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Purchase Agreement - Channel 51

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Sectors: Media
Governing Law: Delaware, View Delaware State Laws
Effective Date: July 31, 1996
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PURCHASE AGREEMENT


BY AND AMONG


AMERICA 51, L.P.,


PAXSON COMMUNICATIONS
OF PHOENIX-51, INC.,


HECTOR GARCIA SALVATIERRA, L.P.


AND


HECTOR GARCIA SALVATIERRA


FOR


TELEVISION STATION CHANNEL 51
TOLLESON, ARIZONA


* * *


JULY 31, 1996


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TABLE OF CONTENTS


Page
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ARTICLE 1. CERTAIN DEFINITIONS.............................................................................2
Section 1.1 Terms Defined in this Section..........................................................2
Section 1.2 Clarifications.........................................................................4
Section 1.3 Other Terms............................................................................5


ARTICLE 2. THE INITIAL CLOSING.............................................................................5
Section 2.1 The Initial Closing....................................................................5
Section 2.2 Sale of Initial Interest...............................................................6
Section 2.3 Purchase Price.........................................................................6
Section 2.4 Acquisition of Limited Partnership Interest............................................6
Section 2.5 Assignment of Construction Permit and Site License.....................................6


ARTICLE 3. ACTIONS TO BE TAKEN PRIOR TO THE INITIAL CLOSING................................................6
Section 3.1 FCC Consents...........................................................................6
Section 3.2 Conduct Pending the Initial Closing....................................................7
Section 3.3 Extension Application..................................................................7


ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF BUYER
REGARDING THE INITIAL CLOSING...................................................................7
Section 4.1 Organization and Standing..............................................................7
Section 4.2 Power and Authority....................................................................8
Section 4.3 Conflicts..............................................................................8
Section 4.4 Investment.............................................................................8
Section 4.5 Qualifications.........................................................................8
Section 4.6 Broker.................................................................................8
Section 4.7 Disclosure.............................................................................8


ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF SELLER,
SALVATIERRA AND THE COMPANY REGARDING THE INITIAL
CLOSING.........................................................................................9
Section 5.1 Organization and Standing..............................................................9
Section 5.2 Power and Authority....................................................................9
Section 5.3 Conflicts..............................................................................9
Section 5.4 Exchange Act; Investment Company Act..................................................10
Section 5.5 Ownership of Partnership Interests....................................................10
Section 5.6 Assets and Liabilities of the Company. ..............................................10
Section 5.7 Broker................................................................................10
Section 5.8 Site License..........................................................................10
Section 5.9 Disclosure............................................................................10


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ARTICLE 6. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
AT THE INITIAL CLOSING.........................................................................11
Section 6.1 Representations and Warranties........................................................11
Section 6.2 Covenants and Conditions..............................................................11
Section 6.3 Contribution..........................................................................11
Section 6.4 Site License..........................................................................11
Section 6.5 Deliveries. .........................................................................11
Section 6.6 Adverse Proceedings...................................................................12
Section 6.7 Extension Application.................................................................12
Section 6.8 Limited Partner Interest..............................................................12


ARTICLE 7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF
SELLER, SALVATIERRA AND THE COMPANY AT THE
INITIAL CLOSING................................................................................13
Section 7.1 Representations and Warranties........................................................13
Section 7.2 316 Consent...........................................................................13
Section 7.3 Covenants and Conditions..............................................................13
Section 7.4 Deliveries............................................................................13
Section 7.5 Adverse Proceedings...................................................................14


ARTICLE 8. CONSTRUCTION AND OPERATION OF THE STATION......................................................14
Section 8.1 General...............................................................................14
Section 8.2 FCC Consent...........................................................................14
Section 8.3 Employee Benefit Plans................................................................15
Section 8.4 Labor Relations.......................................................................15
Section 8.5 Licenses..............................................................................15
Section 8.6 Compliance with Laws..................................................................15
Section 8.7 Construction of the Station...........................................................15
Section 8.8 Notification..........................................................................15
Section 8.9 Preservation of Business..............................................................16
Section 8.10 Performance of Agreements.............................................................16
Section 8.11 Cable Carriage........................................................................16


