Monthly Reporting Date; and (c)
income statements for the Systems for the one (1) month period ending on the
Monthly Reporting Date. For purposes of this Agreement the "MONTHLY REPORTING
DATE" shall be the last day of each calendar month.

      5.18. RENEWALS AND EXTENSIONS. Seller shall use commercially reasonable
efforts to obtain a one-year option to renew the lease agreement with Tom S.
Whitehead, Inc. listed in Schedule 3.5 on substantially the same economic terms.

      5.19. POLE ATTACHMENT LETTER AGREEMENTS Buyer and Seller shall cooperate
and use commercially reasonable efforts to obtain:

            (a) a letter agreement from Bluebonnet Electric Cooperative, Inc.
("Bluebonnet") that states that Buyer's rights and obligations related to the
use of Bluebonnet's poles within the System (i) are added to any existing
agreement Buyer may have with Bluebonnet or (ii) if there is none or Bluebonnet
is unwilling to add such poles to any existing agreement after the use of
commercially reasonable efforts to do so, will be governed by a separate and
independently negotiated contract between Buyer and Bluebonnet and that Buyer
may remain on Bluebonnet's poles while such contract is being negotiated;

            (b) a provision in any consent or letter agreement obtained from
Bluebonnet that acknowledges that, as of Closing, Seller is released from any
and all obligations arising from the future use and payments by Buyer related to
the Bluebonnet owned poles within the System and that further acknowledges that
Seller is solely liable for any obligations arising from prior use or past
payments related to Bluebonnet owned poles within the System;

6.    CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER AND SELLER TO CLOSE

      6.1. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER TO CLOSE. The
obligations of Buyer to consummate the transactions contemplated by this
Agreement to occur at the Closing shall be subject to the satisfaction, on or
before the Closing Date, of each and every one of the following conditions, all
or any of which may be waived in writing, in whole or in part, by Buyer for
purposes of consummating such transactions:

            6.1.1. Representations and Warranties. All representations and
warranties of Seller contained in this Agreement shall be true and complete in
all material respects (provided that to the extent any representation or
warranty has a "materiality", "Material Adverse Effect", or similar
qualification, it shall not be further qualified by the use of the word
"material" in this Section 6.1.1) at and as of the Closing Date as though such
representations and warranties were made at and as of such time except to the
extent changes are contemplated pursuant to this Agreement.

            6.1.2. Covenants and Conditions. Seller shall have in all material
respects performed and complied with all covenants, agreements and conditions
required by this Agreement to be performed or complied with by it prior to or on
the Closing Date.

            6.1.3. No Injunction, Etc. No action, suit or other proceeding shall
have been instituted, threatened or proposed before any court, governmental
agency or legislative body to

                                       25

<PAGE>

enjoin, restrain, prohibit or obtain substantial damages in respect of, or which
is related to, or arising out of, this Agreement or the consummation of the
transactions contemplated hereby.

            6.1.4. Consents. Each of the following Consents shall have been duly
obtained and delivered to or waived by Buyer: (a) the Consents of the
Franchising Authorities and other third parties listed on Schedule 3.8 other
than the parties referred to in Section 5.19 and they shall be governed by
Section 6.12; and (b) the Consents of the FCC, except for any FCC consent to any
business radio license that Buyer reasonably expects can be obtained within 120
days after the Closing and so long as a temporary authorization is available to
Buyer under FCC rules with respect thereto.

            6.1.5. Deliveries. Seller shall have made or stand willing and able
to make all the deliveries to Buyer set forth in Section 7.2.

            6.1.6. Material Adverse Change. Between the date of this Agreement
and the Closing Date, there shall have been no material adverse change in the
financial condition of the System, taken as a whole, other than matters
affecting the cable television industry generally (including, without
limitation, legislative, regulatory or litigation matters) and matters relating
to or arising from local or national economic conditions (including financial
and capital markets). For clarification purposes, a change in the number of
Subscribers that does not fall below the Minimum Subscriber number set forth in
Section 6.17 and that is subject to price adjustment as set forth in Section
2.5, shall not constitute a Material Adverse Change.

            6.1.7. Minimum Subscribers. As of the Closing Date, the Broadband
Business shall have no fewer than 3075 Subscribers.

            6.1.8. Discharge. Seller shall have discharged in full or removed
Permitted Encumbrances as set forth in Section 1.22(h).

            6.1.9. Inventory. The inventory of spare parts, equipment, fiber and
cable on hand as of the Closing included in the Assets shall be in amount, type
and quality substantially the same as set forth on Schedule 3.6.

            6.1.10. RESERVED.

            6.1.11. Renewals. Seller shall have used commercially reasonable
efforts to obtain the one-year option to renew the lease agreement with Tom S.
Whitehead pursuant to Section 5.18.

            6.1.12. Pole Attachment Letter Agreements. Buyer shall have obtained
a letter agreement from Bluebonnet satisfying the terms set forth in Section
5.19(a).

            6.1.13. Transitional Billing Services Agreement. Seller shall have
executed a subscriber billing transition services agreement substantially in the
form attached hereto as Exhibit H.

      6.2. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER TO CLOSE. The
obligations of Seller to consummate the transactions contemplated by this
Agreement to occur at the Closing

                                       26

<PAGE>

shall be subject to the satisfaction, on or before the Closing Date, of each and
every one of the following conditions, all or any of which may be waived in
writing, in whole or in part, by Seller for purposes of consummating such
transactions:

            6.2.1. Representations and Warranties. All representations and
warranties of Buyer contained in this Agreement shall be true and complete in
all material respects (provided that to the extent any representation or
warranty has a "materiality", "Material Adverse Effect", or similar
qualification, it shall not be further qualified by the use of the word
"material" in this Section 6.2.1) at and as of the Closing Date as though such
representations and warranties were made at and as of such time except to the
extent changes are contemplated pursuant to this Agreement.

            6.2.2. Covenants and Conditions. Buyer shall have in all material
respects performed and complied with all covenants, agreements and conditions
required by this Agreement to be performed or complied with by it prior to or on
the Closing Date.

            6.2.3. No Injunction, Etc. No action, suit or other proceeding shall
have been instituted, threatened or proposed before any court, governmental
agency or legislative body to enjoin, restrain, prohibit or obtain substantial
damages in respect of, or which is related to, or arising out of, this Agreement
or the consummation of the transactions contemplated hereby.

            6.2.4. Purchase Price Floor. Notwithstanding anything to the
contrary set forth in Section 2.5.5(c), except as provided in clause (b), the
Purchase Price shall in no event be reduced below SEVEN MILLION FIVE HUNDRED
THOUSAND DOLLARS AND 00/100 ($7,500,000.00) (the "Floor"). If the Purchase Price
adjustment set forth in Section 2.5.5 (c) would result in a Purchase Price below
the Floor then either (a) Buyer may elect to set the Purchase Price at the Floor
or, (b) if Buyer does not elect under Section 6.2.4(a) Seller may elect to close
subject to the full Purchase Price adjustment irrespective of the amount of
reduction below the Floor, or (c) if neither Buyer nor Seller make an election
under Section 6.2.4(a) or (b), then this Agreement shall be terminated.

            6.2.5. Deliveries. Buyer shall have made or stand willing and able
to make all the deliveries set forth in Section 7.3.

            6.2.6. Transitional Billing Services Agreement. Buyer shall have
executed a subscriber billing transition services agreement substantially in the
form attached hereto as Exhibit H.

7.    CLOSING AND CLOSING DELIVERIES

      7.1. CLOSING. Subject to Sections 2.5.5 and 6.2.4, if practicable, the
Closing will be held on the last business day of the calendar month during which
the conditions set forth in Sections 6.1.4 and 6.2.4 hereof shall have been
satisfied; provided, however, that if the Closing is not held on the last
business day of the calendar month during which such conditions shall have been
satisfied, the Closing shall be held on the last business day of the next
succeeding calendar month, or on such other date as Buyer and Seller may
mutually agree. The Closing shall be held at 10:00 am. local time at the
Seller's offices at 101 Steward Street, Suite 700, Seattle, WA 98101, or will be
conducted by mail or at such other place and time as the parties may

                                       27

<PAGE>

agree. Notwithstanding the foregoing, the parties agree that the Closing shall
be deemed effective as of 12:01 a.m. on the Closing Date, and all references
herein that relate to the date and time of the Closing, including provisions
dealing with adjustments to the Purchase Price, shall refer to such effective
date and time.

      7.2. DELIVERIES BY SELLER. Prior to or on the Closing Date, Seller shall
deliver to Buyer the following, in form and substance reasonably satisfactory to
Buyer and its counsel:

            7.2.1. Transfer Documents. A duly executed Bill of Sale,
substantially in the form attached hereto as Exhibit F, special warranty deeds
(subject to all matters of record), motor vehicle titles, assignments and other
transfer documents which shall be sufficient to vest good title to the Assets in
the name of Buyer or its permitted assignees, free and clear of any claims,
liabilities, mortgages, liens, pledges, conditions, charges or encumbrances of
any nature whatsoever except for Permitted Encumbrances;

            7.2.2 Assumption Agreements. A duly executed Assignment and
Assumption Agreement, substantially in the form attached hereto as Exhibit E,
pursuant to which Seller shall assign the Assumed Liabilities;

            7.2.3. Consents. The Consents required by Section 6.1.4;

            7.2.4. Officer's Certificate. A certificate, dated as of the Closing
Date, executed by the President or a Vice President of the managing general
partner of Seller, certifying to his knowledge, without personal liability, that
the conditions set forth in Sections 6.1.1 and 6.1.2 are satisfied;

            7.2.5. Secretary's Certificate. One or more certificates, dated as
of the Closing Date, executed by the Secretary of the managing 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 managing 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 as to the incumbency of the person signing this Agreement and any
other documents on behalf of the managing general partner of Seller; (c) 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
(d) the Partnership Agreement of Seller (copies of which shall be attached to
the Certificate).

            7.2.6. Opinions of Counsel. Opinions of Seller's counsel dated as of
the Closing Date, substantially in the forms attached hereto as Exhibit C-1 and
Exhibit C-2; and

            7.2.7. Subscriber List. A true and complete subscriber list as of
the date reasonably close to (and not more than ten (10) business days
preceding) the Closing Date, an updated list of subscriber deposits and
prepayments and a list of disconnected subscribers for each of the six (6)
months preceding the Closing.

            7.2.8. Aging Report. A true and complete accounts receivable aging
report as of a date not more than ten (10) business days prior to the Closing
Date.

                                       28

<PAGE>

            7.2.9. Original Documents. The original instrument, or in the case
where two originals exist, one duplicate original, for each item listed in
Schedules 3.4, 3.5, 3.7, 3.8, 3.9.4, 3.12 and 3.18, that is evidenced in writing
and that relate solely to the System.

      7.3. DELIVERIES BY BUYER. Prior to or on the Closing Date, Buyer shall
deliver to Seller the following, in form and substance reasonably satisfactory
to Seller and its counsel:

            7.3.1. Purchase Price. The Purchase Price, in accordance with
Sections 2.4 and 2.5, including release of the Deposit to Seller;

            7.3.2. Assumption Agreements. A duly executed Assignment and
Assumption Agreement, substantially in the form attached hereto as Exhibit E,
pursuant to which Buyer shall assume and undertake to perform the Assumed
Liabilities;

            7.3.3. Officer's Certificate. A certificate, dated as of the Closing
Date, executed by an executive officer of Buyer, certifying to his knowledge,
without personal liability, that the conditions set forth in Sections 6.2.1 and
6.2.2 are satisfied;

            7.3.4. Secretary's Certificate. A certificate, dated as of the
Closing Date, executed by Buyer's Secretary, without personal liability: (a)
certifying that the resolutions, as attached to such certificate, were duly
adopted by Buyer's Board of Directors, authorizing and approving the execution
of this Agreement and the consummation of the transactions contemplated hereby
and that such resolutions remain in full force and effect; and (b) certifying as
to the incumbency of the person signing this Agreement or any other documents on
behalf of Buyer.

            7.3.5. Opinion of Counsel. An opinion of Buyer's counsel dated as of
the Closing Date, substantially in the form attached hereto as Exhibit D; and

            7.3.6 Billing Transition Services Agreement. A duly executed billing
transition services agreement in the form attached hereto as Exhibit H.

8.    TERMINATION

      8.1. METHOD OF TERMINATION. This Agreement constitutes the binding and
irrevocable agreement of the parties to consummate the transactions contemplated
hereby, subject to and in accordance with the terms hereof, the consideration
for which is (a) the covenants, representations, warranties and agreements set
forth in this Agreement; and (b) the expenditures and obligations incurred and
to be incurred by Buyer on the one hand, and by Seller, on the other hand, in
respect of this Agreement, and this Agreement may be terminated or abandoned
only as follows:

            8.1.1. By the mutual consent of Seller and Buyer, or by either
Seller or Buyer if any condition to the Closing set forth in Section 6.1.3 or
6.2.3 is not fulfilled and the failure of such condition is not a result of a
breach of warranty or nonfulfillment of any covenant or agreement by Buyer or
Seller contained in this Agreement;

            8.1.2. By Seller, if all the conditions set forth in Section 5.16(b)
governing Seller's ability to terminate the Agreement have been met.

                                       29

<PAGE>

            8.1.3. Either Buyer or Seller may terminate this Agreement by giving
notice to the other if (a) such other party has materially breached any of its
representations, warranties or covenants herein such that it cannot comply with
its respective conditions set forth in Sections 6 and 7, and such breach has not
been cured in accordance with Section 10.15 and has not been waived by the
terminating party (provided that the terminating party is not concurrently in
material breach of any representation, warranty, covenant, or other agreement
contained herein) or (b) the conditions to Closing have not been satisfied or
waived by July 31, 2005 so long as the failure to close is not attributable to a
breach hereunder or any other action or inaction by the party seeking to
terminate.

      8.2. RIGHTS UPON TERMINATION.

            8.2.1. In the event of a termination of this Agreement pursuant to
Section 8.1.1 or Section 8.1.3(b) hereof: (a) the Buyer shall be entitled to the
return of the Deposit and all interest accrued thereon; (b) Sections 5.3, 5.4,
and 10 shall survive such termination; and (c) each party shall pay the costs
and expenses incurred by it in connection with this Agreement, and no party (or
any of its officers, directors, partners, employees, agents, representatives or
stockholders) shall be liable to any other party for any cost, expense, damage
or loss of anticipated profits hereunder.

            8.2.2. In the event of a termination of this Agreement by Buyer
pursuant to Section 8.1.3(a) hereof: (a) Buyer shall be entitled to the return
of the Deposit and all interest accrued thereon; (b) Sections 5.3, 5.4, and 10
shall survive such termination; and (c) if Seller is in material breach of this
Agreement, Buyer shall have the right to seek all remedies available to it as
provided hereunder or at law or equity, including the remedy of specific
performance. In the event of any action to enforce this Agreement, Seller hereby
waives the defense that there is an adequate remedy at law.

            8.2.3 In the event of termination of this Agreement by Seller
pursuant to Section 8.1.2 hereof (a) Seller shall pay Buyer a fee equal to ONE
HUNDRED THOUSAND DOLLARS AND 00/100 ($100,000.00) (the "Termination Fee") by
wire transfer of same day funds to an account designated by Buyer concurrent
with such termination; (b) Buyer shall be entitled to the return of the Deposit
and all interest accrued thereon; (c) Sections 5.3, 5.4, and 10 shall survive
such termination.

            8.2.4. In the event of a termination of this Agreement by Seller
pursuant to Section 8.1.3(a), provided Buyer is in breach of warranty or
nonfulfillment of any covenant or agreement contained in this Agreement: (a)
Sections 5.3, 5.4, and 10 shall survive such termination; and (b) Seller shall
be entitled to receive the Deposit and all interest accrued thereon as full
liquidated damages suffered by Seller as a consequence of Buyer's breach (which
amount the parties agree is a reasonable estimate of the damages that will be
suffered by Seller).

9.    SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATION

      9.1. REPRESENTATIONS AND WARRANTIES. All representations, warranties,
covenants and agreements contained in this Agreement or in documents or
instruments delivered pursuant

                                       30

<PAGE>

hereto shall survive the Closing Date and eighteen months thereafter; provided
that 3.1, 3.2, 3.6 (solely with respect to title) 3.11, 3.13, 3.15, and 4.2
shall survive for the duration of the applicable statute of limitations with
respects to the matters set forth therein.

      9.2. INDEMNIFICATION BY SELLER. Seller shall defend, indemnify and hold
Buyer harmless against and with respect to, and shall reimburse Buyer for:

            9.2.1. Any and all losses, liabilities or damages resulting from any
untrue representation, breach of warranty or nonfulfillment of any covenant by
Seller contained herein;

            9.2.2. Any and all obligations of Seller not assumed by Buyer
pursuant to the terms hereof;

            9.2.3. Any and all losses, liabilities or damages resulting from
Seller's operation or ownership of the Systems or Assets prior to the Closing
Date; and

            9.2.4. Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including, without limitation,
reasonable legal fees and expenses, incident to any of the foregoing or incurred
in investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.

      9.3. INDEMNIFICATION BY BUYER. Buyer shall defend, indemnify and hold
Seller harmless against and with respect to, and shall reimburse Seller for:

            9.3.1. Any and all losses, liabilities or damages resulting from any
untrue representation, breach of warranty or nonfulfillment of any covenant by
Buyer contained herein;

            9.3.2. Any and all of the Assumed Liabilities;

            9.3.3. Any and all losses, liabilities or damages resulting from
Buyer's operation or ownership of the Systems or Assets on and after the Closing
Date; and

            9.3.4. Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including, without limitation,
reasonable legal fees and expenses, incident to any of the foregoing or incurred
in investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.

