Exhibit 10.1
RELEASE AND SETTLEMENT AGREEMENT
This RELEASE AND SETTLEMENT AGREEMENT, dated as of February 18, 2005
(this "Agreement"), is entered into by and between Pegasus Communications
Corporation ("Pegasus" or the "Company") and The Blackstone Group L.P., on
behalf of its parents, affiliates and subsidiaries (collectively, "Blackstone").
WHEREAS, Pegasus and Blackstone were parties to a certain
letter agreement dated as of September 5, 2001 (the "Letter Agreement"),
pursuant to which Blackstone would provide mergers and acquisition advisory
services to Pegasus in connection with a change of control or possible sale of
Pegasus' DIRECTV distribution business; and
WHEREAS, on June 2, 2004, certain subsidiaries of Pegasus,
including those that distributed DIRECTV services (collectively, the "Chapter 11
Subsidiaries"), filed a voluntary petition for relief under chapter 11 of title
11 of the United States Code in the U.S. Bankruptcy Court for the District of
Maine (the "Bankruptcy Court"); and
WHEREAS, on June 3, 2004, Pegasus sent a notice to Blackstone
terminating the Letter Agreement;
and
WHEREAS, certain of the Chapter 11 Subsidiaries entered into
as asset purchase agreement with DIRECTV, Inc. dated as of July 30, 2004
pursuant to which these Chapter 11 Subsidiaries sold assets relating to the
DIRECTV distribution business to DIRECTV, Inc. on August 27, 2004; and
WHEREAS, on September 10, 2004 Blackstone sent to Pegasus an
invoice in the amount of $5,235,039.04, which included a transaction fee
relating to disposition of the DIRECTV distribution business, in reliance upon a
provision in the Letter Agreement that provides for a transaction fee to be paid
to Blackstone in the event a Transaction (as defined in the Letter Agreement) is
consummated within 15 months from a termination without cause of the Letter
Agreement; and
WHEREAS, the type of circumstances under which the DIRECTV
distribution business was sold was not contemplated by the parties when the
Letter Agreement was signed, and the parties wish to resolve issues relating to
payments owing to Blackstone.
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein, and other good and valuable consideration, the
receipt, sufficiency and adequacy of which are hereby acknowledged, the parties
hereto hereby agree as follows:
Section 1. Issuance of Shares. In consideration of the delivery by Pegasus of
52,351 shares of Pegasus' Series C Convertible Preferred Stock (the "Series C
Preferred Shares"), Blackstone shall fully and forever release Pegasus and waive
any further or future assertion of liabilities owing to Blackstone from Pegasus
pursuant to the Letter Agreement, including the invoice sent to Pegasus by
Blackstone on September 10, 2004 in the amount of $5,235,039.04. Pegasus agrees
to deliver the Series C Preferred Shares to Blackstone via book entry as soon as
practical after the signing of this Agreement.
Section 2. Release. Upon delivery of the Series C Preferred shares as set forth
in Section 1, Pegasus and Blackstone shall hereby release, remise and discharge
each other, each other's respective parents, subsidiaries, affiliates, heirs,
legal representatives, executors, administrators, successors, subsidiaries,
divisions, assigns, officers, directors, stockholders, agents and employees from
all actions, causes of action, suits, debts, dues, sums of money, accounts,
reckonings, bonds, bills, specialties, covenants, contracts, controversies,
agreements, promises, variances, trespasses, damages, judgments, extents,
executions, claims, and demands whatsoever, in law or equity, which either party
or their respective parents, successors, subsidiaries, affiliates, legal
representatives, divisions and assigns, ever had, now have or hereafter can,
shall or may, have for, upon, or by reason of any matter, cause or thing
whatsoever, whether known or unknown, from the beginning of the world to the day
of the date of this Agreement, arising out of, under or in connection with the
Letter Agreement or any services provided by Blackstone to Pegasus.
Section 3. Representations and Warranties.
3.1 Representations and Warranties of Blackstone.
(A). Blackstone represents and warrants that it understands that this
is a full and final general release.
(B). Blackstone further represents and warrants that
(i) Blackstone is acquiring the Series C Preferred Shares
solely for its own account and not with a view to their
distribution in violation of the registration provisions
of the Securities Act of 1933, as amended, and the Rules
and Regulations thereunder (collectively, the "Act").
(ii) Blackstone is a Qualified Institutional Buyer, or "QIB" (as
defined in Rule 144A under the Act) and that its present and
anticipated financial position permits it to purchase the
Series C Preferred Shares and to hold the Series C Preferred
Shares indefinitely for investment purposes.