ARTICLE 9. THE OPTIONS AND THE SECOND CLOSING.............................................................16
Section 9.1 Call Option...........................................................................16
Section 9.2 Put Option............................................................................17
Section 9.3 The Second Closing....................................................................17
Section 9.4 Purchase Price for Option Interest....................................................17


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ARTICLE 10. COVENANTS OF THE COMPANY AND SELLER REGARDING
THE SECOND CLOSING...........................................................................18
Section 10.1 Contracts.............................................................................18
Section 10.2 Copyrights, Trademarks and Similar Rights.............................................18
Section 10.3 Governmental Authorizations...........................................................18
Section 10.4 Title to and Condition of Real Property...............................................18
Section 10.5 Title to and Condition of Tangible Personal Property..................................18
Section 10.6 Compliance With Laws..................................................................19
Section 10.7 Reports...............................................................................19
Section 10.8 Public Inspection File................................................................19
Section 10.9 Taxes.................................................................................19
Section 10.10 Distributions and Redemptions.........................................................19
Section 10.11 Liabilities of the Company............................................................19


ARTICLE 11. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
AT THE SECOND CLOSING........................................................................20
Section 11.1 Representations and Warranties........................................................20
Section 11.2 Covenants and Conditions..............................................................20
Section 11.3 FCC Consent...........................................................................20
Section 11.4 Consents..............................................................................20
Section 11.5 Deliveries. .........................................................................20
Section 11.6 Adverse Proceedings...................................................................21
Section 11.7 Time Brokerage Agreement..............................................................21
Section 11.8 Adverse Change........................................................................21


ARTICLE 12. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
AND THE COMPANY AT THE SECOND CLOSING........................................................21
Section 12.1 Representations and Warranties........................................................22
Section 12.2 Covenants and Conditions..............................................................22
Section 12.3 FCC Consent...........................................................................22
Section 12.4 Consents..............................................................................22
Section 12.5 Deliveries. .........................................................................22
Section 12.6 Time Brokerage Agreement..............................................................23
Section 12.7 Adverse Proceedings...................................................................23


ARTICLE 13. JOINT COVENANTS..............................................................................23
Section 13.1 Confidentiality.......................................................................23
Section 13.2 Cooperation...........................................................................23
Section 13.3 Governmental Consents.................................................................23
Section 13.4 Station Operation.....................................................................24


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ARTICLE 14. TRANSFER TAXES; FEES AND EXPENSES............................................................24
Section 14.1 Transfer Taxes........................................................................24
Section 14.2 Filing Fees...........................................................................24
Section 14.3 Expenses..............................................................................24


ARTICLE 15. RISK OF LOSS.................................................................................24
Section 15.1 Risk of Loss..........................................................................24
Section 15.2 Postponement of the Second Closing Date...............................................25
Section 15.3 Option to Terminate...................................................................25


ARTICLE 16. TERMINATION RIGHTS...........................................................................25
Section 16.1 Termination by the Parties............................................................25
Section 16.2 Termination by Buyer..................................................................26


ARTICLE 17. SPECIFIC PERFORMANCE.........................................................................26


ARTICLE 18. INDEMNIFICATION..............................................................................26
Section 18.1 Seller's Indemnification..............................................................26
Section 18.2 Buyer's Indemnification...............................................................26
Section 18.3 Notice of Claim.......................................................................26
Section 18.4 Assumption and Defense of Third-Party Action..........................................27
Section 18.5 Limitation Period.....................................................................27


ARTICLE 19. OTHER PROVISIONS.............................................................................27
Section 19.1 Survival of Representations, Warranties and Covenants.................................27
Section 19.2 Press Releases........................................................................27
Section 19.3 Further Assurances....................................................................28
Section 19.4 Benefit and Assignment................................................................28
Section 19.5 Entire Agreement......................................................................28
Section 19.6 Headings..............................................................................28
Section 19.7 Governing Law.........................................................................28
Section 19.8 Notices...............................................................................28
Section 19.9 Counterparts..........................................................................29
Section 19.10 PCC Guarantee.........................................................................29
Section 19.11 Attorney's Fees.......................................................................29
Section 19.12 No Third Party Beneficiaries..........................................................29