      9.4. PROCEDURE FOR INDEMNIFICATION. The procedure for indemnification
shall be as follows:

            9.4.1. The party claiming indemnification (the "CLAIMANT") shall
promptly give notice to the party from whom indemnification is claimed (the
"INDEMNIFYING PARTY") of any claim, whether between the parties or brought by a
third party, specifying (a) the factual basis for such claim and (b) the
estimated amount of the claim. If the claim relates to an action, suit or
proceeding filed by a third party against Claimant, such notice shall be given
by Claimant within ten business days after written notice of such action, suit
or proceeding was given to Claimant; provided that failure to give such notice
within such ten-day period shall not bar or otherwise prejudice Claimant's
rights to indemnification with respect to such third-party action, suit or

                                       31

<PAGE>

proceeding unless any defense, claim, counterclaim or cross-claim of the
Indemnifying Party is prejudiced thereby.

            9.4.2. Following receipt of notice from the Claimant of a claim, the
Indemnifying Party shall have 30 days to make such investigation of the claim as
the Indemnifying Party deems necessary or desirable. For the purposes of such
investigation, the Claimant agrees to make available to the Indemnifying Party
and/or its authorized representative(s) the information relied upon by the
Claimant to substantiate the claim. If the Claimant and the Indemnifying Party
agree at or prior to the expiration of said 30-day period (or any mutually
agreed upon extension thereof) to the validity and amount of such claim, the
Indemnifying Party shall immediately pay to the Claimant the full amount of the
claim subject to the terms and in accordance with the procedures set forth
herein. If the Claimant and the Indemnifying Party do not agree within said
period (or any mutually agreed upon extension thereof), the Claimant may seek
appropriate legal remedy.

            9.4.3. With respect to any claim by a third party as to which the
Claimant is entitled to indemnification hereunder, the Indemnifying Party shall
have the right at its own expense, to participate in or assume control of the
defense of such claim, and the Claimant shall cooperate fully with the
Indemnifying Party. If the Indemnifying Party elects to assume control of the
defense of any third-party claim, the Claimant shall have the right to
participate in the defense of such claim at its own expense. If the Indemnifying
Party does not elect to assume control or otherwise participate in the defense
of any third party claim, it shall be bound by the results obtained by the
Claimant with respect to such claim, and the Indemnifying Party shall be
responsible and shall promptly reimburse Claimant for all associated costs, fees
and expenses.

            9.4.4. If a claim, whether between the parties or by a third party,
requires immediate action, the parties will diligently seek to reach a decision
with respect thereto as expeditiously as practicable.

      9.5. LIMITATION ON INDEMNIFICATION, EXCLUSIVE REMEDY.

            9.5.1. Seller shall not be liable under Section 9.2 for breach of
representations and warranties for any losses or damages arising out of any
single claim or aggregate claims until the total amount of all such losses or
damages suffered or paid by Buyer exceeds TWENTY-FIVE THOUSAND DOLLARS AND
00/100 ($25,000.00) ("SELLER'S BASKET") in which case Seller shall, subject to
the provisions of Section 9.5.2, be liable for the total amount of all such
losses or damages.

            9.5.2. Subject to the provisions of Sections 9.5.4, Seller's
liability under Section 9.2 after Closing shall be limited in amount to the
Holdback.

            9.5.3. The amount payable by Seller to Buyer with respect to Section
9.2 shall be reduced by the amount of any insurance proceeds received or
expected to be received by Buyer with respect to losses, liabilities or damages,
and each of the parties hereby agrees to use reasonable efforts to collect any
and all insurance proceeds to which it may be entitled in respect to any such
losses, liabilities or damages. To the extent that insurance proceeds are
received

                                       32

<PAGE>

and/or a tax benefit is realized after payment has been made by Seller to Buyer,
Buyer shall promptly pay an amount equal to such proceeds or benefit to Seller.

            9.5.4. After the Closing Date, the sole and exclusive remedy of any
party for any misrepresentation or any breach of a warranty or covenant set
forth in or made pursuant to this Agreement shall be a claim for indemnification
under and pursuant to this Article 9; provided that nothing contained herein
shall limit Buyer's remedy of specific performance and other equitable relief
with respect to Seller's obligations under Section 10.7; provided further that
there shall be no limitation on Buyer's indemnity rights hereunder with respect
to any and all breaches of any representations and warranties under Sections
3.1, 3.2, 3.6 (solely with respect to title) 3.11, 3.13, and 3.15

10.   MISCELLANEOUS

      10.1. NOTICES. All notices, demands and requests required or permitted to
be given under the provisions of this Agreement shall be (a) in writing, (b)
delivered by personal delivery, facsimile transmission (to be followed promptly
by written confirmation mailed by certified mail as provided below) or sent by
commercial delivery service or certified mail, return receipt requested, (c)
deemed to have been given on the date of personal delivery, the date of
transmission and receipt of facsimile transmissions, or the date set forth in
the records of the delivery service or on the return receipt, and (d) addressed
as follows:

                  If to Seller:

                                    c/o Northland Communications Corporation
                                    101 Stewart Street, Suite 700
                                    Seattle, WA 98101
                                    Attn: Gary Jones and Paul Milan
                                    Facsimile No.: (206) 748-5061

                           With a copy to:

                                    Perkins Coie LLP
                                    1201 Third Avenue, Suite 4800
                                    Seattle, WA 98101
                                    Attn: Georges Yates, Esq.
                                    Facsimile No.: (206) 359-4402

                  If to Buyer:

                                    Cequel III Communications I, LLC
                                    12444 Powerscourt Drive
                                    St. Louis, Missouri 63131
                                    Attn: Craig Rosenthal
                                    Senior Counsel
                                    Telephone: (314) 965-2020
                                    Facsimile: (314) 965-0500

                           With a copy to:

                                       33

<PAGE>

                                    Heather Wood,
                                    Senior Vice President
                                    Corporate Development
                                    at the same address

                           With a copy to:

                                    Brown Raysman Millstein Felder & Steiner LLP
                                    900 Third Avenue New York, New York 10022
                                    Attn: Stanley E. Bloch
                                    Telephone: (212) 895-2000
                                    Facsimile: (212) 895-2900

                           or to any such other persons or addresses as the
parties may from time to time designate in a writing delivered in accordance
with this Section 10.1.

      10.2. BENEFIT AND BINDING EFFECT. Neither party hereto may assign this
Agreement without the prior written consent of the other party hereto, which
consent shall not be unreasonably withheld; provided, however, that Buyer may
assign this Agreement to one or more of the subsidiaries or affiliates of Buyer,
without the prior written consent of Seller, provided that such assignment does
not cause any consent or approval required to be obtained hereunder to be
withheld or materially delayed, and provided further, that such assignment shall
not relieve assignor of its purchase price and indemnity obligations or
liabilities hereunder. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.

      10.3. BULK TRANSFER. Buyer acknowledges that Seller has not and will not
file any transfer notice or otherwise complied with applicable bulk transfer
laws, and the parties agree to waive compliance with same.

      10.4. GOVERNING LAW; VENUE. This Agreement shall be governed, construed
and enforced in accordance with the laws of the State of New York, without
regard to the conflicts of law principles of such state. The Buyer and Seller
hereby agree that any dispute arising out of or relating to this Agreement shall
be submitted to arbitration before a panel of three arbitrators in Denver,
Colorado in accordance with the commercial arbitration rules of the American
Arbitration Association. At any time that a dispute has arisen which the parties
are unable to resolve, any party to such dispute may send written notice to the
other that it intends to submit such dispute to arbitration. The parties agree
to cooperate to conclude any such arbitration promptly. The decision of such
arbitration panel shall be final and binding. However, the parties can seek
injunctive relief, but not monetary damages, in a court of law. The prevailing
party shall be entitled to the reimbursement from the other party of all costs
and expenses incurred, if any, including attorney's fees, to enforce its rights
and remedies hereunder. The parties agree that this Section 10.4 serves as a
material inducement for Seller to enter into this Agreement. THE PARTIES HEREBY
WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY SUCH ACTION OR PROCEEDING.

                                       34

<PAGE>

      10.5 GENDER AND NUMBER. Words used herein, regardless of the gender and
number specifically used, shall be deemed and construed to include any other
gender, masculine, feminine or neuter, and any other number, singular or plural,
as the context requires.

      10.6. ENTIRE AGREEMENT. This Agreement, all schedules and exhibits hereto,
and all documents and certificates to be delivered by the parties pursuant
hereto collectively represent the entire understanding and agreement between
Buyer and Seller with respect to the subject matter hereof. All schedules and
exhibits attached to this Agreement shall be deemed part of this Agreement and
incorporated herein, where applicable, as if fully set forth herein. This
Agreement supersedes all prior negotiations between Buyer and Seller with
respect to the transactions contemplated hereby, and all letters of intent and
other writings relating to such negotiations, and cannot be amended,
supplemented or modified except by an agreement in writing which makes specific
reference to this Agreement or an agreement delivered pursuant hereto, as the
case may be, and which is signed by the party against which enforcement of any
such amendment, supplement or modification is sought.

      10.7. FURTHER ASSURANCES. Each party covenants that at any time, and from
time to time, after the Closing Date, it will execute such additional
instruments and take such actions as may be reasonably requested by the other
parties to confirm or perfect or otherwise to carry out the intent and purposes
of this Agreement.

      10.8. WAIVER OF COMPLIANCE; CONSENTS. Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
representation, warranty, covenant, agreement or condition herein may be waived
by the party entitled to the benefits thereof, but such waiver or failure to
insist upon strict compliance with such obligation, representation, warranty,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure.

      10.9. SEVERABILITY. If any provision of this Agreement or the application
thereof to any person or circumstance shall be invalid or unenforceable to any
extent, the remainder of this Agreement and the application of such provision to
other persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law; provided, however, that the
economic and legal substance of the transactions contemplated by this Agreement
is not affected in any manner that is materially adverse to any party affected
by such invalidity or unenforceability.

      10.10. COUNTERPARTS. This Agreement may be signed in any number of
counterparts with the same effect as if the signature on each such counterpart
were upon the same instrument, and a facsimile transmission shall be deemed to
be an original signature.

      10.11. NO THIRD-PARTY BENEFICIARIES. This Agreement constitutes an
agreement solely among the parties hereto, and, except as otherwise provided
herein, is not intended to and will not confer any rights, remedies, obligations
or liabilities, legal or equitable on any person other than the parties hereto
and their respective successors or assigns, or otherwise constitute any person a
third party beneficiary under or by reason of this Agreement.

                                       35

<PAGE>

      10.12. TAX CONSEQUENCES. Except as provided in Section 3.13 of this
Agreement, no party to this Agreement makes any representation or warranty,
express or implied, with respect to the tax implications of any aspect of this
Agreement on any other party to this Agreement, and all parties expressly
disclaim any such representation or warranty with respect to any tax
consequences arising under this Agreement. Each party has relied solely on its
own tax advisors with respect to the tax implications of this Agreement.

      10.13. CONSTRUCTION. This Agreement has been negotiated by Buyer and
Seller and their respective legal counsel, and legal or equitable principles
that might require the construction of this Agreement or any provision of this
Agreement against the party drafting this Agreement shall not apply in any
construction or interpretation of this Agreement.

      10.14. TIMING OF NOTICE AND PERFORMANCE. If the last day permitted for the
giving of any notice or the performance of any act required or permitted under
this Agreement falls on a day that is not a business day, the time for the
giving of such notice or the performance of such act will be extended to the
next succeeding business day.

      10.15. CURE. For all purposes under this Agreement, the existence or
occurrence of any event or circumstance that constitutes a breach of a
representation or warranty or the nonfulfillment of any pre-Closing covenant or
agreement of Buyer or Seller contained in this Agreement (including, without
limitation, the schedules hereto) on the date such representation or warranty is
made or the fulfillment of such pre-Closing covenant or agreement is due, shall
not constitute a breach of such representation or warranty or the nonfulfillment
of such pre-Closing covenant or agreement if such event or circumstance is cured
within 15 days of the written notice thereof.

      10.16. COVENANT NOT TO SUE AND NONRECOURSE TO PARTNERS.

              10.16.1 Buyer 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 (each a "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.

              10.16.2 Buyer 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

                                       36

<PAGE>

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).

      10.17. HEADINGS. The headings herein are included for ease of reference
only and shall not control or affect the meaning or construction of the
provisions of this Agreement.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       37

<PAGE>

      WHEREAS, this Asset Purchase Agreement is executed as of the date first
above written, by

                                    BUYER:

                                    CEQUEL III COMMUNICATIONS I, LLC

                                    By: /S/ HEATHER WOOD
                                        ----------------

                                    Name: Heather Wood

                                    Title: Senior Vice President

                         [ADDITIONAL SIGNATURES FOLLOW]

                                       1

<PAGE>

      WHEREAS, this Asset Purchase Agreement is executed as of the date first
above written, by

                                    SELLER:

                                    NORTHLAND CABLE PROPERTIES SEVEN LIMITED
                                    PARTNERSHIP

                                        By: NORTHLAND COMMUNICATIONS CORPORATION
                                            ------------------------------------
                                            (Managing General Partner)

                                        By: /S/ GARY S. JONES
                                            -----------------

                                        Name: Gary S. Jones

                                        Title: President

                                       2<PAGE>

                                                                   EXHIBIT 10.41

                            ASSET PURCHASE AGREEMENT

                          DATED AS OF FEBRUARY 24, 2005

                                     BETWEEN

                       MCDONALD INVESTMENT COMPANY, INC.,

                                       AND

              NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                 PAGE
<S>                                                                                                              <C>
1.  Assets Sold and Purchased; Purchase Price...............................................................       1
    1.1      Purchased Assets...............................................................................       1
    1.2      Excluded Assets................................................................................       2
    1.3      Assumed Liabilities............................................................................       3
    1.4      Purchase Price.................................................................................       4
    1.5      Adjustments to Purchase Price..................................................................       4
    1.6      Final Adjustment Amount........................................................................       6
    1.7      Transfer Taxes.................................................................................       7
    1.8      Allocation.....................................................................................       7
2.  Closing Date and Place..................................................................................       7
3.  Seller's Representations and Warranties.................................................................       7
    3.1      Organization and Standing of Seller............................................................       7
    3.2      Authority; Enforceability......................................................................       7
    3.3      Authorizations and CATV Instruments............................................................       8
    3.4      Properties.....................................................................................      10
    3.5      Contracts Listed; No Defaults..................................................................      10
    3.6      Approvals and Consents.........................................................................      11
    3.7      Financial Statements; Change in Condition of Assets............................................      11
    3.8      Certain Information............................................................................      12
    3.9      Compliance with Laws and Agreements; Litigation................................................      13
    3.10     Trademarks, Trade Names, Copyright.............................................................      13
    3.11     Taxes and Fees.................................................................................      14
    3.12     Condition of System............................................................................      14
    3.13     Employees; Compensation; Unions................................................................      15
    3.14     Insurance......................................................................................      15
    3.15     No Restoration.................................................................................      16
    3.16     Federal Aviation Authority.....................................................................      16
    3.17     Additional FCC Matters.........................................................................      16
    3.18     Environmental Matters..........................................................................      16
    3.19     Books and Records..............................................................................      17
    3.20     Disclosure.....................................................................................      18
4.  Buyer's Representations and Warranties..................................................................      18
    4.1      Organization and Standing of Buyer.............................................................      18
    4.2      Authority; Enforceability......................................................................      18
    4.3      Approvals and Consents.........................................................................      18
    4.4      Disclosure.....................................................................................      18
    4.5      Legal Proceedings..............................................................................      18
    4.6      Financing......................................................................................      19
5.  Covenants...............................................................................................      19
    5.1      Conduct of Business Pending Closing............................................................      19
    5.2      Regulatory and Other Authorizations; Consents..................................................      21
    5.3      Access to Information..........................................................................      21
    5.4      Contracts Not To Be Assumed....................................................................      22
</TABLE>

