EX-10.5






EXHIBIT 10.5




SETTLEMENT AGREEMENT 




This Settlement Agreement (the “Agreement”) dated November 7, 2005, together with the releases
herein, is made and entered into by and between NBC Universal, Inc. (“NBCU”) and Paxson
Communications Corporation (“Paxson”). The term “Parties” shall refer collectively to all of the
parties to this Agreement.



WHEREAS NBCU filed an action against Paxson in the Delaware Court of Chancery (the “Chancery
Court”) on August 19, 2004 (the “Chancery Court Action”) seeking declaratory relief and asserting
breach of contract with respect to the Cost of Capital Dividend Rate provision of the September 15,
1999 Certificate of Designation governing Paxson’s 8% Series B Convertible Exchangeable Preferred
Stock (the “COD”);



WHEREAS NBCU filed a First Amended Complaint in the Chancery Court Action on September 28,
2004, and Paxson filed an Answer and Counterclaim on October 14, 2004, seeking declaratory relief
with respect to certain of NBCU’s redemption rights under the COD and the Investment Agreement
between National Broadcasting Company, Inc. (“NBC”) and Paxson, dated September 15, 1999 (the
“Investment Agreement”);



WHEREAS the Parties filed motions for judgment on the pleadings with respect to the claims in
the Chancery Court Action, which were denied in one respect and granted in all other respects by
the Chancery Court, including that the Chancery Court granted judgment on the pleadings in NBCU’s
favor with respect to the proper Cost of Capital Dividend Rate under the COD, and whereas Paxson
has sought to appeal that ruling to the Supreme Court of Delaware;



WHEREAS the Chancery Court Action is currently stayed but remains pending;



WHEREAS NBCU commenced an arbitration proceeding against Paxson with the American Arbitration
Association on May 12, 2005 (the “Arbitration Proceeding”) seeking damages for alleged breaches of
Section 6.7 of the Investment Agreement and Section 10(d) of the Network Sales Agreement between
NBC and Paxson, dated November 19, 1999 (the “Network Sales Agreement”), as well as seeking damages
and declaratory relief pursuant to allegations that Paxson wrongfully attempted to terminate the
Network Sales Agreement, the National Agreement between NBC and Paxson, dated July 16, 2001 (the
“National Sales Agreement”), and the Joint Sales Agreements, which were entered into by NBC and
Paxson for various local television markets (the “JSAs”) pursuant to three letter agreements, dated
September 15, 1999, between NBC and Paxson in respect of joint sales of advertising and other joint
services by NBC, Paxson and their respective affiliates (the “Letter Agreements”) (collectively,
the Network Sales Agreement, National Sales Agreement, the JSAs and the Letter Agreements are
referred to herein as the “Sales Agreements”);



WHEREAS Paxson filed an Answer in the Arbitration Proceeding denying NBCU’s allegations and
asserting that NBCU is entitled to no relief in the Arbitration Proceeding; and



WHEREAS the Arbitration Proceeding is stayed but remains pending:



NOW, THEREFORE, in consideration of the mutual obligations and promises contained herein, as
well as in consideration of the execution and delivery of the Master Transaction Agreement, by and
among NBCU, Paxson, and other parties, dated November 7, 2005 (the “Master Transaction Agreement”)
and the other agreements to be executed and delivered by the Parties pursuant to the Master
Transaction Agreement, the Parties agree as follows:



1. The Parties agree to voluntarily dismiss, with prejudice, all claims, counterclaims, and
demands asserted in the Chancery Court Action. Simultaneously with the execution of this
Agreement, the Parties shall exchange a signed stipulation of dismissal with prejudice of the
Chancery Court Action in the form attached hereto as Exhibit A. NBCU shall file the stipulation
with Chancery Court on the business day following the execution of this Agreement.



2. The Parties agree to voluntarily dismiss, with prejudice, all claims, counterclaims, and
demands asserted in the Arbitration Proceeding. Simultaneously with the execution of this
Agreement, the Parties shall exchange a signed stipulation of dismissal of the Arbitration
Proceeding in the form attached hereto as Exhibit B. NBCU shall submit the stipulation to the
American Arbitration Association on the business day following the execution of this Agreement.



