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
<PAGE>
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 Wa