<PAGE>

<TABLE>
<S>                                                                                                               <C>
    5.5      Confidentiality................................................................................      22
    5.6      Preservation of Records........................................................................      22
    5.7      Rate Practices.................................................................................      23
    5.8      Employees......................................................................................      23
    5.9      Proof of Performance; Signal Leakage; Electrical Requirements..................................      23
    5.10     Public Announcements...........................................................................      24
    5.11     Real Property Matters..........................................................................      24
    5.12     Notification...................................................................................      25
    5.13     Inventory; Commercially Reasonable Efforts.....................................................      25
6.  Conditions to Buyer's Obligations.......................................................................      25
    6.1      Consents and Acknowledgments...................................................................      26
    6.2      No Material Adverse Changes....................................................................      26
    6.3      Representations True and Agreements Performed..................................................      26
    6.4      Seller's Deliveries............................................................................      26
    6.5      Real Property Matters..........................................................................      26
    6.6      Legal Proceedings..............................................................................      26
7.  Conditions of Seller's Obligations......................................................................      27
    7.1      Representations True and Agreements Performed..................................................      27
    7.2      Consents.......................................................................................      27
    7.3      Buyer's Deliveries.............................................................................      27
    7.4      Legal Proceedings..............................................................................      27
8.  Seller's Deliveries at Closing..........................................................................      27
    8.1      Documents of Conveyance and Transfer...........................................................      27
    8.2      Officer's Certificate of Seller................................................................      28
    8.3      Lien Search....................................................................................      28
    8.4      Release of Encumbrances........................................................................      28
    8.5      Other Documents................................................................................      28
    8.6      Power of Attorney..............................................................................      29
    8.7      Opinion of Counsel.............................................................................      29
    8.8      Opinion of FCC Counsel.........................................................................      29
    8.9      Noncompetition Agreement.......................................................................      29
    8.10     Escrow Agreement...............................................................................      29
    8.11     Post Closing Agreement.........................................................................      29
9.  Buyer's Deliveries at Closing...........................................................................      29
    9.1      Officer's Certificate of Buyer.................................................................      29
    9.2      Opinion of Counsel.............................................................................      29
    9.3      Assumption of Obligations......................................................................      29
    9.4      Payment........................................................................................      29
    9.5      Noncompetition Agreement.......................................................................      29
    9.6      Escrow Agreement...............................................................................      30
    9.7      Post Closing Agreement.  The TransitionalServices Agreement, substantially in the form of
             Exhibit I, duly executed by Buyer..............................................................      30
10. Commissions.............................................................................................      30
11. Termination.............................................................................................      30
    11.1     Method of Termination..........................................................................      30
    11.2     Rights Upon Termination........................................................................      31
</TABLE>

                                       ii

<PAGE>

<TABLE>
<S>                                                                                                               <C>
12. Indemnification by Seller and Buyer.....................................................................      31
    12.1     Indemnification of Buyer.......................................................................      31
    12.2     Indemnification of Seller......................................................................      31
    12.3     Defense and Settlement of Claims...............................................................      32
    12.4     Indemnification Fund...........................................................................      33
    12.5     Limitation of Indemnification..................................................................      33
    12.6     Remedies Exclusive.............................................................................      33
    12.7     Time of Claim..................................................................................      34
7.  Non-Assignable Contracts................................................................................      34
8.  Survival of Representations, Warranties and Covenants...................................................      34
9.  Risk of Loss and Casualty Damage........................................................................      34
10. Miscellaneous...........................................................................................      34
    10.1     Successors and Assigns.........................................................................      34
    10.2     Construction...................................................................................      34
    10.3     Notice.........................................................................................      34
    10.4     Multiple Counterparts..........................................................................      35
    10.5     Captions.......................................................................................      36
    10.6     Exhibits and Schedules.........................................................................      36
    10.7     No Third-Party Rights..........................................................................      36
    10.8     Further Assurances.............................................................................      36
    10.9     Cure...........................................................................................      36
    10.10    Covenant Not To Sue and Nonrecourse to Partners................................................      36
    10.11    Amendments.....................................................................................      37
    10.12    Severability...................................................................................      37
    10.13    Entire Agreement...............................................................................      37
</TABLE>

                                      iii

<PAGE>

INDEX OF SCHEDULES

    Schedule 1.1(d)      Contracts Not To Be Assigned
    Schedule 1.2         Excluded Assets
    Schedule 1.4(c)      Advertising Receivables
    Schedule 1.8         Allocation of Purchase Price
    Schedule 3.3(a)      Authorizations and CATV Instruments
    Schedule 3.3(d)      Authority Rights to Purchase the System and Intent to
                         Provide CATV Services
    Schedule 3.3(f)      List of all Franchise Areas that are Certified to
                         Regulate Rates
    Schedule 3.3(g)      Unfulfilled Promises or Commitments for Capital
                         Improvements
    Schedule 3.4(a)-1    Real Property
    Schedule 3.4(a)-2    Personal Property
    Schedule 3.5         Business Contracts
    Schedule 3.6         Approvals and Consents for Seller
    Schedule 3.7         Financial Statements
    Schedule 3.8         Technical and Business Information Concerning the
                         System
    Schedule 3.9(a)      Noncompliance with Laws and Agreements
    Schedule 3.9(b)      Modification of Signals Carried on the System
    Schedule 3.10        Filings with the United States Copyright Office
    Schedule 3.12        Condition of System
    Schedule 3.13(a)     Employees
    Schedule 3.13(b)     Employee Benefit Plans
    Schedule 3.14        Insurance Policies
    Schedule 3.16        Federal Aviation Authority Approvals and Waivers
    Schedule 3.17(b)     Compliance with Laws
    Schedule 3.18(a)     Phase I Report
    Schedule 3.18(b)     Environmental Permits, Licenses
    Schedule 4.3         Approvals and Consents for Buyer
    Schedule 5.1(c)      Inventory and Spare Parts
    Schedule 5.1(g)      Disconnect Policy
    Schedule 5.3         Authorized Employees
    Schedule 5.7         Rate Practices

INDEX OF EXHIBITS

    Exhibit A            Escrow Agreement
    Exhibit B            Form of Franchise Consent Resolution
    Exhibit C            Special Warranty Deed
    Exhibit D            Form of Bill of Sale
    Exhibit E            Form of Power of Attorney
    Exhibit F            Opinion of Seller's Counsel
    Exhibit G            Opinion of Seller's FCC Counsel
    Exhibit H            Form of Noncompetition Agreement
    Exhibit I            Transition Billing Services Agreement
    Exhibit J            Opinion of Buyer's Counsel

                                       iv

<PAGE>

    Exhibit K            Assignment and Assumption Agreement

                                        v

<PAGE>

                            ASSET PURCHASE AGREEMENT

            THIS ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of the
24th day of February, 2005, is entered into by and between MCDONALD INVESTMENT
COMPANY, INC., an Alabama corporation ("Buyer"), and NORTHLAND CABLE PROPERTIES
SEVEN LIMITED PARTNERSHIP, a Washington limited partnership ("Seller").

                                   WITNESSETH:

            WHEREAS, Seller is the owner and operator of a cable television
("CATV") system and business in respect thereof (the "CATV Business") serving
Bay City, Texas and surrounding areas (said system, but excluding any portion of
the system situated in Matagorda, Texas, and the CATV Business being
collectively referred to herein as the "System"), pursuant to certain
franchises, permits, licenses, consents and other authorizations (collectively
being termed the "Authorizations," the grantors thereof being termed the
"Authorities" and the instruments granting the same being termed the "CATV
Instruments"); and

            WHEREAS, Seller desires to sell, and Buyer desires to buy, on the
terms and subject to the conditions contained in this Agreement, the System,
together with the Authorizations, CATV Instruments, assets, contracts and rights
used by Seller in connection with the System, free and clear of all mortgages,
security interests, liens, charges, reservations or exclusions of rights or
interests, or other encumbrances ("Encumbrances"), except as hereinafter
provided;

            NOW, THEREFORE, in consideration of the promises, covenants and
agreements set forth herein, the parties hereto agree as follows:

1. Assets Sold and Purchased; Purchase Price.

            1.1 Purchased Assets. On the Closing Date, and subject to the
conditions hereinafter set forth, Seller shall sell, and Buyer shall buy, all of
the following assets, properties and rights of Seller (the "Purchased Assets"):

                  (a) All Authorizations (including the CATV Instruments
      relating thereto) that relate solely to the operation of the System;

                  (b) All real property, including, without limitation, all
      towers, fixtures, leaseholds, licenses, easements, rights-of-way, and
      other real property interests owned or held by Seller at the Closing Date
      (as defined in Section 2), but excluding agreements for the attachment of
      cable plant to third-party poles and through conduit, and used exclusively
      in connection with the System (collectively, the "Real Property");

                  (c) All tangible personal property owned by Seller at the
      Closing Date and used exclusively in connection with the System
      (collectively, the "Personal Property");

<PAGE>

                  (d) All contracts, leases of personal property, pole
      attachment (to the extent assignable) and other agreements, licenses,
      commitments and understandings exclusively relating to the System, other
      than the CATV Instruments, (i) in effect on the date of this Agreement or
      (ii) entered into by Seller after the execution of this Agreement which
      are made in the ordinary course of business consistent with past practice,
      but excluding any collective bargaining agreements, employment agreements
      and employee benefit plans (as defined under the Employment Retirement
      Income Security Act of 1974, as amended ("ERISA"), and those other
      contracts, leases, agreements, licenses, commitments and understandings
      set forth on Schedule 1.1(d) as those not to be assigned and assumed
      (subject to such exception, the "Business Contracts").

                  (e) All commitments and orders for CATV service to customers
      to be provided by the System existing at the Closing Date;

                  (f) All telephone numbers and listings exclusively relating to
      the System;

                  (g) All of Seller's right, title and interest in and to
      manufacturers' warranties with respect to the Purchased Assets;

                  (h) All available schematics, blueprints, engineering data,
      current customer lists, system maps and other technical information
      exclusively relating to the System;

                  (i) All other assets of whatever nature and wherever located
      owned by Seller and exclusively used in connection with the design,
      construction or operation of the System, which assets shall include all of
      Seller's books and records or copies thereof relating exclusively to the
      System; and

                  (j) All Accounts Receivable (as herein defined) of Seller that
      relate exclusively to the System.

            1.2 Excluded Assets. Notwithstanding anything in this Agreement to
the contrary, the assets sold to Buyer hereunder shall not include (and Seller
shall retain):

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

                  (b) Cash, cash equivalents and marketable securities;

                  (c) Rights to any tax refunds for tax periods ending on or
      prior to the Closing;

                  (d) All Personal Property disposed of or consumed in the
      ordinary course of business, consistent with past practices and as
      permitted under the terms hereof, between the date hereof and the Closing
      Date;

                                       2

<PAGE>

                  (e) All expenses associated with the system of the Seller
      known as the "Matagorda System";

                  (f) Seller's rights under any Business Contract not assumed by
      Buyer pursuant to Section 1.1(d) hereof;

                  (g) All trademarks, trade names, service marks, service names,
      logos and copyright and similar proprietary rights of Seller or its
      affiliates, whether or not used in the business of the System;

                  (h) Any employee benefit plan, compensation arrangement or
      multi-employer benefit plan in which System employees currently
      participate;

                  (i) All rights to receive fees or services from any affiliate
      of Seller; other than fees for services, if any, rendered by Buyer after
      Closing;

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

                  (k) Subject to Section 8.11 hereof, all equipment, software,
      licenses and agreements related to Seller's customer billing system;

                  (l) Any contracts, agreements or other arrangements between
      Seller and any affiliate of Seller;

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

                  (n) All insurance policies and bonds and all proceeds,
      payments, settlements and other amounts payable under such policies;

                  (o) All advertising accounts receivables; and (p) The other
      assets listed on Schedule 1.2.

            1.3 Assumed Liabilities. Buyer will assume and agrees to pay,
perform and discharge when due all of Seller's liabilities and obligations under
all advertising commitments, if any, for which Buyer has received advanced
deposits as listed on Schedule 1.3, the Business Contracts, the Authorizations,
the CATV Instruments, and all customer obligations, in each case relating to
periods from and after the Closing Date (the "Assumed Liabilities"). Except as
expressly set forth in this Agreement, Buyer will not assume any other
liabilities of Seller or related to the System, the Purchased Assets, or the
CATV Business. Without limiting the foregoing, Buyer shall assume no liability
or obligation with respect to the payment of salary or severance or provision of
benefits, including but not limited to the benefits payable under any employee
benefit plan with respect to the employment by Seller of any employee or
independent contractor of Seller or of any former employee of Seller. Seller
shall be responsible for (a) compliance with the COBRA notice and continuation
coverage requirements under Part 6 of Title I of ERISA, with respect to all
employees (and their beneficiaries) experiencing a qualifying event (as defined
in Section 603 of ERISA) on account of the transactions

                                       3

<PAGE>

contemplated by this Agreement or occurring prior to the Closing and (b) rate
refunds to customers of the System with respect to rates in effect for periods
prior to the Closing Date.

            1.4 Purchase Price. (a) The aggregate purchase price (the "Purchase
      Price") to be paid by Buyer to Seller for the Purchased Assets shall be an
      amount in cash equal to the sum of (a) Ten Million Three Hundred Fifty-Six
      Thousand, Fifty-Eight Dollars ($10,356,058), and (b) the amount of the
      customer Accounts Receivable of Seller as determined by Section 1.4(b).
      Upon signing, Buyer shall deliver to USBank, as escrow agent (the "Escrow
      Agent") the amount of one hundred twenty-five thousand dollars ($125,000)
      (the "Deposit") to secure the obligations of Buyer to close under this
      Agreement. The Deposit shall be held in an account and applied pursuant to
      the terms of an Escrow Agreement, substantially in the form attached
      hereto as Exhibit A (the "Escrow Agreement"). Upon the Closing, the
      Deposit, together with interest thereon, shall be delivered to Seller and
      credited against the Purchase Price. The remainder of the Purchase Price
      (the Purchase Price less the amount of the Deposit plus any accrued
      interest) shall be payable on the Closing Date by wire transfer to such
      account or accounts as Seller shall direct, subject to the adjustments set
      forth in Section 1.5, and provided that a portion of the Purchase Price
      equal to the "Indemnification Fund" (as defined in Section 12.4), will be
      paid on the Closing Date by Buyer into an escrow account pursuant to the
      Escrow Agreement and applied as described in Section 12.4.

                  (b) Accounts Receivable. The Purchase Price shall include an
      amount equal to 95% of the amount of the accounts receivable due from
      customers of the System existing as of the Closing Date and billed sixty
      (60) or less days prior to the Closing Date, as shown on the Estimate
      Statement. For purposes of this subparagraph, and for subparagraph 1.5(d),
      a month shall be considered as thirty (30) days, regardless of the actual
      number of days in the month.

            1.5 Adjustments to Purchase Price. The Purchase Price will be
adjusted as follows:

                  (a) Seller shall prepare and deliver to Buyer, at least seven
      (7) days prior to the Closing Date (the "Estimate Statement Due Date"), a
      statement (the "Estimate Statement") showing as of the latest date
      reasonably possible (i) the amount reasonably estimated by Seller, in good
      faith, to be the net amount, if any, of the Purchase Price adjustments
      provided for in this Section 1.5, (ii) a list of the System's accounts
      receivable prepared in accordance with generally accepted accounting
      principles and consistent with Seller's past practices, showing the aging
      thereof, and customer deposits, and (iii) a statement as to the number of
      Basic Customers (as defined in Section 1.5(c)) accompanied by materials
      sufficient to show how such numbers were determined, each certified by
      Seller's general partner on behalf of Seller as being true and correct and
      prepared in accordance with the terms of this Agreement. Prior to the
      Closing, Seller shall provide Buyer with copies of or reasonable access to
      such relevant books and records as Buyer may reasonably request for
      purposes of verifying the adjustments set forth in the Estimate Statement.
      Seller and Buyer agree to work together in good faith to resolve on or
      before the Closing Date any disagreement with respect to any matter set
      forth in the Estimate Statement. The Purchase Price paid by Buyer shall be
      based on the estimated

                                       4

<PAGE>

      adjustment amount set forth in the Estimate Statement agreed to by Seller
      and Buyer and shall be adjusted post-Closing, if necessary, pursuant to
      Section 1.6.

                  (b) Prorations and Deposits. The Purchase Price shall be
      increased for prepaid expenses (excluding, however, prepaid expenses
      relating to any Business Contracts or agreements that will not be assumed
      by Buyer and are listed on Schedule 1.1(d)), and shall be reduced for
      accrued expenses and prepaid income, all as determined in accordance with
      generally accepted accounting principles, to reflect the principle that,
      except as qualified in this Section 1.5, all income and expenses
      attributable to the System for the period before 12:01 a.m. on the Closing
      Date are for the account of Seller, and all income and expenses
      attributable to the System for the period on or after 12:01 a.m. on the
      Closing Date are for the account of Buyer. Payroll expenses, including
      accrued wages, salaries, vacation and sick pay for Seller's employees, and
      franchise fees shall be paid by Seller to the day of Closing and shall not
      be prorated. The Purchase Price shall be increased by the amount of any
      monies relating to the System that are on deposit with third parties as
      security for Seller's performance of the Business Contracts as of the
      Closing Date. The Purchase Price shall be decreased by the amount of any
      monies held by Seller as customer deposits, liability for which is assumed
      by Buyer.

                  (c) Basic Customers. Subject to the provisions of Section
      1.5(e), if the number of Basic Customers of the System, as shown on the
      Estimate Statement, is less than 4,695, the Purchase Price shall be
      decreased by an amount equal to the product of (i) $2,205.76 times (ii)
      the difference of (A) 4,695 minus (B) the number of Basic Customers.
      "Basic Customers" means the number based on an equivalent basic unit base,
      which shall include customers for economy basic, standard basic, and the
      equivalent customers derived from the result of the bulk customers revenue
      divided by the Effective Rate; provided, however, that such result shall
      be limited by the terms of Section 1.5(e) hereof. "Effective Rate" is the
      result of the sum of the total billings from economy basic and standard
      basic customers, divided by the number of economy basic and standard basic
      customers. Customers will be included in the calculation if (i) full
      payment for at least one month of service has been paid by customer, and
      (ii) the account is not more than sixty (60) days past due from the first
      day of the month for which services are provided or, if more than sixty
      (60) days past due, who owe $5.00 or less with respect to the amount due
      for the period beyond sixty (60) days. Notwithstanding any of the
      foregoing, if any Basic Customer who has been a customer for less than
      thirty (30) days prior to the Closing Date disconnects service within
      ninety (90) days after the Closing Date, Seller shall pay to Buyer a
      credit for each such customer in an amount calculated in accordance with
      the calculation provided above in this Section 1.5(c); provided, however,
      that Seller shall pay Buyer such credit only in the case that Buyer during
      such ninety (90) day period has not made (i) any rate increases, (ii) any
      voluntary deletions of any channels, including any deletions within a tier
      of service, (iii) any changes from Seller's pre-Closing disconnect
      policies..