3. NBCU, for itself as well as for its present and former agents, parents, affiliates,
subsidiaries, divisions, units, partners, shareholders, officers, directors, employees,
contractors, predecessors, successors, assigns, assignors, and attorneys, whether or not acting in
such capacity, (collectively, the “NBCU Releasors”) hereby releases and forever discharges Paxson
and its respective present and former agents, parents, affiliates, subsidiaries, divisions, units,
partners, shareholders, officers, directors, employees, contractors, predecessors, successors,
assigns, assignors, and attorneys, whether or not acting in such capacity, (collectively, the
“Paxson Releasees”) from any and all claims, counterclaims, demands, controversies, actions, causes
of action, obligations, liabilities, costs (including any court or statutory costs), attorneys’
fees, and damages, in law or equity, that have been or could have been brought related to the facts
alleged in the Chancery Court Action and/or the Arbitration Proceeding, whether known or unknown;
provided, however, (a) that nothing in this Agreement shall be construed to release, bar,
alter, or affect the rights or obligations of the Parties, or any party, under any agreement, and
shall not release, bar, alter, or affect any litigation or arbitration claim, based on conduct,
facts, or injuries occurring after the date of the execution of this Agreement; and (b) that the
Sales Agreements shall remain in full force and effect, provided that the obligations of the
Parties thereunder have been and shall continue to be suspended unless the Parties thereto mutually
agree in writing to revoke such suspension.



4. Paxson, for itself and for its present or former agents, parents, affiliates, subsidiaries,
divisions, units, partners, shareholders, officers, directors, employees, contractors,
predecessors, successors, assigns, assignors, and attorneys, whether or not acting in such
capacity, (collectively, the “Paxson Releasors”) hereby releases and forever discharges NBCU and
its present and former agents, parents, affiliates, subsidiaries, divisions, units, partners,
shareholders, officers, directors, employees, contractors, predecessors, successors, assigns,
assignors, and attorneys, whether or not acting in such capacity, (collectively, the “NBCU
Releasees”) from any and all claims, counterclaims, demands, controversies, actions, causes of
action, obligations, liabilities, costs (including any court or statutory costs), attorneys’ fees,
and damages, in law or equity, that have been or could have been brought related to the facts
alleged in the Chancery Court Action and/or the Arbitration Proceeding, whether known or unknown;
provided, however, (a) that nothing in this Agreement shall be construed to release, bar,
alter, or affect the rights or obligations of the Parties, or any party, under any agreement, and
shall not release, bar, alter, or affect any litigation or arbitration claim, in each case, based
on conduct, facts, or injuries occurring after the date of the execution of this Agreement; and
(b) that the Sales Agreements shall remain in full force and effect, provided that the
obligations of the Parties thereunder have been and shall continue to be suspended unless the
Parties thereto mutually agree in writing to revoke such suspension. On the business day following
the execution of this Agreement, Paxson and NBCU shall send a letter to the Federal Communication
Commission (“FCC”) in the form attached hereto as Exhibit C, advising the FCC that the Arbitration
Proceeding has been voluntarily dismissed by the Parties, withdrawing its prior filings with the
FCC concerning the Sales Agreements, stating that the Sales Agreements remain in full force and
effect, although the obligations of the Parties thereunder have been suspended, and advising the
FCC that the Parties have resolved any dispute regarding the Sales Agreements. The Parties agree
that (x) the execution and delivery of the Sales Agreements and the performance by the parties of
their obligations thereunder were intended not to create an attributable interest for NBCU in any
station affiliated with or owned, operated or controlled by Paxson, (y) NBCU’s efforts to enforce
its rights under the Sales Agreements did not create any such attributable interest and (z) neither
NBCU nor Paxson shall make any statements in the future to the FCC or any third party, in writing
or otherwise, inconsistent with or contrary to the foregoing.



5. The Parties each agree to bear their own costs, including, but not limited to, attorney’s
fees, arbitrator fees, administrative fees, and filing fees associated with the Chancery Court
Action, the Arbitration Proceeding, and the execution and delivery of this Agreement.



6. The execution of this Agreement and the stipulations contemplated herein shall not be used
as, construed as, or deemed to be evidence of any admission or concession of liability, wrongdoing,
damages, facts or law on the part of any of the Parties.



7. If one or more provisions of this Agreement or the application thereof to any person or
circumstances is determined by a court or agency of competent jurisdiction to violate any law or
regulation, including, without limitation, any rule or policy of the FCC, or to be invalid, void or
unenforceable to any extent (a “Conflicting Provision”), the Conflicting Provision shall have no
further force or effect, but the remainder of this Agreement and the application of the Conflicting
Provision to other persons or circumstances or in jurisdictions other than those as to which it has
been held invalid or unenforceable shall not be affected thereby and shall be enforced to the
greatest extent permitted by law, so long as any such violation, invalidity or unenforceability
does not change the basic economic or legal positions of the Parties. In such event, the Parties
shall negotiate in good faith such changes in other terms as shall be practicable in order to
effect the original intent of the Parties.