(iii) Blackstone acknowledges that
(a) The availability of the exemption from registration under
the Act relied upon by the Company in issuing the Series C
Preferred Shares is dependent, in part, upon the truth of
the representations made herein.
(b) It is thoroughly familiar with the business of the Company
and has made all investigations which it deems necessary
or desirable.
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(c) The Series C Preferred Shares are not registered under
the Act or under any applicable state securities law
and must be held indefinitely unless they are
subsequently so registered or unless an exemption from
such registration is available.
(d) The Company is under no obligation to register the
Series C Preferred Shares under any circumstances or to
attempt to make available any exemption from registration
under the Act or any applicable state securities law, at
Blackstone's expense or otherwise.
(e) The Series C Preferred Shares are currently held in book
entry under CUSIP Number 000000000, which is the CUSIP
number used for Series C Preferred Shares sold in a Rule
144A private offering. If Blackstone requests a physical
stock certificate, Blackstone acknowledges that the
Company may legend the physical stock certificate in
accordance with the Certificate of Designation of the
Series C Preferred Shares.
(f) If, at a time when registration is required, it is
legally permissible for Blackstone to sell the Series C
Preferred Shares privately without registration, any
Series C Preferred Shares so sold will be restricted in
the hands of the purchaser.
3.2 Mutual Representations and Warranties. Each party hereto (and,
with respect to Section 3.2(b)(ii) below only, each person signing this
Agreement) hereby makes the following representations and warranties to
the other party hereto as follows:
(a) It is duly organized and validly existing as a corporation
or partnership or limited liability company, as the case
may be, in good standing under the laws of its
jurisdiction of incorporation or organization.
(b) It has full power and authority to enter into this
Agreement and to consummate the transactions contemplated
hereby, and (ii) the person who has executed this
Agreement is duly authorized to do so and thereby bind the
party on whose behalf he or she is purporting to act.
(c) This Agreement is a valid and binding agreement,
enforceable against such party in accordance with its
terms.
(d) Neither the execution and delivery of this Agreement,
nor the consummation of the transactions contemplated
hereby, will violate, result in a breach of any of the
terms or provisions of, constitute a default (or any event
that, with the giving of notice or the passage of time or
both would constitute a default) under, accelerate any
obligations under, or conflict with, (i) its charter,
articles or certificate of incorporation, limited
liability company agreement, partnership agreement or
bylaws (or other organizational documents), if applicable,
or any agreement, indenture or other instrument to which
it is a party or by which it or its properties are bound,
(ii) any judgment, decree, order or award or any court,
governmental body or arbitrator to which it is subject or
(iii) any law, rule or regulation applicable to it.
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3.3 Representations and Warranties of the Company. The Company
hereby represents and warrants to Blackstone that the Company is the
sole legal and beneficial owner of the Series C Preferred Shares, and,
upon the delivery of the Series C Preferred Shares to Blackstone,
Blackstone will acquire the Series C Preferred Shares free and clear
of any liens, encumbrances, pledges, security interest or other
restrictions or claims of third parties, other than any of the
foregoing created by Blackstone.
Section 4. Miscellaneous. This Agreement represents the entire understanding of
the parties with respect to the subject matter contained herein. This Agreement
may not be amended, modified or waived except in a writing signed by the party
against whom enforcement of such amendment, modification or waiver is sought.
This Agreement shall be construed and interpreted in accordance with the
internal laws of the Commonwealth of Pennsylvania, without reference to the
conflict of laws principles thereof. The parties hereby agree and submit to the
jurisdiction of the courts sitting in the Commonwealth of Pennsylvania for the
resolution of any dispute relating to this Agreement. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original,
but all of which, when taken together shall constitute one and the same
instrument. This Agreement may be executed by facsimile signatures.
Section 5. Confidentiality. The parties agree that this Agreement and its
specific terms, including the existence of this Agreement, will be held in
strict confidence, and will not be disclosed to anyone except the parties to it,
their respective counsel and accountants and their necessary agents, any and all
policing or regulatory agencies and as required by law.
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In Witness whereof, each of Pegasus and Blackstone has caused this
Agreement to be executed by its duly authorized officers as the date first
written above.
THE BLACKSTONE GROUP L.P.
By: /s/ X. X. Xxxxxxx
Name: X.X. Xxxxxxx
Title: Senior Managing Director
PEGASUS COMMUNICATIONS CORPORATION
By: /s/ Xxxxx Xxxxxx Blank
Name: Xxxxx Xxxxxx Blank
Title: Sr. V. P.
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