                  (d) Gross Revenues. In the alternative to the price adjustment
      set forth in Section 1.5(c), at Buyer's option and subject to the
      provisions of Section 1.5(e), the Purchase Price may be adjusted downward
      to the extent that the "Monthly Recurring Revenue Per Basic Customer" (as
      defined below) is less than $46.89 (the "Target Recurring Revenue"). The
      amount of any such Purchase Price reduction shall be a dollar

                                       5

<PAGE>

      amount equal to the product of (i) the positive remainder, if any, of the
      Monthly Recurring Revenue Per Basic Customer divided by the Target
      Recurring Revenue, subtracted from the number one, multiplied by (ii)
      $10,356,058. "Monthly Recurring Revenue" shall mean the monthly average
      from the most recent advance billing reports for the three (3) months
      immediately preceding the Closing Date of Seller's advance monthly
      billings to Basic Customers for recurring monthly charges for cable
      service, pay services, digital services, converter box rental, Internet
      services and franchise fees, but excluding all other charges, including
      (without limitation) charges for pass-through of sales taxes, late charges
      or installation or disconnect fees or other non-recurring charges,
      computed on a per Basic Customer basis using the number of monthly Basic
      Customers related to such billings for each of the three (3) full months
      immediately preceding the Closing Date. The foregoing amounts shall be
      adjusted, on a pro forma basis, for (i) any rate roll back ordered prior
      to the Closing Date and (ii) any implemented rate increase to the extent
      either adjustment is not fully reflected in the foregoing amounts.

                  (e) Purchase Price Floor. Notwithstanding anything to the
      contrary set forth in Section 1.5(c) or 1.5(d) above, the Purchase Price
      shall in no event be reduced below $9,000,000 (the "Floor"). If the
      Purchase Price adjustments set forth in Section 1.5(c) or 1.5(d) would
      result in a Purchase Price below the Floor, Buyer may elect to set the
      Purchase Price at the Floor or, if Buyer does not so elect, Seller may
      elect to terminate this Agreement.

            1.6 Final Adjustment Amount. Within ninety (90) days after the
Closing Date, Buyer shall deliver to Seller a certificate (the "Adjustment
Certificate") setting forth any changes (based on actual amounts as of the
Closing Date including the number of Basic Customers) in the adjustments made at
Closing pursuant to Section 1.5, together with a copy of any working papers or
other documents relating to the Adjustment Certificate or other documents
supporting the Adjustment Certificate as Seller may reasonably request. Buyer
will provide Seller with copies or reasonable access to all books and records
and other information or documents reasonably requested by Seller for the
limited use of reviewing and analyzing the Adjustment Certificate. To the extent
any item cannot be reasonably determined within ninety (90) days after the
Closing Date, the appropriate party shall furnish such item to the other as soon
as practicable after it is available thereafter, but in no event more than 60
days later, and such item thereafter shall be adjusted under the procedures set
forth in this Section 1.6. If Seller shall conclude that the Adjustment
Certificate does not accurately reflect the changes to be made to the
adjustments made at Closing pursuant to the first sentence of this Section 1.6,
Seller shall, within thirty (30) days after its receipt of the Adjustment
Certificate, provide to Buyer written notice thereof, which notice shall set
forth in reasonable detail the basis for Seller's objections to the Adjustment
Certificate. If Buyer and Seller cannot resolve any dispute to their mutual
satisfaction within fifteen (15) days after Buyer's receipt of Seller's written
notice of objection (the "Resolution Period"), Buyer and Seller hereby designate
Ernst & Young LLP to review the Adjustment Certificate, Seller's discrepancy
statement and any other relevant documents. The cost of retaining such firm
shall be borne by Buyer on the one hand, and Seller, on the other hand, in the
same proportion that the aggregate amount of the disputed items submitted to
Ernst & Young, LLP that is resolved in favor of the Buyer or Seller bears to the
total amount of the disputed items submitted (as finally determined by Ernst &
Young, LLP). Ernst & Young, LLP shall report its conclusions in writing to Buyer
and Seller no later than forty-five (45) days after

                                       6

<PAGE>

appointment pursuant to this Section 1.6, and such conclusions as to factual and
accounting matters respecting adjustments shall be conclusive on all parties to
this Agreement and not subject to dispute or review. If, as a result of any
adjustments made hereunder, Buyer is finally determined to owe an amount to
Seller, Buyer shall within five (5) business days pay such amount thereof to
Seller, and if Seller is finally determined to owe an amount to Buyer, Seller
shall within five (5) business days pay such amount thereof to Buyer, and if not
so paid, Buyer, at its option, may also make a claim against the Indemnification
Fund for any payments of Seller required under this Section 1.6 (in the event of
any such claim being paid from the Indemnification Fund, Seller shall
immediately replenish the Indemnification Fund in the amount of such payment).
Any payments to be made hereunder shall be made by wire transfer of immediately
available funds to such parties as are designated in writing by the party
receiving payment.

            1.7 Transfer Taxes. Any sales, use, transfer, franchise, recording
or other similar taxes, fees or charges due as a result of the transactions
provided for herein shall be shared equally by Seller and Buyer.

            1.8 Allocation. For federal income and other applicable tax
purposes, the Purchase Price shall be allocated among the Purchased Assets as
set forth on Schedule 1.8, such allocation to be made as provided in Section
1060 of the Internal Revenue Code of 1986, as amended (the "Code"). Buyer and
Seller shall not take any position on the respective federal income tax or other
applicable tax returns that is inconsistent with the allocation of the Purchase
Price as agreed to in Schedule 1.8 or as adjusted as a result of a subsequent
increase or decrease in the Purchase Price.

2. Closing Date and Place. Unless this Agreement is terminated pursuant to
Section 11, the date of closing ("Closing") hereunder (the "Closing Date") shall
be the last day of the month following the date on which the conditions set
forth in Sections 6 and 7 (other than the delivery of documents to be delivered
at Closing) have been satisfied. The Closing shall, to the extent practicable,
be handled by fax, mail and express mail; if a physical Closing shall be
necessary, the Closing shall be held at the offices of the System in Bay City,
Texas.

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

            3.1 Organization and Standing of Seller. Seller is a limited
partnership duly organized, validly existing, and in good standing under the
laws of the State of Washington, and is qualified to do business and in good
standing in the State of Texas. Seller has all requisite partnership power and
authority to execute, deliver, and perform this Agreement, and has all requisite
power as is necessary and required to operate the System at the places where and
in the manner in which the System is operated. Seller is not a participant in
any joint venture, partnership or similar arrangement with any other person or
party with respect to any part of the System or the Purchased Assets.

            3.2 Authority; Enforceability. The execution, delivery and
performance of this Agreement have been duly and validly authorized by Seller,
and the execution, delivery and (assuming receipt of the consents of third
parties required for transfer of the Authorizations, CATV Instruments and
Business Contracts to be assumed by Buyer) performance of this

                                       7

<PAGE>

Agreement by Seller will not: (i) result in a breach or violation by Seller of,
(ii) constitute a default by Seller under, or (iii) create or impose any
Encumbrance upon any of the Purchased Assets pursuant to, any CATV Instrument,
Business Contract or other agreement or instrument, charter or by-law provision,
statute, ordinance, rule, regulation, or order to which Seller is a party or by
which Seller or the Purchased Assets is bound, except for such breaches,
defaults and encumbrances as could not reasonably be expected to result in a
Material Adverse Effect on the System as a whole. (For purposes of this
Agreement, the term "Material Adverse Effect" shall mean monetary consequences
to a party of $32,500 or more in any single event or series of related events.)
This Agreement constitutes the legal, valid, and binding obligation of Seller
enforceable against Seller in accordance with its terms, except (a) as rights to
indemnity hereunder may be limited by federal or state securities laws or the
public policies embodied therein, (b) as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally, and (c) as the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.

            3.3 Authorizations and CATV Instruments.

                  (a) Schedule 3.3(a) contains a true and complete list of all
      current Authorizations and CATV Instruments issued to Seller by the
      Federal Communications Commission (the "FCC") and any other Authority,
      including, but not limited to, all licenses, franchises, ordinances,
      permits, registrations and certifications and of all compliance
      certificates, reports to the FCC (including, but not limited to, reports
      on Schedule 1 and 2 to Form 325 and Form 395-A and schedules thereto),
      reports by Seller to any municipal authority granting any licenses or
      franchises, any license or franchise application and those Authorizations
      relating to business radio services and community antenna relay services,
      and for the System's earth stations, the information contained in the
      latest of each of such reports being accurate and complete in all material
      respects as of the date filed with the respective agency. All of the
      agreements listed on Schedule 3.3(a) are valid and binding and are in full
      force and effect and are legally enforceable in accordance with their
      terms. To Seller's knowledge, there are no facts that constitute a valid
      basis for revocation, suspension, termination or denial of the granting of
      a new Authorization upon the expiration thereof, or elimination of any
      rights under any Authorization or CATV Instrument. Subject to Seller
      obtaining the required consents of applicable Authorities and third
      parties, the execution, delivery and performance of this Agreement will
      not entitle any person or entity to cancel, suspend, terminate or diminish
      the rights of Seller under any Authorization or CATV Instrument, all of
      which rights are being assigned to Buyer to the full extent held by
      Seller. No conditions or restrictions, except as stated in the
      Authorizations or CATV Instruments, apply to the Authorizations or CATV
      Instruments. Seller has furnished to Buyer true and complete copies of all
      documents listed on Schedule 3.3(a) and all correspondence between Seller
      and any Authorities having a material relevance thereto. Seller has
      furnished accurate written summaries of all oral agreements and
      understandings binding on Seller with respect to any Authorizations or
      CATV Instruments. Except as set forth on Schedule 3.3(a), Seller has not
      received any written notice from the FCC or any other Authority within the
      last 5 years that Seller or the System is not in material compliance with
      all Seller Authorizations and CATV Instruments.

                                       8

<PAGE>

                  (b) The Authorizations duly authorize Seller, and Buyer as
      successor-in-interest to Seller (assuming all required consents are
      obtained for the assignment of such Authorizations to Buyer and Buyer's
      eligibility to hold such Authorizations), to operate the System as and
      where it is presently operated.

                  (c) To the knowledge of Seller, after due inquiry of an
      appropriate official of each Authority by Seller's System Manager, no
      Authority has granted a franchise to any person other than Seller or
      Buyer, nor has any person applied to any Authority for a franchise to
      build or operate a CATV system within the geographical area covered by the
      franchise granted to Seller as listed on Schedule 3.3(a), except as set
      forth on Schedule 3.3(a).

                  (d) Except as set forth on Schedule 3.3(d), no Authority has
      any right to purchase the System or any portion thereof, and no Authority
      that has granted a franchise to Seller has notified Seller in writing of
      any intention to provide any CATV services.

                  (e) Seller has timely made all filings relating to the System
      in order to preserve its rights pursuant to Section 626 of the
      Communications Act of 1934, as amended (the "Communications Act") and
      otherwise has diligently pursued the renewal of any franchise relating to
      the System due to expire by its terms within 36 months of the date of this
      Agreement in order to obtain such renewal on commercially reasonable
      terms. Seller is in compliance in all material respects with all federal,
      state and local laws, including any franchise, relating to the System, and
      has no reason to believe that any franchise relating to the System will
      not be renewed on reasonable terms.

                  (f) Seller has filed all rate regulation forms required to be
      filed with the FCC and/or appropriate Authority for the System. Seller has
      made available to Buyer true and complete copies of such forms. Set forth
      on Schedule 3.3(f) is an accurate list of all franchise areas that are
      certified to regulate the basic rates of the System pursuant to the laws
      and regulations of the FCC and a list of all franchise areas in which a
      complaint regarding cable programming services has been filed with the FCC
      within the past 36 months. All factual statements made by or on behalf of
      the System in any such form are, in all material respects, accurate and
      complete. Schedule 3.3(f) sets forth a true and complete listing of all
      current rate disputes and/or rate settlements with the FCC and/or
      appropriate Authority relating to the System. To Seller's knowledge, no
      basis exists under Section 623 of the Communications Act or relevant rules
      of the FCC, as in effect at the date of this Agreement, for any rollback
      of rates for basic service, cable programming service or any rollback or
      refund of rates for any premium or pay service, with respect to the
      System.

                  (g) Except as may be set forth on Schedule 3.3(g) or as
      required by law, no unfulfilled promises or commitments for capital
      improvements in connection with the CATV Business have been made by Seller
      regarding the System.

                                       9

<PAGE>

                  (h) Seller has made all submissions required under the
         Communications Act, FCC rules and the Authorizations and CATV
         Instruments to operate the System. Seller has received no written
         notice from any Authority regarding a failure to make any such
         submission regarding the System.

            3.4 Properties.

                  (a) Schedule 3.4-(a)-1 contains a complete and correct list of
      all Real Property specifying Seller's interest therein, and Schedule
      3.4-(a)-2 contains a complete and current list of all material items
      (including, without limitation, all headend equipment, test equipment,
      office equipment and motor vehicles (year and model)) of Personal Property
      (other than inventory) and a list of the inventory that Seller will
      deliver to Buyer at Closing (which list can be revised by Seller, upon
      prior notification and consent by Buyer, if items to be delivered at
      Closing are different from those set forth on Schedule 3.4-(a)-2). Except
      for Permitted Encumbrances, (i) Seller has good and marketable title, free
      and clear of any Encumbrance or adverse claim to all Purchased Assets, and
      (ii) none of the Purchased Assets is subject to any restriction (except
      for any consents required for transfer or assignment) which would prevent
      or materially adversely affect the use presently made thereof or the
      transfer of the CATV Business and related assets contemplated by this
      Agreement or the value of the Purchased Asset(s) to which such restriction
      pertains, and, upon such transfer, Buyer shall acquire such title as
      Seller herein represents and warrants Seller has. "Permitted Encumbrances"
      means any and all Encumbrances: (i) for Taxes if the same shall at the
      time not be delinquent or are being contested in good faith; (ii)
      consisting of easements, zoning restrictions, encumbrances or other
      restrictions on the use of the Real Property that do not materially affect
      the value of the Purchased Assets encumbered thereby as they are used in
      the CATV Business or materially impair the ability of Seller to use such
      Purchased Assets in the CATV Business; (iii) standard exceptions reflected
      on the Title Commitment, and any title or survey objections which are
      waived or deemed waived by Buyer pursuant to Section 5.11; (iv) resulting
      from deposits to secure payments of workers' compensation, employment
      insurance or other social security programs; (v) that are to be removed at
      closing; (vi) associated with the Assumed Liabilities; (vii) arising by
      operation of law or in the ordinary course of business with respect to
      obligations to vendors, carriers, warehousemen, repairmen, mechanics,
      workers, materialmen, that are not yet due or that are being contested in
      good faith.

                  (b) Assuming Buyer's qualification to transact business in the
      State of Texas, the receipt of all necessary Authorizations by Buyer and
      subject to the employment of necessary personnel by Buyer subsequent to
      Closing, Buyer obtaining or possessing its own customer billing system and
      any other replacement for necessary Excluded Assets, the Purchased Assets
      collectively constitute all assets and rights reasonably required to
      enable Buyer to operate the System as a going enterprise and as
      successor-in-interest to Seller.

            3.5 Contracts Listed; No Defaults. All Business Contracts (except
employment agreements terminable at will and items listed on Schedule 1.1(d))
are listed and correctly described on Schedule 3.5. Seller has furnished to
Buyer true and complete copies of

                                       10

<PAGE>

all Business Contracts listed on Schedule 3.5. Each of the CATV Instruments and
Business Contracts is in full force and effect and constitutes a valid and
binding obligation of Seller, enforceable against Seller in accordance with its
terms; Seller and, to Seller's knowledge, each other party thereto, has complied
with all material provisions thereof and are not in default thereunder; and all
payments required to be made and currently due thereunder have been made by the
parties required to do so, except to the extent that any payments are being
contested in good faith. There are not (i) any currently threatened
cancellations of any Business Contracts, (ii) any outstanding disputes under any
Business Contract or (iii) to Seller's knowledge, any basis for any claim of
breach or default thereunder, except in the case of each of the foregoing, that
would not cause a Material Adverse Effect on the System. The execution, delivery
and performance of this Agreement will not entitle any other party to a Business
Contract to cancel, suspend or terminate such Business Contract except for such
Business Contracts that require the consent to such assignment by such other
party. Except as set forth in Schedule 3.5, in the case of any CATV Instruments
and Business Contracts to which Seller was not an original party, Seller's
rights thereunder have been duly assigned to Seller by written instrument, and
where required, such assignment has been consented to in writing by the other
party or parties thereto, and Seller has furnished Buyer with true and complete
copies of all such assignments and consents.

            3.6 Approvals and Consents. Schedule 3.6 sets forth all the persons
or parties whose approval of or consent to Seller's execution, delivery or
performance of this Agreement and the transactions contemplated hereby, or with
whom the filing of any certificate, notice, application, report or other
documents, is legally or contractually required or is necessary to preclude any
cancellation, suspension, or termination of or diminution of rights under any of
the CATV Instruments or Business Contracts or to enable Buyer to continue to
operate the CATV Business as is presently conducted. Seller is not subject to
any restriction which would prevent consummation of the transactions
contemplated by this Agreement other than such approvals and consents set forth
on Schedule 3.6.