8. This Agreement may not be amended or modified except by a written instrument signed by or
on behalf of all the Parties hereto.



9. The Parties acknowledge that they have been advised by counsel concerning the contents and
effect of this Agreement, that they understand all of its provisions, and that they are entering
into this Agreement knowingly and voluntarily.



10. In the event that an ambiguity or a question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions
of this Agreement.



11. The undersigned persons represent and warrant that they are duly authorized to sign this
Agreement on behalf of the person or entity on whose behalf they are listed as signing and that
they have full and proper authority to bind such person or entity to all of the terms herein.



12. This Agreement shall be governed by and construed in accordance with the laws of the State
of New York applicable to contracts executed and performed within such state, and each party hereby
submits to the jurisdiction of the Chancery Court. In the event the Chancery Court does not have
jurisdiction over any dispute arising out of this Agreement, each party hereby submits to the
jurisdiction of the United States District Court for the Southern District of New York, provided
that in the event such court does not have jurisdiction over any dispute arising out of this
Agreement, each party hereby submits to the jurisdiction of the Supreme Court of the State of New
York, New York County. THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT.



IN WITNESS WHEREOF, the Parties hereto and their counsel have caused this Agreement to be duly
executed as of the date first above written.




PAXSON COMMUNICATIONS CORPORATION



	 	 	 
	By: /s/ Dean M. Goodman

	 

	Name:

Title:

	 	Dean M. Goodman

President and Chief Operating Officer






	 	 	 
	NBC UNIVERSAL, INC.
	By:	 	/s/ Robert C. Wright
	Name: Robert C. Wright
	Title:	President and Chief Executive Officer










1




	 	 	 	Exhibit A





IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE




IN AND FOR NEW CASTLE COUNTY




	 	 	 	 	 	 	 	 	 	 	 	 	 
	NBC UNIVERSAL, INC.,	 	 	 	 	 	)	 	 	 	 
	 	 	 	 	 	 	)	 	 	 	 
	 
	 	Plaintiff,
	 	 	)	 	 	 	 	 
	 
	 	 	 	 	 	 	)	 	 	 	 	 
	v.
	 	 	 	 	 	 	)	 	 	C.A. No. 650-N
	 
	 	 	 	 	 	 	)	 	 	 	 	 
	PAXSON COMMUNICATIONS
	 	 	 	 	 	 	)	 	 	 	 	 
	CORPORATION,
	 	 	 	 	 	 	)	 	 	 	 	 
	 
	 	 	 	 	 	 	)	 	 	 	 	 
	 
	 	Defendant.
	 	 	)	 	 	 	 	 






STIPULATION OF DISMISSAL WITH PREJUDICE




Pursuant to Chancery Court Rule 41(a)(1), plaintiff NBC Universal, Inc. and defendant Paxson
Communications Corporation hereby dismiss this action, and all claims and counterclaims asserted
therein, with prejudice. Each party shall bear its own costs and attorneys’ fees.



	 	 	 	 	 






2




	 	 	 	 	 
	CONNOLLY BOVE LODGE & HUTZ LLP
____________________________________
Collins J. Seitz, Jr. (Bar No. 2237)
1007 North Orange Street
P.O. Box 2207
Wilmington, DE 19899
	 	MORRIS NICHOLS ARSHT & TUNNELL

	(302) 658-9141
	 	 	—	 
	Stephen Fishbein
	 	Kenneth J. Nachbar (Bar No. 2067)

	Adam S. Hakki
	 	David J. Teklits (Bar No. 3221)

	SHEARMAN & STERLING LLP
	 	Morris Nichols Arsht & Tunnell

	599 Lexington Avenue
	 	1201 North Market Street
	New York, NY 10022
	 	P.O. Box 1347

	(212) 848-4000
	 	Wilmington, DE  19899

	Susan E. Weiner
	 	 	(302) 658-9200	 
	Executive Vice President and
	 	William Pratt, Esq.

	Deputy General Counsel
	 	KIRKLAND & ELLIS LLP

	NBC Universal, Inc.
	 	153 East 53rd Street
	30 Rockefeller Plaza
	 	New York, NY  10022

	New York, New York 10112
	 	 	(212) 446-4862	 
	(212) 664-2806
	 	Attorneys for Paxson Communications

	Attorneys for NBC Universal, Inc.
	 	Corporation







IT IS SO ORDERED, this      day of      , 2005.