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PURCHASE AGREEMENT


THIS PURCHASE AGREEMENT (the "Agreement") is dated as of the 31st day of July, 1996, by and among AMERICA 51, L.P., a Delaware limited partnership (the "Company"); PAXSON COMMUNICATIONS OF PHOENIX-51, INC., a Florida corporation ("Buyer"), HECTOR GARCIA SALVATIERRA, L.P., an Arizona limited partnership ("Seller"), and HECTOR GARCIA SALVATIERRA ("Salvatierra").


W I T N E S S E T H


WHEREAS, Seller is the holder of a construction permit, File No.BPCT-850215LB (as subsequently modified through the date hereof, the "Construction Permit"), issued by the Federal Communications Commission ("FCC") for new television station KAJW (TV), Channel 51, Tolleson, Arizona (the "Station");


WHEREAS, pursuant to the Limited Partnership Agreement of the Company, dated as of July 30, 1996 (the "Partnership Agreement"), Seller is the holder of all of the general partnership interest and ninety-nine percent (99%) of the limited partnership interest of the Company and Salvatierra is the holder of one percent (1%) of the limited partnership interest of the Company;


WHEREAS, subject to FCC approval of the assignment of the Construction Permit from Seller to the Company, Seller intends to convey (i) the Construction Permit and (ii) that certain South Mountain Communications Site License (the "Site License"), No. 70648, dated as of January 12, 1995, by and between Seller and the City of Phoenix, Arizona Parks and Recreation Board, to the Company as a capital contribution to the Company;


WHEREAS, Buyer desires to purchase from Seller, following the acquisition of the Construction Permit by the Company, a forty-nine percent (49%) limited partnership interest of the Company, subject to the terms and conditions set forth herein, and concurrently with the consummation of such purchase, Seller shall acquire the remaining one percent (1%) limited partnership interest of the Company from Salvatierra and all of Seller's remaining interest in the Company shall become general partnership interest;


WHEREAS, Buyer desires to grant to Seller an option to require Buyer to purchase the remaining general and limited partnership interests of the Company, and Seller desires to grant to Buyer an option to purchase such partnership interests, subject to the terms and conditions set forth herein;


7


WHEREAS, in connection with the foregoing transactions, (a) Buyer and the Company have entered into a Construction and Lease Agreement dated as of the date hereof, pursuant to which Buyer agrees to provide certain services in connection with the construction of the Station and pursuant to which Buyer agrees to lease to the Company certain assets to be used in the business and operations of the Station, and (b) Buyer and the Company have entered into a Time Brokerage Agreement dated as of the date hereof, pursuant to which, upon completion of construction of the Station and commencement of broadcast operations, Buyer shall provide programming for broadcast on the Station, subject to the rules, regulations and policies of the FCC;


NOW, THEREFORE, in consideration of these premises and the mutual covenants, conditions and promises contained herein, and for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, agree as follows:


ARTICLE 1. CERTAIN DEFINITIONS


Section 1.1 Terms Defined in this Section. The following terms, as used in this Agreement, have the meanings set forth in this Section:


"316 Application" means the application filed by Seller, Buyer and the Company with the FCC requesting approval of the assignment of the Construction Permit by Seller to the Company concurrently with the purchase of the Initial Interest by Buyer from Seller.


"316 Consent" means the action by the FCC granting its consent to the 316 Application.


"Closings" means the collective reference to the Initial Closing and the Second Closing.


"Communications Act" means the Communications Act of 1934, as amended by the Telecommunications Act of 1996, and the rules and regulations promulgated thereunder.


"Consents" means the consents, permits, or approvals of government authorities and other third parties necessary to transfer the Construction Permit and the Site License to the Company and to transfer the Partnership Interests to Buyer or otherwise to consummate the transactions contemplated by this Agreement.


"Construction and Lease Agreement" means the Construction and Lease Agreement dated as of the date hereof, by and between Buyer and the Company.