            3.7 Financial Statements; Change in Condition of Assets.

                  (a) Attached hereto as Schedule 3.7 are true and complete
      copies of unaudited System statements of income for the nine months ended
      December 31, 2004 and unaudited System statements of income for the years
      ended December 31, 2003, December 31, 2002 and December 31, 2001, and
      capital expenditures, proceeds from asset dispositions and distributions
      to partners for the time periods indicated above (collectively, the
      "Financial Statements"), each of which was prepared from books and records
      of account of Seller kept in the normal course of business and in
      accordance with generally accepted accounting principles, consistently
      applied in accordance with Seller's past practices, as such Financial
      Statements are reflected in prior audited financial statements of Seller,
      and together present fairly and accurately the results of its operations
      for the periods covered thereby. Since December 31, 2003, there has been
      no material adverse change to the condition of the Purchased Assets as a
      whole or to the CATV Business, no portion of the movable Personal Property
      has been removed from the System since such time except in the ordinary
      course of business, and Seller has not acted to cause, and has experienced
      no occurrence of, any circumstance, event, condition, or state of facts of
      any character, whether or not in the ordinary course of business and
      whether or not covered by insurance,

                                       11

<PAGE>

      which might reasonably be expected to result in any material adverse
      change to the Purchased Assets as a whole or the CATV Business or the
      System's financial condition, results of operations or prospects.

                  (b) The Financial Statements do not, because of the provision
      of services or the bearing of costs and expenses by any other person,
      related or unrelated, or for any other reason, understate the actual costs
      and expenses of the operating System or otherwise conducting the CATV
      Business.

                  (c) There are no liabilities, debts, or obligations of any
      nature, whether accrued, absolute, contingent or otherwise relating to the
      System, except for (i) obligations under Authorizations and CATV
      Instruments listed on Schedule 3.3(a), (ii) contractual obligations under
      Business Contracts listed (or not required to be listed) on Schedule 3.5,
      (iii) obligations accrued and reflected on the Financial Statements, (iv)
      obligations arising in the ordinary course of business and which, either
      individually or in the aggregate, are immaterial (v) Permitted
      Encumbrances, or (vi) which otherwise would not result in or cause a
      Material Adverse Effect.

            3.8 Certain Information. Attached hereto as Schedule 3.8 is the
following current technical and business information concerning the System,
which information is correct and complete except to the extent noted thereon in
order for the same not to be materially misleading: (i) a list of all System
maps; (ii) a summary of strand miles of plant showing the number of linear
miles, aerial, underground and total, (showing approximately 154 miles of
distribution plant) and number of homes passed (showing approximately 8,300
homes passed); (iii) a description of the System's channel capacity by headend,
including channels available for use; (iv) a list of all stations or signals
carried by the System, with a breakdown as to those being carried by microwave
and off-air reception and those which must be carried pursuant to the
Communications Act and those for which there are retransmission agreements; (v)
a list of all performance bonds or other security required by the Authorizations
and Business Contracts and the amount so required; (vi) a description of current
standard monthly customer rates for CATV services by franchise area, which rates
are in material compliance with all Authorizations, laws, CATV Instruments and
Business Contracts, and the current franchise fees being charged; (vii) a list
of names of the licensors of each System pole attachment and conduit license and
an attached copy of the most recent invoice with respect thereto showing all
pole attachments and conduit rentals for which the System is being billed;
(viii) a list of all grantors of crossing permits, permit numbers, general
location for which the permit is granted and an attached copy of the most recent
invoice with respect thereto showing all crossing permits for which the System
is being billed; (ix) the number of basic customers as of the respective dates
of the Financial Statements, and a breakdown of the number of System customers,
showing as separate items basic, commercial outlets, basic bulk, pay, pay bulk
and additional outlets for which a charge is made, if any, calculated for each
System franchise and consolidated for the system as a whole, and each of such
items showing separate data for subscriptions for a term of one year or less and
for more than one year from the date hereof; (x) a list of all courtesy customer
accounts; and (xi) a list of all bulk and commercial accounts including monthly
rates and expiration dates. A "home passed" for purposes of clause (ii) shall
mean a habitable dwelling that can be served by a drop cable from the system
which will provide (to the extent the original installation has not been

                                       12

<PAGE>

modified) a (phi)dBmV signal to the back of each television set (up to a
maximum of two) in the household, without use of a home amplifier.

            3.9 Compliance with Laws and Agreements; Litigation.

                  (a) Seller is in compliance in all material respects with all
      applicable laws, rules, regulations, requirements, standards and
      guidelines of all federal, state and local authorities or agencies having
      jurisdiction over the System or any portion thereof and with the terms and
      provisions of any mortgage, lease, license, indenture, franchise or
      agreement relating to the System. Seller is not in default of or in
      violation with respect to any judgment, order, injunction or decree of any
      court, administrative agency or other governmental authority respecting
      the System. Neither Seller nor any officer, director, stockholder, agent,
      employee or representative of Seller has violated any rule or regulation
      in connection with procuring or maintaining any Authorization or CATV
      Instrument in any respect so as to materially adversely affect the
      System's assets. Without limitation as to any of the foregoing, with
      respect to the System, Seller is in material compliance with all equal
      employment opportunity ("EEO") standards prescribed in paragraphs (b), (c)
      and (d) of Section 634 of the Cable Communications Policy Act of 1984 and
      meets all other EEO standards which it is required to meet, except where
      the failure to do so would not have a Material Adverse Effect.

                  (b) Seller is not a party to, and has no knowledge of any
      basis, for the institution of, any legal action, counterclaim, suit,
      arbitration, governmental investigation, other legal, administrative or
      tax proceeding, or material claim against or relating to the System.
      Except as disclosed in writing to Buyer on or before the date hereof or
      set forth on Schedule 3.9(a), without any limitation on the foregoing, and
      solely with respect to the System, there are no proceedings pending or
      known by Seller to be threatened, nor does Seller have any knowledge of
      any pending written demands made upon Seller by any federal, state or
      local government, or agency thereof, or a broadcasting station or any
      telephone company or other public utility, pole landlord or licensor,
      obligating Seller to terminate, modify or change, in any material respect,
      the terms and conditions of any of Seller's rights with respect to (i)
      pole attachment rights or rentals, (ii) CATV customer rates or tariffs,
      (iii) Authorizations, (iv) leases or rental payments, (v) locations of
      cable, amplifiers, towers or other property (including easements, rights
      of access and similar rights in connection therewith), (vi) carriage of
      signals presently carried on the System (except as set forth on Schedule
      3.9(b)), (vii) EEO standards, (viii) Business Contracts or (ix) CATV
      Instruments, except, in each case, as may affect the industry in general
      or arise out of a change in law or regulation.

            3.10 Trademarks, Trade Names, Copyright. Set forth on Schedule 3.10
is a correct and complete list of all marks, licenses, initial notices, notices
of change and statements of account filed in calendar year 2003 and thereafter,
and any supplements, amendments and schedules thereto, issued by or filed with
the United States Patent and Trademark Office or the United States Copyright
Office solely in connection with the System. Seller has furnished to Buyer true
and complete copies of all documents listed on Schedule 3.10 as well as all
correspondence with any Authorities having a material relevance thereto. Seller,
with respect to each item set forth on Schedule 3.10, has filed all required
trademark, trade name, and copyright

                                       13

<PAGE>

notices and statements and supplemental statements with the United States Patent
and Trademark Office or the United States Copyright Office, as applicable, and
has paid all fees and surcharges required with respect thereto. Seller has
furnished to Buyer true and complete copies of all documents listed on Schedule
3.10 as well as all correspondence with any Authorities having a material
relevance thereto. Seller has full legal right and authority, and all necessary
Authorizations from the FCC and the United States Copyright Office, to carry on
and to continue to carry and use in the conduct of the CATV Business all signals
now being carried and which are listed in Schedule 3.8, including all distant
signals. Solely with respect to the System, no written notices or written
demands have been received from the FCC, from any local television station or
from any other person, association, company, station, governmental unit or
agency challenging the right of Seller to carry any signal or program, or
challenging any method of copyright reporting or the amount of copyright fees
and surcharges to be paid with respect to the System. There exists no pending,
or to Seller's knowledge, threatened claims against Seller alleging that
Seller's trademarks, trade names or copyrights infringe on or conflicts with the
rights of any other party. Except as to claims of Seller and its affiliates to
the marks listed on Schedule 3.10, the Purchased Assets when conveyed to Buyer
will be free of the rightful claim of any third person by way of trademark,
trade name or copyright infringement or the like.

            3.11 Taxes and Fees. Seller has paid and discharged, or has caused
to be paid and discharged, or is contesting in good faith, all taxes,
assessments, excises, levies and other obligations and liabilities for which it
is obligated and will pay and discharge all such items which will have become
due and payable prior to or as of the Closing Date with respect to the System,
the Purchased Assets or the CATV Business. Seller has duly filed or will file,
or has caused or will cause to be duly filed, with the appropriate federal,
state and local governmental agencies all returns and reports required to be
filed by Seller as of the Closing Date and with respect to any taxable period
prior to or which includes the Closing Date (each of which fairly present or
will present the information purported to be shown and reflect or will reflect,
all tax liability of Seller for the periods in question) and Seller has paid or
will pay in full (or will contest in good faith) all taxes, interest, penalties,
assessments or deficiencies, if any, due to, or claimed to be due by, any such
taxing authority in respect of the periods for which such returns and reports
were filed. All necessary payments required to be withheld for Seller's
employees (including, without limitation, for unemployment insurance) have been
properly withheld and paid. There are no tax liens affecting any of the
Purchased Assets other than liens for current taxes not yet due and payable or
for taxes contested by Seller in good faith as described in this Section 3.11.

            3.12 Condition of System.

                  (a) Except as set forth on Schedule 3.12, the System and all
      major component parts including specifically, but not limited to, towers,
      headend antenna equipment, headend amplifiers and associated equipment,
      line amplifiers, trunk line cable, and distribution cable, are in good
      operating condition, and are currently maintained, and require no more
      repair, replacement and rehabilitation than is normal in the CATV
      industry. The System delivers a picture and sound quality to all customers
      which meets the technical standards of 47 C.F.R., Part 76, Subpart K, and
      an adequate proof of performance test as required hereunder shall be made
      pursuant to Section 5.9 showing compliance

                                       14

<PAGE>

      therewith. The plant, including any electrical grounding, used in the
      System does not require any material rearrangement or rehabilitation in
      order to conform to the requirements of the National Electrical Safety
      Code or the National Electrical Code, or the terms of any pole attachment,
      conduit or buried cable agreement. The towers used in the System do not
      require any material rearrangement or rehabilitation in order to conform
      to the requirements of the Federal Aviation Authority, the FCC or the
      Occupational Safety and Health Administration.

                  (b) As to the System, Seller monitors signal leakage,
      maintains applicable signal leakage logs, conducts the cumulative leakage
      tests, demonstrates compliance with the cumulative leakage criteria by
      showing a passing cumulative leakage index or a successful flyover, and
      complies with the frequency separation standards, in material compliance
      with the requirements set forth in 47 C.F.R. Section 76.610 through
      Section 76.619. With respect to the System, Seller has filed with the FCC
      all notifications of utilization of frequencies in the 108-137 MHZ and
      225-400 MHZ bands and all other reports required to be filed under such
      rules and regulations (the "CLI Reports") and has not received any
      notification of objection thereto by the FCC which has not been promptly
      resolved by Seller with no Material Adverse Effect on the System. As to
      the System, Seller has provided Buyer with true and complete copies of all
      CLI Reports which it has filed since December 31, 2003, together with
      descriptions of its preventive maintenance program regarding signal
      leakage.

            3.13 Employees; Compensation; Unions.

                  (a) Schedule 3.13(a) lists the name and address of each
      present employee of the System, date of employment, position, and has
      provided to Buyer in a separate confidential communication the latest
      increase in compensation, and total compensation payable for such
      position. Seller has provided to Buyer a copy of Seller's employee policy
      manual, setting forth Seller's policies as to payment of salaries, payment
      of commissions, payment of bonuses, accrued vacation time, accrued sick
      pay and similar items. As of the date hereof, Seller's System manager has
      not received notification that any of the current employees of the System
      presently plan to terminate their employment.

                  (b) Schedule 3.13(b) lists all the employee benefit plans
      which Seller maintains for the System. System employees participate in
      some or all of the listed plans.

                  (c) None of the employees of the System are unionized nor, to
      Seller's knowledge, has any effort been made to organize any such
      employees. There is no claim or litigation pending before any local, state
      or federal agencies or any court with respect to any strike or unresolved
      labor dispute, the outcome of which would adversely affect the operation
      of the System.

            3.14 Insurance. All liability insurance policies pertaining to the
System are listed on Schedule 3.14 and are in full force and effect on the date
hereof.

                                       15

<PAGE>

            3.15 No Restoration. Seller has received no notice, and to Seller's
knowledge, there is no material restoration, repaving, repair, or other work
required to be made by Seller to any street, sidewalk, or abutting or adjacent
areas, required by ordinance, code, permit, easement, contract, or otherwise,
relating to any installation of cable, conduits, curb cuts, or other
construction of the distribution system of the System.

            3.16 Federal Aviation Authority. Seller has obtained all necessary
Federal Aviation Authority approvals and waivers with respect to System towers,
each of which is listed on Schedule 3.16. Seller has furnished to Buyer true and
complete copies of all documents listed on Schedule 3.16 as well as all
correspondence between Seller and any Authorities having a material relevance
thereto.

            3.17 Additional FCC Matters.

                  (a) Seller is providing syndicated exclusivity and network
      nonduplication protection to stations entitled thereto which have
      requested such protection and have followed the FCC procedures applicable
      to origination cablecasting, the fairness doctrine, equal time and
      personal attack obligations, obscenity, sponsorship identifications and
      sponsorship lists as specified by FCC rules.

                  (b) Except as set forth on Schedule 3.17(b), Seller has
      received no written notice or other communication indicating that, with
      respect to the System, that Seller is not in compliance with any
      requirements of (i) the FCC or the Communications Act, or that any FCC
      license has been revoked or suspended, has expired or is otherwise not in
      full force and effect or (ii) applicable state and local statutes,
      regulations or ordinances. Solely with respect to the System, no written
      notices or written demands have been made to Seller challenging its right
      to carry any program services or demanding Seller to carry any program
      service not currently carried.

                  (c) The carriage of the broadcast signals carried by the
      System in each community in which such signals are so carried has been
      duly registered with the FCC and the United States Copyright Office to the
      extent required, and each of such signals is being carried in material
      compliance with all rules and regulations of the FCC. All approvals and
      authorizations of the FCC for the use of aeronautical frequency bands and
      mobile radio licenses, in each case as are necessary for the operation of
      the System, have been duly obtained. Except as set forth on Schedule
      3.17(b), all such approvals and licenses are valid and in full force and
      effect. Solely with respect to the System, Seller is in material
      compliance with the Copyright Act of 1976. Seller has not received any
      notice asserting that the System is not in compliance with the Copyright
      Act of 1976.

            3.18 Environmental Matters.

                  (a) Schedule 3.18(c) hereto contains a list of all
      environmental studies, analyses and reports in Seller's possession
      relating to the environmental condition of the Real Property. Seller shall
      deliver to Buyer copies of all such studies, analyses and reports in
      accordance with Section 5.11(c) hereof. Neither Seller nor any affiliate
      has stored, treated, disposed of, managed, generated, manufactured,
      produced, released (as

                                       16

<PAGE>

      "release" is defined in Section 101(22) of the Comprehensive Environmental
      Response, Compensation and Liability Act of 1980 ("CERCLA")), emitted or
      discharged in any material respect any Hazardous Materials on, to, in,
      under or from the Real Property.

                  (b) Seller has been and is in compliance in all material
      respects with all environmental laws and has obtained all environmental
      licenses, permits, approvals, registrations and authorizations (federal,
      state and local) material to the System. Schedule 3.18(b) contains a true,
      correct and complete list of permits, licenses, approvals, registrations
      and operating authorizations pursuant to all environmental laws with
      respect to the Real Property, the System or the Purchased Assets, and
      true, correct and complete copies of such permits, licenses, approvals and
      operating authorizations have been delivered to Buyer. All such licenses,
      permits, approvals, registrations and authorizations will be in full force
      and effect as of the Closing Date. Seller shall use commercially
      reasonable efforts to convey and arrange and, to the extent necessary,
      shall cause its affiliates to convey and arrange to transfer to Buyer by
      appropriate instruments all of their respective rights, registration,
      options, privileges and obligations existing under any transferable
      permit, license, approval or authorization with respect to the Real
      Property, the System or the Purchased Assets, and regarding environmental
      laws, including but not limited to, all such air emission permits, water
      discharge permits, and solid and hazardous waste treatment, storage and
      disposal permits.

                  (c) No governmental or private action, suit or proceeding to
      enforce or impose liability under any environmental laws is pending or, to
      Seller's knowledge, is threatened against Seller or any affiliate of
      Seller with respect to the Real Property or the System and, to Seller's
      knowledge, no lien has been created on any of the System, or the Real
      Property upon which it is situated, under any environmental laws.