     



Vice Chancellor



(422951; DE)




3




Exhibit B




[S&S Letterhead]




sfishbein@shearman.com November      , 2005



(212) 848-4424



By Fax



	 
	 

	Jennifer Eltahan

Case Manager

American Arbitration Association

950 Warren Avenue

East Providence, Rhode Island 02914







Re: 13 140 Y 01097 05 — NBC Universal, Inc. V. Paxson Communications Corporation




Dear Ms. Eltahan:


Please be advised that Claimant NBC Universal, Inc. and Respondent Paxson Communications
Corporation hereby withdraw and dismiss all claims in the above-referenced arbitration.




Very truly yours,



     



	 	 	 
	Stephen Fishbein, Esq.

SHEARMAN & STERLING LLP

599 Lexington Avenue

New York, New York 10022

	 	William Pratt, Esq.

KIRKLAND & ELLIS LLP

153 East 53rd Street

New York, New York 10022






Attorney for NBC Universal, Inc. Attorney for Paxson Communications Corporation



cc: Susan Weiner, Esq.



4




EXHIBIT C

 




	 	 	 
	November      , 2005

The Honorable Kevin J. Martin

Chairman

	 	





	 
	 	 
	Federal Communications Commission

	 
	 	 
	The Portals — 8th Floor

445 12th Street, SW

Washington, DC 20554

Re:

	 	





Paxson Communications Corporation and NBCU
	
 
	 	 






Dear Chairman Martin:



Paxson Communications Corporation (“PCC”) hereby withdraws that series of letters that PCC
filed with the Office of the Chairman on the following dates: April 28, 2005, May 4, 2005, May 23,
2005, June 22, 2005, and July 21, 2005 (the “PCC Correspondence”). Paxson Management Corporation
(“PMC”) joins in this request.1 In response to the PCC Correspondence, NBC Universal,
Inc. (f/k/a National Broadcasting Company, Inc.) (“NBCU”) submitted letters to the Office of the
Chairman on the following dates: May 25, 2005 and June 7, 2005 (the “NBCU Correspondence”). NBCU
hereby withdraws the NBCU Correspondence. The PCC Correspondence and the NBCU Correspondence
addressed certain matters arising under the contractual agreements between PCC and NBCU, which were
previously considered by the Commission in Telemundo Group, Inc., 17 FCC Rcd 6958 (2002). By
letter dated May 23, 2005, PCC advised your office that NBCU had filed with the American
Arbitration Association a request for arbitration regarding the Parties’ rights and
responsibilities under the agreements.



Since the filing of the PCC Correspondence and the NBCU Correspondence, NBCU and PCC have
voluntarily dismissed the arbitration proceeding and have settled their contractual dispute. In
addition, the Network Sales Agreement, the National Sales Agreement and the Joint Sales Agreements
between PCC and NBCU remain in full force and effect, although, at this time, the obligations of
the parties thereunder have been suspended unless the parties thereto mutually agree in writing to
revoke such suspension. Accordingly, there is no reason for any Commission action regarding those
matters, and PCC hereby withdraws the PCC Correspondence and NBCU hereby withdraws the NBCU
Correspondence and PCC and NBCU hereby request the dismissal of this matter with prejudice.



Please inform the undersigned if any question should arise concerning this request.



5





PAXSON COMMUNICATIONS CORPORATION



	 	 	 	 	 
	By:
	 	 	—	 
	   John R. Feore, Jr., Esq.

	   Dow, Lohnes & Albertson, PLLC

	 
	 	1200 New Hampshire Ave., NW
	   Suite 800

	   Washington, DC  20036

	   Its Counsel







	 	 	 	 	 
	 	 	NBC UNIVERSAL, INC.
	 
	 	By:_____________________________

	 
	 	Margaret Tobey, Esq.

	 
	 	Morrison & Foerster

	 
	 	2000 Pennsylvania Ave., NW
	 
	 	Suite 5500

	 
	 	Washington, DC  20006

	 
	 	Its Counsel

	cc:
	 	Commissioner Kathleen Q. Abernathy

	 
	 	Commissioner Michael J. Copps

	 
	 	Commissioner Jonathan S. Adelstein

	 
	 	Donna Gregg, Chief, Media Bureau

	 
	 	Robert Ratcliffe, Deputy Bureau Chief, Media Bureau








1 PMC is a party to this letter because
pursuant to prior Commission consent (see FCC File Nos. BTTCT-20050817ADH, et.
seq.), PMC has voting control over the licensees of the PCC television
stations.




6