"Contracts" means all contracts, leases, non-governmental licenses, and other agreements (including leases for personal or real property and employment agreements), written or oral (including any amendments and other modifications thereto) to which the


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Company is a party or that are binding upon the Company and that relate to or affect the assets or the business or operations of the Station, and (a) that are in effect on the date of this Agreement or (b) that are entered into by the Company between the date of this Agreement and the Second Closing Date in conformity with the terms hereof.


"FCC Consent" means action by the FCC granting its consent to the transfer of control of the Company as contemplated by this Agreement.


"FCC Licenses" means those licenses, permits, and authorizations issued by the FCC in connection with the business and operations of the Station.


"Final Order" means an action by the FCC that has not been reversed, stayed, enjoined, set aside, annulled, or suspended, and with respect to which no requests are pending for administrative or judicial review, reconsideration, appeal, or stay, and the time for filing any such requests and the time for the FCC to set aside the action on its own motion have expired.


"General Partnership Interest" means the general partnership interest of the Company.


"Initial Closing" means the consummation of the purchase and sale of the Initial Interest pursuant to this Agreement in accordance with the provisions of Article 2.


"Initial Closing Date" means the date on which the Initial Closing occurs, as determined pursuant to Section 2.1.


"Initial Interest" means a 49% Limited Partnership Interest.


"Intangibles" means all copyrights, trademarks, trade names, service marks, service names, licenses, patents, permits, jingles, proprietary information, technical information and data, machinery and equipment warranties, and other similar intangible property rights and interests (and any goodwill associated with any of the foregoing) applied for, issued to, or owned by the Company or under which the Company is licensed or franchised and that are used or useful in the business and operations of the Station, together with any additions thereto between the date of this Agreement and the Second Closing Date.


"Licenses" means all licenses, permits, construction permits, and other authorizations issued as of the date hereof by the FCC, the Federal Aviation Administration, or any other federal, state, or local governmental authorities for the construction or operation of the Station, together with any additions thereto between the date of this Agreement and the Second Closing Date.


"Limited Partnership Interest" means the limited partnership interest of the Company.


"Option Interest" means all Partnership Interests other than the Initial Interest.


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"Partnership Interests" mean, collectively, the Limited Partnership Interest and the General Partnership Interest.


"Real Property" means all real property, and all buildings and other improvements thereon, whether or not owned or held by Seller or the Company, used or useful in the business or operations of the Station.


"Real Property Interests" means all interests in real property, including fee estates, leaseholds and subleaseholds, purchase options, easements, licenses, rights to access, and rights of way, and all buildings and other improvements thereon, owned or held by Seller or the Company that are used or useful in the business or operations of the Station, together with any additions thereto between the date of this Agreement and the Second Closing Date.


"Second Closing" means the consummation of the purchase and sale of the Option Interest pursuant to this Agreement in accordance with the provision of Article 9.


"Second Closing Date" means the date on which the Second Closing occurs, as determined pursuant to Section 9.3.


"Tangible Personal Property" means all machinery, equipment, tools, vehicles, furniture, leasehold improvements, office equipment, plant, inventory, spare parts, and other tangible personal property owned or held by Seller or the Company that is used or useful in the conduct of the business or operations of the Station, together with any additions thereto between the date of this Agreement and the Second Closing Date.


"Taxes" means all federal, state, local or foreign income, gross receipts, windfall profits, severance, property, production, sales, use, license, excise, franchise, capital, transfer, employment, withholding and other taxes and assessments, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties.


"Tax Returns" means all federal, state, local and foreign income, franchise, sales, use, occupation, property, excise, alternative or add-on minimum, social security, employees' withholding, unemployment, disability, transfer, capital stock and other tax returns and tax reports.


"Time Brokerage Agreement" means the Time Brokerage Agreement dated as of the date hereof, by and between Buyer and the Company.


"Transaction Documents" means the Construction and Lease Agreement and Time Brokerage Agreement.


Section 1.2 Clarifications. Words used herein, regardless of the gender and number specifically used, shall be deemed and construed to include any other gender and any


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