                  (d) Neither Seller nor any affiliate of Seller has disposed of
      any materials from its facilities at any sites listed by the United States
      Environmental Protection Agency on the proposed or final National
      Priorities List developed pursuant to 42 U.S.C. Section 9605(8)(B) of the
      Comprehensive Environmental Response, Compensation and Liability Act.
      Additionally, Seller has no knowledge of any disposal sites utilized by it
      or any affiliate of Seller that are presently under investigation by any
      Government. No underground storage tanks are or to Seller's knowledge have
      been at any time located on the owned Real Property. None of the
      improvements at any owned Real Property, or on or under the owned Real
      Property contain asbestos or asbestos-containing material.

            3.19 Books and Records. The books, records and accounts of Seller
maintained with respect to the System, accurately and fairly reflect in all
material respects and in reasonable detail, the material transactions and the
material assets and liabilities of Seller. Seller has not engaged in any
transaction, maintained any bank account or used any of the funds of the System
except for transactions, bank accounts and funds which have been and are
reflected in the normally maintained books and records of the Seller.

                                       17

<PAGE>

            3.20 Disclosure. No representation or warranty made by Seller in
this Agreement or any material statement or material certificate furnished or to
be furnished by Seller to Buyer pursuant hereto or in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements
contained therein, in light of the circumstances in which they are made, not
misleading.

4. Buyer's Representations and Warranties.

            Buyer represents and warrants that:

            4.1 Organization and Standing of Buyer. Buyer is a corporation duly
organized and validly existing under the laws of the State of Alabama and has
all requisite power and authority under its articles of incorporation and under
the laws of the State of Alabama relating to corporations to execute, deliver
and perform this Agreement.

            4.2 Authority; Enforceability. The execution, delivery and
performance of this Agreement have been duly authorized by all necessary action
on Buyer's part. This Agreement has been duly executed and delivered by Buyer
and constitutes the legal, valid, and binding obligation of Buyer enforceable in
accordance with its terms, except to the extent such enforcement may be limited
by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
similar laws or equitable principals of general application relating to or
limiting creditor's rights. Assuming the receipt of the consents described in
Schedule 4.3, the execution, delivery and performance of this Agreement by Buyer
will not result in a breach or violation by Buyer of, or constitute a default
under, any agreement, instrument, statute, ordinance, rule, regulation or order
to which Buyer is a party or by which Buyer is bound.

            4.3 Approvals and Consents. The only persons whose approval of or
consent to the execution, delivery or performance of this Agreement and the
transactions contemplated hereby by Buyer or with whom the filing of any
certificate, notice, application, report or other document is legally or
contractually required are specified on Schedule 4.3, and Buyer is not subject
to any restriction which would prevent consummation of the transactions
contemplated by this Agreement other than such approvals and consents.

            4.4 Disclosure. No representation or warranty made by Buyer in this
Agreement or any material statement or material certificate furnished or to be
furnished by Buyer to Seller pursuant hereto or in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements
contained therein, in the light of the circumstances in which they are made, not
misleading.

            4.5 Legal Proceedings. Buyer is not a party to any action,
arbitration, audit, hearing, investigation, litigation or suit or, to Buyer's
knowledge, has been threatened with any such proceeding relating to or involving
Buyer or any of its assets, at law or in equity, that challenges, or may have
the effect of preventing, delaying, making illegal, or otherwise interfering
with Buyer's ability to consummate the transaction contemplated hereby.

                                       18

<PAGE>

            4.6 Financing. Buyer has sufficient equity capital and/or has
obtained financing commitments from a qualified lender(s) which are not subject
to material contingencies, qualifications or conditions and are sufficient to
satisfy all of its obligations under this Agreement.

5. Covenants.

            5.1 Conduct of Business Pending Closing. Until the Closing, Seller
shall:

                  (a) Conduct the CATV Business diligently and in the usual and
      ordinary manner in which the CATV Business has been conducted in the past,
      use its commercially reasonable efforts to preserve good relationships
      with suppliers, customers and other persons having business relations with
      it, and operate the CATV Business in accordance with the sound practices
      of the CATV industry;

                  (b) Not (i) without the prior written consent of Buyer, which
      shall not be unreasonably withheld or delayed, enter into any commitments
      affecting the CATV Business which, when judged in relationship to past
      business operations of the CATV Business, are unusual or extraordinary or
      outside the scope of the normal course of routine operations, or (ii)
      change any subscription rates;

                  (c) Operate the CATV Business so as to keep all the Personal
      Property in a normal and current state of repair and operating efficiency
      and maintain the inventory and spare parts to be delivered to Buyer at
      Closing as listed on Schedule 5.1(c);

                  (d) Not, without the prior written consent of Buyer, amend,
      alter or modify to the detriment of the CATV Business any material
      provision of any of the CATV Instruments or Business Contracts, or
      transfer or agree to transfer, encumber or agree to encumber any Purchased
      Assets other than in the ordinary and usual course of business;

                  (e) Not, without the prior written consent of Buyer, which
      shall not be unreasonably withheld or delayed, grant any raises to
      employees of the System, or enter into any collective bargaining
      arrangements with such employees;

                  (f) Except as authorized in Section 5.7, not, without the
      prior written consent of Buyer, enter into any agreements, whether as a
      marketing promotion or otherwise, providing for free CATV or Internet
      service or CATV or Internet service at rates less than the rates referred
      to in Section 3.8 and set forth on Schedule 3.8 or providing for free
      installations or for installation at less than Seller's standard
      installation charges or otherwise market or promote the System;

                  (g) Continue to disconnect customers consistent with its
      disconnect policy as listed on Schedule 5.1(g);

                  (h) Provide Buyer with monthly financial and operating
      statements (including customer counts for all services) within thirty (30)
      days after the end of each month, except that such statements for the
      month of Closing shall be provided

                                       19

<PAGE>

      within fifteen (15) days after the end of that month, and will promptly
      furnish Buyer with copies of such documents and with such information with
      respect to the System and its operations as Buyer may, from time to time,
      reasonably request, including billing information, cash collections and
      disbursements information, expense invoices and similar data. All such
      financial statements and other information shall (i) be true and complete
      in all material respects, (ii) be prepared from the books and records of
      Seller and in accordance with generally accepted accounting principles
      consistently applied and maintained throughout the periods indicated and
      (iii) present fairly in all material respects the financial condition of
      Seller for the periods covered by such statements. Seller shall assist
      Buyer in obtaining further financial information as Buyer may reasonably
      require;

                  (i) Maintain insurance covering the Purchased Assets in the
      System on a basis consistent with past practice;

                  (j) Pay all debts and obligations incurred by it in the
      operation of the System in the ordinary course of business consistent with
      past practice;

                  (k) Use commercially reasonable efforts not to commit any act
      or omit to do any act, nor, to the extent within Seller's reasonable
      control, permit any act or omission to act, which may cause a material
      breach of any of the Business Contracts;

                  (l) Maintain its books, accounts and records in the usual
      manner and on a basis consistent with past practice;

                  (m) Operate the System in material compliance with all
      applicable legal requirements;

                  (n) Promptly inform Buyer in writing of any material adverse
      change in the condition (financial or otherwise), operations, assets,
      liabilities or business of the System, provided, however, that, subject to
      the terms of this Agreement, the disclosure to Buyer of any such material
      adverse change shall not relieve Seller of liability for, nor shall the
      providing of such information by Seller to Buyer be deemed a waiver by
      Buyer of, the breach of any representation or warranty of Seller contained
      in this Agreement;

                  (o) Not solicit or participate in negotiations or knowingly
      permit any other person from so doing with any third party with respect to
      the sale of the Purchased Assets or the System or any transaction
      inconsistent with those contemplated hereby;

                  (p) Not, without the prior written consent of Buyer, which
      shall not be unreasonably withheld or delayed, enter into any single
      Business Contract involving a commitment by Buyer of more than $3,000 or
      any Business Contracts (other than agreements or orders for CATV service)
      which in the aggregate involve a commitment by Buyer of more than $10,000;

                  (q) Timely make all filings relating to the System in order to
      preserve its rights pursuant to Section 626 of the Communications Act and
      otherwise diligently pursue the renewal of any franchise relating to the
      System due to expire by its

                                       20

<PAGE>

      terms within thirty-six (36) months of the Closing Date in order to obtain
      such renewal on commercially reasonable terms; and

                  (r) Not make any changes to the existing channel line-up of
      the System, except (i) with the prior written consent of Buyer, which
      shall not be unreasonably withheld or delayed, or (ii) as may be necessary
      to comply with applicable law or any currently existing contract.

            5.2 Regulatory and Other Authorizations; Consents.

                  (a) Each party hereto will use its reasonable best efforts to
      obtain all Authorizations, consents, orders, permit transfers and
      approvals of all federal, state and local regulatory bodies and officials
      and other third parties that may be or become necessary for the
      performance of its obligations pursuant to this Agreement and the
      operation of the System after Closing and will cooperate fully with the
      other party hereto in promptly seeking to obtain all such Authorizations,
      consents, orders, permit transfers and approvals. The parties hereto will
      not take any action that will have the effect of materially delaying,
      impairing or impeding the receipt of any required approvals, consents or
      permit transfers or the termination of any waiting periods, except
      reasonable actions in response to unreasonable, noncontractual or unlawful
      requests from the party whose consent is being sought.

                  (b) Seller and Buyer shall each proceed timely and in good
      faith to prepare, file and prosecute obtaining the consents listed on
      Schedule 3.6, including, without limitation, the filing of FCC Form 394
      and the information required thereby, and shall submit to each franchising
      Authority whose consent is required a form of consent substantially in the
      form of Exhibit B. Each party shall prepare its own sections of such FCC
      Form 394, as applicable. Provided Buyer timely provides all requisite
      information, each such FCC Form 394 shall be filed not later than twenty
      (20) days following the date of this Agreement. Buyer shall be materially
      and substantially involved in the process of obtaining required consents
      from governmental authorities or other third parties, including, without
      limitation, joint participation with Seller in the analysis of the correct
      procedures to be followed (i) to obtain such consents and (ii) in the
      initiation, negotiation and prosecution of obtaining such consents from
      applicable authorities. Buyer shall use its reasonable best efforts to
      assist Seller, including, without limitation, making qualified personnel
      available for attending hearings and meetings with respect to such
      required consents, in accordance with time schedules reasonably
      established by Seller. Seller and Buyer shall consult with each other and
      promptly and regularly notify each other with respect to all significant
      developments in each such consent process. Seller shall give Buyer
      reasonable prior notice of all meetings and hearings scheduled with any
      franchising Authorities, and Buyer shall have the right to participate
      therein.

            5.3 Access to Information. Prior to Closing, Seller shall accord to
Buyer and to Buyer's counsel, accountants, engineers, and other representatives,
during normal business hours and on five (5) days prior written notice (which
shall include by fax or email), reasonable access to the System and to all
books, records and documents relating to the System and provide to Buyer such
information concerning the CATV Business and the operations of the System as

                                       21

<PAGE>

Buyer may reasonably request. The foregoing notwithstanding, Seller shall not be
obligated to provide Buyer access to any privileged information relating to
other systems owned by Seller, and other information that is required to be kept
confidential under applicable laws, such as HIPAA. Without the prior written
consent of the other party, neither party shall communicate with any of the
other party's employees regarding this transaction except those identified by
both Seller and Buyer on Schedule 5.3 as authorized to discuss matters with
Seller or Buyer, as the case may be. Neither Buyer nor Seller shall disclose any
facts regarding the Agreement to any of the other party's employees without
obtaining the other party's prior written consent. Any investigation or
examination by Seller or Buyer in connection with the foregoing shall not in any
way diminish or obviate any representation or warranties of Seller or Buyer, as
the case may be, made in this Agreement and the Schedules and Exhibits hereto or
in connection herewith and therewith. Any and all information, disclosures,
knowledge or facts regarding Seller or Buyer, as the case may be, and its
operations and properties derived or resulting from Seller's or Buyer's, as the
case may be, acts or conduct under the provisions of this Section and this
Agreement shall be kept confidential in accordance with the requirements of
Section 5.5. Both parties shall promptly disclose to the other party in writing,
any and all facts that it learns pursuant to this Section 5.3 that such
discovering party believes may give rise to it having a claim against the other
party under the terms of this Agreement.

            5.4 Contracts Not To Be Assumed. Buyer shall not assume those
Business Contracts which Buyer, in its sole discretion, elects not to assume
hereunder and lists on Schedule 1.1(d); provided, however, that those Business
Contracts requiring consent for any such assignment to Buyer which have not been
obtained shall not be assumed by Buyer, unless Buyer waives such consent.
Notwithstanding anything to the contrary herein, Buyer shall not be required to
accept any assignment which imposes terms more adverse to Buyer than under the
agreement or instrument to be accepted.

            5.5 Confidentiality. Each party acknowledges that the other party
would be irreparably damaged if confidential information concerning the business
and affairs of such party were disclosed to or utilized on behalf of any person
not a party to this Agreement. Each party covenants and agrees that it will not
at any time directly or indirectly, except in connection with the transactions
contemplated hereby or to the extent required by law, or as necessary to obtain
limited partner approval (including such filings with the Securities and
Exchange Commission as Seller determines are necessary or advisable to solicit
such approval or otherwise comply with applicable securities laws), make use of
or divulge, or permit any of its agents or employees to make use of or divulge,
nonpublic information concerning the business, financial or other affairs of, or
any of the methods of doing business used by, the other party. In the event that
the transactions contemplated hereby are not consummated, each party shall
return or destroy all information received from the other party upon such
party's request.

            5.6 Preservation of Records. Buyer shall preserve and make available
(including the right to inspect and copy) to Seller, its attorneys and
accountants, for a reasonable period of time, but not longer than a period
consistent with Buyer's record-retention policies and practices in its ordinary
course of business, from and after the Closing Date and during normal business
hours, such of the books, records, files, correspondence, memoranda and other
documents transferred pursuant to this Agreement as Seller may reasonably
require in connection

                                       22

<PAGE>

with any legitimate purpose, including, but not limited to, the preparation of
tax reports and returns and the preparation of financial statements.

            5.7 Rate Practices. Except as set forth on Schedule 5.7, Seller
shall obtain the prior written consent of Buyer before instituting or
implementing any changes to any standard monthly customer rates for CATV
services or Rate Practices (as defined below) in effect on the date hereof.
Except as set forth on Schedule 5.7, in connection with any such changes to the
standard monthly customer rates for CATV services or Rate Practices of Seller,
(i) Seller shall notify Buyer promptly of any planned changes to its Rate
Practices and of any hearings or meetings with governmental authorities with
respect thereto, additional certifications filed with the FCC by municipalities
and complaints filed pursuant to the 1992 Act (as defined below) and (ii) Buyer
shall use its commercially reasonable efforts to respond as promptly as
practicable (which shall include, subject to clause (i) above, response in time
to permit Seller to respond to mandatory deadlines) to any requests for consent
to any changes to Rate Practices. "Rate Practices" means any activity that is or
can reasonably be expected to be subject to (A)(1) the rate regulation
provisions of the 1992 Act and (2) any rules, regulations, orders or other
actions promulgated, enacted or taken at any time by the FCC or any state or
local governmental authority pursuant to the rate regulation provisions of the
1992 Act; or (B) any other federal law, statute, rule or regulation promulgated,
enacted or taken after the date of this Agreement, but prior to the Closing,
that directly regulates the rates of the System. "1992 Act" means The Cable
Television Consumer Protection and Competition Act of 1992, as amended.

            5.8 Employees. On or prior to the Closing Date, Seller shall
terminate all of the System employees. Buyer shall not be obligated to offer
employment to any of such employees. No later than twenty (20) days prior to the
Closing Date, Buyer will inform Seller in writing of those employees it wishes
to retain and present offers of employment to such employees (the "Transferred
Employees"). Buyer may employ an employee on such terms and with such
compensation (including participation in Buyer's benefit plans) as Buyer may
determine in its sole discretion. Any obligations Seller may have with respect
to Seller's employees under Section 4980B of the Code and Section 601 et seq. of
ERISA shall be and remain the obligations of Seller and Buyer shall not assume
any liability or responsibility therefor. Seller acknowledges that Seller shall
be responsible for and shall cause to be discharged and satisfied in full all
amounts that are required to be paid under Seller's existing employment and
compensation policies to any Transferred Employees through the Closing Date,
including wages, salaries, accrued vacation, sick pay, any employment,
incentive, compensation or bonus agreements or other benefits or payments on
account of termination. Seller shall indemnify Buyer and hold Buyer harmless
from any loss arising from Seller's employment of any Transferred Employee prior
to the Closing Date.

            5.9 Proof of Performance; Signal Leakage; Electrical Requirements.

                  (a) Seller shall, at its own expense, together with a
      representative of Buyer, no later than fifteen (15) days prior to the
      Closing Date, complete a proof of the plant of the System to enable Seller
      to meet, and to prove that it meets, FCC specifications at 450 MHZ, and
      shall have delivered proper documentation of such to Buyer. To the extent
      that such proof demonstrates that Seller does not meet the above-described
      FCC

                                       23

<PAGE>

      specifications, Seller shall remedy and repair such deficiencies to
      Buyer's reasonable satisfaction prior to the Closing Date and shall have
      delivered proper documentation of such remedy and repair to Buyer.

                  (b) No later than ten (10) days prior to the Closing Date,
      Seller shall, at its own expense, conduct a ground based System ride out
      (and Buyer at its option and own expense may conduct a "fly over")
      performance test of the System to determine compliance with the FCC basic
      signal leakage performance criteria as set forth in the FCC's rules and
      regulations and Seller agrees to remediate to be in compliance with FCC
      basic signal leakage performance criteria, on or prior to the Closing
      Date, any signal leakage which is in excess of the maximum parameters set
      forth in such criteria.

            5.10 Public Announcements. Neither party shall, without the others
prior written consent issue any press release or other public statements (or
relevant portions thereof) relating to the transactions contemplated by this
Agreement except as may be required by applicable law, court process, by
obligations pursuant to any listing agreement with any national securities
exchange, as may be necessary by Seller to obtain limited partner approval, or
as may be appropriate to inform Seller's limited partners of the status of the
transaction (but not including the specific terms of the Agreement) via Seller's
publication solely to its limited partners, know as "Cable Line".

            5.11 Real Property Matters.

                  (a) Seller shall use commercially reasonable efforts to obtain
      within forty five (45) days from the date of this Agreement, and deliver
      to Buyer, at Seller's sole cost and expense, a standard Texas form of
      Title Commitment ("Title Commitment") from Chicago Title Insurance Company
      (the "Title Company") in the amount of the agreed value of the owned Real
      Property together with copies of all title exceptions. If Seller is unable
      to deliver to Buyer the Title Commitment within forty five (45) days of
      the date of this Agreement due to a delay by a person other than the
      Seller, such as by the Title Company, such failure shall not constitute a
      breach or default under this Agreement. Buyer shall have twenty (20) days
      after receipt of such Title Commitment and title exceptions to determine
      whether such title is or is not acceptable to Buyer in the exercise of its
      reasonable discretion, which shall include Buyer's acceptance of Permitted
      Encumbrances. In the event the condition of the title is not acceptable to
      Buyer in the exercise of its reasonable discretion, Buyer shall state
      which exceptions are unacceptable. If such title exceptions that are
      consensual monetary liens are capable of being cured or eliminated by the
      payment of a liquidated sum, Seller shall be obligated, at Seller's
      expense, to remove such exceptions. If such exceptions are not consensual
      liens that can be cured by the payment of a liquidated sum, Seller may
      elect to either (i) cure such condition, or (ii) inform Buyer in writing
      that such exceptions will not be cured. If not cured, as Buyer's sole and
      exclusive remedy, Buyer may either waive such exception or terminate this
      Agreement and receive return of the Deposit.

                  (b) Seller shall use commercially reasonable efforts to obtain
      within forty five (45) days from the date of this Agreement, and provide
      to Buyer, at

                                       24

<PAGE>

      Seller's expense, a current survey of all owned Real Property prepared by
      a duly licensed land surveyor reasonably acceptable to Buyer. If Seller is
      unable to deliver to Buyer the current survey within forty five (45) days
      of the date of this Agreement due to a delay by a person other than the
      Seller, such failure shall not constitute a breach or default under this
      Agreement. Buyer shall have twenty (20) days from receipt of such survey
      to object to such survey and any matters reflected thereon, and any such
      objection shall be treated in the same manner as a title exception under
      the procedure set forth in subparagraph (a) above.

                  (c) Seller shall use commercially reasonable efforts to obtain
      within forty five (45) days from the date of this Agreement, and provide
      to Buyer, at Seller's expense, a Phase I Environmental Report prepared by
      an environmental company reasonably acceptable to Buyer regarding all
      owned Real Property showing the owned Real Property to be free and clear
      of any hazardous or toxic substances. If Seller is unable to deliver to
      Buyer the Phase I Environmental Report within forty five (45) days of the
      date of this Agreement due to a delay by a person other than the Seller,
      such failure shall not constitute a breach or default under this
      Agreement. If such report reflects the presence or possible presence of
      any hazardous or toxic substance on any of the owned Real Property, Buyer
      shall have Thirty (30) days from receipt of such report to give notice to
      Seller of such objections and the matter shall be treated in the same
      manner as a title exception under the procedures set forth in subparagraph
      (a) above.

            5.12 Notification. Each party will promptly notify the other in
writing upon becoming aware of any order or decree or any complaint praying for
an order or decree restraining or enjoining the consummation of this Agreement
or the transactions contemplated hereby, or upon receiving any notice from any
governmental authority of its intention to institute an investigation into, or
institute a suit or proceeding to restrain or enjoin the consummation of this
Agreement or such transactions, or to nullify or render ineffective this
Agreement or such transactions contemplated if consummated, or upon the
occurrence of, or upon becoming aware of the impending or threatened occurrence
of, any event which would cause or constitute a breach or would have caused a
breach had such event occurred or been known to such party prior to the date
hereof, of any of the respective representations and warranties contained in or
referred to in this Agreement or in any Schedule or Exhibits hereto.

            5.13 Inventory; Commercially Reasonable Efforts. Seller and Buyer
shall negotiate in good faith to develop a list containing approximately thirty
(30) days working inventory, not to exceed $10,000 in value (the "Inventory
List"). The parties shall complete the Inventory List no later than March 31,
2005. At Closing, pursuant to Section 8.5(c), Seller shall update Schedule
5.1(c) with the Inventory List. Seller and Buyer shall use commercially
reasonable efforts to cause all conditions to the consummation of the
transactions contemplated hereby to be fulfilled on or prior to the Closing
Date.

6. Conditions to Buyer's Obligations.

            The obligations of Buyer to be performed under this Agreement on the
Closing Date are subject to the following conditions, any one or more of which
may, however, be waived in whole or in part by Buyer by giving written notice to
Seller to that effect:

                                       25

<PAGE>

            6.1 Consents and Acknowledgments. Seller shall have obtained the
consents and approvals of the persons or parties set forth on Schedule 3.6 for
the assignment to Buyer without material modification of all CATV Instruments,
Authorizations and material Business Contracts to be assigned by Seller to Buyer
on the Closing Date pursuant to the terms of this Agreement. Without limiting
the foregoing, each franchising authority listed on Schedule 3.6 shall have
executed and delivered to Buyer a consent resolution substantially in the form
of Exhibit B. In addition, each party identified on Schedule 6.1 to each of the
agreements identified beside such parties' names on Schedule 6.1 (collectively,
the "Third Party Agreements") shall have executed and delivered to Buyer either
(i) an acknowledgment from such party to the effect that the Third Party
Agreement entered into with such party (to the extent of such party's remaining
interest therein) is in full force and effect and that Seller is in compliance
in all material respects with the terms and provisions of such agreement; or
(ii) an amendment or modification of the Third Party Agreement entered into with
such party (to the extent of such party's remaining interest therein) in form
and substance reasonably satisfactory to Buyer.

            6.2 No Material Adverse Changes. Since the date hereof, there shall
have been no material adverse change to the condition (financial or otherwise)
or operations of the System, the Purchased Assets or the CATV Business, except
(i) to the extent contemplated by this Agreement and (ii) to the extent Seller
has made or will make adequate provisions to remedy such change as of Closing.

            6.3 Representations True and Agreements Performed. The
representations and warranties of Seller set forth in this Agreement shall be
true and correct in all material respects on and as of the Closing Date with the
same effect as if made on and as of the Closing Date after taking into account
those changes authorized under the terms of this Agreement, and Seller shall
have performed each and all of its agreements, in all material respects, herein
to be performed by it on or before the Closing Date.

            6.4 Seller's Deliveries. Seller shall have delivered the documents
listed in Section 8.

            6.5 Real Property Matters. Buyer shall have received the items set
forth in Section 5.10 hereof, and shall have obtained at Seller's cost and at
standard rates from Chicago Title Insurance Company, a standard Texas form of
owner's title insurance policies for the Real Property, dated the Closing Date,
in face amounts equal to the agreed value and in form reasonably satisfactory to
Buyer insuring Buyer's interests in the Real Property and the System.

            6.6 Legal Proceedings. No action, suit or proceeding shall have been
instituted or threatened in writing against any of the parties to this Agreement
before any court or governmental department, agency or commission which might
restrain, prohibit or otherwise invalidate this Agreement or the consummation of
the transactions contemplated hereby (other than an action or proceeding
instituted or threatened directly or indirectly by Buyer or Seller). If any such
proceedings shall have been instituted, the Closing may be adjourned at the
option of either party for a period of up to ninety (90) days, and if, at the
end of such ninety (90) day period, the action, suit or proceeding shall not
have been favorably resolved to each parties' satisfaction, either party may, by
written notice to the other, terminate this Agreement without

                                       26

<PAGE>

further obligation to the other (other than obligations, if any, arising from
any prior breach of this Agreement by such party).

7. Conditions of Seller's Obligations. The obligations of Seller to be performed
under this Agreement on the Closing Date are subject to the following
conditions, any one or more of which may, however, be waived in whole or in part
by Seller by giving written notice to Buyer to that effect:

            7.1 Representations True and Agreements Performed. The
representations and warranties of Buyer set forth in this Agreement shall be
true and correct in all material respects on and as of the Closing Date with the
same effect as if made on and as of the Closing Date, and Buyer shall have
performed each and all of its agreements in all material respects herein to be
performed by it on or before the Closing Date.

            7.2 Consents. Seller shall have obtained the consents and approvals
of the persons or parties set forth on Schedule 3.6 for the assignment to Buyer
without material modification of all CATV Instruments, Authorizations and
material Business Contracts to be assigned by Seller to Buyer on the Closing
Date pursuant to the terms of this Agreement.

            7.3 Buyer's Deliveries. Buyer shall have delivered the documents
listed in Section 9.

            7.4 Legal Proceedings. No action, suit or proceeding shall have been
instituted or threatened in writing against any of the parties to this Agreement
before any court or governmental department, agency or commission which might
restrain, prohibit or otherwise invalidate this Agreement or the consummation of
the transactions contemplated hereby (other than an action or proceeding
instituted or threatened by Buyer or Seller). If any such proceedings shall have
been instituted, the Closing may be adjourned at the option of either party for
a period of up to ninety (90) days, and if, at the end of such ninety (90) day
period, the action, suit or proceeding shall not have been favorably resolved to
each parties' satisfaction, either party may, by written notice to the other,
terminate this Agreement without further obligation to the other (other than
obligations, if any arising from any prior breach of this Agreement by such
party).

8. Seller's Deliveries at Closing. On or prior to the Closing (except as
otherwise specified below), Seller shall deliver to Buyer:

            8.1 Documents of Conveyance and Transfer. A duly executed special
warranty deed to the owned Real Property in substantially the form attached as
Exhibit C hereto and subject to the approval of the title agent, a bill of sale
in substantially the form attached as Exhibit D hereto, and such other
endorsements, assignments, and other good and sufficient instruments of
conveyance, transfer and assignment and notices to third parties of the same as
may be reasonably requested by Buyer in order to vest in Buyer all the right,
title and interest of Seller in and to the Purchased Assets subject to the
Permitted Encumbrances. At or after Closing, and without further consideration,
Seller shall execute and deliver such further instruments of conveyance and
transfer and take such other action as Buyer shall reasonably request in order
to convey and transfer to Buyer any of the assets, properties and business to be

                                       27

<PAGE>

transferred pursuant to this Agreement. Seller shall obtain and deliver to Buyer
on the Closing Date such consents, approvals, assurances, and statements from
third parties as Buyer may reasonably require.

            8.2 Officer's Certificate of Seller. A certificate of Seller, signed
by the managing general partner of Seller, certifying that all the conditions
set forth in Sections 6.1, 6.2 and 6.3 have been satisfied.

            8.3 Lien Search. The results of a lien search made as of a date
within thirty (30) days of the Closing Date at the office of the Secretary of
State of the State of Texas and at the recording office in each county in which
Seller owns or leases real property used in connection with the System and at
any other locations requested by Buyer showing no liens inconsistent with the
representation made by Seller in Section 3.4 hereof.

            8.4 Release of Encumbrances. Evidence satisfactory to Buyer's
counsel of the payment or release of any and all Encumbrances against any of the
Purchased Assets, other than Permitted Encumbrances.

            8.5 Other Documents.

                  (a) All existing blueprints, schematics, working drawings,
      plans, specifications, projections, statistics, engineering records, a
      System map or maps reflecting the System "as built" (delivery of which
      shall be deemed made to the extent such lists, files and records are then
      located at the System's offices) and copies of all executed CATV
      Instruments and Business Contracts and consents to the assignment by
      Seller to Buyer thereof not previously delivered and originals where
      available;

                  (b) Customer lists, files and records used by Seller in
      connection with the operation of the System including a list of all
      pending subscriber hook-up, disconnect and repair orders, supply orders,
      and any other lists reasonably necessary to transfer smoothly the
      operation of the System as a going enterprise from Seller to Buyer
      (delivery of which shall be deemed made to the extent such lists, files
      and records are then located at the System's offices);

                  (c) Revised Schedules, certified by Seller as being true and
      correct as of the Closing Date, marked to show changes from the Schedules
      attached hereto which Revised Schedules shall, with the consent and
      approval of Buyer (which consent and approval shall not be unreasonably
      withheld) at Closing, be deemed to modify any representations or
      warranties under this Agreement other than for purposes of Section 6.3
      hereof;

                  (d) A list at Closing of the System's Accounts Receivable, as
      of the close of Business on the tenth (10th) day prior to the Closing
      Date, prepared in accordance with generally accepted accounting principles
      and consistent with Seller's past practices, showing the aging thereof,
      and customer deposits, and a statement as to the number of Basic Customers
      accompanied by materials sufficient to show how such numbers were
      determined, each certified by Seller's chief financial officer or other

                                       28

<PAGE>

      designated officer on behalf of Seller as being true and correct and
      prepared in accordance with the terms of this Agreement.

            8.6 Power of Attorney. A limited power of attorney from Seller to
Buyer in the form of Exhibit E only authorizing the endorsement of any payments
by check made with respect to the System's accounts receivable and indemnifying
Seller for Buyer exceeding the scope of such power.

            8.7 Opinion of Counsel. An opinion of Seller's counsel, dated the
Closing Date substantially in the form of Exhibit F.

            8.8 Opinion of FCC Counsel. An opinion of Seller's special FCC
counsel dated the Closing Date substantially in the form of Exhibit G.

            8.9 Noncompetition Agreement. The Noncompetition Agreement
substantially in the form attached hereto as Exhibit H, duly executed by Seller
and its managing general partner, and limited in term to 4 years and in
geographic scope to a fifty (50) mile radius of the System headend location
existing as of the date of this Agreement.

            8.10 Escrow Agreement. The Escrow Agreement, substantially in the
form of Exhibit A, duly executed by Seller.

            8.11 Post Closing Agreement. A Transition Services Agreement
substantially in the form of Exhibit I authorizing Buyer to use Seller's
subscriber billing services, trademarks, T-1 line connections (only in the event
the parties are unable to obtain consent to assign such T-1 line connections)
and similar essential services at Buyer's sole cost and expense for a period not
to exceed two (2) months from the Closing Date in order for Buyer to install and
operate its own billing System, and to arrange for other services.

9. Buyer's Deliveries at Closing.

   At the Closing, Buyer shall deliver to Seller:

            9.1 Officer's Certificate of Buyer. A certificate of Buyer, signed
by the President or a Vice President, that the conditions set forth in Section
7.1 have been satisfied.

            9.2 Opinion of Counsel. An opinion of Buyer's counsel, dated the
Closing Date, substantially in the form of Exhibit J.

            9.3 Assumption of Obligations. An Assignment and Assumption
Agreement, in the form attached hereto as Exhibit K, evidencing Buyer's
assumption and agreement to pay, discharge and perform the Assumed Liabilities.

            9.4 Payment. Payment of the Purchase Price, including the release of
the Deposit, on or before 2:00 p.m. C.S.T. on the Closing Date.

            9.5 Noncompetition Agreement. The Noncompetition Agreement,
substantially in the form of Exhibit H, duly executed by Buyer.

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<PAGE>

            9.6 Escrow Agreement. The Escrow Agreement, substantially in the
form of Exhibit A, duly executed by Buyer.

            9.7 Post Closing Agreement. The TransitionalServices Agreement,
substantially in the form of Exhibit I, duly executed by Buyer.

10. Commissions. Except for the commitments to Daniels & Associates, L.P., each
party represents and warrants to the other that it has not entered into any
agreement with any person, firm or corporation, or become indirectly a party to
any such agreement, nor has it taken any action nor is it aware of any facts
which would result in the assertion of any liability or claim for the payment of
any commission, brokerage or finder's fee in connection with the execution of
this Agreement or the consummation of the transactions contemplated hereby. Any
and all amounts due to Daniels & Associates, L.P. arising from this transaction
shall be borne by Seller.

11. Termination

            11.1 Method of Termination. This Agreement constitutes the binding
and irrevocable agreement of the parties to consummate the transactions
contemplated hereby, subject to and in accordance with the terms hereof, the
consideration for which is (a) the covenants, representations, warranties and
agreements set forth in this Agreement; and (b) the expenditures and obligations
incurred and to be incurred by Buyer on the one hand, and by Seller, on the
other hand, in respect of this Agreement, and this Agreement may be terminated
or abandoned only as follows:

                  (a) By the mutual written consent of Seller and Buyer;

                  (b) By either Buyer or Seller if the conditions to Closing
      have not been satisfied or waived by the party entitled to do so, the day
      that is one hundred and forty (140) days after the date of this Agreement,
      so long as the failure to close is not attributable to a breach hereunder
      or any other action or inaction by the party seeking to terminate;

                  (c) By either Seller or Buyer in accordance with the
      provisions of Section 6.6 or 7.4;

                  (d) By written notice delivered by Buyer on the one hand, or
      Seller on the other, if (i) a representation or warranty was not true and
      correct in all material respects when made by the non-terminating party,
      (ii) the non-terminating party has failed to perform, satisfy, or comply
      with all of its respective covenants and agreements in all material
      respects, or (iii) the non-terminating party has failed to satisfy all of
      its respective obligations and conditions in all material respects,
      provided that in the case of (ii), (iii), such non-terminating party has
      received thirty (30) days prior written notice of such failure and such
      failure has not been cured within such thirty (30) day period;

                  (e) By Seller (i) if the Purchase Price adjustment mechanism
      in Section 1.5(c) or 1.5(e) would result in a purchase price less than the
      Floor; or (ii) if Buyer elects to assume less than all the Business
      Contracts pursuant to Section 5.4 and Seller is

                                       30

<PAGE>

      unable to cause the termination of such unassumed contracts without
      material cost, penalty or other liability; or

                  (f) By Buyer in accordance with the provisions of Section
      5.11.

11.2 Rights Upon Termination.

                  (a) If either Seller or Buyer terminates this Agreement
      pursuant to Section 11.1 above, all rights and obligations of the parties
      hereunder shall terminate without any liability of any party to any other
      party except for the obligations of the parties hereto which are stated to
      survive any termination of this Agreement including, without limitation,
      any liability of any party then in breach of this Agreement and the
      indemnity provisions set forth in Section 12 hereof.

                  (b) In the event of a termination of the Agreement by Seller
      pursuant to Section 11(d), Seller shall be entitled to receive the Deposit
      as full liquidated damages suffered by Seller as a consequence of Buyer's
      breach (which amount the parties agree is a reasonable estimate of the
      damages that will be suffered by Seller and which does not constitute a
      penalty).

12. Indemnification by Seller and Buyer.

            12.1 Indemnification of Buyer. Seller shall upon demand of Buyer
indemnify and hold harmless Buyer and its officers, directors, shareholders,
employees, agents and affiliates against and in respect of all actual losses,
damages or liabilities (collectively, "Indemnified Costs") resulting from any
(a) breach of representation or warranty or non-fulfillment of any agreement
(whether to be performed prior to or subsequent to the Closing Date) on the part
of Seller under this Agreement or in any agreement delivered in connection with
this Agreement or in any certificate delivered by Seller in connection with the
Closing, (b) any liabilities or obligations on claims against Seller arising
with respect to the operation of the System prior to the Closing Date that are
not assumed by Buyer under the terms of this Agreement, (c) any liabilities or
obligations of and claims against Seller (whether absolute, accrued, contingent
or otherwise and whether a contractual, tax or any other type of liability,
obligation or claim) existing immediately prior to the Closing or arising out of
facts or circumstances existing prior thereto not expressly assumed by Buyer
pursuant hereto, (d) any failure of Seller to comply with any bulk sales or
transfer law (including the bulk sales provisions of the Uniform Commercial Code
in any jurisdiction) of any jurisdiction applicable to the sale and transfer of
the Purchased Assets contemplated hereby, and (e) all actions, suits,
proceedings, demands, assessments, judgments, reasonable attorneys' fees, costs
and expenses incident to any of the foregoing.

            12.2 Indemnification of Seller. Buyer shall upon demand of Seller
indemnify and hold harmless Seller and its officers, directors, shareholders,
employees, agents and affiliates against and in respect of all Indemnified Costs
resulting from any (a) breach of representation or warranty or non-fulfillment
of any agreement (whether to be performed prior to or subsequent to the Closing
Date) on the part of Buyer under this Agreement or in any agreement delivered in
connection with this Agreement or in any certificate delivered by Buyer in
connection with the

                                       31

<PAGE>

Closing, (b) any liabilities or obligations of and claims relating to the
operation of the System from and after the Closing Date, (c) Assumed
Liabilities, and (d) all actions, suits, proceedings, demands, assessments,
judgments, reasonable attorneys' fees, costs and expenses incident to any of the
foregoing.

            12.3 Defense and Settlement of Claims. The rights, obligations and
liabilities of the parties hereto with respect to any action, claim, suit,
proceeding or assertion of liability by any person who is not a party to the
Agreement (an "Action") as a result of which a party (the "Indemnified Party")
is to be indemnified by the other party (the "Indemnifying Party") pursuant to
Section 12.1 or Section 12.2, shall be subject to the following terms and
conditions.

                  (a) The Indemnified Party shall give prompt written notice to
      the Indemnifying Party of any Action, stating the nature and basis of the
      Action and the amount claimed thereunder, to the extent known, together
      with a copy of any claim, process or other document asserting or
      commencing the Action; provided, however, that any failure to give such
      notice will relieve the Indemnifying Party of liability only to the extent
      that the Indemnifying Party is prejudiced as a result of such failure.

                  (b) The Action shall be defended (including all proceedings on
      appeal or for review which counsel for the Indemnified Party shall deem
      appropriate) by the Indemnifying Party at the sole expense and liability
      of the Indemnifying Party, provided that within a reasonable time after
      the giving of such notice by the Indemnified Party, the Indemnifying Party
      shall have: (i) notified the Indemnified Party in writing of the
      Indemnifying Party's intention to assume the defense thereof, (ii)
      provided evidence satisfactory to the Indemnified Party of the
      Indemnifying Party's ability to pay in full any amount (including interest
      and penalties) for which the Indemnified Party may be liable as a result
      of such Action, and (iii) retained legal counsel reasonably satisfactory
      to the Indemnified Party to conduct the defense of such Action. The
      Indemnified Party shall have the right to employ its own counsel in any
      such Action, but the fees and expenses of such counsel shall be at the
      Indemnified Party's own expense unless (i) the employment of counsel by
      such Indemnified Party has been authorized by the Indemnifying Party, (ii)
      the Indemnified Party shall have reasonably concluded that there may be a
      conflict of interest between the Indemnifying Party and the Indemnified
      Party in the conduct of the defense of such action (in which case the
      Indemnifying Party shall not have the right to direct the defense of such
      action on behalf of the Indemnified Party), or (iii) the Indemnifying
      Party shall not in fact have employed counsel reasonably satisfactory to
      the Indemnified Party to assume the defense of such action.

                  (c) The Indemnifying Party shall keep the Indemnified Party
      fully informed of such Action at all stages thereof whether or not the
      Indemnified Party is represented. Each party shall make available to the
      other party and its attorneys and accountants all books and records of
      such party relating to such Action, and the parties hereto shall render to
      each other such assistance as they may reasonably require of each other in
      order to ensure the proper and adequate defense of the Action.

                  (d) The Indemnifying Party shall not, without consent of the
      Indemnified Party, which consent will not be unreasonably withheld, settle
      or compromise

                                       32

<PAGE>

      any Action or consent to entry of any judgment which does not include as
      an unconditional term thereof the giving by the claimant or the plaintiff
      to the Indemnified Party of a release from all claims against the
      Indemnified Party in respect of the Action.

            12.4 Indemnification Fund. To provide a fund (the "Indemnification
Fund") for Seller's potential indemnification obligations hereunder, ten percent
(10%) of the Purchase Price shall be delivered to the Escrow Agent, to be held
after the Closing Date in accordance with the terms of the Escrow Agreement
attached hereto as Exhibit A, subject to any changes (reasonably acceptable to
Buyer and Seller) which may be requested by the Escrow Agent. In the event Buyer
elects to adjust the Purchase Price at Closing pursuant to Section 1.5(c), then
within ten (10) days of completion of any Adjustment Certificate pursuant to
Section 1.6, (a) in the event of a Purchase Price adjustment that results in an
increase in the Purchase Price, Seller shall pay the Indemnification Fund such
amounts as may be required to make the Indemnification Fund equal 10% of the
final Adjusted Purchase Price, or (b) in the event of a Purchase Price
adjustment that results in an decrease in the Purchase Price, Buyer and Seller
shall instruct the Escrow Agent to release to Seller from the Indemnification
Fund such amounts as may be required to make the Indemnification Fund equal 10%
of the final Adjusted Purchase Price. Eighteen (18) months after the Closing
Date that portion of the Indemnification Fund remaining after satisfaction of
all indemnification obligations, but excluding any reserves for pending
unresolved Actions, shall be returned to Seller by the Escrow Agent on that date
in accordance with the terms of the Escrow Agreement. Such Indemnification Fund
shall be held, disposed of and released in accordance with the terms of the
Escrow Agreement; provided however, that Buyer's claims for indemnification
shall be limited to the Indemnification Fund.

            12.5 Limitation of Indemnification. An Indemnified Party shall not
be entitled to indemnification hereunder with respect to claims relating to any
inaccuracy in or breach of any representation or warranty of an Indemnifying
Party unless the aggregate amount of all damages to the Indemnified Party
resulting from such claims for which the Indemnifying Party would, but for the
provision of this Section 12.5, be liable to an Indemnified Party exceeds
$25,000 (the "Basket Amount") in the aggregate, at which time all amounts of
such damages including the Basket Amount, may be recovered as provided in this
Article 12. Notwithstanding the foregoing, irrespective of the Basket Amount,
full recovery may be had for all damages resulting from intentional fraud
regarding any representation or warranty. The aggregate liability of Seller to
indemnify Buyer under Section 12.5 hereof shall not exceed the Indemnification
Fund, as adjusted pursuant to Section 12.4; provided, however, that the
foregoing limitation shall not apply to any indemnified costs arising from (i)
defects in title to the Purchased Assets, (ii) environmental claims, (iii) taxes
(including, without limitation, all taxes referenced in or arising pursuant to
Sections 1.7 and 3.11, or (iv) fraud on the part of or fraudulent statement made
by Seller in connection with this transaction. In no event shall either party be
entitled to indemnification with respect to consequential, special, punitive,
exemplary and other similar types of damages.

            12.6 Remedies Exclusive. After Closing, both parties' sole and
exclusive remedy for any losses suffered with respect to the System, this
Agreement or the transaction contemplated hereby, shall be a claim for
indemnification under this Article 12.

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<PAGE>

            12.7 Time of Claim. No request for indemnification pursuant to this
Article 12 for breach of any representations or warranties of Seller or Buyer in
Article 3 and 4, respectively, shall be made after eighteen (18) months after
the Closing Date; provided, however, that the foregoing limitation shall not
apply to any indemnified costs arising from (i) defects in title to the
Purchased Assets, (ii) environmental claims, (iii) taxes (including, without
limitation, all taxes reference in or arising pursuant to Sections 1.7 and 3.11,
or (iv) fraud on the part of or fraudulent statement made by Seller or Buyer in
connection with this transaction, in which cases, the indemnification obligation
of Buyer or Seller, as the case may be, shall extend for the applicable statutes
of limitations.

13. Non-Assignable Contracts.

      Nothing contained in this Agreement shall be construed as an assignment or
an attempted assignment of any contract which is in law non-assignable without
the consent of the other party or parties thereto, unless such consent shall be
given.

14. Survival of Representations, Warranties and Covenants.

      All representations, warranties and covenants made by Seller and Buyer in
this Agreement, or pursuant hereto, shall survive the consummation of the
transactions contemplated in this Agreement until indemnification for breaches
thereof is no longer available under Section 12.7, regardless of any
investigation at any time made by or on behalf of Buyer or Seller, and shall not
be deemed merged in any document or instrument executed or delivered at the
Closing.

15. Risk of Loss and Casualty Damage.

      The risk of loss or damage by fire or other casualty to the Purchased
Assets or the System shall be upon Seller until the Closing Date.

16. Miscellaneous.

            16.1 Successors and Assigns. This Agreement shall be binding upon,
and inure to the benefit of, the respective successors and permitted assigns of
the parties. It is expressly understood that Buyer may assign its rights under
this Agreement to any affiliated entity; provided, however, that Buyer shall
remain fully liable for its obligations hereunder. In the event that at or
subsequent to Closing Buyer causes the assets and business of the System to be
transferred to some other person or corporation, the rights of Buyer hereunder
may be enforced by such other person or corporation in its own right.

            16.2 Construction. This Agreement shall be construed and enforced in
accordance with the substantive laws of the State of Texas without reference to
its principles of conflicts of law.

            16.3 Notice. Any notice, consent, waiver or other communications
hereunder shall be sent by certified, express or registered mail, return receipt
requested, postage prepaid, hand delivery or overnight air courier service, in
the case of each party to the address specified

                                       34

<PAGE>

below (or at such other address which party shall specify to the other party in
accordance herewith):

                                (a) If to Buyer:

                                    William W. McDonald, Jr.
                                    McDonald Investment Company, Inc.
                                    One Office Park Circle, Suite 300
                                    Birmingham, Alabama 35223

                                With a copy to:

                                    J. Fred Powell, Esq.
                                    Burr & Forman LLP
                                    Suite 3100, SouthTrust Tower
                                    420 North 20th Street
                                    Birmingham, Alabama 35203

                                (b) If to Seller:
                                    Northland Cable Properties Seven Limited
                                    Partnership
                                    101 Stewart Street, Suite 700
                                    Seattle, WA 98101

                                With copies to:

                                    Georges Yates, Esq.
                                    Perkins Coie LLP
                                    1201 Third Avenue, 40th Floor
                                    Seattle, WA 98101

                                And to:

                                    Paul Milan, Esq.
                                    Senior Counsel
                                    Northland Communications Corporation
                                    101 Stewart Street, Suite 700
                                    Seattle WA 98101

Notice shall be deemed to have been given three (3) business days after mailing
if sent by registered or certified mail, at the time of delivery if delivered by
hand or on the next business day if sent by express mail or overnight air
courier.

            16.4 Multiple Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. In addition, this
Agreement may contain more than one counterpart of the signature page and this
Agreement may be executed by the affixing of the signature of each party to one
of such counterpart signature pages; all of such counterpart signature pages
shall be read

                                       35

<PAGE>

as though one, and they shall have the same force and effect as though all of
the signers had signed a single signature page.

            16.5 Captions. The paragraph captions and headings in this Agreement
are for convenience and reference purposes only and should not affect in any way
the meaning or interpretation of this Agreement.

            16.6 Exhibits and Schedules. All Exhibits and Schedules are hereby
incorporated into and made a part of this Agreement.

            16.7 No Third-Party Rights. Except as provided for in Article 12
hereof, nothing in this Agreement, express or implied, shall be construed to
confer upon any person, other than the parties hereto, their successors and
permitted assigns, any legal or equitable rights, remedies, claims, obligations
or liabilities under or by reason of this Agreement.

            16.8 Further Assurances. Each party agrees to execute and deliver
any and all further agreements, documents or instruments necessary to effectuate
this Agreement and the transactions referred to herein, contemplated hereby or
reasonably requested by the other party to perfect or evidence its rights
hereunder. Each of Seller and Buyer will use commercially reasonable efforts to
complete the transactions contemplated by this Agreement as promptly as
practicable and will promptly notify the other party of any information
delivered to or obtained by such party concerning an event that would prevent
the consummation of the transactions contemplated by this Agreement.

            16.9 Cure. For all purposes under this Agreement, the existence or
occurrence of any event or circumstance that constitutes a breach of a
representation or warranty or the nonfulfillment of any pre-Closing covenant or
agreement of Buyer or Seller contained in this Agreement (including, without
limitation, the Schedules hereto) on the date such representation or warranty is
made or the fulfillment of such pre-Closing covenant or agreement is due, shall
not constitute a breach of such representation or warranty or the nonfulfillment
of such pre-Closing covenant or agreement if such event or circumstance is cured
on or prior to the Closing Date.

            16.10 Covenant Not To Sue and Nonrecourse to Partners. (a) Buyer
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 (each a "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 (except as provided for in Section 16.10(c)). As used
herein, the term "nonrecourse" means that the obligations and liabilities are
limited in recourse solely 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, either

                                       36

<PAGE>

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) Buyer 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 this Agreement or any other
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 (except
as provided for in Section 16.10(c))), 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).

            (c) Notwithstanding the provisions of Section 16.10(a) and (b), the
general partner of Seller shall remain fully liable to Buyer (i) for intentional
fraud on the part of or intentional fraudulent statements made by Seller in
connection with this transaction and (ii) with respect to its obligations
pursuant to the Noncompetition Agreement referred to in Section 8.9 or any other
separate agreement between the managing general partner of Seller and Buyer.

            16.11 Amendments. No amendment to this Agreement shall be effective
unless it be in writing and is signed by all of the parties hereto.

            16.12 Severability. If any provision of this Agreement or the
application of such provision to any person or circumstance shall be held
invalid, legal or enforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or other enforceability shall not
affect any other provision hereof.

            16.13 Entire Agreement. This Agreement, together with the Exhibits
and Schedules hereto and together with any other agreements that expressly
provide that they are entered into in connection with this Agreement,
constitutes the entire agreement of the parties with respect to the subject
matter hereof and supersedes all prior agreements or understandings with respect
to the subject matter hereof.

                  [Remainder of Page Intentionally Left Blank.]

                                       37

<PAGE>

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.

                                   NORTHLAND CABLE PROPERTIES SEVEN LIMITED
                                   PARTNERSHIP

                                   By: Northland Communications Corporation,
                                       its Managing General Partner

                                   By:/S/ GARY S. JONES
                                      -------------------
                                      Name: Gary S. Jones
                                      Title: President

                                   MCDONALD INVESTMENT COMPANY, INC.

                                   By:/S/ WILLIAM W. MCDONALD, JR.
                                      ------------------------------
                                      Name: William W. McDonald, Jr.
                                      Title: Vice President

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